Document:

EXHIBIT 10.1

                          SECURITIES PURCHASE AGREEMENT
                          -----------------------------
                            LAURUS MASTER FUND, LTD.

                                       AND

                            NEW CENTURY ENERGY CORP.

                              DATED: JUNE 30, 2005

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                                TABLE OF CONTENTS
                                -----------------
                                                                            PAGE
                                                                            ----

1.     Agreement  to  Sell  and  Purchase,                                    1

2.     Fees,  Warrant  and  Option                                            2

3.     Closing,  Delivery  and  Payment                                       2
       3.1     Closing                                                        2
       3.2     Delivery                                                       2

4.     Representations  and  Warranties  of  the  Company                     3
       4.1     Organization,  Good  Standing  and  Qualification              3
       4.2     Subsidiaries                                                   3
       4.3     Capitalization;  Voting  Rights                                4
       4.4     Authorization;  Binding  Obligations                           4
       4.5     Liabilities                                                    5
       4.6     Agreements;  Action                                            5
       4.7     Obligations  to  Related  Parties                              7
       4.8     Changes                                                        8
       4.9     Title  to  Properties  and  Assets;  Liens,  Etc               9
       4.10    Intellectual  Property                                         9
       4.11    Compliance  with  Other  Instruments                          10
       4.12    Litigation                                                    10
       4.13    Tax  Returns  and  Payments                                   10
       4.14    Employees                                                     11
       4.15    Registration  Rights  and  Voting  Rights                     11
       4.16    Compliance  with  Laws;  Permits                              12
       4.17    Environmental  and  Safety  Laws                              12
       4.18    Valid  Offering                                               12
       4.19    Full  Disclosure                                              12
       4.20    Insurance                                                     13
       4.21    SEC  Reports                                                  13
       4.22    Listing                                                       13
       4.23    No  Integrated  Offering                                      13
       4.24    Stop  Transfer                                                14
       4.25    Dilution                                                      14
       4.26    Patriot  Act                                                  14
       4.27    ERISA                                                         14

5.     Representations  and  Warranties  of  the  Purchaser                  15
       5.1     No  Shorting                                                  15
       5.2     Requisite  Power  and  Authority                              15
       5.3     Investment  Representations                                   15
       5.4     The  Purchaser  Bears  Economic  Risk                         16
       5.5     Acquisition  for  Own  Account                                16
       5.6     The  Purchaser  Can  Protect  Its  Interest                   16
       5.7     Accredited  Investor                                          16

                                        i
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       5.8     Legends                                                       16

6.     Covenants  of  the  Company                                           17
       6.1      Stop-Orders                                                  17
       6.2      Listing                                                      18
       6.3      Market  Regulations                                          18
       6.4      Reporting  Requirements                                      18
       6.5      Use  of  Funds                                               18
       6.6      Access  to  Facilities                                       18
       6.7      Taxes                                                        19
       6.8      Insurance                                                    19
       6.9      Intellectual  Property                                       20
       6.10     Properties                                                   20
       6.11     Confidentiality                                              20
       6.12     Required  Approvals                                          21
       6.13     Reissuance  of  Securities                                   22
       6.14     Opinion                                                      22
       6.15     Margin  Stock                                                22
       6.16     Financing  Right  of  First  Refusal                         22
       6.17     Additional  Investment                                       23
       6.18     Authorization  and  Reservation  of  Shares                  23

7.     Covenants  of  the  Purchaser                                         24
       7.1     Confidentiality                                               24
       7.2     Non-Public  Information                                       24
       7.3     Limitation on Acquisition of Common Stock of the Company      24

8.     Covenants of the Company and the Purchaser Regarding Indemnification  24
       8.1     Company  Indemnification                                      24
       8.2     Purchaser's  Indemnification                                  25

9.     Conversion  of  Convertible  Note                                     25
       9.1     Mechanics  of  Conversion                                     25

10.    Registration  Rights                                                  27
       10.1    Registration  Rights  Granted                                 27
       10.2    Offering  Restrictions                                        27

11.    Miscellaneous                                                         27
       11.1    Governing  Law,  Jurisdiction  and  Waiver  of  Jury  Trial   27
       11.2    Severability                                                  28
       11.3    Survival                                                      29
       11.4    Successors                                                    29
       11.5    Entire  Agreement;  Maximum  Interest                         29
       11.6    Amendment  and  Waiver                                        29
       11.7    Delays  or  Omissions                                         29
       11.8    Notices                                                       30
       11.9    Attorneys'  Fees                                              31
       11.10   Titles  and  Subtitles                                        31

                                       ii
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       11.11   Facsimile  Signatures;  Counterparts                          31
       11.12   Broker's  Fees                                                31
       11.13   Construction                                                  31

                                      iii
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                                LIST OF EXHIBITS
Form  of  Convertible  Term  Note     Exhibit  A
Form  of  Warrant     Exhibit  B
Form  of  Option     Exhibit  C
Form  of  Opinion     Exhibit  D
Form  of  Escrow  Agreement     Exhibit  E

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                          SECURITIES PURCHASE AGREEMENT

     THIS  SECURITIES  PURCHASE AGREEMENT (this "Agreement") is made and entered
into  as  of  June 30, 2005, by and between NEW CENTURY ENERGY CORP., a Colorado
corporation  (the  "Company"),  and  LAURUS  MASTER FUND, LTD., a Cayman Islands
company  (the  "Purchaser").

                                    RECITALS

     WHEREAS,  the Company has authorized the sale to the Purchaser of a Secured
Convertible  Term  Note  in  the  aggregate  principal amount of Fifteen Million
Dollars  ($15,000,000)  in the form of Exhibit A hereto (as amended, modified or
supplemented  from  time  to  time,  the "Note"), which Note is convertible into
shares  of  the  Company's common stock, $0.001 par value per share (the "Common
Stock")  at an initial fixed conversion price of $0.62 per share of Common Stock
("Fixed  Conversion  Price");

     WHEREAS, the Company wishes to issue to the Purchaser a warrant in the form
of Exhibit B hereto (as amended, modified or supplemented from time to time, the
"Warrant")  to  purchase  up  to  7,258,065 shares of the Company's Common Stock
(subject  to adjustment as set forth therein) in connection with the Purchaser's
purchase of the Note;

     WHEREAS, the Company wishes to issue to the Purchaser an option in the form
of Exhibit C hereto (as amended, modified or supplemented from time to time, the
"Option")  to  purchase  up  to  10,222,784 shares of the Company's Common Stock
(subject  to adjustment as set forth therein) in connection with the Purchaser's
purchase of the Note;

     WHEREAS,  the  Purchaser  desires to purchase the Note, the Warrant and the
Option on the terms and conditions set forth herein; and

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

                                    AGREEMENT

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

     1.     Agreement  to  Sell  and  Purchase.  Pursuant  to  the  terms  and
            ----------------------------------
conditions  set  forth  in  this  Agreement,  on the Closing Date (as defined in
Section  3),  the  Company  shall sell to the Purchaser, and the Purchaser shall
purchase  from  the Company, the Note.  The sale of the Note on the Closing Date
shall be known as the "Offering."  The Note will mature on the Maturity Date (as
defined  in  the  Note).  Collectively, the Note, the Common Stock issuable upon
conversion  of the Note, the Warrant, the Common Stock issuable upon exercise of
the  Warrant,  the  Option  and  the  Common Stock issuable upon exercise of the
Option  are  referred  to  as  the  "Securities."

                                        1
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     2.     Fees,  Warrant  and  Option.  On  the  Closing  Date:
            ---------------------------

               (a)  The  Company  will  issue  and  deliver to the Purchaser the
          Warrant to purchase up to 7,258,065 shares of Common Stock (subject to
          adjustment  as  set  forth  in  the  Warrant)  in  connection with the
          Offering,  pursuant  to  Section  1  hereof.  All the representations,
          covenants,  warranties,  undertakings,  and indemnification, and other
          rights  made  or granted to or for the benefit of the Purchaser by the
          Company are hereby also made and granted in respect of the Warrant and
          shares  of  the  Company's  Common Stock issuable upon exercise of the
          Warrant (the "Warrant Shares").

               (b)  The  Company  will  issue  and  deliver to the Purchaser the
          Option to purchase up to 10,222,784 shares of Common Stock (subject to
          adjustment  as  set  forth  in  the  Option)  in  connection  with the
          Offering,  pursuant  to  Section  1  hereof.  All the representations,
          covenants,  warranties,  undertakings,  and indemnification, and other
          rights  made  or granted to or for the benefit of the Purchaser by the
          Company are hereby also made and granted for the benefit of the holder
          of  the  Option and shares of the Company's Common Stock issuable upon
          exercise of the Option (the "Option Shares").

               (c) Subject to the terms of Section 2(e) below, the Company shall
          pay  to  Laurus  Capital  Management,  L.L.C.,  the  manager  of  the
          Purchaser,  a closing payment in an amount equal to three and one half
          percent  (3.50%)  of  the  aggregate principal amount of the Note. The
          foregoing fee is referred to herein as the "Closing Payment."

               (d)  The Company shall reimburse the Purchaser for its reasonable
          expenses  (including  legal  fees and expenses) incurred in connection
          with the preparation and negotiation of this Agreement and the Related
          Agreements  (as  hereinafter  defined),  and  expenses  incurred  in
          connection  with  the  Purchaser's due diligence review of the Company
          and  its  Subsidiaries  (as  defined  in  Section 4.2) and all related
          matters;  provided  that the due diligence fees may not exceed $17,500
          (exclusive  of third party appraisals or extraordinary due diligence).
          Amounts  required  to  be paid under this Section 2(d) will be paid on
          the Closing Date.

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

                                        2
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     3.     Closing,  Delivery  and  Payment.
            --------------------------------

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

          3.2  Delivery. Pursuant to the Escrow Agreement, at the Closing on the
               --------
     Closing  Date,  the  Company  will  deliver  to  the Purchaser, among other
     things, the Note, the Warrant and the Option and the Purchaser will deliver
     to  the  Company,  among  other  things,  the  amounts  set  forth  in  the
     Disbursement Letter by certified funds or wire transfer.

     4.     Representations  and  Warranties of the Company.  The Company hereby
            -----------------------------------------------
represents  and  warrants  to  the  Purchaser  as  follows

          4.1 Organization, Good Standing and Qualification. Each of the Company
              ---------------------------------------------
     and  each  of  its  Subsidiaries  is  a corporation, partnership or limited
     liability company, as the case may be, duly organized, validly existing and
     in  good  standing under the laws of its jurisdiction of organization. Each
     of  the  Company  and  each  of its Subsidiaries has the corporate, limited
     liability  company  or partnership, as the case may be, power and authority
     to own and operate its properties and assets and, insofar as it is or shall
     be a party thereto, to (a) execute and deliver (i) this Agreement, (ii) the
     Note,  the  Warrant  and  the  Option  to be issued in connection with this
     Agreement,  (iii) the Master Security Agreement dated as of the date hereof
     between  the Company, certain Subsidiaries of the Company and the Purchaser
     (as  amended,  modified  and/or supplemented from time to time, the "Master
     Security  Agreement"),  (iv)  the Registration Rights Agreement relating to
     the  Securities  dated  as  of  the date hereof between the Company and the
     Purchaser  (as amended, modified and/or supplemented from time to time, the
     "Registration  Rights  Agreement"), (v) the Subsidiary Guaranty dated as of
     the  date  hereof  made by certain Subsidiaries of the Company (as amended,
     modified and/or supplemented from time to time, the "Subsidiary Guaranty"),
     (vi)  the  Stock  Pledge  Agreement  dated  as of the date hereof among the
     Company, certain Subsidiaries of the Company and the Purchaser (as amended,
     modified  and/or  supplemented  from  time  to  time,  the  "Stock  Pledge
     Agreement"),  (vii)  the Funds Escrow Agreement dated as of the date hereof
     among  the Company, the Purchaser and the escrow agent referred to therein,
     substantially  in the form of Exhibit E hereto (as amended, modified and/or
     supplemented  from  time  to  time,  the  "Escrow  Agreement"), (viii) each
     mortgage  dated  as  of the date hereof made by the Company in favor of the
     Purchaser  and (ix) all other documents, instruments and agreements entered
     into  in  connection  with the transactions contemplated hereby and thereby
     (the  preceding  clauses  (ii)  through  (ix),  collectively,  the "Related
     Agreements");  (b)  issue  and sell the Note and the shares of Common Stock
     issuable  upon  conversion  of  the Note (the "Note Shares"); (c) issue and
     sell  the Warrant and the Warrant Shares; (d) issue and sell the Option and
     the  Option  Shares; and (e) carry out the provisions of this Agreement and
     the Related Agreements and to carry on its business as presently conducted.

                                        3
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     Each  of  the Company and each of its Subsidiaries is duly qualified and is
     authorized to do business and is in good standing as a foreign corporation,
     partnership  or  limited  liability  company,  as  the  case may be, in all
     jurisdictions  in which the nature or location of its activities and of its
     properties  (both  owned  and  leased)  makes such qualification necessary,
     except  for those jurisdictions in which failure to do so has not, or could
     not  reasonably  be  expected  to have, individually or in the aggregate, a
     material  adverse  effect  on  the business, assets, liabilities, condition
     (financial  or  otherwise),  properties,  operations  or  prospects  of the
     Company  and  its  Subsidiaries,  taken  individually  and  as  a  whole (a
     "Material Adverse Effect").

