Exhibit 10.1

                          SECURITIES PURCHASE AGREEMENT

      This  Securities  Purchase  Agreement  (this  "Agreement")  is dated as of
August 8, 2006 among Able Energy,  Inc., a Delaware 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:

            "Able  Energy/All  American  Transaction"  shall  mean the  business
      combination of All American Plazas,  Inc., a Pennsylvania  corporation and
      the Company such that,  upon completion of the business  combination,  the
      Company owns all or substantially all of the assets of All American Plaza,
      Inc.,  whether  through the  payment of debt,  equity or any other form of
      consideration.

            "Able   Energy/All   American   Transaction   Documents"  means  the
      securities assumption,  amendment and issuance agreements, the convertible
      debentures,  the security agreements, the warrants and any other documents
      or agreements  executed in connection with the  transactions  contemplated
      under such securities assumption,  amendment and issuance agreements which
      shall be substantially in the form of Annex X to that Securities  Purchase
      Agreement, dated May 26, 2005.

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

            "Additional Securities" shall have the meaning ascribed to such term
      in Section 4.18(a).

<PAGE>

            "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 the  Trading  Day when all of the  Transaction
      Documents  have been  executed  and  delivered by the  applicable  parties
      thereto, and all conditions  precedent to (i) the Purchasers'  obligations
      to pay the  Subscription  Amount  and (ii) the  Company's  obligations  to
      deliver the Securities have been satisfied or waived.

            "Commission" means the Securities and Exchange Commission.

            "Common  Stock"  means the common  stock of the  Company,  par value
      $0.001  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 Law Offices of Kenneth Miller.

            "Conversion  Price" shall have the meaning  ascribed to such term in
      the Debentures.

            "Debentures" means, the Variable Rate Secured Convertible Debentures
      due, subject to the terms therein and the amortization  schedule,  2 years
      from  their  date of  issuance  issued by the  Company  to the  Purchasers
      hereunder, in the form of Exhibit A.

            "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.


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<PAGE>

            "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.

            "Exempt  Issuance"  means the issuance of (a) shares of Common Stock
      or options to employees,  officers 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,  (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, (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  equity  or  equity  linked  securities,   (d)
      securities issued to fuel suppliers of the Company provided such issuances
      do not exceed  $1,000,000 of Common Stock or Common Stock  Equivalents  in
      any 12 month  period,  (e) the one-time  issuance of  $6,000,000 of Common
      Stock to Trans Montaigne pursuant to convertible  indebtedness outstanding
      on the date  hereof  for a  conversion  price of at least  $6.00 per share
      provided  that such  shares do not have  registration  rights (or, if they
      have  registration  rights,  Trans  Montaigne  has entered into a one year
      lock-up  agreement on any securities of the Company it beneficially  owns,
      which lock-up agreement shall be in form and substance  acceptable to each
      Purchaser)  and (f)  securities  issued to the  purchasers  party to those
      certain Securities Purchase Agreements, dated May 26, 2005 and January 24,
      2006, by and among All American Plazas, Inc. and such purchasers (g) up to
      14.5 million shares of Common Stock (subject to adjustment for reverse and
      forward  stock  splits,  stock  dividends,  stock  combinations  and other
      similar transactions of the Common Stock that occur after the date of this
      Agreement)  issued to the  shareholders  of All American  Plazas,  Inc. in
      connection with the Able Energy/All American Transaction.

            "Force  Majeure"  shall mean any unusual  event  arising from causes
      reasonably  beyond the control of the Company that could not be reasonably
      anticipated  that causes a delay in or  prevents  the  performance  of any
      obligation  under this Agreement or the Transaction  Documents,  including
      but not limited to: acts of God; fire; war; terrorism; insurrection; civil
      disturbance;  explosion;  adverse  weather  conditions  that  could not be
      reasonably anticipated; unusual delay in transportation;  strikes or other
      labor disputes;  restraint by court order or order of public authority but
      not including delays solely caused by any action of, or failure to act by,
      the Commission or the Company's transfer agent.


