Document:

STEWART ENTERPRISES, INC.

2000 DIRECTORS' STOCK OPTION PLAN

1.     Purpose of the Plan.

    

        The purpose of the Stewart Enterprises, Inc. 2000 Directors'
Stock Option Plan is to promote the interests of the Company and its
shareholders by strengthening the Company's ability to attract, motivate and
retain Directors of experience and ability, and to encourage the highest level
of Directors' performance by providing Directors with a proprietary interest in
the Company's financial success and growth.

    
    2.     Definitions.

    

                2.1   
        "Board" means the Board of Directors of
        the Company.

        2.2    
"Committee" means the Compensation Committee of
the Board or a subcommittee thereof as shall be appointed by the Board from time
to time. The Committee shall consist of two or more members of the Board none of
whom shall be Employees of the Company.

        2.3   
"Common Stock" means the Class A common stock of
the Company.

        2.4   
"Company" means Stewart Enterprises, Inc., a
Louisiana corporation.

        2.5   
"Director" means a member of the Board who is not
an Employee.

        2.6   
"Employee" means any employee of the Company, or
any of its present or future parent or subsidiary corporations.

        2.7   
"Fair Market Value" means (i) if the Common Stock
is listed on an established stock exchange or any automated quotation system
that provides sale quotations, the closing sale price for a share of the Common
Stock on such exchange or quotation system on the day preceding the date as of
which fair market value is to be determined, or if no sale of the Common Stock
shall have been made on that day, on the next preceding day on which there was a
sale of the Common Stock; (ii) if the Common Stock is not listed on any exchange
or quotation system, but bid and asked prices are quoted and published, the mean
between the quoted bid and asked prices on the day preceding the date as of
which fair market value is to be determined, and if bid and asked prices are not
available on such day, on the next preceding day on which such prices were
available; and (iii) if the Common Stock is not regularly quoted, the fair
market value of a share of Common Stock on the applicable date as established by
the Committee in good faith.

    2.8    "Participant" means each Director.

    2.9    "Option" means a stock option that does not
satisfy the requirements of Section 422 of the Internal Revenue Code of 1986, as
amended.

    2.10    "Plan" means the Stewart Enterprises, Inc. 2000
Directors' Stock Option Plan as set forth herein and as amended from time to
time.

3.     Shares of Common Stock Subject to the Plan.

        Subject to the adjustment provisions of Section 7, the aggregate
number of shares of Common Stock that may be issued pursuant to the exercise of
Options under the Plan is 350,000 shares of Common Stock. Such shares may be
either authorized but unissued shares or shares issued and thereafter acquired
by the Company. To the extent any shares of Common Stock subject to an Option
are not issued because the Option is forfeited or cancelled, such shares shall
again be available for grant pursuant to Options granted under the Plan.

4.     Administration of the Plan.

        4.1    
The Plan shall be administered by the Committee, which shall
have the power to interpret the Plan and, subject to its provisions, to
prescribe, amend and rescind rules and to make all other determinations
necessary for the Plan's administration.

        4.2    
All action taken by the Committee in the administration and
interpretation of the Plan shall be final and binding upon all parties. No
member of the Committee will be liable for any action or determination made in
good faith by the Committee with respect to the Plan or any Option.

5.     Grant of Options.

        5.1    
Each Director shall automatically be granted an Option to
acquire 50,000 shares of Common Stock on the day following the 2000 annual
meeting of shareholders of the Company. Each person who becomes a Director after
the 2000 annual meeting of shareholders, but prior to the 2004 annual meeting of
shareholders, shall be granted an Option to acquire a pro rata number of shares
of Common Stock calculated as follows:

                       Number of full calendar months between the date
        50,000   X     the person becomes a Director and April 30, 2004
                       ------------------------------------------------
                                             48
 

        5.2    
In the event shares remain available for issuance under
Section 3 hereof, because of cancellation or forfeiture of Options or because
all available shares have not been utilized for grants to new Directors, Options
with respect to the remaining shares may be granted to Directors in the
discretion of the Committee and shall be exercisable and shall terminate as
determined by the Committee.

6.     Terms and Conditions of Options.

        6.1    
Unless exercisability is accelerated as provided in Sections
6.4 and 8.2 hereof, the Options shall become exercisable in 25 percent annual
increments beginning one year following the date of grant. In the case of
Options granted to persons who become Directors after the 2000 annual meeting of
shareholders, the exercisability terms shall be such that, subject to Section
6.5 hereof, the Options shall be fully exercisable for a period of at least one
year prior to the termination date provided in Section 6.2.

        6.2    
Unless terminated earlier as provided in Section 6.5 or 8.3,
the Options shall expire and terminate on January 31, 2005.

        6.3    
The exercise price of the Options granted to Directors shall
be equal to the Fair Market Value, as defined herein, of a share of Common Stock
on the date of grant.

        6.4    
The Committee may accelerate the exercisability of any
Option at any time in its discretion.

        6.5    
In the event a Director ceases to serve on the Board of
Directors of the Company for any reason, the Options granted hereunder must be
exercised, to the extent otherwise exercisable at the time of termination of
Board service, within one year from the date of termination of Board service.
Options that are not exercisable at the time of termination of Board service
shall be forfeited.

        6.6    
An Option may be exercised, in whole or in part, by giving
written notice to the Company, specifying the number of shares of Common Stock
to be purchased. The exercise notice shall be accompanied by the full purchase
price for such shares. The option price shall be payable in United States
dollars and may be paid (a) in cash; (b) by uncertified or certified check; (c)
by delivery of shares of Common Stock, which shares shall be valued for this
purpose at their Fair Market Value on the date such option is exercised, and,
unless otherwise determined by the Committee, shall have been held by the
Participant for at least six months; or (d) in such other manner as may be
authorized from time to time by the Committee. The Committee may also permit
Participants, either on a selective or aggregate basis, simultaneously to
exercise options and sell the shares of Common Stock acquired pursuant to a
brokerage or similar arrangement, approved in advance by the Committee, and use
the proceeds from such sale as payment of the exercise price. In the case of
delivery of an uncertified check upon exercise of a stock option, no shares
shall be issued until the check has been paid in full. Prior to the issuance of
shares of Common Stock upon the exercise of an Option, a Participant shall have
no rights as a shareholder.

        6.7    
Except for adjustments pursuant to Section 7, the exercise
price for any outstanding Option granted under the Plan may not be decreased
after the date of grant nor may an outstanding Option granted under the Plan be
surrendered to the Company as consideration for the grant of a new Option with a
lower exercise price.

7.     Adjustment Provisions.

        In the event of any recapitalization, stock dividend, stock
split, combination of shares or other change in the Common Stock, all
limitations on numbers of shares of Common Stock provided in the Plan, and the
number of shares subject to outstanding Options, shall be adjusted in proportion
to the change in outstanding shares of Common Stock. In the event of any such
adjustments, the purchase price of any Option shall be adjusted as and to the
extent appropriate, in the reasonable discretion of the Committee, to provide
Participants with the same relative rights before and after such adjustment.

8.     Change of Control.

        8.1    
A Change of Control shall mean:

                 
(a)    the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934 (the "1934 Act") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the 1934 Act) of more than 30 percent of the
outstanding shares of the Common Stock; provided, however, that for purposes of
this subsection (a), the following acquisitions shall not constitute a Change of
Control:

                        
(i)     any acquisition of Common Stock directly from the
        Company,

                                
        (ii)     any acquisition of Common Stock by the Company,

                                
        (iii)    any acquisition of Common Stock by any employee
        benefit plan (or related trust) sponsored or maintained by the Company
        or any corporation controlled by the Company, or

                                
        (iv)    any acquisition of Common Stock by any corporation
        pursuant to a transaction that complies with clauses (i), (ii) and (iii)
        of subsection (c) of this Section 8.1; or

               
(b)     individuals who, as of the date the Plan was adopted by the
Board of Directors (the "Approval Date"), constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the Approval Date whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered a member of the Incumbent Board, unless such individual's initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person other
than the Incumbent Board; or

               
(c)     consummation of a reorganization, merger or consolidation
(including a merger or consolidation of the Company or any direct or indirect
subsidiary of the Company), or sale or other disposition of all or substantially
all of the assets of the Company (a "Business Combination"), in each
case, unless, following such Business Combination,

                               
        (i)     all or substantially all of the individuals and
        entities who were the beneficial owners of the Company's outstanding
        common stock and the Company's voting securities entitled to vote
        generally in the election of directors immediately prior to such
        Business Combination have direct or indirect beneficial ownership,
        respectively, of more than 50 percent of the then outstanding shares of
        common stock, and more than 50 percent of the combined voting power of
        the then outstanding voting securities entitled to vote generally in the
        election of directors, of the corporation resulting from such Business
        Combination (which, for purposes of this paragraph (i) and paragraphs
        (ii) and (iii), shall include a corporation which as a result of such
        transaction owns the Company or all or substantially all of the
        Company's assets either directly or through one or more subsidiaries),
        and

                               
        (ii)     except to the extent that such ownership existed
        prior to the Business Combination, no person (excluding any corporation
        resulting from such Business Combination or any employee benefit plan or
        related trust of the Company or such corporation resulting from such
        Business Combination) beneficially owns, directly or indirectly, 20
        percent or more of the then outstanding shares of common stock of the
        corporation resulting from such Business Combination or 20 percent or
        more of the combined voting power of the then outstanding voting
        securities of such corporation, and

                               
        (iii)     at least a majority of the members of the board of
        directors of the corporation resulting from such Business Combination
        were members of the Incumbent Board at the time of the execution of the
        initial agreement, or of the action of the Board, providing for such
        Business Combination; or

               
(d)     approval by the shareholders of the Company of a plan of
complete liquidation or dissolution of the Company.

        8.2    
Upon a Change of Control, or immediately prior to the
closing of a transaction that will result in a Change of Control if consummated,
all outstanding Options granted pursuant to the Plan shall automatically become
fully exercisable.

        8.3    
No later than 30 days after the approval by the Board of a
Change of Control of the types described in Sections 8.1(c) or (d) and no later
than 30 days after a Change of Control of the types described in Sections 8.1(a)
or (b), the Committee (as the Committee was composed immediately prior to such
Change of Control and notwithstanding any removal or attempted removal of some
or all of the members thereof as directors or Committee members), acting in its
sole discretion without the consent or approval of any Participant may act to
effect one or more of the alternatives listed below, and such act by the
Committee may not be revoked or rescinded by persons not members of the
Committee immediately prior to the Change of Control:

                   
    (a)     require that all outstanding Options be exercised on or
    before a specified date (before or after such Change of Control) fixed by
    the Committee, after which specified date any unexercised portion of the
    Option shall terminate,

                   
    (b)     make such equitable adjustments to the Options then
    outstanding as the Committee deems appropriate to reflect such Change of
    Control (provided, however, that the Committee may determine in its sole
    discretion that no adjustment is necessary), or

                   
    (c)     provide for mandatory conversion of some or all of the
    outstanding Options held by some or all Participants as of a date before or
    after such Change of Control, in which event such Options shall be deemed
    automatically cancelled and the Company shall pay, or cause to be paid, to
    each such participant an amount in cash equal to the excess, if any, of the
    Change of Control Value of the shares subject to such Options, as defined
    and calculated below, over the exercise price of such Options, or, in lieu
    of such cash payment, the issuance of Common Stock or securities of an
    acquiring entity having a Fair Market Value equal to such excess,

                   
    (d)     provide that thereafter, upon any exercise of all or
    part of an Option, the Participant shall be entitled to purchase under the
    Option, in lieu of the number of shares of Common Stock then covered by the
    Option, the number and class of shares of stock or other securities or
    property (including, without limitation, cash) to which the Participant
    would have been entitled pursuant to the terms of the agreement providing
    for the reorganization, merger, consolidation or asset sale, if, immediately
    prior to such Change of Control, the Participant had been the holder of
    record of the number of shares of Common Stock then covered by the Option.

        8.4    
For the purposes of paragraph (c) of Section 8.3
"Change of Control Value" shall be the amount determined by whichever
of the following items is applicable:

                   
    (a)     the per share price to be paid to stockholders of
    Stewart in any such merger, consolidation or other reorganization,

                   
    (b)     the price per share offered to stockholders of Stewart
    in any tender offer or exchange offer whereby a Change of Control takes
    place, or

                   
    (c)     in all other events, the Fair Market Value per share of
    Common Stock into which such Options being converted are exercisable, as
    determined by the Committee as of the date determined by the Committee to be
    the date of conversion of the Options.

                   
    (d)     In the event that the consideration offered to
    stockholders of Stewart in any transaction described in this Section 8.4
    consists of anything other than cash, the Committee shall determine the fair
    cash equivalent of the portion of the consideration offered that is other
    than cash.

    9.     General Provisions.

        9.1    
Nothing in the Plan or in any instrument executed pursuant
to the Plan will confer upon any Participant any right to continue as a Director
or affect the right of the Company to terminate the services of any Participant.

        9.2    
No shares of Common Stock will be issued or transferred
pursuant to an Option unless and until all then-applicable requirements imposed
by federal and state securities and other laws, rules and regulations and by any
regulatory agencies having jurisdiction, and by any stock exchanges upon which
the Common Stock may be listed, have been fully met. As a condition precedent to
the issuance of shares pursuant to the exercise of an Option, the Company may
require the Participant to take any reasonable action to meet such requirements.

        9.3    
No Participant and no beneficiary or other person claiming
under or through such Participant will have any right, title or interest in or
to any shares of Common Stock allocated or reserved under the Plan or subject to
any Option except as to such shares of Common Stock, if any, that have been
issued or transferred to such Participant.

        9.4    
No Options granted hereunder may be transferred, pledged,
assigned or otherwise encumbered by an optionee except:

                   
    (a)     by will;

                   
    (b)     by the laws of descent and distribution; or

                   
    (c)     if permitted by the Committee and so provided in the
    Option or an amendment thereto, (i) pursuant to a domestic relations order,
    as defined in the Code, (ii) to Immediate Family Members, (iii) to a
    partnership in which Immediate Family Members, or entities in which
    Immediate Family Members are the owners, members or beneficiaries, as
    appropriate, are the sole partners, (iv) to a limited liability company in
    which Immediate Family Members, or entities in which Immediate Family
    Members are the owners, members or beneficiaries, as appropriate, are the
    sole members, or (v) to a trust for the benefit solely of Immediate Family
    Members. "Immediate Family Members" shall be defined as the spouse
    and natural or adopted children or grandchildren of the optionee and their
    spouses.

               
Any attempted assignment, transfer, pledge, hypothecation or
other disposition of an Option or levy of attachment, or similar process upon an
Option not specifically permitted herein, shall be null and void and without
effect.

        9.5    
Each Option shall be evidenced by a written instrument,
including terms and conditions consistent with the Plan, as the Committee may
determine.

10.    
Amendment or Discontinuance of the Plan.

          The Board may amend or discontinue the Plan at any time;
provided, however, that no such amendment may

(a)     without the approval of the shareholders, (i)
    increase, subject to adjustments permitted herein, the maximum number of
    shares of Common Stock that may be issued through the Plan, (ii) materially
    increase the benefits accruing to participants under the Plan or (iii)
    materially expand the classes of persons eligible to participant in the
    Plan, or (iv) amend Section 6.7 to permit repricing of Options, or

    
    (b)     materially impair, without the consent of the
    recipient, an Option previously granted, except that the Company retains all
    rights under Section 8. hereof.

