Document:

REGISTRATION RIGHTS AGREEMENT

     REGISTRATION  RIGHTS  AGREEMENT  (this "AGREEMENT"), dated as of August 30,
2006,  by  and  among  Charys Holding Company, Inc., a Delaware corporation (the
"COMPANY"),  and  the undersigned buyers (each, a "BUYER", and collectively, the
"BUYERS").

     WHEREAS:

     A.     In  connection  with  the Securities Purchase Agreement by and among
the  parties hereto of even date herewith (the "SECURITIES PURCHASE AGREEMENT"),
the  Company  has agreed, upon the terms and subject to the conditions set forth
in  the  Securities  Purchase  Agreement,  to  issue  and sell to each Buyer (i)
convertible  notes  of the Company (the "NOTES") which will, among other things,
be  convertible  into shares of the Company's common stock, par value $0.001 per
share (the "COMMON STOCK") (as converted, the "CONVERSION SHARES") in accordance
with  the  terms  of the Notes, and (ii) warrants (the "WARRANTS") which will be
exercisable  to  purchase  a number of shares of Common Stock in accordance with
the  terms  of  the  Warrants (as exercised collectively, the "WARRANT SHARES").

     B.     To  induce the Buyers to execute and deliver the Securities Purchase
Agreement,  the  Company has agreed to provide certain registration rights under
the  Securities  Act  of  1933,  as  amended,  and  the  rules  and  regulations
thereunder, or any similar successor statute (collectively, the "1933 ACT"), and
applicable  state  securities  laws.

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
contained  herein  and  other  good  and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the Buyers
hereby  agree  as  follows:

1.     DEFINITIONS.
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     Capitalized  terms  used herein and not otherwise defined herein shall have
the respective meanings set forth in the Securities Purchase Agreement.  As used
in  this  Agreement,  the  following  terms  shall  have the following meanings:

     a.     "BUSINESS  DAY"  means  any  day  other than Saturday, Sunday or any
other  day  on  which commercial banks in The City of New York are authorized or
required  by  law  to  remain  closed.

     b.     "CLOSING  DATE"  shall  have the meaning set forth in the Securities
Purchase  Agreement.

     c.     "EFFECTIVE  DATE" means the date that the Registration Statement has
been  declared  effective  by  the  SEC.

     d.     "EFFECTIVENESS  DEADLINE"  means  the  date  which  is  ninety  (90)
calendar  days  after  the  Closing  Date.

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     e.     "FILING  DEADLINE" means the date sixty (60) calendar days after the
Closing  Date.

     f.     "INVESTOR"  means  a  Buyer or any transferee or assignee thereof to
whom  a  Buyer  assigns its rights under this Agreement and who agrees to become
bound  by  the provisions of this Agreement in accordance with Section 9 and any
transferee  or  assignee  thereof  to  whom a transferee or assignee assigns its
rights  under this Agreement and who agrees to become bound by the provisions of
this  Agreement  in  accordance  with  Section  9.

     g.     "PERSON"  means  an  individual,  a  limited  liability  company,  a
partnership,  a  joint  venture,  a  corporation,  a  trust,  an  unincorporated
organization  and  a  government  or  any  department  or  agency  thereof.

     h.     "REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing one or more Registration Statements (as defined
below)  in  compliance  with  the  1933  Act  and  pursuant  to Rule 415 and the
declaration  or  ordering  of effectiveness of such Registration Statement(s) by
the  SEC.

     i.     "REGISTRABLE  SECURITIES"  means (i) the Conversion Shares issued or
issuable  upon  conversion  of  the  Notes,  (ii)  the  Warrant Shares issued or
issuable  upon  exercise  of  the  Warrants  and  (iii) any capital stock of the
Company issued or issuable with respect to the Conversion Shares, the Notes, the
Warrant  Shares  and/or  the  Warrants  as  a  result  of any stock split, stock
dividend,  recapitalization,  exchange  or  similar  event or otherwise, without
regard  to  any  limitations  on  conversions  of  the Notes or exercises of the
Warrants.

     j.     "REGISTRATION  STATEMENT"  means  a  registration  statement  or
registration  statements  of  the  Company filed under the 1933 Act covering the
Registrable  Securities.

     k.     "REQUIRED  HOLDERS"  means the holders of at least a majority of the
Registrable  Securities.

     l.     "REQUIRED  REGISTRATION  AMOUNT"  means  175%  of the sum of (i) the
number  of Conversion Shares issued and issuable pursuant to the Notes as of the
Trading Day immediately preceding the applicable date of determination, and (ii)
the  number of Warrant Shares issued and issuable pursuant to the Warrants as of
the  Trading Day immediately preceding the applicable date of determination, all
subject  to  adjustment  as  provided  in  Section  2(e)  (without regard to any
limitations  on  conversion  of  the  Notes  or  exercise  of  the  Warrants).

     m.     "RULE  415"  means Rule 415 under the 1933 Act or any successor rule
providing  for  offering  securities  on  a  continuous  or  delayed  basis.

     n.     "SEC"  means  the  United States Securities and Exchange Commission.

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2.     REGISTRATION.
       ------------

     a.     Mandatory  Registration.  The Company shall prepare, and, as soon as
            -----------------------
practicable,  but  in no event later than the Filing Deadline, file with the SEC
the  Registration  Statement on Form SB-2, or any other available form, covering
the  resale  of  all of the Registrable Securities, subject to the provisions of
Section  2(d).  The  Registration  Statement  prepared  pursuant  hereto  shall
register  for  resale at least the number of shares of Common Stock equal to the
Required  Registration Amount as of date the Registration Statement is initially
filed  with  the  SEC.  The  Company  shall  use  its  best  efforts to have the
Registration Statement declared effective by the SEC as soon as practicable, but
in  no  event later than the Effectiveness Deadline.  By 9:30 am on the Business
Day  following  the  Effective  Date,  the  Company  shall  file with the SEC in
accordance  with  Rule 424 under the 1933 Act the final prospectus to be used in
connection  with  sales  pursuant  to  such  Registration  Statement.

     b.     Allocation  of  Registrable  Securities.  The  initial  number  of
            ---------------------------------------
Registrable  Securities  included in any Registration Statement and any increase
in  the number of Registrable Securities included therein shall be allocated pro
rata  among  the Investors based on the number of Registrable Securities held by
each  Investor  at  the  time  the  Registration Statement covering such initial
number  of  Registrable  Securities or increase thereof is declared effective by
the SEC.  In the event that an Investor sells or otherwise transfers any of such
Investor's Registrable Securities, each transferee shall be allocated a pro rata
portion  of the then remaining number of Registrable Securities included in such
Registration Statement for such transferor.  Any Shares of Common Stock included
in  a  Registration  Statement  and  which  remain allocated to any Person which
ceases to hold any Registrable Securities covered by such Registration Statement
shall  be  allocated to the remaining Investors, pro rata based on the number of
Registrable  Securities  then  held  by such Investors which are covered by such
Registration  Statement.  The  Investors  understand  that  the  Company  has
obligations  with  respect to other registration rights and that the Company may
include  in  the  Registration  Statement those securities set forth on Schedule
2(b) hereof with respect to which it has an existing obligation to register such
securities  under  1933  Act  as  of  the  date  hereof.

     c.     Legal  Counsel.  Subject  to  Section 5 hereof, the Required Holders
            --------------
shall  have  the  right  to  select  one legal counsel to review and oversee any
registration  pursuant  to  this  Section  2  ("LEGAL  COUNSEL"), which shall be
Gottbetter & Partners, LLP or such other counsel as thereafter designated by the
Required Holders.  The Company and Legal Counsel shall reasonably cooperate with
each  other  in  performing  the  Company's  obligations  under  this Agreement.

     d.     Ineligibility  for  Form  S-3.  In  the  event  that Form S-3 is not
            -----------------------------
available  for  the  registration  of  the  resale  of  Registrable  Securities
hereunder,  the  Company  shall  (i)  register  the  resale  of  the Registrable
Securities  on  another  appropriate  form reasonably acceptable to the Required
Holders and (ii) undertake to register the Registrable Securities on Form S-3 as
soon  as  such  form  is available, provided that the Company shall maintain the
effectiveness  of the Registration Statement then in effect until such time as a
Registration  Statement on Form S-3 covering the Registrable Securities has been
declared  effective  by  the  SEC.

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     e.     Sufficient  Number of Shares Registered.  In the event the number of
            ---------------------------------------
shares  available  under a Registration Statement filed pursuant to Section 2(a)
is  insufficient  to  cover  all  of  the  Registrable Securities required to be
covered by such Registration Statement or an Investor's allocated portion of the
Registrable  Securities  pursuant  to  Section 2(b), the Company shall amend the
applicable  Registration Statement, or file a new Registration Statement (on the
shortest  form  available  therefor,  if applicable), or both, so as to cover at
least  the  Required  Registration  Amount  as  of  the  Trading Day immediately
preceding  the  date  of  the  filing  of  such  amendment  or  new Registration
Statement, in each case, as soon as practicable, but in any event not later than
forty-five (45) days after the necessity therefor arises.  The Company shall use
its  best  efforts  to cause such amendment and/or new Registration Statement to
become  effective  as  soon  as  practicable  following the filing thereof.  For
purposes  of  the  foregoing  provision,  the number of shares available under a
Registration  Statement  shall  be  deemed  "insufficient  to  cover  all of the
Registrable  Securities"  if  at  any  time the number of shares of Common Stock
available  for  resale under the Registration Statement is less than the product
determined  by  multiplying (i) the Required Registration Amount as of such time
by (ii) 0.90.  The calculation set forth in the foregoing sentence shall be made
without regard to any limitations on the conversion of the Notes or the exercise
of  the  Warrants  and  such  calculation  shall  assume that the Notes are then
convertible  into  shares of Common Stock at the then prevailing Conversion Rate
(as  defined in the Notes) and that the Warrants are then exercisable for shares
of  Common  Stock  at  the  then  prevailing  Exercise  Price (as defined in the
Warrants)  and  for  the  number  of  Warrant  Shares  covered  thereby.

     f.     Effect  of  Failure to File and Obtain and Maintain Effectiveness of
            --------------------------------------------------------------------
Registration  Statement.  If  (i)  a  Registration Statement covering all of the
-----------------------
Registrable  Securities  required to be covered thereby and required to be filed
by  the  Company  pursuant to this Agreement is (A) not filed with the SEC on or
before  the  respective Filing Deadline (a "FILING FAILURE") or (B) not declared
effective  by  the  SEC  on  or before the respective Effectiveness Deadline (an
"EFFECTIVENESS FAILURE"); provided, however, that for thirty (30) days following
                          --------  -------
the  Effective  Deadline  there  will  be no Effectiveness Failure if the SEC is
reviewing  the  Registration Statement and the Company is using its best efforts
to  have  the Registration Statement declared effective or (ii) on any day after
the  Effective  Date  sales  of all of the Registrable Securities required to be
included  on  such  Registration  Statement cannot be made (other than during an
Allowable  Grace  Period  (as  defined  in  Section  3(r))  pursuant  to  such
Registration  Statement  (including, without limitation, because of a failure to
keep  such  Registration Statement effective, to disclose such information as is
necessary  for  sales  to  be made pursuant to such Registration Statement or to
register  a  sufficient  number  of  Shares  of  Common  Stock)  (a "MAINTENANCE
FAILURE") then, as partial relief for the damages to any holder by reason of any
Filing  Failure, Effectiveness Failure or Maintenance Faiure (which remedy shall
not  be  exclusive  of  any  other  remedies available at law or in equity), the
Company  shall  pay  to  each  holder of Registrable Securities relating to such
Registration  Statement  an  amount  in  cash  equal  to two percent (2%) of the
aggregate  Purchase  Price  (as  such term is defined in the Securities Purchase
Agreement)  of  such  Investor's  Notes  relating  to the Registrable Securities
included  in such Registration Statement on each of the following dates: (i) the
day  of a Filing Failure and on every thirtieth (30th) day thereafter (pro rated
for  periods  totaling  less than thirty (30) days) until such Filing Failure is
cured;  (ii)  the  day of an Effectiveness Failure and on every thirtieth (30th)
day thereafter (pro rated for periods totaling less than thirty (30) days) until
such  Effectiveness

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<PAGE>
Failure  is  cured;  provided,  however,  if an Effectiveness Failure occurs and
                     --------   -------
there  has  been an SEC review of the Registration Statement, Registration Delay
Payments  will  begin  to accrue on the date 120 days from the Closing Date; and
(iii) the initial day of a Maintenance Failure and on every thirtieth (30th) day
thereafter  (pro  rated  for  periods totaling less than thirty (30) days) until
such  Maintenance  Failure  is  cured.  The  payments to which a holder shall be
entitled  pursuant  to this Section 2(f) are referred to herein as "REGISTRATION
DELAY  PAYMENTS".  Registration  Delay  Payments shall be paid on the day of the
Filing  Failure,  Effectiveness  Failure  and  the  initial day of a Maintenance
Failure,  as  applicable,  and  thereafter  on  the earlier of (I) the thirtieth
(30th)  day  after  the  event  or failure giving rise to the Registration Delay
Payments has occurred and (II) the third Business Day after the event or failure
giving  rise to the Registration Delay Payments is cured.  By way of example, if
a  Registration  Statement  covering  the Registrable Securities is filed on the
36th  day following the Closing Date, the Company shall pay to the Investors the
Registration  Delay  Payment  on the date of the Filing Failure and shall, on or
prior  to the third Business Day following such 36th day, pay to the Investors a
pro  rata  amount  of  the Registration Delay Payment for such subsequent period
(determined  by  multiplying  such  Registration  Delay  Payment  by the product
obtained  by  dividing  the  number of days (6) during which such Filing Failure
occurred  during such subsequent period by 30)).  In the event the Company fails
to  make Registration Delay Payments in a timely manner, such Registration Delay
Payments  shall bear interest at the rate of one and one-half percent (1.5%) per
month  (prorated  for  partial  months)  until  paid  in  full.  Notwithstanding
anything  herein  to  the  contrary,  in  no  event shall the Registration Delay
Payments  exceed  ten  percent  (10%)  of  the  aggregate Purchase Price for all
Investors  (the "REGISTRATION DELAY PAYMENTS CAP").  Any amount in excess of the
Registration Delay Payments Cap (the "EXCESS REGISTRATION DELAY PAYMENTS") shall
cause  the  Conversion  Price of the Investor's Notes to be lowered by an amount
equal  to the quotient of the amount of such Investors Excess Registration Delay
Payments  divided  by  the  then  outstanding  amount  of such Investor's Notes.
Notwithstanding anything to the contrary contained herein, (y) in no event shall
the  Company be liable for any damages in connection with the Warrant or Warrant
Shares  and  (z) no Registration Delay Payments shall be payable with respect to
any Registrable Securities excluded from a Registration Statement by election of
an  Investor.

3.     RELATED  OBLIGATIONS.
       --------------------

     At  such  time as the Company is obligated to file a Registration Statement
with  the  SEC  pursuant to Section 2(a), 2(d) or 2(e), the Company will use its
best  efforts  to  effect  the  registration  of  the  Registrable Securities in
accordance  with  the  intended  method  of  disposition  thereof  and, pursuant
thereto,  the  Company  shall  have  the  following  obligations:

     a.     The  Company  shall  promptly, but in no event later than the Filing
Deadline, prepare and file with the SEC a Registration Statement with respect to
the  Registrable  Securities and use its best efforts to cause such Registration
Statement  relating to the Registrable Securities to become effective as soon as
practicable  after  such  filing  (but  in no event later than the Effectiveness
Deadline).  The  Company  shall  keep  each  Registration  Statement  effective
pursuant  to Rule 415 at all times until the earlier of (i) the date as of which
the  Investors  may  sell  all  of  the  Registrable  Securities covered by such
Registration  Statement  without  restriction  pursuant  to  Rule 144(k) (or any
successor  thereto) promulgated under the 1933 Act or (ii) the date on which the
Investors  shall  have  sold  all  of the Registrable Securities covered by such

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<PAGE>
Registration  Statement  (the  "REGISTRATION PERIOD").  The Company shall ensure
that  each  Registration  Statement  (including  any  amendments  or supplements
thereto  and  prospectuses  contained  therein)  shall  not  contain  any untrue
statement  of  a  material  fact or omit to state a material fact required to be
stated  therein,  or  necessary  to  make the statements therein (in the case of
prospectuses,  in  the  light  of the circumstances in which they were made) not
misleading.  The  term  "best  efforts" shall mean, among other things, that the
Company shall submit to the SEC, within two (2) Business Days after the later of
the date that (i) the Company learns that no review of a particular Registration
Statement  will be made by the staff of the SEC or that the staff has no further
comments  on  a  particular Registration Statement, as the case may be, and (ii)
the  approval  of  Legal  Counsel  pursuant  to  Section 3(c) (which approval is
immediately  sought),  a  request  for  acceleration  of  effectiveness  of such
Registration  Statement  to  a  time  and date not later than 48 hours after the
submission  of  such  request.

     b.     The  Company  shall  prepare  and  file with the SEC such amendments
(including  post-effective  amendments)  and  supplements  to  a  Registration
Statement  and  the  prospectus  used  in  connection  with  such  Registration
Statement,  which  prospectus  is  to  be filed pursuant to Rule 424 promulgated
under  the  1933  Act,  as  may be necessary to keep such Registration Statement
effective  at all times during the Registration Period, and, during such period,
comply  with  the  provisions of the 1933 Act with respect to the disposition of
all Registrable Securities of the Company covered by such Registration Statement
until  such  time as all of such Registrable Securities shall have been disposed
of  in  accordance  with  the  intended  methods of disposition by the seller or
sellers  thereof  as  set  forth in such Registration Statement.  In the case of
amendments  and supplements to a Registration Statement which are required to be
filed  pursuant  to  this Agreement (including pursuant to this Section 3(b)) by
reason  of the Company filing a report on Form 10-Q or Form 10-QSB, Form 10-K or
Form  10-KSB  or any analogous report under the Securities Exchange Act of 1934,
as  amended (the "1934 ACT"), the Company shall have incorporated such report by
reference  into  such  Registration Statement, if applicable, or shall file such
amendments  or  supplements  with  the SEC on the same day on which the 1934 Act
report  is  filed  which  created  the  requirement  for the Company to amend or
supplement  such  Registration  Statement.

     c.     The  Company  shall  (A)  permit Legal Counsel to review and comment
upon  (i)  a Registration Statement at least five (5) Business Days prior to its
filing  with the SEC and (ii) all amendments and supplements to all Registration
Statements  (except  for Annual Reports on Form 10-K or Form 10-KSB, and Reports
on  Form  10-Q  or  Form  10-QSB  and any similar or successor reports) within a
reasonable  number  of days prior to their filing with the SEC, and (B) not file
any Registration Statement or amendment or supplement thereto in a form to which
Legal  Counsel  reasonably  objects.  The Company shall not submit a request for
acceleration  of  the effectiveness of a Registration Statement or any amendment
or supplement thereto without the prior approval of Legal Counsel, which consent
shall not be unreasonably withheld.  The Company shall furnish to Legal Counsel,
without  charge,  (i)  copies of any correspondence from the SEC or the staff of
the  SEC  to  the  Company  or  its representatives relating to any Registration
Statement,  (ii) promptly after the same is prepared and filed with the SEC, one
copy  of  any  Registration  Statement  and  any amendment(s) thereto, including
financial  statements  and  schedules,  all  documents  incorporated  therein by
reference,  if  requested  by  an  Investor, and all exhibits and (iii) upon the
effectiveness  of  any  Registration  Statement,  one  copy  of  the

