Exhibit 10.1

                          SECURITIES PURCHASE AGREEMENT

     THIS SECURITIES  PURCHASE AGREEMENT (this  "AGREEMENT"),  dated as of March
13, 2006, by and among CITY NETWORK, INC., a Nevada corporation (the "COMPANY"),
and the Buyers listed on Schedule I attached hereto (individually,  a "BUYER" or
collectively "BUYERS").

                                   WITNESSETH

     WHEREAS,  the  Company and the Buyers are  executing  and  delivering  this
Agreement in reliance upon an exemption from securities registration pursuant to
Section 4(2) and/or Rule 506 of Regulation D ("REGULATION  D") as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "SECURITIES ACT");

     WHEREAS,  on August 10, 2005,  the Company and Highgate  House Funds,  Ltd.
("HIGHGATE")   entered  into  the  Securities  Purchase  Agreement  (the  "PRIOR
SECURITIES  PURCHASE  AGREEMENT"),  pursuant  to which the  Company  issued  the
Amended and Restated Secured  Convertible  Debenture,  dated August 17, 2005, in
favor of Highgate, and the Secured Convertible  Debenture,  dated as of December
16, 2005, in favor of Highgate,  for an aggregate  principal  amount of $250,000
(the "ORIGINAL NOTES");

     WHEREAS, in connection with the Prior Securities  Purchase  Agreement,  the
Company issued a warrant, dated August 17, 2005 (the "PRIOR WARRANT"),  in favor
of Highgate;

     WHEREAS,  contemporaneously  with the Prior Securities  Purchase Agreement,
the Company and Cornell Capital  Partners,  LP ("CORNELL  CAPITAL") entered into
the  Standby  Equity  Distribution  Agreement,  dated as of August 10, 2005 (the
"SEDA"),  pursuant to which Cornell Capital received nine hundred  seventy-seven
thousand,  two hundred  seventy-three  (977,273)  shares of the Company's common
stock, par value $0.001 (the "COMMON STOCK");

     WHEREAS,  in  connection  with  the  SEDA,  the  Company  entered  into the
Placement Agent  Agreement,  dated as of August 10, 2005 (the  "PLACEMENT  AGENT
AGREEMENT"),  between the Company and Monitor Capital,  Inc.,  pursuant to which
Monitor Capital, Inc. received 10,000 shares of Common Stock;

     WHEREAS,  the  parties  desire  that,  upon the  terms and  subject  to the
conditions  contained herein, the Company shall issue and sell to the Buyers, as
provided herein,  and the Buyers shall purchase up to Six Hundred Fifty Thousand
Dollars ($650,000) of secured convertible debentures,  in substantially the form
attached  as EXHIBIT A hereto  (the  "CONVERTIBLE  DEBENTURES"),  which shall be
convertible into shares of Common Stock (as converted, the "CONVERSION SHARES"),
in the respective amounts set forth opposite each Buyers name on Schedule I (the
"SUBSCRIPTION  AMOUNT")  for a  total  purchase  price  of up to  $650,000  (the
"PURCHASE PRICE");

     WHEREAS,   contemporaneously  with  the  execution  and  delivery  of  this
Agreement,  the Company and the Buyers are executing and  delivering an Investor
Registration  Rights Agreement,  in substantially the form attached as EXHIBIT B
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hereto (the "REGISTRATION RIGHTS AGREEMENT"),  pursuant to which the Company has
agreed to provide certain  registration  rights under the Securities Act and the
rules and regulations  promulgated  there under, and applicable state securities
laws;

     WHEREAS,  on or before the Closing Date (as defined in Section  1(b)),  the
Company and the Buyers are executing an Amended and Restated Security Agreement,
in substantially the form attached as EXHIBIT C-1 hereto; City Technology, Inc.,
a  wholly-owned  subsidiary  of the  Company,  and the Buyers are  executing  an
Amended and Restated Security  Agreement,  in substantially the form attached as
EXHIBIT C-2 hereto; City Network, Inc.--Taiwan, a wholly-owned subsidiary of the
Company,  and  the  Buyers  are  executing  an  Amended  and  Restated  Security
Agreement,  in substantially  the form attached as EXHIBIT C-3 hereto;  and City
Construction Co., Ltd., a wholly-owned subsidiary of the Company, and the Buyers
are executing an Amended and Restated Security  Agreement,  in substantially the
form  attached  as EXHIBIT C-4 hereto (all such  amended and  restated  security
agreements,  the "SECURITY  AGREEMENTS"),  pursuant to which the Company and its
wholly-owned  subsidiaries shall agree to provide the Buyers a security interest
in Pledged  Collateral  (as this term is defined in each Security  Agreement) to
secure the Company's obligations under the Convertible Debentures;

     WHEREAS,  on or before the Closing  Date,  the Company,  the Buyers and the
David  Gonzalez,  Esq.  (the "ESCROW  AGENT") are  executing  and  delivering an
Amended and Restated  Pledge and Escrow  Agreement,  in  substantially  the form
attached as EXHIBIT D hereto (the  "PLEDGE AND ESCROW  AGREEMENT"),  pursuant to
which  the  Company  shall  provide  the  Buyers a  security  interest  in up to
6,445,455 shares of Common Stock (the "PLEDGED  SHARES") to secure the Company's
obligations under the Convertible Debentures;

     WHEREAS,  on or before the Closing  Date,  the  parties  hereto and Pacific
Stock Transfer Company,  the Company's transfer agent as of the date hereof (the
"TRANSFER  AGENT'),  are executing and  delivering  Irrevocable  Transfer  Agent
Instructions,  in  substantially  the form  attached  as  EXHIBIT E hereto  (the
"IRREVOCABLE   TRANSFER  AGENT   INSTRUCTIONS,"   and   collectively   with  the
Registration  Rights  Agreement,  the  Security  Agreements,  and the Pledge and
Escrow Agreement, and any related agreements contemplated by this Agreement, the
"TRANSACTION  Documents"),  pursuant to which the Transfer  Agent shall agree to
certain  obligations  in  connection  with  the  conversion  of the  Convertible
Debentures; and

     WHEREAS, on or before the Closing Date,  Highgate,  Cornell Capital and the
Company desire to terminate the Prior Securities  Purchase  Agreement,  the SEDA
and  certain  other  documents  previously  executed  in  connection  with  such
agreements.

     NOW,  THEREFORE,  in  consideration  of  the  mutual  covenants  and  other
agreements  contained in this  Agreement the Company and the Buyers hereby agree
as follows:

     1. PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.

     (a) PURCHASE OF CONVERTIBLE  DEBENTURES.  Subject to the  satisfaction  (or
waiver)  of the terms and  conditions  of this  Agreement,  each  Buyer  agrees,
severally  and not  jointly,  to  purchase  at the  closing of the  transactions
contemplated  by this Agreement  (the  "CLOSING") and the Company agrees to sell
and issue to each Buyer, severally and not jointly, at the Closing,  Convertible

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Debentures  in  amounts  corresponding  with the  Subscription  Amount set forth
opposite each Buyer's name on Schedule I hereto.  Notwithstanding the foregoing,
the Buyers  shall have no  obligation  to purchase  over  $275,000 in  aggregate
principal  amount of  Convertible  Debentures  if  shareholder  approval  of the
issuance of Common  Stock  pursuant  to the  transactions  contemplated  in this
Agreement  has not been  obtained  within  ninety (90) days of the date  hereof;
provided that in the event the Company files a preliminary proxy statement for a
special  meeting of  stockholders to approve such issuance within 30 days of the
date hereof and the SEC issues comments on the preliminary proxy statement,  the
time shall be extended by sixty (60) days.

     (b) CLOSING DATE.  The closing of the purchase and sale of the  Convertible
Debentures  shall take place upon the  earlier of (a) the date two (2)  business
days after the date the Company  receives  approval from AMEX for the additional
listing on AMEX of shares of Common Stock issuable  pursuant to the transactions
contemplated in this Agreement and the Transaction  Documents (which application
for  additional  listing  shall be made  subject to Section  4(o) herein) or (b)
ninety (90) days from the date hereof,  subject to  notification of satisfaction
of the conditions to the Closing set forth herein and in Sections 6 and 7 below,
(or such other date as is mutually agreed to by the Company and the Buyers) (the
"CLOSING DATE").  The Closing shall occur at the offices of Yorkville  Advisors,
LLC,  3700 Hudson  Street,  Suite 3700,  Jersey City,  New Jersey 07302 (or such
other place as is mutually agreed to by the Company and the Buyers).

     (c)  FORM  OF  PAYMENT.  Subject  to  the  satisfaction  of the  terms  and
conditions of this Agreement,  on the Closing Date, (i) the Buyers shall deliver
to the Company in such aggregate  proceeds for the Convertible  Debentures to be
issued  and sold to such  Buyers,  minus the fees to be paid  directly  from the
gross  proceeds of the Closing as set forth  herein,  and (ii) the Company shall
deliver to each Buyer,  Convertible  Debentures which such Buyers are purchasing
in amounts indicated  opposite such Buyer's name on Schedule I, duly executed on
behalf of the Company.

