Exhibit 4.5

                        SECURITIES PURCHASE AGREEMENT

      AGREEMENT, dated as of July  24, 2003, between Dial-Thru  International
 Corporation (the  "  Company") and  GCA  Strategic Investment  Fund  Limited
 ("Purchaser").

                               R E C I T A L S:

      WHEREAS, the Company desires to sell and issue to Purchaser, and
 Purchaser desires to purchase from the Company $550,000 principal amount of
 the 10% Promissory Note due December 23, 2003,  (the "Note") in accordance
 with the terms and conditions as set forth in the form of Note attached
 hereto as Exhibit A;

      WHEREAS, in order to induce the Purchaser to enter into the
 transactions described in this Agreement, the Company desires to issue to
 the Purchaser a Warrant to purchase 100,000 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
 "Warrant"); and

      WHEREAS, Purchaser will have certain registration rights with respect
 to such shares of Common Stock issuable upon exercise of the Warrant (the
 "Warrant Shares") following a Payment Default (as such term is defined in
 the Note) of the Note, in which case the Note will be exchanged for one of
 the Company's 6% Secured Convertible Debentures due November 8, 2004 (the
 "2004 Debentures") in the aggregate principal amount plus accrued and unpaid
 interest due thereon;

      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:

     "Additional Shares of Common Stock" has the meaning set forth in
 Section 11.6.

     "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 11.5.

     "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 Purchaser and other than pursuant to any Jenkins
 Conversion 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 33% or more of the outstanding shares of Common Stock without the
 prior written consent of Purchaser; (ii) any sale or other disposition
 (other than by reason of death or disability) to any Person of more than
 75,000 shares of Common Stock by any executive officers and/or employee
 directors of the Company without the prior written consent of Purchaser;
 (iii) 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.

     "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 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 the Note is issued by
 the Company to Purchaser.

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

     "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, and its successors.

     "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, notes, 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.

     "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.

     "Derivative Securities" has the meaning set forth in Section 8.6.

     "Discounted Equity Offerings" has the meaning set forth in Section 8.6.

     "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 and all members of
 a controlled group of corporation and all trades or businesses (whether or
 not incorporated) under common control which, together with the Company or
 any Subsidiary, are treated as a single employer under the Code.

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

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

     "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, other than Permitted Financings.

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

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

     "Guarantee" by any Person means any obligation, contingent or
 otherwise, of such Person directly or indirectly guaranteeing (whether by
 virtue of partnership arrangements, by agreement to keep well, to purchase
 assets, goods, securities or services, to take-or-pay, or to maintain a
 minimum net worth, financial ratio or similar requirements, or otherwise)
 any Debt of any other Person and, without limiting the generality of the
 foregoing, any obligation, direct or indirect, contingent or otherwise,
 of such Person (i) to purchase or pay (or advance or supply funds for the
 purchase or payment of) such Debt or (ii) entered into for the purpose of
 assuring in any other manner the holder of such Debt of the payment thereof
 or to protect such holder against loss in respect thereof (in whole or in
 part); provided that the term Guarantee shall not include endorsements for
 collection or deposit in the ordinary course of business.  The term
 Guarantee used as a verb has a corresponding meaning.

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

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

     "Jenkins Conversion" means the conversion at any time and from time to
 time by John Jenkins of all or any portion of one or more promissory notes
 issued on or after October 25, 2001 by the Company to Mr. Jenkins.

     "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, Purchaser and
 (ii) at any time thereafter, the holders of more than 50% in aggregate
 principal amount of the Note.

     "Market Price" shall mean the Closing Bid Price of the Common Stock on
 the date immediately preceding the date on which a determination of Market
 Price is required to be made in accordance with any section of this
 Agreement or any other Transaction Agreement.

     "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.

     "Maximum Number of Shares" shall mean that percentage that the Company
 may issue without shareholder approval under the applicable rules of the
 National Market or the applicable OTC Bulletin Board or equivalent entity,
 of the then issued and outstanding shares of Common Stock of the Company as
 of the applicable date of determination, or such greater number of shares as
 the stockholders of the Company may have previously approved.

     "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.

     "Note" means the Company's 10% Promissory Note substantially in the
 form set forth as Exhibit A hereto.

     "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 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 bulletin board operated
 by the NASD.

