Document:

EXHIBIT 10.2

                      Exclusive Recording Artist Agreement
                      ------------------------------------

         This Agreement is made as of the 24th day of June,  2004 by and between
G2 VENTURES,  INC.  (hereinafter  "G2") and Neil Swanson and Justin Jones,  both
individually and jointly, and p/k/a "OneUp" (hereinafter "Artist").

1. ARTIST'S WARRANTIES AND REPRESENTATIONS

         1.01  Artist  represents  and  warrants  that:  (a)  it is  authorized,
empowered  and able to enter into and fully perform its  obligations  under this
Agreement;  (b) neither this Agreement nor the fulfillment there of by any party
infringes upon the rights of any other person or entity; (c) it has not and will
not do anything  that  impairs  G2's rights  under this  Agreement,  nor will it
permit any other  person or entity to do so; and (d) Artist is  resident  of the
United States of America for income tax purposes.

         1.02. Artist further  represents and warrants that: (a) there now exist
no prior  recorded  performances  by  Artists  other  than  those  listed on the
attached  Exhibit  A; (b) that it owns all of the  rights in and to the  Masters
listed in Exhibit A; (c) none of the Masters delivered to G2 by Artists, nor the
performances  embodied thereon, nor any other Materials,  nor any use thereof by
G2 or its  grantees,  licensees or assigns,  will  violate or infringe  upon the
rights of any third  party.  "Materials,"  as used by this  Paragraph  means all
Controlled Compositions, each name used by Artists, any logo used by Artist, and
all other  musical,  artistic,  literary  and other  materials,  ideas and other
intellectual  properties  furnished by Artist or any other producers  engaged by
Artist and contained or used in connection with any Masters made  hereunder,  or
the packaging, sale, advertising or other exploitation thereof.  Notwithstanding
the foregoing,  the parties  acknowledge that the recordings listed in Exhibit A
are being acquired by G2 under this  Agreement,  and shall count toward Artist's
Minimum Recording Commitment.  In addition,  the parties acknowledge that Artist
has already begun  recording its Minimum  Recording  Commitment  for the Initial
Period.

2. TERM AND RECORDING COMMITMENT

         2.01  The  Term  of  this  Agreement  shall  be for an  Initial  Period
commencing on the date hereof and expiring nine months thereafter.

         2.02.  Artist  hereby  grants G2 three  (3)  separate  and  irrevocable
options to extend the Term of this  Agreement  for further  periods (the "Option
Periods"_  commencing  immediately upon the expiration of the Initial Period and
expiring nine months after  delivery to G2 of the Minimum  Recording  Commitment
for said Option  Period.  Each option shall be exercised when G2 sends a written
notice to Artist that the option is being exercised at least sixty days prior to
the  commencement  of the Option Period;  provided that G2 shall have a right to
cure any  failure  to send  such a notice  at any time up to ten days  following
receipt of a written  notice from Artist that the  deadline  for  exercising  an
option has passed.

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         2.03.  During the Term of this  Agreement (as the same may be extended)
Artist agrees to produce and Artist shall deliver to G2 Masters comprising sound
alone sufficient to comprise the following (the "Minimum Recording Commitment"):

         (a)      during the Initial Period- - one (1) Album (the "First Album")

         (b)      during the First  Option  Period- - one (1) Album (the "Second
                  Album")

         (c)      during the Second  Option  Period- - one (1) Album (the "Third
                  Album")

         (d)      during the Third  Option  Period- - one (1) Album (the "Fourth
                  Album")

         2.04. Notwithstanding anything else herein to the contrary:

         (a) Each Album shall be  delivered  to G2 within five (5) months  after
the commencement of the applicable Initial Period or Option Period.

         (b) Artist  shall not commence  the  recording  of any Album  hereunder
earlier than three (3) months following delivery to G2 of the prior album.

         (c) G2 shall not be obliged to accept  delivery of any Album  hereunder
earlier  than nine  months  following  the date of  delivery  to G2 of the prior
album.  If any such  premature  delivery is tendered,  the  contractual  date of
delivery  hereunder  of such  Album  shall  be  deemed  to be the  date one year
following the date of delivery of the prior album, provided that the prior album
has  been  recorded  and  delivered  in all  respects  in  accordance  with  the
provisions  of  this  Agreement  and  comprises  acceptable  Masters  as  herein
provided.

         (d) In the event that, during the Initial Period or the Option Periods,
Artist produces more than the Minimum Recording Commitment, G2 shall as its sole
option be entitled to treat such additional material (or some of it) as counting
towards the Minimum Recording  Commitment (or not) but said additional  material
shall be and  remain  the sole  and  exclusive  property  of G2  subject  to the
provisions of this Agreement.

         (e) Each  Album  delivered  shall  consist  of not  less  than ten (10)
Masters  and not less  than  forty-five  (45) nor more  than  seventy-four  (74)
minutes of Artist's performances. Each Master shall consist of not less than two
minutes and thirty  seconds of Artist's  performances.  No album  consisting  of
Artist's  "live"  performances  shall  be  deemed  to be in  fulfillment  of any
Artist's  obligations  hereunder except that upon mutual consent,  in writing, a
live  recording may be accepted in  fulfillment  of Artist's  Minimum  Recording
Commitment.  If any such  performances are recording during the Term hereof,  G2

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shall be the owner  thereof  and shall have the right to exploit  same under the
same terms as contained herein for the First Album,  except that no advance will
be paid to Artist. No Multiple Albums shall be delivered  hereunder without G2's
prior written  consent;  any such Multiple Album delivered to and accepted by G2
shall be deemed a single album for all purposes hereof. No Mini-Album shall form
part of the Minimum  Recording  Commitment unless expressly agreed in writing by
G2 as its absolute discretion.

         (f) Artist shall  deliver to G2 each Master  hereunder in the form of a
digital  two-track  stereo tape  master,  as well as  reference  discs which are
representative of such tape masters.  Artist shall also deliver at the same time
any multi-track  master tapes recorded in connection with the same project.  The
two-track  stereo  master  tape  shall be fully  edited,  mixed,  equalized  and
leadered for the production of parts from which satisfactory  Phonograph Records
can be manufactured.

         (g) As used in this Agreement, "delivery" shall mean the receipt of all
tape masters as provided herein, as well as Artist's submission to G2 in written
form of all necessary  information,  consents,  licenses and permission  that G2
requires to  manufacture,  distribute  and  release  the  Masters as  Phonograph
Records,  including, but not limited to, mechanical licenses,  credits, musician
and producer releases, and any information required to be delivered to unions or
other third parties.  Payment of funds due at delivery by G2 shall not be deemed
a waiver of information or documents required hereunder.

         (h) Artist shall be available to G2 and shall  perform for the purposes
of making  such music  videos at such  times and  places as G2 shall  reasonable
agree with Artist. The cost of making such music videos shall be deemed advances
hereunder  and  shall be  fifty  percent  (50%)  recoupable  from  all  sources,
excluding  Mechanical  Royalties and merchandise  royalties,  payable to Artists
hereunder.

         (i) G2 shall  release a minimum  of one  thousand  copies of each Album
delivered by Artist,  within ninety days of its delivery.  G2 shall have a right
to cure any  failure  to  timely  make such  release  at any time up to ten days
following the receipt of a written notice from Artists that the deadline release
has passed.  Failure to cure by G2 shall  entitle  Artist to buy the  unreleased
Masters for one hundred ten percent (110%) of the Recording Costs spent by G2 on
the Masters,  provided that Artist delivers  written notice of its intent to buy
the Masters  within ten days of the  expiration of G2's right to cure,  and pays
the  purchase  price in full  within  ninety  days of  delivery of its notice of
intent.

3. GRANT OF RIGHTS

         3.01. During the Term of the Agreement,  Artist shall furnish to G2 its
exclusive recording services throughout the Universe.  Any contract entered into
by Artist or on Artist's behalf during the Term hereof or any extensions thereof
for Artist's  performances in television or radio  broadcasts or motion pictures
or stage productions shall  specifically  exclude the right to use any recording
of such performance for the manufacture and sale of Phonograph  Records or music
videos unless previously  authorized in writing by G2, which authority shall not
be unreasonably withheld.

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Artist shall promptly  deliver to G2 copies of the pertinent  provisions of each
such contract and Artist will cooperate fully with G2 in any controversy dispute
or  litigation  which  may arise in  relation  to the  rights  of G2 under  this
Paragraph.

         3.02.  Artist  hereby grants and assigns to G2 all rights of every kind
and  the  complete,  unconditional,  exclusive,  perpetual,  unencumbered  title
throughout the Universe in and to all results and products of Artist's  services
and performances  hereunder (being the recording of musical performances and the
sound  recordings  in Exhibit A), any and all  Masters,  records,  tapes,  sound
recordings,  music videos,  long form videos,  and other  material of every kind
made or authorized by G2 hereunder or otherwise produced during the Initial Term
and/or  Option Terms and which  include the voice,  instrumental  or other sound
and/or visual effects,  services,  or performances of Artist,  including without
limitation the right to record, reproduce,  broadcast,  transmit, publish, sell,
exhibit, distribute, advertise, exploit, perform, and use the same separately or
in any combination with any other material for any purpose in any manner,  under
any  label,  trademark,  or other  identification  and by any  means or  method,
whether known or not known, invented, used, or contemplated, and to refrain from
all or any part thereof.

         3.03.  Without in any way limiting  the  generality  of the  foregoing,
Artist hereby grants to G2 the following rights throughout the Universe which G2
may use or refrain from using as it elects in G2's sole discretion:

         (a)  the  exclusive  right  during  the  Term  hereof  to  manufacture,
distribute,  and sell  anywhere  in the  Universe  Phonograph  Records and music
videos produced from Masters made during the Terms hereunder;

         (b)  the  exclusive   right  for  the  full  periods  of  copyright  to
manufacture, distribute, and sell throughout the Universe Phonograph Records and
music videos produced from Masters made during the Terms hereunder;

         (c) the exclusive right in all media and forms to advertise, publicize,
and  exploit  anywhere  in the  Universe  Phonograph  Records  and music  videos
produced  during the Terms hereunder by any and every means,  particularly,  but
without limiting the generality of the foregoing, to use the name, including the
professional  name,   approved  photograph  and/or  likeness  of,  and  approved
biographical  material  concerning  Artist  for  advertising,   publicizing  and
otherwise exploiting said Phonograph Records and music videos, said approval not
to be unreasonably withheld;

         (d)  the  exclusive  right  to  authorize  public  performances  in the
Universe  of  Phonograph  Records  and music  videos  produced  during the Terms
hereunder;

         (e) the right to permit and authorize  others to exercise,  directly or
through persons designated by them, any and all of G2's rights hereunder.