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<PAGE>

            "FW" 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.

            "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.

            "Purchaser  Additional  Rights"  shall have the meaning  ascribed to
      such term in Section 4.18(a).

            "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.


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<PAGE>

            "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.

            "Security  Agreement" means the Security  Agreement,  dated the date
      hereof,  among the  Company and the  Purchasers,  in the form of Exhibit F
      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 security  interest in the
      assets of the Company as provided in the Security Agreement, including all
      UCC-1 filing receipts.

            "Shareholder Approval" means such approval as may be required by the
      applicable  rules and  regulations of the Nasdaq  SmallCap  Market (or any
      successor entity) from the shareholders of the Company with respect to the
      transactions  contemplated  by the  Transaction  Documents,  including the
      issuance  of all of the  Underlying  Shares  and  shares of  Common  Stock
      issuable  upon  exercise of the Warrants in excess of 19.99% of the issued
      and outstanding Common Stock on the Closing Date.

            "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).


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<PAGE>

            "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,  dated the
      date  hereof,  executed  by  each  of the  Subsidiaries  in  favor  of the
      Purchasers, in the form of Exhibit G 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 or the Nasdaq National Market.

            "Transaction  Documents" means this Agreement,  the Debentures,  the
      Warrants, the Registration Rights Agreement,  the Security Agreement,  the
      Security  Documents  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 or redemption 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.

            "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  L.P.  (based on a Trading Day from 9:30 a.m. New York City time
      to 4:02 p.m. New York City 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


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<PAGE>

      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  Purchaser  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.  On the  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 new cash Subscription Amounts of $2,000,000. Each Purchaser shall
deliver to the  Company  via wire  transfer  or a  certified  check  immediately
available funds equal to 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
Closing.  Upon satisfaction of the conditions set forth in Sections 2.2 and 2.3,
the  Closing  shall  occur at the  offices of FW, or such other  location as the
parties shall mutually agree.

      2.2 Deliveries.

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

                  (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 such
            Purchaser's  Subscription  Amount,  registered  in the  name of such
            Purchaser;

                  (iv) a Warrant  registered  in the name of such  Purchaser  to
            purchase  up to a number of shares of Common  Stock equal to 100% of
            such  Purchaser's  principal  amount of  Debentures  divided  by the
            Conversion  Price,  with an exercise  price equal to $4,  subject to
            adjustment therein;

                  (v) a  Warrant  registered  in the name of such  Purchaser  to
            purchase  up to a number of shares of Common  Stock  equal to 50% of
            such Purchaser's


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<PAGE>

            principal amount of Debentures divided by the Conversion Price, with
            an exercise price equal to $6, subject to adjustment therein;

                  (vi) a Warrant  registered  in the name of such  Purchaser  to
            purchase  up to a number of shares of Common  Stock  equal to 50% of
            such  Purchaser's  principal  amount of  Debentures  divided  by the
            Conversion  Price,  with an exercise  price equal to $7,  subject to
            adjustment therein;

                  (vii) the written voting  agreement,  in the form of Exhibit E
            attached hereto, of all of the officers,  directors and shareholders
            holding more than 10% of the issued and outstanding shares of Common
            Stock on the date  hereof to vote all Common  Stock owned by each of
            such officers,  directors and shareholders as of the record date for
            the  annual  meeting  of  shareholders  of the  Company  in favor of
            Shareholder Approval amounting to, in the aggregate, at least 51% of
            the issued and outstanding Common Stock;

                  (viii) the Security  Agreement,  duly  executed by the Company
            and  its  Subsidiaries,  along  with  all  the  Security  Documents,
            including the Subsidiary Guarantees;

                  (ix) a first  mortgage  of  $1,000,000  on that  certain  real
            property  owned,  as of the Closing Date, by the Company and located
            at 10 Industrial Park Road, Warrensburg,  New York, all as evidenced
            by  loan  documents  and  other   documentation   and   certificates
            acceptable to the Purchaser;

