Exhibit 4.1

                        SECURITIES PURCHASE AGREEMENT

      AGREEMENT, dated as of November 8, 2002, between Dial-Thru
 International Corporation (the " Company") and Global Capital Funding
 Group, L.P. (" Purchaser").

                               R E C I T A L S:

      WHEREAS, the Company desires to sell and issue to the Purchaser, and
 Purchaser desires to purchase from the Company, a $1,250,000 principal
 amount Secured Promissory Note due November 8, 2004 (" Note"), with terms
 and conditions as set forth in the form of Note attached hereto as Exhibit
 A; and

      WHEREAS, in order to induce the Purchaser to enter into the
 transactions described in this Agreement, the Company desires to issue
 to the Purchaser up to an aggregate of 500,000 warrants to purchase shares
 of Common Stock upon the Closing (as defined herein) on the terms and
 conditions described in the form of the common stock purchase warrant
 attached hereto as Exhibit E (the " Warrants"); and

      WHEREAS, the Purchaser will have certain registration rights with
 respect to such shares of Common Stock issuable upon exercise of the
 Warrants (the " Warrant Shares") as set forth in the Registration Rights
 Agreement in the form attached hereto as Exhibit B; and

      NOW, THEREFORE, in consideration of the foregoing premises and the
 covenants contained herein and other good and valuable consideration, the
 receipt and sufficiency of which are hereby acknowledged, the parties hereto
 agree as follows:

                           ARTICLE 1.  DEFINITIONS

 ARTICLE 1.1  Definitions .  The following terms, as used herein, have
 the following meanings:

      "Affiliate" means, with respect to any Person (the " Subject Person"),
 (i) any other Person (a " Controlling Person") that directly, or indirectly
 through one or more intermediaries, Controls the Subject Person or (ii) any
 other Person (other than the Subject Person or a Consolidated Subsidiary of
 the Subject Person) which is Controlled by or is under common Control with
 a Controlling Person.

      "Agreement" means this Securities Purchase Agreement, as amended,
 supplemented or otherwise modified from time to time in accordance with
 its terms.

      "Asset Sale" has the meaning set forth in Section 8.4.

      "Benefit Arrangement" means at any time an employee benefit plan within
 the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer
 Plan and which is maintained or otherwise contributed to by the Company.

      "Benefit Plans" has the meaning set forth in Section 4.9(b).

      "Business Day" means any day except a Saturday, Sunday or other day on
 which commercial banks in the City of New York are authorized or required by
 law to close.

      "Capital Reorganization" has the meaning set forth in Section 11.6.

      "Change in Control" means (i) after the date of this Agreement, any
 person or group of persons (within the meaning of Sections 13 and 14 of the
 Exchange Act and the rules and regulations of the Commission relating to
 such sections) other than the Purchaser shall have acquired beneficial
 ownership (within the meaning of Rules 13d-3 and 13d-5 promulgated by the
 Commission pursuant to the Exchange Act) of 33a% or more of the outstanding
 shares of Common Stock of the Company; (ii) individuals constituting the
 Board of Directors of the Company on the date hereof (together with any new
 Directors whose election by such Board of Directors or whose nomination for
 election by the stockholders of the Company was approved by a vote of at
 least 50.1% of the Directors still in office who are either Directors as of
 the date hereof or whose election or nomination for election was previously
 so approved), cease for any reason to constitute at least two-thirds of the
 Board of Directors of the Company then in office and (iii)  any sale or
 other disposition (other than by reason of death or disability) by John
 Jenkins, Chief Executive Officer and Chairman, to any Person of more than
 an aggregate of 500,000 shares of Common Stock of the Company, without the
 prior written consent of Purchaser during the term of the Note.

      "Closing Bid Price" shall mean for any security as of any date, the
 lowest closing bid price as reported by Bloomberg, L.P. (" Bloomberg") on
 the principal securities exchange or trading market where such security is
 listed or traded or, if the foregoing does not apply, the lowest closing bid
 price of such security in the over-the-counter market on the electronic
 bulletin board for such security as reported by Bloomberg, or, if no lowest
 trading price is reported for such security by Bloomberg, then the average
 of the bid prices of any market makers for such securities as reported in
 the "Pink Sheets" by the National Quotation Bureau, Inc.  If the lowest
 closing bid price cannot be calculated for such security on such date on
 any of the foregoing bases, the lowest closing bid price of such security
 on such date shall be the fair market value as mutually determined by the
 Purchaser and the Company for which the calculation of the closing bid price
 requires, and in the absence of such mutual determination, as determined by
 the Board of Directors of the Company in good faith.

      "Closing Date" means the date on which all of the conditions set forth
 in Sections 6.1 and 6.2 shall have been satisfied and Note in the aggregate
 principal amount of $1,250,000 and Warrants to acquire 500,000 shares of
 Common Stock are issued by the Company to the Purchaser.

      "Code" means the Internal Revenue Code of 1986, as amended.

      "Collateral" has the meaning set forth in the Security Agreement

      "Commission" means the Securities and Exchange Commission or any entity
 succeeding to all of its material functions.

      "Common Stock" means the common stock, $.001 par value per share, of
 the Company.

      "Company" means Dial-Thru International Corporation, a Delaware
 corporation.

      "Company Corporate Documents" means the certificate of incorporation
 and bylaws of the Company.

      "Consolidated Subsidiary" means at any date with respect to any Person
 or Subsidiary or other entity, the accounts of which would be consolidated
 with those of such Person in its consolidated financial statements if such
 statements were prepared as of such date.

      "Control" (including, with correlative meanings, the terms
 "Controlling," "Controlled by" and under "common Control with"), as used
 with respect to any Person, means the possession, directly or indirectly, of
 the power to direct or cause the direction of the management and policies of
 that Person, whether through the ownership of voting securities, by contract
 or otherwise.

      "Deadline" has the meaning set forth in Section 10.1.

      "Debt" of any Person means at any date, without duplication, (i) all
 obligations of such Person for borrowed money, (ii) all obligations of such
 Person evidenced by bonds, debentures, Note, or other similar instruments
 issued by such Person, (iii) all obligations of such Person as lessee which
 (y) are capitalized in accordance with GAAP or (z) arise pursuant to sale-
 leaseback transactions, (iv) all reimbursement obligations of such Person in
 respect of letters of credit or other similar instruments, (v) all Debt of
 others secured by a Lien on any asset of such Person, whether or not such
 Debt is otherwise an obligation of such Person and (vi) all Debt of others
 Guaranteed by such Person.

      "Debt from Related Persons"means (i) Existing Debt from Related Persons
 and (ii) New Debt from Related Persons.

      "Default" means any event or condition which constitutes an Event of
 Default or which with the giving of notice or lapse of time or both would,
 unless cured or waived, become an Event of Default.

      "Default Fee" has the meaning set forth in Section 10.4.

      "Directors" means the individuals then serving on the Board of
 Directors or similar such management council of the Company.

      "Environmental Laws" means any and all federal, state and local
 statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
 permits, concessions, grants, franchises, licenses, agreements or other
 governmental restrictions relating to the environment or to emissions,
 discharges or releases of pollutants, contaminants, petroleum or petroleum
 products, chemicals or industrial, toxic or hazardous substances or wastes
 into the environment, including, without limitation, ambient air, surface
 water, ground water, or land, or otherwise relating to the manufacture,
 processing, distribution, use, treatment, storage, disposal, transport or
 handling of pollutants, contaminants, petroleum or petroleum products,
 chemicals or industrial, toxic or hazardous substances or wastes or the
 cleanup or other remediation thereof.

      "ERISA" means the Employee Retirement Income Security Act of 1974,
 as amended, or any successor statute.

      "ERISA Group" means the Company and each Subsidiary.

      "Event of Default" has the meaning set forth in Article XII hereof.

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

      "Existing Debt from Related Persons" means those certain 10%
 Convertible Notes of the Company in the aggregate principal amount of
 $2,348,391 issued to the Related Persons on October 25, 2001, as such
 obligations may be amended and restated from time to time.

      "Financing" means a public or private financing consummated (meaning
 closing and funding) through the issuance of debt or equity securities (or
 securities convertible into or exchangeable for debt or equity securities)
 of the Company for cash, except for the issuance of stock options or
 warrants to purchase the Company's Common Stock.

      "Fixed Price" has the meaning set forth in Section 11.1.

      "Formula Price" shall mean a dollar amount equal to the aggregate
 principal amount of the Note then outstanding, together with all accrued
 and unpaid interest thereon.

      "GAAP" has the meaning set forth in Section 1.2.

      "Intellectual Property" has the meaning set forth in Section 4.20.

      "Interest Shares" shall mean any shares of Common Stock issued to
 Purchaser pursuant to the terms of the Note as payment of interest on the
 Note.

      "Investment" means any investment in any Person, whether by means of
 share purchase, partnership interest, capital contribution, loan, time
 deposit or otherwise.

      "Lien" means any lien, mechanic's lien, materialmen's lien, lease,
 easement, charge, encumbrance, mortgage, conditional sale agreement, title
 retention agreement, agreement to sell or convey, option, claim, title
 imperfection, encroachment or other survey defect, pledge, restriction,
 security interest or other adverse claim, whether arising by contract or
 under law or otherwise (including, without limitation, any financing lease
 having substantially the same economic effect as any of the foregoing, and
 the filing of any financing statement under the Uniform Commercial Code or
 comparable law of any jurisdiction in respect of any of the foregoing).

      "Majority Holders" means (i) as of the Closing Date, the Purchaser and
 (ii) at any time thereafter, the holders of more than 50% in aggregate
 principal amount of the Note outstanding at such time.

      "Material Plan" means at any time a Plan or Plans having aggregate
 Unfunded Liabilities in excess of $500,000.

      "Maturity Date" shall mean the date of maturity of the Note;
 specifically, November 8, 2004.

      "NASD" has the meaning set forth in Section 7.10.

      "Nasdaq Market" means the Nasdaq Stock Market's National Market System.

      "National Market" means the Nasdaq Market, the Nasdaq Small Cap Market,
 the New York Stock Exchange, Inc. or the American Stock Exchange, Inc.

      "Net Cash Proceeds" means, with respect to any transaction, the total
 amount of cash proceeds received by the Company or any Subsidiary less
 (i) reasonable underwriters' fees, brokerage commissions, reasonable
 professional fees and other customary out-of-pocket expenses payable in
 connection with such transaction, and (ii) in the case of dispositions of
 assets, (A) actual transfer taxes (but not income taxes) payable with
 respect to such dispositions, and (B) the amount of Debt, if any, secured by
 a Lien on the asset or assets disposed of and required to be, and actually
 repaid by the Company or any Subsidiary in connection therewith, and any
 trade payables specifically relating to such asset or assets sold by the
 Company or any Subsidiary that are not assumed by the purchaser of such
 asset or assets.

      "New Debt from Related Persons" means an aggregate of $1,000,000 loaned
 to the Company at any one time or from time to time following the Closing by
 one or more of the Related Persons.

      "Notice of Exercise" means the form to be delivered by a holder of a
 Warrant upon exercise of all or a portion thereof to the Company
 substantially in the form of Exhibit A to the form of Warrant.

      "Officer's Certificate" shall mean a certificate executed by the
 President, chief executive officer or chief financial officer of the
 Company in the form of Exhibit D attached hereto.

     "OTC Bulletin Board" means the over-the-counter bulleting board
 operated by the NASD.

      "Other Taxes" has the meaning set forth in Section 3.6(b).

      "Pay-off Amount" means the total principal amount plus any accrued and
 unpaid interest outstanding on the Company's $1,000,000 Principal Amount 6%
 Convertible Debenture owned by Purchaser.

      "PBGC" means the Pension Benefit Guaranty Corporation or any entity
 succeeding to any or all of its functions under ERISA.

      "Permits" means all domestic and foreign licenses, franchises, grants,
 authorizations, permits, easements, variances, exemptions, consents,
 certificates, orders and approvals necessary to own, lease and operate
 the properties of, and to carry on the business of the Company and the
 Subsidiaries.

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

      "Plan" means at any time an employee pension benefit plan which is
 covered by Title IV of ERISA or subject to the minimum funding standards
 under the Code and either (i) is maintained, or contributed to, by any
 member of the ERISA group for employees of any member of the ERISA group
 or (ii) has at any time within the preceding five years been maintained, or
 contributed to, by any Person which was at such time a member of the ERISA
 group for employees of the Person which was at such time a member of the
 ERISA Group.

      "Purchase Price" means the purchase price for the Securities set forth
 in Section 2.2 hereof.

      "Purchaser" means Global Capital Funding Group, L.P. and its successors
 and assigns, including holders from time to time of the Note.

      "Registrable Securities" has the meaning set forth in Section 10.4(a).

      "Registration Default" has the meaning set forth in Section 10.4(c).

      "Registration Statement" has the meaning set forth in Section 10.4(b).

      "Registration Rights Agreement" means the agreement between the Company
 and the Purchaser dated the date hereof substantially in the form set forth
 in Exhibit B attached hereto.

      "Related Person" means one or more of the following Persons: John
 Jenkins, Allen Sciarillo and Larry Vierra.

      "Required Effectiveness Date" has the meaning set forth in
 Section 10.4(b).

      "Reserved Amount" has the meaning set forth in Section 7.10.

