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                                                                  EXHIBIT 10(ii)

THIS COMMON STOCK PURCHASE WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR
THE PROVISIONS OF THIS COMMON STOCK PURCHASE WARRANT.

                    Number of Shares of Common Stock 100,000
                                  Warrant No. 1

                          COMMON STOCK PURCHASE WARRANT

                           To Purchase Common Stock of

                          CVF Technologies Corporation

                  THIS IS TO CERTIFY THAT The Shaar Fund, Ltd., or registered
assigns, is entitled, at any time from the Closing Date (as hereinafter defined)
to the Expiration Date (as hereinafter defined), to purchase from CVF
Technologies Corporation, a Nevada corporation (the "Company"), 100,000 shares
of Common Stock (as hereinafter defined and subject to adjustment as provided
herein), in whole or in part, including fractional parts, at a purchase price
per share equal to $.35, subject to adjustment as specified herein, all on the
terms and conditions and pursuant to the provisions hereinafter set forth.

                  1.       DEFINITIONS

                  As used in this Common Stock Purchase Warrant (this
"Warrant"), the following terms have the respective meanings set forth below:

                  "ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of
Common Stock issued by the Company after the Closing Date, other than Warrant
Stock.

                  "BUSINESS DAY" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.

                  "CLOSING DATE" shall mean February 27, 2004.

                  "COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act and other
federal securities laws.

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                  "COMMON STOCK" shall mean (except where the context otherwise
indicates) the Common Stock, par value $0.001 per share, of the Company as
constituted on the Closing Date, and any capital stock into which such Common
Stock may thereafter be changed, and shall also include (i) capital stock of the
Company of any other class (regardless of how denominated) issued to the holders
of shares of Common Stock upon any reclassification thereof which is also not
preferred as to dividends or assets over any other class of stock of the Company
and which is not subject to redemption and (ii) shares of common stock of any
successor or acquiring corporation received by or distributed to the holders of
Common Stock of the Company in the circumstances contemplated by Section 4.4.

                  "CONVERTIBLE SECURITIES" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable,
with or without payment of additional consideration in cash or property, for
shares of Common Stock, either immediately or upon the occurrence of a specified
date or a specified event.

                  "CURRENT WARRANT PRICE" shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of Common
Stock may be purchased pursuant to this Warrant on such date, as set forth in
the first paragraph hereof.

                  "EXCHANGE AGREEMENT" shall mean the Exchange Agreement dated
February 20, 2004 between the Company and The Shaar Fund, Ltd., as it may be
amended from time to time.

                  "EXERCISE DATE" shall mean the date of exercise of all or any
portion of the right to acquire Warrant Stock hereunder

                  "EXERCISE PERIOD" shall mean the period during which this
Warrant is exercisable pursuant to Section 2.1.

                  "EXPIRATION DATE" shall mean the third anniversary of the
Closing Date.

                  "HOLDER" shall mean the Person in whose name the Warrant or
Warrant Stock set forth herein is registered on the books of the Company
maintained for such purpose.

                  "MARKET PRICE" per share of Common Stock means the average of
the closing prices of the Common Stock as reported on the Amex for the five
trading days immediately preceding the Exercise Date.

                  "OTHER PROPERTY" shall have the meaning set forth in Section
4.4.

                  "PERSON" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, incorporated organization, association,
corporation, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).

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                  "RESTRICTED COMMON STOCK" shall mean shares of Common Stock
which are, or which upon their issuance on their exercise of this Warrant would
be, evidenced by a certificate bearing the restrictive legend set forth in
Section 9.1(a).

                  "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

                  "TRANSFER" shall mean any disposition of any Warrant or
Warrant Stock or of any interest in either thereof, which would constitute a
sale thereof within the meaning of the Securities Act.

                  "TRANSFER NOTICE" shall have the meaning set forth in Section
9.2.

                  "WARRANT PRICE" shall mean an amount equal to (i) the number
of shares of Common Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of
such exercise.

                  "WARRANT STOCK" shall mean the shares of Common Stock
purchased by the holders of the Warrants upon the exercise thereof.

                  "WARRANTS" shall mean this Warrant and all warrants issued
upon transfer, division or combination of, or in substitution for, any thereof.
All Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of shares of Common Stock for which they may be
exercised.

                  2.       EXERCISE OF WARRANT

                  2.1      MANNER OF EXERCISE

                  From and after the Closing Date and until 5:00 p.m., New York
time, on the Expiration Date, Holder may exercise this Warrant, on any Business
Day, for all or any part of the number of shares of Common Stock purchasable
hereunder.

                  In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at 8604 Main Street, Suite
1, Williamsville, NY 14221 or at the office or agency designated by the Company
pursuant to Section 12, (i) a written notice of Holder's election to exercise
this Warrant, which notice shall specify the number of shares of Common Stock to
be purchased, (ii) to the extent such exercise is not being effected through a
Cashless Exercise, payment of the Warrant Price in cash or wire transfer or
cashier's check drawn on a United States bank and (iii) this Warrant. Such
notice shall be substantially in the form of the subscription form appearing at
the end of this Warrant as Exhibit A, duly executed by Holder or its agent or
attorney. Upon receipt of the items referred to in clauses (i), (ii) and (iii)
above, the Company shall, as promptly as practicable, and in any event within
five Business Days thereafter, execute or cause to be executed and deliver or
cause to be delivered to Holder a certificate or certificates representing the
aggregate number of full shares of Common Stock issuable upon such exercise,
together with cash in lieu of any fraction of a share, as hereinafter provided.
The

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stock certificate or certificates so delivered shall be, to the extent possible,
in such denomination or denominations as Holder shall request in the notice and
shall be registered in the name of Holder or, subject to Section 9, such other
name as shall be designated in the notice. This Warrant shall be deemed to have
been exercised and such certificate or certificates shall be deemed to have been
issued, and Holder or any other Person so designated to be named therein shall
be deemed to have become a holder of record of such shares for all purposes, as
of the date the notice, together with the cash or check or checks and this
Warrant, is received by the Company as described above and all taxes required to
be paid by Holder, if any, pursuant to Section 2.2 prior to the issuance of such
shares have been paid. If this Warrant shall have been exercised in part, the
Company shall, at the time of delivery of the certificate or certificates
representing Warrant Stock, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased shares of Common Stock called for
by this Warrant, which new Warrant shall in all other respects be identical with
this Warrant, or, at the request of Holder, appropriate notation may be made on
this Warrant and the same returned to Holder. Notwithstanding any provision
herein to the contrary, the Company shall not be required to register shares in
the name of any Person who acquired this Warrant (or part hereof) or any Warrant
Stock otherwise than in accordance with this Warrant.

                  Simultaneously with the exercise of this Warrant, payment in
full of the Warrant Price may be made, at the option of the Holder, (i) by
payment of the Warrant Price in cash or by wire transfer or cashier's check
drawn on a United States bank, (ii) by the surrender (which surrender shall be
evidenced by cancellation of the number of Warrants represented by any
certificate(s) evidencing the Warrants (the "WARRANT CERTIFICATE") presented in
connection with a Cashless Exercise of a Warrant or Warrants (represented by one
or more Warrant Certificates), and without payment of the Warrant Price in cash,
for such number of shares equal to the product of (1) the number of shares for
which such Warrant is exercisable with payment in cash of the Warrant Price as
of the date of exercise and (2) the Cashless Exercise Ratio or (iii) by any
combination of (i) and (ii). For purposes of this Agreement, the "CASHLESS
EXERCISE RATIO" shall equal a fraction, the numerator of which is the excess of
the Market Price per share of the Common Stock on the date of exercise over the
Warrant Price per share as of the date of exercise and the denominator of which
is the Market Price per share of the Common Stock on the date of exercise. Any
exercise of a Warrant in accordance with the immediately preceding sentences is
herein called a "CASHLESS EXERCISE." Upon surrender of a Warrant Certificate
representing more than one Warrant in connection with the Holder's option to
elect a Cashless Exercise, the number of shares deliverable upon a Cashless
Exercise shall be equal to the Cashless Exercise Ratio multiplied by the product
of (a) the number of Warrants that the Holder specifies is to be exercised
pursuant to a Cashless Exercise and (b) the number of shares for which such
Warrant is then exercisable (without giving effect to the Cashless Exercise
option). All provisions of this Agreement shall be applicable with respect to an
exercise of a Warrant Certificate pursuant to a Cashless Exercise for less than
the full number of Warrants represented thereby.

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                  2.2      PAYMENT OF TAXES AND CHARGES

                  All shares of Common Stock issuable upon the exercise of this
Warrant pursuant to the terms hereof shall be validly issued, fully paid and
nonassessable, freely tradable and without any preemptive rights. The Company
shall pay all expenses in connection with, and all taxes and other governmental
charges that may be imposed with respect to, the issue or delivery thereof,
unless such tax or charge is imposed by law upon Holder, in which case such
taxes or charges shall be paid by Holder. The Company shall not be required,
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for shares of Common Stock issuable
upon exercise of this Warrant in any name other than that of Holder, and in such
case the Company shall not be required to issue or deliver any stock certificate
until such tax or other charge has been paid or it has been established to the
satisfaction of the Company that no such tax or other charge is due.

                  2.3      FRACTIONAL SHARES

                  The Company shall not be required to issue a fractional share
of Common Stock upon exercise of any Warrant. As to any fraction of a share
which Holder would otherwise be entitled to purchase upon such exercise, the
Company shall pay a cash adjustment in respect of such final fraction in an
amount equal to the same fraction of the Market Price per share of Common Stock.

                  2.4      CONTINUED VALIDITY

                  A holder of shares of Common Stock issued upon the exercise of
this Warrant, in whole or in part (other than a holder who acquires such shares
after the same have been publicly sold pursuant to a Registration Statement
under the Securities Act or sold pursuant to Rule 144 thereunder), shall
continue to be entitled with respect to such shares to all rights to which it
would have been entitled as Holder under Sections 9, 10 and 14 of this Warrant.
The Company will, at the time of exercise of this Warrant, in whole or in part,
upon the request of Holder, acknowledge in writing, in form reasonably
satisfactory to Holder, its continuing obligation to afford Holder all such
rights; provided, however, that if Holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the Company to afford
to Holder all such rights.

