Exhibit 4.1

                          SECURITIES PURCHASE AGREEMENT

     This Securities  Purchase Agreement (this "Agreement") is dated as of March
10, 2008 by and between Easy Energy,  Inc., a Nevada corporation (the "Company")
and Tailor Made Capital, Ltd. (the "Purchaser").  Capitalized terms used in this
Agreement and not otherwise  defined shall have the meanings ascribed to them in
Article 1.

     WHEREAS,  the  parties  desire  that,  upon the  terms and  subject  to the
conditions  contained herein, the Company shall have the right to issue and sell
to the Purchaser from time to time as provided  herein,  and the Purchaser shall
be obligated to purchase  from the Company up to  $1,000,000  worth of shares of
Common  Stock  on a  private  placement  basis  pursuant  to an  exemption  from
registration under Section 4(2) of the Security Act of 1933; and

     WHEREAS,  the Purchaser  shall be entitled to resell shares of Common Stock
acquired hereunder pursuant to a resale  registration  statement  established by
the Company pursuant to the terms of the Registration  Rights Agreement  between
the  Company  and  the  Purchaser  which  shall  be  declared  effective  by the
Commission prior to the delivery of the first Draw Down Notice.

     NOW,  THEREFORE,  in  consideration  of the  foregoing  premises,  and  the
promises and covenants  herein  contained,  the receipt and sufficiency of which
are hereby  acknowledged  by the parties  hereto,  the parties,  intending to be
legally bound, hereby agree as follows:

                                   ARTICLE I.
                                   DEFINITIONS

     1.1  Definitions.  In  addition  to the  terms  defined  elsewhere  in this
Agreement,  for all purposes of this  Agreement,  the  following  terms have the
meanings indicated in this Section 1.1:

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

     "Affiliate"  means any Person that,  directly or indirectly  through one or
more  intermediaries,  controls or is controlled  by or is under common  control
with a Person as such terms are used in and  construed  under Rule 144 under the
Securities  Act. With respect to the Purchaser,  any investment  fund or managed
account that is managed on a discretionary  basis by the same investment manager
as the Purchaser will be deemed to be an Affiliate of the Purchaser.

     "Business Day" means any day except Saturday,  Sunday,  any day which shall
be a federal  legal  holiday  in the United  States or any day on which  banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

     "Commission" means the Securities and Exchange Commission.

     "Commencement  Date" shall mean the Trading Day  immediately  following the
date on which the applicable Draw Down Notice is delivered to the Purchaser.

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     "Commitment Amount" shall have the meaning assigned to such term in Section
2.1 hereof.

     "Commitment  Period"  shall  mean  the  period  of  24  consecutive  months
commencing  immediately  after the Effective Date but in no event later than the
36 month anniversary of the date hereof.

     "Common Stock" means the common stock of the Company, $0.0001 par value per
share,  and any  other  class of  securities  into  which  such  securities  may
hereafter be reclassified or changed into.

     "Common  Stock  Equivalents"  means any  securities  of the  Company or the
Subsidiaries  which  would  entitle  the  holder  thereof to acquire at any time
Common Stock, including,  without limitation, any debt, preferred stock, rights,
options,  warrants or other  instrument that is at any time  convertible into or
exercisable  or  exchangeable  for, or otherwise  entitles the holder thereof to
receive, Common Stock.

     "Company  Counsel"  means___________________________________________or  any
other counsel that the Company shall designate upon providing  reasonable notice
to Purchaser of such designation.

     "Disclosure  Schedules"  means  the  Disclosure  Schedules  of the  Company
delivered concurrently herewith.

     "Draw Down" shall have the meaning  assigned to such term in Section 6.1(a)
hereof.

     "Draw Down Notice" shall have the meaning  assigned to such term in Section
6.1(c) hereof.

     "Draw Down Pricing  Period" shall mean a period of 10  consecutive  Trading
Days including and  immediately  preceding the date on which the applicable Draw
Down Notice is delivered to the Purchaser.

     "Draw Down Shares" shall mean the shares of Common Stock issuable  pursuant
to a Draw Down.

     "DTC" shall have the meaning assigned to such term in Section 6.1(g).

     "DWAC"  shall have the  meaning  assigned  to such term in Section  6.1(g).
"Effective Date" means the date that the initial Registration Statement filed by
the Company  pursuant to the  Registration  Rights  Agreement is first  declared
effective by the Commission.

     "Equity  Conditions"  shall mean,  during the period in  question,  (i) all
liquidated  damages and other  amounts  owing to the  Purchaser  pursuant to the
Transaction  Documents have been paid,  (ii) there is an effective  Registration
Statement pursuant to which the Purchaser is permitted to utilize the prospectus

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thereunder  to  resell  all of the Draw  Down  Shares  (issued  and to be issued
pursuant to the  applicable  Draw Down),  the Shares and the Warrant Shares (and
the Company  believes,  in good faith,  that such  effectiveness  will  continue
uninterrupted for the foreseeable future),  (iii) the Common Stock is trading on
the Trading Market and all of the shares  issuable  pursuant to the  Transaction
Documents are listed or quoted (if  applicable)  for trading on a Trading Market
(and the Company believes,  in good faith, that trading of the Common Stock on a
Trading Market will continue  uninterrupted  for the foreseeable  future),  (iv)
there is a sufficient number of authorized but unissued and otherwise unreserved
shares of Common Stock for the  issuance of all of the Draw Down Shares  (issued
and to be issued  pursuant  to the  applicable  Draw  Down),  the Shares and the
Warrant  Shares,  (v) the  issuance  of the  Draw  Down  Shares  subject  to the
applicable  Draw Down would not  violate  the  limitations  set forth in Section
4.12,  (vi) the daily  trading  volume for each  Trading  Day during such period
shall  equal  or  exceed  $10,000  of  Common  Stock  (based  on the VWAP on the
applicable day) and (vii) the Company, directly or indirectly,  has not provided
the Purchaser with any material,  non-public  information that has not been made
publicly available in a widely disseminated release.

     "Exchange Act" means the Securities  Exchange Act of 1934, as amended,  and
the rules and regulations promulgated thereunder.

     "Exempt  Issuance"  means the  issuance  of (a)  shares of Common  Stock or
options to employees, officers or directors of the Company pursuant to any stock
or option  plan duly  adopted by a majority of the  non-employee  members of the
Board of Directors of the Company or a majority of the members of a committee of
non-employee  directors  established  for such purpose,  (b) securities upon the
exercise or exchange of or conversion of any Securities  issued hereunder and/or
other  securities  exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this Agreement, provided that
such  securities  have not been  amended  since  the date of this  Agreement  to
increase the number of such securities or to decrease the exercise,  exchange or
conversion price of any such securities,  and (c) securities  issued pursuant to
acquisitions   or  strategic   transactions   approved  by  a  majority  of  the
disinterested  directors,  provided any such issuance  shall only be to a Person
which is, itself or through its subsidiaries, an operating company in a business
synergistic  with the business of the Company and in which the Company  receives
benefits  in  addition  to the  investment  of funds,  but  shall not  include a
transaction in which the Company is issuing securities primarily for the purpose
of raising  capital or to an entity  whose  primary  business  is  investing  in
securities.

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

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

     "Initial  Closing" shall have the meaning  assigned to such term in Section
2.2 hereof.

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     "Initial  Closing  Date"  shall have the  meaning  assigned to such term in
Section .2 hereof.

     "Intellectual Property Rights" shall have the meaning ascribed to such term
in Section 3.1(o).

     "Investment Amount" shall have the meaning assigned to such term in Section
6.1(c) hereof.

     "Legend  Removal  Date"  shall have the  meaning  ascribed  to such term in
Section 4.1(c).

     "Liens" means a lien,  charge,  security  interest,  encumbrance,  right of
first refusal, preemptive right or other restriction.

     "Market  Price" means,  with respect to a Draw Down, the lowest VWAP during
the Draw Down Pricing Period applicable to such Draw Down.

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

     "Material  Permits" shall have the meaning ascribed to such term in Section
3.1(m).

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

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

     "Purchase  Price" shall mean,  with  respect to Draw Down Shares  purchased
during each  applicable  Draw Down Pricing  Period,  if the Market Price is less
than $0.60, 90% of the Market Price, if the Market Price is $0.60 or greater and
less than $0.90,  92.5% of the Market  Price and if the Market Price is $0.90 or
greater,  95% of the Market Price. All prices are subject to adjustment  subject
to  adjustment  for reverse and forward  stock splits,  stock  dividends,  stock
combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.

     "Purchaser  Party" shall have the meaning  ascribed to such term in Section
4.7.

     "Registration  Rights  Agreement" means the Registration  Rights Agreement,
dated the date  hereof,  between the Company and the  Purchaser,  in the form of
Exhibit A attached hereto.

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     "Registration   Statement"  means  a  registration  statement  meeting  the
requirements  set forth in the  Registration  Rights  Agreement and covering the
resale by the  Purchaser  of the Draw Down  Shares,  the Shares and the  Warrant
Shares.

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

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

     "Rule 424" means Rule 424  promulgated  by the  Commission  pursuant to the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
rule or regulation  hereafter adopted by the Commission having substantially the
same effect as such Rule.

     "Securities"  means the Draw Down Shares,  the Shares, the Warrants and the
Warrant Shares.

     "Securities  Act" means the  Securities  Act of 1933,  as amended,  and the
rules and regulations promulgated thereunder.

     "Settlement"  shall  mean the  delivery  of the Draw Down  Shares  into the
Purchaser's DTC account via DTC's DWAC system in exchange for payment therefor.

     "Settlement  Date" shall have the meaning  assigned to such term in Section
6.1(f).

     "Shares"  shall mean the shares of Common Stock  delivered to the Purchaser
pursuant to Section 2.3.

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

     "Short  Sales"  shall  include all "short  sales" as defined in Rule 200 of
Regulation  SHO under the  Exchange  Act (but shall not be deemed to include the
location and/or reservation of borrowable shares of Common Stock).

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

     "Trading  Cushion"  shall mean the  mandatory  10 Trading Days between Draw
Down Pricing Periods.

     "Trading  Day" means a day on which the Common Stock is traded on a Trading
Market.

     "Trading  Market"  means the  following  markets or  exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the Nasdaq

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Capital Market,  the American Stock Exchange,  the New York Stock Exchange,  the
Nasdaq National Market or the OTC Bulletin Board.

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

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

     "Warrants" means  collectively the Common Stock purchase  warrants,  in the
form of Exhibit C delivered  to the  Purchaser  in  accordance  with Section 2.3
hereof, which Warrants shall be exercisable  immediately upon their issuance and
have a term of exercise equal to 5 years from the date of issuance.

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

                                   ARTICLE II.
                                PURCHASE AND SALE

     2.1 Purchase  and Sale of Draw Down  Shares.  Upon the terms and subject to
the  conditions  of this  Agreement,  the  Company  may  sell  and  issue to the
Purchaser and the Purchaser shall be obligated to purchase from the Company,  up
to an aggregate of $1,000,000  worth of shares of Common Stock (the  "Commitment
Amount").

     2.2 Initial  Closing.  The execution and delivery of this Agreement and the
other agreements  referred to herein (the "Initial Closing") shall take place at
the offices of FWS, 420 Lexington  Avenue,  Suite 2620, New York, New York 10170
(i) at 10:00 a.m.  local time within 5 Trading Days of the date hereof,  or (ii)
at such other time and place or on such date as the  Purchaser  and the  Company
may agree upon (the  "Initial  Closing  Date").  Each party  shall  deliver  the
following  documents,  instruments  and  writings  at or  prior  to the  Initial
Closing:

     (a) the Company shall deliver or cause to be delivered to the Purchaser the
following:

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     (a) this Agreement duly executed by the Company;

     (b) a legal opinion of Company  Counsel,  in the form of Exhibit B attached
hereto; and

     (c) the Registration Rights Agreement duly executed by the Company.

     (b) the Purchaser shall deliver or cause to be delivered to the Company the
following:

     (a) this Agreement duly executed by the Purchaser; and

     (b) the Registration Rights Agreement duly executed by the Purchaser.

     2.3 Issuance of Warrants and Common Stock.  On the Trading Day  immediately
following  the 10th Trading Day  following the day the Common Stock is initially
listed or quoted for trading on a Trading  Market,  the Company  shall issue the
Purchaser the following  certificates  registered in the name of the  Purchaser:
(a) a Warrant  to  purchase  up to 3 million  shares  of Common  Stock,  with an
exercise price equal to $0.27, subject to adjustment therein; and

     (b) a certificate evidencing a number of 882,353 Shares.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

     3.1  Representations  and  Warranties  of the Company.  Except as set forth
under the  corresponding  section of the Disclosure  Schedules which  Disclosure
Schedules  shall be deemed a part  hereof and to qualify any  representation  or
warranty  otherwise  made herein to the extent of such  disclosure,  the Company
hereby  makes  the  representations  and  warranties  set  forth  below  to  the
Purchaser:

     (a)  Subsidiaries.  The Company  currently  owns,  no  subsidiaries  either
directly  or  indirectly.  If the Company  has no  subsidiaries,  then all other
references in the Transaction  Documents to the subsidiaries or any of them will
be disregarded.

     (b)   Organization  and   Qualification.   The  Company  and  each  of  the
Subsidiaries  is an entity duly  incorporated  or otherwise  organized,  validly
existing  and in  good  standing  under  the  laws  of the  jurisdiction  of its
incorporation  or  organization  (as  applicable),  with the requisite power and
authority to own and use its  properties and assets and to carry on its business
as currently  conducted.  Neither the Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate or articles of
incorporation,  bylaws or other organizational or charter documents. Each of the
Company and the  Subsidiaries  is duly  qualified to conduct  business and is in
good standing as a foreign  corporation or other entity in each  jurisdiction in
which the nature of the business  conducted  or property  owned by it makes such
qualification necessary,  except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result

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in (i) a material adverse effect on the legality,  validity or enforceability of
any  Transaction  Document,  (ii) a material  adverse  effect on the  results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries,  taken as a whole, or (iii) a material adverse
effect on the Company's  ability to perform in any material  respect on a timely
basis its obligations under any Transaction Document (ANY of (i), (ii) or (iii),
a "Material  Adverse  Effect") and no Proceeding has been instituted in any such
jurisdiction  revoking,  limiting or curtailing  or seeking to revoke,  limit or
curtail  such  power  and  authority  or   qualification.

     (c)  Authorization;  Enforcement.  The Company has the requisite  corporate
power  and  authority  to  enter  into  and  to  consummate   the   transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder.  The execution and delivery of each of the
Transaction  Documents  by  the  Company  and  the  consummation  by it  of  the
transactions  contemplated  hereby and thereby have been duly  authorized by all
necessary action on the part of the Company and no further action is required by
the Company,  its board of directors or its stockholders in connection therewith
other than in connection with the Required Approvals.  Each Transaction Document
has been (or upon  delivery  will have been) duly  executed by the Company  and,
when delivered in accordance with the terms hereof and thereof,  will constitute
the valid and binding obligation of the Company  enforceable against the Company
in  accordance  with its  terms  except  (i) as  limited  by  general  equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general  application  affecting  enforcement of creditors'  rights
generally,  (ii) as limited by laws  relating  to the  availability  of specific
performance,  injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

     (d)  No  Conflicts.   The  execution,   delivery  and  performance  of  the
Transaction  Documents  by the  Company,  the issuance and sale of the Draw Down
Shares  and  the   consummation  by  the  Company  of  the  other   transactions
contemplated hereby and thereby do not and will not (i) conflict with or violate
any provision of the Company's or any  Subsidiary's  certificate  or articles of
incorporation,  bylaws or other  organizational  or charter  documents,  or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default)  under,  result in the creation of any Lien
upon any of the properties or assets of the Company or any  Subsidiary,  or give
to others any rights of  termination,  amendment,  acceleration  or cancellation
(with or  without  notice,  lapse of time or both)  of,  any  agreement,  credit
facility,  debt or other instrument  (evidencing a Company or Subsidiary debt or
otherwise) or other  understanding  to which the Company or any  Subsidiary is a
party or by which any  property  or asset of the  Company or any  Subsidiary  is
bound or affected, or (iii) subject to the Required Approvals,  conflict with or
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental  authority to which the
Company or a Subsidiary is subject  (including federal and state securities laws
and  regulations),  or by  which  any  property  or asset  of the  Company  or a
Subsidiary is bound or affected;  except in the case of each of clauses (ii) and

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(iii),  such as could not have or reasonably be expected to result in a Material
Adverse Effect.