      "Sale Event" has the meaning set forth in Section 3.4.

      "SEC Reports" shall have the meaning set forth in Section 4.7.

      "Securities" means the Note, Interest Shares, the Warrants and the
 Warrant Shares.

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

      "Security Agreement" means that certain Security Agreement between the
 Company and Purchaser, pursuant to which certain of the Company's assets
 will serve as collateral to secure the Note, in the form set forth in
 Exhibit F attached hereto.

      "Share Reorganization" has the meaning set forth in Section 11.2.

      "Solvency Certificate" shall mean a certificate executed by the chief
 executive officer of the Company as to the solvency of the Company, the
 adequacy of its capital and its ability to pay its debts, all after giving
 effect to the issuance and sale of the Note, which such Solvency Certificate
 shall be in the from of Exhibit C attached hereto.

      "Subsidiaries" has the meaning set forth in Section 4.27.

      "Subsidiary Corporate Documents" means the certificates of
 incorporation and bylaws of each Subsidiary.

      "Taxes" has the meaning set forth in Section 3.6.

      "Trading Day" shall mean any Business Day in which the OTC Bulleting
 Board, National Market or other automated quotation system or exchange on
 which the Common Stock is then traded is open for trading for at least four
 (4) hours.

      "Transaction Agreements" means this Agreement, the Note, the Security
 Agreement, the Warrants, and the Registration Rights Agreement.

      "Transfer" means any disposition of Securities that would constitute
 a sale thereof under the Securities Act.

      "Unfunded Liabilities" means, with respect to any Plan at any time, the
 amount (if any) by which (i) the present value of all benefits under Plan
 exceeds (ii) the fair market value of all Plan assets allocable to such
 benefits (excluding any accrued but unpaid contributions), all determined as
 of the then most recent valuation date for such Plan, but only to the extent
 that such excess represents a potential liability of a member of the ERISA
 Group to the PBGC or any other Person under Title IV of ERISA.

      "Warrants" means the Common Stock Purchase Warrants issued to the
 Purchaser for up to an aggregate of 500,000 shares of Common Stock on the
 Closing Date in the form of Exhibit E hereto.

      "Warrant Shares" has the meaning set forth in the Recitals.

 ARTICLE 1.2  Accounting Terms and Determinations .  Unless otherwise
 specified herein, all accounting terms used herein shall be interpreted,
 all accounting determinations hereunder shall be made, and all financial
 statements required to be delivered hereunder shall be prepared, in
 accordance with generally accepted accounting principles as in effect from
 time to time, applied on a consistent basis (except for changes concurred in
 by the Company's independent public accountants) (" GAAP").  All references
 to "dollars," "Dollars" or "$" are to United States dollars unless otherwise
 indicated.


                 ARTICLE 2. PURCHASE AND SALE OF SECURITIES

 ARTICLE 2.1  Purchase and Sale of Note .

           (a)  Subject to the terms and conditions set forth herein, the
      Company agrees to issue and sell to Purchaser, and Purchaser agrees to
      purchase from the Company, the Note in the aggregate principal amount
      of up to $1,250,000.

           (b)  Purchaser shall acquire the Note on the Closing Date in an
      aggregate principal amount of One Million Two Hundred Fifty Thousand
      Dollars ($1,250,000).

           (c)  In connection with the Purchaser's agreement to purchase the
      Note specified in this Article II, the Company shall issue and deliver
      to the Purchaser on the Closing Date, Warrants to purchase an aggregate
      of 500,000 shares of Common Stock.

           (d)  The Note is secured by certain assets of the Company pursuant
      to the Security Agreement (the "Security Agreement"), of even date
      herewith.

 ARTICLE 2.2  Purchase Price .  The purchase price for the Note and
 Warrants shall be $1,250,000 (the " Purchase Price") and shall be allocated
 as set forth on Schedule 2.2.

 ARTICLE 2.3  Closing and Mechanics of Payment .  Subject to satisfaction
 of the conditions set forth in Sections 6.1 and 6.2 hereof, the Closing Date
 shall occur on November 8, 2002.


                      ARTICLE 3.  PAYMENT TERMS OF NOTE

 ARTICLE 3.1  Ranking; Payment of Principal and Interest; Payment
 Mechanics . The Note shall rank pari passu in right of payment (but not with
 respect to the rights in the Collateral (as defined in the Note)) to the
 Company's outstanding debt as of the Closing Date and senior to any debt
 incurred by the Company following the Closing Date.  The Company will pay
 all amounts due on each Note by the method and at the address specified
 for such purpose by the applicable Purchaser in writing, without the
 presentation or surrender of any Note or the making of any notation thereon,
 except that upon written request of the Company made concurrently with or
 reasonably promptly after payment or prepayment in full of the Note, the
 holder shall surrender the Note for cancellation, reasonably promptly after
 any such request, to the Company at its principal executive office.  Prior
 to any sale or other disposition of any Note, the holder thereof will, at
 its election, either endorse thereon the amount of principal paid thereon
 and the last date to which interest has been paid thereon or surrender the
 Note to the Company in exchange for a new Note.  The Company will afford the
 benefits of this Section 3.1 to any direct or indirect transferee of the
 Note and that has made the same agreement relating to this Note as the
 Purchaser has in this Section 3.1; provided that such transferee is an
 "accredited investor" under Rule 501 of the Securities Act and has delivered
 to the Company such representations, warranties and covenants as may be
 reasonably requested thereby.

 ARTICLE 3.2  . Payment of Interest .  Interest shall accrue on the
 outstanding principal amount of the Note as of the date of issuance and
 shall be payable as specified therein.

 ARTICLE 3.3  Voluntary Prepayment .  For so long as an Event of Default
 has not occurred and is continuing, the Company may at any time until the
 Maturity Date, at its option, repay, the full amount of, the Note at the
 Pre-Payment Price set forth in the Note following at least five (5) Business
 Days prior written notice to the Purchaser (the expiration of such five (5)
 Business Day period being referred to as the "Prepayment Date"); provided,
 however, that if such date is not a Business Day, the Prepayment Date shall
 be the next Business Day thereafter.

 ARTICLE 3.4  Mandatory Prepayments .

      (a)  Upon the occurrence of a (i) Change in Control of the Company or
 (ii) a transfer of all or substantially all of the assets of the Company to
 any Person in a single transaction or series of related transactions, or
 (iii) a consolidation, merger or amalgamation of the Company with or into
 another Person in which the Company is not the surviving entity (other
 than a merger which is effected solely to change the jurisdiction of
 incorporation of the Company and results in a reclassification, conversion
 or exchange of outstanding shares of Common Stock solely into shares of
 Common Stock), (each a " Sale Event"), or  the occurrence of a Registration
 Default which continues uncured for a period of sixty (60) days, then, in
 each case, the Company shall, upon request of the Majority Holders, redeem
 this Note in cash for the then applicable Prepayment Price.

      (b)  Upon the consummation of one or more Financings other than the
 issuance of New Debt from Related Persons, the Company shall use 25% of the
 Net Cash Proceeds therefrom (unless the Net Cash Proceeds from each such
 Financing is less than $250,000) to redeem the Note. The redemption price
 payable upon any such redemption shall be the Prepayment Price.

 ARTICLE 3.5  Prepayment Procedures .

      (a)  Any permitted prepayment or redemption of the Note pursuant to
 Sections 3.3 or 3.4 above shall be deemed to be effective and consummated
 (for purposes of determining the Formula Price or Pre-Payment Price as
 follows:

           (i)  A prepayment pursuant to Section 3.3, the "Prepayment Date"
      specified therein;

           (ii)  A redemption pursuant to Section 3.4(a), the date of
      consummation of the applicable Sale Event or the Registration Default;
      and

           (iii)  A redemption pursuant to Section 3.4(b), three (3)
      Business Days following the date of consummation of the applicable
      Financing (meaning closing and funding).

      (b)  On the Maturity Date (if the Company has elected to repay in cash
 the remaining principal balance of the Note) or on the effective date of a
 repayment or redemption a portion of the principal balance of the Note as
 specified in Section 3.5(a) above, the Company shall deliver by wire
 transfer of funds the repayment/redemption price to each Purchaser of the
 Note subject to redemption.  Should any Purchaser not receive payment of any
 amounts due on redemption of its Note by reason of the Company's failure to
 make payment within three business days of the times prescribed above for
 any reason, the Company shall pay to the applicable holder on demand
 (x) interest on the sums not paid when due at an annual rate equal to the
 lesser of (I) the maximum lawful rate and (II) 18% per annum, compounded
 at the end of each thirty (30) days, until the applicable holder is paid
 in full and (y) all costs of collection, including, but not limited to,
 reasonable attorneys' fees and costs, whether or not suit or other formal
 proceedings are instituted.

 ARTICLE 3.6  Payment of Additional Amounts .

      (a)  Any and all payments by the Company hereunder or under the Note to
 any Purchaser and each "qualified assignee" thereof shall be made free and
 clear of and without deduction or withholding for any and all present or
 future taxes, levies, imposts, deductions, charges or withholdings, and
 all liabilities with respect thereto (all such taxes, levies, imposts,
 deductions, charges, withholdings and liabilities being hereinafter referred
 to as " Taxes") unless such Taxes are required by law or the administration
 thereof to be deducted or withheld.  If the Company shall be required by
 law or the administration thereof to deduct or withhold any Taxes from or
 in respect of any sum payable under the Note (i) the holders of the Note
 subject to such Taxes shall have the right, but not the obligation, for a
 period of thirty (30) days commencing upon the day it shall have received
 written notice from the Company that it is required to withhold Taxes to
 transfer all or any portion of the Note to a qualified assignee to the
 extent such transfer can be effected in accordance with the other provisions
 of this Agreement and applicable law; (ii) the Company shall make such
 deductions or withholdings; and (iii) the Company shall forthwith pay the
 full amount deducted or withheld to the relevant taxation or other authority
 in accordance with applicable.  A "qualified assignee" of a Purchaser is a
 Person that is organized under the laws of (I) the United States or (II)
 any jurisdiction other than the United States or any political subdivision
 thereof and that (y) represents and warrants to the Company that payments of
 the Company to such assignee under the laws in existence on the date of this
 Agreement would not be subject to any Taxes and (z) from time to time, as
 and when requested by the Company, executes and delivers to the Company
 and the Internal Revenue Service forms, and provides the Company with any
 information necessary to establish such assignee's continued exemption from
 Taxes under applicable law.

      (b)  Within 30 days after the date of any payment of Taxes, the Company
 will furnish to Purchaser the original or a certified copy of a receipt
 evidencing payment thereof.


                  ARTICLE 4.  REPRESENTATIONS AND WARRANTIES

     The Company represents and warrants to the Purchaser as of the Closing
 Date, the following:

 ARTICLE 4.1  Organization and Qualification .  The Company and each
 Subsidiary is a corporation (or other legal entity) duly organized,
 validly existing and in good standing under the laws of its jurisdiction of
 incorporation, with full power and authority to own, lease, use and operate
 its properties and to carry on its business as and where now owned, leased,
 used, operated and conducted.  The Company is qualified to conduct business
 as a foreign corporation and is in good standing in every jurisdiction in
 which the nature of the business conducted by it makes such qualification
 necessary, except where such failure would not have a Material Adverse
 Effect.  A " Material Adverse Effect" means any material adverse effect
 on the operations, results of operations, properties, assets or condition
 (financial or otherwise) of the Company or the Company and its Subsidiaries,
 taken as a whole, or on the transactions contemplated hereby or by the
 agreements or instruments to be entered into in connection herewith.

 ARTICLE 4.2  Authorization and Execution .

      (a)  The Company has all requisite corporate power and authority to
 enter into and perform each Transaction Agreement and to consummate the
 transactions contemplated hereby and thereby and to issue the Securities
 in accordance with the terms hereof and thereof.

      (b)  The execution, delivery and performance by the Company of each
 Transaction Agreement and the issuance by the Company of the Securities have
 been duly and validly authorized and no further consent or authorization of
 the Company, its Board of Directors or its shareholders is required.

      (c)  This Agreement has been duly executed and delivered by the
 Company.

      (d)  This Agreement constitutes, and upon execution and delivery
 thereof by the Company, each of the Transaction Agreements will constitute,
 a valid and binding agreement of the Company, in each case enforceable
 against the Company in accordance with its respective terms, subject to
 (i) applicable bankruptcy, insolvency or similar laws affecting the
 enforceability of creditors rights generally and (ii) equitable principles
 of general applicability.

