Exhibit 10.2

                         EQUITY LINE OF CREDIT AGREEMENT


         AGREEMENT dated as of the 22nd day of March 2001, (the "Agreement")
between Cornell Capital Partners, L.P., a limited partnership (the "Investor")
and ARS Networks, Inc., a corporation organized and existing under the laws of
the State of New Hampshire (the "Company").

         WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investor,
from time to time as provided herein, and the Investor shall purchase up to Five
Million ($5,000,000) Dollars of the Company's common stock, par value $0.0001
per share (the "Common Stock"), for a total purchase price of Five Million
($5,000,000) Dollars; and

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

         WHEREAS, the Investor is a limited partnership and the business affairs
of the Investor are managed by Yorkville Advisors Management, LLC, a Delaware
Corporation.

         NOW, THEREFORE, the parties hereto agree as follows:

                                    ARTICLE I
                               Certain Definitions

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

         Section  1.2  "ADVANCE  DATE"  shall  mean  the  date  Butler  Gonzalez
LLP/First  Union Escrow Account is in receipt of the funds from the Investor and
Butler Gonzalez LLP, as the Investor's Counsel, is in possession of free trading
shares from the Company and  therefore an Advance by the Investor to the Company
can be made and Butler  Gonzalez LLP can release the free trading  shares to the
Investor.  No Advance  Date shall be less than eleven (11) Trading Days after an
Advance Notice Date.

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

         Section  1.4  "ADVANCE  NOTICE  DATE"  shall mean each date the Company
delivers to the  Investor an Advance  Notice  requiring  the Investor to advance
funds to the Company,  subject to the terms of this Agreement. No Advance Notice


<PAGE>

Date shall be less than eleven (11) Trading Days after the prior Advance  Notice
Date.


         Section 1.5  "ADVANCE  NOTICE  WITHDRAWAL"  shall mean that the Company
shall  automatically  withdraw that portion of the Advance  Notice that does not
meet the Minimum Acceptable Price.

         Section 1.6 "BID PRICE" shall mean, on any date,  the closing bid price
(as reported by Bloomberg  L.P.) of the Common Stock on the Principal  Market or
if the Common Stock is not traded on a Principal  Market,  the highest  reported
bid price for the Common  Stock,  as furnished by the  National  Association  of
Securities Dealers, Inc.

         Section 1.7 "CLOSING"  shall mean one of the closings of a purchase and
sale of Common Stock pursuant to Section 2.1.

         Section 1.8 "COMMITMENT  AMOUNT" shall mean the aggregate  amount of up
to  $5,000,000  which the Investor has agreed to provide to the Company in order
to purchase the Company's  Common Stock  pursuant to the terms and conditions of
this Agreement.

         Section 1.9 "COMMITMENT PERIOD" shall mean the period commencing on the
earlier to occur of (i) the  Effective  Date,  or (ii) such  earlier date as the
Company and the  Investor  may  mutually  agree in writing,  and expiring on the
earliest to occur of (x) the date on which the Investor  shall have made payment
of Advances  pursuant to this  Agreement in the aggregate  amount of $5,000,000,
(y) the date this  Agreement is  terminated  pursuant to Section 2.6, or (z) the
date occurring twenty four (24) months from the date hereof.

         Section 1.10 "COMMON STOCK" shall mean the Company's  common stock, par
value $0.0001 per share.

         Section 1.11 "CONDITION  SATISFACTION  DATE" shall have the meaning set
forth in Section 7.2.

         Section 1.12 "DAMAGES" shall mean any loss, claim,  damage,  liability,
costs and expenses (including,  without limitation,  reasonable  attorney's fees
and disbursements and costs and expenses of expert witnesses and investigation).

         Section  1.13  "EFFECTIVE  DATE"  shall  mean the date on which the SEC
first declares effective a Registration  Statement registering the resale of the
Registrable Securities as set forth in Section 7.2(a).

         Section 1.14 "ESCROW  AGREEMENT"  shall mean the escrow agreement among
the Company, First Union National Bank and the Investor dated the date hereof.


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<PAGE>

         Section 1.15 "EXCHANGE  ACT" shall mean the Securities  Exchange Act of
1934, as amended, and the rules and regulations promulgated there under.

         Section  1.16  "MATERIAL  ADVERSE  EFFECT"  shall  mean any  condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to enter into and perform any of its obligations
under this  Agreement  or the  Registration  Rights  Agreement  in any  material
respect.

         Section  1.17  "MARKET  PRICE"  shall  mean the  average  of the lowest
closing Bid Prices of the Common Stock during the Pricing Period .

         Section 1.18 "MAXIMUM ADVANCE AMOUNT" shall be equal to one hundred and
fifty percent  (150%) of the average daily volume of the Company's  Common Stock
over the forty (40) Trading Days prior to the Advance Notice Date  multiplied by
the Purchase Price.