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

          4.3     Capitalization;  Voting  Rights.
                  -------------------------------

               (a)  The  authorized capital stock of the Company, as of the date
          hereof consists of 120,000,000 shares, of which 100,000,000 are shares
          of  Common  Stock,  par  value  $0.001 per share, 49,560,600 shares of
          which are issued and outstanding as of the date hereof, and 20,000,000
          are shares of preferred stock, par value $0.001 per share. The Company
          has  5,000  shares  of Series A convertible preferred stock designated
          and  5,000  shares  of Series A convertible preferred stock issued and
          outstanding  as  of  the  date hereof and 2,000,000 shares of Series B
          convertible  preferred  stock  designated  and  0  shares  of Series B
          convertible  preferred  stock  issued and outstanding. The authorized,
          issued and outstanding capital stock of each Subsidiary of the Company
          is set forth on Schedule 4.3.

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

                                        4
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               (c)  All  issued  and  outstanding shares of the Company's Common
          Stock:  (i) have been duly authorized and validly issued and are fully
          paid  and  nonassessable;  and (ii) were issued in compliance with all
          applicable  state  and  federal  laws  concerning  the  issuance  of
          securities.

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

          4.4  Authorization; Binding Obligations. All corporate, partnership or
               ----------------------------------
     limited  liability  company,  as the case may be, action on the part of the
     Company  and  each of its Subsidiaries (including their respective officers
     and  directors)  necessary  for the authorization of this Agreement and the
     Related  Agreements,  the performance of all obligations of the Company and
     its  Subsidiaries  hereunder  and under the other Related Agreements at the
     Closing,  and  the  authorization, sale, issuance and delivery of the Note,
     the  Warrant  and  the  Option has been taken or will be taken prior to the
     Closing.  This  Agreement  and  the  Related  Agreements, when executed and
     delivered  and  to  the  extent  it  is  a party thereto, will be valid and
     binding  obligations  of  each of the Company and each of its Subsidiaries,
     enforceable  against  each  such  entity  in  accordance  with their terms,
     except:

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

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

                                        5
<PAGE>

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

          4.5  Liabilities.  Neither the Company nor any of its Subsidiaries has
               -----------
     any liabilities, except current liabilities incurred in the ordinary course
     of business and liabilities disclosed in any of the Company's filings under
     the Securities Exchange Act of 1934 ("Exchange Act") made prior to the date
     of  this  Agreement  (collectively,  the "Exchange Act Filings"), copies of
     which have been provided to the Purchaser.

          4.6  Agreements;  Action.  Except  as  set forth on Schedule 4.6 or as
               -------------------
     disclosed in any Exchange Act Filings:

               (a)  there  are  no  agreements,  understandings,  instruments,
          contracts,  proposed transactions, judgments, orders, writs or decrees
          to which the Company or any of its Subsidiaries is a party or by which
          it  is  bound  which  may  involve:  (i)  obligations  (contingent  or
          otherwise)  of, or payments to, the Company or any of its Subsidiaries
          in  excess  of $50,000 (other than obligations of, or payments to, the
          Company  or  any  of  its  Subsidiaries  arising from purchase or sale
          agreements  entered  into in the ordinary course of business); or (ii)
          the  transfer  or  license  of  any patent, copyright, trade secret or
          other  proprietary  right  to  or  from  the  Company  or  any  of its
          Subsidiaries  (other  than  licenses arising from the purchase of "off
          the  shelf"  or  other  standard  products);  or  (iii)  provisions
          restricting  the  development,  manufacture  or  distribution  of  the
          Company's  or  any  of its Subsidiaries' products or services; or (iv)
          indemnification by the Company or any of its Subsidiaries with respect
          to infringements of proprietary rights.

               (b)  Since  December 31, 2004 (the "Balance Sheet Date"), neither
          the  Company nor any of its Subsidiaries has: (i) declared or paid any
          dividends, or authorized or made any distribution upon or with respect
          to  any  class  or  series  of  its  capital  stock; (ii) incurred any
          indebtedness  for  money borrowed or any other liabilities (other than
          ordinary  course obligations) individually in excess of $50,000 or, in
          the  case  of  indebtedness  and/or liabilities individually less than
          $50,000,  in excess of $100,000 in the aggregate; (iii) made any loans
          or  advances to any person or entity in excess, individually or in the
          aggregate, of $100,000, other than ordinary course advances for travel
          expenses;  or (iv) sold, exchanged or otherwise disposed of any of its
          assets or rights, other than the sale of its inventory in the ordinary
          course of business.

                                        6
<PAGE>

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

               (d)  The  Company  maintains  disclosure  controls and procedures
          ("Disclosure  Controls")  designed to ensure that information required
          to be disclosed by the Company in the reports that it files or submits
          under  the  Exchange  Act  is  recorded,  processed,  summarized,  and
          reported,  within the time periods specified in the rules and forms of
          the Securities and Exchange Commission ("SEC").

               (e)  The  Company  makes  and  keep books, records, and accounts,
          that,  in  reasonable  detail,  accurately  and  fairly  reflect  the
          transactions  and  dispositions  of  the Company's assets. The Company
          maintains  internal  control  over  financial  reporting  ("Financial
          Reporting  Controls")  designed  by,  or under the supervision of, the
          Company's  principal  executive  and principal financial officers, and
          effected  by  the  Company's board of directors, management, and other
          personnel,  to  provide reasonable assurance regarding the reliability
          of financial reporting and the preparation of financial statements for
          external  purposes  in  accordance  with generally accepted accounting
          principles ("GAAP"), including that:

          (i)  transactions are executed in accordance with management's general
     or specific authorization;

          (ii)  unauthorized  acquisition,  use, or disposition of the Company's
     assets  that  could  have a material effect on the financial statements are
     prevented or timely detected;

          (iii)  transactions are recorded as necessary to permit preparation of
     financial  statements  in  accordance  with  GAAP,  and  that the Company's
     receipts  and  expenditures  are  being  made  only  in  accordance  with
     authorizations of the Company's management and board of directors;

                                        7
<PAGE>

          (iv) transactions are recorded as necessary to maintain accountability
     for assets; and

          (v)  the  recorded  accountability  for  assets  is  compared with the
     existing  assets  at  reasonable intervals, and appropriate action is taken
     with respect to any differences.

               (f)  There  is  no  weakness  in  any of the Company's Disclosure
          Controls  or  Financial  Reporting  Controls  that  is  required to be
          disclosed in any of the Exchange Act Filings, except as so disclosed.

          4.7  Obligations  to  Related Parties. Except as set forth on Schedule
               --------------------------------
     4.7,  there are no obligations of the Company or any of its Subsidiaries to
     officers, directors, stockholders or employees of the Company or any of its
     Subsidiaries other than:

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

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

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

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

     Except  as  described  above  or  set  forth  on  Schedule 4.7, none of the
     officers,  directors  or,  to  the  best  of  the  Company's knowledge, key
     employees  or stockholders of the Company or any of its Subsidiaries or any
     members  of their immediate families, are indebted to the Company or any of
     its Subsidiaries, individually or in the aggregate, in excess of $50,000 or
     have  any  direct or indirect ownership interest in any firm or corporation
     with  which  the  Company  or any of its Subsidiaries is affiliated or with
     which  the  Company or any of its Subsidiaries has a business relationship,
     or  any  firm  or corporation which competes with the Company or any of its
     Subsidiaries,  other  than passive investments in publicly traded companies
     (representing less than one percent (1%) of such company) which may compete
     with  the Company or any of its Subsidiaries. Except as described above, no
     officer,  director,  stockholder of the Company or any of its Subsidiaries,
     or  any  member  of  their  immediate families, is, directly or indirectly,
     interested  in  any  material  contract  with  the  Company  or  any of its
     Subsidiaries and no agreements, understandings or proposed transactions are
     contemplated  between  the  Company or any of its Subsidiaries and any such
     person. Except as set forth on Schedule 4.7, neither the Company nor any of
     its  Subsidiaries  is  a guarantor or indemnitor of any indebtedness of any
     other person, firm or entity.

                                        8
<PAGE>

          4.8  Changes. Since the Balance Sheet Date, except as disclosed in any
               -------
     Exchange  Act  Filing or in any Schedule to this Agreement or to any of the
     Related Agreements, there has not been:

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

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

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

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

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

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

               (g)  any  material  change  in  any  compensation  arrangement or
          agreement  with  any  employee,  officer, director, stockholder of the
          Company or any of its Subsidiaries;

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

                                        9
<PAGE>

               (i) any labor organization activity related to the Company or any
          of its Subsidiaries;

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

               (k)  any sale, assignment or transfer of any patents, trademarks,
          copyrights,  trade  secrets  or  other  intangible assets owned by the
          Company or any of its Subsidiaries;

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

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

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

          4.9 Title to Properties and Assets; Liens, Etc. Except as set forth on
              ------------------------------------------
     Schedule 4.9, each of the Company and each of its Subsidiaries has good and
     marketable  title  to  its  properties  and  assets,  and good title to its
     leasehold  interests,  in  each  case subject to no mortgage, pledge, lien,
     lease, encumbrance or charge, other than:

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

               (b)  minor liens and encumbrances which do not materially detract
          from  the  value  of the property subject thereto or materially impair
          the  operations  of the Company or any of its Subsidiaries, so long as
          in  each  such case, such liens and encumbrances have no effect on the
          lien priority of the Purchaser in such property; and

               (c)  those  that  have otherwise arisen in the ordinary course of
          business,  so  long as they have no effect on the lien priority of the
          Purchaser in such property.

                                       10
<PAGE>

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

          4.10 Intellectual Property.
               ---------------------

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

               (b)  Neither the Company nor any of its Subsidiaries has received
          any  communications  alleging  that  the  Company  or  any  of  its
          Subsidiaries  has  violated  any  of  the patents, trademarks, service
          marks,  trade  names, copyrights or trade secrets or other proprietary
          rights of any other person or entity, nor is the Company or any of its
          Subsidiaries aware of any basis therefor.

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

          4.11 Compliance with Other Instruments. Neither the Company nor any of
               ---------------------------------
     its  Subsidiaries is in violation or default of (a) any term of its Charter
     or  Bylaws,  or (b) any provision of any indebtedness, mortgage, indenture,
     contract,  agreement  or  instrument to which it is party or by which it is
     bound  or  of  any  judgment,  decree,  order  or  writ, which violation or
     default,  in  the  case of this clause (b), has had, or could reasonably be
     expected  to  have,  either  individually  or  in the aggregate, a Material
     Adverse  Effect.  Subject  to  the  requirement that the Company obtain any
     consents  set  forth  on  Schedule  4.11,  the  Company's  or  any  of  its
     Subsidiary's  execution,  delivery  and  performance of and compliance with
     this  Agreement  and the Related Agreements to which it is a party, and the
     issuance  and  sale  of the Note by the Company and the other Securities by
     the Company each pursuant hereto and thereto, will not, with or without the
     passage of time or giving of notice, result in any such material violation,
     or  be  in  conflict  with  or  constitute a default under any such term or
     provision,  or  result  in  the  creation  of  any  mortgage, pledge, lien,
     encumbrance  or  charge upon any of the properties or assets of the Company
     or  any  of  its  Subsidiaries  or  the suspension, revocation, impairment,
     forfeiture  or nonrenewal of any permit, license, authorization or approval
     applicable  to the Company, its business or operations or any of its assets
     or properties.

                                       11
<PAGE>

          4.12 Litigation. Except as set forth on Schedule 4.12 hereto, there is
               ----------
     no  action,  suit, proceeding or investigation pending or, to the Company's
     knowledge,  currently  threatened  against  the  Company  or  any  of  its
     Subsidiaries  that  prevents  the  Company  or any of its Subsidiaries from
     entering  into  this  Agreement  or  the  other Related Agreements, or from
     consummating  the transactions contemplated hereby or thereby, or which has
     had, or could reasonably be expected to have, either individually or in the
     aggregate,  a  Material  Adverse Effect or any change in the current equity
     ownership  of  the  Company  or any of its Subsidiaries, nor is the Company
     aware  that  there is any basis to assert any of the foregoing. Neither the
     Company  nor  any  of  its  Subsidiaries  is  a  party to or subject to the
     provisions  of any order, writ, injunction, judgment or decree of any court
     or  government  agency  or  instrumentality.  There  is  no  action,  suit,
     proceeding  or  investigation  by  the  Company  or any of its Subsidiaries
     currently  pending  or which the Company or any of its Subsidiaries intends
     to initiate.

          4.13  Tax  Returns  and  Payments. Each of the Company and each of its
                ---------------------------
     Subsidiaries  has  timely  filed all tax returns (federal, state and local)
     required  to  be filed by it. All taxes shown to be due and payable on such
     returns,  any  assessments  imposed, and all other taxes due and payable by
     the  Company or any of its Subsidiaries on or before the Closing, have been
     paid  or  will  be paid prior to the time they become delinquent. Except as
     set forth on Schedule 4.13, neither the Company nor any of its Subsidiaries
     has been advised:

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

               (b)  of  any adjustment, deficiency, assessment or court decision
          in respect of its federal, state or other taxes.