     (e) Filings,  Consents and Approvals. The Company is not required to obtain
any consent, waiver,  authorization or order of, give any notice to, or make any
filing or registration  with, any court or other federal,  state, local or other
governmental  authority  or other  Person  in  connection  with  the  execution,
delivery and performance by the Company of the Transaction Documents, other than
(i) filings required pursuant to Section 4.4 of this Agreement,  (ii) the filing
with  the  Commission  of the  Registration  Statement  and  any  amendments  or
supplements thereto,  (iii) application(s) to each applicable Trading Market for
the  listing  of the  Securities  for  trading  thereon  in the time and  manner
required  thereby,  and (iv) the filing of Form D with the  Commission  and such
filings  as are  required  to be made under  applicable  state  securities  laws
(collectively, the "Required Approvals").

     (f) Issuance of the  Securities.  The Securities are duly  authorized  and,
when  issued  and  paid  for  in  accordance  with  the  applicable  Transaction
Documents,  will be duly and validly issued, fully paid and nonassessable,  free
and clear of all  Liens  imposed  by the  Company  other  than  restrictions  on
transfer  provided for in the Transaction  Documents.  The Warrant Shares,  when
issued  in  accordance  with the  terms of the  Transaction  Documents,  will be
validly  issued,  fully  paid and  nonassessable,  free and  clear of all  Liens
imposed by the  Company.  The  Company  has  reserved  from its duly  authorized
capital stock the maximum number of shares of Common Stock issuable  pursuant to
this Agreement and the Warrants.

     (g)  Capitalization.  The  capitalization of the Company is as set forth on
Schedule 3.1(g).  The Company has not issued any capital stock other than as set
forth on Schedule 3.1(g).  No Person has any right of first refusal,  preemptive
right,  right of  participation,  or any  similar  right to  participate  in the
transactions  contemplated by the Transaction  Documents.  Except as a result of
the  purchase  and sale of the  Securities,  there are no  outstanding  options,
warrants,  script rights to subscribe to, calls or  commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for
or  acquire,   any  shares  of  Common   Stock,   or   contracts,   commitments,
understandings  or arrangements by which the Company or any Subsidiary is or may
become  bound to issue  additional  shares  of  Common  Stock  or  Common  Stock
Equivalents.  The  issuance  and sale of the  Securities  will not  obligate the
Company to issue shares of Common Stock or other securities to any Person (other
than the  Purchaser)  and will not  result in a right of any  holder of  Company
securities to adjust the exercise, conversion, exchange or reset price under any
of such  securities.  All of the  outstanding  shares  of  capital  stock of the
Company are validly issued,  fully paid and  nonassessable,  have been issued in
compliance  with  all  federal  and  state  securities  laws,  and  none of such
outstanding  shares was issued in violation of any preemptive  rights or similar
rights  to  subscribe  for  or  purchase  securities.  No  further  approval  or
authorization  of any  stockholder,  the Board of  Directors  of the  Company or
others is required  for the issuance  and sale of the  Securities.  There are no
stockholders  agreements,  voting  agreements or other similar  agreements  with
respect to the  Company's  capital  stock to which the Company is a party or, to

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the   knowledge  of  the  Company,   between  or  among  any  of  the  Company's
stockholders.

     (h)  Financial  Statements.  Attached  hereto as  Schedule  3.1(h)  are the
audited financial  statements of the Company for the last one year and unaudited
financial  statements  for its most recent fiscal  quarter  ended  September 30,
2007. Such financial  statements comply in all material respects with applicable
accounting  requirements  and the rules and  regulations of the Commission  with
respect  thereto as in effect at the time of filing.  Such financial  statements
have  been  prepared  in  accordance  with  United  States  generally   accepted
accounting  principles applied on a consistent basis during the periods involved
("GAAP"),  except as may be otherwise specified in such financial  statements or
the notes thereto and except that unaudited financial statements may not contain
all footnotes  required by GAAP, and fairly present in all material respects the
financial  position of the Company and its  consolidated  subsidiaries as of and
for the dates  thereof  and the  results  of  operations  and cash flows for the
periods then ended,  subject,  in the case of unaudited  statements,  to normal,
immaterial, year-end audit adjustments.

     (i) Material  Changes;  Undisclosed  Events,  Liabilities or  Developments.
Since the date of the latest audited financial  statements  attached hereto, (i)
there has been no event,  occurrence or  development  that has had or that could
reasonably be expected to result in a Material Adverse Effect,  (ii) the Company
has not incurred any liabilities  (contingent or otherwise) other than (A) trade
payables  and  accrued  expenses  incurred  in the  ordinary  course of business
consistent  with past practice and (B)  liabilities not required to be reflected
in the Company's  financial  statements pursuant to GAAP or disclosed in filings
made with the  Commission,  (iii) the  Company  has not  altered  its  method of
accounting,  (iv)  the  Company  has  not  declared  or  made  any  dividend  or
distribution  of  cash or  other  property  to its  stockholders  or  purchased,
redeemed or made any  agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity  securities  to any officer,
director or Affiliate,  except pursuant to existing  Company stock option plans.
The  Company  does not have  pending  before  the  Commission  any  request  for
confidential treatment of information. Except for the issuance of the Securities
contemplated  by this  Agreement or as set forth on Schedule  3.1(i),  no event,
liability or  development  has occurred or exists with respect to the Company or
its  Subsidiaries  or  their  respective  business,  properties,  operations  or
financial condition, that would be required to be disclosed by the Company under
applicable  securities laws at the time this representation is made that has not
been  publicly  disclosed  at least 1  Trading  Day  prior to the date that this
representation is made.

     (j) Litigation.  There is no action,  suit,  inquiry,  notice of violation,
proceeding  or  investigation  pending  or,  to the  knowledge  of the  Company,
threatened  against or affecting  the Company,  any  Subsidiary  or any of their
respective  properties  before  or by any  court,  arbitrator,  governmental  or
administrative agency or regulatory authority (federal,  state, county, local or
foreign)  (collectively,  an "Action") which (i) adversely affects or challenges
the legality,  validity or enforceability of any of the Transaction Documents or
the  Securities or (ii) could,  if there were an unfavorable  decision,  have or
reasonably  be  expected  to result in a Material  Adverse  Effect.  Neither the
Company nor any Subsidiary,  nor any director or officer thereof, is or has been
the subject of any Action  involving a claim of violation of or liability  under

                                       10
<PAGE>
federal or state  securities laws or a claim of breach of fiduciary duty.  There
has not been,  and to the  knowledge  of the  Company,  there is not  pending or
contemplated,  any investigation by the Commission  involving the Company or any
current or former  director or officer of the Company.  The  Commission  has not
issued  any stop  order or  other  order  suspending  the  effectiveness  of any
registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.

     (k) Labor Relations.  No material labor dispute exists or, to the knowledge
of the Company,  is imminent with respect to any of the employees of the Company
which could reasonably be expected to result in a Material Adverse Effect.  None
of the  Company's  or its  Subsidiaries'  employees  is a member of a union that
relates to such  employee's  relationship  with the  Company,  and  neither  the
Company  or  any of its  Subsidiaries  is a  party  to a  collective  bargaining
agreement, and the Company and its Subsidiaries believe that their relationships
with their  employees  are good. No executive  officer,  to the knowledge of the
Company,  is, or is now expected to be, in violation of any material term of any
employment  contract,  confidentiality,  disclosure or  proprietary  information
agreement or  non-competition  agreement,  or any other contract or agreement or
any restrictive  covenant,  and the continued  employment of each such executive
officer does not subject the Company or any of its Subsidiaries to any liability
with respect to any of the foregoing  matters.  The Company and its Subsidiaries
are in  compliance  with all U.S.  federal,  state,  local and foreign  laws and
regulations  relating  to  employment  and  employment   practices,   terms  and
conditions of employment and wages and hours,  except where the failure to be in
compliance could not,  individually or in the aggregate,  reasonably be expected
to have a Material Adverse Effect.

     (1)  Compliance.  Neither the Company nor any  Subsidiary (i) is in default
under or in  violation  of (and no event has  occurred  that has not been waived
that,  with  notice or lapse of time or both,  would  result in a default by the
Company or any Subsidiary under), nor has the Company or any Subsidiary received
notice of a claim that it is in default under or that it is in violation of, any
indenture,  loan or credit  agreement or any other  agreement or  instrument  to
which it is a party or by which it or any of its properties is bound (whether or
not such  default or  violation  has been  waived),  (ii) is in violation of any
order of any court,  arbitrator or governmental body, or (iii) is or has been in
violation of any statute,  rule or  regulation  of any  governmental  authority,
including  without  limitation  all  foreign,  federal,  state  and  local  laws
applicable to its business and all such laws that affect the environment, except
in each case as could not have or reasonably be expected to result in a Material
Adverse Effect.

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

                                       11
<PAGE>
     (n)  Title to  Assets.  The  Company  and the  Subsidiaries  have  good and
marketable  title in fee  simple  to all  real  property  owned by them  that is
material  to the  business  of the  Company  and the  Subsidiaries  and good and
marketable title in all personal  property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens,  except for Liens as do not materially  affect the value of such property
and do not  materially  interfere  with the use made and  proposed to be made of
such property by the Company and the  Subsidiaries  and Liens for the payment of
federal,  state or other taxes,  the payment of which is neither  delinquent nor
subject to penalties.  Any real property and facilities  held under lease by the
Company  and the  Subsidiaries  are held by them  under  valid,  subsisting  and
enforceable   leases  with  which  the  Company  and  the  Subsidiaries  are  in
compliance.

     (o) Patents and Trademarks.  The Company and the Subsidiaries have, or have
rights  to  use,  all  patents,  patent  applications,   trademarks,   trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual  property rights and similar rights necessary or
material for use in connection  with their  respective  businesses and which the
failure  to so have  could have a Material  Adverse  Effect  (collectively,  the
"Intellectual  Property  Rights").  Neither the Company nor any.  Subsidiary has
received a notice (written or otherwise) that the  Intellectual  Property Rights
used by the Company or any  Subsidiary  violates or infringes upon the rights of
any Person.  To the  knowledge of the Company,  all such  Intellectual  Property
Rights are enforceable  and there is no existing  infringement by another Person
of any of the  Intellectual  Property  Rights.  The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy,  confidentiality
and value of all of their intellectual properties, except where failure to do so
could not,  individually  or in the aggregate,  reasonably be expected to have a
Material Adverse Effect.

     (p) Insurance.  The Company and the Subsidiaries are insured by insurers of
recognized  financial  responsibility  against such losses and risks and in such
amounts as are prudent and customary in the  businesses in which the Company and
the  Subsidiaries  are engaged,  including,  but not limited to,  directors  and
officers  insurance  coverage at least equal to $1,000,000.  Neither the Company
nor any  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 without a significant increase in cost.

     (q)  Transactions  With  Affiliates and Employees.  None of the officers or
directors  of the Company  and, to the  knowledge  of the  Company,  none of the
employees  of the  Company  is  presently  a party to any  transaction  with the
Company or any  Subsidiary  (other than for services as employees,  officers and
directors), including any contract, agreement or other arrangement providing for
the  furnishing  of services to or by,  providing for rental of real or personal
property to or from,  or  otherwise  requiring  payments to or from any officer,
director or such  employee or, to the  knowledge  of the Company,  any entity in
which any officer,  director, or any such employee has a substantial interest or
is an officer,  director, trustee or partner, in each case in excess of $120,000
other than (i) for payment of salary or consulting  fees for services  rendered,
(ii)  reimbursement for expenses incurred on behalf of the Company and (iii) for

                                       12
<PAGE>
other  employee  benefits,  including  stock option  agreements  under any stock
option plan of the Company.

     (r) Internal Accounting Controls. The Company and the Subsidiaries maintain
a system of  internal  accounting  controls  sufficient  to  provide  reasonable
assurance that (i)  transactions  are executed in accordance  with  management's
general or specific authorizations,  (ii) transactions are recorded as necessary
to permit  preparation  of financial  statements in conformity  with GAAP and to
maintain  asset  accountability,  (iii)  access to assets is  permitted  only in
accordance with  management's  general or specific  authorization,  and (iv) the
recorded  accountability  for assets is  compared  with the  existing  assets at
reasonable  intervals  and  appropriate  action  is taken  with  respect  to any
differences.

     (s) Certain Fees. The brokerage or finder's fees or commissions that are or
will be payable by the Company to any broker,  financial  advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the transactions  contemplated by the Transaction  Documents are as set forth on
Schedule 3.1(s). The Purchaser shall have no obligation with respect to any fees
or with respect to any claims made by or on behalf of other  Persons for fees of
a type  contemplated  in this  Section  that may be due in  connection  with the
transactions contemplated by the Transaction Documents.

     (t)  Private   Placement.   Assuming   the   accuracy   of  the   Purchaser
representations  and warranties set forth in Section 3.2, no registration  under
the  Securities  Act is required for the offer and sale of the Securities by the
Company to the Purchaser as  contemplated  hereby.  The issuance and sale of the
Securities  hereunder  does not  contravene  the  rules and  regulations  of the
Trading Market.

     (u) Investment Company. The Company is not, and is not an Affiliate of, and
immediately  after receipt of payment for the  Securities,  will not be or be an
Affiliate  of, an  "investment  company"  within the  meaning of the  Investment
Company Act of 1940,  as amended.  The Company  shall  conduct its business in a
manner so that it will not become subject to the Investment Company Act.

     (v) Registration  Rights.  Other than each of the Purchaser,  no Person has
any right to cause the Company to effect the  registration  under the Securities
Act of any securities of the Company.

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

                                       13
<PAGE>
     (x) Disclosure. Except with respect to the material terms and conditions of
the transactions contemplated by the Transaction Documents, the Company confirms
that,  neither it nor any other Person  acting on its behalf has provided any of
the Purchaser or their agents or counsel with any  information  that it believes
constitutes or might constitute material,  non-public  information.  The Company
understands  and  confirms  that  the  Purchaser  will  rely  on  the  foregoing
representation  in effecting  transactions  in  securities  of the Company.  All
disclosure  furnished by or on behalf of the Company to the Purchaser  regarding
the Company, its business and the transactions  contemplated  hereby,  including
the Disclosure Schedules to this Agreement,  with respect to the representations
and  warranties   made  herein  are  true  and  correct  with  respect  to  such
representations  and  warranties  and do not contain any untrue  statement  of a
material fact or omit to state any material fact  necessary in order to make the
statements  made therein,  in light of the  circumstances  under which they were
made, not misleading.  The press releases disseminated by the Company during the
twelve  months  preceding  the  date of this  Agreement  taken as a whole do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the  statements,  in
light of the  circumstances  under  which  they  were  made and when  made,  not
misleading.  The Company  acknowledges and agrees that no Purchaser makes or has
made  any  representations  or  warranties  with  respect  to  the  transactions
contemplated  hereby  other than  those  specifically  set forth in Section  3.2
hereof.

     (y) No  Integrated  Offering.  Assuming  the  accuracy  of the  Purchaser's
representations  and warranties  set forth in Section 3.2,  neither the Company,
nor any of its  affiliates,  nor any Person  acting on its or their  behalf has,
directly or  indirectly,  made any offers or sales of any  security or solicited
any  offers to buy any  security,  under  circumstances  that  would  cause this
offering of the Securities to be integrated  with prior offerings by the Company
for  purposes  of the  Securities  Act or any  applicable  shareholder  approval
provisions of any Trading  Market on which any of the  securities of the Company
are listed or designated.

     (z)  Solvency.  Based on the  financial  condition of the Company as of the
Closing Date after  giving  effect to the receipt by the Company of the proceeds
from the sale of the  Securities  hereunder,  (i) the fair saleable value of the
Company's  assets  exceeds  the amount that will be required to be paid on or in
respect of the Company's  existing debts and other liabilities  (including known
contingent  liabilities)  as they  mature;  (ii)  the  Company's  assets  do not
constitute  unreasonably small capital to carry on its business as now conducted
and as proposed to be conducted  including its capital needs taking into account
the particular  capital  requirements of the business  conducted by the Company,
and projected capital requirements and capital  availability  thereof; and (iii)
the current  cash flow of the  Company,  together  with the proceeds the Company
would receive, were it to liquidate all of its assets, after taking into account
all anticipated  uses of the cash,  would be sufficient to pay all amounts on or
in respect of its  liabilities  when such amounts are  required to be paid.  The
Company  does not intend to incur debts  beyond its ability to pay such debts as
they mature (taking into account the timing and amounts of cash to be payable on
or in  respect  of its  debt).  The  Company  has no  knowledge  of any facts or
circumstances  which lead it to believe that it will file for  reorganization or
liquidation  under the  bankruptcy or  reorganization  laws of any  jurisdiction

                                       14
<PAGE>
within one year from the  Closing  Date.  Schedule  3.1(z)  sets forth as of the
dates thereof all outstanding secured and unsecured  Indebtedness of the Company
or any Subsidiary,  or for which the Company or any Subsidiary has  commitments.
For  the  purposes  of  this  Agreement,   "Indebtedness"  shall  mean  (a)  any
liabilities  for borrowed money or amounts owed in excess of $25,000 (other than
trade accounts  payable  incurred in the ordinary  course of business),  (b) all
guaranties,   endorsements  and  other  contingent  obligations  in  respect  of
Indebtedness  of others,  whether or not the same are or should be  reflected in
the  Company's  balance  sheet  (or the notes  thereto),  except  guaranties  by
endorsement  of  negotiable  instruments  for deposit or  collection  or similar
transactions  in the ordinary  course of business;  and (c) the present value of
any lease  payments  in excess  of  $50,000  due  under  leases  required  to be
capitalized in accordance  with GAAP.  Neither the Company nor any Subsidiary is
in default with respect to any Indebtedness.