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         3.04. (a) Each Master (including all sound recordings embodied thereon)
produced  hereunder or embodying  Artist's  performances and recorded during the
Terms shall,  belong to Artist.  Artist grants G2 a security  interest in and to
its copyright in the First Album to secure recoupment of all sums expended by G2
in the  recording  and promotion of all Albums  recorded  under this  agreement.
Artist  further agrees to execute any document  reasonably  necessary to perfect
such security interest.  In the event Artist fails to execute any such documents
or instruments Artist hereby irrevocably grants to G2 power of attorney, coupled
with an interest, to execute all such security agreements.

         (b)  Each  Master  (including  all  sound  recording  embodied  thereon
produced hereunder or embodying Artist's  performances recorded during the Terms
shall, from the inception of its creation,  be considered a "work made for hire"
for G2 within the meaning of the U.S.  Copyright Law. If it is determined that a
Master does not so qualify,  then such  Master,  together  with all rights in it
(including  the sound  recording  copyright),  shall be  deemed,  and are hereby
transferred and assigned to G2 by this  Agreement.  Artist agrees to execute and
deliver to G2 any and all documents or instruments which G2 may request in order
to  confirm  G2's  acquisition  and/or  title  to  the  Masters  (including  the
copyright)  as described  herein.  In the event Artist fails to execute any such
documents  or  instruments  Artist  hereby  irrevocably  grants  to G2  power of
attorney, coupled with an interest, to execute all such documents of conveyance.
All Masters  recorded by Artist from the inception of the recording  thereof and
all reproductions  derived  therefrom,  together with the performances  embodied
thereon,  shall be entirely the  property of G2 in  perpetuity,  throughout  the
Universe,  free of any claim  whatsoever  by Artist or any persons  deriving any
rights or interests therefrom.

         3.05. Artist shall not authorize or permit Artist's  performances to be
recorded for any purpose without  obtaining an express  written  approval of G2,
and  Artist  shall  take  reasonable   measures  to  prevent  the   manufacture,
distribution  and sale of  Phonograph  Records or music  videos  containing  its
performances (an the use of Artist's name and likeness in connection  therewith)
by any person or entity other than G2, its successors, licensees and assigns.

         3.06.  Artist  grants G2 the right to include any Master  produced  and
delivered  hereunder in a soundtrack  or  compilation  album,  at any time,  and
without any further advance,  except that royalties shall be payable as provided
herein.

         3.07. As used in this  Agreement,  "Phonograph  Records" shall mean any
and  all  mechanical   reproductions  of  the  Masters  produced  and  delivered
hereunder,  in any  format,  whether  now known or  unknown,  including  but not
limited to compact discs, cassette tapes, vinyl records, DAT tapes or any future
format.

4. RECORDING COSTS AND PROCEDURES

         4.01.  Advances  payable to Artist  pursuant to this  Agreement are and
shall be  inclusive  of all  costs  incurred  in the  course  of  producing  and
recording Masters hereunder  (including without limitation,  the costs of studio
time, musician fees, union payments,  instrument hire,  producer's fees, and the
cost of tape  editing,  mixing,  remixing  and  mastering,  advances,  and other
similar costs  customarily  regarded in the industry as being recording  costs).

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All such costs are sometimes  herein referred to as "recording  costs" and shall
be  paid  by G2  and  constitute  advances  recoupable  from  royalties  payable
hereunder. G2 shall, in accordance with the provisions of this Agreement, deduct
and retain out of said  advances  such sums as may be  necessary to pay the said
recording  costs.  In the event that, as a result of an event within the control
of the Artist, any recording costs shall exceed the amount of the recording fund
specifically  referred to in Paragraph  5.01 below,  then the excess costs shall
(if paid by G2)  constitute  a loan to  Artist  payable  on demand  and  without
prejudice  to G2's  other  rights  and the  same  shall  at  G2's  election,  be
recoverable  by G2 out of any  monies  payable  by G2 to Artist  or on  Artist's
behalf hereunder.

         4.02. G2 and Artist shall,  prior to the commencement of any recording:
(a) mutually designate the producer(s) of all Masters  hereunder;  and (b) agree
on a budget for recording costs. G2 shall not unreasonably  withhold its consent
to any budget for recording  costs that is less than ninety percent (90%) of the
recording fund for that album as specified in Paragraph 5.01.

         4.03. Artist shall be properly  rehearsed and shall appear at the times
and places  designated by G2 after  consultation  with and reasonable  notice to
Artist from time to time for all recording  sessions  required  hereunder and at
each session  Artist shall  tender  their  professional  services to the best of
their  ability.  G2 and Artist  shall  mutually  designate  the  material  to be
recorded  and each  Master  shall be subject  to G2's  approval  as  technically
satisfactory  and similar in style to Artist's current  performances.  Upon G2's
request,  Artist shall re-record any material until a Master, which in G2's sole
judgment is satisfactory, shall have been obtained.

         4.04.  The Masters  delivered to G2 by Artist under this  Agreement and
the performances embodies therein shall be produced in accordance with the rules
and regulations of the American Federation of Musicians, the American Federation
of Television and Radio Artists and all other unions having jurisdiction. Artist
is or will become and remain, to the extent necessary to fulfill this Agreement,
a member in good standing of all labor unions or guilds in which  membership may
be required for the performance of Artist's services hereunder.

         4.05. Artist shall not perform for or in connection with (and shall not
permit any other person or entity to use Artist's name or likeness in connection
with) the recording or exploitation of any Phonograph Record embodying any
Composition recorded by artist under this Agreement prior to date four (4) years
subsequent to the expiration or termination of the term of this Agreement, or
any extensions thereof.

         4.06. Without limiting the foregoing,  G2 shall not be required to make
any payments of any kind for, or in connection with, the  acquisition,  exercise
or  exploitation  of  rights  by G2  except  as  specifically  provided  in this
Agreement.  Artist shall be solely  responsible for all sums due to labor unions
or guilds,  individual  musicians,  producers  and all other persons or entities
entitled to receive  royalties or other payments in connection  with the sale of

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Phonograph Records derived from Masters hereunder, although G2 will undertake to
make all such payments to the extent of the recording fun specified in Paragraph
5.01.  None of the persons  whose  performances  are  embodied in the Masters or
whose  services are used in record the Masters  shall be bound by any  agreement
that would  restrict such  performances  or services,  or to the extent they are
otherwise bound or restricted,  Artist shall obtain all necessary  clearances in
writing.

5. ADVANCES AND RECORDING FUND

         5.01.  As  advances  against  and  recoupable  from  royalties  payable
hereunder,  G2 agrees to pay with respect to each Album constituting the Minimum
Recording Commitment hereunder a sum equal to the amount by which the greater of
(1) the applicable sum set forth below;  or (2) a sum equal to two-thirds of the
royalties  actually  accruing to Artist on the immediate prior Album exceeds (3)
the sum of the  documented  receipts for the recording  costs  concerned and any
other advances made to Artist prior to delivery of the applicable  Album ("Album
Recording Fund"):

Album Recording Fund:      First Album               $10,000
                           Second Album              $20,000
                           Third Album               $35,000
                           Fourth Album              $50,000

         5.02. If net sales through normal retail  channels in the United States
for which  royalties are payable  pursuant to Paragraph  6.01(a)  below,  net of
applicable  reserves of any album shall exceed  seventy-five  thousand  (75,000)
unites as of the date nine (9) months after the initial release of that album in
the United States,  then the Album  Recording Fun on the next  subsequent  album
shall be increased by Ten Thousand Dollars ($10,000).

         5.03. The advances due under  Paragraph 5.01 shall be payable  promptly
following the delivery to G2 of: (a) the Minimum Recording  Commitment;  (b) the
documents required under the Paragraph 2.04(g);  and (c) all invoices pertaining
to the recording of the Minimum Recording  Commitment.  With respect to payments
to be made  following  delivery G2 shall have the right to withhold  ten percent
(10%) for ninety  (90) days to provide for  anticipated  costs which have no yet
been paid.

         5.04.  All  advances  paid to Artist  or on  Artist's  behalf  shall be
recoupable against the royalties payable under this Agreement, from whatever the
source,  except  that  advances  shall  not  be  recoupable  against  Mechanical
Royalties except as provided for in Paragraph 8.01.

6. ROYALTIES

         6.01. Subject to Artist's  compliance with all obligations  required of
Artist  hereunder and subject as otherwise  granted  herein,  G2 will pay to the
Artist for the rights granted  percentages of one hundred  percent (100%) of the
G2's published  wholesale price,  exclusive of taxes and duties actually paid by
G2, and the container cost deductions  specified below for all records and music
videos  manufactured,  sold  and  not  returned,  and  for  which  G2  is  paid,
reproducing exclusively Masters recorded hereunder, namely:

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         (a) With  respect to sales for  distribution  in the  United  States of
Albums reproducing  exclusively  Masters  hereunder:  Twenty Four percent (24%).
This royalty  reverts to Twenty percent (20%) if this Agreement is assigned to a
Major Record Label or a label distributed by a Major Record Label.

         (b) The royalty  rate with respect to 12-inch  singles  shall be twenty
percent (20%).  This royalty  reverts to fifteen percent (15%) if this Agreement
is assigned to a Major  Record  Label or a label  distributed  by a Major Record
Label.

         (c) The royalty rate with respects of 7-inch  singles and other records
shall be fifteen percent (15%).  This royalty reverts to twelve percent (12%) if
this  Agreement is assigned to a Major Record Label or a label  distributed by a
Major Record Labor.

