EXHIBIT 4.7

                          SECURITIES PURCHASE AGREEMENT

     SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of February 12,
2003, by and among FullCircle Registry, Inc., a Nevada corporation, with
headquarters located at 500 West Jefferson Street, PNC Plaza, Suite 2310,
Louisville, KY 40202 (the "Company"), and each of the purchasers set forth on
the signature pages hereto (the "Buyers").

     WHEREAS:

     (a) The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by the
rules and regulations as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act");

     (b) Buyers desire to purchase and the Company desires to issue and sell,
upon the terms and conditions set forth in this Agreement (i) 12% convertible
debentures of the Company, in the form attached hereto as Exhibit "A", in the
aggregate principal amount of Six Hundred Thousand Dollars ($600,000) (together
with any debenture(s) issued in replacement thereof or as a dividend thereon or
otherwise with respect thereto in accordance with the terms thereof, the
"Debentures"), convertible into shares of common stock, par value $.001 per
share, of the Company (the "Common Stock"), upon the terms and subject to the
limitations and conditions set forth in such Debentures and (ii) warrants, in
the form attached hereto as Exhibit "B", to purchase One Million Eight Hundred
Thousand (1,800,000) shares of Common Stock (the "Warrants").

     (c) Each Buyer wishes to purchase, upon the terms and conditions stated in
this Agreement, such principal amount of Debentures and number of Warrants as is
set forth immediately below its name on the signature pages hereto; and

     (d) Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement, in
the form attached hereto as Exhibit "C" (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the 1933 Act and the rules and regulations promulgated thereunder, and
applicable state securities laws.

     NOW, THEREFORE, the Company and each of the Buyers severally (and not
jointly) hereby agree as follows:

          (i) PURCHASE AND SALE OF DEBENTURES AND WARRANTS.

               (1) Purchase of Debentures and Warrants. On the Closing Date (as
          defined below), the Company shall issue and sell to each Buyer and
          each Buyer severally agrees to purchase from the Company such
          principal amount of Debentures and number of Warrants as is set forth
<PAGE>
          immediately below such Buyer's name on the signature pages hereto.

               (2) Form of Payment. On the Closing Date (as defined below), (i)
          each Buyer shall pay the purchase price for the Debentures and the
          Warrants to be issued and sold to it at the Closing (as defined below)
          (the "Purchase Price") by wire transfer of immediately available funds
          to the Company, in accordance with the Company's written wiring
          instructions, against delivery of the Debentures in the principal
          amount equal to the Purchase Price and the number of Warrants as is
          set forth immediately below such Buyer's name on the signature pages
          hereto, and (ii) the Company shall deliver such Debentures and
          Warrants duly executed on behalf of the Company, to such Buyer,
          against delivery of such Purchase Price.

               (3) Closing Date. Subject to the satisfaction (or written waiver)
          of the conditions thereto set forth in Section 6 and Section 7 below,
          the date and time of the issuance and sale of the Debentures and the
          Warrants pursuant to this Agreement (the "Closing Date") shall be
          12:00 noon, Eastern Standard Time on February 12, 2003 or such other
          mutually agreed upon time. The closing of the transactions
          contemplated by this Agreement (the "Closing") shall occur on the
          Closing Date at such location as may be agreed to by the parties.

          (ii) BUYERS' REPRESENTATIONS AND WARRANTIES. Each Buyer severally (and
     not jointly) represents and warrants to the Company solely as to such Buyer
     that:

                    (1) Investment Purpose. As of the date hereof, the Buyer is
               purchasing the Debentures and the shares of Common Stock issuable
               upon conversion of or otherwise pursuant to the Debentures
               (including, without limitation, such additional shares of Common
               Stock, if any, as are issuable (i) on account of interest on the
               Debentures, (ii) as a result of the events described in Sections
               1.3 and 1.4(g) of the Debentures and Section 2(c) of the
               Registration Rights Agreement or (iii) in payment of the Standard
               Liquidated Damages Amount (as defined in Section 2(f) below)
               pursuant to this Agreement, such shares of Common Stock being
               collectively referred to herein as the "Conversion Shares") and
<PAGE>
               the Warrants and the shares of Common Stock issuable upon
               exercise thereof (the "Warrant Shares" and, collectively with the
               Debentures, Warrants and Conversion Shares, the "Securities") for
               its own account and not with a present view towards the public
               sale or distribution thereof, except pursuant to sales registered
               or exempted from registration under the 1933 Act; provided,
               however, that by making the representations herein, the Buyer
               does not agree to hold any of the Securities for any minimum or
               other specific term and reserves the right to dispose of the
               Securities at any time in accordance with or pursuant to a
               registration statement or an exemption under the 1933 Act.

                    (2) Accredited Investor Status. The Buyer is an "accredited
               investor" as that term is defined in Rule 501(a) of Regulation D
               (an "Accredited Investor").

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

                    (4) Information. The Buyer and its advisors, if any, have
               been, and for so long as the Debentures and Warrants remain
               outstanding will continue to be, furnished with all materials
               relating to the business, finances and operations of the Company
               and materials relating to the offer and sale of the Securities
               which have been requested by the Buyer or its advisors. The Buyer
               and its advisors, if any, have been, and for so long as the
               Debentures and Warrants remain outstanding will continue to be,
               afforded the opportunity to ask questions of the Company.
               Notwithstanding the foregoing, the Company has not disclosed to
               the Buyer any material nonpublic information and will not
               disclose such information unless such information is disclosed to
               the public prior to or promptly following such disclosure to the
               Buyer. Neither such inquiries nor any other due diligence
               investigation conducted by Buyer or any of its advisors or
               representatives shall modify, amend or affect Buyer's right to
               rely on the Company's representations and warranties contained in
               Section 3 below. The Buyer understands that its investment in the
               Securities involves a significant degree of risk.
<PAGE>
                    (5) Governmental Review. The Buyer understands that no
               United States federal or state agency or any other government or
               governmental agency has passed upon or made any recommendation or
               endorsement of the Securities.

                    (6) Transfer or Re-sale. The Buyer understands that (i)
               except as provided in the Registration Rights Agreement, the sale
               or re-sale of the Securities has not been and is not being
               registered under the 1933 Act or any applicable state securities
               laws, and the Securities may not be transferred unless (a) the
               Securities are sold pursuant to an effective registration
               statement under the 1933 Act, (b) the Buyer shall have delivered
               to the Company an opinion of counsel that shall be in form,
               substance and scope customary for opinions of counsel in
               comparable transactions to the effect that the Securities to be
               sold or transferred may be sold or transferred pursuant to an
               exemption from such registration, which opinion shall be accepted
               by the Company, (c) the Securities are sold or transferred to an
               "affiliate" (as defined in Rule 144 promulgated under the 1933
               Act (or a successor rule) ("Rule 144")) of the Buyer who agrees
               to sell or otherwise transfer the Securities only in accordance
               with this Section 2(f) and who is an Accredited Investor, (d) the
               Securities are sold pursuant to Rule 144, or (e) the Securities
               are sold pursuant to Regulation S under the 1933 Act (or a
               successor rule) ("Regulation S"), and the Buyer shall have
               delivered to the Company an opinion of counsel that shall be in
               form, substance and scope customary for opinions of counsel in
               corporate transactions, which opinion shall be accepted by the
               Company; (ii) any sale of such Securities made in reliance on
               Rule 144 may be made only in accordance with the terms of said
               Rule and further, if said Rule is not applicable, any re-sale of
               such Securities under circumstances in which the seller (or the
               person through whom the sale is made) may be deemed to be an
               underwriter (as that term is defined in the 1933 Act) may require
               compliance with some other exemption under the 1933 Act or the
<PAGE>
               rules and regulations of the SEC thereunder; and (iii) neither
               the Company nor any other person is under any obligation to
               register such Securities under the 1933 Act or any state
               securities laws or to comply with the terms and conditions of any
               exemption thereunder (in each case, other than pursuant to the
               Registration Rights Agreement). Notwithstanding the foregoing or
               anything else contained herein to the contrary, the Securities
               may be pledged as collateral in connection with a bona fide
               margin account or other lending arrangement. In the event that
               the Company does not accept the opinion of counsel provided by
               the Buyer with respect to the transfer of Securities pursuant to
               an exemption from registration, such as Rule 144 or Regulation S,
               within three (3) business days of delivery of the opinion to the
               Company, the Company shall pay to the Buyer liquidated damages of
               three percent (3%) of the outstanding amount of the Debentures
               per month plus accrued and unpaid interest on the Debentures,
               prorated for partial months, in cash or shares at the option of
               the Buyer ("Standard Liquidated Damages Amount"). If the Buyer
               elects to be paid the Standard Liquidated Damages Amount in
               shares of Common Stock, such shares shall be issued at the
               Conversion Price at the time of payment.

