EXHIBIT 4.1
                          SECURITIES PURCHASE AGREEMENT


                          Securities Purchase Agreement

         This Securities  Purchase  Agreement (this  "Agreement") is dated as of
March 5, 2004, among Usurf America,  Inc., a Nevada corporation (the "Company"),
and the purchasers identified on the signature pages hereto (each, including its
successors and assigns, a "Purchaser" and collectively the "Purchasers").

         WHEREAS,  subject  to the  terms  and  conditions  set  forth  in  this
Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act") and Rule 506 promulgated thereunder,  the Company desires
to issue  and sell to each  Purchaser,  and each  Purchaser,  severally  and not
jointly, desires to purchase from the Company, securities of the Company as more
fully described in this Agreement.

         NOW,  THEREFORE,  IN CONSIDERATION of the mutual covenants contained in
this Agreement,  and for other good and valuable  consideration  the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:

                                  I. ARTICLE I

                                   DEFINITIONS

         A. 1.1 Definitions.  In addition to the terms defined elsewhere in this
Agreement:  (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Debentures (as defined herein),  and (b) the
following terms have the meanings indicated in this Section 1.1:

         "Action"  shall  have the  meaning  ascribed  to such  term in  Section
3.1(j).

                  "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 under the Securities Act.

                  B.  "Capital  Shares" means the Common Stock and any shares of
         any other class of common stock  whether now or  hereafter  authorized,
         having the right to  participate  in the  distribution  of earnings and
         assets of the Company.

                  C. "Capital Shares  Equivalents" means any securities,  rights
         or obligations  that are convertible  into or exchangeable  for or give
         any right to subscribe  for or purchase,  directly or  indirectly,  any
         Capital  Shares or any  warrants,  options or other rights to subscribe
         for or purchase,  directly or  indirectly,  Capital  Shares or any such
         convertible or exchangeable securities.

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

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

                  "Commission" means the Securities and Exchange Commission.

                  "Common  Stock"  means the common  stock of the  Company,  par
         value  $0.0001  per share,  and any  securities  into which such common
         stock shall hereinafter have been reclassified into.


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                  "Company Counsel" means Christopher K. Brenner, Esq.

                  "Crestview"  shall have the  meaning  ascribed to such term in
         Section 5.2.

                  "Debentures"  means,  the Secured  Convertible  Debentures due
         eighteen  months from their date of issuance,  issued by the Company to
         the Purchasers hereunder, in the form of Exhibit A.

                  "Disclosure Schedules" shall have the meaning ascribed to such
         term in Section 3.1 hereof.

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

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

                  "Exempt  Securities"  shall have the meaning  ascribed to such
         term in Section 4.13.

                  "FW" means Feldman Weinstein LLP with offices at 420 Lexington
         Avenue, Suite 2620, New York, New York 10170-0002.

                  "GAAP" shall have the meaning ascribed to such term in Section
         3.1(h) hereof.

                  "Liens"  shall  have  the  meaning  ascribed  to such  term in
         Section 3.1(a) hereof.

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

                  "Market   Price"  shall  mean  the  average  of  the  5  VWAPs
         immediately prior to the date in question.

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

                  "Person"  means an  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 other entity of any kind.

                  "Principal Market" means initially the American Stock Exchange
         and shall also include the OTC Bulletin Board, NASDAQ Small-Cap Market,
         New York Stock Exchange, or the NASDAQ National Market, whichever is at
         the time the principal trading exchange or market for the Common Stock,
         based upon share volume.

                  "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.

                  "Registration  Rights Agreement" means the Registration Rights
         Agreement, dated the date hereof, among the Company and the Purchasers,
         in the form of Exhibit B attached hereto.

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

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


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                  "Required   Minimum"  means,  as  of  any  date,  the  maximum
         aggregate  number of shares of Common Stock then issued or  potentially
         issuable in the future pursuant to the Transaction Documents, including
         any Underlying  Shares  issuable upon exercise or conversion in full of
         all Warrants and Debentures, ignoring any conversion or exercise limits
         set forth  therein,  and assuming that the Set Price is at all times on
         and  after the date of  determination  75% of the then Set Price on the
         Trading Day immediately prior to the date of determination.

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

                  "SEC Reports" shall have the meaning  ascribed to such term in
         Section 3.1(h) hereof.

                  "Securities"  means  the  Debentures,  the  Warrants  and  the
         Underlying Shares.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Security  Agreement" means the Security Agreement,  dated the
         date  hereof,  among the  Company  and the  Purchasers,  in the form of
         Exhibit F attached hereto.

                  "Security Documents" shall mean the Security Agreement and any
         other  documents and filing  required  thereunder in order to grant the
         Purchasers a first priority  security  interest in all of the assets of
         the Company, including all UCC-1 filing receipts.

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

                  "Shareholder  Approval" means such approval as may be required
         by the applicable rules and regulations of the Principal Market (or any
         successor  entity) from the shareholders of the Company with respect to
         the transactions  contemplated by the Transaction Documents,  including
         the issuance of all of the Underlying Shares and shares of Common Stock
         issuable  upon  exercise  of the  Warrants  in  excess  of 19.9% of the
         Company's issued and outstanding Common Stock on the Closing Date.

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

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

                  "Subsidiary"  means any subsidiary of the Company as set forth
         on Schedule 3.1(a) attached hereto.

                  "Trading Day" means any day during which the Principal  Market
         shall be open for business.

                  "Transaction Documents" means this Agreement,  the Debentures,
         the Security Agreement, the Warrants, the Registration Rights Agreement
         and any other  documents or agreements  executed in connection with the
         transactions contemplated hereunder.

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


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

                  "Warrants"  means   collectively  the  Common  Stock  purchase
         warrants,  in the form of Exhibit C delivered to the  Purchasers at the
         Closing in accordance with Section 2.2 hereof.

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

                                 II. ARTICLE II

                                PURCHASE AND SALE

         a. 2.1 Closing.  On the Closing Date, upon the terms and subject to the
conditions set forth herein,  concurrent with the execution and delivery of this
Agreement by the parties hereto,  the Company agrees to sell, and each Purchaser
agrees to purchase in the aggregate, severally and not jointly, up to $2,850,000
principal amount of the Debentures.  Each Purchaser shall deliver to the Company
via wire  transfer or a certified  check  immediately  available  funds equal to
their Subscription  Amount and the Company shall deliver to each Purchaser their
respective  Debenture and Warrants as determined  pursuant to Section 2.2(a)(ii)
and the other  items set forth in Section  2.2  issuable  at the  Closing.  Upon
satisfaction of the conditions set forth in Section 2.2, the Closing shall occur
at the  offices of FW, or such other  location  as the  parties  shall  mutually
agree.

         B. 2.2 Conditions to Closing.

                  1. (a) At or prior to the Closing,  unless otherwise indicated
         below,  the  Company  shall  deliver or cause to be  delivered  to each
         Purchaser the following:

                  a.  (i) a  Debenture  with a  principal  amount  equal to such
         Purchaser's  Subscription  Amount,  registered  in  the  name  of  such
         Purchaser;

                  (ii) a Warrant  registered  in the name of such  Purchaser  to
         purchase up to a number of shares of Common Stock equal to 125% of such
         Purchaser's Subscription Amount divided by the Market Price on the date
         hereof,  with a term of 5 years and an  exercise  price equal to $0.25,
         subject to adjustment therein;

                  (iii) the legal  opinion  of Company  Counsel,  in the form of
         Exhibit D attached hereto, addressed to the Purchasers;

                  (iv) the  Registration  Rights  Agreement duly executed by the
         Company in the form of Exhibit B attached hereto;


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                  (v) the  written  voting  agreement,  in the form of Exhibit E
         attached  hereto,  of all of the officers,  directors and  shareholders
         holding  more than 10% of the issued and  outstanding  shares of Common
         Stock on the date hereof to vote all Common Stock owned by each of such
         officers,  directors  and  shareholders  as of the record  date for the
         annual meeting of  shareholders  of the Company in favor of Shareholder
         Approval amounting to, in the aggregate, at least 10% of the issued and
         outstanding Common Stock;

                  (vi) the Security Agreement along with all Security Documents;
         and

                  (vii) this Agreement, duly executed by the Company.