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

          4.14  Employees.  Except  as  set  forth on Schedule 4.14, neither the
     Company  nor  any  of  its  Subsidiaries  has  any  collective  bargaining
     agreements  with  any  of its employees. There is no labor union organizing
     activity pending or, to the Company's knowledge, threatened with respect to
     the Company or any of its Subsidiaries. Except as disclosed in the Exchange
     Act  Filings  or  on  Schedule  4.14,  neither  the  Company nor any of its
     Subsidiaries  is  a party to or bound by any currently effective employment
     contract,  deferred  compensation  arrangement, bonus plan, incentive plan,

                                       12
<PAGE>

     profit  sharing  plan,  retirement agreement or other employee compensation
     plan  or  agreement. To the Company's knowledge, no employee of the Company
     or any of its Subsidiaries, nor any consultant with whom the Company or any
     of  its  Subsidiaries  has  contracted,  is in violation of any term of any
     employment  contract,  proprietary  information  agreement  or  any  other
     agreement  relating  to the right of any such individual to be employed by,
     or  to contract with, the Company or any of its Subsidiaries because of the
     nature  of  the  business  to  be  conducted  by  the Company or any of its
     Subsidiaries;  and  to  the Company's knowledge the continued employment by
     the  Company  and  its  Subsidiaries  of  their  present employees, and the
     performance  of  the  Company's  and  its  Subsidiaries' contracts with its
     independent contractors, will not result in any such violation. Neither the
     Company  nor  any of its Subsidiaries is aware that any of its employees is
     obligated  under any contract (including licenses, covenants or commitments
     of  any  nature)  or other agreement, or subject to any judgment, decree or
     order of any court or administrative agency that would interfere with their
     duties  to  the Company or any of its Subsidiaries. Neither the Company nor
     any  of  its  Subsidiaries  has  received any notice alleging that any such
     violation  has  occurred. Except for employees who have a current effective
     employment  agreement  with  the  Company  or  any  of its Subsidiaries, no
     employee  of  the  Company  or any of its Subsidiaries has been granted the
     right  to continued employment by the Company or any of its Subsidiaries or
     to  any  material compensation following termination of employment with the
     Company  or  any of its Subsidiaries. Except as set forth on Schedule 4.14,
     the  Company  is  not  aware  that  any  officer,  key employee or group of
     employees  intends  to  terminate  his,  her  or  their employment with the
     Company  or  any  of  its  Subsidiaries, nor does the Company or any of its
     Subsidiaries  have  a  present intention to terminate the employment of any
     officer, key employee or group of employees.

          4.15  Registration  Rights  and  Voting Rights. Except as set forth on
                ----------------------------------------
     Schedule  4.15 and except as disclosed in Exchange Act Filings, neither the
     Company  nor any of its Subsidiaries is presently under any obligation, and
     neither  the Company nor any of its Subsidiaries has granted any rights, to
     register  any  of  the Company's or its Subsidiaries' presently outstanding
     securities or any of its securities that may hereafter be issued. Except as
     set forth on Schedule 4.15 and except as disclosed in Exchange Act Filings,
     to  the  Company's  knowledge,  no stockholder of the Company or any of its
     Subsidiaries  has  entered into any agreement with respect to the voting of
     equity securities of the Company or any of its Subsidiaries.

          4.16 Compliance with Laws; Permits. Neither the Company nor any of its
               -----------------------------
     Subsidiaries  is in violation of any provision of the Sarbanes-Oxley Act of
     2002  or any SEC regulation or rule or any rule of the Principal Market (as
     hereafter  defined) promulgated thereunder or any applicable statute, rule,
     regulation,  order  or restriction of any domestic or foreign government or
     any  instrumentality  or  agency  thereof  in respect of the conduct of its
     business  or  the  ownership  of  its  properties  which  has had, or could
     reasonably  be expected to have, either individually or in the aggregate, a
     Material  Adverse  Effect.  No  governmental orders, permissions, consents,
     approvals  or  authorizations  are  required  to  be  obtained  and  no
     registrations  or  declarations are required to be filed in connection with
     the execution and delivery of this Agreement or any other Related Agreement
     and  the  issuance  of any of the Securities, except such as have been duly
     and  validly obtained or filed, or with respect to any filings that must be
     made  after  the  Closing, as will be filed in a timely manner. Each of the
     Company and its Subsidiaries has all material franchises, permits, licenses
     and  any similar authority necessary for the conduct of its business as now
     being  conducted  by it, the lack of which could, either individually or in
     the aggregate, reasonably be expected to have a Material Adverse Effect.

                                       13
<PAGE>

          4.17 Environmental and Safety Laws. Neither the Company nor any of its
               -----------------------------
     Subsidiaries  is  in violation of any applicable statute, law or regulation
     relating  to  the environment or occupational health and safety, and to its
     knowledge,  no  material  expenditures  are or will be required in order to
     comply  with  any  such  existing statute, law or regulation. Except as set
     forth  on Schedule 4.17, no Hazardous Materials (as defined below) are used
     or  have  been  used,  stored,  or disposed of by the Company or any of its
     Subsidiaries  or, to the Company's knowledge, by any other person or entity
     on  any  property  owned,  leased  or  used  by  the  Company or any of its
     Subsidiaries.  For  the  purposes  of  the  preceding  sentence, "Hazardous
     Materials" shall mean:

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

               (b) any petroleum products or nuclear materials.

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

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

                                       14
<PAGE>

          4.20  Insurance.  Each of the Company and each of its Subsidiaries has
                ---------
     general  commercial,  product liability, and will deliver to the Purchaser,
     within  thirty (30) days of the Closing Date, evidence of fire and casualty
     insurance policies, in each case, with coverages which the Company believes
     are  customary  for  companies  similarly  situated  to the Company and its
     Subsidiaries in the same or similar business.

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

          4.22  Listing.  The  Company's  Common  Stock  is listed or quoted, as
                -------
     applicable,  on a Principal Market (as hereafter defined) and satisfies and
     at  all times hereafter will satisfy, all requirements for the continuation
     of  such  listing or quotation, as applicable. The Company has not received
     any notice that its Common Stock will be delisted from, or no longer quoted
     on,  as  applicable, the Principal Market or that its Common Stock does not
     meet  all  requirements  for  such listing or quotation, as applicable. For
     purposes  hereof,  the  term "Principal Market" means the NASD OTC Bulletin
     Board,  NASDAQ  SmallCap  Market,  NASDAQ  National Market System, American
     Stock Exchange or New York Stock Exchange (whichever of the foregoing is at
     the time the principal trading exchange or market for the Common Stock).

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

          4.24 Stop Transfer. The Securities are restricted securities as of the
               -------------
     date  of  this  Agreement.  Neither the Company nor any of its Subsidiaries
     will  issue  any  stop  transfer order or other order impeding the sale and
     delivery  of  any  of  the  Securities  at  such time as the Securities are
     registered  for public sale or an exemption from registration is available,
     except as required by state and federal securities laws.

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

                                       15
<PAGE>

          4.26 Patriot Act. The Company certifies that, to the best of Company's
               -----------
     knowledge,  neither  the  Company  nor  any  of  its  Subsidiaries has been
     designated,  nor  is  or  shall  be  owned  or  controlled by, a "suspected
     terrorist"  as  defined  in  Executive  Order  13224.  The  Company  hereby
     acknowledges  that  the  Purchaser seeks to comply with all applicable laws
     concerning money laundering and related activities. In furtherance of those
     efforts,  the  Company  hereby represents, warrants and covenants that: (a)
     none  of  the  cash or property that the Company or any of its Subsidiaries
     will  pay  or will contribute to the Purchaser has been or shall be derived
     from,  or  related  to,  any  activity that is deemed criminal under United
     States law; and (b) no contribution or payment by the Company or any of its
     Subsidiaries  to  the  Purchaser,  to  the  extent that they are within the
     Company's  and/or its Subsidiaries' control shall cause the Purchaser to be
     in  violation  of  the  United  States  Bank Secrecy Act, the United States
     International  Money  Laundering  Control  Act of 1986 or the United States
     International  Money  Laundering Abatement and Anti-Terrorist Financing Act
     of  2001.  The  Company shall promptly notify the Purchaser if any of these
     representations,  warranties  or  covenants  ceases to be true and accurate
     regarding the Company or any of its Subsidiaries. The Company shall provide
     the  Purchaser  any and all additional information regarding the Company or
     any of its Subsidiaries that the Purchaser deems necessary or convenient to
     ensure  compliance with all applicable laws concerning money laundering and
     similar  activities. The Company understands and agrees that if at any time
     it  is  discovered that any of the foregoing representations, warranties or
     covenants  are  incorrect,  or  if  otherwise required by applicable law or
     regulation related to money laundering or similar activities, the Purchaser
     may  undertake appropriate actions to ensure compliance with applicable law
     or  regulation,  including but not limited to segregation and/or redemption
     of  the  Purchaser's  investment  in  the  Company.  The  Company  further
     understands  that  the Purchaser may release confidential information about
     the  Company  and  its  Subsidiaries  and,  if  applicable,  any underlying
     beneficial  owners,  to  proper  authorities  if the Purchaser, in its sole
     discretion, determines that it is in the best interests of the Purchaser in
     light  of  relevant  rules  and  regulations  under  the  laws set forth in
     subsection (b) above.

          4.27  ERISA. Based upon the Employee Retirement Income Security Act of
                -----
     1974  ("ERISA"),  and  the  regulations  and  published  interpretations
     thereunder: (a) neither the Company nor any of its Subsidiaries has engaged
     in  any  Prohibited  Transactions  (as  defined in Section 406 of ERISA and
     Section  4975  of  the  Internal  Revenue  Code  of  1986,  as amended (the
     "Code"));  (b) each of the Company and each of its Subsidiaries has met all
     applicable  minimum  funding  requirements  under  Section  302 of ERISA in
     respect  of  its plans; (c) neither the Company nor any of its Subsidiaries
     has  any knowledge of any event or occurrence which would cause the Pension
     Benefit  Guaranty  Corporation  to  institute proceedings under Title IV of
     ERISA  to  terminate  any employee benefit plan(s); (d) neither the Company
     nor  any  of  its  Subsidiaries  has  any  fiduciary  responsibility  for
     investments  with  respect  to any plan existing for the benefit of persons
     other  than  the  Company's or such Subsidiary's employees; and (e) neither
     the  Company  nor  any  of  its  Subsidiaries  has withdrawn, completely or
     partially,  from  any  multi-employer pension plan so as to incur liability
     under the Multiemployer Pension Plan Amendments Act of 1980.

                                       16
<PAGE>

     5.  Representations  and  Warranties of the Purchaser. The Purchaser hereby
         -------------------------------------------------
represents  and  warrants  to  the  Company as follows (such representations and
warranties  do  not  lessen or obviate the representations and warranties of the
Company set forth in this Agreement):

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

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

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

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

          5.3  Investment  Representations.  The  Purchaser understands that the
               ---------------------------
     Securities  are  being  offered  and  sold  pursuant  to  an exemption from
     registration  contained  in  the  Securities  Act  based  in  part upon the
     Purchaser's representations contained in this Agreement, including, without
     limitation,  that  the  Purchaser  is  an  "accredited investor" within the
     meaning  of  Regulation D under the Securities Act of 1933, as amended (the
     "Securities  Act").  The Purchaser confirms that it has received or has had
     full access to all the information it considers necessary or appropriate to
     make  an informed investment decision with respect to the Note, the Warrant
     and  the  Option  to  be  purchased by it under this Agreement and the Note
     Shares,  the  Warrant  Shares and the Option Shares acquired by it upon the
     conversion of the Note, the exercise of the Warrant and the exercise of the
     Option,  respectively.  The  Purchaser  further confirms that it has had an
     opportunity to ask questions and receive answers from the Company regarding
     the  Company's  and  its  Subsidiaries'  business, management and financial
     affairs  and  the  terms  and  conditions  of  the  Offering, the Note, the
     Warrant, the Option and the Securities and to obtain additional information
     (to  the  extent the Company possessed such information or could acquire it
     without unreasonable effort or expense) necessary to verify any information
     furnished to the Purchaser or to which the Purchaser had access.

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

                                       17
<PAGE>

          5.5  Acquisition for Own Account. The Purchaser is acquiring the Note,
               ---------------------------
     the Warrant, the Option, the Note Shares, the Warrant Shares and the Option
     Shares  for  the  Purchaser's own account for investment only, and not as a
     nominee  or  agent  and not with a view towards or for resale in connection
     with their distribution.

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

          5.7  Accredited  Investor.  The  Purchaser  represents  that  it is an
               --------------------
     accredited investor within the meaning of Regulation D under the Securities
     Act.

