Exhibit 10.1


                          SECURITIES PURCHASE AGREEMENT


     SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of May 30, 2006,
by  and  among  Pediatric  Prosthetics,  Inc.,  an  Idaho  corporation,  with
headquarters  located  at  12926  Willowchase  Drive,  Houston,  TX  77070  (the
"COMPANY"),  and  each of the purchasers set forth on the signature pages hereto
(the  "BUYERS").

     WHEREAS:

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

     B.  Buyers  desire  to  purchase and the Company desires to issue and sell,
upon the terms and conditions set forth in this Agreement 6% secured convertible
notes  of  the  Company,  in  the  form  attached  hereto as EXHIBIT "A", in the
aggregate  principal  amount  of  One  Million  Five  Hundred  Thousand  Dollars
($1,500,000)  (together  with  any note(s) issued in replacement thereof or as a
dividend  thereon or otherwise with respect thereto in accordance with the terms
thereof,  the "NOTES"), convertible into shares of common stock, par value $.001
per  share,  of  the Company (the "COMMON STOCK"), upon the terms and subject to
the limitations and conditions set forth in such Notes and warrants, in the form
attached  hereto  as  EXHIBIT "B", to purchase 50,000,000 shares of Common Stock
(the  "WARRANTS").

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

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

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

          1.  PURCHASE  AND  SALE  OF  NOTES  AND  WARRANTS.
              ---------------------------------------

               A.  PURCHASE  OF  NOTES  AND  WARRANTS.  On  the Closing Date (as
                   ----------------------------------
          defined  below),  the  Company  shall issue and sell to each Buyer and
          each  Buyer  severally  agrees  to  purchase  from  the  Company  such

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          principal  amount  of  Notes  and  number  of Warrants as is set forth
          immediately  below  such  Buyer's  name on the signature pages hereto.

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

               C.  CLOSING DATE. Subject to the satisfaction (or written waiver)
                   ------------
          of  the conditions thereto set forth in Section 6 and Section 7 below,
          the  date  and  time  of  the  issuance  and sale of the Notes and the
          Warrants  pursuant  to  this  Agreement  (the "CLOSING DATE") shall be
          12:00  noon,  Eastern  Standard  Time  on  May 30, 2006, or such other
          mutually  agreed  upon  time.  The  closing  of  the  transactions
          contemplated  by  this  Agreement  (the  "CLOSING") shall occur on the
          Closing  Date  at  such  location  as may be agreed to by the parties.

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

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

               B.  ACCREDITED  INVESTOR  STATUS.  The  Buyer  is  an "accredited
                   ----------------------------
          investor"  as  that term is defined in Rule 501(a) of Regulation D (an
          "ACCREDITED  INVESTOR").

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

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               D.  INFORMATION.  The  Buyer and its advisors, if any, have been,
                   -----------
          and  for  so  long  as  the Notes and Warrants remain outstanding will
          continue to be, furnished with all materials relating to the business,
          finances  and  operations of the Company and materials relating to the
          offer  and  sale  of  the  Securities which have been requested by the
          Buyer  or its advisors. The Buyer and its advisors, if any, have been,
          and  for  so  long  as  the Notes and Warrants remain outstanding will
          continue  to  be,  afforded  the  opportunity  to ask questions of the
          Company.  Notwithstanding the foregoing, the Company has not disclosed
          to  the Buyer any material nonpublic information and will not disclose
          such  information  unless  such information is disclosed to the public
          prior  to  or promptly following such disclosure to the Buyer. Neither
          such  inquiries nor any other due diligence investigation conducted by
          Buyer or any of its advisors or representatives shall modify, amend or
          affect  Buyer's  right  to  rely  on the Company's representations and
          warranties  contained  in  Section 3 below. The Buyer understands that
          its  investment  in  the  Securities  involves a significant degree of
          risk.

               E.  GOVERNMENTAL  REVIEW.  The  Buyer  understands that no United
                   --------------------
          States federal or state agency or any other government or governmental
          agency  has  passed  upon or made any recommendation or endorsement of
          the  Securities.

               F.  TRANSFER  OR  RE-SALE.  The  Buyer understands that except as
                   ---------------------
          provided  in the Registration Rights Agreement, the sale or re-sale of
          the Securities has not been and is not being registered under the 1933
          Act  or  any  applicable state securities laws, and the Securities may
          not  be  transferred  unless  the  Securities  are sold pursuant to an
          effective  registration  statement under the 1933 Act, the Buyer shall
          have  delivered  to the Company an opinion of counsel that shall be in
          form,  substance  and  scope  customary  for  opinions  of  counsel in
          comparable  transactions  to the effect that the Securities to be sold
          or  transferred  may  be  sold or transferred pursuant to an exemption
          from  such  registration,  which  opinion  shall  be  accepted  by the
          Company,  the Securities are sold or transferred to an "affiliate" (as
          defined  in  Rule  144  promulgated under the 1933 Act (or a successor
          rule)  ("RULE  144"))  of  the  Buyer  who agrees to sell or otherwise
          transfer  the Securities only in accordance with this Section 2(f) and
          who  is  an  Accredited  Investor, the Securities are sold pursuant to
          Rule  144,  or  the Securities are sold pursuant to Regulation S under
          the  1933  Act  (or  a successor rule) ("REGULATION S"), and the Buyer
          shall  have  delivered to the Company an opinion of counsel that shall
          be  in  form, substance and scope customary for opinions of counsel in
          corporate  transactions,  which  opinion  shall  be  accepted  by  the
          Company; (ii) any sale of such Securities made in reliance on Rule 144
          may  be  made  only  in  accordance  with  the  terms of said Rule and
          further,  if  said  Rule  is  not  applicable,  any  re-sale  of  such
          Securities  under  circumstances  in  which  the seller (or the person
          through  whom the sale is made) may be deemed to be an underwriter (as
          that term is defined in the 1933 Act) may require compliance with some
          other exemption under the 1933 Act or the rules and regulations of the
          SEC  thereunder; and (iii) neither the Company nor any other person is
          under any obligation to register such Securities under the 1933 Act or
          any  state  securities laws or to comply with the terms and conditions
          of  any exemption thereunder (in each case, other than pursuant to the
          Registration  Rights  Agreement).  Notwithstanding  the  foregoing  or
          anything  else contained herein to the contrary, the Securities may be
          pledged as collateral in connection with a bona fide margin account or
                                                     ---- ----
          other  lending  arrangement.  In  the  event that the Company does not
          accept  the  opinion  of counsel provided by the Buyer with respect to
          the transfer of Securities pursuant to an exemption from registration,
          such  as  Rule  144  or Regulation S, within five (5) business days of

<PAGE>

          delivery  of the opinion to the Company unless there is a legal reason
          for  not  accepting  the  opinion,  the Company shall pay to the Buyer
          liquidated  damages  of  two percent (2%) of the outstanding amount of
          the  Notes  per  month  plus accrued and unpaid interest on the Notes,
          prorated  for  partial  months, in cash or shares at the option of the
          Company  ("STANDARD LIQUIDATED DAMAGES AMOUNT"). If the Company elects
          to  be  pay the Standard Liquidated Damages Amount in shares of Common
          Stock, such shares shall be issued at the Conversion Price at the time
          of  payment.