                    (7) Legends. The Buyer understands that the Debentures and
               the Warrants and, until such time as the Conversion Shares and
               Warrant Shares have been registered under the 1933 Act as
               contemplated by the Registration Rights Agreement or otherwise
               may be sold pursuant to Rule 144 or Regulation S without any
               restriction as to the number of securities as of a particular
               date that can then be immediately sold, the Conversion Shares and
               Warrant Shares may bear a restrictive legend in substantially the
               following form (and a stop-transfer order may be placed against
               transfer of the certificates for such Securities):

          "The securities represented by this certificate have not been
          registered under the Securities Act of 1933, as amended. The
          securities may not be sold, transferred or assigned in the absence of
          an effective registration statement for the securities under said Act,
          or an opinion of counsel, in form, substance and scope customary for
          opinions of counsel in comparable transactions, that registration is
          not required under said Act or unless sold pursuant to Rule 144 or
          Regulation S under said Act."

     The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
such Security is registered for sale under an effective registration statement
filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or
Regulation S without any restriction as to the number of securities as of a
particular date that can then be immediately sold, or (b) such holder provides
<PAGE> the Company with an opinion of counsel, in form, substance and scope
customary for opinions of counsel in comparable transactions, to the effect that
a public sale or transfer of such Security may be made without registration
under the 1933 Act, which opinion shall be accepted by the Company so that the
sale or transfer is effected or (c) such holder provides the Company with
reasonable assurances that such Security can be sold pursuant to Rule 144 or
Regulation S. The Buyer agrees to sell all Securities, including those
represented by a certificate(s) from which the legend has been removed, in
compliance with applicable prospectus delivery requirements, if any.

                    (8) Authorization; Enforcement. This Agreement and the
               Registration Rights Agreement have been duly and validly
               authorized. This Agreement has been duly executed and delivered
               on behalf of the Buyer, and this Agreement constitutes, and upon
               execution and delivery by the Buyer of the Registration Rights
               Agreement, such agreement will constitute, valid and binding
               agreements of the Buyer enforceable in accordance with their
               terms.

                    (9) Residency. The Buyer is a resident of the jurisdiction
               set forth immediately below such Buyer's name on the signature
               pages hereto.

          (iii) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
     represents and warrants to each Buyer that:

          (1) Organization and Qualification. The Company and each of its
     Subsidiaries (as defined below), if any, is a corporation duly organized,
     validly existing and in good standing under the laws of the jurisdiction in
     which it is incorporated, with full power and authority (corporate and
     other) to own, lease, use and operate its properties and to carry on its
     business as and where now owned, leased, used, operated and conducted.
     Schedule 3(a) sets forth a list of all of the Subsidiaries of the Company
     and the jurisdiction in which each is incorporated. The Company and each of
     its Subsidiaries is duly qualified as a foreign corporation to do business
     and is in good standing in every jurisdiction in which its ownership or use
     of property or the nature of the business conducted by it makes such
     qualification necessary except where the failure to be so qualified or in
     good standing would not have a Material Adverse Effect. "Material Adverse
     Effect" means any material adverse effect on the business, operations,
     assets, financial condition or prospects of the Company or its
     Subsidiaries, if any, taken as a whole, or on the transactions contemplated
     hereby or by the agreements or instruments to be entered into in connection
     herewith. "Subsidiaries" means any corporation or other organization,
     whether incorporated or unincorporated, in which the Company owns, directly
     or indirectly, any equity or other ownership interest.
<PAGE>
               (2) Authorization; Enforcement. (i) The Company has all requisite
          corporate power and authority to enter into and perform this
          Agreement, the Registration Rights Agreement, the Debentures and the
          Warrants and to consummate the transactions contemplated hereby and
          thereby and to issue the Securities, in accordance with the terms
          hereof and thereof, (ii) the execution and delivery of this Agreement,
          the Registration Rights Agreement, the Debentures and the Warrants by
          the Company and the consummation by it of the transactions
          contemplated hereby and thereby (including without limitation, the
          issuance of the Debentures and the Warrants and the issuance and
          reservation for issuance of the Conversion Shares and Warrant Shares
          issuable upon conversion or exercise thereof) have been duly
          authorized by the Company's Board of Directors and no further consent
          or authorization of the Company, its Board of Directors, or its
          shareholders is required, (iii) this Agreement has been duly executed
          and delivered by the Company by its authorized representative, and
          such authorized representative is the true and official representative
          with authority to sign this Agreement and the other documents executed
          in connection herewith and bind the Company accordingly, and (iv) this
          Agreement constitutes, and upon execution and delivery by the Company
          of the Registration Rights Agreement, the Debentures and the Warrants,
          each of such instruments will constitute, a legal, valid and binding
          obligation of the Company enforceable against the Company in
          accordance with its terms.

               (3) Capitalization. As of the date hereof, the authorized capital
          stock of the Company consists of (i) 50,000,000 shares of Common
          Stock, of which 22,406,030 shares are issued and outstanding, 400,000
          shares are reserved for issuance pursuant to the Company's stock
          option plans, 970,000 shares are reserved for issuance pursuant to
          securities (other than the Debentures and the Warrants) exercisable
          for, or convertible into or exchangeable for shares of Common Stock
          and 5,892,994 shares are reserved for issuance upon conversion of the
          Debentures and the Additional Debentures (as defined in Section 4(l))
          and exercise of the Warrants and the Additional Warrants (as defined
          in Section 4(l)) (subject to adjustment pursuant to the Company's
          covenant set forth in Section 4(h) below); and (ii) 5,000,000 shares
          of preferred stock, of which 210,750 shares are issued and
          outstanding. 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 any other similar rights of the shareholders
          of the Company or any liens or encumbrances imposed through the
<PAGE>
          actions or failure to act of the Company. Except as disclosed in
          Schedule 3(c), as of the effective date of this Agreement, (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, (ii) there
          are no agreements or arrangements under which the Company or any of
          its Subsidiaries is obligated to register the sale of any of its or
          their securities under the 1933 Act (except the Registration Rights
          Agreement) 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 Debentures, the Warrants, the Conversion Shares
          or Warrant Shares. The Company has furnished to the Buyer true and
          correct copies of the Company's Articles of Incorporation as in effect
          on the date hereof ("Articles of Incorporation"), the Company's
          By-laws, as in effect on the date hereof (the "By-laws"), and the
          terms of all securities convertible into or exercisable for Common
          Stock of the Company and the material rights of the holders thereof in
          respect thereto. The Company shall provide the Buyer with a written
          update of this representation signed by the Company's Chief Executive
          or Chief Financial Officer on behalf of the Company as of the Closing
          Date.

               (4) Issuance of Shares. The Conversion Shares and Warrant Shares
          are duly authorized and reserved for issuance and, upon conversion of
          the Debentures and exercise of the Warrants in accordance with their
          respective terms, will be validly issued, fully paid and
          non-assessable, and free from all taxes, liens, claims and
          encumbrances with respect to the issue thereof and shall not be
          subject to preemptive rights or other similar rights of shareholders
          of the Company and will not impose personal liability upon the holder
          thereof.
<PAGE>
               (5) Acknowledgment of Dilution. The Company understands and
          acknowledges the potentially dilutive effect to the Common Stock upon
          the issuance of the Conversion Shares and Warrant Shares upon
          conversion of the Debenture or exercise of the Warrants. The Company
          further acknowledges that its obligation to issue Conversion Shares
          and Warrant Shares upon conversion of the Debentures or exercise of
          the Warrants in accordance with this Agreement, the Debentures and the
          Warrants is absolute and unconditional regardless of the dilutive
          effect that such issuance may have on the ownership interests of other
          shareholders of the Company.

