Document:

<PAGE>

                                                                   Exhibit 10.52
                              INVESTMENT AGREEMENT

         INVESTMENT  AGREEMENT (this "AGREEMENT"),  dated as of July 29, 2003 by
and between Ventures National Incorporated,  a Utah 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  $1,500,000  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.

"ARTICLES OF INCORPORATION" shall have the meaning specified in Section 4(c).

                                       1
<PAGE>

"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.

"BY-LAWS" shall have the meaning specified in Section 4(c).

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

"CLOSING  DATE" shall mean,  as defined in Section  2(h),  the date which is the
earlier of:  seven (7) Trading  Days  following  the Put Notice Date or when the
Investor deems the Put closed.

"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).

"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).

                                       2
<PAGE>

"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 ten (10)  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 five (5) 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 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 95% (ninety-five  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 have the meaning set forth in Section 2(b) hereof.

"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
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.

                                       3
<PAGE>

"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.

"PUT TERMINATION NOTICE" shall have the meaning specified in Section 2(b).

"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 $.001 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.

                                       4
<PAGE>

"TRANSACTION  DOCUMENTS" shall mean this Agreement,  and the Registration Rights
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

         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 $1,500,000.

         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 written notice (the "PUT NOTICE")
to the Investor which states the Put Amount. The Put Notice shall be in the form
attached  hereto as Exhibit "F" and  incorporated  herein by reference.  The Put
Amount  designated by the Company in the form of a Put Notice shall be up to the
greater of a) 200% of the average daily volume (U.S.  market only) of the Common
Stock for the ten (10)  Trading  Days prior to the  applicable  Put Notice Date;
provided that such number when  multiplied by the average of the three (3) daily
closing  bid  prices  immediately  preceding  the Put  Date,  shall  not  exceed
$1,000,000 or b) such number of shares having a Purchase Price equal to $20,000.

         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 95%
(ninety-five percent) of the lowest closing price of the Common Stock during the
Pricing Period.

              (ii) If the lowest  bid with  respect to a Put Notice is less than
75% (seventy-five  percent) of the average closing bid price of the Common Stock
for the ten (10) Trading  Days prior to the  relevant Put Notice Date  ("MINIMUM
ACCEPTABLE PRICE"), the Put Notice will be terminable by the Company by delivery
to the Investor of a written termination notice ("PUT TERMINATION  NOTICE") sent
via FACSIMILE to the Investor  prior to the Closing of such Put Notice.  The Put
Termination  Notice shall be deemed  received by the Investor on (i) the Trading
Day it is actually  received by  facsimile  or otherwise by the Investor 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 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 that were sold by the Investor  through and including the
end of the Trading Day on which the Put Termination Notice is deemed received by
the  Investor  as  determined  in  accordance  with  the  immediately  preceding
sentence.

                                       5
<PAGE>

              (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.
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.

                                       6
<PAGE>

         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 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
(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.

                                       7
<PAGE>

         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 or the Investor  deeming a Put closed
(a "CLOSING")  shall occur on the date which is the earlier of seven (7) Trading
Days  following the  applicable Put Notice Date or when the Investor deems a Put
closed after having  provided at least two (2) Trading Days prior written notice
thereof to the Company (each a "CLOSING  DATE").  On each Closing Date,  (i) the
Company shall deliver to the Investor,  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 Company the Purchase  Price
to be paid for such Shares,  determined  as set forth in Section  2(b),  by wire
transfer.  All  delivery  of  physical  certificates  must be made by a major US
Carrier and delivered via Overnight from transfer  agent.  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 Investor's prime broker (which shall be specified by the Investor
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

                                       8
<PAGE>

actual damages for the Company's  failure to issue and deliver the Securities to
the  Investor,  except to 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 the  Investor has received a Put
Notice,  but prior to the related  Closing  Date,  the  Investor may request the
Company to  release,  every five (5)  Trading  Days,  a portion of the  Purchase
Amount  from the  Investor  to the  Company in  exchange  for a fixed  number of
Shares,  which  request  shall be met by the Investor  subject to the  following
conditions:

                  (i)      The  Investor  shall  fill  out  and  sign a  Partial
                           Release of Purchase Amount and Shares,  substantially
                           in  the  form  attached  hereto  as  Exhibit  H  (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 Investor  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 95% (ninety-five  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.

         This section  relates to the partial  release of funds and not multiple
or different  closing dates.  No discretion is conferred to the Investor by this
section it simply allows for interim disbursements.

         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 Investor 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 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

                                       9
<PAGE>

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).

         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 the  Investor at the time of a Put
                           Notice is delivered to the Investor.

                                       10
<PAGE>

         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 the  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 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 the  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  LETTER")  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

                                       11
<PAGE>

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.

                  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  immediately  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.

                                       12
<PAGE>

         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 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 not in excess
of the Put Amount set forth therein.

         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.

         g. 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 laws;

         4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

                                       13
<PAGE>

         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
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).

         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 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)  950,000,000  shares of Common Stock,  $.001 par
value per share,  of which as of the date hereof,  14,343,751  shares are issued
and  outstanding;  and  approximately  1,838,753 (as of July 24, 2003) shares of
Common Stock are issuable upon the exercise of options,  warrants and conversion
rights.  All of such  outstanding  shares have been,  or upon  issuance will be,
validly  issued and are fully paid and  nonassessable.  Except as  disclosed  in
Schedule  4(c)  which  is  attached  hereto  and  made a part  hereof  or in the
Company's  SEC  Documents,  (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

                                       14
<PAGE>

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 "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

                                       15
<PAGE>

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 the SEC Documents,  neither the Company nor any of 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
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.  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. For purposes
of this Agreement the awareness of the Company and its  Subsidiaries  is limited
to the actual  knowledge of the executive  officers and directors of the Company
or any Subsidiary.

         f. SEC Documents; Financial Statements. Since at least August 21, 2002,
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

                                       16
<PAGE>

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.

         g.  Absence  of  Certain  Changes.  Except  as  disclosed  in  the  SEC
Documents,  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 the SEC  Documents,
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

                                       17
<PAGE>

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 December 31, 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.

         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.  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 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

                                       18
<PAGE>

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 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
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.

