Document:

Exhibit 10.2

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE  BEEN  REGISTERED  WITH  THE  SECURITIES  AND  EXCHANGE  COMMISSION  OR THE
SECURITIES   COMMISSION  OF  ANY  STATE  IN  RELIANCE  UPON  AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES  LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH  EFFECT,  THE  SUBSTANCE  OF WHICH SHALL BE  REASONABLY  ACCEPTABLE  TO THE
COMPANY.  THIS  SECURITY  AND THE  SECURITIES  ISSUABLE  UPON  EXERCISE  OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION  WITH A BONA FIDE MARGIN  ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

                          COMMON STOCK PURCHASE WARRANT

                 To Purchase 1,500,000 Shares of Common Stock of

                           New Century Companies, Inc.

      THIS COMMON STOCK PURCHASE  WARRANT (the  "Warrant")  certifies  that, for
value received,  CAMOFI Master LDC (the "Holder"),  is entitled,  upon the terms
and subject to the  limitations on exercise and the conditions  hereinafter  set
forth, at any time on or after the date hereof (the "Initial Exercise Date") and
on or prior to the close of  business  on  December  19,  2013,  the seven  year
anniversary  of the  Initial  Exercise  Date (the  "Termination  Date")  but not
thereafter,  to subscribe for and purchase from New Century  Companies,  Inc., a
Delaware corporation (the "Company"), 1,500,000 shares (the "Warrant Shares") of
Common Stock, $0.10 par value, of the Company (the "Common Stock"). The purchase
price of one share of Common  Stock  under  this  Warrant  shall be equal to the
Exercise Price, as defined in Section 2(b).

Section 1.  Definitions.   Capitalized   terms  used  and not otherwise  defined
            herein shall have the meanings set forth in that certain  Securities
            Purchase  Agreement (the "Purchase  Agreement"),  dated February 28,
            2006, between the Company and the purchaser signatory thereto.

Section 2.  Exercise.

            a)    Exercise  of  Warrant.   Exercise  of  the   purchase   rights
                  represented  by this  Warrant may be made at any time or times
                  on or after the  Initial  Exercise  Date and on or before  the
                  Termination Date by delivery to the Company of a duly executed
                  facsimile  copy of the Notice of Exercise Form annexed  hereto
                  (or such  other  office  or agency  of the  Company  as it may
                  designate by notice in writing to the registered Holder at the
                  address of such Holder appearing on the books of the Company);
                  provided,  however,  within 5  Trading  Days of the date  said
                  Notice of Exercise is  delivered  to the  Company,  the Holder
                  shall have  surrendered  this  Warrant to the  Company and the
                  Company shall have received payment of the aggregate  Exercise
                  Price of the shares  thereby  purchased  by wire  transfer  or
                  cashier's check drawn on a United States bank.

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            b)    Exercise  Price.  The exercise price of the Common Stock under
                  this  Warrant  shall  be $0.35  (the  "Exercise  Price").  The
                  Exercise  Price  shall be subject to  adjustment  pursuant  to
                  Section 3 hereof.

            c)    Cashless  Exercise.  In the event that  there is no  effective
                  registration  statement  covering  the  resale  of the  shares
                  underlying this Warrant, this Warrant may also be exercised by
                  means of a "cashless  exercise"  in which the Holder  shall be
                  entitled  to receive a  certificate  for the number of Warrant
                  Shares equal to the quotient  obtained by dividing [(A-B) (X)]
                  by (A), where:

                  (A) = the VWAP on the Trading Day  immediately  preceding  the
                  date of such election;

                  (B) = the Exercise Price of this Warrant, as adjusted; and

                  (X) = the number of Warrant  Shares  issuable upon exercise of
                  this Warrant in  accordance  with the terms of this Warrant by
                  means of a cash exercise rather than a cashless exercise.

            d)    Exercise Limitations;  Holder's Restrictions. The Holder shall
                  not have the right to exercise  any  portion of this  Warrant,
                  pursuant  to Section  2(c) or  otherwise,  to the extent  that
                  after  giving  effect to such  issuance  after  exercise,  the
                  Holder (together with the Holder's  affiliates),  as set forth
                  on the applicable Notice of Exercise,  would  beneficially own
                  in excess of 4.99% of the number of shares of the Common Stock
                  outstanding  immediately after giving effect to such issuance.
                  For purposes of the foregoing  sentence,  the number of shares
                  of  Common  Stock  beneficially  owned by the  Holder  and its
                  affiliates  shall include the number of shares of Common Stock
                  issuable  upon  exercise of this Warrant with respect to which
                  the  determination  of such sentence is being made,  but shall
                  exclude  the number of shares of Common  Stock  which would be
                  issuable  upon (A)  exercise  of the  remaining,  nonexercised
                  portion of this  Warrant  beneficially  owned by the Holder or
                  any of its  affiliates  and (B) exercise or  conversion of the
                  unexercised or nonconverted portion of any other securities of
                  the Company (including, without limitation, any other Notes or
                  Warrants)  subject to a limitation  on  conversion or exercise
                  analogous  to the  limitation  contained  herein  beneficially
                  owned by the  Holder or any of its  affiliates.  Except as set
                  forth in the preceding sentence,  for purposes of this Section
                  2(d),  beneficial  ownership shall be calculated in accordance
                  with Section 13(d) of the Exchange Act, it being  acknowledged
                  by Holder that the Company is not  representing to Holder that
                  such  calculation  is in compliance  with Section 13(d) of the
                  Exchange  Act  and  Holder  is  solely   responsible  for  any
                  schedules required to be filed in accordance therewith. To the
                  extent that the  limitation  contained  in this  Section  2(d)
                  applies,   the   determination  of  whether  this  Warrant  is
                  exercisable  (in  relation  to other  securities  owned by the
                  Holder) and of which a portion of this Warrant is  exercisable
                  shall  be in the  sole  discretion  of  such  Holder,  and the
                  submission of a Notice of Exercise  shall be deemed to be such
                  Holder's  determination of whether this Warrant is exercisable
                  (in relation to other  securities owned by such Holder) and of
                  which  portion of this  Warrant is  exercisable,  in each case
                  subject  to  such  aggregate  percentage  limitation,  and the
                  Company  shall have no  obligation  to verify or  confirm  the
                  accuracy of such  determination.  For purposes of this Section
                  2(d),  in  determining  the  number of  outstanding  shares of
                  Common Stock, the Holder may rely on the number of outstanding
                  shares of Common Stock as reflected in (x) the Company's  most
                  recent Form 10-QSB or Form  10-KSB (or similar  form),  as the
                  case may be,  (y) a more  recent  public  announcement  by the
                  Company  or  (z)  any  other  notice  by  the  Company  or the
                  Company's Transfer Agent setting forth the number of shares of
                  Common Stock outstanding.  Upon the written or oral request of
                  the Holder,  the Company shall within two Trading Days confirm
                  orally  and in  writing  to the Holder the number of shares of
                  Common  Stock  then  outstanding.  In any case,  the number of
                  outstanding  shares of Common Stock shall be determined  after
                  giving  effect to the  conversion or exercise of securities of
                  the  Company,  including  this  Warrant,  by the Holder or its
                  affiliates   since  the  date  as  of  which  such  number  of
                  outstanding   shares  of  Common  Stock  was   reported.   The
                  provisions  of this  Section  2(d) may be waived by the Holder
                  upon,  at the  election of the Holder,  not less than 61 days'
                  prior  notice  to the  Company,  and  the  provisions  of this
                  Section  2(d) shall  continue to apply until such 61st day (or
                  such  later  date,  as  determined  by the  Holder,  as may be
                  specified in such notice of waiver).