     "Out of Pocket Expense Fee" has the meaning set forth in Section 13.4.

     "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.

     "Permitted Financings" has the meaning set forth in Section 10.5.

     "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  the entity listed on the signature page hereto and
 its successors and assigns, including holders from time to time of the Note.

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

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

     "SEC Reports" has the meaning set forth in Section 7.1(a).

     "Securities" means the Note and the Warrant.

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

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

     "Solvency Certificate" shall mean a certificate executed by the chief
 financial officer or treasurer 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 and the completion
 of the offering (including without limitation the payment of any fees or
 expenses in connection therewith), which such Solvency Certificate shall
 be in the form of Exhibit C attached hereto.

     "Subsidiary" means, with respect to any Person, any corporation or
 other entity of which (x) a majority of the capital stock or other ownership
 interests having ordinary voting power to elect a majority of the Board of
 Directors or other persons performing similar functions are at the time
 directly or indirectly owned by such Person or (y) the results of
 operations, the assets and the liabilities of which are consolidated with
 such Person under GAAP.

     "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 Bulletin
 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 Warrant
 and the other agreements contemplated by this 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.

     "Warrant" means the Common Stock Purchase Warrant substantially in the
 form set forth in Exhibit E hereto.

 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") and Regulation S-
 X promulgated under the Securities Act ("Regulation S-X").  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.

           (b)  Purchaser shall acquire the Note on the Closing Date in an
 aggregate principal amount of Five Hundred and Fifty Thousand Dollars
 ($550,000.00).

           (c)  In connection with the Purchaser's agreement to purchase the
 Note specified in this Article II, the Company shall issue and deliver the
 Warrant to the Purchaser on the Closing Date.

 ARTICLE 2.2   Purchase Price .  The purchase price (the " Purchase
 Price") for the Note and the Warrant on the Closing Date shall be
 $550,000.00.

 ARTICLE 2.3   Closing and Mechanics of Payment .

           (a)  The Purchase Price shall be paid on the Closing Date by wire
 transfer of immediately available funds less any fees owed by the Company to
 Purchaser or its affiliates.

           (b)  The Note and Warrant issued on the Closing Date shall be
 dated the date thereof.

                      ARTICLE 3.  PAYMENT TERMS OF NOTE

 ARTICLE 3.1  Payment of Principal and Interest; Payment Mechanics .  The
 Company will pay all amounts due on each Note by the method and at the
 address specified for such purpose by Purchaser in writing, without the
 presentation or surrender of the 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 the 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 or 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 the Note as
 Purchaser has in this Section 3.1; provided that such transferee is an
 "accredited investor" as defined under Rule 501 of the Securities Act and
 has delivered to the Company such representation, warranties and covenants
 as may be reasonably requested thereby and such transfer has otherwise been
 made in compliance with applicable securities laws.

 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  Intentionally Omitted .

 ARTICLE 3.4  Mandatory Redemption .  Upon (i) the occurrence of a Change
 in Control, (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 of items (i), (ii) and
 (iii) being referred to as a " Sale Event"), then, in each case, the Company
 shall, upon request of the Majority Holders, redeem the Note and Warrant.
 The redemption price payable upon any such redemption shall be (x) for the
 Note, the outstanding principal amount, plus all accrued and unpaid interest
 and (y) for the Warrant, the Redemption Price in Section 14 of the Warrant,
 (each referred to herein as the "Formula Price").

 ARTICLE 3.5  Redemption Procedures .

           (a)  Any permitted redemption of the Note and Warrant, as
      applicable pursuant to Section 3.4 above shall be deemed to be
      effective and consummated (for purposes of determining the Formula
      Price) on the date of consummation of the applicable Sale Event.

           (b)  On the Maturity Date and on the effective date of a
      redemption of the Note and Warrant as specified in Section 3.5(a)
      above, the Company shall deliver by wire transfer of funds the
      redemption price to Purchaser of the Note and Warrant subject to
      redemption.  Should Purchaser not receive payment of any amounts due on
      redemption of its Note and Warrant by reason of the Company's failure
      to make payment at 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 14%, 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 4.  REPRESENTATIONS AND WARRANTIES

     The Company represents and warrants to 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 creditor's 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 except as set forth on Schedule 4.3 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 as set forth
 in that certain Registration Rights Agreement dated as of November 8, 2002
 between the Company and Purchaser) 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.  The Company has made available 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, (c) the filing of a "Form D" as described in
 Section 7.13 below, (d) the filing of one or more registration statements
 covering the Securities and such registration statement being declared
 effective and (e) compliance with applicable state securities laws
 provisions.