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

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

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

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

               I.  RESIDENCY.  The  Buyer  is a resident of the jurisdiction set
                   ---------
          forth  immediately  below  such  Buyer's  name  on the signature pages
          hereto.

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          3.  REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.  The  Company
              --------------------------------------------------
     represents  and  warrants  to  each  Buyer  that:

               A.  ORGANIZATION  AND  QUALIFICATION. The Company and each of its
                   --------------------------------
          Subsidiaries  (as  defined  below),  if  any,  is  a  corporation duly
          organized, validly existing and in good standing under the laws of the
          jurisdiction  in  which  it  is  incorporated,  with  full  power  and
          authority  (corporate  and  other)  to own, lease, use and operate its
          properties  and  to  carry  on  its  business  as and where now owned,
          leased,  used, operated and conducted. SCHEDULE 3(A) sets forth a list
          of  all  of  the  Subsidiaries  of the Company and the jurisdiction in
          which  each  is incorporated. The Company and each of its Subsidiaries
          is  duly  qualified  as a foreign corporation to do business and is in
          good  standing  in every jurisdiction in which its ownership or use of
          property  or  the  nature  of  the business conducted by it makes such
          qualification necessary except where the failure to be so qualified or
          in  good  standing would not have a Material Adverse Effect. "MATERIAL
          ADVERSE  EFFECT" means any of (i) a material and adverse effect on the
          legality,  validity  or  enforceability  of  any  document executed in
          connection  with this financing, (ii) a material and adverse effect on
          the  results  of  operations, assets, prospects, business or condition
          (financial or otherwise) of the Company and the Subsidiaries, taken as
          a  whole,  or  (iii) an adverse impairment to the Company's ability to
          perform  under  any  of the documents executed in connection with this
          financing. "SUBSIDIARIES" means any corporation or other organization,
          whether  incorporated  or  unincorporated,  in which the Company owns,
          directly  or  indirectly,  any  equity  or  other  ownership interest.

               B.  AUTHORIZATION; ENFORCEMENT. (i) The Company has all requisite
                   --------------------------
          corporate  power  and  authority  to  enter  into  and  perform  this
          Agreement,  the  Registration  Rights  Agreement,  the  Notes  and the
          Warrants  and  to  consummate the transactions contemplated hereby and
          thereby  and  to  issue  the  Securities, in accordance with the terms
          hereof and thereof, (ii) the execution and delivery of this Agreement,
          the  Registration  Rights Agreement, the Notes and the Warrants by the
          Company  and  the  consummation by it of the transactions contemplated
          hereby  and thereby (including without limitation, the issuance of the
          Notes  and  the Warrants and the issuance and reservation for issuance
          of  the  Conversion Shares and Warrant Shares issuable upon conversion
          or  exercise thereof) have been duly authorized by the Company's Board
          of  Directors  and no further consent or authorization of the Company,
          its  Board  of  Directors, or its shareholders is required, (iii) this
          Agreement  has  been duly executed and delivered by the Company by its
          authorized  representative,  and such authorized representative is the
          true and official representative with authority to sign this Agreement
          and  the  other documents executed in connection herewith and bind the
          Company  accordingly,  and  (iv)  this Agreement constitutes, and upon
          execution  and  delivery  by  the  Company  of the Registration Rights
          Agreement,  the  Notes and the Warrants, each of such instruments will
          constitute,  a  legal,  valid  and  binding  obligation of the Company
          enforceable  against  the  Company  in  accordance  with  its  terms.

               C.  CAPITALIZATION. As of the date hereof, the authorized capital
                   --------------
          stock  of  the Company consists of 100,000,000 shares of common stock,
          of  which 97,828,462 shares are issued and outstanding, [ ] shares are
          reserved  for issuance pursuant to the Company's stock option plans, [
          ]  shares are reserved for issuance pursuant to securities (other than
          the  Notes  and  the Warrants) exercisable for, or convertible into or
          exchangeable  for  shares  of  Common Stock and 120,312,500 shares are
          reserved  for issuance upon conversion of the Notes and the Additional
          Notes  and the Warrants and Additional Warrants (as defined in Section

<PAGE>

          4(1))  (subject  to  adjustment pursuant to the Company's covenant set
          forth in Section 4(n) below. No shares of capital stock of the Company
          are  subject  to  preemptive rights or any other similar rights of the
          shareholders  of  the  Company  or  any  liens or encumbrances imposed
          through  the  actions  or  failure  to  act  of the Company. Except as
          disclosed  in  SCHEDULE  3(C),  as  of  the  effective  date  of  this
          Agreement,  (i)  there  are  no  outstanding options, warrants, scrip,
          rights  to  subscribe  for,  puts,  calls,  rights  of  first refusal,
          agreements,  understandings,  claims or other commitments or rights of
          any  character  whatsoever  relating  to,  or  securities  or  rights
          convertible  into  or  exchangeable for any shares of capital stock of
          the  Company  or any of its Subsidiaries, or arrangements by which the
          Company  or  any  of  its Subsidiaries is or may become bound to issue
          additional  shares  of  capital  stock  of  the  Company or any of its
          Subsidiaries, (ii) there are no agreements or arrangements under which
          the  Company  or  any of its Subsidiaries is obligated to register the
          sale  of any of its or their securities under the 1933 Act (except the
          Registration Rights Agreement) and (iii) there are no anti-dilution or
          price  adjustment  provisions  contained in any security issued by the
          Company  (or  in  any  agreement providing rights to security holders)
          that will be triggered by the issuance of the Notes, the Warrants, the
          Conversion  Shares or Warrant Shares. The Company has furnished to the
          Buyer  true  and  correct  copies  of  the  Company's  Certificate  of
          Incorporation  as  in  effect  on  the  date  hereof  ("CERTIFICATE OF
          INCORPORATION"),  the  Company's  By-laws,  as  in  effect on the date
          hereof  (the  "BY-LAWS"),  and the terms of all securities convertible
          into  or  exercisable for Common Stock of the Company and the material
          rights  of  the  holders thereof in respect thereto. The Company shall
          provide  the Buyer with a written update of this representation signed
          by  the Company's Chief Executive or Chief Financial Officer on behalf
          of  the  Company  as  of  the  Closing  Date.

               D.  ISSUANCE  OF  SHARES.  Subject  to  Stockholder  Approval (as
                   --------------------
          defined in Section 4(n)), the Conversion Shares and Warrant Shares are
          duly  authorized and reserved for issuance and, upon conversion of the
          Notes and exercise of the Warrants in accordance with their respective
          terms, will be validly issued, fully paid and non-assessable, and free
          from  all  taxes,  liens,  claims and encumbrances with respect to the
          issue  thereof  and shall not be subject to preemptive rights or other
          similar  rights  of  shareholders  of  the Company and will not impose
          personal  liability  upon  the  holder  thereof.

               E.  ACKNOWLEDGMENT  OF  DILUTION.  The  Company  understands  and
                   ----------------------------
          acknowledges  the potentially dilutive effect to the Common Stock upon
          the  issuance  of  the  Conversion  Shares  and  Warrant  Shares  upon
          conversion  of  the  Note  or  exercise  of  the Warrants. The Company
          further  acknowledges  that  its obligation to issue Conversion Shares
          and  Warrant  Shares  upon  conversion of the Notes or exercise of the
          Warrants in accordance with this Agreement, the Notes and the Warrants
          is  absolute  and unconditional regardless of the dilutive effect that
          such  issuance  may  have  on  the  ownership  interests  of  other
          shareholders  of  the  Company.

