Document:

AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT

      This  Amended and  Restated  Securities  Purchase  Agreement,  dated as of
January 23, 2006 (this  "Agreement"),  among World Waste  Technologies,  Inc., a
California  corporation  (the "Company"),  and each purchaser  identified on the
signature pages hereto,  including  holders of Existing  Securities that execute
this  Agreement  after the date hereof in accordance  with Section 2.1(b) hereof
(each,  including its successors and assigns, a "Purchaser" and collectively the
"Purchasers"),  amends and  restates in its  entirety  the  Securities  Purchase
Agreement  dated as of  December  27,  2005,  by and among the  Company  and the
Purchasers.

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

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

                                   ARTICLE I.
                                   DEFINITIONS

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

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

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

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

      "Closing Date" means the second Trading Day following the Trading Day when
all  conditions  precedent  to (i)  the  Purchasers'  obligations  to pay  their
respective  Subscription  Amounts and (ii) the Company's  obligations to deliver
the Debentures and Warrants have been satisfied or waived.

      "Commission" means the Securities and Exchange Commission.

<PAGE>

      "Common Stock" means the common stock of the Company, par value $0.001 per
share,  and any  other  class of  securities  into  which  such  securities  may
hereafter have been reclassified or changed into.

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

      "Company  Counsel" means Troy & Gould, 1801 Century Park East, 16th Floor,
Los Angeles, California 90067.

      "Debentures"  means the 10% Senior Secured  Debentures to be issued by the
Company to the Purchasers at the Closing, in the form of Exhibit A.

      "Disclosure  Schedules"  shall have the  meaning  ascribed to such term in
Section 3.1.

      "Discussion  Time" shall have the meaning ascribed to such term in Section
3.2(f).

      "Effective  Date" means the date that the initial  registration  statement
filed by the Company registering the Warrant Shares for resale is first declared
effective by the Commission.

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

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

      "Exchange  Offer" shall have the meaning  ascribed to such term in Section
2.1(b).

      "Exempt  Issuance"  means the  issuance  of (a) shares of Common  Stock or
options to employees, officers, consultants or directors of the Company pursuant
to any stock or option  plan duly  adopted  by a  majority  of the  non-employee
members of the Board of Directors of the Company or a majority of the members of
a  committee  of  non-employee  directors  established  for  such  purpose,  (b)
securities  upon the  exercise or exchange of any  Securities  issued  hereunder
and/or securities  exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this Agreement, provided that
such  securities  have not been  amended  since  the date of this  Agreement  to
increase the number of such securities or to decrease the exercise,  exchange or
conversion price of any such securities, (c) the exchange of securities pursuant
to the  Exchange  Offer,  (d)  securities  issued  pursuant to  acquisitions  or
strategic  transactions,  provided any such  issuance  shall only be to a Person
which is, itself or through its subsidiaries, an operating company in a business
synergistic  with the business of the Company and in which the Company  receives
benefits in addition to the investment of funds in the good faith  determination
of the Board of Directors of the Company, but shall not include a transaction in
which the  Company is issuing  securities  primarily  for the purpose of raising
capital or to an entity whose primary  business is investing in securities,  (d)
shares of Common  Stock  issued upon  conversions,  redemptions  and  additional
shares  issued on account of  adjustments  of the  Company's  Series A Preferred
Stock or any accrued dividends thereon and securities issued as consideration to
the Series A Preferred Stock holders to obtain consent or waivers, (e) shares of
Common Stock issued in a public  offering,  (f)  securities  issued to financial
institutions,  equipment  leasing  companies or lessors in  connection  with any
commercial   credit   arrangements,   equipment   financings  or  other  similar
transactions,  or other vendors,  (g) securities  issued in connection  with the
acquisition of  intellectual  property or other  intangible  rights in licensing
transactions or otherwise to existing or potential  trade  partners;  securities
issued  in  connection  with  any  stock  split,   recapitalization  or  similar
transaction,  (h)  securities  issued as dividend or other  distribution  on the
Company's Series A Preferred Stock, or (i) usual and customary securities issued
to finders or brokers in fund raising transactions.

                                       2
<PAGE>

      "Existing  Notes" shall have the meaning  ascribed to such term in Section
2.1(b).

      "Existing  Securities"  shall have the  meaning  ascribed  to such term in
Section 2.1(b).

      "Existing  Securityholder" shall have the meaning ascribed to such term in
Section 2.1(b).

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

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

      "Indebtedness"  shall have the  meaning  ascribed  to such term in Section
3.1(aa).

      "Intellectual  Property  Rights"  shall have the meaning  ascribed to such
term in Section 3.1(o).

      "Knowledge  of the  Company"  shall mean actual  awareness  of a fact,  or
awareness  of a fact if a prudent  individual  could be  expected to discover or
otherwise  become aware of such fact or other matter in the course of conducting
a reasonably  comprehensive  investigation concerning the existence of such fact
or other matter, by the Company's management installed since August 25, 2004.

      "Legend  Removal  Date"  shall have the  meaning  ascribed to such term in
Section 4.1(c).

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

      "Material  Adverse Effect" shall have the meaning assigned to such term in
Section 3.1(b).

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

      "Maximum  Rate"  shall have the  meaning  ascribed to such term in Section
5.17.

      "Necessary  Existing  Securityholder  Approval"  shall  have  the  meaning
ascribed to such term in Section 2.1(b).

      "Participation  Maximum"  shall have the meaning  ascribed to such term in
Section 4.13.

                                       3
<PAGE>

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

      "Pre-Notice" shall have the meaning ascribed to such term in Section 4.13.

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

      "Purchaser  Party" shall have the meaning ascribed to such term in Section
4.11.

      "Qualified  Purchaser"  shall mean any  Purchaser  that  purchases  at the
Closing at least $1,000,000  principal amount of Debentures until such Purchaser
no longer holds any Debentures or Warrants.

      "Registration  Rights  Agreement"  means a registration  rights  agreement
among the Company, the Purchasers and the Existing Securityholders,  in the form
of Exhibit F attached hereto.

      "Restriction Date" shall have the meaning ascribed to such term in Section
4.15.

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

      "Required  Minimum" means, as of any date, the maximum aggregate number of
shares  of Common  Stock  then  issued or  potentially  issuable  in the  future
pursuant to the  Transaction  Documents,  including any Warrant Shares  issuable
upon  exercise in full of all Warrants,  ignoring any exercise  limits set forth
therein.

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

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

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

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

      "Security  Agreement"  means a Security  Agreement among the Company,  the
Purchasers and the Existing  Securityholders,  in the form of Exhibit D attached
hereto.

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

                                       4
<PAGE>

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

      "Subscription Amount" means, as to each Purchaser, the aggregate amount to
be paid for Debentures and Warrants purchased  hereunder as specified below such
Purchaser's name on the signature page of this Agreement and next to the heading
"Subscription Amount", (a) in United States Dollars and in immediately available
funds by wire  transfer to such  accounts as specified in writing by the Company
or (b) in exchange for Existing  Securities on a $1 for $1 basis with respect to
the Debentures (including accrued but unpaid interest thereon).

      "Subsequent  Financing"  shall have the  meaning  ascribed to such term in
Section 4.13.

      "Subsequent Financing Notice" shall have the meaning ascribed to such term
in Section 4.13.

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

      "Subsidiary  Guarantee"  means a Subsidiary  Guarantee,  among each of the
Subsidiaries  (other than  subsidiaries  that have no  material  assets) and the
Purchasers, in the form of Exhibit E attached hereto.

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

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

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

      "VWAP"  means,  for any  date,  the price  determined  by the first of the
following clauses that applies: (a) if the Common Stock is then listed or quoted
on a Trading Market, the daily volume weighted average price of the Common Stock
for such date (or the nearest preceding date) on the Trading Market on which the
Common  Stock is then listed or quoted as reported by Bloomberg  Financial  L.P.
(based on a Trading Day from 9:30 a.m.  Eastern Time to 4:02 p.m. Eastern Time);
(b) if the Common Stock is not then listed or quoted on a Trading  Market and if
prices for the Common Stock are then reported in the "Pink Sheets"  published by
the National Quotation Bureau Incorporated (or a similar  organization or agency
succeeding to its functions of reporting prices),  the most recent bid price per
share of the  Common  Stock so  reported;  or (c) in all other  cases,  the fair
market  value  of a share  of  Common  Stock  as  determined  by an  independent
appraiser  selected in good faith by the  Qualified  Purchasers  and  reasonably
acceptable to the Company.

                                       5
<PAGE>

      "Warrants" means collectively the Common Stock purchase  warrants,  in the
form  of  Exhibit  C,  to be  delivered  to the  Purchasers  at the  Closing  in
accordance  with  Section  2.2  hereof,  which  Warrants  shall  be  exercisable
immediately  as of the Closing Date and have a term of exercise equal to 4 years
from the Closing  Date.  The term  "Warrants"  also  includes  the Common  Stock
purchase warrants issued to Existing Securityholders.

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

                                  ARTICLE II.
                                PURCHASE AND SALE

      2.1 Closing.

            (a)  On  the  Closing  Date,  upon  the  terms  and  subject  to the
conditions  set forth herein,  the Company  agrees to sell,  and each  Purchaser
agrees to purchase in the aggregate, severally and not jointly, up to $6,265,000
principal  amount  of  Debentures  (plus  such  additional  principal  amount of
Debentures  to take into  account any accrued  but unpaid  interest  through the
Closing Date with respect to any Existing  Notes) and Warrants to purchase up to
a total of 297,000  shares of Common  Stock.  At the Closing,  and except as set
forth in Section  2.1(b),  each Purchaser  shall deliver to the Company via wire
transfer  or a  certified  check  immediately  available  funds  equal  to their
respective  Subscription Amount (or, with respect to Purchasers who are Existing
Securityholders,  the  Existing  Notes being  exchanged)  and the Company  shall
deliver to each  Purchaser  their  respective  Debenture  and  Warrants  and the
parties  shall  deliver to each other the other  items set forth in Section  2.2
issuable  at the  Closing.  Notwithstanding  anything  herein  to the  contrary,
because the Existing  Securityholders  received  Warrants in connection with the
issuance of the  Existing  Notes,  no Existing  Shareholders  shall  receive any
Warrants  hereunder.  Upon  satisfaction  of the conditions set forth in Section
2.2,  the Closing  shall occur on the Closing Date at the offices of FW, or such
other location as the parties shall mutually agree.

