Document:

Production
      Building Lease Contract

     

    
      	Lessor:	
              Dongguan
                Diguang Electronics Science & Technology Co.,
                Ltd.

            

      	 	(Hereinafter referred to as Party
              A)

    

     

    Authorized
      Representative: Ge Mingbo (assistant of president)

    Address:
      Chanshantou Hongmenshan Industry District, Dongguan 

    TEL:
      0769-7293808 FAX: 0769-7293812 P.C.:523660

    

    
      	Lessee:	
              Dongguan
                Branch, Shenzhen Diguang Electronics Co. 

            

      	 	(Hereinafter referred to as Party
              B) 

    

     

    Authority
      Representative: Song Hong (vice president)

    Address: chanshantou
      Hongmenshan Industry District, Dongguan 

    TEL:
      0769-7293805 FAX: 0769-7293805 P.C.:523660

    

    Pursuant
      to the related regulations and laws, Party A and Party B have reached the
      agreement through amicable consultation as follows:

    

    Article
      1: location, Area, Purpose and Use

    

    1.1
      Party
      A will lease the production building (“Lease Material”) of Part A, which is
      located at Dongguan Chanshantou Hongmenshan Industry District, to Party B for
      use. It has confirmed by both sides that the area of Leas Material accounts
      for
      40,000 square meters.

    

    1.2
      The
      Lease Material is performed as the production building for the fixed use of
      Party B. The approval in writing will have to be made by Party A If Party B
      intends to change this function, for which all the expenses to be required
      and
      paid in terms of formalities required in the governmental regulations will
      be
      born by Party B on his own.

    

    1.3The
      Lease Material is taken in the fixed form, which is under control of Party
      B.

    

    Article
      2: Term of Lease

    

    2.1
      Term
      of lease: 5 years, namely, from February 1st
      2005 to
      January 31st
      2010

    

    2.2
      In
      tow months prior to the expiration date of the lease, the request should be
      put
      forward for the approval of Party A. After the same approval, Party A and Party
      B will execute a new lease contract for the relevant lease issues. At the same
      lease condition, Party B will take a priority.

    

    Article
      3: Handover of Rental and Lease Material

    

    3.1
      The
      lease term from February 1st
      2005 to
      April 31st 2005 is the period free of rent. The rent from May 1st 2005 to July
      31st
      2005
      will be assumed by Shenzhen Diguang Electronics Co. Limited. Starting with
      August 1st
      2005,
      the rent will be undertaken by Dongguan Branch, Shenzhen Diguang Electronics
      Co.
      Limited. 

    

    3.2
      Within15 days from effective date of this lease contract, Party A will hand
      over
      to Party B the current Lease Material and Party B will agree to lease the same
      Lease Material. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Article
      4: Lease Expenses

    

    4.1
      Lease
      Deposit

    

    The
      lease
      deposit is 3 times as much as the rent for the first month, namely,
      RMB1.14million.

    

    4.2
      rent

    

    RMB950,000/M2
      will be
      taken as the rent per month in the 1st
      and
      2nd
      years
      including the maintenance fees, totaling up to RMB380,000/per month. In the
      term
      from the 3rd
      to
      5th
      years
      the rent will be based on RMB380,000/per month, which can be adjusted with
      the
      prevailing market price.

    

    4.3
      Power
      Increase Capacity Fee and Electricity Fee

    

    Party
      A
      will undertake to deal with the formalities of power increase capacity, however,
      all the expenses to occur for the same formalities will be taken by Party B.
      The
      electricity fees to be used for all the production areas will be assumed by
      Party B. 

    

    Article
      5: Payment of Rent

    

    5.1
      Party
      B will disburse RMB1.14million (deposit) to Party A in lump sum as of March
      31st
      2006. As
      of the expiration of the lease term, Party will unconditionally return the
      deposit to Party B within 15 days after all the due rent and expenses have
      been
      paid up to Party A and the Lease Material has been returned to Party A with
      the
      stipulated obligations in the contract completely fulfilled by Party
      B.

    

    5.2
      Party
      B will pay for the monthly rent to Party A on or as of the date of the
      30th
      as well
      as remit the same rent to the following band account appointed by Party A or
      the
      payment will be made upon the other means that is approved by both parties
      in
      writing. 

    

    If
      the
      overdue payment is made on the rent, Party B will disburse the demurrage to
      Party A, which comes to Late Days × 0.1% (of the total arrear rent).

    

    5.3
      Party
      B will disburse the maintenance fee to Party A on or as of the date the
      30th
      every
      month in accordance with Article 4.3 of the contract. If the overdue payment
      is
      made, Party B will disburse the demurrage to Party A, which comes to Late Days
×
0.1% (of the total arrear amount of maintenance fee). 

    

    5.4
      After
      execution of the contract, Party A will go through the related formalities
      on
      the power increase capacity, for which the expenses, but not limited to the
      same
      increase capacity, will be borne by Party B. Party B will pay for the same
      expenses to Party A during the ongoing formalities that is handled by Party
      A.

    

    Article
      6: lease Transfer

    

    6.1
      During the lease period, if Party A transfers all or part of the Lease Material,
      Party A should ensure that Lessee can continue to fulfill the contract. At
      the
      same condition, Party B will take a priority.

    

    Article
      7: Special Facilities, Maintenance of Site

     

    7.1
      During the lease period, Party B will have the special right to use the
      facilities attached for the Lease Material. Party B will take responsibility
      for
      the maintenance, upkeep and annual check for the special facilities of the
      Lease
      Material as well as ensure that the special facilities will work properly,
      which
      are returned to Party B with the Lease Material at the expiration of the
      contract, for which Party A will have the right to make the inspection and
      supervision. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    7.2
      Party
      B will be responsible for the proper use and maintenance of the attachments
      of
      the Lease Material, and eliminate in time the various possible faults and
      dangers so as to avoid all the possible hidden troubles.

     

    7.3
      In
      the lease term, Party B will repair or recover the damages, which could happen
      due to the mal-operation by Party B, the expenses will be taken by Party B.
      

    

    Article
      8: Safety of Fireproofing 

    

    8.1
      In
      the lease term, Party B must abide by the relevant regulations (Fireproofing
      Rules of P.R.China) and make the active coordination with Party A for the good
      fireproofing work, otherwise, all the responsibilities to be caused thereof
      will
      be taken by Party B. 

    

    8.2
      Party
      B will provide the fire extinguishers in the Lease Material pursuant to the
      relevant regulations and it is forbidden to use the fire protection facilities
      in the building for the other purposes. 

    

    8.3
      Party
      B will be all in charge of the safety of fireproofing in the Lease Material
      pursuant to the related regulations from the fire protection department. Party
      A
      will have the right to check the fireproofing safety in the Lease Material
      at
      the reasonable time fixed by both sides, for which the prior notice in writing
      should be issued to Party B, which is not allowed to be refused or delayed
      without reason by Party B. 

    

    Article
      9: liability of insurance

    

    In
      the
      lease term, Party A will be in charge of the insurance purchase for the Lease
      Material and Party B will be in charge of the insurance purchase for the
      property and the others in the Lease Material including the liability insurance.
      If both parties do not buy the insurances as above, the compensation and
      liabilities to be caused will be separately taken by both parties.

    

    Article
      10: Management of Maintenance and Repair

    

    10.1
      At
      the expiration of the lease term or the advance termination of the contract,
      Party B will return the Lease Material to Party A with the building cleaned
      and
      the move completed as of the date of the expiration or by the date of the
      advance termination. If the Lease Material is handed over by Party B without
      the
      litters’ clearance, then, Party B will assume the expenses that are used for
      clearing the litters from Party A.

    

    10.2
      For
      the use of the Lease Material, Party B must abide by the laws, regulations
      that
      are issued both from P.R.China or the local government as well as the relevant
      rules that are stipulated on the maintenance and repair from Party A, otherwise,
      Party B will assume the responsibility concerned. If Party B the other users
      cannot make the normal operation around the buildings due to the mal-operation
      against the above that is made by Party B, all the loss to occur will be
      compensated for by Party B. 

    

    Article
      11: Decoration 

    

    11.1
      In
      the lease term, if Party B intends to do the decoration and renovation, the
      same
      design plans will have to be provided to Party A for approval. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    If
      the
      same plans could affect the public utilities and the other neighboring users,
      Party A may oppose the same plan, for which Party B will make the modification.
      The expenses for the same will be borne by Party B. 

    

    11.2
      If
      the plan could affect the main structure of the Lease Material, the same plan
      cannot be carried out until the approval is given from Party A and the original
      designing department in writing. 

