EXHIBIT 10.2

                                                                  EXECUTION COPY

                          SECURITIES PURCHASE AGREEMENT

      This  Securities  Purchase  Agreement  (this  "AGREEMENT")  is dated as of
January 31, 2005 by and among Cadence Resources Corporation,  a Utah corporation
(the  "COMPANY"),  and each  purchaser  listed  on the  Schedule  of  Purchasers
attached hereto (each, a "PURCHASER" and collectively, the "PURCHASERS").

      WHEREAS:

      A. The  Company  and each  Purchaser  is  executing  and  delivering  this
Agreement in reliance upon the exemption from securities  registration  afforded
by Section  4(2) of the  Securities  Act of 1933,  as amended  (the  "SECURITIES
ACT"),  and Rule 506 of  Regulation D  ("REGULATION  D") as  promulgated  by the
United  States  Securities  and  Exchange   Commission  (the  "SEC")  under  the
Securities Act.

      B. Each Purchaser wishes to purchase, and the Company wishes to sell, upon
the terms and conditions  stated in this Agreement,  (i) the aggregate number of
shares of common  stock of the  Company,  par value $0.01 per share (the "COMMON
STOCK") set forth opposite such  Purchaser's  name in column (3) on the Schedule
of Purchasers  (collectively,  the "NEW COMMON  STOCK"),  and (ii) Warrants,  in
substantially  the  form  attached  hereto  as  Exhibit  A  (collectively,   the
"WARRANTS")  to  acquire up to that  number of shares of Common  Stock set forth
opposite  such  Purchaser's  name in column (4) of the  Schedule  of  Purchasers
attached hereto (collectively, the "WARRANT SHARES").

      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  of the
Purchasers agree as follows:

                                   ARTICLE I
                                   DEFINITIONS

      1.1  Definitions.  In  addition  to the terms  defined  elsewhere  in this
Agreement, the following terms have the meanings indicated:

            "AFFILIATE"  means any Person that,  directly or indirectly  through
      one or more  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.

            "ANNUAL REPORT" means the Company's  Annual Report (Form 10-KSB) for
      the fiscal year ended September 30, 2003.

            "AURORA" means Aurora Energy, Ltd, a Nevada company.

<PAGE>

            "BUSINESS  DAY" means any day other than  Saturday,  Sunday or other
      day on which  commercial  banks in The City of New York are  authorized or
      required by law to remain closed.

            "CLOSING"  means the  closing  of the  purchase  and sale of the New
      Common Stock and Warrants pursuant to Section 2.1.

            "CLOSING DATE" means the date of the Closing.

            "COMMON  STOCK"  means the common  stock of the  Company,  par value
      $0.01 per share.

            "COMMON  STOCK  EQUIVALENTS"   means,   collectively,   Options  and
      Convertible Securities.

            "COMPANY COUNSEL" means Jenkens & Gilchrist Parker Chapin LLP.

            "CONVERTIBLE  SECURITIES"  means any stock or securities (other than
      Options) convertible into or exercisable or exchangeable for Common Stock.

            "EFFECTIVE DATE" means the date that the  Registration  Statement is
      first declared effective by the SEC.

            "EFFECTIVENESS PERIOD" means the fourth anniversary of the Effective
      Date or such earlier date when either (i) all  Registrable  Securities  of
      the Purchaser covered by the applicable  Registration  Statement have been
      sold or (ii) all Registrable Securities owned by the Purchaser may be sold
      pursuant to Rule 144(k) as evidenced by a written  opinion  letter to such
      effect,  addressed  to the  Company's  transfer  agent  and  the  affected
      Holders.

            "ELIGIBLE  MARKET" means any of The New York Stock  Exchange,  Inc.,
      the  American  Stock  Exchange,  the Nasdaq  National  Market,  The Nasdaq
      SmallCap Market or the OTC Bulletin Board.

            "EXCHANGE  ACT"  means  the  Securities  Exchange  Act of  1934,  as
      amended.

            "FILING  DATE"  means  thirty days after the  effective  date of the
      closing of the Merger.

            "HYDROCARBONS"  means  oil,  gas,  coal  seam gas,  casinghead  gas,
      condensate,  distillate,  liquid hydrocarbons,  gaseous hydrocarbons,  all
      products  refined,  separated,  settled and  dehydrated  therefrom and all
      products  refined  therefrom,  including,  without  limitation,  kerosene,
      liquefied  petroleum gas,  refined  lubricating  oils,  diesel fuel,  drip
      gasoline, natural gasoline, helium, sulfur and all other gaseous or liquid
      minerals.

            "HYDROCARBON  INTERESTS"  means all rights,  titles,  interests  and
      estates  now  owned  or  hereafter  acquired  by  the  Company  in  and to
      Hydrocarbon  leases,  Hydrocarbon  or  mineral  fee  or  lease  interests,
      farm-ins,  overriding royalty and royalty interests, net profit interests,
      oil payments,  production payment interests and similar mineral interests,
      including any reserved or residual interest of whatever nature.


                                       2
<PAGE>

            "LEAD  PURCHASER"  means  Rubicon  Master Fund, a company  organized
      under the laws of the Cayman Islands.

            "LIEN"  means any  lien,  charge,  claim,  tax,  security  interest,
      encumbrance, right of first refusal or other restriction.

            "LOSSES"  means any and all losses,  claims,  damages,  liabilities,
      settlement costs and expenses,  including,  without  limitation,  costs of
      preparation and reasonable attorneys' fees.

            "MERGER"  means the merger of the  Company (or a  subsidiary  of the
      Company) and Aurora, as contemplated by the Merger Agreement.

            "MERGER S-4" means the  registration  statement on Form S-4, or such
      other form of registration statement permitted by law, with respect to the
      Merger.

            "OIL AND GAS PROPERTIES" means Hydrocarbon  Interests;  the personal
      property  and/or real  property now or hereafter  pooled or unitized  with
      Hydrocarbon  Interests;  all  presently  existing  or future  unitization,
      pooling  agreements and declarations of pooled units and the units created
      thereby  (including  without  limitation  all units  created under orders,
      regulations and rules of any governmental  authority having  jurisdiction)
      which may affect  all or any  portion of the  Hydrocarbon  Interests;  all
      Hydrocarbons in and under and which may be produced,  saved,  processed or
      attributable to the Hydrocarbon  Interests,  the lands covered thereby and
      all  Hydrocarbons  in pipelines,  gathering  lines,  tanks and  processing
      plants and all rents, issues, profits,  proceeds,  products,  revenues and
      other  incomes from or  attributable  to the  Hydrocarbon  Interests;  all
      tenements, hereditaments,  appurtenances and personal property and/or real
      property in any way appertaining,  belonging, affixed or incidental to the
      Hydrocarbon  Interests,  and all  rights,  titles,  interests  and estates
      described or referred to above,  including any and all real property,  now
      owned or hereafter  acquired,  used or held for use in connection with the
      operating,  working or development of any of such Hydrocarbon Interests or
      personal   property  and/or  real  property  and  including  any  and  all
      pipelines,  gathering lines, compression facilities,  tanks and processing
      plants, all oil wells, gas wells, water wells, injection wells, platforms,
      spars or other offshore facilities,  casings,  rods, tubing, pumping units
      and engines,  Christmas trees,  derricks,  separators,  gun barrels,  flow
      lines, gas systems (for gathering,  treating and  compression),  and water
      systems  (for  treating,   disposal  and   injection);   surface   leases,
      rights-of-way,  easements  and  servitude  together  with  all  additions,
      substitutions,  replacements, accessions and attachments to any and all of
      the foregoing.

            "OPTIONS" means any rights,  warrants or options to subscribe for or
      purchase Common Stock or Convertible Securities.


                                       3
<PAGE>

            "PERMITTED  LIENS"  means  (i)  royalties,   overriding   royalties,
      reversionary interests, production payments and similar burdens which have
      been taken into account in the  ownership  interests of the Company in and
      to the Oil and Gas  Properties as set forth in the Annual  Report,  as the
      case may be; (ii) sales  contracts or other  arrangements  for the sale of
      production of Hydrocarbons  which would not (when considered  cumulatively
      with the matters discussed in clause (i) above) deprive the Company of any
      material right in respect of the Oil and Gas Properties (except for rights
      customarily  granted with  respect to such  contracts  and  arrangements);
      (iii)  statutory  Liens  for taxes or other  assessments  that are not yet
      delinquent (or that, if delinquent,  are being  contested in good faith by
      appropriate proceedings, levy and execution thereon having been stayed and
      continue to be stayed and for which the Company has set aside on its books
      adequate reserves);  (iv) easements,  rights of way, servitudes,  permits,
      surface  leases  and  other  rights  in  respect  to  surface  operations,
      pipelines,  grazing,  logging,  canals,  ditches,  reservoirs or the like,
      conditions,  covenants and other  restrictions,  and easements of streets,
      alleys,  highways,  pipelines,  telephone lines, power lines, railways and
      other  easements  and rights of way on,  over or in respect of the Oil and
      Gas Properties and that do not  individually  or in the aggregate,  have a
      material adverse effect on the Oil and Gas Properties; (v) rights reserved
      to or vested in any municipality,  governmental, statutory or other public
      authority to control or regulate the Oil and Gas Properties in any manner,
      and all applicable laws, rules and orders from any governmental authority;
      (vi) Liens in favor of operators and  non-operators  under joint operating
      agreements to secure amounts  owing,  which amounts are not yet due or are
      being  contested  in good faith by  appropriate  proceedings,  if adequate
      reserves shall have been made therefor;  and (vii) such  imperfections  of
      title which do not in the aggregate  materially  detract from the value of
      the Oil and Gas  Properties,  or the use  thereof,  in the business of the
      Company.

            "PERSON" means any individual or  corporation,  partnership,  trust,
      incorporated  or  unincorporated   association,   joint  venture,  limited
      liability  company,  joint  stock  company,  government  (or an  agency or
      subdivision thereof) or any court or other federal,  state, local or other
      governmental authority or other entity of any kind.

            "POST-EFFECTIVE  AMENDMENT" means a post-effective  amendment to the
      Registration Statement.

            "POST-EFFECTIVE  AMENDMENT  FILING DEADLINE" means the tenth Trading
      Day after the Registration  Statement  ceases to be effective  pursuant to
      applicable securities laws due to the passage of time or the occurrence of
      an  event  requiring  the  Company  to  file a  Post-Effective  Amendment;
      provided,  however,  that such number of Trading Days does not include any
      days that the Post-Effective Amendment cannot be filed because one or more
      Purchasers  has not provided the Company with  information  required to be
      contained in the Post-Effective  Amendment,  but only to the extent one or
      more Purchasers fails to deliver such information  within five (5) Trading
      Days after the date that the Company reasonably requests,  in writing, the
      Purchasers to provide such information.

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


                                       4
<PAGE>

            "PROSPECTUS"  means  the  prospectus  included  in the  Registration
      Statement (including,  without limitation,  a prospectus that includes any
      information  previously  omitted  from a  prospectus  filed  as part of an
      effective  registration  statement in reliance upon Rule 430A  promulgated
      under the Securities  Act), as amended or  supplemented  by any prospectus
      supplement,  with  respect to the terms of the  offering of any portion of
      the Registrable Securities covered by the Registration Statement,  and all
      other   amendments   and   supplements   to  the   Prospectus,   including
      post-effective  amendments,  and all material incorporated by reference or
      deemed to be incorporated by reference in such Prospectus.

            "REGISTRABLE  SECURITIES"  means  any New  Common  Stock or  Warrant
      Shares issued or issuable pursuant to the Transaction Documents,  together
      with any securities  issued or issuable upon any stock split,  dividend or
      other distribution,  recapitalization or similar event with respect to the
      foregoing.

            "REGISTRATION  STATEMENT" means each registration statement required
      to be filed under  Article VI,  including  (in each case) the  Prospectus,
      amendments and supplements to such  registration  statement or Prospectus,
      including pre- and post-effective  amendments,  all exhibits thereto,  and
      all material  incorporated  by reference or deemed to be  incorporated  by
      reference in such registration statement.

