Document:

TII INDUSTRIES, INC.

                             SUBSCRIPTION AGREEMENT

                                       AND

                         INVESTOR INFORMATION STATEMENT

                                  INSTRUCTIONS

                IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING.
           SIGNIFICANT REPRESENTATIONS ARE CONTAINED IN THIS DOCUMENT.

               THERE ARE TWO AGREEMENTS ATTACHED. BOTH AGREEMENTS
             NEED TO BE REVIEWED, COMPLETED AND EXECUTED AS FOLLOWS:

         1.       Fill in the missing information on Page 1.

         2.       Individual Investors must complete and sign Question 7.7 on
                  Page 4 and complete and sign the signature page on Page 8.

         3.       Entity Investors must complete Question 7.8 on Page 5 and sign
                  the signature page on Page 9 (certain persons  affiliated with
                  the entity may be required to  complete  Question  7.7 and, if
                  so, copies of Page 4 should be added,  completed and signed by
                  those persons).

                       DELIVER THE EXECUTED AGREEMENTS TO:
                            M.H. MEYERSON & CO., INC.
                            525 WASHINGTON BOULEVARD

                                   34TH FLOOR

                              JERSEY CITY, NJ 07310
                  ATTENTION: MS. TRACY R. CEPEDA (800) 444-4114

<PAGE>

                            Print Name of Subscriber ___________________________

            SUBSCRIPTION AGREEMENT AND INVESTOR INFORMATION STATEMENT

 IMPORTANT: PLEASE REFER TO SCHEDULE 1 COMMENCING ON PAGE 10 WHEN REVIEWING THIS
     DOCUMENT. THE SCHEDULE IS INCORPORATED HEREIN AND MADE A PART HEREOF.

The Company and the Investor hereby agree as follows:

         1. SUBSCRIPTION FOR SECURITIES.  I (sometimes referred to herein as the
"Investor") hereby subscribe for and agree to purchase  $________________ of the
securities  being  offered  by  the  Company  described  on  SCHEDULE  1  hereto
("Securities")  upon the terms and  conditions  set forth in this  Agreement and
SCHEDULE 1. M.H.  Meyerson & Co., Inc. ("M.H.  Meyerson") is acting as exclusive
placement agent for the offering.

         2. OFFERING  PERIOD.  The Securities are currently being offered by the
Company through the date set forth on SCHEDULE 1 ("Termination Date").

         3. INVESTOR DELIVERY OF DOCUMENTS AND PAYMENT.  I hereby tender to M.H.
Meyerson, as placement agent for the Company (i) the full purchase price for all
Securities  subscribed  for by me by  check  or  wire  in  accordance  with  the
instructions  set forth on SCHEDULE 1, and (ii) two manually  executed copies of
this  Subscription  Agreement.  Prior to the earlier of a Closing (as defined in
Section 5 hereof) or the Termination Date, my wire transfer will be held by M.H.
Meyerson in a non-interest bearing bank,  segregated bank account subject to the
terms and  conditions  herein.  If the  Company  does not receive and accept the
minimum  subscriptions  required to have a Closing as set forth on SCHEDULE 1 by
the  Termination  Date,  my payment  will be returned to me without  interest or
deduction.

         4.  ACCEPTANCE  OR  REJECTION  OF  SUBSCRIPTION.  The  Company and M.H.
Meyerson have the right to reject this subscription for the Securities, in whole
or in part, for any reason and at any time prior to the Closing, notwithstanding
prior receipt by me of notice of acceptance of my subscription.  In the event of
the rejection of this  subscription,  my payment will be returned promptly to me
without interest or deduction and, if my subscription is rejected in whole, this
Subscription  Agreement will have no force or effect. The Securities  subscribed
for herein will not be deemed  issued to or owned by me until two copies of this
Subscription Agreement have been executed by me and countersigned by the Company
and the Closing with respect to my subscription has occurred.

         5. CLOSING AND DELIVERY OF SECURITIES.  A closing ("Closing") may occur
at the office of Graubard Mollen & Miller at such time as determined  jointly by
the Company and M.H.  Meyerson  provided that M.H. Meyerson has received and the
Company has accepted  subscriptions  for the minimum amount of Securities as set
forth on SCHEDULE  1. In the event my  subscription  is accepted  and there is a
Closing,  my  payment  will be  released  to the  Company  and the  certificates
representing the Securities will be delivered  promptly to me along with a fully
executed version of this Agreement.

         6.  OFFERING  TO  ACCREDITED  INVESTORS.  This  offering  is limited to
accredited investors as defined in Rule 501(a) of Regulation D promulgated under
the Securities  Act of 1933, as amended  ("Securities  Act"),  and is being made
without  registration  under the  Securities Act in reliance upon the exemptions
contained in Section 4(2) of the Securities Act and applicable  state

<PAGE>

securities  laws.  As indicated  by my responses on page 7 or 8 hereof,  I am an
"accredited investor" within the meaning of Rule 501 promulgated thereunder. 1.

         7. INVESTOR  REPRESENTATIONS AND WARRANTIES.  I acknowledge,  represent
and warrant to the Company and M.H. Meyerson as follows:

            7.1 Obligations of the Company and the Investor.  The Company has no
obligation  to me other than as set forth in this  Agreement,  including but not
limited to the  obligations  described in Section 7.1 of SCHEDULE 1. I have read
and agree to the restrictions set forth in Section 7.1 of SCHEDULE 1. I am aware
that,  except for any rescission  rights that may be provided  under  applicable
laws, I am not entitled to cancel,  terminate or revoke this  subscription,  and
any agreements made in connection  herewith will survive my death or disability.
In  order to  induce  the  Company  to issue  and sell the  Securities  to me, I
represent and warrant that the information  relating to me stated herein is true
and  complete as of the date hereof and will be true and complete as of the date
on which my purchase of  Securities  becomes  effective.  If, prior to the final
consummation of the offer and sale of the Securities, there should be any change
in such information or any of such information  becomes incorrect or incomplete,
I agree to notify the Company and supply the Company  promptly  with  corrective
information.

            7.2 Information About the Company.

                  (1) I have read the confidential  private placement memorandum
         relating  to  this  offering  ("Memorandum")  and all  exhibits  listed
         therein and fully  understand  the  Memorandum,  including  the Section
         entitled  "Risk  Factors" and the  Memorandum's  exhibits.  I have been
         given access to full and complete information regarding the Company and
         have  utilized  such  access  to my  satisfaction  for the  purpose  of
         verifying  the  information  included in the  Memorandum  and  exhibits
         thereto,   and  I  have  either  met  with  or  been  given  reasonable
         opportunity  to meet with  officers  of the  Company for the purpose of
         asking reasonable  questions of such officers  concerning the terms and
         conditions  of the  offering of the  Securities  and the  business  and
         operations of the Company and all such  questions have been answered to
         my full  satisfaction.  I have also been given an opportunity to obtain
         any additional relevant  information to the extent reasonably available
         to the Company. I have received all information and materials regarding
         the Company that I have reasonably  requested.  After my reading of the
         materials about the Company, I understand that there is no assurance as
         to the future performance of the Company.

                  (2) I have  received no  representation  or warranty  from the
         Company  or  M.H.  Meyerson  or  any  of  their  respective   officers,
         directors,  employees  or agents in  respect  of my  investment  in the
         Company.  I (i) have not seen any  advertisement,  article,  notice  or
         other  communication  published in any  newspaper,  magazine or similar
         media or broadcast over television, radio or the Internet and (ii) have
         not  participated  in any seminar or meeting whose  attendees have been
         invited by any general solicitation or general advertising.

<PAGE>

            7.3  Speculative  Investment.  I am aware that the  Securities are a
speculative  investment that involves a high degree of risk  including,  but not
limited to, the risk of losses from operations of the Company and the total loss
of my investment. I have such knowledge and experience in financial and business
matters as to be capable of evaluating  the merits and risks of an investment in
the Securities and have obtained,  in my judgment,  sufficient  information from
the Company to evaluate the merits and risks of an investment in the Company.  I
have either used a purchaser representative (as defined in Regulation D) or I do
not require any person to serve as my  purchaser  representative  (as defined in
Regulation  D) in  connection  with  evaluating  such  merits  and risks as I am
capable of relying on my own investigation in making a decision to invest in the
Company.  I have been advised to seek  independent  advice from my  professional
advisors  relating to the suitability of an investment in the Company in view of
my overall financial needs and with respect to the legal and tax implications of
such investment. I believe that the investment in the Securities is suitable for
me based upon my investment  objectives and financial needs, and I have adequate
means for providing for my current financial needs and contingencies and have no
need for liquidity with respect to my investment in the Company.  The investment
in  the  Company  will  not  constitute  a  substantial  part  of my  investment
portfolio.

            7.4  Restrictions on Transfer.  I understand that (i) the Securities
have not been  registered  under the Securities  Act or the  securities  laws of
certain states in reliance on specific  exemptions  from  registration,  (ii) no
securities  administrator of any state or the federal government has recommended
or endorsed this offering or made any finding or  determination  relating to the
fairness of an investment in the Company, and (iii) the Company is relying on my
representations  and  agreements  for the purpose of  determining  whether  this
transaction meets the requirements of the exemptions  afforded by the Securities
Act and  applicable  state  securities  laws.  I  acknowledge  that  there is no
assurance  that  the  Company  will  file  any  Registration  Statement  for the
Securities I am purchasing,  that such Registration Statement, if filed, will be
declared effective or, if declared  effective,  that the Company will be able to
keep it effective until I sell the securities registered thereon.

            7.5 No Market for Securities.  I am purchasing the Securities for my
own account  for  investment  and not with a view to, or for sale in  connection
with,  any  subsequent  distribution  of the  Securities,  nor with any  present
intention  of  selling  or  otherwise  disposing  of  all  or  any  part  of the
Securities.  I understand that, although there is a public market for the Common
Stock  included in the  Securities,  there is no assurance that such market will
continue  and there is no  market at  present  for the Units  themselves  or the
Warrants  included in the  Securities and it is unlikely that a market will ever
develop  for these two  securities  in the future (the term  Securities  will be
deemed hereinafter to include the underlying  securities).  I agree that (i) the
purchase of the  Securities is a long-term  investment,  (ii) I may have to bear
the economic  risk of investment  for an  indefinite  period of time because the
Securities  have not been  registered  under the Securities Act and may never be
registered and,  cannot be resold,  pledged,  assigned or otherwise  disposed of
unless  they are  subsequently  registered  under the  Securities  Act and under
applicable  securities  laws  of  certain  states,  or an  exemption  from  such
registration is available.  I understand that the Company is under no obligation
to  register  the  Securities,  except  as may be set  forth in  Section  7.1 of
SCHEDULE  1,  or  to  assist  me in  complying  with  any  exemption  from  such
registration  under the  Securities Act or any state  securities  laws. I hereby
authorize  the  Company  to  place a legend  denoting  the  restrictions  on the
certificates  representing  the Securities  and  corresponding  "stop  transfer"
instructions with respect to the Securities.

            7.6 Entity  Authority.  If the  Investor is a  corporation,  limited
liability  company,   partnership,   company,   trust,  employee  benefit  plan,
individual  retirement  account,  Keogh Plan or other tax-exempt  entity,  it is
authorized  and  qualified  to become an  investor in the Company and the person
signing  this  Subscription  Agreement  on behalf of such  entity  has been duly
authorized

                                       3
<PAGE>

by such entity to do so and to carry out such subscriber's obligations under the
Subscription  Agreement,  including  making such  entity's  representations  and
warranties made hereby.

                                       4
<PAGE>

            7.7 ACCREDITED INVESTOR STATUS FOR INDIVIDUALS.  (INVESTORS THAT ARE
CORPORATIONS,  LIMITED  LIABILITY  COMPANIES,  PARTNERSHIPS,  REVOCABLE  TRUSTS,
IRREVOCABLE  TRUSTS,  EMPLOYEE  BENEFIT  PLAN TRUSTS AND  INDIVIDUAL  RETIREMENT
ACCOUNTS SHOULD IGNORE THE FOLLOWING QUESTIONS AND PROCEED TO SECTION 7.8).

                  (a) I am an accredited  investor within the meaning of Section
2(15) of the Securities Act and Rule 501 promulgated  thereunder  because (check
any boxes that apply):

                  My individual annual income during each of the two most recent
        [  ]      years  exceeded  $200,000 and I expect my annual income during
                  the current year will exceed $200,000.

                  If I am married,  my joint annual income with my spouse during
        [  ]      each of the two most  recent  years  exceeded  $300,000  and I
                  expect  my joint  annual  income  with my  spouse  during  the
                  current year will exceed $300,000.