    11.     Effective Date of Plan and Duration of Plan.

           This Plan shall become effective upon adoption by the Board,
subject to approval by the holders of a majority of the shares of Common Stock
represented in person or by proxy and entitled to vote on the subject at the
2000 annual meeting of shareholders of the Company.SUBSCRIPTION AGREEMENT

Dear Subscriber:

         You (the  "Subscriber")  hereby  agree to purchase,  and ICOA,  Inc., a
Nevada  corporation  (the  "Company")  hereby agrees to issue and to sell to the
Subscriber,  9% Convertible  Notes (the "Notes")  convertible in accordance with
the terms  thereof  into shares of the  Company's  $.0001 par value common stock
(the  "Company  Shares")  for the  aggregate  consideration  as set forth on the
signature  page  hereof  ["Purchase  Price"].  The form of  Convertible  Note is
annexed  hereto as Exhibit A. (The  Company  Shares are  sometimes  referred  to
herein as the  "Shares"  or "Common  Stock").  (The Notes,  the Company  Shares,
Common  Stock  Purchase  Warrants   ("Warrants")   issuable  to  the  recipients
identified on Schedule B hereto,  the Common Stock issuable upon exercise of the
Warrants,  and the Put Securities (as herein defined) are collectively  referred
to herein  as, the  "Securities").  Upon  acceptance  of this  Agreement  by the
Subscriber,  the  Company  shall issue and  deliver to the  Subscriber  the Note
against payment, by federal funds (U.S.) wire transfer of the Purchase Price.

                  The  following  terms  and  conditions  shall  apply  to  this
subscription.

                  1. Subscriber's Representations and Warranties. The Subscriber
hereby represents and warrants to and agrees with the Company that:

                           (a)  Information on Company.  The Subscriber has been
furnished  with the Company's  audited  financial  statements for the year ended
September 30, 1999 (hereinafter referred to as the "Reports").  In addition, the
Subscriber has received from the Company such other  information  concerning its
operations,  financial  condition  and  other  matters  as  the  Subscriber  has
requested,  and considered all factors the Subscriber deems material in deciding
on the advisability of investing in the Securities (such  information in writing
is collectively, the "Other Written Information").

                           (b)  Information on Subscriber.  The Subscriber is an
"accredited  investor",  as such term is defined in Regulation D promulgated  by
the Commission under the Securities Act of 1933, as amended (the "1933 Act"), is
experienced  in  investments  and business  matters,  has made  investments of a
speculative nature and has purchased securities of United States  publicly-owned
companies in private placements in the past and, with its  representatives,  has
such knowledge and experience in financial, tax and other business matters as to
enable the Subscriber to utilize the  information  made available by the Company
to evaluate the merits and risks of and to make an informed  investment decision
with  respect  to  the  proposed   purchase,   which  represents  a  speculative
investment.  The Subscriber has the authority and is duly and legally  qualified
to purchase and own the  Securities.  The Subscriber is able to bear the risk of
such investment for an indefinite period and to afford a complete loss thereof.

                           (c)  Purchase  of  Note.  On the  Closing  Date,  the
Subscriber will purchase the Note for its own account and not with a view to any
distribution thereof.

                           (d) Compliance  with  Securities  Act. The Subscriber
understands and agrees that the Securities  have not been  registered  under the
1933 Act by reason of their  issuance  in a  transaction  that does not  require
registration under the 1933 Act, in reliance upon Rule 903 of Regulation S under
the 1933  Act,  and  that  such  Securities  must be held  unless  a  subsequent
disposition   is  registered   under  the  1933  Act  or  is  exempt  from  such
registration.

<PAGE>

                           (e) Company Shares Legend.  The Company  Shares,  and
the shares of Common Stock  issuable  upon the exercise of the  Warrants,  shall
bear the following legend:

                  "THESE SHARES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN
                  REGISTERED  UNDER THE  SECURITIES ACT OF 1933, AS AMENDED (THE
                  "1933 ACT"), OR APPLICABLE  STATE OR FOREIGN  SECURITIES LAWS.
                  THESE  SHARES MAY NOT BE  TRANSFERRED  OR RESOLD IN THE UNITED
                  STATES,  OR TO A U.S.  PERSON,  OR TO OR FOR  THE  ACCOUNT  OR
                  BENEFIT OF A U.S.  PERSON  (AS SUCH TERMS ARE  DEFINED IN RULE
                  902 OF  REGULATION  S UNDER  THE 1933 ACT) FOR A PERIOD OF ONE
                  YEAR EXPIRING ON AUGUST 28, 2001,  EXCEPT IN  ACCORDANCE  WITH
                  THE  PROVISIONS  OF  REGULATION S UNDER THE 1933 ACT OR UNLESS
                  REGISTERED  UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES
                  LAWS OR UNLESS THE HOLDER PROVIDES THE COMPANY WITH AN OPINION
                  FROM  COUNSEL  ACCEPTABLE  TO  THE  COMPANY  STATING  THAT  AN
                  EXEMPTION FROM  REGISTRATION  IS AVAILABLE AT THE TIME OF SUCH
                  TRANSFER.  HEDGING TRANSACTIONS INVOLVING THESE SHARES MAY NOT
                  BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT."

                           (f)  Warrants  Legend.  The  Warrants  shall bear the
following legend:

                  "THIS WARRANT AND THE COMMON SHARES  ISSUABLE UPON EXERCISE OF
                  THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
                  OF 1933, AS AMENDED (THE "1933 ACT"),  OR APPLICABLE  STATE OR
                  FOREIGN  SECURITIES  LAWS.  THIS WARRANT AND THE COMMON SHARES
                  ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE  TRANSFERRED
                  OR RESOLD IN THE UNITED STATES,  OR TO A U.S. PERSON, OR TO OR
                  FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON (AS SUCH TERMS ARE
                  DEFINED  IN RULE 902 OF  REGULATION  S UNDER THE 1933 ACT) AND
                  THIS  WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S.
                  PERSON FOR A PERIOD OF ONE YEAR  EXPIRING ON AUGUST 28,  2001,
                  EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER
                  THE  1933  ACT OR  UNLESS  REGISTERED  UNDER  THE 1933 ACT AND
                  APPLICABLE STATE SECURITIES LAWS OR UNLESS THE HOLDER PROVIDES
                  THE COMPANY  WITH AN OPINION FROM  COUNSEL  ACCEPTABLE  TO THE
                  COMPANY  STATING  THAT  AN  EXEMPTION  FROM   REGISTRATION  IS
                  AVAILABLE AT THE TIME OF SUCH TRANSFER.  HEDGING  TRANSACTIONS
                  INVOLVING  THIS  WARRANT OR THE COMMON  SHARES  ISSUABLE  UPON
                  EXERCISE  OF THIS  WARRANT  MAY  NOT BE  CONDUCTED  UNLESS  IN
                  COMPLIANCE WITH THE 1933 ACT."

                           (g) Note  Legend.  The Note shall bear the  following
legend:

                                        2
<PAGE>

                  "THIS NOTE AND THE COMMON SHARES  ISSUABLE UPON  CONVERSION OF
                  THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
                  1933,  AS AMENDED (THE "1933  ACT"),  OR  APPLICABLE  STATE OR
                  FOREIGN  SECURITIES  LAWS.  THIS  NOTE AND THE  COMMON  SHARES
                  ISSUABLE UPON  CONVERSION OF THIS NOTE MAY NOT BE  TRANSFERRED
                  OR RESOLD IN THE UNITED STATES,  OR TO A U.S. PERSON, OR TO OR
                  FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON (AS SUCH TERMS ARE
                  DEFINED IN RULE 902 OF  REGULATION S UNDER THE 1933 ACT) FOR A
                  PERIOD OF ONE YEAR  EXPIRING  ON AUGUST  28,  2001,  EXCEPT IN
                  ACCORDANCE  WITH THE PROVISIONS OF REGULATION S UNDER THE 1933
                  ACT OR UNLESS  REGISTERED  UNDER  THE 1933 ACT AND  APPLICABLE
                  STATE  SECURITIES  LAWS OR  UNLESS  THE  HOLDER  PROVIDES  THE
                  COMPANY WITH AN OPINION FROM COUNSEL ACCEPTABLE TO THE COMPANY
                  STATING THAT AN EXEMPTION  FROM  REGISTRATION  IS AVAILABLE AT
                  THE TIME OF SUCH TRANSFER. HEDGING TRANSACTIONS INVOLVING THIS
                  NOTE OR THE COMMON  SHARES  ISSUABLE  UPON  CONVERSION OF THIS
                  NOTE MAY NOT BE CONDUCTED  UNLESS IN COMPLIANCE  WITH THE 1933
                  ACT."

                           (h)  Communication  of  Offer.  The offer to sell the
Securities  was  directly  communicated  to the  Subscriber.  At no time was the
Subscriber  presented  with or solicited  by any leaflet,  newspaper or magazine
article,  radio  or  television  advertisement,  or any  other  form of  general
advertising  or solicited or invited to attend a promotional  meeting  otherwise
than in  connection  and  concurrently  with  such  communicated  offer.  To the
knowledge of the Subscriber, the offer to sell the Securities was not the result
of "directed  selling  efforts" (as that term is defined in Regulation S) by any
Distributor (as that term is defined in Regulation S) or any affiliate thereof.

                           (i)   Offshore   Transaction.    Subscriber   further
represents and warrants to Company as follows:

                                 (i)  Subscriber  is not,  and at the  time  the
offer to  purchase  the  Securities  was  made to  Subscriber  was not,  a "U.S.
Person", as that term is defined under Regulation S of the 1933 Act ("Regulation
S").

                                 (ii)   Subscriber  is  outside  of  the  United
States, as of the date of the execution of this Subscription Agreement.

                                 (iii)  No  resale  of  any  of  the  Securities
subscribed  for under this Agreement has been  pre-arranged  with a purchaser in
the United States.

                                 (iv)  Subscriber is not a Distributor  (as that
term is defined under  Regulation S) and is not purchasing  Securities  with the
intent of distributing  the Securities on behalf of the Company or a Distributor
or any of their  affiliates,  and to the knowledge of the Subscriber there is no
Distributor of the Securities.

                                       3
<PAGE>

                                 (v) Subscriber is purchasing the Securities for
its own  account  (and/or  for the  account of other  non-U.S.  Persons  who are
outside of the  United  States)  and not for the  account or benefit of any U.S.
Person.

                                 (vi) Subscriber  hereby covenants and agrees to
transfer or resell any of the Securities  only in accordance with the provisions
of Regulation S including,  without limitation,  Rules 902(c),  902(d),  902(g),
902(h),   902(k),   903(a),   903(b)(3)  and  903(b)(5)  thereof,   pursuant  to
registration  of the  Securities  under the 1933 Act or pursuant to an available
exemption from registration under the 1933 Act.

                                 (vii)  Subscriber  hereby  covenants and agrees
not to engage in hedging  transactions  with regard to the Securities  unless in
compliance with the 1933 Act.

                                 (viii)  The   certificates   representing   the
Securities will bear the legends in Sections 1(e), 1(f) and 1(g) above.

                           (j)  Correctness of  Representations.  The Subscriber
represents  that  the  foregoing  representations  and  warranties  are true and
correct as of the date hereof and, unless the Subscriber  otherwise notifies the
Company prior to the Closing Date (as  hereinafter  defined),  shall be true and
correct as of the Closing Date.  The foregoing  representations  and  warranties
shall survive the Closing Date.

                  2.  Company   Representations  and  Warranties.   The  Company
represents and warrants to and agrees with the Subscriber that:

                           (a) Due  Incorporation.  The  Company and each of its
subsidiaries  is a  corporation  duly  organized,  validly  existing and in good
standing under the laws of the respective  jurisdictions of their  incorporation
and have the requisite  corporate power to own their  properties and to carry on
their business as now being conducted.  The Company and each of its subsidiaries
is  duly  qualified  as a  foreign  corporation  to do  business  and is in good
standing in each  jurisdiction  where the nature of the  business  conducted  or
property  owned by it makes  such  qualification  necessary,  other  than  those
jurisdictions  in which the  failure  to so  qualify  would not have a  material
adverse effect on the business,  operations or prospects or condition (financial
or otherwise) of the Company.

                           (b)  Outstanding  Stock.  All issued and  outstanding
shares of capital  stock of the  Company and each of its  subsidiaries  has been
duly  authorized  and  validly  issued  and are fully  paid and  non-assessable.
Schedule 2(b) annexed hereto is a description  of the authorized  capitalization
of the Company  and the equity and rights to acquire  equity  outstanding  as of
July 31, 2000.

                           (c)  Authority;  Enforceability.  This  Agreement has
been duly  authorized,  executed and delivered by the Company and is a valid and
binding  agreement   enforceable  in  accordance  with  its  terms,  subject  to
bankruptcy,  insolvency,  fraudulent  transfer,  reorganization,  moratorium and
similar laws of general applicability relating to or affecting creditors' rights
generally  and to  general  principles  of  equity;  and the  Company  has  full
corporate  power and  authority  necessary to enter into this  Agreement  and to
perform its obligations  hereunder and all other agreements  entered into by the
Company relating hereto.

                           (d)  Additional  Issuances.  There are no outstanding
agreements or preemptive or similar rights  affecting the Company's common stock
or equity  and no  outstanding  rights,  warrants  or  options  to  acquire,  or
instruments   convertible   into  or   exchangeable   for,  or   agreements   or
understandings  with  respect  to the sale or  issuance  of any shares of common
stock  or  equity  of  the  Company  or  other  equity  interest  in  any of the
subsidiaries of the Company, except as described in the Reports or Other Written
Information.

                                       4
<PAGE>

                           (e) Consents. No consent, approval,  authorization or
order  of  any  court,   governmental   agency  or  body  or  arbitrator  having
jurisdiction over the Company, or any of its affiliates, the NASD, NASDAQ or the
Company's  Shareholders  is required for  execution of this  Agreement,  and all
other  agreements  entered  into by the  Company  relating  thereto,  including,
without limitation  issuance and sale of the Securities,  and the performance of
the Company's obligations hereunder.

                           (f)  No   Violation   or   Conflict.   Assuming   the
representations  and  warranties  of the  Subscriber in Paragraph 1 are true and
correct and the Subscriber  complies with its obligations  under this Agreement,
neither the  issuance  and sale of the  Securities  nor the  performance  of its
obligations  under this Agreement and all other  agreements  entered into by the
Company relating thereto by the Company will:

                                 (i) violate,  conflict with, result in a breach
of, or  constitute a default (or an event which with the giving of notice or the
lapse of time or both would be reasonably  likely to constitute a default) under
(A) the  articles of  incorporation,  charter or bylaws of the Company or any of
its affiliates,  (B) to the Company's knowledge,  any decree,  judgment,  order,
law, treaty, rule, regulation or determination  applicable to the Company or any
of its  affiliates  of any court,  governmental  agency or body,  or  arbitrator
having  jurisdiction  over  the  Company  or any of its  affiliates  or over the
properties  or  assets  of the  Company  or any of its  affiliates  except as to
foreign law applicable to the Subscriber,  (C) the terms of any bond, debenture,
note or any other evidence of  indebtedness,  or any agreement,  stock option or
other  similar  plan,  indenture,  lease,  mortgage,  deed  of  trust  or  other
instrument to which the Company or any of its  affiliates  is a party,  by which
the Company or any of its affiliates is bound, or to which any of the properties
of the  Company or any of its  affiliates  is  subject,  or (D) the terms of any
"lock-up" or similar provision of any underwriting or similar agreement to which
the Company, or any of its affiliates is a party; or

                                 (ii) result in the  creation or  imposition  of
any lien,  charge or encumbrance upon the Securities or any of the assets of the
Company, or any of its affiliates.