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<PAGE>
prospectus  included  in  such  Registration  Statement  and  all amendments and
supplements  thereto.  The Company shall reasonably cooperate with Legal Counsel
in  performing  the  Company's  obligations  pursuant  to  this  Section  3.

     d.     The  Company  shall  furnish  to  each  Investor  whose  Registrable
Securities  are  included  in any Registration Statement, without charge, (i) if
the  Company shall not have filed a final prospectus in accordance with Rule 424
per Section 2(a), upon the effectiveness of any Registration Statement, ten (10)
copies  of  the  prospectus  included  in  such  Registration  Statement and all
amendments  and  supplements  thereto  (or  such  other number of copies as such
Investor may reasonably request) and (ii) such other documents, including copies
of  any preliminary or final prospectus, as such Investor may reasonably request
from  time  to  time  in  order to facilitate the disposition of the Registrable
Securities  owned  by  such  Investor.

     e.     The  Company shall use its best efforts to (i) register and qualify,
unless  an  exemption from registration and qualification applies, the resale by
Investors  of  the  Registrable  Securities  covered by a Registration Statement
under  such  other securities or "blue sky" laws of all applicable jurisdictions
in  the  United  States,  (ii)  prepare  and  file  in those jurisdictions, such
amendments  (including  post-effective  amendments)  and  supplements  to  such
registrations  and  qualifications  as  may  be  necessary  to  maintain  the
effectiveness  thereof  during  the  Registration  Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect  at  all  times  during  the Registration Period, and (iv) take all other
actions  reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required  in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but  for  this  Section 3(e), (y) subject itself to general taxation in any such
jurisdiction,  or  (z)  file a general consent to service of process in any such
jurisdiction.  The Company shall promptly notify Legal Counsel and each Investor
who  holds  Registrable  Securities  of  the  receipt  by  the  Company  of  any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or "blue sky"
laws of any jurisdiction in the United States or its receipt of actual notice of
the  initiation  or  threatening  of  any  proceeding  for  such  purpose.

     f.     The  Company shall notify Legal Counsel and each Investor in writing
of  the  happening of any event, as promptly as practicable after becoming aware
of  such  event,  as a result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission  to state a material fact required to be stated therein or necessary to
make  the statements therein, in the light of the circumstances under which they
were  made,  not misleading (provided that in no event shall such notice contain
any  material,  nonpublic  information),  and, subject to Section 3(r), promptly
prepare a supplement or amendment to such Registration Statement to correct such
untrue  statement or omission, and deliver ten (10) copies of such supplement or
amendment  to Legal Counsel and each Investor (or such other number of copies as
Legal  Counsel or such Investor may reasonably request).  The Company shall also
promptly notify Legal Counsel and each Investor in writing (i) when a prospectus
or  any  prospectus  supplement  or post-effective amendment has been filed, and
when  a  Registration  Statement  or  any  post-effective  amendment  has become
effective  (notification  of  such  effectiveness  shall  be  delivered to Legal
Counsel  and  each  Investor  by  facsimile  or  e-mail

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<PAGE>
on  the  same  day  of  such  effectiveness  and by overnight mail), (ii) of any
request  by the SEC for amendments or supplements to a Registration Statement or
related prospectus or related information, and (iii) of the Company's reasonable
determination  that a post-effective amendment to a Registration Statement would
be  appropriate.

     g.     The  Company  shall  use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
or  the suspension of the qualification of any of the Registrable Securities for
sale  in  any  jurisdiction  and,  if  such an order or suspension is issued, to
obtain  the  withdrawal  of  such  order  or suspension at the earliest possible
moment  and  to  notify  Legal  Counsel  and each Investor who holds Registrable
Securities  being  sold of the issuance of such order and the resolution thereof
or  its  receipt  of actual notice of the initiation or threat of any proceeding
for  such  purpose.

     h.     At the reasonable request of any Investor, the Company shall furnish
to such Investor, on the date of the effectiveness of the Registration Statement
and  thereafter  from  time  to time on such dates as an Investor may reasonably
request  (i) a letter, dated such date, from the Company's independent certified
public  accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed  to  the  Investors,  and  (ii)  an opinion, dated as of such date, of
counsel representing the Company for purposes of such Registration Statement, in
form,  scope  and  substance  as  is customarily given in an underwritten public
offering,  addressed  to  the  Investors.

     i.     If  any  Investor may be required under applicable securities law to
be  described in the Registration Statement as an underwriter, the Company shall
make  available for inspection by (i) any Investor, (ii) Legal Counsel and (iii)
one firm of accountants or other agents retained by the Investors (collectively,
the  "INSPECTORS"),  all  pertinent  financial  and other records, and pertinent
corporate documents and properties of the Company (collectively, the "RECORDS"),
as  shall  be  reasonably  deemed  necessary  by  each  Inspector, and cause the
Company's  officers,  directors  and  employees,  counsel  and  the  Company's
independent  certified public accountants to supply all information which may be
necessary and any Inspector may reasonably request; provided, however, that each
Inspector  shall  agree  to  hold  in  strict  confidence and shall not make any
disclosure  (except  to  an  Investor) or use of any Record or other information
which  the  Company  determines  in  good faith to be confidential, and of which
determination  the Inspectors are so notified, unless (a) the disclosure of such
Records  is  necessary  to  avoid  or  correct a misstatement or omission in any
Registration  Statement  or  is  otherwise  required under the 1933 Act, (b) the
release  of such Records is ordered pursuant to a final, non-appealable subpoena
or  order  from a court or government body of competent jurisdiction, or (c) the
information  in  such  Records  has  been made generally available to the public
other  than  by  disclosure in violation of this or any other agreement of which
the  Inspector has knowledge.  Each Investor agrees that it shall, upon learning
that  disclosure of such Records is sought in or by a court or governmental body
of  competent  jurisdiction  or  through  other means, give prompt notice to the
Company  and  allow the Company, at its expense, to undertake appropriate action
to  prevent  disclosure  of,  or  to  obtain a protective order for, the Records
deemed  confidential.  Nothing herein (or in any other confidentiality agreement
between  the  Company  and any Investor) shall be deemed to limit the Investors'
ability to sell Registrable Securities in a manner which is otherwise consistent
with  applicable  laws  and  regulations.

                                        8
<PAGE>
     j.     The  Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of  such  information  is  necessary  to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement  or  omission  in  any Registration Statement, (iii) the release of
such  information  is  ordered  pursuant  to  a  subpoena  or  other  final,
non-appealable  order  from  a  court  or  governmental  body  of  competent
jurisdiction,  or (iv) such information has been made generally available to the
public  other  than  by  disclosure  in violation of this Agreement or any other
agreement.  The  Company  agrees that it shall, upon learning that disclosure of
such  information  concerning  an  Investor  is  sought  in  or  by  a  court or
governmental  body of competent jurisdiction or through other means, give prompt
written  notice  to  such  Investor  and  allow such Investor, at the Investor's
expense,  to undertake appropriate action to prevent disclosure of, or to obtain
a  protective  order  for,  such  information.

     k.     The  Company  shall  use its best efforts either to (i) cause all of
the  Registrable  Securities covered by a Registration Statement to be listed on
each  securities exchange on which securities of the same class or series issued
by  the Company are then listed (which shall include the OTC Bulletin Board), if
any,  if  the listing of such Registrable Securities is then permitted under the
rules  of  such exchange, or (ii) secure designation and quotation of all of the
Registrable  Securities  covered  by  a  Registration  Statement  on  the Nasdaq
National Market, or (iii) if, despite the Company's commercially reasonable best
efforts to satisfy the preceding clauses (i) or (ii) the Company is unsuccessful
in  satisfying  the  preceding  clauses (i) or (ii), to secure the inclusion for
quotation  on  The  Nasdaq  Capital  Market for such Registrable Securities and,
without  limiting  the  generality  of  the  foregoing,  to use its commercially
reasonable  best  efforts  to arrange for at least two market makers to register
with  the National Association of Securities Dealers, Inc. ("NASD") as such with
respect  to  such  Registrable  Securities.  The  Company shall pay all fees and
expenses  in  connection with satisfying its obligation under this Section 3(k).

     l.     The  Company shall cooperate with the Investors who hold Registrable
Securities  being  offered  and, to the extent applicable, facilitate the timely
preparation  and  delivery  of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered pursuant to a Registration
Statement  and  enable such certificates to be in such denominations or amounts,
as  the  case  may be, as the Investors may reasonably request and registered in
such  names  as  the  Investors  may  request.

     m.     If  requested by an Investor, the Company shall within ten (10) days
of  receipt  of  notice  from  such  Investor  (i)  incorporate  in a prospectus
supplement  or  post-effective  amendment  such  information  as  an  Investor
reasonably requests to be included therein relating to the sale and distribution
of  Registrable  Securities,  including,  without  limitation,  information with
respect  to  the  number  of  Registrable  Securities being offered or sold, the
purchase  price  being  paid therefor and any other terms of the offering of the
Registrable  Securities  to  be  sold  in  such offering; (ii) make all required
filings  of  such  prospectus supplement or post-effective amendment after being
notified  of  the  matters  to  be incorporated in such prospectus supplement or
post-effective  amendment;  and  (iii)  supplement  or  make  amendments  to any
Registration  Statement  if  reasonably  requested  by  an  Investor holding any
Registrable  Securities.

                                        9
<PAGE>
     n.     The  Company shall reasonably cooperate with the Investors as may be
necessary  to  consummate  the  disposition  of  such  Registrable  Securities.

     o.     The  Company  shall make generally available to its security holders
as soon as practical, but not later than ninety (90) days after the close of the
period  covered  thereby,  an earnings statement (in form complying with, and in
the  manner provided by, the provisions of Rule 158 under the 1933 Act) covering
a  twelve-month  period  beginning not later than the first day of the Company's
fiscal  quarter next following the effective date of the Registration Statement.

     p.     The  Company shall otherwise use its best efforts to comply with all
applicable  rules and regulations of the SEC in connection with any registration
hereunder.

     q.     Within  two  (2)  Business Days after a Registration Statement which
covers Registrable Securities is ordered effective by the SEC, the Company shall
deliver,  and  shall  cause  legal  counsel  for  the Company to deliver, to the
transfer  agent  for  such  Registrable Securities (with copies to the Investors
whose  Registrable  Securities  are  included  in  such  Registration Statement)
confirmation that such Registration Statement has been declared effective by the
SEC  in  the  form  attached  hereto  as  Exhibit  A.
                                          ----------

     r.     Notwithstanding  anything  to the contrary herein, at any time after
Effective  Date,  the  Company  may delay the disclosure of material, non-public
information  concerning  the Company the disclosure of which at the time is not,
in  the  good  faith  opinion  of  the Board of Directors of the Company and its
counsel,  in  the best interest of the Company and, in the opinion of counsel to
the  Company,  otherwise required (a "GRACE PERIOD"); provided, that the Company
shall promptly (i) notify the Investors in writing of the existence of material,
non-public  information  giving  rise  to  a Grace Period (provided that in each
notice  the  Company  will not disclose the content of such material, non-public
information to the Investors) and the date on which the Grace Period will begin,
and  (ii)  notify the Investors in writing of the date on which the Grace Period
ends;  and,  provided  further,  that  no  Grace  Period  shall  exceed ten (10)
consecutive  days  and during any three hundred sixty five (365) day period such
Grace  Periods  shall  not exceed an aggregate of thirty (30) days and the first
day  of any Grace Period must be at least two Trading Days after the last day of
any  prior  Grace  Period  (each, an "ALLOWABLE GRACE PERIOD").  For purposes of
determining  the length of a Grace Period above, the Grace Period shall begin on
and  include the date the Investors receive the notice referred to in clause (i)
and  shall  end  on  and include the later of the date the Investors receive the
notice  referred to in clause (ii) and the date referred to in such notice.  The
provisions  of  Section 3(g) hereof shall not be applicable during the period of
any  Allowable  Grace  Period.  Upon expiration of the Grace Period, the Company
shall  again  be bound by the first sentence of Section 3(f) with respect to the
information  giving rise thereto unless such material, non-public information is
no  longer  applicable.  Notwithstanding  anything  to the contrary, the Company
shall cause its transfer agent to deliver unlegended shares of Common Stock to a
transferee  of  an  Investor  in  accordance  with  the  terms of the Securities
Purchase  Agreement  in  connection with any sale of Registrable Securities with
respect to which an Investor has entered into a contract for sale, and delivered
a  copy  of  the  prospectus  included  as  part  of the applicable Registration
Statement  (unless  an

                                       10
<PAGE>
exemption  from  such  prospectus  delivery  requirement  exists),  prior to the
Investor's  receipt  of  the notice of a Grace Period and for which the Investor
has  not  yet  settled.

4.     OBLIGATIONS  OF  THE  INVESTORS.
       -------------------------------

     a.     At  least  ten  (10)  Business  Days  prior to the first anticipated
filing  date of a Registration Statement, the Company shall notify each Investor
in  writing  of  the information the Company requires from each such Investor if
such  Investor  elects  to  have  any  of such Investor's Registrable Securities
included  in  such Registration Statement.  It shall be a condition precedent to
the  obligations  of  the  Company to complete the registration pursuant to this
Agreement  with  respect  to the Registrable Securities of a particular Investor
that  such  Investor  shall  furnish  to  the Company such information regarding
itself,  the  Registrable  Securities  held  by  it  and  the intended method of
disposition  of  the  Registrable  Securities held by it, as shall be reasonably
required  to  effect  and maintain the effectiveness of the registration of such
Registrable  Securities and shall execute such documents in connection with such
registration  as  the  Company  may  reasonably  request.

     b.     Each  Investor,  by  such  Investor's  acceptance of the Registrable
Securities,  agrees to cooperate with the Company as reasonably requested by the
Company  in  connection  with  the  preparation  and  filing of any Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such  Investor's  election  to  exclude  all  of  such  Investor's  Registrable
Securities  from  such  Registration  Statement.

     c.     Each  Investor  agrees  that,  upon  receipt  of any notice from the
Company  of  the happening of any event of the kind described in Section 3(g) or
the  first  sentence  of  3(f),  such  Investor  will  immediately  discontinue
disposition  of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor's receipt of the copies
of  the  supplemented  or amended prospectus contemplated by Section 3(g) or the
first  sentence  of 3(f) or receipt of notice that no supplement or amendment is
required.  Notwithstanding anything to the contrary, the Company shall cause its
transfer  agent  to deliver unlegended shares of Common Stock to a transferee of
an Investor in accordance with the terms of the Securities Purchase Agreement in
connection  with  any  sale  of  Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor's receipt of
a notice from the Company of the happening of any event of the kind described in
Section  3(g)  or  the first sentence of 3(f) and for which the Investor has not
yet  settled.

     d.     Each  Investor  covenants  and  agrees  that it will comply with any
applicable  prospectus delivery requirements of the 1933 Act as applicable to or
an  exemption  therefrom  it  in connection with sales of Registrable Securities
pursuant  to  the  Registration  Statement.

5.     EXPENSES  OF  REGISTRATION.
       --------------------------

All  reasonable  expenses,  other  than  underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections  2  and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel  for  the  Company  related  to  registrations  shall  be  paid  by

                                       11
<PAGE>
the  Company.  The  Company  shall also reimburse the Investors for the fees and
disbursements  of  Legal  Counsel  in  connection  with  registration, filing or
qualification  pursuant to Sections 2 and 3 of this Agreement which amount shall
be  limited  to  $15,000.

6.     INDEMNIFICATION.
       ---------------

     In  the  event  any  Registrable  Securities are included in a Registration
Statement  under  this  Agreement:

     a.     To the fullest extent permitted by law, the Company will, and hereby
does,  indemnify,  hold  harmless  and  defend  each  Investor,  the  directors,
officers,  members,  managers,  partners,  employees,  stockholders,  agents,
representatives  of,  and  each Person, if any, who controls any Investor within
the  meaning  of  the  1933 Act or the 1934 Act (each, an "INDEMNIFIED PERSON"),
against  any  losses, claims, damages, liabilities, judgments, fines, penalties,
charges,  costs,  reasonable  attorneys'  fees,  amounts  paid  in settlement or
expenses,  joint or several, (collectively, "CLAIMS") incurred in investigating,
preparing  or  defending  any  action,  claim,  suit,  inquiry,  proceeding,
investigation  or  appeal  taken  from  the  foregoing by or before any court or
governmental,  administrative  or  other  regulatory  agency,  body  or the SEC,
whether  pending or threatened, whether or not an indemnified party is or may be
a party thereto ("INDEMNIFIED DAMAGES"), to which any of them may become subject
insofar  as  such  Claims  (or  actions  or  proceedings,  whether  commenced or
threatened,  in  respect thereof) arise out of or are based upon: (i) any untrue
statement  or  alleged  untrue  statement  of  a material fact in a Registration
Statement  or  any  post-effective  amendment  thereto  or in any filing made in
connection  with the qualification of the offering under the securities or other
"blue  sky" laws of any jurisdiction in which Registrable Securities are offered
("BLUE  SKY  FILING"),  or  the omission or alleged omission to state a material
fact  required  to be stated therein or necessary to make the statements therein
not  misleading,  (ii)  any  untrue  statement  or alleged untrue statement of a
material  fact  contained  in  any  preliminary  prospectus if used prior to the
effective  date  of  such  Registration  Statement,  or  contained  in the final
prospectus  (as  amended  or  supplemented,  if  the Company files any amendment
thereof  or supplement thereto with the SEC) or the omission or alleged omission
to  state  therein  any  material  fact  necessary  to  make the statements made
therein,  in  light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of
the  1933  Act,  the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or  sale  of  the Registrable Securities pursuant to a Registration Statement or
(iv)  any  violation of this Agreement (the matters in the foregoing clauses (i)
through  (iv)  being, collectively, "VIOLATIONS").  Subject to Section 6(c), the
Company  shall  reimburse the Indemnified Persons, promptly as such expenses are
incurred  and  are  due  and  payable,  for  any  legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any such
Claim.  Notwithstanding  anything  to  the  contrary  contained  herein,  the
indemnification agreement contained in this Section 6(a): (i) shall not apply to
a  Claim by an Indemnified Person arising out of or based upon a Violation which
occurs  in reliance upon and in conformity with information furnished in writing
to  the Company by such Indemnified Person for such Indemnified Person expressly
for  use in connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto, if such prospectus was timely made
available  by  the  Company  pursuant  to  Section  3(d)  and

                                       12
<PAGE>
(ii)  shall  not  apply  to  amounts  paid  in  settlement  of any Claim if such
settlement  is  effected without the prior written consent of the Company, which
consent  shall  not  be  unreasonably withheld or delayed.  Such indemnity shall
remain  in  full  force and effect regardless of any investigation made by or on
behalf  of  the  Indemnified  Person  and  shall  survive  the  transfer  of the
Registrable  Securities  by  the  Investors  pursuant  to  Section  9.

