EXHIBIT 10.8
                                  ------------


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

      THIS  SECURITIES  PURCHASE  AGREEMENT  (this  "AGREEMENT"),  dated  as  of
September ___, 2001, by and among SAFE TRANSPORTATION  SYSTEMS,  INC., a Florida
corporation,  with  headquarters  located  at  909  Lakeway  Drive,  Suite  208,
Bellingham,  Washington 98226 (the "COMPANY"), and the Buyers listed on Schedule
I attached hereto (individually, a "BUYER" or collectively "BUYERS").


                                   WITNESSETH:
                                   -----------

      WHEREAS,  the Company and the Buyer(s) are executing and  delivering  this
Agreement in reliance upon an exemption from securities registration pursuant to
Section 4(2) and/or Rule 506 of Regulation D ("REGULATION  D") as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 ACT");

      WHEREAS,  the  parties  desire  that,  upon the terms and  subject  to the
conditions  contained herein,  the Company shall issue and sell to the Buyer(s),
as provided herein,  and the Buyer(s) shall purchase One Hundred and Twenty Five
Thousand  Dollars   ($125,000)  of  convertible   debentures  (the  "CONVERTIBLE
DEBENTURES"),  which shall be  convertible  into shares of the Company's  common
stock, (the "COMMON STOCK") (as converted, the "CONVERSION SHARES"), for a total
purchase price of One Hundred and Twenty Five Thousand  Dollars  ($125,000) (the
"PURCHASE  PRICE") in the  respective  amounts set forth  opposite each Buyer(s)
name on Schedule I ( the "SUBSCRIPTION AMOUNT"); and

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

      WHEREAS, the aggregate proceeds of the sale of the Convertible  Debentures
contemplated  hereby shall be held in escrow  pursuant to the terms of an escrow
agreement  substantially in the form of the Escrow Agreement  attached hereto as
EXHIBIT B.

      NOW,  THEREFORE,  in  consideration  of the  mutual  covenants  and  other
agreements  contained in this Agreement the Company and the Buyer(s)hereby agree
as follows:

      1.    PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.
            -------------------------------------------

            (a) PURCHASE OF CONVERTIBLE DEBENTURES.  Subject to the satisfaction
(or waiver) of the terms and  conditions of this  Agreement,  each Buyer agrees,
severally and not jointly,  to purchase at Closing (as defined herein below) and
the Company  agrees to sell and issue to each Buyer,  severally and not jointly,
at  Closing,   Convertible   Debentures  in  amounts   corresponding   with  the
Subscription Amount set forth opposite each Buyer's name on Schedule I hereto.

<PAGE>

Upon execution hereof by a Buyer, the Buyer shall wire transfer the Subscription
Amount set forth  opposite  his name on Schedule I in same-day  funds or a check
payable to "First Union National  Bank, as Escrow Agent for Safe  Transportation
Systems,  Inc. / Cornell Capital Partners,  LP", which Subscription Amount shall
be held in escrow pursuant to the terms of the Escrow  Agreement (as hereinafter
defined) and disbursed in accordance therewith. Notwithstanding the foregoing, a
Buyer may withdraw his  Subscription  Amount and terminate  this Agreement as to
such Buyer at any time  after the  execution  hereof  and prior to  Closing  (as
hereinafter defined).

            (b)  CLOSING  DATE.  The  closing  of the  purchase  and sale of the
Convertible  Debentures (the "CLOSING")  shall take place at 10:00 a.m.  Eastern
Standard  Time on the fifth  business day  ("CLOSING  DATE")  following the date
hereof, subject to notification of satisfaction (or waiver) of the conditions to
the  Closing  set  forth in  Sections  6 and 7 below (or such  later  date as is
mutually  agreed to by the Company and the Buyers).  The Closing  shall occur on
the Closing Date at the offices of Butler Gonzalez, LLP, 1000 Stuyvesant Avenue,
Suite 6, Union,  NJ 07083 (or such other  place as is mutually  agreed to by the
Company and the Buyers).

            (c) ESCROW ARRANGEMENTS;  FORM OF PAYMENT.  Upon execution hereof by
Buyer(s)  and  pending  Closing,  the  aggregate  proceeds  of the  sale  of the
Convertible  Debentures to Buyer(s) pursuant hereto,  plus the fees and expenses
of the Yorkville Advisors Management, LLC (the "CONSULTANT"), shall be deposited
in a  non-interest  bearing  escrow  account with First Union  National Bank, as
escrow  agent  ("ESCROW  AGENT"),  pursuant to the terms of an escrow  agreement
between the Company,  the  Consultant  and the Escrow Agent in the form attached
hereto as Exhibit B (the "ESCROW AGREEMENT"). Subject to the satisfaction of the
terms and  conditions of this  Agreement,  on the Closing  Date,  (i) the Escrow
Agent shall  deliver to the Company in  accordance  with the terms of the Escrow
Agreement such aggregate  gross  proceeds for the  Convertible  Debentures to be
issued and sold to such  Buyer(s) at the Closing  minus the fees and expenses of
the  Consultant,  by wire transfer of immediately  available funds in accordance
with the Company's written wire instructions, and (ii) the Company shall deliver
to each Buyer,  Convertible  Debentures  which such  Buyer(s) is  purchasing  in
amounts  indicated  opposite  such Buyer's name on Schedule I, duly  executed on
behalf of the Company.

