Exhibit 10.1

                         SECURITIES PURCHASE AGREEMENT

     This  Securities Purchase Agreement (this "Agreement") is dated as of March
                                                ---------
31,  2006,  among  Trinity  Learning  Corporation,  a  Utah  corporation  (the
"Company"),  and  each purchaser identified on the signature pages hereto (each,
including  its  successors  and  assigns,  a  "Purchaser"  and  collectively the
                                               ---------
"Purchasers").
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WHEREAS,  subject  to  the  terms and conditions set forth in this Agreement and
pursuant  to  Section  4(2)  of  the  Securities  Act  of  1933, as amended (the
"Securities  Act")  and  Rule 506 promulgated thereunder, the Company desires to
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issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires  to  purchase  from the Company, securities of the Company as more fully
described  in  this  Agreement.

NOW,  THEREFORE,  IN  CONSIDERATION  of  the  mutual covenants contained in this
Agreement,  and  for  other  good  and  valuable  consideration  the receipt and
adequacy  of which are hereby acknowledged, the Company and each Purchaser agree
as  follows:
                                    ARTICLE I
                                   DEFINITIONS
     1.1     Definitions.  In  addition  to  the terms defined elsewhere in this
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Agreement:  (a) capitalized terms that are not otherwise defined herein have the
meanings  given to such terms in the Debentures (as defined herein), and (b) the
following  terms  have  the  meanings  indicated  in  this  Section  1.1:

"Action"  shall  have  the meaning ascribed to such term in Section 3.1(j).
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"Actual  Minimum"  means, as of any date, the maximum aggregate number of shares
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of  Common  Stock  then issued or potentially issuable in the future pursuant to
the  Transaction  Documents,  including  any  Underlying  Shares  issuable  upon
exercise  or  conversion  in  full  of all Warrants and Debentures, ignoring any
conversion  or  exercise  limits  set  forth  therein,  and  assuming  that  any
previously  unconverted  Debentures are held until the fourth anniversary of the
Closing  Date  and  all  interest  are paid in shares of Common Stock until such
fourth  anniversary.

"Affiliate"  means  any  Person that, directly or indirectly through one or more
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intermediaries,  controls  or is controlled by or is under common control with a
Person,  as  such  terms  are  used  in  and  construed under Rule 144 under the
Securities  Act.  With  respect  to  a Purchaser, any investment fund or managed
account  that is managed on a discretionary basis by the same investment manager
as  such  Purchaser  will  be  deemed  to  be  an  Affiliate  of such Purchaser.

"Business  Day"  means any day except Saturday, Sunday, any day which shall be a
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federal  legal  holiday  in  the  United  States  or  any  day  on which banking
institutions in the State of New York are authorized or required by law or other
governmental  action  to  close.

"Closing"  means the closing of the purchase and sale of the Securities pursuant
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to  Section  2.1.

"Closing Date" means the Trading Day when all of the Transaction Documents have
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been  executed  and  delivered  by  the  applicable  parties  thereto,  and  all
conditions  precedent to (i) the Purchasers' obligations to pay the Subscription
Amount  and  (ii)  the Company's obligations to deliver the Securities have been
satisfied  or  waived.

"Commission"  means  the  Securities  and  Exchange  Commission.
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"Common  Stock"  means  the common stock of the Company, no par value per share,
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and  any  other  class of securities into which such securities may hereafter be
reclassified  or  changed  into.

"Common  Stock  Equivalents"  means  any  securities  of  the  Company  or  the
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Subsidiaries  which  would  entitle  the  holder  thereof to acquire at any time
Common  Stock,  including,  without  limitation,  any  debt, Debentures, rights,
options,  warrants  or  other instrument that is at any time convertible into or
exercisable  or  exchangeable  for,  or otherwise entitles the holder thereof to
receive,  Common  Stock.

"Company  Counsel"  means  Sichenzia Ross Friedman Ference LLP with offices
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located  at  1065  Avenue  of  the  Americas,  21st  Floor New York, N.Y. 10018.

"Conversion  Price"  shall  have  the  meaning ascribed to such term in the
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Debentures.

"Debentures"  means,  the  Convertible Debentures due, subject to the terms
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therein,  4  years  from  their  date  of issuance, issued by the Company to the
Purchasers  hereunder,  in  the  form  of  Exhibit  A.
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"Disclosure  Schedules"  shall have the meaning ascribed to such term in Section
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3.1.

"Effective Date" means the date that the initial Registration Statement filed by
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the  Company  pursuant  to  the  Registration Rights Agreement is first declared
effective  by  the  Commission.

"Escrow  Agent"  shall  have the meaning set forth in the Escrow Agreement.
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"Escrow  Agreement"  shall  mean  the Escrow Agreement in substantially the
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form  of  Exhibit  E  hereto  executed and delivered contemporaneously with this
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Agreement.

"Evaluation  Date"  shall  have  the  meaning  ascribed  to such term in Section
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3.1(r).

"Exchange  Act"  means  the Securities Exchange Act of 1934, as amended, and the
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rules  and  regulations  promulgated  thereunder.

"Exempt Issuance" means the issuance of (a) shares of Common Stock or options to
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employees,  consultants  (up  to  ____________),  officers  or  directors of the
Company  pursuant  to any stock or option plan duly adopted by a majority of the
non-employee  members  of the Board of Directors of the Company or a majority of
the  members  of  a  committee  of  non-employee  directors established for such
purpose,  (b)  securities  upon the exercise or exchange of or conversion of any
Securities  issued hereunder and/or other securities exercisable or exchangeable
for  or  convertible  into  shares of Common Stock issued and outstanding on the
date  of  this  Agreement,  provided  that such securities have not been amended
since the date of this Agreement to increase the number of such securities or to
decrease  the exercise, exchange or conversion price of any such securities, (c)
securities issued pursuant to acquisitions or strategic transactions approved by
a majority of the disinterested directors, provided any such issuance shall only
be  to  a  Person  which  is,  itself  or through its subsidiaries, an operating
company  in a business synergistic with the business of the Company and in which
the  Company receives benefits in addition to the investment of funds, but shall
not  include  a transaction in which the Company is issuing securities primarily
for  the  purpose  of  raising capital or to an entity whose primary business is
investing  in  securities,  and  (d)  securities  issued  with the prior written
consent  of  each  of  the  Purchasers.

"GAAP"  shall  have  the  meaning  ascribed to such term in Section 3.1(h).
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"Intellectual  Property  Rights" shall have the meaning ascribed to such term in
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Section  3.1(o).

"Legend  Removal  Date"  shall have the meaning ascribed to such term in Section
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4.1(c).


"Liens"  means  a  lien,  charge, security interest, encumbrance, right of first
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refusal,  preemptive  right  or  other  restriction.

"Material  Adverse  Effect" shall have the meaning assigned to such term in
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Section  3.1(b).

"Material  Permits"  shall  have  the  meaning  ascribed to such term in Section
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3.1(m).

"Maximum  Rate"  shall  have  the meaning ascribed to such term in Section 5.17.
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"Participation  Maximum" shall have the meaning ascribed to such term in Section
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4.13(b).

"Person" means an individual or corporation, partnership, trust, incorporated or
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unincorporated  association,  joint  venture,  limited  liability company, joint
stock  company, government (or an agency or subdivision thereof) or other entity
of  any  kind.

"Pre-Notice"  shall  have  the meaning ascribed to such term in Section 4.13(c).
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"Principal  Amount" shall mean, as to each Purchaser, the aggregate amount to be
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paid  for  the Debenture purchased hereunder as specified below such Purchaser's
name  on the signature page of this Agreement and next to the heading "Principal
Amount,"  in  United  States  Dollars  and  in  immediately  available  funds.

"Proceeding"  means  an  action,  claim,  suit,  investigation  or  proceeding
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(including,  without limitation, an investigation or partial proceeding, such as
a  deposition),  whether  commenced  or  threatened.

"Prohibition  Right"  shall  have  the  meaning ascribed to such term in Section
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4.13(a).

"Purchaser  Party" shall have the meaning ascribed to such term in Section 4.11.
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"Registration  Rights  Agreement" means the Registration Rights Agreement, dated
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the  date hereof, among the Company and the Purchasers, in the form of Exhibit B
                                                                       ---------
attached  hereto.

"Registration Statement" means a registration statement meeting the requirements
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set  forth  in  the Registration Rights Agreement and covering the resale of the
Underlying  Shares  by each Purchaser as provided for in the Registration Rights
Agreement.

"Required  Approvals"  shall  have  the meaning ascribed to such term in Section
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3.1(e).

"Rule  144"  means  Rule  144  promulgated  by  the  Commission  pursuant to the
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Securities  Act,  as  such Rule may be amended from time to time, or any similar
rule  or regulation hereafter adopted by the Commission having substantially the
same  effect  as  such  Rule.

"SEC  Reports"  shall  have the meaning ascribed to such term in Section 3.1(h).
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"Securities"  means  the  Debenture,  the  Warrants,  the Warrant Shares and the
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Underlying  Shares.
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"Securities Act" means the Securities Act of 1933, as amended, and the rules and
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regulations  promulgated  thereunder.

"Short  Sales"  shall  include  all  "short  sales"  as  defined  in Rule 200 of
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Regulation  SHO  under  the Exchange Act (but shall not be deemed to include the
location  and/or  reservation  of  borrowable  shares  of  Common  Stock).

"SRFF"  means  Sichenzia  Ross  Friedman  Ference  LLP.

"Subscription  Amount" shall mean, as to each Purchaser, the aggregate amount to
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be  paid  for  the  Debentures  purchased  hereunder  as  specified  below  such
Purchaser's name on the signature page of this Agreement and next to the heading
"Subscription  Amount",  in  United  States Dollars and in immediately available
funds.

"Subsequent  Financing"  shall have the meaning ascribed to such term in Section
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4.13(b).

"Subsequent  Financing  Notice"  shall have the meaning ascribed to such term in
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Section  4.13(c).

"Subsidiary"  means  any material U.S. subsidiary of the Company as set forth on
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Schedule  3.1(a).

"Trading  Day"  means  a  day  on  which the Common Stock is traded on a Trading
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Market.

"Trading  Market"  means the following markets or exchanges on which the Common
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Stock  is  listed  or  quoted  for  trading  on the date in question: the Nasdaq
Capital  Market,  the  American Stock Exchange, the New York Stock Exchange, the
Nasdaq  National  Market  or  the  OTC  Bulletin  Board.

"Transaction  Documents"  means  this  Agreement,  the  15  %  Senior  Secured
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Convertible  Debenture,  the  Common  Stock  Purchase  Warrant, the Registration
Rights  Agreement,  the Subsidiary Guarantee, the Security Agreement, the Voting
Agreement  and any other documents or agreements executed in connection with the
transactions  contemplated  hereunder.

"Underlying  Shares"  means  the shares of Common Stock issued and issuable upon
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conversion  of  the  Debentures,  upon  exercise  of the Warrants and issued and
issuable in lieu of the cash payment of interest on the Debentures in accordance
with  the  terms  of  the  Debentures.

"VWAP"  means,  for  any  date,  the  price  determined by the first of the
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following clauses that applies: (a) if the Common Stock is then listed or quoted
on a Trading Market, the daily volume weighted average price of the Common Stock
for such date (or the nearest preceding date) on the Trading Market on which the
Common  Stock is then listed or quoted for trading as reported by Bloomberg L.P.
(based  on  a  Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New
York  City  time);  (b)  if  the OTC Bulletin Board is not a Trading Market, the
volume  weighted average price of the Common Stock for such date (or the nearest
preceding  date)  on the OTC Bulletin Board; (c) if the Common Stock is not then
quoted  for trading on the OTC Bulletin Board and if prices for the Common Stock
are  then  reported  in  the  "Pink  Sheets" published by Pink Sheets, LLC (or a
similar organization or agency succeeding to its functions of reporting prices),
the  most  recent bid price per share of the Common Stock so reported; or (d) in
all  other cases, the fair market value of a share of Common Stock as determined
by  an independent appraiser selected in good faith by the Holder and reasonably
acceptable  to  the  Company.

"Warrants"  means  collectively the Common Stock purchase warrants, in the form
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of  Exhibit  C  delivered  to  the  Purchasers at the Closing in accordance with
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Section  2.2(a) hereof, which Warrants shall be exercisable immediately and have
a  term  of  exercise  equal  to  4  years.

"Warrant  Shares" means the shares of Common Stock issuable upon exercise of the
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Warrants.