            (b) In  November  2005,  the  Company  issued  and  sold  $4,015,000
aggregate  principal amount of senior secured notes (the "Existing Notes" or the
"Existing  Securities")  together  with  Warrants  to  purchase up to a total of
529,980  shares  of  Common  Stock  to a number  of  accredited  investors  (the
"Existing  Securityholders").  The  approval  of the  holders  of at  least  75%
principal  amount of  Existing  Notes (the  "Necessary  Existing  Securityholder
Approval")  is  necessary  in order  for the  Company  to issue  the  Debentures
hereunder.  Following  the date  hereof,  the  Company  shall  use  commercially
reasonable  efforts to obtain the Necessary  Existing  Securityholder  Approval.
Additionally,  following the date hereof,  the Company shall offer each Existing
Securityholder  (the "Exchange Offer") the right to surrender its Existing Notes
(together with any accrued but unpaid interest thereon through the Closing Date)
to the Company for  cancellation  in exchange for the issuance to such  Existing
Securityholder  of  Debentures  in the same  aggregate  principal  amount of the
Existing  Notes  (together  with  accrued  but unpaid  interest  thereon)  being
exchanged. Each Existing Securityholder that accepts the Exchange Offer shall be
required to execute this Agreement, whereupon such Existing Securityholder shall
be deemed a "Purchaser" hereunder. The Company agrees to keep the Exchange Offer
open until  January 27,  2006.  Any  Existing  Securityholder  that  accepts the
Exchange  Offer  after the  Closing  Date  shall be  required  to  execute  this
Agreement and deliver to the Company the documents and  instruments set forth in
Section  2.2,  and the Company  shall be  required  to deliver to such  Existing
Securityholder  the documents set forth in Section 2.3,  whereupon such Existing
Securityholder shall also be deemed to be a "Purchaser" hereunder.  The Exchange
Offer  will not be  consummated  unless the  holders  of at least 75%  aggregate
principal  amount  of  outstanding   Existing  Notes  accept  the  offer.   Upon
consummation of the Exchange Offer,  the  registration  rights agreement and the
security agreement entered into by the Company and the Existing  Securityholders
shall  be  amended  and  restated  as set  forth  on  Exhibits  F and D  hereto,
respectively, and the Existing Notes of each Existing Securityholder (whether or
not such  Existing  Securityholder  has  accepted  the  Exchange  Offer) will be
exchanged for New Debentures.

                                       6
<PAGE>

      2.2 Deliveries.

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

                  (i) this Agreement duly executed by the Company;

                  (ii) a legal opinion of Company Counsel, reasonably acceptable
to the Qualified Purchasers;

                  (iii)  a  Debenture  in the  principal  amount  equal  to such
Purchaser's Subscription Amount, registered in the name of such Purchaser;

                  (iv) a Warrant  registered  in the name of such  Purchaser  to
purchase  up to a  number  of  shares  of  Common  Stock  equal  to 33% of  such
Purchaser's  Subscription  Amount divided by $2.50, with an exercise price equal
to $0.01  per  share,  subject  to  adjustment  therein  (except  that  Existing
Securityholders shall not receive any Warrants);

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

                  (vi) the  Security  Agreement,  duly  executed by the Company,
along with all the Security Documents, including the Subsidiary Guarantee.

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

                  (i) this Agreement duly executed by such Purchaser;

                  (ii) such Purchaser's Subscription Amount (other than Existing
Securityholders,  who  will in lieu of cash  deliver  their  Existing  Notes  as
described in (v) below);

                  (iii) the Registration Rights Agreement, duly executed by such
Purchaser;

                  (iv) the Security Agreement,  duly executed by such Purchaser;
and

                  (v)  with  respect  to  each  Purchaser  that  is an  Existing
Securityholder, such Purchaser's Existing Securities for cancellation.

                                       7
<PAGE>

      2.3 Closing Conditions.

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

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

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

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

            (b)  The  respective  obligations  of the  Purchasers  hereunder  in
connection with the Closing are subject to the following conditions being met or
waived by each Qualified Purchaser:

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

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

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

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

                  (v) the Exchange Offer has been consummated, and the accepting
holders shall have  executed this  Agreement and delivered to the Company (to be
held by the Company in escrow  pending the  Closing)  all of the  documents  and
instruments  required to be delivered by such  Purchaser  under Section 2.2 (b);
and

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

                                       8
<PAGE>

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

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

            (a) Subsidiaries. All of the direct and indirect subsidiaries of the
Company  are set  forth on  Schedule  3.1(a).  The  Company  owns,  directly  or
indirectly,  all  of the  capital  stock  or  other  equity  interests  of  each
Subsidiary  free and clear of any  Liens,  and all the  issued  and  outstanding
shares of capital  stock of each  Subsidiary  are  validly  issued and are fully
paid,  non-assessable and free of preemptive and similar rights to subscribe for
or purchase securities.

            (b)  Organization  and  Qualification.  The  Company and each of the
Subsidiaries  is an entity duly  incorporated  or otherwise  organized,  validly
existing  and in  good  standing  under  the  laws  of the  jurisdiction  of its
incorporation  or  organization  (as  applicable),  with the requisite power and
authority to own and use its  properties and assets and to carry on its business
as currently  conducted.  Neither the Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate or articles of
incorporation,  bylaws or other organizational or charter documents. Each of the
Company and the  Subsidiaries  is duly  qualified to conduct  business and is in
good standing as a foreign  corporation or other entity in each  jurisdiction in
which the nature of the business  conducted  or property  owned by it makes such
qualification necessary,  except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in (i) a material adverse effect on the legality,  validity or enforceability of
any  Transaction  Document,  (ii) a material  adverse  effect on the  results of
operations,  assets,  business or  condition  (financial  or  otherwise)  of the
Company  and the  Subsidiaries,  taken as a whole,  or (iii) a material  adverse
effect on the Company's  ability to perform in any material  respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a "Material  Adverse  Effect") and no Proceeding has been instituted in any such
jurisdiction  revoking,  limiting or curtailing  or seeking to revoke,  limit or
curtail such power and authority or qualification.

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

                                       9
<PAGE>

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

            (e) Filings,  Consents and Approvals. The Company is not required to
obtain any consent,  waiver,  authorization  or order of, give any notice to, or
make any filing or registration  with, any court or other federal,  state, local
or  other  governmental  authority  or  other  Person  in  connection  with  the
execution, delivery and performance by the Company of the Transaction Documents,
other than (i) filings  required  pursuant to Section 4.6 and (ii) the filing of
Form D with the  Commission  and such  filings as are  required to be made under
applicable state securities laws (collectively, the "Required Approvals").

            (f) Issuance of the Warrant Shares. The Warrant Shares,  when issued
and upon  payment  of the  exercise  price in  accordance  with the terms of the
Transaction  Documents,  will be validly issued,  fully paid and  nonassessable,
free and clear of all Liens  imposed by the  Company.  The Company has  reserved
from its duly  authorized  capital  stock a number of shares of Common Stock for
issuance of the Warrant  Shares at least  equal to the  Required  Minimum on the
date hereof.

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

                                       10
<PAGE>

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

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

                                       11
<PAGE>

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

            (k) Labor  Relations.  No material  labor dispute  exists or, to the
Knowledge of the Company,  is imminent  with respect to any of the  employees of
the Company which could  reasonably be expected to result in a Material  Adverse
Effect.

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

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

                                       12
<PAGE>

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

            (o) Patents and Trademarks.  The Company and the Subsidiaries  have,
or have rights to use, all patents, patent applications,  trademarks,  trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights  necessary  or  material  for use in  connection  with  their  respective
businesses  as  described  in the SEC  Reports  and which the failure to so have
would have a Material  Adverse  Effect,  except for such items as have yet to be
conceived or developed  or that are  expected to be available  for  licensing on
reasonable terms from third parties  (collectively,  the "Intellectual  Property
Rights").  Neither the Company nor any  Subsidiary has received a written notice
that the  Intellectual  Property  Rights used by the  Company or any  Subsidiary
violates or  infringes  upon the rights of any Person.  To the  Knowledge of the
Company,  all such Intellectual  Property Rights are enforceable and there is no
existing  infringement  by another  Person of any of the  Intellectual  Property
Rights of others.

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

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

                                       13
<PAGE>

            (r) Sarbanes-Oxley;  Internal Accounting Controls. The Company is in
material  compliance with all provisions of the Sarbanes-Oxley Act of 2002 which
are  applicable to it as of the Closing Date.  The Company and the  Subsidiaries
maintain  a  system  of  internal  accounting  controls  sufficient  to  provide
reasonable  assurance  that (i)  transactions  are executed in  accordance  with
management's general or specific authorizations,  (ii) transactions are recorded
as necessary to permit  preparation of financial  statements in conformity  with
GAAP and to maintain asset  accountability,  (iii) access to assets is permitted
only in accordance with management's general or specific authorization, and (iv)
the recorded  accountability  for assets is compared with the existing assets at
reasonable  intervals  and  appropriate  action  is taken  with  respect  to any
differences.  The Company has established disclosure controls and procedures (as
defined in  Exchange  Act Rules  13a-15(e)  and  15d-15(e))  for the Company and
designed  such  disclosure  controls  and  procedures  to ensure  that  material
information relating to the Company,  including its Subsidiaries,  is made known
to the certifying officers by others within those entities,  particularly during
the period in which the Company's most recently filed periodic  report under the
Exchange Act, as the case may be, is being  prepared.  The Company's  certifying
officers have evaluated the effectiveness of the Company's  disclosure  controls
and  procedures  as of the date  prior to the filing  date of the most  recently
filed periodic report under the Exchange Act (such date, the "Evaluation Date").
The Company  presented  in its most  recently  filed  periodic  report under the
Exchange Act the conclusions of the certifying  officers about the effectiveness
of the disclosure  controls and procedures based on their  evaluations as of the
Evaluation  Date.  Since the  Evaluation  Date,  there have been no  significant
changes  in the  Company's  internal  controls  (as such term is defined in Item
307(b) of  Regulation  S-K under the Exchange  Act) or, to the  Knowledge of the
Company, in other factors that could significantly affect the Company's internal
controls.

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

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

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

            (v)  Registration  Rights.  No  Person  has any  right to cause  the
Company to effect the registration under the Securities Act of any securities of
the Company.