               F.  NO CONFLICTS. Subject to Stockholder Approval, the execution,
                   ------------
          delivery  and  performance  of this Agreement, the Registration Rights
          Agreement,  the  Notes  and  the  Warrants  by  the  Company  and  the
          consummation  by  the  Company of the transactions contemplated hereby
          and  thereby  (including,  without  limitation,  the  issuance  and
          reservation  for issuance of the Conversion Shares and Warrant Shares)
          will  not  (i) conflict with or result in a violation of any provision
          of  the  Certificate  of  Incorporation  or By-laws or (ii) violate or
          conflict  with,  or  result  in  a  breach  of  any  provision  of, or

<PAGE>

          constitute  a  default (or an event which with notice or lapse of time
          or both could become a default) under, or give to others any rights of
          termination,  amendment,  acceleration  or  cancellation  of,  any
          agreement,  indenture,  patent,  patent license or instrument to which
          the  Company  or  any  of its Subsidiaries is a party, or (iii) to the
          Company's  knowledge,  result  in  a  violation  of  any  law,  rule,
          regulation,  order,  judgment  or  decree (including federal and state
          securities laws and regulations and regulations of any self-regulatory
          organizations  to  which  the  Company  or its securities are subject)
          applicable  to  the Company or any of its Subsidiaries or by which any
          property  or  asset of the Company or any of its Subsidiaries is bound
          or  affected  (except  for  such  conflicts,  defaults,  terminations,
          amendments,  accelerations, cancellations and violations as would not,
          individually  or  in  the  aggregate, have a Material Adverse Effect).
          Neither the Company nor any of its Subsidiaries is in violation of its
          Certificate  of  Incorporation,  By-laws  or  other  organizational
          documents  and  neither  the Company nor any of its Subsidiaries is in
          default  (and no event has occurred which with notice or lapse of time
          or  both  could put the Company or any of its Subsidiaries in default)
          under,  and  neither the Company nor any of its Subsidiaries has taken
          any  action or failed to take any action that would give to others any
          rights of termination, amendment, acceleration or cancellation of, any
          agreement,  indenture or instrument to which the Company or any of its
          Subsidiaries  is  a  party  or  by which any property or assets of the
          Company  or  any  of its Subsidiaries is bound or affected, except for
          possible defaults as would not, individually or in the aggregate, have
          a  Material  Adverse  Effect.  The  businesses  of the Company and its
          Subsidiaries,  if  any,  are  not  being  conducted,  and shall not be
          conducted  so long as a Buyer owns any of the Securities, in violation
          of any law, ordinance or regulation of any governmental entity. Except
          as  specifically  contemplated by this Agreement and as required under
          the  1933 Act and any applicable state securities laws, the Company is
          not required to obtain any consent, authorization or order of, or make
          any  filing  or  registration  with,  any  court, governmental agency,
          regulatory agency, self regulatory organization or stock market or any
          third  party in order for it to execute, deliver or perform any of its
          obligations  under  this Agreement, the Registration Rights Agreement,
          the  Notes  or  the  Warrants  in  accordance with the terms hereof or
          thereof or to issue and sell the Notes and Warrants in accordance with
          the terms hereof and to issue the Conversion Shares upon conversion of
          the Notes and the Warrant Shares upon exercise of the Warrants. Except
          as  disclosed  in SCHEDULE 3(F), all consents, authorizations, orders,
          filings  and  registrations  which  the  Company is required to obtain
          pursuant  to  the preceding sentence have been obtained or effected on
          or  prior  to  the  date  hereof.

               G.  SEC  DOCUMENTS;  FINANCIAL STATEMENTS. Except as disclosed in
                   -------------------------------------
          SCHEDULE  3(G),  since  December 31, 2005 the Company has timely filed
          all reports, schedules, forms, statements and other documents required
          to  be filed by it with the SEC pursuant to the reporting requirements
          of  the  Securities  Exchange Act of 1934, as amended (the "1934 ACT")
          (all  of the foregoing filed prior to the date hereof and all exhibits
          included  therein  and  financial statements and schedules thereto and
          documents  (other  than  exhibits  to  such documents) incorporated by
          reference  therein,  being  hereinafter referred to herein as the "SEC
          DOCUMENTS").  As of their respective dates, the SEC Documents complied
          in all material respects with the requirements of the 1934 Act and the
          rules  and regulations of the SEC promulgated thereunder applicable to
          the  SEC  Documents,  and  none of the SEC Documents, at the time they
          were  filed with the SEC, contained any untrue statement of a material
          fact or omitted to state a material fact required to be stated therein

<PAGE>

          or  necessary in order to make the statements therein, in light of the
          circumstances  under which they were made, not misleading. None of the
          statements made in any such SEC Documents is, or has been, required to
          be amended or updated under applicable law (except for such statements
          as  have  been amended or updated in subsequent filings prior the date
          hereof). As of their respective dates, the financial statements of the
          Company  included  in  the  SEC  Documents  complied as to form in all
          material  respects  with  applicable  accounting  requirements and the
          published  rules and regulations of the SEC with respect thereto. Such
          financial  statements  have  been  prepared  in accordance with United
          States generally accepted accounting principles, consistently applied,
          during  the periods involved (except (i) as may be otherwise indicated
          in such financial statements or the notes thereto, or (ii) in the case
          of  unaudited  interim  statements, to the extent they may not include
          footnotes  or  may  be  condensed  or  summary  statements) and fairly
          present  in  all material respects the consolidated financial position
          of  the  Company  and  its  consolidated  Subsidiaries as of the dates
          thereof  and  the  consolidated  results  of their operations and cash
          flows  for  the  periods then ended (subject, in the case of unaudited
          statements, to normal year-end audit adjustments). Except as set forth
          in  the  financial  statements  of  the  Company  included  in the SEC
          Documents,  the  Company  has no liabilities, contingent or otherwise,
          other than (i) liabilities incurred in the ordinary course of business
          subsequent  to  December 31, 2005 and (ii) obligations under contracts
          and  commitments  incurred  in the ordinary course of business and not
          required  under  generally  accepted  accounting  principles  to  be
          reflected  in such financial statements, which, individually or in the
          aggregate,  are  not  material to the financial condition or operating
          results  of  the  Company.

               H. ABSENCE OF CERTAIN CHANGES. Since December 31, 2005, there has
                  --------------------------
          been no material adverse change and no material adverse development in
          the  assets,  liabilities, business, properties, operations, financial
          condition, results of operations or prospects of the Company or any of
          its  Subsidiaries.