                                       19
<PAGE>

         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.

         t. Certain Transactions. Except as set forth 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) or in the SEC Documents,  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

                                       20
<PAGE>

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 or warrants 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
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

                                       21
<PAGE>

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 in the SEC Documents.

         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
on  which  (A) the  Holders  shall  have  sold  all the  Securities  or (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

                                       22
<PAGE>

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).

         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

                                       23
<PAGE>

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 three (3) 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
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

                                       24
<PAGE>

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
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 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.

                                       25
<PAGE>

         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 Investor 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 Company.

         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.

         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).

                                       26
<PAGE>

         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 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
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.

                                       27
<PAGE>

         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:

                  (i) when the Investor has purchased an aggregate of $1,500,000
                  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,

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

                                       28
<PAGE>

                  (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.

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

10.      INDEMNIFICATION.

                                       29
<PAGE>

         a. 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  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
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.

         b. 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 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

                                       30
<PAGE>

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.

         11. GOVERNING LAW; MISCELLANEOUS.

         a. Governing Law. This Agreement  shall be governed by and  interpreted
in accordance with the laws of the Commonwealth 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.  Legal  Fees.  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.

                                       31
<PAGE>

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.

         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:

         Ventures National Incorporated
         Andrew Glashow, President
         44358 Old Warm Springs Blvd

                                       32
<PAGE>

         Fremont, CA  94538
         Tel:  (510) 824-1200
         Fax:

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

         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 by either party.

         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 for a
period of 18 months.

         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.

                                       33
<PAGE>

         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 Oftring and Company, Inc.
("OFTRING"),  a registered  broker dealer, 1% of the Purchase Amount on each Put
as a fee. Oftring 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 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.

         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  on
Bloomberg.com.

                                       34
<PAGE>

                         Ventures National Incorporated
                                 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
                                 ---------------------------------------
                             Date: July 29, 2003
                             Name: Douglas H. Leighton
                             Title: A Managing Member

                                       35
<PAGE>

                             COMPANY ACCEPTANCE PAGE

This Investment Agreement accepted and agreed
to on July 29, 2003.

Ventures National Incorporated

By /s/ Andrew Glashow
   --------------------------------------
   Andrew Glashow, its President

                                       36
<PAGE>

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

EXHIBIT A                           Registration Rights Agreement
EXHIBIT B                           [omitted]
EXHIBIT C                           [omitted]
EXHIBIT D                           Broker Representation Letter
EXHIBIT E                           [omitted]
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

                                       37
<PAGE>

                                    EXHIBIT A

                                       38
<PAGE>

                                    EXHIBIT D

                              [BROKER'S LETTERHEAD]

Date
Via Facsimile

Attention:

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

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

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

                       Re: Ventures National Incorporated

Dear __________________:

It is our understanding that the Form______  Registration  Statement bearing SEC
File Number ( ___-______) filed by Ventures National  Incorporated on Form _____
on __________, 2003 was declared effective on _________, 2003.

This letter  shall  confirm  that  ______________  shares of the common stock of
Ventures  National  Incorporated 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:  .

                                       39
<PAGE>

                                    EXHIBIT F

Date:

RE: Put Notice Number __

Dear Mr. Leighton,

This is to inform you that as of today, Ventures National  Incorporated,  a Utah
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,

------------------------
Andrew Glashow
Ventures National Incorporated

                                       40
<PAGE>

                                    EXHIBIT G

                              PUT SETTLEMENT SHEET

Date:

Andrew,

Pursuant to the Put given by Ventures National  Incorporated to Dutchess Private
Equities Fund, L.P. on _________________  200x, 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 have the funds wired to the
Company.

Regards,

Douglas H. Leighton

                                       41
<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

       Lowest 1 (one) Closing Bid in Pricing Period

       Put Amount
       1% Fee Due to Oftring

       Amount Wired to Company

       Purchase Price (95% (ninety-five percent))

       Amount of Shares Due

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

Ventures National Incorporated

--------------------------------
Andrew Glashow, President

                                       42
<PAGE>

                                    Exhibit H

                  PARTIAL RELEASE OF PURCHASE AMOUNT AND SHARES

         Ventures National Incorporated
         Andrew Glashow
         44358 Old Warm Springs Blvd.
         Fremont, CA  94538
         Telephone:        510-824-1200
         Facsimile:        330-XXX-XXXX

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  Investor  shall wire  $____________  to the
Company within two (2) Trading Days of said confirmation.

                                            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 95%
(ninety-five  percent)  of the lowest  closing  bid price  during that number of
Trading Days that have elapsed in the specified Pricing Period.

                                       43
<PAGE>

                           Schedule 4(a) Subsidiaries

                                       44
<PAGE>

                          Schedule 4(c) Capitalization

                                       45<PAGE>

                                                                   Exhibit 10.53

                          REGISTRATION RIGHTS AGREEMENT

         REGISTRATION RIGHTS AGREEMENT (this "Agreement"),  dated as of July 29,
2003, by and between Ventures National  Incorporated,  a company organized under
the laws of State of Utah, with its principal executive office at 44358 Old Warm
Springs Blvd, Fremont, CA 94538, (the "Company"),  and Dutchess Private Equities
Fund, L.P. (the "Investor").

         WHEREAS, in connection with the Investment Agreement by and between the
Company and the Investor of even date herewith (the "Investment Agreement"), the
Company has agreed to issue and sell to the Investor an indeterminate  number of
shares of the  Company's  common  stock,  $.001 par value per share (the "Common
Stock"), to be purchased pursuant to the terms and subject to the conditions set
forth in the Investment Agreement; and

         WHEREAS,  to induce the Investor to execute and deliver the  Investment
Agreement,  the Company has agreed to provide certain  registration rights under
the  Securities  Act  of  1933,  as  amended,  and  the  rules  and  regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable  state  securities  laws,  with respect to the shares of Common Stock
issuable pursuant to the Investment Agreement.