                  2.5      LIMITATION UPON EXERCISE

                  Notwithstanding anything herein to the contrary, the Holder
shall not have the right to exercise this Warrant, if and to the extent that the
issuance to the Holder of shares of Common Stock upon such exercise would result
in the Holder being deemed the "beneficial owner" of more than 9.9% of the then
outstanding shares of Common Stock within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder.

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                  3.       TRANSFER, DIVISION AND COMBINATION

                  3.1      TRANSFER

                  Subject to compliance with Section 9, transfer of this Warrant
and all rights hereunder, in whole or in part, shall be registered on the books
of the Company to be maintained for such purpose, upon surrender of this Warrant
at the principal office of the Company referred to in Section 2.1 or the office
or agency designated by the Company pursuant to Section 12, together with a
written assignment of this Warrant substantially in the form of Exhibit B hereto
duly executed by Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall, subject to Section 9, execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denomination specified in such instrument of assignment, and shall
issue to the assignor a new Warrant evidencing the portion of this Warrant not
so assigned, and this Warrant shall promptly be canceled. A Warrant, if properly
assigned in compliance with Section 9, may be exercised by a new Holder for the
purchase of shares of Common Stock without having a new Warrant issued.

                  3.2      DIVISION AND COMBINATION

                  Subject to Section 9, this Warrant may be divided or combined
with other Warrants upon presentation hereof at the aforesaid office or agency
of the Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by Holder or its
agent or attorney. Subject to compliance with Section 3.1 and with Section 9, as
to any transfer which may be involved in such division or combination, the
Company shall execute and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants' to be divided or combined in accordance with such notice.

                  3.3      EXPENSES

                  The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrants or Warrants under this
Section 3.

                  3.4      MAINTENANCE OF BOOKS

                  The Company agrees to maintain, at its aforesaid office or
agency, books for the registration and the registration of transfer of the
Warrants.

                  4.       ADJUSTMENTS

                  The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this Section 4. The Company shall give Holder notice of any event described
below which requires an adjustment pursuant to this Section 4 at the time of
such event.

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                  4.1      STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS

                  If at any time the Company shall:

                  a.       take a record of the holders of its Common Stock for
the purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Common Stock;

                  b.       subdivide its outstanding shares of Common Stock into
a larger number of shares of Common Stock; or

                  c.       combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock;

then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current Warrant Price
shall be adjusted to equal (A) the Current Warrant Price multiplied by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of shares for
which this Warrant is exercisable immediately after such adjustment.

                  4.2      CERTAIN OTHER DISTRIBUTIONS

                  If at any time the Company shall take a record of the holders
of its Common Stock for the purpose of entitling them to receive any dividend or
other distribution of:

                  a.       cash;

                  b.       any evidences of its indebtedness, any shares of its
stock or any other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock); or

                  c.       any warrants or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash, Convertible
Securities or Additional Shares of Common Stock); then Holder shall be entitled
to receive such dividend or distribution as if Holder had exercised the Warrant.
A reclassification of the Common Stock (other than a change in par value, or
from par value to no par value or from no par value to par value) into shares of
Common Stock and shares of any other class of stock shall be deemed a
distribution by the Company to the holders of its Common Stock of such shares of
such other class of stock within the meaning of this Section 4.2 and, if the
outstanding shares of Common Stock shall be changed into a larger or smaller
number of shares of Common Stock as a part of such reclassification, such change
shall be deemed a subdivision or

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combination, as the case may be, of the outstanding shares of Common Stock
within the meaning of Section 4.1.

                  4.3      OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS
                           SECTION

                  The following provisions shall be applicable to the making of
adjustments of the number of shares of Common Stock for which this Warrant is
exercisable and the Current Warrant Price provided for in this Section 4:

                  a.       WHEN ADJUSTMENTS TO BE MADE. The adjustments required
by this Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur. For the purpose of any adjustment, any
specified event shall be deemed to have occurred at the close of business on the
date of its occurrence.

                  b.       FRACTIONAL INTERESTS. In computing adjustments under
this Section 4, fractional interests in Common Stock shall be taken into account
to the nearest 1/10th of a share.

                  c.       WHEN ADJUSTMENT NOT REQUIRED. If the Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or distribution or subscription or purchase rights
and shall, thereafter and before the distribution to stockholders thereof,
legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be required
by reason of the taking of such record and any such adjustment previously made
in respect thereof shall be rescinded and annulled.

                  d.       CHALLENGE TO GOOD FAITH DETERMINATION. Whenever the
Board of Directors of the Company shall be required to make a determination in
good faith of the fair value of any item under this Section 4, such
determination may be challenged in good faith by the Holder, and any dispute
shall be resolved by an investment banking firm of recognized national standing
selected by the Company and acceptable to Holder.

                  4.4      REORGANIZATION, RECLASSIFICATION, MERGER,
                           CONSOLIDATION OR DISPOSITION OF ASSETS

                  In case the Company shall reorganize its capital, reclassify
its capital stock, consolidate or merge with or into another corporation (where
the Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of the Company), or sell, transfer
or otherwise dispose of all or substantially all its property, assets or
business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("OTHER
PROPERTY"), are to be received by or distributed to the holders of Common Stock
of the Company, then Holder shall have the right thereafter to receive, upon
exercise of the Warrant, the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the

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surviving corporation, and Other Property receivable upon or as a result of such
reorganization, reclassification, consolidation or disposition of assets by a
holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined by resolution of the Board of Directors of
the Company) in order to provide for adjustments of shares of Common Stock for
which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 4. For purposes of
this Section 4.4, "COMMON STOCK OF THE SUCCESSOR OR ACQUIRING CORPORATION" shall
include stock of such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such corporation and which
is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions of
this Section 4.4 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.

                  4.5      CERTAIN LIMITATIONS

                  Notwithstanding anything herein to the contrary, the Company
agrees not to enter into any transaction which, by reason of any adjustment
hereunder, would cause the Current Warrant Price to be less than the par value
per share of Common Stock.

                  5.       NOTICES TO HOLDER

                  5.1      NOTICE OF ADJUSTMENTS

                  Whenever the number of shares of Common Stock for which this
Warrant is exercisable, or whenever the price at which a share of such Common
Stock may be purchased upon exercise of the Warrants, shall be adjusted pursuant
to Section 4, the Company shall forthwith prepare a certificate to be executed
by the chief financial officer of the Company setting forth, in reasonable
detail, the event requiring the adjustment and the method by which such
adjustment was calculated (including a description of the basis on which the
Board of Directors of the Company determined the fair value of any evidences of
indebtedness, shares of stock, other securities or property or warrants or other
subscription or purchase rights referred to in Section 4.2), specifying the
number of shares of Common Stock for which this Warrant is exercisable and (if
such adjustment was made pursuant to Section 4.4 or 4.5) describing the number
and kind of any other shares of stock or Other Property for which this Warrant
is exercisable, and any change in the purchase price or prices thereof, after
giving effect to such adjustment or change. The Company shall promptly cause a
signed copy of such certificate to be delivered to the Holder in accordance with
Section 14.2. The Company shall keep at its office or agency

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designated pursuant to Section 12 copies of all such certificates and cause the
same to be available for inspection at said office during normal business hours
by the Holder or any prospective purchaser of a Warrant designated by Holder.

                  5.2      NOTICE OF CORPORATE ACTION

                  If at any time:

                  a.       the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right; or

                  b.       there shall be any capital reorganization of the
Company, any reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company with, or any sale,
transfer or other disposition of all or substantially all the property, assets
or business of the Company to, another corporation; or

                  c.       there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at
least 10 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 10 days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder
at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 14.2.

                  6.       NO IMPAIRMENT

                  The Company shall not by any action, including, without
limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or other voluntary action, materially impair the rights
granted to the Holder in this Warrant or avoid or seek to

<PAGE>

avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or appropriate to protect
the rights of Holder against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase in par
value, (b) take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant, and (c) use its best efforts to
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.

                  Upon the request of Holder, the Company will at any time
during the period this Warrant is outstanding acknowledge in writing, in form
satisfactory to Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.

                  7.       RESERVATION AND AUTHORIZATION OF COMMON STOCK

                  From and after the Closing Date, the Company shall at all
times reserve and keep available for issue upon the exercise of Warrants such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants. All
shares of Common Stock which shall be so issuable, when issued upon exercise of
any Warrant and payment therefor in accordance with the terms of such Warrant,
shall be duly and validly issued and fully paid and nonassessable and not
subject to preemptive rights.

                  Before taking any action which would cause an adjustment
reducing the Current Warrant Price below the then par value, if any, of the
shares of Common Stock issuable upon exercise of the Warrants, the Company shall
take any corporate action which may be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of such Common
Stock at such adjusted Current Warrant Price.

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

                  8.       TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS

                  In the case of all dividends or other distributions by the
Company to the holders of its Common Stock with respect to which any provision
of Section 4 refers to the taking of record of such holders, the Company will in
each case take such a record

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and will take such record as of the close of business on a Business Day. The
Company will not at any time, except upon dissolution, liquidation or winding up
of the Company, close its stock transfer books or Warrant transfer books so as
to result in preventing or delaying the exercise or transfer of any Warrant.

                  9.       RESTRICTIONS ON TRANSFERABILITY

                  The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any Warrant or
any Warrant Stock. Holder, by acceptance of this Warrant, agrees to be bound by
the provisions of this Section 9.

                  9.1      RESTRICTIVE LEGEND

                  a.       Holder, by accepting this Warrant and any Warrant
Stock agrees that this Warrant and the Warrant Stock issuable upon exercise
hereof may not be assigned or otherwise transferred unless and until (i) the
Company has received an opinion of counsel for Holder that such securities may
be sold pursuant to an exemption from registration under the Securities Act or
(ii) a registration statement relating to such securities has been filed b the
Company and declared effective by the Commission.