 ARTICLE 4.5  Issuance of Warrant Shares .  Upon exercise of the Warrant
 (assuming payment of the exercise price thereof), the Warrant Shares 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
 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 to which it is a party did not and will not,
 the issuance and sale by the Company of the Securities did not and will not
 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.
 Except as set forth on Schedule 4.6, 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 . Since January 31, 2003, except as
 disclosed in Schedule 4.7, 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 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 is contemplated or threatened which might cause such a change in the
 future.  The unaudited consolidated balance sheets of the Company and its
 Subsidiaries for the periods ending January 31, 2003 and April 30, 2003,
 respectively, and the related unaudited 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 (ii) have been prepared in accordance with GAAP
 consistently applied throughout the periods indicated, except that such
 financial statements do not contain notes 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.

 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 be reasonably
 expected to have a Material Adverse Effect or which challenges the validity
 of any of the 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.

      (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 and
 premiums under the Benefit Plans to the date hereof have been made, the
 respective fund or funds established under the Benefit Plans 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 at set forth on Schedule 4.11, 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
 and other governmental charges have been established in accordance with GAAP
 and Regulation S-X.

 ARTICLE 4.12  Investments, Joint Ventures .  Other than as set forth in
 Schedule 4.12, the Company has no Subsidiaries or other 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 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
 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 (as such terms are
 defined by the Securities Act) 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.  Except as set forth
 on Schedule 4.15, 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 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 neither itself nor any Person authorized to act on
 its behalf (except that the Company makes no representation as to Purchaser
 and any of its 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 best
 knowledge of the Company, the issuance of the Securities to 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 OTC Bulletin Board.

 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 .  Except as otherwise set forth in the Company's
 Consolidated balance sheet for the period ending April 30, 2003, 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 .  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 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; except as set forth on Schedule 4.20, 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.  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 Properties .  Except as set forth on Schedule
 4.22, the Company and its Subsidiaries have good and marketable title to
 all their respective properties free and clear of all Liens.

 ARTICLE 4.23  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 4.24  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 in violation of
 any law, rule or regulation.


           ARTICLE 5.  REPRESENTATIONS AND WARRANTIES OF PURCHASER

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

           (a)  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, 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;

           (b)  the execution, delivery and performance of this Agreement and
      the purchase of the Securities pursuant thereto are within Purchaser's
      corporate or partnership powers, as applicable, and have been duly and
      validly authorized by all requisite corporate or partnership action;
      and no further consent or authorization by the Purchaser, or its
      partners is required;

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

           (d)  the execution and delivery by 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 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 the remaining Transaction
      Agreements;

           (f)  this Agreement constitutes a valid and binding agreement of
      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)  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 Purchaser is capable of bearing
      the economic risks of such investment;

           (h)  Purchaser is knowledgeable, sophisticated and experienced
      in business and financial matters; Purchaser fully understands the
      limitations on transfer described herein; 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; 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 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 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
      Purchaser's ability to rely thereon;

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

           (j)  Purchaser is not a U.S. Person as such term is defined in
      Rule 902 of the Securities Act and is not acquiring the Securities for
      the account or benefit of any such U.S. Person;

           (k)  Purchaser agrees to resell such Securities in accordance with
      the provisions of Regulation S (Rule 901 through 905; and Preliminary
      Notes) of the Securities Act, pursuant to registration under the
      Securities Act, or pursuant to an available exemption; and agrees that
      the Company must refuse to register any transfer of the Securities not
      made in accordance with the foregoing requirements; and

           (l)  Purchaser agrees not to engage in hedging transactions with
      regard to such Securities unless in compliance with the Securities Act.


