Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Texada Ventures Inc. - Exhibit 4.1

 Texada Ventures Inc. 

	NUMBER

      [               
      ] 	INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA 

      100,000,000 SHARES COMMON STOCK AUTHORIZED, $.001 PAR VALUE	SHARES

      [               
      ] 

	This

      certifies

      that	[NAME OF SHAREHOLDER] 	 	 
	CUSIP
	881718 10 0
	SEE REVERSE FOR
	CERTAIN DEFINITIONS

Is the owner of [NUMBER OF SHARES] 

 FULLY PAID AND NON-ASSESSABLE SHARES
  OF COMMON STOCK OF 

 Texada Ventures Inc. 

 transferable on the books of the Corporation in person or by
  duly authorized attorney upon surrender of this certificate properly endorsed.
  This certificate and the shares represented hereby are subject to the laws of
  the State of Nevada, and to the Articles of Incorporation and Bylaws of the
  Corporation, as now or hereafter amended. This certificate is not valid unless
  countersigned by the Transfer Agent. WITNESS the facsimile seal of the Corporation
  and the signature of its duly authorized officers. 

DATED [DATE] 

/s/ Marc Branson
	PRESIDENT/	CORPORATE SEAL	 

	 	SECRETARY 

 The following abbreviations, when used in the inscription
  on the face of this certificate, shall be construed as though they were written
  out in full according to applicable laws or regulations. 

	 TEN COM  	- 	 as tenants in common  	 UNIF GIFT MIN ACT____________ 	Custodian______________  
	 TEN ENT  	- 	as tenants by the entireties  	 (Cust)        
    	                            (Minor) 
    
	 JT TEN  	- 	 as joint tenants with the right of  	 Act________________________	________________
	  	 	  survivorship and not as tenants  	    (State)        
    	  
	  	 	  in common  	  	  

 Additional abbreviations may also be used though not in the
  above list. 

 For value received,________________________________ hereby sell, assign
  and transfer unto 

  PLEASE INSERT SOCIAL SECURITY OR OTHER 

  IDENTIFYING NUMBER OF ASSIGNEE

	 	 

 (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP
  CODE, OF ASSIGNEE) 

  	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 

of the capital stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint
	 	 
	 	, Attorney
	 	 

to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises. 
 Dated ________________________________

   

	X	 

     THE SIGNATURE TO
  THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THIS
  CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
  WHATSOEVER. THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
  (Banks, Stockbrokers, Savings and Loan Associations and Credit Unions). 

 SIGNATURE GUARANTEED: 

  

 

TRANSFER FEE WILL APPLYEXHIBIT 4.1
                                                                     -----------

                          SECURITIES PURCHASE AGREEMENT

            This Securities Purchase Agreement (this "Agreement") is dated as of
June 8, 2005 among Western Power & Equipment Corp., a Delaware corporation (the
"Company"), and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a "Purchaser" and collectively the
"Purchasers").

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

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

                                   ARTICLE I.
                                   DEFINITIONS

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

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

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

                        "APM Purchase Note" shall mean that certain Promissory
            Note of the Company issued on September 8, 2004 with a principal
            amount of $2,500,000 made payable to Basalite Concrete Products, LLC
            and Edith Greenberg Irrevocable Trust, which note is guaranteed by
            Advanced Mineral Technology of Nevada, Inc.

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

                        "Closing Date" means the Trading Day when all of the
            Transaction Documents have been executed and delivered by the
            applicable parties thereto, and all conditions
<PAGE>

            precedent to (i) the Purchasers' obligations to pay the Subscription
            Amount and (ii) the Company's obligations to deliver the Securities
            have been satisfied or waived.

                        "Commission" means the Securities and Exchange
            Commission.

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

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

                        "Company Counsel" means Gersten Savage Kaplowitz Wolf &
            Marcus, LLP.

                        "Contingent Obligation" means, as to any Person, any
            direct or indirect liability, contingent or otherwise, of that
            Person with respect to any indebtedness, lease, dividend or other
            obligation of another Person if the primary purpose or intent of the
            Person incurring such liability, or the primary effect thereof, is
            to provide assurance to the obligee of such liability that such
            liability will be paid or discharged, or that any agreements
            relating thereto will be complied with, or that the holders of such
            liability will be protected (in whole or in part) against loss with
            respect thereto.

                        "Conversion Price" shall have the meaning ascribed to
            such term in the Debentures.

                        "Debentures" means, collectively, the Series A
            Debentures and the Series B Debentures.

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

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

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

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

                        "Exempt Issuance" means the issuance of (a) shares of
            Common Stock or options to employees, officers or directors of the
            Company pursuant to any stock or option plan duly adopted by a
            majority of the non-employee members of the Board of Directors of
            the Company or a majority of the members of a committee of
            non-employee directors

                                       2
<PAGE>

            established for such purpose, provided in no event shall the Company
            issue shares of Common Stock or issue options to purchase shares of
            Common Stock in excess of, in the aggregate, 3% of the Company's
            issued and outstanding shares of Common Stock on the date hereof;
            (b) securities upon the exercise or exchange of or conversion of any
            Securities issued hereunder and/or securities exercisable or
            exchangeable for or convertible into shares of Common Stock issued
            and outstanding on the date of this Agreement, provided that such
            securities have not been amended since the date of this Agreement to
            increase the number of such securities or to decrease the exercise,
            exchange or conversion price of any such securities; and (c)
            securities issued pursuant to acquisitions of assets or securities
            of any other Person, mergers, joint ventures or other strategic
            transactions, provided any such issuance shall only be to a Person
            which is, itself or through its subsidiaries, an operating company
            in a business that, in the reasonable business judgment of the board
            of directors of the Company is complementary to the existing
            businesses of the Company and in which the Company receives benefits
            in addition to the investment of funds, but shall not include a
            transaction in which the Company is issuing securities primarily for
            the purpose of raising capital or to an entity whose primary
            business is investing in securities.