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

               J.  PATENTS,  COPYRIGHTS,  ETC.  The  Company  and  each  of  its
                   --------------------------
          Subsidiaries owns or possesses the requisite licenses or rights to use
          all patents, patent applications, patent rights, inventions, know-how,
          trade  secrets,  trademarks,  trademark  applications,  service marks,
          service  names,  trade  names and copyrights ("INTELLECTUAL PROPERTY")
          necessary  to  enable it to conduct its business as now operated (and,
          except  as  set  forth  in  SCHEDULE  3(J)  hereof, to the best of the
          Company's  knowledge,  as presently contemplated to be operated in the
          future);  there  is no claim or action by any person pertaining to, or
          proceeding  pending,  or  to the Company's knowledge threatened, which
          challenges the right of the Company or of a Subsidiary with respect to
          any  Intellectual  Property  necessary  to  enable  it  to conduct its
          business  as  now  operated (and, except as set forth in SCHEDULE 3(J)

<PAGE>

          hereof,  to  the  best  of  the  Company's  knowledge,  as  presently
          contemplated  to  be  operated  in  the  future);  to  the best of the
          Company's  knowledge,  the  Company's or its Subsidiaries' current and
          intended  products,  services  and  processes  do  not infringe on any
          Intellectual  Property  or  other  rights  held by any person; and the
          Company is unaware of any facts or circumstances which might give rise
          to any of the foregoing. The Company and each of its Subsidiaries have
          taken  reasonable  security  measures  to  protect  the  secrecy,
          confidentiality  and  value  of  their  Intellectual  Property.

               K.  NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Company nor
                   ------------------------------------
          any  of its Subsidiaries is subject to any charter, corporate or other
          legal  restriction, or any judgment, decree, order, rule or regulation
          which  in the judgment of the Company's officers has or is expected in
          the  future to have a Material Adverse Effect. Neither the Company nor
          any  of its Subsidiaries is a party to any contract or agreement which
          in the judgment of the Company's officers has or is expected to have a
          Material  Adverse  Effect.

               L.  TAX STATUS. Except as set forth on SCHEDULE 3(L), the Company
                   ----------
          and  each of its Subsidiaries has made or filed all federal, state and
          foreign  income  and  all  other tax returns, reports and declarations
          required  by  any jurisdiction to which it is subject (unless and only
          to  the  extent  that the Company and each of its Subsidiaries has set
          aside  on  its books provisions reasonably adequate for the payment of
          all  unpaid  and  unreported  taxes)  and has paid all taxes and other
          governmental  assessments  and  charges  that  are material in amount,
          shown  or  determined  to  be  due  on  such  returns,  reports  and
          declarations,  except  those being contested in good faith and has set
          aside  on  its books provisions reasonably adequate for the payment of
          all taxes for periods subsequent to the periods to which such returns,
          reports  or  declarations  apply.  There  are  no  unpaid taxes in any
          material  amount  claimed  to  be  due  by the taxing authority of any
          jurisdiction, and the officers of the Company know of no basis for any
          such  claim. The Company has not executed a waiver with respect to the
          statute of limitations relating to the assessment or collection of any
          foreign,  federal, state or local tax. Except as set forth on SCHEDULE
          3(L),  none of the Company's tax returns is presently being audited by
          any  taxing  authority.

               M. CERTAIN TRANSACTIONS. Except as set forth on SCHEDULE 3(M) and
                  --------------------
          except  for arm's length transactions pursuant to which the Company or
          any  of  its  Subsidiaries  makes  payments  in the ordinary course of
          business  upon  terms no less favorable than the Company or any of its
          Subsidiaries  could obtain from third parties and other than the grant
          of  stock  options  disclosed  on SCHEDULE 3(C), none of the officers,
          directors,  or  employees  of  the Company is presently a party to any
          transaction  with  the  Company or any of its Subsidiaries (other than
          for  services  as  employees,  officers  and directors), including any
          contract,  agreement or other arrangement providing for the furnishing
          of  services  to  or  by,  providing  for  rental  of real or personal
          property  to  or  from, or otherwise requiring payments to or from any
          officer,  director  or  such  employee  or,  to  the  knowledge of the
          Company,  any corporation, partnership, trust or other entity in which
          any officer, director, or any such employee has a substantial interest
          or  is  an  officer,  director,  trustee  or  partner.

               N.  DISCLOSURE.  All  information  relating  to or concerning the
                   ----------
          Company  or  any  of  its Subsidiaries set forth in this Agreement and
          provided  to  the Buyers pursuant to Section 2(d) hereof and otherwise
          in  connection  with  the transactions contemplated hereby is true and
          correct  in  all  material respects and the Company has not omitted to

<PAGE>

          state any material fact necessary in order to make the statements made
          herein or therein, in light of the circumstances under which they were
          made,  not misleading. No event or circumstance has occurred or exists
          with respect to the Company or any of its Subsidiaries or its or their
          business,  properties,  prospects, operations or financial conditions,
          which,  under  applicable  law,  rule  or  regulation, requires public
          disclosure  or  announcement  by the Company but which has not been so
          publicly  announced  or  disclosed (assuming for this purpose that the
          Company's reports filed under the 1934 Act are being incorporated into
          an  effective  registration  statement  filed by the Company under the
          1933  Act).

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

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

               Q.  NO BROKERS. Except as set forth in SCHEDULE 3(Q), the Company
                   ----------
          has  taken  no action which would give rise to any claim by any person
          for  brokerage  commissions,  transaction  fees  or  similar  payments
          relating  to  this  Agreement or the transactions contemplated hereby.

               R.  PERMITS; COMPLIANCE. The Company and each of its Subsidiaries
                   -------------------
          is  in possession of all franchises, grants, authorizations, licenses,
          permits,  easements,  variances,  exemptions,  consents, certificates,
          approvals  and  orders  necessary  to  own,  lease  and  operate  its
          properties  and  to carry on its business as it is now being conducted
          (collectively,  the "COMPANY PERMITS"), and there is no action pending
          or,  to  the knowledge of the Company, threatened regarding suspension
          or cancellation of any of the Company Permits. Neither the Company nor
          any  of  its  Subsidiaries  is  in  conflict  with,  or  in default or
          violation  of,  any  of  the  Company  Permits,  except  for  any such
          conflicts,  defaults  or  violations  which,  individually  or  in the
          aggregate, would not reasonably be expected to have a Material Adverse
          Effect.  Since  December  31, 2004, neither the Company nor any of its
          Subsidiaries  has  received  any notification with respect to possible
          conflicts,  defaults  or  violations  of  applicable  laws, except for
          notices  relating to possible conflicts, defaults or violations, which
          conflicts,  defaults  or  violations would not have a Material Adverse
          Effect.

<PAGE>

               S.  ENVIRONMENTAL  MATTERS.
                   ----------------------

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

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

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

               T.  TITLE TO PROPERTY. The Company and its Subsidiaries have good
                   -----------------
          and  marketable  title in fee simple to all real property and good and
          marketable  title  to  all  personal  property  owned by them which is
          material  to the business of the Company and its Subsidiaries, in each
          case free and clear of all liens, encumbrances and defects except such
          as are described in SCHEDULE 3(T) or such as would not have a Material
          Adverse  Effect.  Any real property and facilities held under lease by
          the  Company  and  its  Subsidiaries  are  held  by  them under valid,
          subsisting  and  enforceable  leases with such exceptions as would not
          have  a  Material  Adverse  Effect.

               U.  INSURANCE.  The  Company  and  each  of  its Subsidiaries are
                   ---------
          insured  by  insurers  of  recognized financial responsibility against
          such losses and risks and in such amounts as management of the Company
          believes  to  be  prudent and customary in the businesses in which the

<PAGE>

          Company  and its Subsidiaries are engaged. Neither the Company nor any
          such  Subsidiary has any reason to believe that it will not be able to
          renew  its  existing  insurance  coverage  as  and  when such coverage
          expires  or to obtain similar coverage from similar insurers as may be
          necessary  to  continue  its  business at a cost that would not have a
          Material  Adverse  Effect.  The Company has provided to Buyer true and
          correct  copies  of  all policies relating to directors' and officers'
          liability  coverage,  errors  and  omissions  coverage, and commercial
          general  liability  coverage.