         NOW,  THEREFORE,  in  consideration  of the foregoing  premises and the
mutual   covenants   contained   hereinafter   and  other   good  and   valuable
consideration, the receipt and sufficiency of which are 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:

a. "Execution  Date" means the date this Agreement and the Investment  Agreement
are signed by the Company and the Investor.

b. "Holder"  means Dutchess  Private  Equities  Fund,  L.P., a Delaware  limited
partnership.

c. "Person" means a corporation,  a limited liability company, an association, a
partnership,  an  organization,  a business,  an individual,  a governmental  or
political subdivision thereof or a governmental agency.

d. "Potential Material Event" means any of the following:  (i) the possession by
the Company of material  information  not ripe for  disclosure in a Registration
Statement, which shall be evidenced by determinations in good faith by the Board
of  Directors  of  the  Company  that  disclosure  of  such  information  in the
Registration  Statement  would be detrimental to the business and affairs of the
Company, or (ii) any material engagement or activity by the Company which would,
in the good faith  determination  of the Board of Directors  of the Company,  be
adversely affected by disclosure in a Registration Statement at such time, which
determination shall be accompanied by a good faith determination by the Board of
Directors of the Company that the  Registration  Statement  would be  materially
misleading absent the inclusion of such information.

<PAGE>

e.  "Principal  Market"  shall  mean  The  American  Stock  Exchange,   National
Association of Securities  Dealer's,  Inc. OTC electronic  bulletin  board,  the
Nasdaq National Market or The Nasdaq SmallCap Market, whichever is the principal
market on which the Common Stock is listed.

f. "Register," "Registered," and "Registration" refer to a registration effected
by preparing and filing one or more  Registration  Statements in compliance with
the 1933 Act and pursuant to Rule 415 under the 1933 Act or any  successor  rule
providing for offering  securities on a continuous  basis ("Rule 415"),  and the
declaration or ordering of  effectiveness of such  Registration  Statement(s) by
the United States Securities and Exchange Commission (the "SEC").

g.  "Registrable  Securities"  means (i) the  shares of Common  Stock  issued or
issuable  pursuant to the Investment  Agreement,  and (ii) any shares of capital
stock issued or issuable with respect to such shares of Common Stock, if any, as
a result of any stock  split,  stock  dividend,  recapitalization,  exchange  or
similar event or otherwise,  which have not been (x) included in a  Registration
Statement  that  has  been  declared  effective  by the  SEC or (y)  sold  under
circumstances  meeting  all of the  applicable  conditions  of Rule  144 (or any
similar provision then in force) under the 1933 Act.

h. "Registration  Statement" means a registration statement of the Company filed
under the 1933 Act.

         All capitalized  terms used in this Agreement and not otherwise defined
herein  shall  have  the  same  meaning  ascribed  to them as in the  Investment
Agreement.

         2. REGISTRATION.

a. Mandatory  Registration.  On or before the execution of this  Agreement,  the
Company  shall  have  a  draft  of  the  Registration   Statement  covering  the
Registrable Securities.  The Company shall, as soon as practicable file, but not
later than fifteen (15) calendar days following the Execution Date, with the SEC
a Registration  Statement or  Registration  Statements (as is necessary) on Form
SB-2 (or, if such form is  unavailable  for such a  registration,  on such other
form as is available for such a registration), covering the resale of all of the
Registrable  Securities,  which  Registration  Statement(s) shall state that, in
accordance  with Rule 416  promulgated  under the 1933  Act,  such  Registration
Statement also covers such  indeterminate  number of additional shares of Common
Stock as may become  issuable  upon stock  splits,  stock  dividends  or similar
transactions.  The Company shall initially  register for resale 1,000,000 shares
of Common Stock which would be issuable on the date  preceding the filing of the
Registration  Statement  based on the closing bid price of the Company's  Common
Stock on such date.

b. The Company shall use its best efforts to have the Registration  Statement(s)
declared  effective  by the SEC  within  ninety  (90)  calendar  days  after the
Execution Date.

<PAGE>

c. The Company agrees not to include any other  securities in this  Registration
Statement  without  Investor's prior written consent.  Furthermore,  the Company
agrees  that it will  not  file  any  other  Registration  Statement  for  other
securities, until thirty (30) calendar days after the Registration Statement for
the Registrable Securities is declared effective.

d. Counsel.  Subject to Section 5 hereof, in connection with any offering of the
Registrable  Securities  pursuant to this  Section 2, the Holder  shall have the
right to select one legal counsel to  administer  its interests in the offering.
The Company shall reasonably cooperate with any such counsel.

                  3. RELATED OBLIGATIONS.

         At such  time  as the  Company  is  obligated  to  prepare  and  file a
Registration  Statement  with the SEC pursuant to Section 2(a), the Company will
use its best efforts to effect the registration of the Registrable Securities in
accordance  with the intended  method of  disposition  thereof and, with respect
thereto, the Company shall have the following obligations:

a. The Company shall use its best efforts to cause such  Registration  Statement
relating to the Registrable  Securities to become  effective  within ninety (90)
days  after the  Execution  Date and  shall  keep  such  Registration  Statement
effective  until the earlier to occur of (i) the date as of which the Holder may
sell all of the  Registrable  Securities  without  restriction  pursuant to Rule
144(k) promulgated under the 1933 Act (or successor thereto) or (ii) the date on
which (A) the Holder shall have sold all the Registrable  Securities and (B) the
Investor has no right to acquire any additional shares of Common Stock under the
Investment   Agreement   respectively   (the   "Registration   Period"),   which
Registration  Statement  (including any  amendments or  supplements  thereto and
prospectuses  contained  therein)  shall not contain any untrue  statement  of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they were  made,  not  misleading.  The  Company  shall use its best  efforts to
respond to all SEC comments  within seven (7) business days from receipt of such
comments by the  Company.  The Company  shall use its best  efforts to cause the
Registration   Statement  relating  to  the  Registrable  Securities  to  become
effective no later than three (3)  business  days after notice from the SEC that
the Registration  Statement may be declared  effective.  In order to achieve the
foregoing objectives,  the Holder agrees to provide all information necessary to
complete  the   registration   statement,   including  the  intended  method  of
disposition of the  Registrable  Securities,  and the Company's  obligations set
forth above shall be conditioned on the receipt of such information.

b. The Company  shall prepare and file with the SEC such  amendments  (including
post-effective  amendments) and supplements to a Registration  Statement and the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed  pursuant to Rule 424  promulgated  under the 1933 Act, as may be
necessary to keep such Registration  Statement effective during the Registration
Period, and, during such period, comply with the provisions of the 1933 Act with
respect to the disposition of all Registrable  Securities of the Company covered
by such  Registration  Statement  until  such  time  as all of such  Registrable
Securities  shall have been disposed of in accordance with the intended  methods
of  disposition  by the  Investor  thereof