         Section 1.19 "MINIMUM ACCEPTABLE PRICE" shall mean seventy five percent
(75%) of the lowest  Closing  Bid Price of the  Company's  Common  Stock for the
fifteen (15) Trading Days prior to a relevant Advance Notice Date.

         Section 1.20 "NASD" shall mean the National  Association  of Securities
Dealers, Inc.

         Section  1.21  "PERSON"  shall mean an  individual,  a  corporation,  a
partnership, an association, a trust or other entity or organization,  including
a government or political subdivision or an agency or instrumentality thereof.

         Section  1.22  "PRICING  PERIOD"  shall mean the ten (10)  Trading  Day
period  beginning  on the first  Trading  Day after an Advance  Notice  Date and
ending on the Trading Day prior to the relevant Advance Date.

         Section 1.23 "PRINCIPAL  MARKET" shall mean the Nasdaq National Market,
the Nasdaq  SmallCap  Market,  the American Stock Exchange or the New York Stock
Exchange,  whichever is at the time the principal trading exchange or market for
the Common Stock.

         Section 1.24  "PURCHASE  PRICE" shall be set at ninety percent (90%) of
the Market Price during the Pricing Period.

         Section 1.25  "REGISTRABLE  SECURITIES" shall mean the shares of Common
Stock (i) in respect of which the  Registration  Statement has not been declared
effective by the SEC, (ii) which have not been sold under circumstances  meeting
all of the applicable  conditions of Rule 144 (or any similar  provision then in
force)  under the  Securities  Act  ("Rule  144") or (iii)  which  have not been
otherwise  transferred to a holder who may trade such shares without restriction
under the  Securities  Act, and the Company has delivered a new  certificate  or

                                      -3-
<PAGE>

other  evidence of  ownership  for such  securities  not  bearing a  restrictive
legend.

         Section   1.26   "REGISTRATION   RIGHTS   AGREEMENT"   shall  mean  the
Registration Rights Agreement dated the date hereof, regarding the filing of the
Registration  Statement for the resale of the  Registrable  Securities,  entered
into between the Company and the Investor.

         Section  1.27  "REGISTRATION   STATEMENT"  shall  mean  a  registration
statement on Form S-1 or Form S-3 (if use of such form is then  available to the
Company  pursuant  to the  rules  of the SEC and,  if not,  on such  other  form
promulgated  by the SEC for which the Company then  qualifies  and which counsel
for the Company  shall deem  appropriate,  and which form shall be available for
the  resale  of the  Registrable  Securities  to be  registered  there  under in
accordance  with the  provisions of this Agreement and the  Registration  Rights
Agreement,  and in accordance  with the intended  method of distribution of such
securities),  for  the  registration  of  the  resale  by  the  Investor  of the
Registrable Securities under the Securities Act.

         Section  1.28  "REGULATION  D" shall have the  meaning set forth in the
recitals of this Agreement.

         Section 1.29 "SEC" shall mean the Securities and Exchange Commission.

         Section 1.30  "SECURITIES  ACT" shall have the meaning set forth in the
recitals of this Agreement.

         Section 1.31 "SEC DOCUMENTS"  shall mean Annual Reports on Form 10-KSB,
Quarterly  Reports  on  Form  10-QSB,  Current  Reports  on Form  8-K and  Proxy
Statements  of the  Company as  supplemented  to the date  hereof,  filed by the
Company for a period of at least twelve (12) months  immediately  preceding  the
date  hereof or the  Advance  Date,  as the case may be,  until such time as the
Company  no  longer  has  an  obligation  to  maintain  the  effectiveness  of a
Registration Statement as set forth in the Registration Rights Agreement.

         Section 1.32 "TRADING DAY" shall mean any day during which the New York
Stock Exchange shall be open for business.


                                   ARTICLE II
                                    Advances

         Section 2.1 Investments.
                     -----------

         (a) ADVANCES. Upon the terms and conditions set forth herein (including
without limitation the provisions of Article VII hereof),  on any Advance Notice
Date the Company may  request an Advance by the  Investor by the  delivery of an
Advance  Notice.  The number of shares of Common Stock that the  Investor  shall

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<PAGE>

receive for each  Advance  shall be  determined  by  dividing  the amount of the
Advance by the Purchase Price. No fractional shares shall be issued.  Fractional
shares shall be rounded to the next higher whole number of shares. The aggregate
maximum  amount of all  Advances  that the  Investor  shall be obligated to make
under this Agreement shall not exceed the Commitment Amount.

