Document:

EXHIBIT 10.1

                          SECURITIES PURCHASE AGREEMENT

      This  Securities  Purchase  Agreement  (this  "Agreement")  is dated as of
January  21,  2004 by and  between  LMIC,  Inc.,  a  Delaware  corporation  (the
"Company"), and each purchaser identified on the signature pages hereto (each, a
"Purchaser" and collectively, the "Purchasers").

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

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

                                   ARTICLE I
                                   DEFINITIONS

      1.1  Definitions.  In  addition  to the terms  defined  elsewhere  in this
Agreement, the following terms have the meanings indicated:

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

            "Bankruptcy  Event"  means  any of the  following  events:  (a)  the
      Company or any Subsidiary  commences a case or other  proceeding under any
      bankruptcy,  reorganization,  arrangement,  adjustment of debt,  relief of
      debtors,  dissolution,  insolvency  or  liquidation  or similar law of any
      jurisdiction  relating to the Company or any Subsidiary thereof; (b) there
      is  commenced  against  the  Company  or any  Subsidiary  any such case or
      proceeding that is not dismissed  within 60 days after  commencement;  (c)
      the Company or any Subsidiary is adjudicated  insolvent or bankrupt or any
      order of relief or other order  approving  any such case or  proceeding is
      entered;  (d) the Company or any Subsidiary suffers any appointment of any
      custodian or the like for it or any substantial  part of its property that
      is not  discharged  or  stayed  within  60 days;  (e) the  Company  or any
      Subsidiary  makes a general  assignment for the benefit of creditors;  (f)
      the Company or any Subsidiary fails to pay, or states that it is unable to
      pay or is unable to pay,  its debts  generally as they become due; (g) the
      Company or any Subsidiary  calls a meeting of its creditors with a view to
      arranging a composition,  adjustment or restructuring of its debts; or (h)
      the  Company or any  Subsidiary,  by any act or failure to act,  expressly
      indicates  its  consent  to,  approval  of or  acquiescence  in any of the
      foregoing  or takes any  corporate  or other  action  for the  purpose  of
      effecting any of the foregoing.

<PAGE>

            "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.

            "Change of Control"  means the occurrence of any of the following in
      one or a series of related transactions: (i) an acquisition after the date
      hereof by an  individual  or legal entity or "group" (as described in Rule
      13d-5(b)(1)  under the Exchange Act) of more than  one-third of the voting
      rights or equity interests in the Company; (ii) a replacement of more than
      one-third of the members of the Company's  board of directors  that is not
      approved by those individuals who are members of the board of directors on
      the  date  hereof  (or  other  directors   previously   approved  by  such
      individuals);  (iii) a  merger  or  consolidation  of the  Company  or any
      Subsidiary  or a sale of more than  one-third of the assets of the Company
      in  one  or a  series  of  related  transactions,  unless  following  such
      transaction  or series  of  transactions,  the  holders  of the  Company's
      securities prior to the first such  transaction  continue to hold at least
      50.1% of the voting rights and equity interests in of the surviving entity
      or acquirer of such assets;  (iv) a  recapitalization,  reorganization  or
      other transaction involving the Company or any Subsidiary that constitutes
      or results in a transfer of more than  one-third  of the voting  rights or
      equity  interests  in the  Company;  (v)  consummation  of a  "Rule  13e-3
      transaction"  as defined in Rule 13e-3 under the Exchange Act with respect
      to the Company,  or (vi) the  execution by the Company or its  controlling
      stockholders of an agreement  providing for or reasonably likely to result
      in any of the foregoing events.

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

            "Closing Date" means the date of the Closing.

            "Closing  Price" means,  for any date,  the price  determined by the
      first of the following  clauses that  applies:  (a) if the Common Stock is
      then  listed  or  quoted  on an  Eligible  Market  or any  other  national
      securities  exchange,  the closing price per share of the Common Stock for
      such date (or the nearest  preceding date) on the primary  Eligible Market
      or  exchange on which the Common  Stock is then  listed or quoted;  (b) if
      prices for the Common Stock are then quoted on the OTC Bulletin Board, the
      closing  price per share of the Common Stock for such date (or the nearest
      preceding  date) so quoted;  (c) if prices  for the Common  Stock are then
      reported in the "Pink Sheets"  published by the National  Quotation Bureau
      Incorporated  (or a  similar  organization  or  agency  succeeding  to its
      functions  of  reporting  prices),  the most recent  closing bid price per
      share of the Common Stock so reported; or (d) in all other cases, the fair
      market value of a share of Common Stock as  determined  by an  independent
      appraiser selected in good faith by the  then-majority-in-interest  of the
      Purchasers and the Company.

            "Commission" means the Securities and Exchange Commission.

            "Common  Stock"  means the common  stock of the  Company,  par value
      $0.001 per share.

                                       2
<PAGE>

            "Common  Stock  Equivalents"   means,   collectively,   Options  and
      Convertible Securities.

            "Company Counsel" means Feldman Weinstein LLP.

            "Convertible  Securities"  means any stock or securities (other than
      Options) convertible into or exercisable or exchangeable for Common Stock.

            "Effective Date" means the date that the  Registration  Statement is
      first declared effective by the Commission.

            "Eligible  Market"  means any of the New York  Stock  Exchange,  the
      American Stock Exchange,  the Nasdaq National Market, the Nasdaq Small Cap
      Market or the OTC Bulletin Board or any successor to any of the foregoing.

            "Exchange  Act"  means  the  Securities  Exchange  Act of  1934,  as
      amended.

            "Excluded  Stock"  means  the  issuance  of  Common  Stock  (A) upon
      exercise or  conversion  of any Options or other  securities  described in
      Schedule  3.1(f)  (provided  that such  exercise or  conversion  occurs in
      accordance with the terms thereof, without amendment or modification,  and
      that the applicable  exercise or conversion price or ratio is described in
      such schedule),  (B) in connection with any grant of options to employees,
      officers,  directors  or  consultants  of the Company  pursuant to a stock
      option plan duly adopted by the Company's board of directors or in respect
      of the issuance of Common  Stock upon  exercise of any such  options,  (C)
      pursuant to a bona fide firm commitment  underwritten public offering with
      a nationally recognized  underwriter  (excluding any equity line) at a per
      share  offering  price  equal  to at  least  the  market  price  and in an
      aggregate  offering amount greater than  $25,000,000,  (D) pursuant to any
      bona fide  strategic  transaction or  investment,  the primary  purpose of
      which is not to raise  capital,  (E)  pursuant to any fixed,  convertible,
      premium  investment  to be made in the Company by Omicron  Capital  within
      three (3) months from the date hereof (the "Omicron  Financing") or (F) in
      connection with any bona fide loan  transaction  with a commercial bank or
      other similar commercial lender.

            "Filing  Date"  means no later than 45 days  following  the  Closing
      Date.

            "Lien" means any lien, charge, claim, security interest, encumbrance
      or right of first refusal.

            "Losses"  means any and all losses,  claims,  damages,  liabilities,
      settlement costs and expenses,  including,  without  limitation,  costs of
      preparation and reasonable attorneys' fees.

            "Options" means any rights,  warrants or options to subscribe for or
      purchase Common Stock or Convertible Securities.

            "Person" means any individual or  corporation,  partnership,  trust,
      incorporated  or  unincorporated   association,   joint  venture,  limited
      liability  company,  joint  stock  company,  government  (or an  agency or
      subdivision thereof) or any court or other federal,  state, local or other
      governmental authority or other entity of any kind.

                                       3
<PAGE>

            "Post-Effective  Amendment" means a post-effective  amendment to the
      Registration Statement.

            "Post-Effective  Amendment  Filing  Deadline" means the 10th Trading
      Day after the Registration  Statement  ceases to be effective  pursuant to
      applicable securities laws due to the passage of time or the occurrence of
      an event requiring the Company to file a Post-Effective Amendment.

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

            "Prospectus"  means  the  prospectus  included  in the  Registration
      Statement (including,  without limitation,  a prospectus that includes any
      information  previously  omitted  from a  prospectus  filed  as part of an
      effective  registration  statement in reliance upon Rule 430A  promulgated
      under the Securities  Act), as amended or  supplemented  by any prospectus
      supplement,  with  respect to the terms of the  offering of any portion of
      the Registrable Securities covered by the Registration Statement,  and all
      other   amendments   and   supplements   to  the   Prospectus,   including
      post-effective  amendments,  and all material incorporated by reference or
      deemed to be incorporated by reference in such Prospectus.

            "Registrable   Securities"   means  any  Common   Stock   (including
      Underlying   Shares)  issued  or  issuable  pursuant  to  the  Transaction
      Documents,  together with any securities issued or issuable upon any stock
      split,  dividend or other distribution,  recapitalization or similar event
      with respect to the foregoing.

            "Registration  Statement" means each registration statement required
      to be filed under  Article VI,  including  (in each case) the  Prospectus,
      amendments and supplements to such  registration  statement or Prospectus,
      including pre- and post-effective  amendments,  all exhibits thereto,  and
      all material  incorporated  by reference or deemed to be  incorporated  by
      reference in such registration statement.

            "Required  Effectiveness  Date" means 135 days following the Closing
      Date.

            "Rule 144," "Rule 415," and "Rule 424" means Rule 144,  Rule 415 and
      Rule 424,  respectively,  promulgated  by the  Commission  pursuant to the
      Securities  Act,  as such Rules may be amended  from time to time,  or any
      similar rule or  regulation  hereafter  adopted by the  Commission  having
      substantially the same effect as such Rule.

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

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

            "Shares" means the aggregate number of shares of Common Stock, which
      are being issued and sold to the Purchasers at the Closing.

                                       4
<PAGE>

            "Subsidiary"  means any  subsidiary,  as defined in Rule  1-02(x) of
      Regulation S-X promulgated by the Commission, of the Company.

            "Trading  Day" means (a) any day on which the Common Stock is listed
      or quoted  and traded on its  primary  Trading  Market  (or any  successor
      thereto) or (b) if trading  does not occur on any  Trading  Market (or any
      successor thereto), any Business Day.

            "Trading  Market" means the OTC Bulletin Board or any other Eligible
      Market on which the Common Stock is then listed or quoted.

            "Transaction  Documents"  means this  Agreement,  the Warrants,  the
      Transfer Agent Instructions and any other documents or agreements executed
      in connection with the transactions contemplated hereunder.

            "Transfer Agent" means  Continental  Stock Transfer & Trust Company,
      or any other transfer agent selected by the Company.

            "Transfer Agent Instructions"  means the Irrevocable  Transfer Agent
      Instructions,  in the form of  Exhibit  D,  executed  by the  Company  and
      delivered to and acknowledged in writing by the Transfer Agent.

            "Underlying  Shares" means the shares of Common Stock  issuable upon
      exercise of the Warrants or any other securities issued in exchange for or
      in respect of such shares.

            "Warrants" means,  collectively,  the Common Stock purchase warrants
      issued and sold under  this  Agreement,  in the form of Exhibit A, and any
      warrants issued upon exercise of such warrants.

                                   ARTICLE II
                                PURCHASE AND SALE

      2.1  Closing.  Subject  to the  terms  and  conditions  set  forth in this
Agreement,  at the Closing the Company  shall issue and sell to each  Purchaser,
and each Purchaser shall, severally and not jointly,  purchase from the Company,
such  number of Shares  and a Warrant  to  purchase  such  number of  Underlying
Shares,  each as indicated below such  Purchaser's name on the signature page of
this Agreement,  for an aggregate purchase price for such Purchaser as indicated
below such Purchaser's name on the signature page of this Agreement. The Closing
shall take place at the offices of Proskauer Rose LLP immediately  following the
execution hereof, or at such other location or time as the parties may agree.

      2.2 Closing Deliveries.

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

                  (i) one or more  stock  certificates,  free  and  clear of all
            restrictive  and other  legends  (except as  expressly  provided  in
            Section 4.1(b)  hereof),  evidencing the number of Shares  indicated
            below such Purchaser's name on the signature page of this Agreement,
            registered in the name of such Purchaser;

                                       5
<PAGE>

                  (ii) a  Warrant,  registered  in the  name of such  Purchaser,
            pursuant to which such Purchaser shall have the right to acquire the
            number of Underlying Shares indicated below such Purchaser's name on
            the  signature  page of  this  Agreement,  on the  terms  set  forth
            therein;

                  (iii) a legal  opinion  of  Company  Counsel,  in the  form of
            Exhibit B, executed by such counsel and delivered to the Purchasers;
            and

                  (iv) duly executed Transfer Agent Instructions acknowledged by
            the Transfer Agent.

            (b) At the  Closing,  each  Purchaser  shall  deliver or cause to be
      delivered  to  the  Company  the  purchase  price   indicated  below  such
      Purchaser's name on the signature page of this Agreement, in United States
      dollars and in immediately available funds, by wire transfer to an account
      designated in writing by the Company for such purpose.

                                  ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

      3.1  Representations  and  Warranties of the Company.  The Company  hereby
represents and warrants to each of the Purchasers as follows:

            (a) Subsidiaries. The Company has no direct or indirect Subsidiaries
      other  than  those  listed in  Schedule  3.1(a).  Except as  disclosed  in
      Schedule  3.1(a),  the Company owns,  directly or  indirectly,  all of the
      capital stock or comparable  equity  interests of each Subsidiary free and
      clear of any Lien,  and all the issued and  outstanding  shares of capital
      stock or comparable equity interests of each Subsidiary are validly issued
      and are fully  paid,  non-assessable  and free of  preemptive  and similar
      rights.

            (b)  Organization  and  Qualification.  Each of the  Company and the
      Subsidiaries  is an entity duly  organized,  validly  existing and in good
      standing  under  the  laws of the  jurisdiction  of its  incorporation  or
      organization  (as  applicable),  with the requisite power and authority to
      own and use its  properties  and  assets and to carry on its  business  as
      currently conducted. Neither the Company nor any Subsidiary is in material
      violation  of any of the  provisions  of  its  respective  certificate  or
      articles  of  incorporation,  bylaws or other  organizational  or  charter
      documents.  Each of the Company and the  Subsidiaries is duly qualified to
      do  business  and is in good  standing as a foreign  corporation  or other
      entity in each jurisdiction in which the nature of the business  conducted
      or property owned by it makes such qualification  necessary,  except where
      the failure to be so  qualified or in good  standing,  as the case may be,
      could not,  individually  or in the aggregate,  (i)  materially  adversely
      affect  the  legality,  validity  or  enforceability  of  any  Transaction
      Document,  (ii) have or result in a material adverse effect on the results
      of operations,  assets,  business or condition (financial or otherwise) of
      the Company and the  Subsidiaries,  taken as a whole, or (iii)  materially
      adversely impair the Company's  ability to perform fully on a timely basis
      its obligations  under any of the Transaction  Documents (any of (i), (ii)
      or (iii), a "Material Adverse Effect").

                                       6
<PAGE>

            (c)  Authorization;  Enforcement.  The  Company  has  the  requisite
      corporate  power  and  authority  to  enter  into  and to  consummate  the
      transactions  contemplated  by  each  of  the  Transaction  Documents  and
      otherwise  to carry out its  obligations  hereunder  and  thereunder.  The
      execution and delivery of each of the Transaction Documents by the Company
      and the  consummation by it of the  transactions  contemplated  hereby and
      thereby have been duly  authorized by all necessary  action on the part of
      the Company and no further  consent or action is required by the  Company,
      its  Board  of  Directors  or its  stockholders.  Each of the  Transaction
      Documents has been (or upon delivery will be) duly executed by the Company
      and is,  or when  delivered  in  accordance  with the terms  hereof,  will
      constitute,  the valid and binding  obligation of the Company  enforceable
      against  the  Company in  accordance  with its terms,  subject to: (i) the
      effects of bankruptcy, insolvency, fraudulent conveyance,  reorganization,
      moratorium and other similar laws relating to or affecting the enforcement
      of creditors' rights generally; (ii) general equitable principles (whether
      considered  in a  proceeding  in equity or at law);  and (iii) an  implied
      covenant of good faith and fair dealing.

