Document:

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                                                                    EXHIBIT 10.1

                  SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE

                                    AGREEMENT

                           DATED AS OF APRIL 28, 2004

                                      AMONG

                           RS GROUP OF COMPANIES, INC.

                                       AND

                       THE PURCHASERS LISTED ON EXHIBIT A
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                                TABLE OF CONTENTS

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ARTICLE I Purchase and Sale of Preferred Stock..................................................................    1

         Section 1.1       Purchase and Sale of Stock...........................................................    1
         Section 1.2       The Conversion Shares................................................................    1
         Section 1.3       Purchase Price and Closing...........................................................    2
         Section 1.4       Warrants.............................................................................    2

ARTICLE II Representations and Warranties.......................................................................    2

         Section 2.1       Representations and Warranties of the Company........................................    2
         Section 2.2       Representations and Warranties of the Purchasers.....................................    9

ARTICLE III Covenants...........................................................................................   11

         Section 3.1       Securities Compliance................................................................   11
         Section 3.2       Registration and Listing.............................................................   11
         Section 3.3       Compliance with Laws.................................................................   12
         Section 3.4       Keeping of Records and Books of Account..............................................   12
         Section 3.5       Reporting Requirements...............................................................   12
         Section 3.6       Amendments...........................................................................   12
         Section 3.7       Other Agreements.....................................................................   12
         Section 3.8       Distributions........................................................................   14
         Section 3.9       Status of Dividends..................................................................   14
         Section 3.10      Use of Proceeds......................................................................   14
         Section 3.11      Reservation of Shares Transfer Agent Instructions....................................   14
         Section 3.12      Transfer Agent Instructions..........................................................   14
         Section 3.13      Disposition of Assets................................................................   15
         Section 3.14      Reporting Status.....................................................................   15
         Section 3.15      Disclosure of Transaction ...........................................................   15
         Section 3.16      Disclosure of Material Information...................................................   15
         Section 3.17      Pledge of Securities.................................................................   15
         Section 3.18      Subsequent Financings................................................................   16
         Section 3.19      Registration Statements..............................................................   16

ARTICLE IV Conditions...........................................................................................   16

         Section 4.1       Conditions Precedent to the Obligation of the Company to Sell the Shares.............   16
         Section 4.2       Conditions Precedent to the Obligation of the Purchasers to Purchase
                  the Shares.....................................................................................  17
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ARTICLE V Stock Certificate Legend...............................................................................  19

         Section 5.1       Legend................................................................................  19

ARTICLE VI Indemnification.......................................................................................  20

         Section 6.1       General Indemnity.....................................................................  20
         Section 6.2       Indemnification Procedure.............................................................  20

ARTICLE VII Miscellaneous........................................................................................  21

         Section 7.1       Fees and Expenses.....................................................................  21
         Section 7.2       Specific Enforcement, Consent to Jurisdiction.........................................  22
         Section 7.3       Entire Agreement; Amendment...........................................................  22
         Section 7.4       Notices...............................................................................  23
         Section 7.5       Waivers...............................................................................  24
         Section 7.6       Headings..............................................................................  24
         Section 7.7       Successors and Assigns................................................................  24
         Section 7.8       No Third Party Beneficiaries..........................................................  24
         Section 7.9       Governing Law.........................................................................  24
         Section 7.10      Survival..............................................................................  24
         Section 7.11      Counterparts..........................................................................  24
         Section 7.12      Publicity.............................................................................  24
         Section 7.13      Severability..........................................................................  25
         Section 7.14      Further Assurances....................................................................  25
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             SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

      This SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT is dated as
of April 28, 2004 (this "Agreement") by and among RS Group of Companies, Inc., a
Florida corporation (the "Company"), and each of the Purchasers of shares of
Series B Convertible Preferred Stock of the Company whose names are set forth on
Exhibit A hereto (individually, a "Purchaser" and collectively, the
"Purchasers").

      The parties hereto agree as follows:

                                   ARTICLE I

                      PURCHASE AND SALE OF PREFERRED STOCK

            Section 1.1 Purchase and Sale of Stock. Upon the following terms and
conditions, the Company shall issue and sell to the Purchasers and each of the
Purchasers shall purchase from the Company, the number of shares of the
Company's Series B Convertible Preferred Stock, no par value per share (the
"Preferred Shares"), set forth opposite such Purchaser's name on Exhibit A
hereto. Upon the following terms and conditions, each of the Purchasers shall be
issued Series B-1 Warrants, in substantially the form attached hereto as Exhibit
B (the "Series B-1 Warrants"), and Series B-2 Warrants, in substantially the
form attached hereto as Exhibit C (the "Series B-2 Warrants" and, together with
the Series B-1 Warrants, the "Warrants"), to purchase the number of shares of
the Company's Common Stock, no par value per share (the "Common Stock") set
forth opposite such Purchaser's name on Exhibit A hereto. The aggregate purchase
price for the Preferred Shares and the Warrants shall be up to $8,580,000. The
designation, rights, preferences and other terms and provisions of the Series B
Convertible Preferred Stock are set forth in the Certificate of Designation of
the Relative Rights and Preferences of the Series B Convertible Preferred Stock
in the form attached hereto as Exhibit D (the "Certificate of Designation"). The
Company and the Purchasers are executing and delivering this Agreement in
accordance with and in reliance upon the exemption from securities registration
afforded by Rule 506 of Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act") or Section 4(2) of the
Securities Act.

            Section 1.2 The Conversion Shares. The Company has authorized and
has reserved and covenants to continue to reserve, free of preemptive rights and
other similar contractual rights of stockholders, such number of shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all of the Preferred Shares and exercise of the Warrants then outstanding.
Any shares of Common Stock issuable upon conversion of the Preferred Shares and
exercise of the Warrants (and such shares when issued) are herein referred to as
the "Conversion Shares" and the "Warrant Shares", respectively. The Preferred
Shares, the Conversion Shares and the Warrant Shares are sometimes collectively
referred to as the "Shares".

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            Section 1.3 Purchase Price and Closing. The Company agrees to issue
and sell to the Purchasers and, in consideration of and in express reliance upon
the representations, warranties, covenants, terms and conditions of this
Agreement, the Purchasers, severally but not jointly, agree to purchase that
number of the Preferred Shares and Warrants set forth opposite their respective
names on Exhibit A attached hereto. The aggregate purchase price of the
Preferred Shares and Warrants being acquired by each Purchaser is set forth
opposite such Purchaser's name on Exhibit A attached hereto (for each such
Purchaser, the "Purchase Price" and collectively referred to as the "Purchase
Prices"). The closing of the purchase and sale of the Preferred Shares and
Warrants shall take place at the offices of Jenkens & Gilchrist Parker Chapin
LLP, The Chrysler Building, 405 Lexington Avenue, New York, New York 10174 (the
"Closing") at 1:00 p.m. (eastern time) upon the satisfaction of each of the
conditions set forth in Article IV hereof (the "Closing Date"). Funding with
respect to the Closing shall take place by wire transfer of immediately
available funds on or prior to the Closing Date.

            Section 1.4 Warrants. The Company agrees to issue to each of the
Purchasers Series B-1 Warrants and Series B-2 Warrants to purchase the number of
shares of Common Stock set forth opposite such Purchaser's name on Exhibit A
attached hereto. The Series B-1 Warrants shall expire three (3) years from the
Closing Date and shall have an exercise price per share equal to $1.50. The
Series B-2 Warrants shall expire three (3) years from the Closing Date and shall
have an exercise price per share equal to $2.25.

                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

            Section 2.1 Representations and Warranties of the Company. The
Company hereby makes the following representations and warranties to the
Purchasers, except as set forth in the Company's disclosure schedule delivered
with this Agreement, as follows:

            (a) Organization, Good Standing and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Florida and has the requisite corporate power to own, lease
and operate its properties and assets and to conduct its business as it is now
being conducted. The Company does not have any subsidiaries except as set forth
in the Company's Form 10-KSB for the year ended December 31, 2003, including the
accompanying financial statements (the "Form 10-KSB"), or in the Company's Form
10-QSB for the fiscal quarters ended September 30, 2003, June 30, 2003 or March
31, 2003 (collectively, the "Form 10-QSB"). The Company and each such subsidiary
is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary except for any
jurisdiction(s) (alone or in the aggregate) in which the failure to be so
qualified will not have a Material Adverse Effect (as defined in Section 2.1(c)
hereof) on the Company's financial condition.

            (b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and perform this Agreement, the
Registration Rights Agreement attached hereto as Exhibit E (the "Registration
Rights Agreement"), the Irrevocable Transfer Agent Instructions (as defined in
Section 3.12), the Certificate of Designation, and the

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Warrants (collectively, the "Transaction Documents") and to issue and sell the
Shares and the Warrants in accordance with the terms hereof. The execution,
delivery and performance of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary corporate action, and no further
consent or authorization of the Company or its Board of Directors or
stockholders is required. This Agreement has been duly executed and delivered by
the Company. The other Transaction Documents will have been duly executed and
delivered by the Company at the Closing. Each of the Transaction Documents
constitutes, or shall constitute when executed and delivered, a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor's rights and remedies or by other
equitable principles of general application.

            (c) Capitalization. The authorized capital stock of the Company and
the shares thereof currently issued and outstanding as of March 26, 2004 are set
forth in the Form 10-KSB. All of the outstanding shares of the Company's Common
Stock and Series B Convertible Preferred Stock have been duly and validly
authorized. Except as set forth in this Agreement and the Registration Rights
Agreement and as set forth on the disclosure schedule hereto, no shares of
Common Stock are entitled to preemptive rights or registration rights and there
are no outstanding options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company. Furthermore,
except as set forth in this Agreement and the Registration Rights Agreement or
on the disclosure schedule, there are no contracts, commitments, understandings,
or arrangements by which the Company is or may become bound to issue additional
shares of the capital stock of the Company or options, securities or rights
convertible into shares of capital stock of the Company. Except for customary
transfer restrictions contained in agreements entered into by the Company in
order to sell restricted securities or as set forth on the disclosure schedule
hereto, the Company is not a party to any agreement granting registration or
anti-dilution rights to any person with respect to any of its equity or debt
securities. The Company is not a party to, and it has no knowledge of, any
agreement restricting the voting or transfer of any shares of the capital stock
of the Company. The offer and sale of all capital stock, convertible securities,
rights, warrants, or options of the Company issued prior to the Closing complied
with all applicable Federal and state securities laws, and no stockholder has a
right of rescission or claim for damages with respect thereto which would have a
Material Adverse Effect (as defined below) on the Company's financial condition
or operating results. The Company has furnished or made available to the
Purchasers true and correct copies of the Company's Articles of Incorporation as
in effect on the date hereof (the "Articles"), and the Company's Bylaws as in
effect on the date hereof (the "Bylaws"). For the purposes of this Agreement,
"Material Adverse Effect" means any material adverse effect on the business,
operations, properties, prospects, or financial condition of the Company and its
subsidiaries and/or any condition, circumstance, or situation that would
prohibit or otherwise materially interfere with the ability of the Company to
perform any of its obligations under this Agreement in any material respect.

            (d) Issuance of Shares. The Preferred Shares and the Warrants to be
issued at the Closing have been duly authorized by all necessary corporate
action and the Preferred

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Shares, when paid for or issued in accordance with the terms hereof, shall be
validly issued and outstanding, fully paid and nonassessable and entitled to the
rights and preferences set forth in the Certificate of Designation. When the
Conversion Shares and the Warrant Shares are issued in accordance with the terms
of the Certificate of Designation and the Warrants, respectively, such shares
will be duly authorized by all necessary corporate action and validly issued and
outstanding, fully paid and nonassessable, and the holders shall be entitled to
all rights accorded to a holder of Common Stock.

            (e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company, the performance by the Company of its
obligations under the Certificate of Designation and the consummation by the
Company of the transactions contemplated herein and therein and the issuance of
the Shares as contemplated hereby do not and will not (i) violate or conflict
with any provision of the Company's Articles or Bylaws, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, mortgage, deed of
trust, indenture, note, bond, license, lease agreement, instrument or obligation
to which the Company is a party or by which it or its properties or assets are
bound, (iii) create or impose a lien, mortgage, security interest, charge or
encumbrance of any nature on any property of the Company under any agreement or
any commitment to which the Company is a party or by which the Company is bound
or by which any of its respective properties or assets are bound, or (iv) result
in a violation of any federal, state, local or foreign statute, rule,
regulation, order, judgment or decree (including Federal and state securities
laws and regulations) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its subsidiaries are bound
or affected, except, in all cases other than violations pursuant to clauses (i)
and (iv) above, for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect. The business of the Company and its
subsidiaries is not being conducted in violation of any laws, ordinances or
regulations of any governmental entity, except for possible violations which
singularly or in the aggregate do not and will not have a Material Adverse
Effect. The Company is not required under Federal, state or local law, rule or
regulation to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under the Transaction
Documents, or issue and sell the Preferred Shares, the Warrants, the Conversion
Shares and the Warrant Shares in accordance with the terms hereof or thereof
(other than any filings which may be required to be made by the Company with the
Commission or state securities administrators subsequent to the Closing, any
registration statement which may be filed pursuant hereto, and the Certificate
of Designation); provided that, for purposes of the representation made in this
sentence, the Company is assuming and relying upon the accuracy of the relevant
representations and agreements of the Purchasers herein.

            (f) Commission Documents, Financial Statements. The Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and, since December 31, 2003, the Company
has timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the Commission pursuant to the reporting
requirements of the Exchange Act, including material filed pursuant to

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Section 13(a) or 15(d) of the Exchange Act (all of the foregoing including
filings incorporated by reference therein being referred to herein as the
"Commission Documents"). The Company has delivered or made available to each of
the Purchasers true and complete copies of the Commission Documents filed with
the Commission since December 31, 2003. The Company has not provided to the
Purchasers any material non-public information or other information which,
according to applicable law, rule or regulation, was required to have been
disclosed publicly by the Company but which has not been so disclosed, other
than with respect to the transactions contemplated by this Agreement. At the
times of their respective filings, the Form 10-KSB and the Form 10-QSB complied
in all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder and other federal,
state and local laws, rules and regulations applicable to such documents, and,
as of their respective dates, none of the Form 10-KSB and the Form 10-QSB
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 light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the Commission
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or summary
statements), and fairly present in all material respects the financial position
of the Company and its subsidiaries as of 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 year-end audit adjustments).

            (g) Subsidiaries. For the purposes of this Agreement, "subsidiary"
shall mean any corporation or other entity of which at least a majority of the
securities or other ownership interest having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Company
and/or any of its other subsidiaries. All of the outstanding shares of capital
stock of each subsidiary have been duly authorized and validly issued, and are
fully paid and nonassessable. There are no outstanding preemptive, conversion or
other rights, options, warrants or agreements granted or issued by or binding
upon any subsidiary for the purchase or acquisition of any shares of capital
stock of any subsidiary or any other securities convertible into, exchangeable
for or evidencing the rights to subscribe for any shares of such capital stock.
Neither the Company nor any subsidiary is subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire any shares of the
capital stock of any subsidiary or any convertible securities, rights, warrants
or options of the type described in the preceding sentence. Neither the Company
nor any subsidiary is party to, nor has any knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock of any
subsidiary.

            (h) No Material Adverse Change. Since December 31, 2003, the Company
has not experienced or suffered any Material Adverse Effect, except as disclosed
on the disclosure schedule.

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            (i) Actions Pending. There is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or any other proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any subsidiary which questions the validity of this Agreement or any of the
other Transaction Documents or the transactions contemplated hereby or thereby
or any action taken or to be taken pursuant hereto or thereto. Except as set
forth in the Form 10-KSB or Form 10-QSB, there is no action, suit, claim,
investigation, arbitration, alternate dispute resolution proceeding or any other
proceeding pending or, to the knowledge of the Company, threatened, against or
involving the Company, any subsidiary or any of their respective properties or
assets. Except as set forth in the Form 10-KSB or Form 10-QSB, there are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
arbitrator or governmental or regulatory body against the Company or any
subsidiary or any officers or directors of the Company or subsidiary in their
capacities as such.

            (j) Compliance with Law. The business of the Company and the
subsidiaries has been and is presently being conducted in accordance with all
applicable federal, state and local governmental laws, rules, regulations and
ordinances, except as set forth in the Form 10-KSB, Form 10-QSB, or such that,
individually or in the aggregate, do not cause a Material Adverse Effect. The
Company and each of its subsidiaries have all franchises, permits, licenses,
consents and other governmental or regulatory authorizations and approvals
necessary for the conduct of its business as now being conducted by it unless
the failure to possess such franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

            (k) Taxes. Except as set forth in the Form 10-KSB or in the Form
10-QSB, the Company and each of the subsidiaries has accurately prepared and
filed all federal, state and other tax returns required by law to be filed by
it, has paid or made provisions for the payment of all taxes shown to be due and
all additional assessments, and adequate provisions have been and are reflected
in the financial statements of the Company and the subsidiaries for all current
taxes and other charges to which the Company or any subsidiary is subject and
which are not currently due and payable. None of the federal income tax returns
of the Company or any subsidiary have been audited by the Internal Revenue
Service. The Company has no knowledge of any additional assessments, adjustments
or contingent tax liability (whether federal or state) of any nature whatsoever,
whether pending or threatened against the Company or any subsidiary for any
period, nor of any basis for any such assessment, adjustment or contingency.

            (l) Certain Fees. There are no brokers, finders or financial
advisory fees or commissions will be payable by the Company or any subsidiary or
any Purchaser with respect to the transactions contemplated by this Agreement.

            (m) Disclosure. To the best of the Company's knowledge, neither this
Agreement or the disclosure schedule hereto nor any other documents,
certificates or instruments furnished to the Purchasers by or on behalf of the
Company or any subsidiary in connection with the transactions contemplated by
this Agreement contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements made herein or
therein, in the light of the circumstances under which they were made herein or
therein, not misleading.

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            (n) Operation of Business. The Company and each of the subsidiaries
owns or possesses all patents, trademarks, domain names (whether or not
registered) and any patentable improvements or copyrightable derivative works
thereof, websites and intellectual property rights relating thereto, service
marks, trade names, copyrights, licenses and authorizations as set forth in the
Form 10-KSB and all rights with respect to the foregoing, which are necessary
for the conduct of its business as now conducted without any conflict with the
rights of others.

            (o) Material Agreements. Except as set forth in the Form 10-KSB or
Form 10-QSB, neither the Company nor any subsidiary is a party to any written or
oral contract, instrument, agreement, commitment, obligation, plan or
arrangement, a copy of which would be required to be filed with the Commission
as an exhibit to a registration statement on Form S-3 or applicable form
(collectively, "Material Agreements") if the Company or any subsidiary were
registering securities under the Securities Act. Except as set forth in the
Commission Documents, the Company and each of its subsidiaries has in all
material respects performed all the obligations required to be performed by them
to date under the foregoing agreements, have received no notice of default and,
to the best of the Company's knowledge are not in default under any Material
Agreement now in effect, the result of which could cause a Material Adverse
Effect. Except as set forth in the Commission Documents, no written or oral
contract, instrument, agreement, commitment, obligation, plan or arrangement of
the Company or of any subsidiary limits or shall limit the payment of dividends
on the Company's Preferred Shares, other Preferred Stock, if any, or its Common
Stock.

            (p) Securities Act of 1933. Based in material part upon the
representations herein of the Purchasers, the Company has complied and will
comply with all applicable federal and state securities laws in connection with
the offer, issuance and sale of the Shares and the Warrants hereunder. Neither
the Company nor anyone acting on its behalf, directly or indirectly, has or will
sell, offer to sell or solicit offers to buy any of the Shares, the Warrants or
similar securities to, or solicit offers with respect thereto from, or enter
into any preliminary conversations or negotiations relating thereto with, any
person, or has taken or will take any action so as to bring the issuance and
sale of any of the Shares and the Warrants under the registration provisions of
the Securities Act and applicable state securities laws, and neither the Company
nor any of its affiliates, nor any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Securities Act) in connection with the offer
or sale of any of the Shares and the Warrants.

            (q) Governmental Approvals. Except as set forth in the Form 10-KSB
or Form 10-QSB, and except for the filing of any notice prior or subsequent to
the Closing Date that may be required under applicable state and/or Federal
securities laws (which if required, shall be filed on a timely basis), including
the filing of a Form D and a registration statement or statements pursuant to
the Registration Rights Agreement, and the filing of the Certificate of
Designation with the Secretary of State for the State of Florida, no
authorization, consent, approval, license, exemption of, filing or registration
with any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary for, or in
connection with, the execution or delivery of the Preferred Shares and the
Warrants, or for the performance by the Company of its obligations under the
Transaction

                                       7

<PAGE>

Documents.