            "REQUIRED  EFFECTIVENESS  DATE" means 90 days after the Filing Date,
      provided, however, that such date shall be extended by such number of days
      as the  Company  is  unable  to  file  the  Registration  Statement  or an
      amendment  thereto  because one or more  Purchasers  has not  provided the
      Company  with  information  required to be  included  in the  Registration
      Statement  or an  amendment  thereto,  but only to the  extent one or more
      Purchasers fails to deliver such information  within five (5) Trading Days
      after the date that the Company reasonably requests,  in writing, that the
      Purchasers to provide such information.

            "RULE 144," "RULE 415," and "RULE 424" means Rule 144,  Rule 415 and
      Rule 424, respectively,  promulgated by the SEC pursuant to the Securities
      Act, as such Rules may be amended  from time to time,  or any similar rule
      or regulation  hereafter adopted by the SEC having  substantially the same
      effect as such Rule.

            "SECURITIES"  means,  collectively,  New Common Stock,  Warrants and
      Warrant Shares.

            "SUBSIDIARY"  means any  Person in which the  Company,  directly  or
      indirectly, owns capital stock or holds an equity or similar interest.

            "TRADING  DAY" means (a) any day on which the Common Stock is listed
      or quoted  and traded on its  primary  Trading  Market,  (b) if the Common
      Stock is not then listed or quoted and traded on any Eligible Market, then
      a day on which  trading  occurs  on The  Nasdaq  SmallCap  Market  (or any
      successor  thereto),  or (c) if  trading  does  not  occur  on The  Nasdaq
      SmallCap Market (or any successor thereto), any Business Day.

            "TRADING  MARKET" means the OTC Bulletin Board or any other Eligible
      Market on which the Common Stock is then listed or quoted.


                                       5
<PAGE>

            "TRANSACTION  DOCUMENTS"  means this  Agreement,  the Warrants,  the
      Transfer Agent Instructions and any other documents or agreements executed
      in connection with the transactions contemplated hereunder.

            "TRANSFER AGENT" means OTC Stock Transfer Company of Salt Lake City,
      Utah, or any other transfer agent selected by the Company

            "TRANSFER AGENT INSTRUCTIONS"  means the Irrevocable  Transfer Agent
      Instructions,  in the form of  Exhibit  B,  executed  by the  Company  and
      delivered to and acknowledged in writing by the Transfer Agent.

                                   ARTICLE II
                                PURCHASE AND SALE

      2.1 Closing. Subject to the satisfaction (or waiver) of the conditions set
forth in Section 5 below,  the Company  shall issue and sell to each  Purchaser,
and each  Purchaser  severally,  but not  jointly,  agrees to purchase  from the
Company on the Closing Date, (A) such number of shares of New Common Stock as is
set forth  opposite  such  Purchaser's  name in column  (3) on the  Schedule  of
Purchasers, and (B) one or more Warrants to acquire up to that number of Warrant
Shares as is set  forth  opposite  such  Purchaser's  name in column  (4) on the
Schedule of  Purchasers.  The aggregate  purchase price for the Securities to be
purchased by each Purchaser at the Closing (the  "PURCHASE  PRICE") shall be the
amount set forth opposite such Purchaser's name in column (5) of the Schedule of
Purchasers.  For the  avoidance  of doubt and  subject to the  satisfaction  (or
waiver) of the  conditions set forth in Section 5 below,  no Purchaser  shall be
obligated to purchase any Securities  hereunder  other than such  Securities set
forth opposite such Purchaser's name on the Schedule of Purchasers.  The Closing
shall  take  place  at the  offices  of  Schulte  Roth & Zabel  LLP  immediately
following the execution hereof, or at such other location or time as the parties
may agree.

      2.2 Closing Deliveries.

            (a) At the  Closing,  the  Company  shall  deliver  or  cause  to be
delivered to each Purchaser the following:

                  (i) each of the Transaction  Documents to which the Company is
      a party duly executed by the Company;

                  (ii) Warrants and  certificates  for the New Common Stock such
      Purchaser is purchasing  hereunder (in each case, in such denominations as
      the Purchaser shall reasonably request).

                  (iii) a certificate,  executed by a duly authorized  executive
      officer of the Company,  dated as of the Closing Date in the form attached
      hereto as Exhibit D.

                  (iv) a certificate,  executed by a duly  authorized  executive
      officer  of  Aurora,  dated as of the  Closing  Date in the form  attached
      hereto as Exhibit E.


                                       6
<PAGE>

                  (v) a legal opinion of Company Counsel, in the form of Exhibit
      C, executed by such counsel and delivered to the Purchasers; and

                  (vi) duly executed Transfer Agent Instructions acknowledged by
      the Transfer Agent.

            (b) At the  Closing,  each  Purchaser  shall  deliver or cause to be
delivered to the Company (i) each  Transaction  Document to which such Purchaser
is a party duly executed by such Purchaser and (ii) the purchase price indicated
below such Purchaser's  name on the signature page of this Agreement,  in United
States  dollars  and in  immediately  available  funds,  by wire  transfer to an
account designated in writing by the Company for such purpose.

                                  ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

      3.1  Representations  and  Warranties of the Company.  The Company  hereby
represents and warrants to each of the Purchasers as follows:

            (a) Subsidiaries. The Company has no direct or indirect Subsidiaries
other than those  listed in Schedule  3.1(a).  Except as  disclosed  in Schedule
3.1(a),  the Company owns,  directly or indirectly,  all of the capital stock or
comparable  equity  interests of each Subsidiary free and clear of any Lien, and
all the issued and  outstanding  shares of capital  stock or  comparable  equity
interests  of  each   Subsidiary   are  validly   issued  and  are  fully  paid,
non-assessable and free of preemptive and similar rights.

            (b) Organization and Qualification.  Except as disclosed in Schedule
3.1(b)  each of the Company and the  Subsidiaries  is an entity duly  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
of  any  of  the  provisions  of  its  respective  certificate  or  articles  of
incorporation,  bylaws or other  organizational  or  charter  documents.  To the
knowledge  of the  Company,  each of the  Company and the  Subsidiaries  is duly
qualified to do 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,
individually or in the aggregate, (i) adversely affect the legality, validity or
enforceability  of any Transaction  Document,  (ii) have or result in a material
adverse  effect on the results of  operations,  assets,  prospects,  business or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole, or (iii) impair the Company's ability to materially perform on a timely
basis its obligations  under any of the Transaction  Documents (any of (i), (ii)
or (iii), a "MATERIAL ADVERSE EFFECT").

            (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 consent or action is
required by the Company, its Board of Directors or its stockholders. Each of the
Transaction  Documents  has been (or upon delivery will be) duly executed by the
Company and is, or when  delivered in  accordance  with the terms  hereof,  will
constitute,  the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.


                                       7
<PAGE>

            (d) No Conflicts.  The  execution,  delivery and  performance of the
Transaction  Documents by the Company and the consummation by the Company of the
transactions  contemplated  hereby and thereby do not and will not (i)  conflict
with or violate any provision of the Company's, Aurora's or any Subsidiary's (or
following  the  effective  date of the  closing  of the  Merger,  the  surviving
entity's)   certificate   or   articles  of   incorporation,   bylaws  or  other
organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that 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  (with or without notice,  lapse of time or both) of, any agreement
(including the Merger  Agreement),  credit  facility,  debt or other  instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to
which the Company, Aurora, or any Subsidiary (or following the effective date of
the  closing of the  Merger,  the  surviving  entity) is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected,  except
to the  extent  that such  conflict,  default  or  termination  right  could not
reasonably  be  expected to have a Material  Adverse  Effect,  or (iii),  to the
knowledge of the Company,  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 and the rules and
regulations  of any  self-regulatory  organization  to which the  Company or its
securities  are subject),  or by which any property or asset of the Company or a
Subsidiary is bound or affected.

            (e)  Issuance of the  Securities.  New Common Stock and Warrants are
duly authorized and, when issued and paid for in accordance with the Transaction
Documents,  shall be free and clear  from all Liens  with  respect  to the issue
thereof  and shall not be subject  to  preemptive  rights or  similar  rights of
stockholders.  As of the Closing  Date, a number of shares of Common Stock shall
have been duly  authorized  and reserved  for issuance  which equals 130% of the
number of shares of Common Stock issuable upon conversion of the exercise of the
Warrants to be issued at such Closing.  Upon exercise and issuance in accordance
with the Warrants,  the Warrant Shares shall be validly  issued,  fully paid and
nonassessable  and free from all Liens with respect to the issue  thereof,  with
the holders being  entitled to all rights  accorded to a holder of Common Stock.
Assuming  the  accuracy of each of the  representations  and  warranties  of the
Purchasers  contained  in  Section  3.2,  the  issuance  by the  Company  of the
Securities is exempt from registration under the Securities Act.

            (f) Capitalization. The number of shares and type of all authorized,
issued and  outstanding  capital  stock,  options  and other  securities  of the
Company   (whether  or  not  presently   convertible   into  or  exercisable  or
exchangeable  for  shares  of  capital  stock of the  Company)  is set  forth in
Schedule  3.1(f).  All outstanding  shares of capital stock are duly authorized,
validly issued,  fully paid and nonassessable and have been issued in compliance
with  all  applicable  securities  laws,  except  where  the  failure  to  be so
authorized,  issued or in compliance  could not reasonably be expected to result
in a Material Adverse Effect (as defined below). Except as disclosed in Schedule
3.1(f), 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 securities or rights convertible or exchangeable into shares of
Common Stock. Except as set forth in Schedule 3.1(f), there are no anti-dilution
or price adjustment  provisions  contained in any security issued by the Company
(or in any  agreement  providing  rights to security  holders) and the issue 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 such securities.  To the knowledge of
the Company,  except as specifically  disclosed in Schedule 3.1(f), no Person or
group of related Persons beneficially owns (as determined pursuant to Rule 13d-3
under the Exchange  Act), or has the right to acquire,  by agreement  with or by
obligation binding upon the Company,  beneficial ownership of in excess of 5% of
the outstanding  Common Stock,  ignoring for such purposes any limitation on the
number of shares of Common Stock that may be owned at any single time.


                                       8
<PAGE>

            (g) SEC  Reports;  Financial  Statements.  The Company has filed all
reports  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 to file such material) (the foregoing materials being collectively  referred
to  herein as the "SEC  REPORTS"  and,  together  with  this  Agreement  and the
Schedules to this Agreement,  the  "DISCLOSURE  MATERIALS") 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. The Company has delivered
to the  Purchasers  true,  correct and complete  copies of all SEC Reports filed
within  the ten (10) days  preceding  the date  hereof.  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
SEC promulgated  thereunder,  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 SEC 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 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.  All material
agreements  to which the  Company or any  Subsidiary  is a party or to which the
property or assets of the Company or any  Subsidiary are subject are included as
part of or specifically identified in the SEC Reports.


                                       9
<PAGE>

            (h) Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports,  except as specifically disclosed in
the SEC Reports,  (i) there has been no event,  occurrence or development  that,
individually  or in the  aggregate,  has had or that could  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 required to be disclosed in filings made with the SEC, (iii) the Company
has not altered its method of accounting  or the identity of its auditors,  (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 or as set forth in Schedule
3.1(h). No event, liability, development or circumstance has occurred or exists,
or is contemplated  to occur with respect to the Company or its  Subsidiaries or
their  respective  business,  properties,  prospects,  operations  or  financial
condition,  that  would  be  required  to be  disclosed  by  the  Company  under
applicable  securities  laws on a registration  statement on Form S-1 filed with
the SEC  relating to an issuance and sale by the Company of its Common Stock and
which has not been publicly announced.

            (i) Absence of Litigation.  Except as set forth in Schedule  3.1(i),
there is no action, suit, claim, proceeding,  inquiry or investigation before or
by any court, public board, government agency,  self-regulatory  organization or
body  pending  or,  to the  knowledge  of the  Company,  threatened  against  or
affecting the Company or any of its Subsidiaries that could,  individually or in
the  aggregate,  have a Material  Adverse  Effect.  Schedule  3.1(i)  contains a
complete list and summary description of any pending or, to the knowledge of the
Company,  threatened  proceeding  against or affecting the Company or any of its
Subsidiaries  that  could  individually  or in the  aggregate,  have a  Material
Adverse Effect.

            (j)  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)
to the  knowledge  of the  Company,  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  relating to taxes,  environmental
protection,  occupational  health and  safety,  product  quality  and safety and
employment and labor matters,  except in each case as could not, individually or
in the aggregate, have or result in a Material Adverse Effect.