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

            (e) Issuance of the  Securities.  The Securities are duly authorized
      and,  when  issued  and  paid  for  in  accordance  with  the  Transaction
      Documents,  will be duly and validly issued, fully paid and nonassessable,
      free and clear of all Liens and shall not be subject to preemptive  rights
      or similar rights of stockholders.  The Company has reserved from its duly
      authorized  capital  stock the  maximum  number of shares of Common  Stock
      issuable upon exercise of the Warrants.

                                       7
<PAGE>

            (f) Capitalization. The number of shares and type of all authorized,
      issued and outstanding capital stock,  options and other securities of the
      Company  (whether or not  presently  convertible  into or  exercisable  or
      exchangeable  for shares of capital  stock of the Company) is set forth in
      Schedule  3.1(f).  All  outstanding  shares  of  capital  stock  are  duly
      authorized,  validly issued,  fully paid and  nonassessable  and have been
      issued  in  compliance  with all  applicable  securities  laws.  Except as
      disclosed in Schedule 3.1(f), there are no outstanding options,  warrants,
      script  rights to subscribe  to,  calls or  commitments  of any  character
      whatsoever relating to, or securities,  rights or obligations  convertible
      into or exercisable or exchangeable for, or giving any Person any right to
      subscribe  for or  acquire,  any  shares of Common  Stock,  or  contracts,
      commitments,  understandings  or  arrangements by which the Company or any
      Subsidiary  is or may become  bound to issue  additional  shares of Common
      Stock, or securities or rights  convertible or exchangeable into shares of
      Common Stock.  There are no anti-dilution  or price adjustment  provisions
      contained  in any  security  issued by the  Company  (or in any  agreement
      providing  rights  to  security  holders)  and the  issue  and sale of the
      Securities  will not  obligate the Company to issue shares of Common Stock
      or other securities to any Person (other than the Purchasers) and will not
      result  in a right of any  holder of  Company  securities  to  adjust  the
      exercise,  conversion,  exchange or reset price under such securities.  To
      the knowledge of the Company, except as specifically disclosed in Schedule
      3.1(f),  no  Person  or group of  related  Persons  beneficially  owns (as
      determined  pursuant to Rule 13d-3  under the  Exchange  Act),  or has the
      right to acquire,  by  agreement  with or by  obligation  binding upon the
      Company, beneficial ownership of in excess of 5% of the outstanding Common
      Stock,  ignoring for such purposes any  limitation on the number of shares
      of Common Stock that may be owned at any single time.

            (g) SEC  Reports;  Financial  Statements.  The Company has filed all
      reports  required  to be  filed  by it under  the  Securities  Act and the
      Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,  since
      July 17, 2003 (or such  shorter  period as the Company was required by law
      to  file  such  material)  (the  foregoing  materials  being  collectively
      referred to herein as the "SEC Reports" and,  together with this Agreement
      and the Schedules to this  Agreement,  the  "Disclosure  Materials")  on a
      timely basis or has received a valid  extension of such time of filing and
      has  filed  any  such SEC  Reports  prior  to the  expiration  of any such
      extension.  The Company has delivered to the Purchasers true,  correct and
      complete  copies  of all  SEC  Reports  filed  within  the ten  (10)  days
      preceding the date hereof.  As of their respective  dates, the SEC Reports
      complied in all material  respects with the requirements of the Securities
      Act and the Exchange Act and the rules and  regulations  of the Commission
      promulgated thereunder, and none of the SEC Reports, when filed, contained
      any untrue  statement  of a  material  fact or omitted to state a material
      fact  required  to be stated  therein  or  necessary  in order to make the
      statements  therein,  in the light of the  circumstances  under which they
      were  made,  not  misleading.  The  financial  statements  of the  Company
      included  in  the  SEC  Reports  comply  in  all  material  respects  with
      applicable  accounting  requirements  and the rules and regulations of the
      Commission with respect  thereto as in effect at the time of filing.  Such
      financial  statements  have been prepared in accordance with United States
      generally  accepted  accounting  principles  applied on a consistent basis
      during the periods involved ("GAAP"), except as may be otherwise specified
      in such financial  statements or the notes thereto,  and fairly present in
      all  material  respects  the  financial  position  of the  Company and its
      consolidated  subsidiaries as of and for the dates thereof and the results
      of operations and cash flows for the periods then ended,  subject,  in the
      case  of  unaudited  statements,  to  normal,  immaterial  year-end  audit
      adjustments.   All  material  agreements  to  which  the  Company  or  any
      Subsidiary is a party or to which the property or assets of the Company or
      any  Subsidiary  are  subject  are  included  as part  of or  specifically
      identified in the SEC Reports.

                                       8
<PAGE>

            (h) Material Changes. Since the date of the latest audited financial
      statements  included  within the SEC  Reports  (the  "Financial  Statement
      Date"), except as specifically disclosed in the SEC Reports, (i) there has
      been no event,  occurrence or  development  that,  individually  or in the
      aggregate, has had or that could result in a Material Adverse Effect, (ii)
      the Company has not incurred any  liabilities  (contingent  or  otherwise)
      other than (A) trade payables and accrued  expenses  incurred  pursuant to
      arrangements  in existence on the Financial  Statement Date or incurred in
      the  ordinary  course of business  consistent  with past  practice and (B)
      liabilities  not  required  to be  reflected  in the  Company's  financial
      statements  pursuant to GAAP or required to be  disclosed  in filings made
      with the  Commission,  (iii) the  Company  has not  altered  its method of
      accounting  or the  identity  of its  auditors,  (iv) the  Company has not
      declared or made any dividend or distribution of cash or other property to
      its stockholders or purchased, redeemed or made any agreements to purchase
      or redeem any shares of its  capital  stock,  and (v) the  Company has not
      issued any equity securities to any officer, director or Affiliate, except
      pursuant to existing Company stock option plans.

            (i) Absence of Litigation.  Except as set forth in Schedule  3.1(i),
      there is no  Proceeding  against or  affecting  the  Company or any of its
      Subsidiaries that could, individually or in the aggregate, have a Material
      Adverse Effect.

            (j)  Compliance.  Neither the Company nor any  Subsidiary  (i) is in
      default  under or in violation of (and no event has occurred  that has not
      been waived that, with notice or lapse of time or both,  would result in a
      default by the Company or any  Subsidiary  under),  nor has the Company or
      any Subsidiary  received  notice of a claim that it is in default under or
      that it is in violation of, any indenture, loan or credit agreement or any
      other agreement or instrument to which it is a party or by which it or any
      of its  properties is bound  (whether or not such default or violation has
      been waived),  (ii) is in violation of any order of any court,  arbitrator
      or governmental body, or (iii) is or has been in violation of any statute,
      rule  or  regulation  of any  governmental  authority,  including  without
      limitation all foreign,  federal,  state and local laws relating to taxes,
      environmental protection,  occupational health and safety, product quality
      and safety and employment and labor matters,  except in each case as could
      not,  individually  or in the  aggregate,  have or  result  in a  Material
      Adverse Effect.

            (k) Title to Assets.  The Company and the Subsidiaries have good and
      marketable  title in fee simple to all real property owned by them that is
      material to the business of the Company and the  Subsidiaries and good and
      marketable  title in all personal  property owned by them that is material
      to the business of the Company and the Subsidiaries, in each case free and
      clear of all Liens, except for Liens as do not materially affect the value
      of such  property and do not  materially  interfere  with the use made and
      proposed to be made of such property by the Company and the  Subsidiaries.
      Any real property and  facilities  held under lease by the Company and the
      Subsidiaries  are held by them under  valid,  subsisting  and  enforceable
      leases  of  which  the  Company  and  the  Subsidiaries  are  in  material
      compliance.

            (l)  Certain  Fees.  Except  for the fees to  Ashenden  Finance  and
      described  in  Schedule  3.1(l),  all of which are  payable to  registered
      broker-dealers,  no brokerage or finder's fees or commissions  are or will
      be payable by the Company to any broker,  financial advisor or consultant,
      finder,  placement  agent,  investment  banker,  bank or other Person with
      respect  to the  transactions  contemplated  by  this  Agreement,  and the
      Company  has not taken any action  that would  cause any  Purchaser  to be
      liable for any such fees or commissions.

                                       9
<PAGE>

            (m) Private Placement.  Neither the Company nor any Person acting on
      the Company's behalf has sold or offered to sell or solicited any offer to
      buy the  Securities  by  means  of any  form of  general  solicitation  or
      advertising.  Neither the Company nor any of its Affiliates nor any Person
      acting on the Company's  behalf has,  directly or indirectly,  at any time
      within  the past six  months,  made any offer or sale of any  security  or
      solicitation  of any offer to buy any security  under  circumstances  that
      would eliminate the availability of the exemption from registration  under
      Regulation D under the  Securities  Act in  connection  with the offer and
      sale of the Securities as contemplated  hereby. The Company is not, and is
      not an Affiliate  of, an  "investment  company"  within the meaning of the
      Investment  Company Act of 1940,  as amended.  The Company is not a United
      States real property holding corporation within the meaning of the Foreign
      Investment in Real Property Tax Act of 1980.

            (n) Form SB-2  Eligibility.  The Company is eligible to register its
      Common  Stock for resale by the  Purchasers  using  Form SB-2  promulgated
      under the Securities Act.

            (o) Listing and Maintenance Requirements. The Company has not, since
      July 17, 2003,  received  notice (written or oral) from any Trading Market
      on which the  Common  Stock is or has been  listed or quoted to the effect
      that the  Company is not in  compliance  with the  listing or  maintenance
      requirements of such Trading Market.  The Company is, and has no reason to
      believe  that it will not in the  foreseeable  future  continue  to be, in
      compliance with all such listing and maintenance requirements.

            (p) Registration Rights. Except as described in Schedule 3.1(p), the
      Company  has not  granted  or agreed  to grant to any  Person  any  rights
      (including "piggy-back" registration rights) to have any securities of the
      Company registered with the Commission or any other governmental authority
      that have not been satisfied.

            (q) Application of Takeover  Protections.  There is no control share
      acquisition, business combination, poison pill (including any distribution
      under a rights agreement) or other similar  anti-takeover  provision under
      the Company's  charter documents that is or could become applicable to any
      of the Purchasers as a result of the Purchasers and the Company fulfilling
      their  obligations  or  exercising  their  rights  under  the  Transaction
      Documents,  including,  without  limitation,  as a result of the Company's
      issuance  of  the  Securities  and  the   Purchasers'   ownership  of  the
      Securities.

            (r) Disclosure.  The Company  confirms that neither it nor any other
      Person  acting on its behalf has provided any of the  Purchasers  or their
      agents  or  counsel  with  any  information   that  constitutes  or  might
      constitute material,  nonpublic  information.  The Company understands and
      confirms  that  each  of  the  Purchasers   will  rely  on  the  foregoing
      representations  in effecting  transactions  in securities of the Company.
      All  disclosure  provided to the  Purchasers  regarding  the Company,  its
      business and the transactions contemplated hereby, including the Schedules
      to this  Agreement,  furnished by or on behalf of the Company are true and
      correct and do not contain any untrue statement of a material fact or omit
      to state any material fact necessary in order to make the statements  made
      therein, in the light of the circumstances under which they were made, not
      misleading.  No event or circumstance  has occurred or information  exists
      with  respect to the  Company or any of its  Subsidiaries  or its or their
      business,  properties,  prospects,  operations  or  financial  conditions,
      which,   under  applicable  law,  rule  or  regulation,   requires  public
      disclosure  or  announcement  by the  Company  but  which  has not been so
      publicly announced or disclosed.  The Company acknowledges and agrees that
      no Purchaser  makes or has made any  representations  or  warranties  with
      respect  to  the  transactions   contemplated   hereby  other  than  those
      specifically set forth in Section 3.2.

                                       10
<PAGE>

            (s) Acknowledgment Regarding Purchasers' Purchase of Securities. The
      Company  acknowledges  and agrees  that each of the  Purchasers  is acting
      solely in the capacity of an arm's length  purchaser  with respect to this
      Agreement and the transactions  contemplated  hereby.  The Company further
      acknowledges  that no  Purchaser  is  acting  as a  financial  advisor  or
      fiduciary  of the  Company  or,  to the best of its  knowledge,  any other
      Purchaser (or in any similar  capacity) with respect to this Agreement and
      the transactions contemplated hereby and any advice given by any Purchaser
      or any of their  respective  representatives  or agents in connection with
      this  Agreement  and  the  transactions   contemplated  hereby  is  merely
      incidental to such  Purchaser's  purchase of the  Securities.  The Company
      further  represents to each Purchaser that the Company's decision to enter
      into this Agreement has been based solely on the independent evaluation of
      the   transactions   contemplated   hereby   by  the   Company   and   its
      representatives.

            (t) Patents and Trademarks.  The Company and the Subsidiaries  have,
      or have  rights to use,  all  patents,  patent  applications,  trademarks,
      trademark applications,  service marks, trade names, copyrights,  licenses
      and  other  similar  rights  that are  necessary  or  material  for use in
      connection  with  their  respective  businesses  as  described  in the SEC
      Reports  and which the  failure to so have  could have a Material  Adverse
      Effect  (collectively,  the "Intellectual  Property Rights").  Neither the
      Company  nor any  Subsidiary  has  received  a  written  notice  that  the
      Intellectual  Property  Rights  used  by the  Company  or  any  Subsidiary
      violates or infringes  upon the rights of any Person.  To the knowledge of
      the Company,  all such  Intellectual  Property  Rights are enforceable and
      there  is no  existing  infringement  by  another  Person  of  any  of the
      Intellectual Property Rights.

            (u)  Insurance.  The  Company  and the  Subsidiaries  are insured by
      insurers of recognized  financial  responsibility  against such losses and
      risks and in such amounts as are prudent and  customary in the  businesses
      in which the Company and the Subsidiaries are engaged. Neither the Company
      nor any  Subsidiary  has any reason to believe that it will not be able to
      renew its existing insurance coverage as and when such coverage expires or
      to obtain  similar  coverage from similar  insurers as may be necessary to
      continue its business without a significant increase in cost.

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

                                       11
<PAGE>

            (w) Transactions With Affiliates and Employees.  Except as set forth
      in SEC  Reports,  none of the officers or directors of the Company and, to
      the  knowledge  of the  Company,  none of the  employees of the Company is
      presently a party to any  transaction  with the Company or any  Subsidiary
      (other than for services as employees, officers and directors),  including
      any contract,  agreement or other arrangement providing for the furnishing
      of services to or by, providing for rental of real or personal property to
      or from, or otherwise requiring payments to or from any officer,  director
      or such employee or, to the knowledge of the Company,  any entity in which
      any officer,  director, or any such employee has a substantial interest or
      is an officer, director, trustee or partner.

            (x)   Solvency.   Following   consummation   of   the   transactions
      contemplated hereby, based on the financial condition of the Company as of
      the Closing  Date,  (i) the Company's  fair  saleable  value of its assets
      exceeds  the amount  that will be  required to be paid on or in respect of
      the  Company's  existing  debts and  other  liabilities  (including  known
      contingent  liabilities)  as they mature and (ii) the Company's  assets do
      not constitute unreasonably small capital to carry on its business for the
      current  fiscal year as now  conducted  and as  proposed  to be  conducted
      including  its capital  needs taking into account the  particular  capital
      requirements  of the  business  conducted by the  Company,  and  projected
      capital requirements and capital availability  thereof,  after taking into
      account all anticipated  uses of the cash,  would be sufficient to pay all
      amounts on or in respect of its debt when such  amounts are required to be
      paid. The Company does not intend to incur debts beyond its ability to pay
      such debts as they mature  (taking  into account the timing and amounts of
      cash to be payable on or in respect of its debt).

            (y)  Going  Concern.  Following  consummation  of  the  transactions
      contemplated  hereby,  the Company and the Subsidiaries  have no knowledge
      (after  taking into account the proceeds  received by the Company from the
      sale of the Securities) that the Company's independent public accountants,
      will  issue an  audit  letter  containing  a "going  concern"  opinion  in
      connection  with the Company's  quarterly  report on Form 10-Q pursuant to
      Section 13 or 15(d) under the Exchange Act for the period ended  September
      30, 2003 or otherwise.