          5.8 Legends.
              -------

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

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

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

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

                                       18
<PAGE>

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

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

               (d) The Option shall bear substantially the following legend:

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

     6.  Covenants  of  the  Company.  The Company covenants and agrees with the
         ---------------------------
Purchaser as follows:

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

          6.2  Listing.  The  Company  shall  promptly  secure  the  listing  or
               -------
     quotation,  as  applicable,  of  the  shares  of Common Stock issuable upon
     conversion  of  the  Note,  upon  the  exercise of the Warrant and upon the

                                       19
<PAGE>

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

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

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

          6.5 Use  of  Funds. The Company shall use the proceeds of the sale of
              --------------
     the Note, the Warrant and the Option as set forth on Schedule 6.5.

          6.6  Access  to  Facilities.  Each  of  the  Company  and  each of its
               ----------------------
     Subsidiaries  will  permit  any representatives designated by the Purchaser
     (or  any  successor  of  the  Purchaser), upon reasonable notice and during
     normal  business  hours,  at  such  person's  expense  and accompanied by a
     representative  of  the  Company  or  any Subsidiary (provided that no such
     prior  notice  shall  be required to be given and no such representative of
     the  Company or any Subsidiary shall be required to accompany the Purchaser
     in the event the Purchaser believes such access is necessary to preserve or
     protect  the  Collateral  (as  defined in the Master Security Agreement) or
     following  the occurrence and during the continuance of an Event of Default
     (as defined in the Note)), to:

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

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

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

                                       20
<PAGE>

     Notwithstanding  the  foregoing,  neither  the  Company  nor  any  of  its
     Subsidiaries  will  provide  any  material,  non-public  information to the
     Purchaser  unless  the  Purchaser  signs  a  confidentiality  agreement and
     otherwise complies with Regulation FD, under the federal securities laws.

          6.7  Taxes.  Each  of  the  Company  and each of its Subsidiaries will
               -----
     promptly  pay  and  discharge, or cause to be paid and discharged, when due
     and  payable,  all  taxes,  assessments  and governmental charges or levies
     imposed  upon  the income, profits, property or business of the Company and
     its  Subsidiaries; provided, however, that any such tax, assessment, charge
     or  levy  need  not  be  paid  currently  if (a) the validity thereof shall
     currently  and  diligently  be  contested  in  good  faith  by  appropriate
     proceedings,  (b) such tax, assessment, charge or levy shall have no effect
     on the lien priority of the Purchaser in any property of the Company or any
     of  its  Subsidiaries  and  (c) if the Company and/or such Subsidiary shall
     have  set  aside  on  its  books  adequate reserves with respect thereto in
     accordance  with  GAAP;  and  provided,  further,  that the Company and its
     Subsidiaries  will  pay  all  such  taxes,  assessments,  charges or levies
     forthwith  upon the commencement of proceedings to foreclose any lien which
     may have attached as security therefor.

          6.8  Insurance. Each of the Company and its Subsidiaries will keep its
               ---------
     assets which are of an insurable character insured by financially sound and
     reputable  insurers  against  loss  or  damage by fire, explosion and other
     risks  customarily  insured  against  by  companies  in  similar  business
     similarly situated as the Company and its Subsidiaries; and the Company and
     its  Subsidiaries  will  maintain,  and  in the case of casualty insurance,
     within  thirty  (30)  days of the Closing Date, will procure and thereafter
     maintain,  in  each  case,  with  financially sound and reputable insurers,
     insurance  against  other  hazards  and  risks and liability to persons and
     property  to  the  extent  and  in  the manner which the Company reasonably
     believes  is customary for companies in similar business similarly situated
     as  the  Company  and  its  Subsidiaries  and  to  the  extent available on
     commercially  reasonable  terms. The Company, and each of its Subsidiaries,
     will  jointly and severally bear the full risk of loss from any loss of any
     nature  whatsoever  with  respect to the assets pledged to the Purchaser as
     security  for  their respective obligations hereunder and under the Related
     Agreements.  At  the  Company's  and  each  of  its Subsidiaries' joint and
     several cost and expense in amounts and with carriers reasonably acceptable
     to  the  Purchaser,  each of the Company and each of its Subsidiaries shall
     (a)  keep  all  its  insurable properties and properties in which it has an
     interest  insured  against  the  hazards of fire, flood, sprinkler leakage,
     those  hazards  covered  by  extended  coverage  insurance  and  such other
     hazards,  and  for  such  amounts, as is customary in the case of companies
     engaged  in  businesses  similar  to  the  Company's  or  the  respective
     Subsidiary's  including  business  interruption  insurance;  (b) maintain a
     bond,  in  such amounts as is customary in the case of companies engaged in
     businesses  similar  to  the  Company's  or  the  respective  Subsidiary's,
     insuring  against  larceny, embezzlement or other criminal misappropriation
     of  insured's  officers and employees who may either singly or jointly with
     others at any time have access to the assets or funds of the Company or any
     of  its  Subsidiaries  either directly or through governmental authority to
     draw upon such funds or to direct generally the disposition of such assets;
     (c)  maintain  public  and  product  liability insurance against claims for
     personal  injury, death or property damage suffered by others; (d) maintain
     all  such  worker's  compensation  or  similar insurance as may be required
     under  the  laws  of  any state or jurisdiction in which the Company or the
     respective Subsidiary is engaged in business; and (e) furnish the Purchaser
     with  (i)  copies  of  all policies and evidence of the maintenance of such
     policies  at  least  thirty  (30)  days  before  any  expiration date, (ii)

                                       21
<PAGE>

     excepting  the Company's workers' compensation policy, endorsements to such
     policies  naming  the Purchaser as "co-insured" or "additional insured" and
     appropriate loss payable endorsements in form and substance satisfactory to
     the  Purchaser, naming the Purchaser as loss payee, and (iii) evidence that
     as  to  the  Purchaser  the  insurance  coverage  shall  not be impaired or
     invalidated  by any act or neglect of the Company or any Subsidiary and the
     insurer  will  provide  the Purchaser with at least thirty (30) days notice
     prior  to  cancellation. The Company and each Subsidiary shall instruct the
     insurance  carriers  that in the event of any loss thereunder, the carriers
     shall  make  payment for such loss to the Company and/or the Subsidiary and
     the  Purchaser jointly. In the event that as of the date of receipt of each
     loss  recovery  upon  any such insurance, the Purchaser has not declared an
     event  of  default  with  respect  to  this Agreement or any of the Related
     Agreements,  then  the Company and/or such Subsidiary shall be permitted to
     direct  the application of such loss recovery proceeds toward investment in
     property,  plant  and equipment that would comprise "Collateral" secured by
     the  Purchaser's  security  interest  pursuant  to  the  Master  Security
     Agreement,  any  Related  Agreement and/or such other security agreement as
     shall  be  required  by the Purchaser, with any surplus funds to be applied
     toward  payment  of the obligations of the Company to the Purchaser. In the
     event  that  the  Purchaser  has properly declared an event of default with
     respect  to  this Agreement or any of the Related Agreements, then all loss
     recoveries received by the Purchaser upon any such insurance thereafter may
     be  applied  to  the  obligations  of  the  Company hereunder and under the
     Related  Agreements,  in  such  order  as  the Purchaser may determine. Any
     surplus  (following  satisfaction  of  all  Company  obligations  to  the
     Purchaser)  shall be paid by the Purchaser to the Company or applied as may
     be  otherwise  required by law. Any deficiency thereon shall be paid by the
     Company or the Subsidiary, as applicable, to the Purchaser, on demand.

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

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

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

                                       22
<PAGE>

          6.12  Required  Approvals. For so long as twenty-five percent (25%) of
                -------------------
     the  principal  amount of the Note is outstanding, the Company, without the
     prior written consent of the Purchaser, shall not, and shall not permit any
     of its Subsidiaries to:

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

               (b)  liquidate,  dissolve or effect a material reorganization (it
          being  understood  that  in  no  event shall the Company or any of its
          Subsidiaries  dissolve,  liquidate  or  merge with any other person or
          entity  (unless,  in the case of such a merger, the Company or, in the
          case  of  merger  not  involving  the  Company,  such  Subsidiary,  as
          applicable, is the surviving entity);

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

               (d)  materially  alter or change the scope of the business of the
          Company and its Subsidiaries taken as a whole;

               (e) (i) create, incur, assume or suffer to exist any indebtedness
          (exclusive  of trade debt and debt incurred to finance the purchase of
          equipment (not in excess of five percent (5%) of the fair market value
          of  the  Company's  and  its Subsidiaries' assets)) whether secured or
          unsecured  other  than  (x)  the  Company's  obligations  owed  to the
          Purchaser,  (y)  indebtedness  set  forth on Schedule 6.12(e) attached
          hereto  and  made  a  part hereof and any refinancings or replacements
          thereof  on  terms  no  less  favorable  to  the  Purchaser  than  the
          indebtedness  being  refinanced  or replaced, and (z) any indebtedness
          incurred  in  connection  with  the  purchase  of  assets  (other than
          equipment)  in the ordinary course of business, or any refinancings or
          replacements  thereof on terms no less favorable to the Purchaser than
          the  indebtedness  being  refinanced  or replaced, so long as any lien

                                       23
<PAGE>

          relating thereto shall only encumber the fixed assets so purchased and
          no other assets of the Company or any of its Subsidiaries; (ii) cancel
          any  indebtedness  owing  to  it in excess of $50,000 in the aggregate
          during  any  12  month  period;  (iii)  assume,  guarantee, endorse or
          otherwise  become  directly  or contingently liable in connection with
          any  obligations of any other person or entity, except the endorsement
          of negotiable instruments by the Company or any Subsidiary thereof for
          deposit  or  collection or similar transactions in the ordinary course
          of  business  or  guarantees of indebtedness otherwise permitted to be
          outstanding pursuant to this clause (e);

               (f) create or acquire any Subsidiary after the date hereof unless
          (i)  such  Subsidiary  is a wholly-owned Subsidiary of the Company and
          (ii) such Subsidiary becomes a party to the Master Security Agreement,
          the  Stock  Pledge  Agreement  and  the Subsidiary Guaranty (either by
          executing  a counterpart thereof or an assumption or joinder agreement
          in  respect  thereof)  and,  to  the extent required by the Purchaser,
          satisfies  each condition of this Agreement and the Related Agreements
          as if such Subsidiary were a Subsidiary on the Closing Date; and

               (g) transfer or assign in any manner whatsoever any of its assets
          to  any  person or entity, including without limitation any subsidiary
          created after the date hereof.

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

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

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

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

          6.14  Opinion.  On  the  Closing Date, the Company will deliver to the
                -------
     Purchaser  an  opinion  acceptable  to  the  Purchaser  from  the Company's
     external legal counsel. The Company will provide, at the Company's expense,
     such  other legal opinions in the future as are deemed reasonably necessary
     by  the  Purchaser (and acceptable to the Purchaser) in connection with the
     conversion of the Note and exercise of the Warrant or Option.

                                       24
<PAGE>

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

          6.16 Financing Right of First Refusal.
               --------------------------------

               (a)  The  Company hereby grants to the Purchaser a right of first
          refusal  to  provide any Additional Financing (as defined below) to be
          issued  by  the Company and/or any of its Subsidiaries, subject to the
          following  terms and conditions. From and after the date hereof, prior
          to  the  incurrence  of any additional indebtedness and/or the sale or
          issuance  of  any  equity  interests  of  the  Company  or  any of its
          Subsidiaries  (an  "Additional  Financing"),  the  Company  and/or any
          Subsidiary  of  the  Company,  as  the  case  may be, shall notify the
          Purchaser of its intention to enter into such Additional Financing. In
          connection  therewith,  the  Company  and/or the applicable Subsidiary
          thereof  shall  submit  a  fully executed term sheet (a "Proposed Term
          Sheet")  to  the  Purchaser  setting  forth  the terms, conditions and
          pricing  of  any  such  Additional  Financing  (such  financing  to be
          negotiated  on  "arm's  length"  terms  and  the  terms  thereof to be
          negotiated  in  good faith) proposed to be entered into by the Company
          and/or  such  Subsidiary.  The Purchaser shall have the right, but not
          the obligation, to deliver its own proposed term sheet (the "Purchaser
          Term  Sheet")  setting  forth  the terms and conditions upon which the
          Purchaser would be willing to provide such Additional Financing to the
          Company and/or such Subsidiary. The Purchaser Term Sheet shall contain
          terms  no  less  favorable  to the Company and/or such Subsidiary than
          those  outlined  in  Proposed  Term Sheet. The Purchaser shall deliver
          such  Purchaser Term Sheet within ten business days of receipt of each
          such  Proposed  Term  Sheet.  If  the provisions of the Purchaser Term
          Sheet are at least as favorable to the Company and/or such Subsidiary,
          as  the case may be, as the provisions of the Proposed Term Sheet, the
          Company  and/or  such  Subsidiary  shall enter into and consummate the
          Additional Financing transaction outlined in the Purchaser Term Sheet.

                                       25
<PAGE>

               (b)  The  Company  will not, and will not permit its Subsidiaries
          to,  agree, directly or indirectly, to any restriction with any person
          or  entity  which limits the ability of the Purchaser to consummate an
          Additional Financing with the Company or any of its Subsidiaries.