        [  ]      My  individual  or joint  (together  with my spouse) net worth
                  (including my home, home furnishings and automobiles)  exceeds
                  $1,000,000.

         (b)      The   aggregate   value   of  my   assets   is   approximately
                  $___________.

         (c)      My aggregate liabilities are approximately $___________.

         (d)      My current and expected income is:
<TABLE>
<CAPTION>
         --------------------------------------- -------------------------------
                          YEAR                               INCOME
         --------------------------------------- -------------------------------
         <S>                                     <C>
                    2000 (estimated)             $
         --------------------------------------- -------------------------------
                     1999 (Actual)               $
         --------------------------------------- -------------------------------
                     1998 (Actual)               $
         --------------------------------------- -------------------------------
</TABLE>
                  I hereby  confirm  the  answers  to  Section  7.7 are true and
                  correct in all  respects  as of the date hereof and will be on
                  the date of the purchase of Securities.

                  Executed this ____ day of ________, 2000.

                  Signature:

                  Print Name:

         INDIVIDUAL  INVESTORS  MAY SKIP TO SECTION  7.9 ON PAGE 6. EACH  PERSON
ASSOCIATED  WITH  AN  ENTITY  INVESTOR  WHO IS  REQUIRED  UNDER  SECTION  7.8 TO
SEPARATELY COMPLETE THE QUESTIONS IN THIS SECTION 7.7 MUST COMPLETE THIS SECTION
7.7 AND SIGN THE ABOVE CONFIRMATION.

                                       5

<PAGE>

            7.8  ACCREDITED  INVESTOR  STATUS FOR ENTITIES.  (INVESTORS  WHO ARE
INDIVIDUALS SHOULD IGNORE THESE QUESTIONS.)

                  (a) The entity is a (check applicable box):

|_|      Corporation
|_|      Limited Liability Company
|_|      Partnership
|_|      Revocable Trust
|_|      Irrevocable  Trust  (if  the  Investor  is  an  Irrevocable   Trust,  a
         supplemental  questionnaire  must be completed by the person  directing
         the decision for the trust.  Please contact M.H. Meyerson for a copy of
         such supplemental  questionnaire.  Its address and telephone number are
         on SCHEDULE 1.)
|_|      Employee Benefit Plan Trust
|_|      Individual Retirement Account (If you are an IRA, skip (b))

                  (b)     Check all boxes which apply:

|_|      The Entity was NOT formed for the specific  purpose of investing in the
         Company
|_|      The Entity has total assets in excess of $5 million dollars
|_|      For Employee  Benefit  Plan Trusts Only:  The decision to invest in the
         Company was made by a plan  fiduciary,  as defined in Section  3(21) of
         ERISA, who is either a bank, insurance company or registered investment
         advisor.

                  (c) If you did not check  the first two of the three  boxes in
Question  (b)  OR  if  the  Entity  is  an  Individual   Retirement  Account,  a
Self-directed Employee Benefit Plan Trust or an Irrevocable Trust, list the name
of each person who:

                  (i)  owns  an  equity  interest  in  the  Entity  (i.e.,  each
                  shareholder if the Entity is a corporation, each member if the
                  Entity is a limited  liability company and each partner if the
                  Entity is a partnership); or

                  (ii)  is a  grantor  for the  revocable  trust  or  Individual
                  Retirement Account; or

                  (iii) is the  person  making  the  investment  decision  for a
                  self-directed Employee Benefit Plan Trust; or

                  (iv) is the person  making  the  investment  decisions  for an
                  Irrevocable Trust.

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

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

          EACH PERSON LISTED ABOVE MUST SEPARATELY COMPLETE AND SUBMIT
             TO THE COMPANY THE ANSWERS TO QUESTION 7.7 AND SIGN THE
                 WRITTEN CONFIRMATION AT THE END OF SECTION 7.7.

<PAGE>

            7.9 No Offer Until Determination of Suitability.  I acknowledge that
any delivery to me of the documents  relating to the offering of the  Securities
prior to the  determination by the Company of my suitability will not constitute
an offer of the Securities until such determination of suitability is made.

            7.10 For Florida Residents.  The Securities have not been registered
under the Securities Act of 1933, as amended,  or the Florida Securities Act, by
reason of specific exemptions thereunder relating to the limited availability of
the Offering.  The Securities cannot be sold,  transferred or otherwise disposed
of to any person or entity unless  subsequently  registered under the Securities
Act of 1933, as amended,  or the Securities Act of Florida, if such registration
is required. Pursuant to Section 517.061(11) of the Florida Securities Act, when
sales are made to five (5) or more persons in Florida, any sale made pursuant to
Subsection  517.061(11)  of the Florida  Securities Act will be voidable by such
Florida   purchaser   either  within  three  days  after  the  first  tender  of
consideration is made by the purchaser to the issuer, an agent of the issuer, or
an escrow agent, or within three days after the availability of the privilege is
communicated to such purchaser,  whichever  occurs later.  This constitutes such
communication.  In addition, as required by Section 517.061(11) (a)(3),  Florida
Statutes and by Rule 3-500.05(a)  thereunder,  if I am a Florida resident I have
had, at the offices of the Company,  at any reasonable  hour,  after  reasonable
notice,  access to the  materials  set forth in the Rule  that the  Company  can
obtain without unreasonable effort or expense.

         8.  INDEMNIFICATION.  I hereby agree to indemnify and hold harmless the
Company and M.H. Meyerson, their respective officers,  directors,  stockholders,
employees,  agents, and attorneys against any and all losses,  claims,  demands,
liabilities, and expenses (including reasonable legal or other expenses incurred
by each such person in  connection  with  defending  or  investigating  any such
claims or liabilities,  whether or not resulting in any liability to such person
or whether incurred by the indemnified party in any action or proceeding between
the indemnitor and indemnified  party or between the  indemnified  party and any
third party) to which any such indemnified party may become subject,  insofar as
such losses, claims,  demands,  liabilities and expenses (a) arise out of or are
based upon any untrue  statement or alleged untrue  statement of a material fact
made by me and contained  herein or omission to make a statement made herein not
misleading,  or (b)  arise  out of or are  based  upon any  breach  by me of any
representation,  warranty,  or  agreement  made  by me  contained  herein.  M.H.
Meyerson is a third-party  beneficiary  of this Section and this Section may not
be modified or amended without the prior written agreement of M.H. Meyerson.

         9. SEVERABILITY;  REMEDIES. In the event any parts of this Subscription
Agreement are found to be void,  the remaining  provisions of this  Subscription
Agreement are nevertheless binding with the same effect as though the void parts
were deleted.

         10. GOVERNING LAW AND JURISDICTION. This Subscription Agreement will be
deemed to have been made and  delivered in New York City and will be governed as
to validity,  interpretation,  construction, effect and in all other respects by
the internal laws of the State of New York. Each of the Company and the Investor
hereby (i) agrees that any legal suit,  action or  proceeding  arising out of or
relating to this  Subscription  Agreement will be instituted  exclusively in New
York State Supreme Court,  County of New York, or in the United States  District
Court for the Southern  District of New York,  (ii) waives any  objection to the
venue of any such suit,  action or proceeding  and the right to assert that such
forum is not a  convenient  forum for such  suit,  action or  proceeding,  (iii)
irrevocably  consents to the  jurisdiction  of the New York State Supreme Court,
County  of New York,  and the  United  States  District  Court for the  Southern
District  of New York in any such suit,  action or  proceeding,  (iv)  agrees to
accept and acknowledge  service of any and all process that may be served in any
such suit,  action or proceeding in New York State Supreme Court,  County of New
York or in the United  States  District  Court for the Southern  District of New

                                       7
<PAGE>

York and (v) agrees that  service of process  upon the  Investor  may be made by
certified mail to the Investor's address set forth on the signature page will be
deemed in every respect effective service of process upon it in any suit, action
or proceeding.

         11. COUNTERPARTS. This Subscription Agreement may be executed in one or
more  counterparts,  each of which will be deemed an  original  but all of which
together  will  constitute  one and the same  instrument.  The execution of this
Subscription Agreement may be by actual or facsimile signature.

         12. BENEFIT. This Subscription  Agreement is binding upon and inures to
the  benefit of the  parties  hereto  (and M.H.  Meyerson  to the extent it is a
third-party beneficiary hereof) and their respective heirs, executors,  personal
representatives,   successors  and  assigns.  M.H.  Meyerson  is  a  third-party
beneficiary  with respect to any sections hereof that so state or that otherwise
indicate that M.H.  Meyerson  would be entitled to rely on the  representations,
warranties or covenants made by me therein.

         13. NOTICES. All notices,  offers,  acceptance and any other acts under
this  Subscription  Agreement  (except  payment)  must  be in  writing,  and  is
sufficiently  given if sent to the  addressees in person,  by overnight  courier
service,  or, if mailed,  postage  prepaid,  by certified  mail (return  receipt
requested),  and will be effective  three days after being placed in the mail if
mailed,  or upon receipt or refusal of receipt,  if delivered  personally  or by
courier  or  confirmed  telecopy,  in  each  case  addressed  to  a  party.  All
communications  to me should be sent to my  preferred  address on the  signature
page hereto.  All  communications to the Company should be sent to the addresses
set forth on SCHEDULE 1. Each party may designate  another  address by notice to
the other parties.

         14. ORAL EVIDENCE.  This Subscription  Agreement constitutes the entire
agreement  between the parties  with  respect to the subject  matter  hereof and
supersedes all prior oral and written agreements between the parties hereto with
respect to the subject matter  hereof.  This  Subscription  Agreement may not be
changed,  waived,  discharged,  or  terminated  orally,  but  rather,  only by a
statement in writing signed by the party or parties against which enforcement or
the change, waiver, discharge or termination is sought.

         15. SECTION  HEADINGS.  Section  headings herein have been inserted for
reference  only and will not be  deemed  to limit or  otherwise  affect,  in any
matter,  or be  deemed  to  interpret  in whole or in part,  any of the terms or
provisions of this Subscription Agreement.

         16.  SURVIVAL  OF  REPRESENTATIONS,   WARRANTIES  AND  AGREEMENTS.  The
representations,  warranties  and agreements  contained  herein will survive the
delivery of, and the payment for, the Securities.

         17.   ACCEPTANCE   OF   SUBSCRIPTION.   The  Company  may  accept  this
Subscription  Agreement at any time on or before the Termination Date for all or
any  portion of the  Securities  subscribed  for by  executing  a copy hereof as
provided and notifying me within a reasonable time thereafter.

                                       8

<PAGE>

         SIGNATURE PAGE FOR INDIVIDUAL INVESTORS - COMPLETE ALL INFORMATION
         ---------------------------------------

Name: ____________________  Name of Joint Investor (if any): ___________________

Residence Address:  ____________________________________________________________

Telephone:  (H) ___________________ (W) _____________________ Fax ______________

Occupation: _________________________   Employer: ______________________________

Business Address: _____________________________________________________________

Send communications to:   |_| Home      |_| Office

Age:  _______________

Social Security Number:  ____________________

Check Manner in which securities are to be held:

[  ]                        [  ]                      [  ]
    Individual                  Tenants in                Joint Tenants with
    Ownership                   common                    Right of Survivorship
                                                          (both parties must
                                                          sign)

[  ]
    Community                                         [  ]
    Property                                              Other (please
                                                          indicate)

ALL INVESTORS MUST SIGN AND PRINT NAME BELOW

Signature:        _______________________________

Print Name:       _______________________________

Signature:        _______________________________

Print Name:       _______________________________

The foregoing  subscription  is accepted as to  _________________  Units and the
Company hereby agrees to be bound by its terms.

                                       9

<PAGE>

                                         TII INDUSTRIES, INC.

