Document:

INVESTMENT AGREEMENT
                              --------------------

     INVESTMENT  AGREEMENT  (this "AGREEMENT"), dated as of April 1, 2003 by and
between  Cal  Bay International, Inc., a Nevada corporation (the "COMPANY"), and
Dutchess  Private  Equities  Fund,  L.P.,  a  Delaware  limited partnership (the
"INVESTOR").

     WHEREAS,  the  parties  desire  that,  upon  the  terms  and subject to the
conditions  contained  herein,  the  Investor  shall invest up to $10,000,000 to
purchase  the  Company's  common  stock,  $.001 par value per share (the "COMMON
STOCK");

     WHEREAS,  such  investments will be made in reliance upon the provisions of
Section 4(2) under the Securities Act of 1933, as amended (the "1933 ACT"), Rule
506  of  Regulation  D,  and  the  rules and regulations promulgated thereunder,
and/or  upon such other exemption from the registration requirements of the 1933
Act  as may be available with respect to any or all of the investments in Common
Stock  to  be  made  hereunder;  and

     WHEREAS,  contemporaneously  with  the  execution  and  delivery  of  this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement  substantially  in  the  form  attached  hereto  as  Exhibit  A  (the
"REGISTRATION  RIGHTS  AGREEMENT")  pursuant  to which the Company has agreed to
provide  certain  registration  rights  under  the  1933  Act, and the rules and
regulations  promulgated  thereunder,  and  applicable  state  securities  laws.

     NOW  THEREFORE,  in consideration of the foregoing recitals, which shall be
considered  an integral part of this Agreement, the covenants and agreements set
forth  hereafter,  and  other  good  and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Investor hereby
agree  as  follows:

     1.     DEFINITIONS.  As  used  in this Agreement, the following terms shall
            ------------
have  the  following meanings specified or indicated, and such meanings shall be
equally  applicable  to  the  singular  and  plural  forms of the defined terms.

"1933  ACT"  shall  mean  the  Securities  Act  of  1933,  as it may be amended.

"1934 ACT" shall mean the Securities Exchange Act of 1934, as it may be amended.

"AFFILIATE"  shall  have  the  meaning  specified  in  Section  5(h).

"AGREED  UPON  PROCEDURES  REPORT"  shall  have the meaning specified in Section
2(o).

"AGREEMENT"  shall  mean  this  Investment  Agreement.

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"BRING  DOWN  COLD  COMFORT  LETTER" shall have the meaning specified in Section
2(n).

"BUY-IN"  shall  have  the  meaning  specified  in  Section  6.

"BUY-IN  ADJUSTMENT  AMOUNT"  shall  have  the  meaning  specified in Section 6.

"CLOSING"  shall  have  the  meaning  specified  in  Section  2(h).

"CLOSING  DATE"  shall  mean,  as  defined  in  Section  2(h), the date which is
thirteen  (13)  Trading  Days  following  the  Put  Notice  Date.

"COMMON  STOCK"  shall  mean  the  Common  Stock  of  the  Company.

"CONTROL"  or  "CONTROLS"  shall  have  the  meaning  specified in Section 5(h).

"COVERING  SHARES"  shall  have  the  meaning  specified  in  Section  6.

"EFFECTIVE  DATE"  shall mean the date the SEC declares effective under the 1933
Act  the  Registration  Statement  covering  the  Securities.

"ENVIRONMENTAL  LAWS"  shall  have  the  meaning  specified  in  Section  4(m).

"ESCROW  AGENT"  shall  mean  Brown  Rudnick  Berlack  &  Israels,  LP

"ESCROW  AGREEMENT"  shall  mean  the  Escrow Agreement entered into between the
Company,  Investor  and  Escrow  Agent  and  attached  as  Exhibit  C.

"EXECUTION  DATE"  shall mean the date all Transaction Documents are executed by
the  Company  and  Investor.

"INDEMNITEES"  shall  have  the  meaning  specified  in  Section  10.

"INDEMNIFIED  LIABILITIES"  shall  have  the  meaning  specified  in Section 10.

"INEFFECTIVE  PERIOD"  shall  mean  any  period  of  time  that the Registration
Statement  or  any  Supplemental  Registration  Statement  (as  defined  in  the
Registration  Rights  Agreement)  becomes ineffective or unavailable for use for
the  sale  or resale, as applicable, of any or all of the Registrable Securities
(as  defined  in  the  Registration  Rights Agreement) for any reason (or in the
event  the  prospectus under either of the above is not current and deliverable)
during  any  time  period  required  under  the  Registration  Rights Agreement.

"INVESTOR"  shall  mean Dutchess Private Equities Fund, L.P., a Delaware limited
partnership.

"MAJOR  TRANSACTION"  shall  have  the  meaning  specified  in  Section  2(g).

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"MATERIAL  ADVERSE  EFFECT"  shall  have  the meaning specified in Section 4(a).

"MATERIAL  FACTS"  shall  have  the  meaning  specified  in  Section  2(m).

"MAXIMUM  COMMON  STOCK  ISSUANCE"  shall  have the meaning specified in Section
2(j).

"MINIMUM ACCEPTABLE PRICE" with respect to any Put Notice Date shall mean 75% of
the  average  of  the closing bid prices for the fifteen (15) Trading Day period
immediately  preceding  such  Put  Notice  Date.

 "OPEN  PERIOD" shall mean the period beginning on and including the Trading Day
immediately  following  the Effective Date and ending on the earlier to occur of
(i)  the  date  which is 36 (thirty-six) months from the Effective Date and (ii)
termination  of  the  Agreement  in  accordance  with  Section  9.

 "PAYMENT  AMOUNT"  shall  have  the  meaning  specified  in  Section  2(p).

"PARTIAL  RELEASE  FORM"  shall  have  the  meaning  specified  in Section 2(i).

"PRICING  PERIOD"  shall  mean  the  period beginning on the Put Notice Date and
ending  on  and including the date which is ten (10) Trading Days after such Put
Notice  Date.

"PRINCIPAL  MARKET"  shall  mean the American Stock Exchange, Inc., the National
Association  of Securities Dealer's, Inc. OTC-BB, the BBX,   the Nasdaq National
Market  System  or the Nasdaq SmallCap Market, whichever is the principal market
on  which  the  Common  Stock  is  listed.

"PROSPECTUS"  shall mean the prospectus, preliminary prospectus and supplemental
prospectus  used  in  connection  with  the  Registration  Statement.

"PURCHASE  AMOUNT"  shall  mean the total amount being paid by the Investor on a
particular  Closing  Date  to  purchase  the  Securities.

"PURCHASE  PRICE" shall mean 94% (ninety-four percent) of the lowest closing bid
price  of  the  Common  Stock  during  the  Pricing  Period.

"PUT  AMOUNT"  shall  have  the  meaning  set  forth  in  Section  2(b)  hereof.

"PUT  NOTICE"  shall  mean  a written notice sent to the Investor by the Company
stating  the  Put  Amount  of Shares the Company intends to sell to the Investor
pursuant  to the terms of the Agreement and stating the current number of Shares
issued  and  outstanding  on  such  date.

"PUT  NOTICE  DATE"  shall mean the Trading Day immediately following the day on
which  the  Investor receives a Put Notice, however a Put Notice shall be deemed

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delivered on (x) the Trading Day it is received by facsimile or otherwise by the
Investor  if  such  notice is received prior to 9:00 am Eastern Time, or (y) the
immediately  succeeding  Trading Day if it is received by facsimile or otherwise
after  9:00  am  Eastern  Time  on  a  Trading Day.  No Put Notice may be deemed
delivered  on  a  day  that  is  not  a  Trading  Day.

"PUT  RESTRICTION" shall mean the days between the end of the Pricing Period and
the  date  on  which  the  Investor deems the Put closed.  During this time, the
Company  shall  not  be  entitled  to  deliver  another  Put  Notice.

"REGISTRATION  OPINION"  shall  have  the  meaning  specified  in  Section 2(m).

"REGISTRATION  OPINION  DEADLINE"  shall mean the date that is three (3) Trading
Days  prior  to  each  Put  Notice  Date.

"REGISTRATION  PERIOD"  shall  have  the  meaning  specified  in  Section  5(c).

"REGISTRATION  RIGHTS  AGREEMENT"  shall  mean the Agreement entered into by the
Company  with  Investor  for  the  registration  of  the  Securities.

"REGISTRATION  STATEMENT"  means the registration statement of the Company filed
under  the  1933  Act  covering  the  Common  Stock  issuable  hereunder.

"RELATED  PARTY"  shall  have  the  meaning  specified  in  Section  5(h).

"REPURCHASE  EVENT"  shall  have  the  meaning  specified  in  Section  2(p).

"RESOLUTION"  shall  have  the  meaning  specified  in  Section  8(f).

"SEC"  shall  mean  the  U.S.  Securities  &  Exchange  Commission.

"SEC  DOCUMENTS"  shall  have  the  meaning  specified  in  Section  4(f).

"SECURITIES"  shall mean the shares of Common Stock issued pursuant to the terms
of  the  Agreement.

"SHARES"  shall  mean  the  shares  of common stock of the Company having no par
value  per  share.

"SOLD  SHARES"  shall  have  the  meaning  specified  in  Section  6.

"SUBSIDIARIES"  shall  have  the  meaning  specified  in  Section  4(a).

"TRADING DAY" shall mean any day on which the Principal Market for the Company's
common  stock  is  open  for  trading,  from the hours of 9:30 am until 4:00 pm.

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"TRANSACTION  DOCUMENTS"  shall  mean  this  Agreement,  the Registration Rights
Agreement, the Escrow Agreement and each of the other agreements entered into by
the  parties  hereto  in  connection  with  this  Agreement.

"VALUATION  EVENT"  shall  have  the  meaning  specified  in  Section  2(k).

     2.     PURCHASE  AND  SALE  OF  COMMON  STOCK
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     a.     Purchase  and  Sale  of  Common  Stock.  Subject  to  the  terms and
            ---------------------------------------
conditions  set  forth herein, the Company shall issue and sell to the Investor,
and  the  Investor  shall purchase from the Company, up to that number of Shares
having  an  aggregate  Purchase  Price  of  $10,000,000.

     b.     Delivery of Put Notices.     (i) Subject to the terms and conditions
            -----------------------
of  the Transaction Documents, and from time to time during the Open Period, the
Company  may, in its sole discretion, deliver a Put Notice to the Investor which
states  the  Put Amount (designated in shares of Common Stock) which the Company
intends  to  sell to the Investor on a Closing Date.  The Put Notice shall be in
the  form  attached  hereto as Exhibit "F" and incorporated herein by reference.
The  Company shall simultaneously deliver a copy of the Put Notice to the Escrow
Agent.  The  Put  Amount  designated  by the Company in the form of a Put Notice
shall  be  as  follows:

          The  amount  that the Company shall be entitled to Put to the Investor
shall  be  equal  to  175% of the average daily volume (U.S. market only) of the
Common Stock for the 20 (twenty) Trading Days prior to the applicable Put Notice
Date  multiplied  by  the  average  of  the  three  (3) daily closing bid prices
immediately  preceding  the  Put  Date,  but  in  no event more than $1,000,000.

          During  the Open Period, the Company shall not be entitled to submit a
Put  Notice  until  after  the previous Closing has been completed. The Purchase
Price  for  the  Common Stock identified in the Put Notice shall be equal to 94%
(ninety-four percent) of the lowest closing bid price of the Common Stock during
the  Pricing  Period.

     (ii)  If  the  closing  bid price during the applicable Pricing Period with
respect  to  that  Put  Notice  is  less  than 75% (seventy-five percent) of the
closing  bid  prices of the Common Stock for the fifteen (15) Trading Days prior
to  the  Put  Notice  Date  ("MINIMUM  ACCEPTABLE  PRICE")  the  Put Notice will
terminate,  only  at the Company's  request, sent via FACSIMILE to the Investor,
the  Investor  will  continue  the  Put  until  the FACSIMILE is received by the
Investor.  In  the  event  that the closing bid price for the applicable Pricing
Period  is  less  than  the  Minimum Acceptable Price, the Company may elect, by
sending  written  notice to the Investor via facsimile with a copy to the Escrow
Agent,  to  cancel  that  portion of the Put Notice remaining for that number of
Trading  Days remaining after the written cancellation notice is received by the
Investors.  The  written notice shall be deemed received by the Investors on (i)
the  Trading  Day  it  is  actually  received  by  facsimile or otherwise by the
Investors  if such notice is received on or prior to 9:00 A.M. New York time, or
(ii) the immediately succeeding Trading Day if it is received by facsimile after

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9:00  A.M.  New York time on a Trading Day or at anytime on a day which is not a
Trading  Day.  Notwithstanding  the  foregoing,  there  shall  be a closing with
respect  to, and the Company shall be responsible for delivering, that number of
shares  of  Common  Stock  to  the  Escrow Agent that were sold by the Investors
through and including the end of the Trading Day the written cancellation notice
is  received  by  the  Investor.
    --------

      (iii)  Within  Thirteen  (13) calendar days after the commencement of each
calendar  quarter  occurring  subsequent to the commencement of the Open Period,
the  Company  undertakes to notify Investor as to its reasonable expectations as
to  the  Put  Amount  it  intends to raise during such calendar quarter, if any,
through the issuance of Put Notices. Such notification shall constitute only the
Company's good faith estimate with respect to such calendar quarter and shall in
no way obligate the Company to raise such amount during such calendar quarter or
otherwise limit its ability to deliver Put Notices during such calendar quarter.
The  failure  by  the  Company to comply with this provision can be cured by the
Company's  notifying Investor at any time as to its reasonable expectations with
respect  to  the  current  calendar  quarter.

     c.    Interest.   It is the intention of the parties that any interest that
           --------
may  be  deemed  to be payable under this Agreement shall not exceed the maximum
amount  permitted  under  any  applicable  law.  If a law, which applies to this
Agreement which sets the maximum interest amount, is finally interpreted so that
the  interest  in  connection  with this Agreement exceeds the permitted limits,
then:  (1)  any such interest shall be reduced by the amount necessary to reduce
the  interest to the legally permitted limit; and (2) any sums already collected
(if  any)  from  the  Company  which exceed the legally permitted limits will be
refunded  to  the  Company.  The  Investor  may  choose  to  make this refund by
reducing  the  amount  that the Company owes under this Agreement or by making a
direct  payment to the Company.  If a refund reduces the amount that the Company
owes  the Investor, the reduction will be treated as a partial payment.  In case
any  provision of this Agreement is held by a court of competent jurisdiction to
be  excessive  in  scope  or  otherwise invalid or unenforceable, such provision
shall  be adjusted rather than voided, if possible, so that it is enforceable to
the  maximum  extent  possible,  and  the  validity  and  enforceability  of the
remaining  provisions  of  this  Agreement  will  not  in any way be affected or
impaired  thereby.

          d.     reserved.
                 --------
     e.     Limitation  on  Investor's  Obligation  to  Purchase  Shares.
            ------------------------------------------------------------
Notwithstanding  anything  to  the contrary in this Agreement, in no event shall
the  Investor be required to purchase, and the Company shall in no event sell to
the  Investor,  that number of Shares, which when added to the sum of the number
of  Shares "beneficially owned" (as such term is defined under Section 13(d) and
Rule 13d-3 of the Securities Exchange Act of 1934, as may be amended, (the "1934
ACT")),  by the Investor, would exceed 4.99% of the number of Shares outstanding
on the Put Notice Date for such Pricing Period, as determined in accordance with
Rule  13d-1(j)  promulgated  under  the 1934 Act. In no event shall the Investor
purchase  Shares  other  than pursuant to this Agreement until such date as this
Agreement  is terminated.  Each Put Notice shall include a representation of the
Company  as  to the number of Shares outstanding on the related Put Notice Date.