         Section 2.2 Mechanics.
                     ---------

         (a) ADVANCE  NOTICE.  At any time  during the  Commitment  Period,  the
Company may deliver an Advance Notice to the Investor, subject to the conditions
set forth in Section 2.6 and Section 7.2; provided, however, the amount for each
Advance as designated by the Company in the applicable  Advance Notice shall not
be more than the Maximum  Advance Amount.  The aggregate  amount of the Advances
pursuant  to this  Agreement  shall not exceed  the  Commitment  Amount,  unless
otherwise agreed by the Investor in the Investor's sole and absolute discretion.
There will be a minimum of eleven (11) Trading Days between each Advance  Notice
Date.

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

         (c)  WITHDRAWAL  OF ADVANCE  NOTICE.  The Company  shall  automatically
withdraw  that  portion of the  Advance  Notice  that does not meet the  Minimum
Acceptable  Price.  For example if the lowest closing bid price of the stock for
the fifteen (15) Trading  Days prior to the Advance  Notice Date is $0.20,  then
the Minimum  Acceptable  Price would be $0.15 (75% x $0.20) For every day of the
ten (10) Trading  Days after the Advance  Notice Date that the Closing Bid Price
of the stock is below $0.15 the Advance  would be  automatically  reduced by ten
percent  (10%).  If the  number of shares  to be issued in  connection  with the
Advance (not taking into account this Section) is one hundred thousand (100,000)
shares and the stock' s Closing Bid Price is below the Minimum  Acceptable Price
for two (2) of the ten (10) Trading Days following the Advance Notice Date, then
the Advance would be reduced by twenty percent (20%) (2 x 10%) or 20,000 shares.
The  Advance and the number of shares to be issued  under the  Advance  would be
reduced to eighty percent (80%) of the original.

         Section 2.3 CLOSINGS.  On each Advance Date, which shall be eleven (11)
Trading Days after an Advance  Notice Date, (i) the Company shall deliver to the
Investor's counsel,  as defined pursuant to the Escrow Agreement,  shares of the
Company's  Common Stock,  representing the amount of the Advance by the Investor
pursuant to Section 2.1 herein,  registered  in the name of the  Investor  which
shall be delivered to the Investor,  or otherwise in accordance  with the Escrow
Agreement and (ii) the Investor  shall deliver to the Escrow Agent the amount of
the Advance  specified  in the Advance  Notice by wire  transfer of  immediately

                                      -5-
<PAGE>

available  funds  which shall be  delivered  to the  Company,  or  otherwise  in
accordance with the Escrow  Agreement.  In addition,  on or prior to the Advance
Date,  each of the Company and the Investor  shall  deliver to the other through
the Investor's  counsel all documents,  instruments and writings  required to be
delivered or reasonably  requested by either of them pursuant to this  Agreement
in order to implement and effect the transactions  contemplated herein.  Payment
of funds to the  Company  and  delivery  of the  Company's  Common  Stock to the
Investor shall occur in accordance with the conditions set forth above and those
contained in the Escrow  Agreement;  provided,  however,  that to the extent the
Company has not paid the fees,  expenses,  and  disbursements  of the Investor's
counsel and Yorkville  Advisors in accordance  with Section 12.4,  the amount of
such fees,  expenses,  and  disbursements  may be deducted by the Investor  (and
shall be paid to the  relevant  party)  from the amount of the  Advance  with no
reduction in the amount of shares of the Company's  Common Stock to be delivered
on such Advance Date.


         Section 2.4 Intentionally Not Used.
                     ----------------------

         Section 2.5  TERMINATION OF INVESTMENT.  The obligation of the Investor
to make an Advance to the Company  pursuant to this  Agreement  shall  terminate
permanently  (including  with  respect  to an  Advance  Date  that  has  not yet
occurred)  in the event that (i) there shall occur any stop order or  suspension
of the  effectiveness  of the  Registration  Statement for an aggregate of fifty
(50)  Trading  Days,  other  than due to the acts of the  Investor,  during  the
Commitment  Period,  or (ii) the Company  shall at any time fail  materially  to
comply with the requirements of Section 6.3, 6.4 or 6.7; provided, however, that
this  termination  provision  shall not apply to any period  commencing upon the
filing of a post-effective  amendment to such Registration  Statement and ending
upon the date on which such post  effective  amendment is declared  effective by
the SEC.

         Section 2.6 Agreement to Advance Funds.
                     --------------------------

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

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

         (ii) Investor's  counsel shall have received the shares of Common Stock
     applicable to the Advance;

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

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


                                      -6-
<PAGE>

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

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

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

         Section 2.7 LOCK UP PERIOD. (a) During the terms of this Agreement, the
Company shall not, without the prior consent of the Investor,  issue or sell (i)
any Common Stock without  consideration  or for a  consideration  per share less
than the Bid Price on the date of  issuance  or (ii) issue or sell any  warrant,
option,  right,  contract,  call, or other  security or instrument  granting the
holder thereof the right to acquire Common Stock without  consideration or for a
consideration per share less than the Bid Price on the date of issuance.

         (b) On the date hereof,  the Company  shall  obtain from each  officer,
director and Affiliate, as defined below, a lock-up agreement, as defined below,
in the  form  annexed  hereto  as  Schedule  2.7(a)  agreeing  to  only  sell in
compliance  with the volume  limitation  of Rule 144.  "Affiliate"  for purposes
hereof  means,  with respect to any person or entity,  another  person or entity
that,  directly  or  indirectly,  (i) has a five  percent  (5%)  or more  equity
interest in that  person or entity,  (ii) has five  percent  (5%) or more common
ownership with that person or entity,  (iii) controls that person or entity,  or
(iv) shares common  control with that person or entity.  "Control" or "controls"
for  purposes  hereof  means that a person or entity  has the  power,  direct or
indirect, to conduct or govern the policies of another person or entity.


                                   ARTICLE III
                   Representations and Warranties of Investor


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

         Section  3.1   ORGANIZATION   AND   AUTHORIZATION.   Investor  is  duly
incorporated  or  organized  and  validly  existing in the  jurisdiction  of its
incorporation  or  organization  and has all  requisite  power and  authority to
purchase and hold the securities issuable hereunder.  The decision to invest and
the execution and delivery of this Agreement by such Investor,  the  performance
by such  Investor of its  obligations  hereunder  and the  consummation  by such
Investor of the transactions  contemplated  hereby have been duly authorized and

                                      -7-
<PAGE>

requires no other  proceedings on the part of the Investor.  The undersigned has
the right,  power and  authority to execute and deliver this  Agreement  and all
other  instruments ( including,  without  limitations,  the Registration  Rights
Agreement), on behalf of the Investor. This Agreement has been duly executed and
delivered by the Investor and,  assuming the  execution and delivery  hereof and
acceptance thereof by the Company,  will constitute the legal, valid and binding
obligations of the Investor, enforceable against the Investor in accordance with
its terms.

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

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

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

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

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


                                      -8-
<PAGE>

and risks of this investment.  Such Investor has sought such  accounting,  legal
and tax advice,  as it has considered  necessary to make an informed  investment
decision with respect to this transaction.

         Section 3.7 RECEIPT OF DOCUMENTS.  Such Investor and his or its counsel
has received and read in their  entirety:  (i) this  Agreement  and the Exhibits
annexed hereto; (ii) all due diligence and other information necessary to verify
the accuracy and completeness of such representations, warranties and covenants;
(iii) the  Company's  Form 10-KSB for the year ended year ended January 31, 2000
and Form 10-QSB for the periods ended,  April 2000, July 2000, and October 2000;
and (v) answers to all questions the Investor submitted to the Company regarding
an  investment  in the Company;  and the Investor has relied on the  information
contained  therein and has not been furnished any other  documents,  literature,
memorandum or prospectus.

         Section 3.8  REGISTRATION  RIGHTS AGREEMENT AND ESCROW  AGREEMENT.  The
parties have  entered  into the  Registration  Rights  Agreement  and the Escrow
Agreement, each dated the date hereof.

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

         Section 3.10 NOT AN AFFILIATE. The Investor is not an officer, director
or a person that  directly,  or indirectly  through one or more  intermediaries,
controls or is controlled by, or is under common control with the Company or any
Affiliate  of the Company as that term is defined in Rule 405 of the  Securities
Act) of the  Company).  The  Investor  agrees that it will not, and that it will
cause  its  Affiliates  not  to,  engage  in  any  short  sales  of  or  hedging
transactions with respect to the Common Stock.

                                   ARTICLE IV
                  Representations and Warranties of the Company

         Except as stated below or on the disclosure schedules attached hereto,
the Company hereby represents and warrants to, and covenants with, the Investor
that the following are true and correct as of the date hereof.

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


                                      -9-

<PAGE>

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

         Section  4.3  CAPITALIZATION.  As of the date  hereof,  the  authorized
capital stock of the Company consists of 50,000,000  shares of Common Stock, par
value $0.0001 per share, of which 13,020,719 shares were issued and outstanding,
and 25,000,000  shares of preferred stock of which none are outstanding.  All of
such  outstanding  shares  have  been  validly  issued  and are  fully  paid and
nonassessable.  Except as  disclosed in the SEC  Documents,  no shares of Common
Stock are subject to preemptive  rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company. Except as disclosed in the
SEC  Documents,  as of the date hereof,  (i) there are no  outstanding  options,
warrants,  scrip,  rights to subscribe to, calls or commitments of any character
whatsoever  relating to, or securities or rights convertible into, any shares of
capital  stock  of  the  Company  or  any of  its  subsidiaries,  or  contracts,
commitments,  understandings  or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional  shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character  whatsoever  relating to, or
securities  or rights  convertible  into,  any  shares of  capital  stock of the
Company or any of its  subsidiaries,  except for those set forth in that certain
consulting  agreement  dated February 1, 2001,  between the Company and National
Financial  Communications  Corp.,  (ii) there are no outstanding debt securities
and (iii) there are no agreements or arrangements under which the Company or any
of its subsidiaries is obligated to register the sale of any of their securities
under the Securities Act (except pursuant to the Registration Rights Agreement).
There are no  securities  or  instruments  containing  anti-dilution  or similar
provisions that will be triggered by this Agreement or any related  agreement or
the  consummation of the transactions  described herein or therein.  The Company
has  furnished  to the  Investor  true  and  correct  copies  of  the  Company's
Certificate  of  Incorporation,  as amended  and as in effect on the date hereof
(the "Certificate of Incorporation"), and the Company's By-laws, as in effect on
the date hereof (the "By-laws").


                                      -10-
<PAGE>


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

         Section 4.5 SEC DOCUMENTS; FINANCIAL STATEMENTS. Since January 1, 2000,
the  Company  has filed all  reports,  schedules,  forms,  statements  and other
documents required to be filed by it with the SEC under of the Exchange Act (all
of the  foregoing  filed  prior to the date  hereof  and all  exhibits  included
therein  and  financial   statements   and   schedules   thereto  and  documents
incorporated by reference  therein,  being  hereinafter  referred to as the "SEC
Documents").  The Company has delivered to the Investor or its  representatives,
or made  available  through the SEC's  website at  http://www.sec.gov,  true and
complete  copies  of the  SEC  Documents.  As of  their  respective  dates,  the
financial  statements  of the  Company  disclosed  in  the  SEC  Documents  (the
"Financial  Statements")  complied  as to form  in all  material  respects  with
applicable  accounting  requirements  and the published rules and regulations of
the SEC with respect  thereto.  Such financial  statements have been prepared in
accordance with generally accepted accounting principles,  consistently applied,
during the periods  involved  (except (i) as may be otherwise  indicated in such
financial  statements  or the notes  thereto,  or (ii) in the case of  unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position  of  the  Company  as of the  dates  thereof  and  the  results  of its
operations  and cash flows for the periods then ended  (subject,  in the case of

                                      -11-
<PAGE>

unaudited statements, to normal year-end audit adjustments).

         Section  4.6.  10b-5.  The SEC  Documents  do not  include  any  untrue
statements  of  material  fact,  nor do they  omit to state  any  material  fact
required to be stated therein necessary to make the statements made, in light of
the circumstances under which they were made, not misleading.

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

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

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

         Section  4.10  EMPLOYEE  RELATIONS  Neither  the Company nor any of its
subsidiaries  is involved in any labor  dispute  nor,  to the  knowledge  of the
Company or any of its subsidiaries, is any  such dispute threatened. None of the


                                      -12-
<PAGE>

Company's or its subsidiaries' employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

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

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

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

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

     Section 4.15 INTERNAL ACCOUNTING CONTROLS. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded

                                      -13-
<PAGE>

accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

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

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

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

         Section 4.19 OTHER OUTSTANDING SECURITIES/FINANCING RESTRICTIONS. As of
the date hereof,  other than  warrants  and options to acquire  shares of Common
Stock as  disclosed  in Schedule  4.3,  there are no other  warrants and options
registered  with the SEC,  which are available for sale as  unrestricted  ("free
trading") stock.

         Section 4.20 TAX STATUS. The Company and each of its subsidiaries has
made or filed all federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject and (unless
and only to the extent that the Company and each of its subsidiaries has set
aside on its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.

                                       14
<PAGE>

         Section  4.21  CERTAIN  TRANSACTIONS.  Except  as set  forth in the SEC
Documents,  none of the  officers,  directors,  or  employees  of the Company is
presently a party to any  transaction  with the Company (other than for services
as employees,  officers and  directors),  including  any contract,  agreement or
other  arrangement  providing for the furnishing of services to or by, providing
for rental of real or  personal  property  to or from,  or  otherwise  requiring
payments to or from any officer,  director or such employee or, to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any
officer,  director,  or any such  employee has a  substantial  interest or is an
officer, director, trustee or partner.

         Section 4.22 FEES AND RIGHTS OF FIRST  REFUSAL.  Except as set forth in
the SEC Documents,  the Company is not obligated to offer the securities offered
hereunder on a right of first  refusal  basis or otherwise to any third  parties
including,  but not limited to, current or former  shareholders  of the Company,
underwriters, brokers, agents or other third parties.

         Section  4.23 USE OF  PROCEEDS.  The  Company  represents  that the net
proceeds  from this offering  will be used for working  capital  purposes and to
reduce  indebtedness  . However,  in no event shall the net  proceeds  from this
offering  be used by the  Company  for the payment (or loaned to any such person
for the payment) of any judgment, or other liability,  incurred by any executive
officer, officer, director, or employee of the Company.

         Section 4.24 FURTHER  REPRESENTATION AND WARRANTIES OF THE COMPANY. For
so  long as any  securities  issuable  hereunder  held  by the  Investor  remain
outstanding, the Company acknowledges,  represents,  warrants and agrees that it
will use commercially  reasonable  efforts to maintain the listing of its Common
Stock on NASD Bulletin Board.

         Section  4.25  OPINION OF COUNSEL.  Investor  shall  receive an opinion
letter from counsel to the Company (updated where applicable) on the date hereof
and updated annually for the life of the this Agreement .

         Section  4.26  OPINION OF  COUNSEL.  The  Company  will  obtain for the
Investor, at the Company's expense, any and all opinions of counsel which may be
reasonably  required in order to sell the securities  issuable hereunder without
restriction.

         Section  4.27  DILUTION.  The  Company is aware and  acknowledges  that
issuance  of shares of the  Company's  Common  Stock  could  cause  dilution  to
existing shareholders and could significantly increase the outstanding number of
shares of Common Stock.


                                    ARTICLE V
                                 Indemnification

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


                                      -15-
<PAGE>


         Section 5.1  INDEMNIFICATION.  (a) In  consideration  of the Investor's
execution  and  delivery  of  this  Agreement,  and  in  addition  to all of the
Company's  other  obligations  under this  Agreement,  the Company shall defend,
protect,  indemnify and hold harmless the Investor(s),  and all of its officers,
directors,  partners, employees and agents (including, without limitation, those
retained in connection  with the  transactions  contemplated  by this Agreement)
(collectively, the "Investor Indemnitees") from and against any and all actions,
causes of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith  (irrespective of whether any such
Investor Indemnitee is a party to the action for which indemnification hereunder
is sought),  and including  reasonable  attorneys' fees and  disbursements  (the
"Indemnified Liabilities"),  incurred by the Investor Indemnitees or any of them
as a result of, or arising out of, or relating to (a) any  misrepresentation  or
breach of any  representation  or warranty made by the Company in this Agreement
or the  Registration  Rights Agreement or any other  certificate,  instrument or
document  contemplated  hereby  or  thereby,  (b) any  breach  of any  covenant,
agreement  or  obligation  of the Company  contained  in this  Agreement  or the
Registration  Rights Agreement or any other certificate,  instrument or document
contemplated  hereby  or  thereby,  or (c) any  cause of  action,  suit or claim
brought or made against such Investor  Indemnitee  not arising out of any action
or inaction of an Investor Indemnitee,  and arising out of or resulting from the
execution,  delivery,  performance or enforcement of this Agreement or any other
instrument,  document  or  agreement  executed  pursuant  hereto  by  any of the
Investor  Indemnitees.  To the  extent  that the  foregoing  undertaking  by the
Company may be unenforceable for any reason,  the Company shall make the maximum
contribution  to the  payment  and  satisfaction  of  each  of  the  Indemnified
Liabilities, which is permissible under applicable law.

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


                                      -16-
<PAGE>

                                   ARTICLE VI
                            Covenants of the Company

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

         Section 6.2 LISTING OF COMMON  STOCK.  The Company  shall  maintain the
Common Stock's authorization for quotation on the NASD Bulletin Board.

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

         Section 6.4  TRANSFER  AGENT  INSTRUCTIONS.  Upon each  Closing and the
effectiveness  of the  Registration  Statement and re-sale by the Investor,  the
Company  will  deliver  instructions  to its  transfer  agent to issue shares of
Common Stock free of restrictive legends.

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

         Section 6.6 NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION
OF RIGHT TO MAKE AN ADVANCE.  The Company will  immediately  notify the Investor
upon its becoming  aware of the  occurrence  of any of the  following  events in
respect  of a  registration  statement  or  related  prospectus  relating  to an
offering of  Registrable  Securities:  (i) receipt of any request for additional
information  by the SEC or any other  Federal  or state  governmental  authority
during the period of effectiveness of the Registration  Statement for amendments
or supplements to the  registration  statement or related  prospectus;  (ii) the
issuance by the SEC or any other Federal or state governmental  authority of any
stop order suspending the  effectiveness  of the  Registration  Statement or the
initiation  of  any  proceedings   for  that  purpose;   (iii)  receipt  of  any
notification  with respect to the suspension of the  qualification  or exemption
from  qualification  of  any of  the  Registrable  Securities  for  sale  in any
jurisdiction  or the  initiation  or  threatening  of any  proceeding  for  such
purpose;  (iv) the happening of any event that makes any  statement  made in the
Registration  Statement or related  prospectus of any document  incorporated  or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration  Statement,  related
prospectus or documents so that, in the case of the Registration  Statement,  it
will not contain any untrue  statement  of a material  fact or omit to state any
material fact required to be stated  therein or necessary to make the statements
therein not misleading,  and that in the case of the related prospectus, it will
not  contain  any  untrue  statement  of a  material  fact or omit to state  any
material fact required to be stated  therein or necessary to make the statements
therein,  in the light of the  circumstances  under  which they were  made,  not

                                      -17-
<PAGE>

misleading; and (v) the Company's reasonable determination that a post-effective
amendment to the  Registration  Statement would be appropriate;  and the Company
will promptly make available to the Investor any such supplement or amendment to
the related  prospectus.  The  Company  shall not  deliver to the  Investor  any
Advance Notice during the continuation of any of the foregoing events.

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

         Section 6.8  CONSOLIDATION;  MERGER. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into,  or a transfer  of all or  substantially  all the assets of the Company to
another  entity (a  "Consolidation  Event")  unless the  resulting  successor or
acquiring  entity  (if  not the  Company)  assumes  by  written  instrument  the
obligation to deliver to the Investor such shares of stock and/or  securities as
the Investor is entitled to receive pursuant to this Agreement.

         Section 6.9 Issuance of the  Company's  Common  Stock.  The sale of the
shares of Common  Stock  shall be made in  accordance  with the  provisions  and
requirements of Regulation D and any applicable state securities law.


                                   ARTICLE VII
                Conditions for Advance and Conditions to Closing

         Section 7.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY. The
obligation hereunder of the Company to issue and sell the shares of Common Stock
to the  Investor  incident to each  Closing is subject to the  satisfaction,  or
waiver by the Company, at or before each such Closing, of each of the conditions
set forth below.

         (a)  ACCURACY OF THE  INVESTOR'S  REPRESENTATION  AND  WARRANTIES.  The
representations  and warranties of the Investor shall be true and correct in all
material respects.

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


                                      -18-
<PAGE>

         Section 7.2 CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO DELIVER
AN ADVANCE  NOTICE AND THE  OBLIGATION  OF THE  INVESTOR TO  PURCHASE  SHARES OF
COMMON  STOCK.  The right of the  Company to  deliver an Advance  Notice and the
obligation  of the  Investor  hereunder  to  acquire  and pay for  shares of the
Company's  Common Stock incident to a Closing is subject to the  satisfaction or
waiver by the Investor,  on (i) the date of delivery of such Advance  Notice and
(ii) the applicable Advance Date (each a "Condition Satisfaction Date"), of each
of the following conditions:

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

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

         (c) NO FUNDAMENTAL CHANGES. There shall no exist any fundamental change
to the information set forth in the  Registration  Statement which would require
the Company to file a post-effective amendment to the Registration Statement.

         (d)  PERFORMANCE  BY THE  COMPANY.  The Company  shall have  performed,
satisfied and complied in all material  respects with all covenants,  agreements
and conditions  required by this Agreement and the Registration Rights Agreement
to be  performed,  satisfied or complied with by the Company at or prior to each
Condition Satisfaction Date.

         (e) NO  INJUNCTION.  No statute,  rule,  regulation,  executive  order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by any court or governmental  authority of competent  jurisdiction that
prohibits or directly and adversely affects any of the transactions contemplated
by this Agreement, and no proceeding shall have been commenced that may have the
effect  of   prohibiting  or  adversely   affecting  any  of  the   transactions
contemplated by this Agreement.


                                      -19-
<PAGE>

         (f) NO  SUSPENSION  OF TRADING IN OR  DELISTING  OF COMMON  STOCK.  The
trading of the Common Stock is not suspended by the SEC or the Principal  Market
(if the Common Stock is traded on a Principal Market). The issuance of shares of
Common Stock with respect to the applicable  Closing,  if any, shall not violate
the shareholder  approval  requirements  of the Principal  Market (if the Common
Stock is traded on a Principal market).  The Company shall not have received any
notice  threatening  the continued  listing of the Common Stock on the Principal
Market (if the Common Stock is traded on a Principal Market).

         (g) MAXIMUM ADVANCE AMOUNT.  The amount of the advance requested by the
Company does not exceed the Maximum Advance Amount.

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

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


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

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


                                      -20-
<PAGE>

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

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

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


                                   ARTICLE IX
                           Choice of Law/Jurisdiction

         Section 9.1  GOVERNING  LAW.  This  Agreement  shall be governed by and
interpreted in accordance  with the laws of the State of New York without regard
to the principles of conflict of laws. The parties further agree that any action
between them shall be heard in New York City, New York, and expressly consent to
the  jurisdiction  and  venue of the  Supreme  Court of New York and the  United
States District Court for the Southern District of New York for the adjudication
of any civil action asserted pursuant to this paragraph.


                                      -21-
<PAGE>

                                    ARTICLE X
                             Assignment; Termination

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

         Section  10.2  TERMINATION.  The  obligations  of the  Investor to make
Advances  under  Article  II hereof  shall  terminate  24 months  after the date
hereof.


                                   ARTICLE XI
                                     Notices

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

                                       If to the Company, to:

                                       ARS Networks, Inc.
                                       100 Walnut Street
                                       Champlain, New York 12919
                                       Attention: Sydney Harland
                                       Telephone: (518) 298-2042
                                       Facsimile:     (518) 298-2813

         with a copy to:               Kirkpatrick  & Lockhart LLP
                                       201 South Biscayne Boulevard.
                                       Suite 2000
                                       Miami, Fl  33131
                                       Attention: Clayton Parker, Esq.

                                       Telephone: (305) 539-3306
                                       Facsimile: (305) 358-7095


If to the Investor(s), to its address and facsimile number on Exhibit A, with
copies to the Investor's Counsel as set forth on Exhibit A. Each party shall

                                      -22-
<PAGE>

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


                                   ARTICLE XII
                                  Miscellaneous

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

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

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

         Section 12.4 FEES AND EXPENSES. As set forth in the Consulting Services
Agreement  entered into by the Company in connection  herewith,  the Company has
agreed to pay the following fees:

               (a) LEGAL FEES.  Each of the  parties  shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or others
engaged by such party) in connection  with this  Agreement and the  transactions
contemplated  hereby,  except upon the  execution of this  Agreement the Company
will  pay  the sum of  Twenty  Thousand  ($20,000)  Dollars,  to the  Investor's
counsel, Butler Gonzalez LLP, for legal fees. Subsequently on each Advance Date,
the  Company  will pay  Butler  Gonzalez  LLP the sum of Two  Hundred  and Fifty
Dollars ($250) Dollars for escrow fees.

               (b)  CONSULTING  FEES. On each Advance Date the Company shall pay
Yorkville Advisor's  Management,  LLC ("Yorkville  Advisors") an amount equal to
eight and 2/5 percent  (8.4%) of the amount of the Advance.  The Company  hereby

                                      -23-

<PAGE>

agrees that if such payment,  as is described  above, is not made by the Company
on the Advance Date,  such payment will be made at the direction of the Investor
as outlined and mandated by Section 2.3 of this Agreement.  Furthermore upon the
execution of this  Agreement  that Company shall issue and deliver  within seven
(7) days to Yorkville Advisors Management, LLC, 450,000 restricted shares of the
Company's Common Stock.  Such restricted  shares will have demand and piggy-back
registration rights.

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

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



                   [REMAINDER OF PAGE INTENIONALLY LEFT BLANK]

                                      -24-
<PAGE>


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


                                    COMPANY:
                                    ARS NETWORKS, INC.


                                    By:
                                       -----------------------------------------
                                    Name: Sydney Harland
                                    Title: President and Chief Executive Officer

                                    INVESTOR:
                                    CORNELL CAPITAL PARTNERS, L.P.


                                    By: Yorkville Advisors Management LLC
                                    Its: General Partner


                                    By:
                                       -----------------------------------------
                                    Name: Mark A. Angelo
                                    Title:  Fund Manager




                                      -25-
<PAGE>


                                    EXHIBIT A

                              SCHEDULE OF INVESTORS



Cornell Capital Partners, L.P.
c/o Yorkville Advisors Management, LLC
521 Fifth Avenue - 17th Floor
New York, NY 10175









                                      -26-
<PAGE>


                                    EXHIBIT B

                      ADVANCE NOTICE/COMPLIANCE CERTIFICATE

                               ARS NETWORKS, INC.


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

               1. The undersigned is the duly elected Chief Executive Officer of
                  the Company.

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

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

               4. The Advance requested is _____________________.

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

                                               ARS NETWORKS, INC.



                                               By:  ____________________________
                                                    Name:
                                                    Title:




                                      -27-
<PAGE>


                                 SCHEDULE 2.7(a)


                               ARS NETWORKS, INC.


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

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

Dated: _______________, 2001

                                                  Signature


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


                                                  Address:
                                                  City, State, Zip Code:


                                                  ------------------------------
                                                  Print Social Security Number
                                                  or Taxpayer I.D. Number



                                      -28-