                           (g) The Securities. The Securities upon issuance:

                                 (i)  are,  or will be,  free  and  clear of any
security interests, liens, claims or other encumbrances, subject to restrictions
upon transfer under the 1933 Act and State laws;

                                 (ii) have been,  or will be,  duly and  validly
authorized  and on the date of issuance and on the Closing Date, as  hereinafter
defined, and the date the Note is converted, and the Warrants are exercised, the
Securities will be duly and validly issued, fully paid and nonassessable (and if
registered  pursuant  to the 1933  Act,  and  resold  pursuant  to an  effective
registration statement will be free trading and unrestricted,  provided that the
Subscriber complies with the Prospectus delivery requirements);

                                 (iii)  will not  have  been  issued  or sold in
violation  of any  preemptive  or other  similar  rights of the  holders  of any
securities of the Company;

                                 (iv) will not subject  the  holders  thereof to
personal liability by reason of being such holders; and

                           (h) Litigation.  Except as set forth in Schedule 2(h)
hereto, there is no pending or, to the best knowledge of the Company, threatened
action, suit, proceeding or investigation before any court,  governmental agency
or body,  or  arbitrator  having  jurisdiction  over the Company,  or any of its
affiliates  that would affect the execution by the Company or the performance by
the Company of its obligations  under this Agreement,  and all other  agreements
entered into by the Company relating hereto.

                                       5
<PAGE>

                           (i)  Disability.  The Company has no knowledge of any
impediment, nor is there any present impediment which would or could prevent the
Company  from  becoming a fully  reporting  company with a class of common stock
registered  pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "1934 Act").

                           (j) No  Market  Manipulation.  The  Company  has  not
taken,  and will not take,  directly or indirectly,  any action  designed to, or
that might  reasonably  be  expected  to,  cause or result in  stabilization  or
manipulation  of the price of the common stock of the Company to facilitate  the
sale or resale of the Securities or affect the price at which the Securities may
be issued.

                           (k) Information  Concerning Company.  The Reports and
Other  Written  Information  contain all  material  information  relating to the
Company and its operations and financial  condition as of their respective dates
which  information  is required to be disclosed  therein.  Since the date of the
financial  statements  included  in the  Reports,  and except as modified in the
Other  Written  Information,  there has been no material  adverse  change in the
Company's business, financial condition or affairs not disclosed in the Reports.
The Reports and Other Written Information 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 not misleading.

                           (l)  Dilution.  The  number of Shares  issuable  upon
conversion  of the Note may  increase  substantially  in certain  circumstances,
including,  but not necessarily limited to, the circumstance wherein the trading
price  of the  Common  Stock  declines  prior to  conversion  of the  Note.  The
Company's executive officers and directors have studied and fully understand the
nature of the  Securities  being  sold  hereby  and  recognize  that they have a
potential  dilutive effect. The board of directors of the Company has concluded,
in its good faith business judgment, that such issuance is in the best interests
of the Company.  The Company  specifically  acknowledges  that its obligation to
issue the Shares upon  conversion  of the Note and  exercise of the  Warrants is
binding upon the Company and enforceable,  except as otherwise described in this
Subscription Agreement or the Note, regardless of the dilution such issuance may
have on the ownership interests of other shareholders of the Company.

                           (m)Stop  Transfer.   The  Securities  are  restricted
securities as of the date of this Agreement. The Company will not issue any stop
transfer  order or other order  impeding the sale and delivery of the Securities
at such time as the  Securities  are  registered for public sale or an exemption
from registration is available.

                           (n)  Defaults.  Neither  the  Company  nor any of its
subsidiaries is in violation of its Articles of Incorporation or ByLaws. Neither
the Company nor any of its  subsidiaries is (i) in default under or in violation
of any other material agreement or instrument to which it is a party or by which
it or any of its  properties  are bound or affected,  which default or violation
would have a  material  adverse  effect on the  Company,  (ii) in  default  with
respect to any order of any court, arbitrator or governmental body or subject to
or party to any order of any court or governmental  authority arising out of any
action, suit or proceeding under any statute or other law respecting  antitrust,
monopoly, restraint of trade, unfair competition or similar matters, or (iii) to
its  knowledge  in  violation  of  any  statute,   rule  or  regulation  of  any
governmental  authority which violation would have a material  adverse effect on
the Company.

                           (o) No Integrated Offering.  Neither the Company, nor
any of its  affiliates,  nor any  person  acting  on its or  their  behalf,  has
directly or indirectly made any offers or sales of any security or solicited any
offers to buy any security under  circumstances that would cause the offering of
the Securities  pursuant to this Agreement to be integrated with prior offerings
by the Company for purposes of the 1933

                                       6
<PAGE>

Act which would prevent the Company from selling the  Securities  under the 1933
Act, or any applicable  exchange-related  stockholder approval  provisions.  Nor
will the Company or any of its  affiliates  or  subsidiaries  take any action or
steps that would cause the  offering of the  Securities  to be  integrated  with
other offerings.

                           (p) No General Solicitation. Neither the Company, nor
any of its affiliates,  nor to its knowledge,  any person acting on its or their
behalf, has engaged in any form of general  solicitation or general  advertising
(within the meaning of Regulation D under the Act) in connection  with the offer
or sale of the Securities.

                           (q) Listing. The Company's Common Stock is listed for
trading on the OTC Pink Sheets ("Pink  Sheets") and  satisfies all  requirements
for the  continuation  of such listing.  The Company has not received any notice
that its common  stock will be delisted  from the Pink Sheets or that the Common
Stock does not meet all requirements for the continuation of such listing.

                           (r)  Offshore   Transaction.   The  Company   further
represents and warrants to Subscriber as follows:

                                 (i) The  Company is not a  reporting  issuer as
defined by Rule 902 of Regulation S.

                                 (ii) The Company has not offered the Securities
to any  person  in the  United  States  or to any U.S.  Person  (as that term is
defined in Regulation S).

                                 (iii) In  connection  with the  offering of the
Securities,  the Company has not engaged in any "directed  selling  efforts" (as
that term is defined in Regulation S) nor has the Company  conducted any general
solicitation  relating to the  offering of the  Securities  to persons  residing
within  the  United  States or to U.S.  Persons  (as that  terms is  defined  in
Regulation S).

                                 (iv) The Company is not a Distributor  (as that
term is defined under  Regulation S) and is not issuing the Securities  with the
intent of  distributing  the  Securities  on behalf  of any  Distributor  or any
affiliate  thereof,  and to the knowledge of the Company there is no Distributor
of the Securities.

                                 (v) Pursuant to Rule 903(c)(3)(iii)(B)(4) under
the 1933 Act,  the Company  hereby  agrees for the benefit of all holders of the
Securities  that it will refuse to register any transfer of the  Securities  not
made in accordance  with the  provisions  of Regulation S and this  Subscription
Agreement.

                           (s)  Correctness  of  Representations.   The  Company
represents  that  the  foregoing  representations  and  warranties  are true and
correct as of the date hereof in all material respects, will be true and correct
as of  the  Closing  Date,  and,  unless  the  Company  otherwise  notifies  the
Subscriber  prior to the Closing Date, shall be true and correct in all material
respects as of the Closing Date.  The foregoing  representations  and warranties
shall survive the Closing Date.

                  3. Regulation S Offering. This Offering is being made pursuant
to the exemption  from the  registration  provisions of the 1933 Act afforded by
Regulation  S  promulgated  thereunder.  On the Closing  Date,  the Company will
provide an opinion  acceptable  to Subscriber  from the Company's  legal counsel
opining on the  availability  of the Regulation S exemption as it relates to the
offer and  issuance of the  Securities.  A form of the legal  opinion is annexed
hereto as Exhibit C. The Company will provide,  at

                                       7
<PAGE>

the Company's expense, such other legal opinions in the future as are reasonably
necessary for the conversion of the Note and exercise of the Warrants.

                  4.  Reissuance of  Securities.  The Company  agrees to reissue
certificates  representing  the  Securities  without  the  legends  set forth in
Sections 1(e) and 1(f) above at such time as (a) the holder thereof is permitted
to dispose of such Securities pursuant to Rule 144(k) under the Act, or (b) upon
resale subject to an effective  registration  statement after the Securities are
registered under the Act. The Company agrees to cooperate with the Subscriber in
connection with all resales  pursuant to Rule 144(d) and Rule 144(k) and provide
legal  opinions  necessary  to allow such  resales  provided the Company and its
counsel receive  reasonably  requested  representations  from the Subscriber and
selling broker, if any.

                  5.  Redemption.  The  Company  may not redeem  the  Securities
without  the  consent  of the  holder  of the  Securities  except  as  otherwise
described herein.

                  6. Fees/Warrants.

                           (a)  The   Company   shall  pay  to  counsel  to  the
Subscriber  its fee of  $17,000  ($8,500  of which has  already  been  paid) for
services   rendered  to  Subscribers  in  reviewing  this  Agreement  and  other
Subscription  Agreements  for aggregate  subscription  amounts of up to $500,000
(the "Initial  Offering"),  and acting as escrow agent for the Initial Offering.
The  Company  will  pay a cash fee in the  amount  of ten  percent  (10%) of the
Purchase  Price and Put Purchase  Price  designated on the signature page hereto
("Finder's  Fee") and of the actual  cash  proceeds  received  by the Company in
connection  with the  exercise of the  Warrants  issued in  connection  with the
Initial Offering  ("Initial  Warrants") and Warrants issuable in connection with
the Put  ("Put  Warrants")  ("Warrant  Exercise  Compensation")  to the  Finders
identified  on Schedule B hereto.  Collectively,  the Initial  Warrants  and Put
Warrants are referred to herein as Warrants.  The Finder's Fee must be paid each
Closing Date and Put Closing Date.  The Warrant  Exercise  Compensation  must be
paid  within ten (10) days of Warrant  exercise  to the  Finders  identified  on
Schedule B hereto.  The Finder's Fee and legal fees will be payable out of funds
held  pursuant to a Funds  Escrow  Agreement  to be entered into by the Company,
Subscriber and an Escrow Agent.

                           (b) The  Company  will also issue and  deliver to the
Warrant  Recipients,  Warrants in the amounts designated on Schedule B hereto in
connection with the Initial  Offering and exercise of the Put. A form of Warrant
is annexed hereto as Exhibit D. The per share  "Purchase  Price" of Common Stock
as defined in the  Warrant  shall be equal to the lowest bid price of the Common
Stock as  reported  on the Pink  Sheets,  the NASD OTC  Bulletin  Board,  NASDAQ
SmallCap Market, NASDAQ National Market System,  American Stock Exchange, or New
York Stock  Exchange  (whichever  of the  foregoing is at the time the principal
trading  exchange or market for the Common Stock,  the "Principal  Market"),  or
such other  principal  market or  exchange  where the Common  Stock is listed or
traded for the ten (10) trading days  preceding  but not  including  the Closing
Date or Put Closing  Date,  as the case may be. The  aggregate  number of Common
Shares  purchasable  upon  exercise of the Initial  Warrants and Put Warrants is
equal to 12% of the Common  Shares  issued upon  conversion of the Notes and Put
Notes.  The Warrants  must be delivered no later than the Delivery Date (defined
in Section  9.1(b) hereof) in relation to the relevant  Conversion  Date. In the
event the Notes issued in the Initial Offering are not fully converted as of the
Maturity Date of the Notes, then at the election of each Warrant Recipient,  the
Maturity  Date (as  defined in the Note) shall be deemed a  Conversion  Date (as
defined in the Note) and the  Conversion  Price (as defined in the Note) will be
deemed to be 78% of the  average of the three  lowest  closing bid prices of the
Common  Stock as  reported  by the  Principal  Market for the ten  trading  days
preceding  but not including the Maturity  Date.  Failure to timely  deliver the
Finder's Fee, Warrant  Exercise  Compensation or the Warrants shall be deemed an
Event of Default as defined in Article III of the Note and Put Note.

                                       8
<PAGE>

                           (c) The  Finder's  Fee and legal fees will be paid to
the Finders and attorneys  only when,  as, and if a  corresponding  subscription
amount  is  released  from  escrow  to the  Company.  All  the  representations,
covenants, warranties, undertakings, and indemnification, other rights including
but not limited to registration  rights, and rights in Section 9 hereof, made or
granted to or for the benefit of the Subscriber are hereby also made and granted
to the Warrant Recipients in respect of the Warrants and Company Shares issuable
upon exercise of the Warrants.

                  7.1.  Covenants  of the  Company.  The Company  covenants  and
agrees with the Subscriber as follows:

                           (a) The Company will advise the Subscriber,  promptly
after it receives notice of issuance by the Securities and Exchange  Commission,
any state securities  commission or any other  regulatory  authority of any stop
order or of any order preventing or suspending any offering of any securities of
the Company,  or of the suspension of the  qualification  of the Common Stock of
the Company for offering or sale in any  jurisdiction,  or the initiation of any
proceeding for any such purpose.

                           (b) The Company shall promptly  secure the listing of
the Company Shares,  and Common Stock issuable upon the exercise of the Warrants
upon each national securities  exchange,  or automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official notice of
issuance) and shall  maintain such listing so long as any other shares of Common
Stock shall be so listed.  The Company will use its best efforts to maintain the
listing  of its  Common  Stock on a  Principal  Market,  and will  comply in all
respects with the Company's  reporting,  filing and other  obligations under the
bylaws or rules of the National  Association of Securities  Dealers ("NASD") and
such exchanges, as applicable. The Company will provide the Subscriber copies of
all  notices it receives  notifying  the  Company of the  threatened  and actual
delisting of the Common Stock from any Principal Market.

                           (c) The  Company  shall  notify  the  SEC,  NASD  and
applicable  state  authorities,  in accordance with their  requirements,  of the
transactions  contemplated by this Agreement, and shall take all other necessary
action and  proceedings as may be required and permitted by applicable law, rule
and  regulation,  for the legal  and valid  issuance  of the  Securities  to the
Subscriber and promptly provide copies thereof to Subscriber.