                                   ARTICLE II
                                PURCHASE AND SALE

2.1     Closing.  On  the  Closing  Date,  upon  the  terms  and  subject to the
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conditions  set forth herein, concurrent with the execution and delivery of this
Agreement  by the parties hereto, the Company agrees to sell, and each Purchaser
agrees to purchase in the aggregate, severally and not jointly, up to $8,500,000
principal   amount  of  the  Debentures,  with  an  initial  Closing  of  up  to
$4,500,000 no later than March 31, 2006 (the "Initial Closing").  Each Purchaser
shall  deliver to the Company via wire transfer or a certified check immediately
available funds equal to their Subscription Amount and the Company shall deliver
to each Purchaser their respective Debenture and Warrants as determined pursuant
to  Section  2.2(a) and the other items set forth in Section 2.2 issuable at the
Closing.  Upon satisfaction of the conditions set forth in Sections 2.2 and 2.3,
the  Closing  shall  occur at the offices of SRFF, or such other location as the
parties  shall  mutually  agree.

2.2     Deliveries.
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(a)  On the  Closing Date, the Company shall deliver or cause to be delivered to
     each  Purchaser  the  following:

     (i)  this  Agreement  duly  executed  by  the  Company;

     (ii) a legal opinion of Company Counsel, in the form of Exhibit D attached
                                                             ---------
          hereto;


     (iii) a Debenture  equal  to  such  Purchaser's  Principal  Amount,
          registered  in  the  name  of  such  Purchaser;

     (iv) a Warrant  registered  in  the  name  of such Purchaser to purchase up
          to a number of shares of Common Stock equal to 40% of such Purchaser's
          Subscription  Amount divided by the Conversion Price, with an exercise
          price  equal  to 120% of the Closing Bid price for the Common Stock on
          the  day  that  is  one  day  prior  to  the  Closing  Date;

     (v)  the Payoff  Letter  from  Instream  Investment  Partners,  LLC,  and
          Bernard  national  Loan  Investors,  Ltd.;

     (vi) the  Registration  Rights  Agreement  duly  executed  by  the Company;

     (vii) a certificate,  signed  by  the  Secretary  of the Company, attaching
          (i)  the  charter  and  by-laws  of  the Company, and (ii) resolutions
          passed  by  its  Board  of  Directors  to  authorize  the transactions
          contemplated  hereby  and  by  the  other  Transaction  Documents, and
          certifying  that  such  documents  are true and complete copies of the
          originals  and  that  such  resolutions  have  not  been  amended  or
          superseded,  it  being understood that each Purchaser may rely on such
          certificate  as  a  representation  and  warranty  of the Company made
          herein;

     (viii) a certificate,  signed  by  the  Chief  Executive  Officer  of  the
          Company,  certifying  that  the conditions specified in Section 2 have
          been  fulfilled  as  of  the  Closing,  it  being understood that each
          Purchaser  may  rely  on  such  certificate  as  though  it  were  a
          representation  and  warranty  of  the  Company  made  herein;

     (ix) the  Escrow  Agreement  duly  executed  by  the  Company;  and

     (x)  the written  voting  agreement,  in  the  form  of  Exhibit F attached
          hereto,  of  all  of  the officers, directors and shareholders holding
          more  than  5% of the issued and outstanding shares of Common Stock on
          the  date  hereof  to  vote  all  Common  Stock  owned by each of such
          officers,  directors  and  shareholders  as of the record date for the
          annual  meeting of shareholders of the Company in favor of Shareholder
          Approval  amounting  to,  in the aggregate, at least 50% of the issued
          and  outstanding Common Stock Such agreement is to be delivered within
          5  days  from  Closing.

(b)  On the  Closing Date, each Purchaser shall deliver or cause to be delivered
     to  the  Company  the  following:

     (i)  this  Agreement  duly  executed  by  such  Purchaser;

     (ii) the sum  of  such  Purchaser's  Subscription  Amount  as  to  the
          applicable  Closing  by  wire  transfer  to  the  Company;

     (iii) the  Registration  Rights  Agreement duly executed by such Purchaser;
           and

     (iv) the  Escrow  Agreement  duly  executed  by  such  Purchaser.

2.3     Closing  Conditions.
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(a)  The obligations of the Company hereunder in connection with the Closing are
     subject  to  the  following  conditions  being  met:

     (i)  the accuracy  in  all  material  respects  when  made  and  on  the
          Closing  Date  of the representations and warranties of the Purchasers
          contained  herein;

     (ii) all obligations,  covenants  and  agreements  of  the  Purchasers
          required  to  be  performed at or prior to the Closing Date shall have
          been  performed;  and

     (iii) the delivery  by  the  Purchasers  of  the items set forth in Section
          2.2(b)  of  this  Agreement.

(b)  The respective  obligations  of the Purchasers hereunder in connection with
     the  Closing  are  subject  to  the  following  conditions  being  met:

     (i)  the accuracy  in  all  material  respects  on  the Closing Date of the
          representations  and  warranties  of  the  Company  contained  herein;

     (ii) all obligations,  covenants  and  agreements  of  the Company required
          to  be  performed  at  or  prior  to  the Closing Date shall have been
          performed;

     (iii) the delivery  by  the  Company  of  the  items  set  forth in Section
          2.2(a)  of  this  Agreement;

     (iv) there shall  have  been  no  Material  Adverse  Effect with respect to
          the  Company  since  the  date  hereof;

     (v)  the delivery  of  the  Subordination  Agreement  duly  executed by the
          senior  creditors  of  the  Company;  and

     (vi) from the  date  hereof  to  the  Closing  Date,  trading in the Common
          Stock shall not have been suspended by the Commission or the Company's
          principal  Trading  Market  (except  for  any suspension of trading of
          limited  duration  agreed to by the Company, which suspension shall be
          terminated  prior  to  the  Closing),  and,  at  any time prior to the
          Closing Date, trading in securities generally as reported by Bloomberg
          L.P. shall not have been suspended or limited, or minimum prices shall
          not  have  been established on securities whose trades are reported by
          such service, or on any Trading Market, nor shall a banking moratorium
          have  been  declared  either  by  the  United States or New York State
          authorities  nor  shall  there  have occurred any material outbreak or
          escalation  of hostilities or other national or international calamity
          of such magnitude in its effect on, or any material adverse change in,
          any  financial  market which, in each case, in the reasonable judgment
          of  each  Purchaser, makes it impracticable or inadvisable to purchase
          the  Debentures  at  the  Closing.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES
     3.1     Representations and Warranties of the Company.  Except as set forth
             ---------------------------------------------
under  the  corresponding  section  of the disclosure schedules delivered to the
Purchasers  concurrently  herewith (the "Disclosure Schedules") which Disclosure
                                         --------------------
Schedules  shall  be  deemed  a part hereof and to qualify any representation or
warranty  otherwise  made  herein  to the extent of such disclosure, the Company
hereby  makes  the  representations  and  warranties  set  forth  below  to each
Purchaser.

(a)  Subsidiaries.  All  of  the direct and indirect Subsidiaries of the Company
     are set forth on Schedule 3.1(a). The Company owns, directly or indirectly,
     all  of the capital stock or other equity interests of each Subsidiary free
     and  clear  of  any  Liens,  and  all  the issued and outstanding shares of
     capital  stock  of  each  Subsidiary are validly issued and are fully paid,
     non-assessable  and  free of preemptive and similar rights to subscribe for
     or  purchase securities. If the Company has no subsidiaries, then all other
     references  in the Transaction Documents to the Subsidiaries or any of them
     will  be  disregarded.

(b)  Organization and Qualification. The Company and each of the Subsidiaries is
     an entity duly incorporated or otherwise organized, validly existing and in
     good  standing  under  the laws of the jurisdiction of its incorporation or
     organization (as applicable), with the requisite power and authority to own
     and use its properties and assets and to carry on its business as currently
     conducted.  Neither  the  Company  nor  any  Subsidiary  is in violation or
     default  of any of the provisions of its respective certificate or articles
     of incorporation, bylaws or other organizational or charter documents. Each
     of  the  Company and the Subsidiaries is duly qualified to conduct business
     and  is  in  good standing as a foreign corporation or other entity in each
     jurisdiction  in  which  the  nature  of the business conducted or property
     owned by it makes such qualification necessary, except where the failure to
     be  so qualified or in good standing, as the case may be, could not have or
     reasonably  be  expected  to result in (i) a material adverse effect on the
     legality,  validity  or  enforceability of any Transaction Document, (ii) a
     material  adverse  effect  on  the results of operations, assets, business,
     prospects  or  condition  (financial  or  otherwise) of the Company and the
     Subsidiaries,  taken  as a whole, or (iii) a material adverse effect on the
     Company's  ability to perform in any material respect on a timely basis its
     obligations  under  any  Transaction Document (any of (i), (ii) or (iii), a
     "Material  Adverse  Effect")  and  no Proceeding has been instituted in any
     such  jurisdiction  revoking,  limiting or curtailing or seeking to revoke,
     limit  or  curtail  such  power  and  authority  or  qualification.

(c)  Authorization;  Enforcement.  The Company has the requisite corporate power
     and authority to enter into and to consummate the transactions contemplated
     by  each  of  the  Transaction  Documents  and  otherwise  to carry out its
     obligations hereunder and thereunder. The execution and delivery of each of
     the  Transaction Documents by the Company and the consummation by it of the
     transactions  contemplated  hereby and thereby have been duly authorized by
     all  necessary  action  on the part of the Company and no further action is
     required  by  the  Company,  its  board of directors or its stockholders in
     connection  therewith other than in connection with the Required Approvals.
     Each  Transaction  Document has been (or upon delivery will have been) duly
     executed  by  the  Company and, when delivered in accordance with the terms
     hereof and thereof, will constitute the valid and binding obligation of the
     Company enforceable against the Company in accordance with its terms except
     (i)  as  limited by general equitable principles and applicable bankruptcy,
     insolvency,  reorganization,  moratorium  and  other  laws  of  general
     application  affecting  enforcement of creditors' rights generally, (ii) as
     limited  by  laws  relating  to  the  availability of specific performance,
     injunctive  relief  or  other  equitable  remedies  and  (iii)  insofar  as
     indemnification  and  contribution  provisions may be limited by applicable
     law.

(d)  No Conflicts.  The  execution,  delivery and performance of the Transaction
     Documents  by  the Company and the consummation by the Company of the other
     transactions  contemplated  hereby  and  thereby  do  not  and will not (i)
     conflict with or violate any provision of the Company's or any Subsidiary's
     certificate or articles of incorporation, bylaws or other organizational or
     charter  documents,  or  (ii) conflict with, or constitute a default (or an
     event  that  with  notice  or lapse of time or both would become a default)
     under,  result  in  the  creation of any Lien upon any of the properties or
     assets  of  the  Company or any Subsidiary, or give to others any rights of
     termination,  amendment,  acceleration  or  cancellation  (with  or without
     notice,  lapse of time or both) of, any agreement, credit facility, debt or
     other  instrument (evidencing a Company or Subsidiary debt or otherwise) or
     other understanding to which the Company or any Subsidiary is a party or by
     which  any  property  or asset of the Company or any Subsidiary is bound or
     affected,  or  (iii)  subject  to  the Required Approvals, conflict with or
     result  in  a  violation  of  any  law,  rule, regulation, order, judgment,
     injunction,  decree  or  other  restriction  of  any  court or governmental
     authority  to  which  the  Company  or  a  Subsidiary is subject (including
     federal  and  state  securities  laws  and  regulations),  or  by which any
     property  or  asset  of  the  Company or a Subsidiary is bound or affected;
     except  in  the  case  of each of clauses (ii) and (iii), such as could not
     have  or  reasonably  be  expected  to result in a Material Adverse Effect.

(e)  Filings,  Consents and Approvals. The Company is not required to obtain any
     consent, waiver, authorization or order of, give any notice to, or make any
     filing  or  registration  with, any court or other federal, state, local or
     other  governmental  authority  or  other  Person  in  connection  with the
     execution,  delivery  and  performance  by  the  Company of the Transaction
     Documents,  other  than  (i) filings required pursuant to Section 4.6, (ii)
     the  filing  with  the  Commission of the Registration Statement, (iii) the
     notice  and/or  application(s)  to  each  applicable Trading Market for the
     issuance  and  sale  of  the  Securities  and the listing of the Underlying
     Shares for trading thereon in the time and manner required thereby and (iv)
     the  filing  of Form D with the Commission and such filings as are required
     to  be  made  under  applicable  state  securities  laws (collectively, the
     "Required  Approvals").