     (aa) Tax Status.  Except for matters that would not, individually or in the
aggregate,  have or  reasonably  be  expected  to result in a  Material  Adverse
Effect, the Company and each Subsidiary has filed all necessary  federal,  state
and foreign  income and  franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.

     (bb) No General Solicitation.  Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the  Securities  by any form of
general  solicitation  or general  advertising.  The  Company  has  offered  the
Securities  for  sale  only  to the  Purchaser  and  certain  other  "accredited
investors" within the meaning of Rule 501 under the Securities Act.

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

     (dd)  Accountants.  The  Company's  accountants  are set forth on  Schedule
3.1(dd) of the  Disclosure  Schedule.  To the  knowledge  of the  Company,  such
accountants,  who the Company expects will express their opinion with respect to
the financial  statements to be included in the  Registration  Statement,  are a
registered public accounting firm as required by the Exchange Act.

     (ee)  Acknowledgment  Regarding  Purchaser's  Purchase of  Securities.  The
Company  acknowledges  and agrees that each of the Purchaser is acting solely in
the  capacity  of an arm's  length  purchaser  with  respect to the  Transaction
Documents  and  the  transactions  contemplated  thereby.  The  Company  further
acknowledges  that no Purchaser is acting as a financial advisor or fiduciary of
the  Company  (or in any  similar  capacity)  with  respect  to the  Transaction

                                       15
<PAGE>
Documents and the transactions  contemplated thereby and any advice given by the
Purchaser or any of its respective  representatives or agents in connection with
the Transaction  Documents and the transactions  contemplated  thereby is merely
incidental to the Purchaser's  purchase of the  Securities.  The Company further
represents  to the  Purchaser  that the  Company's  decision  to enter into this
Agreement  and the other  Transaction  Documents  has been  based  solely on the
independent  evaluation of the transactions  contemplated  hereby by the Company
and its representatives.

     (ff) Regulation M Compliance.  The Company has not, and will not during the
term of this Agreement, and to its knowledge no one acting on its behalf has, or
will during the term of this Agreement,  (i) taken, directly or indirectly,  any
action  designed to cause or to result in the  stabilization  or manipulation of
the price of any security of the Company to facilitate the sale or resale of any
of the Securities,  (ii) sold, bid for, purchased, or, paid any compensation for
soliciting  purchases of, any of the Securities,  or (iii) paid or agreed to pay
to any person any  compensation  for  soliciting  another to purchase  any other
securities  of the Company,  other than,  in the case of clauses (ii) and (iii),
compensation  paid to the  Company's  placement  agent  in  connection  with the
placement of the Securities.

     (gg) Acknowledgement  Regarding  Purchaser's Trading Activity.  Anything in
this  Agreement  or  elsewhere  herein to the  contrary  notwithstanding,  it is
understood and  acknowledged by the Company that none of the Purchaser have been
asked to agree,  nor has the  Purchaser  agreed,  to desist from  purchasing  or
selling long securities of the Company,  including,  without limitation,  during
the periods  that the value of the Draw Down Shares  deliverable  in  connection
with a Draw  Down are  being  determined.  The  Company  acknowledges  that such
aforementioned  activities do not constitute a breach of any of the  Transaction
Documents.

     3.2  Representations  and  Warranties of the  Purchaser.  Purchaser  hereby
represents and warrants as of the date hereof and as of each Closing Date to the
Company as follows:

     (a) Organization: Authority. Purchaser is an entity duly organized, validly
existing  and in  good  standing  under  the  laws  of the  jurisdiction  of its
organization  with full right,  corporate or partnership  power and authority to
enter into and to consummate the  transactions  contemplated  by the Transaction
Documents and otherwise to carry out its  obligations  hereunder and thereunder.
The execution,  delivery and  performance  by the Purchaser of the  transactions
contemplated  by this  Agreement  have been  duly  authorized  by all  necessary
corporate  or  similar  action on the part of the  Purchaser.  Each  Transaction
Document  to which it is a party has been duly  executed by the  Purchaser,  and
when  delivered  by the  Purchaser in  accordance  with the terms  hereof,  will
constitute  the  valid  and  legally   binding   obligation  of  the  Purchaser,
enforceable  against it in accordance  with its terms,  except (i) as limited by
general   equitable   principles   and   applicable   bankruptcy,    insolvency,
reorganization,  moratorium  and other  laws of  general  application  affecting
enforcement of creditors' rights generally,  (ii) as limited by laws relating to
the availability of specific  performance,  injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

                                       16
<PAGE>
     (b) Own Account.  Purchaser understands that the Securities are "restricted
securities"  and  have not  been  registered  under  the  Securities  Act or any
applicable  state  securities law and is acquiring the Securities at the Initial
Closing  as  principal  for  its  own  account  and  not  with a view  to or for
distributing  or reselling  such  Securities or any part thereof in violation of
the  Securities  Act or any  applicable  state  securities  law,  has no present
intention of distributing  any of such Securities in violation of the Securities
Act or any  applicable  state  securities  law and  has no  direct  or  indirect
arrangement or understandings  with any other persons to distribute or regarding
the  distribution  of such  Securities  (this  representation  and  warranty not
limiting  the  Purchaser's  right  to  sell  the  Securities   pursuant  to  the
Registration  Statement or otherwise in compliance with  applicable  federal and
state  securities  laws) in violation of the  Securities  Act or any  applicable
state  securities  law.  Purchaser is acquiring the Securities  hereunder in the
ordinary course of its business.

     (c) Purchaser Status. At the time the Purchaser was offered the Securities,
it was, and at the date hereof it is, and on each date on which it exercises any
Warrants,  it will be either:  (i) an  "accredited  investor" as defined in Rule
501(a)(1),  (a)(2),  (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a
"qualified  institutional buyer" as defined in Rule 144A(a) under the Securities
Act. Purchaser is not required to be registered as a broker-dealer under Section
15 of the Exchange Act.

     (d) Experience of Purchaser.  Purchaser,  either alone or together with its
representatives,  has such knowledge,  sophistication and experience in business
and financial  matters so as to be capable of evaluating the merits and risks of
the prospective  investment in the  Securities,  and has so evaluated the merits
and risks of such investment.  Purchaser is able to bear the economic risk of an
investment  in the  Securities  and,  at the present  time,  is able to afford a
complete loss of such investment.

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

     Confidentiality Prior To The Date Hereof. Other than to other Persons party
to this  Agreement,  the Purchaser has  maintained  the  confidentiality  of all
disclosures  made to it in  connection  with  this  transaction  (including  the
existence and terms of this transaction).

                                   ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

     4.1 Transfer Restrictions.

     (a) The  Securities  may only be disposed of in  compliance  with state and
federal  securities  laws. In connection  with any transfer of Securities  other
than pursuant to an effective registration statement or Rule 144, to the Company
or to an  affiliate  of  the  Purchaser  or  in  connection  with  a  pledge  as

                                       17
<PAGE>
contemplated in Section 4.1(b),  the Company may require the transferor  thereof
to provide to the Company an opinion of counsel  selected by the  transferor and
reasonably  acceptable  to the Company,  the form and substance of which opinion
shall be  reasonably  satisfactory  to the  Company,  to the  effect  that  such
transfer does not require registration of such transferred  Securities under the
Securities Act. As a condition of transfer,  any such transferee  shall agree in
writing to be bound by the terms of this  Agreement and shall have the rights of
the Purchaser under this Agreement and the Registration Rights Agreement,  as to
issued Securities only.

     (b) The Purchaser agrees to the imprinting,  so long as is required by this
Section 4.1, of a legend on any of the Securities in the following form:

          THESE  SECURITIES  HAVE NOT BEEN  REGISTERED  WITH THE  SECURITIES AND
          EXCHANGE  COMMISSION  OR THE  SECURITIES  COMMISSION  OF ANY  STATE IN
          RELIANCE UPON AN EXEMPTION FROM REGISTRATION  UNDER THE SECURITIES ACT
          OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,  MAY NOT
          BE  OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN  EFFECTIVE  REGISTRATION
          STATEMENT  UNDER  THE  SECURITIES  ACT  OR  PURSUANT  TO AN  AVAILABLE
          EXEMPTION FROM, OR IN A TRANSACTION  NOT SUBJECT TO, THE  REGISTRATION
          REQUIREMENTS  OF THE SECURITIES ACT AND IN ACCORDANCE  WITH APPLICABLE
          STATE  SECURITIES  LAWS AS EVIDENCED BY A LEGAL  OPINION OF COUNSEL TO
          THE  TRANSFEROR  TO SUCH  EFFECT,  THE  SUBSTANCE  OF  WHICH  SHALL BE
          REASONABLY ACCEPTABLE TO THE COMPANY.  THESE SECURITIES MAY BE PLEDGED
          IN  CONNECTION  WITH A BONA  FIDE  MARGIN  ACCOUNT  WITH A  REGISTERED
          BROKER-DEALER  OR OTHER LOAN WITH A FINANCIAL  INSTITUTION  THAT IS AN
          "ACCREDITED  INVESTOR" AS DEFINED IN RULE 501(a) UNDER THE  SECURITIES
          ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

     The Company  acknowledges  and agrees that the  Purchaser  may from time to
time  pledge  pursuant  to a  bona  fide  margin  agreement  with  a  registered
broker-dealer or grant a security interest in some or all of the Securities to a
financial institution that is an "accredited investor" as defined in Rule 501(a)
under the  Securities  Act and who agrees to be bound by the  provisions of this
Agreement and the Registration Rights Agreement and, if required under the terms
of such arrangement, the Purchaser may transfer pledged or secured Securities to
the pledgees or secured parties.  Such a pledge or transfer would not be subject
to approval of the Company and no legal opinion of legal counsel of the pledgee,
secured party or pledgor shall be required in connection therewith.  Further, no
notice shall be required of such pledge. At the Purchaser's expense, the Company
will execute and deliver such reasonable  documentation  as a pledgee or secured
party of  Securities  may  reasonably  request  in  connection  with a pledge or
transfer  of  the  Securities,  including,  if the  Securities  are  subject  to
registration pursuant to the Registration Rights Agreement,  the preparation and

                                       18
<PAGE>
filing of any required  prospectus  supplement  under Rule  424(b)(3)  under the
Securities  Act  or  other  applicable   provision  of  the  Securities  Act  to
appropriately amend the list of Selling Stockholders thereunder.

     (e)  Certificates  evidencing the Draw Down Shares,  the Shares and Warrant
Shares shall not contain any legend  (including  the legend set forth in Section
4.1(b)),  (i)  while  a  registration   statement  (including  the  Registration
Statement)  covering  the  resale  of  such  security  is  effective  under  the
Securities Act, or (ii) following any sale of such Draw Down Shares,  the Shares
or Warrant Shares  pursuant to Rule 144, or (iii) if such Draw Down Shares,  the
Shares or Warrant  Shares are eligible  for sale under Rule  144(k),  or (iv) if
such legend is not required under applicable  requirements of the Securities Act
(including judicial  interpretations  and pronouncements  issued by the staff of
the Commission). The Company shall cause its counsel to issue a legal opinion to
the Company's  transfer  agent  promptly after the Effective Date if required by
the Company's  transfer agent to effect the removal of the legend hereunder.  If
all or any  portion  of a  Warrant  is  exercised  at a time  when  there  is an
effective registration statement to cover the resale of the Warrant Shares, such
Warrant  Shares  shall be issued free of all  legends.  The Company  agrees that
following  the  Effective  Date or at such  time as  such  legend  is no  longer
required  under this Section  4.1(c),  it will, no later than three Trading Days
following the delivery by the Purchaser to the Company or the Company's transfer
agent of a certificate  representing Draw Down Shares, Shares or Warrant Shares,
as the case may be,  issued with a  restrictive  legend (such third Trading Day,
the "Legend Removal Date"),  deliver or cause to be delivered to the Purchaser a
certificate representing such shares that is free from all restrictive and other
legends.  All Draw  Down  Shares  shall be  delivered  without  any  restrictive
legends.  The  Company  may  not  make  any  notation  on its  records  or  give
instructions to any transfer agent of the Company that enlarge the  restrictions
on transfer set forth in this Section.  Certificates  for Securities  subject to
legend  removal  hereunder  shall be  transmitted  by the transfer  agent of the
Company to the  Purchaser  by  crediting  the account of the  Purchaser's  prime
broker with the Depository Trust Company System.

     (d) In addition to the Purchaser's  other available  remedies,  the Company
shall pay to the Purchaser,  in cash, as partial liquidated damages and not as a
penalty, for each $1,000 of Draw Down Shares, Shares or Warrant Shares (based on
the VWAP of the Common Stock on the date such  Securities  are  submitted to the
Company's  transfer agent)  delivered for removal of the restrictive  legend and
subject to Section  4.1(c),  $10 per Trading Day  (increasing to $20 per Trading
Day five (5)  Trading  Days after such  damages  have begun to accrue)  for each
Trading Day after the Legend  Removal Date until such  certificate  is delivered
without a legend.  Nothing  herein shall limit the  Purchaser's  right to pursue
actual damages for the Company's  failure to deliver  certificates  representing
any Securities as required by the Transaction Documents, and the Purchaser shall
have the  right to  pursue  all  remedies  available  to it at law or in  equity
including,   without  limitation,   a  decree  of  specific  performance  and/or
injunctive relief.

     (e)  Purchaser  agrees  that the  removal of the  restrictive  legend  from
certificates  representing  Securities  as set  forth  in  this  Section  4.1 is
predicated  upon  the  Company's  reliance  that  the  Purchaser  will  sell any
Securities  pursuant to either the  registration  requirements of the Securities

                                       19
<PAGE>
Act, including any applicable prospectus delivery requirements,  or an exemption
therefrom, and that if Securities are sold pursuant to a Registration Statement,
they will be sold in compliance with the plan of distribution set forth therein.

     4.2 Furnishing of  Information.  As long as Purchaser owns any  Securities,
the Company  covenants to timely file (or obtain  extensions in respect  thereof
and file within the applicable grace period) all reports required to be filed by
the Company  after the date hereof  pursuant to the Exchange Act. As long as the
Purchaser  owns any  Securities,  if the Company is not required to file reports
pursuant to the Exchange  Act, it will prepare and furnish to the  Purchaser and
make publicly  available in accordance  with Rule 144(c) such  information as is
required for the  Purchaser to sell the  Securities  under Rule 144. The Company
further  covenants  that it will  take  such  further  action  as any  holder of
Securities may reasonably  request,  to the extent required from time to time to
enable  such  Person  to sell such  Securities  without  registration  under the
Securities Act within the requirements of the exemption provided by Rule 144.

     4.3  Integration.  The  Company  shall not sell,  offer for sale or solicit
offers to buy or  otherwise  negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the  Securities  in a manner that would  require the  registration  under the
Securities  Act of the sale of the  Securities to the Purchaser or that would be
integrated  with the offer or sale of the  Securities  for purposes of the rules
and  regulations  of any Trading  Market such that it would require  shareholder
approval  prior to the  closing of such  other  transaction  unless  shareholder
approval is obtained before the closing of such subsequent transaction.

     4.4 Securities Laws Disclosure:  Publicity. The Company shall, by 8:30 a.m.
Eastern time on the Trading Day immediately  following the date hereof,  issue a
Current Report on Form 8-K,  disclosing  the material terms of the  transactions
contemplated  hereby, and shall attach the Transaction  Documents  thereto.  The
Company and the  Purchaser  shall  consult  with each other in issuing any other
press releases with respect to the transactions contemplated hereby, and neither
the Company nor the  Purchaser  shall issue any such press  release or otherwise
make any such public  statement  without the prior consent of the Company,  with
respect to any press release of the  Purchaser,  or without the prior consent of
the Purchaser,  with respect to any press release of the Company,  which consent
shall not  unreasonably  be withheld or delayed,  except if such  disclosure  is
required by law, in which case the disclosing  party shall promptly  provide the
other party with prior notice of such public statement or communication.

