SECURITIES PURCHASE AGREEMENT

SECURITIES  PURCHASE  AGREEMENT  (the "Agreement"), dated as of May 19, 2006, by
and  among Charys Holding Company, Inc. (the "COMPANY") and the investors listed
on  the  Schedule  of  Buyers  attached  hereto  (individually,  a  "BUYER"  and
collectively,  the  "BUYERS").

WHEREAS:

A.     The  Company and each Buyer is executing and delivering this Agreement in
reliance  upon  the  exemption  from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "1933 ACT"), and Rule 506 of
Regulation D ("REGULATION D") as promulgated by the United States Securities and
Exchange  Commission  (the  "SEC")  under  the  1933  Act.

B.     The Company has authorized a new series of convertible preferred stock of
the  Company  designated  as  Series  D Cumulative Preferred Stock, the terms of
which  are  set  forth  in  the  certificate  of  designation for such series of
preferred  stock (the "CERTIFICATE OF DESIGNATIONS") in the form attached hereto
as  Exhibit  A  (together  with  any  convertible  Preferred  Stock  issued  in
    ----------
replacement  thereof  in  accordance  with  the  terms  thereof,  the "PREFERRED
STOCK"),  which  Preferred  Stock shall be convertible into the Company's common
stock,  par  value $0.001 per share (the "COMMON STOCK"), in accordance with the
terms  of  the  Certificate  of  Designations.

C.     Each  Buyer  wishes to purchase, and the Company wishes to sell, upon the
terms  and  conditions  stated  in  this Agreement, (i) that aggregate number of
Preferred  Stock  set  forth  opposite  such  Buyer's  name in column (3) on the
Schedule  of  Buyers (which aggregate number for all Buyers shall be up to 1,300
Preferred  Stock  and the shares of Common Stock into which such Preferred Stock
are  convertible  being  referred to herein as the "CONVERSION SHARES") and (ii)
Warrants  in  substantially  the  form  attached  hereto  as  Exhibit  B  (the
                                                              ----------
"WARRANTS"),  to  acquire  that  number of shares of Common Stock (as exercised,
collectively,  the  "WARRANT  SHARES")  set  forth opposite such Buyer's name in
column  (4)  on  the  Schedule  of  Buyers.

D.     Contemporaneously  with the execution and delivery of this Agreement, the
parties  hereto  are  executing  and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit C (the "REGISTRATION RIGHTS
                                             ---------
AGREEMENT"),  pursuant  to  which  the  Company  has  agreed  to provide certain
registration  rights  with  respect to the Registrable Securities (as defined in
the  Registration  Rights  Agreement),  under  the  1933  Act  and the rules and
regulations  promulgated  thereunder,  and  applicable  state  securities  laws.

E.     At  the  Closing,  the parties hereto shall execute and deliver an Escrow
Shares  Escrow  Agreement substantially in the form attached hereto as Exhibit D
                                                                       ---------
(the "ESCROW SHARES ESCROW AGREEMENT") pursuant to which the Company shall issue
and deliver to Gottbetter & Partners, LLP (the "ESCROW AGENT") Eight Million Six
Hundred  Sixty  Six  Thousand  Six  Hundred  and Sixty Six (8,666,666) shares of
Common  Stock  as  "security  stock"  (the "ESCROW SHARES") and the Escrow Agent
shall  distribute  some or all of the Escrow Shares to the Buyer upon conversion
of  the  Preferred  Stock  and/or  exercise  of  the  Warrants;

F.     The  Preferred Stock, the Conversion Shares, the Warrants and the Warrant
Shares  are  collectively  referred  to  herein  as  the  "SECURITIES".

NOW,  THEREFORE,  the  Company  and  each  Buyer  hereby  agree  as  follows:


<PAGE>
1.     PURCHASE  AND  SALE  OF  PREFERRED  STOCK  AND  WARRANTS.

(a)     Preferred Stock and Warrants. Subject to the satisfaction (or waiver) of
        ----------------------------
the  conditions set forth in Sections 6 and 7 below, the Company shall issue and
sell  to  each  Buyer,  and  each  Buyer  severally,  but not jointly, agrees to
purchase  from the Company on the Closing Date (as defined below), the number of
Preferred Stock, as is set forth opposite such Buyer's name in column (3) on the
Schedule of Buyers, along with Warrants to acquire that number of Warrant Shares
as  is  set  forth  opposite  such Buyer's name in column (4) on the Schedule of
Buyers.

(b)     Closing.  The  closing  (the "CLOSING") of the purchase of the Preferred
        -------
Stock  and the Warrants by the Buyers shall occur at the offices of Gottbetter &
Partners,  LLP,  488 Madison Avenue, New York, New York 10022. The date and time
of  the Closing (the "CLOSING DATE") shall be 10:00 a.m., New York City Time, on
the  date hereof, subject to the notification of satisfaction (or waiver) of the
conditions  to  the  Closing  set forth in Sections 6 and 7 below (or such later
date  as  is  mutually  agreed to by the Company and each Buyer). As used herein
"Business Day" means any day other than a Saturday, Sunday or other day on which
commercial  banks  in  The City of New York are authorized or required by law to
remain  closed.

(c)     Purchase Price. The aggregate purchase price for the Preferred Stock and
        --------------
the  Warrants  to be purchased by each Buyer (the "PURCHASE PRICE") shall be the
amount  set  forth  opposite  such Buyer's name in column (5) on the Schedule of
Buyers.  Each  Buyer  shall  pay  $9,400  for  each share of Preferred Stock and
related  Warrants  to  be  purchased  by  such  Buyer  at  the  Closing.

(d)     Form of  Payment.  On  the  Closing  Date,  (A) each Buyer shall pay its
        ----------------
portion  of  the  Purchase  Price  to  the  Company via the Escrow Agent for the
Preferred  Stock  and  the  Warrants  to be issued and sold to such Buyer at the
Closing,  by wire transfer of immediately available funds in accordance with the
Escrow  Agent's  written  wire instructions and (B) the Company shall deliver to
each Buyer via the Escrow Agent the Preferred Stock (in such denominations as is
set  forth  opposite such Buyer's name in column (3) on the Schedule of Buyers),
along with the Warrants (exercisable for the number of shares of Common Stock as
is  set  forth  opposite  such  Buyer's  name  in  column (4) on the Schedule of
Buyers),  each duly executed on behalf of the Company and registered in the name
of  such  Buyer  or  its  designee.

2.     REPRESENTATIONS  AND  WARRANTIES.

Each  Buyer  represents  and  warrants  with  respect  to  only  itself  that:

(a)     Organization; Authority. Such Buyer is an entity duly organized, validly
        -----------------------
existing  and  in  good  standing  under  the  laws  of  the jurisdiction of its
organization  with  the  requisite  power  and  authority  to  enter into and to
consummate  the  transactions  contemplated  by  the  Transaction  Documents (as
defined below) to which it is a party and otherwise to carry out its obligations
hereunder  and  thereunder.

(b)     No  Public  Sale  or  Distribution.  Such  Buyer  is  (i)  acquiring the
        ----------------------------------
Preferred  Stock  and  the Warrants, (ii) upon conversion of the Preferred Stock
will acquire the Conversion Shares, and (iii) upon exercise of the Warrants will
acquire  the  Warrant  Shares,  in each case, for its own account and not with a
view  towards, or for resale in connection with, the public sale or distribution
thereof,  except  pursuant  to  sales registered or exempted under the 1933 Act;
provided,  however,  that  by making the representations herein, such Buyer does
not  agree  to hold any of the Securities for any minimum or other specific term
and  reserves  the  right to dispose of the Securities at any time in accordance
with or pursuant to a registration statement or an exemption under the 1933 Act.
Such Buyer is not a broker-dealer registered, or required to be registered, with
the  SEC under the 1934 Act. Such Buyer is acquiring the Securities hereunder in
the


                                        2
<PAGE>
ordinary  course  of  its  business.  Such  Buyer  does  not  presently have any
agreement  or  understanding,  directly  or  indirectly,  with  any  Person  to
distribute  any  of  the  Securities.

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

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

(e)     Information.  Such  Buyer  and its advisors, if any, have been furnished
        -----------
with  all  materials  relating  to  the business, finances and operations of the
Company  and  materials  relating  to the offer and sale of the Securities which
have  been  requested  by  such Buyer. Such Buyer and its advisors, if any, have
been  afforded  the  opportunity  to  ask questions of the Company. Neither such
inquiries  nor any other due diligence investigations conducted by such Buyer or
its  advisors, if any, or its representatives shall modify, amend or affect such
Buyer's  right to rely on the Company's representations and warranties contained
herein.  Such Buyer understands that its investment in the Securities involves a
high degree of risk. Such Buyer has sought such accounting, legal and tax advice
as  it  has  considered  necessary  to make an informed investment decision with
respect  to  its  acquisition  of  the  Securities.

(f)     No  Governmental  Review.  Such  Buyer understands that no United States
        ------------------------
federal  or  state  agency  or  any  other government or governmental agency has
passed  on  or  made  any recommendation or endorsement of the Securities or the
fairness  or  suitability  of  the  investment  in  the Securities nor have such
authorities  passed  upon  or  endorsed  the  merits  of  the  offering  of  the
Securities.

(g)     Transfer  or  Resale.  Such Buyer understands that except as provided in
        --------------------
the  Registration Rights Agreement: (i) the Securities have not been and are not
being registered under the 1933 Act or any state securities laws, and may not be
offered  for  sale,  sold,  assigned  or  transferred  unless  (A)  subsequently
registered  thereunder,  (B)  such  Buyer shall have delivered to the Company an
opinion  of  counsel,  in  a  generally acceptable form, to the effect that such
Securities  to  be  sold,  assigned  or  transferred  may  be  sold, assigned or
transferred  pursuant  to an exemption from such registration, or (C) such Buyer
provides the Company with reasonable assurance that such Securities can be sold,
assigned  or transferred pursuant to Rule 144 or Rule 144A promulgated under the
1933  Act, as amended, (or a successor rule thereto) (collectively, "RULE 144");
(ii) any sale of the Securities made in reliance on Rule 144 may be made only in
accordance  with  the  terms  of  Rule  144  and  further,  if  Rule  144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or  the  Person (as defined in Section 3(s)) through whom the sale is made) may
be  deemed  to  be  an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other exemption under the 1933 Act or the rules and
regulations  of  the SEC thereunder; and (iii) neither the Company nor any other
Person  is under any obligation to register the Securities under the 1933 Act or
any  state  securities  laws  or  to comply with the terms and conditions of any
exemption  thereunder.  The  Securities may be pledged in connection with a bona
fide  margin  account  or  other  loan  or  financing arrangement secured by the
Securities  and  such pledge of Securities shall not be deemed to be a transfer,
sale  or assignment of the Securities hereunder, and no Buyer effecting a pledge
of  Securities  shall be required to provide the Company with any notice thereof
or  otherwise make any delivery to the Company pursuant to this Agreement or any
other  Transaction  Document  (as  defined  in Section 3(b)), including, without
limitation,  this  Section  2(g).


                                        3
<PAGE>
(h)     Legends.  Such  Buyer  understands  that  the  certificates  or  other
        -------
instruments  representing  the  Preferred Stock and the Warrants and, until such
time  as  the  resale  of the Conversion Shares and the Warrant Shares have been
registered  under  the  1933  Act  as  contemplated  by  the Registration Rights
Agreement,  the  stock  certificates  representing the Conversion Shares and the
Warrant  Shares, except as set forth below, shall bear any legend as required by
the  "blue  sky" laws of any state and a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such
stock  certificates):

     [NEITHER  THE  ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
     CERTIFICATE  NOR  THE  SECURITIES  INTO  WHICH  THESE  SECURITIES  ARE
     [CONVERTIBLE]  [EXERCISABLE]  HAVE BEEN][THE SECURITIES REPRESENTED BY
     THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF
     1933,  AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
     MAY  NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
     ABSENCE  OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
     UNDER  THE  SECURITIES  ACT  OF 1933, AS AMENDED, OR (B) AN OPINION OF
     COUNSEL,  IN  A  GENERALLY  ACCEPTABLE  FORM, THAT REGISTRATION IS NOT
     REQUIRED  UNDER  SAID  ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR
     144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY
     BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
     OR  FINANCING  ARRANGEMENT  SECURED  BY  THE  SECURITIES.

The  legend  set  forth  above  shall  be  removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped,  if,  unless  otherwise  required  by  state  securities laws, (i) such
Securities are registered for resale under the 1933 Act, (ii) in connection with
a  sale,  assignment or other transfer, such holder provides the Company with an
opinion  of  counsel,  in  a  generally acceptable form, to the effect that such
sale,  assignment or transfer of the Securities may be made without registration
under the applicable requirements of the 1933 Act, or (iii) such holder provides
the  Company with reasonable assurance that the Securities can be sold, assigned
or  transferred  pursuant  to Rule 144 or Rule 144A.  The Company shall bear all
fees  and  expenses related to the removal of the legend and issuance of any new
unlegended  Securities.

(i)     Validity;  Enforcement.  This  Agreement  and  the  Registration  Rights
        ----------------------
Agreement  have  been  duly  and  validly  authorized, executed and delivered on
behalf  of  such  Buyer  and  shall  constitute  the  legal,  valid  and binding
obligations  of  such  Buyer  enforceable  against such Buyer in accordance with
their  respective terms, except as such enforceability may be limited by general
principles  of  equity  or  applicable  bankruptcy,  insolvency, reorganization,
moratorium,  liquidation  and  other  similar  laws  relating  to,  or affecting
generally,  the  enforcement  of  applicable  creditors'  rights  and  remedies.

(j)     No  Conflicts.  The execution, delivery and performance by such Buyer of
        -------------
this  Agreement  and  the  Registration Rights Agreement and the consummation by
such  Buyer  of  the  transactions  contemplated hereby and thereby will not (i)
result  in  a  violation  of  the organizational documents of such Buyer 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  such  Buyer is a party), (iii) result in a
violation  of  any  law, rule, regulation, order, judgment  or decree (including
federal  and state securities laws) applicable to such Buyer, except in the case
of  clauses  (ii)  and  (iii)  above,  for  such  conflicts, defaults, rights or
violations  which  would  not,  individually  or in the aggregate, reasonably be
expected  to  have  a  material  adverse  effect on the ability of such Buyer to
perform  its  obligations  hereunder.


                                        4
<PAGE>
(k)     Residency. Such Buyer is a resident of that jurisdiction specified below
        ---------
its  address  on  the  Schedule  of  Buyers.

(l)     Certain Trading Activities. No Buyer has directly or indirectly, nor has
        ---------------------------
any Person acting on behalf of or pursuant to any understanding with such Buyer,
engaged  in any transactions in the securities of the Company (including without
limitation,  any  Short Sales involving the Company's securities) since the time
that the Buyer was first contacted by the Company or Gottbetter Capital Finance,
LLC regarding an investment in the Company. Each Buyer covenants that neither it
nor  any  Person  acting  on its behalf or pursuant to any understanding with it
will engage in any transaction in the securities of the Company (including Short
Sales)  prior  to  the time that the transactions contemplated by this Agreement
are  publicly  disclosed  pursuant to Section 4(i). Short Sales include, without
limitation,  all  "short  sales"  as  defined  in  Rule  200  promulgated  under
Regulation  SHO  under  the  1934 Act and all types of direct and indirect stock
pledges,  forward  sale  contracts,  options,  puts,  calls,  swaps  and similar
arrangements  (including  on  a  total  return  basis),  and  sales  and  other
transactions  through  non-US  broker  dealers  or  foreign  regulated  brokers.

(m)     General  Solicitation. No Buyer is 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.

3.     REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.

The  Company  represents  and  warrants  to  each  of the Buyers that, except as
otherwise set forth in the SEC Documents (as defined herein) or otherwise on the
schedule  of exceptions delivered to the Buyers in connection with the execution
of  this  Agreement  (the  "Schedules"):

(a)     Organization  and  Qualification.  The  Company  and  its "SUBSIDIARIES"
        --------------------------------
(which  for  purposes  of  this Agreement means any entity in which the Company,
directly  or  indirectly,  owns  capital  stock  or  holds  an equity or similar
interest)  are entities duly organized and validly existing and in good standing
under  the  laws  of  the  jurisdiction  in  which they are formed, and have the
requisite  power and authorization to own their properties and to carry on their
business  as  now  being  conducted. Each of the Company and its Subsidiaries is
duly  qualified  as  a  foreign entity to do business and is in good standing in
every  jurisdiction  in  which  its  ownership  of property or 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. As used in this Agreement, "MATERIAL ADVERSE EFFECT"
means  any  material  adverse  effect  on  the  business,  properties,  assets,
operations, results of operations, condition (financial or otherwise) or current
prospects  of  the  Company  and  its  Subsidiaries,  both  taken as a whole and
individually  as  to any Subsidiary that is a Significant Subsidiary (as defined
in  Regulation  S-X), or on the transactions contemplated hereby or in the other
Transaction Documents or by the agreements and instruments to be entered into in
connection  herewith or therewith, or on the authority or ability of the Company
to  perform  its obligations under the Transaction Documents (as defined below).
The  Company has no Subsidiaries.  The Company owns, directly or indirectly, all
of the capital stock or other equity interests of each Subsidiary free and clear
of any liens, and all the issued and outstanding shares of capital stock of each
Subsidiary  are  validly  issued  and are fully paid, non-assessable and free of
preemptive  and  similar  rights  to  subscribe  for  or  purchase  securities.

(b)     Authorization;  Enforcement;  Validity.  The  Company  has the requisite
        --------------------------------------
corporate  power  and  authority to enter into and perform its obligations under
this  Agreement, the Certificate of Designations, the Warrants, the Registration
Rights  Agreement,  the  Escrow  Shares  Escrow  Agreement and each of the other
agreements  entered  into  by  the  parties  hereto  in  connection  with  the
transactions  contemplated  by


                                        5
<PAGE>
this  Agreement  (collectively,  the  "TRANSACTION  DOCUMENTS") and to issue the
Securities  in  accordance  with the terms hereof and thereof. The execution and
delivery  of  this  Agreement and the other Transaction Documents by the Company
and  the consummation by the Company of the transactions contemplated hereby and
thereby, including, without limitation, the issuance of the Preferred Stock, the
reservation for issuance and the issuance of the Conversion Shares issuable upon
conversion  of  the  Preferred  Stock,  the  issuance  of  the  Warrants and the
reservation  for  issuance  and  issuance  of  the  Warrant Shares issuable upon
exercise  of  the  Warrants, have been duly authorized by the Company's Board of
Directors  and  (other  than the filing with the SEC of one or more Registration
Statements  in  accordance  with  the  requirements  of  the Registration Rights
Agreement  and  any  other  filings  as  may be required by any state securities
agencies)  no  further  filing,  consent,  or  authorization  is required by the
Company,  its  Board  of  Directors  or its stockholders. This Agreement and the
other  Transaction  Documents  of even date herewith have been duly executed and
delivered  by  the  Company,  and  constitute  the  legal,  valid  and  binding
obligations  of  the Company, enforceable against the Company in accordance with
their  respective 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 applicable creditors' rights and remedies and except as rights to
indemnification  and  to  contribution  may  be  limited  by  federal  or  state
securities  law.  The Certificate of Designations in the form attached hereto as
Exhibit A shall be filed with the Secretary of State of the State of Delaware on
---------
or  prior  to  Closing.

(c)     Issuance  of  Securities.  The  issuance  of the Preferred Stock and the
        ------------------------
Warrants  are  duly authorized and upon issuance in accordance with the terms of
the  Transaction  Documents shall be free from all taxes, liens and charges with
respect  to  the issue thereof, and the Preferred Stock shall be entitled to the
rights  and  preferences set forth in the Certificate of Designations. As of the
Closing,  the Company shall have reserved from its duly authorized capital stock
not  less  than  the  sum  of  (i)  the maximum number of shares of Common Stock
issuable upon conversion of the Preferred Stock (without taking into account any
limitations  on  the  conversion  of  the  Preferred  Stock  set  forth  in  the
Certificate  of Designations) and (ii) 4,333,333 shares of Common Stock issuable
upon  exercise  of  the Warrants. Upon issuance or conversion in accordance with
the  Certificate of Designations or exercise in accordance with the Warrants, as
the  case  may  be,  the Conversion Shares and the Warrant Shares, respectively,
will  be  validly  issued,  fully  paid  and  nonassessable  and  free  from all
preemptive or similar rights, taxes, liens and charges with respect to the issue
thereof,  with  the holders being entitled to all rights accorded to a holder of
Common  Stock.  Subject  to  the representations and warranties of the Buyers in
this  Agreement,  the  offer  and  issuance  by the Company of the Securities is
exempt  from  registration  under  the  1933  Act.

(d)     No  Conflicts. The execution, delivery and performance of this Agreement
        -------------
and  the  other Transaction Documents by the Company and the consummation by the
Company  of the transactions contemplated hereby and thereby (including, without
limitation,  the  issuance of the Preferred Stock, the Warrants, and reservation
for  issuance  of  the  Conversion  Shares  and the Warrant Shares) will not (i)
result in a violation of the Certificate of Incorporation (as defined in Section
3(r))  of  the Company or Bylaws (as defined in Section 3(r)) or the Certificate
of  Designations  of  the Company 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, except to the extent such conflict, default
or termination right would not reasonably be expected to have a Material Adverse
Effect,  or  (iii)  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 Over-The Counter Bulletin Board of the NASD
(the "PRINCIPAL MARKET") applicable to the Company or any of its Subsidiaries or
by  which  any  property  or  asset of the Company or any of its Subsidiaries is
bound  or  affected  except,  in  the case of clause (ii) or (iii) above, to the
extent  such  violations  would  not  reasonably  be expected to have a Material
Adverse  Effect.


                                        6
<PAGE>
(e)     Consents.  The  Company  is  not  required  to  obtain  any  consent,
        --------
authorization  or  order of, or make any filing or registration with, any court,
governmental  agency  or  any  regulatory or self-regulatory agency or any other
Person  in  order  for  it to execute, deliver or perform any of its obligations
under  or contemplated by this Agreement and the other Transaction Documents, in
each  case  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  Closing  Date,  and  the  Company is unaware of any facts or
circumstances which might prevent the Company from obtaining or effecting any of
the  registration,  application  or  filings pursuant to the preceding sentence.

(f)     Acknowledgment  Regarding  Buyers'  Purchase  of Securities. The Company
        -----------------------------------------------------------
acknowledges  and  agrees that each Buyer is acting solely in the capacity of an
arm's  length purchaser with respect to this Agreement and the other Transaction
Documents and the transactions contemplated hereby and thereby and that no Buyer
is (i) an officer or director of the Company, (ii) an "affiliate" of the Company
or any of its Subsidiaries (as defined in Rule 144) or (iii) to its knowledge, a
"beneficial  owner"  of  more than 10% of the shares of Common Stock (as defined
for  purposes  of  Rule 13d-3 of the Securities Exchange Act of 1934, as amended
(the "1934 ACT")). The Company further acknowledges that no Buyer is acting as a
financial  advisor or fiduciary of the Company or any of its Subsidiaries (or in
any  similar  capacity)  with  respect  to  the  Transaction  Documents  and the
transactions contemplated hereby and thereby, and any advice given by a Buyer or
any  of  its representatives or agents in connection with this Agreement and the
other Transaction Documents and the transactions contemplated hereby and thereby
is  merely  incidental  to  such Buyer's purchase of the Securities. The Company
further  represents to each Buyer that the Company's decision to enter into this
Agreement  and  the  other  Transaction  Documents  has been based solely on the
independent  evaluation  by  the  Company  and  its  representatives.

(g)     No  General  Solicitation;  Placement Agent's Fees. Neither the Company,
        --------------------------------------------------
nor any of its Subsidiaries or 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) in connection with the offer or sale of the
Securities.  The  Company  shall be responsible for the payment of any placement
agent's  fees,  financial advisory fees, or brokers' commissions (other than for
persons  engaged  by any Buyer or its investment advisor) relating to or arising
out  of  the  transactions  contemplated hereby. The Company shall pay, and hold
each  Buyer harmless against, any liability, loss or expense (including, without
limitation,  attorney's  fees  and out-of-pocket expenses) arising in connection
with  any  such  claim.  The Company acknowledges that it has engaged Gottbetter
Capital Finance, LLC to structure the transaction in connection with the sale of
the  Securities.  The Company has not engaged any placement agent or other agent
in  connection  with  the  sale  of  the  Securities.

(h)     No  Integrated  Offering.  None of the Company, its Subsidiaries, any of
        ------------------------
their  affiliates,  or 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 require registration of any of
the Securities under the 1933 Act or cause this offering of the Securities to be
integrated  with  prior offerings by the Company for purposes of the 1933 Act or
any  applicable  stockholder approval provisions, including, without limitation,
under the rules and regulations of any exchange or automated quotation system on
which any of the securities of the Company are listed or designated. None of the
Company, its Subsidiaries, their affiliates or any Person acting on its or their
behalf  will take any action or steps referred to in the preceding sentence that
would  require registration of any of the Securities under the 1933 Act or cause
the  offering  of  the  Securities  to  be  integrated  with  other  offerings.

(i)     Dilutive  Effect.  The  Company  understands  and  acknowledges that the
        ----------------
Warrant  Shares issuable upon exercise of the Warrants, will increase in certain
circumstances.  The  Company  further


                                        7
<PAGE>
acknowledges  that  its obligation to issue Conversion Shares upon conversion of
the  Preferred  Stock  in  accordance with this Agreement and the Certificate of
Designations and its obligation to issue the Warrant Shares upon exercise of the
Warrants  in  accordance  with this Agreement and the Warrants is, in each case,
absolute  and unconditional regardless of the dilutive effect that such issuance
may  have  on  the  ownership  interests  of  other stockholders of the Company.

(j)     Application  of  Takeover Protections; Rights Agreement. 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 Certificate of Incorporation or the laws of
the jurisdiction of its incorporation which is or could become applicable to any
Buyer as a result of the transactions contemplated by this Agreement, including,
without  limitation,  the  Company's  issuance of the Securities and any Buyer's
ownership  of  the  Securities. The Company has not adopted a stockholder rights
plan or similar arrangement relating to accumulations of beneficial ownership of
Common  Stock  or  a  change  in  control  of  the  Company.

(k)     SEC  Documents;  Financial Statements. During the two (2) years prior to
        -------------------------------------
the  date  hereof,  the  Company  has  timely  filed  or  furnished all reports,
schedules,  forms,  statements  and  other  documents  required  to  be filed or
furnished  by it with the SEC pursuant to the reporting requirements of the 1934
Act  (all  of  the foregoing filed or furnished prior to the date hereof and all
exhibits  included therein and financial statements, notes and schedules thereto
and documents incorporated by reference therein being hereinafter referred to as
the  "SEC  DOCUMENTS").  The  Company  has  delivered  to  the  Buyers  or their
respective  representatives true, correct and complete copies of each of the SEC
Documents  not  available  on  the EDGAR system that have been requested by each
Buyer.  As of their respective dates, the SEC Documents complied in all material
respects  with the requirements of the 1934 Act and the rules and regulations of
the  SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC  Documents,  at  the time they were filed with the SEC, contained any untrue
statement  of a material fact or omitted to state a material fact required to be
stated  therein  or  necessary  in  order to make the statements therein, in the
light  of  the  circumstances  under  which  they were made, not misleading. The
financial statements of the Company included in the SEC Documents complied as to
form  in  all  material respects with applicable accounting requirements and the
published  rules and regulations of the SEC with respect thereto as in effect as
of  the  time  of  filing.  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 Buyers which is not
included  in  the  SEC  Documents,  including,  without  limitation, information
referred  to in Section 2(e) of this Agreement, contains any untrue statement of
a  material  fact or omits to state any material fact necessary in order to make
the  statements  therein  not misleading, in the light of the circumstance under
which  they  are  or  were  made.

(l)     Absence  of Certain Changes. Since the date of the Company's most recent
        ---------------------------
audited  or  reviewed  financial  statements  contained in a Form 10-KSB or Form
10-QSB,  there  has  been  no  material  adverse  change and no material adverse
development  in  the  business,  assets,  liabilities,  properties,  operations,
condition  (financial  or  otherwise), results of operations or prospects of the
Company or its Subsidiaries. Since the date of the Company's most recent audited
financial  statements  contained  in  a  Form 10-KSB or Form 10-QSB, neither the
Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii)
sold any assets, individually or in the aggregate, in excess of $500,000 outside
of  the  ordinary  course  of  business  or  (iii)  had  capital  expenditures,
individually  or  in  the  aggregate,  in  excess  of  $500,000.


                                        8
<PAGE>
Neither  the  Company  nor  any  of its Subsidiaries has taken any steps to seek
protection  pursuant  to  any  bankruptcy  law  nor  does  the  Company have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy  proceedings  or  any  actual  knowledge  of  any  fact  which  would
reasonably  lead  a  creditor  to  do  so.  The  Company  and  its Subsidiaries,
individually  and  on  a  consolidated basis, are not as of the date hereof, and
after  giving  effect  to  the  transactions contemplated hereby to occur at the
Closing,  will not be Insolvent (as defined below). For purposes of this Section
3(l),  "INSOLVENT"  means,  with respect to the Company, on a consolidated basis
with  its Subsidiaries, (i) the present fair saleable value of the Company's and
its  Subsidiaries'  assets is less than the amount required to pay the Company's
and  its Subsidiaries' total Indebtedness (as defined in Section 3(s)), (ii) the
Company  and  its  Subsidiaries  are  unable to pay their debts and liabilities,
subordinated,  contingent  or  otherwise,  as  such debts and liabilities become
absolute  and  matured or (iii) the Company and its Subsidiaries intend to incur
or  believe that they will incur debts that would be beyond their ability to pay
as  such  debts  mature.  The  Company  has  not  engaged  in business or in any
transaction,  and  is not about to engage in business or in any transaction, for
which  the  Company's  remaining  assets  constitute unreasonably small capital.

(m)     No  Undisclosed  Events,  Liabilities, Developments or Circumstances. No
        --------------------------------------------------------------------
event,  liability,  development  or  circumstance  has occurred or exists, or is
contemplated  to  occur  with  respect to the Company, its Subsidiaries or their
respective  business,  properties, prospects, operations or financial condition,
that  would  be  required  to  be  disclosed  by  the  Company  under applicable
securities  laws  on  a  registration  statement  on Form S-1 filed with the SEC
relating  to  an  issuance and sale by the Company of its Common Stock and which
has  not  been  publicly  announced.

(n)     Conduct  of Business; Regulatory Permits. Neither the Company nor any of
        ----------------------------------------
its  Subsidiaries  is  in  violation  of  any  term  of  or in default under its
Certificate  of  Incorporation,  the  Certificate  of  Designations,  any  other
certificate  of  designation,  preferences  or  rights  of any other outstanding
series  of  preferred  stock  of  the  Company or Bylaws or their organizational
charter  or  Articles  of  Incorporation  or  bylaws,  respectively. Neither the
Company  nor  any of its Subsidiaries is in violation of any judgment, decree or
order  or  any  law,  statute,  ordinance,  rule or regulation applicable to the
Company  or  any  of  its  Subsidiaries,  and neither the Company nor any of its
Subsidiaries  will  conduct  its  business in violation of any of the foregoing,
except  in all cases for possible violations which would not, individually or in
the  aggregate,  have a Material Adverse Effect. Without limiting the generality
of  the  foregoing,  the  Company  is  not  in  violation  of  any of the rules,
regulations  or requirements of the Principal Market and has no knowledge of any
facts  or circumstances that would reasonably lead to delisting or suspension of
the  Common  Stock by the Principal Market in the foreseeable future. Since July
2004,  (i)  the  Common Stock has been designated for quotation on the Principal
Market,  (ii)  trading  in the Common Stock has not been suspended by the SEC or
the  Principal  Market  and  (iii)  the  Company  has received no communication,
written  or  oral, from the SEC or the Principal Market regarding the suspension
or  delisting of the Common Stock from the Principal Market. The Company and its
Subsidiaries  possess all certificates, authorizations and permits issued by the
appropriate  regulatory  authorities  necessary  to  conduct  their  respective
businesses,  except  where  the  failure  to  possess  such  certificates,
authorizations  or  permits  would not have, individually or in the aggregate, a
Material  Adverse  Effect,  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.

(o)     Foreign  Corrupt  Practices.  Neither  the  Company  nor  any  of  its
        ---------------------------
Subsidiaries  nor  any director, officer, agent, employee or other Person acting
on  behalf  of  the Company or any of its Subsidiaries has, in the course of its
actions  for,  or  on behalf of, the Company or any of its Subsidiaries (i) used
any  corporate funds for any unlawful contribution, gift, entertainment or other
unlawful  expenses  relating  to  political  activity;  (ii)  made any direct or
indirect  unlawful  payment  to  any  foreign or domestic government official or
employee  from  corporate  funds;  (iii)  violated  or  is  in  violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made  any  unlawful  bribe,  rebate,  payoff,  influence


                                        9
<PAGE>
payment,  kickback  or  other  unlawful  payment  to  any  foreign  or  domestic
government  official  or  employee.

(p)     Sarbanes-Oxley  Act.  The  Company  is  in  compliance  with any and all
        -------------------
applicable  requirements of the Sarbanes-Oxley Act of 2002 that are effective as
of the date hereof, and any and all applicable rules and regulations promulgated
by  the  SEC  thereunder  that  are  effective  as  of  the  date  hereof.

(q)     Transactions  With  Affiliates.  None  of  the  officers,  directors  or
        ------------------------------
employees  of the Company or any of its Subsidiaries is presently a party to any
transaction with the Company or any of its Subsidiaries (other than for ordinary
course  services  as  employees, officers or 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 such officer, director or employee or, to the
knowledge  of  the  Company  or  any  of  its  Subsidiaries,  any  corporation,
partnership,  trust  or  other  entity  in  which any such officer, director, or
employee  has  a  substantial  interest  or  is an officer, director, trustee or
partner.

(r)     Equity Capitalization. As of the date hereof and not taking into account
        ---------------------
the issuance of the Preferred Stock or Warrants, the authorized capital stock of
the  Company  consists of (i) 300,000,000 shares of Common Stock, of which as of
the  date hereof, 19,366,143 are outstanding, 15,407,500 shares are reserved for
issuance  to  third parties pursuant to pending transactions, 900,000 shares are
reserved  for issuance upon conversion of the Company's Series B Preferred Stock
and  Series  C  Preferred Stock, 6,263,939 shares are reserved for issuance upon
exercise of outstanding options, 3,890,469 shares are reserved for issuance upon
exercise  of  outstanding  warrants,  6,366,666 shares are reserved for issuance
upon  exercise  of  options  and warrants reserved for issuance to third parties
pursuant  to  pending  transactions  and 18,250,000 shares are held as "security
stock" by Gottbetter & Partners on behalf of Highgate House Funds, Ltd. and (ii)
5,000,000  shares  of  preferred  stock,  $0.001 par value per share.  There are
currently  three series of preferred stock designated as follows:  (i) 1,000,000
shares  have  been  designated as Series A Preferred Stock, $0.001 par value per
share,  all  of which have been issued and outstanding; (ii) 400,000 shares have
been designated as Series B Preferred Stock, $0.001 per share, all of which have
been  issued and are outstanding; and (iii) 500,000 shares of Series C Preferred
Stock,  $0.001  par  value  per  share,  all  of  which  have  been  issued  and
outstanding.  All  of  such  outstanding shares have been, or upon issuance will
be, validly issued and are fully paid and nonassessable.  As of the date of this
Agreement,  (i)  none  of  the  Company's capital stock is subject to preemptive
rights  or  any  other  similar  rights or any liens or encumbrances suffered or
permitted  by  the  Company;  (ii)  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,  or exercisable or
exchangeable  for,  any 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 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,  or exercisable or
exchangeable  for,  any capital stock of the Company or any of its Subsidiaries;
(iii)  there  are no outstanding debt securities, notes, credit agreements, loan
or  credit  facilities  or other agreements, documents or instruments evidencing
Indebtedness  (as  defined  in  Section  3(s))  of  the  Company  or  any of its
Subsidiaries or by which the Company or any of its Subsidiaries is or may become
bound;  (iv)  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  1933  Act  (except  pursuant  to the Registration Rights
Agreement);  (v)  there  are  no  outstanding  securities  or instruments of the
Company  or  any  of  its  Subsidiaries  which contain any redemption or similar
provisions,  and  there  are  no  contracts,  commitments,  understandings  or
arrangements  by  which  the Company or any of its Subsidiaries is or may become
bound to purchase, repurchase, retire or redeem a security of the Company or any
of  its  Subsidiaries;  (vi)  there  are no securities or instruments containing
anti-dilution  or  similar  provisions  that


                                       10
<PAGE>
will  be triggered by the issuance of the Securities; (vii) the Company does not
have any stock appreciation rights or "phantom stock" plans or agreements or any
similar  plan  or agreement; and (viii) the Company and its Subsidiaries have no
liabilities or obligations required to be disclosed in the SEC Documents but not
so  disclosed  in  the  SEC Documents, other than those incurred in the ordinary
course  of  the  Company's or its Subsidiaries' respective businesses and which,
individually  or  in  the aggregate, do not or would not have a Material Adverse
Effect.  The  Company  has  furnished  to  the Buyers true, correct and complete
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 Bylaws, as amended and as in effect on the date hereof (the "BYLAWS"),
and the terms of all securities convertible into, or exercisable or exchangeable
for,  shares  of  Common Stock and the material rights of the holders thereof in
respect  thereto.

(s)     Indebtedness  and  Other  Contracts.  Neither the Company nor any of its
        -----------------------------------
Subsidiaries  (i) has any outstanding Indebtedness (as defined below), (ii) is a
party  to  any  contract,  agreement  or  instrument, the violation of which, or
default  under  which,  by  the  other party(ies) to such contract, agreement or
instrument  could reasonably be expected to result in a Material Adverse Effect,
(iii) is in violation of any term of or in default under any contract, agreement
or  instrument  relating  to  any Indebtedness, except where such violations and
defaults  would  not  result,  individually  or  in the aggregate, in a Material
Adverse  Effect,  or  (iv)  is  a party to any contract, agreement or instrument
relating  to  any Indebtedness, the performance of which, in the judgment of the
Company's  officers,  has  or is expected to have a Material Adverse Effect. For
purposes  of  this  Agreement:  (x)  "INDEBTEDNESS" of any Person means, without
duplication (A) all indebtedness for borrowed money, (B) all obligations issued,
undertaken  or  assumed  as  the deferred purchase price of property or services
(including,  without  limitation,  "capital leases" in accordance with generally
accepted  accounting  principles) (other than trade payables entered into in the
ordinary  course of business), (C) all reimbursement or payment obligations with
respect  to  letters  of credit, surety bonds and other similar instruments, (D)
all  obligations  evidenced  by notes, bonds, debentures or similar instruments,
including  obligations  so evidenced incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising under
any  conditional  sale  or  other  title  retention  agreement,  or  incurred as
financing,  in  either case with respect to any property or assets acquired with
the  proceeds  of  such indebtedness (even though the rights and remedies of the
seller  or  bank  under  such  agreement  in the event of default are limited to
repossession  or  sale of such property), (F) all monetary obligations under any
leasing  or  similar  arrangement  which,  in connection with generally accepted
accounting  principles, consistently applied for the periods covered thereby, is
classified  as  a capital lease, (G) all indebtedness referred to in clauses (A)
through  (F)  above secured by (or for which the holder of such Indebtedness has
an  existing  right,  contingent  or  otherwise, to be secured by) any mortgage,
lien,  pledge,  charge,  security  interest  or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person,
even  though  the  Person  which owns such assets or property has not assumed or
become  liable  for  the  payment  of  such indebtedness, and (H) all Contingent
Obligations  in  respect  of  indebtedness or obligations of others of the kinds
referred to in clauses (A) through (G) above; (y) "CONTINGENT OBLIGATION" means,
as  to any Person, any direct or indirect liability, contingent or otherwise, of
that  Person  with  respect  to  any  indebtedness,  lease,  dividend  or  other
obligation  of  another  Person  if  the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or  that  any  agreements  relating  thereto  will be complied with, or that the
holders  of  such liability will be protected (in whole or in part) against loss
with  respect thereto; and (z) "PERSON" means an individual, a limited liability
company,  a  partnership,  a  joint  venture,  a  corporation,  a  trust,  an
unincorporated  organization  and  a  government  or  any  department  or agency
thereof.

(t)     Absence  of Litigation. There is no action, suit, proceeding, inquiry or
        ----------------------
investigation  before  or  by  the  Principal  Market,  any court, public board,
government  agency,  self-regulatory  organization  or  body


                                       11
<PAGE>
pending or, to the knowledge of the Company, threatened against or affecting the
Company  or  any  of  its Subsidiaries, the Common Stock or any of the Company's
Subsidiaries  or any of the Company's or its Subsidiaries' officers or directors
which  is  outside  of the ordinary course of business or individually or in the
aggregate  material  to  the  Company.

(u)     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  have  a  Material  Adverse  Effect.

(v)     Employee  Relations.
        -------------------

     (i)     Neither  the  Company nor any of its Subsidiaries is a party to any
     collective  bargaining  agreement  or  employs  any  member of a union. The
     Company  and  its  Subsidiaries  believe  that  their  relations with their
     employees are good. No executive officer of the Company (as defined in Rule
     501(f) of the 1933 Act) or any of its Subsidiaries has notified the Company
     or  any  such  Subsidiary that such officer intends to leave the Company or
     any  such  Subsidiary or otherwise terminate such officer's employment with
     the  Company or any such Subsidiary. No executive officer of the Company or
     any  of  its Subsidiaries is, or is now expected to be, in violation of any
     material  term  of  any employment contract, confidentiality, disclosure or
     proprietary  information agreement, 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.

     (ii)     The  Company  and  its  Subsidiaries  are  in  compliance with all
     federal,  state,  local  and foreign laws and regulations respecting labor,
     employment  and  employment practices and benefits, terms and conditions of
     employment  and  wages  and hours, except where failure to be in compliance
     would  not, either individually or in the aggregate, reasonably be expected
     to  result  in  a  Material  Adverse  Effect.

     (iii)     To  the  knowledge  of  the  Company, no key employee or group of
     employees  has  any  plans  to terminate employment with the Company or any
     Subsidiary.

(w)     Title.  The  Company and its Subsidiaries have good and marketable title
        -----
in fee simple to all real property and good and marketable title to all personal
property  owned by them which is material to the business of the Company and its
Subsidiaries, in each case free and clear of all liens, encumbrances and defects
except  such  as  do not materially affect the value of such property and do not
interfere  with  the  use  made  and proposed to be made of such property by the
Company and any of its Subsidiaries. Any real property and facilities held under
lease  by  the  Company or any of 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
facilities  by  the  Company  and  its  Subsidiaries.

(x)     Intellectual  Property  Rights.  The Company and its Subsidiaries own or
        ------------------------------
possess  adequate rights or licenses to use all trademarks, trade names, service
marks,  service  mark  registrations,  service  names,  patents,  patent rights,
copyrights,  inventions, licenses, approvals, governmental authorizations, trade
secrets  and other intellectual property rights ("INTELLECTUAL PROPERTY RIGHTS")
necessary  to  conduct  their


                                       12
<PAGE>
respective  businesses  as  now  conducted.  None  of  the  Company's  or  its
Subsidiaries'  Intellectual  Property  Rights  have  expired, terminated or been
abandoned,  or  are  expected to expire, terminate or be abandoned, within three
years  from  the date of this Agreement. The Company does not have any knowledge
of  any  infringement  by the Company or any of its Subsidiaries of Intellectual
Property Rights of others. There is no claim, action or proceeding being made or
brought,  or  to  the  knowledge  of  the Company, being threatened, against the
Company  or any of its existing Subsidiaries regarding its Intellectual Property
Rights.  The  Company  is unaware of any facts or circumstances which might give
rise  to  any  of the foregoing infringements or claims, actions or proceedings.
The  Company  and  its  Subsidiaries  have taken reasonable security measures to
protect  the  secrecy,  confidentiality  and  value of all of their Intellectual
Property  Rights.

(y)     Environmental  Laws.  The  Company  and  its  Subsidiaries  (i)  are  in
        -------------------
compliance  with  any  and all Environmental Laws (as hereinafter defined), (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  where,  in  each  of  the  foregoing  clauses (i), (ii) and (iii), the
failure  to  so  comply could be reasonably expected to have, individually or in
the  aggregate,  a  Material Adverse Effect. The term "ENVIRONMENTAL LAWS" means
all federal, state, local or foreign laws relating to pollution or protection of
human  health  or  the  environment (including, without limitation, ambient air,
surface  water,  groundwater,  land  surface  or  subsurface strata), including,
without  limitation,  laws  relating  to  emissions,  discharges,  releases  or
threatened  releases  of  chemicals,  pollutants,  contaminants,  or  toxic  or
hazardous  substances  or  wastes (collectively, "HAZARDOUS MATERIALS") into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as  well  as  all  authorizations,  codes,  decrees,  demands or demand letters,
injunctions,  judgments,  licenses,  notices or notice letters, orders, permits,
plans  or  regulations  issued,  entered,  promulgated  or  approved thereunder.

(z)     Subsidiary  Rights.  The  Company  or  one  of  its Subsidiaries has the
        ------------------
unrestricted  right  to  vote, and (subject to limitations imposed by applicable
law)  to  receive  dividends and distributions on, all capital securities of its
Subsidiaries  as  owned  by  the  Company  or  such  Subsidiary.

(aa)     Tax  Status.  The  Company and each of its Subsidiaries (i) has made or
         -----------
filed  all  foreign, federal and state income and all other tax returns, reports
and  declarations  required by any jurisdiction to which it is subject, (ii) 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 (iii) 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.

(bb)     Internal  Accounting  and  Disclosure Controls. The Company and each of
         ----------------------------------------------
its  Subsidiaries  maintains 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
and  liability  accountability,  (iii)  access  to  assets  or  incurrence  of
liabilities  is  permitted  only  in  accordance  with  management's  general or
specific  authorization  and  (iv)  the  recorded  accountability for assets and
liabilities  is  compared with the existing assets and liabilities at reasonable
intervals  and  appropriate  action is taken with respect to any difference. The
Company maintains disclosure controls and procedures (as such term is defined in
Rule  13a-14 under the 1934 Act) that are effective in ensuring that information
required  to be disclosed by the Company in the reports that it files or submits
under  the  1934 Act is recorded, processed, summarized and reported, within the
time  periods  specified  in  the rules and forms of the SEC, including, without
limitation,  controls


                                       13
<PAGE>
and  procedures  designed in to ensure that information required to be disclosed
by  the  Company  in  the reports that it files or submits under the 1934 Act is
accumulated  and  communicated  to  the  Company's  management,  including  its
principal  executive  officer or officers and its principal financial officer or
officers,  as  appropriate,  to  allow  timely  decisions  regarding  required
disclosure.  During  the  twelve  months  prior  to  the date hereof neither the
Company  nor  any of its Subsidiaries have received any notice or correspondence
from  any  accountant relating to any potential material weakness in any part of
the  system  of  internal  accounting  controls  of  the  Company  or any of its
Subsidiaries.

(cc)     Off  Balance  Sheet Arrangements. There is no transaction, arrangement,
         --------------------------------
or  other  relationship  between  the  Company or any of its Subsidiaries and an
unconsolidated  or  other  off  balance  sheet  entity  that  is  required to be
disclosed by the Company in its 1934 Act filings and is not so disclosed or that
otherwise  would  be  reasonably  likely  to  have  a  Material  Adverse Effect.

(dd)     Investment Company Status. The Company is not, and upon consummation of
         -------------------------
the  sale  of  the  Securities  will  not be, an "investment company," a company
controlled  by  an  "investment  company"  or  an  "affiliated  person"  of,  or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are  defined  in  the  Investment  Company  Act  of  1940,  as  amended.

(ee)     Transfer  Taxes. On the Closing Date, all stock transfer or other taxes
         ---------------
(other than income or similar taxes) which are required to be paid in connection
with  the sale and transfer of the Securities to be sold to each Buyer hereunder
will  be,  or will have been, fully paid or provided for by the Company, and all
laws  imposing  such  taxes  will  be  or  will  have  been  complied  with.

(ff)     Acknowledgement  Regarding  Buyers'  Trading Activity. It is understood
         -----------------------------------------------------
and  acknowledged by the Company (i) that following the public disclosure of the
transactions  contemplated  by the Transaction Documents, in accordance with the
terms  thereof,  none  of  the  Buyers  have  been  asked  by the Company or its
Subsidiaries  to  agree,  nor  has  any  Buyer  agreed  with  the Company or its
Subsidiaries,  to  desist  from  purchasing  or  selling,  long  and/or  short,
securities of the Company, or "derivative" securities based on securities issued
by  the  Company or to hold the Securities for any specified term; (ii) that any
Buyer,  and counter parties in "derivative" transactions to which any such Buyer
is a party, directly or indirectly, presently may have a "short" position in the
Common  Stock  which  were  established  prior  to such Buyer's knowledge of the
transactions  contemplated  by  the  Transaction  Documents, and (iii) that each
Buyer shall not be deemed to have any affiliation with or control over any arm's
length  counter  party  in  any  "derivative"  transaction.  The Company further
understands  and  acknowledges  that  following  the  public  disclosure  of the
transactions  contemplated  by the Transaction Documents, in accordance with the
terms  thereof,  one  or  more  Buyers  may  engage  in  hedging  and/or trading
activities  at  various  times  during  the  period  that  the  Securities  are
outstanding, including, without limitation, during the periods that the value of
the  Conversion  Shares  and  the  Warrant  Shares  deliverable  with respect to
Securities  are being determined and (b) such hedging and/or trading activities,
if  any,  can  reduce the value of the existing stockholders' equity interest in
the Company both at and after the time the hedging and/or trading activities are
being  conducted.  The  Company  acknowledges  that  such aforementioned hedging
and/or  trading  activities  do  not  constitute a breach of this Agreement, the
Preferred  Stock,  the  Warrants  or any of the documents executed in connection
herewith.

(gg)     Registration  Eligibility.  The  Company  is  eligible  to register the
         -------------------------
Conversion  Shares  and  the  Warrant Shares for resale by the Buyers using Form
SB-2  promulgated  under  the  1933  Act.

(hh)     Manipulation  of  Price. The Company and its Subsidiaries have not, and
         -----------------------
to  the  Company's  knowledge  no  one  acting  on  their behalf has, (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


                                       14
<PAGE>
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.

(ii)     U.S.  Real  Property  Holding  Corporation. The Company is not, nor has
         ------------------------------------------
ever  been,  a  U.S.  real  property  holding  corporation within the meaning of
Section  897  of  the Internal Revenue Code of 1986, as amended, and the Company
shall  so  certify  upon  Buyer's  request.

(jj)     Disclosure.  The  Company confirms that neither it nor any other Person
         ----------
acting  on  its behalf has provided any of the Buyers or their agents or counsel
with  any  information  that  constitutes  or  could  reasonably  be expected to
constitute material, nonpublic information. The Company understands and confirms
that  each of the Buyers will rely on the foregoing representations in effecting
transactions in securities of the Company. All disclosure provided to the Buyers
regarding  the Company and its Subsidiaries, their business and the transactions
contemplated  by  this  Agreement and the other Transaction Documents, including
the  Schedules and Exhibits hereto and thereto, furnished by or on behalf of the
Company  is  true  and  correct  and  does not contain any untrue statement of a
material  fact or omit to state any material fact necessary in order to make the
statements made herein or therein, in the light of the circumstances under which
they  were  made,  not misleading. No press release issued by the Company or its
Subsidiaries  during the twelve (12) months preceding the date of this Agreement
contained at the time of release 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 therein, in the light of the circumstances under which they
are  made,  not misleading. No event or circumstance has occurred or information
exists  with  respect  to the Company or any of its Subsidiaries or its or their
business,  assets,  liabilities, properties, prospects, operations or conditions
(financial  or  otherwise),  which,  under  applicable  law, rule or regulation,
requires  public  disclosure at or before the date hereof or announcement by the
Company  but  which  has  not  been  so  publicly  announced  or  disclosed.

4.     COVENANTS.

(a)     Best Efforts. Each party shall use its reasonable best efforts timely to
        ------------
satisfy  each  of the conditions to be satisfied by it as provided in Sections 6
and  7  of  this  Agreement.

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

(c)     Reporting Status. Until the date on which the Buyers shall have sold all
        ----------------
the  Conversion  Shares  and  Warrant Shares, and none of the Preferred Stock or
Warrants  is outstanding (the "REPORTING PERIOD"), the Company shall timely file
all  reports required to be filed with the SEC pursuant to the 1934 Act, and the
Company  shall  not  terminate  its status as an issuer required to file reports
under  the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would  no  longer  require  or  otherwise  permit  such  termination.

(d)     Use  of Proceeds. The Company will use the proceeds from the sale of the
        ----------------
Securities  for working capital purposes including repayment of certain existing
debt  (including  the  remaining  principal  balance


                                       15
<PAGE>
of  the  $4,000,000  Debenture  due  November  16, 2008 issued to Highgate House
Funds,  Ltd.)  and  financing  of  acquisitions.

(e)     Financial  Information. The Company agrees to send the following to each
        ----------------------
Investor  (as defined in the Registration Rights Agreement) during the Reporting
Period  (i)  unless  the  following are filed with the SEC through EDGAR and are
available  to  the  public through the EDGAR system, within one (1) Business Day
after  the  filing  thereof  with  the  SEC,  a  copy  of its Annual Reports and
Quarterly  Reports  on Form 10-K, 10-KSB, 10-Q or 10-QSB, any interim reports or
any  consolidated  balance  sheets,  income  statements,  stockholders'  equity
statements  and/or  cash  flow  statements for any period other than annual, any
Current  Reports on Form 8-K and any registration statements (other than on Form
S-8)  or  amendments filed pursuant to the 1933 Act, (ii) on the same day as the
release thereof, facsimile copies of all press releases issued by the Company or
any  of  its Subsidiaries, and (iii) copies of any notices and other information
made  available  or  given  to  the  stockholders  of  the  Company  generally,
contemporaneously  with  the  making  available  or  giving  thereof  to  the
stockholders.

(f)     Listing.  The  Company  shall  promptly secure the listing of all of the
        -------
Registrable  Securities  (as  defined in the Registration Rights Agreement) upon
each  national  securities exchange and automated quotation system, if any, upon
which  the  Common Stock is then listed (subject to official notice of issuance)
and  shall maintain such listing of all Registrable Securities from time to time
issuable  under  the  terms  of  the  Transaction  Documents on such exchange or
automated quotation system or an Eligible Market. The Company shall maintain the
Common  Stock's authorization for quotation on the Principal Market. Neither the
Company  nor  any  of  its  Subsidiaries  shall  take  any action which would be
reasonably expected to result in the delisting or suspension of the Common Stock
on an Eligible Market. The Company shall pay all fees and expenses in connection
with  satisfying  its  obligations  under  this  Section  4(f).

(g)     Fees. The Company shall reimburse Gottbetter Capital Finance, LLC, or
        ----
its designee(s) (in addition to any other expense amounts paid to any Buyer
prior to the date of this Agreement) for all reasonable costs and expenses,
$20,000, incurred in connection with the transactions contemplated by the
Transaction Documents and due diligence in connection therewith), which amount
shall be non-accountable.  The Company shall reimburse Castlerigg Master
Investments Ltd., or its designee(s) (in addition to any other expense amounts
paid to any Buyer prior to the date of this Agreement) $15,000 for all
reasonable costs and expenses incurred in connection with the transactions
contemplated by the Transaction Documents (including legal fees and
disbursements in connection therewith and documentation and implementation of
the Transaction Documents), which amount shall be paid at the Closing.  The
Company has paid $10,000 of legal fees to Gottbetter & Partners, LLP and shall
pay an additional $10,000 at Closing.  The Company shall be responsible for the
payment of any placement agent's fees, financial advisory fees, or broker's
commissions (other than for Persons engaged by any Buyer) relating to or arising
out of the transactions contemplated by the Transaction Documents, including,
without limitation, any fees payable to Gottbetter Capital Finance, LLC.  The
Company shall pay, and hold each Buyer harmless against, any liability, loss or
expense (including, without limitation, reasonable attorney's fees and
out-of-pocket expenses) arising in connection with any claim relating to any
such payment.

(h)     Pledge  of  Securities.  The  Company  acknowledges  and agrees that the
        ----------------------
Securities  may be pledged by an Investor (as defined in the Registration Rights
Agreement)  in  connection  with  a  bona fide margin agreement or other loan or
financing  arrangement  that  is  secured  by  the  Securities.  The  pledge  of
Securities  shall  not  be  deemed  to  be a transfer, sale or assignment of the
Securities  hereunder, and no Investor effecting a pledge of Securities shall be
required  to  provide  the Company with any notice thereof or otherwise make any
delivery  to  the  Company  pursuant  to this Agreement or any other Transaction
Document. The Company hereby agrees to execute and deliver such documentation as
a  pledgee  of  the


                                       16
<PAGE>
Securities  may reasonably request in connection with a pledge of the Securities
to  such  pledgee  by  an  Investor.

(i)     Disclosure  of Transactions and Other Material Information. On or before
        ----------------------------------------------------------
8:30  a.m., New York Time, on the fourth Business Day following the date of this
Agreement,  the  Company  shall file a Current Report on Form 8-K describing the
terms  of the transactions contemplated by the Transaction Documents in the form
required  by the 1934 Act and attaching (unless the Company shall elect to defer
the  filing  of  exhibits  as  permitted  by  the  Exchange  Act)  the  material
Transaction  Documents  (including, without limitation, this Agreement, the form
of  Certificate of Designations, the form of Warrant and the Registration Rights
Agreement)  (including  all  attachments,  the "8-K FILING"). From and after the
filing  of  the  8-K  Filing  with the SEC, the Company shall have disclosed any
material  nonpublic information delivered to the Buyers by the Company or any of
its  Subsidiaries,  or  any  of their respective officers, directors, employees,
stockholders,  representatives  or  agents;  provided, however, that the Company
shall be permitted to delay disclosure of pending acquisitions identified on the
Schedules  hereto to a date not later than June 30, 2006. The Company shall not,
and  shall  cause  each of its Subsidiaries and its and each of their respective
officers,  directors,  employees  and agents, not to, provide any Buyer with any
material, nonpublic information regarding the Company or any of its Subsidiaries
from  and  after  the  filing of the 8-K Filing with the SEC without the express
written  consent  of  such  Buyer.  In  the  event  of a breach of the foregoing
covenant  by  the  Company,  or  any of its Subsidiaries, or any of its or their
respective  officers,  directors, employees and agents, in addition to any other
remedy  provided  herein or in the Transaction Documents, a Buyer shall have the
right  to  make  a  public  disclosure,  in  the form of a press release, public
advertisement  or otherwise, of such material, nonpublic information without the
prior  approval  by  the  Company,  its  Subsidiaries,  or  any  of its or their
respective  officers,  directors,  employees  or agents. No Buyer shall have any
liability  to  the  Company,  any  of  its  Subsidiaries, or any of its or their
respective  officers, directors, employees, stockholders or agents, for any such
disclosure.  Subject  to the foregoing, none of the Company, its Subsidiaries or
any  Buyer  shall  issue  any press releases or any other public statements with
respect  to  the  transactions  contemplated hereby; provided, however, that the
                                                    --------- --------
Company  shall be entitled, without the prior approval of any Buyer, to make any
press  release  or other public disclosure with respect to such transactions (i)
in  substantial  conformity  with the 8-K Filing and contemporaneously therewith
and  (ii) as is required by applicable law and regulations (provided that in the
case  of  clause  (i) each Buyer shall be consulted by the Company in connection
with  any  such  press release or other public disclosure prior to its release).
Without  the  prior written consent of any applicable Buyer, neither the Company
nor  any of its Subsidiaries shall disclose the name of any Buyer in any filing,
announcement,  release  or  otherwise.

(j)     Corporate  Existence.  So  long  as  any  Buyer  beneficially  owns  any
        --------------------
Preferred  Stock  or Warrants, the Company shall not be party to any Fundamental
Transaction  (as  defined in the Certificate of Designations) unless the Company
is  in  compliance  with  the  applicable  provisions  governing  Fundamental
Transactions  set  forth  in  the  Certificate of Designations and the Warrants.

(k)     Reservation of Shares. The Company shall take all action necessary to at
        ---------------------
all  times  have  authorized,  and reserved for the purpose of issuance, no less
than  130%  of  (i)  the  maximum number of shares of Common Stock issuable upon
conversion  of  the  Preferred  Stock  (assuming  for  purposes hereof, that the
Preferred  Stock  is convertible at the Conversion Price and without taking into
account  any  limitations  on the conversion of the Preferred Stock set forth in
the Certificate of Designations) and (ii) the maximum number of shares of Common
Stock  issuable  upon exercise of the Warrants (assuming for purposes hereof the
Exercise  Price  (as  defined  in the Warrants), subject to adjustment for stock
splits  and  stock  dividends and without taking into account any limitations on
the  exercise  of  the  Warrants  set  forth  in  the  Warrants).


                                       17
<PAGE>
(l)     Conduct  of  Business.  The business of the Company and its Subsidiaries
        ---------------------
shall  not  be conducted in violation of any law, ordinance or regulation of any
government,  or  any  department  or  agency thereof or any governmental entity,
except  where  such  violations  would not result, either individually or in the
aggregate,  in  a  Material  Adverse  Effect.

(m)     No Short Position.  Each of the Buyers and any of its Affiliates do not
        -----------------
have an open short position in the Common Stock.

(n)     Legend.  (i) Certificates evidencing the Warrant Shares and Conversion
        ------
Shares shall not contain any legend (including the legend set forth above), (A)
while a registration statement covering the resale of such security is effective
under the 1933 Act (provided, however, that the Buyer's prospectus delivery
requirements under the 1933 Act will remain applicable), or (B) following any
sale of such Warrant Shares and/or Conversion Shares pursuant to Rule 144, or
(C) if such Warrant Shares and/or Conversion Shares are eligible for sale under
Rule 144(k), or (D) if such legend is not required under applicable requirements
of the 1933 Act (including judicial interpretations and pronouncements issued by
the Staff of the SEC).  Subject to the foregoing, upon written request of the
Buyer to have such legend removed, the Company shall cause its counsel to issue
a legal opinion to the Company's transfer agent promptly after the effective
date of any registration statement (the "EFFECTIVE DATE") if required by the
Company's transfer agent to effect the removal of the legend hereunder. The
Company agrees that following the Effective Date or at such time as such legend
is no longer required under this Section 5(q), it will, no later than three (3)
Trading Days (as defined in the Certificate of Designations) following the
delivery by the Buyer to the Company or the Company's transfer agent of a
certificate representing Warrant Shares and/or Conversion Shares issued with a
restrictive legend, deliver or cause to be delivered to such Buyer a certificate
representing such Warrant Shares and/or Conversion Shares that is free from all
restrictive and other legends. The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that
enlarge(s) the restrictions on transfer set forth herein.

          (ii)  The Company shall cause its securities counsel to deliver the
requisite legal opinion in order to ensure the expedient removal of the legend
on the Escrow Shares as soon as practicable after the effectiveness of the
Registration Statement.

(o)     Removal of Legend.  In addition to the Buyer's other available remedies
        -----------------
and provided that the conditions permitting the removal of legend specified in
Section 4(o) are met, the Company shall pay to the Buyer, in cash, as partial
liquidated damages and not as a penalty, for each $1,000 of Warrant Shares
and/or Conversion Shares (based on the Closing Sale Price (as defined in the
Certificate of Designations) of the Common Stock on the date such Warrant Shares
and/or Conversion Shares are submitted to the Company's transfer agent), $5 per
trading day (increasing to $10 per Trading Day five (5) trading days after such
damages have begun to accrue) for each Trading Day after the seventh (7th)
trading day following delivery by the Buyer to the Company or the Company's
transfer agent of a certificate representing Warrant Shares and/or Conversion
Shares issued with a restrictive legend, until such certificate is delivered to
the Buyer with such legend removed. Nothing herein shall limit the Buyer's right
to pursue actual damages for the failure of the Company and its transfer agent
to deliver certificates representing any securities as required hereby, and the
Buyer 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.

(p)     Publicity.  The Company and the Buyer shall have the right to approve,
        ---------
before issuance any press release or any other public statement with respect to
the transactions contemplated hereby made by any party; provided, however, that
the Company shall be entitled, without the prior approval of the Buyer, to issue
any press release or other public disclosure with respect to such transactions
required under applicable securities or other laws or regulations provided, that
the Company shall use its commercially


                                       18
<PAGE>
reasonable best efforts to consult the Buyer in connection with any such press
release or other public disclosure prior to its release and Buyer shall be
provided with a copy thereof upon release thereof.

(q)     Additional Issuances of Securities.
        ----------------------------------

     (i) For purposes of this Section 4(q), the following definitions shall
apply.

          (1)  "CONVERTIBLE SECURITIES" means any stock or securities (other
               than Options) convertible into or exercisable or exchangeable for
               shares of Common Stock.

          (2)  "OPTIONS" means any rights, warrants or options to subscribe for
               or purchase shares of Common Stock or Convertible Securities.

          (3)  "COMMON STOCK EQUIVALENTS" means, collectively, Options and
               Convertible Securities.

          (4)  "EXCLUDED SECURITIES" means any Common Stock issued or issuable:
               (i) upon conversion of the Preferred Stock or the exercise of the
               Warrants; (ii) pursuant to a bona fide firm commitment
               underwritten public offering with a nationally recognized
               underwriter which generates gross proceeds to the Company in
               excess of $25,000,000 (other than an "at-the-market offering" as
               defined in Rule 415(a)(4) under the 1933 Act and "equity lines");
               and (iii) in connection with any acquisition by the Company,
               whether through an acquisition of stock or a merger of any
               business, assets or technologies the primary purpose of which is
               not to raise equity capital

     (ii) From the date hereof until 30 days after the effective date of the
Registration Statement (as defined in the Registration Rights Agreement) (the
"Effective Date") the Company will not, directly or indirectly, file any
registration statement with the SEC other than the Registration Statement. From
the date hereof until 30 days after the Effective Date, the Company will not,
directly or indirectly, offer, sell, grant any option to purchase, or otherwise
dispose of (or announce any offer, sale, grant or any option to purchase or
other disposition of) any of its equity or equity equivalent securities,
including without limitation any debt, preferred stock or other instrument or
security that is, at any time during its life and under any circumstances,
convertible into or exchangeable or exercisable for shares of Common Stock or
Common Stock Equivalents other than Excluded Securities (any such offer, sale,
grant, disposition or announcement being referred to as a "SUBSEQUENT
PLACEMENT") without complying with the obligations set forth in subsection (iii)
below.