      2.    BUYER'S REPRESENTATIONS AND WARRANTIES.
            --------------------------------------

      Each Buyer represents and warrants, severally and not jointly, that:

            (a)  INVESTMENT  PURPOSE.  Each Buyer is acquiring  the  Convertible
Debentures  and,  upon  conversion  of  Convertible  Debentures,  the Buyer will
acquire the Conversion Shares then issuable,  for its own account for investment
only and not with a view towards,  or for resale in connection  with, the public
sale or distribution  thereof,  except pursuant to sales  registered or exempted
under the 1933  Act;  provided,  however,  that by  making  the  representations
herein, such Buyer reserves the right to dispose of the Conversion Shares at any
time in  accordance  with or pursuant  to an  effective  registration  statement
covering such Conversion Shares or an available exemption under the 1933 Act.

            (b)  ACCREDITED  INVESTOR  STATUS.  Each  Buyer  is  an  "ACCREDITED
INVESTOR" as that term is defined in Rule 501(a)(3) of Regulation D.


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<PAGE>

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

            (d)  INFORMATION.  Each  Buyer  and its  advisors  (and his or,  its
counsel),  if any,  have  been  furnished  with all  materials  relating  to the
business,  finances  and  operations  of the Company and  information  he deemed
material to making an informed investment decision regarding his purchase of the
Convertible  Debentures and the Conversion Shares,  which have been requested by
such  Buyer.  Each  Buyer  and its  advisors,  if any,  have been  afforded  the
opportunity  to ask  questions of the Company and its  management.  Neither such
inquiries nor any other due diligence  investigations conducted by such Buyer or
its advisors,  if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's  representations and warranties contained
in  Section  3  below.  Each  Buyer  understands  that  its  investment  in  the
Convertible Debentures and the Conversion Shares involves a high degree of risk.
Each Buyer is in a position regarding the Company, which, based upon employment,
family relationship or economic bargaining power, enabled and enables such Buyer
to obtain information from the Company in order to evaluate the merits and risks
of this investment. Each Buyer has sought such accounting, legal and tax advice,
as it has  considered  necessary to make an informed  investment  decision  with
respect to its  acquisition  of the  Convertible  Debentures  and the Conversion
Shares.

            (e) NO GOVERNMENTAL  REVIEW.  Each Buyer  understands that no United
States federal or state agency or any other  government or  governmental  agency
has  passed on or made any  recommendation  or  endorsement  of the  Convertible
Debentures  or the  Conversion  Shares,  or the fairness or  suitability  of the
investment in the Convertible Debentures or the Conversion Shares, nor have such
authorities  passed  upon  or  endorsed  the  merits  of  the  offering  of  the
Convertible Debentures or the Conversion Shares.

            (f)  TRANSFER  OR RESALE.  Each  Buyer  understands  that  except as
provided in the Registration  Rights Agreement:  (i) the Convertible  Debentures
have not been  and are not  being  registered  under  the 1933 Act or any  state
securities laws, and may not be offered for sale, sold,  assigned or transferred
unless (A)  subsequently  registered  thereunder,  or (B) such Buyer  shall have
delivered to the Company an opinion of counsel, in a generally  acceptable form,
to the effect that such  securities to be sold,  assigned or transferred  may be
sold,  assigned or transferred  pursuant to an exemption from such  registration
requirements;  (ii) any sale of such  securities  made in  reliance  on Rule 144
under the 1933 Act (or a successor  rule thereto)  ("RULE 144") may be made only
in  accordance  with  the  terms  of Rule  144 and  further,  if Rule 144 is not
applicable,  any  resale of such  securities  under  circumstances  in which the
seller  (or the  person  through  whom the sale is made)  may be deemed to be an
underwriter  (as that term is  defined in the 1933 Act) may  require  compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC there under; and (iii) neither the Company nor any other person is under any
obligation  to  register  such  securities  under  the  1933  Act or  any  state
securities  laws or to comply  with the terms and  conditions  of any  exemption
there under. The Company reserves


                                       3
<PAGE>

the  right  to  place  stop  transfer   instructions   against  the  shares  and
certificates for the Conversion Shares.

            (g) LEGENDS.  Each Buyer  understands that the certificates or other
instruments representing the Convertible Debentures and or the Conversion Shares
shall bear a restrictive  legend in substantially the following form (and a stop
transfer order may be placed against transfer of such stock certificates):

             THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE HAVE NOT
             BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS
             AMENDED,   OR  APPLICABLE   STATE  SECURITIES  LAWS.  THE
             SECURITIES  HAVE  BEEN  ACQUIRED  SOLELY  FOR  INVESTMENT
             PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE
             OFFERED FOR SALE,  SOLD,  TRANSFERRED  OR ASSIGNED IN THE
             ABSENCE OF AN EFFECTIVE  REGISTRATION  STATEMENT  FOR THE
             SECURITIES  UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
             OR  APPLICABLE  STATE  SECURITIES  LAWS, OR AN OPINION OF
             COUNSEL,   IN   A   GENERALLY   ACCEPTABLE   FORM,   THAT
             REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
             STATE SECURITIES LAWS.

The legend  set forth  above  shall be removed  and the  Company  shall  issue a
certificate  without  such  legend to the holder of the  Conversion  Shares upon
which it is stamped, if, unless otherwise required by state securities laws, (i)
in  connection  with a sale  transaction,  provided  the  Conversion  Shares are
registered  under the 1933 Act or (ii) in  connection  with a sale  transaction,
such holder provides the Company with an opinion of counsel,  in form acceptable
to the Company and its counsel, to the effect that a public sale,  assignment or
transfer of the  Conversion  Shares may be made without  registration  under the
1933 Act.

            (h)  AUTHORIZATION,  ENFORCEMENT.  This  Agreement has been duly and
validly  authorized,  executed  and  delivered  on behalf of such Buyer and is a
valid and binding  agreement of such Buyer  enforceable  in accordance  with its
terms,  except as such  enforceability  may be limited by general  principles of
equity  or  applicable  bankruptcy,  insolvency,   reorganization,   moratorium,
liquidation  and other  similar laws  relating to, or affecting  generally,  the
enforcement of applicable creditors' rights and remedies.