                  2.  (b) At or  prior  to the  Closing,  each  Purchaser  shall
         deliver or cause to be delivered to the Company the following:

                  (i) such Purchaser's Subscription Amount;

                  (ii) this Agreement, duly executed by such Purchaser;

                  (iii) the Security Agreement, duly executed by such Purchaser;
         and

                  (iv) the  Registration  Rights Agreement duly executed by such
         Purchaser.

         3.  (c)  All  representations  and  warranties  of  the  other  parties
contained  herein  shall  remain true and correct as of the Closing Date and all
covenants  of the other  party  shall have been  performed  if due prior to such
date.

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

                                III. ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

         A. 3.1  Representations  and  Warranties of the Company.  Except as set
forth under the corresponding  section of the disclosure  schedules delivered to
the  Purchasers   concurrently  herewith  (the  "Disclosure   Schedules")  which
Disclosure Schedules shall be deemed a part hereof, the Company hereby makes the
representations and warranties set forth below to each Purchaser.

                  1.  (a)   Subsidiaries.   All  of  the  direct  and   indirect
         subsidiaries  of the  Company  are set forth on  Schedule  3.1(a).  The
         Company owns, directly or indirectly, all of the capital stock or other
         equity interests of each Subsidiary free and clear of any lien, charge,
         security  interest,  encumbrance,  right  of  first  refusal  or  other
         restriction (collectively, "Liens"), and all the issued and outstanding
         shares of capital stock of each  Subsidiary  are validly issued and are
         fully paid,  non-assessable  and free of preemptive and similar rights.
         If the Company has no subsidiaries,  then references in the Transaction
         Documents to the Subsidiaries shall be disregarded.


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                  2. (b) Organization and Qualification. Each of the Company and
         the Subsidiaries is an entity duly incorporated or otherwise organized,
         validly   existing  and  in  good  standing   under  the  laws  of  the
         jurisdiction of its incorporation or organization (as applicable), with
         the  requisite  power and authority to own and use its  properties  and
         assets and to carry on its business as currently conducted. Neither the
         Company nor any  Subsidiary is in violation of any of the provisions of
         its  respective  certificate  or articles of  incorporation,  bylaws or
         other organizational or charter documents.  Each of the Company and the
         Subsidiaries  is duly  qualified to 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 or
         be reasonably  likely to 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)  adversely  impair the Company's  ability to perform
         fully on a timely basis its  obligations  under any of the  Transaction
         Documents (any of (i), (ii) or (iii), a "Material Adverse Effect").

                  3.  (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 or  thereunder.  The
         execution  and  delivery of each of the  Transaction  Documents  by the
         Company and the  consummation  by it of the  transactions  contemplated
         hereby or 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  other than  Required  Approvals.  Each of the  Transaction
         Documents  has been (or upon  delivery  will be) duly  executed  by the
         Company and, 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, subject to applicable
         bankruptcy,   insolvency,   fraudulent   conveyance,    reorganization,
         moratorium  and similar laws affecting  creditors'  rights and remedies
         generally and general principles of equity. Neither the Company nor any
         Subsidiary is in violation of any of the  provisions of its  respective
         certificate   or   articles   of   incorporation,   by-laws   or  other
         organizational or charter documents.

                  4. (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  thereby do not and will not:
         (i)  conflict  with or violate any  provision  of the  Company's or any
         Subsidiary's certificate or articles of incorporation,  bylaws or other
         organizational or charter  documents,  or (ii) subject to obtaining the
         Required Approvals, 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,  credit  facility,  debt or other  instrument
         (evidencing  a  Company  or  Subsidiary  debt or  otherwise)  or  other
         understanding  to which the Company or any  Subsidiary is a party or by
         which any property or asset of the Company or any  Subsidiary  is bound
         or  affected,  or  (iii)  result,  in a  violation  of any  law,  rule,
         regulation, order, judgment, injunction, decree or other restriction of
         any  court  or  governmental  authority  to  which  the  Company  or  a
         Subsidiary is subject  (including federal and state securities laws and
         regulations),  or by which any  property  or asset of the  Company or a
         Subsidiary is bound or affected;  except in the case of each of clauses
         (ii) and (iii),  such as could not,  individually  or in the aggregate,
         have or result in a Material Adverse Effect.

                  5. (e) Filings,  Consents and  Approvals.  Neither the Company
         nor  any  Subsidiary  is  required  to  obtain  any  consent,   waiver,
         authorization  or order of,  give any  notice to, or make any filing or
         registration  with, any court or other federal,  state,  local or other
         governmental   authority  or  other  Person  in  connection   with  the
         execution,  delivery and  performance by the Company of the Transaction
         Documents,  other than (i) the filings required under Section 4.7, (ii)
         the filing with the Commission of the Registration Statement, (iii) the


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         notice and/or  application(s)  to each applicable  Principal Market for
         the issuance and sale of the Debentures and Warrants and the listing of
         the  Underlying  Shares  for  trading  thereon  in the time and  manner
         required  thereby,  (iv) the filing of Form D with the  Commission  and
         applicable Blue Sky filings and (v) Shareholder Approval (collectively,
         the "Required Approvals").

                  6. (f) Issuance of the  Securities.  The  Securities  are duly
         authorized  and,  when  issued  and  paid  for in  accordance  with the
         applicable  Transaction  Documents,  will be duly and  validly  issued,
         fully paid and non-assessable, free and clear of all Liens. The Company
         has reserved from its duly authorized  capital stock a number of shares
         of Common Stock for issuance of the Underlying Shares at least equal to
         the Required  Minimum on the date  hereof.  The Company has not, and to
         the  knowledge  of the  Company,  no Affiliate of the Company has sold,
         offered for sale or solicited offers to buy or otherwise  negotiated 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 Principal Market.

                  7. (g)  Capitalization.  The  number of shares and type of all
         authorized,  issued and outstanding capital stock of the Company is set
         forth in the Disclosure Schedules attached hereto. No securities of the
         Company are entitled to preemptive or similar rights, and no Person has
         any right of first refusal,  preemptive right,  right of participation,
         or any similar right to participate in the transactions contemplated by
         the Transaction Documents.  Except as a result of the purchase and sale
         of the Securities,  there are no outstanding options,  warrants, script
         rights  to  subscribe  to,  calls  or   commitments  of  any  character
         whatsoever   relating  to,  or   securities,   rights  or   obligations
         convertible into or 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.  The  issuance  and sale of the  Securities  will not
         obligate  the  Company  to  issue  shares  of  Common  Stock  or  other
         securities  to any  Person  (other  than the  Purchasers)  and will not
         result in a right of any  holder of  Company  securities  to adjust the
         exercise,  conversion,  exchange or reset price under such  securities.
         All of the  outstanding  shares of  capital  stock of the  Company  are
         validly  issued,  fully  paid and  nonassessable,  have been  issued in
         compliance with all federal and state securities laws, and none of such
         outstanding  shares was issued in violation of any preemptive rights or
         similar  rights to  subscribe  for or purchase  securities.  No further
         approval or authorization of any stockholder, the Board of Directors of
         the  Company or others is  required  for the  issuance  and sale of the
         Shares.  Except  as  disclosed  in  the  SEC  Reports,   there  are  no
         stockholders agreements,  voting agreements or other similar agreements
         with respect to the  Company's  capital stock to which the Company is a
         party or, to the knowledge of the Company,  between or among any of the
         Company's stockholders.