     (iii) From the Effective Date until the earlier of one (1) year following
the full redemption of the Preferred Stock or the maturity of the Preferred
Stock, the Company will not, directly or indirectly, effect any Subsequent
Placement unless the Company shall have first complied with this Section
4(q)(iii).

          (1) The Company shall deliver to each Buyer a written notice (the
"OFFER NOTICE") of any proposed or intended issuance or sale or exchange (the
"OFFER") of the securities being offered (the "OFFERED SECURITIES") in a
Subsequent Placement, which Offer Notice shall (w) identify and describe the
Offered Securities, (x) describe the price and other terms upon which they are
to be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged, (y) identify the persons or entities
(if known) to which or with which the Offered Securities are to be offered,
issued, sold or exchanged and (z) offer to issue and sell to such Buyers the
Offered Securities in any Subsequent Placement, allocated among such Buyers (a)
based on such Buyer's pro rata portion of the aggregate principal amount of the
Preferred Stock purchased hereunder (the "BASIC AMOUNT"), and (b) with respect
to each Buyer that elects to purchase its Basic Amount, any additional portion
of the


                                       19
<PAGE>
Offered Securities attributable to the Basic Amounts of other Buyers as such
Buyer shall indicate it will purchase or acquire should the other Buyers
subscribe for less than their Basic Amounts (the "UNDERSUBSCRIPTION AMOUNT").

          (2) To accept an Offer, in whole or in part, such Buyer must deliver a
written notice to the Company prior to the end of the tenth (10th) Business Day
after such Buyer's receipt of the Offer Notice (the "OFFER PERIOD"), setting
forth the portion of such Buyer's Basic Amount that such Buyer elects to
purchase and, if such Buyer shall elect to purchase all of its Basic Amount, the
Undersubscription Amount, if any, that such Buyer elects to purchase (in either
case, the "NOTICE OF ACCEPTANCE"). If the Basic Amounts subscribed for by all
Buyers are less than the total of all of the Basic Amounts, then each Buyer who
has set forth an Undersubscription Amount in its Notice of Acceptance shall be
entitled to purchase, in addition to the Basic Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however, that if the
                                               --------- --------
Undersubscription Amounts subscribed for exceed the difference between the total
of all the Basic Amounts and the Basic Amounts subscribed for (the "AVAILABLE
UNDERSUBSCRIPTION AMOUNT"), each Buyer who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Basic Amount of such Buyer bears to
the total Basic Amounts of all Buyers that have subscribed for Undersubscription
Amounts, subject to rounding by the Company to the extent its deems reasonably
necessary.

          (3) The Company shall have ten (10) Business Days from the expiration
of the Offer Period above to offer, issue, sell or exchange all or any part of
such Offered Securities as to which a Notice of Acceptance has not been given by
the Buyers (the "REFUSED SECURITIES"), but only to the offerees described in the
Offer Notice (if so described therein) and only upon terms and conditions
(including, without limitation, unit prices and interest rates) that are not
more favorable to the acquiring person or persons or less favorable to the
Company than those set forth in the Offer Notice.

          (4) In the event the Company shall propose to sell less than all the
Refused Securities (any such sale to be in the manner and on the terms specified
in Section 4(q)(iii)(3) above), then each Buyer may, at its sole option and in
its sole discretion, reduce the number or amount of the Offered Securities
specified in its Notice of Acceptance to an amount that shall be not less than
the number or amount of the Offered Securities that such Buyer elected to
purchase pursuant to Section 4(q)(iii)(2) above multiplied by a fraction, (i)
the numerator of which shall be the number or amount of Offered Securities the
Company actually proposes to issue, sell or exchange (including Offered
Securities to be issued or sold to Buyers pursuant to Section 4(q)(iii)(3) above
prior to such reduction) and (ii) the denominator of which shall be the original
amount of the Offered Securities. In the event that any Buyer so elects to
reduce the number or amount of Offered Securities specified in its Notice of
Acceptance, the Company may not issue, sell or exchange more than the reduced
number or amount of the Offered Securities unless and until such securities have
again been offered to the Buyers in accordance with Section 4(q)(iii)(1) above.

          (5) Upon the closing of the issuance, sale or exchange of all or less
than all of the Refused Securities, the Buyers shall acquire from the Company,
and the Company shall issue to the Buyers, the number or amount of Offered
Securities specified in the Notices of Acceptance, as reduced pursuant to
Section 4(q)(iii)(4) above if the Buyers have so elected, upon the terms and
conditions specified in the Offer. The purchase by the Buyers of any Offered
Securities is subject in all cases to the preparation, execution and delivery by
the Company and the Buyers of a purchase agreement relating to such Offered
Securities reasonably satisfactory in form and substance to the Buyers and their
respective counsel.


                                       20
<PAGE>
          (6) Any Offered Securities not acquired by the Buyers or other persons
in accordance with Section 4(q)(iii)(3) above may not be issued, sold or
exchanged until they are again offered to the Buyers under the procedures
specified in this Agreement.

     (iv) The restrictions contained in subsections (ii) and (iii) of this
Section 4(q) shall not apply in connection with the issuance of any Excluded
Securities.

(r)     Company's  Failure  to  Timely  Deliver  Securities.  In addition to the
        ---------------------------------------------------
foregoing,  if  within three (3) Trading Days after the Company's receipt of the
facsimile  copy  of an exercise or conversion notice the Company shall cause the
Escrow  Agent  to  fail to transfer the Escrow Shares to the Buyer, and if on or
after  such  third  Trading  Day  the  Buyer is required to purchase (in an open
market  transaction  or otherwise) shares of Common Stock in order to deliver in
satisfaction  of a sale initiated by the Buyer in anticipation of receiving from
the Company the shares of Common Stock issuable upon such exercise or conversion
(a  "BUY-IN"),  then the Company shall, within three (3) Business Days after the
Buyer's  request and in the Buyer's discretion, either (i) pay cash to the Buyer
in  an  amount  equal  to  the Buyer's total purchase price (including brokerage
commissions,  if  any)  for the shares of Common Stock so purchased (the "BUY-IN
PRICE"),  at  which point the Company's obligation to deliver such Escrow Shares
resulting  from  such  exercise  or conversion shall terminate, or (ii) promptly
honor  its  obligation  to  deliver  to  the Buyer a certificate or certificates
representing such Escrow Shares and pay cash to the holder in an amount equal to
the  excess  (if any) of the Buy-In Price over the product of (A) such number of
shares  of  Common  Stock,  times  (B)  the  Closing  Sale  Price on the date of
exercise.  Nothing  herein  shall  limit  the  holder's  right  to pursue actual
damages  for the Company's failure to maintain a sufficient number of authorized
shares  of  Common  Stock  or  to  otherwise  issue  shares of Common Stock upon
exercise  of  this  Warrant  in accordance with the terms hereof, and the holder
shall  have  the  right  to  pursue  all  remedies available at law or in equity
(including  a  decree  of  specific  performance  and/or  injunctive  relief).
Notwithstanding  the  foregoing,  the Company shall have no obligations to cause
its  Escrow Agent to deliver Escrow Shares or to pay any Buy-In Price under this
Section  4(r)  if  the  Company  has  timely  delivered in good faith a bonafide
objection  to  such  conversion  or  exercise  notice.

5.     REGISTER.

(a)     Register.  The Company shall maintain at its principal executive offices
        --------
(or  such other office or agency of the Company as it may designate by notice to
each  holder of Securities), a register for the Preferred Stock and the Warrants
in  which  the  Company shall record the name and address of the Person in whose
name  the  Preferred Stock and the Warrants have been issued (including the name
and  address  of  each  transferee),  the number of Preferred Stock held by such
Person,  the  number  of  Conversion  Shares  issuable  upon  conversion  of the
Preferred  Stock  and the number of Warrant Shares issuable upon exercise of the
Warrants  held  by  such  Person.  The  Company shall keep the register open and
available  at all times during business hours for inspection of any Buyer or its
legal  representatives.

(b)     Share  Denominations.  The Escrow Agent shall retain and hold the Escrow
        --------------------
Shares  which  shall  be held in accordance with the terms of this Agreement and
the  Escrow  Shares  Escrow  Agreement.  The Escrow Shares shall be in the share
denominations  specified  in  Schedule  II hereto, registered in the name of the
Buyer.

6.     CONDITIONS  TO  THE  COMPANY'S  OBLIGATION  TO  SELL.

(a)     The  obligation of the Company hereunder to issue and sell the Preferred
Stock  and  the  related Warrants to each Buyer at the Closing is subject to the
satisfaction,  at  or  before  the  Closing  Date,  of  each  of  the  following
conditions,  provided  that  these conditions are for the Company's sole benefit
and  may  be


                                       21
<PAGE>
waived by the Company at any time in its sole discretion by providing each Buyer
with  prior  written  notice  thereof:

     (i)     Such Buyer shall have executed each of the Transaction Documents to
     which  it  is  a  party  and  delivered  the  same  to  the  Company.

     (ii)     Such Buyer and each other Buyer shall have delivered to the Escrow
     Agent  the  Purchase  Price by wire transfer of immediately available funds
     pursuant  to the written wire instructions provided by the Escrow Agent two
     (2)  Business  Days  prior  to  Closing.

     (iii)     The  representations  and  warranties of such Buyer shall be true
     and correct in all material respects as of the date when made and as of the
     Closing  Date  as  though made at that time (except for representations and
     warranties  that  speak  as  of a specific date), and such Buyer shall have
     performed,  satisfied  and  complied  in  all  material  respects  with the
     covenants,  agreements  and  conditions  required  by  this Agreement to be
     performed,  satisfied  or  complied  with  by such Buyer at or prior to the
     Closing  Date.

     (iv)     The  Company  shall have obtained approval of the Principal Market
     to  list  the  Conversion  Shares  and  the  Warrant  Shares.

7.     CONDITIONS  TO  EACH  BUYER'S  OBLIGATION  TO  PURCHASE.

(a)     The  obligation  of each Buyer hereunder to purchase the Preferred Stock
and  the  related  Warrants at the Closing is subject to the satisfaction, at or
before  the  Closing  Date,  of  each of the following conditions, provided that
these  conditions  are  for  each Buyer's sole benefit and may be waived by such
Buyer  at  any  time  in its sole discretion by providing the Company with prior
written  notice  thereof:

     (i)     The  Company  shall  have duly executed and delivered to such Buyer
     (A)  each of the Transaction Documents and (B) the Preferred Stock (in such
     numbers  as is set forth across from such Buyer's name in column (3) of the
     Schedule  of  Buyers  and  the  related Warrants (in such numbers as is set
     forth  across  from  such  Buyer's  name  in  column (4) of the Schedule of
     Buyers)  being  purchased  by  such  Buyer  at the Closing pursuant to this
     Agreement.

     (ii)     Such  Buyer  shall  have  received  the opinion of Paul, Hastings,
     Janofsky  &  Walker  LLP,  the  Company's  outside counsel, dated as of the
     Closing  Date,  in  a  form  reasonably  acceptable  to  Buyers.

     (iii)     The  Company  shall  have  delivered  to such Buyer a certificate
     evidencing  the  formation  and  good standing of the Company issued by the
     Secretary  of  State  of  Delaware as of a date within five (5) days of the
     Closing  Date.

     (iv)     The Company shall have delivered to such Buyer a certified copy of
     the  Certificate of Incorporation as certified by the Secretary of State of
     the  State  of  Delaware  within  five  (5)  days  of  the  Closing  Date.

     (v)     The  Company  shall  have  delivered  to  such Buyer a certificate,
     executed  by the Secretary of the Company and dated as of the Closing Date,
     as  to  (i)  the resolutions consistent with Section 3(b) as adopted by the
     Company's board of directors in a form reasonably acceptable to such Buyer,
     (ii)  the  Certificate  of  Incorporation  and (iii) the Bylaws, each as in
     effect  at  the  Closing.


                                       22
<PAGE>
     (vi)     The  representations  and  warranties of the Company shall be true
     and  correct  as of the date when made and as of the Closing Date as though
     made  at that time (except for representations and warranties that speak as
     of  a  specific  date)  and the Company shall have performed, satisfied and
     complied  in  all  respects  with  the covenants, agreements and conditions
     required  by  the  Transaction  Documents  to  be  performed,  satisfied or
     complied  with  by  the Company at or prior to the Closing Date. Such Buyer
     shall  have received a certificate, executed by the Chief Executive Officer
     of  the  Company, dated as of the Closing Date, to the foregoing effect and
     as  to  such  other  matters  as may be reasonably requested by such Buyer.

     (vii)     The  Company shall have delivered to such Buyer a letter from the
     Company's  transfer  agent  certifying the number of shares of Common Stock
     outstanding  as  of  a  date  within  five  (5)  days  of the Closing Date.

     (viii)     The Common Stock (I) shall be designated for quotation or listed
     on  the  Principal Market and (II) shall not have been suspended, as of the
     Closing  Date,  by  the  SEC  or  the  Principal Market from trading on the
     Principal  Market  nor  shall suspension by the SEC or the Principal Market
     have  been threatened, as of the Closing Date, either (A) in writing by the
     SEC or the Principal Market or (B) by falling below the minimum maintenance
     requirements  of  the  Principal  Market.

     (ix)     The  Company  shall  have obtained all governmental, regulatory or
     third  party  consents and approvals, if any, necessary for the sale of the
     Securities,  including  without limitation, those required by the Principal
     Market.

     (x)     The  Certificate  of  Designations  in  the form attached hereto as
     Exhibit A shall have been filed with the Secretary of State of the State of
     ---------
     Delaware  and  shall  be  in full force and effect, enforceable against the
     Company  in  accordance  with  its  terms  and shall not have been amended.

     (xi)     The  aggregate  Purchase  Price  paid  to  the  Company  for  the
     Securities  by  the  Buyers  at the Closing shall not be less than Thirteen
     Million  One  Hundred  and Sixty Thousand ($13,160,000) Dollars even though
     the Preferred Stock will have an aggregate stated Value of Fourteen Million
     ($14,000,000)  Dollars.

     (xii)     The  Company  shall  have  delivered  to  such  Buyer  such other
     documents  relating  to  the transactions contemplated by this Agreement as
     such  Buyer  or  its  counsel  may  reasonably  request.

     (xiii)     The Company shall have placed the Escrow Shares into escrow with
     Gottbetter  &  Partners, LLP, acting as escrow agent, pursuant to the terms
     of  the  Escrow  Shares  Escrow  Agreement.


                                       23
<PAGE>
8.     TERMINATION.

In the event that the Closing shall not have occurred with respect to a Buyer on
or  before  five  (5) Business Days from the date hereof due to the Company's or
such  Buyer's  failure  to  satisfy the conditions set forth in Sections 6 and 7
above  (and  the  nonbreaching  party's  failure  to  waive  such  unsatisfied
condition(s)),  the  nonbreaching  party shall have the option to terminate this
Agreement  with respect to such breaching party at the close of business on such
date  without liability of any party to any other party; provided, however, that
if  this  Agreement  is terminated pursuant to this Section 8, the Company shall
remain  obligated  to  reimburse  the  non-breaching  Buyers  for  the  expenses
described  in  Section  4(g)  above.

9.     MISCELLANEOUS.

(a)     Governing  Law;  Jurisdiction;  Jury Trial. All questions concerning the
        ------------------------------------------
construction,  validity,  enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to  any choice of law or conflict of law provision or rule (whether of the State
of  New York or any other jurisdictions) that would cause the application of the
laws  of  any  jurisdictions other than the State 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, 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 brought in an inconvenient forum or that the
venue  of  such  suit,  action  or  proceeding  is  improper.  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 to such
party at the address for such 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 manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES  ANY  RIGHT  IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION  OF  ANY  DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS  AGREEMENT  OR  ANY  TRANSACTION  CONTEMPLATED  HEREBY.

(b)     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;  provided  that a facsimile signature shall be
considered  due  execution  and shall be binding upon the signatory thereto with
the  same force and effect as if the signature were an original, not a facsimile
signature.

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

(d)     Severability.  If  any  provision  of this Agreement shall be invalid or
        ------------
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction  or  the  validity  or  enforceability  of  any  provision  of this
Agreement  in  any  other  jurisdiction.

(e)     Entire  Agreement;  Amendments. This Agreement and the other Transaction
        ------------------------------
Documents  supersede  all  other  prior  oral  or written agreements between the
Buyers,  the  Company,  their affiliates and Persons acting on their behalf with
respect  to  the  matters  discussed  herein,  and  this  Agreement,  the  other
Transaction  Documents and the instruments referenced herein and therein contain
the  entire  understanding  of  the  parties with respect to the matters covered
herein  and  therein  and,  except  as


                                       24
<PAGE>
specifically  set  forth  herein  or  therein, neither the Company nor any Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters.  No  provision  of  this  Agreement  may  be  amended  other than by an
instrument  in  writing  signed  by  the  Company  and the holders of at least a
majority of the Preferred Stock issued and issuable hereunder, and any amendment
to  this  Agreement  made in conformity with the provisions of this Section 9(e)
shall  be  binding  on  all  Buyers and holders of Securities, as applicable. No
provision  hereof may be waived other than by an instrument in writing signed by
the  party  against  whom  enforcement  is  sought.  No  such amendment shall be
effective  to  the extent that it applies to less than all of the holders of the
Preferred  Stock  then outstanding. No consideration shall be offered or paid to
any  Person  to amend or consent to a waiver or modification of any provision of
any  of  the Transaction Documents unless the same consideration also is offered
to  all  of the parties to the Transaction Documents, holders of Preferred Stock
or holders of the Warrants, as the case may be. The Company has not, directly or
indirectly,  made  any  agreements  with  any  Buyers  relating  to the terms or
conditions  of the transactions contemplated by the Transaction Documents except
as  set  forth in the Transaction Documents. Without limiting the foregoing, the
Company  confirms that, except as set forth in this Agreement, no Buyer has made
any  commitment  or promise or has any other obligation to provide any financing
to  the  Company  or  otherwise.

(f)     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 confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending  party);  or  (iii)  one  Business  Day  after deposit with an overnight
courier  service,  in  each  case properly addressed to the party to receive the
same.  The  addresses  and  facsimile  numbers for such communications shall be:

               If to the Company:

                                    Charys Holding Company, Inc.
                                    1117 Perimeter Center West, Suite N415
                                    Atlanta, GA 30338
                                    Attention:     Billy Ray, Jr.
                                    Telephone:     678-443-2300
                                    Facsimile:     678-443-2320


               With a copy (for informational purposes only) to:

                                    Paul, Hastings, Janofsky & Walker LLP
                                    600 Peachtree Street, N.E., Suite 2400
                                    Atlanta, GA  30308
                                    Attention:     Karen K. Leach
                                    Telephone:     404-815-2528
                                    Facsimile:     404-685-5028


                                       25
<PAGE>
               If to the Transfer Agent:

                                    Fidelity Transfer Company
                                    1800 S. West Temple, Suite 301
                                    Salt Lake City, Utah 84115
                                    Attention:     Heidi Sadowski
                                    Telephone:     801-484-7222
                                    Facsimile:     801-466-4122

If  to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers, with copies to such Buyer's representatives as set forth on the Schedule
of  Buyers,

               with a copy (for informational purposes only) to:

                                    Gottbetter & Partners, LLP
                                    488 Madison Avenue
                                    New York, New York 10022
                                    Attention:     Jason Rimland
                                    Telephone:     212-400-6900
                                    Facsimile:     212-400-6901

or to such other address and/or facsimile number and/or to the attention of such
other  Person  as  the  recipient party has specified by written notice given to
each  other  party  five  (5)  days  prior  to  the effectiveness of such change
provided,  that  Gottbetter  &  Partners, LLP shall only receive notices sent to
--------
clients  of its firm. Written confirmation of receipt (A) given by the recipient
of  such  notice,  consent,  waiver  or other communication, (B) mechanically or
electronically  generated by the sender's facsimile machine containing the time,
date,  recipient  facsimile  number  and  an  image  of  the  first page of such
transmission or (C) provided by an overnight courier service shall be rebuttable
evidence  of personal service, receipt by facsimile or receipt from an overnight
courier  service  in  accordance  with  clause  (i),  (ii)  or  (iii)  above,
respectively.

(g)     Successors  and  Assigns. This Agreement shall be binding upon and inure
        ------------------------
to  the  benefit  of  the  parties  and their respective successors and assigns,
including  any  purchasers  of  the Preferred Stock or the Warrants. The Company
shall  not  assign this Agreement or any rights or obligations hereunder without
the prior written consent of the holders of at least a majority of the aggregate
number of Registrable Securities issued and issuable hereunder, including by way
of  a  Fundamental  Transaction  (unless  the  Company is in compliance with the
applicable  provisions  governing  Fundamental  Transactions  set  forth  in the
Certificate of Designations and the Warrants). A Buyer may assign some or all of
its  rights  hereunder in connection with transfer of any of its Preferred Stock
or Warrants, subject to compliance with the securities laws, without the consent
of  the  Company,  in  which  event  such assignee shall be deemed to be a Buyer
hereunder  with  respect  to  such  assigned  rights.

(h)     No Third Party Beneficiaries. This Agreement is intended for the benefit
        ----------------------------
of the parties hereto and their respective permitted successors and assigns, and
is  not  for  the  benefit  of, nor may any provision hereof be enforced by, any
other  Person.

(i)     Survival.  Unless  this  Agreement  is  terminated  under Section 8, the
        --------
representations  and  warranties  of  the  Company  and  the Buyers contained in
Sections  2 and 3 shall survive the Closing and the agreements and covenants set
forth  in  Sections  4,  5 and 9 shall survive the Closing.  Each Buyer shall be
responsible  only  for  its  own  representations,  warranties,  agreements  and
covenants  hereunder.


                                       26
<PAGE>
(j)     Further Assurances. Each party shall do and perform, or cause to be done
        ------------------
and  performed,  all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as any other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

(k)     Indemnification. In consideration of each Buyer's execution and delivery
        ---------------
of  the  Transaction  Documents  and  acquiring the Securities thereunder and in
addition  to  all  of  the  Company's  other  obligations  under the Transaction
Documents,  the  Company shall defend, protect, indemnify and hold harmless each
Buyer  and  each affiliate of a Buyer that holds Preferred Stock or Warrants and
all of their stockholders, partners, members, officers, directors, employees and
direct  or  indirect investors and any of the foregoing Persons' agents or other
representatives  (including,  without  limitation,  those retained in connection
with  the  transactions  contemplated  by  this  Agreement)  (collectively,  the
"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 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 any Indemnitee 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 the Transaction Documents, (b) any breach of any covenant, agreement
or  obligation  of the Company contained in the Transaction Documents or (c) any
cause  of  action,  suit  or  claim brought or made against such Indemnitee by a
third  party (including for these purposes a derivative action brought on behalf
of  the  Company)  and  arising  out  of  or  resulting  from (i) the execution,
delivery,  performance  or enforcement of the Transaction Documents or any other
certificate,  instrument  or  document  contemplated hereby or thereby, (ii) any
transaction  financed  or  to  be  financed  in  whole  or  in part, directly or
indirectly,  with  the  proceeds  of  the  issuance of the Securities, (iii) any
disclosure  made  by  such Buyer pursuant to Section 4(i), or (iv) the status of
such Buyer or holder of the Securities as an investor in the Company pursuant to
the  transactions  contemplated  by the Transaction Documents; provided, that no
                                                              ---------
Buyer shall be entitled to indemnification to the extent any of the foregoing is
caused  by  its  gross  negligence or willful misconduct. 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.
Except  as otherwise set forth herein, the mechanics and procedures with respect
to the rights and obligations under this Section 9(k) shall be the same as those
set  forth  in  Section  6  of  the  Registration  Rights  Agreement.

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

(m)     Remedies.  Each Buyer and each affiliate of a Buyer that holds Preferred
        --------
Stock  or  Warrants  shall  have  all  rights  and  remedies  set  forth  in the
Transaction  Documents  and all rights and remedies which such holders have been
granted  at any time under any other agreement or contract and all of the rights
which  such  holders  have under any law. Any Person having any rights under any
provision  of  this  Agreement  shall  be  entitled  to  enforce  such  rights
specifically  (without  posting a bond or other security), to recover damages by
reason  of  any  breach  of  any provision of this Agreement and to exercise all
other  rights  granted  by  law. Furthermore, the Company recognizes that in the
event  that  it  fails  to  perform,  observe,  or  discharge  any or all of its
obligations  under  the Transaction Documents, any remedy at law may prove to be
inadequate  relief  to  the Buyers. The Company therefore agrees that the Buyers
shall  be entitled to seek temporary and permanent injunctive relief in any such
case  without the necessity of proving actual damages and without posting a bond
or  other  security.

(n)     Rescission  and  Withdrawal  Right.  Notwithstanding  anything  to  the
        ----------------------------------
contrary  contained  in  (and  without  limiting  any similar provisions of) the
Transaction  Documents,  whenever  any  Buyer  exercises  a


                                       27
<PAGE>
right,  election,  demand or option under a Transaction Document and the Company
does  not  timely  perform  its  related  obligations within the periods therein
provided,  then  such Buyer may rescind or withdraw, in its sole discretion from
time  to time upon written notice to the Company, any relevant notice, demand or
election  in whole or in part without prejudice to its future actions and rights

(o)     Payment  Set  Aside.  To  the extent that the Company makes a payment or
        -------------------
payments  to  the  Buyers  hereunder or pursuant to any of the other Transaction
Documents  or  the  Buyers  enforce  or  exercise  their  rights  hereunder  or
thereunder,  and such payment or payments or the proceeds of such enforcement or
exercise  or  any  part  thereof  are  subsequently  invalidated, declared to be
fraudulent  or  preferential,  set  aside,  recovered  from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver  or  any other Person under any law (including, without limitation, any
bankruptcy  law, foreign, state or federal law, common law or equitable cause of
action),  then  to  the  extent  of  any such restoration the obligation or part
thereof  originally  intended  to be satisfied shall be revived and continued in
full  force  and effect as if such payment had not been made or such enforcement
or  setoff  had  not  occurred.

(p)     Independent Nature of Buyers' Obligations and Rights. The obligations of
        ----------------------------------------------------
each  Buyer  under  any  Transaction Document are several and not joint with the
obligations of any other Buyer, and no Buyer shall be responsible in any way for
the  performance  of  the  obligations  of any other Buyer under any Transaction
Document.  Nothing contained herein or in any other Transaction Document, and no
action  taken  by  any  Buyer  pursuant  hereto  or  thereto, shall be deemed to
constitute  the  Buyers as a partnership, an association, a joint venture or any
other  kind  of  entity,  or create a presumption that the Buyers are in any way
acting  in  concert  or  as  a  group  with  respect  to such obligations or the
transactions  contemplated  by  the  Transaction  Documents  and  the  Company
acknowledges  that  the  Buyers  are  not  acting  in concert or as a group with
respect  to such obligations or the transactions contemplated by the Transaction
Documents.  Each  Buyer  confirms  that it has independently participated in the
negotiation  of  the  transaction contemplated hereby with the advice of its own
counsel  and advisors. Each Buyer shall be entitled to independently protect and
enforce  its  rights,  including,  without limitation, the rights arising out of
this  Agreement  or  out of any other Transaction Documents, and it shall not be
necessary  for  any  other  Buyer  to  be  joined  as an additional party in any
proceeding  for  such  purpose.

(q)     Exculpation  Among  Buyers:  Each  Buyer  acknowledges  that  it  is not
        --------------------------
relying  upon any Person (including, without limitation, any other Buyer), other
than  the  Company  and  its officers and directors (acting in their capacity as
representatives  of  the  Company),  in  deciding  to  invest  and in making its
investment  in  the  Company.  Each  Buyer  agrees  that  no other Buyer nor the
respective  controlling  Persons,  officers,  directors,  partners,  members,
shareholders,  agents  or  employees  of any other Buyer shall be liable to such
Buyer for any losses incurred by such Buyer in connection with its investment in
the  Company.

                            [SIGNATURE PAGE FOLLOWS]


                                       28
<PAGE>
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.


                                      COMPANY:

                                      CHARYS HOLDING COMPANY, INC.


                                      By:
                                         ----------------------------
                                         Name:   Billy Ray, Jr.
                                         Title:  Chief Executive Officer


                                       29
<PAGE>
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.

                                      BUYERS:

                                      GOTTBETTER CAPITAL MASTER, LTD.


                                      By:
                                         ----------------------------
                                         Name:   Adam S. Gottbetter
                                         Title:  Director

                                      ENABLE GROWTH PARTNERS LP


                                      By:
                                         ----------------------------
                                         Name:   Brendan O'Neil
                                         Title:  Principal and Portfolio Manager

                                        ENABLE OPPORTUNITY PARTNERS LP


                                      By:
                                         ----------------------------
                                         Name:   Brendan O'Neil
                                         Title:  Principal and Portfolio Manager

                                      PIERCE DIVERSIFIED STRATEGY MASTER FUND
                                      LLC


                                      By:
                                         ----------------------------
                                         Name:   Brendan O'Neil
                                         Title:  Principal and Portfolio Manager


                                      CASTLERIGG MASTER INVESTMENTS LTD.


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


                                      UBS O'CONNOR LLC F/B/O O'CONNOR PIPES
                                      CORPORATE STRATEGIES MASTER LTD.


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


                                       30
<PAGE>
<TABLE>
<CAPTION>

                                                      SCHEDULE OF BUYERS


              (1)                            (2)                (3)         (4)          (5)                  (6)
                                                             AGGREGATE   AGGREGATE
                                                             NUMBER OF   NUMBER OF    PURCHASE      LEGAL REPRESENTATIVE'S
                                         ADDRESS AND         PREFERRED    WARRANT       PRICE             ADDRESS AND
BUYER                                 FACSIMILE NUMBER         SHARES     SHARES                       FACSIMILE NUMBER
--------------------------------  -------------------------  ----------  ----------  -----------  ---------------------------
<S>                               <C>                        <C>         <C>         <C>          <C>
Gottbetter Capital Master, Ltd.   488 Madison Avenue            500      1,666,666   $4,700,000   Jason M. Rimland, Esq.
                                  12th Floor                                                      Gottbetter & Partners, LLP
                                  New York, NY 10022                                              488 Madison Avenue
                                  Facsimile:  212.400.6999                                        12th Floor
                                                                                                  New York, NY 10022
                                                                                                  Facsimile:  212.400.6901

-----------------------------------------------------------------------------------------------------------------------------
Enable Growth Partners LP         One Ferry Building             260      866,667    $2,444,000
                                  Suite 255
                                  San Francisco, CA 94111
                                  Facsimile:  415.677.1580

-----------------------------------------------------------------------------------------------------------------------------
Enable Opportunity Partners       One Ferry Building              40      133,333     $376,000
LP                                Suite 255
                                  San Francisco, CA 94111
                                  Facsimile:  415.677.1580

-----------------------------------------------------------------------------------------------------------------------------
Pierce Diversified Strategy       One Ferry Building             100      333,333     $940,000
Master Fund LLC                   Suite 255
                                  San Francisco, CA 94111
                                  Facsimile:  415.677.1580

-----------------------------------------------------------------------------------------------------------------------------
Castlerigg Master Investments     40 W. 57th Street              300     1,000,000   $2,820,000
Ltd.                              26th Floor
                                  New York, NY 10019
                                  Facsimile:  212.603.5710

-----------------------------------------------------------------------------------------------------------------------------
UBS O'Connor LLC F/B/O                                           100      333,333     $940,000
O'Connor Pipes Corporate
Strategies Master Ltd.
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       31
<PAGE>
                                   SCHEDULE II
                                   -----------

                               SHARE DENOMINATIONS
                               -------------------

NAME OF INVESTOR

Gottbetter Capital Master, Ltd.

Stock Certificate Denominations for the 3,333,333 Escrow Shares in the name of
Gottbetter Capital Master, Ltd.:

1 certificates each for 333 shares
15 certificates each for 500 shares
18 certificates each for 1,000 shares
17 certificates each for 2,500 shares
15 certificates each for 5,000 shares
19 certificates each for 10,000 shares
10 certificates each for 25,000 shares
10 certificates each for 50,000 shares
10 certificates each for 100,000 shares
5 certificates each for 250,000 shares


                                       32
<PAGE>
                                   SCHEDULE II
                                   -----------

                               SHARE DENOMINATIONS
                               -------------------

NAME OF INVESTOR

Enable Growth Partners LP

Stock Certificate Denominations for the 1,733,333 Escrow Shares in the name of
Enable Growth Partners LP:

1 certificates each for 333 shares
15 certificates each for 500 shares
18 certificates each for 1,000 shares
17 certificates each for 2,500 shares
15 certificates each for 5,000 shares
19 certificates each for 10,000 shares
10 certificates each for 25,000 shares
5 certificates each for 50,000 shares
4 certificates each for 100,000 shares
2 certificates each for 250,000 shares


                                       33
<PAGE>
                                   SCHEDULE II
                                   -----------

                               SHARE DENOMINATIONS
                               -------------------

NAME OF INVESTOR

Enable Opportunity Partners LP

Stock Certificate Denominations for the 266,666 Escrow Shares in the name of
Enable Opportunity Partners LP:

1 certificates each for 333 shares
15 certificates each for 500 shares
18 certificates each for 1,000 shares
17 certificates each for 2,500 shares
15 certificates each for 5,000 shares
19 certificates each for 10,000 shares
10 certificates each for 25,000 shares
5 certificates each for 50,000 shares
4 certificates each for 100,000 shares
2 certificates each for 250,000 shares


                                       34
<PAGE>
                                   SCHEDULE II
                                   -----------

                               SHARE DENOMINATIONS
                               -------------------

NAME OF INVESTOR

Pierce Diversified Strategy Master Fund, LLC

Stock Certificate Denominations for the 666,667 Escrow Shares in the name of
Pierce Diversified Strategy Master Fund, LLC:

1 certificate for 1 share
2 certificate for 333 shares
15 certificates each for 500 shares
21 certificates each for 1,000 shares
17 certificates each for 2,500 shares
15 certificates each for 5,000 shares
22 certificates each for 10,000 shares
6 certificates each for 25,000 shares
1 certificates each for 50,000 shares
1 certificates each for 100,000 shares


                                       35
<PAGE>
                                   SCHEDULE II
                                   -----------

                               SHARE DENOMINATIONS
                               -------------------

NAME OF INVESTOR

Castlerigg Master Investments Ltd.

Stock Certificate Denominations for the 2,000,000 Escrow Shares in the name of
Castlerigg Master Investments Ltd:

10 certificates each for 500 shares
10 certificates each for 1,000 shares
10 certificates each for 2,500 shares
9 certificates each for 5,000 shares
9 certificates each for 10,000 shares
7 certificates each for 25,000 shares
1 certificates each for 50,000 shares
1 certificates each for 100,000 shares
1 certificates each for 500,000 shares
1 certificates each for 1,000,000 shares


                                       36
<PAGE>
                                   SCHEDULE II
                                   -----------

                               SHARE DENOMINATIONS
                               -------------------

NAME OF INVESTOR

UBS O'Connor LLC F/B/O O'Connor Pipes Corporate Strategies Master Ltd.

Stock Certificate Denominations for the 666,667 Escrow Shares in the name of UBS
O'Connor LLC F/B/O O'Connor Pipes Corporate Strategies Master Ltd.:

1 certificate for 1 share
2 certificate for 333 shares
15 certificates each for 500 shares
21 certificates each for 1,000 shares
17 certificates each for 2,500 shares
15 certificates each for 5,000 shares
22 certificates each for 10,000 shares
6 certificates each for 25,000 shares
1 certificates each for 50,000 shares
1 certificates each for 100,000 shares


                                       37
<PAGE>
<TABLE>
<CAPTION>
                                    EXHIBITS
                                    --------

<S>           <C>
Exhibit A     Form of Certificate of Designations
Exhibit B     Form of Warrants
Exhibit C     Form of Registration Rights Agreement
Exhibit D     Form of Escrow Shares Escrow Agreement
</TABLE>


                                       38
<PAGE>
           CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF THE
                     SERIES D CONVERTIBLE PREFERRED STOCK OF
                          CHARYS HOLDING COMPANY, INC.

Charys Holding Company, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "COMPANY"), hereby certifies that, pursuant
to the authority vested in the Board of Directors of the Company (the "BOARD")
by the Certificate of Incorporation of the Company, as amended (the "CERTIFICATE
OF INCORPORATION"), the following resolution was adopted as of May 18, 2006 by
the Board pursuant to the Section 151 of the Delaware General Corporation Law
("DGCL"):

     RESOLVED, that pursuant to the authority granted to and vested in the Board
in accordance with the provisions of the Certificate of Incorporation, as
amended, there shall be created a series of Preferred Stock, $0.001 par value,
which series shall have the following designations and number thereof, powers,
preferences, rights, qualifications, limitations and restrictions:

(1)     Designation and Number of Shares. There shall hereby be created and
        --------------------------------
established a series of Preferred Stock designated as "Series D Convertible
Preferred Stock" (the "SERIES D PREFERRED STOCK"). The authorized number of
shares of Series D Preferred stock shall be 1,300 shares; provided, that
                                                         ---------
whatever number of shares of Series D Preferred Stock is not issued and sold in
the offering of Series D Preferred Stock being undertaken contemporaneously with
the creation of the Series D Preferred Stock pursuant to the Securities
Purchase, shall be cancelled, retired and eliminated by the Company from the
shares of Series D Preferred Stock which the Company shall be authorized to
issue. Any such shares of Series D Preferred Stock so cancelled, retired and
eliminated shall have the status of authorized and unissued shares of preferred
stock, issuable in undesignated series and may be redesignated and reissued in
any series other than as Series D Preferred Stock provided that no such
redesignated or reissued shares can be Senior Preferred unless authorized
pursuant to Section 12 hereof.

(2)     Dividends and Special Payments. (a) The holders of the shares of Series
        ------------------------------
D Preferred Stock (each, a "HOLDER" and collectively, the "HOLDERS") shall be
entitled to receive, when, as and if declared by the Board out of funds legally
available for the purpose, quarterly dividends ("DIVIDENDS") payable on the
Stated Value (as defined below) of each share of Series D Preferred Stock at the
Dividend Rate (as defined below). Dividends on the shares of Series D Preferred
Stock shall commence accruing and be cumulative on the Initial Issuance Date and
shall be computed on the basis of a 360-day year consisting of twelve 30-day
months and shall be payable in arrears for each Calendar Quarter on the first
day of the succeeding Calendar Quarter during the period beginning on the
Initial Issuance Date and ending on, and including the Maturity Date (each, a
"DIVIDEND DATE") with the first Dividend Date being August 1, 2006. Prior to the
payment of Dividends on a Dividend Date, Dividends on the shares of Series D
Preferred Stock shall accrue at the Dividend Rate. If a Dividend Date is not a
Business Day (as defined below), then the Dividend shall be due and payable on
the Business Day immediately following such Dividend Date.  Dividends shall be
payable in cash.  Notwithstanding the foregoing, if on a Dividend Date, the
Company is not permitted under the DGCL (or under any agreement that would
prohibit the payment of such Dividends provided such agreement was in existence
as of the date hereof or entered into subsequent to the date hereof with the
consent of the Required Holders) to pay such Dividends, the Company shall be
permitted to delay payment of such Dividends until the earliest date on which
the Company would be legally permitted to make such payment.

     (b) The Holders shall be entitled to receive, when, as and if declared by
the Board out of funds legally available for the purpose, monthly special
payments of $416.67 ("SPECIAL PAYMENTS") for each share of Series D Preferred
Stock. Special Payments on the shares of Series D Preferred Stock shall commence
accruing on November 1, 2006 and shall be payable in arrears for each Calendar
Month on the last day of the Calendar Month during the period beginning on
November 1, 2006 and including the


<PAGE>
Maturity Date (each, a "PAYMENT DATE") with the first Payment Date being
November 30, 2006. Prior to the payment of the Special Payment on a Payment
Date, Special Payments on the shares of Series D Preferred Stock shall accrue.
If a Special Payment Date is not a Business Day (as defined below), then the
Special Payment shall be due and payable on the Business Day immediately
following such Special Payment Date. Special Payments shall be paid in cash.
Notwithstanding the foregoing, if on a Special Payment Date, the Company is not
permitted under the DGCL (or under any agreement that would prohibit the payment
of such Special Payment provided such agreement was in existence as of the date
hereof or entered into subsequent to the date hereof with the consent of the
Required Holders) to pay such Special Payments, the Company shall be permitted
to delay payment of such Special Payments until the earliest date on which the
Company would be legally permitted to make such payment.  Any conversions of the
Series D Preferred Stock into Common Stock shall be credited against the Special
Payments.  As an example, if a Holder converted $400 of the Conversion Amount in
March, then the payment on March 31st of the Special Payment shall be $16.67.
If a Holder converted $10 of the Conversion Amount in March, then the payment on
March 31st of the Special Payment shall be $406.67.  If the Holder converted
$500 in March and $100 in April, then the payment of the Special Payment on
April 30 shall be $233.34.

(3)     Conversion. Shares of Series D Preferred Stock shall be convertible into
        ----------
the Company's common shares, $0.001 par value per share (the "COMMON SHARES"),
on the terms and conditions set forth in this Section 3.

     (a)     Certain Defined Terms. For purposes of this Certificate of
             ---------------------
Designations, the following terms shall have the following meanings:

          (i) "APPROVED SHARE PLAN" means any employee benefit plan which has
     been approved by the Board of Directors of the Company, pursuant to which
     the Company's securities may be issued to any employee, officer, consultant
     or director for services provided to the Company.

          (ii) "BLOOMBERG" means Bloomberg Financial Markets.

          (iii) "BUSINESS DAY" means any day other than Saturday, Sunday or
     other day on which commercial banks in The City of New York are authorized
     or required by law to remain closed.

          (iv) "CALENDAR QUARTER" means each of the following periods: the
     period beginning on and including May 1 and ending on and including July
     30; the period beginning on and including August 1 and ending on and
     including October 31; the period beginning on and including November 1 and
     ending on and including January 31; and the period beginning on and
     including February 1 and ending on and including April 30.

          (v) "CHANGE OF CONTROL" means any Fundamental Transaction other than
     (A) any reorganization, recapitalization or reclassification in which
     holders of the Company's voting power immediately prior to such
     reorganization, recapitalization or reclassification continue after such
     reorganization, recapitalization or reclassification to hold publicly
     traded securities and, directly or indirectly, the voting power of the
     surviving entity or entities necessary to elect a majority of the members
     of the board of directors (or their equivalent if other than a corporation)
     of such entity or entities, (B) pursuant to a migratory merger effected
     solely for the purpose of changing the jurisdiction of incorporation of the
     Company or (C) a Fundamental Transaction that has been previously
     authorized by a written consent of the Required Holders prior to the
     consummation of such Fundamental Transaction.


                                        2
<PAGE>
          (vi) "CLOSING BID PRICE" and "CLOSING SALE PRICE" means, for any
     security as of any date, the last closing bid price and last closing trade
     price, respectively, for such security on the Principal Market, as reported
     by Bloomberg, or, if the Principal Market begins to operate on an extended
     hours basis and does not designate the closing bid price or the closing
     trade price, as the case may be, then the last bid price or last trade
     price, respectively, of such security prior to 5:00:00 p.m., New York Time,
     as reported by Bloomberg, or, if the Principal Market is not the principal
     securities exchange or trading market for such security, the last closing
     bid price or last trade price, respectively, of such security on the
     principal securities exchange or trading market where such security is
     listed or traded as reported by Bloomberg, or if the foregoing do not
     apply, the last closing bid price or last trade price, respectively, of
     such security in the over-the-counter market on the electronic bulletin
     board for such security as reported by Bloomberg, or, if no closing bid
     price or last trade price, respectively, is reported for such security by
     Bloomberg, the average of the bid prices, or the ask prices, respectively,
     of any market makers for such security as reported in the "pink sheets" by
     Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the
     Closing Bid Price or the Closing Sale Price cannot be calculated for a
     security on a particular date on any of the foregoing bases, the Closing
     Bid Price or the Closing Sale Price, as the case may be, of such security
     on such date shall be the fair market value as mutually determined by the
     Company and the Required Holders. If the Company and the Required Holders
     are unable to agree upon the fair market value of such security, then such
     dispute shall be resolved pursuant to Section 3(d)(iii). All such
     determinations shall be appropriately adjusted for any share dividend,
     share split, share combination or other similar transaction during the
     applicable calculation period.

          (vii) "CONVERSION AMOUNT" means the Stated Value.

          (viii) "CONVERSION PRICE" means, with respect to the shares of Series
     D Preferred Stock, as of any Conversion Date or other date of
     determination, $3.00, subject to adjustment as provided herein.

          (ix) "CONVERTIBLE SECURITIES" means any shares or securities (other
     than Options) directly or indirectly convertible into or exchangeable or
     exercisable for Common Shares.

          (x) "DIVIDEND RATE" means eight percent (8%) per annum.

          (xii) "ELIGIBLE MARKET" means the Principal Market, NYSE, the Nasdaq
     National Market, The American Stock Exchange or The Nasdaq Capital Market.

          (xiii) "ESCROW AGENT" means Gottbetter & Partners, LLP.

          (xiv) "EXCLUDED SECURITIES" means Common Shares issued or deemed to be
     issued by the Company or Options: (A) in connection with an Approved Share
     Plan or (B) upon issuance of the shares of Series D Preferred Stock or upon
     conversion of the shares of Series D Preferred Stock or upon exercise of
     the Warrants; (C) issued upon exercise of Options or Convertible Securities
     which are outstanding on the date immediately preceding the Subscription
     Date, provided that such issuance of Common Shares upon exercise of such
     Options or Convertible Securities is made pursuant to the terms of such
     Options or Convertible Securities in effect on the date immediately
     preceding the Subscription Date and the exercise, conversion or similar
     price and the number of shares underlying such Option or Convertible
     Security are not amended or changed after the date immediately proceeding
     the Subscription Date and the other material terms of such Options or
     Convertible Securities are not otherwise amended or changed after the date
     immediately preceding the Subscription Date; (D) issued in connection with
     any share split, share


                                        3
<PAGE>
     dividend, recapitalization or similar transaction by the Company for which
     adjustment is made pursuant to Section 3(f)(ii); and (E) designated for
     issuance in connection with transactions identified on Schedule 3(r) to the
     Securities Purchase Agreement.

          (xv) "FUNDAMENTAL TRANSACTION" means that (i) the Company shall,
     directly or indirectly, in one or more related transactions, (A)
     consolidate or merge with or into (whether or not the Company is the
     surviving corporation) another Person, or (B) sell, assign, transfer,
     convey or otherwise dispose of all or substantially all of the properties
     or assets of the Company to another Person, or (C) allow another Person to
     make a purchase, tender or exchange offer that is accepted by the holders
     of more than the 50% of the outstanding Common Shares (not including any
     Common Shares held by the Person or Persons making or party to, or
     associated or affiliated with the Persons making or party to, such
     purchase, tender or exchange offer), (D) consummate a share purchase
     agreement or other business combination (including, without limitation, a
     reorganization, recapitalization, spin-off or scheme of arrangement) with
     another Person whereby such other Person acquires more than the 50% of the
     outstanding Common Shares (not including any Common Shares held by the
     other Person or other Persons making or party to, or associated or
     affiliated with the other Persons making or party to, such share purchase
     agreement or other business combination), or (E) reorganize, recapitalize
     or reclassify its Common Shares or (ii) any "person" or "group" (as these
     terms are used for purposes of Sections 13(d) and 14(d) of the Securities
     Exchange Act of 1934, as amended) is or shall become the "beneficial owner"
     (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
     amended), directly or indirectly, of 50% of the issued and outstanding
     Common Stock or the aggregate ordinary voting power represented by issued
     and outstanding Common Stock.

          (xvi) "INITIAL ISSUANCE DATE" means May 19, 2006.

          (xvii) LIQUIDATION EVENT" means the voluntary or involuntary
     liquidation, dissolution or winding up of the Company or such Subsidiaries
     the assets of which constitute all or substantially all of the business of
     the Company and its Subsidiaries taken as a whole, in a single transaction
     or series of transactions.

          (xviii) "MATURITY DATE" means, with respect to a Preferred Share,
     thirty (30) months after the Initial Issuance Date, unless extended
     pursuant to Section 3(d)(vii).

          (xix) "NYSE" means The New York Stock Exchange, Inc.

          (xx) "OPTIONS" means any rights, warrants or options to subscribe for
     or purchase Common Shares or Convertible Securities.

          (xxi) "PARENT ENTITY" of a Person means an entity that, directly or
     indirectly, controls the applicable Person and whose common shares or
     equivalent equity security are quoted or listed on an Eligible Market, or,
     if there is more than one such Person or Parent Entity, the Person or
     Parent Entity with the largest public market capitalization as of the date
     of consummation of the Fundamental Transaction.

          (xxii) "PERSON" means an individual, a limited liability company, a
     partnership, a joint venture, a corporation, a trust, an unincorporated
     organization and a government or any department or agency thereof.

          (xxiii) "PRINCIPAL MARKET" means The National Association of
     Securities Dealers Inc.'s Over-The-Counter Bulletin Board.


                                        4
<PAGE>
          (xxiv) "REGISTRATION RIGHTS AGREEMENT" means that certain registration
     rights agreement by and among the Company and the initial Holders of the
     Series D Preferred Stock relating to the filing of a registration statement
     covering the resale of the Common Shares issuable upon conversion of the
     Series D Preferred Stock and exercise of the Warrants, as such agreement
     may be amended from time to time as provided in such agreement.

          (xxv) "REQUIRED HOLDERS" means the Holders of shares of Series D
     Preferred Stock representing at least a majority of the aggregate shares of
     Series D Preferred Stock then outstanding.

          (xxvi) "SEC" means the Securities and Exchange Commission.

          (xxvii) SECURITIES PURCHASE AGREEMENT" means that certain securities
     purchase agreement by and among the Company and the initial Holders, dated
     as of the Subscription Date, as such agreement further may be amended from
     time to time as provided in such agreement.

          (xxviii) STATED VALUE" means $10,000 (as subject to adjustment in the
     case of any stock splits, stock combination or similar recapitalization
     affecting the Series D Preferred Stock).

          (xxix) "SUBSCRIPTION DATE" means May 19, 2006.

          (xxx) "SUCCESSOR ENTITY" means the Person, which may be the Company,
     formed by, resulting from or surviving any Fundamental Transaction or the
     Person with which such Fundamental Transaction shall have been made,
     provided that if such Person is not a publicly traded entity whose common
     shares or equivalent equity security are quoted or listed for trading on an
     Eligible Market, Successor Entity shall mean such Person's Parent Entity.

          (xxxi) "TRADING DAY" means any day on which the Common Shares are
     traded on the Principal Market, or, if the Principal Market is not the
     principal trading market for the Common Shares, then on the principal
     securities exchange or securities market on which the Common Shares are
     then traded; provided that "Trading Day" shall not include any day on which
     the Common Shares are scheduled to trade on such exchange or market for
     less than 4.5 hours or any day that the Common Shares are suspended from
     trading during the final hour of trading on such exchange or market (or if
     such exchange or market does not designate in advance the closing time of
     trading on such exchange or market, then during the hour ending at 5:00:00
     p.m., New York Time).

          (xxxii) "TRANSACTION DOCUMENTS" means the Securities Purchase
     Agreement, this Certificate of Designations, the Warrants, the Registration
     Rights Agreement and the Escrow Shares Escrow Agreement delivered in
     accordance with the Securities Purchase Agreement.

          (xxxiii) "WARRANTS" means the warrants to purchase Common Shares
     issued by the Company pursuant to the Securities Purchase Agreement, and
     shall include all Warrants issued in exchange thereof or replacement
     thereof.

          (xxxiv) "WEIGHTED AVERAGE PRICE" means, for any security as of any
     date, the dollar volume-weighted average price for such security on the
     Principal Market during the period beginning at 9:30:01 a.m., New York City
     Time, and ending at 4:00:00 p.m., New York City Time, as reported by
     Bloomberg through its "Volume at Price" function or, if the foregoing does
     not apply, the dollar volume-weighted average price of such security in the
     over-the-counter


                                        5
<PAGE>
     market on the electronic bulletin board for such security during the period
     beginning at 9:30:01 a.m., New York City Time, and ending at 4:00:00 p.m.,
     New York City Time, as reported by Bloomberg, or, if no dollar
     volume-weighted average price is reported for such security by Bloomberg
     for such hours, the average of the highest closing bid price and the lowest
     closing ask price of any of the market makers for such security as reported
     in the "pink sheets" by Pink Sheets LLC (formerly the National Quotation
     Bureau, Inc.). If the Weighted Average Price cannot be calculated for such
     security on such date on any of the foregoing bases, the term "Weighted
     Average Price" shall be being substituted for the term "Closing Bid Price."
     All such determinations shall be appropriately adjusted for any share
     dividend, share split or other similar transaction during such period.

     (b)     Holder's Conversion Right. Subject to the provisions of Section 6
             -------------------------
and Section 14, at any time or times on or after the Initial Issuance Date, any
Holder shall be entitled to convert any whole number of shares of Series D
Preferred Stock into fully paid and nonassessable Common Shares in accordance
with Section 3(d) at the Conversion Rate (as defined below).

     (c)     Conversion Rate. The number of Common Shares issuable upon
             ---------------
conversion of each shares of Series D Preferred Stock pursuant to Section 3(b)
shall be determined according to the following formula (the "CONVERSION RATE"):


                                Conversion Amount
                                -----------------
                                Conversion Price

          No fractional shares of Common Stock are to be issued upon the
          conversion of any shares of Series D Preferred Stock, but rather the
          number of shares of Common Stock to be issued shall be rounded to the
          nearest whole number.


     (d)     Mechanics of Conversion. The conversion of shares of Series D
             -----------------------
Preferred Stock shall be conducted in the following manner:

          (i) Holder's Delivery Requirements. To convert shares of Series D
              ------------------------------
     Preferred Stock into Common Shares on any date (the "CONVERSION DATE"), the
     Holder shall transmit by facsimile or email (or otherwise deliver), for
     receipt on or prior to 5:00 p.m., New York City Time, at least one Business
     Day prior to such Conversion Date, a copy of a properly completed notice of
     conversion executed by the registered Holder of the shares of Series D
     Preferred Stock subject to such conversion in the form attached hereto as
     Exhibit I (the "CONVERSION NOTICE") to the Company and the Escrow Agent.
     ---------

          (ii) Escrow Agent's Response. On or before the first (1st) Business
               -----------------------
     Day following the date of receipt by the Escrow Agent of such Conversion
     Notice (the "SHARE DELIVERY DATE"), and provided the Company shall not have
     objected as provided for in subsection (iii) below, the Escrow Agent shall
     issue and deliver to the address as specified in the Conversion Notice,
     certificates for the number of Escrow Shares to which the Holder shall be
     entitled.

          (iii) Dispute Resolution. The Company shall have one (1) Business Day
                ------------------
     from transmission of the Conversion Notice by the Holder to object to the
     calculation of the Conversion Rate. If the Company fails to object to the
     calculation of the number of Escrow Shares to be released or otherwise with
     respect to the Conversion Notice, within said time, then the Company shall
     be deemed to have waived any objections to said calculation and the


                                        6
<PAGE>
     Conversion Notice. In the case of a dispute, the Company shall instruct the
     Escrow Agent to transfer to the Holder the number of Common Shares that is
     not disputed, if any, and shall transmit an explanation of the disputed
     determinations or arithmetic calculations to the Holder and Escrow Agent
     via facsimile within one (1) Business Day of receipt of such Holder's
     Conversion Notice or other date of determination. If such Holder and the
     Company are unable to agree on the arithmetic calculation of the Conversion
     Rate within one (1) Business Day of such disputed determination or
     arithmetic calculation being transmitted to the Holder, then the Company
     shall promptly submit via facsimile (A) the disputed determination of the
     Closing Sale Price to an independent, reputable investment bank selected by
     the Company and approved by the Required Holders or (B) the disputed
     arithmetic calculation of the Conversion Rate to the Company's independent,
     outside accountant. The Company shall cause, at the Company's expense, the
     investment bank or the accountant, as the case may be, to perform the
     determinations or calculations and notify the Company and the Holders of
     the results no later than one (1) Business Day from the time it receives
     the disputed determinations or calculations. Such investment bank's or
     accountant's determination or calculation, as the case may be, shall be
     binding upon all parties absent manifest error.

          (iv) Record Holder. The Person or Persons entitled to receive the
               -------------
     Common Shares issuable upon a conversion of shares of Series D Preferred
     Stock shall be treated for all purposes as the record holder or holders of
     such Common Shares on the Conversion Date.

          (v) Mandatory Redemption at Maturity. If any shares of Series D
              --------------------------------
     Preferred Stock remain outstanding on the Maturity Date, the Company shall
     redeem such shares of Series D Preferred Stock in cash in an amount equal
     to the outstanding Conversion Amount for such shares of Series D Preferred
     Stock plus any accrued but unpaid Dividends less any Special Payments
     declared and paid on such shares outstanding (the "MATURITY DATE REDEMPTION
     PRICE"). The Company shall pay the Maturity Date Redemption Price on the
     Maturity Date by wire transfer of immediately available funds to an account
     designated in writing by such Holder. If the Company fails to redeem all of
     the shares of Series D Preferred Stock outstanding on the Maturity Date by
     payment of the Maturity Date Redemption Price for each such share, then in
     addition to any remedy such Holder may have under any Transaction Document,
     (I) the applicable Maturity Date Redemption Price payable in respect of
     such unredeemed shares of Series D Preferred Stock shall bear interest at
     the rate of 3.0% per month, prorated for partial months, until paid in
     full, and (II) any Holder shall have the option to require the Company to
     convert any or all of such Holder's shares of Series D Preferred Stock and
     for which the Maturity Date Redemption Price (together with any interest
     thereon) has not been paid into (on a per preferred share basis) shares of
     Common Stock equal to the number which results from dividing the Maturity
     Date Redemption Price (together with any interest thereon) by the
     Conversion Price. If the Company has failed to pay the Maturity Date
     Redemption Price in a timely manner as described above, then the Maturity
     Date shall be automatically extended for any shares of Series D Preferred
     Stock until the date the Holders receive such shares of Common Stock or
     Maturity Date Redemption Price. All redemptions shall be made on a pro-rata
     basis to all holders of outstanding shares of Series D Preferred Stock.

          (vi) Book-Entry. Notwithstanding anything to the contrary set forth
               ----------
     herein, upon conversion of shares of Series D Preferred Stock in accordance
     with the terms hereof, any Holder thereof shall not be required to
     physically surrender the certificate representing the shares of Series D
     Preferred Stock to the Company unless (A) the full or remaining number of
     shares of Series D Preferred Stock represented by the certificate are being
     converted or (B) such Holder has provided the Company with prior written
     notice (which notice may be included in a Conversion Notice) requesting
     reissuance of shares of Series D Preferred Stock upon physical surrender of


                                        7
<PAGE>
     any shares of Series D Preferred Stock. The Holders and the Company shall
     maintain records showing the number of shares of Series D Preferred Stock
     so converted and the dates of such conversions or shall use such other
     method, reasonably satisfactory to the Holders and the Company, so as not
     to require physical surrender of the certificate representing the shares of
     Series D Preferred Stock upon each such conversion. In the event of any
     dispute or discrepancy, such records of the Company establishing the number
     of shares of Series D Preferred Stock to which the record holder is
     entitled shall be controlling and determinative in the absence of manifest
     error. Notwithstanding the foregoing, if shares of Series D Preferred Stock
     represented by a certificate are converted as aforesaid, a Holder may not
     transfer the certificate representing the shares of Series D Preferred
     Stock unless such Holder first physically surrenders the certificate
     representing the shares of Series D Preferred Stock to the Company,
     whereupon the Company will forthwith issue and deliver upon the order of
     such Holder a new certificate of like tenor, registered as such Holder may
     request, representing in the aggregate the remaining number of shares of
     Series D Preferred Stock represented by such certificate. A Holder and any
     assignee, by acceptance of a certificate, acknowledge and agree that, by
     reason of the provisions of this paragraph, following conversion of any
     shares of Series D Preferred Stock, the number of shares of Series D
     Preferred Stock represented by such certificate may be less than the number
     of shares of Series D Preferred Stock stated on the face thereof. Each
     certificate for shares of Series D Preferred Stock shall bear the following
     legend:

     ANY  TRANSFEREE  OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE TERMS
     OF THE COMPANY'S CERTIFICATE OF DESIGNATIONS RELATING TO THE PREFERRED
     SHARES REPRESENTED BY THIS CERTIFICATE. THE NUMBER OF PREFERRED SHARES
     REPRESENTED  BY  THIS  CERTIFICATE  MAY  BE  LESS  THAN  THE NUMBER OF
     PREFERRED  SHARES  STATED  ON  THE  FACE  HEREOF  PURSUANT  TO SECTION
     3(d)(vi)  OF THE CERTIFICATE OF DESIGNATIONS RELATING TO THE PREFERRED
     SHARES  REPRESENTED  BY  THIS  CERTIFICATE.

     (e)     Taxes. The Company shall pay any and all documentary, stamp,
             -----
transfer (but only in respect of the registered holder thereof) and other
similar taxes that may be payable with respect to the issuance and delivery of
Common Shares upon the conversion of shares of Series D Preferred Stock.

     (f)     Adjustments to Conversion Price. The Conversion Price will be
             -------------------------------
subject to adjustment from time to time as provided in this Section 3(f).

          (i) Adjustment of Conversion Price upon Issuance of Common Shares. If
              -------------------------------------------------------------
     and whenever on or after the Subscription Date, the Company issues or
     sells, or in accordance with this Section 3(f) is deemed to have issued or
     sold, any Common Shares (including the issuance or sale of Common Shares
     owned or held by or for the account of the Company but excluding Excluded
     Securities) for a consideration per share (the "NEW ISSUANCE PRICE") less
     than a price (the "APPLICABLE PRICE") equal to the Conversion Price in
     effect immediately prior to such time (a "DILUTIVE ISSUANCE"), then
     immediately after such issue or sale, the Conversion Price then in effect
     shall be reduced to an amount equal to the New Issuance Price. For purposes
     of determining the adjusted Conversion Price under this Section 3(f)(i),
     the following shall be applicable:

               (A) Issuance of Options. If the Company in any manner grants or
                   -------------------
          sells any Options (other than Options which are Excluded Securities)
          and the lowest price per share for which one Common Share is issuable
          upon the exercise of any such Option or upon conversion, exchange or
          exercise of any Convertible Securities issuable upon


                                        8
<PAGE>
          exercise of such Option is less than the Applicable Price, then such
          Common Share shall be deemed to be outstanding and to have been issued
          and sold by the Company at the time of the granting or sale of such
          Option for such price per share. For purposes of this Section
          3(f)(i)(A), the "lowest price per share for which one Common Share is
          issuable upon the exercise of any such Option or upon conversion,
          exchange or exercise of any Convertible Securities issuable upon
          exercise of such Option" shall be equal to the sum of the lowest
          amounts of consideration (if any) received or receivable by the
          Company with respect to any one Common Share upon granting or sale of
          the Option, upon exercise of the Option and upon conversion, exchange
          or exercise of any Convertible Security issuable upon exercise of such
          Option. No further adjustment of the Conversion Price shall be made
          upon the actual issuance of such Common Shares or of such Convertible
          Securities upon the exercise of such Options or upon the actual
          issuance of such Common Shares upon conversion, exchange or exercise
          of such Convertible Securities.

               (B) Issuance of Convertible Securities. If the Company in any
                   ----------------------------------
          manner issues or sells any Convertible Securities (other than
          Convertible Securities which are Excluded Securities) and the lowest
          price per share for which one Common Share is issuable upon such
          conversion, exchange or exercise thereof is less than the Applicable
          Price, then such Common Share shall be deemed to be outstanding and to
          have been issued and sold by the Company at the time of the issuance
          of sale of such Convertible Securities for such price per share. For
          the purposes of this Section 3(f)(i)(B), the "lowest price per share
          for which one Common Share is issuable upon such conversion, exchange
          or exercise" shall be equal to the sum of the lowest amounts of
          consideration (if any) received or receivable by the Company with
          respect to any one Common Share upon the issuance or sale of the
          Convertible Security and upon the conversion, exchange or exercise of
          such Convertible Security. No further adjustment of the Conversion
          Price shall be made upon the actual issuance of such Common Shares
          upon conversion, exchange or exercise of such Convertible Securities,
          and if any such issue or sale of such Convertible Securities is made
          upon exercise of any Options for which adjustment of the Conversion
          Price had been or are to be made pursuant to other provisions of this
          Section 3(f)(i), no further adjustment of the Conversion Price shall
          be made by reason of such issue or sale.

               (C) Change in Option Price or Rate of Conversion. If the purchase
                   --------------------------------------------
          or exercise price provided for in any Options (other than Options
          which are Excluded Securities), the additional consideration, if any,
          payable upon the issue, conversion, exchange or exercise of any
          Convertible Securities, or the rate at which any Convertible
          Securities are convertible into or exchangeable or exercisable for
          Common Shares changes at any time, the Conversion Price in effect at
          the time of such change shall be adjusted to the Conversion Price
          which would have been in effect at such time had such Options or
          Convertible Securities provided for such changed purchase price,
          additional consideration or changed conversion rate, as the case may
          be, at the time initially granted, issued or sold. For purposes of
          this Section 3(f)(i)(C), if the terms of any Option or Convertible
          Security that was outstanding as of the date of issuance of the shares
          of Series D Preferred Stock are changed in the manner described in the
          immediately preceding sentence, then such Option or Convertible
          Security and the Common Shares deemed issuable upon exercise,
          conversion or exchange thereof shall be deemed to have been issued as
          of the date of such change. No adjustment shall be made if such
          adjustment would result in an increase of the Conversion Price then in
          effect.