                           (d)  Until  at  least   two  (2)   years   after  the
effectiveness  of  the  Registration  Statement  on  Form  SB-2  or  such  other
Registration  Statement  described in Section 10.1(iv) hereof,  the Company will
(i) cause its Common Stock to continue to be registered  under Sections 12(b) or
12(g) of the Exchange  Act,  (ii) comply in all respects  with its reporting and
filing  obligations  under the Exchange  Act,  (iii)  comply with all  reporting
requirements  that is applicable to an issuer with a class of Shares  registered
pursuant  to  Section  12(g)  of the  Exchange  Act,  and (iv)  comply  with all
requirements  related  to any  registration  statement  filed  pursuant  to this
Agreement. The Company will not take any action or file any document (whether or
not  permitted  by the  Act or the  Exchange  Act or the  rules  thereunder)  to
terminate or suspend such  registration or to terminate or suspend its reporting
and  filing  obligations  under  said Acts  until the later of (y) two (2) years
after the  effective  date of the  Registration  Statement  on Form SB-2 or such
other  Registration  Statement  described in Section 10.1(iv) hereof, or (z) the
sale by the  Subscribers  of all the  Company  Shares  issuable  by the  Company
pursuant to this Agreement. Until at least two (2) years after the Warrants have
been exercised, the Company will use its commercial best efforts to initiate the
listing of the Common  Stock on the NASD OTC  Bulletin  Board and will comply in
all respects with the Company's  reporting,  filing and other  obligations under
the bylaws or rules of the NASD and NASDAQ.

                           (e) The Company undertakes to use the proceeds of the
Subscriber's funds for working capital and expenses of this offering.

                                       9
<PAGE>

                  8.       Covenants of the Company and Subscriber Regarding
                           -------------------------------------------------
                           Indemnification.
                           ----------------

                           (a) The Company  agrees to indemnify,  hold harmless,
reimburse  and defend  Subscriber,  Subscriber's  officers,  directors,  agents,
affiliates,  control  persons,  and principal  shareholders,  against any claim,
cost, expense, liability, obligation, loss or damage (including reasonable legal
fees) of any  nature,  incurred by or imposed  upon  Subscriber  which  results,
arises out of or is based upon (i) any misrepresentation by Company or breach of
any  warranty  by Company in this  Agreement  or in any  Exhibits  or  Schedules
attached hereto, or Reports or other Written Information;  or (ii) any breach or
default in performance by Company of any covenant or undertaking to be performed
by Company  hereunder,  or any other  agreement  entered into by the Company and
Subscribers relating hereto.

                           (b)  Subscriber  agrees to indemnify,  hold harmless,
reimburse and defend the Company at all times against any claim, cost,  expense,
liability,  obligation,  loss or damage (including reasonable legal fees) of any
nature,  incurred by or imposed upon the Company which results, arises out of or
is based upon (a) any  misrepresentation  by Subscriber in this  Agreement or in
any  Exhibits  or  Schedules  attached  hereto;  or (b) any breach or default in
performance  by  Subscriber  of any covenant or  undertaking  to be performed by
Subscriber  hereunder,  or any other  agreement  entered into by the Company and
Subscribers relating hereto.

                           (c) The  procedures  set forth in Section  10.6 shall
apply to the indemnifications set forth in Sections 8(a) and 8(b) above.

                  9.1.     Conversion of Note.
                           ------------------

                           (a) Upon the  conversion of the Note or part thereof,
the  Company  shall,  at its own cost and  expense,  take all  necessary  action
(including  the issuance of an opinion of counsel) to assure that the  Company's
transfer agent shall issue stock  certificates in the name of Subscriber (or its
nominee)  or  such  other  persons  as  designated  by  Subscriber  and in  such
denominations to be specified at conversion representing the number of shares of
common  stock  issuable  upon such  conversion.  The  Company  warrants  that no
instructions  other  than these  instructions  have been or will be given to the
transfer  agent of the  Company's  Common  Stock  and that  the  Shares  will be
unlegended, free-trading, and freely transferable, and will not contain a legend
restricting  the resale or  transferability  of the Company Shares  provided the
Subscriber has notified the Company of Subscriber's intention to sell the Shares
and the  Shares are  included  in an  effective  registration  statement  or are
otherwise exempt from registration when sold.

                           b.  Subscriber  will give  notice of its  decision to
exercise  its  right to  convert  the Note or part  thereof  by  telecopying  an
executed and completed  Notice of  conversion  ("Notice of  Conversion")  to the
Company.  The  Subscriber  will not be required to surrender  the Note until the
Note has been  fully  converted  or  satisfied.  Each  date on which a Notice of
Conversion is telecopied to the Company in accordance with the provisions hereof
shall be deemed a Conversion  Date. The Company will or cause the transfer agent
to transmit the  Company's  Common Stock  certificates  representing  the Shares
issuable upon conversion of the Note (and a Note representing the balance of the
Note not so converted, if requested by Subscriber) to the Subscriber via express
courier for receipt by such  Subscriber  within five business days after receipt
by the Company of the Notice of Conversion (the "Delivery  Date"). To the extent
that a  Subscriber  elects not to surrender a Note for  reissuance  upon partial
payment or conversion, the Subscriber hereby indemnifies the Company against any
and all loss or  damage  attributable  to a  third-party  claim in an  amount in
excess of the actual amount then due under the Note.

                                       10
<PAGE>

                           c.  The  Company  understands  that  a  delay  in the
delivery of the Shares in the form required pursuant to Section 9 hereof, or the
Mandatory Redemption Amount described in Section 9.2 hereof, beyond the Delivery
Date or Mandatory  Redemption Payment Date (as hereinafter defined) could result
in economic loss to the  Subscriber.  As compensation to the Subscriber for such
loss,  the  Company  agrees  to pay late  payments  to the  Subscriber  for late
issuance  of Shares  in the form  required  pursuant  to  Section 9 hereof  upon
conversion of the Note or late payment of the Mandatory  Redemption  Amount,  in
the  amount  of $100 per  business  day  after the  Delivery  Date or  Mandatory
Redemption  Payment Date, as the case may be, for each $10,000 of Note principal
amount being converted or redeemed.  The Company shall pay any payments incurred
under this Section in immediately available funds upon demand.  Furthermore,  in
addition to any other remedies which may be available to the Subscriber,  in the
event that the Company fails for any reason to effect  delivery of the Shares by
the Delivery Date or make payment by the Mandatory  Redemption Payment Date, the
Subscriber  will be  entitled  to revoke all or part of the  relevant  Notice of
Conversion  or rescind  all or part of the  notice of  Mandatory  Redemption  by
delivery of a notice to such effect to the Company whereupon the Company and the
Subscriber  shall each be restored  to their  respective  positions  immediately
prior to the delivery of such notice, except that late payment charges described
above shall be payable  through the date notice of  revocation  or rescission is
given to the Company.

                           d.  Nothing  contained  herein  or  in  any  document
referred  to herein  or  delivered  in  connection  herewith  shall be deemed to
establish  or require  the  payment of a rate of  interest  or other  charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest or dividends  required to be paid or other charges hereunder exceed the
maximum  permitted by such law, any payments in excess of such maximum  shall be
credited against amounts owed by the Company to the Subscriber and thus refunded
to the Company.

                  9.2.  Mandatory  Redemption.  In the event the Company may not
issue Shares on a Delivery Date or at any time when the Note is convertible, for
any reason,  then at the  Subscriber's  election,  the  Company  must pay to the
Subscriber  five (5) business  days after  request by the  Subscriber  or on the
Delivery  Date (if  requested by the  Subscriber)  a sum of money  determined by
multiplying  the principal of the Note not  convertible  by 130%,  together with
accrued  but unpaid  interest  thereon  ("Mandatory  Redemption  Payment").  The
Mandatory Redemption Payment must be received by the Subscriber on the same date
as the Company  Shares  otherwise  deliverable  or within five (5) business days
after request,  whichever is sooner ("Mandatory  Redemption Payment Date"). Upon
receipt of the Mandatory  Redemption  Payment,  the corresponding Note principal
and interest will be deemed paid and no longer outstanding.

                  9.3. Maximum Conversion.  The Subscriber shall not be entitled
to convert on a Conversion  Date that amount of the Note in connection with that
number of shares of Common  Stock which would be in excess of the sum of (i) the
number of shares of Common Stock  beneficially  owned by the  Subscriber and its
affiliates on a Conversion  Date,  and (ii) the number of shares of Common Stock
issuable upon the conversion of the Note with respect to which the determination
of this  proviso is being  made on a  Conversion  Date,  which  would  result in
beneficial  ownership by the Subscriber and its affiliates of more than 4.99% of
the outstanding  shares of Common Stock of the Company on such Conversion  Date.
For  the  purposes  of  the  proviso  to  the  immediately  preceding  sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities  Exchange Act of 1934, as amended,  and Regulation 13d-3  thereunder.
Subject to the  foregoing,  the  Subscriber  shall not be  limited to  aggregate
conversions of only 4.99%.  The  Subscriber  may void the conversion  limitation
described  in this  Section 9.3 upon 75 days prior  notice to the  Company.  The
Subscriber may allocate  which of the equity of the Company deemed  beneficially
owned by the Subscriber  shall be included in the 4.99% amount  described  above
and which shall be allocated to the excess above 4.99%.

                                       11
<PAGE>

                  9.4.  Injunction - Posting of Bond.  In the event a Subscriber
shall  elect to  convert a Note or part  thereof,  the  Company  may not  refuse
conversion  based on any claim that such  Subscriber  or any one  associated  or
affiliated  with such  Subscriber  has been  engaged  in any  violation  of law,
unless,  an injunction  from a court,  on notice,  restraining  and or enjoining
conversion  of all or part of said Note shall have been sought and  obtained and
the Company posts a surety bond for the benefit of such Subscriber in the amount
of 130% of the amount of the Note,  which is subject  to the  injunction,  which
bond shall remain in effect until the  completion of  arbitration/litigation  of
the dispute and the proceeds of which shall be payable to such Subscriber to the
extent it obtains judgment.

                  9.5. Buy-In.  In addition to any other rights available to the
Subscriber,  if the  Company  fails to deliver  to the  Subscriber  such  shares
issuable  upon  conversion  of a Note by the  Delivery  Date  and if  after  the
Delivery  Date  the  Subscriber  purchases  (in an open  market  transaction  or
otherwise)  shares of Common Stock to deliver in  satisfaction of a sale by such
Subscriber of the Common Stock which the Subscriber  anticipated  receiving upon
such  conversion  (a  "Buy-In"),  then  the  Company  shall  pay in  cash to the
Subscriber  (in  addition  to  any  remedies  available  to or  elected  by  the
Subscriber)  the  amount  by which (A) the  Subscriber's  total  purchase  price
(including  brokerage  commissions,  if any) for the  shares of Common  Stock so
purchased exceeds (B) the aggregate principal and/or interest amount of the Note
for which such conversion was not timely honored, together with interest thereon
at a rate of 15% per annum,  accruing until such amount and any accrued interest
thereon is paid in full (which  amount shall be paid as  liquidated  damages and
not as a penalty).  For example,  if the Subscriber  purchases  shares of Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
an  attempted  conversion  of $10,000 of note  principal  and/or  interest,  the
Company  shall be required to pay the  Subscriber  $1,000,  plus  interest.  The
Subscriber  shall  provide the Company  written  notice  indicating  the amounts
payable to the Subscriber in respect of the Buy-In.

                  10.1.  Registration  Rights.  The  Company  hereby  grants the
following registration rights to holders of the Securities.

                                 (i) On one  occasion,  for a period  commencing
151 days  after the  Closing  Date,  but not later than  three  years  after the
Closing Date ("Request Date"), the Company, upon a written request therefor from
any record  holder or holders of more than 50% of the aggregate of the Company's
Shares issued and issuable  upon  conversion of the Note and the Put Notes which
are actually  issued (the  Securities,  Put Securities and securities  issued or
issuable by virtue of ownership of the Securities,  and Put  Securities,  being,
the  "Registrable   Securities"),   shall  prepare  and  file  with  the  SEC  a
registration  statement under the Act covering the Registrable  Securities which
are the subject of such  request,  unless such  Registrable  Securities  are the
subject of an effective registration statement. In addition, upon the receipt of
such request, the Company shall promptly give written notice to all other record
holders of the Registrable  Securities that such registration statement is to be
filed and shall include in such registration  statement  Registrable  Securities
for which it has  received  written  requests  within 10 days after the  Company
gives such written notice.  Such other requesting record holders shall be deemed
to have exercised their demand registration right under this Section 10.1(i). As
a condition  precedent to the inclusion of  Registrable  Securities,  the holder
thereof  shall  provide  the  Company  with  such  information  as  the  Company
reasonably  requests.  The obligation of the Company under this Section  10.1(i)
shall be limited to one registration statement.

                                 (ii) If the  Company  at any time  proposes  to
register any of its securities under the Act for sale to the public, whether for
its own account or for the  account of other  security  holders or both,  except
with respect to  registration  statements  on Forms S-4, S-8 or another form not
available for  registering  the  Registrable  Securities for sale to the public,
provided the Registrable  Securities are not otherwise  registered for resale by
the Subscriber or Holder pursuant to an effective registration  statement,  each
such  time it will give at least 30 days'  prior  written  notice to the  record
holder of the Registrable Securities of its

                                       12
<PAGE>

intention  so to do.  Upon the written  request of the  holder,  received by the
Company  within 30 days after the giving of any such notice by the  Company,  to
register  any of  the  Registrable  Securities,  the  Company  will  cause  such
Registrable  Securities as to which registration shall have been so requested to
be included  with the  securities  to be covered by the  registration  statement
proposed to be filed by the  Company,  all to the extent  required to permit the
sale or other  disposition  of the  Registrable  Securities so registered by the
holder of such  Registrable  Securities  (the  "Seller").  In the event that any
registration pursuant to this Section 10.1(ii) shall be, in whole or in part, an
underwritten  public  offering  of common  stock of the  Company,  the number of
shares of Registrable  Securities to be included in such an underwriting  may be
reduced by the  managing  underwriter  if and to the extent that the Company and
the  underwriter  shall  reasonably be of the opinion that such inclusion  would
adversely  affect the  marketing  of the  securities  to be sold by the  Company
therein; provided,  however, that the Company shall notify the Seller in writing
of any such reduction.  Notwithstanding the forgoing provisions, or Section 10.4
hereof,  the Company may withdraw or delay or suffer a delay of any registration
statement  referred to in this Section  10.1(ii)  without thereby  incurring any
liability to the Seller.

                                 (iii) If, at the time any  written  request for
registration is received by the Company pursuant to Section 10.1(i), the Company
has  determined  to  proceed  with  the  actual  preparation  and  filing  of  a
registration  statement under the 1933 Act in connection with the proposed offer
and sale for cash of any of its securities  for the Company's own account,  such
written request shall be deemed to have been given pursuant to Section  10.1(ii)
rather  than  Section  10.1(i),  and the rights of the  holders  of  Registrable
Securities covered by such written request shall be governed by Section 10.1(ii)
except  that  the  Company  or  underwriter,  if  any,  may  not  withdraw  such
registration  or limit the amount of  Registrable  Securities  included  in such
registration.

                                 (iv) The Company shall file with the Commission
within 90 days of the Closing Date (the "Filing  Date"),  and use its reasonable
commercial  efforts to cause to be declared  effective a Form SB-2  registration
statement (or such other form that it is eligible to use) within 150 days of the
Closing  Date in order to register  the  Registrable  Securities  for resale and
distribution  under  the  Act.  The  registration  statement  described  in this
paragraph must be declared  effective by the  Commission  within 150 days of the
Closing Date (as defined herein)  ("Effective  Date"). The Company will register
not  less  than  45,000,000  shares  of  Common  Stock  in  the   aforedescribed
registration  statement  of  which  not less  than  33,000,000  Shares  shall be
reserved for issuance upon  conversion of the Notes and exercise of the Warrants
issuable in connection with the Notes and the remaining  registered Shares shall
be reserved for issuance  upon  conversion  of the Put Notes and exercise of the
Warrants  issuable in connection with the Put Notes. The Registrable  Securities
shall be reserved and set aside  exclusively  for the benefit of the  Subscriber
and Warrant Recipients, as the case may be, and not issued, employed or reserved
for anyone other than the Subscriber and Warrant  Recipients.  Such registration
statement will be promptly amended or additional registration statements will be
promptly filed by the Company as necessary to register additional Company Shares
to allow the public  resale of all Common  Stock  included  in and  issuable  by
virtue of the  Registrable  Securities.  No securities of the Company other than
the  Registrable  Securities  will be  included  in the  registration  statement
described in this Section 10.1(iv).

