INVESTMENT AGREEMENT

     INVESTMENT  AGREEMENT  (this "AGREEMENT"), dated as of February 25, 2004 by
and between CompuMed, Inc., a Delaware corporation (the "Company"), and Dutchess
Private  Equities  Fund,  L.P., a Delaware limited partnership (the "Investor").

     Whereas,  the  parties  desire  that,  upon  the  terms  and subject to the
conditions  contained  herein,  the  Investor  shall  invest  up to Five Million
Dollars  ($5,000,000)  to purchase the Company's Common Stock, .01 par value per
share  (the  "Common  Stock");

     Whereas,  such  investments will be made in reliance upon the provisions of
Section 4(2) under the Securities Act of 1933, as amended (the "1933 Act"), Rule
506  of  Regulation  D,  and  the  rules and regulations promulgated thereunder,
and/or  upon such other exemption from the registration requirements of the 1933
Act  as may be available with respect to any or all of the investments in Common
Stock  to  be  made  hereunder;  and

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

     NOW  THEREFORE,  in consideration of the foregoing recitals, which shall be
considered  an integral part of this Agreement, the covenants and agreements set
forth  hereafter,  and  other  good  and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Investor hereby
agree  as  follows:

SECTION  1.  DEFINITIONS.

     As  used  in  this  Agreement, the following terms shall have the following
meanings  specified  or  indicated  below,  and  such  meanings shall be equally
applicable  to  the  singular  and  plural  forms  of  such  defined  terms.

     "1933  Act"  shall  have  the  meaning  set  forth  in the preamble, above.

     "1934  Act"  shall  mean  the Securities Exchange Act of 1934, as it may be
amended.

     "Affiliate"  shall  have  the  meaning  specified  in  Section 5(h), below.

     "Agreement"  shall  mean  this  Investment  Agreement.

"Best  Bid"  shall  mean  the  highest  posted  bid  price  of the Common Stock.

     "Buy  In"  shall  have  the  meaning  specified  in  Section  6,  below.

     "Buy  In  Adjustment Amount" shall have the meaning specified in Section 6.

     "Closing"  shall  have  the  meaning  specified  in  Section  2(h).

     "Closing  Date"  shall mean seven (7) Trading Days following the Put Notice
Date.

"Common  Stock"  shall  have  the  meaning  set  forth  in  the preamble to this
Agreement.

     "Control"  or  "Controls" shall have the meaning specified in Section 5(h).

     "Covering  Shares"  shall  have  the  meaning  specified  in  Section  6.

     "Effective  Date"  shall mean the date the SEC declares effective under the
1933  Act  the  Registration  Statement  covering  the  Securities.

     "Environmental  Laws"  shall  have  the  meaning specified in Section 4(m),
below.

     "Execution  Date"  shall  mean  the  date indicated in the preamble to this
Agreement.

     "Indemnitiees"  shall  have  the  meaning  specified  in Section 11, below.

     "Indemnified  Liabilities"  shall have the meaning specified in Section 11,
below.

     "Ineffective  Period"  shall  mean any period of time that the Registration
Statement  or  any  Supplemental  Registration  Statement  (as  defined  in  the
Registration  Rights  Agreement)  becomes ineffective or unavailable for use for
the  sale  or resale, as applicable, of any or all of the Registrable Securities
(as  defined  in  the  Registration  Rights Agreement) for any reason (or in the
event  the  prospectus under either of the above is not current and deliverable)
during  any  time  period  required  under  the  Registration  Rights Agreement.

     "Investor"  shall  have  the  meaning  indicated  in  the  preamble of this
Agreement.

     "Major  Transaction"  shall  have  the  meaning  specified in Section 2(g),
above.

     "Material Adverse Effect" shall have the meaning specified in Section 4(a).

     "Maximum Common Stock Issuance" shall have the meaning specified in Section
2(i).

     "Minimum  Acceptable  Price" with respect to any Put Notice Date shall mean
75%  of the lowest closing bid prices for the ten Trading Day period immediately
preceding  such  Put  Notice  Date.

     "Open  Period" shall mean the period beginning on and including the Trading
Day  immediately following the Effective Date and ending on the earlier to occur
of  (I)  the  date  which is thirty six (36) months from the Effective Date; and
(II)  termination  of  the  Agreement  in  accordance  with  Section  9,  below.

      "Pricing  Period"  shall  mean the period beginning on the Put Notice Date
and  ending  on  and including the date that is five (5) Trading Days after such
Put  Notice  Date.

     "Principal  Market"  shall  mean  the  American  Stock  Exchange, Inc., the
National  Association  of  Securities  Dealers,  Inc.  Over-the-Counter Bulletin
Board,  the  Nasdaq  National  Market  System  or  the  Nasdaq  SmallCap Market,
whichever  is  the  principal  market  on  which  the  Common  Stock  is listed.

<PAGE>
"Prospectus"  shall mean the prospectus, preliminary prospectus and supplemental
prospectus  used  in  connection  with  the  Registration  Statement.

     "Purchase Amount" shall mean the total amount being paid by the Investor on
a  particular  Closing  Date  to  purchase  the  Securities.

     "Purchase Price" shall mean ninety-five percent (95%) of the average of the
three  lowest  closing  Best  Bid  prices of the Common Stock during the Pricing
Period.

     "Put  Amount"  shall  have  the  meaning  set forth in Section 2(b) hereof.

     "Put  Notice"  shall  mean  a  written  notice  sent to the Investor by the
Company  stating  the  Put  Amount  of Shares the Company intends to sell to the
Investor  pursuant  to the terms of the Agreement and stating the current number
of  Shares  issued  and  outstanding  on  such  date.

     "Put  Notice Date" shall mean the Trading Day immediately following the day
on  which  the  Investor  receives  a  Put Notice, however a Put Notice shall be
deemed delivered on (X) the Trading Day it is received by facsimile or otherwise
if such notice is received prior to 9:00 am Eastern Time, or (Y) the immediately
succeeding Trading Day if it is received by facsimile or otherwise after 9:00 am
Eastern  Time  on a Trading Day.  No Put Notice may be deemed delivered on a day
that  is  not  a  Trading  Day.

     "Put Restriction" shall mean the days between the end of the Pricing Period
and  the  date on which the Put closed.  During this time, the Company shall not
be  entitled  to  deliver  another  Put  Notice.

     "Registration  Period"  shall  have  the meaning specified in Section 5(c),
below.

     "Registration  Rights  Agreement"  shall  have the meaning set forth in the
recitals,  above.

     "Registration  Statement"  means  the registration statement of the Company
filed  under  the  1933  Act  covering  the  Common  Stock  issuable  hereunder.

     "Related  Party"  shall  have  the  meaning  specified  in  Section  5(h).

     "Resolution"  shall  have  the  meaning  specified  in  Section  8(e).

     "SEC"  shall  mean  the  U.S.  Securities  &  Exchange  Commission.

     "SEC  Documents"  shall  have  the  meaning  specified  in  Section  4(f).

     "Securities"  shall  mean the shares of Common Stock issued pursuant to the
terms  of  the  Agreement.

     "Shares"  shall  mean  the  shares  of  the  Company's  Common  Stock.

     "Sold  Shares"  shall  have  the  meaning  specified  in  Section  6.

     "Subsidiaries"  shall  have  the  meaning  specified  in  Section  4(a).

     "Trading  Day"  shall  mean  any  day on which the Principal Market for the
Common  Stock  is  open  for  trading,  from the hours of 9:30 am until 4:00 pm.

<PAGE>
"Transaction  Documents"  shall  mean  this  Agreement,  the Registration Rights
Agreement,  and  each of the other agreements entered into by the parties hereto
in  connection  with  this  Agreement.

     "Valuation  Event"  shall  have  the  meaning  specified  in  Section 2(j).


SECTION  2.  PURCHASE  AND  SALE  OF  COMMON  STOCK.

     (A)  PURCHASE  AND  SALE  OF  COMMON  STOCK.  Subject  to  the  terms  and
conditions  set  forth herein, the Company shall issue and sell to the Investor,
and  the  Investor  shall purchase from the Company, up to that number of Shares
having  an  aggregate  Purchase  Price  of  Five  Million  Dollars ($5,000,000).

     (B)  DELIVERY  OF  PUT  NOTICES.

     (I)  Subject  to the terms and conditions of the Transaction Documents, and
from  time  to  time  during  the  Open  Period,  the  Company  may, in its sole
discretion,  deliver  a  Put  Notice to the Investor which states the Put Amount
which  the  Company  intends to sell to the Investor on a Closing Date.  The Put
Notice shall be in the form attached hereto as Exhibit B and incorporated herein
by  reference.  The  amount  that  the  Company  shall be entitled to Put to the
Investor  in  any single Put Notice (the "Put Amount") shall be equal to, at the
Company's  election, either: (A) two hundred percent (200%) of the average daily
volume  (U.S.  market  only)  of  the Common Stock for the ten (10) Trading Days
prior  to the applicable Put Notice Date, multiplied by the average of the three
(3)  daily  closing  Best  Bid prices immediately preceding the Put Date, or (B)
twenty-five  thousand  $25,000; provided that in no event will the Put Amount be
more  than  One  Million  Dollars  ($1,000,000)  with respect to any single Put.
During the Open Period, the Company shall not be entitled to submit a Put Notice
until  after the previous Closing has been completed. The Purchase Price for the
Common  Stock  identified  in  the Put Notice shall be equal to 95% of the three
lowest  closing  Best  Bid  price of the Common Stock during the Pricing Period.

     (II)  If  any  closing  bid price during the applicable Pricing Period with
respect  to  that  Put  Notice  is  less than 75% of the lowest closing Best Bid
prices  of the Common Stock for the fifteen Trading Days prior to the Put Notice
Date  (the  "Minimum  Acceptable  Price"),  the Put Notice will terminate at the
Company's  request.  In  the event that the closing bid price for the applicable
Pricing Period is less than the Minimum Acceptable Price, the Company may elect,
by  sending  written  notice  to  the  Investor  to  cancel  the  Put  Notice.

     (III)  Within  seven  calendar days prior the commencement of each calendar
quarter occurring subsequent to the commencement of the Open Period, the Company
shall  undertake  to notify Investor as to its reasonable expectations as to the
Put Amount it intends to raise during such calendar quarter, if any, through the
issuance  of  Put Notices. Such notification shall constitute only the Company's
good  faith  estimate  with respect to such calendar quarter and shall in no way
obligate  the  Company  to  raise  such  amount  during such calendar quarter or
otherwise limit its ability to deliver Put Notices during such calendar quarter.
The  failure  by  the  Company  to  comply  with  this provision may be cured by
notifying  the  Investor at any time as to the Company's reasonable expectations
with  respect  to  the  current  calendar  quarter.