            (i)  RECEIPT OF  DOCUMENTS.  Each Buyer and his or its  counsel  has
received and read in their entirety: (i) this Agreement and each representation,
warranty  and  covenant  set forth  herein,  the  Investor  Registration  Rights
Agreement,  and  the  Escrow  Agreement;   (ii)  all  due  diligence  and  other
information   necessary  to  verify  the  accuracy  and   completeness  of  such
representations,  warranties and covenants;  (iii) the Company's Form 10-KSB for
the fiscal year ended December 31, 2000;  (iv) the Company's Form 10-QSB for the
fiscal  quarter ended March 2001 and June 2001; and (v) answers to all questions
the Buyer submitted to the Company  regarding an investment in the Company;  and
the  Buyer has  relied on the  information  contained  therein  and has not been
furnished any other documents, literature, memorandum or prospectus.


                                       4
<PAGE>


            (j) DUE FORMATION OF CORPORATE AND OTHER BUYERS.  If the Buyer(s) is
a  corporation,  trust,  partnership  or other entity that is not an  individual
person, it has been formed and validly exists and has not been organized for the
specific purpose of purchasing the Convertible  Debentures and is not prohibited
from doing so.

            (k) DUE  AUTHORIZATION  OF  FIDUCIARY  BUYERS.  If the  Buyer(s)  is
purchasing the Convertible Debentures in a fiduciary capacity for another person
or entity, including, without limitation, a corporation,  partnership,  trust or
any other entity, the Buyer(s) has been duly authorized and empowered to execute
this Agreement and such other person fulfills all the  requirements for purchase
of the  Convertible  Debentures  and  agrees  to be  bound  by the  obligations,
representations, warranties, and covenants contained herein. Upon request of the
Company,  the Buyer(s)  will provide  true,  complete and current  copies of all
relevant  documents  creating  the Buyers,  authorizing  its  investment  in the
Company and/or evidencing the satisfaction of the foregoing.

            (l) FURTHER  REPRESENTATIONS  BY FOREIGN BUYERS.  If the Buyer(s) is
not a U.S.  Person (as defined  below),  such Buyer hereby  represents that such
Buyer(s)  is  satisfied  as to full  observance  of the  laws  of  such  Buyer's
jurisdiction  in connection  with any invitation to subscribe for the securities
or any use of this  Agreement,  including:  (i) the legal  requirements  of such
Buyer's  jurisdiction  for the  purchase  of the  securities,  (ii) any  foreign
exchange  restrictions  applicable to such purchase,  (iii) any  governmental or
other  consents that may need to be obtained,  and (iv) the income tax and other
tax  consequences,  if any,  which may be  relevant  to the  purchase,  holding,
redemption,  sale, or transfer of the securities.  Such Buyer's subscription and
payment for, and such Buyer's continued  beneficial ownership of, the securities
will  not  violate  any  applicable  securities  or other  laws of such  Buyer's
jurisdiction. The term "U.S. Person" as used herein shall mean any person who is
a citizen or resident of the United States or Canada, or any state, territory or
possession  thereof,  including,  but not  limited  to,  any  estate of any such
person,  or any  corporation,  partnership,  trust or other  entity  created  or
existing under the laws thereof, or any entity controlled or owned by any of the
foregoing.

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

      3.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
            ---------------------------------------------

      The Company represents and warrants to each of the Buyers that:

            (a) ORGANIZATION AND QUALIFICATION. The Company and its subsidiaries
are corporations  duly organized and validly existing in good standing under the
laws of the jurisdiction in which they are incorporated,  and have the requisite
corporate  power to own their  properties  and to carry on their business as now
being conducted. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction


                                       5
<PAGE>

in which the nature of the  business  conducted  by it makes such  qualification
necessary,  except to the extent  that the failure to be so  qualified  or be in
good standing  would not have a material  adverse  effect on the Company and its
subsidiaries taken as a whole.

            (b) AUTHORIZATION,  ENFORCEMENT,  COMPLIANCE WITH OTHER INSTRUMENTS.
(i) The Company has the  requisite  corporate  power and authority to enter into
and perform this Agreement,  the Investor  Registration Rights Agreement and any
related agreements,  and to issue the Convertible  Debentures and the Conversion
Shares in accordance  with the terms hereof and thereof,  (ii) the execution and
delivery of this Agreement,  the  Registration  Rights Agreement and any related
agreements  by the  Company  and  the  consummation  by it of  the  transactions
contemplated hereby and thereby, including,  without limitation, the issuance of
the  Convertible  Debentures  the  Conversion  Shares  and the  reservation  for
issuance and the issuance of the Conversion  Shares  issuable upon conversion or
exercise thereof,  have been duly authorized by the Company's Board of Directors
and no further consent or authorization is required by the Company, its Board of
Directors  or  its   stockholders,   (iii)  this   Agreement  and  the  Investor
Registration Rights Agreement and any related agreements have been duly executed
and delivered by the Company,  (iv) this  Agreement,  the Investor  Registration
Rights  Agreement and any related  agreements  constitute  the valid and binding
obligations of the Company  enforceable  against the Company in accordance  with
their terms,  except as such enforceability may be limited by general principles
of equity or  applicable  bankruptcy,  insolvency,  reorganization,  moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies.