     2. BUYER'S REPRESENTATIONS AND WARRANTIES.

     Each Buyer represents and warrants, severally and not jointly, that:

     (a) INVESTMENT PURPOSE. Each Buyer is acquiring the Convertible  Debentures
and,  upon  conversion  of  Convertible  Debentures,  the Buyer will acquire the
Conversion Shares then issuable, for its own account for investment only and not
with a view  towards,  or for resale in  connection  with,  the  public  sale or
distribution thereof,  except pursuant to sales registered or exempted under the
Securities Act; provided,  however,  that by making the representations  herein,
such Buyer reserves the right to dispose of the Conversion Shares at any time in
accordance with or pursuant to an effective registration statement covering such
Conversion Shares or an available exemption under the Securities Act.

     (b) ACCREDITED INVESTOR STATUS.  Each Buyer is an "ACCREDITED  INVESTOR" as
that term is defined in Rule 501(a)(3) of Regulation D.

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     (c) RELIANCE ON EXEMPTIONS.  Each Buyer  understands  that the  Convertible
Debentures  are being offered and sold to it in reliance on specific  exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
such Buyer's  compliance  with,  the  representations,  warranties,  agreements,
acknowledgments  and  understandings  of such Buyer set forth herein in order to
determine the  availability of such exemptions and the eligibility of such Buyer
to acquire such securities.

     (d) INFORMATION.  Each Buyer and its advisors (and his or, its counsel), if
any, have been furnished with all materials  relating to the business,  finances
and operations of the Company and  information  he deemed  material to making an
informed   investment   decision  regarding  his  purchase  of  the  Convertible
Debentures and the Conversion  Shares,  which have been requested by such Buyer.
Each Buyer and its advisors,  if any, have been afforded the  opportunity to ask
questions  of the Company and its  management.  Neither such  inquiries  nor any
other due diligence  investigations  conducted by such Buyer or its advisors, if
any, or its representatives  shall modify, amend or affect such Buyer's right to
rely on the  Company's  representations  and  warranties  contained in Section 3
below. Each Buyer understands that its investment in the Convertible  Debentures
and the  Conversion  Shares  involves a high degree of risk.  Each Buyer is in a
position   regarding  the  Company,   which,   based  upon  employment,   family
relationship  or economic  bargaining  power,  enabled and enables such Buyer to
obtain information from the Company in order to evaluate the merits and risks of
this investment. Each Buyer has sought such accounting, legal and tax advice, as
it has considered necessary to make an informed investment decision with respect
to its acquisition of the Convertible Debentures and the Conversion Shares.

     (e) NO GOVERNMENTAL  REVIEW.  Each Buyer  understands that no United States
federal  or state  agency or any other  government  or  governmental  agency has
passed  on  or  made  any  recommendation  or  endorsement  of  the  Convertible
Debentures  or the  Conversion  Shares,  or the fairness or  suitability  of the
investment in the Convertible Debentures or the Conversion Shares, nor have such
authorities  passed  upon  or  endorsed  the  merits  of  the  offering  of  the
Convertible Debentures or the Conversion Shares.

     (f) TRANSFER OR RESALE.  Each Buyer  understands that except as provided in
the Registration Rights Agreement:  (i) the Convertible Debentures have not been
and are not being  registered  under the Securities Act or any state  securities
laws, and may not be offered for sale, sold,  assigned or transferred unless (A)
subsequently  registered  thereunder,  or (B) such Buyer shall have delivered to
the Company an opinion of counsel, in a generally acceptable form, to the effect
that such securities to be sold,  assigned or transferred may be sold,  assigned
or  transferred  pursuant to an exemption from such  registration  requirements;
(ii)  any  sale of such  securities  made in  reliance  on Rule  144  under  the
Securities  Act (or a successor  rule thereto)  ("RULE 144") may be made only in
accordance  with  the  terms  of  Rule  144  and  further,  if  Rule  144 is not
applicable,  any  resale of such  securities  under  circumstances  in which the
seller  (or the  person  through  whom the sale is made)  may be deemed to be an
underwriter  (as  that  term is  defined  in the  Securities  Act)  may  require
compliance  with some other  exemption under the Securities Act or the rules and
regulations of the SEC  thereunder;  and (iii) neither the Company nor any other
person is under any obligation to register such securities  under the Securities
Act or any state  securities  laws or to comply with the terms and conditions of

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any exemption thereunder.  The Company reserves the right to place stop transfer
instructions against the shares and certificates for the Conversion Shares.

(g) LEGENDS.  Each Buyer  understands that the certificates or other instruments
representing the Convertible  Debentures and or the Conversion Shares shall bear
a restrictive  legend in  substantially  the following form (and a stop transfer
order may be placed against transfer of such stock certificates):

        THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE HAVE NOT
        BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS
        AMENDED,   OR  APPLICABLE   STATE  SECURITIES  LAWS.  THE
        SECURITIES  HAVE  BEEN  ACQUIRED  SOLELY  FOR  INVESTMENT
        PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE
        OFFERED FOR SALE,  SOLD,  TRANSFERRED  OR ASSIGNED IN THE
        ABSENCE OF AN EFFECTIVE  REGISTRATION  STATEMENT  FOR THE
        SECURITIES  UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
        OR  APPLICABLE  STATE  SECURITIES  LAWS, OR AN OPINION OF
        COUNSEL,   IN   A   GENERALLY   ACCEPTABLE   FORM,   THAT
        REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
        STATE SECURITIES LAWS.

The legend set forth  above  shall be  removed,  and the  Company  shall issue a
certificate  without  such  legend to the holder of the  Conversion  Shares upon
which it is stamped,  within two (2) business days after written  request by the
holder  of the  Conversion  Shares,  if,  unless  otherwise  required  by  state
securities  laws,  (i) in connection  with a sale  transaction,  the  Conversion
Shares are  registered  under the Securities  Act, or (ii) in connection  with a
sale  transaction,  such holder provides the Company with an opinion of counsel,
which  opinion shall be in form,  substance and scope  customary for opinions of
counsel in comparable transactions, to the effect that a public sale, assignment
or transfer of the Conversion Shares may be made without  registration under the
Securities Act.

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

     (i) RECEIPT OF  DOCUMENTS.  Each Buyer and his or its counsel has  received
and read in their entirety: (i) this Agreement,  including the exhibits attached
hereto, and each  representation,  warranty and covenant set forth herein;  (ii)
all due  diligence  and other  information  necessary to verify the accuracy and
completeness  of such  representations,  warranties  and  covenants;  (iii)  the
Company's  Form 10-KSB for the fiscal year ended  December  31,  2004;  (iv) the
Company's  Form 10-QSB for the fiscal  quarter ended  September 30, 2005 and (v)
answers to all  questions  each Buyer  submitted  to the  Company  regarding  an

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<PAGE>
investment  in the  Company;  and  each  Buyer  has  relied  on the  information
contained  therein and has not been furnished any other  documents,  literature,
memorandum or prospectus.

     (j) DUE  FORMATION  OF  CORPORATE  AND OTHER  BUYERS.  If either Buyer is a
corporation,  trust,  partnership  or  other  entity  that is not an  individual
person, it has been formed and validly exists and has not been organized for the
specific purpose of purchasing the Convertible  Debentures and is not prohibited
from doing so.

     (k) NO LEGAL ADVICE FROM THE COMPANY. Each Buyer acknowledges,  that it had
the  opportunity to review this Agreement and the  transactions  contemplated by
this  Agreement  with  his or its  own  legal  counsel  and  investment  and tax
advisors.  Each Buyer is relying  solely on such counsel and advisors and not on
any statements or representations  of the Company or any of its  representatives
or agents for legal,  tax or investment  advice with respect to this investment,
the  transactions  contemplated  by this Agreement or the securities laws of any
jurisdiction.

     3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

     The Company  represents  and  warrants as of the date hereof to each of the
Buyers that,  except as set forth in the SEC Documents (as defined herein) or in
the Disclosure Schedule attached hereto (the "DISCLOSURE SCHEDULE"):

     (a)  ORGANIZATION AND  QUALIFICATION.  The Company and its subsidiaries are
corporations duly organized and validly existing in good standing under the laws
of the  jurisdiction  in which  they are  incorporated,  and have the  requisite
corporate  power to own their  properties  and to carry on their business as now
being conducted. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the  business  conducted  by it makes such  qualification
necessary,  except to the extent  that the failure to be so  qualified  or be in
good standing  would not have a material  adverse  effect on the Company and its
subsidiaries taken as a whole.