     (C)  INTEREST.  It  is  the intention of the parties that any interest that
may  be  deemed  to be payable under this Agreement shall not exceed the maximum
amount  permitted  under  applicable law. If any applicable law sets the maximum
interest  amount,  and  any  payment  required under this Agreement exceeds such
limit,  then:  (I)  any  such  interest  shall  be  reduced  by  the  amount

<PAGE>
necessary  to  reduce  the interest to the legally permitted limit; and (II) any
sums  already collected (if any) from a party which exceed the legally permitted
limits  will  be  refunded  to  such  party.

     (D)  INVESTOR'S  OBLIGATION  TO PURCHASE SHARES.  Subject to the conditions
set  forth  in  this  Agreement,  following  the Investor's receipt of a validly
delivered  Put  Notice,  the  Investor  shall  be  required to purchase from the
Company  during  the  related  Pricing  Period  that  number of Shares having an
aggregate  Purchase Price equal to the lesser of (i) the Put Amount set forth in
the Put Notice, and (ii) 20% of the aggregate trading volume of the Common Stock
during  the  applicable Pricing Period times (x) 95% of the three lowest closing
bid  prices  of  the Company's Common Stock during the specified Pricing Period,
but  only  if  said  Shares  bear no restrictive legend, are not subject to stop
transfer instructions, pursuant to Section 2(h), prior to the applicable Closing
Date.


     (E)  LIMITATION  ON  INVESTOR'S OBLIGATION TO PURCHASE SHARES.  In no event
shall  the  Investor  purchase  Shares (whether from the Company or in public or
private secondary transactions) other than pursuant to this Agreement until such
date  as  this  Agreement  is  terminated.

     (F)  CONDITIONS  TO  INVESTOR'S  OBLIGATION  TO  PURCHASE  SHARES.
Notwithstanding  anything  to  the contrary in this Agreement, the Company shall
not  be entitled to deliver a Put Notice and the Investor shall not be obligated
to  purchase any Shares at a Closing (as defined in Section 2(h)) unless each of
the  following  conditions  are  satisfied:

     (I)  a  Registration Statement shall have been declared effective and shall
remain  effective and available for the resale of all the Registrable Securities
(as defined in the Registration Rights Agreement) at all times until the Closing
with  respect  to  the  subject  Put  Notice;

     (II)  at  all  times  during the period beginning on the related Put Notice
Date  and  ending  on  and  including the related Closing Date, the Common Stock
shall have been listed on the Principal Market and shall not have been suspended
from  trading  thereon  for a period of five consecutive Trading Days during the
Open  Period  or one day during a Pricing Period, and the Company shall not have
been notified of any pending or threatened proceeding or other action to de-list
or  suspend  the  Common  Stock;

     (III) the Company has complied with its obligations and is otherwise not in
breach  of  a  material  provision  of, or in default under, this Agreement, the
Registration  Rights  Agreement  or  any  other agreement executed in connection
herewith  which has not been corrected prior to delivery of the Put Notice Date;

     (IV)  no  injunction  shall have been issued and remain in force, or action
commenced  by  a  governmental authority which has not been stayed or abandoned,
prohibiting  the  purchase  or  the  issuance  of  the  Securities;  and

     (V)  the  issuance  of  the  Securities  will  not  violate any shareholder
approval  requirements  of  the  Principal  Market.

If  any of the events described in clauses (i) through (v) above occurs during a
Pricing  Period,  then the Investor shall have no obligation to purchase the Put
Amount  of  Common  Stock  set  forth  in  the  applicable  Put  Notice.

<PAGE>

     (G)  MAJOR  TRANSACTION.  For  purposes  of  this  Agreement,  a  "Major
Transaction"  shall  be  deemed  to have occurred upon the closing of any of the
following events: (I) the consolidation, merger or other business combination of
the  Company  with  or  into  another person (other than pursuant to a migratory
merger  effected  solely  for  the  purposes  of  changing  the  jurisdiction of
incorporation of the Company or other than a transaction in which the Company is
the  surviving  corporation);  (II) the sale or transfer of all or substantially
all  of the Company's assets; or (III) the consummation of a purchase, tender or
exchange  offer  made  to,  and accepted by, the holders of more than 50% of the
economic  interest  in,  or  the  combined voting power of all classes of voting
stock  of,  the  Company.

     (H)  MECHANICS  OF  PURCHASE  OF  SHARES  BY  INVESTOR.  Subject  to  the
satisfaction  of the conditions set forth in Sections 2(f), 7 and 8, the closing
of  the purchase by the Investor of Shares (a "Closing") shall occur on the date
which  is  no  later than seven Trading Days following the applicable Put Notice
Date (each a "Closing Date").  Prior to each Closing Date, (I) the Company shall
deliver  to  the  Investor  pursuant  to  the  this  Agreement,  certificates
representing the Shares to be issued to the Investor on such date and registered
in  the name of the Investor; and (II) the Investor shall deliver to the Company
the  Purchase  Price  to  be  paid  for  such Shares, determined as set forth in
accordance  with  the  terms  of  this Agreement. In lieu of delivering physical
certificates  representing  the  Securities  and  provided  that  the  Company's
transfer  agent  then  is  participating in The Depository Trust Company ("DTC")
Fast  Automated  Securities  Transfer  ("FAST")  program,  upon  request  of the
Investor, the Company shall use its commercially reasonable efforts to cause its
transfer  agent  to  electronically  transmit  the  Securities  by crediting the
account of the Investor's prime broker (which shall be specified by the Investor
a reasonably sufficient time in advance) with DTC through its Deposit Withdrawal
Agent  Commission  ("DWAC")  system.

     The  Company  understands that a delay in the issuance of Securities beyond
the  Closing  Date  could  result  in  economic loss to the Investor.  After the
Effective  Date,  as  compensation  to  the  Investor for such loss, the Company
agrees  to  pay  late  payments  to the Investor for late issuance of Securities
(delivery  of  Securities  after the applicable Closing Date) in accordance with
the  following  schedule  (where  "No. of Days Late" is defined as the number of
days  beyond  the  Closing  Date):

LATE  PAYMENT  FOR  EACH
NO.  OF  DAYS  LATE               $10,000  OF  COMMON  STOCK

          1                         $100
          2                         $200
          3                         $300
          4                         $400
          5                         $500
          6                         $600
          7                         $700
          8                         $800
          9                         $900
          10                        $1,000
          Over  10                  $1,000  +  $200  for  each
                              Business  Day  late  beyond  10  days

The  Company  shall  pay any payments incurred under this Section in immediately
available funds upon demand.  Nothing herein shall limit the Investor's right to
pursue  actual  damages  for  the  Company's  failure  to  issue and deliver the
Securities  to  the Investor, except to the extent that such late payments shall
constitute  payment  for  and  offset  any  such  actual  damages alleged by the
Investor,  and  any  Buy  In  Adjustment  Amount.

<PAGE>
(I)  OVERALL  LIMIT ON COMMON STOCK ISSUABLE. Notwithstanding anything contained
herein  to the contrary, if during the Open Period the Company becomes listed on
an  exchange that limits the number of shares of Common Stock that may be issued
without  shareholder approval, then the number of Shares issuable by the Company
and  purchasable by the Investor,  shall not exceed that number of the shares of
Common  Stock  that  may  be  issuable  without shareholder approval, subject to
appropriate  adjustment for stock splits, stock dividends, combinations or other
similar  recapitalization  affecting the Common Stock (the "Maximum Common Stock
Issuance"), unless the issuance of Shares, in excess of the Maximum Common Stock
Issuance  shall  first  be  approved by the Company's shareholders in accordance
with  applicable  law  and  the  By-laws and Amended and Restated Certificate of
Incorporation  of  the Company, if such issuance of shares of Common Stock could
cause a delisting on the Principal Market. The parties understand and agree that
the  Company's  failure  to seek or obtain such shareholder approval shall in no
way adversely affect the validity and due authorization of the issuance and sale
of  Securities  or  the  Investor's  obligation in accordance with the terms and
conditions  hereof  to  purchase  a  number of Shares in the aggregate up to the
Maximum  Common  Stock Issuance limitation, and that such approval pertains only
to the applicability of the Maximum Common Stock Issuance limitation provided in
this  Section  2(i).

     (J)  For  the  purpose  of this Agreement, the term "Valuation Event" means
the  Company  taking  any  of the following actions at any time during a Pricing
Period:

     (I)  the  subdivision  or  combinations  of  the  Company's  Common  Stock;

(II)  the payment of a dividend or any other distribution with respect to shares
of  the  Company's  Common  Stock;

     (III)  the  issuance  of  any  options  or other rights to subscribe for or
purchase  Common  Stock  ("Options")  or  any  securities  convertible  into  or
exchangeable  for  Common  Stock ("Convertible Securities"), the price per share
for which Common Stock is shall be less than the bid price in effect immediately
prior  to  such  issuance  of  such  Options  or  Convertible  Securities;

     (IV)  the  issuance of shares of Common Stock other than as provided in the
foregoing subsections (i) through (iii), at a price per share less, or for other
consideration  lower,  than  the  bid  price in effect immediately prior to such
issuance,  or  without  consideration;  or

     (V)   the  distribution  of  its assets or evidences of indebtedness to the
holders  of  Common  Stock  as  a dividend in liquidation or by way of return of
capital  or  other than as a dividend payable out of earnings or surplus legally
available for dividends under applicable law or any distribution to such holders
made  in respect of the sale of all or substantially all of the Company's assets
(other  than  under  the circumstances provided for in the foregoing subsections
(i)  through  (iv)).

     (K)  The Company agrees that it shall not take any action that would result
in  a  Valuation  Event  occurring  during  a  Pricing  Period.

     (L)  RESERVED.

(M)  RESERVED.

     (N)  GOVERNMENTAL OR CRIMINAL ACTIONS.  During the Open Period, the Company
or  any  of  its  management or board of directors ("Insiders") shall not be the
cause  for  an  investigation  by  any  governmental agencies whether foreign or
domestic.  All  Insiders  shall also not be charged with any criminal activities
whether  it be foreign or domestic, securities related or non-securities related
for  the  Open  Period.

SECTION  3.  INVESTOR'S  REPRESENTATIONS,  WARRANTIES  AND  COVENANTS.

