Document:

<PAGE>

EXHIBIT 10.1

                          SECURITIES PURCHASE AGREEMENT

         This Securities Purchase Agreement (this "AGREEMENT") is dated as of
April 26, 2006 among Armor Electric Inc., a Florida corporation (the "COMPANY"),
and each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a "PURCHASER" and collectively the "PURCHASERS").

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

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

                                   ARTICLE I.
                                   DEFINITIONS

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

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

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

                  "BIMO ORDER" means at least 200 irrevocable orders of Electric
         Propulsion System units from Bimoelectric, SA de CV, which orders shall
         be reasonably satisfactory in form and substance to the Purchasers.

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

                                       1

<PAGE>

                  "CLOSING DATES" means, collectively, the dates of the First
         Closing, Second Closing and Third Closing.

                  "CLOSING(S)" means the closing(s) of the purchase and sale of
         the Securities pursuant to Section 2.1.

                  "COMMISSION" means the Securities and Exchange Commission.

                  "COMMON STOCK" means the common stock of the Company, par
         value $.001 per share, and any other class of securities into which
         such securities may hereafter be reclassified or changed into.

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

                  "COMPANY COUNSEL" means Braun & Company residing at #702-777
         Hornby Street, Vancouver, BC V6Z 1S2.

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

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

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

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

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

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

                  "EXEMPT ISSUANCE" means the issuance of (a) shares of Common
         Stock or options to employees, officers or directors of the Company
         pursuant to any stock or option plan duly adopted by a majority of the
         members of the Board of Directors of the Company or a majority of the
         members of a committee of directors established for such purpose,
         provided that such issuance shall in no event exceed 100,000 shares of
         Common Stock or options (subject to adjustment for forward and reverse
         stock splits, recapitalizations and the like) in any 12 month period,

                                       2

<PAGE>

         (b) securities upon the exercise or exchange of or conversion of any
         Securities issued hereunder and/or other securities exercisable or
         exchangeable for or convertible into shares of Common Stock issued and
         outstanding on the date of this Agreement, provided that such
         securities have not been amended since the date of this Agreement to
         increase the number of such securities or to decrease the exercise,
         exchange or conversion price of any such securities, and (c) securities
         issued pursuant to acquisitions or strategic transactions approved by a
         majority of the disinterested directors, provided any such issuance
         shall only be to a Person which is, itself or through its subsidiaries,
         an operating company in a business synergistic with the business of the
         Company and in which the Company receives benefits in addition to the
         investment of funds, but shall not include a transaction in which the
         Company is issuing securities primarily for the purpose of raising
         capital or to an entity whose primary business is investing in
         securities.

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

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

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

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

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

                  "LIQUIDATED DAMAGES" means all current and future partial
         liquidated damages owed by the Company to the purchasers signatory to
         the Securities Purchase Agreement, dated as of February 17, 2005,
         between the Company and the purchasers, arising from the Company's
         failure to fulfill its obligations under the Registration Rights
         Agreement, dated as of February 17, 2005, between the Company and the
         purchasers, to file a registration statement pursuant to the terms
         therein. The aggregate sum of such current and future partial
         liquidated damages is set forth on ANNEX B hereto and is payable at
         Closing in the form of an additional principal amount of Debenture.

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

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

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

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

                                       3

<PAGE>

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

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

                  "PRINCIPAL AMOUNT" shall mean, as to each Purchaser, the
         amounts set forth below such Purchaser's signature block on the
         signature pages hereto and next to the heading "Principal Amount", in
         United States Dollars, which shall equal such Purchaser's Subscription
         Amount multiplied by 1.33.

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

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

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

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

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

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

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

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

                  "SECOND CLOSING CONDITIONS" shall have the meaning ascribed to
         such term in Section 2.1(b).

                                       4

<PAGE>

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

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

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

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

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

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

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

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

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

                  "SUBSIDIARY GUARANTEE" means the Subsidiary Guarantee, dated
         the date hereof, among each of its Subsidiaries and the Purchasers, in
         the form of EXHIBIT F attached hereto.

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

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

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

                                       5

<PAGE>

                  "UNDERLYING SHARES" means the shares of Common Stock issued
         and issuable upon conversion of the Debentures and upon exercise of the
         Warrants.

                  "VWAP" means, for any date, the price determined by the first
         of the following clauses that applies: (a) if the Common Stock is then
         listed or quoted on a Trading Market, the daily volume weighted average
         price of the Common Stock for such date (or the nearest preceding date)
         on the Trading Market on which the Common Stock is then listed or
         quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
         a.m. New York City time to 4:02 p.m. New York City time); (b) if the
         OTC Bulletin Board is not a Trading Market, the volume weighted average
         price of the Common Stock for such date (or the nearest preceding date)
         on the OTC Bulletin Board; (c) if the Common Stock is not then listed
         or quoted on the OTC Bulletin Board and if prices for the Common Stock
         are then reported in the "Pink Sheets" published by Pink Sheets, LLC
         (or a similar organization or agency succeeding to its functions of
         reporting prices), the most recent 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 Holder and reasonably acceptable to the
         Company.

                  "WARRANTS" means collectively the Common Stock purchase
         warrants, in the form of EXHIBIT C delivered to the Purchasers at each
         Closing in accordance with Section 2.2(a) hereof, which Warrants shall
         be exercisable immediately and have a term of exercise equal to 7
         years.

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

                                  ARTICLE II.
                                PURCHASE AND SALE

         2.1 CLOSING. The Company agrees to sell, and each Purchaser agrees,
severally and not jointly, to purchase the respective principal amounts of the
Debentures set forth below its name on the signature pages hereto. The Closings
shall take place in three stages as set forth below (respectively, the "FIRST
CLOSING", the "SECOND CLOSING" and the "THIRD CLOSING"). Upon satisfaction of
the conditions set forth in Section 2.2, each Closing shall occur at the offices
of FW, or such other location as the parties shall mutually agree.

               (a) FIRST CLOSING. The First Closing shall be for up to $215,000
         aggregate cash Subscription Amounts (excluding Liquidated Damages), and
         shall occur within 5 Trading Days of the date hereof.

               (b) SECOND CLOSING. The Second Closing shall be for up to
         $150,000 aggregate cash Subscription Amounts, and shall occur on or
         before the 5th Trading Day following the later of (i) the date the
         Registration Statement required to be filed pursuant to the
         Registration Statement is filed with the Commission in form and
         substance reasonably satisfactory to the Purchasers and (ii) the date
         that the Company presents the Purchasers with reasonable proof that the
         BIMO Order has been achieved (collectively, the "SECOND CLOSING
         CONDITIONS").

                                       6

<PAGE>

               (c) THIRD CLOSING. The Third Closing shall be for up to $235,000
         aggregate cash Subscription Amounts, and shall occur on or before the
         5th Trading Day following the Effective Date.

         2.2 DELIVERIES.

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

                    (i) as to the First Closing only, this Agreement duly
               executed by the Company;

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

                    (iii) a Debenture with a principal amount equal to such
               Purchaser's Subscription Amount during the first year and
               increasing to equal the Principal Amount thereafter, registered
               in the name of such Purchaser;

                    (iv) the Security Agreement, duly executed by the Company,
               along with all the Security Documents, including the Subsidiary
               Guarantees;

                    (v) as to the First Closing, a Warrant registered in the
               name of such Purchaser to purchase up to a number of shares of
               Common Stock equal to 100% of such Purchaser's Principal Amount
               applicable to the First Closing divided by $0.12, with an
               exercise price equal to $0.16, subject to adjustment therein;

                    (vi) as to the Second Closing, a Warrant registered in the
               name of such Purchaser to purchase up to a number of shares of
               Common Stock equal to 100% of such Purchaser's Principal Amount
               applicable to the Second and Third Closing divided by $0.12, with
               an exercise price equal to $0.16, subject to adjustment therein;
               and

                    (vii) as to the First Closing only, the Registration Rights
               Agreement duly executed by the Company.

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

                    (i) as to the First Closing only, this Agreement duly
               executed by such Purchaser;

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

                                       7

<PAGE>

                    (iii) as to the First Closing only, the Registration Rights
               Agreement duly executed by such Purchaser.