Dated:   ______________________          By:_____________________________
                                             Name:  Paul G. Sebetic
                                             Title: Vice President - Financial

SIGNATURE PAGE FOR ENTITY INVESTORS - COMPLETE ALL INFORMATION
-----------------------------------

Name of Entity: ________________________________________________________________

Address of Principal Office:  __________________________________________________
Telephone:   ___________________          Fax:  ___________________

Taxpayer Identification Number:  ______________________

Check type of Entity:
<TABLE>
<CAPTION>

<S>                             <C>                    <C>                          <C>
[   ]                              [   ]                 [   ]                       [   ]
                                                                                            Individual Retirement
          Employee Benefit              Limited                  General                        Account
      Plan Trust                     Partnership              Partnership

[   ]                              [   ]                 [   ]                       [   ]

       Limited                           Trust                  Corporation          Other (please indicate)
       Liability                                                                      __________________
       Company

Date of Formation or incorporation: ___________   State of Formation or incorporation: __________
</TABLE>
Describe the business of the Entity: ___________________________________________

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

List the  names and  positions  of the  executive  officers,  managing  members,
partners or trustees authorized to act with respect to investments by the Entity
generally  and  specify  who has  the  authority  to act  with  respect  to this
investment.
<TABLE>
<CAPTION>

    ------------------------------------------------- ------------------------------------- ------------------------------
                                                                                                 Authority for this
    Name                                              Position                                 investment (yes or no)
    ------------------------------------------------- ------------------------------------- ------------------------------
    <S>                                               <C>                                  <C>
    ------------------------------------------------- ------------------------------------- ------------------------------

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

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

    ------------------------------------------------- ------------------------------------- ------------------------------
</TABLE>

                                       10

<PAGE>
<TABLE>
<CAPTION>

    --------------------------------------------------- ------------------------------------------------------------
<S>                                                           <C>
    INVESTOR:                                                 The foregoing subscription is accepted as to ____________
                                                              Units and the Company hereby agrees to be bound by its
                                                              terms.

                                                              TII INDUSTRIES, INC.
    ---------------------------
    Signature of Authorized Signatory

                                                              By: _____________________________
    Name:                                                            Name:  Paul G. Sebetic
    Title:                                                           Title: Vice President - Financial
    --------------------------------------------------- ------------------------------------------------------------
</TABLE>
                                   SCHEDULE 1

1.       Subscription.  TII INDUSTRIES,  INC. is offering a minimum of 1,300,000
         and a maximum of 1,800,000  Units,  each consisting of one share of the
         Company's Common Stock, par value $0.01 per share ("Common Stock"), and
         one Redeemable Common Stock Purchase Warrant ("Warrant").  The per-Unit
         offering price shall be equal to 75% of the average of the mean between
         the closing bid and closing  asked  prices for the Common Stock for the
         five  consecutive  trading days ending on the last trading day prior to
         the closing of the Offering  (100% of such average being referred to as
         the "Market Price"), with a minimum offering price of $1.75 and maximum
         offering price of $3.00.  Each investor must subscribe for a minimum of
         $50,000,  although a lower amount may be accepted in the  discretion of
         the Company and M.H. Meyerson. The actual number of Units each Investor
         will receive will be based upon the actual per-Unit offering price. Any
         monies  deposited  by an Investor in excess of such  Investor's  actual
         accepted  investment  will be  promptly  returned  without  interest or
         deduction following the Closing. The form of the Warrant is attached as
         Exhibit B to the Memorandum.

2.       Offering  Period.  The Company is  offering  the  Securities  until the
         earlier of (i) the date by which 1,800,000 Units are sold, or (ii) June
         29,  2000,  unless  such newer date is  extended,  which may be without
         notice, to the Investor, by the mutual consent of M.H. Meyerson and the
         Company to a date not later than August 14, 2000 ("Termination Date").

3.       Purchase.  You must  remit  payment  of the  amount  subscribed  for as
         follows:

        PNC Bank, NA
        Pittsburgh, PA
        ABA #: 031-207-607
        Account Name: M.H. Meyerson & Co., Inc. - TII Industries Special Account
        Account #: 8013-62-0715

4.       Not applicable.

5.       Closing. In order to close this Offering,  the Company must receive and
         accept  subscriptions for a minimum of 1,300,000 Units on or before the
         Termination  Date.  A Closing  (the  "Closing")  will be held  promptly
         following the earlier of the

                                       11
<PAGE>

         acceptance of subscriptions  for 1,800,000 Units and, provided at least
         1,300,000 Units are sold, the Termination Date.

6.       Not applicable

         7.1      Obligations of the Company and the Investor.

         1. Registration Rights.

                  (a) Mandatory Registration.  The Company shall file, within 45
         days  after  the  Closing,  a  Registration  Statement   ("Registration
         Statement") under the Securities Act and make appropriate filings under
         "blue  sky"  laws in such  states  as M.H.  Meyerson  shall  reasonably
         specify,  registering for resale the Common Stock and Warrants included
         in the Units and the "Extra Warrants"  referred to below and the Common
         Stock  underlying  the  Warrants  and the Extra  Warrants,  and, to the
         extent  permitted,  registering  the issuance of such Common Stock upon
         the  exercise of the Warrants  and Extra  Warrants,  as the case may be
         (collectively, the "Registrable Securities"). The Company shall use its
         best efforts to have the Registration  Statement  declared effective by
         the 180th day after the Closing  ("Target  Date").  If the Registration
         Statement is not declared effective by the SEC by the Target Date, then
         on the Target Date and on each monthly  anniversary  of the Target Date
         thereafter  until the earlier of the effective date of the Registration
         Statement  ("Effective Date") or the nineteenth monthly  anniversary of
         the Target Date,  the Company shall issue to each purchaser of Units in
         the  Offering,  Warrants  ("Extra  Warrants")  to  purchase a number of
         shares of Common Stock equal to 5% of the number of Warrants  purchased
         by him in the Offering. The Extra Warrants shall have the same terms as
         the Warrants  included in the Units sold in the  Offering.  The Company
         shall keep the Registration  Statement  current and effective until all
         the  securities  registered  thereunder  are sold or can be sold freely
         under an appropriate  exemption  under the Securities Act and the "blue
         sky" laws of the states reasonably specified by M.H. Meyerson,  without
         limitation.  The Company  shall bear all fees and expenses  incurred by
         the Company in  connection  with the  preparation  of the  Registration
         Statement  and filing it with the SEC and the NASD,  including the fees
         (no more than $15,000) and  disbursement of one special counsel for all
         of the holders of the  Registrable  Securities in  connection  with the
         registration  of  the  Registration  Securities  and  the  preparation,
         filing,  modifying  and amending of the  Registration  Statement.  M.H.
         Meyerson has selected  Graubard Mollen & Miller as such special counsel
         and the investor acknowledges and agrees to this selection.

                  (b) "Piggy-back"  Registration.  If at any time commencing 180
         days after the Closing,  if the Registration  Statement  referred to in
         7.1 (a) above  shall not be  effective,  and the  Company  shall file a
         registration statement (excluding  registration statements on Forms S-4
         and S-8),  the  holders of the  Registrable  Securities  shall have the
         right  to  include  the  Registrable  Securities  in such  registration
         statement. If the registration statement is filed in connection with an
         underwritten  offering  on  behalf  of the  Company,  and the  managing
         underwriters  advise the Company in writing  that,  in their good faith
         opinion,  the number of  securities  requested  to be  included in such
         registration  statement  exceeds  the number  which can be sold in such
         offering,  the Company will include in such registration  statement the
         Registrable Securities provided that such holders agree not to sell any
         of  such  Registrable  Securities  for a  period  of 90 days  from  the
         effective date of such Registration Statement without the prior consent
         of such managing  underwriter.  The Company shall keep the Registration
         Statement

                                       12

<PAGE>

         effective  and  current  until the earlier of the date by which all the
         securities  registered  thereunder have been sold or can be sold freely
         under an appropriate exemption under the Securities Act.

                  (c)  Indemnification  by Company.  The Company shall indemnify
         the Holders of the  Registrable  Securities  to be sold pursuant to any
         registration  statement  hereunder,  the officers and directors of each
         Holder and each person,  if any, who controls  such Holders  within the
         meaning  of Section 15 of the  Securities  Act or Section  20(a) of the
         Securities  Exchange Act of 1934, as amended  ("Exchange  Act"), or any
         state securities law or regulation,  against all loss,  claim,  damage,
         expense or liability  (including  all  reasonable  attorneys'  fees and
         other  expenses  reasonably  incurred in  investigating,  preparing  or
         defending  against any claim  whatsoever  incurred  by the  indemnified
         party  in  any  action  or  proceeding   between  the   indemnitor  and
         indemnified  party or between the indemnified party and any third party
         or  otherwise)  to  which  any of them may  become  subject  under  the
         Securities Act, the Exchange Act or any other statute or at common law,
         arising  from such  registration  statement  or based  upon any  untrue
         statement or alleged  untrue  statement of a material fact contained in
         (i)  any  preliminary   prospectus,   the  registration   statement  or
         prospectus (as from time to time each may be amended and supplemented);
         (ii) any post-effective amendment or amendments or any new registration
         statement  and  prospectus in which is included the  Underlying  Common
         Shares;   or  (iii)  any  application  or  other  document  or  written
         communication  (collectively  called  "application")  executed  by  the
         Company or based upon written  information  furnished by the Company in
         any jurisdiction in order to qualify the Underlying Common Shares under
         the  securities  laws thereof or filed with the Securities and Exchange
         Commission,  any state securities  commission or agency,  Nasdaq or any
         securities exchange; or the omission or alleged omission therefrom of a
         material  fact  required to be stated  therein or necessary to make the
         statements therein, in light of the circumstances under which they were
         made,  not  misleading,  unless such  statement  or omission is made in
         reliance upon, and in conformity with, written information furnished to
         the Company by and with respect to such registered holders  ("Purchaser
         Information")  expressly  for use in any  preliminary  prospectus,  the
         registration  statement or prospectus  (including any new  registration
         and  prospectus),   or  any  amendment  (including  any  post-effective
         amendment) or supplement  thereof,  or in any application,  as the case
         may be, or unless the indemnities  failed to deliver a final prospectus
         in which the  material  misstatement  or omission  was  corrected.  The
         Company agrees  promptly to notify such Holders of the  commencement of
         any  litigation  or  proceedings  against  the  Company  or  any of its
         officers, directors or controlling persons in connection with the issue
         and sale or resale of the  Underlying  Common  Shares or in  connection
         with the registration statement or prospectus.

                  (d) Successors and Assigns. The registration rights granted to
         the holders of the Registrable  Securities  inure to the benefit of all
         the holders' successors,  heirs,  pledges,  assignees,  transferees and
         purchasers of any of the Registrable Securities.

                  (e) Permissible Delays and Exceptions

                     (i) The Company shall be entitled to postpone the filing of
         any Registration  Statement otherwise required to be prepared and filed
         by it (other than the  Registration  Statement  required  under Section
         7.1.1(a)  of this  Schedule  1) or  suspend  keeping  any  Registration
         Statement or

                                       13

<PAGE>

         prospectus   current   and/or   effective   without   suspending   such
         effectiveness by instructing the holders of Registrable  Securities not
         to sell any Registrable  Securities  included in any such  Registration
         Statement  for  a  period  not  to  exceed  15  calendar  days  in  any
         consecutive  120-day  period and not to exceed 23 calendar  days in any
         consecutive  365-day  period,  if the  Company  would  be  required  to
         disclose  in  such   Registration   Statement  any  material   business
         situation,  transaction  or negotiation  not otherwise  disclosed as to
         which the Company's Board of Directors has  determined,  in good faith,
         that  valid,  significant  and  material  business  reasons  exist that
         warrant that such  information  not be disclosed and, in the opinion of
         counsel  to the  Company,  such  disclosure  would be  required  in the
         Registration  Statement to keep the corresponding  prospectus  current.
         Nothing in this  Section  7.1.1(e)  shall  relieve  the  Company of its
         obligation to issue Extra Warrants pursuant to Section 7.1.1(a) of this
         Schedule 1.

                     (ii) The Company  shall not be  obligated to include in any
         Registration  Statement the  Registrable  Securities held by any holder
         thereof  unless such holder has furnished to the Company in writing the
         information  regarding  such holder  required by law to be disclosed in
         such  Registration  Statement  pursuant  to  Sections  507  and  508 of
         Regulation S-K promulgated under the Securities Act.

         8.-12.   Not Applicable.

         13.      Notices.  All communications to the Company should be sent to:

                           TII Industries, Inc.
                           1385 Akron Street
                           Copiague, New York 11726
                           Attention: Chief Financial Officer
                                    (631) 789-5000 (phone)
                                    (631) 789-2228 (fax)

                  with copies to:

                  1.       Parker Chapin LLP
                           The Chrysler Building
                           405 Lexington Avenue
                           New York, New York 10174
                           Attention: Richard A.  Rubin, Esq.
                                    (212) 704-6130 (phone)
                                    (212) 704-6288 (fax)

M.H. Meyerson & Co., Inc.
                           525 Washington Boulevard
                           34th Floor
                           Jersey City, New Jersey  07310
                           Attention: Ronald J.  Heller
                           (800) 444-4114 (phone)
                           (201) 459-9458 (fax)

                  and

                           Graubard Mollen & Miller

                                       14

<PAGE>

                           600 Third Avenue
                           New York, New York 10016
                           Attention: David Alan Miller, Esq.
                           (212) 818-8661 (phone)
                           (212) 818-8881 (fax)

         14. - 17.         Not applicable

                                       15TII INDUSTRIES, INC.