          ARTICLE 6.  CONDITIONS PRECEDENT TO PURCHASE OF SECURITIES

 ARTICLE 6.1  Conditions Precedent to 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 duly executed this Agreement, the Note
      and the Warrant, and delivered the same to Purchaser;

           (b)  The Company shall have delivered to Purchaser duly executed
      certificates representing the Note and Warrant in accordance with
      Section 2.3 hereof;

           (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.  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 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)  Except as set forth in Section 4.4 of this Agreement, the
      Company shall have received all governmental, Board of Directors,
      shareholders and third party consents and approvals necessary or
      desirable in connection with the issuance and sale of the Securities
      and the consummation of the transactions contemplated by the
      Transaction Agreements;

           (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 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 prior
      to the Closing Date shall have been paid; provided that, all fees and
      expenses due and payable on the Closing Date to Purchaser shall be
      subtracted from the payment of the Purchase Price;

           (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 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 (other than
      with respect to the Company's German subsidiary) since January 31,
      2003;

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

           (p)  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 Purchaser pursuant to
 this Agreement are subject to the satisfaction, at or prior to the Closing
 Date, of the following conditions:

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

           (d)  The Company shall have received payment of Purchase Price,
      less the Put of Pocket Expense Fee.


                      ARTICLE 7.  AFFIRMATIVE 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 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 files with the Commission following the date
      of this Agreement (collectively, "SEC Reports");

           (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; and

           (f)  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.

 ARTICLE 7.2  Payment of Obligations .  The Company will, and except as
 set forth on Schedule 7.2, will cause each Subsidiary to, pay and discharge,
 at or before maturity, all their respective material obligations, including,
 without limitation, tax liabilities, 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 except as
 set forth on Schedule 7.4, the 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, Purchaser or
 its designated representative 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 Purchaser
 the affairs, finances and accounts of the Company and its Subsidiaries in
 the presence of a representative of the Company; provided, however, that
 such discussions will not result in any unreasonable expense to the Company,
 without Company consent), 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 in accordance with Schedule 7.8
 attached hereto.  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 except as set forth on Schedule 7.9, will cause
 each Subsidiary to, comply, in all respects, with all terms and conditions
 of all material contracts to which it is subject.

 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 full exercise of the Warrant (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.

      (b)  The Company will maintain the listing and trading of its Common
 Stock on the OTC Bulletin Board.  The Company will comply in all material
 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.

 ARTICLE 7.11  Transfer Agent Instructions .  Upon receipt of Notice of
 Exercise, the Company shall immediately direct the Company's transfer agent
 to issue certificates, registered in the name of Purchaser or its nominee,
 for the Warrant Shares, in such amounts as specified from time to time by
 Purchaser to the Company upon proper exercise of the Warrant.  Upon exercise
 of the Warrant in accordance with its terms, the Company will, and will use
 its best lawful 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.  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 Purchaser upon resale of such 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, and prospective purchasers of Securities, information satisfying
 the information requirements of Rule 144 under the Securities Act.


                        ARTICLE 8.  NEGATIVE COVENANTS

     The Company hereby agrees that after the date hereof for so long as the
 Note remains outstanding and for the benefit of 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 (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) and (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 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 .  Neither the Company nor any
 Subsidiary will consummate an Asset Sale of material assets of the Company
 or any Subsidiary without the prior written consent of Purchaser, which
 consent shall 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 Purchaser or the holders of the
 Securities without the prior written consent of Purchaser.

 ARTICLE 8.6  Limitation on Stock Repurchases .  Except as otherwise set
 forth in the Note and the Warrant, 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 Warrant, 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 Note and Warrant shall bear restrictive
 legends in accordance with applicable securities laws.  The Conversion
 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, 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 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
      Notice of Exercise, (the "Deadline") to Purchaser (or any party
      receiving Securities by transfer from Purchaser) at the address of
      Purchaser set forth in the Notice of Exercise.  The Company understands
      that a delay in the issuance of such certificates after the Deadline
      could result in economic loss to Purchaser.

           (b)  Without in any way limiting Purchaser's right to pursue other
      remedies, including actual damages and/or equitable relief, the Company
      agrees that if delivery of the Conversion Shares is more than one (1)
      Business Day after the Deadline the Company shall pay to Purchaser, as
      liquidated damages and not as a penalty, $500 for each day that the
      Company fails to deliver such Common Stock.  Such cash amount shall be
      paid to Purchaser upon demand.

 ARTICLE 10.2  Intentionally Omitted .

 ARTICLE 10.3  Intentionally Omitted .

