Document:

SCHNITZER STEEL INDUSTRIES, INC.    Exhibit 10.2 to Form 8-K      www.EXFILE.com   (888)775-4789

    EXHIBIT
      10.2

    

    NOTE:  
      The following form of Long-Term Incentive Award Agreement is the form used
      for
      awards to corporate-level employees. In the Long-Term Incentive Award Agreements
      for employees who work exclusively for one of the Company’s three business
      segments, (a) the Payout Factor in Section 2.1 is based 50% on the rTSR Payout
      Factor and 50% on the payout factor for the business segment they work in,
      (b)
      text describing the payout factors for the other two business segments is
      deleted from Section 2, (c) Section 2.6 is deleted, (d) a new Section 3.4 is
      added in the form set forth in bold and brackets following Section 3.3 below,
      and (e) various other conforming language changes are made.

    

    

    
      
        	
                SCHNITZER
                  STEEL INDUSTRIES, INC.

              
	
                LONG-TERM
                  INCENTIVE AWARD AGREEMENT

              
	
                (FY
                  20__-20__ Performance Period -
                  ___________)

              

      

       

    

    This
      Agreement is entered into as of __________ __, 20__, between Schnitzer Steel
      Industries, Inc., an Oregon corporation (the “Company”), and _____________
      (“Recipient”).

     

    On
      __________ __, 20__,
      the
      Compensation Committee (the “Committee”) of the Company’s Board of Directors
      (the “Board”) authorized a performance-based award to the Recipient pursuant to
      Section 11 of the Company’s 1993 Stock Incentive Plan (the “Plan”). Compensation
      paid pursuant to the award is intended to qualify as performance-based
      compensation under Section 162(m) of the Internal Revenue Code of 1986 (the
      “Code”). Recipient desires to accept the award subject to the terms and
      conditions of this Agreement.

     

    NOW,
      THEREFORE, the parties agree as follows:

     

    1. Award.
      Subject
      to the terms and conditions of this Agreement, the Company shall issue to the
      Recipient the number of shares of Class A Common Stock of the Company
      (“Performance Shares”) determined under this Agreement based on (a) the
      performance of the Company’s stock and its three business segments during the
      three-year period from September 1, 20__ to August 31, 20__ (the “Performance
      Period”) as described in Section 2, and (b) Recipient’s continued employment
      during the Performance Period as described in Section 3. Recipient’s “Target
      Share Amount” for purposes of this Agreement is _______ shares.

     

    2. Performance
      Conditions.

     

    2.1 Payout
      Factor.
      Subject
      to adjustment under Sections 3, 4, 5 and 6, the number of Performance Shares
      to
      be issued to Recipient shall be determined by multiplying the Payout Factor
      by
      the Target Share Amount. The “Payout Factor” shall be equal to the sum of (a)
      50% of the rTSR Payout Factor as determined under Section 2.2 below, plus (b)
      162⁄3% of the MRB Payout Factor as determined under Section 2.3 below, plus (c)
      162⁄3% of the APB Payout Factor as determined under Section 2.4 below, plus (d)
      162⁄3% of the SMB Payout Factor as determined under Section 2.5
      below.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.2 rTSR
      Payout Factor.

     

    2.2.1 To
      determine the “rTSR Payout Factor,” all of the S&P 500 Industrial Companies
      (as defined below) shall be ranked from highest to lowest based on their TSR
      (as
      defined below) for the Performance Period. Based on that ranking, the TSR levels
      corresponding to the __th,
      __th
      and
      __th
      percentiles of the S&P 500 Industrial Companies shall be determined using
      the percentile function in Microsoft Excel. The rTSR Payout Factor shall then
      be
      determined under the table below based on the TSR of the Company for the
      Performance Period.

     

    
      	 	 	
              rTSR
                Payout

            
	
              Company’s
                TSR

            	 	
              Factor

            
	 	 	 
	
              Less
                than TSR at __th
                percentile

            	 	
              0%

            
	
              TSR
                at __th
                percentile

            	 	
              25%

            
	
              TSR
                at __th
                percentile

            	 	
              100%

            
	
              TSR
                at __th
                percentile or better

            	 	
              200%

            

    

    

    If
      the
      Company’s TSR is between any two data points set forth in the first column of
      the above table, the rTSR Payout Factor shall be determined by interpolation
      between the corresponding data points in the second column of the table as
      follows: the difference between the Company’s TSR and the TSR at the lower data
      point shall be divided by the difference between the TSR at the higher data
      point and the TSR at the lower data point, the resulting fraction shall be
      multiplied by the difference between the two corresponding data points in the
      second column of the table, and the resulting product shall be added to the
      lower corresponding data point in the second column of the table, with the
      resulting sum being the rTSR Payout Factor.

     

    2.2.2 The
      “S&P 500 Industrial Companies” shall mean those companies that are included
      in the Industrials segment of the S&P 500 as of the first day of the
      Performance Period, excluding any such company whose stock ceases to be publicly
      traded prior to the end of the Performance Period (or such shorter period for
      which a determination is required under this Agreement).

     

    2.2.3 The
“TSR”
      for the Company and each S&P 500 Industrial Company shall be calculated by
      (a) assuming that $100 is invested in the common stock of the company at a
      price
      equal to the average of the closing market prices of the stock on the last
      trading day of each of the last three months of the Company’s fiscal 20__, (b)
      assuming that for each dividend or other cash distribution paid on the stock
      during the Performance Period, the amount equal to the dividend or distribution
      paid on the assumed number of shares held is reinvested in additional shares
      at
      a price equal to the closing market price of the stock on the last day of the
      month in which the dividend or distribution is paid, and (c) determining the
      final dollar value of the total assumed number of shares based on the average
      of
      the closing market prices of the stock on the last trading day of each of the
      last three months of the Performance Period. The “TSR” shall then equal the
      amount determined by subtracting $100 from the foregoing final dollar value,
      dividing the result by 100 and expressing the resulting fraction as a
      percentage.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.3 MRB
      Payout Factor.

     

    2.3.1 The
      MRB
      Payout Factor shall be determined under the table below based on the Operating
      Income Per Ton (as defined below) for the Performance Period of the facilities
      and business operations that comprised the Company’s wholly-owned Metals
      Recycling Business segment as of September 1, 20__ (the “Historic
      MRB”).

     

    
      	
              Operating
                Income

            	 	
              MRB
                Payout

            
	
              Per
                Ton

            	 	
              Factor

            
	 	 	 
	
              Less
                than $__

            	 	
              0%

            
	
              $__

            	 	
              25%

            
	
              $__

            	 	
              100%

            
	
              $__
                or more

            	 	
              200%

            

    

    

    If
      the
      Operating Income Per Ton is between any two data points set forth in the first
      column of the above table, the MRB Payout Factor shall be determined by
      interpolation between the corresponding data points in the second column of
      the
      table as follows: the difference between the Operating Income Per Ton and the
      lower data point shall be divided by the difference between the higher data
      point and the lower data point, the resulting fraction shall be multiplied
      by
      the difference between the two corresponding data points in the second column
      of
      the table, and the resulting product shall be added to the lower corresponding
      data point in the second column of the table, with the resulting sum being
      the
      MRB Payout Factor.

     

    2.3.2 The
      “Operating Income Per Ton” for the Performance Period shall be equal to (a) the
      sum of the operating income of the Historic MRB for the three fiscal years
      of
      the Performance Period, divided by (b) the sum of the long tons of ferrous
      metals sold by the Historic MRB for the three fiscal years of the Performance
      Period. For this purpose, the operating income of the Historic MRB shall be
      determined in accordance with generally accepted accounting principles in the
      United States applied in a manner consistent with the application of such
      principles to the preparation of the Company’s financial statements; provided,
      however, that (i) such operating income shall be adjusted to eliminate any
      expense or reversal of expense for estimated or actual environmental remediation
      costs related to environmental damage that occurred prior to ________ __, 20__,
      and (ii) such operating income shall not include any allocation of management
      overhead above the Historic MRB level.

     

    2.4 APB
      Payout Factor.

     

    2.4.1 The
      APB
      Payout Factor shall be determined under the table below based on the number
      of
      EVA Positive Stores (as defined below) of the Company’s Auto Parts Business
      Segment at the end of the Performance Period; provided, however, that
      notwithstanding the table below, the APB Payout Factor shall be 0% unless at
      least __% of the Stores (as defined below) of the Auto Parts Business Segment
      at
      the end of the Performance Period are EVA Positive Stores (the “__%
      Condition”).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              EVA
                Positive

            	 	
              APB
                Payout

            
	
              Stores

            	 	
              Factor

            
	 	 	 
	
              Less
                than __

            	 	
              0%

            
	
              __

            	 	
              25%

            
	
              __

            	 	
              100%

            
	
              __

            	 	
              200%

            
	
              __
                or more

            	 	
              300%

            

    

    

    If
      the
      number of EVA Positive Stores is between any two data points set forth in the
      first column of the above table, the APB Payout Factor shall be determined
      by
      interpolation between the corresponding data points in the second column of
      the
      table as follows: the difference between the number of EVA Positive Stores
      and
      the lower data point shall be divided by the difference between the higher
      data
      point and the lower data point, the resulting fraction shall be multiplied
      by
      the difference between the two corresponding data points in the second column
      of
      the table, and the resulting product shall be added to the lower corresponding
      data point in the second column of the table, with the resulting sum being
      the
      APB Payout Factor.

     

    2.4.2 A
“Store”
      shall mean a retail location of the Auto Parts Business that is owned by the
      Company at the end of the Performance Period and was acquired or opened at
      least
      one month prior to the end of the Performance Period.

     

    2.4.3 A
      Store
      shall be considered an “EVA Positive Store” at the end of the Performance Period
      if the LTIP EVA of the Store for the last 12 months of the Performance Period
      (or such shorter number of full months as the Store had been owned by the
      Company) is greater than $0. A Store’s “LTIP EVA” for any period shall be
      determined by subtracting the Store’s Capital Charge calculated for the period
      from the Store’s Adjusted Operating Income After Tax for the period. The parties
      acknowledge and agree that LTIP EVA is calculated differently from the manner
      in
      which EVA is calculated for purposes of the Company’s EVA Bonus
      Plans.

