EQUITY LINE OF CREDIT AGREEMENT

     AGREEMENT dated as of the ___ day of June, 2002 (the  "Agreement")  between
CORNELL CAPITAL PARTNERS,  LP, a Delaware limited  partnership (the "Investor"),
and AZCO MINING INC., a corporation organized and existing under the laws of the
State of Delaware (the "Company").

     WHEREAS,  the  parties  desire  that,  upon the  terms and  subject  to the
conditions  contained herein,  the Company shall issue and sell to the Investor,
from time to time as provided  herein,  and the Investor shall purchase from the
Company up to Five Million  ($5,000,000)  Dollars of the Company's common stock,
par value $0.002 per share (the "Common  Stock"),  for a total purchase price of
Five Million ($5,000,000) Dollars; and

     WHEREAS,  such  investments will be made in reliance upon the provisions of
Regulation D ("Regulation D") of the Securities Act of 1933, as amended, and the
regulations  promulgated  there under (the  "Securities  Act"), and or upon such
other exemption from the registration  requirements of the Securities Act as may
be available with respect to any or all of the investments to be made hereunder.

     WHEREAS,  the  Company has engaged  Westrock  Advisors,  Inc. to act as the
Company's exclusive placement agent in connection with the sale of the Company's
Common Stock to the Investor hereunder.

     NOW, THEREFORE, the parties hereto agree as follows:


                                   ARTICLE I.
                               Certain Definitions

     Section  1.1.  "Advance"  shall mean the portion of the  Commitment  Amount
requested by the Company in the Advance Notice.

     Section 1.2.  "Advance Date" shall mean the date Butler Gonzalez  LLP/First
Union  Escrow  Account is in receipt of the funds from the  Investor  and Butler
Gonzalez LLP, as the Investor's Counsel, is in possession of free trading shares
from the Company and  therefore an Advance by the Investor to the Company can be
made and  Butler  Gonzalez  LLP can  release  the  free  trading  shares  to the
Investor.  No  Advance  Date  shall be less than six (6)  Trading  Days after an
Advance Notice Date.

<PAGE>

     Section 1.3.  "Advance  Notice" shall mean a written notice to the Investor
setting forth the Advance amount that the Company requests from the Investor and
the Advance Date.

     Section  1.4.  "Advance  Notice  Date"  shall  mean each  date the  Company
delivers to the  Investor an Advance  Notice  requiring  the Investor to advance
funds to the Company,  subject to the terms of this Agreement. No Advance Notice
Date shall be less than five (5)  Trading  Days after the prior  Advance  Notice
Date.

     Section 1.5. "Bid Price" shall mean, on any date, the closing bid price (as
reported by Bloomberg  L.P.) of the Common Stock on the  Principal  Market or if
the Common Stock is not traded on a Principal  Market,  the highest reported bid
price  for the  Common  Stock,  as  furnished  by the  National  Association  of
Securities Dealers, Inc.

     Section  1.6.  "Closing"  shall mean one of the  closings of a purchase and
sale of Common Stock pursuant to Section 2.3.

     Section 1.7.  "Commitment  Amount" shall mean the aggregate amount of up to
Five Million  Dollars  ($5,000,000)  which the Investor has agreed to provide to
the Company in order to purchase  the  Company's  Common  Stock  pursuant to the
terms and  conditions  of this  Agreement,  provided  that the Company shall not
request an Advance if the  issuance of the full number of shares of Common Stock
issuable in connection with such Advance would result in a violation of the AMEX
Listing  Standards,  Policies  and  Requirements  Section  713 (or  any  similar
applicable  section)  unless the necessary  shareholder  approval or consent has
been received prior to such request.

     Section 1.8.  "Commitment  Period" shall mean the period  commencing on the
earlier to occur of (i) the  Effective  Date,  or (ii) such  earlier date as the
Company and the  Investor  may  mutually  agree in writing,  and expiring on the
earliest to occur of (x) the date on which the Investor  shall have made payment
of Advances  pursuant to this Agreement in the aggregate  amount of Five Million
Dollars  ($5,000,000),  (y) the date this  Agreement is  terminated  pursuant to
Section  2.5,  or (z) the date  occurring  twenty  four  (24)  months  after the
Effective Date.

     Section 1.9.  "Common  Stock" shall mean the Company's  common  stock,  par
value $0.002 per share.

     Section  1.10.  "Condition  Satisfaction  Date"  shall have the meaning set
forth in Section 7.2.

     Section 1.11.  "Damages"  shall mean any loss,  claim,  damage,  liability,
costs and expenses (including,  without limitation,  reasonable  attorney's fees
and disbursements and costs and expenses of expert witnesses and investigation).

<PAGE>

     Section 1.12.  "Effective  Date" shall mean the date on which the SEC first
declares  effective  a  Registration  Statement  registering  the  resale of the
Registrable Securities as set forth in Section 7.2(a).

     Section 1.13.  "Escrow Agreement" shall mean the escrow agreement among the
Company, the Investor, the Investor's Counsel and Wachovia,  N.A. dated the date
hereof.

     Section  1.14.  "Exchange  Act" shall mean the  Securities  Exchange Act of
1934, as amended, and the rules and regulations promulgated there under.

     Section  1.15.   "Material   Adverse  Effect"  shall  mean  any  condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to enter into and perform any of its obligations
under this  Agreement  or the  Registration  Rights  Agreement  in any  material
respect.

     Section 1.16. "Market Price" shall mean the lowest closing Bid Price of the
Common Stock during the Pricing Period.

     Section 1.17.  "Maximum  Advance  Amount" shall be equal up to Five Hundred
Thousand Dollars ($500,000),  in the aggregate,  in any thirty (30) calendar day
period after the Effective Date.

     Section  1.18 "NASD"  shall mean the  National  Association  of  Securities
Dealers, Inc.

     Section  1.19  "Person"  shall  mean  an  individual,   a  corporation,   a
partnership, an association, a trust or other entity or organization,  including
a government or political subdivision or an agency or instrumentality thereof.

     Section  1.20  "Placement  Agent"  shall  mean  Westrock  Advisors,  Inc. a
registered broker-dealer.

     Section 1.21 "Pricing  Period" shall mean the five (5) consecutive  Trading
Days after the Advance Notice Date.

     Section 1.22 "Principal  Market" shall mean the Nasdaq National Market, the
Nasdaq SmallCap Market,  the American Stock Exchange,  the OTC Bulletin Board or
the New York Stock  Exchange,  whichever  is at the time the  principal  trading
exchange or market for the Common Stock.

     Section  1.23  "Purchase  Price"  shall be set at  ninety  two and one half
percent (92.5%) of the Market Price during the Pricing Period.

<PAGE>

     Section 1.24 "Registrable Securities" shall mean the shares of Common Stock
(i) in  respect  of which  the  Registration  Statement  has not  been  declared
effective by the SEC, (ii) which have not been sold under circumstances  meeting
all of the applicable  conditions of Rule 144 (or any similar  provision then in
force)  under the  Securities  Act  ("Rule  144") or (iii)  which  have not been
otherwise  transferred to a holder who may trade such shares without restriction
under the  Securities  Act, and the Company has delivered a new  certificate  or
other  evidence of  ownership  for such  securities  not  bearing a  restrictive
legend.

     Section 1.25  "Registration  Rights  Agreement" shall mean the Registration
Rights Agreement dated the date hereof, regarding the filing of the Registration
Statement for the resale of the Registrable Securities, entered into between the
Company and the Investor.

     Section 1.26 "Registration  Statement" shall mean a registration  statement
on Form  S-1 or  SB-2  (if use of such  form is then  available  to the  Company
pursuant to the rules of the SEC and, if not, on such other form  promulgated by
the SEC for which the Company then  qualifies  and which counsel for the Company
shall deem appropriate,  and which form shall be available for the resale of the
Registrable  Securities  to be  registered  there under in  accordance  with the
provisions  of this  Agreement and the  Registration  Rights  Agreement,  and in
accordance with the intended method of distribution of such securities), for the
registration of the resale by the Investor of the Registrable  Securities  under
the Securities Act.

     Section  1.27  "Regulation  D" shall  have  the  meaning  set  forth in the
recitals of this Agreement.

     Section 1.28 "SEC" shall mean the Securities and Exchange Commission.

     Section  1.29  "Securities  Act"  shall have the  meaning  set forth in the
recitals of this Agreement.

     Section  1.30 "SEC  Documents"  shall  mean  Annual  Reports  on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and Proxy Statements
of the Company as  supplemented  to the date hereof,  filed by the Company for a
period of at least twelve (12) months  immediately  preceding the date hereof or
the Advance  Date,  as the case may be, until such time as the Company no longer
has an obligation to maintain the  effectiveness of a Registration  Statement as
set forth in the Registration Rights Agreement.