               V.  INTERNAL  ACCOUNTING  CONTROLS.  The  Company and each of its
                   ------------------------------
          Subsidiaries  maintain  a  system  of  internal  accounting  controls
          sufficient,  in  the  judgment of the Company's board of directors, to
          provide  reasonable  assurance  that  (i) transactions are executed in
          accordance  with management's general or specific authorizations, (ii)
          transactions  are  recorded  as  necessary  to  permit  preparation of
          financial  statements in conformity with generally accepted accounting
          principles  and  to  maintain  asset  accountability,  (iii) access to
          assets  is  permitted  only in accordance with management's general or
          specific authorization and (iv) the recorded accountability for assets
          is  compared  with  the  existing  assets  at reasonable intervals and
          appropriate  action  is  taken  with  respect  to  any  differences.

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

               X. SOLVENCY. The Company (after giving effect to the transactions
                  --------
          contemplated  by  this  Agreement) is solvent (i.e., its assets have a
                                                         ----
          fair market value in excess of the amount required to pay its probable
          liabilities on its existing debts as they become absolute and matured)
          and  currently  the  Company  has no information that would lead it to
          reasonably conclude that the Company would not, after giving effect to
          the  transaction  contemplated by this Agreement, have the ability to,
          nor  does  it  intend to take any action that would impair its ability
          to,  pay  its debts from time to time incurred in connection therewith
          as  such  debts  mature.

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

               Z.  CERTAIN  REGISTRATION  MATTERS.  Assuming the accuracy of the
                   ------------------------------
          Buyers'  representations  and  warranties  set  forth in Section 3, no
          registration  under  the  Securities Act is required for the offer and
          sale of the Conversion Shares and Warrant Shares by the Company to the
          Buyers  under  the  transaction  documents.  Except  as  specified  in
          SCHEDULE  3(Z),  the Company has not granted or agreed to grant to any
          Person any rights (including "piggy-back" registration rights) to have

<PAGE>

          any  securities  of  the Company registered with the Commission or any
          other  governmental  authority  that  have  not  been  satisfied.

               AA.  BREACH  OF REPRESENTATIONS AND WARRANTIES BY THE COMPANY. If
                    --------------------------------------------------------
          the  Company  materially  breaches  any  of  the  representations  or
          warranties  set  forth in this Section 3, and in addition to any other
          remedies  available  to  the  Buyers  pursuant  to this Agreement, the
          Company  shall pay to the Buyer the Standard Liquidated Damages Amount
          in  cash  or  in  shares of Common Stock at the option of the Company,
          until  such breach is cured. If the Company elects to pay the Standard
          Liquidated  Damages  Amounts  in  shares  of Common Stock, such shares
          shall  be  issued  at  the  Conversion  Price  at the time of payment.

          4.  COVENANTS.
              ---------

               A.  BEST  EFFORTS.  The  parties  shall use their best efforts to
                   -------------
          satisfy  timely each of the conditions described in Section 6 and 7 of
          this  Agreement.

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

               C.  REPORTING  STATUS;  ELIGIBILITY TO USE FORM S-3, SB-2 OR FORM
                   -------------------------------------------------------------
          S-1.  The  Company's Common Stock is registered under Section 12(g) of
          ---
          the  1934  Act.  The Company represents and warrants that it meets the
          requirements  for  the  use  of  Form  S-3  (or  if the Company is not
          eligible  for the use of Form S-3 as of the Filing Date (as defined in
          the  Registration  Rights  Agreement), the Company may use the form of
          registration  for  which it is eligible at that time) for registration
          of  the sale by the Buyer of the Registrable Securities (as defined in
          the  Registration Rights Agreement). So long as the Buyer beneficially
          owns  any of the Securities, the Company shall timely file all reports
          required  to  be  filed with the SEC pursuant to the 1934 Act, and the
          Company  shall  not terminate its status as an issuer required to file
          reports  under  the  1934  Act  even  if the 1934 Act or the rules and
          regulations  thereunder  would  permit  such  termination. The Company
          further agrees to file all reports required to be filed by the Company
          with  the  SEC  in  a  timely  manner  so  as  to become eligible, and
          thereafter  to  maintain its eligibility, for the use of Form S-3. The
          Company  shall  issue a press release describing the material terms of
          the  transaction  contemplated hereby as soon as practicable following
          the  Closing  Date but in no event more than four (4) business days of
          the Closing Date, which press release shall be subject to prior review
          by  the  Buyers.  The Company agrees that such press release shall not
          disclose  the  name  of  the  Buyers  unless expressly consented to in
          writing  by  the  Buyers  or  unless  required  by  applicable  law or
          regulation,  and  then  only  to  the  extent  of  such  requirement.

               D.  USE  OF PROCEEDS. The Company shall use the net proceeds from
                   ----------------
          the  sale  of  the  Notes  and the Warrants in the manner set forth in
          SCHEDULE  4(D)  attached  hereto and made a part hereof and shall not,

<PAGE>

          directly  or  indirectly,  use  such  proceeds  for (i) any loan to or
          investment  in any other corporation, partnership, enterprise or other
          person  (except  in  connection  with its currently existing direct or
          indirect  Subsidiaries);  (ii)  the satisfaction of any portion of the
          Company's  debt  (other  than  payment  of  trade payables and accrued
          expenses  in  the  ordinary  course  of  the  Company's  business  and
          consistent  with prior past practices), or (iii) the redemption of any
          Common  Stock.