            (z) Internal Accounting  Controls.  The Company and the Subsidiaries
      maintain a system of internal  accounting  controls  sufficient to provide
      reasonable assurance that (i) transactions are executed in accordance with
      management's  general or specific  authorizations,  (ii)  transactions are
      recorded as necessary to permit  preparation  of financial  statements  in
      conformity with generally accepted  accounting  principles and to maintain
      asset  accountability,  (iii)  access  to  assets  is  permitted  only  in
      accordance with management's general or specific  authorization,  and (iv)
      the  recorded  accountability  for assets is  compared  with the  existing
      assets at  reasonable  intervals  and  appropriate  action  is taken  with
      respect to any differences.

      3.2  Representations  and  Warranties of the  Purchasers.  Each  Purchaser
hereby, as to itself only and for no other Purchaser, represents and warrants to
the Company as follows:

                                       12
<PAGE>

            (a)  Organization;  Authority.  Such  Purchaser  is an  entity  duly
      organized,  validly  existing and in good  standing  under the laws of the
      jurisdiction  of  its  organization   with  the  requisite   corporate  or
      partnership  power  and  authority  to enter  into and to  consummate  the
      transactions  contemplated by the  Transaction  Documents and otherwise to
      carry out its obligations  hereunder and thereunder.  The purchase by such
      Purchaser  of  the  Shares  and  the  Warrants  hereunder  has  been  duly
      authorized by all  necessary  action on the part of such  Purchaser.  This
      Agreement  has been duly  executed  and  delivered by such  Purchaser  and
      constitutes   the  valid  and  binding   obligation  of  such   Purchaser,
      enforceable against it in accordance with its terms.

            (b) Investment Intent. Such Purchaser is acquiring the Securities as
      principal for its own account for investment  purposes only and not with a
      view to or for  distributing  or  reselling  such  Securities  or any part
      thereof, without prejudice, however, to such Purchaser's right, subject to
      the  provisions  of this  Agreement,  at all  times  to sell or  otherwise
      dispose of all or any part of such  Securities  pursuant  to an  effective
      registration statement under the Securities Act or under an exemption from
      such  registration  and in compliance  with  applicable  federal and state
      securities laws. Nothing contained herein shall be deemed a representation
      or warranty by such Purchaser to hold Securities for any period of time.

            (c)  Purchaser  Status.  At the time such  Purchaser was offered the
      Shares  and the  Warrants,  it  was,  and at the  date  hereof  it is,  an
      "accredited  investor" as defined in Rule 501(a) under the Securities Act,
      as evidenced by such Purchaser's completion of the Statement of Accredited
      Investor attached hereto as Exhibit E.

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

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

            (f) Company  Information.  Such  Purchaser has had an opportunity to
      discuss the Company's  business,  management  and  financial  affairs with
      directors,  officers  and  management  of the  Company  and  has  had  the
      opportunity  to review  the  Company's  operations  and  facilities.  Such
      Purchaser  has also had the  opportunity  to ask  questions of and receive
      answers  from,  the Company  and its  management  regarding  the terms and
      conditions of this investment.

                                       13
<PAGE>

            (g)  Residence.  If  such  Purchaser  is an  individual,  then  such
      Purchaser  resides in the state or province  identified  in the address of
      such Purchaser set forth on the signature  page hereto;  if such Purchaser
      is a partnership,  corporation, limited liability company or other entity,
      then the  office or  offices  of such  Purchaser  in which its  investment
      decision was made is located at the address or addresses of such Purchaser
      set forth on the signature page hereto.

            (h) Certain Fees. Except for the fees to Ashenden,  all of which are
      payable to  registered  broker-dealers,  Purchasers  have no  brokerage or
      finder's fees or commissions which are or will be payable by any Purchaser
      to any broker,  financial advisor or consultant,  finder, placement agent,
      investment  banker,  bank or other Person with respect to the transactions
      contemplated  by this  Agreement that would cause the Company to be liable
      for any such fees or commissions.

                                   ARTICLE IV
                         OTHER AGREEMENTS OF THE PARTIES

      4.1 Transfer Restrictions.

            (a)  Securities  may only be disposed  of  pursuant to an  effective
      registration  statement  under  the  Securities  Act  or  pursuant  to  an
      available  exemption from the registration  requirements of the Securities
      Act, and in  compliance  with any  applicable  state  securities  laws. In
      connection  with any  transfer  of  Securities  other than  pursuant to an
      effective  registration  statement  or to the  Company or pursuant to Rule
      144(k),  except as otherwise set forth herein, the Company may require the
      transferor to provide to the Company an opinion of counsel selected by the
      transferor,  the form and  substance of which  opinion shall be reasonably
      satisfactory  to the Company,  to the effect that such  transfer  does not
      require  registration  under  the  Securities  Act.   Notwithstanding  the
      foregoing,  the Company  hereby  consents to and agrees to register on the
      books of the Company and with its Transfer  Agent,  without any such legal
      opinion, any transfer of Securities by a Purchaser to an Affiliate of such
      Purchaser,  provided that the transferee  certifies to the Company that it
      is an "accredited investor" as defined in Rule 501(a) under the Securities
      Act.

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

            NEITHER  THESE  SECURITIES  NOR  THE  SECURITIES  INTO  WHICH  THESE
            SECURITIES  ARE  EXERCISABLE  HAVE  NOT  BEEN  REGISTERED  WITH  THE
            SECURITIES AND EXCHANGE  COMMISSION OR THE SECURITIES  COMMISSION OF
            ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION  UNDER THE
            SECURITIES  ACT OF 1933,  AS AMENDED (THE  "SECURITIES  ACT"),  AND,
            ACCORDINGLY,  MAY NOT BE  OFFERED  OR  SOLD  EXCEPT  PURSUANT  TO AN
            EFFECTIVE   REGISTRATION  STATEMENT  UNDER  THE  SECURITIES  ACT  OR
            PURSUANT TO AN AVAILABLE  EXEMPTION  FROM, OR IN A  TRANSACTION  NOT
            SUBJECT TO, THE REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT AND
            IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING
            THE FOREGOING,  THESE  SECURITIES  AND THE SECURITIES  ISSUABLE UPON
            EXERCISE OF THESE  SECURITIES  MAY BE PLEDGED IN  CONNECTION  WITH A
            BONA FIDE  MARGIN  ACCOUNT  OR OTHER LOAN OR  FINANCING  ARRANGEMENT
            SECURED BY SUCH SECURITIES.

                                       14
<PAGE>

            (c)  Certificates  evidencing  Securities  shall not be  required to
      contain such legend or any other legend (i) while a Registration Statement
      covering the resale of such  Securities is effective  under the Securities
      Act, or (ii) following any valid sale of such Securities  pursuant to Rule
      144 so long as  Purchaser  has  completed  and  filed  Form  144  with the
      Commission and provided evidence satisfactory to the Company of compliance
      with Rule 144, or (iii) if such  Securities  are  eligible  for sale under
      Rule  144(k) and  Purchaser  is not,  and has not been  during the 90 days
      preceding  such sale, an Affiliate of the Company,  or (iv) if such legend
      is not  required  under  applicable  requirements  of the  Securities  Act
      (including judicial interpretations and pronouncements issued by the Staff
      of the Commission). The Company shall cause its counsel to issue the legal
      opinion included in the Transfer Agent  Instructions to the Transfer Agent
      on the Effective  Date.  Following  the Effective  Date or at such earlier
      time as a legend is no longer required for certain Securities, the Company
      will use  reasonable  efforts to, but in no event later than five  Trading
      Days  following the delivery by a Purchaser to the Company or the Transfer
      Agent of a legended certificate  representing such Securities,  deliver or
      cause to be delivered to such  Purchaser a certificate  representing  such
      Securities  that is free  from all  restrictive  and  other  legends.  The
      Company may not make any notation on its records or give  instructions  to
      any  transfer  agent of the  Company  that  enlarge  the  restrictions  on
      transfer set forth in this Section.

            (d) The Company  acknowledges  and agrees that a Purchaser  may from
      time to time  pledge or grant a  security  interest  in some or all of the
      Securities in connection  with a bona fide margin  agreement or other loan
      or financing  arrangement secured by the Securities and, if required under
      the terms of such  agreement,  loan or  arrangement,  such  Purchaser  may
      transfer pledged or secured Securities to the pledgees or secured parties.
      Such a pledge or transfer  would not be subject to approval of the Company
      and no legal  opinion of the pledgee,  secured  party or pledgor  shall be
      required in connection therewith.  Further, no notice shall be required of
      such pledge.  At the  appropriate  Purchaser's  expense,  the Company will
      execute and deliver such reasonable  documentation as a pledgee or secured
      party of Securities may reasonably  request in connection with a pledge or
      transfer of the  Securities,  including the  preparation and filing of any
      required prospectus  supplement under Rule 424(b)(3) of the Securities Act
      or other applicable provision of the Securities Act to appropriately amend
      the list of selling stockholders thereunder.

      4.2 Furnishing of Information.  As long as any Purchaser owns  Securities,
the Company  covenants to timely file (or obtain  extensions in respect  thereof
and file within the applicable grace period) all reports required to be filed by
the Company  after the date hereof  pursuant to the Exchange Act. Not more often
than once every 90 days,  upon the request of any  Purchaser,  the Company shall
deliver to such Purchaser a written  certification of a duly authorized  officer
as to  whether  it has  complied  with the  preceding  sentence.  As long as any
Purchaser  owns  Securities,  if the  Company is not  required  to file  reports
pursuant to such laws,  it will prepare and furnish to the  Purchasers  and make
publicly available in accordance with paragraph (c) of Rule 144 such information
as is required for the  Purchasers  to sell the  Securities  under Rule 144. The
Company further covenants that it will take such further action as any holder of
Securities  may  reasonably  request  to  satisfy  the  provisions  of Rule  144
applicable to the issuer of securities  relating to transactions for the sale of
securities pursuant to Rule 144.

                                       15
<PAGE>

      4.3 Integration.  The Company shall not, and shall use its best efforts to
ensure that no Affiliate of the Company shall,  sell,  offer for sale or solicit
offers to buy or  otherwise  negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the  Securities  in a manner that would  require the  registration  under the
Securities Act of the sale of the Securities to the Purchasers.

      4.4  Reservation  and Listing of Securities.  The Company shall maintain a
reserve from its duly authorized shares of Common Stock for issuance pursuant to
the  Transaction  Documents  in such  amount as may be  required  to fulfill its
obligations in full under the  Transaction  Documents.  In the event that at any
time the then authorized shares of Common Stock are insufficient for the Company
to satisfy its obligations in full under the Transaction Documents,  the Company
shall  promptly  take such  actions as may be required to increase the number of
authorized  shares.  Following the Effective Date, the Company shall in the time
and manner  required by its Trading  Market,  prepare and file with such Trading
Market an additional shares listing application covering the number of shares of
Common Stock issuable under the  Transaction  Documents and shall take all steps
necessary to cause such shares of Common Stock to be approved for listing on its
Trading Market as soon as possible.

      4.5 Subsequent Placements.

            (a) Other than with respect to the Omicron Financing,  from the date
      hereof until the Effective Date (the "Blockout Period"),  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 or the  Subsidiaries'  equity
      or equity equivalent  securities,  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 Common Stock or Common Stock  Equivalents
      (any such offer,  sale, grant,  disposition or announcement being referred
      to as a "Subsequent Placement").

            (b) The Blockout  Period set forth in the  preceding  paragraph  (a)
      shall be  extended  for the number of Trading  Days  during such period in
      which (i) trading in the Common Stock is suspended by any Trading  Market,
      (ii) the Registration Statement is not effective,  or (iii) the prospectus
      included in the  Registration  Statement may not be used by the Purchasers
      for the resale of Registrable Securities thereunder.

            (c)  From  the end of the  Blockout  Period  until  the  18th  month
      anniversary thereof, the Company will not, directly or indirectly,  effect
      any Subsequent Placement unless the Company shall have first complied with
      this Section 4.5(c).

                                       16
<PAGE>

                  (i) The  Company  shall  deliver to each  Purchaser  a written
            notice (the "Offer") of any proposed or intended issuance or sale or
            exchange of the securities being offered (the "Offered  Securities")
            in a  Subsequent  Placement,  which  Offer  shall (w)  identify  and
            describe  the Offered  Securities,  (x) describe the price and other
            terms upon which they are to be issued,  sold or exchanged,  and the
            number or amount of the  Offered  Securities  to be issued,  sold or
            exchanged,  (y) identify the Persons or entities (if known) to which
            or with which the Offered Securities are to be offered, issued, sold
            or  exchanged  and (z) offer to issue and sell to or  exchange  with
            each Purchaser a pro rata portion of the Offered Securities equal to
            (A) the aggregate  purchase price paid by each Purchaser  divided by
            (B) the sum of (i) the aggregate  principal amount of the debentures
            issued  pursuant to the Omicron  Financing and converted into Common
            Stock  prior to the date of the  Subsequent  Placement  and (ii) the
            aggregate  principal  amount paid by the  Purchasers  for all of the
            Shares purchased hereunder (the "Basic Amount"), and with respect to
            each  Purchaser  that  elects  to  purchase  its Basic  Amount,  any
            additional  portion of the Offered  Securities  attributable  to the
            Basic Amounts of other  Purchasers as such Purchaser  shall indicate
            it will purchase or acquire  should the other  Purchasers  subscribe
            for less than their Basic Amounts (the "Undersubscription Amount").

                  (ii) To accept an Offer, in whole or in part, a Purchaser must
            deliver a written  notice to the Company prior to the end of the ten
            (10) Trading Day period of the Offer,  setting  forth the portion of
            the Purchaser's  Basic Amount that such Purchaser elects to purchase
            and, if such  Purchaser  shall  elect to  purchase  all of its Basic
            Amount,  the  Undersubscription  Amount, if any, that such Purchaser
            elects to purchase (in either case, the "Notice of Acceptance").  If
            the Basic Amounts subscribed for by all Purchasers are less than the
            total of all of the Basic  Amounts,  then each Purchaser who has set
            forth an  Undersubcription  Amount in its Notice of Acceptance shall
            be entitled to purchase, in addition to the Basic Amounts subscribed
            for, the  Undersubscription  Amount it has subscribed for; provided,
            however, that if the Undersubscription Amounts subscribed for exceed
            the  difference  between the total of all the Basic  Amounts and the
            Basic  Amounts  subscribed  for  (the  "Available  Undersubscription
            Amount"),    each    Purchaser   who   has    subscribed   for   any
            Undersubscription  Amount shall be entitled to purchase that portion
            of the  Available  Undersubscription  Amount as the Basic  Amount of
            such  Purchaser  bears to the total Basic Amounts of all  Purchasers
            that have  subscribed  for  Undersubscription  Amounts,  subject  to
            rounding  by  the  Board  of  Directors  to  the  extent  its  deems
            reasonably necessary.

                  (iii) The Company  shall have ten (10)  Trading  Days from the
            expiration of the period set forth in Section  4.5(c)(ii) above (the
            "Subsequent  Placement  Closing Period") to issue,  sell or exchange
            all or any part of such Offered  Securities  as to which a Notice of
            Acceptance  has not  been  given  by the  Purchasers  (the  "Refused
            Securities"), but only to the offerees described in the Offer (if so
            described  therein) and only upon terms and  conditions  (including,
            without  limitation,  unit prices and  interest  rates) that are not
            more favorable to the acquiring  Person or Persons or less favorable
            to the Company  than those set forth in the Offer.  However,  if the
            stock  appreciates by more than 15% during the Subsequent  Placement
            Closing  Period (or such shorter  period from the  expiration of the
            period set forth in Section  4.5(c)(ii)  above  through the date the
            Company  sets to issue,  sell or exchange  all or any portion of the
            Refused Securities),  then the Purchasers will have 1 Trading Day to
            elect to issue a Notice of  Acceptance  in  accordance  with Section
            4.5(c)(ii) above relating to the Refused Securities. The Company and
            the Purchasers  agree that the Subsequent  Placement  Closing Period
            shall be extended  until the  expiration of the 1 Trading Day period
            in the immediately preceding sentence.