     

    2.4.4 A
      Store’s
“Capital Charge” for any period shall be equal to the Store’s Capital as of the
      end of the period multiplied by __% multiplied by a fraction, the numerator
      of
      which is the number of full months in the period and the denominator of which
      is
      12. A Store’s “Capital” as of any date shall mean (a) the Store’s share of the
      total assets of the Auto Parts Business, which shall consist of the total assets
      located at or directly associated with the Store plus the Store’s allocable
      portion of the total assets of the Auto Parts Business not located at or
      directly associated with any other Store, less (b) the Store’s share of the
      total non-interest bearing liabilities of the Auto Parts Business, which shall
      consist of the total non-interest bearing liabilities directly associated with
      the Store plus the Store’s allocable portion of the total non-interest bearing
      liabilities of the Auto Parts Business not directly associated with any other
      Store; provided,
      however,
      that
      assets and liabilities shall exclude any intercompany balances other than
      receivables for autobodies sold to the Company’s Metals Recycling Business, and
      that liabilities shall exclude any liability for estimated or actual
      environmental remediation costs related to environmental damage that occurred
      prior to the later of ________ __, 20__ or the acquisition of the applicable
      property.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.4.5 A
      Store’s
“Adjusted Operating Income After Tax” for any period shall be equal to 71% of
      the excess of (a) the Store’s revenues, over (b) the Store’s share of the total
      cost of goods sold and operating expenses of the Auto Parts Business, which
      shall consist of the total cost of goods sold and operating expenses incurred
      at
      or in direct association with the Store plus the Store’s allocable portion of
      the total cost of goods sold and operating expenses of the Auto Parts Business
      not incurred at or in direct association with any other Store; provided,
      however,
      that
      cost of goods sold and operating expenses shall be adjusted to eliminate any
      expense or reversal of expense for estimated or actual environmental remediation
      costs related to environmental damage that occurred prior to the later of
      ________ __, 20__ or the acquisition of the applicable property.

     

    2.4.6 In
      applying the above definitions of Capital and Adjusted Operating Income After
      Tax, the amounts of “assets,” “liabilities,” “revenues,” “cost of goods sold”
and “operating expenses” shall in each case be determined in accordance with
      generally accepted accounting principles in the United States applied in a
      manner consistent with the application of such principles to the preparation
      of
      the Company’s financial statements.

     

    2.5 SMB
      Payout Factor.

     

    2.5.1 The
      SMB
      Payout Factor shall be determined under the table below based on the Man Hours
      Per Ton (as defined below) of the Company’s Steel Manufacturing Business Segment
      for the Performance Period.

    
      	
              Man
                Hours

            	 	
              SMB
                Payout

            
	
              Per
                Ton

            	 	
              Factor

            
	 	 	 
	
              More
                than ____

            	 	
              0%

            
	
              ____

            	 	
              25%

            
	
              ____

            	 	
              100%

            
	
              ____
                or less

            	 	
              200%

            

    

    

    If
      the
      Man Hours Per Ton is between any two data points set forth in the first column
      of the above table, the SMB Payout Factor shall be determined by interpolation
      between the corresponding data points in the second column of the table as
      follows: the difference between the Man Hours Per Ton and the higher data point
      shall be divided by the difference between the higher data point and the lower
      data point, the resulting fraction shall be multiplied by the difference between
      the two corresponding data points in the second column of the table, and the
      resulting product shall be added to the lower corresponding data point in the
      second column of the table, with the resulting sum being the SMB Payout
      Factor.

     

    2.5.2 The
“Man
      Hours Per Ton” for the Performance Period shall be equal to (a) the sum of the
      man hours worked at the Steel Manufacturing Business’ steel mill for the three
      fiscal years of the Performance Period, divided by (b) the sum of the short
      tons
      of finished steel products produced by the Steel Manufacturing Business during
      the three fiscal years of the Performance Period. For this purpose, the man
      hours worked at the steel mill shall be the total of all hours worked for both
      production and non-production employees at the steel mill, including staff
      not
      directly involved in the production process; provided, however, that with

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        
respect
        to all non-union employees at the steel mill, the hours worked in any fiscal
        year shall be equal to 2,080 multiplied by the average of the non-union
        headcount reported on the Company’s internal reports for the 12 months of the
        fiscal year.

    

     

    2.6 Sale
      of Business Segment.
      Notwithstanding anything to the contrary in this Agreement, if the Company
      sells
      or disposes of a controlling interest in the stock or assets of any of its
      three
      business segments or engages in any other transaction that causes the operating
      results of any business segment to no longer be included in the Company’s
      financial statements on a fully consolidated basis, the payout factor related
      to
      that business segment shall for purposes of any determination under this
      Agreement after the date of such transaction be deemed to be 200%.

     

    3. Employment
      Condition.

     

    3.1 Full
      Payout.
      In
      order to receive the full number of Performance Shares determined under Section
      2, Recipient must be employed by the Company on the October 31 immediately
      following the end of the Performance Period (the “Vesting Date”).

     

    3.2 Retirement;
      Termination Without Cause After 12 Months.
      If
      Recipient’s employment with the Company is terminated at any time prior to the
      Vesting Date because of retirement (as defined in paragraph 6(a)(iv)(D) of
      the
      Plan), or if Recipient’s employment is terminated by the Company without Cause
      (as defined below) after the end of the 12th
      month of
      the Performance Period and prior to the Vesting Date, Recipient shall be
      entitled to receive a pro-rated award to be paid following completion of the
      Performance Period. The number of Performance Shares to be issued as a pro-rated
      award under this Section 3.2 shall be determined by multiplying the number
      of
      Performance Shares determined under Section 2 by a fraction, the numerator
      of
      which is the number of days Recipient was employed by the Company since the
      beginning of the Performance Period and the denominator of which is the number
      of days in the period from the beginning of the Performance Period to the
      Vesting Date. Any obligation of the Company to issue a pro-rated award under
      this Section 3.2 shall be subject to and conditioned upon the execution and
      delivery by Recipient of a Release of Claims in such form as may be requested
      by
      the Company. For purposes of this Section 3.2, “Cause” shall mean (a) the
      conviction (including a plea of guilty or nolo contendere) of Recipient of
      a
      felony involving theft or moral turpitude or relating to the business of the
      Company, other than a felony predicated on Recipient's vicarious liability,
      (b)
      Recipient’s continued failure or refusal to perform with reasonable competence
      and in good faith any of the lawful duties assigned by (or any lawful directions
      of) the Company that are commensurate with Recipient’s position with the Company
      (not resulting from any illness, sickness or physical or mental incapacity),
      which continues after the Company has given notice thereof (and a reasonable
      opportunity to cure) to Recipient, (c) deception, fraud, misrepresentation
      or
      dishonesty by Recipient in connection with Recipient’s employment with the
      Company, (d) any incident materially compromising Recipient’s reputation or
      ability to represent the Company with the public, (e) any willful misconduct
      by
      Recipient that substantially impairs the Company’s business or reputation, or
      (f) any other willful misconduct by Recipient that is clearly inconsistent
      with
      Recipient’s position or responsibilities.

     

    3.3 Death
      or Total Disability.
      If
      Recipient’s employment with the Company is terminated at any time prior to the
      Vesting Date because of death or total disability (as defined 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        
in
        paragraph 6(a)(iv)(B) of the Plan), Recipient shall be entitled to receive
        a
        pro-rated award to be paid as soon as reasonably practicable following such
        event. For purposes of calculating the pro-rated award under this Section
        3.3,
        (a) the rTSR Payout Factor, the MRB Payout Factor and the SMB Payout Factor
        shall all be calculated as if the Performance Period ended on the last day
        of
        the Company’s most recently completed fiscal quarter prior to the date of death
        or total disability (the “Partial Period”), and (b) the APB Payout Factor shall
        be calculated based on the assumptions that (i) the average rate of increase
        in
        the number of EVA Positive Stores during the Partial Period (from a starting
        point of __ EVA Positive Stores at September 1, 20__) continues for the
        remainder of the Performance Period and (ii) the __% Condition is satisfied.
        The
        number of Performance Shares to be issued as a pro-rated award under this
        Section 3.3 shall be determined by multiplying the number of Performance
        Shares
        determined after applying the modifications described in the preceding sentence
        by a fraction, the numerator of which is the number of days Recipient was
        employed by the Company since the beginning of the Performance Period and
        the
        denominator of which is the number of days in the period from the beginning
        of
        the Performance Period to the Vesting Date.

    

     

    [This
      Section to be included only in agreements for MRB, APB and SMB business segment
      employees][ 3.4 Sale
      of Business Segment.
      If at any time prior to the Vesting Date the Company sells or disposes of a
      controlling interest in the stock or assets of the ___ Business Segment or
      engages in any other transaction that causes the operating results of the ___
      Business Segment to no longer be included in the Company’s financial statements
      on a fully consolidated basis, and as a result of such transaction Recipient
      ceases to be an employee of either the Company or any consolidated subsidiary
      of
      the Company, Recipient shall be entitled to receive a pro-rated award to be
      paid
      as soon as reasonably practicable following such event. For purposes of
      calculating the pro-rated award under this Section 3.4, (a) the ___ Payout
      Factor shall be deemed to be 200%, and (b) the rTSR Payout Factor shall be
      calculated as if the Performance Period ended on the last day of the Company’s
      most recently completed fiscal quarter prior to the closing of the transaction.
      The number of Performance Shares to be issued as a pro-rated award under this
      Section 3.4 shall be determined by multiplying the number of Performance Shares
      determined after applying the modifications described in the preceding sentence
      by a fraction, the numerator of which is the number of days Recipient was
      employed by the Company since the beginning of the Performance Period and the
      denominator of which is the number of days in the period from the beginning
      of
      the Performance Period to the Vesting Date.]

     

    3.4 Other
      Terminations.
      If
      Recipient’s employment by the Company is terminated at any time prior to the
      Vesting Date and neither Section 3.2 nor Section 3.3 applies to such
      termination, Recipient shall not be entitled to receive any Performance
      Shares.