    

    Article
      12: Advance Termination of Contract

    

    12.1
      In
      the lease term, if Party B owes Party A the rent or the maintenance fees for
      more than three months, Party B will make the outstanding payment within five
      days upon the written arrear notice issued by Party A. Party A will have the
      right to stop Party B using the relevant facilities in the Lease Material,
      for
      which all the loss to be caused will be borne by Party A including, but not
      limited to, the loss from Party B and re-lessee. 

    

    If
      Party
      B owes the rent or the maintenance fee for more than two months, Party A will
      have the right to terminate the contract in advance and act in accordance with
      Article 2. Party A may send fax or a letter to Party B to notify that the
      contract automatically terminates. Party A will have the right to retain the
      property of Party B in the Lease Material (including the property of re-lessee),
      and after 5 days upon the written notice for the contract termination, Party
      A
      will make the application for the auction on the retained property to offset
      all
      the expenses occurred due to the lease, which should have been paid by Party
      B.

    

    12.2
      Party B cannot terminate the contract in advance unless it is approved by Party
      A. If Party B really intends to terminate the contract in advance, it should
      be
      done for Party B to notify Party A in writing three months in advance, and
      the
      end of the engagement cannot be fulfilled unless the following procedures are
      finalized: 

    

    a)
      Return
      the Lease Material to Party A. b) Pay up the rent that happened in the lease
      term and the other expenses occurred in the contract. c) Make the payment before
      the termination of the contract or as of the date prior to the same termination
      as the compensation that is equivalent to certain times as much as the rent
      disbursed to Party A. Within 5 days after the above obligations are completed,
      Party A will return the lease deposit (with no interest) of Party B to Party
      B.

    

    Article
      13: Dismissal of Obligation

    

    13.1
      If
      Party A cannot continue to fulfill the contract due to the modifications made
      from the government in the laws and regulations in terms of the lease aspects,
      the performance will be made pursuant to Article 2.

    

    13.2
      If
      the contract cannot be fulfilled by any of the parties due to war, serious
      natural disaster or Force Majeure, the party in Force Majeure should send an
      email or fax to notify the other party immediately and within 30 days produce
      the certificates to indicate that the contract or part of it cannot be fulfilled
      or postponed, which should be issued from the notarization department in Force
      Majeure area, if it is impossible to get it, the other authoritative certificate
      should be offered. The party in Force Majeure is free of
      obligation.

    

    Article
      14: Termination of Contract

    Upon
      the
      advance termination of the contract or the expiration of the contract, if both
      parties do not reach the renewing agreement, then, Party B should leave the
      Lease Material prior to the date of the termination or expiration of the
      contract and return it to Party A. Party B should pay the double rent to Party
      A
      if Party B does not leave or return the Lease Material beyond the fixed time.
      But when notifying Party Party A will have the right to notify Party B in
      writing that when the notice is not acceptable by Party B, Party A has the
      right
      to acquire the double rent and take back the Lease Material and forcibly to
      evacuate the goods out of the lease Material without any responsibility for
      cares. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Article
      15: Tax and Expenses 

    

    According
      to the relevant regulations and rules from the state and Dongguan, Guangdong
      Province, Party A (Lessor) and Party B (lessee) will respectively take the
      expenses such as the stamp tax, registration fee, notarization fee and the
      others to be levied in connection with the contract. Party A will handle the
      registration. 

    

    Article
      16: Notice

    

    All
      the
      notice and request, etc. from the contract and the documents from Party A to
      Party B and vice versa should be given in writing. The letters and faxes from
      Party A to Party B and vice versa will be deemed delivered once it is sent,
      and
      it is also deemed delivered that the registered mail is received as per the
      contract address or the mail is deliver by a special person. 

    

    Article
      17: Applicable Law

    

    17.1
      If
      there is any dispute in the implementation of this contract, both parties will
      make a solution through amicable consultation. In case the agreement cannot
      be
      reached, the dispute will be submitted for the arbitration. Both sides
      unanimously agree that the arbitration will be judged at Shenzhen Branch, China
      International Economy & Trade Arbitration Committee.

    

    17.2
      This
      contract is governed and construed in the laws of the Peoples’ Republic of
      China. 

    

    Article
      18: Miscellaneous

    

    18.1
      For
      the outstanding matters, the separate agreement can be executed after the
      consultation by both parties.

     

    18.2
      There will be two copies of originals of this contract, one for each party.
      

    

    Article
      19: Effectiveness of Contract

    

    This
      contract will come into the execution with the signature and stamp.

    

    

    Party
      A
      (stamp): 

    Authorized
      representative (signature):

    

    

    Party
      B
      (stamp): 

    Authorized
      representative (signature):SECURITIES PURCHASE AGREEMENT

      This Securities Purchase Agreement (this "Agreement") is dated as of March
__, 2006 among CYBRA Corporation, a New York corporation (the "Company"), and
each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a "Purchaser" and collectively the "Purchasers").

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

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

                                   ARTICLE I.
                                   DEFINITIONS

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

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

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

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

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

                  "Closing Date" means subject to the provisions of Section 5.1,
            the Business 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.

<PAGE>

                  "Commission" means the Securities and Exchange Commission.

                  "Common Stock" means the common stock of the Company, no par
            value per share, and any other class of securities into which such
            securities may hereafter have been 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 exchangeable for, or
            otherwise entitles the holder thereof to receive, Common Stock.

                  "Company Counsel" means Thomas G. Amon, Esq., 500 Fifth
            Avenue, Suite 1650, New York, NY 10110, Fax: (212) 810-2427, email:
            tamon@amonlaw.com.

                  "Conversion Price" shall have the meaning ascribed thereto in
            the Debentures.

                  "Debentures" means the 8% Convertible Debentures due three
            years after the issue date, subject to the terms therein to be
            issued to the Purchasers hereunder in the form of Exhibit F.

                  "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 for the Registrable Securities is first declared effective
            by the Commission.

                  "Escrow Agent" shall have the meaning set forth in the Escrow
            Agreement.

                  "Escrow Agreement" shall mean the Escrow Agreement in
            substantially the form of Exhibit E hereto executed and delivered
            contemporaneously with this Agreement.

                  "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 unanimously adopted by the
            Board of Directors of the Company or a majority of the members of a
            committee of directors established for such purpose, (b) securities
            upon the exercise of or conversion of any Securities issued
            hereunder, convertible securities, options or warrants 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
            or conversion price of any such securities, (c) securities issued
            pursuant to acquisitions or strategic transactions, provided any
            such issuance shall only be to a non-affiliated Person which is,
            itself or through its subsidiaries, an operating company in a
            business synergistic with the business of the Company and in which
            the Company receives benefits in addition to the investment of
            funds, but shall not include a transaction in which the Company is
            issuing securities primarily for the purpose of raising capital or
            to an entity whose primary business is investing in securities, and
            (d) securities described on the Schedules hereto.

                                       2
<PAGE>

                  "Fully-Diluted Outstanding Capital Stock" means the sum of (i)
            the total number of then issued and outstanding shares of Common
            Stock and all other classes of capital stock of the Company, plus
            (ii) the total number of shares of all Common Stock and all other
            classes of capital stock of the Company into which all then issued
            and outstanding and fully-vested Common Stock Equivalents and other
            securities are convertible, exchangeable or otherwise into other
            classes of capital stock of the company may be converted,
            exchangeable or otherwise.

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

                  "GM" means Grushko & Mittman, P.C., with offices located at
            551 Fifth Avenue, Suite 1601, New York, NY 10176, Fax: (212)
            697-3575, email: counslers@aol.com.

                  "Government Entity" shall have the meaning ascribed to such
            term in Section 4.20.

                  "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.

                  "Listing Date" shall have the meaning ascribed to such term in
            Section 4.12(c).

                  "Lock Up Agreement" shall have the meaning ascribed to such
            term in Section 3.1(ss) in the form of Exhibit D.

                  "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.

                                       3
<PAGE>

                  "Minimum Amount" shall have the meaning ascribed to such term
            in Section 4.17.

                  "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.

                  "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.

                  "Records" means all documents, books, records and other
            information (including, without limitation, computer programs,
            tapes, disks, punch cards, data processing software and related
            property and rights) maintained with respect to the Company's
            business.

                  "Registrable Securities" means (i) all of the shares of
            Underlying Shares, (ii) all Warrant Shares, (iii) any securities
            issued or issuable upon any stock split, dividend or other
            distribution, recapitalization or similar event with respect to the
            shares identified in clauses (i) and (ii) above and (iv) any
            additional shares issuable in connection with any anti-dilution
            provisions in the Debentures and Warrants (without giving effect to
            any limitations on exercise set forth in the Debentures and
            Warrants), but in no event less than the Required Minimum.