                        "Existing Indebtedness" shall mean the obligations set
            forth on Schedule 3.1(cc) annexed hereto.

                        "Existing Liens" shall mean the Liens listed on Schedule
            3.1(hh) annexed hereto.

                        "Existing Subsidiary" means any direct or indirect
            Subsidiary of the Company as set forth on Schedule 3.1(a).

                        "Factoring Agreement" shall mean that certain Master
            Factoring Agreement executed by the Company and each Subsidiary of
            the Company for the benefit of the Purchasers and attached to the
            Security Agreement as Annex C.

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

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

                        "GE Facility" means the Company's inventory floor plan
            and operating line of credit June 30, 1999 with GE Commercial
            Distribution Finance, as in effect on the date hereof.

                         "Indebtedness" of any Person means, without duplication
            (A) all indebtedness for borrowed money, (B) all obligations issued,
            undertaken or assumed as the deferred purchase price of property or
            services (other than trade payables entered into in the ordinary
            course of business), (C) all reimbursement or payment obligations
            with respect to letters of credit, surety bonds and other similar
            instruments, (D) all obligations evidenced by notes, bonds,
            debentures or similar instruments, including obligations so
            evidenced incurred in connection with the acquisition of property,
            assets or businesses,

                                       3
<PAGE>

            (E) all indebtedness created or arising under any conditional sale
            or other title retention agreement, or incurred as financing, in
            either case with respect to any property or assets acquired with the
            proceeds of such indebtedness (even though the rights and remedies
            of the seller or bank under such agreement in the event of default
            are limited to repossession or sale of such property), (F) all
            monetary obligations under any leasing or similar arrangement which,
            in connection with generally accepted accounting principles,
            consistently applied for the periods covered thereby, is classified
            as a capital lease, (G) all indebtedness referred to in clauses (A)
            through (F) above secured by (or for which the holder of such
            Indebtedness has an existing right, contingent or otherwise, to be
            secured by) any mortgage, lien, pledge, charge, security interest or
            other encumbrance upon or in any property or assets (including
            accounts and contract rights) owned by any Person, even though the
            Person which owns such assets or property has not assumed or become
            liable for the payment of such indebtedness, and (H) all Contingent
            Obligations in respect of indebtedness or obligations of others of
            the kinds referred to in clauses (A) through (G) above.

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

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

                        "Liens" means a lien, charge, security interest,
            mortgage, encumbrance, or other charge against assets of the Company
            or any of its Subsidiaries.

                        "Lock Box Agreement" shall mean a Four Party Wholesale
            Lockbox Agreement(s), by and among Wells Fargo Bank, the Company,
            each Subsidiary of the Company and the agent appointed by the
            Purchasers, in form and substance reasonably satisfactory to the
            Purchasers.

                        "Material Adverse Effect" shall mean any (i) material
            adverse effect on the legality, validity or enforceability of any
            Transaction Document, (ii) material adverse effect on the results of
            operations, assets, business, prospects or condition (financial or
            otherwise) of the Company and its Subsidiaries, when taken as a
            consolidated whole, or (iii) material adverse effect on the
            Company's ability to perform in any material respect on a timely
            basis its obligations under any Transaction Document.

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

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

                        "McLain/Rubin Notes" shall mean, collectively, that
            certain Promissory Note of the Company issued on September 8, 2004
            with a principal amount of $100,000 made payable to McLain-Rubin
            Realty LLC due on September 30, 2005, that certain Promissory Note
            of the Company issued on September 8, 2004 with a principal amount

                                       4
<PAGE>

            of $50,000 made payable to Cindy McLain as guardian for Cassidy
            Larsen, due on September 30, 2005, that certain Promissory Note of
            the Company issued on September 8, 2004 with a principal amount of
            $50,000 made payable to Christina Walstrom, due on September 30,
            2005, that certain Promissory Note of the Company issued on
            September 8, 2004 with a principal amount of $100,000 made payable
            to Stacy McLain Trust, due on September 30, 2005.

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

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

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

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

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

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

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

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

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

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

                                       5
<PAGE>

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

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

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

                        "Security Agreement" means the Security Agreement, dated
            the date hereof, among the Company and the Purchasers, in the form
            of Exhibit F attached hereto.

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

                        "Series A Debentures" means, the Variable Rate Secured
            Convertible Debentures due, subject to the terms therein, 60 months
            from their date of issuance, issued by the Company to the Purchasers
            hereunder, in the form of Exhibit A.

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

                        "Series A Warrants" means the Common Stock purchase
            warrants, in the form of Exhibit C delivered to the Purchasers at
            the Closing in accordance with Section 2.2(a)(iv) hereof, which
            Series A Warrants shall be exercisable immediately and have a term
            of exercise equal to five years.

                        "Series B Debentures" means, the Variable Rate Secured
            Debentures due, subject to the terms therein, 6 months after their
            date of issuance, issued by the Company to the Purchasers hereunder,
            in the form of Exhibit G.

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

                        "Series B Warrants" means the Common Stock purchase
            warrants, in the form of Exhibit C delivered to the Purchasers at
            the Closing in accordance with Section 2.2(a)(vi) hereof, which
            Series B Warrants shall be exercisable immediately and have a term
            of exercise equal to five years.