                  (x)  pursuant  to the  Security  Agreement  and along with all
            other items required thereunder,  a pledge of 10.5 million shares of
            common stock  (subject to  adjustment  for reverse and forward stock
            splits  and the  like) of CCI  Group  Inc.  for the  benefit  of the
            Purchasers  pursuant  to a  pledge  agreement  satisfactory  to  the
            Purchasers; and

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

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

                  (i) this Agreement duly executed by such Purchaser;

                  (ii) such Purchaser's  Subscription Amount by wire transfer to
            the account as specified in writing by the Company;

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

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

      2.3 Closing Conditions.


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<PAGE>

            (a) The obligations of the Company  hereunder in connection with the
      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 items set forth in
            Section 2.2(b) of this Agreement.

            (b)  The  respective  obligations  of the  Purchasers  hereunder  in
      connection with the 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 items set forth in Section
      2.2(a) of this Agreement;

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

            (v) 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 Closing), and, at any time prior to the Closing Date, trading
      in securities  generally as reported by Bloomberg L.P. 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


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<PAGE>

      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.

            (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 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



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<PAGE>

      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.

            (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, (iv) the filing of Form D with the Commission and such filings as
      are required to be made under  applicable  state  securities laws and (vi)
      Shareholder Approval (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


                                       11
<PAGE>

      clear of all Liens  imposed  by the  Company  other than  restrictions  on
      transfer provided for in the Transaction Documents. The Underlying Shares,
      when issued in  accordance  with the terms of the  Transaction  Documents,
      will be validly issued,  fully paid and  nonassessable,  free and clear of
      all Liens  imposed by the Company.  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,  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
      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


                                       12
<PAGE>

      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 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.  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


                                       13
<PAGE>

      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 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, to the  knowledge of the Company,  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


                                       14
<PAGE>

      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.

            (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.

            (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,  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


                                       15
<PAGE>

      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  material
      information relating to the Company,  including its Subsidiaries,  is made
      known  to  the  certifying  officers  by  others  within  those  entities,
      particularly  during the period in which the Company's most recently filed
      periodic  report  under  the  Exchange  Act,  as the case may be, is being
      prepared.   The  Company's   certifying   officers   have   evaluated  the
      effectiveness  of the  Company's  controls and  procedures  as of the date
      prior to the filing date of the 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 significant
      changes in the  Company's  internal  controls  (as such term is defined in
      Item 307(b) of Regulation S-K under the Exchange Act) or, to the knowledge
      of the  Company,  in other  factors  that could  significantly  affect the
      Company's internal controls.

            (s) Certain Fees. 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


                                       16
<PAGE>

      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
      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


                                       17
<PAGE>

      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 the
      Trading Market.

            (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 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.  The SEC
      Reports  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 $500,000  (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 $250,000 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.


                                       18
<PAGE>

            (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)  Accountants.  The  Company's  accountants  are  set  forth  on
      Schedule  3.1(ee) of the  Disclosure  Schedule.  To the  knowledge  of the
      Company,  such  accountants,  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-K for the year ended  August 30, 2006
      are a registered public accounting firm as required by the Securities Act.

            (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  or  mortgages  (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 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


                                       19
<PAGE>

      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' 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.

            (kk) Form S-3  Eligibility.  The Company is eligible to register the
      resale of the  Underlying  Shares for resale by the  Purchaser on Form S-3
      promulgated under the


                                       20
<PAGE>

      Securities Act.

      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  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


                                       21
<PAGE>

      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).

                                  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.


                                       22
<PAGE>

            (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 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


                                       23
<PAGE>

      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 10 Trading  Days after such  damages have begun to accrue) for
      each Trading Day after the second Trading Day following the 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.  Notwithstanding anything herein to the contrary, as to
      any delays in  performance  caused solely and directly by a Force Majeure,
      the Trading  Days  during  which such delay is  occurring  shall be tolled
      hereunder  with respect to liquidated  damages,  provided that the Company
      has used,  and continues to use,  best efforts to perform its  obligations
      notwithstanding such Force Majeure.