               (6) No Conflicts. The execution, delivery and performance of this
          Agreement, the Registration Rights Agreement, the Debentures and the
          Warrants by the Company and the consummation by the Company of the
          transactions contemplated hereby and thereby (including, without
          limitation, the issuance and reservation for issuance of the
          Conversion Shares and Warrant Shares) will not (i) conflict with or
          result in a violation of any provision of the Articles of
          Incorporation or By-laws or (ii) violate or conflict with, or result
          in a breach of any provision of, or constitute a default (or an event
          which with notice or lapse of time or both could become a default)
          under, or give to others any rights of termination, amendment,
          acceleration or cancellation of, any agreement, indenture, patent,
          patent license or instrument to which the Company or any of its
          Subsidiaries is a party, or (iii) result in a violation of any law,
          rule, regulation, order, judgment or decree (including federal and
          state securities laws and regulations and regulations of any
          self-regulatory organizations to which the Company or its securities
          are subject) applicable to the Company or any of its Subsidiaries or
          by which any property or asset of the Company or any of its
          Subsidiaries is bound or affected (except for such conflicts,
          defaults, terminations, amendments, accelerations, cancellations and
          violations as would not, individually or in the aggregate, have a
          Material Adverse Effect). Neither the Company nor any of its
          Subsidiaries is in violation of its Articles of Incorporation, By-laws
          or other organizational documents and neither the Company nor any of
          its Subsidiaries is in default (and no event has occurred which with
          notice or lapse of time or both could put the Company or any of its
          Subsidiaries in default) under, and neither the Company nor any of its
          Subsidiaries has taken any action or failed to take any action that
          would give to others any rights of termination, amendment,
          acceleration or cancellation of, any agreement, indenture or
<PAGE>
          instrument to which the Company or any of its Subsidiaries is a party
          or by which any property or assets of the Company or any of its
          Subsidiaries is bound or affected, except for possible defaults as
          would not, individually or in the aggregate, have a Material Adverse
          Effect. The businesses of the Company and its Subsidiaries, if any,
          are not being conducted, and shall not be conducted so long as a Buyer
          owns any of the Securities, in violation of any law, ordinance or
          regulation of any governmental entity. Except as specifically
          contemplated by this Agreement and as required under the 1933 Act and
          any applicable state securities laws, the Company is not required to
          obtain any consent, authorization or order of, or make any filing or
          registration with, any court, governmental agency, regulatory agency,
          self regulatory organization or stock market or any third party in
          order for it to execute, deliver or perform any of its obligations
          under this Agreement, the Registration Rights Agreement, the
          Debentures or the Warrants in accordance with the terms hereof or
          thereof or to issue and sell the Debentures and Warrants in accordance
          with the terms hereof and to issue the Conversion Shares upon
          conversion of the Debentures and the Warrant Shares upon exercise of
          the Warrants. Except as disclosed in Schedule 3(f), all consents,
          authorizations, orders, filings and registrations which the Company is
          required to obtain pursuant to the preceding sentence have been
          obtained or effected on or prior to the date hereof. The Company is
          not in violation of the listing requirements of the Over-the-Counter
          Bulletin Board (the "OTCBB") and does not reasonably anticipate that
          the Common Stock will be delisted by the OTCBB in the foreseeable
          future. The Company and its Subsidiaries are unaware of any facts or
          circumstances which might give rise to any of the foregoing.

               (7) SEC Documents; Financial Statements. Except as disclosed in
          Schedule 3(g), the Company has timely filed all reports, schedules,
          forms, statements and other documents required to be filed by it with
          the SEC pursuant to the reporting requirements of the Securities
          Exchange Act of 1934, as amended (the "1934 Act") (all of the
          foregoing filed prior to the date hereof and all exhibits included
          therein and financial statements and schedules thereto and documents
          (other than exhibits to such documents) incorporated by reference
          therein, being hereinafter referred to herein as the "SEC Documents").
<PAGE>
          The Company has delivered to each Buyer true and complete copies of
          the SEC Documents, except for such exhibits and incorporated
          documents. As of their respective dates, the SEC Documents complied in
          all material respects with the requirements of the 1934 Act and the
          rules and regulations of the SEC promulgated thereunder applicable to
          the SEC Documents, and none of the SEC Documents, at the time they
          were filed with the SEC, contained any untrue statement of a material
          fact or omitted to state a material fact required to be stated therein
          or necessary in order to make the statements therein, in light of the
          circumstances under which they were made, not misleading. None of the
          statements made in any such SEC Documents is, or has been, required to
          be amended or updated under applicable law (except for such statements
          as have been amended or updated in subsequent filings prior the date
          hereof). As of their respective dates, the financial statements of the
          Company included in the SEC Documents complied as to form in all
          material respects with applicable accounting requirements and the
          published rules and regulations of the SEC with respect thereto. Such
          financial statements have been prepared in accordance with United
          States generally accepted accounting principles, consistently applied,
          during the periods involved (except (i) as may be otherwise indicated
          in such financial statements or the notes thereto, or (ii) in the case
          of unaudited interim statements, to the extent they may not include
          footnotes or may be condensed or summary statements) and fairly
          present in all material respects the consolidated financial position
          of the Company and its consolidated Subsidiaries as of the dates
          thereof and the consolidated results of their operations and cash
          flows for the periods then ended (subject, in the case of unaudited
          statements, to normal year-end audit adjustments). Except as set forth
          in the financial statements of the Company included in the SEC
          Documents, the Company has no liabilities, contingent or otherwise,
          other than (i) liabilities incurred in the ordinary course of business
          subsequent to December 31, 2001 and (ii) obligations under contracts
          and commitments incurred in the ordinary course of business and not
          required under generally accepted accounting principles to be
          reflected in such financial statements, which, individually or in the
          aggregate, are not material to the financial condition or operating
          results of the Company.
<PAGE>
               (8) Absence of Certain Changes. Since December 31, 2001, there
          has been no material adverse change and no material adverse
          development in the assets, liabilities, business, properties,
          operations, financial condition, results of operations or prospects of
          the Company or any of its Subsidiaries.

               (9) Absence of Litigation. There is no action, suit, claim,
          proceeding, inquiry or investigation before or by any court, public
          board, government agency, self-regulatory organization or body pending
          or, to the knowledge of the Company or any of its Subsidiaries,
          threatened against or affecting the Company or any of its
          Subsidiaries, or their officers or directors in their capacity as
          such, that could have a Material Adverse Effect. Schedule 3(i)
          contains a complete list and summary description of any pending or
          threatened proceeding against or affecting the Company or any of its
          Subsidiaries, without regard to whether it would have a Material
          Adverse Effect. The Company and its Subsidiaries are unaware of any
          facts or circumstances which might give rise to any of the foregoing.

               (10) Patents, Copyrights, etc.

                    a. The Company and each of its Subsidiaries owns or
               possesses the requisite licenses or rights to use all patents,
               patent applications, patent rights, inventions, know-how, trade
               secrets, trademarks, trademark applications, service marks,
               service names, trade names and copyrights ("Intellectual
               Property") necessary to enable it to conduct its business as now
               operated (and, except as set forth in Schedule 3(j) hereof, to
               the best of the Company's knowledge, as presently contemplated to
               be operated in the future); there is no claim or action by any
               person pertaining to, or proceeding pending, or to the Company's
               knowledge threatened, which challenges the right of the Company
               or of a Subsidiary with respect to any Intellectual Property
               necessary to enable it to conduct its business as now operated
               (and, except as set forth in Schedule 3(j) hereof, to the best of
               the Company's knowledge, as presently contemplated to be operated
               in the future); to the best of the Company's knowledge, the
<PAGE>
               Company's or its Subsidiaries' current and intended products,
               services and processes do not infringe on any Intellectual
               Property or other rights held by any person; and the Company is
               unaware of any facts or circumstances which might give rise to
               any of the foregoing. The Company and each of its Subsidiaries
               have taken reasonable security measures to protect the secrecy,
               confidentiality and value of their Intellectual Property.

                    b. All of the Company's computer software and computer
               hardware, and other similar or related items of automated,
               computerized or software systems that are used or relied on by
               the Company in the conduct of its business or that were, or
               currently are being, sold or licensed by the Company to customers
               (collectively, "Information Technology"), are Year 2000
               Compliant. For purposes of this Agreement, the term "Year 2000
               Compliant" means, with respect to the Company's Information
               Technology, that the Information Technology is designed to be
               used prior to, during and after the calendar Year 2000, and the
               Information Technology used during each such time period will
               accurately receive, provide and process date and time data
               (including, but not limited to, calculating, comparing and
               sequencing) from, into and between the 20th and 21st centuries,
               including the years 1999 and 2000, and leap-year calculations,
               and will not malfunction, cease to function, or provide invalid
               or incorrect results as a result of the date or time data, to the
               extent that other information technology, used in combination
               with the Information Technology, properly exchanges date and time
               data with it. The Company has delivered to the Buyers true and
               correct copies of all analyses, reports, studies and similar
               written information, whether prepared by the Company or another
               party, relating to whether the Information Technology is Year
               2000 Compliant, if any.