            (c)  CAPITALIZATION.  The  authorized  capital  stock of the Company
consists of 50,000,000  shares of Common Stock,  $.001 par value,  and 5,000,000
shares of Preferred Stock, $.001 par value. As of September 1, 2001, the Company
had  17,346,250  shares of Common Stock and no shares of Preferred  Stock issued
and outstanding. All of such outstanding shares have been validly issued and are
fully paid and  nonassessable.  Except as  disclosed  in the SEC  Documents  (as
defined in Section  3(f)) as amended,  no shares of Common  Stock are subject to
preemptive  rights or any  other  similar  rights  or any liens or  encumbrances
suffered or permitted by the Company.  Except as disclosed in the SEC Documents,
as of the  date  of  this  Agreement,  (i)  there  are no  outstanding  options,
warrants,  scrip,  rights to subscribe to, calls or commitments of any character
whatsoever  relating to, or securities or rights convertible into, any shares of
capital  stock  of  the  Company  or  any of  its  subsidiaries,  or  contracts,
commitments,  understandings  or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional  shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character  whatsoever  relating to, or
securities  or rights  convertible  into,  any  shares of  capital  stock of the
Company  or  any  of its  subsidiaries,  (ii)  there  are  no  outstanding  debt
securities  and (iii) there are no  agreements or  arrangements  under which the
Company or any of its  subsidiaries  is obligated to register the sale of any of
their securities under the 1933 Act (except pursuant to the Registration  Rights
Agreement).  There are no securities or instruments containing  anti-dilution or
similar  provisions  that will be triggered  by the issuance of the  Convertible
Debentures  as described  in this  Agreement.  The Company has  furnished to the
Buyer true and correct copies of the Company's Certificate of Incorporation,  as
amended   and  as  in  effect  on  the  date   hereof   (the   "CERTIFICATE   OF
INCORPORATION"), and the Company's By-laws, as in effect on the date hereof (the
"BY-LAWS"),  and the terms of all securities convertible into or exercisable for


                                       6
<PAGE>

Common Stock and the material  rights of the holders  thereof in respect thereto
other than stock options issued to employees and consultants.

            (d) ISSUANCE OF  SECURITIES.  The  Convertible  Debentures  are duly
authorized and, upon issuance in accordance with the terms hereof, shall be duly
issued, fully paid and nonassessable, are free from all taxes, liens and charges
with  respect  to  the  issue  thereof.  The  Conversion  Shares  issuable  upon
conversion of the Convertible  Debentures have been duly authorized and reserved
for issuance.  Upon  conversion or exercise in accordance  with the  Convertible
Debentures  the  Conversion   Shares  will  be  duly  issued,   fully  paid  and
nonassessable.

            (e)  NO  CONFLICTS.  Except  as  disclosed  in  SEC  Documents,  the
execution,  delivery and  performance  of this  Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby will not (i)
result in a violation of the  Certificate of  Incorporation,  any certificate of
designations of any outstanding  series of preferred stock of the Company or the
By-laws or (ii)  conflict  with or  constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of  termination,  amendment,  acceleration  or  cancellation  of, any
agreement,  indenture  or  instrument  to  which  the  Company  or  any  of  its
subsidiaries is a party, or result in a violation of any law, rule,  regulation,
order,  judgment  or decree  (including  federal and state  securities  laws and
regulations  and the rules and regulations of the Nasdaq Stock Market Inc.'s OTC
Bulletin Board on which the Common Stock is quoted) applicable to the Company or
any of its  subsidiaries or by which any property or asset of the Company or any
of its  subsidiaries  is bound  or  affected.  Except  as  disclosed  in the SEC
Documents,  neither the Company nor its subsidiaries is in violation of any term
of or in default  under its  Certificate  of  Incorporation  or By-laws or their
organizational  charter or  by-laws,  respectively,  or any  material  contract,
agreement, mortgage,  indebtedness,  indenture,  instrument, judgment, decree or
order or any  statute,  rule or  regulation  applicable  to the  Company  or its
subsidiaries.  The  business of the Company  and its  subsidiaries  is not being
conducted,  and  shall  not be  conducted  in  violation  of any  material  law,
ordinance,  or regulation of any  governmental  entity.  Except as  specifically
contemplated  by this  Agreement  and as  required  under  the  1933 Act and any
applicable  state  securities  laws,  the Company is not  required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute,  deliver or perform any
of its obligations  under or contemplated by this Agreement or the  Registration
Rights  Agreement  in  accordance  with the terms  hereof or thereof.  Except as
disclosed in the SEC Documents,  all consents,  authorizations,  orders, filings
and  registrations  which the  Company is  required  to obtain  pursuant  to the
preceding  sentence  have  been  obtained  or  effected  on or prior to the date
hereof.   The  Company  and  its  subsidiaries  are  unaware  of  any  facts  or
circumstance, which might give rise to any of the foregoing.

            (f) SEC DOCUMENTS:  FINANCIAL STATEMENTS. Since January 1, 2001, the
Company has filed all reports,  schedules, forms, statements and other documents
required to be filed by it with the SEC under of the Securities  Exchange Act of
1934, as amended (the "1934 ACT") (all of the foregoing  filed prior to the date
hereof or amended  after the date hereof and all exhibits  included  therein and
financial  statements  and  schedules  thereto  and  documents  incorporated  by
reference therein,  being hereinafter  referred to as the "SEC DOCUMENTS").  The
Company has delivered to the Buyers or their representatives,  or made available
through the SEC's website at  http://www.sec.gov.,  true and complete  copies of


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<PAGE>

the SEC Documents. As of their respective dates, the financial statements of the
Company disclosed in the SEC Documents (the "FINANCIAL  STATEMENTS") complied as
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto.  Such financial
statements have been prepared in accordance with generally  accepted  accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise  indicated in such Financial  Statements or the notes  thereto,  or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary  statements)  and fairly present in all
material respects the financial  position of the Company as of the dates thereof
and the  results of its  operations  and cash flows for the  periods  then ended
(subject,  in the  case  of  unaudited  statements,  to  normal  year-end  audit
adjustments).  No other  information  provided by or on behalf of the Company to
the  Buyer  which  is not  included  in the SEC  Documents,  including,  without
limitation,  information  referred to in Section 2(d) and (i) of this Agreement,
contains any untrue  statement of a material fact or omits to state any material
fact  necessary  in order to make the  statements  therein,  in the light of the
circumstances under which they were made, not misleading.