                  10.2. Registration Procedures.  If and whenever the Company is
required by the provisions  hereof to effect the  registration  of any shares of
Registrable  Securities  under the Act, the Company  will, as  expeditiously  as
possible:

                           (a)   prepare   and  file  with  the   Commission   a
registration  statement with respect to such securities and use its best efforts
to cause such  registration  statement  to become and remain  effective  for the
period of the distribution contemplated thereby (determined as herein provided),
and  promptly  provide to the holders of  Registrable  Securities  copies of all
filings and Commission letters of comment;

                                       13
<PAGE>

                           (b)  prepare  and  file  with  the  Commission   such
amendments  and  supplements to such  registration  statement and the prospectus
used in  connection  therewith  as may be  necessary  to keep such  registration
statement  effective  until the  latest  of:  (i) six  months  after the  latest
exercise  period of the Warrants;  (ii) twelve months after the Maturity Date of
the Note or Put Note; or (iii) two years after the Closing Date, and comply with
the  provisions  of  the  Act  with  respect  to the  disposition  of all of the
Registrable Securities covered by such registration statement in accordance with
the  Seller's  intended  method of  disposition  set forth in such  registration
statement for such period;

                           (c) furnish to the Seller, and to each underwriter if
any,  such number of copies of the  registration  statement  and the  prospectus
included  therein  (including  each  preliminary  prospectus)  as  such  persons
reasonably  may  request  in  order  to  facilitate  the  public  sale or  their
disposition of the securities covered by such registration statement;

                           (d) use its best  efforts to  register or qualify the
Seller's Registrable Securities covered by such registration statement under the
securities  or "blue  sky" laws of such  jurisdictions  as the Seller and in the
case  of  an  underwritten  public  offering,  the  managing  underwriter  shall
reasonably request,  provided,  however, that the Company shall not for any such
purpose be  required  to qualify  generally  to  transact  business as a foreign
corporation  in any  jurisdiction  where it is not so qualified or to consent to
general service of process in any such jurisdiction;

                           (e) list the Registrable  Securities  covered by such
registration statement with any securities exchange on which the Common Stock of
the Company is then listed;

                           (f)   immediately   notify   the   Seller   and  each
underwriter  under such  registration  statement  at any time when a  prospectus
relating  thereto is required to be delivered under the Act, of the happening of
any event of which the Company has knowledge as a result of which the prospectus
contained in such registration  statement, as then in effect, includes an untrue
statement of a material  fact or omits to state a material  fact  required to be
stated  therein or necessary to make the  statements  therein not  misleading in
light of the circumstances then existing;

                           (g) make available for inspection by the Seller,  any
underwriter  participating  in any  distribution  pursuant to such  registration
statement, and any attorney, accountant or other agent retained by the Seller or
underwriter,  all  publicly  available,  non-confidential  financial  and  other
records,  pertinent corporate documents and properties of the Company, and cause
the  Company's  officers,   directors  and  employees  to  supply  all  publicly
available,  non-confidential  information  reasonably  requested  by the seller,
underwriter,  attorney, accountant or agent in connection with such registration
statement.

                  10.3. Provision of Documents.

                           (a) At the request of the  Seller,  provided a demand
for  registration  has been made  pursuant  to Section  10.1(i) or a request for
registration  has been  made  pursuant  to  Section  10.1(ii),  the  Registrable
Securities  will be included in a registration  statement filed pursuant to this
Section 10.

                           (b) In connection with each  registration  hereunder,
the  Seller  will  furnish  to the  Company  in  writing  such  information  and
representation  letters with respect to itself and the proposed  distribution by
it as reasonably  shall be necessary in order to assure  compliance with federal
and  applicable  state  securities  laws. In connection  with each  registration
pursuant  to  Section  10.1(i)  or  10.1(ii)  covering  an  underwritten  public
offering,  the  Company and the Seller  agree to enter into a written  agreement
with the managing underwriter in such form and containing such provisions as are
customary  in the  securities

                                       14
<PAGE>

business for such an arrangement  between such  underwriter and companies of the
Company's size and investment stature.

                  10.4.  Non-Registration Events. The Company and the Subscriber
agree that the Seller will suffer damages if any registration statement required
under  Section  10.1(i)  or  10.1(ii)  above is not filed  within 90 days  after
written  request by the  Holder and not  declared  effective  by the  Commission
within 150 days after such  request  [or the  Filing  Date and  Effective  Date,
respectively,  in reference to the  Registration  Statement on Form SB-2 or such
other form  described in Section  10.1(iv)],  and  maintained  in the manner and
within the time periods  contemplated by Section 10 hereof,  and it would not be
feasible to ascertain the extent of such damages with precision. Accordingly, if
(i) the Registration  Statement described in Sections 10.1(i) or 10.1(ii) is not
filed within 90 days of such written  request,  or is not declared  effective by
the  Commission on or prior to the date that is 120 days after such request,  or
(ii) the  registration  statement  on Form SB-2 or such other form  described in
Section  10.1(iv)  is not filed on or before  the  Filing  Date or not  declared
effective on or before the sooner of the Effective  Date, or within five days of
receipt  by  the  Company  of a  communication  from  the  Commission  that  the
registration  statement  described in Section 10.1(iv) will not be reviewed,  or
(iii) any  registration  statement  described in Sections  10.1(i),  10.1(ii) or
10.1(iv)  is filed  and  declared  effective  but shall  thereafter  cease to be
effective  (without being  succeeded  immediately by an additional  registration
statement filed and declared  effective) for a period of time which shall exceed
30 days in the aggregate per year but not more than 20 consecutive calendar days
(defined  as a period  of 365  days  commencing  on the  date  the  Registration
Statement is declared  effective)  (each such event  referred to in clauses (i),
(ii) and (iii) of this Section 10.4 is referred to herein as a "Non-Registration
Event"),  then, for so long as such Non-Registration  Event shall continue,  the
Company  shall  pay  in  cash  as  Liquidated  Damages  to  each  holder  of any
Registrable  Securities  an amount equal to one (1%) percent per month  (ratably
applied for any part thereof) for the first forty-five (45) days and two percent
(2%) per month  (ratably  applied for any part  thereof)  thereafter  during the
pendency  of such  Non-Registration  Event,  of (i) the  principal  of the Notes
issued in connection with the Initial Offering,  whether or not converted;  (ii)
the principal  amount of Put Notes  actually  issued,  whether or not converted,
then owned of record by such  holder or  issuable  because of a prior Put Notice
(as  hereinafter  defined),  as of or  subsequent  to  the  occurrence  of  such
Non-Registration  Event. Payments to be made pursuant to this Section 10.4 shall
be due and payable  immediately  upon demand in immediately  available funds. In
the event a Mandatory  Redemption  Payment is  demanded  from the Company by the
Holder  pursuant  to  Section  9.2 of  this  Subscription  Agreement,  then  the
Liquidated  Damages described in this Section 10.4 shall no longer accrue on the
portion of the Purchase Price underlying the Mandatory Redemption Payment,  from
and after the date the Holder  receives the  Mandatory  Redemption  Payment.  It
shall be deemed a Non-Registration Event to the extent that all the Common Stock
underlying  the   Registrable   Securities  is  not  included  in  an  effective
registration  statement  as of and after the  Effective  Date at the  Conversion
Prices in effect from and after the Effective Date.

                  10.5.  Expenses.  All  expenses  incurred  by the  Company  in
complying with Section 10, including,  without limitation,  all registration and
filing  fees,   printing  expenses,   fees  and  disbursements  of  counsel  and
independent  public  accountants for the Company,  fees and expenses  (including
reasonable  counsel  fees)  incurred in  connection  with  complying  with state
securities or "blue sky" laws,  fees of the National  Association  of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars, and costs
of insurance are called "Registration  Expenses". All underwriting discounts and
selling commissions applicable to the sale of Registrable Securities,  including
any fees and  disbursements  of any special  counsel to the  Seller,  are called
"Selling Expenses". The Seller shall pay the fees of its own additional counsel,
if any.

                  The Company will pay all  Registration  Expenses in connection
with the  registration  statement  under  Section  10. All  Selling  Expenses in
connection with each  registration  statement under Section 10 shall be borne by
the Seller and may be apportioned  among the Sellers in proportion to the

                                       15
<PAGE>

number of shares sold by the Seller  relative to the number of shares sold under
such registration statement or as all Sellers thereunder may agree.

                  10.6. Indemnification and Contribution.

                           (a) In the event of a registration of any Registrable
Securities  under the Act pursuant to Section 10, the Company will indemnify and
hold  harmless  the Seller,  each  officer of the Seller,  each  director of the
Seller,  each  underwriter of such  Registrable  Securities  thereunder and each
other person, if any, who controls such Seller or underwriter within the meaning
of the 1933 Act, against any losses,  claims,  damages or liabilities,  joint or
several,  to which the Seller,  or such  underwriter or  controlling  person may
become  subject  under the Act or  otherwise,  insofar as such  losses,  claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue  statement or alleged  untrue  statement  of any  material  fact
contained in any registration  statement under which such Registrable Securities
was registered under the Act pursuant to Section 10, any preliminary  prospectus
or final prospectus  contained therein,  or any amendment or supplement thereof,
or arise out of or are based  upon the  omission  or alleged  omission  to state
therein a material fact  required to be stated  therein or necessary to make the
statements  therein not  misleading,  and will  reimburse the Seller,  each such
underwriter  and each such  controlling  person for any legal or other  expenses
reasonably  incurred by them in connection with  investigating  or defending any
such loss,  claim,  damage,  liability or action;  provided,  however,  that the
Company  will not be liable in any such case if and to the extent  that any such
loss,  claim,  damage  or  liability  arises  out of or is based  upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by any such Seller, the underwriter or any
such controlling  person in writing  specifically  for use in such  registration
statement or prospectus.

                           (b)  In the  event  of a  registration  of any of the
Registrable  Securities  under the Act  pursuant  to Section 10, the Seller will
indemnify and hold harmless the Company,  and each person,  if any, who controls
the Company within the meaning of the Act, each officer of the Company who signs
the registration  statement,  each director of the Company, each underwriter and
each person who controls any underwriter  within the meaning of the Act, against
all losses,  claims,  damages or  liabilities,  joint or  several,  to which the
Company or such officer, director,  underwriter or controlling person may become
subject under the Act or otherwise,  insofar as such losses,  claims, damages or
liabilities  (or actions in respect  thereof) arise out of or are based upon any
untrue  statement or alleged untrue  statement of any material fact contained in
the  registration   statement  under  which  such  Registrable  Securities  were
registered  under the Act pursuant to Section 10, any preliminary  prospectus or
final prospectus  contained therein,  or any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state therein
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements therein not misleading,  and will reimburse the Company and each such
officer,  director,  underwriter and  controlling  person for any legal or other
expenses  reasonably  incurred  by  them in  connection  with  investigating  or
defending any such loss, claim, damage, liability or action, provided,  however,
that the  Seller  will be liable  hereunder  in any such case if and only to the
extent that any such loss, claim,  damage or liability arises out of or is based
upon an untrue  statement  or alleged  untrue  statement  or omission or alleged
omission made in reliance upon and in conformity with information  pertaining to
such  Seller,  as such,  furnished  in  writing to the  Company  by such  Seller
specifically for use in such registration statement or prospectus, and provided,
further, however, that the liability of the Seller hereunder shall be limited to
the proportion of any such loss,  claim,  damage,  liability or expense which is
equal  to the  proportion  that the  public  offering  price of the  Registrable
Securities  sold by the Seller under such  registration  statement  bears to the
total public  offering price of all securities sold  thereunder,  but not in any
event to exceed  the gross  proceeds  received  by the  Seller  from the sale of
Registrable Securities covered by such registration statement.

                           (c) Promptly  after receipt by an  indemnified  party
hereunder of notice of the

                                       16
<PAGE>

commencement of any action,  such indemnified party shall, if a claim in respect
thereof is to be made  against  the  indemnifying  party  hereunder,  notify the
indemnifying  party in  writing  thereof,  but the  omission  so to  notify  the
indemnifying  party shall not relieve it from any liability which it may have to
such  indemnified  party  other than under this  Section  10.6(c) and shall only
relieve it from any liability which it may have to such indemnified  party under
this Section 10.6(c) if and to the extent the  indemnifying  party is prejudiced
by such  omission.  In case  any  such  action  shall  be  brought  against  any
indemnified party and it shall notify the indemnifying party of the commencement
thereof,  the indemnifying party shall be entitled to participate in and, to the
extent it shall wish, to assume and  undertake the defense  thereof with counsel
satisfactory to such indemnified  party, and, after notice from the indemnifying
party to such  indemnified  party of its election so to assume and undertake the
defense thereof,  the indemnifying party shall not be liable to such indemnified
party under this Section 10.6(c) for any legal expenses subsequently incurred by
such  indemnified  party in  connection  with the  defense  thereof  other  than
reasonable  costs of  investigation  and of liaison  with  counsel so  selected,
provided,  however,  that, if the defendants in any such action include both the
indemnified  party and the  indemnifying  party and the indemnified  party shall
have reasonably  concluded that there may be reasonable defenses available to it
which are different  from or additional to those  available to the  indemnifying
party or if the interests of the indemnified  party  reasonably may be deemed to
conflict with the interests of the indemnifying  party, the indemnified  parties
shall have the right to select one  separate  counsel  and to assume  such legal
defenses and otherwise to  participate  in the defense of such action,  with the
reasonable expenses and fees of such separate counsel and other expenses related
to such participation to be reimbursed by the indemnifying party as incurred.

                           (d) In  order  to  provide  for  just  and  equitable
contribution  in the event of joint liability under the Act in any case in which
either (i) the Seller,  or any controlling  person of the Seller,  makes a claim
for  indemnification  pursuant  to  this  Section  10.6  but  it  is  judicially
determined  (by the entry of a final  judgment or decree by a court of competent
jurisdiction  and the  expiration  of time to appeal  or the  denial of the last
right of appeal)  that such  indemnification  may not be  enforced  in such case
notwithstanding  the fact that this Section 10.6 provides for indemnification in
such case, or (ii) contribution under the Act may be required on the part of the
Seller  or  controlling   person  of  the  Seller  in  circumstances  for  which
indemnification  is provided  under this Section  10.6;  then,  and in each such
case,  the Company  and the Seller  will  contribute  to the  aggregate  losses,
claims,  damages or liabilities to which they may be subject (after contribution
from others) in such  proportion so that the Seller is responsible  only for the
portion  represented  by the  percentage  that the public  offering price of its
securities  offered by the  registration  statement bears to the public offering
price  of all  securities  offered  by such  registration  statement,  provided,
however,  that,  in any  such  case,  (A) the  Seller  will not be  required  to
contribute  any  amount  in  excess  of the  public  offering  price of all such
securities  offered by it pursuant to such  registration  statement;  and (B) no
person or entity guilty of fraudulent  misrepresentation  (within the meaning of
Section  10(f) of the Act) will be entitled to  contribution  from any person or
entity who was not guilty of such fraudulent misrepresentation.