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In  the  event  that  the  number of Shares outstanding is different on any date
during  a Pricing Period than the number of Shares outstanding on the Put Notice
Date  associated with such Pricing Period, then the number of Shares outstanding
on such date during such Pricing Period shall govern for purposes of determining
whether  the Investor would be acquiring beneficial ownership of more than 4.99%
of  the  number  of  Shares  outstanding  during  such  period.

     f.     Conditions  to  Investor's  Obligation  to  Purchase  Shares.
            ------------------------------------------------------------
Notwithstanding  anything  to  the contrary in this Agreement, the Company shall
not  be entitled to deliver a Put Notice and the Investor shall not be obligated
to  purchase any Shares at a Closing (as defined in Section 2(h)) unless each of
the  following  conditions  are  satisfied:

          (i)  a  Registration  Statement shall have been declared effective and
          shall  remain  effective  and  available  for  the  resale  of all the
          Registrable  Securities  (as  defined  in  the  Registration  Rights
          Agreement)  at all times until the Closing with respect to the subject
          Put  Notice;

          (ii)  at  all  times  during  the  period beginning on the related Put
          Notice  Date and ending on and including the related Closing Date, the
          Common  Stock shall have been listed on the Principal Market and shall
          not  have been suspended from trading thereon for a period of five (5)
          consecutive  Trading Days during the Open Period and the Company shall
          not  have  been  notified  of  any pending or threatened proceeding or
          other  action  to  delist  or  suspend  the  Common  Stock;

          (iii)  the  Company has complied with its obligations and is otherwise
          not  in  breach  of a material provision of, or in default under, this
          Agreement,  the  Registration  Rights Agreement or any other agreement
          executed  in connection herewith which has not been corrected prior to
          delivery  of  the  Put  Notice  Date;

          (iv)  no  injunction  shall  have  been issued and remain in force, or
          action commenced by a governmental authority which has not been stayed
          or  abandoned,  prohibiting  the  purchase  or  the  issuance  of  the
          Securities;  and

          (v)  the  issuance  of the Securities will not violate the shareholder
          approval  requirements  of  the  Principal  Market.

          If any of the events described in clauses (i) through (v) above occurs
          during a Pricing Period, then the Investor shall have no obligation to
          -----------------------
          purchase  the  Put  Amount of Common Stock set forth in the applicable
          Put  Notice.

     g.  For  purposes  of this Agreement, a "MAJOR TRANSACTION" shall be deemed
to  have  occurred  upon  the  closing  of  any of the following events: (i) the
consolidation,  merger or other business combination of the Company with or into
another  person  (other  than pursuant to a migratory merger effected solely for
the  purposes  of  changing  the jurisdiction of incorporation of the Company or
other than a transaction in which the Company is the surviving corporation) (ii)
the  sale  or  transfer  of all or substantially all of the Company's assets; or

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(iii)  the  consummation  of  a  purchase, tender or exchange offer made to, and
accepted  by,  the  holders of more than 30% of the economic interest in, or the
combined  voting  power  of  all  classes  of  voting  stock  of,  the  Company.

     h.     Mechanics  of  Purchase  of  Shares  by  Investor.  Subject  to  the
            -------------------------------------------------
satisfaction  of the conditions set forth in Sections 2(f), 7 and 8, the closing
of  the purchase by the Investor of Shares (a "CLOSING") shall occur on the date
which  is Thirteen (13) Trading Days following the applicable Put Notice Date or
when  the  Investor  deems  a Put closed (each a "CLOSING DATE").  Prior to each
Closing  Date, (i) the Company shall deliver to the Escrow Agent pursuant to the
Escrow  Agreement,  annexed  hereto  as Exhibit C, certificates representing the
Shares  to  be issued to the Investor on such date and registered in the name of
the  Investor  and  (ii)  the  Investor  shall  deliver  to the Escrow Agent the
Purchase  Price  to  be paid for such Shares (after receipt from Escrow Agent of
confirmation  of  delivery  of  such Shares), determined as set forth in Section
2(b)  and  (d),  by  wire  transfer. In lieu of delivering physical certificates
representing  the Securities and provided that the Company's transfer agent then
is  participating  in  The  Depository  Trust  Company  ("DTC")  Fast  Automated
                                                         -----
Securities  Transfer ("FAST") program, upon request of the Investor, the Company
                      -----
shall  use  its  commercially  reasonable efforts to cause its transfer agent to
electronically  transmit  the  Securities by crediting the account of the Escrow
Agent's prime broker (which shall be specified by the Escrow Agent  a reasonably
sufficient  time  in  advance)  with  DTC  through  its Deposit Withdrawal Agent
Commission  ("DWAC")  system.
             ------

     The  Company  understands that a delay in the issuance of Securities beyond
the  Closing  Date  could  result  in  economic  loss to the Investor. After the
Effective  Date,  as  compensation  to  the  Investor for such loss, the Company
agrees  to  pay  late  payments  to the Investor for late issuance of Securities
(delivery  of  Securities  after the applicable Closing Date) in accordance with
the  following  schedule  (where  "No. of Days Late" is defined as the number of
                                  -----------------
days  beyond  the  Closing  Date):

                                            Late  Payment  For  Each
          No.  of  Days  Late               $10,000  of  Common  Stock
          -------------------               --------------------------

               1                                   $100
               2                                   $200
               3                                   $300
               4                                   $400
               5                                   $500
               6                                   $600
               7                                   $700
               8                                   $800
               9                                   $900
              10                                   $1,000
              Over 10                              $1,000  + $200 for each
                                                   Business Day late  beyond  10
     The  Company  shall  pay  any  payments  incurred  under  this  Section  in
immediately  available  funds  upon  demand.  Nothing  herein  shall  limit  the
Investor's right to pursue actual damages for the Company's failure to issue and
deliver  the  Securities  to  the  Investor,  except  to

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the  extent  that such late payments shall constitute payment for and offset any
such  actual  damages alleged by the Investor, and any Buy In Adjustment Amount.

     i.     Partial  Release  of Shares.       After Investor has received a Put
            ---------------------------
Notice,  but  prior  to the related Closing Date, the Investor may authorize the
Escrow  Agent to release, every five (5) Trading Days, a portion of the Purchase
Amount  from  escrow  to  the  Company in exchange for a fixed number of Shares,
subject  to  the  following  conditions:

          (i)  The  Investor  shall  fill  out  and  sign  a  Partial Release of
               Purchase  Amount  and  Shares  (the  "Partial Release Form"). The
               Partial  Release  Form shall set forth the number of Shares to be
               released to Investor and the dollar amount the Escrow Agent shall
               wire  to  the  Company.

          (ii) The  Partial  Release  Form shall be filled out and signed by the
               Investor  and  faxed  to the Company prior to 12:00 p.m. New York
               City  time.

     The  number  of Shares stated in the Partial Release Form shall be equal to
the  dollar  amount  to  be released divided by 94% (ninety-four percent) of the
lowest  closing  bid  price  during  that  number of Trading Days of the Pricing
Period  that  have  expired.

     The  Company  and  Investor  agree  that  on  the  related Closing Date, an
adjustment  shall be made so that the terms set forth in this Agreement shall be
honored  with  the  balance of the Purchase Amount being released to the Company
and  the  balance of the Shares owed to the Investor being released to Investor.

     j.     Overall  Limit  on  Common  Stock Issuable. Notwithstanding anything
            ------------------------------------------
contained  herein to the contrary, if during the Open Period the Company becomes
listed  on an exchange that limits the number of shares of Common Stock that may
be  issued  without  shareholder approval, then the number of Shares issuable by
the  Company  and  purchasable  by  the Investor, including the shares of Common
Stock issuable to the Investors pursuant to Section 11(b), shall not exceed that
number  of  the  shares of Common Stock that may be issuable without shareholder
approval,  subject  to appropriate adjustment for stock splits, stock dividends,
combinations  or  other similar recapitalization affecting the Common Stock (the
"MAXIMUM  COMMON  STOCK ISSUANCE"), unless the issuance of Shares, including any
                                    ------
Common  Stock to be issued to the Investors pursuant to Section 11(b), in excess
of  the  Maximum  Common Stock Issuance shall first be approved by the Company's
shareholders  in  accordance with applicable law and the By-laws and Articles of
Incorporation  of  the Company, if such issuance of shares of Common Stock could
cause a delisting on the Principal Market. The parties understand and agree that
the  Company's  failure  to seek or obtain such shareholder approval shall in no
way adversely affect the validity and due authorization of the issuance and sale
of  Securities  or  the  Investor's  obligation in accordance with the terms and
conditions  hereof  to  purchase  a  number of Shares in the aggregate up to the
Maximum  Common  Stock Issuance limitation, and that such approval pertains only
to the applicability of the Maximum Common Stock Issuance limitation provided in
this  Section  2(j).

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<PAGE>

     k.  "VALUATION EVENT" means the Company taking any of the following actions
at  any  time  during  a  "Pricing  Period":

          (i)  subdivides  or  combines  its  Common  Stock;
          (ii) pays  a  dividend in Common Stock or makes any other distribution
               of  its  Common  Stock, except for dividends paid with respect to
               the  Preferred  Stock;
          (iii)  issues any options or other rights to subscribe for or purchase
               Common Stock ("Options") and the price per share for which Common
               Stock  may  at  any  time thereafter be issuable pursuant to such
               Options  shall  be  less than the Bid Price in effect immediately
               prior  to  such  issuance  of  such  Options;
          (iv) issues any securities convertible into or exchangeable for Common
               Stock  ("Convertible Securities") and the consideration per share
               for  which  shares  of Common Stock may at any time thereafter be
               issuable  pursuant  to  the  terms of such Convertible Securities
               shall  be  less than the Bid Price in effect immediately prior to
               such  issuance  of  the  Convertible  Securities;
          (v)  issues  shares  of Common Stock otherwise than as provided in the
               foregoing  subsections  (i)  through  (iv),  at a price per share
               less,  or  for  other  consideration lower, than the Bid Price in
               effect  immediately  prior  to  such  issuance,  or  without
               consideration;
          (vi) makes  a  distribution of its assets or evidences of indebtedness
               to the holders of Common Stock as a dividend in liquidation or by
               way  of return of capital or other than as a dividend payable out
               of  earnings  or  surplus  legally  available for dividends under
               applicable  law  or  any  distribution  to  such  holders made in
               respect  of the sale of all or substantially all of the Company's
               assets  (other  than  under the circumstances provided for in the
               foregoing  subsections  (i)  through  (v);  or
          (vii)  takes any action affecting the number of shares of Common Stock
               outstanding,  other  than  an  action  described  in  any  of the
               foregoing  subsections  (i) through (vi) hereof, inclusive, which
               in the opinion of the Company's Board of Directors, determined in
               good  faith,  would  have  a  materially  adverse effect upon the
               rights  of  Investor  at the time of a Put Notice is delivered to
               Investor.

     l.     The  Company  agrees  that  it  shall not take any action that would
result  in  a  Valuation  Event  occurring  during  a  Pricing  Period.

     m.     Accountant's  Letter  and  Registration Opinion. Whenever reasonably
            -----------------------------------------------
requested  by Investor, the Company shall cause to be delivered to the Investor,
on  or  prior to each Registration Opinion Deadline, an opinion of the Company's
independent  counsel  (the  "REGISTRATION  OPINION"),  addressed to the Investor
stating, inter alia, that no material facts ("MATERIAL FACTS") have come to such
counsel's  attention  that  have  caused  it  to  believe  that the Registration
Statement  is  subject  to  an  Ineffective  Period  or  to  believe  that  the

                                       10
<PAGE>

Registration  Statement, any supplemental Registration Statement (as each may be
amended,  if  applicable),  and  any  related  prospectuses,  contain  an untrue
statement  of  material  fact  or  omits  a  material  fact required to make the
statements  contained  therein,  in  light of the circumstances under which they
were  made, not misleading. If a Registration Opinion cannot be delivered by the
Company's  independent  counsel  to  the  Investor  on  the Registration Opinion
Deadline,  the  Company  shall  promptly  notify the Investor and as promptly as
possible  amend  each  of  the  Registration  Statement  and  any  supplemental
Registration Statements, as applicable, and any related prospectus or cause such
Ineffective  Period  to  terminate,  as  the  case  may  be,  and  deliver  such
Registration  Opinion  and updated prospectus as soon as possible thereafter. If
at  any time after a Put Notice shall have been delivered to Investor but before
the  related Closing Date, the Company acquires knowledge of such Material Facts
or  any  Ineffective  Period  occurs,  the  Company shall immediately notify the
Investor  in  writing.

     n.     (i)  Whenever  reasonably  requested  by Investor, the Company shall
engage  its independent auditors to prepare in accordance with the provisions of
Statement  on  Auditing  Standards  No. 71, as amended, such written report (the
"BRING  DOWN  COLD  COMFORT  LETTERS") with respect to the financial information
contained in the Registration Statement and shall have delivered to the Investor
such  a  report  addressed  to  the  Investor,  on or prior to each Registration
Opinion  Deadline;

     (ii)  in  the  event  that the Investor shall have requested delivery of an
Agreed Upon Procedures Report pursuant to Section 2(o), the Company shall engage
its  independent  auditors  to perform certain agreed upon procedures and report
thereon  as shall have been reasonably requested by the Investor with respect to
certain  financial  information  of the Company and the Company shall deliver to
the  Investor a copy of such report addressed to the Investor. In the event that
the  report  required  by this Section 2(n) cannot be delivered by the Company's
independent  auditors,  the  Company  shall,  if  necessary, promptly revise the
Registration  Statement  and  the  Company  shall  not  deliver  a Put Notice to
Investor  until  such  report  is  delivered.

     o.      Procedure if Material Facts are Reasonably believed to be untrue or
            --------------------------------------------------------------------
are omitted. In the event after such consultation the Investor or the Investor's
-----------
counsel  reasonably  believes that the Registration Statement contains an untrue
statement  or  a material fact or omits a material fact required to be stated in
the  Registration  Statement  or  necessary  to  make  the  statements contained
therein,  in light of the circumstances in which they were made, not misleading,
(i)  the  Company  shall  file  with  the  SEC  an amendment to the Registration
Statement  responsive  to  such alleged untrue statement or omission and provide
the  Investor,  as  promptly  as  practicable,  with  copies of the Registration
Statement and related Prospectus, as so amended, or (ii) if the Company disputes
the  existence  of any such material misstatement or omission, (x) the Company's
independent  counsel  shall  provide  the Investor's counsel with a Registration
Opinion  and  (y)  in the event the dispute relates to the adequacy of financial
disclosure  and the Investor shall reasonably request, the Company's independent
auditors shall provide to the Company a letter ("AGREED UPON PROCEDURES REPORT")
outlining  the  performance  of  such  "agreed upon procedures," which shall not
require  any  more than the SAS 71 review described above as shall be reasonably
requested by the Investor and the Company shall provide the Investor with a copy
of  such  letter.