                  Each certificate for Warrant Stock issuable hereunder shall
bear a legend as follows until such securities have been sold pursuant to an
effective registration statement under the Securities Act:

                  "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
                  SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
                  THE SECURITIES LAWS OF ANY STATE, AND ARE BEING OFFERED AND
                  SOLD PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
                  REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THESE
                  SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO
                  AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
                  OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
                  REQUIREMENTS OF THE SECURITIES ACT OR SUCH OTHER LAWS."

                  b.       Except as otherwise provided in this Section 9, the
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:

                  "THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT
                  BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
                  AND MAY NOT BE

<PAGE>

                  TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND
                  REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS WARRANT."

                  9.2      NOTICE OF PROPOSED TRANSFERS

                  Prior to any Transfer or attempted Transfer of any Warrants or
any shares of Restricted Common Stock, the Holder shall give ten days' prior
written notice (a "TRANSFER NOTICE") to the Company of Holder's intention to
effect such Transfer, describing the manner and circumstances of the proposed
Transfer, and obtain from counsel to Holder who shall be reasonably satisfactory
to the Company, an opinion that the proposed Transfer of such Warrants or such
Restricted Common Stock may be effected without registration under the
Securities Act. After receipt of the Transfer Notice and opinion, the Company
shall, within five days thereof, notify the Holder as to whether such opinion is
reasonably satisfactory and, if so, such holder shall thereupon be entitled to
Transfer such Warrants or such Restricted Common Stock, in accordance with the
terms of the Transfer Notice. Each certificate, if any, evidencing such shares
of Restricted Common Stock issued upon such Transfer shall bear the restrictive
legend set forth in Section 9.1(a), and the Warrant issued upon such Transfer
shall bear the restrictive legend set forth in Section 9.1(b), unless in the
opinion of such counsel such legend is not required in order to ensure
compliance with the Securities Act. Holder shall not be entitled to Transfer
such Warrants or such Restricted Common Stock until receipt of notice from the
Company under this Section 9.2(a) that such opinion is reasonably satisfactory.

                  9.3      TERMINATION OF RESTRICTIONS

                  Notwithstanding the foregoing provisions of Section 9, the
restrictions imposed by this Section upon the transferability of the Warrants,
the Warrant Stock and the Restricted Common Stock (or Common Stock issuable upon
the exercise of the Warrants) and the legend requirements of Section 9.1 shall
terminate as to any particular Warrant or share of Warrant Stock or Restricted
Common Stock (or Common Stock issuable upon the exercise of the Warrants) (i)
when and so long as such security shall have been effectively registered under
the Securities Act and disposed of pursuant thereto or (ii) when the Company
shall have received an opinion of counsel reasonably satisfactory to it that
such shares may be transferred without registration thereof under the Securities
Act. Whenever the restrictions imposed by Section 9 shall terminate as to this
Warrant, as herein above provided, the Holder hereof shall be entitled to
receive from the Company upon written request of the Holder, at the expense of
the Company, a new Warrant bearing the following legend in place of the
restrictive legend set forth hereon:

                  "THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN WARRANT
                  CONTAINED IN SECTION 9 HEREOF TERMINATED ON
                  ____________________, AND ARE OF NO FURTHER FORCE AND EFFECT."

<PAGE>

All Warrants issued upon registration of transfer, division or combination of,
or in substitution for, any Warrant or Warrants entitled to bear such legend
shall have a similar legend endorsed thereon. Whenever the restrictions imposed
by this Section shall terminate as to any share of Restricted Common Stock, as
herein above provided, the holder thereof shall be entitled to receive from the
Company, at the Company's expense, a new certificate representing such Common
Stock not bearing the restrictive legend set forth in Section 9. 1 (a).

                  9.4      LISTING ON SECURITIES EXCHANGE

                  If the Company shall list any shares of Common Stock on any
securities exchange or quotation system, it will, at its expense, list thereon,
maintain and, when necessary, increase such listing of, all shares of Common
Stock issued or, to the extent permissible under the applicable securities
exchange rules, issuable upon the exercise of this Warrant so long as any shares
of Common Stock shall be so listed during any such Exercise Period.

                  10.      SUPPLYING INFORMATION

                  The Company shall cooperate with Holder in supplying such
information as may be reasonably necessary for Holder to complete and file any
information reporting forms presently or hereafter required by the Commission as
a condition to the availability of an exemption from the Securities Act for the
sale of any Warrant or Restricted Common Stock.

                  11.      LOSS OR MUTILATION

                  Upon receipt by the Company from Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it being
understood that the written agreement of the Holder shall be sufficient
indemnity), and in case of mutilation upon surrender and cancellation hereof,
the Company will execute and deliver in lieu hereof a new Warrant of like tenor
to Holder; provided, in the case of mutilation no indemnity shall be required if
this Warrant in identifiable form is surrendered to the Company for
cancellation.

                  12.      OFFICE OF THE COMPANY

                  As long as any of the Warrants remain outstanding, the Company
shall maintain an office or agency (which may be the principal executive offices
of the Company) where the Warrants may be presented for exercise, registration
of transfer, division or combination as provided in this Warrant.

                  13.      LIMITATION OF LIABILITY

                  No provision hereof, in the absence of affirmative action by
Holder to purchase shares of Common Stock, and no enumeration herein of the
rights or privileges of Holder hereof, shall give rise to any liability of
Holder for the purchase price of any

<PAGE>

Common Stock or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.

                  14.      MISCELLANEOUS

                  14.1     NONWAIVER AND EXPENSES

                  No course of dealing or any delay or failure to exercise any
right hereunder on the part of Holder shall operate as a waiver of such right or
otherwise prejudice Holder's rights, powers or remedies. If the Company fails to
make, when due, any payments provided for hereunder, or fails to comply with any
other provision of this Warrant, the Company shall pay to Holder such amounts as
shall be sufficient to cover any costs and expenses including, without
limitation, reasonable attorneys' fees, including those of appellate
proceedings, incurred by Holder in collecting any amounts due pursuant hereto or
in otherwise enforcing any of its rights, powers or remedies hereunder.

                  14.2     NOTICE GENERALLY

                  Except as may be otherwise provided herein, any notice or
other communication or delivery required or permitted hereunder shall be in
writing and shall be delivered personally or sent by certified mail, postage
prepaid, or by a nationally recognized overnight courier service, and shall be
deemed given when so delivered personally or by overnight courier service, or,
if mailed, three days after the date of deposit in the United States mails, as
follows:

                  (a)      if to the Company, to:
                           CVF Technologies Corporation
                           8604 Main Street, Suite 1
                           Williamsville, NY 14221
                           Attention: Jeffrey I. Dreben
                           (716) 565-4711
                           (716) 565-4717 (Fax)

                           with a copy to:

                           Hodgson Russ LLP
                           One M&T Plaza, Suite 2000
                           Buffalo, NY 14203-2391
                           Attention: John J. Zak, Esq.
                           (716) 848-1253
                           (716) 849-0349 (Fax)

<PAGE>

                  (b)      if to the Holder, to:

                           The Shaar Fund, Ltd.,
                           c/o Levinson Capital Management
                           350 Fifth Avenue, Suite 2210
                           New York, New York 10118
                           Attention: Samuel Levinson
                           (212) 432-7711
                           (212) 432-7771 (Fax)

with a copy to:

                           Meltzer, Lippe & Goldstein, LLP
                           190 Willis Avenue
                           Mineola, New York 11501
                           Attention: Ira Halperin, Esq.
                           (516) 747-0300
                           (516) 747-0653 (Fax)

The Company or the Holder may change the foregoing address by notice given
pursuant to this Section 14.2.

                  14.3     INDEMNIFICATION

                  The Company agrees to indemnify and hold harmless Holder from
and against any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of
any kind which may be imposed upon, incurred by or asserted against Holder in
any manner relating to or arising out of any failure by the Company to perform
or observe in any material respect any of its covenants, agreements,
undertakings or obligations set forth in this Warrant; provided, however, that
the Company will not be liable hereunder to the extent that any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, attorneys' fees, expenses or disbursements are found in a final
nonappealable judgment by a court to have resulted from Holder's gross
negligence, bad faith or willful misconduct in its capacity as a stockholder or
warrantholder of the Company.

                  14.4     REMEDIES

                  Holder in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under Section 9 of this Warrant. The Company agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of Section 9 of this Warrant and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.

<PAGE>

                  14.5     SUCCESSORS AND ASSIGNS

                  Subject to the provisions of Sections 3.1 and 9, this Warrant
and the rights evidenced hereby shall inure to the benefit of and be binding
upon the successors of the Company and the successors and assigns of Holder. The
provisions of this Warrant are intended to be for the benefit of all Holders
from time to time of this Warrant and, with respect to Section 9 hereof, holders
of Warrant Stock, and shall be enforceable by any such Holder or holder of
Warrant Stock.

                  14.6     AMENDMENT

                  This Warrant and all other Warrants may be modified or amended
or the provisions hereof waived with the written consent of the Company and
Holder.

                  14.7     SEVERABILITY

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

                  14.8     HEADINGS

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

                  14.9     GOVERNING LAW

                  This Warrant shall be governed by the laws of the State of New
York, without regard to the provisions thereof relating to conflicts of law.

                            [SIGNATURE PAGE FOLLOWS.]

<PAGE>

                  In Witness Whereof, the Company has caused this Warrant to be
duly executed.