                  11.1.    Obligation To Purchase.
                           ----------------------

                           (a)  The  Subscriber  agrees  to  purchase  from  the
Company  convertible notes ("Put Notes") in up to the principal amount set forth
on the  signature  page  hereto  for  up to the  aggregate  amount  of Put  Note
principal designated on the signature page hereto (the "Put").  Collectively the
Put Notes,  Warrants  issuable  in  connection  with the Put,  and Common  Stock
issuable  upon  conversion  of the Put Notes and  exercise of the  Warrants  are
referred to as the "Put  Securities".)  The Warrants issuable in connection with
the Put Notes are  referred  to herein as Warrants  or Put  Warrants.  Except as
described in Section 11.1(c) hereof, each Put Note will be identical to the Note
except that the Maturity Date will be three years from

                                       17
<PAGE>

each  Put  Closing  Date  (as  hereinafter  defined).  The  Holders  of the  Put
Securities  are  granted  all the  rights,  undertakings,  remedies,  liquidated
damages and  indemnification  granted to the  Subscriber in connection  with the
Note,  including  but not  limited  to, the rights and  procedures  set forth in
Section 9 hereof and the registration rights described in Section 10 hereof.

                           (b)  The  agreement  to  purchase  the Put  Notes  is
contingent  on the  following  any,  some or all of which  may be  waived by the
Subscriber:

                                    (i) As of a Put Date and Put  Closing  Date,
200% of the Common Shares  issuable upon conversion of a Put Note (employing the
Conversion Price as of such date) and sufficient Common Shares to allow the full
exercise of the Put Warrants  issuable in connection with the Put Note (assuming
exercise of such Put  Warrants  on such date) must be  included in an  effective
registration statement described in Section 10 hereof.

                                    (ii) As of a Put Date and Put Closing  Date,
the Company will be a full reporting company with the class of Shares registered
pursuant to Section 12(g) of the Securities Exchange Act of 1934.

                                    (iii)  No  material  adverse  change  in the
Company's  business or business  prospects shall have occurred after the date of
the most recent financial  statements included in the Reports.  Material adverse
change  is  defined  as any  effect  on the  business,  operations,  properties,
prospects, or financial condition of the Company that is material and adverse to
the Company and its  subsidiaries and affiliates,  taken as a whole,  and/or any
condition, circumstance, or situation that would prohibit or otherwise interfere
with the ability of the Company to enter into and perform any of its obligations
under this Agreement,  or any other agreement entered into or to be entered into
in connection  herewith,  in any material  respect.  There shall not have been a
material negative  restatement of the Company's financial statements referred to
in Paragraph 1(a) hereof.

                                    (iv)  The  non-occurrence  (whether  or  not
continuing) of an Event of Default as described in Article III of the Note.

                                    (v)  The   execution  and  delivery  to  the
Subscriber of a certificate  signed by its chief executive officer  representing
the truth and  accuracy  of all the  Company's  representations  and  warranties
contained in this  Subscription  Agreement  as of the Put Date,  and Put Closing
Date and confirming the  undertakings  contained  herein,  and  representing the
satisfaction of all  contingencies  and conditions  required for the exercise of
the Put.

                                    (vi)   The   Company's   listing   on,   and
compliance with the listing  requirements  of a Principal  Market other than the
Pink Sheets.

                                    (vii)  The  Company's  not  having  received
notice from the OTC Bulletin Board (or any Principal Market) that the Company is
not in compliance with the requirements  for continued  listing which notice has
not been  resolved in a manner  affirming  the  Company's  compliance  with such
requirements.

                                       18
<PAGE>

                                    (viii)  The  execution  by the  Company  and
delivery to the Subscriber of all required  documents in relation to the Put set
forth in Section  11.2 below and such other  documents  which may be  reasonably
requested by the Subscriber.

                           (c) Subject to the adjustments set forth in the Note,
the Conversion Price of the Put Note shall be as follows:

                                    (i)  The  Conversion  Price  of the  initial
5.263% of the aggregate Put Note Purchase  Price set forth on the signature page
hereto shall be the lesser of 80% of the average of the three lowest closing bid
prices of the Common Stock on the  Principal  Market for the thirty (30) trading
days prior to the Put  Closing  Date or 70% of the  average of the three  lowest
closing  bid prices of the Common  Stock on the  Principal  Market for the sixty
(60) trading days prior to the Conversion Date.

                                    (ii) The Conversion  Price of the balance of
the Put Note  Purchase  Price  shall be 72% of the  average of the three  lowest
closing bid prices of the Common Stock on the  Principal  Market for the fifteen
(15)  trading  days  prior  to the  Conversion  Date  subject  to the  following
increases for the designated time periods:

                                           (x)  If  during  the  seventh   (7th)
through  twelfth  (12th)  months  after the  effectiveness  of the  registration
statement described in Section 10.1(iv) hereof, the average closing bid price of
the Common Stock for twenty-two (22) consecutive trading days as reported on the
Principal  Market is more than $.40, then for all Put Notices issued during such
period, the Conversion Price shall be 75% of the average of the three (3) lowest
closing bid prices of the Common Stock on the  Principal  Market for the fifteen
(15) trading days prior the Conversion Date of such Put Notes.

                                           (y) If during the  thirteenth  (13th)
through  eighteenth  (18th) months after the  effectiveness  of the registration
statement described in Section 10.1(iv) hereof, the average closing bid price of
the Common Stock for twenty-two (22) consecutive trading days as reported on the
Principal  Market is more than $.70, then for all Put Notices issued during such
period, the Conversion Price shall be 78% of the average of the three (3) lowest
closing bid prices of the Common Stock on the  Principal  Market for the fifteen
(15) trading days prior the Conversion Date of such Put Notes.

                                           (z) If during the  nineteenth  (19th)
through  thirty-sixth  (36th) months after the effectiveness of the registration
statement described in Section 10.1(iv) hereof, the average closing bid price of
the Common Stock for twenty-two (22) consecutive trading days as reported on the
Principal Market is more than $1.00, then for all Put Notices issued during such
period, the Conversion Price shall be 80% of the average of the three (3) lowest
closing bid prices of the Common Stock on the  Principal  Market for the fifteen
(15) trading days prior the Conversion Date of such Put Notes.

                  11.2.    Exercise of Put.
                           ---------------

                           (a) The Company's right to exercise the Put commences
on the actual effective date of the registration  statement described in Section
10.1(iv)  hereof and  expires  three (3) years  after the  Effective  Date ("Put
Exercise Period").

                           (b) The Put may be exercised by the Company by giving
the Subscriber written notice of exercise ("Put Notice") not more often than one
time each thirty (30)  consecutive  calendar days

                                       19
<PAGE>

during the Put Exercise Period in relation to up to the maximum principal amount
of Put Note that the  Subscriber  has agreed to  purchase  subject to the limits
described in this Agreement.  The date a Put Notice is given is a Put Date. Each
Put Notice must be  accompanied  by (i) the officer's  certificate  described in
Section 11.1(b)(v) above; (ii) a legal opinion relating to the Put Securities in
form  reasonably  acceptable to Subscriber;  and (iii) such other  documents and
certificates reasonably requested by the Subscriber.

                           (c) Unless  otherwise  agreed to by the  Subscribers,
Put Notices must be given to all Subscribers in proportion to the amounts agreed
to be  purchased  by all  Subscribers  undertaking  to purchase Put Notes in the
Initial Offering.

                           (d)  Payment by the  Subscriber  in relation to a Put
Notice  relating to a Put must be made within  fourteen (14) business days after
receipt  of a Put  Notice  and the  items set forth in  Section  11.2(b)  above.
Payment will be made against delivery to the Subscriber or an escrow agent to be
agreed upon by the Company and Subscriber,  of the Put Securities,  and delivery
to the Finders of the Put Commissions relating to the Put being exercised.

                           (e)  Maximum Put  Exercise.  The Company may not give
the  Subscriber  a Put Notice in  connection  with that amount of Put Note which
could be  converted  as of the Put Date into a number of shares of Common  Stock
which would be in excess of the sum of (i) the number of shares of Common  Stock
beneficially  owned by the  Subscriber  and its affiliates on such Put Date, and
(ii) the number of shares of Common Stock  issuable  upon the  conversion of the
Put Note with respect to which the  determination  of this proviso is being made
on a Put Date, which would result in beneficial  ownership by the Subscriber and
its affiliates of more than 4.99% of the  outstanding  shares of Common Stock of
the Company on such Put Date. For the purposes of the proviso to the immediately
preceding sentence,  beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation
13d-3 thereunder.  Subject to the foregoing, the Subscriber shall not be limited
to  aggregate   conversions  of  only  4.99%.  The  Subscriber  may  revoke  the
restriction  described  in  this  paragraph  upon 75 days  prior  notice  to the
Company. The Subscriber shall have the right to determine which of the equity of
the Company deemed beneficially owned by the Subscriber shall be included in the
4.99%  described  above and which shall be  allocated to the excess above 4.99%.
The  aggregate  amount of all Put  Notices  to all  Subscribers  of the  Initial
Offering may not exceed  $9,500,000.  The aggregate  maximum principal amount of
Put Notes for which Put Notices may be given during any thirty (30)  consecutive
calendar days to all  Subscribers in the Initial  Offering may not exceed twelve
(12%) of the average of the closing bid prices of the Common Stock reported on a
Principal  Market  (other  than  the  Pink  Sheets),   during  the  thirty  (30)
consecutive  calendar days prior to the giving of the Put Notice,  multiplied by
the aggregate  reported trading volume of the Company's Common Stock during such
prior  month  ("Trading  Volume  Limitation").   The  foregoing  Trading  Volume
Limitation  notwithstanding and provided all other preconditions to Put exercise
are satisfied,  the Company may exercise the Put for up to the amount designated
on the signature  page hereto as "Section  11.2(e) Put Amount" during the thirty
(30)  consecutive  calendar  days  following  the actual  effective  date of the
registration  statement  described in Section 10.1(iv) hereof. In any event, the
Conversion  Price of the initial Put Purchase  Price amount equal to the Section
11.2(e) amount shall be the same Conversion Price as for the Notes issued in the
Initial Offering.

                  11.3. Put Finders Fees.  The Finders  identified on Schedule B
hereto  shall  receive  on each Put  Closing  Date  aggregate  Finder's  Fees as
described in Section 6 hereof in connection  with the closing of each Put as set
forth  on  Schedule  B  hereto.  Put  Finder's  Fees  shall be  payable  only in
connection  with the Put Purchase Price  actually paid by a Subscriber.  The Put
Finder's Fees and reasonable  legal fees for

                                       20
<PAGE>

counsel to the Subscriber  shall be paid at each Put Closing.  The minimum legal
fee to be paid by the Company to one counsel for the  Subscribers to the Initial
Offering is $2,500 per Put Closing.

                  11.4.    Warrants.
                           --------

                           (a) The Company  shall issue  Warrants to the Warrant
Recipients  in the amounts  designated  on Schedule B hereto and as described in
Section 6 of this Subscription  Agreement.  The Put Warrants will be in the form
of Exhibit D hereto.  The Put  Warrants  will be  exercisable  immediately  upon
issuance and for five years thereafter.

                           (b)  In  the  event,   for  any  reason   except  for
Subscriber's  unwillingness  to purchase greater amounts of Put Notes because of
the beneficial  ownership  limitations of Section 11.2(e), the Put in the amount
of at least  21.05% of the Put Note  Purchase  Price set forth on the  signature
page ("Minimum Principal") has not been exercised as of the first anniversary of
the  Effective  Date,  then the Company  will issue Put  Warrants to the Warrant
Recipients in an amount  determined by subtracting the actual amount of Put Note
Principal  for which  Put  Notices  have been  validly  given  from the  Minimum
Principal (the result being the  "Unexercised  Put") and issuing Put Warrants in
connection  with such  Unexercised Put as if the amount of Put Notes issuable in
connection  with  the  Unexercised  Put  were  actually  issued  and  the  first
anniversary of the Closing Date was the Conversion Date of such Put Notes.

                           (c)  In  the  event,   for  any  reason   except  for
Subscriber's  unwillingness  to purchase greater amounts of Put Notes because of
the beneficial  ownership  limitations of Section 11.2(e), the Put in the amount
of 42.1% of the Put Note Purchase  Price set forth on the signature  page hereto
("Majority  Principal")  has not been exercised as of the second  anniversary of
the  Effective  Date,  then the Company  will issue Put  Warrants to the Warrant
Recipients in an amount  determined by subtracting the actual amount of Put Note
Principal  for which Put Notices have been  validly  given and the amount of Put
Note  Principal  deemed  converted  pursuant to Section  11.4(b)  above from the
Majority Principal (the result being the "Interim  Unexercised Put") and issuing
Put Warrants in connection with such Interim Unexercised Put as if the amount of
Put Notes issuable in connection with the Interim  Unexercised Put were actually
issued and the second anniversary of the Closing Date was the Conversion Date of
such Put Notes.

                           (d)  In  the  event,   for  any  reason   except  for
Subscriber's  unwillingness  to purchase greater amounts of Put Notes because of
the beneficial  ownership  limitations of Section 11.2(e), the entire Put in the
amount of 63.157% of the Put Note Purchase Price set forth on the signature page
hereto ("Maximum  Principal") has not been exercised as of the third anniversary
of the Effective  Date,  then the Company will issue Put Warrants to the Warrant
Recipients in an amount  determined by subtracting the actual amount of Put Note
Principal  for which Put Notices have been  validly  given and the amount of Put
Note Principal deemed  converted  pursuant to Sections 11.4(a) and 11.4(b) above
from the Maximum  Principal (the result being the "Unexercised Put Balance") and
issuing Put Warrants in connection  with such  Unexercised Put Balance as if the
amount of Put Notes issuable in connection with the Unexercised Put Balance were
actually issued and the third anniversary of the Closing Date was the Conversion
Date of such Put Notes.

                           (e) In the event the Company has properly given a Put
Notice and the Subscriber  has  wrongfully  failed to comply with the Put Notice
then after such  default  by the  Subscriber  Put  Warrants  otherwise  issuable
pursuant  to  Sections  11.4(b),  11.4(c)  and  11.4(d)  will not be issued with
respect to anniversaries of the Effective Date occurring after such default.

                                       21
<PAGE>

                           (f)  The   Conversion   Price  to  be  employed  when
calculating  the number of Common Shares  issuable upon exercise of Put Warrants
described in Sections  11.4(b),  11.4(c) and 11.4(d) shall be 78% of the average
of the three  lowest  closing bid prices of the Common  Stock as reported on the
Principal  Market  for the  fifteen  (15)  trading  days  prior  to the  assumed
Conversion Date.

                           (g) Failure to timely pay Finder's  Fees,  legal fees
or deliver any Warrants issuable in connection with the Initial Offering and Put
shall be deemed an Event of Default under the Note and a material  breach of the
Company's obligations hereunder, for which no notice to cure is required.