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            e)    Mechanics of Exercise.

                  i)    Authorization of Warrant Shares.  The Company  covenants
                        that all  Warrant  Shares  which may be issued  upon the
                        exercise  of the  purchase  rights  represented  by this
                        Warrant  will,  upon  exercise  of the  purchase  rights
                        represented by this Warrant, be duly authorized, validly
                        issued,  fully paid and  nonassessable and free from all
                        taxes, liens and charges in respect of the issue thereof
                        (other than taxes in respect of any  transfer  occurring
                        contemporaneously   with  such   issue).   The   Company
                        covenants   that   during  the  period  the  Warrant  is
                        outstanding,  it will  reserve from its  authorized  and
                        unissued  Common Stock a sufficient  number of shares to
                        provide for the issuance of the Warrant  Shares upon the
                        exercise of any purchase rights under this Warrant.  The
                        Company  further  covenants  that its  issuance  of this
                        Warrant shall  constitute full authority to its officers
                        who  are  charged  with  the  duty  of  executing  stock
                        certificates   to  execute   and  issue  the   necessary
                        certificates for the Warrant Shares upon the exercise of
                        the purchase rights under this Warrant. The Company will
                        take all such  reasonable  action as may be necessary to
                        assure  that  such  Warrant  Shares  may  be  issued  as
                        provided herein without  violation of any applicable law
                        or  regulation,  or of any  requirements  of the Trading
                        Market upon which the Common Stock may be listed.

                  ii)   Delivery of Certificates Upon Exercise. Certificates for
                        shares  purchased  hereunder shall be transmitted by the
                        transfer agent of the Company to the Holder by crediting
                        the  account  of the  Holder's  prime  broker  with  the
                        Depository Trust Company through its Deposit  Withdrawal
                        Agent  Commission  ("DWAC")  system if the  Company is a
                        participant  in such system,  and  otherwise by physical
                        delivery to the address  specified  by the Holder in the
                        Notice  of  Exercise  within  3  Trading  Days  from the
                        delivery to the Company of the Notice of Exercise  Form,
                        surrender of this  Warrant and payment of the  aggregate
                        Exercise  Price  as  set  forth  above  ("Warrant  Share
                        Delivery  Date").  This Warrant  shall be deemed to have
                        been  exercised  on  the  date  the  Exercise  Price  is
                        received by the  Company.  The Warrant  Shares  shall be
                        deemed  to have  been  issued,  and  Holder or any other
                        person so designated to be named therein shall be deemed
                        to have become a holder of record of such shares for all
                        purposes,  as of the date the Warrant has been exercised
                        by payment to the Company of the Exercise  Price and all
                        taxes  required  to be  paid  by  the  Holder,  if  any,
                        pursuant to Section  2(e)(vii)  prior to the issuance of
                        such shares, have been paid.

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                  iii)  Delivery of New Warrants Upon Exercise.  If this Warrant
                        shall have been exercised in part, the Company shall, at
                        the time of delivery of the  certificate or certificates
                        representing  Warrant  Shares,  deliver  to Holder a new
                        Warrant  evidencing the rights of Holder to purchase the
                        unpurchased  Warrant  Shares called for by this Warrant,
                        which  new  Warrant  shall  in  all  other  respects  be
                        identical with this Warrant.

                  iv)   Rescission  Rights.  If the  Company  fails to cause its
                        transfer  agent to transmit to the Holder a  certificate
                        or certificates representing the Warrant Shares pursuant
                        to this Section  2(e)(iv) by the Warrant Share  Delivery
                        Date,  then the  Holder  will have the right to  rescind
                        such exercise.

                  v)    Compensation  for Buy-In on  Failure  to Timely  Deliver
                        Certificates  Upon  Exercise.  In  addition to any other
                        rights available to the Holder,  if the Company fails to
                        cause its  transfer  agent to  transmit  to the Holder a
                        certificate  or  certificates  representing  the Warrant
                        Shares  pursuant to an exercise on or before the Warrant
                        Share  Delivery  Date, and if after such date the Holder
                        is required by its broker to purchase (in an open market
                        transaction  or  otherwise)  shares of  Common  Stock to
                        deliver in  satisfaction  of a sale by the Holder of the
                        Warrant  Shares which the Holder  anticipated  receiving
                        upon such exercise (a "Buy-In"),  then the Company shall
                        (1) pay in cash to the  Holder  the  amount by which (x)
                        the Holder's total purchase price  (including  brokerage
                        commissions,  if any) for the shares of Common  Stock so
                        purchased exceeds (y) the amount obtained by multiplying
                        (A) the number of Warrant  Shares  that the  Company was
                        required to deliver to the Holder in connection with the
                        exercise  at issue times (B) the price at which the sell
                        order  giving  rise  to  such  purchase  obligation  was
                        executed,  and (2) at the option of the  Holder,  either
                        reinstate  the  portion of the  Warrant  and  equivalent
                        number of Warrant Shares for which such exercise was not
                        honored or deliver to the Holder the number of shares of
                        Common Stock that would have been issued had the Company
                        timely   complied   with  its   exercise   and  delivery
                        obligations  hereunder.   For  example,  if  the  Holder
                        purchases  Common Stock having a total purchase price of
                        $11,000 to cover a Buy-In with  respect to an  attempted
                        exercise  of shares of Common  Stock  with an  aggregate
                        sale price giving rise to such  purchase  obligation  of
                        $10,000,  under clause (1) of the immediately  preceding
                        sentence the Company shall be required to pay the Holder
                        $1,000.  The Holder  shall  provide the Company  written
                        notice  indicating the amounts  payable to the Holder in
                        respect  of  the  Buy-In,   together   with   applicable
                        confirmations and other evidence reasonably requested by
                        the Company. Nothing herein shall limit a Holder's right
                        to pursue any other remedies  available to it hereunder,
                        at law or in equity  including,  without  limitation,  a
                        decree of specific  performance and/or injunctive relief
                        with respect to the Company's  failure to timely deliver
                        certificates  representing  shares of Common  Stock upon
                        exercise  of the  Warrant as  required  pursuant  to the
                        terms hereof.

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                  vi)   No Fractional  Shares or Scrip. No fractional  shares or
                        scrip  representing  fractional  shares  shall be issued
                        upon the exercise of this Warrant. As to any fraction of
                        a share  which  Holder  would  otherwise  be entitled to
                        purchase  upon such  exercise,  the Company  shall pay a
                        cash  adjustment in respect of such final fraction in an
                        amount equal to such fraction multiplied by the Exercise
                        Price.

                  vii)  Charges,  Taxes and Expenses.  Issuance of  certificates
                        for Warrant  Shares shall be made without  charge to the
                        Holder for any issue or transfer tax or other incidental
                        expense in respect of the issuance of such  certificate,
                        all of which  taxes  and  expenses  shall be paid by the
                        Company,  and such  certificates  shall be issued in the
                        name of the  Holder  or in such  name or names as may be
                        directed by the Holder;  provided,  however, that in the
                        event  certificates  for Warrant Shares are to be issued
                        in a name  other  than  the  name  of the  Holder,  this
                        Warrant  when   surrendered   for   exercise   shall  be
                        accompanied by the Assignment  Form attached hereto duly
                        executed by the Holder; and the Company may require,  as
                        a condition thereto,  the payment of a sum sufficient to
                        reimburse it for any transfer tax incidental thereto.

                  viii) Closing  of  Books.  The  Company  will  not  close  its
                        stockholder   books  or  records  in  any  manner  which
                        prevents the timely  exercise of this Warrant,  pursuant
                        to the terms hereof.