               E.  FUTURE  OFFERINGS. Subject to the exceptions described below,
                   -----------------
          the  Company  will  not,  without  the  prior  written  consent  of  a
          majority-in-interest  of  the  Buyers,  negotiate or contract with any
          party  to obtain additional equity financing (including debt financing
          with  an  equity  component)  that involves (A) the issuance of Common
          Stock  at  a  discount  to the market price of the Common Stock on the
          date  of  issuance  (taking  into account the value of any warrants or
          options to acquire Common Stock issued in connection therewith) or (B)
          the  issuance  of  convertible securities that are convertible into an
          indeterminate  number of shares of Common Stock or (C) the issuance of
          warrants  during  the  period  (the "LOCK-UP PERIOD") beginning on the
          Closing  Date and ending on the later of (i) two hundred seventy (270)
          days from the Closing Date and (ii) one hundred eighty (180) days from
          the  date  the  Registration Statement (as defined in the Registration
          Rights  Agreement) is declared effective (plus any days in which sales
          cannot  be  made  thereunder).  In addition, subject to the exceptions
          described  below,  the  Company  will not conduct any equity financing
          (including  debt with an equity component) ("FUTURE OFFERINGS") during
          the  period  beginning  on  the  Closing Date and ending two (2) years
          after  the  end  of  the  Lock-up  Period  unless  it shall have first
          delivered  to  each Buyer, at least twenty (20) business days prior to
          the  closing  of  such  Future Offering, written notice describing the
          proposed  Future  Offering, including the terms and conditions thereof
          and proposed definitive documentation to be entered into in connection
          therewith,  and providing each Buyer an option during the fifteen (15)
          day  period following delivery of such notice to purchase its pro rata
          share (based on the ratio that the aggregate principal amount of Notes
          purchased  by  it hereunder bears to the aggregate principal amount of
          Notes  purchased  hereunder)  of  the  securities being offered in the
          Future  Offering  on  the  same  terms  as contemplated by such Future
          Offering  (the  limitations  referred  to  in  this  sentence  and the
          preceding  sentence  are  collectively  referred  to  as  the "CAPITAL
          RAISING  LIMITATIONS").  In  the  event  the terms and conditions of a
          proposed  Future Offering are amended in any respect after delivery of
          the  notice to the Buyers concerning the proposed Future Offering, the
          Company  shall  deliver  a  new  notice  to  each Buyer describing the
          amended  terms and conditions of the proposed Future Offering and each
          Buyer  thereafter  shall  have  an  option during the fifteen (15) day
          period  following delivery of such new notice to purchase its pro rata
          share  of  the  securities  being  offered  on  the  same  terms  as
          contemplated  by  such  proposed  Future  Offering,  as  amended.  The
          foregoing  sentence  shall apply to successive amendments to the terms
          and  conditions  of  any proposed Future Offering. The Capital Raising
          Limitations shall not apply to any transaction involving (i) issuances
          of  securities  in  a  firm  commitment  underwritten  public offering
          (excluding  a  continuous offering pursuant to Rule 415 under the 1933
          Act,  an  equity  line  of  credit  or  similar financing arrangement)
          resulting  in  net proceeds to the Company of in excess of $1,500,000,
          or  (ii)  issuances  of  securities  as  consideration  for  a merger,
          consolidation  or  purchase  of  assets,  or  in  connection  with any
          strategic  partnership  or joint venture (the primary purpose of which
          is not to raise equity capital), or in connection with the disposition

<PAGE>

          or  acquisition  of a business, product or license by the Company. The
          Capital  Raising  Limitations  also shall not apply to the issuance of
          securities  upon  exercise  or  conversion  of  the Company's options,
          warrants  or  other  convertible securities outstanding as of the date
          hereof  or  to  the  grant  of  additional options or warrants, or the
          issuance  of  additional securities, under any Company stock option or
          restricted  stock  plan  approved  by the shareholders of the Company.

               F.  EXPENSES.  At the Closing, the Company shall reimburse Buyers
                   --------
          for  expenses  incurred  by  them  in connection with the negotiation,
          preparation, execution, delivery and performance of this Agreement and
          the  other  agreements  to  be  executed  in  connection  herewith
          ("Documents"),  including,  without  limitation,  attorneys'  and
          consultants'  fees  and  expenses, transfer agent fees, fees for stock
          quotation  services,  fees relating to any amendments or modifications
          of  the  Documents  or  any  consents  or waivers of provisions in the
          Documents,  fees  for  the  preparation of opinions of counsel, escrow
          fees,  and costs of restructuring the transactions contemplated by the
          Documents.  When  possible,  the Company must pay these fees directly,
          otherwise the Company must make immediate payment for reimbursement to
          the  Buyers  for all fees and expenses immediately upon written notice
          by  the  Buyer  or  the  submission  of an invoice by the Buyer If the
          Company  fails to reimburse the Buyer in full within ten (10) business
          days  of the written notice or submission of invoice by the Buyer, the
          Company  shall  pay  interest  on  the  total  amount  of  fees  to be
          reimbursed  at  a  rate  of  15%  per  annum.

               G.  FINANCIAL  INFORMATION.  The  Company  agrees  to  send  the
                   ----------------------
          following  reports  to each Buyer until such Buyer transfers, assigns,
          or  sells all of the Securities: within ten (10) days after the filing
          with the SEC, a copy of its Annual Report on Form 10-KSB its Quarterly
          Reports  on  Form  10-QSB  and any Current Reports on Form 8-K; within
          three  (3)  days after release, copies of all press releases issued by
          the Company or any of its Subsidiaries; and contemporaneously with the
          making  available or giving to the shareholders of the Company, copies
          of  any  notices  or  other information the Company makes available or
          gives  to  such  shareholders.

               H.  AUTHORIZATION  AND  RESERVATION  OF  SHARES.  Subject  to
                   -------------------------------------------
          Stockholder  Approval, the Company shall at all times have authorized,
          and  reserved  for  the  purpose  of  issuance, a sufficient number of
          shares  of Common Stock to provide for the full conversion or exercise
          of  the  outstanding Notes and Warrants and issuance of the Conversion
          Shares  and  Warrant  Shares  in  connection  therewith  (based on the
          Conversion  Price  of  the  Notes or Exercise Price of the Warrants in
          effect  from time to time) and as otherwise required by the Notes. The
          Company shall not reduce the number of shares of Common Stock reserved
          for  issuance  upon  conversion  of Notes and exercise of the Warrants
          without  the  consent  of  each  Buyer. The Company shall at all times
          maintain the number of shares of Common Stock so reserved for issuance
          at  an  amount ("RESERVED AMOUNT") equal to no less than two (2) times
          the  number that is then actually issuable upon full conversion of the
          Notes  and  Additional Notes and upon exercise of the Warrants and the
          Additional Warrants (based on the Conversion Price of the Notes or the
          Exercise Price of the Warrants in effect from time to time). If at any
          time  the number of shares of Common Stock authorized and reserved for
          issuance  ("AUTHORIZED  AND  RESERVED  SHARES")  is below the Reserved
          Amount,  the Company will promptly take all corporate action necessary
          to  authorize  and  reserve  a sufficient number of shares, including,
          without  limitation,  calling  a  special  meeting  of shareholders to
          authorize  additional  shares  to meet the Company's obligations under
          this Section 4(h), in the case of an insufficient number of authorized

<PAGE>

          shares,  obtain shareholder approval of an increase in such authorized
          number  of  shares, and voting the management shares of the Company in
          favor of an increase in the authorized shares of the Company to ensure
          that  the  number  of  authorized  shares  is  sufficient  to meet the
          Reserved  Amount.  If  the  Company  fails  to obtain such shareholder
          approval  within  forty-five (45) days following the date on which the
          number  of Reserved Amount exceeds the Authorized and Reserved Shares,
          the  Company shall pay to the Borrower the Standard Liquidated Damages
          Amount,  in  cash  or  in  shares of Common Stock at the option of the
          Buyer,  however, the Company shall have a 15 day period to cure before
          the  Buyer  can  collect Liquidated Damages. If the Buyer elects to be
          paid the Standard Liquidated Damages Amount in shares of Common Stock,
          such  shares  shall  be  issued at the Conversion Price at the time of
          payment.  In  order  to  ensure  that  the  Company  has  authorized a
          sufficient  amount of shares to meet the Reserved Amount at all times,
          the Company must deliver to the Buyer at the end of every month a list
          detailing  (1)  the current amount of shares authorized by the Company
          and  reserved  for  the  Buyer; and (2) amount of shares issuable upon
          conversion  of  the  Notes  and  upon  exercise of the Warrants and as
          payment  of interest accrued on the Notes for one year. If the Company
          fails to provide such list within five (5) business days of the end of
          each  month,  the  Company  shall  pay the Standard Liquidated Damages
          Amount,  in  cash  or  in  shares of Common Stock at the option of the
          Buyer, until the list is delivered. If the Buyer elects to be paid the
          Standard  Liquidated  Damages  Amount  in shares of Common Stock, such
          shares shall be issued at the Conversion Price at the time of payment.