     b.     In  connection  with any Registration Statement in which an Investor
is  participating,  each  such  Investor  agrees  to  severally  and not jointly
indemnify,  hold  harmless and defend, to the same extent and in the same manner
as is set forth in Section 6(a), the Company, each of its directors, each of its
officers  who  signs  the  Registration  Statement  and each Person, if any, who
controls  the  Company within the meaning of the 1933 Act or the 1934 Act (each,
an  "INDEMNIFIED  PARTY"), against any Claim or Indemnified Damages to which any
of  them  may  become  subject,  under  the 1933 Act, the 1934 Act or otherwise,
insofar  as such Claim or Indemnified Damages arise out of or are based upon any
Violation,  in  each  case  to  the  extent,  and  only to the extent, that such
Violation  occurs  in  reliance  upon and in conformity with written information
furnished  to  the Company by such Investor expressly for use in connection with
such  Registration  Statement;  and, subject to Section 6(c), such Investor will
reimburse  any  legal  or  other  expenses reasonably incurred by an Indemnified
Party  in  connection  with investigating or defending any such Claim; provided,
however,  that  the  indemnity  agreement contained in this Section 6(b) and the
agreement with respect to contribution contained in Section 7 shall not apply to
amounts  paid  in settlement of any Claim if such settlement is effected without
the  prior  written  consent  of  such  Investor,  which  consent  shall  not be
unreasonably  withheld or delayed; provided, further, however, that the Investor
shall  be  liable under this Section 6(b) or Section 7 for only that amount of a
Claim  or  Indemnified  Damages  as  does  not  exceed  the net proceeds to such
Investor  as  a  result  of  the sale of Registrable Securities pursuant to such
Registration  Statement.  Such  indemnity  shall remain in full force and effect
regardless  of  any investigation made by or on behalf of such Indemnified Party
and  shall  survive  the transfer of the Registrable Securities by the Investors
pursuant  to  Section  9.  Notwithstanding  anything  to  the contrary contained
herein,  the  indemnification  agreement  contained  in  this  Section 6(b) with
respect  to  any  preliminary  prospectus  shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as  then  amended  or  supplemented.

     c.     Promptly after receipt by an Indemnified Person or Indemnified Party
under  this  Section 6 of notice of the commencement of any action or proceeding
(including  any  governmental  action  or  proceeding)  involving  a Claim, such
Indemnified  Person or Indemnified Party shall, if a Claim in respect thereof is
to  be  made against any indemnifying party under this Section 6, deliver to the
indemnifying  party  a  written  notice  of  the  commencement  thereof, and the
indemnifying  party  shall  have the right to participate in, and, to the extent
the  indemnifying  party  so  desires, jointly with any other indemnifying party
similarly  noticed,  to  assume  control  of  the  defense  thereof with counsel
mutually  satisfactory  to  the indemnifying party and the Indemnified Person or
the  Indemnified  Party,  as  the  case  may  be;  provided,  however,  that  an
Indemnified  Person  or Indemnified Party shall have the right to retain its own
counsel  with  the  fees  and  expenses  of  not  more than one counsel for such
Indemnified  Person  or  Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation  by  such  counsel  of  the  Indemnified  Person  or

                                       13
<PAGE>
Indemnified  Party  and  the  indemnifying  party  would be inappropriate due to
actual  or  potential  differing  interests  between  such Indemnified Person or
Indemnified  Party  and  any  other  party  represented  by such counsel in such
proceeding.  In  the case of an Indemnified Person, legal counsel referred to in
the immediately preceding sentence shall be selected by the Investors holding at
least  a  majority  in  interest  of  the Registrable Securities included in the
Registration  Statement  to  which  the Claim relates.  The Indemnified Party or
Indemnified  Person  shall  cooperate  reasonably with the indemnifying party in
connection  with  any  negotiation or defense of any such action or Claim by the
indemnifying  party  and shall furnish to the indemnifying party all information
reasonably  available  to  the  Indemnified  Party  or  Indemnified Person which
relates  to  such  action  or  Claim.  The  indemnifying  party  shall  keep the
Indemnified  Party  or  Indemnified Person fully apprised at all times as to the
status  of  the defense or any settlement negotiations with respect thereto.  No
indemnifying  party  shall  be liable for any settlement of any action, claim or
proceeding  affected  without its prior written consent, provided, however, that
the  indemnifying  party shall not unreasonably withhold, delay or condition its
consent.  No  indemnifying party shall, without the prior written consent of the
Indemnified  Party  or  Indemnified  Person, consent to entry of any judgment or
enter  into  any  settlement  or  other  compromise which does not include as an
unconditional  term  thereof  the  giving  by  the claimant or plaintiff to such
Indemnified  Party  or  Indemnified  Person  of  a release from all liability in
respect  to such Claim or litigation.  Following indemnification as provided for
hereunder,  the  indemnifying  party  shall  be  subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or  corporations relating to the matter for which indemnification has been made.
The  failure  to  deliver  written  notice  to  the  indemnifying party within a
reasonable  time  of  the commencement of any such action shall not relieve such
indemnifying  party  of  any  liability to the Indemnified Person or Indemnified
Party  under this Section 6, except to the extent that the indemnifying party is
materially  prejudiced  in  its  ability  to  defend  such  action.

     d.     The  indemnification  required  by  this  Section 6 shall be made by
periodic  payments  of the amount thereof during the course of the investigation
or  defense, as and when bills are received or Indemnified Damages are incurred.

     e.     The  indemnity  agreements  contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person  against  the  indemnifying party or others, and (ii) any liabilities the
indemnifying  party  may  be  subject  to  pursuant  to  the  law.

7.     CONTRIBUTION.
       ------------

     To the extent any indemnification by an indemnifying party is prohibited or
limited  by  law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (i) no Person
involved  in  the  sale  of  Registrable  Securities  which  Person is guilty of
fraudulent  misrepresentation  (within  the meaning of Section 11(f) of the 1933
Act)  in  connection  with  such sale shall be entitled to contribution from any
Person  involved  in  such  sale of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities  shall  be  limited  in  amount  to  the  net

                                       14
<PAGE>
amount  of  proceeds  received  by such seller from the sale of such Registrable
Securities  pursuant  to  such  Registration  Statement.

8.     REPORTS  UNDER  THE  1934  ACT.
       ------------------------------

     With  a  view to making available to the Investors the benefits of Rule 144
promulgated  under  the  1933 Act or any other similar rule or regulation of the
SEC  that may at any time permit the Investors to sell securities of the Company
to  the  public  without  registration  ("RULE  144"),  the  Company  agrees to:

     a.     make  and  keep  public  information  available,  as those terms are
understood  and  defined  in  Rule  144;

     b.     file with the SEC in a timely manner all reports and other documents
required  of  the  Company  under  the  1933 Act and the 1934 Act so long as the
Company  remains  subject to such requirements (it being understood that nothing
herein  shall  limit  the  Company's  obligations  under  Section  4(c)  of  the
Securities  Purchase  Agreement)  and  the  filing  of  such  reports  and other
documents  is  required  for  the  applicable  provisions  of  Rule  144;  and

     c.     furnish  to  each Investor so long as such Investor owns Registrable
Securities,  promptly  upon  request, (i) a written statement by the Company, if
true, that it has complied with the reporting requirements of Rule 144, the 1933
Act  and the 1934 Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company, and
(iii)  such  other  information  as  may  be  reasonably requested to permit the
Investors  to  sell  such  securities pursuant to Rule 144 without registration.

9.     ASSIGNMENT  OF  REGISTRATION  RIGHTS.
       ------------------------------------

     The  rights  under  this  Agreement shall be automatically assignable by an
Investor  to any transferee of all or any portion of such Investor's Registrable
Securities  if:  (i)  such  Investor  agrees  in  writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company  within  a  reasonable  time after such assignment; (ii) the Company is,
within  a  reasonable  time  after  such  transfer or assignment, furnished with
written  notice  of (a) the name and address of such transferee or assignee, and
(b)  the  securities  with  respect  to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment
the  further  disposition  of  such  securities by the transferee or assignee is
restricted  under  the 1933 Act and applicable state securities laws; (iv) at or
before  the  time the Company receives the written notice contemplated by clause
(ii)  of  this  sentence  the  transferee or assignee agrees in writing with the
Company  to  be  bound  by  all of the provisions contained herein; and (v) such
transfer  shall have been made in accordance with the applicable requirements of
the  Securities  Purchase  Agreement.

10.     AMENDMENT  OF  REGISTRATION  RIGHTS.
        -----------------------------------

     Provisions  of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or  prospectively),  only

                                       15
<PAGE>
with the written consent of the Company and the Required Holders.  Any amendment
or waiver effected in accordance with this Section 10 shall be binding upon each
Investor  and  the  Company.  No such amendment shall be effective to the extent
that  it  applies to less than all of the holders of the Registrable Securities.
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 this Agreement unless the same
consideration  also  is  offered  to  all  of  the  parties  to  this Agreement.

11.     MISCELLANEOUS.
        -------------

     a.     A Person is deemed to be a holder of Registrable Securities whenever
such  Person owns or is deemed to own of record such Registrable Securities.  If
the  Company receives conflicting instructions, notices or elections from two or
more  Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from such record
owner  of  such  Registrable  Securities.

     b.     Any  notices,  consents, waivers or other communications required or
permitted  to  be given under the terms of this Agreement must be in writing and
will  be  deemed  to  have  been  delivered:  (i)  upon  receipt, when delivered
personally;  (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending  party);  or  (iii)  one  Business  Day  after deposit with a nationally
recognized  overnight  delivery  service, in each case properly addressed to the
party  to  receive  the  same.  The  addresses  and  facsimile  numbers for such
communications  shall  be:

          If  to  the  Company:

                                   Charys Holding Company, Inc.
                                   1117 Perimeter Center West, Suite N415
                                   Atlanta, GA 30338
                                   Attention:     Billy V. Ray, Jr.
                                   Telephone:     678-443-2300
                                   Facsimile:     678-443-2320

          If  to  Legal  Counsel  for  the  Company:

                                   Glast, Phillips & Murray, P.C.
                                   815 Walker Street, Suite 1250
                                   Houston, Texas 77002
                                   Attention:     Norman T. Reynolds, Esq.
                                   Telephone:     713-237-3135
                                   Facsimile:     713-237-3202

If  to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers attached hereto, with copies to such Buyer's representatives as set forth
on  the  Schedule  of  Buyers,  or to such other address and/or facsimile number
and/or  to  the  attention  of  such  other  Person  as  the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness  of such change.  Written confirmation of receipt (A) given by the
recipient  of  such  notice,  consent,  waiver  or  other  communication,  (B)
mechanically  or  electronically  generated  by  the  sender's facsimile machine
containing  the  time,  date,  recipient  facsimile  number  and  an

                                       16
<PAGE>
image  of  the  first  page of such transmission or (C) provided by a courier or
overnight  courier  service  shall  be  rebuttable evidence of personal service,
receipt  by facsimile or receipt from a nationally recognized overnight delivery
service  in  accordance  with  clause  (i),  (ii)  or (iii) above, respectively.

     c.     Failure  of  any  party  to  exercise any right or remedy under this
Agreement  or otherwise, or delay by a party in exercising such right or remedy,
shall  not  operate  as  a  waiver  thereof.

     d.     All questions concerning the construction, validity, enforcement and
interpretation  of  this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision  or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State  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,  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 brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  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 to such party at the address for such 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.
If  any  provision  of  this  Agreement shall be invalid or unenforceable in any
jurisdiction,  such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity  or  enforceability  of  any  provision  of this Agreement in any other
jurisdiction.  EACH  PARTY  HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES  NOT  TO  REQUEST,  A  JURY  TRIAL  FOR  THE  ADJUDICATION OF ANY DISPUTE
HEREUNDER  OR  IN  CONNECTION  HEREWITH  OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION  CONTEMPLATED  HEREBY.

     e.     This  Agreement,  the other Transaction Documents (as defined in the
Securities Purchase Agreement) and the instruments referenced herein and therein
constitute  the  entire  agreement  among the parties hereto with respect to the
subject  matter  hereof  and  thereof.  There  are  no  restrictions,  promises,
warranties or undertakings, other than those set forth or referred to herein and
therein.  This  Agreement,  the  other Transaction Documents and the instruments
referenced  herein and therein supersede all prior agreements and understandings
among  the parties hereto with respect to the subject matter hereof and thereof.

     f.     Subject to the requirements of Section 9, this Agreement shall inure
to  the  benefit  of and be binding upon the permitted successors and assigns of
each  of  the  parties  hereto.

                                       17
<PAGE>
     g.     The headings in this Agreement are for convenience of reference only
and  shall  not  limit  or  otherwise  affect  the  meaning  hereof.

     h.     This  Agreement  may  be executed in identical counterparts, each of
which  shall be deemed an original but all of which shall constitute one and the
same  agreement.  This  Agreement, once executed by a party, may be delivered to
the  other  party  hereto  by facsimile transmission of a copy of this Agreement
bearing  the  signature  of  the  party  so  delivering  this  Agreement.

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

     j.     All  consents  and  other  determinations required to be made by the
Investors  pursuant  to this Agreement shall be made, unless otherwise specified
in  this  Agreement,  by  the  Required  Holders.

     k.     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.

     l.     This Agreement is intended for the benefit of the parties hereto and
their  respective  permitted  successors and assigns, and is not for the benefit
of,  nor  may  any  provision  hereof  be  enforced  by,  any  other  Person.

     m.     The  obligations  of  each Buyer hereunder are several and not joint
with  the  obligations of any other Buyer, and no provision of this Agreement is
intended  to  confer  any  obligations  on  any Buyer vis- -vis any other Buyer.
Nothing  contained  herein,  and  no  action taken by any Buyer pursuant hereto,
shall  be  deemed  to  constitute the Buyers as a partnership, an association, a
joint  venture  or  any  other  kind of entity, or create a presumption that the
Buyers  are  in  any  way  acting  in concert or as a group with respect to such
obligations  or  the  transactions  contemplated  herein.

                                       18
<PAGE>
     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature  page  to this Registration Rights Agreement to be duly executed as of
the  date  first  written  above.

                                             COMPANY:
                                             --------

                                             CHARYS HOLDING COMPANY, INC.

                                             By:
                                                --------------------------------
                                             Name:   Billy V. Ray, Jr.
                                             Title:  Chief Executive Officer

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature  page  to this Registration Rights Agreement to be duly executed as of
the  date  first  written  above.

                                             BUYERS:
                                             -------

                                        GOTTBETTER CAPITAL FINANCE, LLC.

                                        By:
                                            ------------------------------------
                                        Name:   Michael W. Chorske
                                        Title:  President

                                        PCM II, LLC
                                            By: Prentice Capital Management, LP,
                                                as Manager

                                        By:
                                            ------------------------------------
                                            Name:   Michael Weiss
                                            Its:    Chief Financial Officer

                                        FORT MASON MASTER, LP

                                        By:
                                            ------------------------------------
                                            Name:   Dan German
                                            Title:  Managing Member, Fort Mason
                                                    Capital, LLC

                                        FORT MASON PARTNERS, LP

                                        By:
                                            ------------------------------------
                                            Name:   Dan German
                                            Title:  Managing Member, Fort Mason
                                                    Capital, LLC

                                       19
<PAGE>
                                        UBS O'CONNOR LLC, FBO O'CONNOR PIPES
                                        CORPORATE STRATEGIES MASTER LIMITED

                                        By:
                                            ------------------------------------
                                            Name:   Jeff Richmond
                                            Title:

                                        GCA STRATEGIC INVESTMENT FUND LIMITED

                                        By:
                                            ------------------------------------
                                            Name:   Lewis N. Lester
                                            Title:  Director

                                       20
<PAGE>
<TABLE>
<CAPTION>
                                          SCHEDULE OF BUYERS

                                                                           LEGAL REPRESENTATIVE'S
                                                ADDRESS AND                      ADDRESS AND
BUYER                                         FACSIMILE NUMBER                FACSIMILE NUMBER
-------------------------------------  ------------------------------  -------------------------------
<S>                                    <C>                             <C>
Gottbetter Capital Finance, LLC        488 Madison Avenue              Jason M. Rimland, Esq.
                                       12th Floor                      Gottbetter & Partners, LLP
                                       New York, NY 10022              488 Madison Avenue
                                       Facsimile: 212.400.6999         12th Floor
                                                                       New York, NY 10022
                                                                       Facsimile: 212.400.6901

PCM II, LLC                            623 Fifth Avenue, 32nd Fl.      Michael Weiss
                                       New York, NY 10022              Prentice Capital Management, LP
                                       Facsimile: (212) 756-1480       623 Fifth Avenue, 32nd Fl.
                                                                       New York, NY 10022
                                                                       Facsimile: (212) 756-1480

Fort Mason Master, LP                  Four Embarcadero Center, Suite  Marshall Jensen
                                       2050                            Fort Mason Capital, LLC
                                       San Francisco, CA   94111       Four Embarcadero Center,
                                       Facsimile: 415.288.8113         Suite 2050
                                                                       San Francisco, CA 94111
                                                                       Facsimile: 415 288-8113

Fort Mason Partners, LP                Four Embarcadero Center, Suite  Marshall Jensen
                                       2050                            Fort Mason Capital, LLC
                                       San Francisco, CA   94111       Four Embarcadero Center,
                                       Facsimile: 415.288.8113         Suite 2050
                                                                       San Francisco, CA 94111
                                                                       Facsimile: 415 288-8113

UBS O'Connor LLC,                      One North Wacker Drive,         Chuck Mathys, Esq.
FBO O'Connor PIPES Corporate           32nd Floor                      UBS O'Connor
Strategies Master Limited              Chicago, IL 60606               1 North Wacker
                                       Facsimile: 312-525-6271         Chicago, IL 60606
                                                                       Facsimile: 312-525-6271

GCA Strategic Investment Fund Limited  c/o Prime Management Limited    Lewis N. Lester
                                       Mechanics Building              GCA Strategic Investment Fund
                                       12 Church Street                Limited
                                       Hamilton HM II, Bermuda         c/o Prime Management Limited
                                                                       Mechanics Building
                                                                       12 Church Street
                                                                       Hamilton HM II, Bermuda
                                                                       Facsimile: 441-295-3926

------------------------------------------------------------------------------------------------------
</TABLE>

                                       21
<PAGE>
                                    EXHIBIT A
                         FORM OF NOTICE OF EFFECTIVENESS
                         -------------------------------
                            OF REGISTRATION STATEMENT
                            -------------------------

[Registrar  &  Transfer  Co.
10  Commerce  Drive
Cranford,  NJ  07016]

          Re:  Charys  Holding  Co.,  Inc.

Ladies  and  Gentlemen:

     [We  are][I  am]  counsel  to  Charys  Holding  Company,  Inc.,  a Delaware
corporation (the "Company"), and have represented the Company in connection with
that certain Securities Purchase Agreement (the "Securities Purchase Agreement")
entered  into  by  and  among  the  Company  and  the  buyers  named  therein
(collectively,  the  "Holders")  pursuant  to  which  the  Company issued to the
Holders  subordinated  secured  convertible notes (the "Notes") convertible into
the  Company's common stock, $0.001 par value (the "Common Stock"), and warrants
exercisable  for  shares  of  Common  Stock  (the  "Warrants").  Pursuant to the
Securities  Purchase  Agreement,  the  Company  has  entered into a Registration
Rights  Agreement  with  the  Holders  (the  "  Registration Rights Agreement ")
pursuant  to  which  the  Company  agreed,  among  other things, to register the
Registrable  Securities  (as  defined  in  the  Registration  Rights Agreement),
including  the  shares of Common Stock issuable upon conversion of the Notes and
the  shares  of  Common  Stock issuable upon exercise of the Warrants, under the
Securities  Act  of  1933,  as amended (the "1933 Act").  In connection with the
Company's obligations under the Registration Rights Agreement, on ___, 200_, the
Company  filed  a Registration Statement on Form SB-2 (File No.  333-___) (the "
Registration  Statement  ")  with  the  Securities  and Exchange Commission (the
"SEC") relating to the Registrable Securities which names each of the Holders as
a  selling  stockholder  thereunder.