         2.3 CLOSING CONDITIONS.

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

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

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

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

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

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

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

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

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

                    (v) as to the Second Closing only, (1) each of the Second
               Closing Conditions shall have been met by the Company and (2)
               such Closing shall have occurred prior to the 4-month anniversary
               of the date hereof;

                    (vi) as to the Third Closing only, (1) the Company shall
               have filed with the Commission the Registration Statement
               registering all of the Underlying Shares and such Registration
               Statement shall have been declared effective by the Commission as
               to all such securities and been maintained effective since such
               date and (2) such Closing shall have occurred prior to the
               6-month anniversary of the date hereof; and

                                       8

<PAGE>

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

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

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

               (a) SUBSIDIARIES. All of the direct and indirect subsidiaries of
         the Company are set forth on SCHEDULE 3.1(A). The Company owns,
         directly or indirectly, all of the capital stock or other equity
         interests of each Subsidiary free and clear of any Liens, and all the
         issued and outstanding shares of capital stock of each Subsidiary are
         validly issued and are fully paid, non-assessable and free of
         preemptive and similar rights to subscribe for or purchase securities.
         If the Company has no subsidiaries, then all other references in the
         Transaction Documents to the Subsidiaries or any of them will be
         disregarded.

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

                                       9

<PAGE>

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

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

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

                                       10

<PAGE>

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

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

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

                                       11

<PAGE>

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

               (i) MATERIAL CHANGES. Since the date of the latest audited
         financial statements included within the SEC Reports, except as
         specifically disclosed in a subsequent SEC Report, (i) there has been
         no event, occurrence or development that has had or that could
         reasonably be expected to result in a Material Adverse Effect, (ii) the
         Company has not incurred any liabilities (contingent or otherwise)
         other than (A) trade payables and accrued expenses incurred in the
         ordinary course of business consistent with past practice and (B)
         liabilities not required to be reflected in the Company's financial
         statements pursuant to GAAP or disclosed in filings made with the
         Commission, (iii) the Company has not altered its method of accounting,
         (iv) the Company has not declared or made any dividend or distribution
         of cash or other property to its stockholders or purchased, redeemed or
         made any agreements to purchase or redeem any shares of its capital
         stock and (v) the Company has not issued any equity securities to any
         officer, director or Affiliate, except pursuant to existing Company
         stock option plans. The Company does not have pending before the
         Commission any request for confidential treatment of information.
         Except for the issuance of the Securities contemplated by this
         Agreement or as set forth on SCHEDULE 3.1(I), no event, liability or
         development has occurred or exists with respect to the Company or its
         Subsidiaries or their respective business, properties, operations or
         financial condition, that would be required to be disclosed by the
         Company under applicable securities laws at the time this
         representation is made that has not been publicly disclosed at least
         one Trading Day prior to the date that this representation is made.

                                       12

<PAGE>

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

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

                                       13

<PAGE>

               (l) COMPLIANCE. Neither the Company nor any Subsidiary (i) is in
         default under or in violation of (and no event has occurred that has
         not been waived that, with notice or lapse of time or both, would
         result in a default by the Company or any Subsidiary under), nor has
         the Company or any Subsidiary received notice of a claim that it is in
         default under or that it is in violation of, any indenture, loan or
         credit agreement or any other agreement or instrument to which it is a
         party or by which it or any of its properties is bound (whether or not
         such default or violation has been waived), (ii) is in violation of any
         order of any court, arbitrator or governmental body, or (iii) is or has
         been in violation of any statute, rule or regulation of any
         governmental authority, including without limitation all foreign,
         federal, state and local laws applicable to its business and all such
         laws that affect the environment, except in each case as could not have
         or reasonably be expected to result in a Material Adverse Effect.

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

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

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

                                       14

<PAGE>

               (p) INSURANCE. The Company and the Subsidiaries are insured by
         insurers of recognized financial responsibility against such losses and
         risks and in such amounts as are prudent and customary in the
         businesses in which the Company and the Subsidiaries are engaged,
         including, but not limited to, directors and officers insurance
         coverage at least equal to the aggregate Subscription Amount. Neither
         the Company nor any Subsidiary has any reason to believe that it will
         not be able to renew its existing insurance coverage as and when such
         coverage expires or to obtain similar coverage from similar insurers as
         may be necessary to continue its business without a significant
         increase in cost.

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

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

                                       15

<PAGE>

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

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

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

               (v) REGISTRATION RIGHTS. Other than each of the Purchasers and as
         set forth on SCHEDULE 3.1(V), no Person has any right to cause the
         Company to effect the registration under the Securities Act of any
         securities of the Company.

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

               (x) APPLICATION OF TAKEOVER PROTECTIONS. The Company and its
         Board of Directors have taken all necessary action, if any, in order to
         render inapplicable any control share acquisition, business
         combination, poison pill (including any distribution under a rights
         agreement) or other similar anti-takeover provision under the Company's
         Certificate of Incorporation (or similar charter documents) or the laws
         of its state of incorporation that is or could become applicable to the
         Purchasers as a result of the Purchasers and the Company fulfilling
         their obligations or exercising their rights under the Transaction
         Documents, including without limitation as a result of the Company's
         issuance of the Securities and the Purchasers' ownership of the
         Securities.

                                       16

<PAGE>

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

               (z) NO INTEGRATED OFFERING. Assuming the accuracy of the
         Purchasers' representations and warranties set forth in Section 3.2,
         neither the Company, nor any of its affiliates, nor any Person acting
         on its or their behalf has, directly or indirectly, made any offers or
         sales of any security or solicited any offers to buy any security,
         under circumstances that would cause this offering of the Securities to
         be integrated with prior offerings by the Company for purposes of the
         Securities Act or any applicable shareholder approval provision of any
         Trading Market on which any of the securities of the Company are listed
         or designated.

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

                                       17

<PAGE>

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

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

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

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

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

                                       18

<PAGE>

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

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

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

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

                                       19

<PAGE>

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

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

               (a) ORGANIZATION; AUTHORITY. Such Purchaser, if not an
         individual, is an entity duly organized, validly existing and in good
         standing under the laws of the jurisdiction of its organization with
         full right, corporate or partnership power and authority to enter into
         and to consummate the transactions contemplated by the Transaction
         Documents and otherwise to carry out its obligations hereunder and
         thereunder. If such Purchaser is an individual, the execution, delivery
         and performance by such Purchaser of the transactions contemplated by
         this Agreement have been duly authorized by all necessary corporate or
         similar action on the part of such Purchaser. Each Transaction Document
         to which it is a party has been duly executed by such Purchaser, and
         when delivered by such Purchaser in accordance with the terms hereof,
         will constitute the valid and legally binding obligation of such
         Purchaser, enforceable against it in accordance with its terms, except
         (i) as limited by general equitable principles and applicable
         bankruptcy, insolvency, reorganization, moratorium and other laws of
         general application affecting enforcement of creditors' rights
         generally, (ii) as limited by laws relating to the availability of
         specific performance, injunctive relief or other equitable remedies and
         (iii) insofar as indemnification and contribution provisions may be
         limited by applicable law.

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

                                       20

<PAGE>

         Statement or otherwise in compliance with applicable federal and state
         securities laws) in violation of the Securities Act or any applicable
         state securities law. Such Purchaser is acquiring the Securities
         hereunder in the ordinary course of its business.

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

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

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

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

                                       21

<PAGE>

                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

         4.1 TRANSFER RESTRICTIONS.

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

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

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

               The Company acknowledges and agrees that a Purchaser may from
         time to time pledge pursuant to a bona fide margin agreement with a
         registered broker-dealer or grant a security interest in some or all of
         the Securities to a financial institution that is an "accredited
         investor" as defined in Rule 501(a) under the Securities Act and who
         agrees to be bound by the provisions of this Agreement and the
         Registration Rights Agreement and, if required under the terms of such
         arrangement, such Purchaser may transfer pledged or secured Securities
         to the pledgees or secured parties. Such a pledge or transfer would not
         be subject to approval of the Company and no legal opinion of legal

                                       22

<PAGE>

         counsel of the pledgee, secured party or pledgor shall be required in
         connection therewith. Further, no notice shall be required of such
         pledge. At the appropriate Purchaser's expense, the Company will
         execute and deliver such reasonable documentation as a pledgee or
         secured party of Securities may reasonably request in connection with a
         pledge or transfer of the Securities, including, if the Securities are
         subject to registration pursuant to the Registration Rights Agreement,
         the preparation and filing of any required prospectus supplement under
         Rule 424(b)(3) under the Securities Act or other applicable provision
         of the Securities Act to appropriately amend the list of Selling
         Stockholders thereunder.

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

               (d) In addition to such Purchaser's other available remedies, the
         Company shall pay to a Purchaser, in cash, as partial liquidated
         damages and not as a penalty, for each $1,000 of Underlying Shares
         (based on the VWAP of the Common Stock on the date such Securities are
         submitted to the Company's transfer agent) delivered for removal of the
         restrictive legend and subject to Section 4.1(c), $10 per Trading Day
         (increasing to $20 per Trading Day 5 Trading Days after such damages
         have begun to accrue) for each Trading Day after the Legend Removal
         Date until such certificate is delivered without a legend. Nothing
         herein shall limit such Purchaser's right to pursue actual damages for

                                       23

<PAGE>

         the Company's failure to deliver certificates representing any
         Securities as required by the Transaction Documents, and such Purchaser
         shall have the right to pursue all remedies available to it at law or
         in equity including, without limitation, a decree of specific
         performance and/or injunctive relief.