 ARTICLE 4.3  Capitalization  .  As of the date hereof, the authorized,
 issued and outstanding capital stock of the Company is as set forth on
 Schedule 4.3 hereto and no other shares of capital stock of the Company
 will be outstanding as of the Closing Date.  All of such outstanding shares
 of capital stock are, or upon issuance will be, duly authorized, validly
 issued, fully paid and nonassessable.  No shares of capital stock of the
 Company are subject to preemptive rights or similar rights of the
 stockholders of the Company or any liens or encumbrances imposed through
 the actions or failure to act of the Company.  Other than as set forth on
 Schedule 4.3 hereto, as of the date hereof, (i) there are no outstanding
 options, warrants, scrip, rights to subscribe for, puts, calls, rights of
 first refusal, agreements, understandings, claims or other commitments or
 rights of any character whatsoever relating to, or securities or rights
 convertible into or exchangeable for any shares of capital stock of the
 Company or any of its Subsidiaries, or arrangements by which the Company or
 any of its Subsidiaries is or may become bound to issue additional shares
 of capital stock of the Company or any of its Subsidiaries, and (ii) there
 are no agreements or arrangements under which the Company or any of its
 Subsidiaries are obligated to register the sale of any of its or their
 securities under the Securities Act (except pursuant to the Registration
 Rights Agreement and the Registration Rights Agreement between the Company
 and Purchaser dated April 11, 2001) and (iii) there are no anti-dilution or
 price adjustment provisions contained in any security issued by the Company
 (or in any agreement providing rights to security holders) that will be
 triggered by the issuance of the Note, Warrants or Warrant Shares.  The
 Company has furnished to Purchaser true and correct copies of the Company's
 Corporate Documents, and the terms of all securities convertible into or
 exercisable for Common Stock and the material rights of the holders thereof
 in respect thereto.

 ARTICLE 4.4  Governmental Authorization .  The execution and delivery by
 the Company of the Transaction Agreements does not and will not, the
 issuance and sale by the Company of the Securities does not and will not,
 and the consummation of the transactions contemplated hereby and by the
 other Transaction Agreements will not, require any action by or in respect
 of, or filing with, any governmental body, agency or governmental official
 except (a) such actions or filings that have been undertaken or made prior
 to the date hereof and that will be in full force and effect (or as to
 which all applicable waiting periods have expired) on and as of the date
 hereof or which are not required to be filed on or prior to the Closing
 Date, (b) such actions or filings that, if not obtained, would not result
 in a Material Adverse Effect, and (c) the filing of a "Form D" and relevant
 blue sky filings, each as described in Section 7.13 below.

 ARTICLE 4.5  Issuance of Shares .  Upon exercise in accordance with the
 terms of the Warrants (assuming the payment of the exercise price set forth
 in the Warrants), the Warrant Shares and the Interest Shares (if any) shall
 be duly and validly issued and outstanding, fully paid and nonassessable,
 free and clear of any Taxes, Liens and charges with respect to issuance and
 shall not be subject to preemptive rights or similar rights of any other
 stockholders of the Company.  Assuming the representations and warranties of
 the Purchaser herein are true and correct in all material respects, each of
 the Securities will have been issued in material compliance with all
 applicable U.S. federal and state securities laws.

 ARTICLE 4.6  No Conflicts .  The execution and delivery by the Company
 of the Transaction Agreements, the issuance and sale by the Company of the
 Securities and the consummation of the transactions contemplated hereby and
 by the other Transaction Agreements will not, contravene or constitute a
 default under or violation of (i) any provision of applicable law or
 regulation, (ii) the Company Corporate Documents, (iii) any agreement,
 judgment, injunction, order, decree or other instrument binding upon the
 Company or any Subsidiary or any of their respective assets, or result in
 the creation or imposition of any Lien on any asset of the Company or any
 Subsidiary.  The Company and each Subsidiary is in compliance with and
 conforms to all statutes, laws, ordinances, rules, regulations, orders,
 restrictions and all other legal requirements of any domestic or foreign
 government or any instrumentality thereof having jurisdiction over the
 conduct of its businesses or the ownership of its properties, except where
 such failure would not have a Material Adverse Effect.

 ARTICLE 4.7  Financial Information and SEC Reports .  Since January 1,
 2001, the Company has timely filed all forms, reports and documents with the
 Commission required to be filed by it under the Exchange Act through the
 date hereof (all of the foregoing filed prior to the date hereof and all
 exhibits included therein and financial statements and schedules thereto and
 documents (other than exhibits) incorporated by reference therein, being
 referred to herein collectively as the " SEC Reports").  The Company has
 delivered or made available to each Purchaser true and complete copies of
 the SEC Reports, except for such exhibits and incorporated documents.  Such
 SEC Reports, at the time filed, complied in all material respects with the
 requirements of the Exchange Act and the rules and regulations of the
 Commission thereunder applicable to such SEC Reports.  None of the SEC
 Reports, including without limitation, any financial statements or schedules
 included therein, contains any untrue statement of a material fact or omits
 to state a material fact necessary to in order to make the statements made,
 in light of the circumstances under which they were made, not misleading.
 There have been no material adverse changes in the Company's business,
 properties, results of operations, condition (financial or otherwise) or
 prospects since the date of the Company's most recent Report on Form 10-K
 for the year ended October 31, 2001 which have not been disclosed in the
 Company's SEC Reports or to the Purchaser in writing.  The audited and
 unaudited consolidated balance sheets of the Company and its Subsidiaries
 contained in the SEC Reports, and the related consolidated statements of
 income, changes in stockholders' equity and changes in cash flows for the
 periods then ended, including the footnotes thereto, except as indicated
 therein, (i) complied in all material respects with applicable accounting
 requirements and the published rules and regulations of the Commission with
 respect thereto and (ii) have been prepared in accordance with GAAP
 consistently applied throughout the periods indicated, except that the
 unaudited financial statements do not contain footnotes, may be in condensed
 or summary form and may be subject to normal audit adjustments and normal
 annual adjustments.  Such financial statements fairly present in all
 material respects the financial condition of the Company and its
 Subsidiaries at the dates indicated and the consolidated results of
 their operations and cash flows for the periods then ended and, except as
 indicated therein, reflect all claims against and all Debts and liabilities
 of the Company and its Subsidiaries, fixed or contingent.  Since January 1,
 2002, except as disclosed in the SEC Reports, there has been (x) no material
 adverse change in the assets or liabilities, or in the business or
 condition, financial or otherwise, or in the results of operations or
 prospects, of the Company and its Subsidiaries, whether as a result of any
 legislative or regulatory change, revocation of any license or rights to
 do business, fire, explosion, accident, casualty, labor  trouble, flood,
 drought, riot, storm, condemnation, act of God, public force or otherwise
 and (y) no material adverse change in the assets or liabilities, or in
 the business or condition, financial or otherwise, or in the results of
 operations or prospects, of the Company and its Subsidiaries except in the
 ordinary course of business; and no fact or condition exists or, to the
 knowledge of the Company, is contemplated or threatened which might be
 reasonably expected to cause such a change in the future.

 ARTICLE 4.8  Litigation .  Except as set forth On Schedule 4.8, there is
 no action, suit or proceeding pending or, to the knowledge of the Company,
 threatened against the Company or any Subsidiary, before any court or
 arbitrator or any governmental body, agency or official in which there is
 a reasonable possibility of an adverse decision which could materially
 adversely affect the business, condition (financial or otherwise),
 operations, performance, properties or prospects of the Company or which
 challenges the validity of any Transaction Agreements.

 ARTICLE 4.9  Compliance with ERISA and other Benefit Plans .

      (a)  Each member of the ERISA Group has fulfilled its obligations under
 the minimum funding standards of ERISA and the Code with respect to each
 Plan and is in compliance in all material respects with the presently
 applicable provisions of ERISA and the Code with respect to each Plan.  No
 member of the ERISA Group has (i) sought a waiver of the minimum funding
 standard under Section 412 of the Code in respect of any Plan, (ii) failed
 to make any required contribution or payment to any Plan or Multiemployer
 Plan or in respect of any Benefit Arrangement, or made any amendment to
 any Plan or Benefit Arrangement, which has resulted or could be reasonably
 expected to result in the imposition of a Lien or the posting of a bond or
 other security under ERISA or the Code or (iii) incurred any liability under
 Title IV of ERISA other than a liability to the PBGC for premiums under
 Section 4007 of ERISA, if any.

      (b)  The benefit plans not covered under clause (a) above (including
 profit sharing, deferred compensation, stock option, employee stock
 purchase, bonus, retirement, health or insurance plans, collectively the "
 Benefit Plans") relating to the employees of the Company are duly registered
 where required by, and are in good standing in all material respects under,
 all applicable laws.  All required employer and employee contributions under
 the Benefit Plans to the date hereof have been made, the respective fund or
 funds established under the Benefit Plans, if any, are funded in accordance
 with applicable laws, and no past service funding liabilities exist
 thereunder.

      (c)  No Benefit Plans have any unfunded liabilities, either on a
 "going concern" or "winding up" basis and determined in accordance with all
 applicable laws and actuarial practices and using actuarial assumptions and
 methods that are reasonable in the circumstances.  No event has occurred and
 no condition exists with respect to any Benefit Plans that has resulted or
 could reasonably be expected to result in any pension plan having its
 registration revoked or wound up (in whole or in part) or refused for the
 purposes of any applicable laws or being placed under the administration of
 any relevant pension benefits regulatory authority or being required to pay
 any taxes or penalties (in any material amounts) under any applicable laws.

 ARTICLE 4.10  Environmental Matters .  The costs and liabilities
 associated with Environmental Laws (including the cost of compliance
 therewith) are unlikely to have a material adverse effect on the business,
 condition (financial or otherwise), operations, performance, properties or
 prospects of the Company or any Subsidiary.  Each of the Company and the
 Subsidiaries conducts its businesses in compliance in all material respects
 with all applicable Environmental Laws.

 ARTICLE 4.11  Taxes .  Except as set forth on Schedule 4.11 (unpaid
 excise taxes) all United States federal, state, county, municipality, local
 or foreign  income tax returns and all other material tax returns (including
 foreign tax returns) which are required to be filed by or on behalf of the
 Company and each Subsidiary have been filed and all material taxes due
 pursuant to such returns or pursuant to any assessment received by the
 Company and each Subsidiary have been paid except those being disputed in
 good faith and for which adequate reserves have been established.  The
 charges, accruals and reserves on the books of the Company and each
 Subsidiary in respect of taxes  have been established in accordance with
 GAAP and Regulation S-X of the Exchange Act.

 ARTICLE 4.12  Investments, Joint Ventures .  Other than as set forth in
 Schedule 4.12, the Company has no direct or indirect Investment in any
 Person, and the Company is not a party to any partnership, management,
 shareholders' or joint venture or similar agreement.

 ARTICLE 4.13  Not an Investment Company .  Neither the Company nor any
 Subsidiary is an "Investment Company" within the meaning of Investment
 Company Act of 1940, as amended.

 ARTICLE 4.14  Full Disclosure .  The information heretofore furnished by
 the Company to the Purchaser for purposes of or in connection with this
 Agreement or any transaction contemplated hereby does not, and all such
 information hereafter furnished by the Company or any Subsidiary to the
 Purchaser will not (in each case taken together and on the date as of which
 such information is furnished), contain any untrue statement of a material
 fact or omit to state a material fact necessary in order to make the
 statements contained therein, in the light of the circumstances under which
 they are made, not misleading.

 ARTICLE 4.15  No Solicitation; No Integration with Other Offerings .  No
 form of general solicitation or general advertising was used by the Company
 or, to the best of its actual knowledge, any other Person acting on behalf
 of the Company, in connection with the offer and sale of the Securities.
 Neither the Company, nor, to its knowledge, any Person acting on behalf of
 the Company, has, either directly or indirectly, sold or offered for sale to
 any Person (other than the Purchaser) any of the Securities or, within the
 six months prior to the date hereof, any other similar security of the
 Company except as contemplated by this Agreement, and the Company represents
 that it will use its best efforts such that neither itself nor any Person
 authorized to act on its behalf (except that the Company makes no
 representation as to the Purchaser and their Affiliates) will sell or
 offer for sale any such security to, or solicit any offers to buy any such
 security from, or otherwise approach or negotiate in respect thereof with,
 any Person or Persons so as thereby to cause the issuance or sale of any of
 the Securities to be in violation of any of the provisions of Section 5 of
 the Securities Act.  To the knowledge of the Company, the issuance of the
 Securities to the Purchaser will not be integrated with any other issuance
 of the Company's securities (past, current or future) which requires
 stockholder approval under the rules of the Nasdaq Market.

 ARTICLE 4.16  Permits .  (a) Each of the Company and its Subsidiaries has
 all material Permits; (b) all such Permits are in full force and effect, and
 each of the Company and its Subsidiaries has fulfilled and performed all
 material obligations with respect to such Permits; (c) to the knowledge of
 the Company, no event has occurred which allows, or after notice of lapse of
 time would allow, revocation or termination by the issuer thereof or which
 results in any other material impairment of the rights of the holder of
 any such Permit; and (d) the Company has no reason to believe that any
 governmental body or agency is considering limiting, suspending or revoking
 any such Permit.

 ARTICLE 4.17  Leases .  Other than as disclosed in the SEC Reports,
 neither the Company nor any Subsidiary is a party to any capital lease
 obligation with a value greater than $250,000 or to any operating lease with
 an aggregate annual rental greater than $250,000 during the life of such
 lease.

 ARTICLE 4.18  Absence of Any Undisclosed Liabilities or Capital Calls .
 There are no liabilities of the Company or any Subsidiary of any kind
 whatsoever, whether accrued, contingent, absolute, determined, determinable
 or otherwise, and there is no existing condition, situation or set of
 circumstances which would reasonably be expected to result in such a
 liability, other than (i) those liabilities provided for in the financial
 statements delivered pursuant to Section 4.7 hereof and (ii) other
 undisclosed liabilities which, individually or in the aggregate, would
 not have a Material Adverse Effect.