                  8. (h) SEC  Reports;  Financial  Statements.  The  Company has
         filed all reports  required to be filed by it under 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") 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  identified  and made available to the Purchasers a copy of
         all SEC Reports filed within the 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  Commission  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 light of the circumstances under which they were
         made, not misleading.  The financial statements of the Company included
         in the SEC Reports  comply in all  material  respects  with  applicable
         accounting requirements and the rules and regulations of the Commission
         with respect thereto as in effect at the time of filing. Such financial
         statements  have been prepared in accordance  with  generally  accepted
         accounting  principles applied on a consistent basis during the periods


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         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 year-end audit
         adjustments.

                  9. (i) 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  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  Commission,  (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 or similar plans.

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

                  11. (k)  Compliance.  Neither the Company nor any  Subsidiary:
         (i) is in default  under or in  violation of (and no event has occurred
         that has not been  waived  that,  with notice or lapse of time or both,
         would result in a default by the Company or any Subsidiary  under), nor
         has the Company or any Subsidiary received notice of a claim that it is
         in default under or that it is in violation of, any indenture,  loan or
         credit  agreement or any other agreement or instrument to which it is a
         party or by which it or any of its  properties is bound (whether or not
         such default or violation has been waived), (ii) is in violation of any
         order of any court, arbitrator or governmental body, or (iii) is or has
         been  in  violation  of  any  statute,   rule  or   regulation  of  any
         governmental authority,  except in each case as could not, individually
         or in the aggregate, have or result in a Material Adverse Effect.

                  12. (l) Labor Relations.  No material labor dispute exists or,
         to the knowledge of the Company, is imminent with respect to any of the
         employees of the Company.

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


<PAGE>


                  14. (n) Title to Assets. The Company and the Subsidiaries have
         good and  marketable  title in fee simple to all real property owned by
         them  that  is  material  to  the  business  of  the  Company  and  the
         Subsidiaries  and good and  marketable  title in all personal  property
         owned by them that is material  to the  business of the Company and the
         Subsidiaries,  in each  case free and clear of all  Liens,  except  for
         Liens as do not materially affect the value of such property and do not
         materially  interfere with the use made and proposed to be made of such
         property by the Company and the  Subsidiaries.  Any real  property  and
         facilities  held under lease by the Company  and the  Subsidiaries  are
         held  under  valid,  subsisting  and  enforceable  leases  of which the
         Company and the Subsidiaries are in compliance.

                  15.  (o)   Patents  and   Trademarks.   The  Company  and  the
         Subsidiaries  have,  or  have  rights  to  use,  all  patents,   patent
         applications,  trademarks, trademark applications, service marks, trade
         names,  copyrights,  licenses  and other  similar  rights  necessary or
         material for use in  connection  with their  respective  businesses  as
         described  in the SEC  Reports  and which the  failure to so have could
         have  a  Material  Adverse  Effect  (collectively,   the  "Intellectual
         Property Rights").  Neither the Company nor any Subsidiary has received
         a 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.

                  16.  (p)  Insurance.  The  Company  and the  Subsidiaries  are
         insured by insurers of recognized financial responsibility against such
         losses and risks and in such  amounts as are prudent and  customary  in
         the businesses in which the Company and the  Subsidiaries  are engaged.
         To the  best of  Company's  knowledge,  such  insurance  contracts  and
         policies  are  accurate  and  complete.  Neither  the  Company  nor any
         Subsidiary  has any  reason to believe it will not be able to renew its
         existing  insurance  coverage as and when such  coverage  expires or to
         obtain  similar  coverage from similar  insurers as may be necessary to
         continue its business without a significant increase in cost.

                  17. (q) Transactions With Affiliates and Employees.  Except as
         required to be set forth in the SEC  Reports,  none of the  officers or
         directors of the Company and, to the knowledge of the Company,  none of
         the  employees of the Company is  presently a party to any  transaction
         with  the  Company  or any  Subsidiary  (other  than  for  services  as
         employees,  officers and directors),  including any contract, agreement
         or other arrangement providing for the furnishing of services to or by,
         providing  for  rental  of real or  personal  property  to or from,  or
         otherwise  requiring payments to or from any officer,  director or such
         employee or, to the  knowledge of the Company,  any entity in which any
         officer,  director,  or any such employee has a substantial interest or
         is an officer, director, trustee or partner.

                  18. (r)  Internal  Accounting  Controls.  The  Company and the
         Subsidiaries   maintain  a  system  of  internal   accounting  controls
         sufficient to provide  reasonable  assurance that (i)  transactions are
         executed  in   accordance   with   management's   general  or  specific
         authorizations,  (ii)  transactions are recorded as necessary to permit
         preparation  of financial  statements  in  conformity  with GAAP and to
         maintain asset accountability, (iii) access to assets is permitted only
         in accordance with management's general or specific authorization,  and
         (iv) the  recorded  accountability  for  assets  is  compared  with the
         existing assets at reasonable intervals and appropriate action is taken
         with respect to any differences. The Company has established disclosure
         controls  and  procedures  (as defined in Exchange Act Rules 13a-14 and
         15d-14) for the Company and  designed  such  disclosures  controls  and
         procedures to ensure that material information relating to the Company,
         including its Subsidiaries, is made known to the certifying officers by
         others within those entities,  particularly  during the period in which
         the Company's Form 10-K or 10-Q, as the case may be, is being prepared.
         The Company's  certifying  officers have evaluated the effectiveness of
         the Company's  disclosure  controls and procedures as of the end of the
         period ending  September 30, 2003 (such date, the  "Evaluation  Date").
         The Company  presented in the Form 10-Q for the quarter ended September
         30,  2003  the  conclusions  of  the  certifying   officers  about  the
         effectiveness of the disclosure  controls and procedures based on their
         evaluations as of the Evaluation Date. Since the Evaluation Date, there
         have been no significant changes in the Company's internal control over
         financial reporting or, the Company's knowledge,  in other factors that
         could   significantly   affect  the  Company's  internal  control  over
         financial reporting.


<PAGE>


                  19.  (s)   Solvency/Indebtedness.   Based  on  the   financial
         condition of the Company as of the Closing Date:  (i) the fair saleable
         value of the Company's  assets exceeds the amount that will be required
         to be paid on or in respect of the Company's  existing  debts and other
         liabilities  (including known  contingent  liabilities) as they mature;
         (ii) the Company's assets do not constitute  unreasonably small capital
         to carry on its business 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).  The  Company  has no
         knowledge of any facts or  circumstances  which lead it to believe that
         it will file for  reorganization or liquidation under the bankruptcy or
         reorganization  laws of any  jurisdiction  within  one  year  from  the
         Closing  Date.  The SEC Reports  set forth as of the dates  thereof all
         outstanding  secured and unsecured  Indebtedness  of the Company or any
         Subsidiary, or for which the Company or any Subsidiary has commitments.
         For the purposes of this Agreement,  "Indebtedness"  shall mean (a) any
         liabilities  for  borrowed  money or amounts  owed in excess of $50,000
         (other than trade accounts  payable  incurred in the ordinary course of
         business),  (b)  all  guaranties,  endorsements  and  other  contingent
         obligations,  whether or not the same are or should be reflected in the
         Company's  balance  sheet or the notes  thereto,  except  guaranties by
         endorsement of negotiable  instruments for deposit or collection in the
         ordinary  course of  business,  and (c) the present  value of any lease
         payments  in  excess  of  $50,000  due  under  leases  required  to  be
         capitalized  in  accordance  with GAAP.  Neither  the  Company  nor any
         Subsidiary is in default with respect to any Indebtedness.