Dated: February 27, 2004

                                          CVF TECHNOLOGIES CORPORATION

                                          By: __________________________________
                                              Name:  Jeffrey I. Dreben
                                              Title: President

<PAGE>

                                                                       EXHIBIT A

                                SUBSCRIPTION FORM

                 [To be executed only upon exercise of Warrant]

                  The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of shares of Common Stock of CVF
Technologies Corporation and herewith makes payment therefor, all at the price
and on the terms and conditions specified in this Warrant and requests that
certificates for the shares of Common Stock hereby purchased (and any securities
or other property issuable upon such exercise) be issued in the name of and
delivered to

whose address is

and, if such shares of Common Stock shall not include all of the shares of
Common Stock issuable as provided in this Warrant, that a new Warrant of like
tenor and date for the balance of the shares of Common Stock issuable hereunder
be delivered to the undersigned.

                                    ____________________________________________
                                                (Name of Registered Owner)

                                    ____________________________________________
                                                (Signature of Registered Owner)

                                    ____________________________________________
                                                   (Street Address)

                                    ____________________________________________
                                                (City) (State) (Zip Code)

                                    Notice: The signature on this subscription
                                    must correspond with the name as written
                                    upon the face of the within Warrant in every
                                    particular, without alteration or
                                    enlargement or any change whatsoever.

<PAGE>

                                                                       EXHIBIT B

                                 ASSIGNMENT FORM

                  FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:

                   Name and Address of Assignee    No. of Shares of Common Stock

and does hereby irrevocably constitute and appoint

attorney-in-fact to register such transfer on the books of CVF Technologies
Corporation maintained for the purpose, with full power of substitution in the
premises.

Dated:                              ____________________________________________
                                                 (Print Name)

                                    ____________________________________________
                                                 (Signature)

                                    ____________________________________________
                                                 (Print Name of Witness)

                                    ____________________________________________
                                                 (Witness's Signature)

                                    NOTICE: The signature on this assignment
                                    must correspond with the name as written
                                    upon the face of the within Warrant in every
                                    particular, without alteration or
                                    enlargement or any change whatsoever.<PAGE>

                                                                 EXHIBIT 10(iii)

                               EXCHANGE AGREEMENT

                  THIS EXCHANGE AGREEMENT, dated February 20, 2004 (this
"Agreement"), by and between CVF Technologies Corporation, a Nevada corporation
with principal executive offices located at 8604 Main Street, Suite 1,
Williamsville, New York 14221 (the "Company"), and The Shaar Fund, Ltd.
("Shaar").

                  WHEREAS, Shaar is the record and beneficial owner of 339,000
shares of the Company's Series B 6% Convertible Preferred Stock, par value
$0.001 per share (collectively, the "Series B Preferred Shares");

                  WHEREAS, pursuant to a Certificate of Designation,
substantially in the form of Exhibit A hereto (the "Series C Certificate of
Designation"), the Company has created its Series C 6% Convertible Preferred
Stock, par value $0.001 per share (collectively, the "Series C Preferred
Shares"); and

                  WHEREAS, Shaar and the Company have agreed that Shaar will
exchange (hereinafter the "Exchange") all of its right, title and interest in
the Series B Preferred Shares (including all accrued and unpaid dividends
thereon) for (i) 1,000,000 shares of the Company's Common Stock (the
"Replacement Common Shares"), (ii) 100,000 shares of the Company's Series C
Preferred Stock, convertible into 1,000,000 shares of the Company's Common
Stock, subject to adjustment, and redeemable, subject to certain conditions, on
the second anniversary of the date at issuance at its stated value of $10.00 per
share, along with accrued and unpaid dividends and (iii) common stock purchase
warrants in the form attached hereto as Exhibit B (the "Warrants"), to purchase
100,000 shares of the Company's Common Stock at an exercise price of $.35 per
share, subject to adjustment, having a three year term.

                  Now, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:

                  I.       EXCHANGE

                  Shaar and the Company hereby agrees to exchange, in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act of 1933, as amended (the "SECURITIES ACT"), the Series B
Preferred Shares currently held by Shaar for the Replacement Common Shares, the
Series C Preferred Shares and the Warrants. Simultaneously with the execution of
this Agreement, Shaar shall surrender to the Company certificates representing
350,000 Series B Preferred Shares, duly endorsed for transfer. Simultaneously
with the execution of this Agreement, the Company shall deliver to Shaar one or
more duly authorized, issued and executed certificates (I/N/O Shaar or, if the
Company otherwise has been notified, I/N/O Shaar's nominee) evidencing the
Replacement Common Shares, the Series C Preferred Shares and the Warrants.

<PAGE>

                  II.      SHAAR'S REPRESENTATIONS AND WARRANTIES

                  Shaar represents and warrants to and covenants and agrees with
the Company as follows:

                  A.       Shaar is acquiring the Replacement Common Shares, the
Series C Preferred Shares, the Warrants, the Common Stock issuable upon exercise
of the Warrants (the "WARRANT SHARES"), and the Common Stock issuable upon
conversion or redemption of the Preferred Shares (the "CONVERSION SHARES" and,
collectively with the Replacement Common Shares, the Series C Preferred Shares,
the Warrants and the Warrant Shares the "SECURITIES") for its own account, for
investment purposes only and not with a view towards or in connection with the
public sale or distribution thereof in violation of the Securities Act.

                  B.       Shaar is (i) an "accredited investor" within the
meaning of Rule 501 of Regulation D under the Securities Act, (ii) experienced
in making investments of the kind contemplated by this Agreement, (iii) capable,
by reason of its business and financial experience, of evaluation the relative
merits and risks of an investment in the Securities, and (iv) able to afford the
loss of its investment in the Securities.

                  C.       Shaar understands that the Securities are being
offered by the Company in reliance on an exemption from the registration
requirements of the Securities Act and equivalent state securities and "blue
sky" laws, and that the Company is relying upon the accuracy of, and Shaar's
compliance with, Shaar's representations, warranties and covenants set forth in
this Agreement to determine the availability of such exemption and the
eligibility of Shaar to acquire the Securities.

                  D.       Shaar understands that the Securities have not been
approved or disapproved by the Securities and Exchange Commission (the
"Commission") or any state securities commission.

                  E.       This Agreement has been duly and validly authorized,
executed and delivered by Shaar and is a valid and binding agreement of Shaar
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and except as
rights to indemnity and contribution may be limited by federal or state
securities laws or the public policy underlying such laws.

                  F.       Prior to the conversion of all the Series C Preferred
Shares into Common Stock, neither Shaar nor its affiliates nor any person acting
on its or their behalf has the intention of entering, or will enter into, any
put option, short position or other similar instrument or position with respect
to the Common Stock and neither Shaar nor any of its affiliates nor any person
acting on its or their behalf will use at any time shares of Common Stock
acquired pursuant to this Agreement to settle any put option, short position or
other similar instrument or position that may have been entered into prior to
the execution of this Agreement; provided, however, that nothing, in this
Section II shall operate to forbid Shaar or any of its affiliates or any Person
acting on its or

                                      -2-

<PAGE>

their behalf from selling, or entering into any other transaction with respect
to, the Common Stock contemporaneously with or following such date and time as
the Person or Persons in whose name or names the Common Stock Delivered at
Conversion shall be issuable shall be deemed to have become the holder or
holders of record of the Common Shares represented thereby and all voting and
other rights associated with the beneficial ownership of such Common Shares
shall have vested with such Person or Persons.

                  III.     THE COMPANY'S REPRESENTATIONS

                  The Company represents and warrants to Shaar that:

                  A.       CAPITALIZATION.

                           1.       The authorized capital stock of the Company
consists solely of: (x) 50,000,000 shares of Common Stock, of which 10,855,549
shares are issued and outstanding and 481,700 shares are issued and held in
treasury on the date hereof; and (y) 500,000 shares of preferred stock, of which
(i) 25,000 shares are designated Redeemable Series A Preferred Stock, par value
$0.001 per share, and 3,477 shares are issued and outstanding, (ii) 350,000
shares are designated Series B 6% Convertible Preferred Stock, par value $0.001
per share, and 339,000 shares are issued and outstanding; and (iii) 100,000
shares are designated Series C 6% Convertible Preferred Stock, par value $0.001
per share, no shares of which are issued and outstanding. As of the date hereof,
the Company has 2,325,000 outstanding stock options to purchase shares of Common
Stock and warrants outstanding to purchase 1,132,784 shares of Common Stock.

                           2.       The Conversion Shares and the Warrant Shares
have been duly and validly authorized and reserved for issuance by the Company,
and when issued by the Company upon conversion of the Series C Preferred Shares
and on exercise of the Warrants will be duly and validly issued, fully paid and
nonassessable and will not subject the holder thereof to personal liability by
reason of being such holder.

                           3.       Except as may exist in favor of Shaar, there
are no preemptive, subscription, "call," right of first refusal or other similar
rights to acquire any capital stock of the Company or other voting securities of
the Company that have been issued or granted to any person or any other
obligations of the Company (other than those options and warrants disclosed in
Section A.(l) above)to issue, grant, extend or enter into any security, option,
warrant, "call," right, commitment, agreement, arrangement or undertaking with
respect to any of its capital stock.

                  B.       REPORTING COMPANY STATUS.

                           The Company has registered the Common Stock pursuant
to section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Common Stock is listed and traded on the American Stock Exchange (the
"Amex"). The Company has received notices

                                      -3-

<PAGE>

regarding the eligibility of the Common Stock for such listing on the Amex. The
Company does not believe any termination or discontinuance of its eligibility is
imminent.

                  C.       AUTHORIZATION. The Company (i) has duly and validly
authorized and reserved for issuance 1,100,000 shares of Common Stock,
sufficient in number for the conversion of the Series C Preferred Shares and the
exercise of the Warrants, and (ii) at all times from and after the date hereof
shall have a sufficient number of shares of Common Stock duly and validly
authorized and reserved for issuance to satisfy the conversion of the Series C
Preferred Shares and the exercise of the Warrants. The Company acknowledges that
its obligation to issue Conversion Shares upon conversion of the Series C
Preferred Shares and Warrant Shares upon exercise of the Warrants in accordance
with this Agreement, the Series C Certificate of Designation and the Warrants is
absolute and unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other stockholders of the Company and
notwithstanding the commencement of any case under 11 U.S.C. Section 101 et seq.
(the "BANKRUPTCY CODE"). In the event the Company is a debtor under the
Bankruptcy Code, the Company hereby waives to the fullest extent permitted any
rights to relief it may have under 11 U.S.C. Section 362 in respect of the
conversion of the Series C Preferred Shares and the exercise of the Warrants.
The Company agrees, without cost or expense to Shaar, to take or consent to any
and all action necessary to effectuate relief under 11 U.S.C. Section 362.