                  11.5  Assignment  of  Put.  Anything  to the  contrary  herein
notwithstanding,  the  Subscriber  may assign to another  party either before or
after exercise of the Put by the Company,  the Subscriber's  right to pay all or
some of the Put Purchase  Price and receive the  corresponding  Put  Securities.
Such assignment must be in writing. The assignment will be effective only if the
assignee consents in writing to be bound by all of the Subscriber's  obligations
to the Company in connection with such assignment. Upon an effective assignment,
the  assignee  will  succeed  to all  of  the  Subscriber's  rights  under  this
Subscription  Agreement,  and all  other  agreements  relating  to the  assigned
portion of the Put.

                  12.  (a)  Right of First  Refusal.  Until  120 days  after the
actual  effective  date  of the  Registration  Statement  described  in  Section
10.1(iv) hereof ("Actual  Effective  Date"),  the Subscriber  shall be given not
less than ten (10) business  days prior  written  notice of any proposed sale by
the Company of its common stock or other securities or debt  obligations  except
as  disclosed  in the  Reports or Other  Written  Information  or stock or stock
options  granted to employees  or  directors  of the Company;  or equity or debt
issued  in  connection  wit h an  acquisition  of a  business  or  assets by the
Company;  or the Notes,  Warrants or any shares of Common  Stock  issuable  upon
conversion of the Notes or exercise of the Warrants;  or any Permitted Financing
Warrants as hereinafter  defined, or equity issued upon any exercise thereof; or
the issuance by the Company of stock in connection with the  establishment  of a
joint  venture,   partnership  or  licensing   arrangement   (these   exceptions
hereinafter referred to as the "Excepted Issuances").  The Subscriber shall have
the right during the ten (10) business days  following  receipt of the notice to
agree to purchase an amount of Company  Shares in the same  proportion  as being
purchased in the Initial Offering of those securities  proposed to be issued and
sold, in  accordance  with the terms and  conditions  set forth in the notice of
sale.  In the event such terms and  conditions  are  modified  during the notice
period,  the Subscriber  shall be given prompt notice of such  modification  and
shall have the right  during the original  notice  period or for a period of ten
(10) business days following the notice of modification, whichever is longer, to
exercise such right.  In the event the right of first refusal  described in this
Section is  exercised by the  Subscriber  and the Company  thereby  receives net
proceeds  from  such  exercise,  then  commissions  and fees will be paid by the
Company to the Finders in the same amounts as specified in the notice of sale.

                           (b) Offering Restrictions. Except with respect to the
Excepted  Issuances and securities  otherwise  disclosed in the Reports or Other
Written Information,  the Company will not issue any equity, convertible debt or
other  securities  which  are  or  could  be  (by  conversion  or  registration)
free-trading  securities  prior to the  expiration  of 180 days after the Actual
Effective Date (the "Exclusion Period"). This restriction shall not prohibit the
Company from issuing any equity,  convertible  debt or other securities prior to
the expiration of the Exclusion Period,  provided that such equity,  convertible
debt or other  securities  are not  free-trading  when  issued  and  remain  not
free-trading  until  the  expiration  of the  Exclusion  Period.  The  foregoing
notwithstanding,  the Company may issue up to 8,333,333  common  stock  purchase
warrants in connection  with any equity or debt  financing of the Company and/or
any  subsidiary  for not less than

                                       22
<PAGE>

$500,000 of gross  proceeds to the Company  and/or any  subsidiary  provided (i)
that the per share exercise prices of such warrants is not less than $.10, $.15,
$.20 and $.25, respectively, for each one-quarter of such warrants, and (ii) the
Common Stock  issuable upon  exercise of such warrants will not be  free-trading
until 90, 150, 210 and 270 days,  respectively,  after the Actual Effective Date
for each  one-quarter  of such warrants  (warrants  meeting  these  criteria are
referred to herein as "Permitted Financing Warrants").

                  13.      Miscellaneous.
                           -------------

                           (a)  Notices.  All  notices  or other  communications
given or made hereunder shall be in writing and shall be personally delivered or
deemed delivered the first business day after being telecopied  (provided that a
copy is  delivered  by first class mail) to the party to receive the same at its
address set forth below or to such other address as either party shall hereafter
give to the other by notice duly made under this Section: (i) if to the Company,
to ICOA,  Inc.,  111 Airport Road,  Suite 1,  Warwick,  R.I.  02889,  telecopier
number: (401) 739-9215, with a copy by telecopier only to Parker Chapin LLP, 405
Lexington Avenue,  New York, NY 10174,  telecopier number:  (212) 704-6288,  and
(ii) if to the Subscriber, to the name, address and telecopy number set forth on
the signature page hereto,  with a copy by telecopier only to Grushko & Mittman,
P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176, telecopier number:
(212) 697-3575. Any notice that may be given pursuant to this Agreement,  or any
document  delivered  in  connection  with  the  foregoing  may be  given  by the
Subscriber on the first  business day after the  observance  dates in the United
States of America by Orthodox Jewry of Rosh Hashanah,  Yom Kippur, the first two
days of the Feast of Tabernacles,  Shemini Atzeret, Simchat Torah, the first two
and final two days of  Passover  and  Pentecost,  with such  notice to be deemed
given and  effective,  at the election of the  Subscriber on a holiday date that
precedes  such  notice.  Any notice  received  by the  Subscriber  on any of the
aforedescribed  holidays  may be deemed by the  Subscriber  to be  received  and
effective  as if such notice had been  received on the first  business day after
the holiday.

                           (b) Closing.  The  consummation  of the  transactions
contemplated herein shall take place at the offices of Grushko & Mittman,  P.C.,
551 Fifth Avenue, Suite 1601, New York, New York 10176, upon the satisfaction of
all conditions to Closing set forth in this Agreement. The closing date shall be
the date that subscriber funds  representing the net amount due the Company from
the Purchase Price are transmitted by wire transfer to the Company (the "Closing
Date"). The closing date for the Put shall be the date on which Subscriber funds
representing  the net  amount due the  Company  from the Put  Purchase  Price is
transmitted to or on behalf of the Company ("Put Closing Date").

                           (c)  Entire  Agreement;  Assignment.  This  Agreement
represents the entire  agreement  between the parties hereto with respect to the
subject  matter  hereof and may be amended  only by a writing  executed  by both
parties.  No right or obligation of either party shall be assigned by that party
without prior notice to and the written consent of the other party.

                           (d)  Execution.  This  Agreement  may be  executed by
facsimile  transmission,  and in  counterparts,  each of which will be deemed an
original.

                           (e) Law  Governing  this  Agreement.  This  Agreement
shall be governed by and construed in  accordance  with the laws of the State of
New York without  regard to principles of conflicts of laws.  Any action brought
by either party against the other  concerning the  transactions  contemplated by
this  Agreement  shall be brought only in the state courts of New York or in the
federal  courts  located  in the  state  of  New  York.  Both  parties  and  the
individuals  executing  this  Agreement  and other  agreements  on behalf of the
Company  agree to submit to the  jurisdiction  of such courts and waive trial by
jury. The prevailing

                                       23
<PAGE>

party  shall  be  entitled  to  recover  from the  other  party  its  reasonable
attorney's  fees and costs. In the event that any provision of this Agreement or
any other agreement delivered in connection herewith is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed
inoperative  to the extent that it may  conflict  therewith  and shall be deemed
modified to conform with such statute or rule of law. Any such  provision  which
may prove invalid or  unenforceable  under any law shall not affect the validity
or enforceability of any other provision of any agreement.

                           (f) Specific  Enforcement,  Consent to  Jurisdiction.
The Company and Subscriber  acknowledge and agree that irreparable  damage would
occur  in the  event  that  any of the  provisions  of this  Agreement  were not
performed in accordance with their specific terms or were otherwise breached. It
is  accordingly  agreed that the parties  shall be entitled to an  injunction or
injunctions  to prevent or cure breaches of the provisions of this Agreement and
to enforce  specifically the terms and provisions hereof or thereof,  this being
in addition  to any other  remedy to which any of them may be entitled by law or
equity.  Subject to Section  13(e)  hereof,  each of the Company and  Subscriber
hereby waives,  and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally  subject to the  jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient  forum or that
the venue of the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve  process in any other manner  permitted
by law.

                           (g) Confidentiality.  The Company agrees that it will
not  disclose  publicly  or  privately  the  identity of the  Subscriber  unless
expressly  agreed to in writing by the Subscriber or only to the extent required
by law.

                           (h)  Automatic  Termination.   This  Agreement  shall
automatically terminate without any further action of either party hereto if the
Closing shall not have  occurred by the tenth (10th)  business day following the
date this Agreement is accepted by the Subscriber.

                     [THIS SPACE INTENTIONALLY LEFT BLANK]

                                       24
<PAGE>

         Please  acknowledge  your  acceptance  of  the  foregoing  Subscription
Agreement by signing and returning a copy to the undersigned  whereupon it shall
become a binding agreement between us.

                                            ICOA, INC.

                                            By: /s/ George Strouthopoulos
                                               ---------------------------------
                                               George Strouthopoulos
                                               President and Secretary

                                            Dated: August 28, 2000

Purchase Price: $185,000.00

PUT
---

Put Note Purchase Price (aggregate): $3,515,000

Section 11.2(e) Put Amount: $185,000.00

ACCEPTED: Dated as of August 28, 2000

KESHET L.P. - Subscriber
Ragnall House, 18 Peel Road
Douglas, Isle of Man
1M1 4L2, United Kingdom
Fax: 011-972-36120639

By: /s/ illegible
   ------------------------------

<PAGE>

          Please  acknowledge  your  acceptance  of the  foregoing  Subscription
Agreement by signing and returning a copy to the undersigned  whereupon it shall
become a binding agreement between us.

                                            ICOA, INC.

                                            By: /s/ George Strouthopoulos
                                               ---------------------------------
                                               George Strouthopoulos
                                               President and Secretary

                                            Dated: August 28, 2000

Purchase Price: $57,500.00

PUT
---

Put Note Purchase Price (aggregate): $1,092,500

Section 11.2(e) Put Amount: $57,500.00

ACCEPTED: Dated as of August 28, 2000

NESHER LTD. - Subscriber
Ragnall House, 18 Peel Road
Douglas, Isle of Man
1M1 4L2, United Kingdom
Fax: 011-972-36120639

By:/s/ illegible
   ------------------------------

<PAGE>

         Please  acknowledge  your  acceptance  of  the  foregoing  Subscription
Agreement by signing and returning a copy to the undersigned  whereupon it shall
become a binding agreement between us.

                                            ICOA, INC.

                                            By: /s/ George Strouthopoulos
                                               ---------------------------------
                                               George Strouthopoulos
                                               President and Secretary

                                            Dated: August 28, 2000

Purchase Price: $57,500.00

PUT
---

Put Note Purchase Price (aggregate): $1,092,500

Section 11.2(e) Put Amount: $57,500.00

ACCEPTED: Dated as of August 28, 2000

TALBIYA B. INVESTMENTS LTD. - Subscriber
Ragnall House, 18 Peel Road
Douglas, Isle of Man
1M1 4L2, United Kingdom
Fax: 011-972-36120639

By:/s/ illegible
   ------------------------------

<PAGE>

         Please  acknowledge  your  acceptance  of  the  foregoing  Subscription
Agreement by signing and returning a copy to the undersigned  whereupon it shall
become a binding agreement between us.

                                            ICOA, INC.

                                            By: /s/ George Strouthopoulos
                                               ---------------------------------
                                               George Strouthopoulos
                                               President and Secretary

                                            Dated: August 28, 2000

Purchase Price: $200,000.00

PUT
---

Put Note Purchase Price (aggregate): $3,800,000

Section 11.2(e) Put Amount: $200,000.00

ACCEPTED: Dated as of August 28, 2000

TUSK INVESTMENTS, INC. - Subscriber
P.O. Box 4603
Zurich, Switzerland
Fax: 011-411-201-6262

By:/s/ illegible
   ------------------------------

<PAGE>

                      SCHEDULE B TO SUBSCRIPTION AGREEMENT
                      ------------------------------------
<TABLE>
<CAPTION>

-------------------------------------------- ----------------------------------------- ------------------------------------------
FINDERS                                      INITIAL OFFERING                          PUT FINDER'S FEES
-------------------------------------------- ----------------------------------------- ------------------------------------------
<S>                                          <C>     <C>                               <C>      <C>
ALON ENTERPRISES LTD.                        $40,000 (8%)                              $760,000 (8%)
Ragnall House, 18 Peel Road
Douglas, Isle of Man
1M1 4L2, United Kingdom
Fax: 011-44-1624-661594

-------------------------------------------- ----------------------------------------- ------------------------------------------
LIBRA FINANCE, S.A.                          $10,000 (2%)                              $190,000 (2%)
P.O. Box 4603
Zurich, Switzerland
Fax: 011-411-201-6262
-------------------------------------------- ----------------------------------------- ------------------------------------------
TOTAL                                        $50,000 (10%)                             $950,000 (10%)
-------------------------------------------- ----------------------------------------- ------------------------------------------

               PROPORTIONATE SHARE OF AGGREGATE WARRANTS ISSUABLE
               --------------------------------------------------

--------------------------------------------- ---------------------------------------- ------------------------------------------
WARRANT RECIPIENTS                            INITIAL WARRANTS*                        PUT WARRANTS*
--------------------------------------------- ---------------------------------------- ------------------------------------------
TALBIYA B. INVESTMENTS LTD.                   60%                                      60%
Ragnall House, 18 Peel Road
Douglas, Isle of Man
1M1 4L2, United Kingdom
Fax: 011-44-1624-661594
--------------------------------------------- ---------------------------------------- ------------------------------------------
LIBRA FINANCE, S.A.                           40%                                      40%
P.O. Box 4603
Zurich, Switzerland
Fax: 011-411-201-6262
--------------------------------------------- ---------------------------------------- ------------------------------------------
TOTAL                                         100%                                     100%
--------------------------------------------- ---------------------------------------- ------------------------------------------

* The  percentages  in these  columns  represent  the  amount of  common  shares
purchasable upon exercise of the Warrants.

                          WARRANT EXERCISE COMPENSATION
                          -----------------------------

----------------------------------------------------------------- ---------------------------------------------------------------
FINDERS                                                           PROPORTIONATE SHARE OF 10% CASH
                                                                  COMMISSIONS PAYABLE ON WARRANT
                                                                  EXERCISE
----------------------------------------------------------------- ---------------------------------------------------------------
ALON ENTERPRISES LTD.                                             80%
Ragnall House, 18 Peel Road
Douglas, Isle of Man
1M1 4L2, United Kingdom
Fax: 011-44-1624-661594
----------------------------------------------------------------- ---------------------------------------------------------------
LIBRA FINANCE, S.A.                                               20%
P.O. Box 4603
Zurich, Switzerland
Fax: 011-411-201-6262
----------------------------------------------------------------- ---------------------------------------------------------------
TOTAL                                                             100%
----------------------------------------------------------------- ---------------------------------------------------------------
</TABLE>
<PAGE>

                                  Schedule 2(b)

The following is description of the authorized capitalization of the Company and
the equity and rights to acquire equity outstanding as of July 31, 2000.