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

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

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

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

         4.5 CONVERSION AND EXERCISE PROCEDURES. The form of Notice of Exercise
included in the Warrants and the form of Notice of Conversion included in the
Debentures set forth the totality of the procedures required of the Purchasers
in order to exercise the Warrants or convert the Debentures. No additional legal
opinion or other information or instructions shall be required of the Purchasers
to

                                       24

<PAGE>

exercise their Warrants or convert their Debentures. The Company shall honor
exercises of the Warrants and conversions of the Debentures and shall deliver
Underlying Shares in accordance with the terms, conditions and time periods set
forth in the Transaction Documents.

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

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

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

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

                                       25

<PAGE>

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

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

                                       26

<PAGE>

employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Purchaser Party except to the extent that (i) the employment thereof has
been specifically authorized by the Company in writing, (ii) the Company has
failed after a reasonable period of time to assume such defense and to employ
counsel or (iii) in such action there is, in the reasonable opinion of such
separate counsel, a material conflict on any material issue between the position
of the Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses of no more
than one such separate counsel. The Company will not be liable to any Purchaser
Party under this Agreement (i) for any settlement by a Purchaser Party effected
without the Company's prior written consent, which shall not be unreasonably
withheld or delayed; or (ii) to the extent, but only to the extent that a loss,
claim, damage or liability is attributable to any Purchaser Party's breach of
any of the representations, warranties, covenants or agreements made by such
Purchaser Party in this Agreement or in the other Transaction Documents.

         4.12 RESERVATION AND LISTING OF SECURITIES.

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

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

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

         4.13 PARTICIPATION IN FUTURE FINANCING.

               (a) From the date hereof until the date that the Debentures are
         no longer outstanding, upon any issuance by the Company or any of its
         Subsidiaries of Common Stock or Common Stock Equivalents (a "SUBSEQUENT
         FINANCING"), each Purchaser shall have the right to participate in up
         to an amount of the Subsequent Financing equal to 100% of the
         Subsequent Financing (the "PARTICIPATION MAXIMUM") on the same terms,
         conditions and price provided for in the Subsequent Financing.

                                       27

<PAGE>

               (b) At least 5 Trading Days prior to the closing of the
         Subsequent Financing, the Company shall deliver to each Purchaser a
         written notice of its intention to effect a Subsequent Financing
         ("PRE-NOTICE"), which Pre-Notice shall ask such Purchaser if it wants
         to review the details of such financing (such additional notice, a
         "SUBSEQUENT FINANCING NOTICE"). Upon the request of a Purchaser, and
         only upon a request by such Purchaser, for a Subsequent Financing
         Notice, the Company shall promptly, but no later than 1 Trading Day
         after such request, deliver a Subsequent Financing Notice to such
         Purchaser. The Subsequent Financing Notice shall describe in reasonable
         detail the proposed terms of such Subsequent Financing, the amount of
         proceeds intended to be raised thereunder, the Person or Persons
         through or with whom such Subsequent Financing is proposed to be
         effected, and attached to which shall be a term sheet or similar
         document relating thereto.

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

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

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

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

                                       28

<PAGE>

               (g) Notwithstanding the foregoing, this Section 4.13 shall not
         apply in respect of an Exempt Issuance.

         4.14 SUBSEQUENT EQUITY SALES.

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

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

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

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

                                       29

<PAGE>

         4.16 SHORT SALES AND CONFIDENTIALITY AFTER THE DATE HEREOF. Each
Purchaser severally and not jointly with the other Purchasers covenants that
neither it nor any Affiliate acting on its behalf or pursuant to any
understanding with it will execute any Short Sales during the period commencing
at the Discussion Time and ending at the time that the transactions contemplated
by this Agreement are first publicly announced as described in Section 4.6. Each
Purchaser, severally and not jointly with the other Purchasers, covenants that
until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company as described in Section 4.6, such Purchaser will
maintain the confidentiality of all disclosures made to it in connection with
this transaction (including the existence and terms of this transaction). Each
Purchaser understands and acknowledges, severally and not jointly with any other
Purchaser, that the Commission currently takes the position that coverage of
short sales of shares of the Common Stock "against the box" prior to the
Effective Date of the Registration Statement with the Securities is a violation
of Section 5 of the Securities Act, as set forth in Item 65, Section A, of the
Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation Finance.
Notwithstanding the foregoing, no Purchaser makes any representation, warranty
or covenant hereby that it will not engage in Short Sales in the securities of
the Company after the time that the transactions contemplated by this Agreement
are first publicly announced as described in Section 4.6 except that, so long as
a Purchaser continues to hold any Debentures or Warrants, such Purchaser
severally and not jointly with the other Purchasers, covenants that neither it
nor any Affiliate acting on its behalf or pursuant to any understanding with it,
shall knowingly engage in any Short Sales, except on those days (each a
"PERMITTED DAY") on which the aggregate short position with respect to the
Common Stock of such Purchaser prior to giving effect to any Short Sales by such
Purchaser on such Permitted Day does not exceed such Purchaser's Permitted Share
Position (as defined below) on such Permitted Day; PROVIDED, HOWEVER, that a
Purchaser will only be entitled to engage in transactions that constitute Short
Sales on a Permitted Day to the extent that following such transaction, the
aggregate short position with respect to the Common Stock of such Purchaser does
not exceed such Purchaser's Permitted Share Position. For purposes of this
Section 4.16, a Purchaser's "PERMITTED SHARE POSITION" means, with respect to
any date of determination, the number of shares of Common Stock owned by such
Purchaser (including Conversion Shares, Warrant Shares and shares purchased in
the open market or otherwise) plus the sum of (i) the maximum number of
Conversion Shares then issuable (including as to portions of the Debentures not
yet converted and without regard to any exercise caps or other exercise
restrictions applicable to the Debentures and based on the then Set Price) to
such Purchaser and (ii) the maximum number of Warrants Shares then issuable
(including as to portions of the Warrants not yet exercised and without regard
to any exercise caps or other exercise restrictions applicable to the Warrants)
to such Purchaser. Notwithstanding the foregoing, in the case of a Purchaser
that is a multi-managed investment vehicle whereby separate portfolio managers
manage separate portions of such Purchaser's assets and the portfolio managers
have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser's assets, the covenant set
forth above shall only apply with respect to the portion of assets managed by
the portfolio manager that made the investment decision to purchase the
Securities covered by this Agreement.

                                       30

<PAGE>

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

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

         4.19 APPOINTMENT OF AN ADDITIONAL DIRECTOR. The Company shall appoint
(or cause its board of directors or shareholders to appoint) two additional
Persons as members of the Company's Board of Directors, including Samuel Karp
and one other individual reasonably satisfactory to the majority in interest of
the Purchasers, which appointment shall be effective within 90 calendar days
following the Closing. The Company shall use best efforts to nominate, solicit
proxies and recommend that shareholders vote in favor of such Persons, or
replacement directors, for re-election as directors of the Company at each
annual meeting or special meeting of the shareholders of the Company at which
the election of directors is a matter to be acted upon. The Company shall take
all further actions reasonably necessary to satisfy the covenants herein. The
Company shall not increase the number of directors beyond 5 members without the
consent of a majority in interest of the Purchasers.

                                   ARTICLE V.
                                  MISCELLANEOUS

         5.1 TERMINATION. This Agreement may be terminated by any Purchaser, as
to such Purchaser's obligations hereunder only and without any effect whatsoever
on the obligations between the Company and the other Purchasers, by written
notice to the other parties, if the First Closing has not been consummated on or
before April 28, 2006; PROVIDED, HOWEVER, that no such termination will affect
the right of any party to sue for any breach by the other party (or parties).

         5.2 FEES AND EXPENSES. At the First Closing, the Company has agreed to
reimburse Schreiber Living Trust ("SCHREIBER") $18,000, for its legal fees and
expenses, none of which has been paid prior to the First Closing and pay $50,000
in satisfaction of Liquidated Damages. Accordingly, in lieu of the foregoing
payments, the aggregate amount that Schreiber is to pay for the Securities at
the First Closing shall be reduced by $50,000 in lieu thereof. The Company shall
deliver, prior to each Closing, a completed and executed copy of the Closing
Statement, attached hereto as ANNEX A. Except as expressly set forth in the
Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all transfer agent fees, stamp taxes and other taxes and duties levied
in connection with the delivery of any Securities to the Purchasers.