                                       14
<PAGE>

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

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

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

            (z) No Integrated Offering. Assuming the accuracy of the Purchasers'
representations  and warranties  set forth in Section 3.2,  neither the Company,
nor any of its  Affiliates,  nor any Person  acting on its or their  behalf has,
directly or  indirectly,  made any offers or sales of any  security or solicited
any  offers to buy any  security,  under  circumstances  that  would  cause this
offering of the Securities to be integrated  with prior offerings by the Company
for  purposes  of the  Securities  Act or any  applicable  shareholder  approval
provisions,  including,  without limitation,  under the rules and regulations of
any Trading  Market on which any of the  securities of the Company are listed or
designated,  except to the  extent  that any such  integration  would not have a
Material Adverse Effect.

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

                                       15
<PAGE>

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

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

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

            (ee)  Accountants.  The  Company's  accountants  are  set  forth  on
Schedule  3.1(ee) of the Disclosure  Schedule.  To the Knowledge of the Company,
such  accountants,  who  expressed  their  opinion with respect to the financial
statements  included in the Company's  Annual Report on Form 10-KSB for the year
ended December 31, 2004, are a registered  public accounting firm as required by
the Securities Act.

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

            (gg) No  Disagreements  with  Accountants and Lawyers.  There are no
material disagreements of any kind presently existing, or reasonably anticipated
by the  Company to arise,  between  the  accountants  and  lawyers  formerly  or
presently employed by the Company and the Company is current with respect to any
fees owed to its accountants and lawyers.

                                       16
<PAGE>

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

            (ii)   Acknowledgement   Regarding   Purchasers'  Trading  Activity.
Anything in this Agreement or elsewhere  herein to the contrary  notwithstanding
(except for Section 4.15 hereof), it is understood and agreed by the Company (i)
that none of the  Purchasers  have been  asked to agree,  nor has any  Purchaser
agreed, to desist from purchasing or selling,  long and/or short,  securities of
the  Company,  or  "derivative"  securities  based on  securities  issued by the
Company or to hold the  Securities  for any  specified  term;  (ii) that past or
future open  market or other  transactions  by any  Purchaser,  including  Short
Sales,  and  specifically   including,   without  limitation,   Short  Sales  or
"derivative" transactions, before or after the closing of this or future private
placement transactions,  may negatively impact the market price of the Company's
publicly-traded  securities;  (iii) that each Purchaser,  and counter parties in
"derivative"  transactions  to which any such Purchaser is a party,  directly or
indirectly,  presently may have a "short" position in the Common Stock, and (iv)
that each Purchaser shall not be deemed to have any affiliation  with or control
over any arm's length counter-party in any "derivative" transaction. The Company
further  understands and acknowledges that (a) one or more of the Purchasers may
engage in hedging  activities  at  various  times  during  the  period  that the
Securities are outstanding,  including,  without limitation,  during the periods
that the value of the Warrant  Shares  deliverable  with respect to Warrants are
being determined and (b) such hedging activities (if any) could reduce the value
of the existing  stockholders'  equity interests in the Company at and after the
time that the hedging activities are being conducted.  The Company  acknowledges
that such aforementioned hedging activities do not constitute a breach of any of
the Transaction Documents.

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

                                       17
<PAGE>

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

            (a)  Organization;  Authority.  Such  Purchaser  is an  entity  duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction of its organization with full right, corporate or partnership power
and authority to enter into and to consummate the  transactions  contemplated by
the Transaction  Documents and otherwise to carry out its obligations  hereunder
and thereunder. The execution, delivery and performance by such Purchaser of the
transactions  contemplated  by this Agreement  have been duly  authorized by all
necessary  corporate  or  similar  action  on the part of such  Purchaser.  Each
Transaction Document to which it is a party has been duly executed by Purchaser,
and when delivered by such Purchaser in accordance  with the terms hereof,  will
constitute  the  valid  and  legally  binding   obligation  of  such  Purchaser,
enforceable  against it in accordance  with its terms,  except (i) as limited by
general   equitable   principles   and   applicable   bankruptcy,    insolvency,
reorganization,  moratorium  and other  laws of  general  application  affecting
enforcement of creditors' rights generally,  (ii) as limited by laws relating to
the availability of specific  performance,  injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

            (b) Own Account.  Such Purchaser understands that the Securities are
"restricted securities" and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling such
Securities  or any  part  thereof  in  violation  of the  Securities  Act or any
applicable state securities law, has no present intention of distributing any of
such  Securities  in violation of the  Securities  Act or any  applicable  state
securities law and has no arrangement  or  understanding  with any other persons
regarding the distribution of such Securities (this  representation and warranty
not  limiting  such  Purchaser's  right to sell  the  Securities  pursuant  to a
registration  statement or otherwise in compliance with  applicable  federal and
state  securities  laws) in violation of the  Securities  Act or any  applicable
state  securities  law. Such Purchaser is acquiring the Securities  hereunder in
the ordinary course of its business.  Such Purchaser does not have any agreement
or understanding,  directly or indirectly,  with any Person to distribute any of
the Securities.

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

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

                                       18
<PAGE>

            (e) General  Solicitation.  Such  Purchaser  is not  purchasing  the
Securities  as  a  result  of  any  advertisement,   article,  notice  or  other
communication  regarding the Securities published in any newspaper,  magazine or
similar media or broadcast over  television or radio or presented at any seminar
or any other general solicitation or general advertisement or as a result of any
registration  statement of the Company on Form SB-2 that may be on file with the
Commission.

            (f) Short Sales and Confidentiality  Prior To The Date Hereof. Other
than the transaction contemplated hereunder,  such Purchaser has not directly or
indirectly,  nor  has  any  Person  acting  on  behalf  of or  pursuant  to  any
understanding  with such Purchaser,  executed any  disposition,  including Short
Sales (but not including the location and/or reservation of borrowable shares of
Common Stock),  in the  securities of the Company  during the period  commencing
from the time that such  Purchaser  first received a term sheet from the Company
or any  other  Person  setting  forth  the  material  terms of the  transactions
contemplated  hereunder until the date hereof ("Discussion Time"). Other than to
other  Persons  party to this  Agreement,  such  Purchaser  has  maintained  the
confidentiality   of  all  disclosures  made  to  it  in  connection  with  this
transaction (including the existence and terms of this transaction).

            (g)  Existing  Securities.   Each  Purchaser  that  is  an  Existing
Securityholder  further represents and warrants that such Purchaser (i) has good
and marketable title to its Existing Securities,  (ii) has the right to exchange
such  securities  without the consent of any other Person  whatsoever  and (iii)
upon  surrender  of its  Existing  Securities  to the Company  for  cancellation
pursuant to the  Exchange  Offer such  securities  shall be owned by the Company
free and clear of any liens, charges,  encumbrances,  rights of first refusal or
other adverse claims whatsoever.

      The Company  acknowledges  and agrees that each Purchaser does not make or
has not made any  representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.

                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

      4.1 Transfer Restrictions.

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

                                       19
<PAGE>

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

     THESE  SECURITIES  HAVE NOT BEEN  REGISTERED WITH THE SECURITIES AND
     EXCHANGE  COMMISSION  OR THE  SECURITIES  COMMISSION OF ANY STATE IN
     RELIANCE UPON AN EXEMPTION  FROM  REGISTRATION  UNDER THE SECURITIES
     ACT OF 1933, AS AMENDED (THE "SECURITIES  ACT"),  AND,  ACCORDINGLY,
     MAY  NOT  BE  OFFERED  OR  SOLD  EXCEPT  PURSUANT  TO  AN  EFFECTIVE
     REGISTRATION  STATEMENT  UNDER THE  SECURITIES ACT OR PURSUANT TO AN
     AVAILABLE  EXEMPTION  FROM, OR IN A TRANSACTION  NOT SUBJECT TO, THE
     REGISTRATION  REQUIREMENTS  OF THE  SECURITIES ACT AND IN ACCORDANCE
     WITH  APPLICABLE  STATE  SECURITIES  LAWS  AS  EVIDENCED  BY A LEGAL
     OPINION OF COUNSEL TO THE  TRANSFEROR TO SUCH EFFECT,  THE SUBSTANCE
     OF WHICH  SHALL  BE  REASONABLY  ACCEPTABLE  TO THE  COMPANY.  THESE
     SECURITIES  AND THE  SECURITIES  ISSUABLE  UPON  EXERCISE  OF  THESE
     SECURITIES  MAY BE PLEDGED  IN  CONNECTION  WITH A BONA FIDE  MARGIN
     ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

      The Company  acknowledges  and agrees that any  Purchaser may from time to
time  pledge  pursuant  to a  bona  fide  margin  agreement  with  a  registered
broker-dealer or grant a security interest in some or all of its Securities to a
financial institution that is an "accredited investor" as defined in Rule 501(a)
under the  Securities  Act and who agrees to be bound by the  provisions of this
Agreement and, if required under the terms of such  arrangement,  such Purchaser
may transfer  pledged or secured  Securities to the pledgees or secured parties.
Such a pledge or transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or pledgor shall be
required in connection  therewith.  Further, no notice shall be required of such
pledge.  At the appropriate  Purchaser's  expense,  the Company will execute and
deliver  such  reasonable  documentation  as  a  pledgee  or  secured  party  of
Securities may reasonably request in connection with a pledge or transfer of the
Securities,  including  the  preparation  and filing of any required  prospectus
supplement  under Rule 424(b)(3)  under the  Securities Act or other  applicable
provision  of the  Securities  Act to  appropriately  amend the list of  Selling
Stockholders thereunder.

                                       20
<PAGE>

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

            (d) In addition to such Purchaser's  other available  remedies,  the
Company shall pay to a Purchaser, in cash, as partial liquidated damages and not
as a penalty, for each $2,000 of Warrant Shares (based on the VWAP of the Common
Stock on the date such Securities are submitted to the Company's transfer agent)
delivered  for removal of the  restrictive  legend and  subject to this  Section
4.1(c),  $10 per Trading Day  (increasing  to $20 per Trading Day 5 Trading Days
after such  damages  have begun to accrue) for each Trading Day after the Legend
Removal  Date until such  certificate  is  delivered  without a legend.  Nothing
herein  shall  limit such  Purchaser's  right to pursue  actual  damages for the
Company's  failure  to  deliver  certificates  representing  any  Securities  as
required by the Transaction  Documents,  and such Purchaser shall have the right
to pursue all remedies  available to it at law or in equity  including,  without
limitation, a decree of specific performance and/or injunctive relief.