                                       17
<PAGE>

                  (iv) In the event the Company  shall propose to sell less than
            all the Refused Securities (any such sale to be in the manner and on
            the  terms  specified  in  Section  4.5(c)(iii)  above),  then  each
            Purchaser may, at its sole option and in its sole discretion, reduce
            the  number or amount of the  Offered  Securities  specified  in its
            Notice of  Acceptance  to an amount  that shall be not less than the
            number  or  amount  of the  Offered  Securities  that the  Purchaser
            elected to purchase pursuant to Section  4.5(c)(ii) above multiplied
            by a  fraction,  (i) the  numerator  of which shall be the number or
            amount of Offered Securities the Company actually proposes to issue,
            sell or exchange  (including Offered Securities to be issued or sold
            to  Purchasers  pursuant to Section  4.5(c)(ii)  above prior to such
            reduction)  and (ii) the  denominator of which shall be the original
            amount of the Offered Securities. In the event that any Purchaser so
            elects  to  reduce  the  number  or  amount  of  Offered  Securities
            specified  in its Notice of  Acceptance,  the Company may not issue,
            sell or  exchange  more  than the  reduced  number  or amount of the
            Offered  Securities unless and until such securities have again been
            offered to the  Purchasers  in  accordance  with  Section  4.5(c)(i)
            above.

                  (v) Upon the closing of the issuance,  sale or exchange of all
            or less than all of the Refused  Securities,  the  Purchasers  shall
            acquire  from  the  Company,  and the  Company  shall  issue  to the
            Purchasers,  the number or amount of Offered Securities specified in
            the Notices of Acceptance, as reduced pursuant to Section 4.5(c)(iv)
            above  if the  Purchasers  have  so  elected,  upon  the  terms  and
            conditions specified in the Offer. The purchase by the Purchasers of
            any Offered  Securities is subject in all cases to the  preparation,
            execution  and  delivery  by the  Company  and the  Purchasers  of a
            purchase agreement  relating to such Offered  Securities  reasonably
            satisfactory  in form and  substance  to the  Purchasers  and  their
            respective counsel.

                  (vi) Any Offered  Securities not acquired by the Purchasers or
            other Persons in accordance with Section  4.5(c)(iii)  above may not
            be issued,  sold or  exchanged  until they are again  offered to the
            Purchasers under the procedures specified in this Agreement.

            (d) The  restrictions  contained in  paragraphs  (a) and (c) of this
      Section shall not apply to Excluded Stock.

      4.6 Securities  Laws  Disclosure;  Publicity.  The Company  shall,  on the
Closing Date, issue a press release acceptable to the Purchasers  disclosing all
material terms of the transactions contemplated hereby. On the Closing Date, the
Company shall file a Current  Report on Form 8-K with the  Commission  (the "8-K
Filing")   describing  the  terms  of  the  transactions   contemplated  by  the
Transaction  Documents and including as exhibits to such Current  Report on Form
8-K  this  Agreement  and the form of  Warrants,  in the  form  required  by the
Exchange Act. Thereafter,  the Company shall timely file any filings and notices
required by the  Commission or applicable  law with respect to the  transactions
contemplated  hereby and provide copies thereof to the Purchasers promptly after
filing.  Except with respect to the 8-K Filing and the press release  referenced
above (a copy of which will be provided to the  Purchasers  for their  review as
early as  practicable  prior to its  filing),  the Company  shall,  at least two
Trading Days prior to the filing or dissemination of any disclosure  required by
this paragraph,  provide a copy thereof to the Purchasers for their review.  The
Company and the  Purchasers  shall  consult with each other in issuing any press
releases  or  otherwise   making   public   statements   or  filings  and  other
communications  with the Commission or any  regulatory  agency or Trading Market
with respect to the transactions  contemplated  hereby,  and neither party shall
issue any such press release or otherwise make any such public statement, filing
or other  communication  without the prior consent of the other,  except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide the other party with prior  notice of such public  statement,  filing or
other  communication.  Notwithstanding  the  foregoing,  the  Company  shall not
publicly  disclose  the  name  of any  Purchaser,  or  include  the  name of any
Purchaser in any filing with the Commission or any regulatory  agency or Trading
Market,  without  the prior  written  consent of such  Purchaser,  except to the
extent such  disclosure  (but not any disclosure as to the  controlling  Persons
thereof)  is required by law or Trading  Market  regulations,  in which case the
Company shall provide the Purchasers with prior notice of such  disclosure.  The
Company shall not, and shall cause each of its  Subsidiaries and its and each of
their respective officers,  directors,  employees and agents not to, provide any
Purchaser with any material nonpublic  information  regarding the Company or any
of its  Subsidiaries  from and after the  filing of the 8-K Filing  without  the
express  written  consent  of  such  Purchaser.  Purchasers  hereby  consent  to
disclosure  of  their  name  in  the  "Selling   Stockholder"   section  of  the
Registration  Statement.  Neither the Company nor any Purchaser  shall issue any
press releases or any other public  statements with respect to the  transactions
contemplated  hereby;  provided,  however,  that the Company  shall be entitled,
without the prior approval of any Purchaser,  to make any press release or other
public   disclosure  with  respect  to  such  transactions  (i)  in  substantial
conformity  with the 8-K Filing and  contemporaneously  therewith and (ii) as is
required by applicable law and regulations  (provided that in the case of clause
(i) each Purchaser shall be consulted by the Company in connection with any such
press  release or other  public  disclosure  prior to its  release).  Each press
release  disseminated since July 17, 2003 did not at the time of release contain
any  untrue  statement  of a  material  fact or omit to  state a  material  fact
required  to be stated  therein  or  necessary  in order to make the  statements
therein,  in  light  of  the  circumstances  under  which  they  are  made,  not
misleading.

                                       18
<PAGE>

      4.7 Use of  Proceeds.  Except as set forth on  Schedule  4.7,  the Company
shall use the net proceeds from the sale of the Securities hereunder for working
capital  purposes and not for the  satisfaction  of any portion of the Company's
debt (other than payment of trade payables and accrued  expenses in the ordinary
course of the Company's business and consistent with prior practices), to redeem
any Company equity or equity-equivalent  securities or to settle any outstanding
litigation.

      4.8  Reimbursement.  If any  Purchaser  or any  of its  Affiliates  or any
officer, director, partner, controlling Person, employee or agent of a Purchaser
or any of its Affiliates (a "Related  Person")  becomes involved in any capacity
in any  Proceeding  brought by or against any Person in connection  with or as a
result  of the  transactions  contemplated  by the  Transaction  Documents,  the
Company will  indemnify and hold harmless such  Purchaser or Related  Person for
its  reasonable   legal  and  other   expenses   (including  the  costs  of  any
investigation, preparation and travel) and for any Losses incurred in connection
therewith,  as such expenses or Losses are incurred,  excluding only Losses that
result  directly from such  Purchaser's or Related  Person's  misrepresentation,
gross negligence or willful misconduct. In addition, the Company shall indemnify
and hold harmless each Purchaser and Related Person from and against any and all
Losses, as incurred,  arising out of or relating to any breach by the Company of
any of the representations,  warranties or covenants made by the Company in this
Agreement or any other Transaction  Document, or any allegation by a third party
that, if true,  would  constitute such a breach.  The conduct of any Proceedings
for which indemnification is available under this paragraph shall be governed by
Section 6.4(c) below. The indemnification  obligations of the Company under this
paragraph  shall be in addition to any liability  that the Company may otherwise
have and shall be  binding  upon and  inure to the  benefit  of any  successors,
assigns,  heirs and  personal  representatives  of the  Purchasers  and any such
Related  Persons.  The Company also agrees that neither the  Purchasers  nor any
Related Persons shall have any liability to the Company or any Person  asserting
claims on behalf of or in right of the Company in connection with or as a result
of the  transactions  contemplated by the Transaction  Documents,  except to the
extent   that   any   Losses   incurred   by  the   Company   result   from  the
misrepresentation,  gross  negligence,  willful  misconduct  or  breach  of  any
Transaction  Document of or by the  applicable  Purchaser  or Related  Person in
connection with such transactions. If the Company breaches its obligations under
any Transaction Document, then, in addition to any other liabilities the Company
may have under any Transaction Document or applicable law, the Company shall pay
or  reimburse  the  Purchasers  on  demand  for  all  costs  of  collection  and
enforcement (including reasonable attorneys fees and expenses). Without limiting
the generality of the foregoing,  the Company  specifically  agrees to reimburse
the  Purchasers  on  demand  for all  costs  of  enforcing  the  indemnification
obligations in this paragraph.

      4.9 Fundamental  Changes.  In addition to any other rights provided by law
or set forth  herein,  from and after the date of this  Agreement  and until the
Effective  Date, the Company shall not without first  obtaining the approval (by
vote or written consent, as provided by law) of the holders of a majority of the
Purchasers:

            (a) merge with any other  business  entity which results in a Change
      of Control;

            (b) sell a substantial  portion of assets not in the ordinary course
      of business;

            (c) increase the authorized  number of shares of any class or series
      of capital stock of the Company;

            (d) amend the company's charter or by-laws;

                                       19
<PAGE>

            (e)  purchase,  redeem  (other  than  pursuant  to equity  incentive
      agreements  with  non-officer  employees  giving the  Company the right to
      repurchase  shares upon the termination of services) or set aside any sums
      for the  purchase  or  redemption  of,  or  declare  or pay  any  dividend
      (including  a dividend  payable in stock of the Company) or make any other
      distribution  with  respect  to, any shares of capital  stock or any other
      securities that are convertible into or exercisable for such stock;

            (f)  increase  the number of shares  issuable  pursuant to any stock
      option or other equity incentive plan;

            (g) change  the nature of the  Company's  business  to any  business
      which is fundamentally  distinct and separate from the business  currently
      conducted by the Company; or

            (h)  cause or permit  any  subsidiary  of the  Company  directly  or
      indirectly to take any actions described in clauses (a) through (g) above,
      other than issuing securities to the Company.

                                   ARTICLE V
                                   CONDITIONS

      5.1  Conditions  Precedent  to  the  Obligations  of the  Purchasers.  The
obligation of each Purchaser to acquire  Securities at the Closing is subject to
the satisfaction or waiver by such Purchaser,  at or before the Closing, of each
of the following conditions:

            (a)   Representations   and  Warranties.   The  representations  and
      warranties  of the Company  contained  herein shall be true and correct in
      all  material  respects  as of the date when made and as of the Closing as
      though made on and as of such date; and

            (b)  Performance.  The Company and each other  Purchaser  shall have
      performed,  satisfied  and  complied  in all  material  respects  with all
      covenants, agreements and conditions required by the Transaction Documents
      to be  performed,  satisfied  or  complied  with by it at or  prior to the
      Closing, including the conditions set forth in Section 2.2(a).

      5.2 Conditions Precedent to the Obligations of the Company. The obligation
of the Company to sell Securities at the Closing is subject to the  satisfaction
or waiver by the  Company,  at or before the Closing,  of each of the  following
conditions:

            (a)   Representations   and  Warranties.   The  representations  and
      warranties of the Purchasers contained herein shall be true and correct in
      all material  respects as of the date when made and as of the Closing Date
      as though made on and as of such date; and

            (b) Performance. The Purchasers shall have performed,  satisfied and
      complied in all  material  respects  with all  covenants,  agreements  and
      conditions  required  by  the  Transaction   Documents  to  be  performed,
      satisfied or complied with by the Purchasers at or prior to the Closing.

            (c) Receipt of Funds.  The Company shall have  received  immediately
      available  funds payable to the Company from each  Purchaser  representing
      such Purchaser's aggregate purchase price for the Shares and Warrants.

                                       20
<PAGE>

                                   ARTICLE VI
                               REGISTRATION RIGHTS

      6.1 Shelf Registration

            (a) As  promptly  as  possible,  and in any event on or prior to the
      Filing  Date,  the Company  shall  prepare and file with the  Commission a
      "Shelf"  Registration  Statement  covering  the resale of all  Registrable
      Securities  for an offering to be made on a continuous  basis  pursuant to
      Rule 415. The Registration  Statement shall be on Form SB-2 (except if the
      Company is not then  eligible  to  register  for  resale  the  Registrable
      Securities  on Form  SB-2,  in which  case such  registration  shall be on
      another  appropriate  form in accordance  herewith as the  Purchasers  may
      consent)  and  shall  contain   (except  if  otherwise   directed  by  the
      Purchasers) the "Plan of Distribution" attached hereto as Exhibit C.

            (b) The Company  shall use its  commercially  reasonably  efforts to
      cause  the  Registration   Statement  to  be  declared  effective  by  the
      Commission as promptly as possible  after the filing  thereof,  but in any
      event prior to the  Required  Effectiveness  Date,  and shall use its best
      efforts to keep the Registration  Statement  continuously  effective under
      the Securities Act until the  Registrable  Securities can be sold pursuant
      to Rule  144(k)  or such  earlier  date  when all  Registrable  Securities
      covered by such Registration  Statement have been sold (the "Effectiveness
      Period").

            (c) The Company shall notify each Purchaser in writing promptly (and
      in any event within one Trading Day) after receiving notification from the
      Commission that the Registration Statement has been declared effective.

            (d) As  promptly  as  possible,  and in any event no later  than the
      Post-Effective  Amendment Filing  Deadline,  the Company shall prepare and
      file with the Commission a Post-Effective Amendment. The Company shall use
      its best  efforts to cause the  Post-Effective  Amendment  to be  declared
      effective  by the  Commission  as promptly  as  possible  after the filing
      thereof,  but in any event prior to the 45th day after the  Post-Effective
      Amendment  Filing  Deadline.  The Company  shall notify each  Purchaser in
      writing promptly (and in any event within one Trading Day) after receiving
      notification  from the Commission  that the  Post-Effective  Amendment has
      been declared effective.

            (e) Upon the occurrence of any Event (as defined below) and on every
      monthly  anniversary  thereof  until the  applicable  Event is  cured,  as
      partial relief for the damages suffered therefrom by the Purchasers (which
      remedy shall not be exclusive of any other remedies  available  under this
      Agreement,  at law or in equity),  the Company shall pay to each Purchaser
      an amount in cash,  as liquidated  damages and not as a penalty,  equal to
      .5% of the aggregate  purchase price paid by such Purchaser  hereunder for
      the first month and 1% for each month thereafter.  The payments to which a
      Purchaser  shall be entitled  pursuant to this Section 6.1(d) are referred
      to herein as "Event Payments".  Any Event Payments payable pursuant to the
      terms  hereof  shall apply on a pro-rata  basis for any portion of a month
      prior to the cure of an  Event.  In the event  the  Company  fails to make
      Event Payments in a timely manner, such Event Payments shall bear interest
      at the rate of 1.5% per month  (prorated for partial months) until paid in
      full.

For such purposes, each of the following shall constitute an "Event":

                  (i) the Registration Statement is not filed on or prior to the
            Filing Date or is not declared effective on or prior to the Required
            Effectiveness Date; provided,  however, that for the purposes of the
            Event Payment under this Section 6.1(e) only, the Company shall have
            an   additional   15  days  to  cure  the  failure  to  declare  the
            Registration  Statement  effective  on  or  prior  to  the  Required
            Effectiveness   Date  before  such  Event  Payment  is  due  to  the
            Purchasers under this Section 6.1(e);

                                       21
<PAGE>

                  (ii) after the Effective Date, a Purchaser is not permitted to
            sell Registrable  Securities under the Registration  Statement (or a
            subsequent  Registration Statement filed in replacement thereof) for
            any  reason  for  five  or  more  Trading   Days   (whether  or  not
            consecutive);

                  (iii) a  Post-Effective  Amendment is not filed on or prior to
            the  Post-Effective  Amendment  Filing  Deadline or is not  declared
            effective   on  or  prior  to  the  15th   Trading   Day  after  the
            Post-Effective Amendment Filing Deadline;

                  (iv) after the  Effective  Date,  any  Registrable  Securities
            covered by such Registration Statement are not listed on an Eligible
            Market;

                  (v) the Common Stock is not listed or quoted,  or is suspended
            from  trading,  on an Eligible  Market for a period of five  Trading
            Days (which need not be consecutive Trading Days);

                  (vi) the Company fails for any reason to deliver a certificate
            evidencing  any  Securities  to a Purchaser  within ten (10) Trading
            Days after delivery of such certificate is required  pursuant to any
            Transaction  Document  or the  exercise  rights  of  the  Purchasers
            pursuant to the  Transaction  Documents are otherwise  suspended for
            any reason; or

                  (vii) the Company fails to have available a sufficient  number
            of authorized but unissued and otherwise unreserved shares of Common
            Stock available to issue Underlying  Shares upon any exercise of the
            Warrants for more than 3 Trading Days or, at any time  following the
            Effective Date, any Shares or Underlying Shares are not listed on an
            Eligible Market.