(f)  Issuance  of  the  Securities. The Securities are duly authorized and, when
     issued  and  paid  for  in  accordance  with  the  applicable  Transaction
     Documents,  will  be duly and validly issued, fully paid and nonassessable,
     free  and clear of all Liens imposed by the Company other than restrictions
     on  transfer  provided  for  in  the  Transaction Documents. The Underlying
     Shares,  when  issued  in  accordance  with  the  terms  of the Transaction
     Documents,  will  be validly issued, fully paid and nonassessable, free and
     clear  of  all  Liens imposed by the Company. The Company has reserved from
     its  duly  authorized  capital stock a number of shares of Common Stock for
     issuance  of  the Underlying Shares at least equal to the Actual Minimum on
     the  date  hereof.

(g)  Capitalization.  The  capitalization  of  the  Company  is  as set forth on
     Schedule  3.1(g).  The  Company  has not issued any capital stock since its
     most  recently  filed  periodic  report  under the Exchange Act, other than
     pursuant  to  the  exercise  of  employee stock options under the Company's
     stock  option  plans,  the  issuance of shares of Common Stock to employees
     pursuant  to the Company's employee stock purchase plan and pursuant to the
     conversion  or  exercise  of Common Stock Equivalents outstanding as of the
     date  of the most recently filed periodic report under the Exchange Act. No
     Person  has  any  right  of  first  refusal,  preemptive  right,  right  of
     participation,  or  any  similar  right  to participate in the transactions
     contemplated  by  the  Transaction  Documents.  Except  as  a result of the
     purchase  and  sale  of  the  Securities, there are no outstanding options,
     warrants,  script  rights  to  subscribe  to,  calls  or commitments of any
     character  whatsoever  relating  to,  or  securities, rights or obligations
     convertible  into  or exercisable or exchangeable for, or giving any Person
     any  right  to  subscribe  for  or  acquire, any shares of Common Stock, or
     contracts, commitments, understandings or arrangements by which the Company
     or  any  Subsidiary  is  or  may become bound to issue additional shares of
     Common  Stock  or  Common  Stock  Equivalents. The issuance and sale of the
     Securities will not obligate the Company to issue shares of Common Stock or
     other  securities  to  any  Person (other than the Purchasers) and will not
     result  in  a  right  of  any  holder  of  Company securities to adjust the
     exercise, conversion, exchange or reset price under any of such securities.
     All  of  the outstanding shares of capital stock of the Company are validly
     issued,  fully  paid and nonassessable, have been issued in compliance with
     all  federal and state securities laws, and none of such outstanding shares
     was  issued  in  violation  of  any  preemptive rights or similar rights to
     subscribe  for or purchase securities. No further approval or authorization
     of  any  stockholder,  the  Board  of Directors of the Company or others is
     required  for  the  issuance  and  sale  of  the  Securities.  There are no
     stockholders agreements, voting agreements or other similar agreements with
     respect  to the Company's capital stock to which the Company is a party or,
     to  the  knowledge  of  the  Company, between or among any of the Company's
     stockholders.

(h)  SEC Reports;  Financial  Statements.  The  Company  has  filed all reports,
     schedules, forms, statements and other documents required to be filed by it
     under  the  Securities  Act  and  the  Exchange  Act, including pursuant to
     Section 13(a) or 15(d) thereof, for the two years preceding the date hereof
     (or such shorter period as the Company was required by law or regulation to
     file  such  material)  (the  foregoing  materials,  including  the exhibits
     thereto and documents incorporated by reference therein, being collectively
     referred  to herein as the "SEC Reports") on a timely basis or has received
     a valid extension of such time of filing and has filed any such SEC Reports
     prior  to  the  expiration  of  any  such extension. As of their respective
     dates,  the  SEC  Reports  complied  in  all  material  respects  with  the
     requirements  of  the Securities Act and the Exchange Act and the rules and
     regulations  of  the  Commission promulgated thereunder, as applicable, and
     none  of  the  SEC Reports, when filed, contained any untrue statement of a
     material  fact  or  omitted  to state a material fact required to be stated
     therein  or necessary in order to make the statements therein, in the light
     of  the  circumstances  under  which  they  were  made, not misleading. The
     financial  statements  of the Company included in the SEC Reports comply in
     all material respects with applicable accounting requirements and the rules
     and  regulations of the Commission with respect thereto as in effect at the
     time  of filing. Such financial statements have been prepared in accordance
     with  United  States  generally accepted accounting principles applied on a
     consistent  basis  during  the  periods involved ("GAAP"), except as may be
     otherwise  specified  in such financial statements or the notes thereto and
     except  that  unaudited  financial statements may not contain all footnotes
     required by GAAP, and fairly present in all material respects the financial
     position of the Company and its consolidated subsidiaries as of and for the
     dates  thereof and the results of operations and cash flows for the periods
     then  ended,  subject,  in  the  case  of  unaudited statements, to normal,
     immaterial,  year-end  audit  adjustments.

(i)  Material  Changes;  Undisclosed  Events, Liabilities or Developments. Since
     the date of the latest audited financial statements included within the SEC
     Reports,  except  as specifically disclosed in a subsequent SEC Report, (i)
     there  has  been  no  event, occurrence or development that has had or that
     could  reasonably  be expected to result in a Material Adverse Effect, (ii)
     the  Company  has  not  incurred  any liabilities (contingent or otherwise)
     other than (A) trade payables and accrued expenses incurred in the ordinary
     course  of  business  consistent with past practice and (B) liabilities not
     required  to be reflected in the Company's financial statements pursuant to
     GAAP  or  disclosed  in filings made with the Commission, (iii) the Company
     has not altered its method of accounting, (iv) the Company has not declared
     or  made  any  dividend  or  distribution  of cash or other property to its
     stockholders  or  purchased, redeemed or made any agreements to purchase or
     redeem  any  shares of its capital stock and (v) the Company has not issued
     any  equity  securities  to  any  officer,  director  or  Affiliate, except
     pursuant  to existing Company stock option plans. The Company does not have
     pending  before  the  Commission  any request for confidential treatment of
     information. Except for the issuance of the Securities contemplated by this
     Agreement  or  as  set  forth  on  Schedule  3.1(i), no event, liability or
     development  has  occurred  or  exists  with  respect to the Company or its
     Subsidiaries  or  their  respective  business,  properties,  operations  or
     financial  condition, that would be required to be disclosed by the Company
     under  applicable  securities  laws at the time this representation is made
     that  has  not  been publicly disclosed at least 1 Trading Day prior to the
     date  that  this  representation  is  made.

(j)  Litigation.  There  is  no  action,  suit,  inquiry,  notice  of violation,
     proceeding  or  investigation  pending or, to the knowledge of the Company,
     threatened against or affecting the Company, any Subsidiary or any of their
     respective  properties  before or by any court, arbitrator, governmental or
     administrative  agency  or  regulatory  authority  (federal, state, county,
     local  or  foreign) (collectively, an "Action") which (i) adversely affects
     or  challenges  the  legality,  validity  or  enforceability  of any of the
     Transaction  Documents  or  the  Securities or (ii) could, if there were an
     unfavorable  decision,  have  or  reasonably  be  expected  to  result in a
     Material  Adverse  Effect.  Neither the Company nor any Subsidiary, nor any
     director  or  officer  thereof,  is  or  has been the subject of any Action
     involving  a  claim  of  violation  of  or liability under federal or state
     securities laws or a claim of breach of fiduciary duty. There has not been,
     and  to the knowledge of the Company, there is not pending or contemplated,
     any investigation by the Commission involving the Company or any current or
     former  director  or  officer of the Company. The Commission has not issued
     any  stop  order  or  other  order  suspending  the  effectiveness  of  any
     registration  statement  filed  by  the Company or any Subsidiary under the
     Exchange  Act  or  the  Securities  Act.

(k)  Labor Relations.  No  material labor dispute exists or, to the knowledge of
     the  Company,  is  imminent  with  respect  to  any of the employees of the
     Company  which could reasonably be expected to result in a Material Adverse
     Effect. None of the Company's or its Subsidiaries' employees is a member of
     a  union that relates to such employee's relationship with the Company, and
     neither  the  Company or any of its Subsidiaries is a party to a collective
     bargaining  agreement,  and  the  Company and its Subsidiaries believe that
     their relationships with their employees are good. No executive officer, to
     the knowledge of the Company, is, or is now expected to be, in violation of
     any  material  term of any employment contract, confidentiality, disclosure
     or  proprietary  information agreement or non-competition agreement, or any
     other  contract or agreement or any restrictive covenant, and the continued
     employment  of  each such executive officer does not subject the Company or
     any  of  its  Subsidiaries  to  any  liability  with  respect to any of the
     foregoing  matters. The Company and its Subsidiaries are in compliance with
     all U.S. federal, state, local and foreign laws and regulations relating to
     employment and employment practices, terms and conditions of employment and
     wages  and  hours,  except where the failure to be in compliance could not,
     individually or in the aggregate, reasonably be expected to have a Material
     Adverse  Effect.

(l)  Compliance.  Neither the Company nor any Subsidiary (i) is in default under
     or  in  violation  of  (and  no event has occurred that has not been waived
     that,  with  notice  or lapse of time or both, would result in a default by
     the Company or any Subsidiary under), nor has the Company or any Subsidiary
     received  notice  of  a  claim that it is in default under or that it is in
     violation  of,  any  indenture,  loan  or  credit  agreement  or  any other
     agreement or instrument to which it is a party or by which it or any of its
     properties  is  bound  (whether  or  not such default or violation has been
     waived),  (ii)  is  in  violation  of any order of any court, arbitrator or
     governmental  body,  or  (iii)  is or has been in violation of any statute,
     rule  or  regulation  of  any  governmental  authority,  including  without
     limitation  all  foreign,  federal,  state and local laws applicable to its
     business and all such laws that affect the environment, except in each case
     as could not have or reasonably be expected to result in a Material Adverse
     Effect.

(m)  Regulatory  Permits.  The  Company  and  the  Subsidiaries  possess  all
     certificates, authorizations and permits issued by the appropriate federal,
     state,  local  or foreign regulatory authorities necessary to conduct their
     respective  businesses  as  described  in the SEC Reports, except where the
     failure to possess such permits could not have or reasonably be expected to
     result  in  a Material Adverse Effect ("Material Permits"), and neither the
     Company  nor any Subsidiary has received any notice of proceedings relating
     to  the  revocation  or  modification  of  any  Material  Permit.

(n)  Title to  Assets. The Company and the Subsidiaries have good and marketable
     title  in fee simple to all real property owned by them that is material to
     the  business  of  the Company and the Subsidiaries and good and marketable
     title  in  all  personal  property  owned  by  them that is material to the
     business  of  the Company and the Subsidiaries, in each case free and clear
     of  all  Liens,  except  for Liens as do not materially affect the value of
     such  property  and  do  not  materially  interfere  with  the use made and
     proposed  to  be  made of such property by the Company and the Subsidiaries
     and  Liens for the payment of federal, state or other taxes, the payment of
     which is neither delinquent nor subject to penalties. Any real property and
     facilities held under lease by the Company and the Subsidiaries are held by
     them  under valid, subsisting and enforceable leases with which the Company
     and  the  Subsidiaries  are  in  compliance.

(o)  Patents  and  Trademarks.  The  Company  and the Subsidiaries have, or have
     rights  to  use,  all  patents,  patent applications, trademarks, trademark
     applications,  service  marks,  trade  names,  trade  secrets,  inventions,
     copyrights,  licenses  and  other  intellectual property rights and similar
     rights  necessary  or  material for use in connection with their respective
     businesses as described in the SEC Reports and which the failure to so have
     could  have  a  Material  Adverse  Effect  (collectively, the "Intellectual
     Property  Rights").  Neither  the Company nor any Subsidiary has received a
     notice (written or otherwise) that the Intellectual Property Rights used by
     the  Company or any Subsidiary violates or infringes upon the rights of any
     Person.  To  the  knowledge  of the Company, all such Intellectual Property
     Rights  are  enforceable  and  there is no existing infringement by another
     Person  of  any  of  the  Intellectual Property Rights. The Company and its
     Subsidiaries  have  taken  reasonable  security  measures  to  protect  the
     secrecy, confidentiality and value of all of their intellectual properties,
     except  where failure to do so could not, individually or in the aggregate,
     reasonably  be  expected  to  have  a  Material  Adverse  Effect.