            (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.


                                       24
<PAGE>

      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.

      4.6 Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m.
Eastern  time on the second  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


                                       25
<PAGE>

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 payment to the Purchasers for all accrued but unpaid interest and other fees
owing on outstanding obligations of the Company and then for the 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 [INTENTIONALLY DELETED].

      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


                                       26
<PAGE>

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.  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  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.  Notwithstanding
anything herein to the contrary, without limiting any Purchaser's other remedies
at law or equity,  such Purchaser's right to receive  indemnification  hereunder
shall be limited to it Subscription Amount paid at the Closing.

      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.


                                       27
<PAGE>

            (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.  In addition,  the Company shall hold a
      special meeting of  shareholders  (which may also be at the annual meeting
      of shareholders) on or before August 31, 2006 for the purpose of obtaining
      Shareholder  Approval,  with the  recommendation of the Company's Board of
      Directors  that such  proposal be approved,  and the Company shall solicit
      proxies from its  shareholders in connection  therewith in the same manner
      as all  other  management  proposals  in  such  proxy  statement  and  all
      management-appointed  proxyholders  shall vote  their  proxies in favor of
      such proposal.  If the Company does not obtain Shareholder Approval at the
      first  meeting,  the  Company  shall  call a  meeting  every  four  months
      thereafter  to seek  Shareholder  Approval  until the  earlier of the date
      Shareholder   Approval  is  obtained  or  the  Debentures  are  no  longer
      outstanding.

      4.13 Participation in Future Financing.

            (a) Subject to the rights of the holders of the  Company's  Variable
      Rate  Convertible  Debentures  issued on August  12,  2005,  from the date
      hereof until the date that is the later of (i) 9 month  anniversary of the
      Effective Date and (ii) 15 months from the date hereof,  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 50% of the Subsequent  Financing (the  "Participation  Maximum") on the
      same terms, conditions and price provided for in the Subsequent Financing.

            (b) At least 5 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 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 5th  Trading  Day after all of the
      Purchasers  have received the Pre-Notice  that the


                                       28
<PAGE>

      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 5th 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 5th  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 5th  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.

      4.14 Subsequent Equity Sales.

            (a) From the date  hereof  until 60 days after the  Effective  Date,
      neither the Company nor any Subsidiary  shall issue shares of Common Stock
      or Common  Stock  Equivalents;  provided,  however,  the 60 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.


                                       29
<PAGE>

            (b) From the date hereof until such time as no  Purchaser  holds any
      of the  Debentures,  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.

            (c)  Unless  Shareholder  Approval  has  been  obtained  and  deemed
      effective,  the Company  shall not make any issuance  whatsoever of Common
      Stock or  Common  Stock  Equivalents  below  the then  Exercise  Price (as
      defined  in the  Warrants  issued  pursuant  to Section  2.2(a)(vi)).  Any
      Purchaser  shall be  entitled  to obtain  injunctive  relief  against  the
      Company to preclude any such  issuance,  which remedy shall be in addition
      to any right to collect damages.

            (d) Notwithstanding the foregoing, this Section 4.14 shall not apply
      in  respect  of (i) an  Exempt  Issuance,  except  that no  Variable  Rate
      Transaction  shall be an Exempt  Issuance  and (ii) prior to the date that
      the   Registration   Statement  is  filed  or  after  the  date  that  the
      Registration  Statement  is  declared  effective  by  the  Commission,  an
      issuance  of  $35,000,000  of  the  Company's  convertible  debentures  to
      Windstar  Financial  Corp.  and/or  its  Affiliates,  provided  that  such
      securities shall not be a Variable Rate Transaction.

      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 this Agreement are
first publicly announced as described in Section 4.6. Each Purchaser,


                                       30
<PAGE>

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  August  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 Additional Investment.