                  20.  (t)  Certain  Fees.  No  brokerage  or  finder's  fees or
         commissions  are or will  be  payable  by the  Company  to any  broker,
         financial advisor or consultant,  finder,  placement agent,  investment
         banker,   bank  or  other  Person  with  respect  to  the  transactions
         contemplated  by this  Agreement,  and the  Company  has not  taken any
         action that would cause any Purchaser to be liable for any such fees or
         commissions.  The  Company  agrees  that the  Purchasers  shall have no
         obligation  with respect to any fees or with respect to any claims made
         by or on behalf of any Person for fees of the type contemplated by this
         Section with the transactions contemplated by this Agreement.

                  21.  (u)  Private  Placement.  Assuming  the  accuracy  of the
         representations  and warranties of the Purchasers set forth in Sections
         3.2(b)-(f),  the  offer,  issuance  and sale of the  Securities  to the
         Purchasers  as  contemplated  hereby are exempt  from the  registration
         requirements  of the  Securities  Act.  The  issuance  and  sale of the
         Securities  hereunder does not contravene the rules and  regulations of
         the Principal Market,  except that Shareholder Approval is required for
         the  Company to issue in excess of  27,876,847  shares of Common  Stock
         under the Transaction Documents.

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


<PAGE>


                  23. (w)  Registration  Rights.  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 Commission or any other  governmental  authority that have not
         been satisfied.

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

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

                  26. (z) 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 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 with respect to the  representations  and  warranties  made
         herein are true and correct  with respect to such  representations  and
         warranties  and do not contain any untrue  statement of a material fact
         or omit to  state  any  material  fact  necessary  in order to make the
         statements made therein, in light of the circumstances under which they
         were made, not misleading.  The Company acknowledges and agrees that no
         Purchaser  makes or has made any  representations  or  warranties  with
         respect  to the  transactions  contemplated  hereby  other  than  those
         specifically set forth in Section 3.2 hereof.

                  27. (aa) Tax Status.  The Company and each of its Subsidiaries
         has made or filed all federal,  state and foreign  income and all other
         tax returns,  reports and declarations  required by any jurisdiction to
         which it is subject (unless and only to the extent that the Company and
         each  of  its  Subsidiaries  has  set  aside  on its  books  provisions
         reasonably adequate for the payment of all unpaid and unreported taxes)
         and has paid all taxes and other  governmental  assessments and charges
         that are  material  in amount,  shown or  determined  to be due on such
         returns, reports and declarations, except those being contested in good
         faith and has set aside on its books provisions reasonably adequate for
         the payment of all taxes for periods subsequent to the periods to which
         such returns,  reports or declarations apply. There are no unpaid taxes
         in any material amount claimed to be due by the taxing authority of any
         jurisdiction,  and the officers of the Company know of no basis for any
         such claim.  The Company has not  executed a waiver with respect to the
         statute of limitations  relating to the assessment or collection of any
         foreign,  federal,  statue  or local  tax.  None of the  Company's  tax
         returns is presently being audited by any taxing authority.

                  28.  (bb)  Acknowledgment  Regarding  Purchasers'  Purchase of
         Securities. The Company acknowledges and agrees that the Purchasers are
         acting solely in the capacity of arm's length  purchasers  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 in any similar  capacity)  with respect
         to this  Agreement  and the  transactions  contemplated  hereby and any
         statement   made  by  any   Purchaser   or  any  of  their   respective
         representatives  or agents in  connection  with this  Agreement and the
         transactions  contemplated hereby is not advice or a recommendation and
         is merely incidental to the Purchasers' purchase of the Securities. The
         Company  further  represents  to  each  Purchaser  that  the  Company's
         decision  to enter into this  Agreement  has been  based  solely on the
         independent evaluation of the Company and its representatives.


<PAGE>


                  B. (cc) No General  Solicitation  or  Advertising in Regard to
         this  Transaction.  Neither the Company  nor, to the  knowledge  of the
         Company,  any of its  directors or officers  (i) has  conducted or will
         conduct any general  solicitation  (as that term is used in Rule 502(c)
         of Regulation D) or general advertising with respect to the sale of the
         Debentures  or the  Warrants,  or (ii) made any  offers or sales of any
         security  or  solicited  any  offers  to buy  any  security  under  any
         circumstances  that would require  registration of the Debentures,  the
         Underlying  Shares or the Warrants under the Securities Act or made any
         "directed selling efforts" as defined in Rule 902 of Regulation S.

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

                  (ff) No Integrated  Offering.  Neither the Company, nor any of
         its  Affiliates,  nor any  Person  acting on its or their  behalf  has,
         directly  or  indirectly,  made any offers or sales of any  security or
         solicited  any offers to buy any  security,  under  circumstances  that
         would cause this offering of the Securities to be integrated with prior
         offerings  by the Company for purposes of the  Securities  Act or which
         could  violate  any   applicable   shareholder   approval   provisions,
         including,  without limitation,  under the rules and regulations of the
         Principal Market.

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

         C. 3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby,  for itself and for no other  Purchaser,  represents and warrants to the
Company as follows:

                  1. (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  power and  authority to enter into and to  consummate  the
         transactions contemplated by the Transaction Documents and otherwise to
         carry out its obligations thereunder. The purchase by such Purchaser of
         the  Securities  hereunder  has been duly  authorized  by all necessary
         action  on the  part of such  Purchaser.  Each of this  Agreement,  the
         Security Agreement and the Registration  Rights Agreement has been duly
         executed by such  Purchaser,  and when  delivered by such  Purchaser in
         accordance with the terms hereof, will constitute the valid and legally
         binding  obligation  of  such  Purchaser,  enforceable  against  it  in
         accordance   with  its  terms  except  (i)  as  limited  by  applicable
         bankruptcy,  insolvency,  reorganization,  moratorium and other laws of
         general   application   affecting   enforcement  of  creditors'  rights
         generally and (ii) as limited by laws relating to the  availability  of
         specific performance, injunctive relief or other equitable remedies.

                  2. (b)  Investment  Intent.  Such  Purchaser is acquiring  the
         Securities  as principal  for its own account and not with a view to or
         for  distributing  or reselling  such  Securities  or any part thereof,
         without prejudice,  however, to such Purchaser's right,  subject to the
         provisions of this Agreement, at all times to sell or otherwise dispose
         of all  or  any  part  of  such  Securities  pursuant  to an  effective
         registration  statement  under the Securities Act or under an exemption
         from such  registration  and in compliance with applicable  federal and


<PAGE>


         state  securities  laws.  Nothing  contained  herein  shall be deemed a
         representation or warranty by such Purchaser to hold Securities for any
         period of time. Such Purchaser is acquiring the Securities hereunder in
         the ordinary  course of its business.  Such Purchaser does not have any
         agreement or understanding,  directly or indirectly, with any Person to
         distribute any of the Securities (this  representation and warranty not
         limiting such Purchaser's right to sell the Securities  pursuant to the
         Registration  Statement  or  otherwise in  compliance  with  applicable
         federal and state securities laws).

                  3. (c)  Purchaser  Status.  At the  time  such  Purchaser  was
         offered the  Securities,  it was,  and at the date hereof it is, and on
         each date on which it exercises any Warrants or converts any Debentures
         it will be, an  "accredited  investor"  as defined in Rule 501(a) under
         the  Securities  Act. Such Purchaser has not been formed solely for the
         purpose of acquiring the Securities. Such Purchaser is not a registered
         broker-dealer under Section 15 of the Exchange Act.

                  4. (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.