(p)  Insurance.  The  Company  and  the  Subsidiaries are insured by insurers of
     recognized  financial  responsibility  against such losses and risks and in
     such  amounts  as  are prudent and customary in the businesses in which the
     Company  and  the  Subsidiaries are engaged, including, but not limited to,
     directors  and  officers insurance coverage at least equal to the aggregate
     Subscription  Amount. Neither the Company nor any 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 without
     a  significant  increase  in  cost.

(q)  Transactions  With Affiliates and Employees. Except as set forth in the SEC
     Reports,  none  of  the  officers  or  directors of the Company and, to the
     knowledge of the Company, none of the employees of the Company is presently
     a  party  to any transaction with the Company or any Subsidiary (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 entity in which any
     officer, director, or any such employee has a substantial interest or is an
     officer,  director,  trustee  or partner, in each case in excess of $60,000
     other  than  (i)  for  payment  of  salary  or consulting fees for services
     rendered, (ii) reimbursement for expenses incurred on behalf of the Company
     and  (iii)  for  other employee benefits, including stock option agreements
     under  any  stock  option  plan  of  the  Company.

(r)  Sarbanes-Oxley;  Internal  Accounting  Controls. The Company is in material
     compliance  with all provisions of the Sarbanes-Oxley Act of 2002 which are
     applicable  to  it as of the Closing Date. The Company and the 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 GAAP 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.  The  Company  has
     established  disclosure controls and procedures (as defined in Exchange Act
     Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure
     controls and procedures to ensure that information required to be disclosed
     by the Company in the reports it files or submits under the Exchange Act is
     recorded,  processed,  summarized  and  reported,  within  the time periods
     specified  in  the  Commission's  rules and forms. The Company's certifying
     officers  have  evaluated  the  effectiveness  of  the Company's disclosure
     controls  and  procedures  as  of  the  end  of  the  period covered by the
     Company's  most recently filed periodic report under the Exchange Act (such
     date,  the  "Evaluation  Date"). The Company presented in its most recently
     filed  periodic  report  under  the  Exchange  Act  the  conclusions of the
     certifying  officers about the effectiveness of the disclosure controls and
     procedures  based on their evaluations as of the Evaluation Date. Since the
     Evaluation  Date,  there  have  been  no  changes in the Company's internal
     control  over  financial reporting (as such term is defined in the Exchange
     Act)  that  has  materially affected, or is reasonably likely to materially
     affect,  the  Company's  internal  control  over  financial  reporting.

(s)  Certain  Fees.  No brokerage or finder's fees or commissions are or will be
     payable  by  the  Company  to  any broker, financial advisor or consultant,
     finder,  placement  agent,  investment  banker,  bank  or other Person with
     respect  to the transactions contemplated by the Transaction Documents. The
     Purchasers  shall  have  no  obligation  with  respect  to any fees or with
     respect  to  any claims made by or on behalf of other Persons for fees of a
     type  contemplated  in  this Section that may be due in connection with the
     transactions  contemplated  by  the  Transaction  Documents.

(t)  Private  Placement. Assuming the accuracy of the Purchasers representations
     and  warranties  set  forth  in  Section  3.2,  no  registration  under the
     Securities  Act is required for the offer and sale of the Securities by the
     Company  to the Purchasers as contemplated hereby. The issuance and sale of
     the  Securities  hereunder does not contravene the rules and regulations of
     the  Trading  Market.

(u)  Investment  Company.  The  Company  is not, and is not an Affiliate of, and
     immediately  after receipt of payment for the Securities, will not be or be
     an  Affiliate  of,  an  "investment  company"  within  the  meaning  of the
     Investment  Company  Act of 1940, as amended. The Company shall conduct its
     business  in  a manner so that it will not become subject to the Investment
     Company  Act.

(v)  Registration  Rights.  Other than each of the Purchasers, no Person has any
     right  to cause the Company to effect the registration under the Securities
     Act  of  any  securities  of  the  Company.

(w)  Listing  and  Maintenance  Requirements.  The  Company's  Common  Stock  is
     registered  pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
     Company  has  taken  no  action  designed  to, or which to its knowledge is
     likely  to  have  the effect of, terminating the registration of the Common
     Stock  under the Exchange Act nor has the Company received any notification
     that  the  Commission  is  contemplating terminating such registration. The
     Company  has  not,  in  the  12  months preceding the date hereof, received
     notice  from  any  Trading  Market on which the Common Stock is or has been
     listed  or  quoted to the effect that the Company is not in compliance with
     the listing or maintenance requirements of such Trading Market. The Company
     is, and has no reason to believe that it will not in the foreseeable future
     continue  to  be,  in  compliance  with  all  such  listing and maintenance
     requirements.

(x)  Application of Takeover Protections. The Company and its Board of Directors
     have  taken  all  necessary action, if any, in order to render inapplicable
     any control share acquisition, business combination, poison pill (including
     any  distribution  under a rights agreement) or other similar anti-takeover
     provision  under  the  Company's  Certificate  of Incorporation (or similar
     charter  documents)  or  the  laws of its state of incorporation that is or
     could become applicable to the Purchasers as a result of the Purchasers and
     the  Company  fulfilling their obligations or exercising their rights under
     the  Transaction Documents, including without limitation as a result of the
     Company's  issuance  of the Securities and the Purchasers' ownership of the
     Securities.

(y)  Disclosure. Except with respect to the material terms and conditions of the
     transactions  contemplated  by  the  Transaction  Documents,  the  Company
     confirms  that  neither  it  nor  any other Person acting on its behalf has
     provided  any  of  the  Purchasers  or  their  agents  or  counsel with any
     information  that  it  believes  constitutes  or might constitute material,
     nonpublic  information.  The  Company  understands  and  confirms  that the
     Purchasers  will  rely  on  the  foregoing  representation  in  effecting
     transactions  in  securities of the Company. All disclosure furnished by or
     on  behalf  of  the  Company  to  the Purchasers regarding the Company, its
     business and the transactions contemplated hereby, including the Disclosure
     Schedules  to  this  Agreement,  with  respect  to  the representations and
     warranties  made  herein  are  true  and  correct  with  respect  to  such
     representations and warranties and do not contain any untrue statement of a
     material fact or omit to state any material fact necessary in order to make
     the statements made therein, in light of the circumstances under which they
     were  made,  not  misleading.  The  Company acknowledges and agrees that no
     Purchaser  makes or has made any representations or warranties with respect
     to  the  transactions contemplated hereby other than those specifically set
     forth  in  Section  3.2  hereof.

(z)  No Integrated  Offering.  Assuming  the  accuracy  of  the  Purchasers'
     representations  and  warranties  set  forth  in  Section  3.2, neither the
     Company,  nor  any of its Affiliates, nor any Person acting on its or their
     behalf  has,  directly  or  indirectly,  made  any  offers  or sales of any
     security  or  solicited any offers to buy any security, under circumstances
     that  would  cause  this  offering  of the Securities to be integrated with
     prior  offerings  by  the Company for purposes of the Securities Act or any
     applicable  shareholder  approval provisions of any Trading Market on which
     any  of  the  securities  of  the  Company  are  listed  or  designated.

(aa) Solvency. Based on the financial condition of the Company as of the Closing
     Date,  after  giving  effect  to the receipt by the Company of the proceeds
     from  the  sale of the Securities hereunder, (i) the fair saleable value of
     the Company's assets exceeds the amount that will be required to be paid on
     or  in  respect  of  the  Company's  existing  debts  and other liabilities
     (including known contingent liabilities) as they mature, (ii) the Company's
     assets  do  not  constitute  unreasonably  small  capital  to  carry on its
     business  as  now  conducted  and as proposed to be conducted including its
     capital  needs  taking  into account the particular capital requirements of
     the  business  conducted by the Company, and projected capital requirements
     and  capital  availability  thereof  and (iii) the current cash flow of the
     Company,  together  with the proceeds the Company would receive, were it to
     liquidate all of its assets, after taking into account all anticipated uses
     of the cash, would be sufficient to pay all amounts on or in respect of its
     liabilities when such amounts are required to be paid. The Company does not
     intend  to  incur debts beyond its ability to pay such debts as they mature
     (taking  into account the timing and amounts of cash to be payable on or in
     respect  of  its  debt).  The  Company  has  no  knowledge  of any facts or
     circumstances which lead it to believe that it will file for reorganization
     or  liquidation  under  the  bankruptcy  or  reorganization  laws  of  any
     jurisdiction  within  one year from the Closing Date. Schedule 3.1(aa) sets
     forth  as  of  the  dates  thereof  all  outstanding  secured and unsecured
     Indebtedness  of the Company or any Subsidiary, or for which the Company or
     any  Subsidiary  has  commitments.  For  the  purposes  of  this Agreement,
     "Indebtedness" shall mean (a) any liabilities for borrowed money or amounts
     owed  in  excess  of $50,000 (other than trade accounts payable incurred in
     the  ordinary  course  of  business),  (b) all guaranties, endorsements and
     other  contingent obligations in respect of Indebtedness of others, whether
     or  not  the same are or should be reflected in the Company's balance sheet
     (or  the  notes  thereto),  except  guaranties by endorsement of negotiable
     instruments  for  deposit  or  collection  or  similar  transactions in the
     ordinary  course  of  business;  and  (c)  the  present  value of any lease
     payments  in  excess of $50,000 due under leases required to be capitalized
     in  accordance  with  GAAP.  Neither  the  Company nor any Subsidiary is in
     default  with  respect  to  any  Indebtedness.

(bb) Tax Status.  Except  for  matters  that  would  not, individually or in the
     aggregate,  have  or reasonably be expected to result in a Material Adverse
     Effect,  the  Company  and each Subsidiary has filed all necessary federal,
     state  and foreign income and franchise tax returns and has paid or accrued
     all  taxes  shown as due thereon, and the Company has no knowledge of a tax
     deficiency which has been asserted or threatened against the Company or any
     Subsidiary.

(cc) No General  Solicitation.  Neither  the  Company  nor  any person acting on
     behalf of the Company has offered or sold any of the Securities by any form
     of general solicitation or general advertising. The Company has offered the
     Securities  for  sale  only to the Purchasers and certain other "accredited
     investors"  within  the  meaning  of  Rule  501  under  the Securities Act.

(dd) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the
     Company, any agent or other person acting on behalf of the Company, has (i)
     directly  or  indirectly, used any funds for unlawful contributions, gifts,
     entertainment  or  other  unlawful  expenses related to foreign or domestic
     political  activity,  (ii) made any unlawful payment to foreign or domestic
     government  officials  or employees or to any foreign or domestic political
     parties  or  campaigns from corporate funds, (iii) failed to disclose fully
     any  contribution  made by the Company (or made by any person acting on its
     behalf  of which the Company is aware) which is in violation of law or (iv)
     violated  in  any  material  respect  any  provision of the Foreign Corrupt
     Practices  Act  of  1977,  as  amended.

(ee) Accountants. The Company's accountants are set forth on Schedule 3.1(ee) of
     the Disclosure Schedule. To the knowledge of the Company, such accountants,
     who  the  Company  expects  will  express their opinion with respect to the
     financial  statements to be included in the Company's Annual Report on Form
     10-KSB for the year ending June 30, 2006 are a registered public accounting
     firm  as  required  by  the  Securities  Act.

(ff) Seniority.  As  of the Closing Date, no Indebtedness or other equity of the
     Company  is  senior  to  the  Debentures  in right of payment, whether with
     respect to interest or upon liquidation or dissolution, or otherwise, other
     than  indebtedness  secured  by purchase money security interests (which is
     senior  only  as  to  underlying  assets covered thereby) and capital lease
     obligations  (which  is  senior  only  as to the property covered thereby).

(gg) No Disagreements  with  Accountants and Lawyers. There are no disagreements
     of any kind presently existing, or reasonably anticipated by the Company to
     arise,  between  the  Company  and  the accountants and lawyers formerly or
     presently  employed  by the Company and the Company is current with respect
     to  any  fees  owed  to  its  accountants  and  lawyers.

(hh) Acknowledgment  Regarding  Purchasers'  Purchase of Securities. The Company
     acknowledges and agrees that each of the Purchasers is acting solely in the
     capacity  of  an  arm's  length  purchaser  with respect to the Transaction
     Documents  and  the  transactions contemplated thereby. The Company further
     acknowledges  that  no  Purchaser  is  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 thereby and any
     advice given by any Purchaser or any of their respective representatives or
     agents  in  connection  with the Transaction Documents and the transactions
     contemplated  thereby  is  merely incidental to the Purchasers' purchase of
     the  Securities.  The Company further represents to each Purchaser that the
     Company's  decision  to enter into this Agreement and the other Transaction
     Documents  has  been  based  solely  on  the  independent evaluation of the
     transactions  contemplated  hereby  by the Company and its representatives.