               (11) No Materially Adverse Contracts, Etc. Neither the Company
          nor any of its Subsidiaries is subject to any charter, corporate or
          other legal restriction, or any judgment, decree, order, rule or
          regulation which in the judgment of the Company's officers has or is
          expected in the future to have a Material Adverse Effect. Neither the
          Company nor any of its Subsidiaries is a party to any contract or
          agreement which in the judgment of the Company's officers has or is
          expected to have a Material Adverse Effect.
<PAGE>
               (12) Tax Status. Except as set forth on Schedule 3(l), the
          Company and each of its Subsidiaries has made or filed all federal,
          state and foreign income and all other tax returns, reports and
          declarations required by any jurisdiction to which it is subject
          (unless and only to the extent that the Company and each of its
          Subsidiaries has set aside on its books provisions reasonably adequate
          for the payment of all unpaid and unreported taxes) and has paid all
          taxes and other governmental assessments and charges that are material
          in amount, shown or determined to be due on such returns, reports and
          declarations, except those being contested in good faith and has set
          aside on its books provisions reasonably adequate for the payment of
          all taxes for periods subsequent to the periods to which such returns,
          reports or declarations apply. There are no unpaid taxes in any
          material amount claimed to be due by the taxing authority of any
          jurisdiction, and the officers of the Company know of no basis for any
          such claim. The Company has not executed a waiver with respect to the
          statute of limitations relating to the assessment or collection of any
          foreign, federal, state or local tax. Except as set forth on Schedule
          3(l), none of the Company's tax returns is presently being audited by
          any taxing authority.

               (13) Certain Transactions. Except as set forth on Schedule 3(m)
          and except for arm's length transactions pursuant to which the Company
          or any of its Subsidiaries makes payments in the ordinary course of
          business upon terms no less favorable than the Company or any of its
          Subsidiaries could obtain from third parties and other than the grant
          of stock options disclosed on Schedule 3(c), none of the officers,
          directors, or employees of the Company is presently a party to any
          transaction with the Company or any of its Subsidiaries (other than
          for services as employees, officers and directors), including any
          contract, agreement or other arrangement providing for the furnishing
          of services to or by, providing for rental of real or personal
          property to or from, or otherwise requiring payments to or from any
          officer, director or such employee or, to the knowledge of the
          Company, any corporation, partnership, trust or other entity in which
          any officer, director, or any such employee has a substantial interest
          or is an officer, director, trustee or partner.
<PAGE>
               (14) Disclosure. All information relating to or concerning the
          Company or any of its Subsidiaries set forth in this Agreement and
          provided to the Buyers pursuant to Section 2(d) hereof and otherwise
          in connection with the transactions contemplated hereby is true and
          correct in all material respects and the Company has not omitted to
          state any material fact necessary in order to make the statements made
          herein or therein, in light of the circumstances under which they were
          made, not misleading. No event or circumstance has occurred or exists
          with respect to the Company or any of its Subsidiaries or its or their
          business, properties, prospects, operations or financial conditions,
          which, under applicable law, rule or regulation, requires public
          disclosure or announcement by the Company but which has not been so
          publicly announced or disclosed (assuming for this purpose that the
          Company's reports filed under the 1934 Act are being incorporated into
          an effective registration statement filed by the Company under the
          1933 Act).

               (15) Acknowledgment Regarding Buyers' Purchase of Securities. The
          Company acknowledges and agrees that the Buyers are acting solely in
          the capacity of arm's length purchasers with respect to this Agreement
          and the transactions contemplated hereby. The Company further
          acknowledges that no Buyer is acting as a financial advisor or
          fiduciary of the Company (or in any similar capacity) with respect to
          this Agreement and the transactions contemplated hereby and any
          statement made by any Buyer or any of their respective representatives
          or agents in connection with this Agreement and the transactions
          contemplated hereby is not advice or a recommendation and is merely
          incidental to the Buyers' purchase of the Securities. The Company
          further represents to each Buyer that the Company's decision to enter
          into this Agreement has been based solely on the independent
          evaluation of the Company and its representatives.

               (16) No Integrated Offering. Neither the Company, nor any of its
          affiliates, nor any person acting on its or their behalf, has directly
          or indirectly made any offers or sales in any security or solicited
          any offers to buy any security under circumstances that would require
          registration under the 1933 Act of the issuance of the Securities to
          the Buyers. The issuance of the Securities to the Buyers will not be
          integrated with any other issuance of the Company's securities (past,
<PAGE>
          current or future) for purposes of any shareholder approval provisions
          applicable to the Company or its securities.

               (17) No Brokers. The Company has taken no action which would give
          rise to any claim by any person for brokerage commissions, transaction
          fees or similar payments relating to this Agreement or the
          transactions contemplated hereby.

               (18) Permits; Compliance. The Company and each of its
          Subsidiaries is in possession of all franchises, grants,
          authorizations, licenses, permits, easements, variances, exemptions,
          consents, certificates, approvals and orders necessary to own, lease
          and operate its properties and to carry on its business as it is now
          being conducted (collectively, the "Company Permits"), and there is no
          action pending or, to the knowledge of the Company, threatened
          regarding suspension or cancellation of any of the Company Permits.
          Neither the Company nor any of its Subsidiaries is in conflict with,
          or in default or violation of, any of the Company Permits, except for
          any such conflicts, defaults or violations which, individually or in
          the aggregate, would not reasonably be expected to have a Material
          Adverse Effect. Since December 31, 2001, neither the Company nor any
          of its Subsidiaries has received any notification with respect to
          possible conflicts, defaults or violations of applicable laws, except
          for notices relating to possible conflicts, defaults or violations,
          which conflicts, defaults or violations would not have a Material
          Adverse Effect.

               (19) Environmental Matters.

                    a. Except as set forth in Schedule 3(s), there are, to the
               Company's knowledge, with respect to the Company or any of its
               Subsidiaries or any predecessor of the Company, no past or
               present violations of Environmental Laws (as defined below),
               releases of any material into the environment, actions,
               activities, circumstances, conditions, events, incidents, or
               contractual obligations which may give rise to any common law
               environmental liability or any liability under the Comprehensive
               Environmental Response, Compensation and Liability Act of 1980 or
               similar federal, state, local or foreign laws and neither the
               Company nor any of its Subsidiaries has received any notice with
<PAGE>
               respect to any of the foregoing, nor is any action pending or, to
               the Company's knowledge, threatened in connection with any of the
               foregoing. The term "Environmental Laws" means all federal,
               state, local or foreign laws relating to pollution or protection
               of human health or the environment (including, without
               limitation, ambient air, surface water, groundwater, land surface
               or subsurface strata), including, without limitation, laws
               relating to emissions, discharges, releases or threatened
               releases of chemicals, pollutants contaminants, or toxic or
               hazardous substances or wastes (collectively, "Hazardous
               Materials") into the environment, or otherwise relating to the
               manufacture, processing, distribution, use, treatment, storage,
               disposal, transport or handling of Hazardous Materials, as well
               as all authorizations, codes, decrees, demands or demand letters,
               injunctions, judgments, licenses, notices or notice letters,
               orders, permits, plans or regulations issued, entered,
               promulgated or approved thereunder.

                    b. Other than those that are or were stored, used or
               disposed of in compliance with applicable law, no Hazardous
               Materials are contained on or about any real property currently
               owned, leased or used by the Company or any of its Subsidiaries,
               and no Hazardous Materials were released on or about any real
               property previously owned, leased or used by the Company or any
               of its Subsidiaries during the period the property was owned,
               leased or used by the Company or any of its Subsidiaries, except
               in the normal course of the Company's or any of its Subsidiaries'
               business.

                    c. Except as set forth in Schedule 3(s), there are no
               underground storage tanks on or under any real property owned,
               leased or used by the Company or any of its Subsidiaries that are
               not in compliance with applicable law.