Section 3.  Certain Adjustments.

            a)    Stock Dividends and Splits. If the Company,  at any time while
                  this  Warrant is  outstanding:  (A) pays a stock  dividend  or
                  otherwise make a distribution  or  distributions  on shares of
                  its  Common  Stock or any other  equity  or equity  equivalent
                  securities  payable  in  shares of Common  Stock  (which,  for
                  avoidance  of doubt,  shall not  include  any shares of Common
                  Stock  issued by the Company  pursuant to this  Warrant),  (B)
                  subdivides  outstanding  shares of Common  Stock into a larger
                  number of shares,  (C) combines  (including  by way of reverse
                  stock split) outstanding shares of Common Stock into a smaller
                  number of shares, or (D) issues by  reclassification of shares
                  of the  Common  Stock  any  shares  of  capital  stock  of the
                  Company,  then  in each  case  the  Exercise  Price  shall  be
                  multiplied by a fraction of which the  numerator  shall be the
                  number of shares of Common Stock  (excluding  treasury shares,
                  if  any)  outstanding  before  such  event  and of  which  the
                  denominator  shall be the  number of  shares  of Common  Stock
                  outstanding after such event and the number of shares issuable
                  upon  exercise  of  this  Warrant  shall  be   proportionately
                  adjusted.  Any  adjustment  made pursuant to this Section 3(a)
                  shall become effective  immediately  after the record date for
                  the  determination  of  stockholders  entitled to receive such
                  dividend   or   distribution   and  shall   become   effective
                  immediately  after  the  effective  date  in  the  case  of  a
                  subdivision, combination or re-classification.

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            b)    Subsequent  Equity  Sales.  If the  Company or any  Subsidiary
                  thereof,  as  applicable,  at any time while  this  Warrant is
                  outstanding,  shall offer,  sell, grant any option to purchase
                  or offer,  sell or grant any right to reprice its  securities,
                  or otherwise dispose of or issue (or announce any offer, sale,
                  grant or any  option to  purchase  or other  disposition)  any
                  Common Stock or Common Stock Equivalents  entitling any Person
                  to acquire shares of Common Stock,  at an effective  price per
                  share less than the then Exercise Price (such lower price, the
                  "Base  Share  Price"  and  such  issuances   collectively,   a
                  "Dilutive Issuance"),  as adjusted hereunder (if the holder of
                  the Common Stock or Common Stock  Equivalents  so issued shall
                  at  any  time,   whether  by  operation   of  purchase   price
                  adjustments, reset provisions,  floating conversion,  exercise
                  or exchange prices or otherwise,  or due to warrants,  options
                  or rights per share  which is issued in  connection  with such
                  issuance,  be entitled to receive shares of Common Stock at an
                  effective  price  per share  which is less  than the  Exercise
                  Price, such issuance shall be deemed to have occurred for less
                  than the Exercise  Price),  then,  the Exercise Price shall be
                  reduced to equal the Base Share Price.  Such adjustment  shall
                  be made whenever such Common Stock or Common Stock Equivalents
                  are issued. Such adjustment shall be made whenever such Common
                  Stock or Common  Stock  Equivalents  are  issued.  The Company
                  shall notify the Holder in writing,  no later than the Trading
                  Day following the issuance of any Common Stock or Common Stock
                  Equivalents  subject to this section,  indicating  therein the
                  applicable  issuance  price,  or of  applicable  reset  price,
                  exchange price, conversion price and other pricing terms (such
                  notice  the  "Dilutive  Issuance  Notice").  For  purposes  of
                  clarification,  whether or not the Company provides a Dilutive
                  Issuance  Notice  pursuant  to this  Section  3(b),  upon  the
                  occurrence  of any Dilutive  Issuance,  after the date of such
                  Dilutive  Issuance  the Holder is entitled to receive a number
                  of Warrant  Shares based upon the Base Share Price  regardless
                  of  whether  the  Holder  accurately  refers to the Base Share
                  Price in the Notice of Exercise.

            c)    Pro Rata  Distributions.  If the Company, at any time prior to
                  the  Termination  Date,  shall  distribute  to all  holders of
                  Common Stock (and not to Holders of the Warrants) evidences of
                  its  indebtedness or assets or rights or warrants to subscribe
                  for or  purchase  any  security  other than the  Common  Stock
                  (which  shall be subject to Section  3(b)),  then in each such
                  case the Exercise Price shall be adjusted by  multiplying  the
                  Exercise Price in effect  immediately prior to the record date
                  fixed for  determination  of stockholders  entitled to receive
                  such distribution by a fraction of which the denominator shall
                  be the VWAP determined as of the record date mentioned  above,
                  and of which the  numerator  shall be such VWAP on such record
                  date less the then per share fair market  value at such record
                  date of the portion of such assets or evidence of indebtedness
                  so  distributed  applicable  to one  outstanding  share of the
                  Common Stock as  determined  by the Board of Directors in good
                  faith. In either case the adjustments  shall be described in a
                  statement  provided to the Holders of the portion of assets or
                  evidences of indebtedness so distributed or such  subscription
                  rights   applicable  to  one  share  of  Common  Stock.   Such
                  adjustment  shall be made  whenever any such  distribution  is
                  made and shall become effective  immediately  after the record
                  date mentioned above.

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            d)    Calculations.  All calculations  under this Section 3 shall be
                  made to the nearest cent or the nearest 1/100th of a share, as
                  the  case  may be.  The  number  of  shares  of  Common  Stock
                  outstanding  at any given  time shall not  includes  shares of
                  Common  Stock  owned  or  held by or for  the  account  of the
                  Company,  and the  description  of any such  shares  of Common
                  Stock shall be  considered  on issue or sale of Common  Stock.
                  For purposes of this Section 3, the number of shares of Common
                  Stock deemed to be issued and  outstanding  as of a given date
                  shall be the sum of the  number  of  shares  of  Common  Stock
                  (excluding treasury shares, if any) issued and outstanding.

            e)    Notice to Holders.

                        i. Adjustment to Exercise  Price.  Whenever the Exercise
                  Price is  adjusted  pursuant  to this  Section 3, the  Company
                  shall  promptly mail to each Holder a notice setting forth the
                  Exercise Price after such adjustment and setting forth a brief
                  statement  of the  facts  requiring  such  adjustment.  If the
                  Company   issues  a  variable  rate   security,   despite  the
                  prohibition  thereon in the  Purchase  Agreement,  the Company
                  shall be deemed to have issued  Common  Stock or Common  Stock
                  Equivalents  at the lowest  possible  conversion  or  exercise
                  price at which such  securities  may be converted or exercised
                  in the case of a Variable Rate  Transaction (as defined in the
                  Purchase  Agreement),  or the lowest possible adjustment price
                  in the case of an MFN  Transaction (as defined in the Purchase
                  Agreement.