                                       11
<PAGE>

          p.  Delisting;  Suspension.  If  at any time during the Open Period or
              ----------------------
within  thirty  (30)  calendar  days  after  the end of the Open Period, (i) the
Registration  Statement,  after it has been declared effective, shall not remain
effective  and available for sale of all the Registrable Securities for a period
exceeding  10  calendar  days,  (ii) the Common Stock shall not be listed on the
Principal  Market  or  shall have been suspended from trading thereon (excluding
suspensions  of  not  more  than  one  trading  day  resulting  from  business
announcements  by  the  Company)  or the Company shall have been notified of any
pending or threatened proceeding or other action to delist or suspend the Common
Stock,  (iii)  there  shall  have  occurred  a  Major Transaction (as defined in
Section  2(g))  or  the public announcement of a pending Major Transaction which
has  not  been abandoned or terminated, or (iv) the Registration Statement is no
longer  effective  or stale for a period of more than five (5) Trading Days as a
result  of  the Company's failure to timely file its financial statements or for
any  other reason, the Company shall repurchase within thirty (30) calendar days
of  the  occurrence  of  one of the events listed in clauses (i), (ii), (iii) or
(iv) above (each a "REPURCHASE EVENT") and subject to the limitations imposed by
applicable  federal  and  state law, all or any part of the Securities issued to
the  Investor within the sixty (60) Trading Days preceding the occurrence of the
Repurchase Event and then held by the Investor at a price per Share equal to the
highest  closing  bid  price  during  the  period  beginning  on the date of the
Repurchase  Event  and ending on and including the date on which the Investor is
paid  by the Company for the repurchase of the Shares (the "PAYMENT AMOUNT"). If
the  Company  fails  to  pay  to  the Investor the full aggregate Payment Amount
within  ten  (10)  calendar  days  of  the occurrence of a Repurchase Event, the
Company shall pay to the Investor, on the first Trading Day following such tenth
(10th)  calendar  day,  in  addition  to  and  not in lieu of the Payment Amount
payable  by  the Company to the Investor, an amount equal to two (2%) percent of
the  aggregate  Payment  Amount then due and payable to the Investor, in cash by
wire  transfer,  plus  compounded  annual interest of 18% on such Payment Amount
during  the  period,  beginning  on  the  day following such tenth calendar day,
during  which  such  Payment  Amount,  or  any  portion thereof, is outstanding.

     3.  INVESTOR'S  REPRESENTATIONS,  WARRANTIES  AND  COVENANTS.
         ---------------------------------------------------------

     The  Investor  represents and warrants to the Company, and covenants, that:

     a.     Sophisticated Investor.  The Investor has, by reason of its business
            -----------------------
and  financial  experience,  such  knowledge,  sophistication  and experience in
financial  and  business matters and in making investment decisions of this type
that  it  is  capable of (A) evaluating the merits and risks of an investment in
the  Securities  and  making an informed investment decision, (B) protecting its
own  interest  and  (C)  bearing  the  economic  risk  of such investment for an
indefinite  period  of  time.

     b.     Authorization;  Enforcement.     This  Agreement  has  been duly and
            ---------------------------
validly  authorized,  executed  and delivered on behalf of the Investor and is a

                                       12
<PAGE>

valid  and binding agreement of the Investor enforceable against the Investor in
accordance with its terms, subject as to enforceability to general principles of
equity  and  to  applicable  bankruptcy, insolvency, reorganization, moratorium,
liquidation  and  other  similar  laws  relating to, or affecting generally, the
enforcement  of  applicable  creditors'  rights  and  remedies.

     c.     Section  9  of  the  1934 Act.  During the Open Period, the Investor
            -----------------------------
will  comply  with  the  provisions  of Section 9 of the 1934 Act, and the rules
promulgated thereunder, with respect to transactions involving the Common Stock.
The  Investor  agrees  not  to  short, either directly or indirectly through its
affiliates,  principals  or advisors, the Company's common stock during the term
of this Agreement, however, it shall not be deemed a short if the Investor sells
common  stock  after  the  delivery  of  the  Put  Notice  from  the  Company.

     d.   Accredited  Investor.  Investor  is  an  "Accredited Investor" as that
          ---------------------
term  is  defined  in  Rule  501(a)(3)  of  Regulation  D  of  the  1933  Act.

     e.     No  Conflicts.  The  execution,  delivery  and  performance  of  the
            -------------
Transaction  Documents  by  the Investor and the consummation by the Investor of
the  transactions contemplated hereby and thereby will not result in a violation
of  the Articles of Incorporation, the By-laws or other organizational documents
of  the  Investor.

     f.     The  Investor  has  had  an  opportunity  to  discuss  the business,
management  and  financial affairs of the Company with the Company's management;
          The  Investor  is  purchasing  the  Securities for its own account for
investment purposes and not with a view towards distribution; provided, however,
that  by  making the representations herein, the Investor does not agree to hold
any  of  the  Securities for any minimum or other specific term and reserves the
right to dispose of the Securities at any time in accordance with or pursuant to
a  registration  statement or an exemption under applicable state and/or federal
securities  law;

     4.     REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.
            --------------------------------------------------

     Except  as  set  forth  in  the  Schedules  attached  hereto,  the  Company
represents  and  warrants  to  the  Investor  that:

     a.     Organization  and  Qualification.  The Company is a corporation duly
            --------------------------------
organized  and  validly  existing  in  good  standing  under  the  laws  of  its
jurisdiction, and has the requisite corporate power and authorization to own its
properties  and  to  carry  on  its business as now being conducted. Each of the
Company  and  its  Subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which its ownership of
property  or the nature of the business conducted by it makes such qualification
necessary,  except  to  the  extent that the failure to be so qualified or be in
good  standing  would  not  have  a  Material  Adverse  Effect.  As used in this
Agreement,  "MATERIAL  ADVERSE  EFFECT" means any material adverse effect on the
business,  properties,  assets,  operations,  results  of  operations, financial
condition  or  prospects of the Company and its Subsidiaries, if any, taken as a
whole,  or  on  the  transactions  contemplated  hereby or by the agreements and

                                       13
<PAGE>

instruments  to  be  entered into in connection herewith, or on the authority or
ability  of  the  Company  to  perform  its  obligations  under  the Transaction
Documents  (as  defined  in  Section  1  and  4(b)below).  The  Company  has  no
subsidiaries.

     b.     Authorization;  Enforcement; Compliance with Other Instruments.  (i)
            --------------------------------------------------------------
The  Company  has  the requisite corporate power and authority to enter into and
perform  this Agreement, the Registration Rights Agreement, the Escrow Agreement
and  each  of  the  other  agreements  entered  into  by  the  parties hereto in
connection  with  the transactions contemplated by this Agreement (collectively,
the "TRANSACTION DOCUMENTS"), and to issue the Securities in accordance with the
terms  hereof  and  thereof,  (ii) the execution and delivery of the Transaction
Documents  by  the  Company  and  the  consummation  by  it  of the transactions
contemplated  hereby  and  thereby, including without limitation the reservation
for issuance and the issuance of the Securities pursuant to this Agreement, have
been  duly  and  validly  authorized  by the Company's Board of Directors and no
further  consent  or  authorization  is  required  by  the Company, its Board of
Directors,  or  its shareholders, (iii) the Transaction Documents have been duly
and  validly  executed  and  delivered  by the Company, and (iv) the Transaction
Documents  constitute  the  valid  and  binding  obligations  of  the  Company
enforceable  against  the Company in accordance with their terms, except as such
enforceability  may  be  limited  by  general principles of equity or applicable
bankruptcy,  insolvency, reorganization, moratorium, liquidation or similar laws
relating  to,  or  affecting generally, the enforcement of creditors' rights and
remedies.

     c.     Capitalization.  As of the date hereof, the authorized capital stock
            --------------
of  the  Company  consists  of  (i) 75,000,000 shares of Common Stock, $.001 par
value  per  share,  of which as of the date hereof, 24,985,000 shares are issued
and  outstanding.  All  of  such outstanding shares have been validly issued and
are fully paid and nonassessable.  Except as disclosed in Schedule 4(c) which is
attached  hereto  and made a part hereof, (i) no shares of the Company's capital
stock  are subject to preemptive rights or any other similar rights or any liens
or  encumbrances  suffered  or  permitted  by  the  Company,  (ii)  there are no
outstanding  debt  securities,  (iii) there are no outstanding shares of capital
stock, options, warrants, scrip, rights to subscribe to, calls or commitments of
any  character whatsoever relating to, or securities or rights convertible into,
any  shares  of  capital  stock  of  the  Company or any of its Subsidiaries, or
contracts,  commitments,  understandings or arrangements by which the Company or
any  of  its  Subsidiaries  is or may become bound to issue additional shares of
capital  stock  of  the Company or any of its Subsidiaries or options, warrants,
scrip,  rights to subscribe to, calls or commitments of any character whatsoever
relating  to,  or  securities  or rights convertible into, any shares of capital
stock of the Company or any of its Subsidiaries, (iv) there are no agreements or
arrangements  under which the Company or any of its Subsidiaries is obligated to
register  the  sale  of  any  of their securities under the 1933 Act (except the
Registration  Rights  Agreement), (v) there are no outstanding securities of the
Company  or  any  of  its  Subsidiaries  which contain any redemption or similar
provisions,  and  there  are  no  contracts,  commitments,  understandings  or
arrangements  by  which  the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries, (vi) there
are  no securities or instruments containing anti-dilution or similar provisions
that  will  be  triggered by the issuance of the Securities as described in this
Agreement,  (vii)  the  Company  does  not have any stock appreciation rights or

                                       14
<PAGE>

"phantom  stock" plans or agreements or any similar plan or agreement and (viii)
there  is  no  dispute  as  to  the class of any shares of the Company's capital
stock. The Company has furnished to the Investor, or the Investor has had access
through  EDGAR  to,  true  and  correct  copies  of  the  Company's  Articles of
Incorporation,  as  in  effect  on  the  date  hereof  (the  "ARTICLES  OF
INCORPORATION"), and the Company's By-laws, as in effect on the date hereof (the
"BY-LAWS '), and the terms of all securities convertible into or exercisable for
Common  Stock and the material rights of the holders thereof in respect thereto.

     d.     Issuance  of  Shares.     A  sufficient  number  of  Shares issuable
            --------------------
pursuant  to  this  Agreement has been duly authorized and reserved for issuance
(subject  to  adjustment pursuant to the Company's covenant set forth in Section
5(f)  below)  pursuant to this Agreement.  Upon issuance in accordance with this
Agreement,  the  Securities will be validly issued, fully paid and nonassessable
and free from all taxes, liens and charges with respect to the issue thereof. In
the  event the Company cannot register a sufficient number of Shares, due to the
remaining  number  of  authorized shares of Common Stock being insufficient, the
Company  will  use  its best efforts to register the maximum number of shares it
can  based  on  the remaining balance of authorized shares and will use its best
efforts  to  increase  the number of its authorized shares as soon as reasonably
practicable.

     e.     No  Conflicts.  The  execution,  delivery  and  performance  of  the
            -------------
Transaction  Documents by the Company and the consummation by the Company of the
transactions  contemplated hereby and thereby will not (i) result in a violation
of  the  Articles of Incorporation, any Certificate of Designations, Preferences
and  Rights  of  any outstanding series of preferred stock of the Company or the
By-laws  or  (ii)  conflict  with, or constitute a material default (or an event
which  with  notice  or  lapse  of time or both would become a material default)
under,  or  give to others any rights of termination, amendment, acceleration or
cancellation  of,  any  material  agreement,  contract,  indenture  mortgage,
indebtedness  or instrument to which the Company or any of its Subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree  (including  United  States  federal  and  state  securities  laws  and
regulations  and  the rules and regulations of the Principal Market or principal
securities  exchange  or  trading  market on which the Common Stock is traded or
listed)  applicable  to  the  Company or any of its Subsidiaries or by which any
property  or  asset  of  the  Company  or  any  of  its Subsidiaries is bound or
affected.  Except  as  disclosed  in  Schedule 4(e), neither the Company nor its
Subsidiaries  is  in violation of any term of, or in default under, the Articles
of Incorporation, any Certificate of Designations, Preferences and Rights of any
outstanding  series  of  preferred  stock of the Company or the By-laws or their
organizational  charter  or  by-laws,  respectively, or any contract, agreement,
mortgage,  indebtedness, indenture, instrument, judgment, decree or order or any
statute,  rule  or  regulation  applicable  to  the Company or its Subsidiaries,
except  for  possible  conflicts,  defaults,  terminations,  amendments,
accelerations,  cancellations  and  violations that would not individually or in
the  aggregate  have  a Material Adverse Effect. The business of the Company and
its  Subsidiaries  is  not  being  conducted,  and  shall  not  be conducted, in
violation  of  any  law,  statute,  ordinance,  rule, order or regulation of any
governmental  authority  or  agency,  regulatory  or  self-regulatory agency, or
court,  except  for  possible  violations  the  sanctions  for  which  either
individually  or  in  the  aggregate  would  not have a Material Adverse Effect.
Except  as specifically contemplated by this Agreement and as required under the

                                       15
<PAGE>

1933  Act,  the  Company  is  not required to obtain any consent, authorization,
permit  or  order of, or make any filing or registration (except the filing of a
registration  statement)  with,  any  court,  governmental  authority or agency,
regulatory  or  self-regulatory  agency  or other third party in order for it to
execute,  deliver  or  perform any of its obligations under, or contemplated by,
the  Transaction  Documents  in accordance with the terms hereof or thereof. All
consents,  authorizations,  permits, orders, filings and registrations which the
Company  is  required  to  obtain  pursuant  to the preceding sentence have been
obtained  or  effected  on or prior to the date hereof and are in full force and
effect  as of the date hereof. Except as disclosed in Schedule 4(e), the Company
and  its Subsidiaries are unaware of any facts or circumstances which might give
rise  to any of the foregoing. The Company is not, and will not be, in violation
of  the  listing  requirements  of the Principal Market as in effect on the date
hereof  and  on  each  of  the Closing Dates and is not aware of any facts which
would  reasonably  lead to delisting of the Common Stock by the Principal Market
in  the  foreseeable  future.