<PAGE>

as set forth in such Registration  Statement.  In the event the number of shares
of Common Stock available under a Registration  Statement filed pursuant to this
Agreement  is  at  any  time  insufficient  to  cover  all  of  the  Registrable
Securities,  the Company shall amend such Registration  Statement, or file a new
Registration Statement (on the short form available therefor, if applicable), or
both, so as to cover all of the Registrable Securities, in each case, as soon as
practicable,  but in any  event  within  thirty  (30)  calendar  days  after the
necessity  therefor arises (based on the then Purchase Price of the Common Stock
and other  relevant  factors on which the  Company  reasonably  elects to rely),
assuming the Company has  sufficient  authorized  shares at that time, and if it
does not, within thirty (30) calendar days after such shares are authorized. The
Company  shall  use  it  best  efforts  to  cause  such  amendment   and/or  new
Registration  Statement to become effective as soon as practicable following the
filing thereof.

c. The Company  shall  furnish to the Holder whose  Registrable  Securities  are
included in any Registration  Statement and its legal counsel without charge (i)
promptly  after the same is prepared and filed with the SEC at least one copy of
such Registration  Statement and any amendment(s)  thereto,  including financial
statements and schedules,  all documents  incorporated  therein by reference and
all exhibits,  the prospectus included in such Registration Statement (including
each   preliminary   prospectus)   and,   with  regards  to  such   Registration
Statement(s),  any  correspondence  by or on behalf of the Company to the SEC or
the staff of the SEC and any correspondence from the SEC or the staff of the SEC
to the  Company  or its  representatives,  (ii)  upon the  effectiveness  of any
Registration  Statement,  ten (10)  copies of the  prospectus  included  in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as the  Holder  may  reasonably  request)  and (iii) such other
documents,  including  copies of any  preliminary  or final  prospectus,  as the
Holder  may  reasonably  request  from time to time in order to  facilitate  the
disposition of the Registrable Securities.

d. The Company  shall use  reasonable  efforts to (i)  register  and qualify the
Registrable  Securities  covered by a  Registration  Statement  under such other
securities  or "blue sky" laws of such states in the United States as the Holder
reasonably  requests,  (ii)  prepare  and  file  in  those  jurisdictions,  such
amendments  (including  post-effective   amendments)  and  supplements  to  such
registrations   and   qualifications   as  may  be  necessary  to  maintain  the
effectiveness  thereof  during the  Registration  Period,  (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times  during  the  Registration  Period,  and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable  Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection  therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d),  (y) subject  itself to general  taxation in any such
jurisdiction,  or (z) file a general  consent  to service of process in any such
jurisdiction. The Company shall promptly notify the Holder who holds Registrable
Securities of the receipt by the Company of any notification with respect to the
suspension  of the  registration  or  qualification  of  any of the  Registrable
Securities for sale under the securities or "blue sky" laws of any  jurisdiction
in the  United  States or its  receipt  of actual  notice of the  initiation  or
threatening of any proceeding for such purpose.

e. As promptly as practicable  after  becoming aware of such event,  the Company
shall notify the Holder in writing of the  happening of any event as a result of
which the prospectus  included in a

<PAGE>

Registration  Statement,  as then in effect,  includes an untrue  statement of a
material fact or omission 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 (each, a "Registration  Default"),  and use
all  diligent  efforts to promptly  prepare a  supplement  or  amendment to such
Registration Statement and take any other necessary steps to cure a Registration
Default, (which, if such Registration Statement is on Form S-3, may consist of a
document to be filed by the  Company  with the SEC  pursuant  to Section  13(a),
13(c),  14 or 15(d) of the 1934 Act (as defined below) and to be incorporated by
reference in the prospectus) to correct such untrue  statement or omission,  and
deliver ten (10) copies of such  supplement  or amendment to the Holder (or such
other number of copies as the Holder may reasonably request).  Failure to cure a
Registration  Default  within ten (10) business days shall result in the Company
paying  liquidated  damages of 2.0% of the cost of all Common Stock then held by
the  Holder  for each  thirty  (30)  calendar  day  period or  portion  thereof,
beginning on the date of suspension.  The Company shall also promptly notify the
Holder  in  writing  (i)  when a  prospectus  or any  prospectus  supplement  or
post-effective  amendment has been filed,  and when a Registration  Statement or
any  post-effective   amendment  has  become  effective  (notification  of  such
effectiveness  shall be  delivered to the Holder by facsimile on the same day of
such  effectiveness  and by overnight mail),  (ii) of any request by the SEC for
amendments or supplements to a Registration  Statement or related  prospectus or
related  information,  (iii) of the Company's  reasonable  determination  that a
post-effective amendment to a Registration Statement would be appropriate,  (iv)
in the event the  Registration  Statement  is no longer  effective  or,  (v) the
Registration  Statement is stale for a period of more than five (5) Trading Days
as a result of the Company's failure to timely file its financials.

         The  Company  acknowledges  that  its  failure  to cure a  Registration
Default  within ten (10) business days will cause the Investor to suffer damages
in an amount that will be difficult to ascertain. Accordingly, the parties agree
that it is  appropriate  to include a  provision  for  liquidated  damages.  The
parties acknowledge and agree that the liquidated damages provision set forth in
this section  represents the parties' good faith effort to quantify such damages
and,  as such,  agree that the form and amount of such  liquidated  damages  are
reasonable and will not constitute a penalty.

         It is the intention of the parties that  interest  payable under any of
the terms of 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
permitted  limit;  and (2) any sums already  collected (if any) from the Company
which exceed the 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.