                         "Series C Warrants" means the warrants to purchase
            additional Series A Debentures and Series A Warrants, in the form of
            Exhibit E delivered to the Purchasers at the Closing in accordance
            with Section 2.2(a) hereof, which Series C Warrants shall be

                                       6
<PAGE>

            exercisable immediately and have a term of exercise equal to the
            earlier of (i) the 18 months anniversary of the Effective Date and
            (ii) the 3 year anniversary of the date hereof.

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

                        "Subscription Amount" means the Series A Subscription
            Amount and the Series B Subscription Amount.

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

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

                        "Subsidiary" of any Person shall mean and include (i)
            any corporation more than 50% of whose stock of any class or classes
            having by the terms thereof ordinary voting power to elect a
            majority of the directors of such corporation (irrespective of
            whether or not at the time stock of any class or classes of such
            corporation shall have or might have voting power by reason of the
            happening of any contingency) is at the time owned by such Person
            directly or indirectly through Subsidiaries and (ii) any limited
            liability company, partnership, association, joint venture or other
            entity in which such Person directly or indirectly through
            Subsidiaries, has more than a 50% equity or ownership interest at
            the time.

                        "Subsidiary Guarantee" means the Subsidiary Guarantee,
            dated the date hereof, among each of its Subsidiaries and the
            Purchasers, in the form of Exhibit H attached hereto.

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

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

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

                        "Trust Note" shall mean that certain Promissory Note of
            the Company issued on September 8, 2004 with a principal amount of
            $200,000 made payable to the Rubin Family Irrevocable Stock Trust
            due on September 30, 2005.

                                       7
<PAGE>

                        "Underlying Shares" means the shares of Common Stock
            issuable and issued upon conversion of the Debentures and upon
            exercise of the Warrants and issuable and issued in lieu of the cash
            payment of interest on the Debentures in accordance with the terms
            of the Debentures.

                        "VWAP" means, for any date, the price determined by the
            first of the following clauses that applies: (a) if the Common Stock
            is then listed or quoted on a Trading Market, the daily volume
            weighted average price of the Common Stock for such date (or the
            nearest preceding date) on the primary Trading Market on which the
            Common Stock is then listed or quoted as reported by Bloomberg
            Financial L.P. (based on a Trading Day from 9:30 a.m. EST to 4:02
            p.m. Eastern Time) using the VAP function; (b) if the Common Stock
            is not then listed or quoted on the Trading Market and if prices for
            the Common Stock are then reported in the "Pink Sheets" published by
            the Pink Sheets, LLC (or a similar organization or agency succeeding
            to its functions of reporting prices), the most recent bid price per
            share of the Common Stock so reported; or (c) in all other cases,
            the fair market value of a share of Common Stock as determined by a
            nationally recognized-independent appraiser selected in good faith
            by Purchasers holding a majority of the principal amount of the
            Debentures then outstanding.

                        "Warrants" means, collectively, the Series A Warrants,
            the Series B Warrants and the Series C Warrants.

                        "Warrant Shares" means the shares of Common Stock
            issuable upon exercise of the Series A Warrants and the Series B
            Warrants.

                                  ARTICLE II.
                                PURCHASE AND SALE

            2.1 Closing. On the Closing Date, upon the terms and subject to the
conditions set forth herein, concurrent with the execution and delivery of this
Agreement by the parties hereto, the Company agrees to sell, and each Purchaser
agrees to purchase in the aggregate, severally and not jointly, up to
$32,000,000 principal amount of the Debentures. Each Purchaser shall deliver to
the Company via wire transfer or a certified check immediately available funds
equal to their Subscription Amount and the Company shall deliver to each
Purchaser their respective Debenture and Warrants as determined pursuant to
Section 2.2(a) and the other items set forth in Section 2.2 issuable at the
Closing. Upon satisfaction of the conditions set forth in Sections 2.2 and 2.3,
the Closing shall occur at the offices of FW, or such other location as the
parties shall mutually agree.

            2.2 Deliveries.

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

                      (i)      this Agreement duly executed by the Company;

                                       8
<PAGE>

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

                      (iii)    a Series B Debenture with a principal amount
                               equal to such Purchaser's Series B Subscription
                               Amount (for each $1 million principal amount of
                               Series A Debentures, $66,666 principal amount of
                               Series B Debentures), registered in the name of
                               such Purchaser;

                      (iv)     a Series A Warrant registered in the name of such
                               Purchaser to purchase up to a number of shares of
                               Common Stock equal to 35% of such Purchaser's
                               Series A Subscription Amount divided by the
                               arithmetic average of the 5 consecutive VWAPs
                               immediately prior to the date hereof, with an
                               exercise price equal to $1.75, subject to
                               adjustment therein;

                      (v)      a Series B Warrant registered in the name of such
                               Purchaser, to purchase up to a number of shares
                               of Common Stock equal to 20% of such Purchaser's
                               Series B Subscription Amount divided by the
                               arithmetic average of the 5 consecutive VWAPs
                               immediately prior to the date hereof, with an
                               exercise price equal to $1.75, subject to
                               adjustment therein;

                      (vi)     a Series C Warrant registered in the name of such
                               Purchaser, to purchase (A) such principal amount
                               of additional Series A Debentures equal to 25% of
                               such Purchaser's Series A Subscription Amount and
                               otherwise identical to the Series A Debentures
                               issued at the Closing, and (B) a number of Series
                               A Warrants equal to 35% of the shares of Common
                               Stock issuable upon conversion of such additional
                               Series A Debentures and otherwise identical to
                               the Series A Warrants issued at the Closing;

                      (vii)    the Registration Rights Agreement duly executed
                               by the Company;

                      (viii)   the Security Agreement, duly executed by the
                               Company, along with all the Security Documents;

                      (ix)     a payoff letter for the GE Facility and UCC Form
                               3 termination statements of the Existing Liens
                               securing the GE Facility;