                                       31

<PAGE>

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

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

         5.5 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company and each Purchaser or, in the case of a
waiver, by the party against whom enforcement of any such waived provision is
sought. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such
right.

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

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

         5.8 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.11.

                                       32

<PAGE>

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

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

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

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

                                       33

<PAGE>

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

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

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

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

         5.17 USURY. To the extent it may lawfully do so, the Company hereby
agrees not to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force, in
connection with any claim, action or proceeding that may be brought by any
Purchaser in order to enforce any right or remedy under any Transaction
Document. Notwithstanding any provision to the contrary contained in any
Transaction Document, it is expressly agreed and provided that the total
liability of the Company under the Transaction Documents for payments in the
nature of interest shall not exceed the maximum lawful rate authorized under
applicable law (the "MAXIMUM RATE"), and, without limiting the foregoing, in no
event shall any rate of interest or default interest, or both of them, when
aggregated with any other sums in the nature of interest that the Company may be

                                       34

<PAGE>

obligated to pay under the Transaction Documents exceed such Maximum Rate. It is
agreed that if the maximum contract rate of interest allowed by law and
applicable to the Transaction Documents is increased or decreased by statute or
any official governmental action subsequent to the date hereof, the new maximum
contract rate of interest allowed by law will be the Maximum Rate applicable to
the Transaction Documents from the effective date forward, unless such
application is precluded by applicable law. If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to any
Purchaser with respect to indebtedness evidenced by the Transaction Documents,
such excess shall be applied by such Purchaser to the unpaid principal balance
of any such indebtedness or be refunded to the Company, the manner of handling
such excess to be at such Purchaser's election.

         5.18 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance or non-performance of the obligations
of any other Purchaser under any Transaction Document. Nothing contained herein
or in any other Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. Each Purchaser has been represented by its own
separate legal counsel in their review and negotiation of the Transaction
Documents. For reasons of administrative convenience only, Purchasers and their
respective counsel have chosen to communicate with the Company through FW. FW
does not represent all of the Purchasers but only Schreiber. The Company has
elected to provide all Purchasers with the same terms and Transaction Documents
for the convenience of the Company and not because it was required or requested
to do so by the Purchasers.

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

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

                                       35

<PAGE>

                            (SIGNATURE PAGES FOLLOW)

                                       36

<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.

ARMOR ELECTRIC INC.                            ADDRESS FOR NOTICE:
                                               -------------------

By:__________________________________________
     Name:
     Title:

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

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

                                       37

<PAGE>

        [PURCHASER SIGNATURE PAGES TO ARME SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: _____________________________________________________________

SIGNATURE OF AUTHORIZED SIGNATORY OF PURCHASER: ________________________________

Name of Authorized Signatory: __________________________________________________

Title of Authorized Signatory: _________________________________________________

Email Address of Purchaser: ____________________________________________________

Facsimile Number of Purchaser: _________________________________________________

Address for Notice of Purchaser:

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

First Closing Subscription Amount: (1)
First Closing Warrant Shares:
Second Closing Subscription Amount:
Second Closing Warrant Shares: [YOU MUST ISSUE THE THIRD CLOSING WARRANTS HERE
IN ORDER TO REGISTER THEM AT ALL - WARRANTS MUST ALL BE ISSUED PRIOR TO THE
FILING DATE]
Third Closing Subscription Amount:

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

____________________________
1        Include new cash consideration as well as Liquidated Damages owed to
applicable fund.

                                       38

<PAGE>

ANNEX A

                                CLOSING STATEMENT

Pursuant to the attached Securities Purchase Agreement, dated as of the date
hereto, the purchasers shall purchase up to $400,000 of Debentures and Warrants
from Armor Electic Inc. (the "COMPANY"). All funds will be wired into a trust
account maintained by ____________, counsel to the Company. All funds will be
disbursed in accordance with this Closing Statement.

DISBURSEMENT DATE: April ___, 2006

________________________________________________________________________________

I.   PURCHASE PRICE
     --------------

                    GROSS PROCEEDS TO BE RECEIVED IN TRUST              $

II.  DISBURSEMENTS
     -------------

                                                                        $
                                                                        $
                                                                        $
                                                                        $
                                                                        $

TOTAL AMOUNT DISBURSED:                                                 $

WIRE INSTRUCTIONS:
-----------------

To: _____________________________________

To: _____________________________________

                                       39

(1) Include new cash consideration as well as Liquidated Damages owed to
applicable fund.<PAGE>

EXHIBIT 10.2

                          REGISTRATION RIGHTS AGREEMENT

         This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of April 26, 2006, among Armor Electric Inc., a Florida
corporation (the "COMPANY"), and the several purchasers signatory hereto (each
such purchaser is a "PURCHASER" and collectively, the "PURCHASERS").

         This Agreement is made pursuant to the Securities Purchase Agreement,
dated as of the date hereof between the Company and each Purchaser (the
"PURCHASE AGREEMENT").

         The Company and each Purchaser hereby agrees as follows:

         1.       Definitions

         CAPITALIZED TERMS USED AND NOT OTHERWISE DEFINED HEREIN THAT ARE
DEFINED IN THE PURCHASE AGREEMENT SHALL HAVE THE MEANINGS GIVEN SUCH TERMS IN
THE PURCHASE AGREEMENT. As used in this Agreement, the following terms shall
have the following meanings:

                  "ADVICE" shall have the meaning set forth in Section 6(d).

                  "EFFECTIVENESS DATE" means, with respect to the initial
         Registration Statement required to be filed hereunder, the 180th
         calendar day following the date hereof and, with respect to any
         additional Registration Statements which may be required pursuant to
         Section 3(c), the 90th calendar day following the date on which the
         Company first knows, or reasonably should have known, that such
         additional Registration Statement is required hereunder; PROVIDED,
         HOWEVER, in the event the Company is notified by the Commission that
         one of the above Registration Statements will not be reviewed or is no
         longer subject to further review and comments, the Effectiveness Date
         as to such Registration Statement shall be the fifth Trading Day
         following the date on which the Company is so notified if such date
         precedes the dates required above.

                  "EFFECTIVENESS PERIOD" shall have the meaning set forth in
         Section 2(a).

                  "EVENT" shall have the meaning set forth in Section 2(b).

                  "EVENT DATE" shall have the meaning set forth in Section 2(b).

                  "FILING DATE" means, with respect to the initial Registration
         Statement required hereunder, the 120th calendar day following the date
         hereof and, with respect to any additional Registration Statements
         which may be required pursuant to Section 3(c), the 30th day following
         the date on which the Company first knows, or reasonably should have
         known that such additional Registration Statement is required
         hereunder.

                                       1

<PAGE>

                  "HOLDER" or "HOLDERS" means the holder or holders, as the case
         may be, from time to time of Registrable Securities.

                  "INDEMNIFIED PARTY" shall have the meaning set forth in
         Section 5(c).

                  "INDEMNIFYING PARTY" shall have the meaning set forth in
         Section 5(c).

                  "LOSSES" shall have the meaning set forth in Section 5(a).

                  "PLAN OF DISTRIBUTION" shall have the meaning set forth in
         Section 2(a).

                  "PROSPECTUS" means the prospectus included in a 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 a 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 (i) all of the shares of Common
         Stock issuable upon conversion in full of the Debentures, (ii) all
         Warrant Shares, (iii) any additional shares issuable in connection with
         any anti-dilution provisions in the Debentures or the Warrants (in each
         case, without giving effect to any limitations on conversion set forth
         in the Debenture or limitations on exercise set forth in the Warrant)
         and (iv) 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 the registration statements
         required to be filed hereunder and any additional registration
         statements contemplated by Section 3(c), 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.

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

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

                                       2

<PAGE>

                  "SELLING SHAREHOLDER QUESTIONNAIRE" shall have the meaning set
         forth in Section 3(a).