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

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

                  "Required 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, 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 Business 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.

                                       4
<PAGE>

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

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Short Sales" shall include all "short sales" as defined in
            Rule 200 of Regulation SHO under the Exchange Act.

                  "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. The dollar amount of the Subscription Amount shall equal the
            principal amount of the Debentures and shall be allocated entirely
            to the acquisition cost of the Debentures.

                  "Subsequent Financing" shall have the meaning ascribed to such
            term in Section 4.25.

                  "Subsequent Financing Notice" shall have the meaning ascribed
            to such term in Section 4.25.

                  "Subsidiary" means any subsidiary of the Company as set forth
            on Schedule 3.1(a).

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

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

                  "Underlying Shares" means the shares of Common Stock issuable
            upon conversion of the Debentures.

                  "Variable Rate Transaction" shall have the meaning ascribed to
            such term in Section 4.14.

                  "VWAP" means, for any date, the price determined by the first
            of the following clauses that applies: (a) if the Common Stock is
            then listed or quoted on a Trading Market, the daily volume weighted
            average price of the Common Stock for such date (or the nearest
            preceding date) on the Trading Market on which the Common Stock is
            then listed or quoted as reported by Bloomberg Financial L.P. (based
            on a Business Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern
            Time); (b) if the Common Stock is not then listed or quoted on a

                                       5
<PAGE>

            Trading Market and if prices for the Common Stock are then reported
            in the "Pink Sheets" published by the Pink Sheets LLC (or a similar
            organization or agency succeeding to its functions of reporting
            prices), the most recent bid price per share of the Common Stock so
            reported; or (c) in all other cases, the fair market value of a
            share of Common Stock as determined by an independent appraiser
            selected in good faith by the Purchasers and reasonably acceptable
            to the Company.

                  "Warrants" means collectively the Common Stock purchase
            warrants, in the form of Exhibit A delivered to the Purchasers at
            the Closing in accordance with Section 2.2(a) hereof.

                  "Warrant Shares" means all of the shares of Common Stock
            issuable upon exercise of the Warrants at all times.

                                  ARTICLE II.
                                PURCHASE AND SALE

      2.1 Closing. On the Closing Date, upon the terms and subject to the
conditions set forth herein, 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 $2,500,000
of aggregate Subscription Amount. Each Purchaser shall deliver to the Company
via wire transfer or a certified check for immediately available funds equal to
their Subscription Amount and the Company shall deliver to each Purchaser their
respective Debentures and Warrants as determined pursuant to Section 2.2(a) and
the other items set forth in Section 2.2(a) 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 GM, 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 C 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 shares of Common Stock in the amount and at the
                        prices set forth in Exhibit A;

                                       6
<PAGE>

                  (v)   the Registration Rights Agreement duly executed by the
                        Company;

                  (vi)  the Escrow Agreement duly executed by the Company; and

                  (vii) duly executed lock-up agreements, in the form of Exhibit
                        D attached hereto, from each officer, director,
                        employee, consultant and advisor of the Company and from
                        each shareholder of the Company owning more than 5% of
                        the issued and outstanding shares of Common Stock (or
                        Common Stock Equivalents on a fully converted basis),
                        who are identified on Schedule 2.2(a).

            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 specified in the Escrow Agreement;

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

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

      2.3 Closing Conditions.

            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 Company shall have entered into agreements for the
                        purchase of $2,500,000 of principal amount of Debentures
                        hereunder;

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

                                       7
<PAGE>

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

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

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

                  (vi)  from the date hereof to the Closing Date, there shall
                        not have been a banking moratorium 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 and Warrants at the Closing.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

      3.1 Representations and Warranties of the Company. Except as set forth
under the corresponding section of the disclosure schedules delivered to the
Purchasers concurrently herewith (the "Disclosure Schedules") which Disclosure
Schedules shall be deemed a part hereof, the Company hereby makes the
representations and warranties set forth below to each Purchaser.

            (a) Subsidiaries. All of the direct subsidiaries of the Company are
      set forth on Schedule 3.1(a). The Company owns 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 references in the Transaction
      Documents to the Subsidiaries 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 financial condition 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.

                                       8
<PAGE>

            (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 thereunder. The execution and
      delivery of each of the Transaction Documents by the Company and the
      consummation by it of the transactions contemplated thereby have been duly
      authorized by all necessary action on the part of the Company. 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, will constitute the valid and binding obligation of the Company
      enforceable against the Company in accordance with its terms except (i) as
      limited by applicable bankruptcy, insolvency, reorganization, moratorium
      and other laws of general application affecting enforcement of creditors'
      rights generally and (ii) as limited by laws relating to the availability
      of specific performance, injunctive relief or other equitable remedies.

            (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 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) 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.

                                       9
<PAGE>

            (e) Filings, Consents and Approvals. The Company is not required to
      obtain any consent, waiver, authorization or order of, give any notice to,
      or make any filing or registration with, any court or other federal,
      state, local or other governmental authority or other Person in connection
      with the execution, delivery and performance by the Company of the
      Transaction Documents.

            (f) Issuance of the Securities. The Securities are duly authorized
      and, when issued and paid for in accordance with the applicable
      Transaction Documents, will be duly and validly issued, fully paid and
      nonassessable, free and clear of all Liens imposed by the Company other
      than restrictions on transfer provided for in the Transaction Documents.
      The Securities, 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 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). 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 or as set
      forth on Schedule 3.1(g), there are no outstanding options, warrants,
      script rights to subscribe to, calls or commitments of any character
      whatsoever relating to, or securities, rights or obligations convertible
      into or 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 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. Except as disclosed in
      Schedule 3.1(g), 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. A complete list of
      stockholders of record, with their shareholdings as of March 1, 2006, is
      included in Schedule 3.1(g).

            (h) Financial Statements. The audited financial statements of the
      Company for the last three fiscal years ended December 31, 2003, 2004 and
      2005 and unaudited statements for the most recent fiscal quarter if an
      entire quarter has elapsed since December 31, 2005 and prior to the
      Closing Date, are attached hereto as Schedule 3.1(h). 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.

                                       10
<PAGE>

            (i) Material Changes. Since the date of the Company's most recent
      financial statements, attached hereto as Schedule 3.1(h), (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, (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.

            (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 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.

            (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.

            (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 except in each case as could not have a Material Adverse Effect.

                                       11
<PAGE>

            (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 listed on Schedule 3.1(m), except
      where the failure to possess such permits could not have or reasonably be
      expected to result in a Material Adverse Effect ("Material Permits"), and
      neither the Company nor any Subsidiary has received any notice of
      proceedings relating to the revocation or modification of any Material
      Permit.

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

            (o) Intellectual Property.

                  (i) The term "Intellectual Property Rights" includes:

                        1.    the name of the Company, all fictional business
                              names, trading names, registered and unregistered
                              trademarks, service marks, and applications
                              (collectively, "Marks");

                        2.    all patents, patent applications, and inventions
                              and discoveries that may be patentable
                              (collectively, "Patents");

                        3.    all copyrights in both published works and
                              published works (collectively, "Copyrights");

                        4.    all rights in mask works (collectively, "Rights in
                              Mask Works"); and

                        5.    all know-how, trade secrets, confidential
                              information, customer lists, software, technical
                              information, data, process technology, plans,
                              drawings, and blue prints (collectively, "Trade
                              Secrets"); owned, used, or licensed by the Company
                              as licensee or licensor.

                                       12
<PAGE>

                  (ii) Agreements. Schedule 3.1(o) contains a complete and
                  accurate list and summary description including any royalties
                  paid or received by the Company, of all contracts relating to
                  the Intellectual Property Rights to which the Company is a
                  party or by which the Company is bound, except for any license
                  implied by the sale of a product and perpetual, paid-up
                  licenses for commonly available software programs with a value
                  of less than $10,000 under which the Company is the licensee.
                  There are no outstanding and, to Company's knowledge, no
                  threatened disputes or disagreements with respect to any such
                  agreement.

                  (iii) Know-How Necessary for the Business. The Intellectual
                  Property Rights are all those necessary for the operation of
                  the Company's businesses as it is currently conducted or as
                  reflected in the business plan given to the Purchaser. The
                  Company is the owner of all right, title, and interest in and
                  to each of the Intellectual Property Rights, free and clear of
                  all liens, security interests, charges, encumbrances,
                  equities, and other adverse claims, and has the right to use
                  without payment to a third party all of the Intellectual
                  Property Rights. To the Company's knowledge, no employee of
                  the Company has entered into any contract that restricts or
                  limits in any way the scope or type of work in which the
                  employee may be engaged or requires the employee to transfer,
                  assign, or disclose information concerning his work to anyone
                  other than of the Company.