                  D.       AUTHORITY; VALIDITY AND ENFORCEABILITY. The Company
has the requisite corporate power and authority to perform its obligations under
the Series C Certificate of Designation and to enter into the Documents (as
hereinafter defined), and to perform all of its obligations hereunder and
thereunder (including the issuance, sale and delivery to Shaar of the
Securities). The execution, delivery and performance by the Company of the
Documents, and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation the issuance of the
Replacement Common Shares, the Series C Preferred Shares and the Warrants and
the issuance and reservation for issuance of the Conversion Shares and the
Warrant Shares), have been duly authorized by all necessary corporate action on
the part of the Company. Each of the Documents has been duly and validly
executed and delivered by the Company and the Series C Certificate of
Designation has been duly filed with the Nevada Secretary of State's office by
the Company and each Document constitutes a valid and binding obligation of the
Company enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and except as rights to indemnity and contribution may be limited by federal or
state securities laws or the public policy underlying such laws. The Securities
have been duly and validly authorized for issuance by the Company and, when
executed and delivered by the Company, will be valid and binding obligations of
the Company enforceable against it in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally.
For purposes of this Agreement, the term "DOCUMENTS" MEANS (i) this Agreement;
(ii) the Series C Certificate of Designation; and (iii) the Warrants.

                                      -4-

<PAGE>

                  E.       VALIDITY OF ISSUANCE OF SECURITIES. As of the Closing
Date, the Replacement Common Shares, the Series C Preferred Shares and the
Warrants, and the Conversion Shares and the Warrant Shares upon their issuance,
will be validly issued and outstanding, fully paid and nonassessable, and not
subject to any preemptive rights, rights of first refusal, tag-along rights,
drag-along rights or other similar rights.

                  F.       NON-CONTRAVENTION. Except for such notice filings as
may be required under applicable federal and state securities laws, the
execution and delivery by the Company of the Documents, the issuance of the
Securities, and the consummation by the Company of the other transactions
contemplated hereby and thereby, do not, and compliance with the provisions of
this Agreement and other Documents will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a material benefit under, or result in the creation of
any lien upon any of the properties or assets of the Company under, or result in
the termination of, or require that any consent be obtained or any notice be
given with respect to, (i) the Certificate of Incorporation or By-Laws of the
Company, (ii) any loan or credit agreement, note, bond, mortgage, indenture,
lease, contract or other agreement, instrument or permit applicable to the
Company or its properties or assets, or (iii) any law applicable to the Company
or its respective properties or assets.

                  G.       APPROVALS. No authorization, approval or consent of
any court or public or governmental authority is required to be obtained by the
Company for the issuance and sale of the Replacement Common Shares, the Series C
Preferred Shares or the Warrants (and the Conversion Shares and Warrant Shares)
to Shaar as contemplated by this Agreement, except such authorizations,
approvals and consents that have been obtained by the Company prior to the date
hereof.

                  H.       COMMISSION FILINGS. Except for its failure to have
timely filed its Form 10-QSB for the quarter ended March 31, 2003, the Company
has properly and timely filed with the Commission all reports, proxy statements,
forms and other documents required to be filed with the Commission under the
Securities Act and the Exchange Act since October 1, 1996 (the "COMMISSION
FILINGS"). As of their respective dates, (i) the Commission Filings complied in
all material respects with the requirements of the Securities Act, or the
Exchange Act, as the case may be, and the rules and regulations of the
Commission promulgated thereunder applicable to such Commission Filings, and
(ii) none of the Commission Filings contained at the time of their filing any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the Commission Filings, as of
the dates of such documents, were true and complete in all material respects and
complied with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto, have been prepared in
accordance with, generally accepted accounting principles in the United States
("GAAP") (except in the case of the unaudited statements, as permitted by Form
10-Q under the Exchange Act) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly presented
the consolidated financial position of the Company and its material subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the

                                      -5-

<PAGE>

case of unaudited statements, to normal year-end audit adjustments that in the
aggregate are not material and to any other adjustment described therein).

                  I.       SECURITIES LAW MATTERS. Assuming the accuracy of the
representations and warranties of Shaar set forth in Section II hereof, the
Exchange is exempt from (i) the registration and prospectus delivery
requirements of the Securities Act and the rules and regulations of the
Commission thereunder and (ii) the registration and/or qualification provisions
of all applicable state securities and "blue sky" laws. The Company shall not
directly or indirectly take, and shall not permit any of its directors, officers
or Affiliates directly or indirectly to take, any action (including, without
limitation, any offering or sale to any person or entity of the Series C
Preferred Shares or shares of Common Stock), so as to make unavailable the
exemption from Securities Act registration being relied upon by the Company for
the offer and sale to Shaar of the Replacement Common Shares, the Series C
Preferred Shares and the Warrants (and the Conversion Shares and the Warrant
Shares) as contemplated by this Agreement. No form of general solicitation or
advertising has been used or authorized by the Company or any of its officers,
directors or affiliates in connection with the offer or sale of the Replacement
Common Shares, the Series C Preferred Shares and the Warrants (and the
Conversion Shares and the Warrant Shares) as contemplated by this Agreement or
any other agreement to which the Company is a party.

                  J.       DIVIDENDS. The timely payment of dividends on the
Series C Preferred Shares as specified in the Series C Certificate of
Designation is not prohibited by the Certificate of Incorporation or By-Laws of
the Company or any agreement, contract, documents or other undertaking to which
the Company is a party.

                  K.       NO MISREPRESENTATION. No representation or warranty
of the Company contained in this Agreement, any schedule, annex or exhibit
hereto or any agreement, instrument or certificate furnished by the Company to
Shaar pursuant to this Agreement, contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, not misleading.

                  L.       FINDER'S FEE. There are no finder's fee, brokerage
commission or like payment in connection with the transactions contemplated by
this Agreement for which Shaar is liable or responsible.

                                      -6-

<PAGE>

                  IV.      CERTAIN COVENANTS AND ACKNOWLEDGMENTS

                  A.       RESTRICTIVE LEGEND. The Company and Shaar acknowledge
that the sale by Shaar of Replacement Common Shares, the Series C Preferred
Shares, and, upon issuance, the Conversion Shares may be effected by Shaar
pursuant to the Rule 144(k) under the Securities Act of 1933. Shaar acknowledges
and agrees that, upon issuance pursuant to this Agreement, the Warrant Shares
shall have endorsed thereon a legend in substantially the following form (and a
stop- transfer order may be placed against transfer of the Warrant Shares until
such legend has been removed):

         "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
         1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
         STATE, AND ARE BEING OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM THE
         REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THESE
         SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN
         EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
         TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
         SECURITIES ACT OR SUCH OTHER LAWS."

                  B.       FILINGS. The Company shall make all necessary
Commission Filings and "blue sky" filings required to be made by the Company in
connection with the sale of the Securities to Shaar as required by all
applicable laws, and shall provide a copy thereof to Shaar promptly after such
filing.

                  C.       REPORTING STATUS. So long as Shaar beneficially owns
any of the Securities, the Company shall timely file all reports required to be
filed by it with the Commission pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended.

                  D.       LISTING. Except to the extent the Company lists its
Common Stock on The New York Stock Exchange or the Nasdaq National Market
System, the Company shall use its best efforts to maintain its listing of the
Common Stock on the Amex. If the Common Stock is delisted from the Amex, the
Company will use its best efforts to list the Common Stock on the most liquid
national securities exchange or quotation system that the Common Stock is
qualified to be listed on.

                  E.       RESERVED CONVERSION SHARES. The Company at all times
from and after the date hereof shall have such number of shares of Common Stock
duly and validly authorized and reserved for issuance as shall be sufficient for
the conversion in full of the Series C Preferred Shares and the exercise in full
of the Warrants.

                  F.       RIGHT OF FIRST REFUSAL. If, during the period
commencing on the date hereof and ending two years after the Closing Date (the
"RIGHT OF FIRST REFUSAL PERIOD"), the Company should propose (the "PROPOSAL") to
issue Common Stock or securities convertible into Common

                                      -7-

<PAGE>

Stock (excluding compensatory options or warrants issued to employees, directors
and service providers at exercise prices not less than fair market value at the
time of issuance, which issuances are approved by the Board of Directors of the
Company) or debt at less than par value or having an effective annual interest
rate in excess of 11.9% and which would cause the Company upon issuance to have
aggregate indebtedness in respect of money borrowed in excess of $1,250,000
(each a "RIGHT OF FIRST REFUSAL SECURITY" and collectively, the "RIGHT OF FIRST
REFUSAL SECURITIES"), in each case on the date of issuance the Company shall be
obligated to offer a portion of such Right of First Refusal, Securities to Shaar
on the terms set forth in the Proposal (the "Offer") and Shaar shall have the
right, but not the obligation, to accept such Offer on such terms. The portion
of the Right of First Refusal Securities offered to Shaar will be equal to the
total number (or, if debt securities are being offered, the total principal
amount of such debt securities) of Right of First Refusal Securities being
offered by the Company multiplied by the fully diluted percentage of the
Company's common stock then owned by Shaar; provided, however, that in no event
will such fully diluted percentage exceed Shaar's fully diluted percentage
computed as of the Closing Date. The Company shall provide written notice to
Shaar of any Proposal, setting forth in full the terms and conditions thereof,
and Shaar shall then have 10 business days to accept or reject the Offer in
writing. If Shaar rejects the Offer or fails to respond within such 10-day
period, the Company may proceed with the issuance of the Right of First Refusal
Securities free from any rights of Shaar under this Section.