     (b) AUTHORIZATION,  ENFORCEMENT, COMPLIANCE WITH OTHER INSTRUMENTS. (i) The
Company  has the  requisite  corporate  power and  authority  to enter  into and
perform this Agreement and the Transaction Agreements to which it is a party and
to issue the Convertible Debentures and the Conversion Shares in accordance with
the terms hereof and thereof, (ii) the execution and delivery of the Transaction
Documents  by  the  Company  and  the  consummation  by it of  the  transactions
contemplated hereby and thereby, including,  without limitation, the issuance of
the  Convertible  Debentures,  the  Conversion  Shares and the  reservation  for
issuance and the issuance of the Conversion  Shares  issuable upon conversion or
exercise thereof,  have been duly authorized by the Company's Board of Directors
and no further consent or authorization is required by the Company, its Board of
Directors or its  stockholders,  (iii) the Transaction  Documents have been duly
executed and delivered by the Company, (iv) the Transaction Documents constitute
the valid and binding obligations of the Company enforceable against the Company
in accordance with their terms,  except as such enforceability may be limited by
general   principles   of   equity   or   applicable   bankruptcy,   insolvency,
reorganization,   moratorium,  liquidation  or  similar  laws  relating  to,  or
affecting  generally,  the  enforcement of creditors'  rights and remedies.  The
authorized  officer of the Company executing the Transaction  Documents knows of

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no reason why the Company  cannot file the  registration  statement  as required
under the  Registration  Rights  Agreement or perform any of the Company's other
obligations under such documents.

     (c) CAPITALIZATION. The authorized capital stock of the Company consists of
100,000,000 shares of Common Stock and 50,000,000 shares of preferred stock, par
value $0.001 ("PREFERRED  STOCK") of which 30,934,366 shares of Common Stock and
zero shares of Preferred Stock are issued and outstanding,  and 2,032,817 shares
of Common Stock are held as treasury shares. All of such outstanding shares have
been validly issued and are fully paid and nonassessable. Except as disclosed in
the SEC  Documents (as defined in Section  3(f)),  no shares of Common Stock are
subject  to  preemptive  rights  or any  other  similar  rights  or any liens or
encumbrances  suffered or permitted  by the Company.  Except as disclosed in the
SEC Documents,  as of the date of this  Agreement,  (i) there are no outstanding
options,  warrants,  scrip,  rights to subscribe to, calls or commitments of any
character  whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments,  understandings  or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional  shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character  whatsoever  relating to, or
securities  or rights  convertible  into,  any  shares of  capital  stock of the
Company  or  any  of its  subsidiaries,  (ii)  there  are  no  outstanding  debt
securities  and (iii) there are no  agreements or  arrangements  under which the
Company or any of its  subsidiaries  is obligated to register the sale of any of
their  securities  under the Securities Act (except pursuant to the Registration
Rights Agreement) and (iv) there are no outstanding  registration statements and
there are no outstanding  comment  letters from the SEC or any other  regulatory
agency other than on Form S-8 or as contemplated by this Agreement. There are no
securities or instruments  containing  anti-dilution or similar  provisions that
will be triggered by the issuance of the Convertible  Debentures as described in
this  Agreement.  The Company has furnished to the Buyer true and correct copies
of the Company's  Articles of Incorporation,  as amended and as in effect on the
date hereof (the "ARTICLES OF INCORPORATION"),  and the Company's By-laws, as in
effect on the date  hereof  (the  "BY-LAWS"),  and the  terms of all  securities
convertible  into or exercisable for Common Stock and the material rights of the
holders  thereof in respect thereto other than stock options issued to employees
and consultants.

     (d) ISSUANCE OF SECURITIES.  The Convertible Debentures are duly authorized
and, upon issuance in  accordance  with the terms hereof,  shall be duly issued,
fully  paid and  nonassessable,  free from all  taxes,  liens and  charges  with
respect to the issue thereof.  The Conversion Shares issuable upon conversion of
the Convertible  Debentures have been duly authorized and reserved for issuance.
Upon conversion or exercise in accordance  with the  Convertible  Debentures the
Conversion Shares will be duly issued, fully paid and nonassessable.

     (e) NO CONFLICTS.  Except as disclosed in the SEC Documents, the execution,
delivery and  performance  of the  Transaction  Documents by the Company and the
consummation by the Company of the transactions contemplated hereby will not (i)
result in a violation  of the  Articles of  Incorporation,  any  certificate  of
designations of any outstanding  series of preferred stock of the Company or the
By-laws or (ii)  conflict  with or  constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of  termination,  amendment,  acceleration  or  cancellation  of, any

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agreement,  indenture  or  instrument  to  which  the  Company  or  any  of  its
subsidiaries is a party, or result in a violation of any law, rule,  regulation,
order,  judgment  or decree  (including  federal and state  securities  laws and
regulations  and the  rules  and  regulations  of the  American  Stock  Exchange
("AMEX") on which the Common Stock is quoted)  applicable  to the Company or any
of its subsidiaries or by which any material property or asset of the Company or
any of its  subsidiaries  is bound or affected  which would  interfere  with the
ability of the Company to perform its  obligations  under this  Agreement in any
material respect. Except as disclosed in the SEC Documents,  neither the Company
nor its  subsidiaries  is in  violation  of any term of or in default  under its
Articles of Incorporation or By-laws or their organizational charter or by-laws,
respectively,  or any  material  contract,  agreement,  mortgage,  indebtedness,
indenture,  instrument,  judgment,  decree  or  order  or any  statute,  rule or
regulation  applicable to the Company or its  subsidiaries.  The business of the
Company and its subsidiaries is not being conducted,  and shall not be conducted
in material violation of any law,  ordinance,  or regulation of any governmental
entity.  Except as  specifically  contemplated by this Agreement and as required
under the Securities Act and any applicable  state  securities laws, the Company
is not  required to obtain any consent,  authorization  or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under or contemplated by this
Agreement or the  Registration  Rights  Agreement in  accordance  with the terms
hereof or thereof.  Except as  disclosed  in the SEC  Documents,  all  consents,
authorizations,  orders, filings and registrations which the Company is required
to obtain  pursuant to the preceding  sentence have been obtained or effected on
or prior to the date hereof. The Company and its subsidiaries are unaware of any
facts or circumstance that might give rise to any of the foregoing.

     (f) SEC DOCUMENTS: FINANCIAL STATEMENTS. Since January 1, 2003, the Company
has filed all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC under the  Securities  Exchange  Act of 1934,  as
amended  (the  "EXCHANGE  ACT") (all of the  foregoing  filed  prior to the date
hereof or amended  after the date hereof and all exhibits  included  therein and
financial  statements  and  schedules  thereto  and  documents  incorporated  by
reference therein,  being hereinafter  referred to as the "SEC DOCUMENTS").  The
Company has delivered to the Buyers or their representatives,  or made available
through the SEC's website at  http://www.sec.gov.,  true and complete  copies of
the SEC Documents. As of their respective dates, the financial statements of the
Company disclosed in the SEC Documents (the "FINANCIAL  STATEMENTS") complied as
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto.  Such financial
statements have been prepared in accordance with generally  accepted  accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise  indicated in such Financial  Statements or the notes  thereto,  or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary  statements) and, fairly present in all
material respects the financial  position of the Company as of the dates thereof
and the  results of its  operations  and cash flows for the  periods  then ended
(subject,  in the  case  of  unaudited  statements,  to  normal  year-end  audit
adjustments).  No other  information  provided by or on behalf of the Company to
the  Buyer  which  is not  included  in the SEC  Documents,  including,  without
limitation,  information  referred  to in this  Agreement,  contains  any untrue
statement of a material  fact or omits to state any material  fact  necessary in
order to make the statements  therein,  in the light of the circumstances  under
which they were made, not misleading.

                                       8
<PAGE>
     (g)  10(B)-5.  As of their  respective  dates,  the SEC  Documents  did not
include any untrue  statements of material  fact,  nor do they omit to state any
material fact  required to be stated  therein  necessary to make the  statements
made, in light of the circumstances under which they were made, not misleading.

     (h) ABSENCE OF LITIGATION.  Except as disclosed in the SEC Documents, there
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board,  government agency,  self-regulatory  organization or body pending
against or  affecting  the  Company,  the Common  Stock or any of the  Company's
subsidiaries,  wherein an unfavorable decision, ruling or finding would (i) have
a material adverse effect on the transactions contemplated hereby (ii) adversely
affect the  validity or  enforceability  of, or the  authority or ability of the
Company to perform its obligations under, this Agreement or any of the documents
contemplated  herein,  or  (iii)  except  as  expressly  disclosed  in  the  SEC
Documents,  have  a  material  adverse  effect  on  the  business,   operations,
properties,  financial condition or results of operations of the Company and its
subsidiaries taken as a whole.