                                AGENCY AGREEMENT

                               As of May 15, 2000

M.H. Meyerson & Co., Inc.
525 Washington Boulevard
Jersey City, New Jersey 07310

Gentlemen:

                  TII  Industries,  Inc.,  a Delaware  corporation  ("Company"),
proposes  to offer for sale in a private  placement  ("Offering")  a minimum  of
1,300,000 and a maximum of 1,800,000  units  ("Units") at a purchase price equal
to 75% of the average of the mean  between the closing bid and asked  prices for
the Company's common stock for the five  consecutive  trading days ending on the
last  trading day prior to the  closing of the  Offering  (100% of such  average
being referred to as the "Market Price") with a minimum  offering price of $1.75
and a maximum  offering price of $3.00 per Unit. Each Unit consists of one share
("Share(s)")  of the  Company's  Common Stock  ("Common  Stock") and one warrant
("Warrant(s)")  to purchase an additional share of the Company's Common Stock at
an exercise  price equal to the lower of 125% of the Market Price or $4.75,  but
in either  case not less than  $2.69 per  share.  The Units will be offered on a
"best efforts,  minimum  1,3000,000  Units,  maximum  1,800,000 Units" basis, in
accordance  with  Section  4(2)  of the  Securities  Act  of  1933,  as  amended
("Securities Act"), and Regulation D ("Reg D") promulgated  thereunder,  only to
"accredited  investors,"  as defined in Reg D. The minimum  subscription  amount
will be $50,000,  although  subscriptions  for amounts  less than $50,000 may be
accepted at the discretion of the Placement Agent (as hereinafter  defined) with
the Company's consent.

                  The Units,  Shares and Warrants have the terms and  conditions
reflected in the Company's  Confidential  Private Placement Memorandum dated May
15, 2000 to be delivered  to each  purchaser  of the Units  ("Memorandum").  The
Memorandum,  together with all exhibits  thereto,  will be referred to herein as
the "Offering Documents."

1.       Appointment of Placement Agent; The Offering Period.
------------------------------------------------------------

       1.1 Appointment of Placement Agent. M.H. Meyerson & Co., Inc. ("Meyerson"
or  "Placement  Agent") is hereby  appointed  exclusive  Placement  Agent of the
Company during the offering period herein specified  ("Offering Period") for the
purpose of assisting  the Company in placing the Units with  purchasers  who are
qualified  accredited  investors  ("Subscribers").  The  Placement  Agent hereby
accepts  such  agency and agrees to assist the Company in placing the Units with
the Subscribers. The Placement Agent's agency hereunder is not terminable by the
Company except upon termination of the Offering, a breach by the Placement Agent
of its material  obligations  hereunder  or as  otherwise  provided in Section 7
hereon.

       1.2 Offering Period.  The Offering Period shall commence on May 15, 2000,
the day the Offering  Documents are first made available to the Placement  Agent
by the Company and shall continue until June 29, 2000; provided,  however,  that
the Offering Period may be extended for up

<PAGE>

to an additional  period of forty-five  (45) days by the mutual  decision of the
Placement  Agent and the Company  without notice to any Subscriber (the last day
of  the  Offering  Period,  as it  may  be  extended,  is  referred  to  as  the
"Termination  Date"). If, at any time during the Offering Period,  subscriptions
for at least  1,300,000 of the Units have been  received and accepted by you and
the Company (and funds in payment therefor have cleared),  then, upon the mutual
consent of the Company and the Placement Agent, a closing ("Closing") shall take
place  with  respect  to such  accepted  subscriptions  and the  Offering  shall
terminate. If subscriptions for at least 1,300,000 of the Units are not received
and accepted (and funds in payment  therefor  cleared) by the Termination  Date,
then the Offering will be  terminated  and all funds  received from  Subscribers
will be returned, without interest and without any deduction.

       1.3 Placement Agent's Purchase Option. The Company hereby agrees to issue
and sell to the Placement  Agent (and/or its  designees) at the Closing,  for an
aggregate  purchase price of $100.00,  an option  ("Placement  Agent's  Purchase
Option") to purchase a number of Units equal to that percentage of Units sold in
the Offering as set forth on Schedule 1.3 hereto,  ("Placement  Agent's  Units")
which  percentage  will be dependent on the Market Price,  at an exercise  price
equal to 110% of the Market  Price,  but in any  event,  not less than $2.69 per
Unit. The Placement Agent Purchase  Option will be in the form attached  hereto.
The  Placement  Agent's  Units  shall  be  identical  to the  Units  sold in the
Offering.  The Placement  Agent's  Purchase  Option shall be  exercisable  for a
period of four years  commencing on the day following the six-month  anniversary
of the Closing.

       1.4 Offering Documents. The Company will provide the Placement Agent with
a  sufficient  number  of  copies  of the  Offering  Documents  and the forms of
Subscription   Agreement  and  Investor  Information  Statement   ("Subscription
Agreement"),  to be  executed  by each  Subscriber  for  delivery  to  potential
Subscribers  and such other  information,  documents  and  instruments  that the
Placement Agent deems  reasonably  necessary to act as Placement Agent hereunder
and to comply  with the  rules,  regulations  and  judicial  and  administrative
interpretations respecting compliance with applicable state and federal statutes
related to the Offering.

       1.5  Segregation of Funds.  Each Subscriber for the Units shall tender to
the  Placement  Agent a wire transfer  payable to the order of "M.H.  Meyerson &
Co.,  Inc.--TII  Industries  Special  Account"  in the amount of the  investment
subscribed  for,  which  funds  shall  be  held  by  Meyerson  in a  segregated,
non-interest-bearing  bank account,  in  accordance  with Rules 10b-9 and 15c2-4
promulgated under the Securities Exchange Act of 1934 ("Exchange Act").

       1.6 No Firm Commitment. The Company understands and acknowledges that the
undertaking  by the Placement  Agent  pursuant to this  Agreement is not a "firm
commitment" offering and that the Placement Agent is not obligated in any way to
purchase or sell the Units offered hereby.

       1.7  Participation  by Selected  Dealers.  The Placement Agent may engage
other  persons  that are  members  of the  National  Association  of  Securities
Dealers,  Inc. ("NASD") or registered  representatives of such members to assist
the Placement Agent in the Offering (each such person being hereinafter referred
to as a "Selected  Dealer") and the Placement  Agent may allow such persons such
part of the  compensation and payment of expenses payable to the Placement Agent
hereunder as the Placement Agent shall determine.

2.  Representations and Warranties of the Company. The Company hereby represents
and warrants to the Placement Agent and the Selected  Dealers upon the execution
of this Agreement and again at each Closing as follows:

                                       2
<PAGE>

       2.1 Due  Incorporation  and  Qualification.  The  Company  has been  duly
incorporated,  is validly existing and is in good standing under the laws of its
state of  incorporation  and is duly qualified as a foreign  corporation for the
transaction  of business and is in good standing in each  jurisdiction  in which
the  ownership  or  leasing of its  properties  or the  conduct of its  business
requires  such  qualification,  except where the failure to so qualify would not
have a material adverse effect on the business,  operations,  assets,  financial
condition  or  prospects  of the Company and its  subsidiaries  taken as a whole
("Material Adverse Effect").  The Company has all requisite  corporate power and
authority  necessary to own or hold its  properties  and conduct its business as
described in the Offering Documents.

       2.2 Authorized Capital;  Outstanding  Securities.  As of the date hereof,
the Company's  capitalization,  including all options,  warrants and convertible
securities,  is as  described on SCHEDULE  2.2.  Except as set forth on SCHEDULE
2.2,  the Company does not have  outstanding  any option,  warrant,  convertible
security,  or other right  permitting or requiring it to issue,  or otherwise to
purchase  or  convert  any  obligation  into,  shares of  Common  Stock or other
securities  of the  Company  and the Company has not agreed to issue or sell any
shares of Common Stock or other  securities  of the  Company.  As of the date of
Closing,  there will be no other securities of the Company  outstanding,  except
for (i) stock options granted to employees since the date hereof in the ordinary
course with exercise prices no less than fair market value on the date of grant,
and (ii)  additional  Common  Stock issued upon  conversion  or exercise of such
outstanding options, warrants and convertible securities.  All of the issued and
outstanding  shares of Common  Stock have been duly and validly  authorized  and
issued  and are  fully  paid and  non-assessable.  None of the  holders  of such
outstanding  shares of Common Stock is subject to personal  liability  solely by
reason of being such a holder.  The offers  and sales of all  securities  of the
Company within the last three years were at all relevant times either registered
under the Securities Act and the applicable state securities or Blue Sky laws or
exempt from such registration.

       2.3 No Preemptive  Rights;  Registration  Rights.  Except as set forth on
SCHEDULE  2.3,  there are no  preemptive  or other  rights to  subscribe  for or
purchase,  or any  restriction  upon the  voting or  transfer  of, any shares of
Common  Stock or other  securities  of the  Company,  under the  Certificate  of
Incorporation  or  By-Laws  of the  Company  or  under  any  agreement  or other
outstanding  instrument to which the Company is a party or by which it is bound.
No holder  of any of the  Company's  securities  has any  "piggyback"  or demand
registration rights with respect to which the Company has not already registered
such  securities.  The Company has reserved for issuance a sufficient  number of
shares of Common Stock to be issued to the Subscribers  upon the issuance of the
Units, the exercise of the Warrants  ("Warrant Shares") and upon the exercise of
the  Placement  Agent's  Purchase  Option  and  the  exercise  of  the  Warrants
underlying the Placement Agent's Purchase Option.

       2.4  Financial  Statements.  The  financial  statements  of  the  Company
included in the Offering Documents  ("Financials")  fairly present the financial
position and results of  operations  of the Company at the dates thereof and for
the  periods  covered  thereby,  subject,  in the case of  interim  periods,  to
year-end adjustments and normal recurring accruals.  The Company has no material
liabilities or obligations, contingent, direct, indirect or otherwise except (i)
as set forth in the latest  balance  sheet  included  in the  Financials  or the
footnotes  thereto  (the date of such  balance  sheet  being  referred to as the
"Balance  Sheet  Date"),  and (ii)  those  incurred  in the  ordinary  course of
business  since  the  Balance  Sheet  Date.  Except as may be  disclosed  in the
Financials, there are no amounts due to any officers, directors or 5% or greater
stockholders of the Company,  or to any of their  respective  affiliates,  other
than salary and other  compensation  disclosed  in the  Offering  Documents  and
expense reimbursements.

                                       3
<PAGE>

       2.5 No  Material  Adverse  Changes.  Except  as  otherwise  stated in the
Offering  Documents,  since  the  Balance  Sheet  Date,  there  has not been any
material  adverse  change  in the  condition,  financial  or  otherwise,  of the
Company.

       2.6 Subsidiaries.  Except for the subsidiaries set forth on SCHEDULE 2.8,
the Company has no subsidiaries  and has no interest in, shares of capital stock
of or right to acquire an  interest  in or shares of capital  stock of any other
corporation, limited liability company, partnership or other entity.

       2.7 Taxes.  The  Company  has filed all federal tax returns and all state
and  municipal  and  local tax  returns  (whether  relating  to  income,  sales,
franchise,  withholding,  real or  personal  property  or other  types of taxes)
required to be filed under the laws of the United States and applicable  states,
and has paid in full all taxes that have become due  pursuant to such returns or
claimed to be due by any taxing authority;  provided,  however, that the Company
has not  paid  any  tax,  assessment,  charge,  levy or  license  fee that it is
contesting in good faith and by proper proceedings and adequate reserves for the
accrual of same are  maintained  if required by  generally  accepted  accounting
principles.   The  Company  has   withheld,   collected  and  paid  all  levies,
assessments,  license  fees and taxes to the extent  required.  As used  herein,
"tax" or "taxes" include all taxes,  charges,  fees, levies or other assessments
imposed by any Federal,  state,  local, or foreign taxing authority,  including,
without limitation, income, premium, recapture, credit, excise, property, sales,
use,  occupation,  service,  service use,  leasing,  leasing  use,  value added,
transfer,  payroll,  employment,  license,  stamp,  franchise  or similar  taxes
(including any interest  earned  thereon or penalties or additions  attributable
thereto).