(ii) Acknowledgement  Regarding  Purchasers'  Trading Activity. Anything in this
     Agreement  or  elsewhere herein to the contrary notwithstanding (except for
     Sections  3.2(f) and 4.16 hereof), it is understood and acknowledged by the
     Company  (i)  that none of the Purchasers have been asked to agree, nor has
     any  Purchaser  agreed,  to  desist from purchasing or selling, long and/or
     short,  securities  of  the  Company,  or  "derivative" securities based on
     securities  issued  by  the  Company  or  to  hold  the  Securities for any
     specified  term, (ii) that past or future open market or other transactions
     by  any  Purchaser,  including  Short  Sales,  and  specifically including,
     without  limitation,  Short  Sales  or "derivative" transactions, before or
     after  the  closing  of  this or future private placement transactions, may
     negatively  impact  the  market  price  of  the  Company's  publicly-traded
     securities,  (iii)  that any Purchaser, and counter-parties in "derivative"
     transactions  to  which  any  such  Purchaser  is  a  party,  directly  or
     indirectly,  presently  may have a "short" position in the Common Stock and
     (iv)  that  each Purchaser shall not be deemed to have any affiliation with
     or  control  over  any  arm's  length  counter-party  in  any  "derivative"
     transaction.The  Company  further understands and acknowledges that (a) one
     or more Purchasers may engage in hedging activities at various times during
     the  period  that  the  Securities  are  outstanding,  including,  without
     limitation,  during  the  periods  that  the value of the Underlying Shares
     deliverable  with  respect  to Securities are being determined and (b) such
     hedging  activities  (if  any)  could  reduce  the  value  of  the existing
     stockholders'  equity  interests  in the Company at and after the time that
     the  hedging  activities are being conducted. The Company acknowledges that
     such aforementioned hedging activities do not constitute a breach of any of
     the  Transaction  Documents.

(jj) Manipulation  of  Price.  The  Company has not, and to its knowledge no one
     acting  on  its  behalf  has, (i) taken, directly or indirectly, any action
     designed  to cause or to result in the stabilization or manipulation of the
     price  of  any  security of the Company to facilitate the sale or resale of
     any  of  the  Securities,  (ii)  sold,  bid  for,  purchased,  or, paid any
     compensation  for  soliciting purchases of, any of the Securities, or (iii)
     paid or agreed to pay to any person any compensation for soliciting another
     to purchase any other securities of the Company, other than, in the case of
     each  of  clauses  (ii)  and  (iii),  compensation  paid  to  the Company's
     placement  agent  in  connection  with  the  placement  of  the Securities.

     3.2     Representations  and  Warranties  of  the  Purchasers
             -----------------------------------------------------
       Each Purchaser hereby, for itself and for no other Purchaser, represents
and  warrants as of the date hereof and as of the Closing Date to the Company as
follows:

(a)  Organization;  Authority.  Such  Purchaser  is  an  entity  duly organized,
     validly existing and in good standing under the laws of the jurisdiction of
     its  organization  with  full  right,  corporate  or  partnership power and
     authority  to enter into and to consummate the transactions contemplated by
     the  Transaction  Documents  and  otherwise  to  carry  out its obligations
     hereunder  and  thereunder. The execution, delivery and performance by such
     Purchaser of the transactions contemplated by this Agreement have been duly
     authorized by all necessary corporate or similar action on the part of such
     Purchaser.  Each  Transaction Document to which it is a party has been duly
     executed  by  such  Purchaser,  and  when  delivered  by  such Purchaser in
     accordance  with  the  terms  hereof, will constitute the valid and legally
     binding  obligation of such Purchaser, enforceable against it in accordance
     with  its  terms, except (i) as limited by general equitable principles and
     applicable  bankruptcy,  insolvency,  reorganization,  moratorium and other
     laws  of  general  application  affecting  enforcement of creditors' rights
     generally, (ii) as limited by laws relating to the availability of specific
     performance,  injunctive  relief  or  other  equitable  remedies  and (iii)
     insofar  as  indemnification  and contribution provisions may be limited by
     applicable  law.

(b)  Own Account. Such Purchaser understands that the Securities are "restricted
     securities"  and  have  not been registered under the Securities Act or any
     applicable  state  securities  law  and  is  acquiring  the  Securities  as
     principal for its own account and not with a view to or for distributing or
     reselling  such  Securities  or  any  part  thereof  in  violation  of  the
     Securities  Act  or  any  applicable  state  securities law, has no present
     intention  of  distributing  any  of  such  Securities  in violation of the
     Securities  Act or any applicable state securities law and has no direct or
     indirect arrangement or understandings with any other persons to distribute
     or  regarding  the distribution of such Securities (this representation and
     warranty  not  limiting  such  Purchaser's  right  to  sell  the Securities
     pursuant  to  the  Registration  Statement  or otherwise in compliance with
     applicable  federal  and  state  securities  laws)  in  violation  of  the
     Securities  Act  or  any applicable state securities law. Such Purchaser is
     acquiring  the Securities hereunder in the ordinary course of its business.

(c)  Purchaser Status. At the time such Purchaser was offered the Securities, it
     was,  and  at  the date hereof it is, and on each date on which it converts
     any  Debentures  or  exercises  any  Warrants,  it  will  be  either (i) an
     "accredited  investor" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7)
     or  (a)(8)  under  the  Securities  Act  or (ii) a "qualified institutional
     buyer"  as defined in Rule 144A(a) under the Securities Act. Such Purchaser
     is not required to be registered as a broker-dealer under Section 15 of the
     Exchange  Act.

(d)  Experience of Such Purchaser. Such Purchaser, either alone or together with
     its  representatives,  has such knowledge, sophistication and experience in
     business and financial matters so as to be capable of evaluating the merits
     and  risks  of  the  prospective  investment  in the Securities, and has so
     evaluated  the  merits and risks of such investment. Such Purchaser is able
     to  bear  the  economic risk of an investment in the Securities and, at the
     present  time,  is  able  to  afford  a  complete  loss of such investment.

(e)  General  Solicitation. Such Purchaser is not purchasing the Securities as a
     result  of  any  advertisement,  article,  notice  or  other  communication
     regarding  the  Securities  published in any newspaper, magazine or similar
     media  or broadcast over television or radio or presented at any seminar or
     any  other  general  solicitation  or  general  advertisement.

(f)  Short Sales  and  Confidentiality  Prior To the Date Hereof. Other than the
     transaction  contemplated  hereunder,  such  Purchaser  has not directly or
     indirectly,  nor  has  any  Person  acting  on behalf of or pursuant to any
     understanding  with  such  Purchaser,  executed  any disposition, including
     Short  Sales, in the securities of the Company during the period commencing
     from  the  time that such Purchaser first received a term sheet (written or
     oral) from the Company or any other Person setting forth the material terms
     of  the  transactions  contemplated  hereunder  until  the  date  hereof
     ("Discussion  Time").  Notwithstanding  the  foregoing,  in  the  case of a
     Purchaser  that  is  a  multi-managed  investment  vehicle whereby separate
     portfolio  managers manage separate portions of such Purchaser's assets and
     the portfolio managers have no direct knowledge of the investment decisions
     made  by the portfolio managers managing other portions of such Purchaser's
     assets, the representation set forth above shall only apply with respect to
     the  portion  of  assets  managed  by  the  portfolio manager that made the
     investment  decision  to purchase the Securities covered by this Agreement.
     Other  than  to  other  Persons party to this Agreement, such Purchaser has
     maintained  the confidentiality of all disclosures made to it in connection
     with  this  transaction  (including  the  existence  and  terms  of  this
     transaction).

                                   ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES
     4.1     Transfer  Restrictions.
             ----------------------

(a)  The Securities may only be disposed of in compliance with state and federal
     securities  laws.  In connection with any transfer of Securities other than
     pursuant to an effective registration statement or Rule 144, to the Company
     or  to  an  affiliate  of  a  Purchaser  or  in connection with a pledge as
     contemplated  in  Section  4.1(b),  the  Company may require the transferor
     thereof  to  provide  to  the Company an opinion of counsel selected by the
     transferor and reasonably acceptable to the Company, the form and substance
     of  which  opinion  shall be reasonably satisfactory to the Company, to the
     effect that such transfer does not require registration of such transferred
     Securities  under  the Securities Act. As a condition of transfer, any such
     transferee  shall  agree  in  writing  to  be  bound  by  the terms of this
     Agreement and shall have the rights of a Purchaser under this Agreement and
     the  Registration  Rights  Agreement.

(b)  The Purchasers  agree  to  the  imprinting,  so long as is required by this
     Section 4.1(b), of a legend on any of the Securities in the following form:
     [NEITHER]  THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES
     ARE  [EXERCISABLE]  [CONVERTIBLE]] HAVE BEEN REGISTERED WITH THE SECURITIES
     AND  EXCHANGE  COMMISSION  OR  THE  SECURITIES  COMMISSION  OF ANY STATE IN
     RELIANCE  UPON  AN  EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
     1933,  AS  AMENDED  (THE  "SECURITIES  ACT"),  AND, ACCORDINGLY, MAY NOT BE
     OFFERED  OR  SOLD  EXCEPT  PURSUANT  TO AN EFFECTIVE REGISTRATION STATEMENT
     UNDER  THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN
     A  TRANSACTION  NOT  SUBJECT  TO,  THE  REGISTRATION  REQUIREMENTS  OF  THE
     SECURITIES  ACT  AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
     EVIDENCED  BY  A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,
     THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE
     SECURITIES  AND  THE  SECURITIES  ISSUABLE  UPON [EXERCISE] [CONVERSION] OF
     THESE  SECURITIES  MAY  BE  PLEDGED  IN  CONNECTION WITH A BONA FIDE MARGIN
     ACCOUNT  OR  OTHER  LOAN  SECURED  BY  SUCH  SECURITIES.

     The  Company  acknowledges  and  agrees  that  a Purchaser may from time to
     time  pledge  pursuant  to  a  bona fide margin agreement with a registered
     broker-dealer or grant a security interest in some or all of the Securities
     to  a  financial institution that is an "accredited investor" as defined in
     Rule  501(a)  under  the  Securities  Act and who agrees to be bound by the
     provisions  of this Agreement and the Registration Rights Agreement and, if
     required  under  the terms of such arrangement, such Purchaser may transfer
     pledged  or  secured  Securities to the pledgees or secured parties. Such a
     pledge  or  transfer would not be subject to approval of the Company and no
     legal  opinion  of  legal  counsel of the pledgee, secured party or pledgor
     shall  be  required  in  connection  therewith. Further, no notice shall be
     required  of  such  pledge.  At  the  appropriate  Purchaser's expense, the
     Company will execute and deliver such reasonable documentation as a pledgee
     or  secured party of Securities may reasonably request in connection with a
     pledge  or  transfer  of  the  Securities, including, if the Securities are
     subject  to registration pursuant to the Registration Rights Agreement, the
     preparation  and  filing  of  any required prospectus supplement under Rule
     424(b)(3)  under  the  Securities  Act or other applicable provision of the
     Securities  Act  to  appropriately  amend  the list of Selling Stockholders
     thereunder.

(c)  Certificates  evidencing the Underlying Shares shall not contain any legend
     (including  the  legend  set  forth  in Section 4.1(b) hereof): (i) while a
     registration  statement (including the Registration Statement) covering the
     resale  of  such  security  is  effective under the Securities Act, or (ii)
     following any sale of such Underlying Shares pursuant to Rule 144, or (iii)
     if  such Underlying Shares are eligible for sale under Rule 144(k), or (iv)
     if  such  legend  is  not  required  under  applicable  requirements of the
     Securities  Act  (including  judicial  interpretations  and  pronouncements
     issued by the staff of the Commission). The Company shall cause its counsel
     to issue a legal opinion to the Company's transfer agent promptly after the
     Effective  Date  if  required by the Company's transfer agent to effect the
     removal of the legend hereunder. If all or any Debentures or any portion of
     a Warrant is converted or exercised (as applicable) at a time when there is
     an  effective  registration statement to cover the resale of the Underlying
     Shares,  or  if  such Underlying Shares may be sold under Rule 144(k) or if
     such  legend is not otherwise required under applicable requirements of the
     Securities  Act  (including  judicial  interpretations  and  pronouncements
     issued by the staff of the Commission) then such Underlying Shares shall be
     issued free of all legends. The Company agrees that following the Effective
     Date  or  at  such  time  as  such  legend is no longer required under this
     Section  4.1(c),  it  will,  no  later than five Trading Days following the
     delivery by a Purchaser to the Company or the Company's transfer agent of a
     certificate  representing  Underlying  Shares, as applicable, issued with a
     restrictive  legend  (such  third  Trading Day, the "Legend Removal Date"),
     deliver  or  cause  to  be  delivered  to  such  Purchaser  a  certificate
     representing  such  shares  that  is  free  from  all restrictive and other
     legends.  The  Company  may  not  make  any notation on its records or give
     instructions  to  any  transfer  agent  of  the  Company  that  enlarge the
     restrictions  on  transfer  set  forth  in  this  Section. Certificates for
     Underlying  Shares subject to legend removal hereunder shall be transmitted
     by  the  transfer  agent  of the Company to the Purchasers by crediting the
     account  of  the Purchaser's prime broker with the Depository Trust Company
     System.

