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Exhibit 10.4

                          SECURITIES PURCHASE AGREEMENT

         THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of December 23, 2004, by and between NETGURU, INC., a Delaware
corporation (the "Company"), and Laurus Master Fund, Ltd., a Cayman Islands
company (the "Purchaser").

                                    RECITALS

         WHEREAS, the Company has authorized the sale to the Purchaser of a
Convertible Term Note in the aggregate principal amount of One Million Dollars
($1,000,000) (the "Note"), which Note is convertible into shares of the
Company's common stock, $0.01 par value per share (the "Common Stock") at an
initial fixed conversion price of $1.29 per share of Common Stock ("Fixed
Conversion Price");

         WHEREAS, the Company wishes to issue a warrant to the Purchaser to
purchase up to 130,000 shares of the Company's Common Stock (subject to
adjustment as set forth therein) in connection with Purchaser's purchase of the
Note;

         WHEREAS, Purchaser desires to purchase the Note and the Warrant (as
defined in Section 2) on the terms and conditions set forth herein; and

         WHEREAS, the Company desires to issue and sell the Note and Warrant to
Purchaser on the terms and conditions set forth herein.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises, representations, warranties and covenants hereinafter set forth
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

         1. AGREEMENT TO SELL AND PURCHASE. Pursuant to the terms and conditions
set forth in this Agreement, on the Closing Date (as defined in Section 3), the
Company agrees to sell to the Purchaser, and the Purchaser hereby agrees to
purchase from the Company a Note in the aggregate principal amount of $1,000,000
convertible in accordance with the terms thereof into shares of the Company's
Common Stock in accordance with the terms of the Note and this Agreement. The
Note purchased on the Closing Date shall be known as the "Offering." A form of
the Note is annexed hereto as Exhibit A. The Note will mature on the Maturity
Date (as defined in the Note). Collectively, the Note and Warrant and Common
Stock issuable in payment of the Note, upon conversion of the Note and upon
exercise of the Warrant are referred to as the "Securities."

         2. FEES AND WARRANT. On the Closing Date:

                  (a) The Company will issue and deliver to the Purchaser a
         Warrant to purchase up to 130,000 shares of Common Stock in connection
         with the Offering (the "Warrant") pursuant to Section 1 hereof. The
         Warrant must be delivered on the Closing Date. A form of Warrant is
         annexed hereto as Exhibit B. All the representations, covenants,
         warranties, undertakings, and indemnification, and other rights made or

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         granted to or for the benefit of the Purchaser by the Company are
         hereby also made and granted in respect of the Warrant and shares of
         the Company's Common Stock issuable upon exercise of the Warrant (the
         "Warrant Shares").

                  (b) Subject to the terms of Section 2(d) below, the Company
         shall pay to Laurus Capital Management, LLC, manager of Purchaser a
         closing payment in an amount equal to $5,000. The foregoing fee is
         referred to herein as the "Closing Payment."

                  (c) The Company shall reimburse the Purchaser for its
         reasonable expenses (including legal fees and expenses) incurred in
         connection with the preparation and negotiation of this Agreement and
         the Related Agreements (as hereinafter defined), and expenses incurred
         in connection with the Purchaser's due diligence review of the Company
         and its Subsidiaries (as defined in Section 4.2) and all related
         matters. Amounts required to be paid under this Section 2(c) will be
         paid on the Closing Date and shall be $5,000 for such expenses referred
         to in this Section 2(c).

                  (d) The Closing Payment and the expenses referred to in the
         preceding clause (c) (net of deposits previously paid by the Company)
         shall be paid at closing out of funds held pursuant to the Escrow
         Agreement (as defined below) and a disbursement letter (the
         "Disbursement Letter").

         3. CLOSING, DELIVERY AND PAYMENT.

                  3.1 CLOSING. Subject to the terms and conditions herein, the
closing of the transactions contemplated hereby (the "Closing"), shall take
place on the date hereof, at such time or place as the Company and Purchaser may
mutually agree (such date is hereinafter referred to as the "Closing Date").

                  3.2 DELIVERY. Pursuant to the Escrow Agreement, at the Closing
on the Closing Date, the Company will deliver to the Purchaser, among other
things, a Note in the form attached as Exhibit A representing the principal
amount of $1,000,000 and a Warrant in the form attached as Exhibit B in the
Purchaser's name representing 130,000 Warrant Shares and the Purchaser will
deliver to the Company, among other things, the amounts set forth in the
Disbursement Letter by certified funds or wire transfer.

         4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Purchaser as follows (which representations and
warranties are supplemented by, and subject to, the Company's filings under the
Securities Exchange Act of 1934 made prior to the date of this Agreement
(collectively, the "Exchange Act Filings"), copies of which the Purchaser has
had an opportunity to review:

                  4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization. The Company has the corporate power
and authority to own and operate its properties and assets, to execute and

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deliver this (i) this Agreement, (ii) the Note and the Warrant to be issued in
connection with this Agreement, (iii) the Security Agreement dated as of the
date hereof between the Company and the Purchaser, (iv) the Registration Rights
Agreement relating to the Securities dated as of the date hereof between the
Company and the Purchaser (as amended, modified or supplemented from time to
time, the "Registration Rights Agreement"), (v) the Escrow Agreement dated as of
the date hereof among the Company, the Purchaser and the escrow agent referred
to therein, substantially in the form of Exhibit D hereto (as amended, modified
or supplemented from time to time, the "Escrow Agreement") and (vi) all other
agreements related to this Agreement and the Note and referred to herein (the
preceding clauses (ii) through (vi), collectively, the "Related Agreements"), to
issue and sell the Note and the shares of Common Stock issuable upon conversion
of the Note (the "Note Shares"), to issue and sell the Warrant and the Warrant
Shares, and to carry out the provisions of this Agreement and the Related
Agreements and to carry on its business as presently conducted. The Company is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions, except for those jurisdictions in
which the failure to do so has not had, or could not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on the
business, assets, liabilities, condition (financial or otherwise), properties,
operations or prospects of the Company (a "Material Adverse Effect").

                  4.2 SUBSIDIARIES. Each direct and indirect Subsidiary of the
Company, the direct owner of such Subsidiary and its percentage ownership
thereof, is set forth on Schedule 4.2. For the purpose of this Agreement, a
"SUBSIDIARY" of any person or entity means (i) a corporation or other entity
whose shares of stock or other ownership interests having ordinary voting power
(other than stock or other ownership interests having such power only by reason
of the happening of a contingency) to elect a majority of the directors of such
corporation, or other persons or entities performing similar functions for such
person or entity, are owned, directly or indirectly, by such person or entity or
(ii) a corporation or other entity in which such person or entity owns, directly
or indirectly, more than 50% of the equity interests at such time.

                  4.3 CAPITALIZATION; VOTING RIGHTS.

                  (a) The authorized capital stock of the Company, as of the
         date hereof, consists of 155,000,000 shares, of which 150,000,000 are
         shares of Common Stock, par value $0.01 per share, 18,917,154 shares of
         which are issued and outstanding, and 5,000,000 are shares of preferred
         stock, par value $0.01 per share, of which no shares of preferred stock
         are issued and outstanding.

                  (b) Except as disclosed on Schedule 4.3, other than: (i) the
         shares reserved for issuance under the Company's stock option plans;
         and (ii) shares which may be issued pursuant to this Agreement and the
         Related Agreements, there are no outstanding options, warrants, rights
         (including conversion or preemptive rights and rights of first
         refusal), proxy or stockholder agreements, or arrangements or
         agreements of any kind for the purchase or acquisition from the Company
         of any of its securities. Except as disclosed on Schedule 4.3, neither
         the offer, issuance or sale of any of the Note or Warrant, or the
         issuance of any of the Note Shares or Warrant Shares, nor the
         consummation of any transaction contemplated hereby will result in a
         change in the price or number of any securities of the Company
         outstanding, under anti-dilution or other similar provisions contained
         in or affecting any such securities.

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                  (c) All issued and outstanding shares of the Company's Common
         Stock: (i) have been duly authorized and validly issued and are fully
         paid and nonassessable; and (ii) were issued in compliance with all
         applicable state and federal laws concerning the issuance of
         securities.

                  (d) The rights, preferences, privileges and restrictions of
         the shares of the Common Stock are as stated in the Company's
         Certificate of Incorporation (the "Charter"). The Note Shares and
         Warrant Shares have been duly and validly reserved for issuance. When
         issued in compliance with the provisions of this Agreement and the
         Company's Charter, the Securities will be validly issued, fully paid
         and nonassessable, and will be free of any liens or encumbrances;
         provided, however, that the Securities may be subject to restrictions
         on transfer under state and/or federal securities laws as set forth
         herein or as otherwise required by such laws at the time a transfer is
         proposed.

                  4.4 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action
on the part of the Company, its officers and directors necessary for the
authorization of this Agreement and the Related Agreements, the performance of
all obligations of the Company hereunder and under the Related Agreements at the
Closing and, the authorization, sale, issuance and delivery of the Note and
Warrant has been taken or will be taken prior to the Closing. This Agreement and
the Related Agreements, when executed and delivered and to the extent it is a
party thereto, will be valid and binding obligations of the Company enforceable
in accordance with their terms, except:

                  (a) as limited by applicable bankruptcy, insolvency,
         reorganization, moratorium or other laws of general application
         affecting enforcement of creditors' rights; and

                  (b) general principles of equity that restrict the
         availability of equitable or legal remedies.

The sale of the Note and the subsequent conversion of the Note into Note Shares
are not and will not be subject to any preemptive rights or rights of first
refusal that have not been properly waived or complied with. The issuance of the
Warrant and the subsequent exercise of the Warrant for Warrant Shares are not
and will not be subject to any preemptive rights or rights of first refusal that
have not been properly waived or complied with.

                  4.5 LIABILITIES. The Company does not have any contingent
liabilities, except current liabilities incurred in the ordinary course of
business and liabilities disclosed in any Exchange Act Filings.