         2.       SHELF REGISTRATION

                  (a) On or prior to each Filing Date, the Company shall prepare
         and file with the Commission a "Shelf" Registration Statement covering
         the resale of 200% of the Registrable Securities on such Filing Date
         for an offering to be made on a continuous basis pursuant to Rule 415.
         The Registration Statement shall be on Form S-3 (except if the Company
         is not then eligible to register for resale the Registrable Securities
         on Form S-3, in which case such registration shall be on another
         appropriate form in accordance herewith) and shall contain (unless
         otherwise directed by at least an 85% majority in interest of the
         Holders) substantially the "PLAN OF DISTRIBUTION" attached hereto as
         ANNEX A. Subject to the terms of this Agreement, the Company shall use
         its best efforts to cause a Registration Statement to be declared
         effective under the Securities Act as promptly as possible after the
         filing thereof, but in any event prior to the applicable Effectiveness
         Date, and shall use its best efforts to keep such Registration
         Statement continuously effective under the Securities Act until the
         earlier of (i) the date that all Registrable Securities covered by such
         Registration Statement have been sold, or may be sold without volume
         restrictions pursuant to Rule 144(k), as determined by the counsel to
         the Company pursuant to a written opinion letter to such effect,
         addressed and acceptable to the Company's transfer agent and the
         affected Holders or (ii) the two year anniversary of the Closing Date
         provided that the Company shall have notified the Holders in writing of
         such termination prior to withdrawing the Registration Statement and
         reconfirmed and acknowledged that, upon a cashless exercise of the
         Warrants, the Warrant Shares then issuable shall have no resale
         restrictions (the "EFFECTIVENESS PERIOD"). The Company shall
         telephonically request effectiveness of a Registration Statement as of
         5:00 pm Eastern Time on a Trading Day. The Company shall immediately
         notify the Holders via facsimile of the effectiveness of a Registration
         Statement on the same Trading Day that the Company telephonically
         confirms effectiveness with the Commission, which shall be the date
         requested for effectiveness of a Registration Statement. The Company
         shall, by 9:30 am Eastern Time on the Trading Day after the Effective
         Date (as defined in the Purchase Agreement), file a final Prospectus
         with the Commission as required by Rule 424. Failure to so notify the
         Holder within 1 Trading Day of such notification of effectiveness or
         failure to file a final Prospectus as a foresaid shall be deemed an
         Event under Section 2(b).

                  (b) If: (i) a Registration Statement is not filed on or prior
         to its Filing Date (if the Company files a Registration Statement
         without affording the Holders the opportunity to review and comment on
         the same as required by Section 3(a), the Company shall not be deemed
         to have satisfied this clause (i)), or (ii) the Company fails to file
         with the Commission a request for acceleration in accordance with Rule
         461 promulgated under the Securities Act, within five Trading Days of
         the date that the Company is notified (orally or in writing, whichever
         is earlier) by the Commission that a Registration Statement will not be
         "reviewed," or not subject to further review, or (iii) prior to its
         Effectiveness Date, the Company fails to file a pre-effective amendment
         and otherwise respond in writing to comments made by the Commission in

                                       3

<PAGE>

         respect of such Registration Statement within 10 calendar days after
         the receipt of comments by or notice from the Commission that such
         amendment is required in order for a Registration Statement to be
         declared effective, or (iv) a Registration Statement filed or required
         to be filed hereunder is not declared effective by the Commission by
         its Effectiveness Date, or (v) after the Effectiveness Date, a
         Registration Statement ceases for any reason to remain continuously
         effective as to all Registrable Securities for which it is required to
         be effective, or the Holders are otherwise not permitted to utilize the
         Prospectus therein to resell such Registrable Securities for more than
         10 consecutive calendar days or more than an aggregate of 15 calendar
         days during any 12-month period (which need not be consecutive calendar
         days) (any such failure or breach being referred to as an "EVENT", and
         for purposes of clause (i) or (iv) the date on which such Event occurs,
         or for purposes of clause (ii) the date on which such five Trading Day
         period is exceeded, or for purposes of clause (iii) the date which such
         10 calendar day period is exceeded, or for purposes of clause (v) the
         date on which such 10 or 15 calendar day period, as applicable, is
         exceeded being referred to as "EVENT DATE"), then in addition to any
         other rights the Holders may have hereunder or under applicable law, on
         each such Event Date and on each monthly anniversary of each such Event
         Date (if the applicable Event shall not have been cured by such date)
         until the applicable Event is cured, the Company shall pay to each
         Holder an amount in cash, as partial liquidated damages and not as a
         penalty, equal to 2% of the aggregate purchase price paid by such
         Holder pursuant to the Purchase Agreement for any Registrable
         Securities then held by such Holder, up to a maximum of 24% per Holder
         of the aggregate purchase price paid by such Holder pursuant to the
         Purchase Agreement. If the Company fails to pay any partial liquidated
         damages pursuant to this Section in full within seven days after the
         date payable, the Company will pay interest thereon at a rate of 18%
         per annum (or such lesser maximum amount that is permitted to be paid
         by applicable law) to the Holder, accruing daily from the date such
         partial liquidated damages are due until such amounts, plus all such
         interest thereon, are paid in full. The partial liquidated damages
         pursuant to the terms hereof shall apply on a daily pro-rata basis for
         any portion of a month prior to the cure of an Event.

         3.       REGISTRATION PROCEDURES.

         In connection with the Company's registration obligations hereunder,
the Company shall:

                  (a) Not less than five Trading Days prior to the filing of
         each Registration Statement and not less than one Trading Day prior to
         the filing of 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 Holder 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 Holders, and (ii)
         cause its officers and directors, counsel and independent certified
         public accountants to respond to such inquiries as shall be necessary,

                                       4

<PAGE>

                  in the reasonable opinion of respective counsel to each Holder
         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
         the Holders of a majority of the Registrable Securities shall
         reasonably object in good faith, provided that, the Company is notified
         of such objection in writing no later than 5 Trading Days after the
         Holders have been so furnished copies of a Registration Statement or 1
         Trading Day after the Holders have been so furnished copies of any
         related Prospectus or amendments or supplements thereto. Each Holder
         agrees to furnish to the Company a completed Questionnaire in the form
         attached to this Agreement as Annex B (a "SELLING SHAREHOLDER
         QUESTIONNAIRE") not less than two Trading Days prior to the Filing Date
         or by the end of the fourth Trading Day following the date on which
         such Holder receives draft materials in accordance with this Section.

                  (b) (i) Prepare and file with the Commission such amendments,
         including post-effective amendments, to a Registration Statement and
         the Prospectus used in connection therewith as may be necessary to keep
         a 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 (subject to the
         terms of this Agreement), and as so supplemented or amended to be filed
         pursuant to Rule 424; (iii) respond as promptly as reasonably possible
         to any comments received from the Commission with respect to a
         Registration Statement or any amendment thereto and as promptly as
         reasonably possible provide the Holders true and complete copies of all
         correspondence from and to the Commission relating to a Registration
         Statement (provided that the Company may excise any information
         contained therein which would constitute material non-public
         information as to any Holder which has not executed a confidentiality
         agreement with the Company); 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 a
         Registration Statement during the applicable period in accordance
         (subject to the terms of this Agreement) with the intended methods of
         disposition by the Holders thereof set forth in such Registration
         Statement as so amended or in such Prospectus as so supplemented.

                  (c) If during the Effectiveness Period, the number of
         Registrable Securities at any time exceeds 75% of the number of shares
         of Common Stock then registered in a Registration Statement, then the
         Company shall file as soon as reasonably practicable but in any case
         prior to the applicable Filing Date, an additional Registration
         Statement covering the resale by the Holders of not less than 200% of
         the number of such Registrable Securities. Notwithstanding anything
         herein to the contrary, unless Section 5(h) of the Debenture is
         subsequently amended by the mutual consent of the parties or the
         Conversion Price is reduced pursuant to Section 5 of the Debentures,
         provided that the Company registers the maximum number of Conversion
         Shares issuable based on the $0.04 floor price in Section 5(h) of the
         Debentures along with 200% of the then Warrant Shares, the Company
         shall not be obligated to register an additional Registration Statement
         thereafter.