          6.17  Additional  Investment. The Company agrees and acknowledges that
                ----------------------
     the Purchaser shall have the right (at its sole option), on or prior to the
     date  which  is 270 days following the Closing Date, to issue an additional
     note  to  the Company in an aggregate principal amount of up to $15,000,000
     but  not  less than $1,000,000 on the same terms and conditions (including,
     without  limitation, the same interest rate, the Fixed Conversion Price (as
     defined in the Note) then in effect, proportionate warrant coverage (at the
     same  exercise  prices),  a  proportionate amortization schedule, etc.) set
     forth  in,  and  pursuant  to  substantially similar documentation as, this
     Agreement and the Related Agreements. The Purchaser agrees and acknowledges
     that  no  new  warrants  or  options  must be granted by the Company to the
     Purchaser in connection with such additional investment.

          6.18 Authorization and Reservation of Shares. The Company shall at all
               ---------------------------------------
     times  have authorized and reserved a sufficient number of shares of Common
     Stock  to  provide  for  the  conversion  of  the Note, the exercise of the
     Warrant and the exercise of the Option.

          6.19  DWAC  System. At all times following the date that is forty-five
                ------------
     days after the Closing Date, the Company shall not utilize any system other
     than the DWAC system for the transfer of Securities to Laurus.

     7.  Covenants of the Purchaser. The Purchaser covenants and agrees with the
Company as follows:

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

          7.2 Non-Public Information. The Purchaser will not effect any sales in
              ----------------------
     the  shares  of the Company's Common Stock while in possession of material,
     non-public  information  regarding  the Company if such sales would violate
     applicable securities law.

          7.3  Limitation  on  Acquisition  of  Common  Stock  of  the  Company.
               ----------------------------------------------------------------
     Notwithstanding  anything  to the contrary contained in this Agreement, any
     Related  Agreement or any document, instrument or agreement entered into in
     connection  with  any  other  transactions  between  the  Purchaser and the
     Company,  the  Purchaser  may  not acquire stock in the Company (including,
     without  limitation,  pursuant  to a contract to purchase, by exercising an
     option  or  warrant,  by  converting  any  other security or instrument, by
     acquiring  or  exercising  any  other  right to acquire, shares of stock or
     other  security  convertible  into  shares  of  stock  in  the  Company, or
     otherwise,  and  such  contracts,  options,  warrants,  conversion or other
     rights  shall  not  be enforceable or exercisable) to the extent such stock
     acquisition  would  cause  any  interest  (including  any  original  issue
     discount)  payable  by  the  Company  to  the  Purchaser  not to qualify as

                                       26
<PAGE>

     "portfolio  interest"  within the meaning of Section 881(c)(2) of the Code,
     by  reason  of  Section  881(c)(3)  of  the  Code,  taking into account the
     constructive  ownership  rules  under Section 871(h)(3)(C) of the Code (the
     "Stock  Acquisition  Limitation").  The  Stock Acquisition Limitation shall
     automatically  become  null and void without any notice to the Company upon
     the  earlier to occur of either (a) the Company's delivery to the Purchaser
     of  a Notice of Redemption (as defined in the Note) or (b) the existence of
     an  Event  of  Default  (as defined in the Note) at a time when the average
     closing  price of the Company's common stock as reported by Bloomberg, L.P.
     on  the Principal Market for the immediately preceding five trading days is
     greater  than or equal to 150% of the Fixed Conversion Price (as defined in
     the Note).

     8. Covenants of the Company and the Purchaser Regarding Indemnification.
        --------------------------------------------------------------------

          8.1  Company  Indemnification.  The  Company agrees to indemnify, hold
               ------------------------
     harmless,  reimburse  and  defend  the  Purchaser,  each of the Purchaser's
     officers,  directors,  agents,  affiliates,  control persons, and principal
     shareholders,  against  any  and  all claims, costs, expenses, liabilities,
     obligations,  losses  or  damages  (including reasonable legal fees) of any
     nature,  incurred  by or imposed upon the Purchaser which result, arise out
     of  or  are  based upon: (a) any misrepresentation by the Company or any of
     its  Subsidiaries  or  breach  of any warranty by the Company or any of its
     Subsidiaries  in  this  Agreement,  any  other  Related Agreement or in any
     exhibits or schedules attached hereto or thereto; (b) any breach or default
     HLHannah  Loev1184293445Will  failure to become effective with registration
     statement by certain time constitute material default?in performance by the
     Company  or  any  of  its Subsidiaries of any covenant or undertaking to be
     performed  by  the  Company or any of its Subsidiaries hereunder, under any
     other  Related Agreement or any other agreement entered into by the Company
     and/or any of its Subsidiaries and the Purchaser relating hereto or thereto
     or  (c)  (i)  the  violation  of  any  local, state or federal law, rule or
     regulation pertaining to environmental regulation, contamination or cleanup
     (collectively,  "Environmental  Laws"),  including  without limitation, the
     Comprehensive  Environmental  Response,  Compensation  and Liability Act of
     1980  (42  U.S.C.  9601  et  seq.  and  40 CFR 302.1 et seq.), the Resource
     Conservation and Recovery Act of 1976 (42 U.S.C. 6901 et seq.), the Federal
     Water  Pollution  Control  Act (33 U.S.C. 1251 et seq., and 40 CFR 116.1 et
     seq.),  the Hazardous Materials Transportation Act (49 U.S.C. 1801 et seq.)
     and  the  regulations promulgated pursuant to said laws, all as amended and
     relating  to  or  affecting  the  Company  and/or  any  Subsidiary  and the
     Company's  and/or  any Subsidiary's properties, whether or not caused by or
     within  the  control  of the Purchaser and/or (ii) the presence, release or
     threat  of  release  of any hazardous, toxic or harmful substances, wastes,
     materials,  pollutants  or  contaminants  (including,  without  limitation,
     asbestos,  polychlorinated  biphenyls,  petroleum  products,  flammable
     explosives,  radioactive  materials, infectious substances or raw materials
     which  include  hazardous  constituents)  or  any  other  substances or raw
     materials  which  are included under or regulated by Environmental Laws on,
     in,  under  or  affecting all or any portion of any property of the Company
     and/or  any  Subsidiary  or any surrounding areas, regardless of whether or
     not caused by or within the control of the Purchaser.

          8.2  Purchaser's  Indemnification.  The Purchaser agrees to indemnify,
               ----------------------------
     hold  harmless,  reimburse and defend the Company and each of the Company's
     officers,  directors,  agents,  affiliates,  control  persons and principal
     shareholders,  at  all  times  against  any  claims,  costs,  expenses,
     liabilities,  obligations,  losses  or  damages (including reasonable legal
     fees)  of any nature, incurred by or imposed upon the Company which result,
     arise  out of or are based upon: (a) any misrepresentation by the Purchaser
     or  breach  of  any  warranty  by the Purchaser in this Agreement or in any
     exhibits  or schedules attached hereto or any Related Agreement; or (b) any
     breach  or  default  in  performance  by  the  Purchaser of any covenant or
     undertaking  to  be  performed  by  the  Purchaser  hereunder, or any other
     agreement entered into by the Company and the Purchaser relating hereto.

                                       27
<PAGE>

     9. Conversion of Convertible Note.
        ------------------------------

          9.1 Mechanics of Conversion.
              -----------------------

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

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

                                       28
<PAGE>

          counsel  within three (3) business days of the date of the delivery to
          the  Company  of the Notice of Conversion and shall cause the transfer
          agent  to transmit the certificates representing the Conversion Shares
          to the Holder by crediting the account of the Purchaser's prime broker
          with  the  Depository  Trust  Company  ("DTC") through its DWAC system
          within  three  (3)  business  days after receipt by the Company of the
          Notice of Conversion (the "Delivery Date").

               (c)  The  Company understands that a delay in the delivery of the
          Note  Shares  in the form required pursuant to Section 9 hereof beyond
          the  Delivery  Date could result in economic loss to the Purchaser. In
          the  event  that  the  Company  fails  to direct its transfer agent to
          deliver  the  Note  Shares to the Purchaser via the DWAC system within
          the  time  frame set forth in Section 9.1(b) above and the Note Shares
          are  not  delivered  to  the  Purchaser  by  the  Delivery  Date,  as
          compensation to the Purchaser for such loss, the Company agrees to pay
          late payments to the Purchaser for late issuance of the Note Shares in
          the  form required pursuant to Section 9 hereof upon conversion of the
          Note  in  the amount equal to $200 per business day after the Delivery
          Date.  The  Company shall pay any payments incurred under this Section
          in  immediately available funds upon demand and, in the case of actual
          damages, accompanied by reasonable documentation of the amount of such
          damages.  Such documentation shall show the number of shares of Common
          Stock  the  Purchaser  is  forced  to  purchase  (in  an  open  market
          transaction)  which  the  Purchaser  anticipated  receiving  upon such
          conversion,  and  shall  be  calculated as the amount by which (A) the
          Purchaser's  total  purchase  price  (including  customary  brokerage
          commissions,  if  any)  for  the  shares  of Common Stock so purchased
          exceeds  (B)  the  aggregate  principal  and/or interest amount of the
          Note, for which such Conversion Notice was not timely honored.

     10. Registration Rights.
         -------------------

          10.1  Registration  Rights  Granted.  The  Company  hereby  grants
                -----------------------------
     registration  rights  to  the Purchaser pursuant to the Registration Rights
     Agreement.

          10.2  Offering Restrictions. Except as previously disclosed in the SEC
                ---------------------
     Reports  or  in the Exchange Act Filings, or stock or stock options granted
     to  employees  or  directors  of  the Company (these exceptions hereinafter
     referred  to  as  the "Excepted Issuances"), neither the Company nor any of
     its  Subsidiaries  will,  prior  to the full repayment or conversion of the
     Note  (together  with  all  accrued  and  unpaid  interest and fees related
     thereto),  (a)  enter  into  any equity line of credit agreement or similar
     agreement  or  (b)  issue,  or  enter  into  any  agreement  to  issue, any
     securities with a variable/floating conversion and/or pricing feature which
     are  or  could  be  (by conversion or registration) free-trading securities
     (i.e. common stock subject to a registration statement).

                                       29
<PAGE>

     11. Miscellaneous.
         -------------

          11.1 Governing Law, Jurisdiction and Waiver of Jury Trial.
               ----------------------------------------------------

               (a)  THIS  AGREEMENT  AND  THE  OTHER RELATED AGREEMENTS SHALL BE
          GOVERNED  BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
          THE  STATE  OF  NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
          SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

               (b)  THE  COMPANY  HEREBY  CONSENTS  AND AGREES THAT THE STATE OR
          FEDERAL  COURTS  LOCATED  IN THE COUNTY OF NEW YORK, STATE OF NEW YORK
          SHALL  HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
          DISPUTES  BETWEEN  THE COMPANY, ON THE ONE HAND, AND THE PURCHASER, ON
          THE  OTHER  HAND,  PERTAINING  TO THIS AGREEMENT OR ANY OF THE RELATED
          AGREEMENTS  OR  TO  ANY  MATTER  ARISING  OUT  OF  OR  RELATED TO THIS
          AGREEMENT  OR  ANY OF THE OTHER RELATED AGREEMENTS; PROVIDED, THAT THE
          PURCHASER  AND  THE  COMPANY  ACKNOWLEDGE  THAT ANY APPEALS FROM THOSE
          COURTS  MAY  HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY
          OF  NEW YORK, STATE OF NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN
          THIS  AGREEMENT  SHALL  BE DEEMED OR OPERATE TO PRECLUDE THE PURCHASER
          FROM  BRINGING  SUIT  OR  TAKING  OTHER  LEGAL  ACTION  IN  ANY  OTHER
          JURISDICTION  TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL
          (AS  DEFINED  IN  THE MASTER SECURITY AGREEMENT) OR ANY OTHER SECURITY
          FOR  THE OBLIGATIONS (AS DEFINED IN THE MASTER SECURITY AGREEMENT), OR
          TO  ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE PURCHASER.

                                       30
<PAGE>

          THE  COMPANY  EXPRESSLY  SUBMITS  AND  CONSENTS  IN  ADVANCE  TO  SUCH
          JURISDICTION  IN  ANY  ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
          THE  COMPANY  HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON
          LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS.
          THE  COMPANY  HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT
          AND  OTHER  PROCESS  ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
          SERVICE  OF  SUCH  SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
          REGISTERED  OR  CERTIFIED MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS
          SET  FORTH  IN  SECTION  11.9 AND THAT SERVICE SO MADE SHALL BE DEEMED
          COMPLETED  UPON THE EARLIER OF THE COMPANY'S ACTUAL RECEIPT THEREOF OR
          THREE  (3)  DAYS  AFTER  DEPOSIT  IN  THE  U.S.  MAILS, PROPER POSTAGE
          PREPAID.

               (c) THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
          APPLYING  SUCH  APPLICABLE  LAWS.  THEREFORE,  TO  ACHIEVE  THE  BEST
          COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION,
          THE  PARTIES  HERETO  WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
          SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN
          CONTRACT,  TORT, OR OTHERWISE BETWEEN THE PURCHASER AND/OR THE COMPANY
          ARISING  OUT  OF,  CONNECTED  WITH,  RELATED  OR  INCIDENTAL  TO  THE
          RELATIONSHIP  ESTABLISHED  BETWEEN  THEM  IN  CONNECTION  WITH  THIS
          AGREEMENT,  ANY  OTHER  RELATED  AGREEMENT OR THE TRANSACTIONS RELATED
          HERETO OR THERETO.