     4.5  Shareholder  Rights  Plan.  No claim will be made or  enforced  by the
Company  or,  with the  consent  of the  Company,  any  other  Person,  that the
Purchaser is an "Acquiring Person" under any control share acquisition, business
combination,  poison pill (including any distribution  under a rights agreement)
or similar  anti-takeover  plan or arrangement in effect or hereafter adopted by
the Company,  or that the Purchaser could be deemed to trigger the provisions of
any such  plan or  arrangement,  by  virtue of  receiving  Securities  under the
Transaction  Documents or under any other agreement  between the Company and the
Purchaser.

     4.6 Non-Public  Information.  Except with respect to the material terms and
conditions of the transactions  contemplated by the Transaction  Documents,  the

                                       20
<PAGE>
Company  covenants and agrees that neither it nor any other Person acting on its
behalf will provide the Purchaser or its agents or counsel with any  information
that the Company believes  constitutes  material nonpublic  information,  unless
prior thereto the Purchaser  shall have executed a written  agreement  regarding
the  confidentiality  and use of such information.  The Company  understands and
confirms that the Purchaser shall be relying on the foregoing representations in
effecting transactions in securities of the Company.

     4.7 Indemnification of Purchaser. Subject to the provisions of this Section
4.7,  the Company  will  indemnify  and hold the  Purchaser  and its  directors,
officers,  shareholders,  members, partners, employees and agents (and any other
Persons  with a  functionally  equivalent  role of a Person  holding such titles
notwithstanding  a lack of such  title or any  other  title),  each  Person  who
controls the Purchaser  (within the meaning of Section 15 of the  Securities Act
and Section 20 of the Exchange Act), and the directors, officers,  shareholders,
agents,   members,   partners  or  employees  (and  any  other  Persons  with  a
functionally  equivalent role of a Person holding such titles  notwithstanding a
lack of such title or any other  title) of such  controlling  persons  (each,  a
"Purchaser Party") harmless from any and all losses,  liabilities,  obligations,
claims,  contingencies,  damages,  costs and expenses,  including all judgments,
amounts paid in  settlements,  court costs and  reasonable  attorneys'  fees and
costs of  investigation  that any the  Purchaser  Party may suffer or incur as a
result  of or  relating  to (a)  any  breach  of  any  of  the  representations,
warranties,  covenants or agreements made by the Company in this Agreement or in
the  other  Transaction  Documents  or (b) any  action  instituted  against  the
Purchaser,  or any of its  Affiliates,  by any stockholder of the Company who is
not an  Affiliate  of the  Purchaser,  with  respect to any of the  transactions
contemplated  by the Transaction  Documents  (unless such action is based upon a
breach of the  Purchaser's  representations,  warranties or covenants  under the
Transaction Documents or any agreements or understandings the Purchaser may have
with any such stockholder or any violations by the Purchaser of state or federal
securities laws or any conduct by the Purchaser which constitutes  fraud,  gross
negligence,  willful misconduct or malfeasance).  If any action shall be brought
against any Purchaser Party in respect of which indemnity may be sought pursuant
to this  Agreement,  the Purchaser  Party shall  promptly  notify the Company in
writing, and the Company shall have the right to assume the defense thereof with
counsel of its own choosing  reasonably  acceptable to the Purchaser  Party. Any
Purchaser  Party  shall  have the right to employ  separate  counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Purchaser Party except to the extent that
(i) the employment  thereof has been  specifically  authorized by the Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such  defense  and to employ  counsel or (iii) in such  action  there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue  between the  position of the  Company and the  position of the  Purchaser
Party,  in which case the Company shall be responsible  for the reasonable  fees
and expenses of no more than one such separate counsel.  The Company will not be
liable to any Purchaser Party under this Agreement (i) for any settlement by the
Purchaser  Party effected  without the Company's  prior written  consent,  which
shall not be unreasonably  withheld or delayed;  or (ii) to the extent, but only
to the extent that a loss,  claim,  damage or liability is  attributable  to any
Purchaser Party's breach of any of the representations, warranties, covenants or
agreements  made by the  Purchaser  Party  in  this  Agreement  or in the  other
Transaction Documents.

                                       21
<PAGE>
     4.8  Reservation  of Common Stock.  As of the date hereof,  the Company has
reserved  and the Company  shall  continue to reserve and keep  available at all
times, free of preemptive  rights, a sufficient number of shares of Common Stock
for the  purpose of enabling  the Company to issue Draw Down Shares  pursuant to
this Agreement and Warrant Shares pursuant to any exercise of the Warrants.

     4.9 Listing of Common Stock.  The Company hereby agrees to use best efforts
to maintain the listing of the Common Stock on a Trading Market,  and as soon as
reasonably  practicable  following  the Initial  Closing (but not later than the
Effective  Date) to list all of the Draw Down  Shares,  the Shares  and  Warrant
Shares on such  Trading  Market.  The  Company  further  agrees,  if the Company
applies to have the Common Stock  traded on any other  Trading  Market,  it will
include in such application all of the Draw Down Shares,  the Shares and Warrant
Shares, and will take such other action as is necessary to cause all of the Draw
Down Shares,  the Shares and Warrant  Shares to be listed on such other  Trading
Market as promptly as  possible.  The  Company  will take all action  reasonably
necessary  to continue  the listing and trading of its Common Stock on a Trading
Market and will comply in all respects with the Company's reporting,  filing and
other obligations under the bylaws or rules of the Trading Market.

     4.10  Short  Sales and  Confidentiality  After The Date  Hereof.  Purchaser
covenants that neither it nor any Affiliate  acting on its behalf or pursuant to
any  understanding  with it will execute any Net Short Sales (as defined  below)
during the following period  commencing on the date hereof and at the Discussion
Time and ending on the earliest of (i) the 24 month anniversary of the Effective
Date,  (ii) such time that the Company has  exercised  Draw Downs for the entire
Commitment Amount hereunder,  (iii) the 36 month anniversary of the date of this
Agreement and (iv) the termination of this Agreement.  Purchaser  covenants that
until such time as the transactions  contemplated by this Agreement are publicly
disclosed  by the  Company as  described  in Section  4.4,  the  Purchaser  will
maintain the  confidentiality  of all disclosures  made to it in connection with
this transaction  (including the existence and terms of this  transaction).  For
purposes of this Section 4.10, a "Net Short Sale" by the Purchaser  shall mean a
sale of Common Stock by such  Purchaser  that is marked as a short sale and that
is made at a time when there is no equivalent offsetting long position in Common
Stock held by such  Purchaser.  For purposes of determining  whether there is an
equivalent  offsetting  long  position  in Common  Stock held by the  Purchaser,
shares  of  Common  Stock   underlying  the  Warrants   (ignoring  any  exercise
limitations therein) shall be deemed to be held long by the Purchaser,  plus any
shares of Common Stock otherwise then held by such Purchaser.

     4.11 Form D; Blue Sky Filings.  The Company  agrees to timely file a Form D
with respect to the Securities as required  under  Regulation D and to provide a
copy  thereof,  promptly upon request of the  Purchaser.  The Company shall take
such action as the Company shall  reasonably  determine is necessary in order to
obtain an exemption for, or to qualify the Securities for, sale to the Purchaser
at the Closing under  applicable  securities or "Blue Sky" laws of the states of
the United  States,  and shall  provide  evidence of such actions  promptly upon
request of Purchaser.

     4.12   The   Shares.   Anything   in  this   Agreement   to  the   contrary
notwithstanding,  the  Company  may not make a Draw Down to the extent that such

                                       22
<PAGE>
Draw Down  exceeds  9.999% of the then issued and  outstanding  shares of Common
Stock as reported in the Company's  most recent  periodic  report filed with the
Commission.

     4.13 Accuracy of  Registration  Statement.  On each  Settlement  Date,  the
Registration  Statement and the  prospectus  therein  (including  any prospectus
supplement) shall not contain any untrue statement of a material fact or omit to
state any material fact  required to be stated  therein or necessary in order to
make the statements  therein not misleading in light of the circumstances  under
which they were made; and on such Settlement Date the Registration Statement and
the prospectus  therein will not include any untrue statement of a material fact
or omit to state a  material  fact  necessary  in  order to make the  statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading;   provided,   however,  the  Company  makes  no  representations  or
warranties as to the information  contained in or omitted from the  Registration
Statement and the prospectus therein in reliance upon and in conformity with the
information  furnished in writing to the Company by the  Purchaser  specifically
for inclusion in the Registration Statement and the prospectus therein.

     4.14 Notice of Certain Events Affecting  Registration;  Suspension of Right
to Request a Draw Down.  The  Company  will  promptly  notify the  Purchaser  in
writing  upon the  occurrence  of any of the events set forth in Section 3(d) of
the  Registration  Rights  Agreement.  The  Company  shall  not  deliver  to the
Purchaser any Draw Down Notice during the  continuation  of any of the foregoing
events.  The Company  shall  promptly  make  available to the Purchaser any such
supplements  or amendments to the related  prospectus,  at which time,  provided
that the registration  statement and any supplements and amendments  thereto are
then effective, the Company may recommence the delivery of Draw Down Notices.

     4.15 Participation in Future Financing.

     (a) During the Commitment  Period,  upon any issuance by the Company or any
of its  Subsidiaries  of  Common  Stock or  Common  Stock  Equivalents  for cash
consideration (a "Subsequent Financing"),  the Purchaser shall have the right to
participate in up to an amount of the Subsequent  Financing equal to 100% of the
Subsequent Financing (the "Participation Maximum") on the same terms, conditions
and price provided for in the Subsequent Financing.

     (b) At  least  5  Trading  Days  prior  to the  closing  of the  Subsequent
Financing,  the Company shall  deliver to the Purchaser a written  notice of its
intention  to effect a Subsequent  Financing  ("Pre-Notice"),  which  Pre-Notice
shall ask such  Purchaser  if it wants to review the  details of such  financing
(such additional notice, a "Subsequent  Financing Notice").  Upon the request of
the  Purchaser,  and only upon a request  by such  Purchaser,  for a  Subsequent
Financing  Notice,  the Company shall promptly,  but no later than 1 Trading Day
after such request, deliver a Subsequent Financing Notice to such Purchaser. The
Subsequent  Financing  Notice shall  describe in reasonable  detail the proposed
terms of such Subsequent Financing, the amount of proceeds intended to be raised
thereunder  and the  Person or  Persons  through  or with  whom such  Subsequent
Financing is proposed to be effected  and shall  include a term sheet or similar
document relating thereto as an attachment.

                                       23
<PAGE>
     (c) If the Purchaser desires to participate in such Subsequent Financing it
must provide written notice to the Company by not later than 5:30 p.m. (New York
City time) on the 5th Trading Day it receives the Pre-Notice  that the Purchaser
is  willing  to  participate  in the  Subsequent  Financing,  the  amount of the
Purchaser's participation, and that the Purchaser has such funds ready, willing,
and available for investment on the terms set forth in the Subsequent  Financing
Notice.  If the Company  receives no notice  from the  Purchaser  as of such 5th
Trading Day, such Purchaser shall be deemed to have notified the Company that it
does not elect to participate.

     (d) If by 5:30 p.m.  (New York City time) on the 5th  Trading Day after the
Purchaser  has received the  Pre-Notice,  notification  by the  Purchaser of its
willingness  to  participate  in the  Subsequent  Financing  (or to cause  their
designees to  participate)  is, in the aggregate,  less than the total amount of
the Subsequent  Financing,  then the Company may effect the remaining portion of
such  Subsequent  Financing  on the terms and with the  Persons set forth in the
Subsequent Financing Notice.

     (e) The  Company  must  provide  the  Purchaser  with a  second  Subsequent
Financing  Notice,  and the Purchaser will again have the right of participation
set forth above in this Section 4.15, if the Subsequent Financing subject to the
initial  Subsequent  Financing  Notice is not  consummated for any reason on the
terms set forth in such Subsequent Financing Notice within 90 Trading Days after
the date of the initial Subsequent Financing Notice.

     (f)  Notwithstanding  the  foregoing,  this Section 4.15 shall not apply in
respect of (i) an Exempt  Issuance or (ii) an  underwritten  public  offering of
Common Stock.

     4.16 Subsequent Equity Sales.

     (a) From the date hereof until 3 months after the Effective Date and during
the 60 day period  following any Draw Down Pricing  Period,  neither the Company
nor  any  Subsidiary  shall  issue  shares  of  Common  Stock  or  Common  Stock
Equivalents;  provided,  however,  the 3 month  period set forth in this Section
4.16 shall be  extended  for the number of Trading  Days  during  such period in
which (i) trading in the Common  Stock is suspended  by any Trading  Market,  or
(ii) following the Effective Date, the  Registration  Statement is not effective
or the prospectus included in the Registration  Statement may not be used by the
Purchaser for the resale of the Shares and Warrant Shares.

     (b) Until the  expiration of the  Commitment  Period,  the Company shall be
prohibited from effecting or entering into an agreement to effect any Subsequent
Financing  involving a "Variable  Rate  Transaction".  The term  "Variable  Rate
Transaction"  shall mean a transaction  in which the Company issues or sells (i)
any  debt or  equity  securities  that are  convertible  into,  exchangeable  or
exercisable  for,  or include the right to receive  additional  shares of Common
Stock either (A) at a conversion,  exercise or exchange rate or other price that
is based upon and/or  varies with the trading  prices of or  quotations  for the
shares of Common  Stock at any time after the  initial  issuance of such debt or
equity securities, or (B) with a conversion,  exercise or exchange price that is

                                       24
<PAGE>
subject to being reset at some  future  date after the initial  issuance of such
debt or equity security or upon the occurrence of specified or contingent events
directly or indirectly  related to the business of the Company or the market for
the Common Stock or (ii) enters into any agreement,  including,  but not limited
to, an equity  line of credit,  whereby the  Company  may sell  securities  at a
future  determined  price. The Purchaser shall be entitled to obtain  injunctive
relief against the Company to preclude any such issuance,  which remedy shall be
in addition to any right to collect damages.

     (c)  Notwithstanding  the  foregoing,  this Section 4.16 shall not apply in
respect of an Exempt Issuance, except that no Variable Rate Transaction shall be
an Exempt Issuance.

                                   ARTICLE V.
                  CONDITIONS TO INITIAL CLOSING AND DRAW DOWNS

     5.1 Conditions  Precedent to the Obligation of the Company to Sell the Draw
Down Shares.  The  obligation  hereunder of the Company to proceed to close this
Agreement and to issue and sell the Draw Down Shares to the Purchaser is subject
to the satisfaction or waiver, at or before the Initial Closing,  and as of each
Settlement Date of each of the conditions set forth below.  These conditions are
for the  Company's  sole  benefit and may be waived by the Company in writing at
any time in its sole discretion.

     (a)  Accuracy  of  the  Purchaser's  Representations  and  Warranties.  The
representations and warranties of the Purchaser shall be true and correct in all
material  respects as of the date when made and as of the Initial Closing and as
of each Settlement Date as though made at that time (except for  representations
and  warranties  that speak as of a  particular  date,  which  shall be true and
correct in all material respects as of such dates).

     (b)  Performance  by the  Purchaser.  The Purchaser  shall have  performed,
satisfied and complied in all material  respects with all covenants,  agreements
and conditions required by this Agreement to be performed, satisfied or complied
with  by the  Purchaser  at or  prior  to the  Initial  Closing  and as of  each
Settlement Date.

     (c) No Injunction.  No statute, rule, regulation,  executive order, decree,
ruling or injunction shall have been enacted,  entered,  promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this Agreement.

     (d) No  Proceedings  or  Litigation.  No  material  Action  shall have been
commenced against the Purchaser or the Company or any subsidiary,  or any of the
officers,  directors or affiliates of the Company or any subsidiary,  seeking to
restrain,  prevent or change the transactions contemplated by this Agreement, or
seeking damages in connection with such transactions.

     (e) Initial Closing Deliveries.  The delivery by the Purchaser of the items
set forth in Section 2.2(b) of this Agreement.

                                       25
<PAGE>
     (f) The Shares. A registration  statement covering the resale of the Shares
by the Purchaser shall have been declared  effective by the Commission  within 6
months from the date hereof.

     5.2 Conditions  Precedent to the Obligation of the Purchaser to Close.  The
obligation  hereunder  of the  Purchaser to perform its  obligations  under this
Agreement and to purchase the Draw Down Shares is subject to the satisfaction or
waiver,  at or before the Initial  Closing,  of each of the conditions set forth
below.  These  conditions are for the Purchaser's sole benefit and may be waived
by the Purchaser in writing at any time in its sole discretion.

     (a) Accuracy of the Company's  Representations and Warranties.  Each of 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  Initial  Closing  as
though made at that time (except for  representations  and warranties that speak
as of a  particular  date,  which  shall be true  and  correct  in all  material
respects as of such date).

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

     (c) No Injunction.  No statute, rule, regulation,  executive order, decree,
ruling or injunction shall have been enacted,  entered,  promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this Agreement.