                                       10
<PAGE>

            (k) Title to Assets.  The Company and the Subsidiaries have 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.  To the  knowledge  of the
Company,  any real property and  facilities  held under lease by the Company and
the Subsidiaries are held by them under valid, subsisting and enforceable leases
of which the Company and the Subsidiaries are in compliance.

            (l)  Certain  Fees.  Except  as set  forth on  Schedule  3.1(l),  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 this Agreement.  The Company has not taken any action that would
cause any Purchaser to be liable for any such fees or commissions.

            (m) Private Placement.  Neither the Company nor any Person acting on
the  Company's  behalf has sold or offered to sell or solicited any offer to buy
the Securities by means of any form of general  solicitation or advertising.  To
the knowledge of the Company,  neither the Company nor any of its Affiliates nor
any Person acting on the Company's  behalf has,  directly or indirectly,  at any
time  within  the past six  months,  made any offer or sale of any  security  or
solicitation of any offer to buy any security under circumstances that would (i)
eliminate the availability of the exemption from registration under Regulation D
under the Securities Act in connection with the offer and sale of the Securities
as contemplated  hereby or (ii) cause the offering of the Securities pursuant to
the  Transaction  Documents to be integrated with prior offerings by the Company
for  purposes  of  any  applicable  law,  regulation  or  stockholder   approval
provisions,  including,  without limitation,  under the rules and regulations of
any  Trading  Market.  The  Company  is  not,  and is not an  Affiliate  of,  an
"investment  company" within the meaning of the Investment  Company Act of 1940,
as amended. The Company is not a United States real property holding corporation
within the meaning of the Foreign Investment in Real Property Tax Act of 1980.

            (n) Form SB-2  Eligibility.  The Company is eligible to register its
Common Stock for resale by the Purchasers using Form SB-2 promulgated  under the
Securities Act.

            (o)  Listing  and  Maintenance  Requirements.   The  Company  is  in
compliance  with the listing or maintenance  requirements  of its Trading Market
and will take all steps necessary to have its shares of Common Stock continue to
be traded and listed on its 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.

            (p) Registration Rights. Except as described in Schedule 3.1(p), the
Company has not  granted or agreed to grant to any Person any rights  (including
"piggy-back"  registration  rights)  to  have  any  securities  of  the  Company
registered with the SEC or any other  governmental  authority that have not been
satisfied.


                                       11
<PAGE>

            (q) Application of Takeover  Protections.  There is no control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company's
charter  documents  or the laws of its state of  incorporation  that is or could
become applicable to any of 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.  The foregoing  notwithstanding,  the Company has  authorized in its
articles of incorporation blank check preferred stock.

            (r) Disclosure.  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  constitutes or might constitute  material,
nonpublic  information.  The Company  understands  and confirms that each of the
Purchasers will rely on the foregoing  representations in effecting transactions
in  securities  of the  Company.  All  disclosure  provided  to  the  Purchasers
regarding the Company,  its business and the transactions  contemplated  hereby,
including  the  Schedules  to this  Agreement,  furnished by or on behalf of the
Company  are true and  correct  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 the light of the circumstances under which they were
made,  not  misleading.  No event or  circumstance  has occurred or  information
exists with  respect to the Company or any of its  Subsidiaries  or its or their
business,  properties,  prospects,  operations or financial  conditions,  which,
under  applicable  law,  rule  or  regulation,  requires  public  disclosure  or
announcement  by the  Company but which has not been so  publicly  announced  or
disclosed.  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.

            (s) 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 this Agreement and the
transactions  contemplated  hereby.  The Company  further  acknowledges  that no
Purchaser  is acting as a financial  advisor or  fiduciary of the Company or any
other Purchaser (or in any similar  capacity) with respect to this Agreement and
the  transactions  contemplated  hereby and any advice given by any Purchaser or
any of their  respective  representatives  or  agents  in  connection  with this
Agreement and the transactions  contemplated hereby is merely incidental to such
Purchaser's  purchase of the Securities.  The Company further represents to each
Purchaser  that the  Company's  decision to enter into this  Agreement  has been
based solely on the  independent  evaluation  of the  transactions  contemplated
hereby by the Company and its representatives.

            (t) 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, copyrights, licenses and other similar
rights  that  are  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 written
notice  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.


                                       12
<PAGE>

            (u) Regulatory Permits. To the knowledge of the Company, 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,
individually  or in the aggregate,  have or 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.

            (v) Transactions With Affiliates and Employees.  Except as set forth
below or in SEC Reports  filed at least ten days prior to the date hereof,  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.

            (w)  Indebtedness.  Except as disclosed in Schedule 3.1(w),  neither
the Company nor any of its  Subsidiaries  has any outstanding  Indebtedness  (as
defined below).  Schedule 3.1(w) provides a detailed description of the material
terms of any such outstanding Indebtedness.  For purposes of this Agreement: (i)
"INDEBTEDNESS" of any Person means, without duplication (A) all indebtedness for
borrowed  money,  (B) all  obligations  issued,  undertaken  or  assumed  as the
deferred  purchase  price of  property or  services  (other than trade  payables
entered into in the  ordinary  course of  business),  (C) all  reimbursement  or
payment  obligations  with respect to letters of credit,  surety bonds and other
similar instruments,  (D) all obligations evidenced by notes, bonds,  debentures
or  similar  instruments,   including   obligations  so  evidenced  incurred  in
connection  with the  acquisition  of property,  assets or  businesses,  (E) all
indebtedness  created  or  arising  under any  conditional  sale or other  title
retention  agreement,  or incurred as financing,  in either case with respect to
any property or assets  acquired  with the proceeds of such  indebtedness  (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property),  (F) all
monetary  obligations  under  any  leasing  or  similar  arrangement  which,  in
accordance  with GAAP, is classified as a capital  lease,  (G) all  indebtedness
referred to in clauses (A) through (F) above secured by (or for which the holder
of such  Indebtedness  has an existing  right,  contingent or  otherwise,  to be
secured by) any Lien upon or in any property or assets  (including  accounts and
contract  rights)  owned by any Person,  even though the Person  which owns such
assets or  property  has not  assumed or become  liable for the  payment of such
indebtedness,  and (H) all Contingent  Obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (A) through (G) above;
and (ii) "CONTINGENT OBLIGATION" means, as to any Person, any direct or indirect
liability,  contingent  or  otherwise,  of  that  Person  with  respect  to  any
indebtedness,  lease,  dividend  or other  obligation  of another  Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect  thereof,  is to provide  assurance to the obligee of such liability that
such  liability  will be paid or  discharged,  or that any  agreements  relating
thereto will be complied  with,  or that the holders of such  liability  will be
protected (in whole or in part) against loss with respect thereto.


                                       13
<PAGE>

            (x) Solvency.  Based on the financial condition of the Company as of
the Closing Date,  (i) the Company's  fair saleable  value of its 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 for the current  fiscal year 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 debt 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).

            (y) Internal Accounting  Controls.  To the knowledge of the Company.
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 generally  accepted  accounting  principles and to
maintain  asset  accountability,  (iii)  access to assets is  permitted  only in
accordance with  management's  general or specific  authorization,  and (iv) the
recorded  accountability  for assets is  compared  with the  existing  assets at
reasonable  intervals  and  appropriate  action  is taken  with  respect  to any
differences.

            (z)  Sarbanes-Oxley  Act. The Company is in compliance  with any and
all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective
as of the  date  hereof,  and any  and  all  applicable  rules  and  regulations
promulgated  by the SEC  thereunder  that are  effective  as of the date hereof,
except  where  such  noncompliance  would  not  have,  individually  or  in  the
aggregate, a Material Adverse Effect.

            (aa)  Merger.   The  Company  and  Aurora  have  executed  a  merger
agreement,  in the form  delivered to the Lead Purchaser on or prior to the date
hereof (the "Merger Agreement").  The Merger Agreement has been duly and validly
executed on or prior to the date hereof by the parties  thereto,  is enforceable
in accordance with its terms and has not been terminated,  amended,  modified or
revoked nor has Cadence or Aurora agreed to, or given notice,  whether formal or
informal of its intention to, terminate,  amend, modify or revoke or make claims
relating to the Merger Agreement, on or prior to the date hereof. As of the date
hereof,  neither  Cadence nor Aurora has failed to comply with any material term
or  condition of the Merger  Agreement  or asserted  that the other party has so
failed or may fail,  and no third party or  authority  has  asserted  any claims
relating to or  indicated  any  intention  to assert any claims  relating to the
Merger  Agreement.  As of the date hereof the  conditions  to the closing of the
Merger  set forth on  Schedule  3.1(aa)  have been met to the  extent  set forth
therein.


                                       14
<PAGE>

      3.2  Representations  and  Warranties of the  Purchasers.  Each  Purchaser
hereby, as to itself only and for no other Purchaser, represents and warrants 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 the requisite  corporate or partnership or
other  applicable  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 purchase by such Purchaser of
the Securities hereunder has been duly authorized by all necessary action on the
part of such Purchaser.  This Agreement and the Security Agreement has been duly
executed and delivered by such Purchaser and  constitutes  the valid and binding
obligation of such  Purchaser,  enforceable  against it in  accordance  with its
terms.

            (b)  Investment  Intent.  Such  Purchaser is (i)  acquiring  the New
Common Stock and Warrants  and (ii) upon  exercise of the Warrants  will acquire
the Warrant  Shares  issuable  upon  exercise of the  Warrants,  in the ordinary
course of  business  for its own  account  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  Purchaser does not
agree to hold any of the  Securities  for any minimum or other specific term and
reserves the right to dispose of the  Securities at any time in accordance  with
or pursuant to a  registration  statement or an exemption  under the  Securities
Act. Such  Purchaser does not have any agreement or  understanding,  directly or
indirectly, with any Person to distribute any of the Securities.

            (c)  Purchaser  Status.  At the time such  Purchaser was offered the
Securities  it was,  and at the date hereof it is, an  "accredited  investor" as
defined in Rule 501(a) under the Securities 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) Access to Information.  Such Purchaser  acknowledges that it has
reviewed the Disclosure  Materials and has been afforded (i) the  opportunity to
ask such questions as it has deemed  necessary of, and to receive  answers from,
representatives  of the  Company  concerning  the  terms and  conditions  of the
offering  of the  Securities  and the  merits  and  risks  of  investing  in the
Securities;  (ii) access to information  about the Company and the  Subsidiaries
and their  respective  financial  condition,  results of  operations,  business,
properties,  management  and  prospects  sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that
is  necessary  to make an  informed  investment  decision  with  respect  to the
investment.  Neither such inquiries nor any other investigation  conducted by or
on behalf of such  Purchaser or its  representatives  or counsel  shall  modify,
amend or  affect  such  Purchaser's  right to rely on the  truth,  accuracy  and
completeness of the Disclosure  Materials and the Company's  representations and
warranties contained in the Transaction Documents.


                                       15
<PAGE>

                                   ARTICLE IV
                         OTHER AGREEMENTS OF THE PARTIES

      4.1 Transfer Restrictions.

            (a) The  Securities may only be disposed of pursuant to an effective
registration  statement  under the  Securities  Act or pursuant to an  available
exemption  from the  registration  requirements  of the  Securities  Act, and in
compliance  with any applicable  state  securities  laws. In connection with any
transfer  of  Securities  other  than  pursuant  to  an  effective  registration
statement or to the Company or pursuant to Rule 144(k),  except as otherwise set
forth herein,  the Company may require the  transferor to provide to the Company
an opinion of counsel  selected by the  transferor,  the form and  substance  of
which  opinion shall be reasonably  satisfactory  to the Company,  to the effect
that such  transfer  does not require  registration  under the  Securities  Act.
Notwithstanding  the  foregoing,  the Company  hereby  consents to and agrees to
register on the books of the Company and with its  Transfer  Agent,  without any
such legal opinion, any transfer of Securities by a Purchaser to an Affiliate of
such Purchaser, provided that the transferee certifies to the Company that it is
an "accredited investor" as defined in Rule 501(a) under the Securities Act.

            (b) The Purchasers  agree to the imprinting,  so long as is required
by this Section 4.1(b),  of a legend  substantially in the following form on any
certificate evidencing Securities:

      THESE SECURITIES HAVE NOT 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.
      NOTWITHSTANDING  THE  FOREGOING,   THESE  SECURITIES  MAY  BE  PLEDGED  IN
      CONNECTION  WITH A BONA FIDE  MARGIN  ACCOUNT OR OTHER  LOAN OR  FINANCING
      ARRANGEMENT SECURED BY SUCH SECURITIES.