     

    4. Company
      Sale.

     

    4.1 If
      a
      Company Sale (as defined below) occurs before the Vesting Date, Recipient shall
      be entitled to receive a pro-rated award to be paid no later than the earlier
      of
      15 days following such event or the last day on which the Performance Shares
      could be issued so that Recipient may participate as a shareholder in receiving
      proceeds from the Company Sale. For purposes of calculating the pro-rated award
      under this Section 4, (a) the MRB Payout Factor, 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        
the
        APB
        Payout Factor and the SMB Payout Factor shall each be deemed to be 200%,
        and (b)
        the rTSR Payout Factor shall be determined as of the closing date of the
        Company
        Sale (the “Closing Date”) by (i) using the closing market price of the Class A
        Common Stock on the last trading day prior to the Closing Date as the final
        stock price for purposes of calculating the Company’s TSR, and (ii) for purposes
        of calculating the TSR for each of the S&P 500 Industrial Companies, using
        the average of the closing market price of the stock on the last trading
        day
        prior to the Closing Date and the closing market prices of the stock as of
        the
        last trading day of the two preceding months as the final stock price. The
        number of Performance Shares to be issued as a pro-rated award under this
        Section 4 shall be determined by multiplying the number of Performance Shares
        determined after applying the modifications described in the preceding sentence
        by a fraction, the numerator of which is the number of days Recipient was
        employed by the Company since the beginning of the Performance Period and
        the
        denominator of which is the number of days in the period from the beginning
        of
        the Performance Period to the Vesting Date.

    

     

    4.2 For
      purposes of this Agreement, a “Company Sale” shall mean the occurrence of any of
      the following events:

     

    4.2.1 any
      consolidation, merger or plan of share exchange involving the Company (a
“Merger”) in which the Company is not the continuing or surviving corporation or
      pursuant to which outstanding shares of Class A Common Stock would be converted
      into cash, other securities or other property; or

     

    4.2.2 any
      sale,
      lease, exchange or other transfer (in one transaction or a series of related
      transactions) of all, or substantially all, the assets of the
      Company.

     

    5. Certification
      and Payment.
      As soon
      as practicable following the completion of the audit of the Company’s
      consolidated financial statements for the final fiscal year of the Performance
      Period, the Company shall calculate the Payout Factor and the corresponding
      number of Performance Shares issuable to Recipient. This calculation shall
      be
      submitted to the Committee. Notwithstanding anything to the contrary in this
      Agreement, the Committee may, in its sole discretion, reduce or eliminate the
      number of Performance Shares so calculated based on circumstances relating
      to
      the performance of the Company or Recipient. No later than the Vesting Date
      the
      Committee shall certify in writing (which may consist of approved minutes of
      a
      Committee meeting) the levels of rTSR, Operating Income Per Ton, EVA Positive
      Stores and Man Hours Per Ton attained by the Company for the Performance Period
      and the number of Performance Shares issuable to Recipient based on such
      performance. Subject to applicable tax withholding, the number of Performance
      Shares so certified shall be issued to Recipient as soon as practicable
      following the Vesting Date, but no Performance Shares shall be issued prior
      to
      certification. No fractional shares shall be issued and the number of
      Performance Shares deliverable shall be rounded to the nearest whole share.
      In
      the event of the death or total disability of Recipient as described in Section
      3.3 or a Company Sale as described in Section 4, each of which requires payout
      of a pro-rated award earlier than the Vesting Date, a similar calculation and
      certification process shall be followed within the time frames required by
      those
      sections.

     

    6. Tax
      Withholding.
      Recipient acknowledges that, on the date the Performance Shares are issued
      to
      Recipient (the “Payment Date”), the Value (as defined below) on that date of

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        
the
        Performance Shares will be treated as ordinary compensation income for federal
        and state income and FICA tax purposes, and that the Company will be required
        to
        withhold taxes on these income amounts. To satisfy the required minimum
        withholding amount, the Company shall withhold the number of Performance
        Shares
        having a Value equal to the minimum withholding amount. For purposes of this
        Section 6, the “Value” of a Performance Share shall be equal to the closing
        market price for Class A Common Stock on the last trading day preceding the
        Payment Date.

    

     

    7. Changes
      in Capital Structure.
      If the
      outstanding Class A Common Stock of the Company is hereafter increased or
      decreased or changed into or exchanged for a different number or kind of shares
      or other securities of the Company by reason of any stock split, combination
      of
      shares or dividend payable in shares, recapitalization or reclassification,
      appropriate adjustment shall be made by the Committee in the number and kind
      of
      shares subject to this Agreement so that the Recipient’s proportionate interest
      before and after the occurrence of the event is maintained.

     

    8. Approvals.
      The
      obligations of the Company under this Agreement are subject to the approval
      of
      state, federal or foreign authorities or agencies with jurisdiction in the
      matter. The Company will use its reasonable best efforts to take steps required
      by state, federal or foreign law or applicable regulations, including rules
      and
      regulations of the Securities and Exchange Commission and any stock exchange
      on
      which the Company’s shares may then be listed, in connection with the award
      evidenced by this Agreement. The foregoing notwithstanding, the Company shall
      not be obligated to deliver Class A Common Stock under this Agreement if such
      delivery would violate or result in a violation of applicable state or federal
      securities laws.

     

    9. No
      Right to Employment.
      Nothing
      contained in this Agreement shall confer upon Recipient any right to be employed
      by the Company or to continue to provide services to the Company or to interfere
      in any way with the right of the Company to terminate Recipient’s services at
      any time for any reason, with or without cause.

     

    10. Miscellaneous.

     

    10.1 Entire
      Agreement; Amendment.
      This
      Agreement constitutes the entire agreement of the parties with regard to the
      subjects hereof and may be amended only by written agreement between the Company
      and Recipient.

     

    10.2 Notices.
      Any
      notice required or permitted under this Agreement shall be in writing and shall
      be deemed sufficient when delivered personally to the party to whom it is
      addressed or when deposited into the United States Mail as registered or
      certified mail, return receipt requested, postage prepaid, addressed to the
      Company, Attention: Corporate Secretary, at its principal executive offices
      or
      to Recipient at the address of Recipient in the Company’s records, or at such
      other address as such party may designate by ten (10) days’ advance written
      notice to the other party.

     

    10.3 Assignment;
      Rights and Benefits.
      Recipient shall not assign this Agreement or any rights hereunder to any other
      party or parties without the prior written consent 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        
of
        the
        Company. The rights and benefits of this Agreement shall inure to the benefit
        of
        and be enforceable by the Company’s successors and assigns and, subject to the
        foregoing restriction on assignment, be binding upon Recipient’s heirs,
        executors, administrators, successors and assigns.

    

     

    10.4 Further
      Action.
      The
      parties agree to execute such further instruments and to take such further
      action as may reasonably be necessary to carry out the intent of this
      Agreement.

     

    10.5 Applicable
      Law; Attorneys’ Fees.
      The
      terms and conditions of this Agreement shall be governed by the laws of the
      State of Oregon. In the event either party institutes litigation hereunder,
      the
      prevailing party shall be entitled to reasonable attorneys’ fees to be set by
      the trial court and, upon any appeal, the appellate court.

     

    10.6 Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original.

     

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      day
      and year first above written.

     

    
      	 	 	 	 
	 	 	 

    

     

     

    
      	 
 	 
  

              SCHNITZER
                STEEL INDUSTRIES, INC. 

            	 
	 	 	 	 
	 	By:  	 	 
	 	
              Title:

            	 	 
	 	 	 	 
	 	 	 	 
	 	 RECIPIENTexhibit 10.1

                         SECURITIES PURCHASE AGREEMENT

SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of November 29, 2005,
by and among INFE-Human Resources, Inc., a Nevada corporation, with headquarters
located at 67 Wall Street, 22nd Floor, New York, NY 10005 (the "Company"), and
each of the purchasers set forth on the signature pages hereto (the "Buyers").

WHEREAS:

A.	The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by the
rules and regulations as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act");

B.	Buyers desire to purchase and the Company desires to issue and sell,
upon the terms and conditions set forth in this Agreement (i) 8% secured
convertible notes of the Company, in the form attached hereto as Exhibit "A", in
the aggregate principal amount of Three Million Dollars ($3,000,000) (together
with any note(s) issued in replacement thereof or as a dividend thereon or
otherwise with respect thereto in accordance with the terms thereof, the
"Notes"), convertible into shares of  common stock, par value $.001 per share,
of the Company (the "Common Stock"), upon the terms and subject to the
limitations and conditions set forth in such Notes and (ii) warrants, in the
form attached hereto as Exhibit "B", to purchase 1,400,000 shares of Common
Stock (the "Warrants").

C.	Each Buyer wishes to purchase, upon the terms and conditions stated in
this Agreement, such principal amount of Notes and number of Warrants as is set
forth immediately below its name on the signature pages hereto; and

D.	Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement, in
the form attached hereto as Exhibit "C" (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the 1933 Act and the rules and regulations promulgated thereunder, and
applicable state securities laws.

<page>1

NOW THEREFORE, the Company and each of the Buyers severally (and not jointly)
hereby agree as follows:

1.	PURCHASE AND SALE OF NOTES AND WARRANTS.

a.	Purchase of Notes and Warrants.  On the Closing Date (as defined below),
the Company shall issue and sell to each Buyer and each Buyer severally agrees
to purchase from the Company such principal amount of Notes and number of
Warrants as is set forth immediately below such Buyer's name on the signature
pages hereto.

b.	Form of Payment.  On the Closing Date (as defined below), (i)each Buyer
shall pay the purchase price for the Notes and the Warrants to be issued and
sold to it at the Closing (as defined below) (the "Purchase Price") by wire
transfer of immediately available funds to the Company, in accordance with the
Company's written wiring instructions, against delivery of the Notes in the
principal amount equal to the Purchase Price and the number of Warrants as is
set forth immediately below such Buyer's name on the signature pages hereto, and
(ii) the Company shall deliver such Notes and Warrants duly executed on behalf
of the Company, to such Buyer, against delivery of such Purchase Price.

c.	Closing Date.  Subject to the satisfaction (or written waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the Notes and the Warrants pursuant to this
Agreement (the "Closing Date") shall be 12:00 noon, Eastern Standard Time on
November 29, 2005, or such other mutually agreed upon time.  The closing of the
transactions contemplated by this Agreement (the "Closing") shall occur on the
Closing Date at such location as may be agreed to by the parties.