          11.2  Severability. Wherever possible each provision of this Agreement
                ------------
     and  the  Related  Agreements  shall be interpreted in such manner as to be
     effective  and  valid  under  applicable  law, but if any provision of this
     Agreement  or  any  Related  Agreement shall be prohibited by or invalid or
     illegal  under  applicable  law  such provision shall be ineffective to the
     extent  of  such  prohibition  or  invalidity  or  illegality,  without
     invalidating  the  remainder  of such provision or the remaining provisions
     thereof which shall not in any way be affected or impaired thereby.

          11.3  Survival.  The  representations,  warranties,  covenants  and
                --------
     agreements  made  herein  shall  survive  any  investigation  made  by  the
     Purchaser  and  the  closing of the transactions contemplated hereby to the
     extent  provided therein. All statements as to factual matters contained in
     any  certificate  or  other  instrument  delivered  by  or on behalf of the
     Company  pursuant  hereto  in connection with the transactions contemplated
     hereby  shall be deemed to be representations and warranties by the Company
     hereunder  solely  as  of  the  date of such certificate or instrument. All
     indemnities  set  forth  herein  shall  survive the execution, delivery and
     termination  of this Agreement and the Note and the making and repayment of
     the  obligations  arising  hereunder,  under  the  Note and under the other
     Related Agreements.

                                       31
<PAGE>

          11.4  Successors.  Except  as otherwise expressly provided herein, the
                ----------
     provisions  hereof  shall inure to the benefit of, and be binding upon, the
     successors,  heirs,  executors and administrators of the parties hereto and
     shall  inure  to the benefit of and be enforceable by each person or entity
     which shall be a holder of the Securities from time to time, other than the
     holders  of  Common  Stock which has been sold by the Purchaser pursuant to
     Rule  144  or  an  effective  registration statement. The Purchaser may not
     assign  its rights hereunder or under any Related Agreement to a competitor
     of  the  Company  unless  an  Event of Default (as defined in the Note) has
     occurred and is continuing.

          11.5  Entire  Agreement; Maximum Interest. This Agreement, the Related
                -----------------------------------
     Agreements,  the  exhibits  and  schedules hereto and thereto and the other
     documents  delivered  pursuant  hereto  constitute  the  full  and  entire
     understanding and agreement between the parties with regard to the subjects
     hereof  and no party shall be liable or bound to any other in any manner by
     any  representations,  warranties,  covenants  and  agreements  except  as
     specifically  set  forth  herein  and  therein.  Nothing  contained in this
     Agreement,  any  Related Agreement or in any document referred to herein or
     delivered  in  connection  herewith shall be deemed to establish or require
     the payment of a rate of interest or other charges in excess of the maximum
     rate permitted by applicable law. In the event that the rate of interest or
     dividends required to be paid or other charges hereunder exceed the maximum
     rate permitted by such law, any payments in excess of such maximum shall be
     credited  against  amounts  owed  by  the Company to the Purchaser and thus
     refunded to the Company.

          11.6 Amendment and Waiver.
               --------------------

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

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

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

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

                                       32
<PAGE>

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

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

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

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

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

     All communications shall be sent as follows:

      If to the Company, to:   New Century Energy Corp.
                               5851 San Felipe, Suite 775
                               Houston, TX 77057
                               Attention: Chief Financial Officer
                               Facsimile: 713-255-4358

                               with  a  copy  to:

                               David M. Loev, Esq.
                               2777 Allen Parkway
                               Suite 1000
                               Houston,  Texas  77019
                               Facsimile:  713-524-4122

      If to the Purchaser, to: Laurus Master Fund, Ltd.
                               c/o M&C Corporate Services Limited
                               P.O.  Box  309  GT
                               Ugland  House
                               George  Town
                               South  Church  Street
                               Grand  Cayman,  Cayman  Islands
                               Facsimile:  345-949-8080

                                       33
<PAGE>

                               with  a  copy  to:

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

                               with  a  copy  to:

                               Loeb & Loeb LLP
                               345 Park  Avenue
                               New  York,  NY  10154
                               Attention: Scott J. Giordano, Esq.
                               Facsimile:  212-407-4990

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

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

          11.10 Titles and Subtitles. The titles of the sections and subsections
                --------------------
     of  this  Agreement are for convenience of reference only and are not to be
     considered in construing this Agreement.

          11.11  Facsimile  Signatures;  Counterparts.  This  Agreement  may  be
                 ------------------------------------
     executed by facsimile signatures and in any number of counterparts, each of
     which  shall be an original, but all of which together shall constitute one
     agreement.

          11.12  Broker's  Fees.  Except  as set forth on Schedule 11.12 hereof,
                 --------------
     each party hereto represents and warrants that no agent, broker, investment
     banker,  person  or firm acting on behalf of or under the authority of such
     party  hereto is or will be entitled to any broker's or finder's fee or any
     other commission directly or indirectly in connection with the transactions
     contemplated  herein.  Each  party  hereto further agrees to indemnify each
     other party for any claims, losses or expenses incurred by such other party
     as a result of the representation in this Section 11.13 being untrue.

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

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                       34
<PAGE>

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

COMPANY:                        PURCHASER:

NEW  CENTURY  ENERGY  CORP.     LAURUS  MASTER  FUND,  LTD.

By: /s/ Edward R. DeStefano     By: /s/ Eugene Grin
   -----------------------         ------------------------
Name: Edward R. DeStefano       Name: Eugene Grin
     -----------------------         ------------------------
Title: President                Title: Director
      -----------------------         ------------------------

                                       35
<PAGE>EXHIBIT 10.2

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

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

     FOR  VALUE  RECEIVED, NEW CENTURY ENERGY CORP., a Colorado corporation (the
"COMPANY"),  promises  to  pay  to  LAURUS  MASTER FUND, LTD., c/o M&C Corporate
Services  Limited,  P.O.  Box  309 GT, Ugland House, South Church Street, George
Town,  Grand  Cayman,  Cayman  Islands,  Fax: 345-949-8080 (the "HOLDER") or its
registered assigns or successors in interest, the sum of Fifteen Million Dollars
($15,000,000), together with any accrued and unpaid interest hereon, on June 30,
2008  (the  "MATURITY  DATE")  if  not  sooner  paid.

     Capitalized  terms  used  herein without definition shall have the meanings
ascribed to such terms in that certain Securities Purchase Agreement dated as of
the  date hereof by and between the Company and the Holder (as amended, modified
and/or  supplemented  from  time  to  time,  the  "PURCHASE  AGREEMENT").
     The following terms shall apply to this Secured Convertible Term Note (this
"NOTE"):

                                    ARTICLE I
                         CONTRACT RATE AND AMORTIZATION

     1.1     Contract  Rate.  Subject to Sections 4.2 and 5.10, interest payable
             --------------
on  the outstanding principal amount of this Note (the "PRINCIPAL AMOUNT") shall
accrue  at  a  rate  per  annum  equal to the "prime rate" published in The Wall
                                                                        --------
Street  Journal from time to time (the "PRIME RATE"), plus two percent (2%) (the
---------------
"CONTRACT RATE").  The Contract Rate shall be increased or decreased as the case
may  be  for  each  increase or decrease in the Prime Rate in an amount equal to
such  increase  or decrease in the Prime Rate; each change to be effective as of
the  day  of the change in the Prime Rate.  Subject to Section 1.2, the Contract
Rate  shall  not at any time be less than seven percent (7%).  Interest shall be
(i)  calculated  on  the  basis  of a 360 day year, and (ii) payable monthly, in
arrears,  commencing  on  September  1,  2005, on the first business day of each
consecutive  calendar  month thereafter through and including the Maturity Date,
and  on  the  Maturity  Date,  whether  by  acceleration  or  otherwise.

     1.2     Contract Rate Adjustments and Payments.  The Contract Rate shall be
             --------------------------------------
calculated on the last business day of each calendar month hereafter (other than
for  increases  or  decreases  in  the  Prime Rate which shall be calculated and
become effective in accordance with the terms of Section 1.1) until the Maturity
Date  (each  a  "DETERMINATION  DATE") and shall be subject to adjustment as set
forth herein.  If (i) the Company shall have registered the shares of the Common
Stock  underlying the conversion of this Note and each Warrant on a registration
statement  declared  effective  by  the  Securities and Exchange Commission (the
"SEC"),  and  (ii)  the market price (the "MARKET PRICE") of the Common Stock as
reported  by  Bloomberg,  L.P.  on the Principal Market for the five (5) trading
days  immediately  preceding  a  Determination  Date exceeds the then applicable
Fixed  Conversion Price by at least twenty-five percent (25%), the Contract Rate
for  the  succeeding  calendar month shall automatically be reduced by 100 basis
points  (100  b.p.) (1%) for each incremental twenty-five percent (25%) increase
in  the  Market  Price  of  the  Common  Stock  above  the then applicable Fixed
Conversion  Price.  Notwithstanding  the foregoing (and anything to the contrary
contained  herein), in no event shall the Contract Rate at any time be less than
zero  percent  (0%).

<PAGE>

     1.3     Principal  Payments. Amortizing payments of the aggregate principal
             -------------------
amount outstanding under this Note at any time (the "PRINCIPAL AMOUNT") shall be
made  by  the  Company  on January 1, 2006 and on the first business day of each
succeeding  month  thereafter  through and including the Maturity Date (each, an
"AMORTIZATION  DATE").  Subject  to  Article  III below, commencing on the first
Amortization Date, the Company shall make monthly payments to the Holder on each
Repayment  Date,  each  such payment in the amount of $250,000 together with any
accrued and unpaid interest on such portion of the Principal Amount plus any and
all  other  unpaid  amounts  which  are then owing under this Note, the Purchase
Agreement  and/or  any  other  Related  Agreement  (collectively,  the  "MONTHLY
AMOUNT").  Any outstanding Principal Amount together with any accrued and unpaid
interest  and  any  and  all  other  unpaid  amounts which are then owing by the
Company  to  the Holder under this Note, the Purchase Agreement and/or any other
Related  Agreement  shall  be  due  and  payable  on  the  Maturity  Date.

                                   ARTICLE II
                            CONVERSION AND REDEMPTION

     2.1     Payment  of  Monthly  Amount.
             -----------------------------

          (a)     Payment in Cash or Common Stock.  If  the Monthly Amount (or a
                  -------------------------------
portion of such Monthly Amount if not all of the Monthly Amount may be converted
into  shares  of Common Stock pursuant to Section 3.2) is required to be paid in
cash pursuant to Section 2.1(b), then the Company shall pay the Holder an amount
in  cash  equal  to  102% of the Monthly Amount (or such portion of such Monthly
Amount to be paid in cash) due and owing to the Holder on the Amortization Date.
If  the  Monthly  Amount  (or a portion of such Monthly Amount if not all of the
Monthly  Amount may be converted into shares of Common Stock pursuant to Section
3.2)  is  required  to  be  paid  in  shares of Common Stock pursuant to Section
2.1(b),  the  number of such shares to be issued by the Company to the Holder on
such  Amortization  Date  (in  respect  of  such  portion  of the Monthly Amount
converted  into shares of Common Stock pursuant to Section 2.1(b)), shall be the
number  determined  by  dividing (i) the portion of the Monthly Amount converted
into shares of Common Stock, by (ii) the then applicable Fixed Conversion Price.
For  purposes  hereof,  subject  to  Section  3.6  hereof,  the  initial  "FIXED
CONVERSION  PRICE"  means  $0.62.

<PAGE>

          (b)     Monthly  Amount  Conversion  Conditions.  Subject  to Sections
                  -------------------------------------
2.1(a),  2.2,  and  3.2  hereof,  the Holder shall convert into shares of Common
Stock  all  or  a portion of the Monthly Amount due on each Amortization Date if
the  following  conditions  (the  "CONVERSION  CRITERIA") are satisfied: (i) the
average  closing price of the Common Stock as reported by Bloomberg, L.P. on the
Principal  Market  for  the  five  (5)  trading  days immediately preceding such
Amortization Date shall be greater than or equal to 110% of the Fixed Conversion
Price and (ii) the amount of such conversion does not exceed twenty five percent
(25%)  of the aggregate dollar trading volume of the Common Stock for the period
of twenty-two (22) trading days immediately preceding such Amortization Date. If
subsection  (i)  of  the  Conversion  Criteria is met but subsection (ii) of the
Conversion Criteria is not met as to the entire Monthly Amount, the Holder shall
convert  only  such part of the Monthly Amount that meets subsection (ii) of the
Conversion  Criteria.  Any  portion of the Monthly Amount due on an Amortization
Date  that  the  Holder has not been able to convert into shares of Common Stock
due to the failure to meet the Conversion Criteria, shall be paid in cash by the
Company  at  the  rate  of  102%  of  the  Monthly  Amount otherwise due on such
Amortization Date, within three (3) business days of such Amortization Date.