 ARTICLE 10.4  Registration Rights .  Upon a Payment Default on the Note,
 the Warrant Shares and any shares issuable upon conversion of the 2004 6%
 Debentures into which the Note is exchanged shall have the registration
 rights set forth in that certain Registration Rights Agreement dated as
 of November 8, 2002 between the Company and Purchaser.



                    ARTICLE 11.  ADJUSTMENT OF FIXED PRICE

 ARTICLE 11.1  Reorganization .  The exercise price of the Warrant
 (collectively, 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 applicable 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 applicable 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 right to convert Note 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 applicable Fixed Price shall be required
      unless such adjustment would result in a change of at least 1% in the
      applicable 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 applicable 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 applicable Fixed Price deliver to Purchaser a certificate
 specifying the nature of the event requiring the adjustment, the amount of
 the adjustment necessitated thereby, the applicable 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 Holders .  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
 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;

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

           (d)  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;

           (e)  following the 152nd day of this Agreement, the trading in the
      Common Stock shall have been suspended by the Commission, OTC Bulletin
      Board or any National Market (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 any National Market, the Common Stock is then listed
      and approved for trading on another  National Market within ten (10)
      Trading Days thereof);

           (f)  following the 152nd day of this Agreement, 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;

           (g)  the Company or, except with regard to the Company's German
      subsidiary, any 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;

           (h)  an involuntary case or other proceeding has been commenced
      against the Company or any 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;

           (i)  default in any payment provision or any agreement governing
      the terms of any Debt of the Company or any Subsidiary (except with
      respect to the Company's German subsidiary) in excess of $1,000,000,
      which has not been cured within any applicable period of grace
      associated therewith;

           (j)  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

           (k)  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, 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
 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 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 Formula Price.

 ARTICLE 12.2  Powers and Remedies Cumulative .  No right or remedy herein
 conferred upon or reserved to 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 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 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 Purchaser,
      its Affiliates, and each Person, if any, who controls 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 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 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 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 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 Purchaser and the other Indemnified Parties, satisfactory in
      form and substance to 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 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 Purchaser on the other, but also the relative fault of
      the Company and 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 Purchaser pursuant
      to this Agreement.  It is hereby further agreed that the relative
      benefits to the Company on the one hand and 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
      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 Purchaser or
      any other Indemnified Party.

 ARTICLE 13.4  Expenses:  Documentary Taxes . The Company agrees to pay to
 Global Capital Advisors, LLC, on the Closing Date, a fee of $12,000.00 (the
 "Out of Pocket Expense 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 other
 out of pocket expenses.  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 Purchaser
 shall own any Note purchased by it from the Company hereunder, the Company
 will make payments to Purchaser of all amounts due thereon by wire transfer
 by 4:00 P.M. (E.S.T.).

 ARTICLE 13.6  Successors and Assigns .  This Agreement shall be binding
 upon the Company and upon Purchaser and its 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 its affiliates or to holders of
 Securities are for the express benefit of such Persons and their successors
 and assigns.

 ARTICLE 13.7  Brokers .  Except for the cash fee owed to Colony Park
 Financial Services, LLC in the amount of $23,000, the Company represents and
 Warrant 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 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 FEDERAL DISTRICT 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 TO THIS AGREEMENT IRREVOCABLY CONSENTS TO THE SERVICE
 OF PROCESS IN ANY SUCH PROCEEDING BY THE MAILING OF COPIES THEREOF BY
 REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS
 SET FORTH HEREIN.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO
 SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.  EACH PARTY WAIVES ITS
 RIGHT TO A TRIAL BY JURY.

 ARTICLE 13.9  Entire Agreement .  This Agreement, the Exhibits or
 Schedules hereto, which include, but are not limited to the Note and the
 Warrant, set forth the entire agreement and understanding of the parties
 relating to the subject matter hereof and supercedes all prior and
 contemporaneous agreements, negotiations and understandings between the
 parties, both oral and written relating to the subject matter hereof. The
 terms and conditions of all Exhibits and Schedules to this Agreement are
 incorporated herein by this reference and shall constitute part of this
 Agreement as is fully set forth herein.