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

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

            (i)  ACKNOWLEDGMENT  REGARDING  BUYER'S  PURCHASE OF THE CONVERTIBLE
DEBENTURES.  The Company  acknowledges  and agrees  that the  Buyer(s) is acting
solely  in the  capacity  of an arm's  length  purchaser  with  respect  to this
Agreement  and  the  transactions   contemplated  hereby.  The  Company  further
acknowledges that the Buyer(s) is not acting as a financial advisor or fiduciary
of the Company (or in any similar  capacity)  with respect to this Agreement and
the transactions contemplated hereby and any advice given by the Buyer(s) or any
of their respective  representatives or agents in connection with this Agreement
and the transactions  contemplated  hereby is merely  incidental to such Buyer's
purchase of the  Convertible  Debentures or the Conversion  Shares.  The Company
further  represents to the Buyer that the Company's  decision to enter into this
Agreement has been based solely on the independent evaluation by the Company and
its representatives.

            (j) NO GENERAL  SOLICITATION.  Neither the  Company,  nor any of its
affiliates,  nor any person  acting on its or their  behalf,  has engaged in any
form of general  solicitation  or general  advertising  (within  the  meaning of


                                       8
<PAGE>

Regulation  D under  the 1933 Act) in  connection  with the offer or sale of the
Convertible Debentures or the Conversion Shares.

            (k) 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,  under  circumstances  that would require  registration of the
Convertible Debentures or the Conversion Shares under the 1933 Act or cause this
offering of the Convertible Debentures or the Conversion Shares to be integrated
with prior offerings by the Company for purposes of the 1933 Act.

            (l)  EMPLOYEE  RELATIONS.   Neither  the  Company  nor  any  of  its
subsidiaries  is involved in any labor  dispute  nor,  to the  knowledge  of the
Company or any of its subsidiaries,  is any such dispute threatened. None of the
Company's or its subsidiaries'  employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

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

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

            (o) TITLE.  Any real property and facilities held under lease by the
Company  and its  subsidiaries  are held by them  under  valid,  subsisting  and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such  property and buildings by the
Company and its subsidiaries.

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


                                       9
<PAGE>

engaged.  Neither  the  Company  nor any such  subsidiary  has been  refused any
insurance  coverage  sought or applied  for and neither the Company nor any such
subsidiary  has any  reason  to  believe  that it will not be able to renew  its
existing  insurance  coverage  as and when such  coverage  expires  or to obtain
similar  coverage  from  similar  insurers as may be  necessary  to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise,  or the earnings,  business or operations of the Company
and its subsidiaries, taken as a whole.

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

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

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

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

            (u) CERTAIN  TRANSACTIONS.  Except as set forth in the SEC Documents
and except for arm's  length  transactions  pursuant to which the Company  makes
payments in the ordinary  course of business upon terms no less  favorable  than
the Company  could  obtain from third  parties and other than the grant of stock


                                       10
<PAGE>

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

            (v) FEES AND RIGHTS OF FIRST  REFUSAL.  The Company is not obligated
to offer the securities  offered  hereunder on a right of first refusal basis or
otherwise to any third parties including,  but not limited to, current or former
shareholders  of the  Company,  underwriters,  brokers,  agents  or other  third
parties.

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

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

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

            (c) REPORTING STATUS.  Until the earlier of (i) the date as of which
the Investor(s) (as that term is defined in the Registration  Rights  Agreement)
may sell all of the  Conversion  Shares  without  restriction  pursuant  to Rule
144(k) promulgated under the 1933 Act (or successor  thereto),  or (ii) the date
on which (A) the Buyer(s) shall have sold all the Conversion Shares and (B) none
of the Convertible  Debentures are outstanding (the "REGISTRATION  PERIOD"), the
Company shall use its commercially reasonable efforts to file in a timely manner
all reports  required to be filed with the SEC  pursuant to the 1934 Act and the
regulations  of the SEC there under,  and the Company  shall not  terminate  its
status as an issuer required to file reports under the 1934 Act even if the 1934
Act or the rules  and  regulations  there  under  would  otherwise  permit  such
termination.

            (d) USE OF PROCEEDS. The Company will use the proceeds from the sale
of the Convertible Debentures for general corporate purposes.

            (e)  RESERVATION  OF  SHARES.  The  Company  shall  take all  action
reasonably  necessary  to at all times have  authorized,  and  reserved  for the
purpose of issuance, such number of shares of Common Stock as shall be necessary
to effect the issuance of the Conversion Shares. If at any time the Company does
not have  available  such  shares of Common  Stock as shall from time to time be
sufficient  to effect  the  conversion  of all of the  Conversion  Shares of the


                                       11
<PAGE>

Company shall call and hold a special meeting of the  shareholders  within sixty
(60) days of such  occurrence,  for the sole purpose of increasing the number of
shares authorized.  The Company's management shall recommend to the shareholders
to vote in favor of increasing the number of shares of Common Stock  authorized.
Management  shall also vote all of its shares in favor of increasing  the number
of authorized shares of Common Stock.

            (f) LISTINGS OR  QUOTATION.  The Company shall  promptly  secure the
listing or  quotation of the  Conversion  Shares upon each  national  securities
exchange, automated quotation system or Over-The-Counter Bulletin Board or other
market,  if any,  upon which  shares of Common  Stock are then  listed or quoted
(subject  to  official  notice of  issuance)  and shall use its best  efforts to
maintain,  so long as any other shares of Common Stock shall be so listed,  such
listing of all  Conversion  Shares from time to time issuable under the terms of
this Agreement.  The Company shall maintain the Common Stock's authorization for
quotation in the over-the counter market.