            (r) ERISA. No liability to the Pension Benefit Guaranty Corporation
has been incurred with respect to any Plan by the Company or any of its
subsidiaries which is or would be materially adverse to the Company and its
subsidiaries. The execution and delivery of this Agreement and the issuance and
sale of the Preferred Shares will not involve any transaction which is subject
to the prohibitions of Section 406 of ERISA or in connection with which a tax
could be imposed pursuant to Section 4975 of the Internal Revenue Code of 1986,
as amended, provided that, if any of the Purchasers, or any person or entity
that owns a beneficial interest in any of the Purchasers, is an "employee
pension benefit plan" (within the meaning of Section 3(2) of ERISA) with respect
to which the Company is a "party in interest" (within the meaning of Section
3(14) of ERISA), the requirements of Sections 407(d)(5) and 408(e) of ERISA, if
applicable, are met. As used in this Section 2.1(r), the term "Plan" shall mean
an "employee pension benefit plan" (as defined in Section 3 of ERISA) which is
or has been established or maintained, or to which contributions are or have
been made, by the Company or any subsidiary or by any trade or business, whether
or not incorporated, which, together with the Company or any subsidiary, is
under common control, as described in Section 414(b) or (c) of the Code.

            (s) Independent Nature of Purchasers. The Company acknowledges that
the obligations of each Purchaser under the Transaction Documents are several
and not joint with the obligations of any other Purchaser, and no Purchaser
shall be responsible in any way for the performance of the obligations of any
other Purchaser under the Transaction Documents. The Company acknowledges that
the decision of each Purchaser to purchase Securities pursuant to this Agreement
has been made by such Purchaser independently of any other purchase and
independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Company or of
its Subsidiaries which may have made or given by any other Purchaser or by any
agent or employee of any other Purchaser, and no Purchaser or any of its agents
or employees shall have any liability to any Purchaser (or any other person)
relating to or arising from any such information, materials, statements or
opinions. The Company acknowledges that nothing contained herein, or in any
Transaction Document, and no action taken by any Purchaser pursuant hereto or
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. The Company acknowledges that for reasons of
administrative convenience only, the Transaction Documents have been prepared by
counsel for one of the Purchasers and such counsel does not represent all of the
Purchasers but only such Purchaser and the other Purchasers have retained their
own individual counsel with respect to the transactions contemplated hereby. The
Company acknowledges that it 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. The Company
acknowledges that such procedure with respect to the Transaction Documents in no
way creates a presumption that the Purchasers are in any way acting in concert
or as a group with respect to the Transaction Documents or the transactions
contemplated hereby or thereby.

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<PAGE>
            (t) No Integrated Offering. 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 the offering of the Shares
pursuant to this Agreement to be integrated with prior offerings by the Company
for purposes of the Securities Act which would prevent the Company from selling
the Shares pursuant to Rule 506 under the Securities Act, or any applicable
exchange-related stockholder approval provisions, nor will the Company or any of
its affiliates or subsidiaries take any action or steps that would cause the
offering of the Shares to be integrated with other offerings. The Company does
not have any registration statement pending before the Commission or currently
under the Commission's review.

            (u) Sarbanes-Oxley Act(v) . The Company is in substantial compliance
with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the
"Sarbanes-Oxley Act"), and the rules and regulations promulgated thereunder,
that are effective and intends to comply substantially with other applicable
provisions of the Sarbanes-Oxley Act, and the rules and regulations promulgated
thereunder, upon the effectiveness of such provisions.

            Section 2.2 Representations and Warranties of the Purchasers. Each
of the Purchasers hereby makes the following representations and warranties to
the Company with respect solely to itself and not with respect to any other
Purchaser:

            (a) Organization and Standing of the Purchasers. If the Purchaser is
an entity, such Purchaser is a corporation, limited liability company, trust,
partnership or other entity duly incorporated or organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
organization.

            (b) Authorization and Power. Each Purchaser has the requisite power
and authority to enter into and perform this Agreement and to purchase the
Preferred Shares and Warrants being sold to it hereunder. The execution,
delivery and performance of this Agreement and the Registration Rights Agreement
by such Purchaser and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary and legal action
of such Purchaser entity, and no further consent or authorization of such
Purchaser or its Board of Directors, stockholders, members, trustees or
partners, as the case may be, is required. Each of this Agreement and the
Registration Rights Agreement has been duly authorized, executed and delivered
by such Purchaser and constitutes, or shall constitute when executed and
delivered, a valid and binding obligation of the Purchaser enforceable against
the Purchaser in accordance with the terms thereof.

            (c) No Conflicts. The execution, delivery and performance of this
Agreement and the Registration Rights Agreement and the consummation by such
Purchaser of the transactions contemplated hereby and thereby or relating hereto
do not and will not (i) result in a violation of such Purchaser's charter
documents or bylaws or other organizational documents or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of any agreement, indenture or
instrument or obligation to which such Purchaser is a party or by which its
properties or assets are bound, or result in a violation of

                                       9

<PAGE>

any law, rule, or regulation, or any order, judgment or decree of any court or
governmental agency applicable to such Purchaser or its properties (except for
such conflicts, defaults and violations as would not, individually or in the
aggregate, have a material adverse effect on such Purchaser). Such Purchaser is
not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or the
Registration Rights Agreement or to purchase the Preferred Shares or acquire the
Warrants in accordance with the terms hereof, provided that for purposes of the
representation made in this sentence, such Purchaser is assuming and relying
upon the accuracy of the relevant representations and agreements of the Company
herein.

            (d) Acquisition for Investment. Each Purchaser is acquiring the
Preferred Shares and the Warrants solely for its own account for the purpose of
investment and not with a view to or for sale in connection with their
distribution. Each Purchaser does not have a present intention to sell the
Preferred Shares or the Warrants, nor a present arrangement (whether or not
legally binding) or intention to effect any distribution of the Preferred Shares
or the Warrants to or through any person or entity; provided, however, that by
making the representations herein and subject to Section 2.2(f) below, such
Purchaser does not agree to hold the Shares or the Warrants for any minimum or
other specific term and reserves the right to dispose of the Shares or the
Warrants at any time in accordance with Federal and state securities laws
applicable to such disposition. Each Purchaser acknowledges that it is able to
bear the financial risks associated with an investment in the Preferred Shares
and the Warrants and that it has been offered full access to such records of the
Company and the subsidiaries and to the officers of the Company and the
subsidiaries and received such information as it has deemed necessary or
appropriate to conduct its due diligence investigation and has sufficient
knowledge and experience in investing in companies similar to the Company in
terms of the Company's stage of development so as to be able to evaluate the
risks and merits of its investment in the Company.

            (e) Status of Purchasers. Such Purchaser is an "accredited investor"
as defined in Regulation D promulgated under the Securities Act. Such Purchaser
is not required to be registered as a broker-dealer under Section 15 of the
Exchange Act and such Purchaser is not a broker-dealer.

            (f) Opportunities for Additional Information. Each Purchaser
acknowledges that such Purchaser has had the opportunity to ask questions of and
receive answers from, or obtain additional information from, the executive
officers of the Company concerning the financial and other affairs of the
Company, and to the extent deemed necessary in light of such Purchaser's
personal knowledge of the Company's affairs, such Purchaser has asked such
questions and received answers to the full satisfaction of such Purchaser, and
such Purchaser desires to invest in the Company.

            (g) No General Solicitation. Each Purchaser acknowledges that the
Preferred Shares and the Warrants were not offered to such Purchaser by means of
any form of general or public solicitation or general advertising, or publicly
disseminated advertisements or sales literature, including (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media, or broadcast over television or radio, or
(ii) any

                                       10

<PAGE>

seminar or meeting to which such Purchaser was invited by any of the foregoing
means of communications.

            (h) Rule 144. Each Purchaser understands that the Shares must be
held indefinitely unless such Shares are registered under the Securities Act or
an exemption from registration is available. Each Purchaser acknowledges that
such Purchaser is familiar with Rule 144 of the rules and regulations of the
Commission, as amended, promulgated pursuant to the Securities Act ("Rule 144"),
and that such Purchaser has been advised that Rule 144 permits resales only
under certain circumstances. Such Purchaser understands that to the extent that
Rule 144 is not available, such Purchaser will be unable to sell any Shares
without either registration under the Securities Act and any applicable state
securities law or the existence of another exemption from such registration
requirement.

            (i) General. Such Purchaser understands that the Shares are being
offered and sold in reliance on a transactional exemption from the registration
requirement of Federal and state securities laws and the Company is relying upon
the truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of such Purchaser set forth herein in order
to determine the applicability of such exemptions and the suitability of such
Purchaser to acquire the Shares.

            (j) Independent Investment. No Purchaser has agreed to act with any
other Purchaser for the purpose of acquiring, holding, voting or disposing of
the Shares purchased hereunder for purposes of Section 13(d) under the Exchange
Act, and each Purchaser is acting independently with respect to its investment
in the Shares.

                                  ARTICLE III

                                    COVENANTS

      The Company covenants with each of the Purchasers as follows, which
covenants are for the benefit of the Purchasers and their permitted assignees
(as defined herein).

            Section 3.1 Securities Compliance. The Company shall notify the
Commission in accordance with its rules and regulations, of the transactions
contemplated by any of the Transaction Documents, including filing a Form D with
respect to the Preferred Shares, Warrants, Conversion Shares and Warrant Shares
as required under Regulation D, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Preferred Shares, the
Warrants, the Conversion Shares and the Warrant Shares to the Purchasers or
subsequent holders.

            Section 3.2 Registration and Listing. The Company will cause its
Common Stock to continue to be registered under Sections 12(b) or 12(g) of the
Exchange Act, will comply in all respects with its reporting and filing
obligations under the Exchange Act, will comply with all requirements related to
any registration statement filed pursuant to this Agreement or the Registration
Rights Agreement, and will not take any action or file any

                                       11

<PAGE>

document (whether or not permitted by the Securities Act or the rules
promulgated thereunder) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under the Exchange Act
or Securities Act, except as permitted herein. The Company will take all action
necessary to continue the listing or trading of its Common Stock on the OTC
Bulletin Board.

            Section 3.3 Compliance with Laws. The Company shall comply, and
cause each subsidiary to comply, with all applicable laws, rules, regulations
and orders, noncompliance with which could have a Material Adverse Effect.

            Section 3.4 Keeping of Records and Books of Account. The Company
shall keep and cause each subsidiary to keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions of the Company and
its subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.

            Section 3.5 Reporting Requirements. If the Commission ceases making
periodic reports filed under Section 13 of the Exchange Act available via its
Electronic Data Gathering Analysis and Retrieval System, then at a Purchaser's
request the Company shall furnish the following to such Purchaser so long as
such Purchaser shall be obligated hereunder to purchase the Preferred Shares or
shall beneficially own any Preferred Shares, or shall own Conversion Shares
which, in the aggregate, represent more than 2% of the total combined voting
power of all voting securities then outstanding:

            (a) Quarterly Reports filed with the Commission on Form 10-QSB as
soon as practical after the document is filed with the Commission, and in any
event within fifty-five (55) days after the end of each of the first three
fiscal quarters of the Company;

            (b) Annual Reports filed with the Commission on Form 10-KSB as soon
as practical after the document is filed with the Commission, and in any event
within one hundred (100) days after the end of each fiscal year of the Company;
and

            (c) Copies of all notices and information, including without
limitation notices and proxy statements in connection with any meetings, that
are provided to holders of shares of Common Stock, contemporaneously with the
delivery of such notices or information to such holders of Common Stock.

            Section 3.6 Amendments. The Company shall not amend or waive any
provision of the Articles or Bylaws of the Company in any way that would
adversely affect the liquidation preferences, dividends rights, conversion
rights, voting rights or redemption rights of the Preferred Shares; provided,
however, that any creation and issuance of another series of Junior Stock (as
defined in the Certificate of Designation) or any other class or series of
equity securities which by its terms shall rank on parity with the Preferred
Shares shall not be deemed to materially and adversely affect such rights,
preferences or privileges.

                                       12

<PAGE>

            Section 3.7 Other Agreements. The Company shall not enter into any
agreement in which the terms of such agreement would restrict or impair the
right or ability to perform of the Company or any subsidiary under any
Transaction Document.

            Section 3.8 Distributions. So long as any Preferred Shares or
Warrants remain outstanding, the Company agrees that it shall not (i) declare or
pay any dividends or make any distributions to any holder(s) of Common Stock or
(ii) purchase or otherwise acquire for value, directly or indirectly, any Common
Stock or other equity security of the Company.

            Section 3.9 Status of Dividends. The Company covenants and agrees
that (i) no Federal income tax return or claim for refund of Federal income tax
or other submission to the Internal Revenue Service will adversely affect the
Preferred Shares, any other series of its Preferred Stock, or the Common Stock,
and any deduction shall not operate to jeopardize the availability to Purchasers
of the dividends received deduction provided by Section 243(a)(1) of the Code or
any successor provision, (ii) in no report to shareholders or to any
governmental body having jurisdiction over the Company or otherwise will it
treat the Preferred Shares other than as equity capital or the dividends paid
thereon other than as dividends paid on equity capital unless required to do so
by a governmental body having jurisdiction over the accounts of the Company or
by a change in generally accepted accounting principles required as a result of
action by an authoritative accounting standards setting body, and (iii) other
than pursuant to this Agreement or the Certificate of Designation, it will take
no action which would result in the dividends paid by the Company on the
Preferred Shares out of the Company's current or accumulated earnings and
profits being ineligible for the dividends received deduction provided by
Section 243(a)(1) of the Code. The preceding sentence shall not be deemed to
prevent the Company from designating the Preferred Stock as "Convertible
Preferred Stock" in its annual and quarterly financial statements in accordance
with its prior practice concerning other series of preferred stock of the
Company. Notwithstanding the foregoing, the Company shall not be required to
restate or modify its tax returns for periods prior to the Closing Date. In the
event that the Purchasers have reasonable cause to believe that dividends paid
by the Company on the Preferred Shares out of the Company's current or
accumulated earnings and profits will not be treated as eligible for the
dividends received deduction provided by Section 243(a)(1) of the Code, or any
successor provision, the Company will, at the reasonable request of the
Purchasers of 51% of the outstanding Preferred Shares, join with the Purchasers
in the submission to the Service of a request for a ruling that dividends paid
on the Shares will be so eligible for Federal income tax purposes, at the
Purchasers expense. In addition, the Company will reasonably cooperate with the
Purchasers (at Purchasers' expense) in any litigation, appeal or other
proceeding challenging or contesting any ruling, technical advice, finding or
determination that earnings and profits are not eligible for the dividends
received deduction provided by Section 243(a)(1) of the Code, or any successor
provision to the extent that the position to be taken in any such litigation,
appeal, or other proceeding is not contrary to any provision of the Code or
incurred in connection with any such submission, litigation, appeal or other
proceeding. Notwithstanding the foregoing, nothing herein contained shall be
deemed to preclude the Company from claiming a deduction with respect to such
dividends if (i) the Code shall hereafter be amended, or final Treasury
regulations thereunder are issued or modified, to provide that dividends on the
Preferred Shares or Conversion Shares should not be treated as dividends for
Federal income tax purposes or that a deduction with respect to all or a portion
of the dividends

                                       13

<PAGE>

on the Shares is allowable for Federal income tax purposes, or (ii) in the
absence of such an amendment, issuance or modification and after a submission of
a request for ruling or technical advice, the service shall rule or advise that
dividends on the shares should not be treated as dividends for Federal income
tax purposes. If the Service determines that the Preferred Shares or Conversion
Shares constitute debt, the Company may file protective claims for refund.

            Section 3.10 Use of Proceeds. The proceeds from the sale of the
Preferred Shares will be used by the Company for certain strategic acquisitions,
working capital and general corporate purposes.

            Section 3.11 Reservation of Shares. So long as any of the Preferred
Shares or Warrants remain outstanding, the Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than the aggregate number of shares of Common Stock needed to
provide for the issuance of the Conversion Shares and the Warrant Shares.

            Section 3.12 Transfer Agent Instructions. The Company shall issue
irrevocable instructions to its transfer agent, and any subsequent transfer
agent, to issue certificates, registered in the name of each Purchaser or its
respective nominee(s), for the Conversion Shares and the Warrant Shares in such
amounts as specified from time to time by each Purchaser to the Company upon
conversion of the Preferred Shares or exercise of the Warrants in the form of
Exhibit F attached hereto (the "Irrevocable Transfer Agent Instructions"). Prior
to registration of the Conversion Shares and the Warrant Shares under the
Securities Act, all such certificates shall bear the restrictive legend
specified in Section 5.1 of this Agreement. The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 3.12 will be given by the Company to its transfer agent and that
the Shares shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement and the Registration
Rights Agreement. Nothing in this Section 3.12 hall affect in any way each
Purchaser's obligations and agreements set forth in Section 5.1 to comply with
all applicable prospectus delivery requirements, if any, upon resale of the
Shares. If a Purchaser provides the Company with an opinion of counsel, in a
generally acceptable form, to the effect that a public sale, assignment or
transfer of the Shares may be made without registration under the Securities Act
or the Purchaser provides the Company with reasonable assurances that the Shares
can be sold pursuant to Rule 144 without any restriction as to the number of
securities acquired as of a particular date that can then be immediately sold,
the Company shall permit the transfer, and, in the case of the Conversion Shares
and the Warrant Shares, promptly instruct its transfer agent to issue one or
more certificates in such name and in such denominations as specified by such
Purchaser and without any restrictive legend. The Company acknowledges that a
breach by it of its obligations under this Section 3.12 will cause irreparable
harm to the Purchasers by vitiating the intent and purpose of the transaction
contemplated hereby. Accordingly, the Company acknowledges that the remedy at
law for a breach of its obligations under this Section 3.12 will be inadequate
and agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Section 3.12 that the Purchasers shall be entitled, in
addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.

                                       14

<PAGE>

            Section 3.13 Disposition of Assets. So long as the Preferred Shares
remain outstanding, neither the Company nor any Subsidiary shall sell, transfer
or otherwise dispose of any of its properties, assets and rights including,
without limitation, its software and intellectual property, to any person except
for sales to customers in the ordinary course of business or with the prior
written consent of the holders of a majority of the Preferred Shares then
outstanding.

            Section 3.14 Reporting Status. So long as a Purchaser beneficially
owns any of the Securities, the Company shall timely file (including any
extensions permitted by the Commission) all reports required to be filed with
the Commission pursuant to the Exchange Act, and the Company shall not terminate
its status as an issuer required to file reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would permit such
termination.

            Section 3.15 Disclosure of Transaction. The Company shall issue a
press release describing the material terms of the transactions contemplated
hereby (the "Press Release") as soon as practicable after the Closing; provided,
however, that if Closing occurs after 4:00 P.M. Eastern Time on any Trading Day
but in no event later than one hour after the Closing, the Company shall issue
the Press Release no later than 9:00 A.M. Eastern Time on the first Trading Day
following the Closing Date. The Company shall also file with the Commission a
Current Report on Form 8-K (the "Form 8-K") describing the material terms of the
transactions contemplated hereby (and attaching as exhibits thereto this
Agreement, the Registration Rights Agreement and the form of Warrant) as soon as
practicable following the date of execution of this Agreement but in no event
more than two (2) Trading Days following the date of execution of this
Agreement, which Press Release and Form 8-K shall be subject to prior review and
comment by counsel to the Purchasers. "Trading Day" means any day during which
the OTC Bulletin Board (or other principal exchange on which the Common Stock is
traded) shall be open for trading.

            Section 3.16 Disclosure of Material Information. The Company
covenants and agrees that neither it nor any other person acting on its behalf
has provided or 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. Section

            3.17 Pledge of Securities. The Company acknowledges and agrees that
the Securities may be pledged by a Purchaser in connection with a bona fide
margin agreement or other loan or financing arrangement that is secured by the
Common Stock. The pledge of Common Stock shall not be deemed to be a transfer,
sale or assignment of the Common Stock hereunder, and no Purchaser effecting a
pledge of Common Stock shall be required to provide the Company with any notice
thereof or otherwise make any delivery to the Company pursuant to this Agreement
or any other Transaction Document; provided that a Purchaser and its pledgee
shall be required to comply with the provisions of Article V hereof in order to
effect a sale, transfer or assignment of Common Stock to such pledgee. At the
Purchasers' expense, the Company hereby agrees to execute and deliver such
documentation as a pledgee of the Common

                                       15

<PAGE>

Stock may reasonably request in connection with a pledge of the Common Stock to
such pledgee by a Purchaser.