2.	BUYERS' REPRESENTATIONS AND WARRANTIES.  Each Buyer severally (and not
jointly) represents and warrants to the Company solely as to such Buyer that:

a.	Investment Purpose.  As of the date hereof, the Buyer is purchasing the
Notes and the shares of Common Stock issuable upon conversion of or otherwise
pursuant to the Notes (including, without limitation, such additional shares of
Common Stock, if any, as are issuable (i) on account of interest on the Notes,
(ii) as a result of the events described in Sections 1.3 and 1.4(g) of the Notes
and Section 2(c) of the Registration Rights Agreement or (iii) in payment of the
Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant
to this Agreement, such shares of Common Stock being collectively referred to
herein as the "Conversion Shares") and the Warrants and the shares of Common
Stock issuable upon exercise thereof (the "Warrant Shares" and, collectively
with the Notes, Warrants and Conversion Shares, the "Securities") for its own
account and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration under
the 1933 Act; provided, however, that by making the representations herein, the
Buyer does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the 1933 Act.

<page>2

b.	Accredited Investor Status.  The Buyer is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D promulgated under the 1933
Act (an "Accredited Investor").

c.	Reliance on Exemptions.  The Buyer understands that the Securities are
being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Securities.

d.	Information.  The Buyer and its advisors, if any, have been, and for so
long as the Notes and Warrants remain outstanding will continue to be, furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities which
have been requested by the Buyer or its advisors.  The Buyer and its advisors,
if any, have been, and for so long as the Notes and Warrants remain outstanding
will continue to be, afforded the opportunity to ask questions of the Company.
Notwithstanding the foregoing, the Company has not disclosed to the Buyer any
material nonpublic information and will not disclose such information unless
such information is disclosed to the public prior to or promptly following such
disclosure to the Buyer.  Neither such inquiries nor any other due diligence
investigation conducted by Buyer or any of its advisors or representatives shall
modify, amend or affect Buyer's right to rely on the Company's representations
and warranties contained in Section 3 below.  The Buyer understands that its
investment in the Securities involves a significant degree of risk.

e.	Governmental Review.  The Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.

<page>3

f.	Transfer or Re-sale.  The Buyer understands that (i) except as provided
in the Registration Rights Agreement, the sale or re-sale of the Securities has
not been and is not being registered under the 1933 Act or any applicable state
securities laws, and the Securities may not be transferred unless (a) the
Securities are sold pursuant to an effective registration statement under the
1933 Act, (b) the Buyer shall have delivered to the Company an opinion of
counsel that shall be in form, substance and scope customary for opinions of
counsel in comparable transactions to the effect that the Securities to be sold
or transferred may be sold or transferred pursuant to an exemption from such
registration, which opinion shall be accepted by the Company, (c) the Securities
are sold or transferred to an "affiliate" (as defined in Rule 144 promulgated
under the 1933 Act (or a successor rule) ("Rule 144")) of the Buyer who agrees
to sell or otherwise transfer the Securities only in accordance with this
Section 2(f) and who is an Accredited Investor, (d) the Securities are sold
pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S
under the 1933 Act (or a successor rule) ("Regulation S"), and the Buyer shall
have delivered to the Company an opinion of counsel that shall be in form,
substance and scope customary for opinions of counsel in corporate transactions,
which opinion shall be accepted by the Company; (ii) any sale of such Securities
made in reliance on Rule 144 may be made only in accordance with the terms of
said Rule and further, if said Rule is not applicable, any re-sale of such
Securities under circumstances in which the seller (or the person through whom
the sale is made) may be deemed to be an underwriter (as that term is defined in
the 1933 Act) may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (iii) neither the
Company nor any other person is under any obligation to register such Securities
under the 1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder (in each case, other than pursuant to the
Registration Rights Agreement).  Notwithstanding the foregoing or anything else
contained herein to the contrary, the Securities may be pledged as collateral in
connection with a bona fide margin account or other lending arrangement.  In the
event that the Company does not accept the opinion of counsel provided by the
Buyer with respect to the transfer of Securities pursuant to an exemption from
registration, such as Rule 144 or Regulation S, within three (3) business days
of delivery of the opinion to the Company, the Company shall pay to the Buyer
liquidated damages of three percent (3%) of the outstanding amount of the Notes
per month plus accrued and unpaid interest on the Notes, prorated for partial
months, in cash or shares at the option of the Company ("Standard Liquidated
Damages Amount").  If the Company elects to be pay the Standard Liquidated
Damages Amount in shares of Common Stock, such shares shall be issued at the
Conversion Price at the time of payment.

<page>4

g.	Legends.  The Buyer understands that the Notes and the Warrants and,
until such time as the Conversion Shares and Warrant Shares have been registered
under the 1933 Act as contemplated by the Registration Rights Agreement or
otherwise may be sold pursuant to Rule 144 or Regulation S without any
restriction as to the number of securities as of a particular date that can then
be immediately sold, the Conversion Shares and Warrant Shares may bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Securities):

"The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended.  The securities may not be sold,
transferred or assigned in the absence of an effective registration statement
for the securities under said Act, or an opinion of counsel, in form, substance
and scope customary for opinions of counsel in comparable transactions, that
registration is not required under said Act or unless sold pursuant to Rule 144
or Regulation S under said Act."

The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
such Security is registered for sale under an effective registration statement
filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or
Regulation S without any restriction as to the number of securities as of a
particular date that can then be immediately sold, or (b) such holder provides
the Company with an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public
sale or transfer of such Security may be made without registration under the
1933 Act, which opinion shall be accepted by the Company so that the sale or
transfer is effected or (c) such holder provides the Company with reasonable
assurances that such Security can be sold pursuant to Rule 144 or Regulation S.
The Buyer agrees to sell all Securities, including those represented by a
certificate(s) from which the legend has been removed, in compliance with
applicable prospectus delivery requirements, if any.

h.	Authorization; Enforcement. This Agreement and the Registration Rights
Agreement have been duly and validly authorized.  This Agreement has been duly
executed and delivered on behalf of the Buyer, and this Agreement constitutes,
and upon execution and delivery by the Buyer of the Registration Rights
Agreement, such agreement will constitute, valid and binding agreements of the
Buyer enforceable in accordance with their terms.

<page>5

i.	Residency.  The Buyer is a resident of the jurisdiction set forth
immediately below such Buyer's name on the signature pages hereto.

3.	REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company represents
and warrants to each Buyer that:

a.	Organization and Qualification.  The Company and each of its
Subsidiaries (as defined below), if any, is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated, with full power and authority (corporate and other) to
own, lease, use and operate its properties and to carry on its business as and
where now owned, leased, used, operated and conducted.  Schedule 3(a) sets forth
a list of all of the Subsidiaries of the Company and the jurisdiction in which
each is incorporated.  The Company and each of its Subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which its ownership or use of property or the nature of
the business conducted by it makes such qualification necessary except where the
failure to be so qualified or in good standing would not have a Material Adverse
Effect.  "Material Adverse Effect" means any of (i) a material and adverse
effect on the legality, validity or enforceability of any document executed in
connection with this financing, (ii) a material and adverse effect on the
results of operations, assets, prospects, business or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) an
adverse impairment to the Company's ability to perform under any of the
documents executed in connection with this financing.  "Subsidiaries" means any
corporation or other organization, whether incorporated or unincorporated, in
which the Company owns, directly or indirectly, any equity or other ownership
interest.

b.	Authorization; Enforcement.  (i) The Company has all requisite corporate
power and authority to enter into and perform this Agreement, the Registration
Rights Agreement, the Notes and the Warrants and to consummate the transactions
contemplated hereby and thereby and to issue the Securities, in accordance with
the terms hereof and thereof, (ii) the execution and delivery of this Agreement,
the Registration Rights Agreement, the Notes and the Warrants by the Company and
the consummation by it of the transactions contemplated hereby and thereby
(including without limitation, the issuance of the Notes and the Warrants and
the issuance and reservation for issuance of the Conversion Shares and Warrant
Shares issuable upon conversion or exercise thereof) have been duly authorized
by the Company's Board of Directors and no further consent or authorization of
the Company, its Board of Directors, or its shareholders is required, (iii) this
Agreement has been duly executed and delivered by the Company by its authorized
representative, and such authorized representative is the true and official
representative with authority to sign this Agreement and the other documents
executed in connection herewith and bind the Company accordingly, and (iv) this
Agreement constitutes, and upon execution and delivery by the Company of the
Registration Rights Agreement, the Notes and the Warrants, each of such
instruments will constitute, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.

<page>6

c.	Capitalization.  As of the date hereof, the authorized capital stock of
the Company consists of (i) 100,000,000 shares of Common Stock, of which [
] shares are issued and outstanding, [                 ] shares are reserved for
issuance pursuant to the Company's stock option plans, [             ] shares
are reserved for issuance pursuant to securities (other than the Notes and the
Warrants) exercisable for, or convertible into or exchangeable for shares of
Common Stock and, 24,476,923 shares are reserved for issuance upon conversion of
the Notes and exercise of the Warrants (subject to adjustment pursuant to the
Company's covenant set forth in Section 4(h) below); and (ii) [     ]  shares of
preferred stock of which [        ] shares are issued and outstanding.  All of
such outstanding shares of capital stock are, or upon issuance will be, duly
authorized, validly issued, fully paid and nonassessable.  No shares of capital
stock of the Company are subject to preemptive rights or any other similar
rights of the shareholders of the Company or any liens or encumbrances imposed
through the actions or failure to act of the Company.  Except as disclosed in
Schedule 3(c), as of the effective date of this Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe for, puts, calls,
rights of first refusal, agreements, understandings, claims or other commitments
or rights of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for any shares of capital stock of the Company
or any of its Subsidiaries, or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries, (ii) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of its or their securities under the 1933 Act (except
the Registration Rights Agreement) and (iii) there are no anti-dilution or price
adjustment provisions contained in any security issued by the Company (or in any
agreement providing rights to security holders) that will be triggered by the
issuance of the Notes, the Warrants, the Conversion Shares or Warrant Shares.
The Company has furnished to the Buyer true and correct copies of the Company's
Certificate of Incorporation as in effect on the date hereof ("Certificate of
Incorporation"), the Company's By-laws, as in effect on the date hereof (the
"By-laws"), and the terms of all securities convertible into or exercisable for
Common Stock of the Company and the material rights of the holders thereof in
respect thereto.  The Company shall provide the Buyer with a written update of
this representation signed by the Company's Chief Executive or Chief Financial
Officer on behalf of the Company as of the Closing Date.