 ARTICLE 4.19  Public Utility Holding Company .  Neither the Company nor
 any Subsidiary is, or will be upon issuance and sale of the Securities and
 the use of the proceeds described herein, subject to regulation under the
 Public Utility Holding Company Act of 1935, as amended, the Federal Power
 Act, the Interstate Commerce Act or to any federal or state statute or
 regulation limiting its ability to issue and perform its obligations under
 any Transaction Agreement.

 ARTICLE 4.20  Intellectual Property Rights .  Each of the Company and its
 Subsidiaries owns, or is licensed under, and has the rights to use, all
 material patents, trademarks, trade names, copyrights, technology, know-how
 and processes (collectively, " Intellectual Property") used in, or necessary
 for the conduct of its business; no claims have been asserted by any Person
 to the use of any such Intellectual Property or challenging or questioning
 the validity or effectiveness of any license or agreement related thereto,
 other than as set forth on Schedule 4.8.  To the best of Company's and its
 Subsidiaries' knowledge, there is no valid basis for any such claim and the
 use of such Intellectual Property by the Company and its Subsidiaries will
 not infringe upon the rights of any Person.

 ARTICLE 4.21  Insurance .  Except as set forth on Schedule 4.21, the
 Company and its Subsidiaries maintain, with financially sound and reputable
 insurance companies, insurance in at least such amounts and against such
 risks such that any uninsured loss would not have a Material Adverse Effect.
 All insurance coverages of the Company and its Subsidiaries are in full
 force and effect and there are no past due premiums in respect of any such
 insurance.

 ARTICLE 4.22  Title to Assets and Properties .  Except as set forth on
 Schedule 4.22 or otherwise as a result of Liens granted pursuant to the
 Security Agreement, the Company and its Subsidiaries have good and
 marketable title to all their respective assets and properties, real and
 personal, free and clear of all Liens.

 ARTICLE 4.23   Reserved.

 ARTICLE 4.24  Internal Accounting Controls .  The Company and each of its
 Subsidiaries maintain a system of internal accounting controls sufficient,
 in the judgment of the Company's Board of Directors, to provide reasonable
 assurance that (i) transactions are executed in accordance with managements'
 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.

 ARTICLE 4.25  Foreign Practices .  Neither the Company nor any of its
 Subsidiaries nor, to the Company's knowledge, any employee or agent of the
 Company or any Subsidiary has made any payments of funds of the Company or
 Subsidiary, or received or retained any funds, in each case (x) in violation
 of any law, rule or regulation or (y) of a character required to be
 disclosed by the Company in any of the SEC Reports.

 ARTICLE 4.26   Subsidiaries .  Except for the directly and indirectly
 owned subsidiaries of the Company as set forth on Schedule 4.26 (the
 "Subsidiaries"), the Company does not own or hold any shares of stock or
 any other security or interest in any other equity, or any rights to acquire
 any such security or interest.  Except for the Subsidiaries disclosed on
 Schedule 4.26, the Company has never had any subsidiary corporation of which
 the securities having a majority of voting power in electing the board of
 directors or representing a majority of the economic interests were, at the
 time as of which any determination was made, owned by the Company either
 directly or indirectly.  The number of authorized, issued and outstanding
 shares of capital stock of the Subsidiaries is as set forth on Schedule
 4.26.  All outstanding shares of the Subsidiaries capital stock are validly
 issued, fully paid and nonassessable, are free from, and were not issued in
 violation of any preemptive rights, and are owned of record and beneficially
 by the Company.


         ARTICLE 5.  REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 ARTICLE 5.1  Purchaser .  Purchaser hereby represents and warrants to
 the Company that:

      (a)  the Purchaser is an "accredited investor" within the meaning of
 Rule 501(a) under the Securities Act and the Securities to be acquired by it
 pursuant to this Agreement are being acquired for its own account and, as of
 the date hereof, not with a view toward, or for sale in connection with, any
 distribution thereof except in compliance with applicable United States
 federal and state securities law; provided that the disposition of the
 Purchaser's property shall at all times be and remain within its control;

      (b)  the execution, delivery and performance of this Agreement and
 the purchase of the Securities pursuant thereto are within the Purchaser's
 corporate or partnership powers, as applicable, and have been duly and
 validly authorized by all requisite corporate or partnership action;

      (c)  this Agreement has been duly executed and delivered by the
 Purchaser;

      (d)  the execution and delivery by the Purchaser of the Transaction
 Agreements to which it is a party does not, and the consummation of the
 transactions contemplated hereby and thereby will not, contravene or
 constitute a default under or violation of (i) any provision of applicable
 law or regulation, or (ii) any agreement, judgment, injunction, order,
 decree or other instrument binding upon such Purchaser;

      (e)  Purchaser understands that the Securities have not been registered
 under the Securities Act and may not be transferred or sold except as
 specified in this Agreement or in the Transaction Agreements;

      (f)  this Agreement and each of the Transaction Agreements to which
 Purchaser is a party constitutes a valid and binding agreement of the
 Purchaser enforceable in accordance with its terms, subject to (i)
 applicable bankruptcy, insolvency or similar laws affecting the
 enforceability of creditors rights generally and (ii) equitable principles
 of general applicability;

      (g)  the Purchaser has such knowledge and experience in financial and
 business matters so as to be capable of evaluating the merits and risks of
 its investment in the Securities and the Purchaser is capable of bearing the
 economic risks of such investment;

      (h)  the Purchaser is knowledgeable, sophisticated and experienced in
 business and financial matters; the Purchaser has previously invested in
 securities similar to the Securities and fully understands the limitations
 on transfer described herein; the Purchaser has been afforded access to
 information about the Company and the financial condition, results of
 operations, property, management and prospects of the Company sufficient to
 enable it to evaluate its investment in the Securities; the Purchaser has
 been afforded the opportunity to ask such questions as it has deemed
 necessary of, and to receive answers from, representatives of the Company
 concerning the terms and conditions of the offering of the Securities and
 the merits and the risks of investing in the Securities; and the Purchaser
 has been afforded the opportunity to obtain such additional information
 which the Company possesses or can acquire that is necessary to verify
 the accuracy and completeness of the information given to the Purchaser
 concerning the Company.  The foregoing does not in any way relieve the
 Company of its representations and other undertakings hereunder, and shall
 not limit any Purchaser's ability to rely thereon; and

      (i)  no part of the source of funds used by the Purchaser to acquire
 the Securities constitutes assets allocated to any separate account
 maintained by the Purchaser in which any employee benefit plan (or its
 related trust) has any interest.


          ARTICLE 6.  CONDITIONS PRECEDENT TO PURCHASE OF SECURITIES

 ARTICLE 6.1  Conditions Precedent to the Purchaser's Obligations to
 Purchase .  The obligation of Purchaser hereunder to purchase the Note at
 the Closing is subject to the satisfaction, on or before the Closing Date
 of each of the following conditions, provided that these conditions are for
 Purchaser's sole benefit and may be waived by Purchaser at any time in its
 sole discretion;

      (a)  The Company shall have executed this Agreement, the Escrow
 Agreement and the Registration Rights Agreement and delivered the same to
 the Purchaser;

      (b)  The Company shall have delivered to the Purchaser a duly executed
 Note in accordance with Article 2 hereof, the Security Agreement and all
 related documents.

      (c)  The Company shall have delivered the Solvency Certificate;

      (d)  The representations and warranties of the Company contained
 in each Transaction Agreement shall be true and correct in all material
 respects as of the date when made and as of the Closing Date as though made
 at such time (except for representations and warranties that speak as of a
 specified date) and the Company shall have performed, satisfied and complied
 with all covenants, agreements and conditions required by such Transaction
 Agreements to be performed, satisfied or complied with by it at or prior
 to the Closing Date.  The Purchaser  shall have received an Officer's
 Certificate executed by the chief executive officer of the Company, dated as
 of the Closing Date, to the foregoing effect and as to such other matters as
 may be reasonably requested by the Purchaser, including but not limited to
 certificates with respect to the Company Corporate Documents, resolutions
 relating to the transactions contemplated hereby and the incumbencies of
 certain officers and Directors of the Company.  The form of such certificate
 is attached hereto as Exhibit D;

      (e)  The Company shall have received all governmental, Board of
 Directors, shareholders and third party consents and approvals necessary in
 connection with the issuance and sale of the Securities;

      (f)  All applicable waiting periods in respect to the issuance and sale
 of the Securities shall have expired without any action having been taken by
 any competent authority that could restrain, prevent or impose any
 materially adverse conditions thereon or that could seek or threaten any of
 the foregoing;

      (g)  No law or regulation shall have been imposed or enacted that, in
 the judgment of the Purchaser, could adversely affect the transactions set
 forth herein or in the other Transaction Agreements, and no law or
 regulation shall have been proposed that in the reasonable judgment of
 Purchaser could reasonably have any such effect;

      (h)  Purchaser shall have received an opinion, dated the Closing Date,
 of counsel to the Company in form and substance reasonably satisfactory to
 Purchaser;

      (i)  All fees and expenses due and payable by the Company on or prior
 to the Closing Date shall have been paid;

      (j)  The Company Corporate Documents and the Subsidiary Corporate
 Documents, if any, shall be in full force and effect and no term or
 condition thereof shall have been amended, waived or otherwise modified
 without the prior written consent of the Purchaser;

      (k)  There shall have occurred no material adverse change in the
 business, condition (financial or otherwise), operations, performance,
 properties or prospects of the Company or any Subsidiary since July 31,
 2002;

      (l)  There shall exist no action, suit, investigation, litigation or
 proceeding pending or threatened in any court or before any arbitrator or
 governmental instrumentality that challenges the validity of or purports
 to affect this Agreement or any other Transaction Agreement, or other
 transaction contemplated hereby or thereby or that could reasonably be
 expected to have a Material Adverse Effect, or any material adverse effect
 on the enforceability of the Transaction Agreements or the Securities or the
 rights of the holders of the Securities or the Purchaser hereunder;

      (m)  There shall not have occurred any disruption or adverse change in
 the financial or capital markets generally, or in the market for the Common
 Stock (including but not limited to any suspension or delisting), which the
 Purchaser reasonably deems material in connection with the purchase of the
 Securities;

      (n)  Immediately before and on the Closing Date, no Default or Event of
 Default shall have occurred and be continuing;

      (o)  The Purchaser shall have received all other opinions, resolutions,
 certificates, instruments, agreements or other documents as they shall
 reasonably request; and

      (p)  The Company shall have delivered to Purchaser the Use of Proceeds
 Schedule 7.8.


 ARTICLE 6.2  Conditions to the Company's Obligations .  The obligations
 of the Company to issue and sell the Securities to the Purchaser pursuant to
 this Agreement are subject to the satisfaction, at or prior to any Closing
 Date, of the following conditions:

      (a)  The representations and warranties of the Purchaser contained
 herein shall be true and correct in all material respects on the Closing
 Date and the Purchaser shall have performed and complied in all material
 respects with all agreements required by this Agreement to be performed or
 complied with by the Purchaser at or prior to the Closing Date;

      (b)  The issue and sale of the Securities by the Company shall not be
 prohibited by any applicable law, court order or governmental regulation;

      (c)  Receipt by the Company of duly executed counterparts of this
 Agreement, the Escrow Agreement and the Registration Rights Agreement signed
 by the Purchaser; and

      (d)  The Company shall have received payment of the Purchase Price,
 less the Pay-Off Amount and the applicable transaction fees.


                      ARTICLE 7.  AFFIRMATIVE COVENANTS

     The Company hereby agrees that, from and after the date hereof for so
 long as any principal amount of the Note remains outstanding (except for
 Sections 7.1(a) and (d), 7.10, 7.11 and 7.12  which shall apply for so long
 as the Note or Warrants remain outstanding) and for the benefit of the
 Purchaser:

 ARTICLE 7.1   Information .  The Company will deliver to each holder of
 the Note:

      (a)  promptly upon the filing thereof, copies of (i) all registration
 statements (other than the exhibits thereto and any registration statements
 on Form S-8 or its equivalent), and (ii) all reports of Forms 10-K, 10-Q and
 8-K (or other equivalents) which the Company or any Subsidiary has filed
 with the Commission;

      (b)  simultaneously with the delivery of each item referred to in
 clause (a) above, a certificate from the chief financial officer of the
 Company stating that no Default or Event of Default has occurred and is
 continuing, or, if as of the date of such delivery a Default shall have
 occurred and be continuing, a certificate from the Company setting forth the
 details of such Default or Event of Default and the action which the Company
 is taking or proposes to take with respect thereto;

      (c)  within two (2) days after any officer of the Company obtains
 knowledge of a Default or Event of Default, or that any Person has given any
 notice or taken any action with respect to a claimed Default hereunder, a
 certificate of the chief financial officer of the Company setting forth the
 details thereof and the action which the Company is taking or proposed to
 take with respect thereto;

      (d)  promptly upon the mailing thereof to the shareholders of the
 Company generally, copies of all financial statements, reports and proxy
 statements so mailed and any other document generally distributed to
 shareholders;

      (e)  at least two (2) Business Days prior to the consummation of any
 Financing or other event requiring a repayment of the Note under Section
 3.4, notice thereof together with a summary of all material terms thereof
 and copies of all documents and instruments associated therewith;

      (f)  notice promptly upon the occurrence of any event by which the
 Reserved Amount becomes less than the maximum number of Warrant Shares
 issuable pursuant to the Transaction Agreements; and

      (g)  promptly following the commencement thereof, notice and a
 description in reasonable detail of any litigation or proceeding to which
 the Company or any Subsidiary is a party in which the amount involved is
 $250,000 or more and not covered by insurance or in which injunctive or
 similar relief is sought or which the Company is required to disclose in
 its SEC Reports.