            (a) From the date  hereof  until  the later of the date that (i) the
      Registration  Statement  is  filed  with the  Commission  or (ii) the Able
      Energy/All   American   Transaction  and  the  Able  Energy/All   American
      Transaction  Documents shall have been consummated and be effective,  each
      Purchaser may, in its sole determination, elect to purchase, severally and
      not  jointly  with the  other  Purchasers,  additional  debentures  with a
      principal amount of up to such Purchasers Subscription Amount and warrants
      to  acquire  shares of Common  Stock  (such  securities,  the  "Additional
      Securities" and such right to receive the Additional  Securities  pursuant
      to this Section 4.18, the "Purchaser Additional Rights").

            (b) Any Additional Right exercised by a Purchaser shall close within
      10 Trading  Days of a duly  delivered  exercise  notice by the  exercising
      Purchaser. Any additional investment in the Additional Securities shall be
      on terms, conditions and conversion and exercise prices identical to those
      set forth in the  Transaction  Documents,  mutatis  mutandis.  In order to
      effectuate a purchase and sale of the Additional  Securities,  the Company
      and the  Purchasers  shall  enter  into the  following  agreements:  (x) a
      Securities  Purchase  Agreement  identical  to  this  Agreement,   mutatis
      mutandis  and  shall


                                       31
<PAGE>

      include  updated  disclosure  schedules  and  (y)  a  registration  rights
      agreement identical to the Registration Rights Agreement, mutatis mutandis
      and shall include updated disclosure  schedules.  Any Purchaser may assign
      its Purchaser  Additional  Rights to any Affiliate of such Purchaser or to
      any other Purchaser.

                                   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 15, 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
Lilac Ventures Master Fund Ltd.  ("Lilac") the  non-accountable  sum of $50,000,
for its legal  fees and  expenses,  $10,000  which  has been  paid  prior to the
Closing.  Accordingly,  in lieu of the foregoing payments,  the aggregate amount
that  Lilac is to pay for the  Securities  at the  Closing  shall be  reduced by
$40,000 in lieu thereof.  The Company  shall  deliver,  prior to the Closing,  a
completed and executed copy of the Closing  Statement,  attached hereto as Annex
A. 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.


                                       32
<PAGE>

      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 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


                                       33
<PAGE>

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.

      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


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<PAGE>

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  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


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<PAGE>

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
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  FW.  FW does not  represent  all of the
Purchasers  but only Lilac.  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)


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<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.

ABLE ENERGY, INC.                                Address for Notice:


By:__________________________________________
   Name:
   Title:

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

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


                                       37
<PAGE>

        [PURCHASER SIGNATURE PAGES TO ABLE 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: ________________________________________________________

Signature of Authorized Signatory of Purchaser: ___________________________

Name of Authorized Signatory: _____________________________________________

Title of Authorized Signatory: ____________________________________________

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:
Total principal amount of Debenture:
Warrant Shares:

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]


                                       38
<PAGE>

                                                                         Annex A

                                CLOSING STATEMENT

Pursuant to the attached  Securities  Purchase  Agreement,  dated as of the date
hereto,  the  purchasers  shall  purchase up to  $2,000,000  of  Debentures  and
Warrants from Able Energy, Inc. (the "Company").  All funds will be wired into a
trust account  maintained by Feldman  Weinstein,  LLP, counsel to Lilac Ventures
Master Fund Ltd.  All funds will be disbursed  in  accordance  with this Closing
Statement.

Disbursement Date:    August ___, 2005

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

I. PURCHASE PRICE

                    Gross Proceeds to be Received in Trust           $2,000,000

II. DISBURSEMENTS

                     Lilac  Ventures  Master  Fund  Ltd.  (Fees and  $40,000
                    Expenses)
                    Lilac Ventures Master Fund Ltd.                  $
                    Cranshire Capital, LP                            $
                    Iroquios Master Fund Ltd.                        $
                    Smithfield Fiduciary LLC                         $
                    Crestview Capital Master, LLC                    $

Total Amount Disbursed:                                              $

WIRE INSTRUCTIONS:

To: _____________________________________


To: _____________________________________


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