     f.     SEC  Documents;  Financial Statements.  Since at least January 1999,
            -------------------------------------
the  Company  has  filed  all  reports,  schedules,  forms, statements and other
documents  required  to  be  filed  by it with the SEC pursuant to the reporting
requirements  of  the  1934  Act  (all  of the foregoing filed prior to the date
hereof  and all exhibits included therein and financial statements and schedules
thereto  and  documents  incorporated  by  reference  therein  being hereinafter
referred  to  as the "SEC DOCUMENTS"). The Company has delivered to the Investor
or  its  representatives,  or  they  have  had access through EDGAR to, true and
complete  copies  of  the  SEC  Documents. As of their respective dates, the SEC
Documents  complied  in  all material respects with the requirements of the 1934
Act  and  the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with  the  SEC,  contained any untrue statement of a material fact or omitted to
state  a  material  fact  required to be stated therein or necessary to make the
statements  therein,  in  light of the circumstances under which they were made,
not  misleading.  As  of their respective dates, the financial statements of the
Company  included  in  the  SEC  Documents  complied  as to form in all material
respects  with  applicable  accounting  requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared  in  accordance  with  generally  accepted  accounting  principles,
consistently  applied,  during  the  periods  involved  (except  (i)  as  may be
otherwise  indicated  in such financial statements or the notes thereto, or (ii)
in  the  case  of  unaudited  interim statements, to the extent they may exclude
footnotes  or  may be condensed or summary statements) and fairly present in all
material  respects the financial position of the Company as of the dates thereof
and  the  results  of  its  operations and cash flows for the periods then ended
(subject,  in  the  case  of  unaudited  statements,  to  normal  year-end audit
adjustments).  No  other  written  information  provided  by or on behalf of the
Company  to  the Investor which is not included in the SEC Documents, including,
without  limitation,  information referred to in Section 4(d) of this Agreement,
contains  any untrue statement of a material fact or omits to state any material
fact  necessary to make the statements therein, in the light of the circumstance
under  which  they are or were made, not misleading. Neither the Company nor any
of  its  Subsidiaries  or  any of their officers, directors, employees or agents
have  provided  the  Investor with any material, nonpublic information which was
not  publicly  disclosed  prior  to  the date hereof and any material, nonpublic
information  provided  to the Investor by the Company or its Subsidiaries or any
of  their  officers,  directors,  employees  or agents prior to any Closing Date
shall  be  publicly  disclosed  by  the  Company  prior  to  such  Closing Date.

                                       16
<PAGE>

     g.     Absence  of  Certain Changes.  Except as disclosed in Schedule 4(g),
            ----------------------------
the  Company  does  not intend to change the business operations of the Company.
The  Company  has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any bankruptcy law nor does the Company or
its  Subsidiaries  have  any  knowledge  or reason to believe that its creditors
intend  to  initiate  involuntary  bankruptcy  proceedings.

     h.     Absence  of Litigation.  Except as set forth in Schedule 4(h), there
            ----------------------
is no action, suit, proceeding, inquiry or investigation before or by any court,
public  board,  government  agency, self-regulatory organization or body pending
or,  to  the  knowledge  of  the  executive  officers  of  Company or any of its
Subsidiaries,  threatened  against or affecting the Company, the Common Stock or
any  of  the  Company's  Subsidiaries  or  any of the Company's or the Company's
Subsidiaries'  officers  or  directors  in their capacities as such, in which an
adverse  decision  could  have  a  Material  Adverse  Effect.

     i.     Acknowledgment Regarding Investor's Purchase of Shares.  The Company
            ------------------------------------------------------
acknowledges  and  agrees  that the Investor is acting solely in the capacity of
arm's  length  purchaser  with  respect  to  the  Transaction  Documents and the
transactions  contemplated  hereby and thereby. The Company further acknowledges
that  the  Investor  is  not  acting as a financial advisor or fiduciary  of the
Company  (or  in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated hereby and thereby and any advice given by the
Investor  or  any of its respective representatives or agents in connection with
the  Transaction  Documents and the transactions contemplated hereby and thereby
is  merely  incidental to the Investor's purchase of the Securities. The Company
further represents to the Investor that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company  and  its  representatives.

     j.     No  Undisclosed  Events, Liabilities, Developments or Circumstances.
            -------------------------------------------------------------------
Since  June  30,  2002,  no  event,  liability,  development or circumstance has
occurred or exists, or to the Company's knowledge is contemplated to occur, with
respect  to  the  Company  or  its  Subsidiaries  or  their respective business,
properties,  assets, prospects, operations or financial condition, that would be
required  to  be  disclosed by the Company under applicable securities laws on a
registration  statement  filed  with the SEC relating to an issuance and sale by
the  Company  of  its  Common  Stock  and which has not been publicly announced.

     k.     Employee Relations.  Neither the Company nor any of its Subsidiaries
            ------------------
is  involved  in any union labor dispute nor, to the knowledge of the Company or
any of its Subsidiaries, is any such dispute threatened. Neither the Company nor
any of its Subsidiaries is a party to a collective bargaining agreement, and the
Company  and  its  Subsidiaries  believe that relations with their employees are
good.  No  executive  officer  (as  defined  in Rule 501(f) of the 1933 Act) has
notified  the Company that such officer intends to leave the Company's employ or
otherwise  terminate  such  officer's  employment  with  the  Company.

                                       17
<PAGE>

     l.     Intellectual  Property Rights.  The Company and its Subsidiaries own
            -----------------------------
or  possess  adequate  rights  or  licenses  to use all trademarks, trade names,
service  marks,  service  mark  registrations,  service  names,  patents, patent
rights,  copyrights,  inventions,  licenses,  approvals,  governmental
authorizations,  trade  secrets and rights necessary to conduct their respective
businesses  as  now conducted. Except as set forth on Schedule 4(l), none of the
Company's  trademarks,  trade  names, service marks, service mark registrations,
service  names,  patents,  patent  rights,  copyrights,  inventions,  licenses,
approvals,  government  authorizations,  trade  secrets  or  other  intellectual
property  rights  necessary  to conduct its business as now or as proposed to be
conducted  have  expired  or  terminated, or are expected to expire or terminate
within  two  years  from  the  date  of  this  Agreement.  The  Company  and its
Subsidiaries do not have any knowledge of any infringement by the Company or its
Subsidiaries  of  trademark,  trade  name  rights,  patents,  patent  rights,
copyrights,  inventions,  licenses,  service  names, service marks, service mark
registrations,  trade  secret  or other similar rights of others, or of any such
development  of  similar  or identical trade secrets or technical information by
others  and,  except as set forth on Schedule 4(l), there is no claim, action or
proceeding  being  made or brought against, or to the Company's knowledge, being
threatened  against,  the Company or its Subsidiaries regarding trademark, trade
name,  patents,  patent  rights,  invention,  copyright, license, service names,
service  marks,  service mark registrations, trade secret or other infringement;
and  the  Company and its Subsidiaries are unaware of any facts or circumstances
which  might give rise to any of the foregoing. The Company and its Subsidiaries
have  taken reasonable security measures to protect the secrecy, confidentiality
and  value  of  all  of  their  intellectual  properties.

     m.     Environmental  Laws.  The  Company  and  its Subsidiaries (i) are in
            -------------------
compliance  with  any  and all applicable foreign, federal, state and local laws
and  regulations  relating  to  the  protection  of human health and safety, the
environment  or  hazardous  or  toxic  substances  or  wastes,  pollutants  or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other  approvals required of them under applicable Environmental Laws to conduct
their  respective  businesses  and  (iii)  are  in compliance with all terms and
conditions  of  any such permit, license or approval where, in each of the three
foregoing  cases,  the  failure  to so comply would have, individually or in the
aggregate,  a  Material  Adverse  Effect.

     n.     Title.  The  Company  and  its Subsidiaries have good and marketable
            -----
title  in  fee  simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects  except  such  as  are  described  in  Schedule  4(n)  or such as do not
materially  affect  the value of such property and do not interfere with the use
made  and  proposed  to  be  made  of such property by the Company or any of its
Subsidiaries.  Any  real property and facilities held under lease by the Company
or  any  of  its  Subsidiaries  are  held  by  them  under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with  the use made and proposed to be made of such property and buildings by the
Company  and  its  Subsidiaries.

     o.     Insurance.  The  Company and each of its Subsidiaries are insured by
            ---------
insurers  of  recognized  financial responsibility against such losses and risks
and  in  such  amounts  as  management  of the Company reasonably believes to be

                                       18
<PAGE>

prudent  and  customary  in  the  businesses  in  which  the  Company  and  its
Subsidiaries  are  engaged. Neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any  such 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  at  a  cost  that  would  not  have  a  Material  Adverse  Effect.

     p.     Regulatory  Permits.  The  Company and its Subsidiaries have in full
            -------------------
force  and  effect  all certificates, approvals, authorizations and permits from
the  appropriate  federal,  state,  local  or foreign regulatory authorities and
comparable foreign regulatory agencies, necessary to own, lease or operate their
respective  properties  and  assets and conduct their respective businesses, and
neither  the  Company  nor  any  such  Subsidiary  has  received  any  notice of
proceedings  relating to the revocation or modification of any such certificate,
approval,  authorization  or  permit,  except  for such certificates, approvals,
authorizations  or  permits  which  if  not  obtained,  or  such  revocations or
modifications  which,  would  not  have  a  Material  Adverse  Effect.

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

     r.     No  Materially  Adverse Contracts, Etc.  Neither the Company nor any
            --------------------------------------
of  its  Subsidiaries  is  subject  to  any  charter,  corporate  or other legal
restriction,  or  any  judgment,  decree, order, rule or regulation which in the
judgment  of  the  Company's officers has or is expected in the future to have a
Material  Adverse  Effect.  Neither the Company nor any of its Subsidiaries is a
party  to  any  contract  or  agreement  which  in the judgment of the Company's
officers  has  or  is  expected  to  have  a  Material  Adverse  Effect.

     s.     Tax  Status.  The  Company  and each of its Subsidiaries has made or
            -----------
filed  all  United  States  federal  and state income and all other tax returns,
reports  and  declarations  required  by any jurisdiction to which it is subject
(unless and only to the extent that the Company and each of its Subsidiaries has
set  aside  on  its  books provisions reasonably adequate for the payment of all
unpaid  and  unreported  taxes)  and  has  paid all taxes and other governmental
assessments  and  charges that are material in amount, shown or determined to be
due  on  such returns, reports and declarations, except those being contested in
good  faith and has set aside on its books provision reasonably adequate for the
payment  of  all  taxes  for  periods  subsequent  to  the periods to which such
returns,  reports  or  declarations  apply.  There  are  no  unpaid taxes in any
material  amount  claimed to be due by the taxing authority of any jurisdiction,
and  the  officers  of  the  Company  know  of  no  basis  for  any  such claim.

                                       19
<PAGE>

     t.     Certain  Transactions.  Except  as set forth on Schedule 4(t) and in
            ---------------------
the  SEC  Documents  filed at least ten days prior to the date hereof and except
for  arm's  length  transactions pursuant to which the Company makes payments in
the  ordinary  course  of business upon terms no less favorable than the Company
could  obtain  from  third  parties  and  other  than the grant of stock options
disclosed on Schedule 4(c), none of the officers, directors, or employees of the
Company  is  presently a party to any transaction with the Company or any of its
Subsidiaries  (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 corporation,
partnership,  trust  or other entity in which any officer, director, or any such
employee  has  a  substantial  interest  or  is an officer, director, trustee or
partner.

     u.     Dilutive  Effect.  The Company understands and acknowledges that the
            ----------------
number  of  shares  of  Common  Stock  issuable  upon purchases pursuant to this
Agreement  will increase in certain circumstances including, but not necessarily
limited  to,  the  circumstance  wherein  the  trading price of the Common Stock
declines  during  the  period between the Effective Date and the end of the Open
Period.  The  Company's  executive officers and directors have studied and fully
understand  the  nature  of  the transactions contemplated by this Agreement and
recognize that they have a potential dilutive effect.  The board of directors of
the  Company  has  concluded,  in  its  good  faith business judgment, that such
issuance  is  in  the  best  interests of the Company.  The Company specifically
acknowledges that, subject to such limitations as are expressly set forth in the
Transaction  Documents,  its  obligation  to  issue  shares of Common Stock upon
purchases pursuant to this Agreement is absolute and unconditional regardless of
the  dilutive  effect  that such issuance may have on the ownership interests of
other  shareholders  of  the  Company.

     v.   Right of First Refusal. The Company shall not, directly or indirectly,
          ----------------------
without  the  prior written consent of Investor offer, sell, grant any option to
purchase,  or  otherwise  dispose  of (or announce any offer, sale, grant or any
option  to  purchase or other disposition) any of its Common Stock or securities
convertible  into  Common Stock at a price that is less than the market price of
the  Common  Stock  at  the  time  of issuance of such security or investment (a
"SUBSEQUENT  FINANCING")  for  a  period  of  one year after the Effective Date,
except  (i)  the granting of options, warrants or shares to employees, officers,
directors  and  consultants, and the issuance of shares upon exercise of options
granted, under any stock option plan heretofore or hereafter duly adopted by the
Company,  (ii) shares issued upon exercise of any currently outstanding warrants
or  options  and  upon  conversion  of  any  currently  outstanding  convertible
debenture  or  convertible  preferred  stock, in each case disclosed pursuant to
Section  4(c),  (iii) securities issued in connection with the capitalization or
creation  of a joint venture with a strategic partner, (iv) shares issued to pay
part  or all of the purchase price for the acquisition by the Company of another
entity (which, for purposes of this clause (iv), shall not include an individual
or  group  of individuals), and (v) shares issued in a bona fide public offering
by  the Company of its securities, unless (A) the Company delivers to Investor a
                                   ------
written  notice  (the  "SUBSEQUENT FINANCING NOTICE") of its intention to effect
such  Subsequent  Financing, which Subsequent Financing Notice shall describe in

                                       20
<PAGE>

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  shall  be  effected,  and  attached to which shall be a term sheet or
similar  document  relating thereto and (B) Investor shall not have notified the
Company  by  5:00  p.m. (New York time) on the fifth (5th) Trading Day after its
receipt  of  the  Subsequent  Financing  Notice  of  its willingness to provide,
subject  to  completion  of  mutually acceptable documentation, financing to the
Company on substantially the terms set forth in the Subsequent Financing Notice.
If Investor shall fail to notify the Company of its intention to enter into such
negotiations within such time period, then the Company may effect the Subsequent
Financing  substantially  upon  the  terms set forth in the Subsequent Financing
Notice;  PROVIDED  THAT  the  Company  shall  provide  Investor  with  a  second
Subsequent  Financing  Notice,  and Investor shall again have the right of first
refusal  set forth above in this Section, if the Subsequent Financing subject to
the  initial Subsequent Financing Notice shall not have been consummated for any
reason  on the terms set forth in such Subsequent Financing Notice within thirty
(30) Trading Days after the date of the initial Subsequent Financing Notice. The
rights granted to Investor in this Section are not subject to any prior right of
first  refusal  given  to any other person except as disclosed on Schedule 4(c).

     w.  Lock-up.  The  Company  shall  cause its officers, insiders, directors,
         --------
affiliates  or other related parties to refrain from selling Common Stock during
each  Pricing  Period.

     x. No General Solicitation. Neither the Company, nor any of its affiliates,
        -----------------------
nor  any  person  acting  on  its  behalf,  has  engaged  in any form of general
solicitation  or  general  advertising  (within  the meaning of Regulation D) in
connection  with  the  offer  or  sale  of  the  Common  Stock  offered  hereby.