                        ii.  Notice  to Allow  Exercise  by  Holder.  If (A) the
                  Company shall  declare a dividend (or any other  distribution)
                  on the Common  Stock;  (B) the Company shall declare a special
                  nonrecurring  cash  dividend on or a redemption  of the Common
                  Stock;  (C) the Company  shall  authorize  the granting to all
                  holders of the Common  Stock  rights or warrants to  subscribe
                  for or purchase any shares of capital stock of any class or of
                  any  rights;  (D)  the  approval  of any  stockholders  of the
                  Company   shall   be   required   in   connection   with   any
                  reclassification  of the Common Stock,  any  consolidation  or
                  merger to which the  Company is a party,  any sale or transfer
                  of all or substantially  all of the assets of the Company,  of
                  any  compulsory  share  exchange  whereby the Common  Stock is
                  converted  into other  securities,  cash or property;  (E) the
                  Company  shall   authorize   the   voluntary  or   involuntary
                  dissolution,  liquidation  or winding up of the affairs of the
                  Company;  then,  in each case,  the Company  shall cause to be
                  mailed to the Holder at its last  addresses as it shall appear
                  upon the Warrant Register of the Company, at least 20 calendar
                  days  prior  to  the  applicable   record  or  effective  date
                  hereinafter  specified, a notice stating (x) the date on which
                  a record  is to be taken  for the  purpose  of such  dividend,
                  distribution,  redemption,  rights or warrants, or if a record
                  is not to be taken,  the date as of which the  holders  of the
                  Common  Stock  of  record  to be  entitled  to such  dividend,
                  distributions,  redemption,  rights  or  warrants  are  to  be
                  determined  or (y) the  date on which  such  reclassification,
                  consolidation,  merger,  sale,  transfer or share  exchange is
                  expected  to become  effective  or  close,  and the date as of
                  which it is  expected  that  holders  of the  Common  Stock of
                  record  shall be  entitled  to  exchange  their  shares of the
                  Common   Stock  for   securities,   cash  or  other   property
                  deliverable upon such reclassification, consolidation, merger,
                  sale, transfer or share exchange;  provided,  that the failure
                  to mail such  notice or any defect  therein or in the  mailing
                  thereof shall not affect the validity of the corporate  action
                  required  to be  specified  in  such  notice.  The  Holder  is
                  entitled to exercise  this  Warrant  during the 20-day  period
                  commencing  the date of such notice to the  effective  date of
                  the event triggering such notice.

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            f)    Fundamental Transaction. If, at any time while this Warrant is
                  outstanding,   (A)  the   Company   effects   any   merger  or
                  consolidation of the Company with or into another Person,  (B)
                  the Company  effects any sale of all or  substantially  all of
                  its assets in one or a series of related transactions, (C) any
                  tender  offer or  exchange  offer  (whether  by the Company or
                  another  Person) is  completed  pursuant  to which  holders of
                  Common Stock are permitted to tender or exchange  their shares
                  for other  securities,  cash or  property,  or (D) the Company
                  effects  any  reclassification  of  the  Common  Stock  or any
                  compulsory  share exchange  pursuant to which the Common Stock
                  is   effectively   converted   into  or  exchanged  for  other
                  securities, cash or property (in any such case, a "Fundamental
                  Transaction"),  then,  upon any subsequent  conversion of this
                  Warrant,  the Holder shall have the right to receive, for each
                  Warrant Share that would have been issuable upon such exercise
                  absent  such  Fundamental  Transaction,  at the  option of the
                  Holder,  (a) upon  exercise  of this  Warrant,  the  number of
                  shares  of  Common   Stock  of  the   successor  or  acquiring
                  corporation  or  of  the  Company,  if  it  is  the  surviving
                  corporation, and Alternate Consideration receivable upon or as
                  a result  of such  reorganization,  reclassification,  merger,
                  consolidation  or  disposition  of  assets  by a Holder of the
                  number of shares of Common  Stock for which  this  Warrant  is
                  exercisable  immediately prior to such event or (b) cash equal
                  to the value of this Warrant as determined in accordance  with
                  the  Black-Scholes  option  pricing  formula  (the  "Alternate
                  Consideration").  For  purposes  of  any  such  exercise,  the
                  determination  of the  Exercise  Price shall be  appropriately
                  adjusted to apply to such Alternate Consideration based on the
                  amount of Alternate  Consideration  issuable in respect of one
                  share of Common Stock in such Fundamental Transaction, and the
                  Company shall apportion the Exercise Price among the Alternate
                  Consideration in a reasonable  manner  reflecting the relative
                  value   of  any   different   components   of  the   Alternate
                  Consideration. If holders of Common Stock are given any choice
                  as to the  securities,  cash or  property  to be received in a
                  Fundamental  Transaction,  then the Holder  shall be given the
                  same choice as to the Alternate Consideration it receives upon
                  any  exercise  of  this  Warrant  following  such  Fundamental
                  Transaction.   To  the  extent  necessary  to  effectuate  the
                  foregoing   provisions,   any  successor  to  the  Company  or
                  surviving entity in such Fundamental  Transaction  shall issue
                  to the  Holder a new  warrant  consistent  with the  foregoing
                  provisions  and evidencing the Holder's right to exercise such
                  warrant  into  Alternate  Consideration.   The  terms  of  any
                  agreement  pursuant  to  which a  Fundamental  Transaction  is
                  effected  shall include terms  requiring any such successor or
                  surviving  entity  to  comply  with  the  provisions  of  this
                  paragraph  (f) and  insuring  that this  Warrant  (or any such
                  replacement  security)  will be  similarly  adjusted  upon any
                  subsequent transaction analogous to a Fundamental Transaction.

            g)    Exempt   Issuance.    Notwithstanding   the   foregoing,    no
                  adjustments,  Alternate  Consideration  nor  notices  shall be
                  made,  paid or issued  under  this  Section 3 in respect of an
                  Exempt Issuance.

            h)    Voluntary  Adjustment By Company.  The Company may at any time
                  during  the  term of this  Warrant  reduce  the  then  current
                  Exercise Price to any amount and for any period of time deemed
                  appropriate by the Board of Directors of the Company.

                                    8 of 15
<PAGE>

Section 4.  Transfer of Warrant.

            a)    Transferability.  Subject to  compliance  with any  applicable
                  securities  laws and the conditions set forth in Sections 5(a)
                  and 4(d)  hereof and to the  provisions  of Section 4.1 of the
                  Purchase Agreement,  this Warrant and all rights hereunder are
                  transferable,  in  whole or in part,  upon  surrender  of this
                  Warrant at the principal office of the Company,  together with
                  a written assignment of this Warrant substantially in the form
                  attached  hereto  duly  executed by the Holder or its agent or
                  attorney  and  funds  sufficient  to pay  any  transfer  taxes
                  payable upon the making of such transfer.  Upon such surrender
                  and, if required,  such payment, the Company shall execute and
                  deliver a new Warrant or Warrants in the name of the  assignee
                  or  assignees  and  in  the   denomination  or   denominations
                  specified in such instrument of assignment, and shall issue to
                  the  assignor a new  Warrant  evidencing  the  portion of this
                  Warrant not so assigned,  and this Warrant  shall  promptly be
                  cancelled.  A Warrant, if properly assigned,  may be exercised
                  by a new holder for the  purchase  of Warrant  Shares  without
                  having a new Warrant issued.

            b)    New  Warrants.  This  Warrant may be divided or combined  with
                  other  Warrants  upon  presentation  hereof  at the  aforesaid
                  office  of  the  Company,   together  with  a  written  notice
                  specifying the names and  denominations  in which new Warrants
                  are to be  issued,  signed  by the  Holder  or  its  agent  or
                  attorney.  Subject to compliance  with Section 4(a), as to any
                  transfer   which  may  be   involved   in  such   division  or
                  combination,  the  Company  shall  execute  and  deliver a new
                  Warrant or Warrants in exchange for the Warrant or Warrants to
                  be divided or combined in accordance with such notice.

            c)    Warrant  Register.  The Company  shall  register this Warrant,
                  upon records to be  maintained by the Company for that purpose
                  (the  "Warrant  Register"),  in the name of the record  Holder
                  hereof  from time to time.  The Company may deem and treat the
                  registered Holder of this Warrant as the absolute owner hereof
                  for the purpose of any exercise hereof or any  distribution to
                  the Holder,  and for all other purposes,  absent actual notice
                  to the contrary.

            d)    Transfer  Restrictions.  If, at the time of the  surrender  of
                  this Warrant in connection  with any transfer of this Warrant,
                  the transfer of this Warrant shall not be registered  pursuant
                  to an effective  registration  statement  under the Securities
                  Act and under  applicable  state  securities or blue sky laws,
                  the  Company may  require,  as a  condition  of allowing  such
                  transfer (i) that the Holder or transferee of this Warrant, as
                  the case may be,  furnish to the Company a written  opinion of
                  counsel (which  opinion shall be in form,  substance and scope
                  customary for opinions of counsel in comparable  transactions)
                  to  the  effect  that  such   transfer  may  be  made  without
                  registration  under the  Securities  Act and under  applicable
                  state  securities  or blue sky laws,  (ii) that the  holder or
                  transferee  execute and  deliver to the Company an  investment
                  letter in form and  substance  acceptable  to the  Company and
                  (iii)  that the  transferee  be an  "accredited  investor"  as
                  defined in Rule 501(a)(1),  (a)(2),  (a)(3), (a)(7), or (a)(8)
                  promulgated   under  the   Securities   Act  or  a   qualified
                  institutional  buyer as  defined  in Rule  144A(a)  under  the
                  Securities Act.