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

                  6. (f)  Open  Short  Position.  As of the  date  hereof,  each
         Purchaser,  for itself only,  represents  and warrants that neither it,
         nor any person or entity  acting at the  direction  of such  Purchaser,
         holds an open short position in the Company's Common Stock.


                                 IV. ARTICLE IV

                         OTHER AGREEMENTS OF THE PARTIES

         A. 4.1 Transfer Restrictions.

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

                  2. (b) Each Purchaser agrees to the imprinting,  so long as is
         required  by  this  Section  4.1(b),  of the  following  legend  on any
         certificate evidencing Securities:

[NEITHER] THESE  SECURITIES [NOR THE SECURITIES INTO WHICH THESE  SECURITIES ARE
[EXERCISABLE]  [CONVERTIBLE]]  HAVE  BEEN  REGISTERED  WITH THE  SECURITIES  AND
EXCHANGE  COMMISSION OR THE SECURITIES  COMMISSION OF ANY STATE IN RELIANCE UPON


<PAGE>


AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY,  MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE  REGISTRATION  STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN  AVAILABLE   EXEMPTION  FROM,  OR  IN  A  TRANSACTION  NOT  SUBJECT  TO,  THE
REGISTRATION   REQUIREMENTS  OF  THE  SECURITIES  ACT  AND  IN  ACCORDANCE  WITH
APPLICABLE  STATE  SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE  TRANSFEROR  REASONABLY  ACCEPTABLE  TO THE  COMPANY  TO  SUCH  EFFECT,  THE
SUBSTANCE  OF  WHICH  SHALL  BE  REASONABLY  ACCEPTABLE  TO THE  COMPANY.  THESE
SECURITIES AND THE SECURITIES  ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE
PLEDGED IN CONNECTION  WITH A BONA FIDE MARGIN  ACCOUNT OR OTHER LOAN SECURED BY
SUCH SECURITIES.

                  The Company  acknowledges and agrees that a Purchaser may from
         time to time pledge pursuant to a bona fide margin agreement or grant a
         security  interest  in some  or all of the  Securities  to a  financial
         institution that is an "accredited  investor" as defined in Rule 501(a)
         under  the  Securities  Act and,  if  required  under the terms of such
         arrangement,  such Purchaser may transfer pledged or secured Securities
         to the pledgees or secured  parties.  Such pledge or transfer would not
         be subject to approval of the Company; provided the Company may require
         a legal  opinion  of legal  counsel of the  pledgee , secured  party or
         pledgor  in  connection  with  any  eventual   transfer  of  beneficial
         ownership  resulting  from such  pledge.  Further,  no notice  shall be
         required of such pledge. At the appropriate  Purchaser's  expense,  the
         Company  will execute and deliver such  reasonable  documentation  as a
         pledgee  or  secured  party of  Securities  may  reasonably  request in
         connection with a pledge or transfer of the  Securities,  including 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.

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

                  4.  (d)  In  addition  to  such  Purchaser's  other  available
         remedies, the Company shall pay to a Purchaser,  in cash, as liquidated
         damages  and not as a penalty,  for each  $5,000 of  Underlying  Shares
         (based on the VWAP of the Common Stock on the date such  Securities are
         submitted to the Company's transfer agent) delivered for removal of the
         restrictive  legend and subject to this Section 4.1(c), $50 per Trading


<PAGE>


         Day  (increasing  to $100 per  Trading  Day 3 Trading  Days  after such
         damages  have begun to accrue)  for each  Trading  Day after the Legend
         Removal  Date until such  certificate  is  delivered  without a legend.
         Nothing  herein  shall limit such  Purchaser's  right to pursue  actual
         damages for the Company's failure to deliver certificates  representing
         any  Securities  as required  by the  Transaction  Documents,  and such
         Purchaser  shall have the right to pursue all remedies  available to it
         at law or in equity including, without limitation, a decree of specific
         performance and/or injunctive relief.

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

         C.  4.3  Furnishing  of  Information.  As  long as any  Purchaser  owns
Securities,  the Company covenants to use 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 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  Rule  144(c)  such  information  as is  required  for  the
Purchasers to sell the Securities under Rule 144. The Company further  covenants
that it will take such further action as any holder of Securities may reasonably
request,  all to the extent  required from time to time to enable such Person to
sell such Securities  without  registration  under the Securities Act within the
limitation of the exemptions provided by Rule 144.

         D. 4.4  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 Principal Market.

         E. 4.5 Reservation and Listing of Securities.

                  1. (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.

                  2. (b) If, on any date,  the number of authorized but unissued
         (and  otherwise  unreserved)  shares of  Common  Stock is less than the
         Required  Minimum  on such  date,  then the Board of  Directors  of the
         Company  shall  use  commercially   reasonable  efforts  to  amend  the
         Company's  certificate  or articles of  incorporation  to increase  the
         number of  authorized  but unissued  shares of Common Stock to at least
         the Required Minimum at such time, as soon as possible and in any event
         not later than the 75th day after such date.

                  3. (c) The Company shall,  if applicable:  (i) in the time and
         manner  required by the  Principal  Market,  prepare and file with such
         Principal Market an additional  shares listing  application  covering a
         number of shares of Common Stock at least equal to the Required Minimum
         on the date of such application, (ii) take all steps necessary to cause
         such shares of Common Stock to be approved for listing on the Principal
         Market as soon as possible thereafter,  (iii) provide to the Purchasers
         evidence of such listing,  and (iv) maintain the listing of such Common
         Stock on any date at least equal to the  Required  Minimum on such date
         on such Principal Market or another Principal Market. In addition,  the
         Company shall hold a special meeting of shareholders (which may also be


<PAGE>


         the annual meeting of shareholders) at the earliest practical date, but
         in no event later than September 30, 2004, for the purpose of obtaining
         Shareholder Approval, with the recommendation of the Company's Board of
         Directors that such proposal be approved, and the Company shall solicit
         proxies  from its  shareholders  in  connection  therewith  in the same
         manner as all other  management  proposals in such proxy  statement and
         all management-appointed proxyholders shall vote their proxies in favor
         of such proposal.

         F. 4.6  Conversion  and  Exercise  Procedures.  The form of  Notice  of
Exercise included in the Warrants and the form of Notice of Conversion  included
in the  Debentures  set forth the  totality  of the  procedures  required of the
Purchasers  in order to exercise  the  Warrants or convert  the  Debentures.  No
additional legal opinion or other information or instructions  shall be required
of the Purchasers to exercise their  Warrants or convert their  Debentures.  The
Company shall honor  exercises of the Warrants and conversions of the Debentures
and shall deliver Underlying Shares in accordance with the terms, conditions and
time periods set forth in the Transaction Documents.

         G. 4.7 Securities  Laws  Disclosure;  Publicity.  The Company shall, by
8:30 a.m.  Eastern time on the Trading Day following the date of this Agreement,
issue a press release or file a Current Report on Form 8-K reasonably acceptable
to each Purchaser disclosing all material terms of the transactions contemplated
hereby.  The Company and the Purchasers shall consult with each other in issuing
any press  releases  with respect to the  transactions  contemplated  hereby and
neither  the  Company nor any  Purchaser  shall issue any such press  release or
otherwise  make any such  public  statement  without  the prior  consent  of the
Company, with respect to any press release of any Purchaser, with respect to any
press release of the Company,  which consent shall not unreasonably be withheld,
except if such disclosure is required by law, in which case the disclosing party
shall  promptly  provide  the other  party  with  prior  notice  of such  public
statement or  communication.  Notwithstanding  the foregoing,  other than in any
registration  statement filed pursuant to the Registration  Rights Agreement and
filings related thereto, the Company shall not publicly disclose the name of any
Purchaser,  or  include  the  name  of any  Purchaser  in any  filing  with  the
Commission  or any  regulatory  agency or  Principal  Market,  without the prior
written  consent of such  Purchaser,  except to the extent  such  disclosure  is
required by law or Principal Market regulations, in which case the Company shall
provide each Purchaser with prior notice of such disclosure.