                                       16
<PAGE>

Certificates  evidencing Securities shall not be required to contain such legend
or any other legend (i) while a  Registration  Statement  covering the resale of
such  Securities  is effective  under the  Securities  Act;  provided,  that the
Company's  counsel shall have delivered a legal opinion  relating to the removal
of legends upon a sale or transfer of such  Securities,  or (ii)  following  any
sale of such  Securities  pursuant to Rule 144, or (iii) if such  Securities 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 SEC). The Company
shall cause its  counsel to issue the legal  opinion  included  in the  Transfer
Agent  Instructions  to the Transfer  Agent on the Effective Date and to deliver
any required legal opinions with respect to the removal of legends upon the sale
or transfer of Securities.  Following the Effective Date or at such earlier time
as a legend is no longer  required for certain  Securities,  the Company will no
later than five  Trading  Days  following  the  delivery by a  Purchaser  to the
Company  of  a  legended  certificate  representing  such  Securities,  use  its
reasonable  best efforts to deliver or cause to be delivered to such Purchaser a
certificate  representing  such Securities 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.  For so long as any  Purchaser  owns
Securities,  the Company will not effect or publicly  announce its  intention to
effect any exchange,  recapitalization  or other  transaction  that  effectively
requires or rewards  physical  delivery of  certificates  evidencing  the Common
Stock.

                  (c) The Company  acknowledges  and agrees that a Purchaser may
      from time to time  pledge or grant a security  interest  in some or all of
      the  Securities in connection  with a bona fide margin  agreement or other
      loan or financing  arrangement  secured by the Securities and, if required
      under the terms of such agreement, loan or 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 the pledgee,  secured  party or pledgor  shall be
      required in connection therewith.  Further, no notice shall be required of
      a 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 the  preparation and filing of any required
      prospectus  supplement under Rule 424(b)(3) of the Securities Act or other
      applicable provision of the Securities Act to appropriately amend the list
      of selling stockholders thereunder.

      4.2 Furnishing of Information.  As long as any Purchaser owns  Securities,
the  Company  covenants  to use its best  efforts  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. Upon the request of any  Purchaser,  the Company shall deliver
to such Purchaser a written  certification  of a duly  authorized  officer as to
whether it has complied  with the preceding  sentence.  As long as any Purchaser
owns any Securities,  if the Company is not required to file reports pursuant to
such laws,  it will  prepare and  furnish to the  Purchasers  and make  publicly
available in accordance  with  paragraph (c) of Rule 144 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  Purchaser or
subsequent holder of Securities may reasonably request to satisfy the provisions
of Rule 144 applicable to the issuer of securities  relating to transactions for
the sale of  securities  pursuant  to Rule 144,  but only to the extent that the
Company,  or counsel of the Company  agree,  that the  Purchaser  or  subsequent
holder is able to avail themselves of the exemption created by Rule 144.


                                       17
<PAGE>

      4.3 Integration.  The Company shall not, and shall use its best efforts to
ensure that no Affiliate of the Company shall,  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.

      4.4 Reservation and Listing of Common Stock.

                  (a) 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.  In the event that at any time the
      then authorized shares of Common Stock are insufficient for the Company to
      satisfy  its  obligations  in full under the  Transaction  Documents,  the
      Company  shall  promptly  take such actions as may be required to increase
      the number of authorized shares.

                  (b) The Company  shall take all steps  necessary  to cause its
      Common Stock to be approved for listing on its Trading Market and maintain
      the  listing  of such  Common  Stock on such  Trading  Market  or  another
      Eligible  Market.  The  Company  covenants  to  promptly  file any listing
      application  required  by its Trading  Market with  respect to the Warrant
      Shares.

      4.5 [Intentionally Deleted.]

      4.6 Variable Securities; Additional Registration Statement. For so long as
any Warrants remain outstanding,  the Company shall not, in any manner, issue or
sell any rights,  warrants or options to subscribe for or purchase  Common Stock
or directly or indirectly  convertible  into or  exchangeable or exercisable for
Common  Stock at a price which  varies or may vary with the market  price of the
Common Stock, including by way of one or more reset(s) to any fixed price unless
the  conversion,  exchange or exercise price of any such security cannot be less
than the then  applicable  Exercise  Price (as  defined  in the  Warrants)  with
respect to the Common  Stock under any into which any  Warrant is  exerciseable.
Until the Effective  Time,  the Company will not file a  registration  statement
under the  Securities  Act relating to securities  that are not the  Securities,
other  than (i) a  registration  statement  on Form  S-8,  in order to  register
increases in the shares underlying equity incentive plans in existence as of the
date of this  Agreement,  and or (ii)  the  Merger  S-4 in  connection  with the
Merger.


                                       18
<PAGE>

      4.7 Securities Laws Disclosure; Publicity. The Company shall, on or before
8:30 a.m., New York City Time, on the day following execution of this Agreement,
issue a press  release,  not in violation  of any  applicable  securities  laws,
acceptable to the Purchasers  disclosing all material terms of the  transactions
contemplated  hereby.  On the Closing  Date,  the  Company  shall file a Current
Report on Form 8-K with the SEC (the "8-K FILING")  describing  the terms of the
transactions contemplated by the Transaction Documents and including as exhibits
to such Current  Report on Form 8-K this  Agreement,  the form of Warrant in the
form required by the Exchange Act. Thereafter, the Company shall timely file any
filings and notices  required by the SEC or  applicable  law with respect to the
transactions  contemplated  hereby and provide  copies thereof to the Purchasers
promptly  after  filing.  Except  with  respect  to the 8-K Filing and the press
release referenced above (a copy of which will be provided to the Purchasers for
their review as early as practicable prior to its filing), the Company shall, at
least two Trading Days prior to the filing or  dissemination  of any  disclosure
required by this  paragraph,  provide a copy thereof to the Purchasers for their
review.  The Company and the Purchasers shall consult with each other in issuing
any press  releases or otherwise  making public  statements or filings and other
communications  with the SEC or any  regulatory  agency or Trading  Market  with
respect to the transactions  contemplated  hereby, and neither party shall issue
any such press release or otherwise  make any such public  statement,  filing or
other  communication  without  the prior  consent of the  other,  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,  filing or
other  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 SEC or any regulatory agency or Trading Market,
without the prior written consent of such  Purchaser,  except to the extent such
disclosure  (but not any disclosure as to the  controlling  Persons  thereof) is
required by law or Trading Market  regulations,  in which case the Company shall
provide the Purchasers with prior notice of such  disclosure.  The Company shall
not,  and  shall  cause  each of its  Subsidiaries  and its  and  each of  their
respective  officers,  directors,  employees  and  agents  not to,  provide  any
Purchaser with any material nonpublic  information  regarding the Company or any
of its  Subsidiaries  from and after the  filing of the 8-K Filing  without  the
express  written  consent  of such  Purchaser.  In the  event of a breach of the
foregoing  covenant by the Company,  any of its  Subsidiaries,  or any of its or
their respective officers,  directors,  employees and agents, in addition to any
other remedy provided herein or in the Transaction  Documents, a Purchaser shall
have  the  right to make a public  disclosure,  in the form of a press  release,
public  advertisement  or  otherwise,  of such  material  nonpublic  information
without the prior approval by the Company,  its  Subsidiaries,  or any of its or
their respective  officers,  directors,  employees or agents. No Purchaser shall
have any  liability to the  Company,  its  Subsidiaries,  or any of its or their
respective officers, directors,  employees,  stockholders or agents for any such
disclosure.   Each  Purchaser  hereby  agrees  not  to  knowingly   request  any
information from the Company, its directors, officers, employees or agents which
such  purchaser  should  reasonably  know is  material  non-public  information.
Subject to the foregoing,  neither the Company nor any Purchaser shall issue any
press releases or any other public  statements with respect to the  transactions
contemplated  hereby;  provided,  however,  that the Company  shall be entitled,
without the prior approval of any Purchaser,  to make any press release or other
public   disclosure  with  respect  to  such  transactions  (i)  in  substantial
conformity  with the 8-K Filing and  contemporaneously  therewith and (ii) as is
required by applicable law and regulations  (provided that in the case of clause
(i) the Lead Purchaser  shall be consulted by the Company in connection with any
such press release or other public disclosure prior to its release).  Each press
release  disseminated  during the 12 months preceding the date of this Agreement
did not at the time of release  contain any untrue  statement of a material fact
or omit 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 are made, not misleading

      4.8 Use of Proceeds.  The Company shall use the net proceeds from the sale
of the New Common Stock and Warrants  hereunder  (i) to pay any and all expenses
incurred in connection  with the sale of the Securities  hereunder,  (ii) to pay
for the filing and maintaining of any  registration  statement  required by this
Agreement,  (iii) to pay for any and all expenses related to the Merger, (iv) to
pay off up to  $6,000,000  of notes issued by the Company which are to be repaid
pursuant  to the  Merger,  (v) to pay for any and all  expenses  relating to the
filing of the Merger S-4 and (vi) for the general working  capital  requirements
of the Company.


                                       19
<PAGE>

      4.9  Reimbursement.  If any  Purchaser  or any  of its  Affiliates  or any
officer, director, partner, controlling Person, employee or agent of a Purchaser
or any of its Affiliates (a "RELATED  PERSON")  becomes involved in any capacity
in any  Proceeding  brought by or against any Person in connection  with or as a
result of the transactions  contemplated by the Transaction Documents other than
one brought by the applicable Purchaser or a Related Person thereof, the Company
will  indemnify  and hold  harmless  such  Purchaser  or Related  Person for its
reasonable legal and other expenses  (including the costs of any  investigation,
preparation and travel) and for any Losses incurred in connection therewith,  as
such expenses or Losses are incurred, excluding only Losses that result directly
from  such   Purchaser's  or  Related   Person's  gross  negligence  or  willful
misconduct.  In addition,  the Company  shall  indemnify  and hold harmless each
Purchaser and Related  Person from and against any and all Losses,  as incurred,
arising  out  of or  relating  to  any  breach  by  the  Company  of  any of the
representations,  warranties or covenants  made by the Company in this Agreement
or any other Transaction  Document,  or any allegation by a third party that, if
true, would  constitute such a breach.  The conduct of any Proceedings for which
indemnification  is available  under this paragraph shall be governed by Section
6.4(c)  below.  The  indemnification  obligations  of  the  Company  under  this
paragraph  shall be in addition to any liability  that the Company may otherwise
have and shall be  binding  upon and  inure to the  benefit  of any  successors,
assigns,  heirs and  personal  representatives  of the  Purchasers  and any such
Related  Persons.  The Company also agrees that neither the  Purchasers  nor any
Related Persons shall have any liability to the Company or any Person  asserting
claims on behalf of or in right of the Company in connection with or as a result
of the  transactions  contemplated by the Transaction  Documents,  except to the
extent that any Losses incurred by the Company result from the gross  negligence
or  willful  misconduct  of  the  applicable  Purchaser  or  Related  Person  in
connection with such transactions. If the Company breaches its obligations under
any Transaction Document, then, in addition to any other liabilities the Company
may have under any Transaction Document or applicable law, the Company shall pay
or  reimburse  the  Purchasers  on  demand  for  all  costs  of  collection  and
enforcement  (including reasonable attorneys fees and expenses).  Subject to the
foregoing, the Company specifically agrees to reimburse the Purchasers on demand
for all costs of enforcing the indemnification obligations in this paragraph.

      4.10 Lost, etc. Certificates  Evidencing New Common Stock; Exchange.  Upon
receipt by the Company of evidence  reasonably  satisfactory  to it of the loss,
theft,  destruction or mutilation of any  certificate  evidencing any New Common
Stock  owned  by one of the  Purchasers,  and (in the  case of  loss,  theft  or
destruction)   of  an  unsecured   indemnity   satisfactory   to  it,  and  upon
reimbursement to the Company of all reasonable expenses incidental thereto,  and
upon surrender and cancellation of such certificate,  if mutilated,  the Company
will make and  deliver in lieu of such  certificate  a new  certificate  of like
tenor and for the number of shares  evidenced by such  certificate  which remain
outstanding.  Such Purchaser's agreement of indemnity shall constitute indemnity
satisfactory to the Company for purposes of this Section 4.10. Upon surrender of
any certificate  representing any New Common Stock for exchange at the office of
the  Company,  the  Company at its  expense  will cause to be issued in exchange
therefor  new  certificates  in such  denomination  or  denominations  as may be
requested for the same aggregate  number of New Common Stock  represented by the
certificate  so  surrendered  and  registered  as such holder may  request.  The
Company will also pay the cost of all deliveries of certificates for such shares
to the office of such Purchaser (including the cost of insurance against loss or
theft in an amount  satisfactory to the holders) upon any exchange  provided for
in this Section 4.10.