     Section  1.31  "Trading  Day" shall mean any day during  which the New York
Stock Exchange shall be open for business.


                                   ARTICLE II.
                                    Advances

     Section 2.1. Investments.

          (a)  Advances.   Upon  the  terms  and  conditions  set  forth  herein
     (including,  without limitation,  the provisions of Article VII hereof), on
     any Advance  Notice Date the Company may request an Advance by the Investor
     by the delivery of an Advance Notice.  The number of shares of Common Stock
     that the Investor  shall  receive for each Advance  shall be  determined by
     dividing the amount of the Advance by the  Purchase  Price.  No  fractional
     shares  shall be  issued.  Fractional  shares  shall be rounded to the next
     higher whole number of shares. The aggregate maximum amount of all Advances
     that the Investor shall be obligated to make under this Agreement shall not
     exceed the  Commitment  Amount.  Notwithstanding  the foregoing the Company
     shall only be entitled to an Advance if the  Company's  Common Stock has an
     active bid at all times during the Pricing Period.

<PAGE>

          (b) The Company  acknowledges that the Investor may sell the Company's
     Common  Stock   purchased   pursuant  to  an  Advance   Notice  during  the
     corresponding Pricing Period.

     Section 2.2. Mechanics.

          (a) Advance  Notice.  At any time during the  Commitment  Period,  the
     Company  may  deliver an  Advance  Notice to the  Investor,  subject to the
     conditions set forth in Section 7.2;  provided,  however,  unless waived by
     the  Investor,  the amount for each Advance as designated by the Company in
     the applicable  Advance Notice, as well as the aggregate amount of multiple
     Advances in any thirty (30) calendar day period, shall not be more than the
     Maximum Advance Amount.  The aggregate  amount of the Advances  pursuant to
     this  Agreement  shall  not  exceed  the  Commitment  Amount.  The  Company
     acknowledges  that the  Investor  may sell shares of the  Company's  Common
     Stock corresponding with a particular Advance Notice on the day the Advance
     Notice is  received  by the  Investor.  There will be a minimum of ten (10)
     Trading Days between each Advance Notice Date.

          (b) Date of Delivery of Advance  Notice.  An Advance  Notice  shall be
     deemed  delivered  on (i) the Trading Day it is  received by  facsimile  or
     otherwise  by the  Investor if such notice is received  prior to 12:00 noon
     Eastern  Time,  or (ii) the  immediately  succeeding  Trading  Day if it is
     received by  facsimile  or  otherwise  after 12:00 noon  Eastern  Time on a
     Trading Day or at any time on a day which is not a Trading  Day. No Advance
     Notice may be deemed delivered, on a day that is not a Trading Day.

          (c) Pre-Closing  Share Credit.  Within two (2) business days after the
     Advance  Notice  Date,  the Company  shall credit  shares of the  Company's
     Common Stock to the Investor's  balance  account with The Depository  Trust
     Company through its Deposit  Withdrawal At Custodian  system,  in an amount
     equal to the amount of the  requested  Advance  divided by the  closing Bid
     Price  of  the  Company's  Common  Stock  as of  the  Advance  Notice  Date
     multiplied by one point one (1.1).  Any adjustments to the number of shares
     to be delivered to the Investor at the Closing as a result of  fluctuations
     in the closing Bid Price of the Company's  Common Stock shall be made as of
     the date of the  Closing.  Any excess  shares shall be credited to the next
     Advance.  In no event shall the number of shares  issuable to the  Investor
     pursuant  to an Advance  exceed  nine and 9/10  percent  (9.9%) of the then
     outstanding Common Stock of the Company.

          (d) In the  event  the  Investor  sells  the  Company's  Common  Stock
     pursuant  to  subsection  (c) above and the Company  fails to perform  it's
     obligations as mandated in Section 2.5 and 2.2 (c), and specifically  fails
     to provide the Investor with the shares of Common Stock for the  applicable
     Advance,  the Company acknowledges that the Investor shall suffer financial
     hardship and therefore shall be liable for any and all losses, commissions,
     fees, or financial hardship caused to the Investor.

     Section 2.3. Closings. On each Advance Date, which shall be six (6) Trading
Days  after an  Advance  Notice  Date,  (i) the  Company  shall  deliver  to the
Investor's Counsel,  as defined pursuant to the Escrow Agreement,  shares of the
Company's  Common Stock,  representing the amount of the Advance by the Investor
pursuant to Section 2.1 herein,  registered  in the name of the  Investor  which
shall be delivered to the Investor,  or otherwise in accordance  with the Escrow
Agreement  and (ii) the Investor  shall  deliver to Wachovia,  N.A. (the "Escrow
Agent")  the  amount of the  Advance  specified  in the  Advance  Notice by wire
transfer of immediately available funds which shall be delivered to the Company,
or otherwise in accordance with the Escrow Agreement.  In addition,  on or prior
to the Advance Date,  each of the Company and the Investor  shall deliver to the
other through the  Investor's  Counsel all documents,  instruments  and writings
required to be delivered or  reasonably  requested by either of them pursuant to
this  Agreement in order to implement and effect the  transactions  contemplated
herein.  Payment of funds to the Company and  delivery of the  Company's  Common
Stock to the Investor  shall occur in accordance  with the  conditions set forth
above and those contained in the Escrow Agreement;  provided,  however,  that to
the extent the Company has not paid the fees, expenses, and disbursements of the
Investor or its Investor's  counsel in accordance  with Section 12.4, the amount
of such fees,  expenses,  and disbursements may be deducted by the Investor (and
shall be paid to the  relevant  party)  from the amount of the  Advance  with no
reduction in the amount of shares of the Company's  Common Stock to be delivered
on such Advance Date.

     Section 2.4.  Termination of Investment.  The obligation of the Investor to
make an  Advance to the  Company  pursuant  to this  Agreement  shall  terminate
permanently  (including  with  respect  to an  Advance  Date  that  has  not yet
occurred)  in the event that (i) there shall occur any stop order or  suspension
of the  effectiveness  of the  Registration  Statement for an aggregate of fifty
(50)  Trading  Days,  other  than due to the acts of the  Investor,  during  the
Commitment  Period,  and (ii) the Company  shall at any time fail  materially to
comply with the  requirements of Article VI and such failure is not cured within
thirty (30) days after receipt of written  notice from the  Investor,  provided,
however,  that  this  termination  provision  shall  not  apply  to  any  period
commencing upon the filing of a  post-effective  amendment to such  Registration
Statement  and ending upon the date on which such post  effective  amendment  is
declared effective by the SEC..

<PAGE>

     Section 2.5. Agreement to Advance Funds.

          (a) The Investor agrees to advance the amount specified in the Advance
     Notice  to the  Company  after  the  completion  of each  of the  following
     conditions and the other conditions set forth in this Agreement:

               (i) the execution and delivery by the Company,  and the Investor,
          of this Agreement, and the Exhibits hereto;

               (ii) Investor's  Counsel shall have received the shares of Common
          Stock  applicable  to the Advance in  accordance  with Section  2.2(c)
          hereof;

               (iii) the Company's  Registration  Statement  with respect to the
          resale of the  Registrable  Securities in accordance with the terms of
          the Registration  Rights Agreement shall have been declared  effective
          by the SEC;

               (iv) the Company  shall have  obtained all  material  permits and
          qualifications required by any applicable state for the offer and sale
          of the  Registrable  Securities,  or shall  have the  availability  of
          exemptions  there  from.  The sale  and  issuance  of the  Registrable
          Securities  shall be legally  permitted by all laws and regulations to
          which the Company is subject;

               (v) the Company shall have filed with the  Commission in a timely
          manner  all  reports,  notices  and  other  documents  required  of  a
          "reporting  company" under the Exchange Act and applicable  Commission
          regulations;

               (vi) the fees as set forth in Section  12.4 below shall have been
          paid or can be withheld as provided in Section 2.3; and

               (vii) the  conditions  set forth in  Section  7.2 shall have been
          satisfied.

               (viii)  The  Company  shall  have  provided  to the  Investor  an
          acknowledgement,  to  the  satisfaction  of  the  Investor,  from  the
          Company's  accountants as to the  accountant's  ability to provide all
          consents  required  in  order  to  file a  registration  statement  in
          connection with this transaction;

               (ix) The Company's transfer agent shall be DWAC eligible.

     Section 2.6. Lock Up Period.