     5.     COVENANTS  OF  THE  COMPANY
            ---------------------------

     a.     Best  Efforts.  The  Company  shall  use  its best efforts timely to
            -------------
satisfy each of the conditions to be satisfied by it as provided in Section 7 of
this  Agreement.

     b.     Blue  Sky.  The  Company  shall, at its sole cost and expense, on or
            ---------
before  each  of  the  Closing  Dates,  take  such  action  as the Company shall
reasonably  determine  is  necessary  to  qualify  the Securities for, or obtain
exemption  for  the Securities for, sale to the Investor at each of the Closings
pursuant  to  this  Agreement  under applicable securities or "Blue Sky" laws of
such states of the United States, as reasonably specified by Investor, and shall
provide  evidence of any such action so taken to the Investor on or prior to the
Closing  Date. The Company shall, at its sole cost and expense, make all filings
and  reports relating to the offer and sale of the Securities required under the
applicable  securities  or  "Blue  Sky" laws of such states of the United States
following  each  of  the  Closing  Dates.

     c.     Reporting  Status.  Until the earlier to occur of (i) the first date
            -----------------
which  is  after the date this Agreement is terminated pursuant to Section 9 and
on  which  the  Holders  (as  that  term  is  defined in the Registration Rights
Agreement)  may  sell all of the Securities without restriction pursuant to Rule
144(k)  promulgated under the 1933 Act (or successor thereto), and (ii) the date

                                       21
<PAGE>

on  which  (A)  the  Holders  shall  have  sold  all the Securities and (B) this
Agreement has been terminated pursuant to Section 9 (the "REGISTRATION PERIOD"),
the Company shall file all reports required to be filed with the SEC pursuant to
the  1934  Act,  and  the  Company shall not terminate its status as a reporting
company  under  the  1934  Act.

     d.     Use of Proceeds.  The Company will use the proceeds from the sale of
            ---------------
the  Shares  (excluding amounts paid by the Company for fees as set forth in the
Transaction  Documents)  for general corporate and working capital purposes, but
not  to  pay  down  debt.

     e.     Financial  Information.  The Company agrees to make available to the
            ----------------------
Investor  via  EDGAR  or  other  electronic  means the following to the Investor
during  the  Registration  Period:  (i)  within  five (5) Trading Days after the
filing  thereof  with  the SEC, a copy of its Annual Reports on Form 10-KSB, its
Quarterly  Reports  on  Form  10-QSB,  any  Current  Reports on Form 8-K and any
Registration  Statements  or  amendments filed pursuant to the 1933 Act; (ii) on
the  same  day  as  the  release thereof, facsimile copies of all press releases
issued  by  the  Company or any of its Subsidiaries, (iii) copies of any notices
and other information made available or given to the shareholders of the Company
generally,  contemporaneously with the making available or giving thereof to the
shareholders  and  (iv)  within  two  (2)  calendar  days  of filing or delivery
thereof, copies of all documents filed with, and all correspondence sent to, the
Principal Market, any securities exchange or market, or the National Association
of  Securities  Dealers,  Inc.,  unless  such  information is material nonpublic
information.

     f.     Reservation  of  Shares.  Subject  to  the  following  sentence, the
            -----------------------
Company  shall  take  all  action necessary to at all times have authorized, and
reserved  for  the  purpose of issuance, a sufficient number of shares of Common
Stock to provide for the issuance of the Securities hereunder. In the event that
the  Company  determines that it does not have a sufficient number of authorized
shares  of  Common Stock to reserve and keep available for issuance as described
in  this  Section  5(f),  the Company shall use its best efforts to increase the
number  of authorized shares of Common Stock by seeking shareholder approval for
the  authorization  of  such  additional  shares.

     g.     Listing.  The Company shall promptly secure and maintain the listing
            -------
of  all  of  the  Registrable  Securities (as defined in the Registration Rights
Agreement) upon the Principal Market and each other national securities exchange
and  automated  quotation  system, if any, upon which shares of Common Stock are
then  listed  (subject  to official notice of issuance) and shall maintain, such
listing of all Registrable Securities from time to time issuable under the terms
of  the  Transaction  Documents.  The  Company shall maintain the Common Stock's
authorization for quotation on the Principal Market. Neither the Company nor any
of  its Subsidiaries shall take any action which would be reasonably expected to
result  in  the  delisting  or  suspension  of the Common Stock on the Principal
Market  (excluding  suspensions  of not more than one trading day resulting from
business  announcements  by  the Company). The Company shall promptly provide to
the  Investor  copies  of  any  notices  it  receives  from the Principal Market
regarding  the  continued  eligibility  of  the Common Stock for listing on such
automated  quotation  system  or  securities exchange. The Company shall pay all
fees  and  expenses  in  connection  with  satisfying its obligations under this
Section  5(g).

                                       22
<PAGE>

     h.     Transactions  With  Affiliates.  The  Company  shall  not, and shall
            ------------------------------
cause  each of its Subsidiaries not to, enter into, amend, modify or supplement,
or  permit  any  Subsidiary  to  enter  into,  amend,  modify or supplement, any
agreement,  transaction,  commitment  or  arrangement  with  any  of  its or any
Subsidiary's  officers, directors, persons who were officers or directors at any
time during the previous two years, shareholders who beneficially own 5% or more
of  the  Common  Stock,  or  affiliates or with any individual related by blood,
marriage or adoption to any such individual or with any entity in which any such
entity  or  individual  owns  a  5% or more beneficial interest (each a "RELATED
PARTY"),  except  for (i) customary employment arrangements and benefit programs
on  reasonable terms, (ii) any agreement, transaction, commitment or arrangement
on  an  arms-length basis on terms no less favorable than terms which would have
been  obtainable  from  a  person  other  than  such Related Party, or (iii) any
agreement,  transaction,  commitment  or  arrangement  which  is  approved  by a
majority of the disinterested directors of the Company. For purposes hereof, any
director  who is also an officer of the Company or any Subsidiary of the Company
shall  not  be  a  disinterested  director  with  respect to any such agreement,
transaction,  commitment  or arrangement. "AFFILIATE" for purposes hereof means,
with respect to any person or entity, another person or entity that, directly or
indirectly,  (i) has a 5% or more equity interest in that person or entity, (ii)
has  5% or more common ownership with that person or entity, (iii) controls that
person  or  entity,  or (iv) is under common control with that person or entity.
"CONTROL"  or  "CONTROLS"  for purposes hereof means that a person or entity has
the  power,  direct  or  indirect,  to conduct or govern the policies of another
person  or  entity.

     i.     Filing of Form 8-K.  On or before the date which is five (5) Trading
            ------------------
Days  after  the Execution Date, the Company shall file a Current Report on Form
8-K  with  the  SEC  describing the terms of the transaction contemplated by the
Transaction  Documents  in  the form required by the 1934 Act, if such filing is
required.

     j.     Corporate  Existence.  The  Company  shall  use  its best efforts to
            --------------------
preserve  and  continue  the  corporate  existence  of  the  Company.

     k.  Notice of Certain Events Affecting Registration; Suspension of Right to
         -----------------------------------------------------------------------
Make  a  Put.  The Company shall promptly notify Investor upon the occurrence of
-------------
any  of  the  following events in respect of a Registration Statement or related
prospectus  in  respect  of  an  offering  of the Securities: (i) receipt of any
request  for  additional  information  by  the SEC or any other federal or state
governmental  authority  during  the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration Statement or related
prospectus;  (ii)  the  issuance  by  the  SEC  or  any  other  federal or state
governmental  authority  of  any  stop order suspending the effectiveness of any
Registration  Statement  or  the initiation of any proceedings for that purpose;
(iii)  receipt  of  any  notification  with  respect  to  the  suspension of the
qualification  or exemption from qualification of any of the Securities for sale
in  any jurisdiction or the initiation or threatening of any proceeding for such
purpose;  (iv)  the happening of any event that makes any statement made in such
Registration  Statement  or  related  prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that  requires  the making of any changes in the Registration Statement, related
prospectus  or  documents  so  that, in the case of a Registration Statement, it

                                       23
<PAGE>

will  not  contain  any untrue statement of a material fact or omit to state any
material  fact required to be stated therein or necessary to make the statements
therein  not misleading, and that in the case of the related prospectus, it will
not  contain  any  untrue  statement  of  a  material  fact or omit to state any
material  fact required to be stated therein or necessary to make the statements
therein,  in  the  light  of  the  circumstances under which they were made, not
misleading; and (v) the Company's reasonable determination that a post-effective
amendment  to  the  Registration Statement would be appropriate, and the Company
shall  promptly  make  available to Investor any such supplement or amendment to
the related prospectus. The Company shall not deliver to Investor any Put Notice
during  the  continuation  of  any  of  the  foregoing  events.

     l.  Reimbursement.  If  (i)  Investor,  other  than  by reason of its gross
         -------------
negligence  or  willful  misconduct,  becomes  involved  in  any capacity in any
action,  proceeding  or investigation brought by any shareholder of the Company,
in  connection  with  or  as  a  result  of the consummation of the transactions
contemplated  by  the  Transaction Documents, or if Investor is impleaded in any
such  action, proceeding or investigation by any person, or (ii) Investor, other
than  by  reason of its gross negligence or willful misconduct, becomes involved
in  any  capacity  in any action, proceeding or investigation brought by the SEC
(or  any  other  regulatory  agency)  against  or  involving  the  Company or in
connection  with  or  as  a  result  of  the  consummation  of  the transactions
contemplated  by  the  Transaction Documents, or if Investor is impleaded in any
such  action,  proceeding or investigation by any person, then in any such case,
the  Company will reimburse Investor for its reasonable legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith,  as  such expenses are incurred. In addition, other than with respect
to  any  matter  in  which  Investor  is  a named party, the Company will pay to
Investor  the charges, as reasonably determined by Investor, for the time of any
officers  or  employees of Investor devoted to appearing and preparing to appear
as witnesses, assisting in preparation for hearings, trials or pretrial matters,
or  otherwise  with respect to inquiries, hearing, trials, and other proceedings
relating  to the subject matter of this Agreement. The reimbursement obligations
of  the  Company  under this section 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 Investor that are actually named in such action, proceeding
or  investigation,  and  partners,  directors,  agents,  employees,  attorneys,
accountants,  auditors  and controlling persons (if any), as the case may be, of
Investor  and  any  such  affiliate,  and shall be binding upon and inure to the
benefit  of  any  successors of the Company, Investor and any such affiliate and
any  such  person.

     6.  COVER.  If  the  number of Shares represented by any Put Notices become
         -----
restricted  or  are  no  longer  freely  trading  for  any reason, and after the
applicable  Closing  Date, the Investor purchases, in an open market transaction
or  otherwise,  the  Company's  Common Stock (the "Covering Shares") in order to
make  delivery  in  satisfaction  of a sale of Common Stock by the Investor (the
"Sold  Shares"),  which  delivery  such  Investor  anticipated to make using the
Shares represented by the Put Notice  (a "Buy-In"), the Company shall pay to the
Investor  the  Buy-In  Adjustment  Amount  (as  defined  below).  The  "Buy-In
Adjustment  Amount"  is  the  amount  equal  to  the  excess, if any, of (a) the
Investor's  total  purchase  price (including brokerage commissions, if any) for

                                       24
<PAGE>

the  Covering  Shares over (b) the net proceeds (after brokerage commissions, if
any)  received  by  the Investor from the sale of the  Sold Shares.  The Company
shall  pay the Buy-In Adjustment Amount to the Investor in immediately available
funds  immediately  upon demand by the Investor.  By way of illustration and not
in  limitation of the foregoing, if the Investor purchases Common Stock having a
total  purchase  price  (including  brokerage commissions) of $11,000 to cover a
Buy-In with respect to the Common Stock it sold for net proceeds of $10,000, the
Buy-In  Adjustment  Amount  which  the  Company  will  be required to pay to the
Investor  will  be  $1,000.

     7.     CONDITIONS  OF  THE  COMPANY'S  OBLIGATION  TO  SELL.
            ----------------------------------------------------

     The obligation hereunder of the Company to issue and sell the Securities to
the  Investor  is further subject to the satisfaction, at or before each Closing
Date,  of each of the following conditions set forth below. These conditions are
for  the  Company's sole benefit and may be waived by the Company at any time in
its  sole  discretion.

     a.  The  Investor  shall  have  executed  each  of  this  Agreement and the
Registration  Rights  Agreement  and  delivered  the  same  to  the  Company.

     b. The Investor shall have delivered to the Escrow Agent the Purchase Price
for the Securities being purchased by the Investor at the Closing (after receipt
of  confirmation of delivery of such Securities) by wire transfer of immediately
available  funds pursuant to the wire instructions provided by the Escrow Agent.

     c.  The  representations  and  warranties of the Investor shall be true and
correct as of the date when made and as of the applicable Closing Date as though
made  at that time (except for representations and warranties that speak as of a
specific  date),  and  the Investor shall have performed, satisfied and complied
with  the  covenants,  agreements  and  conditions  required  by the Transaction
Documents  to  be  performed,  satisfied  or complied with by the Investor at or
prior  to  such  Closing  Date.

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

     e.  No  Valuation Event shall have occurred since the applicable Put Notice
Date.

     8.     FURTHER  CONDITIONS  OF  THE  INVESTOR'S  OBLIGATION  TO  PURCHASE.
            ------------------------------------------------------------------

     The  obligation  of the Investor hereunder to purchase Shares is subject to
the  satisfaction,  on  or  before  each  Closing Date, of each of the following
conditions  set  forth  below.

     a.     The  Company  shall  have executed each of the Transaction Documents
and  delivered  the  same  to  the  Investor.