            Section 3.18 Subsequent Financings. For a period of thirty (30) days
following the effective date of a registration statement providing for the
resale of the Conversion Shares and the Warrant Shares (the "Effectiveness
Date"), the Company covenants and agrees that it will not, without the prior
written consent of the holders of a majority of the Preferred Shares outstanding
at the time consent is required, enter into any subsequent offer or sale to, or
exchange with (or other type of distribution to), any third party (a "Subsequent
Financing"), of Common Stock or any securities convertible, exercisable or
exchangeable into Common Stock, including convertible debt securities
(collectively, the "Financing Securities"), except for a Permitted Financing. A
"Permitted Financing" shall mean (i) the Company's issuance of Common Stock and
warrants therefore in connection with a merger and/or acquisition or
consolidation, (ii) the issuance of shares of Common Stock or warrants therefore
in connection with strategic license agreements so long as such issuances are
not for the purpose of raising capital, (iii) the Company's issuance of Common
Stock or the issuance or grants of options to purchase Common Stock pursuant to
the Company's stock option plans and employee stock purchase plans as they now
exist, and (iv) the issuance of Common Stock upon the exercise or conversion of
any securities outstanding on the date hereof.

            Section 3.19 Registration Statements. The Company shall not file any
registration statement under the Securities Act registering shares of its equity
securities until the date that is at least ninety (90) days following the
Effectiveness Date.

                                   ARTICLE IV

                                   CONDITIONS

            Section 4.1 Conditions Precedent to the Obligation of the Company to
Sell the Shares. The obligation hereunder of the Company to issue and sell the
Preferred Shares and the Warrants to the Purchasers is subject to the
satisfaction or waiver, at or before the Closing, of each of the conditions set
forth below. These conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion.

            (a) Accuracy of Each Purchaser's Representations and Warranties. The
representations and warranties of each Purchaser shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at that time, except for representations and warranties that are
expressly made as of a particular date, which shall be true and correct in all
material respects as of such date.

            (b) Performance by the Purchasers. Each Purchaser shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Purchaser at or prior to the Closing.

            (c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or

                                       16

<PAGE>

governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.

            (d) Delivery of Purchase Price. The Purchase Price for the Preferred
Shares and Warrants has been delivered to the Company at the Closing Date.

            (e) Delivery of Transaction Documents. The Transaction Documents
have been duly executed and delivered by the Purchasers to the Company.

            Section 4.2 Conditions Precedent to the Obligation of the Purchasers
to Purchase the Shares. The obligation hereunder of each Purchaser to acquire
and pay for the Preferred Shares and the Warrants is subject to the satisfaction
or waiver, at or before the Closing, of each of the conditions set forth below.
These conditions are for each Purchaser's sole benefit and may be waived by such
Purchaser at any time in its sole discretion.

            (a) Accuracy of the Company's Representations and Warranties. Each
of the representations and warranties of the Company in this Agreement and the
Registration Rights Agreement shall be true and correct in all material respects
as of the date when made and as of the Closing Date as though made at that time
(except for representations and warranties that are expressly made as of a
particular date), which shall be true and correct in all material respects as of
such date.

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

            (c) No Suspension, Etc. Trading in the Company's Common Stock shall
not have been suspended by the Commission or the OTC Bulletin Board (except for
any suspension of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the applicable Closing), and, at any
time prior to the Closing Date, trading in securities generally as reported by
Bloomberg Financial Markets ("Bloomberg") shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by Bloomberg, or on The New York Stock Exchange, Inc., 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 or crisis
of such magnitude in its effect on, or any material adverse change in any
financial market which, in each case, in the judgment of such Purchaser, makes
it impracticable or inadvisable to purchase the Preferred Shares.

            (d) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.

            (e) No Proceedings or Litigation. No action, suit or proceeding
before any

                                       17

<PAGE>

arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company or any subsidiary, or any of the officers, directors or affiliates
of the Company or any subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.

            (f) Certificate of Designation of Rights and Preferences. Prior to
the Closing, the Certificate of Designation in the form of Exhibit D attached
hereto shall have been filed with the Secretary of State of Florida.

            (g) Opinion of Counsel, Etc. At the Closing, the Purchasers shall
have received an opinion of counsel to the Company, dated the date of the
Closing, in the form of Exhibit G hereto, and such other certificates and
documents as the Purchasers or its counsel shall reasonably require incident to
the Closing.

            (h) Registration Rights Agreement. At the Closing, the Company shall
have executed and delivered the Registration Rights Agreement to each Purchaser.

            (i) Certificates. The Company shall have executed and delivered to
the Purchasers the certificates (in such denominations as such Purchaser shall
request) for the Preferred Shares and Warrants being acquired by such Purchaser
at the Closing.

            (j) Resolutions. The Board of Directors of the Company shall have
adopted resolutions consistent with Section 2.1(b) hereof in a form reasonably
acceptable to such Purchaser (the "Resolutions").

            (k) Reservation of Shares. As of the Closing Date, the Company shall
have reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Preferred Shares and the exercise of
the Warrants, a number of shares of Common Stock equal to at least the aggregate
number of Conversion Shares issuable upon conversion of the Preferred Shares and
the number of Warrant Shares issuable upon exercise of the Warrants.

            (l) Transfer Agent Instructions. The Irrevocable Transfer Agent
Instructions, in the form of Exhibit F attached hereto, shall have been
delivered to and acknowledged in writing by the Company's transfer agent.

            (m) Secretary's Certificate. The Company shall have delivered to
such Purchaser a secretary's certificate, dated as of the Closing Date, as to
(i) the Resolutions, (ii) the Articles, (iii) the Bylaws, (iv) the Certificate
of Designation, each as in effect at the Closing, and (iv) the authority and
incumbency of the officers of the Company executing the Transaction Documents
and any other documents required to be executed or delivered in connection
therewith.

                                       18

<PAGE>

            (n) Officer's Certificate. The Company shall have delivered to the
Purchasers a certificate of an executive officer of the Company, dated as of the
Closing Date, confirming the accuracy of the Company's representations,
warranties and covenants as of such Closing Date and confirming the compliance
by the Company with the conditions precedent set forth in this Section 4.2 as of
the Closing Date.

            (o) Material Adverse Effect. No Material Adverse Effect shall have
occurred at or before the Closing Date.

                                   ARTICLE V

                            STOCK CERTIFICATE LEGEND

            Section 5.1 Legend. Each certificate representing the Preferred
Shares and the Warrants, and, if appropriate, securities issued upon conversion
thereof, shall be stamped or otherwise imprinted with a legend substantially in
the following form (in addition to any legend required by applicable state
securities or "blue sky" laws):

            THESE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES")
            HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
            AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY
            NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED
            UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS
            OR RS GROUP OF COMPANIES, INC. SHALL HAVE RECEIVED AN OPINION OF
            COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
            ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS
            NOT REQUIRED.

      The Company agrees to reissue certificates representing any of the
Conversion Shares and the Warrant Shares, without the legend set forth above if
at such time, prior to making any transfer of any such securities, such holder
thereof shall give written notice to the Company describing the manner and terms
of such transfer and removal as the Company may reasonably request. Such
proposed transfer and removal will not be effected until: (a) either (i) the
Company has received an opinion of counsel reasonably satisfactory to the
Company, to the effect that the registration of the Conversion Shares or the
Warrant Shares under the Securities Act is not required in connection with such
proposed transfer, (ii) a registration statement under the Securities Act
covering such proposed disposition has been filed by the Company with the
Commission and has become effective under the Securities Act, (iii) the Company
has received other evidence reasonably satisfactory to the Company that such
registration and qualification under the Securities Act and state securities
laws are not required, or (iv) the holder provides the Company with reasonable
assurances that such security can be sold pursuant to Rule 144 under the
Securities Act; and (b) either (i) the Company has received an opinion of
counsel reasonably satisfactory to the Company, to the effect that registration
or qualification under the securities or "blue sky" laws of any state is not
required in connection with such proposed disposition, or (ii)

                                       19

<PAGE>

compliance with applicable state securities or "blue sky" laws has been effected
or a valid exemption exists with respect thereto. The Company will respond to
any such notice from a holder within five (5) business days. In the case of any
proposed transfer under this Section 5.1, the Company will use reasonable
efforts to comply with any such applicable state securities or "blue sky" laws,
but shall in no event be required, (x) to qualify to do business in any state
where it is not then qualified or (y) to take any action that would subject it
to tax or to the general service of process in any state where it is not then
subject. The restrictions on transfer contained in this Section 5.1 shall be in
addition to, and not by way of limitation of, any other restrictions on transfer
contained in any other section of this Agreement. Whenever a certificate
representing the Conversion Shares or Warrant Shares is required to be issued to
a Purchaser without a legend, in lieu of delivering physical certificates
representing the Conversion Shares or Warrant Shares, provided the Company's
transfer agent is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer program, the Company shall use its reasonable best
efforts to cause its transfer agent to electronically transmit the Conversion
Shares or Warrant Shares to a Purchaser by crediting the account of such
Purchaser's Prime Broker with DTC through its Deposit Withdrawal Agent
Commission ("DWAC") system (to the extent not inconsistent with any provisions
of this Agreement).

                                   ARTICLE VI

                                 INDEMNIFICATION

            Section 6.1 General Indemnity. The Company agrees to indemnify and
hold harmless the Purchasers and any finder (and their respective directors,
officers, affiliates, agents, successors and assigns) from and against any and
all losses, liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorneys' fees, charges and disbursements)
incurred by the Purchasers as a result of any inaccuracy in or breach of the
representations, warranties or covenants made by the Company herein. Each
Purchaser severally but not jointly agrees to indemnify and hold harmless the
Company and its directors, officers, affiliates, agents, successors and assigns
from and against any and all losses, liabilities, deficiencies, costs, damages
and expenses (including, without limitation, reasonable attorneys' fees, charges
and disbursements) incurred by the Company as result of any inaccuracy in or
breach of the representations, warranties or covenants made by such Purchaser
herein. The maximum aggregate liability of each Purchaser pursuant to its
indemnification obligations under this Article 8 shall not exceed the portion of
the Purchase Price paid by such Purchaser hereunder.

            Section 6.2 Indemnification Procedure. Any party entitled to
indemnification under this Article VI (an "indemnified party") will give written
notice to the indemnifying party of any matters giving rise to a claim for
indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VI except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
indemnified party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of the indemnified party a conflict of interest between it
and the indemnifying party may exist with respect of such action, proceeding or
claim, to assume the

                                       20

<PAGE>

defense thereof with counsel reasonably satisfactory to the indemnified party.
In the event that the indemnifying party advises an indemnified party that it
will contest such a claim for indemnification hereunder, or fails, within thirty
(30) days of receipt of any indemnification notice to notify, in writing, such
person of its election to defend, settle or compromise, at its sole cost and
expense, any action, proceeding or claim (or discontinues its defense at any
time after it commences such defense), then the indemnified party may, at its
option, defend, settle or otherwise compromise or pay such action or claim. In
any event, unless and until the indemnifying party elects in writing to assume
and does so assume the defense of any such claim, proceeding or action, the
indemnified party's costs and expenses arising out of the defense, settlement or
compromise of any such action, claim or proceeding shall be losses subject to
indemnification hereunder. The indemnified party shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the indemnified party which
relates to such action or claim. The indemnifying party shall keep the
indemnified party fully apprised at all times as to the status of the defense or
any settlement negotiations with respect thereto. If the indemnifying party
elects to defend any such action or claim, then the indemnified party shall be
entitled to participate in such defense with counsel of its choice at its sole
cost and expense. The indemnifying party shall not be liable for any settlement
of any action, claim or proceeding effected without its prior written consent.
Notwithstanding anything in this Article VI to the contrary, the indemnifying
party shall not, without the indemnified party's prior written consent, settle
or compromise any claim or consent to entry of any judgment in respect thereof
which imposes any future obligation on the indemnified party or which does not
include, as an unconditional term thereof, the giving by the claimant or the
plaintiff to the indemnified party of a release from all liability in respect of
such claim. The indemnification required by this Article VI shall be made by
periodic payments of the amount thereof during the course of investigation or
defense, as and when bills are received or expense, loss, damage or liability is
incurred, so long as the indemnified party irrevocably agrees to refund such
moneys if it is ultimately determined by a court of competent jurisdiction that
such party was not entitled to indemnification. The indemnity agreements
contained herein shall be in addition to (a) any cause of action or similar
rights of the indemnified party against the indemnifying party or others, and
(b) any liabilities the indemnifying party may be subject to pursuant to the
law.

                                  ARTICLE VII

                                  MISCELLANEOUS

            Section 7.1 Fees and Expenses. Except as otherwise set forth in this
Agreement, the Registration Rights Agreement or the Certificate of Designation,
each party shall pay the fees and expenses of its advisors, 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; provided that the Company shall pay all actual attorneys' fees
and expenses (including disbursements and out-of-pocket expenses) incurred by
the Purchasers in connection with (i) the preparation, negotiation, execution
and delivery of this Agreement, the Registration Rights Agreement and the
transactions contemplated thereunder, which payment shall be made at Closing and
shall not exceed $20,000, (ii) the filing and

                                       21

<PAGE>

declaration of effectiveness by the Commission of the Registration Statement (as
defined in the Registration Rights Agreement) and (iii) any amendments,
modifications or waivers of this Agreement or any of the other Transaction
Documents. In addition, the Company shall pay all reasonable fees and expenses
incurred by the Purchasers in connection with the enforcement of this Agreement
or any of the other Transaction Documents, including, without limitation, all
reasonable attorneys' fees and expenses. The Company shall pay all stamp or
other similar taxes and duties levied in connection with issuance of the
Preferred Shares pursuant hereto.

            Section 7.2 Specific Enforcement, Consent to Jurisdiction.

            (a) The Company and the Purchasers acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement, the Certificate of Designation or the Registration Rights Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement or the Registration Rights Agreement and to enforce specifically the
terms and provisions hereof or thereof, this being in addition to any other
remedy to which any of them may be entitled by law or equity.

            (b) Each of the Company and the Purchasers (i) hereby irrevocably
submits to the jurisdiction of the United States District Court sitting in the
Southern District of New York and the courts of the State of New York located in
New York county for the purposes of any suit, action or proceeding arising out
of or relating to this Agreement or any of the other Transaction Documents or
the transactions contemplated hereby or thereby and (ii) hereby waives, and
agrees not to assert in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Each of the Company and the
Purchasers consents to process being served in any such suit, action or
proceeding by mailing a copy thereof 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 in this
Section 7.2 shall affect or limit any right to serve process in any other manner
permitted by law.

            Section 7.3 Entire Agreement; Amendment. This Agreement and the
Transaction Documents contains the entire understanding and agreement of the
parties with respect to the matters covered hereby and, except as specifically
set forth herein or in the Transaction Documents or the Certificate of
Designation, neither the Company nor any of the Purchasers makes any
representations, warranty, covenant or undertaking with respect to such matters
and they supersede all prior understandings and agreements with respect to said
subject matter, all of which are merged herein. No provision of this Agreement
may be waived or amended other than by a written instrument signed by the
Company and the holders of at least two-thirds (2/3) of the Preferred Shares
then outstanding, and no provision hereof may be waived other than by an a
written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought. No such amendment shall be effective to the
extent that it applies to less than all of the holders of the Preferred Shares
then outstanding. No consideration shall be offered or paid to any person to
amend or consent to a waiver or modification of any

                                       22

<PAGE>

provision of any of the Transaction Documents or the Certificate of Designation
unless the same consideration is also offered to all of the parties to the
Transaction Documents or holders of Preferred Shares, as the case may be.

            Section 7.4 Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery by telex (with correct answer back
received), telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:

             If to the Company:    RS Group of Companies, Inc.
                                   200 Yorkland Blvd., Suite 200
                                   Toronto, Ontario, Canada M2J 5C1
                                   Attention: President
                                   Tel. No.: (416) 391-4223
                                   Fax No.: (416) 391-4860

             with copies to:       Stark & Stark
                                   P.O. Box 5315
                                   Princeton, New Jersey 08543-5315
                                   Attention: Lawrence Cohen, Esq.
                                   Tel. No.: (609) 219-7421
                                   Fax No.: (609) 895-7395

             If to any Purchaser:  At the address of such Purchaser set forth on
                                   Exhibit A to this Agreement, with copies to
                                   Purchaser's counsel as set forth on Exhibit A
                                   or as specified in writing by such Purchaser
                                   with copies to:

                                   Jenkens & Gilchrist Parker Chapin LLP
                                   The Chrysler Building
                                   405 Lexington Avenue
                                   New York, NY 10174
                                   Attention: Martin Eric Weisberg, Esq.
                                   Tel No.: (212) 704-6000
                                   Fax No.: (212) 704-6288

      Any party hereto may from time to time change its address for notices by
giving at least ten (10) days written notice of such changed address to the
other party hereto.

                                       23

<PAGE>

            Section 7.5 Waivers. No waiver by either party 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 other
provisions, 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 accruing to it thereafter. Section 7.6 Headings. The article,
section and subsection headings in this Agreement are for convenience only and
shall not constitute a part of this Agreement for any other purpose and shall
not be deemed to limit or affect any of the provisions hereof.

            Section 7.7 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns.
Section 7.8 No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

            Section 7.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to any of the conflicts of law principles which would result in
the application of the substantive law of another jurisdiction. This Agreement
shall not be interpreted or construed with any presumption against the party
causing this Agreement to be drafted.

            Section 7.10 Survival. The representations and warranties of the
Company and the Purchasers contained in Section 2.1 shall survive the execution
and delivery hereof and the Closing until the date two (2) years from the
Closing Date, and the agreements and covenants set forth in Articles I, III, VI
and VII of this Agreement shall survive the execution and delivery hereof and
the Closing hereunder until the Purchasers in the aggregate beneficially own
(determined in accordance with Rule 13d-3 under the Exchange Act) less than 10%
of the total combined voting power of all voting securities then outstanding,
provided, that Sections 3.1, 3.2, 3.4, 3.5, 3.7, 3.8, 3.9, 3.10, 3.13, 3.14 and
3.17 shall not expire until the Registration Statement required by Section 2 of
the Registration Rights Agreement is no longer required to be effective under
the terms and conditions of Registration Rights Agreement.

            Section 7.11 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and shall become effective when counterparts have been signed by
each party and delivered to the other parties hereto, it being understood that
all parties need not sign the same counterpart. In the event any signature is
delivered by facsimile transmission, the party using such means of delivery
shall cause four additional executed signature pages to be physically delivered
to the other parties within five days of the execution and delivery hereof.

            Section 7.12 Publicity. The Company agrees that it will not
disclose, and will not include in any public announcement, the name of the
Purchasers without the consent of the Purchasers unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement.

                                       24

<PAGE>

            Section 7.13 Severability. The provisions of this Agreement, the
Certificate of Designation and the Registration Rights Agreement are severable
and, in the event that any court of competent jurisdiction shall determine that
any one or more of the provisions or part of the provisions contained in this
Agreement, the Certificate of Designation or the Registration Rights Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision or part of a provision of this Agreement, the Certificate of
Designation or the Registration Rights Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of such
provision, had never been contained herein, so that such provisions would be
valid, legal and enforceable to the maximum extent possible.

            Section 7.14 Further Assurances. From and after the date of this
Agreement, upon the request of any Purchaser or the Company, each of the Company
and the Purchasers shall execute and deliver such instrument, documents and
other writings as may be reasonably necessary or desirable to confirm and carry
out and to effectuate fully the intent and purposes of this Agreement, the
Preferred Shares, the Conversion Shares, the Warrants, the Warrant Shares, the
Certificate of Designation, and the Registration Rights Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       25

<PAGE>

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

                             RS GROUP OF COMPANIES, INC.

                             By:/s/ Sandro Sordi
                                ------------------------------
                                   Name: Sandro Sordi
                                   Title: General Counsel and Secretary

                             PURCHASER

                             By:_______________________________
                                   Name:
                                   Title:

<PAGE>

                           DISCLOSURE SCHEDULE TO THE
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                           RS GROUP OF COMPANIES, INC.