                  4.6 AGREEMENTS; ACTION. Except as set forth on Schedule 4.6 or
as disclosed in any Exchange Act Filings:

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                  (a) There are no agreements, understandings, instruments,
         contracts, proposed transactions, judgments, orders, writs or decrees
         to which the Company is a party or to its knowledge by which it is
         bound which may involve: (i) obligations (contingent or otherwise) of,
         or payments to, the Company in excess of $100,000 (other than
         obligations of, or payments to, the Company arising from purchase or
         sale agreements entered into in the ordinary course of business); or
         (ii) the transfer or license of any patent, copyright, trade secret or
         other proprietary right to or from the Company (other than licenses
         arising from the purchase of "off the shelf" or other standard
         products); or (iii) provisions restricting the development, manufacture
         or distribution of the Company's products or services; or (iv)
         indemnification by the Company with respect to infringements of
         proprietary rights.

                  (b) Since March 31, 2004, the Company has not: (i) declared or
         paid any dividends, or authorized or made any distribution upon or with
         respect to any class or series of its capital stock; (ii) incurred any
         indebtedness for money borrowed or any other liabilities (other than
         ordinary course obligations) individually in excess of $100,000 or, in
         the case of indebtedness and/or liabilities individually less than
         $100,000, in excess of $100,000 in the aggregate; (iii) made any loans
         or advances to any person not in excess, individually or in the
         aggregate, of $100,000, other than ordinary advances for travel
         expenses; or (iv) sold, exchanged or otherwise disposed of any of its
         assets or rights, other than the sale of its inventory in the ordinary
         course of business.

                  (c) For the purposes of subsections (a) and (b) above, all
         indebtedness, liabilities, agreements, understandings, instruments,
         contracts and proposed transactions involving the same person or entity
         (including persons or entities the Company has reason to believe are
         affiliated therewith) shall be aggregated for the purpose of meeting
         the individual minimum dollar amounts of such subsections.

                  4.7 OBLIGATIONS TO RELATED PARTIES. Except as set forth on
Schedule 4.7, there are no obligations of the Company to officers, directors,
stockholders or employees of the Company other than:

                  (a) for payment of salary for services rendered and for bonus
         payments;

                  (b) reimbursement for reasonable expenses incurred on behalf
         of the Company;

                  (c) for other standard employee benefits made generally
         available to all employees (including stock option agreements
         outstanding under any stock option plan approved by the Board of
         Directors of the Company); and

                  (d) obligations listed in the Company's financial statements
         or disclosed in any of its Exchange Act Filings.

Except as described above or set forth on Schedule 4.7, none of the officers,
directors or, to the best of the Company's knowledge, key employees or
stockholders of the Company or any members of their immediate families, are
indebted to the Company, individually or in the aggregate, in excess of $50,000
or have any direct or indirect ownership interest in any firm or corporation
with which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation which competes with the Company, other
than passive investments in publicly traded companies (representing less than

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one percent (1%) of such company) which may compete with the Company. Except as
described above, no officer, director or stockholder, or any member of their
immediate families, is, directly or indirectly, interested in any material
contract with the Company and no agreements, understandings or proposed
transactions are contemplated between the Company and any such person. Except as
set forth on Schedule 4.7, the Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.

                  4.8 CHANGES. Since March 31, 2004, except as disclosed in any
Exchange Act Filing or in any Schedule to this Agreement or to any of the
Related Agreements, there has not been:

                  (a) any change in the business, assets, liabilities, condition
         (financial or otherwise), properties, operations or prospects of the
         Company, which, individually or in the aggregate, has had or could
         reasonably be expected to have, a Material Adverse Effect;

                  (b) any resignation or termination of any officer, key
         employee or group of employees of the Company;

                  (c) any material change, except in the ordinary course of
         business, in the contingent obligations of the Company by way of
         guaranty, endorsement, indemnity, warranty or otherwise;

                  (d) any damage, destruction or loss, whether or not covered by
         insurance, which has had, or could reasonably be expected to have,
         individually or in the aggregate, a Material Adverse Effect;

                  (e) any waiver by the Company of a valuable right or of a
         material debt owed to it;

                  (f) any direct or indirect material loans made by the Company
         to any stockholder, employee, officer or director of the Company, other
         than advances made in the ordinary course of business;

                  (g) any material change in any compensation arrangement or
         agreement with any employee, officer, director or stockholder;

                  (h) any declaration or payment of any dividend or other
         distribution of the assets of the Company;

                  (i) any labor organization activity related to the Company;

                  (j) any debt, obligation or liability incurred, assumed or
         guaranteed by the Company, except those for immaterial amounts and for
         current liabilities incurred in the ordinary course of business;

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                  (k) any sale, assignment or transfer of any patents,
         trademarks, copyrights, trade secrets or other intangible assets;

                  (l) any change in any material agreement to which the Company
         is a party or by which it is bound which, either individually or in the
         aggregate, has had, or could reasonably be expected to have, a Material
         Adverse Effect;

                  (m) any other event or condition of any character that, either
         individually or in the aggregate, has had, or could reasonably be
         expected to have, a Material Adverse Effect; or

                  (n) any arrangement or commitment by the Company to do any of
         the acts described in subsection (a) through (m) above.

                  4.9 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. Except as set
forth on Schedule 4.9, the Company has good and marketable title to its
properties and assets, and good title to its leasehold estates, in each case
subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than:

                  (a) those resulting from taxes which have not yet become
         delinquent;

                  (b) minor liens and encumbrances which do not materially
         detract from the value of the property subject thereto or materially
         impair the operations of the Company; and

                  (c) those that have otherwise arisen in the ordinary course of
         business.

All facilities, machinery, equipment, fixtures, vehicles and other properties
owned, leased or used by the Company are in good operating condition and repair
and are reasonably fit and usable for the purposes for which they are being
used. Except as set forth on Schedule 4.9, the Company is in compliance with all
material terms of each lease to which it is a party or is otherwise bound.

                  4.10 INTELLECTUAL PROPERTY.

                  (a) The Company owns or possesses sufficient legal rights to
         all patents, trademarks, service marks, trade names, copyrights, trade
         secrets, licenses, information and other proprietary rights and
         processes necessary for its business as now conducted and to the
         Company's knowledge as presently proposed to be conducted (the
         "Intellectual Property"), without any known infringement of the rights
         of others. There are no outstanding options, licenses or agreements of
         any kind relating to the foregoing proprietary rights, nor is the
         Company bound by or a party to any options, licenses or agreements of
         any kind with respect to the patents, trademarks, service marks, trade
         names, copyrights, trade secrets, licenses, information and other
         proprietary rights and processes of any other person or entity other
         than such licenses or agreements arising from the purchase of "off the
         shelf" or standard products.

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                  (b) The Company has not received any communications alleging
         that the Company has violated any of the patents, trademarks, service
         marks, trade names, copyrights or trade secrets or other proprietary
         rights of any other person or entity, nor is the Company aware of any
         basis therefor.

                  (c) The Company does not believe it is or will be necessary to
         utilize any inventions, trade secrets or proprietary information of any
         of its employees made prior to their employment by the Company, except
         for inventions, trade secrets or proprietary information that have been
         rightfully assigned to the Company.

                  4.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of (x) any term of its Charter or Bylaws, or (y) of any
provision of any indebtedness, mortgage ,indenture, contract, agreement or
instrument to which it is party or by which it is bound or of any judgment,
decree, order or writ, which violation or default, in the case of this clause
(y), has had, or could reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect. The execution, delivery and
performance of and compliance with this Agreement and the Related Agreements to
which it is a party, and the issuance and sale of the Note by the Company and
the other Securities by the Company each pursuant hereto and thereto, will not,
with or without the passage of time or giving of notice, result in any such
material violation, or be in conflict with or constitute a default under any
such term or provision, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company or the
suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to the Company, its business or
operations or any of its assets or properties.

                  4.12 LITIGATION. Except as set forth on Schedule 4.12 hereto
or disclosed in its SEC Reports, there is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company that prevents the Company from entering into this Agreement
or the Related Agreements, or from consummating the transactions contemplated
hereby or thereby, or which has had, or could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect or could
result in any change in the current equity ownership of the Company, nor is the
Company aware that there is any basis to assert any of the foregoing. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.

                  4.13 TAX RETURNS AND PAYMENTS. The Company has timely filed
all tax returns (federal, state and local) required to be filed by it. All taxes
shown to be due and payable on such returns, any assessments imposed, and all
other taxes due and payable by the Company on or before the Closing, have been
paid or will be paid prior to the time they become delinquent. Except as set
forth on Schedule 4.13, the Company has not been advised:

                  (a) that any of its returns, federal, state or other, have
         been or are being audited as of the date hereof; or

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                  (b) of any deficiency in assessment or proposed judgment to
         its federal, state or other taxes.

The Company has no knowledge of any liability for any tax to be imposed upon its
properties or assets as of the date of this Agreement that is not adequately
provided for.

                  4.14 EMPLOYEES. Except as set forth on Schedule 4.14, the
Company has no collective bargaining agreements with any of its employees. There
is no labor union organizing activity pending or, to the Company's knowledge,
threatened with respect to the Company. Except as disclosed in the Exchange Act
Filings or on Schedule 4.14, the Company is not a party to or bound by any
currently effective employment contract, deferred compensation arrangement,
bonus plan, incentive plan, profit sharing plan, retirement agreement or other
employee compensation plan or agreement. To the Company's knowledge, no employee
of the Company, nor any consultant with whom the Company has contracted, is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, the Company because of the nature of the
business to be conducted by the Company; and to the Company's knowledge the
continued employment by the Company of its present employees, and the
performance of the Company's contracts with its independent contractors, will
not result in any such violation. The Company is not aware that any of its
employees is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
their duties to the Company. The Company has not received any notice alleging
that any such violation has occurred. Except for employees who have a current
effective employment agreement with the Company, no employee of the Company has
been granted the right to continued employment by the Company or to any material
compensation following termination of employment with the Company. Except as set
forth on Schedule 4.14, the Company is not aware that any officer, key employee
or group of employees intends to terminate his, her or their employment with the
Company, nor does the Company have a present intention to terminate the
employment of any officer, key employee or group of employees.