 ARTICLE 7.2  Payment of Obligations .  The Company will, and will cause
 each Subsidiary to, pay and discharge, at or before maturity, all their
 respective material obligations, including, without limitation, tax
 liabilities, in the ordinary course of business, except where the same may
 be contested in good faith by appropriate proceedings and will maintain, in
 accordance with GAAP, appropriate reserves for the accrual of any of the
 same.

 ARTICLE 7.3   Maintenance of Property; Insurance .  The Company will, and
 will cause each Subsidiary to, keep all property useful and necessary in
 its business in good working order and condition, ordinary wear and tear
 excepted.  In addition, the Company and each Subsidiary will maintain
 insurance in at least such amounts and against such risks as it has insured
 against as of the Closing Date.

 ARTICLE 7.4   Maintenance of Existence .  The Company will, and will cause
 each Subsidiary to, continue to engage in business of the same general type
 as now conducted by the Company and such Subsidiaries, and will preserve,
 renew and keep in full force and effect its respective corporate existence
 and their respective material rights, privileges and franchises necessary or
 desirable in the normal conduct of business.

 ARTICLE 7.5   Compliance with Laws .  The Company will, and will cause
 each Subsidiary to, comply, in all material respects, with all federal,
 state, municipal, local or foreign applicable laws, ordinances, rules,
 regulations, municipal by-laws, codes and requirements of governmental
 authorities (including, without limitation, Environmental Laws and ERISA and
 the rules and regulations thereunder) except (i) where compliance therewith
 is contested in good faith by appropriate proceedings or (ii) where non-
 compliance therewith could not reasonably be expected, in the aggregate,
 to have a material adverse effect on the business, condition (financial or
 otherwise), operations, performance, properties or prospects of the Company
 or such Subsidiary.

 ARTICLE 7.6  Inspection of Property, Books and Records .  The Company
 will, and will cause each Subsidiary to, keep proper books of record and
 account in which full, true and correct entries shall be made of all
 dealings and transactions in relation to their respective businesses and
 activities; and will permit, during normal business hours, the Purchaser,
 representatives of the Purchaser and representatives of the U. S. Small
 Business Administration, to visit and inspect any of their respective
 properties, upon reasonable prior notice, to examine and make abstracts from
 any of their respective books and records and to discuss their respective
 affairs, finances and accounts with their respective executive officers and
 independent public accountants (and by this provision the Company authorizes
 its independent public accountants to disclose and discuss with the
 Purchaser the affairs, finances and accounts of the Company and its
 Subsidiaries), all at such reasonable times.

 ARTICLE 7.7  Investment Company Act .  The Company will not be or become
 an open-end investment trust, unit investment trust or face-amount
 certificate company that is or is required to be registered under Section 8
 of the Investment Company Act of 1940, as amended.

 ARTICLE 7.8   Use of Proceeds .  The proceeds from the issuance and sale
 of the Note by the Company shall be used as set forth on Schedule 7.8.
 None of the proceeds from the issuance and sale of the Note by the Company
 pursuant to this Agreement will be used directly or indirectly for the
 purpose, whether immediate, incidental or ultimate, of purchasing or
 carrying any "margin stock" within the meaning of Regulation G of the Board
 of Governors of the Federal Reserve System.

 ARTICLE 7.9  Compliance with Terms and Conditions of Material Contracts
 The Company will, and will cause each Subsidiary to, comply, in all
 respects, with all terms and conditions of all material contracts to which
 it is subject, so long as each Person who is a party to any such contract
 continues to perform its obligations thereunder.

 ARTICLE 7.10  Reserved Shares and Listings .

      (a)  The Company shall at all times have authorized, and reserved for
 the purpose of issuance, a sufficient number of shares of Common Stock to
 provide for the exercise in full of the Warrants and the issuance of the
 Warrant Shares (based on the exercise price of the Warrants) (collectively,
 the "Reserved Amount").  The Company shall not reduce the Reserved Amount
 without the prior written consent of Purchaser. If  at any time the number
 of shares of Common Stock authorized and reserved for issuance is below
 the Reserved Amount, the Company will promptly take all corporate action
 necessary to authorize and reserve a sufficient number of shares, including,
 without limitation, calling a special meeting of shareholders to authorize
 additional shares, in the case of an insufficient number of authorized
 shares.

      (b)  The Company will maintain the listing and trading of its Common
 Stock on the OTC Bulletin Board.  The Company will use its commercially
 reasonable best efforts to obtain as soon as practicable and maintain the
 listing and trading of its Common Stock on a National Market.  The Company
 will comply in all respects with the Company's reporting, filing and other
 obligations under the bylaws or rules of the National Association of
 Securities Dealers, Inc. (the "NASD") and such exchanges, as applicable.
 The Company shall promptly provide to Purchaser copies of any notices it
 receives regarding the continued eligibility of the Common Stock for listing
 on the OTC Bulletin Board or any National Market.

 ARTICLE 7.11  Irrevocable Instructions .  Upon receipt of a Notice of
 Exercise, as applicable, the Company shall immediately issue irrevocable
 instructions to its transfer agent to issue certificates, registered in
 the name of each Purchaser or its nominee, for the Warrant Shares in such
 amounts as specified from time to time by each Purchaser to the Company in
 such Notice.  Upon exercise of any Warrants in accordance with their terms,
 the Company will use its best efforts to cause its transfer agent to, issue
 one or more certificates representing shares of Common Stock in such name
 or names and in such denominations specified by a Purchaser in a Notice
 of Exercise.  As long as the Registration Statement contemplated by the
 Registration Rights Agreement shall remain effective, the shares of Common
 Stock issuable upon exercise of any Warrants shall be issued to any
 transferee of such shares from Purchaser, including transferee's of such
 shares pursuant to an effective registration statement, without any
 restrictive legend.  The Company further warrants and agrees that no
 instructions other than these instructions have been or will be given to
 its transfer agent.  Nothing in this Section 7.11 shall affect in any way a
 Purchaser's obligation to comply with all securities laws applicable to such
 Purchaser upon exercise of any Warrant or on resale of any shares of Common
 Stock, including any prospectus delivery requirements.

 ARTICLE 7.12  Maintenance of Reporting Status; Supplemental Information .
 So long as any of the Securities are outstanding, the Company shall timely
 file all reports required to be filed with the Commission pursuant to the
 Exchange Act.  The Company shall not terminate its status as an issuer
 required to file reports under the Exchange Act, even if the Exchange Act or
 the rules and regulations thereunder would permit such termination.  If at
 anytime the Company is not subject to the requirements of Section 13 or
 15(d) of the Exchange Act, the Company will promptly furnish at its
 expense, upon request, for the benefit of the holders from time to time of
 Securities,  information satisfying the information requirements of Rule 144
 under the Securities Act.

 ARTICLE 7.13  Form D; Blue Sky Laws .  The Company agrees to file a "Form
 D" with respect to the Securities as required under Regulation D of the
 Securities Act and to provide a copy thereof to the Purchaser promptly after
 such filing.  The Company shall, on or before the Closing Date, take such
 action as the Company shall reasonably determine is necessary to qualify
 the Securities for sale to the Purchaser at the Closing pursuant to this
 Agreement under applicable securities or "blue sky" laws of the states of
 the United States (or to obtain an exemption from such qualification), and
 shall provide evidence of any such action so taken to each Purchaser on or
 prior to the Closing Date.


                       ARTICLE 8.  NEGATIVE COVENANTS

     The Company hereby agrees that, from and after the date hereof for so
 long as the Note remains outstanding and for the benefit of the Purchaser:

 ARTICLE 8.1  Limitations on Debt or Other Liabilities .  Neither the
 Company nor any Subsidiary will create, incur, assume or suffer to exist (at
 any time after the Closing Date, after giving effect to the application of
 the proceeds of the issuance of the Securities), without the prior written
 consent of Purchaser, any Debt except (w) Debt from Related Persons, (x)
 Debt incurred in a Permitted Financing, (y) Debt incurred in connection
 with equipment leases to which the Company or its Subsidiaries are a party
 incurred in the ordinary course of business; and (z) Debt incurred in
 connection with trade accounts payable, imbalances and refunds arising in
 the ordinary course of business.

 ARTICLE 8.2  Transactions with Affiliates .  The Company and each
 Subsidiary will not, directly or indirectly, pay any funds to or for
 the account of, make any investment (whether by acquisition or stock or
 indebtedness, by loan, advance, transfer of property, guarantee or other
 agreement to pay, purchase or service, directly or indirectly, and Debt, or
 otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
 tangible or intangible, to, or participate in, or effect any transaction in
 connection with any joint enterprise or other joint arrangement with, any
 Affiliate, except, (1) pursuant to those agreements specifically identified
 on Schedule 8.2 attached hereto (with a copy of such agreements annexed to
 such Schedule 8.2) or (2) on terms to the Company or such Subsidiary no
 less favorable than terms that could be obtained by the Company or such
 Subsidiary from a Person that is not an Affiliate of the Company upon
 negotiation at arms' length, as determined in good faith by the Board of
 Directors of the Company; provided that no determination of the Board of
 Directors shall be required with respect to any such transactions entered
 into in the ordinary course of business.

 ARTICLE 8.3  Merger or Consolidation .  The Company will not, in a
 single transaction or a series of related transactions,  (i) consolidate
 with or merge with or into any other Person, or (ii) permit any other Person
 to consolidate with or merge into it, unless the Company shall be the
 survivor of such merger or consolidation and (x) immediately before
 and immediately after given effect to such transaction (including any
 indebtedness incurred or anticipated to be incurred in connection with the
 transaction), no Default or Event of Default shall have occurred and be
 continuing; and (y) the Company has delivered to the Purchaser an Officer's
 Certificate stating that such consolidation, merger or transfer complies
 with this Agreement, and that all conditions precedent in this Agreement
 relating to such transaction have been satisfied.

 ARTICLE 8.4  Limitation on Asset Sales .  Except as set forth on
 Schedule 8.4, neither the Company nor any Subsidiary will consummate an
 Asset Sale of material assets of the Company or any Subsidiary without
 prior written notice of Purchaser, which consent will not be unreasonably
 withheld.  As used herein, "Asset Sale" means any sale, lease, transfer
 or other disposition (or series of related sales, leases, transfers or
 dispositions) or sales of capital stock of a Subsidiary (other than
 directors' qualifying shares), property or other assets (each referred
 to for the purpose of this definition as a "disposition"), including any
 disposition by means of a merger, consolidation or similar transaction
 other than a disposition of property or assets at fair market value in
 the ordinary course of business.

 ARTICLE 8.5  Restrictions on Certain Amendments .  Neither the Company
 nor any Subsidiary will waive any provision of, amend, or suffer to be
 amended, any provision of such entity's existing Debt, any material
 contract or agreement previously or hereafter filed by the Company with the
 Commission as part of its SEC Reports, any Company Corporate Document or
 Subsidiary Corporate Document if such amendment, in the Company's reasonable
 judgment, would materially adversely affect the Purchaser or the holders of
 the Securities without the prior written consent of the Purchaser.

 ARTICLE 8.6   Restrictions on Issuances of Securities .  In the event the
 Company proposes to sell securities in a Discounted Equity Offering (as
 defined below), the Company agrees that it will  grant Purchaser a right of
 first refusal to purchase securities proposed to be sold in such offering.
 Purchaser shall have five (5) business days after notice to Purchaser by the
 Company of such proposed sale of securities pursuant to this Section 8.6, to
 exercise its right of first refusal.  "Discounted Equity Offering" shall
 mean the issuance of any of its equity securities (or securities convertible
 into or exchangeable or exercisable for equity securities (the "Derivative
 Securities")) on terms that allow a holder thereof to acquire such equity
 securities (or Derivative Securities) at a discount to the Market Price of
 the Common Stock at the time of issuance or, in the case of Derivative
 Securities, at a conversion price based on any formula (other than standard
 anti-dilution provisions) based on the Market Price on a date later than the
 date of issuance which is below the Market Price on the date of issuance
 other than (i) borrowings under conventional credit facilities existing as
 of the date hereof, (ii) stock issued or credit facilities to be established
 in connection with acquisitions, (iii) equity securities or Derivative
 Securities in connection with employee and director stock option and stock
 purchase plans and (iv) securities issued under the Warrants.  As used
 herein, "discount" shall include, but not be limited to, (i) any warrant,
 right or other security granted or offered in connection with such issuance
 which, on the applicable date of grant, is offered with an exercise or
 conversion price, as the case may be, at less than the then current Market
 Price of the Common Stock or, if such security has an exercise or conversion
 price based on any formula (other than standard anti-dilution provisions)
 based on the Market Price on a date later than the date of issuance, then at
 a price below the Market Price on such date of exercise or conversion, as
 the case may be, or (ii) any commissions, fees or other allowances paid
 in connection with such issuances (other than customary underwriter or
 placement agent commissions, fees or allowances).  For the purposes of
 determining the Market Price at which Common Stock is acquired under this
 Section, normal underwriting commissions and placement fees (including
 underwriters' warrants) shall be excluded.  Notwithstanding the foregoing,
 the Company may enter into the following types of transactions without first
 granting the Purchaser a right of first refusal to purchase the following
 securities, (collectively referred to as "Permitted Financings"):  (1)
 "permanent financing" transactions, which would include any form of debt or
 equity financing (other than an underwritten offering), which is followed by
 a reduction of the said financing commitment to zero and payment of all
 related fees and expenses; (2) "project financing" which provide for the
 issuance of recourse debt instruments in connection with the operation
 of the Company's business as presently conducted or as proposed to be
 conducted; (3) an underwritten offering of Common Stock, provided that such
 offering provides for the registration of the Conversion Shares if the
 Registration Statement has not been declared effective; and (4) other
 financing transactions specifically consented to in writing by the
 Purchaser.