          (a) The Company shall not,  without the prior consent of the Investor,
     issue  or  sell  (i)  any  Common  Stock  without  consideration  or  for a
     consideration  per share less than the Bid Price on the date of issuance or
     (ii) issue or sell any warrant,  option,  right,  contract,  call, or other
     security or  instrument  granting  the holder  thereof the right to acquire
     Common Stock without  consideration  or for a consideration  per share less
     than the Bid Price on the date of issuance.

          (b) On the date hereof, the Company shall obtain from each officer and
     director a lock-up agreement,  as defined below, in the form annexed hereto
     as  Schedule  2.6(b)  agreeing to only sell in  compliance  with the volume
     limitation of Rule 144.

<PAGE>

                                  ARTICLE III.
                   Representations and Warranties of Investor

     Investor  hereby  represents  and warrants to, and agrees with, the Company
that the  following  are true and as of the date  hereof and as of each  Advance
Date:

     Section  3.1.   Organization  and  Authorization.   The  Investor  is  duly
incorporated  or  organized  and  validly  existing in the  jurisdiction  of its
incorporation  or  organization  and has all  requisite  power and  authority to
purchase and hold the securities issuable hereunder.  The decision to invest and
the execution and delivery of this Agreement by such Investor,  the  performance
by such  Investor of its  obligations  hereunder  and the  consummation  by such
Investor of the transactions  contemplated  hereby have been duly authorized and
requires no other  proceedings on the part of the Investor.  The undersigned has
the right,  power and  authority to execute and deliver this  Agreement  and all
other  instruments  (including,  without  limitations,  the Registration  Rights
Agreement), on behalf of the Investor. This Agreement has been duly executed and
delivered by the Investor and,  assuming the  execution and delivery  hereof and
acceptance thereof by the Company,  will constitute the legal, valid and binding
obligations of the Investor, enforceable against the Investor in accordance with
its terms.

     Section 3.2.  Evaluation  of Risks.  The Investor  has such  knowledge  and
experience in financial tax and business  matters as to be capable of evaluating
the  merits  and risks of,  and  bearing  the  economic  risks  entailed  by, an
investment  in the Company and of protecting  its  interests in connection  with
this  transaction.  It recognizes that its investment in the Company  involves a
high degree of risk.

     Section 3.3. No Legal Advice From the  Company.  The Investor  acknowledges
that it had the  opportunity  to  review  this  Agreement  and the  transactions
contemplated  by this Agreement with his or its own legal counsel and investment
and tax  advisors.  The Investor is relying  solely on such counsel and advisors
and  not on any  statements  or  representations  of the  Company  or any of its
representatives  or agents for legal,  tax or investment  advice with respect to
this  investment,  the  transactions  contemplated  by  this  Agreement  or  the
securities laws of any jurisdiction.

     Section 3.4. Investment Purpose.  The securities are being purchased by the
Investor  for its own  account,  for  investment  and  without  any  view to the
distribution, assignment or resale to others or fractionalization in whole or in
part.  The Investor  agrees not to assign or in any way transfer the  Investor's
rights to the  securities  or any  interest  therein and  acknowledges  that the
Company  will not  recognize  any  purported  assignment  or transfer  except in
accordance with applicable  Federal and state  securities  laws. No other person
has or will have a direct or indirect beneficial interest in the securities. The
Investor  agrees not to sell,  hypothecate or otherwise  transfer the Investor's
securities  unless the securities  are  registered  under Federal and applicable
state securities laws or unless,  in the opinion of counsel  satisfactory to the
Company, an exemption from such laws is available.

     Section 3.5. Accredited Investor.  Investor is an "Accredited  Investor" as
that term is defined in Rule 501(a)(3) of Regulation D of the Securities Act.

     Section 3.6. Information.  The Investor and its advisors (and its counsel),
if any,  have  been  furnished  with all  materials  relating  to the  business,
finances and  operations of the Company and  information  it deemed  material to
making an informed investment decision.  The Investor and its advisors,  if any,
have been  afforded  the  opportunity  to ask  questions  of the Company and its
management.  Neither such  inquiries nor any other due diligence  investigations
conducted by such Investor or its advisors, if any, or its representatives shall
modify,  amend  or  affect  the  Investor's  right  to  rely  on  the  Company's
representations  and  warranties  contained  in  this  Agreement.  The  Investor
understands that its investment  involves a high degree of risk. The Investor is
in a position  regarding  the  Company,  which,  based upon  employment,  family
relationship or economic bargaining power,  enabled and enables such Investor to
obtain information from the Company in order to evaluate the merits and risks of
this investment. The Investor has sought such accounting,  legal and tax advice,
as it has  considered  necessary to make an informed  investment  decision  with
respect to this transaction.

     Section  3.7.  Receipt of  Documents.  The  Investor  and its  counsel  has
received and read in their entirety: (i) this Agreement and the Exhibits annexed
hereto;  (ii) all due  diligence and other  information  necessary to verify the
accuracy and  completeness  of such  representations,  warranties and covenants;
(iii) the  Company's  Form 10-K for the year ended year ended June 30,  2001 and
Form 10-Q for the periods ended  September  30, 2001 and December 31, 2001;  and
(v) answers to all questions the Investor  submitted to the Company regarding an
investment  in the  Company;  and the  Investor  has  relied on the  information
contained  therein and has not been furnished any other  documents,  literature,
memorandum or prospectus.

     Section  3.8.  Registration  Rights  Agreement  and Escrow  Agreement.  The
parties have  entered  into the  Registration  Rights  Agreement  and the Escrow
Agreement, each dated the date hereof.

     Section 3.9. No General  Solicitation.  Neither the Company, nor any of its
affiliates,  nor any person  acting on its or their  behalf,  has engaged in any
form of general  solicitation  or general  advertising  (within  the  meaning of
Regulation D under the Securities  Act) in connection  with the offer or sale of
the shares of Common Stock offered hereby.

     Section 3.10. Not an Affiliate. The Investor is not an officer, director or
a person  that  directly,  or  indirectly  through  one or more  intermediaries,
controls or is controlled by, or is under common control with the Company or any
"Affiliate"  of the  Company  (as  that  term  is  defined  in  Rule  405 of the
Securities  Act).  Neither the  Investor  nor its  Affiliates  has an open short
position in the Common  Stock of the Company,  and the  Investor  agrees that it
will not,  and that it will  cause its  Affiliates  not to,  engage in any short
sales of or hedging transactions with respect to the Common Stock, provided that
the Company  acknowledges  and agrees that upon receipt of an Advance Notice the
Investor  will sell the  Shares to be issued  to the  Investor  pursuant  to the
Advance Notice, even if the Shares have not been delivered to the Investor.

<PAGE>

                                   ARTICLE IV.
                  Representations and Warranties of the Company

     Except as stated below, on the disclosure  schedules  attached hereto or in
the SEC  Documents  (as defined  herein),  the  Company  hereby  represents  and
warrants to, and  covenants  with,  the Investor that the following are true and
correct as of the date hereof:

     Section  4.1.   Organization  and   Qualification.   The  Company  is  duly
incorporated  or  organized  and  validly  existing in the  jurisdiction  of its
incorporation  or  organization  and  has  all  requisite  power  and  authority
corporate  power to own its properties and to carry on its business as now being
conducted.  Each of the  Company and its  subsidiaries  is duly  qualified  as a
foreign  corporation  to do business and within ten (10) days of the date hereof
will be in good  standing  in every  jurisdiction  in which  the  nature  of the
business  conducted  by it makes  such  qualification  necessary,  except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect on the Company and its subsidiaries taken as a whole.

     Section 4.2. Authorization, Enforcement, Compliance with Other Instruments.
(i) The Company has the  requisite  corporate  power and authority to enter into
and perform this Agreement,  the  Registration  Rights Agreement and any related
agreements,  in accordance with the terms hereof and thereof, (ii) the execution
and delivery of this Agreement,  the Registration  Rights Agreement,  the Escrow
Agreement and any related  agreements by the Company and the  consummation by it
of the transactions  contemplated hereby and thereby,  have been duly authorized
by the Company's Board of Directors and no further consent or  authorization  is
required by the Company, its Board of Directors or its stockholders,  (iii) this
Agreement,  the  Registration  Rights  Agreement,  the Escrow  Agreement and any
related  agreements  have been duly executed and delivered by the Company,  (iv)
this Agreement,  the  Registration  Rights  Agreement,  the Escrow Agreement and
assuming the execution and delivery  thereof and  acceptance by the Investor and
any  related  agreements  constitute  the valid and binding  obligations  of the
Company  enforceable  against the Company in accordance with their terms, except
as such  enforceability  may be  limited  by  general  principles  of  equity or
applicable bankruptcy,  insolvency,  reorganization,  moratorium, liquidation or
similar laws relating to, or affecting generally,  the enforcement of creditors'
rights and remedies.