                      (x)      pay-off for the APM Purchase Note and, if any,
                               UCC Form 3 termination statements of the Existing
                               Liens securing the APM Purchase Note;

                      (xi)     a first position deed of trust for the benefit of
                               the Purchasers granting a first-position lien and
                               encumbrance upon certain real

                                       9
<PAGE>

                               property owned by Arizona Pacific Materials LLC,
                               a wholly owned subsidiary of the Company, located
                               in Pinal County, Arizona, and consisting of
                               approximately 73.636 acres, commonly know as 9390
                               East Hiller Road, Florence, Arizona, and more
                               particularly described in the Deed of Trust, in
                               form and substance reasonably satisfactory to the
                               Purchasers;

                      (xii)    a duly executed Lock Box Agreement, in form and
                               substance reasonably satisfactory to the
                               Purchasers, duly executed by the parties thereto;

                      (xiii)   a duly executed Factoring Agreement, in form and
                               substance reasonably satisfactory to the
                               Purchasers, duly executed by the parties thereto;

                      (xiv)    agreement to extend the maturity of the Trust
                               Note until December 31, 2005; in form and
                               substance reasonably satisfactory to the
                               Purchasers;

                      (xv)     agreement to extend the maturity of the
                               McLain/Rubin Notes until, as to 1/3 principal
                               amount of such notes, December 31, 2006, as to
                               1/3 principal amount of such notes, December 31,
                               2007 and as to 1/3 principal amount of such
                               notes, December 31, 2008, in form and substance
                               reasonably satisfactory to the Purchasers; and

                      (xvi)    a legal opinion of Company Counsel, in the form
                               of Exhibit D attached hereto.

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

                      (i)      this Agreement duly executed by such Purchaser;

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

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

                      (iv)     the Registration Rights Agreement duly executed
                               by such Purchaser.

            2.3 Closing Conditions.

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

                      (i)      the accuracy in all material respects when made
                               and on the Closing

                                       10
<PAGE>

                               Date of the representations and warranties of the
                               Purchasers contained herein;

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

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

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

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

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

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

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

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

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

                                       11
<PAGE>

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

                      (a) Subsidiaries. All of the Existing Subsidiaries are set
            forth on Schedule 3.1(a). The Company owns, directly or indirectly,
            all of the capital stock or other equity interests of each
            Subsidiary of the Company free and clear of any Liens, and all the
            issued and outstanding shares of capital stock of each Subsidiary of
            the Company are validly issued and are fully paid, non-assessable
            and free of preemptive and similar rights to subscribe for or
            purchase securities. The Company has no Subsidiaries other than the
            Existing Subsidiaries.

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

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

                                       12
<PAGE>

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

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

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

                      (g) Capitalization. The capitalization of the Company is
            as set forth on Schedule 3.1(g). The Company has not issued any
            capital stock since its most recently

                                       13
<PAGE>

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

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

                                       14
<PAGE>

            ("GAAP"), except as may be otherwise specified in such financial
            statements or the notes thereto and except that unaudited financial
            statements may not contain all footnotes required by GAAP, and
            fairly present in all material respects the financial position of
            the Company and its consolidated subsidiaries as of and for the
            dates thereof and the results of operations and cash flows for the
            periods then ended, subject, in the case of unaudited statements, to
            normal, immaterial, year-end audit adjustments.

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

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

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

                                       15
<PAGE>

                      (l) Compliance. Except as set forth on Schedule 3.1(l),
            neither the Company nor any Subsidiary of the Company (i) is in
            default under or in violation of (and no event has occurred that has
            not been waived that, with notice or lapse of time or both, would
            result in a default by the Company or any Subsidiary of the
            Company), nor has the Company or any Subsidiary of the Company
            received notice of a claim that it is in default under or that it is
            in violation of, any indenture, loan or credit agreement or any
            other agreement or instrument to which it is a party or by which it
            or any of its properties is bound (whether or not such default or
            violation has been waived), (ii) is in violation of any order of any
            court, arbitrator or governmental body, or (iii) is or has been in
            violation of any statute, rule or regulation of any governmental
            authority, including without limitation all foreign, federal, state
            and local laws applicable to its business except in each case as
            could not have a Material Adverse Effect.

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

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

                      (o) Leases. All leases of material real property and
            facilities that are leased by the Company and its Subsidiaries from
            third parties are valid, subsisting and in full force and effect and
            neither the Company nor its Subsidiaries are in default thereunder,
            nor, to the knowledge of the Company, is any other party to such
            lease, in default in any material respect thereunder

                      (p) Patents and Trademarks. The Company and its
            Subsidiaries have, or have rights to use, all patents, patent
            applications, trademarks, trademark applications, service marks,
            trade names, copyrights, licenses and other similar rights necessary
            or material for use in connection with their respective businesses
            as described in the SEC Reports and which the failure to so have
            could have a Material Adverse Effect (collectively, the
            "Intellectual Property Rights"). Neither the Company nor any
            Subsidiary of the Company has received a written notice that the
            Intellectual Property Rights used by the Company or any Subsidiary
            of the Company violates or infringes upon the rights of any Person.
            To the knowledge of the Company, all such Intellectual Property
            Rights are

                                       16
<PAGE>

            enforceable and there is no existing infringement by another Person
            of any of the Intellectual Property Rights of others.