               I.  LISTING.  [RESERVED]
                   -------

               J.  CORPORATE EXISTENCE. So long as a Buyer beneficially owns any
                   -------------------
          Notes  or Warrants, the Company shall maintain its corporate existence
          and  shall  not sell all or substantially all of the Company's assets,
          except  in  the  event  of a merger or consolidation or sale of all or
          substantially  all  of  the  Company's  assets, where the surviving or
          successor  entity  in  such  transaction  (i)  assumes  the  Company's
          obligations hereunder and under the agreements and instruments entered
          into  in connection herewith and (ii) is a publicly traded corporation
          whose  Common Stock is listed for trading on the OTCBB, Nasdaq, Nasdaq
          SmallCap,  NYSE  or  AMEX.

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

               L.  SUBSEQUENT INVESTMENT. The Company and the Buyers agree that,
                   ---------------------
          upon  the  filing  by  the Company of the Registration Statement to be
          filed  pursuant  to  the  Registration  Rights  Agreement (the "FILING
          DATE"),  the  Buyers  shall  purchase  additional  Notes  (the "FILING
          NOTES")  in  the  aggregate  principal amount of Four Hundred Thousand
          Dollars  ($400,000)  for  an  aggregate purchase price of Four Hundred
          Thousand  Dollars  ($400,000),  with  the  closing of such purchase to
          occur within five (5) days of the Filing Date; provided, however, that
                                                         --------  -------
          the  obligation  of each Buyer to purchase the Filing Notes is subject
          to  the  satisfaction,  at  or before the closing of such purchase and
          sale,  of  the  conditions set forth in Section 7. The Company and the
          Buyers  further  agree  that, upon the declaration of effectiveness of
          the  Registration  Statement  to be filed pursuant to the Registration
          Rights  Agreement  (the  "EFFECTIVE  DATE"), the Buyers shall purchase
          additional notes (the "EFFECTIVENESS NOTES" and, collectively with the

<PAGE>

          Filing  Notes,  the  "ADDITIONAL  NOTES")  in  the aggregate principal
          amount  of  Five  Hundred Thousand Dollars ($500,000) for an aggregate
          purchase  price  of Five Hundred Thousand Dollars ($500,000), with the
          closing  of  such  purchase  to  occur  within  five  (5)  days of the
          Effective  Date;  provided, however, that the obligation of each Buyer
                            --------  -------
          to purchase the Additional Notes is subject to the satisfaction, at or
          before  the  closing  of such purchase and sale, of the conditions set
          forth  in Section 7; and, provided, further, that there shall not have
          been a Material Adverse Effect as of such effective date. The terms of
          the  Additional  Notes shall be identical to the terms of the Notes to
          be  issued  on  the  Closing  Date.  The  Common  Stock underlying the
          Additional  Notes  shall  be Registrable Securities (as defined in the
          Registration  Rights  Agreement)  and  shall  be  included  in  the
          Registration Statement to be filed pursuant to the Registration Rights
          Agreement.

               M.  KEY  MAN INSURANCE. The Company shall use its best efforts to
                   ------------------
          obtain,  on or before fifteen (15) business days from the date hereof,
          key  man  life  insurance  on  Linda Putback-Bean and Kenneth W. Bean.

               N.  STOCKHOLDER  APPROVAL.  The  Company  shall  file  a proxy or
                   ---------------------
          information statement with the SEC no later than June 30, 2006 and use
          its  best  efforts  to  obtain,  on  or  before  August 15, 2006, such
          approvals  of  the  Company's stockholders as may be required to issue
          all of the shares of Common Stock issuable upon conversion or exercise
          of,  or  otherwise  with  respect  to,  the  Notes and the Warrants in
          accordance  with  Texas law and any applicable rules or regulations of
          the  OTCBB  and  Nasdaq,  either  through a reverse stock split of the
          Common  Stock  or  an increase in authorized capital (the "Stockholder
          Approval").  The  Company  shall  furnish  to each Buyer and its legal
          counsel  promptly  (but  in  no event less than two (2) business days)
          before  the  same  is  filed  with  the  SEC, one copy of the proxy or
          information  statement and any amendment thereto, and shall deliver to
          each Buyer promptly each letter written by or on behalf of the Company
          to  the  SEC  or the staff of the SEC, and each item of correspondence
          from  the  SEC  or the staff of the SEC, in each case relating to such
          proxy  or  information statement (other than any portion thereof which
          contains  information  for  which  the Company has sought confidential
          treatment). The Company will promptly (but in no event more than three
          (3)  business  days) respond to any and all comments received from the
          SEC  (which  comments shall promptly be made available to each Buyer).
          The  Company  shall comply with the filing and disclosure requirements
          of  Section  14  under the 1934 Act in connection with the Stockholder
          Approval.  The  Company  represents  and  warrants  that  its Board of
          Directors  has approved the proposal contemplated by this Section 4(l)
          and shall indicate such approval in the proxy or information statement
          used  in  connection  with  the  Stockholder  Approval.

               O.  RESTRICTION ON SHORT SALES. The Buyers agree that, so long as
                   --------------------------
          any of the Notes remain outstanding, but in no event less than two (2)
          years  from  the date hereof, the Buyers will not enter into or effect
          any  "short  sales"  (as such term is defined in Rule 3b-3 of the 1934
          Act)  of  the  Common Stock or hedging transaction which establishes a
          net  short  position  with  respect  to  the  Common  Stock.

               P.  BREACH  OF  COVENANTS.  If  the  Company  breaches any of the
                   ---------------------
          covenants  set  forth  in this Section 4, and in addition to any other
          remedies  available  to  the  Buyers  pursuant  to this Agreement, the
          Company  shall  pay  to  the  Buyers  the  Standard Liquidated Damages

<PAGE>

          Amount,  in  cash  or  in  shares of Common Stock at the option of the
          Company,  until such breach is cured. If the Company elects to pay the
          Standard  Liquidated  Damages  Amount  in shares, such shares shall be
          issued  at  the  Conversion  Price  at  the  time  of  payment.

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

<PAGE>

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

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

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

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

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

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

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

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

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

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

<PAGE>

          received  a  certificate  or  certificates,  executed  by  the  chief
          executive officer of the Company, dated as of the Closing Date, to the
          foregoing  effect  and  as  to such other matters as may be reasonably
          requested  by  such  Buyer  including, but not limited to certificates
          with  respect  to  the Company's Certificate of Incorporation, By-laws
          and  Board  of  Directors'  resolutions  relating  to the transactions
          contemplated  hereby.