<page>7

d.	Issuance of Shares.  The Conversion Shares and Warrant Shares are duly
authorized and reserved for issuance and, upon conversion of the Notes and
exercise of the Warrants in accordance with their respective terms, will be
validly issued, fully paid and non-assessable, and free from all taxes, liens,
claims and encumbrances with respect to the issue thereof and shall not be
subject to preemptive rights or other similar rights of shareholders of the
Company and will not impose personal liability upon the holder thereof.

e.	Acknowledgment of Dilution.  The Company understands and acknowledges
the potentially dilutive effect to the Common Stock upon the issuance of the
Conversion Shares and Warrant Shares upon conversion of the Note or exercise of
the Warrants.  The Company further acknowledges that its obligation to issue
Conversion Shares and Warrant Shares upon conversion of the Notes or exercise of
the Warrants in accordance with this Agreement, the Notes and the Warrants is
absolute and unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other shareholders of the Company.

f.	No Conflicts.  The execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Notes and the Warrants by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance and reservation
for issuance of the Conversion Shares and Warrant Shares) will not (i) conflict
with or result in a violation of any provision of the Certificate of
Incorporation or By-laws or (ii) violate or conflict with, or result in a breach
of any provision of, or constitute a default (or an event which with notice or
lapse of time or both could become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, patent license or instrument to which the Company
or any of its Subsidiaries is a party, or (iii)  result in a violation of any
law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and regulations of any self-regulatory
organizations to which the Company or its securities are subject) applicable to
the Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect).  Neither the Company nor any of its Subsidiaries is in
violation of its Certificate of Incorporation, By-laws or other organizational
documents and neither the Company nor any of its Subsidiaries is in default (and
no event has occurred which with notice or lapse of time or both could put the
Company or any of its Subsidiaries in default) under, and neither the Company
nor any of its Subsidiaries has taken any action or failed to take any action
that would give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party or by which any property or assets of the
Company or any of its Subsidiaries is bound or affected, except for possible
defaults as would not, individually or in the aggregate, have a Material Adverse
Effect. The businesses of the Company and its Subsidiaries, if any, are not
being conducted, and shall not be conducted so long as a Buyer owns any of the

<page>8

Securities, in violation of any law, ordinance or regulation of any governmental
entity.  Except as specifically contemplated by this Agreement and as required
under the 1933 Act and any applicable state securities laws, the Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency, regulatory agency, self
regulatory organization or stock market or any third party in order for it to
execute, deliver or perform any of its obligations under this Agreement, the
Registration Rights Agreement, the Notes or the Warrants in accordance with the
terms hereof or thereof or to issue and sell the Notes and Warrants in
accordance with the terms hereof and to issue the Conversion Shares upon
conversion of the Notes and the Warrant Shares upon exercise of the Warrants.
Except as disclosed in Schedule 3(f), all consents, authorizations, orders,
filings and registrations which the Company is required to obtain pursuant to
the preceding sentence have been obtained or effected on or prior to the date
hereof.  The Company is not in violation of the quotation requirements of the
Over-the-Counter Bulletin Board (the "OTCBB") and does not reasonably anticipate
that the Common Stock will be delisted by the OTCBB in the foreseeable future.
The Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing.

g.	SEC Documents; Financial Statements.  Except as disclosed in Schedule
3(g), the Company has timely filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"1934 Act") (all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements and schedules thereto and
documents (other than exhibits to such documents) incorporated by reference
therein, being hereinafter referred to herein as the "SEC Documents").  The
Company has delivered to each Buyer true and complete copies of the SEC
Documents, except for such exhibits and incorporated documents.  As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.  None of the
statements made in any such SEC Documents is, or has been, required to be
amended or updated under applicable law (except for such statements as have been
amended or updated in subsequent filings prior the date hereof).  As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto.  Such financial statements have been prepared in accordance
with United States generally accepted accounting principles, consistently
applied, during the periods involved (except (i) as may be otherwise indicated
in such financial statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the consolidated financial position of the Company and its consolidated

<page>9

Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).  Except as set
forth in the financial statements of the Company included in the SEC Documents,
the Company has no liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent to June 30,
2004 and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted accounting
principles to be reflected in such financial statements, which, individually or
in the aggregate, are not material to the financial condition or operating
results of the Company.

h.	Absence of Certain Changes.  Since June 30, 2005, there has been no
material adverse change and no material adverse development in the assets,
liabilities, business, properties, operations, financial condition, results of
operations or prospects of the Company or any of its Subsidiaries.

i.	Absence of Litigation.  There is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company
or any of its Subsidiaries, or their officers or directors in their capacity as
such, that could have a Material Adverse Effect.  Schedule 3(i) contains a
complete list and summary description of any pending or threatened proceeding
against or affecting the Company or any of its Subsidiaries, without regard to
whether it would have a Material Adverse Effect.  The Company and its
Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing.

j.	Patents, Copyrights, etc.  The Company and each of its Subsidiaries owns
or possesses the requisite licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets, trademarks,
trademark applications, service marks, service names, trade names and copyrights
("Intellectual Property") necessary to enable it to conduct its business as now
operated (and, except as set forth in Schedule 3(j) hereof, to the best of the
Company's knowledge, as presently contemplated to be operated in the future);
there is no claim or action by any person pertaining to, or proceeding pending,
or to the Company's knowledge threatened, which challenges the right of the
Company or of a Subsidiary with respect to any Intellectual Property necessary
to enable it to conduct its business as now operated (and, except as set forth
in Schedule 3(j) hereof, to the best of the Company's knowledge, as presently
contemplated to be operated in the future); to the best of the Company's
knowledge, the Company's or its Subsidiaries' current and intended products,
services and processes do not infringe on any Intellectual Property or other
rights held by any person; and the Company is unaware of any facts or
circumstances which might give rise to any of the foregoing.  The Company and
each of its Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of their Intellectual Property.

<page>10

k.	No Materially Adverse Contracts, Etc.  Neither the Company nor any of
its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a
Material Adverse Effect.  Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.

l.	Tax Status.  Except as set forth on Schedule 3(l), the Company and each
of its Subsidiaries has made or filed all federal, state and foreign income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply.  There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim.  The Company has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign, federal,
state or local tax.  Except as set forth on Schedule 3(l), none of the Company's
tax returns is presently being audited by any taxing authority.

m.	Certain Transactions.  Except as set forth on Schedule 3(m) and except
for arm's length transactions pursuant to which the Company or any of its
Subsidiaries makes payments in the ordinary course of business upon terms no
less favorable than the Company or any of its Subsidiaries could obtain from
third parties and other than the grant of stock options disclosed on Schedule
3(c), none of the officers, directors, or employees of the Company is presently
a party to any transaction with the Company or any of its Subsidiaries (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.

<page>11

n.	Disclosure.  All information relating to or concerning the Company or
any of its Subsidiaries set forth in this Agreement and provided to the Buyers
pursuant to Section 2(d) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all material respects
and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under
which they were made, not misleading.  No event or circumstance has occurred or
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed (assuming for this purpose that the Company's reports filed under the
1934 Act are being incorporated into an effective registration statement filed
by the Company under the 1933 Act).

o.	Acknowledgment Regarding Buyers' Purchase of Securities.  The Company
acknowledges and agrees that the Buyers are acting solely in the capacity of
arm's length purchasers with respect to this Agreement and the transactions
contemplated hereby.  The Company further acknowledges that no Buyer is acting
as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby and any
statement made by any Buyer or any of their respective representatives or agents
in connection with this Agreement and the transactions contemplated hereby is
not advice or a recommendation and is merely incidental to the Buyers' purchase
of the Securities.  The Company further represents to each Buyer that the
Company's decision to enter into this Agreement has been based solely on the
independent evaluation of the Company and its representatives.

p.	No Integrated Offering.  Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf, has directly or indirectly made
any offers or sales in any security or solicited any offers to buy any security
under circumstances that would require registration under the 1933 Act of the
issuance of the Securities to the Buyers.  The issuance of the Securities to the
Buyers will not be integrated with any other issuance of the Company's
securities (past, current or future) for purposes of any shareholder approval
provisions applicable to the Company or its securities.

q.	No Brokers.  Except as set forth in Schedule 3(q), the Company has taken
no action which would give rise to any claim by any person for brokerage
commissions, transaction fees or similar payments relating to this Agreement or
the transactions contemplated hereby.

<page>12

r.	Permits; Compliance.  The Company and each of its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the "Company Permits"), and there is
no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits.  Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or violation of,
any of the Company Permits, except for any such conflicts, defaults or
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.  Since June 30, 2004, neither the
Company nor any of its Subsidiaries has received any notification with respect
to possible conflicts, defaults or violations of applicable laws, except for
notices relating to possible conflicts, defaults or violations, which conflicts,
defaults or violations would not have a Material Adverse Effect.

s.	Environmental Matters.