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

         I. 4.9 Use of Proceeds. The Company shall use the net proceeds from the
sale of the Securities  hereunder for working  capital  purposes and not for the
satisfaction  of any portion of the Company's  debt (other than payment of trade
payables,  capital lease obligations and accrued expenses in the ordinary course
of the Company's business and prior practices),  to redeem any Company equity or
equity-equivalent securities or to settle any outstanding litigation.

         J.  4.10  Reimbursement.  If  any  Purchaser  becomes  involved  in any
capacity in any  Proceeding by or against any Person who is a stockholder of the
Company,  solely as a result of such  Purchaser's  acquisition of the Securities
under this Agreement and without  causation by any other  activity,  obligation,
condition or liability on the part of, or pertaining  to such  Purchaser and not
to the  purchase of  Securities  pursuant to this  Agreement,  the Company  will
reimburse such Purchaser,  to the extent such  reimbursement is not provided for
in Section 4.11, for its reasonable legal and other expenses (including the cost
of any investigation,  preparation and travel in connection  therewith) incurred
in  connection  therewith,  as such  expenses are  incurred.  The  reimbursement
obligations (and limitations  thereon) of the Company under this paragraph shall
be in addition to any  liability  which the Company may  otherwise  have,  shall
extend upon the same terms and  conditions to any  Affiliates of the  Purchasers
who are  actually  named  in  such  action,  proceeding  or  investigation,  and
partners,  directors, agents, employees and controlling persons (if any), as the
case may be, of the Purchasers and any such Affiliate, and shall be binding upon


<PAGE>


and  inure  to the  benefit  of any  successors,  assigns,  heirs  and  personal
representatives  of the Company,  the  Purchasers and any such Affiliate and any
such Person.  The Company also agrees that neither the  Purchasers  nor any such
Affiliates,  partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company  solely as a result of acquiring  the  Securities  under
this  Agreement  except to the  extent any  covenant  or  warranty  owing to the
Company is breached.

         K.  4.11  Indemnification.  The  Company  will  indemnify  and hold the
Purchasers and their directors, officers, shareholders,  partners, employees and
agents  (each,  a  "Purchaser   Party")   harmless  from  any  and  all  losses,
liabilities,  obligations,  claims, contingencies,  damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys'  fees and costs of  investigation  that any such Purchaser  Party may
suffer or incur as a result of or relating to: (a) any misrepresentation, breach
or  inaccuracy,  or any  allegation  by a  third  party  that,  if  true,  would
constitute a breach or inaccuracy,  of any of the  representations,  warranties,
covenants or  agreements  made by the Company in this  Agreement or in the other
Transaction Documents; or (b) any cause of action, suit or claim brought or made
against such Purchaser Party and arising solely out of or solely  resulting from
the execution,  delivery, performance or enforcement of this Agreement or any of
the other  Transaction  Documents and without  causation by any other  activity,
obligation,  condition or liability  pertaining to such Purchaser and not to the
transactions  contemplated  by this  Agreement.  The Company will reimburse such
Purchaser for its reasonable legal and other expenses (including the cost of any
investigation,  preparation  and travel in  connection  therewith)  incurred  in
connection therewith, as such expenses are incurred.

         L. 4.12  Shareholders  Rights  Plan.  In the event that a  shareholders
rights plan is adopted by the Company,  no claim will be made or enforced by the
Company or any other Person that any  Purchaser is an  "Acquiring  Person" under
the plan or in any way could be deemed to trigger the provisions of such plan by
virtue of receiving Securities under the Transaction Documents.

         M. 4.13  Participation in Future Financing.  From the date hereof until
18 months after the Effective  Date, upon any financing by the Company or any of
its Subsidiaries of Capital Shares or Capital Shares  Equivalents (a "Subsequent
Financing"), each Purchaser shall have the right to participate in up to 100% of
such Subsequent Financing.  At least 10 Trading Days prior to the closing of the
Subsequent  Financing,  the Company  shall  deliver to each  Purchaser a written
notice of its intention to effect a Subsequent Financing  ("Pre-Notice"),  which
Pre-Notice  shall ask such  Purchaser  if it wants to review the details of such
financing (such additional notice, a "Subsequent  Financing  Notice").  Upon the
request  of a  Purchaser,  and only  upon a  request  by such  Purchaser,  for a
Subsequent  Financing  Notice,  the Company shall promptly,  but no later than 1
Trading Day after such request,  deliver a Subsequent  Financing  Notice to such
Purchaser.  The Subsequent  Financing Notice shall describe in reasonable detail
the proposed terms of such Subsequent Financing, the amount of proceeds intended
to be raised  thereunder,  the Person  with whom such  Subsequent  Financing  is
proposed to be effected,  and attached to which shall be a term sheet or similar
document  relating  thereto.  If by 6:30 p.m.  (New York City  time) on the 10th
Trading  Day  after  all  of  the  Purchasers   have  received  the  Pre-Notice,
notifications  of the  Purchasers of their  willingness  to  participate  in the
Subsequent  Financing  (or to cause  their  designees  to  provide)  is,  in the
aggregate,  less than the total  amount of the  Subsequent  Financing,  then the
Company may effect the  remaining  portion of such  Subsequent  Financing on the
terms and to the Persons set forth in the Subsequent  Financing  Notice.  If the
Company  receives no notice from a Purchaser as of such 10th  Trading Day,  such
Purchaser shall be deemed to have notified the Company that it does not elect to
participate.  The Company must provide the Purchasers  with a second  Subsequent
Financing Notice,  and the Purchasers will again have the right of participation
set forth above in this Section 4.13, if the Subsequent Financing subject to the
initial   Subsequent   Financing  Notice  is  not  consummated  for  any  reason
substantially  on terms no more favorable to the Purchasers than those set forth
in such Subsequent Financing Notice within 60 Trading Days after the date of the
initial Subsequent Financing Notice. In the event the Company receives responses
to Subsequent  Financing  Notices from Purchasers  seeking to purchase more than
the aggregate amount of the Subsequent Financing, each such Purchaser shall have
the  right to  purchase  their  Pro  Rata  Portion  (as  defined  below)  of the
Subsequent  Financing.  "Pro Rata Portion" is the ratio of (x) the  Subscription
Amount  of  a  participating   Purchaser  and  (y)  the  sum  of  the  aggregate
Subscription  Amount  of  all  participating  Purchasers.   Notwithstanding  the
foregoing,  this  Section 4.13 shall not apply in respect of the issuance of (a)
shares of Common  Stock or options to  employees,  officers or  directors of the
Company  pursuant to any stock or option plan duly  adopted by a majority of the


<PAGE>


non-employee  members of the Board of  Directors of the Company or a majority of
the  members of a  committee  of  non-employee  directors  established  for such
purpose,  (b) securities  upon the exercise of or conversion of any  convertible
securities,  options  or  warrants  issued and  outstanding  on the date of this
Agreement, provided that such securities have not been amended since the date of
this Agreement to increase the number of such securities  (unless such amendment
results from the application of any anti dilution provisions  applicable to such
securities)  or (c)  following  the  120th day after  the  Closing  Date,  up to
$3,000,000 principal amount of convertible debentures less any principal amounts
of debentures  purchased  pursuant to Section 4.16 by any Crestview Entities (as
defined therein) on identical terms as the debentures  (including the conversion
price)   issuable   pursuant  to  Section   4.16   (collectively,   the  "Exempt
Securities").