SECTION 2.1 (L) - "CERTAIN FEES": The Company shall compensate Ardent Advisors,
LLC, a consultant to the Company, partly out of the proceeds of this offering,
for its consulting services in connection with this Series B Preferred Stock
offering, as well as a "finders" fee, with three hundred thousand dollars
(UC$300,000) and five hundred thousand (500,000) shares of the Company's Common
Stock.

<PAGE>

                                EXHIBIT A TO THE
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                           RS GROUP OF COMPANIES, INC.

<TABLE>
<CAPTION>
NAMES AND ADDRESSES   NUMBER OF PREFERRED SHARES       DOLLAR AMOUNT OF
   OF PURCHASERS         & WARRANTS PURCHASED             INVESTMENT
-------------------   --------------------------       ----------------
<S>                   <C>                              <C>
</TABLE>

<PAGE>

                                EXHIBIT B TO THE
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                           RS GROUP OF COMPANIES, INC.

                           FORM OF SERIES B-1 WARRANT

<PAGE>

                                EXHIBIT C TO THE
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                           RS GROUP OF COMPANIES, INC.

                           FORM OF SERIES B-2 WARRANT

<PAGE>

                                EXHIBIT D TO THE
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                           RS GROUP OF COMPANIES, INC.

                       FORM OF CERTIFICATE OF DESIGNATION

<PAGE>

                                EXHIBIT E TO THE
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                           RS GROUP OF COMPANIES, INC.

                      FORM OF REGISTRATION RIGHTS AGREEMENT

<PAGE>

                                EXHIBIT F TO THE
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                           RS GROUP OF COMPANIES, INC.

                 FORM OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

                           RS GROUP OF COMPANIES, INC.

                                                    as of April 28, 2004

[Name and address of Transfer Agent]
Attn:  _____________

LADIES AND GENTLEMEN:

      Reference is made to that certain Series B Convertible Preferred Stock
Purchase Agreement (the "Purchase Agreement"), dated as of April 28, 2004, by
and among RS Group of Companies, Inc., a Florida corporation (the "COMPANY"),
and the purchasers named therein (collectively, the "PURCHASERS") pursuant to
which the Company is issuing to the Purchasers shares of its Series B
Convertible Preferred Stock, no par value per share, (the "PREFERRED SHARES")
and warrants (the "WARRANTS") to purchase shares of the Company's common stock,
no par value per share (the "COMMON STOCK"). This letter shall serve as our
irrevocable authorization and direction to you (subject to Section 3.1(a) of the
Purchase Agreement and provided that you are the transfer agent of the Company
at such time) to issue shares of Common Stock upon conversion of the Preferred
Shares (the "CONVERSION SHARES") and exercise of the Warrants (the "WARRANT
SHARES") to or upon the order of a Purchaser from time to time upon (i)
surrender to you of a properly completed and duly executed Conversion Notice or
Exercise Notice, as the case may be, in the form attached hereto as Exhibit I
and Exhibit II, respectively, (ii) in the case of the conversion of Preferred
Shares, a copy of the certificates (with the original certificates delivered to
the Company) representing Preferred Shares being converted or, in the case of
Warrants being exercised, a copy of the Warrants (with the original Warrants
delivered to the Company) being exercised (or, in each case, an indemnification
undertaking with respect to such share certificates or the warrants in the case
of their loss, theft or destruction), and (iii) delivery of a treasury order or
other appropriate order duly executed by a duly authorized officer of the
Company. So long as you have previously received (x) written confirmation from
counsel to the Company that a registration statement covering resales of the
Conversion Shares or Warrant Shares, as applicable, has been declared effective
by the Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 ACT"), and no subsequent notice by the Company or
its counsel of the suspension or termination of its effectiveness and (y) a copy
of such registration statement, and if the Purchaser represents in writing that
the Conversion Shares or the Warrant Shares, as the case may be, were sold
pursuant to the Registration Statement, then certificates representing the
Conversion Shares and the Warrant Shares, as the case may be, shall not bear any
legend restricting transfer of the Conversion Shares and the Warrant Shares, as
the case may be, thereby and should not be subject to any stop-transfer
restriction. Provided, however, that if you have not previously received (i)
written confirmation from counsel to the Company that a registration statement
covering resales of the Conversion Shares or Warrant Shares, as applicable, has
been declared effective by the SEC under the 1933 Act, and (ii) a copy of such
registration statement, then the certificates for the Conversion Shares and the
Warrant Shares shall bear the following legend:

<PAGE>

            "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
            REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
            SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
            TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
            SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS, OR RS GROUP OF
            COMPANIES, INC. SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT
            REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER
            THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED."

and, provided further, that the Company may from time to time notify you to
place stop-transfer restrictions on the certificates for the Conversion Shares
and the Warrant Shares in the event a registration statement covering the
Conversion Shares and the Warrant Shares is subject to amendment for events then
current.

      A form of written confirmation from counsel to the Company that a
registration statement covering resales of the Conversion Shares and the Warrant
Shares has been declared effective by the SEC under the 1933 Act is attached
hereto as Exhibit III.

      Please be advised that the Purchasers are relying upon this letter as an
inducement to enter into the Securities Purchase Agreement and, accordingly,
each Purchaser is a third party beneficiary to these instructions.

      Please execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these instructions. Should you have any
questions concerning this matter, please contact me at ________.

                                      Very truly yours,

                                   RS GROUP OF COMPANIES, INC.

                                      By:_______________________________________
                                           Name:________________________________
                                           Title:_______________________________

ACKNOWLEDGED AND AGREED:

[TRANSFER AGENT]

By:    ________________________________________
Name:  ________________________________________
Title: ________________________________________
Date:  ________________________________________

<PAGE>

                                    EXHIBIT I

                           RS GROUP OF COMPANIES, INC.
                                CONVERSION NOTICE

Reference is made to the Certificate of Designation of the Relative Rights and
Preferences of the Series B Preferred Stock of RS Group of Companies, Inc. (the
"Certificate of Designation"). In accordance with and pursuant to the
Certificate of Designation, the undersigned hereby elects to convert the number
of shares of Series B Preferred Stock, no par value per share (the "Preferred
Shares"), of RS Group of Companies, Inc., a Florida corporation (the "Company"),
indicated below into shares of Common Stock, no par value per share (the "Common
Stock"), of the Company, by tendering the stock certificate(s) representing the
share(s) of Preferred Shares specified below as of the date specified below.

      Date of Conversion:                                  _____________________

      Number of Preferred Shares to be converted:          _________

      Stock certificate no(s). of Preferred Shares to be converted: ____________

      The Common Stock have been sold pursuant to the Registration Statement (as
defined in the Registration Rights Agreement): YES ____    NO____

Please confirm the following information:

      Conversion Price:                                    _____________________

      Number of shares of Common Stock
      to be issued:                                        _____________________

Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the Date of Conversion: _________________________

Please issue the Common Stock into which the Preferred Shares are being
converted and, if applicable, any check drawn on an account of the Company in
the following name and to the following address:

      Issue to:                                            _____________________
                                                           _____________________

      Facsimile Number:                                    _____________________

      Authorization:                                       _____________________
                                                           By:__________________
                                                           Title:_______________
      Dated:

<PAGE>

                                   EXHIBIT II

                             FORM OF EXERCISE NOTICE

                                  EXERCISE FORM

                           RS GROUP OF COMPANIES, INC.

The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of RS Group of
Companies, Inc. covered by the within Warrant.

Dated: _________________            Signature       ___________________________

                                    Address         _____________________
                                                    _____________________

Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the date of Exercise: _________________________

                                   ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

Dated: _________________            Signature       ___________________________

                                    Address         _____________________
                                                    _____________________

                               PARTIAL ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.

Dated: _________________            Signature       ___________________________

                                    Address         _____________________
                                                    _____________________

                           FOR USE BY THE ISSUER ONLY:

This Warrant No. W-_____ canceled (or transferred or exchanged) this _____ day
of ___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.

<PAGE>

                                   EXHIBIT III

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

[Name and address of Transfer Agent]
Attn:  _____________

            Re:      RS GROUP OF COMPANIES, INC.

Ladies and Gentlemen:

      We are counsel to RS Group of Companies, Inc., a Florida corporation (the
"COMPANY"), and have represented the Company in connection with that certain
Series B Convertible Preferred Stock Purchase Agreement (the "PURCHASE
AGREEMENT"), dated as of April 28, 2004, by and among the Company and the
purchasers named therein (collectively, the "PURCHASERS") pursuant to which the
Company issued to the Purchasers shares of its Series B Convertible Preferred
Stock, no par value per share, (the "PREFERRED SHARES") and warrants (the
"WARRANTS") to purchase shares of the Company's common stock, no par value per
share (the "COMMON Stock"). Pursuant to the Purchase Agreement, the Company has
also entered into a Registration Rights Agreement with the Purchasers (the
"REGISTRATION RIGHTS AGREEMENT"), dated as of April 28, 2004, pursuant to which
the Company agreed, among other things, to register the Registrable Securities
(as defined in the Registration Rights Agreement), including the shares of
Common Stock issuable upon conversion of the Preferred Shares and exercise of
the Warrants, under the Securities Act of 1933, as amended (the "1933 ACT"). In
connection with the Company's obligations under the Registration Rights
Agreement, on ________________, 2004, the Company filed a Registration Statement
on Form SB-2 (File No. 333-________) (the "REGISTRATION STATEMENT") with the
Securities and Exchange Commission (the "SEC") relating to the resale of the
Registrable Securities which names each of the present Purchasers as a selling
stockholder thereunder.

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

                                            Very truly yours,

                                            [COMPANY COUNSEL]

                                            By:_________________________________

cc:   [LIST NAMES OF PURCHASERS]

<PAGE>

                                EXHIBIT G TO THE
           SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                           RS GROUP OF COMPANIES, INC.

                           FORM OF OPINION OF COUNSEL

            1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the state of Florida and has the
requisite corporate power to own, lease and operate its properties and assets,
and to carry on its business as presently conducted. The Company is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary.

            2. The Company has the requisite corporate power and authority to
enter into and perform its obligations under the Transaction Documents and to
issue the Preferred Stock, the Warrants and the Common Stock issuable upon
conversion of the Preferred Stock and exercise of the Warrants. The execution,
delivery and performance of each of the Transaction Documents by the Company and
the consummation by it of the transactions contemplated thereby have been duly
and validly authorized by all necessary corporate action and no further consent
or authorization of the Company or its Board of Directors or stockholders is
required. Each of the Transaction Documents have been duly executed and
delivered, and the Preferred Stock and the Warrants have been duly executed,
issued and delivered by the Company and each of the Transaction Documents
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its respective terms. The Common Stock
issuable upon conversion of the Preferred Stock and exercise of the Warrants are
not subject to any preemptive rights under the Articles of Incorporation or the
Bylaws.

            3. The Preferred Stock and the Warrants have been duly authorized
and, when delivered against payment in full as provided in the Purchase
Agreement, will be validly issued, fully paid and nonassessable. The shares of
Common Stock issuable upon conversion of the Preferred Stock and exercise of the
Warrants, have been duly authorized and reserved for issuance, and, when
delivered upon conversion or against payment in full as provided in the
Certificate of Designation and the Warrants, as applicable, will be validly
issued, fully paid and nonassessable.

            4. The execution, delivery and performance of and compliance with
the terms of the Transaction Documents and the issuance of the Preferred Stock,
the Warrants and the Common Stock issuable upon conversion of the Preferred
Stock and exercise of the Warrants do not (i) violate any provision of the
Articles of Incorporation or Bylaws, (ii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, mortgage, deed of trust, indenture,
note, bond, license, lease agreement, instrument or obligation to which the
Company is a party and which is known to us, (iii) create or impose a lien,
charge or encumbrance on any property of the Company under any agreement or any
commitment to which the Company is a party or by which the Company is bound or
by which any of its respective properties or assets are bound, or (iv) result in
a violation of any federal, state, local or foreign statute, rule, regulation,
order, judgment, injunction or decree (including Federal and state securities
laws and regulations) applicable to the Company or by which any property or
asset of the Company is bound or affected, except, in all cases other than
violations pursuant to clause (i) above, for such conflicts, default,
terminations, amendments, acceleration, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect.

<PAGE>

            5. No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the Company
is required under Federal, state or local law, rule or regulation in connection
with the valid execution and delivery of the Transaction Documents, or the
offer, sale or issuance of the Preferred Stock, the Warrants or the Common Stock
issuable upon conversion of the Preferred Stock and exercise of the Warrants
other than the Certificate of Designation and the Registration Statement.

            6. To our knowledge, there is no action, suit, claim, investigation
or proceeding pending or threatened against the Company which questions the
validity of this Agreement or the transactions contemplated hereby or any action
taken or to be taken pursuant hereto or thereto. There is no action, suit,
claim, investigation or proceeding pending, or to our knowledge, threatened,
against or involving the Company or any of its properties or assets and which,
if adversely determined, is reasonably likely to result in a Material Adverse
Effect. There are no outstanding orders, judgments, injunctions, awards or
decrees of any court, arbitrator or governmental or regulatory body against the
Company or any officers or directors of the Company in their capacities as such.

            7. The offer, issuance and sale of the Preferred Stock and the
Warrants and the offer, issuance and sale of the shares of Common Stock issuable
upon conversion of the Preferred Stock and exercise of the Warrants pursuant to
the Purchase Agreement, the Certificate of Designation and the Warrants, as
applicable, are exempt from the registration requirements of the Securities Act.

                                    Very truly yours,<PAGE>

                                                                    EXHIBIT 10.2

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR RS GROUP OF COMPANIES, INC. SHALL HAVE
RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO RS GROUP OF COMPANIES,
INC. THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

                         SERIES B-1 WARRANT TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                           RS GROUP OF COMPANIES, INC.

                             Expires April __, 2007

No.: W-B-1-04-__                                   Number of Shares: ___________
Date of Issuance: April 28, 2004

      FOR VALUE RECEIVED, subject to the provisions hereinafter set forth, the
undersigned, RS Group of Companies, Inc., a Florida corporation (together with
its successors and assigns, the "Issuer"), hereby certifies that
_______________________________ or its registered assigns is entitled to
subscribe for and purchase, during the Term (as hereinafter defined), up to
____________________________________ (_____________) shares (subject to
adjustment as hereinafter provided) of the duly authorized, validly issued,
fully paid and non-assessable Common Stock of the Issuer, at an exercise price
per share equal to the Warrant Price then in effect, subject, however, to the
provisions and upon the terms and conditions hereinafter set forth. Capitalized
terms used in this Warrant and not otherwise defined herein shall have the
respective meanings specified in Section 9 hereof.

      1. Term. The term of this Warrant shall commence on April __, 2004 and
shall expire at 5:00 p.m., eastern time, on April __, 2007 (such period being
the "Term").

      2. Method of Exercise Payment; Issuance of New Warrant; Transfer and
Exchange.

      (a) Time of Exercise. The purchase rights represented by this Warrant may
be exercised in whole or in part commencing on the effective date of the
registration statement providing for the resale of the Warrant Stock and the
Common Stock issuable upon conversion of the Issuer's Series B Convertible
Preferred Stock issued pursuant to the Purchase Agreement and expiring on April
__, 2007.

      (b) Method of Exercise. The Holder hereof may exercise this Warrant, in
whole or in part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal office of the Issuer, and by the
payment to the Issuer of an amount of consideration

<PAGE>

therefor equal to the Warrant Price in effect on the date of such exercise
multiplied by the number of shares of Warrant Stock with respect to which this
Warrant is then being exercised payable by certified or official bank check or
by wire transfer to an account designated by the Issuer.

      (c) Issuance of Stock Certificates. In the event of any exercise of the
rights represented by this Warrant in accordance with and subject to the terms
and conditions hereof, (i) certificates for the shares of Warrant Stock so
purchased shall be dated the date of such exercise and delivered to the Holder
hereof within a reasonable time, not exceeding three (3) Trading Days after such
exercise or, at the request of the Holder (provided that a registration
statement under the Securities Act providing for the resale of the Warrant Stock
is then in effect), issued and delivered to the Depository Trust Company ("DTC")
account on the Holder's behalf via the Deposit Withdrawal Agent Commission
System ("DWAC") within a reasonable time, not exceeding three (3) Trading Days
after such exercise, and the Holder hereof shall be deemed for all purposes to
be the holder of the shares of Warrant Stock so purchased as of the date of such
exercise and (ii) unless this Warrant has expired, a new Warrant representing
the number of shares of Warrant Stock, if any, with respect to which this
Warrant shall not then have been exercised (less any amount thereof which shall
have been canceled in payment or partial payment of the Warrant Price as
hereinabove provided) shall also be issued to the Holder hereof at the Issuer's
expense within such time.

      (d) Transferability of Warrant. Subject to Section 2(e), this Warrant may
be transferred by a Holder without the consent of the Issuer. If transferred
pursuant to this paragraph and subject to the provisions of Section 2(e), this
Warrant may be transferred on the books of the Issuer by the Holder hereof in
person or by duly authorized attorney, upon surrender of this Warrant at the
principal office of the Issuer, properly endorsed (by the Holder executing an
assignment in the form attached hereto) and upon payment of any necessary
transfer tax or other governmental charge imposed upon such transfer. This
Warrant is exchangeable at the principal office of the Issuer for Warrants for
the purchase of the same aggregate number of shares of Warrant Stock, each new
Warrant to represent the right to purchase such number of shares of Warrant
Stock as the Holder hereof shall designate at the time of such exchange. All
Warrants issued upon a transfer or exchange shall be dated the Original Issue
Date and shall be identical with this Warrant except as to the number of shares
of Warrant Stock issuable pursuant hereto.

      (e) Compliance with Securities Laws.

            (i) The Holder of this Warrant, by acceptance hereof, acknowledges
      that this Warrant or the shares of Warrant Stock to be issued upon
      exercise hereof, as applicable, are being acquired for the Holder's own
      account and not as a nominee for any other party, and for investment, and
      that the Holder will not offer, sell or otherwise dispose of this Warrant
      or any shares of Warrant Stock to be issued upon exercise hereof except
      pursuant to an effective registration statement, or an exemption from
      registration, under the Securities Act and any applicable state securities
      laws.

            (ii) Except as provided in Section 2(e)(iii), this Warrant and all
      certificates representing shares of Warrant Stock issued upon exercise
      hereof shall be stamped or imprinted with a legend in substantially the
      following form:

<PAGE>

            THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
            HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
            AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY
            NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED
            UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS
            OR RS GROUP OF COMPANIES, INC. SHALL HAVE RECEIVED AN OPINION OF
            COUNSEL REASONABLY SATISFACTORY TO RS GROUP OF COMPANIES, INC. THAT
            REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER
            THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

            (iii) The Issuer agrees to reissue this Warrant or certificates
      representing any of the Warrant Stock, without the legend set forth above
      if at such time, prior to making any transfer of any such securities, the
      Holder shall give written notice to the Issuer describing the manner and
      terms of such transfer and removal as the Issuer may reasonably request.
      Such proposed transfer and removal will not be effected until: (a) either
      (1) the Issuer has received an opinion of counsel reasonably satisfactory
      to the Issuer, to the effect that the registration of such securities
      under the Securities Act is not required in connection with such proposed
      transfer, (2) a registration statement under the Securities Act covering
      such proposed disposition has been filed by the Issuer with the Securities
      and Exchange Commission and has become effective under the Securities Act,
      (3) the Issuer has received other evidence reasonably satisfactory to the
      Issuer that such registration and qualification under the Securities Act
      and state securities laws are not required, or (4) the Holder provides the
      Issuer with reasonable assurances that such security can be sold pursuant
      to Rule 144 under the Securities Act; and (b) either (x) the Issuer has
      received an opinion of counsel reasonably satisfactory to the Issuer, to
      the effect that registration or qualification under the securities or
      "blue sky" laws of any state is not required in connection with such
      proposed disposition, or (y) compliance with applicable state securities
      or "blue sky" laws has been effected or a valid exemption exists with
      respect thereto. The Issuer will respond to any such notice from the
      Holder within five (5) business days. In the case of any proposed transfer
      under this Section 2(e), the Issuer will use reasonable best efforts to
      comply with any such applicable state securities or "blue sky" laws, but
      shall in no event be required, (A) to qualify to do business in any state
      where it is not then qualified, or (B) to take any action that would
      subject it to tax or to the general service of process in any state where
      it is not then subject. The restrictions on transfer contained in this
      Section 2(e) shall be in addition to, and not by way of limitation of, any
      other restrictions on transfer contained in any other section of this
      Warrant. Whenever a certificate representing the Warrant Stock is required
      to be issued to a the Holder without a legend, in lieu of delivering
      physical certificates representing the Warrant Stock, provided the
      Issuer's transfer agent is participating in the DTC Fast Automated
      Securities Transfer program, the Issuer shall use its reasonable best
      efforts to cause its transfer agent to electronically transmit the Warrant
      Stock to the Holder by crediting the account of the Holder's Prime Broker
      with DTC through DWAC (to the extent not inconsistent with any provisions
      of this Warrant or the Purchase Agreement).