     In  connection  with the foregoing, [we][I] advise you that a member of the
SEC's  staff has advised [us][me] by telephone that the SEC has entered an order
declaring  the  Registration  Statement effective under the 1933 Act at  [ ENTER
TIME  OF  EFFECTIVENESS ]  on  [ ENTER DATE OF EFFECTIVENESS ]  and [we][I] have
no  knowledge, after telephonic inquiry of a member of the SEC's staff, that any
stop  order suspending its effectiveness has been issued or that any proceedings
for  that  purpose  are  pending  before,  or  threatened  by,  the  SEC and the
Registrable  Securities  are available for resale under the 1933 Act pursuant to
the  Registration  Statement.

                                       22
<PAGE>
     This  letter  shall serve as our standing opinion to you that the shares of
Common Stock are freely transferable by the Holders pursuant to the Registration
Statement.  You  need  not  require further letters from us to effect any future
legend-free  issuance  or reissuance of shares of Common Stock to the Holders as
contemplated  by  the  Company's  Irrevocable  Transfer Agent Instructions dated
August  [    ],  2006.  This  letter  shall  serve  as our standing opinion with
regard  to  this  matter.

Very  truly  yours,

[ISSUER'S  COUNSEL]

CC:  [LIST  NAMES  OF  HOLDERS]

                                       23[FORM OF SENIOR SECURED CONVERTIBLE NOTE]

NEITHER  THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR  THE  SECURITIES  INTO  WHICH  THESE  SECURITIES  ARE  CONVERTIBLE HAVE BEEN
REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES  LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR  ASSIGNED  (I)  IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE  SECURITIES  UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS
NOT  REQUIRED  UNDER  SAID  ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A  UNDER  SAID  ACT.  NOTWITHSTANDING  THE  FOREGOING,  THE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT  SECURED  BY  THE  SECURITIES.  ANY  TRANSFEREE  OF THIS NOTE SHOULD
CAREFULLY  REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 20(a)
HEREOF.  THE  PRINCIPAL  AMOUNT  REPRESENTED  BY THIS NOTE AND, ACCORDINGLY, THE
SECURITIES  ISSUABLE  UPON  CONVERSION  HEREOF  MAY BE LESS THAN THE AMOUNTS SET
FORTH  ON  THE  FACE  HEREOF  PURSUANT  TO  SECTION  3(c)(iii)  OF  THIS  NOTE.

                          CHARYS HOLDING COMPANY, INC.
                        SENIOR SECURED CONVERTIBLE NOTE

Issuance Date:  August 31, 2006      Original Principal Amount:  U.S. $1,052,632

FOR  VALUE  RECEIVED,  Charys Holding Company, Inc., a Delaware corporation (the
"COMPANY"),  hereby  promises  to  pay to GOTTBETTER CAPITAL FINANCE, LLC or its
registered assigns ("HOLDER") the amount set out above as the Original Principal
Amount  (as  may be reduced pursuant to the terms hereof pursuant to redemption,
conversion  or  otherwise,  the "PRINCIPAL") when due, whether upon the Maturity
Date (as defined below), on any Installment Date with respect to the Installment
Amount  due  on such Installment Date, acceleration, redemption or otherwise (in
each  case in accordance with the terms hereof) and to pay interest ("INTEREST")
on  any outstanding Principal at a rate per annum equal to the Interest Rate (as
defined  below), from the date set out above as the Issuance Date (the "ISSUANCE
DATE") until the same becomes due and payable, whether upon an Interest Date (as
defined  below),  any  Installment  Date,  or  the  Maturity Date, acceleration,
conversion,  redemption  or otherwise (in each case in accordance with the terms
hereof).  This  Senior  Secured  Convertible  Note (including all Senior Secured
Convertible  Notes  issued  in  exchange,  transfer  or replacement hereof, this
"NOTE")  is  one of an issue of Senior Secured Convertible Notes issued pursuant
to  the  Securities  Purchase  Agreement  on the Closing Date (collectively, the
"NOTES"  and  such  other  Senior Secured Convertible Notes, the "OTHER NOTES").
Certain  capitalized  terms  used  herein  are  defined  in  Section  28.

1.     PAYMENTS  OF PRINCIPAL; MATURITY.  On each Installment Date commencing on
       --------------------------------
July  1,  2007,  the  Company  shall  pay  to  the Holder an amount equal to the
Installment  Amount

<PAGE>
due  on  such Installment Date in cash by wire transfer of immediately available
funds.  The  "MATURITY DATE" shall be August 30, 2008, as may be extended at the
option  of  the  Holder  (i)  in the event that, and for so long as, an Event of
Default  (as  defined  in Section 4(a)) shall have occurred and be continuing or
any  event  shall have occurred and be continuing which with the passage of time
and  the  failure  to cure would result in an Event of Default, and (ii) through
the  date that is ten (10) days after the consummation of a Change of Control in
the  event that a Change of Control is publicly announced or a Change of Control
Notice  (as  defined  in  Section 5(b)) is delivered prior to the Maturity Date.

2.     INTEREST;  INTEREST  RATE.
       -------------------------

     (a)     Interest  on this Note shall commence accruing on the Issuance Date
and shall be computed on the basis of a 360-day year and actual days elapsed and
shall  be payable in arrears for each Calendar Month during the period beginning
on  the  Issuance Date and ending on, and including, the Maturity Date (each, an
"INTEREST DATE") with the first Interest Date being September 1, 2006.  Interest
shall be payable on each Interest Date, to the record holder of this Note on the
applicable  Interest  Date,  in  cash  ("CASH  INTEREST").

     (b)     From  and after the occurrence of an Event of Default, the Interest
Rate  shall  be increased to fifteen percent (15%) per annum.  In the event that
such  Event  of Default is subsequently cured, the adjustment referred to in the
preceding  sentence  shall  cease  to  be effective as of the date of such cure;
provided  that  the  Interest  as  calculated  at such increased rate during the
continuance  of  such  Event  of  Default  shall continue to apply to the extent
relating  to  the days after the occurrence of such Event of Default through and
including  the  date  of  cure  of  such  Event  of  Default.

3.     CONVERSION  OF  NOTES.  This  Note  shall  be  convertible into shares of
       ---------------------
common stock of the Company, par value $0.001 per share (the "COMMON STOCK"), on
the  terms  and  conditions  set  forth  in  this  Section  3.

     (a)     Conversion  Right.  Subject  to  the provisions of Section 3(d), at
             -----------------
any time or times on or after the Issuance Date, the Holder shall be entitled to
convert  any portion of the outstanding and unpaid Conversion Amount (as defined
below)  into  fully  paid and nonassessable shares of Common Stock in accordance
with Section 3(c), at the Conversion Rate (as defined below).  The Company shall
not  issue  any fraction of a share of Common Stock upon any conversion.  If the
issuance  would result in the issuance of a fraction of a share of Common Stock,
the  Company  shall  round  such  fraction  of a share of Common Stock up to the
nearest  whole  share.  The  Company  shall  pay any and all transfer, stamp and
similar  taxes  that may be payable with respect to the issuance and delivery of
Common  Stock  upon  conversion  of  any  Conversion  Amount.

     (b)     Conversion  Rate.  The  number  of  shares of Common Stock issuable
             ----------------
upon  conversion  of  any  Conversion  Amount  pursuant to Section 3(a) shall be
determined  by  dividing  (x) such Conversion Amount by (y) the Conversion Price
then  in  effect  (the  "CONVERSION  RATE").

                                        2
<PAGE>
          (i)     "CONVERSION  AMOUNT"  means the portion of the Principal to be
     converted,  redeemed  or otherwise with respect to which this determination
     is  being  made.

          (ii)    "CONVERSION  PRICE"  means,  as  of  the  Issuance Date, $4.88
     initially,  which Conversion Price shall be subject to adjustment from time
     to  time in accordance with the terms set forth herein (including Section 7
     hereof)  and,  on  the nine (9) months anniversary of the Closing Date, the
     Conversion  Price  shall  be  reduced to an amount equal to one-half of the
     then-existing  Conversion  Price,  which  reduced Conversion Price shall be
     subject  to  further  adjustment  from  time to time in accordance with the
     terms  set  forth herein (including Section 7 hereof). The Conversion Price
     shall  also  be appropriately adjusted for any stock split, stock dividend,
     stock  combination  or  other  similar  transaction  that  proportionately
     decreases  or  increases  the  Common  Stock.

     (c)     Mechanics  of  Conversion.
             -------------------------

          (i)     Optional  Conversion.  To  convert  any Conversion Amount into
                  --------------------
shares  of  Common Stock on any date (a "CONVERSION DATE"), the Holder shall (A)
transmit  by  facsimile (or otherwise deliver), for receipt on or prior to 11:59
p.m., New York Time, on such date, a copy of an executed notice of conversion in
the  form  attached hereto as Exhibit I (the "CONVERSION NOTICE") to the Company
                              ---------
and  (B)  if  required  by Section 3(c)(iv), surrender this Note to a nationally
recognized  overnight  delivery  service  for  delivery  to  the  Company (or an
indemnification  undertaking  with respect to this Note in the case of its loss,
theft  or  destruction). On or before the next Trading Day following the date of
receipt  of  a  Conversion  Notice,  the  Company  shall transmit by facsimile a
confirmation of receipt of such Conversion Notice to the Holder and the Transfer
Agent.  On  or before the second (2nd) Trading Day following the date of receipt
of  a  Conversion  Notice (the "SHARE DELIVERY DATE"), the Company shall (1) (X)
provided  that  the  Transfer  Agent  is  participating  in  the  Fast Automated
Securities  Transfer  Program  of  DTC credit such aggregate number of shares of
Common  Stock  to  which  the  Holder  shall  be entitled to the Holder's or its
designee's  balance  account  with  DTC  through  its  Deposit  Withdrawal Agent
Commission  system  or (Y) if the Transfer Agent is not participating in the DTC
Fast  Automated Securities Transfer Program, issue and deliver to the address as
specified in the Conversion Notice, a certificate, registered in the name of the
Holder  or  its  designee, for the number of shares of Common Stock to which the
Holder  shall  be entitled, and (2) pay to the Holder in cash an amount equal to
the accrued and unpaid Interest on the Conversion Amount up to and including the
Conversion  Date.  If  this  Note  is  physically  surrendered for conversion as
required  by  Section  3(c)(iv)  and  the  outstanding Principal of this Note is
greater  than  the  Principal  portion of the Conversion Amount being converted,
then  the  Company shall as soon as practicable and in no event later than three
Business  Days  after  receipt  of  this  Note and at its own expense, issue and
deliver to the holder a new Note (in accordance with Section 18(d)) representing
the  outstanding  Principal  not  converted.  The  Person or Persons entitled to
receive the shares of Common Stock issuable upon a conversion of this Note shall
be  treated  for  all purposes as the record holder or holders of such shares of
Common  Stock  on  the Conversion Date.  In the event of a partial conversion of
this Note pursuant hereto, the principal amount converted shall be deducted from
the  Installment  Amounts  relating to the Installment Dates as set forth in the
Conversion  Notice.

                                        3
<PAGE>
          (ii)    Company's  Failure  to  Timely  Convert.  If  within three (3)
                  ---------------------------------------
Trading  Days  after the Company's receipt of the facsimile copy of a Conversion
Notice  the  Company shall fail to issue and deliver a certificate to the Holder
or  credit  the  Holder's  balance  account with DTC for the number of shares of
Common  Stock  to  which the Holder is entitled upon such Holder's conversion of
any  Conversion Amount (a "CONVERSION FAILURE"), and if on or after such Trading
Day  the  Holder  purchases  (in an open market transaction or otherwise) Common
Stock  to  deliver  in  satisfaction  of  a  sale  by the Holder of Common Stock
issuable  upon  such  conversion  that the Holder anticipated receiving from the
Company  (a  "BUY-IN"),  then  the Company shall, within three (3) Business Days
after  the  Holder's request and and in the Holder's sole discretion, either (i)
pay  cash  to the Holder in an amount equal to the Holder's total purchase price
(including  brokerage  commissions and other out-of-pocket expenses, if any) for
the shares of Common Stock so purchased (the "BUY-IN PRICE"), at which point the
Company's  obligation  to  deliver  such  certificate  (and to issue such Common
Stock)  shall terminate, or (ii) promptly honor its obligation to deliver to the
Holder a certificate or certificates representing such Common Stock and pay cash
to the Holder in an amount equal to the excess (if any) of the Buy-In Price over
the  product of (A) such number of shares of Common Stock, times (B) the Closing
Bid  Price  on  the  Conversion  Date.

          (iii)     Registration; Book-Entry.  The  Company  shall  maintain  a
                    ------------------------
register  (the "REGISTER") for the recordation of the names and addresses of the
holders  of the Notes and the principal amount of the Notes held by such holders
(the  "REGISTERED  NOTES").  The entries in the Register shall be conclusive and
binding  for all purposes absent manifest error.  The Company and the holders of
the  Notes shall treat each Person whose name is recorded in the Register as the
owner  of  a  Note for all purposes, including, without limitation, the right to
receive  payments of principal and interest hereunder, notwithstanding notice to
the  contrary.  A  Registered  Note  may be assigned or sold in whole or in part
only  by  registration  of  such  assignment  or sale on the Register.  Upon its
receipt  of  a request to assign or sell all or part of any Registered Note by a
Holder,  the  Company  shall  record  the  information  contained therein in the
Register  and  issue  one  or  more  new  Registered Notes in the same aggregate
principal  amount  as the principal amount of the surrendered Registered Note to
the  designated  assignee or transferee pursuant to Section 17.  Notwithstanding
anything  to  the  contrary  set forth herein, upon conversion of any portion of
this  Note in accordance with the terms hereof, the Holder shall not be required
to  physically surrender this Note to the Company unless (A) the full Conversion
Amount  represented  by  this  Note  is  being  converted  or (B) the Holder has
provided  the Company with prior written notice (which notice may be included in
a  Conversion  Notice)  requesting  physical surrender and reissue of this Note.
The  Holder  and  the  Company  shall  maintain  records  showing the Principal,
Interest  and  Late Charges converted and the dates of such conversions or shall
use such other method, reasonably satisfactory to the Holder and the Company, so
as  not  to  require  physical  surrender  of  this  Note  upon  conversion.

          (iv)     Pro  Rata Conversion; Disputes. In the event that the Company
                   ------------------------------
receives  a  Conversion  Notice  from more than one holder of Notes for the same
Conversion  Date and the Company can convert some, but not all, of such portions
of  the  Notes  submitted  for conversion, the Company, subject to Section 3(d),
shall convert from each holder of Notes electing to have Notes converted on such
date  a  pro  rata  amount  of  such holder's portion of its Notes submitted for
conversion  based  on  the principal amount of Notes submitted for conversion on
such  date  by

                                        4
<PAGE>
such  holder  relative  to the aggregate principal amount of all Notes submitted
for  conversion  on  such  date.  In  the event of a dispute as to the number of
shares of Common Stock issuable to the Holder in connection with a conversion of
this  Note, the Company shall issue to the Holder the number of shares of Common
Stock  not  in  dispute  and resolve such dispute in accordance with Section 23.

     (d)     Limitations  on  Conversions.
             ----------------------------

          (i)     Beneficial  Ownership.  The  Company  shall  not  effect  any
                  ---------------------
     conversion  of  this  Note,  and  the  Holder  of  this Note (including any
     successor,  transferee or assignee) shall not have the right to convert any
     portion  of  this  Note  pursuant to Section 3(a), to the extent that after
     giving  effect  to  such conversion, the Holder (together with the Holder's
     affiliates)  would  beneficially  own  in  excess  of  4.99%  (the "MAXIMUM
     PERCENTAGE")  of  the  number  of  shares  of  Common  Stock  outstanding
     immediately  after  giving  effect  to such conversion. For purposes of the
     foregoing sentence, the number of shares of Common Stock beneficially owned
     by  the  Holder  and  its  affiliates shall include the number of shares of
     Common  Stock  issuable  upon conversion of this Note with respect to which
     the  determination  of  such  sentence is being made, but shall exclude the
     number  of  shares  of  Common  Stock  which  would  be  issuable  upon (A)
     conversion of the remaining, nonconverted portion of this Note beneficially
     owned by the Holder or any of its affiliates and (B) exercise or conversion
     of  the  unexercised or nonconverted portion of any other securities of the
     Company  (including,  without  limitation,  any  Other  Notes  or warrants)
     subject  to  a  limitation  on  conversion  or  exercise  analogous  to the
     limitation  contained herein beneficially owned by the Holder or any of its
     affiliates.  Except as set forth in the preceding sentence, for purposes of
     this  Section  3(d)(i),  beneficial  ownership  shall  be  calculated  in
     accordance  with  Section  13(d) of the Securities Exchange Act of 1934, as
     amended. For purposes of this Section 3(d)(i), in determining the number of
     outstanding  shares  of  Common Stock, the Holder may rely on the number of
     outstanding  shares  of Common Stock as reflected in (x) the Company's most
     recent  Form  10-KSB, Form 10-K, Form 10-QSB, Form 10-Q or Form 8-K, as the
     case may be (y) a more recent public announcement by the Company or (z) any
     other  notice by the Company or the Transfer Agent setting forth the number
     of  shares  of Common Stock outstanding. For any reason at any time, during
     regular  business  hours of the Company and upon the written request of the
     Holder,  the  Company shall within two (2) Business Days confirm in writing
     to the Holder the number of shares of Common Stock then outstanding. In any
     case,  the number of outstanding shares of Common Stock shall be determined
     after  giving  effect  to  the  conversion or exercise of securities of the
     Company,  including  this  Note,  by the Holder or its affiliates since the
     date  as  of  which  such  number of outstanding shares of Common Stock was
     reported.  By  written  notice  to  the Company, the Holder may increase or
     decrease  the  Maximum Percentage to any other percentage specified in such
     notice; provided that (i) any such increase will not be effective until the
     sixty-first  (61st) day after such notice is delivered to the Company, (ii)
     any  such increase or decrease will apply only to the Holder and not to any
     other  holder  of  Notes  and  (iii)  and  in  no  case shall Holder or its
     Affiliates  acquire in excess of 9.999% of the outstanding shares of Common
     Stock  or  the  voting  power  of  the  Company.