               (D) Calculation of Consideration Received. In case any Option
                   -------------------------------------
          (other than


                                        9
<PAGE>
          Options which are Excluded Securities) is issued in connection with
          the issue or sale of other securities of the Company, together
          comprising one integrated transaction in which no specific
          consideration is allocated to such Options by the parties thereto, the
          Options will be deemed to have been issued for a consideration of
          $0.001. If any Common Shares, Options or Convertible Securities are
          issued or sold or deemed to have been issued or sold for cash, the
          consideration received therefor will be deemed to be the gross amount
          received by the Company therefor. If any Common Shares, Options or
          Convertible Securities are issued or sold for a consideration other
          than cash, the amount of the consideration other than cash received by
          the Company will be the fair value of such consideration, except where
          such consideration consists of marketable securities, in which case
          the amount of consideration received by the Company will be the
          arithmetic average of the Closing Sale Prices of such securities
          during the ten (10) consecutive Trading Days ending on the date of
          receipt of such securities. The fair value of any consideration other
          than cash or marketable securities will be determined jointly by the
          Company and the Required Holders. If such parties are unable to reach
          agreement within ten (10) days after the occurrence of an event
          requiring valuation (the "VALUATION EVENT"), the fair value of such
          consideration will be determined within five (5) Business Days after
          the tenth (10th) day following the Valuation Event by an independent,
          reputable appraiser selected by the Company and the Required Holders.
          The determination of such appraiser shall be deemed binding upon all
          parties absent manifest error and the fees and expenses of such
          appraiser shall be borne by the Company.

               (E) Record Date. If the Company takes a record of the holders of
                   -----------
          Common Shares for the purpose of entitling them (I) to receive a
          dividend or other distribution payable in Common Shares, Options or
          Convertible Securities or (II) to subscribe for or purchase Common
          Shares, Options or Convertible Securities, then such record date will
          be deemed to be the date of the issue or sale of the Common Shares
          deemed to have been issued or sold upon the declaration of such
          dividend or the making of such other distribution or the date of the
          granting of such right of subscription or purchase, as the case may
          be.

          (ii) Adjustment of Conversion Price upon Subdivision or Combination of
               -----------------------------------------------------------------
     Common Shares. If the Company at any time after the Subscription Date
     -------------
     subdivides (by any share split, share dividend, recapitalization or
     otherwise) its outstanding Common Shares into a greater number of shares,
     the Conversion Price in effect immediately prior to such subdivision will
     be proportionately reduced. If the Company at any time combines (by
     combination, reverse share split or otherwise) its outstanding Common
     Shares into a smaller number of shares and the Conversion Price in effect
     immediately prior to such combination will be proportionately increased.

          (iii) Other Events. If any event occurs of the type contemplated by
                ------------
     the provisions of this Section 3(f) but not expressly provided for by such
     provisions (including, without limitation, the granting of share
     appreciation rights, phantom share rights or other rights with equity
     features), then the Company's Board of Directors will make an appropriate
     adjustment in the Conversion Price so as to protect the rights of the
     Holders; provided that no such adjustment will increase the Conversion
     Price as otherwise determined pursuant to this Section 3(f).

          (iv) Notices.
               -------

               (A) Immediately upon any adjustment of the Conversion Price
          pursuant to this Section 3(f), the Company will give written notice
          thereof to each Holder, setting forth in


                                       10
<PAGE>
          reasonable detail, and certifying, the calculation of such adjustment.
          In the case of a dispute as to the determination of such adjustment,
          then such dispute shall be resolved in accordance with the procedures
          set forth in Section 3(d)(iii).

               (B) The Company will give written notice to each Holder at least
          ten (10) Business Days prior to the date on which the Company closes
          its books or takes a record (I) with respect to any dividend or
          distribution upon the Common Shares, (II) with respect to any pro rata
          subscription offer to holders of Common Shares or (III) for
          determining rights to vote with respect to any Fundamental Transaction
          or Liquidation Event, provided that such information shall be made
          known to the public prior to or in conjunction with such notice being
          provided to such Holder.

               (C) The Company will also give written notice to each Holder no
          later than (i) ten (10) Business Days prior to the date on which any
          Fundamental Transaction or Liquidation Event will take place and (ii)
          the date upon which such Fundamental Transaction or Liquidation Event
          is announced to the public; provided that such information shall be
          made known to the public prior to or in conjunction with such notice
          being provided to such Holder.

(4)     Redemption at Option of Holders.
        --------------------------------

     (a)     Triggering Event. A "TRIGGERING EVENT" shall be deemed to have
             ----------------
occurred at such time as any of the following events:

          (i) the failure of the applicable Registration Statement to be
     declared effective by the SEC on or prior to the date that is one hundred
     twenty (120) days after the applicable Scheduled Effective Deadline (as
     defined in the Registration Rights Agreement);

          (ii) while the Registration Statement is required to be maintained
     effective pursuant to the terms of the Registration Rights Agreement, the
     effectiveness of the Registration Statement lapses for any reason
     (including, without limitation, the issuance of a stop order) or is
     unavailable to the Holder for sale of all of the Registrable Securities in
     accordance with the terms of the Registration Rights Agreement, and such
     lapse or unavailability continues for a period of five (5) consecutive
     Trading Days or for more than an aggregate of ten (10) days in any 365-day
     period;

          (iii) the suspension from trading or failure of the Common Shares to
     be listed on an Eligible Market for a period of five (5) consecutive
     Trading Days or for more than an aggregate of ten (10) Trading Days in any
     365-day period;

          (iv) the Company's failure to pay to the Holder any amounts when and
     as due pursuant to this Certificate of Designations or any other
     Transaction Document (as defined in the Securities Purchase Agreement);

          (v) the entry by a court having jurisdiction in the premises of (i) a
     decree or order for relief in respect of the Company or any Subsidiary of a
     voluntary case or proceeding under any applicable Federal or State
     bankruptcy, insolvency, reorganization or other similar law or (ii) a
     decree or order adjudging the Company or any Subsidiary as bankrupt or
     insolvent, or approving as properly filed a petition seeking
     reorganization, arrangement, adjustment or composition of or in respect of
     the Company or any Subsidiary under any applicable Federal or State law or
     (iii) appointing a custodian, receiver, liquidator, assignee, trustee,
     sequestrator or other similar


                                       11
<PAGE>
     official of the Company or any Subsidiary or of any substantial part of its
     property, or ordering the winding up or liquidation of its affairs, and the
     continuance of any such decree or order for relief or any such other decree
     or order unstayed and in effect for a period of 60 consecutive days;

          (vi) the commencement by the Company or any Subsidiary of a voluntary
     case or proceeding under any applicable Federal or State bankruptcy,
     insolvency, reorganization or other similar law or of any other case or
     proceeding to be adjudicated a bankrupt or insolvent, or the consent by it
     to the entry of a decree or order for relief in respect of the Company or
     any Subsidiary in an involuntary case or proceeding under any applicable
     Federal or State bankruptcy, insolvency, reorganization or other similar
     law or to the commencement of any bankruptcy or insolvency case or
     proceeding against it, or the filing by it of a petition or answer or
     consent seeking reorganization or relief under any applicable Federal or
     State law, or the consent by it to the filing of such petition or to the
     appointment of or taking possession by a custodian, receiver, liquidator,
     assignee, trustee, sequestrator or other similar official of the Company or
     any Subsidiary or of any substantial part of its property, or the making by
     it of an assignment for the benefit of creditors, or the admission by it in
     writing of its inability to pay its debts generally as they become due, or
     the taking of corporate action by the Company or any Subsidiary in
     furtherance of any such action;

          (vii) the Company breaches any material representation, warranty,
     covenant or other term or condition of any Transaction Document, except, in
     the case of a breach or a covenant which is curable, only if the Holder
     gives five (5) Business Days prior notice of such breach and it remains
     uncured for a period of at least five (5) Business Days;

          (viii) If by July 15, 2006, the Company fails to consummate the
     acquisition of Crochet & Borel Services, Inc. by the Company; or

          (ix) (A) the indictment or conviction of any of the named executive
     officers (as defined in Item 402(a)(3) of Regulation S-K) or any of the
     directors of the Company of a violation of federal or state securities laws
     or (B) the settlement in an amount over $1,000,000 by any such officer or
     director of an action relating to such officer's violation of federal or
     state securities laws, breach of fiduciary duties or self-dealing.

     (b)     Redemption Option Upon Triggering Event. In addition to all other
             ---------------------------------------
rights of the Holders contained herein, after a Triggering Event, each Holder
shall have the right, at such Holder's option, to require the Company to redeem
all or a portion of such Holder's shares of Series D Preferred Stock at a price
per Preferred Share equal to the greater of 115% of (x) the Conversion Amount
less any Special Payments declared and paid and (y) the product of (A) the
Conversion Rate in effect at such time as such Holder delivers a Notice of
Redemption at Option of Holder (as defined below) and (B) the Closing Sale Price
of the Common Shares on the Trading Day immediately preceding such Triggering
Event, in the case of each of clauses (x) and (y) above, plus any accrued but
unpaid Dividends per Preferred Share (the "REDEMPTION PRICE").

     (c)     Mechanics of Redemption at Option of Buyer. Within two (2) Business
             ------------------------------------------
Days after the occurrence of a qualifying Triggering Event, the Company shall
deliver written notice thereof via facsimile and overnight courier ("NOTICE OF
TRIGGERING EVENT") to each Holder. At any time after the earlier of a Holder's
receipt of a Notice of Triggering Event and such Holder becoming aware of a
Triggering Event, any Holder of shares of Series D Preferred Stock then
outstanding may require the Company to redeem up to all of such Holder's shares
of Series D Preferred Stock by delivering written notice thereof via facsimile
and overnight courier ("NOTICE OF REDEMPTION AT OPTION OF HOLDER") to the
Company, which Notice of Redemption at Option of Holder shall indicate the
number of shares of Series


                                       12
<PAGE>
D Preferred Stock that such Holder is electing to redeem and a description of
the facts relating to the Triggering Event pursuant to which the Holder is
electing to redeem the shares of Series D Preferred Stock.

     (d)     Payment of Redemption Price. Upon the Company's receipt of a
             ---------------------------
Notice(s) of Redemption at Option of Holder from any Holder, the Company shall
promptly notify each Holder by facsimile of the Company's receipt of such
notice(s). The Company shall deliver on the fifth (5th) Business Day after the
Company's receipt of the first Notice of Redemption at Option of Holder the
applicable Redemption Price to all Holders that deliver a Notice of Redemption
at Option of Holder prior to the fifth (5th) Business Day after the Company's
receipt of the first Notice of Redemption at Option of Holder; provided that, if
required by Section 3(d)(vi), a Holder's Certificates for the Series D Preferred
Stock shall have been delivered to the Transfer Agent. To the extent redemptions
required by this Section 4 are deemed or determined by a court of competent
jurisdiction to be prepayments of the shares of Series D Preferred Stock by the
Company, such redemptions shall be deemed to be voluntary prepayments. If the
Company is unable to redeem all of the shares of Series D Preferred Stock
submitted for redemption, the Company shall (i) redeem a pro rata amount from
each Holder based on the number of shares of Series D Preferred Stock submitted
for redemption by such Holder relative to the total number of shares of Series D
Preferred Stock submitted for redemption by all Holders and (ii) in addition to
any remedy such Holder may have under this Certificate of Designation and the
Securities Purchase Agreement, pay to each Holder interest at the rate of 3.0%
per month (prorated for partial months) in respect of each unredeemed shares of
Series D Preferred Stock tendered for redemption until paid in full. The Holders
and Company agree that in the event of the Company's inability to redeem any
shares of Series D Preferred Stock tendered for redemption under this Section 4,
the Holders' damages resulting therefrom would be uncertain and difficult to
estimate because of the parties' inability to predict future interest rates and
the uncertainty of the availability of a suitable substitute investment
opportunity for the Holders. Accordingly, any redemption premium due under this
Section 4 is intended by the parties to be, and shall be deemed, a reasonable
estimate of the Holders' actual loss of its investment opportunity and not as a
penalty.

     (e)     Void Redemption. In the event that the Company does not pay the
             ---------------
Redemption Price within the time period set forth in Section 4(d), at any time
thereafter and until the Company pays such unpaid applicable Redemption Price in
full, a Holder shall have the option to, in lieu of redemption, require the
Company to promptly return to such Holder any or all of the shares of Series D
Preferred Stock that were submitted for redemption by such Holder under this
Section 4 and for which the applicable Redemption Price (together with any
interest thereon) has not been paid, by sending written notice thereof to the
Company via facsimile (the "VOID OPTIONAL REDEMPTION NOTICE"). Upon the
Company's receipt of such Void Optional Redemption Notice, (i) the Notice of
Redemption at Option of Holder shall be null and void with respect to those
shares of Series D Preferred Stock subject to the Void Optional Redemption
Notice, (ii) the Company shall immediately return any shares of Series D
Preferred Stock subject to the Void Optional Redemption Notice, and (iii) the
Conversion Price of such returned shares of Series D Preferred Stock shall be
adjusted to the lesser of (A) the Conversion Price as in effect on the date on
which the Void Optional Redemption Notice is delivered to the Company and (B)
the lowest Weighted Average Price of the Common Shares during the period
beginning on the date on which the Notice of Redemption at Option of Holder is
delivered to the Company and ending on the date on which the Void Optional
Redemption Notice is delivered to the Company.

     (f)     Disputes; Miscellaneous. In the event of a dispute as to the
             -----------------------
determination of the arithmetic calculation of the Redemption Price, such
dispute shall be resolved pursuant to Section 3(d)(iii) above with the term
"Redemption Price" being substituted for the term "Conversion Rate".  A Holder's
delivery of a Void Optional Redemption Notice and exercise of its rights
following such notice shall not effect the Company's obligations to make any
payments which have accrued prior to


                                       13
<PAGE>
the date of such notice. In the event of a redemption pursuant to this Section 4
of less than all of the shares of Series D Preferred Stock represented by a
particular Certificate, the Company shall promptly cause to be issued and
delivered to the Holder of such shares of Series D Preferred Stock a Certificate
representing the remaining shares of Series D Preferred Stock which have not
been redeemed, if necessary.

(5)     Other Rights of Holders.
        ------------------------

     (a)     Approval. The Company shall not enter into or be party to a
             --------
Fundamental Transaction unless the Required Holders, which must include
Castlerigg Master Investments Ltd. so long as it is the beneficial owner of the
Preferred Stock, shall have consented thereto.

     (b)     Purchase Rights. If at any time the Company grants, issues or sells
             ---------------
any Options, Convertible Securities or rights to purchase shares, warrants,
securities or other property pro rata to the record holders of any class of
Common Shares (the "PURCHASE RIGHTS"), then the Holders will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such Holder could have acquired if such Holder had held
the number of Common Shares acquirable upon complete conversion of the shares of
Series D Preferred Stock (without taking into account any limitations or
restrictions on the convertibility of the shares of Series D Preferred Stock)
immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of Common Shares are to be determined for the grant,
issue or sale of such Purchase Rights.

     (c)     Limitations on Senior Management Securities.  The Company shall not
             -------------------------------------------
permit any of its senior management to sell or transfer, directly or indirectly,
any Common Stock, Option, Convertible Security or any other instrument
convertible into or exercisable or exchangeable for Common Stock, or to convert
or exercise any such convertible or exercisable instrument (except as may be
issued pursuant to the terms of an Approved Share Plan) beneficially owned by
such Person, unless (i) the Required Holders shall have executed a written
consent to such sale, transfer or exercise or (ii) the Weighted Average Price of
the Common Stock shall have equaled or exceeded 175% of the initial Conversion
Price (subject to appropriate adjustments for stock splits, stock dividends,
stock combinations and other similar transactions after the Subscription Date)
for each of the sixty (60) consecutive Trading Days' (the "LIMITATION MEASURING
PERIOD") prior to the date of such sale, transfer or exercise (the "SENIOR
MANAGEMENT LIMITATION").  Notwithstanding anything stated herein to the
contrary, the Securities may be pledged by Senior Management in connection with
a bona fide margin account or other loan or financing arrangement secured by the
Securities and such pledge of Securities (or resulting foreclosure on such
Securities by such lender) shall not be deemed to be a transfer, sale or
assignment of the Securities hereunder, and Senior Management shall not be
required to provide the Holder with any notice thereof or otherwise make any
delivery to the Holder pursuant to this Agreement or any other Transaction
Document.

(6)     Limitation on Beneficial Ownership. The Company shall not effect and
        ----------------------------------
shall have no obligation to effect any conversion of shares of Series D
Preferred Stock, and no Holder shall have the right to convert any shares of
Series D Preferred Stock, to the extent that after giving effect to such
conversion, the beneficial owner of such shares (together with such Person's
affiliates) would have acquired, through conversion of shares of Series D
Preferred Stock or otherwise, beneficial ownership of a number of Common Shares
that exceeds 4.99% ("MAXIMUM PERCENTAGE") of the number of Common Shares
outstanding immediately after giving effect to such conversion. For purposes of
the foregoing sentence, the number of Common Shares beneficially owned by a
Person and its affiliates shall include the number of Common Shares issuable
upon conversion of the shares of Series D Preferred Stock that are subject to a
pending conversion notice for which the determination of whether the Maximum
Percentage had been


                                       14
<PAGE>
exceeded is being determined, but shall exclude the number of Common Shares
which would be issuable upon (A) conversion of any remaining, nonconverted
shares of Series D Preferred Stock beneficially owned by such Person or any of
its affiliates not subject to a pending conversion notice and (B) exercise or
conversion of the unexercised or unconverted portion of any other securities of
the Company (including, without limitation, any warrants) beneficially owned by
such Person or any of its affiliates that are similarly subject to a limitation
on conversion or exercise analogous to the limitation contained in this Section
6.  Except as set forth in the preceding sentence, for purposes of this Section
6, beneficial ownership shall be calculated in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended. For purposes of this Section 6,
in determining the number of outstanding Common Shares, a Holder may rely on the
number of outstanding Common Shares as reflected in (1) the Company's most
recent Form 8-K, Form 10-Q, Form 10-QSB, Form 10-K or Form 10-KSB as the case
may be, (2) a more recent public announcement by the Company, or (3) any other
notice by the Company or its Transfer Agent setting forth the number of Common
Shares outstanding. Upon the written request of any Holder, the Company shall
promptly, but in no event later than one (1) Business Day following the receipt
of such notice, confirm orally and in writing to any such Holder the number of
Common Shares then outstanding. In any case, the number of outstanding Common
Shares shall be determined after giving effect to all conversions of shares of
Series D Preferred Stock by such Holder and its affiliates that had occurred
since the date as of which such number of outstanding Common Shares was
reported. By written notice to the Company, the Holder may increase or decrease
the Maximum Percentage to any other percentage specified in such notice;
provided that (i) any such increase will not be effective until the sixty-first
(61st) day after such notice is delivered to the Company, and (ii) any such
increase or decrease will apply only to the Holder and not to any other Holder.

(7)     Authorized Shares.
        ------------------

     (a)     Reservation. The Company shall have sufficient authorized and
             -----------
unissued Common Shares for each of the share of Series D Preferred Stock equal
to the sum of (i) the maximum number of Common Shares necessary to effect the
conversion at the Conversion Rate with respect to the Conversion Amount of each
share of Series D Preferred Stock as of the Initial Issuance Date and (ii) the
maximum number of Common Shares necessary to effect the exercise of all of the
Warrants. So long as any of the shares of Series D Preferred Stock are
outstanding, the Company shall take all action necessary to reserve and keep
available out of its authorized and unissued Common Shares, solely for the
purpose of effecting the conversion of the shares of Series D Preferred Stock,
the number of Common Shares as shall from time to time be necessary to effect
the conversion of all of the shares of Series D Preferred Stock then
outstanding; provided, that at no time shall the number of Common Shares so
            ----------
available be less than the number of shares required to be reserved by the
previous sentence (without regard to any limitations on conversions) (the
"REQUIRED AMOUNT"). The initial number of shares of Common Shares reserved for
conversions of the shares of Series D Preferred Stock and each increase in the
number of shares so reserved shall be allocated pro rata among the Holders based
on the number of shares of Series D Preferred Stock held by each Holder at the
time of issuance of the shares of Series D Preferred Stock or increase in the
number of reserved shares, as the case may be (the "AUTHORIZED SHARE
ALLOCATION"). In the event a Holder shall sell or otherwise transfer any of such
Holder's shares of Series D Preferred Stock, each transferee shall be allocated
a pro rata portion of the number of reserved Common Shares reserved for such
transferor. Any Common Shares reserved and allocated to any Person which ceases
to hold any shares of Series D Preferred Stock shall be allocated to the
remaining Holders of shares of Series D Preferred Stock, pro rata based on the
number of shares of Series D Preferred Stock then held by such Holders.

     (b)     Insufficient Authorized Shares. If at any time while any of the
             ------------------------------
shares of Series D Preferred Stock remain outstanding the Company does not have
a sufficient number of authorized and unissued Common Shares to satisfy its
obligation to have available for issuance upon conversion of the


                                       15
<PAGE>
shares of Series D Preferred Stock at least a number of Common Shares equal to
the Required Amount (an "AUTHORIZED SHARE FAILURE"), then the Company shall as
promptly as practicable take all action necessary to increase the Company's
authorized Common Shares to an amount sufficient to allow the Company to have
available the Required Amount for the shares of Series D Preferred Stock then
outstanding.

     (c)     Escrow Shares.  The Company shall place 8,666,666 Common Shares
             -------------
into escrow (the "ESCROW SHARES") with the Escrow Agent.  At any time the
Conversion Rate of the Series D Preferred Stock is such that the number of
Escrow Shares is less than the number of Common Shares that would be needed to
satisfy full conversion of the Series D Preferred Stock then outstanding, given
the then current Conversion Rate (the "FULL CONVERSION SHARES"), upon five (5)
Business Days written notice of such circumstance to the Company by the Holder
and the Escrow Agent, the Company shall issue additional share certificates in
the name of the Holders in denominations specified by the Buyer, and deliver
same to the Escrow Agent, such that the new number of Escrow Shares with respect
to the Series D Preferred Stock is equal to the Full Conversion Shares.

(8)     Voting Rights. Holders of shares of Series D Preferred Stock shall have
        --------------
no voting rights, except as required by law, including but not limited to the
DGCL, and as expressly provided in this Certificate of Designations.

(9)     Change of Control Redemption Right. No sooner than fifteen (15) days nor
        ----------------------------------
later than ten (10) days prior to the consummation of a Change of Control, but
not prior to the public announcement of such Change of Control, the Company
shall deliver written notice thereof via facsimile and overnight courier to the
Holders (a "CHANGE OF CONTROL NOTICE"); provided, that with respect to a
                                       ---------
Fundamental Transaction whereby the Company shall consolidate or merge with or
into another Person whereby the Company is the surviving entity and in which
holders of the Company's voting power immediately prior to such consolidation or
merger continue after such consolidation or merger to hold publicly traded
securities and, directly or indirectly, the voting power of the surviving entity
or entities necessary to elect a majority of the members of the board of
directors (or their equivalent if other than a corporation) of such entity or
entities, then, notwithstanding the foregoing, the Change of Control Notice
shall not be required to be delivered prior to the public announcement of such
Change of Control. At any time during the period (the "CHANGE OF CONTROL
PERIOD") beginning after a Holder's receipt of a Change of Control Notice and
ending on the date that is twenty (20) Trading Days after the consummation of
such Change of Control, such Holder may require the Company to redeem all or any
portion of such Holder's shares of Series D Preferred Stock by delivering
written notice thereof ("CHANGE OF CONTROL REDEMPTION NOTICE") to the Company,
which Change of Control Redemption Notice shall indicate the Conversion Amount
the Holder is electing to redeem. Any shares of Series D Preferred Stock subject
to redemption pursuant to this Section 9 shall be redeemed by the Company in
cash at a price equal to 110% of the greater of (i) the product of (x) the sum
of the Conversion Amount being redeemed together with any accrued but unpaid
Dividends and Special Payments per Preferred Share and (y) the quotient
determined by dividing (A) the greater of (I) the Closing Sale Price of the
Common Shares immediately following the public announcement of such proposed
Change of Control, (II) the Closing Sale Price of the Common Shares immediately
prior to the announcement of such proposed Change of Control and (III) the
Closing Sale Price immediately prior to the consummation of such proposed Change
of Control by (B) the Conversion Price and (ii) the sum of the Conversion Amount
being redeemed together with any accrued but unpaid Dividends and Special
Payments per Preferred Share (the "CHANGE OF CONTROL REDEMPTION PRICE"). The
Company shall make payment of the Change of Control Redemption Price
concurrently with the consummation of such Change of Control if such a Change of
Control Redemption Notice is received prior to the consummation of such Change
of Control and within five (5) Trading Days after the Company's receipt of such
notice otherwise (the "CHANGE OF CONTROL REDEMPTION DATE"). To the extent
redemptions required by this Section 9 are deemed or determined by a court of
competent jurisdiction to


                                       16
<PAGE>
be prepayments of the shares of Series D Preferred Stock by the Company, such
redemptions shall be deemed to be voluntary prepayments. Notwithstanding
anything to the contrary in this Section 9, until the Change of Control
Redemption Price (together with any interest thereon) is paid in full, the
Conversion Amount submitted for redemption under this Section 9 may be
converted, in whole or in part, by the Holder into Common Shares, or in the
event the Conversion Date is after the consummation of the Change of Control,
shares or equity interests of the Successor Entity substantially equivalent to
the Company's Common Shares.  The parties hereto agree that in the event of a
Change of Control and the Company's redemption of any portion of the Series D
Preferred Stock under this Section 9 as a result thereof, the Holder's damages
would be uncertain and difficult to estimate because of the parties' inability
to predict future interest rates and the uncertainty of the availability of a
suitable substitute investment opportunity for the Holder. Accordingly, any
redemption premium due under this Section 9 is intended by the parties to be,
and shall be deemed, a reasonable estimate of the Holder's actual loss of its
investment opportunity and not as a penalty. In the event that the Company does
not pay the Change of Control Redemption Price on the Change of Control
Redemption Date, then the Holder shall have the right to void the redemption
using the same procedures set forth in Section 4(e) but substituting the term
"Change of Control Redemption Price" for "Redemption Price" and substituting the
term "Change of Control Redemption Notice" for "Notice of Redemption at Option
of Holder".

(10)     Liquidation, Dissolution, Winding-Up. In the event of a Liquidation
         -------------------------------------
Event, the Holders shall be entitled to receive in cash out of the assets of the
Company, whether from capital or from earnings available for distribution to its
shareholders (the "LIQUIDATION FUNDS"), before any amount shall be paid to the
holders of any of the capital shares of the Company of any class junior in rank
to the shares of Series D Preferred Stock in respect of the preferences as to
distributions and payments on the liquidation, dissolution and winding up of the
Company, an amount per shares of Series D Preferred Stock equal to 120% of the
Conversion Amount plus the amount of any accrued but unpaid Dividends and
Special Payments per shares of Series D Preferred Stock; provided that, if the
Liquidation Funds are insufficient to pay the full amount due to the Holders and
holders of shares of other classes or series of preferred shares of the Company
that are of equal rank with the shares of Series D Preferred Stock as to
payments of Liquidation Funds (the "PARI PASSU SHARES"), then each Holder and
holder of Pari Passu Shares shall receive a percentage of the Liquidation Funds
equal to the full amount of Liquidation Funds payable to such Holder and holders
of Pari Passu Shares, as the case may be, as a liquidation preference, in
accordance with their respective certificate of designations (or equivalent), as
a percentage of the full amount of Liquidation Funds payable to all holders of
shares of Series D Preferred Stock and Pari Passu Shares. To the extent
necessary, the Company shall cause such actions to be taken by any of its
Subsidiaries so as to enable, to the maximum extent permitted by law, the
proceeds of a Liquidation Event to be distributed to the Holders in accordance
with this Section. All the preferential amounts to be paid to the Holders under
this Section shall be paid or set apart for payment before the payment or
setting apart for payment of any amount for, or the distribution of any
Liquidation Funds of the Company to the holders of shares of other classes or
series of preferred shares of the Company junior in rank to the shares of Series
D Preferred Stock in connection with a Liquidation Event as to which this
Section applies. The purchase or redemption by the Company of shares of any
class, in any manner permitted by law, shall not, for the purposes hereof, be
regarded as a Liquidation Event.

(11)     Preferred Rank. All Common Shares shall be of junior rank to all shares
         ---------------
of Series D Preferred Stock with respect to the preferences as to dividends,
distributions and payments upon the liquidation, dissolution and winding up of
the Company. The rights of the Common Shares shall be subject to the preferences
and relative rights of the shares of Series D Preferred Stock. Without the prior
express written consent of the Required Holders, the Company shall not hereafter
authorize or issue additional or other capital shares that are of senior or
pari-passu rank to the shares of Series D Preferred Stock in respect of the
preferences as to distributions and payments upon the liquidation, dissolution
and winding up of the Company (collectively "SENIOR PREFERRED")  The Company
shall be permitted to issue preferred shares


                                       17
<PAGE>
that are junior in rank to the shares of Series D Preferred Stock in respect of
the preferences as to distributions and payments upon the liquidation,
dissolution and winding up of the Company, provided, that the maturity date (or
                                           --------
any other date requiring redemption, repayment or any other payment, including
without limitation, dividends, in respect of any such preferred shares) of any
such junior preferred shares is not on or before 91 days after the Maturity
Date. In the event of the merger or consolidation of the Company with or into
another corporation, the shares of Series D Preferred Stock shall maintain their
relative powers, designations and preferences provided for herein (except that
the shares of Series D Preferred Stock may be pari passu with, but not junior
to, any capital shares of the successor entity) and no merger shall result
inconsistent therewith.  The Series D Preferred Stock shall be junior to, and
shall be subject to the preferences and relative rights of holders of the
Company's Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock as to distributions and payments upon the liquidation,
dissolution and winding up of the Company.

(12)     Vote to Change the Terms of or Issue Series D Preferred Stock. In
         -------------------------------------------------------------
addition to any other rights provided by law, except where the vote or written
consent of the holders of a greater number of shares is required by law or by
another provision of the Certificate of Incorporation, without first obtaining
the affirmative vote at a meeting duly called for such purpose or the written
consent without a meeting of the Required Holders, voting together as a single
class, the Company shall not: (u) amend or repeal any provision of, or add any
provision to, the Certificate of Incorporation or bylaws, or file any
certificate of designations or articles of amendment of any series of preferred
shares, if such action would adversely alter or change the preferences, rights,
privileges or powers of, or restrictions provided for the benefit of the Series
D Preferred Stock, regardless of whether any such action shall be by means of
amendment to the Certificate of Incorporation or by merger, consolidation or
otherwise; (v) increase or decrease (other than by conversion) the authorized
number of the Series D Preferred Stock; (w) create or authorize (by
reclassification or otherwise) any new class or series of shares that has a
preference over or is on a parity with the Series D Preferred Stock with respect
to dividends or the distribution of assets on the liquidation, dissolution or
winding up of the Company; (x) purchase, repurchase or redeem any Common Shares
(other than pursuant to equity incentive agreements with employees giving the
Company the right to repurchase shares upon the termination of services); (y)
pay dividends or make any other distribution on the Common Shares; or (z)
whether or not prohibited by the terms of the Series D Preferred Stock,
circumvent a right of the Series D Preferred Stock.

(13)     Lost or Stolen Certificates. Upon receipt by the Company of evidence
         ----------------------------
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Certificates representing the shares of Series D Preferred
Stock, and, in the case of loss, theft or destruction, of an indemnification
undertaking by the Holder to the Company in customary form and, in the case of
mutilation, upon surrender and cancellation of the Certificate(s), the Company
shall execute and deliver new Certificate(s) of like tenor and date; provided,
however, the Company shall not be obligated to re-issue Certificates if the
Holder contemporaneously requests the Company to convert such shares of Series D
Preferred Stock into Common Shares.

(14)     Remedies, Characterizations, Other Obligations, Breaches and Injunctive
         -----------------------------------------------------------------------
Relief. The remedies provided in this Certificate of Designations shall be
-------
cumulative and in addition to all other remedies available under this
Certificate of Designations, at law or in equity (including a decree of specific
performance and/or other injunctive relief). No remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy.
Nothing herein shall limit a Holder's right to pursue actual damages for any
failure by the Company to comply with the terms of this Certificate of
Designations. The Company covenants to each Holder that there shall be no
characterization concerning this instrument other than as expressly provided
herein. Amounts set forth or provided for herein with respect to payments,
conversion and the like (and the computation thereof) shall be the amounts to be
received by the Holder thereof and shall not, except as expressly provided
herein, be subject to any other


                                       18
<PAGE>
obligation of the Company (or the performance thereof). The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the Holders and that the remedy at law for any such breach may be inadequate.
The Company therefore agrees that, in the event of any such breach or threatened
breach, the Holders shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.

(15)     Failure or Indulgence Not Waiver. No failure or delay on the part of a
         --------------------------------
Holder in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege.

(16)     Notice. Whenever notice is required to be given under this Certificate
         -------
of Designations, unless otherwise provided herein, such notice 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
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
an overnight courier service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:

     If to the Company:
                                          Charys Holding Company, Inc.
                                          1117 Perimeter Center West, Suite N415
                                          Atlanta, GA 30338
                                          Attention:  Billy Ray, Jr.
                                          Telephone:  678-443-2300
                                          Facsimile:  678-443-2320

     If to the Transfer Agent:

                                          Fidelity Transfer Company
                                          1800 S. West Temple, Suite 301
                                          Salt Lake City, Utah 84115
                                          Attention:  Heidi Sadowski
                                          Telephone:  801-484-7222
                                          Facsimile:  801-466-4122

If to a holder of Securities, to its address and facsimile number set forth in
the records of the Company, with a copy (for informational purposes only) to:

                                          Gottbetter & Partners, LLP
                                          488 Madison Avenue
                                          12th Floor
                                          New York, New York  10022
                                          Telephone:  (212) 400-6900
                                          Facsimile:  (212) 400-6901
                                          Attention:  Jason M. Rimland, Esq.

or to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,


                                       19
<PAGE>
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively.

(17)     Transfer of Series D Preferred Stock. A Holder may assign some or all
         ------------------------------------
of the shares of Series D Preferred Stock and the accompanying rights hereunder
held by such Holder without the consent of the Company; provided that such
assignment is in compliance with applicable securities laws.

(18)     Series D Preferred Stock Register. The Company shall maintain at its
         ---------------------------------
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the Holders), a register for the Series D Preferred
Stock, in which the Company shall record the name, address and facsimile number
of the persons in whose name the shares of Series D Preferred Stock have been
issued, as well as the name and address of each transferee. The Company may
treat the person in whose name any Series D Preferred Stock is registered on the
register as the owner and holder thereof for all purposes, notwithstanding any
notice to the contrary, but in all events recognizing any properly made
transfers.

(19)     Dispute Resolution. In the case of a dispute regarding any of the
         ------------------
provisions hereof, the Company shall submit such dispute via facsimile within
two Business Days of receipt of the notice giving rise to such dispute, as the
case may be, to the Holder. If the Holder and the Company are unable to agree
upon such dispute within three Business Days of such dispute being submitted to
the Holder, then the Company shall, within two Business Days thereafter submit
via facsimile such dispute to an independent, reputable investment bank selected
by the Company and approved by the Holder or to the Company's independent,
outside accountant. The Company shall cause at its expense the investment bank
or the accountant, as the case may be, and notify the Company and the Holder of
the results no later than ten Business Days from the time it receives the
dispute. Such investment bank's or accountant's determination or calculation, as
the case may be, shall be binding upon all parties absent demonstrable error.

(20)     Disclosure. Upon receipt or delivery by the Company of any notice in
         ----------
accordance with the terms of this Certificate of Designations, unless the
Company has in good faith determined that the matters relating to such notice do
not constitute material, nonpublic information relating to the Company or its
Subsidiaries, the Company shall within one (1) Business Day after any such
receipt or delivery publicly disclose such material, nonpublic information on a
Current Report on Form 8-K or otherwise. In the event that the Company believes
that a notice contains material, nonpublic information relating to the Company
or its Subsidiaries, the Company so shall indicate to the Holders
contemporaneously with delivery of such notice, and in the absence of any such
indication, the Holders shall be allowed to presume that all matters relating to
such notice do not constitute material, nonpublic information relating to the
Company or its Subsidiaries.


                                       20
<PAGE>
          IN WITNESS WHEREOF, the undersigned, being the Chief Executive Officer
of the Company, has executed this Certificate of Designations this        day of
May, 2006.

                                       CHARYS HOLDING COMPANY, INC.


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


                                       21
<PAGE>
                                    EXHIBITI
                                    --------

                 CHARYS HOLDING COMPANY, INC. CONVERSION NOTICE

Reference is made to the Certificate of Designations, Preferences and Rights of
the Series D Convertible Preferred Stock of Charys Holding Company, Inc. (the
"CERTIFICATE OF DESIGNATIONS"). In accordance with and pursuant to the
Certificate of Designations, the undersigned hereby elects to convert the number
of shares of Series D Convertible Preferred Stock, par value $0.001 per share
(the "SERIES D PREFERRED STOCK"), of Charys Holding Company, Inc., a Delaware
corporation (the "COMPANY"), indicated below into Common Shares, par value
$0.001 per share (the "COMMON SHARES"), of the Company, as of the date specified
below.

    Date of Conversion:

    Number of shares of Series D Preferred Stock to be converted:

    Share certificate no(s). of Series D Preferred Stock to be converted:

    Tax ID Number (If applicable):

    Applicable Conversion Price:

    Number of Common Shares to be issued:

    Authorization:

    By:
       ----------------------------

    Name:
         ----------------------------

    Title:
          -------------------------

    Dated:

    Account Number (if electronic book entry transfer):

    Transaction Code Number (if electronic book entry transfer):


                                       22
<PAGE>
NEITHER  THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR  THE  SECURITIES  INTO  WHICH  THESE  SECURITIES  ARE EXERCISEABLE HAVE BEEN
REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES  LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR  ASSIGNED  (I)  IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE  SECURITIES  UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF  COUNSEL,  IN  A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER  SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED PURSUANT TO AN
AVAILABLE  EXEMPTION  UNDER  THE  1933 ACT IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

                          CHARYS HOLDING COMPANY, INC.

                        WARRANT TO PURCHASE COMMON STOCK

Warrant No.: 001
Number of Shares of Common Stock: 1,666,666
Date of Issuance: May 19, 2006 ("ISSUANCE DATE")

          Charys  Holding Company, Inc., a Delaware corporation (the "COMPANY"),
hereby  certifies  that,  for  good  and valuable consideration, the receipt and
sufficiency  of  which are hereby acknowledged, GOTTBETTER CAPITAL MASTER, LTD.,
the  registered  holder  hereof  or  its  permitted  assigns  (the "HOLDER"), is
entitled, subject to the terms set forth below, to purchase from the Company, at
the  Exercise  Price  (as  defined below) then in effect, upon surrender of this
Warrant  to  Purchase  Common  Stock  (including any Warrants to Purchase Common
Stock issued in exchange, transfer or replacement hereof, the "WARRANT"), at any
time  or  times  on  or after the date hereof but not after 11:59 p.m., New York
Time,  on  the  Expiration  Date  (as  defined  below),  One Million Six Hundred
Sixty-Six  Thousand  Six  Hundred Sixty-Six (1,666,666) fully paid nonassessable
shares  of  Common  Stock  (as  defined below) (the "WARRANT SHARES"). Except as
otherwise  defined  herein,  capitalized  terms  in  this Warrant shall have the
meanings  set  forth  in  Section  16.  This  Warrant  is one of the Warrants to
purchase  Common Stock (the "SPA WARRANTS") issued pursuant to Section 1 of that
certain  Securities  Purchase  Agreement,  dated  as  of  May  19,  2006  (the
"SUBSCRIPTION  DATE"), by and among the Company and the investors (the "BUYERS")
referred to therein (the "SECURITIES PURCHASE AGREEMENT").

          1.     EXERCISE  OF  WARRANT.
                 ---------------------

               (a)     Mechanics  of  Exercise.  Subject  to  the  terms  and
                       -----------------------
conditions  hereof  (including, without limitation, the limitations set forth in
Section  1(f)),  this  Warrant  may  be exercised by the Holder on any day on or
after the date hereof, in whole or in part, by (i) delivery of a written notice,
in the form attached hereto as Exhibit A (the "EXERCISE NOTICE"), of the
                               ---------


<PAGE>
Holder's  election to exercise this Warrant and (ii) (A) payment to Gottbetter &
Partners, LLP (the "ESCROW AGENT") of an amount equal to the applicable Exercise
Price  multiplied  by  the  number of Warrant Shares as to which this Warrant is
being  exercised  (the  "AGGREGATE  EXERCISE PRICE") in cash or wire transfer of
immediately  available  funds  or  (B)  by  notifying the Escrow Agent that this
Warrant  is  being  exercised  pursuant  to  a  Cashless Exercise (as defined in
Section  1(d)). The Holder shall not be required to deliver the original Warrant
in order to effect an exercise hereunder. Execution and delivery of the Exercise
Notice  with  respect to less than all of the Warrant Shares shall have the same
effect  as  cancellation  of  the original Warrant and issuance of a new Warrant
evidencing  the  right to purchase the remaining number of Warrant Shares. On or
before  the second Business Day following the date on which the Escrow Agent has
received each of the Exercise Notice and the Aggregate Exercise Price (or notice
of  a  Cashless  Exercise) (the "EXERCISE DELIVERY DOCUMENTS"), the Escrow Agent
shall  transmit by facsimile an acknowledgment of confirmation of receipt of the
Exercise  Delivery  Documents  to  the  Holder and the Company. On or before the
third  Business  Day following the date on which the Company has received all of
the  Exercise  Delivery  Documents (the "SHARE DELIVERY DATE"), the Escrow Agent
shall  (X)  provided  that  the Company's transfer agent is participating in The
Depository  Trust  Company  ("DTC")  Fast Automated Securities Transfer Program,
upon the request of the Holder, credit such aggregate number of shares of Common
Stock  to which the Holder is entitled pursuant to such exercise to the Holder's
or  its designee's balance account with DTC through its Deposit Withdrawal Agent
Commission  system,  or (Y) if the Company's transfer agent is not participating
in  the DTC Fast Automated Securities Transfer Program, transfer and dispatch by
overnight  courier  to  the  address  as  specified  in  the  Exercise  Notice,
certificates  for  the approximate number of shares of Common Stock to which the
Holder  is  entitled  pursuant  to  such exercise. Upon delivery of the Exercise
Notice  and  Aggregate  Exercise  Price  referred  to in clause (ii)(A) above or
notification  to  the Escrow Agent of a Cashless Exercise referred to in Section
1(d),  the  Holder shall be deemed for all corporate purposes to have become the
holder  of  record  of the Warrant Shares with respect to which this Warrant has
been  exercised,  irrespective  of  the  date  of  delivery  of the certificates
evidencing  such Warrant Shares. If this Warrant is submitted in connection with
any  exercise  pursuant  to  this  Section 1(a) and the number of Warrant Shares
represented by this Warrant submitted for exercise is greater than the number of
Warrant  Shares  being acquired upon an exercise, then the Company shall as soon
as  practicable and in no event later than five Business Days after any exercise
and  at  its  own expense, issue a new Warrant (in accordance with Section 7(d))
representing  the  right  to  purchase  the number of Warrant Shares purchasable
immediately  prior  to  such  exercise  under  this  Warrant, less the number of
Warrant  Shares  with  respect to which this Warrant is exercised. No fractional
shares  of Common Stock are to be transferred upon the exercise of this Warrant,
but  rather  the  number  of  shares  of Common Stock to be transferred shall be
rounded  up to the nearest whole number. The Company shall pay any and all taxes
which may be payable with respect to the issuance and delivery of Warrant Shares
upon  exercise of this Warrant. In the event that the Escrow Agent does not have
a sufficient number of shares of Common Stock to transfer to the Holder upon the
exercise of this Warrant (including, but not limited to, by reason of additional
Warrant  Shares  required  to  be  issued pursuant to Section 2 herein, and such
Warrant  Shares had not previously been delivered to the Escrow Agent), then the
Company  shall  within  1  Business  Day  of the date of delivery of an Exercise
Notice deliver such additional number of Warrant Shares to the Escrow Agent.


                                      - 2 -
<PAGE>
               (b)     Exercise  Price.  For purposes of this Warrant, "EXERCISE
                       ---------------
PRICE" means $6.24, subject to adjustment as provided herein.

               (c)     Company's  Failure  to  Timely  Deliver  Securities.  In
                       ---------------------------------------------------
addition  to the foregoing, if within three (3) Trading Days after the Company's
receipt  of the facsimile copy of an exercise notice the Company shall cause the
Escrow  Agent  to  fail to transfer the Escrow Shares to the Buyer, and if on or
after  such  third  Trading  Day  the  Buyer is required to purchase (in an open
market  transaction  or otherwise) shares of Common Stock in order to deliver in
satisfaction  of a sale initiated by the Buyer in anticipation of receiving from
the Company the shares of Common Stock issuable upon such exercise (a "BUY-IN"),
then the Company shall, within three (3) Business Days after the Buyer's request
and  in  the  Buyer's  discretion, either (i) pay cash to the Buyer in an amount
equal  to  the Buyer's total purchase price (including brokerage commissions, if
any)  for the shares of Common Stock so purchased (the "BUY-IN PRICE"), at which
point the Company's obligation to deliver such Escrow Shares resulting from such
exercise  shall  terminate,  or (ii) promptly honor its obligation to deliver to
the  Buyer a certificate or certificates representing such Escrow Shares and pay
cash to the holder in an amount equal to the excess (if any) of the Buy-In Price
over  the  product  of  (A) such number of shares of Common Stock, times (B) the
Closing  Sale  Price  on  the  date  of exercise. Nothing herein shall limit the
holder's  right to pursue actual damages for the Company's failure to maintain a
sufficient  number  of  authorized  shares of Common Stock or to otherwise issue
shares  of  Common  Stock  upon  exercise of this Warrant in accordance with the
terms  hereof,  and  the  holder  shall  have  the  right to pursue all remedies
available at law or in equity (including a decree of specific performance and/or
injunctive  relief).  Notwithstanding  the  foregoing, the Company shall have no
obligations  to  cause  its  Escrow Agent to deliver Escrow Shares or to pay any
Buy-In Price under this Section 1(c) if the Company has timely delivered in good
faith a bonafide objection to such conversion or exercise notice.

               (d)     Cashless  Exercise.  Notwithstanding  anything  contained
                       ------------------
herein  to  the  contrary,  if  a  Registration  Statement  (as  defined  in the
Registration  Rights Agreement) covering the Warrant Shares that are the subject
of  the  Exercise Notice (the "UNAVAILABLE WARRANT SHARES") is not available for
the  resale  of  such  Unavailable  Warrant  Shares, the Holder may, in its sole
discretion, exercise this Warrant in whole or in part and, in lieu of making the
cash payment otherwise contemplated to be made to the Company upon such exercise
in  payment  of the Aggregate Exercise Price, elect instead to receive upon such
exercise  the "Net Number" of shares of Common Stock determined according to the
following formula (a "CASHLESS EXERCISE"):


                                      - 3 -
<PAGE>
               Net  Number  =  (A  x  B)  -  (A  x  C)
                               -----------------------

                                          B

               For purposes of the foregoing formula:

          A=  the  total  number  of  Warrant  Shares with respect to which this
          Warrant is then being exercised.

          B= the average of the Closing Sale Price of the shares of Common Stock
          (as  reported  by  Bloomberg)  on  the  five  Trading Days immediately
          preceding the date of the Exercise Notice.

          C= the Exercise Price then in effect for the applicable Warrant Shares
               at the time of such exercise.

               (e)     Disputes.  In  the  case  of  a  dispute  as  to  the
                       --------
determination of the Exercise Price or the arithmetic calculation of the Warrant
Shares,  the  Escrow  Agent  shall promptly transfer to the Holder the number of
Warrant Shares that are not disputed and resolve such dispute in accordance with
Section 12.

               (f)     (i)     Limitations  on  Exercises; Beneficial Ownership.
                               ------------------------------------------------
The  Escrow  Agent shall not effect the exercise of this Warrant, and the Holder
shall  not  have  the  right  to exercise this Warrant, to the extent that after
giving  effect  to  such  exercise,  such  Person  (together  with such Person's
affiliates)  would  beneficially  own  (directly  or  indirectly through Warrant
Shares  or  otherwise)  in  excess  of  4.99%  of  the  shares  of  Common Stock
outstanding  immediately  after  giving effect to such exercise. For purposes of
the  foregoing  sentence,  the  aggregate  number  of  shares  of  Common  Stock
beneficially  owned (directly or indirectly through Warrant Shares or otherwise)
by  such  Person and its affiliates shall include the number of shares of Common
Stock  issuable  upon  exercise  of  this  Warrant  with  respect  to  which the
determination of such sentence is being made, but shall exclude shares of Common
Stock  which  would  be issuable upon (i) exercise of the remaining, unexercised
portion of this Warrant beneficially owned by such Person and its affiliates and
(ii)  exercise  or  conversion  of the unexercised or unconverted portion of any
other  securities  of  the  Company  beneficially  owned  by such Person and its
affiliates  (including, without limitation, any convertible notes or convertible
preferred  stock  or warrants) subject to a limitation on conversion or exercise
analogous  to  the  limitation  contained  herein.  Except  as  set forth in the
preceding  sentence, for purposes of this subsection, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934,  as  amended.  For  purposes of this Warrant, in determining the number of
outstanding  shares  of  Common  Stock,  the  Holder  may  rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company's most recent
Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the
Securities and Exchange Commission, as the case may be, (2) a more recent public
announcement  by  the  Company  or  (3)  any  other notice by the Company or the
Company's  transfer  agent  setting  forth  the number of shares of Common Stock
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of
the  Company,  including  the SPA Securities and the SPA Warrants, by the Holder
and its affiliates since the


                                      - 4 -
<PAGE>
date as of which such number of outstanding shares of Common Stock was reported.
By  written  notice  to  the  Company,  the  Holder may increase or decrease the
Maximum  Percentage  to any other percentage not in excess of 9.99% specified in
such notice; provided that (i) any such increase will not be effective until the
sixty-first  (61st)  day after such notice is delivered to the Company, and (ii)
any such increase or decrease will apply only to the Holder and not to any other
holder of SPA Warrants.

                    (ii)     Principal Market Regulation.  The Company shall not
                             ---------------------------
be  obligated  to issue any shares of Common Stock upon exercise of this Warrant
if the issuance of such shares of Common Stock would exceed the aggregate number
of  shares  of  Common  Stock  which  the  Company  may issue upon conversion or
exercise or otherwise, as applicable, of the SPA Securities and Warrants without
breaching  the  Company's  obligations  under  the  rules  or regulations of the
Principal  Market  (the  "EXCHANGE  CAP"), except that such limitation shall not
apply in the event that the Company (A) obtains the approval of its stockholders
as  required  by  the  applicable rules of the Principal Market for issuances of
Common  Stock  in  excess  of  such amount or (B) obtains a written opinion from
outside counsel to the Company that such approval is not required, which opinion
shall be reasonably satisfactory to the Required Holders. Until such approval or
written  opinion  is  obtained,  no  purchaser  of  the Warrants pursuant to the
Securities  Purchase  Agreement  (the  "PURCHASERS")  shall  be  issued  in  the
aggregate,  upon  conversion  or  exercise  or  otherwise, as applicable, of SPA
Securities  or  Warrants,  shares  of Common Stock in an amount greater than the
product  of the Exchange Cap multiplied by a fraction, the numerator of which is
the  number  of  Warrants  issued  to  the Purchasers pursuant to the Securities
Purchase  Agreement  on  the  Closing  Date  and the denominator of which is the
aggregate number of Warrants issued to the Purchasers pursuant to the Securities
Purchase  Agreement  on  the  Closing  Date (with respect to each Purchaser, the
"EXCHANGE  CAP  ALLOCATION").  In  the  event  that  any Purchaser shall sell or
otherwise  transfer  any  of  such  Purchaser's  Warrants,  the transferee, if a
registered  Holder  of  such  Warrants, shall be allocated a pro rata portion of
such  Purchaser's  Exchange  Cap  Allocation,  and the restrictions of the prior
sentence  shall  apply  to  such  transferee  with respect to the portion of the
Exchange  Cap  Allocation  allocated  to  such transferee. In the event that any
holder of Warrants shall exercise all of such holder's Warrants into a number of
shares  of  Common  Stock  which,  in  the aggregate, is less than such holder's
Exchange  Cap Allocation, then the difference between such holder's Exchange Cap
Allocation  and  the  number  of  shares of Common Stock actually issued to such
holder  shall  be  allocated  to  the respective Exchange Cap Allocations of the
remaining  registered  holders  of Warrants on a pro rata basis in proportion to
the  aggregate number of shares of Common Stock underlying the then held by each
such  holder.  To the extent required by the Principal Market, the provisions of
the  Exchange  Cap  shall  be  modified  to comply with the applicable rules and
regulations  of  the Principal Market, provided that any such changes shall not,
in  the  Holder's  reasonable  discretion,  materially  change  the terms of the
transaction contemplated hereby.

          Notwithstanding  anything in this Warrant to the contrary, the Company
shall be entitled to treat the registered holder of this Warrant as such appears
in  its  records,  as  the owner of this Warrant for all purposes; provided that
such  records  are  kept  current  using a reasonably satisfactory and customary
method intended for such purpose.


                                      - 5 -
<PAGE>
          2.     ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  The
                 ---------------------------------------------------------
Exercise  Price  and the number of Warrant Shares shall be adjusted from time to
time as follows:

               (a)     Adjustment  upon  Issuance of shares of Common Stock.  If
                       ----------------------------------------------------
and  whenever  on or after the Subscription Date the Company issues or sells, or
in  accordance  with this Section 2 is deemed to have issued or sold, any shares
of  Common Stock (including the issuance or sale of shares of Common Stock owned
or  held  by  or  for the account of the Company, but excluding shares of Common
Stock  deemed to have been issued by the Company in connection with any Excluded
Securities (as defined in the SPA Securities) for a consideration per share (the
"NEW  ISSUANCE  PRICE")  less than a price (the "APPLICABLE PRICE") equal to the
Exercise  Price  in  effect  immediately  prior  to such issue or sale or deemed
issuance  or  sale (the foregoing a "DILUTIVE ISSUANCE"), then immediately after
such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an
amount  equal  to  the  product  of (A) the Exercise Price in effect immediately
prior  to such Dilutive Issuance and (B) the quotient determined by dividing (1)
the  sum  of (I) the product derived by multiplying the Exercise Price in effect
immediately  prior  to  such  Dilutive  Issuance  and the number of Common Stock
Deemed  Outstanding  immediately  prior  to such Dilutive Issuance plus (II) the
consideration,  if  any, received by the Company upon such Dilutive Issuance, by
(2)  the  product  derived  by  multiplying  (I)  the  Exercise  Price in effect
immediately  prior  to such Dilutive Issuance by (II) the number of Common Stock
Deemed  Outstanding  immediately  after  such  Dilutive Issuance. Upon each such
adjustment  of  the Exercise Price hereunder, the number of Warrant Shares shall
be  adjusted  to  the number of shares of Common Stock determined by multiplying
the  Exercise Price in effect immediately prior to such adjustment by the number
of  Warrant Shares acquirable upon exercise of this Warrant immediately prior to
such adjustment and dividing the product thereof by the Exercise Price resulting
from  such  adjustment.  For purposes of determining the adjusted Exercise Price
under this Section 2(a), the following shall be applicable:

               (i)     Issuance  of  Options.  If the Company grants any Options
                       ---------------------
               and  the  lowest  price  per  share for which one share of Common
               Stock  is  issuable  upon the exercise of any such Option or upon
               conversion,  exercise  or  exchange of any Convertible Securities
               issuable  upon  exercise  of  any  such  Option  is less than the
               Applicable Price, then such share of Common Stock shall be deemed
               to be outstanding and to have been issued and sold by the Company
               at the time of the granting or sale of such Option for such price
               per  share.  For  purposes  of  this Section 2(a)(i), the "lowest
               price  per  share for which one share of Common Stock is issuable
               upon  exercise  of  such  Options or upon conversion, exercise or
               exchange  of  such  Convertible Securities" shall be equal to the
               sum  of  the lowest amounts of consideration (if any) received or
               receivable by the Company with respect to any one share of Common
               Stock  upon  the granting or sale of the Option, upon exercise of
               the  Option  and  upon  conversion,  exercise  or exchange of any
               Convertible  Security  issuable  upon exercise of such Option. No
               further  adjustment  of  the  Exercise Price or number of Warrant
               Shares  shall  be made upon the actual issuance of such shares of
               Common  Stock or of such Convertible Securities upon the exercise
               of such Options


                                      - 6 -
<PAGE>
               or  upon  the actual issuance of such shares of Common Stock upon
               conversion, exercise or exchange of such Convertible Securities.

               (ii)     Issuance  of  Convertible Securities.  If the Company in
                        ------------------------------------
               any  manner  issues  or  sells any Convertible Securities and the
               lowest  price  per  share  for which one share of Common Stock is
               issuable  upon  the  conversion,  exercise or exchange thereof is
               less  than  the Applicable Price, then such share of Common Stock
               shall  be  deemed  to  be outstanding and to have been issued and
               sold  by  the Company at the time of the issuance or sale of such
               Convertible Securities for such price per share. For the purposes
               of  this  Section 2(a)(ii), the "lowest price per share for which
               one  share  of  Common  Stock  is  issuable  upon the conversion,
               exercise  or  exchange"  shall  be equal to the sum of the lowest
               amounts  of  consideration (if any) received or receivable by the
               Company  with  respect  to  one  share  of  Common Stock upon the
               issuance or sale of the Convertible Security and upon conversion,
               exercise  or  exchange  of  such Convertible Security. No further
               adjustment  of  the  Exercise  Price  or number of Warrant Shares
               shall  be  made upon the actual issuance of such shares of Common
               Stock  upon  conversion, exercise or exchange of such Convertible
               Securities,  and  if  any  such issue or sale of such Convertible
               Securities  is  made  upon  exercise  of  any  Options  for which
               adjustment  of this Warrant has been or is to be made pursuant to
               other  provisions  of this Section 2(a), no further adjustment of
               the  Exercise  Price or number of Warrant Shares shall be made by
               reason of such issue or sale.

               (iii)     Change  in  Option Price or Rate of Conversion.  If the
                         -----------------------------------------------
               purchase  price  provided  for  in  any  Options,  the additional
               consideration,  if  any,  payable  upon  the  issue,  conversion,
               exercise  or  exchange of any Convertible Securities, or the rate
               at  which  any  Convertible  Securities  are  convertible into or
               exercisable  or exchangeable for shares of Common Stock increases
               or  decreases  at  any time, the Exercise Price and the number of
               Warrant Shares in effect at the time of such increase or decrease
               shall be adjusted to the Exercise Price and the number of Warrant
               Shares  which  would  have  been  in effect at such time had such
               Options  or Convertible Securities provided for such increased or
               decreased  purchase  price, additional consideration or increased
               or  decreased  conversion  rate,  as the case may be, at the time
               initially  granted,  issued or sold. For purposes of this Section
               2(a)(iii),  if  the  terms  of any Option or Convertible Security
               that  was  outstanding as of the date of issuance of this Warrant
               are  increased  or  decreased  in  the  manner  described  in the
               immediately  preceding  sentence, then such Option or Convertible
               Security  and  the  shares  of  Common Stock deemed issuable upon
               exercise,  conversion or exchange thereof shall be deemed to have
               been  issued  as  of  the  date  of such increase or decrease. No
               adjustment  pursuant  to  this Section 2(a) shall be made if such
               adjustment would result in an increase of the Exercise Price then
               in effect or a decrease in the number of Warrant Shares.


                                      - 7 -
<PAGE>
               (iv)     Calculation  of  Consideration  Received.  In  case  any
                        ----------------------------------------
               Option  is  issued  in connection with the issue or sale of other
               securities  of  the  Company,  together comprising one integrated
               transaction  in  which  no specific consideration is allocated to
               such  Options  by the parties thereto, the Options will be deemed
               to  have  been issued for a consideration of $0.01. If any shares
               of  Common Stock, Options or Convertible Securities are issued or
               sold  or  deemed  to  have  been  issued  or  sold  for cash, the
               consideration  received  therefor  will  be  deemed to be the net
               amount  received by the Company therefor. If any shares of Common
               Stock, Options or Convertible Securities are issued or sold for a
               consideration  other  than cash, the amount of such consideration
               received  by  the  Company  will  be  the  fair  value  of  such
               consideration,  except  where  such  consideration  consists  of
               securities, in which case the amount of consideration received by
               the  Company  will  be the Closing Sale Price of such security on
               the  date  of  receipt. If any shares of Common Stock, Options or
               Convertible  Securities  are  issued  to  the  owners  of  the
               non-surviving  entity  in connection with any merger in which the
               Company  is  the  surviving  entity,  the amount of consideration
               therefor  will  be deemed to be the fair value of such portion of
               the  net  assets  and  business of the non-surviving entity as is
               attributable  to  such  shares  of  Common  Stock,  Options  or
               Convertible Securities, as the case may be. The fair value of any
               consideration  other  than  cash or securities will be determined
               jointly  by the Company and the Required Holders. If such parties
               are  unable  to  reach  agreement  within ten (10) days after the
               occurrence  of  an  event  requiring  valuation  (the  "VALUATION
               EVENT"),  the fair value of such consideration will be determined
               within  five  (5) Business Days after the tenth day following the
               Valuation  Event  by  an independent, reputable appraiser jointly
               selected  by  the  Company  and  the  Required  Holders.  The
               determination  of  such appraiser shall be final and binding upon
               all  parties  absent  manifest error and the fees and expenses of
               such appraiser shall be borne by the Company.

               (v)     Record  Date.  If  the  Company  takes  a  record  of the
                       ------------
               holders  of  shares  of Common Stock for the purpose of entitling
               them  (A)  to receive a dividend or other distribution payable in
               shares  of  Common Stock, Options or in Convertible Securities or
               (B)  to subscribe for or purchase shares of Common Stock, Options
               or  Convertible  Securities, then such record date will be deemed
               to be the date of the issue or sale of the shares of Common Stock
               deemed  to  have been issued or sold upon the declaration of such
               dividend  or the making of such other distribution or the date of
               the  granting  of  such right of subscription or purchase, as the
               case may be.

               (b)     Adjustment  upon  Subdivision or Combination of shares of
                       ---------------------------------------------------------
Common  Stock.  If  the  Company  at  any time on or after the Subscription Date
-------------
subdivides  (by  any stock split, stock dividend, recapitalization or otherwise)
one  or  more  classes  of its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect


                                      - 8 -
<PAGE>
immediately  prior  to  such subdivision will be proportionately reduced and the
number  of  Warrant  Shares will be proportionately increased. If the Company at
any  time  on  or  after the Subscription Date combines (by combination, reverse
stock  split  or  otherwise)  one  or  more classes of its outstanding shares of
Common  Stock  into  a  smaller  number  of shares, the Exercise Price in effect
immediately  prior to such combination will be proportionately increased and the
number of Warrant Shares will be proportionately decreased. Any adjustment under
this  Section  2(b)  shall become effective at the close of business on the date
the subdivision or combination becomes effective.

               (c)     Other  Events.  If  any  event  occurs  of  the  type
                       -------------
contemplated  by  the provisions of this Section 2(c) but not expressly provided
for  by  such  provisions  (including, without limitation, the granting of share
appreciation rights, phantom share rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate adjustment in the
Exercise Price so as to protect the rights of the Holders; provided that no such
adjustment  will increase the Exercise Price as otherwise determined pursuant to
this Section 2(c).

          3.     RIGHTS  UPON  DISTRIBUTION  OF  ASSETS.  If  the  Company shall
                 --------------------------------------
declare  or  make any dividend or other distribution of its assets (or rights to
acquire  its  assets)  to holders of shares of Common Stock, by way of return of
capital  or  otherwise (including, without limitation, any distribution of cash,
stock  or  other  securities not addressed by Section 2, property or options not
addressed  by  Section  2  by  way  of  a  dividend, spin off, reclassification,
corporate  rearrangement, scheme of arrangement or other similar transaction) (a
"DISTRIBUTION"),  at  any time after the issuance of this Warrant, then, in each
such case:

               (a)     any  Exercise  Price  in  effect immediately prior to the
close  of  business on the record date fixed for the determination of holders of
shares  of  Common  Stock entitled to receive the Distribution shall be reduced,
effective as of the close of business on such record date, to a price determined
by  multiplying  such  Exercise  Price  by a fraction of which (i) the numerator
shall  be  the  Closing  Bid Price of a share of Common Stock on the trading day
immediately  preceding  such record date minus the value of the Distribution (as
determined  in good faith by the Company's Board of Directors) applicable to one
share  of  Common Stock, and (ii) the denominator shall be the Closing Bid Price
of  the  shares  of  Common  Stock on the trading day immediately preceding such
record date; and

               (b)     the  number  of  Warrant  Shares  shall be increased to a
number  of  shares  equal  to  the  number  of shares of Common Stock obtainable
immediately  prior  to  the  close  of business on the record date fixed for the
determination  of  holders  of  shares  of  Common Stock entitled to receive the
Distribution  multiplied  by  the  reciprocal  of  the fraction set forth in the
immediately  preceding  paragraph  (a);  provided  that  in  the  event that the
Distribution  is  of  shares of Common Stock (or common stock) ("OTHER SHARES OF
COMMON  STOCK")  of  a  company  whose  common  shares  are traded on a national
securities  exchange  or  a national automated quotation system, then the Holder
may  elect to receive a warrant to purchase Other Shares of Common Stock in lieu
of  an  increase  in  the  number of Warrant Shares, the terms of which shall be
identical  to  those  of  this  Warrant,  except  that  such  warrant  shall  be
exercisable into the number of shares of Other Shares of Common Stock that would
have  been  payable  to  the  Holder pursuant to the Distribution had the Holder
exercised  this  Warrant  immediately  prior  to  such  record  date and with an
aggregate exercise price equal to the product of the amount by which the


                                      - 9 -
<PAGE>
exercise  price  of  this Warrant was decreased with respect to the Distribution
pursuant  to the terms of the immediately preceding paragraph (a) and the number
of Warrant Shares calculated in accordance with the first part of this paragraph
(b).

          4.     PURCHASE  RIGHTS;  FUNDAMENTAL  TRANSACTIONS.
                 --------------------------------------------

               (a)     Purchase Rights.  In addition to any adjustments pursuant
                       ---------------
to  Section  2  above,  if  at  any time the Company grants, issues or sells any
Options,  Convertible  Securities  or  rights  to  purchase  stock,  warrants,
securities  or  other  property  pro  rata to the record holders of any class of
shares  of  Common  Stock  (the  "PURCHASE RIGHTS"), then, upon exercise of this
Warrant,  the  Holder  will be entitled to acquire, upon the terms applicable to
such  Purchase Rights, the aggregate Purchase Rights which the Holder could have
acquired  if  the  Holder  had held the proportionate number of shares of Common
Stock  acquirable  upon  exercise  of  this  Warrant  (without  regard  to  any
limitations  on  the  exercise  of  this Warrant) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or,  if  no  such  record  is  taken, the date as of which the record holders of
shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.

               (b)     Fundamental  Transactions.  If the Company enters into or
                       -------------------------
is  party  to a Fundamental Transaction, then the Holder shall have the right to
either (A) purchase and receive upon the basis and upon the terms and conditions
herein  specified  and  in  lieu  of  the Warrant Shares immediately theretofore
issuable  upon  exercise  of  the  Warrant,  such shares of stock, securities or
assets  (including  cash) as would have been issuable or payable with respect to
or  in  exchange  for  a number of Warrant Shares equal to the number of Warrant
Shares  immediately  theretofore issuable upon exercise of the Warrant, had such
Fundamental  Transaction  not  taken place or (B) require the repurchase of this
Warrant  for  a  purchase  price,  payable in cash within five (5) business days
after  such  request,  equal  to  the  Black  Scholes  Value  of  the  remaining
unexercised  portion  of  this Warrant on the date of such request. The terms of
any  agreement  pursuant  to  which  a Fundamental Transaction is effected shall
include  terms  requiring  any  such successor or surviving entity and Holder to
comply  with the provisions of this Section 4(b). The provisions of this Section
                                    ------------
shall  apply  similarly  and  equally to successive Fundamental Transactions and
shall  be  applied  without  regard  to  any limitations on the exercise of this
Warrant.

          5.     NONCIRCUMVENTION.  The Company hereby covenants and agrees that
                 ----------------
the  Company  will not, by amendment of its Articles of Incorporation, Bylaws or
through any reorganization, transfer of assets, consolidation, merger, scheme of
arrangement,  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,  and  will  at  all  times  in  good  faith carry out all the
provisions  of  this  Warrant  and take all action that is required hereunder to
protect  the  rights  of  the  Holder.  Without  limiting  the generality of the
foregoing,  the  Company  (i)  shall not increase the par value of any shares of
Common  Stock  receivable  upon  the exercise of this Warrant above the Exercise
Price  then  in  effect, (ii) shall take all such actions as may be necessary or
appropriate  in  order  that the Company may validly and legally have the Common
Stock  fully  paid  and  nonassessable shares of Common Stock transferred to the
Holder upon the exercise of this Warrant, and (iii) shall, so long as any of the
SPA  Warrants  are  outstanding,  take  all action necessary to reserve and keep
available  out  of  its  authorized  and  unissued  shares  of


                                     - 10 -
<PAGE>
Common  Stock,  solely  for  the  purpose  of  effecting the exercise of the SPA
Warrants,  120%  (or  such  lesser  amount  limited by the SEC) of the number of
shares  of  Common  Stock  as shall from time to time be necessary to effect the
exercise of the SPA Warrants then outstanding (without regard to any limitations
on  exercise).

          6.     WARRANT  HOLDER  NOT DEEMED A STOCKHOLDER.  Except as otherwise
                 -----------------------------------------
specifically  provided herein, the Holder, solely in such Person's capacity as a
holder of this Warrant, shall not be entitled to vote or receive dividends or be
deemed  the  holder  of  share capital of the Company for any purpose, nor shall
anything  contained  in  this  Warrant  be  construed to confer upon the Holder,
solely  in  such  Person's  capacity  as  the Holder of this Warrant, any of the
rights  of  a  shareholder of the Company or any right to vote, give or withhold
consent  to  any  corporate  action (whether any reorganization, issue of stock,
reclassification  of  stock,  consolidation,  merger,  conveyance or otherwise),
receive  notice  of  meetings,  receive  dividends  or  subscription  rights, or
otherwise,  prior to the issuance to the Holder of the Warrant Shares which such
Person  is  then  entitled  to receive upon the due exercise of this Warrant. In
addition,  nothing  contained in this Warrant shall be construed as imposing any
liabilities  on  the  Holder  to  purchase any securities (upon exercise of this
Warrant  or  otherwise) or as a shareholder of the Company. Notwithstanding this
Section  6, the Company shall provide the Holder with copies of the same notices
and  other  information  given  to  the  shareholders  of the Company generally,
contemporaneously with the giving thereof to its shareholders.

          7.     REISSUANCE  OF  WARRANTS.
                 ------------------------

               (a)     Transfer  of  Warrant.  If  this  Warrant  is  to  be
                       ---------------------
transferred,  the  Holder shall surrender this Warrant to the Company, whereupon
the  Company will forthwith issue and deliver upon the order of the Holder a new
Warrant (in accordance with Section 7(d)), registered as the Holder may request,
representing  the  right  to  purchase  the  number  of  Warrant  Shares  being
transferred  by  the Holder and, if less then the total number of Warrant Shares
then  underlying this Warrant is being transferred, a new Warrant (in accordance
with  Section  7(d)) to the Holder representing the right to purchase the number
of Warrant Shares not being transferred.

               (b)     Lost,  Stolen  or Mutilated Warrant.  Upon receipt by the
                       -----------------------------------
Company  of  evidence reasonably satisfactory to the Company of the loss, theft,
destruction  or  mutilation  of this Warrant, and, in the case of loss, theft or
destruction,  of any indemnification undertaking by the Holder to the Company in
customary  form  and, in the case of mutilation, upon surrender and cancellation
of  this  Warrant,  the  Company  shall  execute and deliver to the Holder a new
Warrant (in accordance with Section 7(d)) representing the right to purchase the
Warrant Shares then underlying this Warrant.

               (c)     Exchangeable  for  Multiple  Warrants.  This  Warrant  is
                       -------------------------------------
exchangeable, upon the surrender hereof by the Holder at the principal office of
the  Company,  for  a  new Warrant or Warrants (in accordance with Section 7(d))
representing in the aggregate the right to purchase the number of Warrant Shares
then underlying this Warrant, and each such new Warrant will represent the right
to  purchase  such portion of such Warrant Shares as is designated by the Holder
at  the  time  of  such  surrender;  provided,  however,  that  no  Warrants for
fractional shares of Common Stock shall be given.


                                     - 11 -
<PAGE>
               (d)     Issuance  of  New  Warrants.  Whenever  the  Company  is
                       ---------------------------
required  to issue a new Warrant pursuant to the terms of this Warrant, such new
Warrant  (i)  shall be of like tenor with this Warrant, (ii) shall represent, as
indicated  on  the  face  of such new Warrant, the right to purchase the Warrant
Shares  then  underlying  this  Warrant  (or  in the case of a new Warrant being
issued  pursuant  to Section 7(a) or Section 7(c), the Warrant Shares designated
by  the  Holder  which,  when  added  to  the  number  of shares of Common Stock
underlying  the other new Warrants issued in connection with such issuance, does
not  exceed  the  number  of Warrant Shares then underlying this Warrant), (iii)
shall  have an issuance date, as indicated on the face of such new Warrant which
is  the  same  as  the  Issuance  Date,  and (iv) shall have the same rights and
conditions as this Warrant.

          8.     NOTICES.  Whenever  notice  is  required to be given under this
                 -------
Warrant,  unless  otherwise  provided  herein,  such  notice  shall  be given in
accordance  with  Section 9(f) of the Securities Purchase Agreement. The Company
shall  provide  the  Holder  with  prompt  written  notice  of all actions taken
pursuant  to  this Warrant, including in reasonable detail a description of such
action  and  the  reason  therefore.  Without  limiting  the  generality  of the
foregoing, the Company will give written notice to the Holder (i) promptly after
any  adjustment  of  the Exercise Price, setting forth in reasonable detail, and
certifying,  the calculation of such adjustment and (ii) at least ten days prior
to  the  date  on  which the Company closes its books or takes a record (A) with
respect  to  any  dividend  or distribution upon the shares of Common Stock, (B)
with  respect  to  any  grants,  issuances  or sales of any Options, Convertible
Securities  or  rights to purchase stock, warrants, securities or other property
to  holders of shares of Common Stock or (C) for determining rights to vote with
respect  to any Fundamental Transaction, dissolution or liquidation, provided in
each case that such information shall be made known to the public prior to or in
conjunction with such notice being provided to the Holder.

          9.     AMENDMENT AND WAIVER.  Except as otherwise provided herein, the
                 --------------------
provisions  of  this  Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it,  only  if  the  Company  has  obtained  the  written consent of the Required
Holders; provided that no such action may increase the exercise price of any SPA
Warrant  or  decrease  the  number  of  shares or class of stock obtainable upon
exercise  of  any SPA Warrant without the written consent of the Holder. No such
amendment  shall  be effective to the extent that it applies to less than all of
the holders of the SPA Warrants then outstanding.

          10.     SEVERABILITY.  If  any  provision  of  this  Warrant  or  the
                  ------------
application  thereof becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of the terms of this Warrant
will continue in full force and effect.

          11.     GOVERNING  LAW.  This  Warrant  shall  be  governed  by  and
                  --------------
construed  and  enforced  in  accor-dance with, and all questions concerning the
construction,  validity, interpretation and performance of this Warrant shall be
governed  by,  the internal laws of the State of New York, without giving effect
to  any choice of law or conflict of law provision or rule (whether of the State
of  New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York.


                                     - 12 -
<PAGE>
          12.     CONSTRUCTION;  HEADINGS.  This  Warrant  shall be deemed to be
                  -----------------------
jointly  drafted  by  the  Company and all the Buyers and shall not be construed
against  any  person as the drafter hereof. The headings of this Warrant are for
convenience  of  reference  and  shall  not  form  part  of,  or  affect  the
interpretation of, this Warrant.

          13.     DISPUTE  RESOLUTION.  In  the  case  of  a  dispute  as to the
                  -------------------
determination of the Exercise Price or the arithmetic calculation of the Warrant
Shares,  the  Company  shall  submit  the  disputed determinations or arithmetic
calculations  via  facsimile within two Business Days of receipt of the Exercise
Notice  giving  rise  to such dispute, as the case may be, to the Holder. If the
Holder  and  the  Company  are  unable  to  agree  upon  such  determination  or
calculation  of  the  Exercise Price or the Warrant Shares within three Business
Days of such disputed determination or arithmetic calculation being submitted to
the  Holder,  then  the  Company  shall,  within  two  Business  Days submit via
facsimile  (a)  the  disputed  determination  of  the  Exercise  Price  to  an
independent,  reputable  investment bank selected by the Company and approved by
the  Holder  or (b) the disputed arithmetic calculation of the Warrant Shares to
the  Company's  independent, outside accountant. The Company shall cause, at the
expense  of the losing party, the investment bank or the accountant, as the case
may be, to perform the determinations or calculations and notify the Company and
the  Holder  of  the  results  no  later than ten Business Days from the time it
receives  the disputed determinations or calculations. Such investment bank's or
accountant's  determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error.

          14.     REMEDIES,  OTHER  OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
                  -------------------------------------------------------------
The remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant and the other Transaction Documents,
at  law  or  in  equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder right
to pursue actual damages for any failure by the Company to comply with the terms
of this Warrant. The Company acknowledges that a breach by it of its obligations
hereunder  will  cause irreparable harm to the Holder and that the remedy at law
for any such breach may be inadequate. The Company therefore agrees that, in the
event  of any such breach or threatened breach, the holder of this Warrant shall
be  entitled,  in  addition  to  all  other available remedies, to an injunction
restraining  any  breach,  without  the  necessity  of showing economic loss and
without any bond or other security being required.

          15.     TRANSFER.     This  Warrant  may  be  offered  for sale, sold,
                  --------
transferred  or  assigned  without  the  consent  of  the Company, except as may
otherwise be required by Section 2(f) of the Securities Purchase Agreement.

          16.     CERTAIN  DEFINITIONS.  For  purposes  of  this  Warrant,  the
                  --------------------
following terms shall have the following meanings:

               (a)     "BLACK  SCHOLES  VALUE"  means  the value of this Warrant
based  on  the  Black  and  Scholes  Option Pricing Model obtained from the "OV"
function  on Bloomberg determined as of the day immediately following the public
announcement  of  the  applicable  Fundamental  Transaction and reflecting (i) 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 such date of request


                                     - 13 -
<PAGE>
and  (ii)  an  expected  volatility  equal to the greater of 60% and the 100 day
volatility obtained from the HVT function on Bloomberg.

               (b)     "BLOOMBERG"  means  Bloomberg  Financial  Markets.

               (c)     "BUSINESS  DAY" means any day other than Saturday, Sunday
or other day on which commercial banks in The City of New York are authorized or
required by law to remain closed.

               (d)     "CLOSING  BID  PRICE" and "CLOSING SALE PRICE" means, for
any  security  as of any date, the last closing bid price and last closing trade
price,  respectively,  for such security on the Principal Market, as reported by
Bloomberg,  or,  if  the Principal Market begins to operate on an extended hours
basis  and  does not designate the closing bid price or the closing trade price,
as  the  case may be, then the last bid price or last trade price, respectively,
of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg,
or,  if the Principal Market is not the principal securities exchange or trading
market  for  such  security,  the  last  closing  bid price or last trade price,
respectively,  of  such security on the principal securities exchange or trading
market  where  such security is listed or traded as reported by Bloomberg, or if
the  foregoing  do  not  apply,  the last closing bid price or last trade price,
respectively,  of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price  or  last  trade  price,  respectively,  is  reported for such security by
Bloomberg,  the  average  of the bid prices, or the ask prices, respectively, of
any  market  makers  for  such security as reported in the "pink sheets" by Pink
Sheets  LLC  (formerly  the National Quotation Bureau, Inc.). If the Closing Bid
Price  or  the  Closing  Sale  Price  cannot  be  calculated for a security on a
particular  date  on  any  of  the foregoing bases, the Closing Bid Price or the
Closing  Sale  Price, as the case may be, of such security on such date shall be
the  fair  market value as mutually determined by the Company and the Holder. If
the  Company  and  the  Holder are unable to agree upon the fair market value of
such  security,  then such dispute shall be resolved pursuant to Section 12. All
such  determinations  to be appropriately adjusted for any stock dividend, stock
split,  stock  combination  or  other  similar transaction during the applicable
calculation period.

               (e)     "COMMON  STOCK"  means (i) the Company's shares of Common
Stock,  $0.10  par  value  per share, and (ii) any share capital into which such
Common  Stock  shall  have  been  changed  or any share capital resulting from a
reclassification of such Common Stock.

               (f)     "COMMON  STOCK  DEEMED  OUTSTANDING"  means, at any given
time,  the  number  of shares of Common Stock actually outstanding at such time,
plus  the  number of shares of Common Stock deemed to be outstanding pursuant to
Sections  2(a)(i)  and  2(a)(ii)  hereof  regardless  of  whether the Options or
Convertible  Securities are actually exercisable at such time, but excluding any
shares  of  Common  Stock  owned or held by or for the account of the Company or
issuable  upon conversion and exercise, as applicable, of the SPA Securities and
the Warrants.

               (g)     "CONVERTIBLE  SECURITIES"  means  any stock or securities
(other  than  Options) directly or indirectly convertible into or exercisable or
exchangeable at the option of the holder thereof for shares of Common Stock.


                                     - 14 -
<PAGE>
               (h)     "ELIGIBLE  MARKET"  means  the  Principal  Market,  the
American  Stock  Exchange, The New York Stock Exchange, Inc., the Nasdaq Capital
Market or the Nasdaq National Market.

               (i)     "EXPIRATION  DATE"  means the date sixty months after the
Issuance  Date  or,  if such date falls on a day other than a Business Day or on
which  trading  does  not  take place on the Principal Market (a "HOLIDAY"), the
next date that is not a Holiday.

               (j)     "FUNDAMENTAL  TRANSACTION"  means that the Company shall,
directly  or indirectly, in one or more related transactions, (i) consolidate or
merge  with  or  into  (whether or not the Company is the surviving corporation)
another  Person,  or (ii) sell, assign, transfer, convey or otherwise dispose of
all  or  substantially all of the properties or assets of the Company to another
Person,  or  (iii)  allow  another Person to make a purchase, tender or exchange
offer that is accepted by such number of holders of outstanding shares of Common
Stock  resulting  in  such  Person (together with any affiliates of such Person)
holding  more  than  the  50%  of  the  outstanding  Common Stock of the Company
following  such  purchase,  tender or exchange offer, or (iv) consummate a stock
purchase agreement or other business combination (including, without limitation,
a  reorganization,  recapitalization,  spin-off  or  scheme of arrangement) with
another  Person  resulting in such other Person (together with any affiliates of
such  person)  holding  more than the 50% of the outstanding Common Stock of the
Company  following  such stock purchase agreement or other business combination,
or (v) reorganize, recapitalize or reclassify its Common Stock.

               (k)     "OPTIONS"  means  any  rights,  warrants  or  options  to
subscribe for or purchase shares of Common Stock or Convertible Securities.

               (l)     "PERSON"  means  an  individual,  a  limited  liability
company,  a  partnership,  a  joint  venture,  a  corporation,  a  trust,  an
unincorporated organization, any other entity and a government or any department
or agency thereof.

               (m)     "PRINCIPAL  MARKET"  means  the  NASD OTC Bulletin Board.

               (n)     "REGISTRATION  RIGHTS  AGREEMENT"  means  that  certain
registration rights agreement by and among the Company and the Buyers.

               (o)     "REQUIRED  HOLDERS" means the holders of the SPA Warrants
representing  at  least  a majority of shares of Common Stock underlying the SPA
Warrants then outstanding.

               (p)     "SPA  SECURITIES"  means  the  Preferred  Stock  issued
pursuant to the Securities Purchase Agreement.

                            [SIGNATURE PAGE FOLLOWS]


                                     - 15 -
<PAGE>
     IN  WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common
Stock to be duly executed as of the Issuance Date set out above.


                                        CHARYS HOLDING COMPANY, INC.


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


<PAGE>
                                                                       EXHIBIT A

                                 EXERCISE NOTICE
            TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
                        WARRANT TO PURCHASE COMMON STOCK

                          CHARYS HOLDING COMPANY, INC.

     The  undersigned  holder  hereby  exercises  the  right  to  purchase
                   of  the  shares  of Common Stock ("WARRANT SHARES") of Charys
-----------------
Holding  Company, Inc., a Delaware corporation (the "COMPANY"), evidenced by the
attached  Warrant  to  Purchase  Common Stock (the "WARRANT"). Capitalized terms
used  herein  and  not  otherwise defined shall have the respective meanings set
forth in the Warrant.

     1.  Form  of  Exercise  Price.  The  Holder  intends  that  payment  of the
Exercise Price shall be made as:

                           a  "Cash  Exercise" with respect to
          ------------         ---------------                 -----------------
Warrant Shares; and/or

                           a "Cashless Exercise" with respect to
          ------------       -------------------                 ---------------
Warrant Shares.

     2.  Notwithstanding  anything  to  the  contrary  contained  herein,  this
Exercise  Notice  shall constitute a representation by the Holder of the Warrant
submitting  this  Exercise  Notice  that,  after  giving  effect to the exercise
provided for in this Exercise Notice, such Holder (together with its affiliates)
will  not  have  beneficial ownership (together with the beneficial ownership of
such  Person's  affiliates)  of a number of shares of Common Stock which exceeds
the  maximum  percentage  of  the  total  outstanding  shares of Common Stock as
determined pursuant to the provisions of Section 1(f)(i) of the Warrant.

     3.  Payment  of Exercise Price.  In the event that the holder has elected a
Cash  Exercise  with  respect  to  some  or  all  of  the  Warrant  Shares to be
transferred  pursuant  hereto, the holder shall pay the Aggregate Exercise Price
in  the  sum of $                    to the Company in accordance with the terms
                 -------------------
of the Warrant.

     4.  Delivery  of  Warrant  Shares.  The Company shall deliver to the holder
           Warrant Shares in accordance with the terms of the Warrant.
----------
Date:                   ,
      --------------- --  ------

------------------------------------
     Name of Registered Holder


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


<PAGE>
                                 ACKNOWLEDGMENT


     Gottbetter  &  Partners,  LLP  hereby acknowledges this Exercise Notice and
will transfer                      shares of Common Stock.
              --------------------


                                        GOTTBETTER & PARTNERS. LLP


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


<PAGE>
NEITHER  THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR  THE  SECURITIES  INTO  WHICH  THESE  SECURITIES  ARE EXERCISEABLE HAVE BEEN
REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES  LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR  ASSIGNED  (I)  IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE  SECURITIES  UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF  COUNSEL,  IN  A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER  SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED PURSUANT TO AN
AVAILABLE  EXEMPTION  UNDER  THE  1933 ACT IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

                          CHARYS HOLDING COMPANY, INC.

                        WARRANT TO PURCHASE COMMON STOCK

Warrant No.: 002
Number of Shares of Common Stock: 866,667
Date of Issuance: May 19, 2006 ("ISSUANCE DATE")

          Charys  Holding Company, Inc., a Delaware corporation (the "COMPANY"),
hereby  certifies  that,  for  good  and valuable consideration, the receipt and
sufficiency  of  which  are  hereby acknowledged, ENABLE GROWTH PARTNERS LP, the
registered  holder  hereof or its permitted assigns (the "HOLDER"), is entitled,
subject  to  the  terms  set  forth  below, to purchase from the Company, at the
Exercise Price (as defined below) then in effect, upon surrender of this Warrant
to Purchase Common Stock (including any Warrants to Purchase Common Stock issued
in  exchange,  transfer  or  replacement  hereof, the "WARRANT"), at any time or
times  on  or  after the date hereof but not after 11:59 p.m., New York Time, on
the  Expiration  Date  (as  defined below), Eight Hundred Sixty Six Thousand Six
Hundred  Sixty-Seven  (866,667)  fully paid nonassessable shares of Common Stock
(as  defined  below) (the "WARRANT SHARES"). Except as otherwise defined herein,
capitalized  terms  in this Warrant shall have the meanings set forth in Section
16.  This  Warrant  is  one  of  the Warrants to purchase Common Stock (the "SPA
WARRANTS")  issued  pursuant  to  Section  1 of that certain Securities Purchase
Agreement,  dated as of May 19, 2006 (the "SUBSCRIPTION DATE"), by and among the
Company  and  the  investors (the "BUYERS") referred to therein (the "SECURITIES
PURCHASE AGREEMENT").

          1.     EXERCISE OF WARRANT.
                 --------------------

               (a)     Mechanics  of  Exercise.  Subject  to  the  terms  and
                       -----------------------
conditions  hereof  (including, without limitation, the limitations set forth in
Section  1(f)),  this  Warrant  may  be exercised by the Holder on any day on or
after the date hereof, in whole or in part, by (i) delivery of a written notice,
in the form attached hereto as Exhibit A (the "EXERCISE NOTICE"), of the
                               ---------


<PAGE>
Holder's  election to exercise this Warrant and (ii) (A) payment to Gottbetter &
Partners, LLP (the "ESCROW AGENT") of an amount equal to the applicable Exercise
Price  multiplied  by  the  number of Warrant Shares as to which this Warrant is
being  exercised  (the  "AGGREGATE  EXERCISE PRICE") in cash or wire transfer of
immediately  available  funds  or  (B)  by  notifying the Escrow Agent that this
Warrant  is  being  exercised  pursuant  to  a  Cashless Exercise (as defined in
Section  1(d)). The Holder shall not be required to deliver the original Warrant
in order to effect an exercise hereunder. Execution and delivery of the Exercise
Notice  with  respect to less than all of the Warrant Shares shall have the same
effect  as  cancellation  of  the original Warrant and issuance of a new Warrant
evidencing  the  right to purchase the remaining number of Warrant Shares. On or
before  the second Business Day following the date on which the Escrow Agent has
received each of the Exercise Notice and the Aggregate Exercise Price (or notice
of  a  Cashless  Exercise) (the "EXERCISE DELIVERY DOCUMENTS"), the Escrow Agent
shall  transmit by facsimile an acknowledgment of confirmation of receipt of the
Exercise  Delivery  Documents  to  the  Holder and the Company. On or before the
third  Business  Day following the date on which the Company has received all of
the  Exercise  Delivery  Documents (the "SHARE DELIVERY DATE"), the Escrow Agent
shall  (X)  provided  that  the Company's transfer agent is participating in The
Depository  Trust  Company  ("DTC")  Fast Automated Securities Transfer Program,
upon the request of the Holder, credit such aggregate number of shares of Common
Stock  to which the Holder is entitled pursuant to such exercise to the Holder's
or  its designee's balance account with DTC through its Deposit Withdrawal Agent
Commission  system,  or (Y) if the Company's transfer agent is not participating
in  the DTC Fast Automated Securities Transfer Program, transfer and dispatch by
overnight  courier  to  the  address  as  specified  in  the  Exercise  Notice,
certificates  for  the approximate number of shares of Common Stock to which the
Holder  is  entitled  pursuant  to  such exercise. Upon delivery of the Exercise
Notice  and  Aggregate  Exercise  Price  referred  to in clause (ii)(A) above or
notification  to  the Escrow Agent of a Cashless Exercise referred to in Section
1(d),  the  Holder shall be deemed for all corporate purposes to have become the
holder  of  record  of the Warrant Shares with respect to which this Warrant has
been  exercised,  irrespective  of  the  date  of  delivery  of the certificates
evidencing  such Warrant Shares. If this Warrant is submitted in connection with
any  exercise  pursuant  to  this  Section 1(a) and the number of Warrant Shares
represented by this Warrant submitted for exercise is greater than the number of
Warrant  Shares  being acquired upon an exercise, then the Company shall as soon
as  practicable and in no event later than five Business Days after any exercise
and  at  its  own expense, issue a new Warrant (in accordance with Section 7(d))
representing  the  right  to  purchase  the number of Warrant Shares purchasable
immediately  prior  to  such  exercise  under  this  Warrant, less the number of
Warrant  Shares  with  respect to which this Warrant is exercised. No fractional
shares  of Common Stock are to be transferred upon the exercise of this Warrant,
but  rather  the  number  of  shares  of Common Stock to be transferred shall be
rounded  up to the nearest whole number. The Company shall pay any and all taxes
which may be payable with respect to the issuance and delivery of Warrant Shares
upon  exercise of this Warrant. In the event that the Escrow Agent does not have
a sufficient number of shares of Common Stock to transfer to the Holder upon the
exercise of this Warrant (including, but not limited to, by reason of additional
Warrant  Shares  required  to  be  issued pursuant to Section 2 herein, and such
Warrant  Shares had not previously been delivered to the Escrow Agent), then the
Company  shall  within  1  Business  Day  of the date of delivery of an Exercise
Notice  deliver  such  additional  number of Warrant Shares to the Escrow Agent.


                                      - 2 -
<PAGE>
               (b)     Exercise  Price.  For purposes of this Warrant, "EXERCISE
                       ---------------
PRICE" means $6.24, subject to adjustment as provided herein.

               (c)     Company's  Failure  to  Timely  Deliver  Securities.  In
                       ---------------------------------------------------
addition  to the foregoing, if within three (3) Trading Days after the Company's
receipt  of the facsimile copy of an exercise notice the Company shall cause the
Escrow  Agent  to  fail to transfer the Escrow Shares to the Buyer, and if on or
after  such  third  Trading  Day  the  Buyer is required to purchase (in an open
market  transaction  or otherwise) shares of Common Stock in order to deliver in
satisfaction  of a sale initiated by the Buyer in anticipation of receiving from
the Company the shares of Common Stock issuable upon such exercise (a "BUY-IN"),
then the Company shall, within three (3) Business Days after the Buyer's request
and  in  the  Buyer's  discretion, either (i) pay cash to the Buyer in an amount
equal  to  the Buyer's total purchase price (including brokerage commissions, if
any)  for the shares of Common Stock so purchased (the "BUY-IN PRICE"), at which
point the Company's obligation to deliver such Escrow Shares resulting from such
exercise  shall  terminate,  or (ii) promptly honor its obligation to deliver to
the  Buyer a certificate or certificates representing such Escrow Shares and pay
cash to the holder in an amount equal to the excess (if any) of the Buy-In Price
over  the  product  of  (A) such number of shares of Common Stock, times (B) the
Closing  Sale  Price  on  the  date  of exercise. Nothing herein shall limit the
holder's  right to pursue actual damages for the Company's failure to maintain a
sufficient  number  of  authorized  shares of Common Stock or to otherwise issue
shares  of  Common  Stock  upon  exercise of this Warrant in accordance with the
terms  hereof,  and  the  holder  shall  have  the  right to pursue all remedies
available at law or in equity (including a decree of specific performance and/or
injunctive  relief).  Notwithstanding  the  foregoing, the Company shall have no
obligations  to  cause  its  Escrow Agent to deliver Escrow Shares or to pay any
Buy-In Price under this Section 1(c) if the Company has timely delivered in good
faith a bonafide objection to such conversion or exercise notice.

               (d)     Cashless  Exercise.  Notwithstanding  anything  contained
                       ------------------
herein  to  the  contrary,  if  a  Registration  Statement  (as  defined  in the
Registration  Rights Agreement) covering the Warrant Shares that are the subject
of  the  Exercise Notice (the "UNAVAILABLE WARRANT SHARES") is not available for
the  resale  of  such  Unavailable  Warrant  Shares, the Holder may, in its sole
discretion, exercise this Warrant in whole or in part and, in lieu of making the
cash payment otherwise contemplated to be made to the Company upon such exercise
in  payment  of the Aggregate Exercise Price, elect instead to receive upon such
exercise  the "Net Number" of shares of Common Stock determined according to the
following formula (a "CASHLESS EXERCISE"):


                                      - 3 -
<PAGE>
               Net  Number  =  (A  x  B)  -  (A  x  C)
                               -----------------------

                                          B

               For  purposes  of  the  foregoing  formula:

          A=  the  total  number  of  Warrant  Shares with respect to which this
          Warrant is then being exercised.

          B= the average of the Closing Sale Price of the shares of Common Stock
          (as  reported  by  Bloomberg)  on  the  five  Trading Days immediately
          preceding the date of the Exercise Notice.

          C= the Exercise Price then in effect for the applicable Warrant Shares
               at the time of such exercise.

               (e)     Disputes.  In  the  case  of  a  dispute  as  to  the
                       --------
determination of the Exercise Price or the arithmetic calculation of the Warrant
Shares,  the  Escrow  Agent  shall promptly transfer to the Holder the number of
Warrant Shares that are not disputed and resolve such dispute in accordance with
Section 12.

               (f)     (i)     Limitations  on  Exercises; Beneficial Ownership.
                               ------------------------------------------------
The  Escrow  Agent shall not effect the exercise of this Warrant, and the Holder
shall  not  have  the  right  to exercise this Warrant, to the extent that after
giving  effect  to  such  exercise,  such  Person  (together  with such Person's
affiliates)  would  beneficially  own  (directly  or  indirectly through Warrant
Shares  or  otherwise)  in  excess  of  4.99%  of  the  shares  of  Common Stock
outstanding  immediately  after  giving effect to such exercise. For purposes of
the  foregoing  sentence,  the  aggregate  number  of  shares  of  Common  Stock
beneficially  owned (directly or indirectly through Warrant Shares or otherwise)
by  such  Person and its affiliates shall include the number of shares of Common
Stock  issuable  upon  exercise  of  this  Warrant  with  respect  to  which the
determination of such sentence is being made, but shall exclude shares of Common
Stock  which  would  be issuable upon (i) exercise of the remaining, unexercised
portion of this Warrant beneficially owned by such Person and its affiliates and
(ii)  exercise  or  conversion  of the unexercised or unconverted portion of any
other  securities  of  the  Company  beneficially  owned  by such Person and its
affiliates  (including, without limitation, any convertible notes or convertible
preferred  stock  or warrants) subject to a limitation on conversion or exercise
analogous  to  the  limitation  contained  herein.  Except  as  set forth in the
preceding  sentence, for purposes of this subsection, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934,  as  amended.  For  purposes of this Warrant, in determining the number of
outstanding  shares  of  Common  Stock,  the  Holder  may  rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company's most recent
Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the
Securities and Exchange Commission, as the case may be, (2) a more recent public
announcement  by  the  Company  or  (3)  any  other notice by the Company or the
Company's  transfer  agent  setting  forth  the number of shares of Common Stock
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of
the  Company,  including  the SPA Securities and the SPA Warrants, by the Holder
and its affiliates since the


                                      - 4 -
<PAGE>
date as of which such number of outstanding shares of Common Stock was reported.
By  written  notice  to  the  Company,  the  Holder may increase or decrease the
Maximum  Percentage  to any other percentage not in excess of 9.99% specified in
such notice; provided that (i) any such increase will not be effective until the
sixty-first  (61st)  day after such notice is delivered to the Company, and (ii)
any such increase or decrease will apply only to the Holder and not to any other
holder of SPA Warrants.

                    (ii)     Principal Market Regulation.  The Company shall not
                             ---------------------------
be  obligated  to issue any shares of Common Stock upon exercise of this Warrant
if the issuance of such shares of Common Stock would exceed the aggregate number
of  shares  of  Common  Stock  which  the  Company  may issue upon conversion or
exercise or otherwise, as applicable, of the SPA Securities and Warrants without
breaching  the  Company's  obligations  under  the  rules  or regulations of the
Principal  Market  (the  "EXCHANGE  CAP"), except that such limitation shall not
apply in the event that the Company (A) obtains the approval of its stockholders
as  required  by  the  applicable rules of the Principal Market for issuances of
Common  Stock  in  excess  of  such amount or (B) obtains a written opinion from
outside counsel to the Company that such approval is not required, which opinion
shall be reasonably satisfactory to the Required Holders. Until such approval or
written  opinion  is  obtained,  no  purchaser  of  the Warrants pursuant to the
Securities  Purchase  Agreement  (the  "PURCHASERS")  shall  be  issued  in  the
aggregate,  upon  conversion  or  exercise  or  otherwise, as applicable, of SPA
Securities  or  Warrants,  shares  of Common Stock in an amount greater than the
product  of the Exchange Cap multiplied by a fraction, the numerator of which is
the  number  of  Warrants  issued  to  the Purchasers pursuant to the Securities
Purchase  Agreement  on  the  Closing  Date  and the denominator of which is the
aggregate number of Warrants issued to the Purchasers pursuant to the Securities
Purchase  Agreement  on  the  Closing  Date (with respect to each Purchaser, the
"EXCHANGE  CAP  ALLOCATION").  In  the  event  that  any Purchaser shall sell or
otherwise  transfer  any  of  such  Purchaser's  Warrants,  the transferee, if a
registered  Holder  of  such  Warrants, shall be allocated a pro rata portion of
such  Purchaser's  Exchange  Cap  Allocation,  and the restrictions of the prior
sentence  shall  apply  to  such  transferee  with respect to the portion of the
Exchange  Cap  Allocation  allocated  to  such transferee. In the event that any
holder of Warrants shall exercise all of such holder's Warrants into a number of
shares  of  Common  Stock  which,  in  the aggregate, is less than such holder's
Exchange  Cap Allocation, then the difference between such holder's Exchange Cap
Allocation  and  the  number  of  shares of Common Stock actually issued to such
holder  shall  be  allocated  to  the respective Exchange Cap Allocations of the
remaining  registered  holders  of Warrants on a pro rata basis in proportion to
the  aggregate number of shares of Common Stock underlying the then held by each
such  holder.  To the extent required by the Principal Market, the provisions of
the  Exchange  Cap  shall  be  modified  to comply with the applicable rules and
regulations  of  the Principal Market, provided that any such changes shall not,
in  the  Holder's  reasonable  discretion,  materially  change  the terms of the
transaction contemplated hereby.

          Notwithstanding  anything in this Warrant to the contrary, the Company
shall be entitled to treat the registered holder of this Warrant as such appears
in  its  records,  as  the owner of this Warrant for all purposes; provided that
such  records  are  kept  current  using a reasonably satisfactory and customary
method intended for such purpose.


                                      - 5 -
<PAGE>
          2.     ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  The
                 ---------------------------------------------------------
Exercise  Price  and the number of Warrant Shares shall be adjusted from time to
time as follows:

               (a)     Adjustment  upon  Issuance of shares of Common Stock.  If
                       ----------------------------------------------------
and  whenever  on or after the Subscription Date the Company issues or sells, or
in  accordance  with this Section 2 is deemed to have issued or sold, any shares
of  Common Stock (including the issuance or sale of shares of Common Stock owned
or  held  by  or  for the account of the Company, but excluding shares of Common
Stock  deemed to have been issued by the Company in connection with any Excluded
Securities (as defined in the SPA Securities) for a consideration per share (the
"NEW  ISSUANCE  PRICE")  less than a price (the "APPLICABLE PRICE") equal to the
Exercise  Price  in  effect  immediately  prior  to such issue or sale or deemed
issuance  or  sale (the foregoing a "DILUTIVE ISSUANCE"), then immediately after
such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an
amount  equal  to  the  product  of (A) the Exercise Price in effect immediately
prior  to such Dilutive Issuance and (B) the quotient determined by dividing (1)
the  sum  of (I) the product derived by multiplying the Exercise Price in effect
immediately  prior  to  such  Dilutive  Issuance  and the number of Common Stock
Deemed  Outstanding  immediately  prior  to such Dilutive Issuance plus (II) the
consideration,  if  any, received by the Company upon such Dilutive Issuance, by
(2)  the  product  derived  by  multiplying  (I)  the  Exercise  Price in effect
immediately  prior  to such Dilutive Issuance by (II) the number of Common Stock
Deemed  Outstanding  immediately  after  such  Dilutive Issuance. Upon each such
adjustment  of  the Exercise Price hereunder, the number of Warrant Shares shall
be  adjusted  to  the number of shares of Common Stock determined by multiplying
the  Exercise Price in effect immediately prior to such adjustment by the number
of  Warrant Shares acquirable upon exercise of this Warrant immediately prior to
such adjustment and dividing the product thereof by the Exercise Price resulting
from  such  adjustment.  For purposes of determining the adjusted Exercise Price
under this Section 2(a), the following shall be applicable:

               (i)     Issuance  of  Options.  If the Company grants any Options
                       ---------------------
               and  the  lowest  price  per  share for which one share of Common
               Stock  is  issuable  upon the exercise of any such Option or upon
               conversion,  exercise  or  exchange of any Convertible Securities
               issuable  upon  exercise  of  any  such  Option  is less than the
               Applicable Price, then such share of Common Stock shall be deemed
               to be outstanding and to have been issued and sold by the Company
               at the time of the granting or sale of such Option for such price
               per  share.  For  purposes  of  this Section 2(a)(i), the "lowest
               price  per  share for which one share of Common Stock is issuable
               upon  exercise  of  such  Options or upon conversion, exercise or
               exchange  of  such  Convertible Securities" shall be equal to the
               sum  of  the lowest amounts of consideration (if any) received or
               receivable by the Company with respect to any one share of Common
               Stock  upon  the granting or sale of the Option, upon exercise of
               the  Option  and  upon  conversion,  exercise  or exchange of any
               Convertible  Security  issuable  upon exercise of such Option. No
               further  adjustment  of  the  Exercise Price or number of Warrant
               Shares  shall  be made upon the actual issuance of such shares of
               Common  Stock or of such Convertible Securities upon the exercise
               of such Options


                                      - 6 -
<PAGE>
               or  upon  the actual issuance of such shares of Common Stock upon
               conversion, exercise or exchange of such Convertible Securities.

               (ii)     Issuance  of  Convertible Securities.  If the Company in
                        ------------------------------------
               any  manner  issues  or  sells any Convertible Securities and the
               lowest  price  per  share  for which one share of Common Stock is
               issuable  upon  the  conversion,  exercise or exchange thereof is
               less  than  the Applicable Price, then such share of Common Stock
               shall  be  deemed  to  be outstanding and to have been issued and
               sold  by  the Company at the time of the issuance or sale of such
               Convertible Securities for such price per share. For the purposes
               of  this  Section 2(a)(ii), the "lowest price per share for which
               one  share  of  Common  Stock  is  issuable  upon the conversion,
               exercise  or  exchange"  shall  be equal to the sum of the lowest
               amounts  of  consideration (if any) received or receivable by the
               Company  with  respect  to  one  share  of  Common Stock upon the
               issuance or sale of the Convertible Security and upon conversion,
               exercise  or  exchange  of  such Convertible Security. No further
               adjustment  of  the  Exercise  Price  or number of Warrant Shares
               shall  be  made upon the actual issuance of such shares of Common
               Stock  upon  conversion, exercise or exchange of such Convertible
               Securities,  and  if  any  such issue or sale of such Convertible
               Securities  is  made  upon  exercise  of  any  Options  for which
               adjustment  of this Warrant has been or is to be made pursuant to
               other  provisions  of this Section 2(a), no further adjustment of
               the  Exercise  Price or number of Warrant Shares shall be made by
               reason of such issue or sale.

               (iii)     Change  in  Option Price or Rate of Conversion.  If the
                         -----------------------------------------------
               purchase  price  provided  for  in  any  Options,  the additional
               consideration,  if  any,  payable  upon  the  issue,  conversion,
               exercise  or  exchange of any Convertible Securities, or the rate
               at  which  any  Convertible  Securities  are  convertible into or
               exercisable  or exchangeable for shares of Common Stock increases
               or  decreases  at  any time, the Exercise Price and the number of
               Warrant Shares in effect at the time of such increase or decrease
               shall be adjusted to the Exercise Price and the number of Warrant
               Shares  which  would  have  been  in effect at such time had such
               Options  or Convertible Securities provided for such increased or
               decreased  purchase  price, additional consideration or increased
               or  decreased  conversion  rate,  as the case may be, at the time
               initially  granted,  issued or sold. For purposes of this Section
               2(a)(iii),  if  the  terms  of any Option or Convertible Security
               that  was  outstanding as of the date of issuance of this Warrant
               are  increased  or  decreased  in  the  manner  described  in the
               immediately  preceding  sentence, then such Option or Convertible
               Security  and  the  shares  of  Common Stock deemed issuable upon
               exercise,  conversion or exchange thereof shall be deemed to have
               been  issued  as  of  the  date  of such increase or decrease. No
               adjustment  pursuant  to  this Section 2(a) shall be made if such
               adjustment would result in an increase of the Exercise Price then
               in effect or a decrease in the number of Warrant Shares.


                                      - 7 -
<PAGE>
               (iv)     Calculation  of  Consideration  Received.  In  case  any
                        ----------------------------------------
               Option  is  issued  in connection with the issue or sale of other
               securities  of  the  Company,  together comprising one integrated
               transaction  in  which  no specific consideration is allocated to
               such  Options  by the parties thereto, the Options will be deemed
               to  have  been issued for a consideration of $0.01. If any shares
               of  Common Stock, Options or Convertible Securities are issued or
               sold  or  deemed  to  have  been  issued  or  sold  for cash, the
               consideration  received  therefor  will  be  deemed to be the net
               amount  received by the Company therefor. If any shares of Common
               Stock, Options or Convertible Securities are issued or sold for a
               consideration  other  than cash, the amount of such consideration
               received  by  the  Company  will  be  the  fair  value  of  such
               consideration,  except  where  such  consideration  consists  of
               securities, in which case the amount of consideration received by
               the  Company  will  be the Closing Sale Price of such security on
               the  date  of  receipt. If any shares of Common Stock, Options or
               Convertible  Securities  are  issued  to  the  owners  of  the
               non-surviving  entity  in connection with any merger in which the
               Company  is  the  surviving  entity,  the amount of consideration
               therefor  will  be deemed to be the fair value of such portion of
               the  net  assets  and  business of the non-surviving entity as is
               attributable  to  such  shares  of  Common  Stock,  Options  or
               Convertible Securities, as the case may be. The fair value of any
               consideration  other  than  cash or securities will be determined
               jointly  by the Company and the Required Holders. If such parties
               are  unable  to  reach  agreement  within ten (10) days after the
               occurrence  of  an  event  requiring  valuation  (the  "VALUATION
               EVENT"),  the fair value of such consideration will be determined
               within  five  (5) Business Days after the tenth day following the
               Valuation  Event  by  an independent, reputable appraiser jointly
               selected  by  the  Company  and  the  Required  Holders.  The
               determination  of  such appraiser shall be final and binding upon
               all  parties  absent  manifest error and the fees and expenses of
               such appraiser shall be borne by the Company.

               (v)     Record  Date.  If  the  Company  takes  a  record  of the
                       ------------
               holders  of  shares  of Common Stock for the purpose of entitling
               them  (A)  to receive a dividend or other distribution payable in
               shares  of  Common Stock, Options or in Convertible Securities or
               (B)  to subscribe for or purchase shares of Common Stock, Options
               or  Convertible  Securities, then such record date will be deemed
               to be the date of the issue or sale of the shares of Common Stock
               deemed  to  have been issued or sold upon the declaration of such
               dividend  or the making of such other distribution or the date of
               the  granting  of  such right of subscription or purchase, as the
               case may be.

               (b)     Adjustment  upon  Subdivision or Combination of shares of
                       ---------------------------------------------------------
Common  Stock.  If  the  Company  at  any time on or after the Subscription Date
-------------
subdivides  (by  any stock split, stock dividend, recapitalization or otherwise)
one  or  more  classes  of its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect


                                      - 8 -
<PAGE>
immediately  prior  to  such subdivision will be proportionately reduced and the
number  of  Warrant  Shares will be proportionately increased. If the Company at
any  time  on  or  after the Subscription Date combines (by combination, reverse
stock  split  or  otherwise)  one  or  more classes of its outstanding shares of
Common  Stock  into  a  smaller  number  of shares, the Exercise Price in effect
immediately  prior to such combination will be proportionately increased and the
number of Warrant Shares will be proportionately decreased. Any adjustment under
this  Section  2(b)  shall become effective at the close of business on the date
the subdivision or combination becomes effective.

               (c)     Other  Events.  If  any  event  occurs  of  the  type
                       -------------
contemplated  by  the provisions of this Section 2(c) but not expressly provided
for  by  such  provisions  (including, without limitation, the granting of share
appreciation rights, phantom share rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate adjustment in the
Exercise Price so as to protect the rights of the Holders; provided that no such
adjustment  will increase the Exercise Price as otherwise determined pursuant to
this Section 2(c).

          3.     RIGHTS  UPON  DISTRIBUTION  OF  ASSETS.  If  the  Company shall
                 --------------------------------------
declare  or  make any dividend or other distribution of its assets (or rights to
acquire  its  assets)  to holders of shares of Common Stock, by way of return of
capital  or  otherwise (including, without limitation, any distribution of cash,
stock  or  other  securities not addressed by Section 2, property or options not
addressed  by  Section  2  by  way  of  a  dividend, spin off, reclassification,
corporate  rearrangement, scheme of arrangement or other similar transaction) (a
"DISTRIBUTION"),  at  any time after the issuance of this Warrant, then, in each
such case:

               (a)     any  Exercise  Price  in  effect immediately prior to the
close  of  business on the record date fixed for the determination of holders of
shares  of  Common  Stock entitled to receive the Distribution shall be reduced,
effective as of the close of business on such record date, to a price determined
by  multiplying  such  Exercise  Price  by a fraction of which (i) the numerator
shall  be  the  Closing  Bid Price of a share of Common Stock on the trading day
immediately  preceding  such record date minus the value of the Distribution (as
determined  in good faith by the Company's Board of Directors) applicable to one
share  of  Common Stock, and (ii) the denominator shall be the Closing Bid Price
of  the  shares  of  Common  Stock on the trading day immediately preceding such
record date; and

               (b)     the  number  of  Warrant  Shares  shall be increased to a
number  of  shares  equal  to  the  number  of shares of Common Stock obtainable
immediately  prior  to  the  close  of business on the record date fixed for the
determination  of  holders  of  shares  of  Common Stock entitled to receive the
Distribution  multiplied  by  the  reciprocal  of  the fraction set forth in the
immediately  preceding  paragraph  (a);  provided  that  in  the  event that the
Distribution  is  of  shares of Common Stock (or common stock) ("OTHER SHARES OF
COMMON  STOCK")  of  a  company  whose  common  shares  are traded on a national
securities  exchange  or  a national automated quotation system, then the Holder
may  elect to receive a warrant to purchase Other Shares of Common Stock in lieu
of  an  increase  in  the  number of Warrant Shares, the terms of which shall be
identical  to  those  of  this  Warrant,  except  that  such  warrant  shall  be
exercisable into the number of shares of Other Shares of Common Stock that would
have  been  payable  to  the  Holder pursuant to the Distribution had the Holder
exercised  this  Warrant  immediately  prior  to  such  record  date and with an
aggregate exercise price equal to the product of the amount by which the


                                      - 9 -
<PAGE>
exercise  price  of  this Warrant was decreased with respect to the Distribution
pursuant  to the terms of the immediately preceding paragraph (a) and the number
of Warrant Shares calculated in accordance with the first part of this paragraph
(b).

          4.     PURCHASE  RIGHTS;  FUNDAMENTAL  TRANSACTIONS.
                 --------------------------------------------

               (a)     Purchase Rights.  In addition to any adjustments pursuant
                       ---------------
to  Section  2  above,  if  at  any time the Company grants, issues or sells any
Options,  Convertible  Securities  or  rights  to  purchase  stock,  warrants,
securities  or  other  property  pro  rata to the record holders of any class of
shares  of  Common  Stock  (the  "PURCHASE RIGHTS"), then, upon exercise of this
Warrant,  the  Holder  will be entitled to acquire, upon the terms applicable to
such  Purchase Rights, the aggregate Purchase Rights which the Holder could have
acquired  if  the  Holder  had held the proportionate number of shares of Common
Stock  acquirable  upon  exercise  of  this  Warrant  (without  regard  to  any
limitations  on  the  exercise  of  this Warrant) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or,  if  no  such  record  is  taken, the date as of which the record holders of
shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.

               (b)     Fundamental  Transactions.  If the Company enters into or
                       -------------------------
is  party  to a Fundamental Transaction, then the Holder shall have the right to
either (A) purchase and receive upon the basis and upon the terms and conditions
herein  specified  and  in  lieu  of  the Warrant Shares immediately theretofore
issuable  upon  exercise  of  the  Warrant,  such shares of stock, securities or
assets  (including  cash) as would have been issuable or payable with respect to
or  in  exchange  for  a number of Warrant Shares equal to the number of Warrant
Shares  immediately  theretofore issuable upon exercise of the Warrant, had such
Fundamental  Transaction  not  taken place or (B) require the repurchase of this
Warrant  for  a  purchase  price,  payable in cash within five (5) business days
after  such  request,  equal  to  the  Black  Scholes  Value  of  the  remaining
unexercised  portion  of  this Warrant on the date of such request. The terms of
any  agreement  pursuant  to  which  a Fundamental Transaction is effected shall
include  terms  requiring  any  such successor or surviving entity and Holder to
comply  with the provisions of this Section 4(b). The provisions of this Section
                                    ------------
shall  apply  similarly  and  equally to successive Fundamental Transactions and
shall  be  applied  without  regard  to  any limitations on the exercise of this
Warrant.

          5.     NONCIRCUMVENTION.  The Company hereby covenants and agrees that
                 ----------------
the  Company  will not, by amendment of its Articles of Incorporation, Bylaws or
through any reorganization, transfer of assets, consolidation, merger, scheme of
arrangement,  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,  and  will  at  all  times  in  good  faith carry out all the
provisions  of  this  Warrant  and take all action that is required hereunder to
protect  the  rights  of  the  Holder.  Without  limiting  the generality of the
foregoing,  the  Company  (i)  shall not increase the par value of any shares of
Common  Stock  receivable  upon  the exercise of this Warrant above the Exercise
Price  then  in  effect, (ii) shall take all such actions as may be necessary or
appropriate  in  order  that the Company may validly and legally have the Common
Stock  fully  paid  and  nonassessable shares of Common Stock transferred to the
Holder upon the exercise of this Warrant, and (iii) shall, so long as any of the
SPA  Warrants  are  outstanding,  take  all action necessary to reserve and keep
available  out  of  its  authorized  and  unissued  shares  of


                                     - 10 -
<PAGE>
Common  Stock,  solely  for  the  purpose  of  effecting the exercise of the SPA
Warrants,  120%  (or  such  lesser  amount  limited by the SEC) of the number of
shares  of  Common  Stock  as shall from time to time be necessary to effect the
exercise of the SPA Warrants then outstanding (without regard to any limitations
on exercise).

          6.     WARRANT  HOLDER  NOT DEEMED A STOCKHOLDER.  Except as otherwise
                 -----------------------------------------
specifically  provided herein, the Holder, solely in such Person's capacity as a
holder of this Warrant, shall not be entitled to vote or receive dividends or be
deemed  the  holder  of  share capital of the Company for any purpose, nor shall
anything  contained  in  this  Warrant  be  construed to confer upon the Holder,
solely  in  such  Person's  capacity  as  the Holder of this Warrant, any of the
rights  of  a  shareholder of the Company or any right to vote, give or withhold
consent  to  any  corporate  action (whether any reorganization, issue of stock,
reclassification  of  stock,  consolidation,  merger,  conveyance or otherwise),
receive  notice  of  meetings,  receive  dividends  or  subscription  rights, or
otherwise,  prior to the issuance to the Holder of the Warrant Shares which such
Person  is  then  entitled  to receive upon the due exercise of this Warrant. In
addition,  nothing  contained in this Warrant shall be construed as imposing any
liabilities  on  the  Holder  to  purchase any securities (upon exercise of this
Warrant  or  otherwise) or as a shareholder of the Company. Notwithstanding this
Section  6, the Company shall provide the Holder with copies of the same notices
and  other  information  given  to  the  shareholders  of the Company generally,
contemporaneously with the giving thereof to its shareholders.

          7.     REISSUANCE  OF  WARRANTS.
                 ------------------------

               (a)     Transfer  of  Warrant.  If  this  Warrant  is  to  be
                       ---------------------
transferred,  the  Holder shall surrender this Warrant to the Company, whereupon
the  Company will forthwith issue and deliver upon the order of the Holder a new
Warrant (in accordance with Section 7(d)), registered as the Holder may request,
representing  the  right  to  purchase  the  number  of  Warrant  Shares  being
transferred  by  the Holder and, if less then the total number of Warrant Shares
then  underlying this Warrant is being transferred, a new Warrant (in accordance
with  Section  7(d)) to the Holder representing the right to purchase the number
of Warrant Shares not being transferred.

               (b)     Lost,  Stolen  or Mutilated Warrant.  Upon receipt by the
                       -----------------------------------
Company  of  evidence reasonably satisfactory to the Company of the loss, theft,
destruction  or  mutilation  of this Warrant, and, in the case of loss, theft or
destruction,  of any indemnification undertaking by the Holder to the Company in
customary  form  and, in the case of mutilation, upon surrender and cancellation
of  this  Warrant,  the  Company  shall  execute and deliver to the Holder a new
Warrant (in accordance with Section 7(d)) representing the right to purchase the
Warrant Shares then underlying this Warrant.

               (c)     Exchangeable  for  Multiple  Warrants.  This  Warrant  is
                       -------------------------------------
exchangeable, upon the surrender hereof by the Holder at the principal office of
the  Company,  for  a  new Warrant or Warrants (in accordance with Section 7(d))
representing in the aggregate the right to purchase the number of Warrant Shares
then underlying this Warrant, and each such new Warrant will represent the right
to  purchase  such portion of such Warrant Shares as is designated by the Holder
at  the  time  of  such  surrender;  provided,  however,  that  no  Warrants for
fractional shares of Common Stock shall be given.


                                     - 11 -
<PAGE>
               (d)     Issuance  of  New  Warrants.  Whenever  the  Company  is
                       ---------------------------
required  to issue a new Warrant pursuant to the terms of this Warrant, such new
Warrant  (i)  shall be of like tenor with this Warrant, (ii) shall represent, as
indicated  on  the  face  of such new Warrant, the right to purchase the Warrant
Shares  then  underlying  this  Warrant  (or  in the case of a new Warrant being
issued  pursuant  to Section 7(a) or Section 7(c), the Warrant Shares designated
by  the  Holder  which,  when  added  to  the  number  of shares of Common Stock
underlying  the other new Warrants issued in connection with such issuance, does
not  exceed  the  number  of Warrant Shares then underlying this Warrant), (iii)
shall  have an issuance date, as indicated on the face of such new Warrant which
is  the  same  as  the  Issuance  Date,  and (iv) shall have the same rights and
conditions as this Warrant.

          8.     NOTICES.  Whenever  notice  is  required to be given under this
                 -------
Warrant,  unless  otherwise  provided  herein,  such  notice  shall  be given in
accordance  with  Section 9(f) of the Securities Purchase Agreement. The Company
shall  provide  the  Holder  with  prompt  written  notice  of all actions taken
pursuant  to  this Warrant, including in reasonable detail a description of such
action  and  the  reason  therefore.  Without  limiting  the  generality  of the
foregoing, the Company will give written notice to the Holder (i) promptly after
any  adjustment  of  the Exercise Price, setting forth in reasonable detail, and
certifying,  the calculation of such adjustment and (ii) at least ten days prior
to  the  date  on  which the Company closes its books or takes a record (A) with
respect  to  any  dividend  or distribution upon the shares of Common Stock, (B)
with  respect  to  any  grants,  issuances  or sales of any Options, Convertible
Securities  or  rights to purchase stock, warrants, securities or other property
to  holders of shares of Common Stock or (C) for determining rights to vote with
respect  to any Fundamental Transaction, dissolution or liquidation, provided in
each case that such information shall be made known to the public prior to or in
conjunction with such notice being provided to the Holder.

          9.     AMENDMENT AND WAIVER.  Except as otherwise provided herein, the
                 --------------------
provisions  of  this  Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it,  only  if  the  Company  has  obtained  the  written consent of the Required
Holders; provided that no such action may increase the exercise price of any SPA
Warrant  or  decrease  the  number  of  shares or class of stock obtainable upon
exercise  of  any SPA Warrant without the written consent of the Holder. No such
amendment  shall  be effective to the extent that it applies to less than all of
the holders of the SPA Warrants then outstanding.

          10.     SEVERABILITY.  If  any  provision  of  this  Warrant  or  the
                  ------------
application  thereof becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of the terms of this Warrant
will continue in full force and effect.

          11.     GOVERNING  LAW.  This  Warrant  shall  be  governed  by  and
                  --------------
construed  and  enforced  in  accordance  with, and all questions concerning the
construction,  validity, interpretation and performance of this Warrant shall be
governed  by,  the internal laws of the State of New York, without giving effect
to  any choice of law or conflict of law provision or rule (whether of the State
of  New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York.


                                     - 12 -
<PAGE>
          12.     CONSTRUCTION;  HEADINGS.  This  Warrant  shall be deemed to be
                  -----------------------
jointly  drafted  by  the  Company and all the Buyers and shall not be construed
against  any  person as the drafter hereof. The headings of this Warrant are for
convenience  of  reference  and  shall  not  form  part  of,  or  affect  the
interpretation of, this Warrant.

          13.     DISPUTE  RESOLUTION.  In  the  case  of  a  dispute  as to the
                  -------------------
determination of the Exercise Price or the arithmetic calculation of the Warrant
Shares,  the  Company  shall  submit  the  disputed determinations or arithmetic
calculations  via  facsimile within two Business Days of receipt of the Exercise
Notice  giving  rise  to such dispute, as the case may be, to the Holder. If the
Holder  and  the  Company  are  unable  to  agree  upon  such  determination  or
calculation  of  the  Exercise Price or the Warrant Shares within three Business
Days of such disputed determination or arithmetic calculation being submitted to
the  Holder,  then  the  Company  shall,  within  two  Business  Days submit via
facsimile  (a)  the  disputed  determination  of  the  Exercise  Price  to  an
independent,  reputable  investment bank selected by the Company and approved by
the  Holder  or (b) the disputed arithmetic calculation of the Warrant Shares to
the  Company's  independent, outside accountant. The Company shall cause, at the
expense  of the losing party, the investment bank or the accountant, as the case
may be, to perform the determinations or calculations and notify the Company and
the  Holder  of  the  results  no  later than ten Business Days from the time it
receives  the disputed determinations or calculations. Such investment bank's or
accountant's  determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error.

          14.     REMEDIES,  OTHER  OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
                  -------------------------------------------------------------
The remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant and the other Transaction Documents,
at  law  or  in  equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder right
to pursue actual damages for any failure by the Company to comply with the terms
of this Warrant. The Company acknowledges that a breach by it of its obligations
hereunder  will  cause irreparable harm to the Holder and that the remedy at law
for any such breach may be inadequate. The Company therefore agrees that, in the
event  of any such breach or threatened breach, the holder of this Warrant shall
be  entitled,  in  addition  to  all  other available remedies, to an injunction
restraining  any  breach,  without  the  necessity  of showing economic loss and
without any bond or other security being required.

          15.     TRANSFER.     This  Warrant  may  be  offered  for sale, sold,
                  --------
transferred  or  assigned  without  the  consent  of  the Company, except as may
otherwise be required by Section 2(f) of the Securities Purchase Agreement.

          16.     CERTAIN  DEFINITIONS.  For  purposes  of  this  Warrant,  the
                  --------------------
following terms shall have the following meanings:

               (a)     "BLACK  SCHOLES  VALUE"  means  the value of this Warrant
based  on  the  Black  and  Scholes  Option Pricing Model obtained from the "OV"
function  on Bloomberg determined as of the day immediately following the public
announcement  of  the  applicable  Fundamental  Transaction and reflecting (i) 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 such date of request


                                     - 13 -
<PAGE>
and  (ii)  an  expected  volatility  equal to the greater of 60% and the 100 day
volatility obtained from the HVT function on Bloomberg.

               (b)     "BLOOMBERG"  means  Bloomberg  Financial  Markets.

               (c)     "BUSINESS  DAY" means any day other than Saturday, Sunday
or other day on which commercial banks in The City of New York are authorized or
required by law to remain closed.

               (d)     "CLOSING  BID  PRICE" and "CLOSING SALE PRICE" means, for
any  security  as of any date, the last closing bid price and last closing trade
price,  respectively,  for such security on the Principal Market, as reported by
Bloomberg,  or,  if  the Principal Market begins to operate on an extended hours
basis  and  does not designate the closing bid price or the closing trade price,
as  the  case may be, then the last bid price or last trade price, respectively,
of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg,
or,  if the Principal Market is not the principal securities exchange or trading
market  for  such  security,  the  last  closing  bid price or last trade price,
respectively,  of  such security on the principal securities exchange or trading
market  where  such security is listed or traded as reported by Bloomberg, or if
the  foregoing  do  not  apply,  the last closing bid price or last trade price,
respectively,  of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price  or  last  trade  price,  respectively,  is  reported for such security by
Bloomberg,  the  average  of the bid prices, or the ask prices, respectively, of
any  market  makers  for  such security as reported in the "pink sheets" by Pink
Sheets  LLC  (formerly  the National Quotation Bureau, Inc.). If the Closing Bid
Price  or  the  Closing  Sale  Price  cannot  be  calculated for a security on a
particular  date  on  any  of  the foregoing bases, the Closing Bid Price or the
Closing  Sale  Price, as the case may be, of such security on such date shall be
the  fair  market value as mutually determined by the Company and the Holder. If
the  Company  and  the  Holder are unable to agree upon the fair market value of
such  security,  then such dispute shall be resolved pursuant to Section 12. All
such  determinations  to be appropriately adjusted for any stock dividend, stock
split,  stock  combination  or  other  similar transaction during the applicable
calculation period.

               (e)     "COMMON  STOCK"  means (i) the Company's shares of Common
Stock,  $0.10  par  value  per share, and (ii) any share capital into which such
Common  Stock  shall  have  been  changed  or any share capital resulting from a
reclassification of such Common Stock.

               (f)     "COMMON  STOCK  DEEMED  OUTSTANDING"  means, at any given
time,  the  number  of shares of Common Stock actually outstanding at such time,
plus  the  number of shares of Common Stock deemed to be outstanding pursuant to
Sections  2(a)(i)  and  2(a)(ii)  hereof  regardless  of  whether the Options or
Convertible  Securities are actually exercisable at such time, but excluding any
shares  of  Common  Stock  owned or held by or for the account of the Company or
issuable  upon conversion and exercise, as applicable, of the SPA Securities and
the Warrants.

               (g)     "CONVERTIBLE  SECURITIES"  means  any stock or securities
(other  than  Options) directly or indirectly convertible into or exercisable or
exchangeable at the option of the holder thereof for shares of Common Stock.


                                     - 14 -
<PAGE>
               (h)     "ELIGIBLE  MARKET"  means  the  Principal  Market,  the
American  Stock  Exchange, The New York Stock Exchange, Inc., the Nasdaq Capital
Market or the Nasdaq National Market.

               (i)     "EXPIRATION  DATE"  means the date sixty months after the
Issuance  Date  or,  if such date falls on a day other than a Business Day or on
which  trading  does  not  take place on the Principal Market (a "HOLIDAY"), the
next date that is not a Holiday.

               (j)     "FUNDAMENTAL  TRANSACTION"  means that the Company shall,
directly  or indirectly, in one or more related transactions, (i) consolidate or
merge  with  or  into  (whether or not the Company is the surviving corporation)
another  Person,  or (ii) sell, assign, transfer, convey or otherwise dispose of
all  or  substantially all of the properties or assets of the Company to another
Person,  or  (iii)  allow  another Person to make a purchase, tender or exchange
offer that is accepted by such number of holders of outstanding shares of Common
Stock  resulting  in  such  Person (together with any affiliates of such Person)
holding  more  than  the  50%  of  the  outstanding  Common Stock of the Company
following  such  purchase,  tender or exchange offer, or (iv) consummate a stock
purchase agreement or other business combination (including, without limitation,
a  reorganization,  recapitalization,  spin-off  or  scheme of arrangement) with
another  Person  resulting in such other Person (together with any affiliates of
such  person)  holding  more than the 50% of the outstanding Common Stock of the
Company  following  such stock purchase agreement or other business combination,
or (v) reorganize, recapitalize or reclassify its Common Stock.

               (k)     "OPTIONS"  means  any  rights,  warrants  or  options  to
subscribe for or purchase shares of Common Stock or Convertible Securities.

               (l)     "PERSON"  means  an  individual,  a  limited  liability
company,  a  partnership,  a  joint  venture,  a  corporation,  a  trust,  an
unincorporated organization, any other entity and a government or any department
or agency thereof.

               (m)     "PRINCIPAL  MARKET"  means  the  NASD OTC Bulletin Board.

               (n)     "REGISTRATION  RIGHTS  AGREEMENT"  means  that  certain
registration rights agreement by and among the Company and the Buyers.

               (o)     "REQUIRED  HOLDERS" means the holders of the SPA Warrants
representing  at  least  a majority of shares of Common Stock underlying the SPA
Warrants then outstanding.

               (p)     "SPA  SECURITIES"  means  the  Preferred  Stock  issued
pursuant to the Securities Purchase Agreement.

                            [SIGNATURE PAGE FOLLOWS]


                                     - 15 -
<PAGE>
     IN  WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common
Stock to be duly executed as of the Issuance Date set out above.


                                        CHARYS HOLDING COMPANY, INC.


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


<PAGE>
                                                                       EXHIBIT A

                                 EXERCISE NOTICE
            TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
                        WARRANT TO PURCHASE COMMON STOCK

                          CHARYS HOLDING COMPANY, INC.

     The  undersigned  holder  hereby  exercises  the  right  to  purchase
                   of  the  shares  of Common Stock ("WARRANT SHARES") of Charys
-----------------
Holding  Company, Inc., a Delaware corporation (the "COMPANY"), evidenced by the
attached  Warrant  to  Purchase  Common Stock (the "WARRANT"). Capitalized terms
used  herein  and  not  otherwise defined shall have the respective meanings set
forth in the Warrant.

     1.  Form  of  Exercise  Price.  The  Holder  intends  that  payment  of the
Exercise Price shall be made as:

                           a  "Cash  Exercise" with respect to
          ------------         ---------------                 -----------------
Warrant Shares; and/or

                           a "Cashless Exercise" with respect to
          ------------       -------------------                 ---------------
Warrant Shares.

     2.  Notwithstanding  anything  to  the  contrary  contained  herein,  this
Exercise  Notice  shall constitute a representation by the Holder of the Warrant
submitting  this  Exercise  Notice  that,  after  giving  effect to the exercise
provided for in this Exercise Notice, such Holder (together with its affiliates)
will  not  have  beneficial ownership (together with the beneficial ownership of
such  Person's  affiliates)  of a number of shares of Common Stock which exceeds
the  maximum  percentage  of  the  total  outstanding  shares of Common Stock as
determined pursuant to the provisions of Section 1(f)(i) of the Warrant.

     3.  Payment  of Exercise Price.  In the event that the holder has elected a
Cash  Exercise  with  respect  to  some  or  all  of  the  Warrant  Shares to be
transferred  pursuant  hereto, the holder shall pay the Aggregate Exercise Price
in  the  sum of $                    to the Company in accordance with the terms
                 -------------------
of the Warrant.

     4.  Delivery  of  Warrant  Shares.  The Company shall deliver to the holder
           Warrant Shares in accordance with the terms of the Warrant.
----------

Date:                     ,
       ---------------  --   ------


--------------------------------------
     Name of Registered Holder


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


<PAGE>
                                 ACKNOWLEDGMENT


     Gottbetter  &  Partners,  LLP  hereby acknowledges this Exercise Notice and
will transfer                      shares of Common Stock.
              --------------------


                                        GOTTBETTER & PARTNERS. LLP


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


<PAGE>
NEITHER  THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR  THE  SECURITIES  INTO  WHICH  THESE  SECURITIES  ARE EXERCISEABLE HAVE BEEN
REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES  LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR  ASSIGNED  (I)  IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE  SECURITIES  UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF  COUNSEL,  IN  A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER  SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING  THE  FOREGOING, THE SECURITIES MAY BE PLEDGED PURSUANT TO
AN  AVAILABLE EXEMPTION UNDER THE 1933 ACT IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

                          CHARYS HOLDING COMPANY, INC.

                        WARRANT TO PURCHASE COMMON STOCK

Warrant No.: 003
Number of Shares of Common Stock: 133,333
Date of Issuance: May 19, 2006 ("ISSUANCE DATE")

          Charys  Holding Company, Inc., a Delaware corporation (the "COMPANY"),
hereby  certifies  that,  for  good  and valuable consideration, the receipt and
sufficiency  of  which  are hereby acknowledged, ENABLE OPPORTUNITY PARTNERS LP,
the  registered  holder  hereof  or  its  permitted  assigns  (the "HOLDER"), is
entitled, subject to the terms set forth below, to purchase from the Company, at
the  Exercise  Price  (as  defined below) then in effect, upon surrender of this
Warrant  to  Purchase  Common  Stock  (including any Warrants to Purchase Common
Stock issued in exchange, transfer or replacement hereof, the "WARRANT"), at any
time  or  times  on  or after the date hereof but not after 11:59 p.m., New York
Time,  on  the  Expiration  Date  (as  defined  below), One Hundred Thirty Three
Thousand Three Hundred Thirty Three (133,333) fully paid nonassessable shares of
Common  Stock  (as  defined  below) (the "WARRANT SHARES").  Except as otherwise
defined  herein,  capitalized  terms in this Warrant shall have the meanings set
forth  in  Section  16.  This  Warrant is one of the Warrants to purchase Common
Stock  (the  "SPA  WARRANTS")  issued  pursuant  to  Section  1  of that certain
Securities  Purchase  Agreement,  dated  as  of  May 19, 2006 (the "SUBSCRIPTION
DATE"),  by  and  among the Company and the investors (the "BUYERS") referred to
therein (the "SECURITIES PURCHASE AGREEMENT").

          1.     EXERCISE  OF  WARRANT.
                 ---------------------

               (a)     Mechanics  of  Exercise.  Subject  to  the  terms  and
                       -----------------------
conditions  hereof  (including, without limitation, the limitations set forth in
Section  1(f)),  this  Warrant  may  be exercised by the Holder on any day on or
after the date hereof, in whole or in part, by (i) delivery of a written notice,
in the form attached hereto as Exhibit A (the "EXERCISE NOTICE"), of the
                               ---------


<PAGE>
Holder's  election to exercise this Warrant and (ii) (A) payment to Gottbetter &
Partners, LLP (the "ESCROW AGENT") of an amount equal to the applicable Exercise
Price  multiplied  by  the  number of Warrant Shares as to which this Warrant is
being  exercised  (the  "AGGREGATE  EXERCISE PRICE") in cash or wire transfer of
immediately  available  funds  or  (B)  by  notifying the Escrow Agent that this
Warrant  is  being  exercised  pursuant  to  a  Cashless Exercise (as defined in
Section 1(d)).  The Holder shall not be required to deliver the original Warrant
in  order  to  effect  an  exercise  hereunder.  Execution  and  delivery of the
Exercise  Notice  with respect to less than all of the Warrant Shares shall have
the  same  effect  as cancellation of the original Warrant and issuance of a new
Warrant evidencing the right to purchase the remaining number of Warrant Shares.
On  or  before  the  second  Business Day following the date on which the Escrow
Agent  has received each of the Exercise Notice and the Aggregate Exercise Price
(or  notice  of  a  Cashless  Exercise) (the "EXERCISE DELIVERY DOCUMENTS"), the
Escrow  Agent  shall  transmit by facsimile an acknowledgment of confirmation of
receipt  of the Exercise Delivery Documents to the Holder and the Company. On or
before  the  third  Business  Day  following  the  date on which the Company has
received all of the Exercise Delivery Documents (the "SHARE DELIVERY DATE"), the
Escrow  Agent  shall  (X)  provided  that  the  Company's  transfer  agent  is
participating  in The Depository Trust Company ("DTC") Fast Automated Securities
Transfer  Program,  upon the request of the Holder, credit such aggregate number
of  shares  of  Common  Stock  to  which the Holder is entitled pursuant to such
exercise  to the Holder's or its designee's balance account with DTC through its
Deposit  Withdrawal  Agent  Commission  system, or (Y) if the Company's transfer
agent  is  not  participating  in  the  DTC  Fast  Automated Securities Transfer
Program,  transfer and dispatch by overnight courier to the address as specified
in  the  Exercise  Notice,  certificates for the approximate number of shares of
Common  Stock  to  which the Holder is entitled pursuant to such exercise.  Upon
delivery  of  the  Exercise  Notice  and Aggregate Exercise Price referred to in
clause  (ii)(A) above or notification to the Escrow Agent of a Cashless Exercise
referred  to  in  Section  1(d),  the  Holder  shall be deemed for all corporate
purposes  to have become the holder of record of the Warrant Shares with respect
to  which  this Warrant has been exercised, irrespective of the date of delivery
of  the  certificates  evidencing  such  Warrant  Shares.  If  this  Warrant  is
submitted  in connection with any exercise pursuant to this Section 1(a) and the
number  of  Warrant Shares represented by this Warrant submitted for exercise is
greater  than the number of Warrant Shares being acquired upon an exercise, then
the  Company  shall  as  soon  as  practicable  and  in no event later than five
Business Days after any exercise and at its own expense, issue a new Warrant (in
accordance  with  Section 7(d)) representing the right to purchase the number of
Warrant  Shares  purchasable  immediately  prior  to  such  exercise  under this
Warrant, less the number of Warrant Shares with respect to which this Warrant is
exercised.  No  fractional shares of Common Stock are to be transferred upon the
exercise  of this Warrant, but rather the number of shares of Common Stock to be
transferred  shall be rounded up to the nearest whole number.  The Company shall
pay  any  and  all  taxes  which may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant.  In the event that the
Escrow  Agent  does  not  have  a sufficient number of shares of Common Stock to
transfer  to  the  Holder  upon the exercise of this Warrant (including, but not
limited  to,  by  reason  of  additional  Warrant  Shares  required to be issued
pursuant  to  Section  2 herein, and such Warrant Shares had not previously been
delivered  to the Escrow Agent), then the Company shall within 1 Business Day of
the  date  of  delivery  of an Exercise Notice deliver such additional number of
Warrant Shares to the Escrow Agent.


                                      - 2 -
<PAGE>
               (b)     Exercise  Price.  For purposes of this Warrant, "EXERCISE
                       ---------------
PRICE" means $6.24, subject to adjustment as provided herein.

               (c)     Company's  Failure  to  Timely  Deliver  Securities.  In
                       ---------------------------------------------------
addition  to the foregoing, if within three (3) Trading Days after the Company's
receipt  of the facsimile copy of an exercise notice the Company shall cause the
Escrow  Agent  to  fail to transfer the Escrow Shares to the Buyer, and if on or
after  such  third  Trading  Day  the  Buyer is required to purchase (in an open
market  transaction  or otherwise) shares of Common Stock in order to deliver in
satisfaction  of a sale initiated by the Buyer in anticipation of receiving from
the Company the shares of Common Stock issuable upon such exercise (a "BUY-IN"),
then the Company shall, within three (3) Business Days after the Buyer's request
and  in  the  Buyer's  discretion, either (i) pay cash to the Buyer in an amount
equal  to  the Buyer's total purchase price (including brokerage commissions, if
any)  for the shares of Common Stock so purchased (the "BUY-IN PRICE"), at which
point the Company's obligation to deliver such Escrow Shares resulting from such
exercise  shall  terminate,  or (ii) promptly honor its obligation to deliver to
the  Buyer a certificate or certificates representing such Escrow Shares and pay
cash to the holder in an amount equal to the excess (if any) of the Buy-In Price
over  the  product  of  (A) such number of shares of Common Stock, times (B) the
Closing  Sale  Price  on  the  date of exercise.  Nothing herein shall limit the
holder's  right to pursue actual damages for the Company's failure to maintain a
sufficient  number  of  authorized  shares of Common Stock or to otherwise issue
shares  of  Common  Stock  upon  exercise of this Warrant in accordance with the
terms  hereof,  and  the  holder  shall  have  the  right to pursue all remedies
available at law or in equity (including a decree of specific performance and/or
injunctive  relief).  Notwithstanding  the  foregoing, the Company shall have no
obligations  to  cause  its  Escrow Agent to deliver Escrow Shares or to pay any
Buy-In Price under this Section 1(c) if the Company has timely delivered in good
faith a bonafide objection to such conversion or exercise notice.

               (d)     Cashless  Exercise.  Notwithstanding  anything  contained
                       ------------------
herein  to  the  contrary,  if  a  Registration  Statement  (as  defined  in the
Registration  Rights Agreement) covering the Warrant Shares that are the subject
of  the  Exercise Notice (the "UNAVAILABLE WARRANT SHARES") is not available for
the  resale  of  such  Unavailable  Warrant  Shares, the Holder may, in its sole
discretion, exercise this Warrant in whole or in part and, in lieu of making the
cash payment otherwise contemplated to be made to the Company upon such exercise
in  payment  of the Aggregate Exercise Price, elect instead to receive upon such
exercise  the "Net Number" of shares of Common Stock determined according to the
following formula (a "CASHLESS EXERCISE"):


                                      - 3 -
<PAGE>
               Net  Number  =  (A  x  B)  -  (A  x  C)
                               -----------------------

                                          B

               For  purposes  of  the  foregoing  formula:

          A=  the  total  number  of  Warrant  Shares with respect to which this
          Warrant is then being exercised.

          B= the average of the Closing Sale Price of the shares of Common Stock
          (as  reported  by  Bloomberg)  on  the  five  Trading Days immediately
          preceding the date of the Exercise Notice.

          C= the Exercise Price then in effect for the applicable Warrant Shares
               at the time of such exercise.

               (e)     Disputes.  In  the  case  of  a  dispute  as  to  the
                       --------
determination of the Exercise Price or the arithmetic calculation of the Warrant
Shares,  the  Escrow  Agent  shall promptly transfer to the Holder the number of
Warrant Shares that are not disputed and resolve such dispute in accordance with
Section 12.

               (f)     (i)     Limitations  on  Exercises; Beneficial Ownership.
                               ------------------------------------------------
The  Escrow  Agent shall not effect the exercise of this Warrant, and the Holder
shall  not  have  the  right  to exercise this Warrant, to the extent that after
giving  effect  to  such  exercise,  such  Person  (together  with such Person's
affiliates)  would  beneficially  own  (directly  or  indirectly through Warrant
Shares  or  otherwise)  in  excess  of  4.99%  of  the  shares  of  Common Stock
outstanding  immediately  after  giving effect to such exercise. For purposes of
the  foregoing  sentence,  the  aggregate  number  of  shares  of  Common  Stock
beneficially  owned (directly or indirectly through Warrant Shares or otherwise)
by  such  Person and its affiliates shall include the number of shares of Common
Stock  issuable  upon  exercise  of  this  Warrant  with  respect  to  which the
determination of such sentence is being made, but shall exclude shares of Common
Stock  which  would  be issuable upon (i) exercise of the remaining, unexercised
portion of this Warrant beneficially owned by such Person and its affiliates and
(ii)  exercise  or  conversion  of the unexercised or unconverted portion of any
other  securities  of  the  Company  beneficially  owned  by such Person and its
affiliates  (including, without limitation, any convertible notes or convertible
preferred  stock  or warrants) subject to a limitation on conversion or exercise
analogous  to  the  limitation  contained  herein.  Except  as  set forth in the
preceding  sentence, for purposes of this subsection, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934,  as  amended.  For  purposes of this Warrant, in determining the number of
outstanding  shares  of  Common  Stock,  the  Holder  may  rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company's most recent
Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the
Securities and Exchange Commission, as the case may be, (2) a more recent public
announcement  by  the  Company  or  (3)  any  other notice by the Company or the
Company's  transfer  agent  setting  forth  the number of shares of Common Stock
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of
the  Company,  including  the SPA Securities and the SPA Warrants, by the Holder
and its affiliates since the


                                      - 4 -
<PAGE>
date as of which such number of outstanding shares of Common Stock was reported.
By  written  notice  to  the  Company,  the  Holder may increase or decrease the
Maximum  Percentage  to any other percentage not in excess of 9.99% specified in
such notice; provided that (i) any such increase will not be effective until the
sixty-first  (61st)  day after such notice is delivered to the Company, and (ii)
any such increase or decrease will apply only to the Holder and not to any other
holder of SPA Warrants.

                    (ii)     Principal Market Regulation.  The Company shall not
                             ---------------------------
be  obligated  to issue any shares of Common Stock upon exercise of this Warrant
if the issuance of such shares of Common Stock would exceed the aggregate number
of  shares  of  Common  Stock  which  the  Company  may issue upon conversion or
exercise or otherwise, as applicable, of the SPA Securities and Warrants without
breaching  the  Company's  obligations  under  the  rules  or regulations of the
Principal  Market  (the  "EXCHANGE  CAP"), except that such limitation shall not
apply in the event that the Company (A) obtains the approval of its stockholders
as  required  by  the  applicable rules of the Principal Market for issuances of
Common  Stock  in  excess  of  such amount or (B) obtains a written opinion from
outside counsel to the Company that such approval is not required, which opinion
shall be reasonably satisfactory to the Required Holders. Until such approval or
written  opinion  is  obtained,  no  purchaser  of  the Warrants pursuant to the
Securities  Purchase  Agreement  (the  "PURCHASERS")  shall  be  issued  in  the
aggregate,  upon  conversion  or  exercise  or  otherwise, as applicable, of SPA
Securities  or  Warrants,  shares  of Common Stock in an amount greater than the
product  of the Exchange Cap multiplied by a fraction, the numerator of which is
the  number  of  Warrants  issued  to  the Purchasers pursuant to the Securities
Purchase  Agreement  on  the  Closing  Date  and the denominator of which is the
aggregate number of Warrants issued to the Purchasers pursuant to the Securities
Purchase  Agreement  on  the  Closing  Date (with respect to each Purchaser, the
"EXCHANGE  CAP  ALLOCATION").  In  the  event  that  any Purchaser shall sell or
otherwise  transfer  any  of  such  Purchaser's  Warrants,  the transferee, if a
registered  Holder  of  such  Warrants, shall be allocated a pro rata portion of
such  Purchaser's  Exchange  Cap  Allocation,  and the restrictions of the prior
sentence  shall  apply  to  such  transferee  with respect to the portion of the
Exchange  Cap  Allocation  allocated  to  such transferee. In the event that any
holder of Warrants shall exercise all of such holder's Warrants into a number of
shares  of  Common  Stock  which,  in  the aggregate, is less than such holder's
Exchange  Cap Allocation, then the difference between such holder's Exchange Cap
Allocation  and  the  number  of  shares of Common Stock actually issued to such
holder  shall  be  allocated  to  the respective Exchange Cap Allocations of the
remaining  registered  holders  of Warrants on a pro rata basis in proportion to
the  aggregate number of shares of Common Stock underlying the then held by each
such  holder.  To the extent required by the Principal Market, the provisions of
the  Exchange  Cap  shall  be  modified  to comply with the applicable rules and
regulations  of  the Principal Market, provided that any such changes shall not,
in  the  Holder's  reasonable  discretion,  materially  change  the terms of the
transaction contemplated hereby.

          Notwithstanding  anything in this Warrant to the contrary, the Company
shall be entitled to treat the registered holder of this Warrant as such appears
in  its  records,  as  the owner of this Warrant for all purposes; provided that
such  records  are  kept  current  using a reasonably satisfactory and customary
method intended for such purpose.


                                      - 5 -
<PAGE>
          2.     ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  The
                 ---------------------------------------------------------
Exercise  Price  and the number of Warrant Shares shall be adjusted from time to
time as follows:

               (a)     Adjustment  upon  Issuance of shares of Common Stock.  If
                       ----------------------------------------------------
and  whenever  on or after the Subscription Date the Company issues or sells, or
in  accordance  with this Section 2 is deemed to have issued or sold, any shares
of  Common Stock (including the issuance or sale of shares of Common Stock owned
or  held  by  or  for the account of the Company, but excluding shares of Common
Stock  deemed to have been issued by the Company in connection with any Excluded
Securities (as defined in the SPA Securities) for a consideration per share (the
"NEW  ISSUANCE  PRICE")  less than a price (the "APPLICABLE PRICE") equal to the
Exercise  Price  in  effect  immediately  prior  to such issue or sale or deemed
issuance  or  sale (the foregoing a "DILUTIVE ISSUANCE"), then immediately after
such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an
amount  equal  to  the  product  of (A) the Exercise Price in effect immediately
prior  to such Dilutive Issuance and (B) the quotient determined by dividing (1)
the  sum  of (I) the product derived by multiplying the Exercise Price in effect
immediately  prior  to  such  Dilutive  Issuance  and the number of Common Stock
Deemed  Outstanding  immediately  prior  to such Dilutive Issuance plus (II) the
consideration,  if  any, received by the Company upon such Dilutive Issuance, by
(2)  the  product  derived  by  multiplying  (I)  the  Exercise  Price in effect
immediately  prior  to such Dilutive Issuance by (II) the number of Common Stock
Deemed  Outstanding  immediately  after  such  Dilutive Issuance. Upon each such
adjustment  of  the Exercise Price hereunder, the number of Warrant Shares shall
be  adjusted  to  the number of shares of Common Stock determined by multiplying
the  Exercise Price in effect immediately prior to such adjustment by the number
of  Warrant Shares acquirable upon exercise of this Warrant immediately prior to
such adjustment and dividing the product thereof by the Exercise Price resulting
from  such  adjustment.  For purposes of determining the adjusted Exercise Price
under this Section 2(a), the following shall be applicable:

               (i)     Issuance  of  Options.  If the Company grants any Options
                       ---------------------
               and  the  lowest  price  per  share for which one share of Common
               Stock  is  issuable  upon the exercise of any such Option or upon
               conversion,  exercise  or  exchange of any Convertible Securities
               issuable  upon  exercise  of  any  such  Option  is less than the
               Applicable Price, then such share of Common Stock shall be deemed
               to be outstanding and to have been issued and sold by the Company
               at the time of the granting or sale of such Option for such price
               per  share.  For  purposes  of  this Section 2(a)(i), the "lowest
               price  per  share for which one share of Common Stock is issuable
               upon  exercise  of  such  Options or upon conversion, exercise or
               exchange  of  such  Convertible Securities" shall be equal to the
               sum  of  the lowest amounts of consideration (if any) received or
               receivable by the Company with respect to any one share of Common
               Stock  upon  the granting or sale of the Option, upon exercise of
               the  Option  and  upon  conversion,  exercise  or exchange of any
               Convertible  Security  issuable  upon exercise of such Option. No
               further  adjustment  of  the  Exercise Price or number of Warrant
               Shares  shall  be made upon the actual issuance of such shares of
               Common  Stock or of such Convertible Securities upon the exercise
               of such Options


                                      - 6 -
<PAGE>
               or  upon  the actual issuance of such shares of Common Stock upon
               conversion, exercise or exchange of such Convertible Securities.

               (ii)     Issuance  of  Convertible Securities.  If the Company in
                        ------------------------------------
               any  manner  issues  or  sells any Convertible Securities and the
               lowest  price  per  share  for which one share of Common Stock is
               issuable  upon  the  conversion,  exercise or exchange thereof is
               less  than  the Applicable Price, then such share of Common Stock
               shall  be  deemed  to  be outstanding and to have been issued and
               sold  by  the Company at the time of the issuance or sale of such
               Convertible Securities for such price per share. For the purposes
               of  this  Section 2(a)(ii), the "lowest price per share for which
               one  share  of  Common  Stock  is  issuable  upon the conversion,
               exercise  or  exchange"  shall  be equal to the sum of the lowest
               amounts  of  consideration (if any) received or receivable by the
               Company  with  respect  to  one  share  of  Common Stock upon the
               issuance or sale of the Convertible Security and upon conversion,
               exercise  or  exchange  of  such Convertible Security. No further
               adjustment  of  the  Exercise  Price  or number of Warrant Shares
               shall  be  made upon the actual issuance of such shares of Common
               Stock  upon  conversion, exercise or exchange of such Convertible
               Securities,  and  if  any  such issue or sale of such Convertible
               Securities  is  made  upon  exercise  of  any  Options  for which
               adjustment  of this Warrant has been or is to be made pursuant to
               other  provisions  of this Section 2(a), no further adjustment of
               the  Exercise  Price or number of Warrant Shares shall be made by
               reason of such issue or sale.

               (iii)     Change  in  Option Price or Rate of Conversion.  If the
                         -----------------------------------------------
               purchase  price  provided  for  in  any  Options,  the additional
               consideration,  if  any,  payable  upon  the  issue,  conversion,
               exercise  or  exchange of any Convertible Securities, or the rate
               at  which  any  Convertible  Securities  are  convertible into or
               exercisable  or exchangeable for shares of Common Stock increases
               or  decreases  at  any time, the Exercise Price and the number of
               Warrant Shares in effect at the time of such increase or decrease
               shall be adjusted to the Exercise Price and the number of Warrant
               Shares  which  would  have  been  in effect at such time had such
               Options  or Convertible Securities provided for such increased or
               decreased  purchase  price, additional consideration or increased
               or  decreased  conversion  rate,  as the case may be, at the time
               initially  granted,  issued or sold. For purposes of this Section
               2(a)(iii),  if  the  terms  of any Option or Convertible Security
               that  was  outstanding as of the date of issuance of this Warrant
               are  increased  or  decreased  in  the  manner  described  in the
               immediately  preceding  sentence, then such Option or Convertible
               Security  and  the  shares  of  Common Stock deemed issuable upon
               exercise,  conversion or exchange thereof shall be deemed to have
               been  issued  as  of  the  date  of such increase or decrease. No
               adjustment  pursuant  to  this Section 2(a) shall be made if such
               adjustment would result in an increase of the Exercise Price then
               in effect or a decrease in the number of Warrant Shares.


                                      - 7 -
<PAGE>
               (iv)     Calculation  of  Consideration  Received.  In  case  any
                        ----------------------------------------
               Option  is  issued  in connection with the issue or sale of other
               securities  of  the  Company,  together comprising one integrated
               transaction  in  which  no specific consideration is allocated to
               such  Options  by the parties thereto, the Options will be deemed
               to  have  been issued for a consideration of $0.01. If any shares
               of  Common Stock, Options or Convertible Securities are issued or
               sold  or  deemed  to  have  been  issued  or  sold  for cash, the
               consideration  received  therefor  will  be  deemed to be the net
               amount  received by the Company therefor. If any shares of Common
               Stock, Options or Convertible Securities are issued or sold for a
               consideration  other  than cash, the amount of such consideration
               received  by  the  Company  will  be  the  fair  value  of  such
               consideration,  except  where  such  consideration  consists  of
               securities, in which case the amount of consideration received by
               the  Company  will  be the Closing Sale Price of such security on
               the  date  of  receipt. If any shares of Common Stock, Options or
               Convertible  Securities  are  issued  to  the  owners  of  the
               non-surviving  entity  in connection with any merger in which the
               Company  is  the  surviving  entity,  the amount of consideration
               therefor  will  be deemed to be the fair value of such portion of
               the  net  assets  and  business of the non-surviving entity as is
               attributable  to  such  shares  of  Common  Stock,  Options  or
               Convertible Securities, as the case may be. The fair value of any
               consideration  other  than  cash or securities will be determined
               jointly  by the Company and the Required Holders. If such parties
               are  unable  to  reach  agreement  within ten (10) days after the
               occurrence  of  an  event  requiring  valuation  (the  "VALUATION
               EVENT"),  the fair value of such consideration will be determined
               within  five  (5) Business Days after the tenth day following the
               Valuation  Event  by  an independent, reputable appraiser jointly
               selected  by  the  Company  and  the  Required  Holders.  The
               determination  of  such appraiser shall be final and binding upon
               all  parties  absent  manifest error and the fees and expenses of
               such appraiser shall be borne by the Company.

               (v)     Record  Date.  If  the  Company  takes  a  record  of the
                       ------------
               holders  of  shares  of Common Stock for the purpose of entitling
               them  (A)  to receive a dividend or other distribution payable in
               shares  of  Common Stock, Options or in Convertible Securities or
               (B)  to subscribe for or purchase shares of Common Stock, Options
               or  Convertible  Securities, then such record date will be deemed
               to be the date of the issue or sale of the shares of Common Stock
               deemed  to  have been issued or sold upon the declaration of such
               dividend  or the making of such other distribution or the date of
               the  granting  of  such right of subscription or purchase, as the
               case may be.

               (b)     Adjustment  upon  Subdivision or Combination of shares of
                       ---------------------------------------------------------
Common  Stock.  If  the  Company  at  any time on or after the Subscription Date
-------------
subdivides  (by  any stock split, stock dividend, recapitalization or otherwise)
one  or  more  classes  of its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect


                                      - 8 -
<PAGE>
immediately  prior  to  such subdivision will be proportionately reduced and the
number  of  Warrant  Shares will be proportionately increased. If the Company at
any  time  on  or  after the Subscription Date combines (by combination, reverse
stock  split  or  otherwise)  one  or  more classes of its outstanding shares of
Common  Stock  into  a  smaller  number  of shares, the Exercise Price in effect
immediately  prior to such combination will be proportionately increased and the
number of Warrant Shares will be proportionately decreased. Any adjustment under
this  Section  2(b)  shall become effective at the close of business on the date
the subdivision or combination becomes effective.

               (c)     Other  Events.  If  any  event  occurs  of  the  type
                       -------------
contemplated  by  the provisions of this Section 2(c) but not expressly provided
for  by  such  provisions  (including, without limitation, the granting of share
appreciation rights, phantom share rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate adjustment in the
Exercise Price so as to protect the rights of the Holders; provided that no such
adjustment  will increase the Exercise Price as otherwise determined pursuant to
this Section 2(c).

          3.     RIGHTS  UPON  DISTRIBUTION  OF  ASSETS.  If  the  Company shall
                 --------------------------------------
declare  or  make any dividend or other distribution of its assets (or rights to
acquire  its  assets)  to holders of shares of Common Stock, by way of return of
capital  or  otherwise (including, without limitation, any distribution of cash,
stock  or  other  securities not addressed by Section 2, property or options not
addressed  by  Section  2  by  way  of  a  dividend, spin off, reclassification,
corporate  rearrangement, scheme of arrangement or other similar transaction) (a
"DISTRIBUTION"),  at  any time after the issuance of this Warrant, then, in each
such case:

               (a)     any  Exercise  Price  in  effect immediately prior to the
close  of  business on the record date fixed for the determination of holders of
shares  of  Common  Stock entitled to receive the Distribution shall be reduced,
effective as of the close of business on such record date, to a price determined
by  multiplying  such  Exercise  Price  by a fraction of which (i) the numerator
shall  be  the  Closing  Bid Price of a share of Common Stock on the trading day
immediately  preceding  such record date minus the value of the Distribution (as
determined  in good faith by the Company's Board of Directors) applicable to one
share  of  Common Stock, and (ii) the denominator shall be the Closing Bid Price
of  the  shares  of  Common  Stock on the trading day immediately preceding such
record date; and

               (b)     the  number  of  Warrant  Shares  shall be increased to a
number  of  shares  equal  to  the  number  of shares of Common Stock obtainable
immediately  prior  to  the  close  of business on the record date fixed for the
determination  of  holders  of  shares  of  Common Stock entitled to receive the
Distribution  multiplied  by  the  reciprocal  of  the fraction set forth in the
immediately  preceding  paragraph  (a);  provided  that  in  the  event that the
Distribution  is  of  shares of Common Stock (or common stock) ("OTHER SHARES OF
COMMON  STOCK")  of  a  company  whose  common  shares  are traded on a national
securities  exchange  or  a national automated quotation system, then the Holder
may  elect to receive a warrant to purchase Other Shares of Common Stock in lieu
of  an  increase  in  the  number of Warrant Shares, the terms of which shall be
identical  to  those  of  this  Warrant,  except  that  such  warrant  shall  be
exercisable into the number of shares of Other Shares of Common Stock that would
have  been  payable  to  the  Holder pursuant to the Distribution had the Holder
exercised  this  Warrant  immediately  prior  to  such  record  date and with an
aggregate exercise price equal to the product of the amount by which the


                                      - 9 -
<PAGE>
exercise  price  of  this Warrant was decreased with respect to the Distribution
pursuant  to the terms of the immediately preceding paragraph (a) and the number
of Warrant Shares calculated in accordance with the first part of this paragraph
(b).

          4.     PURCHASE  RIGHTS;  FUNDAMENTAL  TRANSACTIONS.
                 --------------------------------------------

               (a)     Purchase Rights.  In addition to any adjustments pursuant
                       ---------------
to  Section  2  above,  if  at  any time the Company grants, issues or sells any
Options,  Convertible  Securities  or  rights  to  purchase  stock,  warrants,
securities  or  other  property  pro  rata to the record holders of any class of
shares  of  Common  Stock  (the  "PURCHASE RIGHTS"), then, upon exercise of this
Warrant,  the  Holder  will be entitled to acquire, upon the terms applicable to
such  Purchase Rights, the aggregate Purchase Rights which the Holder could have
acquired  if  the  Holder  had held the proportionate number of shares of Common
Stock  acquirable  upon  exercise  of  this  Warrant  (without  regard  to  any
limitations  on  the  exercise  of  this Warrant) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or,  if  no  such  record  is  taken, the date as of which the record holders of
shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.

               (b)     Fundamental  Transactions.  If the Company enters into or
                       -------------------------
is  party  to a Fundamental Transaction, then the Holder shall have the right to
either (A) purchase and receive upon the basis and upon the terms and conditions
herein  specified  and  in  lieu  of  the Warrant Shares immediately theretofore
issuable  upon  exercise  of  the  Warrant,  such shares of stock, securities or
assets  (including  cash) as would have been issuable or payable with respect to
or  in  exchange  for  a number of Warrant Shares equal to the number of Warrant
Shares  immediately  theretofore issuable upon exercise of the Warrant, had such
Fundamental  Transaction  not  taken place or (B) require the repurchase of this
Warrant  for  a  purchase  price,  payable in cash within five (5) business days
after  such  request,  equal  to  the  Black  Scholes  Value  of  the  remaining
unexercised  portion  of  this Warrant on the date of such request. The terms of
any  agreement  pursuant  to  which  a Fundamental Transaction is effected shall
include  terms  requiring  any  such successor or surviving entity and Holder to
comply  with the provisions of this Section 4(b). The provisions of this Section
                                    ------------
shall  apply  similarly  and  equally to successive Fundamental Transactions and
shall  be  applied  without  regard  to  any limitations on the exercise of this
Warrant.

          5.     NONCIRCUMVENTION.  The Company hereby covenants and agrees that
                 ----------------
the  Company  will not, by amendment of its Articles of Incorporation, Bylaws or
through any reorganization, transfer of assets, consolidation, merger, scheme of
arrangement,  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,  and  will  at  all  times  in  good  faith carry out all the
provisions  of  this  Warrant  and take all action that is required hereunder to
protect  the  rights  of  the  Holder.  Without  limiting  the generality of the
foregoing,  the  Company  (i)  shall not increase the par value of any shares of
Common  Stock  receivable  upon  the exercise of this Warrant above the Exercise
Price  then  in  effect, (ii) shall take all such actions as may be necessary or
appropriate  in  order  that the Company may validly and legally have the Common
Stock  fully  paid  and  nonassessable shares of Common Stock transferred to the
Holder upon the exercise of this Warrant, and (iii) shall, so long as any of the
SPA  Warrants  are  outstanding,  take  all action necessary to reserve and keep
available out of its authorized and unissued shares of


                                     - 10 -
<PAGE>
Common  Stock,  solely  for  the  purpose  of  effecting the exercise of the SPA
Warrants,  120%  (or  such  lesser  amount  limited by the SEC) of the number of
shares  of  Common  Stock  as shall from time to time be necessary to effect the
exercise of the SPA Warrants then outstanding (without regard to any limitations
on exercise).

          6.     WARRANT  HOLDER  NOT DEEMED A STOCKHOLDER.  Except as otherwise
                 -----------------------------------------
specifically  provided herein, the Holder, solely in such Person's capacity as a
holder of this Warrant, shall not be entitled to vote or receive dividends or be
deemed  the  holder  of  share capital of the Company for any purpose, nor shall
anything  contained  in  this  Warrant  be  construed to confer upon the Holder,
solely  in  such  Person's  capacity  as  the Holder of this Warrant, any of the
rights  of  a  shareholder of the Company or any right to vote, give or withhold
consent  to  any  corporate  action (whether any reorganization, issue of stock,
reclassification  of  stock,  consolidation,  merger,  conveyance or otherwise),
receive  notice  of  meetings,  receive  dividends  or  subscription  rights, or
otherwise,  prior to the issuance to the Holder of the Warrant Shares which such
Person  is  then  entitled  to receive upon the due exercise of this Warrant. In
addition,  nothing  contained in this Warrant shall be construed as imposing any
liabilities  on  the  Holder  to  purchase any securities (upon exercise of this
Warrant  or  otherwise) or as a shareholder of the Company. Notwithstanding this
Section  6, the Company shall provide the Holder with copies of the same notices
and  other  information  given  to  the  shareholders  of the Company generally,
contemporaneously with the giving thereof to its shareholders.

          7.     REISSUANCE  OF  WARRANTS.
                 ------------------------

               (a)     Transfer  of  Warrant.  If  this  Warrant  is  to  be
                       ---------------------
transferred,  the  Holder shall surrender this Warrant to the Company, whereupon
the  Company will forthwith issue and deliver upon the order of the Holder a new
Warrant (in accordance with Section 7(d)), registered as the Holder may request,
representing  the  right  to  purchase  the  number  of  Warrant  Shares  being
transferred  by  the Holder and, if less then the total number of Warrant Shares
then  underlying this Warrant is being transferred, a new Warrant (in accordance
with  Section  7(d)) to the Holder representing the right to purchase the number
of Warrant Shares not being transferred.

               (b)     Lost,  Stolen  or Mutilated Warrant.  Upon receipt by the
                       -----------------------------------
Company  of  evidence reasonably satisfactory to the Company of the loss, theft,
destruction  or  mutilation  of this Warrant, and, in the case of loss, theft or
destruction,  of any indemnification undertaking by the Holder to the Company in
customary  form  and, in the case of mutilation, upon surrender and cancellation
of  this  Warrant,  the  Company  shall  execute and deliver to the Holder a new
Warrant (in accordance with Section 7(d)) representing the right to purchase the
Warrant Shares then underlying this Warrant.

               (c)     Exchangeable  for  Multiple  Warrants.  This  Warrant  is
                       -------------------------------------
exchangeable, upon the surrender hereof by the Holder at the principal office of
the  Company,  for  a  new Warrant or Warrants (in accordance with Section 7(d))
representing in the aggregate the right to purchase the number of Warrant Shares
then underlying this Warrant, and each such new Warrant will represent the right
to  purchase  such portion of such Warrant Shares as is designated by the Holder
at  the  time  of  such  surrender;  provided,  however,  that  no  Warrants for
fractional shares of Common Stock shall be given.


                                     - 11 -
<PAGE>
               (d)     Issuance  of  New  Warrants.  Whenever  the  Company  is
                       ---------------------------
required  to issue a new Warrant pursuant to the terms of this Warrant, such new
Warrant  (i)  shall be of like tenor with this Warrant, (ii) shall represent, as
indicated  on  the  face  of such new Warrant, the right to purchase the Warrant
Shares  then  underlying  this  Warrant  (or  in the case of a new Warrant being
issued  pursuant  to Section 7(a) or Section 7(c), the Warrant Shares designated
by  the  Holder  which,  when  added  to  the  number  of shares of Common Stock
underlying  the other new Warrants issued in connection with such issuance, does
not  exceed  the  number  of Warrant Shares then underlying this Warrant), (iii)
shall  have an issuance date, as indicated on the face of such new Warrant which
is  the  same  as  the  Issuance  Date,  and (iv) shall have the same rights and
conditions as this Warrant.

          8.     NOTICES.  Whenever  notice  is  required to be given under this
                 -------
Warrant,  unless  otherwise  provided  herein,  such  notice  shall  be given in
accordance  with  Section 9(f) of the Securities Purchase Agreement. The Company
shall  provide  the  Holder  with  prompt  written  notice  of all actions taken
pursuant  to  this Warrant, including in reasonable detail a description of such
action  and  the  reason  therefore.  Without  limiting  the  generality  of the
foregoing, the Company will give written notice to the Holder (i) promptly after
any  adjustment  of  the Exercise Price, setting forth in reasonable detail, and
certifying,  the calculation of such adjustment and (ii) at least ten days prior
to  the  date  on  which the Company closes its books or takes a record (A) with
respect  to  any  dividend  or distribution upon the shares of Common Stock, (B)
with  respect  to  any  grants,  issuances  or sales of any Options, Convertible
Securities  or  rights to purchase stock, warrants, securities or other property
to  holders of shares of Common Stock or (C) for determining rights to vote with
respect  to any Fundamental Transaction, dissolution or liquidation, provided in
each case that such information shall be made known to the public prior to or in
conjunction with such notice being provided to the Holder.

          9.     AMENDMENT AND WAIVER.  Except as otherwise provided herein, the
                 --------------------
provisions  of  this  Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it,  only  if  the  Company  has  obtained  the  written consent of the Required
Holders; provided that no such action may increase the exercise price of any SPA
Warrant  or  decrease  the  number  of  shares or class of stock obtainable upon
exercise  of  any SPA Warrant without the written consent of the Holder. No such
amendment  shall  be effective to the extent that it applies to less than all of
the holders of the SPA Warrants then outstanding.

          10.     SEVERABILITY.  If  any  provision  of  this  Warrant  or  the
                  ------------
application  thereof becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of the terms of this Warrant
will continue in full force and effect.

          11.     GOVERNING  LAW.  This  Warrant  shall  be  governed  by  and
                  --------------
construed  and  enforced  in  accor-dance with, and all questions concerning the
construction,  validity, interpretation and performance of this Warrant shall be
governed  by,  the internal laws of the State of New York, without giving effect
to  any choice of law or conflict of law provision or rule (whether of the State
of  New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York.


                                     - 12 -
<PAGE>
          12.     CONSTRUCTION;  HEADINGS.  This  Warrant  shall be deemed to be
                  -----------------------
jointly  drafted  by  the  Company and all the Buyers and shall not be construed
against  any  person as the drafter hereof. The headings of this Warrant are for
convenience  of  reference  and  shall  not  form  part  of,  or  affect  the
interpretation of, this Warrant.

          13.     DISPUTE  RESOLUTION.  In  the  case  of  a  dispute  as to the
                  -------------------
determination of the Exercise Price or the arithmetic calculation of the Warrant
Shares,  the  Company  shall  submit  the  disputed determinations or arithmetic
calculations  via  facsimile within two Business Days of receipt of the Exercise
Notice  giving  rise  to such dispute, as the case may be, to the Holder. If the
Holder  and  the  Company  are  unable  to  agree  upon  such  determination  or
calculation  of  the  Exercise Price or the Warrant Shares within three Business
Days of such disputed determination or arithmetic calculation being submitted to
the  Holder,  then  the  Company  shall,  within  two  Business  Days submit via
facsimile  (a)  the  disputed  determination  of  the  Exercise  Price  to  an
independent,  reputable  investment bank selected by the Company and approved by
the  Holder  or (b) the disputed arithmetic calculation of the Warrant Shares to
the  Company's  independent, outside accountant. The Company shall cause, at the
expense  of the losing party, the investment bank or the accountant, as the case
may be, to perform the determinations or calculations and notify the Company and
the  Holder  of  the  results  no  later than ten Business Days from the time it
receives  the disputed determinations or calculations. Such investment bank's or
accountant's  determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error.

          14.     REMEDIES,  OTHER  OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
                  -------------------------------------------------------------
The remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant and the other Transaction Documents,
at  law  or  in  equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder right
to pursue actual damages for any failure by the Company to comply with the terms
of this Warrant. The Company acknowledges that a breach by it of its obligations
hereunder  will  cause irreparable harm to the Holder and that the remedy at law
for any such breach may be inadequate. The Company therefore agrees that, in the
event  of any such breach or threatened breach, the holder of this Warrant shall
be  entitled,  in  addition  to  all  other available remedies, to an injunction
restraining  any  breach,  without  the  necessity  of showing economic loss and
without any bond or other security being required.

          15.     TRANSFER.     This  Warrant  may  be  offered  for sale, sold,
                  --------
transferred  or  assigned  without  the  consent  of  the Company, except as may
otherwise be required by Section 2(f) of the Securities Purchase Agreement.

          16.     CERTAIN  DEFINITIONS.  For  purposes  of  this  Warrant,  the
                  --------------------
following terms shall have the following meanings:

               (a)     "BLACK  SCHOLES  VALUE"  means  the value of this Warrant
based  on  the  Black  and  Scholes  Option Pricing Model obtained from the "OV"
function  on Bloomberg determined as of the day immediately following the public
announcement  of  the  applicable  Fundamental  Transaction and reflecting (i) 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 such date of request


                                     - 13 -
<PAGE>
and  (ii)  an  expected  volatility  equal to the greater of 60% and the 100 day
volatility obtained from the HVT function on Bloomberg.

               (b)     "BLOOMBERG"  means  Bloomberg  Financial  Markets.

               (c)     "BUSINESS  DAY" means any day other than Saturday, Sunday
or other day on which commercial banks in The City of New York are authorized or
required by law to remain closed.

               (d)     "CLOSING  BID  PRICE" and "CLOSING SALE PRICE" means, for
any  security  as of any date, the last closing bid price and last closing trade
price,  respectively,  for such security on the Principal Market, as reported by
Bloomberg,  or,  if  the Principal Market begins to operate on an extended hours
basis  and  does not designate the closing bid price or the closing trade price,
as  the  case may be, then the last bid price or last trade price, respectively,
of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg,
or,  if the Principal Market is not the principal securities exchange or trading
market  for  such  security,  the  last  closing  bid price or last trade price,
respectively,  of  such security on the principal securities exchange or trading
market  where  such security is listed or traded as reported by Bloomberg, or if
the  foregoing  do  not  apply,  the last closing bid price or last trade price,
respectively,  of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price  or  last  trade  price,  respectively,  is  reported for such security by
Bloomberg,  the  average  of the bid prices, or the ask prices, respectively, of
any  market  makers  for  such security as reported in the "pink sheets" by Pink
Sheets  LLC  (formerly  the National Quotation Bureau, Inc.). If the Closing Bid
Price  or  the  Closing  Sale  Price  cannot  be  calculated for a security on a
particular  date  on  any  of  the foregoing bases, the Closing Bid Price or the
Closing  Sale  Price, as the case may be, of such security on such date shall be
the  fair  market value as mutually determined by the Company and the Holder. If
the  Company  and  the  Holder are unable to agree upon the fair market value of
such  security,  then such dispute shall be resolved pursuant to Section 12. All
such  determinations  to be appropriately adjusted for any stock dividend, stock
split,  stock  combination  or  other  similar transaction during the applicable
calculation period.

               (e)     "COMMON  STOCK"  means (i) the Company's shares of Common
Stock,  $0.10  par  value  per share, and (ii) any share capital into which such
Common  Stock  shall  have  been  changed  or any share capital resulting from a
reclassification of such Common Stock.

               (f)     "COMMON  STOCK  DEEMED  OUTSTANDING"  means, at any given
time,  the  number  of shares of Common Stock actually outstanding at such time,
plus  the  number of shares of Common Stock deemed to be outstanding pursuant to
Sections  2(a)(i)  and  2(a)(ii)  hereof  regardless  of  whether the Options or
Convertible  Securities are actually exercisable at such time, but excluding any
shares  of  Common  Stock  owned or held by or for the account of the Company or
issuable  upon conversion and exercise, as applicable, of the SPA Securities and
the Warrants.

               (g)     "CONVERTIBLE  SECURITIES"  means  any stock or securities
(other  than  Options) directly or indirectly convertible into or exercisable or
exchangeable at the option of the holder thereof for shares of Common Stock.


                                     - 14 -
<PAGE>
               (h)     "ELIGIBLE  MARKET"  means  the  Principal  Market,  the
American  Stock  Exchange, The New York Stock Exchange, Inc., the Nasdaq Capital
Market or the Nasdaq National Market.

               (i)     "EXPIRATION  DATE"  means the date sixty months after the
Issuance  Date  or,  if such date falls on a day other than a Business Day or on
which  trading  does  not  take place on the Principal Market (a "HOLIDAY"), the
next date that is not a Holiday.

               (j)     "FUNDAMENTAL  TRANSACTION"  means that the Company shall,
directly  or indirectly, in one or more related transactions, (i) consolidate or
merge  with  or  into  (whether or not the Company is the surviving corporation)
another  Person,  or (ii) sell, assign, transfer, convey or otherwise dispose of
all  or  substantially all of the properties or assets of the Company to another
Person,  or  (iii)  allow  another Person to make a purchase, tender or exchange
offer that is accepted by such number of holders of outstanding shares of Common
Stock  resulting  in  such  Person (together with any affiliates of such Person)
holding  more  than  the  50%  of  the  outstanding  Common Stock of the Company
following  such  purchase,  tender or exchange offer, or (iv) consummate a stock
purchase agreement or other business combination (including, without limitation,
a  reorganization,  recapitalization,  spin-off  or  scheme of arrangement) with
another  Person  resulting in such other Person (together with any affiliates of
such  person)  holding  more than the 50% of the outstanding Common Stock of the
Company  following  such stock purchase agreement or other business combination,
or (v) reorganize, recapitalize or reclassify its Common Stock.

               (k)     "OPTIONS"  means  any  rights,  warrants  or  options  to
subscribe for or purchase shares of Common Stock or Convertible Securities.

               (l)     "PERSON"  means  an  individual,  a  limited  liability
company,  a  partnership,  a  joint  venture,  a  corporation,  a  trust,  an
unincorporated organization, any other entity and a government or any department
or agency thereof.

               (m)     "PRINCIPAL  MARKET"  means  the  NASD OTC Bulletin Board.

               (n)     "REGISTRATION  RIGHTS  AGREEMENT"  means  that  certain
registration rights agreement by and among the Company and the Buyers.

               (o)     "REQUIRED  HOLDERS" means the holders of the SPA Warrants
representing  at  least  a majority of shares of Common Stock underlying the SPA
Warrants then outstanding.

               (p)     "SPA  SECURITIES"  means  the  Preferred  Stock  issued
pursuant to the Securities Purchase Agreement.

                            [SIGNATURE PAGE FOLLOWS]


                                     - 15 -
<PAGE>
     IN  WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common
Stock to be duly executed as of the Issuance Date set out above.


                              CHARYS HOLDING COMPANY, INC.


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


<PAGE>
                                                                       EXHIBIT A

                                 EXERCISE NOTICE
            TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
                        WARRANT TO PURCHASE COMMON STOCK

                          CHARYS HOLDING COMPANY, INC.

     The  undersigned  holder  hereby  exercises  the  right  to  purchase
                   of  the  shares  of Common Stock ("WARRANT SHARES") of Charys
-----------------
Holding  Company, Inc., a Delaware corporation (the "COMPANY"), evidenced by the
attached  Warrant  to  Purchase  Common Stock (the "WARRANT"). Capitalized terms
used  herein  and  not  otherwise defined shall have the respective meanings set
forth in the Warrant.

     1.  Form  of  Exercise  Price.  The  Holder  intends  that  payment  of the
Exercise Price shall be made as:

                           a  "Cash  Exercise" with respect to
          ------------         ---------------                 -----------------
Warrant  Shares;  and/or

                           a "Cashless Exercise" with respect to
          ------------       -------------------                 ---------------
Warrant  Shares.

     2.  Notwithstanding  anything  to  the  contrary  contained  herein,  this
Exercise  Notice  shall constitute a representation by the Holder of the Warrant
submitting  this  Exercise  Notice  that,  after  giving  effect to the exercise
provided for in this Exercise Notice, such Holder (together with its affiliates)
will  not  have  beneficial ownership (together with the beneficial ownership of
such  Person's  affiliates)  of a number of shares of Common Stock which exceeds
the  maximum  percentage  of  the  total  outstanding  shares of Common Stock as
determined pursuant to the provisions of Section 1(f)(i) of the Warrant.

     3.  Payment  of Exercise Price.  In the event that the holder has elected a
Cash  Exercise  with  respect  to  some  or  all  of  the  Warrant  Shares to be
transferred  pursuant  hereto, the holder shall pay the Aggregate Exercise Price
in  the  sum of $                    to the Company in accordance with the terms
                 -------------------
of the Warrant.

     4.  Delivery  of  Warrant  Shares.  The Company shall deliver to the holder
           Warrant Shares in accordance with the terms of the Warrant.
----------

Date:                   ,
      --------------- --  ------

----------------------------------
     Name of Registered Holder


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


<PAGE>
                                 ACKNOWLEDGMENT


     Gottbetter  &  Partners,  LLP  hereby acknowledges this Exercise Notice and
will transfer                      shares of Common Stock.
              --------------------


                              GOTTBETTER & PARTNERS. LLP


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


<PAGE>
NEITHER  THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR  THE  SECURITIES  INTO  WHICH  THESE  SECURITIES  ARE EXERCISEABLE HAVE BEEN
REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES  LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR  ASSIGNED  (I)  IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE  SECURITIES  UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF  COUNSEL,  IN  A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER  SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING  THE  FOREGOING, THE SECURITIES MAY BE PLEDGED PURSUANT TO
AN  AVAILABLE EXEMPTION UNDER THE 1933 ACT IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT  OR  OTHER  LOAN  OR  FINANCING  ARRANGEMENT  SECURED BY THE SECURITIES.

                          CHARYS HOLDING COMPANY, INC.

                        WARRANT TO PURCHASE COMMON STOCK

Warrant No.: 004
Number of Shares of Common Stock: 333,333
Date of Issuance: May 19, 2006 ("ISSUANCE DATE")

          Charys  Holding Company, Inc., a Delaware corporation (the "COMPANY"),
hereby  certifies  that,  for  good  and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, PIERCE DIVERSIFIED STRATEGY MASTER
FUND  LLC, the registered holder hereof or its permitted assigns (the "HOLDER"),
is entitled, subject to the terms set forth below, to purchase from the Company,
at  the Exercise Price (as defined below) then in effect, upon surrender of this
Warrant  to  Purchase  Common  Stock  (including any Warrants to Purchase Common
Stock issued in exchange, transfer or replacement hereof, the "WARRANT"), at any
time  or  times  on  or after the date hereof but not after 11:59 p.m., New York
Time,  on  the  Expiration  Date  (as defined below), Three Hundred Thirty-Three
Thousand Three Hundred Thirty-Three (333,333) fully paid nonassessable shares of
Common  Stock  (as  defined  below) (the "WARRANT SHARES").  Except as otherwise
defined  herein,  capitalized  terms in this Warrant shall have the meanings set
forth  in  Section  16.  This  Warrant is one of the Warrants to purchase Common
Stock  (the  "SPA  WARRANTS")  issued  pursuant  to  Section  1  of that certain
Securities  Purchase  Agreement,  dated  as  of  May 19, 2006 (the "SUBSCRIPTION
DATE"),  by  and  among the Company and the investors (the "BUYERS") referred to
therein  (the  "SECURITIES  PURCHASE  AGREEMENT").

          1.     EXERCISE  OF  WARRANT.
                 ---------------------

               (a)     Mechanics  of  Exercise.  Subject  to  the  terms  and
                       -----------------------
conditions  hereof  (including, without limitation, the limitations set forth in
Section  1(f)),  this  Warrant  may  be exercised by the Holder on any day on or
after  the  date  hereof,  in  whole  or  in  part,  by  (i)  delivery


<PAGE>
of  a  written  notice,  in the form attached hereto as Exhibit A (the "EXERCISE
                                                        ---------
NOTICE"), of the Holder's election to exercise this Warrant and (ii) (A) payment
to  Gottbetter  &  Partners,  LLP (the "ESCROW AGENT") of an amount equal to the
applicable Exercise Price multiplied by the number of Warrant Shares as to which
this Warrant is being exercised (the "AGGREGATE EXERCISE PRICE") in cash or wire
transfer  of  immediately  available  funds or (B) by notifying the Escrow Agent
that this Warrant is being exercised pursuant to a Cashless Exercise (as defined
in  Section  1(d)).  The  Holder  shall  not be required to deliver the original
Warrant in order to effect an exercise hereunder.  Execution and delivery of the
Exercise  Notice  with respect to less than all of the Warrant Shares shall have
the  same  effect  as cancellation of the original Warrant and issuance of a new
Warrant evidencing the right to purchase the remaining number of Warrant Shares.
On  or  before  the  second  Business Day following the date on which the Escrow
Agent  has received each of the Exercise Notice and the Aggregate Exercise Price
(or  notice  of  a  Cashless  Exercise) (the "EXERCISE DELIVERY DOCUMENTS"), the
Escrow  Agent  shall  transmit by facsimile an acknowledgment of confirmation of
receipt  of the Exercise Delivery Documents to the Holder and the Company. On or
before  the  third  Business  Day  following  the  date on which the Company has
received all of the Exercise Delivery Documents (the "SHARE DELIVERY DATE"), the
Escrow  Agent  shall  (X)  provided  that  the  Company's  transfer  agent  is
participating  in The Depository Trust Company ("DTC") Fast Automated Securities
Transfer  Program,  upon the request of the Holder, credit such aggregate number
of  shares  of  Common  Stock  to  which the Holder is entitled pursuant to such
exercise  to the Holder's or its designee's balance account with DTC through its
Deposit  Withdrawal  Agent  Commission  system, or (Y) if the Company's transfer
agent  is  not  participating  in  the  DTC  Fast  Automated Securities Transfer
Program,  transfer and dispatch by overnight courier to the address as specified
in  the  Exercise  Notice,  certificates for the approximate number of shares of
Common  Stock  to  which  the Holder is entitled pursuant to such exercise. Upon
delivery  of  the  Exercise  Notice  and Aggregate Exercise Price referred to in
clause  (ii)(A) above or notification to the Escrow Agent of a Cashless Exercise
referred  to  in  Section  1(d),  the  Holder  shall be deemed for all corporate
purposes  to have become the holder of record of the Warrant Shares with respect
to  which  this Warrant has been exercised, irrespective of the date of delivery
of the certificates evidencing such Warrant Shares. If this Warrant is submitted
in  connection with any exercise pursuant to this Section 1(a) and the number of
Warrant  Shares  represented  by  this Warrant submitted for exercise is greater
than  the  number  of  Warrant  Shares being acquired upon an exercise, then the
Company  shall  as  soon as practicable and in no event later than five Business
Days  after  any  exercise  and  at  its  own  expense,  issue a new Warrant (in
accordance  with  Section 7(d)) representing the right to purchase the number of
Warrant  Shares  purchasable  immediately  prior  to  such  exercise  under this
Warrant, less the number of Warrant Shares with respect to which this Warrant is
exercised.  No  fractional shares of Common Stock are to be transferred upon the
exercise  of this Warrant, but rather the number of shares of Common Stock to be
transferred  shall  be rounded up to the nearest whole number. The Company shall
pay  any  and  all  taxes  which may be payable with respect to the issuance and
delivery  of Warrant Shares upon exercise of this Warrant. In the event that the
Escrow  Agent  does  not  have  a sufficient number of shares of Common Stock to
transfer  to  the  Holder  upon the exercise of this Warrant (including, but not
limited  to,  by  reason  of  additional  Warrant  Shares  required to be issued
pursuant  to  Section  2 herein, and such Warrant Shares had not previously been
delivered  to the Escrow Agent), then the Company shall within 1 Business Day of
the  date  of  delivery  of an Exercise Notice deliver such additional number of
Warrant  Shares  to  the  Escrow  Agent.


                                      - 2 -
<PAGE>
               (b)     Exercise  Price.  For purposes of this Warrant, "EXERCISE
                       ---------------
PRICE"  means  $6.24,  subject  to  adjustment  as  provided  herein.

               (c)     Company's  Failure  to  Timely  Deliver  Securities.  In
                       ---------------------------------------------------
addition  to the foregoing, if within three (3) Trading Days after the Company's
receipt  of the facsimile copy of an exercise notice the Company shall cause the
Escrow  Agent  to  fail to transfer the Escrow Shares to the Buyer, and if on or
after  such  third  Trading  Day  the  Buyer is required to purchase (in an open
market  transaction  or otherwise) shares of Common Stock in order to deliver in
satisfaction  of a sale initiated by the Buyer in anticipation of receiving from
the Company the shares of Common Stock issuable upon such exercise (a "BUY-IN"),
then the Company shall, within three (3) Business Days after the Buyer's request
and  in  the  Buyer's  discretion, either (i) pay cash to the Buyer in an amount
equal  to  the Buyer's total purchase price (including brokerage commissions, if
any)  for the shares of Common Stock so purchased (the "BUY-IN PRICE"), at which
point the Company's obligation to deliver such Escrow Shares resulting from such
exercise  shall  terminate,  or (ii) promptly honor its obligation to deliver to
the  Buyer a certificate or certificates representing such Escrow Shares and pay
cash to the holder in an amount equal to the excess (if any) of the Buy-In Price
over  the  product  of  (A) such number of shares of Common Stock, times (B) the
Closing  Sale  Price  on  the  date of exercise.  Nothing herein shall limit the
holder's  right to pursue actual damages for the Company's failure to maintain a
sufficient  number  of  authorized  shares of Common Stock or to otherwise issue
shares  of  Common  Stock  upon  exercise of this Warrant in accordance with the
terms  hereof,  and  the  holder  shall  have  the  right to pursue all remedies
available at law or in equity (including a decree of specific performance and/or
injunctive  relief).  Notwithstanding  the  foregoing, the Company shall have no
obligations  to  cause  its  Escrow Agent to deliver Escrow Shares or to pay any
Buy-In Price under this Section 1(c) if the Company has timely delivered in good
faith  a  bonafide  objection  to  such  conversion  or  exercise  notice.

               (d)     Cashless  Exercise.  Notwithstanding  anything  contained
                       ------------------
herein  to  the  contrary,  if  a  Registration  Statement  (as  defined  in the
Registration  Rights Agreement) covering the Warrant Shares that are the subject
of  the  Exercise Notice (the "UNAVAILABLE WARRANT SHARES") is not available for
the  resale  of  such  Unavailable  Warrant  Shares, the Holder may, in its sole
discretion, exercise this Warrant in whole or in part and, in lieu of making the
cash payment otherwise contemplated to be made to the Company upon such exercise
in  payment  of the Aggregate Exercise Price, elect instead to receive upon such
exercise  the "Net Number" of shares of Common Stock determined according to the
following  formula  (a  "CASHLESS  EXERCISE"):


                                      - 3 -
<PAGE>
               Net Number = (A x B) - (A x C)
                            -----------------

                                    B

               For  purposes  of  the  foregoing  formula:

          A=  the  total  number  of  Warrant  Shares with respect to which this
          Warrant  is  then  being  exercised.

          B= the average of the Closing Sale Price of the shares of Common Stock
          (as  reported  by  Bloomberg)  on  the  five  Trading Days immediately
          preceding  the  date  of  the  Exercise  Notice.

          C= the Exercise Price then in effect for the applicable Warrant Shares
               at the time of such exercise.

               (e)     Disputes.  In  the  case  of  a  dispute  as  to  the
                       --------
determination of the Exercise Price or the arithmetic calculation of the Warrant
Shares,  the  Escrow  Agent  shall promptly transfer to the Holder the number of
Warrant Shares that are not disputed and resolve such dispute in accordance with
Section  12.

               (f)     (i)     Limitations  on  Exercises; Beneficial Ownership.
                               ------------------------------------------------
The  Escrow  Agent shall not effect the exercise of this Warrant, and the Holder
shall  not  have  the  right  to exercise this Warrant, to the extent that after
giving  effect  to  such  exercise,  such  Person  (together  with such Person's
affiliates)  would  beneficially  own  (directly  or  indirectly through Warrant
Shares  or  otherwise)  in  excess  of  4.99%  of  the  shares  of  Common Stock
outstanding  immediately  after giving effect to such exercise.  For purposes of
the  foregoing  sentence,  the  aggregate  number  of  shares  of  Common  Stock
beneficially  owned (directly or indirectly through Warrant Shares or otherwise)
by  such  Person and its affiliates shall include the number of shares of Common
Stock  issuable  upon  exercise  of  this  Warrant  with  respect  to  which the
determination of such sentence is being made, but shall exclude shares of Common
Stock  which  would  be issuable upon (i) exercise of the remaining, unexercised
portion of this Warrant beneficially owned by such Person and its affiliates and
(ii)  exercise  or  conversion  of the unexercised or unconverted portion of any
other  securities  of  the  Company  beneficially  owned  by such Person and its
affiliates  (including, without limitation, any convertible notes or convertible
preferred  stock  or warrants) subject to a limitation on conversion or exercise
analogous  to  the  limitation  contained  herein.  Except  as  set forth in the
preceding  sentence, for purposes of this subsection, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934,  as  amended.  For  purposes of this Warrant, in determining the number of
outstanding  shares  of  Common  Stock,  the  Holder  may  rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company's most recent
Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the
Securities and Exchange Commission, as the case may be, (2) a more recent public
announcement  by  the  Company  or  (3)  any  other notice by the Company or the
Company's  transfer  agent  setting  forth  the number of shares of Common Stock
outstanding.  In  any  case,  the  number  of outstanding shares of Common Stock
shall  be  determined  after  giving  effect  to  the  conversion or exercise of
securities of the Company, including the SPA Securities and the SPA Warrants, by
the  Holder  and  its  affiliates  since  the


                                      - 4 -
<PAGE>
date as of which such number of outstanding shares of Common Stock was reported.
By  written  notice  to  the  Company,  the  Holder may increase or decrease the
Maximum  Percentage  to any other percentage not in excess of 9.99% specified in
such notice; provided that (i) any such increase will not be effective until the
sixty-first  (61st)  day after such notice is delivered to the Company, and (ii)
any such increase or decrease will apply only to the Holder and not to any other
holder  of  SPA  Warrants.

                    (ii)     Principal Market Regulation.  The Company shall not
                             ---------------------------
be  obligated  to issue any shares of Common Stock upon exercise of this Warrant
if the issuance of such shares of Common Stock would exceed the aggregate number
of  shares  of  Common  Stock  which  the  Company  may issue upon conversion or
exercise or otherwise, as applicable, of the SPA Securities and Warrants without
breaching  the  Company's  obligations  under  the  rules  or regulations of the
Principal  Market  (the  "EXCHANGE  CAP"), except that such limitation shall not
apply in the event that the Company (A) obtains the approval of its stockholders
as  required  by  the  applicable rules of the Principal Market for issuances of
Common  Stock  in  excess  of  such amount or (B) obtains a written opinion from
outside counsel to the Company that such approval is not required, which opinion
shall  be  reasonably satisfactory to the Required Holders.  Until such approval
or  written  opinion  is  obtained, no purchaser of the Warrants pursuant to the
Securities  Purchase  Agreement  (the  "PURCHASERS")  shall  be  issued  in  the
aggregate,  upon  conversion  or  exercise  or  otherwise, as applicable, of SPA
Securities  or  Warrants,  shares  of Common Stock in an amount greater than the
product  of the Exchange Cap multiplied by a fraction, the numerator of which is
the  number  of  Warrants  issued  to  the Purchasers pursuant to the Securities
Purchase  Agreement  on  the  Closing  Date  and the denominator of which is the
aggregate number of Warrants issued to the Purchasers pursuant to the Securities
Purchase  Agreement  on  the  Closing  Date (with respect to each Purchaser, the
"EXCHANGE  CAP  ALLOCATION").  In  the  event  that  any Purchaser shall sell or
otherwise  transfer  any  of  such  Purchaser's  Warrants,  the transferee, if a
registered  Holder  of  such  Warrants, shall be allocated a pro rata portion of
such  Purchaser's  Exchange  Cap  Allocation,  and the restrictions of the prior
sentence  shall  apply  to  such  transferee  with respect to the portion of the
Exchange  Cap  Allocation  allocated  to such transferee.  In the event that any
holder of Warrants shall exercise all of such holder's Warrants into a number of
shares  of  Common  Stock  which,  in  the aggregate, is less than such holder's
Exchange  Cap Allocation, then the difference between such holder's Exchange Cap
Allocation  and  the  number  of  shares of Common Stock actually issued to such
holder  shall  be  allocated  to  the respective Exchange Cap Allocations of the
remaining  registered  holders  of Warrants on a pro rata basis in proportion to
the  aggregate number of shares of Common Stock underlying the then held by each
such  holder.  To the extent required by the Principal Market, the provisions of
the  Exchange  Cap  shall  be  modified  to comply with the applicable rules and
regulations  of  the Principal Market, provided that any such changes shall not,
in  the  Holder's  reasonable  discretion,  materially  change  the terms of the
transaction  contemplated  hereby.

          Notwithstanding  anything in this Warrant to the contrary, the Company
shall be entitled to treat the registered holder of this Warrant as such appears
in  its  records,  as  the owner of this Warrant for all purposes; provided that
such  records  are  kept  current  using a reasonably satisfactory and customary
method  intended  for  such  purpose.


                                      - 5 -
<PAGE>
          2.     ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  The
                 ---------------------------------------------------------
Exercise  Price  and the number of Warrant Shares shall be adjusted from time to
time  as  follows:

               (a)     Adjustment  upon  Issuance of shares of Common Stock.  If
                       ----------------------------------------------------
and  whenever  on or after the Subscription Date the Company issues or sells, or
in  accordance  with this Section 2 is deemed to have issued or sold, any shares
of  Common Stock (including the issuance or sale of shares of Common Stock owned
or  held  by  or  for the account of the Company, but excluding shares of Common
Stock  deemed to have been issued by the Company in connection with any Excluded
Securities (as defined in the SPA Securities) for a consideration per share (the
"NEW  ISSUANCE  PRICE")  less than a price (the "APPLICABLE PRICE") equal to the
Exercise  Price  in  effect  immediately  prior  to such issue or sale or deemed
issuance  or  sale (the foregoing a "DILUTIVE ISSUANCE"), then immediately after
such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an
amount  equal  to  the  product  of (A) the Exercise Price in effect immediately
prior  to such Dilutive Issuance and (B) the quotient determined by dividing (1)
the  sum  of (I) the product derived by multiplying the Exercise Price in effect
immediately  prior  to  such  Dilutive  Issuance  and the number of Common Stock
Deemed  Outstanding  immediately  prior  to such Dilutive Issuance plus (II) the
consideration,  if  any, received by the Company upon such Dilutive Issuance, by
(2)  the  product  derived  by  multiplying  (I)  the  Exercise  Price in effect
immediately  prior  to such Dilutive Issuance by (II) the number of Common Stock
Deemed  Outstanding  immediately  after  such Dilutive Issuance.  Upon each such
adjustment  of  the Exercise Price hereunder, the number of Warrant Shares shall
be  adjusted  to  the number of shares of Common Stock determined by multiplying
the  Exercise Price in effect immediately prior to such adjustment by the number
of  Warrant Shares acquirable upon exercise of this Warrant immediately prior to
such adjustment and dividing the product thereof by the Exercise Price resulting
from  such  adjustment.  For purposes of determining the adjusted Exercise Price
under  this  Section  2(a),  the  following  shall  be  applicable:

               (i)     Issuance  of  Options.  If the Company grants any Options
                       ---------------------
               and  the  lowest  price  per  share for which one share of Common
               Stock  is  issuable  upon the exercise of any such Option or upon
               conversion,  exercise  or  exchange of any Convertible Securities
               issuable  upon  exercise  of  any  such  Option  is less than the
               Applicable Price, then such share of Common Stock shall be deemed
               to be outstanding and to have been issued and sold by the Company
               at the time of the granting or sale of such Option for such price
               per  share.  For  purposes  of  this Section 2(a)(i), the "lowest
               price  per  share for which one share of Common Stock is issuable
               upon  exercise  of  such  Options or upon conversion, exercise or
               exchange  of  such  Convertible Securities" shall be equal to the
               sum  of  the lowest amounts of consideration (if any) received or
               receivable by the Company with respect to any one share of Common
               Stock  upon  the granting or sale of the Option, upon exercise of
               the  Option  and  upon  conversion,  exercise  or exchange of any
               Convertible  Security  issuable  upon exercise of such Option. No
               further  adjustment  of  the  Exercise Price or number of Warrant
               Shares  shall  be made upon the actual issuance of such shares of
               Common  Stock or of such Convertible Securities upon the exercise
               of  such  Options


                                      - 6 -
<PAGE>
               or  upon  the actual issuance of such shares of Common Stock upon
               conversion,  exercise or exchange of such Convertible Securities.

               (ii)     Issuance  of  Convertible Securities.  If the Company in
                        ------------------------------------
               any  manner  issues  or  sells any Convertible Securities and the
               lowest  price  per  share  for which one share of Common Stock is
               issuable  upon  the  conversion,  exercise or exchange thereof is
               less  than  the Applicable Price, then such share of Common Stock
               shall  be  deemed  to  be outstanding and to have been issued and
               sold  by  the Company at the time of the issuance or sale of such
               Convertible Securities for such price per share. For the purposes
               of  this  Section 2(a)(ii), the "lowest price per share for which
               one  share  of  Common  Stock  is  issuable  upon the conversion,
               exercise  or  exchange"  shall  be equal to the sum of the lowest
               amounts  of  consideration (if any) received or receivable by the
               Company  with  respect  to  one  share  of  Common Stock upon the
               issuance or sale of the Convertible Security and upon conversion,
               exercise  or  exchange  of  such Convertible Security. No further
               adjustment  of  the  Exercise  Price  or number of Warrant Shares
               shall  be  made upon the actual issuance of such shares of Common
               Stock  upon  conversion, exercise or exchange of such Convertible
               Securities,  and  if  any  such issue or sale of such Convertible
               Securities  is  made  upon  exercise  of  any  Options  for which
               adjustment  of this Warrant has been or is to be made pursuant to
               other  provisions  of this Section 2(a), no further adjustment of
               the  Exercise  Price or number of Warrant Shares shall be made by
               reason  of  such  issue  or  sale.

               (iii)     Change  in  Option Price or Rate of Conversion.  If the
                         -----------------------------------------------
               purchase  price  provided  for  in  any  Options,  the additional
               consideration,  if  any,  payable  upon  the  issue,  conversion,
               exercise  or  exchange of any Convertible Securities, or the rate
               at  which  any  Convertible  Securities  are  convertible into or
               exercisable  or exchangeable for shares of Common Stock increases
               or  decreases  at  any time, the Exercise Price and the number of
               Warrant Shares in effect at the time of such increase or decrease
               shall be adjusted to the Exercise Price and the number of Warrant
               Shares  which  would  have  been  in effect at such time had such
               Options  or Convertible Securities provided for such increased or
               decreased  purchase  price, additional consideration or increased
               or  decreased  conversion  rate,  as the case may be, at the time
               initially  granted,  issued or sold. For purposes of this Section
               2(a)(iii),  if  the  terms  of any Option or Convertible Security
               that  was  outstanding as of the date of issuance of this Warrant
               are  increased  or  decreased  in  the  manner  described  in the
               immediately  preceding  sentence, then such Option or Convertible
               Security  and  the  shares  of  Common Stock deemed issuable upon
               exercise,  conversion or exchange thereof shall be deemed to have
               been  issued  as  of  the  date  of such increase or decrease. No
               adjustment  pursuant  to  this Section 2(a) shall be made if such
               adjustment would result in an increase of the Exercise Price then
               in  effect  or  a  decrease  in  the  number  of  Warrant Shares.


                                      - 7 -
<PAGE>
               (iv)     Calculation  of  Consideration  Received.  In  case  any
                        ----------------------------------------
               Option  is  issued  in connection with the issue or sale of other
               securities  of  the  Company,  together comprising one integrated
               transaction  in  which  no specific consideration is allocated to
               such  Options  by the parties thereto, the Options will be deemed
               to  have  been issued for a consideration of $0.01. If any shares
               of  Common Stock, Options or Convertible Securities are issued or
               sold  or  deemed  to  have  been  issued  or  sold  for cash, the
               consideration  received  therefor  will  be  deemed to be the net
               amount  received by the Company therefor. If any shares of Common
               Stock, Options or Convertible Securities are issued or sold for a
               consideration  other  than cash, the amount of such consideration
               received  by  the  Company  will  be  the  fair  value  of  such
               consideration,  except  where  such  consideration  consists  of
               securities, in which case the amount of consideration received by
               the  Company  will  be the Closing Sale Price of such security on
               the  date  of  receipt. If any shares of Common Stock, Options or
               Convertible  Securities  are  issued  to  the  owners  of  the
               non-surviving  entity  in connection with any merger in which the
               Company  is  the  surviving  entity,  the amount of consideration
               therefor  will  be deemed to be the fair value of such portion of
               the  net  assets  and  business of the non-surviving entity as is
               attributable  to  such  shares  of  Common  Stock,  Options  or
               Convertible Securities, as the case may be. The fair value of any
               consideration  other  than  cash or securities will be determined
               jointly  by the Company and the Required Holders. If such parties
               are  unable  to  reach  agreement  within ten (10) days after the
               occurrence  of  an  event  requiring  valuation  (the  "VALUATION
               EVENT"),  the fair value of such consideration will be determined
               within  five  (5) Business Days after the tenth day following the
               Valuation  Event  by  an independent, reputable appraiser jointly
               selected  by  the  Company  and  the  Required  Holders.  The
               determination  of  such appraiser shall be final and binding upon
               all  parties  absent  manifest error and the fees and expenses of
               such  appraiser  shall  be  borne  by  the  Company.

               (v)     Record  Date.  If  the  Company  takes  a  record  of the
                       ------------
               holders  of  shares  of Common Stock for the purpose of entitling
               them  (A)  to receive a dividend or other distribution payable in
               shares  of  Common Stock, Options or in Convertible Securities or
               (B)  to subscribe for or purchase shares of Common Stock, Options
               or  Convertible  Securities, then such record date will be deemed
               to be the date of the issue or sale of the shares of Common Stock
               deemed  to  have been issued or sold upon the declaration of such
               dividend  or the making of such other distribution or the date of
               the  granting  of  such right of subscription or purchase, as the
               case  may  be.

               (b)     Adjustment  upon  Subdivision or Combination of shares of
                       ---------------------------------------------------------
Common  Stock.  If  the  Company  at  any time on or after the Subscription Date
-------------
subdivides  (by  any stock split, stock dividend, recapitalization or otherwise)
one  or  more  classes  of its outstanding shares of Common Stock into a greater
number  of  shares,  the  Exercise  Price  in  effect


                                      - 8 -
<PAGE>
immediately  prior  to  such subdivision will be proportionately reduced and the
number  of  Warrant Shares will be proportionately increased.  If the Company at
any  time  on  or after the Subscription Date  combines (by combination, reverse
stock  split  or  otherwise)  one  or  more classes of its outstanding shares of
Common  Stock  into  a  smaller  number  of shares, the Exercise Price in effect
immediately  prior to such combination will be proportionately increased and the
number  of  Warrant  Shares  will  be proportionately decreased.  Any adjustment
under  this  Section 2(b) shall become effective at the close of business on the
date  the  subdivision  or  combination  becomes  effective.

               (c)     Other  Events.  If  any  event  occurs  of  the  type
                       -------------
contemplated  by  the provisions of this Section 2(c) but not expressly provided
for  by  such  provisions  (including, without limitation, the granting of share
appreciation rights, phantom share rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate adjustment in the
Exercise Price so as to protect the rights of the Holders; provided that no such
adjustment  will increase the Exercise Price as otherwise determined pursuant to
this  Section  2(c).

          3.     RIGHTS  UPON  DISTRIBUTION  OF  ASSETS.  If  the  Company shall
                 --------------------------------------
declare  or  make any dividend or other distribution of its assets (or rights to
acquire  its  assets)  to holders of shares of Common Stock, by way of return of
capital  or  otherwise (including, without limitation, any distribution of cash,
stock  or  other  securities not addressed by Section 2, property or options not
addressed  by  Section  2  by  way  of  a  dividend, spin off, reclassification,
corporate  rearrangement, scheme of arrangement or other similar transaction) (a
"DISTRIBUTION"),  at  any time after the issuance of this Warrant, then, in each
such  case:

               (a)     any  Exercise  Price  in  effect immediately prior to the
close  of  business on the record date fixed for the determination of holders of
shares  of  Common  Stock entitled to receive the Distribution shall be reduced,
effective as of the close of business on such record date, to a price determined
by  multiplying  such  Exercise  Price  by a fraction of which (i) the numerator
shall  be  the  Closing  Bid Price of a share of Common Stock on the trading day
immediately  preceding  such record date minus the value of the Distribution (as
determined  in good faith by the Company's Board of Directors) applicable to one
share  of  Common Stock, and (ii) the denominator shall be the Closing Bid Price
of  the  shares  of  Common  Stock on the trading day immediately preceding such
record  date;  and

               (b)     the  number  of  Warrant  Shares  shall be increased to a
number  of  shares  equal  to  the  number  of shares of Common Stock obtainable
immediately  prior  to  the  close  of business on the record date fixed for the
determination  of  holders  of  shares  of  Common Stock entitled to receive the
Distribution  multiplied  by  the  reciprocal  of  the fraction set forth in the
immediately  preceding  paragraph  (a);  provided  that  in  the  event that the
Distribution  is  of  shares of Common Stock (or common stock) ("OTHER SHARES OF
COMMON  STOCK")  of  a  company  whose  common  shares  are traded on a national
securities  exchange  or  a national automated quotation system, then the Holder
may  elect to receive a warrant to purchase Other Shares of Common Stock in lieu
of  an  increase  in  the  number of Warrant Shares, the terms of which shall be
identical  to  those  of  this  Warrant,  except  that  such  warrant  shall  be
exercisable into the number of shares of Other Shares of Common Stock that would
have  been  payable  to  the  Holder pursuant to the Distribution had the Holder
exercised  this  Warrant  immediately  prior  to  such  record  date and with an
aggregate  exercise  price  equal  to  the  product  of  the amount by which the


                                      - 9 -
<PAGE>
exercise  price  of  this Warrant was decreased with respect to the Distribution
pursuant  to the terms of the immediately preceding paragraph (a) and the number
of Warrant Shares calculated in accordance with the first part of this paragraph
(b).

          4.     PURCHASE  RIGHTS;  FUNDAMENTAL  TRANSACTIONS.
                 --------------------------------------------

               (a)     Purchase Rights.  In addition to any adjustments pursuant
                       ---------------
to  Section  2  above,  if  at  any time the Company grants, issues or sells any
Options,  Convertible  Securities  or  rights  to  purchase  stock,  warrants,
securities  or  other  property  pro  rata to the record holders of any class of
shares  of  Common  Stock  (the  "PURCHASE RIGHTS"), then, upon exercise of this
Warrant,  the  Holder  will be entitled to acquire, upon the terms applicable to
such  Purchase Rights, the aggregate Purchase Rights which the Holder could have
acquired  if  the  Holder  had held the proportionate number of shares of Common
Stock  acquirable  upon  exercise  of  this  Warrant  (without  regard  to  any
limitations  on  the  exercise  of  this Warrant) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or,  if  no  such  record  is  taken, the date as of which the record holders of
shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase  Rights.

               (b)     Fundamental  Transactions.  If the Company enters into or
                       -------------------------
is  party  to a Fundamental Transaction, then the Holder shall have the right to
either (A) purchase and receive upon the basis and upon the terms and conditions
herein  specified  and  in  lieu  of  the Warrant Shares immediately theretofore
issuable  upon  exercise  of  the  Warrant,  such shares of stock, securities or
assets  (including  cash) as would have been issuable or payable with respect to
or  in  exchange  for  a number of Warrant Shares equal to the number of Warrant
Shares  immediately  theretofore issuable upon exercise of the Warrant, had such
Fundamental  Transaction  not  taken place or (B) require the repurchase of this
Warrant  for  a  purchase  price,  payable in cash within five (5) business days
after  such  request,  equal  to  the  Black  Scholes  Value  of  the  remaining
unexercised  portion  of this Warrant on the date of such request.  The terms of
any  agreement  pursuant  to  which  a Fundamental Transaction is effected shall
include  terms  requiring  any  such successor or surviving entity and Holder to
comply with the provisions of this Section 4(b).  The provisions of this Section
                                   ------------
shall  apply  similarly  and  equally to successive Fundamental Transactions and
shall  be  applied  without  regard  to  any limitations on the exercise of this
Warrant.

          5.     NONCIRCUMVENTION.  The Company hereby covenants and agrees that
                 ----------------
the  Company  will not, by amendment of its Articles of Incorporation, Bylaws or
through any reorganization, transfer of assets, consolidation, merger, scheme of
arrangement,  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,  and  will  at  all  times  in  good  faith carry out all the
provisions  of  this  Warrant  and take all action that is required hereunder to
protect  the  rights  of  the  Holder.  Without  limiting  the generality of the
foregoing,  the  Company  (i)  shall not increase the par value of any shares of
Common  Stock  receivable  upon  the exercise of this Warrant above the Exercise
Price  then  in  effect, (ii) shall take all such actions as may be necessary or
appropriate  in  order  that the Company may validly and legally have the Common
Stock  fully  paid  and  nonassessable shares of Common Stock transferred to the
Holder upon the exercise of this Warrant, and (iii) shall, so long as any of the
SPA  Warrants  are  outstanding,  take  all action necessary to reserve and keep
available  out  of  its  authorized  and  unissued  shares  of


                                     - 10 -
<PAGE>
Common  Stock,  solely  for  the  purpose  of  effecting the exercise of the SPA
Warrants,  120%  (or  such  lesser  amount  limited by the SEC) of the number of
shares  of  Common  Stock  as shall from time to time be necessary to effect the
exercise of the SPA Warrants then outstanding (without regard to any limitations
on  exercise).

          6.     WARRANT  HOLDER  NOT DEEMED A STOCKHOLDER.  Except as otherwise
                 -----------------------------------------
specifically  provided herein, the Holder, solely in such Person's capacity as a
holder of this Warrant, shall not be entitled to vote or receive dividends or be
deemed  the  holder  of  share capital of the Company for any purpose, nor shall
anything  contained  in  this  Warrant  be  construed to confer upon the Holder,
solely  in  such  Person's  capacity  as  the Holder of this Warrant, any of the
rights  of  a  shareholder of the Company or any right to vote, give or withhold
consent  to  any  corporate  action (whether any reorganization, issue of stock,
reclassification  of  stock,  consolidation,  merger,  conveyance or otherwise),
receive  notice  of  meetings,  receive  dividends  or  subscription  rights, or
otherwise,  prior to the issuance to the Holder of the Warrant Shares which such
Person  is  then  entitled to receive upon the due exercise of this Warrant.  In
addition,  nothing  contained in this Warrant shall be construed as imposing any
liabilities  on  the  Holder  to  purchase any securities (upon exercise of this
Warrant  or otherwise) or as a shareholder of the Company.  Notwithstanding this
Section  6, the Company shall provide the Holder with copies of the same notices
and  other  information  given  to  the  shareholders  of the Company generally,
contemporaneously  with  the  giving  thereof  to  its  shareholders.

          7.     REISSUANCE  OF  WARRANTS.
                 ------------------------

               (a)     Transfer  of  Warrant.  If  this  Warrant  is  to  be
                       ---------------------
transferred,  the  Holder shall surrender this Warrant to the Company, whereupon
the  Company will forthwith issue and deliver upon the order of the Holder a new
Warrant (in accordance with Section 7(d)), registered as the Holder may request,
representing  the  right  to  purchase  the  number  of  Warrant  Shares  being
transferred  by  the Holder and, if less then the total number of Warrant Shares
then  underlying this Warrant is being transferred, a new Warrant (in accordance
with  Section  7(d)) to the Holder representing the right to purchase the number
of  Warrant  Shares  not  being  transferred.

               (b)     Lost,  Stolen  or Mutilated Warrant.  Upon receipt by the
                       -----------------------------------
Company  of  evidence reasonably satisfactory to the Company of the loss, theft,
destruction  or  mutilation  of this Warrant, and, in the case of loss, theft or
destruction,  of any indemnification undertaking by the Holder to the Company in
customary  form  and, in the case of mutilation, upon surrender and cancellation
of  this  Warrant,  the  Company  shall  execute and deliver to the Holder a new
Warrant (in accordance with Section 7(d)) representing the right to purchase the
Warrant  Shares  then  underlying  this  Warrant.

               (c)     Exchangeable  for  Multiple  Warrants.  This  Warrant  is
                       -------------------------------------
exchangeable, upon the surrender hereof by the Holder at the principal office of
the  Company,  for  a  new Warrant or Warrants (in accordance with Section 7(d))
representing in the aggregate the right to purchase the number of Warrant Shares
then underlying this Warrant, and each such new Warrant will represent the right
to  purchase  such portion of such Warrant Shares as is designated by the Holder
at  the  time  of  such  surrender;  provided,  however,  that  no  Warrants for
fractional  shares  of  Common  Stock  shall  be  given.


                                     - 11 -
<PAGE>
               (d)     Issuance  of  New  Warrants.  Whenever  the  Company  is
                       ---------------------------
required  to issue a new Warrant pursuant to the terms of this Warrant, such new
Warrant  (i)  shall be of like tenor with this Warrant, (ii) shall represent, as
indicated  on  the  face  of such new Warrant, the right to purchase the Warrant
Shares  then  underlying  this  Warrant  (or  in the case of a new Warrant being
issued  pursuant  to Section 7(a) or Section 7(c), the Warrant Shares designated
by  the  Holder  which,  when  added  to  the  number  of shares of Common Stock
underlying  the other new Warrants issued in connection with such issuance, does
not  exceed  the  number  of Warrant Shares then underlying this Warrant), (iii)
shall  have an issuance date, as indicated on the face of such new Warrant which
is  the  same  as  the  Issuance  Date,  and (iv) shall have the same rights and
conditions  as  this  Warrant.

          8.     NOTICES.  Whenever  notice  is  required to be given under this
                 -------
Warrant,  unless  otherwise  provided  herein,  such  notice  shall  be given in
accordance  with Section 9(f) of the Securities Purchase Agreement.  The Company
shall  provide  the  Holder  with  prompt  written  notice  of all actions taken
pursuant  to  this Warrant, including in reasonable detail a description of such
action  and  the  reason  therefore.  Without  limiting  the  generality  of the
foregoing, the Company will give written notice to the Holder (i) promptly after
any  adjustment  of  the Exercise Price, setting forth in reasonable detail, and
certifying,  the calculation of such adjustment and (ii) at least ten days prior
to  the  date  on  which the Company closes its books or takes a record (A) with
respect  to  any  dividend  or distribution upon the shares of Common Stock, (B)
with  respect  to  any  grants,  issuances  or sales of any Options, Convertible
Securities  or  rights to purchase stock, warrants, securities or other property
to  holders of shares of Common Stock or (C) for determining rights to vote with
respect  to any Fundamental Transaction, dissolution or liquidation, provided in
each case that such information shall be made known to the public prior to or in
conjunction  with  such  notice  being  provided  to  the  Holder.

          9.     AMENDMENT AND WAIVER.  Except as otherwise provided herein, the
                 --------------------
provisions  of  this  Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it,  only  if  the  Company  has  obtained  the  written consent of the Required
Holders; provided that no such action may increase the exercise price of any SPA
Warrant  or  decrease  the  number  of  shares or class of stock obtainable upon
exercise  of any SPA Warrant without the written consent of the Holder.  No such
amendment  shall  be effective to the extent that it applies to less than all of
the  holders  of  the  SPA  Warrants  then  outstanding.

          10.     SEVERABILITY.  If  any  provision  of  this  Warrant  or  the
                  ------------
application  thereof becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of the terms of this Warrant
will  continue  in  full  force  and  effect.

          11.     GOVERNING  LAW.  This  Warrant  shall  be  governed  by  and
                  --------------
construed  and  enforced  in  accordance  with, and all questions concerning the
construction,  validity, interpretation and performance of this Warrant shall be
governed  by,  the internal laws of the State of New York, without giving effect
to  any choice of law or conflict of law provision or rule (whether of the State
of  New York or any other jurisdictions) that would cause the application of the
laws  of  any  jurisdictions  other  than  the  State  of  New  York.


                                     - 12 -
<PAGE>
          12.     CONSTRUCTION;  HEADINGS.  This  Warrant  shall be deemed to be
                  -----------------------
jointly  drafted  by  the  Company and all the Buyers and shall not be construed
against  any person as the drafter hereof.  The headings of this Warrant are for
convenience  of  reference  and  shall  not  form  part  of,  or  affect  the
interpretation  of,  this  Warrant.

          13.     DISPUTE  RESOLUTION.  In  the  case  of  a  dispute  as to the
                  -------------------
determination of the Exercise Price or the arithmetic calculation of the Warrant
Shares,  the  Company  shall  submit  the  disputed determinations or arithmetic
calculations  via  facsimile within two Business Days of receipt of the Exercise
Notice  giving  rise to such dispute, as the case may be, to the Holder.  If the
Holder  and  the  Company  are  unable  to  agree  upon  such  determination  or
calculation  of  the  Exercise Price or the Warrant Shares within three Business
Days of such disputed determination or arithmetic calculation being submitted to
the  Holder,  then  the  Company  shall,  within  two  Business  Days submit via
facsimile  (a)  the  disputed  determination  of  the  Exercise  Price  to  an
independent,  reputable  investment bank selected by the Company and approved by
the  Holder  or (b) the disputed arithmetic calculation of the Warrant Shares to
the  Company's independent, outside accountant.  The Company shall cause, at the
expense  of the losing party, the investment bank or the accountant, as the case
may be, to perform the determinations or calculations and notify the Company and
the  Holder  of  the  results  no  later than ten Business Days from the time it
receives the disputed determinations or calculations.  Such investment bank's or
accountant's  determination or calculation, as the case may be, shall be binding
upon  all  parties  absent  demonstrable  error.

          14.     REMEDIES,  OTHER  OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
                  -------------------------------------------------------------
The remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant and the other Transaction Documents,
at  law  or  in  equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder right
to pursue actual damages for any failure by the Company to comply with the terms
of  this  Warrant.  The  Company  acknowledges  that  a  breach  by  it  of  its
obligations  hereunder  will  cause  irreparable harm to the Holder and that the
remedy  at  law  for  any  such breach may be inadequate.  The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder of
this  Warrant shall be entitled, in addition to all other available remedies, to
an  injunction restraining any breach, without the necessity of showing economic
loss  and  without  any  bond  or  other  security  being  required.

          15.     TRANSFER.  This  Warrant  may  be  offered  for  sale,  sold,
                  --------
transferred  or  assigned  without  the  consent  of  the Company, except as may
otherwise  be  required  by  Section  2(f) of the Securities Purchase Agreement.

          16.     CERTAIN  DEFINITIONS.  For  purposes  of  this  Warrant,  the
                  --------------------
following  terms  shall  have  the  following  meanings:

               (a)     "BLACK  SCHOLES  VALUE"  means  the value of this Warrant
based  on  the  Black  and  Scholes  Option Pricing Model obtained from the "OV"
function  on Bloomberg determined as of the day immediately following the public
announcement  of  the  applicable  Fundamental  Transaction and reflecting (i) 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  such date of request


                                     - 13 -
<PAGE>
and  (ii)  an  expected  volatility  equal to the greater of 60% and the 100 day
volatility  obtained  from  the  HVT  function  on  Bloomberg.

               (b)     "BLOOMBERG"  means  Bloomberg  Financial  Markets.

               (c)     "BUSINESS  DAY" means any day other than Saturday, Sunday
or other day on which commercial banks in The City of New York are authorized or
required  by  law  to  remain  closed.

               (d)     "CLOSING  BID  PRICE" and "CLOSING SALE PRICE" means, for
any  security  as of any date, the last closing bid price and last closing trade
price,  respectively,  for such security on the Principal Market, as reported by
Bloomberg,  or,  if  the Principal Market begins to operate on an extended hours
basis  and  does not designate the closing bid price or the closing trade price,
as  the  case may be, then the last bid price or last trade price, respectively,
of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg,
or,  if the Principal Market is not the principal securities exchange or trading
market  for  such  security,  the  last  closing  bid price or last trade price,
respectively,  of  such security on the principal securities exchange or trading
market  where  such security is listed or traded as reported by Bloomberg, or if
the  foregoing  do  not  apply,  the last closing bid price or last trade price,
respectively,  of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price  or  last  trade  price,  respectively,  is  reported for such security by
Bloomberg,  the  average  of the bid prices, or the ask prices, respectively, of
any  market  makers  for  such security as reported in the "pink sheets" by Pink
Sheets  LLC  (formerly the National Quotation Bureau, Inc.).  If the Closing Bid
Price  or  the  Closing  Sale  Price  cannot  be  calculated for a security on a
particular  date  on  any  of  the foregoing bases, the Closing Bid Price or the
Closing  Sale  Price, as the case may be, of such security on such date shall be
the  fair market value as mutually determined by the Company and the Holder.  If
the  Company  and  the  Holder are unable to agree upon the fair market value of
such  security, then such dispute shall be resolved pursuant to Section 12.  All
such  determinations  to be appropriately adjusted for any stock dividend, stock
split,  stock  combination  or  other  similar transaction during the applicable
calculation  period.

               (e)     "COMMON  STOCK"  means (i) the Company's shares of Common
Stock,  $0.10  par  value  per share, and (ii) any share capital into which such
Common  Stock  shall  have  been  changed  or any share capital resulting from a
reclassification  of  such  Common  Stock.

               (f)     "COMMON  STOCK  DEEMED  OUTSTANDING"  means, at any given
time,  the  number  of shares of Common Stock actually outstanding at such time,
plus  the  number of shares of Common Stock deemed to be outstanding pursuant to
Sections  2(a)(i)  and  2(a)(ii)  hereof  regardless  of  whether the Options or
Convertible  Securities are actually exercisable at such time, but excluding any
shares  of  Common  Stock  owned or held by or for the account of the Company or
issuable  upon conversion and exercise, as applicable, of the SPA Securities and
the  Warrants.

               (g)     "CONVERTIBLE  SECURITIES"  means  any stock or securities
(other  than  Options) directly or indirectly convertible into or exercisable or
exchangeable  at  the  option  of the holder thereof for shares of Common Stock.


                                     - 14 -
<PAGE>
               (h)     "ELIGIBLE  MARKET"  means  the  Principal  Market,  the
American  Stock  Exchange, The New York Stock Exchange, Inc., the Nasdaq Capital
Market  or  the  Nasdaq  National  Market.

               (i)     "EXPIRATION  DATE"  means the date sixty months after the
Issuance  Date  or,  if such date falls on a day other than a Business Day or on
which  trading  does  not  take place on the Principal Market (a "HOLIDAY"), the
next  date  that  is  not  a  Holiday.

               (j)     "FUNDAMENTAL  TRANSACTION"  means that the Company shall,
directly  or indirectly, in one or more related transactions, (i) consolidate or
merge  with  or  into  (whether or not the Company is the surviving corporation)
another  Person,  or (ii) sell, assign, transfer, convey or otherwise dispose of
all  or  substantially all of the properties or assets of the Company to another
Person,  or  (iii)  allow  another Person to make a purchase, tender or exchange
offer that is accepted by such number of holders of outstanding shares of Common
Stock  resulting  in  such  Person (together with any affiliates of such Person)
holding  more  than  the  50%  of  the  outstanding  Common Stock of the Company
following  such  purchase,  tender or exchange offer, or (iv) consummate a stock
purchase agreement or other business combination (including, without limitation,
a  reorganization,  recapitalization,  spin-off  or  scheme of arrangement) with
another  Person  resulting in such other Person (together with any affiliates of
such  person)  holding  more than the 50% of the outstanding Common Stock of the
Company  following  such stock purchase agreement or other business combination,
or  (v)  reorganize,  recapitalize  or  reclassify  its  Common  Stock.

               (k)     "OPTIONS"  means  any  rights,  warrants  or  options  to
subscribe  for  or  purchase  shares  of Common Stock or Convertible Securities.

               (l)     "PERSON"  means  an  individual,  a  limited  liability
company,  a  partnership,  a  joint  venture,  a  corporation,  a  trust,  an
unincorporated organization, any other entity and a government or any department
or  agency  thereof.

               (m)     "PRINCIPAL  MARKET"  means  the  NASD OTC Bulletin Board.

               (n)     "REGISTRATION  RIGHTS  AGREEMENT"  means  that  certain
registration  rights  agreement  by  and  among  the  Company  and  the  Buyers.

               (o)     "REQUIRED  HOLDERS" means the holders of the SPA Warrants
representing  at  least  a majority of shares of Common Stock underlying the SPA
Warrants  then  outstanding.

               (p)     "SPA  SECURITIES"  means  the  Preferred  Stock  issued
pursuant  to  the  Securities  Purchase  Agreement.

                            [SIGNATURE PAGE FOLLOWS]


                                     - 15 -
<PAGE>
     IN  WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common
Stock  to  be  duly  executed  as  of  the  Issuance  Date  set  out  above.


                                        CHARYS  HOLDING  COMPANY,  INC.


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


<PAGE>
                                                                       EXHIBIT A

                                 EXERCISE NOTICE

            TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
                        WARRANT TO PURCHASE COMMON STOCK

                          CHARYS HOLDING COMPANY, INC.

     The  undersigned  holder  hereby  exercises  the  right  to  purchase
                   of  the  shares  of Common Stock ("WARRANT SHARES") of Charys
-----------------
Holding  Company, Inc., a Delaware corporation (the "COMPANY"), evidenced by the
attached  Warrant  to  Purchase Common Stock (the "WARRANT").  Capitalized terms
used  herein  and  not  otherwise defined shall have the respective meanings set
forth  in  the  Warrant.

     1.  Form  of  Exercise  Price.  The  Holder  intends  that  payment  of the
Exercise  Price  shall  be  made  as:

                        a  "Cash  Exercise" with respect to
          ------------      --------------                  -----------------
                        Warrant  Shares;  and/or

                        a "Cashless Exercise" with respect to
          ------------    -------------------                 ---------------
                        Warrant  Shares.

     2.  Notwithstanding  anything  to  the  contrary  contained  herein,  this
Exercise  Notice  shall constitute a representation by the Holder of the Warrant
submitting  this  Exercise  Notice  that,  after  giving  effect to the exercise
provided for in this Exercise Notice, such Holder (together with its affiliates)
will  not  have  beneficial ownership (together with the beneficial ownership of
such  Person's  affiliates)  of a number of shares of Common Stock which exceeds
the  maximum  percentage  of  the  total  outstanding  shares of Common Stock as
determined  pursuant  to  the  provisions  of  Section  1(f)(i)  of the Warrant.

     3.  Payment  of Exercise Price.  In the event that the holder has elected a
Cash  Exercise  with  respect  to  some  or  all  of  the  Warrant  Shares to be
transferred  pursuant  hereto, the holder shall pay the Aggregate Exercise Price
in  the  sum of $                    to the Company in accordance with the terms
                 -------------------
of  the  Warrant.

     4.  Delivery  of  Warrant  Shares.  The Company shall deliver to the holder
            Warrant  Shares  in  accordance  with  the  terms  of  the  Warrant.
----------

Date:                    ,
       --------------- -- -------

-------------------------------------
  Name  of  Registered  Holder


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


<PAGE>
                                 ACKNOWLEDGMENT


     Gottbetter  &  Partners,  LLP  hereby acknowledges this Exercise Notice and
will  transfer                        shares  of  Common  Stock.
                --------------------


                                        GOTTBETTER  &  PARTNERS.  LLP



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


<PAGE>
NEITHER  THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR  THE  SECURITIES  INTO  WHICH  THESE  SECURITIES  ARE EXERCISEABLE HAVE BEEN
REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES  LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR  ASSIGNED  (I)  IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE  SECURITIES  UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF  COUNSEL,  IN  A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER  SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING  THE  FOREGOING, THE SECURITIES MAY BE PLEDGED PURSUANT TO
AN  AVAILABLE EXEMPTION UNDER THE 1933 ACT IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT  OR  OTHER  LOAN  OR  FINANCING  ARRANGEMENT  SECURED BY THE SECURITIES.

                          CHARYS HOLDING COMPANY, INC.

                        WARRANT TO PURCHASE COMMON STOCK

Warrant No.: 005
Number of Shares of Common Stock: 1,000,000
Date of Issuance: May 19, 2006 ("ISSUANCE DATE")

          Charys  Holding Company, Inc., a Delaware corporation (the "COMPANY"),
hereby  certifies  that,  for  good  and valuable consideration, the receipt and
sufficiency  of  which  are  hereby  acknowledged, CASTLERIGG MASTER INVESTMENTS
LTD.,  the  registered holder hereof or its permitted assigns (the "HOLDER"), is
entitled, subject to the terms set forth below, to purchase from the Company, at
the  Exercise  Price  (as  defined below) then in effect, upon surrender of this
Warrant  to  Purchase  Common  Stock  (including any Warrants to Purchase Common
Stock issued in exchange, transfer or replacement hereof, the "WARRANT"), at any
time  or  times  on  or after the date hereof but not after 11:59 p.m., New York
Time,  on  the Expiration Date (as defined below), One Million (1,000,000) fully
paid  nonassessable  shares  of  Common  Stock  (as defined below) (the "WARRANT
SHARES").  Except as otherwise defined herein, capitalized terms in this Warrant
shall  have  the  meanings  set forth in Section 16.  This Warrant is one of the
Warrants  to  purchase  Common  Stock  (the  "SPA  WARRANTS") issued pursuant to
Section  1  of  that  certain Securities Purchase Agreement, dated as of May 19,
2006  (the "SUBSCRIPTION DATE"), by and among the Company and the investors (the
"BUYERS")  referred  to  therein  (the  "SECURITIES  PURCHASE  AGREEMENT").

          1.     EXERCISE  OF  WARRANT.
                 ---------------------

               (a)     Mechanics  of  Exercise.  Subject  to  the  terms  and
                       -----------------------
conditions  hereof  (including, without limitation, the limitations set forth in
Section  1(f)),  this  Warrant  may  be exercised by the Holder on any day on or
after the date hereof, in whole or in part, by (i) delivery of a written notice,
in  the  form  attached  hereto  as  Exhibit  A  (the "EXERCISE NOTICE"), of the
                                     ----------


<PAGE>
Holder's  election to exercise this Warrant and (ii) (A) payment to Gottbetter &
Partners, LLP (the "ESCROW AGENT") of an amount equal to the applicable Exercise
Price  multiplied  by  the  number of Warrant Shares as to which this Warrant is
being  exercised  (the  "AGGREGATE  EXERCISE PRICE") in cash or wire transfer of
immediately  available  funds  or  (B)  by  notifying the Escrow Agent that this
Warrant  is  being  exercised  pursuant  to  a  Cashless Exercise (as defined in
Section 1(d)).  The Holder shall not be required to deliver the original Warrant
in  order  to  effect  an  exercise  hereunder.  Execution  and  delivery of the
Exercise  Notice  with respect to less than all of the Warrant Shares shall have
the  same  effect  as cancellation of the original Warrant and issuance of a new
Warrant evidencing the right to purchase the remaining number of Warrant Shares.
On  or  before  the  second  Business Day following the date on which the Escrow
Agent  has received each of the Exercise Notice and the Aggregate Exercise Price
(or  notice  of  a  Cashless  Exercise) (the "EXERCISE DELIVERY DOCUMENTS"), the
Escrow  Agent  shall  transmit by facsimile an acknowledgment of confirmation of
receipt  of  the Exercise Delivery Documents to the Holder and the CompanyOn or
before  the  third  Business  Day  following  the  date on which the Company has
received all of the Exercise Delivery Documents (the "SHARE DELIVERY DATE"), the
Escrow  Agent  shall  (X)  provided  that  the  Company's  transfer  agent  is
participating  in The Depository Trust Company ("DTC") Fast Automated Securities
Transfer  Program,  upon the request of the Holder, credit such aggregate number
of  shares  of  Common  Stock  to  which the Holder is entitled pursuant to such
exercise  to the Holder's or its designee's balance account with DTC through its
Deposit  Withdrawal  Agent  Commission  system, or (Y) if the Company's transfer
agent  is  not  participating  in  the  DTC  Fast  Automated Securities Transfer
Program,  transfer and dispatch by overnight courier to the address as specified
in  the  Exercise  Notice,  certificates for the approximate number of shares of
Common  Stock  to  which the Holder is entitled pursuant to such exercise.  Upon
delivery  of  the  Exercise  Notice  and Aggregate Exercise Price referred to in
clause  (ii)(A) above or notification to the Escrow Agent of a Cashless Exercise
referred  to  in  Section  1(d),  the  Holder  shall be deemed for all corporate
purposes  to have become the holder of record of the Warrant Shares with respect
to  which  this Warrant has been exercised, irrespective of the date of delivery
of  the  certificates  evidencing  such  Warrant  Shares.  If  this  Warrant  is
submitted  in connection with any exercise pursuant to this Section 1(a) and the
number  of  Warrant Shares represented by this Warrant submitted for exercise is
greater  than the number of Warrant Shares being acquired upon an exercise, then
the  Company  shall  as  soon  as  practicable  and  in no event later than five
Business Days after any exercise and at its own expense, issue a new Warrant (in
accordance  with  Section 7(d)) representing the right to purchase the number of
Warrant  Shares  purchasable  immediately  prior  to  such  exercise  under this
Warrant, less the number of Warrant Shares with respect to which this Warrant is
exercised.  No  fractional shares of Common Stock are to be transferred upon the
exercise  of this Warrant, but rather the number of shares of Common Stock to be
transferred  shall be rounded up to the nearest whole number.  The Company shall
pay  any  and  all  taxes  which may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant.  In the event that the
Escrow  Agent  does  not  have  a sufficient number of shares of Common Stock to
transfer  to  the  Holder  upon the exercise of this Warrant (including, but not
limited  to,  by  reason  of  additional  Warrant  Shares  required to be issued
pursuant  to  Section  2 herein, and such Warrant Shares had not previously been
delivered  to the Escrow Agent), then the Company shall within 1 Business Day of
the  date  of  delivery  of an Exercise Notice deliver such additional number of
Warrant  Shares  to  the  Escrow  Agent.


                                      - 2 -
<PAGE>
               (b)     Exercise  Price.  For purposes of this Warrant, "EXERCISE
                       ---------------
PRICE"  means  $6.24,  subject  to  adjustment  as  provided  herein.

               (c)     Company's  Failure  to  Timely  Deliver  Securities.  In
                       ---------------------------------------------------
addition  to the foregoing, if within three (3) Trading Days after the Company's
receipt  of the facsimile copy of an exercise notice the Company shall cause the
Escrow  Agent  to  fail to transfer the Escrow Shares to the Buyer, and if on or
after  such  third  Trading  Day  the  Buyer is required to purchase (in an open
market  transaction  or otherwise) shares of Common Stock in order to deliver in
satisfaction  of a sale initiated by the Buyer in anticipation of receiving from
the Company the shares of Common Stock issuable upon such exercise (a "BUY-IN"),
then the Company shall, within three (3) Business Days after the Buyer's request
and  in  the  Buyer's  discretion, either (i) pay cash to the Buyer in an amount
equal  to  the Buyer's total purchase price (including brokerage commissions, if
any)  for the shares of Common Stock so purchased (the "BUY-IN PRICE"), at which
point the Company's obligation to deliver such Escrow Shares resulting from such
exercise  shall  terminate,  or (ii) promptly honor its obligation to deliver to
the  Buyer a certificate or certificates representing such Escrow Shares and pay
cash to the holder in an amount equal to the excess (if any) of the Buy-In Price
over  the  product  of  (A) such number of shares of Common Stock, times (B) the
Closing  Sale  Price  on  the  date of exercise.  Nothing herein shall limit the
holder's  right to pursue actual damages for the Company's failure to maintain a
sufficient  number  of  authorized  shares of Common Stock or to otherwise issue
shares  of  Common  Stock  upon  exercise of this Warrant in accordance with the
terms  hereof,  and  the  holder  shall  have  the  right to pursue all remedies
available at law or in equity (including a decree of specific performance and/or
injunctive  relief).  Notwithstanding  the  foregoing, the Company shall have no
obligations  to  cause  its  Escrow Agent to deliver Escrow Shares or to pay any
Buy-In Price under this Section 1(c) if the Company has timely delivered in good
faith  a  bonafide  objection  to  such  conversion  or  exercise  notice.

               (d)     Cashless  Exercise.  Notwithstanding  anything  contained
                       ------------------
herein  to  the  contrary,  if  a  Registration  Statement  (as  defined  in the
Registration  Rights Agreement) covering the Warrant Shares that are the subject
of  the  Exercise Notice (the "UNAVAILABLE WARRANT SHARES") is not available for
the  resale  of  such  Unavailable  Warrant  Shares, the Holder may, in its sole
discretion, exercise this Warrant in whole or in part and, in lieu of making the
cash payment otherwise contemplated to be made to the Company upon such exercise
in  payment  of the Aggregate Exercise Price, elect instead to receive upon such
exercise  the "Net Number" of shares of Common Stock determined according to the
following  formula  (a  "CASHLESS  EXERCISE"):


                                      - 3 -
<PAGE>
               Net Number = (A x B) - (A x C)
                            -----------------

                                    B

               For  purposes  of  the  foregoing  formula:

          A=  the  total  number  of  Warrant  Shares with respect to which this
          Warrant  is  then  being  exercised.

          B= the average of the Closing Sale Price of the shares of Common Stock
          (as  reported  by  Bloomberg)  on  the  five  Trading Days immediately
          preceding  the  date  of  the  Exercise  Notice.

          C= the Exercise Price then in effect for the applicable Warrant Shares
               at  the  time  of  such  exercise.

               (e)     Disputes.  In  the  case  of  a  dispute  as  to  the
                       --------
determination of the Exercise Price or the arithmetic calculation of the Warrant
Shares,  the  Escrow  Agent  shall promptly transfer to the Holder the number of
Warrant Shares that are not disputed and resolve such dispute in accordance with
Section  12.

               (f)     (i)     Limitations  on  Exercises; Beneficial Ownership.
                               ------------------------------------------------
The  Escrow  Agent shall not effect the exercise of this Warrant, and the Holder
shall  not  have  the  right  to exercise this Warrant, to the extent that after
giving  effect  to  such  exercise,  such  Person  (together  with such Person's
affiliates)  would  beneficially  own  (directly  or  indirectly through Warrant
Shares  or  otherwise)  in  excess  of  4.99%  of  the  shares  of  Common Stock
outstanding  immediately  after giving effect to such exercise.  For purposes of
the  foregoing  sentence,  the  aggregate  number  of  shares  of  Common  Stock
beneficially  owned (directly or indirectly through Warrant Shares or otherwise)
by  such  Person and its affiliates shall include the number of shares of Common
Stock  issuable  upon  exercise  of  this  Warrant  with  respect  to  which the
determination of such sentence is being made, but shall exclude shares of Common
Stock  which  would  be issuable upon (i) exercise of the remaining, unexercised
portion of this Warrant beneficially owned by such Person and its affiliates and
(ii)  exercise  or  conversion  of the unexercised or unconverted portion of any
other  securities  of  the  Company  beneficially  owned  by such Person and its
affiliates  (including, without limitation, any convertible notes or convertible
preferred  stock  or warrants) subject to a limitation on conversion or exercise
analogous  to  the  limitation  contained  herein.  Except  as  set forth in the
preceding  sentence, for purposes of this subsection, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934,  as  amended.  For  purposes of this Warrant, in determining the number of
outstanding  shares  of  Common  Stock,  the  Holder  may  rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company's most recent
Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the
Securities and Exchange Commission, as the case may be, (2) a more recent public
announcement  by  the  Company  or  (3)  any  other notice by the Company or the
Company's  transfer  agent  setting  forth  the number of shares of Common Stock
outstanding.  In  any  case,  the  number  of outstanding shares of Common Stock
shall  be  determined  after  giving  effect  to  the  conversion or exercise of
securities of the Company, including the SPA Securities and the SPA Warrants, by
the  Holder  and  its  affiliates  since  the


                                      - 4 -
<PAGE>
date as of which such number of outstanding shares of Common Stock was reported.
By  written  notice  to  the  Company,  the  Holder may increase or decrease the
Maximum  Percentage  to any other percentage not in excess of 9.99% specified in
such notice; provided that (i) any such increase will not be effective until the
sixty-first  (61st)  day after such notice is delivered to the Company, and (ii)
any such increase or decrease will apply only to the Holder and not to any other
holder  of  SPA  Warrants.

                    (ii)     Principal Market Regulation.  The Company shall not
                             ---------------------------
be  obligated  to issue any shares of Common Stock upon exercise of this Warrant
if the issuance of such shares of Common Stock would exceed the aggregate number
of  shares  of  Common  Stock  which  the  Company  may issue upon conversion or
exercise or otherwise, as applicable, of the SPA Securities and Warrants without
breaching  the  Company's  obligations  under  the  rules  or regulations of the
Principal  Market  (the  "EXCHANGE  CAP"), except that such limitation shall not
apply in the event that the Company (A) obtains the approval of its stockholders
as  required  by  the  applicable rules of the Principal Market for issuances of
Common  Stock  in  excess  of  such amount or (B) obtains a written opinion from
outside counsel to the Company that such approval is not required, which opinion
shall  be  reasonably satisfactory to the Required Holders.  Until such approval
or  written  opinion  is  obtained, no purchaser of the Warrants pursuant to the
Securities  Purchase  Agreement  (the  "PURCHASERS")  shall  be  issued  in  the
aggregate,  upon  conversion  or  exercise  or  otherwise, as applicable, of SPA
Securities  or  Warrants,  shares  of Common Stock in an amount greater than the
product  of the Exchange Cap multiplied by a fraction, the numerator of which is
the  number  of  Warrants  issued  to  the Purchasers pursuant to the Securities
Purchase  Agreement  on  the  Closing  Date  and the denominator of which is the
aggregate number of Warrants issued to the Purchasers pursuant to the Securities
Purchase  Agreement  on  the  Closing  Date (with respect to each Purchaser, the
"EXCHANGE  CAP  ALLOCATION").  In  the  event  that  any Purchaser shall sell or
otherwise  transfer  any  of  such  Purchaser's  Warrants,  the transferee, if a
registered  Holder  of  such  Warrants, shall be allocated a pro rata portion of
such  Purchaser's  Exchange  Cap  Allocation,  and the restrictions of the prior
sentence  shall  apply  to  such  transferee  with respect to the portion of the
Exchange  Cap  Allocation  allocated  to such transferee.  In the event that any
holder of Warrants shall exercise all of such holder's Warrants into a number of
shares  of  Common  Stock  which,  in  the aggregate, is less than such holder's
Exchange  Cap Allocation, then the difference between such holder's Exchange Cap
Allocation  and  the  number  of  shares of Common Stock actually issued to such
holder  shall  be  allocated  to  the respective Exchange Cap Allocations of the
remaining  registered  holders  of Warrants on a pro rata basis in proportion to
the  aggregate number of shares of Common Stock underlying the then held by each
such  holder.  To the extent required by the Principal Market, the provisions of
the  Exchange  Cap  shall  be  modified  to comply with the applicable rules and
regulations  of  the Principal Market, provided that any such changes shall not,
in  the  Holder's  reasonable  discretion,  materially  change  the terms of the
transaction  contemplated  hereby.

          Notwithstanding  anything in this Warrant to the contrary, the Company
shall be entitled to treat the registered holder of this Warrant as such appears
in  its  records,  as  the owner of this Warrant for all purposes; provided that
such  records  are  kept  current  using a reasonably satisfactory and customary
method  intended  for  such  purpose.


                                      - 5 -
<PAGE>
          2.     ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  The
                 ---------------------------------------------------------
Exercise  Price  and the number of Warrant Shares shall be adjusted from time to
time  as  follows:

               (a)     Adjustment  upon  Issuance of shares of Common Stock.  If
                       ----------------------------------------------------
and  whenever  on or after the Subscription Date the Company issues or sells, or
in  accordance  with this Section 2 is deemed to have issued or sold, any shares
of  Common Stock (including the issuance or sale of shares of Common Stock owned
or  held  by  or  for the account of the Company, but excluding shares of Common
Stock  deemed to have been issued by the Company in connection with any Excluded
Securities (as defined in the SPA Securities) for a consideration per share (the
"NEW  ISSUANCE  PRICE")  less than a price (the "APPLICABLE PRICE") equal to the
Exercise  Price  in  effect  immediately  prior  to such issue or sale or deemed
issuance  or  sale (the foregoing a "DILUTIVE ISSUANCE"), then immediately after
such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an
amount  equal  to  the  product  of (A) the Exercise Price in effect immediately
prior  to such Dilutive Issuance and (B) the quotient determined by dividing (1)
the  sum  of (I) the product derived by multiplying the Exercise Price in effect
immediately  prior  to  such  Dilutive  Issuance  and the number of Common Stock
Deemed  Outstanding  immediately  prior  to such Dilutive Issuance plus (II) the
consideration,  if  any, received by the Company upon such Dilutive Issuance, by
(2)  the  product  derived  by  multiplying  (I)  the  Exercise  Price in effect
immediately  prior  to such Dilutive Issuance by (II) the number of Common Stock
Deemed  Outstanding  immediately  after  such Dilutive Issuance.  Upon each such
adjustment  of  the Exercise Price hereunder, the number of Warrant Shares shall
be  adjusted  to  the number of shares of Common Stock determined by multiplying
the  Exercise Price in effect immediately prior to such adjustment by the number
of  Warrant Shares acquirable upon exercise of this Warrant immediately prior to
such adjustment and dividing the product thereof by the Exercise Price resulting
from  such  adjustment.  For purposes of determining the adjusted Exercise Price
under  this  Section  2(a),  the  following  shall  be  applicable:

               (i)     Issuance  of  Options.  If the Company grants any Options
                       ---------------------
               and  the  lowest  price  per  share for which one share of Common
               Stock  is  issuable  upon the exercise of any such Option or upon
               conversion,  exercise  or  exchange of any Convertible Securities
               issuable  upon  exercise  of  any  such  Option  is less than the
               Applicable Price, then such share of Common Stock shall be deemed
               to be outstanding and to have been issued and sold by the Company
               at the time of the granting or sale of such Option for such price
               per  share.  For  purposes  of  this Section 2(a)(i), the "lowest
               price  per  share for which one share of Common Stock is issuable
               upon  exercise  of  such  Options or upon conversion, exercise or
               exchange  of  such  Convertible Securities" shall be equal to the
               sum  of  the lowest amounts of consideration (if any) received or
               receivable by the Company with respect to any one share of Common
               Stock  upon  the granting or sale of the Option, upon exercise of
               the  Option  and  upon  conversion,  exercise  or exchange of any
               Convertible  Security  issuable  upon exercise of such Option. No
               further  adjustment  of  the  Exercise Price or number of Warrant
               Shares  shall  be made upon the actual issuance of such shares of
               Common  Stock or of such Convertible Securities upon the exercise
               of  such  Options


                                      - 6 -
<PAGE>
               or  upon  the actual issuance of such shares of Common Stock upon
               conversion,  exercise or exchange of such Convertible Securities.

               (ii)     Issuance  of  Convertible Securities.  If the Company in
                        ------------------------------------
               any  manner  issues  or  sells any Convertible Securities and the
               lowest  price  per  share  for which one share of Common Stock is
               issuable  upon  the  conversion,  exercise or exchange thereof is
               less  than  the Applicable Price, then such share of Common Stock
               shall  be  deemed  to  be outstanding and to have been issued and
               sold  by  the Company at the time of the issuance or sale of such
               Convertible Securities for such price per share. For the purposes
               of  this  Section 2(a)(ii), the "lowest price per share for which
               one  share  of  Common  Stock  is  issuable  upon the conversion,
               exercise  or  exchange"  shall  be equal to the sum of the lowest
               amounts  of  consideration (if any) received or receivable by the
               Company  with  respect  to  one  share  of  Common Stock upon the
               issuance or sale of the Convertible Security and upon conversion,
               exercise  or  exchange  of  such Convertible Security. No further
               adjustment  of  the  Exercise  Price  or number of Warrant Shares
               shall  be  made upon the actual issuance of such shares of Common
               Stock  upon  conversion, exercise or exchange of such Convertible
               Securities,  and  if  any  such issue or sale of such Convertible
               Securities  is  made  upon  exercise  of  any  Options  for which
               adjustment  of this Warrant has been or is to be made pursuant to
               other  provisions  of this Section 2(a), no further adjustment of
               the  Exercise  Price or number of Warrant Shares shall be made by
               reason  of  such  issue  or  sale.

               (iii)     Change  in  Option Price or Rate of Conversion.  If the
                         -----------------------------------------------
               purchase  price  provided  for  in  any  Options,  the additional
               consideration,  if  any,  payable  upon  the  issue,  conversion,
               exercise  or  exchange of any Convertible Securities, or the rate
               at  which  any  Convertible  Securities  are  convertible into or
               exercisable  or exchangeable for shares of Common Stock increases
               or  decreases  at  any time, the Exercise Price and the number of
               Warrant Shares in effect at the time of such increase or decrease
               shall be adjusted to the Exercise Price and the number of Warrant
               Shares  which  would  have  been  in effect at such time had such
               Options  or Convertible Securities provided for such increased or
               decreased  purchase  price, additional consideration or increased
               or  decreased  conversion  rate,  as the case may be, at the time
               initially  granted,  issued or sold. For purposes of this Section
               2(a)(iii),  if  the  terms  of any Option or Convertible Security
               that  was  outstanding as of the date of issuance of this Warrant
               are  increased  or  decreased  in  the  manner  described  in the
               immediately  preceding  sentence, then such Option or Convertible
               Security  and  the  shares  of  Common Stock deemed issuable upon
               exercise,  conversion or exchange thereof shall be deemed to have
               been  issued  as  of  the  date  of such increase or decrease. No
               adjustment  pursuant  to  this Section 2(a) shall be made if such
               adjustment would result in an increase of the Exercise Price then
               in  effect  or  a  decrease  in  the  number  of  Warrant Shares.


                                      - 7 -
<PAGE>
               (iv)     Calculation  of  Consideration  Received.  In  case  any
                        ----------------------------------------
               Option  is  issued  in connection with the issue or sale of other
               securities  of  the  Company,  together comprising one integrated
               transaction  in  which  no specific consideration is allocated to
               such  Options  by the parties thereto, the Options will be deemed
               to  have  been issued for a consideration of $0.01. If any shares
               of  Common Stock, Options or Convertible Securities are issued or
               sold  or  deemed  to  have  been  issued  or  sold  for cash, the
               consideration  received  therefor  will  be  deemed to be the net
               amount  received by the Company therefor. If any shares of Common
               Stock, Options or Convertible Securities are issued or sold for a
               consideration  other  than cash, the amount of such consideration
               received  by  the  Company  will  be  the  fair  value  of  such
               consideration,  except  where  such  consideration  consists  of
               securities, in which case the amount of consideration received by
               the  Company  will  be the Closing Sale Price of such security on
               the  date  of  receipt. If any shares of Common Stock, Options or
               Convertible  Securities  are  issued  to  the  owners  of  the
               non-surviving  entity  in connection with any merger in which the
               Company  is  the  surviving  entity,  the amount of consideration
               therefor  will  be deemed to be the fair value of such portion of
               the  net  assets  and  business of the non-surviving entity as is
               attributable  to  such  shares  of  Common  Stock,  Options  or
               Convertible Securities, as the case may be. The fair value of any
               consideration  other  than  cash or securities will be determined
               jointly  by the Company and the Required Holders. If such parties
               are  unable  to  reach  agreement  within ten (10) days after the
               occurrence  of  an  event  requiring  valuation  (the  "VALUATION
               EVENT"),  the fair value of such consideration will be determined
               within  five  (5) Business Days after the tenth day following the
               Valuation  Event  by  an independent, reputable appraiser jointly
               selected  by  the  Company  and  the  Required  Holders.  The
               determination  of  such appraiser shall be final and binding upon
               all  parties  absent  manifest error and the fees and expenses of
               such  appraiser  shall  be  borne  by  the  Company.

               (v)     Record  Date.  If  the  Company  takes  a  record  of the
                       ------------
               holders  of  shares  of Common Stock for the purpose of entitling
               them  (A)  to receive a dividend or other distribution payable in
               shares  of  Common Stock, Options or in Convertible Securities or
               (B)  to subscribe for or purchase shares of Common Stock, Options
               or  Convertible  Securities, then such record date will be deemed
               to be the date of the issue or sale of the shares of Common Stock
               deemed  to  have been issued or sold upon the declaration of such
               dividend  or the making of such other distribution or the date of
               the  granting  of  such right of subscription or purchase, as the
               case  may  be.

               (b)     Adjustment  upon  Subdivision or Combination of shares of
                       ---------------------------------------------------------
Common  Stock.  If  the  Company  at  any time on or after the Subscription Date
-------------
subdivides  (by  any stock split, stock dividend, recapitalization or otherwise)
one  or  more  classes  of its outstanding shares of Common Stock into a greater
number  of  shares,  the  Exercise  Price  in  effect


                                      - 8 -
<PAGE>
immediately  prior  to  such subdivision will be proportionately reduced and the
number  of  Warrant Shares will be proportionately increased.  If the Company at
any  time  on  or after the Subscription Date  combines (by combination, reverse
stock  split  or  otherwise)  one  or  more classes of its outstanding shares of
Common  Stock  into  a  smaller  number  of shares, the Exercise Price in effect
immediately  prior to such combination will be proportionately increased and the
number  of  Warrant  Shares  will  be proportionately decreased.  Any adjustment
under  this  Section 2(b) shall become effective at the close of business on the
date  the  subdivision  or  combination  becomes  effective.

               (c)     Other  Events.  If  any  event  occurs  of  the  type
                       -------------
contemplated  by  the provisions of this Section 2(c) but not expressly provided
for  by  such  provisions  (including, without limitation, the granting of share
appreciation rights, phantom share rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate adjustment in the
Exercise Price so as to protect the rights of the Holders; provided that no such
adjustment  will increase the Exercise Price as otherwise determined pursuant to
this  Section  2(c).

          3.     RIGHTS  UPON  DISTRIBUTION  OF  ASSETS.  If  the  Company shall
                 --------------------------------------
declare  or  make any dividend or other distribution of its assets (or rights to
acquire  its  assets)  to holders of shares of Common Stock, by way of return of
capital  or  otherwise (including, without limitation, any distribution of cash,
stock  or  other  securities not addressed by Section 2, property or options not
addressed  by  Section  2  by  way  of  a  dividend, spin off, reclassification,
corporate  rearrangement, scheme of arrangement or other similar transaction) (a
"DISTRIBUTION"),  at  any time after the issuance of this Warrant, then, in each
such  case:

               (a)     any  Exercise  Price  in  effect immediately prior to the
close  of  business on the record date fixed for the determination of holders of
shares  of  Common  Stock entitled to receive the Distribution shall be reduced,
effective as of the close of business on such record date, to a price determined
by  multiplying  such  Exercise  Price  by a fraction of which (i) the numerator
shall  be  the  Closing  Bid Price of a share of Common Stock on the trading day
immediately  preceding  such record date minus the value of the Distribution (as
determined  in good faith by the Company's Board of Directors) applicable to one
share  of  Common Stock, and (ii) the denominator shall be the Closing Bid Price
of  the  shares  of  Common  Stock on the trading day immediately preceding such
record  date;  and

               (b)     the  number  of  Warrant  Shares  shall be increased to a
number  of  shares  equal  to  the  number  of shares of Common Stock obtainable
immediately  prior  to  the  close  of business on the record date fixed for the
determination  of  holders  of  shares  of  Common Stock entitled to receive the
Distribution  multiplied  by  the  reciprocal  of  the fraction set forth in the
immediately  preceding  paragraph  (a);  provided  that  in  the  event that the
Distribution  is  of  shares of Common Stock (or common stock) ("OTHER SHARES OF
COMMON  STOCK")  of  a  company  whose  common  shares  are traded on a national
securities  exchange  or  a national automated quotation system, then the Holder
may  elect to receive a warrant to purchase Other Shares of Common Stock in lieu
of  an  increase  in  the  number of Warrant Shares, the terms of which shall be
identical  to  those  of  this  Warrant,  except  that  such  warrant  shall  be
exercisable into the number of shares of Other Shares of Common Stock that would
have  been  payable  to  the  Holder pursuant to the Distribution had the Holder
exercised  this  Warrant  immediately  prior  to  such  record  date and with an
aggregate  exercise  price  equal  to  the  product  of  the amount by which the


                                      - 9 -
<PAGE>
exercise  price  of  this Warrant was decreased with respect to the Distribution
pursuant  to the terms of the immediately preceding paragraph (a) and the number
of Warrant Shares calculated in accordance with the first part of this paragraph
(b).

          4.     PURCHASE  RIGHTS;  FUNDAMENTAL  TRANSACTIONS.
                 --------------------------------------------

               (a)     Purchase Rights.  In addition to any adjustments pursuant
                       ---------------
to  Section  2  above,  if  at  any time the Company grants, issues or sells any
Options,  Convertible  Securities  or  rights  to  purchase  stock,  warrants,
securities  or  other  property  pro  rata to the record holders of any class of
shares  of  Common  Stock  (the  "PURCHASE RIGHTS"), then, upon exercise of this
Warrant,  the  Holder  will be entitled to acquire, upon the terms applicable to
such  Purchase Rights, the aggregate Purchase Rights which the Holder could have
acquired  if  the  Holder  had held the proportionate number of shares of Common
Stock  acquirable  upon  exercise  of  this  Warrant  (without  regard  to  any
limitations  on  the  exercise  of  this Warrant) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or,  if  no  such  record  is  taken, the date as of which the record holders of
shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase  Rights.

               (b)     Fundamental  Transactions.  If the Company enters into or
                       -------------------------
is  party  to a Fundamental Transaction, then the Holder shall have the right to
either (A) purchase and receive upon the basis and upon the terms and conditions
herein  specified  and  in  lieu  of  the Warrant Shares immediately theretofore
issuable  upon  exercise  of  the  Warrant,  such shares of stock, securities or
assets  (including  cash) as would have been issuable or payable with respect to
or  in  exchange  for  a number of Warrant Shares equal to the number of Warrant
Shares  immediately  theretofore issuable upon exercise of the Warrant, had such
Fundamental  Transaction  not  taken place or (B) require the repurchase of this
Warrant  for  a  purchase  price,  payable in cash within five (5) business days
after  such  request,  equal  to  the  Black  Scholes  Value  of  the  remaining
unexercised  portion  of this Warrant on the date of such request.  The terms of
any  agreement  pursuant  to  which  a Fundamental Transaction is effected shall
include  terms  requiring  any  such successor or surviving entity and Holder to
comply with the provisions of this Section 4(b).  The provisions of this Section
                                   ------------
shall  apply  similarly  and  equally to successive Fundamental Transactions and
shall  be  applied  without  regard  to  any limitations on the exercise of this
Warrant.

          5.     NONCIRCUMVENTION.  The Company hereby covenants and agrees that
                 ----------------
the  Company  will not, by amendment of its Articles of Incorporation, Bylaws or
through any reorganization, transfer of assets, consolidation, merger, scheme of
arrangement,  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,  and  will  at  all  times  in  good  faith carry out all the
provisions  of  this  Warrant  and take all action that is required hereunder to
protect  the  rights  of  the  Holder.  Without  limiting  the generality of the
foregoing,  the  Company  (i)  shall not increase the par value of any shares of
Common  Stock  receivable  upon  the exercise of this Warrant above the Exercise
Price  then  in  effect, (ii) shall take all such actions as may be necessary or
appropriate  in  order  that the Company may validly and legally have the Common
Stock  fully  paid  and  nonassessable shares of Common Stock transferred to the
Holder upon the exercise of this Warrant, and (iii) shall, so long as any of the
SPA  Warrants  are  outstanding,  take  all action necessary to reserve and keep
available  out  of  its  authorized  and  unissued  shares  of


                                     - 10 -
<PAGE>
Common  Stock,  solely  for  the  purpose  of  effecting the exercise of the SPA
Warrants,  120%  (or  such  lesser  amount  limited by the SEC) of the number of
shares  of  Common  Stock  as shall from time to time be necessary to effect the
exercise of the SPA Warrants then outstanding (without regard to any limitations
on  exercise).

          6.     WARRANT  HOLDER  NOT DEEMED A STOCKHOLDER.  Except as otherwise
                 -----------------------------------------
specifically  provided herein, the Holder, solely in such Person's capacity as a
holder of this Warrant, shall not be entitled to vote or receive dividends or be
deemed  the  holder  of  share capital of the Company for any purpose, nor shall
anything  contained  in  this  Warrant  be  construed to confer upon the Holder,
solely  in  such  Person's  capacity  as  the Holder of this Warrant, any of the
rights  of  a  shareholder of the Company or any right to vote, give or withhold
consent  to  any  corporate  action (whether any reorganization, issue of stock,
reclassification  of  stock,  consolidation,  merger,  conveyance or otherwise),
receive  notice  of  meetings,  receive  dividends  or  subscription  rights, or
otherwise,  prior to the issuance to the Holder of the Warrant Shares which such
Person  is  then  entitled to receive upon the due exercise of this Warrant.  In
addition,  nothing  contained in this Warrant shall be construed as imposing any
liabilities  on  the  Holder  to  purchase any securities (upon exercise of this
Warrant  or otherwise) or as a shareholder of the Company.  Notwithstanding this
Section  6, the Company shall provide the Holder with copies of the same notices
and  other  information  given  to  the  shareholders  of the Company generally,
contemporaneously  with  the  giving  thereof  to  its  shareholders.

          7.     REISSUANCE  OF  WARRANTS.
                 ------------------------

               (a)     Transfer  of  Warrant.  If  this  Warrant  is  to  be
                       ---------------------
transferred,  the  Holder shall surrender this Warrant to the Company, whereupon
the  Company will forthwith issue and deliver upon the order of the Holder a new
Warrant (in accordance with Section 7(d)), registered as the Holder may request,
representing  the  right  to  purchase  the  number  of  Warrant  Shares  being
transferred  by  the Holder and, if less then the total number of Warrant Shares
then  underlying this Warrant is being transferred, a new Warrant (in accordance
with  Section  7(d)) to the Holder representing the right to purchase the number
of  Warrant  Shares  not  being  transferred.

               (b)     Lost,  Stolen  or Mutilated Warrant.  Upon receipt by the
                       -----------------------------------
Company  of  evidence reasonably satisfactory to the Company of the loss, theft,
destruction  or  mutilation  of this Warrant, and, in the case of loss, theft or
destruction,  of any indemnification undertaking by the Holder to the Company in
customary  form  and, in the case of mutilation, upon surrender and cancellation
of  this  Warrant,  the  Company  shall  execute and deliver to the Holder a new
Warrant (in accordance with Section 7(d)) representing the right to purchase the
Warrant  Shares  then  underlying  this  Warrant.

               (c)     Exchangeable  for  Multiple  Warrants.  This  Warrant  is
                       -------------------------------------
exchangeable, upon the surrender hereof by the Holder at the principal office of
the  Company,  for  a  new Warrant or Warrants (in accordance with Section 7(d))
representing in the aggregate the right to purchase the number of Warrant Shares
then underlying this Warrant, and each such new Warrant will represent the right
to  purchase  such portion of such Warrant Shares as is designated by the Holder
at  the  time  of  such  surrender;  provided,  however,  that  no  Warrants for
fractional  shares  of  Common  Stock  shall  be  given.


                                     - 11 -
<PAGE>
               (d)     Issuance  of  New  Warrants.  Whenever  the  Company  is
                       ---------------------------
required  to issue a new Warrant pursuant to the terms of this Warrant, such new
Warrant  (i)  shall be of like tenor with this Warrant, (ii) shall represent, as
indicated  on  the  face  of such new Warrant, the right to purchase the Warrant
Shares  then  underlying  this  Warrant  (or  in the case of a new Warrant being
issued  pursuant  to Section 7(a) or Section 7(c), the Warrant Shares designated
by  the  Holder  which,  when  added  to  the  number  of shares of Common Stock
underlying  the other new Warrants issued in connection with such issuance, does
not  exceed  the  number  of Warrant Shares then underlying this Warrant), (iii)
shall  have an issuance date, as indicated on the face of such new Warrant which
is  the  same  as  the  Issuance  Date,  and (iv) shall have the same rights and
conditions  as  this  Warrant.

          8.     NOTICES.  Whenever  notice  is  required to be given under this
                 -------
Warrant,  unless  otherwise  provided  herein,  such  notice  shall  be given in
accordance  with Section 9(f) of the Securities Purchase Agreement.  The Company
shall  provide  the  Holder  with  prompt  written  notice  of all actions taken
pursuant  to  this Warrant, including in reasonable detail a description of such
action  and  the  reason  therefore.  Without  limiting  the  generality  of the
foregoing, the Company will give written notice to the Holder (i) promptly after
any  adjustment  of  the Exercise Price, setting forth in reasonable detail, and
certifying,  the calculation of such adjustment and (ii) at least ten days prior
to  the  date  on  which the Company closes its books or takes a record (A) with
respect  to  any  dividend  or distribution upon the shares of Common Stock, (B)
with  respect  to  any  grants,  issuances  or sales of any Options, Convertible
Securities  or  rights to purchase stock, warrants, securities or other property
to  holders of shares of Common Stock or (C) for determining rights to vote with
respect  to any Fundamental Transaction, dissolution or liquidation, provided in
each case that such information shall be made known to the public prior to or in
conjunction  with  such  notice  being  provided  to  the  Holder.

          9.     AMENDMENT AND WAIVER.  Except as otherwise provided herein, the
                 --------------------
provisions  of  this  Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it,  only  if  the  Company  has  obtained  the  written consent of the Required
Holders; provided that no such action may increase the exercise price of any SPA
Warrant  or  decrease  the  number  of  shares or class of stock obtainable upon
exercise  of any SPA Warrant without the written consent of the Holder.  No such
amendment  shall  be effective to the extent that it applies to less than all of
the  holders  of  the  SPA  Warrants  then  outstanding.

          10.     SEVERABILITY.  If  any  provision  of  this  Warrant  or  the
                  ------------
application  thereof becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of the terms of this Warrant
will  continue  in  full  force  and  effect.

          11.     GOVERNING  LAW.  This  Warrant  shall  be  governed  by  and
                  --------------
construed  and  enforced  in  accordance  with, and all questions concerning the
construction,  validity, interpretation and performance of this Warrant shall be
governed  by,  the internal laws of the State of New York, without giving effect
to  any choice of law or conflict of law provision or rule (whether of the State
of  New York or any other jurisdictions) that would cause the application of the
laws  of  any  jurisdictions  other  than  the  State  of  New  York.


                                     - 12 -
<PAGE>
          12.     CONSTRUCTION;  HEADINGS.  This  Warrant  shall be deemed to be
                  -----------------------
jointly  drafted  by  the  Company and all the Buyers and shall not be construed
against  any person as the drafter hereof.  The headings of this Warrant are for
convenience  of  reference  and  shall  not  form  part  of,  or  affect  the
interpretation  of,  this  Warrant.

          13.     DISPUTE  RESOLUTION.  In  the  case  of  a  dispute  as to the
                  -------------------
determination of the Exercise Price or the arithmetic calculation of the Warrant
Shares,  the  Company  shall  submit  the  disputed determinations or arithmetic
calculations  via  facsimile within two Business Days of receipt of the Exercise
Notice  giving  rise to such dispute, as the case may be, to the Holder.  If the
Holder  and  the  Company  are  unable  to  agree  upon  such  determination  or
calculation  of  the  Exercise Price or the Warrant Shares within three Business
Days of such disputed determination or arithmetic calculation being submitted to
the  Holder,  then  the  Company  shall,  within  two  Business  Days submit via
facsimile  (a)  the  disputed  determination  of  the  Exercise  Price  to  an
independent,  reputable  investment bank selected by the Company and approved by
the  Holder  or (b) the disputed arithmetic calculation of the Warrant Shares to
the  Company's independent, outside accountant.  The Company shall cause, at the
expense  of the losing party, the investment bank or the accountant, as the case
may be, to perform the determinations or calculations and notify the Company and
the  Holder  of  the  results  no  later than ten Business Days from the time it
receives the disputed determinations or calculations.  Such investment bank's or
accountant's  determination or calculation, as the case may be, shall be binding
upon  all  parties  absent  demonstrable  error.

          14.     REMEDIES,  OTHER  OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
                  -------------------------------------------------------------
The remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant and the other Transaction Documents,
at  law  or  in  equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder right
to pursue actual damages for any failure by the Company to comply with the terms
of  this  Warrant.  The  Company  acknowledges  that  a  breach  by  it  of  its
obligations  hereunder  will  cause  irreparable harm to the Holder and that the
remedy  at  law  for  any  such breach may be inadequate.  The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder of
this  Warrant shall be entitled, in addition to all other available remedies, to
an  injunction restraining any breach, without the necessity of showing economic
loss  and  without  any  bond  or  other  security  being  required.

          15.     TRANSFER.  This  Warrant  may  be  offered  for  sale,  sold,
                  --------
transferred  or  assigned  without  the  consent  of  the Company, except as may
otherwise  be  required  by  Section  2(f) of the Securities Purchase Agreement.

          16.     CERTAIN  DEFINITIONS.  For  purposes  of  this  Warrant,  the
                  --------------------
following  terms  shall  have  the  following  meanings:

               (a)     "BLACK  SCHOLES  VALUE"  means  the value of this Warrant
based  on  the  Black  and  Scholes  Option Pricing Model obtained from the "OV"
function  on Bloomberg determined as of the day immediately following the public
announcement  of  the  applicable  Fundamental  Transaction and reflecting (i) 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  such date of request


                                     - 13 -
<PAGE>
and  (ii)  an  expected  volatility  equal to the greater of 60% and the 100 day
volatility  obtained  from  the  HVT  function  on  Bloomberg.

               (b)     "BLOOMBERG"  means  Bloomberg  Financial  Markets.

               (c)     "BUSINESS  DAY" means any day other than Saturday, Sunday
or other day on which commercial banks in The City of New York are authorized or
required  by  law  to  remain  closed.

               (d)     "CLOSING  BID  PRICE" and "CLOSING SALE PRICE" means, for
any  security  as of any date, the last closing bid price and last closing trade
price,  respectively,  for such security on the Principal Market, as reported by
Bloomberg,  or,  if  the Principal Market begins to operate on an extended hours
basis  and  does not designate the closing bid price or the closing trade price,
as  the  case may be, then the last bid price or last trade price, respectively,
of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg,
or,  if the Principal Market is not the principal securities exchange or trading
market  for  such  security,  the  last  closing  bid price or last trade price,
respectively,  of  such security on the principal securities exchange or trading
market  where  such security is listed or traded as reported by Bloomberg, or if
the  foregoing  do  not  apply,  the last closing bid price or last trade price,
respectively,  of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price  or  last  trade  price,  respectively,  is  reported for such security by
Bloomberg,  the  average  of the bid prices, or the ask prices, respectively, of
any  market  makers  for  such security as reported in the "pink sheets" by Pink
Sheets  LLC  (formerly the National Quotation Bureau, Inc.).  If the Closing Bid
Price  or  the  Closing  Sale  Price  cannot  be  calculated for a security on a
particular  date  on  any  of  the foregoing bases, the Closing Bid Price or the
Closing  Sale  Price, as the case may be, of such security on such date shall be
the  fair market value as mutually determined by the Company and the Holder.  If
the  Company  and  the  Holder are unable to agree upon the fair market value of
such  security, then such dispute shall be resolved pursuant to Section 12.  All
such  determinations  to be appropriately adjusted for any stock dividend, stock
split,  stock  combination  or  other  similar transaction during the applicable
calculation  period.

               (e)     "COMMON  STOCK"  means (i) the Company's shares of Common
Stock,  $0.10  par  value  per share, and (ii) any share capital into which such
Common  Stock  shall  have  been  changed  or any share capital resulting from a
reclassification  of  such  Common  Stock.

               (f)     "COMMON  STOCK  DEEMED  OUTSTANDING"  means, at any given
time,  the  number  of shares of Common Stock actually outstanding at such time,
plus  the  number of shares of Common Stock deemed to be outstanding pursuant to
Sections  2(a)(i)  and  2(a)(ii)  hereof  regardless  of  whether the Options or
Convertible  Securities are actually exercisable at such time, but excluding any
shares  of  Common  Stock  owned or held by or for the account of the Company or
issuable  upon conversion and exercise, as applicable, of the SPA Securities and
the  Warrants.

               (g)     "CONVERTIBLE  SECURITIES"  means  any stock or securities
(other  than  Options) directly or indirectly convertible into or exercisable or
exchangeable  at  the  option  of the holder thereof for shares of Common Stock.


                                     - 14 -
<PAGE>
               (h)     "ELIGIBLE  MARKET"  means  the  Principal  Market,  the
American  Stock  Exchange, The New York Stock Exchange, Inc., the Nasdaq Capital
Market  or  the  Nasdaq  National  Market.

               (i)     "EXPIRATION  DATE"  means the date sixty months after the
Issuance  Date  or,  if such date falls on a day other than a Business Day or on
which  trading  does  not  take place on the Principal Market (a "HOLIDAY"), the
next  date  that  is  not  a  Holiday.

               (j)     "FUNDAMENTAL  TRANSACTION"  means that the Company shall,
directly  or indirectly, in one or more related transactions, (i) consolidate or
merge  with  or  into  (whether or not the Company is the surviving corporation)
another  Person,  or (ii) sell, assign, transfer, convey or otherwise dispose of
all  or  substantially all of the properties or assets of the Company to another
Person,  or  (iii)  allow  another Person to make a purchase, tender or exchange
offer that is accepted by such number of holders of outstanding shares of Common
Stock  resulting  in  such  Person (together with any affiliates of such Person)
holding  more  than  the  50%  of  the  outstanding  Common Stock of the Company
following  such  purchase,  tender or exchange offer, or (iv) consummate a stock
purchase agreement or other business combination (including, without limitation,
a  reorganization,  recapitalization,  spin-off  or  scheme of arrangement) with
another  Person  resulting in such other Person (together with any affiliates of
such  person)  holding  more than the 50% of the outstanding Common Stock of the
Company  following  such stock purchase agreement or other business combination,
or  (v)  reorganize,  recapitalize  or  reclassify  its  Common  Stock.

               (k)     "OPTIONS"  means  any  rights,  warrants  or  options  to
subscribe  for  or  purchase  shares  of Common Stock or Convertible Securities.

               (l)     "PERSON"  means  an  individual,  a  limited  liability
company,  a  partnership,  a  joint  venture,  a  corporation,  a  trust,  an
unincorporated organization, any other entity and a government or any department
or  agency  thereof.

               (m)     "PRINCIPAL  MARKET"  means  the  NASD OTC Bulletin Board.

               (n)     "REGISTRATION  RIGHTS  AGREEMENT"  means  that  certain
registration  rights  agreement  by  and  among  the  Company  and  the  Buyers.

               (o)     "REQUIRED  HOLDERS" means the holders of the SPA Warrants
representing  at  least  a majority of shares of Common Stock underlying the SPA
Warrants  then  outstanding.

               (p)     "SPA  SECURITIES"  means  the  Preferred  Stock  issued
pursuant  to  the  Securities  Purchase  Agreement.

                            [SIGNATURE PAGE FOLLOWS]


                                     - 15 -
<PAGE>
     IN  WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common
Stock  to  be  duly  executed  as  of  the  Issuance  Date  set  out  above.


                                        CHARYS  HOLDING  COMPANY,  INC.


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


<PAGE>
                                                                       EXHIBIT A

                                 EXERCISE NOTICE

            TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
                        WARRANT TO PURCHASE COMMON STOCK

                          CHARYS HOLDING COMPANY, INC.

     The  undersigned  holder  hereby  exercises  the  right  to  purchase
                   of  the  shares  of Common Stock ("WARRANT SHARES") of Charys
-----------------
Holding  Company, Inc., a Delaware corporation (the "COMPANY"), evidenced by the
attached  Warrant  to  Purchase Common Stock (the "WARRANT").  Capitalized terms
used  herein  and  not  otherwise defined shall have the respective meanings set
forth  in  the  Warrant.

     1.  Form  of  Exercise  Price.  The  Holder  intends  that  payment  of the
Exercise  Price  shall  be  made  as:

                        a  "Cash  Exercise"  with  respect  to
          ------------      --------------                     -----------------
                        Warrant  Shares;  and/or

                        a  "Cashless  Exercise"  with respect to
          ------------     --------------------                  ---------------
                        Warrant  Shares.

     2.  Notwithstanding  anything  to  the  contrary  contained  herein,  this
Exercise  Notice  shall constitute a representation by the Holder of the Warrant
submitting  this  Exercise  Notice  that,  after  giving  effect to the exercise
provided for in this Exercise Notice, such Holder (together with its affiliates)
will  not  have  beneficial ownership (together with the beneficial ownership of
such  Person's  affiliates)  of a number of shares of Common Stock which exceeds
the  maximum  percentage  of  the  total  outstanding  shares of Common Stock as
determined  pursuant  to  the  provisions  of  Section  1(f)(i)  of the Warrant.

     3.  Payment  of Exercise Price.  In the event that the holder has elected a
Cash  Exercise  with  respect  to  some  or  all  of  the  Warrant  Shares to be
transferred  pursuant  hereto, the holder shall pay the Aggregate Exercise Price
in  the  sum of $                    to the Company in accordance with the terms
                 -------------------
of  the  Warrant.

     4.  Delivery  of  Warrant  Shares.  The Company shall deliver to the holder
            Warrant  Shares  in  accordance  with  the  terms  of  the  Warrant.
----------

Date:                    ,
       --------------- --  ------


-------------------------------------
  Name  of  Registered  Holder


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


<PAGE>
                                 ACKNOWLEDGMENT


     Gottbetter  &  Partners,  LLP  hereby acknowledges this Exercise Notice and
will  transfer                        shares  of  Common  Stock.
                --------------------

                                        GOTTBETTER  &  PARTNERS.  LLP


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


<PAGE>
NEITHER  THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR  THE  SECURITIES  INTO  WHICH  THESE  SECURITIES  ARE EXERCISEABLE HAVE BEEN
REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES  LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR  ASSIGNED  (I)  IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE  SECURITIES  UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF  COUNSEL,  IN  A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER  SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED PURSUANT TO AN
AVAILABLE  EXEMPTION  UNDER  THE  1933 ACT IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

                          CHARYS HOLDING COMPANY, INC.

                        WARRANT TO PURCHASE COMMON STOCK

Warrant No.: 006
Number of Shares of Common Stock: 333,333
Date of Issuance: May 19, 2006 ("ISSUANCE DATE")

          Charys  Holding Company, Inc., a Delaware corporation (the "COMPANY"),
hereby  certifies  that,  for  good  and valuable consideration, the receipt and
sufficiency  of  which  are hereby acknowledged, UBS O'CONNOR LLC F/B/O O'CONNOR
PIPES  CORPORATE  STRATEGIES  MASTER  LTD.,  the registered holder hereof or its
permitted  assigns  (the  "HOLDER"), is entitled, subject to the terms set forth
below,  to  purchase  from the Company, at the Exercise Price (as defined below)
then  in  effect,  upon  surrender  of  this  Warrant  to  Purchase Common Stock
(including any Warrants to Purchase Common Stock issued in exchange, transfer or
replacement  hereof,  the  "WARRANT"), at any time or times on or after the date
hereof  but  not  after  11:59  p.m.,  New York Time, on the Expiration Date (as
defined  below),  Three Hundred Thirty-Three Thousand Three Hundred Thirty-Three
(333,333)  fully  paid  nonassessable  shares of Common Stock (as defined below)
(the "WARRANT SHARES"). Except as otherwise defined herein, capitalized terms in
this  Warrant  shall  have the meanings set forth in Section 16. This Warrant is
one  of  the  Warrants  to  purchase  Common  Stock  (the "SPA WARRANTS") issued
pursuant to Section 1 of that certain Securities Purchase Agreement, dated as of
May  19,  2006  (the  "SUBSCRIPTION  DATE"),  by  and  among the Company and the
investors  (the  "BUYERS")  referred  to  therein  (the  "SECURITIES  PURCHASE
AGREEMENT").

          1.     EXERCISE  OF  WARRANT.
                 ---------------------

               (a)     Mechanics  of  Exercise.  Subject  to  the  terms  and
                       -----------------------
conditions  hereof  (including, without limitation, the limitations set forth in
Section  1(f)),  this  Warrant  may  be exercised by the Holder on any day on or
after the date hereof, in whole or in part, by (i) delivery


<PAGE>
of  a  written  notice,  in the form attached hereto as Exhibit A (the "EXERCISE
                                                        ---------
NOTICE"), of the Holder's election to exercise this Warrant and (ii) (A) payment
to  Gottbetter  &  Partners,  LLP (the "ESCROW AGENT") of an amount equal to the
applicable Exercise Price multiplied by the number of Warrant Shares as to which
this Warrant is being exercised (the "AGGREGATE EXERCISE PRICE") in cash or wire
transfer  of  immediately  available  funds or (B) by notifying the Escrow Agent
that this Warrant is being exercised pursuant to a Cashless Exercise (as defined
in  Section  1(d)).  The  Holder  shall  not be required to deliver the original
Warrant  in order to effect an exercise hereunder. Execution and delivery of the
Exercise  Notice  with respect to less than all of the Warrant Shares shall have
the  same  effect  as cancellation of the original Warrant and issuance of a new
Warrant evidencing the right to purchase the remaining number of Warrant Shares.
On  or  before  the  second  Business Day following the date on which the Escrow
Agent  has received each of the Exercise Notice and the Aggregate Exercise Price
(or  notice  of  a  Cashless  Exercise) (the "EXERCISE DELIVERY DOCUMENTS"), the
Escrow  Agent  shall  transmit by facsimile an acknowledgment of confirmation of
receipt  of the Exercise Delivery Documents to the Holder and the Company. On or
before  the  third  Business  Day  following  the  date on which the Company has
received all of the Exercise Delivery Documents (the "SHARE DELIVERY DATE"), the
Escrow  Agent  shall  (X)  provided  that  the  Company's  transfer  agent  is
participating  in The Depository Trust Company ("DTC") Fast Automated Securities
Transfer  Program,  upon the request of the Holder, credit such aggregate number
of  shares  of  Common  Stock  to  which the Holder is entitled pursuant to such
exercise  to the Holder's or its designee's balance account with DTC through its
Deposit  Withdrawal  Agent  Commission  system, or (Y) if the Company's transfer
agent  is  not  participating  in  the  DTC  Fast  Automated Securities Transfer
Program,  transfer and dispatch by overnight courier to the address as specified
in  the  Exercise  Notice,  certificates for the approximate number of shares of
Common  Stock  to  which  the Holder is entitled pursuant to such exercise. Upon
delivery  of  the  Exercise  Notice  and Aggregate Exercise Price referred to in
clause  (ii)(A) above or notification to the Escrow Agent of a Cashless Exercise
referred  to  in  Section  1(d),  the  Holder  shall be deemed for all corporate
purposes  to have become the holder of record of the Warrant Shares with respect
to  which  this Warrant has been exercised, irrespective of the date of delivery
of the certificates evidencing such Warrant Shares. If this Warrant is submitted
in  connection with any exercise pursuant to this Section 1(a) and the number of
Warrant  Shares  represented  by  this Warrant submitted for exercise is greater
than  the  number  of  Warrant  Shares being acquired upon an exercise, then the
Company  shall  as  soon as practicable and in no event later than five Business
Days  after  any  exercise  and  at  its  own  expense,  issue a new Warrant (in
accordance  with  Section 7(d)) representing the right to purchase the number of
Warrant  Shares  purchasable  immediately  prior  to  such  exercise  under this
Warrant, less the number of Warrant Shares with respect to which this Warrant is
exercised.  No  fractional shares of Common Stock are to be transferred upon the
exercise  of this Warrant, but rather the number of shares of Common Stock to be
transferred  shall  be rounded up to the nearest whole number. The Company shall
pay  any  and  all  taxes  which may be payable with respect to the issuance and
delivery  of Warrant Shares upon exercise of this Warrant. In the event that the
Escrow  Agent  does  not  have  a sufficient number of shares of Common Stock to
transfer  to  the  Holder  upon the exercise of this Warrant (including, but not
limited  to,  by  reason  of  additional  Warrant  Shares  required to be issued
pursuant  to  Section  2 herein, and such Warrant Shares had not previously been
delivered  to the Escrow Agent), then the Company shall within 1 Business Day of
the  date  of  delivery  of an Exercise Notice deliver such additional number of
Warrant Shares to the Escrow Agent.


                                      - 2 -
<PAGE>
               (b)     Exercise  Price.  For purposes of this Warrant, "EXERCISE
                       ---------------
PRICE" means $6.24, subject to adjustment as provided herein.

               (c)     Company's  Failure  to  Timely  Deliver  Securities.  In
                       ---------------------------------------------------
addition  to the foregoing, if within three (3) Trading Days after the Company's
receipt  of the facsimile copy of an exercise notice the Company shall cause the
Escrow  Agent  to  fail to transfer the Escrow Shares to the Buyer, and if on or
after  such  third  Trading  Day  the  Buyer is required to purchase (in an open
market  transaction  or otherwise) shares of Common Stock in order to deliver in
satisfaction  of a sale initiated by the Buyer in anticipation of receiving from
the Company the shares of Common Stock issuable upon such exercise (a "BUY-IN"),
then the Company shall, within three (3) Business Days after the Buyer's request
and  in  the  Buyer's  discretion, either (i) pay cash to the Buyer in an amount
equal  to  the Buyer's total purchase price (including brokerage commissions, if
any)  for the shares of Common Stock so purchased (the "BUY-IN PRICE"), at which
point the Company's obligation to deliver such Escrow Shares resulting from such
exercise  shall  terminate,  or (ii) promptly honor its obligation to deliver to
the  Buyer a certificate or certificates representing such Escrow Shares and pay
cash to the holder in an amount equal to the excess (if any) of the Buy-In Price
over  the  product  of  (A) such number of shares of Common Stock, times (B) the
Closing  Sale  Price  on  the  date  of exercise. Nothing herein shall limit the
holder's  right to pursue actual damages for the Company's failure to maintain a
sufficient  number  of  authorized  shares of Common Stock or to otherwise issue
shares  of  Common  Stock  upon  exercise of this Warrant in accordance with the
terms  hereof,  and  the  holder  shall  have  the  right to pursue all remedies
available at law or in equity (including a decree of specific performance and/or
injunctive  relief).  Notwithstanding  the  foregoing, the Company shall have no
obligations  to  cause  its  Escrow Agent to deliver Escrow Shares or to pay any
Buy-In Price under this Section 1(c) if the Company has timely delivered in good
faith a bonafide objection to such conversion or exercise notice.

               (d)     Cashless  Exercise.  Notwithstanding  anything  contained
                       ------------------
herein  to  the  contrary,  if  a  Registration  Statement  (as  defined  in the
Registration  Rights Agreement) covering the Warrant Shares that are the subject
of  the  Exercise Notice (the "UNAVAILABLE WARRANT SHARES") is not available for
the  resale  of  such  Unavailable  Warrant  Shares, the Holder may, in its sole
discretion, exercise this Warrant in whole or in part and, in lieu of making the
cash payment otherwise contemplated to be made to the Company upon such exercise
in  payment  of the Aggregate Exercise Price, elect instead to receive upon such
exercise  the "Net Number" of shares of Common Stock determined according to the
following formula (a "CASHLESS EXERCISE"):


                                      - 3 -
<PAGE>
               Net  Number  =  (A  x  B)  -  (A  x  C)
                               -----------------------

                                          B

               For purposes of the foregoing formula:

          A=  the  total  number  of  Warrant  Shares with respect to which this
          Warrant is then being exercised.

          B= the average of the Closing Sale Price of the shares of Common Stock
          (as  reported  by  Bloomberg)  on  the  five  Trading Days immediately
          preceding the date of the Exercise Notice.

          C= the Exercise Price then in effect for the applicable Warrant Shares
               at the time of such exercise.

               (e)     Disputes.  In  the  case  of  a  dispute  as  to  the
                       --------
determination of the Exercise Price or the arithmetic calculation of the Warrant
Shares,  the  Escrow  Agent  shall promptly transfer to the Holder the number of
Warrant Shares that are not disputed and resolve such dispute in accordance with
Section 12.

               (f)     (i)     Limitations  on  Exercises; Beneficial Ownership.
                               ------------------------------------------------
The  Escrow  Agent shall not effect the exercise of this Warrant, and the Holder
shall  not  have  the  right  to exercise this Warrant, to the extent that after
giving  effect  to  such  exercise,  such  Person  (together  with such Person's
affiliates)  would  beneficially  own  (directly  or  indirectly through Warrant
Shares  or  otherwise)  in  excess  of  4.99%  of  the  shares  of  Common Stock
outstanding  immediately  after  giving effect to such exercise. For purposes of
the  foregoing  sentence,  the  aggregate  number  of  shares  of  Common  Stock
beneficially  owned (directly or indirectly through Warrant Shares or otherwise)
by  such  Person and its affiliates shall include the number of shares of Common
Stock  issuable  upon  exercise  of  this  Warrant  with  respect  to  which the
determination of such sentence is being made, but shall exclude shares of Common
Stock  which  would  be issuable upon (i) exercise of the remaining, unexercised
portion of this Warrant beneficially owned by such Person and its affiliates and
(ii)  exercise  or  conversion  of the unexercised or unconverted portion of any
other  securities  of  the  Company  beneficially  owned  by such Person and its
affiliates  (including, without limitation, any convertible notes or convertible
preferred  stock  or warrants) subject to a limitation on conversion or exercise
analogous  to  the  limitation  contained  herein.  Except  as  set forth in the
preceding  sentence, for purposes of this subsection, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934,  as  amended.  For  purposes of this Warrant, in determining the number of
outstanding  shares  of  Common  Stock,  the  Holder  may  rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company's most recent
Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the
Securities and Exchange Commission, as the case may be, (2) a more recent public
announcement  by  the  Company  or  (3)  any  other notice by the Company or the
Company's  transfer  agent  setting  forth  the number of shares of Common Stock
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of
the  Company,  including  the SPA Securities and the SPA Warrants, by the Holder
and its affiliates since the


                                      - 4 -
<PAGE>
date as of which such number of outstanding shares of Common Stock was reported.
By  written  notice  to  the  Company,  the  Holder may increase or decrease the
Maximum  Percentage  to any other percentage not in excess of 9.99% specified in
such notice; provided that (i) any such increase will not be effective until the
sixty-first  (61st)  day after such notice is delivered to the Company, and (ii)
any such increase or decrease will apply only to the Holder and not to any other
holder of SPA Warrants.

                    (ii)     Principal Market Regulation.  The Company shall not
                             ---------------------------
be  obligated  to issue any shares of Common Stock upon exercise of this Warrant
if the issuance of such shares of Common Stock would exceed the aggregate number
of  shares  of  Common  Stock  which  the  Company  may issue upon conversion or
exercise or otherwise, as applicable, of the SPA Securities and Warrants without
breaching  the  Company's  obligations  under  the  rules  or regulations of the
Principal  Market  (the  "EXCHANGE  CAP"), except that such limitation shall not
apply in the event that the Company (A) obtains the approval of its stockholders
as  required  by  the  applicable rules of the Principal Market for issuances of
Common  Stock  in  excess  of  such amount or (B) obtains a written opinion from
outside counsel to the Company that such approval is not required, which opinion
shall be reasonably satisfactory to the Required Holders. Until such approval or
written  opinion  is  obtained,  no  purchaser  of  the Warrants pursuant to the
Securities  Purchase  Agreement  (the  "PURCHASERS")  shall  be  issued  in  the
aggregate,  upon  conversion  or  exercise  or  otherwise, as applicable, of SPA
Securities  or  Warrants,  shares  of Common Stock in an amount greater than the
product  of the Exchange Cap multiplied by a fraction, the numerator of which is
the  number  of  Warrants  issued  to  the Purchasers pursuant to the Securities
Purchase  Agreement  on  the  Closing  Date  and the denominator of which is the
aggregate number of Warrants issued to the Purchasers pursuant to the Securities
Purchase  Agreement  on  the  Closing  Date (with respect to each Purchaser, the
"EXCHANGE  CAP  ALLOCATION").  In  the  event  that  any Purchaser shall sell or
otherwise  transfer  any  of  such  Purchaser's  Warrants,  the transferee, if a
registered  Holder  of  such  Warrants, shall be allocated a pro rata portion of
such  Purchaser's  Exchange  Cap  Allocation,  and the restrictions of the prior
sentence  shall  apply  to  such  transferee  with respect to the portion of the
Exchange  Cap  Allocation  allocated  to  such transferee. In the event that any
holder of Warrants shall exercise all of such holder's Warrants into a number of
shares  of  Common  Stock  which,  in  the aggregate, is less than such holder's
Exchange  Cap Allocation, then the difference between such holder's Exchange Cap
Allocation  and  the  number  of  shares of Common Stock actually issued to such
holder  shall  be  allocated  to  the respective Exchange Cap Allocations of the
remaining  registered  holders  of Warrants on a pro rata basis in proportion to
the  aggregate number of shares of Common Stock underlying the then held by each
such  holder.  To the extent required by the Principal Market, the provisions of
the  Exchange  Cap  shall  be  modified  to comply with the applicable rules and
regulations  of  the Principal Market, provided that any such changes shall not,
in  the  Holder's  reasonable  discretion,  materially  change  the terms of the
transaction contemplated hereby.

          Notwithstanding  anything in this Warrant to the contrary, the Company
shall be entitled to treat the registered holder of this Warrant as such appears
in  its  records,  as  the owner of this Warrant for all purposes; provided that
such  records  are  kept  current  using a reasonably satisfactory and customary
method intended for such purpose.


                                      - 5 -
<PAGE>
          2.     ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  The
                 ---------------------------------------------------------
Exercise  Price  and the number of Warrant Shares shall be adjusted from time to
time as follows:

               (a)     Adjustment  upon  Issuance of shares of Common Stock.  If
                       ----------------------------------------------------
and  whenever  on or after the Subscription Date the Company issues or sells, or
in  accordance  with this Section 2 is deemed to have issued or sold, any shares
of  Common Stock (including the issuance or sale of shares of Common Stock owned
or  held  by  or  for the account of the Company, but excluding shares of Common
Stock  deemed to have been issued by the Company in connection with any Excluded
Securities (as defined in the SPA Securities) for a consideration per share (the
"NEW  ISSUANCE  PRICE")  less than a price (the "APPLICABLE PRICE") equal to the
Exercise  Price  in  effect  immediately  prior  to such issue or sale or deemed
issuance  or  sale (the foregoing a "DILUTIVE ISSUANCE"), then immediately after
such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an
amount  equal  to  the  product  of (A) the Exercise Price in effect immediately
prior  to such Dilutive Issuance and (B) the quotient determined by dividing (1)
the  sum  of (I) the product derived by multiplying the Exercise Price in effect
immediately  prior  to  such  Dilutive  Issuance  and the number of Common Stock
Deemed  Outstanding  immediately  prior  to such Dilutive Issuance plus (II) the
consideration,  if  any, received by the Company upon such Dilutive Issuance, by
(2)  the  product  derived  by  multiplying  (I)  the  Exercise  Price in effect
immediately  prior  to such Dilutive Issuance by (II) the number of Common Stock
Deemed  Outstanding  immediately  after  such  Dilutive Issuance. Upon each such
adjustment  of  the Exercise Price hereunder, the number of Warrant Shares shall
be  adjusted  to  the number of shares of Common Stock determined by multiplying
the  Exercise Price in effect immediately prior to such adjustment by the number
of  Warrant Shares acquirable upon exercise of this Warrant immediately prior to
such adjustment and dividing the product thereof by the Exercise Price resulting
from  such  adjustment.  For purposes of determining the adjusted Exercise Price
under this Section 2(a), the following shall be applicable:

               (i)     Issuance  of  Options.  If the Company grants any Options
                       ---------------------
               and  the  lowest  price  per  share for which one share of Common
               Stock  is  issuable  upon the exercise of any such Option or upon
               conversion,  exercise  or  exchange of any Convertible Securities
               issuable  upon  exercise  of  any  such  Option  is less than the
               Applicable Price, then such share of Common Stock shall be deemed
               to be outstanding and to have been issued and sold by the Company
               at the time of the granting or sale of such Option for such price
               per  share.  For  purposes  of  this Section 2(a)(i), the "lowest
               price  per  share for which one share of Common Stock is issuable
               upon  exercise  of  such  Options or upon conversion, exercise or
               exchange  of  such  Convertible Securities" shall be equal to the
               sum  of  the lowest amounts of consideration (if any) received or
               receivable by the Company with respect to any one share of Common
               Stock  upon  the granting or sale of the Option, upon exercise of
               the  Option  and  upon  conversion,  exercise  or exchange of any
               Convertible  Security  issuable  upon exercise of such Option. No
               further  adjustment  of  the  Exercise Price or number of Warrant
               Shares  shall  be made upon the actual issuance of such shares of
               Common  Stock or of such Convertible Securities upon the exercise
               of such Options


                                      - 6 -
<PAGE>
               or  upon  the actual issuance of such shares of Common Stock upon
               conversion, exercise or exchange of such Convertible Securities.

               (ii)     Issuance  of  Convertible Securities.  If the Company in
                        ------------------------------------
               any  manner  issues  or  sells any Convertible Securities and the
               lowest  price  per  share  for which one share of Common Stock is
               issuable  upon  the  conversion,  exercise or exchange thereof is
               less  than  the Applicable Price, then such share of Common Stock
               shall  be  deemed  to  be outstanding and to have been issued and
               sold  by  the Company at the time of the issuance or sale of such
               Convertible Securities for such price per share. For the purposes
               of  this  Section 2(a)(ii), the "lowest price per share for which
               one  share  of  Common  Stock  is  issuable  upon the conversion,
               exercise  or  exchange"  shall  be equal to the sum of the lowest
               amounts  of  consideration (if any) received or receivable by the
               Company  with  respect  to  one  share  of  Common Stock upon the
               issuance or sale of the Convertible Security and upon conversion,
               exercise  or  exchange  of  such Convertible Security. No further
               adjustment  of  the  Exercise  Price  or number of Warrant Shares
               shall  be  made upon the actual issuance of such shares of Common
               Stock  upon  conversion, exercise or exchange of such Convertible
               Securities,  and  if  any  such issue or sale of such Convertible
               Securities  is  made  upon  exercise  of  any  Options  for which
               adjustment  of this Warrant has been or is to be made pursuant to
               other  provisions  of this Section 2(a), no further adjustment of
               the  Exercise  Price or number of Warrant Shares shall be made by
               reason of such issue or sale.

               (iii)     Change  in  Option Price or Rate of Conversion.  If the
                         -----------------------------------------------
               purchase  price  provided  for  in  any  Options,  the additional
               consideration,  if  any,  payable  upon  the  issue,  conversion,
               exercise  or  exchange of any Convertible Securities, or the rate
               at  which  any  Convertible  Securities  are  convertible into or
               exercisable  or exchangeable for shares of Common Stock increases
               or  decreases  at  any time, the Exercise Price and the number of
               Warrant Shares in effect at the time of such increase or decrease
               shall be adjusted to the Exercise Price and the number of Warrant
               Shares  which  would  have  been  in effect at such time had such
               Options  or Convertible Securities provided for such increased or
               decreased  purchase  price, additional consideration or increased
               or  decreased  conversion  rate,  as the case may be, at the time
               initially  granted,  issued or sold. For purposes of this Section
               2(a)(iii),  if  the  terms  of any Option or Convertible Security
               that  was  outstanding as of the date of issuance of this Warrant
               are  increased  or  decreased  in  the  manner  described  in the
               immediately  preceding  sentence, then such Option or Convertible
               Security  and  the  shares  of  Common Stock deemed issuable upon
               exercise,  conversion or exchange thereof shall be deemed to have
               been  issued  as  of  the  date  of such increase or decrease. No
               adjustment  pursuant  to  this Section 2(a) shall be made if such
               adjustment would result in an increase of the Exercise Price then
               in effect or a decrease in the number of Warrant Shares.


                                      - 7 -
<PAGE>
               (iv)     Calculation  of  Consideration  Received.  In  case  any
                        ----------------------------------------
               Option  is  issued  in connection with the issue or sale of other
               securities  of  the  Company,  together comprising one integrated
               transaction  in  which  no specific consideration is allocated to
               such  Options  by the parties thereto, the Options will be deemed
               to  have  been issued for a consideration of $0.01. If any shares
               of  Common Stock, Options or Convertible Securities are issued or
               sold  or  deemed  to  have  been  issued  or  sold  for cash, the
               consideration  received  therefor  will  be  deemed to be the net
               amount  received by the Company therefor. If any shares of Common
               Stock, Options or Convertible Securities are issued or sold for a
               consideration  other  than cash, the amount of such consideration
               received  by  the  Company  will  be  the  fair  value  of  such
               consideration,  except  where  such  consideration  consists  of
               securities, in which case the amount of consideration received by
               the  Company  will  be the Closing Sale Price of such security on
               the  date  of  receipt. If any shares of Common Stock, Options or
               Convertible  Securities  are  issued  to  the  owners  of  the
               non-surviving  entity  in connection with any merger in which the
               Company  is  the  surviving  entity,  the amount of consideration
               therefor  will  be deemed to be the fair value of such portion of
               the  net  assets  and  business of the non-surviving entity as is
               attributable  to  such  shares  of  Common  Stock,  Options  or
               Convertible Securities, as the case may be. The fair value of any
               consideration  other  than  cash or securities will be determined
               jointly  by the Company and the Required Holders. If such parties
               are  unable  to  reach  agreement  within ten (10) days after the
               occurrence  of  an  event  requiring  valuation  (the  "VALUATION
               EVENT"),  the fair value of such consideration will be determined
               within  five  (5) Business Days after the tenth day following the
               Valuation  Event  by  an independent, reputable appraiser jointly
               selected  by  the  Company  and  the  Required  Holders.  The
               determination  of  such appraiser shall be final and binding upon
               all  parties  absent  manifest error and the fees and expenses of
               such appraiser shall be borne by the Company.

               (v)     Record  Date.  If  the  Company  takes  a  record  of the
                       ------------
               holders  of  shares  of Common Stock for the purpose of entitling
               them  (A)  to receive a dividend or other distribution payable in
               shares  of  Common Stock, Options or in Convertible Securities or
               (B)  to subscribe for or purchase shares of Common Stock, Options
               or  Convertible  Securities, then such record date will be deemed
               to be the date of the issue or sale of the shares of Common Stock
               deemed  to  have been issued or sold upon the declaration of such
               dividend  or the making of such other distribution or the date of
               the  granting  of  such right of subscription or purchase, as the
               case may be.

               (b)     Adjustment  upon  Subdivision or Combination of shares of
                       ---------------------------------------------------------
Common  Stock.  If  the  Company  at  any time on or after the Subscription Date
-------------
subdivides  (by  any stock split, stock dividend, recapitalization or otherwise)
one  or  more  classes  of its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect


                                      - 8 -
<PAGE>
immediately  prior  to  such subdivision will be proportionately reduced and the
number  of  Warrant  Shares will be proportionately increased. If the Company at
any  time  on  or  after the Subscription Date combines (by combination, reverse
stock  split  or  otherwise)  one  or  more classes of its outstanding shares of
Common  Stock  into  a  smaller  number  of shares, the Exercise Price in effect
immediately  prior to such combination will be proportionately increased and the
number of Warrant Shares will be proportionately decreased. Any adjustment under
this  Section  2(b)  shall become effective at the close of business on the date
the subdivision or combination becomes effective.

               (c)     Other  Events.  If  any  event  occurs  of  the  type
                       -------------
contemplated  by  the provisions of this Section 2(c) but not expressly provided
for  by  such  provisions  (including, without limitation, the granting of share
appreciation rights, phantom share rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate adjustment in the
Exercise Price so as to protect the rights of the Holders; provided that no such
adjustment  will increase the Exercise Price as otherwise determined pursuant to
this Section 2(c).

          3.     RIGHTS  UPON  DISTRIBUTION  OF  ASSETS.  If  the  Company shall
                 --------------------------------------
declare  or  make any dividend or other distribution of its assets (or rights to
acquire  its  assets)  to holders of shares of Common Stock, by way of return of
capital  or  otherwise (including, without limitation, any distribution of cash,
stock  or  other  securities not addressed by Section 2, property or options not
addressed  by  Section  2  by  way  of  a  dividend, spin off, reclassification,
corporate  rearrangement, scheme of arrangement or other similar transaction) (a
"DISTRIBUTION"),  at  any time after the issuance of this Warrant, then, in each
such case:

               (a)     any  Exercise  Price  in  effect immediately prior to the
close  of  business on the record date fixed for the determination of holders of
shares  of  Common  Stock entitled to receive the Distribution shall be reduced,
effective as of the close of business on such record date, to a price determined
by  multiplying  such  Exercise  Price  by a fraction of which (i) the numerator
shall  be  the  Closing  Bid Price of a share of Common Stock on the trading day
immediately  preceding  such record date minus the value of the Distribution (as
determined  in good faith by the Company's Board of Directors) applicable to one
share  of  Common Stock, and (ii) the denominator shall be the Closing Bid Price
of  the  shares  of  Common  Stock on the trading day immediately preceding such
record date; and

               (b)     the  number  of  Warrant  Shares  shall be increased to a
number  of  shares  equal  to  the  number  of shares of Common Stock obtainable
immediately  prior  to  the  close  of business on the record date fixed for the
determination  of  holders  of  shares  of  Common Stock entitled to receive the
Distribution  multiplied  by  the  reciprocal  of  the fraction set forth in the
immediately  preceding  paragraph  (a);  provided  that  in  the  event that the
Distribution  is  of  shares of Common Stock (or common stock) ("OTHER SHARES OF
COMMON  STOCK")  of  a  company  whose  common  shares  are traded on a national
securities  exchange  or  a national automated quotation system, then the Holder
may  elect to receive a warrant to purchase Other Shares of Common Stock in lieu
of  an  increase  in  the  number of Warrant Shares, the terms of which shall be
identical  to  those  of  this  Warrant,  except  that  such  warrant  shall  be
exercisable into the number of shares of Other Shares of Common Stock that would
have  been  payable  to  the  Holder pursuant to the Distribution had the Holder
exercised  this  Warrant  immediately  prior  to  such  record  date and with an
aggregate exercise price equal to the product of the amount by which the


                                      - 9 -
<PAGE>
exercise  price  of  this Warrant was decreased with respect to the Distribution
pursuant  to the terms of the immediately preceding paragraph (a) and the number
of Warrant Shares calculated in accordance with the first part of this paragraph
(b).

          4.     PURCHASE  RIGHTS;  FUNDAMENTAL  TRANSACTIONS.
                 --------------------------------------------

               (a)     Purchase Rights.  In addition to any adjustments pursuant
                       ---------------
to  Section  2  above,  if  at  any time the Company grants, issues or sells any
Options,  Convertible  Securities  or  rights  to  purchase  stock,  warrants,
securities  or  other  property  pro  rata to the record holders of any class of
shares  of  Common  Stock  (the  "PURCHASE RIGHTS"), then, upon exercise of this
Warrant,  the  Holder  will be entitled to acquire, upon the terms applicable to
such  Purchase Rights, the aggregate Purchase Rights which the Holder could have
acquired  if  the  Holder  had held the proportionate number of shares of Common
Stock  acquirable  upon  exercise  of  this  Warrant  (without  regard  to  any
limitations  on  the  exercise  of  this Warrant) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or,  if  no  such  record  is  taken, the date as of which the record holders of
shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.

               (b)     Fundamental  Transactions.  If the Company enters into or
                       -------------------------
is  party  to a Fundamental Transaction, then the Holder shall have the right to
either (A) purchase and receive upon the basis and upon the terms and conditions
herein  specified  and  in  lieu  of  the Warrant Shares immediately theretofore
issuable  upon  exercise  of  the  Warrant,  such shares of stock, securities or
assets  (including  cash) as would have been issuable or payable with respect to
or  in  exchange  for  a number of Warrant Shares equal to the number of Warrant
Shares  immediately  theretofore issuable upon exercise of the Warrant, had such
Fundamental  Transaction  not  taken place or (B) require the repurchase of this
Warrant  for  a  purchase  price,  payable in cash within five (5) business days
after  such  request,  equal  to  the  Black  Scholes  Value  of  the  remaining
unexercised  portion  of  this Warrant on the date of such request. The terms of
any  agreement  pursuant  to  which  a Fundamental Transaction is effected shall
include  terms  requiring  any  such successor or surviving entity and Holder to
comply  with the provisions of this Section 4(b). The provisions of this Section
                                    ------------
shall  apply  similarly  and  equally to successive Fundamental Transactions and
shall  be  applied  without  regard  to  any limitations on the exercise of this
Warrant.

          5.     NONCIRCUMVENTION.  The Company hereby covenants and agrees that
                 ----------------
the  Company  will not, by amendment of its Articles of Incorporation, Bylaws or
through any reorganization, transfer of assets, consolidation, merger, scheme of
arrangement,  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,  and  will  at  all  times  in  good  faith carry out all the
provisions  of  this  Warrant  and take all action that is required hereunder to
protect  the  rights  of  the  Holder.  Without  limiting  the generality of the
foregoing,  the  Company  (i)  shall not increase the par value of any shares of
Common  Stock  receivable  upon  the exercise of this Warrant above the Exercise
Price  then  in  effect, (ii) shall take all such actions as may be necessary or
appropriate  in  order  that the Company may validly and legally have the Common
Stock  fully  paid  and  nonassessable shares of Common Stock transferred to the
Holder upon the exercise of this Warrant, and (iii) shall, so long as any of the
SPA  Warrants  are  outstanding,  take  all action necessary to reserve and keep
available out of its authorized and unissued shares of


                                     - 10 -
<PAGE>
Common  Stock,  solely  for  the  purpose  of  effecting the exercise of the SPA
Warrants,  120%  (or  such  lesser  amount  limited by the SEC) of the number of
shares  of  Common  Stock  as shall from time to time be necessary to effect the
exercise of the SPA Warrants then outstanding (without regard to any limitations
on exercise).

          6.     WARRANT  HOLDER  NOT DEEMED A STOCKHOLDER.  Except as otherwise
                 -----------------------------------------
specifically  provided herein, the Holder, solely in such Person's capacity as a
holder of this Warrant, shall not be entitled to vote or receive dividends or be
deemed  the  holder  of  share capital of the Company for any purpose, nor shall
anything  contained  in  this  Warrant  be  construed to confer upon the Holder,
solely  in  such  Person's  capacity  as  the Holder of this Warrant, any of the
rights  of  a  shareholder of the Company or any right to vote, give or withhold
consent  to  any  corporate  action (whether any reorganization, issue of stock,
reclassification  of  stock,  consolidation,  merger,  conveyance or otherwise),
receive  notice  of  meetings,  receive  dividends  or  subscription  rights, or
otherwise,  prior to the issuance to the Holder of the Warrant Shares which such
Person  is  then  entitled  to receive upon the due exercise of this Warrant. In
addition,  nothing  contained in this Warrant shall be construed as imposing any
liabilities  on  the  Holder  to  purchase any securities (upon exercise of this
Warrant  or  otherwise) or as a shareholder of the Company. Notwithstanding this
Section  6, the Company shall provide the Holder with copies of the same notices
and  other  information  given  to  the  shareholders  of the Company generally,
contemporaneously with the giving thereof to its shareholders.

          7.     REISSUANCE  OF  WARRANTS.
                 ------------------------

               (a)     Transfer  of  Warrant.  If  this  Warrant  is  to  be
                       ---------------------
transferred,  the  Holder shall surrender this Warrant to the Company, whereupon
the  Company will forthwith issue and deliver upon the order of the Holder a new
Warrant (in accordance with Section 7(d)), registered as the Holder may request,
representing  the  right  to  purchase  the  number  of  Warrant  Shares  being
transferred  by  the Holder and, if less then the total number of Warrant Shares
then  underlying this Warrant is being transferred, a new Warrant (in accordance
with  Section  7(d)) to the Holder representing the right to purchase the number
of Warrant Shares not being transferred.

               (b)     Lost,  Stolen  or Mutilated Warrant.  Upon receipt by the
                       -----------------------------------
Company  of  evidence reasonably satisfactory to the Company of the loss, theft,
destruction  or  mutilation  of this Warrant, and, in the case of loss, theft or
destruction,  of any indemnification undertaking by the Holder to the Company in
customary  form  and, in the case of mutilation, upon surrender and cancellation
of  this  Warrant,  the  Company  shall  execute and deliver to the Holder a new
Warrant (in accordance with Section 7(d)) representing the right to purchase the
Warrant Shares then underlying this Warrant.

               (c)     Exchangeable  for  Multiple  Warrants.  This  Warrant  is
                       -------------------------------------
exchangeable, upon the surrender hereof by the Holder at the principal office of
the  Company,  for  a  new Warrant or Warrants (in accordance with Section 7(d))
representing in the aggregate the right to purchase the number of Warrant Shares
then underlying this Warrant, and each such new Warrant will represent the right
to  purchase  such portion of such Warrant Shares as is designated by the Holder
at  the  time  of  such  surrender;  provided,  however,  that  no  Warrants for
fractional shares of Common Stock shall be given.


                                     - 11 -
<PAGE>
               (d)     Issuance  of  New  Warrants.  Whenever  the  Company  is
                       ---------------------------
required  to issue a new Warrant pursuant to the terms of this Warrant, such new
Warrant  (i)  shall be of like tenor with this Warrant, (ii) shall represent, as
indicated  on  the  face  of such new Warrant, the right to purchase the Warrant
Shares  then  underlying  this  Warrant  (or  in the case of a new Warrant being
issued  pursuant  to Section 7(a) or Section 7(c), the Warrant Shares designated
by  the  Holder  which,  when  added  to  the  number  of shares of Common Stock
underlying  the other new Warrants issued in connection with such issuance, does
not  exceed  the  number  of Warrant Shares then underlying this Warrant), (iii)
shall  have an issuance date, as indicated on the face of such new Warrant which
is  the  same  as  the  Issuance  Date,  and (iv) shall have the same rights and
conditions as this Warrant.

          8.     NOTICES.  Whenever  notice  is  required to be given under this
                 -------
Warrant,  unless  otherwise  provided  herein,  such  notice  shall  be given in
accordance  with  Section 9(f) of the Securities Purchase Agreement. The Company
shall  provide  the  Holder  with  prompt  written  notice  of all actions taken
pursuant  to  this Warrant, including in reasonable detail a description of such
action  and  the  reason  therefore.  Without  limiting  the  generality  of the
foregoing, the Company will give written notice to the Holder (i) promptly after
any  adjustment  of  the Exercise Price, setting forth in reasonable detail, and
certifying,  the calculation of such adjustment and (ii) at least ten days prior
to  the  date  on  which the Company closes its books or takes a record (A) with
respect  to  any  dividend  or distribution upon the shares of Common Stock, (B)
with  respect  to  any  grants,  issuances  or sales of any Options, Convertible
Securities  or  rights to purchase stock, warrants, securities or other property
to  holders of shares of Common Stock or (C) for determining rights to vote with
respect  to any Fundamental Transaction, dissolution or liquidation, provided in
each case that such information shall be made known to the public prior to or in
conjunction with such notice being provided to the Holder.

          9.     AMENDMENT AND WAIVER.  Except as otherwise provided herein, the
                 --------------------
provisions  of  this  Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it,  only  if  the  Company  has  obtained  the  written consent of the Required
Holders; provided that no such action may increase the exercise price of any SPA
Warrant  or  decrease  the  number  of  shares or class of stock obtainable upon
exercise  of  any SPA Warrant without the written consent of the Holder. No such
amendment  shall  be effective to the extent that it applies to less than all of
the holders of the SPA Warrants then outstanding.

          10.     SEVERABILITY.  If  any  provision  of  this  Warrant  or  the
                  ------------
application  thereof becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of the terms of this Warrant
will continue in full force and effect.

          11.     GOVERNING  LAW.  This  Warrant  shall  be  governed  by  and
                  --------------
construed  and  enforced  in  accordance  with, and all questions concerning the
construction,  validity, interpretation and performance of this Warrant shall be
governed  by,  the internal laws of the State of New York, without giving effect
to  any choice of law or conflict of law provision or rule (whether of the State
of  New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York.


                                     - 12 -
<PAGE>
          12.     CONSTRUCTION;  HEADINGS.  This  Warrant  shall be deemed to be
                  -----------------------
jointly  drafted  by  the  Company and all the Buyers and shall not be construed
against  any  person as the drafter hereof. The headings of this Warrant are for
convenience  of  reference  and  shall  not  form  part  of,  or  affect  the
interpretation of, this Warrant.

          13.     DISPUTE  RESOLUTION.  In  the  case  of  a  dispute  as to the
                  -------------------
determination of the Exercise Price or the arithmetic calculation of the Warrant
Shares,  the  Company  shall  submit  the  disputed determinations or arithmetic
calculations  via  facsimile within two Business Days of receipt of the Exercise
Notice  giving  rise  to such dispute, as the case may be, to the Holder. If the
Holder  and  the  Company  are  unable  to  agree  upon  such  determination  or
calculation  of  the  Exercise Price or the Warrant Shares within three Business
Days of such disputed determination or arithmetic calculation being submitted to
the  Holder,  then  the  Company  shall,  within  two  Business  Days submit via
facsimile  (a)  the  disputed  determination  of  the  Exercise  Price  to  an
independent,  reputable  investment bank selected by the Company and approved by
the  Holder  or (b) the disputed arithmetic calculation of the Warrant Shares to
the  Company's  independent, outside accountant. The Company shall cause, at the
expense  of the losing party, the investment bank or the accountant, as the case
may be, to perform the determinations or calculations and notify the Company and
the  Holder  of  the  results  no  later than ten Business Days from the time it
receives  the disputed determinations or calculations. Such investment bank's or
accountant's  determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error.

          14.     REMEDIES,  OTHER  OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
                  -------------------------------------------------------------
The remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant and the other Transaction Documents,
at  law  or  in  equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder right
to pursue actual damages for any failure by the Company to comply with the terms
of this Warrant. The Company acknowledges that a breach by it of its obligations
hereunder  will  cause irreparable harm to the Holder and that the remedy at law
for any such breach may be inadequate. The Company therefore agrees that, in the
event  of any such breach or threatened breach, the holder of this Warrant shall
be  entitled,  in  addition  to  all  other available remedies, to an injunction
restraining  any  breach,  without  the  necessity  of showing economic loss and
without any bond or other security being required.

          15.     TRANSFER.     This  Warrant  may  be  offered  for sale, sold,
                  --------
transferred  or  assigned  without  the  consent  of  the Company, except as may
otherwise be required by Section 2(f) of the Securities Purchase Agreement.

          16.     CERTAIN  DEFINITIONS.  For  purposes  of  this  Warrant,  the
                  --------------------
following terms shall have the following meanings:

               (a)     "BLACK  SCHOLES  VALUE"  means  the value of this Warrant
based  on  the  Black  and  Scholes  Option Pricing Model obtained from the "OV"
function  on Bloomberg determined as of the day immediately following the public
announcement  of  the  applicable  Fundamental  Transaction and reflecting (i) 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 such date of request


                                     - 13 -
<PAGE>
and  (ii)  an  expected  volatility  equal to the greater of 60% and the 100 day
volatility obtained from the HVT function on Bloomberg.

               (b)     "BLOOMBERG"  means  Bloomberg  Financial  Markets.

               (c)     "BUSINESS  DAY" means any day other than Saturday, Sunday
or other day on which commercial banks in The City of New York are authorized or
required by law to remain closed.

               (d)     "CLOSING  BID  PRICE" and "CLOSING SALE PRICE" means, for
any  security  as of any date, the last closing bid price and last closing trade
price,  respectively,  for such security on the Principal Market, as reported by
Bloomberg,  or,  if  the Principal Market begins to operate on an extended hours
basis  and  does not designate the closing bid price or the closing trade price,
as  the  case may be, then the last bid price or last trade price, respectively,
of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg,
or,  if the Principal Market is not the principal securities exchange or trading
market  for  such  security,  the  last  closing  bid price or last trade price,
respectively,  of  such security on the principal securities exchange or trading
market  where  such security is listed or traded as reported by Bloomberg, or if
the  foregoing  do  not  apply,  the last closing bid price or last trade price,
respectively,  of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price  or  last  trade  price,  respectively,  is  reported for such security by
Bloomberg,  the  average  of the bid prices, or the ask prices, respectively, of
any  market  makers  for  such security as reported in the "pink sheets" by Pink
Sheets  LLC  (formerly  the National Quotation Bureau, Inc.). If the Closing Bid
Price  or  the  Closing  Sale  Price  cannot  be  calculated for a security on a
particular  date  on  any  of  the foregoing bases, the Closing Bid Price or the
Closing  Sale  Price, as the case may be, of such security on such date shall be
the  fair  market value as mutually determined by the Company and the Holder. If
the  Company  and  the  Holder are unable to agree upon the fair market value of
such  security,  then such dispute shall be resolved pursuant to Section 12. All
such  determinations  to be appropriately adjusted for any stock dividend, stock
split,  stock  combination  or  other  similar transaction during the applicable
calculation period.

               (e)     "COMMON  STOCK"  means (i) the Company's shares of Common
Stock,  $0.10  par  value  per share, and (ii) any share capital into which such
Common  Stock  shall  have  been  changed  or any share capital resulting from a
reclassification of such Common Stock.

               (f)     "COMMON  STOCK  DEEMED  OUTSTANDING"  means, at any given
time,  the  number  of shares of Common Stock actually outstanding at such time,
plus  the  number of shares of Common Stock deemed to be outstanding pursuant to
Sections  2(a)(i)  and  2(a)(ii)  hereof  regardless  of  whether the Options or
Convertible  Securities are actually exercisable at such time, but excluding any
shares  of  Common  Stock  owned or held by or for the account of the Company or
issuable  upon conversion and exercise, as applicable, of the SPA Securities and
the Warrants.

               (g)     "CONVERTIBLE  SECURITIES"  means  any stock or securities
(other  than  Options) directly or indirectly convertible into or exercisable or
exchangeable at the option of the holder thereof for shares of Common Stock.


                                     - 14 -
<PAGE>
               (h)     "ELIGIBLE  MARKET"  means  the  Principal  Market,  the
American  Stock  Exchange, The New York Stock Exchange, Inc., the Nasdaq Capital
Market or the Nasdaq National Market.

               (i)     "EXPIRATION  DATE"  means the date sixty months after the
Issuance  Date  or,  if such date falls on a day other than a Business Day or on
which  trading  does  not  take place on the Principal Market (a "HOLIDAY"), the
next date that is not a Holiday.

               (j)     "FUNDAMENTAL  TRANSACTION"  means that the Company shall,
directly  or indirectly, in one or more related transactions, (i) consolidate or
merge  with  or  into  (whether or not the Company is the surviving corporation)
another  Person,  or (ii) sell, assign, transfer, convey or otherwise dispose of
all  or  substantially all of the properties or assets of the Company to another
Person,  or  (iii)  allow  another Person to make a purchase, tender or exchange
offer that is accepted by such number of holders of outstanding shares of Common
Stock  resulting  in  such  Person (together with any affiliates of such Person)
holding  more  than  the  50%  of  the  outstanding  Common Stock of the Company
following  such  purchase,  tender or exchange offer, or (iv) consummate a stock
purchase agreement or other business combination (including, without limitation,
a  reorganization,  recapitalization,  spin-off  or  scheme of arrangement) with
another  Person  resulting in such other Person (together with any affiliates of
such  person)  holding  more than the 50% of the outstanding Common Stock of the
Company  following  such stock purchase agreement or other business combination,
or (v) reorganize, recapitalize or reclassify its Common Stock.

               (k)     "OPTIONS"  means  any  rights,  warrants  or  options  to
subscribe for or purchase shares of Common Stock or Convertible Securities.

               (l)     "PERSON"  means  an  individual,  a  limited  liability
company,  a  partnership,  a  joint  venture,  a  corporation,  a  trust,  an
unincorporated organization, any other entity and a government or any department
or agency thereof.

               (m)     "PRINCIPAL  MARKET"  means  the  NASD OTC Bulletin Board.

               (n)     "REGISTRATION  RIGHTS  AGREEMENT"  means  that  certain
registration rights agreement by and among the Company and the Buyers.

               (o)     "REQUIRED  HOLDERS" means the holders of the SPA Warrants
representing  at  least  a majority of shares of Common Stock underlying the SPA
Warrants then outstanding.

               (p)     "SPA  SECURITIES"  means  the  Preferred  Stock  issued
pursuant to the Securities Purchase Agreement.

                            [SIGNATURE PAGE FOLLOWS]


                                     - 15 -
<PAGE>
     IN  WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common
Stock to be duly executed as of the Issuance Date set out above.


                                        CHARYS HOLDING COMPANY, INC.


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


<PAGE>
                                                                       EXHIBIT A

                                 EXERCISE NOTICE
            TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
                        WARRANT TO PURCHASE COMMON STOCK

                          CHARYS HOLDING COMPANY, INC.

     The  undersigned  holder  hereby  exercises  the  right  to  purchase
                   of  the  shares  of Common Stock ("WARRANT SHARES") of Charys
-----------------
Holding  Company, Inc., a Delaware corporation (the "COMPANY"), evidenced by the
attached  Warrant  to  Purchase Common Stock (the "WARRANT").  Capitalized terms
used  herein  and  not  otherwise defined shall have the respective meanings set
forth in the Warrant.

     1.  Form  of  Exercise  Price.  The  Holder  intends  that  payment  of the
Exercise Price shall be made as:

                           a  "Cash  Exercise" with respect to
          ------------         ---------------                 -----------------
Warrant Shares; and/or

                           a "Cashless Exercise" with respect to
          ------------       -------------------                 ---------------
Warrant Shares.

     2.  Notwithstanding  anything  to  the  contrary  contained  herein,  this
Exercise  Notice  shall constitute a representation by the Holder of the Warrant
submitting  this  Exercise  Notice  that,  after  giving  effect to the exercise
provided for in this Exercise Notice, such Holder (together with its affiliates)
will  not  have  beneficial ownership (together with the beneficial ownership of
such  Person's  affiliates)  of a number of shares of Common Stock which exceeds
the  maximum  percentage  of  the  total  outstanding  shares of Common Stock as
determined pursuant to the provisions of Section 1(f)(i) of the Warrant.

     3.  Payment  of Exercise Price.  In the event that the holder has elected a
Cash  Exercise  with  respect  to  some  or  all  of  the  Warrant  Shares to be
transferred  pursuant  hereto, the holder shall pay the Aggregate Exercise Price
in  the  sum of $                    to the Company in accordance with the terms
                 -------------------
of the Warrant.

     4.  Delivery  of  Warrant  Shares.  The Company shall deliver to the holder
           Warrant Shares in accordance with the terms of the Warrant.
----------

Date:                     ,
       ---------------  --   ------


---------------------------------------
     Name of Registered Holder


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


<PAGE>
                                 ACKNOWLEDGMENT


     Gottbetter  &  Partners,  LLP  hereby acknowledges this Exercise Notice and
will  transfer                        shares  of  Common  Stock.
                --------------------


                                        GOTTBETTER & PARTNERS. LLP


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


<PAGE>
                     INVESTOR REGISTRATION RIGHTS AGREEMENT
                     --------------------------------------

     THIS  REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of May 19,
                                                ---------
2006,  by  and  among  CHARYS HOLDING COMPANY, INC., a Delaware corporation (the
"Company"),  and (the undersigned investors listed on Schedule I attached hereto
 -------
(each,  an  "Investor"  and  collectively,  the  "Investors").
             --------                             ---------

     WHEREAS:

     A.     Company  and  Investors  have  entered  into  a  Securities Purchase
Agreement  (the  "Securities Purchase Agreement"), pursuant to which the Company
                  -----------------------------
proposes  to  sell  1,300  shares  of  Series D Convertible Preferred Stock (the
"Convertible  Preferred  Stock")  which  shall be convertible into the Company's
 -----------------------------
Common  Stock, par value $0.001 per share (the "Common Stock") and in connection
                                                ------------
therewith  the  Company  has  agreed  to  issue  certain  warrants  to  purchase
additional  shares  of  Common  Stock  (the  "Warrants");
                                              --------

     B.     To  induce  the  Investors  to  execute  and  deliver the Securities
Purchase  Agreement,  the  Company  has  agreed  to provide certain registration
rights  under  the  Securities  Act  of  1933,  as  amended,  and  the rules and
regulations  thereunder,  or  any  similar  successor statute (collectively, the
"Securities  Act"),  and  applicable  state  securities  laws;  and
 ---------------

     C.     Capitalized  terms  used but not otherwise defined herein shall have
the  meanings  set  forth  in  the  Securities  Purchase  Agreement.

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

     1.     DEFINITIONS.
            -----------

     As  used  in  this  Agreement, the following terms shall have the following
meanings:

          (a)     "Person"  means a corporation, a limited liability company, an
                   ------
association,  a  partnership,  an  organization,  a  business,  an individual, a
governmental  or  political  subdivision  thereof  or  a  governmental  agency.

          (b)     "Register,"  "registered,"  and  "registration"  refer  to  a
                   --------     ----------          ------------
registration  effected  by  preparing  and  filing  one  or  more  Registration
Statements (as defined below) in compliance with the Securities Act and pursuant
to  Rule  415  under  the  Securities  Act  or  any successor rule providing for
offering  securities  on  a  continuous  or  delayed basis ("Rule 415"), and the
                                                             --------
declaration  or  ordering  of effectiveness of such Registration Statement(s) by
the  United  States  Securities  and  Exchange  Commission  (the  "SEC").
                                                                   ---

          (c)     "Registrable  Securities"  means  shares of Common Stock in an
                   -----------------------
amount  equal  to  (a) the shares of Common Stock issuable to the Investors upon
conversion  of  the  Convertible  Preferred  Stock  pursuant  to  the Securities
Purchase  Agreement  and  the  Certificate of Designations and (b) the shares of
Common  Stock  issuable  to  the  Investors  upon  exercise  of  the


<PAGE>
Warrant  Shares, as these terms are defined in the Securities Purchase Agreement
dated  the  date  hereof.

          (d)     "Registration  Statement" means a registration statement under
                   -----------------------
the  Securities  Act  which  covers  any  of  the  Registrable  Securities.

          (e)     "Scheduled  Filing  Deadline"  means (a) ninety (90) days from
                   ---------------------------
the  date  hereof  as  applies  to  the  SB-2 Registration Statement (as defined
below), (b) sixty (60) days from the date the Company becomes eligible to file a
registration  statement  on  Form S-3 under the Securities Act as applies to the
S-3  Registration  Statement (as defined below) and (c) sixty (60) days from the
date  there  is  an  increase  in  the  number  of  Registrable Shares under the
Securities  Purchase Agreement or the Certificate of Designations (as defined in
the  Securities  Purchase  Agreement)  to  the extent that there are Registrable
Securities  not otherwise included on the SB-2 Registration Statement or the S-3
Registration  Statement  as  applies  to  the Revised Registration Statement (as
defined  herein).

     2.     REGISTRATION.
            ------------

          (a)     Subject  to  the  terms  and conditions of this Agreement, the
Company shall (a) prepare and file, no later than ninety (90) days from the date
hereof,  with  the  SEC  a registration statement on Form SB-2 (or similar form)
under  the  Securities Act (the "SB-2 Registration Statement") for the resale by
                                 --------------------------
the  Investors of all Registrable Securities, (b) if it becomes eligible to file
a registration statement on Form S-3 under the Securities Act, prepare and file,
no  later  than  ninety  (90)  days  from the date it becomes eligible to file a
registration statement on Form S-3, a registration statement on Form S-3 for the
resale  by  the  Investors  of all Registrable Securities (the "S-3 Registration
                                                                ----------------
Statement")  and  (c)  if due to an increase in the number of Registrable Shares
---------
under the Securities Purchase Agreement or the Certificate of Designations there
are  Registrable  Shares  that  are  not  registered under the SB-2 Registration
Statement or the S-3 Registration Statement, prepare and file, within sixty (60)
days  of  the  date of such an increase a new SB-2 Registration Statement or S-3
Registration Statement, as applicable, so that all the Registrable Shares may be
resold by the Investors (the "Revised Registration Statement" and, together with
                              ------------------------------
the  SB-2  Registration  Statement  and  the  S-3  Registration  Statement,  the
"Registration  Statements").  The  Company shall keep the Registration Statement
 ------------------------
"Evergreen" for the life of the Convertible Preferred Stock or until Rule 144(k)
of  the  Securities Act is available to the Investors with respect to all of the
Conversion  Shares  and  Warrant  Shares  whichever is later.  The Company shall
retain,  and  pay  at  its  sole  expense,  a  law firm to file the Registration
Statement  subject  to  the  reasonable  approval  of a majority of the Required
Holders  (as  defined  in  the  Certificate  of  Designations) of the Investors;
provided,  however, that in no event shall the Company be required to retain any
law  firm  in  addition  to  its current securities counsel for purposes of this
Agreement.  Prior  to the filing of the Registration Statement with the SEC, the
Company  shall  furnish  a  copy  of  the  Initial Registration Statement to the
Investors for their review and comment.  The Investors shall furnish comments on
the  Registration  Statement to the Company within twenty-four (24) hours of the
receipt  thereof  from  the  Company.

          (b)     Effectiveness  of  the  Registration  Statement.  The  Company
                  -----------------------------------------------
shall  use its commercially reasonable best efforts (i) to have the Registration
Statement  declared  effective


                                        2
<PAGE>
by  the  SEC no later than ninety (90) days after the date filed (the "Scheduled
                                                                       ---------
Effective  Deadline") and (ii) to insure that the Registration Statement remains
-------------------
in effect until all of the Registrable Securities have been sold, subject to the
terms  and  conditions  of  this  Agreement.  It  shall  be  an event of default
hereunder  if  the  Registration  Statement is not declared effective by the SEC
within  ninety  (90)  days  after  filing  thereof.

          (c)     Failure  to  File  or Obtain and Maintain Effectiveness of the
                  --------------------------------------------------------------
Registration Statement.  In the event the Registration Statement is not filed by
----------------------
the  Scheduled  Filing  Deadline  or  is not declared effective by the SEC on or
before  the Scheduled Effective Deadline, or if after the Registration Statement
has  been  declared  effective  by the SEC, sales cannot be made pursuant to the
Registration  Statement  (whether  because of a failure to keep the Registration
Statement  effective,  failure  to disclose such information as is necessary for
sales  to  be  made  pursuant to the Registration Statement, failure to register
sufficient  shares of Common Stock or otherwise), then as partial relief for the
damages  to  any holder of Registrable Securities by reason of any such delay in
or reduction of its ability to sell the underlying shares of Common Stock (which
remedy  shall  not  be exclusive of any other remedies at law or in equity), the
Company  will  pay as liquidated damages (the "Liquidated Damages") and not as a
                                               ------------------
penalty,  to the Investors, a cash amount equal to two percent (2%) per month of
the  outstanding stated value of the Convertible Preferred Stock outstanding and
held  by  such  Investors.  In the event that any Investor has opted to exercise
its  "Redemption  at  Option  of  Holders"  pursuant  to  the  Certificate  of
Designations,  the  Liquidated  Damages  shall  not  apply  to  such  shares  of
Convertible  Preferred  Stock  that  have been redeemed.  The initial payment of
Liquidated  Damages shall be made within three (3) business days from the end of
the month in which the Scheduled Filing Deadline or Scheduled Effective Deadline
occurred,  as  the  case  may  be,  and  shall  continue  thereafter  until  the
Registration  Statement  is  filed  or  declared  effective,  or the Convertible
Preferred  Stock  has  been redeemed by the Company, as the case may be.  In the
event  that  the  Liquidated  Damages  are  caused  by a failure to maintain the
effectiveness  of  the  Registration Statement for more than ten days in any 365
day period, the initial payment of Liquidated Damages shall be made within three
(3)  business  days  from the end of the month in which the 11th day in such 365
day  period  that  the  Company  failed  to  maintain  the  effectiveness of the
Registration  Statement  falls  and  shall  continue  thereafter  until  the
effectiveness  of  the  Registration  Statement  has  been  restored.

          (d)     Liquidated  Damages.  The  Company  and  the  Investors hereto
                  -------------------
acknowledge  and  agree  that the sums payable under subsection 2(c) above shall
constitute liquidated damages and not penalties and are in addition to all other
rights  of the Investors, including the right to call a default.  Any Liquidated
Damages  (and  any accrued but unpaid interest thereon) that remain unpaid after
the  date  set forth in Section 2(c) shall accrue interest at the rate of twelve
percent  (12%)  per  annum.  All  Liquidated  Damages  paid  pursuant  to  this
Agreement,  but not including any interest accrued thereon, shall not exceed, in
the aggregate, 10% of the aggregate Purchase Price (as defined in the Securities
Purchase  Agreement)  paid  to  the  Company pursuant to the Securities Purchase
Agreement  (the  "Liquidated  Damages  Maximum"),  and,  at  such  time  as  the
Liquidated  Damages  Maximum  has  been  paid, the Company shall have no further
obligation  to  pay  amounts  under  subsection 2(c) above other than interested
accrued  on  such  Liquidated  Damages  not otherwise paid.  The parties further
acknowledge  that  (i)  the  amount  of loss or damages likely to be incurred is
incapable  or  is difficult to precisely estimate, (ii) the amounts specified in
such  subsection  bear  a  reasonable  relationship  to,  and are not plainly or
grossly  disproportionate  to,  the  probable  loss  likely  to  be


                                        3
<PAGE>
incurred  in  connection  with any failure by the Company to file a Registration
Statement  or  to  obtain  or  maintain  the  effectiveness  of  a  Registration
Statement,  (iii)  one of the reasons for the Company and the Investors reaching
an  agreement  as  to  such  amounts  was the uncertainty and cost of litigation
regarding the question of actual damages, and (iv) the Company and the Investors
are  sophisticated  business  parties and have been represented by sophisticated
and  able  legal  counsel  and  negotiated  this  Agreement  at  arm's  length.

     3.     RELATED  OBLIGATIONS.
            --------------------

          (a)     The  Company  shall  keep the Registration Statement effective
pursuant  to  Rule  415 at all times until the date on which the Investors shall
have  sold all the Registrable Securities covered by such Registration Statement
(the  "Registration  Period"),  which  Registration  Statement  (including  any
       --------------------
amendments  or supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state a material fact
required  to  be stated therein, or necessary to make the statements therein, in
light  of  the  circumstances  in  which  they  were  made,  not  misleading.

          (b)     The  Company  shall  prepare  and  file  with  the  SEC  such
amendments  (including  post-effective  amendments)  and  supplements  to  the
Registration  Statement  and  the  prospectus  used  in  connection  with  such
Registration  Statement,  which  prospectus  is to be filed pursuant to Rule 424
promulgated  under  the  Securities  Act,  as  may  be  necessary  to  keep such
Registration  Statement  effective  at all times during the Registration Period,
and,  during  such period, comply with the provisions of the Securities Act with
respect  to the disposition of all Registrable Securities of the Company covered
by  such  Registration  Statement  until  such  time  as all of such Registrable
Securities  shall  have been disposed of in accordance with the intended methods
of  disposition  by  the  seller  or  sellers  thereof  as  set  forth  in  such
Registration  Statement.  In  the  case  of  amendments  and  supplements  to  a
Registration Statement which are required to be filed pursuant to this Agreement
(including  pursuant  to  this Section 3(b)) by reason of the Company's filing a
report on Form 10-KSB, Form 10-QSB or Form 8-K or any analogous report under the
Securities  Exchange  Act  of 1934, as amended (the "Exchange Act"), the Company
                                                     ------------
shall  incorporate  such report by reference into the Registration Statement, if
applicable,  or  shall  file  such amendments or supplements with the SEC on the
same day on which the Exchange Act report is filed which created the requirement
for  the  Company  to  amend  or  supplement  the  Registration  Statement.

          (c)     The  Company  shall furnish to each Investor whose Registrable
Securities  are  included  in any Registration Statement, without charge, (i) at
least  one  (1) copy of such Registration Statement as declared effective by the
SEC  and any amendment(s) thereto, including financial statements and schedules,
all  documents  incorporated  therein  by  reference,  all  exhibits  and  each
preliminary prospectus, (ii) ten (10) copies of the final prospectus included in
such  Registration Statement and all amendments and supplements thereto (or such
other  number  of copies as such Investor may reasonably request) and (iii) such
other  documents  as  such  Investor may reasonably request from time to time in
order  to facilitate the disposition of the Registrable Securities owned by such
Investor.

          (d)     The Company shall use its commercially reasonable best efforts
to (i) register and qualify the Registrable Securities covered by a Registration
Statement  under  such


                                        4
<PAGE>
other  securities  or "blue sky" laws of such jurisdictions in the United States
as  any  Investor  reasonably  requests,  (ii)  prepare  and  file  in  those
jurisdictions,  such  amendments  (including  post-effective  amendments)  and
supplements  to  such  registrations  and  qualifications as may be necessary to
maintain  the  effectiveness  thereof during the Registration Period, (iii) take
such  other  actions  as  may  be  necessary  to maintain such registrations and
qualifications  in  effect at all times during the Registration Period, and (iv)
take  all  other  actions  reasonably  necessary  or  advisable  to  qualify the
Registrable  Securities  for sale in such jurisdictions; provided, however, that
the  Company  shall  not  be  required in connection therewith or as a condition
thereto  to  (w) make any change to its certificate of incorporation or by-laws,
(x)  qualify  to do business in any jurisdiction where it would not otherwise be
required  to  qualify  but  for this Section 3(d), (y) subject itself to general
taxation  in  any such jurisdiction, or (z) file a general consent to service of
process  in  any  such  jurisdiction.  The  Company  shall  promptly notify each
Investor  who  holds Registrable Securities of the receipt by the Company of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or "blue sky"
laws of any jurisdiction in the United States or its receipt of actual notice of
the  initiation  or  threat  of  any  proceeding  for  such  purpose.

          (e)     As  promptly as practicable after becoming aware of such event
or  development,  the  Company  shall  notify  each  Investor  in writing of the
happening  of  any  event  as  a  result  of  which the prospectus included in a
Registration  Statement,  as  then  in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which  they  were  made,  not  misleading  (provided that in no event shall such
notice  contain  any  material,  nonpublic  information), and promptly prepare a
supplement  or  amendment  to such Registration Statement to correct such untrue
statement  or  omission,  and  deliver  ten  (10)  copies  of such supplement or
amendment  to each Investor.  Notwithstanding any provision of this Agreement to
the  contrary, if the Company makes such a notification, the Company may suspend
the  use  of  any prospectus contained in any Registration Statement for periods
not  to  exceed  forty  five (45) business days in any three month period or two
periods  not to exceed an aggregate of ninety (90) business days in any 12 month
period  in  the  event  that  the  Company  determines,  in  the exercise of its
reasonable  discretion,  confirmed by a legal opinion from outside counsel, that
sales  of  Registrable  Securities thereunder could constitute violations of the
Securities  Act due to the Registration Statement containing an untrue statement
of  a  material  fact or omission to state a material fact required to be stated
therein  or  necessary  to  make  the  statements  therein,  in  light  of  the
circumstances  under  which  they  were  made, not misleading.  In each case the
Company  shall use commercially reasonable best efforts to remedy the deficiency
in  the  Registration  Statement  within thirty (30) business days.  The Company
shall also promptly notify each Investor in writing (i) when a prospectus or any
prospectus  supplement  or  post-effective  amendment has been filed, and when a
Registration  Statement  or  any  post-effective  amendment has become effective
(notification  of  such  effectiveness  shall  be  delivered to each Investor by
facsimile on the same day of such effectiveness), (ii) of any request by the SEC
for  amendments or supplements to a Registration Statement or related prospectus
or related information, and (iii) of the Company's reasonable determination that
a  post-effective  amendment  to  a Registration Statement would be appropriate.

          (f)     The Company shall use its commercially reasonable best efforts
to  prevent  the issuance of any stop order or other suspension of effectiveness
of  a  Registration


                                        5
<PAGE>
Statement,  or  the  suspension  of  the qualification of any of the Registrable
Securities for sale in any jurisdiction within the United States of America and,
if such an order or suspension is issued, to obtain the withdrawal of such order
or  suspension  at  the earliest possible moment and to notify the Investors who
hold  Registrable  Securities  being  sold of the issuance of such order and the
resolution  thereof  or its receipt of actual notice of the initiation or threat
of  any  proceeding  for  such  purpose.

          (g)     At  the  reasonable request of any Investor, the Company shall
furnish  to  such Investor, on the date of the effectiveness of the Registration
Statement  and  thereafter  from  time  to time on such dates as an Investor may
reasonably request (i) a letter, dated such date, from the Company's independent
certified  public  accountants  in form and substance as is customarily given by
independent  certified  public  accountants  to  underwriters in an underwritten
public  offering,  and  (ii)  an  opinion,  dated  as  of  such date, of counsel
representing  the  Company for purposes of such Registration Statement, in form,
scope  and substance as is customarily given in an underwritten public offering,
addressed  to  the  Investors.

          (h)     The  Company  shall  make  available for inspection by (i) any
Investor  and  (ii)  one (1) firm of accountants or other agents retained by the
Investors  (collectively,  the  "Inspectors")  all pertinent financial and other
                                 ----------
records,  and  pertinent  corporate  documents  and  properties  of  the Company
(collectively,  the  "Records"), as shall be reasonably deemed necessary by each
                      -------
Inspector,  and  cause the Company's officers, directors and employees to supply
all  information  which the Inspector may reasonably request; provided, however,
that  each  Inspector  shall  agree,  and any Investor hereby agrees, to hold in
strict  confidence  and shall not make any disclosure (except to an Investor) or
use  any  Record or other information which the Company determines in good faith
to  be  confidential, and of which determination the Inspectors are so notified,
unless  (a)  the  disclosure  of such Records is necessary to avoid or correct a
misstatement  or omission in any Registration Statement or is otherwise required
under the Securities Act, (b) the release of such Records is ordered pursuant to
a  final,  non-appealable  subpoena  or order from a court or government body of
competent  jurisdiction,  or  (c)  the information in such Records has been made
generally  available to the public other than by disclosure in violation of this
or  any  other  agreement of which the Inspector and the Investor has knowledge.
Each  Investor  agrees  that  it  shall,  upon  learning that disclosure of such
Records  is  sought  in  or  by  a  court  or  governmental  body  of  competent
jurisdiction or through other means, give prompt notice to the Company and allow
the  Company,  at  its  expense,  to  undertake  appropriate  action  to prevent
disclosure  of,  or  to  obtain  a  protective  order  for,  the  Records deemed
confidential.

          (i)     The  Company  shall  hold  in  confidence  and  not  make  any
disclosure  of information concerning an Investor provided to the Company unless
(i)  disclosure of such information is necessary to comply with federal or state
securities  laws,  (ii) the disclosure of such information is necessary to avoid
or  correct  a misstatement or omission in any Registration Statement, (iii) the
release  of  such  information is ordered pursuant to a subpoena or other final,
non-appealable  order  from  a  court  or  governmental  body  of  competent
jurisdiction,  or (iv) such information has been made generally available to the
public  other  than  by  disclosure  in violation of this Agreement or any other
agreement.  The  Company  agrees that it shall, upon learning that disclosure of
such  information  concerning  an  Investor  is  sought  in  or  by  a  court or
governmental  body of competent jurisdiction or through other means, give prompt
written  notice  to  such


                                        6
<PAGE>
Investor  and  allow  the  Investor,  at  such  Investor's expense, to undertake
appropriate  action  to  prevent  disclosure of, or to obtain a protective order
for,  such  information.

          (j)     The Company shall use its commercially reasonable best efforts
either  to  cause  all  the  Registrable  Securities  covered  by a Registration
Statement  (i)  to  be listed on each securities exchange on which securities of
the  same  class or series issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the rules of such
exchange  or  (ii)  the  inclusion  for quotation on the National Association of
Securities  Dealers,  Inc.  OTC  Bulletin Board for such Registrable Securities.
The  Company  shall  pay all fees and expenses in connection with satisfying its
obligation  under  this  Section  3(j).

          (k)     The  Company  shall  cooperate  with  the  Investors  who hold
Registrable  Securities  being  offered  and,  to  the  extent  applicable,  to
facilitate  the  timely preparation and delivery of certificates to a transferee
of  the  Investor  (not  bearing  any  restrictive  legend)  representing  the
Registrable  Securities  to  be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be,  as the Investors may reasonably request and registered in such names as the
Investors  may  request.

          (l)     The Company shall use its commercially reasonable best efforts
to  cause  the  Registrable  Securities  covered  by the applicable Registration
Statement  to be registered with or approved by such other governmental agencies
or  authorities  as  may  be  necessary  to  consummate  the disposition of such
Registrable  Securities.

          (m)     The  Company  shall  make  generally available to its security
holders  as  soon  as  practical,  but not later than ninety (90) days after the
close  of  the  period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the Securities Act) covering a twelve (12)
month  period  beginning  not  later  than the first day of the Company's fiscal
quarter  next  following  the  effective  date  of  the  Registration Statement.

          (n)     The  Company  shall  otherwise use its commercially reasonable
best  efforts  to comply with all applicable rules and regulations of the SEC in
connection  with  any  registration  hereunder.

          (o)     Within  two  (2)  business days after a Registration Statement
which  covers  Registrable  Securities  is  declared  effective  by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company to deliver,
to  the  transfer  agent  for  such  Registrable  Securities (with copies to the
Investors  whose  Registrable  Securities  are  included  in  such  Registration
Statement)  confirmation  that  such  Registration  Statement  has been declared
effective  by  the  SEC  in  the  form  attached  hereto  as  Exhibit  A.
                                                              ----------

          (p)     The  Company shall take all other reasonable actions necessary
to  expedite  and  facilitate  disposition  by  the  Investors  of  Registrable
Securities  pursuant  to  a  Registration  Statement.

     4.     OBLIGATIONS  OF  THE  INVESTORS.
            -------------------------------

     Each  Investor  agrees that, upon receipt of any notice from the Company of
the  happening  of  any event of the kind described in Section 3(f) or the first
sentence  of  Section  3(e),  such


                                        7
<PAGE>
Investor  will  immediately  discontinue  disposition  of Registrable Securities
pursuant  to  any Registration Statement(s) covering such Registrable Securities
until  such  event has been remedied.  Notwithstanding anything to the contrary,
the  Company  shall  cause its transfer agent to deliver unlegended certificates
for shares of Common Stock to a transferee of an Investor in accordance with the
terms  of  the  Securities  Purchase  Agreement  in  connection with any sale of
Registrable  Securities  with  respect  to  which an Investor has entered into a
contract  for  sale prior to the Investor's receipt of a notice from the Company
of the happening of any event of the kind described in Section 3(f) or the first
sentence  of  3(e)  and  for  which  the  Investor  has  not  yet  settled.

     5.     EXPENSES  OF  REGISTRATION.
            --------------------------

     All  expenses  incurred  in  connection  with  registrations,  filings  or
qualifications  pursuant  to  the  Agreement  including, without limitation, all
registration,  listing  and  qualifications fees, printers, legal and accounting
fees  shall  be  paid  by  the  Company.

     6.     INDEMNIFICATION.
            ---------------

     With respect to Registrable Securities which are included in a Registration
Statement  under  this  Agreement:

          (a)     To  the fullest extent permitted by law, the Company will, and
hereby  does,  indemnify, hold harmless and defend each Investor, the directors,
officers,  partners,  employees, agents, representatives of, and each Person, if
any,  who  controls any Investor within the meaning of the Securities Act or the
Exchange  Act  (each,  an  "Indemnified  Person"),  against  any losses, claims,
                            -------------------
damages,  liabilities,  judgments,  fines, penalties, charges, costs, reasonable
attorneys'  fees,  amounts  paid  in  settlement  or  expenses, joint or several
(collectively,  "Claims")  incurred in investigating, preparing or defending any
                 ------
action, claim, suit, inquiry, proceeding, investigation or appeal taken from the
foregoing  by  or  before  any  court  or  governmental, administrative or other
regulatory  agency,  body  or the SEC, whether pending or threatened, whether or
not  an  indemnified party is or may be a party thereto ("Indemnified Damages"),
                                                          -------------------
to  which  any  of them may become subject insofar as such Claims (or actions or
proceedings,  whether  commenced or threatened, in respect thereof) arise out of
or  are  based  upon:  (i) any untrue statement or alleged untrue statement of a
material  fact  in  a  Registration  Statement  or  any post-effective amendment
thereto  or  in  any  filing  made  in  connection with the qualification of the
offering  under  the  securities or other "blue sky" laws of any jurisdiction in
which Registrable Securities are offered ("Blue Sky Filing"), or the omission or
                                           ---------------
alleged  omission  to  state  a  material  fact required to be stated therein or
necessary  to  make  the  statements  therein  not  misleading;  (ii) any untrue
statement  or alleged untrue statement of a material fact contained in any final
prospectus  (as  amended  or  supplemented,  if  the Company files any amendment
thereof  or supplement thereto with the SEC) or the omission or alleged omission
to  state  therein  any  material  fact  necessary  to  make the statements made
therein,  in  light of the circumstances under which the statements therein were
made, not misleading; or (iii) any violation or alleged violation by the Company
of  the  Securities  Act,  the  Exchange  Act, any other law, including, without
limitation,  any  state  securities  law,  or any rule or regulation there under
relating  to  the  offer  or  sale  of  the Registrable Securities pursuant to a
Registration  Statement  (the matters in the foregoing clauses (i) through (iii)
being,  collectively,  "Violations").  The  Company  shall
                        ----------


                                        8
<PAGE>
reimburse  the  Investors  and  each  such  controlling  Person promptly as such
expenses  are  incurred  and  are  due  and  payable,  for  any  legal  fees  or
disbursements  or  other reasonable expenses incurred by them in connection with
investigating  or  defending  any  such  Claim.  Notwithstanding anything to the
contrary  contained  herein,  the  indemnification  agreement  contained in this
Section  6(a):  (x)  shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with  information furnished in writing to the Company by such Indemnified Person
expressly  for  use  in  connection  with  the  preparation  of the Registration
Statement  or any such amendment thereof or supplement thereto; (y) shall not be
available  to  the  extent  such  Claim is based on a failure of the Investor to
deliver  or  to  cause  to  be  delivered  the  prospectus made available by the
Company, if such prospectus was timely made available by the Company pursuant to
Section 3(c); and (z) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity shall remain in
full  force  and  effect regardless of any investigation made by or on behalf of
the  Indemnified  Person  and  shall  survive  the  transfer  of the Registrable
Securities  by  the  Investors  pursuant  to  Section  9  hereof.

          (b)     In  connection  with  a  Registration Statement, each Investor
agrees  to severally and not jointly indemnify, hold harmless and defend, to the
same extent and in the same manner as is set forth in Section 6(a), the Company,
each  of  its  directors,  each  of its officers, employees, representatives, or
agents  and  each Person, if any, who controls the Company within the meaning of
the  Securities  Act  or the Exchange Act (each an "Indemnified Party"), against
                                                    -----------------
any  Claim or Indemnified Damages to which any of them may become subject, under
the  Securities  Act,  the  Exchange  Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or is based upon any Violation, in each case to
the  extent, and only to the extent, that such Violation occurs in reliance upon
and  in  conformity  with  written  information furnished to the Company by such
Investor  expressly for use in connection with such Registration Statement; and,
subject  to  Section  6(d),  such  Investor  will  reimburse  any legal or other
expenses  reasonably  incurred  by  them  in  connection  with  investigating or
defending  any  such  Claim;  provided,  however,  that  the indemnity agreement
contained  in  this  Section 6(b) and the agreement with respect to contribution
contained  in  Section  7  shall  not apply to amounts paid in settlement of any
Claim  if  such settlement is effected without the prior written consent of such
Investor,  which  consent shall not be unreasonably withheld; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only that
amount  of a Claim or Indemnified Damages as does not exceed the net proceeds to
such Investor as a result of the sale of Registrable Securities pursuant to such
Registration  Statement.  Such  indemnity  shall remain in full force and effect
regardless  of  any investigation made by or on behalf of such Indemnified Party
and  shall  survive  the transfer of the Registrable Securities by the Investors
pursuant  to  Section  9.  Notwithstanding  anything  to  the contrary contained
herein,  the  indemnification  agreement  contained  in  this  Section 6(b) with
respect  to  any  prospectus  shall  not inure to the benefit of any Indemnified
Party  if  the  untrue  statement  or omission of material fact contained in the
prospectus  was corrected and such new prospectus was delivered to each Investor
prior  to such Investor's use of the prospectus to which the Claim relates.  The
indemnification  provided  for  in  this  Section  6(b) shall not exceed for any
Investor,  the  positive  difference  between  the  Purchase  Price paid for its
portion  of  the  Registrable  Shares and the closing bid price on the Principal
Market (as defined in the Securities Purchase Agreement) of the Company's Common
Stock  on  the  day  that  such  Investor  sells  or  transfers  such  shares.


                                        9
<PAGE>
          (c)     Promptly after receipt by an Indemnified Person or Indemnified
Party  under  this  Section  6  of  notice  of the commencement of any action or
proceeding  (including any governmental action or proceeding) involving a Claim,
such  Indemnified  Person  or  Indemnified  Party  shall,  if a Claim in respect
thereof  is  to  be  made  against  any indemnifying party under this Section 6,
deliver  to the indemnifying party a written notice of the commencement thereof,
and  the  indemnifying party shall have the right to participate in, and, to the
extent  the  indemnifying  party so desires, jointly with any other indemnifying
party  similarly  noticed, to assume control of the defense thereof with counsel
mutually  satisfactory  to  the indemnifying party and the Indemnified Person or
the  Indemnified  Party,  as  the  case  may  be;  provided,  however,  that  an
Indemnified  Person  or Indemnified Party shall have the right to retain its own
counsel  with  the  fees  and expenses of not more than one (1) counsel for such
Indemnified  Person  or  Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation  by  such  counsel of the Indemnified Person or Indemnified Party
and  the  indemnifying  party  would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other  party  represented  by  such counsel in such proceeding.  The Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection  with  any  negotiation or defense of any such action or claim by the
indemnifying  party  and shall furnish to the indemnifying party all information
reasonably  available  to  the  Indemnified  Party  or  Indemnified Person which
relates  to  such  action  or  claim.  The  indemnifying  party  shall  keep the
Indemnified  Party  or  Indemnified Person fully apprised at all times as to the
status  of  the defense or any settlement negotiations with respect thereto.  No
indemnifying  party  shall  be liable for any settlement of any action, claim or
proceeding  effected  without its prior written consent; provided, however, that
the  indemnifying  party shall not unreasonably withhold, delay or condition its
consent.  No  indemnifying party shall, without the prior written consent of the
Indemnified  Party  or  Indemnified  Person, consent to entry of any judgment or
enter  into  any  settlement  or  other  compromise which does not include as an
unconditional  term  thereof  the  giving  by  the claimant or plaintiff to such
Indemnified  Party  or  Indemnified  Person  of  a release from all liability in
respect  to such claim or litigation.  Following indemnification as provided for
hereunder,  the  indemnifying  party  shall  be  subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or  corporations relating to the matter for which indemnification has been made.
The  failure  to  deliver  written  notice  to  the  indemnifying party within a
reasonable  time  of  the commencement of any such action shall not relieve such
indemnifying  party  of  any  liability to the Indemnified Person or Indemnified
Party  under this Section 6, except to the extent that the indemnifying party is
prejudiced  in  its  ability  to  defend  such  action.

          (d)     The  indemnification  required by this Section 6 shall be made
by  periodic  payments  of  the  amount  thereof  during  the  course  of  the
investigation  or defense, as and when bills are received or Indemnified Damages
are  incurred.

          (e)     The indemnity agreements contained herein shall be in addition
to  (i)  any  cause  of  action  or  similar  right  of the Indemnified Party or
Indemnified  Person  against  the  indemnifying  party  or  others, and (ii) any
liabilities  the  indemnifying  party  may  be  subject  to pursuant to the law.


                                       10
<PAGE>
     7.     CONTRIBUTION.
            ------------

     To the extent any indemnification by an indemnifying party is prohibited or
limited  by  law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (i) no seller
of  Registrable  Securities  guilty  of fraudulent misrepresentation (within the
meaning  of  Section  11(f)  of  the  Securities  Act)  shall  be  entitled  to
contribution  from  any  seller  of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities  shall be limited in amount to the net amount of proceeds received by
such  seller  from  the  sale  of  such  Registrable  Securities.

     8.     REPORTS  UNDER  THE  EXHANGE  ACT.
            ---------------------------------

     With  a  view to making available to the Investors the benefits of Rule 144
promulgated  under  the  Securities Act or any similar rule or regulation of the
SEC  that may at any time permit the Investors to sell securities of the Company
to  the  public  without  registration  ("Rule  144")  the  Company  agrees  to:
                                          ---------

          (a)     make and keep public information available, as those terms are
understood  and  defined  in  Rule  144;

          (b)     file  with  the  SEC  in a timely manner all reports and other
documents  required of the Company under the Securities Act and the Exchange Act
so long as the Company remains subject to such requirements (it being understood
that  nothing herein shall limit the Company's obligations under Section 4(c) of
the  Securities  Purchase  Agreement)  and  the filing of such reports and other
documents  as  are  required  by  the  applicable  provisions  of  Rule 144; and

          (c)     furnish  to  each  Investor  so  long  as  such  Investor owns
Registrable  Securities,  promptly  upon request, (i) a written statement by the
Company  that  it  has complied with the reporting requirements of Rule 144, the
Securities  Act  and  the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the  Company, and (iii) such other information as may be reasonably requested to
permit  the  Investors  to  sell  such  securities  pursuant to Rule 144 without
registration.

     9.     AMENDMENT  OF  REGISTRATION  RIGHTS.
            -----------------------------------

     Provisions  of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or  prospectively),  only with the written consent of the Company and a majority
of  the  Required  Holders.  Any amendment or waiver effected in accordance with
this  Section  9  shall  be binding upon each Investor and the Company.  No such
amendment  shall be effective to the extent that it applies to fewer than all of
the holders of the Registrable Securities.  No consideration shall be offered or
paid  to  any  Person  to  amend  or  consent to a waiver or modification of any
provision of any of this Agreement unless the same consideration also is offered
to  all  of  the  parties  to  this  Agreement.


                                       11
<PAGE>
     10.     MISCELLANEOUS.
             -------------

          (a)     A  Person  is  deemed to be a holder of Registrable Securities
whenever  such  Person  owns  or  is  deemed  to  own of record such Registrable
Securities.  If  the  Company  receives  conflicting  instructions,  notices  or
elections  from  two  (2)  or  more Persons with respect to the same Registrable
Securities,  the  Company  shall  act  upon the basis of instructions, notice or
election  received  from  the  registered  owner of such Registrable Securities.

          (b)     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
confirmation  of  transmission  is  mechanically or electronically generated and
kept  on file by the sending party); or (iii) one (1) business 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:                 Charys Holding Company, Inc.
                                       1117 Perimeter Center West, Suite N415
                                       Atlanta, GA 30338
                                       Attention:   Billy Ray, Jr.
                                       Telephone:   (678) 443-2300
                                       Facsimile:   (678) 443-2320

With a copy to:                        Paul, Hastings, Janofsky & Walker LLP
                                       600 Peachtree Street, N.E., Suite 2400
                                       Atlanta, GA  30308
                                       Attention:    Karen K. Leach
                                       Telephone:   (404) 815-2528
                                       Facsimile:   (404) 685-5028
</TABLE>

If  to  an  Investor,  to  its  address  and facsimile number on the Schedule of
Investors attached hereto, with copies to such Investor's representatives as set
forth  on  the  Schedule  of Investors or to such other address and/or facsimile
number  and/or  to the attention of such other person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness  of such change.  Written confirmation of receipt (A) given by the
recipient  of  such  notice,  consent,  waiver  or  other  communication,  (B)
mechanically  or  electronically  generated  by  the  sender's facsimile machine
containing  the time, date, recipient facsimile number and an image of the first
page  of  such  transmission  or  (C) provided by a courier or overnight courier
service  shall  be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with  clause  (i),  (ii)  or  (iii)  above,  respectively.

          (c)     Failure  of  any  party  to exercise any right or remedy under
this  Agreement  or  otherwise,  or delay by a party in exercising such right or
remedy,  shall  not  operate  as  a  waiver  thereof.


                                       12
<PAGE>
          (d)     The  parties  hereto  acknowledge  that  the  transactions
contemplated  by  this  Agreement  and  the  exhibits  hereto  bear a reasonable
relation  to  the State of New York.  The parties hereto agree that the internal
laws  of  the  State  of  New  York shall govern this Agreement and the exhibits
hereto,  including, but not limited to, all issues related to usury.  Any action
to  enforce  the terms of this Agreement or any of its exhibits shall be brought
exclusively  in the state and/or federal courts situated in the County and State
of  New  York.  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 to such party at the address for such 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 manner permitted by law.
If  any  provision  of  this  Agreement shall be invalid or unenforceable in any
jurisdiction,  such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity  or  enforceability  of  any  provision  of this Agreement in any other
jurisdiction.  EACH  PARTY  HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES  NOT  TO  REQUEST,  A  JURY  TRIAL  FOR  THE  ADJUDICATION OF ANY DISPUTE
HEREUNDER  OR  IN  CONNECTION  HEREWITH  OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION  CONTEMPLATED  HEREBY.

          (e)     This  Agreement, the Securities Purchase Agreement and related
documents  including the Certificate of Designations relating to the Convertible
Preferred Stock, the Warrants and the Escrow Shares Escrow Agreement, constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof  and  thereof.  There  are  no  restrictions,  promises,  warranties  or
undertakings,  other  than  those  set  forth or referred to herein and therein.
This  Agreement,  the  Securities  Purchase  Agreement  and  related  documents
including  the Certificate of Designations relating to the Convertible Preferred
Stock, the Warrants, and the Escrow Shares Escrow Agreement, supersede all prior
agreements  and  understandings  among  the  parties  hereto with respect to the
subject  matter  hereof  and  thereof.

          (f)     This  Agreement  shall  inure to the benefit of and be binding
upon  the  permitted  successors  and  assigns  of  each  of the parties hereto.

          (g)     The  headings  in  this  Agreement  are  for  convenience  of
reference  only  and  shall  not  limit  or otherwise affect the meaning hereof.

          (h)     This Agreement may be executed in identical counterparts, each
of  which  shall be deemed an original but all of which shall constitute one and
the  same agreement.  This Agreement, once executed by a party, may be delivered
to  the other party hereto by facsimile transmission of a copy of this Agreement
bearing  the  signature  of  the  party  so  delivering  this  Agreement.

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


                                       13
<PAGE>
          The  language used in this Agreement will be deemed to be the language
chosen  by  the  parties  to  express their mutual intent and no rules of strict
construction  will  be  applied  against  any  party.

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


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                       14
<PAGE>
     IN  WITNESS  WHEREOF,  the  parties  have caused this Investor Registration
Rights  Agreement  to  be  duly executed as of day and year first above written.

                                       COMPANY:
                                       CHARYS HOLDING COMPANY INC.

                                       By:
                                          ------------------------------------
                                       Name:   Billy Ray, Jr.
                                       Title:  Chief Executive Officer


                                       INVESTORS:
                                       GOTTBETTER CAPITAL MASTER, LTD.

                                       By:
                                          ------------------------------------
                                       Name:   Adam S. Gottbetter
                                       Title:  Director


                                       CASTLERIGG MASTER INVESTMENTS LTD.

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


                                       ENABLE GROWTH PARTNERS LP

                                       By:
                                          ------------------------------------
                                       Name:   Brendan O'Neil
                                       Title:  Principal and Portfolio Manager


                                       ENABLE OPPORTUNITY PARTNERS LP

                                       By:
                                          ------------------------------------
                                       Name:   Brendan O'Neil
                                       Title:  Principal and Portfolio Manager


                                       PIERCE DIVERSIFIED STRATEGY MASTER FUND
                                       LLC

                                       By:
                                          ------------------------------------
                                       Name:   Brendan O'Neil
                                       Title:  Principal and Portfolio Manager


                                       15
<PAGE>
                                       UBS O'CONNOR LLC F/B/O O'CONNOR PIPES
                                       CORPORATE STRATEGIES MASTER LTD.

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


                                       16
<PAGE>
<TABLE>
<CAPTION>
                                   SCHEDULE I
                                   ----------

                              SCHEDULE OF INVESTORS
                              ---------------------


                                                    ADDRESS/FACSIMILE
                  NAME                              NUMBER OF INVESTOR
-------------------------------------------  ----------------------------------
<S>                                          <C>

Gottbetter Capital Master, Ltd.              488 Madison Avenue
                                             New York, NY 10022
                                             Facsimile: (212) 400-6999

With a copy to:                              Jason M. Rimland, Esq.
                                             Gottbetter & Partners, LLP
                                             488 Madison Avenue
                                             New York, NY 10022
                                             Facsimile: (212) 400-6901
-------------------------------------------------------------------------------


Castlerigg Master Investments                40 West 57th Street, 26th Floor
                                             New York, NY 100192
                                             Facsimile: (212) 603-5710
                                             Email: mpliskin@sandellmgmt.com
-------------------------------------------------------------------------------


Enable Growth Partners LP                    One Ferry Building, Suite 255
                                             San Francisco, CA 94111
                                             Facsimile: (415) 677-1580
                                             Email:  boneil@enablecapital.com
-------------------------------------------------------------------------------


Enable Opportunity Partners LP               One Ferry Building, Suite 255
                                             San Francisco, CA 94111
                                             Facsimile: (415) 677-1580
                                             Email:  boneil@enablecapital.com
-------------------------------------------------------------------------------


Pierce Diversified Strategy Master Fund LLC  One Ferry Building, Suite 255
                                             San Francisco, CA 94111
                                             Facsimile: (415) 677-1580
                                             Email:  boneil@enablecapital.com
-------------------------------------------------------------------------------


UBS O'Connor LLC F/B/O O'Connor Pipes        1 North Wacker
Corporate Strategies Master Ltd.             Chicago, IL 60606
                                             Facsimile: (312) 525-5868
</TABLE>


<PAGE>
                                    EXHIBIT A

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT
                            -------------------------


Attention:

     Re:     CHARYS  HOLDING  COMPANY  INC.

Ladies  and  Gentlemen:

     We  are counsel to Charys Holding Company Inc., a Delaware corporation (the
"Company"),  and  have  represented  the Company in connection with that certain
 -------
Securities Purchase Agreement (the "Securities Purchase Agreement") entered into
                                    -----------------------------
by  and  among  the  Company  and the investors named therein (collectively, the
"Investors") pursuant to which the Company issued to the Investors shares of its
 ---------
Series  D  Convertible  Preferred  Stock (the "Preferred Stock") which shares of
Preferred  Stock  are  convertible into shares of Common Stock, par value $0.001
per  share (the "Common Stock").  Pursuant to the Securities Purchase Agreement,
                 ------------
the  Company  also  has  entered  into  a Registration Rights Agreement with the
Investors  (the  "Registration  Rights Agreement") pursuant to which the Company
                  ------------------------------
agreed,  among  other things, to register the Registrable Securities (as defined
in  the  Registration  Rights  Agreement)  under  the Securities Act of 1933, as
amended  (the  "Securities  Act").  In connection with the Company's obligations
                ---------------
under the Registration Rights Agreement, on                  , the Company filed
                                            ------------ ----
a  Registration  Statement  on  Form           (File No. 333-             ) (the
                                      --------               -------------
"Registration  Statement")  with  the  Securities  and  Exchange Commission (the
 -----------------------
"SEC")  relating to the Registrable Securities which names each of the Investors
 ---
as  a  selling  stockholder  thereunder.

     In  connection with the foregoing, we advise you that a member of the SEC's
staff  has  advised  us by telephone that the SEC has entered an order declaring
the  Registration Statement effective under the Securities Act at [ENTER TIME OF
EFFECTIVENESS]  on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic  inquiry  of  a  member  of  the  SEC's  staff,  that  any stop order
suspending  its  effectiveness  has been issued or that any proceedings for that
purpose  are  pending  before,  or  threatened  by,  the SEC and the Registrable
Securities  are  available  for  resale under the Securities Act pursuant to the
Registration  Statement.

                                       Very truly yours,

                                       [LAW FIRM]

                                       By:
                                          --------------------------------

cc:     [LIST NAMES OF INVESTOR]


<PAGE>
                         ESCROW SHARES ESCROW AGREEMENT
                         ------------------------------

     THIS  ESCROW  SHARES ESCROW AGREEMENT (the "Agreement") is made and entered
                                                 ---------
into  as  of  May  19,  2006  (the "Effective Date") by and among CHARYS HOLDING
                                    --------------
COMPANY,  INC., a corporation organized and existing under the laws of the State
of  Delaware (the "Company"), the Buyers set forth on Schedule I attached hereto
                   -------
(individually,  a  "Buyer" or collectively "Buyers"), and GOTTBETTER & PARTNERS,
                    -----                   ------
LLP,  as  escrow  agent  ("Escrow  Agent").
                           -------------

                                    RECITALS:
                                    --------

     WHEREAS, the Company and the Buyers have entered into a Securities Purchase
Agreement  (the  "Securities  Purchase Agreement"), dated as of the date hereof,
                  ------------------------------
pursuant  to  which  the  Company  proposes  to  sell  shares  of  its  Series D
Convertible  Preferred  Stock (the "Preferred Stock") which shall be convertible
                                    ---------------
into the Company's Common Stock, par value $0.001 per share (the "Common Stock")
                                                                  ------------
and  in connection therewith the Company has agreed to issue certain warrants to
purchase  additional  shares of Common Stock (the "Warrants"; and, together with
                                                   --------
the  Preferred  Stock,  the  "Securities");
                              ----------

     WHEREAS,  the Securities Purchase Agreement provides that the Company shall
deposit the Escrow Shares (as defined in the Securities Purchase Agreement) in a
segregated  escrow account to be held by Escrow Agent in order to effectuate the
conversions of the Preferred Stock and the exercise of the Warrants;

     WHEREAS, The Escrow Agent is willing to act as escrow agent pursuant to the
terms of this Agreement with respect to the Escrow Shares; and

     NOW,  THEREFORE,  in  consideration  of  the  mutual covenants, agreements,
warranties,  and  representations  herein  contained,  and  for  other  good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  is  hereby
acknowledged, the parties hereto agree as follows:

                              TERMS AND CONDITIONS
                              --------------------

     1.     PROCEDURE  FOR  ESCROW.  The  procedures to be followed in order for
            ----------------------
the  Buyers  to  convert  shares  of  the  Preferred  Stock  and to exercise the
Warrants,  are  governed by the provisions of the Securities Purchase Agreement,
the  Certificate  of  Designation  for  the  Preferred  Stock and the agreements
establishing  the Warrants, all of which are incorporated herein by reference as
if  set  forth  fully  herein.

     2.     TERMS  OF  ESCROW.  (a)  Except  as  otherwise  provided for in this
            -----------------
Agreement,  the terms of the escrow shall be governed by the Securities Purchase
Agreement,  the  Certificate  of  Designation  for  the  Preferred Stock and the
agreements  establishing  the  Warrants, all of which are incorporated herein by
reference  as if set forth fully herein.  This Agreement shall terminate at such
time  as  all  of  the  Escrow  Shares  have  been  released  from  the  escrow.

          (b)  The  Escrow  Agent  shall send the Escrow Shares to the Company's
transfer agent as soon as practicable upon the effectiveness of the Registration
Statement  to  have  the  legend  removed.

          (c) Upon each conversion, the Company shall pay the Escrow Agent a fee
of  One  Hundred  Fifty  Dollars  ($150).


<PAGE>
     3.     CONCERNING  THE  ESCROW  AGENT.
            ------------------------------

          3.1.     The  Escrow  Agent  undertakes to perform only such duties as
are  expressly  set  forth  herein and no implied duties or obligations shall be
read  into  this  Agreement  against  the  Escrow  Agent.

          3.2.     The  Escrow  Agent  may  act  in reliance upon any writing or
instrument  or  signature  which  it, in good faith, believes to be genuine, may
assume the validity and accuracy of any statement or assertion contained in such
a  writing  or instrument, and may assume that any person purporting to give any
writing, notice, advice or instructions in connection with the provisions hereof
has  been duly authorized to do so.  The Escrow Agent shall not be liable in any
manner  for the sufficiency or correctness as to form, manner, and execution, or
validity  of  any  instrument  deposited in this escrow, nor as to the identity,
authority,  or  right of any person executing the same; and its duties hereunder
shall  be  limited to the safekeeping of such certificates, monies, instruments,
or  other document received by it as such escrow holder, and for the disposition
of  the  same  in  accordance with the written instruments accepted by it in the
escrow.

          3.3.     The  Buyers  and  the  Company  hereby  agree,  to defend and
indemnify  the  Escrow  Agent  and  hold  it  harmless  from any and all claims,
liabilities,  losses, actions, suits, or proceedings at law or in equity, or any
other  expenses,  fees, or charges of any character or nature which it may incur
or with which it may be threatened by reason of its acting as Escrow Agent under
this  Agreement;  and  in  connection  therewith,  to indemnify the Escrow Agent
against  any  and all expenses, including attorneys' fees and costs of defending
any  action,  suit, or proceeding or resisting any claim (and any costs incurred
by  the  Escrow Agent pursuant to Sections 6.4 or 6.5 hereof).  The Escrow Agent
shall  be  vested  with  a  lien  on  all  property  deposited  hereunder,  for
indemnification  of  attorneys'  fees  and  court  costs  regarding  any  suit,
proceeding  or  otherwise,  or  any  other  expenses,  fees,  or  charges of any
character  or  nature,  which  may  be incurred by the Escrow Agent by reason of
disputes  arising  between  the  makers  of  this  escrow  as  to  the  correct
interpretation  of  this  Agreement  and  instructions given to the Escrow Agent
hereunder,  or  otherwise, with the right of the Escrow Agent, regardless of the
instructions  aforesaid,  to hold said property until and unless said additional
expenses,  fees,  and  charges  shall be fully paid; provided, however, that the
Escrow  Agent  shall  not  have  a lien on any property deposited hereunder that
would  otherwise be required to be distributed or returned to the Company except
to  the extent such fees and expenses incurred by the Escrow Agent arise from an
obligation  owed to the Escrow Agent by the Company.  Any fees and costs charged
by  the  Escrow  Agent  for  serving  hereunder  shall  be  paid  by the Buyers.

          3.4.     If  any  of  the  parties  shall be in disagreement about the
interpretation  of  this  Agreement, or about the rights and obligations, or the
propriety  of  any action contemplated by the Escrow Agent hereunder, the Escrow
Agent  may,  at  its sole discretion deposit the Escrow Shares with the Clerk of
the  United  States  District Court of New York, sitting in Manhattan, New York,
and,  upon  notifying all parties concerned of such action, all liability on the
part  of  the  Escrow  Agent  shall fully cease and terminate.  The Escrow Agent
shall  be  indemnified  by  the  Company and the Buyers for all costs, including
reasonable  attorneys'  fees  in  connection  with the aforesaid proceeding, and
shall  be  fully  protected  in suspending all or a part of its activities under
this  Agreement  until a final decision or other settlement in the proceeding is
received.

          3.5.     The  Escrow  Agent may consult with counsel of its own choice
(and  the costs of such counsel shall be paid by the Company and the Buyers) and
shall  have  full and complete authorization and protection for any action taken
or  suffered by it hereunder in good faith and in accordance with the opinion of
such  counsel.  The  Escrow  Agent  shall  not  be  liable  for  any mistakes of


                                        2
<PAGE>
fact  or  error of judgment, or for any actions or omissions of any kind, unless
caused  by  its  willful  misconduct  or  gross  negligence.

          3.6.     The  Escrow  Agent  may  resign  upon  ten (10) days' written
notice  to  the  parties  in this Agreement.  If a successor Escrow Agent is not
appointed within this ten (10) day period, the Escrow Agent may petition a court
of  competent  jurisdiction  to  name  a  successor.

          3.7.     Conflict  Waiver.  The  Company  hereby acknowledges that the
                   ----------------
Escrow  Agent  is  counsel  to  Gottbetter  Capital  Master,  Ltd.  ("GCM"),  in
connection  with the transactions contemplated and referred herein.  The Company
agrees  that  in  the  event  of  any  dispute  arising  in connection with this
Agreement  or  otherwise  in  connection  with  any  transaction  or  agreement
contemplated  and  referred  herein,  the  Escrow  Agent  shall  be permitted to
continue  to  represent  GCM  and  the  Company will not seek to disqualify such
counsel  and  waives any objection Company might have with respect to the Escrow
Agent acting as the Escrow Agent pursuant to this Agreement.

          3.8.     Notices.  Unless  otherwise  provided  herein,  all  demands,
                   --------
notices,  consents,  service  of  process,  requests  and  other  communications
hereunder  shall  be in writing and shall be delivered in person or by overnight
courier  service,  or  mailed  by  certified  mail,  return  receipt  requested,
addressed:

<TABLE>
<CAPTION>
<S>                                     <C>
If to the Company, to:                  Charys Holding Company, Inc.
                                        1117 Perimeter Center West, Suite N415
                                        Atlanta, GA  30338
                                        Attention:  Billy Ray, Jr.
                                        Telephone:   678-443-2300
                                        Facsimile:   678-443-2320

With a copy to:                         Paul, Hastings, Janofsky & Walker LLP
                                        600 Peachtree Street, N.E., Suite 2400
                                        Atlanta, GA  30308
                                        Attention:  Karen K. Leach
                                        Telephone:   404-815-2528
                                        Facsimile:   404-685-5028

If  to  the  Buyers,  to  the  address  opposite each Buyer's name on Schedule I
hereto,  with  a  copy  to

With copy to:                           Jason Rimland
                                        Gottbetter & Partners, LLP
                                        488 Madison Avenue
                                        NewYork, NY  10022
                                        Telephone:   (212) 400-6900
                                        Facsimile:   (212) 400-6901

If to the Escrow Agent:                 Gottbetter & Partners, LLP
                                        488 Madison Avenue
                                        New York, NY  10022
                                        Attention:  Jason Rimland
                                        Telephone:   (212) 400-6900
                                        Facsimile:   (212) 400-6901
</TABLE>


                                        3
<PAGE>
Any  such  notice  shall  be  effective (a) when delivered, if delivered by hand
delivery or overnight courier service, or (b) five (5) days after deposit in the
United  States  mail,  as  applicable.

     4.     BINDING  EFFECT.  All  of  the  covenants  and obligations contained
            ---------------
herein  shall  be  binding upon and shall inure to the benefit of the respective
parties,  their  successors  and  assigns.

     5.     GOVERNING  LAW;  VENUE;  SERVICE  OF  PROCESS.  The  parties  hereto
            ---------------------------------------------
acknowledge  that  the  transactions  contemplated  by  this  Agreement  and the
exhibits  hereto  bear  a  reasonable  relation  to  the State of New York.  The
parties  hereto  agree  that  the  internal  laws of the State of New York shall
govern  this  Agreement  and the exhibits hereto, including, but not limited to,
all  issues related to usury.  Any action to enforce the terms of this Agreement
or  any of its exhibits shall be brought exclusively in the state and/or federal
courts  situated in the County and State of New York.  Service of process in any
action  by  the  Buyers  to  enforce  the terms of this Agreement may be made by
serving  a  copy of the summons and complaint, in addition to any other relevant
documents,  by  commercial  overnight  courier  to  the Company at its principal
address  set  forth  in  this  Agreement.

     6.     ENFORCEMENT  COSTS.  If  any  legal  action  or  other proceeding is
            ------------------
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach,  default  or misrepresentation in connection with any provisions of this
Agreement,  the  successful  or prevailing party or parties shall be entitled to
recover  reasonable  attorneys'  fees,  court costs and all expenses even if not
taxable  as court costs (including, without limitation, all such fees, costs and
expenses  incident  to  appeals),  incurred  in  that  action  or proceeding, in
addition  to  any  other  relief to which such party or parties may be entitled.

     7.     REMEDIES  CUMULATIVE.  No  remedy herein conferred upon any party is
            --------------------
intended  to  be  exclusive  of any other remedy, and each and every such remedy
shall  be  cumulative  and  shall  be  in  addition  to every other remedy given
hereunder  or  now  or  hereafter  existing  at  law,  in equity, by statute, or
otherwise.  No  single  or  partial exercise by any party of any right, power or
remedy hereunder shall preclude any other or further exercise thereof.

     8.     COUNTERPARTS.  This  Agreement  may  be  executed  in  one  or  more
            ------------
counterparts,  each  of  which  shall  be  deemed  an original, but all of which
together  shall  constitute  the  same  instrument.

     9.     NO  PENALTIES.  No  provision of this Agreement is to be interpreted
            -------------
as a penalty upon any party to this Agreement.

     10.     JURY  TRIAL.  EACH  OF THE BUYERS AND THE COMPANY HEREBY KNOWINGLY,
             -----------
VOLUNTARILY  AND  INTENTIONALLY WAIVES THE RIGHT WHICH IT MAY HAVE TO A TRIAL BY
JURY  OF  ANY  CLAIM, DEMAND, ACTION OR CAUSE OF ACTION BASED HEREON, OR ARISING
OUT  OF,  UNDER OR IN ANY WAY CONNECTED WITH THE DEALINGS BETWEEN THE BUYERS AND
COMPANY,  THIS  ESCROW  SHARES  ESCROW  AGREEMENT  OR  ANY  DOCUMENT EXECUTED IN
CONNECTION  HEREWITH,  OR  ANY  COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO OR THERETO IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY
OR  OTHERWISE.

                          REMAINDER OF PAGE LEFT BLANK


                                        4
<PAGE>
     IN  WITNESS  WHEREOF,  the  parties  hereto  have duly executed this Escrow
Shares Escrow Agreement as of the date first above written.



                                       CHARYS HOLDING COMPANY, INC.

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



                                       GOTTBETTER & PARTNERS, LLP


                                       By:
                                          -------------------------
                                       Name:  Adam S. Gottbetter
                                       Title: Managing Partner


                                        5
<PAGE>
<TABLE>
<CAPTION>
                                                SCHEDULE I
                                                ----------

                                            SCHEDULE OF BUYERS
                                            ------------------


                                                                                 ADDRESS/FACSIMILE
               NAME                               SIGNATURE                     NUMBER OF INVESTORS
----------------------------------  -------------------------------------  ------------------------------
<S>                                 <C>                                    <C>

Gottbetter Capital Master, Ltd.     By:                                    488 Madison Avenue, 12th Floor
                                       ---------------------------------
                                    Name: Adam S. Gottbetter               New York, NY 10022
                                    Its:  Director                         Telephone:  212.400.6990
                                                                           Facsimile:  212.400.6999

Castlerigg Master Investments Ltd.  By:                                    40 W. 57th Street, 26th Floor
                                       ---------------------------------
                                    Name:                                  New York, NY 10019
                                    Its:                                   Telephone:  212.603.5822
                                                                           Facsimile:  212.603.5710

Enable Growth Partners LP           By:                                    One Ferry Building, Suite 255
                                       ---------------------------------
                                    Name: Brendan O'Neil                   San Francisco, CA 94111
                                    Its:  Principal and Portfolio Manager  Telephone:  415.677.1578
                                                                           Facsimile:  415.677.1580

Enable Opportunity Partners LP      By:                                    One Ferry Building, Suite 255
                                       ---------------------------------
                                    Name: Brendan O'Neil                   San Francisco, CA 94111
                                    Its:  Principal and Portfolio Manager  Telephone:  415.677.1578
                                                                           Facsimile:  415.677.1580

Pierce Diversified Strategy Master  By:                                    One Ferry Building, Suite 255
                                       ---------------------------------
Fund LLC                            Name: Brendan O'Neil                   San Francisco, CA 94111
                                    Its:  Principal and Portfolio Manager  Telephone:  415.677.1578
                                                                           Facsimile:  415.677.1580

UBS O'Connor LLC F/B/O              By:                                    1 North Wacker
                                       ---------------------------------
O'Connor Pipes Corporate            Name: Brian Herward                    Chicago, IL 60606
Strategies Master Ltd.              Its:                                   Telephone:
                                                                           Facsimile:
</TABLE>


                                        6