                                       25
<PAGE>

     b.     The  Common Stock shall be authorized for quotation on the Principal
Market  and  trading  in  the  Common Stock shall not have been suspended by the
Principal  Market  or  the  SEC,  at  any  time beginning on the date hereof and
through  and including the respective Closing Date (excluding suspensions of not
more  than one Trading Day resulting from business announcements by the Company,
provided  that such suspensions occur prior to the Company's delivery of the Put
Notice  related  to  such  Closing).

     c.     The  representations and warranties of the Company shall be true and
correct as of the date when made and as of the applicable Closing Date as though
made  at  that time (except for (i) representations and warranties that speak as
of a specific date and (ii) with respect to the representations made in Sections
4(g),  (h)  and  (j) and the third sentence of Section 4(k) hereof, events which
occur  on  or  after the date of this Agreement and are disclosed in SEC filings
made  by  the Company at least ten (10) Trading Days prior to the applicable Put
Notice  Date)  and the Company shall have performed, satisfied and complied with
the  covenants,  agreements and conditions required by the Transaction Documents
to  be  performed,  satisfied  or complied with by the Company on or before such
Closing  Date.  The  Investor  may  request  an  update  as of such Closing Date
regarding  the  representation  contained  in  Section  4(c)  above.

     d.     Investor  shall  have  received  an  opinion letter of the Company's
counsel  on  or  before  the  Execution  Date.

     e.     The Company shall have executed and delivered to the Escrow Agent or
Investor  the  certificates representing, or have executed electronic book-entry
transfer  of,  the  Securities  (in  such  denominations  as such Investor shall
request)  being  purchased  by  the  Investor  at  such  Closing.

     f.     The Board of Directors of the Company shall have adopted resolutions
consistent  with Section 4(b)(ii) above (the "RESOLUTIONS") and such Resolutions
shall  not  have  been  amended  or  rescinded  prior  to  such  Closing  Date.

     g.     If  requested by the Investor, the Investor shall receive letters of
the  type,  in  the  form  and  with  the  substance of the letters described in
Sections  2(m)  and  2(n)  of  this  Agreement  from  the  Company's  auditors.

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

     i.     The  Registration  Statement shall be effective on each Closing Date
and  no  stop  order  suspending the effectiveness of the Registration statement
shall  be  in  effect  or  shall  be pending or threatened. Furthermore, on each
Closing  Date  (i)  neither  the Company nor Investor shall have received notice
that  the  SEC  has issued or intends to issue a stop order with respect to such
Registration  Statement or that the SEC otherwise has suspended or withdrawn the

                                       26
<PAGE>

effectiveness of such Registration Statement, either temporarily or permanently,
or  intends  or  has  threatened  to  do so (unless the SEC's concerns have been
addressed  and  Investor  is  reasonably  satisfied  that  the  SEC no longer is
considering or intends to take such action), and (ii) no other suspension of the
use or withdrawal of the effectiveness of such Registration Statement or related
prospectus  shall  exist.

     j.     At  the  time of each Closing, the Registration Statement (including
information  or  documents incorporated by reference therein) and any amendments
or supplements thereto shall not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make  the  statements  therein  not  misleading  or  which  would require public
disclosure  or  an  update  supplement  to  the  prospectus.

     k.     There  shall have been no filing of a petition in bankruptcy, either
voluntarily  or  involuntarily,  with respect to the Company and there shall not
have  been commenced any proceedings under any bankruptcy or insolvency laws, or
any  laws  relating  to  the  relief of debtors, readjustment of indebtedness or
reorganization  of debtors, and there shall have been no calling of a meeting of
creditors  of  the  Company  or  appointment  of  a  committee  of  creditors or
liquidating  agents  or  offering of a composition or extension to creditors by,
for,  with  or  without  the  consent  or  acquiescence  of  the  Company.

     l.     If  applicable,  the shareholders of the Company shall have approved
the  issuance  of  any  Shares in excess of the Maximum Common Stock Issuance in
accordance  with  Section  2(j).

     m.     The  conditions to such Closing set forth in Section 2(f) shall have
been  satisfied  on  or  before  such  Closing  Date.

     n.     The  Company  shall  have  certified  to  the Investor the number of
shares  of  Common  Stock  outstanding as of a date within ten (10) Trading Days
prior  to  such  Closing  Date.

     o.     The  Company  shall  have  delivered  to  such  Investor  such other
documents  relating  to  the transactions contemplated by this Agreement as such
Investor  or  its counsel may reasonably request upon reasonable advance notice.

     p.     On or before the execution of this Agreement, the Company shall have
a  draft  of  the  Registration  Statement  covering  the  Securities.

     9.     TERMINATION.  This  Agreement  shall  terminate  upon  any  of  the
following  events or upon the Company submitting in writing to the Investor such
notification of cancellation, which shall be effective within 30 days of receipt
from  the  Investor:

          (i) when the Investor has purchased an aggregate of $10,000,000 in the
          Common  Stock of the Company pursuant to this Agreement; provided that
          the  Company's  representations, warranties and covenants contained in
          this  Agreement  insofar as applicable to the transactions consummated
          hereunder  prior to such termination, shall survive the termination of
          this  Agreement  for  the  period  of  any  applicable  statute  of
          limitations,

                                       27
<PAGE>

          (ii)  on  the date which is 36 (thirty-six) months after the Effective
          Date;

          (iii)  if  the Company shall file or consent by answer or otherwise to
          the  entry  of an order for relief or approving a petition for relief,
          reorganization  or arrangement or any other petition in bankruptcy for
          liquidation  or  to take advantage of any bankruptcy or insolvency law
          of  any  jurisdiction,  or shall make an assignment for the benefit of
          its  creditors,  or  shall  consent to the appointment of a custodian,
          receiver, trustee or other officer with similar powers of itself or of
          any  substantial  part  of  its  property,  or  shall be adjudicated a
          bankrupt  or insolvent, or shall take corporate action for the purpose
          of  any  of  the foregoing, or if a court or governmental authority of
          competent  jurisdiction  shall  enter an order appointing a custodian,
          receiver, trustee or other officer with similar powers with respect to
          the  Company  or  any substantial part of its property or an order for
          relief  or  approving  a  petition for relief or reorganization or any
          other  petition  in bankruptcy or for liquidation or to take advantage
          of  any bankruptcy or insolvency law, or an order for the dissolution,
          winding  up  or  liquidation  of  the Company, or if any such petition
          shall  be  filed  against  the  Company;

          (iv)  if  the  Company  shall  issue  or sell any equity securities or
          securities convertible into, or exchangeable for, equity securities or
          enter into any other equity financing facility during the Open Period,
          other  than  in  compliance  with  Section  4(v);

          (v)  the  trading  of  the  Common  Stock is suspended by the SEC, the
          Principal  Market  or  the  NASD  for a period of five (5) consecutive
          Trading  Days  during  the  Open  Period;

          (vi)  the  Company  shall  not  have  filed  with  the SEC the initial
          Registration  Statement  with respect to the resale of the Registrable
          Securities  in  accordance  with the terms of the initial Registration
          Rights Agreement within sixty (60) calendar days of the date hereof or
          the  Registration Statement has not been declared effective within one
          hundred  eighty  (180)  calendar  days  of  the  date  hereof;  or

          (vii)  The  Common Stock ceases to be registered under the 1934 Act or
          listed  or  traded  on  the  Principal  Market;  or

          (viii) The Company requires shareholder approval under Nasdaq rules to
          issue  additional  shares  and such approval is not obtained within 60
          days  from  the  date  when  the  Company has issued its 19.9% maximum
          allowable  shares.

                                       28
<PAGE>

Upon the occurrence of one of the above-described events, the Company shall send
written  notice  of  such  event  to  the  Investor.

     10.  INDEMNIFICATION.  In  consideration  of  the  Investor's execution and
delivery  of  the  this  Agreement  and  the  Registration  Rights Agreement and
acquiring  the  Shares  hereunder  and in addition to all of the Company's other
obligations  under the Transaction Documents, the Company shall defend, protect,
indemnify  and  hold  harmless  the  Investor  and  all  of  their shareholders,
officers,  directors,  employees,  counsel, and direct or indirect investors and
any  of  the  foregoing  person's  agents  or  other representatives (including,
without  limitation,  those  retained  in  connection  with  the  transactions
contemplated  by  this  Agreement)  (collectively,  the  "INDEMNITEES") from and
against  any  and  all  actions, causes of action, suits, claims, losses, costs,
penalties,  fees,  liabilities and damages, and expenses in connection therewith
(irrespective  of whether any such Indemnitee is a party to the action for which
indemnification  hereunder  is sought), and including reasonable attorneys' fees
and disbursements (the "INDEMNIFIED LIABILITIES'), incurred by any Indemnitee as
a  result  of,  or  arising  out of, or relating to (i) any misrepresentation or
breach  of any representation or warranty made by the Company in the Transaction
Documents  or  any other certificate, instrument or document contemplated hereby
or  thereby  (ii)  any  breach  of  any covenant, agreement or obligation of the
Company  contained  in  the  Transaction  Documents  or  any  other certificate,
instrument  or  document  contemplated  hereby  or  thereby,  (iii) any cause of
action,  suit  or claim brought or made against such Indemnitee by a third party
and  arising  out  of  or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or
document  contemplated hereby or thereby, (iv) any transaction financed or to be
financed  in  whole or in part, directly or indirectly, with the proceeds of the
issuance  of  the  Securities or (v) the status of the Investor or holder of the
Securities  as  an  investor  in  the  Company,  except  insofar  as  any  such
misrepresentation,  breach  or  any  untrue statement, alleged untrue statement,
omission  or  alleged  omission  is made in reliance upon and in conformity with
written  information  furnished  to  the  Company  by  the  Investor  which  is
specifically  intended  by  the  Investor for use in the preparation of any such
Registration Statement, preliminary prospectus or prospectus or based on illegal
or alleged illegal trading of the Shares by the Investor. To the extent that the
foregoing  undertaking  by  the Company may be unenforceable for any reason, the
Company  shall  make the maximum contribution to the payment and satisfaction of
each  of  the Indemnified Liabilities which is permissible under applicable law.
The  indemnity  provisions contained herein shall be in addition to any cause of
action  or similar rights the Investor may have, and any liabilities the Company
may  be  subject  to.

     11.  INDEMNIFICATION.  In  consideration  of  the  Company's  execution and
delivery of the this Agreement and the Registration Rights Agreement and selling
the  Shares hereunder and in addition to all of the Investor's other obligations
under  the  Transaction Documents, the Investor shall defend, protect, indemnify
and  hold harmless the Company and all of its shareholders, officers, directors,
employees,  counsel,  and  direct or indirect investors and any of the foregoing
person's  agents  or other representatives (including, without limitation, those
retained  in  connection  with  the transactions contemplated by this Agreement)
(collectively,  the  "INDEMNITEES") from and against any and all actions, causes
of  action,  suits,  claims,  losses,  costs,  penalties,  fees, liabilities and

                                       29
<PAGE>

damages,  and expenses in connection therewith (irrespective of whether any such
Indemnitee  is  a  party  to  the  action for which indemnification hereunder is
sought),  and  including  reasonable  attorneys'  fees  and  disbursements  (the
"INDEMNIFIED  LIABILITIES'),  incurred  by  any  Indemnitee  as  a result of, or
arising  out  of,  or  relating  to  (i)  any misrepresentation or breach of any
representation  or warranty made by the Investor in the Transaction Documents or
any  other certificate, instrument or document contemplated hereby or thereby or
(ii)  any  breach  of  any  covenant,  agreement  or  obligation of the Investor
contained  in  the Transaction Documents or any other certificate, instrument or
document  contemplated  hereby  or  thereby.  To  the  extent that the foregoing
undertaking  by  the  Investor may be unenforceable for any reason, the Investor
shall  make  the maximum contribution to the payment and satisfaction of each of
the  Indemnified  Liabilities  which  is  permissible  under applicable law. The
indemnity  provisions  contained  herein  shall  be  in addition to any cause of
action  or similar rights the Company may have, and any liabilities the Investor
may  be  subject  to.

     12.     GOVERNING  LAW;  MISCELLANEOUS.

     a.     Governing  Law.  This Agreement shall be governed by and interpreted
            --------------
in  accordance with the laws of the State of Massachusetts without regard to the
principles  of  conflict  of  laws. Each party hereby irrevocably submits to the
exclusive  jurisdiction  of  the state and federal courts sitting in the City of
Boston,  County  of Suffolk, for the adjudication of any dispute hereunder or in
connection  herewith  or  with  any transaction contemplated hereby or discussed
herein,  and  hereby  irrevocably  waives, and agrees not to assert in any suit,
action  or  proceeding,  any  claim  that  it  is  not personally subject to the
jurisdiction  of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each  party hereby irrevocably waives personal service of process and
consents  to  process  being  served  in  any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service  of process and notice thereof. Nothing contained herein shall be deemed
to  limit  in any way any right to serve process in any manner permitted by law.
If  any  provision  of  this  Agreement shall be invalid or unenforceable in any
jurisdiction,  such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity  or  enforceability  of  any  provision  of this Agreement in any other
jurisdiction.

b.  Investor  Fees;  Legal  Fees;  and  Escrow  Fees.
    -------------------------------------------------

          (i)  Prior to execution of this Agreement, the Company has paid $5,000
     to  Investor's  counsel  for  document  preparation  and review. Investor's
     counsel  shall  have a reasonable amount of time to review the Registration
     Statement  contemplated  by  the  Registration Rights Agreement and any SEC
     comments  on  the  Registration  Statement.

          (ii)  The  Company  shall sell to Dutchess Private Equities Fund, L.P.
     ("Dutchess")  on  the  Execution Date Six Hundred Seventy Five Thousand Six
     Hundred  Seventy Five (675,675) shares of the Company's Common Stock. These
     shares will be registered on the Registration Statement and shall be issued
     and  delivered  to Dutchess within three (3) business days of the Execution

                                       30
<PAGE>

     Date  in the form of four (4) certificates (one for 200,000 shares, one for
     158,559  shares  and  two  for  158,558  shares).  Dutchess  shall pay Five
     Thousand  Dollars  ($5,000)  for  these  shares within ten (10) days of the
     Effective  Date.

          (iii)  The Company shall also pay the Escrow Agent for escrow services
     pursuant  to  the terms of a separate escrow agreement dated as of the date
     hereof.

