EXHIBIT 10.27

                          SECURITIES PURCHASE AGREEMENT

         This Securities  Purchase  Agreement (this  "AGREEMENT") is dated as of
August 9, 2006  among  Sonoma  College,  Inc.,  a  California  corporation  (the
"COMPANY"),  and each purchaser  identified on the signature pages hereto (each,
including  its  successors  and assigns,  a  "PURCHASER"  and  collectively  the
"PURCHASERS").

         WHEREAS,  subject  to the  terms  and  conditions  set  forth  in  this
Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "SECURITIES ACT") and Rule 506 promulgated thereunder,  the Company desires
to issue  and sell to each  Purchaser,  and each  Purchaser,  severally  and not
jointly, desires to purchase from the Company, securities of the Company as more
fully described in this Agreement.

         NOW,  THEREFORE,  IN CONSIDERATION of the mutual covenants contained in
this Agreement,  and for other good and valuable  consideration  the receipt and
adequacy of which are hereby acknowledged,  the Company and each Purchaser agree
as follows:

                                   ARTICLE I.
                                   DEFINITIONS

         1.1      DEFINITIONS.  In addition to the terms  defined  elsewhere  in
this Agreement: (a) capitalized terms that are not otherwise defined herein have
the meanings given to such terms in the Debentures (as defined herein),  and (b)
the following terms have the meanings indicated in this Section 1.1:

                  "ACTION"  shall  have the  meaning  ascribed  to such  term in
         Section 3.1(j).

                  "AFFILIATE"  means any Person  that,  directly  or  indirectly
         through one or more intermediaries,  controls or is controlled by or is
         under  common  control  with a  Person,  as such  terms are used in and
         construed  under Rule 144 under the  Securities  Act. With respect to a
         Purchaser,  any investment fund or managed account that is managed on a
         discretionary  basis by the same  investment  manager as such Purchaser
         will be deemed to be an Affiliate of such Purchaser.

                  "BUSINESS DAY" means any day except Saturday,  Sunday, any day
         which shall be a federal  legal holiday in the United States or any day
         on which banking  institutions  in the State of New York are authorized
         or required by law or other governmental action to close.

                  "CLOSING"  means the closing of the  purchase  and sale of the
         Securities pursuant to Section 2.1.

                  "CLOSING  DATE"  means  each  Trading  Day  when  all  of  the
         Transaction   Documents   have  been  executed  and  delivered  by  the
         applicable  parties  thereto,  and all conditions

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         precedent to (i) the Purchasers' obligations to pay the applicable part
         of the  Subscription  Amount  and (ii)  the  Company's  obligations  to
         deliver the applicable Securities have been satisfied or waived.

                  "COMMISSION" means the Securities and Exchange Commission.

                  "COMMON  STOCK"  means the common  stock of the  Company,  par
         value $.0001 per share,  and any other class of  securities  into which
         such securities may hereafter be reclassified or changed into.

                  "COMMON STOCK EQUIVALENTS" means any securities of the Company
         or the  Subsidiaries  which would entitle the holder thereof to acquire
         at any time Common  Stock,  including,  without  limitation,  any debt,
         preferred stock, rights, options,  warrants or other instrument that is
         at any time  convertible  into or exercisable or  exchangeable  for, or
         otherwise entitles the holder thereof to receive, Common Stock.

                  "COMPANY  COUNSEL"  means  Cohen & Czarnik,  LLP with  offices
         located at 140 Broadway, 36th Floor, New York, NY 10005.

                  "CONVERSION  PRICE"  shall have the  meaning  ascribed to such
         term in the Debentures.

                  "DEBENTURES" means, the 9% Secured Convertible Debentures due,
         subject  to the terms  therein,  eighteen  months  from  their  date of
         issuance,  issued by the Company to the  Purchasers  hereunder,  in the
         form of EXHIBIT A hereto.

                  "DISCLOSURE SCHEDULES" shall have the meaning ascribed to such
         term in Section 3.1.

                  "EFFECTIVE DATE" means the date that the initial  Registration
         Statement  filed by the  Company  pursuant to the  Registration  Rights
         Agreement is first declared effective by the Commission.

                  "ESCROW  AGENT"  means   Signature  Bank,  a  New  York  State
         chartered bank and having an office at, 261 Madison  Avenue,  New York,
         New York 10016.

                  "ESCROW  AGREEMENT" shall mean the Escrow  Agreement,  entered
         into on or before the date hereof,  by and among vFinance,  the Company
         and the Escrow  Agent  pursuant to which the  Purchasers,  prior to the
         date hereof, deposited Subscription Amounts with the Escrow Agent to be
         applied to the transactions contemplated hereunder.

                  "EVALUATION DATE" shall have the meaning ascribed to such term
         in Section 3.1(r).

                  "EXCHANGE ACT" means the  Securities  Exchange Act of 1934, as
         amended, and the rules and regulations promulgated thereunder.

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                  "EXEMPT  ISSUANCE" means the issuance of: (a) shares of Common
         Stock or options to employees,  officers,  consultants  or directors of
         the  Company  pursuant  to any stock or option  plan duly  adopted by a
         majority of the  non-employee  members of the Board of Directors of the
         Company or a majority  of the members of a  committee  of  non-employee
         directors  established for such purpose (provided that the strike price
         or exercise price of any such  issuances to consultants  shall be at or
         above  the VWAP on the date of  issuance,  and in no  event  shall  any
         issuance  of  non-qualified  Common  Stock  or  options  to any  single
         consultant exceed 10,000 shares of Common Stock and options (subject to
         adjustment for forward and reverse stock splits,  recapitalizations and
         the like),  in the aggregate,  in any 12 month period without the prior
         written  consent of the  Purchasers  holding  66% or more in  principal
         amount of Debentures then outstanding),  including,  but not limited to
         the 2004 Stock  Option Plan of the  Company,  (b)  securities  upon the
         exercise  or  exchange  of  or  conversion  of  any  Securities  issued
         hereunder  and/or other  securities  exercisable or exchangeable for or
         convertible  into shares of Common Stock issued and  outstanding on the
         date of this  Agreement,  provided that such  securities  have not been
         amended since the date of this Agreement to increase the number of such
         securities or to decrease the exercise, exchange or conversion price of
         any such securities, and (c) securities issued pursuant to acquisitions
         or strategic  transactions  approved by a majority of the disinterested
         directors,  provided any such issuance  shall only be to a Person which
         is,  itself or through  its  subsidiaries,  an  operating  company in a
         business  synergistic with the business of the Company and in which the
         Company  receives  benefits in addition to the investment of funds, but
         shall  not  include  a  transaction  in which the  Company  is  issuing
         securities primarily for the purpose of raising capital or to an entity
         whose primary business is investing in securities.

                   "FWS"  means  Feldman  Weinstein  & Smith  LLP  with  offices
         located  at 420  Lexington  Avenue,  Suite  2620,  New  York,  New York
         10170-0002.

                  "GAAP" shall have the meaning ascribed to such term in Section
         3.1(h).

                  "INTELLECTUAL PROPERTY RIGHTS" shall have the meaning ascribed
         to such term in Section 3.1(o).

                  "LEGEND REMOVAL DATE" shall have the meaning  ascribed to such
         term in Section 4.1(c).

                  "LIENS" means a lien, charge, security interest,  encumbrance,
         right of first refusal, preemptive right or other restriction.

                  "MATERIAL  ADVERSE EFFECT" shall have the meaning  assigned to
         such term in Section 3.1(b).

                  "MATERIAL  PERMITS"  shall have the  meaning  ascribed to such
         term in Section 3.1(m).

                  "MAXIMUM RATE" shall have the meaning ascribed to such term in
         Section 5.17.

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                  "PARTICIPATION  MAXIMUM"  shall have the  meaning  ascribed to
         such term in Section 4.13.

                  "PERSON"  means an  individual  or  corporation,  partnership,
         trust,  incorporated  or  unincorporated  association,  joint  venture,
         limited  liability  company,  joint stock  company,  government  (or an
         agency or subdivision thereof) or other entity of any kind.

                  "PRE-NOTICE"  shall have the meaning  ascribed to such term in
         Section 4.13.

                  "PROCEEDING" means an action,  claim,  suit,  investigation or
         proceeding (including,  without limitation, an investigation or partial
         proceeding, such as a deposition), whether commenced or threatened.

                  "PURCHASER PARTY" shall have the meaning ascribed to such term
         in Section 4.11.

                  "REGISTRATION  RIGHTS AGREEMENT" means the Registration Rights
         Agreement, dated the date hereof, among the Company and the Purchasers,
         in the form of EXHIBIT B attached hereto.

                  "REGISTRATION   STATEMENT"  means  a  registration   statement
         meeting the requirements set forth in the Registration Rights Agreement
         and covering the resale of the  Underlying  Shares by each Purchaser as
         provided for in the Registration Rights Agreement.

                  "REQUIRED  APPROVALS"  shall have the meaning ascribed to such
         term in Section 3.1(e).

                  "REQUIRED   MINIMUM"  means,  as  of  any  date,  the  maximum
         aggregate  number of shares of Common Stock then issued or  potentially
         issuable in the future pursuant to the Transaction Documents, including
         any Underlying  Shares  issuable upon exercise or conversion in full of
         all Warrants and Debentures  (including  Underlying  Shares issuable as
         payment of interest),  ignoring any  conversion or exercise  limits set
         forth therein,  and assuming that the Conversion  Price is at all times
         on and after the date of determination 75% of the then Conversion Price
         on the Trading Day immediately prior to the date of determination.

                  "RULE  144"  means  Rule  144  promulgated  by the  Commission
         pursuant to the  Securities  Act, as such Rule may be amended from time
         to time,  or any similar rule or  regulation  hereafter  adopted by the
         Commission having substantially the same effect as such Rule.

                  "SEC REPORTS" shall have the meaning  ascribed to such term in
         Section 3.1(h).

                  "SECURITIES" means the Debentures,  the Warrants,  the Warrant
         Shares and the Underlying Shares.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended,
         and the rules and regulations promulgated hereunder.

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                  "SECURITY  AGREEMENT" means the Security Agreement,  dated the
         date  hereof,  among the  Company  and the  Purchasers,  in the form of
         EXHIBIT E attached hereto.

                  "SECURITY  DOCUMENTS" shall mean the Security  Agreement,  the
         Subsidiary  Guarantees  and any other  documents  and  filing  required
         thereunder in order to grant the Purchasers a first  priority  security
         interest  in the assets of the  Company  as  provided  in the  Security
         Agreement, including all UCC-1 filing receipts.

                  "SHORT  SALES" shall  include all "short  sales" as defined in
         Rule 200 of  Regulation  SHO under the  Exchange  Act (but shall not be
         deemed to include the location and/or  reservation of borrowable shares
         of Common Stock).

                   "SUBSCRIPTION  AMOUNT"  means,  as  to  each  Purchaser,  the
         aggregate  amount  to be paid for  Debentures  and  Warrants  purchased
         hereunder as specified  below such  Purchaser's  name on the  signature
         page of this Agreement and next to the heading  "Subscription  Amount",
         in United States Dollars and in immediately available funds.

                  "SUBSEQUENT FINANCING" shall have the meaning ascribed to such
         term in Section 4.13.

                  "SUBSEQUENT  FINANCING NOTICE" shall have the meaning ascribed
         to such term in Section 4.13.

                  "SUBSIDIARY"  means any subsidiary of the Company as set forth
         on SCHEDULE 3.1(A).

                  "SUBSIDIARY GUARANTEE" means the Subsidiary Guarantee in favor
         of the Purchasers, in the form of EXHIBIT F attached hereto.

                  "TRADING  DAY" means a day on which the Common Stock is traded
         on a Trading Market.

                  "TRADING  MARKET" means the following  markets or exchanges on
         which the Common  Stock is listed or quoted for  trading on the date in
         question:  the Nasdaq Capital Market, the American Stock Exchange,  the
         New York Stock Exchange, the Nasdaq National Market or the OTC Bulletin
         Board.

                  "TRANSACTION DOCUMENTS" means this Agreement,  the Debentures,
         the  Warrants,   the  Registration   Rights  Agreement,   the  Security
         Agreement,  the Security Documents,  the Escrow Agreement and any other
         documents or agreements  executed in connection  with the  transactions
         contemplated hereunder.

                  "UNDERLYING  SHARES"  means the shares of Common  Stock issued
         and issuable upon conversion of the Debentures and upon exercise of the
         Warrants  and  issued  and  issuable  in lieu of the  cash  payment  of
         interest  on  the  Debentures  in  accordance  with  the  terms  of the
         Debentures.

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                  "VFINANCE"  means  vFinance  Investments,  Inc., the placement
         agent for this transaction.