<PAGE>

      3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.

      (a) Stock Fully Paid. The Issuer represents and warrants to the Holder,
and covenants and agrees for the benefit of the Holder that all shares of
Warrant Stock which may be issued upon the exercise of this Warrant or otherwise
hereunder will, upon issuance, be duly authorized, validly issued, fully paid
and non-assessable and free from all taxes, liens, charges or other encumbrances
of any nature whatsoever created by or through the Issuer. The Issuer further
covenants and agrees that during the period within which this Warrant may be
exercised, the Issuer will at all times have authorized and reserved for the
purpose of the issue upon exercise of this Warrant a sufficient number of shares
of Common Stock to provide for the exercise of this Warrant.

      (b) Reservation. If any shares of Common Stock required to be reserved for
issuance upon exercise of this Warrant or as otherwise provided hereunder
require registration or qualification with any governmental authority under any
federal or state law before such shares may be so issued, the Issuer will in
good faith use its best efforts at its expense to cause such shares to be duly
registered or qualified. If the Issuer shall list any shares of Common Stock on
any securities exchange or market it will, at its expense, list thereon,
maintain and increase when necessary such listing, of, all shares of Warrant
Stock from time to time issued upon exercise of this Warrant or as otherwise
provided hereunder (provided that such Warrant Stock has been registered
pursuant to a registration statement under the Securities Act then in effect),
and, to the extent permissible under the applicable securities exchange rules,
all unissued shares of Warrant Stock which are at any time issuable hereunder,
so long as any shares of Common Stock shall be so listed. The Issuer will also
so list on each securities exchange or market, and will maintain such listing
of, any other securities which the Holder of this Warrant shall be entitled to
receive upon the exercise of this Warrant if at the time any securities of the
same class shall be listed on such securities exchange or market by the Issuer.

      (c) Covenants. The Issuer shall not by any action including, without
limitation, amending the Articles of Incorporation or the by-laws of the Issuer,
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other action, avoid or seek to
avoid the observance or performance of any of the terms or provisions of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of the Holder hereof against dilution (to the
extent specifically provided herein) or impairment. Without limiting the
generality of the foregoing, the Issuer will (i) not permit the par value, if
any, of its Common Stock to exceed the then effective Warrant Price, (ii) not
amend or modify any provision of the Articles of Incorporation or by-laws of the
Issuer in any manner that would adversely affect the rights of the Holder of
this Warrant, (iii) take all such action as may be reasonably necessary in order
that the Issuer may validly and legally issue fully paid and nonassessable
shares of Common Stock, free and clear of any liens, claims, encumbrances and
restrictions (other than as provided herein) upon the exercise of this Warrant,
and (iv) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
reasonably necessary to enable the Issuer to perform its obligations under this
Warrant.

      (d) Loss, Theft, Destruction of Warrants. Upon receipt of evidence
satisfactory to the Issuer of the ownership of and the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security reasonably satisfactory to
the Issuer or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Issuer will make and deliver, in lieu of such
lost, stolen, destroyed or

<PAGE>

mutilated Warrant, a new Warrant of like tenor and representing the right to
purchase the same number of shares of Common Stock.

      4.    Adjustment of Warrant Price and Warrant Share Number. The number of
            shares of Common Stock for which this Warrant is exercisable, and
            the price at which such shares may be purchased upon exercise of
            this Warrant, shall be subject to adjustment from time to time as
            set forth in this Section 4. The Issuer shall give the Holder notice
            of any event described below which requires an adjustment pursuant
            to this Section 4 in accordance with Section 5.

      (a)   Recapitalization, Reorganization, Reclassification, Consolidation,
            Merger or Sale.

            (i) In case the Issuer after the Original Issue Date shall do any of
      the following (each, a "Triggering Event"): (a) consolidate with or merge
      into any other Person and the Issuer shall not be the continuing or
      surviving corporation of such consolidation or merger, or (b) permit any
      other Person to consolidate with or merge into the Issuer and the Issuer
      shall be the continuing or surviving Person but, in connection with such
      consolidation or merger, any Capital Stock of the Issuer shall be changed
      into or exchanged for Securities of any other Person or cash or any other
      property, or (c) transfer all or substantially all of its properties or
      assets to any other Person, or (d) effect a capital reorganization or
      reclassification of its Capital Stock, then, and in the case of each such
      Triggering Event, proper provision shall be made so that, upon the basis
      and the terms and in the manner provided in this Warrant, the Holder of
      this Warrant shall be entitled upon the exercise hereof at any time after
      the consummation of such Triggering Event, to the extent this Warrant is
      not exercised prior to such Triggering Event, to receive at the Warrant
      Price in effect at the time immediately prior to the consummation of such
      Triggering Event in lieu of the Common Stock issuable upon such exercise
      of this Warrant prior to such Triggering Event, the Securities, cash and
      property to which such Holder would have been entitled upon the
      consummation of such Triggering Event if such Holder had exercised the
      rights represented by this Warrant immediately prior thereto, subject to
      adjustments (subsequent to such corporate action) as nearly equivalent as
      possible to the adjustments provided for elsewhere in this Section 4.

            (ii) Notwithstanding anything contained in this Warrant to the
      contrary, a Triggering Event shall not be deemed to have occurred if,
      prior to the consummation thereof, each Person (other than the Issuer)
      which may be required to deliver any Securities, cash or property upon the
      exercise of this Warrant as provided herein shall assume, by written
      instrument delivered to, and reasonably satisfactory to, the Holder of
      this Warrant, (A) the obligations of the Issuer under this Warrant (and if
      the Issuer shall survive the consummation of such Triggering Event, such
      assumption shall be in addition to, and shall not release the Issuer from,
      any continuing obligations of the Issuer under this Warrant) and (B) the
      obligation to deliver to such Holder such Securities, cash or property as,
      in accordance with the foregoing provisions of this subsection (a), such
      Holder shall be entitled to receive, and such Person shall have similarly
      delivered to such Holder an opinion of counsel for such Person, which
      counsel shall be reasonably satisfactory to such Holder, or in the
      alternative, a written acknowledgement executed by the President or Chief
      Financial Officer of the Issuer, stating that this Warrant shall
      thereafter continue in full force and effect and the terms hereof
      (including, without limitation, all of the provisions of this subsection
      (a)) shall be applicable to the Securities, cash or property which such
      Person may be required to deliver upon any exercise of this Warrant or the
      exercise of any rights pursuant hereto.

<PAGE>

            (b) Stock Dividends, Subdivisions and Combinations. If at any time
the Issuer shall:

                  (i) take a record of the holders of its Common Stock for the
      purpose of entitling them to receive a dividend payable in, or other
      distribution of, shares of Common Stock,

                  (ii) subdivide its outstanding shares of Common Stock into a
      larger number of shares of Common Stock, or

                  (iii) combine its outstanding shares of Common Stock into a
      smaller number of shares of Common Stock,

then (1) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (2) the Warrant Price then in
effect shall be adjusted to equal (A) the Warrant Price then in effect
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable immediately after
such adjustment.

      (c) Certain Other Distributions. If at any time the Issuer shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of:

                  (i) cash (other than a cash dividend payable out of earnings
      or earned surplus legally available for the payment of dividends under the
      laws of the jurisdiction of incorporation of the Issuer),

                  (ii) any evidences of its indebtedness, any shares of stock of
      any class or any other securities or property of any nature whatsoever
      (other than cash, Common Stock Equivalents or Additional Shares of Common
      Stock), or

                  (iii) any warrants or other rights to subscribe for or
      purchase any evidences of its indebtedness, any shares of stock of any
      class or any other securities or property of any nature whatsoever (other
      than cash, Common Stock Equivalents or Additional Shares of Common Stock),

then (1) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
adjustment multiplied by a fraction (A) the numerator of which shall be the Per
Share Market Value of Common Stock at the date of taking such record and (B) the
denominator of which shall be such Per Share Market Value minus the amount
allocable to one share of Common Stock of any such cash so distributable and of
the fair value (as determined in good faith by the Board of Directors of the
Issuer and supported by an opinion from an investment banking firm of recognized
national standing acceptable to (but not affiliated with) the Holder) of any and
all such evidences of indebtedness, shares of stock, other securities or
property or warrants or other subscription or purchase rights so distributable,
and (2) the Warrant Price then in effect shall be adjusted to equal (A) the
Warrant Price then in effect

<PAGE>

multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable immediately after
such adjustment. A reclassification of the Common Stock (other than a change in
par value, or from par value to no par value or from no par value to par value)
into shares of Common Stock and shares of any other class of stock shall be
deemed a distribution by the Issuer to the holders of its Common Stock of such
shares of such other class of stock within the meaning of this Section 4(c) and,
if the outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such reclassification,
such change shall be deemed a subdivision or combination, as the case may be, of
the outstanding shares of Common Stock within the meaning of Section 4(b).

      (d) Issuance of Additional Shares of Common Stock.

            (i) In the event the Issuer shall at any time following the Original
Issue Date issue any Additional Shares of Common Stock (otherwise than as
provided in the foregoing subsections (a) through (c) of this Section 4), at a
price per share less than the Warrant Price then in effect or without
consideration, then the Warrant Price upon each such issuance shall be adjusted
to that price determined by multiplying the Warrant Price then in effect by a
fraction:

                  (A) the numerator of which shall be equal to the sum of (x)
            the number of shares of Outstanding Common Stock immediately prior
            to the issuance of such Additional Shares of Common Stock plus (y)
            the number of shares of Common Stock (rounded to the nearest whole
            share) which the aggregate consideration for the total number of
            such Additional Shares of Common Stock so issued would purchase at a
            price per share equal to the Warrant Price then in effect, and

                  (B) the denominator of which shall be equal to the number of
            shares of Outstanding Common Stock immediately after the issuance of
            such Additional Shares of Common Stock.

            (ii) No adjustment of the number of shares of Common Stock for which
this Warrant shall be exercisable shall be made under paragraph (i) of Section
4(d) upon the issuance of any Additional Shares of Common Stock which are issued
pursuant to the exercise of any Common Stock Equivalents, if any such adjustment
shall previously have been made upon the issuance of such Common Stock
Equivalents (or upon the issuance of any warrant or other rights therefor)
pursuant to Section 4(e).

      (e) Issuance of Common Stock Equivalents. If at any time the Issuer shall
issue or sell any Common Stock Equivalents, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the aggregate
price per share for which Common Stock is issuable upon such conversion or
exchange plus the consideration received by the Issuer for issuance of such
Common Stock Equivalent divided by the number of shares of Common Stock issuable
pursuant to such Common Stock Equivalent shall be less than the Warrant Price in
effect immediately prior to the time of such issue or sale, then the number of
shares of Common Stock for which this Warrant is exercisable and the Warrant
Price then in effect shall be adjusted as provided in Section 4(d) on the basis
that the maximum number of Additional Shares of Common Stock necessary to effect
the conversion or exchange of all such Common Stock Equivalents shall be deemed
to have been issued and outstanding and the Issuer shall have received all of
the consideration payable therefor, if any, as of the date of actual issuance of
such Common Stock Equivalents. No further adjustment of the number of shares of
Common Stock for which this Warrant is exercisable and the Warrant Price then in
effect shall be made under

<PAGE>

this Section 4(e) upon the issuance of any Common Stock Equivalents which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor, if any such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to this Section
4(e). No further adjustments of the number of shares of Common Stock for which
this Warrant is exercisable and the Warrant Price then in effect shall be made
upon the actual issue of such Common Stock upon conversion or exchange of such
Common Stock Equivalents.

      (f) Superseding Adjustment. If, at any time after any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable and the
Warrant Price then in effect shall have been made pursuant to Section 4(e) as
the result of any issuance of Common Stock Equivalents, and (i) such Common
Stock Equivalents, or the right of conversion or exchange in such Common Stock
Equivalents, shall expire, and all or a portion of such or the right of
conversion or exchange with respect to all or a portion of such Common Stock
Equivalents, as the case may be, shall not have been exercised, or (ii) the
consideration per share for which shares of Common Stock are issuable pursuant
to such Common Stock Equivalents shall be increased, then such previous
adjustment shall be rescinded and annulled and the Additional Shares of Common
Stock which were deemed to have been issued by virtue of the computation made in
connection with the adjustment so rescinded and annulled shall no longer be
deemed to have been issued by virtue of such computation. Upon the occurrence of
an event set forth above, there shall be a recomputation made of the effect of
such Common Stock Equivalents on the basis of: (i) treating the number of
Additional Shares of Common Stock theretofore actually issued or issuable
pursuant to the previous exercise of Common Stock Equivalents or any such right
of conversion or exchange, as having been issued on the date or dates of any
such exercise and for the consideration actually received and receivable
therefor, and (ii) treating any such Common Stock Equivalents which then remain
outstanding as having been granted or issued immediately after the time of such
increase of the consideration per share for which Additional Shares of Common
Stock are issuable under such Common Stock Equivalents; whereupon a new
adjustment of the number of shares of Common Stock for which this Warrant is
exercisable and the Warrant Price then in effect shall be made, which new
adjustment shall supersede the previous adjustment so rescinded and annulled.

      (g) Other Provisions applicable to Adjustments under this Section. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Warrant Price then in effect provided for in this Section 4:

                  (i) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Common Stock Equivalents (or any
warrants or other rights therefor) shall be issued for cash consideration, the
consideration received by the Issuer therefor shall be the amount of the cash
received by the Issuer therefor, or, if such Additional Shares of Common Stock
or Common Stock Equivalents are offered by the Issuer for subscription, the
subscription price, or, if such Additional Shares of Common Stock or Common
Stock Equivalents are sold to underwriters or dealers for public offering
without a subscription offering, the initial public offering price (in any such
case subtracting any amounts paid or receivable for accrued interest or accrued
dividends and without taking into account any compensation, discounts or
expenses paid or incurred by the Issuer for and in the underwriting of, or
otherwise in connection with, the issuance thereof). In connection with any
merger or consolidation in which the Issuer is the surviving corporation (other
than any consolidation or merger in which the previously outstanding shares of
Common Stock of the Issuer shall be changed to or exchanged for the stock or
other securities of another corporation), the amount of consideration therefore
shall be,

<PAGE>

deemed to be the fair value, as determined reasonably and in good faith by the
Board, of such portion of the assets and business of the nonsurviving
corporation as the Board may determine to be attributable to such shares of
Common Stock or Common Stock Equivalents, as the case may be. The consideration
for any Additional Shares of Common Stock issuable pursuant to any warrants or
other rights to subscribe for or purchase the same shall be the consideration
received by the Issuer for issuing such warrants or other rights plus the
additional consideration payable to the Issuer upon exercise of such warrants or
other rights. The consideration for any Additional Shares of Common Stock
issuable pursuant to the terms of any Common Stock Equivalents shall be the
consideration received by the Issuer for issuing warrants or other rights to
subscribe for or purchase such Common Stock Equivalents, plus the consideration
paid or payable to the Issuer in respect of the subscription for or purchase of
such Common Stock Equivalents, plus the additional consideration, if any,
payable to the Issuer upon the exercise of the right of conversion or exchange
in such Common Stock Equivalents. In the event of any consolidation or merger of
the Issuer in which the Issuer is not the surviving corporation or in which the
previously outstanding shares of Common Stock of the Issuer shall be changed
into or exchanged for the stock or other securities of another corporation, or
in the event of any sale of all or substantially all of the assets of the Issuer
for stock or other securities of any corporation, the Issuer shall be deemed to
have issued a number of shares of its Common Stock for stock or securities or
other property of the other corporation computed on the basis of the actual
exchange ratio on which the transaction was predicated, and for a consideration
equal to the fair market value on the date of such transaction of all such stock
or securities or other property of the other corporation. In the event any
consideration received by the Issuer for any securities consists of property
other than cash, the fair market value thereof at the time of issuance or as
otherwise applicable shall be as determined in good faith by the Board. In the
event Common Stock is issued with other shares or securities or other assets of
the Issuer for consideration which covers both, the consideration computed as
provided in this Section 4(g)(i) shall be allocated among such securities and
assets as determined in good faith by the Board.

            (ii) When Adjustments to Be Made. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event requiring
an adjustment shall occur, except that any adjustment of the number of shares of
Common Stock for which this Warrant is exercisable that would otherwise be
required may be postponed (except in the case of a subdivision or combination of
shares of the Common Stock, as provided for in Section 4(b)) up to, but not
beyond the date of exercise if such adjustment either by itself or with other
adjustments not previously made adds or subtracts less than one percent (1%) of
the shares of Common Stock for which this Warrant is exercisable immediately
prior to the making of such adjustment. Any adjustment representing a change of
less than such minimum amount (except as aforesaid) which is postponed shall be
carried forward and made as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would result in
a minimum adjustment or on the date of exercise. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.

            (iii) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account to
the nearest one one-hundredth (1/100th) of a share.

            (iv) When Adjustment Not Required. If the Issuer shall take a record
of the holders of its Common Stock for the purpose of entitling them to receive
a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution,
<PAGE>

subscription or purchase rights, then thereafter no adjustment shall be required
by reason of the taking of such record and any such adjustment previously made
in respect thereof shall be rescinded and annulled.

      (h) Form of Warrant after Adjustments. The form of this Warrant need not
be changed because of any adjustments in the Warrant Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.

      (i) Escrow of Warrant Stock. If after any property becomes distributable
pursuant to this Section 4 by reason of the taking of any record of the holders
of Common Stock, but prior to the occurrence of the event for which such record
is taken, and the Holder exercises this Warrant, any shares of Common Stock
issuable upon exercise by reason of such adjustment shall be deemed the last
shares of Common Stock for which this Warrant is exercised (notwithstanding any
other provision to the contrary herein) and such shares or other property shall
be held in escrow for the Holder by the Issuer to be issued to the Holder upon
and to the extent that the event actually takes place, upon payment of the
current Warrant Price. Notwithstanding any other provision to the contrary
herein, if the event for which such record was taken fails to occur or is
rescinded, then such escrowed shares shall be cancelled by the Issuer and
escrowed property returned.

      5. Notice of Adjustments. Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an "adjustment"), the Issuer shall cause its Chief Financial
Officer to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), and the Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
promptly after each adjustment. Any dispute between the Issuer and the Holder of
this Warrant with respect to the matters set forth in such certificate may at
the option of the Holder of this Warrant be submitted to one of the national
accounting firms currently known as the "big four" selected by the Holder,
provided that the Issuer shall have ten (10) days after receipt of notice from
such Holder of its selection of such firm to object thereto, in which case such
Holder shall select another such firm and the Issuer shall have no such right of
objection. The firm selected by the Holder of this Warrant as provided in the
preceding sentence shall be instructed to deliver a written opinion as to such
matters to the Issuer and such Holder within thirty (30) days after submission
to it of such dispute. Such opinion shall be final and binding on the parties
hereto.

      6. Fractional Shares. No fractional shares of Warrant Stock will be issued
in connection with any exercise hereof, but in lieu of such fractional shares,
the Issuer shall make a cash payment therefor equal in amount to the product of
the applicable fraction multiplied by the Per Share Market Value then in effect.

      7. Ownership Cap and Certain Exercise Restrictions. (a) Notwithstanding
anything to the contrary set forth in this Warrant, at no time may a Holder of
this Warrant exercise this Warrant if the number of shares of Common Stock to be
issued pursuant to such exercise would exceed, when aggregated with all other
shares of Common Stock owned by such Holder at such time, the number of shares
of Common Stock which would result in such Holder owning more than 4.999% of all
of the Common Stock outstanding at such time; provided, however, that upon a
holder of this Warrant providing the Issuer with sixty-one (61) days notice
(pursuant to Section 13 hereof) (the "Waiver Notice") that such Holder would
like to waive this Section 7(a) with

<PAGE>

regard to any or all shares of Common Stock issuable upon exercise of this
Warrant, this Section 7(a) will be of no force or effect with regard to all or a
portion of the Warrant referenced in the Waiver Notice; provided, further, that
this provision shall be of no further force or effect (i) during the sixty-one
(61) days immediately preceding the expiration of the term of this Warrant or
(ii) upon the Holder's receipt of a Call Notice (as defined in Section 8
hereof).