<PAGE>

f. The Company  shall use its best  efforts to prevent the  issuance of any stop
order or other suspension of effectiveness of a Registration  Statement,  or the
suspension of the qualification of any of the Registrable Securities for sale in
any  jurisdiction  and, if such an order or suspension is issued,  to obtain the
withdrawal of such order or suspension  at the earliest  possible  moment and to
notify the Holder who holds Registrable Securities being sold of the issuance of
such order and the  resolution  thereof or its  receipt of actual  notice of the
initiation or threat of any proceeding for such purpose.

g. The Company shall permit the Holder and a single firm of counsel,  designated
by the  Holder,  to review and comment  upon a  Registration  Statement  and all
amendments  and  supplements  thereto at least seven (7) business  days prior to
their  filing  with the SEC,  and not file any  document in a form to which such
counsel  reasonably  objects.  The Company shall not submit to the SEC a request
for acceleration of the  effectiveness of a Registration  Statement or file with
the SEC a Registration  Statement or any amendment or supplement thereto without
the prior approval of such counsel,  which  approval  shall not be  unreasonably
withheld.

h. At the request of the Holder,  the Company shall cause to be furnished to the
Holder,  on the  date  of the  effectiveness  of a  Registration  Statement,  an
opinion, dated as of such date, of counsel representing the Company for purposes
of such Registration Statement.

i. The Company shall make  available  for  inspection by (i) the Holder and (ii)
one firm of attorneys and one firm of  accountants  or other agents  retained by
the Holder  (collectively,  the "Inspectors") all pertinent  financial and other
records,  and  pertinent  corporate  documents  and  properties  of the  Company
(collectively,  the "Records"),  as shall be reasonably deemed necessary by each
Inspector,  and cause the Company's officers,  directors and employees to supply
all information which any Inspector may reasonably request;  provided,  however,
that  each  Inspector  shall  hold in strict  confidence  and shall not make any
disclosure  (except to the  Holder)  or use of any  Record or other  information
which the  Company  determines  in good faith to be  confidential,  and of which
determination the Inspectors are so notified,  unless (a) the disclosure of such
Records is  necessary  to avoid or correct a  misstatement  or  omission  in any
Registration  Statement  or is  otherwise  required  under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final,  non-appealable subpoena
or order from a court or government body of competent  jurisdiction,  or (c) the
information  in such  Records has been made  generally  available  to the public
other than by  disclosure  in violation of this or any other  agreement of which
the Inspector has knowledge. The Holder agrees that it shall, upon learning that
disclosure  of such Records is sought in or by a court or  governmental  body of
competent jurisdiction or through other means, give prompt notice to the Company
and allow the  Company,  at its  expense,  to  undertake  appropriate  action to
prevent  disclosure of, or to obtain a protective  order for, the Records deemed
confidential.

j.  The  Company  shall  hold in  confidence  and not  make  any  disclosure  of
information  concerning the Holder provided to the Company unless (i) disclosure
of such  information  is necessary  to comply with  federal or state  securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement  or omission in any  Registration  Statement,  (iii) the release of
such   information   is  ordered   pursuant  to  a  subpoena  or  other   final,
non-appealable

<PAGE>

order from a court or governmental body of competent jurisdiction,  or (iv) such
information  has been made  generally  available  to the  public  other  than by
disclosure in violation of this  Agreement or any other  agreement.  The Company
agrees  that it  shall,  upon  learning  that  disclosure  of  such  information
concerning  the  Holder  is  sought  in or by a court  or  governmental  body of
competent jurisdiction or through other means, give prompt written notice to the
Holder and allow the Holder, at the Holder's expense,  to undertake  appropriate
action to prevent  disclosure  of, or to obtain a  protective  order  for,  such
information.

k. The Company shall use its best efforts to secure designation and quotation of
all the  Registrable  Securities  covered by any  Registration  Statement on the
Principal  Market.  If,  despite  the  Company's  best  efforts,  the Company is
unsuccessful in satisfying the preceding sentence, it shall use its best efforts
to cause all the Registrable Securities covered by any Registration Statement to
be listed on each other  national  securities  exchange and automated  quotation
system,  if any, on which  securities  of the same class or series issued by the
Company are then listed,  if any, if the listing of such Registrable  Securities
is then  permitted  under the rules of such exchange or system.  If, despite the
Company's  best  efforts,  the Company is  unsuccessful  in  satisfying  the two
preceding  sentences,  it will use its best efforts to secure the  inclusion for
quotation on the Nasdaq  SmallCap  Market for such  Registrable  Securities and,
without  limiting the generality of the  foregoing,  to arrange for at least two
market makers to register with the National  Association of Securities  Dealers,
Inc. as such with respect to such Registrable Securities.  The Company shall pay
all fees and expenses in connection  with  satisfying its obligation  under this
Section 3(k).

l. The  Company  shall  cooperate  with the  Investor to  facilitate  the timely
preparation  and delivery of certificates  (not bearing any restrictive  legend)
representing the Registrable Securities to be offered pursuant to a Registration
Statement and enable such  certificates to be in such  denominations or amounts,
as the case may be, as the Holder may reasonably request.

m. The Company shall provide a transfer agent for all the Registrable Securities
not later than the  effective  date of the first  Registration  Statement  filed
pursuant hereto.

n. If  requested  by the  Holder,  the Company  shall (i) as soon as  reasonably
practical  incorporate in a prospectus  supplement or  post-effective  amendment
such information as the Holder  reasonably  determine should be included therein
relating to the sale and  distribution  of  Registrable  Securities,  including,
without limitation,  information with respect to the offering of the Registrable
Securities to be sold in such offering;  (ii) make all required  filings of such
prospectus  supplement  or  post-effective  amendment as soon as notified of the
matters to be  incorporated  in such  prospectus  supplement  or  post-effective
amendment; and (iii) supplement or make amendments to any Registration Statement
if reasonably requested by the Holder.

o. The Company  shall use its best efforts to cause the  Registrable  Securities
covered  by the  applicable  Registration  Statement  to be  registered  with or
approved by such other governmental  agencies or authorities as may be necessary
to consummate the disposition of such Registrable Securities.

<PAGE>

p.  The  Company  shall  otherwise  use its  best  efforts  to  comply  with all
applicable  rules and regulations of the SEC in connection with any registration
hereunder.

q. Within one (1) business day after the  Registration  Statement which includes
Registrable  Securities  is declared  effective  by the SEC,  the Company  shall
deliver,  and shall  cause legal  counsel  for the  Company to  deliver,  to the
transfer  agent for such  Registrable  Securities,  with copies to the Investor,
confirmation that such Registration Statement has been declared effective by the
SEC in the form attached hereto as Exhibit A.

r. At or prior to the date of the first Put  Notice  (as that term is defined in
the  Investment  Agreement) and at such other times as the Holder may reasonably
request,  the Company  shall cause to be  delivered,  letters from the Company's
independent  certified public  accountants (i) addressed to the Holder that such
accountants are independent  public  accountants  within the meaning of the 1933
Act and the applicable published rules and regulations  thereunder,  and (ii) in
customary  form and  covering  such  financial  and  accounting  matters  as are
customarily  covered by  letters of  independent  certified  public  accountants
delivered to underwriters in connection with public offerings.

s. The Company shall take all other reasonable actions necessary to expedite and
facilitate  disposition  by the Holder of Registrable  Securities  pursuant to a
Registration Statement.