                   "VWAP" means, for any date, the price determined by the first
         of the following clauses that applies:  (a) if the Common Stock is then
         listed or quoted on a Trading Market, the daily volume weighted average
         price of the Common Stock for such date (or the nearest preceding date)
         on the  Trading  Market on which  the  Common  Stock is then  listed or
         quoted as reported by Bloomberg  Financial L.P. (based on a Trading Day
         from 9:30 a.m.  Eastern Time to 4:02 p.m. Eastern Time); (b) if the OTC
         Bulletin Board is not a Trading  Market,  the volume  weighted  average
         price of the Common Stock for such date (or the nearest preceding date)
         on the OTC Bulletin  Board;  (c) if the Common Stock is not then listed
         or quoted on the OTC Bulletin  Board and if prices for the Common Stock
         are then  reported in the "Pink Sheets"  published by Pink Sheets,  LLC
         (or a similar  organization  or agency  succeeding  to its functions of
         reporting  prices),  the most  recent bid price per share of the Common
         Stock so reported;  or (d) in all other cases, the fair market value of
         a share of  Common  Stock as  determined  by an  independent  appraiser
         selected in good faith by the Purchasers  and reasonably  acceptable to
         the Company.

                  "WARRANTS"  means   collectively  the  Common  Stock  purchase
         warrants,  in the form of EXHIBIT C delivered to the  Purchasers at the
         Closing in accordance with Section 2.2(a) hereof,  which Warrants shall
         be  exercisable  immediately  and  have a term of  exercise  equal to 5
         years.

                  "WARRANT  SHARES"  means the shares of Common  Stock  issuable
         upon exercise of the Warrants.

                                   ARTICLE II.
                                PURCHASE AND SALE

         2.1      CLOSING.

                  (a)      FIRST  CLOSING.  On the first Closing Date,  upon the
         terms and subject to the  conditions  set forth  herein,  substantially
         concurrent  with the  execution  and delivery of this  Agreement by the
         parties hereto,  the Company agrees to sell, and each Purchaser  agrees
         to purchase in the aggregate, severally and not jointly, up to $250,000
         principal amount of the Debentures. Each Purchaser shall deliver to the
         Escrow  Agent  via  wire  transfer  or a  certified  check  immediately
         available funds equal to one-half of their Subscription  Amount and the
         Company shall deliver to each Purchaser their respective  Debenture and
         Warrants as determined  pursuant to Section  2.2(a) and the other items
         set  forth  in  Section  2.2  issuable  at  the  first  Closing.   Upon
         satisfaction  of the  conditions set forth in Sections 2.2 and 2.3, the
         first Closing shall occur at the offices of FWS, or such other location
         as the parties shall mutually agree.

         2.2      DELIVERIES.

                  (a)      On the first Closing Date,  the Company shall deliver
         or cause to be delivered to each Purchaser the following:

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                           (i)      this Agreement duly executed by the Company;

                           (ii)     a legal opinion of Company  Counsel,  in the
                  form of EXHIBIT D attached hereto;

                           (iii)    a Debenture with a principal amount equal to
                  one-half of such Purchaser's  Subscription Amount,  registered
                  in the name of such Purchaser;

                           (iv)     the Security Agreement, duly executed by the
                  Company,  along with all the Security Documents  including the
                  Subsidiary Guarantees (provided,  however, MW Asia, Inc. shall
                  not  be  required  to  execute  the   Security   Agreement  or
                  Subsidiary Guarantee at Closing);

                           (v)      a  Warrant  registered  in the  name of such
                  Purchaser to purchase up to a number of shares of Common Stock
                  equal  to 100% of the  principal  amount  of such  Purchaser's
                  Debenture  divided by the initial  Conversion  Price,  with an
                  exercise price equal to $0.10,  subject to adjustment therein;
                  and

                           (vi)     the   Registration   Rights  Agreement  duly
                  executed by the Company.

                  (b)      On the  first  Closing  Date,  each  Purchaser  shall
         deliver or cause to be delivered  to the Company  (except as noted) the
         following:

                           (i)      this   Agreement   duly   executed  by  such
                  Purchaser;

                           (ii)     one  half of such  Purchaser's  Subscription
                  Amount by wire transfer to the Escrow Agent;

                           (iii)    the Security Agreement duly executed by such
                  Purchaser; and

                           (iv)     the   Registration   Rights  Agreement  duly
                  executed by such Purchaser.

                  (c)      The  second  Closing  Date  shall  occur on the fifth
         Trading Day after the Effective Date.

                           (i)      On the  second  Closing  Date,  the  Company
                  shall  deliver or cause to be delivered to each  Purchaser the
                  following:

                           (A) a  Debenture  with a  principal  amount  equal to
         one-half of such  Purchaser's  Subscription  Amount,  registered in the
         name of such Purchaser; and

                           (B)  a  Warrant   registered  in  the  name  of  such
         Purchaser to purchase up to a number of shares of Common Stock equal to
         100% of the principal amount of such Purchaser's  Debenture  divided by
         the initial  Conversion  Price,  with an exercise price equal to $0.10,
         subject to adjustment therein.

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                           (ii)     On the second  Closing Date,  each Purchaser
                  shall  deliver  to the  Company  one half of such  Purchaser's
                  Subscription Amount by wire transfer to the Escrow Agent.

         2.3      CLOSING CONDITIONS.

                  (a)      The   obligations   of  the  Company   hereunder   in
         connection  with each Closing are subject to the  following  conditions
         being met:

                           (i)      the accuracy in all material  respects  when
                  made  and on the  Closing  Date  of  the  representations  and
                  warranties of the Purchasers contained herein;

                           (ii)     all obligations, covenants and agreements of
                  the  Purchasers  required to be  performed  at or prior to the
                  Closing Date shall have been performed; and

                           (iii)    the  delivery  by  the   Purchasers  of  the
                  applicable items set forth in Section 2.2 of this Agreement.

                  (b)      The   respective   obligations   of  the   Purchasers
         hereunder in connection  with each Closing are subject to the following
         conditions being met:

                           (i)      the accuracy in all material respects on the
                  Closing  Date of the  representations  and  warranties  of the
                  Company contained herein;

                           (ii)     all obligations, covenants and agreements of
                  the  Company  required  to be  performed  at or  prior  to the
                  Closing Date shall have been performed;

                           (iii)    the   delivery   by  the   Company   of  the
                  applicable items set forth in Section 2.2 of this Agreement;

                           (iv)     the   delivery   by   the   Company   of   a
                  Subordination  Agreement,  in the form of  EXHIBIT  G  hereto,
                  executed by each of Wisse Enterprises,  LLC; TLC, LLC; Charles
                  Newman;  Joseph Keats;  David Weaver and Technology  Exchange,
                  Inc.

                           (v)      the  delivery  by  the  Company  of  lock-up
                  agreements  in the form of EXHIBIT H hereto,  executed by each
                  of Harold Newman,  Charles Newman, David Weaver,  Joseph Keats
                  and Tricia Devin;

                           (vi)     there  shall have been no  Material  Adverse
                  Effect with respect to the Company since the date hereof; and

                           (vii)    from the date  hereof to the  Closing  Date,
                  trading in the Common  Stock shall not have been  suspended by
                  the  Commission  or the  Company's  principal  Trading  Market
                  (except  for any  suspension  of trading  of limited  duration
                  agreed to by the Company, which suspension shall be terminated
                  prior to the

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                  Closing),  and, at any time prior to the Closing Date, trading
                  in  securities  generally as reported by  Bloomberg  Financial
                  Markets shall not have been  suspended or limited,  or minimum
                  prices shall not have been  established  on  securities  whose
                  trades are reported by such service, or on any Trading Market,
                  nor shall a banking  moratorium  have been declared  either by
                  the  United  States or New York  State  authorities  nor shall
                  there have  occurred any material  outbreak or  escalation  of
                  hostilities  or other  national or  international  calamity of
                  such  magnitude  in its  effect  on, or any  material  adverse
                  change in, any financial  market  which,  in each case, in the
                  reasonable judgment of each Purchaser,  makes it impracticable
                  or inadvisable to purchase the Debentures at the Closing.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

         3.1      REPRESENTATIONS  AND WARRANTIES OF THE COMPANY.  Except as set
forth under the corresponding  section of the disclosure  schedules delivered to
the  Purchasers   concurrently  herewith  (the  "DISCLOSURE   SCHEDULES")  which
Disclosure  Schedules  shall  be  deemed  a  part  hereof  and  to  qualify  any
representation  or  warranty  otherwise  made  herein  to  the  extent  of  such
disclosure,  the Company  hereby makes the  representations  and  warranties set
forth below to each Purchaser.

                  (a)      SUBSIDIARIES.   All  of  the  direct   and   indirect
         subsidiaries  of the  Company  are set forth on  SCHEDULE  3.1(A).  The
         Company owns, directly or indirectly, all of the capital stock or other
         equity  interests of each Subsidiary  free and clear of any Liens,  and
         all  the  issued  and  outstanding  shares  of  capital  stock  of each
         Subsidiary  are validly issued and are fully paid,  non-assessable  and
         free of  preemptive  and similar  rights to  subscribe  for or purchase
         securities.  If  the  Company  has  no  subsidiaries,  then  all  other
         references in the Transaction  Documents to the  Subsidiaries or any of
         them  will  be  disregarded.  As of the  Closing,  the  Company's  only
         Subsidiary is MW Asia, Inc., a Nevada corporation. Since its inception,
         MW Asia, Inc. has been inactive and has not conducted any operations of
         any nature  whatsoever.  MW Asia,  Inc.  does not intend to conduct any
         operations for the foreseeable future.

                  (b)      ORGANIZATION AND QUALIFICATION.  The Company and each
         of  the  Subsidiaries  is an  entity  duly  incorporated  or  otherwise
         organized,  validly existing and in good standing under the laws of the
         jurisdiction of its incorporation or organization (as applicable), with
         the  requisite  power and authority to own and use its  properties  and
         assets and to carry on its business as currently conducted. Neither the
         Company nor any  Subsidiary  is in  violation  or default of any of the
         provisions of its respective  certificate or articles of incorporation,
         bylaws  or  other  organizational  or  charter  documents.  Each of the
         Company and the  Subsidiaries is duly qualified to conduct business and
         is in good  standing as a foreign  corporation  or other entity in each
         jurisdiction in which the nature of the business  conducted or property
         owned  by it makes  such  qualification  necessary,  except  where  the
         failure to be so  qualified  or in good  standing,  as the case may be,
         could not have or  reasonably  be  expected to result in (i) a material
         adverse  effect on the  legality,  validity  or  enforceability  of any
         Transaction Document,  (ii) a material adverse

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         effect on the results of  operations,  assets,  business,  prospects or
         condition (financial or otherwise) of the Company and the Subsidiaries,
         taken as a whole,  or (iii) a material  adverse effect on the Company's
         ability  to  perform  in any  material  respect  on a timely  basis its
         obligations under any Transaction  Document (any of (i), (ii) or (iii),
         a "MATERIAL  ADVERSE  EFFECT") and no Proceeding has been instituted in
         any such  jurisdiction  revoking,  limiting or curtailing or seeking to
         revoke, limit or curtail such power and authority or qualification.

                  (c)      AUTHORIZATION;   ENFORCEMENT.  The  Company  has  the
         requisite corporate power and authority to enter into and to consummate
         the transactions  contemplated by each of the Transaction Documents and
         otherwise to carry out its obligations  hereunder and  thereunder.  The
         execution  and  delivery of each of the  Transaction  Documents  by the
         Company and the  consummation  by it of the  transactions  contemplated
         hereby thereby have been duly authorized by all necessary action on the
         part of the Company and no further  action is required by the  Company,
         its board of  directors or its  stockholders  in  connection  therewith
         other than in connection with the Required Approvals.  Each Transaction
         Document has been (or upon  delivery  will have been) duly  executed by
         the Company and, when delivered in accordance with the terms hereof and
         thereof,  will  constitute  the valid  and  binding  obligation  of the
         Company  enforceable  against the Company in accordance  with its terms
         except (i) as limited by general  equitable  principles  and applicable
         bankruptcy,  insolvency,  reorganization,  moratorium and other laws of
         general   application   affecting   enforcement  of  creditors'  rights
         generally,  (ii) as limited by laws  relating  to the  availability  of
         specific performance, injunctive relief or other equitable remedies and
         (iii) insofar as  indemnification  and  contribution  provisions may be
         limited by applicable law.

                  (d)      NO CONFLICTS. The execution, delivery and performance
         of the Transaction Documents by the Company and the consummation by the
         Company of the other  transactions  contemplated  hereby and thereby do
         not and will not:  (i)  conflict  with or violate any  provision of the
         Company's or any Subsidiary's certificate or articles of incorporation,
         bylaws or other  organizational or charter documents,  or (ii) conflict
         with, or constitute a default (or an event that with notice or lapse of
         time or both would become a default)  under,  result in the creation of
         any Lien upon any of the  properties  or assets of the  Company  or any
         Subsidiary,  or give to others  any rights of  termination,  amendment,
         acceleration or cancellation (with or without notice,  lapse of time or
         both) of, any  agreement,  credit  facility,  debt or other  instrument
         (evidencing  a  Company  or  Subsidiary  debt or  otherwise)  or  other
         understanding  to which the Company or any  Subsidiary is a party or by
         which any property or asset of the Company or any  Subsidiary  is bound
         or affected, or (iii) subject to the Required Approvals,  conflict with
         or result in a violation of any law, rule, regulation, order, judgment,
         injunction,  decree or other  restriction of any court or  governmental
         authority  to which the Company or a Subsidiary  is subject  (including
         federal and state  securities  laws and  regulations),  or by which any
         property or asset of the Company or a Subsidiary  is bound or affected;
         except in the case of each of clauses (ii) and (iii), such as could not
         have or reasonably be expected to result in a Material Adverse Effect.