         (d) The royalty rate with respect to the  following is fifteen  percent
(15%)  [thirteen  percent (13%) if this  Agreement is assigned to a Major Record
Label or a label  distributed  by a Major  Record  Label]:  records  sold to any
government  body, PX sales,  sales to  educational  institutions,  record clubs,
soundtrack  records,  compilation  records,  budget records (defined as a record
which is sold at a  wholesale  price of at least  fifty  percent  but less  than
eighty percent of G2's published  wholesale  price),  and EP records (defined as
records containing between three and nine Masters); except that the royalty rate
for  compilations  released  exclusively  on the G2 label  shall be  twenty-five
percent  (25%) [twenty  percent  (20%) if this  Agreement is assigned to a Major
Record Label or a label  distributed  by a Major Record  Label.]  Royalties  for
soundtracks and compilations on which Artist appears with other performers shall
be pro-rated in the same proportion  that Artist's  Master(s) bear to the entire
album.

         (e) Foreign  royalty rate: The rate for the records  manufactured by G2
or G2's  affiliates and sold in Canada will be eighty-five  percent (85%) of the
applicable  royalty rate, and sales outside the United States and Canada will be
seventy-five  percent (75%) of the applicable royalty rate. The royalty rate for
masters licensed by G2 outside the United States shall be fifty percent (50%) of
the net income  therefrom.  Net income shall mean all income received less third
party our of pocket expenses to establish the license, third party out of pocket
collection costs,  foreign currency exchange,  wire transfer fees and applicable
taxes.

         (f) Royalty rate for music videos sold and not returned shall be twenty
percent (20%) of G2's  published  wholesale  price.  The royalty rate for videos
licensed by G2 shall be fifty percent (50%) of the net income therefrom.

7. ROYALTY PAYMENTS

         7.01.  Royalties  earned  hereunder will be accrued  semi-annually  and
paid,  less all advances,  taxes,  and any other charges,  within sixty (6) days
following  each  June 30th and  December  31st for the  preceding  six (6) month

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period, in accordance with G2's regular accounting practices. G2 shall, however,
have the right to establish reasonable reserves for returns and exchanges,  said
reserves not to exceed thirty percent (30%). Each reserve established  hereunder
shall be liquidated at the end of the following  semi-annual period. If G2 makes
any overpayment of royalties  (e.g., by reason of an accounting  error or paying
royalties  on Records  returned  later),  G2 shall have the right to offset such
overpayment  against any  subsequent  payment  due to Artist from G2,  excluding
mechanical royalties and merchandise royalties.

         7.02.  Each  royalty  payment  hereunder  shall  be  accompanied  by  a
statement in accordance with G2's regular accounting  practices.  Each statement
shall  become  binding  upon Artist and Artist  shall  neither have nor make any
claim  against G2 with respect to such a statement,  unless  Artist shall advise
G2, in writing,  of the specific  basis of such claim within two (2) years after
the date G2 mails such statement.  G2's  accounting  books and records will kept
and maintained in accordance  with  generally  accepted  accounting  principles,
consistently applied.

         7.03.  Artist shall not be entitled to recover  damages or to terminate
this  Agreement for any reason because of a claimed breach by G2 of its material
obligations  hereunder,  unless G2 has failed to remedy such breach within sixty
(60) days following receipt of written notice thereof.  Artist will not have the
right  to  sue G2 in  connection  with  any  royalty  accounting,  or sue G2 for
royalties  accrued  by Artist  during the  period a royalty  accounting  covers,
unless  Artist  commences  the suit within two (2) years after the date when the
statement  in question is rendered to Artist.  If Artist  commences  suit on any
controversy or claim  concerning  royalty  accountings  rendered to Artist under
this Agreement, the scope of the proceeding will be limited to the determination
of the amount of royalties due for the accounting periods covered and reasonable
attorney fees, and the court will have no authority to consider any other issues
or award any relief  except  recovery of any  royalties  found  owing.  Artist's
recovery  of any such  royalties  and  attorney's  fees will be the sole  remedy
available to Artist by reason of G2's royalty  accounting.  Without limiting the
generality  of the  preceding  sentence,  Artist will not have the right to seek
termination  of this  Agreement or avoid the  performance  of their  obligations
under it by reason of any such claim.  However, in the event that G2 is found by
a court to have  breached  its  obligation  to account for an pay  royalties  to
Artist,  then any unexercised options to extend the term of this agreement shall
be void.  Artist's  remedy for G2's  willful  refusal to permit it to record its
Minimum Recording Contract shall be an option to terminate this Agreement.

         7.04. G2 agrees that Artist may, not more than once during any calendar
year, but only once with respect to any statement rendered hereunder,  audit its
books and records for the purpose of determining the accuracy of G2's statements
to Artist.  If Artist wishes to perform any such audit,  Artist will be required
to notify G2 at least ten (10) days before the date when  Artist  plans to being
the audit.  If Artist's audit has not been  completed  within one (1) month from
the time Artist  begins in, G2 may require  Artist to  terminate it on seven (7)

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days notice to Artist and G2 will not be  required to permit  Artist to continue
the examination after the end of that seven (7) day period.  Artist shall not be
entitled to examine any  manufacturing  records or any other records which do no
report sales of Records or  calculation  of net receipts on which  royalties are
accruable hereunder. All audits shall be made during regular business hours, and
shall be  conducted  on  Artist's  behalf  by an  independent  Certified  Public
Accountant and/or licensed attorney.  Each examination shall be made at Artist's
sole expense at G2's regular place of business in United States, where the books
and records are maintained.

8. MECHANICAL LICENSE AND ROYALTIES

         8.01.  All  Controlled  Compositions  (defined as musical  compositions
composed  in whole or in part by any  individual  member of  Artist)  are hereby
licensed to g2 and its licensees for reproduction on Phonograph Records anywhere
in the Universe. Royalties for the mechanical license herein granted shall be at
a rate equal to seventy-five percent (75%) of the minimum U.S. statutory rate in
effect at the time the recording is first  released  (including  the "long work"
rate, if applicable) for  royalty-bearing  records sold and not returned and for
which G2 is paid,  excluding any instance where G2 and Artist are sharing income
under  Paragraph  6.01(e)  above.  In no event  shall the  mechanical  royalties
payable  hereunder for any album exceed ten (10) times the rate set forth above.
The  foregoing  also applies to music videos,  as well as to any instance  where
such a  license  must be  executed  in favor of G2,  G2 shall  not  recoup  from
mechanical  royalties  due to Artist any advances  payable to Artist  except any
advances of cash or consigned materials (or the like) to Artist.

         8.02.  If any record  contains one of more  compositions  which are not
Controlled  Compositions,  then G2 will have the right to reduce  the  amount of
Mechanical  Royalties payable on the Controlled  Compositions by an amount equal
to the amount of mechanical royalties payable on non-Controlled Compositions.

9. TRADEMARKS

         9.01. Artist shall perform under the professional name, "OneUp." Artist
warrants  and  represents  that it is the sole owner of such name in  connection
with Phonograph Records during the term hereof. Artist shall not use a different
name in connection with  Phonograph  records unless Artist and G2 mutually agree
in  writing.  Artist  agrees  that G2 may cause a search to  instituted  for the
purpose of determining  whether any professional name used by Artist has been or
is being used by another person in connection  with Phonograph  Records.  G2 may
require Artist to file a federal application for trademark protection to be made
in favor of Artist for  Phonograph  Record and/or  entertainment  purposes.  Any
amounts up to One Thousand Seven Hundred Dollars ($1,700.00)  expended by Artist
in successfully  obtaining a requested trademark  registration  pursuant to this
Paragraph  shall be  reimbursed  by G2 and  deemed  Advances  hereunder.  If the
trademark  search  indicates  that such name  should not be used,  G2 and Artist
shall mutually agree on a substitute name for Artist.  Nothing  contained herein
shall release Artist from its indemnification of G2 with respect to Artist's use
of such name.

<PAGE>

10. FREE GOODS

         10.01. No royalties shall be payable with respect to records given away
or furnished on a "no charge"  basis to one-stops,  rack jobbers,  distributors,
dealers,  radio  stations,  television  stations or film  companies,  theatrical
hooking agencies,  print media, music publishers or the like, provided that such
records do not exceed one hundred (100) non-royalty bearing Singles out of every
one thousand  (1,000)  Singles  distributed  and one hundred  (100)  non-royalty
bearing  Albums out of every one thousand  (1,000)  Albums.  Any record sold for
less  than  fifty  percent  (50%)  of G2's  published  wholesale  price  will be
non-royalty bearing record.

         10.02.  During each applicable contract period, G2 shall provide Artist
with thirty (30 ) non-royalty  bearing  copies of Artist's then current Album at
no charge to the Artist.

11. CONTAINER COSTS

         11.01.  G2's  container  deduction  shall be a sum equal to: one dollar
($1.00) for singles,  one dollar and fifty cents ($1.50) for LPs and  cassettes,
two dollars ($2.00) for double LP sets and compact discs,  three dollars ($3.00)
for double  cassettes,  and four dollars  ($4.00) for other  formats,  including
double compact disks, and all video formats.

12. INDEMNIFICATION

         12.01. Artist agrees to and does hereby indemnify, save and hold G2 and
its licensees harmless of and from any and all liability, loss, damage, cost, or
expense (including all legal expenses and reasonable  attorney fees) arising out
of or  connected  with  any  breach  of this  Agreement  or any  claim  which is
inconsistent  with any of the  warranties or  representations  made by Artist in
this Agreement, and Artist agrees to reimburse G2 on demand for any payment made
or  incurred  by G2 with  respect to the  foregoing  if the claim  concerned  is
settled or has resulted in a final judgment against G2 or its licensees. Pending
the  determination of any claim with respect to which G2 is entitled  indemnity,
G2 may  withhold  monies  which would be  otherwise  payable to Artist up to the
amount of it's potential liability.

         12.02.  G2 agrees to defend and does  hereby  indemnify,  save and hold
Artist  harmless  of and from any and all  liability,  loss,  damage,  cost,  or
expense (including all legal expenses and reasonable  attorney fees) arising out
of or connected with any claim which is inconsistent  with any of the warranties
or  representations  made by G2 in this  Agreement,  and G2 agrees to  reimburse
Artist on demand for any payment  made or incurred by Artist with respect to the
foregoing if the claim  concerned is settled or has resulted in a final judgment
against Artist.

13. DEFAULT AND TERMINATION

         13.01.  In  the  event  of any  default  or  breach  by  Artist  in the
performance of any of Artist's obligations hereunder,  G2 may, without prejudice
to its other rights,  claims or remedies,  suspend its obligations hereunder for
the  duration  of such  default  or breach and until the same has been cured and

<PAGE>

may, at its option, extend the Term for a period equal to all or any part of the
period of such  default or breach,  and in such event the dates for the exercise
by G2 of the Option  Periods  hereunder  and the dates of  commencement  of each
subsequent Option Period shall be extended accordingly.

14. FORCE MAJEUR

         14.01.  If G2's  material  performance  hereunder is delayed or becomes
impossible or impractical because of any act of God, fire,  earthquake,  strike,
act of government or any order, regulation, ruling, or action of any labor union
or  association of artists  effecting G2 or Artist under the  phonograph  record
industry,  G2,  upon notice to Artist may  suspend  its  obligations  under this
Agreement for a period not to exceed  ninety days,  and in such event the number
of days equal to the number of days of such suspension  shall be added on to the
then-current  period  of the Term  thereof.  In the  event  that  G2's  material
performance hereunder is delayed or becomes impossible or impractical because of
any civil strife, G2, upon notice to Artist, may suspend its obligation of under
this Agreement for the duration of such delay, impossibility or impracticability
and in such  event  the  number  of days  equal to the  numbers  of days of such
suspension shall be added to the then-current period of the Term thereof.

15. MERCHANDISING

         15.01.  Artist  hereby grants G2 the  exclusive  right to  manufacture,
sell, license, distribute and exploit, throughout the Universe and by mail-order
and through retail sources of, without limitation, all merchandise of every kind
featuring the Artist (name/logo/likeness), during the Term of this Agreement.

         15.02. It is expressly  agreed and understood that any contract for the
purpose  of  merchandising  Artist  entered  into by G2  during  the Term  shall
continue in full force and effect in accordance with the provisions  thereof for
a period not to exceed one (1) year following the expiration of the term of this
Agreement.

         15.03.  In the case of any such products or property  manufactured  and
sold by G2 or by an associated company, Artist shall be entitled to a royalty of
thirty-four percent (34%) of the adjusted gross receipts  therefrom.  As used in
this  paragraph,  the term  "adjusted  gross" shall mean gross revenues from the
sale of  applicable  merchandise,  less venues  commissions  and state sales tax
where  collected and actually  paid. In the event that G2 licenses to others any
of its rights under this clause,  then Artist shall  receive sixty percent (60%)
of the  net  receipts  therefrom.  As  used in this  paragraph,  the  term  "net
receipts"  shall be calculated as gross revenues from the sale of the applicable
merchandise,  less the cost  actually  incurred and paid by G2 or its  licensing
company for manufacturing;  sales personnel salaries and/or  commissions,  venue
commissions and state sales tax where collected and actually paid.

<PAGE>

         15.04.  Artist has the right of approval of all merchandising  artwork,
so long as said approval is not unreasonable  withheld.  During the Term of this
Agreement,  Artist  shall cause the  inclusion of G2's logo and proper name at a
reasonable size and position on all merchandise.

         15.05. No royalties shall be payable with respect to merchandise  given
away or furnished on a no-charge basis. Upon Artist's request,  G2 shall provide
Artist with twenty (20) non-royalty-bearing  samples of each item of merchandise
at no charge.

         15.06.  The  parties  agree  to  negotiate  in good  faith a  long-form
agreement  for the  sale  of  merchandise  that is  consistent  with  the  terms
contained herein.

16. ARTWORK

         16.01.  Artist  agrees that G2 is the owner of any and all artwork,  LP
jacket art, and promotional  artistic renderings  undertaken or completed within
the Term of this Agreement. Artist shall have the right to use artwork which has
been mutually approved by G2 and Artist for the purpose of merchandising.

17. NOTICES

17.01. All notices, demands or the like which are required to be given hereunder
shall be in  writing  and may be  served  upon the  other  party  personally  by
Registered Mail, Return Receipt Requested, or by telecopy (facsimile). Notice to
Artist  will be  received  by:__________________________________________________
________________________________________________________________________________
and notice to G2 will be received by: Gust Kepler, G2 Companies,  Inc., 14110 N.
Dallas Parkway, Suite 365, Dallas, TX 75254.

18. PROMOTIONS AND ADVERTISING CAMPAIGNS

         18.01. Any promotional monies spent by G2 on behalf of Artist are fifty
percent (50%)  recoupable from movies otherwise due to Artist from G2, excluding
Mechanical  Royalties and  merchandise  royalties,  notwithstanding  the source.
Container  costs shall not be considered  promotional  monies.  Any  promotional
monies spent on behalf of Artist in  combination  with other G2 Artists shall be
recoupable from Artists on a pro-rata basis.

         18.02.  G2 is not obligated to produce a promotional  video for Artist,
but if G2  undertakes  to produce said video,  the cost is fifty  percent  (50%)
recoupable  from  royalties,  excluding  Mechanical  Royalties  and  merchandise
royalties,  not  withstanding the source.  The cost of producing  nonpromotional
videos intended for resale are fully recoupable.

19. CONTROLLING LAW

         19.01.  The Agreement is entered into and performable in Dallas County,
Texas and the validity,  interpretation and legal effect of this Agreement shall
be governed by Texas law.  Venue for any legal action shall be in Dallas County,
Texas.

<PAGE>

20. REMEDIES

         20.01.  Artist  acknowledges,  recognizes  and agrees that his services
hereunder are of a special,  unique,  unusual,  extraordinary  and  intellectual
character  which  gives  them a  peculiar  value,  the loss of which  cannot  be
reasonably  or  adequately  compensated  for by  damages  in an  action  of law.
Inasmuch as a breach of such  services  will cause G2  irreparable  damages,  G2
shall be entitled  to  injunctive  and other  equitable  relief,  in addition to
whatever  legal  remedies are  available,  to prevent or cure any such breach or
threatened breach.

21. HEADINGS

         21.01.  The headings of the clauses herein are intended for convenience
only,  and  shall  not be of any  effect  in  construing  the  contents  of this
Agreement.

22. RELATIONSHIP

         22.01.  Artist has the status of an independent  contractor and nothing
herein contained shall  contemplate or constitute  Artist or its members as G2's
agents or  employees.  This  Agreement  does not and shall not be  construed  to
create a partnership or joint venture between the parties to this Agreement.

23. VALIDITY AND MODIFICATIONS

         23.01.  The invalidity or  unenforceability  of any provision shall not
affect the validity or  enforceability  of any other  provision.  This Agreement
contains the entire understanding of the parties relating to its subject matter.
No change of this  Agreement will be binding unless signed by all parties hereto
or their  duly  authorized  representatives.  A waiver  by  either  party of any
provision of this  Agreement in any instance shall not be deemed to waive it for
the future. All remedies, rights, undertakings and obligations contained in this
Agreement  shall be  cumulative  and none of them shall limit any other  remedy,
right, undertaking or obligation.

24. ASSIGNMENT

         24.01.  G2 may assign its rights  under this  Agreement  in whole or in
part to any Major  Record Label or its  subsidiary  or legal  successor.  G2 may
assigns its rights under this Agreement in whole or in part to any other Company
with Artist's consent, such consent not to be unreasonably withheld.

25. LEGAL REPRESENTATION

         25.01. Artist, by their signature hereto,  confirms that G2 has advised
Artist to take independent legal counsel,  from a lawyer specializing  generally
in  the  music  business  and  specifically  in  the  negotiation  of  recording
agreements, on the terms and conditions of this Agreement and on the obligations
being undertaken by Artist in executing the Agreement.

<PAGE>

26. COOPERATION

         26.01.  Artist shall  execute such other  documentation  and shall give
such further  assurances  as may  reasonably  be necessary or desirable  for the
purpose of vesting, confirming, protecting or further assuring any of the rights
granted herein.

27. DISCLAIMER

         27.01. G2 has not made and does not hereby make any  representation  or
warranty  with respect to the extent of the sale of records or the  exploitation
of music videos hereunder.

SIGNED THIS 24th DAY OF JUNE, 2004.

G2 VENTURES, INC.

By: /s/Gust Kepler
   ---------------
Gust Kepler, President

14110 North Dallas Parkway
Suite 365
Dallas, TX 75254

ARTIST

p/k/aOneUp

By: /s/ Neil Swanson
   -----------------
Printed Name: Neil Swanson
SSN: ###-##-####

By: /s/ Justin Jones
   -----------------
Printed Name: Justin Jones
SSN: ###-##-####

Artist Address: 132 Brookwood Dr.
Desoto, TX 75115

<PAGE>

                                    EXHIBIT A

                    Appendix Of Existing Commercial Releases

Date              Title             Song Title                Label

<PAGE>

                                    EXHIBIT B

                                 APPROVED LABELSEXHIBIT 10.62

                        HOST AMERICA CORPORATION

                      SECURITIES PURCHASE AGREEMENT

                              June 23, 2004

<PAGE>
                            TABLE OF CONTENTS
                                                                     Page
                                                                     ----
1.   Agreement to Sell and Purchase. . . . . . . . . . . . . . . . . . .2

2.   Fees and Warrant. . . . . . . . . . . . . . . . . . . . . . . . . .2

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

4.   Representations and Warranties of the Company . . . . . . . . . . .3
     4.1   Organization, Good Standing and Qualification . . . . . . . .3
     4.2   Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . .4
     4.3   Capitalization; Voting Rights . . . . . . . . . . . . . . . .4
     4.4   Authorization; Binding Obligations. . . . . . . . . . . . . .5
     4.5   Liabilities . . . . . . . . . . . . . . . . . . . . . . . . .6
     4.6   Agreements; Action. . . . . . . . . . . . . . . . . . . . . .6
     4.7   Obligations to Related Parties. . . . . . . . . . . . . . . .7
     4.8   Changes . . . . . . . . . . . . . . . . . . . . . . . . . . .7
     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 . . . . . . . . . . . . . . . . . . . . . . 13
     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 . . . . . . . . . . . . . . . . . . . . . . . . 12

5.   Representations and Warranties of the Purchaser . . . . . . . . . 14
     5.1   No Shorting . . . . . . . . . . . . . . . . . . . . . . . . 15
     5.2   Requisite Power and Authority . . . . . . . . . . . . . . . 15
     5.3   Investment Representations. . . . . . . . . . . . . . . . . 15
     5.4   Purchaser Bears Economic Risk . . . . . . . . . . . . . . . 15
     5.5   Acquisition for Own Account . . . . . . . . . . . . . . . . 15
     5.6   Purchaser Can Protect Its Interest. . . . . . . . . . . . . 16
     5.7   Accredited Investor . . . . . . . . . . . . . . . . . . . . 16
     5.8   Legends . . . . . . . . . . . . . . . . . . . . . . . . . . 16

                                    i
<PAGE>
6.   Covenants of the Company. . . . . . . . . . . . . . . . . . . . . 17
     6.1   Stop-Orders . . . . . . . . . . . . . . . . . . . . . . . . 17
     6.2   Listing . . . . . . . . . . . . . . . . . . . . . . . . . . 17
     6.3   Market Regulations. . . . . . . . . . . . . . . . . . . . . 17
     6.4   Reporting Requirements                                      17
     6.5   Use of Funds. . . . . . . . . . . . . . . . . . . . . . . . 17
     6.6   Access to Facilities. . . . . . . . . . . . . . . . . . . . 18
     6.7   Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
     6.8   Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 19
     6.9   Intellectual Property . . . . . . . . . . . . . . . . . . . 20
     6.10  Properties. . . . . . . . . . . . . . . . . . . . . . . . . 20
     6.11  Confidentiality . . . . . . . . . . . . . . . . . . . . . . 20
     6.12  Required Approvals. . . . . . . . . . . . . . . . . . . . . 20
     6.13  Reissuance of Securities. . . . . . . . . . . . . . . . . . 22
     6.14  Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . 22
     6.15  Margin Stock. . . . . . . . . . . . . . . . . . . . . . . . 19
     6.16  Restricted Cash Disclosure. . . . . . . . . . . . . . . . . 19
     6.17  Financing Right of First Refusal. . . . . . . . . . . . . . 19

7.   Covenants of the Purchaser. . . . . . . . . . . . . . . . . . . . 23
     7.1   Confidentiality . . . . . . . . . . . . . . . . . . . . . . 24
     7.2   Non-Public Information. . . . . . . . . . . . . . . . . . . 24

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

9.   Conversion of Convertible Notes . . . . . . . . . . . . . . . . . 24
     9.1   Mechanics of Conversion . . . . . . . . . . . . . . . . . . 24

10.  Registration Rights . . . . . . . . . . . . . . . . . . . . . . . 26
     10.1  Registration Rights Granted . . . . . . . . . . . . . . . . 26
     10.2  Offering Restrictions . . . . . . . . . . . . . . . . . . . 26

11.  Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 26
     11.1  Governing Law . . . . . . . . . . . . . . . . . . . . . . . 26
     11.2  Survival. . . . . . . . . . . . . . . . . . . . . . . . . . 27
     11.3  Successors. . . . . . . . . . . . . . . . . . . . . . . . . 27
     11.4  Entire Agreement. . . . . . . . . . . . . . . . . . . . . . 27
     11.5  Severability. . . . . . . . . . . . . . . . . . . . . . . . 27
     11.6  Amendment and Waiver. . . . . . . . . . . . . . . . . . . . 27
     11.7  Delays or Omissions . . . . . . . . . . . . . . . . . . . . 28
     11.8  Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 28
     11.9  Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . 29
     11.10 Titles and Subtitles. . . . . . . . . . . . . . . . . . . . 29
     11.11 Facsimile Signatures; Counterparts. . . . . . . . . . . . . 29
     11.12 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . 29
     11.13 Construction. . . . . . . . . . . . . . . . . . . . . . . . 29

                                   ii
<PAGE>
                            LIST OF EXHIBITS
-------------------------------------------------------------------------

Form of Term Note A. . . . . . . . . . . . . . . . . . . . . .Exhibit A-1
Form of Term Note B. . . . . . . . . . . . . . . . . . . . . .Exhibit A-2
Form of Warrant. . . . . . . . . . . . . . . . . . . . . . . . .Exhibit B
Form of Opinion. . . . . . . . . . . . . . . . . . . . . . . . .Exhibit C
Form of Escrow Agreement . . . . . . . . . . . . . . . . . . . .Exhibit D

                                   iii
<PAGE>
                      SECURITIES PURCHASE AGREEMENT

     THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of June 23, 2004, by and between Host America
Corporation, 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 A in the aggregate principal amount of Four
Million Dollars ($4,000,000) (the "Term Note A"), which Term Note A is
convertible into shares of the Company's common stock, $0.01 par value
per share (the "Common Stock") at an initial fixed conversion price of
$5.03 per share of Common Stock (the "Term Note A Fixed Conversion
Price");

     WHEREAS, the Company has authorized the sale to the Purchaser of a
Secured Convertible Term Note B in the aggregate principal amount of Four
Million Dollars ($4,000,000) (the "Term Note B"; the Term Note A and the
Term Note B are collectively referred to herein as the "Notes" and each,
a "Note"), which Term Note B is convertible into shares of the Company's
common stock, $0.01 par value per share (the "Common Stock") at an
initial fixed conversion price of $5.48 per share of Common Stock (the
"Term Note B Fixed Conversion Price"; the Term Note A Fixed Conversion
Price and the Term Note B Fixed Conversion Price are collectively
referred to herein as the "Fixed Conversion Price");

     WHEREAS, the Company wishes to issue a warrant to the Purchaser to
purchase up to 450,000 shares of the Company's Common Stock (subject to
adjustment as set forth therein) in connection with Purchaser's purchase
of the Notes;

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

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

                                AGREEMENT

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

<PAGE>
1. AGREEMENT TO SELL AND PURCHASE.  Pursuant to the terms and conditions
set forth in this Agreement, on the Closing Date (as defined in Section
3), the Company agrees to sell to the Purchaser, and the Purchaser hereby
agrees to purchase from the Company, (x) a Term Note A in the aggregate
principal amount of $4,000,000 and (y) a Term Note B in an aggregate
principal amount of $4,000,000, in each case, convertible in accordance
with the terms thereof into shares of the Company's Common Stock in
accordance with the terms of the Notes and this Agreement. The Notes
purchased on the Closing Date shall be known as the "Offering." A form of
the Term Note A is annexed hereto as Exhibit A-1 and a form of the Term
Note B is annexed hereto as Exhibit A-2. Each Note will mature on the
Maturity Date (as defined in the respective Note). Collectively, the
Notes and Warrant and Common Stock issuable in payment of the Notes, upon
conversion of the Notes and upon exercise of the Warrant are referred to
as the "Securities."

2. FEES AND WARRANT.  On the Closing Date:

           (a) The Company will issue and deliver to the Purchaser a
               Warrant to purchase up to 450,000 shares of Common
               Stock in connection with the Offering (the "Warrant")
               pursuant to Section 1 hereof. The Warrant must be
               delivered on the Closing Date. A form of Warrant is
               annexed hereto as Exhibit B. All the representations,
               covenants, warranties, undertakings, and
               indemnification, and other rights made or granted to
               or for the benefit of the Purchaser by the Company
               are hereby also made and granted in respect of the
               Warrant and shares of the Company's Common Stock
               issuable upon exercise of the Warrant (the "Warrant
               Shares").

           (b) Subject to the terms of Section 2(d) below, the
               Company shall pay to Laurus Capital Management, LLC,
               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 Notes. The
               foregoing fee is referred to herein as the "Closing
               Payment."

           (c) The Company shall reimburse the Purchaser for its
               reasonable expenses (including documentation 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 6.8) and all related matters.
               Amounts required to be paid under this Section 2(c)
               will be paid on the Closing Date and shall be $42,500
               (net of deposits previously paid by the Company)  for
               such expenses (including documentation fees and
               expenses) referred to in this Section 2(c).

           (d) The Closing Payment and the expenses referred to in
               the preceding clause (c) (net of deposits previously
               paid by the Company) shall be paid at closing out of
               funds held pursuant to a Funds Escrow Agreement of
               even date herewith among the Company, Purchaser, and
               an Escrow Agent (the "Funds Escrow Agreement") and a
               disbursement letter (the "Disbursement Letter").

                                    2
<PAGE>
3. CLOSING, DELIVERY AND PAYMENT.

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

     3.2 DELIVERY.  Pursuant to the Funds Escrow Agreement in the form
attached hereto as Exhibit D, at the Closing on the Closing Date, the
Company will deliver to the Purchaser, among other things, a Term Note A
in the form attached as Exhibit A-1 representing the aggregate principal
amount of $4,000,000, a Term Note B in the form attached as Exhibit A-2
representing the aggregate principal amount of $4,000,000 and a Warrant
in the form attached as Exhibit B in the Purchaser's name representing
450,000 Warrant Shares and the Purchaser will deliver to the Company,
among other things, the amounts set forth in the Disbursement Letter  by
certified funds or wire transfer (it being understood that the entire
amount of the proceeds of the Term Note B shall be deposited in the
Restricted Account (as defined in the Restricted Account Agreement
referred to below)).

4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company hereby
represents and warrants to the Purchaser as follows (which
representations and warranties are supplemented by the Company's filings
under the Securities Exchange Act of 1934 (collectively, the "Exchange
Act Filings"), copies of which have been provided to the Purchaser):

     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 power and authority to own and operate its properties and
assets, to execute and deliver (i) this Agreement, (ii) the Term Note A,
the Term Note B and the Warrant 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 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 (the "Registration Rights Agreement"), (v) the
Subsidiary Guaranty dated as of the date hereof made by certain
Subsidiaries of the Company (as amended, modified 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 or supplemented from
time to time, the "Stock Pledge Agreement"), (vii) the Escrow Agreement
dated as of the date hereof among the Company, the Purchaser and the
escrow agent referred to therein, (viii) the Restricted Account Agreement
dated as of the date hereof among the Company, the Purchaser and North
Fork Bank (the "Restricted Account Agreement"), (ix) the Restricted
Account Side Letter related to the Restricted Account Agreement dated as
of the date hereof between the Company and the Purchaser (the "Restricted
Account Side Letter"), (x) [Add Three Party Agreement related to soft

                                    3
<PAGE>
lockbox] and (xi) all other agreements related to this Agreement and the
Notes and referred to herein (the preceding clauses (ii) through (xi),
collectively, the "Related Agreements"), to issue and sell the Notes and
the shares of Common Stock issuable upon conversion of the Notes (the
"Note Shares"), to issue and sell the Warrant and the Warrant Shares, and
to carry out the provisions of this Agreement and the Related Agreements
and to carry on its business as presently conducted.  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 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 it
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 (i) a corporation
or other entity whose shares of stock or other ownership interests having
ordinary voting power (other than stock or other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the directors of such corporation, or other persons
or entities performing similar functions for such person or entity, are
owned, directly or indirectly, by such person or entity or (ii) a
corporation or other entity in which such person or entity owns, directly
or indirectly, more than 50% of the equity interests at such time.

     4.3 Capitalization; Voting Rights.

           (a) The authorized capital stock of the Company, as of
               the date hereof consists of 82,000,000 shares, of
               which 80,000,000 are shares of Common Stock, par
               value $0.01 per share, of which are issued and
               outstanding 4,117,461, and 2,000,000 are shares of
               preferred stock, par value $0.01 per share of which
               266,667 shares of preferred stock are issued and
               outstanding.  The authorized 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; (ii) shares which may be granted
               pursuant to this Agreement and the Related
               Agreements; and (iii) Disclosed Acquisition Common
               Stock (as defined below) the shares of Common Stock
               contemplated to be issued in connection with the
               Disclosed Acquisitions (as defined below), so long as
               (i) the fair market value of such shares of Common
               Stock (on a fully diluted basis and determined in
               good faith by the Board of Directors of the Company),
               when issued, is no less than $4.00 and (ii) such
               shares of Common Stock are restricted securities that
               (A) are not subject to any registration rights and
               (B) cannot be publicly traded other than by virtue of
               the satisfaction of the requirements of Rule 144(k)
               of the Exchange Act , there are no outstanding
               options, warrants, rights (including conversion or
               preemptive

                                    4
<PAGE>
               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 Notes or the Warrant, or the issuance
               of any of the Note Shares or Warrant Shares, nor the
               consummation of any transaction contemplated hereby
               will result in a change in the price (other than as
               traded under typical market conditions in the
               Principal Market) or number of any securities of the
               Company outstanding, under anti-dilution or other
               similar provisions contained in or affecting any such
               securities.  For the purpose of this Agreement and
               the Related Agreements, "Disclosed Acquisition Common
               Stock" shall mean up to 2,467,700 shares of Common
               Stock (subject to adjustment for any combination,
               subdivision or similar event with respect to the
               Common Stock) contemplated to be issued in connection
               with the Disclosed Acquisitions (as defined below),
               provided that such shares of Common Stock have the
               following characteristics: (i) the fair market value
               of such shares of Common Stock at the time of
               issuance thereof (calculated on a fully diluted basis
               and determined in good faith by the Board of
               Directors of the Company) is no less than $4.00 per
               share of Common Stock and (ii) such shares of Common
               Stock are restricted securities that (A) are not
               subject to any registration rights and (B) cannot be
               publically traded other than by virtue of the
               satisfaction of the requirements of Rule 144(k) of
               the Exchange Act.

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

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

     4.4 AUTHORIZATION; BINDING OBLIGATIONS.  All corporate, partnership
or limited liability company, as the case may be, action on the part of
the Company and each of its Subsidiaries (including the 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 Notes and Warrant has been taken or will be taken prior
to the Closing.  This Agreement and the Related Agreements, when executed
and

                                    5
<PAGE>
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 person in accordance with their terms,
except:

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

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

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

     4.5 LIABILITIES.  Neither the Company nor any of its Subsidiaries
has any contingent liabilities, except current liabilities incurred in
the ordinary course of business and liabilities disclosed in any Exchange
Act Filings.

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

           (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 in excess
               of $50,000 (other than obligations of, or payments
               to, the Company arising from purchase or sale
               agreements entered into in the ordinary course of
               business); or (ii) the transfer or license of any
               patent, copyright, trade secret or other proprietary
               right to or from the Company (other than licenses
               arising from the purchase of "off the shelf" or other
               standard products); or (iii) provisions restricting
               the development, manufacture or distribution of the
               Company's products or services; or (iv)
               indemnification by the Company with respect to
               infringements of proprietary rights.

           (b) Since June 30, 2003, 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 not in excess, individually or
               in the aggregate, of $100,000, other than ordinary
               course advances for travel expenses; or (iv) sold,

                                    6
<PAGE>
               exchanged or otherwise disposed of any of its assets
               or rights, other than the sale of its inventory in
               the ordinary course of business.

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

     4.7 OBLIGATIONS TO RELATED PARTIES.  Except as set forth on Schedule
4.7, there are no obligations of the Company 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

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

Except as described above or set forth on SCHEDULE 4.7, none of the
officers, directors or, to the best of the Company's knowledge, key
employees or stockholders of the Company or any members of their
immediate families, are indebted to the Company, individually or in the
aggregate, in excess of $50,000 or have any direct or indirect ownership
interest in any firm or corporation with which the Company is affiliated
or with which the Company has a business relationship, or any firm or
corporation which competes with the Company, other than passive
investments in publicly traded companies (representing less than one
percent (1%) of such company) which may compete with the Company. Except
as described above, no officer, director or stockholder, or any member of
their immediate families, is, directly or indirectly, interested in any
material contract with the Company and no agreements, understandings or
proposed transactions are contemplated between the Company and any such
person.  Except as set forth on SCHEDULE 4.7, the Company is not a
guarantor or indemnitor of any indebtedness of any other person, firm or
corporation.

     4.8 CHANGES.  Since June 30, 2003, except as set forth on Schedule
4.8 or as disclosed in any Exchange Act Filing , 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

                                    7
<PAGE>
               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, 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 or
               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;

           (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;

                                    8
<PAGE>
           (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 estates, in each case subject to no mortgage, pledge, lien,
lease, encumbrance or charge, other than:

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

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

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

All facilities, machinery, equipment, fixtures, vehicles and other
properties owned, leased or used by the Company and its Subsidiaries are
in such operating condition and repair as are 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 terms of each
lease to which it is a party or is otherwise bound, except to the extent
that any such noncompliance has not had, or could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.

     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,

                                    9
<PAGE>
               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 (x) any term of its
Charter or Bylaws, or (y) of any provision of any indebtedness, mortgage,
indenture, contract, agreement or instrument to which it is party or by
which it is bound or of any judgment, decree, order or writ, which
violation or default, in the case of this clause (y), has had, or could
reasonably be expected to have, either individually or in the aggregate,
a Material Adverse Effect.  The execution, delivery and performance of
and compliance with this Agreement and the Related Agreements to which it
is a party, and the issuance and sale of the Notes 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, except in
favor of Purchaser, or the suspension, revocation, impairment, forfeiture
or nonrenewal of any permit, license, authorization or approval
applicable to the Company, its business or operations or any of its
assets or properties.

     4.12 LITIGATION.  Except as set forth on SCHEDULE 4.12 hereto, 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 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:

                                   10
<PAGE>
           (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 deficiency in assessment or proposed judgment
               to its federal, state or other taxes.

The Company has no knowledge of any liability of 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.  The Company has not been notified
of any labor union organizing activity pending or 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, 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 or any of its Subsidiaries of its
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 has not been notified of any officer, key employee or
group of employees who 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

                                   11
<PAGE>
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 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 has
been duly and validly obtained or filed, or with respect to any filings
that must be made after the Closing, as will be filed in a timely manner.
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.

     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
that has had, or could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect, and to its knowledge, no
expenditures are or will be required in order to comply with any such
existing statute, law or regulation, which expenditures could reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect. 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, except to the extent that such use
storage or diposal has not had, or could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. 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 Notes and Warrant 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.

                                   12
<PAGE>
     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 Notes and
Warrant, 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.

     4.20 INSURANCE.  Each of the Company and each of its Subsidiaries
has general commercial, product liability, fire and casualty insurance
policies with coverages which the Company believes are customary for
companies similarly situated to the Company 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 with copies of:
(i) its Annual Report on Form 10-KSB for its fiscal year ended June 30,
2003, (ii) its Quarterly Report on Form 10-QSB for its fiscal quarters
ended September 30, 2003, December 31, 2004 and March 31, 2004, and (iii)
the Form 8-K filings which it has made during its fiscal year ending June
30, 2004 (collectively, the "SEC Reports"). Except as set forth on
SCHEDULE 4.21, each SEC Report was, at the time of its filing, in
substantial compliance with the requirements of its respective form and
none of the SEC Reports, nor the financial statements (and the notes
thereto) included in the SEC Reports, as of their respective filing
dates, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading.

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

     4.23 NO INTEGRATED OFFERING. Neither the Company, nor any of its
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

                                   13
<PAGE>
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
Notes and exercise of the Warrant is binding upon the Company and
enforceable regardless of the dilution such issuance may have on the
ownership interests of other shareholders of the Company.

     4.26 PATRIOT ACT.  The Company certifies that, to the best of
Company's knowledge, neither the Company nor any of its Subsidiaries has
been designated, and is not owned or controlled, by a "suspected
terrorist" as defined in Executive Order 13224.  The Company hereby
acknowledges that the Purchaser seeks to comply with all applicable laws
concerning money laundering and related activities.  In furtherance of
those efforts, the Company hereby represents, warrants and agrees that:
(i) none of the cash or property that the Company 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 (ii) 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 ceases to be true and
accurate regarding the Company or any of its Subsidiaries.  The Company
agrees to provide the Purchaser any 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 are incorrect, or if otherwise required by applicable law
or regulation related to money laundering 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 (ii) above.

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

                                   14
<PAGE>
     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, directly or indirectly, to engage in "short sales" of the
Company's Common Stock as long as the Notes shall be outstanding.

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

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

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

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

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

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

                                   15
<PAGE>
     5.6 PURCHASER CAN PROTECT ITS INTEREST.  The Purchaser represents
that by reason of its, or of its management's, business and financial
experience, the Purchaser has the capacity to evaluate the merits and
risks of its investment in the Notes, the Warrant and the Securities and
to protect its own interests in connection with the transactions
contemplated in this Agreement and the Related Agreements.  Further,
Purchaser is aware of no publication of any advertisement in connection
with the transactions contemplated in the Agreement or the Related
Agreements.

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

     5.8 LEGENDS.

           (a) Each 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 HOST AMERICA CORPORATION THAT SUCH
           REGISTRATION IS NOT REQUIRED."

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

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

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

           "THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF
           THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
           ACT OF 1933, AS AMENDED, OR ANY

                                   16
<PAGE>
           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 HOST AMERICA CORPORATION
           THAT SUCH REGISTRATION IS NOT REQUIRED."

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

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

     6.2 LISTING.  The Company shall promptly secure the listing of the
shares of Common Stock issuable upon conversion of the Notes and upon the
exercise of the Warrant on the NASDAQ Small Cap Market (the "Principal
Market") upon which shares of Common Stock are listed (subject to
official notice of issuance) and shall maintain such listing so long as
any other shares of Common Stock shall be so listed. The Company will
maintain the listing of its Common Stock on the Principal Market (which
shall include the NASD OTC Bulletin Board, NASDAQ Small Cap Market,
NASDAQ National Market System, American Stock Exchange or New York Stock
Exchange), 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/or such
exchanges, as applicable.

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

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

     6.5 USE OF FUNDS.  The Company agrees that it will use (i) up to
$1,250,000 of the proceeds of the sale of the Term A Note to consummate
the Company's contemplated acquisitions of Food  Brokers, Inc., KWM
Electronics Corporation, RS Services and Energy NSync substantially on
the terms set forth on Schedule 6.5 (collectively, the "Disclosed

                                   17
<PAGE>
Acquisitions"), and to pay transaction costs incurred in connection with
such Disclosed Acquisitions, (ii) up to $500,000 of the proceeds of the
sale of the Term Note A to refinancing existing indebtedness of the
Company and its Subsidiaries, (iii) up to $1,100,000 of the proceeds of
the sale of the Term Note A to pay legal, due diligence and transaction
fees incurred in connection with the transactions contemplated hereby,
(iv) up to $575,000 of the proceeds of the sale of the Term Note A in
connection with the research and development of the Company's and its
Subsidiaries' residential and commercial applications, (v) the remainder
of the proceeds of the sale of the Term Note A for general working
capital purposes, (vi) the proceeds of the sale of the Term Note B (x)
for the acquisitions of assets approved by the Purchaser, (y) to purchase
inventory in connection with certain customer contracts entered into by
the Company and/or any of its Subsidiaries, to the extent that such
purchase orders are reasonably satisfactory to the Purchaser and (z) for
general working capital purposes (it being understood that the entire
amount of the proceeds of the Term Note B will be deposited in the
Restricted Account on the Closing Date and shall be subject to the terms
and conditions of the Restricted Account Agreement and the Restricted
Account Side Letter) and (vii) the proceeds of the sale of the Warrant
shall be used for general working capital purposes.

     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, to:

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

           (b) examine (but not more often than once per fiscal
               quarter of the Company unless an Event of Default has
               occurred and is continuing) 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.

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, before
delinquency, all lawful 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 if the validity or amount
thereof shall currently be contested in good faith by appropriate
proceedings and if the Company and/or such Subsidiary shall have set
aside on its books adequate reserves with respect thereto, and provided,
further, that the Company and its Subsidiaries will either pay or bond
all such taxes, assessments, charges or levies forthwith upon

                                   18
<PAGE>
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, 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 its 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 Purchaser, the Company and each of its
Subsidiaries shall (i) 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; (ii)
maintain employee practice liability insurance 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; (iii) maintain
public and product liability insurance against claims for personal
injury, death or property damage suffered by others; (iv) 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 (v) on the Closing Date
and upon the request of Purchaser (which request shall not be made more
than once per fiscal quarter of the Company unless an Event of Default
has occurred and is continuing, furnish Purchaser with (x) copies of all
policies and evidence of the maintenance of such policies at least thirty
(30) days before any expiration date, (y) excepting the Company's
workers' compensation policy, endorsements to such policies naming
Purchaser as "co-insured" or "additional insured" and appropriate loss
payable endorsements in form and substance satisfactory to Purchaser,
naming Purchaser as loss payee, and (z) evidence that as to Purchaser the
insurance coverage shall not be impaired or invalidated by any act or
neglect of the Company or any Subsidiary and the insurer will provide
Purchaser with at least thirty (30) days notice prior to cancellation.
The Company and each Subsidiary shall instruct the insurance carriers
that in the event of any loss thereunder, the carriers shall make payment
for such loss to the Company and/or the Subsidiary and Purchaser jointly.
In the event that as of the date of receipt of each loss recovery upon
any such insurance, the Purchaser has not declared an Event of Default
(as defined in the Note or any other event of default with respect to
this Agreement or any of the Related Agreements (and, in either case,
such Event of Default or event of default, as the case may be, in
continuing), 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

                                   19
<PAGE>
"Collateral" secured by Purchaser's security interest pursuant to its
security agreements, with any surplus funds to (i) with respect to the
first $50,000 of such surplus funds received by the Company or any of its
Subsidiaries in connection with each such loss recovery, be paid to the
Company and (ii) with respect to all other surplus funds received by the
Company or any of its Subsidiaries in connection with each such loss
recovery, applied toward payment of the obligations of the Company to
Purchaser. In the event that Purchaser has properly declared an Event of
Default (as defined in the Note) or any other event of default with
respect to this Agreement or any of the Related Agreements (and, in
either case, such Event of Default or event of default, as the case may
be, in continuing), then all loss recoveries received by Purchaser upon
any such insurance thereafter may be applied to the obligations of the
Company hereunder and under the Related Agreements, in such order as the
Purchaser may determine. Any surplus (following satisfaction of all
Company obligations to Purchaser) shall be paid by Purchaser to the
Company or applied as may be otherwise required by law.  Any deficiency
thereon shall be paid by the Company or the Subsidiary, as applicable, to
Purchaser, on demand.

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

     6.12 REQUIRED APPROVALS.  For so long as twenty-five percent (25%)
of the aggregate principal amount of the Notes 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 Company
               or any of its wholly-owned Subsidiaries, (ii) issue
               any preferred stock that is manditorily redeemable by
               the holder thereof prior to the one year anniversary
               of the Maturity Date or (iii) redeem any of its
               preferred stock or other equity interests;

           (b) liquidate, dissolve or effect a material
               reorganization (it being understood that in no event
               shall the Company dissolve, liquidate or merge with
               any

                                   20
<PAGE>
               other person or entity (unless the Company is the
               surviving entity) except that Subsidiaries of the
               Company may be merged into one another or into the
               Company so long as (i) in connection with any such
               merger involving the Company, the Company is the
               surviving entity, (ii) in connection with any such
               merger involving one Subsidiary of the Company
               merging into another Subsidiary of the Company, the
               surviving Subsidiary enters into, or remains a party
               to, the Subsidiary Guaranty and (iii) in connection
               with any such merger, the Purchaser's security
               interest with respect to the assets involved in any
               such merger remains unaffected in all material
               respects;

           (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) subject to Section 6.12(g), 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%) per annum of the fair
               market value of the Company's assets) whether secured
               or unsecured other than (x) the Company's
               indebtedness to the Purchaser, (y) indebtedness set
               forth on SCHEDULE 6.12(e) attached hereto and made a
               part hereof and any refinancings or replacements
               thereof on terms (taken as a whole) no less favorable
               to the Company (as reasonably determined by the
               Purchaser) than the indebtedness being refinanced or
               replaced, and (z) any debt incurred in connection
               with the purchase of assets in the ordinary course of
               business, or any refinancings or replacements thereof
               on terms (taken as a whole) no less favorable to the
               Company (as reasonably determined by the Purchaser)
               than the indebtedness being refinanced or replaced;
               (ii) cancel any debt owing to it in excess of $50,000
               in the aggregate during any 12 month period (provided
               that the Company and its Subsidiaries may cancel debt
               that is determined to be uncollectable by the
               auditors of the Company and its Subsidiaries to the
               extent that such auditors require such cancellation);
               (iii) assume, guarantee, endorse or otherwise become
               directly or contingently liable in connection with
               any obligations of any other Person, except (A) as
               set forth in clause (iii) of the proviso to Section
               6.12(d) and (B) the endorsement of negotiable
               instruments by the Company 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); and

           (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

                                   21
<PAGE>
               Subsidiary becomes 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;

           (g) consummate the Disclosed Acquisitions; provided that
               the Disclosed Acquisitions may be consummated so long
               as (i) the assets acquired in connection with such
               Disclosed Acquisitions are acquired free and clear of
               all encumbrances (unless such encumbrances are
               satisfactory to the Purchaser) and are subject to the
               terms of the Master Security Agreement, (ii) in the
               event that equity interests of any person or entity
               are acquired in connection with any such Disclosed
               Acquisition, the Company and/or the relevant
               Subsidiary thereof has complied with Section 6.12(f),
               (iii) the aggregate principal amount of all
               indebtedness assumed in connection with the Disclosed
               Acquisitions (taken as a whole) does not exceed
               $600,000 and (iv) prior to any such consummation of a
               Disclosed Acquisition, the initial Registration
               Statement referred to in the Registration Rights
               Agreement has been declared effective by the SEC; and

           (h) make any principal repayment in respect of either of
               (x) the Company's 12.0% Unsecured Notes due January
               31, 2008 in an aggregate principal amount of
               $1,500,000 or (y) the Company's 7.5% Unsecured Notes
               due January 31, 2009 in an aggregate principal amount
               of $2,000,000.

     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 selling
Purchaser and broker, if any.

     6.14 OPINION.  On the Closing Date, the Company will deliver to the
Purchaser an opinion acceptable to the Purchaser from the Company's
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 Notes and exercise of the Warrant.

                                   22
<PAGE>
     6.15 MARGIN STOCK.  The Company will not permit any of the proceeds
of the Notes or the Warrant to be used directly or indirectly to
"purchase" or "carry" "margin stock" or to repay indebtedness incurred to
"purchase" or "carry" "margin stock" within the respective meanings of
each of the quoted terms under Regulation U of the Board of Governors of
the Federal Reserve System as now and from time to time hereafter in
effect.

     6.16  RESTRICTED CASH DISCLOSURE.  The Company agrees that, in
connection with its filing of its 8-K Report with the SEC concerning the
transactions contemplated by this Agreement and the Related Agreements
(such report, the "Laurus Transaction 8-K") in a timely manner after the
date hereof, it will disclose in such Laurus Transaction 8-K the amount
of the proceeds of the Term Note B issued to the Purchaser that has been
placed in a restricted cash account and is subject to the terms and
conditions of this Agreement and the Related Agreements.  Furthermore,
the Company agrees to disclose in all public filings required by the
Commission (where appropriate) following the filing of the Laurus
Transaction 8-K, the existence of the restricted cash referred to in the
immediately preceding sentence, together with the amount thereof.