               (20) Title to Property. The Company and its Subsidiaries have
          good and marketable title in fee simple to all real property and good
          and marketable title to all personal property owned by them which is
          material to the business of the Company and its Subsidiaries,
<PAGE>
          including any companies acquired by the Company or its Subsidiaries,
          in each case free and clear of all liens, encumbrances and defects
          except such as are described in Schedule 3(t) or such as would not
          have a Material Adverse Effect. Any real property and facilities held
          under lease by the Company and its Subsidiaries are held by them under
          valid, subsisting and enforceable leases with such exceptions as would
          not have a Material Adverse Effect.

               (21) Insurance. The Company and each of its Subsidiaries are
          insured by insurers of recognized financial responsibility against
          such losses and risks and in such amounts as management of the Company
          believes to be prudent and customary in the businesses in which the
          Company and its Subsidiaries are engaged. Neither the Company nor any
          such Subsidiary has any reason to believe that it will not be able to
          renew its existing insurance coverage as and when such coverage
          expires or to obtain similar coverage from similar insurers as may be
          necessary to continue its business at a cost that would not have a
          Material Adverse Effect. The Company has provided to Buyer true and
          correct copies of all policies relating to directors' and officers'
          liability coverage, errors and omissions coverage, and commercial
          general liability coverage.

               (22) 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 management's general or specific authorizations, (ii)
          transactions are recorded as necessary to permit preparation of
          financial statements in conformity with generally accepted accounting
          principles and to maintain asset accountability, (iii) access to
          assets is permitted only in accordance with management's general or
          specific authorization and (iv) the recorded accountability for assets
          is compared with the existing assets at reasonable intervals and
          appropriate action is taken with respect to any differences.

               (23) Foreign Corrupt Practices. Neither the Company, nor any of
          its Subsidiaries, nor any director, officer, agent, employee or other
          person acting on behalf of the Company or any Subsidiary has, in the
          course of his actions for, or on behalf of, the Company, used any
          corporate funds for any unlawful contribution, gift, entertainment or
          other unlawful expenses relating to political activity; made any
          direct or indirect unlawful payment to any foreign or domestic

<PAGE>
          government official or employee from corporate funds; violated or is
          in violation of any provision of the U.S. Foreign Corrupt Practices
          Act of 1977, as amended, or made any bribe, rebate, payoff, influence
          payment, kickback or other unlawful payment to any foreign or domestic
          government official or employee.

               (24) Solvency. The Company (after giving effect to the
          transactions contemplated by this Agreement) is solvent (i.e., its
          assets have a fair market value in excess of the amount required to
          pay its probable liabilities on its existing debts as they become
          absolute and matured) and currently the Company has no information
          that would lead it to reasonably conclude that the Company would not,
          after giving effect to the transaction contemplated by this Agreement,
          have the ability to, nor does it intend to take any action that would
          impair its ability to, pay its debts from time to time incurred in
          connection therewith as such debts mature. The Company did not receive
          a qualified opinion from its auditors with respect to its most recent
          fiscal year end and, after giving effect to the transactions
          contemplated by this Agreement, does not anticipate or know of any
          basis upon which its auditors might issue a qualified opinion in
          respect of its current fiscal year.

               (25) No Investment Company. The Company is not, and upon the
          issuance and sale of the Securities as contemplated by this Agreement
          will not be an "investment company" required to be registered under
          the Investment Company Act of 1940 (an "Investment Company"). The
          Company is not controlled by an Investment Company.

               (26) Breach of Representations and Warranties by the Company. If
          the Company breaches any of the representations or warranties set
          forth in this Section 3, and in addition to any other remedies
          available to the Buyers pursuant to this Agreement, the Company shall
          pay to the Buyer the Standard Liquidated Damages Amount in cash or in
          shares of Common Stock at the option of the Buyer, until such breach
          is cured. If the Buyers elect to be paid the Standard Liquidated
          Damages Amounts in shares of Common Stock, such shares shall be issued
          at the Conversion Price at the time of payment.
<PAGE>
          (iv) COVENANTS.

               (1) Best Efforts. The parties shall use their best efforts to
          satisfy timely each of the conditions described in Section 6 and 7 of
          this Agreement.

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

               (3) Reporting Status; Eligibility to Use Form S-3, SB-2 or Form
          S-1. The Company's Common Stock is registered under Section 12(g) of
          the 1934 Act. The Company represents and warrants that it meets the
          requirements for the use of Form S-3 (or if the Company is not
          eligible for the use of Form S-3 as of the Filing Date (as defined in
          the Registration Rights Agreement), the Company may use the form of
          registration for which it is eligible at that time) for registration
          of the sale by the Buyer of the Registrable Securities (as defined in
          the Registration Rights Agreement). So long as the Buyer beneficially
          owns any of the Securities, the Company shall timely file all reports
          required to be filed with the SEC pursuant to the 1934 Act, and the
          Company shall not terminate its status as an issuer required to file
          reports under the 1934 Act even if the 1934 Act or the rules and
          regulations thereunder would permit such termination. The Company
          further agrees to file all reports required to be filed by the Company
          with the SEC in a timely manner so as to become eligible, and
          thereafter to maintain its eligibility, for the use of Form S-3. The
          Company shall issue a press release describing the materials terms of
          the transaction contemplated hereby as soon as practicable following
          the Closing Date but in no event more than two (2) business days of
          the Closing Date, which press release shall be subject to prior review
          by the Buyers. The Company agrees that such press release shall not
          disclose the name of the Buyers unless expressly consented to in
          writing by the Buyers or unless required by applicable law or
          regulation, and then only to the extent of such requirement.

               (4) Use of Proceeds. The Company shall use the proceeds from the
          sale of the Debentures and the Warrants in the manner set forth in
          Schedule 4(d) attached hereto and made a part hereof and shall not,
          directly or indirectly, use such proceeds for any loan to or
          investment in any other corporation, partnership, enterprise or other
          person (except in connection with its currently existing direct or
          indirect Subsidiaries)
<PAGE>
               (5) Future Offerings. Subject to the exceptions described below,
          the Company will not, without the prior written consent of a
          majority-in-interest of the Buyers, not to be unreasonably withheld,
          negotiate or contract with any party to obtain additional equity
          financing (including debt financing with an equity component) that
          involves (A) the issuance of Common Stock at a discount to the market
          price of the Common Stock on the date of issuance (taking into account
          the value of any warrants or options to acquire Common Stock issued in
          connection therewith) or (B) the issuance of convertible securities
          that are convertible into an indeterminate number of shares of Common
          Stock or (C) the issuance of warrants during the period (the "Lock-up
          Period") beginning on the Closing Date and ending on the later of (i)
          two hundred seventy (270) days from the Closing Date and (ii) one
          hundred eighty (180) days from the date the Registration Statement (as
          defined in the Registration Rights Agreement) is declared effective
          (plus any days in which sales cannot be made thereunder). In addition,
          subject to the exceptions described below, the Company will not
          conduct any equity financing (including debt with an equity component)
          ("Future Offerings") during the period beginning on the Closing Date
          and ending two (2) years after the end of the Lock-up Period unless it
          shall have first delivered to each Buyer, at least twenty (20)
          business days prior to the closing of such Future Offering, written
          notice describing the proposed Future Offering, including the terms
          and conditions thereof and proposed definitive documentation to be
          entered into in connection therewith, and providing each Buyer an
          option during the fifteen (15) day period following delivery of such
          notice to purchase its pro rata share (based on the ratio that the
          aggregate principal amount of Debentures purchased by it hereunder
          bears to the aggregate principal amount of Debentures purchased
          hereunder) of the securities being offered in the Future Offering on
          the same terms as contemplated by such Future Offering (the
          limitations referred to in this sentence and the preceding sentence
          are collectively referred to as the "Capital Raising Limitations"). In
          the event the terms and conditions of a proposed Future Offering are
          amended in any respect after delivery of the notice to the Buyers
          concerning the proposed Future Offering, the Company shall deliver a
          new notice to each Buyer describing the amended terms and conditions
          of the proposed Future Offering and each Buyer thereafter shall have
          an option during the fifteen (15) day period following delivery of
          such new notice to purchase its pro rata share of the securities being
          offered on the same terms as contemplated by such proposed Future
          Offering, as amended. The foregoing sentence shall apply to successive
          amendments to the terms and conditions of any proposed Future
          Offering. The Capital Raising Limitations shall not apply to any
          transaction involving (i) issuances of securities in a firm commitment
          underwritten public offering (excluding a continuous offering pursuant
          to Rule 415 under the 1933 Act) or (ii) issuances of securities as
          consideration for a merger, consolidation or purchase of assets, or in
          connection with any strategic partnership or joint venture (the
<PAGE>
          primary purpose of which is not to raise equity capital), or in
          connection with the disposition or acquisition of a business, product
          or license by the Company. The Capital Raising Limitations also shall
          not apply to the issuance of securities upon exercise or conversion of
          the Company's options, warrants or other convertible securities
          outstanding as of the date hereof or to the grant of additional
          options or warrants, or the issuance of additional securities, under
          any Company stock option or restricted stock plan approved by the
          shareholders of the Company.