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

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

                                       21
<PAGE>

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

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

      4.5 Exercise  Procedures.  The form of Notice of Exercise  included in the
Warrants set forth the totality of the procedures  required of the Purchasers in
order to exercise the Warrants. No additional legal opinion or other information
or instructions  shall be required of the Purchasers to exercise their Warrants.
The Company  shall honor  exercises of the Warrants  and shall  deliver  Warrant
Shares in accordance  with the terms,  conditions  and time periods set forth in
the Transaction Documents.

      4.6 Securities Laws Disclosure; Publicity. The Company shall, by 5:30 p.m.
Eastern  time on the fourth  Trading  Day  following  the date  hereof,  issue a
Current Report on Form 8-K,  reasonably  acceptable to each Qualified  Purchaser
disclosing the material terms of the transactions contemplated hereby, and shall
attach  the  Transaction  Documents  thereto.  The  Company  and  the  Qualified
Purchasers  shall  consult  with each other in issuing any other press  releases
with respect to the transactions  contemplated  hereby,  and neither the Company
nor any Purchaser  shall issue any such press release or otherwise make any such
public statement  without the prior consent of the Company,  with respect to any
press release of any  Purchaser,  or without the prior consent of each Qualified
Purchaser, with respect to any press release of the Company, which consent shall
not  unreasonably be withheld (the failure of any such party to object within 24
hours to any such press release or public  statement shall be deemed  acceptance
of such  press  release  or  public  statement),  except if such  disclosure  is
required by law, in which case the disclosing  party shall promptly  provide the
other  party  with  prior  notice of such  public  statement  or  communication.
Notwithstanding the foregoing,  the Company shall not publicly disclose the name
of any  Purchaser,  or include the name of any  Purchaser in any filing with the
Commission or any regulatory agency or Trading Market, without the prior written
consent  of  each  Qualified  Purchaser,  except  (i)  as  required  by  federal
securities law in connection  with the  registration  statement  registering the
resale of the Warrant Shares and (ii) to the extent such  disclosure is required
by law or Trading  Market  regulations,  in which case the Company shall provide
the Purchasers  with prior notice of such  disclosure  permitted under subclause
(i) or (ii).

                                       22
<PAGE>

      4.7  Shareholder  Rights  Plan.  No claim will be made or  enforced by the
Company or, to the Knowledge of the Company, any other Person that any Purchaser
is an "Acquiring  Person" under any  shareholder  rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any Purchaser
could be deemed to trigger the  provisions of any such plan or  arrangement,  by
virtue of  receiving  Securities  under the  Transaction  Documents or under any
other  agreement  between  the  Company and the  Purchasers.  The Company  shall
conduct  its  business  in a manner so that it will not  become  subject  to the
Investment Company Act.

      4.8 Non-Public Information.  The Company covenants and agrees that neither
it nor any other Person  acting on its behalf will provide any  Purchaser or its
agents or counsel with any  information  that the Company  believes  constitutes
material non-public information,  unless prior thereto such Purchaser shall have
executed  a written  agreement  regarding  the  confidentiality  and use of such
information.  The Company  understands and confirms that each Purchaser shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.

      4.9 Use of Proceeds. The Company shall be required to use the net proceeds
from the sale of the Securities hereunder  specifically as set forth on Schedule
4.9 hereto.

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

                                       23
<PAGE>

      4.11  Indemnification  of  Purchasers.  Subject to the  provisions of this
Section  4.11,  the Company will  indemnify  and hold the  Purchasers  and their
directors,  officers,  shareholders,  members,  partners,  employees  and agents
(each,  a  "Purchaser  Party")  harmless  from any and all losses,  liabilities,
obligations,  claims, contingencies,  damages, costs and expenses, including all
judgments,  amounts paid in settlements,  court costs and reasonable  attorneys'
fees and costs of  investigation  that any such  Purchaser  Party may  suffer or
incur  as  a  result  of  or   relating   to  (a)  any  breach  of  any  of  the
representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other  Transaction  Documents  or (b) any action  instituted
against  a  Purchaser,  or any of them or their  respective  Affiliates,  by any
stockholder  of the  Company who is not an  Affiliate  of such  Purchaser,  with
respect to any of the  transactions  contemplated by the  Transaction  Documents
(unless such action is based upon a breach of such Purchaser's  representations,
warranties or covenants  under the  Transaction  Documents or any  agreements or
understandings  such  Purchaser  may  have  with  any  such  stockholder  or any
violations by such Purchaser of state or federal  securities laws or any conduct
by Purchaser which constitutes  fraud,  gross negligence,  willful misconduct or
malfeasance).  If any action  shall be brought  against any  Purchaser  Party in
respect  of which  indemnity  may be sought  pursuant  to this  Agreement,  such
Purchaser  Party shall promptly  notify the Company in writing,  and the Company
shall  have the right to assume  the  defense  thereof  with  counsel of its own
choosing. Any Purchaser Party shall have the right to employ separate counsel in
any  such  action  and  participate  in the  defense  thereof,  but the fees and
expenses of such counsel shall be at the expense of such Purchaser  Party except
to the extent that (i) the employment  thereof has been specifically  authorized
by the Company in writing, (ii) the Company has failed after a reasonable period
of time to assume  such  defense  and to employ  counsel or (iii) in such action
there is,  in the  reasonable  opinion  of such  separate  counsel,  a  material
conflict  on any  material  issue  between  the  position of the Company and the
position  of such  Purchaser  Party.  The  Company  will  not be  liable  to any
Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party
effected  without  the  Company's  prior  written  consent,  which  shall not be
unreasonably  withheld or delayed; or (ii) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchaser Party's
breach of any of the representations,  warranties,  covenants or agreements made
by the Purchasers in this Agreement or in the other Transaction Documents.

      4.12 Reservation and Listing of Securities.

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

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

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

                                       24
<PAGE>

      4.13 Participation in Future Financing.

            (a) From the date  hereof  until the earlier of (i) the later of (A)
18  months  from the date  hereof  and (B) the date that the  Debentures  are no
longer  outstanding and (ii) the date that the Company has  consummated,  in the
aggregate  since  the  date  hereof,  the sale of at  least  $12,030,000  of the
Company's securities in one or more Subsequent  Financings following the Closing
that are subject to the rights of  participation  under this Section 4.13,  upon
any  financing  by the  Company or any of its  Subsidiaries  of Common  Stock or
Common Stock Equivalents after the date hereof (a "Subsequent Financing"),  each
Purchaser  shall  have  the  right  to  participate  in up to an  amount  of the
Subsequent Financing equal to the lesser of (i) 100% of the Subsequent Financing
and (ii) the principal amount of such Purchaser's  Debentures issued and sold by
the Company  pursuant to this Agreement  (whether such Debentures were purchased
for cash or upon exchange of Existing Notes) (the "Participation Maximum").

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

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

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

            (e) If by 5:30  p.m.  (New York City  time) on the 5th  Trading  Day
after all of the  Purchasers  have been sent the  Pre-Notice  with  respect to a
Subsequent  Financing,  the Company receives responses to a Subsequent Financing
Notice from  Purchasers  seeking to purchase,  in the  aggregate,  more than the
aggregate amount of the Subsequent Financing, each such Purchaser shall have the
right to purchase the greater of (a) their Pro Rata  Portion (as defined  below)
of the  Participation  Maximum and (b) the difference  between the Participation
Maximum and the aggregate amount of participation by all other Purchasers.  "Pro
Rata  Portion"  is the  ratio  of (x)  the  Subscription  Amount  of  Securities
purchased  on the Closing Date by a Purchaser  participating  under this Section
4.13  and  (y) the  sum of the  aggregate  Subscription  Amounts  of  Securities
purchased on the Closing Date by all Purchasers participating under this Section
4.13  (whether  such  Securities  were  purchased  for cash or upon  exchange of
Existing Notes).

                                       25
<PAGE>

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

            (g) Notwithstanding  anything herein to the contrary, if the Company
effects a Subsequent Financing at any time while the Debentures are outstanding,
each Purchaser may elect, in its sole discretion, to exchange all or some of the
Debentures  then held by such  Purchaser for any  securities or  combination  of
securities  issued in such Subsequent  Financing based on the effective price at
which  such  securities  were  sold in such  Subsequent  Financing.  For each $1
principal  amount of Debenture  exchanged,  such  Purchaser  shall receive $1 of
securities issued in such Subsequent Financing as if such Purchaser had paid for
such securities in cash.  This right to exchange  Debentures into new securities
shall be in addition to the Purchasers' rights to participate in the transaction
for cash  consideration  pursuant  to Section  4.13(a)  but shall  otherwise  be
subject to the procedures  set forth in this Section 4.13  regarding  notice and
closing.

            (h) Upon  exercise  of any of the rights  granted to the  Purchasers
hereunder,  such Purchaser's  right shall be conditioned upon the  participating
Purchasers  entering  into the  same  documents  agreed  to by the  third  party
investors in the Subsequent Financing.

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

            (j)  Notwithstanding any provision in this Agreement or in any other
Transaction  Document to the contrary,  provided that the Company  complies with
any obligations it has expressly  agreed to and rights it has expressly  granted
to the  Purchasers  under the  Transaction  Documents,  nothing else in any such
agreement   shall  be  interpreted  to  give  any  of  the  Purchasers   (acting
collectively  or  individually),  the right to take any action that would block,
delay or otherwise  hinder the Company's  ability to raise  capital  through the
sale of  Common  Stock or Common  Stock  Equivalents  that are not  Indebtedness
(unless such  Indebtedness is used to prepay the  Debentures).  Without limiting
the  generality of the  foregoing,  the parties agree and  acknowledge  that any
amendment to the Company's  articles of  incorporation,  bylaws or other charter
documents  effectuated  in order to enable the Company to issue  Common Stock or
Common Stock Equivalents in a bona fide round of financing (such as the creation
of a new series of  preferred  stock,  an increase in the  Company's  authorized
shares of any class of capital stock, or any change  requested by the holders of
the Company's  Series A Preferred  Stock to the terms thereof in order to obtain
such holders'  consent to such  financing)  shall in no event be deemed to be an
amendment that materially and adversely affects the rights of any Purchaser.

                                       26
<PAGE>

            (k) The  Company  shall have 20 Trading  Days from  delivery  of the
Pre-Notice to publicly announce the Subsequent Financing.  If by the end of such
20 Trading Day  period,  the  Company  has not made a public  announcement  with
respect to the Subsequent  Financing,  such Subsequent Financing shall be deemed
terminated and knowledge of such transaction shall no longer be deemed material,
non-public information.