     6.17 FINANCING RIGHT OF FIRST REFUSAL. (a) For so long as
twenty-five (25%) percent of the aggregate principal amount of the Notes
is outstanding, 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. Prior to the incurrence of additional
indebtedness (other than trade indebtedness, purchase money indebtedness
and capitalized lease obligations) or the issuance of any additional
equity interests (an "Additional Financing"), in each case, after the
date hereof, 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, together with the terms that such proposed
Additional Financing will be subject to.   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 agree to provide such Additional Financing to
the Company and/or such Subsidiary on terms no less favorable than those
outlined in Proposed Term Sheet within ten business days of receipt of
any such Proposed Term Sheet. If the provisions of the Purchaser's term
sheet are at least as favorable to the Company 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 the Additional Financing outlined
in the Purchaser's term sheet.

           (b) For so long as twenty-five (25%) percent of the
aggregate principal amount of the Notes is outstanding, 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.

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

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

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

8. COVENANTS OF THE COMPANY AND 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 claim, cost, expense, liability, obligation,
loss or damage (including reasonable legal fees) of any nature, incurred
by or imposed upon the Purchaser which results, arises out of or is based
upon: (i) any misrepresentation by 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; or (ii) any breach or default in
performance by Company or any of its Subsidiaries of any covenant or
undertaking to be performed by 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 Purchaser
relating hereto or thereto.

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

9. CONVERSION OF CONVERTIBLE NOTES.

     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 Notes 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

                                   24
<PAGE>
               and in such denominations to be specified
               representing the number of Note Shares issuable upon
               such conversion; and (ii) the Company warrants that
               no instructions other than these instructions have
               been or will be given to the transfer agent of the
               Company's Common Stock and that after the
               Effectiveness Date (as defined in the Registration
               Rights Agreement) the Note Shares issued will be
               freely transferable subject to the prospectus
               delivery requirements of the Securities Act and the
               provisions of this Agreement, and will not contain a
               legend restricting the resale or transferability of
               the Note Shares.

           (b) Purchaser will give notice of its decision to
               exercise its right to convert the Notes 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 Notes until the Purchaser receives a
               credit to the account of the Purchaser's prime broker
               through the DWAC system (as defined below),
               representing the Note Shares or until the Notes have
               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 counsel within one (1) business day of the
               date of the delivery to the Company of the  Notice of
               Conversion  and shall cause the transfer agent to
               transmit the certificates representing the Conversion
               Shares to the Holder by crediting the account of the
               Purchaser's prime broker with the Depository Trust
               Company ("DTC") through its Deposit Withdrawal Agent
               Commission ("DWAC") system within three (3) business
               days after receipt by the Company of the Notice of
               Conversion (the "Delivery Date").

           (c) The Company understands that a delay in the delivery
               of the Note Shares in the form required pursuant to
               Section 9 hereof beyond the Delivery Date could
               result in economic loss to the Purchaser.  In the
               event that the Company fails to direct its transfer
               agent to deliver the Note Shares to the Purchaser via
               the DWAC system within the time frame set forth in
               Section 9.1(b) above and the Note Shares are not
               delivered to the Purchaser by the Delivery Date, as
               compensation to the Purchaser for such loss, the
               Company agrees to pay late payments to the Purchaser
               for late issuance of the Note Shares in the form
               required pursuant to Section 9 hereof upon conversion
               of the Notes in the amount equal to the greater of:
               (i) $500 per business day after the Delivery Date; or
               (ii) the Purchaser's actual damages from such delayed
               delivery. Notwithstanding the foregoing, the Company
               will not owe the Purchaser any late payments if the
               delay in the delivery of the Note Shares beyond the
               Delivery Date is solely out of the control of the
               Company and the Company is actively trying to cure
               the cause of the delay.  The Company shall pay any
               payments incurred under this Section in immediately
               available funds upon demand and, in the case of
               actual

                                   25
<PAGE>
               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 Notes, for which such
               Conversion Notice was not timely honored.

Nothing contained herein or in any document referred to herein or
delivered in connection herewith shall be deemed to establish or require
the payment of a rate of interest or other charges in excess of the
maximum permitted by applicable law.  In the event that the rate of
interest or dividends required to be paid or other charges hereunder
exceed the maximum amount permitted by such law, any payments in excess
of such maximum shall be credited against amounts owed by the Company to
a Purchaser and thus refunded to the Company.  Furthermore, nothing
contained in this Section 9 shall limit in any respect the terms of any
of the Related Agreements.

10. REGISTRATION RIGHTS.

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

     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 issue any securities with a continuously
variable/floating conversion feature which are or could be (by conversion
or registration) free-trading securities (i.e. common stock subject to a
registration statement) prior to the full repayment or conversion of the
Notes (together with all accrued and unpaid interest and fees related
thereto) (the "Exclusion Period").

11. MISCELLANEOUS.

     11.1 GOVERNING LAW.  THIS AGREEMENT AND EACH RELATED AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.  ANY ACTION
BROUGHT BY EITHER PARTY AGAINST THE OTHER CONCERNING THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT AND EACH RELATED AGREEMENT SHALL BE
BROUGHT ONLY IN THE STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS
LOCATED IN THE STATE OF NEW YORK.  BOTH PARTIES AND THE INDIVIDUALS
EXECUTING THIS AGREEMENT AND THE RELATED AGREEMENTS ON BEHALF OF THE
COMPANY AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS AND WAIVE
TRIAL BY JURY.  IN THE EVENT THAT ANY PROVISION OF THIS AGREEMENT OR ANY
RELATED AGREEMENT DELIVERED IN CONNECTION HEREWITH IS INVALID OR

                                   26
<PAGE>
UNENFORCEABLE UNDER ANY APPLICABLE STATUTE OR RULE OF LAW, THEN SUCH
PROVISION SHALL BE DEEMED INOPERATIVE TO THE EXTENT THAT IT MAY CONFLICT
THEREWITH AND SHALL BE DEEMED MODIFIED TO CONFORM WITH SUCH STATUTE OR
RULE OF LAW.  ANY SUCH PROVISION WHICH MAY PROVE INVALID OR UNENFORCEABLE
UNDER ANY LAW SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY
OTHER PROVISION OF THIS AGREEMENT OR ANY RELATED AGREEMENT.

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

     11.3 SUCCESSORS.  Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, heirs, executors and administrators of the parties hereto and
shall inure to the benefit of and be enforceable by each person who shall
be a holder of the Securities from time to time, other than the holders
of Common Stock which has been sold by the Purchaser pursuant to Rule 144
or an effective registration statement. Purchaser may not assign its
rights hereunder  to a competitor of the Company.  Furthermore, so long
as no Event of Default has occurred and is continuing, the Purchaser will
not assign any of its rights hereunder to any person or entity other than
to an affiliate of the Purchaser without the consent of the Company
(which consent shall not be unreasonably withheld).

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

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

     11.6 AMENDMENT AND WAIVER.

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

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

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

                                   27
<PAGE>
     11.7 DELAYS OR OMISSIONS.  It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any
breach, default or noncompliance by another party under this Agreement or
the Related Agreements, shall impair any such right, power or remedy, nor
shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar
breach, default or noncompliance thereafter occurring.  All remedies,
either under this Agreement or the Related Agreements, by law or
otherwise afforded to any party, shall be cumulative and not alternative.

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

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

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

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

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

All communications shall be sent as follows:

     IF TO THE COMPANY, TO:   Host America Corporation
                              2 Broadway
                              Hamden, CT 06518

                              Attention:  Dave Murphy
                              Facsimile:  203-230-8667

                              WITH A COPY TO:

                              Berman and Sable LLC
                              One Financial Plaza
                              Hartford, CT 06103

                              Attention:  Steven A. Berman, Esq.
                              Facsimile:  860-527-9077

     IF TO THE PURCHASER, TO: Laurus Master Fund, Ltd.
                              c/o Ironshore Corporate Services ltd.
                              P.O. Box 1234 G.T.
                              Queensgate House, South Church Street
                              Grand Cayman, Cayman Islands
                              Facsimile:  345-949-9877

                                   28
<PAGE>
                              WITH A COPY TO:

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

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

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

     11.10 TITLES AND SUBTITLES.  The titles of the sections and
subsections of 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 instrument.

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

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

        [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                   29
<PAGE>
     IN WITNESS WHEREOF, the parties hereto have executed the SECURITIES
PURCHASE AGREEMENT as of the date set forth in the first paragraph
hereof.

COMPANY:                           PURCHASER:

HOST AMERICA CORPORATION           LAURUS MASTER FUND, LTD.

By:    /s/ David Murphy            By:    /s/ David Grin
      ------------------------           -------------------------
Name:  David Murphy                Name:  David Grin
      ------------------------           -------------------------
Title: CFO                         Title: Managing Partner
      ------------------------           -------------------------

                                   30
<PAGE>
                            LIST OF SCHEDULES
                            -----------------

Schedule       Subject
--------       -------

4.2            Each direct and indirect Subsidiary of the Company, the
               direct owner of such Subsidiary and its percentage
               ownership thereof.

4.3            The authorized capital stock of the Company and each
               Subsidiary of the Company.

4.6            List of agreements, understandings, instruments,
               contracts, proposed transactions, judgments, orders, writs
               or decrees to which the Company or any of its Subsidiaries
               is a party.

4.7            Obligations to Related Parties.

4.8            Changes

4.9            Company's and each Subsidiaries' Title to Properties and
               Assets; Liens; Etc.

4.12           Litigation involving Company and each Subsidiary

4.13           Tax Returns and Payments of Company and each Subsidiary

4.14           Employees

4.15           Registration Rights and Voting Rights

4.17           Disclosure of Hazardous Materials

4.21           SEC Reports

6.12(e)        Indebtedness

11.12          Broker's Fees

                                   31
<PAGE>
                               EXHIBIT A-1

                           FORM OF TERM NOTE A

                                   A-1
<PAGE>
                               EXHIBIT A-2

                           FORM OF TERM NOTE B

                                    2
<PAGE>
                                EXHIBIT B

                             FORM OF WARRANT

                                   B-1
<PAGE>
                                EXHIBIT C

                             FORM OF OPINION

                                   C-1
<PAGE>
                                EXHIBIT D

                        FORM OF ESCROW AGREEMENT

                                   D-2

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