                                    9 of 15
<PAGE>

Section 5.  Miscellaneous.

            a)    Title to Warrant. Prior to the Termination Date and subject to
                  compliance with applicable laws and Section 4 of this Warrant,
                  this Warrant and all rights  hereunder  are  transferable,  in
                  whole or in part,  at the  office or agency of the  Company by
                  the  Holder  in person or by duly  authorized  attorney,  upon
                  surrender of this Warrant  together with the  Assignment  Form
                  annexed hereto properly endorsed. The transferee shall sign an
                  investment   letter   in   form   and   substance   reasonably
                  satisfactory to the Company.

            b)    No Rights as Shareholder Until Exercise. This Warrant does not
                  entitle the Holder to any voting  rights or other  rights as a
                  shareholder of the Company prior to the exercise hereof.  Upon
                  the surrender of this Warrant and the payment of the aggregate
                  Exercise  Price  (or by means  of a  cashless  exercise),  the
                  Warrant  Shares  so  purchased  shall be and be  deemed  to be
                  issued to such Holder as the record owner of such shares as of
                  the  close  of  business  on the  later  of the  date  of such
                  surrender or payment.

            c)    Loss, Theft, Destruction or Mutilation of Warrant. The Company
                  covenants  that  upon  receipt  by  the  Company  of  evidence
                  reasonably satisfactory to it of the loss, theft,  destruction
                  or  mutilation  of  this  Warrant  or  any  stock  certificate
                  relating to the Warrant Shares,  and in case of loss, theft or
                  destruction,  of indemnity or security reasonably satisfactory
                  to it (which,  in the case of the  Warrant,  shall not include
                  the posting of any bond),  and upon surrender and cancellation
                  of such  Warrant  or  stock  certificate,  if  mutilated,  the
                  Company   will  make  and  deliver  a  new  Warrant  or  stock
                  certificate  of like tenor and dated as of such  cancellation,
                  in lieu of such Warrant or stock certificate.

            d)    Saturdays,  Sundays,  Holidays,  etc. If the last or appointed
                  day for the  taking  of any  action or the  expiration  of any
                  right required or granted  herein shall be a Saturday,  Sunday
                  or a legal  holiday,  then  such  action  may be taken or such
                  right  may be  exercised  on the  next  succeeding  day  not a
                  Saturday, Sunday or legal holiday.

            e)    Authorized  Shares.  The  Company  covenants  that  during the
                  period the Warrant is  outstanding,  it will  reserve from its
                  authorized  and unissued  Common Stock a sufficient  number of
                  shares to provide for the issuance of the Warrant  Shares upon
                  the exercise of any purchase  rights under this  Warrant.  The
                  Company  further  covenants  that its issuance of this Warrant
                  shall  constitute  full  authority  to its  officers  who  are
                  charged  with  the duty of  executing  stock  certificates  to
                  execute and issue the necessary  certificates  for the Warrant
                  Shares upon the  exercise of the  purchase  rights  under this
                  Warrant.  The Company will take all such reasonable  action as
                  may be  necessary  to assure that such  Warrant  Shares may be
                  issued as provided herein without  violation of any applicable
                  law or  regulation,  or of  any  requirements  of the  Trading
                  Market upon which the Common Stock may be listed.

                                    10 of 15
<PAGE>

                  Except  and to the  extent as waived  or  consented  to by the
                  Holder,  the  Company  shall  not  by any  action,  including,
                  without limitation,  amending its certificate of incorporation
                  or   through   any   reorganization,   transfer   of   assets,
                  consolidation,   merger,   dissolution,   issue   or  sale  of
                  securities  or any other  voluntary  action,  avoid or seek to
                  avoid the  observance  or  performance  of any of the terms of
                  this  Warrant,  but will at all times in good faith  assist in
                  the  carrying  out of all such  terms and in the taking of all
                  such actions as may be necessary or appropriate to protect the
                  rights  of  Holder  as  set  forth  in  this  Warrant  against
                  impairment.  Without limiting the generality of the foregoing,
                  the Company will (a) not increase the par value of any Warrant
                  Shares above the amount  payable  therefor  upon such exercise
                  immediately  prior to such increase in par value, (b) take all
                  such action as may be necessary or  appropriate  in order that
                  the  Company  may  validly  and  legally  issue fully paid and
                  nonassessable   Warrant  Shares  upon  the  exercise  of  this
                  Warrant, and (c) use commercially reasonable efforts to obtain
                  all  such  authorizations,  exemptions  or  consents  from any
                  public regulatory body having  jurisdiction  thereof as may be
                  necessary  to enable the  Company to perform  its  obligations
                  under this Warrant.

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

            f)    Jurisdiction.   All  questions  concerning  the  construction,
                  validity, enforcement and interpretation of this Warrant shall
                  be  determined  in  accordance  with  the  provisions  of  the
                  Purchase Agreement.

            g)    Restrictions.  The Holder acknowledges that the Warrant Shares
                  acquired upon the exercise of this Warrant, if not registered,
                  will  have  restrictions  upon  resale  imposed  by state  and
                  federal securities laws.

            h)    Nonwaiver and  Expenses.  No course of dealing or any delay or
                  failure to exercise any right  hereunder on the part of Holder
                  shall operate as a waiver of such right or otherwise prejudice
                  Holder's rights, powers or remedies,  notwithstanding the fact
                  that all rights hereunder  terminate on the Termination  Date.
                  If the Company  willfully and  knowingly  fails to comply with
                  any provision of this  Warrant,  which results in any material
                  damages to the Holder,  the  Company  shall pay to Holder such
                  amounts as shall be sufficient to cover any costs and expenses
                  including,  but not limited to,  reasonable  attorneys'  fees,
                  including those of appellate  proceedings,  incurred by Holder
                  in collecting any amounts due pursuant  hereto or in otherwise
                  enforcing any of its rights, powers or remedies hereunder.

            i)    Notices.  Any notice,  request or other  document  required or
                  permitted  to be  given  or  delivered  to the  Holder  by the
                  Company  shall be  delivered  in  accordance  with the  notice
                  provisions of the Purchase Agreement.

            j)    Limitation of Liability.  No provision  hereof, in the absence
                  of any  affirmative  action by Holder to exercise this Warrant
                  or purchase Warrant Shares,  and no enumeration  herein of the
                  rights  or  privileges  of  Holder,  shall  give  rise  to any
                  liability of Holder for the purchase price of any Common Stock
                  or as a stockholder of the Company,  whether such liability is
                  asserted by the Company or by creditors of the Company.

                                    11 of 15
<PAGE>

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

            l)    Successors and Assigns. Subject to applicable securities laws,
                  this Warrant and the rights and obligations  evidenced  hereby
                  shall  inure  to  the  benefit  of  and be  binding  upon  the
                  successors  of the Company and the  successors  and  permitted
                  assigns of Holder. The provisions of this Warrant are intended
                  to be for the benefit of all Holders from time to time of this
                  Warrant and shall be  enforceable by any such Holder or holder
                  of Warrant Shares.

            m)    Amendment.  This  Warrant  may be  modified  or amended or the
                  provisions  hereof  waived  with the  written  consent  of the
                  Company and the Holder.