     (i)   ACKNOWLEDGMENT   REGARDING   BUYER'S   PURCHASE  OF  THE  CONVERTIBLE
DEBENTURES.  The  Company  acknowledges  and  agrees  that the Buyers are acting
solely  in the  capacity  of an arm's  length  purchaser  with  respect  to this
Agreement  and  the  transactions   contemplated  hereby.  The  Company  further
acknowledges  that the Buyers are not acting as a financial advisor or fiduciary
of the Company (or in any similar  capacity)  with respect to this Agreement and
the transactions  contemplated  hereby and any advice given by the Buyers or any
of their respective  representatives or agents in connection with this Agreement
and the transactions  contemplated  hereby is merely  incidental to such Buyer's
purchase of the  Convertible  Debentures or the Conversion  Shares.  The Company
further  represents to the Buyer that the Company's  decision to enter into this
Agreement has been based solely on the independent evaluation by the Company and
its representatives.

     (j)  NO  GENERAL  SOLICITATION.   Neither  the  Company,  nor  any  of  its
affiliates,  nor any person  acting on its or their  behalf,  has engaged in any
form of general  solicitation  or general  advertising  (within  the  meaning of
Regulation D under the Securities  Act) in connection  with the offer or sale of
the Convertible Debentures or the Conversion Shares.

     (k) NO INTEGRATED OFFERING. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf has,  directly or indirectly,  made
any offers or sales of any security or solicited any offers to buy any security,
under   circumstances  that  would  require   registration  of  the  Convertible
Debentures  or the  Conversion  Shares  under the  Securities  Act or cause this
offering of the Convertible Debentures or the Conversion Shares to be integrated
with prior offerings by the Company for purposes of the Securities Act.

     (l) EMPLOYEE RELATIONS.  Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company or any of its
subsidiaries,  is any such  dispute  threatened.  None of the  Company's  or its
subsidiaries'  employees  is a  member  of a  union  and  the  Company  and  its
subsidiaries believe that their relations with their employees are good.

                                       9
<PAGE>
     (m) INTELLECTUAL  PROPERTY RIGHTS.  The Company and its subsidiaries own or
possess adequate rights or licenses to use all trademarks,  trade names, service
marks,  service mark  registrations,  service  names,  patents,  patent  rights,
copyrights, inventions, licenses, approvals, governmental authorizations,  trade
secrets and rights  necessary  to conduct  their  respective  businesses  as now
conducted,  except where its failure to would not have a material adverse effect
on the  Company's  business.  The Company and its  subsidiaries  do not have any
knowledge of any  infringement by the Company or its  subsidiaries of trademark,
trade name rights, patents,  patent rights,  copyrights,  inventions,  licenses,
service names, service marks, service mark registrations,  trade secret or other
similar  rights of others,  and, to the  knowledge  of the  Company  there is no
claim,  action or proceeding being made or brought against,  or to the Company's
knowledge,  being threatened against, the Company or its subsidiaries  regarding
trademark,  trade name, patents, patent rights, invention,  copyright,  license,
service names, service marks, service mark registrations,  trade secret or other
infringement;  and the Company and its  subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.

     (n)  ENVIRONMENTAL  LAWS.  The  Company  and  its  subsidiaries  are (i) in
material  compliance  with any and all applicable  foreign,  federal,  state and
local  laws and  regulations  relating  to the  protection  of human  health and
safety,  the environment or hazardous or toxic substances or wastes,  pollutants
or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all material permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct their  respective  businesses  and (iii) are in  compliance  with all
terms and conditions of any such permit, license or approval.

     (o) TITLE. Any real property and facilities held under lease by the Company
and its  subsidiaries  are held by them under valid,  subsisting and enforceable
leases with such  exceptions as are not material and do not  interfere  with the
use made and proposed to be made of such  property and  buildings by the Company
and its subsidiaries.

     (p)  INSURANCE.  The  Company and each of its  subsidiaries  are insured by
insurers of recognized  financial  responsibility  against such losses and risks
and in such  amounts as  management  of the  Company  believes to be prudent and
customary  in the  businesses  in which the  Company  and its  subsidiaries  are
engaged.  Neither  the  Company  nor any such  subsidiary  has been  refused any
insurance  coverage  sought or applied  for and neither the Company nor any such
subsidiary  has any  reason  to  believe  that it will not be able to renew  its
existing  insurance  coverage  as and when such  coverage  expires  or to obtain
similar  coverage  from  similar  insurers as may be  necessary  to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise,  or the earnings,  business or operations of the Company
and its subsidiaries, taken as a whole.

     (q)  REGULATORY  PERMITS.  The  Company  and its  subsidiaries  possess all
material  certificates,  authorizations  and permits  issued by the  appropriate
federal,  state or foreign  regulatory  authorities  necessary to conduct  their
respective  businesses,  and neither the  Company  nor any such  subsidiary  has
received any notice of proceedings relating to the revocation or modification of
any such material certificate, authorization or permit.

                                       10
<PAGE>
     (r) INTERNAL ACCOUNTING CONTROLS.  The Company and each of its subsidiaries
maintain  a  system  of  internal  accounting  controls  sufficient  to  provide
reasonable  assurance  that (i)  transactions  are executed in  accordance  with
management's general or specific authorizations,  (ii) transactions are recorded
as necessary to permit  preparation of financial  statements in conformity  with
generally accepted accounting  principles and to maintain asset  accountability,
and (iii) the recorded  amounts for assets is compared with the existing  assets
at  reasonable  intervals  and  appropriate  action is taken with respect to any
differences.

     (s) NO  MATERIAL  ADVERSE  BREACHES,  ETC.  Except  as set forth in the SEC
Documents,  neither the Company  nor any of its  subsidiaries  is subject to any
charter,  corporate or other legal restriction,  or any judgment, decree, order,
rule or  regulation  which in the judgment of the  Company's  officers has or is
expected  in the  future to have a  material  adverse  effect  on the  business,
properties,  operations, financial condition, results of operations or prospects
of the Company or its  subsidiaries.  Except as set forth in the SEC  Documents,
neither the Company nor any of its  subsidiaries is in breach of any contract or
agreement  which breach,  in the judgment of the Company's  officers,  has or is
expected  to  have  a  material  adverse  effect  on the  business,  properties,
operations,  financial  condition,  results of  operations  or  prospects of the
Company or its subsidiaries.

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

     (u) CERTAIN  TRANSACTIONS.  Except as set forth in the SEC  Documents,  and
except  for  arm's  length  transactions  pursuant  to which the  Company  makes
payments in the ordinary  course of business upon terms no less  favorable  than
the Company  could  obtain from third  parties and other than the grant of stock
options  disclosed in the SEC  Documents,  none of the officers,  directors,  or
employees  of the  Company  is  presently  a party to any  transaction  with the
Company  (other  than  for  services  as  employees,  officers  and  directors),
including  any  contract,  agreement  or  other  arrangement  providing  for the
furnishing  of  services  to or by,  providing  for  rental of real or  personal
property to or from,  or  otherwise  requiring  payments to or from any officer,
director or such employee or, to the knowledge of the Company,  any corporation,
partnership,  trust or other entity in which any officer,  director, or any such
employee  has a  substantial  interest  or is an officer,  director,  trustee or
partner.

     (v) FEES AND RIGHTS OF FIRST REFUSAL. The Company is not obligated to offer
the securities  offered hereunder on a right of first refusal basis or otherwise
to  any  third  parties  including,  but  not  limited  to,  current  or  former
shareholders  of the  Company,  underwriters,  brokers,  agents  or other  third
parties.

                                       11
<PAGE>
     4. COVENANTS.

     (a)  COMMERCIALLY  REASONABLE  EFFORTS.  Each party shall use  commercially
reasonable  efforts to timely  satisfy each of the conditions to be satisfied by
it as provided in Sections 6 and 7 of this Agreement.

     (b)  FORM  D.  The  Company  agrees  to file a Form D with  respect  to the
Conversion  Shares as required under  Regulation D and to provide a copy thereof
to each Buyer  promptly after such filing.  The Company shall,  on or before the
Closing  Date,  take such action as the Company  shall  reasonably  determine is
necessary  to qualify the  Conversion  Shares,  or obtain an  exemption  for the
Conversion  Shares,  for sale to the  Buyers  at the  Closing  pursuant  to this
Agreement  under  applicable  securities or "Blue Sky" laws of the states of the
United  States,  and shall  provide  evidence of any such action so taken to the
Buyers on or prior to the Closing Date.

     (c)  REPORTING  STATUS.  Until the  earlier of (i) the date as of which the
Buyers may sell all of the  Conversion  Shares without  restriction  pursuant to
Rule 144(k) promulgated under the Securities Act (or successor thereto), or (ii)
the date on which (A) the Buyers shall have sold all the  Conversion  Shares and
(B)  none of the  Convertible  Debentures  are  outstanding  (the  "REGISTRATION
PERIOD"),  the Company shall file in a timely manner all reports  required to be
filed with the SEC pursuant to the Exchange Act and the  regulations  of the SEC
thereunder, and the Company shall not terminate its status as an issuer required
to file reports under the Exchange Act even if the Exchange Act or the rules and
regulations thereunder would otherwise permit such termination.