       2.8 Finder's Fees;  Other  Underwriters.  The Company is not obligated to
pay a finder's fee to anyone in connection with the  introduction of the Company
to  the  Placement  Agent  or the  consummation  of  the  Offering  contemplated
hereunder.  Since May 15,  1999,  the Company has not paid or issued any monies,
securities or other  compensation  to any member of the NASD or to any affiliate
or associate of such a member or to any other person in  consideration  for such
person raising funds for the Company or providing  financial or public relations
consulting  services to the  Company,  except as set forth on SCHEDULE  2.8. The
Company  does not owe any  monies  or  other  obligations  to any  NASD  member,
affiliate or associate  other than as may be owed to the  Placement  Agent under
this Agreement.

       2.9 No Pending Actions. There are no actions, suits, proceedings,  claims
or hearings of any kind or nature  existing or pending or, to the best knowledge
of the  Company,  threatened  and,  to the best  knowledge  of the  Company,  no
investigations  or  inquiries,  before or by any  court,  or other  governmental
authority, tribunal or instrumentality (or, to the Company's best knowledge, any
state of facts that would give rise thereto),  pending or threatened against the
Company,  or involving  the  properties  of the Company,  that, as to any matter
covered by this  Section 2.9,  are  reasonably  likely to result in any Material
Adverse Effect or that might  adversely  affect the  transactions  or other acts
contemplated  by  this  Agreement  or the  validity  or  enforceability  of this
Agreement.

                                       4
<PAGE>

       2.10  Private  Offering  Exemption;   Offering  Documents.  The  Offering
Documents  taken as a whole do not  contain any untrue  statement  of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements  therein,  in the light of the circumstances  under which
they were made, not  misleading.  The Units,  Warrants and "Extra  Warrants" (as
defined in the Subscription Agreement and the Placement Agent's Purchase Option)
("Extra Warrants"),  if any, and the Placement Agent's Purchase Option,  conform
in all material  respects to the descriptions  thereof contained in the Offering
Documents.  Assuming that (i) a proper Form D is filed in  accordance  with Rule
503 of Reg D, (ii) the offer  and the sale of the Units by the  Placement  Agent
was made in  compliance  with Rule  502(c) of Reg D and/or  Section  4(2) of the
Securities  Act,  and  (iii)  the  representations  of  the  Subscribers  in the
Subscription  Agreements  signed by them are true and correct  (which facts will
not be independently verified by the Company), the sale of Units in the Offering
is exempt from  registration  under the Securities Act and is in compliance with
Reg D.

       2.11 Due  Authorization.  The Company has full right, power and authority
to enter into this Agreement, the Subscription  Agreements,  the Warrants, Extra
Warrants, if any, and the Placement Agent's Purchase Option, to issue the Units,
Shares,  Warrants,  Extra Warrants,  if any, and the Placement  Agent's Purchase
Option and to perform all of its  obligations  hereunder  and  thereunder.  This
Agreement has been, and the Subscription  Agreements,  Warrants, Extra Warrants,
if any, and the Placement Agent's Purchase Option,  when executed and delivered,
will have been, duly authorized by all necessary corporate action and no further
corporate  action  or  approval  is or will be  required  for  their  respective
execution,  delivery  and  performance.  This  Agreement  constitutes,  and  the
Subscription  Agreements,  Warrants,  Extra Warrants,  if any, and the Placement
Agent's Purchase Option, upon execution and delivery will constitute,  valid and
binding  obligations  of the  Company,  enforceable  in  accordance  with  their
respective  terms,  except (i) as the  enforceability  thereof may be limited by
bankruptcy,  fraudulent conveyance,  insolvency,  moratorium,  reorganization or
similar laws  affecting  creditors'  rights  generally,  (ii) that the remedy of
specific  performance and injunctive and other forms of equitable  relief may be
subject to equitable  defenses and to the  discretion  of the court before which
any proceedings  therefor may be brought,  and (iii) that the  enforceability of
the indemnification and contribution provisions of the respective agreements may
be limited by the federal and state securities laws and public policy.

       2.12 Non-Contravention; Consents. The Company's execution and delivery of
this Agreement, the Subscription  Agreements,  Warrants, Extra Warrants, if any,
and the Placement Agent's Purchase Option, and the incurrence of the obligations
herein  and  therein  set  forth,  and  the  consummation  of  the  transactions
contemplated  herein and therein will not (i)  conflict  with,  or  constitute a
breach of, or a default under,  the certificate of  incorporation  or by-laws of
the Company,  or any contract,  lease or other  agreement or instrument to which
the Company is a party or in which the Company has a  beneficial  interest or by
which the Company is bound;  (ii) violate any  existing  applicable  law,  rule,
regulation,  judgment,  order or  decree  of any  governmental  agency or court,
domestic  or  foreign,  having  jurisdiction  over  the  Company  or  any of its
properties or business  (collectively,  "Laws"),  except where such violation(s)
would not, singly or in the aggregate,  result in a Material Adverse Effect;  or
(iii)  have any effect on any  permit,  certification,  registration,  approval,
consent,  license  or  franchise  (collectively,  "Permits")  necessary  for the
Company to own or lease and  operate  any of its  properties  or to conduct  its
business, except for such effects as would not, singly or in the aggregate, have
a Material Adverse Effect. No consent,  Permit, approval,  authorization,  order
of, or filing with, any court or governmental authority or any other third party
is required to consummate the transactions  contemplated by this Agreement,  the
Subscription  Agreements,  Warrants,  Extra Warrants,  if any, and the Placement
Agent's  Purchase  Option,  and the  issuance  of the  Shares,  Warrants,  Extra
Warrants,  if any, and the securities  underlying the Placement Agent's Purchase
Option,   except  that  the  offer  and  sale  of  such

                                       5
<PAGE>

securities  in certain  jurisdictions  may be subject to the  provisions  of the
securities or Blue Sky laws of such jurisdictions.

       2.13 Valid Issuances.  The Warrants  included in the Units and underlying
the  Placement  Agent's  Purchase  Option and the Extra  Warrants,  if any, when
issued and delivered in accordance with the terms of the Subscription Agreement,
the  Placement  Agent's  Purchase  Option and this  Agreement,  will be duly and
validly  issued.  The Shares  included in the Units and underlying the Placement
Agent's Purchase Option and underlying the Warrants and Extra Warrants,  if any,
have  been duly and  validly  authorized  and,  when  issued  and  delivered  in
accordance  with the terms of this Agreement,  Warrants,  Extra Warrants and the
Placement  Agent's  Purchase Option will be duly and validly issued,  fully paid
and  non-assessable.  The  holders of the Shares will not be subject to personal
liability  by  reason  of being  such  holders  and will not be  subject  to the
preemptive  rights of any  holders  of any  security  of the  Company or similar
contractual rights granted by the Company.

       2.14 No  Right to  Purchase.  Except  for the  reduction  in the  maximum
conversion  price of the  Series C  Convertible  Preferred  Stock from $7.08 per
share to approximately  $5.55 per share, the issuance of the Units or underlying
Shares and Warrants in the Offering and upon exercise of the  Placement  Agent's
Purchase  Option  will not give any holder of any of the  Company's  outstanding
shares of Common Stock,  options,  warrants or other  convertible  securities or
rights to purchase  securities  of the  Company  (i) the right to  purchase  any
additional  shares of Common Stock or any other  securities  of the Company,  or
(ii) the right to purchase any securities at a reduced price.

       2.15 No Regulatory Problems. The Company (i) has not filed a registration
statement  that is the subject of any pending  proceeding or  examination  under
Section 8 of the Securities  Act, and is not and has not been the subject of any
refusal  order or stop order  thereunder;  (ii) is not  subject  to any  pending
proceeding  under Rule 258 of the  Securities  Act or any similar  rule  adopted
under Section 3(b) of the  Securities  Act, or to an order  entered  thereunder;
(iii) has not been convicted of any felony or misdemeanor in connection with the
purchase or sale of any  security or  involving  the making of any false  filing
with the Commission;  (iv) is not subject to any order,  judgment,  or decree of
any court of competent jurisdiction temporarily or preliminarily  restraining or
enjoining,  or any  order,  judgment,  or  decree  of  any  court  of  competent
jurisdiction  permanently restraining or enjoining, the Company from engaging in
or continuing any conduct or practice in connection with the purchase or sale of
any security or involving the making of any false filing with the Securities and
Exchange  Commission  ("Commission");  and (v) is not subject to a United States
Postal  Service false  representation  order entered under Section 3005 of Title
39,  United  States  Code  or  a  temporary  restraining  order  or  preliminary
injunction  entered under  Section 3007 of Title 39,  United  States Code,  with
respect to conduct  alleged to have  violated  Section 3005 of Title 39,  United
States  Code.  To the  Company's  knowledge,  none of the  Company's  directors,
officers,  or beneficial owners of 10 percent or more of any class of its equity
securities  (i) has been  convicted of any felony or  misdemeanor  in connection
with the  purchase  or sale of any  security,  involving  the  making of a false
filing with the Commission,  or arising out of the conduct of the business of an
underwriter, broker, dealer, municipal securities dealer, or investment advisor;
(ii) is  subject  to any  order,  judgment  or decree of any court of  competent
jurisdiction  temporarily  or  preliminarily  enjoining  or  restraining,  or is
subject to any order, judgment or decree of any court of competent  jurisdiction
permanently enjoining or restraining, such person from engaging in or continuing
any conduct or practice in connection with the purchase or sale of any security,
or involving the making of a false filing with the Commission, or arising out of
the  conduct  of the  business  of an  underwriter,  broker,  dealer,  municipal
securities  dealer, or investment  adviser;  (iii) is subject to an order of the
Commission  entered pursuant to Section 15(b),  15B(a) or 15B(c) of the Exchange
Act,  or is subject to an order of the  Commission  entered  pursuant to Section
203(e) or (f) of the  Investment  Advisers  Act of 1940;  (iv) is  suspended  or
expelled  from  membership  in, or suspended or barred from

                                       6
<PAGE>

association  with a member of, an exchange  registered as a national  securities
exchange pursuant to Section 6 of the Exchange Act, an association registered as
a national  securities  association  under Section 15A of the Exchange Act, or a
Canadian  securities  exchange  or  association  for any act or  omission to act
constituting  conduct  inconsistent with just and equitable principles of trade;
or (v) is subject to a United States Postal Service false  representation  order
entered  under  Section 3005 of Title 39, United States Code, or is subject to a
restraining order or preliminary  injunction entered under Section 3007 of Title
39, United States Code, with respect to conduct alleged to have violated Section
3005 of Title 39, United States Code.

       2.16 Material Contracts;  No Defaults. The exhibit index set forth in the
Form 10-K  annexed as Exhibit C to the  Memorandum,  as it may have been updated
with  subsequent  filings  by the  Company  with  the  Securities  and  Exchange
Commission,  contains  a true  and  complete  list  of all  material  contracts,
agreements,   instruments,   indentures,  mortgages,  loans,  leases,  licenses,
arrangements or undertakings of any nature,  of the Company that are required to
be  filed  with  the   Securities   and   Exchange   Commission   (collectively,
"Contracts").  Except in instances  which singly or in the  aggregate  would not
cause a Material  Adverse  Effect,  each of the  Contracts  is in full force and
effect,  the  Company  has  performed  in  all  material  respects  all  of  its
obligations  thereunder  and is not in  default  thereunder,  and no  party to a
Contract  has made a claim to the effect  that the Company has failed to perform
any obligations  thereunder.  To the knowledge of the Company, there is no plan,
intention,  or  indication  of any  contracting  party  to a  Contract  to cause
termination,  cancellation  or  modification  of such  Contract  or to reduce or
otherwise  change  its  activity  thereunder  so as to  adversely  affect in any
material respect the benefits derived or expected to be derived therefrom by the
Company.  The  Company  does  not  know of the  occurrence  of any  event or the
existence  of any state of facts that with notice or the passage of time or both
could  cause it to be in default  under any  Contract  which  could  result in a
Material Adverse Effect.

       2.17  Conduct of  Business;  Compliance  with Law.  The  Company  has all
requisite  corporate power and authority,  and has all necessary Permits, to own
or lease its  properties  and conduct its  business as described in the Offering
Documents,  except  where  the  failure  to have such  Permits  would not have a
Material  Adverse  Effect.  The  Company  has been  operating  its  business  in
compliance with all such Permits, except where such noncompliance would not have
a Material Adverse Effect. The disclosures in the Offering Documents  concerning
the effects of federal,  state and local regulation on the Company's business as
currently  contemplated are correct in all material  respects and do not omit to
state a material fact.  The Company is in compliance  with all Laws except where
noncompliance,  singly or in the  aggregate,  would not have a Material  Adverse
Effect.  The  Company  is not in  violation  of any  term  or  provision  of its
certificate of incorporation or by-laws.