                                       5

<PAGE>

                  (d) Notify the Holders of Registrable Securities to be sold
         (which notice shall, pursuant to clauses (iii) through (vi) hereof, be
         accompanied by an instruction to suspend the use of the Prospectus
         until the requisite changes have been made) as promptly as reasonably
         possible (and, in the case of (i)(A) below, not less than one Trading
         Day prior to such filing) and (if requested by any such Person) confirm
         such notice in writing no later than one Trading Day following the day
         (i)(A) when a Prospectus or any Prospectus supplement or post-effective
         amendment to a Registration Statement is proposed to be filed; (B) when
         the Commission notifies the Company whether there will be a "review" of
         such Registration Statement and whenever the Commission comments in
         writing on such Registration Statement; and (C) with respect to a
         Registration Statement or any post-effective amendment, when the same
         has become effective; (ii) of any request by the Commission or any
         other Federal or state governmental authority for amendments or
         supplements to a Registration Statement or Prospectus or for additional
         information; (iii) of the issuance by the Commission or any other
         federal or state governmental authority of any stop order suspending
         the effectiveness of a Registration Statement covering any or all of
         the Registrable Securities or the initiation of any Proceedings for
         that purpose; (iv) of the receipt by the Company of any notification
         with respect to the suspension of the qualification or exemption from
         qualification of any of the Registrable Securities for sale in any
         jurisdiction, or the initiation or threatening of any Proceeding for
         such purpose; (v) of the occurrence of any event or passage of time
         that makes the financial statements included in a Registration
         Statement ineligible for inclusion therein or any statement made in a
         Registration Statement or Prospectus or any document incorporated or
         deemed to be incorporated therein by reference untrue in any material
         respect or that requires any revisions to a Registration Statement,
         Prospectus or other documents so that, in the case of a Registration
         Statement or the Prospectus, as the case may be, 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 light of the circumstances under which they were made, not
         misleading; and (vi) the occurrence or existence of any pending
         corporate development with respect to the Company that the Company
         believes may be material and that, in the determination of the Company,
         makes it not in the best interest of the Company to allow continued
         availability of a Registration Statement or Prospectus; provided that
         any and all of such information shall remain confidential to each
         Holder until such information otherwise becomes public, unless
         disclosure by a Holder is required by law; PROVIDED, FURTHER,
         notwithstanding each Holder's agreement to keep such information
         confidential, the Holders make no acknowledgement that any such
         information is material, non-public information.

                  (e) Use its best efforts to avoid the issuance of, or, if
         issued, obtain the withdrawal of (i) any order suspending the
         effectiveness of a 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.

                  (f) Furnish to each Holder, without charge, at least one
         conformed copy of each such Registration Statement and each amendment
         thereto, including financial statements and schedules, all documents
         incorporated or deemed to be incorporated therein by reference to the
         extent requested by such Person, and all exhibits to the extent
         requested by such Person (including those previously furnished or
         incorporated by reference) promptly after the filing of such documents
         with the Commission.

                                       6

<PAGE>

                  (g) Subject to the terms of this Agreement, the Company hereby
         consents to the use of such Prospectus and each amendment or supplement
         thereto by each of the selling Holders in connection with the offering
         and sale of the Registrable Securities covered by such Prospectus and
         any amendment or supplement thereto, except after the giving of any
         notice pursuant to Section 3(d).

                  (h) If NASDR Rule 2710 requires any broker-dealer to make a
         filing prior to executing a sale by a Holder, the Company shall (i)
         make an Issuer Filing with the NASDR, Inc. Corporate Financing
         Department pursuant to proposed NASDR Rule 2710(b)(10)(A)(i), (ii)
         respond within five Trading Days to any comments received from NASDR in
         connection therewith, (iii) and pay the filing fee required in
         connection therewith.

                  (i) Prior to any resale of Registrable Securities by a Holder,
         use its commercially reasonable efforts to register or qualify or
         cooperate with the selling Holders in connection with the registration
         or qualification (or exemption from the Registration or qualification)
         of such Registrable Securities for the resale by the Holder under the
         securities or Blue Sky laws of such jurisdictions within the United
         States as any Holder reasonably requests in writing, to keep each
         registration or qualification (or exemption therefrom) effective during
         the Effectiveness Period and to do any and all other acts or things
         reasonably necessary to enable the disposition in such jurisdictions of
         the Registrable Securities covered by each Registration Statement;
         provided, that the Company shall not be required to qualify generally
         to do business in any jurisdiction where it is not then so qualified,
         subject the Company to any material tax in any such jurisdiction where
         it is not then so subject or file a general consent to service of
         process in any such jurisdiction.

                  (j) If requested by the Holders, cooperate with the Holders 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 the Purchase Agreement, of all restrictive
         legends, and to enable such Registrable Securities to be in such
         denominations and registered in such names as any such Holders may
         request.

                  (k) Upon the occurrence of any event contemplated by this
         Section 3, as promptly as reasonably possible under the circumstances
         taking into account the Company's good faith assessment of any adverse
         consequences to the Company and its stockholders of the premature
         disclosure of such event, prepare a supplement or amendment, including
         a post-effective amendment, to a 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 a 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 light of the circumstances
         under which they were made, not misleading. If the Company notifies the
         Holders in accordance with clauses (iii) through (vi) of Section 3(d)
         above to suspend the use of any Prospectus until the requisite changes
         to such Prospectus have been made, then the Holders shall suspend use
         of such Prospectus. The Company will use its best efforts to ensure
         that the use of the Prospectus may be resumed as promptly as is
         practicable. The Company shall be entitled to exercise its right under
         this Section 3(k) to suspend the availability of a Registration
         Statement and Prospectus, subject to the payment of partial liquidated
         damages pursuant to Section 2(b), for a period not to exceed 60
         calendar days (which need not be consecutive days) in any 12 month
         period.

                                       7

<PAGE>

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

                  (m) The Company may require each selling Holder to furnish to
         the Company a certified statement as to the number of shares of Common
         Stock beneficially owned by such Holder and, if required by the
         Commission, the natural persons thereof that have voting and
         dispositive control over the Shares. During any periods that the
         Company is unable to meet its obligations hereunder with respect to the
         registration of the Registrable Securities solely because any Holder
         fails to furnish such information within three Trading Days of the
         Company's request, any liquidated damages that are accruing at such
         time as to such Holder only shall be tolled and any Event that may
         otherwise occur solely because of such delay shall be suspended as to
         such Holder only, until such information is delivered to the Company.

         4.       REGISTRATION EXPENSES. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to a
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with any Trading Market on which the Common Stock is then
listed for trading, (B) in compliance with applicable state securities or Blue
Sky laws reasonably agreed to by the Company in writing (including, without
limitation, fees and disbursements of counsel for the Company in connection with
Blue Sky qualifications or exemptions of the Registrable Securities) and (C) if
not previously paid by the Company in connection with an Issuer Filing, with
respect to any filing that may be required to be made by any broker through
which a Holder intends to make sales of Registrable Securities with NASD
Regulation, Inc. pursuant to the NASD Rule 2710, so long as the broker is
receiving no more than a customary brokerage commission in connection with such
sale, (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities), (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the Company,
(v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions of any Holder or, except to
the extent provided for in the Transaction Documents, any legal fees or other
costs of the Holders.

                                       8

<PAGE>

         5.       INDEMNIFICATION

                  (a) INDEMNIFICATION BY THE COMPANY. The Company shall,
         notwithstanding any termination of this Agreement, indemnify and hold
         harmless each Holder, the officers, directors, members, partners,
         agents, brokers (including brokers who offer and sell Registrable
         Securities as principal as a result of a pledge or any failure to
         perform under a margin call of Common Stock), investment advisors and
         employees (and any other Persons with a functionally equivalent role of
         a Person holding such titles, notwithstanding a lack of such title or
         any other title) of each of them, each Person who controls any such
         Holder (within the meaning of Section 15 of the Securities Act or
         Section 20 of the Exchange Act) and the officers, directors, members,
         shareholders, partners, agents and employees (and any other Persons
         with a functionally equivalent role of a Person holding such titles,
         notwithstanding a lack of such title or any other title) of each such
         controlling Person, to the fullest extent permitted by applicable law,
         from and against any and all losses, claims, damages, liabilities,
         costs (including, without limitation, reasonable attorneys' fees) and
         expenses (collectively, "LOSSES"), as incurred, arising out of or
         relating to (1) any untrue or alleged untrue statement of a material
         fact contained in a 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 light of the
         circumstances under which they were made) not misleading or (2) any
         violation or alleged violation by the Company of the Securities Act,
         the Exchange Act or any state securities law, or any rule or regulation
         thereunder, in connection with the performance of its obligations under
         this Agreement, except to the extent, but only to the extent, that (i)
         such untrue statements or omissions are based solely upon information
         regarding such Holder furnished in writing to the Company by such
         Holder expressly for use therein, or to the extent that such
         information relates to such Holder or such Holder's proposed method of
         distribution of Registrable Securities and was reviewed and expressly
         approved in writing by such Holder expressly for use in a Registration
         Statement, such Prospectus or such form of Prospectus or in any
         amendment or supplement thereto (it being understood that the Holder
         has approved Annex A hereto for this purpose) or (ii) in the case of an
         occurrence of an event of the type specified in Section 3(d)(iii)-(vi),
         the use by such Holder of an outdated or defective Prospectus after the
         Company has notified such Holder in writing that the Prospectus is
         outdated or defective and prior to the receipt by such Holder of the
         Advice contemplated in Section 6(d). The Company shall notify the
         Holders promptly of the institution, threat or assertion of any
         Proceeding arising from or in connection with the transactions
         contemplated by this Agreement of which the Company is aware.