                  (iv) Know-How Necessary for the Business. Schedule 3.1(o)
                  contains a complete and accurate list and summary description
                  of all Patents. The Company is the owner of all right, title
                  and interest in and to each of the Patents, free and clear of
                  all liens, security interests, charges, encumbrances,
                  entities, and other adverse claims. All of the issued Patents
                  are currently in compliance with formal legal requirements
                  (including payment of filing, examination, and maintenance
                  fees and proofs of working or use), are valid and enforceable,
                  and are not subject to any maintenance fees or taxes or
                  actions falling due within ninety days after the Closing Date.
                  No patent has been or is now involved in any interference,
                  reissue, reexamination, or opposition proceeding. To the
                  Company's knowledge, there is no potentially interfering
                  patent or patent application of any third party. No Patent is
                  infringed or, to the Company's knowledge, has been challenged
                  or threatened in any way. To the Company's knowledge, none of
                  the products manufactured and sold, nor any process or
                  know-how used, by the Company infringes or is alleged to
                  infringe any patent or other proprietary right of any other
                  Person. All products made, used, or sold under the Patents
                  have been marked with the proper patent notice.

                                       13
<PAGE>

                  (v) Trademarks. Schedule 3.1(o) contains a complete and
                  accurate list and summary description of all Marks. The
                  Company is the owner of all right, title, and interest in and
                  to each of the Marks, free and clear of all liens, security
                  interests. charges, encumbrances, equities, and other adverse
                  claims. All Marks that have been registered with the United
                  States Patent and Trademark Office are currently in compliance
                  with all formal legal requirements (including the timely
                  post-registration tiling of affidavits of use and
                  incontestability and renewal applications), are valid and
                  enforceable, and are not subject to any maintenance fees or
                  taxes or actions falling due within ninety days after the
                  Closing Date. No Mark has been or is now involved in any
                  opposition, invalidation, or cancellation and, to the
                  Company's knowledge, no such action is threatened with respect
                  to any of the Marks. To the Company's knowledge, there is no
                  potentially interfering trademark or trademark application of
                  any third party. No Mark is infringed or, to the Company's
                  knowledge, has been challenged or threatened in any way. To
                  the Company's knowledge, none of the Marks used by the Company
                  infringes or is alleged to infringe any trade name, trademark,
                  or service mark of any third party. All products and materials
                  containing a Mark bear the proper federal registration notice
                  where permitted by law.

                  (vi) Copyrights. Schedule 3.1(o) contains a complete and
                  accurate list and summary description of all Copyrights. The
                  Company is the owner of all right, title, and interest in and
                  to each of the Copyrights, free and clear of all liens,
                  security interests, charges, encumbrances, equities, and other
                  adverse claims. All the Copyrights have been registered and
                  are currently in compliance with formal requirements, are
                  valid and enforceable, and are not subject to any maintenance
                  fees or taxes or actions falling due within ninety days after
                  the date of Closing. No Copyright is infringed or, to the
                  Company's knowledge, has been challenged or threatened in any
                  way. To the Company's knowledge, none of the subject matter of
                  any of the Copyrights infringes or is alleged to infringe any
                  copyright of any third party or is a derivative work based on
                  the work of a third party. All works encompassed by the
                  Copyrights have been marked with the proper copyright notice.

                        1. Trade Secrets. With respect to each Trade Secret, the
                  documentation relating to such Trade Secret is current,
                  accurate, and sufficient in detail and content to identify and
                  explain it and to allow its full and proper use without
                  reliance on the knowledge or memory of any individual. The
                  Company has taken all reasonable precautions to protect the
                  secrecy, confidentiality, and value of its Trade Secrets. The
                  Company has good title and an absolute (but not necessarily
                  exclusive) right to use the Trade Secrets. The Trade Secrets
                  are not part of the public knowledge or literature, and, to
                  the Company's knowledge, have not been used, divulged, or
                  appropriated either for the benefit of any Person (other the
                  Company) or to the detriment of the Company. No Trade Secret
                  is subject to any adverse claim or has been challenged or
                  threatened in any way.

                                       14
<PAGE>

            (p) Insurance. The Company and the Subsidiaries are insured by
      insurers of recognized financial responsibility against such losses and
      risks and in such amounts as are prudent and customary in the businesses
      in which the Company and the Subsidiaries are engaged. To the best of
      Company's knowledge, such insurance contracts and policies are accurate
      and complete. 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 Schedule 3.1(q), none of the officers or directors of the Company and,
      to the knowledge of the Company, none of the employees of the Company are
      presently a party to any transaction with the Company or any Subsidiary
      (other than for services as employees, officers and directors), including
      any contract, agreement or other arrangement providing for the furnishing
      of services to or by, providing for rental of real or personal property to
      or from, or otherwise requiring payments to or from any officer, director
      or such employee or, to the knowledge of the Company, any entity in which
      any officer, director, or any such employee has a substantial interest or
      is an officer, director, trustee or partner, in each case in excess of
      $60,000 other than (i) for payment of salary or consulting fees for
      services rendered, (ii) reimbursement for expenses incurred on behalf of
      the Company and (iii) for other employee benefits, including stock option
      agreements under any stock option plan of the Company.

            (r) Internal Accounting Controls. The Company and the Subsidiaries
      maintain a system of internal accounting controls which the Company
      believes is 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..

            (s) Certain Fees. Except as set forth on Schedule 3.1(s), no
      brokerage or finder's fees or commissions are or will be payable by the
      Company to any broker, financial advisor or consultant, finder, placement
      agent, investment banker, bank or other Person with respect to the
      transactions contemplated by this Agreement. 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 this Agreement.

            (t) Private Placement. Assuming the accuracy of the Purchasers
      representations and warranties set forth in Section 3.2, no registration
      under the Securities Act is required for the offer and sale of the
      Securities by the Company to the Purchasers as contemplated hereby.

                                       15
<PAGE>

            (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) 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.

            (x) Disclosure. The Company understands and confirms that the
      Purchasers will rely on the foregoing representations and covenants in
      effecting transactions in securities of the Company. All disclosure
      provided to the Purchasers regarding the Company, its business and the
      transactions contemplated hereby, including the Disclosure Schedules to
      this Agreement, furnished by or on behalf of the Company with respect to
      the representations and warranties made herein are true and correct with
      respect to such representations and warranties and do not contain any
      untrue statement of a material fact or omit to state any material fact
      necessary in order to make the statements made therein, in light of the
      circumstances under which they were made, not misleading. The Company
      acknowledges and agrees that no Purchaser makes or has made any
      representations or warranties with respect to the transactions
      contemplated hereby other than those specifically set forth in Section 3.2
      hereof.

            (y) No Integrated Offering. Assuming the accuracy of the Purchasers'
      representations and warranties set forth in Section 3.2, neither the
      Company, nor any of its affiliates, nor any Person acting on its or their
      behalf has, directly or indirectly, made any offers or sales of any
      security or solicited any offers to buy any security, under circumstances
      that would cause this offering of the Securities to be integrated with
      prior offerings by the Company for purposes of the Securities Act or any
      applicable shareholder approval provisions which integration would impair
      the exemptions relied upon for the offer, sale and issuance of the
      Securities.

                                       16
<PAGE>

            (z) 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 Company's fair
      saleable value of its 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 for the current fiscal year 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 debt 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).

            (aa) 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.

            (bb) 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.

            (cc) 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.

            (dd) Accountants. The Company's accountants are set forth on
      Schedule 3.1(dd) of the Disclosure Schedule.

            (ee) Indebtedness and Seniority. As of the date hereof, all
      indebtedness and liens of the Company are as set forth on Schedule
      3.1(ee). As of the Closing Date, no indebtedness or other equity of the
      Company is senior to the Debentures in right of payment, whether with
      respect to interest or upon liquidation or dissolution, or otherwise,
      other than indebtedness secured by purchase money security interests
      (which is senior only as to underlying assets covered thereby) and capital
      lease obligations (which is senior only as to the property covered
      thereby).

                                       17
<PAGE>

            (ff) 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 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.

            (gg) Acknowledgment Regarding Purchasers' Purchase of Securities.
      The Company acknowledges and agrees that each of the Purchasers is acting
      solely in the capacity of an arm's length purchaser with respect to the
      Transaction Documents and the transactions contemplated hereby. 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 this Agreement and the transactions contemplated hereby and any
      advice given by any Purchaser or any of their respective representatives
      or agents in connection with this Agreement and the transactions
      contemplated hereby 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 has been based solely on
      the independent evaluation of the transactions contemplated hereby by the
      Company and its representatives.