                  G.       INFORMATION. Each of the parties hereto acknowledges
and agrees that Shaar shall not be provided with, nor be given access to, any
material non-public information relating to the Company and the Material
Subsidiaries.

                  H.       ACCOUNTING AND RESERVES. The Company shall maintain a
standard and uniform system of accounting and shall keep proper books and
records and accounts in which full, true and correct entries shall be made of
its transactions, all in accordance with GAAP applied on a consistent basis
through all periods, and shall set aside on such books for each fiscal year all
such proper reserves for depreciation, obsolescence, amortization, bad debts and
other purposes in connection with its operations as are required by such
principles so applied.

                  I.       ISSUANCES OF ADDITIONAL CONVERTIBLE PREFERRED SHARES
OR CONVERTIBLE DEBENTURES. So long as Shaar beneficially owns any of the Series
C Preferred Shares, the Company shall not issue any additional convertible
preferred stock or convertible debt securities, in each case, convertible into
Common Stock at a floating conversion price without the prior written consent of
Shaar.

                  J.       PRESS RELEASE. Following the consummation of the
transactions contemplated hereto, the parties hereto with jointly issue a press
release substantially in the form of Exhibit C hereto.

                                      -8-

<PAGE>

                         V. TRANSFER AGENT INSTRUCTIONS

                  A.       The Company undertakes and agrees that no instruction
other than the instructions referred to in this Section V and customary stop
transfer instructions prior to the registration and sale of the Common Stock
pursuant to an effective Securities Act registration statement will be given to
its transfer agent for the Common Stock and that the Conversion Shares and the
Warrant Shares otherwise shall be freely transferable on the books and records
of the Company as and to the extent provided in this Agreement and applicable
law. Nothing contained in this Section V A. shall affect in any way Shaar's
obligations and agreement to comply with all applicable securities laws upon
resale of such Common Stock. If, at any time, Shaar provides the Company with an
opinion of counsel reasonably satisfactory to the Company that registration of
the resale by Shaar of such Common Stock is not required under the Securities
Act and that the removal of restrictive legends is permitted under applicable
law, the Company shall permit the transfer of such Common Stock and, promptly
instruct the Company's transfer agent to issue one or more certificates for
Common Stock without any restrictive legends endorsed thereon.

                  B.       Shaar shall have the right to convert the Series C
Preferred Shares by telecopying an executed and completed Notice of Conversion
(as defined in the Series C Certificate of Designation) to the Company. Each
date on which a Notice of Conversion is telecopied to and received by the
Company in accordance with the provisions hereof shall be deemed a Conversion
Date (as defined in the Series C Certificate of Designation). The Company shall
transmit the certificates evidencing the shares of Common Stock issuable upon
conversion of any Series C Preferred Shares (together with certificates
evidencing any Series C Preferred Shares not being so converted) to Shaar via
express courier, by electronic transfer or otherwise, within five business days
after receipt by the Company of the Notice of Conversion (the "Delivery Date").
Within 30 days after Shaar delivers the Notice of Conversion to the Company,
Shaar shall deliver to the Company the Series C Preferred Shares being
converted.

                  C.       Shaar shall have the right to purchase shares of
Common Stock pursuant to exercise of the Warrants in accordance with its
applicable terms of the Warrants. The last date that the Company may deliver
shares of Common Stock issuable upon any exercise of Warrants is referred to
herein as the "Warrant Delivery Date."

                  D.       The Company understands that a delay in the issuance
of the shares of Common Stock upon the conversion of the Series C Preferred
Shares or exercise of the Warrants beyond the Delivery Date or Warrant Delivery
Date could result in economic loss to Shaar. As compensation to Shaar for such
loss (and not as a penalty), the Company agrees to pay to Shaar for late
issuance of Common Stock issuable upon conversion of the Series C Preferred
Shares or exercise of the Warrants in accordance with the following schedule
(where "No. Business Days" is defined as the number of business days beyond
thirty days from the Delivery Date or the Warrant Delivery Date, as applicable):

                                      -9-

<PAGE>

<TABLE>
<CAPTION>
                                              COMPENSATION FOR EACH 10 SHARES OF
                                                 SERIES C PREFERRED SHARES NOT
                                              CONVERTED TIMELY OR 500 SHARES OF
                                                 COMMON STOCK UPON EXERCISE OF
NO. BUSINESS DAYS                                 WARRANTS NOT ISSUED TIMELY
-----------------                             ----------------------------------
<S>                                           <C>
        1                                                    $25
        2                                                     50
        3                                                     75
        4                                                    100
        5                                                    125
        6                                                    150
        7                                                    175
        8                                                    200
        9                                                    225
       10                                                    250
  more than 10                                 $250 + $100 for each Business
                                                  Day Late Beyond 10 days
</TABLE>

The Company shall pay to Shaar the compensation described above by the transfer
of immediately available funds upon Shaar's demand. Nothing herein shall limit
Shaar's right to pursue actual damages for the Company's failure to issue and
deliver Common Stock to Shaar, and in addition to any other remedies which may
be available to Shaar, in the event the Company fails for any reason to effect
delivery of such shares of Common Stock within thirty business days after the
Delivery Date or the Warrant Delivery Date, as applicable, Shaar shall be
entitled to rescind the relevant Notice of Conversion or exercise of Warrants by
delivering a notice to such effect to the Company, whereupon the Company and
Shaar shall each be restored to their respective original positions immediately
prior to delivery of such Notice of Conversion on delivery.

                                VI. CLOSING DATE

                  The date and time (THE "CLOSING DATE") of the Exchange (the
"CLOSING") shall be February 27, 2004 at 10:00 a.m., time being of the essence,
or such other date and time as shall be mutually agreed upon in writing.

                  VII. CONDITIONS TO THE COMPANY'S OBLIGATIONS

                  The Company's obligation to complete the Exchange pursuant to
this Agreement is conditioned upon:

                  E.       Delivery by Shaar to the Company of the Series B
Preferred Stock;

                                      -10-

<PAGE>

                  F.       Delivery by Shaar to the Company of a general
release, substantially in the form of Exhibit D hereto,

                  G.       The accuracy on the Closing Date of the
representations and warranties of Shaar contained in this Agreement as if made
on the Closing Date (except for representations and warranties which, by their
express terms, speak as of and relate to a specified date, in which case such
accuracy shall be measured as of such specified date) and the performance by
Shaar in all material respects on or before the Closing Date of all covenants
and agreements of Shaar required to be performed by it pursuant to this
Agreement on or before the Closing Date; and

                  H.       There shall not be in effect any law or order,
ruling, judgment or writ of any court or public or governmental authority
restraining, enjoining or otherwise prohibiting any of the transactions
contemplated by this Agreement.

                     VIII. CONDITIONS TO SHAAR'S OBLIGATIONS

                  Shaar's obligation to complete the Exchange pursuant to this
Agreement is conditioned upon:

                  A.       Delivery by the Company to Shaar of evidence that the
Series C Certificate of Designation has been filed and is effective.

                  B.       Delivery by the Company to Shaar of one or more
certificates (I/N/O Shaar or I/N/O Shaar's nominee) evidencing the Securities to
be acquired by Shaar pursuant to this Agreement;

                  C.       The accuracy on the Closing Date of the
representations and warranties of the Company contained in this Agreement as if
made on the Closing Date (except for representations and warranties which, by
their express terms, speak as of and relate to a specified date, in which case
such accuracy shall be measured as of such specified date) and the performance
by the Company in all material respects on or before the Closing Date of all
covenants and agreements of the Company required to be performed by it pursuant
to this Agreement on or before the Closing Date, all of which shall be confirmed
to Shaar by the chief executive officer of the Company by delivery of a
certificate to that effect;

                  D.       There not having occurred (i) any general suspension
of trading in, or limitation on prices listed for, the Common Stock on the Amex,
(ii) the declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) the commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States or any of its territories, protectorates or
possessions, or (iv) in the case of the foregoing, existing at the date of this
Agreement, a material acceleration or worsening thereof;

                                      -11-

<PAGE>

                  E.       Delivery by the Company to Shaar of a general
release, substantially in the form of Exhibit E hereto;

                  F.       There shall not be in effect any law or order,
ruling, judgment or writ of any court or public or governmental authority
restraining, enjoining or otherwise prohibiting any of the transactions
contemplated by this Agreement;

                  G.       Delivery by the Company of irrevocable instructions
to the Company's transfer agent to reserve 1,100,000 shares of Common Stock for
issuance of the Conversion Shares and the Warrant Shares;

                  H.       The Company shall have obtained all consents,
approvals or waivers from governmental authorities and third persons necessary
for the execution, delivery and performance of the Documents and the
transactions contemplated thereby, all without material cost to the Company; and

                  I.       Shaar shall have received such additional documents,
certificates, payment, assignments, transfers and other delivers, as it or its
legal counsel may reasonably request and as are customary to effect a closing of
the matters herein contemplated.

                                 IX. TERMINATION

                  A.       TERMINATION BY MUTUAL WRITTEN CONSENT. This Agreement
may be terminated and the transactions contemplated hereby may be abandoned, for
any reason and at any time prior to the Closing Date, by the mutual written
consent of the Company and Shaar.

                  B.       TERMINATION BY THE COMPANY OR SHAAR. This Agreement
may be terminated and the transactions contemplated hereby may be abandoned by
action of the Company or Shaar if (i) the Closing shall not have occurred at or
prior to 5:00 p.m., New York City time, on March 5, 2004 (the "LATEST CLOSING
DATE"); provided, however, that the right to terminate this Agreement pursuant
to this Section IX.B. shall not be available to any party whose failure to
fulfill any of its obligations under this Agreement has been the cause of or
resulted in the failure of the Closing to occur at or before such time and date.