     The  Investor  represents and warrants to the Company, and covenants, that:

     (A)   SOPHISTICATED  INVESTOR.  The Investor has, by reason of its business
and  financial  experience,  such  knowledge,  sophistication  and experience in
financial  and  business matters and in making investment decisions of this type
that  it  is  capable of (I) evaluating the merits and risks of an investment in
the  Securities  and making an informed investment decision; (II) protecting its
own  interest;  and  (III)  bearing  the economic risk of such investment for an
indefinite  period  of  time.

     (B)  AUTHORIZATION;  ENFORCEMENT.  This Agreement has been duly and validly
authorized,  executed and delivered on behalf of the Investor and is a valid and
binding agreement of the Investor enforceable against the Investor in accordance
with its terms, subject as to enforceability to general principles of equity and
to  applicable  bankruptcy,  insolvency, reorganization, moratorium, liquidation
and  other  similar laws relating to, or affecting generally, the enforcement of
applicable  creditors'  rights  and  remedies.

     (C)  SECTION  9  OF  THE  1934 ACT.  During the term of this Agreement, the
Investor  will  comply with the provisions of Section 9 of the 1934 Act, and the
rules  promulgated thereunder, with respect to transactions involving the Common
Stock.   The Investor agrees not to short, either directly or indirectly through
its  affiliates,  principals  or advisors, the Company's Common Stock during the
term  of  this  Agreement.

     (D)  ACCREDITED  INVESTOR.  Investor  is  an  "Accredited Investor" as that
term  is  defined  in  Rule  501(a)(3)  of  Regulation  D  of  the  1933  Act.

     (E)  NO  CONFLICTS.  The  execution,  delivery  and  performance  of  the
Transaction  Documents  by  the Investor and the consummation by the Investor of
the  transactions contemplated hereby and thereby will not result in a violation
of  Partnership  Agreement  or  other  organizational documents of the Investor.

     (F)   OPPORTUNITY  TO  DISCUSS.  The  Investor  has  had  an opportunity to
discuss  the  business, management and financial affairs of the Company with the
Company's  management  to  a  level  of satisfactory conditions for this type of
investment.

     (G)  INVESTMENT  PURPOSES.  The  Investor  is purchasing the Securities for
its own account for investment purposes and not with a view towards distribution
and agrees to resell or otherwise dispose of the Securities solely in accordance
with  the  registration  provisions of the 1933 Act (or pursuant to an exemption
from  such  registration  provisions).

     (H)  NO  REGISTRATION  AS A BROKER OR DEALER.  The Investor is not and will
not  be  required  to be registered as a "broker or "dealer" under the 1934 Act,
either  as  a  result  of its execution and performance of its obligations under
this  Agreement  or  otherwise.

     (I)  GOOD STANDING.  The Investor is a Limited Partnership, duly organized,
validly  existing  and  in  good  standing  in  the  State  of  Delaware.

(J)     TAX LIABILITIES.  The Investor understands that it is liable for its own
tax  liabilities.

     (K)  REGULATION  M.  The  Investor  will comply with Regulation M under the
1934  Act,  if  applicable

SECTION  4.  REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.

     Except  as  set  forth in the Schedules attached hereto, or as disclosed on
the Company's SEC Documents, the Company represents and warrants to the Investor
that:

     (A)  ORGANIZATION  AND  QUALIFICATION.  The  Company  is a corporation duly
organized  and  validly existing in good standing under the laws of the State of
Delaware,  and  has  the  requisite corporate power and authorization to own its
properties  and  to  carry  on  its business as now being conducted. Each of the
Company  and  its  Subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which its ownership of
property  or the nature of the business conducted by it makes such qualification
necessary,  except  to  the  extent that the failure to be so qualified or be in
good  standing  would  not  have  a  Material  Adverse  Effect.  As used in this
Agreement,  "Material  Adverse  Effect" means any material adverse effect on the
business,  properties,  assets,  operations,  results  of  operations, financial
condition  or  prospects of the Company and its Subsidiaries, if any, taken as a
whole,  or  on  the  transactions  contemplated  hereby or by the agreements and
instruments  to  be  entered into in connection herewith, or on the authority or
ability  of  the  Company  to  perform  its  obligations  under  the Transaction
Documents  (as  defined  in  Section  1  and  4(b),  below).

     (B)  AUTHORIZATION;  ENFORCEMENT;  COMPLIANCE  WITH  OTHER  INSTRUMENTS.

     (I)  The  Company  has the requisite corporate power and authority to enter
into  and perform this Agreement, the Registration Rights Agreement, and each of
the  other  agreements entered into by the parties hereto in connection with the
transactions  contemplated  by  this  Agreement  (collectively, the "Transaction
Documents"), and to issue the Securities in accordance with the terms hereof and
thereof.

(II)  The execution and delivery of the Transaction Documents by the Company and
the  consummation  by  it  of  the transactions contemplated hereby and thereby,
including  without  limitation  the reservation for issuance and the issuance of
the Securities pursuant to this Agreement, have been duly and validly authorized
by  the  Company's Board of Directors and no further consent or authorization is
required  by  the  Company,  its  Board  of  Directors,  or  its  shareholders.

(III)  The  Transaction  Documents  have  been  duly  and  validly  executed and
delivered  by  the  Company.

(IV)  The  Transaction Documents constitute the valid and binding obligations of
the  Company  enforceable  against  the  Company in accordance with their terms,
except  as such enforceability may be limited by general principles of equity or
applicable  bankruptcy,  insolvency,  reorganization, moratorium, liquidation or
similar  laws relating to, or affecting generally, the enforcement of creditors'
rights  and  remedies.

     (C) CAPITALIZATION.  As of the date hereof, the authorized capital stock of
the Company consists of (i) 50,000,000 shares of Common Stock, .01 par value per
share,  of  which  as  of  the  date  hereof,  17,869,309  shares are issued and
outstanding;  1,000,000  shares  of Preferred Stock, .10 par value per share, of
which 8,400 Class A and 300 Class B share are issued and outstanding (as of June
30,  2003)  shares reserved for issuance pursuant to options, warrants and other
convertible  securities.  All  of  such  outstanding  shares  have been, or upon
issuance  will  be, validly issued and are fully paid and nonassessable.  Except
as  disclosed in the Company's publicly available filings with Periodic Filings,
(I) no shares of the Company's capital stock are subject to preemptive rights or
any  other  similar rights or any liens or encumbrances suffered or permitted by
the  Company;  (II) there are no outstanding debt securities; (III) there are no
outstanding  shares  of  capital  stock,  options,  warrants,  scrip,  rights to
subscribe  to,  calls or commitments of any character whatsoever relating to, or
securities  or  rights  convertible  into,  any  shares  of capital stock of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements  by  which  the Company or any of its Subsidiaries is or may become
bound  to  issue additional shares of capital stock of the Company or any of its
Subsidiaries  or  options,  warrants,  scrip,  rights  to subscribe to, calls or
commitments  of  any  character  whatsoever relating to, or securities or rights
convertible  into,  any  shares  of  capital  stock of the Company or any of its
Subsidiaries;  (IV)  there  are  no  agreements  or arrangements under which the
Company  or  any of its Subsidiaries is obligated to register the sale of any of
their  securities under the 1933 Act (except the Registration Rights Agreement);
(V)  there  are  no  outstanding  securities  of  the  Company  or  any  of  its
Subsidiaries  which  contain any redemption or similar provisions, and there are
no  contracts,  commitments, understandings or arrangements by which the Company
or  any  of  its Subsidiaries is or may become bound to redeem a security of the
Company  or any of its Subsidiaries; (VI) there are no securities or instruments
containing  anti-dilution  or  similar  provisions that will be triggered by the
issuance  of  the  Securities  as described in this Agreement; (VII) the Company
does  not  have  any  stock  appreciation  rights  or  "phantom  stock" plans or
agreements  or  any similar plan or agreement; and (VIII) there is no dispute as
to  the classification of any shares of the Company's capital stock. The Company
has  furnished to the Investor, or the Investor has had access through EDGAR to,
true  and  correct  copies  of the Company's Amended and Restated Certificate of
Incorporation,  as  in  effect  on  the  date  hereof  (the  "Certificate  of
Incorporation"), and the Company's By-laws, as in effect on the date hereof (the
"By-laws"),  and the terms of all securities convertible into or exercisable for
Common  Stock and the material rights of the holders thereof in respect thereto.

     (D)  ISSUANCE  OF  SHARES.  The  Company has reserved 10,000,000 Shares for
issuance  pursuant  to  this Agreement has been duly authorized and reserved for
issuance  (subject to adjustment pursuant to the Company's covenant set forth in
Section  5(f)  below)  pursuant  to this Agreement.  Upon issuance in accordance
with  this  Agreement,  the  Securities  will  be validly issued, fully paid and
non-assessable  and  free  from all taxes, liens and charges with respect to the
issue  thereof.  In the event the Company cannot register a sufficient number of
Shares  for  issuance  pursuant to this Agreement, the Company will use its best
efforts  to authorize and reserve for issuance the number of Shares required for
the  Company  to  perform  its  obligations  hereunder  as  soon  as  reasonably
practicable.