 ARTICLE 13.10  Survival; Severability.  The representations,
 warranties, covenants and agreements of the parties hereto shall survive
 the Closing hereunder. In the event that any provision of this Agreement
 becomes or is declared by a court of competent jurisdiction to be illegal,
 unenforceable or void, this Agreement shall continue in full force and
 effect without said provision; provided that such severability shall be
 ineffective if it materially changes the economic benefit of this Agreement
 to any party.

 ARTICLE 13.11  Title and Subtitles .  The titles and subtitles used in
 this Agreement are used for convenience only and are not to be considered
 in construing or interpreting this Agreement.

 ARTICLE 13.12  Reporting Entity for the Common Stock.   The reporting
 entity relied upon for the determination of the trading price or trading
 volume of the Common Stock on any given Trading Day for the purposes of
 this Agreement and all Exhibits shall be Bloomberg, L.P. or any successor
 thereto. The written mutual consent of the Purchaser and the Company shall
 be required to employ any other reporting entity.

 ARTICLE 13.13  Publicity.   The Company and the Purchaser shall consult
 with each other in issuing any press releases or otherwise making public
 statements with respect to the transactions contemplated hereby and no
 party shall issue any such press release or otherwise make any such public
 statement without the prior written consent of the other parties, which
 consent shall not be unreasonably withheld or delayed, except that no prior
 consent shall be required if such disclosure is required by law, in which
 such case the disclosing party shall provide the other parties with prior
 notice of such public statement.  Notwithstanding the foregoing, the Company
 shall not publicly disclose the name of Purchaser without the prior written
 consent of Purchaser, except to the extent required by law, in which case
 the Company shall provide Purchaser with prior written notice of such public
 disclosure.

                           [signature page follows]

<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:    ________________________________
                               Name:  ________________________________
                               Title: ________________________________


                               Address: Dial-Thru International Corporation
                                        17383 Sunset Blvd.
                                        Suite 350
                                        Los Angeles, CA 90272

                                        Telephone:  (310) 566-1700
                                        Fax:  (310) 573-9435




                               GCA STRATEGIC INVESTMENT FUND LIMITED



                               By:    ________________________________
                               Name:  Lewis N. Lester
                               Title: Director

                               Address:  c\o Prime Management
                                         Mechanics Building
                                         12 Church Street
                                         Hamilton, Bermuda HM11

                                         Fax: 441-295-3926
                                         Tel.:   441-295-0329

                                                Securities Purchase Agreement

<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  Payment of Principal and Interest;
              Payment Mechanics .............................         9
            Section 3.2  Payment of Interest ................         9
            Section 3.3  Intentionally Omitted ..............         9
            Section 3.4  Mandatory Redemption ...............         9
            Section 3.5  Redemption Procedures ..............         9

      ARTICLE IV.  REPRESENTATIONS AND WARRANTIES............        10
            Section 4.1  Organization and Qualification .....        10
            Section 4.2  Authorization and Execution ........        10
            Section 4.3  Capitalization  ....................        11
            Section 4.4  Governmental Authorization .........        11
            Section 4.5  Issuance of Warrant Shares .........        11
            Section 4.6  No Conflicts .......................        12
            Section 4.7  Financial Information ..............        12
            Section 4.8  Litigation .........................        12
            Section 4.9  Compliance with ERISA and other
              Benefit Plans..................................        13
            Section 4.10  Environmental Matters .............        13
            Section 4.11  Taxes .............................        13
            Section 4.12  Investments, Joint Ventures .......        14
            Section 4.13  Not an Investment Company .........        14
            Section 4.14  Full Disclosure ...................        14
            Section 4.15  No Solicitation; No Integration
              with Other Offerings ..........................        14
            Section 4.16  Permits ...........................        14
            Section 4.17  Leases ............................        15
            Section 4.18  Absence of Any Undisclosed
              Liabilities....................................        15
            Section 4.19  Public Utility Holding Company ....        15
            Section 4.20  Intellectual Property Rights ......        15
            Section 4.21  Insurance .........................        15
            Section 4.22  Title to Properties ...............        15
            Section 4.23  Internal Accounting Controls ......        15
            Section 4.24  Foreign Practices .................        16

      ARTICLE V.  REPRESENTATIONS AND WARRANTIES OF PURCHASER        16
            Section 5.1  Purchaser ..........................        16

      ARTICLE VI.  CONDITIONS PRECEDENT TO PURCHASE OF SECURITIES    17
            Section 6.1  Conditions Precedent to Purchaser's
              Obligations to Purchase .......................        17
            Section 6.2  Conditions to the Company's
              Obligations....................................        19