                      (q) Insurance. The Company and its Subsidiaries are
            insured by insurers of recognized financial responsibility against
            such losses and risks and in such amounts as are prudent and
            customary in the businesses in which the Company and its
            Subsidiaries are engaged, including, but not limited to, directors
            and officers insurance coverage equal to the amount set forth on
            Schedule 3.1(q). To the knowledge of the Company, such insurance
            contracts and policies are accurate and complete. Neither the
            Company nor any Subsidiary of the Company has any reason to believe
            that it will not be able to renew its existing insurance coverage as
            and when such coverage expires or to obtain similar coverage from
            similar insurers as may be necessary to continue its business
            without a significant increase in cost.

                      (r) Transactions With Affiliates and Employees. Except as
            set forth in the SEC Reports or on Schedule 3.1(s) attached hereto,
            none of the officers or directors of the Company and, to the
            knowledge of the Company, none of the employees of the Company is
            presently a party to any transaction with the Company or any
            Subsidiary of the Company (other than for services as employees,
            officers and directors), including any contract, agreement or other
            arrangement providing for the furnishing of services to or by,
            providing for rental of real or personal property to or from, or
            otherwise requiring payments to or from any officer, director or
            such employee or, to the knowledge of the Company, any entity in
            which any officer, director, or any such employee has a substantial
            interest or is an officer, director, trustee or partner, in each
            case in excess of $60,000 other than (i) for payment of salary or
            consulting fees for services rendered, (ii) reimbursement for
            expenses incurred on behalf of the Company and (iii) for other
            employee benefits, including stock option agreements under any stock
            option plan of the Company.

                      (s) Sarbanes-Oxley; Internal Accounting Controls. To the
            best knowledge of the management of the Company, the Company is in
            material compliance with all provisions of the Sarbanes-Oxley Act of
            2002 which are applicable to it as of the Closing Date. The Company
            and 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
            GAAP and to maintain asset accountability, (iii) access to assets is
            permitted only in accordance with management's general or specific
            authorization, and (iv) the recorded accountability for assets is
            compared with the existing assets at reasonable intervals and
            appropriate action is taken with respect to any differences. The
            Company has established disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
            Company and designed such disclosure controls and procedures to
            ensure that material information relating to the Company, including
            its Subsidiaries, is made known to the certifying officers by others
            within those entities, particularly during the period in which the
            Company's most recently filed periodic report under the Exchange
            Act, as the case may be, is being prepared. The Company's certifying
            officers have

                                       17
<PAGE>

            evaluated the effectiveness of the Company's controls and procedures
            as of the date prior to the filing date of the most recently filed
            periodic report under the Exchange Act (such date, the "Evaluation
            Date"). The Company presented in its most recently filed periodic
            report under the Exchange Act the conclusions of the certifying
            officers about the effectiveness of the disclosure controls and
            procedures based on their evaluations as of the Evaluation Date.
            Since the Evaluation Date, there have been no significant changes in
            the Company's internal controls (as such term is defined in Item
            307(b) of Regulation S-K under the Exchange Act) or, to the
            knowledge of the Company, in other factors that could significantly
            affect the Company's internal controls.

                      (t) Certain Fees. No brokerage or finder's fees or
            commissions are or will be payable by the Company to any broker,
            financial advisor or consultant, finder, placement agent, investment
            banker, bank or other Person with respect to the transactions
            contemplated by the Transaction Documents. The Purchasers shall have
            no obligation with respect to any fees or with respect to any claims
            made by or on behalf of other Persons for fees of a type
            contemplated in this Section that may be due in connection with the
            transactions contemplated by the Transaction Documents.

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

                      (v) Investment Company. The Company is not, and is not an
            Affiliate of, and immediately after receipt of payment for the
            Securities, will not be or be an Affiliate of, an "investment
            company" within the meaning of the Investment Company Act of 1940,
            as amended. Notwithstanding the foregoing, the Company makes no
            representation or warranty as to whether any Purchaser hereunder may
            be or become an "investment company" within the meaning of said act.
            The Company shall conduct its business in a manner so that it will
            not become subject to the Investment Company Act.

                      (w) Registration Rights. Other than each of the
            Purchasers, no Person has any right to cause the Company to effect
            the registration under the Securities Act of any securities of the
            Company.

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

                                       18
<PAGE>

            to believe that it will not in the foreseeable future continue to
            be, in compliance with all such listing and maintenance
            requirements.

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

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

                      (aa) No Integrated Offering. Assuming the accuracy of the
            Purchasers' representations and warranties set forth in Section 3.2,
            neither the Company, nor any of its affiliates, nor any Person
            acting on its or their behalf has, directly or indirectly, made any
            offers or sales of any security or solicited any offers to buy any
            security, under circumstances that would cause this offering of the
            Securities to be integrated with prior offerings by the Company for
            purposes of the Securities Act or any applicable shareholder
            approval provisions, including, without limitation, under the rules
            and regulations of any Trading Market on which any of the securities
            of the Company are listed or designated.

                      (bb) Solvency. Based on the financial condition of the
            Company as of the Closing Date after giving effect to the receipt by
            the Company of the proceeds from the sale of the Securities
            hereunder, (i) the Company's fair saleable value of its assets
            exceeds the amount that will be required to be paid on or in respect
            of the Company's existing debts and other liabilities (including
            known contingent liabilities) as they mature; (ii) the Company's
            assets do not constitute unreasonably small capital to carry on its
            business for the current fiscal year as now conducted and as
            proposed to be conducted

                                       19
<PAGE>

            including its capital needs taking into account the particular
            capital requirements of the business conducted by the Company, and
            projected capital requirements and capital availability thereof; and
            (iii) the current cash flow of the Company, together with the
            proceeds the Company would receive, were it to liquidate all of its
            assets, after taking into account all anticipated uses of the cash,
            would be sufficient to pay all amounts on or in respect of its debt
            when such amounts are required to be paid. The Company does not
            intend to incur debts beyond its ability to pay such debts as they
            mature (taking into account the timing and amounts of cash to be
            payable on or in respect of its debt). The Company has no knowledge
            of any facts or circumstances which lead it to believe that it will
            file for reorganization or liquidation under the bankruptcy or
            reorganization laws of any jurisdiction within one year from the
            Closing Date. The SEC Reports set forth as of the dates thereof all
            outstanding secured and unsecured Indebtedness of the Company or any
            Subsidiary of the Company, or for which the Company or any
            Subsidiary of the Company has commitments.