            (f) The  Company  shall  not,  prior  to the  Effective  Date of the
      Registration   Statement,   prepare  and  file  with  the   Commission   a
      registration  statement relating to an offering for its own account or the
      account  of  others  under  the  Securities  Act  of  any  of  its  equity
      securities.

      6.2 Registration Procedures. In connection with the Company's registration
obligations hereunder, the Company shall:

            (a) Not less  than  three  Trading  Days  prior to the  filing  of a
      Registration  Statement  or any related  Prospectus  or any  amendment  or
      supplement  thereto  (including any document that would be incorporated or
      deemed to be  incorporated  therein by  reference),  the Company shall (i)
      furnish to each  Purchaser  and any counsel  designated  by any  Purchaser
      (each, a "Purchaser  Counsel",  and Vertical  Ventures,  LLC has initially
      designated Proskauer Rose LLP) copies of all such documents proposed to be
      filed,  which  documents  (other than those  incorporated  or deemed to be
      incorporated  by  reference)  will  be  subject  to  the  review  of  such
      Purchasers  and each  Purchaser  Counsel,  and (ii) cause its officers and
      directors, counsel and independent certified public accountants to respond
      to such inquiries as shall be necessary, in the reasonable opinion of each
      Purchaser  Counsel,  to  conduct a  reasonable  investigation  within  the
      meaning of the  Securities  Act. The Company shall not file a Registration
      Statement or any such Prospectus or any amendments or supplements  thereto
      to which Purchasers holding a majority of the Registrable Securities shall
      reasonably object.

                                       22
<PAGE>

            (b) (i)  Prepare  and file  with  the  Commission  such  amendments,
      including  post-effective  amendments,  to each Registration Statement and
      the  Prospectus  used in connection  therewith as may be necessary to keep
      the  Registration  Statement  continuously  effective as to the applicable
      Registrable  Securities for the Effectiveness  Period and prepare and file
      with the Commission  such additional  Registration  Statements in order to
      register  for  resale  under  the  Securities  Act all of the  Registrable
      Securities;   (ii)  cause  the  related   Prospectus   to  be  amended  or
      supplemented by any required Prospectus supplement, and as so supplemented
      or amended to be filed  pursuant to Rule 424; (iii) respond as promptly as
      reasonably  possible,  and in any event  within ten days,  to any comments
      received from the Commission with respect to the Registration Statement or
      any amendment  thereto and as promptly as reasonably  possible provide the
      Purchasers true and complete copies of all correspondence  from and to the
      Commission relating to the Registration Statement;  and (iv) comply in all
      material  respects  with  the  provisions  of the  Securities  Act and the
      Exchange Act with respect to the disposition of all Registrable Securities
      covered by the  Registration  Statement  during the  applicable  period in
      accordance  with the intended  methods of  disposition  by the  Purchasers
      thereof set forth in the  Registration  Statement as so amended or in such
      Prospectus as so supplemented.

            (c) Notify the Purchasers of  Registrable  Securities to be sold and
      each  Purchaser  Counsel  as  promptly  as  reasonably  possible,  and (if
      requested by any such Person) confirm such notice in writing no later than
      one  Trading  Day  thereafter,  of any of the  following  events:  (i) the
      Commission  notifies the Company  whether  there will be a "review" of any
      Registration  Statement;  (ii) the  Commission  comments in writing on any
      Registration  Statement  (in which case the Company  shall deliver to each
      Purchaser a copy of such comments and of all written  responses  thereto);
      (iii)  any  Registration  Statement  or any  post-effective  amendment  is
      declared  effective;  (iv) the  Commission  or any other  Federal or state
      governmental  authority  requests  any  amendment  or  supplement  to  any
      Registration  Statement or Prospectus or requests  additional  information
      related thereto;  (v) the Commission  issues any stop order suspending the
      effectiveness of any  Registration  Statement or initiates any Proceedings
      for that purpose;  (vi) the Company  receives  notice of any suspension of
      the  qualification  or exemption  from  qualification  of any  Registrable
      Securities  for sale in any  jurisdiction,  or the initiation or threat of
      any  Proceeding  for such  purpose;  or  (vii)  the  financial  statements
      included in any  Registration  Statement  become  ineligible for inclusion
      therein or any statement made in any Registration  Statement or Prospectus
      or any  document  incorporated  or deemed to be  incorporated  therein  by
      reference  is  untrue  in  any  material  respect  or  any  revision  to a
      Registration  Statement,  Prospectus or other document is required so that
      it will not contain  any untrue  statement  of a material  fact or omit to
      state any 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.

                                       23
<PAGE>

            (d) Use its best  efforts  to avoid the  issuance  of or, if issued,
      obtain the withdrawal of (i) any order suspending the effectiveness of any
      Registration  Statement,  or (ii) any suspension of the  qualification (or
      exemption from  qualification)  of any of the  Registrable  Securities for
      sale in any jurisdiction, at the earliest practicable moment.

            (e) Furnish to each  Purchaser and each Purchaser  Counsel,  without
      charge,  at least one conformed  copy of each  Registration  Statement and
      each amendment thereto,  including financial statements and schedules, all
      documents  incorporated  therein by  reference,  and all  exhibits  to the
      extent  requested  by  such  Person  promptly  after  the  filing  of such
      documents with the Commission.

            (f) Promptly  deliver to each Purchaser and each Purchaser  Counsel,
      without  charge,   as  many  copies  of  the  Prospectus  or  Prospectuses
      (including  each form of  prospectus)  and each  amendment  or  supplement
      thereto  as such  Persons  may  reasonably  request.  The  Company  hereby
      consents to the use of such  Prospectus  and each  amendment or supplement
      thereto by each of the selling  Purchasers  in  connection  with the valid
      offering and sale of the Registrable Securities covered by such Prospectus
      and any amendment or supplement thereto.

            (g) (i) In the time and  manner  required  by each  Trading  Market,
      prepare and file with such Trading  Market an  additional  shares  listing
      application  covering  all of the  Registrable  Securities;  (ii) take all
      steps  necessary to cause such  Registrable  Securities to be approved for
      listing  on each  Trading  Market as soon as  possible  thereafter;  (iii)
      provide to the Purchasers evidence of such listing;  and (iv) maintain the
      listing of such  Registrable  Securities  on each such  Trading  Market or
      another Eligible Market.

            (h) Prior to any public offering of Registrable Securities,  use its
      best  efforts  to  register  or  qualify  or  cooperate  with the  selling
      Purchasers and each  applicable  Purchaser  Counsel in connection with the
      registration  or  qualification  (or exemption from such  registration  or
      qualification) of such Registrable Securities for offer and sale under the
      securities or blue sky laws of such jurisdictions within the United States
      as any Purchaser  requests in writing,  to keep each such  registration or
      qualification (or exemption  therefrom) effective during the Effectiveness
      Period and to do any and all other acts or things  necessary  or advisable
      to  enable  the  disposition  in  such  jurisdictions  of the  Registrable
      Securities covered by a Registration  Statement;  provided,  however, that
      the Company shall not be obligated to file any general  consent to service
      of  process  or to  qualify  as a  foreign  corporation  or as a dealer in
      securities  in any  jurisdiction  in  which it is not so  qualified  or to
      subject   itself  to  taxation  in  respect  of  doing   business  in  any
      jurisdiction in which it is not otherwise subject.

            (i)  Cooperate   with  the   Purchasers  to  facilitate  the  timely
      preparation   and  delivery  of  certificates   representing   Registrable
      Securities  to be  delivered to a  transferee  pursuant to a  Registration
      Statement,  which  certificates  shall be free, to the extent permitted by
      this Agreement and applicable securities laws, of all restrictive legends,
      and  to  enable  such  Registrable  Securities  to be in  such  reasonable
      denominations  and  registered  in such names as any such  Purchasers  may
      request.

                                       24
<PAGE>

            (j)  Upon  the   occurrence  of  any  event   described  in  Section
      6.2(c)(vii),  as promptly as reasonably possible,  prepare a supplement or
      amendment,  including  a  post-effective  amendment,  to the  Registration
      Statement  or a  supplement  to the  related  Prospectus  or any  document
      incorporated or deemed to be incorporated  therein by reference,  and file
      any other required document so that, as thereafter delivered,  neither the
      Registration   Statement  nor  such  Prospectus  will  contain  an  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
      light of the circumstances under which they were made, not misleading.

            (k)  Cooperate  with  any  reasonable  due  diligence  investigation
      undertaken by the  Purchasers in connection  with the sale of  Registrable
      Securities, including without limitation by making available any documents
      and  information;  provided  that the  Company  will not  deliver  or make
      available to any Purchaser  material,  nonpublic  information  unless such
      Purchaser specifically requests in advance to receive material,  nonpublic
      information  in writing and signs a  confidentiality,  non-disclosure  and
      indemnification agreement with respect to all such non-public information.

            (l) If Holders of a majority  of the  Registrable  Securities  being
      offered pursuant to a Registration  Statement select  underwriters for the
      offering,  the Company shall enter into and perform its obligations  under
      an underwriting agreement, in usual and customary form, including, without
      limitation,  by providing  customary legal  opinions,  comfort letters and
      indemnification and contribution obligations.

            (m)  Comply  with  all  applicable  rules  and  regulations  of  the
      Commission.

      6.3  Registration  Expenses.  The  Company  shall  pay (or  reimburse  the
Purchasers  for)  all  fees  and  expenses  incident  to the  performance  of or
compliance with this Agreement by the Company,  including without limitation (a)
all  registration  and filing fees and expenses,  including  without  limitation
those  related  to  filings  with the  Commission,  any  Trading  Market  and in
connection  with  applicable  state  securities  or Blue Sky laws,  (b) printing
expenses  (including  without limitation  expenses of printing  certificates for
Registrable   Securities   and  of  printing   prospectuses   requested  by  the
Purchasers),  (c)  messenger,  telephone  and  delivery  expenses,  (d) fees and
disbursements  of counsel for the Company and up to $10,000 in the aggregate for
the Purchaser  Counsels,  (e) fees and expenses of all other Persons retained by
the Company in connection with the consummation of the transactions contemplated
by this  Agreement,  and (f) all  listing  fees to be paid by the Company to the
Trading Market.

      6.4 Indemnification

            (a) Indemnification by the Company.  The Company shall indemnify and
      hold harmless each Purchaser, the officers, directors,  partners, members,
      agents, investment advisors and employees of each of them, each Person who
      controls  any such  Purchaser  (within  the  meaning  of Section 15 of the
      Securities  Act or  Section  20 of the  Exchange  Act)  and the  officers,
      directors,   partners,   members,   agents  and  employees  of  each  such
      controlling  Person,  to the fullest extent  permitted by applicable  law,
      from and  against  any and all  Losses,  as  incurred,  arising  out of or
      relating  to any untrue or alleged  untrue  statement  of a material  fact
      contained in the  Registration  Statement,  any  Prospectus or any form of
      prospectus or in any amendment or supplement thereto or in any preliminary
      prospectus,  or arising  out of or  relating  to any  omission  or alleged
      omission of a material fact required to be stated  therein or necessary to
      make the  statements  therein  (in the case of any  Prospectus  or form of
      prospectus or supplement  thereto, in the light of the circumstances under
      which they were made) not  misleading,  except to the extent,  but only to
      the extent,  that (i) such untrue  statements,  alleged untrue statements,
      omissions or alleged omissions are based solely upon information regarding
      such  Purchaser  furnished  in  writing to the  Company by such  Purchaser
      expressly for use therein,  or to the extent that such information relates
      to such Purchaser or such  Purchaser's  proposed method of distribution of
      Registrable  Securities and was reviewed and expressly approved in writing
      by such Purchaser  expressly for use in the Registration  Statement,  such
      Prospectus  or such form of  Prospectus  or in any amendment or supplement
      thereto  or (ii) in the  case of an  occurrence  of an  event  of the type
      specified  in Section  6.2(c)(v)-(vii),  the use by such  Purchaser  of an
      outdated or  defective  Prospectus  after the Company  has  notified  such
      Purchaser in writing  that the  Prospectus  is outdated or  defective  and
      prior to the  receipt  by such  Purchaser  of the Advice  contemplated  in
      Section  6.5.  The Company  shall  notify the  Purchasers  promptly of the
      institution, threat or assertion of any Proceeding of which the Company is
      aware in connection with the transactions contemplated by this Agreement.

                                       25
<PAGE>

            (b) Indemnification by Purchasers.  Each Purchaser shall,  severally
      and not jointly,  indemnify and hold harmless the Company,  its directors,
      officers,  agents and  employees,  each  Person who  controls  the Company
      (within the meaning of Section 15 of the  Securities Act and Section 20 of
      the Exchange  Act), and the  directors,  officers,  agents or employees of
      such  controlling  Persons,  to the fullest extent permitted by applicable
      law,  from and against all Losses (as  determined  by a court of competent
      jurisdiction  in a final judgment not subject to appeal or review) arising
      solely out of any untrue  statement  of a material  fact  contained in the
      Registration Statement, any Prospectus,  or any form of prospectus,  or in
      any amendment or supplement  thereto,  or arising solely out of failure to
      comply with all  prospectus  delivery  requirements  upon a re-sale of any
      Securities  or any  omission  of a  material  fact  required  to be stated
      therein or  necessary to make the  statements  therein (in the case of any
      Prospectus or form of prospectus  or supplement  thereto,  in the light of
      the  circumstances  under  which  they were  made) not  misleading  to the
      extent, but only to the extent,  that such untrue statement or omission is
      contained in any  information so furnished in writing by such Purchaser to
      the Company  specifically for inclusion in such Registration  Statement or
      such  Prospectus  or to the  extent  that (i) such  untrue  statements  or
      omissions  are based  solely upon  information  regarding  such  Purchaser
      furnished in writing to the Company by such  Purchaser  expressly  for use
      therein,  or to the extent that such information relates to such Purchaser
      or  such  Purchaser's  proposed  method  of  distribution  of  Registrable
      Securities  and was  reviewed  and  expressly  approved in writing by such
      Purchaser expressly for use in the Registration Statement, such Prospectus
      or such form of Prospectus  or in any  amendment or supplement  thereto or
      (ii) in the case of an  occurrence  of an event of the type  specified  in
      Section  6.2(c)(v)-(vii),  the use by such  Purchaser  of an  outdated  or
      defective  Prospectus  after the Company has  notified  such  Purchaser in
      writing  that the  Prospectus  is outdated or  defective  and prior to the
      receipt by such Purchaser of the Advice contemplated in Section 6.5. In no
      event shall the liability of any selling Purchaser hereunder be greater in
      amount  than  the  dollar  amount  of the net  proceeds  received  by such
      Purchaser upon the sale of the Registrable  Securities giving rise to such
      indemnification obligation.

            (c) Conduct of Indemnification  Proceedings. If any Proceeding shall
      be brought or asserted against any Person entitled to indemnity  hereunder
      (an "Indemnified Party"), such Indemnified Party shall promptly notify the
      Person  from  whom  indemnity  is sought  (the  "Indemnifying  Party")  in
      writing,  and the  Indemnifying  Party shall  assume the defense  thereof,
      including  the  employment  of  counsel  reasonably  satisfactory  to  the
      Indemnified  Party and the  payment of all fees and  expenses  incurred in
      connection  with  defense  thereof;  provided,  that  the  failure  of any
      Indemnified  Party to give such notice shall not relieve the  Indemnifying
      Party of its obligations or liabilities pursuant to this Agreement, except
      (and only) to the extent that it shall be finally determined by a court of
      competent  jurisdiction  (which  determination is not subject to appeal or
      further  review) that such failure shall have  proximately  and materially
      adversely prejudiced the Indemnifying Party.