                                       20
<PAGE>

      4.11 Corporate Existence.  So long as any Purchaser  beneficially owns any
Warrants,  the Company shall maintain its corporate existence and shall not sell
all or  substantially  all of the  Company's  assets,  except  in the event of a
merger or  consolidation  or sale of all or  substantially  all of the Company's
assets,  where the surviving or successor entity in such transaction (i) assumes
the Company's  obligations  hereunder and under the agreements  and  instruments
entered into in connection  herewith and (ii) is a publicly  traded  corporation
whose common stock is quoted on or listed for trading on an Eligible Market.

                                   ARTICLE V
                                   CONDITIONS

      5.1  Conditions  Precedent  to  the  Obligations  of the  Purchasers.  The
obligation of each  Purchaser to acquire the  Securities set forth opposite such
Purchaser's  name on the Schedule of Purchasers at the Closing is subject to the
satisfaction or waiver by such Purchaser,  at or before the Closing,  of each of
the following conditions:

                  (a)  Representations  and Warranties.  The representations and
      warranties  of the Company  contained  herein shall be true and correct in
      all  material  respects  as of the date when made and as of the Closing as
      though made on and as of such date.

                  (b)  Performance.  The Company and each other  Purchaser shall
      have performed,  satisfied and complied in all material  respects with all
      covenants, agreements and conditions required by the Transaction Documents
      to be  performed,  satisfied  or  complied  with by it at or  prior to the
      Closing.

                  (c) Good  Standing.  The Company shall have  delivered to such
      Purchaser a certificate  evidencing the formation and good standing of the
      Company and each of its  Subsidiaries  in such  entity's  jurisdiction  of
      formation issued by the Secretary of State (or comparable  office) of such
      jurisdiction, as of a date within 10 days of the Closing Date.

                  (d)  Qualification.  The Company shall have  delivered to such
      Purchaser  a  certificate  evidencing  the  Company's  qualification  as a
      foreign corporation and good standing issued by the Secretary of State (or
      comparable  office)  of each  jurisdiction  in  which  the  Company  is so
      qualified, as of a date within 10 days of the Closing Date.

                  (e)  Listing.  The Common  Stock (I) shall be  designated  for
      quotation  or listed on the  Trading  Market  and (II) shall not have been
      suspended,  as of the Closing Date, by the SEC or the Trading  Market from
      trading  on the  Trading  Market  nor shall  suspension  by the SEC or the
      Trading Market have been threatened, as of the Closing Date, either (A) in
      writing  by the SEC or the  Trading  Market  or (B) by  falling  below the
      minimum listing maintenance requirements of the Trading Market.


                                       21
<PAGE>

      5.2 Conditions Precedent to the Obligations of the Company. The obligation
of the Company to sell the Securities set forth opposite each  Purchaser's  name
on the Schedule of  Purchasers is subject to the  satisfaction  or waiver by the
Company, at or before the Closing, of each of the following conditions:

                  (a)  Representations  and Warranties.  The representations and
      warranties of the Purchasers contained herein shall be true and correct in
      all material  respects as of the date when made and as of the Closing Date
      as though made on and as of such date; and

                  (b)   Performance.   The  Purchasers   shall  have  performed,
      satisfied  and  complied  in all  material  respects  with all  covenants,
      agreements  and  conditions  required by the  Transaction  Documents to be
      performed, satisfied or complied with by the Purchasers at or prior to the
      Closing.

                                   ARTICLE VI
                               REGISTRATION RIGHTS

      6.1 Shelf Registration

                  (a) On or prior to the Filing Date,  the Company shall prepare
      and file with the SEC a "Shelf" Registration Statement covering the resale
      of all  Registrable  Securities for an offering to be made on a continuous
      basis pursuant to Rule 415. The  Registration  Statement  shall be on Form
      SB-2  (except if the Company is not then  eligible to register  for resale
      the Registrable  Securities on Form SB-2, in which case such  registration
      shall  be on  another  appropriate  form  in  accordance  herewith  as the
      Purchasers may reasonably  consent) and shall contain (except if otherwise
      directed by the Purchasers) the "Plan of Distribution"  attached hereto as
      Exhibit G.

                  (b) The Company shall use its commercially  reasonable efforts
      to cause the Registration Statement to be declared effective by the SEC as
      promptly as possible after the filing  thereof,  but in any event prior to
      the Required  Effectiveness  Date,  and shall use its best efforts to keep
      the Registration Statement continuously effective under the Securities Act
      until  the  end  of  the  Effectiveness  Period;  provided,  however,  the
      Company's  obligation to keep such Registration  Statement effective shall
      cease in the event the Company has  replaced  such  Regitration  Statement
      with a Registration  Statement on Form S-3, declared effective by the SEC,
      covering the resale of all of the  Registrable  Securities for an offering
      to be made on a continuous  basis  pursuant to Rule 415. The Company shall
      use its best  efforts  to keep  such  Registration  Statement  on Form S-3
      continuously  effective  under  the  Securities  Act  until the end of the
      Effectiveness Period.


                                       22
<PAGE>

                  (c)  The  Company  shall  notify  each  Purchaser  in  writing
      promptly  (and in any  event  within  one  Trading  Day)  after  receiving
      notification  from  the SEC  that  the  Registration  Statement  has  been
      declared effective.

                  (d) As  promptly as  possible,  and in any event no later than
      the  Post-Effective  Amendment Filing Deadline,  the Company shall prepare
      and file with the SEC a  Post-Effective  Amendment.  The Company shall use
      its best  efforts to cause the  Post-Effective  Amendment  to be  declared
      effective by the SEC as promptly as possible after the filing thereof, but
      in any event prior to the fifteenth  Trading Day after the  Post-Effective
      Amendment  Filing  Deadline.  The Company  shall notify each  Purchaser in
      writing  promptly  (and  in any  event  within  one  business  day)  after
      receiving notification from the SEC that the Post-Effective  Amendment has
      been declared effective.

                  (e) Upon the  occurrence of any Event (as defined below) prior
      to  the  24-month  anniversary  of  the  Closing,  and  on  every  monthly
      anniversary  thereof  occurring no later than the 24-month  anniversary of
      the Closing until the applicable Event is cured, as partial relief for the
      damages  suffered  therefrom by the Purchasers  (which remedy shall not be
      exclusive of any other remedies available under this Agreement,  at law or
      in equity),  the Company shall pay to each Purchaser an amount in cash, as
      liquidated  damages  and not as a  penalty,  equal to 1% of the  aggregate
      purchase price paid by such  Purchaser.  The payments to which a Purchaser
      shall be entitled  pursuant to this Section  6.1(e) are referred to herein
      as "EVENT  PAYMENTS".  Any Event  Payments  payable  pursuant to the terms
      hereof shall apply on a pro-rata basis for any portion of a month prior to
      the cure of an  Event.  In the  event  the  Company  fails  to make  Event
      Payments  within 10  Business  Days of any  demand  therefore,  such Event
      Payments  shall bear interest at the rate of 1.5% per month  (prorated for
      partial months) until paid in full.

      For such purposes, each of the following shall constitute an "EVENT":

                  (i) the Registration Statement is not filed on or prior to the
      Filing  Date or is not  declared  effective  on or prior  to the  Required
      Effectiveness Date;

                  (ii) a  Post-Effective  Amendment  is not filed on or prior to
      the Post-Effective  Amendment Filing Deadline or is not declared effective
      on or prior to the  twenty-first  Trading  Day  after  the  Post-Effective
      Amendment Filing Deadline;

                  (iii) after the  Effective  Date, a Purchaser is not permitted
      to sell  Registrable  Securities  under the  Registration  Statement (or a
      subsequent  Registration  Statement filed in replacement  thereof) for any
      reason (other than the requirement of the Company to file a Post-Effective
      Amendment and for such Post-Effective  Amendment to be declared effective)
      for either (A) 10 or more consecutive Trading Days or (B) 30 Trading Days,
      whether or not  consecutive,  in any 365-day period);  provided,  however,
      that none of the  foregoing  shall  constitute  an "Event" if the delay is
      caused by any act of war, terrorism, natural disaster or power failure.


                                       23
<PAGE>

                  (f) The Company shall not,  prior to the Effective Date of the
      Registration  Statement,  prepare  and file  with  the SEC a  registration
      statement  relating to an  offering  for its own account or the account of
      others under the Securities Act of any of its equity securities.

      6.2 Registration Procedures. In connection with the Company's registration
obligations hereunder, the Company shall:

                  (a) Not less than three  Trading Days prior to the filing of a
      Registration  Statement  or any related  Prospectus  or any  amendment  or
      supplement  thereto  (including any document that would be incorporated or
      deemed to be  incorporated  therein by  reference),  the Company shall (i)
      furnish to each  Purchaser  and any counsel  designated  by any  Purchaser
      (each,  a  "PURCHASER  COUNSEL",  and the  Lead  Purchaser  has  initially
      designated Schulte Roth & Zabel LLP) copies of all such documents proposed
      to be filed,  which documents (other than those  incorporated or deemed to
      be  incorporated  by  reference)  will be  subject  to the  review of such
      Purchasers  and each  Purchaser  Counsel,  and (ii) cause its officers and
      directors, counsel and independent certified public accountants to respond
      to such inquiries as shall be necessary, in the reasonable opinion of each
      Purchaser  Counsel,  to  conduct a  reasonable  investigation  within  the
      meaning of the  Securities  Act. The Company shall not file a Registration
      Statement or any such Prospectus or any amendments or supplements  thereto
      to which Purchasers holding a majority of the Registrable Securities shall
      reasonably  object.   However,   any  objection  to  the  filing  of  such
      registration  statement or other document  enumerated above, shall suspend
      from  occurring  any of the  "Events"  listed  above in  Section  6.1 ((e)
      i.-iv.) for the period of time during which the objection remains,  but in
      no case will the period of suspension exceed ten Trading Days.

                  (b)  (i)  Prepare  and  file  with  the SEC  such  amendments,
      including  post-effective  amendments,  to each Registration Statement and
      the  Prospectus  used in connection  therewith as may be necessary to keep
      the  Registration  Statement  continuously  effective as to the applicable
      Registrable  Securities for the Effectiveness  Period and prepare and file
      with the SEC such additional  Registration Statements in order to register
      for resale under the  Securities  Act all of the  Registrable  Securities;
      (ii) cause the related  Prospectus  to be amended or  supplemented  by any
      required  Prospectus  supplement,  and as so supplemented or amended to be
      filed  pursuant  to Rule 424;  (iii)  respond as  promptly  as  reasonably
      possible,  and in any event  within ten  Business  Days,  to any  comments
      received  from the SEC with respect to the  Registration  Statement or any
      amendment  thereto and as promptly as reasonably  practicable  provide the
      Purchasers true and complete copies of all correspondence  from and to the
      SEC  relating  to the  Registration  Statement;  and  (iv)  comply  in all
      material  respects  with  the  provisions  of the  Securities  Act and the
      Exchange Act with respect to the disposition of all Registrable Securities
      covered by the  Registration  Statement  during the  applicable  period in
      accordance  with the intended  methods of  disposition  by the  Purchasers
      thereof set forth in the  Registration  Statement as so amended or in such
      Prospectus as so supplemented


                                       24
<PAGE>

                  (c) Notify the Purchasers of Registrable Securities to be sold
      and each Purchaser Counsel as promptly as reasonably practicable,  and (if
      requested by any such Person) confirm such notice in writing no later than
      two Trading Days thereafter,  of any of the following events:  (i) the SEC
      notifies the Company whether there will be a "review" of any  Registration
      Statement;  (ii) the SEC comments in writing on any Registration Statement
      (in which case the Company shall deliver to each  Purchaser a copy of such
      comments and of all written  responses  thereto);  (iii) any  Registration
      Statement or any post-effective amendment is declared effective;  (iv) the
      SEC or any other  Federal or state  governmental  authority  requests  any
      amendment or  supplement  to any  Registration  Statement or Prospectus or
      requests additional  information  related thereto;  (v) the SEC issues any
      stop order suspending the  effectiveness of any Registration  Statement or
      initiates  any  Proceedings  for that purpose;  (vi) the Company  receives
      notice  of  any  suspension  of  the   qualification   or  exemption  from
      qualification of any Registrable  Securities for sale in any jurisdiction,
      or the initiation or threat of any  Proceeding for such purpose;  or (vii)
      the financial  statements  included in any  Registration  Statement become
      ineligible for inclusion therein or any statement made in any Registration
      Statement  or  Prospectus  or any  document  incorporated  or deemed to be
      incorporated therein by reference is untrue in any material respect or any
      revision to a  Registration  Statement,  Prospectus  or other  document is
      required so that it will not contain  any untrue  statement  of a material
      fact or omit to state any material fact  required to be stated  therein or
      necessary  to  make  the   statements   therein,   in  the  light  of  the
      circumstances under which they were made, not misleading.