            (b) The Holder may not exercise the Warrant hereunder to the extent
such exercise would result in the Holder beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act and the rules thereunder) in
excess of 9.999% of the then issued and outstanding shares of Common Stock,
including shares issuable upon exercise of the Warrant held by the Holder after
application of this Section; provided, however, that upon a holder of this
Warrant providing the Company with a Waiver Notice that such holder would like
to waive this Section 7(b) with regard to any or all shares of Common Stock
issuable upon exercise of this Warrant, this Section 7(b) shall be of no force
or effect with regard to those shares of Warrant Stock referenced in the Waiver
Notice; provided, further, that this provision shall be of no further force or
effect (i) during the sixty-one (61) days immediately preceding the expiration
of the term of this Warrant or (ii) upon the Holder's receipt of a Call Notice.

      8. Call. Notwithstanding anything herein to the contrary, the Issuer, at
its option, may call up to one hundred percent (100%) of this Warrant if the Per
Share Market Value of the Common Stock has been equal to or greater than $3.00
(as may be adjusted for any stock splits or combinations of the Common Stock)
for a period of five (5) consecutive Trading Days immediately prior to the date
of delivery of the Call Notice (a "Call Notice Period") by providing the Holder
of this Warrant written notice pursuant to Section 13 (the "Call Notice");
provided, that (a) a registration statement under the Securities Act providing
for the resale of the Warrant Stock and the shares of Common Stock issuable upon
conversion of the Issuer's Series B Preferred Stock issued pursuant to the
Purchase Agreement has been declared effective by the Securities and Exchange
Commission and has been effective, without lapse or suspension of any kind, for
a period of 30 consecutive calendar days, (b) trading in the Common Stock shall
not have been suspended by the Securities and Exchange Commission or the OTC
Bulletin Board and (c) the Issuer is in material compliance with the terms and
conditions of this Warrant and the other Transaction Documents (as defined in
the Purchase Agreement); provided, further, that the Registration Statement is
in effect from the date of delivery of the Call Notice until the date which is
the later of (i) the date the Holder exercises the Warrant pursuant to the Call
Notice and (ii) the 10th day after the Holder receives the Call Notice (the
"Early Termination Date"). The rights and privileges granted pursuant to this
Warrant with respect to the shares of Warrant Stock subject to the Call Notice
(the "Called Warrant Shares") shall expire on the Early Termination Date if this
Warrant is not exercised with respect to such Called Warrant Shares prior to
such Early Termination Date. In the event this Warrant is not exercised with
respect to the Called Warrant Shares, the Issuer shall remit to the Holder of
this Warrant (A) $.01 per Called Warrant Share and (B) a new Warrant
representing the number of shares of Warrant Stock, if any, which shall not have
been subject to the Call Notice upon the Holder tendering to the Issuer the
applicable Warrant certificate.

      9. Definitions. For the purposes of this Warrant, the following terms have
the following meanings:

            "Additional Shares of Common Stock" means all shares of Common Stock
      issued by the Issuer after the Original Issue Date, and all shares of
      Other Common, if any, issued by the Issuer after the Original Issue Date,
      except: (i) securities issued pursuant to a bona fide firm underwritten
      public offering of the Issuer's securities, (ii) securities

<PAGE>

      issued pursuant to the conversion or exercise of convertible or
      excercisable securities issued or outstanding on or prior to the date
      hereof or issued pursuant to the Purchase Agreement, (iii) the Warrant
      Stock, (iv) securities issued in connection with strategic license
      agreements so long as such issuances are not for the purpose of raising
      capital, (v) Common Stock issued or options to purchase Common Stock
      granted or issued pursuant to the Issuer's stock option plans and employee
      stock purchase plans as they now exist, and (vi) securities issued (other
      than for cash) in connection with a merger, acquisition or consolidation.

            "Articles of Incorporation" means the Articles of Incorporation of
      the Issuer as in effect on the Original Issue Date, and as hereafter from
      time to time amended, modified, supplemented or restated in accordance
      with the terms hereof and thereof and pursuant to applicable law.

            "Board" shall mean the Board of Directors of the Issuer.

            "Capital Stock" means and includes (i) any and all shares,
      interests, participations or other equivalents of or interests in (however
      designated) corporate stock, including, without limitation, shares of
      preferred or preference stock, (ii) all partnership interests (whether
      general or limited) in any Person which is a partnership, (iii) all
      membership interests or limited liability company interests in any limited
      liability company, and (iv) all equity or ownership interests in any
      Person of any other type.

            "Common Stock" means the Common Stock, no par value per share, of
      the Issuer and any other Capital Stock into which such stock may hereafter
      be changed.

            "Common Stock Equivalent" means any Convertible Security or warrant,
      option or other right to subscribe for or purchase any Additional Shares
      of Common Stock or any Convertible Security.

            "Convertible Securities" means evidences of Indebtedness, shares of
      Capital Stock or other Securities which are or may be at any time
      convertible into or exchangeable for Additional Shares of Common Stock.
      The term "Convertible Security" means one of the Convertible Securities.

            "Governmental Authority" means any governmental, regulatory or
      self-regulatory entity, department, body, official, authority, commission,
      board, agency or instrumentality, whether federal, state or local, and
      whether domestic or foreign.

            "Holder" means the Person who holds this Warrant. The term "Holders"
      means one of the Persons who shall from time to time hold this Warrant.

            "Independent Appraiser" means a nationally recognized or major
      regional investment banking firm or firm of independent certified public
      accountants of recognized standing (which may be the firm that regularly
      examines the financial statements of the Issuer) that is regularly engaged
      in the business of appraising the Capital Stock or assets of corporations
      or other entities as going concerns, and which is not affiliated with
      either the Issuer or the Holder of any Warrant.

            "Issuer" means Rent Shield Corp, Inc., a Florida corporation, and
      its successors and assigns.

<PAGE>

            "Majority Holders" means at any time the Holders of Warrants
      exercisable for a majority of the shares of Warrant Stock issuable under
      the Warrants at the time outstanding.

            "Original Issue Date" means April __, 2004.

            "OTC Bulletin Board" means the over-the-counter electronic bulletin
      board.

            "Other Common" means any other Capital Stock of the Issuer of any
      class which shall be authorized at any time after the date of this Warrant
      (other than Common Stock) and which shall have the right to participate in
      the distribution of earnings and assets of the Issuer without limitation
      as to amount.

            "Outstanding Common Stock" means, at any given time, the aggregate
      amount of outstanding shares of Common Stock, assuming full exercise,
      conversion or exchange (as applicable) of all options, warrants and other
      Securities which are convertible into or exercisable or exchangeable for,
      and any right to subscribe for, shares of Common Stock that are
      outstanding at such time.

            "Person" means an individual, corporation, limited liability
      company, partnership, joint stock company, trust, unincorporated
      organization, joint venture, Governmental Authority or other entity of
      whatever nature.

            "Per Share Market Value" means on any particular date (a) the
      closing bid price for a share of Common Stock in the over-the-counter
      market, as reported by the OTC Bulletin Board or in the National Quotation
      Bureau Incorporated or similar organization or agency succeeding to its
      functions of reporting prices) at the close of business on such date, or
      (b) if the Common Stock is not then reported by the OTC Bulletin Board or
      the National Quotation Bureau Incorporated (or similar organization or
      agency succeeding to its functions of reporting prices), then the average
      of the "Pink Sheet" quotes for the relevant conversion period, as
      determined in good faith by the holder, or (c) if the Common Stock is not
      then publicly traded the fair market value of a share of Common Stock as
      determined by the Board in good faith; provided, however, that the
      Majority Holders, after receipt of the determination by the Board, shall
      have the right to select, jointly with the Issuer, an Independent
      Appraiser, in which case, the fair market value shall be the determination
      by such Independent Appraiser; and provided, further that all
      determinations of the Per Share Market Value shall be appropriately
      adjusted for any stock dividends, stock splits or other similar
      transactions during such period. The determination of fair market value
      shall be based upon the fair market value of the Issuer determined on a
      going concern basis as between a willing buyer and a willing seller and
      taking into account all relevant factors determinative of value, and shall
      be final and binding on all parties. In determining the fair market value
      of any shares of Common Stock, no consideration shall be given to any
      restrictions on transfer of the Common Stock imposed by agreement or by
      federal or state securities laws, or to the existence or absence of, or
      any limitations on, voting rights.

            "Purchase Agreement" means the Series B Convertible Preferred Stock
      Purchase Agreement dated as of April __, 2004, among the Issuer and the
      investors a party thereto.

            "Securities" means any debt or equity securities of the Issuer,
      whether now or hereafter authorized, any instrument convertible into or
      exchangeable for Securities or a

<PAGE>

      Security, and any option, warrant or other right to purchase or acquire
      any Security. "Security" means one of the Securities.

            "Securities Act" means the Securities Act of 1933, as amended, or
      any similar federal statute then in effect.

            "Subsidiary" means any corporation at least 50% of whose outstanding
      Voting Stock shall at the time be owned directly or indirectly by the
      Issuer or by one or more of its Subsidiaries, or by the Issuer and one or
      more of its Subsidiaries.

            "Term" has the meaning specified in Section 1 hereof.

            "Trading Day" means (a) a day on which the Common Stock is traded on
      the OTC Bulletin Board, or (b) if the Common Stock is not traded on the
      OTC Bulletin Board, a day on which the Common Stock is quoted in the
      over-the-counter market as reported by the National Quotation Bureau
      Incorporated (or any similar organization or agency succeeding its
      functions of reporting prices); provided, however, that in the event that
      the Common Stock is not listed or quoted as set forth in (a) or (b)
      hereof, then Trading Day shall mean any day except Saturday, Sunday and
      any day which shall be a legal holiday or a day on which banking
      institutions in the State of New York are authorized or required by law or
      other government action to close.

            "Voting Stock" means, as applied to the Capital Stock of any
      corporation, Capital Stock of any class or classes (however designated)
      having ordinary voting power for the election of a majority of the members
      of the Board of Directors (or other governing body) of such corporation,
      other than Capital Stock having such power only by reason of the happening
      of a contingency.

            "Warrants" means the Warrants issued and sold pursuant to the
      Purchase Agreement, including, without limitation, this Warrant, and any
      other warrants of like tenor issued in substitution or exchange for any
      thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or
      of any of such other Warrants.

            "Warrant Price" initially means U.S. $1.50, as such Warrant Price
      may be adjusted from time to time as shall result from the adjustments
      specified in this Warrant, including Section 4 hereto.

            "Warrant Share Number" means at any time the aggregate number of
      shares of Warrant Stock which may at such time be purchased upon exercise
      of this Warrant, after giving effect to all prior adjustments and
      increases to such number made or required to be made under the terms
      hereof.

            "Warrant Stock" means Common Stock issuable upon exercise of any
      Warrant or Warrants or otherwise issuable pursuant to any Warrant or
      Warrants.

      10. Other Notices. In case at any time:

                        (A)   the Issuer shall make any distributions to the
                              holders of Common Stock; or

<PAGE>

                        (B)   the Issuer shall authorize the granting to all
                              holders of its Common Stock of rights to subscribe
                              for or purchase any shares of Capital Stock of any
                              class or other rights; or

                        (C)   there shall be any reclassification of the Capital
                              Stock of the Issuer; or

                        (D)   there shall be any capital reorganization by the
                              Issuer; or

                        (E)   there shall be any (i) consolidation or merger
                              involving the Issuer or (ii) sale, transfer or
                              other disposition of all or substantially all of
                              the Issuer's property, assets or business (except
                              a merger or other reorganization in which the
                              Issuer shall be the surviving corporation and its
                              shares of Capital Stock shall continue to be
                              outstanding and unchanged and except a
                              consolidation, merger, sale, transfer or other
                              disposition involving a wholly-owned Subsidiary);
                              or

                        (F)   there shall be a voluntary or involuntary
                              dissolution, liquidation or winding-up of the
                              Issuer or any partial liquidation of the Issuer or
                              distribution to holders of Common Stock;

then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
(20) days prior to the record date or effective date for the event specified in
such notice.

      11. Amendment and Waiver. Any term, covenant, agreement or condition in
this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; provided, however, that no such amendment or
waiver shall reduce the Warrant Share Number, increase the Warrant Price,
shorten the period during which this Warrant may be exercised or modify any
provision of this Section 11 without the consent of the Holder of this Warrant.

      12. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY
OF ITS PRINCIPLES OF CONFLICTS OF LAW WHICH WOULD RESULT IN THE APPLICATION OF
THE SUBSTANTIVE LAW OF ANOTHER JURISDICTION.

      13. 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 earlier of (i) the date of transmission, if
such notice or communication is delivered via

<PAGE>

facsimile at the facsimile telephone number specified for notice prior to 5:00
p.m., eastern time, on a Trading Day, (ii) the Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice later than 5:00 p.m., eastern
time, on any date and earlier than 11:59 p.m., eastern time, on such date, (iii)
the Trading Day following the date of mailing, if sent by nationally recognized
overnight courier service or (iv) actual receipt by the party to whom such
notice is required to be given. The addresses for such communications shall be
with respect to the Holder of this Warrant or of Warrant Stock issued pursuant
hereto, addressed to such Holder at its last known address or facsimile number
appearing on the books of the Issuer maintained for such purposes, or with
respect to the Issuer, addressed to:

                          RS Group of Companies, Inc.
                          200 Yorkland Blvd., Suite 200
                          Toronto, Ontario, Canada M2J 5C1
                          Attention: President
                          Tel. No.: (416) 391-4223
                          Fax No.:  (416) 391-4860

Copies of notices to the Issuer shall be sent to Stark & Stark, P.O. Box 5315,
Princeton, New Jersey 08543-5315, Attention: Lawrence Cohen, Esq., Tel. No.:
(609) 219-7421, Fax No.: (609) 895-7395. Copies of notices to the Holder shall
be sent to Jenkens & Gilchrist Parker Chapin LLP, 405 Lexington Avenue, New
York, New York 10174, Attention: Martin Eric Weisberg, Esq., Facsimile No.:
(212) 704-6288. Any party hereto may from time to time change its address for
notices by giving at least ten (10) days written notice of such changed address
to the other party hereto.

      14. Warrant Agent. The Issuer may, by written notice to each Holder of
this Warrant, appoint an agent for the purpose of issuing shares of Warrant
Stock on the exercise of this Warrant pursuant to subsection (b) of Section 2
hereof, exchanging this Warrant pursuant to subsection (d) of Section 2 hereof
or replacing this Warrant pursuant to subsection (d) of Section 3 hereof, or any
of the foregoing, and thereafter any such issuance, exchange or replacement, as
the case may be, shall be made at such office by such agent.

      15. Remedies. The Issuer stipulates that the remedies at law of the Holder
of this Warrant in the event of any breach or threatened breach by the Issuer in
the performance of or compliance with any of the terms or provisions of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms or provisions may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms or provisions hereof or
otherwise.

      16. Successors and Assigns. This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors and assigns of
the Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant Stock issued pursuant hereto, and shall be enforceable by any such
Holder or Holders of Warrant Stock.

      17. Severability. If, in any action before any court or agency legally
empowered to enforce any provision contained herein, any provision hereof is
found to be unenforceable, then such provision shall be deemed modified to the
extent necessary to make it enforceable by such court or agency. If any such
provision is not enforceable as set forth in the preceding sentence, the
unenforceability of such provision shall not affect the other provisions of this
Warrant, but

<PAGE>

this Warrant shall be construed as if such unenforceable provision had never
been contained herein.

      18. Headings. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant and shall not influence the construction or interpretation of
this Warrant.

<PAGE>

      IN WITNESS WHEREOF, the Issuer has executed this Series B-1 Warrant as of
the day and year first above written.

                                RS GROUP OF COMPANIES, INC.

                                By: /s/ Sandro Sordi
                                    --------------------------------------------
                                    Name: Sandro Sordi
                                    Title: General Counsel and Secretary

<PAGE>

                                  EXERCISE FORM
                               SERIES B-1 WARRANT
                           RS GROUP OF COMPANIES, INC.

The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of RS Group of
Companies, Inc. covered by the within Warrant.

Dated: _________________       Signature  _____________________________

                               Address    ___________________________
                                          ___________________________

Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the date of Exercise: _______________________

                                   ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

Dated: _________________       Signature  _____________________________

                               Address    ___________________________
                                          ___________________________

                               PARTIAL ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.

Dated: _________________       Signature  ___________________________

                               Address    ___________________________
                                          ___________________________

                           FOR USE BY THE ISSUER ONLY:

This Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of
___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.

__________________________

__________________________

(....continued)

                                                                  (continued...)

                                      -19-
<PAGE>

                                       1

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR RS GROUP OF COMPANIES, INC. SHALL HAVE
RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO RS GROUP OF COMPANIES,
INC. THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

                         SERIES B-2 WARRANT TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                           RS GROUP OF COMPANIES, INC.

                             Expires April __, 2007

No.: W-B-2-04-__                                   Number of Shares: ___________
Date of Issuance: April 28, 2004

      FOR VALUE RECEIVED, subject to the provisions hereinafter set forth, the
undersigned, RS Group of Companies, Inc., a Florida corporation (together with
its successors and assigns, the "Issuer"), hereby certifies that
_______________________________ or its registered assigns is entitled to
subscribe for and purchase, during the Term (as hereinafter defined), up to
____________________________________ (_____________) shares (subject to
adjustment as hereinafter provided) of the duly authorized, validly issued,
fully paid and non-assessable Common Stock of the Issuer, at an exercise price
per share equal to the Warrant Price

<PAGE>

                                      AGE 2

then in effect, subject, however, to the provisions and upon the terms and
conditions hereinafter set forth. Capitalized terms used in this Warrant and not
otherwise defined herein shall have the respective meanings specified in Section
9 hereof.

      1. Term. The term of this Warrant shall commence on April __, 2004 and
shall expire at 5:00 p.m., eastern time, on April __, 2007 (such period being
the "Term").

      2. Method of Exercise Payment; Issuance of New Warrant; Transfer and
Exchange.

      (a) Time of Exercise. The purchase rights represented by this Warrant may
be exercised in whole or in part commencing on the effective date of the
registration statement providing for the resale of the Warrant Stock and the
Common Stock issuable upon conversion of the Issuer's Series B Convertible
Preferred Stock issued pursuant to the Purchase Agreement and expiring on April
__, 2007.

      (b) Method of Exercise. The Holder hereof may exercise this Warrant, in
whole or in part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal office of the Issuer, and by the
payment to the Issuer of an amount of consideration therefor equal to the
Warrant Price in effect on the date of such exercise multiplied by the number of
shares of Warrant Stock with respect to which this Warrant is then being
exercised, payable by certified or official bank check or by wire transfer to an
account designated by the Issuer.

      (c) Issuance of Stock Certificates. In the event of any exercise of the
rights represented by this Warrant in accordance with and subject to the terms
and conditions hereof, (i) certificates for the shares of Warrant Stock so
purchased shall be dated the date of such exercise and delivered to the Holder
hereof within a reasonable time, not exceeding three (3) Trading Days after such
exercise or, at the request of the Holder (provided that a registration
statement under the Securities Act providing for the resale of the Warrant Stock
is then in effect), issued and delivered to the Depository Trust Company ("DTC")
account on the Holder's behalf via the Deposit Withdrawal Agent Commission
System ("DWAC") within a reasonable time, not exceeding three (3) Trading Days
after such exercise, and the Holder hereof shall be deemed for all purposes to
be the holder of the shares of Warrant Stock so purchased as of the date of such
exercise and (ii) unless this Warrant has expired, a new Warrant representing
the number of shares of Warrant Stock, if any, with respect to which this
Warrant shall not then have been exercised (less any amount thereof which shall
have been canceled in payment or partial payment of the Warrant Price as
hereinabove provided) shall also be issued to the Holder hereof at the Issuer's
expense within such time.