                                       26
<PAGE>

      An Indemnified  Party shall have the right to employ  separate  counsel in
any  such  Proceeding  and  to  participate  in the  defense  thereof,  but  the
reasonable  fees and  expenses of such  counsel  shall be at the expense of such
Indemnified  Party or Parties unless:  (i) the Indemnifying  Party has agreed in
writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have
failed  promptly to assume the defense of such  Proceeding and to employ counsel
reasonably  satisfactory to such Indemnified  Party in any such  Proceeding;  or
(iii) the named parties to any such Proceeding (including any impleaded parties)
include  both  such  Indemnified  Party  and the  Indemnifying  Party,  and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified  Party
and the Indemnifying  Party (in which case, if such  Indemnified  Party notifies
the  Indemnifying  Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense  thereof and such counsel shall be at the expense of
the  Indemnifying  Party).  The  Indemnifying  Party shall not be liable for any
settlement of any such Proceeding  effected without its written  consent,  which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party,  unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.

      All fees and expenses of the Indemnified Party (including  reasonable fees
and  expenses  to the  extent  incurred  in  connection  with  investigating  or
preparing  to defend  such  Proceeding  in a manner not  inconsistent  with this
Section) shall be paid to the Indemnified Party, as incurred, within ten Trading
Days of written notice thereof to the Indemnifying  Party (regardless of whether
it is  ultimately  determined  that an  Indemnified  Party  is not  entitled  to
indemnification  hereunder;  provided,  that the Indemnifying  Party may require
such  Indemnified  Party to undertake to reimburse all such fees and expenses to
the extent it is finally  judicially  determined that such Indemnified  Party is
not entitled to indemnification hereunder).

            (d)  Contribution.  If a claim  for  indemnification  under  Section
      6.4(a) or (b) is  unavailable  to an  Indemnified  Party (by reasons other
      than the specified exclusions to indemnification),  then each Indemnifying
      Party, in lieu of indemnifying such Indemnified Party, shall contribute to
      the amount paid or payable by such  Indemnified  Party as a result of such
      Losses, in such proportion as is appropriate to reflect the relative fault
      of the  Indemnifying  Party and  Indemnified  Party in connection with the
      actions,  statements or omissions  that resulted in such Losses as well as
      any other relevant  equitable  considerations.  The relative fault of such
      Indemnifying  Party and Indemnified Party shall be determined by reference
      to,  among other  things,  whether any action in question,  including  any
      untrue or alleged  untrue  statement  of a material  fact or  omission  or
      alleged omission of a material fact, has been taken or made by, or relates
      to information  supplied by, such Indemnifying Party or Indemnified Party,
      and the parties'  relative  intent,  knowledge,  access to information and
      opportunity to correct or prevent such action,  statement or omission. The
      amount  paid or  payable  by a party as a result  of any  Losses  shall be
      deemed to include, subject to the limitations set forth in Section 6.4(c),
      any reasonable attorneys' or other reasonable fees or expenses incurred by
      such party in  connection  with any  Proceeding  to the extent  such party
      would  have  been   indemnified   for  such  fees  or   expenses   if  the
      indemnification  provided for in this Section was  available to such party
      in accordance with its terms.

                                       27
<PAGE>

      The  parties  hereto  agree  that it would  not be just and  equitable  if
contribution  pursuant  to this  Section  6.4(d)  were  determined  by pro  rata
allocation or by any other method of allocation  that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding  the provisions of this Section  6.4(d),  no Purchaser  shall be
required to contribute,  in the aggregate, any amount in excess of the amount by
which the  proceeds  actually  received by such  Purchaser  from the sale of the
Registrable  Securities  subject  to the  Proceeding  exceeds  the amount of any
damages that such Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue  statement or omission or alleged  omission.  No Person
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of
the Securities  Act) shall be entitled to  contribution  from any Person who was
not guilty of such fraudulent misrepresentation.

      The indemnity and contribution agreements contained in this Section are in
addition  to any  liability  that  the  Indemnifying  Parties  may  have  to the
Indemnified Parties.

      6.5  Dispositions.  Each  Purchaser  agrees that it will comply with,  and
indemnify and hold harmless all relevant  Indemnified Parties in connection with
any failure of such Purchaser to comply with,  prospectus delivery  requirements
of  the  Securities  Act  as  applicable  to  it in  connection  with  sales  of
Registrable  Securities pursuant to the Registration  Statement.  Each Purchaser
further agrees that, upon receipt of a notice from the Company of the occurrence
of any event of the kind described in Sections  6.2(c)(v),  (vi) or (vii),  such
Purchaser will discontinue  disposition of such Registrable Securities under the
Registration  Statement  until  such  Purchaser's  receipt  of the copies of the
supplemented  Prospectus and/or amended Registration  Statement  contemplated by
Section 6.2(j),  or until it is advised in writing (the "Advice") by the Company
that the use of the applicable  Prospectus may be resumed,  and, in either case,
has  received  copies  of  any  additional  or  supplemental  filings  that  are
incorporated  or deemed to be  incorporated  by reference in such  Prospectus or
Registration  Statement.  The  Company may  provide  appropriate  stop orders to
enforce the provisions of this paragraph.

      6.6 No  Piggyback  on  Registrations.  Except as set forth on Schedule 6.6
attached hereto, neither the Company nor any of its security holders (other than
the Purchasers in such capacity  pursuant hereto) may include  securities of the
Company in the Registration Statement other than the Registrable Securities, and
the Company shall not after the date hereof enter into any  agreement  providing
any such right to any of its security holders.

                                       28
<PAGE>

      6.7  Piggy-Back  Registrations.  If at any time  during the  Effectiveness
Period  there is not an  effective  Registration  Statement  covering all of the
Registrable  Securities and the Company shall determine to prepare and file with
the  Commission  a  registration  statement  relating to an offering for its own
account or the account of others under the  Securities  Act of any of its equity
securities,  other than on Form S-4 or Form S-8 (each as  promulgated  under the
Securities Act) or their then  equivalents  relating to equity  securities to be
issued solely in connection  with any  acquisition  of any entity or business or
equity  securities  issuable in connection  with stock option or other  employee
benefit plans,  then the Company shall send to each Purchaser  written notice of
such determination and if, within fifteen days after receipt of such notice, any
such  Purchaser  shall so request in writing,  the Company shall include in such
registration  statement  all or any  part of such  Registrable  Securities  such
Purchaser requests to be registered.

                                  ARTICLE VII
                                  MISCELLANEOUS

      7.1  Termination.  This  Agreement  may be  terminated  by the  Company or
Vertical  Ventures,  LLC by written notice to the other parties,  if the Closing
has not been  consummated  by the third  Trading Day  following the date of this
Agreement;  provided that no such termination will affect the right of any party
to sue for any breach by the other party (or parties).

      7.2 Fees and  Expenses.  At the  Closing,  the  Company  shall  pay (i) to
Vertical Ventures, LLC an aggregate of $20,000 for their legal fees and expenses
incurred in connection  with the  preparation and negotiation of the Transaction
Documents,  of which amount $10,000 has been  previously  paid by the Company to
Proskauer  Rose  LLP and (ii) to  Ashenden  Finance,  a cash  fee  equal to five
percent  (5%) of all  money  invested  by any  Purchaser  who is not,  as of the
Closing  Date,  an officer,  director,  employee,  advisor or  consultant to the
Company,  or an  Affiliate  of any of the  foregoing.  In lieu of the  foregoing
payment set forth in subsection  (i) above,  Vertical  Ventures,  LLC may retain
such amount at the  Closing.  Except as expressly  set forth in the  Transaction
Documents  to the  contrary,  each party shall pay the fees and  expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party  incident  to the  negotiation,  preparation,  execution,
delivery and performance of this  Agreement.  The Company shall pay all Transfer
Agent fees, stamp taxes and other taxes and duties levied in connection with the
issuance of the Securities.

      7.3  Entire  Agreement.  The  Transaction  Documents,  together  with  the
Exhibits and Schedules thereto,  contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents,  exhibits and schedules. At or
after the Closing, and without further  consideration,  the Company will execute
and  deliver to the  Purchasers  such  further  documents  as may be  reasonably
requested  in order to give  practical  effect to the  intention  of the parties
under  the  Transaction  Documents.  Notwithstanding  anything  to the  contrary
herein,  Securities may be assigned to any Person in connection with a bona fide
margin  account or other loan or financing  arrangement  secured by such Company
Securities.

                                       29
<PAGE>

      7.4 Notices.  Any and all notices or other  communications  or  deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of  transmission,  if
such notice or  communication is delivered via facsimile at the facsimile number
specified in this Section  prior to 6:30 p.m.  (New York City time) on a Trading
Day, (b) the next Trading Day after the date of transmission,  if such notice or
communication  is delivered via facsimile at the facsimile  number  specified in
this  Section on a day that is not a Trading  Day or later  than 6:30 p.m.  (New
York City time) on any Trading  Day, (c) the Trading Day  following  the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or (d)
upon  actual  receipt by the party to whom such  notice is required to be given.
The  addresses  and facsimile  numbers for such notices and  communications  are
those  set  forth on the  signature  pages  hereof,  or such  other  address  or
facsimile number as may be designated in writing hereafter,  in the same manner,
by such Person.

      7.5 Amendments;  Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument  signed, in the case of an amendment,  by
the Company and each of the Purchasers or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought.  No waiver of any default
with respect to any provision,  condition or requirement of this Agreement shall
be deemed to be a continuing  waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise  any right  hereunder in
any manner impair the exercise of any such right. Notwithstanding the foregoing,
a waiver or consent  to depart  from the  provisions  hereof  with  respect to a
matter that relates exclusively to the rights of Purchasers under Article VI and
that does not directly or indirectly  affect the rights of other  Purchasers may
be given by Purchasers holding at least a majority of the Registrable Securities
to which such waiver or consent relates.

      7.6  Construction.  The headings herein are for  convenience  only, do not
constitute a part of this  Agreement  and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent,  and no
rules of strict construction will be applied against any party.

      7.7 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their  successors and permitted  assigns.  The
Company may not assign this  Agreement  or any rights or  obligations  hereunder
without the prior written  consent of the  Purchasers.  Any Purchaser may assign
its rights under this Agreement to any Person to whom such Purchaser  assigns or
transfers  any  Securities,  provided  such  transferee  agrees in writing to be
bound, with respect to the transferred Securities, by the provisions hereof that
apply to the  "Purchasers."  Notwithstanding  anything to the  contrary  herein,
Securities  may be assigned to any Person in connection  with a bona fide margin
account or other loan or financing arrangement secured by such Securities.

      7.8 No  Third-Party  Beneficiaries.  This  Agreement  is intended  for the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person, except that each Related Person is an intended third party
beneficiary of Section 4.8 and each Indemnified Party is an intended third party
beneficiary of Section 6.4 and (in each case) may enforce the provisions of such
Sections directly against the parties with obligations thereunder.

                                       30
<PAGE>

      7.9 Governing Law; Venue;  Waiver Of Jury Trail. all questions  concerning
the  construction,  validity,  enforcement and  interpretation of this Agreement
shall be governed by and construed  and enforced in accordance  with the laws of
the state of new york. THE COMPANY AND PURCHASERS Hereby  Irrevocably  Submit 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 BROUGHT BY
THE  COMPANY OR ANY  PURCHASER  Hereunder,  In  Connection  Herewith Or With Any
Transaction  Contemplated  Hereby Or Discussed Herein (Including With Respect To
The Enforcement Of Any Of The  Transaction  Documents),  And Hereby  Irrevocably
Waive, And Agree Not To Assert In Any Suit, Action Or ProceedinG  BROUGHT BY THE
COMPANY OR ANY  PURCHASER,  Any Claim That It Is Not  Personally  Subject To The
Jurisdiction  Of Any Such  Court,  OR That 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 Via  Registered Or Certified  Mail Or Overnight  Delivery
(With  Evidence Of  Delivery) To Such Party At The Address In Effect For Notices
To It Under This  Agreement And Agrees That Such Service Shall  Constitute  Good
And Sufficient  Service Of Process And Notice Thereof.  Nothing Contained Herein
Shall Be  Deemed To Limit In Any Way Any Right To Serve  Process  In Any  Manner
Permitted By Law. The Company AND PURCHASERS  Hereby Waive All Rights To A Trial
By Jury.

      7.10 Survival. The representations,  warranties,  agreements and covenants
contained  herein shall survive the Closing and the delivery  and/or exercise of
the Securities, as applicable.

      7.11   Execution.   This   Agreement  may  be  executed  in  two  or  more
counterparts,  all of which when taken  together shall be considered one and the
same agreement and shall become effective when  counterparts have been signed by
each party and  delivered  to the other  party,  it being  understood  that both
parties need not sign the same  counterpart.  In the event that any signature is
delivered by facsimile  transmission,  such  signature  shall create a valid and
binding  obligation of the party executing (or on whose behalf such signature is
executed)  with the same force and effect as if such  facsimile  signature  page
were an original thereof.

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

      7.13  Rescission and  Withdrawal  Right.  Notwithstanding  anything to the
contrary  contained in (and  without  limiting  any similar  provisions  of) the
Transaction  Documents,  whenever  any  Purchaser  exercises a right,  election,
demand or option  under a  Transaction  Document and the Company does not timely
perform its related  obligations within the periods therein provided,  then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice,  demand or election in whole
or in part without prejudice to its future actions and rights.

                                       31
<PAGE>

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

      7.15  Remedies.  In  addition to being  entitled  to  exercise  all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Purchasers  and the Company will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that  monetary  damages  may not be
adequate  compensation  for  any  loss  incurred  by  reason  of any  breach  of
obligations  described in the  foregoing  sentence and hereby agrees to waive in
any action for specific  performance  of any such  obligation the defense that a
remedy at law would be adequate.

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

      7.17  Adjustments  in Share Numbers and Prices.  In the event of any stock
split,  subdivision,  dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder thereof
to receive directly or indirectly shares of Common Stock),  combination or other
similar  recapitalization  or  event  occurring  after  the  date  hereof,  each
reference in any Transaction Document to a number of shares or a price per share
shall be amended to appropriately account for such event.

      7.18  Independent  Nature  of  Purchasers'  Obligations  and  Rights.  The
obligations of each Purchaser under any Transaction Document are several and not
joint with the  obligations of any other  Purchaser,  and no Purchaser  shall be
responsible  in any way for the  performance  of the  obligations  of any  other
Purchaser  under any  Transaction  Document except to the extent such Purchasers
are  Affiliates.  The decision of each Purchaser to purchase  Shares pursuant to
this  Agreement  has been  made by such  Purchaser  independently  of any  other
Purchaser  and  independently  of  any  information,  materials,  statements  or
opinions  as  to  the  business,   affairs,   operations,   assets,  properties,
liabilities,  results of  operations,  condition  (financial  or  otherwise)  or
prospects of the Company or of the Subsidiary  which may have been made or given
by any other Purchaser or by any agent or employee of any other  Purchaser,  and
no Purchaser or any of its agents or employees  shall have any  liability to any
other  Purchaser  (or any other  Person)  relating  to or arising  from any such
information,  materials,  statements or opinions. Nothing contained herein or in
any Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint  venture  or any other kind of entity,  or create a  presumption  that the
Purchasers  are in any way acting in concert or as a group with  respect to such
obligations or the transactions  contemplated by the Transaction Document.  Each
Purchaser  acknowledges  that no other  Purchaser  has  acted as agent  for such
Purchaser in connection  with making its investment  hereunder and that no other
Purchaser  will  be  acting  as  agent  of such  Purchaser  in  connection  with
monitoring  its  investment  hereunder.  Each  Purchaser  shall be  entitled  to
independently  protect and enforce its rights,  including without limitation the
rights arising out of this Agreement or out of the other Transaction  Documents,
and it shall  not be  necessary  for any  other  Purchaser  to be  joined  as an
additional party in any proceeding for such purpose.

                           [Signature pages to follow]

                                       32
<PAGE>

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

                                        LMIC, INC.