 ARTICLE 8.7  Limitation on Stock Repurchases .  Except as otherwise set
 forth in the Warrants, the Company shall not, without the written consent of
 the Majority Holders, redeem, repurchase or otherwise acquire (whether for
 cash or in exchange for property or other securities or otherwise) any
 shares of capital stock of the Company or any warrants, rights or options to
 purchase or acquire any such shares.


                       ARTICLE 9.  RESTRICTIVE LEGENDS

 ARTICLE 9.1  Restrictions on Transfer .  From and after their respective
 dates of issuance, none of the Securities shall be transferable except upon
 the conditions specified in this Article IX, which conditions are intended
 to ensure compliance with the provisions of the Securities Act in respect of
 the Transfer of any of such Securities or any interest therein.  Purchaser
 will use its best efforts to cause any proposed transferee of any Securities
 held by it to agree to take and hold such Securities subject to the
 provisions and upon the conditions specified in this Article IX.

 ARTICLE 9.2  Legends.   The Warrants and the Warrant Shares issuable
 upon any exercise of any Warrant, shall bear restrictive legends in
 accordance with applicable securities laws.  The Warrant Shares, upon resale
 by the Purchaser pursuant to the Registration Statement, shall be freely
 tradeable and unrestricted.

 ARTICLE 9.3  Notice of Proposed Transfers .  Prior to any proposed
 Transfer of the Securities (other than a Transfer (i) registered or exempt
 from registration under the Securities Act, (ii) to an  affiliate of a
 Purchaser which is an "accredited investor" within the meaning of Rule
 501(a) under the Securities Act, provided that any such transferee shall
 agree to be bound by the terms of this Agreement and the Registration Rights
 Agreement, and shall have provided to the Company such representations,
 warranties and covenants as may be reasonably requested thereby, or (iii)
 to be made in reliance on Rule 144 under the Securities Act), the holder
 thereof shall give written notice to the Company of such holder's intention
 to effect such Transfer, setting forth the manner and circumstances of the
 proposed Transfer, which shall be accompanied by (a) an opinion of counsel
 reasonably acceptable to the Company, confirming that such transfer does not
 give rise to a violation of the Securities Act, (B) representation letters
 in form and substance reasonably satisfactory to the Company to ensure
 compliance with the provisions of the Securities Act and (C) letters in
 form and substance reasonably satisfactory to the Company from each such
 transferee stating such transferee's agreement to be bound by the terms
 of this Agreement and the Registration Rights Agreement.  Such proposed
 Transfer may be effected only if the Company shall have received such notice
 of transfer, opinion of counsel, representation letters and other letters
 referred to in the immediately preceding sentence, whereupon the holder of
 such Securities shall be entitled to Transfer such Securities in accordance
 with the terms of the notice delivered by the holder to the Company.


             ARTICLE 10.  ADDITIONAL AGREEMENTS AMONG THE PARTIES

 ARTICLE 10.1  Liquidated Damages .

      (a)  The Company shall, and shall use its best efforts to cause its
 transfer agent to, issue and deliver shares of Common Stock consistent with
 Section 7.11 hereof within three (3) New York Stock Exchange Trading Days
 of delivery of a Notice of Exercise, as applicable (the "Deadline") to
 the Purchaser (or any party receiving Securities by transfer from such
 Purchaser) at the address of the Purchaser set forth in the Notice of
 Exercise, as the case may be.  The Company understands that a delay in the
 issuance of such certificates after the Deadline could result in economic
 loss to the Purchaser.

      (b)  Without in any way limiting the Purchaser's right to pursue other
 remedies, including actual damages and/or equitable relief, the Company
 agrees that if delivery of the Warrant Shares is more than one (1) Business
 Day after the Deadline (other than a failure due to the circumstances
 described in Section 4.3 of the Note, which failure shall be governed by
 such Section) the Company shall pay to each Purchaser, as liquidated damages
 and not as a penalty, $500 for each $100,000 of Note then outstanding per
 day in cash, for each of the first ten (10) days beyond the Deadline, and
 $1,000 for each $100,000 of Note then outstanding per day in cash for each
 day thereafter that the Company fails to deliver such Common Stock.  Such
 cash amount shall be paid to each Purchaser upon demand.

 ARTICLE 10.2   Exercise Notice .  The Company agrees that, in addition to
 any other remedies which may be available to the Purchaser, including, but
 not limited to, the remedies available under Section 10.1, in the event the
 Company fails for any reason (other than as a result of actions taken by a
 Purchaser in breach of this Agreement) to effect delivery to a Purchaser of
 certificates with or without restrictive legends as contemplated by Article
 IX representing the shares of Common Stock on or prior to the Deadline after
 exercise of any Warrant, such Purchaser will be entitled, if prior to
 the delivery of such certificates, to revoke the Notice of Exercise, as
 applicable, by delivering a notice to such effect to the Company whereupon
 the Company and the Purchaser shall each be restored to their respective
 positions immediately prior to delivery of such Notice of Exercise.

 ARTICLE 10.3  Reserved .

 ARTICLE 10.4  Registration Rights .

      (a)  The Company shall grant the Purchaser registration rights covering
 the Warrant Shares and Interest Shares (if any) (the "Registrable
 Securities") on the terms set forth in the Registration Rights Agreement and
 herein.

      (b)  The Company shall prepare and file, within 180 days following
 the Closing Date (the "Filing Date"), a registration statement (the
 "Registration Statement") covering the sale of the Registrable Securities.
 The Company shall use its best efforts to cause the Registration Statement
 to be declared effective by the Commission no later than (x) 210 days
 following the Closing Date or (y) after the receipt of a "no review" or
 similar letter from the Commission (the "Required Effectiveness Date").  The
 Company shall pay all expenses of registration (other than underwriting fees
 and discounts, if any, in respect of Registrable Securities offered and sold
 under such Registration Statement by the Purchaser).

      (c)  If the Registration Statement is not filed by the Filing Date, the
 Company shall pay to Purchaser, as liquidated damages and not as a penalty,
 an amount equal to two percent (2%) of the principal amount of Note
 outstanding for each 30-day period (prorated) until the Registration
 Statement is filed with the Commission, provided that such damages shall
 not exceed four percent (4%) of such principal amount of the Note.  If the
 Registration Statement is not declared effective by the Commission by the
 Required Effectiveness Date, the Company shall pay to the Purchaser, as
 liquidated damages and not as a penalty, an aggregate amount of one percent
 (1%) of the outstanding principal amount of the Note  (a "  Default Fee"),
 for each 30-day period (prorated)  the Registration Statement is not
 declared effective by the Commission following the Required Effectiveness
 Date; provided, however, such damages shall not exceed 4% of the principal
 amount of the Note in the aggregate.  In the event the Company fails to
 obtain an effective registration statement by the 360th day following the
 Closing Date, Purchaser shall have the right to require the Company to
 redeem the Note and the Warrants at the Prepayment Price set forth in
 Section 4 of the Note and the Redemption Price set forth in Section 14 of
 the Warrant, respectively.  If, following the declaration of effectiveness
 of the Registration Statement, the Registration Statement (or any prospectus
 or supplemental prospectus contained therein) shall cease to be effective
 for any reason (including, but not limited to, the occurrence of any event
 that results in any prospectus or supplemental prospectus containing an
 untrue statement of a material fact or omitting 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
 Company fails to file required amendments to the Registration Statement in
 order to allow the Purchaser to exercise its rights to receive unrestricted,
 unlegended, freely tradeable shares of Common Stock, or if for any reason
 there are insufficient shares of such shares of Common Stock registered
 under the then current Registration Statement to effect full exercise of the
 Warrants or for the issuance of the Interest Shares (each a "Registration
 Default"), the Company shall immediately take all necessary steps to cause
 the Registration Statement to be amended or supplemented so as to cure the
 Registration Default.  Failure to cure a Registration Default within ten
 (10) Business Days shall result in the Company paying to Purchaser
 liquidated damages at the rate of one percent (1%) of the outstanding
 principal amount of Note for each 30-day period (prorated) that the
 Registration Default remains uncured, provided that such damages shall
 not exceed four percent (4%) of such principal amount of the Note.

      (d)  In the event that there is an insufficient number of authorized,
 issuable, unlegended and freely tradeable shares of Common Stock registered
 under the Registration Statement filed by the Company to fully exercise all
 Warrants held by Purchaser or for the issuance of the Interest Shares and to
 sell such shares issued thereon, then the Company shall immediately file
 an amendment to the then current registration statement to register a
 sufficient number of such shares to exercise the Warrants and sell the
 Interest Shares and Warrant Shares.  The failure of the Company to register
 a sufficient number of such shares to fully exercise such Warrants shall be
 a Registration Default under Section 10.4(c).

      (e)  Any such Registration Default shall be paid in cash by the Company
 to the Purchaser by wire transfer in immediately available funds on the last
 day of each calendar week following the event requiring its payment.

      (f)  If, for any reason (including but not limited to the issuance
 of all shares of Common Stock covered by the prospectus included in the
 Registration Statement), the Registration Default is incurred for a period
 of sixty (60) days, the holders of a majority of the Note then outstanding
 may elect to cause the Company to repay the Note in full at the Prepayment
 Price set forth in Section 4 of the Note.


                    ARTICLE 11.  ADJUSTMENT OF FIXED PRICE

 ARTICLE 11.1  Reorganization .  The exercise price of the Warrants (the "
 Fixed Price") shall be adjusted, as applicable, as hereafter provided.

 ARTICLE 11.2  Share Reorganization .  If and whenever the Company shall:

           (i)  subdivide the outstanding shares of Common Stock into a
      greater number of shares;

           (ii)  consolidate the outstanding shares of Common Stock into a
      smaller number of shares;

          (iii)  issue Common Stock or securities convertible into or
      exchangeable for shares of Common Stock as a stock dividend to all or
      substantially all the holders of Common Stock; or

           (iv)  make a distribution on the outstanding Common Stock to all
      or substantially all the holders of Common Stock payable in Common
      Stock or securities convertible into or exchangeable for Common Stock;

 any of such events being herein called a "Share Reorganization," then in
 each such case the Fixed Price shall be adjusted, effective immediately
 after the record date at which the holders of Common Stock are determined
 for the purposes of the Share Reorganization or, if no record date is fixed,
 the effective date of the Share Reorganization, by multiplying the Fixed
 Price in effect on such record or effective date, as the case may be, by a
 fraction of which:

            (I)  the numerator shall be the number of shares of Common Stock
      outstanding on such record or effective date (without giving effect to
      the transaction); and

           (II) the denominator shall be the number of shares of Common
      Stock outstanding after giving effect to such Share Reorganization,
      including, in the case of a distribution of securities convertible into
      or exchangeable for shares of Common Stock, the number of shares of
      Common Stock that would have been outstanding if such securities had
      been converted into or exchanged for Common Stock on such record or
      effective date.

 ARTICLE 11.3   Capital Reorganization .  If and whenever there shall occur:

           (i)    a reclassification or redesignation of the shares of Common
      Stock or any change of the shares of Common Stock into other shares,
      other than in a Share Reorganization;

           (ii)   a consolidation, merger or amalgamation of the Company
      with, or into another body corporate; or

           (iii)  the transfer of all or substantially all of the assets
      of the Company to another body corporate;

 (any such event being herein called a "Capital Reorganization"), then in
 each such case the holder who exercises the Warrants after the effective
 date of such Capital Reorganization shall be entitled to receive and shall
 accept, upon the exercise of such right, in lieu of the number of shares of
 Common Stock to which such holder was theretofore entitled upon the exercise
 of the conversion privilege, the aggregate number of shares or other
 securities or property of the Company or of the body corporate resulting
 from such Capital Reorganization that such holder would have been entitled
 to receive as a result of such Capital Reorganization if, on the effective
 date thereof, such holders had been the holder of the number of shares of
 Common Stock to which such holder was theretofore entitled upon conversion;
 provided, however, that no such Capital Reorganization shall be consummated
 in effect unless all necessary steps shall have been taken so that such
 holders shall thereafter be entitled to receive such number of shares or
 other securities of the Company or of the body corporate resulting from such
 Capital Reorganization, subject to adjustment thereafter in accordance with
 provisions the same, as nearly as may be possible, as those contained above.