                  C.       TERMINATION BY SHAAR. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned by Shaar at
any time prior to the Closing Date, if (i) the Company shall have failed to
comply in all material respects with its covenants or agreements contained in
this Agreement, (ii) there shall have been a breach by the Company with respect
to any representation or warranty made by it in this Agreement, (iii) there
shall have occurred any event or development, or there shall be in existence any
condition, having or reasonably likely to have a material adverse effect upon
the Company or (iv) the Company shall have failed to satisfy the conditions
provided in Section VII hereof.

                                       12

<PAGE>

                  D.       TERMINATION BY THE COMPANY. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned by the
Company at any time prior to the Closing Date, if (i) Shaar shall have failed to
comply in all material respects with its covenants or agreements contained in
this Agreement or (ii) there shall have been a breach by Shaar with respect to
any representation or warranty made by it in this Agreement.

                  E.       EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to this Section IX, this Agreement shall
thereafter become void and have no effect, and no party hereto shall have any
liability or obligation to any other party hereto in respect of this Agreement,
except that the provisions of Article X, this Section IX.E and Section IX.F
shall survive any such termination; provided, however, that no party shall be
released from any liability hereunder if this Agreement is terminated and the
transactions contemplated hereby abandoned by reason of (i) willful failure of
such party to perform its obligations hereunder or (ii) any misrepresentation
made by such party of any matter set forth herein.

                          X. SURVIVAL; INDEMNIFICATION

                  A.       The representations, warranties and covenants made by
each of the Company and Shaar in this Agreement, the annexes, schedules and
exhibits hereto and in each instrument, agreement and certificate entered into
and delivered by them pursuant to this Agreement, shall survive the Closing and
the consummation of the transactions contemplated hereby. In the event of a
breach or violation of any of such representations, warranties or covenants, the
party to whom such representations, warranties or covenants have been made shall
have all rights and remedies for such breach or violation available to it under
the provisions of this Agreement or otherwise, whether at law or in equity,
irrespective of any investigation made by or on behalf of such party on or prior
to the Closing Date.

                  B.       The Company hereby agrees to indemnify and hold
harmless Shaar, its Affiliates and their respective officers, directors,
partners and members (collectively, the "SHAAR INDEMNITEES"), from and against
any and all losses, claims, damages, judgments, penalties, liabilities and
deficiencies (collectively, "Losses"), and agrees to reimburse Shaar Indemnitees
for all out of-pocket expenses (including the fees and expenses of legal
counsel), in each case promptly as incurred by Shaar Indemnitees and to the
extent arising out of or in connection with:

                           1.       any misrepresentation, omission of fact or
         breach of any of the Company's representations or warranties contained
         in this Agreement or the other Documents, or the annexes, schedules or
         exhibits hereto or thereto or any instrument, agreement or certificate
         entered into or delivered by the Company pursuant to this Agreement or
         the other Documents;

                           2.       any failure by the Company to perform in any
         material respect any of its covenants, agreements, undertakings or
         obligations set forth in this Agreement or the other Documents or any
         instrument, certificate or agreement

                                      -13-

<PAGE>

         entered into or delivered by the Company pursuant to this Agreement or
         the other Documents.

                  C.       Shaar hereby agrees to indemnify and hold harmless
the Company, its Affiliates and their respective officers, directors, partners
and members (collectively, the "COMPANY INDEMNITEES"), from and against any and
all Losses, and agrees to reimburse the Company Indemnitees for all
out-of-pocket expenses (including the fees and expenses of legal counsel), in
each case promptly as incurred by the Company Indemnitees and to the extent
arising out of or in connection with:

                           1.       any misrepresentation, omission of fact, or
         breach of any of Shaar's representations or warranties contained in
         this Agreement or the other Documents, or the annexes, schedules or
         exhibits hereto or thereto or any instrument, agreement or certificate
         entered into or delivered by Shaar pursuant to this Agreement or the
         other Documents; and

                           2.       any failure by Shaar to perform in any
         material respect any of its covenants, agreements, undertakings or
         obligations set forth in this Agreement or the other Documents or any
         instrument, certificate or agreement entered into or delivered by Shaar
         pursuant to this Agreement or the other Documents.

                  D.       Promptly after receipt by either party hereto seeking
indemnification pursuant to this Section X (an "INDEMNIFIED PARTY") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "CLAIM"), the Indemnified Party
promptly shall notify the party against whom indemnification pursuant to this
Section X is being sought (the "INDEMNIFYING PARTY") of the commencement
thereof; but the omission to so notify the Indemnifying Party shall not relieve
it from any liability that it otherwise may have to the Indemnified Party except
to the extent that the Indemnifying Party is materially prejudiced and forfeits
substantive rights and defenses by reason of such failure. In connection with
any Claim as to which both the Indemnifying Party and the Indemnified Party are
parties, the Indemnifying Party shall be entitled to assume the defense thereof.
Notwithstanding the assumption of the defense of any Claim by the Indemnifying
Party, the Indemnified Party shall have the right to employ separate legal
counsel and to participate in the defense of such Claim, and the Indemnifying
Party shall bear the reasonable fees, out-of-pocket costs and expenses of such
separate legal counsel to the Indemnified Party if (and only if): (x) the
Indemnifying Party shall have agreed to pay such fees, out-of-pocket costs and
expenses, (y) the Indemnified Party and the Indemnifying Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal counsel would not be appropriate due to actual or, as
reasonably determined by legal counsel to the Indemnified Party, potentially
differing interests between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are in addition to or disparate from those available to the Indemnifying Party,
or (z) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the Indemnified Party
employs separate legal counsel in

                                      -14-

<PAGE>

circumstances other than as described in clauses (x), (y) or (z) above, the
fees, costs and expenses of such legal counsel shall be borne exclusively by the
Indemnified Party. Except as provided above, the Indemnifying Party shall not,
in connection with any Claim in the same jurisdiction, be liable for the fees
and expenses of more than one firm of legal counsel for the Indemnified Party
(together with appropriate local counsel). The Indemnifying Party shall not,
without the prior written consent of the Indemnified Party (which consent shall
not unreasonably be withheld), settle or compromise any Claim or consent to the
entry of any judgment that does not include an unconditional release of the
Indemnified Party from all liabilities with respect to such Claim or judgment.

                  E.       In the event one party hereunder should have a claim
for indemnification that does not involve a claim or demand being asserted by a
third party, the Indemnified Party promptly shall deliver notice of such claim
to the Indemnifying Party. If the Indemnified Party disputes the claim, such
dispute shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association. Judgment upon any
award rendered by any arbitrators may be entered in any court having competent
jurisdiction thereof.

                                XI. GOVERNING LAW

                  This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York, without regard to the
conflicts of law principles of such state.

                         XII. SUBMISSION TO JURISDICTION

                  Each of the parties hereto consents to the exclusive
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
the other Documents. Each party hereto hereby irrevocably and unconditionally
waives, to the fullest extent it may effectively do so, any defense of an
inconvenient forum or improper venue to the maintenance of such action or
proceeding in any such court and any right of jurisdiction on account of its
place of residence or domicile. Each party hereto irrevocably and
unconditionally consents to the service of any and all process in any such
action or proceeding in such courts by the mailing of copies of such process by
certified or registered airmail at its address specified in Section XVIII. Each
party hereto agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.

                                      -15-

<PAGE>

                            XIII. WAIVER OF JURY TRIAL

TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OTHER DOCUMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS AGREEMENT AND OTHER DOCUMENTS. EACH PARTY HERETO (i)
CERTIFIES THAT NEITHER OF THEIR RESPECTIVE REPRESENTATIVES, AGENTS OR ATTORNEYS
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT
IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.

                          XIV. COUNTERPARTS; EXECUTION

                  This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which when
so executed and delivered shall be an original, but all the counterparts shall
together constitute one and the same instrument. A facsimile transmission of
this signed Agreement shall be legal and binding on all parties hereto.

                                  XV. HEADINGS

                  The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.

                                XVI. SEVERABILITY

                  In the event any one or more of the provisions contained in
this Agreement or in the other Documents should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein or therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.

             XVII. ENTIRE AGREEMENT; REMEDIES, AMENDMENTS AND WAIVERS

                  This Agreement and the Documents constitute the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. No supplement, modification or waiver
of this Agreement shall be binding unless executed in writing, by all parties.
No waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.

                                      -16-

<PAGE>

                                 XVIII. NOTICES

                  Except as may be otherwise provided herein, any notice or
other communication or delivery required or permitted hereunder shall be in
writing and shall be delivered personally or sent by certified mail, postage
prepaid, or by a nationally recognized overnight courier service, and shall be
deemed given when so delivered personally or by overnight courier service, or,
if mailed, three (3) days after the date of deposit in the United States mails,
as follows:

                  A.       if to the Company, to:

                           CVF Technologies Corporation
                           8604 Main Street, Suite 1
                           Williamsville, NY 14221
                           Attention. Jeffrey I. Dreben
                           (716)565-4711
                           (716)565-4717 (Fax)

                           with a copy to:

                           Hodgson Russ LLP
                           One M&T Plaza, Suite 2000
                           Buffalo, NY 14203-2391
                           Attention: John J. Zak, Esq.
                           (716)848-1253
                           (716)849-0349 (Fax)

                  B.       if to Shaar, to:

                           The Shaar Fund, Ltd.
                           c/o Levinson Capital Management
                           350 Fifth Avenue, Suite 2210
                           New York, NY 10118
                           Attention: Samuel Levinson
                           (212)432-7711
                           (212)432-7771 (Fax)

                                      -17-

<PAGE>

                           with a copy to:

                           Meltzer, Lippe & Goldstein, LLP
                           190 Willis Avenue
                           Mineola, New York 11501
                           Attention: Ira Halperin, Esq.
                           (516)747-0300
                           (516)747-0653 (Fax)

The Company or Shaar may change the foregoing address by notice given pursuant
to this Section XVIII.

                              XIX. CONFIDENTIALITY

                  Each of the Company and Shaar agrees to keep confidential and
not to disclose to or use for the benefit of any third party the terms of this
Agreement or any other information which at any time is communicated by the
other party as being confidential without the prior written approval of the
other party; provided, however, that this provision shall not apply to
information which, at the time of disclosure, is already part of the public
domain (except by breach of this Agreement) and information which is required to
be disclosed by law (including, without limitation, pursuant to Item 601(b)(10)
of Regulation S-K under the Securities Act and the Exchange Act).