               (6) Expenses. At the Closing, the Company shall reimburse Buyers
          for expenses incurred by them in connection with the negotiation,
          preparation, execution, delivery and performance of this Agreement and
          the other agreements to be executed in connection herewith
          ("Documents"), including, without limitation, attorneys' and
          consultants' fees and expenses, transfer agent fees, fees for stock
          quotation services, fees relating to any amendments or modifications
          of the Documents or any consents or waivers of provisions in the
          Documents, fees for the preparation of opinions of counsel, escrow
          fees, and costs of restructuring the transactions contemplated by the
          Documents. When possible, the Company must pay these fees directly,
          otherwise the Company must make immediate payment for reimbursement to
          the Buyers for all fees and expenses immediately upon written notice
          by the Buyer or the submission of an invoice by the Buyer If the
          Company fails to reimburse the Buyer in full within three (3) business
          days of the written notice or submission of invoice by the Buyer, the
          Company shall pay interest on the total amount of fees to be
          reimbursed at a rate of 15% per annum.
<PAGE>
               (7) Financial Information. The Company agrees to send the
          following reports to each Buyer until such Buyer transfers, assigns,
          or sells all of the Securities: (i) within ten (10) days after the
          filing with the SEC, a copy of its Annual Report on Form 10-KSB, its
          Quarterly Reports on Form 10-KSB and any Current Reports on Form 8-K;
          (ii) within one (1) day after release, copies of all press releases
          issued by the Company or any of its Subsidiaries; and (iii)
          contemporaneously with the making available or giving to the
          shareholders of the Company, copies of any notices or other
          information the Company makes available or gives to such shareholders.

               (8) Authorization and Reservation of Shares. 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
          conversion or exercise of the outstanding Debentures and Warrants and
          issuance of the Conversion Shares and Warrant Shares in connection
          therewith (based on the Conversion Price of the Debentures or Exercise
          Price of the Warrants in effect from time to time) and as otherwise
          required by the Debentures. The Company shall not reduce the number of
          shares of Common Stock reserved for issuance upon conversion of
          Debentures and exercise of the Warrants without the consent of each
          Buyer. The Company shall at all times maintain the number of shares of
          Common Stock so reserved for issuance at an amount ("Reserved Amount")
          equal to no less than two (2) times the number that is then actually
          issuable upon full conversion of the Debentures and Additional
          Debentures and upon exercise of the Warrants and the Additional
          Warrants (based on the Conversion Price of the Debentures or the
          Exercise Price of the Warrants in effect from time to time). If at any
          time the number of shares of Common Stock authorized and reserved for
          issuance ("Authorized and Reserved Shares") is below the Reserved
          Amount, the Company will promptly take all corporate action necessary
          to authorize and reserve a sufficient number of shares, including,
          without limitation, calling a special meeting of shareholders to
          authorize additional shares to meet the Company's obligations under
          this Section 4(h), in the case of an insufficient number of authorized
          shares, obtain shareholder approval of an increase in such authorized
          number of shares, and voting the management shares of the Company in
          favor of an increase in the authorized shares of the Company to ensure
          that the number of authorized shares is sufficient to meet the
          Reserved Amount. If the Company fails to obtain such shareholder
          approval within thirty (30) days following the date on which the
          number of Authorized and Reserved Shares exceeds the Reserved Amount,
          the Company shall pay to the Borrower the Standard Liquidated Damages
          Amount, in cash or in shares of Common Stock at the option of the
          Buyer. If the Buyer elects to be paid the Standard Liquidated Damages
<PAGE>
          Amount in shares of Common Stock, such shares shall be issued at the
          Conversion Price at the time of payment. In order to ensure that the
          Company has authorized a sufficient amount of shares to meet the
          Reserved Amount at all times, the Company must deliver to the Buyer at
          the end of every month a list detailing (1) the current amount of
          shares authorized by the Company and reserved for the Buyer; and (2)
          amount of shares issuable upon conversion of the Debentures and upon
          exercise of the Warrants and as payment of interest accrued on the
          Debentures for one year. If the Company fails to provide such list
          within five (5) business days of the end of each month, the Company
          shall pay the Standard Liquidated Damages Amount, in cash or in shares
          of Common Stock at the option of the Buyer, until the list is
          delivered. If the Buyer elects to be paid the Standard Liquidated
          Damages Amount in shares of Common Stock, such shares shall be issued
          at the Conversion Price at the time of payment.

               (9) Listing. The Company shall promptly secure the listing of the
          Conversion Shares and Warrant Shares upon each national securities
          exchange or automated quotation system, if any, upon which shares of
          Common Stock are then listed (subject to official notice of issuance)
          and, so long as any Buyer owns any of the Securities, shall maintain,
          so long as any other shares of Common Stock shall be so listed, such
          listing of all Conversion Shares and Warrant Shares from time to time
          issuable upon conversion of the Debentures or exercise of the
          Warrants. The Company will obtain and, so long as any Buyer owns any
          of the Securities, maintain the listing and trading of its Common
          Stock on the OTCBB or any equivalent replacement exchange, the Nasdaq
          National Market ("Nasdaq"), the Nasdaq SmallCap Market ("Nasdaq
          SmallCap"), the New York Stock Exchange ("NYSE"), or the American
          Stock Exchange ("AMEX") and will comply in all respects with the
          Company's reporting, filing and other obligations under the bylaws or
          rules of the National Association of Securities Dealers ("NASD") and
          such exchanges, as applicable. The Company shall promptly provide to
          each Buyer copies of any notices it receives from the OTCBB and any
          other exchanges or quotation systems on which the Common Stock is then
          listed regarding the continued eligibility of the Common Stock for
          listing on such exchanges and quotation systems.
<PAGE>
               (10) Corporate Existence. So long as a Buyer beneficially owns
          any Debentures or Warrants, the Company shall maintain its corporate
          existence and shall not sell all or substantially all of the Company's
          assets, except in the event of a merger or consolidation or sale of
          all or substantially all of the Company's assets, where the surviving
          or successor entity in such transaction (i) assumes the Company's
          obligations hereunder and under the agreements and instruments entered
          into in connection herewith and (ii) is a publicly traded corporation
          whose Common Stock is listed for trading on the OTCBB, Nasdaq, Nasdaq
          SmallCap, NYSE or AMEX.

               (11) No Integration. The Company shall not make any offers or
          sales of any security (other than the Securities) under circumstances
          that would require registration of the Securities being offered or
          sold hereunder under the 1933 Act or cause the offering of the
          Securities to be integrated with any other offering of securities by
          the Company for the purpose of any stockholder approval provision
          applicable to the Company or its securities.