                                       10
<PAGE>

                  (e)      FILINGS,  CONSENTS AND APPROVALS.  The Company is not
         required to obtain any consent, waiver, authorization or order of, give
         any notice to, or make any filing or  registration  with,  any court or
         other federal,  state, local or other  governmental  authority or other
         Person in connection  with the execution,  delivery and  performance by
         the  Company  of the  Transaction  Documents,  other  than (i)  filings
         required  pursuant to Section 4.6, (ii) the filing with the  Commission
         of the Registration  Statement,  (iii) the notice and/or application(s)
         to each  applicable  Trading  Market for the  issuance  and sale of the
         Securities and the listing of the Underlying Shares for trading thereon
         in the time and manner required thereby,  and (iv) the filing of Form D
         with the  Commission  and such filings as are required to be made under
         applicable   state   securities  laws   (collectively,   the  "REQUIRED
         APPROVALS").

                  (f)      ISSUANCE OF THE  SECURITIES.  The Securities are duly
         authorized  and,  when  issued  and  paid  for in  accordance  with the
         applicable  Transaction  Documents,  will be duly and  validly  issued,
         fully paid and  nonassessable,  free and clear of all Liens  imposed by
         the Company  other than  restrictions  on transfer  provided for in the
         Transaction   Documents.   The  Company  has  reserved  from  its  duly
         authorized  capital  stock a number  of  shares  of  Common  Stock  for
         issuance  of the  Underlying  Shares  at least  equal  to the  Required
         Minimum on the date hereof.

                  (g)      CAPITALIZATION.  The capitalization of the Company is
         as set forth on SCHEDULE 3.1(G). The Company has not issued any capital
         stock since its most recently filed periodic  report under the Exchange
         Act,  other than  pursuant to the  exercise of employee  stock  options
         under the  Company's  stock  option  plans,  the  issuance of shares of
         Common  Stock to employees  pursuant to the  Company's  employee  stock
         purchase  plan and  pursuant  to the  conversion  or exercise of Common
         Stock Equivalents outstanding as of the date of the most recently filed
         periodic  report  under the  Exchange  Act.  No Person has any right of
         first refusal, preemptive right, right of participation, or any similar
         right  to  participate  in  the   transactions   contemplated   by  the
         Transaction  Documents.  Except as a result of the purchase and sale of
         the  Securities  and as set  forth on  SCHEDULE  3.1(G),  there  are no
         outstanding options,  warrants, script rights to subscribe to, calls or
         commitments  of any character  whatsoever  relating to, or  securities,
         rights or obligations  convertible  into or exercisable or exchangeable
         for, or giving any Person any right to  subscribe  for or acquire,  any
         shares of Common Stock, or contracts,  commitments,  understandings  or
         arrangements  by which the Company or any  Subsidiary  is or may become
         bound to issue  additional  shares  of  Common  Stock or  Common  Stock
         Equivalents.  The issuance and sale of the Securities will not obligate
         the Company to issue shares of Common Stock or other  securities to any
         Person  (other than the  Purchasers)  and will not result in a right of
         any holder of Company  securities to adjust the  exercise,  conversion,
         exchange  or  reset  price  under  any of such  securities.  All of the
         outstanding  shares of capital stock of the Company are validly issued,
         fully paid and  nonassessable,  have been issued in compliance with all
         federal and state securities laws, and none of such outstanding  shares
         was issued in violation of any  preemptive  rights or similar rights to
         subscribe  for  or  purchase   securities.   No  further   approval  or
         authorization of any stockholder, the Board of Directors of the Company
         or others is  required  for the  issuance  and sale of the  Securities.
         There  are no  stockholders  agreements,  voting

                                       11
<PAGE>

         agreements  or other similar  agreements  with respect to the Company's
         capital  stock to which the Company is a party or, to the  knowledge of
         the Company, between or among any of the Company's stockholders.

                  (h)      SEC REPORTS;  FINANCIAL  STATEMENTS.  The Company has
         filed all reports,  schedules,  forms,  statements and other  documents
         required to be filed by it under the  Securities  Act and the  Exchange
         Act, including pursuant to Section 13(a) or 15(d) thereof,  for the two
         years  preceding the date hereof (or such shorter period as the Company
         was required by law or regulation to file such material) (the foregoing
         materials, including the exhibits thereto and documents incorporated by
         reference therein,  being  collectively  referred to herein as the "SEC
         REPORTS") on a timely  basis or has received a valid  extension of such
         time of  filing  and has  filed  any  such  SEC  Reports  prior  to the
         expiration of any such extension. As of their respective dates, the SEC
         Reports complied in all material  respects with the requirements of the
         Securities  Act and the Exchange Act and the rules and  regulations  of
         the Commission promulgated thereunder,  as applicable,  and none of the
         SEC Reports,  when filed,  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 the light of
         the  circumstances  under  which they were made,  not  misleading.  The
         financial  statements of the Company included in the SEC Reports comply
         in all material  respects with applicable  accounting  requirements and
         the rules and  regulations of the Commission with respect thereto as in
         effect  at the time of  filing.  Such  financial  statements  have been
         prepared in accordance with United States generally accepted accounting
         principles  applied on a consistent  basis during the periods  involved
         ("GAAP"),  except  as may be  otherwise  specified  in  such  financial
         statements  or the notes  thereto and except that  unaudited  financial
         statements  may not contain all footnotes  required by GAAP, and fairly
         present in all material respects the financial  position of the Company
         and its  consolidated  subsidiaries as of and for 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,  immaterial,
         year-end audit adjustments.

                  (i)      MATERIAL  CHANGES.  Since  the  date  of  the  latest
         audited financial statements included within the SEC Reports, except as
         specifically  disclosed in a subsequent SEC Report,  (i) there has been
         no  event,  occurrence  or  development  that  has  had or  that  could
         reasonably be expected to result in a Material Adverse Effect, (ii) the
         Company has not  incurred any  liabilities  (contingent  or  otherwise)
         other than:  (A) trade  payables and accrued  expenses  incurred in the
         ordinary  course of  business  consistent  with past  practice  and (B)
         liabilities  not required to be reflected  in the  Company's  financial
         statements  pursuant  to GAAP or  disclosed  in  filings  made with the
         Commission, (iii) the Company has not altered its method of accounting,
         (iv) the Company has not declared or made any dividend or  distribution
         of cash or other property to its stockholders or purchased, redeemed or
         made any  agreements  to  purchase  or redeem any shares of its capital
         stock and (v) the Company has not issued any equity  securities  to any
         officer,  director or Affiliate,  except  pursuant to existing  Company
         stock  option  plans.  The  Company  does not have  pending  before the
         Commission  any  request for  confidential  treatment  of  information.
         Except  for  the  issuance  of  the  Securities  contemplated  by  this
         Agreement or

                                       12
<PAGE>

         as set forth on SCHEDULE 3.1(I), no event, liability or development has
         occurred or exists with respect to the Company or its  Subsidiaries  or
         their  respective   business,   properties,   operations  or  financial
         condition,  that would be required to be disclosed by the Company under
         applicable securities laws at the time this representation is made that
         has not been  publicly  disclosed at least one Trading Day prior to the
         date that this representation is made.

                  (j)      LITIGATION.  Except as set forth on SCHEDULE  3.1(J),
         there is no action, suit, inquiry,  notice of violation,  proceeding or
         investigation  pending or, to the knowledge of the Company,  threatened
         against  or  affecting  the  Company,  any  Subsidiary  or any of their
         respective properties before or by any court, arbitrator,  governmental
         or  administrative  agency or  regulatory  authority  (federal,  state,
         county,  local  or  foreign)  (collectively,  an  "ACTION")  which  (i)
         adversely   affects   or   challenges   the   legality,   validity   or
         enforceability of any of the Transaction Documents or the Securities or
         (ii) could, if there were an unfavorable  decision,  have or reasonably
         be expected to result in a Material Adverse Effect. Neither the Company
         nor any Subsidiary, nor any director or officer thereof, is or has been
         the  subject  of any  Action  involving  a  claim  of  violation  of or
         liability  under federal or state  securities laws or a claim of breach
         of  fiduciary  duty.  There has not been,  and to the  knowledge of the
         Company, there is not pending or contemplated, any investigation by the
         Commission  involving the Company or any current or former  director or
         officer of the Company. The Commission has not issued any stop order or
         other order suspending the effectiveness of any registration  statement
         filed by the Company or any  Subsidiary  under the  Exchange Act or the
         Securities Act.

                  (k)      LABOR RELATIONS. No material labor dispute exists or,
         to the knowledge of the Company, is imminent with respect to any of the
         employees of the Company  which could  reasonably be expected to result
         in  a  Material   Adverse   Effect.   None  of  the  Company's  or  its
         Subsidiaries'  employees  is a member of a union  that  relates to such
         employee's  relationship  with the Company,  and neither the Company or
         any  of  its  Subsidiaries  is  a  party  to  a  collective  bargaining
         agreement,  and the Company  and its  Subsidiaries  believe  that their
         relationships with their employees are good. No executive  officer,  to
         the  knowledge  of the  Company,  is,  or is  now  expected  to be,  in
         violation   of  any   material   term  of  any   employment   contract,
         confidentiality,  disclosure or  proprietary  information  agreement or
         non-competition  agreement,  or any other  contract or agreement or any
         restrictive  covenant,  and  the  continued  employment  of  each  such
         executive   officer  does  not  subject  the  Company  or  any  of  its
         Subsidiaries  to any  liability  with  respect to any of the  foregoing
         matters.  The Company and its  Subsidiaries  are in compliance with all
         U.S. federal, state, local and foreign laws and regulations relating to
         employment and employment practices, terms and conditions of employment
         and wages and hours, except where the failure to be in compliance could
         not, individually or in the aggregate, reasonably be expected to have a
         Material Adverse Effect.

                  (l)      COMPLIANCE.  Neither the  Company nor any  Subsidiary
         (i) is in default  under or in  violation of (and no event has occurred
         that has not been  waived  that,  with notice or lapse of time or both,
         would result in a default by the Company or any Subsidiary  under), nor
         has the Company or any Subsidiary received notice of a claim that

                                       13
<PAGE>

         it is in default  under or that it is in violation  of, any  indenture,
         loan or credit  agreement or any other agreement or instrument to which
         it is a party or by which it or any of its properties is bound (whether
         or not such default or violation has been waived), (ii) is in violation
         of any order of any court, arbitrator or governmental body, or (iii) is
         or has been in  violation  of any statute,  rule or  regulation  of any
         governmental  authority,  including  without  limitation  all  foreign,
         federal,  state and local laws  applicable to its business and all such
         laws that affect the environment, except in each case as could not have
         or reasonably be expected to result in a Material Adverse Effect.

                  (m)      REGULATORY PERMITS.  The Company and the Subsidiaries
         possess all  certificates,  authorizations  and  permits  issued by the
         appropriate  federal,  state, local or foreign  regulatory  authorities
         necessary to conduct  their  respective  businesses as described in the
         SEC Reports, except where the failure to possess such permits could not
         have or reasonably be expected to result in a Material  Adverse  Effect
         ("MATERIAL  PERMITS"),  and neither the Company nor any  Subsidiary has
         received  any  notice of  proceedings  relating  to the  revocation  or
         modification of any Material Permit.

                  (n)      TITLE TO ASSETS.  The  Company  and the  Subsidiaries
         have good and marketable title in fee simple to all real property owned
         by  them  that is  material  to the  business  of the  Company  and the
         Subsidiaries  and good and  marketable  title in all personal  property
         owned by them that is material  to the  business of the Company and the
         Subsidiaries,  in each  case free and clear of all  Liens,  except  for
         Liens as do not materially affect the value of such property and do not
         materially  interfere with the use made and proposed to be made of such
         property by the Company and the  Subsidiaries and Liens for the payment
         of  federal,  state or other  taxes,  the  payment  of which is neither
         delinquent  nor subject to penalties.  Any real property and facilities
         held under lease by the Company and the  Subsidiaries  are held by them
         under valid,  subsisting and enforceable  leases with which the Company
         and the Subsidiaries are in compliance,  except where the failure to be
         in compliance could not,  individually or in the aggregate,  reasonably
         be expected to have a Material Adverse Effect.

                  (o)      PATENTS   AND   TRADEMARKS.   The   Company  and  the
         Subsidiaries  have,  or  have  rights  to  use,  all  patents,   patent
         applications,  trademarks, trademark applications, service marks, trade
         names,  trade  secrets,  inventions,  copyrights,  licenses  and  other
         intellectual  property rights and similar rights  necessary or material
         for use in connection with their respective  businesses as described in
         the SEC  Reports and which the failure to so have could have a Material
         Adverse Effect  (collectively,  the  "INTELLECTUAL  PROPERTY  RIGHTS").
         Neither the Company nor any Subsidiary  has received a notice  (written
         or otherwise) that the Intellectual Property Rights used by the Company
         or any Subsidiary  violates or infringes upon the rights of any Person.
         To the knowledge of the Company, all such Intellectual  Property Rights
         are enforceable and there is no existing infringement by another Person
         of any  of the  Intellectual  Property  Rights.  The  Company  and  its
         Subsidiaries  have taken  reasonable  security  measures to protect the
         secrecy,  confidentiality  and  value  of  all  of  their  intellectual
         properties, except where failure to do so could not, individually or in
         the aggregate, reasonably be expect to have a Material Adverse Effect.