                  (d) Use its reasonable efforts to avoid the issuance of or, if
      issued,   obtain  the   withdrawal  of  (i)  any  order   suspending   the
      effectiveness of any Registration Statement, or (ii) any suspension of the
      qualification (or exemption from  qualification) of any of the Registrable
      Securities  for  sale in any  jurisdiction,  at the  earliest  practicable
      moment.

                  (e)  Furnish to each  Purchaser  and each  Purchaser  Counsel,
      without charge, at least one conformed copy of each Registration Statement
      and each amendment thereto,  including financial statements and schedules,
      all  documents  incorporated  or  deemed  to be  incorporated  therein  by
      reference,  and all  exhibits  to the  extent  requested  by  such  Person
      (including  those  previously  furnished or  incorporated by reference) as
      promptly as practicable after the filing of such documents with the SEC.

                  (f)  Promptly  deliver to each  Purchaser  and each  Purchaser
      Counsel,  without charge, as many copies of the Prospectus or Prospectuses
      (including  each form of  prospectus)  and each  amendment  or  supplement
      thereto as such Persons may reasonably request within two Business Days of
      such request.  The Company hereby  consents to the use of such  Prospectus
      and each amendment or supplement thereto by each of the selling Purchasers
      in  connection  with the offering and sale of the  Registrable  Securities
      covered by such Prospectus and any amendment or supplement thereto.

                  (g) (i) In the  time  and  manner  required  by  each  Trading
      Market,  prepare and file with such Trading  Market an  additional  shares
      listing application covering all of the Registrable Securities;  (ii) take
      all steps  necessary to cause such  Registrable  Securities to be approved
      for  listing on each  Trading  Market as soon as  practicable  thereafter;
      (iii)  provide  to the  Purchasers  evidence  of such  listing;  and  (iv)
      maintain the listing of such  Registrable  Securities on each such Trading
      Market or another Eligible Market.

                  (h) Prior to any public  offering of  Registrable  Securities,
      use its best efforts to register or qualify or cooperate  with the selling
      Purchasers and each  applicable  Purchaser  Counsel in connection with the
      registration  or  qualification  (or exemption from such  registration  or
      qualification) of such Registrable Securities for offer and sale under the
      securities or blue sky laws of such jurisdictions within the United States
      as any Purchaser  requests in writing,  to keep each such  registration or
      qualification (or exemption  therefrom) effective during the Effectiveness
      Period and to do any and all other acts or things  necessary  or advisable
      to  enable  the  disposition  in  such  jurisdictions  of the  Registrable
      Securities covered by a Registration  Statement;  provided,  however, that
      the Company shall not be obligated to file any general  consent to service
      of  process  or to  qualify  as a  foreign  corporation  or as a dealer in
      securities  in any  jurisdiction  in  which it is not so  qualified  or to
      subject   itself  to  taxation  in  respect  of  doing   business  in  any
      jurisdiction in which it is not otherwise subject.


                                       25
<PAGE>

                  (i) Cooperate  with the  Purchasers  to facilitate  the timely
      preparation   and  delivery  of  certificates   representing   Registrable
      Securities  to be  delivered to a  transferee  pursuant to a  Registration
      Statement,  which  certificates  shall be free, to the extent permitted by
      this Agreement, of all restrictive legends, and to enable such Registrable
      Securities to be in such denominations and registered in such names as any
      such Purchasers may request.

                  (j) Upon the  occurrence  of any event  described  in  Section
      6.2(c)(vii),  as promptly as reasonably practicable,  prepare a supplement
      or amendment,  including a post-effective  amendment,  to the Registration
      Statement  or a  supplement  to the  related  Prospectus  or any  document
      incorporated or deemed to be incorporated  therein by reference,  and file
      any other required document so that, as thereafter delivered,  neither the
      Registration   Statement  nor  such  Prospectus  will  contain  an  untrue
      statement of a material  fact or omit to state a material fact required to
      be stated  therein or necessary  to make the  statements  therein,  in the
      light of the circumstances under which they were made, not misleading.

                  (k) Reasonably cooperate with any due diligence  investigation
      undertaken by the  Purchasers in connection  with the sale of  Registrable
      Securities, including without limitation by making available any documents
      and  information;  provided  that the  Company  will not  deliver  or make
      available to any Purchaser  material,  nonpublic  information  unless such
      Purchaser specifically requests in advance to receive material,  nonpublic
      information in writing.

                  (l) If  Holders of a majority  of the  Registrable  Securities
      being offered pursuant to a Registration Statement select underwriters for
      the  offering,  the Company  shall enter into and perform its  obligations
      under an  underwriting  agreement,  in usual and customary form reasonably
      acceptable to the Company,  including,  without  limitation,  by providing
      customary  legal  opinions,   comfort  letters  and   indemnification  and
      contribution obligations;  provided, that no such agreement shall obligate
      the Company to pay any amount not otherwise  contemplated  by this Article
      VI.

                  (m) Comply with all  applicable  rules and  regulations of the
      SEC.


                                       26
<PAGE>

      6.3  Registration  Expenses.  The  Company  shall  pay (or  reimburse  the
Purchasers  for)  all  fees  and  expenses  incident  to the  performance  of or
compliance with this Agreement by the Company,  including without limitation (a)
all  registration  and filing fees and expenses,  including  without  limitation
those related to filings with the SEC, any Trading Market and in connection with
applicable state securities or Blue Sky laws, (b) printing  expenses  (including
without limitation expenses of printing certificates for Registrable  Securities
and of  printing  prospectuses  requested  by the  Purchasers),  (c)  messenger,
telephone  and  delivery  expenses  incurred  by  the  Company,   (d)  fees  and
disbursements  of counsel for the Company and up to $5,000 in the  aggregate for
the  Purchaser  Counsels  (incurred  in  preparing  the  initial  filing  of the
registration statement for the Registrable Securities and all amendments thereto
prior to it being  declared  effective),  (e) fees  and  expenses  of all  other
Persons  retained  by the Company in  connection  with the  consummation  of the
transactions contemplated by this Agreement, and (f) all listing fees to be paid
by the Company to the Trading  Market.  In all events,  the Purchasers  shall be
solely  responsible  for paying all brokerage fees,  underwriter  commissions or
similar  compensation  relating to their sale of Registrable  Securities and any
income taxes resulting from any such sale of Registrable Securities.

            6.4 Indemnification

                  (a)  Indemnification  by  the  Company.   The  Company  shall,
      notwithstanding  any  termination  of this  Agreement,  indemnify and hold
      harmless each  Purchaser,  the  officers,  directors,  partners,  members,
      agents,   brokers  (including  brokers  who  offer  and  sell  Registrable
      Securities  as principal as a result of a pledge or any failure to perform
      under a margin call of Common Stock), investment advisors and employees of
      each of them,  each Person who  controls  any such  Purchaser  (within the
      meaning of Section 15 of the  Securities Act or Section 20 of the Exchange
      Act) and the officers, directors,  partners, members, agents and employees
      of each such  controlling  Person,  to the  fullest  extent  permitted  by
      applicable law, from and against any and all Losses, as incurred,  arising
      out of or relating to any untrue or alleged untrue statement of a material
      fact contained in the Registration  Statement,  any Prospectus or any form
      of  prospectus  or in  any  amendment  or  supplement  thereto  or in  any
      preliminary  prospectus,  or arising out of or relating to any omission or
      alleged  omission  of a material  fact  required  to be stated  therein or
      necessary to make the statements therein (in the case of any Prospectus or
      form  of  prospectus  or   supplement   thereto,   in  the  light  of  the
      circumstances  under which they were made) not  misleading,  except to the
      extent, but only to the extent,  that (i) such untrue statements,  alleged
      untrue  statements,  omissions or alleged  omissions are based solely upon
      information  regarding such Purchaser  furnished in writing to the Company
      by such  Purchaser  expressly for use therein,  or to the extent that such
      information relates to such Purchaser or such Purchaser's  proposed method
      of distribution  of Registrable  Securities and was reviewed and expressly
      approved  in  writing  by  such   Purchaser   expressly  for  use  in  the
      Registration  Statement,  such Prospectus or such form of Prospectus or in
      any amendment or  supplement  thereto or (ii) in the case of an occurrence
      of an event of the type specified in Section  6.2(c)(v)-(vii),  the use by
      such  Purchaser of an outdated or defective  Prospectus  after the Company
      has notified such  Purchaser in writing that the Prospectus is outdated or
      defective  and  prior  to the  receipt  by such  Purchaser  of the  Advice
      contemplated  in Section  6.5.  The Company  shall  notify the  Purchasers
      promptly of the  institution,  threat or  assertion of any  Proceeding  of
      which  the  Company  is  aware  in   connection   with  the   transactions
      contemplated by this Agreement.

                  (b)  Indemnification  by  Purchasers.  Each  Purchaser  shall,
      severally and not jointly,  indemnify  and hold harmless the Company,  its
      directors,  officers,  agents and employees,  each Person who controls the
      Company  (within  the  meaning  of Section  15 of the  Securities  Act and
      Section 20 of the Exchange Act), and the  directors,  officers,  agents or
      employees of such controlling  Persons, to the fullest extent permitted by
      applicable  law, from and against all Losses (as  determined by a court of
      competent  jurisdiction  in a final  judgment  not  subject  to  appeal or
      review)  arising  solely out of any untrue  statement  of a material  fact
      contained in the Registration  Statement,  any Prospectus,  or any form of
      prospectus,  or in any amendment or supplement  thereto, or arising solely
      out of any omission of a material  fact  required to be stated  therein or
      necessary to make the statements therein (in the case of any Prospectus or
      form  of  prospectus  or   supplement   thereto,   in  the  light  of  the
      circumstances  under which they were made) not  misleading  to the extent,
      but  only to the  extent,  that  such  untrue  statement  or  omission  is
      contained in any  information so furnished in writing by such Purchaser to
      the Company  specifically for inclusion in such Registration  Statement or
      such  Prospectus  or to the  extent  that (i) such  untrue  statements  or
      omissions  are based  solely upon  information  regarding  such  Purchaser
      furnished in writing to the Company by such  Purchaser  expressly  for use
      therein,  or to the extent that such information relates to such Purchaser
      or  such  Purchaser's  proposed  method  of  distribution  of  Registrable
      Securities  and was  reviewed  and  expressly  approved in writing by such
      Purchaser expressly for use in the Registration Statement, such Prospectus
      or such form of Prospectus  or in any  amendment or supplement  thereto or
      (ii) in the case of an  occurrence  of an event of the type  specified  in
      Section  6.2(c)(v)-(vii),  the use by such  Purchaser  of an  outdated  or
      defective  Prospectus  after the Company has  notified  such  Purchaser in
      writing  that the  Prospectus  is outdated or  defective  and prior to the
      receipt by such Purchaser of the Advice contemplated in Section 6.5. In no
      event shall the liability of any selling Purchaser hereunder be greater in
      amount  than  the  dollar  amount  of the net  proceeds  received  by such
      Purchaser upon the sale of the Registrable  Securities giving rise to such
      indemnification obligation.