                      (cc) Indebtedness. All of the Indebtedness of the Company
            is as set forth on Schedule 3.1(cc). Except as set forth on Schedule
            3.1(cc) annexed hereto, the Company is not in default under any
            Existing Indebtedness that could reasonably be expected to have a
            Material Adverse Effect.

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

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

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

                      (gg) Accountants. The Company's accountants are set forth
            on Schedule 3.1(gg) of the Disclosure Schedule. To the knowledge of
            the Company, such accountants, who the Company expects will express
            their opinion with respect to the

                                       20
<PAGE>

            financial statements to be included in the Company's Annual Report
            on Form 10-K for the year ending July 31, 2005 are a registered
            public accounting firm as required by the Securities Act.

                      (hh) Senior Liens. Except as disclosed on Schedule 3.1
            (hh), as of the Closing Date, no Existing Indebtedness of the
            Company is secured by Existing Liens that are senior to the Liens
            securing payment of the Debentures, whether with respect to
            principal, interest or upon maturity, liquidation or dissolution.

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

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

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

                                       21
<PAGE>

            the time that the hedging activities are being conducted. The
            Company acknowledges that such aforementioned hedging activities do
            not constitute a breach of any of the Transaction Documents.

                      (ll) Deed of Trust. The Company has caused its Subsidiary,
            Arizona Pacific Materials LLC, to execute and deliver a Deed of
            Trust, Assignment of Rents and Security Agreement (the "Deed of
            Trust"), granting a first-position lien and encumbrance upon certain
            real property located in Pinal County, Arizona, and consisting of
            approximately 73.636 acres, commonly know as 9390 East Hiller Road,
            Florence, Arizona, and more particularly described in the Deed of
            Trust (the "Property"). The Deed of Trust secures any and all of the
            obligations of the Company or its Subsidiaries to the Purchasers,
            under the Transaction Documents. The Company shall pay for and
            maintain an ALTA Extended Policy of Title Insurance insuring the
            Purchasers' first-position lien upon the Property in the amount of
            Seven Hundred Twenty-Nine Thousand Dollars ($729,000.00), subject
            only to such matters of record as the Agent (as defined in the
            Security Agreement), on behalf of the Purchasers, may approve in its
            sole and absolute discretion. The legally described Property is one
            and the same real property as the real property upon which the
            Company and/or its Subsidiaries intend to conduct the mining
            activities which are the underlying purpose of the financing
            evidenced by the Transaction Documents. Any default under the Deed
            of Trust shall be deemed to be a default under the Transaction
            Documents and any default under any of the Transaction Documents
            shall be deemed to be a default under the Deed of Trust.

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

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

                      (b) Own Account. Such Purchaser understands that the
            Securities are "restricted securities" and have not been registered
            under the Securities Act or any

                                       22
<PAGE>

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

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

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

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

                      (f) Short Sales and Confidentiality. Other than the
            transaction contemplated hereunder, such Purchaser has not directly
            or indirectly, nor has any Person acting on behalf of or pursuant to
            any understanding with such Purchaser, executed any disposition,
            including Short Sales (but not including the location and/or
            reservation of borrowable shares of Common Stock), in the securities
            of the Company during the period commencing from the time that such
            Purchaser first received a term sheet from the Company or any other
            Person setting forth the material terms of the transactions
            contemplated hereunder until the date hereof ("Discussion Time").
            Notwithstanding the foregoing, in the case of a Purchaser that is a
            multi-managed investment vehicle whereby separate portfolio managers
            manage separate portions of such Purchaser's assets and the
            portfolio managers have no direct knowledge of the investment
            decisions made by the portfolio managers managing other portions of
            such Purchaser's assets, the representation set forth above shall
            only apply with respect to the portion of assets managed by the

                                       23
<PAGE>

            portfolio manager that either (i) made the investment decision to
            purchase the Securities covered by this Agreement, or (ii) has
            knowledge of this Agreement. Other than to other Persons party to
            this Agreement, such Purchaser has maintained the confidentiality of
            all disclosures made to it in connection with this transaction
            (including the existence and terms of this transaction).

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

                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

            4.1 Transfer Restrictions.

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

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

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

                                       24
<PAGE>

            A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

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

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

                                       25
<PAGE>

            crediting the account of the Purchaser's prime broker with the
            Depository Trust Company System.

                      (d) In addition to such Purchaser's other available
            remedies, the Company shall pay to a Purchaser, in cash, as partial
            liquidated damages and not as a penalty, for each $1,000 of
            Underlying Shares (based on the VWAP of the Common Stock on the date
            such Securities are submitted to the Company's transfer agent)
            delivered for removal of the restrictive legend and subject to
            Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading
            Day 5 Trading Days after such damages have begun to accrue) for each
            Trading Day after the Legend Removal Date until such certificate is
            delivered without a legend. Nothing herein shall limit such
            Purchaser's right to pursue actual damages for the Company's failure
            to deliver certificates representing any Securities as required by
            the Transaction Documents, and such Purchaser shall have the right
            to pursue all remedies available to it at law or in equity
            including, without limitation, a decree of specific performance
            and/or injunctive relief.