      (d) Transferability of Warrant. Subject to Section 2(e), this Warrant may
be transferred by a Holder without the consent of the Issuer. If transferred
pursuant to this paragraph and subject to the provisions of Section 2(e), this
Warrant may be transferred on the books of the Issuer by the Holder hereof in
person or by duly authorized attorney, upon surrender of this Warrant at the
principal office of the Issuer, properly endorsed (by the Holder executing an
assignment in the form attached hereto) and upon payment of any necessary
transfer tax or other governmental charge imposed upon such transfer. This
Warrant is exchangeable at the principal office of the Issuer for Warrants for
the purchase of the same aggregate number of shares of Warrant Stock, each new
Warrant to represent the right to purchase such number of shares of Warrant
Stock as the Holder hereof shall designate at the time of such exchange. All
Warrants issued upon a transfer or exchange shall be dated the Original Issue
Date and shall be
<PAGE>

                                     AGE 3

identical with this Warrant except as to the number of shares of Warrant Stock
issuable pursuant hereto.

      (e) Compliance with Securities Laws.

            (i) The Holder of this Warrant, by acceptance hereof, acknowledges
      that this Warrant or the shares of Warrant Stock to be issued upon
      exercise hereof, as applicable, are being acquired for the Holder's own
      account and not as a nominee for any other party, and for investment, and
      that the Holder will not offer, sell or otherwise dispose of this Warrant
      or any shares of Warrant Stock to be issued upon exercise hereof except
      pursuant to an effective registration statement, or an exemption from
      registration, under the Securities Act and any applicable state securities
      laws.

            (ii) Except as provided in Section 2(e)(iii), this Warrant and all
      certificates representing shares of Warrant Stock issued upon exercise
      hereof shall be stamped or imprinted with a legend in substantially the
      following form:

            THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
            HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
            AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY
            NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED
            UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS
            OR RS GROUP OF COMPANIES, INC. SHALL HAVE RECEIVED AN OPINION OF
            COUNSEL REASONABLY SATISFACTORY TO RS GROUP OF COMPANIES, INC. THAT
            REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER
            THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

            (iii) The Issuer agrees to reissue this Warrant or certificates
      representing any of the Warrant Stock, without the legend set forth above
      if at such time, prior to making any transfer of any such securities, the
      Holder shall give written notice to the Issuer describing the manner and
      terms of such transfer and removal as the Issuer may reasonably request.
      Such proposed transfer and removal will not be effected until: (a) either
      (1) the Issuer has received an opinion of counsel reasonably satisfactory
      to the Issuer, to the effect that the registration of such securities
      under the Securities Act is not required in connection with such proposed
      transfer, (2) a registration statement under the Securities Act covering
      such proposed disposition has been filed by the Issuer with the Securities
      and Exchange Commission and has become effective under the Securities Act,
      (3) the Issuer has received other evidence reasonably satisfactory to the
      Issuer that such registration and qualification under the Securities Act
      and state securities laws are not required, or (4) the Holder provides the
      Issuer with reasonable assurances that such security can be sold pursuant
      to Rule 144 under the Securities Act; and (b) either (x) the Issuer has
      received an opinion of counsel reasonably satisfactory to the Issuer, to
      the effect that registration or qualification under the securities or
      "blue sky" laws of any state is not required in connection with such
      proposed disposition, or (y) compliance with applicable state securities
      or "blue sky" laws has been effected or a valid exemption exists with
      respect thereto. The Issuer will respond to any such notice from the
      Holder

<PAGE>

                                     AGE 4

      within five (5) business days. In the case of any proposed transfer under
      this Section 2(e), the Issuer will use reasonable best efforts to comply
      with any such applicable state securities or "blue sky" laws, but shall in
      no event be required, (A) to qualify to do business in any state where it
      is not then qualified, or (B) to take any action that would subject it to
      tax or to the general service of process in any state where it is not then
      subject. The restrictions on transfer contained in this Section 2(e) shall
      be in addition to, and not by way of limitation of, any other restrictions
      on transfer contained in any other section of this Warrant. Whenever a
      certificate representing the Warrant Stock is required to be issued to a
      the Holder without a legend, in lieu of delivering physical certificates
      representing the Warrant Stock, provided the Issuer's transfer agent is
      participating in the DTC Fast Automated Securities Transfer program, the
      Issuer shall use its reasonable best efforts to cause its transfer agent
      to electronically transmit the Warrant Stock to the Holder by crediting
      the account of the Holder's Prime Broker with DTC through DWAC (to the
      extent not inconsistent with any provisions of this Warrant or the
      Purchase Agreement).

      3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.

      (a) Stock Fully Paid. The Issuer represents and warrants to the Holder,
and covenants and agrees for the benefit of the Holder that all shares of
Warrant Stock which may be issued upon the exercise of this Warrant or otherwise
hereunder will, upon issuance, be duly authorized, validly issued, fully paid
and non-assessable and free from all taxes, liens, charges or other encumbrances
of any nature whatsoever created by or through the Issuer. The Issuer further
covenants and agrees that during the period within which this Warrant may be
exercised, the Issuer will at all times have authorized and reserved for the
purpose of the issue upon exercise of this Warrant a sufficient number of shares
of Common Stock to provide for the exercise of this Warrant.

      (b) Reservation. If any shares of Common Stock required to be reserved for
issuance upon exercise of this Warrant or as otherwise provided hereunder
require registration or qualification with any governmental authority under any
federal or state law before such shares may be so issued, the Issuer will in
good faith use its best efforts at its expense to cause such shares to be duly
registered or qualified. If the Issuer shall list any shares of Common Stock on
any securities exchange or market it will, at its expense, list thereon,
maintain and increase when necessary such listing, of, all shares of Warrant
Stock from time to time issued upon exercise of this Warrant or as otherwise
provided hereunder (provided that such Warrant Stock has been registered
pursuant to a registration statement under the Securities Act then in effect),
and, to the extent permissible under the applicable securities exchange rules,
all unissued shares of Warrant Stock which are at any time issuable hereunder,
so long as any shares of Common Stock shall be so listed. The Issuer will also
so list on each securities exchange or market, and will maintain such listing
of, any other securities which the Holder of this Warrant shall be entitled to
receive upon the exercise of this Warrant if at the time any securities of the
same class shall be listed on such securities exchange or market by the Issuer.

      (c) Covenants. The Issuer shall not by any action including, without
limitation, amending the Articles of Incorporation or the by-laws of the Issuer,
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other action, avoid or seek to
avoid the observance or performance of any of the terms or provisions of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of the Holder hereof against dilution (to the
extent specifically provided herein) or impairment.

<PAGE>

                                      AGE 5

Without limiting the generality of the foregoing, the Issuer will (i) not permit
the par value, if any, of its Common Stock to exceed the then effective Warrant
Price, (ii) not amend or modify any provision of the Articles of Incorporation
or by-laws of the Issuer in any manner that would adversely affect the rights of
the Holder of this Warrant, (iii) take all such action as may be reasonably
necessary in order that the Issuer may validly and legally issue fully paid and
nonassessable shares of Common Stock, free and clear of any liens, claims,
encumbrances and restrictions (other than as provided herein) upon the exercise
of this Warrant, and (iv) use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be reasonably necessary to enable the Issuer to
perform its obligations under this Warrant.

      (d) Loss, Theft, Destruction of Warrants. Upon receipt of evidence
satisfactory to the Issuer of the ownership of and the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security reasonably satisfactory to
the Issuer or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Issuer will make and deliver, in lieu of such
lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same number of shares of Common Stock.

      4. Adjustment of Warrant Price and Warrant Share Number. The number of
shares of Common Stock for which this Warrant is exercisable, and the price at
which such shares may be purchased upon exercise of this Warrant, shall be
subject to adjustment from time to time as set forth in this Section 4. The
Issuer shall give the Holder notice of any event described below which requires
an adjustment pursuant to this Section 4 in accordance with Section 5.

      (a) Recapitalization, Reorganization, Reclassification, Consolidation,
Merger or Sale.

            (i) In case the Issuer after the Original Issue Date shall do any of
      the following (each, a "Triggering Event"): (a) consolidate with or merge
      into any other Person and the Issuer shall not be the continuing or
      surviving corporation of such consolidation or merger, or (b) permit any
      other Person to consolidate with or merge into the Issuer and the Issuer
      shall be the continuing or surviving Person but, in connection with such
      consolidation or merger, any Capital Stock of the Issuer shall be changed
      into or exchanged for Securities of any other Person or cash or any other
      property, or (c) transfer all or substantially all of its properties or
      assets to any other Person, or (d) effect a capital reorganization or
      reclassification of its Capital Stock, then, and in the case of each such
      Triggering Event, proper provision shall be made so that, upon the basis
      and the terms and in the manner provided in this Warrant, the Holder of
      this Warrant shall be entitled upon the exercise hereof at any time after
      the consummation of such Triggering Event, to the extent this Warrant is
      not exercised prior to such Triggering Event, to receive at the Warrant
      Price in effect at the time immediately prior to the consummation of such
      Triggering Event in lieu of the Common Stock issuable upon such exercise
      of this Warrant prior to such Triggering Event, the Securities, cash and
      property to which such Holder would have been entitled upon the
      consummation of such Triggering Event if such Holder had exercised the
      rights represented by this Warrant immediately prior thereto, subject to
      adjustments (subsequent to such corporate action) as nearly equivalent as
      possible to the adjustments provided for elsewhere in this Section 4.

            (ii) Notwithstanding anything contained in this Warrant to the
      contrary, a Triggering Event shall not be deemed to have occurred if,
      prior to the consummation thereof, each Person (other than the Issuer)
      which may be required to deliver any

<PAGE>

                                     AGE 6

      Securities, cash or property upon the exercise of this Warrant as provided
      herein shall assume, by written instrument delivered to, and reasonably
      satisfactory to, the Holder of this Warrant, (A) the obligations of the
      Issuer under this Warrant (and if the Issuer shall survive the
      consummation of such Triggering Event, such assumption shall be in
      addition to, and shall not release the Issuer from, any continuing
      obligations of the Issuer under this Warrant) and (B) the obligation to
      deliver to such Holder such Securities, cash or property as, in accordance
      with the foregoing provisions of this subsection (a), such Holder shall be
      entitled to receive, and such Person shall have similarly delivered to
      such Holder an opinion of counsel for such Person, which counsel shall be
      reasonably satisfactory to such Holder, or in the alternative, a written
      acknowledgement executed by the President or Chief Financial Officer of
      the Issuer, stating that this Warrant shall thereafter continue in full
      force and effect and the terms hereof (including, without limitation, all
      of the provisions of this subsection (a)) shall be applicable to the
      Securities, cash or property which such Person may be required to deliver
      upon any exercise of this Warrant or the exercise of any rights pursuant
      hereto.

            (b) Stock Dividends, Subdivisions and Combinations. If at any time
the Issuer shall:

                  (i) take a record of the holders of its Common Stock for the
      purpose of entitling them to receive a dividend payable in, or other
      distribution of, shares of Common Stock,

                  (ii) subdivide its outstanding shares of Common Stock into a
      larger number of shares of Common Stock, or

                  (iii) combine its outstanding shares of Common Stock into a
      smaller number of shares of Common Stock,

then (1) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (2) the Warrant Price then in
effect shall be adjusted to equal (A) the Warrant Price then in effect
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable immediately after
such adjustment.

      (c) Certain Other Distributions. If at any time the Issuer shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of:

                  (i) cash (other than a cash dividend payable out of earnings
      or earned surplus legally available for the payment of dividends under the
      laws of the jurisdiction of incorporation of the Issuer),

                  (ii) any evidences of its indebtedness, any shares of stock of
      any class or any other securities or property of any nature whatsoever
      (other than cash, Common Stock Equivalents or Additional Shares of Common
      Stock), or

<PAGE>

                                     AGE 7

                  (iii) any warrants or other rights to subscribe for or
      purchase any evidences of its indebtedness, any shares of stock of any
      class or any other securities or property of any nature whatsoever (other
      than cash, Common Stock Equivalents or Additional Shares of Common Stock),

then (1) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
adjustment multiplied by a fraction (A) the numerator of which shall be the Per
Share Market Value of Common Stock at the date of taking such record and (B) the
denominator of which shall be such Per Share Market Value minus the amount
allocable to one share of Common Stock of any such cash so distributable and of
the fair value (as determined in good faith by the Board of Directors of the
Issuer and supported by an opinion from an investment banking firm of recognized
national standing acceptable to (but not affiliated with) the Holder) of any and
all such evidences of indebtedness, shares of stock, other securities or
property or warrants or other subscription or purchase rights so distributable,
and (2) the Warrant Price then in effect shall be adjusted to equal (A) the
Warrant Price then in effect multiplied by the number of shares of Common Stock
for which this Warrant is exercisable immediately prior to the adjustment
divided by (B) the number of shares of Common Stock for which this Warrant is
exercisable immediately after such adjustment. A reclassification of the Common
Stock (other than a change in par value, or from par value to no par value or
from no par value to par value) into shares of Common Stock and shares of any
other class of stock shall be deemed a distribution by the Issuer to the holders
of its Common Stock of such shares of such other class of stock within the
meaning of this Section 4(c) and, if the outstanding shares of Common Stock
shall be changed into a larger or smaller number of shares of Common Stock as a
part of such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of Common Stock
within the meaning of Section 4(b).

      (d) Issuance of Additional Shares of Common Stock.

            (i) In the event the Issuer shall at any time following the Original
Issue Date issue any Additional Shares of Common Stock (otherwise than as
provided in the foregoing subsections (a) through (c) of this Section 4), at a
price per share less than the Warrant Price then in effect or without
consideration, then the Warrant Price upon each such issuance shall be adjusted
to that price determined by multiplying the Warrant Price then in effect by a
fraction:

                  (A) the numerator of which shall be equal to the sum of (x)
            the number of shares of Outstanding Common Stock immediately prior
            to the issuance of such Additional Shares of Common Stock plus (y)
            the number of shares of Common Stock (rounded to the nearest whole
            share) which the aggregate consideration for the total number of
            such Additional Shares of Common Stock so issued would purchase at a
            price per share equal to the Warrant Price then in effect, and

                  (B) the denominator of which shall be equal to the number of
            shares of Outstanding Common Stock immediately after the issuance of
            such Additional Shares of Common Stock.

            (ii) No adjustment of the number of shares of Common Stock for which
this Warrant shall be exercisable shall be made under paragraph (i) of Section
4(d) upon the issuance of any Additional Shares of Common Stock which are issued
pursuant to the exercise of any Common Stock Equivalents, if any such adjustment
shall previously have been made upon the issuance of such Common Stock
Equivalents (or upon the issuance of any warrant or other rights

<PAGE>

                                      AGE 8

therefor) pursuant to Section 4(e).

      (e) Issuance of Common Stock Equivalents. If at any time the Issuer shall
issue or sell any Common Stock Equivalents, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the aggregate
price per share for which Common Stock is issuable upon such conversion or
exchange plus the consideration received by the Issuer for issuance of such
Common Stock Equivalent divided by the number of shares of Common Stock issuable
pursuant to such Common Stock Equivalent shall be less than the Warrant Price in
effect immediately prior to the time of such issue or sale, then the number of
shares of Common Stock for which this Warrant is exercisable and the Warrant
Price then in effect shall be adjusted as provided in Section 4(d) on the basis
that the maximum number of Additional Shares of Common Stock necessary to effect
the conversion or exchange of all such Common Stock Equivalents shall be deemed
to have been issued and outstanding and the Issuer shall have received all of
the consideration payable therefor, if any, as of the date of actual issuance of
such Common Stock Equivalents. No further adjustment of the number of shares of
Common Stock for which this Warrant is exercisable and the Warrant Price then in
effect shall be made under this Section 4(e) upon the issuance of any Common
Stock Equivalents which are issued pursuant to the exercise of any warrants or
other subscription or purchase rights therefor, if any such adjustment shall
previously have been made upon the issuance of such warrants or other rights
pursuant to this Section 4(e). No further adjustments of the number of shares of
Common Stock for which this Warrant is exercisable and the Warrant Price then in
effect shall be made upon the actual issue of such Common Stock upon conversion
or exchange of such Common Stock Equivalents.

      (f) Superseding Adjustment. If, at any time after any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable and the
Warrant Price then in effect shall have been made pursuant to Section 4(e) as
the result of any issuance of Common Stock Equivalents, and (i) such Common
Stock Equivalents, or the right of conversion or exchange in such Common Stock
Equivalents, shall expire, and all or a portion of such or the right of
conversion or exchange with respect to all or a portion of such Common Stock
Equivalents, as the case may be, shall not have been exercised, or (ii) the
consideration per share for which shares of Common Stock are issuable pursuant
to such Common Stock Equivalents shall be increased, then such previous
adjustment shall be rescinded and annulled and the Additional Shares of Common
Stock which were deemed to have been issued by virtue of the computation made in
connection with the adjustment so rescinded and annulled shall no longer be
deemed to have been issued by virtue of such computation. Upon the occurrence of
an event set forth above, there shall be a recomputation made of the effect of
such Common Stock Equivalents on the basis of: (i) treating the number of
Additional Shares of Common Stock theretofore actually issued or issuable
pursuant to the previous exercise of Common Stock Equivalents or any such right
of conversion or exchange, as having been issued on the date or dates of any
such exercise and for the consideration actually received and receivable
therefor, and (ii) treating any such Common Stock Equivalents which then remain
outstanding as having been granted or issued immediately after the time of such
increase of the consideration per share for which Additional Shares of Common
Stock are issuable under such Common Stock Equivalents; whereupon a new
adjustment of the number of shares of Common Stock for which this Warrant is
exercisable and the Warrant Price then in effect shall be made, which new
adjustment shall supersede the previous adjustment so rescinded and annulled.

      (g) Other Provisions applicable to Adjustments under this Section. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common

<PAGE>

                                      AGE 9

Stock for which this Warrant is exercisable and the Warrant Price then in effect
provided for in this Section 4:

            (i) Computation of Consideration. To the extent that any Additional
Shares of Common Stock or any Common Stock Equivalents (or any warrants or other
rights therefor) shall be issued for cash consideration, the consideration
received by the Issuer therefor shall be the amount of the cash received by the
Issuer therefor, or, if such Additional Shares of Common Stock or Common Stock
Equivalents are offered by the Issuer for subscription, the subscription price,
or, if such Additional Shares of Common Stock or Common Stock Equivalents are
sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price (in any such case subtracting any
amounts paid or receivable for accrued interest or accrued dividends and without
taking into account any compensation, discounts or expenses paid or incurred by
the Issuer for and in the underwriting of, or otherwise in connection with, the
issuance thereof). In connection with any merger or consolidation in which the
Issuer is the surviving corporation (other than any consolidation or merger in
which the previously outstanding shares of Common Stock of the Issuer shall be
changed to or exchanged for the stock or other securities of another
corporation), the amount of consideration therefore shall be, deemed to be the
fair value, as determined reasonably and in good faith by the Board, of such
portion of the assets and business of the nonsurviving corporation as the Board
may determine to be attributable to such shares of Common Stock or Common Stock
Equivalents, as the case may be. The consideration for any Additional Shares of
Common Stock issuable pursuant to any warrants or other rights to subscribe for
or purchase the same shall be the consideration received by the Issuer for
issuing such warrants or other rights plus the additional consideration payable
to the Issuer upon exercise of such warrants or other rights. The consideration
for any Additional Shares of Common Stock issuable pursuant to the terms of any
Common Stock Equivalents shall be the consideration received by the Issuer for
issuing warrants or other rights to subscribe for or purchase such Common Stock
Equivalents, plus the consideration paid or payable to the Issuer in respect of
the subscription for or purchase of such Common Stock Equivalents, plus the
additional consideration, if any, payable to the Issuer upon the exercise of the
right of conversion or exchange in such Common Stock Equivalents. In the event
of any consolidation or merger of the Issuer in which the Issuer is not the
surviving corporation or in which the previously outstanding shares of Common
Stock of the Issuer shall be changed into or exchanged for the stock or other
securities of another corporation, or in the event of any sale of all or
substantially all of the assets of the Issuer for stock or other securities of
any corporation, the Issuer shall be deemed to have issued a number of shares of
its Common Stock for stock or securities or other property of the other
corporation computed on the basis of the actual exchange ratio on which the
transaction was predicated, and for a consideration equal to the fair market
value on the date of such transaction of all such stock or securities or other
property of the other corporation. In the event any consideration received by
the Issuer for any securities consists of property other than cash, the fair
market value thereof at the time of issuance or as otherwise applicable shall be
as determined in good faith by the Board. In the event Common Stock is issued
with other shares or securities or other assets of the Issuer for consideration
which covers both, the consideration computed as provided in this Section
4(g)(i) shall be allocated among such securities and assets as determined in
good faith by the Board.