                                        5
<PAGE>
4.     RIGHTS  UPON  EVENT  OF  DEFAULT.
       --------------------------------

     (a)     Event of Default.  Each of the following events shall constitute an
             ----------------
"Event  of  Default":

          (i)     the  failure of the applicable Registration Statement required
     to be filed pursuant to the Registration Rights Agreement to be filed on or
     prior  to  the  Filing  Deadline  (as  defined  in  the Registration Rights
     Agreement) or declared effective by the SEC on or prior to the date that is
     thirty (30) days after the applicable Effectiveness Deadline (as defined in
     the  Registration  Rights Agreement), or, while the applicable Registration
     Statement  is  required to be maintained effective pursuant to the terms of
     the  Registration  Rights  Agreement,  the  effectiveness of the applicable
     Registration  Statement  lapses  for  any  reason  (including,  without
     limitation,  the  issuance of a stop order) or is unavailable to any holder
     of  the  Notes  for sale of all of such holder's Registrable Securities (as
     defined  in the Registration Rights Agreement) in accordance with the terms
     of  the  Registration  Rights  Agreement,  and such lapse or unavailability
     continues  for  a  period  of ten (10) consecutive days or for more than an
     aggregate of thirty (30) days in any 365-day period (other than days during
     an  Allowable  Grace  Period  (as  defined  in  the  Registration  Rights
     Agreement));

          (ii)     the suspension from trading or failure of the Common Stock to
     be  listed on the Principal Market or on an Eligible Market for a period of
     five (5) consecutive Trading Days or for more than an aggregate of ten (10)
     Trading  Days  in  any  365-day  period;

          (iii)     the  Company's  (A)  failure to cure a Conversion Failure by
     delivery  of  the required number of shares of Common Stock within ten (10)
     Business Days after the applicable Conversion Date or (B) written notice to
     any holder of the Notes, including by way of public announcement or through
     any  of  its authorized agents, at any time, of its intention not to comply
     with a request for conversion of any Notes into shares of Common Stock that
     is  tendered  in  accordance  with  the  provisions  of  the  Notes;

          (iv)     at any time following the tenth consecutive Business Day that
     the  Holder's Authorized Share Allocation is less than the number of shares
     of  Common  Stock  that  the  Holder  would  be  entitled to receive upon a
     conversion  of four hundred percent (400%) of the full Conversion Amount of
     this  Note  (without  regard  to any limitations on conversion set forth in
     Section  3(d)  or  otherwise);

          (v)     the  Company's  failure  to  pay  to  the Holder any amount of
     Principal (including, without limitation or any redemption), Interest, Late
     Charges  or  other  amounts  when  and  as due under this Note or any other
     Transaction  Document  (as  defined  in the Securities Purchase Agreement),
     including  any Company Redemption Price or Redemption Premium in connection
     with  any  redemption  of  this  Note,  or  any  other agreement, document,
     certificate  or  other  instrument  delivered  in  connection  with  the
     transactions  contemplated  hereby  and  thereby  to  which the Holder is a
     party,  except,  in  the case of a failure to pay Interest and Late Charges
     when  and  as  due,  in  which  case  only

                                        6
<PAGE>
     if  such failure continues for a period of at least five (5) Business Days;

          (vi)     any  default  under,  redemption  of or acceleration prior to
     maturity  of any Indebtedness of the Company or any of its Subsidiaries (as
     defined  in  Section  3(a)  of  the  Securities  Purchase  Agreement);

          (vii)     the  Company  or  any  of  its  Subsidiaries, pursuant to or
     within  the meaning of Title 11, U.S. Code, or any similar Federal, foreign
     or  state  law  for the relief of debtors (collectively, "BANKRUPTCY LAW"),
     (A)  commences  a voluntary case, (B) consents to the entry of an order for
     relief  against  it in an involuntary case, (C) consents to the appointment
     of  a  receiver,  trustee,  assignee,  liquidator  or  similar  official (a
     "CUSTODIAN"),  (D)  makes  a  general  assignment  for  the  benefit of its
     creditors  or  (E) admits in writing that it is generally unable to pay its
     debts  as  they  become  due;

          (viii)     a court of competent jurisdiction enters an order or decree
     under  any Bankruptcy Law that (A) is for relief against the Company or any
     of its Subsidiaries in an involuntary case, (B) appoints a Custodian of the
     Company  or  any  of  its Subsidiaries or (C) orders the liquidation of the
     Company  or  any  of  its  Subsidiaries;

          (ix)     a  final  judgment  or  judgments  for  the  payment of money
     aggregating  in  excess of $250,000 are rendered against the Company or any
     of  its  Subsidiaries  and  which judgments are not, within sixty (60) days
     after  the  entry  thereof, bonded, discharged or stayed pending appeal, or
     are  not  discharged  within  sixty  (60) days after the expiration of such
     stay; provided, however, that any judgment which is covered by insurance or
     an  indemnity  from  a  credit  worthy  party  shall  not  be  included  in
     calculating  the  $250,000  amount  set  forth above so long as the Company
     provides  the  Holder  a  written  statement from such insurer or indemnity
     provider  (which  written statement shall be reasonably satisfactory to the
     Holder)  to  the  effect  that  such judgment is covered by insurance or an
     indemnity  and  the  Company will receive the proceeds of such insurance or
     indemnity  within  thirty  (30)  days  of  the  issuance  of such judgment;

          (x)     the Company breaches any representation, warranty, covenant or
     other term or condition of any Transaction Document, except, in the case of
     a  breach of a covenant which is curable, only if such breach continues for
     a  period  of  at  least  ten  (10)  consecutive  Business  Days;

          (xi)     any  breach  or  failure  in  any  respect to comply with (x)
     Section  15  of  this  Note or (y) any of the Potential Partner Conditions;

          (xii)     any  Event of Default (as defined in the Other Notes) occurs
     with  respect  to  any  Other  Notes;

          (xiii)     to  the knowledge of the Company, the SEC commencing either
     a  formal or informal investigation of the Company and/or its Subsidiaries,
     which  has  not  been  concluded  in  the  Company's favor within 120 days;

                                        7
<PAGE>
          (xiv)     the inability of the Common Stock to be transferred with DTC
     through  the  Deposit  Withdrawal  at  Custodian  system;  or

          (xv)     The Security Agreement (as defined in the Securities Purchase
     Agreement)  shall  for  any  reason  fail  or  cease  to create a valid and
     perfected  and,  except to the extent permitted by the terms thereof, first
     priority  lien  in  favor  of  the  Collateral  Agent  (as  defined  in the
     Securities  Purchase Agreement) for the benefit of the holders of the Notes
     on  any  Collateral  (as defined in the Security Agreement) purported to be
     covered  thereby.

     (b)     Redemption  Right.  Upon the occurrence of an Event of Default with
             -----------------
respect  to  this Note, the Company shall within two (2) Business Days after the
day on which the Company is aware of the Event of Default deliver written notice
thereof  via  facsimile  and overnight courier (an "EVENT OF DEFAULT NOTICE") to
the  Holder.  At  any time after the earlier of the Holder's receipt of an Event
of  Default  Notice  and  the  Holder becoming aware of an Event of Default, the
Holder  may  require  the  Company  to redeem all or any portion of this Note by
delivering  written notice thereof (the "Event of Default Redemption Notice") to
the Company, which Event of Default Redemption Notice shall indicate the portion
of this Note the Holder is electing to have redeemed.  Each portion of this Note
subject  to  redemption  by  the  Company pursuant to this Section 4(b) shall be
redeemed  by  the  Company at a price equal to the greater of (i) the product of
(x) the Conversion Amount to be redeemed and (y) the Redemption Premium and (ii)
the product of (A) the Conversion Rate with respect to such Conversion Amount in
effect at such time as the Holder delivers an Event of Default Redemption Notice
and  (B)  the  Closing  Sale  Price  of the Common Stock on the date immediately
preceding  such  Event  of  Default  (the  "EVENT OF DEFAULT REDEMPTION PRICE").
Redemptions  required  by this Section 4(b) shall be made in accordance with the
provisions  of  Section  12.  To the extent redemptions required by this Section
4(b)  are  deemed  or  determined  by  a  court  of competent jurisdiction to be
prepayments  of  the Note by the Company, such redemptions shall be deemed to be
voluntary  prepayments.  The  parties  hereto  agree  that  in  the event of the
Company's  redemption  of  any portion of this Note under this Section 4(b), the
Holder's  damages  would  be  uncertain and difficult to estimate because of the
parties'  inability  to predict future interest rates and the uncertainty of the
availability  of  a  suitable  substitute investment opportunity for the Holder.
Accordingly,  any  Redemption Premium due under this Section 4(b) is intended by
the  parties  to  be, and shall be deemed, a reasonable estimate of the Holder's
actual  loss  of  its  investment  opportunity  and  not  as  a  penalty.

5.     RIGHTS  UPON  FUNDAMENTAL  TRANSACTION  AND  CHANGE  OF  CONTROL.
       ----------------------------------------------------------------

     (a)     Assumption.  The  Company  shall  not  enter  into or be party to a
             ----------
Fundamental  Transaction unless (i)  the Successor Entity assumes in writing all
of  the  obligations  of  the  Company under this Note and the other Transaction
Documents  in  accordance  with  the provisions of this Section 5(a) pursuant to
written  agreements  in  form and substance satisfactory to the Required Holders
and  approved  by  the  Required  Holders prior to such Fundamental Transaction,
including  agreements  to  deliver  to each holder of Notes in exchange for such
Notes  a  security  of  the  Successor  Entity evidenced by a written instrument
substantially  similar  in  form  and substance to the Notes, including, without
limitation,  having  a principal amount and interest rate equal to the principal
amounts  and  the  interest  rates  of  the  Notes  held  by such holder, having

                                        8
<PAGE>
similar  conversion rights as the Notes and having similar ranking to the Notes,
and  satisfactory  to  the  Required  Holders  and  (ii)  the  Successor  Entity
(including  its  Parent  Entity)  is  a publicly traded corporation whose common
stock  is  quoted  on  or  listed  for  trading  on an Eligible Market. Upon the
occurrence  of  any  Fundamental Transaction, the Successor Entity shall succeed
to,  and be substituted for (so that from and after the date of such Fundamental
Transaction,  the provisions of this Note referring to the "Company" shall refer
instead  to the Successor Entity), and may exercise every right and power of the
Company  and  shall assume all of the obligations of the Company under this Note
with  the  same effect as if such Successor Entity had been named as the Company
herein.  Upon  consummation of the Fundamental Transaction, the Successor Entity
shall  deliver  to  the  Holder  confirmation  that  there  shall be issued upon
conversion  or redemption of this Note at any time after the consummation of the
Fundamental  Transaction,  in  lieu  of  the  shares  of  Common Stock (or other
securities,  cash, assets or other property) issuable upon the conversion of the
Notes  prior  to  such  Fundamental  Transaction, such shares of publicly traded
common  stock  (or  their  equivalent)  of  the Successor Entity, as adjusted in
accordance  with  the  provisions  of this Note.  The provisions of this Section
shall  apply  similarly  and  equally to successive Fundamental Transactions and
shall  be  applied  without  regard to any limitations on the conversion of this
Note.

     (b)     Change  of Control Redemption  Right.  No  sooner than fifteen (15)
             ------------------------------------
days  nor  later  than  ten  (10)  days prior to the consummation of a Change of
Control, but not prior to the public announcement of such Change of Control, the
Company shall deliver written notice thereof via facsimile and overnight courier
to  the  Holder  (a  "CHANGE OF CONTROL NOTICE").  At any time during the period
beginning  after  the  Holder's receipt of a Change of Control Notice and ending
ten  (10)  Trading  Days  after  the consummation of such Change of Control, the
Holder  may  require  the  Company  to redeem all or any portion of this Note by
delivering written notice thereof ("CHANGE OF CONTROL REDEMPTION NOTICE") to the
Company, which Change of Control Redemption Notice shall indicate the Conversion
Amount  the Holder is electing to be redeemed.  The portion of this Note subject
to  redemption  pursuant  to  this Section 5 shall be redeemed by the Company in
cash at a price equal to the greater of (i) the product of the Change of Control
Premium  and  the product of (x) the sum of the Conversion Amount being redeemed
and  any  accrued and unpaid Interest with respect to such Conversion Amount and
accrued  and  unpaid  Late  Charges  with  respect to such Conversion Amount and
Interest  and (y) the quotient determined by dividing (A) the Closing Sale Price
of  the  Common  Stock  immediately  following  the  public announcement of such
proposed  Change of Control by (B) the Conversion Price and (ii) 150% of the sum
of the Conversion Amount being redeemed and any accrued and unpaid Interest with
respect  to  such Conversion Amount subject to such Change of Control Redemption
and  accrued  and unpaid Late Charges with respect to such Conversion Amount and
Interest  (the  "CHANGE  OF CONTROL REDEMPTION PRICE").  Redemptions required by
this Section 5 shall be made in accordance with the provisions of Section 15 and
shall  have  priority to payments to shareholders in connection with a Change of
Control.  To  the extent redemptions required by this Section 5(b) are deemed or
determined  by  a court of competent jurisdiction to be prepayments of this Note
by  the  Company,  such redemptions shall be deemed to be voluntary prepayments.
Notwithstanding  anything to the contrary in this Section 5, until the Change of
Control  Redemption  Price (together with any interest thereon) is paid in full,
the  Conversion  Amount  submitted for redemption under this Section 5(c) may be
converted, in whole or in part, by the Holder into shares of Common Stock, or in
the  event  the  Conversion  Date  is  after  the

                                        9
<PAGE>
consummation  of  the  Change of Control, shares of publicly traded common stock
(or  their  equivalent)  of  the  Successor  Entity  pursuant to Section 3.  The
parties  hereto  agree  that  in  the  event  of the Company's redemption of any
portion  of  this  Note  under  this Section 5(b), the Holder's damages would be
uncertain and difficult to estimate because of the parties' inability to predict
future  interest  rates  and  the  uncertainty of the availability of a suitable
substitute  investment  opportunity for the Holder.  Accordingly, any redemption
premium  due under this Section 5(b) is intended by the parties to be, and shall
be  deemed,  a reasonable estimate of the Holder's actual loss of its investment
opportunity  and  not  as  a  penalty.

6.     RIGHTS  UPON  ISSUANCE  OF  PURCHASE  RIGHTS AND OTHER CORPORATE EVENTS.
       -----------------------------------------------------------------------

     (a)     Purchase  Rights.  If  at  any  time  the Company grants, issues or
             ----------------
sells any Options, Convertible Securities or rights to purchase stock, warrants,
securities  or  other  property  pro  rata to the record holders of any class of
Common  Stock  (the  "PURCHASE  RIGHTS"),  then  the  Holder will be entitled to
acquire,  upon  the  terms  applicable  to  such  Purchase Rights, the aggregate
Purchase  Rights which the Holder could have acquired if the Holder had held the
number  of  shares  of  Common Stock acquirable upon complete conversion of this
Note  (without  taking  into  account  any  limitations  or  restrictions on the
convertibility  of  this  Note) immediately before the date on which a record is
taken  for  the  grant, issuance or sale of such Purchase Rights, or, if no such
record  is taken, the date as of which the record holders of Common Stock are to
be  determined  for  the  grant,  issue  or  sale  of  such  Purchase  Rights.

     (b)     Other Corporate Events.  In addition to and not in substitution for
             ----------------------
any  other  rights  hereunder,  prior  to  the  consummation  of any Fundamental
Transaction  pursuant to which holders of shares of Common Stock are entitled to
receive  securities or other assets with respect to or in exchange for shares of
Common Stock (a "CORPORATE EVENT"), the Company shall make appropriate provision
to  insure  that  the  Holder  will  thereafter  have  the right to receive upon
conversion  of  this Note, at the Holder's option, (i) in addition to the shares
of Common Stock receivable upon such conversion, such securities or other assets
to  which  the  Holder  would  have been entitled with respect to such shares of
Common  Stock  had  such shares of Common Stock been held by the Holder upon the
consummation  of  such  Corporate  Event  (without  taking  into  account  any
limitations  or restrictions on the convertibility of this Note) or (ii) in lieu
of  the  shares  of Common Stock otherwise receivable upon such conversion, such
securities  or other assets received by the holders of shares of Common Stock in
connection  with the consummation of such Corporate Event in such amounts as the
Holder  would  have been entitled to receive had this Note initially been issued
with  conversion rights for the form of such consideration (as opposed to shares
of  Common  Stock) at a conversion rate for such consideration commensurate with
the Conversion Rate.  Provision made pursuant to the preceding sentence shall be
in a form and substance satisfactory to the Required Holders.  The provisions of
this  Section  shall  apply similarly and equally to successive Corporate Events
and  shall  be  applied  without  regard to any limitations on the conversion or
redemption  of  this  Note.

7.     RIGHTS  UPON  ISSUANCE  OF  OTHER  SECURITIES.
       ---------------------------------------------

     (a)     Adjustment  of  Conversion Price upon Issuance of Common Stock.  If
             --------------------------------------------------------------
at any time

                                       10
<PAGE>
after  the Subscription Date, the Company issues or sells, or in accordance with
this  Section  7(a) is deemed to have issued or sold, any shares of Common Stock
(including  the  issuance  or sale of shares of Common Stock owned or held by or
for  the  account of the Company, but excluding shares of Common Stock deemed to
have  been  issued  or  sold  by  the  Company  in  connection with any Excluded
Security)  for  a consideration per share (the "NEW ISSUANCE PRICE") less than a
price  (the  "APPLICABLE  PRICE")  equal  to  the  Conversion  Price  in  effect
immediately  prior  to such issue or sale (the foregoing a "DILUTIVE ISSUANCE"),
then  immediately  after  such  Dilutive  Issuance, the Conversion Price then in
effect  shall be reduced to the New Issuance Price.  For purposes of determining
the  adjusted  Conversion  Price under this Section 7(a), the following shall be
applicable:

          (i)     Issuance  of  Options.  If the Company in any manner grants or
                  ---------------------
     sells  any  Options  and  the lowest price per share for which one share of
     Common  Stock  is  issuable  upon  the  exercise of any such Option or upon
     conversion  or  exchange or exercise of any Convertible Securities issuable
     upon exercise of such Option is less than the Applicable Price, then all of
     such  shares  of  Common Stock underlying such Option shall be deemed to be
     outstanding  and to have been issued and sold by the Company at the time of
     the  granting or sale of such Option for such price per share. For purposes
     of this Section 7(a)(i), the "lowest price per share for which one share of
     Common  Stock  is  issuable  upon  the  exercise of any such Option or upon
     conversion  or  exchange or exercise of any Convertible Securities issuable
     upon  exercise  of  such  Option"  shall  be equal to the sum of the lowest
     amounts  of  consideration  (if  any) received or receivable by the Company
     with  respect to any one share of Common Stock upon granting or sale of the
     Option,  upon  exercise  of  the  Option and upon conversion or exchange or
     exercise of any Convertible Security issuable upon exercise of such Option.
     No further adjustment of the Conversion Price shall be made upon the actual
     issuance  of  such  share of Common Stock or of such Convertible Securities
     upon  the  exercise  of  such  Options  or upon the actual issuance of such
     Common  Stock  upon  conversion or exchange or exercise of such Convertible
     Securities.

          (ii)     Issuance  of  Convertible  Securities.  If the Company in any
                   -------------------------------------
     manner  issues or sells any Convertible Securities and the lowest price per
     share  for which one share of Common Stock is issuable upon such conversion
     or exchange or exercise thereof is less than the Applicable Price, then all
     share  of  Common  Stock  issuable  upon  conversion  of  such  Convertible
     Securities  shall  be  deemed to be outstanding and to have been issued and
     sold by the Company at the time of the issuance or sale of such Convertible
     Securities  for  such  price  per  share.  For the purposes of this Section
     7(a)(ii),  the  "lowest price per share for which one share of Common Stock
     is issuable upon such conversion or exchange or exercise" shall be equal to
     the  sum  of  the  lowest  amounts  of  consideration  (if any) received or
     receivable  by  the  Company  with respect to any one share of Common Stock
     upon  the  issuance  or  sale  of  the  Convertible  Security  and upon the
     conversion or exchange or exercise of such Convertible Security. No further
     adjustment  of  the Conversion Price shall be made upon the actual issuance
     of  such  share  of Common Stock upon conversion or exchange or exercise of
     such  Convertible  Securities,  and  if  any  such  issue  or  sale of such
     Convertible  Securities  is  made  upon  exercise  of any Options for which
     adjustment  of  the Conversion Price had been or are to be made pursuant to
     other

                                       11
<PAGE>
     provisions  of  this  Section 7(a), no further adjustment of the Conversion
     Price  shall  be  made  by  reason  of  such  issue  or  sale.