     2.2     No  Effective  Registration.  Notwithstanding  anything  to  the
             ---------------------------
contrary  herein,  none  of  the  Company's  obligations  to  the  Holder may be
converted  into  Common  Stock  unless  (a)  either  (i)  an  effective  current
Registration  Statement  (as  defined  in  the  Registration  Rights  Agreement)
covering the shares of Common Stock to be issued in connection with satisfaction
of  such obligations exists or (ii) an exemption from registration for resale of
all of the Common Stock issued and issuable is available pursuant to Rule 144 of
the  Securities  Act and (b) no Event of Default (as hereinafter defined) exists
and  is  continuing, unless such Event of Default is cured within any applicable
cure  period  or  otherwise  waived  in  writing  by  the  Holder.

     2.3     Optional  Redemption  in  Cash.  The  Company  may prepay this Note
             ------------------------------
("OPTIONAL  REDEMPTION")  by  paying  to  the Holder a sum of money equal to the
  --------------------
Applicable  Principal Amount (as defined below) together with accrued but unpaid
interest  thereon  and  any  and  all  other sums due, accrued or payable to the
Holder  arising  under  this  Note,  the Purchase Agreement or any other Related
Agreement  (the  "REDEMPTION AMOUNT") outstanding on the Redemption Payment Date
(as defined below).  The Company shall deliver to the Holder a written notice of
redemption  (the  "NOTICE  OF REDEMPTION") specifying the date for such Optional
Redemption  (the  "REDEMPTION  PAYMENT  DATE"),  which  date  shall be seven (7)
business  days  after  the  date  of  the  Notice of Redemption (the "REDEMPTION
PERIOD").  A  Notice  of  Redemption  shall not be effective with respect to any
portion  of  this Note for which the Holder has previously delivered a Notice of
Conversion (as hereinafter defined) or for conversions elected to be made by the
Holder  pursuant  to  Section  3.3 during the Redemption Period.  The Redemption
Amount  shall  be  determined  as  if the Holder's conversion elections had been
completed  immediately  prior  to  the date of the Notice of Redemption.  On the
Redemption Payment Date, the Redemption Amount must be paid in good funds to the
Holder.  In  the  event  the  Company  fails to pay the Redemption Amount on the
Redemption Payment Date as set forth herein, then such Redemption Notice will be
null  and  void.  For  purposes  of  this Section 2.3, the "APPLICABLE PRINCIPAL
AMOUNT"  shall  mean  (a)  during  the  period commencing on the date hereof and
ending  on  the  date  immediately  preceding  the first anniversary of the date
hereof, 125% of the Principal Amount outstanding at the time of such prepayment,
(b) during the period commencing on the first anniversary of the date hereof and
ending  on  the  date  immediately  preceding the second anniversary of the date
hereof,  120% of the Principal Amount outstanding at the time of such prepayment
and  (c)  during  the  period  commencing  on the second anniversary of the date
hereof and ending on the Maturity Date, 115% of the Principal Amount outstanding
at  the  time  of  such  prepayment.

<PAGE>

                                   ARTICLE III
                           HOLDER'S CONVERSION RIGHTS

     3.1     Optional  Conversion.  Subject  to  the  terms  set  forth  in this
             --------------------
Article III, the Holder shall have the right, but not the obligation, to convert
all or any portion of the issued and outstanding Principal Amount and/or accrued
interest  and  fees  due and payable into fully paid and nonassessable shares of
Common  Stock  at  the Fixed Conversion Price.  The shares of Common Stock to be
issued  upon such conversion are herein referred to as, the "CONVERSION SHARES."

     3.2     Conversion Limitation. Notwithstanding anything contained herein to
             ---------------------
the  contrary, the Holder shall not be entitled to convert pursuant to the terms
of  this Note an amount that would be convertible into that number of Conversion
Shares  which  would  exceed the difference between (i) 4.99% of the outstanding
shares  of  Common  Stock  and  (ii)  the  number  of  shares  of  Common  Stock
beneficially  owned  by  the  Holder.  For purposes of the immediately preceding
sentence,  beneficial  ownership  shall be determined in accordance with Section
13(d) of the Exchange Act and Regulation 13d-3 thereunder. The Conversion Shares
limitation  described  in  this  Section 3.2 shall automatically become null and
void  following  notice  to  any  Company  upon  the  occurrence  and during the
continuance  of an Event of Default, or upon 75 days prior notice to the Parent.
Notwithstanding  anything  contained  herein  to the contrary, the provisions of
this  Section  3.2  are  irrevocable  and may not be waived by the Holder or any
Company.

     3.3     Mechanics  of  Holder's  Conversion.  In  the event that the Holder
             -----------------------------------
elects  to  convert this Note into Common Stock, the Holder shall give notice of
such  election  by  delivering an executed and completed notice of conversion in
substantially  the form of Exhibit A hereto (appropriate completed)  ("NOTICE OF
CONVERSION")  to  the  Company  and  such  Notice  of Conversion shall provide a
breakdown  in  reasonable  detail  of the Principal Amount, accrued interest and
fees that are being converted.  On each Conversion Date (as hereinafter defined)
and  in  accordance  with  its  Notice  of Conversion, the Holder shall make the
appropriate  reduction  to  the  Principal  Amount, accrued interest and fees as
entered  in  its records and shall provide written notice thereof to the Company
within  two  (2)  business days after the Conversion Date.  Each date on which a
Notice  of  Conversion  is  delivered or telecopied to the Company in accordance
with  the  provisions  hereof shall be deemed a Conversion Date (the "CONVERSION
DATE").  Pursuant  to  the  terms  of the Notice of Conversion, the Company will
issue  instructions  to  the transfer agent accompanied by an opinion of counsel
within  one  (1)  business day of the date of the delivery to the Company of the
Notice  of  Conversion  and  shall  cause  the  transfer  agent  to transmit the
certificates  representing  the Conversion Shares to the Holder by crediting the
account  of the Holder's designated broker with the Depository Trust Corporation
("DTC")  through  its Deposit Withdrawal Agent Commission ("DWAC") system within
three (3) business days after receipt by the Company of the Notice of Conversion
(the "DELIVERY DATE").  In the case of the exercise of the conversion rights set
forth herein the conversion privilege shall be deemed to have been exercised and
the Conversion Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Company of the Notice of Conversion.  The
Holder  shall be treated for all purposes as the record holder of the Conversion
Shares,  unless  the  Holder  provides  the  Company written instructions to the
contrary.

<PAGE>

     3.4     Late  Payments.  The  Company  understands  that  a  delay  in  the
             --------------
delivery  of the Conversion Shares in the form required pursuant to this Article
beyond  the  Delivery  Date  could  result  in  economic loss to the Holder.  As
compensation  to  the  Holder for such loss, in addition to all other rights and
remedies which the Holder may have under this Note, applicable law or otherwise,
the  Company  shall  pay  late  payments  to the Holder for any late issuance of
Conversion  Shares  in  the  form  required  pursuant  to  this  Article II upon
conversion  of this Note, in the amount equal to $200 per business day after the
Delivery  Date.  The Company shall make any payments incurred under this Section
in  immediately  available  funds  upon  demand.

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

     3.6     Adjustment  Provisions. The Fixed Conversion Price and  number  and
             ----------------------
kind  of  shares  or  other  securities  to be issued upon conversion determined
pursuant  to this Note shall be subject to adjustment from time to time upon the
occurrence  of  certain  events  during  the  period  that this conversion right
remains outstanding, as follows:

          (a)     Reclassification.  If  the  Company  at  any  time  shall,  by
                  ----------------
reclassification  or  otherwise,  change  the  Common  Stock  into the same or a
different  number  of  securities  of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
to evidence the right to purchase an adjusted number of such securities and kind
of  securities  as  would  have  been issuable as the result of such change with
respect  to the Common Stock (i) immediately prior to or (ii) immediately after,
such  reclassification  or  other  change  at  the  sole election of the Holder.

          (b)     Stock Splits, Combinations and Dividends.  If  the  shares  of
                  ----------------------------------------
Common  Stock  are  subdivided  or  combined into a greater or smaller number of
shares  of  Common  Stock,  or  if a dividend is paid on the Common Stock or any
preferred  stock  issued  by  the  Company  in shares of Common Stock, the Fixed
Conversion  Price  shall  be  proportionately  reduced in case of subdivision of
shares or stock dividend or proportionately increased in the case of combination
of  shares,  in  each such case by the ratio which the total number of shares of
Common  Stock outstanding immediately after such event bears to the total number
of shares of Common Stock outstanding immediately prior to such event.

          (c)     Share  Issuances.  Subject  to  the  provisions  of  this
                  ----------------
Section  3.6,  if  the  Company  shall  at  any  time prior to the conversion or
repayment  in  full  of the Principal Amount issue any shares of Common Stock or
securities  convertible  into  Common  Stock  to  a Person other than the Holder
(except  (i) pursuant to Sections 3.6(a) or (b) above; (ii) pursuant to options,
warrants, or other obligations to issue shares outstanding on the date hereof as
disclosed to the Holder in writing; (iii) pursuant to options and/or shares that
may  be  issued  under  any employee incentive stock option and/or any qualified
stock  option  plan  adopted by the Company, or (iv) pursuant to the issuance of
restricted  shares to vendors for goods received and/or services rendered to the
Company  in  an  amount  not  to  exceed an aggregate of 1,000,000 shares which,
unless  the  Holder  otherwise consents in writing, shares may not be sold until
the  earlier  of (A) three years from the date hereof or (B) the date all of the
obligations  and  liabilities  of  the  Company to the Holder under the Purchase
Agreement  are  paid  in full) for a consideration per share (the "OFFER PRICE")
less  than  the  Fixed  Conversion Price in effect at the time of such issuance,
then  the  Fixed Conversion Price shall be immediately reset to such lower Offer
Price.  For  purposes  hereof,  the  issuance  of  any  security  of the Company
convertible into or exercisable or exchangeable for Common Stock shall result in
an  adjustment  to  the  Fixed  Conversion  Price  upon  the  issuance  of  such
securities.

<PAGE>

          (d)     Computation  of Consideration. For purposes of any computation
                  ------------------------------
respecting  consideration  received  pursuant  to  Section  3.6(c)  above,  the
following  shall  apply:

               (i)  in  the  case  of the issuance of shares of Common Stock for
          cash,  the  consideration  shall  be the amount of such cash, provided
          that  in  no  case  shall  any  deduction be made for any commissions,
          discounts  or  other  expenses  incurred  by  the  Company  for  any
          underwriting of the issue or otherwise in connection therewith;

          (ii)  in  the  case  of  the  issuance of shares of Common Stock for a
     consideration  in whole or in part other than cash, the consideration other
     than cash shall be deemed to be the fair market value thereof as determined
     in good faith by the Board of Directors of the Company (irrespective of the
     accounting treatment thereof); and

          (iii) upon any such exercise, the aggregate consideration received for
     such  securities  shall  be  deemed to be the consideration received by the
     Company  for  the  issuance  of such securities plus the additional minimum
     consideration, if any, to be received by the Company upon the conversion or
     exchange  thereof  (the  consideration in each case to be determined in the
     same  manner  as  provided  in  subsections  (i)  and  (ii) of this Section
     3.6(d)).

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

     3.8     Registration  Rights.  The  Holder  has been  granted  registration
             --------------------
rights  with  respect  to the Conversion Shares as set forth in the Registration
Rights Agreement.

<PAGE>

     3.9     Issuance  of  New Note.  Upon any partial conversion of this Note,
             ----------------------
a  new  Note  containing the same date and provisions of this Note shall, at the
request  of the Holder, be issued by the Company to the Holder for the principal
balance  of  this Note and interest which shall not have been converted or paid.
Subject  to the provisions of Article IV of this Note, the Company shall not pay
any  costs, fees or any other consideration to the Holder for the production and
issuance of a new Note.

                                   ARTICLE IV
                                EVENTS OF DEFAULT

     4.1     Events  of  Default.  The occurrence of any of the following events
             -------------------
set  forth  in  this Section 4.1 shall constitute an event of default ("EVENT OF
DEFAULT")  hereunder:

          (a)     Failure  to Pay.  The Company fails to pay when due any
                  ---------------
installment  of principal, interest or other fees hereon in accordance herewith,
or  the  Company fails to pay any of the other Obligations (under and as defined
in  the Master Security Agreement) when due, and, in any such case, such failure
shall  continue for a period of three (3) days following the date upon which any
such payment was due.

          (b) Breach of  Covenant.  The  Company  or  any  of  its  Subsidiaries
              ------------------
breaches  any  covenant  or  any  other  term  or  condition of this Note in any
material  respect and such breach, if subject to cure, continues for a period of
fifteen (15) days after the occurrence thereof.

          (c)     Breach  of Representations and Warranties. Any representation,
                  -----------------------------------------
warranty  or  statement  made  or  furnished  by  the  Company  or  any  of  its
Subsidiaries in this Note, the Purchase Agreement or any other Related Agreement
shall  at any time be false or misleading in any material respect on the date as
of which made or deemed made.