(d)  In addition to such Purchaser's other available remedies, the Company shall
     pay  to  a  Purchaser,  in cash, as partial liquidated damages and not as a
     penalty,  for  each  $1,000  of Underlying Shares (based on the VWAP of the
     Common  Stock  on  the  date such Securities are submitted to the Company's
     transfer agent) delivered for removal of the restrictive legend and subject
     to Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day 5
     Trading  Days after such damages have begun to accrue) for each Trading Day
     after the Legend Removal Date until such certificate is delivered without a
     legend.  Nothing herein shall limit such Purchaser's right to pursue actual
     damages  for the Company's failure to deliver certificates representing any
     Securities  as  required  by  the Transaction Documents, and such Purchaser
     shall  have  the  right to pursue all remedies available to it at law or in
     equity  including,  without  limitation,  a  decree of specific performance
     and/or  injunctive  relief.

(e)  Each Purchaser, severally and not jointly with the other Purchasers, agrees
     that  the  removal of the restrictive legend from certificates representing
     Securities  as  set  forth  in  this  Section  4.1  is  predicated upon the
     Company's  reliance that the Purchaser will sell any Securities pursuant to
     either  the  registration requirements of the Securities Act, including any
     applicable prospectus delivery requirements, or an exemption therefrom, and
     that if Securities are sold pursuant to a Registration Statement, they will
     be  sold  in  compliance  with  the plan of distribution set forth therein.

4.2     Acknowledgment  of  Dilution.  The  Company  acknowledges  that the
        ----------------------------
issuance  of  the Securities may result in dilution of the outstanding shares of
Common Stock, which dilution may be substantial under certain market conditions.
The  Company  further  acknowledges  that  its obligations under the Transaction
Documents, including, without limitation, its obligation to issue the Underlying
Shares pursuant to the Transaction Documents, are unconditional and absolute and
not  subject  to  any  right  of  set  off,  counterclaim,  delay  or reduction,
regardless  of the effect of any such dilution or any claim the Company may have
against  any  Purchaser and regardless of the dilutive effect that such issuance
may  have  on  the  ownership  of  the  other  stockholders  of  the  Company.

4.3     Furnishing  of  Information.  As  long as any Purchaser owns Securities,
        ---------------------------
the  Company  covenants  to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the  Company after the date hereof pursuant to the Exchange Act.  As long as any
Purchaser  owns  Securities,  if  the  Company  is  not required to file reports
pursuant  to the Exchange Act, it will prepare and furnish to the Purchasers and
make  publicly  available  in accordance with Rule 144(c) such information as is
required  for the Purchasers to sell the Securities under Rule 144.  The Company
further  covenants  that  it  will  take  such  further  action as any holder of
Securities  may  reasonably request, to the extent required from time to time to
enable  such  Person  to  sell  such  Securities  without registration under the
Securities  Act  within  the requirements of the exemption provided by Rule 144.

4.4     Integration.  The  Company  shall  not  sell,  offer for sale or solicit
        -----------
offers  to  buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of  the  Securities  in  a  manner that would require the registration under the
Securities  Act of the sale of the Securities to the Purchasers or that would be
integrated  with  the  offer or sale of the Securities for purposes of the rules
and  regulations  of  any  Trading  Market.

4.5     Conversion  and  Exercise  Procedures.  The  form  of Notice of Exercise
        -------------------------------------
included  in  the  Warrants and the form of Notice of Conversion included in the
Debentures  set  forth the totality of the procedures required of the Purchasers
in  order  to  exercise  the  Warrants or convert the Debentures.  No additional
legal  opinion  or  other  information  or instructions shall be required of the
Purchasers  to exercise their Warrants or convert their Debentures.  The Company
shall  honor  exercises  of  the  Warrants and conversions of the Debentures and
shall  deliver  Underlying  Shares  in accordance with the terms, conditions and
time  periods  set  forth  in  the  Transaction  Documents.

4.6     Securities  Laws Disclosure; Publicity.  The Company shall, by 8:30 a.m.
        --------------------------------------
(New  York  City time) on the Trading Day immediately following the date hereof,
issue  a  Current  Report  on  Form  8-K,  disclosing  the material terms of the
transactions  contemplated  hereby,  and  shall attach the Transaction Documents
thereto.  The  Company  and  each  Purchaser  shall  consult  with each other in
issuing  any  other press releases with respect to the transactions contemplated
hereby,  and  neither  the  Company nor any Purchaser shall issue any such press
release or otherwise make any such public statement without the prior consent of
the  Company, with respect to any press release of any Purchaser, or without the
prior  consent  of  each  Purchaser,  with  respect  to any press release of the
Company,  which consent shall not unreasonably be withheld or delayed, except if
such  disclosure  is  required  by law, in which case the disclosing party shall
promptly  provide  the other party with prior notice of such public statement or
communication.  Notwithstanding  the  foregoing,  the Company shall not publicly
disclose  the name of any Purchaser, or include the name of any Purchaser in any
filing  with  the Commission or any regulatory agency or Trading Market, without
the  prior  written consent of such Purchaser, except (i) as required by federal
securities law in connection with (A) any registration statement contemplated by
the  Registration  Rights  Agreement  and  (B)  the  filing of final Transaction
Documents  (including  signature  pages thereto) with the Commission and (ii) to
the  extent such disclosure is required by law or Trading Market regulations, in
which  case  the  Company shall provide the Purchasers with prior notice of such
disclosure  permitted  under  this  clause  (ii).

4.7     Shareholder  Rights Plan.  No claim will be made or enforced by the
        ------------------------
Company  or,  with  the  consent  of  the  Company,  any  other Person, that any
Purchaser is an "Acquiring Person" under any control share acquisition, business
combination,  poison  pill (including any distribution under a rights agreement)
or  similar  anti-takeover plan or arrangement in effect or hereafter adopted by
the  Company, or that any Purchaser could be deemed to trigger the provisions of
any  such  plan  or  arrangement,  by  virtue  of receiving Securities under the
Transaction  Documents  or under any other agreement between the Company and the
Purchasers.

4.8     Non-Public  Information.  Except with respect to the material terms
        -----------------------
and  conditions  of  the transactions contemplated by the Transaction Documents,
the  Company covenants and agrees that neither it nor any other Person acting on
its  behalf  will  provide  any  Purchaser  or  its  agents  or counsel with any
information  that  the  Company  believes  constitutes  material  non-public
information,  unless  prior thereto such Purchaser shall have executed a written
agreement  regarding  the  confidentiality  and  use  of  such information.  The
Company  understands  and  confirms  that each Purchaser shall be relying on the
foregoing  representations  in  effecting  transactions  in  securities  of  the
Company.

4.9     Use  of  Proceeds.  Except as set forth on Schedule 4.9 attached hereto,
        -----------------                          ------------
the Company shall use the net proceeds from the sale of the Securities hereunder
for  working capital purposes and not for the satisfaction of any portion of the
Company's  debt  (other than payment of trade payables in the ordinary course of
the  Company's  business  and up to $2,500,000 to redeem Debentures purchased at
the  Initial  Closing), to redeem Common Stock or Common Stock Equivalents or to
settle  any  outstanding  litigation.

4.10     Reimbursement.  If  any  Purchaser  becomes involved in any capacity in
         -------------
any  Proceeding  by  or  against  any Person who is a stockholder of the Company
(except  as a result of sales, pledges, margin sales and similar transactions by
such  Purchaser  to  or  with any other stockholder), solely as a result of such
Purchaser's acquisition of the Securities under this Agreement, the Company will
reimburse  such Purchaser for its reasonable legal and other expenses (including
the  cost  of  any investigation preparation and travel in connection therewith)
incurred  in  connection  therewith,  as  such  expenses  are  incurred.  The
reimbursement  obligations  of  the  Company  under  this  paragraph 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 the Purchasers who are
actually  named  in  such  action,  proceeding  or  investigation, and partners,
directors,  agents,  employees and controlling persons (if any), as the case may
be,  of  the  Purchasers  and  any such Affiliate, and shall be binding upon and
inure  to  the  benefit  of  any  successors,  assigns,  heirs  and  personal
representatives  of  the  Company, the Purchasers and any such Affiliate and any
such  Person.  The  Company also agrees that neither the Purchasers nor any such
Affiliates,  partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any Person asserting claims on behalf of or
in  right  of  the  Company solely as a result of acquiring the Securities under
this  Agreement,  except  if  such  claim arises primarily from a breach of such
Purchaser's  representations,  warranties  or  covenants  under  the Transaction
Documents  or  any agreements or understandings such Purchaser may have with any
such  stockholder  or  any  violations  by  the  Purchaser  of  state or federal
securities  laws or any conduct by such Purchaser which constitutes fraud, gross
negligence,  willful  misconduct  or  malfeasance.

4.11     Indemnification  of  Purchasers.   Subject  to  the  provisions of this
         -------------------------------
Section  4.11,  the  Company  will  indemnify  and  hold  each Purchaser and its
directors,  officers, shareholders, members, partners, employees and agents (and
any  other  Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title), each Person who
controls  such Purchaser (within the meaning of Section 15 of the Securities Act
and  Section  20  of  the  Exchange  Act),  and the directors, officers, agents,
members,  shareholders,  partners  or  employees  (and  any other Persons with a
functionally  equivalent  role of a Person holding such titles notwithstanding a
lack  of  such  title  or  any other title) of such controlling persons (each, a
"Purchaser  Party")  harmless from any and all losses, liabilities, obligations,
    -------------
claims,  contingencies,  damages,  costs  and expenses, including all judgments,
amounts  paid  in  settlements,  court  costs and reasonable attorneys' fees and
costs  of  investigation  that any such Purchaser Party may suffer or incur as a
result  of  or  relating  to  (a)  any  breach  of  any  of the representations,
warranties,  covenants or agreements made by the Company in this Agreement or in
the  other  Transaction  Documents  or  (b)  any  action  instituted  against  a
Purchaser,  or any of them or their respective Affiliates, by any stockholder of
the  Company  who  is not an Affiliate of such Purchaser, with respect to any of
the  transactions  contemplated by the Transaction Documents (unless such action
is  based  upon  a  breach  of  such  Purchaser's representations, warranties or
covenants  under  the  Transaction Documents or any agreements or understandings
such  Purchaser  may  have  with  any  such stockholder or any violations by the
Purchaser  of  state or federal securities laws or any conduct by such Purchaser
which  constitutes  fraud, gross negligence, willful misconduct or malfeasance).
If  any  action shall be brought against any Purchaser Party in respect of which
indemnity  may  be sought pursuant to this Agreement, such Purchaser Party shall
promptly  notify the Company in writing, and the Company shall have the right to
assume  the  defense  thereof  with  counsel  of  its  own  choosing  reasonably
acceptable  to the Purchaser Party.  Any Purchaser Party shall have the right to
employ  separate  counsel  in  any  such  action  and participate in the defense
thereof,  but  the  fees and expenses of such counsel shall be at the expense of
such  Purchaser  Party  except to the extent that (i) the employment thereof has
been  specifically  authorized  by  the Company in writing, (ii) the Company has
failed  after  a  reasonable period of time to assume such defense and to employ
counsel  or  (iii)  in  such  action there is, in the reasonable opinion of such
separate counsel, a material conflict on any material issue between the position
of  the  Company  and  the  position  of such Purchaser Party, in which case the
Company  shall  be  responsible  for the reasonable fees and expenses of no more
than  on such separate counsel.  The Company will not be liable to any Purchaser
Party  under this Agreement (i) for any settlement by a Purchaser Party effected
without  the  Company's  prior  written consent, which shall not be unreasonably
withheld  or delayed; or (ii) to the extent, but only to the extent that a loss,
claim,  damage  or  liability is attributable to any Purchaser Party's breach of
any  of  the  representations,  warranties, covenants or agreements made by such
Purchaser  in  this  Agreement  or  in  the  other  Transaction  Documents.