                                       9

<PAGE>

                  (b) INDEMNIFICATION BY HOLDERS. Each Holder 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 incurred, to the
         extent arising out of or based solely upon: (x) such Holder's failure
         to comply with the prospectus delivery requirements of the Securities
         Act or (y) any untrue or alleged untrue statement of a material fact
         contained in any 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 not misleading (i) 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 Holder
         to the Company specifically for inclusion in such Registration
         Statement or such Prospectus or (ii) to the extent that such
         information relates to such Holder's proposed method of distribution of
         Registrable Securities and was reviewed and expressly approved in
         writing by such Holder expressly for use in a Registration Statement
         (it being understood that the Holder has approved Annex A hereto for
         this purpose), 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 3(d)(iii)-(vi), the use by
         such Holder of an outdated or defective Prospectus after the Company
         has notified such Holder in writing that the Prospectus is outdated or
         defective and prior to the receipt by such Holder of the Advice
         contemplated in Section 6(d). In no event shall the liability of any
         selling Holder hereunder be greater in amount than the dollar amount of
         the net proceeds received by such Holder 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 have
         the right to 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 prejudiced the Indemnifying Party.

                  An Indemnified Party shall have the right to employ separate
         counsel in any such Proceeding and to participate in the defense
         thereof, but the fees and expenses of such counsel shall be at the
         expense of such Indemnified Party or Parties unless: (1) the
         Indemnifying Party has agreed in writing to pay such fees and expenses;
         (2) 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 (3)

                                       10

<PAGE>

                  the named parties to any such Proceeding (including any
         impleaded parties) include both such Indemnified Party and the
         Indemnifying Party, and counsel to the Indemnified Party shall
         reasonably believe that a material 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 the reasonable fees and expenses of no more than one
         separate 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 or delayed. 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.

                  Subject to the terms of this Agreement, all reasonable 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; provided, that the Indemnified Party shall promptly reimburse
         the Indemnifying Party for that portion of such fees and expenses
         applicable to such actions for which such Indemnified Party is
         judicially determined to be not entitled to indemnification hereunder.

                  (d) CONTRIBUTION. If the indemnification under Section 5(a) or
         5(b) is unavailable to an Indemnified Party or insufficient to hold an
         Indemnified Party harmless for any Losses, then each Indemnifying Party
         shall contribute to the amount paid or payable by such Indemnified
         Party, 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 this Agreement, any reasonable
         attorneys' or other 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.

                                       11

<PAGE>

                  The parties hereto agree that it would not be just and
         equitable if contribution pursuant to this Section 5(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 5(d), no Holder shall be required to contribute, in the
         aggregate, any amount in excess of the amount by which the proceeds
         actually received by such Holder from the sale of the Registrable
         Securities subject to the Proceeding exceeds the amount of any damages
         that such Holder has otherwise been required to pay by reason of such
         untrue or alleged untrue statement or omission or alleged omission,
         except in the case of fraud by such Holder.

                  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.        MISCELLANEOUS

                  (a) REMEDIES. In the event of a breach by the Company or by a
         Holder, of any of their respective obligations under this Agreement,
         each Holder or the Company, as the case may be, in addition to being
         entitled to exercise all rights granted by law and under this
         Agreement, including recovery of damages, will be entitled to specific
         performance of its rights under this Agreement. The Company and each
         Holder agree that monetary damages would not provide adequate
         compensation for any losses incurred by reason of a breach by it of any
         of the provisions of this Agreement and hereby further agrees that, in
         the event of any action for specific performance in respect of such
         breach, it shall not assert or shall waive the defense that a remedy at
         law would be adequate.

                  (b) NO PIGGYBACK ON REGISTRATIONS. Except as set forth on
         SCHEDULE 6(B) attached hereto, neither the Company nor any of its
         security holders (other than the Holders in such capacity pursuant
         hereto) may include securities of the Company in the initial
         Registration Statement other than the Registrable Securities. The
         Company shall not file any other registration statements until the
         initial Registration Statement required hereunder is declared effective
         by the Commission, provided that this Section 6(b) shall not prohibit
         the Company from filing amendments to registration statements already
         filed.

                  (c) COMPLIANCE. Each Holder covenants and agrees that it will
         comply with the prospectus delivery requirements of the Securities Act
         as applicable to it in connection with sales of Registrable Securities
         pursuant to a Registration Statement.

                  (d) DISCONTINUED DISPOSITION. Each Holder agrees by its
         acquisition of Registrable Securities that, upon receipt of a notice
         from the Company of the occurrence of any event of the kind described
         in Section 3(d)(iii) through (vi), such Holder will forthwith
         discontinue disposition of such Registrable Securities under a
         Registration Statement until it is advised in writing (the "ADVICE") by
         the Company that the use of the applicable Prospectus (as it may have
         been supplemented or amended) may be resumed. The Company will use its
         best efforts to ensure that the use of the Prospectus may be resumed as
         promptly as it practicable. The Company agrees and acknowledges that
         any periods during which the Holder is required to discontinue the
         disposition of the Registrable Securities hereunder shall be subject to
         the provisions of Section 2(b).

                                       12

<PAGE>

                  (e) 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 the stock
         option or other employee benefit plans, then the Company shall send to
         each Holder a written notice of such determination and, if within
         fifteen days after the date of such notice, any such Holder shall so
         request in writing, the Company shall include in such registration
         statement all or any part of such Registrable Securities such Holder
         requests to be registered; PROVIDED, HOWEVER, that, the Company shall
         not be required to register any Registrable Securities pursuant to this
         Section 6(e) that are eligible for resale pursuant to Rule 144(k)
         promulgated under the Securities Act or that are the subject of a then
         effective Registration Statement.

                  (f) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
         including the provisions of this sentence, may not be amended, modified
         or supplemented, and waivers or consents to departures from the
         provisions hereof may not be given, unless the same shall be in writing
         and signed by the Company and each Holder of the then outstanding
         Registrable Securities. 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 Holders and that does not
         directly or indirectly affect the rights of other Holders may be given
         by Holders of all of the Registrable Securities to which such waiver or
         consent relates; PROVIDED, HOWEVER, that the provisions of this
         sentence may not be amended, modified, or supplemented except in
         accordance with the provisions of the immediately preceding sentence.

                  (g) NOTICES. Any and all notices or other communications or
         deliveries required or permitted to be provided hereunder shall be
         delivered as set forth in the Purchase Agreement.

                  (h) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
         benefit of and be binding upon the successors and permitted assigns of
         each of the parties and shall inure to the benefit of each Holder. The
         Company may not assign (except by merger) its rights or obligations
         hereunder without the prior written consent of all of the Holders of
         the then-outstanding Registrable Securities. Each Holder may assign
         their respective rights hereunder in the manner and to the Persons as
         permitted under the Purchase Agreement.

                  (i) NO INCONSISTENT AGREEMENTS. Neither the Company nor any of
         its Subsidiaries has entered, as of the date hereof, nor shall the
         Company or any of its Subsidiaries, on or after the date of this
         Agreement, enter into any agreement with respect to its securities,
         that would have the effect of impairing the rights granted to the
         Holders in this Agreement or otherwise conflicts with the provisions
         hereof. Except as set forth on SCHEDULE 6(I), neither the Company nor
         any of its subsidiaries has previously entered into any agreement
         granting any registration rights with respect to any of its securities
         to any Person that have not been satisfied in full.

                                       13

<PAGE>

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

                  (k) GOVERNING LAW. All questions concerning the construction,
         validity, enforcement and interpretation of this Agreement shall be
         determined in accordance with the provisions of the Purchase Agreement.

                  (l) CUMULATIVE REMEDIES. The remedies provided herein are
         cumulative and not exclusive of any other remedies provided by law.

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

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

                  (o) INDEPENDENT NATURE OF HOLDERS' OBLIGATIONS AND RIGHTS. The
         obligations of each Holder hereunder are several and not joint with the
         obligations of any other Holder hereunder, and no Holder shall be
         responsible in any way for the performance of the obligations of any
         other Holder hereunder. Nothing contained herein or in any other
         agreement or document delivered at any closing, and no action taken by
         any Holder pursuant hereto or thereto, shall be deemed to constitute
         the Holders as a partnership, an association, a joint venture or any
         other kind of entity, or create a presumption that the Holders are in
         any way acting in concert with respect to such obligations or the
         transactions contemplated by this Agreement. Each Holder shall be
         entitled to protect and enforce its rights, including without
         limitation the rights arising out of this Agreement, and it shall not
         be necessary for any other Holder to be joined as an additional party
         in any proceeding for such purpose.

                              ********************

                                       14

<PAGE>

               IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.

                                   ARMOR ELECTRIC INC.