                                       14
<PAGE>

                  (p)      INSURANCE.  The  Company  and  the  Subsidiaries  are
         insured by insurers of recognized financial responsibility against such
         losses and risks and in such  amounts as are prudent and  customary  in
         the businesses in which the Company and the  Subsidiaries  are engaged,
         including,  but  not  limited  to,  directors  and  officers  insurance
         coverage at least equal to the aggregate  Subscription Amount.  Neither
         the Company nor any  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  without  a  significant
         increase in cost.

                  (q)      TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as
         set  forth  in the SEC  Reports  and on  SCHEDULE  3.1(Q),  none of the
         officers or  directors  of the Company  and,  to the  knowledge  of the
         Company,  none of the  employees of the Company is presently a party to
         any  transaction  with the  Company or any  Subsidiary  (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 entity in which
         any officer,  director, or any such employee has a substantial interest
         or is an officer,  director, trustee or partner, in each case in excess
         of $60,000 other than (i) for payment of salary or consulting  fees for
         services  rendered,  (ii) reimbursement for expenses incurred on behalf
         of the Company, and (iii) for other employee benefits,  including stock
         option agreements under any stock option plan of the Company.

                  (r)      SARBANES-OXLEY;  INTERNAL  ACCOUNTING  CONTROLS.  The
         Company  is  in  material   compliance   with  all  provisions  of  the
         Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing
         Date.  The Company and the  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 GAAP
         and to  maintain  asset  accountability,  (iii)  access  to  assets  is
         permitted  only in  accordance  with  management's  general or specific
         authorization,  and (iv) the  recorded  accountability  for  assets  is
         compared  with  the  existing   assets  at  reasonable   intervals  and
         appropriate  action  is taken  with  respect  to any  differences.  The
         Company has established  disclosure controls and procedures (as defined
         in Exchange  Act Rules  13a-15(e)  and  15d-15(e))  for the Company and
         designed  such  disclosure  controls  and  procedures  to  ensure  that
         information  required to be  disclosed by the Company in the reports it
         files  or  submits  under  the  Exchange  Act is  recorded,  processed,
         summarized  and  reported,  within the time  periods  specified  in the
         Commission's  rules and forms. The Company's  certifying  officers have
         evaluated the  effectiveness of the Company's  disclosure  controls and
         procedures as of the end of the period  covered by the  Company's  most
         recently filed  periodic  report under the Exchange Act (such date, the
         "EVALUATION  DATE").  The Company  presented in its most recently filed
         periodic   report  under  the  Exchange  Act  the  conclusions  of  the
         certifying  officers about the effectiveness of the disclosure controls
         and procedures  based on their  evaluations as of the Evaluation  Date.
         Since the Evaluation  Date, there have been no changes in the

                                       15
<PAGE>

         Company's  internal  control over financial  reporting (as such term is
         defined  in the  Exchange  Act)  that has  materially  affected,  or is
         reasonably likely to materially  affect, the Company's internal control
         over financial reporting.

                  (s)      CERTAIN FEES. Except as set forth on SCHEDULE 3.1(S),
         no brokerage or finder's fees or commissions  are or will be payable by
         the Company to any broker,  financial  advisor or  consultant,  finder,
         placement agent,  investment banker,  bank or other Person with respect
         to the  transactions  contemplated  by the Transaction  Documents.  The
         Purchasers  shall have no  obligation  with respect to any fees or with
         respect to any claims made by or on behalf of other Persons for fees of
         a type  contemplated in this Section that may be due in connection with
         the transactions contemplated by the Transaction Documents.

                  (t)      PRIVATE  PLACEMENT.  Assuming  the  accuracy  of  the
         Purchasers  representations and warranties set forth in Section 3.2, no
         registration  under the  Securities  Act is required  for the offer and
         sale of the Securities by the Company to the Purchasers as contemplated
         hereby.  The issuance  and sale of the  Securities  hereunder  does not
         contravene the rules and regulations of the Trading Market.

                  (u)      INVESTMENT COMPANY. The Company is not, and is not an
         Affiliate  of,  and  immediately  after  receipt  of  payment  for  the
         Securities,  will not be or be an Affiliate of, an "investment company"
         within the meaning of the  Investment  Company Act of 1940, as amended.
         The Company  shall conduct its business in a manner so that it will not
         become subject to the Investment Company Act.

                  (v)      REGISTRATION   RIGHTS.   Other   than   each  of  the
         Purchasers,  no Person has any right to cause the Company to effect the
         registration under the Securities Act of any securities of the Company.

                  (w)      LISTING AND MAINTENANCE  REQUIREMENTS.  The Company's
         Common Stock is  registered  pursuant to Section  12(b) or 12(g) of the
         Exchange Act, and the Company has taken no action designed to, or which
         to its  knowledge  is likely to have the  effect  of,  terminating  the
         registration  of the Common  Stock under the  Exchange  Act nor has the
         Company received any notification  that the Commission is contemplating
         terminating  such  registration.  The Company has not, in the 12 months
         preceding the date hereof,  received  notice from any Trading Market on
         which the  Common  Stock is or has been  listed or quoted to the effect
         that the Company is not in compliance  with the listing or  maintenance
         requirements of such Trading Market.  The Company is, and has no reason
         to believe that it will not in the  foreseeable  future continue to be,
         in compliance with all such listing and maintenance requirements.

                  (x)      APPLICATION OF TAKEOVER PROTECTIONS.  The Company and
         its Board of  Directors  have taken all  necessary  action,  if any, in
         order to render  inapplicable any control share  acquisition,  business
         combination,  poison pill  (including any  distribution  under a rights
         agreement) or other similar anti-takeover provision under the Company's
         Certificate of Incorporation (or similar charter documents) or the laws
         of its state of

                                       16
<PAGE>

         incorporation that is or could become applicable to the Purchasers as a
         result of the Purchasers and the Company  fulfilling their  obligations
         or exercising their rights under the Transaction  Documents,  including
         without  limitation  as a  result  of  the  Company's  issuance  of the
         Securities and the Purchasers' ownership of the Securities.

                  (y)      DISCLOSURE. Except with respect to the material terms
         and  conditions of the  transactions  contemplated  by the  Transaction
         Documents,  the Company  confirms  that neither it nor any other Person
         acting on its behalf has provided any of the Purchasers or their agents
         or counsel with any information  that it believes  constitutes or might
         constitute material, nonpublic information. The Company understands and
         confirms that the Purchasers will rely on the foregoing  representation
         in effecting  transactions in securities of the Company. All disclosure
         furnished  by or on behalf of the Company to the  Purchasers  regarding
         the Company,  its business and the  transactions  contemplated  hereby,
         including the Disclosure  Schedules to this Agreement,  with respect to
         the  representations  and  warranties  made herein are true and correct
         with respect to such  representations and warranties and do not contain
         any untrue  statement of a material  fact or omit to state any material
         fact necessary in order to make the statements  made therein,  in light
         of the  circumstances  under which they were made, not misleading.  The
         Company acknowledges and agrees that no Purchaser makes or has made any
         representations   or  warranties  with  respect  to  the   transactions
         contemplated  hereby other than those specifically set forth in Section
         3.2 hereof.

                  (z)      NO INTEGRATED OFFERING.  Assuming the accuracy of the
         Purchasers'  representations  and  warranties set forth in Section 3.2,
         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 cause this offering of the Securities to
         be integrated  with prior  offerings by the Company for purposes of the
         Securities Act or any applicable  shareholder approval provision of any
         Trading Market on which any of the securities of the Company are listed
         or designated.

                  (aa)     SOLVENCY.  Based on the  financial  condition  of the
         Company as of the Closing  Date after  giving  effect to the receipt by
         the Company of the proceeds from the sale of the Securities  hereunder,
         (i) the fair saleable value of the Company's  assets exceeds the amount
         that will be  required  to be paid on or in  respect  of the  Company's
         existing  debts  and  other  liabilities  (including  known  contingent
         liabilities)  as  they  mature;   (ii)  the  Company's  assets  do  not
         constitute  unreasonably  small capital to carry on its business as now
         conducted  and as proposed to be conducted  including its capital needs
         taking into account the particular capital requirements of the business
         conducted  by the  Company,  and  projected  capital  requirements  and
         capital  availability  thereof;  and (iii) the current cash flow of the
         Company,  together with the proceeds the Company would receive, were it
         to  liquidate  all  of  its  assets,  after  taking  into  account  all
         anticipated uses of the cash, would be sufficient to pay all amounts on
         or in respect of its  liabilities  when such amounts are required to be
         paid.  The Company does not intend to incur debts beyond its ability to
         pay such  debts as they  mature  (taking  into  account  the timing and
         amounts  of cash to be  payable  on or in  respect  of its  debt).  The
         Company has no

                                       17
<PAGE>

         knowledge of any facts or  circumstances  which lead it to believe that
         it will file for  reorganization or liquidation under the bankruptcy or
         reorganization  laws of any  jurisdiction  within  one  year  from  the
         Closing Date.  SCHEDULE  3.1(AA) sets forth as of the dates thereof all
         outstanding  secured and unsecured  Indebtedness  of the Company or any
         Subsidiary, or for which the Company or any Subsidiary has commitments.
         For the purposes of this Agreement,  "INDEBTEDNESS"  shall mean (a) any
         liabilities  for  borrowed  money or amounts  owed in excess of $50,000
         (other than trade accounts  payable  incurred in the ordinary course of
         business),  (b)  all  guaranties,  endorsements  and  other  contingent
         obligations in respect of  Indebtedness  of others,  whether or not the
         same are or should be reflected in the Company's  balance sheet (or the
         notes  thereto),   except   guaranties  by  endorsement  of  negotiable
         instruments  for deposit or collection or similar  transactions  in the
         ordinary  course of  business;  and (c) the present  value of any lease
         payments  in  excess  of  $50,000  due  under  leases  required  to  be
         capitalized  in  accordance  with GAAP.  Neither  the  Company  nor any
         Subsidiary is in default with respect to any Indebtedness.

                  (bb)     TAX  STATUS.  Except  for  matters  that  would  not,
         individually  or in the  aggregate,  have or  reasonably be expected to
         result in a Material  Adverse  Effect,  the Company and each Subsidiary
         has filed all necessary federal, state and foreign income and franchise
         tax returns and has paid or accrued all taxes shown as due thereon, and
         the  Company  has no  knowledge  of a tax  deficiency  which  has  been
         asserted or threatened against the Company or any Subsidiary.

                  (cc)     NO GENERAL SOLICITATION.  Neither the Company nor any
         person  acting on behalf of the  Company has offered or sold any of the
         Securities by any form of general  solicitation or general advertising.
         The Company has offered the  Securities for sale only to the Purchasers
         and certain other "accredited investors" within the meaning of Rule 501
         under the Securities Act.

                  (dd)     FOREIGN CORRUPT PRACTICES.  Neither the Company,  nor
         to the  knowledge of the Company,  any agent or other person  acting on
         behalf of the Company,  has (i) directly or indirectly,  used any funds
         for unlawful  contributions,  gifts,  entertainment  or other  unlawful
         expenses related to foreign or domestic political  activity,  (ii) made
         any  unlawful  payment to foreign or domestic  government  officials or
         employees or to any foreign or domestic  political parties or campaigns
         from corporate  funds,  (iii) failed to disclose fully any contribution
         made by the  Company  (or made by any  person  acting on its  behalf of
         which the  Company  is aware)  which is in  violation  of law,  or (iv)
         violated in any material  respect any provision of the Foreign  Corrupt
         Practices Act of 1977, as amended.

                  (ee)     AUDITORS.  The Company's independent auditors are set
         forth on SCHEDULE 3.1(EE) of the Disclosure Schedule.  To the knowledge
         of the Company, such independent auditors, who the Company expects will
         express their  opinion with respect to the  financial  statements to be
         included  in the  Company's  Annual  Report on Form 10-KSB for the year
         ending  June  30,  2006  are a  registered  public  accounting  firm as
         required by the Securities Act.

                                       18
<PAGE>

                  (ff)     SENIORITY. As of the Closing Date, no Indebtedness or
         other claim against the Company is senior to the Debentures in right of
         payment,  whether  with  respect to  interest  or upon  liquidation  or
         dissolution,  or otherwise, other than indebtedness secured by purchase
         money security  interests (which is senior only as to underlying assets
         covered thereby) and capital lease obligations (which is senior only as
         to the property covered thereby).

                  (gg)     NO DISAGREEMENTS WITH ACCOUNTANTS AND LAWYERS.  There
         are no  disagreements  of any kind  presently  existing,  or reasonably
         anticipated  by the  Company  to arise,  between  the  Company  and the
         accountants and lawyers  formerly or presently  employed by the Company
         and except as set forth on  SCHEDULE  3.1(GG),  the  Company is current
         with respect to any fees owed to its accountants and lawyers.