            (hh) Manufacturing and Marketing Rights. Except as set forth on
      Schedule 3.1(hh), the Company has not granted rights to develop,
      manufacture, produce, assemble, license, distribute, market, or sell its
      products to any other Person and is not bound by any agreement that
      affects the Company's exclusive right to develop, manufacture, produce,
      assemble, license, distribute, market or sell its products.

            (ii) Employees. The Company has no collective bargaining agreements
      with any of its employees. There is no labor union organizing activity
      pending or, to the Company's knowledge, threatened with respect to the
      Company. Except as set forth on Schedule 3.1(ii), the Company is not a
      party to or bound by any currently effective employment contract, deferred
      compensation arrangement, bonus plan, incentive plan, retirement agreement
      or other employee compensation plan or agreement. Except as set forth on
      Schedule 3.1(ii), the Company is not a party to any profit sharing plan.
      To the Company's knowledge, no employee of the Company, nor any consultant
      with whom the Company has contracted, is in violation of any term of any
      employment contract, proprietary information agreement or any other
      agreement relating to the right of any such individual to be employed by,
      or to contract with, the Company because of the nature of the business to
      be conducted by the Company; and to the Company's knowledge the continued
      employment by the Company of its present employees, and the performance of
      the Company's contracts with its independent contractors, will not result
      in any such violation. The Company has not received any notice alleging
      that any such violation has occurred. No employee of the Company has been
      granted the right to continued employment by the Company or to any
      material compensation following termination of employment with the
      Company. The Company is not aware that any officer, key employee or group
      of employees intends to terminate his, her or their employment with the
      Company nor does the Company have a present intention to terminate the
      employment of any officer, key employee or group of employees.

                                       18
<PAGE>

            (jj) Obligations of Management. Except for the Company's Treasurer,
      each officer and key employee of the Company is currently devoting
      substantially all of his or her business time to the conduct of business
      of the Company and the Company is not aware that any officer or key
      employee of the Company is planning to work less than full time at the
      Company in the future. No officer or key employee is the currently working
      or, to the Company's knowledge, plans to work for a competitive
      enterprise, whether or not such officer of key employee is or will be
      compensated by such enterprise.

            (kk) Environmental and Safety Laws. Except as set forth in Schedule
      3.1(kk):

                  (i) The Company is, and at all times has been, in full
                  compliance with, and has not been and is not in violation of
                  or liable under, any Environmental Law. The Company has no
                  basis to expect, nor has it or any other Person for whose
                  conduct it is or may be held to be responsible received, any
                  actual or threatened order, notice, or other communication
                  from (i) any governmental body or private citizen acting in
                  the public interest, or (ii) the current or prior owner or
                  operator of any facilities, of any actual or potential
                  violation or failure to comply with any Environmental Law, or
                  of any actual or threatened obligation to undertake or bear
                  the cost of any environmental, health, and safety liabilities
                  with respect to any of the facilities or any other properties
                  or assets (whether real, personal, or mixed) in which the
                  Company has had an interest, or with respect to any property
                  or facility at or to which Hazardous Materials were generated,
                  manufactured, refined, transferred, imported, used, or
                  processed by the Company, or any other Person for whose
                  conduct it are or may be held responsible, or from which
                  Hazardous Materials have been transported, treated, stored,
                  handled, transferred, disposed, recycled, or received.

                  (ii) There are no pending or, to the knowledge of the Company,
                  threatened claims, encumbrances, or other restrictions of any
                  nature, resulting from any environmental, health, and safety
                  liabilities or arising under or pursuant to any Environmental
                  Law, with respect to or affecting any of the facilities or any
                  other properties and assets (whether real, personal, or mixed)
                  in which the Company has or had an interest.

                                       19
<PAGE>

                  (iii) The Company has no knowledge of any basis to expect, nor
                  has it or any other Person for whose conduct it is or may be
                  held responsible, received, any citation, directive, inquiry,
                  notice, order, summons, warning, or other communication that
                  relates to Hazardous Materials, or any alleged, actual, or
                  potential violation or failure to comply with any
                  Environmental Law, or of any alleged, actual, or potential
                  obligation to undertake or bear the cost of any environmental,
                  health, and safety liabilities with respect to any of the
                  facilities or any other properties or assets (whether real,
                  personal, or mixed) in which the Company had an interest, or
                  with respect to any property or facility to which Hazardous
                  Materials generated, manufactured, refined, transferred,
                  imported, used, or processed by the Company, or any other
                  Person for whose conduct it is or may be held responsible,
                  have been transported, treated, stored, handled, transferred,
                  disposed, recycled, or received.

                  (iv) Neither the Company nor any other Person for whose
                  conduct it is or may be held responsible, had any
                  environmental, health, and safety liabilities with respect to
                  the facilities or, to the knowledge of the Company, with
                  respect to any other properties and assets (whether real,
                  personal, or mixed) in which the Company (or any predecessor),
                  has or had an interest, or at any property geologically or
                  hydrologically adjoining the facilities or any such other
                  property or assets.

                  (v) There are no Hazardous Materials present on or in the
                  environment at the facilities or at any geologically or
                  hydrologically adjoining property, including any Hazardous
                  Materials contained in barrels, above or underground storage
                  tanks, landfills, land deposits, dumps, equipment (whether
                  moveable or fixed) or other containers, either temporary or
                  permanent, and deposited or located in land, water, sumps, or
                  any other part of the facilities or such adjoining property,
                  or incorporated into any structure therein or thereon. Neither
                  the Company nor any other Person for whose conduct it is or
                  may be held responsible, or to the knowledge of the Company,
                  any other Person, has permitted or conducted, or is aware of,
                  any hazardous activity conducted with respect to the
                  facilities or any other properties or assets (whether real,
                  personal, or mixed) in which the Company has or had an
                  interest except in full compliance with all applicable
                  Environmental Laws.

                  (vi) There has been no release or, to the knowledge of the
                  Company, threat of release, of any Hazardous Materials at or
                  from the facilities or at any other locations where any
                  Hazardous Materials were generated, manufactured, refined,
                  transferred, produced, imported, used, or processed from or by
                  the facilities, or from or by any other properties and assets
                  (whether real, personal, or mixed) in which the Company has or
                  had an interest, or to the knowledge of the Company any
                  geologically or hydrologically adjoining property, whether by
                  the Company, or any other Person.

                  (vii) The Company has delivered to the Purchasers true and
                  complete copies and results of any reports, studies, analyses,
                  tests, or monitoring possessed or initiated by the Company
                  pertaining to Hazardous Materials in, on, or under the
                  facilities, or concerning compliance by the Company, or any
                  other Person for whose conduct they are or may be held
                  responsible, with Environmental Laws.

                                       20
<PAGE>

                  (viii) For the purpose of this Section, Hazardous Material
                  shall mean (i) materials which are listed or otherwise defined
                  as "hazardous" or "toxic" under any applicable federal, local
                  or stated and/or foreign laws and regulations that govern the
                  existence and/or remedy of contamination on property, the
                  protection of the environment from contamination, the control
                  of the hazardous wastes, or other activities involving
                  hazardous substances, including building materials or (b)
                  petroleum products or nuclear materials.

                  (ix) For the purpose of this Section 3.1(kk), "Environmental
                  Law" shall have the following meaning:

                  1.    advising appropriate authorities, employees, and the
                        public intended or actual releases of pollutants or
                        hazardous substances or material, violations of
                        discharge limits, or other prohibitions and of the
                        commencements of activities, such as resource extraction
                        or construction, that could have significant impact on
                        the environment;

                  2.    preventing or reducing to acceptable levels the release
                        of pollutants or hazardous substances or materials into
                        the environment;

                  3.    reducing the quantities, preventing the release, or
                        minimizing the hazardous characterics of waste that are
                        generated;

                  4.    assuring that products are designed, formulated,
                        packaged, and used so that they do not present
                        unreasonable risks to human health or the environment
                        when used or disposed of;

                  5.    protecting resources, species or ecological amenities;

                  6.    reducing to acceptable levels the risk inherent in the
                        transportation of hazardous substances, pollutants, oil
                        or other potentially harmful substances;

                  7.    cleaning up pollutants that have been released,
                        preventing the threat of release or paying the costs of
                        such clean up or prevention; or

                  8.    making responsible parties pay private parties, or
                        groups of them, for damages done to their health or to
                        the environment, or permitting self appointed
                        representatives of the public interest to recover for
                        injuries done to public assets.