                                        By: /S/
                                           -------------------------------------
                                           Name:  Luis P. Negrete
                                           Title: President & CEO

                                        Address for Notice:

                                        6435 Virginia Manor Road
                                        Beltsville, MD  20705
                                        Facsimile No.:
                                        Telephone No.: (204) 264-8300
                                        Attn:

            With a copy to:             Feldman Weinstein LLP
                                        420 Lexington Avenue
                                        Suite 2620
                                        New York, NY 10170
                                        Facsimile No.: (212) 997-4242
                                        Telephone No.: (212) 869-7000
                                        Attn: David N. Feldman, Esq.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES FOR PURCHASERS FOLLOW]

                                       33EXHIBIT 10.2

NEITHER THESE  SECURITIES  NOR THE  SECURITIES  FOR WHICH THESE  SECURITIES  ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE  COMMISSION OR
THE  SECURITIES  COMMISSION  OF ANY STATE IN  RELIANCE  UPON AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN COMPLIANCE  WITH  APPLICABLE  STATE
SECURITIES OR BLUE SKY LAWS. THESE  SECURITIES AND THE SECURITIES  ISSUABLE UPON
EXERCISE  OF THESE  SECURITIES  MAY BE  PLEDGED IN  CONNECTION  WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

                                   LMIC, INC.

                                     WARRANT

Warrant No. [  ]                                         Dated: January 21, 2004

       LMIC,  Inc., a Delaware  corporation  (the  "Company"),  hereby certifies
that,  for value  received,  [Name of Holder]  or its  registered  assigns  (the
"Holder"),  is  entitled  to  purchase  from the Company up to a total of [ ](1)
shares of common stock,  $0.001 par value per share (the "Common Stock"), of the
Company (each such share,  a "Warrant  Share" and all such shares,  the "Warrant
Shares") at an exercise price equal to $1.50 per share (as adjusted from time to
time as provided in Section 9, the "Exercise Price"),  at any time and from time
to time from and after the date hereof and through and  including  the date that
is five years from the date of issuance  hereof  (the  "Expiration  Date"),  and
subject to the following terms and conditions.  This Warrant (this "Warrant") is
one of a series of similar  warrants issued pursuant to that certain  Securities
Purchase  Agreement,  dated as of the date hereof,  by and among the Company and
the Purchasers identified therein (the "Purchase Agreement").  All such warrants
are referred to herein, collectively, as the "Warrants."

      1.  Definitions.  In  addition  to the  terms  defined  elsewhere  in this
Warrant,  capitalized  terms  that are not  otherwise  defined  herein  have the
meanings given to such terms in the Purchase Agreement.

      2. Registration of Warrant. The Company shall register this Warrant,  upon
records  to be  maintained  by  the  Company  for  that  purpose  (the  "Warrant
Register"),  in the name of the  record  Holder  hereof  from time to time.  The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise  hereof or any  distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.

----------
(1) 100% warrant coverage

<PAGE>

      3.  Registration of Transfers.  The Company shall register the transfer of
any portion of this  Warrant in the Warrant  Register,  upon  surrender  of this
Warrant,  with the Form of Assignment attached hereto duly completed and signed,
with such other documents as the Transfer Agent may reasonably  request,  to the
Transfer Agent or to the Company at its address specified herein.  Upon any such
registration   or  transfer,   a  new  warrant  to  purchase  Common  Stock,  in
substantially the form of this Warrant (any such new warrant,  a "New Warrant"),
evidencing  the portion of this  Warrant so  transferred  shall be issued to the
transferee and a New Warrant  evidencing  the remaining  portion of this Warrant
not so  transferred,  if any, shall be issued to the  transferring  Holder.  The
acceptance  of the New  Warrant by the  transferee  thereof  shall be deemed the
acceptance by such  transferee of all of the rights and  obligations of a holder
of a Warrant.

      4. Exercise and Duration of Warrants.

            (a) This Warrant shall be exercisable  by the  registered  Holder at
any time and from time to time on or after the date hereof to and  including the
Expiration  Date. At 6:30 P.M., New York City time on the  Expiration  Date, the
portion of this Warrant not exercised prior thereto shall be and become void and
of no value;  provided  that, if the average of the Closing  Prices for the five
Trading  Days  immediately  prior to (but not  including)  the  Expiration  Date
exceeds the Exercise  Price on the Expiration  Date,  then this Warrant shall be
deemed to have been exercised in full (to the extent not  previously  exercised)
on a "cashless exercise" basis at 6:30 P.M. New York City time on the Expiration
Date if a  "cashless  exercise"  may occur at such time  pursuant  to Section 10
below.  Notwithstanding  anything to the contrary  herein,  the Expiration  Date
shall  be  extended  for  each  day  following  the  Effective   Date  that  the
Registration Statement is not effective.

            (b) A Holder may exercise  this Warrant by delivering to the Company
(i) an exercise  notice,  in the form attached  hereto (the "Exercise  Notice"),
appropriately  completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant  Shares as to which  this  Warrant is being  exercised
(which  may  take the  form of a  "cashless  exercise"  if so  indicated  in the
Exercise Notice and if a "cashless  exercise" may occur at such time pursuant to
this Section 10 below), and the date such items are delivered to the Company (as
determined  in  accordance  with the notice  provisions  hereof) is an "Exercise
Date." The Holder shall not be required to deliver the original Warrant in order
to effect an exercise  hereunder.  Execution and delivery of the Exercise Notice
shall have the same effect as cancellation of the original  Warrant and issuance
of a New  Warrant  evidencing  the right to  purchase  the  remaining  number of
Warrant Shares.  Holder shall deliver the original Warrant to the Company within
30 Trading Days of the exercise Date.

      5. Delivery of Warrant Shares.

            (a) Upon exercise of this Warrant,  the Company shall  promptly (but
in no event  later than three  Trading  Days after the  Exercise  Date) issue or
cause to be issued and cause to be delivered to or upon the written order of the
Holder and in such name or names as the Holder may designate,  a certificate for
the Warrant Shares issuable upon such exercise,  which certificate shall contain
customary  restrictive legends until such time as (i) such Warrant Shares may be
sold  pursuant to a  registration  statement  covering the resale of the Warrant
Shares  and  naming  the  Holder as a  selling  stockholder  thereunder  is then
effective  or (ii) the Warrant  Shares are freely  transferable  without  volume
restrictions  pursuant to Rule 144 under the Securities Act. The Holder,  or any
Person so designated by the Holder to receive Warrant Shares, shall be deemed to
have become holder of record of such Warrant Shares as of the Exercise Date. The
Company shall,  upon request of the Holder and if issuable  without  restrictive
legend, use its best efforts to deliver Warrant Shares hereunder  electronically
through  the  Depository  Trust  Corporation  or  another  established  clearing
corporation performing similar functions.

                                       2
<PAGE>

            (b) This  Warrant is  exercisable,  either in its  entirety or, from
time to time, for a portion of the number of Warrant  Shares.  Upon surrender of
this Warrant following one or more partial exercises, the Company shall issue or
cause to be  issued,  at its  expense,  a New  Warrant  evidencing  the right to
purchase the remaining number of Warrant Shares.

            (c) In addition to any other rights  available  to a Holder,  if the
Company fails to deliver to the Holder a certificate representing Warrant Shares
by the fifth Trading Day after the date on which delivery of such certificate is
required  by this  Warrant,  and if after  such  fifth  Trading  Day the  Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in  satisfaction  of a sale by the Holder of the Warrant Shares that the
Holder  anticipated  receiving  from the Company (a "Buy-In"),  then the Company
shall,  within three Trading Days after the Holder's request and in the Holder's
discretion, either (i) pay cash to the Holder in an amount equal to the Holder's
total purchase price (including brokerage commissions, 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
Price  on the date of the  event  giving  rise to the  Company's  obligation  to
deliver such certificate.

            (d) The Company's obligations to issue and deliver Warrant Shares in
accordance with the terms hereof are absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same,  any waiver or consent
with respect to any provision  hereof,  the recovery of any judgment against any
Person  or  any  action  to  enforce  the  same,  or any  setoff,  counterclaim,
recoupment,  limitation or  termination,  or any breach or alleged breach by the
Holder or any other Person of any  obligation to the Company or any violation or
alleged violation of law by the Holder or any other Person,  and irrespective of
any other  circumstance  which  might  otherwise  limit such  obligation  of the
Company to the Holder in connection with the issuance of Warrant Shares. Nothing
herein shall limit a Holder's right to pursue any other remedies available to it
hereunder,  at law or in  equity  including,  without  limitation,  a decree  of
specific  performance  and/or  injunctive  relief with respect to the  Company's
failure to timely deliver certificates  representing shares of Common Stock upon
exercise of the Warrant as required pursuant to the terms hereof.

                                       3
<PAGE>

      6. Charges, Taxes and Expenses.  Issuance and delivery of certificates for
shares of Common  Stock upon  exercise  of this  Warrant  shall be made  without
charge to the Holder for any issue or transfer tax,  withholding  tax,  transfer
agent fee or other  incidental tax or expense in respect of the issuance of such
certificates,  all of which  taxes and  expenses  shall be paid by the  Company;
provided,  however,  that the Company shall not be required to pay any tax which
may be payable in respect of any transfer  involved in the  registration  of any
certificates  for  Warrant  Shares or  Warrants in a name other than that of the
Holder or an Affiliate  thereof.  The Holder shall be responsible  for all other
tax liability that may arise as a result of holding or transferring this Warrant
or receiving Warrant Shares upon exercise hereof.

      7. Replacement of Warrant.  If this Warrant is mutilated,  lost, stolen or
destroyed,  the  Company  shall  issue or cause to be  issued  in  exchange  and
substitution for and upon  cancellation  hereof,  or in lieu of and substitution
for this Warrant,  a New Warrant,  but only upon receipt of evidence  reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable  indemnity,  if  requested.  Applicants  for a New Warrant under such
circumstances  shall also  comply  with such other  reasonable  regulations  and
procedures and pay such other  reasonable  third-party  costs as the Company may
prescribe.

      8.  Reservation of Warrant Shares.  The Company  covenants that it will at
all times reserve and keep  available out of the aggregate of its authorized but
unissued  and  otherwise  unreserved  Common  Stock,  solely for the  purpose of
enabling  it to issue  Warrant  Shares upon  exercise of this  Warrant as herein
provided,  the number of Warrant Shares which are then issuable and  deliverable
upon the exercise of this entire  Warrant,  free from  preemptive  rights or any
other  contingent  purchase rights of persons other than the Holder (taking into
account the  adjustments and  restrictions of Section 9). The Company  covenants
that all Warrant Shares so issuable and deliverable shall, upon issuance and the
payment of the applicable Exercise Price in accordance with the terms hereof, be
duly and  validly  authorized,  issued  and fully  paid and  nonassessable.  The
Company will take all such action as may be necessary to assure that such shares
of Common  Stock  may be issued as  provided  herein  without  violation  of any
applicable law or regulation,  or of any requirements of any securities exchange
or automated quotation system upon which the Common Stock may be listed.

      9. Certain  Adjustments.  The Exercise  Price and number of Warrant Shares
issuable upon  exercise of this Warrant are subject to  adjustment  from time to
time as set forth in this Section 9.

            (a) Stock  Dividends and Splits.  If the Company,  at any time while
this Warrant is  outstanding,  (i) pays a stock  dividend on its Common Stock or
otherwise  makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides  outstanding shares of Common Stock into
a larger number of shares, or (iii) combines  outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock  outstanding  immediately  before such event, on a fully diluted
basis,  and of which  the  denominator  shall be the  number of shares of Common
Stock  outstanding  immediately  after such event, on a fully diluted basis. Any
adjustment made pursuant to clause (i) of this paragraph shall become  effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution,  and any adjustment pursuant to clause
(ii) or (iii) of this paragraph  shall become  effective  immediately  after the
effective date of such subdivision or combination.

                                       4
<PAGE>

            (b) Pro Rata  Distributions.  If the Company, at any time while this
Warrant is outstanding,  distributes to holders of Common Stock (i) evidences of
its  indebtedness,  (ii) any security (other than a distribution of Common Stock
covered by the preceding  paragraph),  (iii) rights or warrants to subscribe for
or purchase any  security,  or (iv) any other asset (in each case,  "Distributed
Property"),  then in each such  case the  Exercise  Price in effect  immediately
prior to the record date fixed for  determination  of  stockholders  entitled to
receive such distribution  shall be adjusted  (effective on such record date) to
equal  the  product  of such  Exercise  Price  times a  fraction  of  which  the
denominator shall be the average of the Closing Prices for the five Trading Days
immediately  prior to (but not  including)  such  record  date and of which  the
numerator  shall  be such  average  less  the  then  fair  market  value  of the
Distributed  Property  distributed in respect of one outstanding share of Common
Stock, as determined by the Company's  independent  certified public accountants
that regularly examine the financial statements of the Company (an "Appraiser").
In such event, the Holder,  after receipt of the determination by the Appraiser,
shall  have the  right to  select  an  additional  appraiser  (which  shall be a
nationally  recognized  accounting  firm),  in which case such fair market value
shall be deemed to equal the  average  of the values  determined  by each of the
Appraiser and such appraiser.  As an alternative to the foregoing  adjustment to
the Exercise Price, at the request of the Holder  delivered  before the 90th day
after such record date,  the Company  will  deliver to such Holder,  within five
Trading  Days after such request (or, if later,  on the  effective  date of such
distribution),  the  Distributed  Property  that  such  Holder  would  have been
entitled  to receive in respect  of the  Warrant  Shares for which this  Warrant
could have been exercised immediately prior to such record date. If a Holder has
elected to receive  Distributed  Property and such  Distributed  Property is not
delivered to a Holder pursuant to the preceding  sentence,  then upon expiration
of or any  exercise of the  Warrant  that occurs  after such record  date,  such
Holder  shall  remain  entitled  to receive,  in addition to the Warrant  Shares
otherwise  issuable  upon  such  exercise  (if  applicable),   such  Distributed
Property.

            (c) Fundamental Transactions.  If, at any time while this Warrant is
outstanding,  (i) the Company effects any merger or consolidation of the Company
with or into  another  Person,  (ii)  the  Company  effects  any  sale of all or
substantially  all of its  assets  in one or a series of  related  transactions,
(iii) any tender  offer or  exchange  offer  (whether  by the Company or another
Person) is completed  pursuant to which holders of Common Stock are permitted to
tender or exchange their shares for other securities,  cash or property, or (iv)
the Company effects any  reclassification  of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively  converted into
or exchanged for other securities, cash or property (other than as a result of a
subdivision  or  combination  of shares of Common Stock  covered by Section 9(a)
above) (in any such case, a  "Fundamental  Transaction"),  then the Holder shall
have the right  thereafter to receive,  upon exercise of this Warrant,  the same
amount and kind of  securities,  cash or property as it would have been entitled
to receive upon the occurrence of such  Fundamental  Transaction if it had been,
immediately prior to such Fundamental  Transaction,  the holder of the number of
Warrant  Shares  then  issuable  upon  exercise  in full of  this  Warrant  (the
"Alternate  Consideration").  The aggregate Exercise Price for this Warrant will
not be  affected by any such  Fundamental  Transaction,  but the  Company  shall
apportion such aggregate  Exercise Price among the Alternate  Consideration in a
reasonable manner  reflecting the relative value of any different  components of
the Alternate Consideration.  If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it  receives  upon any  exercise  of this  Warrant  following  such  Fundamental
Transaction.  At the Holder's request, any successor to the Company or surviving
entity in such Fundamental  Transaction  shall issue to the Holder a new warrant
consistent  with the foregoing  provisions  and evidencing the Holder's right to
purchase the  Alternate  Consideration  for the  aggregate  Exercise  Price upon
exercise  thereof.  The terms of any  agreement  pursuant to which a Fundamental
Transaction  is effected  shall  include terms  requiring any such  successor or
surviving  entity  to  comply  with the  provisions  of this  paragraph  (c) and
insuring that the Warrant (or any such  replacement  security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
If the Company  completes a "Rule  13e-3  transaction"  as defined in Rule 13e-3
under the Exchange  Act or other  analogous  "going  private"  transaction,  the
Company (or any such  successor or surviving  entity) will  purchase the Warrant
from the Holder for a purchase  price,  payable in cash within five Trading Days
after  such  request  (or,  if later,  on the  effective  date of the Rule 13e-3
transaction),  equal to the  Black-Scholes  value of the  remaining  unexercised
portion of this Warrant on the date of such request.