                  4.15 REGISTRATION RIGHTS AND VOTING RIGHTS. Except as set
forth on Schedule 4.15 and except as disclosed in Exchange Act Filings, the
Company is presently not under any obligation, and has not granted any rights,
to register any of the Company's presently outstanding securities or any of its
securities that may hereafter be issued. Except as set forth on Schedule 4.15
and except as disclosed in Exchange Act Filings, to the Company's knowledge, no
stockholder of the Company has entered into any agreement with respect to the
voting of equity securities of the Company.

                  4.16 COMPLIANCE WITH LAWS; PERMITS. To its knowledge, the
Company is not in violation of any applicable statute, rule, regulation, order
or restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties which has had, or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect. No governmental
orders, permissions, consents, approvals or authorizations are required to be

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obtained and no registrations or declarations are required to be filed in
connection with the execution and delivery of this Agreement or any Related
Agreement and the issuance of any of the Securities, except such as has been
duly and validly obtained or filed, or with respect to any filings that must be
made after the Closing, as will be filed in a timely manner. The Company has all
material franchises, permits, licenses and any similar authority necessary for
the conduct of its business as now being conducted by it, the lack of which
could, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

                  4.17 ENVIRONMENTAL AND SAFETY LAWS. The Company is not in
violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and to its knowledge, no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation. Except as set forth on Schedule 4.17, no Hazardous
Materials (as defined below) are used or have been used, stored, or disposed of
by the Company or, to the Company's knowledge, by any other person or entity on
any property owned, leased or used by the Company. For the purposes of the
preceding sentence, "Hazardous Materials" shall mean:

                  (a) materials which are listed or otherwise defined as
         "hazardous" or "toxic" under any applicable local, state, federal
         and/or foreign laws and regulations that govern the existence and/or
         remedy of contamination on property, the protection of the environment
         from contamination, the control of hazardous wastes, or other
         activities involving hazardous substances, including building
         materials; or

                  (b) any petroleum products or nuclear materials.

                  4.18 VALID OFFERING. Assuming the accuracy of the
representations and warranties of the Purchaser contained in this Agreement, the
offer, sale and issuance of the Securities will be exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and will have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification requirements of
all applicable state securities laws.

                  4.19 FULL DISCLOSURE. The Company has provided the Purchaser
with all information requested by the Purchaser in connection with its decision
to purchase the Note and Warrant, including all information the Company believes
is reasonably necessary to make such investment decision. Neither this
Agreement, the Related Agreements nor the exhibits and schedules hereto and
thereto nor any other document delivered by the Company to Purchaser or its
attorneys or agents in connection herewith or therewith or with the transactions
contemplated hereby or thereby, contain any untrue statement of a material fact
nor omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances in which they are
made, not misleading. Any financial projections and other estimates provided to
the Purchaser by the Company were based on the Company's experience in the
industry and on assumptions of fact and opinion as to future events which the
Company, at the date of the issuance of such projections or estimates, believed
to be reasonable.

                  4.20 INSURANCE. The Company has general commercial, product
liability, fire and casualty insurance policies with coverages which the Company
believes are customary for companies similarly situated to the Company in the
same or similar business.

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                  4.21 SEC REPORTS. Except as set forth on Schedule 4.21, the
Company has filed all proxy statements, reports and other documents required to
be filed by it under the Securities Exchange Act 1934, as amended (the "Exchange
Act"). The Company has furnished or made available to the Purchaser copies of:
(i) its Annual Report on Form 10-KSB for the fiscal year ended March 31, 2004;
and (ii) its Quarterly Reports on Form 10-QSB for the fiscal quarters ended June
30, 2004 and September 30, 2004, and the Form 8-K filings which it has made
during the fiscal year 2005 to date (collectively, the "SEC Reports"). Except as
set forth on Schedule 4.21, each SEC Report was, at the time of its filing, in
substantial compliance with the requirements of its respective form and none of
the SEC Reports, nor the financial statements (and the notes thereto) included
in the SEC Reports, as of their respective filing dates, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

                  4.22 LISTING. The Company's Common Stock is listed for trading
on the NASDAQ SmallCap Market ("NASDAQ SC") and satisfies all requirements for
the continuation of such listing. The Company has not received any notice that
its Common Stock will be delisted from NASDAQ SC or that its Common Stock does
not meet all requirements for listing.

                  4.23 NO INTEGRATED OFFERING. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would cause the offering of the
Securities pursuant to this Agreement or any Related Agreement to be integrated
with prior offerings by the Company for purposes of the Securities Act which
would prevent the Company from selling the Securities pursuant to Rule 506 under
the Securities Act, or any applicable exchange-related stockholder approval
provisions, nor will the Company or any of its affiliates or subsidiaries take
any action or steps that would cause the offering of the Securities to be
integrated with other offerings.

                  4.24 STOP TRANSFER. The Securities are restricted securities
as of the date of this Agreement. The Company will not issue any stop transfer
order or other order impeding the sale and delivery of any of the Securities at
such time as the Securities are registered for public sale or an exemption from
registration is available, except as required by state and federal securities
laws.

                  4.25 DILUTION. The Company specifically acknowledges that its
obligation to issue the shares of Common Stock upon conversion of the Note and
exercise of the Warrant is binding upon the Company and enforceable regardless
of the dilution such issuance may have on the ownership interests of other
shareholders of the Company.

                  4.26 PATRIOT ACT. The Company certifies that, to the best of
Company's knowledge, the Company has not been designated, and is not owned or
controlled, by a "suspected terrorist" as defined in Executive Order 13224. The
Company hereby acknowledges that the Purchaser seeks to comply with all
applicable laws concerning money laundering and related activities. In
furtherance of those efforts, the Company hereby represents, warrants and agrees
that: (i) none of the cash or property that the Company will pay or will

                                       11
<PAGE>

contribute to the Purchaser has been or shall be derived from, or related to,
any activity that is deemed criminal under United States law; and (ii) no
contribution or payment by the Company to the Purchaser, to the extent that they
are within the Company's control shall cause the Purchaser to be in violation of
the United States Bank Secrecy Act, the United States International Money
Laundering Control Act of 1986 or the United States International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001. The Company shall
promptly notify the Purchaser if any of these representations ceases to be true
and accurate regarding the Company. The Company agrees to provide the Purchaser
any additional information regarding the Company that the Purchaser deems
necessary or convenient to ensure compliance with all applicable laws concerning
money laundering and similar activities. The Company understands and agrees that
if at any time it is discovered that any of the foregoing representations are
incorrect, or if otherwise required by applicable law or regulation related to
money laundering or similar activities, the Purchaser may undertake appropriate
actions to ensure compliance with applicable law or regulation, including but
not limited to segregation and/or redemption of the Purchaser's investment in
the Company. The Company further understands that the Purchaser may release
confidential information about the Company and, if applicable, any underlying
beneficial owners, to proper authorities if the Purchaser, in its sole
discretion, determines that it is in the best interests of the Purchaser in
light of relevant rules and regulations under the laws set forth in subsection
(ii) above.

         5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby represents and warrants to the Company as follows (such representations
and warranties do not lessen or obviate the representations and warranties of
the Company set forth in this Agreement)

                  5.1 NO SHORTING. The Purchaser or any of its affiliates and
investment partners has not, will not and will not cause any person or entity,
to directly engage in "short sales" of the Company's Common Stock as long as the
Note shall be outstanding.

                  5.2 REQUISITE POWER AND AUTHORITY. The Purchaser has all
necessary power and authority under all applicable provisions of law to execute
and deliver this Agreement and the Related Agreements and to carry out their
provisions. All corporate action on Purchaser's part required for the lawful
execution and delivery of this Agreement and the Related Agreements have been or
will be effectively taken prior to the Closing. Upon their execution and
delivery, this Agreement and the Related Agreements will be valid and binding
obligations of Purchaser, enforceable in accordance with their terms, except:

                  (a) as limited by applicable bankruptcy, insolvency,
         reorganization, moratorium or other laws of general application
         affecting enforcement of creditors' rights; and

                  (b) as limited by general principles of equity that restrict
         the availability of equitable and legal remedies.

                  5.3 INVESTMENT REPRESENTATIONS. Purchaser understands that the
Securities are being offered and sold pursuant to an exemption from registration
contained in the Securities Act based in part upon Purchaser's representations
contained in the Agreement, including, without limitation, that the Purchaser is
an "accredited investor" within the meaning of Regulation D under the Securities
Act of 1933, as amended (the "Securities Act"). The Purchaser confirms that it
has received or has had full access to all the information it considers

                                       12
<PAGE>

necessary or appropriate to make an informed investment decision with respect to
the Note and the Warrant to be purchased by it under this Agreement and the Note
Shares and the Warrant Shares acquired by it upon the conversion of the Note and
the exercise of the Warrant, respectively. The Purchaser further confirms that
it has had an opportunity to ask questions and receive answers from the Company
regarding the Company's business, management and financial affairs and the terms
and conditions of the Offering, the Note, the Warrant and the Securities and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to the Purchaser or to which the
Purchaser had access.

                  5.4 PURCHASER BEARS ECONOMIC RISK. The Purchaser has
substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to the Company so that it is
capable of evaluating the merits and risks of its investment in the Company and
has the capacity to protect its own interests. The Purchaser must bear the
economic risk of this investment until the Securities are sold pursuant to: (i)
an effective registration statement under the Securities Act; or (ii) an
exemption from registration is available with respect to such sale.

                  5.5 ACQUISITION FOR OWN ACCOUNT. The Purchaser is acquiring
the Note and Warrant and the Note Shares and the Warrant Shares for the
Purchaser's own account for investment only, and not as a nominee or agent and
not with a view towards or for resale in connection with their distribution.

                  5.6 PURCHASER CAN PROTECT ITS INTEREST. The Purchaser
represents that by reason of its, or of its management's, business and financial
experience, the Purchaser has the capacity to evaluate the merits and risks of
its investment in the Note, the Warrant and the Securities and to protect its
own interests in connection with the transactions contemplated in this
Agreement, and the Related Agreements. Further, the Purchaser is aware of no
publication of any advertisement in connection with the transactions
contemplated in the Agreement or the Related Agreements.