       2.18 Title to Property;  Insurance.  The Company has good and  marketable
title to, or valid and enforceable  leasehold  estates in, all items of real and
personal  property  (tangible  and  intangible)  owned or leased by it, free and
clear of all  liens,  encumbrances,  claims,  security  interests,  defects  and
restrictions of any material nature  whatsoever,  except (a) as reflected in the
Financials  and (b)  such as  would  not,  singly  or in the  aggregate,  have a
Material  Adverse  Effect.  The Company has  adequately  insured its  properties
against loss or damage by fire or other casualty and maintains such insurance in
adequate amounts.

       2.19  Intangibles.  The Company  owns,  licenses or possesses  or, to its
knowledge,  can acquire  "off-the-shelf"  on an as needed  basis,  the requisite
licenses or rights to use all trademarks,  service marks,  service names,  trade
names,   patents  and  patent   applications,   and  copyrights   (collectively,
"Intangibles")  to be used by the Company in its  business as  described  in the
Memorandum.  There  is no  claim or  action  by any  person  pertaining  to,  or
proceeding  pending or, to the Company's  knowledge,  threatened and the Company
has not received any notice of conflict with, the asserted rights of others that
challenges  the  exclusive  right (except that  "off-the-shelf"

                                       7
<PAGE>

licenses may be  non-exclusive)  of the Company with respect to any  Intangibles
used in the conduct of the Company's proposed business except in instances which
would  not  cause a  Material  Adverse  Effect.  To the  best  of the  Company's
knowledge,  the Intangibles and the Company's proposed services and processes do
not  infringe on any  intangibles  held by any third  party.  To the best of the
Company's  knowledge,  no others  have  infringed  upon the  Intangibles  of the
Company, except in instances which would not cause a Material Adverse Effect.

       2.20 Employee  Matters.  The Company has generally enjoyed a satisfactory
employer-employee  relationship  with its  employees and is in compliance in all
material  respects  with all  federal,  state  and  local  laws and  regulations
respecting the employment of its employees and employment  practices,  terms and
conditions  of employment  and wages and hours  relating  thereto,  except where
noncompliance,  singly or in the  aggregate,  would not have a Material  Adverse
Effect.  To  the  best  of  the  Company's  knowledge,   there  are  no  pending
investigations  involving the Company by any  government  Department of Labor or
any other governmental agency responsible for the enforcement of employment laws
and regulations.  There is no unfair labor practice charge or complaint  against
the Company  pending before a Labor  Relations  Board or any strike,  picketing,
boycott,  dispute, slowdown or stoppage pending or, to the best of the Company's
knowledge,  threatened  against or  involving  the  Company  or any  predecessor
entity.  To the  best  of  the  Company's  knowledge,  no  questions  concerning
representation  exist  respecting  the  employees of the Company.  No collective
bargaining  agreement or modification  thereof is currently being  negotiated by
the Company. No grievance or arbitration proceeding is pending under any expired
or existing collective bargaining agreements of the Company, if any.

       2.21  Subsidiaries  Included  in  Representations  and  Warranties.   The
representations  and warranties made by the Company in this Agreement shall also
apply and be true with respect to each  subsidiary,  individually and taken as a
whole with the Company and all other subsidiaries, as if each representation and
warranty  contained  herein made specific  reference to the subsidiary each time
the term  "Company"  was used,  except as the context of the  representation  of
warranty clearly indicates otherwise.

       3.  Representations,  Warranties  and Certain  Covenants of the Placement
Agent and Selected  Dealers.  The Placement Agent, and each Selected Dealer that
the  Placement  Agent may from time to time  appoint,  by signing  the  Selected
Dealer Agreement, severally represents and warrants as follows:

       3.1 Due  Incorporation.  Such Placement  Agent or Selected Dealer is duly
incorporated  and validly  existing and in good  standing  under the laws of its
state of  incorporation  and is duly qualified as a foreign  corporation for the
transaction of business and is in good standing in each  jurisdiction  where the
failure to be so qualified would have a material  adverse effect on the business
of such Placement Agent or Selected Dealer.

       3.2 Broker/Dealer  Registration.  Such Placement Agent or Selected Dealer
is registered as a broker-dealer under Section 15 of the Exchange Act.

       3.3 Good Standing. Such Placement Agent or Selected Dealer is a member in
good standing of the NASD.

       3.4 Sale In Certain Jurisdictions. Sales of Units by such Placement Agent
or  Selected  Dealer  will be made only in such  jurisdictions  in which (i) the
Placement  Agent or Selected  Dealer is a registered  broker-dealer  or where an
applicable  exemption  from such  registration  exists and (ii) the Offering and
sale  of  the  Units  is  registered  under,  or  is  exempt  from,   applicable
registration requirements.

                                       8
<PAGE>

       3.5 Compliance with Laws.  Offers and sales of the Units by the Placement
Agent or Selected  Dealer will be made in compliance with the provisions of Rule
502(c) of Reg D and Section 4(2) of the Securities  Act, and the Placement Agent
or  Selected  Dealer  will  furnish  to each  investor  a copy  of the  Offering
Documents prior to accepting any payments for the Units.

4.       Closing.

       4.1 Closing. At any time prior to the Termination Date and after the sale
of 1,300,000 Units and the clearance of the funds  representing the sale of such
Units, upon the mutual consent of the Company and the Placement Agent that there
shall be a closing,  a closing  ("Closing")  shall take place at the  offices of
Graubard Mollen & Miller ("GM&M"),  600 Third Avenue, New York, New York or such
other location as may be agreed upon by the parties. At the Closing, payment for
the Units issued and sold by the Company (by  certified  check or wire  transfer
payable  to the  order  of the  Company),  less  the  amount  deductible  by the
Placement Agent pursuant to Section 4.4 hereof,  shall be made against  delivery
of  certificates  representing  Shares and  Warrants  comprising  the Units.  If
certificates  representing the Shares and Warrants are not available at the time
of Closing,  the other items to be  delivered  hereunder  and the payments to be
made  hereunder  shall be held in  escrow by  Placement  Agent's  counsel  for a
maximum of three business days pending delivery of such certificates.

       4.2  Deliveries  at Closing.  At the  Closing,  and as a condition to the
Closing,  the Company  shall  deliver or cause to be delivered to the  Placement
Agent:

            4.2.1  Opinion of Counsel.  The  opinions  of Parker  Chapin LLP and
Leonard  W.  Suroff,  Esq.,  dated as of the date of the  Closing,  in the forms
annexed hereto as Exhibits A and B and the letter of Parker Chapin LLP, dated as
of the date of the Closing, in the form annexed hereto as Exhibit C.

            4.2.2 Officers' Certificate. A certificate of the Company, signed by
two  executive  officers  thereof,  stating  (a)  that the  representations  and
warranties contained in Section 2 hereof are true and accurate at the Closing as
applied to the  Company  with the same  effect as though  expressly  made at the
Closing, and (b) that the Company has complied with all covenants and agreements
required to be complied with as of the Closing.

            4.2.3 Subscription Agreements. Subscription Agreements signed by the
Company and each of the Subscribers.

            4.2.4 Certificates. The certificates representing the Shares and the
Warrants.

            4.2.5 Consents.  Consents of any parties required to consummate this
Offering.

            4.2.6  Placement  Agent's  Purchase  Option.  The Placement  Agent's
Purchase  Option in the  names and  denominations  designated  by the  Placement
Agent.

            4.2.7 Lock-Up Agreements.  The Lock-Up Agreements executed by Alfred
Roach and Timothy Roach (together,  the "Insiders")  referred to in Section 5.10
hereof.

            4.2.8 Other  Documents.  Such other  closing  documents  as shall be
reasonably requested by the Placement Agent or its counsel.

       4.3 Conditions.

            4.3.1  Conditions  to  the  Placement   Agent's   Obligations.   The
obligations of the Placement  Agent under this Agreement shall be subject to the
following conditions:

                                       9
<PAGE>

                  (1) All  representations  and  warranties  of the  Company set
forth in this  Agreement  shall be true and  accurate as of the Closing with the
same effect as though expressly made at the Closing;

                  (2) The Company has complied with all covenants and agreements
required to be complied with as of the date of the Closing;

                  (3) The Company has  obtained  all  consents of third  parties
required to be obtained in connection with this Offering; and

                  (4) There shall be no action, lawsuit, administrative or other
proceeding   pending  or  threatened  that  seeks  to  enjoin  the  transactions
contemplated by this Agreement.

              4.3.2 Conditions to Company's Obligations.  The obligations of the
Company under this Agreement shall be subject to the conditions that:

                  (1) The  representations and warranties of the Placement Agent
set forth in this  Agreement  are true and  accurate as of the Closing  with the
same effect as though expressly made at the Closing; and

                  (2) There shall be no action, lawsuit, administrative or other
proceeding   pending  or  threatened  that  seeks  to  enjoin  the  transactions
contemplated by this Agreement; and

                  (3) The  Placement  Agent has complied  with all covenants and
agreements required to be complied with as of the Closing; and

                  (4) The Company shall have received the payments  contemplated
to be made to it under the Agreement; and

                  (5) The Company  shall have received  Subscription  Agreements
signed by each Subscriber.

       4.4 Placement  Agent's Fees and Expenses.  At Closing,  the Company shall
pay to the Placement Agent a cash  commission  equal to 5% of the gross proceeds
of the sale of the  Units,  a cash  Placement  Manager's  fee equal to 3% of the
gross  proceeds of the sale of the Units,  a  nonaccountable  expense  allowance
equal to 2% of the  gross  proceeds  of the sale of the Units  less the  $25,000
deposit paid by the Company upon the execution of the Letter of Intent dated May
3, 2000. No compensation shall be payable to the Placement Agent with respect to
the sale of the Placement Agent's Purchase Option, the exercise thereof,  or the
exercise of the Warrants  contained in the Units  issuable  upon exercise of the
Placement  Agent's  Purchase  Option.  At the  Closing,  the Company  also shall
reimburse the Placement Agent for the expenses  described in Section 5.3 hereof.
All the foregoing  amounts and any other expenses to be paid pursuant to Section
5.3 are payable at the Placement Agent's  direction  directly to the parties who
are owed same by deduction from the aggregate purchase price of the Units sold.

5. Covenants. The Company covenants and agrees that:

       5.1  Amendments  to  Offering  Documents.  Until  the  Offering  has been
completed  or  terminated,  if  there  shall  occur  any  event  relating  to or
affecting,  among other things,  the Company or any  affiliate,  or the proposed
operations of the Company as described in the Offering Documents, as a result of
which it is necessary, in the reasonable opinion of Parker Chapin LLP or counsel
for the Placement Agent, to amend or supplement the Offering  Documents in order
that the Offering  Documents will not contain an untrue  statement of a material
fact or omit to state a material fact  necessary in order to make the statements
therein,  in the light of the  circumstances

                                       10
<PAGE>

under which they were made, not misleading,  the Company shall promptly  prepare
and  furnish  to the  Placement  Agent  a  reasonable  number  of  copies  of an
appropriate  amendment of or supplement to the Offering  Documents,  in form and
substance satisfactory to counsel for the Placement Agent.

       5.2 Use of Proceeds.  The proceeds of the Offering  will be used for such
purposes as described in the  Memorandum  and no proceeds will be used to prepay
any  indebtedness  for  borrowed  funds  (other  than debt  under the  Company's
revolving credit  facility) or any obligations owed to any Insider,  without the
Placement Agent's prior written consent.