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

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

            p)    Registration  Rights. The shares underlying this Warrant shall
                  be deemed to be Warrant  Shares  pursuant  to the terms of the
                  Amended and Restated Registration Rights Agreement dated as of
                  December  19,  2006 and shall be  subject to  registration  in
                  accordance with the terms thereof.

                              ********************

                                    12 of 15
<PAGE>

      IN WITNESS WHEREOF,  the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.

Dated:  December 19, 2006

                                       NEW CENTURY COMPANIES, INC.

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

                                    13 of 15
<PAGE>

                               NOTICE OF EXERCISE

TO:   NEW CENTURY COMPANIES, INC.

      (1) The undersigned  hereby elects to purchase  ________ Warrant Shares of
the Company  pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.

      (2) Payment shall take the form of (check applicable box):

            [ ] in lawful money of the United States; or

            [ ]  the  cancellation  of  such  number  of  Warrant  Shares  as is
            necessary,  in  accordance  with the formula set forth in subsection
            2(c), to exercise this Warrant with respect to the maximum number of
            Warrant  Shares  purchasable   pursuant  to  the  cashless  exercise
            procedure set forth in subsection 2(c).

      (3) Please  issue a certificate  or  certificates  representing  said
Warrant  Shares  in the  name of the  undersigned  or in such  other  name as is
specified below:

                           -------------------------------

The Warrant Shares shall be delivered to the following:

                           -------------------------------

                           -------------------------------

                           -------------------------------

      (4) Accredited  Investor.  The undersigned is an "accredited  investor" as
defined  in  Regulation  D  promulgated  under the  Securities  Act of 1933,  as
amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity:
                         -------------------------------------------------------
Entity:
      --------------------------------------------------------------------------
Name of Authorized Signatory:
                             ---------------------------------------------------
Title of Authorized Signatory:
                              --------------------------------------------------
Date:
     ---------------------------------------------------------------------------

<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

      FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to

                                                           whose address is
---------------------------------------------------------

-------------------------------------------------------------------------------.

                                                Dated:
                                                      --------------------------

                           Holder's Signature:
                                              ----------------------------------

                           Holder's Address:
                                              ----------------------------------

                                              ----------------------------------

Signature Guaranteed:
                      --------------------------------------------

NOTE: The signature to this  Assignment Form must correspond with the name as it
appears on the face of the Warrant,  without  alteration or  enlargement  or any
change whatsoever,  and must be guaranteed by a bank or trust company.  Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.AGREEMENT

AGREEMENT dated the 13th day of December, 2006 (this "Agreement"), by and
between Steven D.
Rudnik, with an address at 2 Hilltop Road, Mendham, New Jersey 07945
("Executive"), and Magnitude Information Systems, Inc., a Delaware corporation
with an address at 1250 Route 28, Suite 309, Branchburg, New Jersey 08876
("Magnitude").

                                   WITNESSETH:

         WHEREAS, Magnitude and Executive have executed an agreement on August
8, 2006 annexed hereto and made a part hereof as Exhibit "A" (the "Resignation
Agreement"), wherein Executive resigned as Chairman of Magnitude conditional on
the obligations and representations cited in the Resignation Agreement being
fulfilled by Magnitude; and

         WHEREAS, the Resignation Agreement provides for a series of lump sum
cash settlement payments, via PNC accounts transfer, of $30,000 to be paid
before September 1, 2006; $15,000 to be paid on or before October 1, 2006, and
$15,000 to be paid on or before November 1, 2006 (the "October Payment"); and

         WHEREAS, the Resignation Agreement provides that Executive's 2,903,542
options and 1,583,333 warrants which were suspended in August 2005 (the
"Suspended Options and Warrants") are agreed to be restored with the terms in
force at the time of suspension, except with the expiration dates extended to be
three (3) years from the restoration date, and will be restored in any event as
soon as practicable following the earlier occurrence of a recapitalization of
Magnitude that would provide sufficient common shares to accommodate such
restoration or upon the second anniversary date of this Agreement; and

         WHEREAS, Magnitude owes one hundred thousand ($100,000) dollars to
Executive as memorialized by a secured debt demand note due to Executive by
Magnitude (the "Demand Note"); and

         WHEREAS, Magnitude requested of Executive and Executive agreed, in the
Resignation Agreement, to a twelve (12) month moratorium of repayment or
conversion of the Demand Note (the "Moratorium"); and

         WHEREAS, the Resignation Agreement provides that during the life of the
Demand Note, all interest payments were to be fully paid in cash, via PNC
accounts transfer, by the 15th of each month equaling ten thousand ($10,000)
dollars of interest to be paid during the Moratorium (the "Interest"); and

         WHEREAS, the Resignation Agreement provides that Demand Note can, at
Executive's option, be converted at any time after the Moratorium including on
unsolicited repayment offer by Magnitude; and

         WHEREAS, the Resignation Agreement provides that any conversion of the
Demand Note, in whole or in part, is to be conducted in accordance with the best
rates and terms utilized by investors during the previous twelve months prior to
conversion (the "Best Terms"); and

         WHEREAS, the October Payment and Interest have not been paid as agreed
in the Resignation Agreement, and remain unpaid, resulting in Magnitude's having
defaulted the Resignation Agreement; and

         WHEREAS, On November 2, 2006, Executive had properly notified Magnitude
of its default of the Resignation Agreement and Executive has requested that
Magnitude cure such default; and

         WHEREAS, Magnitude desires Executive to now convert the Demand Note,
October Payment and the Interest into equity at Best Terms while preserving
Executive's existing rights (i) in the Resignation Agreement and (ii) in the
case of Magnitude's declaring bankruptcy; and

         WHEREAS, Magnitude desires to cure its default of the Resignation
Agreement and Executive confirms such proposed cure of Magnitude's default of
the Resignation Agreement to be satisfactory conditional on Magnitude fulfilling
its obligations and covenants cited in this Agreement;

               Initials: Magnitude ELM, Executive SR Page 1 of 8
<PAGE>

         NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged,

IT IS AGREED:

1. Recitals. The parties hereby adopt as part of this Agreement each of the
recitals set forth above in the WHEREAS clauses and agree that such WHEREAS
clauses are hereby confirmed and ratified as being accurate by each party as to
itself.

2. Debt Conversion at Best Terms. The aggregated amount of the Demand Note,
October Payment and Interest equals one hundred twenty five thousand ($125,000)
dollars (the "Conversion Value"). Magnitude and Executive agree to convert,
conditional upon Magnitude's obligations and covenants being fulfilled as
defined in this Agreement, the Conversion Value at the Best Terms.

         A. Initial Conversion. At the date of this Agreement, the Best Terms
include, inter alia, conversion of cash or debt into securities at the rate of
$0.02 per share of common stock par value $.0001 of Magnitude (the "Common
Stock") and accompanying every two shares of Common Stock is one three-year
warrant to purchase one share of Common Stock at $0.05 (the "Original Conversion
Terms"). At the date of this Agreement, the securities to be exchanged for the
Conversion Value at the Original Conversion Terms include (i) six million two
hundred fifty thousand (6,250,000) shares of Common Stock (the "Shares"), and
(ii) threeyear warrants (the "Warrants") to purchase an additional three million
one hundred twenty five thousand (3,125,000) shares of Common Stock (the
"Warrant Shares") pursuant to the terms and conditions of this Agreement.