          (iii)     Change  in  Option  Price  or  Rate  of  Conversion.  If the
                    ---------------------------------------------------
     purchase  price  provided for in any Options, the additional consideration,
     if  any,  payable  upon  the issue, conversion, exchange or exercise of any
     Convertible Securities, or the rate at which any Convertible Securities are
     convertible into or exchangeable or exercisable for Common Stock changes at
     any  time,  the Conversion Price in effect at the time of such change shall
     be adjusted to the Conversion Price which would have been in effect at such
     time  had  such Options or Convertible Securities provided for such changed
     purchase price, additional consideration or changed conversion rate, as the
     case may be, at the time initially granted, issued or sold. For purposes of
     this  Section 7(a)(iii), if the terms of any Option or Convertible Security
     that  was outstanding as of the Subscription Date are changed in the manner
     described  in  the  immediately  preceding  sentence,  then  such Option or
     Convertible  Security  and  the Common Stock deemed issuable upon exercise,
     conversion  or  exchange  thereof shall be deemed to have been issued as of
     the  date  of  such  change. No adjustment shall be made if such adjustment
     would  result  in  an  increase  of  the  Conversion  Price then in effect.

          (iv)     Calculation of Consideration Received.  In case any Option is
                   -------------------------------------
     issued  in  connection  with  the  issue or sale of other securities of the
     Company,  together  comprising  one  integrated  transaction  in  which  no
     specific consideration is allocated to such Options by the parties thereto,
     the  Options  will  be deemed to have been issued for such consideration as
     determined  in  good faith by the Board of Directors of the Company. If any
     Common  Stock,  Options  or  Convertible  Securities  are issued or sold or
     deemed  to  have  been  issued or sold for cash, the consideration received
     therefor  will  be  deemed  to  be  the  net amount received by the Company
     therefor. If any Common Stock, Options or Convertible Securities are issued
     or  sold  for  a  consideration  other  than  cash,  the  amount  of  the
     consideration  other  than  cash  received  by the Company will be the fair
     value  of  such  consideration  as determined in good faith by the Board of
     Directors  of  the  Company,  except  where  such consideration consists of
     publicly  traded  securities,  in  which  case  the amount of consideration
     received  by  the  Company  will be the Closing Sale Price of such publicly
     traded  securities  on the date of receipt. If any Common Stock, Options or
     Convertible Securities are issued to the owners of the non-surviving entity
     in connection with any merger in which the Company is the surviving entity,
     the amount of consideration therefor will be deemed to be the fair value of
     such  portion of the net assets and business of the non-surviving entity as
     is attributable to such Common Stock, Options or Convertible Securities, as
     the  case  may  be.  The fair value of any consideration other than cash or
     publicly  traded  securities  will be determined jointly by the Company and
     the  Required Holders. If such parties are unable to reach agreement within
     ten  (10)  days  after  the occurrence of an event requiring valuation (the
     "VALUATION EVENT"), the fair value of such consideration will be determined
     within  five  (5) Business Days after the tenth day following the Valuation
     Event  by  an  independent,  reputable  appraiser  jointly  selected by the
     Company and the Required Holders. The determination of such appraiser shall
     be  deemed  binding upon all parties absent manifest error and the fees and
     expenses  of  such  appraiser  shall  be  borne  by  the  Company.

                                       12
<PAGE>
          (v)     Record  Date.  If the Company takes a record of the holders of
                  ------------
     Common Stock for the purpose of entitling them (A) to receive a dividend or
     other  distribution  payable  in  Common  Stock,  Options or in Convertible
     Securities  or  (B)  to  subscribe for or purchase Common Stock, Options or
     Convertible Securities, then such record date will be deemed to be the date
     of the issue or sale of the Common Stock deemed to have been issued or sold
     upon  the  declaration  of  such  dividend  or  the  making  of  such other
     distribution  or  the date of the granting of such right of subscription or
     purchase,  as  the  case  may  be.

     (b)     Adjustment  of  Conversion Price upon Subdivision or Combination of
             -------------------------------------------------------------------
Common  Stock.  If  the  Company  at  any time on or after the Subscription Date
-------------
subdivides  (by  any stock split, stock dividend, recapitalization or otherwise)
one  or  more  classes  of its outstanding shares of Common Stock into a greater
number  of  shares,  the  Conversion  Price  in effect immediately prior to such
subdivision  will  be proportionately reduced.  If the Company at any time on or
after  the  Subscription  Date  combines (by combination, reverse stock split or
otherwise)  one or more classes of its outstanding shares of Common Stock into a
smaller  number  of  shares, the Conversion Price in effect immediately prior to
such  combination  will  be  proportionately  increased.

     (c)     Other  Events.  If any event occurs of the type contemplated by the
             -------------
provisions  of  this Section 7 but not expressly provided for by such provisions
(including,  without  limitation,  the  granting  of  stock appreciation rights,
phantom  stock  rights or other rights with equity features), then the Company's
Board  of  Directors will make an appropriate adjustment in the Conversion Price
so as to protect the rights of the Holder under this Note; provided that no such
adjustment  will  increase the Conversion Price as otherwise determined pursuant
to  this  Section  7.

8.     COMPANYRIGHT  OFREDEMPTION.
       --------------------------

     (a)     General.  For  as  long  as no Event of Default has occurred and is
             -------
continuing, the Company at its option shall have the right to redeem, with three
(3)  Business  Days  advance written notice (the "COMPANY REDEMPTION NOTICE"), a
portion or all of the outstanding principal of the Note.  The Holder may convert
this  Note after the Company Redemption Notice is received up until such time as
the  Company  Redemption  Price is received by the Holder.  The redemption price
shall  be  one  hundred  twenty  percent (120%) of the face amount redeemed plus
accrued  interest  until  the nine (9) month anniversary of the Closing Date and
one  hundred  forty  percent (140%) of the face thereafter plus accrued interest
(the  "COMPANY REDEMPTION PRICE").  The Company shall pay the Company Redemption
Price  on all payments made pursuant to this Note (except to the extent a higher
redemption  price  is  due  in  connection with an Event of Default or Change of
Control,  in  which  case  such  higher  redemption  price  shall be paid by the
Company),  including  payments  made before, on, or after the Maturity Date.  It
shall  be  an Event of Default if the Company does not timely redeem the portion
of this Note elected to be redeemed pursuant to a Company Redemption Notice and,
thereafter,  the Holder shall be able to exercise all of its rights and remedies
hereunder  upon an Event of Default, including the right to accelerate this Note
and  cause this Note to be redeemed in full pursuant to Section 4(b) hereof. For
all payments under this Note, the payment of the Company Redemption Price by the

                                       13
<PAGE>
Company  shall  be  in  addition  to  any  accrued  interest  due.

     (b)     Mechanics  of  Company Redemption.  If the Company elects to redeem
             ---------------------------------
the  Note in accordance with Section 8(a), then the Company Redemption Price, if
any,  which  is  to  be  paid  to the Holder, shall be paid, by wire transfer of
immediately  available  funds,  an  amount  in cash equal to 100% of the Company
Redemption  Price.  If  the Company fails to redeem the Company Redemption Price
on  such  date,  then  at  the option of the Holder designated in writing to the
Company  (any  such designation, "CONVERSION NOTICE" for purposes of this Note),
the  Holder  may  require  the Company to convert all or any part of the Company
Redemption  Price at the Conversion Price.  Conversions required by this Section
8(b)  shall  be  made  in  accordance  with  the  provisions  of  Section  3(c).
Notwithstanding  anything  to  the contrary in this Section 8(b), but subject to
Section  3(d),  until  the  Company Redemption Price (together with any interest
thereon)  is  paid  in  full,  the  Company  Redemption Price (together with any
interest  thereon)  may  be  converted,  in whole or in part, by the Holder into
Common  Stock  pursuant  to  Section  3.

     (c)     Pro Rata Redemption  Requirement.  If the Company elects to convert
             --------------------------------
any  Conversion  Amount  of  this  Note  pursuant  to Section 8(a), then it must
simultaneously  take  the same action in the same proportion with respect to the
Other  Notes.

     (d)     Upon  the  occurrence  of  a  Financing Transaction, the Holder may
require  the  Company  to  redeem  all or any portion of this Note by delivering
written  notice  thereof  (the "FINANCING TRANSACTION REDEMPTION NOTICE") to the
Company,  which  Financing  Transaction  Redemption  Notice  shall  indicate the
portion  of  this  Note  the Holder is electing to redeem.  Each portion of this
Note subject to redemption by the Company pursuant to this Section 8(d) shall be
redeemed  by  the  Company  at  a  price  equal  to  the then-applicable Company
Redemption  Price.  Redemptions  required  by this Section 8(d) shall be made in
accordance  with  the  provisions  of  Section  12.

     (e)     Upon the nine month anniversary of the Closing Date, the Holder may
require  the  Company  to  redeem  all or any portion of this Note by delivering
written  notice  thereof  (the  "NINE  MONTH REDEMPTION NOTICE") to the Company,
which  Nine  Month Redemption Notice shall indicate the portion of this Note the
Holder  is  electing  to  be  redeemed.  Each  portion  of  this Note subject to
redemption by the Company pursuant to this Section 8(e) shall be redeemed by the
Company  at a price equal to the Company Redemption Price.  Redemptions required
by  this Section 8(e) shall be made in accordance with the provisions of Section
12.

9.     SECURITY.  This Note and the Other Notes are secured to the extent and in
       --------
the  manner  set  forth  in the Security Documents (as defined in the Securities
Purchase  Agreement).

10.     NONCIRCUMVENTION.  The  Company  hereby  covenants  and  agrees that the
        ----------------
Company  will  not,  by  amendment  of  its Articles of Incorporation, Bylaws or
through any reorganization, transfer of assets, consolidation, merger, scheme of
arrangement,  dissolution,  issue  or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of  this  Note,  and  will  at  all  times  in  good  faith carry out all of the
provisions  of  this  Note  and take all reasonable action as may be required to
protect  the  rights  of  the  Holder  of  this  Note.

                                       14
<PAGE>
11.     RESERVATION  OF  AUTHORIZED  SHARES.
        -----------------------------------

     (a)     Reservation.  The  Company  initially  shall  reserve  out  of  its
             -----------
authorized and unissued Common Stock a number of shares of Common Stock for each
of the Notes equal to 175% of the Conversion Rate with respect to the Conversion
Amount  of  each such Note as of the Issuance Date.  So long as any of the Notes
are outstanding, the Company shall take all action necessary to reserve and keep
available  out  of  its  authorized  and  unissued  Common Stock, solely for the
purpose  of  effecting the conversion of the Notes, 175% of the number of shares
of Common Stock as shall from time to time be necessary to effect the conversion
of  all of the Notes then outstanding; provided that at no time shall the number
of shares of Common Stock so reserved be less than the number of shares required
to  be  reserved  pursuant  to  the  previous  sentence  (without  regard to any
limitations on conversions) (the "REQUIRED RESERVE AMOUNT").  The initial number
of  shares  of  Common  Stock  reserved  for  conversions  of the Notes and each
increase  in  the number of shares so reserved shall be allocated pro rata among
the holders of the Notes based on the principal amount of the Notes held by each
holder  at  the  Closing  (as  defined  in the Securities Purchase Agreement) or
increase  in  the number of reserved shares, as the case may be (the "AUTHORIZED
SHARE ALLOCATION").  In the event that a holder shall sell or otherwise transfer
any  of  such  holder's  Notes,  each  transferee  shall be allocated a pro rata
portion  of  such  holder's  Authorized  Share Allocation.  Any shares of Common
Stock  reserved and allocated to any Person which ceases to hold any Notes shall
be  allocated to the remaining holders of Notes, pro rata based on the principal
amount  of  the  Notes  then  held  by  such  holders.

     (b)     Insufficient  Authorized  Shares.  If  at any time while any of the
             --------------------------------
Notes  remain  outstanding  the  Company  does  not  have a sufficient number of
authorized  and  unreserved  shares of Common Stock to satisfy its obligation to
reserve for issuance upon conversion of the Notes at least a number of shares of
Common  Stock  equal  to  the  Required  Reserve  Amount  (an  "AUTHORIZED SHARE
FAILURE"),  then  the  Company  shall  immediately  take all action necessary to
increase the Company's authorized shares of Common Stock to an amount sufficient
to  allow  the Company to reserve the Required Reserve Amount for the Notes then
outstanding.  Without limiting the generality of the foregoing sentence, as soon
as  practicable after the date of the occurrence of an Authorized Share Failure,
but  in  no  event  later than forty-five (45) days after the occurrence of such
Authorized  Share  Failure, the Company shall hold a meeting of its shareholders
for  the  approval  of  an increase in the number of authorized shares of Common
Stock.  In  connection  with  such  meeting,  the  Company  shall  provide  each
shareholder with a proxy or information statement and shall use its best efforts
to  solicit  its shareholders' approval of such increase in authorized shares of
Common  Stock  and  to  cause  its  board  of  directors  to  recommend  to  the
shareholders  that  they  approve  such  proposal.

12.     HOLDER'S  REDEMPTIONS.  (a)  The  Company  shall  deliver the applicable
        ---------------------
Event  of  Default  Redemption Price to the Holder within five (5) Business Days
after  the Company's receipt of the Holder's Event of Default Redemption Notice.
If  the Holder has submitted a Change of Control Redemption Notice in accordance
with  Section  5(b),  the Company shall deliver the applicable Change of Control
Redemption Price to the Holder concurrently with the consummation of such Change
of  Control  if such notice is received prior to the consummation of such Change
of Control and within five (5) Business Days after the Company's receipt of such
notice otherwise. If the Holder has submitted a Financing Transaction Redemption
Notice  or  a

                                       15
<PAGE>
Nine  Month  Redemption Notice, the Company shall deliver the applicable Company
Redemtion  Price  within  five  (5) Business Days after the Company's receipt of
such  notice.  In  the  event of a redemption of less than all of the Conversion
Amount of this Note, the Company shall promptly cause to be issued and delivered
to  the  Holder  a  new Note (in accordance with Section 18(d)) representing the
outstanding  Principal  which  has  not  been  redeemed.  In  the event that the
Company  does  not  pay the applicable Redemption Price to the Holder within the
time  period  required,  at  any time thereafter and until the Company pays such
unpaid  Redemption  Price  in full, the Holder shall have the option, in lieu of
redemption,  to  require the Company to promptly return to the Holder all or any
portion  of  this Note representing the Conversion Amount that was submitted for
redemption and for which the applicable Redemption Price (together with any Late
Charges  thereon) has not been paid.  Upon the Company's receipt of such notice,
(x) the applicable Redemption Notice shall be null and void with respect to such
Conversion  Amount, (y) the Company shall immediately return this Note, or issue
a new Note (in accordance with Section 18(d)) to the Holder representing the sum
of  such  Conversion  Amount  to  be  redeemed  together with accrued and unpaid
Interest  with  respect  to  such  Conversion Amount and accrued and unpaid Late
Charges  with  respect  to  such  Conversion  Amount  and  Interest  and (z) the
Conversion  Price of this Note or such new Notes shall be adjusted to the lesser
of  (A)  the  Conversion  Price as in effect on the date on which the applicable
Redemption  Notice  is  voided  and  (B) the lowest Closing Bid Price during the
period  beginning  on  and including the date on which the applicable Redemption
Notice is delivered to the Company and ending on and including the date on which
the  applicable  Redemption Notice is voided.  The Holder's delivery of a notice
voiding  a  Redemption  Notice  and exercise of its rights following such notice
shall  not affect the Company's obligations to make any payments of Late Charges
which  have  accrued  prior  to  the  date  of  such  notice with respect to the
Conversion  Amount  subject  to  such  notice.

     (b)     Redemption  by Other Holders.  Upon the Company's receipt of notice
             ----------------------------
from  any  of  the  holders  of the Other Notes for redemption or repayment as a
result  of  an  event  or  occurrence  substantially  similar  to  the events or
occurrences  described  in  Section  4(b)  or  Section  5(b)  (each,  an  "OTHER
REDEMPTION  NOTICE"),  the  Company shall immediately, but no later than one (1)
Business  Day  of its receipt thereof, forward to the Holder by facsimile a copy
of  such  notice.  If  the  Company receives a Redemption Notice and one or more
Other  Redemption Notices, during the seven (7) Business Day period beginning on
and  including  the date which is three (3) Business Days prior to the Company's
receipt  of  the Holder's Redemption Notice and ending on and including the date
which  is  three  (3)  Business Days after the Company's receipt of the Holder's
Redemption  Notice  and  the Company is unable to redeem all principal, interest
and other amounts designated in such Redemption Notice and such Other Redemption
Notices  received  during  such  seven (7) Business Day period, then the Company
shall  redeem  a  pro  rata  amount from each holder of the Notes (including the
Holder)  based  on  the  principal  amount of the Notes submitted for redemption
pursuant to such Redemption Notice and such Other Redemption Notices received by
the  Company  during  such  seven  (7)  Business  Day  period.

13.     RESTRICTION  ON  REDEMPTION  AND CASH DIVIDENDS.  Until all of the Notes
        -----------------------------------------------
have  been  converted,  redeemed or otherwise satisfied in accordance with their
terms,  the  Company  shall  not,  directly or indirectly, redeem, repurchase or
declare  or  pay  any cash dividend or distribution on its capital stock without
the  prior  express  written  consent  of  the  Required  Holders.

                                       16
<PAGE>
14.     VOTING  RIGHTS.  The Holder shall have no voting rights as the holder of
        --------------
this  Note,  except as required by law, including but not limited to Section 212
of the Delaware General Corporation Law, and as expressly provided in this Note.

15.     COVENANTS.
        ---------

     (a)     Rank.  All  payments due under this Note shall rank pari passu with
             ----
all  Other  Notes  and no other Indebtedness of the Company and its Subsidiaries
shall  be senior to the Indebtedness of the Company and its Subsidiary evidenced
by  the  Note  and  the  Other  Notes.

     (b)     Incurrence  of  Indebtedness.  So long as this Note is outstanding,
             ----------------------------
the  Company shall not, and the Company shall not permit any of its Subsidiaries
to,  directly  or  indirectly, incur or guarantee, assume or suffer to exist any
Indebtedness,  other  than  (i)  the Indebtedness evidenced by this Note and the
Other  Notes  and  (ii)  Permitted  Indebtedness.

     (c)     Existence  of  Liens.  So  long  as  this  Note is outstanding, the
             --------------------
Company  shall not, and the Company shall not permit any of its Subsidiaries to,
directly  or  indirectly,  allow  or suffer to exist any mortgage, lien, pledge,
charge, security interest or other encumbrance upon or in any property or assets
(including  accounts  and  contract  rights)  owned by the Company or any of its
Subsidiaries  (collectively,  "LIENS")  other  than  Permitted  Liens.