   (i)	Except as set forth in Schedule 3(s), there are, to the Company's
   knowledge, with respect to the Company or any of its Subsidiaries or any
   predecessor of the Company, no past or present violations of Environmental
   Laws (as defined below), releases of any material into the environment,
   actions, activities, circumstances, conditions, events, incidents, or
   contractual obligations which may give rise to any common law environmental
   liability or any liability under the Comprehensive Environmental Response,
   Compensation and Liability Act of 1980 or similar federal, state, local or
   foreign laws and neither the Company nor any of its Subsidiaries has received
   any notice with respect to any of the foregoing, nor is any action pending
   or, to the Company's knowledge, threatened in connection with any of the
   foregoing.  The term "Environmental Laws" means all federal, state, local or
   foreign laws relating to pollution or protection of human health or the
   environment (including, without limitation, ambient air, surface water,
   groundwater, land surface or subsurface strata), including, without
   limitation, laws relating to emissions, discharges, releases or threatened
   releases of chemicals, pollutants contaminants, or toxic or hazardous
   substances or wastes (collectively, "Hazardous Materials") into the
   environment, or otherwise relating to the manufacture, processing,
   distribution, use, treatment, storage, disposal, transport or handling of
   Hazardous Materials, as well as all authorizations, codes, decrees, demands
   or demand letters, injunctions, judgments, licenses, notices or notice
   letters, orders, permits, plans or regulations issued, entered, promulgated
   or approved thereunder.

<page>13

  (ii)	Other than those that are or were stored, used or disposed of in
  compliance with applicable law, no Hazardous Materials are contained on or
  about any real property currently owned, leased or used by the Company or any
  of its Subsidiaries, and no Hazardous Materials were released on or about any
  real property previously owned, leased or used by the Company or any of its
  Subsidiaries during the period the property was owned, leased or used by the
  Company or any of its Subsidiaries, except in the normal course of the
  Company's or any of its Subsidiaries' business.

 (iii)	Except as set forth in Schedule 3(s), there are no underground storage
 tanks on or under any real property owned, leased or used by the Company or any
 of its Subsidiaries that are not in compliance with applicable law.

t.	Title to Property.  The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(t) or such
as would not have a Material Adverse Effect.  Any real property and facilities
held under lease by the Company and its Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as would not have
a Material Adverse Effect.

u.	Insurance.  The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged.  Neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.  The Company has provided to Buyer true and correct copies of
all policies relating to directors' and officers' liability coverage, errors and
omissions coverage, and commercial general liability coverage.

v.	Internal Accounting Controls.  The Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient, in the judgment of
the Company's board of directors, to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

<page>14

w.	Foreign Corrupt Practices.  Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any Subsidiary has, in the course of his actions
for, or on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended, or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or
employee.

x.	Solvency.  The Company (after giving effect to the transactions
contemplated by this Agreement) is solvent (i.e., its assets have a fair market
value in excess of the amount required to pay its probable liabilities on its
existing debts as they become absolute and matured) and currently the Company
has no information that would lead it to reasonably conclude that the Company
would not, after giving effect to the transaction contemplated by this
Agreement, have the ability to, nor does it intend to take any action that would
impair its ability to, pay its debts from time to time incurred in connection
therewith as such debts mature.  The Company did not [YES IT DID!!!!!-SEE 10k
FOR NOVEMBER 30, 2004 FILED FEBRUARY 28, 2005] receive a qualified opinion from
its auditors with respect to its most recent fiscal year end and, after giving
effect to the transactions contemplated by this Agreement, does not anticipate
or know of any basis upon which its auditors might issue a qualified opinion in
respect of its current fiscal year.

y.	No Investment Company.  The Company is not, and upon the issuance and
sale of the Securities as contemplated by this Agreement will not be an
"investment company" required to be registered under the Investment Company Act
of 1940 (an "Investment Company").  The Company is not controlled by an
Investment Company.

z.	Breach of Representations and Warranties by the Company.  If the Company
breaches any of the representations or warranties set forth in this Section 3,
and in addition to any other remedies available to the Buyers pursuant to this
Agreement, the Company shall pay to the Buyer the Standard Liquidated Damages
Amount in cash or in shares of Common Stock at the option of the Company, until
such breach is cured.  If the Company elects to pay the Standard Liquidated
Damages Amounts in shares of Common Stock, such shares shall be issued at the
Conversion Price at the time of payment.

<page>15

4.	COVENANTS.

a.	Best Efforts.  The parties shall use their best efforts to satisfy
timely each of the conditions described in Section 6 and 7 of this Agreement.

b.	Form D; Blue Sky Laws.  The Company agrees to file a Form D with respect
to the Securities as required under Regulation D and to provide a copy thereof
to each Buyer promptly after such filing.  The Company shall, on or before the
Closing Date, take such action as the Company shall reasonably determine is
necessary to qualify the Securities for sale to the Buyers at the applicable
closing pursuant to this Agreement under applicable securities or "blue sky"
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to each
Buyer on or prior to the Closing Date.

c.	Reporting Status; Eligibility to Use Form S-3, SB-2 or Form

S-1.  The Company's Common Stock is registered under Section 12(g) of the 1934
Act. The Company represents and warrants that it meets the requirements for the
use of Form S-3 (or if the Company is not eligible for the use of Form S-3 as of
the Filing Date (as defined in the Registration Rights Agreement), the Company
may use the form of registration for which it is eligible at that time) for
registration of the sale by the Buyer of the Registrable Securities (as defined
in the Registration Rights Agreement).  So long as the Buyer beneficially owns
any of the Securities, the Company shall timely file all reports required to be
filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate
its status as an issuer required to file reports under the 1934 Act even if the
1934 Act or the rules and regulations thereunder would permit such termination.
The Company further agrees to file all reports required to be filed by the
Company with the SEC in a timely manner so as to become eligible, and thereafter
to maintain its eligibility, for the use of Form S-3.  The Company shall issue a
press release describing the material terms of the transaction contemplated
hereby as soon as practicable following the Closing Date but in no event more
than two (2) business days of the Closing Date, which press release shall be
subject to prior review by the Buyers.  The Company agrees that such press
release shall not disclose the name of the Buyers unless expressly consented to
in writing by the Buyers or unless required by applicable law or regulation, and
then only to the extent of such requirement.

d.	Use of Proceeds.  The Company shall use the net proceeds from the sale
of the Notes and the Warrants in the manner set forth in Schedule 4(d) attached
hereto and made a part hereof and shall not, directly or indirectly, use such
proceeds for (i) any loan to or investment in any other corporation,
partnership, enterprise or other person (except in connection with its currently
existing direct or indirect Subsidiaries); (ii) the satisfaction of any portion
of the Company's debt (other than payment of trade payables and accrued expenses
in the ordinary course of the Company's business and consistent with prior past
practices), or (iii) the redemption of any Common Stock (other than the
Securities).

<page>16

e.	Future Offerings.  Subject to the exceptions described below, the
Company will not, without the prior written consent of a majority-in-interest of
the Buyers, negotiate or contract with any party to obtain additional equity
financing (including debt financing with an equity component) that involves (A)
the issuance of Common Stock at a discount to the market price of the Common
Stock on the date of issuance (taking into account the value of any warrants or
options to acquire Common Stock issued in connection therewith) or (B) the
issuance of convertible securities that are convertible into an indeterminate
number of shares of Common Stock or (C) the issuance of warrants during the
period (the "Lock-up Period") beginning on the Closing Date and ending on the
later of (i) two hundred seventy (270) days from the Closing Date and (ii) one
hundred eighty (180) days from the date the Registration Statement (as defined
in the Registration Rights Agreement) is declared effective (plus any days in
which sales cannot be made thereunder).  In addition, subject to the exceptions
described below, the Company will not conduct any equity financing (including
debt with an equity component) ("Future Offerings") during the period beginning
on the Closing Date and ending two (2) years after the end of the Lock-up Period
unless it shall have first delivered to each Buyer, at least twenty (20)
business days prior to the closing of such Future Offering, written notice
describing the proposed Future Offering, including the terms and conditions
thereof and proposed definitive documentation to be entered into in connection
therewith, and providing each Buyer an option during the fifteen (15) day period
following delivery of such notice to purchase its pro rata share (based on the
ratio that the aggregate principal amount of Notes purchased by it hereunder
bears to the aggregate principal amount of Notes purchased hereunder) of the
securities being offered in the Future Offering on the same terms as
contemplated by such Future Offering (the limitations referred to in this
sentence and the preceding sentence are collectively referred to as the "Capital
Raising Limitations").  In the event the terms and conditions of a proposed
Future Offering are amended in any respect after delivery of the notice to the
Buyers concerning the proposed Future Offering, the Company shall deliver a new
notice to each Buyer describing the amended terms and conditions of the proposed
Future Offering and each Buyer thereafter shall have an option during the
fifteen (15) day period following delivery of such new notice to purchase its
pro rata share of the securities being offered on the same terms as contemplated
by such proposed Future Offering, as amended.  The foregoing sentence shall
apply to successive amendments to the terms and conditions of any proposed
Future Offering.  The Capital Raising Limitations shall not apply to any
transaction involving (i) issuances of securities in a firm commitment
underwritten public offering (excluding a continuous offering pursuant to Rule
415 under the 1933 Act, an equity line of credit or similar financing
arrangement) resulting in net proceeds to the Company of in excess of
$15,000,000, or (ii) issuances of securities as consideration for a merger,
consolidation or purchase of assets, or in connection with any strategic
partnership or joint venture (the primary purpose of which is not to raise
equity capital), or in connection with the disposition or acquisition of a
business, product or license by the Company.  The Capital Raising Limitations
also shall not apply to the issuance of securities upon exercise or conversion
of the Company's options, warrants or other convertible securities outstanding
as of the date hereof or to the grant of additional options or warrants, or the
issuance of additional securities, under any Company stock option or restricted
stock plan approved by the shareholders of the Company.  Notwithstanding
anything in  this section 4(e) to the contrary, in the event the Company's Board
of Directors decides, in good faith, to enter into a transaction or relationship
in which the Company issues shares of Common Stock or other securities of the
Company to a person or any entity which is, itself or through its subsidiaries,
an operating company in a business synergistic with the business of the Company
and in which the Company received benefits in addition to the investment of
funds, but shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an entity whose
business is investing in securities, the Company shall be permitted to do so.