                                       21
<PAGE>

            (ll) Minute Books. The minute books of the Company made available to
      the Purchasers contain an accurate and complete summary of all meetings of
      directors and stockholders since the time of incorporation.

            (mm) Lock Up. The parties identified on Schedule 3.1(mm) who are
      officers, directors, and shareholders of the Company will enter into an
      agreement restricting the sales of Common Stock in the form of Exhibit D
      ("Lock Up Agreement").

            (nn) Accounts Receivable. All accounts receivable of the Company and
      its Subsidiaries that are reflected on the Company's balance sheet or
      interim balance sheet or on the accounting records of the Company and its
      Subsidiaries as of the Closing Date (collectively, the "Accounts
      Receivable") represent or will represent valid obligations arising from
      sales actually made or services actually performed in the ordinary course
      of business. Unless paid prior to the Closing Date, the Accounts
      Receivable are or will be as of the Closing Date current and collectible
      net of the respective reserves shown on the balance sheet or interim
      balance sheet or on the accounting records of the Company and its
      Subsidiaries as of the Closing Date (which reserves are adequate and
      calculated consistent with past practice and, in the case of the reserve
      as of the Closing Date, will not represent a greater percentage of the
      Accounts Receivable as of the Closing Date than the reserve reflected in
      the interim balance sheet represented of the Accounts Receivable reflected
      therein and will not represent a material adverse change in the
      composition of such Accounts Receivable in terms of aging). Subject to
      such reserves, each of the Accounts Receivable either has been or will be
      collected in full without any set-off, within ninety days after the day on
      which it must becomes due and payable. There is no contest, claim, or
      right of set-off, other than returns in the ordinary course of business,
      under any agreement and/or contract with any obligor of an Accounts
      Receivable relating to the amount or validity of such Accounts Receivable.
      Schedule 3.1(nn) contains a complete and accurate list of all Accounts
      Receivable as of the date of the interim balance sheet, which list sets
      forth the aging of such Accounts Receivable.

            (oo) Inventory. All inventory of the Company and the Subsidiaries,
      whether or not reflected in the balance sheet or interim balance sheet,
      consists of a quality and quantity usable and salable in the ordinary
      course of business, except for obsolete items and items of below standard
      quality, all of which have been written off or written down to net
      realizable value in the balance sheet or interim balance sheet or on the
      accounting records of the Company and the Subsidiaries as of the Closing
      Date, as the case may be. All inventories not written off have been priced
      at the lower of cost or market on the last in, first out basis. The
      quantities of each item of inventory (whether raw materials,
      work-in-process, or finished goods) are not excessive, but are reasonable
      in the present circumstances of the Company and the Subsidiaries.

            (pp) Employee Benefits: Except as set forth on Schedule 3.1(pp), the
      Company has no plans which are subject to ERISA. "ERISA" means the
      Employee Retirement Income Security Act of 1974 or any successor law, and
      regulations and rules issued pursuant to that Act or any successor law.

                                       22
<PAGE>

            (qq) Returns and Complaints. The Company has received no customer
      complaints concerning its products and/or services, nor has it had any of
      its products returned by a purchaser thereof, other than minor,
      nonrecurring warranty or similar problems occurring in the normal course
      of its business.

            (rr) Material Agreements. Schedule 3.1(rr) sets forth all agreements
      of the Company that would otherwise be required to be filed with the
      Commission pursuant to the Exchange Act, if the Company were subject to
      the reporting requirements of the Exchange Act.

            (ss) Subsidiary Representations. All of the representations,
      warranties and disclosure described in Article III of this Agreement are
      hereby made by the Company with respect to each of the Subsidiaries. All
      such disclosure is made on the Schedules hereto with respect to the
      Subsidiaries.

            (tt) Valuation. The Company represents that the initial Conversion
      Price of $0.50 on the Closing Date is equal to $5,800,000 divided by the
      Fully Diluted Outstanding Capital Stock as of immediately prior to the
      Closing. The Company further represents that the value of the Fully
      Diluted Outstanding Capital Stock immediately after the Closing, at a per
      share value of $0.50 will be $8,300,000.

      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 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.

                                       23
<PAGE>

            (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
      arrangement or understanding with any other persons 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. Such
      Purchaser does not have any agreement or understanding, directly or
      indirectly, with any Person to distribute any of the Securities.

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

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

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

            (f) Short Sales. For the period of time commencing upon the
      execution of this Agreement and ending one year after the Effective Date
      the Purchaser and its Affiliates will not enter into or effect any Short
      Sales of the Common Stock or hedging transaction which establish a net
      short position with respect to the Common Stock.

            (g) Reliance. The Purchasers acknowledge that the Company will be
      relying on the foregoing representations and warranties in making a
      determination as to the availability of federal and state securities laws
      exemptions. The Company acknowledges and agrees that each Purchaser does
      not make or has not made any representations or warranties with respect to
      the transactions contemplated hereby other than those specifically set
      forth in this Section 3.2.

                                       24
<PAGE>

                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

      4.1 Transfer Restrictions.

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

            (b) The Purchasers agree to the imprinting, so long as is required
      by this Section 4.1(b), 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 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.

                                       25
<PAGE>

            (c) Certificates evidencing the Underlying Shares and Warrant Shares
      shall not contain any legend (including the legend set forth in Section
      4.1(b) hereof): (i) following any sale of such shares pursuant to a
      registration statement (including the Registration Statement) covering the
      resale of such security, or (ii) following any sale of such shares
      pursuant to Rule 144, or (iii) if such shares are eligible for sale under
      Rule 144(k), or (iv) if such legend is not required under applicable
      requirements of the Securities Act (including judicial interpretations and
      pronouncements issued by the staff of the Commission). The Company shall
      cause its counsel to issue a legal opinion to the Company's transfer agent
      promptly after the Effective Date if required by the Company's transfer
      agent to effect the removal of the legend hereunder. If all or any portion
      of a Debenture is converted or a Warrant is exercised at a time when there
      is an effective Registration Statement to cover the resale of such shares
      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, or if such Underlying Shares
      and Warrant 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 thereof) then such 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 Business Days following
      the delivery by a Purchaser to the Company or the Company's transfer agent
      of a certificate representing such shares, as applicable, issued with a
      restrictive legend (such third Business 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
      Securities 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,
      if applicable.

            (d) If after the date hereof the Company becomes subject to the
      reporting requirements of the Exchange Act, 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 and Warrant 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 Business Day (increasing to $20 per
      Business Day 5 Business Days after such damages have begun to accrue) for
      each Business Day after 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.

                                       26
<PAGE>

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

      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 and Warrant 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. If after the date hereof the Company
becomes subject to the reporting requirements of the Exchange Act and 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 and the Company is
subject to the reporting requirement of the Exchange Act, the Company 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. As long as any Purchaser owns Securities and the
Company is subject to the reporting requirement of the Exchange Act, the Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell such Securities without registration under the
Securities Act within the limitation of the exemptions 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.

                                       27
<PAGE>

      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
the Underlying Shares and Warrant Shares in accordance with the terms,
conditions and time periods set forth in the Transaction Documents.

      4.6 Securities Laws Disclosure; Publicity. The Company and each Purchaser
shall consult with each other in issuing any press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Purchaser
shall issue any such press release or otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of
any Purchaser, or without the prior consent of each Purchaser, with respect to
any press release of the Company, which consent shall not unreasonably be
withheld, 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 the registration
statement contemplated by the Registration Rights Agreement 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 subclause (i) or (ii).

      4.7 Shareholder Rights Plan. No claim will be made or enforced by the
Company or, to the knowledge of the Company, any other Person that any Purchaser
is an "Acquiring Person" under any shareholder rights plan or similar 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. The Company shall
conduct its business in a manner so that it will not become subject to the
Investment Company Act.

      4.8 Non-Public Information. If at any time the Company becomes subject to
the reporting provisions of the Exchange Act, 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. The Company shall use the net proceeds from the sale
of the Securities hereunder for the purposes set forth on Schedule 4.9 attached
hereto, and not for the satisfaction of any portion of the Company's
indebtedness (other than as shown on Schedule 4.9 and payment of trade payables
in the ordinary course of the Company's business and consistent with prior
practices) nor to redeem any Common Stock or Common Stock Equivalents or to
settle any outstanding litigation.