     (d)     Restricted  Payments.  The Company shall not, and the Company shall
             --------------------
not  permit any of its Subsidiaries to, directly or indirectly, redeem, defease,
repurchase,  repay or make any payments in respect of, by the payment of cash or
cash  equivalents (in whole or in part, whether by way of open market purchases,
tender  offers,  private  transactions  or otherwise), all or any portion of any
Permitted Indebtedness, whether by way of payment in respect of principal of (or
premium,  if  any) or interest on, such Indebtedness if at the time such payment
is  due  or  is otherwise made or, after giving effect to such payment, an event
constituting,  or  that  with  the passage of time and without being cured would
constitute,  an  Event  of  Default  has  occurred  and  is  continuing.

     (e)     Sales  of Equity Securities.  Except for any issuance of Securities
             ---------------------------
in  accordance  with the Transaction Documents or as set forth on Schedule 18(e)
                                                                  --------------
attached  hereto,  the  Company  will  not, directly or indirectly, offer, sell,
grant  any  option  to purchase, or otherwise dispose of (or announce any offer,
sale, grant or any option to purchase or other disposition of) any of its equity
or  Common  Stock Equivalents (as defined in the Securities Purchase Agreement),
including  without  limitation  any debt, preferred stock or other instrument or
security  that  is,  at  any  time  during its life and under any circumstances,
convertible  into  or exchangeable or exercisable for shares of common equity of
the  Company,  without  the  prior  written  consent  of  the  Required Holders.

     (f)     Subsidiary  Internal  Accounting Controls.  So long as this Note is
             -----------------------------------------
outstanding,  the  Company  and  each of its Subsidiaries shall maintain, in all
material  respects, a system of internal accounting controls consistent with the
Internal  Accounting Controls (as defined in the Securities Purchase Agreement).

                                       17
<PAGE>
     (g)     Dispositions.  So  long  as  any  Obligations  are outstanding, the
             ------------
Company  shall not, and the Company shall not permit any of its Subsidiaries to,
convey,  sell,  lease  or sublease, transfer or otherwise dispose of, whether in
one  transaction  or  a  series  of related transactions, all or any part of its
business,  property or assets, whether now owned or hereafter acquired (or agree
to  do  any  of  the  foregoing);  provided,  however,  that the Company and its
Subsidiaries  may  (i)  sell  inventory in the ordinary course of business, (ii)
dispose of obsolete or worn-out equipment in the ordinary course of business and
(iii)  dispose  of  the  non-core  assets  set forth on  Schedule 15(g)  hereto.
                                                         --------------

     (h)     Additional  Collateral  Security.  The  Company  shall  cause  each
             --------------------------------
Subsidiary  of  the  Company  or  any  such  Subsidiary  not in existence on the
Issuance  Date,  to  execute and deliver to the Collateral Agent promptly and in
any  event  within  five  (5)  Business Days after the formation, acquisition or
change  in  status  thereof  (i)  a  Security  Agreement  and  (ii)  such  other
agreements, instruments, approvals, legal opinions or other documents reasonably
requested  by  the  Collateral  Agent in order to create, perfect, establish the
first  priority  of  (subject  to Permitted Liens) or otherwise protect any Lien
purported  to  be  covered by any such Security Agreement or otherwise to effect
the  intent  that  such  Subsidiary  shall  become  bound  by  all of the terms,
covenants  and  agreements  contained in the this Note and that all property and
assets  of  such  Subsidiary  shall  become  Collateral  for  the  Obligations.

16.     VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES.  The affirmative vote at a
        --------------------------------------------
meeting duly called for such purpose or the written consent without a meeting of
the  Required Holders shall be required for any change or amendment to this Note
or  the Other Notes.  In no event shall any amendment, modification or waiver be
made  to  this  Note which would adversely affect the Holder without the written
consent  of  the  Holder.

17.     TRANSFER.  The Holder acknowledges and agrees that this Note may only be
        --------
offered,  sold, assigned or transferred by the Holder without the consent of the
Company, provided that the provisions of Section 2(f) of the Securities Purchase
Agreement  are  complied  with  in  all  respects.

18.     REISSUANCE  OF  THIS  NOTE.
        --------------------------

     (a)     Transfer.  If  this  Note  is  to  be transferred, the Holder shall
             --------
surrender  this  Note to the Company, whereupon the Company will issue, promptly
following  the  satisfaction of the provisions of Section 2(f) of the Securities
Purchase  Agreement,  and  deliver  upon  the order of the Holder a new Note (in
accordance with Section 18(d)), in the name of the validly registered assigns or
transferee,  representing  the  outstanding  Principal  being transferred by the
Holder  and, if less then the entire outstanding Principal is being transferred,
a  new  Note  (in  accordance with Section 18(d)) to the Holder representing the
outstanding  Principal  not  being transferred.  The Holder and any assignee, by
acceptance of this Note, acknowledge and agree that, by reason of the provisions
of  Section 3(c)(iii) and this Section 18(a), following conversion or redemption
of  any portion of this Note, the outstanding Principal represented by this Note
may  be  less  than  the  Principal  stated  on  the  face  of  this  Note.

                                       18
<PAGE>
     (b)     Lost,  Stolen  or  Mutilated  Note.  Upon receipt by the Company of
             ----------------------------------
evidence  reasonably satisfactory to the Company of the loss, theft, destruction
or  mutilation  of this Note, and, in the case of loss, theft or destruction, of
any  indemnification  undertaking by the Holder to the Company in customary form
and,  in  the  case of mutilation, upon surrender and cancellation of this Note,
the  Company  shall  execute and deliver to the Holder a new Note (in accordance
with  Section  18(d))  representing  the  outstanding  Principal.

     (c)     Note  Exchangeable  for  Different  Denominations.  This  Note  is
             -------------------------------------------------
exchangeable, upon the surrender hereof by the Holder at the principal office of
the  Company,  for  a new Note or Notes (in accordance with Section 18(d) and in
principal  amounts  of  at  least  $100,000)  representing  in the aggregate the
outstanding  Principal  of this Note, and each such new Note will represent such
portion of such outstanding Principal as is designated by the Holder at the time
of  such  surrender.

     (d)     Issuance of New Notes.  Whenever the Company is required to issue a
             ---------------------
new  Note pursuant to the terms of this Note, such new Note (i) shall be of like
tenor with this Note, (ii) shall represent, as indicated on the face of such new
Note,  the  Principal  remaining outstanding (or in the case of a new Note being
issued  pursuant  to Section 18(a) or Section 18(c), the Principal designated by
the Holder which, when added to the principal represented by the other new Notes
issued in connection with such issuance, does not exceed the Principal remaining
outstanding  under  this  Note immediately prior to such issuance of new Notes),
(iii)  shall  have  an issuance date, as indicated on the face of such new Note,
which  is  the  same as the Issuance Date of this Note, (iv) shall have the same
rights and conditions as this Note, and (v) shall represent accrued Interest and
Late Charges on the Principal and Interest of this Note, from the Issuance Date.

19.     REMEDIES,  CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
        ------------------------------------------------------------------------
RELIEF.  The  remedies provided in this Note shall be cumulative and in addition
------
to all other remedies available under this Note and any of the other Transaction
Documents at law or in equity (including a decree of specific performance and/or
other  injunctive  relief), and nothing herein shall limit the Holder's right to
pursue actual and consequential damages for any failure by the Company to comply
with  the  terms  of  this  Note.  Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof) shall
be  the  amounts to be received by the Holder and shall not, except as expressly
provided  herein,  be  subject  to  any  other obligation of the Company (or the
performance  thereof).  The  Company  acknowledges  that  a  breach by it of its
obligations  hereunder  will  cause  irreparable harm to the Holder and that the
remedy  at  law  for  any  such breach may be inadequate.  The Company therefore
agrees  that,  in  the event of any such breach or threatened breach, the Holder
shall be entitled, in addition to all other available remedies, to an injunction
restraining  any  breach,  without  the  necessity  of showing economic loss and
without  any  bond  or  other  security  being  required.

20.     PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS.  If (a) this Note is
        --------------------------------------------------
placed in the hands of an attorney for collection or enforcement or is collected
or enforced through any legal proceeding or the Holder otherwise takes action to
collect amounts due under this Note or to enforce the provisions of this Note or
(b)  there  occurs  any  bankruptcy,

                                       19
<PAGE>
reorganization,  receivership  of  the  Company  or  other proceedings affecting
Company  creditors'  rights  and  involving  a  claim  under this Note, then the
Company  shall  pay  the  costs  incurred  by  the  Holder  for such collection,
enforcement  or  action  or  in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, but not limited to, attorneys' fees
and  disbursements.

21.     CONSTRUCTION; HEADINGS.  This Note shall be deemed to be jointly drafted
        ----------------------
by  the  Company  and  all the Purchasers and shall not be construed against any
person  as the drafter hereof.  The headings of this Note are for convenience of
reference  and  shall  not  form  part of, or affect the interpretation of, this
Note.

22.     FAILURE  OR  INDULGENCE  NOT WAIVER.  No failure or delay on the part of
        -----------------------------------
the  Holder  in  the  exercise  of any power, right or privilege hereunder shall
operate  as  a  waiver  thereof, nor shall any single or partial exercise of any
such  power, right or privilege preclude other or further exercise thereof or of
any  other  right,  power  or  privilege.

23.     DISPUTE RESOLUTION.  In the case of a dispute as to the determination of
        ------------------
the  Closing  Bid Price, the Closing Sale Price, the Average Market Price or the
Weighted  Average  Price or the arithmetic calculation of the Conversion Rate or
any  Redemption  Price,  the Company shall submit the disputed determinations or
arithmetic  calculations via facsimile within one (1) Business Day of receipt of
the  Conversion  Notice  or Redemption Notice or other event giving rise to such
dispute,  as  the case may be, to the Holder.  If the Holder and the Company are
unable  to  agree upon such determination or calculation within one (1) Business
Day  of such disputed determination or arithmetic calculation being submitted to
the  Holder,  then  the  Company  shall,  within one (1) Business Day submit via
facsimile  (a)  the disputed determination of the Closing Bid Price, the Closing
Sale  Price,  the  Average  Market  Price  or  the  Weighted Average Price to an
independent,  reputable  investment bank selected by the Company and approved by
the Holder (such approval not to be unreasonably withheld or delayed) or (b) the
disputed  arithmetic  calculation of the Conversion Rate or any Redemption Price
to the Company's independent, outside accountant.  The Company, at the Company's
expense,  shall cause the investment bank or the accountant, as the case may be,
to  perform  the  determinations  or calculations and notify the Company and the
Holder  of  the  results  no  later than five (5) Business Days from the time it
receives the disputed determinations or calculations.  Such investment bank's or
accountant's  determination or calculation, as the case may be, shall be binding
upon  all  parties  absent  demonstrable  error.

24.     NOTICES;  PAYMENTS.
        ------------------

     (a)     Notices.  Whenever  notice is required to be given under this Note,
             -------
unless  otherwise provided herein, such notice shall be given in accordance with
Section  9(f)  of  the Securities Purchase Agreement.  The Company shall provide
the  Holder  with  prompt  written  notice of all actions taken pursuant to this
Note, including in reasonable detail a description of such action and the reason
therefore.  Without  limiting  the generality of the foregoing, the Company will
give  written  notice  to  the Holder (i) immediately upon any adjustment of the
Conversion  Price,  setting  forth  in  reasonable  detail,  and certifying, the
calculation  of  such  adjustment and (ii) at least twenty (20)days prior to the
date  on  which  the  Company  closes  its

                                       20
<PAGE>
books  or  takes  a record (A) with respect to any dividend or distribution upon
the Common Stock, (B) with respect to any pro rata subscription offer to holders
of  Common  Stock  or  (C)  for  determining  rights to vote with respect to any
Fundamental  Transaction, dissolution or liquidation, provided in each case that
such  information  shall  be made known to the public prior to or in conjunction
with  such  notice  being  provided  to  the  Holder.

     (b)     Payments.  Whenever  any  payment  of  cash  is  to  be made by the
             --------
Company  to  any  Person  pursuant  to  this Note, such payment shall be made in
lawful  money of the United States of America by a check drawn on the account of
the  Company  and  sent  via  overnight  courier  service to such Person at such
address  as previously provided to the Company in writing (which address, in the
case  of each of the Purchasers, shall initially be as set forth on the Schedule
of  Buyers  attached  to  the  Securities Purchase Agreement); provided that the
Holder  may  elect to receive a payment of cash via wire transfer of immediately
available  funds  by providing the Company with prior written notice setting out
such  request  and the Holder's wire transfer instructions.  Whenever any amount
expressed  to  be due by the terms of this Note is due on any day which is not a
Business  Day, the same shall instead be due on the next succeeding day which is
a  Business  Day  and, in the case of any Interest Date which is not the date on
which this Note is paid in full, the extension of the due date thereof shall not
be  taken into account for purposes of determining the amount of Interest due on
such  date.  Any  amount of Principal or other amounts due under the Transaction
Documents,  other  than  Interest,  which is not paid when due shall result in a
late  charge  being  incurred  and  payable by the Company in an amount equal to
interest  on such amount at the rate of fifteen percent (15%) per annum from the
date  such  amount  was  due  until  the  same  is paid in full ("Late Charge").

25.     CANCELLATION.  After  all  Principal, accrued Interest and other amounts
        ------------
at  any  time  owed  on  this  Note  has  been  paid  in  full,  this Note shall
automatically  be  deemed  canceled,  shall  be  surrendered  to the Company for
cancellation  and  shall  not  be  reissued.

26     WAIVER  OF  NOTICE.  To  the  extent permitted by law, the Company hereby
       ------------------
waives  demand,  notice, protest and all other demands and notices in connection
with  the  delivery,  acceptance,  performance,  default  or enforcement of this
Note, the Securities  Purchase  Agreement  and  the other Transaction Documents.

27.     GOVERNING  LAW;  JURISDICTION; JURY TRIAL.  This Note shall be construed
        -----------------------------------------
and  enforced in accordance with, and all questions concerning the construction,
validity,  interpretation and performance of this Note shall be governed by, the
internal  laws  of the State of New York, without giving effect to any choice of
law  or  conflict  of law provision or rule (whether of the State of New York or
any  other  jurisdictions)  that  would cause the application of the laws of any
jurisdictions  other than the State of New York.  The Company 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, 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
brought  in  an  inconvenient  forum  or  that the venue of such suit, action or
proceeding  is improper.  The Company hereby irrevocably waives personal service
of  process

                                       21
<PAGE>
and  consents  to process being served in any such suit, action or proceeding by
mailing  a  copy  thereof  to  such  party  at  the  address it set forth on the
signature  page  hereto  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.  In  the event that any provision of this Note is invalid or
unenforceable  under  any applicable statute or rule of law, then such provision
shall  be  deemed  inoperative  to the extent that it may conflict therewith and
shall  be deemed modified to conform with such statute or rule of law.  Any such
provision  which  may  prove  invalid  or  unenforceable under any law shall not
affect  the  validity  or  enforceability  of  any other provision of this Note.
Nothing  contained herein shall be deemed or operate to preclude the Holder from
bringing  suit  or  taking  other  legal action against the Company in any other
jurisdiction  to  collect on the Company's obligations to the Holder, to realize
on  any  collateral  or any other security for such obligations, or to enforce a
judgment  or  other  court  ruling  in  favor of the Holder.  THE COMPANY HEREBY
IRREVOCABLY  WAIVES  ANY  RIGHT  IT  MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL  FOR  THE  ADJUDICATION  OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING  OUT  OF  THIS  NOTE  OR  ANY  TRANSACTION  CONTEMPLATED  HEREBY.

28.     CERTAIN DEFINITIONS.  For purposes of this Note, the following terms
        -------------------
shall have the following meanings:

     (a)     "APPROVED  STOCK  PLAN"  means  any employee benefit plan which has
been  approved  by  the Board of Directors of the Company, pursuant to which the
Company's  securities  may  be  issued  to  any employee, consultant, officer or
director  for  services  provided  to  the  Company.

     (b)     "AVERAGE MARKET PRICE" means, for any given date, the lesser of (i)
the  arithmetic average of the Weighted Average Price of the Common Stock during
the twenty (20) consecutive Trading Day period ending on the third (3rd) Trading
Day  immediately prior to such given date and (ii) the arithmetic average of the
Weighted  Average  Price  of  the  Common  Stock during the five (5) consecutive
Trading  Day  period  commencing  during the 20th consecutive Trading Day period
ending  on  the  third  (3rd)  Trading  Day immediately prior to such given date
provided,  that  all such determinations shall be appropriately adjusted for any
stock split, stock dividend, stock combination or other similar transaction that
proportionately  decreases  or  increases  the Common Stock during such periods.

     (c)     "BLOOMBERG"  means  Bloomberg  Financial  Markets.

     (d)     "BUSINESS  DAY"  means any day other than Saturday, Sunday or other
day on which commercial banks in The City of New York are authorized or required
by  law  to  remain  closed.

     (e)     "CALENDAR  MONTH"  means  the period beginning on and including the
first  of  each  calendar month and ending on and including the last day of such
calendar  month.

     (f)     "CHANGE  OF  CONTROL"  means any Fundamental Transaction other than
(i)  any

                                       22
<PAGE>
reorganization,  recapitalization  or  reclassification  of  the Common Stock in
which  holders  of a majority of the Company's voting power immediately prior to
such  reorganization,  recapitalization  or reclassification continue after such
reorganization,  recapitalization  or  reclassification  to hold publicly traded
securities and, directly or indirectly, the voting power of the surviving entity
or  entities  necessary  to  elect  a  majority  of  the members of the board of
directors  (or  their  equivalent if other than a corporation) of such entity or
entities, or (ii) pursuant to a migratory merger effected solely for the purpose
of  changing  the  jurisdiction  of  incorporation  of  the  Company.

     (g)     "CHANGE  OF  CONTROL  PREMIUM"  means  (i) 125% or (ii) 120% in the
event  of  a  Change  of  Control involving consideration paid to holders of the
Company's Common Stock where the consideration per share of the Company's Common
Stock to be received by the holders thereof is greater (as to amounts other than
cash,  as  determined  reasonably and in good faith by the Board of Directors of
the  Company)  than 200% of the Conversion Price as of the Initial Issuance Date
(as  adjusted  for  stock  splits,  stock  dividends,  reverse  stock  splits,
recapitalizations,  reclassifications  and  similar  events).

     (h)     "CLOSING  BID  PRICE"  and  "CLOSING  SALE  PRICE"  means,  for any
security  as  of  any  date,  the  last closing bid price and last closing trade
price,  respectively,  for such security on the Principal Market, as reported by
Bloomberg,  or,  if  the Principal Market begins to operate on an extended hours
basis  and  does not designate the closing bid price or the closing trade price,
as  the  case may be, then the last bid price or last trade price, respectively,
of  such  security  prior to 4:00 p.m., New York Time, as reported by Bloomberg,
or,  if the Principal Market is not the principal securities exchange or trading
market  for  such  security,  the  last  closing  bid price or last trade price,
respectively,  of  such security on the principal securities exchange or trading
market  where  such security is listed or traded as reported by Bloomberg, or if
the  foregoing  do  not  apply,  the last closing bid price or last trade price,
respectively,  of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price  or  last  trade  price,  respectively,  is  reported for such security by
Bloomberg,  the  average  of the bid prices, or the ask prices, respectively, of
any  market  makers  for  such security as reported in the "pink sheets" by Pink
Sheets  LLC  (formerly the National Quotation Bureau, Inc.).  If the Closing Bid
Price  or  the  Closing  Sale  Price  cannot  be  calculated for a security on a
particular  date  on  any  of  the foregoing bases, the Closing Bid Price or the
Closing  Sale  Price, as the case may be, of such security on such date shall be
the  fair market value as mutually determined by the Company and the Holder.  If
the  Company  and  the  Holder are unable to agree upon the fair market value of
such  security, then such dispute shall be resolved pursuant to Section 23.  All
such  determinations  to be appropriately adjusted for any stock dividend, stock
split,  stock  combination  or  other  similar transaction during the applicable
calculation  period.