            (g)  EXPENSES.  Each of the Company and the  Buyer(s)  shall pay all
costs and expenses  incurred by such party in connection  with the  negotiation,
investigation,  preparation,  execution  and delivery of this  Agreement and the
Registration  Rights  Agreement.  The costs and expenses of the Consultant,  its
counsel,  and  Kirkpatrick  & Lockhart  LLP shall be paid for by the  Company at
Closing in accordance  with the terms of the  Consulting  Agreement  between the
Company and the Consultant, of even date herewith.

            (h)  CORPORATE  EXISTENCE.   So  long  as  any  of  the  Convertible
Debentures  remain  outstanding,  the Company  shall not directly or  indirectly
consummate any merger, reorganization, restructuring, consolidation, sale of all
or  substantially  all of the  Company's  assets or any similar  transaction  or
related  transactions  (each such transaction,  a "SALE OF THE COMPANY") unless,
prior  to  the  consummation  of a  Sale  of  the  Company,  the  Company  makes
appropriate  provision to insure that, upon the consummation of such Sale of the
Company, each of the holders of the Convertible  Debentures will thereafter have
the right to acquire and receive such shares of stock,  securities  or assets as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock  immediately  theretofore  acquirable  and  receivable  upon the
conversion of such holder's Convertible  Debentures had such Sale of the Company
not taken place. In any such case, the Company will make  appropriate  provision
with respect to such holders' rights and interests to insure that the provisions
of  this  Section  4(h)  will   thereafter  be  applicable  to  the  Convertible
Debentures.

            (i)  TRANSACTIONS  WITH  AFFILIATES.  So  long  as  any  Convertible
Debentures are  outstanding,  the Company shall not, and shall cause each of its
subsidiaries  not to, enter into,  amend,  modify or  supplement,  or permit any
subsidiary  to  enter  into,   amend,   modify  or  supplement   any  agreement,
transaction,  commitment,  or  arrangement  with any of its or any  subsidiary's
officers,  directors,  person who were  officers or directors at any time during
the previous two (2) years,  stockholders who beneficially own five percent (5%)
or more of the  Common  Stock,  or  Affiliates  (as  defined  below) or with any
individual  related by blood,  marriage,  or adoption to any such  individual or
with any entity in which any such entity or individual  owns a five percent (5%)
or more beneficial  interest (each a "RELATED PARTY"),  except for (a) customary
employment  arrangements  and benefit  programs  on  reasonable  terms,  (b) any
investment  in an  Affiliate  of the Company,  (c) any  agreement,  transaction,
commitment,  or arrangement  on an arms-length  basis on terms no less favorable


                                       12
<PAGE>

than  terms  which  would  have been  obtainable  from a person  other than such
Related Party, (d) any agreement transaction,  commitment,  or arrangement which
is approved by a majority of the  disinterested  directors of the  Company,  for
purposes  hereof,  any  director  who is also an officer  of the  Company or any
subsidiary of the Company shall not be a disinterested  director with respect to
any such agreement,  transaction,  commitment,  or arrangement.  "AFFILIATE" for
purposes hereof means,  with respect to any person or entity,  another person or
entity that, directly or indirectly,  (i) has a ten percent (10%) or more equity
interest  in that person or entity,  (ii) has ten  percent  (10%) or more common
ownership with that person or entity,  (iii) controls that person or entity,  or
(iv) shares common  control with that person or entity.  "CONTROL" or "CONTROLS"
for  purposes  hereof  means that a person or entity  has the  power,  direct or
indirect, to conduct or govern the policies of another person or entity.

            (j) TRANSFER  AGENT.  The Company  covenants and agrees that, in the
event that the Company's agency  relationship  with the transfer agent should be
terminated  for any  reason  prior to a date  which is two (2)  years  after the
Closing Date,  the Company shall  immediately  appoint a new transfer  agent and
shall require that the transfer agent execute and agree to be bound by the terms
of the Irrevocable Instructions (as defined herein) to Transfer Agent.

      5.    TRANSFER AGENT INSTRUCTIONS.
            ---------------------------

      The Company  shall issue  irrevocable  instructions  in the form  attached
hereto as EXHIBIT C to its transfer agent to issue  certificates,  registered in
the name of the Buyer(s) or its respective nominee(s), for the Conversion Shares
representing  such amounts of  Convertible  Debentures as specified from time to
time  by the  Buyer(s)  to  the  Company  upon  conversion  of  the  Convertible
Debentures   (the   "IRREVOCABLE   TRANSFER  AGENT   INSTRUCTIONS").   Prior  to
registration of the Conversion  Shares under the 1933 Act, all such certificates
shall bear the restrictive  legend  specified in Section 2(g) of this Agreement.
The Company  warrants that no instruction  other than the  Irrevocable  Transfer
Agent Instructions referred to in this Section 5, and stop transfer instructions
to give  effect to Section  2(f)  hereof (in the case of the  Conversion  Shares
prior to  registration  of such shares  under the 1933 Act) will be given by the
Company to its transfer agent and that the Conversion  Shares shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the  Registration  Rights  Agreement.  Nothing in
this Section 5 shall affect in any way the Buyer's  obligations and agreement to
comply with all applicable  securities laws upon resale of Conversion Shares. If
the  Buyer(s)  provides  the  Company  with an  opinion of  counsel,  reasonably
satisfactory  in form,  and  substance to the Company,  that  registration  of a
resale by the Buyer(s) of any of the Conversion Shares is not required under the
1933 Act,  the Company  shall  permit the transfer  and,  promptly  instruct its
transfer  agent  to  issue  one or more  certificates  in such  name and in such
denominations as specified by the Buyer. The Company  acknowledges that a breach
by it of its obligations  hereunder will cause  irreparable harm to the Buyer by
vitiating  the  intent  and  purpose  of the  transaction  contemplated  hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations  under this Section 5 will be inadequate and agrees, in the event of
a breach or threatened  breach by the Company of the  provisions of this Section
5, that the  Buyer(s)  shall be  entitled,  in addition  to all other  available
remedies,  to an  injunction  restraining  any  breach and  requiring  immediate
issuance  and  transfer,  without the  necessity  of showing  economic  loss and
without any bond or other security being required.