       5.3  Expenses  of  Offering  and Other  Expenses.  The  Company  shall be
responsible for, and shall pay, all fees, disbursements and expenses incurred in
connection with the Offering, including, but not limited to, the Company's legal
and accounting fees and disbursements, the costs of preparing, printing, mailing
and delivering,  and filing,  where  necessary,  the Offering  Documents and all
amendments  and  supplements  thereto (all in such  quantities  as the Placement
Agent may reasonably  require),  preparing and printing the certificates for the
Shares and Warrants,  and Extra  Warrants,  if any,  preparation  of transaction
"bibles" in such reasonable  quantities as requested by the Placement Agent, the
reasonable  costs of any "due  diligence"  meetings held by the Company,  filing
fees,  costs and  expenses  as incurred  (including  fees and  disbursements  of
Graubard Mollen & Miller,  blue sky counsel as provided in Section 5.4) incurred
in qualifying  the Offering  under the "blue sky" laws of the states  reasonably
specified by the Placement  Agent,  the  substantiated  costs of "tombstone" and
other advertisements in various publications selected by the Placement Agent, as
well as lucite  momentos and  transfer  taxes,  transfer  and warrant  agent and
registrar  fees. The Company shall also reimburse the Placement  Agent for legal
fees and disbursements.  Notwithstanding the foregoing, the Company shall not be
required  to spend  more  than an  aggregate  of  $120,000  for "due  diligence"
meetings,  tombstone and other  advertisements  and the Placement  Agent's legal
fees and disbursements.  The Company shall also prepay an on account retainer to
Placement  Agent's  counsel of $15,000 for legal fees in  connection  with their
engagement as special counsel for the Investors under the Subscription Agreement
in connection with the preparation of the  Registration  Statement  provided for
therein,  which amount shall be an "on account"  retainer from which any amounts
in excess of actual time (at regular  hourly rates) and  disbursements  expended
shall be refunded to the Company.

       5.4 Blue Sky  Requirements.  The Company shall "Blue Sky" the Offering in
such states as the Placement  Agent shall  reasonably  request and shall pay for
all blue sky  filing  fees and  costs and  expenses  of any  necessary  blue sky
registration  or  qualification  or notice filings  associated with an exemption
from  registration or  qualification,  including the fees and  disbursements  of
counsel.  All blue sky work shall be  undertaken  by counsel  designated  by the
Placement Agent. Upon the commencement of blue sky filings (which shall be at or
prior to the  Commencement  Date),  the Company shall pay $2,500 to such counsel
for such  professional  services (plus the filing fees to be paid to the various
states),  with  the  balance  due for  professional  services  of  $2,500,  plus
counsel's other out-of-pocket disbursements, due at the Closing.

       5.5 Board of Directors.  For a period of three years from the closing (or
such earlier time as 75% of the Warrants  have been  exercised) at the Company's
discretion,  the  Company  will  either  (i)  appoint  a person  to the Board of
Directors of the Company that is mutually  agreeable to the Placement  Agent and
the Company,  or (ii) if such a person is not  appointed,  permit the  Placement
Agent to send a representative (who need not be the same individual from meeting
to  meeting)  to  observe  each  meeting  of  the  Board  of   Directors.   Such
representative  shall be entitled to receive  reimbursement  for all  reasonable
costs incurred in attending such meetings,  including, but not limited to, food,
lodging and  transportation.  The  Company  agrees to give the  Placement  Agent
written  notice of each such meeting and to provide the Placement  Agent with an
agenda  and

                                       11
<PAGE>

minutes of the  meeting no later than it gives  such  notice and  provides  such
items to the other directors.

       5.6 Right of First Refusal. The Company hereby grants the Placement Agent
a right of first  refusal to manage or  co-manage  any  underwriting  or private
placement of debt or equity  securities  (excluding sales to employees under any
compensation  or stock option plan approved by the  stockholders  of the Company
and shares issued in payment of the  consideration  for an  acquisition)  of the
Company or any  subsidiary  or  successor of the Company  during the  nine-month
period following the Closing.  If the Placement Agent fails to accept in writing
any such  proposal for such public or private sale within 30 days after  receipt
of a  written  notice  from  the  Company  containing  such  proposal,  then the
Placement  Agent  shall  have no claim or right  with  respect  to any such sale
contained in any such notice. If,  thereafter,  such proposal is modified in any
material respect,  the Company shall adopt the same procedure as with respect to
the original proposed public or private sale.

       5.7 Warrant Solicitation Fees. The Company will pay the Placement Agent a
warrant  solicitation  fee of four percent of the exercise price of the Warrants
for each  Warrant  exercised,  payable  within five days from the receipt of the
proceeds received upon exercise of the Warrant(s).  The Company will not solicit
the exercise of the Warrants other than through the Placement Agent. The Company
will not be obligated to be pay any warrant  solicitation  fees for the exercise
of Warrants issued upon exercise of the Placement Agent's Purchase Option.

       5.8 Issuance of Securities.  For a period of one year after the Effective
Date (as defined in the  Subscription  Agreement),  without the prior consent of
Placement Agent, the Company shall not issue any securities pursuant to Reg D or
Regulation  S, subject to the proviso that this  restriction  will lapse at such
earlier time as 75% of the Warrants have been exercised.

       5.9 Transfer  Sheets.  Upon Placement  Agent's  reasonable  request,  the
Company shall provide  Placement  Agent with copies of the Company's daily stock
transfer  sheets and lists of the beneficial and record holders of the Company's
securities from the Company's  transfer agent and the Weekly  Position  Listings
from the Depository Trust Company, at the Company's sole cost and expense.

       5.10 Transfer  Restrictions.  The Company agrees not to permit or cause a
private or public sale or private or public  offering of any  securities  of the
Company (in any manner,  including  pursuant to Rule 144 under the Act) that are
owned or to be owned of  record,  or  beneficially  by Alfred or  Timothy  Roach
(excluding   shares  held  by  any  family   member  as  of  the  date   hereof)
(collectively,  "Insiders")  for a period  commencing on the date of this letter
and  terminating  twelve  months  after the  Effective  Date (as  defined in the
Subscription  Agreement)  without  obtaining the prior  written  approval of the
Placement  Agent.  The Company  shall cause the Insiders to execute an agreement
("Lock-Up  Agreement")  with the Placement  Agent  regarding such  restrictions,
subject to the proviso that this  restriction will lapse at such earlier time as
75% of the Warrants have been exercised.

       5.11  Further  Assurances.  The Company  will take such actions as may be
reasonably  required or desirable to carry out the  provisions of this Agreement
and the transactions contemplated hereby.

       5.12  Accuracy of  Representations  and  Warranties.  The Company  hereby
agrees that, prior to the Termination  Date or the Closing,  as the case may be,
it will not enter into any transaction or take any action, and will use its best
efforts to prevent the occurrence of any event,  that could result in any of its
representations,  warranties or covenants  contained in this Agreement or any of
the Offering  Documents  not to be true and  correct,  or not to be performed as
contemplated,  at and as of the time  immediately  after the  occurrence of such
transaction or event.

                                       12
<PAGE>

       5.13 Reservation of Shares. If the Company becomes obligated to issue any
Extra  Warrants,  it will promptly  reserve with its transfer agent and register
the number of shares of Common Stock issuable upon exercise thereof.

6.       Indemnification and Contribution.

       6.1  Indemnification  of the Placement Agent by the Company.  The Company
agrees to indemnify and hold harmless the  Placement  Agent and each person,  if
any, who controls the Placement  Agent within the meaning of the  Securities Act
and/or the  Exchange  Act against any losses,  claims,  damages or  liabilities,
joint or several, to which such Placement Agent or controlling person may become
subject, under the Securities Act or otherwise,  insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue  statement or alleged  untrue  statement of a material  fact
contained (A) in the Offering  Documents,  or (B) in any blue sky application or
other  document  executed by the Company  specifically  for blue sky purposes or
based upon any other  written  information  furnished  by the  Company or on its
behalf to any state or other  jurisdiction in order to qualify any or all of the
Shares under the  securities  laws thereof  (any such  application,  document or
information being hereinafter called a "Blue Sky Application"),  (ii) any breach
by the Company of any of its representations,  warranties or covenants contained
herein or in any of the  Offering  Documents,  or (iii) the  omission or alleged
omission by the Company to state in the  Offering  Documents  or in any Blue Sky
Application a material  fact required to be stated  therein or necessary to make
the  statements  therein,  in light of the  circumstances  under which they were
made,  not  misleading;  and will  reimburse the  Placement  Agent and each such
controlling  person for any legal or other expenses  reasonably  incurred by the
Placement Agent or such controlling  person in connection with  investigating or
defending any such loss, claim, damage, liability or action, whether arising out
of an action between the Placement  Agent and the Company or the Placement Agent
and a third party; provided, however, that the Company will not be liable in any
such case to the extent that any such loss,  claim,  damage or liability  arises
out of or is based upon (i) an untrue  statement or alleged untrue  statement or
omission  or alleged  omission  made in  reliance  upon and in  conformity  with
written  information  regarding  the  Placement  Agent that is  furnished to the
Company by the  Placement  Agent  specifically  for  inclusion  in the  Offering
Documents or any such Blue Sky  Application  or (ii) any breach by the Placement
Agent  of  the   representations,   warranties  or  covenants  contained  herein
(together,  (I)  and  (ii)  above  are  referred  to  as  the  "Placement  Agent
Non-Indemnity  Events"),  or (iii) a Selected  Dealer  Non-Indemnity  Event,  as
defined below.

       6.2  Indemnification of the Company by the Placement Agent. The Placement
Agent agrees to indemnify and hold harmless the Company and each person, if any,
who controls  the Company  within the meaning of the  Securities  Act and/or the
Exchange  Act against  any  losses,  claims,  damages or  liabilities,  joint or
several,  to which the Company or such  controlling  person may become  subject,
under the Securities Act or otherwise,  insofar as such losses,  claims, damages
or  liabilities  (or actions in respect  thereof) arise out of or are based upon
any Placement Agent Non-Indemnity Event; and will reimburse the Company and each
such controlling person for any legal or other expenses  reasonably  incurred by
the Company or such  controlling  person in  connection  with  investigating  or
defending any such loss, claim, damage,  liability or action, provided that such
loss, claim, damage or liability is found ultimately to arise out of or be based
upon any Placement Agent Non-Indemnity Event.

       6.3  Indemnification of the Selected Dealers by the Company.  The Company
agrees to indemnify and hold harmless each Selected  Dealer and each person,  if
any, who controls a Selected  Dealer  within the meaning of the  Securities  Act
and/or the  Exchange  Act against any losses,  claims,  damages or  liabilities,
joint or several, to which such Selected Dealer or controlling person may become
subject under the Securities Act or otherwise,  insofar as such losses,  claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (I) any untrue

                                       13
<PAGE>

statement or alleged  untrue  statement of a material fact  contained (A) in the
Offering Documents,  or (B) in any Blue Sky Application,  (ii) any breach by the
Company of any of its representations,  warranties or covenants contained herein
or in any of the Offering  Documents,  or (iii) the omission or alleged omission
by the Company to state in the Offering Documents or in any Blue Sky Application
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein,  in light of the circumstances  under which they were made,
not  misleading;   and  will  reimburse  each  Selected  Dealer  and  each  such
controlling person for any legal or other expenses  reasonably  incurred by such
Selected  Dealer or  controlling  person in  connection  with  investigating  or
defending any such loss, claim, damage, liability or action, whether arising out
of an action  between  such  Selected  Dealer and the  Company or such  Selected
Dealer and a third party; provided, however, that the Company will not be liable
in any such case to the extent that any such loss,  claim,  damage or  liability
arises  out of or is based  upon  (i) an  untrue  statement  or  alleged  untrue
statement  or  omission  or  alleged  omission  made  in  reliance  upon  and in
conformity with written information  regarding such Selected Dealer specifically
for inclusion in the Offering Documents or any such Blue Sky Application or (ii)
any  breach  by such  Selected  Dealer  of the  representations,  warranties  or
covenants  contained herein together,  (i) and (ii) above are referred to as the
"Selected Dealer Non-Indemnity Events") or (iii) a Placement Agent Non-Indemnity
Event.

       6.4 Indemnification of the Company by the Selected Dealers.  The Selected
Dealers,  severally  and not jointly,  agree to indemnify  and hold harmless the
Company and each person,  if any, who controls the Company within the meaning of
the Securities Act and/or the Exchange Act against any losses,  claims,  damages
or  liabilities,  joint or  several,  to which the  Company or such  controlling
person may become  subject,  under the Securities  Act or otherwise,  insofar as
such losses,  claims,  damages or  liabilities  (or actions in respect  thereof)
arise out of or are based upon any Selected Dealer Non-Indemnity Event; and will
reimburse  the Company and each such  controlling  person for any legal or other
expenses  reasonably  incurred  by the  Company  or such  controlling  person in
connection  with  investigating  or  defending  any such  loss,  claim,  damage,
liability or action provided that such loss, claim, damage or liability is found
ultimately  to arise out of or be based upon any Selected  Dealer  Non-Indemnity
Event.