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

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

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

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

                                       26
<PAGE>

registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.

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

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

            4.6 Securities Laws Disclosure; Publicity. The Company shall, by
8:30 a.m. Eastern time on the Trading Day following the date hereof, issue a
press release, reasonably acceptable to each Purchaser disclosing the material
terms of the transactions contemplated hereby. In addition, the Company shall,
no later than three (3) business days following the date hereof, file a Current
Report on Form 8-K and shall attach the Transaction Documents thereto. The
Company and each Purchaser shall consult with each other in issuing any other
press releases with respect to the transactions contemplated hereby, and neither
the Company nor any Purchaser shall issue any such press release or otherwise
make any such public statement without the prior consent of the Company, with
respect to any press release of any Purchaser, or without the prior consent of
each Purchaser, with respect to any press release of the Company, which consent
shall not unreasonably be withheld, except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser, or
include the name of any Purchaser in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written consent of such
Purchaser, except (i) as required by federal securities law in connection with
the registration statement contemplated by the Registration Rights Agreement and
(ii) to the extent such disclosure is required by law or Trading Market
regulations, in which case the Company shall provide the Purchasers with prior
notice of such disclosure permitted under subclause (i) or (ii).

            4.7 Shareholder Rights Plan. No claim will be made or enforced by
the Company or, to the knowledge of the Company, any other Person that any
Purchaser is an "Acquiring Person" under any shareholder rights plan or similar
plan or arrangement in effect or hereafter adopted by the Company, or that any
Purchaser could be deemed to trigger the provisions of any such plan or
arrangement, by virtue of receiving Securities under the Transaction Documents
or under any

                                       27
<PAGE>

other agreement between the Company and the Purchasers. The Company shall
conduct its business in a manner so that it will not become subject to the
Investment Company Act.

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

            4.9 Use of Proceeds. Except for the retirement of the Existing
Indebtedness constituting the GE Facility and the APM Purchase Note, which shall
satisfied in full directly out of the net proceeds from the sale of the
Securities hereunder at the Closing, or as otherwise set forth on Schedule 4.9
attached hereto, the Company shall use the net proceeds from the sale of the
Securities hereunder for working capital purposes and not for the satisfaction
of any portion of the Existing Indebtedness, to redeem or repurchase any Common
Stock or Common Stock Equivalents or to settle any outstanding litigation.

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

            4.11 Indemnification of Purchasers. Subject to the provisions of
this Section 4.11, the Company will indemnify and hold the Purchasers and their
directors, officers, shareholders, members, partners, employees and agents
(each, a "Purchaser Party") harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and reasonable attorneys'
fees and costs of investigation that any such Purchaser Party may suffer or
incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other Transaction Documents or (b) any action instituted
against a Purchaser, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such Purchaser, with
respect to any of the transactions contemplated by

                                       28
<PAGE>

the Transaction Documents (unless such action is based upon a breach of such
Purchaser's representation, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser may have with any
such stockholder or any violations by the Purchaser of state or federal
securities laws or any conduct by such Purchaser which constitutes fraud, gross
negligence, willful misconduct or malfeasance). If any action shall be brought
against any Purchaser Party in respect of which indemnity may be sought pursuant
to this Agreement, such Purchaser Party shall promptly notify the Company in
writing, and the Company shall have the right to assume the defense thereof with
counsel of its own choosing. Any Purchaser Party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Purchaser
Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or (iii)
in such action there is, in the reasonable opinion of such separate counsel, a
material conflict on any material issue between the position of the Company and
the position of such Purchaser Party. The Company will not be liable to any
Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party
effected without the Company's prior written consent, which shall not be
unreasonably withheld or delayed; or (ii) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchaser Party's
breach of any of the representations, warranties, covenants or agreements made
by the Purchasers in this Agreement or in the other Transaction Documents.

            4.12 Reservation and Listing of Securities.

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

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

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

            4.13 Participation in Future Financing.

                                       29
<PAGE>

                      (a) From the date hereof until the date that is the 12
            month anniversary of the Effective Date, upon any financing by the
            Company or any of its Subsidiaries of Common Stock or Common Stock
            Equivalents (a "Subsequent Financing"), each Purchaser shall have
            the right to participate in up to an amount of the Subsequent
            Financing equal to 100% of the Subsequent Financing (the
            "Participation Maximum").

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

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

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

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

                                       30
<PAGE>

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

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

            4.14 Subsequent Equity Sales.

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

                      (b) From the date hereof until such time as no Purchaser
            holds any of the Securities, the Company shall be prohibited from
            effecting or entering into an agreement to effect any Subsequent
            Financing involving a "Variable Rate Transaction". The term
            "Variable Rate Transaction" shall mean a transaction in which the
            Company (i) enters into any agreement, including, but not limited
            to, an equity line of credit, whereby the Company may sell
            securities at a future determined price, unless such future
            determined price shall be not less than 85% of the VWAP as of the
            date of issuance or sale of the overlying security; or (ii) issues
            or sells any debt or equity securities that are convertible into,
            exchangeable or exercisable for, or include the right to receive
            additional shares of Common Stock either (A) at a conversion,
            exercise or exchange rate or other price that is based upon and/or
            varies with the trading prices of or quotations for the shares of
            Common Stock at any time after the initial issuance of such debt or
            equity securities, or (B) with a conversion, exercise or exchange
            price that is subject to being reset at some future date after the
            initial issuance of such debt or equity security or upon the
            occurrence of specified or contingent events directly or indirectly
            related to the business of the Company or the market for the Common
            Stock, unless in either such event the conversion, exercise or
            exchange rate or other price is not less than 85% of the VWAP as at
            the date of issuance or sale of the overlying security.