     Section 4.3. Capitalization.  As of the date hereof, the authorized capital
stock of the Company  consists of 100,000,000  shares of Common Stock, par value
$0.002 per share of which  30,050,621  shares of Common  Stock  were  issued and
outstanding  as of February 19, 2002. All of such  outstanding  shares have been
validly issued and are fully paid and nonassessable.  Except as disclosed in the
SEC Documents (as defined in Section 4.5 hereof),  no shares of Common Stock are
subject  to  preemptive  rights  or any  other  similar  rights  or any liens or
encumbrances  suffered or permitted  by the Company.  Except as disclosed in the
SEC  Documents,  as of the date hereof,  (i) there are no  outstanding  options,
warrants,  scrip,  rights to subscribe to, calls or commitments of any character
whatsoever  relating to, or securities or rights convertible into, any shares of
capital  stock  of  the  Company  or  any of  its  subsidiaries,  or  contracts,
commitments,  understandings  or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional  shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character  whatsoever  relating to, or
securities  or rights  convertible  into,  any  shares of  capital  stock of the
Company  or  any  of its  subsidiaries,  (ii)  there  are  no  outstanding  debt
securities  and (iii) there are no  agreements or  arrangements  under which the
Company or any of its  subsidiaries  is obligated to register the sale of any of
their  securities  under the Securities Act (except pursuant to the Registration
Rights   Agreement).   There  are  no  securities  or   instruments   containing
anti-dilution or similar  provisions that will be triggered by this Agreement or
any related  agreement or the consummation of the transactions  described herein
or therein..  The Company has furnished to the Investor true and correct  copies
of the Company's  Certificate of  Incorporation,  as amended and as in effect on
the date hereof (the "Certificate of Incorporation"), and the Company's By-laws,
as in effect on the date hereof (the "By-laws"), and the terms of all securities
convertible  into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.

<PAGE>

     Section 4.4. No Conflict.  The execution,  delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated  hereby will not (i) result in a violation  of the  Certificate  of
Incorporation,  any certificate of  designations  of any  outstanding  series of
preferred  stock of the Company or By-laws or (ii) conflict with or constitute a
default (or an event  which with notice or lapse of time or both would  become a
default)  under,  or  give to  others  any  rights  of  termination,  amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its  subsidiaries  is a party, or result in a violation of
any law, rule,  regulation,  order,  judgment or decree  (including  federal and
state  securities  laws and  regulations  and the rules and  regulations  of the
Principal Market on which the Common Stock is quoted)  applicable to the Company
or any of its  subsidiaries  or by which any  material  property or asset of the
Company or any of its  subsidiaries is bound or affected and which would cause a
Material Adverse Effect.  Except as disclosed in the SEC Documents,  neither the
Company nor its  subsidiaries is in violation of any term of or in default under
its Certificate of Incorporation or By-laws or their  organizational  charter or
by-laws,   respectively,   or  any  material  contract,   agreement,   mortgage,
indebtedness,  indenture,  instrument, judgment, decree or order or any statute,
rule or regulation  applicable to the Company or its subsidiaries.  The business
of the Company and its  subsidiaries  is not being conducted in violation of any
material  law,  ordinance,  regulation  of any  governmental  entity.  Except as
specifically contemplated by this Agreement and as required under the Securities
Act and any  applicable  state  securities  laws, the Company is not required to
obtain  any  consent,   authorization  or  order  of,  or  make  any  filing  or
registration with, any court or governmental  agency in order for it to execute,
deliver  or  perform  any of its  obligations  under  or  contemplated  by  this
Agreement or the  Registration  Rights  Agreement in  accordance  with the terms
hereof  or  thereof.   All  consents,   authorizations,   orders,   filings  and
registrations  which the Company is required to obtain pursuant to the preceding
sentence  have been  obtained or effected  on or prior to the date  hereof.  The
Company and its subsidiaries are unaware of any fact or circumstance which might
give rise to any of the foregoing.

     Section 4.5. SEC Documents;  Financial  Statements.  Since January 1, 2000,
the  Company  has filed all  reports,  schedules,  forms,  statements  and other
documents required to be filed by it with the SEC under of the Exchange Act. The
Company has delivered to the Investor or its representatives,  or made available
through the SEC's website at http://www.sec.gov, true and complete copies of the
SEC Documents.  As of their respective  dates,  the financial  statements of the
Company disclosed in the SEC Documents (the "Financial  Statements") complied as
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto.  Such financial
statements have been prepared in accordance with generally  accepted  accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise  indicated in such financial  statements or the notes  thereto,  or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary  statements)  and fairly present in all
material respects the financial  position of the Company as of the dates thereof
and the  results of its  operations  and cash flows for the  periods  then ended
(subject,  in the  case  of  unaudited  statements,  to  normal  year-end  audit
adjustments).  No other  information  provided by or on behalf of the Company to
the  Investor  which is not  included in the SEC  Documents  contains any untrue
statement of a material  fact or omits to state any material  fact  necessary in
order to make the statements  therein,  in the light of the circumstances  under
which they were made, not misleading.  Section 4.6. 10b-5.  The SEC Documents do
not include any untrue  statements of material  fact,  nor do they omit to state
any material fact required to be stated therein necessary to make the statements
made, in light of the circumstances under which they were made, not misleading.

     Section  4.7. No  Default.  Except as  disclosed  in Section 4.4 or the SEC
Documents, the Company is not in default in the performance or observance of any
material  obligation,   agreement,   covenant  or  condition  contained  in  any
indenture,  mortgage, deed of trust or other material instrument or agreement to
which it is a party or by which it is or its  property  is bound and neither the
execution,  nor the delivery by the Company,  nor the performance by the Company
of its  obligations  under this  Agreement or any of the exhibits or attachments
hereto will  conflict  with or result in the breach or  violation  of any of the
terms or  provisions  of, or  constitute  a default or result in the creation or
imposition  of any lien or charge on any  assets or  properties  of the  Company
under  its  Certificate  of  Incorporation,  By-Laws,  any  material  indenture,
mortgage, deed of trust or other material agreement applicable to the Company or
instrument  to which  the  Company  is a party or by which it is  bound,  or any
statute,  or any decree,  judgment,  order,  rules or regulation of any court or
governmental  agency  or  body  having  jurisdiction  over  the  Company  or its
properties,  in each  case  which  default,  lien or charge is likely to cause a
Material Adverse Effect on the Company's business or financial condition.

<PAGE>

     Section 4.8. Absence of Events of Default.  Except for matters described in
the SEC Documents and/or this Agreement,  no Event of Default, as defined in the
respective  agreement to which the Company is a party, and no event which,  with
the giving of notice or the  passage of time or both,  would  become an Event of
Default (as so  defined),  has occurred  and is  continuing,  which would have a
Material  Adverse  Effect  on the  Company's  business,  properties,  prospects,
financial condition or results of operations.

     Section 4.9. Intellectual Property Rights. The Company and its subsidiaries
own or possess adequate rights or licenses to use all material trademarks, trade
names, service marks, service mark registrations, service names, patents, patent
rights,    copyrights,    inventions,    licenses,    approvals,    governmental
authorizations,  trade secrets and rights  necessary to conduct their respective
businesses as now conducted.  The Company and its  subsidiaries  do not have any
knowledge of any  infringement by the Company or its  subsidiaries of trademark,
trade name rights, patents,  patent rights,  copyrights,  inventions,  licenses,
service names, service marks, service mark registrations,  trade secret or other
similar  rights of others,  and, to the  knowledge of the  Company,  there is no
claim,  action or proceeding being made or brought against,  or to the Company's
knowledge,  being threatened against, the Company or its subsidiaries  regarding
trademark,  trade name, patents, patent rights, invention,  copyright,  license,
service names, service marks, service mark registrations,  trade secret or other
infringement;  and the Company and its  subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.

     Section  4.10.  Employee  Relations.  Neither  the  Company  nor any of its
subsidiaries  is involved in any labor  dispute  nor,  to the  knowledge  of the
Company or any of its subsidiaries,  is any such dispute threatened. None of the
Company's or its subsidiaries'  employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

     Section 4.11.  Environmental Laws. The Company and its subsidiaries are (i)
in compliance with any and all applicable material foreign,  federal,  state and
local  laws and  regulations  relating  to the  protection  of human  health and
safety,  the environment or hazardous or toxic substances or wastes,  pollutants
or contaminants ("Environmental Laws"), (ii) have received all permits, licenses
or other  approvals  required  of them under  applicable  Environmental  Laws to
conduct their  respective  businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval.