          (d)     Default Under Other Agreements. The occurrence of  any default
                  ------------------------------
or  similar  term)  in  the  observance or performance of any other agreement or
condition  relating  to any indebtedness or contingent obligation of the Company
or  any  of  its Subsidiaries beyond the period of grace (if any), the effect of
which  default is to cause, or permit the holder or holders of such indebtedness
or  beneficiary  or  beneficiaries  of such contingent obligation to cause, such
indebtedness  to  become  due  prior  to  its stated maturity or such contingent
obligation to become payable;

          (e)     Material  Adverse  Effect. Any change or the occurrence of any
                  -------------------------
event which could reasonably be expected to have a Material Adverse Effect;

          (f)     Bankruptcy.  The Company or any of its Subsidiaries  shall (i)
                  ----------
apply  for,  consent  to or suffer to exist the appointment of, or the taking of
possession  by, a receiver, custodian, trustee or liquidator of itself or of all
or  a  substantial  part of its property, (ii) make a general assignment for the
benefit  of  creditors,  (iii)  commence  a  voluntary  case  under  the federal
bankruptcy  laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt
or  insolvent,  (v)  file  a petition seeking to take advantage of any other law
providing for the relief of debtors, (vi) acquiesce to, without challenge within
ten (10) days of the filing thereof, or failure to have dismissed, within thirty
(30)  days,  any  petition  filed  against it in any involuntary case under such
bankruptcy  laws,  or  (vii) take any action for the purpose of effecting any of
the foregoing;

<PAGE>

          (g)     Judgments.  Attachments or levies in excess of $100,000 in the
                  ---------
aggregate  are  made  upon  the  Company  or any of its Subsidiary's assets or a
judgment  is  rendered  against  the Company's property involving a liability of
more  than  $100,000  which  shall  not have been vacated, discharged, stayed or
bonded within thirty (30) days from the entry thereof;

          (h)     Insolvency.  The  Company  or  any  of  its Subsidiaries shall
                  ----------
admit in writing its inability, or be generally unable, to pay its debts as they
become due or cease operations of its present business;

          (i)     Change  in  Control.  A  Change  in  Control  shall occur.
                  -------------------
A  "Change  in  Control" shall arise when any "Person" or "group" (as such terms
are defined in Sections 13(d) and 14(d) of the Exchange Act, as in effect on the
date  hereof)  is or becomes the "beneficial owner" (as defined in Rules 13(d)-3
and 13(d)-5 under the Exchange Act), directly or indirectly, of 35% or more on a
fully diluted basis of the then outstanding voting equity interest of the Parent
(other  than  a  "Person"  or "group" that beneficially owns 35% or more of such
outstanding  voting  equity  interests of the Parent on the date hereof) or (ii)
the Board of Directors of the Parent shall cease to consist of a majority of the
Parent's  board  of  directors  on  the date hereof (or directors appointed by a
majority  of  the  board  of  directors  in  effect  immediately  prior  to such
appointment);

          (j)     Indictment; Proceedings.  The indictment or threatened
                  -----------------------
indictment of the Company or any of its Subsidiaries or any executive officer of
the  Company  or  any  of  its  Subsidiaries  under  any  criminal  statute,  or
commencement  or threatened commencement of criminal or civil proceeding against
the  Company  or any of its Subsidiaries or any executive officer of the Company
or  any of its Subsidiaries pursuant to which statute or proceeding penalties or
remedies  sought  or  available include forfeiture of any of the property of the
Company or any of its Subsidiaries;

          (k)     The  Purchase Agreement and Related Agreements.  (i) An Event
                  ----------------------------------------------
of  Default  shall  occur  under and as defined in the Purchase Agreement or any
other  Related  Agreement,  (ii)  the  Company  or any of its Subsidiaries shall
breach  any  term  or  provision  of the Purchase Agreement or any other Related
Agreement in any material respect and such breach, if capable of cure, continues
unremedied for a period of fifteen (15) days after the occurrence thereof, (iii)
the  Company  or  any  of its Subsidiaries attempts to terminate, challenges the
validity  of,  or  its  liability  under,  the Purchase Agreement or any Related
Agreement,  (iv)  any  proceeding  shall  be  brought to challenge the validity,
binding  effect  of  the  Purchase Agreement or any Related Agreement or (v) the
Purchase  Agreement  or  any Related Agreement ceases to be a valid, binding and
enforceable  obligation of the Company or any of its Subsidiaries (to the extent
such persons or entities are a party thereto);

          (l)     Stop  Trade.  An  SEC  stop  trade  order  or Principal Market
                  -----------
trading  suspension  of  the  Common  Stock  shall  be  in  effect  for five (5)
consecutive  days or five (5) days during a period of ten (10) consecutive days,
excluding  in  all  cases  a  suspension  of  all trading on a Principal Market,
provided  that  the  Company  shall  not  have  been  able  to cure such trading
suspension  within  thirty  (30)  days  of the notice thereof or list the Common
Stock on another Principal Market within sixty (60) days of such notice; or

<PAGE>

          (m)     Failure  to  Deliver  Common  Stock  or Replacement Note.  The
                  --------------------------------------------------------
Company's  failure  to deliver Common Stock to the Holder pursuant to and in the
form  required  by  this Note and the Purchase Agreement and, if such failure to
deliver  Common  Stock  shall  not  be cured within two (2) business days or the
Company  is  required  to issue a replacement Note to the Holder and the Company
shall fail to deliver such replacement Note within seven (7) business days.

     4.2     Default  Interest.  Following  the  occurrence  and  during  the
             -----------------
continuance of an Event of Default, the Company shall pay additional interest on
this  Note in an amount equal to two percent (2%) per month, and all outstanding
obligations  under  this  Note,  the  Purchase  Agreement and each other Related
Agreement,  including unpaid interest, shall continue to accrue interest at such
additional  interest  rate from the date of such Event of Default until the date
such  Event  of  Default  is  cured  or  waived.

     4.3     Default Payment.  Following  the  occurrence  and  during the
             ---------------
continuance  of  an  Event  of  Default,  the  Holder, at its option, may demand
repayment  in  full  of  all obligations and liabilities owing by Company to the
Holder  under  this  Note,  the  Purchase  Agreement  and/or  any  other Related
Agreement and/or may elect, in addition to all rights and remedies of the Holder
under  the  Purchase  Agreement  and  the  other  Related  Agreements  and  all
obligations  and liabilities of the Company under the Purchase Agreement and the
other  Related  Agreements,  to  require  the  Company to make a Default Payment
("DEFAULT  PAYMENT").  The  Default  Payment  shall  be  130% of the outstanding
principal  amount  of the Note, plus accrued but unpaid interest, all other fees
then  remaining  unpaid,  and  all  other amounts payable hereunder. The Default
Payment  shall  be  applied  first  to  any  fees  due and payable to the Holder
pursuant  to  this  Note,  the  Purchase  Agreement,  and/or  the  other Related
Agreements, then to accrued and unpaid interest due on this Note and then to the
outstanding principal balance of this Note. The Default Payment shall be due and
payable  immediately  on  the  date  that  the  Holder  has exercised its rights
pursuant to this Section 4.3.

                                    ARTICLE V
                                  MISCELLANEOUS

     5.1     Conversion  Privileges.  The  conversion  privileges  set  forth in
             ----------------------
Article  III  shall  remain  in  full force and effect immediately from the date
hereof  until  the  date  this Note is indefeasibly paid in full and irrevocably
terminated.

     5.2     Cumulative  Remedies.  The remedies under this Note shall be
             --------------------
cumulative.

     5.3     Failure  or  Indulgence  Not Waiver.  No failure or delay on the
             -----------------------------------
part  of  the  Holder  hereof  in  the exercise of any power, right or privilege
hereunder  shall  operate  as  a waiver thereof, nor shall any single or partial
exercise  of  any  such  power,  right  or  privilege  preclude other or further
exercise  thereof  or  of  any  other  right, power or privilege. All rights and
remedies  existing hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.

<PAGE>

     5.4     Notices.  Any notice herein required or permitted to be given shall
             -------
be  in  writing  and  provided  in  accordance  with  the  terms of the Purchase
Agreement.

     5.5     Amendment Provision. The term "Note" and all references thereto, as
             --------------------
used  throughout  this  instrument,  shall  mean  this  instrument as originally
executed,  or  if  later  amended  or  supplemented,  then  as  so  amended  or
supplemented,  and  any successor instrument as such successor instrument may be
amended  or  supplemented.

     5.6     Assignability.  This Note shall be binding upon the Company and its
             -------------
successors  and  assigns,  and  shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with the
requirements  of  the Purchase Agreement.  The Company may not assign any of its
obligations under this Note without the prior written consent of the Holder, any
such  purported  assignment  without  such  consent  being  null  and  void.

     5.7     Cost of Collection. In case of any  Event  of  Default  under  this
             --------------------
Note, the Company shall pay the Holder reasonable costs of collection, including
reasonable attorneys' fees.

     5.8     Governing  Law,  Jurisdiction  and  Waiver  of  Jury  Trial.
             -----------------------------------------------------------

          (a)     THIS  NOTE  SHALL  BE  GOVERNED  BY  AND  CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.

          (b)     THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR
FEDERAL  COURTS  LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE
EXCLUSIVE  JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE
COMPANY,  ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND, PERTAINING TO THIS
NOTE  OR  ANY OF THE OTHER RELATED AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATED  TO  THIS  NOTE  OR  ANY  OF  THE RELATED AGREEMENTS; PROVIDED, THAT THE
                                                              --------
COMPANY  ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY
A  COURT  LOCATED  OUTSIDE  OF  THE  COUNTY  OF NEW YORK, STATE OF NEW YORK; AND
FURTHER  PROVIDED,  THAT  NOTHING  IN  THIS  NOTE  SHALL BE DEEMED OR OPERATE TO
-----------------
PRECLUDE THE HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION  TO  COLLECT  THE  OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY
OTHER  SECURITY  FOR  THE  OBLIGATIONS,  OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER  IN  FAVOR  OF  THE  HOLDER. THE COMPANY EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE  TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND THE COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
PERSONAL  JURISDICTION,  IMPROPER  VENUE  OR  FORUM  NON CONVENIENS. THE COMPANY
                                              ---------------------
HEREBY  WAIVES  PERSONAL  SERVICE  OF  THE  SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED  IN  ANY  SUCH  ACTION  OR  SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT  AND  OTHER  PROCESS  MAY  BE  MADE  BY  REGISTERED  OR CERTIFIED MAIL
ADDRESSED  TO THE COMPANY AT THE ADDRESS SET FORTH IN THE PURCHASE AGREEMENT AND
THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY'S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE  PREPAID.

<PAGE>

          (c)     THE  COMPANY  DESIRES THAT ITS DISPUTES BE RESOLVED BY A
JUDGE  APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF  THE  BENEFITS  OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE COMPANY HERETO
WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE
HOLDER  AND THE COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO
THE  RELATIONSHIP  ESTABLISHED  BETWEEN  THEM  IN CONNECTION WITH THIS NOTE, ANY
OTHER RELATED AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

     5.9     Severability.  In  the  event  that  any  provision of this Note is
             ------------
invalid  or unenforceable under any applicable statute or rule of law, then such
provision  shall  be  deemed  inoperative  to  the  extent  that it may conflict
therewith  and  shall be deemed modified to conform with such statute or rule of
law.  Any  such provision which may prove invalid or unenforceable under any law
shall  not  affect the validity or enforceability of any other provision of this
Note.

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

     5.11     Security  Interest  and  Guarantee.  The Holder has been granted a
              ----------------------------------
security  interest  (i) in certain assets of the Company and its Subsidiaries as
more  fully  described  in  the  Master  Security Agreement dated as of the date
hereof  and (ii) in the equity interests of the Companies' Subsidiaries pursuant
to  the  Stock Pledge Agreement dated as of the date hereof.  The obligations of
the  Company  under  this  Note  are  guaranteed  by certain Subsidiaries of the
Company  pursuant  to  the  Subsidiary  Guaranty  dated  as  of the date hereof.

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

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

<PAGE>

IN WITNESS WHEREOF, the Company has caused this Secured Convertible Term Note to
be  signed  in  its  name  effective  as  of  this 30th day  of  June,  2005.

                                                    NEW CENTURY ENERGY CORP.

                                                    By: /s/ Edward R. DeStefano
                                                       -------------------------
                                                    Name:  Edward R. DeStefano
                                                    Title: President

WITNESS:

/s/ Kimberly Newman
---------------------------------
    Kimberly Newman

<PAGE>

                                    EXHIBIT A
                                    ---------
                              NOTICE OF CONVERSION
                              --------------------

        (To be executed by the Holder in order to convert all or part of
              the Secured Convertible Term Note into Common Stock)

New  Century  Energy  Corp.
5851  San  Felipe,  Suite  775
Houston,  Texas  77057

     The  undersigned hereby converts $         of the principal due on [specify
                                       ---------
applicable  Repayment  Date] under the Secured Convertible Term Note dated as of
June 30, 2005 (the "NOTE") issued by New Century Energy Corp. (the "COMPANY") by
delivery  of  shares of Common Stock of the Company ("SHARES") on and subject to
the  conditions  set  forth  in  the  Note.

1.     Date  of  Conversion
                                 -------------------------

2.     Shares  To  Be  Delivered:
                                 -------------------------

                                            [HOLDER]

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

<PAGE>

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