                  (hh)     ACKNOWLEDGMENT   REGARDING  PURCHASERS'  PURCHASE  OF
         SECURITIES.  The  Company  acknowledges  and  agrees  that  each of the
         Purchasers  is  acting  solely  in  the  capacity  of an  arm's  length
         purchaser   with  respect  to  the   Transaction   Documents   and  the
         transactions  contemplated  thereby.  The Company further  acknowledges
         that no Purchaser is acting as a financial  advisor or fiduciary of the
         Company (or in any similar  capacity)  with respect to the  Transaction
         Documents  and the  transactions  contemplated  thereby  and any advice
         given by any Purchaser or any of their  respective  representatives  or
         agents  in   connection   with  the   Transaction   Documents  and  the
         transactions   contemplated   thereby  is  merely   incidental  to  the
         Purchasers' purchase of the Securities.  The Company further represents
         to each  Purchaser  that the  Company's  decision  to enter  into  this
         Agreement and the other Transaction  Documents has been based solely on
         the independent  evaluation of the transactions  contemplated hereby by
         the Company and its representatives.

                  (ii)     ACKNOWLEDGEMENT    REGARDING    PURCHASERS'   TRADING
         ACTIVITY.  Anything  in  this  Agreement  or  elsewhere  herein  to the
         contrary  notwithstanding (except for Sections 3.2(f) and 4.16 hereof),
         it is understood and acknowledged by the Company:  (i) that none of the
         Purchasers have been asked to agree, nor has any Purchaser  agreed,  to
         desist from purchasing or selling, long and/or short, securities of the
         Company,  or "derivative"  securities based on securities issued by the
         Company or to hold the  Securities  for any specified  term;  (ii) that
         past or future  open  market or other  transactions  by any  Purchaser,
         including Short Sales, and specifically including,  without limitation,
         Short Sales or "derivative"  transactions,  before or after the closing
         of this or future private placement transactions, may negatively impact
         the market price of the  Company's  publicly-traded  securities;  (iii)
         that any Purchaser, and counter-parties in "derivative" transactions to
         which any such Purchaser is a party, directly or indirectly,  presently
         may have a "short"  position  in the Common  Stock,  and (iv) that each
         Purchaser shall not be deemed to have any  affiliation  with or control
         over any arm's length  counter-party in any  "derivative"  transaction.
         The Company further  understands and acknowledges  that (a) one or more
         Purchasers may engage in hedging activities at various times during the
         period  that  the  Securities  are  outstanding,   including,   without
         limitation,  during the periods that the value of the Underlying Shares
         deliverable  with respect to Securities  are being  determined  and (b)
         such hedging activities (if any) could reduce the value of the existing
         stockholders'

                                       19
<PAGE>

         equity  interests in the Company at and after the time that the hedging
         activities  are being  conducted.  The Company  acknowledges  that such
         aforementioned  hedging activities do not constitute a breach of any of
         the Transaction Documents.

                  (jj)     MANIPULATION  OF PRICE.  The Company has not,  and to
         its  knowledge no one acting on its behalf has, (i) taken,  directly or
         indirectly,   any  action  designed  to  cause  or  to  result  in  the
         stabilization  or  manipulation  of the  price of any  security  of the
         Company to facilitate the sale or resale of any of the Securities, (ii)
         sold,  bid for,  purchased,  or paid any  compensation  for  soliciting
         purchases  of, any of the  securities  of the  Company or (iii) paid or
         agreed to pay to any person any compensation for soliciting  another to
         purchase any other  securities of the Company,  other than, in the case
         of clauses (ii) and (iii), compensation paid to the Company's placement
         agent in connection with the placement of the Securities.

         3.2      REPRESENTATIONS   AND  WARRANTIES  OF  THE  PURCHASERS.   Each
Purchaser hereby, for itself and for no other Purchaser, represents and warrants
as of the date hereof and as of the Closing Date to the Company as follows:

                  (a)      ORGANIZATION;  AUTHORITY. Such Purchaser is an entity
         duly organized, validly existing and in good standing under the laws of
         the  jurisdiction  of its  organization  with full right,  corporate or
         partnership  power and  authority to enter into and to  consummate  the
         transactions contemplated by the Transaction Documents and otherwise to
         carry out its  obligations  hereunder and  thereunder.  The  execution,
         delivery  and  performance  by  such  Purchaser  of  the   transactions
         contemplated  by  this  Agreement  have  been  duly  authorized  by all
         necessary  corporate or similar  action on the part of such  Purchaser.
         Each Transaction Document to which it is a party has been duly executed
         by such  Purchaser,  and when delivered by such Purchaser in accordance
         with the terms hereof,  will  constitute the valid and legally  binding
         obligation of such Purchaser, enforceable against it in accordance with
         its terms,  except: (i) as limited by general equitable  principles and
         applicable bankruptcy, insolvency, reorganization, moratorium and other
         laws of general application  affecting enforcement of creditors' rights
         generally,  (ii) as limited by laws  relating  to the  availability  of
         specific  performance,  injunctive relief or other equitable  remedies,
         and (iii) insofar as indemnification and contribution provisions may be
         limited by applicable law.

                  (b)      OWN  ACCOUNT.  Such  Purchaser  understands  that the
         Securities are  "restricted  securities"  and have not been  registered
         under the Securities Act or any applicable  state securities law and is
         acquiring the  Securities as principal for its own account and not with
         a view to or for  distributing or reselling such Securities or any part
         thereof in  violation of the  Securities  Act or any  applicable  state
         securities law, has no present  intention of  distributing  any of such
         Securities in violation of the Securities  Act or any applicable  state
         securities   law  and  has  no  direct  or  indirect   arrangement   or
         understandings  with any other  persons to  distribute or regarding the
         distribution of such Securities (this  representation  and warranty not
         limiting such Purchaser's right to sell the Securities  pursuant to the
         Registration  Statement  or  otherwise in  compliance  with  applicable
         federal and state  securities  laws) in violation of the Securities Act
         or any

                                       20
<PAGE>

         applicable  state  securities  law.  Such  Purchaser is  acquiring  the
         Securities hereunder in the ordinary course of its business.

                  (c)      PURCHASER  STATUS.  At the time  such  Purchaser  was
         offered the  Securities,  it was,  and at the date hereof it is, and on
         each date on which it exercises any Warrants or converts any Debentures
         it will be  either:  (i) an  "accredited  investor"  as defined in Rule
         501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or
         (ii) a "qualified institutional buyer" as defined in Rule 144A(a) under
         the Securities  Act. Such Purchaser is not required to be registered as
         a broker-dealer under Section 15 of the Exchange Act.

                  (d)      EXPERIENCE OF SUCH PURCHASER. Such Purchaser,  either
         alone  or  together  with  its  representatives,  has  such  knowledge,
         sophistication  and experience in business and financial  matters so as
         to be capable  of  evaluating  the merits and risks of the  prospective
         investment in the Securities, and has so evaluated the merits and risks
         of such investment. Such Purchaser is able to bear the economic risk of
         an  investment in the  Securities  and, at the present time, is able to
         afford a complete loss of such investment.

                  (e)      GENERAL   SOLICITATION.   Such   Purchaser   is   not
         purchasing  the Securities as a result of any  advertisement,  article,
         notice or other communication regarding the Securities published in any
         newspaper,  magazine or similar media or broadcast  over  television or
         radio or presented at any seminar or any other general  solicitation or
         general advertisement.

                  (f)      SHORT  SALES  AND  CONFIDENTIALITY  PRIOR TO THE DATE
         HEREOF.  Other  than  the  transaction  contemplated  hereunder,   such
         Purchaser has not directly or indirectly,  nor has any Person acting on
         behalf  of or  pursuant  to  any  understanding  with  such  Purchaser,
         executed any  disposition,  including Short Sales, in the securities of
         the  Company  during  the  period  commencing  from the time  that such
         Purchaser  first  received  a term  sheet  (written  or oral)  from the
         Company or any other Person  setting  forth the  material  terms of the
         transactions  contemplated hereunder until the date hereof ("DISCUSSION
         TIME").  Notwithstanding the foregoing, in the case of a Purchaser that
         is  a  multi-managed  investment  vehicle  whereby  separate  portfolio
         managers manage separate  portions of such  Purchaser's  assets and the
         portfolio managers have no direct knowledge of the investment decisions
         made  by  the  portfolio  managers  managing  other  portions  of  such
         Purchaser's assets, the representation set forth above shall only apply
         with respect to the portion of assets managed by the portfolio  manager
         that made the investment decision to purchase the Securities covered by
         this  Agreement.  Other than to other Persons party to this  Agreement,
         such Purchaser has maintained the  confidentiality  of all  disclosures
         made to it in connection with this transaction (including the existence
         and terms of this transaction).

                                       21
<PAGE>

                                   ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

         4.1      TRANSFER RESTRICTIONS.

                  (a)      The  Securities may only be disposed of in compliance
         with state and federal securities laws. In connection with any transfer
         of  Securities  other  than  pursuant  to  an  effective   registration
         statement or Rule 144, to the Company or to an affiliate of a Purchaser
         or in connection with a pledge as  contemplated in Section 4.1(b),  the
         Company may require the transferor thereof to provide to the Company an
         opinion of counsel selected by the transferor and reasonably acceptable
         to the  Company,  the form and  substance  of  which  opinion  shall be
         reasonably  satisfactory  to the  Company,  to  the  effect  that  such
         transfer does not require  registration of such transferred  Securities
         under  the  Securities  Act.  As a  condition  of  transfer,  any  such
         transferee  shall  agree in  writing  to be bound by the  terms of this
         Agreement and shall have the rights of a Purchaser under this Agreement
         and the Registration Rights Agreement.

                  (b)      The Purchasers agree to the imprinting, so long as is
         required by this Section 4.1, of a legend on any of the  Securities  in
         the following form:

         [NEITHER]  THESE  SECURITIES  [NOR  THE  SECURITIES  INTO  WHICH  THESE
         SECURITIES ARE [EXERCISABLE]  [CONVERTIBLE]]  HAVE BEEN REGISTERED WITH
         THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES  COMMISSION OF
         ANY STATE IN RELIANCE  UPON AN EXEMPTION  FROM  REGISTRATION  UNDER THE
         SECURITIES  ACT OF  1933,  AS  AMENDED  (THE  "SECURITIES  ACT"),  AND,
         ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
         REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR  PURSUANT  TO AN
         AVAILABLE  EXEMPTION  FROM,  OR IN A  TRANSACTION  NOT  SUBJECT TO, THE
         REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
         APPLICABLE  STATE  SECURITIES  LAWS AS EVIDENCED BY A LEGAL  OPINION OF
         COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,  THE SUBSTANCE OF WHICH SHALL
         BE  REASONABLY  ACCEPTABLE  TO THE COMPANY.  THESE  SECURITIES  AND THE
         SECURITIES  ISSUABLE UPON [EXERCISE]  [CONVERSION] OF THESE  SECURITIES
         MAY BE PLEDGED IN CONNECTION  WITH A BONA FIDE MARGIN  ACCOUNT OR OTHER
         LOAN SECURED BY SUCH SECURITIES.

                  The Company  acknowledges and agrees that a Purchaser may from
         time to time pledge  pursuant to a bona fide  margin  agreement  with a
         registered broker-dealer or grant a security interest in some or all of
         the  Securities  to a  financial  institution  that  is an  "accredited
         investor"  as defined in Rule 501(a) under the  Securities  Act and who
         agrees  to be  bound  by the  provisions  of  this  Agreement  and  the
         Registration  Rights Agreement and, if required under the terms of such
         arrangement,  such Purchaser may transfer pledged or secured Securities
         to the pledgees or secured parties. Such a pledge or transfer would not
         be subject to approval  of the  Company  and no legal  opinion of legal
         counsel of the pledgee,  secured  party or pledgor shall be required in
         connection  therewith.  Further,  no notice  shall be  required of such
         pledge.  At the  appropriate  Purchaser's  expense,  the  Company  will
         execute  and  deliver  such  reasonable  documentation  as a pledgee or
         secured party of Securities may reasonably request in connection with a
         pledge or transfer of the Securities,  including, if the Securities are

                                       22
<PAGE>

         subject to registration  pursuant to the Registration Rights Agreement,
         the preparation and filing of any required prospectus  supplement under
         Rule 424(b)(3) under the Securities Act or other  applicable  provision
         of the  Securities  Act to  appropriately  amend  the  list of  Selling
         Stockholders thereunder.