 ARTICLE 11.4  Adjustment Rules . The following rules and procedures shall
 be applicable to adjustments made in this Article XI:

      (a)  no adjustment in the Fixed Price shall be required unless such
 adjustment would result in a change of at least 1% in the Fixed Price then
 in effect, provided, however, that any adjustments which, but for the
 provisions of this clause would otherwise have been required to be made,
 shall be carried forward and taken into account in any subsequent
 adjustment;

      (b)  if any event occurs of the type contemplated by the adjustment
 provisions of this Article XI but not expressly provided for by such
 provisions, the Company will give notice of such event as provided herein,
 and the Company's board of directors will make an appropriate adjustment in
 the Fixed Price so that the rights of the holders of the applicable Security
 shall not be diminished by such event; and

      (c)  if a dispute shall at any time arise with respect to any
 adjustment of the Fixed Price, such dispute shall be conclusively determined
 by the auditors of the Company or, if they are unable or unwilling to act,
 by a firm of independent chartered accountants selected by the Directors and
 any such determination shall be binding upon the Company and Purchaser.

 ARTICLE 11.5  Certificate as to Adjustment .  The Company shall from time
 to time promptly after the occurrence of any event which requires an
 adjustment in the Fixed Price deliver to the Purchaser a certificate
 specifying the nature of the event requiring the adjustment, the amount of
 the adjustment necessitated thereby, the Fixed Price after giving effect
 to such adjustment and setting forth, in reasonable detail, the method of
 calculation and the facts upon which such calculation is based.

 ARTICLE 11.6  Notice to Noteholders .  If the Company shall fix a record
 date for:

      (a)  any Share Reorganization (other than the subdivision of
 outstanding Common Stock into a greater number of shares or the
 consolidation of outstanding Common Stock into a smaller number of shares),

      (b)  any Capital Reorganization (other than a reclassification or
 redesignation of the Common Stock into other shares),

      (c)  Sale Event; or

      (d)  any cash dividend,

 the Company shall, not less than 10 days prior to such record date or, if no
 record date is fixed, prior to the effective date of such event, give to the
 Purchaser notice of the particulars of the proposed event or the extent that
 such particulars have been determined at the time of giving the notice.


                        ARTICLE 12.  EVENTS OF DEFAULT

 ARTICLE 12.1  Events of Default.   If one or more of the following events
 (each an "Event of Default") shall have occurred and be continuing:

      (a)  failure by the Company to pay or repay when due, all or any part
 of the principal on  the Note (whether by virtue of the agreements specified
 in this Agreement or the Note);

      (b)  failure by the Company to pay (i) within five (5) Business Days
 of the due date thereof any interest on the Note or (ii) within five (5)
 Business Days following the delivery of notice to the Company of any fees
 or any other amount payable (not otherwise referred to in (a) above or this
 clause (b)) by the Company under this Agreement or any other Transaction
 Agreement;

      (c)  reserved;

      (d)  failure on the part of the Company to observe or perform any
 covenant contained in Article VIII of this Agreement;

      (e)  failure on the part of the Company to observe or perform any
 covenant or agreement contained in any Transaction Agreement (other than
 those covered by clauses (a), (b), (c) or (d) above) for 30 days from the
 date of such occurrence;

      (f)  the trading in the Common Stock shall have been suspended by
 the Commission or by the OTC Bulletin Board (except for any suspension
 of trading of limited duration solely to permit dissemination of material
 information regarding the Company and except if, at the time there is any
 suspension on the OTC Bulletin Board, the Common Stock is then listed and
 approved for trading on any National Market within ten (10) Trading Days
 thereof) except as a result of the general suspension of trading of all
 securities so listed;

      (g)  reserved;

      (h)  the Company shall have its Common Stock delisted from the OTC
 Bulletin Board or a National Market for at least ten (10) consecutive
 Trading Days and is unable to obtain a listing on a National Market within
 such ten (10) Trading Days;

      (i)  the Registration Statement shall not have been declared effective
 by the Commission by the Required Effectiveness Date, or such effectiveness
 shall not be maintained for the Registration Maintenance Period, in each
 case which results in the Company incurring the Default Fee for a period
 in excess of sixty (60) days;

      (j)  the Company or any material Subsidiary has commenced a voluntary
 case or other proceeding seeking liquidation, winding-up, reorganization
 or other relief with respect to itself or its debts under any bankruptcy,
 insolvency, moratorium or other similar law now or hereafter in effect or
 seeking the appointment of a trustee, receiver, liquidator, custodian or
 other similar official of it or any substantial part of its property, or has
 consented to any such relief or to the appointment of or taking possession
 by any such official in an involuntary case or other proceeding commenced
 against it, or has made a general assignment for the benefit of creditors,
 or has taken any corporate action to authorize any of the foregoing;

      (k)  an involuntary case or other proceeding has been commenced against
 the Company or any material Subsidiary seeking liquidation, winding-up,
 reorganization or other relief with respect to it or its debts under any
 bankruptcy, insolvency, moratorium or other similar law now or hereafter
 in effect or seeking the appointment of a trustee, receiver, liquidator,
 custodian or other similar official of it or any substantial part of its
 property, and such involuntary case or other proceeding shall remain
 undismissed and unstayed for a period of 60 days, or an order for relief
 has been entered against the Company or any Subsidiary under the federal
 bankruptcy laws as now or hereafter in effect;

      (l)  default in any payment provision (whether interest or principal)
 governing the terms of any Debt of the Company or any Subsidiary in excess
 of $1,000,000, which has not been cured within any applicable period of
 grace associated therewith;

      (m)  judgments or orders for the payment of money which in the
 aggregate at any one time exceed $1,000,000 and are not covered by insurance
 have been rendered against the Company or any Subsidiary by a court of
 competent jurisdiction and such judgments or orders shall continue
 unsatisfied and unstayed for a period of 60 days; or

      (n)  any representation, warranty, certification or statement made
 by the Company in any Transaction Agreement or which is contained in any
 certificate, document or financial or other statement furnished at any time
 under or in connection with any Transaction Agreement shall prove to have
 been untrue in any material respect when made resulting in a Material
 Adverse Effect.

 then, and in every such occurrence, any Purchaser may, with respect to
 an Event of Default specified in paragraphs (a) or (b), and the Majority
 Holders may, with respect to any other Event of Default, by notice to
 the Company, declare the Note to be, and the Note shall thereon become
 immediately due and payable; provided that in the case of any of the Events
 of Default specified in paragraph (j) or (k) above with respect to the
 Company or any Subsidiary, then, without any notice to the Company or any
 other act by any Purchaser, the entire amount of the Note shall become
 immediately due and payable, provided, further, if any Event of Default has
 occurred and is continuing, and irrespective of whether any Note has been
 declared immediately due and payable hereunder, any Purchaser of Note may
 proceed to protect and enforce the rights of such Purchaser by an action
 at law, suit in equity or other appropriate proceeding, whether for the
 specific performance of any agreement contained herein or in any Note, or
 for an injunction against a violation of any of the terms hereof or thereof,
 or in aid of the exercise of any power granted hereby or thereby or by law
 or otherwise, and provided further, in the case of any Event of Default, the
 amount declared due and payable on the Note shall be the Prepayment Price.

 ARTICLE 12.2  Powers and Remedies Cumulative .  No right or remedy herein
 conferred upon or reserved to the Purchaser is intended to be exclusive of
 any other right or remedy, and every right and remedy shall, to the extent
 permitted by law, be cumulative and in addition to every other right and
 remedy given hereunder or now hereafter existing at law or in equity or
 otherwise.  The assertion or employment of any right or remedy hereunder, or
 otherwise, shall not prevent the concurrent assertion or employment of any
 other appropriate right or remedy.  Every power and remedy given by the Note
 or by law may be exercised from time to time, and as often as shall be
 deemed expedient, by the Purchaser.


                          ARTICLE 13.  MISCELLANEOUS

 ARTICLE 13.1  Notices .  All notices, demands and other communications to
 any party hereunder shall be in writing (including telecopier or similar
 writing) and shall be given to such party at its address set forth on the
 signature pages hereof, or such other address as such party may hereafter
 specify for the purpose to the other parties.  Each such notice, demand or
 other communication shall be effective (i) if given by telecopy, when such
 telecopy is transmitted to the telecopy number specified on the signature
 page hereof, (ii) if given by mail, four days after such  communication
 is deposited in the mail with first class postage prepaid, addressed as
 aforesaid or (iii) if given by any other means, when delivered at the
 address specified in or pursuant to this Section.

 ARTICLE 13.2  No Waivers; Amendments .

      (a)  No failure or delay on the part of any party in exercising any
 right, power or remedy hereunder shall operate as a waiver thereof, nor
 shall any single or partial exercise of any such right, power or remedy
 preclude any other or further exercise thereof or the exercise of any other
 right, power or remedy.

      (b)  Any provision of this Agreement may be amended, supplemented or
 waived if, but only if, such amendment, supplement or waiver is in writing
 and is signed by the Company and the Majority Holders; provided, that
 without the consent of each holder of any Note affected thereby, an
 amendment or waiver may not (a) reduce the aggregate principal amount of
 Note whose holders must consent to an amendment or waiver, (b) reduce the
 rate or extend the time for payment of interest on any Note, (c) reduce the
 principal amount of or extend the stated maturity of any Note or (d) make
 any Note payable in money or property other than as stated in such Note.  In
 determining whether the holders of the requisite principal amount of Note
 have concurred in any direction, consent, or waiver as provided in any
 Transaction Agreement, Note which are owned by the Company or any other
 obligor on or guarantor of the Note, or by any Person Controlling,
 Controlled by, or under common Control with any of the foregoing, shall be
 disregarded and deemed not to be outstanding for the purpose of any such
 determination; and provided further that no such amendment, supplement or
 waiver which affects the rights of the Purchaser and their affiliates
 otherwise than solely in their capacities as holders of Note shall be
 effective with respect to them without their prior written consent.

 ARTICLE 13.3  Indemnification .

      (a)  The Company agrees to indemnify and hold harmless each Purchaser,
 its Affiliates, and each Person, if any, who controls such Purchaser, or any
 of its Affiliates, within the meaning of the Securities Act or the Exchange
 Act (each, a "Controlling Person"), and the respective partners, agents,
 employees, officers and Directors of each Purchaser, their Affiliates and
 any such Controlling Person (each an "Indemnified Party") and collectively,
 the "Indemnified Parties"), from and against any and all losses, claims,
 damages, liabilities and expenses (including, without limitation and as
 incurred, reasonable costs of investigating, preparing or defending any such
 claim or action, whether or not such Indemnified Party is a party thereto,
 provided that the Company shall not be obligated to advance such costs to
 any Indemnified Party other than the Purchaser unless it has received from
 such Indemnified Party an undertaking to repay to the Company the costs so
 advanced if it should be determined by final judgment of a court of
 competent jurisdiction that such Indemnified Party was not entitled
 to indemnification hereunder with respect to such costs) which may be
 incurred by such Indemnified Party in connection with any investigative,
 administrative or judicial proceeding brought or threatened that relates to
 or arises out of, or is in connection with any activities contemplated by
 any Transaction Agreement or any other services rendered in connection
 herewith; provided that the Company will not be responsible for any claims,
 liabilities losses, damages or expenses that are determined by final
 judgment of a court of competent jurisdiction to result from such
 Indemnified Party's gross negligence, willful misconduct or bad faith.

      (b)  If any action shall be brought against an Indemnified Party with
 respect to which indemnity may be sought against the Company under this
 Agreement, such Indemnified Party shall promptly notify the Company in
 writing and the Company, at its option, may, assume the defense thereof,
 including the employment of counsel reasonably satisfactory to such
 Indemnified Party and payment of all reasonable fees and expenses.  The
 failure to so notify the Company shall not affect any obligations the
 Company may have to such Indemnified Party under this Agreement or otherwise
 unless the Company is materially adversely affected by such failure.  Such
 Indemnified Party shall have the right to employ separate counsel in such
 action and participate in the defense thereof, but the fees and expenses of
 such counsel shall be at the expense of such Indemnified Party, unless (i)
 the Company has failed to assume the defense and employ counsel or (ii) the
 named parties to any such action (including any impleaded parties) include
 such Indemnified Party and the Company, and such Indemnified Party shall
 have been advised by counsel that there may be one or more legal defenses
 available to it which are different from or additional to those available to
 the Company, in which case, if such Indemnified Party notifies the Company
 in writing that it elects to employ separate counsel at the expense of the
 Company, the Company shall not have the right to assume the defense of such
 action or proceeding on behalf of such Indemnified Party, provided, however,
 that the Company shall not, in connection with any one such action or
 proceeding or separate but substantially similar or related actions or
 proceedings in the same jurisdiction arising out of the same general
 allegations or circumstances, be responsible hereunder for the reasonable
 fees and expenses of more than one such firm of separate counsel, in
 addition to any local counsel, which counsel shall be designated by the
 Purchaser.  The Company shall not be liable for any settlement of any such
 action effected without the written consent of the Company (which shall not
 be unreasonably withheld) and the Company agrees to indemnify and hold
 harmless each Indemnified Party from and against any loss or liability by
 reason of settlement of any action effected with the consent of the Company.
 In addition, the Company will not, without the prior written consent of the
 Purchaser, settle or compromise or consent to the entry of any judgment in
 or otherwise seek to terminate any pending or threatened action, claim, suit
 or proceeding in respect to which indemnification or contribution may be
 sought hereunder (whether or not any Indemnified Party is a party thereto)
 unless such settlement, compromise, consent or termination includes an
 express unconditional release of the Purchaser and the other Indemnified
 Parties, satisfactory in form and substance to the Purchaser, from all
 liability arising out of such action, claim, suit or proceeding.