         N. 4.14  Prohibition  on  Subsequent  Financings.  From the date hereof
until 90 days  after the  Effective  Date,  other than as  contemplated  by this
Agreement,  neither  the  Company  nor any  Subsidiary  shall  issue or sell any
Capital Shares or Capital Shares Equivalents. Notwithstanding anything herein to
the contrary, the 90 day period set forth in this Section 4.14 shall be extended
for the number of Trading  Days  during  such period in which (y) trading in the
Common  Stock  is  suspended  by any  Principal  Market,  or (z)  following  the
Effective  Date, the  Registration  Statement is not effective or the prospectus
included in the Registration Statement may not be used by the Purchasers for the
resale  of the  Underlying  Shares.  Notwithstanding  anything  to the  contrary
herein, this Section 4.14 shall not apply to any Exempt Securities. In addition,
unless Shareholder Approval has been obtained and deemed effective in accordance
with  Section  4.5(c),  the Company  shall not make any issuance  whatsoever  of
Capital Shares or Capital Shares Equivalents which would cause any adjustment of
the Set Price (other than pursuant to Section 4(c)(ii) of the Debentures) to the
extent the holders of  Debentures  would not be  permitted,  pursuant to Section
4(a)(ii)(A)  of the  Debenture and Section  3(c)(ii) of the Warrant,  to convert
their respective  outstanding  Debentures and exercise their respective Warrants
in full.

         O. 4.15  Equal  Treatment  of  Purchasers.  No  consideration  shall be
offered or paid to any person to amend or consent to a waiver or modification of
any provision of any of the Transaction  Documents unless the same consideration
is also offered to all of the parties to the Transaction Documents. Further, the
Company shall not make any payment of principal or interest on the Debentures in
amounts  which  are   disproportionate  to  the  respective   principal  amounts
outstanding  on  the  Debentures  at  any  applicable  time.  For  clarification
purposes,  this provision constitutes a separate right granted to each Purchaser
by the Company and negotiated  separately by each Purchaser,  and is intended to
treat for the Company the Debenture  holders as a class and shall not in any way
be construed as the  Purchasers  acting in concert or as a group with respect to
the purchase, disposition or voting of Securities or otherwise.

         P.  4.16  Additional  Investment  Option of  Purchasers.  From the date
hereof  until 120 days after the  Closing  Date,  Crestview  (and/or  any of its
designated  Affiliates,  collectively,  the "Crestview  Entities"),  in its sole
determination,  may elect to purchase  additional  convertible  debentures.  The
Crestview Entities shall have the right to purchase up to an amount equal to, at
the election of such entities,  $3,000,000  principal amount of debentures.  Any
additional  investment  will  be on  terms  identical  those  set  forth  in the
Transaction  Documents,  mutatis mutandis,  except that, the conversion price of
the convertible  debentures  shall be $0.192,  subject to adjustment for reverse
and forward stock splits, stock dividends,  stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement and
no additional  warrants  shall be issued in connection  with such  issuance.  In
order to  effectuate a purchase  and sale of such  convertible  debentures,  the
Company and the Crestview  Entities  shall enter into the following  agreements:
(x) a securities  purchase  agreement  otherwise  identical  to this  Agreement,
mutatis  mutandis  and shall  include  updated  disclosure  schedules  and (y) a
registration  rights agreement  otherwise  identical to the Registration  Rights
Agreement, mutatis mutandis and shall include updated disclosure schedules.

         4.17 Underlying Shares Price Protection.  From the date hereof until 18
months after the Closing Date, if in connection with a Subsequent Financing, the
Company or any  subsidiary  thereof  shall issue any  Capital  Shares or Capital
Shares  Equivalents  entitling any person or entity to acquire  shares of Common
Stock at a price per share  less than the  effective  price  paid by a holder of
Underlying  Shares (the "Discounted  Purchase Price", as further defined below),
the Company  shall issue to such  holder  that  number of  additional  shares of
Common Stock equal to (a) the effective  aggregate  purchase  price paid by such


<PAGE>


holder  for all  Underlying  Shares  then  held by such  holder  divided  by the
Discounted  Purchase  Price,  less (b) the  Underlying  Shares then held by such
holder. The term "Discounted Purchase Price" shall mean the amount actually paid
by third  parties  for a share  of  Common  Stock.  The  sale of  Common  Shares
Equivalents  shall be deemed to have occurred at the time of the issuance of the
Common Shares  Equivalents  and the Discounted  Purchase  Price covered  thereby
shall also include the actual  exercise or conversion  price thereof at the time
of the  conversion  or exercise (in addition to the  consideration  per share of
Common Stock  underlying the Common Shares  Equivalents  received by the Company
upon such sale or issuance of the Common Shares Equivalents). In the case of any
Subsequent  Financing  involving  a  "Variable  Rate  Transaction"  or  an  "MFN
Transaction"  (each as defined  below),  the Discounted  Purchase Price shall be
deemed to be the  lowest  actual  conversion  or  exercise  price at which  such
securities   are  converted  or  exercised  in  the  case  of  a  Variable  Rate
Transaction,  or the lowest  adjustment price in the case of an MFN Transaction.
If shares are issued for a consideration  other than cash, the per share selling
price shall be the fair value of such  consideration as determined in good faith
by the Board of Directors of the Company.  The term "Variable Rate  Transaction"
shall mean a transaction in which the Company issues or sells any debt or equity
securities  that are  convertible  into,  exchangeable  or  exercisable  for, or
include the right to receive  additional  shares of Common Stock either (x) at a
conversion,  exercise or exchange  rate or other price that is based upon and/or
varies with the trading  prices of or quotations  for the shares of Common Stock
at any time after the initial issuance of such debt or equity securities, or (y)
with a conversion,  exercise or exchange price that is subject to being reset at
some future date after the initial  issuance of such debt or equity  security or
upon the  occurrence  of specified or contingent  events  directly or indirectly
related to the business of the Company or the market for the Common  Stock.  The
term "MFN  Transaction"  shall mean a transaction in which the Company issues or
sells any  securities  in a capital  raising  transaction  or series of  related
transactions  which grants to an investor the right to receive additional shares
based upon future transactions of the Company on terms more favorable than those
granted to the such  investor  in such  offering.  The Company may not refuse to
issue a  Purchaser  additional  Shares  hereunder  based on any claim  that such
Purchaser or any one  associated  or  affiliated  with such  Purchaser  has been
engaged in any violation of law,  agreement or for any other reason,  unless, an
injunction  from a court,  on notice,  restraining  and or enjoining an issuance
hereunder  shall have been sought and  obtained  and the Company  posts a surety
bond for the benefit of such Purchaser in the amount of 150% of the market value
of such Shares  (based on the Closing  Price of the Common  Stock on the date of
the event giving rise to the Company's obligation  hereunder),  which is subject
to the  injunction,  which bond shall remain in effect until the  completion  of
litigation  of the  dispute  and the  proceeds  of which shall be payable to the
Purchaser  to the extent it  obtains  judgment.  Nothing  herein  shall  limit a
Purchaser's  right to pursue actual damages for the Company's failure to deliver
Shares  hereunder and such Purchaser shall have the right to pursue all remedies
available to it at law or in equity including,  without limitation,  a decree of
specific performance and/or injunctive relief.  Notwithstanding  anything to the
contrary herein, this Section 4.17 shall not apply to Exempt Securities.

                                  V. ARTICLE V

                                  MISCELLANEOUS

         A. 5.1 Termination.  This Agreement may be terminated by any Purchaser,
by written notice to the other parties,  if the Closing has not been consummated
on or before March 5, 2004;  provided that no such  termination  will affect the
right of any party to sue for any breach by the other party (or parties).

         B. 5.2 Fees and  Expenses.  At the  Closing,  the Company has agreed to
reimburse Crestview Capital Master LLC ("Crestview")  $30,000 for its legal fees
and expenses and such funds shall be wired per the  instructions  of  Crestview.
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 any Securities.