     (d) USE OF PROCEEDS. The Company will use the proceeds from the sale of the
Convertible  Debentures for general corporate and working capital purposes,  and
to repay the principal amount, plus accrued interest, on the Original Notes.

     (e)  RESERVATION  OF SHARES.  The Company shall take all action  reasonably
necessary  to at all times have  authorized,  and  reserved  for the  purpose of
issuance,  such number of shares of Common Stock as shall be necessary to effect
the issuance of the Conversion  Shares. If at any time the Company does not have
available  such shares of Common Stock as shall from time to time be  sufficient
to effect the conversion of all of the Conversion Shares, the Company shall call
and hold a special  meeting of the  shareholders  within sixty (60) days of such
occurrence,  for the sole purpose of increasing the number of shares authorized,
provided that in the event the Company files a preliminary proxy statement for a
special meeting within 30 days of such occurrence and the SEC issues comments on
the preliminary proxy statement,  the time shall be extended by sixty (60) days.
The Company's management shall recommend to the shareholders to vote in favor of
increasing  the number of shares of Common Stock  authorized.  Management  shall
also vote all of its  shares in favor of  increasing  the  number of  authorized
shares of Common Stock.

     (f) LISTINGS OR QUOTATION. The Company shall promptly secure the listing or
quotation of the Conversion  Shares upon the AMEX or other market,  if any, upon
which  shares of Common  Stock are then  listed or quoted  (subject  to official
notice of issuance) and shall use commercially  reasonable  efforts to maintain,
so long as any other shares of Common Stock shall be so listed,  such listing of

                                       12
<PAGE>
all  Conversion  Shares  from  time to time  issuable  under  the  terms of this
Agreement. The Company shall maintain the Common Stock's eligibility for listing
on the AMEX.

     (g) FEES AND EXPENSES.

     (i) Each of the  Company  and the Buyers  shall pay all costs and  expenses
incurred  by such  party  in  connection  with the  negotiation,  investigation,
preparation,  execution and delivery of the  Transaction  Documents,  except the
Company  shall pay a structuring  fee to Yorkville  Advisors LLC of Ten Thousand
Dollars ($10,000) on the date hereof.

     (ii) The  Company  shall  pay  Yorkville  Advisors  LLC a fee  equal to ten
percent (10%) of the Purchase Price on all amounts funded in excess of $250,000.
This fee shall be paid directly from the gross proceeds of the Closing and shall
not exceed in the aggregate Forty Thousand Dollars ($40,000).

     (iii) The  Company  shall  issue to the  Buyers  warrants  ("WARRANTS")  to
purchase up to a total of One Million (1,000,000) shares of the Company's Common
Stock for a period of five (5) years at an exercise price of $0.001 per share at
the Closing in the amount set forth next to each Buyer's name on Schedule I. The
shares of Common  Stock  underlying  the  Warrants  shall be  referred to as the
"WARRANT  SHARES."  The  Warrant  Shares  shall  have  "piggy-back"  and  demand
registration  rights.  The  Warrants  shall be issued on or prior to the Closing
Date.

     (h)  CORPORATE  EXISTENCE.  Beginning  on the  date of this  Agreement  and
continuing for so long as any of the Convertible  Debentures remain outstanding,
the  Company   shall  not  directly  or   indirectly   consummate   any  merger,
reorganization, restructuring, reverse stock split consolidation, sale of all or
substantially all of the Company's assets or any similar  transaction or related
transactions  (each such  transaction,  an  "ORGANIZATIONAL  CHANGE") unless the
Company makes  appropriate  provisions  with respect to such holders' rights and
interests to insure that the provisions of this Section 4(h) will  thereafter be
applicable to the Convertible Debentures.

     (i) TRANSACTIONS  WITH AFFILIATES.  Beginning on the date of this Agreement
and continuing for so long as any Convertible  Debentures are  outstanding,  the
Company shall not, and shall cause each of its  subsidiaries not to, enter into,
amend,  modify or  supplement,  or permit any  subsidiary to enter into,  amend,
modify or supplement any agreement, transaction, commitment, or arrangement with
any of its or any subsidiary's officers,  directors, person who were officers or
directors  at any time  during  the  previous  two (2) years,  stockholders  who
beneficially  own five percent (5%) or more of the Common  Stock,  or Affiliates
(as  defined  below)  or with any  individual  related  by blood,  marriage,  or
adoption to any such  individual  or with any entity in which any such entity or
individual owns a five percent (5%) or more beneficial interest (each a "RELATED
PARTY"),  except for (a) customary employment  arrangements and benefit programs
on reasonable terms, (b) any investment in an Affiliate of the Company,  (c) any
agreement,  transaction,  commitment,  or arrangement on an arms-length basis on
terms no less  favorable  than terms  which  would have been  obtainable  from a

                                       13
<PAGE>
person  other  than  such  Related  Party,   (d)  any  agreement,   transaction,
commitment,  or arrangement which is approved by a majority of the disinterested
directors  of the  Company;  for  purposes  hereof,  any director who is also an
officer  of  the  Company  or  any  subsidiary  of the  Company  shall  not be a
disinterested  director  with  respect  to  any  such  agreement,   transaction,
commitment, or arrangement.  "AFFILIATE" for purposes hereof means, with respect
to any person or entity,  another person or entity that, directly or indirectly,
(i) has a ten percent  (10%) or more  equity  interest in that person or entity,
(ii) has ten percent (10%) or more common  ownership with that person or entity,
(iii)  controls that person or entity,  or (iv) shares common  control with that
person or entity.  "CONTROL"  or  "CONTROLS"  for  purposes  hereof means that a
person or entity has the  power,  direct or  indirect,  to conduct or govern the
policies of another person or entity.

     (j) TRANSFER  AGENT.  The Company  covenants  and agrees that, in the event
that the  Company's  agency  relationship  with the  Transfer  Agent  should  be
terminated  for any  reason  prior to a date  which is two (2)  years  after the
Closing Date,  the Company shall  immediately  appoint a new transfer  agent and
shall  require that the new transfer  agent execute and agree to be bound by the
terms of the Irrevocable Transfer Agent Instructions (as defined herein).

     (k) RESTRICTION ON ISSUANCE OF THE CAPITAL STOCK.  Beginning on the date of
this  Agreement and  continuing  for so long as any  Convertible  Debentures are
outstanding,  the Company shall not,  without the prior  written  consent of the
Buyers,  (i) issue or sell shares of Common  Stock or  Preferred  Stock  without
consideration  or for a  consideration  per share less than the bid price of the
Common  Stock  determined  immediately  prior to its  issuance,  (ii)  issue any
preferred stock, warrant,  option, right,  contract,  call, or other security or
instrument granting the holder thereof the right to acquire Common Stock without
consideration  or for a  consideration  less than such Common  Stock's bid price
determined  immediately  prior to its  issuance,  (iii) enter into any  security
instrument  granting the holder a security interest in any and all assets of the
Company, or (iv) file any registration  statement on Form S-8 except to register
up to four million  (4,000,000) shares of Common Stock issued or to be issued to
employees under a bona fide employee stock incentive plan.

     (l) SHORT  POSITIONS.  Neither the Buyers nor any of its affiliates have an
open short position in any securities of the Company, and each Buyer agrees that
it shall not, and that it will cause its  affiliates not to, engage in any short
sales of or hedging  transactions  with respect to any securities of the Company
as long as any Convertible Debentures or Warrants shall remain outstanding.

     (m)  RIGHTS  OF FIRST  REFUSAL.  For a period  of 18  months  from the date
hereof,  if the Company intends to raise  additional  capital by the issuance or
sale of capital stock of the Company, including without limitation shares of any
class of common stock,  any class of preferred stock,  options,  warrants or any
other securities convertible or exercisable into shares of common stock (whether
the offering is conducted by the Company,  underwriter,  placement  agent or any
third party) the Company shall be obligated to offer to the Buyers such issuance
or sale of capital  stock,  by  providing  in writing  the  principal  amount of
capital it intends to raise and outline of the  material  terms of such  capital
raise, prior to the offering such issuance or sale of capital stock to any third
parties including,  but not limited to, current or former officers or directors,
current or former  shareholders  and/or investors of the obligor,  underwriters,

                                       14
<PAGE>
brokers,  agents or other third parties;  PROVIDED THAT the Company may issue up
to four million  (4,000,000)  shares of Common  Stock to employees  under a bona
fide employee stock  incentive plan without such issuances  being subject to the
right of first refusal  proved  herein.  The Buyers shall have ten (10) business
days from  receipt of such notice of the sale or  issuance  of capital  stock to
accept or reject all or a portion of such capital raising offer.