                                       27
<PAGE>

                  (c) Conduct of Indemnification  Proceedings. If any Proceeding
      shall be brought or  asserted  against any Person  entitled  to  indemnity
      hereunder (an "INDEMNIFIED  PARTY"), such Indemnified Party shall promptly
      notify the Person from whom indemnity is sought (the "INDEMNIFYING PARTY")
      in writing,  and the Indemnifying  Party shall assume the defense thereof,
      including  the  employment  of  counsel  reasonably  satisfactory  to  the
      Indemnified  Party and the  payment of all fees and  expenses  incurred in
      connection  with  defense  thereof;  provided,  that  the  failure  of any
      Indemnified  Party to give such notice shall not relieve the  Indemnifying
      Party of its obligations or liabilities pursuant to this Agreement, except
      (and only) to the extent that it shall be finally determined by a court of
      competent  jurisdiction  (which  determination is not subject to appeal or
      further  review) that such failure shall have  proximately  and materially
      adversely prejudiced the Indemnifying Party.

            An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense  thereof,  but the fees
and expenses of such counsel shall be at the expense of such  Indemnified  Party
or Parties unless:  (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses;  or (ii) the Indemnifying Party shall have failed promptly to
assume  the  defense  of  such  Proceeding  and  to  employ  counsel  reasonably
satisfactory  to such  Indemnified  Party in any such  Proceeding;  or (iii) the
named parties to any such Proceeding  (including any impleaded  parties) include
both such  Indemnified  Party and the  Indemnifying  Party, and such Indemnified
Party shall have been  advised by counsel  that a conflict of interest is likely
to exist if the same counsel were to represent  such  Indemnified  Party and the
Indemnifying  Party (in which  case,  if such  Indemnified  Party  notifies  the
Indemnifying  Party in writing that it elects to employ separate  counsel at the
expense of the Indemnifying  Party,  the  Indemnifying  Party shall not have the
right to assume the defense  thereof and such counsel shall be at the expense of
the  Indemnifying  Party).  The  Indemnifying  Party shall not be liable for any
settlement of any such Proceeding  effected without its written  consent,  which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party,  unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.


                                       28
<PAGE>

            All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent  incurred in connection  with  investigating  or
preparing  to defend  such  Proceeding  in a manner not  inconsistent  with this
Section) shall be paid to the Indemnified Party, as incurred, within ten Trading
Days of written notice thereof to the Indemnifying  Party (regardless of whether
it is  ultimately  determined  that an  Indemnified  Party  is not  entitled  to
indemnification  hereunder;  provided,  that the Indemnifying  Party may require
such  Indemnified  Party to undertake to reimburse all such fees and expenses to
the extent it is finally  judicially  determined that such Indemnified  Party is
not entitled to indemnification hereunder).

                  (d) Contribution. If a claim for indemnification under Section
      6.4(a) or (b) is  unavailable  to an  Indemnified  Party (by reasons other
      than the specified exclusions to indemnification),  then each Indemnifying
      Party, in lieu of indemnifying such Indemnified Party, shall contribute to
      the amount paid or payable by such  Indemnified  Party as a result of such
      Losses, in such proportion as is appropriate to reflect the relative fault
      of the  Indemnifying  Party and  Indemnified  Party in connection with the
      actions,  statements or omissions  that resulted in such Losses as well as
      any other relevant  equitable  considerations.  The relative fault of such
      Indemnifying  Party and Indemnified Party shall be determined by reference
      to,  among other  things,  whether any action in question,  including  any
      untrue or alleged  untrue  statement  of a material  fact or  omission  or
      alleged omission of a material fact, has been taken or made by, or relates
      to information  supplied by, such Indemnifying Party or Indemnified Party,
      and the parties'  relative  intent,  knowledge,  access to information and
      opportunity to correct or prevent such action,  statement or omission. The
      amount  paid or  payable  by a party as a result  of any  Losses  shall be
      deemed to include, subject to the limitations set forth in Section 6.4(c),
      any reasonable attorneys' or other reasonable fees or expenses incurred by
      such party in  connection  with any  Proceeding  to the extent  such party
      would  have  been   indemnified   for  such  fees  or   expenses   if  the
      indemnification  provided for in this Section was  available to such party
      in accordance with its terms.

            The parties  hereto agree that it would not be just and equitable if
contribution  pursuant  to this  Section  6.4(d)  were  determined  by pro  rata
allocation or by any other method of allocation  that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding  the provisions of this Section  6.4(d),  no Purchaser  shall be
required to contribute,  in the aggregate, any amount in excess of the amount by
which the  proceeds  actually  received by such  Purchaser  from the sale of the
Registrable  Securities  subject  to the  Proceeding  exceeds  the amount of any
damages that such Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue  statement or omission or alleged  omission.  No Person
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of
the Securities  Act) shall be entitled to  contribution  from any Person who was
not guilty of such fraudulent misrepresentation.


                                       29
<PAGE>

            The indemnity and contribution  agreements contained in this Section
are in addition to any liability that the  Indemnifying  Parties may have to the
Indemnified Parties.

      6.5  Dispositions.  Each  Purchaser  agrees  that it will  comply with the
prospectus  delivery  requirements  of the Securities Act as applicable to it in
connection  with sales of Registrable  Securities  pursuant to the  Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from the
Company  of the  occurrence  of any  event of the  kind  described  in  Sections
6.2(c)(v),  (vi) or (vii),  such Purchaser will discontinue  disposition of such
Registrable  Securities under the Registration  Statement until such Purchaser's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 6.2(j), or until it is advised in writing (the
"ADVICE")  by the  Company  that  the use of the  applicable  Prospectus  may be
resumed,  and,  in  either  case,  has  received  copies  of any  additional  or
supplemental  filings  that are  incorporated  or deemed to be  incorporated  by
reference in such Prospectus or Registration Statement.  The Company may provide
appropriate stop orders to enforce the provisions of this paragraph.

      6.6 No Piggyback on  Registrations.  Except as set forth on Schedule  6.6,
neither the Company nor any of its security  holders  (other than the Purchasers
in such capacity  pursuant hereto) may include  securities of the Company in the
Registration Statement other than the Registrable  Securities.  In addition, the
Company shall not after the date hereof enter into any  agreement  providing any
such right to any of its security holders.

      6.7  Piggy-Back  Registrations.  If at any time  during the  Effectiveness
Period  there is not an  effective  Registration  Statement  covering all of the
Registrable  Securities and the Company shall determine to prepare and file with
the SEC a registration  statement relating to an offering for its own account or
the account of others under the Securities Act of any of its equity  securities,
other  than on Form S-4 or Form S-8 (each as  promulgated  under the  Securities
Act) or their then equivalents relating to equity securities to be issued solely
in  connection  with  any  acquisition  of any  entity  or  business  or  equity
securities  issuable in connection  with stock option or other employee  benefit
plans,  then the Company  shall send to each  Purchaser  written  notice of such
determination and if, within fifteen days after receipt of such notice, any such
Purchaser  shall so  request  in  writing,  the  Company  shall  include in such
registration  statement  all or any  part of such  Registrable  Securities  such
Purchaser requests to be registered.

                                   ARTICLE VII
                                  MISCELLANEOUS

      7.1  Termination.  This Agreement may be terminated by the Lead Purchaser,
by written notice to the other parties,  if the Closing has not been consummated
by the fourth Trading Day following the date of this Agreement; provided that no
such termination will affect the right of any party to sue for any breach by the
other party (or parties).


                                       30
<PAGE>

      7.2 Fees and Expenses.  At the Closing, and only upon Closing, the Company
shall  pay the  reasonable  fees  and  expenses  of  legal  counsel  to the Lead
Purchaser  incurred in connection  with the  preparation  and negotiation of the
Transaction  Documents.  In lieu of the foregoing  payment,  Lead  Purchaser may
retain  such  amount at the  Closing or require  the  Company to pay such amount
directly  to Schulte  Roth & Zabel  LLP.  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 issuance of the Securities.

      7.3  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. At or
after the Closing, and without further  consideration,  the Company will execute
and  deliver to the  Purchasers  such  further  documents  as may be  reasonably
requested  in order to give  practical  effect to the  intention  of the parties
under  the  Transaction  Documents.  Notwithstanding  anything  to the  contrary
herein,  the Securities may be assigned to any Person in connection  with a bona
fide  margin  account or other  loan or  financing  arrangement  secured by such
Securities.

      7.4  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  receipt,  when sent by  facsimile  (provided
confirmation of transmission  is  mechanically or  electronically  generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
an overnight  courier service,  in each case properly  addressed to the party to
receive the same.  The addresses and facsimile  numbers for such  communications
shall be:

                  (a) If to the Company:

                          Cadence Resources Corporation
                          6 East Rose Street
                          P.O. Box 2056
                          Walla Walla, WA  99362
                          Facsimile No.: (509) 526-3492
                          Telephone No.: (509) 526-3491
                          Attn:  Howard Crosby

                      With a copy to:
                          Jenkens & Gilchrist Parker Chapin LLP
                          The Chrysler Building
                          New York, New York 10174
                          Facsimile No.: (212) 704-6288
                          Telephone No.: (212)704-6000
                          Attn: Henry I Rothman, Esq.


                                       31
<PAGE>

                      If to a Purchaser, to its address and facsimile number set
                      forth on the Schedule of  Purchasers,  with copies to such
                      Purchaser's  representatives  as set forth on the Schedule
                      of Purchasers,

                      With a copy (for informational purposes only) to:

                          Schulte Roth & Zabel LLP
                          919 Third Avenue
                          New York, New York  10022
                          Telephone: (212) 756-2000
                          Facsimile: (212) 593-5955
                          Attention: Peter Halasz, Esq.

or to such other address and/or facsimile number and/or to the attention of such
other Person as the  recipient  party has  specified by written  notice given to
each  other  party  five (5) days  prior to the  effectiveness  of such  change.
Written  confirmation  of receipt  (A) given by the  recipient  of such  notice,
consent,  waiver or other  communication,  (B)  mechanically  or  electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile  number  and an image of the first  page of such  transmission  or (C)
provided  by an  overnight  courier  service  shall be  rebuttable  evidence  of
personal  service,  receipt by facsimile  or receipt  from an overnight  courier
service in accordance with clause (i), (ii) or (iii) above, respectively.

      7.5 Amendments;  Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument  signed, in the case of an amendment,  by
the Company and each of the Purchasers or, in the case of a waiver, by the party
against whom enforcement of any such waiver 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 either party to exercise  any right  hereunder in
any manner impair the exercise of any such right. Notwithstanding the foregoing,
a waiver or consent  to depart  from the  provisions  hereof  with  respect to a
matter that relates exclusively to the rights of Purchasers under Article VI and
that does not directly or indirectly  affect the rights of other  Purchasers may
be given by Purchasers holding at least a majority of the Registrable Securities
to which such waiver or consent relates.

      7.6  Construction.  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. 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.

      7.7 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 the  Purchasers.  Any Purchaser may assign
its  rights  (except  those of  indemnification  or  reimbursement)  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  hereof  that  apply to the
"Purchasers." Notwithstanding anything to the contrary herein, Securities may be
assigned to any Person in  connection  with a bona fide margin  account or other
loan or financing arrangement secured by such Securities.


                                       32
<PAGE>

      7.8 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 that each Related Person is an intended third party
beneficiary of Section 4.8 and each Indemnified Party is an intended third party
beneficiary of Section 6.4 and (in each case) may enforce the provisions of such
Sections directly against the parties with obligations thereunder.

      7.9 Governing Law; Venue;  Waiver Of Jury Trail. all questions  concerning
the  construction,  validity,  enforcement and  interpretation of this Agreement
shall be governed by and construed  and enforced in accordance  with the laws of
the state of new york. THE COMPANY AND PURCHASERS Hereby  Irrevocably  Submit 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 BROUGHT BY
THE  COMPANY OR ANY  PURCHASER  Hereunder,  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
Waive, And Agree Not To Assert In Any Suit, Action Or ProceedinG  BROUGHT BY THE
COMPANY OR ANY  PURCHASER,  Any Claim That It Is Not  Personally  Subject To The
Jurisdiction  Of Any Such  Court,  OR That Such Suit,  Action Or  Proceeding  Is
Improper.  Each party Hereby  Irrevocably Waives Personal Service Of Process And
Consents  To Process  Being  Served In Any Such Suit,  Action Or  Proceeding  By
Mailing A Copy Thereof 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  Manner
Permitted By Law. The Company AND PURCHASERS  Hereby Waive All Rights To A Trial
By Jury.