                  (c)      Certificates  evidencing the Underlying  Shares shall
         not  contain  any  legend  (including  the  legend set forth in Section
         4.1(b)  hereof):  (i) while a  registration  statement  (including  the
         Registration  Statement)  covering  the  resale  of  such  security  is
         effective  under the Securities Act, or (ii) following any sale of such
         Underlying  Shares  pursuant to Rule 144,  or (iii) if such  Underlying
         Shares are eligible for sale under Rule 144(k),  or (iv) if such legend
         is not required  under  applicable  requirements  of the Securities Act
         (including judicial  interpretations  and pronouncements  issued by the
         staff of the Commission).  The Company shall cause its counsel to issue
         a legal  opinion to the Company's  transfer  agent  promptly  after the
         Effective  Date if required by the Company's  transfer  agent to effect
         the  removal  of the  legend  hereunder.  If all  or any  portion  of a
         Debenture or Warrant is converted or  exercised  (as  applicable)  at a
         time when there is an  effective  registration  statement  to cover the
         resale of the Underlying  Shares,  or if such Underlying  Shares may be
         sold  under Rule  144(k) or if such  legend is not  otherwise  required
         under applicable requirements of the Securities Act (including judicial
         interpretations   and  pronouncements   issued  by  the  staff  of  the
         Commission)  then such  Underlying  Shares  shall be issued free of all
         legends.  The Company  agrees that  following the Effective  Date or at
         such time as such  legend  is no longer  required  under  this  Section
         4.1(c),  it will,  no later  than  three  Trading  Days  following  the
         delivery by a Purchaser to the Company or the Company's  transfer agent
         of a certificate representing Underlying Shares, as applicable,  issued
         with a restrictive  legend (such third Trading Day, the "LEGEND REMOVAL
         DATE"),   deliver  or  cause  to  be  delivered  to  such  Purchaser  a
         certificate  representing such shares that is free from all restrictive
         and other legends. The Company may not make any notation on its records
         or give  instructions to any transfer agent of the Company that enlarge
         the  restrictions  on transfer set forth in this Section.  Certificates
         for  Underlying  Shares subject to legend  removal  hereunder  shall be
         transmitted  by the transfer  agent of the Company to the Purchasers by
         crediting  the  account  of  the  Purchaser's  prime  broker  with  the
         Depository Trust Company System.

                  (d)      In  addition  to  such  Purchaser's  other  available
         remedies,  the Company  shall pay to a Purchaser,  in cash,  as partial
         liquidated damages and not as a penalty,  for each $1,000 of Underlying
         Shares  (based  on the  VWAP  of the  Common  Stock  on the  date  such
         Securities are submitted to the Company's transfer agent) delivered for
         removal of the restrictive  legend and subject to Section  4.1(c),  $10
         per Trading Day (increasing to $20 per Trading Day 5 Trading Days after
         such  damages  have begun to  accrue)  for each  Trading  Day after the
         second  Trading  Day  following  such  Legend  Removal  Date until such
         certificate is delivered  without a legend.  Nothing herein shall limit
         such  Purchaser's  right to pursue  actual  damages  for the  Company's
         failure to deliver certificates representing any Securities as required
         by the Transaction  Documents,  and such Purchaser shall have the right
         to pursue all remedies  available to it at law or in equity  including,
         without limitation,  a decree of specific performance and/or injunctive
         relief.

                                       23
<PAGE>

                  (e)      Each  Purchaser,  severally  and not jointly with the
         other  Purchasers,  agrees that the removal of the  restrictive  legend
         from certificates  representing Securities as set forth in this Section
         4.1 is predicated  upon the Company's  reliance that the Purchaser will
         sell any Securities pursuant to either the registration requirements of
         the  Securities  Act,  including  any  applicable  prospectus  delivery
         requirements,  or an exemption  therefrom,  and that if Securities  are
         sold  pursuant  to a  Registration  Statement,  they  will  be  sold in
         compliance with the plan of distribution set forth therein.

         4.2      ACKNOWLEDGMENT OF DILUTION.  The Company acknowledges that the
issuance of the Securities may result in dilution of the  outstanding  shares of
Common Stock, which dilution may be substantial under certain market conditions.
The Company  further  acknowledges  that its  obligations  under the Transaction
Documents,  including without  limitation its obligation to issue the Underlying
Shares pursuant to the Transaction Documents, are unconditional and absolute and
not  subject  to any  right  of  set  off,  counterclaim,  delay  or  reduction,
regardless  of the effect of any such dilution or any claim the Company may have
against any Purchaser and  regardless of the dilutive  effect that such issuance
may have on the ownership of the other stockholders of the Company.

         4.3      FURNISHING  OF  INFORMATION.  As  long as any  Purchaser  owns
Securities,  the  Company  covenants  to timely  file (or obtain  extensions  in
respect  thereof  and file  within the  applicable  grace  period)  all  reports
required  to be filed by the  Company  after  the date  hereof  pursuant  to the
Exchange Act. As long as any Purchaser  owns  Securities,  if the Company is not
required to file  reports  pursuant  to the  Exchange  Act, it will  prepare and
furnish to the  Purchasers and make publicly  available in accordance  with Rule
144(c) such information as is required for the Purchasers to sell the Securities
under Rule 144.  The Company  further  covenants  that it will take such further
action  as any  holder of  Securities  may  reasonably  request,  to the  extent
required from time to time to enable such Person to sell such Securities without
registration  under the Securities Act within the  requirements of the exemption
provided by Rule 144.

         4.4      INTEGRATION.  The  Company  shall not sell,  offer for sale or
solicit  offers to buy or  otherwise  negotiate  in respect of any  security (as
defined in Section 2 of the  Securities  Act) that would be integrated  with the
offer or sale of the Securities in a manner that would require the  registration
under the Securities Act of the sale of the Securities to the Purchasers or that
would be integrated with the offer or sale of the Securities for purposes of the
rules and regulations of any Trading Market.

         4.5      CONVERSION  AND  EXERCISE  PROCEDURES.  The form of  Notice of
Exercise included in the Warrants and the form of Notice of Conversion  included
in the  Debentures  set forth the  totality  of the  procedures  required of the
Purchasers  in order to exercise  the  Warrants or convert  the  Debentures.  No
additional legal opinion or other information or instructions  shall be required
of the Purchasers to exercise their  Warrants or convert their  Debentures.  The
Company shall honor  exercises of the Warrants and conversions of the Debentures
and shall deliver Underlying Shares in accordance with the terms, conditions and
time periods set forth in the Transaction Documents.

                                       24
<PAGE>

         4.6      SECURITIES LAWS DISCLOSURE;  PUBLICITY.  The Company shall, by
8:30 a.m.  Eastern time on the Trading Day  following  the date hereof,  issue a
Current Report on Form 8-K  disclosing  the material  terms of the  transactions
contemplated  hereby, and shall attach the Transaction  Documents  thereto.  The
Company and each  Purchaser  shall  consult with each other in issuing any other
press releases with respect to the transactions contemplated hereby, and neither
the Company nor any  Purchaser  shall issue any such press  release or otherwise
make any such public  statement  without the prior consent of the Company,  with
respect to any press release of any  Purchaser,  or without the prior consent of
each Purchaser,  with respect to any press release of the Company, which consent
shall not  unreasonably  be withheld or delayed,  except if such  disclosure  is
required by law, in which case the disclosing  party shall promptly  provide the
other  party  with  prior  notice of such  public  statement  or  communication.
Notwithstanding the foregoing,  the Company shall not publicly disclose the name
of any  Purchaser,  or include the name of any  Purchaser in any filing with the
Commission or any regulatory agency or Trading Market, without the prior written
consent of such Purchaser,  except (i) as required by federal  securities law in
connection with: (A) any registration statement contemplated by the Registration
Rights Agreement,  and (B) the filing of final Transaction  Documents (including
signature  pages  thereto)  with  the  Commission  and (ii) to the  extent  such
disclosure is required by law or Trading Market  regulations,  in which case the
Company  shall  provide  the  Purchasers  with prior  notice of such  disclosure
permitted under this subclause (ii).

         4.7      SHAREHOLDER  RIGHTS PLAN. No claim will be made or enforced by
the  Company or, with the consent of the  Company,  any other  Person,  that any
Purchaser is an "Acquiring Person" under any control share acquisition, business
combination,  poison pill (including any distribution  under a rights agreement)
or similar  anti-takeover  plan or arrangement in effect or hereafter adopted by
the Company,  or that any Purchaser could be deemed to trigger the provisions of
any such  plan or  arrangement,  by  virtue of  receiving  Securities  under the
Transaction  Documents or under any other agreement  between the Company and the
Purchasers.

         4.8      NON-PUBLIC  INFORMATION.  Except with  respect to the material
terms  and  conditions  of the  transactions  contemplated  by  the  Transaction
Documents, the Company covenants and agrees that neither it nor any other Person
acting on its behalf will  provide any  Purchaser  or its agents or counsel with
any  information  that the  Company  believes  constitutes  material  non-public
information,  unless prior thereto such Purchaser  shall have executed a written
agreement regarding the confidentiality and use of such information. The Company
understands  and confirms that each Purchaser  shall be relying on the foregoing
representations in effecting transactions in securities of the Company.

         4.9      USE OF PROCEEDS.  Except as set forth on SCHEDULE 4.9 attached
hereto,  the Company shall use the net proceeds from the sale of the  Securities
hereunder  for working  capital  purposes  and not for the  satisfaction  of any
portion of the  Company's  debt  (other  than  payment of trade  payables in the
ordinary course of the Company's  business and prior  practices),  to redeem any
Common  Stock  or  Common  Stock   Equivalents  or  to  settle  any  outstanding
litigation.

         4.10     REIMBURSEMENT.  If  any  Purchaser  becomes  involved  in  any
capacity in any  Proceeding by or against any Person who is a stockholder of the
Company  (except  as a result  of  sales,  pledges,  margin  sales  and  similar
transactions  by such Purchaser to or with any other

                                       25
<PAGE>

stockholder),  solely  as a  result  of  such  Purchaser's  acquisition  of  the
Securities  under this Agreement,  the Company will reimburse such Purchaser for
its reasonable legal and other expenses (including the cost of any investigation
preparation  and  travel  in  connection   therewith)   incurred  in  connection
therewith,  as such expenses are incurred. The reimbursement  obligations of the
Company under this  paragraph  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 the  Purchasers  who 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 the Purchasers 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, the Purchasers and
any such Affiliate and any such Person. The Company also agrees that neither the
Purchasers nor any such Affiliates,  partners,  directors,  agents, employees or
controlling  persons  shall  have any  liability  to the  Company  or any Person
asserting  claims on behalf of or in right of the Company  solely as a result of
acquiring the Securities under this Agreement.

         4.11     INDEMNIFICATION  OF  PURCHASERS.  Subject to the provisions of
this Section 4.11,  the Company will  indemnify and hold each  Purchaser and its
directors, officers, shareholders,  members, partners, employees and agents (and
any other Persons with a functionally  equivalent  role of a Person holding such
titles notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser  (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers,  shareholders,
agents,   members,   partners  or  employees  (and  any  other  Persons  with  a
functionally  equivalent role of a Person holding such titles  notwithstanding a
lack of such  title or any other  title) of such  controlling  person  (each,  a
"PURCHASER PARTY") harmless from any and all losses,  liabilities,  obligations,
claims,  contingencies,  damages,  costs and expenses,  including all judgments,
amounts paid in  settlements,  court costs and  reasonable  attorneys'  fees and
costs of  investigation  that any such Purchaser  Party may suffer or incur as a
result  of or  relating  to:  (a)  any  breach  of any  of the  representations,
warranties,  covenants or agreements made by the Company in this Agreement or in
the  other  Transaction  Documents  or  (b)  any  action  instituted  against  a
Purchaser, or any of them or their respective Affiliates,  by any stockholder of
the Company who is not an  Affiliate of such  Purchaser,  with respect to any of
the transactions  contemplated by the Transaction  Documents (unless such action
is based  upon a  breach  of such  Purchaser's  representations,  warranties  or
covenants  under the Transaction  Documents or any agreements or  understandings
such  Purchaser  may have with any such  stockholder  or any  violations  by the
Purchaser of state or federal  securities  laws or any conduct by such Purchaser
which constitutes fraud,  gross negligence,  willful misconduct or malfeasance).
If any action shall be brought  against any Purchaser  Party in respect of which
indemnity may be sought pursuant to this  Agreement,  such Purchaser Party shall
promptly notify the Company in writing,  and the Company shall have the right to
assume  the  defense  thereof  with  counsel  of  its  own  choosing  reasonably
acceptable to the Purchaser  Party.  Any Purchaser Party shall have the right to
employ  separate  counsel in any such  action  and  participate  in the  defense
thereof,  but the fees and expenses of such  counsel  shall be at the expense of
such Purchaser  Party except to the extent that: (i) the employment  thereof has
been  specifically  authorized  by the Company in writing,  (ii) the Company has
failed  after a  reasonable  period of time to assume such defense and to employ
counsel,  or (iii) in such action  there is, in the  reasonable  opinion of such
separate counsel, a material conflict on any material issue between the position
of the  Company  and the  position of such  Purchaser  Party,  in which

                                       26
<PAGE>

case the Company shall be responsible for the reasonable fees and expenses of no
more  than one such  separate  counsel.  The  Company  will not be liable to any
Purchaser  Party under this  Agreement:  (i) for any  settlement  by a Purchaser
Party effected without the Company's prior written  consent,  which shall not be
unreasonably  withheld or delayed; or (ii) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchaser Party's
breach of any of the representations,  warranties,  covenants or agreements made
by such Purchaser Party in this Agreement or in the other Transaction Documents.

         4.12     RESERVATION AND LISTING OF SECURITIES.

                  (a)      The Company  shall  maintain a reserve  from its duly
         authorized  shares  of  Common  Stock  for  issuance  pursuant  to  the
         Transaction  Documents in such amount as may be required to fulfill its
         obligations in full under the Transaction Documents.