         B. Preservation of Best Terms. Executive shall have the right of
resetting any of the Original Conversion Terms during the next twelve (12)
months or longer as contemplated in Article 2.E. (the "Reset Period") which will
be retroactively applied to the initial conversion of the Conversion Value
requiring new securities and/or rights to be granted, issued and delivered by
Magnitude to Executive. It is anticipated in this Agreement that Magnitude may
at any time during the Reset Period enter into a transaction or agreement which
provides for either an equity investment or the conversion of debt or other
securities into equity of Magnitude where at least one term is more favorable
than any of the current Best Terms at the time (the "New Transaction"). Each
time during the Reset Period where Magnitude enters into any New Transaction,
Executive shall be entitled, at his option, to additional rights and securities
being granted, issued and delivered by Magnitude (the "Reset Provision"). The
Reset Provision shall not include the right to appoint a person to the Board of
Directors as a term.

In the event of a New Transaction, the Reset Provision provides that additional
rights and/or securities will be granted, issued and delivered to Executive, at
Executive's Option, in order to reflect the Conversion Value being converted at
the more favorable conversion terms (the "Adjusted Conversion Terms") which are
added to the current list of Best Terms. The number of additional securities
that will be granted, issued and delivered to Executive by Magnitude, at
Executive's option, under the Reset Provision would be equal to the difference
between (i) the number of securities that would have been granted if the
Original Conversion Terms would have been the Adjusted Conversion Terms and (ii)
what has been already granted for conversion of the Conversion Value under this
Agreement. There are no limits to the number of New Transaction events to be
applied during the Reset Period or any extension thereof as provided herein.

For example and illustrative purposes, in the case where a Conversion Value was
one hundred thousand ($100,000) dollars and the Original Conversion Terms
included $0.02 per share and one Warrant for every two shares, then the
Conversion Value would be initially converted into five million (5,000,000)
shares of Common Stock and two and a half million (2,500,000) Warrants. If at
some later date, during the Reset Period, Magnitude entered into a New
Transaction including terms of conversion of $0.01 per share, then the Reset
Provision would acknowledge the new conversion rate of $0.01 per share to be
known as the Adjusted Conversion Terms which would have converted the Conversion
Value into ten million (10,000,000) shares of Common Stock and five million
(5,000,000) Warrants. Since five million (5,000,000) shares of Common Stock and
two and a half million (2,500,000) Warrants have already been initially granted,
issued and delivered to Executive in this example, then an additional five
million (5,000,000) shares of Common Stock and two and a half million
(2,500,000) Warrants would be additionally granted, issued and delivered to
Executive to satisfy the Reset Provision for this event.

               Initials: Magnitude ELM, Executive _SR_ Page 2 of 8

<PAGE>

         C. Transactions And Agreements Notice Period. Executive will be
notified by Magnitude in writing with the full terms of each transaction or
agreement Magnitude executes where an equity investment or the conversion of
debt or other securities into equity of Magnitude is contemplated within three
(3) days of the investment transaction or agreement being executed. In addition,
Executive will be notified by Magnitude with the same timeliness in writing of
any other agreements between Magnitude and the investing party or its affiliates
for the period of six months prior to the transaction or agreement and for a
period of six months after the transaction or agreement. The form of notice for
the purposes of this paragraph shall be a copy of the fully executed agreement
or transaction in question.

         D. More Favorable Term. In each transaction contemplated under the
Reset Provision where at least one term is more favorable than the current list
of Best Terms, Executive can elect to add that term by itself or terms by
themselves to the current list of Best Terms. Executive will notify Magnitude of
each election. There is no expiration of the availability of any New Transaction
with regard to utilization by Executive under the Reset Provision. For example,
if there were a series of New Transactions which occurred, then Executive can
still utilize any of them in any order in the future.

         E. Duration of Reset Period. The initial Reset Period is twelve (12)
months as defined above, however, in each New Transaction contemplated under the
Reset Provision where at least one term is not immediately quantifiable (the
"Indeterminate Term"), as in the case of but not limited to an anti-dilution
clause, then the Indeterminate Term is also available to become added to the
Best Terms, at Executive's option, and in which case the length of time that the
Indeterminate Term can exist will be added to the current Reset Period therefore
extending it.

         F. Distribution. Magnitude and Executive agree to the following
distribution schedule for delivery of securities to be exchanged for the
Conversion Value:

              i. On or before January 6, 2007, Magnitude shall issue and deliver
the Shares to Executive. If Magnitude has not issued and delivered the Shares to
Executive on or before January 6, 2007, Magnitude shall grant, issue and deliver
an additional forty five thousand (45,000) shares of Common Stock to the
Executive for each subsequent business day that begins until such distribution
is made.

              ii. On or before February 18, 2007, Magnitude shall issue and
deliver to Executive the Warrants in the form annexed hereto and made a part
hereof as Exhibit "B". If the Executive has not received the Warrants on or
prior to February 18, 2007, Magnitude agrees to increase the number of shares of
Common Stock which may be purchased pursuant to the exercise of the Warrants by
one (1%) percent for each business day that said issuance and delivery is
delayed. On or before February 18, 2007, Magnitude shall issue and deliver to
Executive the Suspended Options and Warrants. If the Executive has not received
the Suspended Options and Warrants on or prior to February 18, 2007, Magnitude
agrees to increase the number of shares of Common Stock which may be purchased
pursuant to the exercise of the Suspended Options and Warrants by one (1%)
percent for each business day that said issuance and delivery is delayed.

              iii. Within five (5) business days of Magnitude receiving each
notice by Executive that he elects to adopt any new more favorable terms from
any New Transaction, Magnitude shall grant, issue and deliver the additional
securities required, if any, which would be equal to the difference between (i)
the number of securities that would have been granted, issued or issuable if the
Original Conversion Terms would have been the Adjusted Conversion Terms and (ii)
what was originally granted, issued or issuable (see example in Article 2.B
above). If Magnitude has not granted, issued and delivered the additional
securities to Executive within three (3) days of Magnitude receiving each notice
by Executive that he elects to adopt any new more favorable terms from any New
Transaction, Magnitude shall grant, issue and deliver an additional forty five
thousand (45,000) shares of Common Stock to the Executive for each subsequent
business day that begins until such distribution is made.

                Initials: Magnitude ELM, Executive SR Page 3 of 8

<PAGE>

         G. Tacking Consideration. Magnitude and Executive agree that the
securities granted, issued and delivered to Executive resulting from each
conversion, current and future, of the Demand Note's pro-rata portion of the
Conversion Value tack to the Demand Note's origination date for all purposes
including but not limited to SEC Rule 144 determination and tax purposes.

         H. Cancellation of Demand Note. Upon execution of this Agreement, the
Demand Note including all security interests therein shall be cancelled
conditional upon all of the obligations and covenants of Magnitude within this
Agreement having been properly fulfilled.

3. Event of Default. In the event where Magnitude fails to fulfill any of its
obligations and covenants under this Agreement within the timelines defined in
this Agreement or files for bankruptcy (the "Default"), then any conversion of
the Demand Note, October Payment and Interest shall immediately be considered
null and void whereby the Demand Note, October Payment and Interest shall be
deemed by the parties to not have been converted. Executive and Magnitude agree
that in the event of Default, all of Executive's rights and values associated
with the Demand Note, Security interest in the Demand Note, October Payment,
Interest and Resignation Agreement shall be in full force and value again as
they were immediately prior to conversion under this Agreement. Magnitude and
Executive agree there is no cure period provision in the case of Default. In
addition, Magnitude and Executive agree that in the event of Default the current
state of Magnitude's Resignation Agreement default shall again exist as it did
prior to the execution of this Agreement.

         4. Magnitude's Representations, Warranties and Covenants. Magnitude
represents, warrants and covenants that:

         A. Corporate Status. Magnitude is a corporation duly organized, validly
existing and in good standing pursuant to the laws of the State of Delaware,
with all requisite power and authority to carry on its business as presently
conducted in all jurisdictions where presently conducted, to enter into this
Agreement and to consummate the transactions set forth in this Agreement.