     (d) No  Proceedings  or  Litigation.  No  material  Action  shall have been
commenced, against the Purchaser or the Company or any subsidiary, or any of the
officers,  directors or affiliates of the Company or any  subsidiary  seeking to
restrain,  prevent or change the transactions contemplated by this Agreement, or
seeking damages in connection with such transactions.

     (e) Initial  Closing  Deliveries.  The delivery by the Company of the items
set forth in Section 2.2(a) of this Agreement.

     5.3  Conditions  Precedent to the  Obligation  of the Purchaser to Accept a
Draw Down and  Purchase the Draw Down Shares.  The  obligation  hereunder of the
Purchaser to accept a Draw Down request and to acquire and pay for the Draw Down
Shares is subject to the satisfaction at or before each Settlement Date, of each
of the conditions set forth below.

     (a) Satisfaction of Conditions to Initial  Closing.  The Company shall have
satisfied  at the Initial  Closing,  or the  Purchaser  shall have waived at the
Initial Closing, the conditions set forth in Section 5.2 hereof.

     (b) No  Suspension.  Trading  in the  Common  Stock  shall  not  have  been
suspended by the  Commission or the Trading Market (except for any suspension of
trading of limited duration agreed to by the Company,  which suspension shall be
terminated  prior to the  delivery of each Draw Down  Notice),  and, at any time
prior to such Draw Down Notice,  trading in securities  generally as reported on

                                       26
<PAGE>
the Trading Market shall not have been  suspended or limited,  or minimum prices
shall not have been  established on securities  whose trades are reported on the
Trading  Market  unless the general  suspension  or  limitation  shall have been
terminated prior to the delivery of such Draw Down Notice.

     (c) Material Adverse Effect. No Material Adverse Effect has occurred.

     (d) Opinion of Counsel.  The Purchaser  shall have received a  "bring-down"
letter from the Company's  counsel,  confirming that there is no change from the
counsel's  previously  delivered opinion,  or else specifying with particularity
the reason for any change and an opinion as to the additional items specified in
Exhibit D hereto.

     (e) Minimum  Investment  Amount.  The Investment  Amount for the applicable
Draw Down Notice, as permitted pursuant to Section 6.1(c), shall exceed $20,000.
For purposes of  clarification,  if the maximum  Investment Amount as determined
pursuant  to Section  6.1(c) is less than  $20,000,  then the  Company  shall be
precluded from exercising a Draw Down at such time.

     (f) Equity  Conditions.  During the Draw Down  Pricing  Period  through the
Settlement Date, all of the Equity Conditions have been met.

     (g) Prospectus  Supplement.  On the Trading Day that the Company delivers a
Draw Down Notice,  the Company shall have filed with the Commission a prospectus
supplement pursuant to Rule 424 under the Securities Act setting forth the terms
of the Draw Down.

     (h) Involuntary  Suspension  During Draw Down Pricing Period. If during any
Trading Day during the Draw Down Pricing  Period  trading of the Common Stock on
the Trading Market is suspended for more than 3 hours,  in the aggregate,  or if
any Trading Day during the Draw Down Pricing  Period is  shortened  because of a
public holiday.

     (i) Voluntary  Suspension  During Draw Down Pricing  Period.  If during any
Trading  Day  during  the Draw Down  Pricing  Period  sales of Draw Down  Shares
pursuant to the  Registration  Statement  are  suspended by the Company for more
than three (3) hours, in the aggregate.

                                   ARTICLE VI.
                                 DRAW DOWN TERMS

     6.1 Draw Down Terms.  Subject to the  satisfaction  of the  conditions  set
forth in this Agreement, the parties agree as follows:

     (a) The Company may, in its sole discretion,  issue and exercise draw downs
against the Commitment Amount (each a "Draw Down") during the Commitment Period,
which Draw Downs the  Purchaser  shall be  obligated  to accept,  subject to the
terms and conditions  under this Agreement.  Before the Company shall exercise a
Draw Down, the Company shall have caused a sufficient number of shares of Common

                                       27
<PAGE>
Stock to be  registered to cover the Draw Down Shares to be issued in connection
with such Draw Down  (using a good faith  estimate  based on the  recent  market
price of the Common  Stock),  and, on the Trading Day that such request is made,
the  Company  shall have  filed  with the  Commission  a  prospectus  supplement
pursuant to Rule 424 under the  Securities  Act  setting  forth the terms of the
Draw Down.

     (b) Only one Draw Down shall be allowed  in each Draw Down  Pricing  Period
and the  Company  may not  exercise  a Draw Down  until the  applicable  Trading
Cushion has elapsed since the end of the previous Draw Down Pricing Period.

     (c) The Company must inform the Purchaser by delivering a Draw Down notice,
in the form of Exhibit E attached hereto (the "Draw Down Notice"), via facsimile
transmission,  in  accordance  with Section 8.3, as to the dollar  amount of the
Draw Down (the "Investment Amount") the Company wishes to exercise.

     (d) The  maximum  Investment  Amount as to each Draw Down shall be equal to
the lesser of (i) the average daily dollar trading volume of the Common Stock on
the  Trading  Market  during  the  20  Trading  Days  immediately  prior  to the
applicable  Commencement Date and (ii) $200,000.  For purposes of clarification,
such average in clause (i) shall be  determined  by  averaging  the daily dollar
trading volumes for each Trading Day during such period,  not by aggregating the
volume over such period and dividing by 20.

     (e) The number of Draw Down Shares to be issued on a Settlement  Date shall
equal the Investment  Amount  applicable to such  Settlement Date divided by the
lesser of the  Purchase  Price as  calculated  during the  applicable  Draw Down
Pricing Period and, if the  applicable  Draw Down Shares are not delivered on or
before the applicable  Settlement Date, the Purchase Price as calculated  during
the  applicable  Draw Down Pricing  Period,  but assuming such Draw Down Pricing
Period is extended  through the  Trading Day  immediately  prior to the date the
applicable Draw Down Shares are actually delivered to the Purchaser.

     (f) On the Trading Day immediately  following the last day of the Draw Down
Pricing  Period,  the Company  shall  deliver to the Purchaser and the Purchaser
shall  acknowledge  to the  Company  a  settlement  statement  (the  "Settlement
Statement")  setting  forth  the  calculation  of the  Purchase  Price  and  the
Investment Amount as to the applicable Draw Down Pricing Period. The issuance of
the Draw Down Shares as to a Draw Down and the payment of the Investment  Amount
as to a Draw Down shall occur within 1 Trading Day of the end of the  applicable
Draw Down Pricing Period (the "Settlement Date").

     (g) On or before the Settlement Date, the applicable Draw Down Shares shall
be delivered to the Depository  Trust Company  ("DTC") account of the Purchaser,
or its designees,  as designated by the Purchaser in the  Settlement  Statement,
via DTC's Deposit Withdrawal Agent Commission system ("DWAC").  Upon the Company
electronically  delivering  such Draw  Down  Shares  to the DTC  account  of the
Purchaser,  or its designees,  via DWAC by 9:30 a.m. ET, the Purchaser shall, on

                                       28
<PAGE>
the same day (or the next  Business Day if such day is not a Business  Day) wire
transfer  immediately   available  funds  to  the  Company's  bank  account,  as
designated  by the Company in the  Settlement  Statement,  for the amount of the
Investment  Amount of such Draw Down  Shares.  Upon the  Company  electronically
delivering  the  applicable  Draw Down Shares to the Purchaser or its designee's
DTC account via DWAC after 9:30 a.m. ET, the Purchaser  shall wire transfer next
day available funds to the Company's designated account on such day (or the next
Business Day if such day is not a Business Day) for the amount of the Investment
Amount of such Draw Down Shares. In the event that following the Initial Closing
the Company elects to establish an escrow  account  pursuant to a written escrow
agreement for the receipt of the Investment  Amount  payable in connection  with
Draw Downs,  provided the terms and conditions of any such escrow  agreement are
reasonably  acceptable to the Purchaser and the Company  instructs the Purchaser
to pay an applicable  Investment  Amount to such escrow agent when it delivers a
Draw Down  Notice,  the Draw Down Shares shall be credited by the Company to the
DTC account  designated  by the  Purchaser  via DWAC upon receipt by such escrow
agent of  payment  for the Draw Down  Shares  into such  escrow  agent's  escrow
account and notice to the Company thereof.

     (h) The Company  understands  that a delay in the delivery of the Draw Down
Shares into the  Purchaser's DTC account beyond the Settlement Date could result
in  economic  loss  to the  Purchaser.  In  addition  to the  Purchaser's  other
available remedies, the Company shall pay to the Purchaser,  in cash, as partial
liquidated  damages  and not as a penalty,  for each  $1,000 of Draw Down Shares
(based  on the VWAP of the  Common  Stock  on the  applicable  Settlement  Date)
required to be delivered on the Settlement Date, $10 per Trading Day (increasing
to $20 per Trading Day five (5) Trading  Days after such  damages  have begun to
accrue)  for each  Trading  Day after the  Settlement  Date until such Draw Down
Shares are delivered pursuant to this Article VI. Nothing herein shall limit the
Purchaser's  right to pursue actual damages for the Company's failure to deliver
certificates   representing  any  Securities  as  required  by  the  Transaction
Documents,  and the  Purchaser  shall  have the  right to  pursue  all  remedies
available to it at law or in equity including,  without limitation,  a decree of
specific performance and/or injunctive relief.

                                  ARTICLE VII.
                                  TERMINATION

     7.1 Term.  The term of this  Agreement  shall  begin on the date hereof and
shall  end on the  earlier  of (i) 24  months  from  the  Effective  Date  or as
otherwise  set forth in  Section  7.2 and (ii) 36 months  from the date  hereof;
provided,  however,  if the  Purchaser has not honored  three  consecutive  duly
issued Draw Down Notices from the Company in  violation of this  Agreement,  the
Company may terminate  this  Agreement with 90 days prior written notice to such
Purchaser.

     7.2 Other  Termination.  This Agreement  shall  terminate if (i) the Common
Stock  is  de-listed  from the  Trading  Market  unless  such  de-listing  is in
connection with a subsequent listing on another Trading Market, (ii) the Company
files  for  protection  from  creditors  under any  applicable  law or (iii) the

                                       29
<PAGE>
Registration  Statement  is not  declared  effective  by the  Commission  on the
12-month anniversary of the date hereof.

                                  ARTICLE VIII.
                                  MISCELLANEOUS

     8.1 Fees and  Expenses.  The Company has agreed to pay the  non-accountable
sum of $10,000 to the  Purchaser  for its legal fees and expenses in  connection
with the transactions  contemplated hereunder,  all of which has been paid prior
to the date hereof.  Except as expressly set forth in the Transaction  Documents
to the  contrary,  each party shall pay the fees and  expenses of its  advisers,
counsel,  accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation,  preparation, execution, delivery and
performance  of this  Agreement.  The Company shall pay all transfer agent fees,
stamp taxes and other taxes and duties levied in connection with the delivery of
any Securities to the Purchaser.

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

     8.3  Notices.  Any and all notices or other  communications  or  deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of  transmission,  if
such notice or  communication is delivered via facsimile at the facsimile number
set forth on the signature  pages  attached  hereto prior to 5:30 p.m. (New York
City  time)  on a  Trading  Day,  (b) the next  Trading  Day  after  the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day,  (c) the 2nd Trading  Day  following  the date of mailing,  if sent by U.S.
nationally  recognized  overnight courier service, or (d) upon actual receipt by
the party to whom such  notice is  required  to be given.  The  address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

     8.4  Amendments;  Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument  signed, in the case of an amendment,  by
the Company and the Purchaser or, in the case of a waiver,  by the party against
whom  enforcement  of any such  waived  provision  is  sought.  No waiver of any
default  with  respect  to any  provision,  condition  or  requirement  of  this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any  subsequent  default  or a  waiver  of any  other  provision,  condition  or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right.

     8.5  Headings.  The  headings  herein  are  for  convenience  only,  do not
constitute a part of this  Agreement  and shall not be deemed to limit or affect
any of the provisions hereof.

                                       30
<PAGE>
     8.6 Successors and Assigns.  This Agreement shall be binding upon and inure
to the  benefit of the parties and their  successors.  Neither  party may assign
this Agreement or any rights or obligations hereunder (other than by merger).

     8.7 No  Third-Party  Beneficiaries.  This  Agreement  is  intended  for the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.7.

     8.8 Governing  Law. All questions  concerning the  construction,  validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance  with the internal laws of the State of
New York,  without  regard to the  principles of conflicts of law thereof.  Each
party  agrees  that  all  legal  proceedings   concerning  the  interpretations,
enforcement and defense of the  transactions  contemplated by this Agreement and
any other Transaction  Documents  (whether brought against a party hereto or its
respective affiliates,  directors, officers, shareholders,  employees or agents)
shall be commenced  exclusively  in the state and federal  courts sitting in the
City of New  York.  Each  party  hereby  irrevocably  submits  to the  exclusive
jurisdiction  of the state and federal  courts  sitting in the City of New York,
borough  of  Manhattan  for the  adjudication  of any  dispute  hereunder  or in
connection  herewith or with any  transaction  contemplated  hereby or discussed
herein  (including  with respect to the  enforcement  of any of the  Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action  or  proceeding,  any  claim  that it is not  personally  subject  to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient  venue for such proceeding.  Each party hereby irrevocably
waives  personal  service of process and consents to process being served in any
such suit,  action or  proceeding  by mailing a copy thereof via  registered  or
certified  mail or overnight  delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this  Agreement and agrees that
such service shall constitute good and sufficient  service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner  permitted by law. The parties hereby waive
all  rights to a trial by jury.  If either  party  shall  commence  an action or
proceeding to enforce any  provisions  of the  Transaction  Documents,  then the
prevailing  party in such action or proceeding  shall be reimbursed by the other
party for its reasonable  attorneys' fees and other costs and expenses  incurred
with  the   investigation,   preparation  and  prosecution  of  such  action  or
proceeding.

     8.9 Survival.  The  representations  and warranties  contained herein shall
survive  the Closing and the  delivery of the Draw Down  Shares,  the Shares and
Warrant Shares.

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

                                       31
<PAGE>
     8.11 Severability.  If any term, provision, covenant or restriction of this
Agreement is held by a court of competent  jurisdiction to be invalid,  illegal,
void or  unenforceable,  the remainder of the terms,  provisions,  covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected,  impaired or  invalidated,  and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially  the same result as that  contemplated by such
term, provision,  covenant or restriction.  It is hereby stipulated and declared
to be the  intention of the parties that they would have  executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

     8.12 Replacement of Securities. If any certificate or instrument evidencing
any Securities is mutilated,  lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange  and  substitution  for and upon  cancellation
thereof (in the case of mutilation),  or in lieu of and substitution therefor, a
new  certificate  or  instrument,  but only upon receipt of evidence  reasonably
satisfactory to the Company of such loss,  theft or  destruction.  The applicant
for a new certificate or instrument under such circumstances  shall also pay any
reasonable third-party costs (including customary indemnity) associated with the
issuance of such replacement Securities.

     8.13  Remedies.  In  addition  to being  entitled  to  exercise  all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Purchaser  and the Company  will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that  monetary  damages  may not be
adequate  compensation  for  any  loss  incurred  by  reason  of any  breach  of
obligations  contained in the  Transaction  Documents and hereby agrees to waive
and not to assert in any action for specific  performance of any such obligation
the defense that a remedy at law would be adequate.

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

     8.15  Construction.  The  parties  agree  that  each of them  and/or  their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved  against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.

                            (Signature Pages Follow)

                                       32
<PAGE>
     IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed b their  respective  authorized  signatories as of
the date first indicated above.

EASY ENERGY                                    Address of Notice:


By: /s/ GUY OFIR
   -----------------------
Name:  Guy Ofir
Title: President

With a copy to (shall not constitute notice)


                   [REMINDER OF PAGE INTENTIONALLY LEFT BLANK

                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

                                       33
<PAGE>
       [PURCHASER SIGNATURE PAGES TO ESYE SECURITIES PURCHASE AGREEMENT}:

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

Name of Purchaser: Tailor-Made Capital Ltd.

Signature of Authorized Signatory of Holder: /s/ TAILOR-MADE CAPITAL LTD
Name of Authorized Signatory: /s/ YONATAN MALCA  /s/ITZIK SHENIDORSKY
Title of Authorized Signatory: _____________________________.
Email Address of Purchaser: liorosta@meitav.co.il.
Fax Number of Purchaser: +972-3-7778201
Address for Notice of Purchaser: 4 Berkowitz St., Tel Aviv 61880, Israel.

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

Commitment amount: $1,000,000.
Shares: 882,353
Warrants: 3,000,000.