                                   By:__________________________________________
                                      Name:
                                      Title:

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]

                                       15

<PAGE>

                     [SIGNATURE PAGE OF HOLDERS TO ARME RRA]

Name of Holder: __________________________
SIGNATURE OF AUTHORIZED SIGNATORY OF HOLDER: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________

                           [SIGNATURE PAGES CONTINUE]

                                       16

<PAGE>

                              Plan of Distribution
                              --------------------

         Each Selling Stockholder (the "SELLING STOCKHOLDERS") of the common
stock and any of their pledgees, assignees and successors-in-interest may, from
time to time, sell any or all of their shares of common stock on the OTC
Bulletin Board or any other stock exchange, market or trading facility on which
the shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. A Selling Stockholder may use any one or more of the
following methods when selling shares:

            o    ordinary brokerage transactions and transactions in which the
                 broker-dealer solicits purchasers;

            o    block trades in which the broker-dealer will attempt to sell
                 the shares as agent but may position and resell a portion of
                 the block as principal to facilitate the transaction;

            o    purchases by a broker-dealer as principal and resale by the
                 broker-dealer for its account;

            o    an exchange distribution in accordance with the rules of the
                 applicable exchange;

            o    privately negotiated transactions;

            o    settlement of short sales entered into after the effective date
                 of the registration statement of which this prospectus is a
                 part;

            o    broker-dealers may agree with the Selling Stockholders to sell
                 a specified number of such shares at a stipulated price per
                 share;

            o    through the writing or settlement of options or other hedging
                 transactions, whether through an options exchange or otherwise;

            o    a combination of any such methods of sale; or

            o    any other method permitted pursuant to applicable law.

         The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), if available, rather
than under this prospectus.

         Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage commission
in compliance with NASDR Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with NASDR IM-2440.

                                       17

<PAGE>

         In connection with the sale of the common stock or interests therein,
the Selling Stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).

         The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Each Selling Stockholder has
informed the Company that it does not have any written or oral agreement or
understanding, directly or indirectly, with any person to distribute the Common
Stock. In no event shall any broker-dealer receive fees, commissions and markups
which, in the aggregate, would exceed eight percent (8%).

         The Company is required to pay certain fees and expenses incurred by
the Company incident to the registration of the shares. The Company has agreed
to indemnify the Selling Stockholders against certain losses, claims, damages
and liabilities, including liabilities under the Securities Act.

         Because Selling Stockholders may be deemed to be "underwriters" within
the meaning of the Securities Act, they will be subject to the prospectus
delivery requirements of the Securities Act including Rule 172 thereunder. In
addition, any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather
than under this prospectus. There is no underwriter or coordinating broker
acting in connection with the proposed sale of the resale shares by the Selling
Stockholders.

         We agreed to keep this prospectus effective until the earlier of (i)
the date on which the shares may be resold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule
144(k) under the Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

         Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the resale shares may not simultaneously
engage in market making activities with respect to the common stock for the
applicable restricted period, as defined in Regulation M, prior to the
commencement of the distribution. In addition, the Selling Stockholders will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including Regulation M, which may limit the timing of
purchases and sales of shares of the common stock by the Selling Stockholders or
any other person. We will make copies of this prospectus available to the
Selling Stockholders and have informed them of the need to deliver a copy of
this prospectus to each purchaser at or prior to the time of the sale (including
by compliance with Rule 172 under the Securities Act).

                                       18

<PAGE>

                                                                         ANNEX B
                               ARMOR ELECTRIC INC.

                 SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

         The undersigned beneficial owner of common stock, par value $.001 per
share (the "Common Stock"), of Armor Electric Inc., a Florida corporation (THE
"COMPANY"), (the "REGISTRABLE SECURITIES") understands that the Company has
filed or intends to file with the Securities and Exchange Commission (the
"COMMISSION") a registration statement on Form [___ (the "REGISTRATION
STATEMENT") for the registration and resale under Rule 415 of the Securities Act
of 1933, as amended (the "SECURITIES ACT"), of the Registrable Securities, in
accordance with the terms of the Registration Rights Agreement, dated as of
April 26, 2006 (the "REGISTRATION RIGHTS AGREEMENT"), among the Company and the
Purchasers named therein. A copy of the Registration Rights Agreement is
available from the Company upon request at the address set forth below. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.

         Certain legal consequences arise from being named as a selling
securityholder in the Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Registration
Statement and the related prospectus.

                                     NOTICE

         The undersigned beneficial owner (the "SELLING SECURITYHOLDER") of
Registrable Securities hereby elects to include the Registrable Securities owned
by it and listed below in Item 3 (unless otherwise specified under such Item 3)
in the Registration Statement.

                                       19

<PAGE>

The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

                                  QUESTIONNAIRE

1. NAME.

         (a)      Full Legal Name of Selling Securityholder

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

         (b)      Full Legal Name of Registered Holder (if not the same as (a)
                  above) through which Registrable Securities Listed in Item 3
                  below are held:

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

         (c)      Full Legal Name of Natural Control Person (which means a
                  natural person who directly or indirectly alone or with others
                  has power to vote or dispose of the securities covered by the
                  questionnaire):

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

2. ADDRESS FOR NOTICES TO SELLING SECURITYHOLDER:

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

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

--------------------------------------------------------------------------------
Telephone:
          ----------------------------------------------------------------------
Fax:
    ----------------------------------------------------------------------------
Contact Person:
               -----------------------------------------------------------------

3. BENEFICIAL OWNERSHIP OF REGISTRABLE SECURITIES:

         (a)      Type and Principal Amount of Registrable Securities
                  beneficially owned (not including the Registrable Securities
                  that are issuable pursuant to the Purchase Agreement):

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

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

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

                                       20

<PAGE>

4. BROKER-DEALER STATUS:

         (a)      Are you a broker-dealer?

                                            Yes [ ]      No [ ]

         (b)      If "yes" to Section 4(a), did you receive your Registrable
                  Securities as compensation for investment banking services to
                  the Company.

                                            Yes [ ]      No [ ]

         Note:    If no, the Commission's staff has indicated that you should be
                  identified as an underwriter in the Registration Statement.

         (c)      Are you an affiliate of a broker-dealer?

                                            Yes [ ]      No [ ]

         (d)      If you are an affiliate of a broker-dealer, do you certify
                  that you bought the Registrable Securities in the ordinary
                  course of business, and at the time of the purchase of the
                  Registrable Securities to be resold, you had no agreements or
                  understandings, directly or indirectly, with any person to
                  distribute the Registrable Securities?

                                            Yes [ ]      No [ ]

         Note:    If no, the Commission's staff has indicated that you should be
                  identified as an underwriter in the Registration Statement.

5. BENEFICIAL OWNERSHIP OF OTHER SECURITIES OF THE COMPANY OWNED BY THE SELLING
SECURITYHOLDER.

         EXCEPT AS SET FORTH BELOW IN THIS ITEM 5, THE UNDERSIGNED IS NOT THE
         BENEFICIAL OR REGISTERED OWNER OF ANY SECURITIES OF THE COMPANY OTHER
         THAN THE REGISTRABLE SECURITIES LISTED ABOVE IN ITEM 3.

         (a)      Type and Amount of Other Securities beneficially owned by the
                  Selling Securityholder:

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

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

                                       21

<PAGE>

6. RELATIONSHIPS WITH THE COMPANY:

         EXCEPT AS SET FORTH BELOW, NEITHER THE UNDERSIGNED NOR ANY OF ITS
         AFFILIATES, OFFICERS, DIRECTORS OR PRINCIPAL EQUITY HOLDERS (OWNERS OF
         5% OF MORE OF THE EQUITY SECURITIES OF THE UNDERSIGNED) HAS HELD ANY
         POSITION OR OFFICE OR HAS HAD ANY OTHER MATERIAL RELATIONSHIP WITH THE
         COMPANY (OR ITS PREDECESSORS OR AFFILIATES) DURING THE PAST THREE
         YEARS.

         State any exceptions here:

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

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

         The undersigned agrees to promptly notify the Company of any
inaccuracies or changes in the information provided herein that may occur
subsequent to the date hereof at any time while the Registration Statement
remains effective.

         By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items 1 through 6 and the
inclusion of such information in the Registration Statement and the related
prospectus and any amendments or supplements thereto. The undersigned
understands that such information will be relied upon by the Company in
connection with the preparation or amendment of the Registration Statement and
the related prospectus.

         IN WITNESS WHEREOF the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.

Dated:                            Beneficial Owner:
       ----------------------                      ---------------------------

                                  By:
                                     -------------------------------------------
                                     Name:
                                     Title:

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

                                       22

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}]]