                                       13
<PAGE>

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

      The obligation of the Company  hereunder to issue and sell the Convertible
Debentures to the Buyer(s) at the Closing is subject to the satisfaction,  at or
before the Closing  Date,  of each of the  following  conditions,  provided that
these  conditions  are for the  Company's  sole benefit and may be waived by the
Company at any time in its sole discretion:

            (a)  Each  Buyer  shall  have  executed   this   Agreement  and  the
Registration Rights Agreement and delivered the same to the Company.

            (b) The  Buyer(s)  shall  have  delivered  to the  Escrow  Agent the
Purchase  Price for  Convertible  Debentures in respective  amounts as set forth
next to each Buyer as  outlined  on  Schedule  I attached  hereto and the Escrow
Agent  shall have  delivered  such  funds to the  Company  by wire  transfer  of
immediately  available U.S. funds pursuant to the wire instructions  provided by
the Company.

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

      7.    CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
            ------------------------------------------------

      The  obligation  of the Buyer(s)  hereunder  to purchase  the  Convertible
Debentures  at the  Closing  is subject  to the  satisfaction,  at or before the
Closing  Date,  of  each  of  the  following  conditions,  provided  that  these
conditions are for the Buyer's sole benefit and may be waived by the Buyer(s) at
any time in its sole discretion:

            (a)  The  Company  shall  have  executed  this   Agreement  and  the
Registration Rights Agreement, and delivered the same to the Buyer(s).

            (b) The  Common  Stock  shall be  authorized  for  quotation  on The
National Association of Securities Dealers,  Inc. OTC Bulletin Board, trading in
the Common  Stock  shall not have been  suspended  for any reason and all of the
Conversion  Shares issuable upon conversion of the Convertible  Debentures shall
be approved for listing or quotation on The National  Association  of Securities
Dealers, Inc. OTC Bulletin Board.

            (c) The  representations and warranties of the Company shall be true
and  correct in all  material  respects  (except to the extent  that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case, such  representations  and warranties  shall be true and
correct  without further  qualification)  as of the date when made and as of the
Closing  Date as  though  made at that  time  (except  for  representations  and
warranties  that  speak  as of a  specific  date)  and the  Company  shall  have
performed,  satisfied and complied in all material  respects with the covenants,
agreements and conditions required by this Agreement to be performed,  satisfied
or complied with by the Company at or prior to the Closing Date. The Buyer shall


                                       14
<PAGE>

have received a certificate,  executed by the President of the Company, dated as
of the Closing Date, to the foregoing effect and as to such other matters as may
be reasonably requested by the Buyer including,  without limitation an update as
of the Closing  Date  regarding  the  representation  contained  in Section 3(c)
above.

            (d) The Company  shall have  executed and  delivered to the Buyer(s)
the  Convertible  Debentures in the  respective  amounts set forth opposite each
Buyer(s) name on Schedule I attached hereto.

            (e) As of the Closing  Date,  the Company shall have reserved out of
its  authorized and unissued  Common Stock,  solely for the purpose of effecting
the conversion of the Convertible  Debentures,  shares of Common Stock to effect
the conversion of all of the Conversion then outstanding.

            (f)  The  Irrevocable  Transfer  Agent  Instructions,  in  form  and
substance   satisfactory  to  the  Buyer,  shall  have  been  delivered  to  and
acknowledged in writing by the Company's transfer agent.

      8.    INDEMNIFICATION.
            ---------------

            (a) In consideration  of the Buyer's  execution and delivery of this
Agreement and acquiring the  Convertible  Debentures and the  Conversion  Shares
hereunder,  and in addition to all of the Company's other obligations under this
Agreement,  the Company shall defend,  protect,  indemnify and hold harmless the
Buyer(s) and each other holder of the Convertible  Debentures and the Conversion
Shares, and all of their officers,  directors,  employees and agents (including,
without   limitation,   those  retained  in  connection  with  the  transactions
contemplated by this Agreement) (collectively, the "BUYER INDEMNITEES") from and
against any and all actions,  causes of action,  suits, claims,  losses,  costs,
penalties,  fees,  liabilities and damages, and expenses in connection therewith
(irrespective  of whether any such Buyer Indemnitee is a party to the action for
which indemnification  hereunder is sought), and including reasonable attorneys'
fees and disbursements  (the "INDEMNIFIED  Liabilities"),  incurred by the Buyer
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any  misrepresentation  or breach of any  representation or warranty made by the
Company in this Agreement, the Convertible Debentures or the Registration Rights
Agreement or any other certificate,  instrument or document  contemplated hereby
or thereby,  (b) any breach of any  covenant,  agreement  or  obligation  of the
Company contained in this Agreement, or the Registration Rights Agreement or any
other certificate, instrument or document contemplated hereby or thereby, or (c)
any cause of action,  suit or claim brought or made against such  Indemnitee and
arising  out of or  resulting  from  the  execution,  delivery,  performance  or
enforcement  of this  Agreement or any other  instrument,  document or agreement
executed pursuant hereto by any of the Indemnities,  any transaction financed or
to be financed in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Convertible  Debentures or the status of the Buyer or holder
of the Convertible  Debentures the Conversion  Shares, as a Buyer of Convertible
Debentures in the Company.  To the extent that the foregoing  undertaking by the
Company may be unenforceable for any reason,  the Company shall make the maximum
contribution  to the  payment  and  satisfaction  of  each  of  the  Indemnified
Liabilities, which is permissible under applicable law.

