SUBORDINATED SECURITIES PURCHASE AGREEMENT
                   ------------------------------------------


                            LAURUS MASTER FUND, LTD.

                                       AND

                                TRUEYOU.COM INC.


                            DATED: DECEMBER 22, 2006

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                                LIST OF EXHIBITS

Subordinated Secured Term Note.........................................Exhibit A


Warrant................................................................Exhibit B


Escrow Agreement ......................................................Exhibit C

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                   SUBORDINATED SECURITIES PURCHASE AGREEMENT



         THIS SUBORDINATED SECURITIES PURCHASE AGREEMENT (as amended,  modified,
restated and/or  supplemented  from time to time, this  "Agreement") is made and
entered  into as of December  22,  2006,  by and  between  TRUEYOU.COM  Inc.,  a
Delaware  corporation  (the  "Company"),  and LAURUS MASTER FUND, LTD., a Cayman
Islands company (the "Purchaser").

                                    RECITALS

         WHEREAS,  the Company has  authorized  the sale to the  Purchaser  of a
Subordinated  Secured Term Note in the aggregate principal amount of One Million
Dollars  ($1,000,000)  in the form of  Exhibit A hereto (as  amended,  modified,
restated and/or supplemented from time to time, the "Note");

         WHEREAS,  the Company wishes to issue to the Purchaser  warrants in the
form of Exhibits B hereto (as amended,  modified,  restated and/or  supplemented
from time to time,  "Warrant A"), (the  "Warrants") to purchase up to 10,000,000
shares of the  Company's  Common Stock (upon the terms and subject to adjustment
as set forth therein) in connection with the Purchaser's purchase of the Note;

         WHEREAS, the Purchaser desires to purchase the Note and the Warrants on
the terms and conditions set forth herein; and

         WHEREAS, the Company desires to issue and sell the Note and Warrants to
the Purchaser on the terms and conditions set forth herein.

                                    AGREEMENT

         NOW,  THEREFORE,  in  consideration  of the foregoing  recitals and the
mutual  promises,  representations,  warranties  and covenants  hereinafter  set
forth,  and  for  other  good  and  valuable  consideration,   the  receipt  and
sufficiency  of which are  hereby  acknowledged,  the  parties  hereto  agree as
follows:

         1.       AGREEMENT  TO SELL AND  PURCHASE.  Pursuant  to the  terms and
conditions  set forth in this  Agreement,  on the  Closing  Date (as  defined in
Section 3), the Company shall sell to the  Purchaser,  and the  Purchaser  shall
purchase  from the Company,  the Note.  The sale of the Note on the Closing Date
shall be known as the "Offering".  The Note will mature on the Maturity Date (as
defined in the Note).  Collectively,  the Note and  Warrants,  together with the
Warrant Shares (as hereinafter defined), are referred to as the "Securities".

         2.       FEES AND WARRANTS. On the Closing Date:

                  (a)      The Company  will issue and deliver to the  Purchaser
         the  Warrants to purchase up to  10,000,000  of shares of Common  Stock
         (subject to adjustment as set forth

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         therein and in the Warrant  Side  Letter,  as  hereinafter  defined) in
         connection with and in consideration of the Purchaser's purchase of the
         Note pursuant to Section 1 hereof.  The shares of the Company's  Common
         Stock (as  defined in Section  4.3(a)  below)  issued  upon the due and
         timely  exercise of the  Warrants  will be referred to as the  "Warrant
         Shares".  Subject  to Section  11.4  hereof,  all the  representations,
         covenants,  warranties,  undertakings,  and indemnification,  and other
         rights  made or granted to or for the benefit of the  Purchaser  by the
         Company  are  hereby  also  made and  granted  for the  benefit  of the
         Purchaser as holder of the Warrants.

                  (b)      Subject  to the  terms of  Section  2(d)  below,  the
         Company shall pay to Laurus Capital Management, LLC, the manager of the
         Purchaser,  a closing  payment in an amount equal to three and one-half
         percent  (3.50%) of the  aggregate  principal  amount of the Note.  The
         foregoing fee is referred to herein as the "Closing Payment."

                  (c)      The Company  shall  reimburse  the  Purchaser for its
         reasonable  expenses  (including  legal fees and expenses)  incurred in
         connection  with the  preparation and negotiation of this Agreement and
         the Related Agreements (as hereinafter defined),  and expenses incurred
         in connection with the Purchaser's due diligence  review of the Company
         and its  Subsidiaries  (as  defined  in  Section  4.2) and all  related
         matters.  Amounts  required to be paid under this  Section 2(c) will be
         paid on the  Closing  Date and  shall  be  $20,000  for  such  expenses
         referred to in this Section 2(c).

                  (d)      The Closing  Payment and the expenses  referred to in
         the  preceding  clause  (c)  (net of  deposits  previously  paid by the
         Company)  shall be paid at closing  out of funds held  pursuant  to the
         Escrow  Agreement  (as defined  below) and a  disbursement  letter (the
         "Disbursement Letter").

         3.       CLOSING, DELIVERY AND PAYMENT.

                  3.1      CLOSING.  Subject to the terms and conditions herein,
the closing of the transactions contemplated hereby (the "Closing"),  shall take
place on the date hereof, at such time or place as the Company and the Purchaser
may mutually agree (such date is hereinafter referred to as the "Closing Date").

                  3.2      DELIVERY.  Pursuant to the Escrow  Agreement,  at the
Closing on the Closing Date,  the Company will deliver to the  Purchaser,  among
other things,  the Note and the Warrants and the  Purchaser  will deliver to the
Company, among other things, the amounts set forth in the Disbursement Letter by
certified  funds or wire TRANSFER.  The Company hereby  acknowledges  and agrees
that Purchaser's obligation to purchase the Note from the Company on the Closing
Date shall be contingent  upon the  satisfaction  (or waiver by the Purchaser in
its sole discretion) of the items and matters set forth in the closing checklist
provided by the Purchaser to the Company on or prior to the Closing Date.


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         4.       REPRESENTATIONS  AND  WARRANTIES  OF THE COMPANY.  The Company
hereby represents and warrants to the Purchaser as follows as of the date hereof
(unless an earlier  date is  indicated):

                  4.1      ORGANIZATION,  GOOD STANDING AND QUALIFICATION.  Each
of the Company and each of its  Subsidiaries  is a  corporation,  partnership or
limited liability company, as the case may be, duly organized,  validly existing
and in good standing under the laws of its jurisdiction of organization. Each of
the Company and each of its  Subsidiaries has the corporate,  limited  liability
company  or  partnership,  as the case may be,  power and  authority  to own and
operate  its  properties  and assets  and,  insofar as it is or shall be a party
thereto,  to (1) execute and deliver (i) this  Agreement,  (ii) the Note and the
Warrants  to  be  issued  in   connection   with  this   Agreement,   (iii)  the
Reaffirmation,  Ratification and Amendment Agreement dated as of the date hereof
between the Company,  certain  Subsidiaries of the Company and the Purchaser (as
amended,  modified  and/or  supplemented  from time to time, the  "Reaffirmation
Agreement")  (iv) the Funds Escrow  Agreement  dated as of the date hereof among
the  Company,   the  Purchaser  and  the  escrow  agent   referred  to  therein,
substantially  in the form of Exhibit C hereto (as amended,  modified,  restated
and/or  supplemented  from  time  to  time,  the  "Escrow  Agreement"),  (v) the
Warrants;  (vi) the letter  agreement  dated as of the date  hereof  between the
Purchaser and the Company  respecting the securities  issueable  pursuant to the
Warrants (as amended, modified,  restated and/or supplemented from time to time,
the  "Warrant  Side  Letter";  and (vii) all other  documents,  instruments  and
agreements  entered  into on or after  the date  hereof in  connection  with the
transactions  contemplated  hereby and  thereby,  as executed by the  applicable
parties and thereafter amended, modified, restated and/or supplemented from time
to time (the preceding  clauses (ii) through (vii),  collectively,  the "Related
Agreements");  (2) issue and sell the Note;  (3) issue and sell the Warrants and
Warrant  Shares;  and (4) carry out the  provisions  of this  Agreement  and the
Related Agreements and to carry on its business as presently conducted.  Each of
the Company and each of its  Subsidiaries is duly qualified and is authorized to
do business and is in good  standing as a foreign  corporation,  partnership  or
limited liability company, as the case may be, in all jurisdictions in which the
nature or  location  of its  activities  and of its  properties  (both owned and
leased) makes such qualification  necessary,  except for those  jurisdictions in
which  failure to do so has not,  or could not  reasonably  be expected to have,
individually  or in the  aggregate,  a material  adverse effect on the business,
assets, liabilities,  condition (financial or otherwise), properties, operations
and prospects of the Company and its Subsidiaries, taken as a whole (a "Material
Adverse Effect").

                  4.2      SUBSIDIARIES.  Each direct and indirect Subsidiary of
the Company,  the direct owner of such  Subsidiary and its percentage  ownership
thereof,  is set forth on Schedule  4.2.  For the purpose of this  Agreement,  a
"Subsidiary"  of any person or entity  means (i) a  corporation  or other entity
whose shares of stock or other ownership  interests having ordinary voting power
(other than stock or other ownership  interests having such power only by reason
of the happening of a contingency)  to elect a majority of the directors of such
corporation,  or other persons or entities performing similar functions for such
person or entity, are owned, directly or indirectly, by such person or entity or
(ii) a corporation or other entity in which such person or entity owns, directly
or indirectly, more than 50% of the equity interests at such time.

                  4.3      Capitalization; Voting Rights.


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                  (a)      The  authorized  capital stock of the Company,  as of
         the date hereof consists of 21,000,000  shares, of which 20,000,000 are
         authorized as shares of common  stock,  par value $0.001 per share (the
         "Common Stock"),  and 14,995,513  shares of Common Stock are issued and
         outstanding  , and  1,000,000  are  authorized  as shares of  preferred
         stock,  par  value  $0.001  per  share  (the  "Preferred  Stock"),  and
         37,840.7895  shares of Preferred Stock are issued and outstanding.  The
         authorized,  issued and outstanding capital stock of each Subsidiary of
         the Company is set forth on Schedule 4.3.

                  (b)      Except (i) as  disclosed  on Schedule  4.3,  (ii) the
         shares  reserved  for  issuance  under  the stock  option  plans of the
         Company and its  Subsidiaries,  and (iii)  warrants,  rights and shares
         granted  pursuant to this Agreement and the Related  Agreements,  there
         are no outstanding options,  warrants,  rights (including conversion or
         preemptive  rights and rights of first  refusal),  proxy or stockholder
         agreements,  or arrangements or agreements of any kind for the purchase
         or acquisition from the Company of any of its equity securities. Except
         as disclosed on Schedule  4.3,  neither the offer,  issuance or sale of
         any of the Note or the Warrants, nor the issuance of any of the Warrant
         Shares,  nor the consummation of any transaction  contemplated  hereby,
         will result in a change in the price or number of any equity securities
         of  the  Company  outstanding  under  anti-dilution  or  other  similar
         provisions contained in or affecting any such equity securities.

                  (c)      All issued and  outstanding  shares of the  Company's
         Common Stock and Preferred  Stock:  (i) have been duly  authorized  and
         validly  issued  and are fully  paid and  nonassessable;  and (ii) were
         issued  in  compliance  with all  applicable  state  and  federal  laws
         concerning the issuance of securities.

                  (d)      The rights, preferences,  privileges and restrictions
         of the  shares of the  Common  Stock  are as  stated  in the  Company's
         Certificate of Incorporation  (the "Charter").  The Warrant Shares have
         been duly and validly reserved for issuance.  When issued in compliance
         with the provisions of this Agreement,  the Related  Agreements and the
         Company's  Charter,  the Securities will be validly issued,  fully paid
         and  nonassessable,  and  will be free of any  liens  or  encumbrances;
         provided, however, that the Securities are subject to the provisions of
         this Agreement, the Related Agreements and applicable law other than to
         the extent  effectively  waived  hereunder  or  thereunder  (including,
         without  limitation,  the  Uniform  Commercial  Code in the case of the
         Note) and may be subject to restrictions on transfer under state and/or
         federal securities laws as set forth herein or as otherwise required by
         such laws at the time a transfer is proposed.

                  4.4      AUTHORIZATION;  BINDING  OBLIGATIONS.  All corporate,
partnership or limited liability company, as the case may be, action on the part
of the Company and each of its Subsidiaries (including their respective officers
and directors) necessary for the authorization of this Agreement and the Related
Agreements,   the  performance  of  all  obligations  of  the  Company  and  its
Subsidiaries  hereunder  and under the other  Related  Agreements at the Closing
and, the authorization, sale, issuance and delivery of the Note and Warrants has
been taken or will be taken prior to the Closing. This Agreement and the Related
Agreements, when executed and delivered and to the extent it is a party thereto,
will be valid and  binding  obligations  of each of


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the Company and each of its Subsidiaries,  enforceable  against each such person
or entity in accordance with their terms, except:

                  (a)      as  limited  by  applicable  bankruptcy,  insolvency,
         reorganization,   moratorium  or  other  laws  of  general  application
         affecting enforcement of creditors' rights; and

                  (b)      general   principles  of  equity  that  restrict  the
         availability of equitable or legal remedies.