                              XX. NON DISPARAGEMENT

                  Each of the Company and Shaar agrees not to make or cause to
be made any statement, oral, written or electronic, which disparages the other,
or the other's respective officers, directors, employees and affiliates.

                                 XXI. ASSIGNMENT

                  This Agreement shall not be assignable by either of the
parties hereto prior to the Closing without the prior written consent of the
other party, and any attempted assignment contrary to the provisions hereby
shall be null and void; provided, however, that Shaar may assign its rights and
obligations hereunder, in whole or in part, to any affiliate of Shaar.

                            [SIGNATURE PAGE FOLLOWS.]

                                      -18-

<PAGE>

                  In Witness Whereof, the parties have caused this Agreement to
be duly executed and delivered as of the date first above written.

                                                 CVF TECHNOLOGIES CORPORATION

                                                 By: /s/ Jeffrey J. Dreben
                                                     ---------------------------
                                                     Name:  Jeffrey J. Dreben
                                                     Title: President

                                       19

<PAGE>
'
                  In Witness Whereof, the parties have caused this Agreement to
be duly executed and delivered as of the date first above written.

                                           THE SHAAR FUND, LTD.

                                           By: InterCaribbean Services, Ltd.,
                                               Sole Director

                                           By: /s/ Claudio Cecchini
                                               ------------------------------
                                               Name: Claudio Cecchini
                                                     ------------------------
                                               Title: Attorney-in-Fact

                                           By: /s/ Patrick G. Fenlon
                                               ------------------------------
                                               Name: Patrick G. Fenlon
                                                     ------------------------
                                               Title: Attorney-in-Fact

                                      -19-
<PAGE>

                                                                       EXHIBIT A

                           CERTIFICATE OF DESIGNATION

                                      -20-
<PAGE>

                                                                       EXHIBIT B

                         COMMON STOCK PURCHASE WARRANTS

                                      -21-
<PAGE>

                                                                       EXHIBIT C

                                  PRESS RELEASE

                    CVF TECHNOLOGIES CORPORATION RESTRUCTURES
                                PREFERRED SHARES

CVF Technologies Corporation and the holder of its outstanding Series B
Convertible Preferred Stock entered into a transaction to restructure the
Company's equity.

On February______, 2004, the holder exchanged its Series B Convertible Preferred
Stock with a stated value of $3,390,000 and accrued dividends of approximately
$630,000, which was accruing dividends at an annual rate of 10%, for 1,000,000
shares of CVF common stock and a new Series C 6% Convertible Preferred Stock
with a stated value of $1,000,000, convertible into common stock at $1 per
share. The 6% annual dividend will accrue for two years and be payable on
February_______, 2006 and semi-annually thereafter. The Series C Preferred will
be subject to mandatory redemption on February___________, 2006; however, CVF's
obligation to redeem will be limited to cash available to it at that time in
excess of one year's prospective working capital. CVF also issued to the former
Series B holder a three-year warrant to purchase 100,000 shares of CVF common
stock at an exercise price of $.35 per share.

This represents an important and beneficial development for CVF and all of its
shareholders. The former Series B holder's agreement to restructure its
preferred stock significantly streamlines the Company's capital structure,
largely eliminating the overhand on CVF's common shares and creating a stronger
company going forward. CVF appreciates the holder's professionalism throughout
this process, and its willingness to work constructively on behalf of the
Company and the interests of all shareholders and other constituencies.

                                      -22-
<PAGE>

                                                                       EXHIBIT D

                                  SHAAR RELEASE

         For and in consideration of the obligations of THE SHAAR FUND, LTD.
("SHAAR"), and for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, CVF TECHNOLOGIES CORPORATION ("CVF"),
individually and derivatively and on behalf of its predecessors, successors,
affiliates, subsidiaries, heirs, trustees, officers, directors, successors and
assigns (hereinafter individually and collectively referred to as the "CVF
Releasing Parties"), hereby release, acquit, and forever discharge SHAAR, its
subsidiaries, affiliates, advisors, including, without limitation, Shaar
Advisory Services, N.V., Levinson Capital Management LLC, Cita Investments
Israel Ltd., and all of its officers, directors, members, shareholders,
employees, consultants, attorneys, representatives, agents, predecessors,
successors, assigns, heirs, executors, administrators and personal
representatives and each and every one of them, including, without limitation,
Sam Levinson and Uri Wolfson, (hereinafter individually and collectively
referred to as the "Shaar Released Parties") of and from any and all actions,
causes of action, suits, debts, dues, sums of money, accounts, reckonings,
covenants, contracts, agreements, promises, damages, judgments, obligations,
liabilities, controversies, costs, expenses, attorneys' fees, executions,
claims, and demands whatsoever, whether known or unknown, asserted or
unasserted, in law or equity, of every kind and nature whatsoever, which the CVF
Releasing Parties ever had, now have, or hereafter can, shall, or may have, or
claim to have, against the Shaar Released Parties, for, upon, or by reason of
any matter, cause of action, or thing, whatsoever from the beginning of the
world to the date hereof (collectively, the "Shaar Released Claims"), but
expressly excluding from the Shaar Released Claims (i) any claim arising under
the Exchange Agreement, dated February 20,2004, between SHAAR and CVF (the
"Exchange Agreement"), (ii) any claim with respect to any act or omission that
occurs after the time that the Exchange Agreement is executed and delivered and
(iii) any claim pursuant to any equity or debt security issued by CVF, or any
right to acquire any equity or debt security of CVF, registered in the name of
SHAAR or any nominee of SHAAR, which debt or equity security or right is
acquired by or after the date of this Release. The Shaar Released Claims
include, without limitation, any claims for breach of implied or express
contract, interference with contract, breach of promise, promissory estoppel,
misrepresentation, negligence, negligent misrepresentation, breach of fiduciary
duty, actual or constructive fraud, including, without limitation, common law
fraud or fraud asserted under any statutory theory under any federal or state
law and including, without limitation, under any theory of primary, secondary or
control person liability, estoppel, defamation, conspiracy, business or economic
interference, violation of any federal or state securities law or administrative
regulation, violation of public policy and for attorneys' or other professional
fees, that the CVF Releasing Parties, including, without limitation, their
successors, trustees, heirs, executors, administrators, successors and assigns,
now have, ever had or may hereafter have, whether known or unknown, suspected or
unsuspected, up to and including the date of this Release.

         This RELEASE may not be changed orally.

                                      -23-
<PAGE>

         IN WITNESS WHEREOF, the RELEASOR has duly executed this Release as of
the 27th day of February, 2004.

                                    CVF TECHNOLOGIES CORPORATION

                                    By:_________________________________________

                                      -24-
<PAGE>

                                                                       EXHIBIT E

                                COMPANY RELEASE

         For and in consideration of the obligations of CVF TECHNOLOGIES
CORPORATION ("CVF"), and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, THE SHAAR FUND, LTD. ("SHAAR"),
individually and derivatively and on behalf of its predecessors, successors,
affiliates, subsidiaries, heirs, trustees, officers, directors, successors and
assigns, including, without limitation, Shaar Advisory Services N.V., Levinson
Capital Management LLC, Cita Investments Israel Ltd., Sam Levinson and Uri
Wolfson (hereinafter individually and collectively referred to as the "SHAAR
Releasing Parties"), hereby release, acquit, and forever discharge CVF, its
subsidiaries, affiliates, advisors, and all of its officers, directors, members,
shareholders, employees, consultants, attorneys, representatives, agents,
predecessors, successors, assigns, heirs, executors, administrators and personal
representatives and each and every one of them, (hereinafter individually and
collectively referred to as the "CVF Released Parties") of and from any and all
actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, covenants, contracts, agreements, promises, damages, judgments,
obligations, liabilities, controversies, costs, expenses, attorneys' fees,
executions, claims, and demands whatsoever, whether known or unknown, asserted
or unasserted, in law or equity, of every kind and nature whatsoever, which the
SHAAR Releasing Parties ever had, now have, or hereafter can, shall, or may
have, or claim to have, against the CVF Released Parties, for, upon, or by
reason of any matter, cause of action, or thing, whatsoever from the beginning
of the world to the date hereof (collectively, the "CVF Released Claims"), but
expressly excluding from the CVF Released Claims (i) any claim arising under the
Exchange Agreement, dated February 20, 2004, between CVF and SHAAR (the
"Exchange Agreement") and (ii) any claim with respect to any act or omission
that occurs after the time that the Exchange Agreement is executed and
delivered. The CVF Released Claims include, without limitation, any claims for
breach of implied or express contract, interference with contract, breach of
promise, promissory estoppel, misrepresentation, negligence, negligent
misrepresentation, breach of fiduciary duty, actual or constructive fraud,
including, without limitation, common law fraud or fraud asserted under any
statutory theory under any federal or state law and including, without
limitation, under any theory of primary, secondary or control person liability,
estoppel, defamation, conspiracy, business or economic interference, violation
of any federal or state securities law or administrative regulation, violation
of public policy and for attorneys' or other professional fees, that the SHAAR
Releasing Parties, including, without limitation, their successors, trustees,
heirs, executors, administrators, successors and assigns, now have, ever had or
may hereafter have, whether known or unknown, suspected or unsuspected, up to
and including the date of this Release.

         This RELEASE may not be changed orally.

                                      -25-
<PAGE>

         IN WITNESS WHEREOF, the RELEASOR has duly executed this Release as of
the 27th day of February, 2004.

                                             THE SHAAR FUND, LTD.

                                             By: InterCaribbean Services, Ltd.,
                                                 Sole Director

                                             By:________________________________
                                                Name:
                                                Title: Attorney-in-Fact

                                             By:________________________________
                                                Name:
                                                Title: Attorney-in-Fact

                                      -26-

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