         4. OBLIGATIONS OF THE HOLDER.

a. At least five (5) calendar days prior to the first anticipated filing date of
a  Registration  Statement the Company shall notify the Holder in writing of the
information  the Company  requires  from the Holder if the Holder elects to have
any of  the  Holder's  Registrable  Securities  included  in  such  Registration
Statement.  It shall be a condition  precedent to the obligations of the Company
to complete  the  registration  pursuant to this  Agreement  with respect to the
Registrable  Securities of a particular  Holder that the Holder shall furnish in
writing to the  Company  such  information  regarding  itself,  the  Registrable
Securities  held by it and the intended method of disposition of the Registrable
Securities held by it as shall reasonably be required to effect the registration
of such  Registrable  Securities  and shall execute such documents in connection
with such  registration  as the  Company  may  reasonably  request.  The  Holder
covenants and agrees that, in connection with any sale of Registrable Securities
by it pursuant to a  Registration  Statement,  it shall comply with the "Plan of
Distribution"  section of the current  prospectus  relating to such Registration
Statement.

b. The Holder, by the Holder's acceptance of the Registrable Securities,  agrees
to  cooperate  with the  Company  as  reasonably  requested  by the  Company  in
connection  with  the  preparation  and  filing  of any  Registration  Statement
hereunder, unless the Holder has notified the Company in writing of the Holder's
election  to  exclude  all of the  Holder's  Registrable  Securities  from  such
Registration Statement.

c. The Holder  agrees  that,  upon receipt of any notice from the Company of the
happening  of any  event of the kind  described  in  Section  3(f) or the  first
sentence  of 3(e),  the  Holder  will  immediately  discontinue  disposition  of
Registrable  Securities pursuant to any Registration  Statement(s) covering such
Registrable  Securities  until  the  Holder's  receipt  of  the  copies  of  the
supplemented  or amended  prospectus  contemplated  by Section 3(f) or the first
sentence of 3(e).

<PAGE>

         5. EXPENSES OF REGISTRATION.

         All  reasonable  expenses,   other  than  underwriting   discounts  and
commissions  and fees of the  Holder's  counsel  other  than as set forth in the
Investment  Agreement,  incurred in connection  with  registrations,  filings or
qualifications pursuant to Sections 2 and 3, including,  without limitation, all
registration, listing and qualifications fees, printing and accounting fees, and
fees and disbursements of counsel for the Company shall be paid by the Company.

         6. INDEMNIFICATION.

         In the event any Registrable  Securities are included in a Registration
Statement under this Agreement:

a. To the fullest  extent  permitted by law, the Company will,  and hereby does,
indemnify,  hold  harmless  and defend  the  Holder  who holds such  Registrable
Securities,  the directors,  officers,  partners,  employees,  counsel,  agents,
representatives of, and each Person, if any, who controls, the Holder within the
meaning of the 1933 Act or the Securities  Exchange Act of 1934, as amended (the
"1934  Act"),  (each,  an  "Indemnified  Person"),  against any losses,  claims,
damages,  liabilities,  judgments, fines, penalties,  charges, costs, reasonable
attorneys'  fees,  amounts  paid in  settlement  or  expenses,  joint or several
(collectively,  "Claims"), incurred in investigating, preparing or defending any
action, claim, suit, inquiry, proceeding, investigation or appeal taken from the
foregoing  by or  before  any  court or  governmental,  administrative  or other
regulatory  agency,  body or the SEC, whether pending or threatened,  whether or
not an indemnified party is or may be a party thereto  ("Indemnified  Damages"),
to which any of them may become  subject  insofar as such  Claims (or actions or
proceedings,  whether commenced or threatened,  in respect thereof) arise out of
or are based upon:  (i) any untrue  statement or alleged  untrue  statement of a
material  fact  in a  Registration  Statement  or any  post-effective  amendment
thereto  or in any  filing  made in  connection  with the  qualification  of the
offering  under the securities or other "blue sky" laws of any  jurisdiction  in
which Registrable Securities are offered ("Blue Sky Filing"), or the omission or
alleged  omission  to state a material  fact  required  to be stated  therein or
necessary to make the statements  therein,  in light of the circumstances  under
which  the  statements  therein  were  made,  not  misleading,  (ii) any  untrue
statement or alleged untrue  statement of a material fact contained in the final
prospectus  (as  amended or  supplemented,  if the Company  files any  amendment
thereof or supplement  thereto with the SEC) or the omission or alleged omission
to state  therein  any  material  fact  necessary  to make the  statements  made
therein,  in light of the circumstances  under which the statements therein were
made, not misleading, or (iii) any violation or alleged violation by the Company
of the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable  Securities pursuant to a Registration Statement (the
matters  in  the  foregoing  clauses  (i)  through  (iii)  being,  collectively,
"Violations").  Subject  to the  restrictions  set  forth in  Section  6(c) with
respect to the number of legal counsel,  the Company shall  reimburse the Holder
and each such controlling person, promptly as such expenses are incurred and are
due and payable,  for any  reasonable  legal fees or other  reasonable  expenses
incurred by them in connection with  investigating  or defending any