The sale of the Note is not and will not be subject to any preemptive  rights or
rights of first refusal that have not been properly waived or complied with. The
issuance of the Warrants and the subsequent exercise of the Warrants for Warrant
Shares  are not and will not be subject  to any  preemptive  rights or rights of
first refusal that have not been properly waived or complied with.

                  4.5      LIABILITIES.  Neither  the  Company  nor  any  of its
Subsidiaries has any liabilities that should have been but were not disclosed in
any of the Company's filings under the Securities Act or Securities Exchange Act
of  1934  ("Exchange  Act")  made on or  prior  to the  date of this  Agreement,
including  (without   limitation)  the  SEC  Reports,   as  hereinafter  defined
(collectively, the "Securities Filings"), except for (i) liabilities incurred in
the ordinary course of business,  and (ii) liabilities under documents governing
Permitted  Indebtedness  and  Permitted  Guarantees,  copies of which  governing
documents have been provided to the Purchaser and (iii) liabilities set forth in
the Schedules.

                  4.6      AGREEMENTS;  ACTION.  Except as set forth on Schedule
4.6 or as disclosed in any Securities Filings:

                  (a)      There are no agreements, understandings, instruments,
         contracts,  proposed transactions,  judgments, orders, writs or decrees
         to which the Company or any of its  Subsidiaries is a party or by which
         it is bound  containing any: (i) obligations  (contingent or otherwise)
         of, or payments to, the Company or any of its Subsidiaries in excess of
         $50,000 (other than (A)  obligations of, or payments to, the Company or
         any of its Subsidiaries  arising from purchase,  lease, license or sale
         agreements  entered  into  in the  ordinary  course  of  business,  (B)
         Permitted  Indebtedness and Permitted Guarantees (as defined in Section
         6.12(e)  hereof),  and (C) the matters  disclosed in Schedule  4.7); or
         (ii)  transfer or license of any  patent,  copyright,  trade  secret or
         other  proprietary  right  to  or  from  the  Company  or  any  of  its
         Subsidiaries (other than licenses arising from the purchase of "off the
         shelf" or other standard products); or (iii) provisions restricting the
         development, manufacture or distribution of the Company's or any of its
         Subsidiaries  products  or  services;  or (iv)  indemnification  by the
         Company or any of its  Subsidiaries  with respect to  infringements  of
         proprietary rights (other than  indemnification  provisions  protecting
         the  licensor of licenses  arising from the purchase of "off the shelf"
         or other standard products).

                  (b)      Since  July  1,  2006  (the  "Balance  Sheet  Date"),
         neither the Company nor any of its  Subsidiaries  has:  (i) declared or
         paid any dividends, or authorized or made any distribution upon or with
         respect to any class or series of its capital stock;  (ii) incurred


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         any  indebtedness  for money borrowed or any other  liabilities  (other
         than ordinary course obligations) individually in excess of $50,000 or,
         in the case of indebtedness  and/or liabilities  individually less than
         $50,000,  in excess of $100,000 in the aggregate,  other than Permitted
         Indebtedness and Permitted Guarantees; (iii) made any loans or advances
         to  any  person  or  entity  not  in  excess,  individually  or in  the
         aggregate, of $100,000,  other than ordinary course advances for travel
         expenses,  and other than  intercompany  loans and  advances  among the
         Company and its  Subsidiaries  SET FORTH ON SCHEDULE 4.6; or (iv) sold,
         exchanged or otherwise  disposed of any of its assets or rights,  other
         than the sale of its inventory in the ordinary course of business.

                  (c)      For the  purposes of  subsections  (a) and (b) above,
         all  such  indebtedness,   liabilities,   agreements,   understandings,
         instruments,  contracts  or proposed  transactions  involving  the same
         person or entity  (including  persons or  entities  the  Company or any
         Subsidiary  of  the  Company  has  reason  to  believe  are  affiliated
         therewith)   shall  be  aggregated  for  the  purpose  of  meeting  the
         individual minimum dollar amounts of such subsections.

                  (d)      The Company  maintains  all  disclosure  controls and
         procedures  required  under  applicable  law  ("Disclosure   Controls")
         designed to ensure that  information  required to be  disclosed  by the
         Company in the reports that it files or submits  under the Exchange Act
         is recorded, processed, summarized, and reported in accordance with and
         within  the  time  periods  specified  in the  rules  and  forms of the
         Securities and Exchange Commission ("SEC").

                  (e)      The  Company  makes  and  keep  books,  records,  and
         accounts, that, in reasonable detail, accurately and fairly reflect the
         transactions  and  dispositions  of the Company's  assets.  The Company
         maintains  internal  control  over  financial   reporting   ("Financial
         Reporting  Controls")  designed  by, or under the  supervision  of, the
         Company's principal  executive and principal  financial  officers,  and
         effected by the  Company's  board of directors,  management,  and other
         personnel, to provide reasonable assurance regarding the reliability of
         financial  reporting and the  preparation  of financial  statements for
         external  purposes in accordance  with  generally  accepted  accounting
         principles ("GAAP"), including that:

                           (i)      material   transactions   are   executed  in
                  accordance with management's general or specific authorization
                  or material deviations are timely detected;

                           (ii)     unauthorized     acquisition,     use,    or
                  disposition of the Company's assets that could have a material
                  effect on the  financial  statements  are  prevented or timely
                  detected;

                           (iii)    transactions  are  recorded as  necessary to
                  permit preparation of financial  statements in accordance with
                  GAAP,  and that the Company's  receipts and  expenditures  are
                  being made only in  accordance  with the  general or  specific
                  authorizations of, or policies and procedures  established by,
                  the Company's management and/or board of directors;


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                           (iv)     transactions  are  recorded as  necessary to
                  maintain  accountability  for all material assets; and (v) the
                  recorded  accountability  for  assets  is  compared  with  the
                  existing  assets  at  reasonable  intervals,  and  appropriate
                  action is taken with respect to any differences.

                  (f)      There  is  no  weakness  in  any  of  the   Company's
         Disclosure Controls or Financial Reporting Controls that is required to
         be disclosed in any of the Securities Filings, except as so disclosed.

                  4.7      OBLIGATIONS TO RELATED  PARTIES.  Except as set forth
on Schedule 4.7 or in the  Securities  Filings,  there are no obligations of the
Company or any of its  Subsidiaries  to  officers,  directors,  stockholders  or
employees of the Company or of any of its Subsidiaries other than:

                  (a)      for payment of salary for  services  rendered and for
         bonus payments;

                  (b)      reimbursement  for  reasonable  expenses  incurred on
         behalf of the Company and its Subsidiaries;

                  (c)      for other standard  employee  benefits made generally
         available  to  all  employees   (including   stock  option   agreements
         outstanding  under  any  stock  option  plan  approved  by the Board of
         Directors  of the  Company  and  each  Subsidiary  of the  Company,  as
         applicable); and

                  (d)      obligations  listed in the  Company's and each of its
         Subsidiary's  financial statements or disclosed in any of the Company's
         Securities Filings.

Except as described  above,  in the Securities  Filings or set forth on Schedule
4.6 or 4.7: (i) none of the officers, directors or, to the best of the Company's
knowledge,  key  employees  or  stockholders  of  the  Company  or  any  of  its
Subsidiaries  or any members of their  immediate  families,  are indebted to the
Company or any of its Subsidiaries,  individually or in the aggregate, in excess
of $50,000  or have any direct or  indirect  ownership  interest  in any firm or
corporation  with which the Company or any of its  Subsidiaries is affiliated or
with which the Company or any of its Subsidiaries  has a business  relationship,
or any  firm or  corporation  which  competes  with  the  Company  or any of its
Subsidiaries,  other than  passive  investments  in  publicly  traded  companies
(representing less than one percent (1%) of such company) which may compete with
the Company or any of its Subsidiaries; (ii) no officer, director or stockholder
of the  Company or any of its  Subsidiaries,  or any  member of their  immediate
families,  is, directly or indirectly,  interested in any material contract with
the Company or any of its  Subsidiaries  and no  agreements,  understandings  or
proposed  transactions  are  contemplated  between  the  Company  or  any of its
Subsidiaries  and any such person;  and (iii) neither the Company nor any of its
Subsidiaries  is a guarantor  or  indemnitor  of any  indebtedness  of any other
person or entity other than pursuant to any of the Permitted Guarantees.


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                  4.8      CHANGES.  Since the  Balance  Sheet  Date,  except as
disclosed in any  Securities  Filing or in any Schedule to this  Agreement or to
any of the  Related  Agreements,  there  has not  been:

                  (a)      any  change  in the  business,  assets,  liabilities,
         condition (financial or otherwise), properties, operations or prospects
         of the Company or any of its Subsidiaries, which individually or in the
         aggregate   has  had,  or  could   reasonably   be  expected  to  have,
         individually or in the aggregate, a Material Adverse Effect;

                  (b)      any  resignation or  termination of any officer,  key
         employee  or  group  of   employees  of  the  Company  or  any  of  its
         Subsidiaries;

                  (c)      any material change, except in the ordinary course of
         business,  in the  contingent  obligations of the Company or any of its
         Subsidiaries by way of guaranty,  endorsement,  indemnity,  warranty or
         otherwise,  other  than (A) any  Permitted  Guarantees,  or (B) any new
         licenses arising from the purchase of "off the shelf" or other standard
         products containing  indemnification provisions protecting the licensor
         thereof;

                  (d)      any  damage,  destruction  or  loss,  whether  or not
         covered by insurance, which has had, or could reasonably be expected to
         have, individually or in the aggregate, a Material Adverse Effect;

                  (e)      any waiver by the Company or any of its  Subsidiaries
         of a valuable right or of a material debt owed to it;

                  (f)      any direct or  indirect  loans made by the Company or
         any of  its  Subsidiaries  to any  stockholder,  employee,  officer  or
         director of the Company or any of its Subsidiaries, other than advances
         made in the ordinary course of business;

                  (g)      any material change in any  compensation  arrangement
         or agreement with any employee, officer, director or stockholder of the
         Company or any of its Subsidiaries;

                  (h)      any  declaration  or payment of any dividend or other
         distribution  of the assets of the  Company or any of its  Subsidiaries
         (for the sake of clarity, advances and repayments of intercompany loans
         and  advances  among  the  Company  and its  Subsidiaries  are not such
         distributions);

                  (i)      any  labor  organization   activity  related  to  the
         Company or any of its Subsidiaries;

                  (j)      any debt,  obligation or liability incurred,  assumed
         or guaranteed by the Company or any of its  Subsidiaries,  except those
         for  immaterial  amounts,  for  current  liabilities  incurred  in  the
         ordinary  course  of  business,  and  for  Permitted  Indebtedness  and
         Permitted Guarantees;

                  (k)      any sale,  assignment  or  transfer  of any  patents,
         trademarks,  copyrights, trade secrets or other intangible assets owned
         by the Company or any of its Subsidiaries;


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<PAGE>

                  (l)      any  change in any  material  agreement  to which the
         Company or any of its  Subsidiaries  is a party or by which  either the
         Company or any of its  Subsidiaries is bound which either  individually
         or in the aggregate  has had, or could  reasonably be expected to have,
         individually or in the aggregate, a Material Adverse Effect;

                  (m)      any other event or condition of any  character  that,
         either  individually or in the aggregate,  has had, or could reasonably
         be  expected  to have,  individually  or in the  aggregate,  a Material
         Adverse Effect; or

                  (n)      any  arrangement  or commitment by the Company or any
         of its  Subsidiaries  to do any of the acts described in subsection (a)
         through (m) above.

                  4.9      TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. Except as
set forth on Schedule 4.9, each of the Company and each of its  Subsidiaries has
good and marketable  title to its  properties and assets,  and good title to its
leasehold interests,  in each case subject to no mortgage,  pledge, lien, lease,
encumbrance   or  charge,   other  than  the   following   (each  a   "Permitted
Encumbrance"):

                  (a)      those  resulting from taxes which have not yet become
         delinquent or are being contested as permitted by Section 6.7;

                  (b)      statutory  liens  incurred or imposed in the ordinary
         course (i) of mechanics,  carriers, warehouses,  processors,  suppliers
         and  laborers,  (ii)  respecting  worker's  compensation,  unemployment
         insurance, or social security, or (iii) as a condition precedent to the
         operation  of  business or the  exercise of any of any  authorizations,
         licenses or privileges, in each case to the extent and only for so long
         as  the  underlying   obligations  are  not  delinquent  or  are  being
         diligently contested in good faith;

                  (c)      liens  incurred  in respect of  judgments  and awards
         discharged  within 30 days from the  making  thereof;

                  (d)      in the case of real estate, easements, rights-of-way,
         restrictions,  covenants  and  other  agreements  of  record  and other
         similar charges or encumbrances that (i) do not secure  indebtedness or
         guarantees, and (ii) do not interfere with the use of or conduct of any
         business of the Company or any of its Subsidiaries thereon;

                  (e)      any  cash  deposits  made  or  bonds  posted  in  the
         ordinary course to secure  performance under any contract or applicable
         law;

                  (f)      in the case of any account,  intangible,  instrument,
         lease, agreement or document, any contractual right, power,  privilege,
         remedy, interest, defect,  restriction,  covenant, claim, counterclaim,
         right of recoupment,  abatement, reduction or setoff, or defense of any
         account  debtor  or  other  party  thereto,  whether  now  existing  or
         hereafter arising,  and whether pursuant to the applicable  contractual
         provisions or applicable law;

                  (g)      the  security  interests or liens  (including  leases
         treated as security interests or liens) encumbering  Equipment or other
         assets purchased or leased with Permitted  Indebtedness so long as they
         respectively  secure only the corresponding  Permitted


                                       9
<PAGE>

         Indebtedness  or capitalized  lease  obligations  and encumber only the
         assets so purchased  or leased (and the products and proceeds  thereof,
         insurance  therefor  and  warranty and other  contract  rights  related
         thereto) and no other assets of the Company or any of its Subsidiaries;

                  (h)      each  currently  existing lien  described in Schedule
         4.9 hereto, or any continuation, restatement, or replacement thereof on
         terms no less favorable in all material  respects to the Purchaser than
         the lien being continued, restated or replaced;

                  (i)      minor liens and encumbrances  which do not materially
         detract from the value of the property  subject  thereto or  materially
         impair the  operations  of the Company or any of its  Subsidiaries,  so
         long as in each such case, such liens and  encumbrances  have no effect
         on the lien priority of the Purchaser in such property; and

                  (j)      those  that have  otherwise  arisen  in the  ordinary
         course of business, so long as they have no effect on the lien priority
         of the Purchaser therein.

All facilities,  machinery,  equipment,  fixtures, vehicles and other properties
owned,  leased or used by the Company and its Subsidiaries are in good operating
condition  and repair and are  reasonably  fit and usable for the  purposes  for
which they are being used.  Except as set forth on Schedule 4.9, the Company and
its  Subsidiaries  are in  compliance  with all material  terms of each lease to
which it is a party or is otherwise bound.

                  4.10     Intellectual Property.

                  (a)      Each of the Company and each of its Subsidiaries owns
         or  possesses  sufficient  legal  rights  to all  patents,  trademarks,
         service  marks,  trade  names,  copyrights,  trade  secrets,  licenses,
         information and other  proprietary  rights and processes  necessary for
         its  business as now  conducted  and, to the  Company's  knowledge,  as
         presently  proposed  to be  conducted  (the  "Intellectual  Property"),
         without any known  infringement  of the rights of others.  There are no
         outstanding options, licenses or agreements of any kind relating to the
         foregoing  proprietary  rights,  nor  is  the  Company  or  any  of its
         Subsidiaries bound by or a party to any options, licenses or agreements
         of any kind with respect to the  patents,  trademarks,  service  marks,
         trade names, copyrights, trade secrets, licenses, information and other
         proprietary  rights and  processes  of any other person or entity other
         than such licenses or agreements  arising from the purchase of "off the
         shelf" or standard products.

                  (b)      Neither the Company nor any of its  Subsidiaries  has
         received  any  communications  alleging  that the Company or any of its
         Subsidiaries  has  violated  any of the  patents,  trademarks,  service
         marks,  trade names,  copyrights or trade secrets or other  proprietary
         rights of any other person or entity,  nor is the Company or any of its
         Subsidiaries aware of any basis therefor.

                  (c)      The  Company  does  not  believe  it  is or  will  be
         necessary  to utilize  any  inventions,  trade  secrets or  proprietary
         information of any of its employees  made prior to their  employment by
         the Company or any of its  Subsidiaries,  except for inventions,  trade


                                       10
<PAGE>

         secrets or proprietary  information that have been rightfully  assigned
         to the Company or any of its Subsidiaries.

                  4.11     COMPLIANCE  WITH  OTHER   INSTRUMENTS.   Neither  the
Company nor any of its  Subsidiaries  is in violation or default of (x) any term
of  its  Charter  or  Bylaws,  or (y)  any  indebtedness,  mortgage,  indenture,
contract,  agreement or  instrument to which it is party or by which it is bound
or of any judgment,  decree,  order or writ, which violation or default,  in the
case of this  clause  (y),  has had,  or could  reasonably  be expected to have,
either  individually  or in  the  aggregate,  a  Material  Adverse  Effect.  The
execution,  delivery and  performance of and compliance  with this Agreement and
the Related  Agreements to which it is a party, and the issuance and sale of the
Note by the Company and the other Securities by the Company each pursuant hereto
and thereto,  will not, with or without the passage of time or giving of notice,
result in (i) any such  violation or default,  or be in conflict in any material
respect with, any such indebtedness, mortgage, indenture, contract, agreement or
instrument,  (ii)  result  in  the  creation  of  any  mortgage,  pledge,  lien,
encumbrance  or charge  thereunder  upon any of the  properties or assets of the
Company  or  any  of its  Subsidiaries,  or  (iii)  result  in  the  suspension,
revocation,  impairment,  forfeiture  or  nonrenewal  of  any  material  permit,
license,  authorization or approval  applicable to the Company,  its business or
operations or any of its assets or properties.

                  4.12     LITIGATION.  Except  as set  forth on  Schedule  4.12
hereto, there is no action, suit, proceeding or investigation pending or, to the
Company's  knowledge,  currently  threatened  against  the Company or any of its
Subsidiaries,  and neither the Company nor any of its Subsidiaries is a party to
or subject to the provisions of any order, writ, injunction,  judgment or decree
of any court or  government  agency or  instrumentality,  that (a)  prevents the
Company or any of its  Subsidiaries (i) from entering into this Agreement or the
other  Related   Agreements,   or  (ii)  from   consummating   the  transactions
contemplated hereby or thereby, or (b) has had, or if adversely determined could
reasonably  be expected to have,  either  individually  or in the  aggregate,  a
Material  Adverse  Effect or any change in the current  equity  ownership of the
Company or any of its  Subsidiaries;  and the  Company has no  knowledge  of any
reasonable basis to assert any of the foregoing. Except as set forth on Schedule
4.12  hereto,  there is no action,  suit,  proceeding  or  investigation  by the
Company or any of its  Subsidiaries  (as  plaintiff or  investigator)  currently
pending or which the  Company  or any of its  Subsidiaries  intends to  initiate
other than collection and similar matters in the normal course.

                  4.13     TAX  RETURNS  AND  PAYMENTS.  Except  as set forth on
Schedule 4.13 hereto:  (i) each of the Company and each of its  Subsidiaries has
timely filed all tax returns (federal,  state and local) required to be filed by
it;  and (ii)  all  taxes  shown  to be due and  payable  on such  returns,  any
assessments  imposed,  and all other taxes due and payable by the Company or any
of its  Subsidiaries  on or before the  Closing,  have been paid or will be paid
prior to the time they  become  delinquent  other  than those  being  diligently
contested  in good  faith.  Except as set forth on  Schedule  4.13,  neither the
Company  nor any of its  Subsidiaries  has  been  advised:

                  (a)      that any of its  returns,  federal,  state or  other,
         have been or are being audited as of the date hereof; or

                  (b)      of any  adjustment,  deficiency,  assessment or court
         decision in respect of its federal, state or other taxes.


                                       11
<PAGE>

Except as set forth on  Schedule  4.13,  the  Company  has no  knowledge  of any
liability for any tax to be imposed upon its properties or assets as of the date
of this Agreement that is not adequately  provided for.

                  4.14     EMPLOYEES.   Neither  the  Company  nor  any  of  its
Subsidiaries has any collective bargaining agreements with any of its employees.
There is no  labor  union  organizing  activity  pending  or,  to the  Company's
knowledge,  threatened  with respect to the Company or any of its  Subsidiaries.
Except as disclosed in the Securities  Filings or on Schedule 4.14,  neither the
Company  nor any of its  Subsidiaries  is a party to or  bound by any  currently
effective employment contract,  deferred compensation  arrangement,  bonus plan,
incentive  plan,  profit  sharing plan,  retirement  agreement or other employee
compensation plan or agreement.  To the Company's knowledge:  no employee of the
Company or any of its Subsidiaries,  nor any consultant with whom the Company or
any of its  Subsidiaries  has  contracted,  is in  violation  of any term of any
material employment  contract,  proprietary  information  agreement or any other
agreement  relating to the right of any such individual to be employed by, or to
contract with, the Company or any of its  Subsidiaries  because of the nature of
the business to be conducted by the Company or any of its  Subsidiaries;  and to
the  Company's  knowledge  the  continued  employment  by the  Company  and  its
Subsidiaries  of their present  employees,  and the performance of the Company's
and its  Subsidiaries'  contracts  with its  independent  contractors,  will not
result in any such  violation.  To the Company's  knowledge,  no employee of the
Company or any of its  Subsidiaries  is obligated  under any  material  contract
(including licenses, covenants or commitments of any nature) or other agreement,
or  subject  to any  judgment,  decree or order of any  court or  administrative
agency  that  would  interfere  with their  duties to the  Company or any of its
Subsidiaries.  To the  Company's  knowledge,  neither the Company nor any of its
Subsidiaries  has  received  any notice  alleging  that any such  violation  has
occurred.  Except  for  employees  who have a current  effective  employment  or
severance  agreement with the Company or any of its  Subsidiaries and any rights
that may be available under applicable law, and except for the general severance
policies of the Company and its Subsidiaries,  no employee of the Company or any
of its  Subsidiaries  has been granted the right to continued  employment by the
Company or any of its  Subsidiaries  or to any material  compensation  following
termination of employment with the Company or any of its Subsidiaries. Except as
set forth on Schedule  4.14,  to the knowledge of the Company,  no officer,  key
employee or group of employees intends to terminate his, her or their employment
with the Company or any of its Subsidiaries,  nor does the Company or any of its
Subsidiaries  have a  present  intention  to  terminate  the  employment  of any
officer, key employee or group of employees.

                  4.15     REGISTRATION RIGHTS AND VOTING RIGHTS.  Except as set
forth on Schedule 4.15, and except as disclosed in Securities  Filings,  neither
the Company nor any of its  Subsidiaries is presently under any obligation,  and
neither  the  Company nor any of its  Subsidiaries  has  granted any rights,  to
register  any  of  the  Company's  or its  Subsidiaries'  presently  outstanding
securities or any of its securities that may hereafter be issued.  Except as set
forth on Schedule  4.15 and except as disclosed in  Securities  Filings,  to the
Company's  knowledge,  no stockholder of the Company or any of its  Subsidiaries
has entered into any agreement  with respect to the voting of equity  securities
of the Company or any of its Subsidiaries.


                                       12
<PAGE>

                  4.16     COMPLIANCE  WITH LAWS;  PERMITS.  Neither the Company
nor  any  of  its   Subsidiaries  is  in  violation  of  any  provision  of  the
Sarbanes-Oxley  Act of  2002  or  any  SEC  related  regulation,  or  any  other
applicable statute,  rule,  regulation,  order or restriction of any domestic or
foreign  government or any  instrumentality  or agency thereof in respect of the
conduct of its  business or the  ownership of its  properties,  that has had, or
could reasonably be expected to have, either individually or in the aggregate, a
Material  Adverse  Effect.  No  governmental  orders,   permissions,   consents,
approvals or authorizations  are required to be obtained and no registrations or
declarations  are  required to be filed in  connection  with the  execution  and
delivery of this  Agreement or any other  Related  Agreement and the issuance of
any of the  Securities,  except such as have been duly and  validly  obtained or
filed,  or with respect to any filings  that must be made after the Closing,  as
will be filed by or on  behalf  of the  Company  in a timely  manner or by or on
behalf  of the  Purchaser.  Each of the  Company  and its  Subsidiaries  has all
material franchises,  permits,  licenses and any similar authority necessary for
the  conduct of its  business  as now being  conducted  by it, the lack of which
could, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

                  4.17     ENVIRONMENTAL  AND SAFETY  LAWS.  Neither the Company
nor any of its  Subsidiaries is in violation of any applicable  statute,  law or
regulation relating to the environment or occupational health and safety, and to
its  knowledge,  no  material  expenditures  are or will be required in order to
comply with any such existing statute, law or regulation. Except as set forth on
Schedule  4.17, no Hazardous  Materials (as defined below) are used or have been
used,  stored,  or disposed of by the Company or any of its  Subsidiaries or, to
the Company's  knowledge,  by any other person or entity on any property  owned,
leased or used by the  Company  or any of its  Subsidiaries,  other  than in the
normal course in accordance with such applicable statutes,  laws or regulations.
For the purposes of the preceding sentence, "Hazardous Materials" shall mean:

                  (a)      materials  which are listed or  otherwise  defined as
         "hazardous"  or "toxic"  under any  applicable  local,  state,  federal
         and/or foreign laws and  regulations  that govern the existence  and/or
         remedy of contamination on property,  the protection of the environment
         from   contamination,   the  control  of  hazardous  wastes,  or  other
         activities   involving   hazardous   substances,   including   building
         materials; or

                  (b)      any petroleum products or nuclear materials.

                  4.18     VALID   OFFERING.   Assuming   the  accuracy  of  the
representations and warranties of the Purchaser contained in this Agreement, the
offer,  sale and issuance of the Securities will be exempt from the registration
requirements of the Securities Act of 1933, as amended (the  "Securities  Act"),
and will have been registered or qualified (or are exempt from  registration and
qualification) under the registration,  permit or qualification  requirements of
all applicable state securities laws.

                  4.19     FULL DISCLOSURE.  Each of the Company and each of its
Subsidiaries  has  provided  to  the  Purchaser  or  its   representatives   all
information  requested  by the  Purchaser  in  connection  with its  decision to
purchase the Note and Warrants,  including all  information  the Company and its
Subsidiaries  believe is reasonably  necessary to make such investment decision.
Neither this  Agreement,  the Related  Agreements,  the  exhibits and  schedules
hereto and thereto


                                       13
<PAGE>

nor any other document  delivered by the Company or any of its  Subsidiaries  to
Purchaser or its attorneys or agents in connection herewith or therewith or with
the transactions contemplated hereby or thereby, contain any untrue statement of
a material fact nor omit to state a material fact necessary in order to make the
statements  contained herein or therein,  in light of the circumstances in which
they are made, not  misleading.  Any financial  projections  and other estimates
provided to the Purchaser by the Company or any of its  Subsidiaries  were based
on the  Company's  and  its  Subsidiaries'  experience  in the  industry  and on
assumptions  of fact and opinion as to future events which the Company or any of
its Subsidiaries,  at the date of the issuance of such projections or estimates,
believed to be reasonable.

                  4.20     INSURANCE.  Each  of  the  Company  and  each  of its
Subsidiaries  has  general  commercial,  product  liability,  fire and  casualty
insurance  policies with coverages  that the Company  believes are customary for
companies  similarly situated to the Company and its Subsidiaries in the same or
similar business.

                  4.21     SEC  REPORTS.  Except as set forth on Schedule  4.21,
the Company has filed all proxy statements, reports and other documents required
to be filed by it under the  Securities  Exchange  Act  1934,  as  amended  (the
"Exchange  Act").  The Company has furnished  the  Purchaser  copies of: (i) its
Annual Reports on Form 10-KSB for its fiscal years ended June 30, 2005; and (ii)
its Quarterly  Reports on Form 10-Q for its fiscal  quarter  ended  December 31,
2005and on Form 10-QSB for its fiscal quarter ended  September 30, 2005, and its
12B-25 filed May 16, 2006, and the Form 8-K filings which it has made since June
30, 2005,  to date  (collectively,  the "SEC  Reports").  Except as set forth on
Schedule 4.21 or subsequent SEC Reports set forth in this Section 4.21, each SEC
Report  was,  at the time of its  filing,  in  substantial  compliance  with the
requirements  of its  respective  form  and  none  of the SEC  Reports,  nor the
financial  statements (and the notes thereto) included in the SEC Reports, as of
their respective filing dates, contained any untrue statement of a material fact
or omitted 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.

                  4.22     LISTING.  The Company's Common Stock is quoted on the
Pink  Sheets(R)  under the  symbol  "TUYO.PK"  and is not  listed or quoted on a
Principal  Market  (as  hereafter  defined).   For  purposes  hereof,  the  term
"Principal  Market"  means  the NASD Over The  Counter  Bulletin  Board,  NASDAQ
Capital  Market,  NASDAQ Global Select Market,  NASDAQ Global  Market,  American
Stock Exchange or New York Stock Exchange  (whichever of the foregoing,  if any,
is at the time the principal trading exchange or market for the Common Stock).

                  4.23     NO INTEGRATED OFFERING.  Neither the Company, nor any
of its Subsidiaries or affiliates, nor any person acting on its or their behalf,
has directly or indirectly made any offers or sales of any security or solicited
any offers to buy any security under circumstances that would cause the offering
of the Securities pursuant to this Agreement or any of the Related Agreements to
be integrated with prior offerings by the Company for purposes of the Securities
Act that would prevent the Company from selling the Securities  pursuant to Rule
506 under the  Securities  Act, or any applicable  exchange-related  stockholder
approval  provisions,  nor  will  the  Company  or  any  of  its  affiliates  or
Subsidiaries  take any  action or steps  that would  cause the  offering  of the
Securities to be integrated with other offerings.


                                       14
<PAGE>

                  4.24     STOP   TRANSFER.   The   Securities   are  restricted
securities as of the date of this Agreement.  Neither the Company nor any of its
Subsidiaries will issue any stop transfer order or other order impeding the sale
and delivery of any of the Warrant Shares at such time as the Warrant Shares are
registered  for public sale or an  exemption  from  registration  is  available,
except as required by state and federal securities laws.

                  4.25     DILUTION. The Company specifically  acknowledges that
its obligation to issue the shares of Common Stock upon exercise of the Warrants
is binding upon the Company and  enforceable  regardless  of the  dilution  such
issuance  may  have on the  ownership  interests  of other  shareholders  of the
Company.

                  4.26     PATRIOT ACT.   (a) The Company certifies that, to the
best of Company's knowledge, neither the Company nor any of its Subsidiaries has
been  designated,  nor is or  shall  be owned  or  controlled,  by a  "suspected
terrorist" as defined in U.S. Federal  Executive Order 13224. The Company hereby
acknowledges  that the  Purchaser  seeks to  comply  with  all  applicable  laws
concerning  money  laundering  and related  activities.  In furtherance of those
efforts, the Company hereby represents, warrants and covenants that: (i) none of
the cash or  property  that the Company or any of its  Subsidiaries  will pay or
will  contribute  to the Purchaser has been or shall be derived from, or related
to, any activity  that is deemed  criminal  under United States law; and (ii) no
contribution  or  payment  by the  Company  or any  of its  Subsidiaries  to the
Purchaser,  to the  extent  that  they  are  within  the  Company's  and/or  its
Subsidiaries'  control,  shall cause the  Purchaser  to be in  violation  of the
United States Bank Secrecy Act, the United States International Money Laundering
Control  Act of  1986  or  the  United  States  International  Money  Laundering
Abatement and  Anti-Terrorist  Financing Act of 2001. The Company shall promptly
notify the  Purchaser if any of these  representations,  warranties or covenants
ceases to be true and accurate regarding the Company or any of its Subsidiaries.
The Company shall provide the Purchaser all additional information regarding the
Company  or any of its  Subsidiaries  that  the  Purchaser  deems  necessary  or
convenient  to ensure  compliance  with all  applicable  laws  concerning  money
laundering and similar activities. The Company understands and agrees that if at
any time it is discovered that any of the foregoing representations,  warranties
or covenants  are  incorrect,  or if  otherwise  required by  applicable  law or
regulation related to money laundering or similar activities,  the Purchaser may
undertake  appropriate  actions  to ensure  compliance  with  applicable  law or
regulation,  including but not limited to segregation  and/or  redemption of the
Purchaser's  investment in the Company. The Company further understands that the
Purchaser  may  release  confidential  information  about  the  Company  and its
Subsidiaries  and, if applicable,  any underlying  beneficial  owners, to proper
authorities if the Purchaser,  in its sole discretion,  determines that it is in
the best interests of the Purchaser in light of relevant  rules and  regulations
under the laws set forth in subsection (ii) above.

         (b)      The  Purchaser  certifies  that,  to the  best of  Purchaser's
knowledge,   neither  the  Purchaser  nor  any  of  its  Subsidiaries  has  been
designated,  nor is or shall be owned or controlled,  by a "suspected terrorist"
as  defined  in  U.S.  Federal  Executive  Order  13224.  The  Purchaser  hereby
acknowledges  that  the  Company  seeks  to  comply  with  all  applicable  laws
concerning  money  laundering  and related  activities.  In furtherance of those
efforts, the Purchaser hereby represents,  warrants and covenants that: (i) none
of the cash or property that the Purchaser or any of its  Subsidiaries  will pay
or will  contribute to the Company has been or shall be derived from, or related
to, any activity  that is deemed  criminal  under United States law; and (ii) no


                                       15
<PAGE>

contribution  or  payment by the  Purchaser  or any of its  Subsidiaries  to the
Company,  to the  extent  that  they  are  within  the  Purchaser's  and/or  its
Subsidiaries'  control, shall cause the Company to be in violation of the United
States Bank  Secrecy  Act,  the United  States  International  Money  Laundering
Control  Act of  1986  or  the  United  States  International  Money  Laundering
Abatement and Anti-Terrorist Financing Act of 2001. The Purchaser shall promptly
notify the  Company if any of these  representations,  warranties  or  covenants
ceases  to  be  true  and  accurate  regarding  the  Purchaser  or  any  of  its
Subsidiaries. The Purchaser shall provide the Company all additional information
regarding  the  Purchaser  or any of its  Subsidiaries  that the  Company  deems
necessary or convenient to ensure compliance with all applicable laws concerning
money laundering and similar  activities.  The Purchaser  understands and agrees
that if at any time it is discovered that any of the foregoing  representations,
warranties or covenants are  incorrect,  or if otherwise  required by applicable
law or regulation related to money laundering or similar activities, the Company
may undertake  appropriate  actions to ensure  compliance with applicable law or
regulation,  including but not limited to segregation  and/or  redemption of the
Company's  investment in the Purchaser.  The Purchaser further  understands that
the Company may release  confidential  information  about the  Purchaser and its
Subsidiaries  and, if applicable,  any underlying  beneficial  owners, to proper
authorities if the Company, in its sole discretion, determines that it is in the
best interests of the Company in light of relevant rules and  regulations  under
the laws set forth in subsection (ii) above.

                  4.27     ERISA.  To  the  extent  the  Company  or  any of its
Subsidiaries  has any benefit  plan subject to the  Employee  Retirement  Income
Security   Act  of  1974   ("ERISA"),   and  the   regulations   and   published
interpretations  thereunder: (i) neither the Company nor any of its Subsidiaries
has engaged in any Prohibited  Transactions  (as defined in Section 406 of ERISA
and Section 4975 of the Internal Revenue Code of 1986, as amended (the "CODE"));
(ii) each of the Company  and each of its  Subsidiaries  has met all  applicable
minimum funding requirements under Section 302 of ERISA in respect of its plans;
(iii) neither the Company nor any of its  Subsidiaries  has any knowledge of any
event or occurrence which would cause the Pension Benefit  Guaranty  Corporation
to  institute  proceedings  under Title IV of ERISA to  terminate  any  employee
benefit  plan(s);  (iv) neither the Company nor any of its  Subsidiaries has any
fiduciary  responsibility  for investments with respect to any plan existing for
the benefit of persons other than the Company's or such Subsidiary's  employees;
and  (v)  neither  the  Company  nor  any of  its  Subsidiaries  has  withdrawn,
completely or  partially,  from any  multi-employer  pension plan so as to incur
liability under the Multiemployer Pension Plan Amendments Act of 1980.

         5.       REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby  represents and warrants to and covenants and agrees with (as applicable)
the  Company as  follows  (it being  understood  that such  representations  and
warranties do not lessen or obviate the  representations  and  warranties of the
Company set forth in this Agreement):

                  5.1      NO SHORTING.  The Purchaser or any of its  affiliates
and  investment  partners  has not,  will not and will not cause  any  person or
entity to,  directly or  beneficially  engage in "short  sales" of the Company's
Common  Stock or  Preferred  Stock as long as the  Note  and  Warrants  shall be
outstanding.

                  5.2      REQUISITE POWER AND AUTHORITY. The Purchaser has full
all necessary  power and authority  under all  applicable  provisions of law, to
execute and deliver this


                                       16
<PAGE>

Agreement  and the Related  Agreements  and to carry out their  provisions.  All
corporate  action on the Purchaser's  part required for the lawful execution and
delivery  of this  Agreement  and the  Related  Agreements  have been or will be
effectively taken prior to the Closing. Upon their execution and delivery,  this
Agreement and the Related  Agreements  will be valid and binding  obligations of
the Purchaser, enforceable in accordance with their terms, except:

                  (a)      as  limited  by  applicable  bankruptcy,  insolvency,
         reorganization,   moratorium  or  other  laws  of  general  application
         affecting enforcement of creditors' rights; and

                  (b)      as  limited  by  general  principles  of equity  that
         restrict the availability of equitable and legal remedies.

                  5.3      INVESTMENT REPRESENTATIONS. The Purchaser understands
that the  Securities  are being offered and sold  pursuant to an exemption  from
registration  contained in the Securities Act based in part upon the Purchaser's
representations contained in this Agreement,  including, without limitation, the
Purchaser's  representation (in Section 5,7) that it is an "accredited investor"
within the meaning of Regulation D under the  Securities Act of 1933, as amended
(the "Securities  Act"). The Purchaser  confirms that it has received or has had
full access to all the information it considers necessary or appropriate to make
an informed  investment decision with respect to the Note and the Warrants to be
purchased by it under this Agreement and the Warrant Shares  acquired by it upon
the exercise of the Warrants,  respectively. The Purchaser further confirms that
it has had the opportunity to ask questions and receive answers from the Company
regarding the Company's and its Subsidiaries' business, management and financial
affairs and the terms and conditions of the Offering, the Note, the Warrants and
the  Securities  and obtain  additional  information  (to the extent the Company
possessed such  information or could acquire it without  unreasonable  effort or
expense)  necessary to verify any  information  furnished to the Purchaser or to
which the Purchaser had access.

                  5.4      THE PURCHASER  BEARS ECONOMIC RISK. The Purchaser has
substantial   experience  in  evaluating  and  investing  in  private  placement
transactions  of  securities  in companies  similar to the Company so that it is
capable of evaluating  the merits and risks of its investment in the Company and
has the  capacity  to protect its own  interests.  The  Purchaser  must bear the
economic risk of this investment  until the Securities are sold pursuant to: (i)
an  effective  registration  statement  under  the  Securities  Act;  or (ii) an
exemption from registration that is available with respect to such sale.

                  5.5      ACQUISITION   FOR  OWN  ACCOUNT.   The  Purchaser  is
acquiring the Note and Warrants and the Warrant Shares for the  Purchaser's  own
account for  investment  only, and not as a nominee or agent and not with a view
towards or for resale in connection with their distribution.

                  5.6      THE PURCHASER CAN PROTECT ITS INTEREST. The Purchaser
represents that by reason of its, or of its management's, business and financial
experience,  the  Purchaser has the capacity to evaluate the merits and risks of
its  investment in the Note,  the Warrants and the Securities and to protect its
own interests in connection with the transactions contemplated in this Agreement
and the Related Agreements.  Further, the Purchaser is aware of no advertisement
or


                                       17
<PAGE>

other  publication  in  connection  with the  transactions  contemplated  in the
Agreement or the Related Agreements.

                  5.7      ACCREDITED INVESTOR. The Purchaser represents that it
is an  accredited  investor  within  the  meaning  of  Regulation  D  under  the
Securities Act.

                  5.8      Legends.

                  (a)      The Warrant Shares,  if not issued by DWAC system (as
         hereinafter   defined),   shall  bear  a  legend   which  shall  be  in
         substantially  the  following  form until such shares are covered by an
         effective registration statement filed with the SEC:

                  "THE  SHARES  REPRESENTED  BY THIS  CERTIFICATE  HAVE NOT BEEN
                  REGISTERED  UNDER THE SECURITIES  ACT OF 1933, AS AMENDED,  OR
                  ANY APPLICABLE  STATE SECURITIES LAWS. THESE SHARES MAY NOT BE
                  SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
                  OF AN EFFECTIVE  REGISTRATION  STATEMENT UNDER SUCH SECURITIES
                  ACT  AND  APPLICABLE  STATE  LAWS  OR AN  OPINION  OF  COUNSEL
                  REASONABLY   SATISFACTORY  TO  [TRUEYOU.COM   INC.  THAT  SUCH
                  REGISTRATION IS NOT REQUIRED."

                  (b)      The Warrants shall bear  substantially  the following
         legend:

                  "THIS WARRANT AND THE COMMON SHARES  ISSUABLE UPON EXERCISE OF
                  THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
                  OF 1933, AS AMENDED,  OR ANY APPLICABLE STATE SECURITIES LAWS.
                  THIS WARRANT AND THE COMMON  SHARES  ISSUABLE UPON EXERCISE OF
                  THIS  WARRANT MAY NOT BE SOLD,  OFFERED  FOR SALE,  PLEDGED OR
                  HYPOTHECATED  IN  THE  ABSENCE  OF AN  EFFECTIVE  REGISTRATION
                  STATEMENT  AS TO THIS  WARRANT  OR THE  UNDERLYING  SHARES  OF
                  COMMON STOCK UNDER SAID ACT AND  APPLICABLE  STATE  SECURITIES
                  LAWS OR AN  OPINION  OF  COUNSEL  REASONABLY  SATISFACTORY  TO
                  TRUEYOU.COM INC. THAT SUCH REGISTRATION IS NOT REQUIRED."

                  (c)      The  Note  shall  bear  substantially  the  following
         legend:

                  "THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
                  1933, AS AMENDED,  OR ANY APPLICABLE  STATE  SECURITIES  LAWS.
                  THIS  NOTE MAY NOT BE  SOLD,  OFFERED  FOR  SALE,  PLEDGED  OR
                  HYPOTHECATED  IN  THE  ABSENCE  OF AN  EFFECTIVE  REGISTRATION
                  STATEMENT UNDER SAID ACT AND APPLICABLE  STATE SECURITIES LAWS
                  OR  AN   OPINION  OF  COUNSEL   REASONABLY   SATISFACTORY   TO
                  TRUEYOU.COM INC. THAT SUCH REGISTRATION IS NOT REQUIRED."


                                       18
<PAGE>

         6.       COVENANTS OF THE COMPANY.  The Company  covenants  and agrees,
with the  Purchaser  that,  until such time as the Note  Amounts have been fully
paid,  unless  the  Purchaser  in its sole  discretion  consents  otherwise  (as
provided in Section 11.4 and 11.6):

                  6.1      STOP-ORDERS.  The Company will advise the  Purchaser,
promptly after it receives  notice of issuance by the SEC, any state  securities
commission or any other regulatory authority, of such issuance of any stop order
or other order  preventing or suspending  any offering of any  securities of the
Company,  or of the suspension of the  qualification  of the Common Stock of the
Company  for  offering or sale in any  jurisdiction,  or the  initiation  of any
proceeding for any such purpose.

                  6.2      LISTING.  The Company shall, within six (6) months of
the date hereof, secure the listing or quotation,  as applicable,  of the shares
of its Common Stock including,  without  limitation,  those shares issuable upon
the exercise of the Warrants,  on a Principal Market (subject to official notice
of issuance) and shall  maintain such listing or quotation,  as  applicable,  so
long as any other  shares  of Common  Stock  shall be so  listed or  quoted,  as
applicable.  The Company will maintain the listing or quotation,  as applicable,
of its Common Stock on the  Principal  Market,  and will comploy in all material
respects with the Company's  reporting,  filing and other  obligations under the
bylaws or rules of the National  Association of Securities  Dealers ("NASD") and
such exchanges, as applicable.

                  6.3      AUTHORIZATION  OF COMMON  STOCK.  The Company  shall,
within three (3) months of the date hereof, have sufficient authorized shares of
Common Stock for the exercise of the Warrants. In the event that the Company has
not complied  with this Section 6.3 by the  nine-month  anniversary  of the date
hereof,  the Company  shall pay interest to the  Purchaser at a rate that is two
percent  (2%) above the  Contract  Rate until such time as such shares have been
authorized.

                  6.4      MARKET REGULATIONS.  The Company shall notify the SEC
and applicable state authorities, in accordance with their requirements,  of the
transactions  contemplated by this Agreement, and shall take all other necessary
action and  proceedings as may be required and permitted by applicable law, rule
and  regulation,  for the legal  and valid  issuance  of the  Securities  to the
Purchaser and promptly  provide copies  thereof to the Purchaser.

                  6.5      REPORTING REQUIREMENTS.  The Company will deliver, or
cause to be delivered, to the Purchaser each of the following, which shall be in
form and detail acceptable to the Purchaser:

                  (a)      As soon as  available  after  the end of each  fiscal
         year of the  Company,  and in any  event  by no later  than  the  first
         business  day  after  the  expiration  of  the  period  (including  any
         extensions)  required for filing of its annual report on Form 10-K with
         the SEC under the Exchange Act, a copy of such annual report, including
         the consolidated  audited  financial  statements of the Company and its
         Subsidiaries  together with a report of  independent  certified  public
         accountants  of  recognized   standing  selected  by  the  Company  and
         reasonably acceptable to the Purchaser (the "ACCOUNTANTS") (the current
         accountants being acceptable),  which annual financial statements shall
         include each of the  consolidated  balance sheet of the Company and its
         Subsidiaries  as at  the  end of  such


                                       19
<PAGE>

         fiscal year and the related consolidated statements of income, retained
         earnings  and cash flows of the  Company and its  Subsidiaries  for the
         fiscal  year then  ended,  all in  reasonable  detail and  prepared  in
         accordance with GAAP,  together with (i) if and when available,  copies
         of any  management  letters  prepared  by the  Accountants;  and (ii) a
         certificate  of the Company's  President,  Chief  Executive  Officer or
         Chief  Financial  Officer  stating that such financial  statements have
         been prepared to his  knowledge in accordance  with GAAP and whether or
         not such officer has knowledge of the occurrence and/or  continuance of
         any Event of Default (as  defined in the Note) and,  if so,  stating in
         reasonable detail the facts with respect thereto;

                  (b)      As soon as  available  after  the end of each  fiscal
         quarter  of the  Company,  and in any event by no later  than the first
         business  day  after  the  expiration  of  the  period  (including  any
         extensions)  required for filing of its  quarterly  report on Form 10-Q
         with the SEC under the Exchange Act, a copy of such  quarterly  report,
         including an unaudited  consolidated  balance  sheet and  statements of
         income,  retained  earnings  and  cash  flows  of the  Company  and its
         Subsidiaries  as at the end of and for such quarter and for the year to
         date period then ended, in reasonable detail and prepared in accordance
         with  GAAP,  subject  to  year-end  adjustments  and  accompanied  by a
         certificate  of the Company's  President,  Chief  Executive  Officer or
         Chief  Financial  Officer,  stating (i) that such financial  statements
         have been prepared in accordance with GAAP to his knowledge, subject to
         year-end  audit  adjustments,  and (ii) whether or not such officer has
         knowledge of the occurrence and/or  continuance of any Event of Default
         (as defined in the Note) not theretofore  reported and remedied and, if
         so, stating in reasonable detail the facts with respect thereto;

                  (c)      As soon as available and in any event within  fifteen
         (15) days after the end of each calendar month, a copy of the Company's
         regularly   prepared   internal   unaudited    consolidated   financial
         statements,  including (without limitation) balance sheets,  statements
         of income,  retained  earnings and cash flows, and in reasonable detail
         and stating in comparative form the figures for the corresponding  date
         and periods in the previous year, all prepared in accordance  with past
         practice,   subject  to  year-end  adjustments  and  accompanied  by  a
         certificate  of the Company's  President,  Chief  Executive  Officer or
         Chief  Financial  Officer,  stating (i) that such financial  statements
         have been  prepared  in  accordance  with  past  practice,  subject  to
         year-end  audit  adjustments;  and (ii) whether or not such officer has
         knowledge of the  occurrence fo any Event of Default (as defined in the
         Note) not  theretofore  reported  and remedied  and, if so,  stating in
         reasonable detail the facts with respect thereto;

                  (d)      Promptly after (i) the filing thereof,  copies of the
         Company's most recent  registration  statements and annual,  quarterly,
         monthly  or other  regular  reports  which the  Company  files with the
         Securities and Exchange  Commission (the "SEC"),  and (ii) the issuance
         thereof,  copies  of  such  financial  statements,  reports  and  proxy
         statements as the Company shall send to its stockholders; and

                  (e)      Promptly  following  request  such other  information
         respecting  the Company and its  Subsidiaries  as the  Purchaser  shall
         reasonably request.


                                       20
<PAGE>

The Company  shall  timely  file with the SEC all  reports  required to be filed
pursuant to the  Exchange  Act and  refrain  from  terminating  its status as an
issuer  required by the  Exchange  Act to file  reports  thereunder  even if the
Exchange  Act  or  the  rules  or  regulations   thereunder  would  permit  such
termination.

                  6.6      USE OF FUNDS.  The Company  shall use the proceeds of
the sale of the Note and the Warrants to fund the Company's  operating  expenses
and  finance  further  research  and  development  of the  Company's  technology
platform.

                  6.7      ACCESS TO FACILITIES. Each of the Company and each of
its Subsidiaries will permit any representatives designated by the Purchaser (or
any  successor  of the  Purchaser),  upon  reasonable  notice and during  normal
business hours, at such person's expense and accompanied by a representative  of
the  Company or any  Subsidiary  (provided  that no such prior  notice  shall be
required to be given and no such representative of the Company or any Subsidiary
shall be required to accompany the Purchaser in the event the Purchaser believes
such access is  necessary to preserve or protect the  Collateral  (as defined in
the Master  Security  Agreement)  or  following  the  occurrence  and during the
continuance of an Event of Default (as defined in the Note)), to:

                  (a)      visit  and  inspect  any  of  the  properties  of the
         Company or any of its Subsidiaries;

                  (b)      examine the corporate  and  financial  records of the
         Company or any of its  Subsidiaries  (unless  such  examination  is not
         permitted  by  federal,  state or local  law or by  contract)  and make
         copies thereof or extracts therefrom; and

                  (c)      discuss the  affairs,  finances  and  accounts of the
         Company or any of its  Subsidiaries  with the  directors,  officers and
         independent accountants of the Company or any of its Subsidiaries.

Notwithstanding  the foregoing,  neither the Company nor any of its Subsidiaries
will provide any material,  non-public  information to the Purchaser  unless the
Purchaser  signs  a  confidentiality   agreement  and  otherwise  complies  with
Regulation FD and other applicable federal securities laws.

                  6.8      TAXES.   Each  of  the   Company   and  each  of  its
Subsidiaries  will  promptly  pay  and  discharge,  or  cause  to  be  paid  and
discharged,  when due and  payable,  all  taxes,  assessments  and  governmental
charges or levies imposed upon the income, profits,  property or business of the
Company and its Subsidiaries;  provided, however, that any such tax, assessment,
charge or levy need not be paid  currently  if (i) the  validity  thereof  shall
currently and diligently be contested in good faith by appropriate  proceedings,
(ii)  such tax,  assessment,  charge  or levy  shall  have no effect on the lien
priority  of the  Purchaser's  liens (if any) on the  affected  property  of the
Company or any of its Subsidiaries, and (iii) the Company and/or such Subsidiary
shall have set aside on its books  adequate  reserves  with  respect  thereto in
accordance  with  GAAP;  and  provided,   further,  that  the  Company  and  its
Subsidiaries will pay all such taxes,  assessments,  charges or levies forthwith
upon the  commencement  of  proceedings  to  foreclose  any lien  which may have
attached as security therefor.


                                       21
<PAGE>

                  6.9      INSURANCE.  Each of the Company and its  Subsidiaries
will keep its assets which are of an insurable  character insured by financially
sound and reputable insurers against loss or damage by fire, explosion and other
risks  customarily  insured against by companies in similar  business  similarly
situated  as  the  Company  and  its  Subsidiaries;  and  the  Company  and  its
Subsidiaries  will  maintain,  with  financially  sound and reputable  insurers,
insurance  against other hazards and risks and liability to persons and property
to the  extent  and in the  manner  which the  Company  reasonably  believes  is
customary for companies in similar  business  similarly  situated as the Company
and its  Subsidiaries  and to the extent  available on  commercially  reasonable
terms.  The Company,  and each of its  Subsidiaries,  will jointly and severally
bear the full risk of loss from any loss of any nature  whatsoever  with respect
to their  respective  assets  pledged to the  Purchaser  as  security  for their
respective  obligations  hereunder  and under  the  Related  Agreements.  At the
Company's  and each of its  Subsidiaries'  joint and several cost and expense in
amounts and with carriers  reasonably  acceptable to the Purchaser,  each of the
Company and each of its Subsidiaries shall (i) keep all its insurable properties
and its insurable  interests in  properties in which it has an interest  insured
against the hazards of fire, flood,  sprinkler leakage, those hazards covered by
extended  coverage  insurance and such other  hazards,  and for such amounts and
with such  deductibles,  as is reasonable and customary in the case of companies
engaged in businesses  similar to the Company's or the respective  Subsidiary's;
(ii)  maintain a bond in such  amounts as is  customary in the case of companies
engaged in businesses  similar to the Company's or the  respective  Subsidiary's
insuring against  larceny,  embezzlement or other criminal  misappropriation  of
insured's officers and employees who may either singly or jointly with others at
any time  have  access  to the  assets  or funds  of the  Company  or any of its
Subsidiaries either directly or through governmental authority to draw upon such
funds or to direct  generally the  disposition  of such assets;  (iii)  maintain
public and product liability insurance against claims for personal injury, death
or  property  damage  suffered  by  others;  (iv)  maintain  all  such  worker's
compensation or similar insurance as may be required under the laws of any state
or jurisdiction in which the Company or the respective  Subsidiary is engaged in
business;  and (v) furnish the  Purchaser  with (x) copies of all  policies  and
evidence of the  maintenance  of such  policies at least thirty (30) days before
any  expiration  date,  (y)  excepting the Company's  fidelity  bonds,  workers'
compensation  policy,  D&O Policies,  and insurance  that is part of a Permitted
Encumbrance,  endorsements to such policies naming the Purchaser as "co-insured"
or "additional  insured" and in the case of casualty losses to tangible personal
property pledged to the Purchaser appropriate loss payable endorsements, in form
and substance satisfactory to the Purchaser, naming the Purchaser as loss payee,
and (z) evidence that as to the Purchaser  the insurance  coverage  shall not be
impaired or  invalidated  by any act or neglect of the Company or any Subsidiary
and the insurer will provide the Purchaser with at least thirty (30) days notice
prior to  cancellation.  The  Company and each  Subsidiary  shall  instruct  the
insurance  carriers that in the event of any casualty loss  thereunder for which
the Purchaser is the applicable loss payee,  the carriers shall make payment for
such loss to the Company and/or the Subsidiary and the Purchaser jointly. In the
event that as of the date of receipt of each such  casualty  loss  recovery upon
any such  insurance,  the  Purchaser  has not  declared  an Event of Default (as
defined in the Note), then the Company and/or such Subsidiary shall be permitted
to direct the application of such loss recovery  proceeds  toward  investment in
property,  plant and equipment that would comprise  "Collateral"  secured by the
Purchaser's  security interest  pursuant to the Master Security  Agreement or if
not  applicable,  such other  security  agreement  as shall be  required  by the
Purchaser,  with  any  surplus  funds  to  be  applied  toward  payment  of  the


                                       22
<PAGE>

obligations of the Company to the Purchaser as a permitted voluntary  prepayment
without  premium  or  penalty.  In the event  that the  Purchaser  has  properly
declared an Event of Default, then all such casualty loss recoveries received by
the  Purchaser  upon  any  such  insurance  thereafter  may  be  applied  to the
obligations of the Company hereunder and under the Related  Agreements,  in such
order as the Purchaser may determine. Any surplus (following satisfaction of all
of the Company's outstanding  obligations to the Purchaser) shall be paid by the
Purchaser  to the Company or applied as may be  otherwise  required by law.  Any
deficiency  thereon  shall  be  paid  by  the  Company  or  the  Subsidiary,  as
applicable, to the Purchaser, on demand.

                  6.10     INTELLECTUAL  PROPERTY.  Each of the Company and each
of its  Subsidiaries  shall  maintain  in full force and  effect its  existence,
rights and  franchises  and all licenses  and other  rights to use  Intellectual
Property  owned or licensed by it and  reasonably  deemed to be necessary and of
continued value to the conduct of its business.

                  6.11     PROPERTIES.  Each  of the  Company  and  each  of its
Subsidiaries will keep its equipment and real properties in good repair, working
order and condition,  reasonable wear and tear and retirement excepted, and from
time to time  make all  needful  and  proper  repairs,  renewals,  replacements,
additions  and  improvements  thereto;  and each of the  Company and each of its
Subsidiaries will at all times comply with each provision of all leases to which
it is a party  or  under  which  it  occupies  property  if the  breach  of such
provision could, either individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

                  6.12     CONFIDENTIALITY.  The Company  will not, and will not
permit any of its Subsidiaries to, disclose,  and will not include in any public
announcement,  the name of the  Purchaser,  unless  expressly  agreed  to by the
Purchaser or unless and until such  disclosure  is required by law or applicable
regulation, and then only to the extent of such requirement. Notwithstanding the
foregoing,  the Company may disclose the  Purchaser's  identity and the terms of
this Agreement to its current and prospective debt and equity financing sources.
The Purchaser  acknowledges  that,  promptly  following  execution and delivery,
conformed copies of this Agreement and the Related Agreements and all amendments
thereto may  (notwithstanding the foregoing) be filed by the Company as material
agreements with the SEC.

                  6.13     REQUIRED  APPROVALS.  (I) For so long as  twenty-five
percent (25%) of the principal  amount of the Note is outstanding,  the Company,
without the prior  written  consent of the  Purchaser,  shall not, and shall not
permit any of its Subsidiaries to:

                  (a)      (i)  directly or  indirectly  declare or pay any cash
         dividends,  other than cash dividends paid to the Company or any of its
         wholly-owned  Subsidiaries,  (ii) issue any Preferred  Stock that has a
         scheduled  mandatory  redemption date prior to the one year anniversary
         of the  Maturity  Date (as defined in the Note) or (iii)  redeem any of
         its Preferred Stock or other equity interests;

                  (b)      liquidate,    dissolve    or   effect   a    material
         reorganization  (it being understood that in no event shall the Company
         or any of its Subsidiaries dissolve,  liquidate or merge with any other
         person or entity  (unless,  in the case of such a merger  involving the
         Company, the Company is the surviving entity, or, in the case of merger
         not involving the


                                       23
<PAGE>

         Company,  any  Subsidiary or any entity  acquired by the Company or any
         Subsidiary, as applicable, is the surviving entity);

                  (c)      become subject to (including,  without limitation, by
         way of amendment to or  modification  of) any  agreement or  instrument
         that by its terms would (under any circumstances) restrict the right of
         the Company or any of its  Subsidiaries  to perform the  provisions  of
         this  Agreement,  any Related  Agreement  or any of the  currently  and
         expressly agreements contemplated hereby or thereby;

                  (d)      materially  alter or change the scope of the business
         of the Company and its Subsidiaries taken as a whole; or

                  (e)      (i)  create,  incur,  assume  or  suffer to exist any
         indebtedness  (exclusive  of  Permitted  Indebtedness,  as  hereinafter
         defined)  whether  secured or  unsecured,  other than (A) the Company's
         indebtedness  owed under this Agreement or any Related  Agreement,  (B)
         the  subordinated  debt  aggregating  $10,000,000  listed  in  Schedule
         6.12(e) hereto and made a part hereof,  and the other  indebtedness (if
         any) set forth on  Schedule  6.12(e)  attached  hereto  and made a part
         hereof,  and any refinancings or replacements  thereof on terms no less
         favorable  as a whole  to the  Purchaser  than the  indebtedness  being
         refinanced  or  replaced,  as  determined  by  Purchaser  in  its  sole
         discretion,  (C) any  indebtedness  incurred to finance the purchase of
         equipment  not in excess of five  percent (5%) of the fair market value
         of the Company's and its  Subsidiaries'  assets,  and any  indebtedness
         incurred  in  connection  with  the  purchase  of  assets  (other  than
         equipment),  or any restatements,  refinancings or replacements thereof
         on  terms  no less  favorable  as a whole  to the  Purchaser  than  the
         indebtedness being restated,  refinanced or replaced,  as determined by
         Purchaser in its sole discretion,  so long as any lien relating thereto
         shall only  encumber  the fixed  assets so purchased or leased (and the
         products  and  proceeds  thereof,  insurance  therefor and warranty and
         other  contract  rights  related  thereto)  and no other  assets of the
         Company or any of its Subsidiaries,  (D) intercompany loans and advance
         among the Company and its subsidiaries,  (E) short-term unsecured trade
         obligations  for the  purchase  of goods or  services  in the  ordinary
         course,  and (F)  additional  subordinated  debt in such amounts and on
         such  subordination  and other terms as the  Purchaser may approve from
         time to time, and any refinancings or replacements  thereof on terms no
         less favorable as a whole to the Purchaser than the indebtedness  being
         refinanced  or  replaced,  as  determined  by  Purchaser  in  its  sole
         discretion,  (the  indebtedness  permitted  by clauses  (A) through (F)
         being  referred  to  as  "Permitted  Indebtedness");  (ii)  cancel  any
         indebtedness  owing to it in excess of $50,000 in the aggregate  during
         any 12 month  period,  excluding  the  settlement of any account in the
         ordinary  course  and any  intercompany  loans and  advances  among the
         Company  and its  Subsidiaries;  (iii)  assume,  guarantee,  endorse or
         otherwise become directly or contingently liable in connection with any
         obligations  of  any  other  person  or  entity,  except  for  (A)  the
         endorsement of negotiable  instruments by the Company or any Subsidiary
         thereof  for  deposit  or  collection  or similar  transactions  in the
         ordinary  course of business,  (B) any guarantees and  indemnifications
         respecting  indebtedness otherwise permitted to be outstanding pursuant
         to this clause (e), (C)  guarantees by the Company or any Subsidiary of
         any  obligation  of any  Subsidiary or the Company that could have been
         incurred  directly by the guarantor without violating this Agreement or
         any Related


                                       24
<PAGE>

         Agreement, and (D) any guarantees of indebtedness set forth on Schedule
         6.12(e)  attached  hereto  and  made  a  part  hereof  (the  guarantees
         permitted  by clauses (A) through (F) being  referred to as  "Permitted
         Guarantees"); and

         (II) The Company,  without the prior written  consent of the Purchaser,
shall not, and shall not permit any of its  Subsidiaries  to,  create or acquire
any  Subsidiary   after  the  date  hereof  unless  (i)  such  Subsidiary  is  a
wholly-owned  Subsidiary of the Company and (ii) such Subsidiary becomes a party
to the Master Security Agreement,  the Stock Pledge Agreement and the Subsidiary
Guaranty (either by executing a counterpart  thereof or an assumption or joinder
agreement  in respect  thereof)  and, to the extent  required by the  Purchaser,
satisfies each condition of this Agreement and the Related Agreements as if such
Subsidiary were a Subsidiary on the Closing Date.

                  6.14     REISSUANCE  OF  SECURITIES.  The  Company  agrees  to
reissue  certificates  representing  the Warrant  Shares without the legends set
forth in Section 5.8 above at such time as:

                  (a)      the holder  thereof is  permitted  to dispose of such
         Warrant Shares pursuant to Rule 144(k) under the Securities Act; or

                  (b)      upon  resale  subject  to an  effective  registration
         statement after such Warrant Shares are registered under the Securities
         Act.

The Company  agrees to  cooperate  with the  Purchaser  in  connection  with all
resales  pursuant  to Rule 144(d) and Rule  144(k) and  provide  legal  opinions
necessary  to allow such resales  provided  the Company and its counsel  receive
reasonably  requested  representations  from the Purchaser  and broker,  if any,
including (without limitation) the representations required by applicable law.

                  6.15     OPINION.  On  the  Closing  Date,  the  Company  will
deliver  to the  Purchaser  an  opinion  acceptable  to the  Purchaser  from the
Company's  external  legal counsel.  The Company will provide,  at the Company's
expense,  such other  legal  opinions  in the  future as are  deemed  reasonably
necessary by the Purchaser (and  acceptable to the Purchaser) in connection with
the exercise of the Warrants.

                  6.16     MARGIN STOCK.  The Company will not permit any of the
proceeds  of the Note or the  Warrants  to be used  directly  or  indirectly  to
"purchase"  or  "carry"  "margin  stock" or to repay  indebtedness  incurred  to
"purchase" or "carry"  "margin stock" within the respective  meanings of each of
the quoted  terms under  Regulation  U of the Board of  Governors of the Federal
Reserve System as now and from time to time hereafter in effect.

                  6.17     NO RESTRICTION ON FUTURE INVESTMENT BY PURCHASER. The
Company will not, and will not permit its  Subsidiaries  to, agree,  directly or
indirectly, to any restriction with any person or entity limiting the ability of
the  Purchaser  to provide any  additional  funds and/or he sale or issuance any
equity interests of the Company or any of its  Subsidiaries  with the Company or
any of its Subsidiaries.

                  6.18     AUTHORIZATION  AND  RESERVATION OF SHARES.  Following
the  increase in the  authorized  shares of Common  Stock  required  pursuant to
Section 6.3 hereof,  the Company shall


                                       25
<PAGE>

at all times  have  authorized  and  reserved a  sufficient  number of shares of
Common Stock to provide for the exercise of the Warrants.

         7.       COVENANTS OF THE PURCHASER. The Purchaser covenants and agrees
with the Company as follows:

                  7.1      CONFIDENTIALITY. The Purchaser will not disclose, and
will not include in any public  announcement,  the name of the  Company,  unless
expressly  agreed to by the  Company  or unless  and until  such  disclosure  is
required by law or  applicable  regulation,  and then only to the extent of such
requirement.

                  7.2      NON-PUBLIC INFORMATION. The Purchaser will not effect
any sales in the shares of the  Company's  Common Stock while in  possession  of
material,  non-public  information  regarding  the  Company if such sales  would
violate applicable securities law.

                  7.3      LIMITATION  ON  ACQUISITION  OF  COMMON  STOCK OF THE
COMPANY.  Notwithstanding  anything to the contrary contained in this Agreement,
any Related  Agreement or any document,  instrument or agreement entered into in
connection  with any other  transactions  between the Purchaser and the Company,
the  Purchaser  may  not  acquire  stock  in  the  Company  (including,  without
limitation,  pursuant  to a contract to  purchase,  by  exercising  an option or
warrant,  by  converting  any other  security or  instrument,  by  acquiring  or
exercising  any  other  right to  acquire,  shares  of  stock or other  security
convertible  into  shares  of  stock  in the  Company,  or  otherwise,  and such
contracts,   options,  warrants,   conversion  or  other  rights  shall  not  be
enforceable or exercisable)to  the extent such stock acquisition would cause any
interest  (including any original issue discount)  payable by the Company to the
Purchaser not to qualify as "portfolio  interest"  within the meaning of Section
881(c)(2) of the Code, by reason of Section  881(c)(3) of the Code,  taking into
account the constructive  ownership rules under Section 871(h)(3)(C) of the Code
(the "Stock  Acquisition  Limitation").  The Stock Acquisition  Limitation shall
automatically  become null and void  without any notice to the Company  upon the
earlier to occur of either (a) the  Company's  delivery  to the  Purchaser  of a
Notice of  Redemption  (as defined in the Note) or (b) the existence of an Event
of Default (as defined in the Note) at a time when the average  closing price of
the  Company's  Common  Stock as reported by Pink  Sheets(R)  or any  applicable
Principal Market for the immediately preceding five trading days is greater than
or equal to $1.00 per share.

         8.       COVENANTS   OF  THE  COMPANY  AND  THE   PURCHASER   REGARDING
INDEMNIFICATION.

                  8.1      COMPANY   INDEMNIFICATION.   The  Company  agrees  to
indemnify,  hold  harmless,  reimburse  and  defend the  Purchaser,  each of the
Purchaser's  officers,  directors,  agents,  affiliates,  control  persons,  and
principal  shareholders,  against  all  claims,  costs,  expenses,  liabilities,
obligations,  losses or damages (including  reasonable legal fees) of any nature
("Purchaser  Losses"),  incurred by or imposed upon the  Purchaser  that result,
arise out of or are based upon: (i) any  misrepresentation by the Company or any
of its  Subsidiaries  or breach of any  warranty  by the  Company  or any of its
Subsidiaries  in this  Agreement,  any Related  Agreement  or in any exhibits or
schedules  attached  hereto  or  thereto;  or (ii)  any  breach  or  default  in
performance by Company or any of its Subsidiaries of any covenant or undertaking
to be  performed  by Company  or any of its  Subsidiaries  hereunder,  under any
Related  Agreement  or


                                       26
<PAGE>

under  any  other  agreement  entered  into  by the  Company  and/or  any of its
Subsidiaries  and the  Purchaser  relating  hereto  or  thereto;  IN  EACH  CASE
excluding all Purchaser Losses to the extent occasioned by the gross negligence,
willful  misconduct  or bad  faith of any such  indemnified  person  as  finally
determined pursuant to applicable law.

                  8.2      PURCHASER'S INDEMNIFICATION.  The Purchaser agrees to
indemnify,  hold  harmless,  reimburse  and defend the  Company  and each of the
Company's officers, directors, agents, affiliates, control persons and principal
shareholders,  at all times against any claims,  costs,  expenses,  liabilities,
obligations,  losses or damages (including  reasonable legal fees) of any nature
("Company Losses"),  incurred by or imposed upon the Company that result,  arise
out of or are based upon: (i) any  misrepresentation  by the Purchaser or breach
of any warranty by the Purchaser in this  Agreement or any Related  Agreement or
in any exhibits or schedules  attached hereto or thereto;  or (ii) any breach or
default in  performance  by the Purchaser of any covenant or  undertaking  to be
performed by the Purchaser  hereunder,  under any Related Agreement or under any
other agreement entered into by the Company and the Purchaser relating hereto or
thereto;  IN EACH CASE excluding all Company Losses to the extent  occasioned by
the gross  negligence,  willful  misconduct or bad faith of any such indemnified
person as finally determined pursuant to applicable law.

         9.       EXERCISE OF THE WARRANTS.

                  9.1      Mechanics of Exercise.

                  (a)      Provided  the  Purchaser  has notified the Company of
         the Purchaser's intention to sell the Warrant Shares in accordance with
         the  Warrants  and the  Warrant  Shares are  included  in an  effective
         registration statement or are otherwise exempt from registration in the
         amount  to be sold:  (i)  upon the  exercise  of the  Warrants  or part
         thereof,  the  Company  shall,  at its own cost and  expense,  take all
         necessary  action  (including  the  issuance  of an  opinion of counsel
         reasonably  acceptable  to the  Purchaser  following  a request  by the
         Purchaser)  to assure  that the  Company's  transfer  agent shall issue
         shares of the  Company's  Common Stock in the name of the Purchaser (or
         its nominee) or such other  persons as  designated  by the Purchaser in
         accordance with Section 9.1(b) hereof and in such  denominations  to be
         specified  representing the number of Warrant Shares issuable upon such
         exercise; and (ii) the Company warrants that no instructions other than
         these  instructions  have been or will be given by the  Company  to the
         transfer  agent  of the  Company's  Common  Stock  and that  after  the
         Effectiveness  Date (as defined in the Registration  Rights  Agreement)
         the  registered  Warrant  Shares  issued  will be  freely  transferable
         subject to the prospectus  delivery  requirements of the Securities Act
         and the  provisions  of this  Agreement,  and will not contain a legend
         restricting  the resale or  transferability  of the registered  Warrant
         Shares.

                  (b)      The  Purchaser  will give  notice of its  decision to
         exercise  its  right  to  exercise  the  Warrants  or part  thereof  by
         telecopying or otherwise delivering an executed and completed notice of
         the  number of shares to be  subscribed  to the  Company  (the "Form of
         Subscription").  The  Purchaser  will not be required to surrender  the
         Warrants  until the  Purchaser  receives a credit to the account of the
         Purchaser's  prime broker  through the DWAC system (as defined  below),
         representing  the Warrant  Shares or until


                                       27
<PAGE>

         the Warrants  have been fully  exercised.  Each date on which a Form of
         Subscription  is  telecopied  or delivered to the Company in accordance
         with the provisions  hereof shall be deemed a "Exercise Date." Pursuant
         to the  terms of the  Form of  Subscription,  the  Company  will  issue
         instructions to the transfer agent accompanied by an opinion of counsel
         within  three  (3)  business  days of the date of the  delivery  to the
         Company  of the duly and  timely  completed  Form of  Subscription  and
         payment  therefore  (the  "Instruction  Date")  and  shall use its best
         efforts  to  cause  the  transfer   agent  to  promptly   transmit  the
         certificates   representing   the  Warrant  Shares  set  forth  in  the
         applicable  Form of Subscription to the Holder by crediting the account
         of the  Purchaser's  prime  broker with the  Depository  Trust  Company
         ("DTC") through its Deposit Withdrawal Agent Commission ("DWAC") system
         within  three  (3)  business  days  after  the  Instruction  Date  (the
         "Delivery Date").

                  (c)      The Company  understands that a delay in the delivery
         of the Warrant Shares in the form required pursuant to Section 9 hereof
         beyond  the  Delivery  Date  could  result  in  economic  loss  to  the
         Purchaser.  In the event that the Company  fails to direct its transfer
         agent to  deliver  the  Warrant  Shares to the  Purchaser  via the DWAC
         system within the time frame set forth in Section  9.1(b) above and the
         Warrant Shares are not delivered to the Purchaser by the Delivery Date,
         as  compensation  to the Purchaser for such loss, the Company agrees to
         pay late  payments to the  Purchaser  for late  issuance of the Warrant
         Shares in the form required  pursuant to Section 9 hereof upon exercise
         of the  Warrants  in the amount  equal to the  greater of: (i) $500 per
         business day after the Delivery  Date; or (ii) the  Purchaser's  actual
         damages from such delayed delivery.  The Company shall pay any payments
         incurred under this Section in immediately  available funds upon demand
         and,  in  the  case  of  actual  damages,   accompanied  by  reasonable
         documentation of the amount of such damages.  Such documentation  shall
         show the number of shares of Common  Stock (if any) that the  Purchaser
         was  forced  to  purchase  (in an open  market  transaction)  which the
         Purchaser  anticipated  receiving  upon  such  exercise,  and  shall be
         calculated as the amount by which (A) the  Purchaser's  total  purchase
         price  (including  customary  brokerage  commissions,  if any)  for the
         shares of Common Stock so purchased exceeds (B) the aggregate amount of
         the  Exercise   Price  for  the  Warrants,   for  which  such  Form  of
         Subscription was not timely honored.

         10.      REGISTRATION RIGHTS.

                  10.1     REGISTRATION  RIGHTS  GRANTED.   The  Company  hereby
grants  registration rights to the Purchaser pursuant to the Registration Rights
Agreement.

                  10.2     OFFERING RESTRICTIONS. Except as previously disclosed
in the SEC  Reports  or in the  Securities  Filings,  or stock or stock  options
granted to  employees or  directors  of the Company or its  Subsidiaries  (these
exceptions  hereinafter  referred to as the "Excepted  Issuances"),  neither the
Company nor any of its  Subsidiaries  will,  prior to the full  repayment of the
Note (together with all accrued and unpaid  interest and fees related  thereto),
(x) enter into any equity line of credit  agreement or similar  agreement or (y)
issue,   or  enter  into  any  agreement  to  issue,   any  securities   with  a
variable/floating  conversion  and/or  pricing  feature that are or could be (by
conversion or registration)  free-trading securities (i.e., common stock subject
to a registration statement).


                                       28
<PAGE>

         11.      MISCELLANEOUS.

                  11.1     Governing Law, Jurisdiction and Waiver of Jury Trial.

                  (a)      THIS  AGREEMENT AND THE RELATED  AGREEMENTS  SHALL BE
         GOVERNED  BY  AND  CONSTRUED  AND  ENFORCED  IN  ACCORDANCE   WITH  THE
         APPLICABLE  LAWS OF THE STATE OF NEW YORK  APPLICABLE TO CONTRACTS MADE
         AND PERFORMED IN SUCH STATE,  WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
         OF  LAWS;  PROVIDED,  HOWEVER,  THAT  THE  CREATION,   PERFECTION,  AND
         ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT TO THE
         RELATED  AGREEMENTS  SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
         ACCORDANCE  WITH THE  APPLICABLE  LAWS OF (A) THE  STATE  IN WHICH  THE
         APPLICABLE  COMPANY OR  SUBSIDIARY IS ORGANIZED IN THE CASE OF TYPES OF
         COLLATERAL IN WHICH  SECURITY  INTERESTS CAN BE PERFECTED BY THE FILING
         OF UCC FINANCING STATEMENTS IN THAT STATE OR (B) IN ALL OTHER CASES THE
         STATE IN WHICH THE  APPLICABLE  ASSET OR  PROPERTY IS LOCATED OR DEEMED
         LOCATED.

                  (b)      THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE
         OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK,  STATE OF NEW YORK
         SHALL HAVE EXCLUSIVE  JURISDICTION  TO HEAR AND DETERMINE ANY CLAIMS OR
         DISPUTES  BETWEEN THE COMPANY,  ON THE ONE HAND, AND THE PURCHASER,  ON
         THE OTHER  HAND,  PERTAINING  TO THIS  AGREEMENT  OR ANY OF THE RELATED
         AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT
         OR ANY OF THE OTHER RELATED  AGREEMENTS;  PROVIDED,  THAT THE PURCHASER
         AND THE COMPANY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE
         TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE
         OF NEW YORK;  AND FURTHER  PROVIDED,  THAT,  NOTHING IN THIS  AGREEMENT
         SHALL BE DEEMED OR OPERATE TO PRECLUDE THE PURCHASER FROM BRINGING SUIT
         OR TAKING OTHER LEGAL ACTION IN ANY OTHER  JURISDICTION  TO COLLECT THE
         OBLIGATIONS,  TO REALIZE ON THE  COLLATERAL  (AS  DEFINED IN THE MASTER
         SECURITY  AGREEMENT)  OR ANY OTHER  SECURITY  FOR THE  OBLIGATIONS  (AS
         DEFINED IN THE MASTER SECURITY AGREEMENT),  OR TO ENFORCE A JUDGMENT OR
         OTHER COURT  ORDER IN FAVOR OF THE  PURCHASER.  THE  COMPANY  EXPRESSLY
         SUBMITS AND CONSENTS IN ADVANCE TO SUCH  JURISDICTION  IN ANY ACTION OR
         SUIT  COMMENCED IN ANY SUCH COURT,  AND THE COMPANY  HEREBY  WAIVES ANY
         OBJECTION  THAT IT MAY HAVE BASED UPON LACK OF  PERSONAL  JURISDICTION,
         IMPROPER  VENUE OR FORUM NON  CONVENIENS.  THE  COMPANY  HEREBY  WAIVES
         PERSONAL SERVICE OF THE SUMMONS,  COMPLAINT AND OTHER PROCESS ISSUED IN
         ANY SUCH  ACTION  OR SUIT AND  AGREES  THAT  SERVICE  OF SUCH  SUMMONS,
         COMPLAINT  AND  OTHER  PROCESS  MAY  BE  MADE  BY  FEDERAL  EXPRESS  OR
         REGISTERED  OR CERTIFIED  MAIL  DELIVERED TO THE COMPANY AT THE ADDRESS
         SET


                                       29
<PAGE>

         FORTH IN  SECTION  11.9  AND  THAT  SERVICE  SO MADE  SHALL  BE  DEEMED
         COMPLETED  UPON  THE  COMPANY'S  ACTUAL  RECEIPT  THEREOF  OR FOUR  (4)
         BUSINESS DAYS AFTER DEPOSIT IN THE U.S. MAILS FOR DELIVERY BY SUCH MAIL
         AND PROPER POSTAGE PREPAID.

                  (c)      THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY
         A JUDGE APPLYING SUCH APPLICABLE LAWS.  THEREFORE,  TO ACHIEVE THE BEST
         COMBINATION OF THE BENEFITS OF THE JUDICIAL  SYSTEM AND OF ARBITRATION,
         THE  PARTIES  HERETO  WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY  ACTION,
         SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,  WHETHER ARISING IN
         CONTRACT,  TORT, OR OTHERWISE  BETWEEN THE PURCHASER AND/OR THE COMPANY
         ARISING  OUT  OF,   CONNECTED  WITH,   RELATED  OR  INCIDENTAL  TO  THE
         RELATIONSHIP   ESTABLISHED   BETWEEN  THEM  IN  CONNECTION   WITH  THIS
         AGREEMENT,  ANY RELATED AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR
         THERETO.

                  11.2     SEVERABILITY.  Wherever  possible  each  provision of
this Agreement and the Related Agreements shall be interpreted in such manner as
to be effective  and valid under  applicable  law, but if any  provision of this
Agreement or any Related  Agreement shall be prohibited by or invalid or illegal
under  applicable law such provision  shall be ineffective to the extent of such
prohibition or invalidity or illegality,  without  invalidating the remainder of
such provision or the remaining provisions thereof which shall not in any way be
affected or impaired thereby.

                  11.3     SURVIVAL. The representations,  warranties, covenants
and agreements of the parties made herein shall survive any  investigation  made
by the parties and the closing of the  transactions  contemplated  hereby to the
extent provided  therein.  All statements as to factual matters contained in any
certificate  or  other  instrument  delivered  by or on  behalf  of the  Company
pursuant hereto in connection with the transactions contemplated hereby shall be
deemed to be  representations  and warranties by the Company hereunder solely as
of the date of such certificate or instrument.  All indemnities set forth herein
shall survive the execution,  delivery and termination of this Agreement and the
Note, and the making and repayment of the obligations  arising hereunder,  under
the Note and under the other Related Agreements.

                  11.4     SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided  herein,  this Agreement and the Related  Agreements shall inure to the
benefit  of, and be binding  upon and  enforceable  by, the  successors,  heirs,
executors,  administrators  and  permitted  assigns of the parties  hereto.  The
Purchaser  shall not be permitted to assign this Agreement or Related  Agreement
or any of its rights  hereunder or  thereunder  to a  competitor  of the Company
unless  an Event of  Default  (as  defined  in the  Note)  has  occurred  and is
continuing.  Notwithstanding  anything to the contrary in this  Agreement or any
Related  Agreement,  and  irrespective  of  any  permitted  assignment  of  this
Agreement  or any  Related  Agreement  (in  whole or in  part):  until the first
anniversary of the date hereof:  (a) the Company and its  Subsidiaries  shall be
entitled at all times to deal  exclusively  with the Purchaser  respecting  this
Agreement and the Related Agreements,  the administration hereof and thereof and
its performance hereunder and thereunder, including (without limitation) (i) any
supplement to,  modification,  amendment,


                                       30
<PAGE>

restatement  or  waiver  of or  departure  from this  Agreement  or any  Related
Agreement  or any  release  of  Collateral  (each a  "Modification"),  (ii)  the
delivery of any notice,  report,  other document or further assurance,  or (iii)
any payment or collateral administration;  (b) the Purchaser shall not assign or
delegate  (in whole or in part) to any other person in its sole  discretion  its
right or power to review, approve or sign any Modification or to administer this
Agreement or any Related Agreement; and (c) no permitted assignee shall have any
right or power  whatsoever  to review,  approve or sign any  Modification  or to
administer  this  Agreement  or  any  Related  Agreement,  irrespective  of  its
agreements and understandings with the Purchaser.

                  11.5     ENTIRE AGREEMENT;  MAXIMUM  INTEREST.  This Agreement
and  the  exhibits  and  schedules   hereto   constitute  the  full  and  entire
understanding  and  agreement  between the parties  with regard to the  subjects
hereof,  and supersede and completely replace any and all (and no party shall be
liable  or  bound  to  any  other  in  any   manner  by  any)   prior  or  other
representations, warranties, covenants, promises, assurances or other agreements
or understandings  (whether written,  oral, express,  implied or otherwise) with
regard to the subjects hereof except as specifically  set forth herein.  Nothing
contained in this Agreement,  any Related  Agreement or in any document referred
to herein or delivered in  connection  herewith  shall be deemed to establish or
require  the  payment of a rate of  interest  or other  charges in excess of the
maximum rate permitted by applicable law. In the event that the rate of interest
or dividends  required to be paid or other charges  hereunder exceed the maximum
rate  permitted by such law,  any  payments in excess of such  maximum  shall be
credited  against  principal  amounts owed by the Company to the Purchaser (as a
permitted  prepayment  without  premium or  penalty)  and thus  refunded  to the
Company.

                  11.6     AMENDMENT AND WAIVER. Subject to Section 11.4 hereof:

                  (a)      Except as otherwise provided in subsection (b) or (c)
         of  this  Section  with  respect  to  waivers,  this  Agreement  may be
         restated, supplemented, amended or modified only in a written agreement
         between the Company and the Purchaser.

                  (b)      The  obligations of the Company and the rights of the
         Purchaser  under this  Agreement  may be waived  only with the  written
         consent of the Purchaser.

                  (c)      The  obligations  of the  Purchaser and the rights of
         the Company  under this  Agreement  may be waived only with the written
         consent of the Company.

                  11.7     DELAYS OR  OMISSIONS.  It is agreed  that no delay or
omission to exercise any right,  power or remedy accruing to any party, upon any
breach,  default or  noncompliance  by another party under this Agreement or the
Related  Agreements,  shall impair any such right, power or remedy, nor shall it
be construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence  therein, or of or in any similar breach,  default or noncompliance
thereafter occurring.  All remedies,  either under this Agreement or the Related
Agreements,  by law or otherwise  afforded to any party, shall be cumulative and
not alternative.

                  11.8     NOTICES.  All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given:

                  (a)      upon personal delivery to the party to be notified;


                                       31
<PAGE>

                  (b)      when  sent by  confirmed  facsimile  if  sent  during
         normal  business hours of the  recipient,  and if not, then on the next
         business day;

                  (c)      four (4)  business  days  after  having  been sent by
         registered  or  certified  mail,  return  receipt  requested,   postage
         prepaid; or

                  (d)      one (1) business day after  deposit on a business day
         in  time  for  that  evening's  pickup  with  a  nationally  recognized
         overnight   courier,   specifying  next  day  delivery,   with  written
         verification of receipt.

All communications shall be sent as follows:

                                TRUEYOU.COM INC.
         IF TO THE COMPANY, TO:     501 Merritt 7, 5th Floor
                                    Norwalk, Connecticut 06851
                                    Attention:   Chief Financial Officer

                           Attention:   Chief Financial Officer
                           Facsimile:   Facsimile:   203-295-2102

                           WITH A COPY TO:

                                    Troutman Sanders LLP
                                    405 Lexington Avenue
                                    New York, New York 10174



                           Attention:   Edward R. Mandell
                           Facsimile:   212-704-6160

         IF TO THE PURCHASER, TO:   Laurus Master Fund, Ltd.
                                    c/o M&C Corporate Services Limited
                                    P.O. Box 309 GT
                                    Ugland House
                                    George Town
                                    South Church Street
                                    Grand Cayman, Cayman Islands
                                    Facsimile:   345-949-8080

                                    WITH A COPY TO:

                                    John E.  Tucker, Esq.
                                    825 Third Avenue 14th Floor
                                    New York, NY 10022
                                    Facsimile:   212-541-4434


                                       32
<PAGE>

or at such  other  address as the  Company or the  Purchaser  may  designate  by
written  notice to the other parties hereto given in accordance  herewith.

                  11.9     ATTORNEYS' FEES. In the event that any suit or action
is  instituted  to  enforce  any  provision  in this  Agreement  or any  Related
Agreement,  the  prevailing  party in such dispute  shall be entitled to recover
from the losing party all fees,  costs and  expenses of  enforcing  any right of
such  prevailing  party  under or with  respect to this  Agreement  and/or  such
Related  Agreement,  including,  without  limitation,  such  reasonable fees and
expenses of attorneys and accountants,  which shall include, without limitation,
all fees, costs and expenses of appeals.

                  11.10    TITLES AND SUBTITLES.  The titles of the sections and
subsections of this Agreement and the Related  Agreements are for convenience of
reference only and are not to be considered in construing  this Agreement or any
Related Agreement.

                  11.11    FACSIMILE SIGNATURES; COUNTERPARTS. This Agreement or
any Related Agreement may be executed by facsimile  signatures and in any number
of  counterparts  of any such  document or any of its signature  pages,  each of
which shall be an original,  but all of which  together for such document  shall
constitute one agreement.

                  11.12    BROKER'S FEES.  Except as set forth on Schedule 11.12
hereof,  each  party  hereto  represents  and  warrants  that no agent,  broker,
investment banker,  person or firm acting on behalf of or under the authority of
such party  hereto is or will be entitled to any broker's or finder's fee or any
other  commission  directly or indirectly in  connection  with the  transactions
contemplated  herein.  Each party hereto  further agrees to indemnify each other
party for any  claims,  losses or  expenses  incurred  by such other  party as a
result of the representation in this Section 11.12 being untrue.

                  11.13    CONSTRUCTION.  Each party acknowledges that its legal
counsel  participated  in the  preparation  of this  Agreement  and the  Related
Agreements  and,  therefore,  stipulates  that  the  rule of  construction  that
ambiguities  are to be resolved  against the drafting party shall not be applied
in the  interpretation  of this Agreement or any Related  Agreement to favor any
party against the other.

                  11.14

             [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK


                                       33
<PAGE>

IN WITNESS  WHEREOF,  the parties hereto have executed the  SECURITIES  PURCHASE
AGREEMENT as of the date set forth in the first paragraph hereof.


COMPANY:                                    PURCHASER:

TRUEYOU.COM INC.                            LAURUS MASTER FUND, LTD.


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

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

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


                                       34
<PAGE>

                                    EXHIBIT A

                                SECURED TERM NOTE





                                      A-1
<PAGE>

                                    EXHIBIT B

                                     WARRANT





                                      B-1
<PAGE>

                                    EXHIBIT C

                                ESCROW AGREEMENT





                                      D-1