          (iv)  Except as otherwise set forth in the Transaction Documents, each
     party  shall  pay  the  fees  and  expenses  of  its advisers, counsel, the
     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.  Any  attorneys'  fees  and expenses
     incurred  by  either  the Company or by the Investor in connection with the
     preparation,  negotiation, execution and delivery of any amendments to this
     Agreement  or relating to the enforcement of the rights of any party, after
     the  occurrence  of  any  breach  of the terms of this Agreement by another
     party  or  any  default  by  another  party  in respect of the transactions
     contemplated hereunder, shall be paid on demand by the party which breached
     the  Agreement  and/or defaulted, as the case may be. The Company shall pay
     all stamp and other taxes and duties levied in connection with the issuance
     of  any  Securities.

     c.     Counterparts.  This  Agreement  may  be  executed  in  two  or  more
            ------------
identical  counterparts,  all  of  which  shall  be  considered one and the same
agreement  and shall become effective when counterparts have been signed by each
party  and  delivered  to  the  other party; provided that a facsimile signature
shall  be  considered  due  execution  and  shall  be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a  facsimile  signature.

     d.     Headings;  Singular/Plural.  The  headings of this Agreement are for
            ---------------------------
convenience  of  reference  and  shall  not  form  part  of,  or  affect  the
interpretation  of,  this  Agreement.  Whenever  required by the context of this
Agreement, the singular shall include the plural and masculine shall include the
feminine.

     e.     Severability. If any provision of this Agreement shall be invalid or
            ------------
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction  or  the  validity  or  enforceability  of  any  provision  of this
Agreement  in  any  other  jurisdiction.

     f.     Entire  Agreement;  Amendments.  This Agreement supersedes all other
            ------------------------------
prior  oral  or  written  agreements  between  the  Investor, the Company, their
affiliates  and  persons  acting  on  their  behalf  with respect to the matters
discussed  herein,  and  this  Agreement  and  the instruments referenced herein
(including  the other Transaction Documents) contain the entire understanding of
the  parties  with respect to the matters covered herein and therein and, except
as  specifically  set  forth  herein  or  therein,  neither  the Company nor the
Investor  makes  any  representation,  warranty,  covenant  or  undertaking with
respect  to  such  matters.  No provision of this Agreement may be amended other
than  by an instrument in writing signed by the Company and the Investor, and no
provision  hereof may be waived other than by an instrument in writing signed by
the  party  against  whom  enforcement  is  sought.

                                       31
<PAGE>

     g.     Notices.  Any  notices or other communications required or permitted
            -------
to  be  given  under  the terms of this Agreement must be in writing and will be
deemed  to have been delivered (i) upon receipt, when delivered personally; (ii)
upon  receipt,  when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or  (iii)  one  (1)  day  after  deposit  with a nationally recognized overnight
delivery  service,  in  each case properly addressed to the party to receive the
same.  The  addresses  and  facsimile  numbers for such communications shall be:

     If  to  the  Company:

     Cal  Bay  International,  Inc.
     1582  Parkway  Loop
     Suite  G
     Tustin,  CA  92780
     Attention:  Robert  Thompson,  CEO
     Telephone:  714-258-7070
     Facsimile:  714-258-7077

     With  a  copy  to:

     Cletha  Walstrand,  Attorney  at  Law
     8  East  Broadway,  Suite  609
     Salt  Lake  City,  UT  84111
     Tel:  (801)  363-0890
     Fax:  (801)  363-8512

     If  to  the  Investor:

     Dutchess  Private  Equities  fund,  LP
     312  Stuart  St.
     Boston,  MA  02116
     Tel:  (617)  960-3582
     Fax::  (617)  960-3772

     With  a  copy  to:

     John  Nossiff,  Esq
     Brown  Rudnick  Berlack  &  Israels,  LP
     One  Financial  Center
     Boston,  MA  02111
     Tel:  617-856-8200
     Fax:  617-856-8201

                                       32
<PAGE>

     Each  party  shall provide five (5) days' prior written notice to the other
party  of  any  change  in  address  or  facsimile  number.

     h.     No  Assignment.  This  Agreement  may  not  be  assigned.
            --------------

     i.     No  Third  Party  Beneficiaries.  This Agreement is intended for the
            -------------------------------
benefit  of  the  parties  hereto  and  is  not  for the benefit of, nor may any
provision  hereof  be  enforced  by,  any  other  person.

     j.     Survival.  The representations and warranties of the Company and the
            --------
Investor  contained  in Sections 2 and 3, the agreements and covenants set forth
in Sections 4 and 5, and the indemnification provisions set forth in Section 10,
shall  survive  each  of  the  Closings  and  the termination of this Agreement.

     k.     Publicity.  The  Company  and Investor shall consult with each other
            ---------
in issuing any press releases or otherwise making public statements with respect
to  the transactions contemplated hereby and no party shall issue any such press
release  or  otherwise  make any such public statement without the prior written
consent  of  the other parties, which consent shall not be unreasonably withheld
or delayed, except that no prior consent shall be required if such disclosure is
required by law, in which such case the disclosing party shall provide the other
parties  with  prior  notice  of  such  public  statement.  Notwithstanding  the
foregoing,  the Company shall not publicly disclose the name of Investor without
the  prior  written  consent  of such Investor, except to the extent required by
law.  Investor  acknowledges  that  this  Agreement  and  all  or  part  of  the
Transaction  Documents  may be deemed to be "material contracts" as that term is
defined by Item 601(b)(10) of Regulation S-K, and that the Company may therefore
be  required  to  file  such  documents  as  exhibits to reports or registration
statements filed under the Securities 1933 Act or the 1934 Act. Investor further
agrees  that  the  status  of such documents and materials as material contracts
shall  be  determined  solely  by the Company, in consultation with its counsel.

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

     m.     Placement  Agent.  The  Company  agrees to pay Boston First Capital,
            ----------------
LLC,  ("BFC") a registered broker dealer, 1% of the Put Amount on each draw as a
fee.  BFC  will  also  act as an unaffiliated broker dealer.  The Investor shall
have  no  obligation with respect to any fees or with respect to any claims made
by  or on behalf of other persons or entities for fees of a type contemplated in
this Section that may be due in connection with the transactions contemplated by
the  Transaction  Documents.  The  Company shall indemnify and hold harmless the
Investor,  their employees, officers, directors, agents, and partners, and their
respective  affiliates,  from  and  against  all  claims, losses, damages, costs
(including  the  costs of preparation and attorney's fees) and expenses incurred
in  respect  of any such claimed or existing fees, as such fees and expenses are
incurred.

                                       33
<PAGE>

     n.     No  Strict Construction. 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.

     o.     Remedies.  The Investor and each holder of the Shares shall have all
            --------
rights  and  remedies  set  forth  in this Agreement and the Registration Rights
Agreement  and  all  rights and remedies which such holders have been granted at
any  time under any other agreement or contract and all of the rights which such
holders  have under any law. Any person having any rights under any provision of
this  Agreement  shall  be entitled to enforce such rights specifically (without
posting  a  bond or other security), to recover damages by reason of any default
or  breach  of  any  provision  of  this  Agreement,  including  the recovery of
reasonable attorneys fees and costs, and to exercise all other rights granted by
law.

     p.     Payment Set Aside. To the extent that the Company makes a payment or
            -----------------
payments  to  the Investor hereunder or the Registration Rights Agreement or the
Investor  enforces  or  exercises  its  rights hereunder or thereunder, and such
payment  or payments or the proceeds of such enforcement or exercise or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set  aside,  recovered from, disgorged by or are required to be refunded, repaid
or  otherwise  restored  to the Company, 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.

     q.     Pricing  of  Common  Stock.  For purposes of this Agreement, the bid
            --------------------------
price  of  the Common Stock in this Agreement shall be as reported by Bloomberg.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       34
<PAGE>

                           Cal Bay International, Inc.
                                 SIGNATURE PAGE
                                 --------------

     Your  signature on this Signature Page evidences your agreement to be bound
by  the  terms  and  conditions of the Investment Agreement and the Registration
Rights  Agreement.

     1.     The  undersigned signatory hereby certifies that he/she has read and
understands  the  Investment  Agreement,  and  the  representations  made by the
undersigned  in  this  Investment  Agreement  are  true  and  accurate.

                                   DUTCHESS  PRIVATE  EQUITIES  FUND,  L.P.
                                   BY  ITS  GENERAL  PARTNER  DUTCHESS
                                   CAPITAL  MANAGEMENT,  LLC

                                   By:/s/Douglas  H.  Leighton
                                   -----------------------------
                                   Douglas  H.  Leighton
                                   A  Managing  Member

                                       35
<PAGE>

                             COMPANY ACCEPTANCE PAGE
                             -----------------------

This  Investment  Agreement  accepted  and  agreed
to  on  April  1,  2003.

Cal  Bay  International,  Inc.

By  /s/  Robert  Thompson,
--------------------------
Robert  Thompson
CEO

                                       36
<PAGE>

                                LIST OF EXHIBITS
                                -----------------

EXHIBIT  A         Registration  Rights  Agreement
EXHIBIT  B         Opinion  of  Company's  Counsel
EXHIBIT  C         Escrow  Agreement
EXHIBIT  D         Broker  Representation  Letter
EXHIBIT  E         Board  Resolution
EXHIBIT  F         Put  Notice
EXHIBIT  G         Put  Settlement  Sheet
EXHIBIT  H         Partial  Release  of  Put  Amount  and  Shares

                                LIST OF SCHEDULES
                                -----------------

Schedule  4(a)     Subsidiaries
Schedule  4(c)     Capitalization
Schedule  4(e)     Conflicts
Schedule  4(g)     Material  Changes
Schedule  4(h)     Litigation
Schedule  4(l)     Intellectual  Property
Schedule  4(n)     Liens
Schedule  4(t)     Certain  Transactions

                                       37
<PAGE>

     EXHIBIT  A

                                       38
<PAGE>

     EXHIBIT  B

                                       39
<PAGE>

     EXHIBIT  C

                                       40
<PAGE>

                                    EXHIBIT D

                              [BROKER'S LETTERHEAD]

Date
Via  Facsimile

Attention:
______________________
______________________
______________________

                         Re: Cal Bay International, Inc.

Dear  __________________:

It  is  our understanding that the Form______ Registration Statement bearing SEC
File  Number ( ___-______) filed by Cal Bay International, Inc. on Form _____ on
__________,  2003  was  declared  effective  on  _________,  200_.

This  letter shall confirm that ______________ shares of the common stock of Cal
Bay  International, Inc. are being sold on behalf of __________________ and that
we  shall  comply  with  the  prospectus delivery requirements set forth in that
Registration  Statement  by  filing  the  same  with  the  purchaser.

If  you  have  any  questions  please  do  not  hesitate  to  call.

Sincerely,

______________________

cc:  .

                                       41
<PAGE>

     EXHIBIT  E

                                       42
<PAGE>

     EXHIBIT  F

Date:

RE:  Put  Notice  Number  __

Dear  Mr.  Leighton,

This  is  to  inform you that as of today, Cal Bay International, Inc., a Nevada
corporation (the "Company"), hereby elects to exercise its right pursuant to the
Investment  Agreement to require Dutchess Private Equities Fund, LP. to purchase
shares  of  its  common  stock.   The  Company  hereby  certifies  that:

The  amount  of  this  put  is  $__________.

The  Pricing  Period  runs  from  ________  until  _______.

The  current  number  of  shares  issued  and outstanding as of the Company are:

____________________

Regards,

________________________
Robert  Thompson,  CEO
Cal  Bay  International,  Inc.

                                       43
<PAGE>

                                    EXHIBIT G

                              PUT SETTLEMENT SHEET

Date:

Robert,

Pursuant  to  the  Put  given by Cal Bay International, Inc. to Dutchess Private
Equities  Fund, L.P. on _________________ 20xx, we are now submitting the amount
of  common  shares  for  you  to  issue  to  Dutchess.

Please  have  a  certificate  baring  no  restrictive legend totaling __________
shares  issued  to  Dutchess  Private Equities Fund, LP immediately and send via
DWAC  to  the  following  account:

XXXXXX

If  not  DWAC  eligible,  please  send  Fedex  Priority  Overnight  to:

XXXXXX

Once  these  shares  are received by us, we will break escrow and have the funds
wired  to  the  Company.

Regards,

Douglas  H.  Leighton

                                       44
<PAGE>

                                    DATE                     PRICE

         Date of Day 1                        Closing Bid of Day 1
         Date of Day 2                        Closing Bid of Day 2
         Date of Day 3                        Closing Bid of Day 3
         Date of Day 4                        Closing Bid of Day 4
         Date of Day 5                        Closing Bid of Day 5
         Date of Day 6                        Closing Bid of Day 6
         Date of Day 7                        Closing Bid of Day 7
         Date of Day 8                        Closing Bid of Day 8
         Date of Day 9                        Closing Bid of Day 9
         Date of Day 10                       Closing Bid of Day 10

         LOWEST 1 (ONE) BIDS IN PRICING
         PERIOD

         PUT  AMOUNT
         LESS  BFC  FEE  (1%)
         LESS  ESCROW  FEE
         AMOUNT  WIRED  TO  COMPANY

         PURCHASE PRICE (94% (NINETY-FOUR
         PERCENT))

         AMOUNT  OF  SHARES  DUE

The  undersigned has completed this Put as of this ___th day of _________, 20xx.

Cal  Bay  International,  Inc.

________________________________
Robert  Thompson,  CEO

                                       45
<PAGE>

                                    EXHIBIT H

                  PARTIAL RELEASE OF PURCHASE AMOUNT AND SHARES

     To:

     Cal  Bay  International,  Inc.
     1582  Parkway  Loop
     Suite  G
     Tustin,  CA  92780
     Attention:  RobertThompson
     Telephone:  714-258-7070
     Facsimile:  714-258-7077

     With  a  copy  to

     John  Nossiff,  Esq
     Brown  Rudnick  Berlack  &  Israels,  LP
     One  Financial  Center
     Boston,  MA  02111
     Phone:  617-856-8200
     Facsimile:  617-856-8201

Pursuant  to  the  terms  of  the Investment Agreement the Investor requests the
release  from  the Company of __________ shares of the Company's Common Stock by
overnight delivery or DWAC, if available, and the Investor, upon confirmation of
receipt  of  the  Securities by the Escrow Agent shall wire $____________ to the
Escrow  Agent  within  two  (2)  Trading Days of said confirmation at which time
Escrow  Agent  shall wire the funds to the Company and deliver the shares to the
Investor  pursuant to the instructions given to the Escrow Agent by the Investor

                           INVESTOR

                        By:
                           -------------------------------------------------

Note:  The  number  of  Shares  stated in this PARTIAL RELEASE OF PUT AMOUNT AND
----
SHARES  Form  shall  be equal to the dollar amount to be released divided by 94%
(ninety-four  percent)  of  the  lowest  closing bid price during that number of
Trading  Days  that  have  elapsed  in  the  specified  Pricing  Period.