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

      4.15 Short Sales and Confidentiality After The Date Hereof. Each Purchaser
severally and not jointly with the other  Purchasers  covenants  that neither it
nor any Affiliates acting on its behalf or pursuant to any understanding with it
will  execute any  disposition,  including  Short Sales (but not  including  the
location  and/or  reservation  of  borrowable  shares of Common  Stock),  in the
securities  of the  Company  during the  period  after the  Discussion  Time (as
defined  in  Section  3.2(f))  and  ending on March 23,  2006 (the  "Restriction
Date").  Each  Purchaser  severally  and not jointly  with the other  Purchasers
covenants  that  until  such  time  as the  transactions  contemplated  by  this
Agreement  are  publicly  disclosed  by the Company as described in Section 4.6,
such Purchaser will maintain,  the confidentiality of all disclosures made to it
in connection with this  transaction  (including the existence and terms of this
transaction).  Each Purchaser  understands and  acknowledges,  severally and not
jointly  with any  other  Purchaser,  that the  Commission  currently  takes the
position that coverage of short sales of shares of the Common Stock "against the
box" prior to the Effective Date of the registration  statement registering such
Common Stock with the  Commission is a violation of Section 5 of the  Securities
Act,  as set  forth in Item 65,  Section  5 under  Section  A, of the  Manual of
Publicly Available Telephone  Interpretations,  dated July 1997, compiled by the
Office of Chief Counsel,  Division of Corporation  Finance.  Notwithstanding the
foregoing,  no Purchaser makes any  representation,  warranty or covenant hereby
that it will not engage in Short Sales in the  securities  of the Company  after
the Restriction Date.

      4.16  Piggy-Back  Registrations.  If at any  time  prior  to the  24-month
anniversary of the Closing Date there is not an effective registration statement
covering all of the Warrant  Shares and the Company  shall  determine to prepare
and file with the  Commission a registration  statement  relating to an offering
for its own account or the account of others under the  Securities Act of any of
its equity  securities,  then the Company shall send to each Purchaser a written
notice of such  determination and, if within fifteen days after the date of such
notice,  any such Holder shall so request in writing,  the Company shall include
in such  registration  statement all or any part of such Warrant  Shares as such
Holder  requests  to be  registered  (if and to the  extent  such  inclusion  is
permitted by the rules and  regulations  of the  Commission).  The  registration
rights of the  Purchasers  are set forth more fully in the  Registration  Rights
Agreement.

                                       27
<PAGE>

                                   ARTICLE V.
                                  MISCELLANEOUS

      5.1 Termination.  This Agreement may be terminated by any Purchaser, as to
such Purchaser's obligations hereunder only and without any effect whatsoever on
the obligations between the Company and the other Purchasers,  by written notice
to the other  parties,  if the  Closing  has not been  consummated  on or before
January 27, 2006;  provided,  however,  that no such termination will affect the
right of any party to sue for any breach by the other party (or  parties).  This
Agreement may be terminated by the Company at any time after January 27, 2006 if
the Company has not obtained the Necessary Existing  Securityholder  Approval by
such date;  provided  that the  Company has  complied  with its  obligations  in
Section 2.1(b) to use  commercially  reasonable  efforts to obtain such approval
and it provides to the Qualified Purchasers,  upon their request,  documentation
evidencing the same (or if such documentation is not available they represent in
writing that such  approval was not obtained  despite the  Company's  compliance
with Section 2.1 (b)).

      5.2 Fees and Expenses. At the Closing, the Company has agreed to reimburse
Midsummer Capital, LLC ("Midsummer") up to $10,000, for its actual,  reasonable,
out-of-pocket  legal fees and  expenses.  Except as  expressly  set forth in the
Transaction  Documents  to the  contrary,  each  party  shall  pay the  fees and
expenses of its advisers,  counsel,  accountants and other experts,  if any, and
all  other  expenses  incurred  by  such  party  incident  to  the  negotiation,
preparation,  execution, delivery and performance of this Agreement. The Company
shall pay all transfer agent fees, stamp taxes and other taxes and duties levied
in connection with the delivery of any Securities.

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

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

                                       28
<PAGE>

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

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

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

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

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

                                       29
<PAGE>

      5.10 Survival.  The representations and warranties  contained herein shall
survive the Closing and the  delivery  and  exercise of the  Securities  for the
applicable statue of limitations.

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

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

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

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

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

                                       30
<PAGE>

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

      5.17 Usury. To the extent it may lawfully do so, the Company hereby agrees
not to insist upon or plead or in any manner  whatsoever  claim, and will resist
any and all efforts to be compelled  to take the benefit or advantage  of, usury
laws wherever enacted, now or at any time hereafter in force, in connection with
any claim, action or proceeding that may be brought by any Purchaser in order to
enforce any right or remedy under any Transaction Document.  Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed  and  provided  that  the  total  liability  of  the  Company  under  the
Transaction  Documents  for payments in the nature of interest  shall not exceed
the maximum lawful rate authorized  under  applicable law (the "Maximum  Rate"),
and, without  limiting the foregoing,  in no event shall any rate of interest or
default  interest,  or both of them,  when aggregated with any other sums in the
nature  of  interest  that  the  Company  may  be  obligated  to pay  under  the
Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum
contract  rate of  interest  allowed by law and  applicable  to the  Transaction
Documents is  increased  or  decreased  by statute or any official  governmental
action subsequent to the date hereof,  the new maximum contract rate of interest
allowed by law will be the Maximum Rate applicable to the Transaction  Documents
from the  effective  date  forward,  unless such  application  is  precluded  by
applicable law. If under any circumstances whatsoever, interest in excess of the
Maximum  Rate  is  paid  by  the  Company  to  any  Purchaser  with  respect  to
Indebtedness  evidenced  by the  Transaction  Documents,  such  excess  shall be
applied  by  such  Purchaser  to  the  unpaid  principal  balance  of  any  such
Indebtedness  or be refunded to the Company,  the manner of handling such excess
to be at such Purchaser's election.

      5.18  Independent  Nature  of  Purchasers'  Obligations  and  Rights.  The
obligations of each Purchaser under any Transaction Document are several and not
joint with the  obligations  of any other  Purchaser,  if any,  and no Purchaser
shall be  responsible in any way for the  performance of the  obligations of any
other Purchaser under any Transaction  Document.  Nothing contained herein or in
any Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall  be  deemed  to  constitute  the  Purchasers,  if  more  than  one,  as  a
partnership,  an  association,  a joint venture or any other kind of entity,  or
create a presumption  that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights,  including without  limitation the rights arising out of
this  Agreement or out of the other  Transaction  Documents  (provided  that the
action of the  holders  of at least  30% of the  aggregate  principal  amount of
Debentures  is  required  to  call  an  Event  of  Default  (as  defined  in the
Debentures)  under the Debentures),  and it shall not be necessary for any other
Purchaser  to be  joined  as an  additional  party  in any  proceeding  for such
purpose.  Each Purchaser has been represented,  or been given the opportunity to
be represented  by its own separate legal counsel in its review and  negotiation
of the Transaction  Documents.  For reasons of administrative  convenience only,
Purchasers  and their  respective  counsel have chosen to  communicate  with the
Company  through  FW.  FW does  not  represent  all of the  Purchasers  but only
Midsummer. The Company has elected to provide all Purchasers with the same terms
and Transaction  Documents for the convenience of the Company and not because it
was required or requested to do so by the Purchasers.

                                       31
<PAGE>

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

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

      5.21  Limitation  of  Liability.  Notwithstanding  anything  herein to the
contrary,  the  Company  acknowledges  and  agrees  that  the  liability  of any
Purchaser  arising directly or indirectly under any Transaction  Document of any
and every nature  whatsoever shall be satisfied solely out of the assets of such
Purchaser,  and that no trustee,  officer, other investment vehicle or any other
Affiliate of such Purchaser or any investor,  shareholder or holder of shares of
beneficial  interest  of such  Purchaser  shall  be  personally  liable  for any
liabilities of such Purchaser.

                            (Signature Pages Follow)

                                       32
<PAGE>

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

WORLD WASTE TECHNOLOGIES, INC.                               Address for Notice:
                                                             ------------------

By: /s/ JOHN PIMENTEL
       ---------------
     Name: John Pimentel
     Title: CEO

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

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

                                       33
<PAGE>

        [PURCHASER SIGNATURE PAGES TO WDWT SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser:
                  --------------------------------------------------------------
Signature of Authorized Signatory of Purchaser:
                                               ---------------------------------
Name of Authorized Signatory:
                             ---------------------------------------------------
Title of Authorized Signatory:
                              --------------------------------------------------
Email Address of Purchaser:
                           -----------------------------------------------------

Address for Notice of Purchaser:

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

Subscription Amount:

Warrant Shares:

                                       34
<PAGE>

                                                                         Annex A

                             CASH CLOSING STATEMENT

      Pursuant to the attached Securities  Purchase  Agreement,  dated as of the
date hereto,  the  purchasers  shall purchase for new cash  consideration  up to
$2,250,000 of Debentures and Warrants from World Waste  Technologies,  Inc. (the
"Company").  All funds will be wired into a trust account  maintained by Feldman
Weinstein,  LLP, counsel to Midsummer. All funds will be disbursed in accordance
with this Closing Statement.

Disbursement Date:         January ___, 2006

I.        PURCHASE PRICE

                  Gross Proceeds to be Received in Trust            $

II.       DISBURSEMENTS

                  Midsummer Capital                                 $
                                                                    $
                                                                    $
                                                                    $
                                                                    $

Total Amount Disbursed:                                             $

WIRE INSTRUCTIONS:

To:
   _________________________________NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE  BEEN  REGISTERED  WITH  THE  SECURITIES  AND  EXCHANGE  COMMISSION  OR THE
SECURITIES   COMMISSION  OF  ANY  STATE  IN  RELIANCE  UPON  AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES  LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH  EFFECT,  THE  SUBSTANCE  OF WHICH SHALL BE  REASONABLY  ACCEPTABLE  TO THE
COMPANY.  THIS  SECURITY  AND THE  SECURITIES  ISSUABLE  UPON  EXERCISE  OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION  WITH A BONA FIDE MARGIN  ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

                          COMMON STOCK PURCHASE WARRANT

                  To Purchase _______ Shares of Common Stock of

                         World Waste Technologies, Inc.