                            [SIGNATURE PAGE CONTINUE]

                                       34
<PAGE>
                                                                       EXHIBIT C

NEITHER THIS SECURITY NOR THE  SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE
HAVE  BEEN  REGISTERED  WITH  THE  SECURITIES  AND  EXCHANGE  COMMISSION  OR THE
SECURITIES   COMMISSION  OF  ANY  STATE  IN  RELIANCE  UPON  AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES  LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH  EFFECT,  THE  SUBSTANCE  OF WHICH SHALL BE  REASONABLY  ACCEPTABLE  TO THE
COMPANY.  THIS  SECURITY  AND THE  SECURITIES  ISSUABLE  UPON  EXERCISE  OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION  WITH A BONA FIDE MARGIN  ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

                          COMMON STOCK PURCHASE WARRANT

                                EASY ENERGY, INC.

Warrant Shares: [_______                   Initial Exercise Date: March __, 2008

     THIS COMMON STOCK  PURCHASE  WARRANT (the  "WARRANT")  certifies  that, for
value  received,  _____________  (the "HOLDER") is entitled,  upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after March ___, 2013 (the "INITIAL  EXERCISE DATE") and on or
prior to the close of  business  on the five  year  anniversary  of the  Initial
Exercise Date (the "TERMINATION DATE") but not thereafter,  to subscribe for and
purchase from Easy Energy,  Inc., a Nevada  corporation (the  "COMPANY"),  up to
______ shares (the "WARRANT  SHARES") of Common Stock. The purchase price of one
share of Common Stock under this Warrant  shall be equal to the Exercise  Price,
as defined in Section 2(b).

     SECTION 1.  DEFINITIONS.  Capitalized  terms used and not otherwise defined
herein shall have the meanings  set forth in that  certain  Securities  Purchase
Agreement (the "PURCHASE  AGREEMENT"),  dated March __, 2008,  among the Company
and the purchasers signatory thereto.

     SECTION 2. EXERCISE.

     a) EXERCISE OF WARRANT. Exercise of the purchase rights represented by this
Warrant may be made,  in whole or in part,  at any time or times on or after the
Initial  Exercise Date and on or before the Termination  Date by delivery to the
Company of a duly executed facsimile copy of the Notice of Exercise Form annexed
hereto (or such other  office or agency of the  Company as it may  designate  by
notice  in  writing  to the  registered  Holder  at the  address  of the  Holder

                                       1
<PAGE>
appearing on the books of the Company);  and,  within 3 Trading Days of the date
said Notice of Exercise is  delivered  to the  Company,  the Company  shall have
received payment of the aggregate Exercise Price of the shares thereby purchased
by  wire   transfer  or  cashier's   check  drawn  on  a  United   States  bank.
Notwithstanding  anything  herein  to the  contrary,  the  Holder  shall  not be
required to  physically  surrender  this Warrant to the Company until the Holder
has purchased all of the Warrant Shares available  hereunder and the Warrant has
been exercised in full, in which case,  the Holder shall  surrender this Warrant
to the  Company  for  cancellation  within 3 Trading  Days of the date the final
Notice of  Exercise is  delivered  to the  Company.  Partial  exercises  of this
Warrant  resulting  in  purchases  of a portion  of the total  number of Warrant
Shares  available  hereunder  shall have the effect of lowering the  outstanding
number  of  Warrant  Shares  purchasable  hereunder  in an  amount  equal to the
applicable number of Warrant Shares purchased.  The Holder and the Company shall
maintain  records showing the number of Warrant Shares purchased and the date of
such  purchases.  The  Company  shall  deliver  any  objection  to any Notice of
Exercise  Form within 1 Business Day of receipt of such notice.  In the event of
any dispute or  discrepancy,  the records of the Holder shall be controlling and
determinative in the absence of manifest error. THE HOLDER AND ANY ASSIGNEE,  BY
ACCEPTANCE  OF THIS  WARRANT,  ACKNOWLEDGE  AND  AGREE  THAT,  BY  REASON OF THE
PROVISIONS OF THIS PARAGRAPH, FOLLOWING THE PURCHASE OF A PORTION OF THE WARRANT
SHARES HEREUNDER,  THE NUMBER OF WARRANT SHARES AVAILABLE FOR PURCHASE HEREUNDER
AT ANY GIVEN TIME MAY BE LESS THAN THE AMOUNT STATED ON THE FACE HEREOF.

     b) EXERCISE  PRICE.  The exercise price per share of the Common Stock under
this Warrant shall be $0.27,  subject to  adjustment  hereunder  (the  "EXERCISE
PRICE").

     c)  CASHLESS  EXERCISE.  If  at  any  time  after  the  completion  of  the
then-applicable  holding period required by Rule 144, or any successor provision
then in effect,  which  would  allow  "tacking"  of the  holding  period of this
Warrant and the Warrant Shares pursuant to the SEC Manual of Publicly  Available
Telephone  Interpretations  or other  Commission  rule or guidance,  there is no
effective Registration Statement registering, or no current prospectus available
for,  the  resale  of the  Warrant  Shares  by the  Holder  at a time  when such
Registration  Statement is required to be effective pursuant to the Registration
Rights Agreement,  then this Warrant may also be exercised at such time by means
of a  "cashless  exercise"  in which the Holder  shall be  entitled to receive a
certificate  for the number of Warrant Shares equal to the quotient  obtained by
dividing [(A-B) (X)] by (A), where:

     (A) = the VWAP on the Trading Day  immediately  preceding the date of such
           election;

     (B) = the Exercise Price of this Warrant, as adjusted; and

     (X) = the number of Warrant Shares  issuable upon exercise of this Warrant
           in  accordance  with  the  terms of this  Warrant  by means of a cash
           exercise rather than a cashless exercise.

                                       2
<PAGE>
     Notwithstanding  anything herein to the contrary,  on the Termination Date,
this Warrant shall be automatically  exercised via cashless exercise pursuant to
this Section 2(c).

     d) HOLDER'S RESTRICTIONS. The Company shall not effect any exercise of this
Warrant,  and a Holder  shall not have the right to exercise any portion of this
Warrant,  pursuant to Section 2 or  otherwise,  to the extent that after  giving
effect to such issuance after exercise as set forth on the applicable  Notice of
Exercise,  the Holder  (together  with the  Holder's  Affiliates,  and any other
person  or  entity  acting  as a group  together  with the  Holder or any of the
Holder's  Affiliates),  would  beneficially  own in  excess  of  the  Beneficial
Ownership Limitation (as defined below). For purposes of the foregoing sentence,
the number of shares of Common  Stock  beneficially  owned by the Holder and its
Affiliates  shall  include the number of shares of Common  Stock  issuable  upon
exercise of this Warrant with respect to which such determination is being made,
but shall  exclude the number of shares of Common  Stock which would be issuable
upon  (A)  exercise  of the  remaining,  nonexercised  portion  of this  Warrant
beneficially  owned by the Holder or any of its  Affiliates  and (B) exercise or
conversion of the unexercised or nonconverted portion of any other securities of
the Company (including,  without limitation, any other Common Stock Equivalents)
subject to a limitation on conversion  or exercise  analogous to the  limitation
contained  herein  beneficially  owned by the  Holder or any of its  affiliates.
Except as set forth in the  preceding  sentence,  for  purposes of this  Section
2(d)(i),  beneficial  ownership  shall be calculated in accordance  with Section
13(d) of the Exchange Act and the rules and regulations  promulgated thereunder,
it being  acknowledged by the Holder that the Company is not representing to the
Holder that such calculation is in compliance with Section 13(d) of the Exchange
Act and the Holder is solely  responsible for any schedules required to be filed
in accordance  therewith.  To the extent that the  limitation  contained in this
Section  2(d)(i)  applies,   the   determination  of  whether  this  Warrant  is
exercisable (in relation to other  securities  owned by the Holder together with
any Affiliates) and of which portion of this Warrant is exercisable  shall be in
the sole  discretion of the Holder,  and the  submission of a Notice of Exercise
shall be deemed to be the  Holder's  determination  of whether  this  Warrant is
exercisable (in relation to other  securities  owned by the Holder together with
any  Affiliates)  and of which portion of this Warrant is  exercisable,  in each
case subject to the Beneficial Ownership Limitation,  and the Company shall have
no  obligation  to verify or confirm  the  accuracy  of such  determination.  In
addition,  a determination as to any group status as contemplated above shall be
determined  in  accordance  with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. For purposes of this Section 2(d)(i), in
determining the number of outstanding  shares of Common Stock, a Holder may rely
on the number of  outstanding  shares of Common  Stock as  reflected  in (x) the
Company's most recent Form 10-Q (or10-QSB) or Form 10-K (or 10-KSB), as the case
may be, (y) a more recent  public  announcement  by the Company or (z) any other
notice by the Company or the Company's  Transfer  Agent setting forth the number
of shares of Common  Stock  outstanding.  Upon the written or oral  request of a
Holder,  the Company shall within two Trading Days confirm orally and in writing
to the  Holder the number of shares of Common  Stock  then  outstanding.  In any
case, the number of outstanding shares of Common Stock shall be determined after

                                       3
<PAGE>
giving  effect to the  conversion  or exercise  of  securities  of the  Company,
including  this Warrant,  by the Holder or its  Affiliates  since the date as of
which  such  number of  outstanding  shares of Common  Stock was  reported.  The
"BENEFICIAL  OWNERSHIP LIMITATION" shall be 4.99% of the number of shares of the
Common Stock  outstanding  immediately  after  giving  effect to the issuance of
shares of Common Stock  issuable upon exercise of this Warrant.  The  Beneficial
Ownership  Limitation  provisions  of this Section  2(d)(i) may be waived by the
Holder, at the election of the Holder,  upon not less than 61 days' prior notice
to the Company to change the  Beneficial  Ownership  Limitation  to 9.99% of the
number of shares of the Common Stock outstanding immediately after giving effect
to the issuance of shares of Common Stock upon exercise of this Warrant, and the
provisions of this Section  2(d)(i) shall continue to apply.  Upon such a change
by a Holder of the Beneficial Ownership Limitation from such 4.99% limitation to
such 9.99% limitation,  the Beneficial  Ownership  Limitation may not be further
waived by the Holder.  The provisions of this  paragraph  shall be construed and
implemented in a manner  otherwise than in strict  conformity  with the terms of
this Section 2(d)(i) to correct this paragraph (or any portion hereof) which may
be defective or inconsistent with the intended Beneficial  Ownership  Limitation
herein  contained  or to make changes or  supplements  necessary or desirable to
properly  give effect to such  limitation.  The  limitations  contained  in this
paragraph shall apply to a successor holder of this Warrant.

     e) MECHANICS OF EXERCISE.

     i.  DELIVERY  OF  CERTIFICATES  UPON  EXERCISE.   Certificates  for  shares
purchased hereunder shall be transmitted by the transfer agent of the Company to
the Holder by  crediting  the  account of the  Holder's  prime  broker  with the
Depository  Trust  Company  through  its  Deposit  Withdrawal  Agent  Commission
("DWAC")  system if the Company is a participant  in such system and there is an
effective  Registration Statement permitting the resale of the Warrant Shares by
the Holder,  and otherwise by physical  delivery to the address specified by the
Holder in the Notice of Exercise  within 3 Trading Days from the delivery to the
Company of the Notice of Exercise Form,  surrender of this Warrant (if required)
and payment of the aggregate  Exercise Price as set forth above  ("WARRANT SHARE
DELIVERY DATE"). This Warrant shall be deemed to have been exercised on the date
the  Exercise  Price is received by the  Company.  The Warrant  Shares  shall be
deemed to have been issued,  and Holder or any other person so  designated to be
named  therein  shall be deemed to have become a holder of record of such shares
for all  purposes,  as of the date the Warrant has been  exercised by payment to
the Company of the Exercise  Price (or by cashless  exercise,  if permitted) and
all  taxes  required  to be paid by the  Holder,  if any,  pursuant  to  Section
2(e)(vi)  prior to the issuance of such shares,  have been paid.  If the Company
fails for any  reason to  deliver  to the  Holder  certificates  evidencing  the
Warrant  Shares  subject to a Notice of Exercise by the Warrant  Share  Delivery
Date,  the Company shall pay to the Holder,  in cash, as liquidated  damages and
not as a penalty,  for each $1,000 of Warrant  Shares  subject to such  exercise
(based on the VWAP of the Common Stock on the date of the  applicable  Notice of

                                       4
<PAGE>
Exercise),  $10 per Trading Day  (increasing to $20 per Trading Day on the fifth
Trading Day after such liquidated  damages begin to accrue) for each Trading Day
after such Warrant Share Delivery Date until such certificates are delivered.

     ii. DELIVERY OF NEW WARRANTS UPON EXERCISE. If this Warrant shall have been
exercised  in part,  the  Company  shall,  at the  request  of a Holder and upon
surrender  of  this  Warrant  certificate,  at  the  time  of  delivery  of  the
certificate or certificates representing Warrant Shares, deliver to Holder a new
Warrant  evidencing  the rights of Holder to purchase  the  unpurchased  Warrant
Shares called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant.

     iii. RESCISSION RIGHTS. If the Company fails to cause its transfer agent to
transmit to the Holder a certificate or  certificates  representing  the Warrant
Shares pursuant to this Section 2(e)(i) by the Warrant Share Delivery Date, then
the Holder will have the right to rescind such exercise.

     iv. COMPENSATION FOR BUY-IN ON FAILURE TO TIMELY DELIVER  CERTIFICATES UPON
EXERCISE.  In  addition to any other  rights  available  to the  Holder,  if the
Company  fails  to  cause  its  transfer  agent  to  transmit  to the  Holder  a
certificate  or  certificates  representing  the Warrant  Shares  pursuant to an
exercise on or before the Warrant Share  Delivery  Date,  and if after such date
the Holder is required by its broker to purchase (in an open market  transaction
or otherwise) or the Holder's  brokerage  firm  otherwise  purchases,  shares of
Common Stock to deliver in  satisfaction  of a sale by the Holder of the Warrant
Shares which the Holder  anticipated  receiving upon such exercise (a "BUY-IN"),
then the Company shall (1) pay in cash to the Holder the amount by which (x) the
Holder's total purchase price (including brokerage commissions,  if any) for the
shares  of  Common  Stock  so  purchased  exceeds  (y) the  amount  obtained  by
multiplying  (A) the number of Warrant  Shares that the Company was  required to
deliver to the Holder in  connection  with the  exercise  at issue times (B) the
price at which  the sell  order  giving  rise to such  purchase  obligation  was
executed,  and (2) at the option of the Holder,  either reinstate the portion of
the Warrant and equivalent  number of Warrant Shares for which such exercise was
not  honored or deliver to the Holder the number of shares of Common  Stock that
would have been issued had the Company  timely  complied  with its  exercise and
delivery  obligations  hereunder.  For example,  if the Holder  purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted  exercise of shares of Common  Stock with an  aggregate  sale price
giving rise to such  purchase  obligation  of $10,000,  under  clause (1) of the
immediately  preceding  sentence the Company shall be required to pay the Holder
$1,000.  The Holder shall  provide the Company  written  notice  indicating  the
amounts  payable to the Holder in respect of the Buy-In and, upon request of the

                                       5
<PAGE>
Company,  evidence  of the amount of such loss.  Nothing  herein  shall  limit a
Holder's right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive  relief  with  respect to the  Company's  failure  to timely  deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.

     v.  NO  FRACTIONAL   SHARES  OR  SCRIP.  No  fractional   shares  or  scrip
representing  fractional  shares  shall  be  issued  upon the  exercise  of this
Warrant.  As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall at its election,  either pay a
cash  adjustment  in respect of such final  fraction in an amount  equal to such
fraction multiplied by the Exercise Price or round up to the next whole share.

     vi.  CHARGES,  TAXES AND  EXPENSES.  Issuance of  certificates  for Warrant
Shares shall be made without  charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such certificate,  all
of which taxes and expenses shall be paid by the Company,  and such certificates
shall be  issued  in the name of the  Holder  or in such name or names as may be
directed by the Holder;  PROVIDED,  however,  that in the event certificates for
Warrant  Shares are to be issued in a name  other  than the name of the  Holder,
this  Warrant  when  surrendered  for  exercise  shall  be  accompanied  by  the
Assignment Form attached hereto duly executed by the Holder; and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.

     vii. CLOSING OF BOOKS. The Company will not close its stockholder  books or
records in any  manner  which  prevents  the timely  exercise  of this  Warrant,
pursuant to the terms hereof.