      ARTICLE VII.  AFFIRMATIVE COVENANTS....................        20
            Section 7.1 Information .........................        20
            Section 7.2 Payment of Obligations ..............        21
            Section 7.3 Maintenance of Property; Insurance ..        21
            Section 7.4 Maintenance of Existence ............        21
            Section 7.5 Compliance with Laws ................        21
            Section 7.6 Inspection of Property, Books and
              Records........................................        21
            Section 7.7 Investment Company Act ..............        22
            Section 7.8 Use of Proceeds .....................        22
            Section 7.9 Compliance with Terms and Conditions
              of Material Contracts .........................        22
            Section 7.10  Reserved Shares and Listings ......        22
            Section 7.11  Transfer Agent Instructions .......        22
            Section 7.12  Maintenance of Reporting Status;
              Supplemental Information ......................        23

      ARTICLE VIII.  NEGATIVE COVENANTS......................        23
            Section 8.1  Limitations on Debt or Other
              Liabilities....................................        23
            Section 8.2  Transactions with Affiliates .......        23
            Section 8.3  Merger or Consolidation ............        23
            Section 8.4  Limitation on Asset Sales ..........        24
            Section 8.5  Restrictions on Certain Amendments..        24
            Section 8.6  Limitation on Stock Repurchases ....        24

      ARTICLE IX.  RESTRICTIVE LEGENDS.......................        24
            Section 9.1  Restrictions on Transfer ...........        24
            Section 9.2  Legends. ...........................        25
            Section 9.3  Notice of Proposed Transfers .......        25

      ARTICLE X.  ADDITIONAL AGREEMENTS AMONG THE PARTIES....        25
            Section 10.1  Liquidated Damages ................        25
            Section 10.2  Intentionally Omitted .............        25
            Section 10.3  Intentionally Omitted .............        26
            Section 10.4  Registration Rights ...............        26

      ARTICLE XI.  ADJUSTMENT OF FIXED PRICE.................        26
            Section 11.1  Reorganization ....................        26
            Section 11.2  Share Reorganization ..............        26
            Section 11.3  Capital Reorganization ............        27
            Section 11.4  Adjustment Rules ..................        27
            Section 11.5  Certificate as to Adjustment ......        28
            Section 11.6  Notice to Holders .................        28

      ARTICLE XII.  EVENTS OF DEFAULT........................        28
            Section 12.1  Events of Default. ................        28
            Section 12.2  Powers and Remedies Cumulative ....        30

      ARTICLE XIII.  MISCELLANEOUS...........................        30
            Section 13.1  Notices ...........................        30
            Section 13.2  No Waivers; Amendments ............        31
            Section 13.3  Indemnification ...................        31
            Section 13.4  Expenses:  Documentary Taxes ......        33
            Section 13.5  Payment ...........................        33
            Section 13.6  Successors and Assigns ............        34
            Section 13.7  Brokers ...........................        34
            Section 13.8  Delaware Law; Submission to
              Jurisdiction; Waiver of Jury Trial; Appointment
              of Agent ......................................        34
            Section 13.9  Entire Agreement...................        34
            Section 13.10 Survival; Severability.............        34
            Section 13.11 Title and Subtitles................        35
            Section 13.12 Reporting Entity for the Common
              Stock..........................................        35
            Section 13.13 Publicity..........................        35


<PAGE>


                              LIST OF SCHEDULES

      Schedule 4.3
      Schedule 4.7
      Schedule 4.8
      Schedule 4.11
      Schedule 4.12
      Schedule 4.15
      Schedule 4.17
      Schedule 4.20
      Schedule 4.21
      Schedule 4.22
      Schedule 7.2
      Schedule 7.4
      Schedule 7.8
      Schedule 7.9
      Schedule 8.2

<PAGE>


                               LIST OF EXHIBITS

      Exhibit A
      Exhibit C
      Exhibit D
      Exhibit E


<PAGE>


                        SECURITIES PURCHASE AGREEMENT


                                 dated as of


                                July 24, 2003


                                by and between


                     Dial-Thru International Corporation
                                as the Issuer,


                                     and


                    GCA Strategic Investment Fund Limited