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


<PAGE>


         D.  5.4  Notices.  Any and  all  notices  or  other  communications  or
deliveries  required or permitted to be provided  hereunder  shall be in writing
and  shall be deemed  given and  effective  on the  earliest  of (a) the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number  specified on the signature page attached hereto prior to 5:30
p.m.  (New York City time) on a Trading Day and an  electronic  confirmation  of
delivery is received by the sender,  (b) the next  Trading Day after the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading Day or
later than 5:30 p.m.  (New York City time) on any Trading Day, (c) three Trading
Days  following  the  date of  mailing,  if sent by U.S.  nationally  recognized
overnight courier service,  or (d) upon actual receipt by the party to whom such
notice  is  required  to  be  given.   The   addresses   for  such  notices  and
communications  are those set forth on the signature pages hereof, or such other
address as may be designated in writing  hereafter,  in the same manner, by such
Person.

         E. 5.5  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.

         F. 5.6  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.

         G. 5.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted  assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written  consent of the  Purchasers.  Any Purchaser may assign
its rights under this  Agreement and the  Registration  Rights  Agreement to any
Person to whom such Purchaser assigns or transfers any Securities.

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

         I. 5.9  Governing  Law;  Venue;  Waiver of Jury  Trial.  All  questions
concerning the  construction,  validity,  enforcement and  interpretation of the
Transaction  Documents  shall be  governed  by and  construed  and  enforced  in
accordance  with the internal laws of the State of New York,  without  regard to
the  principles  of conflicts  of law thereof.  Each party agrees that all legal
proceedings  concerning  the  interpretations,  enforcement  and  defense of the
transactions  contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers,  shareholders,  employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of New York.  Each party hereby
irrevocably  submits  to the  exclusive  jurisdiction  of the state and  federal
courts  sitting  in  the  City  of  New  York,  borough  of  Manhattan  for  the
adjudication  of any dispute  hereunder  or in  connection  herewith or with any
transaction  contemplated  hereby or discussed herein (including with respect to
the enforcement of any of the  Transaction  Documents),  and hereby  irrevocably
waives,  and agrees not to assert in any suit,  action or proceeding,  any claim
that it is not personally  subject to the  jurisdiction of any such court,  that
such suit,  action or  proceeding  is  improper or  inconvenient  venue for such
proceeding. Each party hereby irrevocably waives personal service of process and
consents  to process  being  served in any such suit,  action or  proceeding  by
mailing a copy thereof via  registered or certified  mail or overnight  delivery
(with  evidence of  delivery) to such party at the address in effect for notices
to it under this  Agreement and agrees that such service shall  constitute  good



<PAGE>


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 parties  hereby  waive all rights to a trial by jury.  If
either party shall commence an action or proceeding to enforce any provisions of
this Agreement,  then the prevailing party in such action or proceeding shall be
reimbursed  by the other  party  for its  attorneys'  fees and  other  costs and
expenses  incurred with the  investigation,  preparation and prosecution of such
action or proceeding.

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

         K.  5.11  Execution.  This  Agreement  may be  executed  in two or more
counterparts,  all of which when taken  together shall be considered one and the
same agreement and shall become effective when  counterparts have been signed by
each party and  delivered  to the other  party,  it being  understood  that both
parties need not sign the same  counterpart.  In the event that any signature is
delivered by facsimile  transmission,  such  signature  shall create a valid and
binding  obligation of the party executing (or on whose behalf such signature is
executed)  such  document  with the same force and  effect as if such  facsimile
signature page were an original thereof.

         L. 5.12 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.

         M. 5.13 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;  provided,
however,  in the case of a rescission of a conversion of a Debenture or exercise
of a Warrant,  the  Purchaser  shall be  required to return any shares of Common
Stock subject to any such rescinded conversion or exercise notice.

         N. 5.14  Replacement  of Securities.  If any  certificate or instrument
evidencing any Securities is mutilated,  lost, stolen or destroyed,  the Company
shall  issue or cause to be issued in  exchange  and  substitution  for and upon
cancellation thereof, 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.

         O. 5.15 Remedies.  In addition to being entitled to exercise all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Purchasers  and the Company will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that  monetary  damages  may not be
adequate  compensation  for  any  loss  incurred  by  reason  of any  breach  of
obligations  described 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.  Without  limiting  the  generality  of the
foregoing,  the  Company  expressly  agrees  that its breach of the next to last
sentence  of Section  4.14 would  cause each  Purchaser  irreparable  harm,  and
consents to granting of injunctive  relieve by any court having  jurisdiction to
preclude any such issuance of securities.

         P. 5.16  Payment  Set Aside.  To the extent  that the  Company  makes a
payment or payments to any Purchaser  pursuant to any Transaction  Document or a
Purchaser  enforces or  exercises  its rights  thereunder,  and such  payment or
payments or the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated,  declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company,  a trustee,  receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable  cause of action),  then to the extent of any such  restoration
the  obligation  or part thereof  originally  intended to be satisfied  shall be
revived and  continued  in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.


<PAGE>


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

         5.18  Independent  Nature of Purchasers'  Obligations  and Rights.  The
obligations of each Purchaser under any Transaction Document are several and not
joint with the  obligations of any other  Purchaser,  and no Purchaser  shall be
responsible  in any way for the  performance  of the  obligations  of any  other
Purchaser under any Transaction  Document.  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  shall be  entitled to  independently  protect and enforce its rights,
including without  limitation the rights arising out of this Agreement or out of
the other  Transaction  Documents,  and it shall not be necessary  for any other
Purchaser  to be  joined  as an  additional  party  in any  proceeding  for such
purpose.  Each Purchaser has been  represented by its own separate legal counsel
in their review and  negotiation of the  Transaction  Documents.  For reasons of
administrative  convenience only,  Purchasers and their respective  counsel have
chosen to communicate  with the Company through FW. FW does not represent all of
the  Purchasers  but only  Crestview.  The  Company  has  elected to provide all
Purchasers with the same terms and Transaction  Documents for the convenience of
the  Company  and not  because  it was  required  or  requested  to do so by the
Purchasers.

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

                            (Signature Pages Follow)


<PAGE>


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


                                             USURF AMERICA, INC.


                                             By:  /s/ Douglas O. McKinnno
                                               -----------------------------
                                               Name: Douglas O. Mckinnon
                                               Title: President

                                             Address for Notice:
                                             6005 Delmonico Drive, Suite 140
                                             Colorado Springs, Colorado 80919
                                             Attn: Douglas O. Mckinnon
                                             Tel: (719) 260-7455
                                             Fax: (719) 260-7456



With a copy to:                              Kirkpatrick & Lockhart, LLP
                                             201 South Biscayne Blvd., Ste. 2000
                                             Miami, Florida 33131
                                             Attn: Clayton E. Parker, Esq.
                                             Tel: (305) 539-3306
                                             Fax: (305) 358-7095

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




<PAGE>



                       [PURCHASER'S SIGNATURE PAGE - UAX]

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


Name of Investing Entity: __Crestview Capital Master LLC________________________

Signature of Authorized Signatory of Investing Entity:  /s/ Richard Levy
                                                     ---------------------------
Name of Authorized Signatory: Richard Levy
                            ----------------------------------------------------
Title of Authorized Signatory: Managing Partner
                             ---------------------------------------------------
Email Address of Authorized Signatory:  Richard@crestviewcap.com
                                     -------------------------------------------

Address for Notice of Investing Entity:     95 Revere Drive, Suite A
                                            Northbrook, IL 60062




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




Subscription Amount:
Principal Amount of Debenture:
Warrant Shares:
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]