     SECTION 3. CERTAIN ADJUSTMENTS.

     a) STOCK  DIVIDENDS  AND  SPLITS.  If the  Company,  at any time while this
Warrant  is  outstanding:  (A)  pays  a  stock  dividend  or  otherwise  make  a
distribution or  distributions on shares of its Common Stock or any other equity
or equity equivalent  securities  payable in shares of Common Stock (which,  for
avoidance  of doubt,  shall not include any shares of Common Stock issued by the
Company upon exercise of this  Warrant),  (B) subdivides  outstanding  shares of
Common Stock into a larger number of shares,  (C) combines  (including by way of
reverse stock split) outstanding shares of Common Stock into a smaller number of
shares,  or (D) issues by  reclassification  of shares of the  Common  Stock any
shares of capital  stock of the Company,  then in each case the  Exercise  Price
shall be multiplied by a fraction of which the numerator  shall be the number of
shares  of  Common  Stock  (excluding   treasury  shares,  if  any)  outstanding
immediately  before such event and of which the denominator  shall be the number

                                       6
<PAGE>
of shares of Common  Stock  outstanding  immediately  after  such  event and the
number of shares issuable upon exercise of this Warrant shall be proportionately
adjusted  such that the  aggregate  Exercise  Price of this Warrant shall remain
unchanged.  Any  adjustment  made  pursuant to this  Section  3(a) shall  become
effective   immediately   after  the  record  date  for  the   determination  of
stockholders  entitled to receive such dividend or distribution and shall become
effective  immediately  after the effective  date in the case of a  subdivision,
combination or re-classification.

     b) SUBSEQUENT  EQUITY SALES. If the Company or any Subsidiary  thereof,  as
applicable,  at any time while this Warrant is outstanding,  shall sell or grant
any option to  purchase,  or sell or grant any right to  reprice,  or  otherwise
dispose  of or issue  (or  announce  any  offer,  sale,  grant or any  option to
purchase or other  disposition)  any Common  Stock or Common  Stock  Equivalents
entitling any Person to acquire  shares of Common Stock,  at an effective  price
per share less than the then Exercise  Price (such lower price,  the "BASE SHARE
PRICE" and such issuances collectively, a "DILUTIVE ISSUANCE") (if the holder of
the  Common  Stock or Common  Stock  Equivalents  so  issued  shall at any time,
whether by operation of purchase price adjustments,  reset provisions,  floating
conversion,  exercise  or  exchange  prices or  otherwise,  or due to  warrants,
options or rights per share which are issued in connection  with such  issuance,
be entitled to receive  shares of Common Stock at an  effective  price per share
which is less than the Exercise  Price,  such  issuance  shall be deemed to have
occurred  for  less  than  the  Exercise  Price  on such  date  of the  Dilutive
Issuance),  then the  Exercise  Price shall be reduced and only reduced to equal
the Base Share Price and the number of Warrant Shares  issuable  hereunder shall
be increased  such that the aggregate  Exercise Price payable  hereunder,  after
taking into account the decrease in the  Exercise  Price,  shall be equal to the
aggregate Exercise Price prior to such adjustment. Such adjustment shall be made
whenever   such  Common   Stock  or  Common   Stock   Equivalents   are  issued.
Notwithstanding  the  foregoing,  no adjustments  shall be made,  paid or issued
under this  Section  3(b) in respect of an Exempt  Issuance.  The Company  shall
notify the  Holder in  writing,  no later than the  Trading  Day  following  the
issuance of any Common Stock or Common Stock Equivalents subject to this Section
3(b),  indicating  therein the applicable  issuance price,  or applicable  reset
price, exchange price, conversion price and other pricing terms (such notice the
"DILUTIVE ISSUANCE NOTICE").  For purposes of clarification,  whether or not the
Company provides a Dilutive  Issuance Notice pursuant to this Section 3(b), upon
the  occurrence  of any  Dilutive  Issuance,  after  the  date of such  Dilutive
Issuance the Holder is entitled to receive a number of Warrant Shares based upon
the Base Share Price regardless of whether the Holder  accurately  refers to the
Base Share Price in the Notice of Exercise.

     c)  SUBSEQUENT  RIGHTS  OFFERINGS.  If the  Company,  at any time while the
Warrant is outstanding,  shall issue rights,  options or warrants to all holders
of Common Stock (and not to Holders) entitling them to subscribe for or purchase
shares of Common  Stock at a price  per share  less than the VWAP at the  record
date mentioned below, then the Exercise Price shall be multiplied by a fraction,
of which the  denominator  shall be the  number of  shares of the  Common  Stock
outstanding  on the date of issuance of such rights or warrants  plus the number
of additional  shares of Common Stock offered for subscription or purchase,  and
of which  the  numerator  shall be the  number of  shares  of the  Common  Stock

                                       7
<PAGE>
outstanding  on the date of issuance of such rights or warrants  plus the number
of shares which the  aggregate  offering  price of the total number of shares so
offered (assuming  receipt by the Company in full of all  consideration  payable
upon exercise of such rights,  options or warrants) would purchase at such VWAP.
Such adjustment  shall be made whenever such rights or warrants are issued,  and
shall become effective  immediately  after the record date for the determination
of stockholders entitled to receive such rights, options or warrants.

     d) PRO RATA  DISTRIBUTIONS.  If the Company, at any time while this Warrant
is  outstanding,  shall  distribute  to all holders of Common  Stock (and not to
Holders of the Warrants) evidences of its indebtedness or assets (including cash
and cash  dividends)  or rights or warrants  to  subscribe  for or purchase  any
security  other than the Common Stock (which shall be subject to Section  3(b)),
then in each such case the Exercise Price shall be adjusted by  multiplying  the
Exercise  Price  in  effect  immediately  prior to the  record  date  fixed  for
determination  of  stockholders  entitled  to  receive  such  distribution  by a
fraction of which the denominator  shall be the VWAP determined as of the record
date  mentioned  above,  and of which the  numerator  shall be such VWAP on such
record date less the then per share fair market value at such record date of the
portion of such assets or evidence of indebtedness so distributed  applicable to
one  outstanding  share  of the  Common  Stock  as  determined  by the  Board of
Directors in good faith. In either case the adjustments  shall be described in a
statement  provided  to the  Holder of the  portion  of assets or  evidences  of
indebtedness so distributed or such subscription  rights applicable to one share
of Common Stock. Such adjustment shall be made whenever any such distribution is
made and shall  become  effective  immediately  after the record date  mentioned
above.

     e)  FUNDAMENTAL  TRANSACTION.  If,  at  any  time  while  this  Warrant  is
outstanding,  (A) the Company effects any merger or consolidation of the Company
with  or into  another  Person,  (B)  the  Company  effects  any  sale of all or
substantially all of its assets in one or a series of related transactions,  (C)
any tender offer or exchange offer (whether by the Company or another Person) is
completed  pursuant to which  holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (D) the Company
effects  any  reclassification  of the  Common  Stock  or any  compulsory  share
exchange  pursuant to which the Common Stock is  effectively  converted  into or
exchanged   for  other   securities,   cash  or  property   (each   "FUNDAMENTAL
TRANSACTION"),  then, upon any subsequent  exercise of this Warrant,  the Holder
shall have the right to  receive,  for each  Warrant  Share that would have been
issuable  upon  such  exercise  immediately  prior  to the  occurrence  of  such
Fundamental  Transaction,  the number of shares of Common Stock of the successor
or acquiring corporation or of the Company, if it is the surviving  corporation,
and any additional consideration (the "ALTERNATE CONSIDERATION") receivable as a
result of such merger, consolidation or disposition of assets by a holder of the
number of  shares  of  Common  Stock  for  which  this  Warrant  is  exercisable
immediately  prior  to such  event.  For  purposes  of any  such  exercise,  the
determination of the Exercise Price shall be appropriately  adjusted to apply to
such  Alternate  Consideration  based on the amount of  Alternate  Consideration
issuable  in  respect  of  one  share  of  Common  Stock  in  such   Fundamental
Transaction,  and the  Company  shall  apportion  the  Exercise  Price among the
Alternate  Consideration in a reasonable manner reflecting the relative value of

                                       8
<PAGE>
any different  components of the Alternate  Consideration.  If holders of Common
Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction,  then the Holder shall be given the same choice as
to the  Alternate  Consideration  it receives  upon any exercise of this Warrant
following such  Fundamental  Transaction.  To the extent necessary to effectuate
the foregoing  provisions,  any successor to the Company or surviving  entity in
such Fundamental  Transaction shall issue to the Holder a new warrant consistent
with the foregoing provisions and evidencing the Holder's right to exercise such
warrant into  Alternate  Consideration.  The terms of any agreement  pursuant to
which a Fundamental  Transaction is effected  shall include terms  requiring any
such successor or surviving entity to comply with the provisions of this Section
3(e) and insuring that this Warrant (or any such  replacement  security) will be
similarly  adjusted upon any subsequent  transaction  analogous to a Fundamental
Transaction.  Notwithstanding  anything  to  the  contrary,  in the  event  of a
Fundamental  Transaction that is (1) an all cash transaction,  (2) a "Rule 13e-3
transaction" as defined in Rule 13e-3 under the Securities Exchange Act of 1934,
as amended,  or (3) a Fundamental  Transaction  involving a person or entity not
traded on a national securities  exchange,  the Nasdaq Global Select Market, the
Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any successor
entity shall pay at the Holder's  option,  exercisable at any time  concurrently
with or within 30 days after the consummation of the Fundamental Transaction, an
amount of cash equal to the value of this Warrant as  determined  in  accordance
with the Black Scholes  Option  Pricing Model obtained from the "OV" function on
Bloomberg  L.P. using (i) a price per share of Common Stock equal to the VWAP of
the  Common  Stock  for  the  Trading  Day  immediately  preceding  the  date of
consummation  of  the  applicable  Fundamental  Transaction,  (ii)  a  risk-free
interest rate  corresponding to the U.S. Treasury rate for a period equal to the
remaining term of this Warrant as of the date of  consummation of the applicable
Fundamental  Transaction and (iii) an expected  volatility  equal to the 100 day
volatility  obtained from the "HVT" function on Bloomberg L.P.  determined as of
the Trading Day immediately  following the public announcement of the applicable
Fundamental Transaction.

     f) CALCULATIONS. All calculations under this Section 3 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this  Section 3, the number of shares of Common Stock deemed to be issued and
outstanding  as of a given  date  shall be the sum of the  number  of  shares of
Common Stock (excluding treasury shares, if any) issued and outstanding.

     g) VOLUNTARY  ADJUSTMENT BY COMPANY. The Company may at any time during the
term of this Warrant  reduce the then current  Exercise  Price to any amount and
for any  period of time  deemed  appropriate  by the Board of  Directors  of the
Company.

     h) NOTICE TO HOLDER.

     i.  ADJUSTMENT TO EXERCISE  PRICE.  Whenever the Exercise Price is adjusted
pursuant to any provision of this Section 3, the Company shall  promptly mail to
the Holder a notice setting forth the Exercise  Price after such  adjustment and
setting forth a brief statement of the facts requiring such  adjustment.  If the
Company  enters into a Variable  Rate  Transaction  (as defined in the  Purchase

                                       9
<PAGE>
Agreement),  despite the  prohibition  thereon in the  Purchase  Agreement,  the
Company shall be deemed to have issued Common Stock or Common Stock  Equivalents
at the lowest possible conversion or exercise price at which such securities may
be converted or exercised.

     ii. NOTICE TO ALLOW EXERCISE BY HOLDER.  If (A) the Company shall declare a
dividend (or any other  distribution in whatever form) on the Common Stock;  (B)
the  Company  shall  declare  a  special  nonrecurring  cash  dividend  on  or a
redemption of the Common Stock;  (C) the Company shall authorize the granting to
all holders of the Common Stock rights or warrants to subscribe  for or purchase
any shares of capital  stock of any class or of any rights;  (D) the approval of
any  stockholders  of the  Company  shall be  required  in  connection  with any
reclassification  of the Common Stock, any  consolidation or merger to which the
Company is a party,  any sale or  transfer  of all or  substantially  all of the
assets of the Company, of any compulsory share exchange whereby the Common Stock
is converted  into other  securities,  cash or property;  (E) the Company  shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company;  then,  in each case,  the Company shall cause to be
mailed to the Holder at its last  address as it shall  appear  upon the  Warrant
Register  of the  Company,  at least 20  calendar  days prior to the  applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the  purpose of such  dividend,  distribution,
redemption,  rights or warrants,  or if a record is not to be taken, the date as
of which the  holders  of the  Common  Stock of record  to be  entitled  to such
dividend, distributions,  redemption, rights or warrants are to be determined or
(y) the  date on  which  such  reclassification,  consolidation,  merger,  sale,
transfer or share  exchange is expected to become  effective  or close,  and the
date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or
other property deliverable upon such  reclassification,  consolidation,  merger,
sale, transfer or share exchange;  provided that the failure to mail such notice
or any defect therein or in the mailing thereof shall not affect the validity of
the  corporate  action  required to be specified  in such notice.  The Holder is
entitled to exercise  this Warrant  during the period  commencing on the date of
such notice to the effective date of the event triggering such notice.

     SECTION 4. TRANSFER OF WARRANT.

     a)  TRANSFERABILITY.  Subject to compliance with any applicable  securities
laws and the  conditions  set forth in Section 4(d) hereof and to the provisions
of Section 4.1 of the Purchase Agreement,  this Warrant and all rights hereunder
(including,  without limitation,  any registration rights) are transferable,  in
whole or in part, upon surrender of this Warrant at the principal  office of the
Company or its  designated  agent,  together  with a written  assignment of this

                                       10
<PAGE>
Warrant substantially in the form attached hereto duly executed by the Holder or
its agent or attorney and funds  sufficient  to pay any transfer  taxes  payable
upon the making of such transfer.  Upon such  surrender  and, if required,  such
payment,  the Company shall execute and deliver a new Warrant or Warrants in the
name of the  assignee or  assignees  and in the  denomination  or  denominations
specified in such  instrument of  assignment,  and shall issue to the assignor a
new Warrant  evidencing  the portion of this Warrant not so  assigned,  and this
Warrant shall promptly be cancelled.  A Warrant,  if properly  assigned,  may be
exercised by a new holder for the purchase of Warrant  Shares  without  having a
new Warrant issued.

     b) NEW  WARRANTS.  This  Warrant  may be  divided  or  combined  with other
Warrants  upon  presentation  hereof at the  aforesaid  office  of the  Company,
together with a written notice  specifying the names and  denominations in which
new  Warrants  are to be issued,  signed by the Holder or its agent or attorney.
Subject  to  compliance  with  Section  4(a),  as to any  transfer  which may be
involved in such division or combination,  the Company shall execute and deliver
a new Warrant or Warrants in exchange  for the Warrant or Warrants to be divided
or combined in accordance with such notice.  All Warrants issued on transfers or
exchanges  shall be dated the original  Issue Date and shall be  identical  with
this  Warrant  except  as to the  number of  Warrant  Shares  issuable  pursuant
thereto.

     c) WARRANT REGISTER.  The Company shall register this Warrant, upon records
to be maintained by the Company for that purpose (the  "WARRANT  REGISTER"),  in
the name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any  distribution  to the Holder,  and for all
other purposes, absent actual notice to the contrary.

     d) TRANSFER RESTRICTIONS.  If, at the time of the surrender of this Warrant
in connection  with any transfer of this  Warrant,  the transfer of this Warrant
shall not be registered  pursuant to an effective  registration  statement under
the Securities Act and under  applicable  state securities or blue sky laws, the
Company may  require,  as a condition  of allowing  such  transfer  (i) that the
Holder or transferee of this Warrant, as the case may be, furnish to the Company
a written  opinion of counsel  (which  opinion  shall be in form,  substance and
scope  customary  for  opinions of counsel in  comparable  transactions)  to the
effect that such transfer may be made without  registration under the Securities
Act and under applicable state securities or blue sky laws, (ii) that the holder
or transferee  execute and deliver to the Company an  investment  letter in form
and  substance  acceptable  to the Company and (iii) that the  transferee  be an
"accredited investor" as defined in Rule 501(a)(1),  (a)(2),  (a)(3), (a)(7), or
(a)(8) promulgated under the Securities Act or a "qualified institutional buyer"
as defined in Rule 144A(a) under the Securities Act.

                                       11
<PAGE>
     SECTION 5. MISCELLANEOUS.

     a) NO RIGHTS AS SHAREHOLDER  UNTIL EXERCISE.  This Warrant does not entitle
the Holder to any voting rights or other rights as a shareholder  of the Company
prior to the exercise hereof as set forth in Section 2(e)(i).

     b) LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company covenants
that upon receipt by the Company of evidence  reasonably  satisfactory  to it of
the  loss,  theft,  destruction  or  mutilation  of this  Warrant  or any  stock
certificate  relating  to the  Warrant  Shares,  and in case of  loss,  theft or
destruction,  of indemnity or security reasonably  satisfactory to it (which, in
the case of the  Warrant,  shall not include the posting of any bond),  and upon
surrender and cancellation of such Warrant or stock  certificate,  if mutilated,
the Company  will make and deliver a new  Warrant or stock  certificate  of like
tenor  and  dated  as of such  cancellation,  in lieu of such  Warrant  or stock
certificate.

     c) SATURDAYS,  SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for the
taking of any action or the  expiration of any right  required or granted herein
shall not be a Business  Day, then such action may be taken or such right may be
exercised on the next succeeding Business Day.

     d) AUTHORIZED SHARES.