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

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

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

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

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

          8.  GOVERNING  LAW;  MISCELLANEOUS.
              ------------------------------

               A.  GOVERNING  LAW. THIS AGREEMENT SHALL BE ENFORCED, GOVERNED BY
                   --------------
          AND  CONSTRUED  IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK
          APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
          STATE,  WITHOUT  REGARD  TO  THE  PRINCIPLES  OF CONFLICT OF LAWS. THE
          PARTIES  HERETO  HEREBY  SUBMIT  TO  THE EXCLUSIVE JURISDICTION OF THE
          UNITED  STATES  FEDERAL  COURTS  LOCATED  IN  NEW  YORK, NEW YORK WITH
          RESPECT  TO  ANY  DISPUTE ARISING UNDER THIS AGREEMENT, THE AGREEMENTS
          ENTERED  INTO  IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
          HEREBY  OR  THEREBY.  BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN
          INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH
          PARTIES  FURTHER  AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY
          REGISTERED FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
          SERVICE  OF  PROCESS  UPON  THE  PARTY IN ANY SUCH SUIT OR PROCEEDING.

<PAGE>

          NOTHING  HEREIN  SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN
          ANY  OTHER  MANNER  PERMITTED  BY LAW. BOTH PARTIES AGREE THAT A FINAL
          NON-APPEALABLE  JUDGMENT  IN  ANY  SUCH  SUIT  OR  PROCEEDING SHALL BE
          CONCLUSIVE  AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH
          JUDGMENT  OR  IN  ANY  OTHER  LAWFUL  MANNER. THE PARTY WHICH DOES NOT
          PREVAIL  IN  ANY  DISPUTE  ARISING  UNDER  THIS  AGREEMENT  SHALL  BE
          RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING REASONABLE ATTORNEYS'
          FEES,  INCURRED  BY  THE  PREVAILING  PARTY  IN  CONNECTION  WITH SUCH
          DISPUTE.

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

               C.  HEADINGS.  The headings of this Agreement are for convenience
                   --------
          of  reference  only  and  shall  not  form  part  of,  or  affect  the
          interpretation  of,  this  Agreement.

               D.  SEVERABILITY.  In  the  event  that  any  provision  of  this
                   ------------
          Agreement  is invalid or unenforceable under any applicable statute or
          rule  of  law,  then such provision shall be deemed inoperative to the
          extent  that it may conflict therewith and shall be deemed modified to
          conform  with  such statute or rule of law. Any provision hereof which
          may  prove invalid or unenforceable under any law shall not affect the
          validity  or  enforceability  of  any  other  provision  hereof.

               E.  ENTIRE  AGREEMENT;  AMENDMENTS.  This  Agreement  and  the
                   ------------------------------
          instruments  referenced herein contain the entire understanding of the
          parties  with  respect  to the matters covered herein and therein and,
          except  as  specifically  set  forth  herein  or  therein, neither the
          Company  nor the Buyer makes any representation, warranty, covenant or
          undertaking  with  respect  to  such  matters.  No  provision  of this
          Agreement  may  be  waived  or  amended other than by an instrument in
          writing  signed  by  the  party  to  be  charged  with  enforcement.

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

<PAGE>

                           If  to  the  Company:

                           Pediatric Prosthetics, Inc.
                           12926 Willowchase Drive
                           Houston, TX 77070
                           Attention:  Chief Executive Officer
                           Telephone:  (281) 897-1108
                           Facsimile:  (281)

                           With a copy to:

                           David M. Loev, Esq.
                           2777 Allen Parkway, Suite 1000
                           Houston, TX 77019
                           Attention:   David M. Loev, Esq.
                           Telephone:  (713) 524-4110
                           Facsimile:   (713)  524-4122

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

                           With  copy  to:

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


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

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

               H.  THIRD PARTY BENEFICIARIES. This Agreement is intended for the
                   -------------------------
          benefit  of  the  parties  hereto  and  their  respective  permitted
          successors  and  assigns,  and  is not for the benefit of, nor may any
          provision  hereof  be  enforced  by,  any  other  person.

               I.  SURVIVAL.  The  representations and warranties of the Company
                   --------
          and  the  agreements and covenants set forth in Sections 3, 4, 5 and 8
          shall  survive the closing hereunder notwithstanding any due diligence

<PAGE>

          investigation  conducted  by  or  on behalf of the Buyers. The Company
          agrees to indemnify and hold harmless each of the Buyers and all their
          officers,  directors,  employees and agents for loss or damage arising
          as  a  result  of  or  related  to any breach or alleged breach by the
          Company  of  any  of its representations, warranties and covenants set
          forth  in  Sections  3  and  4  hereof  or  any  of  its covenants and
          obligations under this Agreement or the Registration Rights Agreement,
          including  advancement  of  expenses  as  they  are  incurred.

               J.  PUBLICITY.  The Company and each of the Buyers shall have the
                   ---------
          right  to  review  a  reasonable period of time before issuance of any
          press  releases,  SEC,  OTCBB  or  NASD  filings,  or any other public
          statements  with  respect  to  the  transactions  contemplated hereby;
          provided,  however,  that  the  Company shall be entitled, without the
          --------   -------
          prior  approval  of  each  of the Buyers, to make any press release or
          SEC,  OTCBB  (or other applicable trading market) or NASD filings with
          respect  to  such  transactions  as  is required by applicable law and
          regulations  (although  each  of  the Buyers shall be consulted by the
          Company in connection with any such press release prior to its release
          and  shall be provided with a copy thereof and be given an opportunity
          to  comment  thereon).

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

               L.  NO  STRICT  CONSTRUCTION. The language used in this Agreement
                   ------------------------
          will  be  deemed  to  be the language chosen by the parties to express
          their  mutual  intent,  and  no  rules  of strict construction will be
          applied  against  any  party.

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

<PAGE>

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



PEDIATRIC  PROSTHETICS,  INC.

/s/ Linda Putback-Bean
--------------------------------------
Linda  Putback-Bean
Chief  Executive  Officer


AJW  PARTNERS,  LLC
By:  SMS  Group,  LLC

/s/ Corey S. Ribotsky
--------------------------------------
Corey  S.  Ribotsky
Manager


RESIDENCE:  Delaware

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

AGGREGATE  SUBSCRIPTION  AMOUNT:

     Aggregate Principal Amount of Notes:             $________
     Number of Warrants:                               ________
     Aggregate  Purchase  Price:                      $________

<PAGE>

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


/s/ Corey S. Ribotsky
-------------------------------------
Corey  S.  Ribotsky
Manager


RESIDENCE:   Cayman  Islands

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

AGGREGATE  SUBSCRIPTION  AMOUNT:

     Aggregate  Principal  Amount  of  Notes:        $_______
     Number  of  Warrants:                            _______
     Aggregate  Purchase  Price:                     $_______

<PAGE>

AJW QUALIFIED PARTNERS, LLC
By:  AJW Manager, LLC


/s/ Corey S. Ribotsky
---------------------------------
Corey S. Ribotsky
Manager



RESIDENCE:    New  York

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


AGGREGATE  SUBSCRIPTION  AMOUNT:

     Aggregate  Principal  Amount  of  Notes:         $________
     Number  of  Warrants:                             ________
     Aggregate  Purchase  Price:                      $________


<PAGE>

NEW MILLENNIUM CAPITAL PARTNERS II, LLC
By:  First Street Manager II, LLP

/s/ Corey S. Ribotsky
---------------------------------------
Corey S. Ribotsky
Manager



RESIDENCE:    New  York

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


AGGREGATE  SUBSCRIPTION  AMOUNT:

     Aggregate  Principal  Amount of Notes:            $______
     Number  of  Warrants:                              ______
     Aggregate  Purchase  Price:                       $______

<PAGE>