                  (b)      If,  on  any  date,  the  number  of  authorized  but
         unissued (and otherwise unreserved) shares of Common Stock is less than
         the Required  Minimum on such date,  then the Board of Directors of the
         Company  shall  use  commercially   reasonable  efforts  to  amend  the
         Company's  certificate  or articles of  incorporation  to increase  the
         number of  authorized  but unissued  shares of Common Stock to at least
         the Required Minimum at such time, as soon as possible and in any event
         not later than the 75th day after such date.

                  (c)      The Company shall, if applicable: (i) in the time and
         manner required by the principal Trading Market,  prepare and file with
         such Trading Market an additional shares listing application covering a
         number of shares of Common Stock at least equal to the Required Minimum
         on the date of such application, (ii) take all steps necessary to cause
         such shares of Common  Stock to be approved for listing on such Trading
         Market as soon as possible thereafter,  (iii) provide to the Purchasers
         evidence of such listing,  and (iv) maintain the listing of such Common
         Stock on any date at least equal to the  Required  Minimum on such date
         on such Trading Market or another Trading Market.

         4.13     PARTICIPATION IN FUTURE FINANCING.

                  (a)      From the date  hereof  until  the date that is the 18
         month  anniversary  of the  Effective  Date,  upon any  issuance by the
         Company  or any of its  Subsidiaries  of Common  Stock or Common  Stock
         Equivalents (a "SUBSEQUENT  FINANCING"),  each Purchaser shall have the
         right to  participate  in up to an amount of the  Subsequent  Financing
         equal to 100% of the Subsequent Financing (the "PARTICIPATION MAXIMUM")
         on the same terms,  conditions and price provided for in the Subsequent
         Financing.

                  (b)      At least 10 Trading  Days prior to the closing of the
         Subsequent  Financing,  the Company shall  deliver to each  Purchaser a
         written  notice  of its  intention  to  effect a  Subsequent  Financing
         ("PRE-NOTICE"),  which  Pre-Notice shall ask such Purchaser if it wants
         to review the details of such  financing  (such  additional  notice,  a
         "SUBSEQUENT  FINANCING NOTICE").  Upon the request of a Purchaser,  and
         only upon a  request  by such  Purchaser,  for a  Subsequent  Financing
         Notice,  the Company  shall  promptly,  but no later than 1 Trading Day
         after  such  request,  deliver a  Subsequent  Financing  Notice to such

                                       27
<PAGE>

         Purchaser. The Subsequent Financing Notice shall describe in reasonable
         detail the proposed terms of such Subsequent  Financing,  the amount of
         proceeds  intended  to be raised  thereunder,  the  Person  or  Persons
         through  or with whom  such  Subsequent  Financing  is  proposed  to be
         effected,  and  attached  to  which  shall be a term  sheet or  similar
         document relating thereto.

                  (c)      Any  Purchaser   desiring  to   participate  in  such
         Subsequent  Financing must provide written notice to the Company by not
         later than 5:30 p.m. (New York City time) on the 10th Trading Day after
         all of the Purchasers  have received the Pre-Notice  that the Purchaser
         is willing to participate in the  Subsequent  Financing,  the amount of
         the  Purchaser's  participation,  and that the Purchaser has such funds
         ready,  willing, and available for investment on the terms set forth in
         the Subsequent Financing Notice. If the Company receives no notice from
         a Purchaser as of such 10th Trading Day, such Purchaser shall be deemed
         to have notified the Company that it does not elect to participate.

                  (d)      If by 5:30  p.m.  (New  York  City  time) on the 10th
         Trading Day after all of the Purchasers  have received the  Pre-Notice,
         notifications by the Purchasers of their  willingness to participate in
         the Subsequent  Financing (or to cause their  designees to participate)
         is, in the  aggregate,  less than the  total  amount of the  Subsequent
         Financing,  then the Company may effect the  remaining  portion of such
         Subsequent Financing on the terms and with the Persons set forth in the
         Subsequent Financing Notice.

                  (e)      If by 5:30  p.m.  (New  York  City  time) on the 10th
         Trading Day after all of the Purchasers  have received the  Pre-Notice,
         the Company  receives  responses to a Subsequent  Financing Notice from
         Purchasers  seeking to purchase more than the  aggregate  amount of the
         Participation  Maximum,  each such  Purchaser  shall  have the right to
         purchase the greater of: (a) their Pro Rata Portion (as defined  below)
         of the  Participation  Maximum  and  (b)  the  difference  between  the
         Participation  Maximum and the aggregate amount of participation by all
         other  Purchasers.  "PRO  RATA  PORTION"  is  the  ratio  of:  (x)  the
         Subscription  Amount of  Securities  purchased on the Closing Date by a
         Purchaser  participating under this Section 4.13 and (y) the sum of the
         aggregate  Subscription  Amounts of Securities purchased on the Closing
         Date by all Purchasers participating under this Section 4.13.

                  (f)      The Company must provide the Purchasers with a second
         Subsequent  Financing  Notice,  and the Purchasers  will again have the
         right of  participation  set forth above in this Section  4.13,  if the
         Subsequent Financing subject to the initial Subsequent Financing Notice
         is not  consummated  for any  reason  on the  terms  set  forth in such
         Subsequent  Financing  Notice  within 60 Trading Days after the date of
         the initial Subsequent Financing Notice.

                  (g)      Notwithstanding  the  foregoing,  this  Section  4.13
         shall not apply in  respect of an Exempt  Issuance  or in respect of an
         underwritten  public offering of the Company's equity securities with a
         nationally recognized and reputable underwriter.

                                       28
<PAGE>

         4.14     SUBSEQUENT EQUITY SALES.

                  (a)      From  the  date  hereof   until  90  days  after  the
         Effective  Date,  neither the Company  nor any  Subsidiary  shall issue
         shares of Common Stock or Common Stock Equivalents;  PROVIDED, HOWEVER,
         the 90 day period set forth in this  Section 4.14 shall be extended for
         the number of Trading  Days  during such period in which (i) trading in
         the Common Stock is suspended by any Trading Market,  or (ii) following
         the Effective Date, the Registration  Statement is not effective or the
         prospectus  included in the  Registration  Statement may not be used by
         the Purchasers for the resale of the Underlying Shares.

                  (b)      From the date hereof  until such time as no Purchaser
         holds any of the  Securities,  the  Company  shall be  prohibited  from
         effecting  or  entering  into an  agreement  to effect  any  Subsequent
         Financing  involving a "Variable Rate Transaction".  The term "VARIABLE
         RATE TRANSACTION"  shall mean a transaction in which the Company issues
         or sells (i) any debt or equity  securities that are convertible  into,
         exchangeable  or  exercisable  for,  or  include  the right to  receive
         additional shares of Common Stock either (A) at a conversion,  exercise
         or exchange  rate or other price that is based upon and/or  varies with
         the trading  prices of or quotations  for the shares of Common Stock at
         any time after the initial issuance of such debt or equity  securities,
         or (B) with a conversion, exercise or exchange price that is subject to
         being reset at some future date after the initial issuance of such debt
         or equity  security or upon the  occurrence  of specified or contingent
         events directly or indirectly related to the business of the Company or
         the market  for the Common  Stock or (ii)  enters  into any  agreement,
         including,  but not limited  to, an equity line of credit,  whereby the
         Company may sell securities at a future determined price.


                  (d)      Notwithstanding  the  foregoing,  this  Section  4.14
         shall  not  apply in  respect  of an Exempt  Issuance,  except  that no
         Variable Rate Transaction shall be an Exempt Issuance.

         4.15     EQUAL  TREATMENT  OF  PURCHASERS.  No  consideration  shall be
offered or paid to any Person to amend or consent to a waiver or modification of
any provision of any of the Transaction  Documents unless the same consideration
is also offered to all of the parties to the Transaction Documents. Further, the
Company shall not make any payment of principal or interest on the Debentures in
amounts  which  are   disproportionate  to  the  respective   principal  amounts
outstanding  on  the  Debentures  at  any  applicable  time.  For  clarification
purposes,  this provision constitutes a separate right granted to each Purchaser
by the Company and negotiated separately by each Purchaser,  and is intended for
the  Company  to treat  the  Purchasers  as a class  and shall not in any way be
construed as the Purchasers  acting in concert or as a group with respect to the
purchase, disposition or voting of Securities or otherwise.

         4.16     SHORT SALES AND  CONFIDENTIALITY  AFTER THE DATE HEREOF.  Each
Purchaser  severally and not jointly with the other  Purchasers  covenants  that
neither  it  nor  any  Affiliate  acting  on  its  behalf  or  pursuant  to  any
understanding  with it will execute any Short Sales during the period commencing
at the Discussion Time and ending at the time that the transactions contemplated
by

                                       29
<PAGE>

this  Agreement are first  publicly  announced as described in Section 4.6. Each
Purchaser,  severally and not jointly with the other Purchasers,  covenants that
until such time as the transactions  contemplated by this Agreement are publicly
disclosed  by the Company as  described  in Section  4.6,  such  Purchaser  will
maintain the  confidentiality  of all disclosures  made to it in connection with
this transaction  (including the existence and terms of this transaction).  Each
Purchaser understands and acknowledges, severally and not jointly with any other
Purchaser,  that the  Commission  currently  takes the position that coverage of
short  sales of  shares  of the  Common  Stock  "against  the box"  prior to the
Effective Date of the Registration  Statement with the Securities is a violation
of Section 5 of the  Securities  Act, as set forth in Item 65, Section A, of the
Manual  of  Publicly  Available  Telephone  Interpretations,  dated  July  1997,
compiled  by the  Office of Chief  Counsel,  Division  of  Corporation  Finance.
Notwithstanding the foregoing,  no Purchaser makes any representation,  warranty
or covenant  hereby that it will not engage in Short Sales in the  securities of
the Company after the time that the transactions  contemplated by this Agreement
are first publicly  announced as described in Section 4.6.  Notwithstanding  the
foregoing, in the case of a Purchaser that is a multi-managed investment vehicle
whereby separate portfolio managers manage separate portions of such Purchaser's
assets and the  portfolio  managers have no direct  knowledge of the  investment
decisions  made  by the  portfolio  managers  managing  other  portions  of such
Purchaser's  assets,  the covenant set forth above shall only apply with respect
to the  portion  of  assets  managed  by the  portfolio  manager  that  made the
investment decision to purchase the Securities covered by this Agreement.

         4.17     FORM D; BLUE SKY FILINGS.  The Company agrees to timely file a
Form D with  respect to the  Securities  as required  under  Regulation D and to
provide a copy  thereof,  promptly  upon request of any  Purchaser.  The Company
shall take such action as the Company shall reasonably determine is necessary in
order to obtain an exemption for, or to qualify the Securities  for, sale to the
Purchasers at the Closing under applicable  securities or "Blue Sky" laws of the
states of the United States, and shall provide evidence of such actions promptly
upon request of any Purchaser.

         4.18     CAPITAL  CHANGES.  Until  the  one  year  anniversary  of  the
Effective Date, the Company shall not undertake a reverse or forward stock split
or reclassification of the Common Stock without the prior written consent of the
Purchasers holding a majority in principal amount outstanding of the Debentures.

         4.19     SUBSIDIARIES.  In the event that MW Asia,  Inc.  commences  or
intends to commence  operations,  the Company shall  immediately  cause MW Asia,
Inc. to execute and deliver each Purchaser the Subsidiary Guarantee (in addition
to complying with the requirements of the Security Agreement).  In addition, the
Company shall cause each of its Subsidiaries formed or acquired on or subsequent
to the date hereof,  in addition to complying  with the  requirements  under the
Security  Agreement,  to execute  and  deliver  each  Purchaser  the  Subsidiary
Guarantee.

         4.20     MOST  FAVORED  NATION  PROVISION.  If the  Company  effects  a
Subsequent  Financing at any time while the  Debentures  are  outstanding,  each
Purchaser  may elect,  in its sole  discretion,  to exchange  all or some of the
Debentures  then held by such  Purchaser for  additional  securities of the same
class issued in a  Subsequent  Financing  (such  exchange to be made at the same
time

                                       30
<PAGE>

as, and  pursuant  to, the closing of such  Subsequent  Financing)  based on the
principal  amount of such Debenture then  outstanding  plus accrued,  but unpaid
interest  thereon and the effective  price at which such securities were sold in
such Subsequent  Financing.  The Company shall provide each Purchaser  notice of
any such Subsequent Financing in the manner provided in Section 4.13.

                                   ARTICLE V.
                                  MISCELLANEOUS

         5.1      TERMINATION.   This   Agreement   may  be  terminated  by  any
Purchaser,  as to such  Purchaser's  obligations  hereunder only and without any
effect  whatsoever  on  the  obligations  between  the  Company  and  the  other
Purchasers,  by written notice to the other parties, if the Closing has not been
consummated  on or before  August  31,  2006;  PROVIDED,  HOWEVER,  that no such
termination  will  affect  the right of any  party to sue for any  breach by the
other party (or parties).