     Section 4.12. Title. Except as set forth in the SEC Documents,  the Company
has good and marketable title to its properties and material assets owned by it,
free and clear of any pledge,  lien,  security interest,  encumbrance,  claim or
equitable  interest  other than such as are not  material to the business of the
Company.  Any real property and  facilities  held under lease by the Company and
its subsidiaries are held by them under valid, subsisting and enforceable leases
with such  exceptions as are not material and do not interfere with the use made
and proposed to be made of such  property  and  buildings by the Company and its
subsidiaries.

     Section  4.13.  Insurance.  The  Company and each of its  subsidiaries  are
insured by insurers of recognized financial  responsibility  against such losses
and risks and in such  amounts  as  management  of the  Company  believes  to be
prudent  and  customary  in  the   businesses  in  which  the  Company  and  its
subsidiaries  are engaged.  Neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such  subsidiary has any reason to believe that it will not be able to renew
its existing  insurance  coverage as and when such coverage expires or to obtain
similar  coverage  from  similar  insurers as may be  necessary  to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise,  or the earnings,  business or operations of the Company
and its subsidiaries, taken as a whole.

     Section 4.14.  Regulatory Permits. The Company and its subsidiaries possess
all material certificates,  authorizations and permits issued by the appropriate
federal,  state or foreign  regulatory  authorities  necessary to conduct  their
respective  businesses,  and neither the  Company  nor any such  subsidiary  has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.

     Section 4.15.  Internal  Accounting  Controls.  The Company and each of its
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 generally accepted  accounting  principles and to maintain asset
accountability,  (iii) access to assets is  permitted  only in  accordance  with
management's   general  or  specific   authorization   and  (iv)  the   recorded
accountability  for assets is compared  with the existing  assets at  reasonable
intervals and appropriate action is taken with respect to any differences.

     Section 4.16. No Material Adverse Breaches, etc. Except as set forth in the
SEC Documents, neither the Company nor any of its subsidiaries is subject to any
charter,  corporate or other legal restriction,  or any judgment, decree, order,
rule or  regulation  which in the judgment of the  Company's  officers has or is
expected  in the  future to have a  Material  Adverse  Effect  on the  business,
properties,  operations, financial condition, results of operations or prospects
of the Company or its  subsidiaries.  Except as set forth in the SEC  Documents,
neither the Company nor any of its  subsidiaries is in breach of any contract or
agreement  which breach,  in the judgment of the Company's  officers,  has or is
expected  to  have  a  Material  Adverse  Effect  on the  business,  properties,
operations,  financial  condition,  results of  operations  or  prospects of the
Company or its subsidiaries.

<PAGE>

     Section  4.17.  Absence  of  Litigation.  Except  as set  forth  in the SEC
Documents, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board, government agency,  self-regulatory  organization
or body pending against or affecting the Company, the Common Stock or any of the
Company's subsidiaries, wherein an unfavorable decision, ruling or finding would
(i) have a Material Adverse Effect on the transactions  contemplated hereby (ii)
adversely affect the validity or enforceability  of, or the authority or ability
of the Company to perform its  obligations  under,  this Agreement or any of the
documents contemplated herein, or (iii) except as expressly disclosed in the SEC
Documents,  have  a  Material  Adverse  Effect  on  the  business,   operations,
properties,  financial  condition or results of operation of the Company and its
subsidiaries taken as a whole.

     Section 4.18.  Subsidiaries.  Except as disclosed in the SEC Documents, the
Company does not presently own or control, directly or indirectly,  any interest
in any other corporation, partnership, association or other business entity.

     Section 4.19. Tax Status. The Company and each of its subsidiaries has made
or filed all federal  and state  income and all other tax  returns,  reports and
declarations required by any jurisdiction to which it is subject and (unless and
only to the extent that the Company and each of its  subsidiaries  has set aside
on its books  provisions  reasonably  adequate for the payment of all unpaid and
unreported  taxes)  has paid all taxes and other  governmental  assessments  and
charges  that are  material  in amount,  shown or  determined  to be due on such
returns,  reports and  declarations,  except those being contested in good faith
and has set aside on its books provision  reasonably adequate for the payment of
all taxes for periods  subsequent to the periods to which such returns,  reports
or declarations  apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any  jurisdiction,  and the officers of the
Company know of no basis for any such claim.

     Section  4.20.  Certain  Transactions.  Except  as set  forth  in  the  SEC
Documents  none of the  officers,  directors,  or  employees  of the  Company is
presently a party to any  transaction  with the Company (other than for services
as employees,  officers and  directors),  including  any contract,  agreement or
other  arrangement  providing for the furnishing of services to or by, providing
for rental of real or  personal  property  to or from,  or  otherwise  requiring
payments to or from any officer,  director or such employee or, to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any
officer,  director,  or any such  employee has a  substantial  interest or is an
officer, director, trustee or partner.

     Section 4.21. Fees and Rights of First Refusal.  Except as set forth in the
SEC  Documents,  the Company is not  obligated to offer the  securities  offered
hereunder on a right of first  refusal  basis or otherwise to any third  parties
including,  but not limited to, current or former  shareholders  of the Company,
underwriters, brokers, agents or other third parties.

     Section 4.22. Use of Proceeds. The Company represents that the net proceeds
from this offering will be used for general corporate  purposes.  However, in no
event shall the net proceeds  from this  offering be used by the Company for the
payment (or loaned to any such person for the payment) of any judgment, or other
liability,  incurred by any executive officer,  officer, director or employee of
the Company, except for any liability owed to such person for services rendered,
or if any  judgment or other  liability  is incurred by such person  originating
from  services  rendered to the  Company,  or the Company has  indemnified  such
person from liability.

     Section 4.23. Further  Representation and Warranties of the Company. For so
long  as  any  securities   issuable  hereunder  held  by  the  Investor  remain
outstanding, the Company acknowledges,  represents,  warrants and agrees that it
will maintain the listing of its Common Stock on the Principal Market

     Section 4.24. Opinion of Counsel.  Investor shall receive an opinion letter
from  Kirkpatrick  &  Lockhart  LLP,  counsel  to  the  Company  (updated  where
applicable) on the date hereof.

     Section 4.25. Opinion of Counsel. The Company will obtain for the Investor,
at the  Company's  expense,  any  and  all  opinions  of  counsel  which  may be
reasonably  required in order to sell the securities  issuable hereunder without
restriction.

<PAGE>

     Section 4.26. Dilution. The Company is aware and acknowledges that issuance
of shares of the  Company's  Common  Stock  could  cause  dilution  to  existing
shareholders and could  significantly  increase the outstanding number of shares
of Common Stock.

                                   ARTICLE V.
                                 Indemnification

     The Investor  and the Company  represent  to the other the  following  with
respect to itself:

     Section 5.1. Indemnification.

          (a) In consideration of the Investor's  execution and delivery of this
     Agreement,  and in addition to all of the Company's other obligations under
     this  Agreement,  the Company  shall  defend,  protect,  indemnify and hold
     harmless  the  Investor,  and  all of its  officers,  directors,  partners,
     employees and agents  (including,  without  limitation,  those  retained in
     connection   with  the   transactions   contemplated   by  this  Agreement)
     (collectively,  the  "Investor  Indemnitees")  from and against any and all
     actions, causes of action, suits, claims, losses, costs,  penalties,  fees,
     liabilities and damages, and expenses in connection therewith (irrespective
     of whether any such Investor  Indemnitee is a party to the action for which
     indemnification  hereunder is sought), and including reasonable  attorneys'
     fees and  disbursements  (the "Indemnified  Liabilities"),  incurred by the
     Investor  Indemnitees  or any of them as a result of, or arising out of, or
     relating to (a) any  misrepresentation  or breach of any  representation or
     warranty made by the Company in this Agreement or the  Registration  Rights
     Agreement or any other  certificate,  instrument  or document  contemplated
     hereby or thereby, (b) any breach of any covenant,  agreement or obligation
     of the Company  contained  in this  Agreement  or the  Registration  Rights
     Agreement or any other  certificate,  instrument  or document  contemplated
     hereby or  thereby,  or (c) any cause of action,  suit or claim  brought or
     made  against  such  Investor  Indemnitee  not arising out of any action or
     inaction of an Investor  Indemnitee,  and arising out of or resulting  from
     the  execution,  delivery,  performance or enforcement of this Agreement or
     any other instrument, document or agreement executed pursuant hereto by any
     of the Investor  Indemnitees.  To the extent that the foregoing undertaking
     by the Company may be unenforceable for any reason,  the Company shall make
     the maximum  contribution  to the payment and  satisfaction  of each of the
     Indemnified Liabilities, which is permissible under applicable law.