               (12) Subsequent Investment. The Company and the Buyers agree
          that, upon filing by the Company of the Registration Statement to be
          filed pursuant to the Registration Rights Agreement (the "Filing
          Date"), the Buyers shall purchase additional debentures ("Filing
          Debentures") in the aggregate principal amount of Two Hundred Thousand
          Dollars ($200,000) and additional warrants (the "Filing Warrants") to
          purchase an aggregate of 600,000 shares of Common Stock, for an
          aggregate purchase price of Two Hundred Thousand Dollars ($200,000),
          with the closing of such purchase to occur within ten (10) days of the
          Filing Date; provided, however, that the obligation of each Buyer to
          purchase the Filing Debentures and the Filing Warrants is subject to
          the satisfaction, at or before the closing of such purchase and sale,
          of the conditions set forth in Section 7. The Company and the Buyers
          further agree that, upon the declaration of effectiveness of the
          Registration Statement to be filed pursuant to the Registration Rights
          Agreement (the "Effective Date"), the Buyers shall purchase additional
          debentures (the "Effectiveness Debentures" and, collectively with the
          Filing Debentures, the "Additional Debentures") in the aggregate
          principal amount of Two Hundred Thousand Dollars ($200,000) and
          additional warrants (the "Effectiveness Warrants" and, collectively
<PAGE>
          with the Filing Warrants, the "Additional Warrants") to purchase an
          aggregate of 600,000 shares of Common Stock, for an aggregate purchase
          price of Two Hundred Thousand Dollars ($200,000), with the closing of
          such purchase to occur within ten (10) days of the Effective Date;
          provided, however, that the obligation of each Buyer to purchase the
          Effectiveness Debentures and the Effectiveness Warrants is subject to
          the satisfaction, at or before the closing of such purchase and sale,
          of the conditions set forth in Section 7; and, provided, further, that
          there shall not have been a Material Adverse -------- ------- Effect
          as of such effective date. The terms of the Additional Debentures and
          the Additional Warrants shall be identical to the terms of the
          Debentures and Warrants, as the case may be, to be issued on the
          Closing Date. The Common Stock underlying the Additional Debentures
          and the Additional Warrants shall be Registrable Securities (as
          defined in the Registration Rights Agreement) and shall be included in
          the Registration Statement to be filed pursuant to the Registration
          Rights Agreement.

               (13) Breach of Covenants. If the Company breaches any of the
          covenants set forth in this Section 4, and in addition to any other
          remedies available to the Buyers pursuant to this Agreement, the
          Company shall pay to the Buyers the Standard Liquidated Damages
          Amount, in cash or in shares of Common Stock at the option of the
          Buyer, until such breach is cured. If the Buyers elect to be paid the
          Standard Liquidated Damages Amount in shares, such shares shall be
          issued at the Conversion Price at the time of payment.

          (v) TRANSFER AGENT INSTRUCTIONS. The Company shall issue irrevocable
     instructions to its transfer agent to issue certificates, registered in the
     name of each Buyer or its nominee, for the Conversion Shares and Warrant
     Shares in such amounts as specified from time to time by each Buyer to the
     Company upon conversion of the Debentures or exercise of the Warrants in
     accordance with the terms thereof (the "Irrevocable Transfer Agent
     Instructions"). Prior to registration of the Conversion Shares and Warrant
     Shares under the 1933 Act or the date on which the Conversion Shares and
     Warrant Shares may be sold pursuant to Rule 144 without any restriction as
     to the number of Securities as of a particular date that can then be
     immediately sold, all such certificates shall bear the restrictive legend
     specified in Section 2(g) of this Agreement. The Company warrants that no
     instruction other than the Irrevocable Transfer Agent Instructions referred
     to in this Section 5, and stop transfer instructions to give effect to
     Section 2(f) hereof (in the case of the Conversion Shares and Warrant
     Shares, prior to registration of the Conversion Shares and Warrant Shares
     under the 1933 Act or the date on which the Conversion Shares and Warrant
<PAGE>
     Shares may be sold pursuant to Rule 144 without any restriction as to the
     number of Securities as of a particular date that can then be immediately
     sold), will be given by the Company to its transfer agent and that the
     Securities shall otherwise be freely transferable on the books and records
     of the Company as and to the extent provided in this Agreement and the
     Registration Rights Agreement. Nothing in this Section shall affect in any
     way the Buyer's obligations and agreement set forth in Section 2(g) hereof
     to comply with all applicable prospectus delivery requirements, if any,
     upon re-sale of the Securities. If a Buyer provides the Company with (i) an
     opinion of counsel in form, substance and scope customary for opinions in
     comparable transactions, to the effect that a public sale or transfer of
     such Securities may be made without registration under the 1933 Act and
     such sale or transfer is effected or (ii) the Buyer provides reasonable
     assurances that the Securities can be sold pursuant to Rule 144, the
     Company shall permit the transfer, and, in the case of the Conversion
     Shares and Warrant Shares, promptly instruct its transfer agent to issue
     one or more certificates, free from restrictive legend, in such name and in
     such denominations as specified by such Buyer. The Company acknowledges
     that a breach by it of its obligations hereunder will cause irreparable
     harm to the Buyers, by vitiating the intent and purpose of the transactions
     contemplated hereby. Accordingly, the Company acknowledges that the remedy
     at law for a breach of its obligations under this Section 5 may be
     inadequate and agrees, in the event of a breach or threatened breach by the
     Company of the provisions of this Section, that the Buyers shall be
     entitled, in addition to all other available remedies, to an injunction
     restraining any breach and requiring immediate transfer, without the
     necessity of showing economic loss and without any bond or other security
     being required.

          (vi) CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of
     the Company hereunder to issue and sell the Debentures and Warrants to a
     Buyer at the Closing is subject to the satisfaction, at or before the
     Closing Date of each of the following conditions thereto, provided that
     these conditions are for the Company's sole benefit and may be waived by
     the Company at any time in its sole discretion:

               (1) The applicable Buyer shall have executed this Agreement and
          the Registration Rights Agreement, and delivered the same to the
          Company.

               (2) The applicable Buyer shall have delivered the Purchase Price
          in accordance with Section 1(b) above.

               (3) The representations and warranties of the applicable Buyer
          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 that time (except
          for representations and warranties that speak as of a specific date),
          and the applicable Buyer shall have performed, satisfied and complied
          in all material respects with the covenants, agreements and conditions
          required by this Agreement to be performed, satisfied or complied with
          by the applicable Buyer at or prior to the Closing Date.
<PAGE>
               (4) No litigation, statute, rule, regulation, executive order,
          decree, ruling or injunction shall have been enacted, entered,
          promulgated or endorsed by or in any court or governmental authority
          of competent jurisdiction or any self-regulatory organization having
          authority over the matters contemplated hereby which prohibits the
          consummation of any of the transactions contemplated by this
          Agreement.

          (vii) CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE. The
     obligation of each Buyer hereunder to purchase the Debentures and Warrants
     at the Closing is subject to the satisfaction, at or before the Closing
     Date of each of the following conditions, provided that these conditions
     are for such Buyer's sole benefit and may be waived by such Buyer at any
     time in its sole discretion:

          (1) The Company shall have executed this Agreement and the
     Registration Rights Agreement, and delivered the same to the Buyer.

          (2) The Company shall have delivered to such Buyer duly executed
     Debentures (in such denominations as the Buyer shall request) and Warrants
     in accordance with Section 1(b) above.

          (3) The Irrevocable Transfer Agent Instructions, in form and substance
     satisfactory to a majority-in-interest of the Buyers, shall have been
     delivered to and acknowledged in writing by the Company's Transfer Agent.

          (4) The representations and warranties of the Company 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 specific date) and the Company shall have
     performed, satisfied and complied in all material respects with the
     covenants, agreements and conditions required by this Agreement to be
     performed, satisfied or complied with by the Company at or prior to the
     Closing Date. The Buyer shall have received a certificate or certificates,
     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 such Buyer including, but not limited to
     certificates with respect to the Company's Articles of Incorporation,
     By-laws and Board of Directors' resolutions relating to the transactions
<PAGE>
     contemplated hereby.

          (5) No litigation, statute, rule, regulation, executive order, decree,
     ruling or injunction shall have been enacted, entered, promulgated or
     endorsed by or in any court or governmental authority of competent
     jurisdiction or any self-regulatory organization having authority over the
     matters contemplated hereby which prohibits the consummation of any of the
     transactions contemplated by this Agreement.

          (6) No event shall have occurred which could reasonably be expected to
     have a Material Adverse Effect on the Company.

          (7) The Conversion Shares and Warrant Shares shall have been
     authorized for quotation on the OTCBB and trading in the Common Stock on
     the OTCBB shall not have been suspended by the SEC or the OTCBB.