         5.2      FEES AND EXPENSES.  At the Closing,  the Company has agreed to
reimburse vFinance the  non-accountable  sum of $30,000,  for its legal fees and
expenses,  $10,000  of which  has been  paid  prior to the  Closing.  Except  as
expressly set forth in the  Transaction  Documents to the  contrary,  each party
shall pay the fees and expenses of its advisers, counsel,  accountants and other
experts,  if any, and all other expenses  incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all transfer  agent fees,  stamp taxes and other taxes and
duties  levied  in  connection  with  the  delivery  of  any  Securities  to the
Purchasers.

         5.3      ENTIRE AGREEMENT. The Transaction Documents, together with the
exhibits and schedules thereto,  contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

         5.4      NOTICES.  Any and  all  notices  or  other  communications  or
deliveries  required or permitted to be provided  hereunder  shall be in writing
and shall be deemed  given and  effective  on the  earliest  of: (a) the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number set forth on the signature pages attached hereto prior to 5:30
p.m.  (New York City time) on a Trading  Day, (b) the next Trading Day after the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile  number set forth on the signature  pages attached  hereto on a
day that is not a Trading  Day or later  than 5:30 p.m.  (New York City time) on
any Trading Day, (c) the 2nd Trading Day following the date of mailing,  if sent
by U.S.  nationally  recognized  overnight  courier service,  or (d) upon actual
receipt by the party to whom such notice is  required  to be given.  The address
for such notices and communications shall be as set forth on the signature pages
attached hereto.

         5.5      AMENDMENTS;  WAIVERS.  No provision of this  Agreement  may be
waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment,  by the Company and each  Purchaser or, in the case
of a waiver,  by the party against whom enforcement of any such waived provision
is sought. No waiver of any default with

                                       31
<PAGE>

respect to any provision,  condition or  requirement of this Agreement  shall be
deemed to be a  continuing  waiver in the  future or a waiver of any  subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right  hereunder in any
manner impair the exercise of any such right.

         5.6      HEADINGS. The headings herein are for convenience only, do not
constitute a part of this  Agreement  and shall not be deemed to limit or affect
any of the provisions hereof.

         5.7      SUCCESSORS AND ASSIGNS.  This Agreement  shall be binding upon
and inure to the  benefit of the  parties  and their  successors  and  permitted
assigns.  The Company may not assign this Agreement or any rights or obligations
hereunder  without the prior written  consent of each  Purchaser  (other than by
merger).  Any Purchaser may assign any or all of its rights under this Agreement
to any  Person to whom such  Purchaser  assigns  or  transfers  any  Securities,
provided  such  transferee  agrees in writing to be bound,  with  respect to the
transferred  Securities,  by the  provisions of the  Transaction  Documents that
apply to the "Purchasers".

         5.8      NO THIRD-PARTY  BENEFICIARIES.  This Agreement is intended for
the benefit of the parties hereto 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, except as otherwise set forth in Section 4.11.

         5.9      GOVERNING  LAW. All  questions  concerning  the  construction,
validity,  enforcement and interpretation of the Transaction  Documents shall be
governed by and construed  and enforced in accordance  with the internal laws of
the State of New York,  without  regard to the  principles  of  conflicts of law
thereof.   Each  party  agrees  that  all  legal   proceedings   concerning  the
interpretations,  enforcement  and defense of the  transactions  contemplated by
this Agreement and any other  Transaction  Documents  (whether brought against a
party hereto or its respective affiliates,  directors,  officers,  shareholders,
employees  or agents)  shall be commenced  exclusively  in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive  jurisdiction  of the state and federal courts sitting in the City
of New York,  borough of Manhattan for the adjudication of any dispute hereunder
or in  connection  herewith  or with  any  transaction  contemplated  hereby  or
discussed  herein  (including  with  respect  to the  enforcement  of any of the
Transaction Documents),  and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding,  any claim that it is not personally  subject
to the jurisdiction of any such court,  that such suit,  action or proceeding is
improper or is an  inconvenient  venue for such  proceeding.  Each party  hereby
irrevocably  waives  personal  service of process and consents to process  being
served in any such suit,  action or  proceeding  by mailing a copy  thereof  via
registered or certified  mail or overnight  delivery (with evidence of delivery)
to such party at the  address in effect for  notices to it under this  Agreement
and agrees that such service shall  constitute  good and  sufficient  service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve  process in any other  manner  permitted  by law. The
parties  hereby  waive all  rights to a trial by jury.  If  either  party  shall
commence an action or  proceeding to enforce any  provisions of the  Transaction
Documents,  then the  prevailing  party in such  action or  proceeding  shall be
reimbursed by the other party for its reasonable attorneys' fees and other costs
and expenses  incurred with the  investigation,  preparation  and prosecution of
such action or proceeding.

                                       32
<PAGE>

         5.10     SURVIVAL. The representations, warranties, covenants and other
agreements contained herein shall survive the Closing and the delivery, exercise
and/or conversion of the Securities,  as applicable for the applicable statue of
limitations.

         5.11     EXECUTION.  This  Agreement  may be  executed  in two or  more
counterparts,  all of which when taken  together 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,  it being  understood  that both
parties need not sign the same  counterpart.  In the event that any signature is
delivered by facsimile  transmission  or by e-mail  delivery of a ".pdf"  format
data file,  such  signature  shall create a valid and binding  obligation of the
party  executing (or on whose behalf such  signature is executed)  with the same
force and effect as if such facsimile or ".pdf"  signature page were an original
thereof.

         5.12     SEVERABILITY.  If any term, provision, covenant or restriction
of this  Agreement is held by a court of competent  jurisdiction  to be invalid,
illegal,  void  or  unenforceable,  the  remainder  of  the  terms,  provisions,
covenants  and  restrictions  set forth  herein  shall  remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto  shall use their  commercially  reasonable  efforts to find and employ an
alternative  means to achieve the same or substantially  the same result as that
contemplated  by such term,  provision,  covenant or  restriction.  It is hereby
stipulated  and declared to be the intention of the parties that they would have
executed the remaining terms,  provisions,  covenants and  restrictions  without
including any of such that may be hereafter declared invalid,  illegal,  void or
unenforceable.

         5.13     RESCISSION AND WITHDRAWAL RIGHT.  Notwithstanding  anything to
the contrary  contained in (and without limiting any similar  provisions of) any
of the other Transaction  Documents,  whenever any Purchaser  exercises a right,
election, demand or option under a Transaction Document and the Company does not
timely perform its related obligations within the periods therein provided, then
such Purchaser may rescind or withdraw, in its sole discretion from time to time
upon written notice to the Company,  any relevant notice,  demand or election in
whole or in part without  prejudice to its future actions and rights;  PROVIDED,
HOWEVER,  in the case of a rescission of a conversion of a Debenture or exercise
of a Warrant,  the  Purchaser  shall be  required to return any shares of Common
Stock subject to any such rescinded conversion or exercise notice.

         5.14     REPLACEMENT  OF SECURITIES.  If any  certificate or instrument
evidencing any Securities is mutilated,  lost, stolen or destroyed,  the Company
shall  issue or cause to be issued in  exchange  and  substitution  for and upon
cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor,  a new  certificate or  instrument,  but only upon receipt of evidence
reasonably  satisfactory to the Company of such loss, theft or destruction.  The
applicant for a new  certificate or instrument  under such  circumstances  shall
also  pay any  reasonable  third-party  costs  (including  customary  indemnity)
associated with the issuance of such replacement Securities.

         5.15     REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Purchasers  and the Company will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that

                                       33
<PAGE>

monetary  damages  may not be  adequate  compensation  for any loss  incurred by
reason of any breach of obligations  contained in the Transaction  Documents and
hereby agrees to waive and not to assert in any action for specific  performance
of any such obligation the defense that a remedy at law would be adequate.

         5.16     PAYMENT  SET ASIDE.  To the extent  that the  Company  makes a
payment or payments to any Purchaser  pursuant to any Transaction  Document or a
Purchaser  enforces or  exercises  its rights  thereunder,  and such  payment or
payments or the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated,  declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company,  a trustee,  receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable  cause of action),  then to the extent of any such  restoration
the  obligation  or part thereof  originally  intended to be satisfied  shall be
revived and  continued  in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

         5.17     USURY. To the extent it may lawfully do so, the Company hereby
agrees not to insist upon or plead or in any manner  whatsoever  claim, and will
resist any and all efforts to be compelled to take the benefit or advantage  of,
usury  laws  wherever  enacted,  now or at  any  time  hereafter  in  force,  in
connection  with any  claim,  action or  proceeding  that may be  brought by any
Purchaser  in  order to  enforce  any  right or  remedy  under  any  Transaction
Document.  Notwithstanding  any  provision  to  the  contrary  contained  in any
Transaction  Document,  it is  expressly  agreed  and  provided  that the  total
liability of the Company  under the  Transaction  Documents  for payments in the
nature of interest  shall not exceed the maximum  lawful rate  authorized  under
applicable law (the "MAXIMUM RATE"), and, without limiting the foregoing,  in no
event  shall any rate of  interest or default  interest,  or both of them,  when
aggregated with any other sums in the nature of interest that the Company may be
obligated to pay under the Transaction Documents exceed such Maximum Rate. It is
agreed  that  if the  maximum  contract  rate  of  interest  allowed  by law and
applicable to the Transaction  Documents is increased or decreased by statute or
any official  governmental action subsequent to the date hereof, the new maximum
contract rate of interest  allowed by law will be the Maximum Rate applicable to
the  Transaction  Documents  from  the  effective  date  forward,   unless  such
application  is  precluded  by  applicable  law.  If  under  any   circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to any
Purchaser with respect to indebtedness  evidenced by the Transaction  Documents,
such excess shall be applied by such Purchaser to the unpaid  principal  balance
of any such  indebtedness or be refunded to the Company,  the manner of handling
such excess to be at such Purchaser's election.

         5.18     INDEPENDENT NATURE OF PURCHASERS'  OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the  obligations of any other  Purchaser,  and no Purchaser  shall be
responsible in any way for the performance or non-performance of the obligations
of any other Purchaser under any Transaction Document.  Nothing contained herein
or in any  other  Transaction  Document,  and no action  taken by any  Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an  association,  a joint  venture  or any  other  kind of  entity,  or create a
presumption  that the  Purchasers are in any way acting in concert or as a group
with  respect  to  such  obligations  or the

                                       34
<PAGE>

transactions  contemplated by the Transaction Documents. Each Purchaser shall be
entitled to  independently  protect and  enforce its rights,  including  without
limitation  the  rights  arising  out of  this  Agreement  or  out of the  other
Transaction Documents,  and it shall not be necessary for any other Purchaser to
be  joined as an  additional  party in any  proceeding  for such  purpose.  Each
Purchaser has been represented by its own separate legal counsel in their review
and  negotiation of the  Transaction  Documents.  For reasons of  administrative
convenience  only,  Purchasers  and  their  respective  counsel  have  chosen to
communicate  with the Company  through  FWS. FWS does not  represent  any of the
Purchasers  but only  vFinance,  the placement  agent for the  transaction.  The
Company  has  elected  to  provide  all  Purchasers  with  the  same  terms  and
Transaction  Documents for the convenience of the Company and not because it was
required or requested to do so by the Purchasers.

         5.19     LIQUIDATED  DAMAGES.  The  Company's  obligations  to pay  any
partial  liquidated  damages  or  other  amounts  owing  under  the  Transaction
Documents  is a  continuing  obligation  of the Company and shall not  terminate
until all unpaid  partial  liquidated  damages and other  amounts have been paid
notwithstanding  the fact that the instrument or security pursuant to which such
partial  liquidated damages or other amounts are due and payable shall have been
canceled.

         5.20     CONSTRUCTION. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved  against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.


                            (SIGNATURE PAGES FOLLOW)

                                       35
<PAGE>

         IN WITNESS  WHEREOF,  the parties  hereto  have caused this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

SONOMA COLLEGE, INC.                           Address for Notice:
                                               -------------------


By:    /s/
    --------------------------------------
    Name:  Charles Newman
    Title: CEO

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




                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

                                       36
<PAGE>

        [PURCHASER SIGNATURE PAGES TO SNMA SECURITIES PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.


Name of Purchaser: _________ Harborview Master Fund LP __

SIGNATURE OF AUTHORIZED SIGNATORY OF PURCHASER: ___/s/__________________________

Name of Authorized Signatory: _____________Navigator Management Limited_________

Title of Authorized Signatory: ______________Director___________________________

Email Address of Purchaser: ____________________________________________________

Facsimile Number of Purchaser: _________________________________________________


Address for Notice of Purchaser:





Address for Delivery of Securities for Purchaser (if not same as above):





Subscription Amount: $250,000
Warrant Shares:





EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

                                       37
<PAGE>

        [PURCHASER SIGNATURE PAGES TO SNMA SECURITIES PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.


Name of Purchaser: _________ Monarch Capital Fund Ltd.__

SIGNATURE OF AUTHORIZED SIGNATORY OF PURCHASER: __/s/___________________________

Name of Authorized Signatory: _____________Navigator Management Limited_________

Title of Authorized Signatory: ______________Director___________________________

Email Address of Purchaser: ____________________________________________________

Facsimile Number of Purchaser: _________________________________________________



Address for Notice of Purchaser:





Address for Delivery of Securities for Purchaser (if not same as above):





Subscription Amount: $250,000
Warrant Shares:

                                       38