      THIS COMMON STOCK PURCHASE  WARRANT (the  "Warrant")  certifies  that, for
value received,  _______________ (the "Holder"), is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after the date hereof (the "Initial  Exercise Date") and on or
prior to the close of  business  on the four  year  anniversary  of the  Initial
Exercise Date (the "Termination Date") but not thereafter,  to subscribe for and
purchase  from World Waste  Technologies,  Inc., a California  corporation  (the
"Company"),  up to _______  shares (the "Warrant  Shares") of Common Stock,  par
value $0.001 per share, of the Company (the "Common Stock").  The purchase price
of one share of Common Stock under this  Warrant  shall be equal to the Exercise
Price, as defined in Section 2(b).

      Section 1.  Definitions.  Capitalized terms used and not otherwise defined
herein shall have the meanings  set forth in that  certain  Securities  Purchase
Agreement (the "Purchase Agreement"), dated December 27, 2005, among the Company
and the purchasers signatory thereto.

      Section 2. Exercise.

            (a) Exercise of Warrant. Exercise of the purchase rights represented
by this  Warrant  may be made,  in whole or in part,  at any time or times on or
after  the  Initial  Exercise  Date and on or  before  the  Termination  Date by
delivery  to the  Company  of a duly  executed  facsimile  copy of the Notice of
Exercise  Form annexed  hereto (or such other office or agency of the Company as
it may designate by notice in writing to the registered Holder at the address of
the Holder appearing on the books of the Company);  provided,  however, within 5
Trading  Days of the date said Notice of Exercise is  delivered  to the Company,
the Holder  shall have  surrendered  this Warrant to the Company and the Company
shall  have  received  payment  of the  aggregate  Exercise  Price of the shares
thereby  purchased by wire transfer or cashier's  check drawn on a United States
bank.

<PAGE>

            (b) Exercise  Price.  The  exercise  price of the Common Stock under
this Warrant shall be $0.01,  subject to  adjustment  hereunder  (the  "Exercise
Price").

            (c) Cashless  Exercise.  If at any time after one year from the date
of  issuance  of this  Warrant  there  is no  effective  Registration  Statement
registering,  or no current prospectus  available for, the resale of the Warrant
Shares by the Holder,  then this  Warrant may also be  exercised at such time by
means of a "cashless  exercise" in which the Holder shall be entitled to receive
a certificate for the number of Warrant Shares equal to the quotient obtained by
dividing [(A-B) (X)] by (A), where:

            (A) = the VWAP on the Trading Day  immediately  preceding the date
                  of such election;

            (B) = the Exercise Price of this Warrant, as adjusted; and

            (X) = the number of Warrant Shares  issuable upon exercise of this
                  Warrant in accordance  with the terms of this Warrant by means
                  of a cash exercise rather than a cashless exercise.

      Notwithstanding  anything herein to the contrary, on the Termination Date,
this Warrant shall be automatically  exercised via cashless exercise pursuant to
this Section 2(c).

            (d)  Holder's  Restrictions.  The Holder shall not have the right to
exercise any portion of this Warrant,  pursuant to Section 2(c) or otherwise, to
the extent that after giving effect to such issuance after exercise,  the Holder
(together with the Holder's  affiliates),  as set forth on the applicable Notice
of Exercise,  would  beneficially own in excess of 4.99% of the number of shares
of the  Common  Stock  outstanding  immediately  after  giving  effect  to  such
issuance. For purposes of the foregoing sentence, the number of shares of Common
Stock  beneficially  owned by the Holder and its  affiliates  shall  include the
number of shares of Common  Stock  issuable  upon  exercise of this Warrant with
respect to which the  determination  of such  sentence is being made,  but shall
exclude the number of shares of Common  Stock  which would be issuable  upon (A)
exercise of the  remaining,  nonexercised  portion of this Warrant  beneficially
owned by the Holder or any of its  affiliates  and (B) exercise or conversion of
the unexercised or nonconverted  portion of any other  securities of the Company
(including,  without limitation,  any other Warrants) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned  by the  Holder  or any of its  affiliates.  Except  as set  forth  in the
preceding sentence,  for purposes of this Section 2(d)(i),  beneficial ownership
shall be  calculated  in  accordance  with Section 13(d) of the Exchange Act, it
being  acknowledged  by the Holder that the Company is not  representing  to the
Holder that such calculation is in compliance with Section 13(d) of the Exchange
Act and the Holder is solely  responsible for any schedules required to be filed
in accordance  therewith.  To the extent that the  limitation  contained in this
Section 2(d) applies,  the  determination of whether this Warrant is exercisable

                                       2
<PAGE>

(in relation to other  securities owned by the Holder) and of which a portion of
this Warrant is exercisable  shall be in the sole discretion of the Holder,  and
the  submission  of a Notice of  Exercise  shall be  deemed to be each  Holder's
determination  of whether  this  Warrant is  exercisable  (in  relation to other
securities  owned  by the  Holder)  and of  which  portion  of this  Warrant  is
exercisable,  in each case subject to such aggregate percentage limitation,  and
the Company  shall have no  obligation to verify or confirm the accuracy of such
determination.  For purposes of this Section 2(d), in determining  the number of
outstanding  shares  of  Common  Stock,  the  Holder  may rely on the  number of
outstanding shares of Common Stock as reflected in (x) the Company's most recent
Form  10-QSB  or Form  10-KSB,  as the case  may be,  (y) a more  recent  public
announcement  by the  Company  or (z) any  other  notice by the  Company  or the
Company's  Transfer  Agent  setting  forth the number of shares of Common  Stock
outstanding.  Upon the written or oral request of the Holder,  the Company shall
within two Trading Days  confirm  orally and in writing to the Holder the number
of  shares  of  Common  Stock  then  outstanding.  In any  case,  the  number of
outstanding  shares of Common Stock shall be  determined  after giving effect to
the conversion or exercise of securities of the Company, including this Warrant,
by the  Holder  or its  affiliates  since  the date as of which  such  number of
outstanding shares of Common Stock was reported.  The provisions of this Section
2(d) may be waived by the Holder,  at the election of the Holder,  upon not less
than 61 days' prior notice to the Company,  and the  provisions  of this Section
2(d)  shall  continue  to apply  until  such 61st day (or such  later  date,  as
determined by the Holder, as may be specified in such notice of waiver).

            (e) Mechanics of Exercise.

                  (i)  Authorization  of Warrant Shares.  The Company  covenants
that all Warrant  Shares  which may be issued upon the  exercise of the purchase
rights  represented by this Warrant will,  upon exercise of the purchase  rights
represented by this Warrant, be duly authorized,  validly issued, fully paid and
nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue).

                  (ii) Delivery of Certificates Upon Exercise.  Certificates for
shares  purchased  hereunder  shall be  transmitted by the transfer agent of the
Company to the Holder by crediting the account of the Holder's prime broker with
the Depository  Trust Company through its Deposit  Withdrawal  Agent  Commission
("DWAC") system if the Company is a participant in such system, and otherwise by
physical  delivery  to the  address  specified  by the  Holder in the  Notice of
Exercise within 3 Trading Days from the delivery to the Company of the Notice of
Exercise Form,  surrender of this Warrant and payment of the aggregate  Exercise
Price as set forth above ("Warrant Share Delivery Date").  This Warrant shall be
deemed to have been  exercised on the date the Exercise Price is received by the
Company.  The Warrant Shares shall be deemed to have been issued,  and Holder or
any  other  person so  designated  to be named  therein  shall be deemed to have
become a holder of record of such  shares for all  purposes,  as of the date the
Warrant has been  exercised by payment to the Company of the Exercise  Price and
all  taxes  required  to be paid by the  Holder,  if any,  pursuant  to  Section
2(e)(vii) prior to the issuance of such shares, have been paid.

                  (iii) Delivery of New Warrants Upon Exercise.  If this Warrant
shall have been exercised in part, the Company shall, at the time of delivery of
the certificate or  certificates  representing  Warrant  Shares,  deliver to the
Holder a new  Warrant  evidencing  the  rights  of the  Holder to  purchase  the
unpurchased  Warrant Shares called for by this Warrant,  which new Warrant shall
in all other respects be identical with this Warrant.

                                       3
<PAGE>

                  (iv)  Rescission  Rights.  If the  Company  fails to cause its
transfer  agent  to  transmit  to  the  Holder  a  certificate  or  certificates
representing the Warrant Shares pursuant to this Section 2(e)(iv) by the Warrant
Share  Delivery  Date,  then the  Holder  will  have the right to  rescind  such
exercise.

                  (v)  Compensation  for  Buy-In on  Failure  to Timely  Deliver
Certificates  Upon  Exercise.  In addition to any other rights  available to the
Holder,  if the  Company  fails to cause its  transfer  agent to transmit to the
Holder a certificate or certificates representing the Warrant Shares pursuant to
an exercise on or before the Warrant Share Delivery Date, and if after such date
the Holder is required by its broker to purchase (in an open market  transaction
or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant  Shares which the Holder  anticipated  receiving upon such
exercise (a "Buy-In"),  then the Company shall (1) pay in cash to the Holder the
amount by which (x) the  Holder's  total  purchase  price  (including  brokerage
commissions, if any) for the shares of Common Stock so purchased exceeds (y) the
amount obtained by multiplying (A) the number of Warrant Shares that the Company
was required to deliver to the Holder in  connection  with the exercise at issue
times  (B) the  price  at which  the sell  order  giving  rise to such  purchase
obligation was executed,  and (2) at the option of the Holder,  either reinstate
the  portion of the Warrant and  equivalent  number of Warrant  Shares for which
such  exercise  was not honored or deliver to the Holder the number of shares of
Common Stock that would have been issued had the Company  timely  complied  with
its exercise  and delivery  obligations  hereunder.  For example,  if the Holder
purchases  Common  Stock  having a total  purchase  price of  $11,000 to cover a
Buy-In with respect to an  attempted  exercise of shares of Common Stock with an
aggregate sale price giving rise to such purchase  obligation of $10,000,  under
clause (1) of the immediately  preceding  sentence the Company shall be required
to pay the Holder  $1,000.  The Holder shall provide the Company  written notice
indicating the amounts payable to the Holder in respect of the Buy-In,  together
with applicable  confirmations  and other evidence  reasonably  requested by the
Company.  Nothing  herein  shall  limit the  Holder's  right to pursue any other
remedies  available  to it  hereunder,  at law or in equity  including,  without
limitation,  a decree of  specific  performance  and/or  injunctive  relief with
respect to the Company's  failure to timely  deliver  certificates  representing
shares of Common Stock upon exercise of the Warrant as required  pursuant to the
terms hereof.