<PAGE>

such Claim.  Notwithstanding  anything to the  contrary  contained  herein,  the
indemnification agreement contained in this Section 6(a): (i) shall not apply to
a Claim  arising out of or based upon a Violation  which occurs in reliance upon
and in conformity  with  information  furnished in writing to the Company by any
Indemnified  Person  expressly for use in connection with the preparation of the
Registration  Statement or any such amendment thereof or supplement  thereto, if
such  prospectus  were timely made available by the Company  pursuant to Section
3(c);  (ii) shall not be  available  to the extent  such Claim is based on (a) a
failure of the Holder to deliver or to cause to be delivered the prospectus made
available  by the Company or (b) the  Indemnified  Person's  use of an incorrect
prospectus  despite being promptly  advised in advance by the Company in writing
not to use such  incorrect  prospectus;  (iii) any claims based on the manner of
sale of the  Registrable  Securities  by the  Holder;  (iv) any  omission of the
Holder to notify the Company of any  material  fact that should be stated in the
Registration  Statement  or  prospectus  relating to the Holder or the manner of
sale;  or (v) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected  without the prior written consent of the Company,  which
consent shall not be unreasonably withheld.  Such indemnity shall remain in full
force and effect  regardless  of any  investigation  made by or on behalf of the
Indemnified Person and shall survive the resale of the Registrable Securities by
the Holder pursuant to the Registration Statement.

b. In  connection  with any  Registration  Statement  in  which  the  Holder  is
participating, each the Holder agrees to indemnify, hold harmless and defend, to
the same  extent  and in the same  manner as is set forth in Section  6(a),  the
Company, each of its directors,  each of its officers who signs the Registration
Statement,  each Person,  if any, who controls the Company within the meaning of
the 1933 Act or the 1934 Act and the Company's agents (collectively and together
with an  Indemnified  Person,  an  "Indemnified  Party"),  against  any Claim or
Indemnified Damages to which any of them may become subject, under the 1933 Act,
the 1934 Act or otherwise,  insofar as such Claim or  Indemnified  Damages arise
out of or are based upon any Violation,  in each case to the extent, and only to
the extent,  that such Violation  occurs in reliance upon and in conformity with
written information  furnished to the Company by the Holder expressly for use in
connection with such Registration  Statement;  and, subject to Section 6(c), the
Holder will reimburse any legal or other expenses reasonably incurred by them in
connection with  investigating or defending any such Claim;  provided,  however,
that the  indemnity  agreement  contained in this Section 6(b) and the agreement
with respect to  contribution  contained in Section 7 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of the Holder, which consent shall not be unreasonably withheld;
provided,  further,  however, that the Holder shall be liable under this Section
6(b) for only that amount of a Claim or  Indemnified  Damages as does not exceed
the net proceeds to the Holder as a result of the sale of Registrable Securities
pursuant to such  Registration  Statement.  Such indemnity  shall remain in full
force and effect  regardless of any  investigation  made by or on behalf of such
Indemnified Party and shall survive the resale of the Registrable  Securities by
the Holder pursuant to the Registration Statement.  Notwithstanding  anything to
the contrary contained herein, the  indemnification  agreement contained in this
Section 6(b) with respect to any preliminary  prospectus  shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission of material
fact contained in the preliminary prospectus were corrected on a timely basis in
the prospectus, as then amended or supplemented.  This indemnification provision
shall apply  separately to each Investor and  liability  hereunder  shall not be
joint and several.

<PAGE>

c. Promptly  after receipt by an Indemnified  Person or Indemnified  Party under
this  Section 6 of  notice  of the  commencement  of any  action  or  proceeding
(including  any  governmental  action or  proceeding)  involving  a Claim,  such
Indemnified  Person or Indemnified Party shall, if a Claim in respect thereof is
to be made against any  indemnifying  party under this Section 6, deliver to the
indemnifying  party  a  written  notice  of the  commencement  thereof,  and the
indemnifying  party shall have the right to  participate  in, and, to the extent
the indemnifying  party so desires,  jointly with any other  indemnifying  party
similarly  noticed,  to assume  control  of the  defense  thereof  with  counsel
mutually  satisfactory to the indemnifying  party and the Indemnified  Person or
the  Indemnified  Party,  as  the  case  may  be;  provided,  however,  that  an
Indemnified  Person or Indemnified  Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying  party, if, in
the  reasonable  opinion of counsel  retained  by the  indemnifying  party,  the
representation  by such counsel of the Indemnified  Person or Indemnified  Party
and the  indemnifying  party would be  inappropriate  due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party  represented by such counsel in such  proceeding.  The  indemnifying
party shall pay for only one separate legal counsel for the Indemnified  Persons
or the Indemnified Parties, as applicable, and such counsel shall be selected by
the  Holder,  if the Holder is  entitled to  indemnification  hereunder,  or the
Company, if the Company is entitled to indemnification hereunder, as applicable.
The  Indemnified  Party or  Indemnified  Person shall  cooperate  fully with the
indemnifying  party in connection  with any  negotiation  or defense of any such
action or Claim by the indemnifying  party and shall furnish to the indemnifying
party  all  information   reasonably  available  to  the  Indemnified  Party  or
Indemnified Person which relates to such action or Claim. The indemnifying party
shall keep the  Indemnified  Party or Indemnified  Person fully appraised at all
times as to the  status  of the  defense  or any  settlement  negotiations  with
respect thereto. No indemnifying party shall be liable for any settlement of any
action,  claim or proceeding  effected  without its written  consent,  provided,
however, that the indemnifying party shall not unreasonably  withhold,  delay or
condition its consent.  No indemnifying party shall,  without the consent of the
Indemnified  Party or  Indemnified  Person,  consent to entry of any judgment or
enter into any  settlement  or other  compromise  which  does not  include as an
unconditional  term  thereof  the giving by the  claimant or  plaintiff  to such
Indemnified  Party or  Indemnified  Person of a release  from all  liability  in
respect to such Claim. Following  indemnification as provided for hereunder, the
indemnifying party shall be surrogated to all rights of the Indemnified Party or
Indemnified  Person with  respect to all third  parties,  firms or  corporations
relating to the matter for which  indemnification  has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified  Person or Indemnified  Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.

d. The  indemnification  required  by this  Section 6 shall be made by  periodic
payments  of the  amount  thereof  during  the  course of the  investigation  or
defense, as and when bills are received or Indemnified Damages are incurred.

<PAGE>

e. The  indemnity  agreements  contained  herein shall be in addition to (i) any
cause of action or similar right of the Indemnified Party or Indemnified  Person
against  the  indemnifying  party  or  others,  and  (ii)  any  liabilities  the
indemnifying party may be subject to pursuant to the law.