                                       46
<PAGE>

                           SCHEDULE 4(a) SUBSIDIARIES

                                       47
<PAGE>

                          SCHEDULE 4(c) CAPITALIZATION

                                       48
<PAGE>

                            SCHEDULE 4(e) CONFLICTS

                                       49
<PAGE>

                         SCHEDULE 4(g) MATERIAL CHANGES

                                       50
<PAGE>

                            SCHEDULE 4(h) LITIGATION

                                       51
<PAGE>

                     SCHEDULE 4(l)  INTELLECTUAL PROPERTY

                                       52
<PAGE>

                              SCHEDULE 4(n) LIENS

                                       53
<PAGE>

                       SCHEDULE 4(t)  CERTAIN TRANSACTIONS

                                       54
<PAGE>ESCROW AGREEMENT

     ESCROW  AGREEMENT (this "Escrow Agreement"), dated as of April 28, 2003, by
and  among  Dutchess  Private  Equities Fund, LP, a Fund (the "Investor"), Brown
Rudnick Berlack Israels LLP (the "Escrow Agent") and Cal Bay International, Inc.
(the  "Company").

                                    RECITALS

     A.     Simultaneously  with  the  execution  of  this Escrow Agreement, the
Company  and Investor have entered into a Equity Line of Credit Agreement, dated
as  of  the  date  hereof  (the "Agreement"), pursuant to which the Investor has
agreed  to  purchase  securities  (the  "Securities")  of  the  Company.

     B.     The  Escrow  Agent is willing to act as escrow agent pursuant to the
terms  of  this  Agreement  with  respect to the Purchase Price (as such term is
defined  in  the  Agreement)  to  be paid in connection with the purchase of the
Securities.

     C.     Upon  the  closing of the transactions contemplated by the Agreement
(the  "Closing(s)"),  the  Escrow  Agent  shall  cause  the  distribution of the
Purchase  Price  (as  adjusted)  in accordance with the terms of this Agreement.

     D.     All  capitalized  terms  used  but not defined herein shall have the
meanings  ascribed  thereto  in  the  Agreement.

                          NOW, THEREFORE, IT IS AGREED:

     1.  DEPOSIT  OF  FUNDS.  (a)  The  Investor  shall  deposit with the Escrow
         ------------------
Agent  (i) copies of each of the Agreement, the Registration Rights Agreement of
even  date  and this Escrow Agreement, or counterparts thereof, each executed by
the Investor, and (ii) the Purchase Price, for each purchase of Securities.  The
Company  shall  deliver to the Escrow Agent copies of each of the Agreement, the
Registration  Rights  Agreement  of  even  date  and  this  Escrow Agreement, or
counterparts  thereof,  each  executed  by  the  Company.

                                        1
<PAGE>

     (i)     The  Purchase Price shall be delivered by the Company to the Escrow
Agent  by  (A)  check  payable  to  the  order  of the Escrow Agent, or (B) wire
transfer  to  the  following  account:

     BANK:              EASTERN  BANK
     ABA:               011301798
     CITY:              LYNN
     STATE:             MASSACHUSETTS
     ACCOUNT  #:        600242556
     ACCOUNT  NAME:     BROWN  RUDNICK  BERLACK  ISRAELS  LLP,  CLIENT
                        TRUST  FUND

     BRBI ATTORNEY NAME: Attn: JOHN G. NOSSIFF, JR. Re: [Dutchess Private Equity
                         -------------------------------------------------------
Fund,  LP]
---------

     (ii)     All  of the other items listed above in paragraph (a) of Section 1
to  be  delivered  by  the  Company or the Investor to the Escrow Agent shall be
delivered  to  the  Escrow  Agent at its address for notice indicated in Section
6(a).

     (b) The Company and the Investor understand that the funds delivered to the
Escrow  Agent pursuant to Section 1(a) shall be held in escrow in a non-interest
bearing  client  trust  fund  account  until  each  Closing.

     2.  TERMS  OF  ESCROW.
         -----------------

     (a)     The  Escrow Agent shall hold the Purchase Price in escrow until the
receipt  by  the  Escrow Agent of a notice, executed by each of the Investor and
the  Company,  stating that the Closing has occurred, or otherwise directing the
disposition  of  the  Purchase  Price.

     (b)     If the Escrow Agent, prior to delivering or causing to be delivered
the  Purchase  Price  in  accordance  herewith,  receives  notice  of objection,
dispute,  or  other  assertion  in accordance with any of the provisions of this
Agreement, the Escrow Agent shall continue to hold the Purchase Price until such
time as the Escrow Agent shall receive (i) written instructions jointly executed
by  the  Company and the Investor, directing distribution of the Purchase Price,
or  (ii) a certified copy of a judgment, order or decree of a court of competent
jurisdiction,  final  beyond  the right of appeal, directing the Escrow Agent to
distribute said Purchase Price to any party hereto or as such judgment, order or
decree  shall  otherwise  specify (including any such order directing the Escrow
Agent to deposit the Purchase Price into the court rendering such order, pending
determination  of  any  dispute  between  any of the parties).  In addition, the
Escrow  Agent  shall  have the right to deposit any of the Purchase Price with a
court  of  competent jurisdiction without liability to any party if said dispute
is  not  resolved  within  thirty  (30)  days  of  receipt of any such notice of
objection,  dispute  or  otherwise.

                                        2
<PAGE>

     (c)  This  Escrow  Agreement  shall  terminate  upon  termination  of  the
Agreement.

     3.  DUTIES  AND  OBLIGATIONS  OF  THE  ESCROW  AGENT.
         ------------------------------------------------

     (a)     The  parties  hereto  agree  that the duties and obligations of the
Escrow  Agent  are  only  such as are herein specifically provided and no other.
The  Escrow  Agent's duties are as a depositary only, and the Escrow Agent shall
incur  no  liability  whatsoever,  except  as  a  direct  result  of its willful
misconduct  or  gross  negligence.

     (b)     The  Escrow Agent may consult with counsel of its choice, and shall
not be liable for any action taken, suffered or omitted by it in accordance with
the  advice  of  such  counsel.

     (c)     The  Escrow Agent shall not be bound in any way by the terms of any
other  agreement  to  which the Company and the Investor are parties, whether or
not  it  has  knowledge  thereof,  and  the Escrow Agent shall not in any way be
required  to determine whether or not any other agreement has been complied with
by  the  Company and the Investor, or any other party thereto.  The Escrow Agent
shall  not  be  bound by any modification, amendment, termination, cancellation,
rescission or supersession of this Agreement unless the same shall be in writing
and  signed  jointly  by each of the  Company and the Investor, and agreed to in
writing  by  the  Escrow  Agent.

     (d)     If  the  Escrow Agent shall be uncertain as to its duties or rights
hereunder  or  shall  receive  instructions,  claims  or  demands  which, in its
opinion,  are in conflict with any of the provisions of this Agreement, it shall
be  entitled  to  refrain  from taking any action, other than to keep safely all
property held in escrow, until it shall jointly be directed otherwise in writing
by  the  Company  and  the Investor or by a final judgment (non-appealable) of a
court  of  competent  jurisdiction.

     (e)     The  Escrow  Agent  shall  be  fully  protected in relying upon any
written  notice,  demand,  certificate  or  document  which  it,  in good faith,
believes  to  be  genuine.  The  Escrow  Agent  shall not be responsible for the
sufficiency  or  accuracy  of  the  form,  execution, validity or genuineness of
documents  or  securities  now  or  hereafter  deposited  hereunder,  or  of any
endorsement  thereon,  or  for  any  lack  of  endorsement  thereon,  or for any
description  therein; nor shall the Escrow Agent be responsible or liable in any
respect on account of the identity, authority or rights of the persons executing
or delivering or purporting to execute or deliver any such document, security or
endorsement.

     (f)     The  Escrow  Agent  shall  not  be  required  to  institute  legal
proceedings  of  any  kind  and  shall  not  be  required  to  defend  any legal
proceedings  which  may  be  instituted against it or in respect of the Purchase
Price.

                                        3
<PAGE>

     (g)     If  the  Escrow Agent at any time, in its sole discretion, deems it
necessary or advisable to relinquish custody of the Purchase Price, it may do so
by  delivering  the  same  to  any  other escrow agent mutually agreeable to the
Company  and  the Investor and, if no such escrow agent shall be selected within
three days of the Escrow Agent's notification to the Company and the Investor of
its desire to so relinquish custody of the Purchase Price, then the Escrow Agent
may  do  so by delivering the Purchase Price (a) to any bank or trust company in
the County of Suffolk, Commonwealth of Massachusetts, which is willing to act as
escrow  agent thereunder in place and instead of the Escrow Agent, or (b) to the
clerk  or  other  proper  officer of a court of competent jurisdiction as may be
permitted  by  law.  The  fee of any such bank or trust company or court officer
shall  be  shared equally by the parties hereto (other than Escrow Agent).  Upon
such  delivery,  the  Escrow  Agent  shall  be  discharged  from  any  and  all
responsibility  or  liability  with  respect  to  the  Purchase  Price.

     (h)     This  Agreement  shall  not create any fiduciary duty on the Escrow
Agent's  part  to  the  Company or the Investor, nor disqualify the Escrow Agent
from  representing  Investor  in any dispute with Company, including any dispute
with  respect  to  the  Purchase  Price.  The parties understand that the Escrow
Agent  has  acted,  and  will  continue  to  act,  as  counsel  to the Investor.

     (i)     The  Escrow  Agent  represents  that it is counsel to the Investor.
The  parties  agree that the Escrow Agent's engagement as provided for herein is
not  and  shall  not  be  objectionable  for  any  reason.

     (j)     Upon the Escrow Agent's performance of this Agreement in accordance
with  its terms, the Escrow Agent shall be deemed released and discharged of any
further  obligations  hereunder.

     4.  FEES.     The  Escrow  Agent  shall be paid a fee of $750 in connection
         ----
with  each  closing.  Such fee and any legal fees owing by the Company to Escrow
Agent  pursuant to Section 2(d) of that certain Registration Rights Agreement of
even date between the Company and the Investor shall be deducted by Escrow Agent
from  the  Purchase  Price  prior  to  distribution  to  the  Company.

     5.  INDEMNIFICATION.
         ---------------

     (a)  The  Company  hereby  indemnifies  and  holds free and harmless Escrow
Agent  from any and all losses, expenses, liabilities and damages (including but
not  limited  to  reasonable  attorney's  fees,  and amounts paid in settlement)
resulting from claims asserted by the Investor against Escrow Agent with respect
to  the  performance  of  any  of  the  provisions  of  this  Agreement.

                                        4
<PAGE>

     (b)  The  Investor  hereby  indemnifies  and holds free and harmless Escrow
Agent  from any and all losses, expenses, liabilities and damages (including but
not  limited  to  reasonable  attorney's  fees,  and amounts paid in settlement)
resulting  from claims asserted by the Company against Escrow Agent with respect
to  the  performance  of  any  of  the  provisions  of  this  Agreement.

     (c)  The  Company and the Investor, jointly and severally, hereby indemnify
and hold the Escrow Agent harmless from and against any and all losses, damages,
taxes,  liabilities  and  expenses  that  may  be  incurred by the Escrow Agent,
arising out of or in connection with its acceptance of appointment as the Escrow
Agent hereunder and/or the performance of its duties pursuant to this Agreement,
including,  but not limited to, all legal costs and expenses of the Escrow Agent
incurred  defending itself against any claim or liability in connection with its
performance  hereunder,  provided that the Escrow Agent shall not be entitled to
any  indemnity  for  any  losses,  damages,  taxes, liabilities or expenses that
directly  result  from  its  willful  misconduct  or  gross  negligence.

     6.  MISCELLANEOUS.
         -------------

     (a)     All  notices,  requests, demands and other communications hereunder
shall  be  in writing, with copies to all the other parties hereto, and shall be
deemed to have been duly given when (i) if delivered by hand, upon receipt, (ii)
if  sent  by telecopier, upon receipt of proof of sending thereof, (iii) if sent
by  Express  Mail,  Federal  Express  or other express delivery service (receipt
requested), the next business day or (iv) if mailed by first-class registered or
certified mail, return receipt requested, postage prepaid, upon receipt, in each
case  if  delivered  to  the  following  addresses:

     (i)     If  to  the  Investor:
             Dutchess  Private  Equities  Fund,  LP
             312  Stuart  St
             Boston,  MA  02116
             Attn.:  Douglas  H.  Leighton,  Managing  Member
             Tel:  617-960-3570
             Fax:  617-960-3772

             With  Copy  to:

             John  G.  Nossiff,  Jr.
             Brown  Rudnick  Berlack  Israels  LLP
             One  Financial  Center
             Boston,  MA  02111
             Tel:  (617)  856-8200
             Fax:  (617)  856-8201

                                        5
<PAGE>

     (ii)    If  to  the  Company:

             Cal  Bay  International,  Inc.
             1582  Parkway  Loop
             Suite  G
             Tustin,  CA  92780
             Attention:  Robert  Thompson
             Telephone:     714-258-7070
             Facsimile:     714-258-7077

     Copy  to:

             Cletha  Walstrand,  Attorney  at  Law
             8  East  Broadway,  Suite  609
             Salt  Lake  City,  UT  84111
             Tel:  (801)  363-0890
             Fax:  (801)  363-8512

     (iii)   If  to  the  Escrow  Agent:

             John  G.  Nossiff,  Jr.
             Brown  Rudnick  Berlack  Israels  LLP
             One  Financial  Center
             Boston,  MA  02111
             Tel:  (617)  856-8200
             Fax:  (617)  856-8201

or  at  such other address as any of the parties to this Agreement may hereafter
designate  in  the  manner  set  forth  above  to  the  others.

     (b)     This  Agreement  shall be construed and enforced in accordance with
the  law  of  the  Commonwealth of Massachusetts applicable to contracts entered
into  and  performed  entirely  within  Massachusetts.

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

                         [   Signature Page Follows   ]

                                        6
<PAGE>

     IN  WITNESS  WHEREOF,  the  parties hereto have caused this Agreement to be
signed  the  day  and  year  first  above  written.

                                COMPANY:

                                By:  /s/Robert  Thompson
                                -------------------------
                                Name:  Robert  Thompson
                                Title:  President  &  CEO

                                INVESTOR:

                                Dutchess  Private  Equities  Fund,  LP

                                By:  /s/  Douglas  H.  Leighton
                                --------------------------------
                                Name:  Douglas  H.  Leighton
                                Title:  Managing  Member:
                                        Dutchess  Capital  Management,  LLC
                                        General  Partner  to:
                                        Dutchess  Private  Equities  Fund,  LP

                                ESCROW  AGENT:

                                BROWN  RUDNICK  BERLACK  ISRAELS  LLP

                                By:  /s/John  G.  Nossif,  Jr.
                                ------------------------------
                                John  G.  Nossif,  Jr.

                                        7
<PAGE>

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