          (8) The Buyer shall have received an opinion of the Company's counsel,
     dated as of the Closing Date, in form, scope and substance reasonably
     satisfactory to the Buyer and in substantially the same form as Exhibit "D"
     attached hereto.

          (9) The Buyer shall have received an officer's certificate described
     in Section 3(c) above, dated as of the Closing Date.

     (viii) GOVERNING LAW; MISCELLANEOUS.

          (1) Governing Law. THIS AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND
     CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
     TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT
     REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY
     SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS
     LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER
     THIS AGREEMENT, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE
     TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE
     THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR
<PAGE>
     PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY
     MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
     SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING
     HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN ANY OTHER
     MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE
     JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
     ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
     LAWFUL MANNER. THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING
     UNDER THIS AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES,
     INCLUDING ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION
     WITH SUCH DISPUTE.

          (2) Counterparts; Signatures by Facsimile. This Agreement may be
     executed in one or more counterparts, each of which shall be deemed an
     original but all of which shall constitute one and the same agreement and
     shall become effective when counterparts have been signed by each party and
     delivered to the other party. This Agreement, once executed by a party, may
     be delivered to the other party hereto by facsimile transmission of a copy
     of this Agreement bearing the signature of the party so delivering this
     Agreement.

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

          (4) Severability. In the event that any provision of this Agreement is
     invalid or unenforceable under any applicable statute or rule of law, then
     such provision shall be deemed inoperative to the extent that it may
     conflict therewith and shall be deemed modified to conform with such
     statute or rule of law. Any provision hereof which may prove invalid or
     unenforceable under any law shall not affect the validity or enforceability
     of any other provision hereof.
<PAGE>
          (5) Entire Agreement; Amendments. This Agreement and the instruments
     referenced herein contain the entire understanding of the parties with
     respect to the matters covered herein and therein and, except as
     specifically set forth herein or therein, neither the Company nor the Buyer
     makes any representation, warranty, covenant or undertaking with respect to
     such matters. No provision of this Agreement may be waived or amended other
     than by an instrument in writing signed by the party to be charged with
     enforcement.

          (6) Notices. Any notices required or permitted to be given under the
     terms of this Agreement shall be sent by certified or registered mail
     (return receipt requested) or delivered personally or by courier (including
     a recognized overnight delivery service) or by facsimile and shall be
     effective five days after being placed in the mail, if mailed by regular
     United States mail, or upon receipt, if delivered personally or by courier
     (including a recognized overnight delivery service) or by facsimile, in
     each case addressed to a party. The addresses for such communications shall
     be:

                           If to the Company:

                                    FullCircle Registry, Inc.
                                    500 West Jefferson Street
                                    PNC Plaza, Suite 2310
                                    Louisville, KY 40202
                                    Attention:  James A. Reskin
                                    Telephone: 502-540-5112
                                    Facsimile:  502-540-5879
                                    Email: jreskin@fullcircleregistry.com

                           With a copy to:

                                    Walstrand & Associates
                                    8 East Broadway, Suite 620
                                    Salt Lake City, UT 84111- 2204
                                    Attention:  Cletha A. Walstrand, Esq.
                                    Telephone:  801-532-7858
                                    Facsimile:   801-363-1715
                                    Email: cwalstrand@networld.com


If to a Buyer: To the address set forth immediately below such Buyer's name on
the signature pages hereto.
<PAGE>
                           With copy to:

                                    Ballard Spahr Andrews & Ingersoll, LLP
                                    1735 Market Street
                                    51st Floor
                                    Philadelphia, Pennsylvania  19103
                                    Attention:  Gerald J. Guarcini, Esq.
                                    Telephone:  215-864-8625
                                    Facsimile:  215-864-8999
                                    Email:  guarcini@ballardspahr.com

Each party shall provide notice to the other party of any change in address.

          (7) Successors and Assigns. This Agreement shall be binding upon and
     inure to the benefit of the parties and their successors and assigns.
     Neither the Company nor any Buyer shall assign this Agreement or any rights
     or obligations hereunder without the prior written consent of the other.
     Notwithstanding the foregoing, subject to Section 2(f), any Buyer may
     assign its rights hereunder to any person that purchases Securities in a
     private transaction from a Buyer or to any of its "affiliates," as that
     term is defined under the 1934 Act, without the consent of the Company.

          (8) Third Party Beneficiaries. This Agreement is intended for the
     benefit of the parties hereto and their respective permitted successors and
     assigns, and is not for the benefit of, nor may any provision hereof be
     enforced by, any other person.

          (9) Survival. The representations and warranties of the Company and
     the agreements and covenants set forth in Sections 3, 4, 5 and 8 shall
     survive the closing hereunder notwithstanding any due diligence
     investigation conducted by or on behalf of the Buyers. The Company agrees
     to indemnify and hold harmless each of the Buyers and all their officers,
     directors, employees and agents for loss or damage arising as a result of
     or related to any breach or alleged breach by the Company of any of its
     representations, warranties and covenants set forth in Sections 3 and 4
     hereof or any of its covenants and obligations under this Agreement or the
     Registration Rights Agreement, including advancement of expenses as they
     are incurred.
<PAGE>
          (10) Publicity. The Company and each of the Buyers shall have the
     right to review a reasonable period of time before issuance of any press
     releases, SEC, OTCBB or NASD filings, or any other public statements with
     respect to the transactions contemplated hereby; provided, however, that
     the Company shall be entitled, without the prior approval of each of the
     Buyers, to make any press release or SEC, OTCBB (or other applicable
     trading market) or NASD filings with respect to such transactions as is
     required by applicable law and regulations (although each of the Buyers
     shall be consulted by the Company in connection with any such press release
     prior to its release and shall be provided with a copy thereof and be given
     an opportunity to comment thereon).

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

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

          (13) Remedies. The Company acknowledges that a breach by it of its
     obligations hereunder will cause irreparable harm to the Buyers by
     vitiating the intent and purpose of the transaction contemplated hereby.
     Accordingly, the Company acknowledges that the remedy at law for a breach
     of its obligations under this Agreement will be inadequate and agrees, in
     the event of a breach or threatened breach by the Company of the provisions
     of this Agreement, that the Buyers shall be entitled, in addition to all
     other available remedies at law or in equity, and in addition to the
     penalties assessable herein, to an injunction or injunctions restraining,
     preventing or curing any breach of this Agreement and to enforce
     specifically the terms and provisions hereof, without the necessity of
     showing economic loss and without any bond or other security being
     required.

<PAGE>
                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


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



FULLCIRCLE REGISTRY, INC.


--------------------------------
James A. Reskin
Chief Executive Officer


                               AJW PARTNERS, LLC
By:  SMS Group, LLC


--------------------------------------
Corey S. Ribotsky
Manager


RESIDENCE:  Delaware

ADDRESS: 1044 Northern Boulevard
                  Suite 302
                  Roslyn, New York  11576
                  Facsimile:  (516) 739-7115
                  Telephone:  (516) 739-7110

AGGREGATE SUBSCRIPTION AMOUNT:

         Aggregate Principal Amount of Debentures:            $57,500
         Number of Warrants:                                  172,500
         Aggregate Purchase Price:                            $57,500


<PAGE>
AJW OFFSHORE, LTD.
By:  First Street Manager II, LLC


--------------------------------------
Corey S. Ribotsky
Manager


RESIDENCE:            Cayman Islands

ADDRESS: AJW Offshore, Ltd.
                  P.O. Box 32021 SMB
                  Grand Cayman, Cayman Island, B.W.I.

AGGREGATE SUBSCRIPTION AMOUNT:

         Aggregate Principal Amount of Debentures:            $85,000
         Number of Warrants:                                  255,000
         Aggregate Purchase Price:                            $85,000


<PAGE>
AJW QUALIFIED PARTNERS, LLC
By:  AJW Manager, LLC


------------------------------------
Corey S. Ribotsky
Manager



RESIDENCE:            New York

ADDRESS: 1044 Northern Boulevard
                  Suite 302
                  Roslyn, New York  11576
                  Facsimile:        (516) 739-7115
                  Telephone:        (516) 739-7110


AGGREGATE SUBSCRIPTION AMOUNT:

         Aggregate Principal Amount of Debentures:            $57,500
         Number of Warrants:                                  172,500
         Aggregate Purchase Price:                            57,500