                  5.7 ACCREDITED INVESTOR. Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.

                  5.8 LEGENDS.

                  (a) The Note shall bear substantially the following legend:

                  "THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF
                  THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
                  1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
                  THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF
                  THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
                  HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
                  STATEMENT AS TO THIS NOTE OR SUCH SHARES UNDER SAID ACT AND
                  APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
                  REASONABLY SATISFACTORY TO NETGURU, INC. THAT SUCH
                  REGISTRATION IS NOT REQUIRED."

                                       13
<PAGE>

                  (b) The Note Shares and the Warrant Shares, if not issued by
         DWAC system (as hereinafter defined), shall bear a legend which shall
         be in substantially the following form until such shares are covered by
         an effective registration statement filed with the SEC:

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
                  ANY APPLICABLE, STATE SECURITIES LAWS. THESE SHARES MAY NOT BE
                  SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
                  OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES
                  ACT AND APPLICABLE STATE LAWS OR AN OPINION OF COUNSEL
                  REASONABLY SATISFACTORY TO NETGURU, INC. THAT SUCH
                  REGISTRATION IS NOT REQUIRED."

                  (c) The Warrant shall bear substantially the following legend:

                  "THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF
                  THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
                  OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
                  THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF
                  THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
                  HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
                  STATEMENT AS TO THIS WARRANT OR THE UNDERLYING SHARES OF
                  COMMON STOCK UNDER SAID ACT AND APPLICABLE STATE SECURITIES
                  LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
                  NETGURU, INC. THAT SUCH REGISTRATION IS NOT REQUIRED."

         6. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
Purchaser as follows:

                  6.1 STOP-ORDERS. The Company will advise the Purchaser,
promptly after it receives notice of issuance by the Securities and Exchange
Commission (the "SEC"), any state securities commission or any other regulatory
authority of any stop order or of any order preventing or suspending any
offering of any securities of the Company, or of the suspension of the
qualification of the Common Stock of the Company for offering or sale in any
jurisdiction, or the initiation of any proceeding for any such purpose.

                                       14
<PAGE>

                  6.2 LISTING. The Company shall promptly secure the listing of
the shares of Common Stock issuable upon conversion of the Note and upon the
exercise of the Warrant on the NASDAQ SC (the "Principal Market") upon which
shares of Common Stock are listed (subject to official notice of issuance) and
shall maintain such listing so long as any other shares of Common Stock shall be
so listed. The Company will maintain the listing of its Common Stock on the
Principal Market, and will comply in all material respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the
National Association of Securities Dealers ("NASD") and such exchanges, as
applicable.

                  6.3 MARKET REGULATIONS. The Company shall notify the SEC, NASD
and applicable state authorities, in accordance with their requirements, of the
transactions contemplated by this Agreement, and shall take all other necessary
action and proceedings as may be required and permitted by applicable law, rule
and regulation, for the legal and valid issuance of the Securities to the
Purchaser and promptly provide copies thereof to the Purchaser.

                  6.4 REPORTING REQUIREMENTS. The Company will timely file with
the SEC all reports required to be filed pursuant to the Exchange Act and
refrain from terminating its status as an issuer required by the Exchange Act to
file reports thereunder even if the Exchange Act or the rules or regulations
thereunder would permit such termination.

                  6.5 USE OF FUNDS. The Company agrees that it will use the
proceeds of the sale of the Note and Warrant for general working capital
purposes only.

                  6.6 ACCESS TO FACILITIES. The Company will permit any
representatives designated by the Purchaser (or any successor of the Purchaser),
upon reasonable notice and during normal business hours, at such person's
expense and accompanied by a representative of the Company, to:

                  (a) visit and inspect any of the properties of the Company;

                  (b) examine the corporate and financial records of the Company
         (unless such examination is not permitted by federal, state or local
         law or by contract) and make copies thereof or extracts therefrom; and

                  (c) discuss the affairs, finances and accounts of the Company
         with the directors, officers and independent accountants of the
         Company.

Notwithstanding the foregoing, the Company will not provide any material,
non-public information to the Purchaser unless the Purchaser signs a
confidentiality agreement and otherwise complies with Regulation FD, under the
federal securities laws.

                  6.7 TAXES. The Company will promptly pay and discharge, or
cause to be paid and discharged, when due and payable, all lawful taxes,
assessments and governmental charges or levies imposed upon the income, profits,
property or business of the Company; provided, however, that any such tax,
assessment, charge or levy need not be paid if the validity thereof shall
currently be contested in good faith by appropriate proceedings and if the
Company shall have set aside on its books adequate reserves with respect
thereto, and provided, further, that the Company will pay all such taxes,
assessments, charges or levies forthwith upon the commencement of proceedings to
foreclose any lien which may have attached as security therefor.

                                       15
<PAGE>

                  6.8 INSURANCE. The Company will keep its assets which are of
an insurable character insured by financially sound and reputable insurers
against loss or damage by fire, explosion and other risks customarily insured
against by companies in similar business similarly situated as the Company; and
the Company will maintain, with financially sound and reputable insurers,
insurance against other hazards and risks and liability to persons and property
to the extent and in the manner which the Company reasonably believes is
customary for companies in similar business similarly situated as the Company
and to the extent available on commercially reasonable terms. Excepting the
Company's workers' compensation policy, endorsements to such all insurance
policies of the Company its Subsidiaries shall name Purchaser as "co-insured" or
"additional insured" and appropriate loss payable endorsements in form and
substance satisfactory to Purchaser, naming Purchaser as loss payee, and
evidence that as to Purchaser the insurance coverage shall not be impaired or
invalidated by any act or neglect of the Company or any Subsidiary and the
insurer will provide Purchaser with at least thirty (30) days notice prior to
cancellation. The Company and each Subsidiary shall instruct the insurance
carriers that in the event of any loss thereunder, the carriers shall make
payment for such loss to the Company and/or the Subsidiary and Purchaser
jointly. In the event that as of the date of receipt of each loss recovery upon
any such insurance, the Purchaser has not declared an event of default with
respect to this Agreement or any of the Related Agreements, then the Company
shall be permitted to direct the application of such loss recovery proceeds
toward investment in property, plant and equipment that would comprise
"Collateral" secured by Purchaser's security interest pursuant to its security
agreement, with any surplus funds to be applied toward payment of the
obligations of the Company to Purchaser. In the event that Purchaser has
properly declared an event of default with respect to this Agreement or any of
the Related Agreements, then all loss recoveries received by Purchaser upon any
such insurance thereafter may be applied to the obligations of the Company
hereunder and under the Related Agreements, in such order as the Purchaser may
determine. Any surplus (following satisfaction of all Company obligations to
Purchaser) shall be paid by Purchaser to the Company or applied as may be
otherwise required by law. Any deficiency thereon shall be paid by the Company
or the Subsidiary, as applicable, to Purchaser, on DEMAND.

                  6.9 INTELLECTUAL PROPERTY. The Company shall maintain in full
force and effect its corporate existence, rights and franchises and all licenses
and other rights to use Intellectual Property owned or possessed by it and
reasonably deemed to be necessary to the conduct of its business.

                  6.10 PROPERTIES. The Company will keep its properties in good
repair, working order and condition, reasonable wear and tear excepted, and from
time to time make all needful and proper repairs, renewals, replacements,
additions and improvements thereto; and the Company will at all times comply
with each provision of all leases to which it is a party or under which it
occupies property if the breach of such provision could reasonably be expected
to have a Material Adverse Effect.

                  6.11 CONFIDENTIALITY. The Company agrees that it will not
disclose, and will not include in any public announcement, the name of the
Purchaser, unless expressly agreed to by the Purchaser or unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement. The Company may disclose Purchaser's identity and
the terms of this Agreement to its current and prospective debt and equity
financing sources.

                                       16
<PAGE>

                  6.12 REQUIRED APPROVALS. For so long as twenty-five percent
(25%) of the principal amount of the Note is outstanding, the Company, without
the prior written consent of the Purchaser, shall not:

                  (a) (i) directly or indirectly declare or pay any dividends,
         other than dividends paid to the Parent or any of its wholly-owned
         Subsidiaries, (ii) issue any preferred stock that is manditorily
         redeemable prior to the one year anniversary of the Maturity Date (as
         defined in the Note) or (iii) redeem any of its preferred stock or
         other equity interests;

                  (b) liquidate, dissolve or effect a material reorganization
         (it being understood that in no event shall the Company dissolve,
         liquidate or merge with any other person or entity (unless the Company
         is the surviving entity);

                  (c) become subject to (including, without limitation, by way
         of amendment to or modification of) any agreement or instrument which
         by its terms would (under any circumstances) restrict the Company's
         right to perform the provisions of this Agreement or any of the
         agreements contemplated thereby; and

                  (d) materially alter or change the scope of the business of
         the Company.

                  (e) create, incur, assume or suffer to exist any indebtedness
         (exclusive of trade debt and debt incurred to finance the purchase of
         equipment (in excess of five percent (5%) of the fair market value of
         the Company's and its Subsidiaries' assets) whether secured or
         unsecured other than (x) the Company's indebtedness to the Purchaser,
         (y) indebtedness set forth on SCHEDULE 6.12(e) attached hereto and made
         a part hereof and any refinancings or replacements thereof on terms no
         less favorable to the Purchaser than the debt being refinanced or
         replaced, and (z) any indebtedness incurred in connection with the
         purchase of assets in the ordinary course of business, and any
         refinancings or replacements thereof on terms no less favorable to the
         Purchaser than the indebtedness being refinanced or replaced; (ii)
         cancel any indebtedness owing to it in excess of $50,000 in the
         aggregate during any 12 month period; (iii) assume, guarantee, endorse
         or otherwise become directly or contingently liable in connection with
         any obligations of any other Person, except the endorsement of
         negotiable instruments by the Company for deposit or collection or
         similar transactions in the ordinary course of business.

                  6.13 REISSUANCE OF SECURITIES. The Company agrees to reissue
certificates representing the Securities without the legends set forth in
Section 5.8 above at such time as:

                  (a) the holder thereof is permitted to dispose of such
         Securities pursuant to Rule 144(k) under the Securities Act; or

                  (b) upon resale subject to an effective registration statement
         after such Securities are registered under the Securities Act.