      7.10 Survival. The representations,  warranties,  agreements and covenants
contained  herein shall survive the Closing and the delivery  and/or exercise of
the Securities, as applicable.

      7.11   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,  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  signature  page
were an original thereof.


                                       33
<PAGE>

      7.12  Severability.  If any  provision  of  this  Agreement  is held to be
invalid or unenforceable in any respect,  the validity and enforceability of the
remaining  terms  and  provisions  of  this  Agreement  shall  not in any way be
affected or impaired  thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor,  and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

      7.13  Rescission and  Withdrawal  Right.  Notwithstanding  anything to the
contrary  contained in (and  without  limiting  any similar  provisions  of) the
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.

      7.14   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, 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  and  customary  and  reasonable
indemnity,  if requested.  The  applicants  for a new  certificate or instrument
under  such  circumstances  shall  also  pay any  reasonable  third-party  costs
associated  with the  issuance of such  replacement  Securities.  The  Purchaser
agrees that the loss, mutilation, theft, or destruction of any certificate shall
not trigger the  occurrence  of an Event as defined in Section 6.1 (e)  sections
i-iv, unless such loss, mutilation,  theft, or destruction is directly caused by
the negligence of the Company. The phrase "directly"  specifically  excludes any
persons or parties who are agents of the Company.

      7.15  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 in the  foregoing  sentence and hereby agrees to waive in
any action for specific  performance  of any such  obligation the defense that a
remedy at law would be adequate.

      7.16 Payment Set Aside.  To the extent that the Company makes a payment or
payments to any Purchaser  hereunder or any Purchaser  enforces or exercises its
rights hereunder or thereunder,  and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are  subsequently  invalidated,
declared to be fraudulent or preferential,  set aside, recovered from, disgorged
by or are required to be refunded,  repaid or otherwise  restored to the Company
by 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.


                                       34
<PAGE>

      7.17  Adjustments  in Share Numbers and Prices.  In the event of any stock
split,  subdivision,  dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder thereof
to receive directly or indirectly shares of Common Stock),  combination or other
similar  recapitalization  or  event  occurring  after  the  date  hereof,  each
reference in any Transaction Document to a number of shares or a price per share
shall be amended to appropriately account for such event.

      7.18  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  of the  obligations  of any  other
Purchaser  under any  Transaction  Document.  The decision of each  Purchaser to
purchase  the  Securities  pursuant  to this  Agreement  has  been  made by such
Purchaser  independently  of  any  other  Purchaser  and  independently  of  any
information,  materials,  statements  or opinions as to the  business,  affairs,
operations, assets, properties,  liabilities,  results of operations,  condition
(financial or otherwise) or prospects of the Company or of the Subsidiary  which
may have been made or given by any other  Purchaser  or by any agent or employee
of any other Purchaser, and no Purchaser or any of its agents or employees shall
have any liability to any other  Purchaser (or any other Person)  relating to or
arising from any such information,  materials,  statements or opinions.  Nothing
contained  herein or in any  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  Document.  Each Purchaser  acknowledges that no other Purchaser has
acted as agent for such  Purchaser  in  connection  with  making its  investment
hereunder and that no other  Purchaser will be acting as agent of such Purchaser
in connection with monitoring its investment hereunder.  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.

                           [Signature pages to follow]


                                       35
<PAGE>

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

                                    CADENCE RESOURCES CORPORATION

                                    By:     ____________________________________
                                    Name:   John P. Ryan
                                    Title:  Vice President

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES FOR PURCHASERS FOLLOW]
<PAGE>

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

                                    RUBICON MASTER FUND

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

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

                                    Crestview Capital Master, LLC

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

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

                                    Union Spring Fund Ltd.

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

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

                                    Nathan A. Low Family Trust dated 4/12/96

                                    By:     ____________________________________
                                    Name:

<PAGE>

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

                                    Bear Stearns as Custodian
                                    For Nathan A. Low Roth IRA

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

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

                                    Ruth Low

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

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

                                    Zinc Partners, LP

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

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

                                    Zinc Partners Offshore, Ltd.

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

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

                                    Cordillera Fund L.P.

                                    By:     ____________________________________
                                    Name:   James P. Andrew
                                    Title:  Co-CEO of ANdrew Carter Capital,
                                            Inc., the General Partner of ACCF
                                            GenPar, L.P., the General Partner of
                                            the Cordillera Fund L.P.

<PAGE>

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

                                    Enable Growth Partners LP

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

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

                                    Michael Weiss

                                    By:     ____________________________________
                                            Name: Michael Weiss

<PAGE>

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

                                    Don Sanders

                                    By:     ____________________________________
                                            Name:    Don Sanders

<PAGE>

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

                                    Sanders Opportunity Fund (INST) LP

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

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

                                    Sanders Opportunity Fund LP

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

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

                                    Sanders 1998 Children's Trust

                                    By:     ____________________________________
                                    Name:
                                    Title:

<PAGE>

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

        Don Weir AND JULIE E. WEIR

        By:     ____________________        By:_____________________
                Name:    Don Weir               Name: Julie E. Weir

<PAGE>

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

                                    Ben Morris

                                    By:     ____________________________________
                                            Name:    Ben Morris

<PAGE>

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

                                    George K. Ball

                                    By:     ____________________________________
                                    Name:   George K. Ball

<PAGE>

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

                                    Fredrick Saalwachter

                                    By:     ____________________________________
                                    Name:   Fredrick Saalwachter

<PAGE>

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

       John Malanga AND JODI MALANGA

       By:     ____________________        By:  _____________________
               Name:    John Malanga            Name: Jodi Malanga

<PAGE>

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

                                    Bruce McMaken

                                    By:     ____________________________________
                                    Name:   Bruce McMaken

<PAGE>

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

                                    Mike Chadwick

                                    By:     ____________________________________
                                    Name:   Mike Chadwick

<PAGE>

                             SCHEDULE OF PURCHASERS

<TABLE>
<CAPTION>
     (1)                             (2)                    (3)           (4)        (5)                      (6)
                                                          NUMBER OF     NUMBER                               LEGAL
                                                          SHARES OF       OF                            REPRESENTATIVE'S
                       ADDRESS AND                       NEW COMMON     WARRANT    PURCHASE               ADDRESS AND
PURCHASER              FAX NUMBER                          STOCK        SHARES       PRICE                 FAX NUMBER
------------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>                                 <C>         <C>          <C>           <C>
                       c/o Rubicon Fund Management LLP
 Rubicon Master        103 Mount St.                                                              Schulte Roth & Zabel LLP
 Fund                  London W1K2TJ                                                              919 Third Avenue
                       United Kingdom                                                             New York, New York  10022
                       Facsimile No.:  +44 207-074 4280                                           Attention:  Peter Halasz, Esq.
                       Telephone No.:  +44 207 074 4299                                           Facsimile No.:  (212) 593-5955
                       Attn: William Callanan              2,800,000   8,000,000    $3,500,000    Telephone No.:  (212) 756-2238
                       95 RevereDrive

 Crestview             Suite A
 Capital Master,       Northbrook, Illinois  60062
 LLC                   Facsimile No.:  (847) 559-5807
                       Telephone No.:  (847) 418-8302
                       Attn: Stuart Flink                  1,840,000   1,840,000    $2,300,000    N/A

 Union Spring          c/o Dundee Leeds Management                                                Mayer, Brown, Rowe & Maw LLP
 Fund Ltd.             129 Front Street                                                           190 South LaSalle Street
                       Services Ltd.                                                              Chicago, Illinois 60603
                       Hamilton HM 12, Bermuda                                                    Attention: Deborah A. Monson, Esq.
                       Attention: Robin J. Bedford                                                Facsimile No.:  312-706-9103
                       Facsimile No.:  441-292-2239                                               Telephone No.:  312-701-8356
                       Telephone No.:  441-495-8617        560,000     1,600,000    $700,000

 Nathan A. Low         c/o Nathan A. Low
 Family Trust          Sunrise Securities Corp.
 dated 4/12/96         641 Lexington Avenue
                       25th Floor
                       New York, NY  10022
                       Facsimile No.:  (212) 750-7277
                       Telephone No.:  (212) 421-1616
                                       Ext. 135            360,000     360,000      $450,000*     N/A

 Bear Stearns as       c/o Nathan A. Low
 Custodian For         Sunrise Securities Corp.
 Nathan A. Low         641 Lexington Avenue
 Roth IRA              25th Floor
                       New York, NY  10022
                       Facsimile No.:  (212) 750-7277
                       Telephone No.:  (212) 421-1616
                                       Ext. 135            200,000     200,000      $250,000*     N/A

 Ruth Low              c/o Nathan A. Low
                       Sunrise Securities Corp.
                       641 Lexington Avenue
                       25th Floor
                       New York, NY  10022
                       Facsimile No.:  (212) 750-7277
                       Telephone No.:  (212) 421-1616
                                       Ext. 135            240,000     240,000      $300,000*     N/A
</TABLE>

<PAGE>

<TABLE>
<S>                    <C>                                 <C>         <C>          <C>           <C>
 Zinc Partners LP      c/o Zinc Capital Management LLC
                       711 Fifth Avenue, 5th floor
                       New York, NY  10022
                       Facsimile No.:  (212) 813-2825
                       Telephone No.:  (212) 813-2820      88,256      88,256       $110,320      N/A

 Zinc Partners         c/o Zinc Capital Management LLC
 Offshore, Ltd.        711 Fifth Avenue, 5th floor
                       New York, NY  10022
                       Facsimile No.:  (212) 813-2825
                       Telephone No.:  (212) 813-2820      231,744     231,744      $289,680      N/A

 Cordillera Fund       C/o Andrew Carter Capital, Inc.
 L.P.                  8201 Preston Road
                       Suite 400
                       Dallas, TX 75225
                       Facsimile No.:  214-722-1360
                       Telephone No.:  214-969-5700
                        Attn: James Andrew                 400,000     400,000      $500,000      N/A

 Enable Growth         One Ferry Building, Suite 255
 Partners LP           San Francisco, CA 94111
                       Facsimile No.:  415-677-1580
                       Telephone No.:  415-677-1578
                       Attn: Brendan O'Neil                240,000     240,000      $300,000      N/A

 Michael Weiss         25 Briarwood Land
                       Lawrence, NY  11559
                       Telephone No.:  212-838-7200        50,000      50,000       $62,500       N/A

 Don Sanders           600 Travis
                       Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      160,000     160,000      $200,000      N/A

 Sanders               600 Travis
 Opportunity Fund      Suite 3100
 (Inst) LP             Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      246,823     246,823      $308,529      N/A

 Sanders               600 Travis
 Opportunity Fund      Suite 3100
 LP                    Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      77,177      77,177       $96,471       N/A

 Sanders 1998          600 Travis
 Children's Trust      Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      120,000     120,000      $150,000      N/A

 Don Weir and          600 Travis
 Julie E. Weir         Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      80,000      80,000       $100,000      N/A
</TABLE>

<PAGE>

<TABLE>
<S>                    <C>                                 <C>         <C>          <C>           <C>
 Ben T. Morris         600 Travis
                       Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      20,000      20,000       $25,000       N/A

 George K. Ball        600 Travis
                       Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      20,000      20,000       $25,000       N/A

 Fredrick              600 Travis
 Saalwachter           Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      20,000      20,000       $25,000       N/A

 John Malanga and      600 Travis
 Jodi Malanga          Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      16,000      16,000       $20,000       N/A

 Bruce McMaken         600 Travis
                       Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      20,000      20,000       $25,000       N/A


 Mike Chadwick         600 Travis
                       Suite 3100
                       Houston, TX 77002
                       Facsimile No.:  713-250-4298
                       Telephone No.:  713-250-4215
                       Attn: Don Weir                      20,000      20,000       $25,000       N/A
====================================================================================================================================
TOTAL                                                                            $2,262,500

</TABLE>

* Purchase price paid through debt conversion.

<PAGE>

Exhibits:
A      Form of Warrant
B      Form of Transfer Agent Instructions
C      Form of Opinion of Company Counsel
D      Company Officer's Certificate
E      Aurora Officer's Certificate
F      Plan of Distribution