                                       28
<PAGE>

      4.10 Reimbursement. If any Purchaser becomes involved in any capacity in
any Proceeding by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar transactions by
such Purchaser to or with any current stockholder), solely as a result of such
Purchaser's acquisition of the Securities under this Agreement, the Company will
reimburse such Purchaser for its reasonable legal and other expenses (including
the cost of any investigation preparation and travel in connection therewith)
incurred in connection therewith, as such expenses are incurred. The
reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any Affiliates of the Purchasers who are
actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may
be, of the Purchasers and any such Affiliate, and shall be binding upon and
inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Purchasers and any such Affiliate and any
such Person. The Company also agrees that neither the Purchasers nor any such
Affiliates, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company solely as a result of acquiring the Securities under
this Agreement.

      4.11 Indemnification of Purchasers. Subject to the provisions of this
Section 4.11, the Company will indemnify and hold the Purchasers and their
directors, officers, shareholders, partners, employees and agents (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. 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 the Purchasers
in this Agreement or in the other Transaction Documents.

                                       29
<PAGE>

      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, 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 Minimmum at such time, as soon as
      possible and in any event not later than the 75th day after such date.

            (c) The Company shall, not later than ten days after the Effective
      Date: (i) in the time and manner required by a 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
      Registrable Securities on the date of such application, (ii) take all
      steps necessary to cause such Registrable Securities to be approved for
      listing and actually listed on the Trading Market as soon as possible
      thereafter but in no event later than fifty-five days after the Effective
      Date ("Listing Date"), (iii) provide to the Purchasers evidence of such
      listing, and (iv) maintain the listing of such Registrable Securities on
      any date at least equal to the Required Minimum on such date on such
      Trading Market or another Trading Market. In the event the shares of
      Common Stock described above are not timely listed by the Listing Date, or
      if the listing is not continuously maintained for two years after the
      Listing Date (each a "Listing Default"), then in addition to any other
      rights the Purchasers may have hereunder or under applicable law, on the
      first day of a Listing Default and on each monthly anniversary of each
      such Listing Default date (if the applicable Listing Default shall not
      have been cured by such date) until the applicable Listing Default is
      cured, the Company shall pay to each Purchaser an amount in cash, as
      partial liquidated damages and not as a penalty, equal to 1.5% of the
      aggregate purchase price paid by such Purchaser pursuant to this Agreement
      for any Registrable Securities then held by such Purchaser. If the Company
      fails to pay any partial liquidated damages pursuant to this Section in
      full within seven days after the date payable, the Company will pay
      interest thereon at a rate of 18% per annum (or such lesser maximum amount
      that is permitted to be paid by applicable law) to the Purchaser, accruing
      daily from the date such partial liquidated damages are due until such
      amounts, plus all such interest thereon, are paid in full. The partial
      liquidated damages pursuant to the terms hereof shall apply on a daily
      pro-rata basis for any portion of a month prior to the cure of a Listing
      Default.

                                       30
<PAGE>

      4.13 Reporting Requirements. Until the time the Company becomes subject to
the reporting provisions of the Exchange Act, the Company shall furnish to each
Purchaser that holds Debentures and/or Undderlying Shares purchased for at least
$250,000, the following:

            (a) As soon as available and in any event within ninety (90) days
      after the end of each fiscal year of the Company, audited financial
      statements of the Company as at the end of such fiscal year and related
      statements of income and expenses for such fiscal year, all in reasonable
      detail and in scope to the Purchaser, prepared in accordance with GAAP,
      with the opinion of an independent certified public accountant reasonably
      acceptable to the Purchaser as evidenced by the prior written consent of
      the Purchaser;

            (b) As soon as available and in any event within forth-five (45)
      days after the end of the sixth (6th) month of the Company's fiscal year,
      reviewed financial statements of the Company as at the end of such six
      month period and related statements of income and expenses for such
      period, all in reasonable detail and scope to Purchaser, prepared in
      accordance with GAAP, and prepared by an independent certified public
      accountant reasonably acceptable to the Purchaser as evidenced by the
      prior written consent of the Purchaser;

            (c) As soon as available and in any event within thirty (30) days
      after the end of each fiscal quarter, quarterly financial statements
      prepared by the Company and other information reasonably requested by the
      Purchaser;

            (d) As soon as available and in any event within fifteen (15) days
      after the end of each month, monthly reports containing information on the
      Company's sales and other information reasonably requested by the
      Purchaser;

            (e) As soon as available and in any event not less than thirty (30)
      days prior to the commencement of each fiscal year, a detailed annual
      budget and strategic plan for the Company's business for such fiscal year,
      which shall have been approved by the Company's Board of Directors;

            (f) As soon as possible and in any event within five (5) days after
      the Purchasers notify the Company of the occurrence of each Event of
      Default, a statement of an authorized officer of the Company setting forth
      the nature and period of existence of such Event of Default and the action
      which the Company has taken and proposes to take with respect thereto;

            (g) Promptly after the sending or filing thereof, copies of all
      reports, if any, which the Company sends to any of its shareholders, and
      copies of all reports and registration statements, if any, which the
      Company files with the Commission or any Trading Market;

            (h) Promptly after the filing or receiving thereof, copies of all
      reports and notices, if any, which the Company files under ERISA, with the
      Internal Revenue Service or the Pension Benefit Guaranty Corporation or
      the U.S. Department of Labor or which the Company receives from any of
      such Persons;

                                       31
<PAGE>

            (i) Promptly upon determination by the Company's Chief Executive
      Officer of the need for the Company or Board of Directors to obtain
      additional financing, all information concerning such determination if, as
      and when available;

            (j) Information concerning offers or solicitations, and the terms
      and conditions thereof, for additional equity financing, given to the
      Purchaser not less than 30 days prior to the entering into of such
      financial arrangement; and

            (k) Such other information respecting the condition or operations,
      financial or otherwise, of the Company as the Purchasers may from time to
      time reasonably request.

      4.14 Subsequent Equity Sales. 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 equity sale
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.

      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. 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 to treat for the Company 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 Accountants. Until the time the Company becomes subject to the
reporting provisions of the Exchange Act, the Company shall promptly give the
Purchaser notice of any change in the firm of independent certified public
accountants utilized by the Company.

      4.17 Access to Records. Until the time the Company becomes subject to the
reporting provisions of the Exchange Act, the Company shall provide each
Purchaser that holds Debentures and/or Underlying Shares purchased hereunder for
at least $250,000 ("Minimum Amount") and/or any of its duly authorized
representatives, attorneys or accountants access to any and all records at the
premises of the Company where such records are kept, such access being afforded
without charge, but only upon reasonable request stating the purpose of such
request and during normal business hours. Each such Purchaser making such
request agrees to request to execute a confidentiality agreement or similar
document reasonably requested by the Company.

                                       32
<PAGE>

      4.18 Board of Directors. The Company shall have elected and in place a
duly elected Board of Directors consisting of five directors and provide each
Purchaser that holds the Minimum Amount with "observer" status and until the
time the Company becomes subject to the reporting provisions of the Exchange
Act, the right to attend all meetings of the Board of Directors of the Company
and to obtain copies of all minutes from and notices regarding such meetings, as
well as copies of all correspondence to members of the Board of Directors,
subject to reasonable limitations in order to maintain the attorney-client
privilege and confidentiality, including with respect to transactions involving
such Purchaser. Until the sooner of the Effective Date or until the Purchasers,
in the aggregate, hold less than the Minimum Amount, the Purchasers shall be
entitled to appoint two members to the Company's Board of Directors which shall
consist of five directors. The initial appointees to the Board of Directors are
set forth on Schedule 4.18. The Purchaser appointed directors shall be given all
the benefits, compensation, indemnification, insurance and other rights
available to the other directors of the Company.

      4.19 Maintenance of Property. The Company shall keep all of its property,
which is necessary or useful to the conduct of its business, in good working
order and condition, ordinary wear and tear excepted.

      4.20 Litigation. Until the time the Company becomes subject to the
reporting provisions of the Exchange Act, the Company shall promptly give the
Purchasers notice in writing of all litigation and of all proceedings before any
court, tribunal or Government Entity (as defined below) affecting the Company or
any Subsidiary, except litigation proceedings which, if adversely determined,
would not have a Material Adverse Effect. A "Government Entity" means the United
States of America, any state, any political subdivision of a state and any
agency or instrumentality of the United States of America or any state or
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

      4.21 Preservation of Corporate Existence. The Company shall preserve and
maintain its corporate existence, rights, privileges and franchises in the
jurisdiction of its incorporation, and qualify and remain qualified, as a
foreign corporation in each jurisdiction in which such qualification is
necessary in view of its business or operations and where the failure to qualify
or remain qualified might reasonably have a Material Adverse Effect upon the
financial condition, business or operations of the Company and its Subsidiaries
taken as a whole.