      (c)  If for any reason the foregoing indemnity is unavailable
 (otherwise than pursuant to the express terms of such indemnity) to an
 Indemnified Party or insufficient to hold an Indemnified Party harmless,
 then in lieu of indemnifying such Indemnified Party, the Company shall
 contribute to the amount paid or payable by such Indemnified Party as a
 result of such claims, liabilities, losses, damages, or expenses (i) in such
 proportion as is appropriate to reflect the relative benefits received by
 the Company on the one hand and by the Purchaser on the other from the
 transactions contemplated by this Agreement or (ii) if the allocation
 provided by clause (i) is not permitted under applicable law, in such
 proportion as is appropriate to reflect not only the relative benefits
 received by the Company on the one hand and the Purchaser on the other, but
 also the relative fault of the Company and the Purchaser as well as any
 other relevant equitable considerations.  Notwithstanding the provisions of
 this Section 13.3, the aggregate contribution of all Indemnified Parties
 shall not exceed the amount of interest and fees actually received by the
 Purchaser pursuant to this Agreement.  It is hereby further agreed that the
 relative benefits to the Company on the one hand and the Purchaser on the
 other with respect to the transactions contemplated hereby shall be
 determined by reference to, among other things, whether any untrue or
 alleged untrue statement of material fact or the omission or alleged
 omission to state a material fact related to information supplied by the
 Company or by the Purchaser and the parties' relative intent, knowledge,
 access to information and opportunity to correct or prevent such statement
 or omission.  No Person guilty of fraudulent misrepresentation (within the
 meaning of Section 11(f) of the Securities Act) shall be entitled to
 contribution from any Person who was not guilty of such fraudulent
 misrepresentation.

      (d)  The indemnification, contribution and expense reimbursement
 obligations set forth in this Section 13.3 (i) shall be in addition to any
 liability the Company may have to any Indemnified Party at common law or
 otherwise; (ii) shall survive the termination of this Agreement and the
 other Transaction Agreements and the payment in full of the Note and (iii)
 shall remain operative and in full force and effect regardless of any
 investigation made by or on behalf of the Purchaser or any other Indemnified
 Party.

 ARTICLE 13.4  Expenses:  Documentary Taxes .  The Company has agreed to
 pay an application fee of 1.5% of the principal amount of Note to Purchaser
 at the Closing.  The Company agrees to pay to Global Capital Advisors, Ltd.,
 on the Closing Date, a fee of $15,000.00 (the "Out of Pocket Fee") in full
 satisfaction of all obligations of the Company to Purchaser and its agents
 in connection with the negotiation and preparation of the Transaction
 Agreements, relevant due diligence, and fees and disbursements of legal
 counsel.  In addition, the Company agrees to pay any and all stamp, transfer
 and other similar taxes, assessments or charges payable in connection with
 the execution and delivery of any Transaction Agreement or the issuance of
 the Securities to Purchaser, excluding their assigns.

 ARTICLE 13.5  Payment .  The Company agrees that, so long as a Purchaser
 shall own any Note purchased by it from the Company hereunder, the Company
 will make payments to such Purchaser of all amounts due thereon by wire
 transfer by 4:00 P.M. (New York City time).

 ARTICLE 13.6  Successors and Assigns .  This Agreement shall be binding
 upon the Company and upon the Purchaser and their respective successors and
 assigns; provided that the Company shall not assign or otherwise transfer
 its rights or obligations under this Agreement to any other Person without
 the prior written consent of the Majority Holders.  All provisions hereunder
 purporting to give rights to Purchaser and their affiliates or to holders of
 Securities are for the express benefit of such Persons and their successors
 and assigns.

 ARTICLE 13.7  Brokers .  The Company represents and warrants to
 Purchaser, and Purchaser represents and warrants to the Company that it has
 not employed any broker, finder, financial advisor or investment banker who
 would be entitled to any brokerage, finder's or other fee or commission
 payable by the Company or the Purchaser in connection with the sale of the
 Securities.

 ARTICLE 13.8   Delaware Law; Submission to Jurisdiction; Waiver of Jury
 Trial; Appointment of Agent .  THIS AGREEMENT SHALL BE CONSTRUED IN
 ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.  EACH
 PARTY HERETO HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED
 STATES DISTRICT COURT FOR DELAWARE AND OF ANY STATE COURT SITTING IN
 DELAWARE FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
 THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH PARTY HERETO
 IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
 WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
 PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
 BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  EACH
 PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
 IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
 TRANSACTIONS CONTEMPLATED HEREBY.

      Section 13.9 Severability. If any term, provision, covenant or
 restriction of this Agreement is held by  a court of competent jurisdiction
 to be invalid, void or unenforceable, the remainder of the terms,
 provisions, covenants and restrictions of this Agreement shall remain in
 full force and effect and shall in no way be affected, impaired, or
 invalidated unless a failure of consideration would result thereby.

      Section 13.10 Survival.  Sections 7.1(a), (d), 7.4, 7.6, 7.8, 7.10,
 7.11, 7.12, Article 10 and Section 12.1 Subsections (f), (h) and (i)
 contained in this Agreement shall survive the payment in full of the Note
 and shall remain operative and in full force until the Warrants have been
 fully exercised.

      Section 13.11 Counterparts. This Agreement may be executed by telecopy
 signatures and in any number of counterparts each of which shall be an
 original with the same effect as if the signatures there to and hereto were
 upon the same instrument.


                         SIGNATURES ON FOLLOWING PAGE

<PAGE>

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



                               DIAL-THRU INTERNATIONAL CORPORATION

              By:    _____________________________________________
              Title: _____________________________________________


                               Address:  17383 Sunset Boulevard
                                         Suite 350
                                         Los Angeles, CA 90272

                                         Fax: 310-573-9435
                                         Attn: John Jenkins



                               GLOBAL CAPITAL FUNDING GROUP, L.P.
                               By its General Partner Global Capital
                               Management Services, Inc.

              By:    _____________________________________________
              Title: _____________________________________________

                               Address:  106 Colony Park Drive
                                         Suite 900
                                         Cumming, GA 30040

                                         Fax:   678-947-6499
                                         Attn:  Mr. Lewis N. Lester

<PAGE>

                           TABLE OF CONTENTS


      ARTICLE I.  DEFINITIONS...............................          1
           Section 1.1  Definitions.........................          1
           Section 1.2  Accounting Terms and Determinations.          8

      ARTICLE II.  PURCHASE AND SALE OF SECURITIES..........          8
           Section 2.1  Purchase and Sale of Note...........          8
           Section 2.2  Purchase Price......................          8
           Section 2.3  Closing and Mechanics of Payment....          8

      ARTICLE III.  PAYMENT TERMS OF NOTE...................          9
           Section 3.1  Ranking; Payment of Principal and
             Interest; Payment Mechanics....................          9
           Section 3.2. Payment of Interest.................          9
           Section 3.3  Voluntary Prepayment................          9
           Section 3.4  Mandatory Prepayments...............          9
           Section 3.5  Prepayment Procedures...............         10
           Section 3.6  Payment of Additional Amounts.......         10

      ARTICLE IV.  REPRESENTATIONS AND WARRANTIES...........         11
           Section 4.1  Organization and Qualification......         11
           Section 4.2  Authorization and Execution.........         11
           Section 4.3  Capitalization .....................         12
           Section 4.4  Governmental Authorization..........         12
           Section 4.5  Issuance of Shares..................         13
           Section 4.6  No Conflicts........................         13
           Section 4.7  Financial Information and
             SEC Reports....................................         13
           Section 4.8  Litigation..........................         14
           Section 4.9  Compliance with ERISA and other
             Benefit Plans..................................         14
           Section 4.10  Environmental Matters..............         15
           Section 4.11  Taxes..............................         15
           Section 4.12  Investments, Joint Ventures........         15
           Section 4.13  Not an Investment Company..........         15
           Section 4.14  Full Disclosure....................         15
           Section 4.15  No Solicitation; No Integration
             with Other Offerings...........................         16
           Section 4.16  Permits............................         16
           Section 4.17  Leases.............................         16
           Section 4.18  Absence of Any Undisclosed
             Liabilities or Capital Calls...................         16
           Section 4.19  Public Utility Holding Company.....         16
           Section 4.20  Intellectual Property Rights.......         17
           Section 4.21  Insurance..........................         17
           Section 4.22  Title to Assets and Properties.....         17
           Section 4.23  Reserved...........................         17
           Section 4.24  Internal Accounting Controls.......         17
           Section 4.25  Foreign Practices..................         17
           Section 4.26  Subsidiaries.......................         17

      ARTICLE V.  REPRESENTATIONS AND WARRANTIES OF THE PURCHASER    18
           Section 5.1  Purchaser...........................         18

      ARTICLE VI.  CONDITIONS PRECEDENT TO PURCHASE OF SECURITIES    19
           Section 6.1  Conditions Precedent to the
             Purchaser's Obligations to Purchase............         19
           Section 6.2  Conditions to the Company's
             Obligations....................................         21

      ARTICLE VII.  AFFIRMATIVE COVENANTS...................         21
           Section 7.1 Information..........................         21
           Section 7.2 Payment of Obligations...............         22
           Section 7.3 Maintenance of Property; Insurance...         22
           Section 7.4 Maintenance of Existence.............         23
           Section 7.5 Compliance with Laws.................         23
           Section 7.6 Inspection of Property, Books and
             Records........................................         23
           Section 7.7 Investment Company Act...............         23
           Section 7.8 Use of Proceeds......................         23
           Section 7.9 Compliance with Terms and
             Conditions of Material Contracts...............         23
           Section 7.10  Reserved Shares and Listings.......         23
           Section 7.11  Irrevocable Instructions...........         24
           Section 7.12  Maintenance of Reporting Status;
             Supplemental Information.......................         24
           Section 7.13  Form D; Blue Sky Laws..............         25

      ARTICLE VIII.  NEGATIVE COVENANTS.....................         25
           Section 8.1  Limitations on Debt or
             Other Liabilities..............................         25
           Section 8.2  Transactions with Affiliates........         25
           Section 8.3  Merger or Consolidation.............         25
           Section 8.4  Limitation on Asset Sales...........         26
           Section 8.5  Restrictions on Certain Amendments..         26
           Section 8.6  Restrictions on Issuances
             of Securities..................................         26
           Section 8.7  Limitation on Stock Repurchases.....         27

      ARTICLE IX.  RESTRICTIVE LEGENDS......................         27
           Section 9.1  Restrictions on Transfer............         27
           Section 9.2  Legends.............................         27
           Section 9.3  Notice of Proposed Transfers........         27

      ARTICLE X.  ADDITIONAL AGREEMENTS AMONG THE PARTIES...         28
           Section 10.1  Liquidated Damages.................         28
           Section 10.2  Exercise Notice....................         28
           Section 10.3  Reserved...........................         29
           Section 10.4  Registration Rights................         29

      ARTICLE XI.  ADJUSTMENT OF FIXED PRICE................         30
           Section 11.1  Reorganization.....................         30
           Section 11.2  Share Reorganization...............         30
           Section 11.3  Capital Reorganization.............         31
           Section 11.4  Adjustment Rules...................         32
           Section 11.5  Certificate as to Adjustment.......         32
           Section 11.6  Notice to Noteholders..............         32

      ARTICLE XII.  EVENTS OF DEFAULT.......................         33
           Section 12.1  Events of Default..................         33
           Section 12.2  Powers and Remedies Cumulative.....         35

      ARTICLE XIII.  MISCELLANEOUS..........................         35
           Section 13.1  Notices............................         35
           Section 13.2  No Waivers; Amendments.............         35
           Section 13.3  Indemnification....................         36
           Section 13.4  Expenses:  Documentary Taxes.......         38
           Section 13.5  Payment............................         38
           Section 13.6  Successors and Assigns.............         38
           Section 13.7  Brokers............................         38
           Section 13.8  Delaware Law; Submission to
             Jurisdiction; Waiver of Jury Trial;
             Appointment of Agent...........................         38


<PAGE>

                              LIST OF SCHEDULES


 Schedule 2.2   Allocation of Purchase Price
 Schedule 4.3   Capitalization
 Schedule 4.8   Litigation
 Schedule 4.11  Taxes
 Schedule 4.12  Investment, Joint Ventures
 Schedule 4.21  Insurance
 Schedule 4.22  Title to Assets and Properties
 Schedule 4.26  Subsidiaries
 Schedule 7.8   Use of Proceeds
 Schedule 8.2   Transactions with Affiliates


<PAGE>


                               LIST OF EXHIBITS

 Exhibit A Secured Promissory Note
 Exhibit B Registration Rights Agreement
 Exhibit C Form of Solvency Certificate
 Exhibit D Form of Officer's Certificate
 Exhibit E Common Stock Purchase Warrant
 Exhibit F Security Agreement