---------------------------------- ------------------------ --------------------
Class of Equity                       Number of Shares        Number of Shares
                                      Authorized at                 Issued at
                                      July 31, 2000(1)          July 31, 2000
---------------------------------- ------------------------ --------------------
---------------------------------- ------------------------ --------------------
Common Stock, $.005 par value(2)         50,000,000                38,780,607
---------------------------------- ------------------------ --------------------

     As of July 31, 2000, there are no rights to acquire any equity of the
Company outstanding.

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

1    Subsequent to July 31, 2000, the Company increased the number of authorized
     shares of Common Stock to 150,000,000.

2    Subsequent to July 31, 2000, the Company changed the par value to $.0001
     per share.

<PAGE>

                                  Schedule 2(h)

Except as set forth below, there is no pending or, to the best knowledge of the
Company, threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company,
or any of its affiliates that would affect the execution by the Company or the
performance by the Company of its obligations under this Agreement, and all
other agreements entered into by the Company relating hereto.

Fernando L. Sabino v. ICOA, Inc. and George Strouthopoulos, Superior Court, Kent
----------------------------------------------------------
County, RI, CA. No. KC98-951. Pursuant to a Stock Purchase Agreement between the
Company and the plaintiff dated June 24, 1997, the plaintiff purchased 200,000
shares of Common Stock of ICOA (the "Shares"). The Stock Purchase Agreement
provided the plaintiff with rights to redeem the Shares under certain
conditions. The plaintiff attempted to redeem the stock, the Company denied
liability, and the plaintiff filed suit. On October 18, 1999, a Judgment was
entered in the above referenced matter in the amount of $39,000 plus
pre-judgment interest of $3,744.00 plus $8,115.75 in attorneys' fees plus
pre-judgment interest. As of November 8, 1999, the total amount due was
$51,409.75. The Company is in the process of attempting to settle this matter,
and has offered the plaintiff $5,000 per month towards the debt owned. As a
condition of the settlement, the plaintiff will agree to stay execution on the
judgment for so long as the monthly payments are made. Should the plaintiff be
able to sell the Shares, the proceeds will be credited toward the debt owed.
Counsel for the plaintiff has agreed in principle to the settlement, pending
further information regarding the specific details of the settlement
transaction.

<PAGE>

                                   EXHIBIT A
                                   ---------

               See Exhibits 10.3(a), 10.3(b), 10.3(c) and 10.3(d)

<PAGE>

                                   EXHIBIT C
                                   ---------

<PAGE>

                                       The Chrysler Building
                                       405 Lexington Avenue, New York, NJ 10174
                                       (212)704-6000 Fax (212)704-6288

                                 August 28, 2000

TO:      SUBSCRIBERS AND WARRANT RECIPIENTS IDENTIFIED ON
         SCHEDULE A HERETO

         We have acted as  counsel  to ICOA,  Inc.,  a Nevada  corporation  (the
"Company"),  in  connection  with the sale on the date  hereof by the Company of
$500,000  principal  amount of Convertible  Notes,  the sale of Convertible  Put
Notes  (the  Convertible  Put Notes,  together  with the  Convertible  Notes are
referred to herein as the "Notes")  and the  issuance of common  stock  purchase
warrants  ("Warrants")  to  Subscribers  and Warrant  Recipients  identified  on
Schedule A hereto  (the  "Purchasers").  Capitalized  terms used  herein and not
otherwise  defined shall have the meaning  assigned to them in the  Subscription
Agreement  (the  "Agreement")  by and between  the  Company and the  Subscribers
entered into at or about the date hereof.  The Agreement and the  agreements and
instruments  listed below on lines (a) through  (g),  inclusive,  are  sometimes
hereinafter  referred to  collectively  as the  "Documents",  and the  Documents
listed  below  on  lines  (a),  (b),  (c)  and (d) are  thereafter  referred  to
collectively as the "Transaction Documents".

         In connection  with the opinions  expressed  herein,  we have made such
examination  of law as we  considered  appropriate  or  advisable  for  purposes
hereof. As to matters of fact material to the opinions expressed herein, we have
relied,  with your  permission,  upon the  representations  and warranties as to
factual  matters  contained  in,  and  made by the  Company  and the  Purchasers
pursuant to, the Transaction  Documents and upon  certificates and statements of
certain government  officials and of officers of the Company as described below.
We have also examined  originals or copies of certain  agreements  and corporate
documents or records of the Company as follows:

         (a)      Form of Agreement;

         (b)      Form of Notes;

         (c)      Form of Common Stock Purchase Warrants;

         (d)      Funds Escrow Agreement;

         (e)      Resolutions of the Company's Board of Directors approving the
                  transactions contemplated by the Agreement (copies of such
                  resolutions certified by the Secretary of the Company are
                  annexed hereto as Exhibit A);
<PAGE>

         (f)      Articles of  Incorporation  of the  Company,  as amended  (the
                  "Articles of Incorporation"); and

         (g)      Bylaws of the Company.

         We have also made such  examination of law and have examined  originals
or copies,  certified or otherwise,  of such corporate  records and documents of
the Company, such agreements, certificates of officers or representatives of the
Company, and such other records, certificates,  including certificates of public
officials, and documents as we have deemed relevant and necessary as a basis for
the opinions hereinafter expressed.

         In rendering this opinion, we have, with your permission,  assumed: (a)
the  authenticity  of  all  documents  submitted  to us as  originals;  (b)  the
conformity to the originals of all documents  submitted to us as copies; (c) the
genuineness  of all  signatures  other than the  signatures  of  officers of the
Company; (d) the legal capacity of natural persons; (e) the truth,  accuracy and
completeness of the information, factual matters, representations and warranties
contained in all of such  documents;  (f) the due  authorization,  execution and
delivery of all such documents, and the legal, valid and binding effect thereof;
and  (g)  the  truth,  accuracy  and  completeness  of the  representations  and
warranties made by the Company and the Subscribers,  respectively,  as set forth
in the Documents, and that the Company and the Purchasers will act in accordance
with their agreements and their respective representations and warranties as set
forth in the Documents.

         As to any facts  relevant  to the  opinions  expressed  below,  we have
relied upon certificates and written  representations of officers of the Company
(including  the  representations  of the  Company  set forth in the  Transaction
Documents) and public officials. All references herein to contracts, instruments
or other  documents  of the Company are limited to such  documents  as have been
provided to us by the Company or of which we have  actual  knowledge.  As to our
opinion in  paragraphs 2 and 3(a) set forth  below,  we have  examined  only the
Articles  of  Incorporation,  the  Bylaws  and the  resolutions  of the Board of
Directors of the Company  relating to the  Documents and issuances of securities
contemplated  thereby,  and our opinion set forth in such  paragraphs is limited
thereto.  We have  not  examined  or  reviewed  any  communication,  instrument,
agreement,  document  or other  item or  conducted  any  independent  inquiry or
investigation  of any matter except as otherwise  expressly set forth above.  We
have also assumed that the Agreement and the other  Transaction  Documents  have
been  executed and  delivered by and are binding on each of the parties  thereto
(other than the Company).

         The opinions  expressed  below with respect to compliance  with certain
statutes, rules and regulations are based upon a review of those statutes, rules
and regulations  that, in our experience,  are applicable to transactions of the
type contemplated by the Agreement and to businesses such as the Company's.  Our
opinion as to the good  standing of the Company in Nevada set forth in the first
sentence  of  paragraph  1 below  is based  solely  upon  our  examination  of a
certificate  of  existence  with status in good  standing  dated  August 7, 2000
provided by the  Secretary of State of Nevada,  and such opinion is given solely
as of such date.

         We  express  no  opinion  respecting  the  enforceable  nature  of  the
Agreement,  the other  Transaction  Documents,  or any  document  or  instrument
executed pursuant thereto or in connection therewith, insofar as the enforceable
nature thereof, or any right, power,  privilege,  remedy or interest intended to
be created thereunder, may be limited (i) by applicable bankruptcy,  insolvency,
moratorium,  fraudulent  conveyance,  reorganization  or other laws or  judicial
decisions  affecting any rights,  powers,  privileges,  remedies or interests of
creditors  generally,  (ii) by rules  or  principles  of  equity  affecting  the
enforcement  of obligations  generally,  whether at law, in equity or otherwise,
(iii)  by the  exercise  of the  discretionary  powers  of any  court  or  other
authority before which may be brought any proceeding  seeking equitable or other
remedies,
<PAGE>

including,  without  limitation,  specific  performance,  injunctive  relief and
indemnification  or (iv) insofar as rights to indemnity and/or  contribution are
concerned,  by federal or state securities laws or the public policy  underlying
such laws.

         Where  reference  is made in this  opinion to matters  within or to our
knowledge,  to the best of our knowledge,  or to facts or circumstances known to
us or  which  have  come to our  attention,  such  reference  means  the  actual
knowledge of those attorneys in our firm who have given substantive attention to
the  preparation  of the  Agreement  and other  Transaction  Documents and their
review of  documents  in  connection  with this  engagement,  without,  however,
independent investigation of any matter unless expressly set forth herein.

         We call your  attention  to the fact that we are  counsel  admitted  to
practice  in the State of New  York,  and we do not  express  any  opinion  with
respect to the applicable  laws, or the effect or  applicability of the laws, of
any  jurisdiction  other than those of the State of New York and the  securities
laws of the United States of America. In particular,  but without limitation, we
do not express any opinion  with respect to the Blue Sky or  securities  laws of
any state or other  jurisdiction  (other than the federal securities laws of the
United   States   of   America),   or   any   law   relating   specifically   to
telecommunications or patents, trademarks or other intellectual property rights.
Accordingly,   and  notwithstanding   anything  contained  in  any  document  or
instrument to the contrary,  for purposes of the opinions  expressed  below,  we
have assumed that  notwithstanding  any choice of law provision contained in the
Agreement and in the other Transaction Documents, the internal laws of the State
of New York will be applied to the  Agreement  and to each  other  document  and
instrument  with respect to which we opine below and that the Agreement and each
other  document  and  instrument  with  respect to which we opine  below will be
governed by, and  construed  and enforced in  accordance  with,  the laws of the
State of New York,  without  regard to principles of conflicts or choice of law.
Special  rulings of  authorities  administering  any of such laws or opinions of
other  counsel  have  not been  sought  or  obtained  by us in  connection  with
rendering the opinions expressed herein.

         With  regard to our opinion  set forth in  paragraph  5 below,  we have
assumed as of the date  hereof  and  hereafter,  in  addition  to the  foregoing
matters, the following:  (a) neither the Company nor anyone acting on its behalf
has engaged or will engage in any "directed  selling efforts" as defined in Rule
902(c) under the Securities Act of 1933, as amended (the "Act"); (b) there is no
Distributor  (as  defined  in Rule  902(d)  under  the Act) nor will  there be a
Distributor  of the Notes and  Warrants,  and the  Common  Stock  issuable  upon
conversion of the Note, and exercise of the Warrants;  (c) Offering Restrictions
(as  defined  in Rule  902(g)  under  the  Act)  were and  will  continue  to be
implemented;  (d) the offering of the Notes and  Warrants,  and the Common Stock
issuable upon conversion of the Note, and exercise of the Warrants,  are each an
Offshore  Transaction  (as  defined in Rule 902(h)  under the Act);  and (e) the
conditions  contained in Rule  903(a),  Rule  903(b)(3),  and with regard to the
Warrants Rule 903(b)(5)  under the Act have been and will remain  fulfilled.  We
express no opinion on the conditions under which the Notes and Warrants, and the
Common  Stock  issuable  upon  conversion  of the  Notes,  and  exercise  of the
Warrants, may be resold.

         Based upon and subject to the foregoing, we are of the opinion that:

         1. The Company is  incorporated,  validly existing and in good standing
in the State of Nevada and has the  requisite  corporate  power and authority to
conduct its business, and to own, lease and operate its properties.

         2. The Company  has the  requisite  corporate  power and  authority  to
execute,  deliver and perform its obligations  under the Transaction  Documents,
and the Transaction  Documents have been duly approved by the Board of Directors
of the Company. The issuance of the Notes and Warrants,  and the reservation and
issuance of 50,400,000  shares of Common Stock  issuable upon  conversion of the
Notes and  exercise  of the  Warrants,  have been duly  approved by the Board of
Directors  of the  Company.  Provided
<PAGE>

there is a sufficient number of shares  authorized by the Company's  Articles of
Incorporation,  all the Securities, when issued and delivered in accordance with
the terms of the Agreement and the other Transaction Documents,  will be validly
issued, and the Common Stock issued upon conversion of the Notes and exercise of
the  Warrants  in  accordance  with the  terms of the  Agreement  and the  other
Transaction Documents, will be fully paid and non-assessable.

         3. The execution, delivery and performance of the Transaction Documents
by the Company and the  consummation of the transactions  contemplated  thereby,
will not, with or without the giving of notice or the passage of time or both:

            (a) Violate the  provisions  of the  Articles  of  Incorporation  or
bylaws of the Company; or

            (b) To the  best  of  counsel's  knowledge,  violate  any  judgment,
decree, order or award of any court binding upon the Company.

         4. The Agreement, Notes, Warrants and Funds Escrow Agreement constitute
the valid and legally  binding  obligations  of the Company and are  enforceable
against the Company in accordance with their respective terms.

         5. The offer, issue, sale, and delivery of the Notes and Warrants,  and
the Common  Stock  issuable  upon  conversion  of the Notes and  exercise of the
Warrants,  have not been registered under the Act or under the laws of any state
or other jurisdiction, and provided they are issued in accordance with the terms
and conditions set forth in the  Transaction  Documents,  are or will constitute
exempted transactions under the registration provisions of the Act.

         This opinion is rendered as of the date first written above,  is solely
for your benefit in connection  with the Agreement and may not be relief upon or
used by,  circulated,  quoted,  or  referred  to nor may any  copies  hereof  by
delivered to any other person without our prior written consent. We disclaim any
obligation   to  update  this  opinion   letter  or  to  advise  you  of  facts,
circumstances,  events or  developments  which  hereafter  may be brought to our
attention and which may alter, affect or modify the opinions expressed herein.

                                                               Very truly yours,

                                                            /s/PARKER CHAPIN LLP
                                                               PARKER CHAPIN LLP

<PAGE>

                           SCHEDULE A TO LEGAL OPINION

KESHET L.P. - Subscriber
Ragnall House, 18 Peel Road
Douglas, Isle of Man
1M1 4L2, United Kingdom
Fax: 011-972-36120639

NESHER LTD. - Subscriber
Ragnall House, 18 Peel Road
Douglas, Isle of Man
1M1 4L2, United Kingdom
Fax: 011-972-36120639

TALBIYA  B.  INVESTMENTS  LTD.  -  Subscriber  and  Warrant
Recipient
Ragnall House, 18 Peel Road
Douglas, Isle of Man
1M1 4L2, United Kingdom
Fax: 011-972-36120639

TUSK INVESTMENTS, INC. - Subscriber
P.O. Box 4603
Zurich, Switzerland
Fax: 011-411-201-6262

LIBRA FINANCE, S.A. - Warrant Recipient
P.O. Box 4603
Zurich, Switzerland
Fax: 011-411-201-626
<PAGE>

                                   EXHIBIT D
                                   ---------

Included as Exhibit 10.4 to the ICOA, Inc. Registration  Statement on Form SB-2,
filed on November 30, 2000.

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