      4.22 Key Man Life Insurance. Until less than the Minimum Amount is held by
the Purchasers, the Company shall purchase for the benefit of the Purchasers and
keep in force a "key man" life insurance policy on the life of Harold Brand, or
his successor as Chief Executive Officer of the Company, which policy shall be
no less than the purchase price of the Securities outstanding from time to time
and be payable to the Purchasers as beneficiaries in amounts equal to each such
Purchaser's amount of Securities held from time to time. Such payment, if ever,
shall not be deemed payment for redemption of the Securities.

                                       33
<PAGE>

      4.23 Finders. The Company on the one hand, and each Purchaser (for himself
only) on the other hand, agrees to indemnify the other against and hold the
other harmless from any and all liabilities to any persons claiming brokerage
commissions or similar fees other than the one or more persons or entities
identified on Schedule 4.23 hereto, (each a "Finder") on account of services
purported to have been rendered on behalf of the indemnifying party in
connection with this Agreement or the transactions contemplated hereby and
arising out of such party's actions. Anything in this Agreement to the contrary
notwithstanding, each Purchaser is providing indemnification only for such
Purchaser's own actions and not for any action of any other Purchaser. Each
Purchaser's liability hereunder is several and not joint. The Company agrees
that it will pay the Finders the fees set forth on Schedule 4.23 hereto.

      4.24 Anti-Dilution. Other than the Exempt Issuances, until the sooner of
(i) three years after the Closing Date, or (ii) the Common Stock has a closing
bid price of not less than 200% of the Conversion Price on a Trading Market for
twenty consecutive Trading Days after the Effective Date with average daily
trading value of not less than $150,000 per day during such twenty Trading Days,
if the Company shall offer, issue or agree to issue any Common Stock or
securities convertible into or exercisable for shares of Common Stock (or modify
any of the foregoing which may be outstanding) to any person or entity at a
price per share of Common Stock which shall be less than the Conversion Price at
which Underlying Shares were issued without the consent of each Purchaser
holding Underlying Shares, then the Company shall issue, for each such occasion,
additional shares of Common Stock to each Purchaser so that the average per
share purchase price of the shares of Common Stock issued to the Purchaser (of
only the Underlying Shares still owned by the Purchaser) is equal to such other
lower price per share. The delivery to the Purchaser of the additional shares of
Common Stock shall be not later than the closing date of the transaction giving
rise to the requirement to issue additional shares of Common Stock. The
Purchaser is granted the registration rights described in the Registration
Rights Agreement in relation to such additional shares of Common Stock except
that the Filing Date and Effectiveness Date vis-a-vis such additional common
shares shall be, respectively, the forty-fifth (45th) and ninetieth (90th) date
after the closing date giving rise to the requirement to issue the additional
shares of Common Stock. For purposes of the issuance and adjustment described in
this paragraph, the issuance of any security of the Company carrying the right
to convert such security into shares of Common Stock or of any warrant, right or
option to purchase Common Stock shall result in the issuance of the additional
shares of Common Stock upon the sooner of the agreement to or actual issuance of
such convertible security, warrant, right or option and again at any time upon
any subsequent issuances of shares of Common Stock upon exercise of such
conversion or purchase rights if such issuance is at a price lower than the per
share purchase price or warrant exercise price in effect upon such issuance. The
rights of the Purchaser set forth in this section are in addition to any other
rights the Purchaser has pursuant to this Agreement, and any other Transaction
Document.

      4.25 Participation in Future Financing.

            (a) From the Closing Date until the date that is the 24 month
      anniversary of the date hereof, upon any financing by the Company or any
      of its Subsidiaries of Common Stock or Common Stock Equivalents (a
      "Subsequent Financing"), each Purchaser shall have the right to
      participate in up to an amount of the Subsequent Financing equal to 100%
      of the Subsequent Financing (the "Participation Maximum").

                                       34
<PAGE>

            (b) At least thirty Business 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 ten Business Days 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 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 Business Day after all of the
      Purchasers have received the Pre-Notice that the Purchaser is willing to
      participate in the Subsequent Financing, the amount of the Purchaser's
      participation, and that the Purchaser has such funds ready, willing, and
      available for investment on the terms set forth in the Subsequent
      Financing Notice. If the Company receives no notice from a Purchaser as of
      such 5th Business 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 Business 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 to the Persons set forth in the Subsequent Financing
      Notice.

            (e) If by 5:30 p.m. (New York City time) on the 5th Business 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 Debentures
      purchased on the Closing Date by a Purchaser participating under this
      Section 4.25 and (y) the sum of the aggregate Subscription Amounts of
      Securities purchased on the Closing Date by all Purchasers participating
      under this Section 4.25.

            (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 4.25, if the Subsequent
      Financing subject to the initial Subsequent Financing Notice is not
      consummated for any reason on substantially the same terms as set forth in
      such Subsequent Financing Notice within 60 Business Days after the date of
      the initial Subsequent Financing Notice.

                                       35
<PAGE>

            (g) Notwithstanding the foregoing, this Section 4.25 shall not apply
      in respect of an Exempt Issuance.

      4.26 Other Registration Statements. Until the Registration Statement has
been effective for ninety days or until Debentures are no longer outstanding,
whichever is sooner, the Company will not file any registration statement with
any Government Entity nor allow any such other registration statement to become
effective for the resale of any Common Stock or Common Stock Equivalent.

      4.27 Public Relations. The Company will allocate and issue an amount of
Common Stock equal to 3.88% of the Fully Diluted Outstanding Common Stock as of
immediately following the Closing and not less than $216,000 for public
relations and stockholder relations.

                                   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 March
31, 2006; provided, however, that no such termination will affect the right of
any party to sue for any breach by the other party (or parties).

      5.2 Fees and Expenses. 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.

      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 Business Day, (b) the next Business 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 Business Day or later than 5:30 p.m. (New York City time) on any
Business Day, (c) the second Business 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.

                                       36
<PAGE>

      5.5 Amendments; Waivers. No provision of this Agreement may be waived 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 waiver 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 either 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. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

      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 affected Purchaser. 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 hereof that apply to the Purchasers and provided, further, that until
the Effective Date, no Purchaser shall transfer Securities representing less
than $50,000 of aggregate Purchase Price (unless such Purchaser is transferring
all of the Securities owned by such Purchaser).

      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 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 manner permitted by law. The parties hereby waive all
rights to a trial by jury. If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its attorneys' fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

                                       37
<PAGE>

      5.10 Survival. The representations and warranties 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, 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 signature page
were an original thereof.

      5.12 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefore, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

      5.13 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
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 an 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.

                                       38
<PAGE>

      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, or in lieu of and substitution therefore, a new
certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity, if requested. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs 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 described in the foregoing sentence and hereby agrees to waive 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.

                                       39
<PAGE>

      5.18 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
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. GM does not
represent all of the Purchasers. 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)

                                       40
<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.

CYBRA CORPORATION                                      Address for Notice:
                                                       -------------------

By:_______________________________                     One Executive Boulevard
     Name: Harold Brand                                Yonkers, NY 10701-6804
     Title: President                                  Fax: (914) 963-6699
                                                       Email: hbrand@cybra.com

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

Thomas G. Amon, Esq.
500 Fifth Avenue, Suite 1650
New York, NY 10110
Fax: (212) 810-2427
Email: tamon@amonlaw.com

As to Section 4.26 only:
10% Shareholders

----------------------------------------
Harold Brand

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

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

                                       41
<PAGE>

                 [PURCHASER SIGNATURE PAGES TO CYBRA CORPORATION
                         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:________________________________________________

Address for Notice to Purchaser:

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

Subscription Amount: $________________

Warrant Shares: ______________________

Taxpayer Identification Number: ________________________

                           [SIGNATURE PAGES CONTINUE]

                                       42
<PAGE>

                                     Annex A

                                CLOSING STATEMENT

Pursuant to the attached Securities Purchase Agreement, dated as of the date
hereto, the purchasers shall purchase up to $2,500,000 of Debentures and
Warrants from CYBRA Corporation, a New York corporation (the "Company"). All
funds will be wired into an escrow account maintained at Grushko & Mittman, P.C.
All funds will be disbursed in accordance with this Closing Statement.

Disbursement Date:    March ___, 2006

________________________________________________________________________________

I.   PURCHASE PRICE

                        Gross Proceeds to be Received in Escrow    $2,500,000.00

II.  DISBURSEMENTS

                        Finder's Fee                               $
                                                                   $
                        Grushko & Mittman P.C. (legal fees)        $25,000.00
                        Thomas G. Amon, Esq. (legal fees)          $
                                                                   $

Total Amount Disbursed:                                            $

                                       43

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