     (n) SHAREHOLDER VOTE; LIMITATION ON THE ISSUANCE OF STOCK.

     (i) Within  ninety  (90) days of the date  hereof the  shareholders  of the
Company  shall  vote on the  issuance  of all the  shares of Common  Stock to be
issued  pursuant  to  the  transactions  contemplated  in  this  Agreement,  the
Transaction  Documents,  the  Warrant  (as  defined in Section  6(g)(iii)),  the
Placement Agent Agreement and the Prior Warrant.

     (ii) The Total  Transaction  Shares  shall not be equal to or greater  than
5,500,000 shares,  until the holders of Common Stock approve the issuance of the
Total  Transaction  Shares.  "TOTAL  TRANSACTION  SHARES"  shall  mean,  in  the
aggregate, any shares of Common Stock issuable under the Convertible Debentures,
the Pledge and Escrow Agreement,  and the Placement Agent Agreement;  as Warrant
Shares (as defined in Section 6(g)(iii));  pursuant to the Prior Warrant; and as
Liquidated Damages (as defined in the Registration Rights Agreement).

     (o)  AMEX  APPROVAL.  The  Company  shall  apply  for  the  listing  of the
Conversion  Shares and the Warrant Shares issued or issuable in connection  with
this Agreement and use commercially reasonable efforts to maintain the continued
listing  approval of the shares of Common Stock issuable under the Prior Warrant
within five (5)  business  days  following  the  shareholder  vote  described in
Section 4(n) and the Company shall use commercially reasonable efforts to obtain
approval for listing of such shares on AMEX within fifteen (15) business days of
the submission of such application.

     5. TRANSFER AGENT INSTRUCTIONS.

     (a) The Company shall issue the Irrevocable  Transfer Agent Instructions to
the Transfer Agent irrevocably appointing David Gonzalez,  Esq. as the Company's
agent for purpose of providing instruction to the Transfer Agent pursuant to the
terms of the Irrevocable  Transfer Agent  Instructions in connection with having
certificates  issued,  registered in the name of the Buyers or their  respective
nominee(s),  for the Conversion Shares  representing such amounts of Convertible
Debentures  as  specified  from time to time by the Buyers to the  Company  upon
conversion  of the  Convertible  Debentures,  for interest  owed pursuant to the
Convertible  Debenture,  and for any and all Liquidated Damages (as this term is
defined in the Registration  Rights  Agreement).  David Gonzalez,  Esq. shall be
paid a cash fee of Fifty Dollars  ($50) for every  occasion they act pursuant to
the Irrevocable  Transfer Agent  Instructions.  The Company shall not change its
transfer  agent unless the  subsequent  transfer agent agrees to be bound by the
Irrevocable Transfer Agent Instructions. Prior to registration of the Conversion
Shares  under  the  Securities  Act,  all  such  certificates   shall  bear  the
restrictive  legend  specified  in Section 2(g) of this  Agreement.  The Company
warrants  that  no  instruction  other  than  the  Irrevocable   Transfer  Agent
Instructions  referred to in this Section 5, and stop transfer  instructions  to
give effect to Section 2(g) hereof (in the case of the  Conversion  Shares prior

                                       15
<PAGE>
to  registration  of such shares under the Securities  Act) will be given by the
Company to its transfer agent and that the Conversion  Shares shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the  Registration  Rights  Agreement.  Nothing in
this Section 5 shall affect in any way the Buyer's  obligations and agreement to
comply with all applicable  securities laws upon resale of Conversion Shares. If
the Buyers provides the Company with an opinion of counsel,  in form,  scope and
substance  customary for opinions of counsel in comparable  transactions  to the
effect  that  registration  of a resale by the  Buyers of any of the  Conversion
Shares is not required  under the  Securities  Act, the Company shall within two
(2) business days instruct its transfer agent to issue one or more  certificates
in such name and in such  denominations  as specified by the Buyer.  The Company
acknowledges  that  a  breach  by it of its  obligations  hereunder  will  cause
irreparable  harm to the  Buyer by  vitiating  the  intent  and  purpose  of the
transaction contemplated hereby. Accordingly,  the Company acknowledges that the
remedy  at law for a breach  of its  obligations  under  this  Section 5 will be
inadequate  and  agrees,  in the event of a breach or  threatened  breach by the
Company of the  provisions of this Section 5, that the Buyers shall be entitled,
in addition to all other available  remedies,  to an injunction  restraining any
breach and requiring  immediate issuance and transfer,  without the necessity of
showing economic loss and without any bond or other security being required.

     6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

     The obligation of the Company  hereunder to issue and sell the  Convertible
Debentures  to the Buyers at the Closing is subject to the  satisfaction,  at or
before the Closing  Dates,  of each of the following  conditions,  provided that
these  conditions  are for the  Company's  sole benefit and may be waived by the
Company at any time in its sole discretion:

     (a) Each Buyer shall have executed the Transaction Documents to which it is
a party and delivered them to the Company.

     (b) The Buyers shall have  delivered to the Company the Purchase  Price for
Convertible  Debentures in respective amounts as set forth next to each Buyer as
outlined on Schedule I attached hereto by wire transfer of immediately available
U.S. funds pursuant to the wire instructions provided by the Company.

     (c) Cornell Capital shall have returned to the Company for cancellation the
nine hundred seventy-seven  thousand, two hundred seventy-three (977,273) shares
of Common Stock it received from the Company pursuant to the SEDA.

     (d) Highgate shall have executed and delivered to the Company a termination
and release,  in form and substance  reasonably  satisfactory to the Company, of
the Securities Purchase Agreement,  dated August 10, 2005 (the "PRIOR SECURITIES
PURCHASE AGREEMENT"), by and between the Company and Highgate.

     (e) Cornell  Capital  shall have  executed  and  delivered to the Company a
termination and release,  in form and substance  reasonably  satisfactory to the
Company, of the SEDA and the Registration  Rights Agreement,  dated as of August
10, 2005, by and between the Company and Cornell Capital (the "SEDA REGISTRATION
RIGHTS AGREEMENT").

                                       16
<PAGE>
     (f) Cornell  Capital  shall have  executed  and  delivered to the Company a
termination and release,  in form and substance  reasonably  satisfactory to the
Company, of each lock-up agreement executed by the officers and directors of the
Company in connection with the SEDA.

     (g)  Subject  to  the  repayment  of  the  entire  principal  and  interest
outstanding  under the  Original  Notes,  Highgate  shall have  returned  to the
Company for cancellation the Original Notes

     (h)  Subject  to  the  repayment  of  the  entire  principal  and  interest
outstanding  under the  Original  Notes,  Highgate  shall have  delivered to the
Company,  in form and substance  satisfactory  to the Company,  an  irrevocable,
unconditional  and complete  release and waiver of the payment of the Redemption
Premium  (as defined in each of the  Original  Notes) for the  repayment  of the
Original Notes.

     (i) The  representations  and  warranties  of the Buyers  shall be true and
correct in all material  respects as of the date when made and as of the Closing
Dates as though made at that time  (except for  representations  and  warranties
that  speak  as of a  specific  date),  and the  Buyers  shall  have  performed,
satisfied and complied in all material  respects with the covenants,  agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Buyers at or prior to the Closing Dates.

     7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

     The  obligation  of  the  Buyers  hereunder  to  purchase  the  Convertible
Debentures  at the  Closing  is subject  to the  satisfaction,  at or before the
Closing Date, of each of the following conditions:

     (a) The Company shall have executed the Transaction Documents and delivered
the same to the Buyers.

     (b) Each of City  Technology,  Inc.,  City Network,  Inc.--Taiwan  and City
Construction Co., Ltd. shall have delivered its respective Security Agreement to
the Buyers.

     (c) The  Conversion  Shares  shall  have been  approved  and  eligible  for
quotation  on the AMEX and  trading  in the  Common  Stock  shall  not have been
suspended for any reason.

     (d) The  representations  and  warranties  of the Company shall be true and
correct  in all  material  respects  (except  to the  extent  that  any of  such
representations and warranties is already qualified as to materiality in Section
3 above, in which case, such  representations  and warranties  shall be true and
correct  without further  qualification)  as of the date when made and as of the
Closing  Date as  though  made at that  time  (except  for  representations  and
warranties  that  speak  as of a  specific  date)  and the  Company  shall  have
performed,  satisfied and complied in all material  respects with the covenants,
agreements and conditions required by this Agreement to be performed,  satisfied
or complied with by the Company at or prior to the Closing Date. If requested by
the  Buyers,  the Buyers  shall have  received a  certificate,  executed  by the
President of the Company,  dated as of the Closing Date, to the foregoing effect

                                       17
<PAGE>
and as to such  other  matters  as may be  reasonably  requested  by the  Buyers
including,  without  limitation  an update as of the Closing Date  regarding the
representation contained in Section 3(c) above.