         7. CONTRIBUTION.

         To  the  extent  any   indemnification  by  an  indemnifying  party  is
prohibited or limited by law, the indemnifying  party agrees to make the maximum
contribution  with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no contribution shall be made under  circumstances where the maker would not
have been  liable for  indemnification  under the fault  standards  set forth in
Section  6; (ii) no  seller  of  Registrable  Securities  guilty  of  fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution  from any seller of Registrable  Securities who was not
guilty of fraudulent misrepresentation;  and (iii) contribution by any seller of
Registrable  Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.

         8. REPORTS UNDER THE 1934 ACT.

         With a view to making  available to the Holder the benefits of Rule 144
promulgated  under the 1933 Act or any other  similar rule or  regulation of the
SEC that may at any time permit the Holder to sell  securities of the Company to
the public without registration ("Rule 144"), the Company agrees to:

a. make and keep public information available, as those terms are understood and
defined in Rule 144;

b. file with the SEC in a timely manner all reports and other documents required
of the  Company  under  the 1933  Act and the  1934  Act so long as the  Company
remains subject to such  requirements  (it being  understood that nothing herein
shall limit the  Company's  obligations  under  Section  5(c) of the  Investment
Agreement)  and the filing of such  reports and other  documents is required for
the applicable provisions of Rule 144; and

c. furnish to the Investor,  promptly upon request,  (i) a written  statement by
the Company that it has complied  with the reporting  requirements  of Rule 144,
the  1933  Act and the  1934  Act,  (ii) a copy of the  most  recent  annual  or
quarterly report of the Company and such other reports and documents so filed by
the Company,  and (iii) such other information as may be reasonably requested to
permit  the  Investor  to sell  such  securities  pursuant  to Rule 144  without
registration.

         9. NO ASSIGNMENT OF REGISTRATION RIGHTS.

         The rights under this Agreement shall not be assignable.

         10. AMENDMENT OF REGISTRATION RIGHTS.

<PAGE>

         Provisions  of this  Agreement  may be  amended  only with the  written
consent of the Company and the Holder.  No such amendment  shall be effective to
the extent  that it  applies  to less than all of the Holder of the  Registrable
Securities.

         11. MISCELLANEOUS.

a. 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 a 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:

         Ventures National Incorporated
         Andrew Glashow, President
         44358 Old Warm Springs Blvd
         Fremont, CA  94538
         Tel:  (510) 824-1200
         Fax:

If to the Investor:

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

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

c. Failure of any party to exercise any right or remedy under this  Agreement or
otherwise,  or delay by a party in  exercising  such right or remedy,  shall not
operate as a waiver thereof.

d. The laws of the State of  Massachusetts  shall govern all issues arising from
or related to this  Agreement  without  regard to the  principles of conflict of
laws. Each party hereby irrevocably submits to the non-exclusive jurisdiction of
the state and federal courts  sitting in the

<PAGE>

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.

e. This Agreement and the Transaction  Documents constitute the entire agreement
among the parties  hereto with respect to the subject matter hereof and thereof.
There are no  restrictions,  promises,  warranties or  undertakings,  other than
those set forth or referred to herein and therein.

f. This Agreement and the Transaction  Documents  supersede all prior agreements
and  understandings  among the parties hereto with respect to the subject matter
hereof and thereof.

g. The headings in this  Agreement  are for  convenience  of reference  only and
shall not limit or otherwise affect the meaning hereof. Whenever required by the
context of this  Agreement,  the singular shall include the plural and masculine
shall include the feminine.  This Agreement  shall not be construed as if it had
been  prepared  by one of the  parties,  but  rather as if all the  parties  had
prepared the same.

h. This Agreement may be executed in two or more identical counterparts, each of
which shall be deemed an original but all of which shall  constitute one and the
same agreement.  This Agreement,  once executed by a party,  may be delivered to
the other party hereto by  facsimile  transmission  of a copy of this  Agreement
bearing the signature of the party so delivering this Agreement.

i. 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.

k. 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.

<PAGE>

IN WITNESS WHEREOF,  the parties have caused this Registration  Rights Agreement
to be duly executed as of the day and year first above written.

                           Ventures National Incorporated

                           By:  /s/ Andrew Glashow
                                ------------------------------------
                                Name: Andrew Glashow
                                Title:  President

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

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

<PAGE>

                                    EXHIBIT A

FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT

                                                             Date: __________
[TRANSFER AGENT]

                  Re:      Ventures National Incorporated

         Ladies and Gentlemen:

         We are counsel to Ventures  National  Incorporated,  a Utah corporation
(the  "Company"),  and have  represented  the  Company in  connection  with that
certain Investment  Agreement (the "Investment  Agreement")  entered into by and
among the Company and  _________________________  (the  "Investor")  pursuant to
which the Company has agreed to issue to the  Investor  shares of the  Company's
common  stock,  $.001 par value per share (the "Common  Stock") on the terms and
conditions  set forth in the  Investment  Agreement.  Pursuant to the Investment
Agreement,  the Company also has entered into a  Registration  Rights  Agreement
with the Investor (the "Registration  Rights  Agreement")  pursuant to which the
Company agreed,  among other things, to register the Registrable  Securities (as
defined in the Registration  Rights  Agreement),  including the shares of Common
Stock issued or issuable  under the Investment  Agreement,  under the Securities
Act of 1933,  as amended  (the "1933 Act").  In  connection  with the  Company's
obligations under the Registration Rights Agreement,  on ____________ ___, 2003,
the  Company  filed  a   Registration   Statement  on  Form  S-  ___  (File  No.
333-________)  (the  "Registration  Statement") with the Securities and Exchange
Commission (the "SEC") relating to the  Registrable  Securities  which names the
Investor as a selling shareholder thereunder.

         In connection  with the  foregoing,  we advise you that a member of the
SEC's  staff has  advised  us by  telephone  that the SEC has  entered  an order
declaring the Registration  Statement effective under the 1933 Act at [enter the
time of effectiveness]  on [enter the date of effectiveness]  and to the best of
our knowledge,  , no stop order suspending its effectiveness has been issued and
no proceedings  for that purpose are pending  before,  or threatened by, the SEC
and the  Registrable  Securities  are  available  for resale  under the 1933 Act
pursuant to the Registration Statement.

                                             Very truly yours,

                                             [Company Counsel]

                                             By:____________________
cc: [Investor]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}]]