            (ii) When Adjustments to Be Made. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event requiring
an adjustment shall occur, except that any adjustment of the number of shares of
Common Stock for which this Warrant is exercisable that would otherwise be
required may be postponed (except in the case of a subdivision or combination of
shares of the Common Stock, as provided for in Section 4(b)) up to, but not
beyond the date of exercise if such adjustment either by itself or with other

<PAGE>

                                     AGE 10

adjustments not previously made adds or subtracts less than one percent (1%) of
the shares of Common Stock for which this Warrant is exercisable immediately
prior to the making of such adjustment. Any adjustment representing a change of
less than such minimum amount (except as aforesaid) which is postponed shall be
carried forward and made as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would result in
a minimum adjustment or on the date of exercise. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.

            (iii) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account to
the nearest one one-hundredth (1/100th) of a share.

            (iv) When Adjustment Not Required. If the Issuer shall take a record
of the holders of its Common Stock for the purpose of entitling them to receive
a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled.

      (h) Form of Warrant after Adjustments. The form of this Warrant need not
be changed because of any adjustments in the Warrant Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.

      (i) Escrow of Warrant Stock. If after any property becomes distributable
pursuant to this Section 4 by reason of the taking of any record of the holders
of Common Stock, but prior to the occurrence of the event for which such record
is taken, and the Holder exercises this Warrant, any shares of Common Stock
issuable upon exercise by reason of such adjustment shall be deemed the last
shares of Common Stock for which this Warrant is exercised (notwithstanding any
other provision to the contrary herein) and such shares or other property shall
be held in escrow for the Holder by the Issuer to be issued to the Holder upon
and to the extent that the event actually takes place, upon payment of the
current Warrant Price. Notwithstanding any other provision to the contrary
herein, if the event for which such record was taken fails to occur or is
rescinded, then such escrowed shares shall be cancelled by the Issuer and
escrowed property returned.

      5. Notice of Adjustments. Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an "adjustment"), the Issuer shall cause its Chief Financial
Officer to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), and the Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
promptly after each adjustment. Any dispute between the Issuer and the Holder of
this Warrant with respect to the matters set forth in such certificate may at
the option of the Holder of this Warrant be submitted to one of the national
accounting firms currently known as the "big four" selected by the Holder,
provided that the Issuer shall have ten (10) days after receipt of notice from
such Holder of its selection of such firm to object thereto, in which case such
Holder shall select another such firm and the Issuer shall have no such right of
objection. The firm selected by the Holder of this Warrant as

<PAGE>

                                     AGE 11

provided in the preceding sentence shall be instructed to deliver a written
opinion as to such matters to the Issuer and such Holder within thirty (30) days
after submission to it of such dispute. Such opinion shall be final and binding
on the parties hereto.

      6. Fractional Shares. No fractional shares of Warrant Stock will be issued
in connection with any exercise hereof, but in lieu of such fractional shares,
the Issuer shall make a cash payment therefor equal in amount to the product of
the applicable fraction multiplied by the Per Share Market Value then in effect.

      7. Ownership Cap and Certain Exercise Restrictions. (a) Notwithstanding
anything to the contrary set forth in this Warrant, at no time may a Holder of
this Warrant exercise this Warrant if the number of shares of Common Stock to be
issued pursuant to such exercise would exceed, when aggregated with all other
shares of Common Stock owned by such Holder at such time, the number of shares
of Common Stock which would result in such Holder owning more than 4.999% of all
of the Common Stock outstanding at such time; provided, however, that upon a
holder of this Warrant providing the Issuer with sixty-one (61) days notice
(pursuant to Section 13 hereof) (the "Waiver Notice") that such Holder would
like to waive this Section 7(a) with regard to any or all shares of Common Stock
issuable upon exercise of this Warrant, this Section 7(a) will be of no force or
effect with regard to all or a portion of the Warrant referenced in the Waiver
Notice; provided, further, that this provision shall be of no further force or
effect (i) during the sixty-one (61) days immediately preceding the expiration
of the term of this Warrant or (ii) upon the Holder's receipt of a Call Notice
(as defined in Section 8 hereof).

            (b) The Holder may not exercise the Warrant hereunder to the extent
such exercise would result in the Holder beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act and the rules thereunder) in
excess of 9.999% of the then issued and outstanding shares of Common Stock,
including shares issuable upon exercise of the Warrant held by the Holder after
application of this Section; provided, however, that upon a holder of this
Warrant providing the Company with a Waiver Notice that such holder would like
to waive this Section 7(b) with regard to any or all shares of Common Stock
issuable upon exercise of this Warrant, this Section 7(b) shall be of no force
or effect with regard to those shares of Warrant Stock referenced in the Waiver
Notice; provided, further, that this provision shall be of no further force or
effect (i) during the sixty-one (61) days immediately preceding the expiration
of the term of this Warrant or (ii) upon the Holder's receipt of a Call Notice.

      8. Call. Notwithstanding anything herein to the contrary, the Issuer, at
its option, may call up to one hundred percent (100%) of this Warrant if the Per
Share Market Value of the Common Stock has been equal to or greater than $4.50
(as may be adjusted for any stock splits or combinations of the Common Stock)
for a period of five (5) consecutive Trading Days immediately prior to the date
of delivery of the Call Notice (a "Call Notice Period") by providing the Holder
of this Warrant written notice pursuant to Section 13 (the "Call Notice");
provided, that (a) a registration statement under the Securities Act providing
for the resale of the Warrant Stock and the shares of Common Stock issuable upon
conversion of the Issuer's Series B Preferred Stock issued pursuant to the
Purchase Agreement has been declared effective by the Securities and Exchange
Commission and has been effective, without lapse or suspension of any kind, for
a period of 30 consecutive calendar days, (b) trading in the Common Stock shall
not have been suspended by the Securities and Exchange Commission or the OTC
Bulletin Board and (c) the Issuer is in material compliance with the terms and
conditions of this Warrant and the other Transaction Documents (as defined in
the Purchase Agreement); provided, further, that the Registration Statement is
in effect from the date of delivery of the Call Notice until the date which is
the later of (i) the date the Holder exercises the Warrant pursuant to the Call
Notice and

<PAGE>

                                     AGE 12

(ii) the 10th day after the Holder receives the Call Notice (the "Early
Termination Date"). The rights and privileges granted pursuant to this Warrant
with respect to the shares of Warrant Stock subject to the Call Notice (the
"Called Warrant Shares") shall expire on the Early Termination Date if this
Warrant is not exercised with respect to such Called Warrant Shares prior to
such Early Termination Date. In the event this Warrant is not exercised with
respect to the Called Warrant Shares, the Issuer shall remit to the Holder of
this Warrant (A) $.01 per Called Warrant Share and (B) a new Warrant
representing the number of shares of Warrant Stock, if any, which shall not have
been subject to the Call Notice upon the Holder tendering to the Issuer the
applicable Warrant certificate.

      9. Definitions. For the purposes of this Warrant, the following terms have
the following meanings:

            "Additional Shares of Common Stock" means all shares of Common Stock
      issued by the Issuer after the Original Issue Date, and all shares of
      Other Common, if any, issued by the Issuer after the Original Issue Date,
      except: (i) securities issued pursuant to a bona fide firm underwritten
      public offering of the Issuer's securities, (ii) securities issued
      pursuant to the conversion or exercise of convertible or excercisable
      securities issued or outstanding on or prior to the date hereof or issued
      pursuant to the Purchase Agreement, (iii) the Warrant Stock, (iv)
      securities issued in connection with strategic license agreements so long
      as such issuances are not for the purpose of raising capital, (v) Common
      Stock issued or options to purchase Common Stock granted or issued
      pursuant to the Issuer's stock option plans and employee stock purchase
      plans as they now exist, and (vi) securities issued (other than for cash)
      in connection with a merger, acquisition or consolidation.

            "Articles of Incorporation" means the Articles of Incorporation of
      the Issuer as in effect on the Original Issue Date, and as hereafter from
      time to time amended, modified, supplemented or restated in accordance
      with the terms hereof and thereof and pursuant to applicable law.

            "Board" shall mean the Board of Directors of the Issuer.

            "Capital Stock" means and includes (i) any and all shares,
      interests, participations or other equivalents of or interests in (however
      designated) corporate stock, including, without limitation, shares of
      preferred or preference stock, (ii) all partnership interests (whether
      general or limited) in any Person which is a partnership, (iii) all
      membership interests or limited liability company interests in any limited
      liability company, and (iv) all equity or ownership interests in any
      Person of any other type.

            "Common Stock" means the Common Stock, no par value per share, of
      the Issuer and any other Capital Stock into which such stock may hereafter
      be changed.

            "Common Stock Equivalent" means any Convertible Security or warrant,
      option or other right to subscribe for or purchase any Additional Shares
      of Common Stock or any Convertible Security.

            "Convertible Securities" means evidences of Indebtedness, shares of
      Capital Stock or other Securities which are or may be at any time
      convertible into or exchangeable for Additional Shares of Common Stock.
      The term "Convertible Security" means one of the Convertible Securities.

<PAGE>

                                     AGE 13

            "Governmental Authority" means any governmental, regulatory or
      self-regulatory entity, department, body, official, authority, commission,
      board, agency or instrumentality, whether federal, state or local, and
      whether domestic or foreign.

            "Holder" means the Person who holds this Warrant. The term "Holders"
      means one of the Persons who shall from time to time hold this Warrant.

            "Independent Appraiser" means a nationally recognized or major
      regional investment banking firm or firm of independent certified public
      accountants of recognized standing (which may be the firm that regularly
      examines the financial statements of the Issuer) that is regularly engaged
      in the business of appraising the Capital Stock or assets of corporations
      or other entities as going concerns, and which is not affiliated with
      either the Issuer or the Holder of any Warrant.

            "Issuer" means Rent Shield Corp, Inc., a Florida corporation, and
      its successors and assigns.

            "Majority Holders" means at any time the Holders of Warrants
      exercisable for a majority of the shares of Warrant Stock issuable under
      the Warrants at the time outstanding.

            "Original Issue Date" means April __, 2004.

            "OTC Bulletin Board" means the over-the-counter electronic bulletin
      board.

            "Other Common" means any other Capital Stock of the Issuer of any
      class which shall be authorized at any time after the date of this Warrant
      (other than Common Stock) and which shall have the right to participate in
      the distribution of earnings and assets of the Issuer without limitation
      as to amount.

            "Outstanding Common Stock" means, at any given time, the aggregate
      amount of outstanding shares of Common Stock, assuming full exercise,
      conversion or exchange (as applicable) of all options, warrants and other
      Securities which are convertible into or exercisable or exchangeable for,
      and any right to subscribe for, shares of Common Stock that are
      outstanding at such time.

            "Person" means an individual, corporation, limited liability
      company, partnership, joint stock company, trust, unincorporated
      organization, joint venture, Governmental Authority or other entity of
      whatever nature.

            "Per Share Market Value" means on any particular date (a) the
      closing bid price for a share of Common Stock in the over-the-counter
      market, as reported by the OTC Bulletin Board or in the National Quotation
      Bureau Incorporated or similar organization or agency succeeding to its
      functions of reporting prices) at the close of business on such date, or
      (b) if the Common Stock is not then reported by the OTC Bulletin Board or
      the National Quotation Bureau Incorporated (or similar organization or
      agency succeeding to its functions of reporting prices), then the average
      of the "Pink Sheet" quotes for the relevant conversion period, as
      determined in good faith by the holder, or (c) if the Common Stock is not
      then publicly traded the fair market value of a share of Common Stock as
      determined by the Board in good faith; provided, however, that the
      Majority Holders, after receipt of the determination by the Board, shall
      have the right to select, jointly with the Issuer, an Independent
      Appraiser, in which case, the fair market value

<PAGE>

                                     AGE 14

      shall be the determination by such Independent Appraiser; and provided,
      further that all determinations of the Per Share Market Value shall be
      appropriately adjusted for any stock dividends, stock splits or other
      similar transactions during such period. The determination of fair market
      value shall be based upon the fair market value of the Issuer determined
      on a going concern basis as between a willing buyer and a willing seller
      and taking into account all relevant factors determinative of value, and
      shall be final and binding on all parties. In determining the fair market
      value of any shares of Common Stock, no consideration shall be given to
      any restrictions on transfer of the Common Stock imposed by agreement or
      by federal or state securities laws, or to the existence or absence of, or
      any limitations on, voting rights.

            "Purchase Agreement" means the Series B Convertible Preferred Stock
      Purchase Agreement dated as of April __, 2004, among the Issuer and the
      investors a party thereto.

            "Securities" means any debt or equity securities of the Issuer,
      whether now or hereafter authorized, any instrument convertible into or
      exchangeable for Securities or a Security, and any option, warrant or
      other right to purchase or acquire any Security. "Security" means one of
      the Securities.

            "Securities Act" means the Securities Act of 1933, as amended, or
      any similar federal statute then in effect.

            "Subsidiary" means any corporation at least 50% of whose outstanding
      Voting Stock shall at the time be owned directly or indirectly by the
      Issuer or by one or more of its Subsidiaries, or by the Issuer and one or
      more of its Subsidiaries.

            "Term" has the meaning specified in Section 1 hereof.

            "Trading Day" means (a) a day on which the Common Stock is traded on
      the OTC Bulletin Board, or (b) if the Common Stock is not traded on the
      OTC Bulletin Board, a day on which the Common Stock is quoted in the
      over-the-counter market as reported by the National Quotation Bureau
      Incorporated (or any similar organization or agency succeeding its
      functions of reporting prices); provided, however, that in the event that
      the Common Stock is not listed or quoted as set forth in (a) or (b)
      hereof, then Trading Day shall mean any day except Saturday, Sunday and
      any day which shall be a legal holiday or a day on which banking
      institutions in the State of New York are authorized or required by law or
      other government action to close.

            "Voting Stock" means, as applied to the Capital Stock of any
      corporation, Capital Stock of any class or classes (however designated)
      having ordinary voting power for the election of a majority of the members
      of the Board of Directors (or other governing body) of such corporation,
      other than Capital Stock having such power only by reason of the happening
      of a contingency.

            "Warrants" means the Warrants issued and sold pursuant to the
      Purchase Agreement, including, without limitation, this Warrant, and any
      other warrants of like tenor issued in substitution or exchange for any
      thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or
      of any of such other Warrants.

<PAGE>

                                     AGE 15

            "Warrant Price" initially means U.S. $2.25, as such Warrant Price
      may be adjusted from time to time as shall result from the adjustments
      specified in this Warrant, including Section 4 hereto.

            "Warrant Share Number" means at any time the aggregate number of
      shares of Warrant Stock which may at such time be purchased upon exercise
      of this Warrant, after giving effect to all prior adjustments and
      increases to such number made or required to be made under the terms
      hereof.

            "Warrant Stock" means Common Stock issuable upon exercise of any
      Warrant or Warrants or otherwise issuable pursuant to any Warrant or
      Warrants.

      10. Other Notices. In case at any time:

                        (A)   the Issuer shall make any distributions to the
                              holders of Common Stock; or

                        (B)   the Issuer shall authorize the granting to all
                              holders of its Common Stock of rights to subscribe
                              for or purchase any shares of Capital Stock of any
                              class or other rights; or

                        (C)   there shall be any reclassification of the Capital
                              Stock of the Issuer; or

                        (D)   there shall be any capital reorganization by the
                              Issuer; or

                        (E)   there shall be any (i) consolidation or merger
                              involving the Issuer or (ii) sale, transfer or
                              other disposition of all or substantially all of
                              the Issuer's property, assets or business (except
                              a merger or other reorganization in which the
                              Issuer shall be the surviving corporation and its
                              shares of Capital Stock shall continue to be
                              outstanding and unchanged and except a
                              consolidation, merger, sale, transfer or other
                              disposition involving a wholly-owned Subsidiary);
                              or

                        (F)   there shall be a voluntary or involuntary
                              dissolution, liquidation or winding-up of the
                              Issuer or any partial liquidation of the Issuer or
                              distribution to holders of Common Stock;

then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
(20) days prior to the record date or effective date for the event specified in
such notice.

<PAGE>

                                     AGE 16

      11. Amendment and Waiver. Any term, covenant, agreement or condition in
this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; provided, however, that no such amendment or
waiver shall reduce the Warrant Share Number, increase the Warrant Price,
shorten the period during which this Warrant may be exercised or modify any
provision of this Section 11 without the consent of the Holder of this Warrant.

      12. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY
OF ITS PRINCIPLES OF CONFLICTS OF LAW WHICH WOULD RESULT IN THE APPLICATION OF
THE SUBSTANTIVE LAW OF ANOTHER JURISDICTION.

      13. 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 earlier of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to 5:00 p.m., eastern time, on a
Trading Day, (ii) the Trading Day after the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile telephone number
specified for notice later than 5:00 p.m., eastern time, on any date and earlier
than 11:59 p.m., eastern time, on such date, (iii) the Trading Day following the
date of mailing, if sent by nationally recognized overnight courier service or
(iv) actual receipt by the party to whom such notice is required to be given.
The addresses for such communications shall be with respect to the Holder of
this Warrant or of Warrant Stock issued pursuant hereto, addressed to such
Holder at its last known address or facsimile number appearing on the books of
the Issuer maintained for such purposes, or with respect to the Issuer,
addressed to:

                        RS Group of Companies, Inc.
                        200 Yorkland Blvd., Suite 200
                        Toronto, Ontario, Canada M2J 5C1
                        Attention: President
                        Tel. No.: (416) 391-4223
                        Fax No.: (416) 391-4860

Copies of notices to the Issuer shall be sent to Stark & Stark, P.O. Box 5315,
Princeton, New Jersey 08543-5315, Attention: Lawrence Cohen, Esq., Tel. No.:
(609) 219-7421, Fax No.: (609) 895-7395. Copies of notices to the Holder shall
be sent to Jenkens & Gilchrist Parker Chapin LLP, 405 Lexington Avenue, New
York, New York 10174, Attention: Martin Eric Weisberg, Esq., Facsimile No.:
(212) 704-6288. Any party hereto may from time to time change its address for
notices by giving at least ten (10) days written notice of such changed address
to the other party hereto.

      14. Warrant Agent. The Issuer may, by written notice to each Holder of
this Warrant, appoint an agent for the purpose of issuing shares of Warrant
Stock on the exercise of this Warrant pursuant to subsection (b) of Section 2
hereof, exchanging this Warrant pursuant to subsection (d) of Section 2 hereof
or replacing this Warrant pursuant to subsection (d) of Section 3 hereof, or any
of the foregoing, and thereafter any such issuance, exchange or replacement, as
the case may be, shall be made at such office by such agent.

<PAGE>

                                     AGE 17

      15. Remedies. The Issuer stipulates that the remedies at law of the Holder
of this Warrant in the event of any breach or threatened breach by the Issuer in
the performance of or compliance with any of the terms or provisions of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms or provisions may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms or provisions hereof or
otherwise.

      16. Successors and Assigns. This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors and assigns of
the Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant Stock issued pursuant hereto, and shall be enforceable by any such
Holder or Holders of Warrant Stock.

      17. Severability. If, in any action before any court or agency legally
empowered to enforce any provision contained herein, any provision hereof is
found to be unenforceable, then such provision shall be deemed modified to the
extent necessary to make it enforceable by such court or agency. If any such
provision is not enforceable as set forth in the preceding sentence, the
unenforceability of such provision shall not affect the other provisions of this
Warrant, but this Warrant shall be construed as if such unenforceable provision
had never been contained herein.

      18. Headings. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant and shall not influence the construction or interpretation of
this Warrant.

<PAGE>

                                     AGE 18

      IN WITNESS WHEREOF, the Issuer has executed this Series B-2 Warrant as of
the day and year first above written.

                                       RS GROUP OF COMPANIES, INC.

                                       By: /s/ Sandro Sordi
                                           ------------------------------
                                           Name: Sandro Sordi
                                           Title: General Counsel and Secretary

<PAGE>

                                  EXERCISE FORM
                               SERIES B-2 WARRANT
                           RS GROUP OF COMPANIES, INC.

The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of RS Group of
Companies, Inc. covered by the within Warrant.

Dated: _________________            Signature  ___________________________

                                    Address    _____________________
                                               _____________________

Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the date of Exercise: ___________________

                                   ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

Dated: _________________            Signature  ___________________________

                                    Address    _____________________
                                               _____________________

                               PARTIAL ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.

Dated: _________________            Signature  ___________________________

                                   Address     _____________________
                                               _____________________

                           FOR USE BY THE ISSUER ONLY:

                                     - 19 -
<PAGE>

This Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of
___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.

                                     - 20 -

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