            4.15 Equal Treatment of Purchasers. No consideration shall be
offered or paid to any person to amend or consent to a waiver or modification of
any provision of any of the Transaction Documents unless the same consideration
is also offered to all of the parties to the Transaction Documents. Further, the
Company shall not make any payment of principal or interest on the Debentures in
amounts which are disproportionate to the respective principal

                                       31
<PAGE>

amounts outstanding on the Debentures at any applicable time. For clarification
purposes, this provision constitutes a separate right granted to each Purchaser
by the Company and negotiated separately by each Purchaser, and is intended to
treat for the Company the Debenture holders as a class and shall not in any way
be construed as the Purchasers acting in concert or as a group with respect to
the purchase, disposition or voting of Securities or otherwise.

            4.16 Short Sales and Confidentiality. Each Purchaser severally and
not jointly with the other Purchasers covenants that neither it nor any
affiliates acting on its behalf or pursuant to any understanding with it will
execute any Short Sales during the period after the Discussion Time and ending
at the time that the transactions contemplated by this Agreement are first
publicly announced as described in Section 4.6. Each Purchaser, severally and
not jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company as described in Section 4.6, such Purchaser will maintain, the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction). Each
Purchaser understands and acknowledges, severally and not jointly with any other
Purchaser, that the Commission currently takes the position that coverage of
short sales of shares of the Common Stock "against the box" prior to the
Effective Date of the Registration Statement with the Securities is a violation
of Section 5 of the Securities Act, as set forth in Item 65, Section 5 under
Section A, of the Manual of Publicly Available Telephone Interpretations, dated
July 1997, compiled by the Office of Chief Counsel, Division of Corporation
Finance. Notwithstanding the foregoing, no Purchaser makes any representation,
warranty or covenant hereby that it will not engage in Short Sales in the
securities of the Company after the time that the transactions contemplated by
this Agreement are first publicly announced as described in Section 4.6.
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser's assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser's assets, the covenant set forth above
shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Securities covered by
this Agreement.

                                   ARTICLE V.
                                  MISCELLANEOUS

            5.1 Termination. This Agreement may be terminated by any Purchaser,
as to such Purchaser's obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by
written notice to the other parties, if the Closing has not been consummated on
or before June 30, 2005; provided, however, that no such termination will affect
the right of any party to sue for any breach by the other party (or parties).

            5.2 Fees and Expenses. At the Closing, the Company has agreed to
reimburse Omicron Master Trust ("Omicron") up to $100,000, for its actual,
reasonable, out-of-pocket legal fees and expenses, $50,000 which shall be paid
prior to the Closing. Accordingly, in lieu of the foregoing payments, the
aggregate amount that Omicron is to pay for the Securities at the Closing shall
be reduced by $50,000 in lieu thereof. The Company shall deliver, prior to the
Closing, a completed and executed copy of the Closing Statement, attached hereto
as Annex A.

                                       32
<PAGE>

Except as expressly set forth in the Transaction Documents to the contrary, each
party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of this
Agreement. The Company shall pay all transfer agent fees, stamp taxes and other
taxes and duties levied in connection with the delivery of any Securities.

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

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

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

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

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

                                       33
<PAGE>

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

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

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

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

            5.12 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties

                                       34
<PAGE>

will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.

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

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

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

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

            5.17 Usury. To the extent it may lawfully do so, the Company hereby
agrees not to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force, in
connection with any claim, action or proceeding that may be brought by any

                                       35
<PAGE>

Purchaser in order to enforce any right or remedy under any Transaction
Document. Notwithstanding any provision to the contrary contained in any
Transaction Document, it is expressly agreed and provided that the total
liability of the Company under the Transaction Documents for payments in the
nature of interest shall not exceed the maximum lawful rate authorized under
applicable law (the "Maximum Rate"), and, without limiting the foregoing, in no
event shall any rate of interest or default interest, or both of them, when
aggregated with any other sums in the nature of interest that the Company may be
obligated to pay under the Transaction Documents exceed such Maximum Rate. It is
agreed that if the maximum contract rate of interest allowed by law and
applicable to the Transaction Documents is increased or decreased by statute or
any official governmental action subsequent to the date hereof, the new maximum
contract rate of interest allowed by law will be the Maximum Rate applicable to
the Transaction Documents from the effective date forward, unless such
application is precluded by applicable law. If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to any
Purchaser with respect to indebtedness evidenced by the Transaction Documents,
such excess shall be applied by such Purchaser to the unpaid principal balance
of any such indebtedness or be refunded to the Company, the manner of handling
such excess to be at such Purchaser's election.

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

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

            5.20 Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the

                                       36
<PAGE>

normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto.

                            (SIGNATURE PAGES FOLLOW)

                                       37
<PAGE>

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

WESTERN POWER & EQUIPMENT CORP.                            Address for Notice:
                                                           ------------------

By:__________________________________________
     Name:
     Title:

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

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

                                       38
<PAGE>

        [PURCHASER SIGNATURE PAGES TO WPEC SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: ________________________________________________________
SIGNATURE OF AUTHORIZED SIGNATORY OF PURCHASER: ___________________________
Name of Authorized Signatory: _____________________________________________
Title of Authorized Signatory: ____________________________________________
Email Address of Purchaser:________________________________________________

Address for Notice of Purchaser:

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

Series A Subscription Amount:
Series A Warrant Shares:
Series B Subscription Amount (for each $1 million principal amount of Series A
Debentures, $66,666 principal amount of Series B Debentures): Series B Warrant
Shares: Principal Amount of Debentures underlying Series C Warrant:
Warrant Shares underlying Series C Warrant:

EIN Number:

                                       39

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}]]