4.12     Reservation  and  Listing  of  Securities.
         -----------------------------------------

(a)  Subject  to Shareholder Approval, the Company shall maintain a reserve from
     its  duly  authorized  shares  of Common Stock for issuance pursuant to the
     Transaction  Documents  in  such  amount  as may be required to fulfill its
     obligations  in  full  under  the  Transaction  Documents.

(b)  If, on  any  date,  the  number  of  authorized but unissued (and otherwise
     unreserved)  shares  of  Common  Stock  is less than 130% of (i) the Actual
     Minimum  on  such  date,  minus  (ii)  the number of shares of Common Stock
     previously  issued pursuant to the Transaction Documents, then the Board of
     Directors of the Company shall use commercially reasonable efforts to amend
     the  Company's  certificate  or  articles  of incorporation to increase the
     number  of  authorized  but unissued shares of Common Stock to at least the
     Actual  Minimum  at  such  time (minus the number of shares of Common Stock
     previously  issued  pursuant  to  the  Transaction  Documents),  as soon as
     possible  and in any event not later than the 90th day after such date (the
     "Shareholder  Approval"); provided that the Company will not be required at
     any  time  to authorize a number of shares of Common Stock greater than the
     maximum  remaining  number of shares of Common Stock that could possibly be
     issued  after  such  time  pursuant  to  the  Transaction  Documents.

(c)  The Company  shall,  if  applicable, (i) in the time and manner required by
     the  principal Trading Market, prepare and file with such Trading Market an
     additional shares listing application covering a number of shares of Common
     Stock at least equal to the Actual Minimum on the date of such application,
     (ii)  take  all  steps necessary to cause such shares of Common Stock to be
     approved for listing on such Trading Market as soon as possible thereafter,
     (iii) provide to the Purchasers evidence of such listing, and (iv) maintain
     the  listing  of such Common Stock on any date at least equal to the Actual
     Minimum  on  such  date  on  such Trading Market or another Trading Market.

4.13     Participation  in  Future  Financing.
         ------------------------------------

(a)  From the date hereof until such date when no Debentures remain outstanding,
     upon any issuance by the Company or any of its Subsidiaries of Common Stock
     or  Common  Stock  Equivalents  (a  "Subsequent Financing"), each Purchaser
     shall  have  the  right to participate in up to an amount of the Subsequent
     Financing  equal  to  100%  of the Subsequent Financing (the "Participation
     Maximum")  on  the  same  terms,  conditions  and price provided for in the
     Subsequent  Financing.

(b)  At least  5  Trading Days prior to the closing of the Subsequent Financing,
     the  Company  shall  deliver  to  each  Purchaser  a  written notice of its
     intention to effect a Subsequent Financing ("Pre-Notice"), which Pre-Notice
     shall  ask  such  Purchaser  if  it  wants  to  review  the details of such
     financing  (such  additional notice, a "Subsequent Financing Notice"). Upon
     the  request of a Purchaser, and only upon a request by such Purchaser, for
     a  Subsequent  Financing  Notice,  the Company shall promptly, but no later
     than  1  Trading  Day  after  such  request, deliver a Subsequent Financing
     Notice to such Purchaser. The Subsequent Financing Notice shall describe in
     reasonable  detail  the  proposed  terms  of such Subsequent Financing, the
     amount  of proceeds intended to be raised thereunder, the Person or Persons
     through  or with whom such Subsequent Financing is proposed to be effected,
     and  attached  to  which shall be a term sheet or similar document relating
     thereto.

(c)  Any Purchaser  desiring  to  participate  in such Subsequent Financing must
     provide written notice to the Company by not later than 5:30 p.m. (New York
     City time) on the 5th Trading Day after all of the Purchasers have received
     the  Pre-Notice  that  the  Purchaser  is  willing  to  participate  in the
     Subsequent Financing, the amount of the Purchaser's participation, and that
     the  Purchaser  has such funds ready, willing, and available for investment
     on  the  terms set forth in the Subsequent Financing Notice. If the Company
     receives  no  notice  from  a  Purchaser  as  of such 5th Trading Day, such
     Purchaser  shall  be  deemed  to have notified the Company that it does not
     elect  to  participate.

(d)  If by 5:30  p.m.  (New  York City time) on the 5th Trading Day after all of
     the  Purchasers  have  received  the  Pre-Notice,  notifications  by  the
     Purchasers  of their willingness to participate in the Subsequent Financing
     (or  to  cause  their  designees to participate) is, in the aggregate, less
     than  the  total  amount  of the Subsequent Financing, then the Company may
     effect  the remaining portion of such Subsequent Financing on the terms and
     with  the  Persons  set  forth  in  the  Subsequent  Financing  Notice.

(e)  If by 5:30  p.m.  (New  York City time) on the 5th Trading Day after all of
     the Purchasers have received the Pre-Notice, the Company receives responses
     to  a  Subsequent Financing Notice from Purchasers seeking to purchase more
     than the aggregate amount of the Participation Maximum, each such Purchaser
     shall  have the right to purchase the greater of (a) their Pro Rata Portion
     (as  defined  below)  of  the  Participation Maximum and (b) the difference
     between the Participation Maximum and the aggregate amount of participation
     by  all  other  Purchasers.  "Pro  Rata  Portion"  is  the ratio of (x) the
     Subscription  Amount  of  Securities  purchased  on  the  Closing Date by a
     Purchaser  participating  under  this  Section  4.13 and (y) the sum of the
     aggregate  Subscription Amounts of Securities purchased on the Closing Date
     by  all  Purchasers  participating  under  this  Section  4.13.

(f)  The Company  must provide the Purchasers with a second Subsequent Financing
     Notice,  and  the Purchasers will again have the right of participation set
     forth  above  in  this Section 4.13, if the Subsequent Financing subject to
     the  initial  Subsequent Financing Notice is not consummated for any reason
     on  the  terms  set  forth  in  such  Subsequent Financing Notice within 60
     Trading  Days  after  the  date of the initial Subsequent Financing Notice.

(g)  Notwithstanding the foregoing, this Section 4.13 shall not apply in respect
     of  an  Exempt  Issuance.

4.14     Subsequent  Equity  Sales.
         -------------------------

(a)  (i) From  the  date  hereof until 90 days after the Effective Date, neither
     the Company nor any Subsidiary shall issue shares of Common Stock or Common
     Stock  Equivalents;  provided, however, that the 90 day period set forth in
     this  Section  4.14 shall be extended for the number of Trading Days during
     such  period  in  which (X) trading in the Common Stock is suspended by any
     Trading  Market,  or  (Y)  following  the  Effective Date, the Registration
     Statement  is  not effective or the prospectus included in the Registration
     Statement  may  not  be  used  by  the  Purchasers  for  the  resale of the
     Underlying  Shares.  (ii)  From  the  date hereof until two years after the
     Closing  Date,  the  Company  shall  not  issue  any warrants or options or
     reprice  any currently outstanding warrants or options (other than by means
     of  currently  existing  antidilution  protections),  other  than  Exempt
     Issuances,  without  the  prior written consent of the holders of more than
     30%  of  the  Debentures outstanding at the time of such proposed issuance.
     (iii)  From  the  date  hereof  until two years after the Closing Date, the
     Company  shall  not  engage  in any mergers or acquisitions (whether as the
     surviving  or  the  non-surviving  entity  and  whether  the  consideration
     consists  of  Company  securities  or  only cash) without the prior written
     consent  of  the  holders of more than 30% of the Debentures outstanding at
     the  time  of  such  proposed  merger  transaction.

(b)  From the  date  hereof  until  such  time  as no Purchaser holds any of the
     Securities, the Company shall be prohibited from effecting or entering into
     an  agreement to effect any Subsequent Financing involving a "Variable Rate
     Transaction." The term "Variable Rate Transaction" shall mean a transaction
     in which the Company issues or sells (i) any debt or equity securities that
     are convertible into, exchangeable or exercisable for, or include the right
     to  receive  additional  shares of Common Stock either (A) at a conversion,
     exercise  or  exchange rate or other price that is based upon and/or varies
     with  the trading prices of or quotations for the shares of Common Stock at
     any  time  after the initial issuance of such debt or equity securities, or
     (B)  with a conversion, exercise or exchange price that is subject to being
     reset at some future date after the initial issuance of such debt or equity
     security  or upon the occurrence of specified or contingent events directly
     or  indirectly related to the business of the Company or the market for the
     Common  Stock or (ii) enters into any agreement, including, but not limited
     to,  an equity line of credit, whereby the Company may sell securities at a
     future  determined  price.

(c)  From the date hereof until such date when no Debentures remain outstanding,
     neither the Company nor any Subsidiary shall issue Common Stock Equivalents
     at an effective price per share of less than $.25 without the prior written
     consent  of  each  Purchaser  of  the  Debentures.

(d)  Notwithstanding the foregoing, this Section 4.14 shall not apply in respect
     of an Exempt Issuance, except that no Variable Rate Transaction shall be an
     Exempt  Issuance.

4.15     Equal  Treatment of Purchasers.  No consideration shall be offered
         ------------------------------
or  paid  to  any  Person to amend or consent to a waiver or modification of any
provision  of  any of the Transaction Documents unless the same consideration is
also  offered  to  all  of  the  parties  to  the  Transaction  Documents.  For
clarification  purposes,  this provision constitutes a separate right granted to
each  Purchaser  by the Company and negotiated separately by each Purchaser, and
is  intended for the Company to treat the Purchasers as a class and shall not in
any  way  be  construed  as  the Purchasers acting in concert or as a group with
respect  to  the  purchase,  disposition  or  voting of Securities or otherwise.

4.16     Short  Sales  and Confidentiality After The Date Hereof. Each Purchaser
         -------------------------------------------------------
severally  and  not  jointly with the other Purchasers covenants that neither it
nor  any Affiliate acting on its behalf or pursuant to any understanding with it
will execute any Short Sales during the period commencing at the Discussion Time
and  ending at the time that the transactions contemplated by this Agreement are
first  publicly  announced as described in Section 4.6.Each Purchaser, severally
and not jointly with the other Purchasers, covenants that until such time as the
transactions  contemplated  by  this  Agreement  are  publicly  disclosed by the
Company  as  described  in  Section  4.6,  such  Purchaser  will  maintain  the
confidentiality  of  all  disclosures  made  to  it  in  connection  with  this
transaction  (including  the  existence  and  terms  of this transaction).  Each
Purchaser understands and acknowledges, severally and not jointly with any other
Purchaser,  that  the  Commission  currently takes the position that coverage of
short  sales  of  shares  of  the  Common  Stock  "against the box" prior to the
Effective  Date of the Registration Statement with the Securities is a violation
of  Section  5 of the Securities Act, as set forth in Item 65, Section A, of the
Manual  of  Publicly  Available  Telephone  Interpretations,  dated  July  1997,
compiled  by  the  Office  of  Chief  Counsel,  Division of Corporation Finance.
Notwithstanding  the  foregoing, no Purchaser makes any representation, warranty
or  covenant  hereby that it will not engage in Short Sales in the securities of
the  Company after the time that the transactions contemplated by this Agreement
are  first  publicly  announced  as described in Section 4.6.Notwithstanding the
foregoing, in the case of a Purchaser that is a multi-managed investment vehicle
whereby separate portfolio managers manage separate portions of such Purchaser's
assets  and  the  portfolio  managers have no direct knowledge of the investment
decisions  made  by  the  portfolio  managers  managing  other  portions of such
Purchaser's  assets,  the covenant set forth above shall only apply with respect
to  the  portion  of  assets  managed  by  the  portfolio  manager that made the
investment  decision  to  purchase  the  Securities  covered  by this Agreement.

4.17     Market  Awareness.     Within  90  days  of  the Closing Date, the
         ------------------
Company  shall  engage  the  services  of  an investor relation firm in order to
market  awareness  of  its  business.

                                    ARTICLE V

                                  MISCELLANEOUS
5.1     Termination.  This Agreement may be terminated by any Purchaser, as
        -----------
to such Purchaser's obligations hereunder only and without any effect whatsoever
on  the  obligations  between  the  Company and the other Purchasers, by written
notice  to  the  other  parties,  if  the Closing has not been consummated on or
before  April  2,  2006; provided, however, that no such termination will affect
the  right  of  any party to sue for any breach by the other party (or parties).