     (E)  NO  CONFLICTS.  The  execution,  delivery  and  performance  of  the
Transaction  Documents by the Company and the consummation by the Company of the
transactions  contemplated hereby and thereby will not (I) result in a violation
of  the  Certificate  of  Incorporation,  any  Certificate  of  Designations,
Preferences  and  Rights  of  any  outstanding  series of preferred stock of the
Company  or the By-laws; or (II) conflict with, or constitute a material default
(or  an event which with notice or lapse of time or both would become a material
default)  under,  or  give  to  others  any  rights  of  termination, amendment,
acceleration  or  cancellation  of,  any material agreement, contract, indenture
mortgage,  indebtedness  or  instrument  to  which  the  Company  or  any of its
Subsidiaries  is a party, or result in a violation of any law, rule, regulation,
order,  judgment or decree (including United States federal and state securities
laws  and  regulations  and the rules and regulations of the Principal Market or
principal  securities  exchange  or  trading market on which the Common Stock is
traded  or  listed)  applicable  to the Company or any of its Subsidiaries or by
which  any  property or asset of the Company or any of its Subsidiaries is bound
or  affected.  Except as disclosed in Schedule 4(e), neither the Company nor its
Subsidiaries  is  in  violation  of  any  term  of,  or  in  default  under, the
Certificate  of  Incorporation, any Certificate of Designations, Preferences and
Rights  of  any  outstanding  series  of  preferred  stock of the Company or the
By-laws  or  their  organizational  charter  or  by-laws,  respectively,  or any
contract,  agreement,  mortgage,  indebtedness, indenture, instrument, judgment,
decree  or order or any statute, rule or regulation applicable to the Company or
its  Subsidiaries,  except  for  possible  conflicts,  defaults,  terminations,
amendments,  accelerations,  cancellations  and  violations  that  would  not
individually or in the aggregate have a Material Adverse Effect. The business of
the  Company  and  its  Subsidiaries  is  not  being conducted, and shall not be
conducted,  in  violation  of  any  law,  statute,  ordinance,  rule,  order  or
regulation  of  any  governmental  authority  or  agency,  regulatory  or
self-regulatory  agency,  or court, except for possible violations the sanctions
for  which  either  individually  or  in the aggregate would not have a Material
Adverse  Effect.  Except  as  specifically contemplated by this Agreement and as
required  under  the  1933  Act  and  applicable  states'  securities  laws  and
regulations,  the  Company is not required to obtain any consent, authorization,
permit  or  order of, or make any filing or registration (except the filing of a
registration  statement)  with,  any  court,  governmental  authority or agency,
regulatory  or  self-regulatory  agency  or other third party in order for it to
execute,  deliver  or  perform any of its obligations under, or contemplated by,
the  Transaction  Documents  in
accordance  with  the  terms  hereof  or  thereof. All consents, authorizations,
permits,  orders,  filings  and  registrations  which the Company is required to
obtain  pursuant  to the preceding sentence have been obtained or effected on or
prior to the date hereof and are in full force and effect as of the date hereof.
Except  as  disclosed  in  Schedule  4(e),  the Company and its Subsidiaries are
unaware  of  any  facts  or  circumstances  which  might give rise to any of the
foregoing.  The  Company  is  not,  and will not be, in violation of the listing
requirements of the Principal Market as in effect on the date hereof and on each
of  the  Closing Dates and is not aware of any facts which would reasonably lead
to  delisting  of  the  Common  Stock by the Principal Market in the foreseeable
future.

     (F)  SEC  DOCUMENTS;  FINANCIAL  STATEMENTS.  Since at least November 24th,
2003,  the Company has filed all reports, schedules, forms, statements and other
documents  required  to  be  filed  by it with the SEC pursuant to the reporting
requirements  of  the  1934  Act  (all  of the foregoing filed prior to the date
hereof  and all exhibits included therein and financial statements and schedules
thereto  and  documents  incorporated  by  reference  therein  being hereinafter
referred  to  as the "SEC Documents"). The Company has delivered to the Investor
or  its  representatives,  or  they  have  had access through EDGAR to, true and
complete  copies  of  the  SEC  Documents. As of their respective dates, the SEC
Documents  complied  in  all material respects with the requirements of the 1934
Act  and  the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with  the  SEC,  contained any untrue statement of a material fact or omitted to
state  a  material  fact  required to be stated therein or necessary to make the
statements  therein,  in  light of the circumstances under which they were made,
not misleading. As of their respective filing dates, the financial statements of
the  Company  included  in the SEC Documents complied as to form in all material
respects  with  applicable  accounting  requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared  in  accordance  with  generally  accepted  accounting  principles,
consistently  applied,  during  the  periods  involved  (except  (I)  as  may be
otherwise  indicated  in such financial statements or the notes thereto, or (II)
in  the  case  of  unaudited  interim statements, to the extent they may exclude
footnotes  or  may be condensed or summary statements) and fairly present in all
material  respects the financial position of the Company as of the dates thereof
and  the  results  of  its  operations and cash flows for the periods then ended
(subject,  in  the  case  of  unaudited  statements,  to  normal  year-end audit
adjustments).  No  other  written  information  provided  by or on behalf of the
Company  to  the Investor which is not included in the SEC Documents, including,
without  limitation,  information referred to in Section 4(d) of this Agreement,
contains  any untrue statement of a material fact or omits to state any material
fact  necessary to make the statements therein, in the light of the circumstance
under  which  they are or were made, not misleading. Neither the Company nor any
of  its  Subsidiaries  or  any of their officers, directors, employees or agents
have  provided  the  Investor with any material, nonpublic information which was
not  publicly  disclosed  prior  to  the date hereof and any material, nonpublic
information  provided  to the Investor by the Company or its Subsidiaries or any
of  their  officers,  directors,  employees  or agents prior to any Closing Date
shall  be  publicly  disclosed  by  the  Company  prior  to  such  Closing Date.

     (G)  ABSENCE OF CERTAIN CHANGES.  Except as set forth in the SEC Documents,
the  Company  does  not intend to change the business operations of the Company.
The  Company  has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any bankruptcy law nor does the Company or
its  Subsidiaries  have  any  knowledge  or reason to believe that its creditors
intend  to  initiate  involuntary  bankruptcy  proceedings.

     (H)  ABSENCE  OF  LITIGATION.  Except  as  set  forth in the SEC Documents,
there  is no action, suit, proceeding, inquiry or investigation before or by any
court,  public  board,  government  agency, self-regulatory organization or body
pending  or, to the knowledge of the executive officers of Company or any of its
Subsidiaries,  threatened  against or affecting the Company, the Common Stock or
any  of  the  Company's  Subsidiaries  or  any of the Company's or the Company's
Subsidiaries'  officers  or  directors  in their capacities as such, in which an
adverse  decision  could  have  a  Material  Adverse  Effect.

     (I)  ACKNOWLEDGMENT  REGARDING  INVESTOR'S PURCHASE OF SHARES.  The Company
acknowledges  and  agrees  that the Investor is acting solely in the capacity of
arm's  length  purchaser  with  respect  to  the  Transaction  Documents and the
transactions  contemplated  hereby and thereby. The Company further acknowledges
that  the  Investor  is  not  acting  as a financial advisor or fiduciary of the
Company  (or  in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated hereby and thereby and any advice given by the
Investor  or  any of its respective representatives or agents in connection with
the  Transaction  Documents and the transactions contemplated hereby and thereby
is  merely  incidental to the Investor's purchase of the Securities. The Company
further represents to the Investor that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company  and  its  representatives.

     (J)  NO  UNDISCLOSED  EVENTS,  LIABILITIES,  DEVELOPMENTS OR CIRCUMSTANCES.
Except  as  set  forth  in the SEC Documents, since November 24, 2003, no event,
liability,  development  or  circumstance  has  occurred  or  exists,  or to the
Company's knowledge is contemplated to occur, with respect to the Company or its
Subsidiaries  or  their  respective  business,  properties,  assets,  prospects,
operations or financial condition, that would be required to be disclosed by the
Company  under applicable securities laws on a registration statement filed with
the  SEC relating to an issuance and sale by the Company of its Common Stock and
which  has  not  been  publicly  announced.

     (K) EMPLOYEE RELATIONS.  Neither the Company nor any of its Subsidiaries is
involved  in any union labor dispute nor, to the knowledge of the Company or any
of its Subsidiaries, is any such dispute threatened. Neither the Company nor any
of  its  Subsidiaries  is  a party to a collective bargaining agreement, and the
Company  and  its  Subsidiaries  believe that relations with their employees are
good.  No  executive  officer  (as  defined  in Rule 501(f) of the 1933 Act) has
notified  the Company that such officer intends to leave the Company's employ or
otherwise  terminate  such  officer's  employment  with  the  Company.

     (L)  INTELLECTUAL PROPERTY RIGHTS.  The Company and its Subsidiaries own or
possess  adequate rights or licenses to use all trademarks, trade names, service
marks,  service  mark  registrations,  service  names,  patents,  patent rights,
copyrights,  inventions, licenses, approvals, governmental authorizations, trade
secrets  and  rights  necessary  to  conduct  their respective businesses as now
conducted.  Except  as  set  forth  the  SEC  Documents,  none  of the Company's
trademarks,  trade  names,  service  marks,  service mark registrations, service
names,  patents,  patent  rights,  copyrights,  inventions, licenses, approvals,
government  authorizations,  trade secrets or other intellectual property rights
necessary  to  conduct  its  business as now or as proposed to be conducted have
expired  or  terminated, or are expected to expire or terminate within two years
from  the  date  of this Agreement. The Company and its Subsidiaries do not have
any  knowledge  of  any  infringement  by  the  Company  or  its Subsidiaries of
trademark,  trade  name  rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service mark registrations, trade secret
or  other  similar  rights  of  others, or of any such development of similar or
identical  trade  secrets  or technical information by others and, except as set
forth  on  the SEC Documents, there is no claim, action or proceeding being made
or brought against, or to the Company's knowledge, being threatened against, the
Company  or  its  Subsidiaries  regarding trademark, trade name, patents, patent
rights,  invention,  copyright,  license,  service names, service marks, service
mark  registrations, trade secret or other infringement; and the Company and its
Subsidiaries  are unaware of any facts or circumstances which might give rise to
any  of  the foregoing. The Company and its Subsidiaries have taken commercially
reasonable  security  measures to protect the secrecy, confidentiality and value
of  all  of  their  intellectual  properties.

     (M)  ENVIRONMENTAL  LAWS.  The Company and its Subsidiaries (I) are, to the
knowledge  of  management  of  the  Company,  in  compliance  with  any  and all
applicable  foreign,  federal,  state and local laws and regulations relating to
the protection of human health and safety, the environment or hazardous or toxic
substances  or  wastes,  pollutants or contaminants ("Environmental Laws"); (II)
have,  to  the  knowledge  of  management  of the Company, received all permits,
licenses or other approvals required of them under applicable Environmental Laws
to  conduct  their  respective  businesses;  and (III) are in compliance, to the
knowledge  of  the  Company,  with  all terms and conditions of any such permit,
license  or approval where, in each of the three foregoing cases, the failure to
so  comply  would  have,  individually  or  in the aggregate, a Material Adverse
Effect.

     (N)  TITLE.  The  Company  and  its  Subsidiaries  have good and marketable
title  in  fee  simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects  except  such  as  are  described in the SEC Documents or such as do not
materially  affect  the value of such property and do not interfere with the use
made  and  proposed  to  be  made  of such property by the Company or any of its
Subsidiaries.  Any  real property and facilities held under lease by the Company
or  any  of  its  Subsidiaries  are  held  by  them  under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with  the use made and proposed to be made of such property and buildings by the
Company  and  its  Subsidiaries.

     (O)  INSURANCE.  The  Company  and  each of its Subsidiaries are insured by
insurers  of  recognized  financial responsibility against such losses and risks
and  in  such  amounts  as  management  of the Company reasonably believes to be
prudent  and  customary  in  the  businesses  in  which  the  Company  and  its
Subsidiaries  are  engaged. Neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any  such Subsidiary has any reason to believe that it will not be able to renew
its  existing  insurance coverage as and when such coverage expires or to obtain
similar  coverage  from  similar  insurers  as  may be necessary to continue its
business  at  a  cost  that  would  not  have  a  Material  Adverse  Effect.