     (e) The  Company  shall  have  executed  and  delivered  to the  Buyers the
Convertible  Debentures in the respective amounts set forth opposite each Buyers
name on Schedule I attached hereto.

     (f) The Buyers  shall have  received an opinion of counsel from Loeb & Loeb
LLP in a form reasonably satisfactory to the Buyers.

     (g) The Company  shall have  provided to the Buyers a  certificate  of good
standing  from the  secretary  of state  from the state in which the  Company is
incorporated.

     (h) The Company  shall have  executed and  delivered  to Cornell  Capital a
termination  and  release,  in form and  substance  reasonably  satisfactory  to
Cornell Capital, of the SEDA and the SEDA Registration Rights Agreement.

     (i) The Company shall have delivered to the Escrow Agent the Pledged Shares
as well as executed and medallion  guaranteed stock powers as required  pursuant
to the Pledge and Escrow Agreement.

     (j) The Company shall have provided to the Buyer an acknowledgement, to the
satisfaction  of the Buyer,  from the  Company's  independent  certified  public
accountants as to its ability to provide all consents  required in order to file
a registration statement in connection with this transaction.

     (k) The Company  shall have  reserved  out of its  authorized  and unissued
Common  Stock,  solely  for the  purpose  of  effecting  the  conversion  of the
Convertible  Debentures,  shares of Common Stock to effect the conversion of all
of  the  Conversion  Shares  underlying  all  the  Convertible  Debentures  then
outstanding.

     (l) The Irrevocable  Transfer Agent  Instructions shall have been delivered
to and acknowledged in writing by the Transfer Agent.

     (m) The Company  shall have issued the  Warrants to the Buyers as set forth
in Section 4(g)(iii) of this Agreement.

     8. INDEMNIFICATION.

     (a)  In  consideration  of the  Buyer's  execution  and  delivery  of  this
Agreement and acquiring the  Convertible  Debentures and the  Conversion  Shares
hereunder,  and in addition to all of the Company's other obligations under this
Agreement,  the Company shall defend,  protect,  indemnify and hold harmless the
Buyers, and all of their officers,  directors,  employees and agents (including,
without   limitation,   those  retained  in  connection  with  the  transactions
contemplated by this Agreement) (collectively, the "BUYER INDEMNITEES") from and
against any and all actions,  causes of action,  suits, claims,  losses,  costs,
penalties,  fees,  liabilities and damages, and expenses in connection therewith
(irrespective  of whether any such Buyer Indemnitee is a party to the action for

                                       18
<PAGE>
which indemnification  hereunder is sought), and including reasonable attorneys'
fees and disbursements  (the "INDEMNIFIED  LIABILITIES"),  incurred by the Buyer
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any  misrepresentation  or breach of any  representation or warranty made by the
Company in this Agreement, the Convertible Debentures or the Registration Rights
Agreement or any other certificate,  instrument or document  contemplated hereby
or thereby,  (b) any breach of any  covenant,  agreement  or  obligation  of the
Company contained in this Agreement, or the Registration Rights Agreement or any
other certificate, instrument or document contemplated hereby or thereby, or (c)
any cause of action, suit or claim brought or made against such Buyer Indemnitee
based on material  misrepresentations of the Company or due to a material breach
of the Company and arising out of or  resulting  from the  execution,  delivery,
performance or enforcement of this Agreement or any other  instrument,  document
or agreement  executed pursuant hereto by the parties hereto. To the extent that
the foregoing  undertaking by the Company may be  unenforceable  for any reason,
the Company shall make the maximum  contribution to the payment and satisfaction
of each of the Indemnified  Liabilities,  which is permissible  under applicable
law.

     (b) In  consideration  of the  Company's  execution  and  delivery  of this
Agreement,  and in addition to all of the Buyer's other  obligations  under this
Agreement,  the Buyer shall  defend,  protect,  indemnify  and hold harmless the
Company and all of its officers,  directors,  employees  and agents  (including,
without   limitation,   those  retained  in  connection  with  the  transactions
contemplated by this Agreement)  (collectively,  the "COMPANY INDEMNITEES") from
and  against  any  and  all  Indemnified  Liabilities  incurred  by the  Company
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any  misrepresentation  or breach of any  representation or warranty made by the
Buyers in this Agreement,  instrument or document contemplated hereby or thereby
executed by the Buyer,  (b) any breach of any covenant,  agreement or obligation
of the Buyers contained in this Agreement,  the Registration Rights Agreement or
any other  certificate,  instrument or document  contemplated  hereby or thereby
executed by the Buyer, or (c) any cause of action, suit or claim brought or made
against  such Company  Indemnitee  based on material  misrepresentations  of the
Buyer or due to a material  breach of the Buyer and arising out of or  resulting
from the execution,  delivery, performance or enforcement of this Agreement, the
Registration  Rights  Agreement or any other  instrument,  document or agreement
executed  pursuant hereto by any of the parties  hereto.  To the extent that the
foregoing  undertaking by each Buyer may be unenforceable  for any reason,  each
Buyer shall make the maximum  contribution  to the payment and  satisfaction  of
each of the Indemnified Liabilities, which is permissible under applicable law.

     9. TERMINATION AND RELEASE.

     (a) Each of (i) the Investor  Registration  Rights  Agreement,  dated as of
August  10,  2005,   by  and  between  the  Company  and  Highgate  (the  "PRIOR
REGISTRATION  RIGHTS  AGREEMENT"),  subject to Section 9(b) below;  and (ii) the
Escrow  Agreement,  dated  August 10, 2005,  by and among the  Company,  Cornell
Capital, and the Escrow Agent (collectively,  the "TERMINATED AGREEMENTS") shall
be terminated and each party to such agreements  shall release the other parties
thereto from any and all obligations under such agreements.

                                       19
<PAGE>
     (b) In  connection  with  the  Prior  Registration  Rights  Agreement,  the
Scheduled Fling Deadline and the Scheduled  Effective  Deadline (each as defined
in the Prior Registration  Rights Agreement) shall be tolled effective as of the
date of this  Agreement  until the date  ninety  (90) days from the date of this
Agreement.  In the event that the  Closing  Date has not  occurred  prior to the
expiration of such ninety (90) day period, then the signature of Highgate hereto
with respect to the Prior  Registration  Rights Agreement shall be null and void
ab initio  and have no force and effect to the  parties  herein and the time for
the Company to comply with the Scheduled Filing Deadline and Scheduled Effective
Deadline  shall,  unless  otherwise  agreed by Highgate,  continue to run but be
extended by the ninety (90) day tolling period set forth above.

     (c) Notwithstanding  anything to the contrary in the Terminated Agreements,
the  parties  hereto  agree  that after the  Closing  Date no  provision  of any
Terminated  Agreement shall survive the termination of such Terminated Agreement
and no party hereto shall  thereafter have any  liabilities,  rights,  duties or
obligations  to the  other  party  under or in  connection  with any  Terminated
Agreement.

     (d) Upon the Closing  Date,  each of the parties  hereto  shall  thereafter
release and indemnify each of the other parties  hereto,  its past,  present and
future agents,  representatives,  members,  principals,  attorneys,  affiliates,
parent corporations,  subsidiaries, officers, directors, employees, predecessors
and successors and assigns (the "RELEASEES")  from any and all legal,  equitable
or other  claims and  causes of action  from the  beginning  of the world to the
Closing Date,  whether known or unknown,  which such party,  its predecessors or
successors  and assigns  ever had,  now have or  hereafter  may have against the
Releasees  resulting  from or in  connection  with  the  Terminated  Agreements.
Notwithstanding  the  foregoing,  nothing  herein  shall be construed to bar any
action  or  claim  for the  enforcement  of the  termination  of the  Terminated
Agreements.

     (e) All agreements,  covenants,  representations and warranties, express or
implied,  oral  or  written,  of the  parties  to the  termination  and  release
concerning the  Terminated  Agreements are contained in this Section 9. No other
agreements,  covenants,  representations or warranties, express or implied, oral
or written,  of the parties hereto  concerning the termination of the Terminated
Agreements   are   contained   elsewhere.   No  other   agreements,   covenants,
representations or warranties,  express or implied,  oral or written,  have been
made by any party to the termination of the Terminated Agreements. All prior and
contemporaneous  conversations,  negotiations,  possible and alleged agreements,
representations,  covenants and  warranties  concerning  the  termination of the
Terminated Agreements are merged herein.

     (f) The parties  hereto shall have the right to enforce the  termination of
the  Terminated  Agreements  and the provisions of this Section 9 by injunction,
specific  performance,  or other  equitable  relief,  without  bond and  without
prejudice to any other rights and remedies that the parties  hereto may have for
a breach of this Section 9.