     The Company covenants that during the period the Warrant is outstanding, it
will reserve from its authorized and unissued  Common Stock a sufficient  number
of shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant.  The Company further  covenants that its
issuance of this Warrant shall constitute full authority to its officers who are
charged with the duty of executing  stock  certificates to execute and issue the
necessary  certificates for the Warrant Shares upon the exercise of the purchase
rights under this Warrant.  The Company will take all such reasonable  action as
may be necessary  to assure that such  Warrant  Shares may be issued as provided
herein  without  violation  of  any  applicable  law  or  regulation,  or of any
requirements  of the Trading  Market upon which the Common  Stock may be listed.
The  Company  covenants  that all  Warrant  Shares  which may be issued upon the
exercise of the purchase rights  represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant, be duly authorized,  validly
issued,  fully paid and nonassessable and free from all taxes, liens and charges
created by the  Company in respect  of the issue  thereof  (other  than taxes in
respect of any transfer occurring contemporaneously with such issue).

     Except  and to the  extent as waived or  consented  to by the  Holder,  the
Company shall not by any action,  including,  without  limitation,  amending its
certificate of incorporation or through any reorganization,  transfer of assets,
consolidation,  merger,  dissolution,  issue or sale of  securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this  Warrant,  but will at all times in good  faith  assist in the
carrying  out of all such terms and in the taking of all such  actions as may be

                                       12
<PAGE>
necessary  or  appropriate  to protect the rights of Holder as set forth in this
Warrant against  impairment.  Without  limiting the generality of the foregoing,
the Company will (a) not increase the par value of any Warrant  Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value,  (b) take all such action as may be necessary or appropriate in order
that the Company may  validly  and  legally  issue fully paid and  nonassessable
Warrant  Shares upon the  exercise  of this  Warrant,  and (c) use  commercially
reasonable  efforts to obtain all such  authorizations,  exemptions  or consents
from any public regulatory body having jurisdiction  thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.

     Before  taking any action which would result in an adjustment in the number
of Warrant  Shares for which this  Warrant  is  exercisable  or in the  Exercise
Price, the Company shall obtain all such  authorizations or exemptions  thereof,
or consents  thereto,  as may be necessary  from any public  regulatory  body or
bodies having jurisdiction thereof.

     e)  JURISDICTION.  All questions  concerning  the  construction,  validity,
enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the Purchase Agreement.

     f) RESTRICTIONS.  The Holder  acknowledges that the Warrant Shares acquired
upon the exercise of this Warrant,  if not  registered,  will have  restrictions
upon resale imposed by state and federal securities laws.

     g) NONWAIVER AND EXPENSES.  No course of dealing or any delay or failure to
exercise any right  hereunder on the part of Holder shall operate as a waiver of
such  right  or  otherwise  prejudice  Holder's  rights,   powers  or  remedies,
notwithstanding  the fact that all rights hereunder terminate on the Termination
Date. If the Company  willfully and knowingly fails to comply with any provision
of this  Warrant,  which  results in any  material  damages to the  Holder,  the
Company  shall pay to Holder such  amounts as shall be  sufficient  to cover any
costs and expenses  including,  but not limited to, reasonable  attorneys' fees,
including those of appellate  proceedings,  incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights,  powers
or remedies hereunder.

     h) NOTICES. Any notice,  request or other document required or permitted to
be given or  delivered  to the  Holder  by the  Company  shall be  delivered  in
accordance with the notice provisions of the Purchase Agreement.

     i)  LIMITATION  OF LIABILITY.  No provision  hereof,  in the absence of any
affirmative  action by Holder to  exercise  this  Warrant  to  purchase  Warrant
Shares, and no enumeration  herein of the rights or privileges of Holder,  shall
give rise to any liability of Holder for the purchase  price of any Common Stock
or as a stockholder  of the Company,  whether such  liability is asserted by the
Company or by creditors of the Company.

                                       13
<PAGE>
     j) REMEDIES.  Holder,  in addition to being entitled to exercise all rights
granted by law,  including  recovery  of  damages,  will be entitled to specific
performance  of its rights under this Warrant.  The Company agrees that monetary
damages would not be adequate  compensation for any loss incurred by reason of a
breach by it of the  provisions  of this Warrant and hereby  agrees to waive and
not to assert the defense in any action for specific  performance  that a remedy
at law would be adequate.

     k) SUCCESSORS  AND ASSIGNS.  Subject to applicable  securities  laws,  this
Warrant  and the rights and  obligations  evidenced  hereby  shall  inure to the
benefit of and be binding upon the  successors of the Company and the successors
and permitted assigns of Holder.  The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any the Holder or holder of Warrant Shares.

     l)  AMENDMENT.  This  Warrant may be modified or amended or the  provisions
hereof waived with the written consent of the Company and the Holder.

     m) SEVERABILITY. Wherever possible, each provision of this Warrant shall be
interpreted  in such manner as to be effective and valid under  applicable  law,
but if any  provision of this Warrant  shall be  prohibited  by or invalid under
applicable  law,  such  provision  shall be  ineffective  to the  extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.

     n) HEADINGS.  The headings used in this Warrant are for the  convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.



                              ********************


                                       14
<PAGE>
     IN WITNESS  WHEREOF,  the Company has caused this Warrant to be executed by
its officer thereunto duly authorized as of the date first above indicated.

                                      EASY ENERGY, INC.

                                      By:
                                         -------------------------------
                                      Name:
                                           -----------------------------
                                      Title:
                                            ----------------------------

                                       15
<PAGE>
                               NOTICE OF EXERCISE

To: Easy Energy, Inc.

     (1) The undersigned  hereby elects to purchase  ________  Warrant Shares of
the Company  pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.

     (2) Payment shall take the form of (check applicable box):

          [ ]  in lawful money of the United States; or

          [ ]  [if  permitted]  the  cancellation  of such  number of  Warrant
               Shares as is necessary,  in accordance with the formula set forth
               in subsection  2(c), to exercise this Warrant with respect to the
               maximum  number of Warrant  Shares  purchasable  pursuant  to the
               cashless exercise procedure set forth in subsection 2(c).

     (3) Please issue a certificate or  certificates  representing  said Warrant
Shares in the name of the  undersigned  or in such  other  name as is  specified
below:

          ----------------------------------------

The Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:

          ----------------------------------------

          ----------------------------------------

          ----------------------------------------

     (4) ACCREDITED  INVESTOR.  The  undersigned is an "accredited  investor" as
defined  in  Regulation  D  promulgated  under the  Securities  Act of 1933,  as
amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity: _____________________________________________________
Signature of Authorized Signatory of Investing Entity: ________________________
Name of Authorized Signatory: _________________________________________________
Title of Authorized Signatory: ________________________________________________
Date: _________________________________________________________________________
<PAGE>
                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

     FOR VALUE  RECEIVED,  [____] all of or  [_______]  shares of the  foregoing
Warrant and all rights evidenced thereby are hereby assigned to

_______________________________________________ whose address is

________________________________________________________________

________________________________________________________________

                                                 Dated:  ______________, _______

                  Holder's Signature:  ___________________________

                  Holder's Address:    ___________________________

                                       ___________________________


Signature Guaranteed: ___________________________________________

NOTE: The signature to this  Assignment Form must correspond with the name as it
appears on the face of the Warrant,  without  alteration or  enlargement  or any
change whatsoever,  and must be guaranteed by a bank or trust company.  Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
<PAGE>
                               Tshuva Victor & Co'
                                   Law Offices

Ha'yezira St 3
Belt Shaap 81h floor
Ramat Gan 52521
Israel
Tel.+972-3- 6138484
Fax.+972-3-6138585

                           E-mail: victor@hlnlaw.co.il

Tshuva Victor, Adv.
Akselrod Eli, Adv.
Stainherts Amir, Adv.
Kaiser Yaron, Adv.


To:
Tailor Made
Capital, Ltd.
4 Borkowits St.
Tel Aviv, 61180
Israel

Ladies and Gentlemen:

     We have acted as counsel to Easy Energy,  Inc., a Nevada  corporation  (the
"Company"),  in connection with the execution and delivery by the Company of the
Securities  Purchase Agreement dated as of March 10, 2008 (the "Agreement"),  by
and among the Company  and the  purchasers  identified  on the  signature  pages
thereto (the  "Purchasers").  This opinion IS given to you pursuant to Article V
of the Agreement. (CAPITALIZED TERMS NOT OTHERWISE DEFINED HEREIN ARE DEFINED AS
SET FORTH IN THE AGREEMENT.)

     We have  participated  in the  preparation and negotiation of the Agreement
and the Exhibits and  Schedules  thereto,  and the other  documents  referred to
therein. We also have examined such certificates of public officials,  corporate
documents  and  records  and  other  certificates,   opinions,   agreements  and
instruments and have made such other  investigations as We have deemed necessary
in connection with the opinions hereinafter set forth.

     Based  on the  foregoing  and upon  such  investigation  as we have  deemed
necessary, we give you our opinion as follows:

     1. The Company is a corporation  duly organized,  validly existing and good
standing  under the laws of Nevada.  The  Company  has all  requisite  power and
<PAGE>
authority, and all material governmental licenses, authorizations,  consents and
approvals, required to own and operate its pr properties and assets and to carry
on its business as now conducted and as proposed to be conducted. The Company is
duly qualified to transact business and is in good standing in each jurisdiction
in which the  failure to qualify  could  have a Material  Adverse  Effect on the
Company.

     2. The Company has all requisite  power and  authority to execute,  deliver
and perform the Transaction  Documents,  to issue,  sell and deliver the Shares,
the Warrants, and, upon exercise of the Warrants, the Warrant Shares pursuant to
the Transaction Documents and to carry out and perform it obligations under, and
to consummate the transactions contemplated by, the Transaction Documents.

     3.  All  action  on  the  part  of  the  Company,  its  directors  and  its
stockholders  necessary  for the  authorization,  execution  and delivery by the
Company of the Transactions Documents,  the a authorization,  issuance, sale and
delivery of the Shares and the Warrants pursuant to the Agreement,  the issuance
and  delivery  the  Warrant  Shares and the  consummation  by the  Company o the
transactions  contemplated by the Transaction Documents has been duly taken. The
Transaction  Documents have been duly and validly  executed and delivered by the
Company and constitute the legal,  valid and binding  obligation of the Company,
enforceable  against the Company in accordance with their terms, except (a) that
such  enforceability  may be limited by bankruptcy,  insolvency or other similar
laws affecting the  enforcement of creditors'  rights in general an (b) that the
remedies of specific  performance  and  injunctive and other forms of injunctive
relief may be subject to equitable defenses.

     4. After giving effect to the  transactions  contemplated by the Agreement,
and immediately  after he Closing,  the authorized  capital stock of the Company
will consist of an aggregate of  1,000,000,000  shares of Common Stock, of which
89,303,717  shares will be issued and outstanding an 1 12,029,440 shares will be
reserved  for  issuance  upon  conversion  of issued  and  outstanding  options,
warrants and other derivative  securities.  All presently issued and outstanding
shares of Common  Stock have been duly  authorized  and  validly  issued and are
fully paid and nonassessable  and free of any preemptive or similar rights,  and
have been issued in compliance with applicable  securities laws and regulations.
The Warrants  and Shares  which are being issued on the date hereof  pursuant to
the Agreement  have been duly  authorized and validly issued and are full;' paid
and nonassessable and free of preemptive or similar rights, and have been issued
in compliance  with  applicable  securities  laws,  rules and  regulations.  The
Warrant Shares have been duly and validly  authorized and reserved for issuance,
and when issued in  accordance  with the exercise of the Warrants in  accordance
with  their   respective   terms  will  be  validly   issued,   fully  paid  and
nonassessable,  and free of any preemptive or similar rights.  To our knowledge,
except for rights  described in the Company's SB/2  effective  December 17, 200,
there are no other  options,  warrants,  conversion  privileges  or other rights
presently  outstanding  to purchase or  otherwise  acquire  from the Company any
capital  stock or other  securities of the Company,  or any other  agreements to
issue any such securities or rights.  The rights,  privileges and preferences of
the Common Stock are as stated in the Company's SB/2.

     5. Based in part upon the  representations  of the Purchasers  contained in
the Agreement,  the Shares, the Warrants and the Warrant Shares may be issued to
the  Purchasers  without  registration  under  the  Securities  Act of 1933,  as
amended.

                                       2
<PAGE>
     6. The  execution,  delivery  and  performance  by the  Company of, and the
compliance by the company with the terms of, the  Transaction  Documents and the
issuance,  sale and delivery of the Shares,  the Draw Down Shares,  the Warrants
and the Warrant  Shares  pursuant to the  Agreement do not (a) conflict  with or
result in a violation of any provision of law, rule or regulation or any rule or
regulation of any Trading Market  applicable to the Company or its  Subsidiaries
or  of  the   certificate   of   incorporation   or  by-laws  or  other  similar
organizational documents of the Company or its Subsidiaries,  (b) conflict with,
result in a breach of or  constitute a default (or an event which with notice or
lapse of time or both would become: a default) under, or result in or permit the
termination or modification of, any agreement, instrument, order, writ, judgment
or decree known to us to which the Company of its  Subsidiaries is a party or is
subject  or (c)  result in the  creation  or  imposition  of any lien,  claim or
encumbrance  on  any  of  the  assets  or  properties  of  the  Company  or  its
Subsidiaries.

     7.  To  our  knowledge,  there  is  no  claim,  action,  suit,  proceeding,
arbitration,  Investigation or inquiry, pending or threatened,  before any court
or governmental or  administrative  body or agency,  or any private  arbitration
tribunal,  against  the  Company  or its  Subsidiaries,  or an of its  officers,
directors  or employees  (in  connection  with the  discharge Of their duties as
officers,  directors  and  employees),  or affecting  any of its  properties  or
assets.

     8. In connection with the valid execution,  delivery and performance by the
Company of the Transaction  Documents,  or the offer, sale, issuance or delivery
of the Shares,  the Draw Down Shares, the Warrants and the Warrant Shares or the
consummation of the  transactions  contemplated  thereby,  no consent,  license,
permit,  waiver,  approval or  authorization  of, or  designation,  declaration,
registration or filing with, any court, governmental or regulatory authority, or
self-regulatory  organization, is required.

     9. The  Company  is not,  and after the  consummation  of the  transactions
Contemplated  by the Transaction  Documents shall not be, an Investment  Company
within the meaning of the Investment Company Act of 1940, as amended.


                                                   /s/ Victor Tshuva
                                                   -----------------------------
                                                   Victor Tshuva, Adv.

                                       3
<PAGE>

ESYE
                                         Shares          Warrants
                                         ------          --------
Total shares according to the SB/2     80,333,190                     17/12/2007
Meir Duke                               4,285,714                     16/01/2008
Victor Tshuva                             300,000        1,000,000    03/03/2008
Meitav Group                            3,676,480       11,029,440    28/02/2008
Anatoli Abramov                           208,333                     28/02/2008
Moshe Buskila                             500,000                     15/02/2008

Total as of March 10, 2008             89,303,717       12,029,440    10/03/2008
<PAGE>
                                                                       EXHIBIT D

                     DRAW DOWN NOTICE/COMPLIANCE CERTIFICATE

                                EASY ENERGY INC.

     The undersigned hereby certifies, with respect to shares of Common Stock of
Easy Energy,  Inc. (the  "Company")  issuable in connection  with this Draw Down
Notice and Compliance  Certificate  dated  _________ (the  "Notice"),  delivered
pursuant  to the  Securities  Purchase  Agreement  dated as March __,  2008 (the
"Agreement"), as follows:

     1. The undersigned is the duly appointed  Chief Executive  Officer or Chief
Financial Officer of the Company.

     2.   Except  as  set  forth  on  the   schedules   attached   hereto,   the
representations  and  warranties  of the Company set forth in the  Agreement are
true and correct in all  material  respects as though made on and as of the date
hereof,  except for  representations  and  warranties are expressly made as of a
particular date.

     3. The Company has  performed in all material  respects all  covenants  and
agreements  and  conditions  required under the Agreement to be performed by the
Company on or prior to the date of this Draw Down Notice.

     4. The Investment Amount is $___________.

     The  undersigned has executed this  Certificate  this ____ day of ________,
_____.

                                         EASY ENERGY, INC.

                                         By:
                                            ------------------------------------
                                         Name:
                                         Title: