PRIVATE EQUITY CREDIT AGREEMENT

                                 BY AND BETWEEN

                          AMERICAN PALLET LEASING, INC.

                                       AND

                       BRITTANY CAPITAL MANAGEMENT LIMITED

                                   Dated as of

                                 April 27, 2005







<PAGE>

         THIS PRIVATE EQUITY CREDIT AGREEMENT is entered into as of the 27th day
of April, 2005 (this  "AGREEMENT"),  by and between BRITTANY CAPITAL  MANAGEMENT
LIMITED,  a  corporation  organized  and existing  under the laws of the Bahamas
("INVESTOR"),  and AMERICAN  PALLET LEASING,  INC., a corporation  organized and
existing under the laws of the State of Delaware (the "COMPANY").

         WHEREAS,  the parties  desire  that,  upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to Investor,  from
time to time as provided herein, and Investor shall purchase, up to Five Million
Dollars ($5,000,000) of the Common Stock (as defined below); and

         WHEREAS,  such investments will be made in reliance upon the provisions
of Section 4(2) ("SECTION  4(2)") of the  Securities Act of 1933,  Regulation D,
and the rules and regulations  promulgated  thereunder (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
in Common Stock to be made hereunder.

         NOW, THEREFORE, the parties hereto agree as follows:

                                    ARTICLE I

                               CERTAIN DEFINITIONS

         Section  1.1 DEFINED  TERMS as used in this  Agreement,  the  following
terms shall have the following meanings specified or indicated (such meanings to
be  equally  applicable  to both the  singular  and  plural  forms of the  terms
defined)

                  "AGREEMENT"  shall have the meaning  specified in the preamble
hereof.

                  "BID  PRICE"  shall mean the  closing  bid price of the Common
Stock on the Principal Market.

                  "BLACKOUT  NOTICE"  shall have the  meaning  specified  in the
Registration Rights Agreement.

                  "BLACKOUT  SHARES" shall have the meaning specified in Section
2.6

                  "BY-LAWS" shall have the meaning specified in Section 4.8.

                  "CERTIFICATE" shall have the meaning specified in Section 4.8.
"CLAIM NOTICE" shall have the meaning specified in Section 9.3(a).

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

                  "CLOSING  DATE" shall  mean,  with  respect to a Closing,  the
eleventh  (11th) Day  following  the Put Date related to such  Closing,  or such
earlier date as the Company and Investor shall agree, provided all

                                       2
<PAGE>

conditions to such Closing have been satisfied on or before such Trading Day.

                  "COMMITMENT  PERIOD"  shall mean the period  commencing on the
Effective  Date,  and ending on the  earlier  of (i) the date on which  Investor
shall have  purchased  Put Shares  pursuant to this  Agreement  for an aggregate
Purchase Price of the Maximum Commitment Amount, (ii) the date this Agreement is
terminated  pursuant to Section 2.5, or (iii) the date occurring thirty six (36)
months from the date of commencement of the Commitment Period.

                  "COMMON STOCK" shall mean the Company's  common stock,  $0.001
par value per share,  and any shares of any other class of common stock  whether
now or hereafter authorized, having the right to participate in the distribution
of  dividends  (as and  when  declared)  and  assets  (upon  liquidation  of the
Company).

                  "COMMON STOCK  EQUIVALENTS" shall mean any securities that are
convertible into or exchangeable for Common Stock or any options or other rights
to  subscribe  for  or  purchase  Common  Stock  or  any  such   convertible  or
exchangeable securities.

                  "COMPANY" shall have the meaning  specified in the preamble to
this Agreement.

                  "CONDITION SATISFACTION DATE" shall have the meaning specified
in Section 7.2.

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

                  "DISCOUNT" shall mean seven (7%) percent.

                  "DISPUTE  PERIOD" shall have the meaning  specified in Section
9.3(a).

                  "DTC" shall the meaning specified in Section 2.3.

                  "DWAC" shall the meaning specified in Section 2.3.

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

                  "EXCHANGE ACT" shall mean the  Securities  Exchange Act of1934
and the rules and regulations promulgated thereunder.

                  "FAST" shall the meaning specified in Section 2.3.

                  "FLOOR PRICE" shall have the meaning specified in Section 2.1

                  "INDEMNIFIED  PARTY"  shall  have  the  meaning  specified  in
Section 9.3(a).

                  "INDEMNIFYING  PARTY"  shall  have the  meaning  specified  in
Section 9.3(a).


                                       3
<PAGE>

                  "INDEMNITY NOTICE" shall have the meaning specified in Section
9.3(b).

                  "INVESTMENT  AMOUNT" shall mean the dollar amount  (within the
range  specified  in Section  2.2) to be invested  by  Investor to purchase  Put
Shares  with  respect to any Put Date as  notified by the Company to Investor in
accordance with Section 2.2.

                   "INVESTOR"  shall have the meaning  specified in the preamble
                   to this Agreement.  "LEGEND" shall have the meaning specified
                   in Section 8.1.

                   "MARKET  PRICE" on any given date  shall mean the  average of
the lowest closing Bid Prices (not  necessarily  consecutive)  for any three (3)
Trading Days during the Valuation Period.

                      "MINIMUM COMMITMENT AMOUNT" shall mean One Million Dollars
($1,000,000).

                  "MAXIMUM  COMMITMENT  AMOUNT" shall mean Five Million  Dollars
($5,000,000).

                  "MATERIAL  ADVERSE  EFFECT"  shall  mean  any  effect  on  the
business,  operations,  properties,  prospects  or  financial  condition  of the
Company  that is material  and adverse to the Company or to the Company and such
other  entities  controlling  or  controlled  by the Company,  taken as a whole,
and/or  any  condition,  circumstance,  or  situation  that  would  prohibit  or
otherwise materially interfere with the ability of the Company to enter into and
perform its obligations under any of (a) this Agreement and (b) the Registration
Rights Agreement.

                  "MAXIMUM PUT AMOUNT" shall mean,  with respect to any Put, Two
Hundred Fifty (250%) percent of the Weighted  Average Volume for the twenty (20)
trading days immediately preceding the Put Date.

                  "MINIMUM  PUT  AMOUNT"  shall mean,  with  respect to any Put,
Fifty Thousand Dollars ($50,000).

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

                  "NASDAQ" shall mean The NASDAQ Stock Market, Inc.

                  "NEW  BID  PRICE"   shall  have  the  meaning   specified   in
Section2.6.

                  "OLD  BID  PRICE"   shall  have  the  meaning   specified   in
Section2.6.

                  "OUTSTANDING" shall mean, with respect to the Common Stock, at
any date as of which the number of shares of Common  Stock is to be  determined,
all issued  and  outstanding  shares of Common  Stock,  including  all shares of
Common Stock issuable in respect of outstanding convertible securities, scrip or
any certificates  representing  fractional  interests in shares of Common Stock;
provided, however, that Outstanding shall not include any shares of Common Stock
then directly or indirectly owned or held by or for the account of the Company.

                  "PERSON"   shall  mean  an  individual,   a   corporation,   a
partnership, an association, a trust or

                                       4
<PAGE>

other entity or organization, including a government or political subdivision or
an agency or instrumentality thereof.

                  "PRINCIPAL  MARKET" shall mean the Nasdaq National Market, the
Nasdaq SmallCap Market,  the Over the Counter Bulletin Board, 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.

                  "PURCHASE PRICE" shall mean, with respect to a Put, the Market
Price on the applicable Put Date (or such other date on which the Purchase Price
is  calculated in accordance  with the terms and  conditions of this  Agreement)
less the product of the Discount and the Market Price.

                  "PUT"  shall mean each  occasion  that the  Company  elects to
exercise its right to tender a Put Notice requiring  Investor to purchase shares
of Common Stock, subject to the terms and conditions of this Agreement.

                  "PUT DATE" shall mean the  Trading  Day during the  Commitment
Period that a Put Notice is deemed delivered pursuant to Section 2.2(b).

                  "PUT NOTICE" shall mean a written notice, substantially in the
form of Exhibit B hereto,  to Investor setting forth the Investment  Amount with
respect to which the Company  intends to require  Investor to purchase shares of
Common Stock pursuant to the terms of this Agreement.

                  "PUT  SHARES"  shall mean all shares of Common Stock issued or
issuable  pursuant  to a Put that  has been  exercised  or may be  exercised  in
accordance with the terms and conditions of this Agreement.

                  "REGISTRABLE  SECURITIES"  shall mean the (a) Put Shares,  (b)
the Blackout  Shares and (c) any  securities  issued or issuable with respect to
any of the  foregoing  by way of exchange,  stock  dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or  other  reorganization  or  otherwise.   As  to  any  particular  Registrable
Securities, once issued such securities shall cease to be Registrable Securities
when (i) a  Registration  Statement has been  declared  effective by the SEC and
such  Registrable  Securities  have been disposed of pursuant to a  Registration
Statement,  (ii) such Registrable  Securities have been sold under circumstances
under which all of the  applicable  conditions  of Rule 144 are met,  (iii) such
time as such Registrable  Securities have been otherwise  transferred to holders
who may trade such shares without  restriction under the Securities Act, and the
Company has delivered a new  certificate or other evidence of ownership for such
securities not bearing a restrictive legend or (iv) in the opinion of counsel to
the Company,  which  counsel shall be  reasonably  acceptable to Investor,  such
Registrable Securities may be sold without registration under the Securities Act
the need for an exemption from any such  registration  requirements  and without
any time, volume or manner  limitations  pursuant to Rule 144(k) (or any similar
provision then in effect) under the Securities Act.

                  "REGISTRATION  RIGHTS  AGREEMENT"  shall mean the registration
rights agreement in the form of Exhibit A hereto.

                  "REGISTRATION  STATEMENT" shall mean a registration  statement
on 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

                                       5
<PAGE>

thereunder  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 Investor
of the Registrable Securities under the Securities Act.

                  "REGULATION  D"  shall  have  the  meaning  specified  in  the
recitals  of this  Agreement.

                  "REGULATION S" shall have the meaning specified in the
recitals of this Agreement.

                  "REMAINING  PUT SHARES"  shall have the meaning  specified  in
Section 2.6.

                  "RULE 144" shall mean Rule 144 under the Securities Act or any
similar provision then in force under the Securities Act.

                  "SEC" shall mean the Securities and Exchange Commission.

                  "SECTION  4(2)"  shall  have  the  meaning  specified  in  the
recitals of this Agreement.

                  "SECURITIES  ACT"  shall  have the  meaning  specified  in the
recitals of this Agreement.

                  "SEC  DOCUMENTS"  shall mean,  as of a  particular  date,  all
reports and other  documents  file by the Company  pursuant to Section  13(a) or
15(d) of the  Exchange  Act  since  the  beginning  of the  Company's  then most
recently  completed fiscal year as of the time in question (provided that if the
date in question is within ninety days of the beginning of the Company's  fiscal
year,  the term shall  include all  documents  filed since the  beginning of the
second preceding fiscal year).

                     "SUBSCRIPTION  DATE"  shall  mean the  date on  which  this
Agreement is executed and delivered by the Company and

Investor.

                  "THIRD  PARTY  CLAIM"  shall  have the  meaning  specified  in
Section 9.3(a).

                  "TRADING  DAY" shall mean any day during  which the  Principal
Market shall be open for business.

                  "TRANSACTION   DOCUMENTS"  means  the  Private  Equity  Credit
Agreement,  the Registration  Rights  Agreement,  Closing  Certificate,  and the
Transfer Agent Instructions.

                  "TRANSFER  AGENT" shall mean the transfer agent for the Common
Stock (and to any substitute or replacement  transfer agent for the Common Stock
upon the Company's  appointment of any such  substitute or replacement  transfer
agent).

                  "UNDERWRITER" shall mean any underwriter  participating in any
disposition of the  Registrable  Securities on behalf of Investor  pursuant to a
Registration Statement.

                  "VALUATION  EVENT" shall mean an event in which the Company at
any time during a Valuation Period takes any of the following actions:

         (a)      subdivides or combines the Common Stock;

                                       6
<PAGE>

         (b)      pays a dividend  in shares of Common  Stock or makes any other
                  distribution  of shares of Common Stock,  except for dividends
                  paid with respect to the Preferred Stock;

         (c)      issues  any  options  or  other  rights  to  subscribe  for or
                  purchase  shares of  Common  Stock and the price per share for
                  which  shares of Common  Stock may at any time  thereafter  be
                  issuable  pursuant to such  options or other  rights  shall be
                  less than the Bid Price in  effect  immediately  prior to such
                  issuance;

         (d)      issues any securities  convertible  into or  exchangeable  for
                  shares of Common  Stock  and the  consideration  per share for
                  which  shares of Common  Stock may at any time  thereafter  be
                  issuable   pursuant  to  the  terms  of  such  convertible  or
                  exchangeable  securities  shall be less  than the Bid Price in
                  effect immediately prior to such issuance;

         (e)      issues  shares of Common Stock  otherwise  than as provided in
                  the  foregoing  subsections  (a)  through  (d), at a price per
                  share less,  or for other  consideration  lower,  than the Bid
                  Price in effect immediately prior to such issuance, or without
                  consideration;

         (f)      makes  a   distribution   of  its  assets  or   evidences   of
                  indebtedness  to the holders of Common  Stock as a dividend in
                  liquidation  or by way of return of capital or other than as a
                  dividend payable out of earnings or surplus legally  available
                  for dividends under applicable law or any distribution to such
                  holders  made in respect  of the sale of all or  substantially
                  all  of  the   Company's   assets   (other   than   under  the
                  circumstances  provided for in the foregoing  subsections  (a)
                  through (e); or

         (g)      takes any action  affecting the number of  Outstanding  Common
                  Stock,  other than an action described in any of the foregoing
                  subsections  (a) through (f) hereof,  inclusive,  which in the
                  opinion of the  Company's  Board of  Directors,  determined in
                  good faith,  would have a materially  adverse  effect upon the
                  rights of Investor at the time of a Put.

"VALUATION  PERIOD"  shall mean the period of ten (10) Trading Days  immediately
following the date on which the  applicable Put Notice is deemed to be delivered
and during  which the Purchase  Price of the Common  Stock is valued;  provided,
however,  that if a Valuation  Event occurs during any Valuation  Period,  a new
Valuation Period shall begin on the Trading Day immediately after the occurrence
of such Valuation Event and end on the tenth (10th) Trading Day thereafter.

"WEIGHTED  AVERAGE VOLUME" shall mean the average of the Weighted Volume for the
relevant days.

"WEIGHTED  VOLUME" shall mean the product of (a) the Closing Bid Price times (b)
the volume on the Principal Market.


                                   ARTICLE II
                        PURCHASE AND SALE OF COMMON STOCK

Section 2.1 INVESTMENTS.

                                       7
<PAGE>

(a) PUTS.  Upon the terms and  conditions set forth herein  (including,  without
limitation,  the  provisions  of Article  VII),  on any Put Date the Company may
exercise a Put by the  delivery of a Put  Notice.  The number of Put Shares that
Investor shall receive  pursuant to such Put shall be determined by dividing the
Investment Amount specified in the Put Notice by the Purchase Price with respect
to such Put Date.

(b) MINIMUM  AMOUNT OF PUTS.  The Company  shall,  in  accordance  with  Section
2.2(a),  deliver to Investor during the Commitment  Period,  Put Notices with an
aggregate  Investment Amount at least equal to the Minimum Commitment Amount. If
the Company for any reason fails to issue and deliver such Put Shares during the
Commitment  Period,  on the  first  Trading  Day  after  the  expiration  of the
Commitment  Period,  the  Company  shall wire to  Investor a sum in  immediately
available funds equal to the product of (i) the Minimum  Commitment Amount minus
the  aggregate  Investment  Amounts of the Put  Notices  delivered  to  Investor
hereunder, and (ii) the Discount.

(c) FLOOR PRICE. The Company may, at its option, specify in each such Put Notice
a Floor Price. In the event that during a Valuation  Period,  the Bid Price on a
Trading Day is below the Floor Price,  the Company  shall be under no obligation
to sell, and the Investor shall be under no obligation to purchase, one tenth of
the Put Amount for each such  Trading  Day and the Put Amount  shall be adjusted
accordingly.  In the event that, during a Valuation Period, the Bid Price on any
three Trading Days -- not  necessarily  consecutive -- is below the Floor Price,
the parties'  obligations to buy and sell the Put Amount shall  terminate on the
last of such Trading Days; provided, however, that in the event that at the time
of such termination the parties have consummated a partial  settlement(s) of the
Put Amount, the termination shall not affect such settlement(s).

Section 2.2  MECHANICS.

(a) PUT  NOTICE.  At any time  during the  Commitment  Period,  the  Company may
deliver a Put Notice to Investor, subject to the conditions set forth in Section
7.2; provided,  however, the Investment Amount for each Put as designated by the
Company in the  applicable Put Notice shall be neither less than the Minimum Put
Amount nor more than the Maximum Put Amount.

(b) DATE OF DELIVERY OF PUT NOTICE.  A Put Notice  shall be deemed  delivered on
(i) the Trading Day it is received by facsimile or otherwise by Investor if such
notice  is  received  on or  prior to 12:00  noon  New  York  time,  or (ii) the
immediately  succeeding  Trading Day if it is received by facsimile or otherwise
after  12:00 noon New York time on a Trading Day or at anytime on a day which is
not a Trading Day.

Section  2.3  CLOSINGS.  On or prior  to each  Closing  Date for a Put,  (a) the
Company shall  deliver to the Escrow  Agent,  or to the  Investor's  broker,  at
Investor's  option,  one or more certificates  representing the Put Shares to be
purchased by Investor pursuant to Section 2.1 herein,  registered in the name of
Investor and (b) Investor  shall deliver to the Escrow Agent,  or to the Company
as the case may be, the  Investment  Amount  specified in the Put Notice by wire
transfer of immediately  available funds to an account  designated by the Escrow
Agent , or by the  Company,  within  24 hours of the  Closing  Date.  In lieu of
delivering  physical  certificates  representing  the Common  Stock  issuable in
accordance  with clause (a) of this Section 2.3, and provided  that the Transfer
Agent  then is  participating  in the  Depository  Trust  Company  ("DTC")  Fast
Automated  Securities Transfer ("FAST") program,  upon request of Investor,  the
Company  shall use its  commercially  reasonable  efforts to cause the  Transfer
Agent to electronically  transmit,  prior to the Closing

                                       8
<PAGE>

Date,  the Put Shares by crediting the account of the holder's prime broker with
DTC through its Deposit Withdrawal Agent Commission ("DWAC") system, and provide
proof  satisfactory  to the Escrow Agent of such  delivery.  In addition,  on or
prior to such Closing  Date,  each of the Company and Investor  shall deliver to
the  Escrow  Agent  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.  On the
Closing Date and provided all  conditions to Closing have been  satisfied by the
Company,  the Escrow agent shall wire  transfer to the Company,  the  Investment
Amount, less any applicable fees and expenses.

Section 2.4    [INTENTIONALLY OMITTED]

Section 2.5  TERMINATION  OF INVESTMENT  OBLIGATION.  The obligation of Investor
pursuant  to this  Agreement  to  purchase  shares of  Common  Stock  shall,  at
Investor's option,  terminate (including with respect to a Closing Date that has
not yet  occurred)  in the event  that (a) there  shall  occur any stop order or
suspension of the  effectiveness of any Registration  Statement for an aggregate
of thirty  (30)Trading Days during the Commitment  Period,  for any reason other
than  deferrals or suspension  during a Blackout  Period in accordance  with the
Registration Rights Agreement,  as a result of corporate developments subsequent
to the Subscription  Date that would require such  Registration  Statement to be
amended  to reflect  such event in order to  maintain  its  compliance  with the
disclosure  requirements  of the Securities Act, or (b) the Company shall at any
time fail to comply with the  requirements  of Section 6.3, 6.4, or 6.6 and such
failure shall continue for more than thirty (30) days.

Section 2.6 BLACKOUT SHARES.  In the event that, (a) within fifteen (15) Trading
Days following any Closing Date, the Company gives a Blackout Notice to Investor
of a Blackout Period in accordance with the Registration  Rights Agreement,  and
(b) the Bid Price on the Trading Day immediately  preceding such Blackout Period
("OLD  BID  PRICE")  is  greater  than the Bid Price on the  first  Trading  Day
following such Blackout Period that Investor may sell its Registrable Securities
pursuant to an effective  Registration  Statement  ("NEW BID  PRICE"),  then the
Company shall issue to Investor the number of additional  shares of  Registrable
Securities  (the  "BLACKOUT  SHARES")  equal to the  difference  between (i) the
product of the number of Put Shares  held by Investor  immediately  prior to the
Blackout Period that were issued on the most recent Closing Date(the  "REMAINING
PUT SHARES") multiplied by the Old Bid Price,  divided by the New Bid Price, and
(ii) the Remaining Put Shares.

Section 2.7 [INTENTIONALLY LEFT BLANK]

Section 2.8 LIQUIDATED DAMAGES. Each of the Company and Investor acknowledge and
agree that the requirement to issue Blackout Shares under Section 2.6 shall give
rise to liquidated  damages and not penalties.  Each of the Company and Investor
further acknowledge that (a) the amount of loss or damages likely to be incurred
is incapable or is difficult to precisely estimate, (b) the amounts specified in
such  Sections  bear a  reasonable  proportion  and are not  plainly  or grossly
disproportionate  to the  probable  loss  likely to be  incurred  by Investor in
connection with the failure by the Company to make Puts with aggregate  Purchase
Prices totaling at least the Minimum  Commitment  Amount or in connection with a
Blackout Period under the  Registration  Rights  Agreement,  and (c) each of the
Company  and  Investor  are   sophisticated   business  parties  and  have  been
represented by sophisticated and able legal and financial counsel and negotiated
this Agreement at arm's length.

                                       9
<PAGE>

                                   ARTICLE III

                   REPRESENTATIONS AND WARRANTIES OF INVESTOR

Investor represents and warrants to the Company that:

Section 3.1 INTENT. Investor is entering into this Agreement for its own account
and Investor has no present arrangement  (whether or not legally binding) at any
time to sell the  Common  Stock to or through  any  person or entity;  provided,
however,  Investor reserves the right to dispose of the Common Stock at any time
in  accordance  with  federal  and  state  securities  laws  applicable  to such
disposition.

Section 3.2  SOPHISTICATED  INVESTOR.  Investor is a sophisticated  investor (as
described in Rule 506(b)(2)(ii) of Regulation D) and an accredited  investor (as
defined  in Rule 501 of  Regulation  D), and  Investor  has such  experience  in
business and financial  matters that it is capable of evaluating  the merits and
risks of an  investment  in the  Common  Stock.  Investor  acknowledges  that an
investment  in the Common  Stock is  speculative  and  involves a high degree of
risk.  In  addition,  the Investor is an  "accredited  investor" as that term is
defined in Rule 501 of Regulation D

Section 3.3  AUTHORITY.  (a) Investor has the  requisite  power and authority to
enter into and perform its obligations under this Agreement and the transactions
contemplated hereby in accordance with its terms; (b) the execution and delivery
of this Agreement and the Registration Rights Agreement, and the consummation by
it of the transactions contemplated hereby and thereby have been duly authorized
by all necessary  action and no further consent or  authorization of Investor or
its partners is required;  and (c) this  Agreement has been duly  authorized and
validly executed and delivered by Investor and is a valid and binding  agreement
of Investor  enforceable  against it in  accordance  with its terms,  subject to
applicable  bankruptcy,  insolvency,  or similar laws  relating to, or affecting
generally  the  enforcement  of,  creditors'  rights  and  remedies  or by other
equitable principles of general application.

Section  3.4  NOT  AN  AFFILIATE.  Investor  is  not  an  officer,  director  or
"affiliate"  (as that term is defined in Rule 405 of the Securities  Act) of the
Company.

Section 3.5 ORGANIZATION AND STANDING. Investor is a corporation duly organized,
validly existing and in good standing under the laws of the Bahamas, and has all
requisite  power and authority to own,  lease and operate its  properties and to
carry on its business as now being  conducted.  Investor 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 or property owned by it makes such
qualification  necessary,  other than  those in which the  failure so to qualify
would not have a material adverse effect on Investor.

Section 3.6 ABSENCE OF CONFLICTS.  The execution and delivery of this  Agreement
and any other document or instrument  contemplated  hereby, and the consummation
of the  transactions  contemplated  hereby and thereby,  and compliance with the
requirements hereof and thereof, will not (a) violate any law, rule, regulation,
order,  writ,  judgment,  injunction,  decree or award binding on Investor,  (b)
violate  any  provision  of any  indenture,  instrument  or  agreement  to which
Investor is a party or is subject,  or by which Investor or any of its assets is
bound, or conflict with or constitute a material default thereunder,  (c) result
in the  creation  or  imposition  of any lien  pursuant to the terms of any such
indenture, instrument or agreement, or constitute a

                                       10
<PAGE>

breach of any fiduciary duty owed by Investor to any third party, or (d) require
the approval of any  third-party  (that has not been  obtained)  pursuant to any
material contract,  instrument,  agreement,  relationship or legal obligation to
which  Investor  is  subject  or to  which  any of  its  assets,  operations  or
management may be subject.

Section  3.7  DISCLOSURE;  ACCESS TO  INFORMATION.  Investor  has  received  all
documents,  records,  books  and  other  information  pertaining  to  Investor's
investment  in the Company that has been  requested  by  Investor.  Investor has
reviewed or received copies of the SEC Documents.

Section 3.8 MANNER OF SALE. At no time was Investor  presented with or solicited
by or through any leaflet, public promotional meeting,  television advertisement
or any other form of general solicitation or advertising.

Section 3.9 FINANCIAL CAPABILITY.  Investor presently has the financial capacity
and the necessary capital to perform its obligations hereunder.

Section 3.10 Investor is not an  underwriter  of, or dealer in, the  Securities,
and Investor is not participating,  pursuant to a contractual agreement,  in the
distribution of Shares. The Investor does not, as of the date of this Agreement,
have any current short position in the Company's stock.


                                   ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Investor that, except as disclosed in the
SEC Documents:

Section 4.1  ORGANIZATION  OF THE  COMPANY.  The Company is a  corporation  duly
organized and validly  existing and in good standing under the laws of the State
of Delaware, and has all requisite power and authority to own, lease and operate
its properties and to carry on its business as now being conducted.  The Company
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 or
property  owned by it makes such  qualification  necessary,  other than those in
which the failure so to qualify would not have a Material Adverse Effect.

Section 4.2  AUTHORITY.  (a) The Company has the requisite  corporate  power and
authority to enter into and perform its obligations under this Agreement and the
Registration  Rights  Agreement  and to issue the Put  Shares  and the  Blackout
Shares,  if any;  (b) the  execution  and  delivery  of this  Agreement  and the
Registration  Rights  Agreement by the Company and the consummation by it of the
transactions  contemplated  hereby and thereby have been duly  authorized by all
necessary  corporate  action and no  further  consent  or  authorization  of the
Company or its Board of Directors or stockholders  is required;  and (c) each of
this Agreement and the Registration  Rights Agreement has been duly executed and
delivered by the Company and  constitute  valid and binding  obligations  of the
Company  enforceable  against the Company in  accordance  with their  respective
terms,  except as such  enforceability may be limited by applicable  bankruptcy,
insolvency,  or similar laws relating to, or affecting generally the enforcement
of, creditors'  rights and remedies or by other equitable  principles of general
application.

                                       11
<PAGE>

Section 4.3  CAPITALIZATION.  As of April 22, 2005, the authorized capital stock
of the  Company  consisted  of  20,000,000  shares  of  Common  Stock,  of which
[13,446,090]  shares  were  issued and  outstanding,  and  10,000,000  shares of
Preferred stock, 0 of which are issued and  outstanding.  Except for (a) options
to purchase approximately ____000,000 shares of Common Stock with exercise price
at  $0.____  per share as set forth in  Schedule  4.3,  there  were no  options,
warrants,  or  rights  to  subscribe  to,  securities,   rights  or  obligations
convertible  into or  exchangeable  for or giving any right to subscribe for any
shares of capital stock of the Company.  All of the outstanding shares of Common
Stock of the Company  have been duly and validly  authorized  and issued and are
fully paid and nonassessable.

Section 4.4 COMMON STOCK.  The Company has  registered the Common Stock pursuant
to Section 12(b) or 12(g) of the Exchange Act and is in full compliance with all
reporting  requirements  of the Exchange Act, and the Company has maintained all
requirements  for the continued  listing or quotation of the Common  Stock,  and
such Common Stock is currently listed or quoted on the Principal  Market.  As of
the date of this Agreement, the Principal Market is the OTC Bulletin Board.

Section 4.5 SEC  DOCUMENTS.  The  Company has  delivered  or made  available  to
Investor  true and  complete  copies of the SEC  Documents  (including,  without
limitation,  proxy  information  and  solicitation  materials).  To the  best of
Company's  knowledge,  the Company has not provided to Investor any  information
that,  according  to  applicable  law,  rule or  regulation,  should  have  been
disclosed  publicly  prior to the date hereof by the Company,  but which has not
been so disclosed.  As of their respective dates, the SEC Documents  complied in
all  material  respects  with  the  requirements  of the  Securities  Act or the
Exchange Act, as the case may be, and other federal, state and local laws, rules
and regulations applicable to such SEC Documents,  and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated  therein or necessary in order to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.  In the  opinion of  management,  the  financial  statements  of the
Company  included in the SEC  Documents  comply as to form and  substance in all
material  respects with  applicable  accounting  requirements  and the published
rules and regulations of the SEC or other  applicable rules and regulations with
respect thereto. Such financial statements have been prepared in accordance with
generally  accepted  accounting  principles applied on a consistent basis during
the periods involved (except (a) as may be otherwise indicated in such financial
statements  or  the  notes  thereto  or (b) 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 financial
position  of the Company as of the dates  thereof and the results of  operations
and cash flows for the periods  then ended  (subject,  in the case of  unaudited
statements, to normal year-end audit adjustments).

Section  4.6  EXEMPTION  FROM  REGISTRATION;  VALID  ISSUANCES.  To the  best of
Company's  knowledge,  the sale and  issuance of the Put Shares and the Blackout
Shares,  if  any,  in  accordance  with  the  terms  and  on  the  bases  of the
representations  and  warranties set forth in this  Agreement,  may and shall be
properly issued by the Company to Investor pursuant to Section 4(2),  Regulation
D and/or any applicable  state law. When issued and paid for as herein provided,
the Put  Shares,  and the  Blackout  Shares,  if any,  shall be duly and validly
issued,  fully paid, and  nonassessable.  Neither the sales of the Put Shares or
the Blackout Shares, if any,  pursuant to, nor the Company's  performance of its
obligations under, this Agreement or the Registration Rights Agreement shall (a)
result in the  creation or  imposition  of any liens,  charges,  claims or other
encumbrances  upon the Put Shares or the Blackout Shares,  if any, or any of the
assets of the Company, or (b) entitle the holders of Outstanding Common Stock to
preemptive  or other rights to subscribe to or acquire the Common Stock or other
securities of the Company. The Put Shares and the Blackout Shares, if any, shall

                                       12
<PAGE>

not subject Investor to personal liability by reason of the ownership thereof.

Section  4.7  NO  GENERAL   SOLICITATION   OR  ADVERTISING  IN  REGARD  TO  THIS
TRANSACTION. Neither the Company nor any of its affiliates nor any person acting
on  its  or  their  behalf  (a)  has  conducted  or  will  conduct  any  general
solicitation  (as that term is used in Rule 502(c) of  Regulation  D) or general
advertising  with  respect to any of the Put Shares or the Blackout  Shares,  if
any, or (b) made any offers or sales of any security or solicited  any offers to
buy any security under any circumstances that would require  registration of the
Common Stock under the Securities Act.

Section 4.8 CORPORATE DOCUMENTS.  The Company has furnished or made available to
Investor true and correct copies of the Company's  Certificate of Incorporation,
as  amended  and in  effect  on the date  hereof  (the  "CERTIFICATE"),  and the
Company's By-Laws, as amended and in effect on the date hereof (the "BY-LAWS").

Section 4.9 NO  CONFLICTS.  The  execution,  delivery  and  performance  of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby, including without limitation the issuance of the Put Shares
and the Blackout  Shares,  if any, do not and will not (a) result in a violation
of the  Certificate  or By-Laws or (b) conflict  with,  or constitute a material
default  (or an event that with  notice or lapse of time or both would  become a
material default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement,  indenture,  instrument
or any "lock-up" or similar  provision of any underwriting or similar  agreement
to which the Company is a party,  or (c) result in a violation  of any  federal,
state,  local or  foreign  law,  rule,  regulation,  order,  judgment  or decree
(including federal and state securities laws and  regulations)applicable  to the
Company or by which any  property  or asset of the  Company 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) nor is the Company  otherwise in violation of,
conflict with or in default under any of the foregoing;  provided, however, that
for purposes of the Company's representations and warranties as to violations of
foreign law, rule or regulation  referenced in clause (c), such  representations
and warranties are made only to the best of the Company's  knowledge  insofar as
the execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions  contemplated  hereby are or may
be affected by the status of Investor under or pursuant to any such foreign law,
rule or  regulation.  The  business  of the  Company is not being  conducted  in
violation of any law, ordinance or regulation of any governmental entity, except
for possible  violations  that either singly or in the aggregate do not and will
not have a Material  Adverse Effect.  The Company is not required under federal,
state or local law, rule or regulation 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 this  Agreement or issue and sell the Common Stock in accordance  with the
terms hereof (other than any SEC, NASD or state  securities  filings that may be
required to be made by the Company  subsequent to any Closing,  any registration
statement  that may be  filed  pursuant  hereto,  and any  shareholder  approval
required by the rules  applicable to companies  whose common stock trades on the
Over  The  Counter  Bulletin   Board);   provided  that,  for  purposes  of  the
representation  made in this sentence,  the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of Investor herein.

Section 4.10 N Section 4.10 NO MATERIAL  ADVERSE CHANGE.  Since January 1, 2005,
no event has occurred that would have a Material  Adverse Effect on the Company,
except as disclosed in the SEC Documents.

                                       13
<PAGE>

Section  4.11 NO  UNDISCLOSED  LIABILITIES.  The Company has no  liabilities  or
obligations  that are material,  individually or in the aggregate,  and that are
not disclosed in the SEC Documents or otherwise publicly  announced,  other than
those incurred in the ordinary course of the Company's  businesses since January
1, 2005 and which,  individually or in the aggregate, do not or would not have a
Material Adverse Effect on the Company.

Section 4.12 NO UNDISCLOSED  EVENTS OR CIRCUMSTANCES.  Since January 1, 2005, no
event or circumstance  has occurred or exists with respect to the Company or its
businesses,  properties,  prospects,  operations or financial  condition,  that,
under  applicable  law,  rule  or  regulation,  requires  public  disclosure  or
announcement  prior to the date  hereof by the Company but which has not been so
publicly announced or disclosed in the SEC Documents.

Section  4.13  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 of any security or solicited any offers to
buy any security,  other than pursuant to this  Agreement,  under  circumstances
that would require registration of the Common Stock under the Securities Act.

Section 4.14 LITIGATION AND OTHER PROCEEDINGS.  Except as may beset forth in the
SEC  Documents,  there are no  lawsuits  or  proceedings  pending or to the best
knowledge of the Company  threatened,  against the Company,  nor has the Company
received  any written or oral notice of any such  action,  suit,  proceeding  or
investigation,  which would have a Material Adverse Effect.  Except as set forth
in the SEC Documents,  no judgment,  order, writ,  injunction or decree or award
has been  issued  by or,  so far as is known by the  Company,  requested  of any
court,  arbitrator or  governmental  agency which would have a Material  Adverse
Effect.

Section 4.15 NO  MISLEADING  OR UNTRUE  COMMUNICATION.  The Company,  any Person
representing the Company, and, to the knowledge of the Company, any other Person
selling or offering to sell the Put Shares or the  Blackout  Shares,  if any, in
connection with the transactions  contemplated by this Agreement, have not made,
at any time, any oral  communication in connection with the offer or sale of the
same which contained any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.

Section 4.16 MATERIAL NON-PUBLIC  INFORMATION.  The Company is not in possession
of, nor has the  Company or its  agents  disclosed  to  Investor,  any  material
non-public  information  that (a) if disclosed,  would reasonably be expected to
have a  materially  adverse  effect  on the  price  of the  Common  Stock  or(b)
according to applicable  law,  rule or  regulation,  should have been  disclosed
publicly  by the  Company  prior to the date  hereof  but  which has not been so
disclosed.

Section 4.17.

a. [INTENTIONALLY OMITTED]

                                       14
<PAGE>

                                    ARTICLE V

                              COVENANTS OF INVESTOR

Section 5.1 COMPLIANCE WITH LAW.  Investor's  trading activities with respect to
shares of the Common Stock will be in compliance  with all applicable  state and
federal  securities laws, rules and regulations and the rules and regulations of
the NASD and the Principal Market on which the Common stock is listed.

Section 5.2 TRADING IN SECURITIES.  The Company specifically  acknowledges that,
except  to the  extent  specifically  provided  herein  or in  any of the  other
Transaction   Agreements  (but  limited  in  each  instance  to  the  extent  so
specified),  the Investor retains the right (but is not otherwise  obligated) to
buy, sell,  engage in hedging  transactions or otherwise trade in the Securities
at any time after the  delivery of a Put Notice  pursuant to this  Agreement  as
permitted by applicable federal and state securities laws.  Notwithstanding  the
preceding  sentence,  the Investor  warranties  that it will only sell shares of
Company  common  stock for which it has  received a Put Notice from the Company.
The Investor, its affiliates, agents and representatives shall not cause, engage
in, in any manner whatsoever, and direct or indirect short-selling or hedging of
the ordinary  shares of the Company.  Any sales  subsequent to delivery of a Put
Notice shall not be deemed a short sale or hedging transaction.

                                   ARTICLE VI

                            COVENANTS OF THE COMPANY

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

Section 6.2 RESERVATION OF COMMON STOCK. As of the date hereof,  the Company has
available and the Company shall reserve and keep available at all times, free of
preemptive  rights,  shares of Common  Stock for the  purpose  of  enabling  the
Company  to satisfy  any  obligation  to issue the Put  Shares and the  Blackout
Shares,  if any;  such amount of shares of Common Stock to be reserved  shall be
5,000,000 for the Put Shares under the terms and  conditions  of this  Agreement
and a good faith  estimate by the Company in  consultation  with Investor of the
number of Blackout  Shares,  if any, that will need to be issued.  The number of
shares so reserved  from time to time,  as  theretofore  increased or reduced as
hereinafter provided,  may be reduced by the number of shares actually delivered
hereunder.

Section 6.3 LISTING OF COMMON  STOCK.  The Company shall use its best efforts to
maintain the listing of the Common Stock on a Principal  Market,  and will cause
the Put Shares and the Blackout  Shares,  if any, to be listed on the  Principal
Market.  The Company  further shall,  if the Company  applies to have the Common
Stock traded on any other Principal Market,  include in such application the Put
Shares and the Blackout  Shares,  if any, and shall take such other action as is
necessary  or desirable  in the  reasonable  opinion of Investor to use its best
efforts to cause the Common Stock to be listed on such other Principal Market as
promptly as possible. The Company shall use its commercially  reasonable efforts
to continue the listing and trading of the Common Stock on the Principal  Market
(including, without limitation,  maintaining sufficient net tangible assets) and
will  comply in all  respects  with the  Company's  reporting,  filing and other
obligations under the bylaws or rules of the NASD and the Principal Market.

Section 6.4 EXCHANGE ACT  REGISTRATION.  The Company shall take all commercially
reasonable  steps

                                       15
<PAGE>

to cause the Common Stock to continue to be  registered  under  Section 12(g) or
12(b) of the  Exchange  Act,  will use its  commercially  reasonable  efforts to
comply in all material respects with its reporting and filing  obligations under
said Act,  and will not take any  action or file any  document  (whether  or not
permitted  by said Act or the rules  thereunder)  to  terminate  or suspend such
registration  or to terminate or suspend its  reporting  and filing  obligations
under said Act.

Section 6.5 LEGENDS. The certificates evidencing the Put Shares and the Blackout
Shares,  if any,  shall be free of legends,  except as  provided  for in Article
VIII.

Section  6.6  CORPORATE  EXISTENCE.  The  Company  shall  take all  commercially
reasonable  steps necessary to preserve and continue the corporate  existence of
the Company.

Section 6.7  ADDITIONAL  SEC  DOCUMENTS.  The Company shall deliver to Investor,
promptly after the originals thereof are submitted to the SEC for filing, copies
of all SEC Documents so furnished or submitted to the SEC.

Section 6.8 NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF RIGHT
TO MAKE A PUT. The Company shall promptly notify Investor upon the occurrence of
any of the following  events in respect of a  registration  statement or related
prospectus in respect of an offering of Registrable  Securities:  (a) 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;  (b)  the  issuance  by the  SEC  or  any  other  federal  or  state
governmental  authority of any stop order  suspending the  effectiveness  of any
Registration  Statement or the initiation of any  proceedings  for that purpose;
(c)  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;  (d) the  happening  of any event  that makes any
statement  made in such  Registration  Statement  or related  prospectus  or 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
a Registration Statement, it will not contain any untrue statement of a material
fact or omit to state  any  material  fact  required  to be  stated  therein  or
necessary to make the statements therein not misleading, and that in the case of
the related  prospectus,  it will not contain any untrue statement of a material
fact or omit to state  any  material  fact  required  to be  stated  therein  or
necessary  to make the  statements  therein,  in the light of the  circumstances
under which they were made,  not  misleading;  and (e) the Company's  reasonable
determination  that a  post-effective  amendment to the  registration  statement
would be appropriate,  and the Company shall promptly make available to Investor
any such  supplement or amendment to the related  prospectus.  The Company shall
not deliver to Investor  any Put Notice  during the  continuation  of any of the
foregoing events.

Section 6.9 EXPECTATIONS  REGARDING PUT NOTICES.  Within ten (10) days after the
commencement of each calendar quarter  occurring  subsequent to the commencement
of the Commitment  Period,  the Company  undertakes to notify Investor as to its
reasonable  expectations as to the dollar amount it intends to raise during such
calendar quarter, if any, through the issuance of Put Notices. Such notification
shall  constitute  only the Company's  good faith  estimate with respect to such
calendar  quarter and shall in no way  obligate the Company to raise such amount
during  such  calendar  quarter or  otherwise  limit its  ability to deliver Put
Notices during such calendar quarter.  The failure by the Company to comply with
this provision can be cured by the Company's  notifying  Investor at any time as
to its reasonable expectations with respect to the current calendar

                                       16
<PAGE>

quarter.

Section 6.10 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 of the assets of the Company to, another
entity unless the resulting  successor or acquiring  entity (if not the Company)
assumes by written  instrument the obligation to deliver to Investor such shares
of Common Stock and/or securities as Investor is entitled to receive pursuant to
this Agreement.

Section  6.11  ISSUANCE OF PUT SHARES AND BLACKOUT  SHARES.  The sale of the Put
Shares  and the  issuance  of the  Blackout  Shares,  if any,  shall  be made in
accordance  with  the  provisions  and  requirements  of  Regulation  D and  any
applicable state law.

Section 6.12 REIMBURSEMENT.  If (i) Investor,  other than by reason of its gross
negligence  or willful  misconduct,  becomes  involved  in any  capacity  in any
action,  proceeding or investigation  brought by any shareholder of the Company,
in  connection  with or as a  result  of the  consummation  of the  transactions
contemplated  by the Transaction  Documents,  or if Investor is impleaded in any
such action,  proceeding or investigation by any person, or (ii) Investor, other
than by reason of its gross negligence or willful misconduct or by reason of its
trading  of the  Common  Stock in a manner  that is  illegal  under the  federal
securities laws,  becomes involved in any capacity in any action,  proceeding or
investigation  brought  by the  SEC  against  or  involving  the  Company  or in
connection  with  or  as a  result  of  the  consummation  of  the  transactions
contemplated  by the Transaction  Documents,  or if Investor is impleaded in any
such action,  proceeding or investigation by any person,  then in any such case,
the Company will reimburse  Investor for its reasonable legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith,  as such expenses are incurred. In addition,  other than with respect
to any  matter in which  Investor  is a named  party,  the  Company  will pay to
Investor the charges, as reasonably determined by Investor,  for the time of any
officers or employees of Investor  devoted to appearing  and preparing to appear
as witnesses, assisting in preparation for hearings, trials or pretrial matters,
or otherwise with respect to inquiries,  hearing,  trials, and other proceedings
relating to the subject matter of this Agreement. The reimbursement  obligations
of the Company under this section  shall be in addition to any  liability  which
the Company may otherwise have,  shall extend upon the same terms and conditions
to any affiliates of Investor that are actually named in such action, proceeding
or investigation,  and partners,  directors,  agents,  employees and controlling
persons (if any),  as the case may be, of Investor and any such  affiliate,  and
shall be binding upon and inure to the benefit of any successors, assigns, heirs
and personal representatives of the Company, Investor and any such affiliate and
any such person.

Section  6.13  DILUTION.  The number of shares of Common  Stock  issuable as Put
Shares may increase substantially in certain circumstances,  including,  but not
necessarily limited to, the circumstance wherein the trading price of the Common
Stock  declines  during the period between the Effective Date and the end of the
Commitment Period.  The Company's  executive officers and directors have studied
and  fully  understand  the  nature  of the  transactions  contemplated  by this
Agreement and recognize that they have a potential dilutive effect. The board of
directors of the Company has  concluded,  in its good faith  business  judgment,
that  such  issuance  is in the  best  interests  of the  Company.  The  Company
specifically acknowledges that its obligation to issue the Put Shares is binding
upon the Company and  enforceable  regardless  of the dilution such issuance may
have on the ownership interests of other shareholders of the Company.

Section  6.14  USE OF  PROCEEDS.  The  Company  will use the  proceeds  received
hereunder  (excluding amounts paid by the Company for legal fees,  finder's fees
and escrow fees in  connection  with the sale of the

                                       17
<PAGE>

Common Stock) for internal working capital  purposes,  and, unless  specifically
consented to in advance in each instance by the Investor, the Company shall not,
directly or  indirectly,  use such proceeds for any loan to or investment in any
other corporation,  partnership  enterprise or other person or for the repayment
of any outstanding loan by the Company to any other party.

Section 6.15 CERTAIN  AGREEMENTS.  (a) (i) The Company covenants and agrees that
it will not,  without the prior written consent of the Investor,  enter into any
subsequent or further offer or sale of Common Stock or Common Stock  Equivalents
(collectively,   "New  Common  Stock")  with  any  third  party  pursuant  to  a
transaction  which in any manner permits the sale of the New Common Stock on any
date which is thirty (30) days prior or subsequent to any Closing Date.

(ii) The provisions of  subparagraph  6.15(i) will not apply to (w) Common Stock
issued  pursuant to an exemption from  registration  under the Securities Act of
1933; (x) an underwritten public offering of shares of Common Stock or Preferred
Stock; (y) an offering of convertible Preferred Stock at market or above; or (z)
the  issuance  of  securities  (other  than  for  cash)  in  connection  with an
acquisition, merger, consolidation,  sale of assets, disposition or the exchange
of the capital stock for assets, stock, strategic  arrangements,  or other joint
venture interests.

(iii) In the event the Company  breaches the  provisions  of this  Section,  the
Discount  shall be  amended to be equal to  (x)110%  of the  Discount  set forth
herein,  and the Investor may terminate its obligations under this Agreement and
demand such amounts as may be owing under Section 2.1.

(b) The Company covenants and agrees that it will not, without the prior written
consent of the Investor, enter into any subsequent or further equity credit line
agreement  (however  denominated)  with any third  party  during the  Commitment
Period.


                                   ARTICLE VII

                            CONDITIONS TO DELIVERY OF
                      PUT NOTICES AND CONDITIONS TO CLOSING

Section 7.1  CONDITIONS  PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE AND
SELL COMMON STOCK. The obligation hereunder of the Company to issue and sell the
Put Shares to Investor  incident to each Closing is subject to the satisfaction,
at or before each such Closing, of each of the conditions set forth below.

(a) ACCURACY OF INVESTOR'S  REPRESENTATIONS AND WARRANTIES.  The representations
and warranties of Investor shall be true and correct in all material respects as
of the date of this  Agreement and as of the date of each such Closing as though
made at each such time, except for changes which have not had a Material Adverse
Effect.

(b)  PERFORMANCE  BY INVESTOR.  Investor  shall have  performed,  satisfied  and
complied in all respects with all covenants,  agreements and conditions required
by this Agreement to be performed,  satisfied or

                                       18
<PAGE>

complied with by Investor at or prior to such Closing.

Section 7.2  CONDITIONS  PRECEDENT  TO THE RIGHT OF THE COMPANY TO DELIVER A PUT
NOTICE AND THE  OBLIGATION OF INVESTOR TO PURCHASE PUT SHARES.  The right of the
Company to deliver a Put Notice and the  obligation  of  Investor  hereunder  to
acquire  and pay for the Put  Shares  incident  to a Closing  is  subject to the
satisfaction,  on (a)  the  date of  delivery  of such  Put  Notice  and (b) the
applicable Closing Date (each a "CONDITION  SATISFACTION  DATE"), of each of the
following conditions:

(a)  REGISTRATION  OF REGISTRABLE  SECURITIES  WITH THE SEC. As set forth in the
Registration  Rights  Agreement,  the Company  shall have filed with the SEC the
Initial  Registration  Statement  with  respect  to the  resale  of the  Initial
Registrable  Securities by Investor and such  Registration  Statement shall have
been declared effective by the SEC prior to the first Put Date. For the purposes
of any Put Notice  with  respect to the  Registrable  Securities  other than the
Initial  Registrable  Securities,  the  Company  shall have filed with the SEC a
Registration Statement with respect to the resale of such Registrable Securities
by Investor which shall have been declared effective by the SEC prior to the Put
Date therefore.

(b) EFFECTIVE  REGISTRATION  STATEMENT.  As set forth in the Registration Rights
Agreement,  a Registration  Statement shall have previously become effective for
the resale by Investor of the Registrable  Securities subject to such Put Notice
and  such  Registration  Statement  shall  remain  effective  on each  Condition
Satisfaction  Date and (i) neither the Company nor Investor  shall have received
notice that the SEC has issued or intends to issue a stop order with  respect to
such Registration Statement or that the SEC otherwise has suspended or withdrawn
the  effectiveness  of  such  Registration  Statement,   either  temporarily  or
permanently,  or intends or has  threatened to do so (unless the SEC's  concerns
have been addressed and 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 such  Registration  Statement or
related prospectus shall exist.

(c)   ACCURACY   OF  THE   COMPANY'S   REPRESENTATIONS   AND   WARRANTIES.   The
representations  and  warranties of the Company shall be true and correct in all
material respects as of each Condition  Satisfaction Date as though made at each
such time (except for representations  and warranties  specifically made as of a
particular  date)  with  respect  to  all  periods,  and as to  all  events  and
circumstances occurring or existing to and including each Condition Satisfaction
Date,   except   for  any   conditions   which  have   temporarily   caused  any
representations  or  warranties  herein  to be  incorrect  and  which  have been
corrected with no continuing impairment to the Company or Investor.

(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 adopted by any
court or  governmental  authority of competent  jurisdiction  that  prohibits or
directly and materially  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 materially  adversely affecting any of the transactions
contemplated by this Agreement.

                                       19
<PAGE>

(f) ADVERSE  CHANGES.  Since the date of filing of the Company's most recent SEC
Document,  no event that had or is reasonably  likely to have a Material Adverse
Effect has occurred.

(g) NO SUSPENSION OF TRADING IN OR DELISTING OF COMMON STOCK. The trading of the
Common Stock shall not have been  suspended by the SEC, the Principal  Market or
the NASD and the Common Stock shall have been  approved for listing or quotation
on and shall not have been delisted from the Principal Market.

(h) LEGAL OPINION. The Company shall have caused to be delivered to Investor and
to the Company's  transfer  agent,  within two (2) Trading Days of the effective
date of the Initial  Registration  Statement  and each  subsequent  Registration
Statement,  an opinion of the  Company's  legal counsel in the form of Exhibit C
hereto, addressed to Investor.

(i) [INTENTIONALLY OMITTED]

(j) FIVE PERCENT LIMITATION. On each Closing Date, the number of Put Shares then
to be  purchased  by Investor  shall not exceed the number of such shares  that,
when  aggregated  with all other shares of Registrable  Securities then owned by
Investor beneficially or deemed beneficially owned by Investor,  would result in
Investor  owning  no more  than  4.99% of all of such  Common  Stock as would be
outstanding on such Closing Date, as determined in accordance with Section 16 of
the Exchange Act and the  regulations  promulgated  thereunder.  For purposes of
this Section 7.2(j), in the event that the amount of Common Stock outstanding as
determined in accordance with Section 16 of the Exchange Act and the regulations
promulgated  thereunder is greater on a Closing Date than on the date upon which
the Put Notice  associated with such Closing Date is given, the amount of Common
Stock  outstanding on such Closing Date shall govern for purposes of determining
whether  Investor,  when aggregating all purchases of Common Stock made pursuant
to this Agreement and Blackout Shares,  if any, would own more than 4.99% of the
Common Stock following such Closing Date.

(k) [INTENTIONALLY OMITTED]

(l) NO  KNOWLEDGE.  The Company shall have no knowledge of any event more likely
than not to have  the  effect  of  causing  such  Registration  Statement  to be
suspended or otherwise ineffective (which event is more likely than not to occur
within the fifteen  Trading Days  following the Trading Day on which such Notice
is deemed delivered).

(m) [INTENTIONALLY OMITTED]

(n) SHAREHOLDER VOTE. 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.

(o) NO VALUATION  EVENT.  No Valuation  Event shall have occurred  since the Put
Date.

(p) OTHER. On each Condition Satisfaction Date, Investor shall have received and
been reasonably  satisfied with such other  certificates  and documents as shall
have been reasonably  requested by Investor in order for Investor to confirm the
Company's  satisfaction  of the  conditions  set  forth  in this  Section  7.2.,
including,  without  limitation,  a certificate  in  substantially  the form and
substance of Exhibit D hereto,  executed

                                       20
<PAGE>

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.

Section 7.3 DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION.

(a) The Company  shall make  available  for  inspection  and review by Investor,
advisors to and  representatives  of Investor  (who may or may not be affiliated
with  Investor  and  who  are  reasonably   acceptable  to  the  Company),   any
Underwriter,  any 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 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 such Registration.  This is subject to SEC
Regulation FD.

(b) Each of the Company, its officers, directors,  employees and agents shall in
no  event  disclose   non-public   information  to  Investor,   advisors  to  or
representatives of Investor.

(c) Nothing herein shall require the Company to disclose non-public  information
to 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 shall, as hereinabove  provided,  immediately  notify the
advisors and  representatives  of Investor and 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 a 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  7.3 shall be  construed  to mean that such
persons or entities other than Investor (without the written consent of 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 and
conditions 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,  any Registration  Statement  contains an
untrue  statement  of a material  fact or omits a material  fact  required to be
stated  in such  Registration  Statement  or  necessary  to make the  statements
contained  therein,  in light of the  circumstances in which they were made, not
misleading.


                                  ARTICLE VIII

                                     LEGENDS

Section  8.1  LEGENDS.   Unless  otherwise   provided  below,  each  certificate
representing   Registrable  Securities  will  bear  the  following  legend  (the
"LEGEND"):

                                       21
<PAGE>

"The securities  represented by this  certificate have not been registered under
the Securities Act of 1933 (the "Securities  Act") or qualified under applicable
state  securities  laws.  These  securities may not be offered,  sold,  pledged,
hypothecated,  transferred  or otherwise  disposed of except  pursuant to (I) an
effective  registration  statement  and  qualification  in effect  with  respect
thereto under the Securities Act and under any applicable  state securities law,
(ii) to the extent  applicable,  Rule 144 under the Securities  Act, or (iii) an
opinion of counsel  reasonably  acceptable to the Company that such registration
and qualification is not required under applicable  federal and state securities
laws."

As soon as  practicable  after the  execution and delivery  hereof,  the Company
shall issue to the Transfer  Agent  Instructions  in  substantially  the form of
Exhibit E hereto. Such instructions shall be irrevocable by the Company from and
after  the date  thereof  or from and  after  the  issuance  thereof  except  as
otherwise  expressly  provided in the Registration  Rights Agreement.  It is the
intent and purpose of such  instructions,  as provided  therein,  to require the
Transfer  Agent to issue to Investor  certificates  evidencing  shares of Common
Stock incident to a Closing,  free of the Legend,  without  consultation  by the
transfer  agent with the  Company or its  counsel  and  without the need for any
further advice or instruction or  documentation to the Transfer Agent by or from
the  Company  or its  counsel  or  Investor;  provided  that (a) a  Registration
Statement shall then be effective,  (b) Investor  confirms to the Transfer Agent
and the  Company  that it has or  intends to sell such  Common  Stock to a third
party which is not an affiliate  of Investor or the Company and Investor  agrees
to redeliver  the  certificate  representing  such shares of Common Stock to the
Transfer  Agent to add the Legend in the event the Common Stock is not sold, and
(c) if  reasonably  requested  by the transfer  agent or the  Company,  Investor
confirms to the transfer  agent and the Company that  Investor has complied with
the prospectus delivery  requirement under the Securities Act. At any time after
the Effective Date, upon surrender of one or more certificates evidencing Common
Stock that bear the Legend, to the extent accompanied by a notice requesting the
issuance of new certificates free of the Legend to replace those surrendered.

Section 8.2 NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend other than
the one  specified  in  Section  8.1 has been or shall be  placed  on the  share
certificates  representing  the  Common  Stock  and  no  instructions  or  "stop
transfers   orders,"  so  called,   "stock  transfer   restrictions,"  or  other
restrictions  have been or shall be given to the Company's  transfer  agent with
respect thereto other than as expressly set forth in this Article VIII.

Section 8.3 COVER. If the Company fails for any reason to deliver the Put Shares
on such Closing Date and the holder of the Put Shares (a "Investor")  purchases,
in an open  market  transaction  or  otherwise,  shares  of  Common  Stock  (the
"Covering Shares") in order to make delivery in satisfaction of a sale of Common
Stock by such  Investor  (the  "Sold  Shares"),  which  delivery  such  Investor
anticipated  to make using the Put Shares (a  "Buy-In"),  then the Company shall
pay to such  Investor,  in addition to all other amounts  contemplated  in other
provisions of the  Transaction  Documents,  and not in lieu thereof,  the Buy-In
Adjustment  Amount (as defined  below).  The "Buy-In  Adjustment  Amount" is the
amount equal to the excess,  if any, of (x) such Investor's total purchase price
(including brokerage  commissions,  if any) for the Covering Shares over (y) the
net proceeds  (after  brokerage  commissions,  if any) received by such Investor
from the sale of the Sold Shares.  The Company  shall pay the Buy-In  Adjustment
Amount to such Investor in immediately  available funds  immediately upon demand
by such Investor. By way of illustration and not in limitation of the foregoing,
if such  Investor  purchases  Covering  Shares  having  a total  purchase  price
(including  brokerage  commissions) of $11,000 to cover a Buy-In with respect to
shares of Common  Stock that it sold for net  proceeds  of  $10,000,  the Buy-In
Adjustment Amount that the Company will be required to pay to such Investor will
be $1,000.

                                       22
<PAGE>

Section 8.4 INVESTOR'S COMPLIANCE.  Nothing in this Article VIII shall affect in
any way Investor's obligations under any agreement to comply with all applicable
securities laws upon resale of the Common Stock.


                                   ARTICLE IX

                            NOTICES; INDEMNIFICATION

Section 9.1 NOTICES. All notices, demands,  requests,  consents,  approvals, and
other  communications  required or permitted  hereunder shall be in writing and,
unless otherwise specified herein, shall be (a) personally  served,(b) deposited
in the mail, registered or certified, return receipt requested, postage prepaid,
(c)  delivered by reputable  air courier  service with charges  prepaid,  or (d)
transmitted by hand  delivery,  telegram,  or facsimile,  addressed as set forth
below or to such other address as such party shall have  specified most recently
by  written   notice  given  in  accordance   herewith.   Any  notice  or  other
communication  required  or  permitted  to be given  hereunder  shall be  deemed
effective  (i) upon hand  delivery  or  delivery  by  facsimile,  with  accurate
confirmation  generated by the transmitting facsimile machine, at the address or
number  designated  below (if delivered on a business day during normal business
hours where such notice is to be received),  or the first business day following
such delivery (if delivered  other than on a business day during normal business
hours where such notice is to be  received)  or (ii) on the second  business day
following  the date of  mailing  by  express  courier  service  or on the  fifth
business day after deposited in the mail, in each case, fully prepaid, addressed
to such address,  or upon actual receipt of such mailing,  whichever shall first
occur. The addresses for such communications shall be:

If to the Company:

                           American Pallet Leasing, Inc.
                           425 Second Street, S.E., Suite 600
                           Cedar Rapids, IA 54201
                           Telephone: (319) 533-5157
                           Facsimile: (319) 247-2757

with a copy (which shall not constitute notice) to:

                           David E. Danovitch, Esq.
                           Gersten, Savage, Kaplowitz, Wolf & Marcus LLP
                           600 Lexington Avenue
                           New York, New York 10022
                           Telephone: (212) 752-9700
                           Facsimile: (212) 980-5192

If to Investor:            Brittany Capital Management Limited
                           c/o Cumberland House
                           27 Cumberland Street
                           PO Box N-10818
                           Nassau, New Providence
                           Bahamas

                                       23
<PAGE>

with a copy (which shall not constitute notice)  to:

                           Southridge Capital Management LLC
                           90 Grove Street
                           Ridgefield, CT 06877
                           Telephone:  (203) 431-8300
                           Facsimile:  (212) 431-8301

Either party hereto may from time to time change its address or facsimile number
for  notices  under this  Section  9.1 by giving at least ten (10)  days'  prior
written  notice of such changed  address or facsimile  number to the other party
hereto.

Section 9.2  INDEMNIFICATION.  The Company agrees to indemnify and hold harmless
Investor and its officers, directors,  employees, and agents, and each Person or
entity,  if any, who controls  Investor  within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act,  together with the Controlling
Persons (as defined in the Registration  Rights  Agreement) from and against any
Damages,  joint or several, and any action in respect thereof to which Investor,
its partners,  affiliates,  officers, directors,  employees, and duly authorized
agents,  and any such  Controlling  Person becomes  subject to,  resulting from,
arising  out of or  relating  to any  misrepresentation,  breach of  warranty or
nonfulfillment of or failure to perform any covenant or agreement on the part of
Company contained in this Agreement, as such Damages are incurred, except to the
extent such Damages  result  primarily  from  Investor's  failure to perform any
covenant  or  agreement  contained  in  this  Agreement  or  Investor's  or  its
officer's,  director's,  employee's, agent's or Controlling Person's negligence,
recklessness or bad faith in performing its obligations under this Agreement.

Section  9.3  METHOD  OF  ASSERTING   INDEMNIFICATION  CLAIMS.  All  claims  for
indemnification  by any  Indemnified  Party (as defined below) under Section 9.2
shall be asserted and resolved as follows:

(a) In the event any claim or demand in  respect  of which any  person  claiming
indemnification  under any  provision  of Section 9.2 (an  "INDEMNIFIED  PARTY")
might seek  indemnity  under  Section  9.2 is  asserted  against or sought to be
collected from such  Indemnified  Party by a person other than a party hereto or
an  affiliate  thereof (a "THIRD  PARTY  CLAIM"),  the  Indemnified  Party shall
deliver a written  notification,  enclosing a copy of all papers served, if any,
and  specifying  the nature of and basis for such Third  Party Claim and for the
Indemnified Party's claim for  indemnification  that is being asserted under any
provision of Section 9.2 against any person (the "INDEMNIFYING PARTY"), together
with the amount or, if not then reasonably ascertainable,  the estimated amount,
determined  in good faith,  of such Third Party  Claim (a "CLAIM  NOTICE")  with
reasonable  promptness to the Indemnifying Party. If the Indemnified Party fails
to provide the Claim Notice with  reasonable  promptness  after the  Indemnified
Party receives notice of such Third Party Claim,  the  Indemnifying  Party shall
not be obligated to indemnify the  Indemnified  Party with respect to such Third
Party Claim to the extent that the  Indemnifying  Party's  ability to defend has
been prejudiced by such failure of the Indemnified Party. The Indemnifying Party
shall  notify the  Indemnified  Party as soon as  practicable  within the period
ending thirty (30) calendar days following receipt by the Indemnifying  Party of
either a Claim Notice or an Indemnity  Notice (as defined  below) (the  "DISPUTE
PERIOD") whether the Indemnifying  Party disputes its liability or the amount of
its  liability  to the  Indemnified  Party  under  Section  9.2 and  whether the
Indemnifying  Party  desires,  at its  sole  cost and  expense,  to  defend  the
Indemnified  Party against such Third Party  Claim.(i)If the Indemnifying  Party
notifies the Indemnified  Party within the Dispute

                                       24
<PAGE>

Period that the Indemnifying  Party desires to defend the Indemnified Party with
respect to the Third  Party  Claim  pursuant to this  Section  9.3(a),  then the
Indemnifying  Party  shall have the right to  defend,  with  counsel  reasonably
satisfactory  to the  Indemnified  Party,  at the sole cost and  expense  of the
Indemnifying Party, such Third Party Claim by all appropriate proceedings, which
proceedings  shall be vigorously and diligently  prosecuted by the  Indemnifying
Party  to a final  conclusion  or  will  be  settled  at the  discretion  of the
Indemnifying  Party (but only with the consent of the  Indemnified  Party in the
case of any  settlement  that  provides for any relief other than the payment of
monetary  damages or that  provides  for the payment of  monetary  damages as to
which the Indemnified Party shall not be indemnified in full pursuant to Section
9.2).  The  Indemnifying  Party  shall  have full  control of such  defense  and
proceedings,  including any compromise or settlement thereof; provided, however,
that the Indemnified  Party may, at the sole cost and expense of the Indemnified
Party,  at any time prior to the  Indemnifying  Party's  delivery  of the notice
referred to in the first sentence of this clause (i), file any motion, answer or
other pleadings or take any other action that the Indemnified  Party  reasonably
believes to be necessary or appropriate  to protect its interests;  and provided
further,  that if requested by the  Indemnifying  Party,  the Indemnified  Party
will, at the sole cost and expense of the Indemnifying Party, provide reasonable
cooperation to the  Indemnifying  Party in contesting any Third Party Claim that
the Indemnifying Party elects to contest.  The Indemnified Party may participate
in,  but not  control,  any  defense  or  settlement  of any Third  Party  Claim
controlled by the Indemnifying  Party pursuant to this clause (i), and except as
provided in the preceding  sentence,  the  Indemnified  Party shall bear its own
costs and  expenses  with  respect to such  participation.  Notwithstanding  the
foregoing,  the  Indemnified  Party may  takeover  the control of the defense or
settlement of a Third Party Claim at any time if it irrevocably waives its right
to indemnity  under Section 9.2 with respect to such Third Party Claim.  (ii) If
the Indemnifying  Party fails to notify the Indemnified Party within the Dispute
Period  that the  Indemnifying  Party  desires to defend the Third  Party  Claim
pursuant to Section 9.3(a),  or if the Indemnifying  Party gives such notice but
fails to prosecute vigorously and diligently or settle the Third Party Claim, or
if the Indemnifying Party fails to give any notice whatsoever within the Dispute
Period,  then the Indemnified  Party shall have the right to defend, at the sole
cost and  expense  of the  Indemnifying  Party,  the  Third  Party  Claim by all
appropriate   proceedings,   which   proceedings  shall  be  prosecuted  by  the
Indemnified Party in a reasonable manner and in good faith or will be settled at
the discretion of the  Indemnified  Party(with  the consent of the  Indemnifying
Party, which consent will not be unreasonably  withheld).  The Indemnified Party
will have full control of such defense and proceedings, including any compromise
or settlement thereof;  provided,  however, that if requested by the Indemnified
Party,  the  Indemnifying  Party  will,  at the  sole  cost and  expense  of the
Indemnifying Party, provide reasonable  cooperation to the Indemnified Party and
its counsel in contesting any Third Party Claim which the  Indemnified  Party is
contesting. Notwithstanding the foregoing provisions of this clause (ii), if the
Indemnifying  Party has notified the Indemnified Party within the Dispute Period
that  the  Indemnifying  Party  disputes  its  liability  or the  amount  of its
liability  hereunder to the  Indemnified  Party with respect to such Third Party
Claim and if such dispute is resolved in favor of the Indemnifying  Party in the
manner  provided  in  clause(iii)  below,  the  Indemnifying  Party  will not be
required  to bear the costs and  expenses  of the  Indemnified  Party's  defense
pursuant  to this  clause  (ii)  or of the  Indemnifying  Party's  participation
therein at the Indemnified  Party's  request,  and the  Indemnified  Party shall
reimburse the  Indemnifying  Party in full for all reasonable costs and expenses
incurred by the  Indemnifying  Party in  connection  with such  litigation.  The
Indemnifying  Party  may  participate  in,  but  not  control,  any  defense  or
settlement controlled by the Indemnified Party pursuant to this clause (ii), and
the  Indemnifying  Party shall bear its own costs and  expenses  with respect to
such  participation.  (iii) If the  Indemnifying  Party notifies the Indemnified
Party that it does not dispute its  liability or the amount of its  liability to
the Indemnified Party with respect to the Third Party Claim under Section 9.2 or
fails to notify the  Indemnified  Party  within the Dispute  Period  whether the
Indemnifying  Party disputes its liability or the amount of its liability to the
Indemnified  Party with respect to such Third Party Claim, the amount of Damages
specified in the Claim Notice  shall be  conclusively  deemed a liability of the

                                       25
<PAGE>

Indemnifying  Party under Section 9.2 and the  Indemnifying  Party shall pay the
amount of such Damages to the Indemnified  Party on demand.  If the Indemnifying
Party has timely  disputed  its  liability or the amount of its  liability  with
respect to such claim,  the Indemnifying  Party and the Indemnified  Party shall
proceed in good faith to  negotiate  a  resolution  of such  dispute;  provided,
however,  that if the dispute is not resolved  within thirty (30) days after the
Claim Notice,  the Indemnifying  Party shall be entitled to institute such legal
action as it deems appropriate.

(b) In the event any  Indemnified  Party  should have a claim under  Section 9.2
against the  Indemnifying  Party that does not involve a Third Party Claim,  the
Indemnified Party shall deliver a written  notification of a claim for indemnity
under Section 9.2  specifying  the nature of and basis for such claim,  together
with the amount or, if not then reasonably ascertainable,  the estimated amount,
determined in good faith, of such claim (an "INDEMNITY  NOTICE") with reasonable
promptness to the Indemnifying  Party.  The failure by any Indemnified  Party to
give the Indemnity  Notice shall not impair such party's rights hereunder except
to the  extent  that  the  Indemnifying  Party  demonstrates  that  it has  been
irreparably   prejudiced   thereby.  If  the  Indemnifying  Party  notifies  the
Indemnified  Party that it does not dispute the claim or the amount of the claim
described  in such  Indemnity  Notice or fails to notify the  Indemnified  Party
within the Dispute Period whether the  Indemnifying  Party disputes the claim or
the  amount of the claim  described  in such  Indemnity  Notice,  the  amount of
Damages  specified  in the  Indemnity  Notice  will  be  conclusively  deemed  a
liability of the Indemnifying Party under Section 9.2 and the Indemnifying Party
shall pay the amount of such Damages to the Indemnified  Party on demand. If the
Indemnifying  Party has  timely  disputed  its  liability  or the  amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall  proceed in good faith to  negotiate a resolution  of such  dispute;
provided,  however,  that if the dispute is not resolved within thirty (30) days
after the Claim Notice,  the  Indemnifying  Party shall be entitled to institute
such legal action as it deems appropriate.

(c) The indemnity  agreements  contained  herein shall be in addition to (i) any
cause  of  action  or  similar  rights  of the  Indemnified  Party  against  the
Indemnifying  Party or others,  and (ii) any liabilities the Indemnifying  Party
may be subject to.

                                    ARTICLE X

                                  MISCELLANEOUS

Section 10.1 GOVERNING LAW;  JURISDICTION.  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 conflicts of law. Each of the Company and Investor
hereby submit to the  exclusive  jurisdiction  of the United States  Federal and
state courts located in 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.

Section  10.2 JURY TRIAL  WAIVER.  The Company and the  Investor  hereby waive a
trial by jury in any action, proceeding or counterclaim brought by either of the
parties  hereto  against the other in respect of any matter arising out of or in
connection with the Transaction Documents.

Section 10.3 SPECIFIC ENFORCEMENT.  The Company and the Investor acknowledge and
agree that irreparable  damage would occur to the Investor in the event that any
of the provisions of this Agreement were not performed in accordance  with their
specific terms or were  otherwise  breached.  It is accordingly  agreed that the
Investor  shall be entitled to an injunction or  injunctions  to prevent or cure
breaches of the  provisions of this

                                       26
<PAGE>

Agreement  and to  enforce  specifically  the  terms  and  provisions  hereof or
thereof,  this being in addition to any other remedy to which any of them may be
entitled by law or equity.

Section 10.4  ASSIGNMENT.  This Agreement shall be binding upon and inure to the
benefit  of the  Company  and  Investor  and  their  respective  successors  and
permitted  assigns.  Neither  this  Agreement  nor any rights of Investor or the
Company  hereunder  may  be  assigned  by  either  party  to any  other  person.
Notwithstanding the foregoing,  (a) the provisions of this Agreement shall inure
to the benefit of, and be  enforceable  by, any  transferee of any of the Common
Stock  purchased  or acquired by Investor  hereunder  with respect to the Common
Stock held by such person, and (b) Investor's  interest in this Agreement may be
assigned at any time, in whole but not in part, to any affiliate of Investor.

Section  10.5 THIRD PARTY  BENEFICIARIES.  This  Agreement  is intended  for the
benefit  of the  Company  and  Investor  and  their  respective  successors  and
permitted  assigns,  and is not for the benefit of, nor may any provision hereof
be enforced by, any other person.

Section 10.6  TERMINATION;  PRIOR  AGREEMENTS  TERMINATED.  This Agreement shall
terminate  at the end of  Commitment  Period  or as  otherwise  provided  herein
(unless  extended  by the  agreement  of the Company  and  Investor);  provided,
however,  that the provisions of Article VI, VIII, and Sections  9.2,10.2,  10.3
and 10.4 shall  survive the  termination  of this  Agreement.  Effective  on the
execution  hereof,   the  parties  mutually  agree  that  with  respect  to  any
outstanding  Put  Notices,  the  obligations  of the  parties  under  the  Third
Agreement shall terminate.

Section 10.7 ENTIRE  AGREEMENT,  AMENDMENT;  NO WAIVER.  This  Agreement and the
instruments  referenced  herein contain the entire  understanding of the Company
and Investor with respect to the matters  covered herein and therein and, except
as  specifically  set forth herein or therein,  neither the Company nor 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 10.8 FEES AND EXPENSES.  Each of the Company and Investor  agrees to pay
its own  expenses in  connection  with the  preparation  of this  Agreement  and
performance of its obligations hereunder. In addition, the Company shall pay all
reasonable  fees and expenses  incurred by the Investor in  connection  with any
amendments,  modifications  or waivers  of this  Agreement  or the  Registration
Rights  Agreement,  or  incurred  in  connection  with the  enforcement  of this
Agreement and the Registration Rights Agreement,  including, without limitation,
all reasonable  attorneys fees and expenses.  The Company shall pay all stamp or
other similar taxes and duties levied in connection  with issuance of the Shares
pursuant hereto.

Section 10.9 NO BROKERS. Each of the Company and Investor represents that it has
had no dealings in connection  with this  transaction  with any finder or broker
who will  demand  payment of any fee or  commission  from the other  party.  The
Company  agrees to indemnify  the Investor  against and hold the other  harmless
from any and all liabilities to any persons  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  10.10  COUNTERPARTS.   This  Agreement  may  be  executed  in  multiple
counterparts,  each of which may be executed by less than all of the Company and
shall be deemed to be an original  instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together shall
constitute

                                       27
<PAGE>

one and the same  instrument.  This Agreement,  once executed by a party, may be
delivered to the other  parties  hereto by facsimile  transmission  of a copy of
this  Agreement  bearing  the  signature  of  the  parties  so  delivering  this
Agreement.

Section 10.11 SURVIVAL; SEVERABILITY. The representations, warranties, covenants
and agreements of the Company hereto shall survive each Closing  hereunder for a
period of one (1) year  thereafter.  In the  event  that any  provision  of this
Agreement  becomes or is declared  by a court of  competent  jurisdiction  to be
illegal,  unenforceable or void, this Agreement shall continue in full force and
effect  without  said  provision;  provided  that  such  severability  shall  be
ineffective if it materially  changes the economic  benefit of this Agreement to
any party.

Section 10.12 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.

Section 10.13 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.

Section 10.14 EQUITABLE RELIEF. The Company recognizes that in the event that it
fails to perform, observe, or discharge any or all of its obligations under this
Agreement,  any remedy at law may prove to be inadequate relief to Investor. The
Company  therefore  agrees that  Investor  shall be entitled  to  temporary  and
permanent  injunctive  relief in any such case without the  necessity of proving
actual  damages .

Section  10.15  TITLE AND  SUBTITLES.  The  titles  and  subtitles  used in this
Agreement are used for the convenience of reference and are not to be considered
in construing or interpreting this Agreement.

Section 10.16 REPORTING ENTITY FOR THE COMMON STOCK. The reporting entity relied
upon for the determination of the trading price 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 Investor and the Company shall
be required to employ any other reporting entity.

Section 10.17 PUBLICITY.  The Company and Investor shall consult with each other
in issuing any press releases or otherwise making public statements with respect
to the transactions  contemplated hereby and no party shall issue any such press
release or otherwise  make any such public  statement  without the prior written
consent of the other parties,  which consent shall not be unreasonably  withheld
or delayed, except that no prior consent shall be required if such disclosure is
required by law, in which such case the disclosing party shall provide the other
parties  with  prior  notice  of  such  public  statement.  Notwithstanding  the
foregoing,  the Company shall not publicly disclose the name of Investor without
the prior written  consent of such  Investor,  except to the extent  required by
law.  Investor  acknowledges  that  this  Agreement  and  all  or  part  of  the
Transaction  Documents may be deemed to be "material  contracts" as that term is
defined by Item 601(b)(10) of Regulation S-K, and that the Company may therefore
be  required  to file such  documents  as  exhibits  to reports or  registration
statements filed under the Securities Act or the Exchange Act.  Investor further
agrees that the status of such  documents  and  materials as material  contracts
shall be determined solely by the Company, in consultation with its counsel.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       28
<PAGE>

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

AMERICAN PALLET LEASING, INC.



By:
    ---------------------------------------
Name: Timothy Bumgarner
Title: Chief Executive Officer


BRITTANY CAPITAL MANAGEMENT LIMITED



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






                                       29