                                       17
<PAGE>

The Company agrees to cooperate with the Purchaser in connection with all
resales pursuant to Rule 144(d) and Rule 144(k) and provide legal opinions
necessary to allow such resales provided the Company and its counsel receive
reasonably requested representations from the selling Purchaser and broker, if
any.

                  6.14 OPINION. On the Closing Date, the Company will deliver to
the Purchaser an opinion acceptable to the Purchaser from the Company's legal
counsel. The Company will provide, at the Company's expense, such other legal
opinions in the future as are reasonably necessary for the conversion of the
Note and exercise of the Warrant.

                  6.15 MARGIN STOCK. The Company will not permit any of the
proceeds of the Note or the Warrant to be used directly or indirectly to
"purchase" or "carry" "margin stock" or to repay indebtedness incurred to
"purchase" or "carry" "margin stock" within the respective meanings of each of
the quoted terms under Regulation U of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect.

         7. COVENANTS OF THE PURCHASER. The Purchaser covenants and agrees with
the Company as follows:

                  7.1 CONFIDENTIALITY. The Purchaser agrees that it will not
disclose, and will not include in any public announcement, the name of the
Company, unless expressly agreed to by the Company or unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement.

                  7.2 NON-PUBLIC INFORMATION. The Purchaser agrees not to effect
any sales in the shares of the Company's Common Stock while in possession of
material, non-public information regarding the Company if such sales would
violate applicable securities law.

                  7.3 LIMITATION ON ACQUISITION OF COMMON STOCK OF THE COMPANY.
Notwithstanding anything to the contrary contained in this Agreement, any
Related Agreement, any document, instrument or agreement entered into in
connection with the transactions contemplated hereby or any document, instrument
or agreement entered into in connection with any other transaction entered into
by and between the Purchaser and the Company (and/or subsidiaries or affiliates
of the Company), the Purchaser shall not acquire stock in the Company
(including, without limitation, pursuant to a contract to purchase, by
exercising an option or warrant, by converting any other security or instrument,
by acquiring or exercising any other right to acquire, shares of stock or other
security convertible into shares of stock in the Company, or otherwise, and such
options, warrants, conversion or other rights shall not be exercisable) to the
extent such stock acquisition would cause any interest (including any original
issue discount) payable by the Company to the Purchaser not to qualify as
portfolio interest, within the meaning of Section 881(c)(2) of the Internal
Revenue Code of 1986, as amended (the "Code") by reason of Section 881(c)(3) of
the Code, taking into account the constructive ownership rules under Section
871(h)(3)(C) of the Code.

         8. COVENANTS OF THE COMPANY AND PURCHASER REGARDING INDEMNIFICATION.

                                       18
<PAGE>

                  8.1 COMPANY INDEMNIFICATION. The Company agrees to indemnify,
hold harmless, reimburse and defend Purchaser, each of Purchaser's officers,
directors, agents, affiliates, control persons, and principal shareholders,
against any claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or imposed upon the
Purchaser which results, arises out of or is based upon: (i) any
misrepresentation by Company or breach of any warranty by Company in this
Agreement, any Related Agreement or in any exhibits or schedules attached hereto
or thereto; or (ii) any breach or default in performance by Company of any
covenant or undertaking to be performed by Company hereunder, or any other
agreement entered into by the Company and Purchaser relating hereto.

                  8.2 PURCHASER'S INDEMNIFICATION. Purchaser agrees to
indemnify, hold harmless, reimburse and defend the Company and each of the
Company's officers, directors, agents, affiliates, control persons and principal
shareholders, at all times against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any nature,
incurred by or imposed upon the Company which results, arises out of or is based
upon: (i) any misrepresentation by Purchaser or breach of any warranty by
Purchaser in this Agreement or in any exhibits or schedules attached hereto or
any Related Agreement; or (ii) any breach or default in performance by Purchaser
of any covenant or undertaking to be performed by Purchaser hereunder, or any
other agreement entered into by the Company and Purchaser relating hereto.

         9. CONVERSION OF CONVERTIBLE NOTE.

                  9.1 MECHANICS OF CONVERSION.

                  (a) Provided the Purchaser has notified the Company of the
         Purchaser's intention to sell the Note Shares and the Note Shares are
         included in an effective registration statement or are otherwise exempt
         from registration when sold: (i) Upon the conversion of the Note or
         part thereof, the Company shall, at its own cost and expense, take all
         necessary action (including the issuance of an opinion of counsel
         reasonably acceptable to the Purchaser following a request by the
         Purchaser) to assure that the Company's transfer agent shall issue
         shares of the Company's Common Stock in the name of the Purchaser (or
         its nominee) or such other persons as designated by the Purchaser in
         accordance with Section 9.1(b) hereof and in such denominations to be
         specified representing the number of Note Shares issuable upon such
         conversion; and (ii) The Company warrants that no instructions other
         than these instructions have been or will be given to the transfer
         agent of the Company's Common Stock and that after the Effectiveness
         Date (as defined in the Registration Rights Agreement) the Note Shares
         issued will be freely transferable subject to the prospectus delivery
         requirements of the Securities Act and the provisions of this
         Agreement, and will not contain a legend restricting the resale or
         transferability of the Note Shares.

                  (b) Purchaser will give notice of its decision to exercise its
         right to convert the Note or part thereof by telecopying or otherwise
         delivering an executed and completed notice of the number of shares to
         be converted to the Company (the "Notice of Conversion"). The Purchaser
         will not be required to surrender the Note until the Purchaser receives
         a credit to the account of the Purchaser's prime broker through the
         DWAC system (as defined below), representing the Note Shares or until
         the Note has been fully satisfied. Each date on which a Notice of
         Conversion is telecopied or delivered to the Company in accordance with

                                       19
<PAGE>

         the provisions hereof shall be deemed a "Conversion Date." Pursuant to
         the terms of the Notice of Conversion, the Company will issue
         instructions to the transfer agent accompanied by an opinion of counsel
         within one (1) business day of the date of the delivery to the Company
         of the Notice of Conversion and shall cause the transfer agent to
         transmit the certificates representing the Conversion Shares to the
         Holder by crediting the account of the Purchaser's prime broker with
         the Depository Trust Company ("DTC") through its Deposit Withdrawal
         Agent Commission ("DWAC") system within three (3) business days after
         receipt by the Company of the Notice of Conversion (the "Delivery
         Date").

                  (c) The Company understands that a delay in the delivery of
         the Note Shares in the form required pursuant to Section 9 hereof
         beyond the Delivery Date could result in economic loss to the
         Purchaser. In the event that the Company fails to direct its transfer
         agent to deliver the Note Shares to the Purchaser via the DWAC system
         within the time frame set forth in Section 9.1(b) above and the Note
         Shares are not delivered to the Purchaser by the Delivery Date, as
         compensation to the Purchaser for such loss, the Company agrees to pay
         late payments to the Purchaser for late issuance of the Note Shares in
         the form required pursuant to Section 9 hereof upon conversion of the
         Note in the amount equal to the greater of: (i) $500 per business day
         after the Delivery Date; or (ii) the Purchaser's actual damages from
         such delayed delivery. Notwithstanding the foregoing, the Company will
         not owe the Purchaser any late payments if the delay in the delivery of
         the Note Shares beyond the Delivery Date is solely out of the control
         of the Company and the Company is actively trying to cure the cause of
         the delay. The Company shall pay any payments incurred under this
         Section in immediately available funds upon demand and, in the case of
         actual damages, accompanied by reasonable documentation of the amount
         of such damages. Such documentation shall show the number of shares of
         Common Stock the Purchaser is forced to purchase (in an open market
         transaction) which the Purchaser anticipated receiving upon such
         conversion, and shall be calculated as the amount by which (A) the
         Purchaser's total purchase price (including customary brokerage
         commissions, if any) for the shares of Common Stock so purchased
         exceeds (B) the aggregate principal and/or interest amount of the Note,
         for which such Conversion Notice was not timely honored.

Nothing contained herein or in any document referred to herein or delivered in
connection herewith shall be deemed to establish or require the payment of a
rate of interest or other charges in excess of the maximum permitted by
applicable law. In the event that the rate of interest or dividends required to
be paid or other charges hereunder exceed the maximum amount permitted by such
law, any payments in excess of such maximum shall be credited against amounts
owed by the Company to a Purchaser and thus refunded to the Company.

         10. REGISTRATION RIGHTS.

                  10.1 REGISTRATION RIGHTS GRANTED. The Company hereby grants
registration rights to the Purchaser pursuant to a Registration Rights Agreement
dated as of even date herewith between the Company and the Purchaser.

                                       20
<PAGE>

                  10.2 OFFERING RESTRICTIONS. Except as previously disclosed in
the SEC Reports or in the Exchange Act Filings, or stock or stock options
granted to employees or directors of the Company (these exceptions hereinafter
referred to as the "Excepted Issuances"), the Company will not issue any
securities with a continuously variable/floating conversion feature which are or
could be (by conversion or registration) free-trading securities (i.e. common
stock subject to a registration statement) prior to the full repayment or
conversion of the Note (together with all accrued and unpaid interest and fees
related thereto (the "Exclusion Period").

         11. MISCELLANEOUS.

                  11.1 GOVERNING LAW. THIS AGREEMENT AND EACH RELATED AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT
BY EITHER PARTY AGAINST THE OTHER CONCERNING THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT AND EACH RELATED AGREEMENT SHALL BE BROUGHT ONLY IN THE STATE
COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK.
BOTH PARTIES AND THE INDIVIDUALS EXECUTING THIS AGREEMENT AND THE RELATED
AGREEMENTS ON BEHALF OF THE COMPANY AGREE TO SUBMIT TO THE JURISDICTION OF SUCH
COURTS AND WAIVE TRIAL BY JURY. IN THE EVENT THAT ANY PROVISION OF THIS
AGREEMENT OR ANY RELATED AGREEMENT DELIVERED IN CONNECTION HEREWITH IS INVALID
OR UNENFORCEABLE UNDER ANY APPLICABLE STATUTE OR RULE OF LAW, THEN SUCH
PROVISION SHALL BE DEEMED INOPERATIVE TO THE EXTENT THAT IT MAY CONFLICT
THEREWITH AND SHALL BE DEEMED MODIFIED TO CONFORM WITH SUCH STATUTE OR RULE OF
LAW. ANY SUCH PROVISION WHICH MAY PROVE INVALID OR UNENFORCEABLE UNDER ANY LAW
SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS
AGREEMENT OR ANY RELATED AGREEMENT.