<page>17

f.	Expenses.  At the Closing, the Company shall reimburse Buyers for all
reasonable expenses incurred by them in connection with the negotiation,
preparation, execution, delivery and performance of this Agreement and the other
agreements to be executed in connection herewith ("Documents"), including,
without limitation, attorneys' and consultants' fees and expenses, transfer
agent fees, fees for stock quotation services, fees relating to any amendments
or modifications of the Documents or any consents or waivers of provisions in
the Documents, fees for the preparation of opinions of counsel, escrow fees, and
costs of restructuring the transactions contemplated by the Documents.  When
possible, the Company must pay these fees directly, otherwise the Company must
make immediate payment for reimbursement to the Buyers for all reasonable fees
and expenses within ___ days upon written notice by the Buyer and the submission
of a detailed, line-item invoice by the Buyer  If the Company fails to reimburse
the Buyer in full within ten (10) business days of submission of said written
notice and invoice by the Buyer, the Company shall pay interest on the total
amount of fees to be reimbursed at a rate of 15% per annum.  [PLACE LIMIT ON
$$$$ AMOUNT OF REIMBURSEMENT]

g.	Financial Information.  The Company agrees to send the following reports
to each Buyer until such Buyer transfers, assigns, or sells all of the
Securities: (i) within ten (10) days after the filing with the SEC, a copy of
its Annual Report on Form 10-KSB, its Quarterly Reports on Form 10-QSB and any
Current Reports on Form 8-K; (ii) within one (1) day after release, copies of
all press releases issued by the Company or any of its Subsidiaries; and (iii)
contemporaneously with the making available or giving to the shareholders of the
Company, copies of any notices or other information the Company makes available
or gives to such shareholders.

h.	Authorization and Reservation of Shares.  Subject to Stockholder
Approval, the Company shall at all times have authorized, and reserved for the
purpose of issuance, a sufficient number of shares of Common Stock to provide
for the full conversion or exercise of the outstanding Notes and Warrants and
issuance of the Conversion Shares and Warrant Shares in connection therewith
(based on the Conversion Price of the Notes or Exercise Price of the Warrants in
effect from time to time) and as otherwise required by the Notes.  The Company
shall not reduce the number of shares of Common Stock reserved for issuance upon
conversion of Notes and exercise of the Warrants without the consent of each
Buyer.  The Company shall at all times maintain the number of shares of Common
Stock so reserved for issuance at an amount ("Reserved Amount") equal to no less
than two (2) times the number that is then actually issuable upon full
conversion of the Notes and Additional Notes and upon exercise of the Warrants
and the Additional Warrants (based on the Conversion Price of the Notes or the
Exercise Price of the Warrants in effect from time to time).  If at any time the
number of shares of Common Stock authorized and reserved for issuance
("Authorized and Reserved Shares") is below the Reserved Amount, the Company
will promptly take all corporate action necessary to authorize and reserve a
sufficient number of shares, including, without limitation, calling a special
meeting of shareholders to authorize additional shares to meet the Company's
obligations under this Section 4(h), in the case of an insufficient number of
authorized shares, obtain shareholder approval of an increase in such authorized
number of shares, and voting the management shares of the Company in favor of an
increase in the authorized shares of the Company to ensure that the number of
authorized shares is sufficient to meet the Reserved Amount.  If the Company
fails to obtain such shareholder approval within thirty (30) days following the
date on which the number of Reserved Amount exceeds the Authorized and Reserved
Shares, the Company shall pay to the Borrower the Standard Liquidated Damages
Amount, in cash or in shares of Common Stock at the option of the Buyer.  If the
Buyer elects to be paid the Standard Liquidated Damages Amount in shares of

<page>18

Common Stock, such shares shall be issued at the Conversion Price at the time of
payment.  In order to ensure that the Company has authorized a sufficient amount
of shares to meet the Reserved Amount at all times, the Company must deliver to
the Buyer at the end of every month a list detailing (1) the current amount of
shares authorized by the Company and reserved for the Buyer; and (2) amount of
shares issuable upon conversion of the Notes and upon exercise of the Warrants
and as payment of interest accrued on the Notes for one year.  If the Company
fails to provide such list within five (5) business days of the end of each
month, the Company shall pay the Standard Liquidated Damages Amount, in cash or
in shares of Common Stock at the option of the Buyer, until the list is
delivered.  If the Buyer elects to be paid the Standard Liquidated Damages
Amount in shares of Common Stock, such shares shall be issued at the Conversion
Price at the time of payment.

i.	Listing.  The Company shall promptly secure the listing or quotation
[HOW CAN COMPANY MAKE THIS REPRESENTATION FOR RESTRICTED STOCK???], as the case
may be, of the Conversion Shares and Warrant Shares upon each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed or quoted, as the case may be, (subject to official
notice of issuance) and, so long as any Buyer owns any of the Securities, shall
maintain, so long as any other shares of Common Stock shall be so listed or
quoted, as the case may be, such listing or quotation, as the case may be, of
all Conversion Shares and Warrant Shares from time to time issuable upon
conversion of the Notes or exercise of the Warrants.  The Company will obtain
and, so long as any Buyer owns any of the Securities, maintain the listing or
quotation, as the case may be, and trading of its Common Stock on the OTCBB or
any equivalent replacement exchange, the Nasdaq National Market ("Nasdaq"), the
Nasdaq SmallCap Market ("Nasdaq SmallCap"), the New York Stock Exchange
("NYSE"), or the American Stock Exchange ("AMEX") and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the National Association of Securities Dealers ("NASD") and
such exchanges, as applicable.  The Company shall promptly provide to each Buyer
copies of any notices it receives from the OTCBB and any other exchanges or
quotation systems on which the Common Stock is then listed or quoted, as the
case may be, regarding the continued eligibility of the Common Stock for listing
or quotation, as the case may be, on such exchanges and quotation systems.

<page>19

j.	Corporate Existence.  So long as a Buyer beneficially owns any Notes or
Warrants, the Company shall maintain its corporate existence and shall not sell
[THIS IS A SUBSTANTIAL VETO RIGHT GIVEN TO BUYERS] all or substantially all of
the Company's assets, except in the event of a merger or consolidation or sale
of all or substantially all of the Company's assets, where the surviving or
successor entity in such transaction (i) assumes the Company's obligations
hereunder and under the agreements and instruments entered into in connection
herewith and (ii) is a publicly traded corporation whose Common Stock is listed
for trading on the OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX.

k.	No Integration.  The Company shall not make any offers or sales of any
security (other than the Securities) under circumstances that would require
registration of the Securities being offered or sold hereunder under the 1933
Act or cause the offering of the Securities to be integrated with any other
offering of securities by the Company for the purpose of any stockholder
approval provision applicable to the Company or its securities[??????????].

l.	Subsequent Investment.  The Company and the Buyers agree that, upon the
filing by the Company of the Registration Statement to be filed pursuant to the
Registration Rights Agreement (the "Filing Date"), the Buyers shall purchase
additional Notes (the "Filing Notes") in the aggregate principal amount of Seven
Hundred and Fifty Thousand Dollars ($750,000) and additional warrants (the
"Filing Warrants") to purchase an aggregate of 350,000 shares of Common Stock,
for an aggregate purchase price of Seven Hundred and Fifty Thousand Dollars
($750,000), with the closing of such purchase to occur within five (5) days of
the Filing Date; provided, however, that the obligation of each Buyer to
purchase the Filing Notes and the Filing Warrants is subject to the
satisfaction, at or before the closing of such purchase and sale, of the
conditions set forth in Section 7.  The Company and the Buyers further agree
that, upon the declaration of effectiveness of the Registration Statement to be
filed pursuant to the Registration Rights Agreement (the "Effective Date"), the
Buyers shall purchase additional notes  (the "Effectiveness Notes" and,
collectively with the Filing Notes, the "Additional Notes") in the aggregate
principal amount of One Million Dollars ($1,000,000) and additional warrants
(the "Effectiveness Warrants" and, collectively with the Filing Warrants, the
"Additional Warrants") to purchase an aggregate of 466,620 shares of Common
Stock, for an aggregate purchase price of One Million Dollars ($1,000,000), with
the closing of such purchase to occur within five (5) days of the Effective
Date; provided, however, that the obligation of each Buyer to purchase the
Additional Notes and the Additional Warrants is subject to the satisfaction, at
or before the closing of such purchase and sale, of the conditions set forth in
Section 7; and, provided, further, that there shall not have been a Material
Adverse Effect as of such effective date.  The terms of the Additional Notes and
the Additional Warrants shall be identical to the terms of the Notes and
Warrants, as the case may be, to be issued on the Closing Date.  The Common
Stock underlying the Additional Notes and the Additional Warrants shall be
Registrable Securities (as defined in the Registration Rights Agreement) and
shall be included in the Registration Statement to be filed pursuant to the
Registration Rights Agreement.

<page>20

m.	Key Man Insurance.  The Company shall use its best efforts to obtain, on
or before five (5) business days from the date hereof, key man life insurance on
all key executive employees.

n.	Restriction on Short Sales. The Buyers agree that, so long as any of the
Notes remain outstanding, but in no event less than two (2) years from the date
hereof, the Buyers will not enter into or effect any "short sales" (as such term
is defined in Rule 3b-3 of the 1934 Act) of the Common Stock or hedging
transaction which establishes a net short position with respect to the Common
Stock.

o.	Breach of Covenants.  If the Company breaches any of the covenants set
forth in this Section 4, and in addition to any other remedies available to the
Buyers pursuant to this Agreement, the Company shall pay to the Buyers the
Standard Liquidated Damages Amount, in cash or in shares of Common Stock at the
option of the Company, until such breach is cured.  If the Company elects to pay
the Standard Liquidated Damages Amount in shares, such shares shall be issued at
the Conversion Price at the time of payment.