       6.5 Procedure.  Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action,  such  indemnified  party
will, if a claim in respect thereof is to be made against any indemnifying party
under  this  Section  6,  notify  in  writing  the  indemnifying  party  of  the
commencement  thereof; and the omission so to notify the indemnifying party will
relieve the indemnifying party from any liability under this Section 6 as to the
particular item for which indemnification is then being sought, but not from any
other  liability  that it may have to any  indemnified  party.  In case any such
action is brought against any indemnified party, and it notifies an indemnifying
party of the commencement  thereof,  the indemnifying  party will be entitled to
participate  therein, and to the extent that it may wish, jointly with any other
indemnifying  party,  similarly  notified,  to assume the defense thereof,  with
counsel who shall be to the reasonable  satisfaction of such indemnified  party,
and after notice from the indemnifying  party to such  indemnified  party of its
election so to assume the defense thereof,  the  indemnifying  party will not be
liable to such  indemnified  party  under this  Section 6 for any legal or other
expenses  subsequently incurred by such indemnified party in connection with the
defense  thereof  other  than  reasonable  costs  of  investigation.   Any  such
indemnifying  party shall not be liable to any such indemnified party on account
of any  settlement of any claim or action  effected  without the consent of such
indemnifying party.

                                       14
<PAGE>

       6.6 Contribution.  If the indemnification  provided for in this Section 6
is unavailable to any  indemnified  party (other than as a result of the failure
to notify the  indemnifying  party as provided in Section 6.5 hereof) in respect
to any losses,  claims,  damages,  liabilities or expenses  referred to therein,
then the indemnifying  party, in lieu of indemnifying  such  indemnified  party,
will  contribute  to the amount paid or payable by such  indemnified  party as a
result of such  losses,  claims,  damages,  liabilities  or expenses (i) in such
proportion as is  appropriate to reflect the relative  benefits  received by the
Company on the one hand,  and the  Placement  Agent or Selected  Dealer,  on the
other hand, from the Offering,  or (ii) if the allocation provided by clause (i)
above is not permitted by applicable  law, in such  proportion as is appropriate
to reflect not only the relative  benefits  referred to in clause (i) above, but
also the relative  fault of the Company,  on the one hand,  and of the Placement
Agent or Selected  Dealer,  on the other hand, in connection with the statements
or omissions  that  resulted in such losses,  claims,  damages,  liabilities  or
expenses as well as any other relevant  equitable  considerations.  The relative
benefits  received by the Company,  on the one hand, and the Placement  Agent or
Selected Dealer, on the other hand, shall be deemed to be in the same proportion
as the  total  proceeds  from the  Offering  (net of sales  commissions  and the
nonaccountable expense allowance,  but before deducting other expenses) received
by the Company bear to the  commissions  and  nonaccountable  expense  allowance
received by the Placement  Agent or Selected  Dealer.  The relative fault of the
Company,  on the one hand, and the Placement  Agent or Selected  Dealer,  on the
other hand,  will be determined  with reference to, among other things,  whether
the untrue or alleged  untrue  statement  of a material  fact or the omission to
state a material fact relates to information supplied by the Company, on the one
hand, and the Placement Agent or Selected  Dealer,  on the other hand, and their
relative intent, knowledge,  access to information and opportunity to correct or
prevent such statement or omission.

       6.7 Equitable  Considerations.  The Company, the Placement Agent and each
Selected  Dealer agree that it would not be just and  equitable if  contribution
pursuant to this  Section 6 were  determined  by pro rata  allocation  or by any
other  method  of  allocation  that  does not take into  account  the  equitable
considerations referred to in the immediately preceding paragraph.

       6.8  Attorneys'  Fees. The amount payable by a party under this Section 6
as a result of the losses, claims, damages,  liabilities or expenses referred to
above will be deemed to include any  reasonable  legal or other fees or expenses
reasonably  incurred by such party in connection with investigating or defending
any action or claim (including,  without  limitation,  fees and disbursements of
counsel incurred by an indemnified party in any action or proceeding between the
indemnifying  party and indemnified  party or between the indemnified  party and
any third party or otherwise).

7.  Termination.  Placement  Agent  reserves  the right not to proceed  with the
Offering for any reason, including if: (i) material adverse information known to
management and not previously  disclosed to Placement Agent by the Company comes
to Placement  Agent's attention  relating to the Company,  its management or its
position in the  industry  which would  preclude a successful  Offering;  (ii) a
material  adverse  change not yet reported in the Company's  public  filings has
occurred in the financial  condition,  business or prospects of the Company;  or
(iii) the Company has breached any of its material  representations,  warranties
or obligations hereunder,  or failed to expeditiously proceed with the Offering.
If  Placement  Agent  elects not to proceed with the Offering as a result of the
conditions  enumerated  in either of clauses (i) or (iii)  above,  or (except as
provided in the next  sentence)  if the Company  elects not to proceed  with the
Offering  for  any  reason,  then  the  Company,  in  full  satisfaction  of its
obligations to Placement Agent hereunder (other than with respect to the payment
of "Source Fees," described below),  shall reimburse Placement Agent in full for
its reasonable out-of-pocket expenses (including,  without limitation, its legal
fees and disbursements),  against which the Deposit shall be applied as a credit
and, in addition,  pay to Placement  Agent a fee of $150,000  ("Break-up  Fee").
Notwithstanding  anything  contained herein to the contrary,  if (a) the Closing
does not occur within 90 days of the  Commencement  Date through no fault of the
Company  (it being  deemed to be the  Company's  "fault" if it refuses to accept

                                       15
<PAGE>

subscriptions from qualified investors sufficient to have a Closing), or (b) the
Offering  requires  stockholder  approval under NASD Marketplace Rule 4310, then
the Company may elect to abandon the  Offering.  In such event,  or in the event
Placement  Agent elects not to proceed with the Offering  other than as a result
of the condition enumerated in clauses (i) or (iii) above, Placement Agent shall
be  entitled  to be  reimbursed  for its  expenses,  including  legal  fees  and
disbursements,  and shall  apply the  Deposit  against  such  expenses,  but the
Company  shall not be liable to  Placement  Agent for any other  expenses or the
Break-up Fee. Notwithstanding anything contained herein to the contrary, whether
or not the Offering is consummated, the Company shall pay to Placement Agent the
commissions and Placement  Manager's Fees referenced herein ("Source Fees") with
respect  to, and based on, any  investment  in the Company by any  "Source"  (as
defined  below)  made at any time within 24 months  after May 3, 2000.  A Source
shall be any  person  whose name had not been first  provided  to the  Placement
Agent in  writing  by the  Company  and who shall  have  received  a copy of the
Memorandum from Placement Agent in connection with the Offering,  a list of whom
shall be provided to the  Company by  Placement  Agent  promptly  following  the
Closing or the abandonment of the Offering, as the case may be.

8. Notices. Any notice hereunder shall be in writing and shall be effective when
delivered in person or by facsimile  transmission  or mailed by certified  mail,
postage prepaid,  return receipt requested, to the appropriate party or parties,
at the following  addresses:  if to the Placement Agent, to M.H. Meyerson & Co.,
Inc., 525 Washington Boulevard,  Jersey City, New Jersey 07310,  Attention:  Mr.
Ronald I.  Heller (Fax No.  (201)  459-9458);  with a copy to Graubard  Mollen &
Miller, 600 Third Avenue, New York, New York 10016, Attention:  Peter M. Ziemba,
Esq. (Fax No. (212) 818-8881); if to the Company, to TII Industries,  Inc., 1385
Akron Street,  Copiague,  New York 11726,  Attention:  Paul G. Sebetic, (Fax No.
(631)  789-2228);  with a copy to Parker Chapin LLP, 405 Lexington  Avenue,  New
York,  New York  10174,  Attention:  Richard  A.  Rubin,  Esq.  (Fax  No.  (212)
704-6288);  or,  in  each  case,  to  such  other  address  as the  parties  may
hereinafter designate by like notice.

9. Parties.  This Agreement will inure to the benefit of and be binding upon the
parties hereto and their  respective  successors and assigns.  Neither party may
assign this  Agreement or its  obligations  hereunder  without the prior written
consent of the other  party.  This  Agreement is intended to be, and is, for the
sole and exclusive  benefit of the parties  hereto and the persons  described in
Sections 6.1 through 6.4 hereof and their respective successors and assigns, and
for the benefit of no other  person,  and no other person will have any legal or
equitable right, remedy or claim under, or in respect of this Agreement.

10.  Amendment  and/or  Modification.  Neither this  Agreement,  nor any term or
provision  hereof,  may be changed,  waived,  discharged,  amended,  modified or
terminated  orally,  or in any  manner  other than by an  instrument  in writing
signed by each of the parties hereto.

11.  Further  Assurances.  Each party to this Agreement will perform any and all
acts and execute any and all  documents as may be necessary and proper under the
circumstances  in order to accomplish the intents and purposes of this Agreement
and to carry out its provisions.

12. Validity.  In case any term of this Agreement will be held invalid,  illegal
or unenforceable, in whole or in part, the validity of any of the other terms of
this Agreement will not in any way be affected thereby.

13.  Waiver of Breach.  The  failure of any party  hereto to insist  upon strict
performance  of any of the  covenants and  agreements  herein  contained,  or to
exercise any option or right herein conferred in any one or more instances, will
not be construed to be a waiver or  relinquishment  of any such option or right,
or of any other covenants or agreements, and the same will be and remain in full
force and effect.

                                       16
<PAGE>

14.  Entire  Agreement.   This  Agreement  contains  the  entire  agreement  and
understanding  of the parties with  respect to the subject  matter  hereof,  and
there are no  representations,  inducements,  promises  or  agreements,  oral or
otherwise,  not  embodied  in this  Agreement.  Any and all  prior  discussions,
negotiations,  commitments and  understanding  relating to the subject matter of
this Agreement are superseded by this Agreement.

15.  Counterparts.  This Agreement may be executed in  counterparts  and each of
such  counterparts  will for all purposes be deemed to be an original,  and such
counterparts will together constitute one and the same instrument.

16. Law. Pursuant to Section 5-401 of the New York General  Obligation Law, this
Agreement will be governed as to validity, interpretation,  construction, effect
and in all other  respects  by the  internal  law of the State of New York.  The
Company and the  Placement  Agent each (i) agree that any legal suit,  action or
proceeding  arising  out of or relating to this  Agreement  shall be  instituted
exclusively in the New York State Supreme  Court,  County of New York, or in the
United States District Court for the Southern  District of New York, (ii) waives
any objection to the venue of any such suit, action or proceeding, and the right
to assert  that  such  forum is an  inconvenient  forum,  and (iii)  irrevocably
consents to the jurisdiction of the New York State Supreme Court,  County of New
York, and the United States District Court for the Southern District of New York
in any such suit,  action or  proceeding.  The Company and the  Placement  Agent
further agree to accept and acknowledge  service of any and all process that may
be served in any such suit,  action or  proceeding in the New York State Supreme
Court,  County of New  York,  or in the  United  States  District  Court for the
Southern  District of New York and agree that  service of process upon either of
them mailed by certified mail to their  respective  addresses shall be deemed in
every  respect  effective  service  of  process  in any  such  suit,  action  or
proceeding.

17.   Representations,   Warranties  and  Covenants  to  Survive  Delivery.  The
respective representations,  indemnities,  agreements, covenants, warranties and
other statements of the Company and the Placement Agent shall survive  execution
of this  Agreement  and  delivery of the Units  and/or the  termination  of this
Agreement prior thereto.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                       17
<PAGE>

                  If  you  find  the  foregoing  is  in   accordance   with  our
understanding, kindly sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts  will become a binding  agreement between
us.

                                       Very truly yours,

                                       TII INDUSTRIES, INC.

                                       By:
                                         ---------------------------------------
                                         Paul G. Sebetic, Vice President-Finance

AGREED:

M.H. MEYERSON & CO., INC.

By:
      ---------------------------------
      Eugene Whitehouse, Vice President

                                       18
<PAGE>

                  SCHEDULE 1.3 PLACEMENT AGENT PURCHASE OPTION
                  --------------------------------------------
<TABLE>
<CAPTION>
     ----------------------------------------- --------------------------------------
                    Percentage                             Market Price
     ----------------------------------------- --------------------------------------
      <S>                                     <C>
                       20%                                 $2.50 or more
     ----------------------------------------- --------------------------------------
                       21%                                $2.40 to $2.49
     ----------------------------------------- --------------------------------------
                       22%                                $2.30 to $2.39
     ----------------------------------------- --------------------------------------
                       23%                                $2.20 to $2.29
     ----------------------------------------- --------------------------------------
                       24%                                $2.10 to $2.19
     ----------------------------------------- --------------------------------------
                       25%                                Less than $2.10
     ----------------------------------------- --------------------------------------
</TABLE>

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