     10. GOVERNING LAW: MISCELLANEOUS.

     (a) GOVERNING LAW. This Agreement  shall be governed by and  interpreted in
accordance  with  the laws of the  State of New  Jersey  without  regard  to the

                                       20
<PAGE>
principles  of  conflict  of laws.  The  parties  further  agree that any action
between them shall be heard in Hudson County,  New Jersey, and expressly consent
to the  jurisdiction  and venue of the Superior Court of New Jersey,  sitting in
Hudson  County and the United  States  District  Court for the  District  of New
Jersey sitting in Newark,  New Jersey for the  adjudication  of any civil action
asserted pursuant to this Paragraph.

     (b)  COUNTERPARTS.  This Agreement may be executed in two or more identical
counterparts,  all of which shall be considered  one and the same  agreement and
shall  become  effective  when  counterparts  have been signed by each party and
delivered to the other party.  In the event any  signature  page is delivered by
facsimile transmission,  the party using such means of delivery shall cause four
(4) additional  original executed signature pages to be physically  delivered to
the other party within five (5) days of the execution and delivery hereof.

     (c)  HEADINGS.  The  headings  of this  Agreement  are for  convenience  of
reference  and shall not form part of, or affect  the  interpretation  of,  this
Agreement.

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

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

     (f)  NOTICES.  Any  notices,  consents,  waivers,  or other  communications
required or permitted to be given under the terms of this  Agreement  must be in
writing  and will be  deemed  to have  been  delivered  (i) upon  receipt,  when
delivered personally; (ii) upon confirmation of receipt, when sent by facsimile;
(iii) ten (10) business  days after being sent by U.S.  certified  mail,  return
receipt requested, or (iv) two (2) business days after deposit with a nationally
recognized overnight delivery service or worldwide courier service, in each case
properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:

                                       21
<PAGE>
If to the Company, to:     City Network, Inc.
                           6F-3, No.16, Jian Ba Road
                           Jhonghe City, Taipei County, 235
                           Taiwan, ROC F5 235
                           Attention: Mr Tiao-Tsan Lai
                           Telephone: 886-2-8226-5566
                           Facsimile: 886-2-8226-8585

With a copy to:            Loeb & Loeb LLP
                           345 Park Avenue
                           New York, NY 10154-0037
                           Attention: Mitchell Nussbaum, Esq.
                           Telephone: (212) 407-4159
                           Facsimile: (212) 407-4990

If to the Buyers, to its address and facsimile number on Schedule I, with copies
to the Buyer's counsel as set forth on Schedule I.

     Each party shall provide five (5) days' prior  written  notice to the other
party of any change in address or facsimile number.

     (g) SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon and inure
to the benefit of the  parties  and their  respective  successors  and  assigns.
Neither the Company nor any Buyer shall  assign this  Agreement or any rights or
obligations  hereunder  without  the prior  written  consent of the other  party
hereto.

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

     (i) SURVIVAL.  Unless this Agreement is terminated under Section 10(l), the
representations  and  warranties  of the  Company  and the Buyers  contained  in
Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5, 9 and
10, and the indemnification provisions set forth in Section 8, shall survive the
Closing  for a  period  of two  (2)  years  following  the  date  on  which  the
Convertible  Debentures  are converted in full.  The Buyers shall be responsible
only  for  its  own  representations,   warranties,   agreements  and  covenants
hereunder.

     (j) PUBLICITY.  The Company and the Buyers shall have the right to approve,
before issuance any press release or any other public  statement with respect to
the transactions contemplated hereby made by any party; provided,  however, that
the Company  shall be  entitled,  without the prior  approval of the Buyers,  to
issue  any  press  release  or other  public  disclosure  with  respect  to such
transactions  required under applicable  securities or other laws or regulations
(the Company shall use commercially  reasonable efforts to consult the Buyers in
connection with any such press release or other public  disclosure  prior to its
release and Buyers shall be provided with a copy thereof upon release thereof).

                                       22
<PAGE>
     (k) FURTHER  ASSURANCES.  Each party shall do and  perform,  or cause to be
done and  performed,  all such  further acts and things,  and shall  execute and
deliver all such other agreements,  certificates,  instruments and documents, as
the other  party may  reasonably  request  in order to carry out the  intent and
accomplish  the  purposes  of  this  Agreement  and  the   consummation  of  the
transactions contemplated hereby.

     (l)  TERMINATION.  In the event that the Closing shall not have occurred on
or before  ninety  (90) days from the date  hereof due to the  Company's  or the
Buyer's  failure to satisfy the  conditions  set forth in Sections 6 and 7 above
(and the non-breaching party's failure to waive such unsatisfied  condition(s)),
the  non-breaching  party shall have the option to terminate this Agreement with
respect to such  breaching  party at the close of business on such date  without
liability  of any  party to any other  party;  provided,  however,  that if this
Agreement  is  terminated  by the Company  pursuant to this Section  10(l),  the
Company shall remain obligated to reimburse the Buyers for the fees and expenses
of Yorkville Advisors LLC described in Section 4(g)(ii) above.

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


                    [REMAINDER PAGE INTENTIONALLY LEFT BLANK]

                                       23
<PAGE>
     IN WITNESS WHEREOF,  the Buyers and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.


                                     COMPANY:
                                     CITY NETWORK, INC.

                                     By: /s/ Tiao-Tsan Lai
                                        ---------------------------------
                                     Name:  Mr Tiao-Tsan Lai
                                     Title: Chief Executive Officer


                                       24
<PAGE>
                                     /s/ David Gonzalez
                                     ---------------------------------
                                     David Gonzalez, Esq.
                                     (For purposes of Section 9 only)


                                     Highgate House Funds, Ltd.


                                     By: /s/ Mark Angelo
                                        ---------------------------------
                                     Name: Mark Angelo
                                     Its:  Portfolio Manager
                                     (For purposes of Section 9 only)


                                       25
<PAGE>
                                   SCHEDULE I

                               SCHEDULE OF BUYERS


         Name                                     Address/Facsimile
         ----                                     -----------------

Cornell Capital Partners, LP              101 Hudson Street - Suite 3700
By: Yorkville Advisors, LLC               Jersey City, NJ  07303
Its: General Partner                      Facsimile: (201) 985-8266

                                          With Copy to:
By: /s/ Mark Angelo                       Troy Rillo, Esq.
   ----------------------------           101 Hudson Street - Suite 3700
Name: Mark Angelo                         Jersey City, NJ 07302
Its: Portfolio Manager                    Facsimile: (201) 985-8266

Subscription Amount                       $650,000.00 (1)
Warrant                                   1,000,000 Shares


----------
1.   To be reduced to $275,000 if shareholder approval of the issuance of Common
     Stock pursuant to the  transactions  contemplated in this Agreement has not
     been obtained in accordance with herwith.

                                       26
<PAGE>
                                  EXHIBIT INDEX

Exhibit A      Form of Convertible Debentures
Exhibit B      Form of Registration Rights Agreement
Exhibit C-1    Form of Security Agreement (the Company)
Exhibit C-2    Form of Security Agreement (City Technology, Inc.)
Exhibit C-3    Form of Security Agreement (City Network, Inc.--Taiwan)
Exhibit C-4    Form of Security Agreement (City Construction Co., Ltd.)
Exhibit D      Form of Pledge and Escrow Agreement
Exhibit E      From of Irrevocable Transfer Agent Instructions

                              DISCLOSURE SCHEDULES

SECTION 3(B): AUTHORIZATION, ENFORCEMENT, COMPLIANCE WITH OTHER INSTRUMENTS

Pursuant  to AMEX  Company  Guide Rule 713,  the  Company is  required to obtain
stockholders  approval for the issuance of Total Transaction  Shares equal to or
greater than 5,500,000 shares.

SECTION 3(C): CAPITALIZATION

The Company is subject to the terms of the Prior Securities  Purchase Agreement,
SEDA and Prior Warrant.

The Company issued the Prior Warrants, which contain anti-dilution provisions.

SECTION 3(E): NO CONFLICTS

The Company is subject to the terms of the Prior Securities  Purchase Agreement,
SEDA and Prior Warrant.

SECTION 3(H): ABSENCE OF LITIGATION

The Company has not formally  responded to  outstanding  comments  from the SEC,
dated  October  5,  2005,  regarding  (1) when it  intends  to refile  financial
statements  for March 30 and June 30, 2005 and (2) the effect of the adequacy of
its disclosure  controls and procedures at the end of the periods covered by its
Form  10-QSBs for the  periods  ended March 30 and June 30, 2005 in light of the
material error the Company disclosed in its SEC filings.

SECTION 3(V): FEES AND RIGHTS OF FIRST REFUSAL

The Company is subject to the terms of the Prior Securities  Purchase Agreement,
SEDA and Prior Warrant.

                                       27