                  (vi) No Fractional  Shares or Scrip.  No fractional  shares or
scrip  representing  fractional shares shall be issued upon the exercise of this
Warrant.  As to any fraction of a share which Holder would otherwise be entitled
to purchase  upon such  exercise,  the Company  shall pay a cash  adjustment  in
respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.

                  (vii) Charges,  Taxes and Expenses.  Issuance of  certificates
for Warrant  Shares shall be made without  charge to the Holder for any issue or
transfer  tax or other  incidental  expense in respect of the  issuance  of such
certificate,  all of which taxes and expenses shall be paid by the Company,  and
such  certificates  shall be issued in the name of the Holder or in such name or
names as may be  directed by the Holder;  provided,  however,  that in the event
certificates  for Warrant  Shares are to be issued in a name other than the name
of the Holder,  this Warrant when  surrendered for exercise shall be accompanied
by the  Assignment  Form attached  hereto duly  executed by the Holder;  and the
Company may require, as a condition thereto,  the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto.

                                       4
<PAGE>

                  (viii)  Closing  of  Books.  The  Company  will not  close its
stockholder books or records in any manner which prevents the timely exercise of
this Warrant, pursuant to the terms hereof.

      Section 3. Certain Adjustments.

            (a) Stock  Dividends and Splits.  If the Company,  at any time while
this  Warrant is  outstanding:  (A) pays a stock  dividend or  otherwise  make a
distribution or  distributions on shares of its Common Stock or any other equity
or equity equivalent  securities  payable in shares of Common Stock (which,  for
avoidance  of doubt,  shall not include any shares of Common Stock issued by the
Company  pursuant  to this  Warrant and shall not include any shares of Series A
Preferred  issued  by the  company  as a  dividend  on its  shares  of  Series A
Preferred),  (B)  subdivides  outstanding  shares of Common  Stock into a larger
number of  shares,  (C)  combines  (including  by way of  reverse  stock  split)
outstanding  shares of Common  Stock  into a smaller  number of  shares,  or (D)
issues by  reclassification  of shares of the Common Stock any shares of capital
stock of the Company,  then in each case the Exercise  Price shall be multiplied
by a  fraction  of which the  numerator  shall be the number of shares of Common
Stock (excluding  treasury shares, if any) outstanding  immediately  before such
event and of which the denominator shall be the number of shares of Common Stock
outstanding  immediately after such event and the number of shares issuable upon
exercise of this Warrant shall be proportionately  adjusted. Any adjustment made
pursuant to this  Section  3(a) shall  become  effective  immediately  after the
record date for the  determination  of  stockholders  entitled  to receive  such
dividend  or  distribution  and shall  become  effective  immediately  after the
effective date in the case of a subdivision, combination or re classification.

            (b) [INTENTIONALLY DELETED]

            (c) Pro Rata Distributions. If the Company, at any time prior to the
Termination  Date,  shall  distribute to all holders of Common Stock (and not to
Holders of the Warrants) evidences of its indebtedness or assets (including cash
and cash  dividends)  or rights or warrants  to  subscribe  for or purchase  any
security  other than the Common Stock (which shall be subject to Section  3(b)),
then in each such case the Exercise Price shall be adjusted by  multiplying  the
Exercise  Price  in  effect  immediately  prior to the  record  date  fixed  for
determination  of  stockholders  entitled  to  receive  such  distribution  by a
fraction of which the denominator  shall be the VWAP determined as of the record
date  mentioned  above,  and of which the  numerator  shall be such VWAP on such
record date less the then per share fair market value at such record date of the
portion of such assets or evidence of indebtedness so distributed  applicable to
one  outstanding  share  of the  Common  Stock  as  determined  by the  Board of
Directors in good faith. In either case the adjustments  shall be described in a
statement  provided  to the  Holder of the  portion  of assets or  evidences  of
indebtedness so distributed or such subscription  rights applicable to one share
of Common Stock. Such adjustment shall be made whenever any such distribution is
made and shall  become  effective  immediately  after the record date  mentioned
above.

                                       5
<PAGE>

            (d) Fundamental  Transaction.  If, at any time while this Warrant is
outstanding,  (A) the Company effects any merger or consolidation of the Company
with  or into  another  Person,  (B)  the  Company  effects  any  sale of all or
substantially all of its assets in one or a series of related transactions,  (C)
any tender offer or exchange offer (whether by the Company or another Person) is
completed  pursuant to which  holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (D) the Company
effects  any  reclassification  of the  Common  Stock  or any  compulsory  share
exchange  pursuant to which the Common Stock is  effectively  converted  into or
exchanged  for  other  securities,  cash  or  property  (in  any  such  case,  a
"Fundamental Transaction"),  then, upon any subsequent exercise of this Warrant,
the Holder shall have the right to receive,  for each  Warrant  Share that would
have been  issuable upon such exercise  immediately  prior to the  occurrence of
such Fundamental Transaction,  at the option of the Holder, (a) upon exercise of
this Warrant, the number of shares of Common Stock of the successor or acquiring
corporation  or of the  Company,  if it is the  surviving  corporation,  and any
additional consideration (the "Alternate Consideration") receivable upon or as a
result  of  such  reorganization,  reclassification,  merger,  consolidation  or
disposition  of assets by the Holder of the number of shares of Common Stock for
which this Warrant is exercisable  immediately prior to such event or (b) if the
Company is acquired in an all cash transaction,  cash equal to the value of this
Warrant as  determined  in  accordance  with the  Black-Scholes  option  pricing
formula.  For purposes of any such exercise,  the  determination of the Exercise
Price shall be appropriately  adjusted to apply to such Alternate  Consideration
based on the amount of Alternate  Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Company shall apportion
the Exercise  Price among the  Alternate  Consideration  in a reasonable  manner
reflecting  the relative  value of any  different  components  of the  Alternate
Consideration.  If  holders  of Common  Stock  are  given  any  choice as to the
securities,  cash or property to be received in a Fundamental Transaction,  then
the Holder shall be given the same choice as to the Alternate  Consideration  it
receives  upon  any  exercise  of  this  Warrant   following  such   Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions, any
successor to the Company or  surviving  entity in such  Fundamental  Transaction
shall issue to the Holder a new warrant consistent with the foregoing provisions
and  evidencing  the Holder's  right to exercise  such  warrant  into  Alternate
Consideration.  The  terms of any  agreement  pursuant  to  which a  Fundamental
Transaction  is effected  shall  include terms  requiring any such  successor or
surviving entity to comply with the provisions of this Section 3(d) and insuring
that this Warrant (or any such replacement  security) will be similarly adjusted
upon any subsequent transaction analogous to a Fundamental Transaction.

            (e)  Calculations.  All  calculations  under this Section 3 shall be
made to the nearest cent or the nearest  1/100th of a share, as the case may be.
For  purposes of this  Section 3, the number of shares of Common Stock deemed to
be issued and  outstanding  as of a given date shall be the sum of the number of
shares  of  Common  Stock  (excluding   treasury  shares,  if  any)  issued  and
outstanding.

            (f)  Voluntary  Adjustment  By Company.  The Company may at any time
during the term of this Warrant  reduce the then current  Exercise  Price to any
amount and for any period of time deemed  appropriate  by the Board of Directors
of the Company.

            (g) Notice to Holders.

                                       6
<PAGE>

                  (i) Adjustment to Exercise Price.  Whenever the Exercise Price
is adjusted  pursuant to this Section 3, the Company shall promptly mail to each
Holder a notice  setting  forth the  Exercise  Price after such  adjustment  and
setting forth a brief statement of the facts requiring such  adjustment.  If the
Company issues a variable rate security,  despite the prohibition thereon in the
Purchase  Agreement,  the Company shall be deemed to have issued Common Stock or
Common Stock Equivalents at the lowest possible  conversion or exercise price at
which such  securities  may be  converted or exercised in the case of a Variable
Rate Transaction (as defined in the Purchase Agreement).

                  (ii) Notice to Allow  Exercise  by Holder.  If (A) the Company
shall declare a dividend (or any other  distribution)  on the Common Stock;  (B)
the  Company  shall  declare  a  special  nonrecurring  cash  dividend  on  or a
redemption of the Common Stock;  (C) the Company shall authorize the granting to
all holders of the Common Stock rights or warrants to subscribe  for or purchase
any shares of capital  stock of any class or of any rights;  (D) the approval of
any  stockholders  of the  Company  shall be  required  in  connection  with any
reclassification  of the Common Stock, any  consolidation or merger to which the
Company is a party,  any sale or  transfer  of all or  substantially  all of the
assets of the Company, of any compulsory share exchange whereby the Common Stock
is converted  into other  securities,  cash or property;  (E) the Company  shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company;  then,  in each case,  the Company shall cause to be
mailed to the Holder at its last  address as it shall  appear  upon the  Warrant
Register  of the  Company,  at least 20  calendar  days prior to the  applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the  purpose of such  dividend,  distribution,
redemption,  rights or warrants,  or if a record is not to be taken, the date as
of which the  holders  of the  Common  Stock of record  to be  entitled  to such
dividend, distributions,  redemption, rights or warrants are to be determined or
(y) the  date on  which  such  reclassification,  consolidation,  merger,  sale,
transfer or share  exchange is expected to become  effective  or close,  and the
date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or
other property deliverable upon such  reclassification,  consolidation,  merger,
sale, transfer or share exchange; provided, that the failure to mail such notice
or any defect therein or in the mailing thereof shall not affect the validity of
the  corporate  action  required to be specified  in such notice.  The Holder is
entitled to exercise  this Warrant  during the 20-day  period  commencing on the
date of such notice to the effective date of the event triggering such notice.

      Section 4. Transfer of Warrant.

            (a)  Transferability.  Subject  to  compliance  with any  applicable
securities  laws and the  conditions  set forth in Sections 5(a) and 4(d) hereof
and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and
all rights  hereunder are  transferable,  in whole or in part, upon surrender of
this Warrant at the  principal  office of the Company,  together  with a written
assignment  of this  Warrant  substantially  in the form  attached  hereto  duly
executed by the Holder or its agent or attorney and funds  sufficient to pay any
transfer  taxes payable upon the making of such  transfer.  Upon such  surrender
and, if required,  such  payment,  the Company  shall  execute and deliver a new
Warrant  or  Warrants  in the  name  of the  assignee  or  assignees  and in the
denomination or  denominations  specified in such instrument of assignment,  and
shall issue to the assignor a new Warrant evidencing the portion of this Warrant
not so assigned,  and this Warrant shall  promptly be cancelled.  A Warrant,  if
properly assigned,  may be exercised by a new holder for the purchase of Warrant
Shares without having a new Warrant issued.