          (b) In consideration  of the Company's  execution and delivery of this
     Agreement, and in addition to all of the Investor's other obligations under
     this  Agreement,  the Investor  shall defend,  protect,  indemnify and hold
     harmless  the Company  and all of its  officers,  directors,  shareholders,
     employees and agents  (including,  without  limitation,  those  retained in
     connection   with  the   transactions   contemplated   by  this  Agreement)
     (collectively,  the  "Company  Indemnitees")  from and  against any and all
     Indemnified  Liabilities incurred by the Company Indemnitees or any of them
     as a result of, or arising out of, or relating to (a) any misrepresentation
     or breach of any  representation  or warranty  made by the Investor in this
     Agreement, the Registration Rights Agreement, or any instrument or document
     contemplated hereby or thereby executed by the Investor,  (b) any breach of
     any covenant,  agreement or obligation of the Investor(s) contained in this
     Agreement,  the  Registration  Rights  Agreement or any other  certificate,
     instrument  or  document  contemplated  hereby or thereby  executed  by the
     Investor, or (c) any cause of action, suit or claim brought or made against
     such Company Indemnitee based on  misrepresentations  or due to a breach by
     the Investor and arising out of or resulting from the execution,  delivery,
     performance  or  enforcement  of this  Agreement  or any other  instrument,
     document  or  agreement  executed  pursuant  hereto  by any of the  Company
     Indemnitees.  To the extent that the foregoing  undertaking by the Investor
     may be  unenforceable  for any reason,  the Investor shall make the maximum
     contribution  to the payment and  satisfaction  of each of the  Indemnified
     Liabilities, which is permissible under applicable law.

<PAGE>
                                   ARTICLE VI.
                            Covenants of the Company

     Section 6.1.  Registration Rights. The Company shall cause the Registration
Rights Agreement to remain in full force and effect and the Company shall comply
in all material respects with the terms thereof.

     Section 6.2. Listing of Common Stock. The Company shall maintain the Common
Stock's authorization for quotation on the American Stock Exchange.

     Section 6.3. Exchange Act  Registration.  The Company will cause its Common
Stock to continue to be registered under Section 12(g) of the Exchange Act, will
file in a timely  manner all  reports  and other  documents  required of it as a
reporting  company  under the  Exchange Act and will not take any action or file
any document  (whether or not permitted by Exchange Act or the rules there under
to  terminate  or suspend  such  registration  or to  terminate  or suspend  its
reporting and filing obligations under said Exchange Act.

     Section 6.4.  Transfer  Agent  Instructions.  Not later than two days after
each Advance Notice Date and prior to each Closing and the  effectiveness of the
Registration  Statement  and resale of the  Common  Stock by the  Investor,  the
Company  will  deliver  instructions  to its  transfer  agent to issue shares of
Common Stock free of restrictive legends.

     Section 6.5. Corporate Existence. The Company will take all steps necessary
to preserve and continue the corporate existence of the Company.

     Section 6.6. Notice of Certain Events Affecting Registration; Suspension of
Right to Make an Advance.  The Company will immediately notify the Investor upon
its becoming aware of the  occurrence of any of the following  events in respect
of a  registration  statement or related  prospectus  relating to an offering of
Registrable Securities: (i) receipt of any request for additional information by
the SEC or any other Federal or state  governmental  authority during the period
of effectiveness of the Registration  Statement for amendments or supplements to
the registration  statement or related prospectus;  (ii) the issuance by the SEC
or  any  other  Federal  or  state  governmental  authority  of any  stop  order
suspending the effectiveness of the Registration  Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the  Registrable  Securities for sale in any  jurisdiction  or the initiation or
threatening of any proceeding for such purpose;  (iv) the happening of any event
that  makes  any  statement  made  in  the  Registration  Statement  or  related
prospectus of any document  incorporated or deemed to be incorporated therein by
reference  untrue in any  material  respect or that  requires  the making of any
changes in the Registration Statement,  related prospectus or documents so that,
in the case of the  Registration  Statement,  it will  not  contain  any  untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements  therein not misleading,  and
that in the case of the  related  prospectus,  it will not  contain  any  untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements  therein, in the light of the
circumstances under which they were made, not misleading;  and (v) the Company's
reasonable  determination  that a  post-effective  amendment to the Registration
Statement would be appropriate;  and the Company will promptly make available to
the Investor any such  supplement  or amendment to the related  prospectus.  The
Company  shall not  deliver  to the  Investor  any  Advance  Notice  during  the
continuation of any of the foregoing events.

         Section 6.7. Expectations Regarding Advance Notices. Within ten (10)
days after the commencement of each calendar quarter occurring subsequent to the
commencement of the Commitment Period, the Company must notify the Investor, in
writing, as to its reasonable expectations as to the dollar amount it intends to
raise during such calendar quarter, if any, through the issuance of Advance
Notices. Such notification shall constitute only the Company's good faith
estimate and shall in no way obligate the Company to raise such amount, or any
amount, or otherwise limit its ability to deliver Advance Notices. The failure
by the Company to comply with this provision can be cured by the Company's
notifying the Investor, in writing, at any time as to its reasonable
expectations with respect to the current calendar quarter.

     Section  6.8.  Consent  of  Investor  to  Sell  Common  Stock.  During  the
Commitment  Period,  the  Company  shall not issue or sell (i) any Common  Stock
without  consideration or for a consideration  per share less than its Bid Price
determined  immediately  prior to its issuance,  (ii) issue or sell any warrant,
option,  right,  contract,  call, or other  security or instrument  granting the
holder thereof the right to acquire Common Stock without  consideration or for a
consideration  per share  less than such  Common  Stock's  Bid Price  determined
immediately prior to its issuance,  or (iii) file any registration  statement on
Form S-8.

<PAGE>

     Section  6.9.  Consolidation;  Merger.  The Company  shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into,  or a transfer  of all or  substantially  all the assets of the Company to
another  entity (a  "Consolidation  Event")  unless the  resulting  successor or
acquiring  entity  (if  not the  Company)  assumes  by  written  instrument  the
obligation to deliver to the Investor such shares of stock and/or  securities as
the Investor is entitled to receive pursuant to this Agreement.

     Section  6.10.  Issuance of the  Company's  Common  Stock.  The sale of the
shares of Common  Stock  shall be made in  accordance  with the  provisions  and
requirements of Regulation D and any applicable state securities law.

                                  ARTICLE VII.
                Conditions for Advance and Conditions to Closing

     Section 7.1.  Conditions  Precedent to the Obligations of the Company.  The
obligation hereunder of the Company to issue and sell the shares of Common Stock
to the  Investor  incident to each  Closing is subject to the  satisfaction,  or
waiver by the Company, at or before each such Closing, of each of the conditions
set forth below.

          (a) Accuracy of the Investor's  Representations  and  Warranties.  The
     representations and warranties of the Investor shall be true and correct in
     all material respects.

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

     Section 7.2. Conditions Precedent to the Right of the Company to Deliver an
Advance Notice and the  Obligation of the Investor to Purchase  Shares of Common
Stock.  The right of the Company to deliver an Advance Notice and the obligation
of the Investor  hereunder to acquire and pay for shares of the Company's Common
Stock  incident  to a Closing is subject  to the  satisfaction  or waiver by the
Investor,  on (i) the  date of  delivery  of such  Advance  Notice  and (ii) the
applicable Advance Date (each a "Condition  Satisfaction  Date"), of each of the
following conditions:

          (a)  Registration  of the Common Stock with the SEC. The Company shall
     have filed with the SEC a Registration Statement with respect to the resale
     of  the  Registrable  Securities  in  accordance  with  the  terms  of  the
     Registration  Rights  Agreement.  As set forth in the  Registration  Rights
     Agreement,   the  Registration   Statement  shall  have  previously  become
     effective and shall remain  effective on each Condition  Satisfaction  Date
     and (i) neither the Company nor the  Investor  shall have  received  notice
     that the SEC has issued or  intends  to issue a stop order with  respect to
     the  Registration  Statement  or that the SEC  otherwise  has  suspended or
     withdrawn  the   effectiveness  of  the  Registration   Statement,   either
     temporarily or  permanently,  or intends or has threatened to do so (unless
     the SEC's  concerns  have been  addressed  and the  Investor is  reasonably
     satisfied  that the SEC no longer is  considering  or  intends to take such
     action),  and  (ii) no other  suspension  of the use or  withdrawal  of the
     effectiveness  of the  Registration  Statement or related  prospectus shall
     exist. The Registration  Statement must have been declared effective by the
     SEC prior to the first Advance Notice Date.

          (b)  Authority.  The  Company  shall have  obtained  all  permits  and
     qualifications  required by any  applicable  state in  accordance  with the
     Registration  Rights  Agreement  for the  offer  and sale of the  shares of
     Common Stock, or shall have the  availability of exemptions there from. The
     sale and issuance of the shares of Common Stock shall be legally  permitted
     by all laws and regulations to which the Company is subject.