                                       5
<PAGE>

      (d) Subsequent Equity Sales.

            (i) If, at any time while this Warrant is  outstanding,  the Company
      or any  Subsidiary  issues  additional  shares of Common  Stock or rights,
      warrants, options or other securities or debt convertible,  exercisable or
      exchangeable for shares of Common Stock or otherwise  entitling any Person
      to  acquire   shares  of  Common  Stock   (collectively,   "Common   Stock
      Equivalents") at an effective net price to the Company per share of Common
      Stock (the  "Effective  Price") less than the Exercise  Price (as adjusted
      hereunder to such date), then the Exercise Price shall be reduced to equal
      the Effective  Price.  If, at any time while this Warrant is  outstanding,
      the  Company  or any  Subsidiary  issues  Common  Stock  or  Common  Stock
      Equivalents  at an Effective  Price  greater  than the Exercise  Price (as
      adjusted  hereunder to such date) but less than the average  Closing Price
      over the  five  Business  Days  prior to such  issuance  (the  "Adjustment
      Price"),  then the Exercise Price shall be reduced to equal the product of
      (A) the Exercise  Price in effect  immediately  prior to such  issuance of
      Common  Stock or  Common  Stock  Equivalents  times  (B) a  fraction,  the
      numerator  of which is the sum of (1) the number of shares of Common Stock
      outstanding  immediately  prior to such  issuance,  plus (2) the number of
      shares of Common Stock which the aggregate  Effective  Price of the Common
      Stock  issued (or deemed to be issued)  would  purchase at the  Adjustment
      Price,  and the denominator of which is the aggregate  number of shares of
      Common Stock  outstanding  or deemed to be outstanding  immediately  after
      such  issuance.  For purposes of this  paragraph,  in connection  with any
      issuance of any Common Stock Equivalents, (A) the maximum number of shares
      of Common Stock potentially issuable at any time upon conversion, exercise
      or exchange of such Common Stock  Equivalents  (the "Deemed Number") shall
      be  deemed  to  be   outstanding   upon  issuance  of  such  Common  Stock
      Equivalents, (B) the Effective Price applicable to such Common Stock shall
      equal the minimum dollar value of consideration  payable to the Company to
      purchase  such  Common  Stock  Equivalents  and to  convert,  exercise  or
      exchange them into Common Stock (net of any discounts,  fees,  commissions
      and other  expenses),  divided  by the Deemed  Number,  and (C) no further
      adjustment shall be made to the Exercise Price upon the actual issuance of
      Common  Stock upon  conversion,  exercise or exchange of such Common Stock
      Equivalents.

                                       6
<PAGE>

            (ii) If, at any time while this Warrant is outstanding,  the Company
      or any Subsidiary  issues Common Stock Equivalents with an Effective Price
      or a number of underlying shares that floats or resets or otherwise varies
      or is subject to  adjustment  based  (directly  or  indirectly)  on market
      prices  of the  Common  Stock  (a  "Floating  Price  Security"),  then for
      purposes  of applying  the  preceding  paragraph  in  connection  with any
      subsequent exercise,  the Effective Price will be determined separately on
      each Exercise Date and will be deemed to equal the lowest  Effective Price
      at which any holder of such Floating Price Security is entitled to acquire
      Common Stock on such Exercise Date  (regardless of whether any such holder
      actually acquires any shares on such date).

            (iii)  Notwithstanding  the  foregoing,  no adjustment  will be made
      under this paragraph (d) in respect to any issuance of Excluded Stock.

            (e) Number of Warrant Shares.  Simultaneously with any adjustment to
the Exercise Price pursuant to paragraphs  (a), (b) or (d) of this Section,  the
number of Warrant  Shares that may be  purchased  upon  exercise of this Warrant
shall be increased or decreased  proportionately,  so that after such adjustment
the aggregate  Exercise  Price payable  hereunder for the increased or decreased
number of Warrant  Shares shall be the same as the aggregate  Exercise  Price in
effect immediately prior to such adjustment;  provided,  however, any adjustment
of the Exercise  Price made  pursuant to this  section  shall adjust back in the
event none of the  convertible  securities  which  caused  such  adjustment  are
converted or exercised, as the case may be.

            (f)  Calculations.  All  calculations  under this Section 9 shall be
made to the nearest cent or the nearest 1/100th of a share,  as applicable.  The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company,  and the  disposition
of any such shares shall be considered an issue or sale of Common Stock.

            (g) Notice of  Adjustments.  Upon the occurrence of each  adjustment
pursuant to this  Section 9, the Company at its expense  will  promptly  compute
such  adjustment  in  accordance  with the terms of this  Warrant  and prepare a
certificate setting forth such adjustment, including a statement of the adjusted
Exercise Price and adjusted number or type of Warrant Shares or other securities
issuable  upon  exercise  of  this  Warrant  (as  applicable),   describing  the
transactions  giving  rise to such  adjustments  and showing in detail the facts
upon which such  adjustment  is based.  Upon written  request,  the Company will
promptly  deliver  a copy of each  such  certificate  to the  Holder  and to the
Company's Transfer Agent.

            (h)  Notice of  Corporate  Events.  If the  Company  (i)  declares a
dividend or any other  distribution  of cash,  securities  or other  property in
respect of its Common Stock, including without limitation any granting of rights
or warrants to subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating
or  solicits  stockholder  approval  for any  Fundamental  Transaction  or (iii)
authorizes the voluntary  dissolution,  liquidation or winding up of the affairs
of the Company, then the Company shall deliver to the Holder a notice describing
the material terms and conditions of such transaction, at least 15 calendar days
prior to the applicable record or effective date on which a Person would need to
hold  Common  Stock in order to  participate  in or vote  with  respect  to such
transaction,  and the Company will take all steps reasonably  necessary in order
to insure that the Holder is given the  practical  opportunity  to exercise this
Warrant prior to such time so as to  participate in or vote with respect to such
transaction;  provided,  however, that the failure to deliver such notice or any
defect therein shall not affect the validity of the corporate action required to
be described in such notice.

                                       7
<PAGE>

      10. Payment of Exercise Price.  The Holder shall pay the Exercise Price in
immediately available funds; provided, however, if commencing one year after the
date of issuance there is no effective  Registration  Statement,  the Holder may
satisfy its obligation to pay the Exercise Price through a "cashless  exercise,"
in which  event the  Company  shall  issue to the  Holder  the number of Warrant
Shares determined as follows:

                         X = Y [(A-B)/A]
           where:
                         X = the number of Warrant Shares to be issued to the
                         Holder.

                         Y = the number of Warrant Shares with
                         respect  to  which  this  Warrant  is
                         being exercised.

                         A = the average of the Closing Prices
                         for the five Trading Days immediately
                         prior  to  (but  not  including)  the
                         Exercise Date.

                         B = the Exercise Price.

            For purposes of Rule 144 promulgated under the Securities Act, it is
intended,  understood  and  acknowledged  that the  Warrant  Shares  issued in a
cashless  exercise  transaction  shall be deemed to have  been  acquired  by the
Holder,  and the holding  period for the Warrant  Shares shall be deemed to have
commenced,  on the date this  Warrant  was  originally  issued  pursuant  to the
Purchase Agreement.

      11.  Limitation  on  Exercise.  Notwithstanding  anything to the  contrary
contained  herein,  the number of shares of Common Stock that may be acquired by
the Holder upon any  exercise of this Warrant (or  otherwise in respect  hereof)
shall be limited to the extent necessary to insure that, following such exercise
(or  other  issuance),   the  total  number  of  shares  of  Common  Stock  then
beneficially owned by such Holder and its Affiliates and any other Persons whose
beneficial  ownership of Common Stock would be aggregated  with the Holder's for
purposes  of Section  13(d) of the  Exchange  Act,  does not exceed  4.999% (the
"Maximum  Percentage") of the total number of issued and  outstanding  shares of
Common Stock  (including  for such  purpose the shares of Common Stock  issuable
upon such exercise). For such purposes, beneficial ownership shall be determined
in  accordance  with  Section  13(d)  of the  Exchange  Act  and the  rules  and
regulations promulgated thereunder. The Company shall, instead of issuing shares
of Common  Stock in excess of the  limitation  referred  to in this  Section 11,
suspend its  obligation  to issue shares in excess of the  foregoing  limitation
until  such  time,  if any,  as such  shares  of  Common  Stock may be issued in
compliance with such limitation. Additionally, by written notice to the Company,
the Holder may waive the  provisions  of this Section 11 or increase or decrease
the Maximum Percentage to any other percentage specified in such notice, but (i)
any such waiver or increase will not be effective  until the 61st day after such
notice is  delivered  to the  Company,  and (ii) any such  waiver or increase or
decrease will apply only to the Holder and not to any other holder of Warrants.

                                       8
<PAGE>

      12. Fractional Shares. The Company shall not be required to issue or cause
to be issued fractional  Warrant Shares on the exercise of this Warrant.  If any
fraction of a Warrant Share would, except for the provisions of this Section, be
issuable  upon  exercise  of this  Warrant,  the number of Warrant  Shares to be
issued will be rounded up to the nearest whole share.

      13.  Notices.  Any and all notices or other  communications  or deliveries
hereunder (including without limitation any Exercise Notice) shall be in writing
and  shall be deemed  given and  effective  on the  earliest  of (i) the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number  specified in this Section  prior to 6:30 p.m.  (New York City
time)  on  a  Trading  Day,  (ii)  the  next  Trading  Day  after  the  date  of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading Day or
later than 6:30 p.m. (New York City time) on any Trading Day,  (iii) the Trading
Day following the date of mailing,  if sent by nationally  recognized  overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices or communications shall be as
set forth in the Purchase Agreement.

      14.  Warrant  Agent.  The Company  shall serve as warrant agent under this
Warrant.  Upon 30 days'  notice to the  Holder,  the  Company  may appoint a new
warrant agent.  Any corporation  into which the Company or any new warrant agent
may be merged or any corporation  resulting from any  consolidation to which the
Company or any new warrant  agent shall be a party or any  corporation  to which
the  Company  or  any  new  warrant  agent  transfers  substantially  all of its
corporate trust or stockholders  services  business shall be a successor warrant
agent under this Warrant  without any further act.  Any such  successor  warrant
agent shall  promptly  cause  notice of its  succession  as warrant  agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.

      15. Miscellaneous.

            (a) Subject to the  restrictions  on transfer set forth on the first
page hereof, this Warrant may be assigned by the Holder. This Warrant may not be
assigned by the  Company  except to a  successor  in the event of a  Fundamental
Transaction.  This  Warrant  shall be binding on and inure to the benefit of the
parties  hereto and their  respective  successors  and  assigns.  Subject to the
preceding  sentence,  nothing in this Warrant  shall be construed to give to any
Person  other than the  Company  and the Holder  any legal or  equitable  right,
remedy or cause of action under this  Warrant.  This Warrant may be amended only
in  writing  signed by the  Company  and the  Holder  and their  successors  and
assigns.

                                       9
<PAGE>

            (b) The Company will not, by amendment of its governing documents or
through  any  reorganization,   transfer  of  assets,   consolidation,   merger,
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 Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holder  against  impairment.  Without  limiting the
generality of the foregoing,  the Company (i) will not increase the par value of
any Warrant Shares above the amount payable therefor on such exercise, (ii) will
take all such action as may be reasonably necessary or appropriate in order that
the Company may validly and legally issue fully paid and  nonassessable  Warrant
Shares on the exercise of this Warrant, and (iii) will not close its stockholder
books or records in any manner which interferes with the timely exercise of this
Warrant.

            (c)  GOVERNING  LAW;  VENUE;  WAIVER OF JURY  TRIAL.  ALL  QUESTIONS
CONCERNING THE CONSTRUCTION,  VALIDITY,  ENFORCEMENT AND  INTERPRETATION OF THIS
WARRANT SHALL BE GOVERNED BY AND  CONSTRUED AND ENFORCED IN ACCORDANCE  WITH THE
LAWS OF 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  (INCLUDING  WITH RESPECT TO THE  ENFORCEMENT  OF ANY OF THE  TRANSACTION
DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT,
ACTION  OR  PROCEEDING,  ANY  CLAIM  THAT IT IS NOT  PERSONALLY  SUBJECT  TO THE
JURISDICTION  OF ANY SUCH  COURT,  THAT  SUCH  SUIT,  ACTION  OR  PROCEEDING  IS
IMPROPER.  EACH PARTY HEREBY  IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND
CONSENTS  TO PROCESS  BEING  SERVED IN ANY SUCH SUIT,  ACTION OR  PROCEEDING  BY
MAILING A COPY THEREOF VIA  REGISTERED OR CERTIFIED  MAIL OR OVERNIGHT  DELIVERY
(WITH  EVIDENCE OF  DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES
TO IT UNDER THIS  AGREEMENT AND AGREES THAT SUCH SERVICE SHALL  CONSTITUTE  GOOD
AND SUFFICIENT  SERVICE OF PROCESS AND NOTICE THEREOF.  NOTHING CONTAINED HEREIN
SHALL BE  DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE  PROCESS  IN ANY  MANNER
PERMITTED BY LAW. THE COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.

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

            (e) In case any one or more of the  provisions of this Warrant shall
be invalid or unenforceable in any respect,  the validity and  enforceability of
the  remaining  terms and  provisions  of this  Warrant  shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to agree
upon a valid and enforceable provision which shall be a commercially  reasonable
substitute  therefor,  and upon so agreeing,  shall  incorporate such substitute
provision in this Warrant.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
                             SIGNATURE PAGE FOLLOWS]

                                       10
<PAGE>

      IN  WITNESS  WHEREOF,  the  Company  has  caused  this  Warrant to be duly
executed by its authorized officer as of the date first indicated above.

                                        LMIC, INC.

                                        By:_____________________________________
                                        Name:___________________________________
                                        Title:__________________________________

                                       11
<PAGE>

                             FORM OF EXERCISE NOTICE

(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)

To:  LMIC, INC.

The undersigned is the Holder of Warrant No. _______ (the  "Warrant")  issued by
LMIC,  Inc., a Delaware  corporation  (the  "Company").  Capitalized  terms used
herein and not otherwise  defined have the respective  meanings set forth in the
Warrant.

1.    The Warrant is currently exercisable to purchase a total of ______________
      Warrant Shares.

2.    The   undersigned   Holder   hereby   exercises   its  right  to  purchase
      _________________ Warrant Shares pursuant to the Warrant.

3.    The Holder  intends that  payment of the  Exercise  Price shall be made as
      (check one):

            ____ "Cash Exercise" under Section 10

            ____ "Cashless Exercise" under Section 10 (if permitted)

4.    If the holder has elected a Cash Exercise, the holder shall pay the sum of
      $____________ to the Company in accordance with the terms of the Warrant.

5.    Pursuant  to this  exercise,  the  Company  shall  deliver  to the  holder
      _______________  Warrant  Shares  in  accordance  with  the  terms  of the
      Warrant.

6.    Following  this  exercise,  the Warrant shall be exercisable to purchase a
      total of ______________ Warrant Shares.

Dated:_______________,__                Name of Holder:

                                        (Print)

                                        By:_____________________________________
                                        Name:___________________________________
                                        Title:__________________________________

                                        (Signature must conform in all respects
                                        to name of holder as specified on the
                                        face of the Warrant)

<PAGE>

                               FORM OF ASSIGNMENT

      [To be completed and signed only upon transfer of Warrant]

      FOR VALUE RECEIVED,  the undersigned  hereby sells,  assigns and transfers
unto  ________________________________  the  right  represented  by  the  within
Warrant to purchase  ____________  shares of Common Stock of LMIC, Inc. to which
the within Warrant  relates and appoints  ________________  attorney to transfer
said right on the books of LMIC,  Inc.  with full power of  substitution  in the
premises.

Dated:________________,__

                                        ________________________________________
                                        (Signature must conform in all respects
                                        to name of holder as specified on the
                                        face of the Warrant)

                                        ________________________________________
                                        Address of Transferee

                                        ________________________________________

                                        ________________________________________

In the presence of:

__________________________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00060-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00060-of-00352.parquet"}]]