                                       7
<PAGE>

            (b) New Warrants. This Warrant may be divided or combined with other
Warrants  upon  presentation  hereof at the  aforesaid  office  of the  Company,
together with a written notice  specifying the names and  denominations in which
new  Warrants  are to be issued,  signed by the Holder or its agent or attorney.
Subject  to  compliance  with  Section  4(a),  as to any  transfer  which may be
involved in such division or combination,  the Company shall execute and deliver
a new Warrant or Warrants in exchange  for the Warrant or Warrants to be divided
or combined in accordance with such notice.

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

            (d) Transfer Restrictions.  If, at the time of the surrender of this
Warrant in connection  with any transfer of this  Warrant,  the transfer of this
Warrant shall not be registered pursuant to an effective  registration statement
under the Securities Act and under applicable state securities or blue sky laws,
the Company may require,  as a condition of allowing  such transfer (i) that the
Holder or transferee of this Warrant, as the case may be, furnish to the Company
a written  opinion of counsel  (which  opinion  shall be in form,  substance and
scope  customary  for  opinions of counsel in  comparable  transactions)  to the
effect that such transfer may be made without  registration under the Securities
Act and under applicable state securities or blue sky laws, (ii) that the holder
or transferee  execute and deliver to the Company an  investment  letter in form
and  substance  acceptable  to the Company and (iii) that the  transferee  be an
"accredited investor" as defined in Rule 501(a)(1),  (a)(2),  (a)(3), (a)(7), or
(a)(8) promulgated under the Securities Act or a qualified  institutional  buyer
as defined in Rule 144A(a) under the Securities Act.

      Section 5. Miscellaneous.

            (a) Title to Warrant.  Prior to the Termination  Date and subject to
compliance with applicable laws and Section 4 of this Warrant,  this Warrant and
all rights  hereunder  are  transferable,  in whole or in part, at the office or
agency of the  Company by the Holder in person or by duly  authorized  attorney,
upon surrender of this Warrant  together with the Assignment Form annexed hereto
properly  endorsed.  The transferee shall sign an investment  letter in form and
substance reasonably satisfactory to the Company.

            (b) No Rights as Shareholder  Until Exercise.  This Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder  of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate  Exercise  Price (or by means of a cashless  exercise),
the  Warrant  Shares  so  purchased  shall be and be  deemed to be issued to the
Holder as the record  owner of such  shares as of the close of  business  on the
later of the date of such surrender or payment.

                                       8
<PAGE>

            (c) Loss, Theft,  Destruction or Mutilation of Warrant.  The Company
covenants that upon receipt by the Company of evidence  reasonably  satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate  relating  to the  Warrant  Shares,  and in case of  loss,  theft or
destruction,  of indemnity or security reasonably  satisfactory to it (which, in
the case of the  Warrant,  shall not include the posting of any bond),  and upon
surrender and cancellation of such Warrant or stock  certificate,  if mutilated,
the Company  will make and deliver a new  Warrant or stock  certificate  of like
tenor  and  dated  as of such  cancellation,  in lieu of such  Warrant  or stock
certificate.

            (d) Saturdays,  Sundays, Holidays, etc. If the last or appointed day
for the taking of any action or the  expiration of any right required or granted
herein shall be a Saturday,  Sunday or a legal holiday,  then such action may be
taken or such right may be exercised on the next  succeeding day not a Saturday,
Sunday or legal holiday.

            (e) Authorized Shares.

            The  Company  covenants  that  during  the  period  the  Warrant  is
outstanding,  it will reserve from its  authorized  and unissued  Common Stock a
sufficient  number of shares to provide for the  issuance of the Warrant  Shares
upon the exercise of any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall  constitute  full authority to
its officers who are charged with the duty of executing  stock  certificates  to
execute and issue the  necessary  certificates  for the Warrant  Shares upon the
exercise of the purchase  rights under this  Warrant.  The Company will take all
such  reasonable  action as may be necessary to assure that such Warrant  Shares
may be issued as provided  herein  without  violation of any  applicable  law or
regulation,  or of any  requirements of the Trading Market upon which the Common
Stock may be listed.

            Except and to the extent as waived or  consented  to by the  Holder,
the Company shall not by any action, including, without limitation, amending its
articles of  incorporation  or through any  reorganization,  transfer of assets,
consolidation,  merger,  dissolution,  issue or sale of  securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this  Warrant,  but will at all times in good  faith  assist in the
carrying  out of all such terms and in the taking of all such  actions as may be
necessary  or  appropriate  to protect  the rights of the Holder as set forth in
this  Warrant  against  impairment.  Without  limiting  the  generality  of  the
foregoing, the Company will (a) not increase the par value of any Warrant Shares
above the amount payable therefor upon such exercise  immediately  prior to such
increase  in par  value,  (b)  take  all  such  action  as may be  necessary  or
appropriate  in order that the Company may validly and legally  issue fully paid
and nonassessable  Warrant Shares upon the exercise of this Warrant, and (c) use
commercially reasonable efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having  jurisdiction  thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.

            Before  taking any action which would result in an adjustment in the
number of  Warrant  Shares  for which  this  Warrant  is  exercisable  or in the
Exercise Price, the Company shall obtain all such  authorizations  or exemptions
thereof,  or consents  thereto,  as may be necessary from any public  regulatory
body or bodies having jurisdiction thereof.

                                       9
<PAGE>

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

            (g)  Restrictions.  The Holder  acknowledges that the Warrant Shares
acquired  upon the  exercise  of this  Warrant,  if not  registered,  will  have
restrictions upon resale imposed by state and federal securities laws.

            (h)  Nonwaiver  and  Expenses.  No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding  the fact that all rights hereunder terminate on the Termination
Date. If the Company  willfully and knowingly fails to comply with any provision
of this  Warrant,  which  results in any  material  damages to the  Holder,  the
Company  shall pay to Holder such  amounts as shall be  sufficient  to cover any
costs and expenses  including,  but not limited to, reasonable  attorneys' fees,
including those of appellate  proceedings,  incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights,  powers
or remedies hereunder.

            (i)  Notices.  Any  notice,  request or other  document  required or
permitted  to be  given or  delivered  to the  Holder  by the  Company  shall be
delivered in accordance with the notice provisions of the Purchase Agreement.

            (j) Limitation of Liability.  No provision hereof, in the absence of
any  affirmative  action by the Holder to  exercise  this  Warrant  or  purchase
Warrant  Shares,  and no  enumeration  herein of the rights or privileges of the
Holder, shall give rise to any liability of the Holder for the purchase price of
any Common Stock or as a stockholder  of the Company,  whether such liability is
asserted by the Company or by creditors of the Company.

            (k) Remedies.  The Holder, in addition to being entitled to exercise
all rights granted by law,  including  recovery of damages,  will be entitled to
specific  performance of its rights under this Warrant.  The Company agrees that
monetary  damages  would not be adequate  compensation  for any loss incurred by
reason of a breach by it of the  provisions of this Warrant and hereby agrees to
waive the defense in any action for  specific  performance  that a remedy at law
would be adequate.

            (l) Successors and Assigns.  Subject to applicable  securities laws,
this Warrant and the rights and obligations  evidenced hereby shall inure to the
benefit of and be binding upon the  successors of the Company and the successors
and permitted assigns of the Holder. The provisions of this Warrant are intended
to be for the benefit of all Holders from time to time of this Warrant and shall
be enforceable by any such Holder or holder of Warrant Shares.

            (m)  Amendment.  This  Warrant  may be  modified  or  amended or the
provisions hereof waived with the written consent of the Company and the Holder.

            (n) Severability.  Wherever possible, each provision of this Warrant
shall  be  interpreted  in  such  manner  as to be  effective  and  valid  under
applicable  law, but if any  provision of this Warrant shall be prohibited by or
invalid under  applicable law, such provision shall be ineffective to the extent
of such  prohibition or invalidity,  without  invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

                                       10
<PAGE>

            (o)  Headings.  The  headings  used  in  this  Warrant  are  for the
convenience of reference  only and shall not, for any purpose,  be deemed a part
of this Warrant.

      IN WITNESS WHEREOF,  the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.

Dated:      February 10, 2006             WORLD WASTE TECHNOLOGIES, INC.

                                          By: /s/ John Pimentel
                                             ------------------------------
                                               Name:     John Pimentel
                                               Title:    Chief Executive Officer

                                       11
<PAGE>

                               NOTICE OF EXERCISE

TO:      [_____________]

      (1) The undersigned  hereby elects to purchase  ________ Warrant Shares of
the Company  pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.

      (2) Payment shall take the form of (check applicable box):

            |_|   in lawful money of the United States; or

            |_|   the  cancellation  of such  number  of  Warrant  Shares  as is
                  necessary,  in  accordance  with  the  formula  set  forth  in
                  subsection  2(c), to exercise this Warrant with respect to the
                  maximum number of Warrant Shares  purchasable  pursuant to the
                  cashless exercise procedure set forth in subsection 2(c).

      (3) Please issue a certificate or certificates  representing  said Warrant
Shares in the name of the  undersigned  or in such  other  name as is  specified
below:

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

The Warrant Shares shall be delivered to the following:

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

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

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

      (4) Accredited  Investor.  The undersigned is an "accredited  investor" as
defined  in  Regulation  D  promulgated  under the  Securities  Act of 1933,  as
amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity:_______________________________________________________
Signature of Authorized Signatory of Investing Entity:__________________________
Name of Authorized Signatory:___________________________________________________
Title of Authorized Signatory:__________________________________________________
Date:___________________________________________________________________________

                                       12
<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

            FOR VALUE RECEIVED,  the foregoing  Warrant and all rights evidenced
thereby are hereby assigned to

                                                                whose address is
               -------------------------------------------------

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

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

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

               Dated:                                 , 200____
                     ---------------------------------

Holder's Signature:
                      -------------------------------------------------
Holder's Address:
                      -------------------------------------------------
                      -------------------------------------------------

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

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

Signature Guaranteed:
                      -------------------------------------------------

NOTE: The signature to this  Assignment Form must correspond with the name as it
appears on the face of the Warrant,  without  alteration or  enlargement  or any
change whatsoever,  and must be guaranteed by a bank or trust company.  Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

                                       13

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