CONVERSION AGREEMENT

THIS  AGREEMENT,  dated as of the 29th day of  August,  1996  between  Heuristic
Development  Group,  Inc.,  a  Delaware  corporation   (hereinafter  called  the
"Company") and Jonathan W. Seybold, (hereinafter called "Seybold"),

WHEREAS,  the Company has entered into a letter of intent (the  "Letter")  for a
proposed  initial public offering of its securities (the "IPO")  through D.H.
Blair Investment Banking Corp. ("Blair"), as underwriter, and

WHEREAS, the Letter contains as a condition to the IPO that the Company effect a
recapitalization  which includes the conversion of all of its outstanding shares
of Series A Preferred Stock, $.01 par value (the "Preferred  Stock") into Common
Stock, $.01 par value (the "Common Stock"), and

WHEREAS,  the Letter contains as a further condition to the IPO that the Company
not have any outstanding indebtedness on its books other than as contemplated by
the Letter and subsequent discussions between the Company and Blair; and

WHEREAS,  at the  date  hereof,  the  Company  had a  total  of  $244,391.69  of
outstanding  indebtedness,  including  accrued  interest,  owed to Seybold ( the
"Seybold Debt"); and

WHEREAS,  the Company and Seybold  believe it is in their mutual best  interests
for the IPO contemplated by the Letter to go forward.

NOW,  THEREFOR,  in  consideration  of the foregoing and the mutual promises and
covenants herein contained, it is hereby agreed as follows:

1. Conversion of Debt:  Effective on the Closing Date, the Seybold Debt shall be
converted  into  59,517.65  shares of  Common  Stock  (on a  post-split  basis),
representing a conversion rate of $4.11 per share.





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


                                        HEURISTIC DEVELOPMENT GROUP, INC.


                                        By: /s/ Deborah E. Griffin
                                           ------------------------------
                                              Chief Operating Officer



                                        JONATHAN W. SEYBOLD

                                        By: /s/ Jonathan W. Seybold
                                           ------------------------------
                                               Jonathan W. Seybold