5.	TRANSFER AGENT INSTRUCTIONS.  The Company shall issue irrevocable
instructions to its transfer agent to issue certificates, registered in the name
of each Buyer or its nominee, for the Conversion Shares and Warrant Shares in
such amounts as specified from time to time by each Buyer to the Company upon
conversion of the Notes or exercise of the Warrants in accordance with the terms
thereof (the "Irrevocable Transfer Agent Instructions").  Prior to registration
of the Conversion Shares and Warrant Shares under the 1933 Act or the date on
which the Conversion Shares and Warrant Shares may be sold pursuant to Rule 144
without any restriction as to the number of Securities as of a particular date
that can then be immediately sold, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement.  The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof (in the case of the Conversion Shares and
Warrant Shares, prior to registration of the Conversion Shares and Warrant
Shares under the 1933 Act or the date on which the Conversion Shares and Warrant
Shares may be sold pursuant to Rule 144 without any restriction as to the number
of Securities as of a particular date that can then be immediately sold), will
be given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the Registration Rights Agreement.
Nothing in this Section shall affect in any way the Buyer's obligations and
agreement set forth in Section 2(g) hereof to comply with all applicable
prospectus delivery requirements, if any, upon re-sale of the Securities.  If a
Buyer provides the Company with (i) an opinion of counsel in form, substance and
scope customary for opinions in comparable transactions, to the effect that a
public sale or transfer of such Securities may be made without registration
under the 1933 Act and such sale or transfer is effected or (ii) the Buyer
provides reasonable assurances that the Securities can be sold pursuant to Rule

<page>21

144, the Company shall permit the transfer, and, in the case of the Conversion
Shares and Warrant Shares, promptly instruct its transfer agent to issue one or
more certificates, free from restrictive legend, in such name and in such
denominations as specified by such Buyer.  The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
Buyers, by vitiating the intent and purpose of the transactions contemplated
hereby.  Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 5 may be inadequate and agrees, in
the event of a breach or threatened breach by the Company of the provisions of
this Section, that the Buyers shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach and requiring
immediate transfer, without the necessity of showing economic loss and without
any bond or other security being required.

6.	CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.  The obligation of the
Company hereunder to issue and sell the Notes and Warrants to a Buyer at the
Closing is subject to the satisfaction, at or before the Closing Date of each of
the following conditions thereto, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion:

a.	The applicable Buyer shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to the Company.

b.	The applicable Buyer shall have delivered the Purchase Price in
accordance with Section 1(b) above.

c.	The representations and warranties of the applicable Buyer shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the applicable Buyer shall
have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the applicable Buyer at or prior to the Closing
Date.

d.	No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by or in any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.

<page>22

7.	CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.  The obligation of
each Buyer hereunder to purchase the Notes and Warrants at the Closing is
subject to the satisfaction, at or before the Closing Date of each of the
following conditions, provided that these conditions are for such Buyer's sole
benefit and may be waived by such Buyer at any time in its sole discretion:

a.	The Company shall have executed this Agreement and the Registration
Rights Agreement, and delivered the same to the Buyer.

b.	The Company shall have delivered to such Buyer duly executed Notes (in
such denominations as the Buyer shall request) and Warrants in accordance with
Section 1(b) above.

c.	The Irrevocable Transfer Agent Instructions, in form and substance
satisfactory to a majority-in-interest of the Buyers, shall have been delivered
to and acknowledged in writing by the Company's Transfer Agent.

d.	The representations and warranties of the Company shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at such time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date.  The Buyer shall have received a
certificate or certificates, executed by the chief executive officer of the
Company, dated as of the Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by such Buyer including, but not
limited to certificates with respect to the Company's Certificate of
Incorporation, By-laws and Board of Directors' resolutions relating to the
transactions contemplated hereby.

e.	No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by or in any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.

f.	No event shall have occurred which could reasonably be expected to have
a Material Adverse Effect on the Company.

g.	The Conversion Shares and Warrant Shares shall have been authorized for
quotation on the OTCBB and trading in the Common Stock on the OTCBB  shall not
have been suspended by the SEC or the OTCBB. [THEY HAVE BEEN AUTHORIZED FOR
QUOTATION AND TRADING????? SEE i ABOVE]

<page>23

h.	The Buyer shall have received an opinion of the Company's counsel, dated
as of the Closing Date, in form, scope and substance reasonably satisfactory to
the Buyer and in substantially the same form as Exhibit "D" attached hereto.

i.	The Buyer shall have received an officer's certificate described in
Section 3(c) above, dated as of the Closing Date.

8.	GOVERNING LAW; MISCELLANEOUS.

a.	Governing Law.  THIS AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS.  THE PARTIES HERETO HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK,
NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE
AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.  BOTH PARTIES FURTHER AGREE
THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING.  NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW.  BOTH PARTIES AGREE THAT A FINAL NON-
APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY
BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL MANNER.  THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER
THIS AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING
ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH
DISPUTE.

b.	Counterparts; Signatures by Facsimile.  This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original but all
of which shall constitute one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other
party.  This Agreement, once executed by a party, may be delivered to the other
party hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.

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

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

e.	Entire Agreement; Amendments.  This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters.  No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.

<page>24

f.	Notices.  Any notices required or permitted to be given under the terms
of this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five days
after being placed in the mail, if mailed by regular United States mail, or upon
receipt, if delivered personally or by courier (including a recognized overnight
delivery service) or by facsimile, in each case addressed to a party.  The
addresses for such communications shall be:

If to the Company:

INFE- Human Resources, Inc.
67 Wall Street, 22nd Floor
New York, NY 10005
Attention: Chief Executive Officer
Telephone:	(212) 859-3466
Facsimile:

With a copy to:
Laura Anthony, Esq.
330 Clemants Street, #217
West Palm Beach, FL 33401
Attention:  Laura Anthony, Esq.
Telephone:  (561) 514-0936
Facsimile:   (561) 514-0832

If to a Buyer:  To the address set forth immediately below such Buyer's name on
the signature pages hereto.

With copy to:

Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street
51st Floor
Philadelphia, Pennsylvania  19103
Attention:  Gerald J. Guarcini, Esq.
Telephone:  215-864-8625
Facsimile:  215-864-8999

Each party shall provide notice to the other party of any change in address.

<page>25

g.	Successors and Assigns.  This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and assigns.  Neither the
Company nor any Buyer shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other.  Notwithstanding the
foregoing, subject to Section 2(f), any Buyer may assign its rights hereunder to
any person that purchases Securities in a private transaction from a Buyer or to
any of its "affiliates," as that term is defined under the 1934 Act, without the
consent of the Company.

h.	Third Party Beneficiaries.  This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.

i.	Survival.  The representations and warranties of the Company and the
agreements and covenants set forth in Sections 3, 4, 5 and 8 shall survive the
closing hereunder notwithstanding any due diligence investigation conducted by
or on behalf of the Buyers.  The Company agrees to indemnify and hold harmless
each of the Buyers and all their officers, directors, employees and agents for
loss or damage arising as a result of or related to any breach or alleged breach
by the Company of any of its representations, warranties and covenants set forth
in Sections 3 and 4 hereof or any of its covenants and obligations under this
Agreement or the Registration Rights Agreement, including advancement of
expenses as they are incurred.

j.	Publicity.  The Company and each of the Buyers shall have the right to
review a reasonable period of time before issuance of any press releases, SEC,
OTCBB or NASD filings, or any other public statements with respect to the
transactions contemplated hereby; provided, however, that the Company shall be
entitled, without the prior approval of each of the Buyers, to make any press
release or SEC, OTCBB (or other applicable trading market) or NASD filings with
respect to such transactions as is required by applicable law and regulations
(although each of the Buyers shall be consulted by the Company in connection
with any such press release prior to its release and shall be provided with a
copy thereof and be given an opportunity to comment thereon).

k.	Further Assurances.  Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

l.	No Strict Construction.  The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

<page>26

m.	Remedies.  The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Buyers by vitiating the
intent and purpose of the transaction contemplated hereby.  Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Agreement will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement, that the
Buyers shall be entitled, in addition to all other available remedies at law or
in equity, and in addition to the penalties assessable herein, to an injunction
or injunctions restraining, preventing or curing any breach of this Agreement
and to enforce specifically the terms and provisions hereof, without the
necessity of showing economic loss and without any bond or other security being
required.

IN WITNESS WHEREOF, the undersigned Buyers and the Company have caused this
Agreement to be duly executed as of the date first above written.

INFE-HUMAN RESOURCES, INC.

________________________________
Arthur Viola
Chief Executive Officer

AJW PARTNERS, LLC
By:  SMS Group, LLC

______________________________________
Corey S. Ribotsky
Manager

RESIDENCE:  Delaware

ADDRESS:	1044 Northern Boulevard
		Suite 302
		Roslyn, New York 11576
Facsimile:  (516) 739-7115
Telephone:  (516) 739-7110

AGGREGATE SUBSCRIPTION AMOUNT:

Aggregate Principal Amount of Notes:	$________
Number of Warrants:	                 ________
Aggregate Purchase Price:	        $________

<page>27

AJW OFFSHORE, LTD.
By:  First Street Manager II, LLC

______________________________________
Corey S. Ribotsky
Manager

RESIDENCE:   Cayman Islands

ADDRESS:AJW Offshore, Ltd.
P.O. Box 32021 SMB
Grand Cayman, Cayman Island, B.W.I.

AGGREGATE SUBSCRIPTION AMOUNT:

Aggregate Principal Amount of Notes:		$_______
Number of Warrants:				_______
Aggregate Purchase Price:			$_______

AJW QUALIFIED PARTNERS, LLC
By:  AJW Manager, LLC
____________________________________
Corey S. Ribotsky
Manager

RESIDENCE:	    New York

ADDRESS:	1044 Northern Boulevard
		Suite 302
		Roslyn, New York 11576
Facsimile:	(516) 739-7115
Telephone:	(516) 739-7110

AGGREGATE SUBSCRIPTION AMOUNT:

Aggregate Principal Amount of Notes:	        $________
Number of Warrants:				________
Aggregate Purchase Price:		       $________

 <page>28

NEW MILLENNIUM CAPITAL PARTNERS II, LLC
By:  First Street Manager II, LLP
____________________________________
Corey S. Ribotsky
Manager

RESIDENCE:	    New York

ADDRESS:	1044 Northern Boulevard
		Suite 302
		Roslyn, New York 11576
Facsimile:	(516) 739-7115
Telephone:	(516) 739-7110

AGGREGATE SUBSCRIPTION AMOUNT:

Aggregate Principal Amount of Notes:		$______
Number of Warrants:			  	 ______
Aggregate Purchase Price:			$______

<page>29

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