          (c) Fundamental Changes. There shall not exist any fundamental changes
     to the  information  set forth in the  Registration  Statement  which would
     require the Company to file a post-effective  amendment to the Registration
     Statement.

          (d)  Performance  by the Company.  The Company  shall have  performed,
     satisfied  and  complied  in all  material  respects  with  all  covenants,
     agreements and conditions  required by this Agreement  (including,  without
     limitation,  the  conditions  specified  in  Section  2.5  hereof)  and the
     Registration  Rights Agreement to be performed,  satisfied or complied with
     by the Company at or prior to each Condition Satisfaction Date.

          (e) 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  that  prohibits or directly and adversely  affects any of the
     transactions  contemplated by this Agreement,  and no proceeding shall have
     been  commenced  that may have  the  effect  of  prohibiting  or  adversely
     affecting any of the transactions contemplated by this Agreement.

          (f) No  Suspension  of Trading in or  Delisting of Common  Stock.  The
     trading of the Common Stock is not  suspended  by the SEC or the  Principal
     Market (if the Common Stock is traded on a Principal Market).  The issuance
     of shares of Common Stock with respect to the applicable  Closing,  if any,
     shall not violate the  shareholder  approval  requirements of the Principal
     Market (if the Common Stock is traded on a Principal  market).  The Company
     shall not have received any notice threatening the continued listing of the
     Common  Stock on the  Principal  Market (if the Common Stock is traded on a
     Principal Market).

          (g) Advances.  The amount of the  individual  Advance,  as well as the
     aggregate  amount of  Advances  in any thirty  (30)  calendar  day  period,
     requested by the Company  does not exceed the Maximum  Advance  Amount.  In
     addition,  in no event shall the number of shares  issuable to the Investor
     pursuant to an Advance cause the Investor to own in excess of nine and 9/10
     percent (9.9%) of the then outstanding Common Stock of the Company.

          (h) No  Knowledge.  The  Company  has no  knowledge  of any event more
     likely than not to have the effect of causing such  Registration  Statement
     to be suspended or otherwise ineffective.

          (i) Prior  Approval.  The Company  shall have  obtained all  approvals
     necessary under the rules and regulations established and maintained by the
     American  Stock  Exchange for the issuance of the shares of Common Stock to
     the Investor  pursuant to Advances  under this  Agreement,  the  Investor's
     shares  pursuant to Section 12.4 and the Placement  Agent's shares pursuant
     to the Placement Agent Agreement.

          (j) Other.  On each  Condition  Satisfaction  Date, the Investor shall
     have received and been  reasonably  satisfied with such other  certificates
     and  documents as shall have been  reasonably  requested by the Investor in
     order  for the  Investor  to  confirm  the  Company's  satisfaction  of the
     conditions set forth in this Section 7.2, including,  without limitation, a
     certificate  executed  by an  executive  officer of the  Company and to the
     effect that all the conditions to such Closing shall have been satisfied as
     at the date of each  such  certificate  substantially  in the form  annexed
     hereto on Exhibit A.

<PAGE>


                                  ARTICLE VIII.
         Due Diligence Review; Non-Disclosure of Non-Public Information

     Section 8.1. Due Diligence Review.  Prior to the filing of the Registration
Statement the Company  shall make  available  for  inspection  and review by the
Investor,  advisors to and  representatives  of the  Investor,  any  underwriter
participating in any disposition of the Registrable  Securities on behalf of the
Investor pursuant to the Registration Statement, any such registration statement
or amendment or supplement  thereto or any blue sky,  NASD or other filing,  all
financial and other  records,  all SEC Documents and other filings with the SEC,
and all other  corporate  documents  and  properties  of the  Company  as may be
reasonably  necessary  for the purpose of such review,  and cause the  Company's
officers,  directors  and  employees to supply all such  information  reasonably
requested by the Investor or any such representative,  advisor or underwriter in
connection with such Registration Statement (including,  without limitation,  in
response to all questions and other  inquiries  reasonably  made or submitted by
any of them),  prior to and from time to time after the filing and effectiveness
of the Registration  Statement for the sole purpose of enabling the Investor and
such representatives, advisors and underwriters and their respective accountants
and attorneys to conduct  initial and ongoing due diligence  with respect to the
Company and the accuracy of the Registration Statement.

     Section 8.2. Non-Disclosure of Non-Public Information.

          (a) The  Company  shall not  disclose  non-public  information  to the
     Investor,  advisors to or  representatives  of the Investor unless prior to
     disclosure of such  information the Company  identifies such information as
     being non-public  information and provides the Investor,  such advisors and
     representatives  with the  opportunity  to accept or refuse to accept  such
     non-public  information  for  review.  The Company  may, as a condition  to
     disclosing any  non-public  information  hereunder,  require the Investor's
     advisors and  representatives to enter into a confidentiality  agreement in
     form reasonably satisfactory to the Company and the Investor.

          (b) Nothing  herein shall  require the Company to disclose  non-public
     information  to the  Investor or its advisors or  representatives,  and the
     Company represents that it does not disseminate  non-public  information to
     any investors who purchase  stock in the Company in a public  offering,  to
     money  managers  or  to  securities  analysts,   provided,   however,  that
     notwithstanding  anything  herein to the  contrary,  the Company  will,  as
     hereinabove  provided,  immediately notify the advisors and representatives
     of the Investor and, if any, underwriters, of any event or the existence of
     any circumstance  (without any obligation to disclose the specific event or
     circumstance)   of  which  it  becomes   aware,   constituting   non-public
     information  (whether  or not  requested  of the  Company  specifically  or
     generally  during the course of due diligence by such persons or entities),
     which,  if not  disclosed in the  prospectus  included in the  Registration
     Statement would cause such prospectus to include a material misstatement or
     to omit a material fact required to be stated  therein in order to make the
     statements, therein, in light of the circumstances in which they were made,
     not misleading. Nothing contained in this Section 8.2 shall be construed to
     mean that such  persons or entities  other than the  Investor  (without the
     written  consent of the Investor  prior to disclosure of such  information)
     may not  obtain  non-public  information  in the course of  conducting  due
     diligence in accordance with the terms of this Agreement and nothing herein
     shall  prevent any such persons or entities  from  notifying the Company of
     their opinion that based on such due diligence by such persons or entities,
     that the  Registration  Statement  contains an untrue statement of material
     fact or omits a material  fact  required  to be stated in the  Registration
     Statement or necessary to make the statements  contained therein,  in light
     of the circumstances in which they were made, not misleading.


                                   ARTICLE IX.
                           Choice of Law/Jurisdiction

     Section  9.1.  Governing  Law.  This  Agreement  shall be  governed  by and
interpreted in accordance with the laws of the State of Delaware  without regard
to the principles of conflict of laws. The parties further agree that any action
between them shall be heard in Hudson County,  New Jersey, and expressly consent
to the  jurisdiction  and venue of the Superior Court of New Jersey,  sitting in
Hudson  County,  New Jersey and the United States  District Court of New Jersey,
sitting in Newark, New Jersey, for the adjudication of any civil action asserted
pursuant to this paragraph.

<PAGE>

                                   ARTICLE X.
                             Assignment; Termination

     Section  10.1.  Assignment.  Neither this  Agreement  nor any rights of the
Company hereunder may be assigned to any other Person.

     Section 10.2. Termination. The obligations of the Investor to make Advances
under  Article II hereof  shall  terminate  twenty-four  (24)  months  after the
Effective Date.


                                   ARTICLE XI.
                                     Notices

     Section  11.1.   Notices.   Any  notices,   consents,   waivers,  or  other
communications  required  or  permitted  to be  given  under  the  terms of this
Agreement  must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered  personally;  (ii) upon receipt, when sent by facsimile,
provided a copy is mailed by U.S.  certified  mail,  return  receipt  requested;
(iii) three (3) days after being sent by U.S.  certified  mail,  return  receipt
requested,  or (iv)  one (1) day  after  deposit  with a  nationally  recognized
overnight  delivery  service,  in each case  properly  addressed to the party to
receive the same.  The addresses and facsimile  numbers for such  communications
shall be:

<TABLE>
<CAPTION>

<S>                                   <C>
If to the Company, to:                Azco Mining Inc.
                                      7239 N. El Mirage Road
                                      Glendale, AZ 85307
                                      Attention:        Ryan Modesto,
                                                        Vice President-Finance
                                      Telephone:        (623) 935-0774
                                      Facsimile:        (623) 935 0781

With a copy to:                       Kirkpatrick & Lockhart, LLP
                                      201 South Biscayne Boulevard - Suite 2000
                                      Miami, FL  33131-2399
                                      Attention: Clayton E. Parker, Esq.
                                      Telephone:        (305) 539-3300
                                      Facsimile:        (305) 358-7095

If to the Investor(s):                Cornell Capital Partners, LP
                                      101 Hudson Street -Suite 3606
                                      Jersey City, NJ 07302
                                      Attention:        Mark Angelo
                                                        Portfolio Manager
                                      Telephone:        (201) 985-8300
                                      Facsimile:        (201) 985-8266

With a Copy to:                       Butler Gonzalez LLP
                                      1000 Stuyvesant Avenue - Suite 6
                                      Union, NJ 07083
                                      Attention:        David Gonzalez, Esq.
                                      Telephone:        (908) 810-8588
                                      Facsimile:        (908) 810-0973

</TABLE>

Each party shall provide five (5) days' prior written  notice to the other party
of any change in address or facsimile number.