                                       15
<PAGE>

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

      9.    GOVERNING LAW: MISCELLANEOUS.
            ----------------------------

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

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

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

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

            (e) ENTIRE  AGREEMENT,  AMENDMENTS.  This  Agreement  supersedes all
other prior oral or written agreements between the Buyer(s),  the Company, their
affiliates  and  persons  acting on their  behalf  with  respect to the  matters
discussed  herein,  and this  Agreement and the  instruments  referenced  herein


                                       16
<PAGE>

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

            (f) NOTICES. Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this  Agreement  must be in
writing  and will be  deemed  to have  been  delivered  (i) upon  receipt,  when
delivered personally; (ii) upon confirmation of receipt, when sent by facsimile;
(iii) three (3) days after being sent by U.S.  certified  mail,  return  receipt
requested, or (iv) one (1) d(360) 527-1112(360)  527-1112ay after deposit with a
nationally   recognized  overnight  delivery  service,  in  each  case  properly
addressed to the party to receive the same. The addresses and facsimile  numbers
for such communications shall be:

If to the Company, to:    Safe Transportation Systems, Inc.
                          909 Lakeway Drive, Suite 208
                          Bellingham, WA 98226
                          Attention:  Ian Pallett, President and CEO

                          Telephone: (360) 527-1112
                          Facsimile: (360) 527-1113

With a copy to:           Kirkpatrick & Lockhart LLP
                          201 South Biscayne Boulevard - Suite 2000
                          Miami, FL  33131-2399
                          Attention:  Clayton E. Parker, Esq.
                          Telephone:  (305) 539-3300
                          Facsimile:  (305) 358-7095

If to the Transfer        Investment Transfer Inc.
Agent, to:                1981 East 4800 South, Suite 400
                          Salt Lake City, Utah 84117
                          Telephone: (801) 272-9294
                          Facsimile: (801) 277-3147

If to the Investor:       At the address listed on Schedule A.

      If to the  Buyer(s),  to its address and  facsimile  number on Schedule I,
with copies to the Buyer's  counsel as set forth on Schedule I. Each party shall
provide five (5) days' prior written  notice to the other party of any change in
address or facsimile number.

            (g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
Neither the Company nor any Buyer shall  assign this  Agreement or any rights or
obligations  hereunder  without  the prior  written  consent of the other  party
hereto.


                                       17
<PAGE>


            (h) NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties  hereto and their  respective  permitted  successors  and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

            (i)  SURVIVAL.  Unless this  Agreement is  terminated  under Section
9(l), the representations and warranties of the Company and the Buyers contained
in Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and
9, and the indemnification  provisions set forth in Section 8, shall survive the
Closing for a period of one (1) year following the date on which the Convertible
Debentures are converted in full. The Buyer(s) shall be responsible only for its
own representations, warranties, agreements and covenants hereunder.

            (j) PUBLICITY.  The Company and the Buyer(s) shall have the right to
approve,  before  issuance any press release or any other public  statement with
respect to the  transactions  contemplated  hereby made by any party;  provided,
however,  that the Company shall be entitled,  without the prior approval of the
Buyer(s),  to issue any press release or other public disclosure with respect to
such  transactions  required  under  applicable  securities  or  other  laws  or
regulations  (the Company  shall use its best efforts to consult the Buyer(s) in
connection with any such press release or other public  disclosure  prior to its
release  and  Buyer(s)  shall  be  provided  with a copy  thereof  upon  release
thereof).

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

            (l)  TERMINATION.  In the  event  that the  Closing  shall  not have
occurred with respect to the Buyers on or before five (5) business days from the
date  hereof  due to the  Company's  or  the  Buyer's  failure  to  satisfy  the
conditions  set forth in Sections 6 and 7 above (and the  non-breaching  party's
failure to waive such unsatisfied  condition(s)),  the non-breaching party shall
have the option to terminate this Agreement with respect to such breaching party
at the close of  business  on such date  without  liability  of any party to any
other party; provided, however, that if this Agreement is terminated pursuant to
this Section 9(l), the Company shall remain  obligated to reimburse the Buyer(s)
for the expenses described in Section 4(g) above.

            (m) 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.


                    [REMAINDER PAGE INTENTIONALLY LEFT BLANK]



                                       18
<PAGE>



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


                                         COMPANY:
                                         SAFE TRANSPORTATION SYSYTEMS
                                         INC.

                                         By:
                                            ---------------------------------
                                         Name:  Ian Pallett
                                         Title: President and CEO


                                         INVESTOR:

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




                                       19

<PAGE>





                                                                       EXHIBIT A


                      FORM OF REGISTRATION RIGHTS AGREEMENT
                      -------------------------------------





<PAGE>



                                                                       EXHIBIT B


                            FORM OF ESCROW AGREEMENT
                            ------------------------







<PAGE>



                                                                       EXHIBIT C

                           TRANSFER AGENT INSTRUCTIONS
                           ---------------------------





<PAGE>




                                   SCHEDULE I
                                   ----------


                               SCHEDULE OF BUYERS
                               ------------------



                                                                       AMOUNT OF
NAME                       ADDRESS/FACSIMILE NUMBER OF BUYER        SUBSCRIPTION
-------------------------- ---------------------------------------- ------------