     (P)  REGULATORY  PERMITS.  The  Company  and  its Subsidiaries have in full
force  and  effect  all certificates, approvals, authorizations and permits from
the  appropriate  federal,  state,  local  or foreign regulatory authorities and
comparable foreign regulatory agencies, necessary to own, lease or operate their
respective  properties  and  assets and conduct their respective businesses, and
neither  the  Company  nor  any  such  Subsidiary  has  received  any  notice of
proceedings  relating to the revocation or modification of any such certificate,
approval,  authorization  or  permit,  except  for such certificates, approvals,
authorizations  or  permits  which  if  not  obtained,  or  such  revocations or
modifications  which,  would  not  have  a  Material  Adverse  Effect.

     (Q)  INTERNAL  ACCOUNTING  CONTROLS.  The  Company  and  each  of  its
Subsidiaries  maintain  a  system  of internal accounting controls sufficient to
provide  reasonable  assurance  that (I) transactions are executed in accordance
with  management's  general  or  specific  authorizations; (II) transactions are
recorded  as  necessary  to  permit  preparation  of  financial  statements  in
conformity  with  generally accepted accounting principles and to maintain asset
accountability;  (III)  access  to  assets  is permitted only in accordance with
management's  general  or  specific  authorization;  and  (IV)  the  recorded
accountability  for  assets  is  compared with the existing assets at reasonable
intervals  and  appropriate  action  is  taken  with respect to any differences.

     (R)  NO  MATERIALLY ADVERSE CONTRACTS, ETC.  Neither the Company nor any of
its  Subsidiaries  is  subject  to  any  charter,  corporate  or  other  legal
restriction,  or  any  judgment,  decree, order, rule or regulation which in the
judgment  of  the  Company's officers has or is expected in the future to have a
Material  Adverse  Effect.  Neither the Company nor any of its Subsidiaries is a
party  to  any  contract  or  agreement  which  in the judgment of the Company's
officers  has  or  is  expected  to  have  a  Material  Adverse  Effect.

     (S)  TAX  STATUS.  The  Company  and  each  of its Subsidiaries has made or
filed  all  United  States  federal  and state income and all other tax returns,
reports  and  declarations  required  by any jurisdiction to which it is subject
(unless and only to the extent that the Company and each of its Subsidiaries has
set  aside  on  its  books provisions reasonably adequate for the payment of all
unpaid  and  unreported  taxes)  and  has  paid all taxes and other governmental
assessments  and  charges that are material in amount, shown or determined to be
due  on  such returns, reports and declarations, except those being contested in
good  faith and has set aside on its books provision reasonably adequate for the
payment  of  all  taxes  for  periods  subsequent  to  the periods to which such
returns,  reports  or  declarations  apply.  There  are  no  unpaid taxes in any
material  amount  claimed to be due by the taxing authority of any jurisdiction,
and  the  officers  of  the  Company  know  of  no  basis  for  any  such claim.

     (T)  CERTAIN  TRANSACTIONS.  Except as set forth in the SEC Documents filed
at  least  ten  days  prior  to  the  date  hereof  and  except for arm's length
transactions pursuant to which the Company makes payments in the ordinary course
of  business  upon  terms  no  less favorable than the Company could obtain from
third  parties  and  other  than the grant of stock options disclosed in the SEC
Documents,  none  of  the  officers,  directors,  or employees of the Company is
presently a party to any transaction with the Company or any of its Subsidiaries
(other  than  for  services as employees, officers and directors), including any
contract,  agreement  or  other  arrangement  providing  for  the  furnishing of
services to or by, providing for rental of real or personal property to or from,
or  otherwise  requiring  payments  to  or  from  any  officer, director or such
employee  or,  to  the  knowledge  of the Company, any corporation, partnership,
trust or other entity in which any officer, director, or any such employee has a
substantial  interest  or  is  an  officer,  director,  trustee  or  partner.

     (U)  DILUTIVE  EFFECT.  The  Company  understands and acknowledges that the
number  of  Shares  issuable  upon  purchases  pursuant  to  this Agreement will
increase in certain circumstances including, but not necessarily limited to, the
circumstance  wherein  the trading price of the Common Stock declines during the
period between the Effective Date and the end of the Open Period.  The Company's
executive officers and directors have studied and fully understand the nature of
the  transactions  contemplated by this Agreement 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, subject to such
limitations  as  are  expressly  set  forth  in  the  Transaction Documents, its
obligation  to  issue  Shares  of  Common  Stock upon purchases pursuant to this
Agreement  is  absolute and unconditional regardless of the dilutive effect that
such  issuance  may have on the ownership interests of other shareholders of the
Company.


     (V)  LOCK-UP.  The  Company  shall cause its officers, insiders, directors,
affiliates  or other related parties to refrain from selling Common Stock during
each  Pricing  Period.

     (W)  NO  GENERAL  SOLICITATION.  Neither  the  Company,  nor  any  of  its
affiliates,  nor  any  person  acting  on its behalf, has engaged in any form of
general solicitation or general advertising (within the meaning of Regulation D)
in  connection  with  the  offer  or  sale  of  the Common Stock offered hereby.

     (X)  NO  BROKERS, FINDERS OR FINANCIAL ADVISORY FEES OR COMMISSIONS will be
payable  by  the  Company  with  respect to the transaction contemplated by this
Agreement  other  than  described  in  Section  12  (m)  of  this  Agreement.

SECTION  5.  COVENANTS  OF  THE  COMPANY

     (A)  BEST  EFFORTS.  The  Company shall use commercially reasonable efforts
timely  to  satisfy  each of the conditions to be satisfied by it as provided in
Section  7  of  this  Agreement.

     (B)  BLUE  SKY.  The  Company  shall,  at  its sole cost and expense, on or
before  each  of  the  Closing  Dates,  take  such  action  as the Company shall
reasonably  determine  is  necessary  to  qualify  the Securities for, or obtain
exemption  for  the Securities for, sale to the Investor at each of the Closings
pursuant  to  this  Agreement  under applicable securities or "Blue Sky" laws of
such states of the United States, as reasonably specified by Investor, and shall
provide  evidence of any such action so taken to the Investor on or prior to the
Closing  Date.

     (C)  REPORTING  STATUS.  Until  the  earlier to occur of (I) the first date
which  is  after the date this Agreement is terminated pursuant to Section 9 and
on  which  the  Holders  (as  that  term  is  defined in the Registration Rights
Agreement)  may  sell all of the Securities without restriction pursuant to Rule
144(k)  promulgated under the 1933 Act (or successor thereto); and (II) the date
on  which  (A)  the  Holders  shall  have  sold all the Securities; and (B) this
Agreement has been terminated pursuant to Section 9 (the "Registration Period"),
the Company shall file all reports required to be filed with the SEC pursuant to
the  1934  Act,  and  the  Company shall not terminate its status as a reporting
company  under  the  1934  Act.

     (D)  USE  OF  PROCEEDS.  The Company will use the proceeds from the sale of
the  Shares  (excluding amounts paid by the Company for fees as set forth in the
Transaction Documents) for general corporate and working capital purposes or for
other  purposes  deemed  fit  by  the  Company's  Board  of  Directors.

     (E)  FINANCIAL  INFORMATION.  The  Company  agrees to make available to the
Investor  via  EDGAR  or  other  electronic  means the following to the Investor
during  the  Registration  Period:  (I)  within  five (5) Trading Days after the
filing  thereof  with  the SEC, a copy of its Annual Reports on Form 10-KSB, its
Quarterly  Reports  on  Form  10-QSB,  any  Current  Reports on Form 8-K and any
Registration  Statements  or  amendments filed pursuant to the 1933 Act; (II) on
the  same  day  as  the  release thereof, facsimile copies of all press releases
issued  by  the  Company or any of its Subsidiaries; (III) copies of any notices
and other information made available or given to the shareholders of the Company
generally,  contemporaneously with the making available or giving thereof to the
shareholders;  and  (IV)  within  two  (2)  calendar  days of filing or delivery
thereof, copies of all documents filed with, and all correspondence sent to, the
Principal Market, any securities exchange or market, or the National Association
of  Securities  Dealers,  Inc.,  unless  such  information is material nonpublic
information.

     (F)  RESERVATION OF SHARES.  Subject to the following sentence, the Company
shall  take  all  action necessary to at all times have authorized, and reserved
for  the  purpose  of issuance, a sufficient number of Shares of Common Stock to
provide  for  the  issuance  of  the Securities hereunder. In the event that the
Company  determines  that  it  does  not  have a sufficient number of authorized
Shares  to  reserve and keep available for issuance as described in this Section
5(f),  the  Company  shall  use  its  best  efforts  to  increase  the number of
authorized  Shares by seeking shareholder approval for the authorization of such
additional  shares.

     (G)  LISTING.  The  Company  shall promptly secure and maintain the listing
of  all  of  the  Registrable  Securities (as defined in the Registration Rights
Agreement) upon the Principal Market and each other national securities exchange
and  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 of all Registrable Securities from time to time issuable under the terms
of  the  Transaction  Documents.  The  Company shall maintain the Common Stock's
authorization for quotation on the Principal Market. Neither the Company nor any
of  its Subsidiaries shall take any action which would be reasonably expected to
result  in  the  delisting  or  suspension  of the Common Stock on the Principal
Market  (excluding  suspensions  of not more than one trading day resulting from
business  announcements  by  the Company). The Company shall promptly provide to
the  Investor  copies  of  any  notices  it  receives  from the Principal Market
regarding  the  continued  eligibility  of  the Common Stock for listing on such
automated  quotation  system  or  securities exchange. The Company shall pay all
fees  and  expenses  in  connection  with  satisfying its obligations under this
Section  5(g).

     (H)  TRANSACTIONS  WITH AFFILIATES.  The Company shall not, and shall cause
each  of  its  Subsidiaries  not to, enter into, amend, modify or supplement, or
permit any Subsidiary to enter into, amend, modify or supplement, any agreement,
transaction,  commitment  or  arrangement  with  any  of its or any Subsidiary's
officers,  directors,  persons who were officers or directors at any time during
the  previous two (2) years, shareholders who beneficially own five percent (5%)
or  more  of  the  Common Stock, or affiliates or with any individual related by
blood,  marriage  or adoption to any such individual or with any entity in which
any  such  entity  or  individual  owns  a  five percent (5%) or more beneficial
interest  (each  a  "Related  Party"),  except  for  (I)  customary  employment
arrangements  and  benefit  programs  on  reasonable  terms, (II) any agreement,
transaction,  commitment or arrangement on an arms-length basis on terms no less
favorable  than  terms which would have been obtainable from a person other than
such  Related  Party,  or  (III)  any  agreement,  transaction,  commitment  or
arrangement  which  is  approved by a majority of the disinterested directors of
the  Company.  For  purposes  hereof, any director who is also an officer of the
Company  or  any Subsidiary of the Company shall not be a disinterested director
with  respect  to  any  such  agreement, transaction, commitment or arrangement.
"Affiliate"  for  purposes  hereof  means, with respect to any person or entity,
another  person  or  entity that, directly or indirectly, (I) has a five percent
(5%)  or  more  equity  interest in that person or entity, (II) has five percent
(5%)  or  more  common ownership with that person or entity, (III) controls that
person  or  entity,  or (IV) is under common control with that person or entity.
"Control"  or  "Controls"  for purposes hereof means that a person or entity has
the  power,  direct  or  indirect,  to conduct or govern the policies of another
person  or  entity.

     (I)  FILING OF FORM 8-K.  On or before the date which is three Trading Days
after  the  Execution  Date, the Company shall file a Current Report on Form 8-K
with  the  SEC  describing  the  terms  of  the  transaction contemplated by the
Transaction  Documents  in  the form required by the 1934 Act, if such filing is
required.

     (J)  CORPORATE  EXISTENCE.  The  Company  shall  use  its  best  efforts to
preserve  and  continue  the  corporate  existence  of  the  Company.

     (K)  NOTICE  OF  CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF RIGHT
TO MAKE A PUT. The Company shall promptly notify Investor upon the occurrence of
any  of  the  following events in respect of a Registration Statement or related
prospectus in respect of an offering of the Securities and shall not deliver any
Put  Notice  during the continuation of any of the following events: (I) receipt
of  any  request  for  additional information by the SEC or any other federal or
state  governmental  authority  during  the  period  of  effectiveness  of  the
Registration  Statement  for  amendments  or  supplements  to  the  Registration
Statement  or  related  prospectus;  (II)  the  issuance by the SEC or any other
federal  or  state  governmental  authority  of  any  stop  order suspending the
effectiveness of any Registration Statement or the initiation of any proceedings
for  that  purpose;  (III)  receipt  of  any  notification  with  respect to the
suspension  of  the  qualification or exemption from qualification of any of the
Securities  for sale in any jurisdiction or the initiation or threatening of any
proceeding  for  such  purpose;  (IV)  the happening of any event that makes any
statement  made  in  such  Registration  Statement  or related prospectus or any
document  incorporated  or deemed to be incorporated therein by reference untrue
in  any  material  respect  or  that  requires  the making of any changes in the
Registration  Statement, related prospectus or documents so that, in the case of
a Registration Statement, it will not contain any untrue statement of a material
fact  or  omit  to  state  any  material  fact  required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the  related  prospectus, it will not contain any untrue statement of a material
fact  or  omit  to  state  any  material  fact  required to be stated therein or
necessary  to  make  the  statements  therein, in the light of the circumstances
under  which  they  were  made, not misleading; and (V) the Company's reasonable
determination  that  a  post-effective  amendment  to the Registration Statement
would  be appropriate, and the Company shall promptly make available to Investor
any  such  supplement  or amendment to the related prospectus. The Company shall
not  deliver  to  Investor  any Put Notice during the continuation of any of the
foregoing  events.

     (L)  REIMBURSEMENT. If (I) Investor becomes involved in any capacity in any
action,  proceeding  or investigation brought by any shareholder of the Company,
in  connection  with  or  as  a  result  of the consummation of the transactions
contemplated  by  the  Transaction Documents, or if Investor is impleaded in any
such  action,  proceeding or investigation by any person (other than as a result
of  a  breach of the Investor's representations and warranties set forth in this
Agreement);  or  (II)  Investor  becomes involved in any capacity in any action,
proceeding  or investigation brought by the SEC against or involving the Company
or  in  connection  with  or as a result of the consummation of the transactions
contemplated by the Transaction Documents (other than as a result of a breach of
the  Investor's  representations and warranties set forth in this Agreement), or
if  Investor is impleaded in any such action, proceeding or investigation by any
person,  then  in  any  such  case,  the Company will reimburse Investor for its
reasonable legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith, as such expenses are incurred. In
addition,  other  than  with  respect to any matter in which Investor is a named
party, the Company will pay to Investor the charges, as reasonably determined by
Investor,  for  the  time  of  any  officers or employees of Investor devoted to
appearing  and  preparing  to  appear as witnesses, assisting in preparation for
hearings,  trials  or  pretrial matters, or otherwise with respect to inquiries,
hearing,  trials,  and  other proceedings relating to the subject matter of this
Agreement. The reimbursement obligations of the Company under this section shall
be  in  addition  to  any  liability which the Company may otherwise have, shall
extend upon the same terms and conditions to any affiliates of Investor that are
actually  named  in  such  action,  proceeding  or  investigation, and partners,
directors,  agents,  employees, attorneys, accountants, auditors and controlling
persons  (if  any),  as the case may be, of Investor and any such affiliate, and
shall be binding upon and inure to the benefit of any successors of the Company,
Investor  and any such affiliate and any such person. The Company shall likewise
be protected if any action, proceeding or investigation is brought about through
an  act  of  the  Investor.

SECTION  6.  COVER.  If  the  number  of  Shares  represented by any Put Notices
become  restricted or are no longer freely trading for any reason, and after the
applicable  Closing  Date, the Investor purchases, in an open market transaction
or  otherwise,  the  Company's  Common Stock (the "Covering Shares") in order to
make  delivery  in  satisfaction  of a sale of Common Stock by the Investor (the
"Sold  Shares"),  which  delivery  such  Investor  anticipated to make using the
Shares represented by the Put Notice  (a "Buy-In"), the Company shall pay to the
Investor  the  Buy-In  Adjustment  Amount  (as  defined  below).  The  "Buy-In
Adjustment  Amount"  is  the  amount  equal  to  the  excess, if any, of (A) the
Investor's  total  purchase  price (including brokerage commissions, if any) for
the  Covering  Shares over (B) the net proceeds (after brokerage commissions, if
any)  received  by  the  Investor from the sale of the Sold Shares.  The Company
shall  pay the Buy-In Adjustment Amount to the Investor in immediately available
funds  immediately  upon demand by the Investor.  By way of illustration and not
in  limitation of the foregoing, if the Investor purchases Common Stock having a
total  purchase  price  (including  brokerage commissions) of $11,000 to cover a
Buy-In with respect to the Common Stock it sold for net proceeds of $10,000, the
Buy-In  Adjustment  Amount  which  the  Company  will  be required to pay to the
Investor  will  be  $1,000.


SECTION  7.  CONDITIONS  OF  THE  COMPANY'S  OBLIGATION  TO  SELL.

     The obligation hereunder of the Company to issue and sell the Securities to
the  Investor  is further subject to the satisfaction, at or before each Closing
Date,  of each of the following conditions set forth below. These conditions are
for  the  Company's sole benefit and may be waived by the Company at any time in
its  sole  discretion.

     (A)  The  Investor  shall  have  executed  each  of  this Agreement and the
Registration  Rights  Agreement  and  delivered  the  same  to  the  Company.

     (B)  The  Investor  shall  have delivered to the Company the Purchase Price
for the Securities being purchased by the Investor at the Closing (after receipt
of  confirmation of delivery of such Securities) by wire transfer of immediately
available  funds  pursuant  to  the  wire  instructions provided by the Company.

     (C)  Reserved.

     (D)  No  statute,  rule,  regulation,  executive  order,  decree, ruling or
injunction  shall  have  been  enacted,  entered, promulgated or endorsed by any
court  or  governmental  authority of competent jurisdiction which prohibits the
consummation  of  any  of  the  transactions  contemplated  by  this  Agreement.

     (E)  No Valuation Event shall have occurred since the applicable Put Notice
Date.


SECTION  8.  FURTHER  CONDITIONS  OF  THE  INVESTOR'S  OBLIGATION  TO  PURCHASE.

     The  obligation of the Investor hereunder to purchase Securities is subject
to  the  satisfaction,  on or before each Closing Date, of each of the following
conditions  set  forth  below.

     (A)  The  Company shall have executed each of the Transaction Documents and
delivered  the  same  to  the  Investor.

     (B)  The  Common  Stock  shall be authorized for quotation on the Principal
Market  and  trading  in  the  Common Stock shall not have been suspended by the
Principal  Market  or  the  SEC,  at  any  time beginning on the date hereof and
through  and including the respective Closing Date (excluding suspensions of not
more  than one Trading Day resulting from business announcements by the Company,
provided  that such suspensions occur prior to the Company's delivery of the Put
Notice  related  to  such  Closing).

     (C)  The  representations  and  warranties of the Company shall be true and
correct as of the date when made and as of the applicable Closing Date as though
made  at  that time (except for (I) representations and warranties that speak as
of a specific date and (II) with respect to the representations made in Sections
4(g),  (h)  and  (j) and the third sentence of Section 4(k) hereof, events which
occur  on  or  after the date of this Agreement and are disclosed in SEC filings
made by the Company at least ten Trading Days prior to the applicable Put Notice
Date)  and  the  Company  shall  have performed, satisfied and complied with the
covenants, agreements and conditions required by the Transaction Documents to be
performed,  satisfied  or complied with by the Company on or before such Closing
Date.  The  Investor may request an update as of such Closing Date regarding the
representation  contained  in  Section  4(c)  above.

     (D)   The  Company  shall  have  executed and delivered to the Investor the
certificates  representing,  or have executed electronic book-entry transfer of,
the  Securities  (in  such  denominations  as such Investor shall request) being
purchased  by  the  Investor  at  such  Closing.

     (E)  The  Board  of Directors of the Company shall have adopted resolutions
consistent  with Section 4(b)(ii) above (the "Resolutions") and such Resolutions
shall  not  have  been  amended  or  rescinded  prior  to  such  Closing  Date.

     (F)  reserved.

     (G)  No  statute,  rule,  regulation,  executive  order,  decree, ruling or
injunction  shall  have  been  enacted,  entered, promulgated or endorsed by any
court  or  governmental  authority of competent jurisdiction which prohibits the
consummation  of  any  of  the  transactions  contemplated  by  this  Agreement.

     (H)  The Registration Statement shall be effective on each Closing Date and
no  stop  order suspending the effectiveness of the Registration statement shall
be  in  effect  or  shall be pending or threatened. Furthermore, on each Closing
Date  (I)  neither  the Company nor Investor shall have received notice that the
SEC  has  issued  or  intends  to  issue  a  stop  order  with  respect  to such
Registration  Statement or that the SEC otherwise has suspended or withdrawn the
effectiveness of such Registration Statement, either temporarily or permanently,
or  intends  or  has  threatened  to  do so (unless the SEC's concerns have been
addressed  and  Investor  is  reasonably  satisfied  that  the  SEC no longer is
considering or intends to take such action), and (II) no other suspension of the
use or withdrawal of the effectiveness of such Registration Statement or related
prospectus  shall  exist.

     (I)  At  the  time  of  each Closing, the Registration Statement (including
information  or  documents incorporated by reference therein) and any amendments
or supplements thereto shall not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make  the  statements  therein  not  misleading  or  which  would require public
disclosure  or  an  update  supplement  to  the  prospectus.

     (J)  If applicable, the shareholders of the Company shall have approved the
issuance  of  any  Shares  in  excess  of  the  Maximum Common Stock Issuance in
accordance  with  Section  2(i).

     (K)  The  conditions  to  such Closing set forth in Section 2(f) shall have
been  satisfied  on  or  before  such  Closing  Date.

     (L)  The  Company shall have certified to the Investor the number of Shares
of  Common  Stock  outstanding  when  a  Put  Notice  is  given to the Investor.


SECTION  9.  TERMINATION.  This  Agreement  shall  terminate  upon  any  of  the
following  events:

     (I)  when  the  Investor has purchased an aggregate of Five Million Dollars
($5,000,000)  in  the  Common  Stock  of the Company pursuant to this Agreement;
provided  that the Company's representations, warranties and covenants contained
in  this  Agreement  insofar  as  applicable  to  the  transactions  consummated
hereunder  prior  to  such  termination,  shall  survive the termination of this
Agreement  for  the  period  of  any  applicable  statute  of  limitations;

     (II)  on the date which is thirty-six (36) months after the Effective Date;

     (III)  if  the  Company shall file or consent by answer or otherwise to the
entry  of an order for relief or approving a petition for relief, reorganization
or  arrangement  or  any other petition in bankruptcy for liquidation or to take
advantage of any bankruptcy or insolvency law of any jurisdiction, or shall make
an  assignment  for  the  benefit  of  its  creditors,  or  shall consent to the
appointment  of  a  custodian,  receiver,  trustee or other officer with similar
powers  of  itself  or  of  any  substantial  part  of its property, or shall be
adjudicated  a  bankrupt  or  insolvent,  or shall take corporate action for the
purpose  of  any  of  the  foregoing, or if a court or governmental authority of
competent  jurisdiction  shall  enter an order appointing a custodian, receiver,
trustee  or other officer with similar powers with respect to the Company or any
substantial  part of its property or an order for relief or approving a petition
for  relief  or  reorganization  or  any  other  petition  in  bankruptcy or for
liquidation  or  to  take  advantage  of any bankruptcy or insolvency law, or an
order  for  the dissolution, winding up or liquidation of the Company, or if any
such  petition  shall  be  filed  against  the  Company;

     (IV)  if  the  Company  shall  issue  or  sell  any  equity  securities  or
securities  convertible  into,  or  exchangeable for, equity securities or enter
into  any  other equity financing facility during the Open Period, other than in
compliance  with  Section  4(v);

SECTION  10.  SUSPENSION.  This  Agreement  shall  be  suspended upon any of the
following  events,  and  shall  remain  suspended until such event is rectified:

     (V)  the trading of the Common Stock is suspended by the SEC, the Principal
Market or the NASD for a period of five consecutive Trading Days during the Open
Period;

     (VI)     the  Company  shall  not  have  filed  with  the  SEC  the initial
Registration  Statement with respect to the resale of the Registrable Securities
in accordance with the terms of the initial Registration Rights Agreement within
60  calendar  days of the date hereof or the Registration Statement has not been
declared  effective  within  180  calendar  days  of  the  date  hereof;  or

     (VII)  The  Common  Stock  ceases  to  be  registered under the 1934 Act or
listed  or  traded  on  the Principal Market.  Upon the occurrence of one of the
above-described  events,  the Company shall send written notice of such event to
the  Investor.


SECTION  11.  INDEMNIFICATION.  In  consideration  of  the  parties  mutual
obligations set forth in the Transaction Documents, each of the parties (in such
capacity,  an  "Indemnitor")  shall defend, protect, indemnify and hold harmless
the  other  and  all  of  the  other  party's shareholders, officers, directors,
employees,  counsel,  and  direct or indirect investors and any of the foregoing
person's  agents  or other representatives (including, without limitation, those
retained  in  connection  with  the transactions contemplated by this Agreement)
(collectively,  the  "Indemnitees") from and against any and all actions, causes
of  action,  suits,  claims,  losses,  costs,  penalties,  fees, liabilities and
damages,  and expenses in connection therewith (irrespective of whether any such
Indemnitee  is  a  party  to  the  action for which indemnification hereunder is
sought),  and  including  reasonable  attorneys'  fees  and  disbursements  (the
"Indemnified  Liabilities"),  incurred  by  any  Indemnitee  as  a result of, or
arising  out  of,  or  relating  to  (I)  any misrepresentation or breach of any
representation  or  warranty  made  by  the Indemnitor or any other certificate,
instrument  or  document  contemplated hereby or thereby; (II) any breach of any
covenant, agreement or obligation of the Indemnitor contained in the Transaction
Documents  or any other certificate, instrument or document  contemplated hereby
or  thereby; or (III) any cause of action, suit or claim brought or made against
such  Indemnitee  by  a  third  party  and  arising out of or resulting from the
execution,  delivery, performance or enforcement of the Transaction Documents or
any  other  certificate,  instrument or document contemplated hereby or thereby,
except  insofar  as  any such misrepresentation, breach or any untrue statement,
alleged  untrue statement, omission or alleged omission is made in reliance upon
and  in  conformity  with  written  information furnished to Indemnitor which is
specifically  intended  for  use  in  the  preparation  of any such Registration
Statement,  preliminary  prospectus, prospectus or amendments to the prospectus.
To  the  extent  that  the  foregoing  undertaking  by  the  Indenitor  may  be
unenforceable for any reason, the Indemnitor shall make the maximum contribution
to  the payment and satisfaction of each of the Indemnified Liabilities which is
permissible  under  applicable  law.  The  indemnity provisions contained herein
shall  be  in  addition  to any cause of action or similar rights Indemnitor may
have,  and  any liabilities the Indemnitor or the Indemnitees may be subject to.


SECTION  12.  GOVERNING  LAW;  MISCELLANEOUS.

     (A)  GOVERNING  LAW. This Agreement shall be governed by and interpreted in
accordance  with the laws of the Commonwealth of Massachusetts without regard to
the principles of conflict of laws. Each party hereby irrevocably submits to the
exclusive  jurisdiction  of  the state and federal courts sitting in the City of
Boston,  County  of Suffolk, for the adjudication of any dispute hereunder or in
connection  herewith  or  with  any transaction contemplated hereby or discussed
herein,  and  hereby  irrevocably  waives, and agrees not to assert in any suit,
action  or  proceeding,  any  claim  that  it  is  not personally subject to the
jurisdiction  of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each  party hereby irrevocably waives personal service of process and
consents  to  process  being  served  in  any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service  of process and notice thereof. Nothing contained herein shall be deemed
to  limit  in any way any right to serve process in any manner permitted by law.
If  any  provision  of  this  Agreement shall be invalid or unenforceable in any
jurisdiction,  such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity  or  enforceability  of  any  provision  of this Agreement in any other
jurisdiction.

     (B)  LEGAL  FEES; AND MISCELLANEOUS FEES.  Except as otherwise set forth in
the  Transaction  Documents,  the Company shall pay the fees and expenses of its
advisers,  counsel,  the  accountants  and  other experts, if any, and all other
expenses  incurred  by  such  party  incident  to  the negotiation, preparation,
execution,  delivery  and performance of this Agreement. Any attorneys' fees and
expenses  incurred  by  either the Company or by the Investor in connection with
the  preparation,  negotiation, execution and delivery of any amendments to this
Agreement  or  relating to the enforcement of the rights of any party, after the
occurrence  of any breach of the terms of this Agreement by another party or any
default  by another party in respect of the transactions contemplated hereunder,
shall  be  paid  on  demand  by  the  party  which breached the Agreement and/or
defaulted,  as  the case may be. The Company shall pay all stamp and other taxes
and  duties  levied  in  connection  with  the  issuance  of  any  Securities.

     (C)  COUNTERPARTS.  This  Agreement  may  be  executed  in  two (2) or more
identical  counterparts,  all  of  which  shall  be  considered one and the same
agreement  and shall become effective when counterparts have been signed by each
party  and  delivered  to  the  other party; provided that a facsimile signature
shall  be  considered  due  execution  and  shall  be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a  facsimile  signature.

     (D)  HEADINGS;  SINGULAR/PLURAL.  The  headings  of  this Agreement are for
convenience  of  reference  and  shall  not  form  part  of,  or  affect  the
interpretation  of,  this  Agreement.  Whenever  required by the context of this
Agreement, the singular shall include the plural and masculine shall include the
feminine.

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

     (F)  ENTIRE  AGREEMENT;  AMENDMENTS.  This  Agreement  supersedes all other
prior  oral  or  written  agreements  between  the  Investor, the Company, their
affiliates  and  persons  acting  on  their  behalf  with respect to the matters
discussed  herein,  and  this  Agreement  and  the instruments referenced herein
(including  the other Transaction Documents) contain the entire understanding of
the  parties  with respect to the matters covered herein and therein and, except
as  specifically  set  forth  herein  or  therein,  neither  the Company nor the
Investor  makes  any  representation,  warranty,  covenant  or  undertaking with
respect  to  such  matters.  No provision of this Agreement may be amended other
than  by an instrument in writing signed by the Company and the Investor, and no
provision  hereof may be waived other than by an instrument in writing signed by
the  party  against  whom  enforcement  is  sought.

     (G)  NOTICES.  Any notices or other communications required or permitted to
be given under the terms of this Agreement must be in writing and will be deemed
to  have  been  delivered (I) upon receipt, when delivered personally; (II) upon
receipt,  when  sent  by  facsimile  (provided  confirmation  of transmission is
mechanically or electronically generated and kept on file by the sending party);
or  (III)  one  (1)  day  after  deposit  with a nationally recognized overnight
delivery  service,  in  each case properly addressed to the party to receive the
same.  The  addresses  and  facsimile  numbers for such communications shall be:

     If  to  the  Company:

CompuMed
5777  West  Century  Blvd
Suite  1285
Los  Angeles,  CA  90045
Telephone:        310-258-5000
Facsimile:     310-645-6055

     With  Copy  to:




     If  to  the  Investor:
          Dutchess  Private  Equities  fund,  LP
          312  Stuart  Street
     Boston,  MA  02116
          Telephone:     617-960-3582
          Facsimile:     617-960-3772

     Each party shall provide five days' prior written notice to the other party
of  any  change  in  address  or  facsimile  number.

     (H)  NO  ASSIGNMENT.  This  Agreement  may  not  be  assigned.

     (I)  NO  THIRD  PARTY  BENEFICIARIES.  This  Agreement  is intended for the
benefit  of  the  parties  hereto  and  is  not  for the benefit of, nor may any
provision  hereof  be  enforced  by,  any  other  person.

     (J)  SURVIVAL.  The  representations  and warranties of the Company and the
Investor  contained  in Sections 2 and 3, the agreements and covenants set forth
in Sections 4 and 5, and the indemnification provisions set forth in Section 11,
shall  survive  each  of  the  Closings  and  the termination of this Agreement.

     (K)  PUBLICITY.  The  Company and Investor shall consult with each other in
issuing any press releases or otherwise making public statements with respect to
the  transactions  contemplated  hereby  and no party shall issue any such press
release  or  otherwise  make any such public statement without the prior written
consent  of  the other parties, which consent shall not be unreasonably withheld
or delayed, except that no prior consent shall be required if such disclosure is
required by law, in which such case the disclosing party shall provide the other
parties  with  prior  notice  of  such  public  statement.  Notwithstanding  the
foregoing,  the Company shall not publicly disclose the name of Investor without
the  prior  written  consent  of such Investor, except to the extent required by
law.  Investor  acknowledges  that  this  Agreement  and  all  or  part  of  the
Transaction  Documents  may be deemed to be "material contracts" as that term is
defined by Item 601(b)(10) of Regulation S-B, and that the Company may therefore
be  required  to  file  such  documents  as  exhibits to reports or registration
statements  filed  under  the  1933 Act or the 1934 Act. Investor further agrees
that  the  status of such documents and materials as material contracts shall be
determined  solely  by  the  Company,  in  consultation  with  its  counsel.

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

     (M)  PLACEMENT  AGENT.  The  Company  agrees  to  pay  Charleston  Capital
Corporation,  ("CCC") a registered broker dealer, $10,000.  The $10,000 shall be
payable  from  1%  (one  percent) of the Put Amount on each draw toward the fee.
CCC  will also act as an unaffiliated broker dealer.  The Investor shall have no
obligation  with respect to any fees or with respect to any claims made by or on
behalf  of  other  persons  or  entities for fees of a type contemplated in this
Section  that may be due in connection with the transactions contemplated by the
Transaction  Documents.  The  Company  shall  indemnify  and  hold  harmless the
Investor,  their employees, officers, directors, agents, and partners, and their
respective  affiliates,  from  and  against  all  claims, losses, damages, costs
(including  the  costs of preparation and attorney's fees) and expenses incurred
in  respect  of any such claimed or existing fees, as such fees and expenses are
incurred.

     (N)  NO  STRICT  CONSTRUCTION.  The language used in this Agreement will be
deemed  to be the language chosen by the parties to express their mutual intent,
and  no  rules  of  strict  construction  will  be  applied  against  any party.

     (O)  REMEDIES.  The  Investor  and each holder of the Shares shall have all
rights  and  remedies  set  forth  in this Agreement and the Registration Rights
Agreement  and  all  rights and remedies which such holders have been granted at
any  time under any other agreement or contract and all of the rights which such
holders  have under any law. Any person having any rights under any provision of
this  Agreement  shall  be entitled to enforce such rights specifically (without
posting  a  bond or other security), to recover damages by reason of any default
or  breach  of  any  provision  of  this  Agreement,  including  the recovery of
reasonable attorneys fees and costs, and to exercise all other rights granted by
law.

     (P)  PAYMENT  SET  ASIDE. To the extent that the Company makes a payment or
payments  to  the Investor hereunder or the Registration Rights Agreement or the
Investor  enforces  or  exercises  its  rights hereunder or thereunder, and such
payment  or payments or the proceeds of such enforcement or exercise or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set  aside,  recovered from, disgorged by or are required to be refunded, repaid
or  otherwise  restored  to the Company, a trustee, receiver or any other person
under  any  law  (including,  without  limitation,  any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the extent of any
such  restoration  the  obligation  or  part  thereof  originally intended to be
satisfied  shall  be  revived  and continued in full force and effect as if such
payment  had  not  been  made  or  such  enforcement or setoff had not occurred.

     (Q)  PRICING  OF  COMMON  STOCK.  For  purposes  of this Agreement, the bid
price  of  the  Common  Stock  in  this  Agreement  shall  be  as  reported  on
Bloomberg.com.



                                     * * *
<PAGE>

                                          SIGNATURE PAGE OF INVESTMENT AGREEMENT

     The  signature  of  the  authorized representative of the on this Signature
Page  evidences  the Company's agreement to be bound by the terms and conditions
of the Investment Agreement and the Registration Rights Agreement as of the date
first  written  above.

     The undersigned signatory hereby certifies that he has read and understands
the  Investment  Agreement,  and the representations made by the Company in this
Investment Agreement are true and accurate, and on behalf of the Company, agrees
to  be  bound  by  its  terms.



DUTCHESS  PRIVATE  EQUITIES  FUND,  L.P.
     BY  ITS  GENERAL  PARTNER,
DUTCHESS  CAPITAL  MANAGEMENT,  LLC



     By:_/s/ Douglas H. Leighton___________________
     Douglas  H.  Leighton,  Managing  Member


COMPUMED,  INC.



By__/s/ John G. McLaughlin____________________________
   John  G.  McLaughlin,  Chief  Executive  Officer







                                LIST OF EXHIBITS
                                -----------------


EXHIBIT  A               Registration  Rights  Agreement
EXHIBIT  B               Pt  Notice
EXHIBIT  C               [reserved]
EXHIBIT  D               Broker  Representation  Letter
EXHIBIT  E               Board  Resolution
EXHIBIT  F               Put  Settlement  Sheet



                                LIST OF SCHEDULES
                                -----------------

Schedule  4(a)                 Subsidiaries
Schedule  4(c)                 Capitalization
Schedule  4(e)                 Conflicts
Schedule  4(g)                 Material  Changes
Schedule  4(h)                 Litigation
Schedule  4(l)                  Intellectual  Property
Schedule  4(n)                 Liens
Schedule  4(t)                  Certain  Transactions






<PAGE>

     EXHIBIT  A


<PAGE>

     EXHIBIT  B


<PAGE>

     EXHIBIT  C


<PAGE>

                                    EXHIBIT D

                              [BROKER'S LETTERHEAD]




Date
Via  Facsimile

Attention:
______________________
______________________
______________________

                               Re: CompuMed, Inc.

Dear  __________________:

It  is  our understanding that the Form______ Registration Statement bearing SEC
File  Number ( ___-______) filed by CompuMed, Inc., on Form _____ on __________,
2003  was  declared  effective  on  _________,  2003.

This  letter  shall  confirm  that  ______________ shares of the Common Stock of
CompuMed,  Inc. are being sold on behalf of __________________ and that we shall
comply  with the prospectus delivery requirements set forth in that Registration
Statement  by  filing  the  same  with  the  purchaser.

If  you  have  any  questions  please  do  not  hesitate  to  call.

Sincerely,



______________________



cc:  .





<PAGE>

     EXHIBIT  E


<PAGE>

     EXHIBIT  B

Date:

RE:  Put  Notice  Number  __

Dear  Mr.  Leighton,

This  is  to inform you that as of today, CompuMed, Inc., a Delaware corporation
(the  "Company"), hereby elects to exercise its right pursuant to the Investment
Agreement  to  require Dutchess Private Equities Fund, LP. to purchase shares of
its  common  stock.   The  Company  hereby  certifies  that:

The  amount  of  this  put  is  $__________.

The  Pricing  Period  runs  from  ________  until  _______.

The  current  number  of  shares  issued  and outstanding as of the Company are:

____________________


Regards,



________________________
John  G.  McLaughlin
CompuMed,  Inc.





                                    EXHIBIT F


                              PUT SETTLEMENT SHEET



Date:

Jerry,

Pursuant  to  the Put given by CompuMed, Inc. to Dutchess Private Equities Fund,
L.P.  on  _________________  200x,  we  are  now submitting the amount of common
shares  for  you  to  issue  to  Dutchess.

Please  have  a  certificate  baring  no  restrictive legend totaling __________
shares  issued  to  Dutchess  Private Equities Fund, LP immediately and send via
DWAC  to  the  following  account:

XXXXXX

If  not  DWAC  eligible,  please  send  FedEx  Priority  Overnight  to:

XXXXXX

Once  these shares are received by us, we will break have the funds wired to the
Company.

Regards,


Douglas  H.  Leighton






                                                                  DATE     PRICE

                                          Date of Day 1     Closing Bid of Day 1
                                          Date of Day 2     Closing Bid of Day 2
                                          Date of Day 3     Closing Bid of Day 3
                                          Date of Day 4     Closing Bid of Day 4
                                          Date of Day 5     Closing Bid of Day 5






LOWEST  3  (THREE)  CLOSING  BID  IN  PRICING  PERIOD


PUT  AMOUNT


AMOUNT  WIRED  TO  COMPANY

PURCHASE  PRICE  (95%  (NINETY-FIVE  PERCENT))

AMOUNT  OF  SHARES  DUE




The  undersigned has completed this Put as of this ___th day of _________, 20xx.

CompuMed,  Inc.

________________________________
John  G.  McLaughlin,  CEO







                          SCHEDULE 4(c)  CAPITALIZATION







                             SCHEDULE 4(e) CONFLICTS












                         SCHEDULE 4(g)  MATERIAL CHANGES







                            SCHEDULE 4(h)  LITIGATION






                      SCHEDULE 4(l)  INTELLECTUAL PROPERTY







                              SCHEDULE 4(n)  LIENS





                       SCHEDULE 4(t)  CERTAIN TRANSACTIONS



<PAGE>