5.2     Fees  and Expenses.  At the Closing, the Company has agreed to reimburse
        ------------------
PEF Advisors LLC the non-accountable sums of $25,000 for its due diligence fees.
Except as expressly set forth in the Transaction Documents to the contrary, each
party  shall pay the fees and expenses of its advisers, counsel, 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.  The Company shall pay all transfer agent fees, stamp taxes and other
taxes and duties levied in connection with the delivery of any Securities to the
Purchasers.

5.3     Entire Agreement.  The Transaction Documents, together with the exhibits
        ----------------
and  schedules  thereto,  contain  the  entire understanding of the parties with
respect  to  the  subject  matter  hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge  have  been  merged  into  such  documents,  exhibits and schedules.

5.4     Notices.  Any and all notices or other communications or deliveries
        -------
required  or permitted to be provided hereunder shall be in writing and shall be
deemed  given  and effective on the earliest of (a) the date of transmission, if
such  notice or communication is delivered via facsimile at the facsimile number
set  forth  on  the signature pages attached hereto prior to 5:30 p.m. (New York
City  time)  on  a  Trading  Day,  (b)  the  next  Trading Day after the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day,  (c)  the  2nd  Trading  Day following the date of mailing, if sent by U.S.
nationally  recognized  overnight courier service, or (d) upon actual receipt by
the  party  to  whom  such notice is required to be given.  The address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

5.5     Amendments;  Waivers.  No  provision  of  this  Agreement may be waived,
        --------------------
modified,  supplemented or amended except in a written instrument signed, in the
case  of  an  amendment,  by the Company and each Purchaser or, in the case of a
waiver,  by  the  party against whom enforcement of any such waived provision is
sought.  No  waiver  of  any default with respect to any provision, condition or
requirement  of  this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise  any  right  hereunder  in  any  manner impair the exercise of any such
right.

5.6     Headings.  The  headings  herein  are  for  convenience  only,  do  not
        --------
constitute  a  part of this Agreement and shall not be deemed to limit or affect
any  of  the  provisions  hereof.

5.7     Successors  and  Assigns
        ------------------------
This  Agreement shall be binding upon and inure to the benefit of the parties
and  their  successors  and  permitted assigns.  The Company may not assign this
Agreement  or  any  rights  or  obligations  hereunder without the prior written
consent  of each Purchaser (other than by merger).  Any Purchaser may assign any
or  all  of its rights under this Agreement to any Person to whom such Purchaser
assigns  or transfers any Securities, provided such transferee agrees in writing
to  be  bound,  with respect to the transferred Securities, by the provisions of
the  Transaction  Documents  that  apply  to  the  "Purchasers".

5.8     No  Third-Party  Beneficiaries.  This Agreement is intended for the
        ------------------------------
benefit  of  the  parties  hereto  and their respective successors and permitted
assigns  and is not for the benefit of, nor may any provision hereof be enforced
by,  any  other  Person,  except  as  otherwise  set  forth  in  Section  4.11.

5.9     Governing  Law.  All  questions  concerning  the construction, validity,
        --------------
enforcement and interpretation of the Transaction Documents shall be governed by
and  construed and enforced in accordance with the internal laws of the State of
New  York,  without  regard to the principles of conflicts of law thereof.  Each
party  agrees  that  all  legal  proceedings  concerning  the  interpretations,
enforcement  and  defense of the transactions contemplated by this Agreement and
any  other  Transaction Documents (whether brought against a party hereto or its
respective  affiliates,  directors, officers, shareholders, employees or agents)
shall  be  commenced  exclusively in the state and federal courts sitting in the
City  of  New  York.  Each  party  hereby  irrevocably  submits to the exclusive
jurisdiction  of  the  state and federal courts sitting in the City of New York,
borough  of  Manhattan  for  the  adjudication  of  any  dispute hereunder or in
connection  herewith  or  with  any transaction contemplated hereby or discussed
herein  (including  with  respect  to  the enforcement of any of the Transaction
Documents), 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 improper
or is an  inconvenient venue for such proceeding.  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 via registered or
certified  mail  or overnight delivery (with evidence of delivery) to such party
at  the address in effect for 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 other manner permitted by law.  The parties hereby waive
all  rights  to  a  trial  by jury.  If either party shall commence an action or
proceeding  to  enforce  any  provisions  of the Transaction Documents, then the
prevailing  party  in such action or proceeding shall be reimbursed by the other
party  for  its reasonable attorneys' fees and other costs and expenses incurred
with  the  investigation,  preparation  and  prosecution  of  such  action  or
proceeding.

5.10     Survival.  The  representations,  warranties,  covenants  and  other
         --------
agreements contained herein shall survive the Closing and the delivery, exercise
and/or  conversion of the Securities, as applicable for the applicable statue of
limitations.

5.11     Execution.  This Agreement may be executed in two or more counterparts,
         ---------
all  of which when taken together 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, it being understood that both parties need not
sign  the  same  counterpart.  In  the  event that any signature is delivered by
facsimile  transmission or by e-mail delivery of a ".pdf" format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such  facsimile  or  ".pdf"  signature  page  were  an  original  thereof.

5.12     Severability.  If  any term, provision, covenant or restriction of this
         ------------
Agreement  is  held by a court of competent jurisdiction to be invalid, illegal,
void  or  unenforceable,  the  remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no  way  be  affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve  the  same or substantially the same result as that contemplated by such
term,  provision,  covenant or restriction. It is hereby stipulated and declared
to  be  the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may  be  hereafter  declared  invalid,  illegal,  void  or  unenforceable.

5.13     Rescission  and  Withdrawal  Right.  Notwithstanding  anything  to  the
         ----------------------------------
contrary  contained  in  (and without limiting any similar provisions of) any of
the  other  Transaction  Documents,  whenever  any  Purchaser exercises a right,
election, demand or option under a Transaction Document and the Company does not
timely perform its related obligations within the periods therein provided, then
such Purchaser may rescind or withdraw, in its sole discretion from time to time
upon  written  notice to the Company, any relevant notice, demand or election in
whole  or  in part without prejudice to its future actions and rights; provided,
however,  in  the  case  of  a  rescission  of a conversion of the Debentures or
exercise  of  a Warrant, the Purchaser shall be required to return any shares of
Common  Stock  subject  to  any  such  rescinded  conversion or exercise notice.

5.14     Replacement of Securities.  If any certificate or instrument evidencing
         -------------------------
any  Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or  cause  to  be  issued in exchange and substitution for and upon cancellation
thereof  (in the case of mutilation), or in lieu of and substitution therefor, a
new  certificate  or  instrument,  but  only upon receipt of evidence reasonably
satisfactory  to  the Company of such loss, theft or destruction.  The applicant
for  a new certificate or instrument under such circumstances shall also pay any
reasonable third-party costs (including customary indemnity) associated with the
issuance  of  such  replacement  Securities.

5.15     Remedies.  In  addition  to  being  entitled  to  exercise  all  rights
         --------
provided  herein  or  granted by law, including recovery of damages, each of the
Purchasers  and  the  Company will be entitled to specific performance under the
Transaction  Documents.  The  parties  agree  that  monetary  damages may not be
adequate  compensation  for  any  loss  incurred  by  reason  of  any  breach of
obligations described and hereby agrees to waive and not to assert in any action
for specific performance of any such obligation the defense that a remedy at law
would  be  adequate.

5.16     Payment  Set Aside. To the extent that the Company makes a payment
         ------------------
or payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights 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.

5.17     Usury.  To  the  extent  it may lawfully do so, the Company hereby
         -----
agrees  not  to insist upon or plead or in any manner whatsoever claim, and will
resist  any and all efforts to be compelled to take the benefit or advantage of,
usury  laws  wherever  enacted,  now  or  at  any  time  hereafter  in force, in
connection  with  any  claim,  action  or  proceeding that may be brought by any
Purchaser  in  order  to  enforce  any  right  or  remedy  under any Transaction
Document.  Notwithstanding  any  provision  to  the  contrary  contained  in any
Transaction  Document,  it  is  expressly  agreed  and  provided  that the total
liability  of  the  Company  under the Transaction Documents for payments in the
nature  of  interest  shall  not exceed the maximum lawful rate authorized under
applicable  law (the "Maximum Rate"), and, without limiting the foregoing, in no
event  shall  any  rate  of  interest or default interest, or both of them, when
aggregated with any other sums in the nature of interest that the Company may be
obligated  to  pay under the Transaction Documents exceed such Maximum Rate.  It
is  agreed  that  if  the  maximum  contract rate of interest allowed by law and
applicable  to the Transaction Documents is increased or decreased by statute or
any  official governmental action subsequent to the date hereof, the new maximum
contract  rate of interest allowed by law will be the Maximum Rate applicable to
the  Transaction  Documents  from  the  effective  date  forward,  unless  such
application  is  precluded  by  applicable  law.  If  under  any  circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to any
Purchaser  with  respect to indebtedness evidenced by the Transaction Documents,
such  excess  shall be applied by such Purchaser to the unpaid principal balance
of  any  such indebtedness or be refunded to the Company, the manner of handling
such  excess  to  be  at  such  Purchaser's  election.

5.18     Independent  Nature  of  Purchasers'  Obligations and Rights.  The
         ------------------------------------------------------------
obligations of each Purchaser under any Transaction Document are several and not
joint  with  the  obligations  of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance or non-performance of the obligations
of any other Purchaser under any Transaction Document.  Nothing contained herein
or  in  any  other  Transaction  Document,  and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an  association,  a  joint  venture  or  any  other  kind of entity, or create a
presumption  that  the Purchasers are in any way acting in concert or as a group
with  respect  to  such  obligations  or  the  transactions  contemplated by the
Transaction  Documents.  Each  Purchaser  shall  be  entitled  to  independently
protect and enforce its rights, including without limitation, the rights arising
out  of  this  Agreement or out of the other Transaction Documents, and it shall
not  be necessary for any other Purchaser to be joined as an additional party in
any proceeding for such purpose.  Each Purchaser has been represented by its own
separate  legal  counsel  in  their  review  and  negotiation of the Transaction
Documents.  The  Company  has  elected  to  provide all Purchasers with the same
terms  and  Transaction  Documents  for  the  convenience of the Company and not
because  it  was  required  or  requested  to  do  so  by  the  Purchasers.

5.19     Liquidated  Damages.  The Company's obligations to pay any partial
         -------------------
liquidated  damages  or other amounts owing under the Transaction Documents is a
continuing  obligation  of  the Company and shall not terminate until all unpaid
partial  liquidated damages and other amounts have been paid notwithstanding the
fact  that  the instrument or security pursuant to which such partial liquidated
damages  or  other  amounts  are  due  and  payable  shall  have  been canceled.

5.20     Construction.  The  parties  agree  that each of them and/or their
         ------------
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities  are to be resolved against the drafting party shall not be employed
in  the  interpretation  of  the Transaction Documents or any amendments hereto.

                            [SIGNATURE PAGE FOLLOWS]

<PAGE>

IN  WITNESS  WHEREOF,  the  parties  hereto have caused this Securities Purchase
Agreement  to  be duly executed by their respective authorized signatories as of
the  date  first  indicated  above.

TRINITY  LEARNING  CORPORATION

By: /s/Pat Quinn
    ------------
Name: Pat Quinn
Title: Chief Financial Officer

     Address  for  Notice:
     ---------------------

Trinity  Learning  Corporation
4101  International  Parkway
Carrollton,  TX  75007

With  a  copy  to  (which  shall  not  constitute  notice):







                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

<PAGE>
        [PURCHASER SIGNATURE PAGES TO TTYL SECURITIES PURCHASE AGREEMENT]

     IN  WITNESS  WHEREOF,  the undersigned have caused this Securities Purchase
Agreement  to  be duly executed by their respective authorized signatories as of
the  date  first  indicated  above.
Name  of  Purchaser:  __________________________
Signature  of  Authorized  Signatory  of  Purchaser:  __________________________
Name  of  Authorized  Signatory:  _________________________
Title  of  Authorized  Signatory:  __________________________
Email  Address  of  Purchaser:  ________________________________
Fax  Number  of  Purchaser:  ______________________________

Address  for  Notice  of  Purchaser:




Address  for  Delivery  of  Securities  for  Purchaser  (if  not same as above):





Subscription  Amount:
Principal  Amount:
Total  amount  payable  at  Closing:
Debentures:
Warrant  Shares:
EIN  Number:  [PROVIDE  THIS  UNDER  SEPARATE  COVER]

                           [SIGNATURE PAGES CONTINUE]