     (i)     "CLOSING  DATE"  shall have the meaning set forth in the Securities
Purchase  Agreement,  which  date is the date the Company initially issued Notes
pursuant  to  the  terms  of  the  Securities  Purchase  Agreement.

     (j)     "CONTINGENT  OBLIGATION"  means,  as  to  any Person, any direct or
indirect  liability, contingent or otherwise, of that Person with respect to any
indebtedness,  lease,  dividend  or  other  obligation  of another Person if the
primary  purpose  or  intent  of  the  Person  incurring  such

                                       23
<PAGE>
liability, or the primary effect thereof, is to provide assurance to the obligee
of  such  liability  that such liability will be paid or discharged, or that any
agreements  relating  thereto will be complied with, or that the holders of such
liability  will  be  protected  (in  whole or in part) against loss with respect
thereto.

     (k)     "CONVERTIBLE  SECURITIES" means any stock or securities (other than
Options)  directly or indirectly convertible into or exercisable or exchangeable
for  Common  Stock.

     (l)     "ELIGIBLE  MARKET"  means, the Principal Market, The New York Stock
Exchange,  Inc.,  the  Nasdaq  Capital  Market,  the Nasdaq Global Market or the
American  Stock  Exchange.

     (m)     "EXCLUDED  SECURITIES"  means  any Common Stock issued or issuable:
(i)  in  connection with any Approved Stock Plan up to a maximum of five percent
(5%)  of  the  outstanding Common Stock; (ii) upon conversion of, or in exchange
for, the Notes or the exercise of the Warrants; and (iii) upon conversion of any
Options  or  Convertible Securities which are outstanding on the day immediately
preceding  the  Subscription  Date,  provided  that the terms of such Options or
Convertible  Securities  are  not  amended,  modified or changed on or after the
Subscription  Date.

     (n)     "FINANCING  TRANSACTION"  means  that  the  Company  or  any of its
Subsidiaries  engages  in  a  debt,  equity  or any other financing or series of
financing  transactions  in  which the Company and/or its Subsidiaries receive a
gross  dollar  amount  of  Fifty  Million  Dollars  ($50,000,000)  or  more.

     (o)     "FUNDAMENTAL TRANSACTION" means that the Company shall, directly or
indirectly,  in  one or more related transactions, (i) consolidate or merge with
or  into  (whether  or  not  the  Company  is the surviving corporation) another
Person,  or  (ii)  sell, assign, transfer, convey or otherwise dispose of all or
substantially  all of the properties or assets of the Company to another Person,
or  (iii) allow another Person or Persons to make a purchase, tender or exchange
offer  that  is  accepted by the holders of more than the 50% of the outstanding
shares  of  Voting  Stock  (not including any shares of Voting Stock held by the
Person  or  Persons  making  or  party  to, or associated or affiliated with the
Person  or Persons making or party to, such purchase, tender or exchange offer),
(iv)  consummate  a  stock  purchase  agreement  or  other  business combination
(including,  without limitation, a reorganization, recapitalization, spin-off or
scheme  of  arrangement)  with another Person whereby such other Person acquires
more  than  the  50%  of  either  the  outstanding  shares  of Voting Stock (not
including  any  shares of Voting Stock held by the other Person or other Persons
making or party to, or associated or affiliated with the other Persons making or
party  to,  such  stock  purchase  agreement or other business combination), (v)
reorganize,  recapitalize or reclassify its Common Stock or (vi) any "person" or
"group" (as these terms are used for purposes of Sections 13(d) and 14(d) of the
Exchange  Act)  is  or  shall  become the "beneficial owner" (as defined in Rule
13d-3  under  the Exchange Act), directly or indirectly, of 50% of the aggregate
Voting  Stock  of  the  Company.

     (p)     "GAAP"  means  United  States  generally  accepted  accounting
principles,  consistently  applied.

                                       24
<PAGE>
     (q)     "HOLDER  PRO  RATA  AMOUNT"  means  a fraction (i) the numerator of
which  is  the  Principal amount of this Note on the applicable Closing Date and
(ii)  the  denominator  of  which is the aggregate principal amount of all Notes
issued  to  the initial purchasers pursuant to the Securities Purchase Agreement
on  the  applicable  Closing  Date.

     (r)     "INDEBTEDNESS"  of  any  Person  means, without duplication (i) all
indebtedness  for  borrowed  money,  (ii)  all obligations issued, undertaken or
assumed  as  the  deferred  purchase  price  of  property or services, including
(without  limitation)  "capital  leases"  in  accordance with generally accepted
accounting  principles  (other  than trade payables entered into in the ordinary
course of business), (iii) all reimbursement or payment obligations with respect
to  letters  of  credit,  surety  bonds  and other similar instruments, (iv) all
obligations  evidenced  by  notes,  bonds,  debentures  or  similar instruments,
including  obligations  so evidenced incurred in connection with the acquisition
of property, assets or businesses, (v) all indebtedness created or arising under
any  conditional  sale  or  other  title  retention  agreement,  or  incurred as
financing,  in  either case with respect to any property or assets acquired with
the  proceeds  of  such indebtedness (even though the rights and remedies of the
seller  or  bank  under  such  agreement  in the event of default are limited to
repossession  or sale of such property), (vi) all monetary obligations under any
leasing  or  similar  arrangement  which,  in connection with generally accepted
accounting  principles, consistently applied for the periods covered thereby, is
classified as a capital lease, (vii) all indebtedness referred to in clauses (i)
through  (vi) above secured by (or for which the holder of such Indebtedness has
an  existing  right,  contingent  or  otherwise, to be secured by) any mortgage,
lien,  pledge,  charge,  security  interest  or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person,
even  though  the  Person  which owns such assets or property has not assumed or
become  liable  for  the  payment  of  such indebtedness, (viii) all obligations
issued,  undertaken or assumed as part of any financing facility with respect to
accounts  receivables  of  the  Company and its Subsidiaries, including, without
limitation,  any factoring arrangement of such accounts receivables and (ix) all
Contingent  Obligations  in  respect of indebtedness or obligations of others of
the  kinds  referred  to  in  clauses  (i)  through  (viii)  above.

     (s)     "INITIAL  ISSUANCE  DATE"  means  August  31,  2006.

     (t)     "INSTALLMENT  AMOUNT"  means, with respect to any Installment Date,
$1,403,508.70  multiplied  by  the Holder Pro Rata Amount.  For the avoidance of
doubt,  any  accrued  and  unpaid  interest  which  may be paid pursuant to this
definition  shall  be  deducted  from  the  total  interest  to  be  paid on any
subsequent  Interest  Payment  Date.  In  the  event  the  Holder  shall sell or
otherwise transfer any portion of this Note, the transferee shall be allocated a
pro  rata  portion  of  each  unpaid  Installment  Amount  hereunder.

     (u)     "INSTALLMENT  DATE"  means  the  first  day of each calendar month.

     (v)     "INTEREST  RATE"  means  ten  percent  (10%)  per annum, subject to
periodic  adjustment  pursuant  to  Section  2.

     (w)     "OPTIONS" means any rights, warrants or options to subscribe for or
purchase  Common  Stock  or  Convertible  Securities.

                                       25
<PAGE>
     (x)     "PARENT  ENTITY"  of  a  Person  means  an entity that, directly or
indirectly,  controls the applicable Person and whose common stock or equivalent
equity  security is quoted or listed on an Eligible Market, or, if there is more
than  one  such  Person  or  Parent Entity, the Person or Parent Entity with the
largest  public  market  capitalization  as  of  the date of consummation of the
Fundamental  Transaction.

     (y)     "PERMITTED  INDEBTEDNESS"  means  (A)  Indebtedness incurred by the
Company  that  is made expressly subordinate in right of payment and priority to
the  Indebtedness  evidenced  by  this Note, as reflected in a written agreement
acceptable  to  the Holder and approved by the Holder in writing (which approval
shall  not  be unreasonably delayed), and which Indebtedness does not provide at
any  time  for (1) the payment, prepayment, repayment, repurchase or defeasance,
directly  or  indirectly,  of  any  principal  or premium, if any, thereon until
ninety-one (91) days after the Maturity Date or later and (2) total interest and
fees  at  a  rate in excess of the Interest Rate hereunder, (B) Permitted Senior
Indebtedness,  (C)  Indebtedness secured by Permitted Liens, (D) Indebtedness to
trade creditors incurred in the ordinary course of business, and (E) extensions,
refinancings  and renewals of any items of Permitted Indebtedness, provided that
the  principal  amount  is  not  increased  or the terms modified to impose more
burdensome  terms  upon  the  Company  or  its  Subsidiary,  as the case may be.

     (z)     "PERMITTED  LIENS"  means  (i)  any  Lien  for taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
adequate  reserves  have  been  established  in  accordance  with GAAP, (ii) any
statutory  Lien  arising  in the ordinary course of business by operation of law
with  respect  to  a liability that is not yet due or delinquent, (iii) any Lien
created  by  operation of law, such as materialmen's liens, mechanics' liens and
other  similar liens, arising in the ordinary course of business with respect to
a  liability  that  is  not yet due or delinquent or that are being contested in
good  faith  by  appropriate  proceedings,  (iv)  Liens  securing  the Company's
obligations  under the Notes, (v) Liens (A) upon or in any equipment (as defined
in  the  Security  Agreement)  acquired  or  held  by  the Company or any of its
Subsidiaries  to  secure  the  purchase  price of such equipment or indebtedness
incurred  solely  for  the purpose of financing the acquisition or lease of such
equipment,  or  (B)  existing  on such equipment at the time of its acquisition,
provided  that  the  Lien  is  confined  solely  to the property so acquired and
improvements thereon, and the proceeds of such equipment, (vi) Liens incurred in
connection  with  the  extension,  renewal  or  refinancing  of the indebtedness
secured  by  Liens  of the type described in clause (v) above, provided that any
extension,  renewal  or  replacement  Lien  shall  be  limited  to  the property
encumbered  by  the  existing  Lien and the principal amount of the Indebtedness
being extended, renewed or refinanced does not increase, (vii) Liens on accounts
receivables  of  the  Company  and  its  Subsidiaries  securing  the  Company's
obligations  under the Permitted Senior Indebtedness; (viii) leases or subleases
and  licenses and sublicenses hereafter granted to others in the ordinary course
of  the  Company's  business,  not  interfering in any material respect with the
business  of  the  Company  and its Subsidiaries taken as a whole, (ix) Liens in
favor  of  customs  and revenue authorities arising as a matter of law to secure
payments of custom duties in connection with the importation of goods; (x) Liens
arising from judgments, decrees or attachments in circumstances not constituting
an  Event  of  Default  under  Section  4(a)(ix),  (xi)  Liens  with  respect to
Indebtedness not individually in excess of $25,000 or in the aggregate in excess
of  $100,000,  which  individually  and  in  aggregate  are  not material to the

                                       26
<PAGE>
Company,  and  (xii)  the  Permitted Liens as defined in the Securities Purchase
Agreement.

     (aa)     "PERMITTED SENIOR INDEBTEDNESS" means any financing facility to be
obtained  by  the  Company after the Initial Issuance Date secured solely by the
accounts  receivables  of  the  Company  and its Subsidiaries, with an aggregate
Indebtedness  at any one time outstanding not to exceed the lesser of (i) 50% of
the accounts receivables of the Company and its Subsidiaries and (ii) $5 million
at  any  time  in  the  2006  fiscal  year  or  $10  million  thereafter.

     (bb)     "PERSON"  means  an  individual,  a  limited  liability company, a
partnership,  a  joint  venture,  a  corporation,  a  trust,  an  unincorporated
organization,  any  other  entity  and  a government or any department or agency
thereof.

     (cc)     "POTENTIAL PARTNER CONDITIONS" means at any time during the period
commencing  on  the date of the consummation of any material transaction between
the  Company  and  a Person and ending on the first anniversary of the Effective
Date, there shall be no disclosure that any executive officer of such Person has
(i)  exhibited  dishonesty  in  the  performance  of his or her duties, which is
materially  and demonstrably injurious to the Company; or (ii) been convicted of
(x)  a  felony under the laws of the United States or any state thereof or (y) a
misdemeanor  involving  moral  turpitude,  in each case, which is materially and
demonstrably  injurious  to  the  Company.

     (dd)     "PRINCIPAL  MARKET"  means  Over-the-Counter  Bulletin  Board.

     (ee)     "REDEMPTION  NOTICES"  means,  collectively,  the Event of Default
Redemption Notices, Change of Control Redemption Notices, the Company Redemption
Notice,  Financing  Transaction Redemption Notice, Nine Month Redemption Notice,
and,  each  of  the  foregoing,  individually,  a  Redemption  Notice.

     (ff)     "REDEMPTION  PREMIUM"  means  (i)  in  the  case  of the Events of
Default  described  in  Section 4(a)(i) - (vi) and (ix) - (xii), 145% or (ii) in
the case of the Events of Default described in Section 4(a)(vii) - (viii), 145%.

     (gg)     "REDEMPTION  PRICES"  means,  collectively,  the  Event of Default
Redemption Price, Change of Control Redemption Price, and the Company Redemption
Amount,  the  Holder Optional Redemption Price and the Holder Partial Redemption
Price  and,  each  of  the  foregoing,  individually,  a  Redemption  Price.

     (hh)     "REGISTRATION  RIGHTS  AGREEMENT"  means that certain registration
rights  agreement  between  the  Company  and  the  initial holders of the Notes
relating  to,  among  other things, the registration of the resale of the Common
Stock  issuable  upon  conversion  of  the  Notes  and exercise of the Warrants.

     (ii)     "REQUIRED HOLDERS" mean the holders of Notes representing at least
twothirds (2/3) of the aggregate principal amount of the Notes then outstanding.

     (jj)     "SEC"  means the United States Securities and Exchange Commission.

                                       27
<PAGE>
     (kk)     "SECURITIES  PURCHASE  AGREEMENT"  means  that  certain securities
purchase  agreement dated the Subscription Date by and among the Company and the
initial  holders  of  the  Notes pursuant to which the Company issued the Notes.

     (ll)     "SUBSCRIPTION  DATE"  means  August  30,  2006.

     (mm)     "SUCCESSOR  ENTITY"  means  the  Person, which may be the Company,
formed by, resulting from or surviving any Fundamental Transaction or the Person
with  which  such Fundamental Transaction shall have been made, provided that if
such  Person  is  not  a publicly traded entity whose common stock or equivalent
equity security is quoted or listed for trading on an Eligible Market, Successor
Entity  shall  mean  such  Person's  Parent  Entity.

     (nn)     "TRADING DAY" means any day on which the Common Stock is traded on
the  Principal  Market, or, if the Principal Market is not the principal trading
market  for  the  Common  Stock,  then  on  the principal securities exchange or
securities  market  on  which  the  Common  Stock  is then traded; provided that
"Trading  Day"  shall not include any day on which the Common Stock is scheduled
to  trade on such exchange or market for less than 4.5 hours or any day that the
Common  Stock is suspended from trading during the final hour of trading on such
exchange  or market (or if such exchange or market does not designate in advance
the  closing  time  of  trading on such exchange or market, then during the hour
ending  at  4:00  p.m.,  New  York  Time).

     (oo)     "VOTING  STOCK"  of a Person means capital stock of such Person of
the  class  or  classes  pursuant  to which the holders thereof have the general
voting  power  to elect, or the general power to appoint, at least a majority of
the  board  of  directors,  managers or trustees of such Person (irrespective of
whether  or  not  at  the time capital stock of any other class or classes shall
have  or might have voting power by reason of the happening of any contingency).

     (pp)     "WARRANTS" has the meaning ascribed to such term in the Securities
Purchase  Agreement,  and shall include all warrants issued in exchange therefor
or  replacement  thereof.

     (qq)     "WEIGHTED  AVERAGE  PRICE" means, for any security as of any date,
the  dollar  volume-weighted  average  price  for such security on the Principal
Market  during  the  period beginning at 9:30 a.m., New York Time (or such other
time  as  the  Principal  Market  publicly  announces  is  the  official open of
trading),  and  ending  at  4:00  p.m., New York Time (or such other time as the
Principal  Market  publicly  announces  is  the  official  close  of trading) as
reported  by  Bloomberg  through  its  "Volume  at  Price" functions, or, if the
foregoing  does  not  apply,  the  dollar  volume-weighted average price of such
security  in  the  over-the-counter  market on the electronic bulletin board for
such  security  during the period beginning at 9:30 a.m., New York Time (or such
other  time  as such market publicly announces is the official open of trading),
and  ending  at  4:00  p.m.,  New  York  Time (or such other time as such market
publicly  announces  is the official close of trading) as reported by Bloomberg,
or,  if no dollar volume-weighted average price is reported for such security by
Bloomberg  for  such hours, the average of the highest closing bid price and the
lowest  closing  ask  price  of  any  of  the market makers for such security as
reported  in  the  "pink  sheets"  by  Pink  Sheets  LLC  (formerly the National
Quotation  Bureau,

                                       28
<PAGE>
Inc.).  If  the  Weighted Average Price cannot be calculated for a security on a
particular  date  on  any  of the foregoing bases, the Weighted Average Price of
such security on such date shall be the fair market value as mutually determined
by  the  Company  and  the  Holder.  If the Company and the Holder are unable to
agree  upon  the  fair market value of such security, then such dispute shall be
resolved  pursuant  to  Section 23.  All such determinations to be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar
transaction  during  the  applicable  calculation  period.

29.     DISCLOSURE.  Upon  receipt  or  delivery by the Company of any notice in
        ----------
accordance  with  the  terms  of this Note, unless the Company has in good faith
determined  that the matters relating to such notice do not constitute material,
nonpublic  information  relating to the Company or its Subsidiaries, the Company
shall  within  one  (1) Business Day after any such receipt or delivery publicly
disclose such material, nonpublic information on a Current Report on Form 8-K or
otherwise.  In  the  event  that  the  Company  believes  that a notice contains
material,  nonpublic  information,  relating to the Company or its Subsidiaries,
the Company shall indicate to the Holder contemporaneously with delivery of such
notice,  and  in the absence of any such indication, the Holder shall be allowed
to  presume that all matters relating to such notice do not constitute material,
nonpublic  information  relating  to  the  Company  or  its  Subsidiaries.

                             [Signature Page Follows]

                                       29
<PAGE>
IN  WITNESS  WHEREOF, the Company has caused this Note to be duly executed as of
the  Issuance  Date  set  out  above.

                                        CHARYS HOLDING COMPANY, INC.

                                        By:
                                           -----------------------------------
                                        Name:   Billy V. Ray, Jr.
                                        Title:  Chief Executive Officer

                                       30

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