                  11.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Purchaser and
the closing of the transactions contemplated hereby to the extent provided
therein. All statements as to factual matters contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.

                  11.3 SUCCESSORS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, heirs, executors and administrators of the parties hereto
and shall inure to the benefit of and be enforceable by each person who shall be
a holder of the Securities from time to time, other than the holders of Common
Stock which has been sold by the Purchaser pursuant to Rule 144 or an effective
registration statement. Purchaser may not assign its rights hereunder to a
competitor of the Company.

                                       21
<PAGE>

                  11.4 ENTIRE AGREEMENT. This Agreement, the Related Agreements,
the exhibits and schedules hereto and thereto and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and no party shall be
liable or bound to any other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein and therein.

                  11.5 SEVERABILITY. In case any provision of the Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

                  11.6 AMENDMENT AND WAIVER.

                  (a) This Agreement may be amended or modified only upon the
         written consent of the Company and the Purchaser.

                  (b) The obligations of the Company and the rights of the
         Purchaser under this Agreement may be waived only with the written
         consent of the Purchaser.

                  (c) The obligations of the Purchaser and the rights of the
         Company under this Agreement may be waived only with the written
         consent of the Company.

                  11.7 DELAYS OR OMISSIONS. It is agreed that no delay or
omission to exercise any right, power or remedy accruing to any party, upon any
breach, default or noncompliance by another party under this Agreement or the
Related Agreements, shall impair any such right, power or remedy, nor shall it
be construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. All remedies, either under this Agreement, or the Related
Agreements, by law or otherwise afforded to any party, shall be cumulative and
not alternative.

                  11.8 NOTICES. All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given:

                  (a) upon personal delivery to the party to be notified;

                  (b) when sent by confirmed facsimile if sent during normal
         business hours of the recipient, if not, then on the next business day;

                  (c) three (3) business days after having been sent by
         registered or certified mail, return receipt requested, postage
         prepaid; or

                  (d) one (1) day after deposit with a nationally recognized
         overnight courier, specifying next day delivery, with written
         verification of receipt.

All communications shall be sent as follows:

                                       22
<PAGE>

         IF TO THE COMPANY, TO:              NetGuru, Inc.
                                             22700 Savi Ranch Parkway
                                             Yorba Linda CA  92887

                                             Attention:  Chief Financial Officer
                                             Facsimile:  (714) 974-4771

                                             WITH A COPY TO:
                                             Richardson & Patel, LLP
                                             10900 Wilshire Blvd., Suite 500
                                             Los Angeles, CA 90024
                                             Attention: Nimish Patel, Esq.
                                             Facsimile: (310) 208-1154

         IF TO THE PURCHASER, TO:            Laurus Master Fund, Ltd.
                                             M&C Corporate Services Limited
                                             P.O. Box 309 GT
                                             Ugland House
                                             George Town
                                             South Church Street
                                             Grand Cayman, Cayman Islands
                                             Facsimile: 345-949-8080

                                             WITH A COPY TO:

                                             John E. Tucker, Esq.
                                             825 Third Avenue 14th Floor
                                             New York, NY 10022
                                             Facsimile: 212-541-4434

or at such other address as the Company or the Purchaser may designate by
written notice to the other parties hereto given in accordance herewith.

                  11.9 ATTORNEYS' FEES. In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including, without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.

                  11.10 TITLES AND SUBTITLES. The titles of the sections and
subsections of the Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.

                  11.11 FACSIMILE SIGNATURES; COUNTERPARTS. This Agreement may
be executed by facsimile signatures and in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.

                                       23
<PAGE>

                  11.12 BROKER'S FEES. Except as set forth on Schedule 11.12
hereof, Each party hereto represents and warrants that no agent, broker,
investment banker, person or firm acting on behalf of or under the authority of
such party hereto is or will be entitled to any broker's or finder's fee or any
other commission directly or indirectly in connection with the transactions
contemplated herein. Each party hereto further agrees to indemnify each other
party for any claims, losses or expenses incurred by such other party as a
result of the representation in this Section 11.12 being untrue.

                  11.13 CONSTRUCTION. Each party acknowledges that its legal
counsel participated in the preparation of this Agreement and the Related
Agreements and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Agreement to favor any party against the other.

             [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK

                                       24
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed the SECURITIES
PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                     PURCHASER:

NETGURU, INC.                                LAURUS MASTER FUND, LTD.

By:                                          By:
             ----------------------------                -----------------------
Name:                                        Name:
             ----------------------------                -----------------------
Title:                                       Title:
             ----------------------------                -----------------------

                                       25<PAGE>

Exhibit 10.5

THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO NETGURU, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

                          SECURED CONVERTIBLE TERM NOTE
                          -----------------------------

         FOR VALUE RECEIVED, NETGURU, INC., a Delaware corporation (the
"BORROWER"), hereby promises to pay to LAURUS MASTER FUND, LTD., c/o M&C
Corporate Services Limited, P.O. Box 309 GT, Ugland House, South Church Street,
George Town, Grand Cayman, Cayman Islands, Fax: 345-949-8080 (the "HOLDER") or
its registered assigns or successors in interest, on order, the sum of One
Million Dollars ($1,000,000), together with any accrued and unpaid interest
hereon, on December 23, 2007 (the "MATURITY DATE") if not sooner paid.

         Capitalized terms used herein without definition shall have the
meanings ascribed to such terms in that certain Securities Purchase Agreement
dated as of the date hereof between the Borrower and the Holder (as amended,
modified or supplemented from time to time, the "PURCHASE AGREEMENT").

The following terms shall apply to this Note:

                                    ARTICLE I
                             INTEREST & AMORTIZATION

         1.1(a) INTEREST RATE. Subject to Sections 4.11 and 5.6 hereof, interest
payable on this Note shall accrue at a rate per annum (the "Interest Rate")
equal to the "prime rate" published in THE WALL STREET JOURNAL from time to
time, plus one percent (1.0%). The prime rate shall be increased or decreased as
the case may be for each increase or decrease in the prime rate in an amount
equal to such increase or decrease in the prime rate; each change to be
effective as of the day of the change in such rate. Subject to Section 1.1(b)
hereof, the Interest Rate shall not be less than five percent (5.0%). Interest
shall be (i) calculated on the basis of a 360 day year, and (ii) payable
monthly, in arrears, commencing on February 1, 2005 and on the first business
day of each consecutive calendar month thereafter until the Maturity Date (and
on the Maturity Date), whether by acceleration or otherwise (each, a "REPAYMENT
DATE").

         1.1 (b) INTEREST RATE ADJUSTMENT. The Interest Rate shall be calculated
on the last business day of each month hereafter until the Maturity Date (each a
"Determination Date") and shall be subject to adjustment as set forth herein.
With effect beginning January 1, 2005, if (i) the Borrower shall have registered
the shares of the Borrower's common stock underlying each of the conversion of
the Note and that certain warrant issued to Holder on a registration statement

                                       1
<PAGE>

declared effective by the Securities and Exchange Commission (the "SEC"), and
(ii) the volume weighted average price (the "VWAP") of the Common Stock as
reported by Bloomberg, L.P. on the Principal Market (as defined below) for the
seven (7) trading days immediately preceding a Determination Date exceeds the
then applicable Fixed Conversion Price by at least thirty percent (30.0%), the
Interest Rate for the succeeding calendar month shall automatically be reduced
by 200 basis points (200 b.p.) (2.0.%) for each incremental twenty five percent
(25%) increase in the Market Price of the Common Stock above the then applicable
Fixed Conversion Price. If (i) the Borrower shall not have registered the shares
of the Borrower's common stock underlying the conversion of the Note and that
certain warrant issued to Holder on a registration statement declared effective
by the SEC and which remains effective, and (ii) the Market Price of the Common
Stock as reported by Bloomberg, L.P. on the principal market for the five (5)
trading days immediately preceding a Determination Date exceeds the then
applicable Fixed Conversion Price by at least twenty five percent (25%), the
Interest Rate for the succeeding calendar month shall automatically be decreased
by 100 basis points (100 b.p.) (1.0.%) for each incremental twenty five percent
(25%) increase in the Market Price of the Common Stock above the then applicable
Fixed Conversion Price. Notwithstanding the foregoing (and anything to the
contrary contained in herein), in no event shall the Interest Rate be less than
zero percent (0%).

         1.2 MINIMUM MONTHLY PRINCIPAL PAYMENTS. Amortizing payments of the
aggregate principal amount outstanding under this Note at any time (the
"PRINCIPAL AMOUNT") shall begin on July 1, 2005 and shall recur on the first
business day of each succeeding month thereafter until the Maturity Date (each,
an "AMORTIZATION DATE"). Subject to Article 3 below, beginning on the first
Amortization Date, the Borrower shall make monthly payments to the Holder on
each Repayment Date, each in the amount of $30,000, together with any accrued
and unpaid interest to date on such portion of the Principal Amount plus any and
all other amounts which are then owing under this Note, the Purchase Agreement
or any other Related Agreement but have not been paid (collectively, the
"MONTHLY AMOUNT"). Any Principal Amount that remains outstanding on the Maturity
Date shall be due and payable on the Maturity Date.

                                   ARTICLE II
                              CONVERSION REPAYMENT

         2.1 (a) PAYMENT OF MONTHLY AMOUNT IN CASH OR COMMON STOCK. If the
Monthly Amount (or a portion thereof of such Monthly Amount if such portion of
the Monthly Amount would have been converted into shares of Common Stock but for
Section 3.2) is required to be paid in cash pursuant to Section 2.1(b), then the
Borrower shall pay the Holder an amount equal to the Monthly Amount due and
owing to the Holder on the Repayment Date in cash. If the Monthly Amount (or a
portion of such Monthly Amount if not all of the Monthly Amount may be converted
into shares of Common Stock pursuant to Section 3.2) is required to be paid in
shares of Common Stock pursuant to Section 2.1(b), the number of such shares to
be issued by the Borrower to the Holder on such Repayment Date (in respect of
such portion of the Monthly Amount converted into in shares of Common Stock

                                       2
<PAGE>

pursuant to Section 2.1(b)), shall be the number determined by dividing (x) the
portion of the Monthly Amount converted into shares of Common Stock, by (y) the
then applicable Fixed Conversion Price. For purposes hereof, the initial "FIXED
CONVERSION PRICE" means $1.29 [which has been determined on the date of this
Note as an amount equal to the lesser of (i) 100% of the average closing price
for the three (3) trading days immediately prior to the date of this Note and
(ii) 100% of the average closing price for the five (5) trading days immediately
prior to the date of this Note].