<PAGE>

                                  ARTICLE XII.
                                  Miscellaneous

     Section 12.1.  Counterparts.  This Agreement may be executed in two or more
identical  counterparts,  all of  which  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.  In the event any  signature  page is
delivered  by  facsimile  transmission,  the party  using such means of delivery
shall  cause  four  (4)  additional  original  executed  signature  pages  to be
physically  delivered to the other party  within five (5) days of the  execution
and delivery hereof.

     Section 12.2. Entire Agreement;  Amendments.  This Agreement supersedes all
other prior oral or written agreements between the Investor,  the Company, their
affiliates  and  persons  acting on their  behalf  with  respect to the  matters
discussed  herein,  and this  Agreement and the  instruments  referenced  herein
contain  the entire  understanding  of the parties  with  respect to the matters
covered  herein and therein  and,  except as  specifically  set forth  herein or
therein,  neither  the  Company  nor  the  Investor  makes  any  representation,
warranty,  covenant or undertaking with respect to such matters. No provision of
this  Agreement  may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.

     Section 12.3.  Reporting  Entity for the Common Stock. The reporting entity
relied upon for the  determination of the trading price or trading volume of the
Common Stock on any given Trading Day for the purposes of this  Agreement  shall
be Bloomberg,  L.P. or any successor thereto.  The written mutual consent of the
Investor and the Company shall be required to employ any other reporting entity.

     Section  12.4.  Fees and  Expenses.  The Company  hereby  agrees to pay the
following fees:

          (a)  Legal  Fees.  Each of the  parties  shall  pay its own  fees  and
     expenses (including the fees of any attorneys,  accountants,  appraisers or
     others  engaged by such party) in  connection  with this  Agreement and the
     transactions  contemplated  hereby,  except that the  Company  will pay the
     outstanding fees and expenses of Kirkpatrick & Lockhart,  LLP directly from
     the  Advances to be paid to the Company  under this  Agreement  and fees to
     Butler  Gonzalez  LLP for legal,  administrative,  and  escrow  fees in the
     amount  of  Fifteen  Thousand  Dollars  ($15,000)  directly  from the first
     Advance hereunder.  Subsequently on each advance date, the Company will pay
     Butler  Gonzalez  LLP,  the sum of Five Hundred  Dollars  ($500) for legal,
     administrative and escrow fees.

          (b) Commitment Fees.

               (i) On each Advance Date the Company  shall pay to the  Investor,
          directly from the gross  proceeds  held in escrow,  an amount equal to
          five percent (5%) of the amount of each  Advance.  The Company  hereby
          agrees that if such payment, as is described above, is not made by the
          Company  on the  Advance  Date,  such  payment  will  be  made  at the
          direction  of the  Investor as outlined and mandated by Section 2.3 of
          this Agreement.

               (ii) In addition upon the execution of this Agreement the Company
          shall issue to the Investor shares of the Company's Common Stock in an
          amount equal to Two Hundred Forty Thousand Dollars  ($240,000) divided
          by the Closing  Bid Price of the  Company's  Common  Stock on the date
          hereof . (the "Investor's Shares")

               (iii) Fully Earned.  The Investor's  Shares shall be deemed fully
          earned upon delivery to the Investor.

               (iv) Registration  Rights. The Investor's Shares will have demand
          and "piggy-back" registration rights.

     Section 12.5. Brokerage.  Each of the parties hereto represents that it has
had no dealings in connection  with this  transaction  with any finder or broker
who will  demand  payment of any fee or  commission  from the other  party.  The
Company on the one hand, and the Investor, on the other hand, agree to indemnify
the other against and hold the other  harmless from any and all  liabilities  to
any  person  claiming  brokerage  commissions  or  finder's  fees on  account of
services  purported to have been rendered on behalf of the indemnifying party in
connection with this Agreement or the transactions contemplated hereby.

<PAGE>

     Section  12.6.   Confidentiality.   If  for  any  reason  the  transactions
contemplated by this Agreement are not  consummated,  each of the parties hereto
shall keep  confidential  any information  obtained from any other party (except
information  publicly  available  or in such  party's  domain  prior to the date
hereof,  and except as required by court order) and shall promptly return to the
other  parties  all  schedules,  documents,  instruments,  work  papers or other
written information without retaining copies thereof, previously furnished by it
as a result of this Agreement or in connection herein.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>


     IN WITNESS  WHEREOF,  the  parties  hereto  have caused this Line of Credit
Agreement to be executed by the undersigned,  thereunto duly  authorized,  as of
the date first set forth above.

                                           COMPANY:
                                           AZCO MINING INC.

                                           By:
                                           Name: Ryan Modesto
                                           Title:   Vice President-Finance


                                           INVESTOR:
                                           CORNELL CAPITAL PARTNERS, LP

                                           By:      Yorkville Advisors, LLC
                                           Its: General Partner

                                           By:
                                           Name:    Mark Angelo
                                           Title:   Portfolio Manager


<PAGE>

                                    EXHIBIT A

                      ADVANCE NOTICE/COMPLIANCE CERTIFICATE

                                AZCO MINING INC.


     The undersigned,  ________________________________  hereby certifies,  with
respect  to the  sale of  shares  of  Common  Stock  of Azco  Mining  Inc.  (the
"Company"),  issuable in  connection  with this  Advance  Notice and  Compliance
Certificate dated ___________________ (the "Notice"),  delivered pursuant to the
Equity Line of Credit Agreement (the "Agreement"), as follows:

     1.   The  undersigned  is the duly  elected Vice  President-Finance  of the
          Company.

     2.   There are no fundamental  changes to the  information set forth in the
          Registration  Statement which would require the Company to file a post
          effective amendment to the Registration Statement.

     3.   The Company has  performed in all material  respects all covenants and
          agreements  to be  performed by the Company on or prior to the Advance
          Date related to the Notice and has  complied in all material  respects
          with all obligations and conditions contained in the Agreement.

     4.   The Advance requested is _____________________.

     The   undersigned   has  executed  this   Certificate   this  ____  day  of
_________________.

                                               AZCO MINING INC.


                                               By:
                                               Name:      Ryan Modesto
                                               Title:     Vice President-Finance


<PAGE>

                                SCHEDULED 2.6(b)

                                AZCO MINING INC.

     The  undersigned  hereby  agrees that for a period  commencing  on the date
hereof and expiring on the  termination  of the Equity Line of Credit  Agreement
dated  ________________  between Azco Mining Inc. (the  "Company"),  and Cornell
Capital  Partners,  LP, (the "Investor") (the "Lock-up  Period"),  he, she or it
will not,  directly  or  indirectly,  without the prior  written  consent of the
Investor,  issue,  offer,  agree or offer to sell, sell, grant an option for the
purchase  or sale of,  transfer,  pledge,  assign,  hypothecate,  distribute  or
otherwise  encumber  or dispose of except  pursuant  to Rule 144 of the  General
Rules and  Regulations  under the  Securities Act of 1933, any securities of the
Company, including common stock or options, rights, warrants or other securities
underlying,  convertible into, exchangeable or exercisable for or evidencing any
right to purchase or subscribe for any common stock (whether or not beneficially
owned by the undersigned), or any beneficial interest therein (collectively, the
"Securities").

     In order to enable the aforesaid covenants to be enforced,  the undersigned
hereby consents to the placing of legends and/or  stop-transfer  orders with the
transfer agent of the Company's securities with respect to any of the Securities
registered  in  the  name  of  the  undersigned  or  beneficially  owned  by the
undersigned, and the undersigned hereby confirms the undersigned's investment in
the Company.

Dated: _______________, 2002

                                           Signature



                                           Address:
                                           City, State, Zip Code:



                                           Print Social Security Number
                                           or Taxpayer I.D. Number