         (b) MONTHLY AMOUNT CONVERSION GUIDELINES. Subject to Sections 2.1(a),
2.2, and 3.2 hereof, the Holder shall convert into shares of Common Stock all or
a portion of the Monthly Amount due on each Repayment Date according to the
following guidelines (the "CONVERSION CRITERIA"): (i) the average closing price
of the Common Stock as reported by Bloomberg, L.P. on the Principal Market for
the five (5) trading days immediately preceding such Repayment Date shall be
greater than or equal to 110% of the Fixed Conversion Price and (ii) the amount
of such conversion does not exceed twenty five percent (25%) of the aggregate
dollar trading volume of the Common Stock for the thirty (30) day trading period
immediately preceding the applicable Repayment Date. If the Conversion Criteria
are not met, the Holder shall convert only such part of the Monthly Amount that
meets the Conversion Criteria. Any part of the Monthly Amount due on a Repayment
Date that the Holder has not been able to convert into shares of Common Stock
due to failure to meet the Conversion Criteria, shall be paid by the Borrower in
cash at the rate of 102% of the Monthly Amount otherwise due on such Repayment
Date, within three (3) business days of the applicable Repayment Date.

         2.2 NO EFFECTIVE REGISTRATION. Notwithstanding anything to the contrary
herein, none of the Borrower's obligations to the Holder may be converted into
Common Stock unless (i) either (x) an effective current Registration Statement
(as defined in the Registration Rights Agreement) covering the shares of Common
Stock to be issued in connection with satisfaction of such obligations exists or
(y) an exemption from registration of the Common Stock is available to pursuant
to Rule 144 of the Securities Act and (ii) no Event of Default hereunder exists
and is continuing, unless such Event of Default is cured within any applicable
cure period or is otherwise waived in writing by the Holder in whole or in part
at the Holder's option.

         2.3 OPTIONAL REDEMPTION IN CASH. The Borrower will have the option of
prepaying this Note ("OPTIONAL REDEMPTION") by paying to the Holder a sum of
money equal to one hundred four percent (104%) of the principal amount of this
Note together with accrued but unpaid interest thereon and any and all other
sums due, accrued or payable to the Holder arising under this Note, the Purchase
Agreement, or any Related Agreement (the "REDEMPTION AMOUNT") outstanding on the
Redemption Payment Date (as defined below). The Borrower shall deliver to the
Holder a written notice of redemption specifying the date for such Optional
Redemption (the "REDEMPTION PAYMENT DATE"), which date shall be seven (7)
business days after the date of the Notice of Redemption (the "REDEMPTION
PERIOD"). A Notice of Redemption shall not be effective with respect to any
portion of this Note for which the Holder has a pending election to convert
pursuant to Section 3.1, or for conversions initiated or made by the Holder
pursuant to Section 3.1 during the Redemption Period. The Redemption Amount
shall be determined as if such Holder's conversion elections had been completed
immediately prior to the date of the Notice of Redemption. On the Redemption
Payment Date, the Redemption Amount must be paid in good funds to the Holder. In
the event the Borrower fails to pay the Redemption Amount on the Redemption
Payment Date as set forth herein, then such Redemption Notice will be null and
void.

                                       3
<PAGE>

                                   ARTICLE III
                                CONVERSION RIGHTS

         3.1. HOLDER'S CONVERSION RIGHTS. The Holder shall have the right, but
not the obligation, to convert all or any portion of the then aggregate
outstanding principal amount of this Note, together with interest and fees due
hereon, into shares of Common Stock subject to the terms and conditions set
forth in this Article III. The Holder may exercise such right by delivery to the
Borrower of a written notice of conversion not less than one (1) day prior to
the date upon which such conversion shall occur. The shares of Common Stock to
be issued upon such conversion are herein referred to as the "CONVERSION
SHARES."

         3.2 Conversion Limitation. Notwithstanding anything contained herein to
the contrary, the Holder shall not be entitled to convert pursuant to the terms
of the Note an amount that would be convertible into that number of shares of
Common Stock which, when added to the number of shares of Common Stock otherwise
beneficially owned by such Holder including those issuable upon exercise of
warrants held by such Holder would exceed 4.99% of the outstanding shares of
Common Stock of the Borrower at the time of conversion. For the purposes of the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and Regulation 13d-3
thereunder. The conversion limitation described in this Section 3.2 shall
automatically become null and void without any notice to Borrower upon the
occurrence and during the continuance beyond any applicable grace period of an
Event of Default, or upon 75 days prior notice to the Borrower, except that at
no time shall the beneficial ownership exceed 19.99% of the Common Stock.
Notwithstanding anything contained herein to the contrary, the number of shares
of Common Stock issuable by the Borrower and acquirable by the Holder at a price
below $1.25 per share pursuant to the terms of this Note, the Purchase Agreement
or any Related Agreement, shall not exceed an aggregate of 3,767,730 shares of
the Borrower's Common Stock (subject to appropriate adjustment for stock splits,
stock dividends, or other similar recapitalizations affecting the Common Stock)
(the "MAXIMUM COMMON STOCK ISSUANCE"), unless the issuance of shares hereunder
in excess of the Maximum Common Stock Issuance shall first be approved by the
Borrower's shareholders. If at any point in time and from time to time the
number of shares of Common Stock issued pursuant to the terms of this Note, the
Purchase Agreement or any Related Agreement, together with the number of shares
of Common Stock that would then be issuable by the Borrower to the Holder in the
event of a conversion or exercise pursuant to the terms of this Note, the
Purchase Agreement or any Related Agreement, would exceed the Maximum Common
Stock Issuance but for this Section 3.2, the Borrower shall promptly call a
shareholders meeting to solicit shareholder approval for the issuance of the
shares of Common Stock hereunder in excess of the Maximum Common Stock Issuance.

                                       4
<PAGE>

         3.3 MECHANICS OF HOLDER'S CONVERSION. (a) In the event that the Holder
elects to convert this Note into Common Stock, the Holder shall give notice of
such election by delivering an executed and completed notice of conversion
("NOTICE OF CONVERSION") to the Borrower and such Notice of Conversion shall
provide a breakdown in reasonable detail of the Principal Amount, accrued
interest and fees being converted. On each Conversion Date (as hereinafter
defined) and in accordance with its Notice of Conversion, the Holder shall make
the appropriate reduction to the Principal Amount, accrued interest and fees as
entered in its records and shall provide written notice thereof to the Borrower
within two (2) business days after the Conversion Date. Each date on which a
Notice of Conversion is delivered or telecopied to the Borrower in accordance
with the provisions hereof shall be deemed a Conversion Date (the "CONVERSION
DATE"). A form of Notice of Conversion to be employed by the Holder is annexed
hereto as Exhibit A.

         (b) Pursuant to the terms of the Notice of Conversion, the Borrower
will issue instructions to the transfer agent accompanied by an opinion of
counsel within one (1) business day of the date of the delivery to Borrower of
the Notice of Conversion and shall cause the transfer agent to transmit the
certificates representing the Conversion Shares to the Holder by crediting the
account of the Holder's designated broker with the Depository Trust Corporation
("DTC") through its Deposit Withdrawal Agent Commission ("DWAC") system within
three (3) business days after receipt by the Borrower of the Notice of
Conversion (the "DELIVERY DATE"). In the case of the exercise of the conversion
rights set forth herein the conversion privilege shall be deemed to have been
exercised and the Conversion Shares issuable upon such conversion shall be
deemed to have been issued upon the date of receipt by the Borrower of the
Notice of Conversion. The Holder shall be treated for all purposes as the record
holder of such Common Stock, unless the Holder provides the Borrower written
instructions to the contrary.

         3.4 CONVERSION MECHANICS.

         (a) The number of shares of Common Stock to be issued upon each
conversion of this Note shall be determined by dividing that portion of the
principal and interest and fees to be converted, if any, by the then applicable
Fixed Conversion Price. In the event of any conversions of outstanding principal
amount under this Note in part pursuant to this Article III, such conversions
shall be deemed to constitute conversions of outstanding principal amount
applying to Monthly Amounts for the remaining Repayment Dates in chronological
order.

         (b) The Fixed Conversion Price and number and kind of shares or other
securities to be issued upon conversion is subject to adjustment from time to
time upon the occurrence of certain events, as follows:

                                       5
<PAGE>

         A. STOCK SPLITS, COMBINATIONS AND DIVIDENDS. If the shares of Common
Stock are subdivided or combined into a greater or smaller number of shares of
Common Stock, or if a dividend is paid on the Common Stock or any preferred
stock issued by the Borrower in shares of Common Stock, the Fixed Conversion
Price or the Conversion Price, as the case may be, shall be proportionately
reduced in case of subdivision of shares or stock dividend or proportionately
increased in the case of combination of shares, in each such case by the ratio
which the total number of shares of Common Stock outstanding immediately after
such event bears to the total number of shares of Common Stock outstanding
immediately prior to such event.

         B. During the period the conversion right exists, the Borrower will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the full conversion of
this Note. The Borrower represents that upon issuance, such shares will be duly
and validly issued, fully paid and non-assessable. The Borrower agrees that its
issuance of this Note shall constitute full authority to its officers, agents,
and transfer agents who are charged with the duty of executing and issuing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the conversion of this Note.

         C. SHARE ISSUANCES. Subject to the provisions of this Section, if the
Borrower at any time shall issue any shares of Common Stock prior to the
conversion of the entire principal amount of the Note (otherwise than as: (i)
provided in Sections 3.4(b)A, 3.4(b)B or 3.4(b)D or this subparagraph C; (ii)
pursuant to warrants or options that may be granted in the future under any
option plan of the Borrower, or any employment agreement, joint venture, credit,
leasing or other financing agreement or any joint venture or other strategic
arrangement, in each case now or hereinafter entered into by the Borrower; (iii)
pursuant to any agreement entered into by the Company or any of its subsidiaries
for the acquisition of another business (whether by stock purchase or asset
purchase, merger or otherwise; or (iv) for services rendered by consultants;
((i), (ii), (iii) and (iv) above, are hereinafter referred to as the "EXCLUDED
ISSUANCES")) for a consideration less than the Fixed Conversion Price that would
be in effect at the time of such issue, then, and thereafter successively upon
each such issue, the Fixed Conversion Price shall be reduced as follows: (i) the
number of shares of Common Stock outstanding immediately prior to such issue
shall be multiplied by the Fixed Conversion Price in effect at the time of such
issue and the product shall be added to the aggregate consideration, if any,
received by the Borrower upon such issue of additional shares of Common Stock;
and (ii) the sum so obtained shall be divided by the number of shares of Common
Stock outstanding immediately after such issue. The resulting quotient shall be
the adjusted Fixed Conversion Price. Except for the Excluded Issuances for
purposes of this adjustment, the issuance of any security of the Borrower
carrying the right to convert such security into shares of Common Stock or of
any warrant, right or option to purchase Common Stock shall result in an
adjustment to the Fixed Conversion Price upon the issuance of shares of Common
Stock upon exercise of such conversion or purchase rights.

         D. RECLASSIFICATION, ETC. If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
to evidence the right to purchase an adjusted number of such securities and kind
of securities as would have been issuable as the result of such change with
respect to the Common Stock immediately prior to such reclassification or other
change.

                                       6
<PAGE>

         3.5 ISSUANCE OF NEW NOTE. Upon any partial conversion of this Note, a
new Note containing the same date and provisions of this Note shall, at the
request of the Holder, be issued by the Borrower to the Holder for the principal
balance of this Note and interest which shall not have been converted or paid.
Subject to the provisions of Article IV, the Borrower will pay no costs, fees or
any other consideration to the Holder for the production and issuance of a new
Note.

                                   ARTICLE IV
                                EVENTS OF DEFAULT

           Upon the occurrence and continuance of an Event of Default beyond any
applicable grace period, the Holder may make all sums of principal, interest and
other fees then remaining unpaid hereon and all other amounts payable hereunder
immediately due and payable. In the event of such an acceleration, the amount
due and owing to the Holder shall be 115% of the outstanding principal amount of
the Note (plus accrued and unpaid interest and fees, if any) (the "DEFAULT
PAYMENT"). The Default Payment shall be applied first to any fees due and
payable to Holder pursuant to the Note or the Related Agreements, then to
accrued and unpaid interest due on the Note and then to outstanding principal
balance of the Note.

         The Default Payment shall be due and payable on the fifth (5th)
business day after the date written notice is sent from the Holder to the
Borrower of an Event of Default as defined in Article IV ("DEFAULT PAYMENT
DATE"). The period between the date of the written notice from the Holder to the
Borrower of an Event of Default and the Default Payment Date shall be the
"DEFAULT NOTICE PERIOD." If during the Default Notice Period, the Borrower cures
the Event of Default, the Event of Default will no longer exist and any rights
the Holder had pertaining to the Event of Default will no longer exist. If the
Event of Default is not cured during the Default Notice Period, all amounts
payable hereunder shall be due and payable on the Default Payment Date, all
without further demand, presentment or notice, or grace period, all of which
hereby are expressly waived.

         The occurrence of any of the following events set forth in Sections 4.1
through 4.10, inclusive, is an "EVENT OF DEFAULT":

         4.1 FAILURE TO PAY PRINCIPAL, INTEREST OR OTHER FEES. The Borrower
fails to pay when due any installment of principal, interest or other fees
hereon in accordance herewith, or the Borrower fails to pay when due any amount
due under any other promissory note issued by Borrower, and in any such case,
such failure shall continue for a period of four (4) days following the date
upon which any such payment was due.

         4.2 BREACH OF COVENANT. The Borrower breaches any covenant or any other
term or condition of this Note, the Purchase Agreement or any Related Agreement
in any material respect, and, in any such case, such breach, if subject to cure,
continues for a period of thirty (30) days after the occurrence thereof.

                                       7
<PAGE>

         4.3 BREACH OF REPRESENTATIONS AND WARRANTIES. Any representation or
warranty made by the Borrower in this Note, the Purchase Agreement or in any
Related Agreement shall, in any such case, be false or misleading in any
material respect on the date that such representation or warranty was made or
deemed made; provided, however, the Borrower shall have thirty (30) business
days to cure such failure.

         4.4 RECEIVER OR TRUSTEE. The Borrower shall make an assignment for the
benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for a substantial part of its property or business; or such
a receiver or trustee shall otherwise be appointed.

         4.5 JUDGMENTS. Any money judgment, writ or similar final process shall
be entered or filed against the Borrower or any of its property or other assets
for more than $250,000, and shall remain unvacated, unbonded or unstayed for a
period of ninety (90) days.

         4.6 BANKRUPTCY. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Borrower;
provided however, that where such action is instituted against the Borrower but
is dismissed within thirty (30) days after the filing of such petition, this
provision shall not apply to such action.

         4.7 STOP TRADE. An SEC stop trade order or Principal Market trading
suspension of the Common Stock shall be in effect for five (5) consecutive days
or five (5) days during a period of ten (10) consecutive days, excluding in all
cases a suspension of all trading on a Principal Market, PROVIDED that the
Borrower shall not have been able to cure such trading suspension within thirty
(30) days of the notice thereof or list the Common Stock on another Principal
Market within sixty (60) days of such notice. The "Principal Market" for the
Common Stock shall include the NASD OTC Bulletin Board, NASDAQ SmallCap Market,
NASDAQ National Market System, American Stock Exchange, or New York Stock
Exchange (whichever of the foregoing is at the time the principal trading
exchange or market for the Common Stock).

         4.8 FAILURE TO DELIVER COMMON STOCK OR REPLACEMENT NOTE. The Borrower
shall fail (i) to timely deliver Common Stock to the Holder pursuant to and in
the form required by this Note, and Section 9 of the Purchase Agreement, if such
failure to timely deliver Common Stock shall not be cured within two (2)
business days or (ii) to deliver a replacement Note to Holder within seven (7)
business days following the required date of such issuance pursuant to this
Note, the Purchase Agreement or any Related Agreement (to the extent required
under such agreements).

4.9 DEFAULT UNDER RELATED AGREEMENTS OR OTHER AGREEMENTS. The(i) occurrence and
continuance of any Event of Default (as defined in the Purchase Agreement or any
Related Agreement) , (ii) occurrence and continuance of any Event of Default as
defined in that certain Amended and Restated Convertible Note of the Borrower in
the original principal amount of $2,400,000 issued to the Holder effective as of
December 4, 2003, or (iii) any event of default in excess of $200,000 (or
similar term) under any other indebtedness of the Borrower.

                                       8
<PAGE>

         4.10 CHANGE IN CONTROL. The occurrence of a change in the controlling
ownership of the Borrower.

                           DEFAULT RELATED PROVISIONS

         4.11 DEFAULT INTEREST RATE. Following the occurrence and during the
continuance of an Event of Default, the Borrower shall pay additional interest
on this Note in an amount equal to five percent (5%) per annum, and all
outstanding obligations under this Note, including unpaid interest, shall
continue to accrue such additional interest from the date of such Event of
Default until the date such Event of Default is cured or waived.

         4.12 CONVERSION PRIVILEGES. The conversion privileges set forth in
Article III shall remain in full force and effect immediately from the date
hereof and until this Note is paid in full.

         4.13 CUMULATIVE REMEDIES. The remedies under this Note shall be
cumulative.

                                    ARTICLE V
                                  MISCELLANEOUS

         5.1 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part
of the Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

         5.2 NOTICES. Any notice herein required or permitted to be given shall
be in writing and shall be deemed effectively given: (a) upon personal delivery
to the party notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the
Borrower at the address provided in the Purchase Agreement executed in
connection herewith, and to the Holder at the address provided in the Purchase
Agreement for such Holder, with a copy to John E. Tucker, Esq., 825 Third
Avenue, 14th Floor, New York, New York 10022, facsimile number (212) 541-4434,
or at such other address as the Borrower or the Holder may designate by ten days
advance written notice to the other parties hereto. A Notice of Conversion shall
be deemed given when made to the Borrower pursuant to the Purchase Agreement.

         5.3 AMENDMENT PROVISION. The term "Note" and all reference thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument issued pursuant to Section 3.5
hereof, as it may be amended or supplemented.

                                       9
<PAGE>

         5.4 ASSIGNABILITY. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with the
requirements of the Purchase Agreement. This Note shall not be assigned by the
Borrower without the consent of the Holder.

         5.5 GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York or in the federal courts located in the State of
New York. Both parties and the individual signing this Note on behalf of the
Borrower agree to submit to the jurisdiction of such courts. The prevailing
party shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this Note is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of this
Note. Nothing contained herein shall be deemed or operate to preclude the Holder
from bringing suit or taking other legal action against the Borrower in any
other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court in favor of the Holder.

         5.6 MAXIMUM PAYMENTS. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and thus refunded to the
Borrower.

         5.7 SECURITY INTEREST. The holder of this Note has been granted a
security interest in certain assets of the Borrower more fully described in a
Master Security Agreement dated as of the date hereof.

         5.8 CONSTRUCTION. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other.

         5.9 COST OF COLLECTION. If default is made in the payment of this Note,
the Borrower shall pay to Holder reasonable costs of collection, including
reasonable attorney's fees.

       [Balance of page intentionally left blank; signature page follows.]

                                       10
<PAGE>

         IN WITNESS WHEREOF, the Borrower has caused this Note to be signed in
its name effective as of this 23rd day of December, 2004.

                                                     NETGURU, INC.

                                                     By:________________________
                                                     Name:______________________
                                                     Title:_____________________

WITNESS:

_____________________________

                                       11

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