         B. Authority. Magnitude has the full right, power and legal capacity to
enter into this Agreement and to consummate the transactions contemplated
hereby. This Agreement constitutes the valid and legally binding obligation of
Magnitude, enforceable in accordance with its terms and conditions. The
execution and delivery of this Agreement by Magnitude and the consummation by it
of the transactions contemplated hereby have been duly approved and authorized
by all necessary action of the Board of Directors of Magnitude, and no further
authorization shall be necessary on the part of Magnitude for the performance
and consummation by Magnitude of the transactions contemplated hereby. The
execution, delivery and performance of this Agreement in accordance with its
terms does not and shall not require approval, consent or authorization of any
third party, including any governmental agency or authority or any political
subdivision thereof.

         C. Compliance with the Law and Other Instruments. The business and
operations of Magnitude have been and are being conducted in accordance with all
applicable laws, rules, and regulations of all authorities which affect
Magnitude or its properties, assets, businesses or prospects. The performance of
this Agreement shall not result in any breach of, or constitute a default under,
or result in the imposition of any lien or encumbrance upon any property of
Magnitude or cause an acceleration under any arrangement, agreement or other
instrument to which Magnitude is a party or by which any of its assets are
bound. In addition, the performance of this Agreement shall not trigger
additional rights in any third parties, including, but not limited to, any
antidilution rights in Magnitude. Magnitude has performed all of its obligations
which are required to be performed by it pursuant to the terms of any such
agreement, contract, or commitment.

         D. No Approval. No approval of any third party including, but not
limited to, any governmental authority is required in connection with the
consummation of the transactions set forth in this Agreement.

                Initials: Magnitude ELM, Executive SR Page 4 of 8
<PAGE>

         E. Survival. The covenants, representations and warranties made by
Magnitude in or in connection with this Agreement shall survive the execution
and delivery of this Agreement and the consummation of the transactions
described herein, it being agreed and understood that each of such covenants,
representations and warranties is of the essence to this Agreement and the same
shall be binding upon Magnitude and inure to Executive and his successors and
assigns. Any articles existing in the Resignation Agreement which have not been
redressed in this Agreement are agreed to be hereby ratified and in full force
and effect.

         F. Complete Disclosure. Magnitude has no knowledge that any covenant,
representation or warranty of Magnitude which is contained in this Agreement or
in a writing furnished or to be furnished pursuant to this Agreement or in
Magnitude's filings with the Securities and Exchange Commission contains or
shall contain any untrue statement of a material fact, omits or shall omit to
state any material fact which is required to make the statements which are
contained herein or therein, not misleading.

         G. Notification of an Event. If any event occurs, or any event known to
Magnitude relating to or affecting Magnitude shall occur, as a result of which
(i) any provision of this Agreement at that time shall include an untrue
statement of a fact, or (ii) this Agreement shall omit to state any fact
necessary to make the statements herein, in light of the circumstances under
which they were made, not misleading, Magnitude shall immediately notify
Executive pursuant to Paragraph "C" of Article "9" of this Agreement.

         H. No Defense. It shall not be a defense to a suit for damages for any
misrepresentation or breach of a covenant, representation or warranty that
Executive knew or had reason to know that any covenant, representation or
warranty in this Agreement contained untrue statements.

         I. No Avoidance. Magnitude will not artificially minimize the
conversion ratio of investment, for purposes of this Agreement's obligations, in
any investment agreement or transaction through entering into a series of
transactions or agreements with any group, investor or its affiliates whereby
additional favorable consideration is given to the investor in transactions or
agreements other than the investment transaction or agreement.

5. Executive's Representations, Warranties and Covenants. Executive represents
warrants and covenants that:

         A. Restricted Securities. Executive acknowledges that none of the
Shares have been registered under the Act or the securities laws of any state
and, therefore, cannot be sold unless they are subsequently registered under the
Act and any applicable state securities laws or exemptions from registration
thereunder are available. Executive further understands that only Magnitude can
take action to register the Shares.

         B. Restrictive Legend. Executive understands that the Shares shall bear
the following restrictive legend until the Shares are registered pursuant to
Paragraph "A" of Article "6" of this Agreement: "These Shares have not been
registered under the Securities Act of 1933, as Amended, having been acquired
for investment purposes only and not with a view to distribute. They may not be
sold or offered for in absence of an effective registration statement as to the
Shares under the Securities Act of 1933, as Amended, or an opinion of counsel
satisfactory to the corporation and an exemption from the Securities Act of
1933, as Amended, is available and that such registration is not required, or in
the alternative that such Shares may be sold under Rule 144, as promulgated by
the Securities and Exchange Commission of the United States."

6. Registration Obligations.

         A. Magnitude shall, without cost or expense to Executive, include in
its Pre-Effective Amendment No. 1 to its November 27, 2006 filed registration
statement on Form SB-2, all of the Shares and all of the Warrant Shares and all
of the shares underlying the Suspended Options and Warrants, for a total of
13,861,875 common shares to be registered (the "Securities"), which amendment
shall be filed no later than January 31, 2007. If Magnitude has not included all
of the Securities in its Pre-Effective Amendment No. 1 to its November 27, 2006
filed registration statement on Form SB-2, Magnitude shall grant, issue and
deliver an additional forty five thousand (45,000) shares of Common Stock to the
Executive for each subsequent business day starting from the date of filing of
the Pre-Effective Amendment No. 1 until a future amendment or registration is
filed which includes all of the Securities missing in the Pre-Effective
Amendment No. 1. Once such filing is made, Magnitude shall use good faith and
best efforts to make the registration effective. If the registration is not
effective within ninety (90) days after filing, Magnitude shall grant, issue and
deliver an additional forty five thousand (45,000) shares of Common Stock to the
Executive for each subsequent business day that begins until the registration
becomes effective.

                Initials: Magnitude ELM, Executive SR Page 5 of 8
<PAGE>

         B. Magnitude shall keep the registrations considered herein effective
until the earlier to occur of (i) twentyfour months from their issuance or (ii)
such time as Executive has sold all of his Securities or the Securities are
eligible to be transferred without restriction pursuant to the provisions of
Rule 144k. Magnitude agrees to provide an opinion of counsel within five (5)
business days with respect to any sales of the Securities by Executive if such
sale is permissible under Rule 144. If Magnitude fails to timely provide or
approve a legal opinion pursuant to Paragraph "A" of this Article "6" of this
Agreement, Magnitude agrees to pay Executive five hundred ($500.00) dollars per
day for each day that said opinion or approval is delayed.

         C. All expenses in connection with preparing and filing any
registration statement shall be borne in full by Magnitude; provided, however,
that Executive shall pay any and all underwriting commissions and expenses and
the fees and expenses of any legal counsel selected by Executive to represent it
with respect to the sale of the Securities.

7. Additional Covenants of Magnitude. Magnitude covenants and agrees as follows:

         A. Magnitude shall continuously remain a reporting company under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and will file
with the SEC on a timely basis all reports, statements and other materials
required to be filed by Magnitude to remain a reporting company under the
Exchange Act.

         B. The Common Stock of Magnitude shall continuously be listed on a
national securities exchange, or traded on the NASDAQ National Market, the
NASDAQ Small Cap Market, or the Over the Counter Bulletin Board (the "OTCBB").

         C. Magnitude shall, at its cost, provide the appropriate opinion
letters to be issued by Magnitude's counsel in compliance with the provisions of
Rule 144, as amended, with respect to the transfer or sale of the securities of
Magnitude owned by Executive, if such transfer or sale is permissible under Rule
144. Magnitude shall provide the appropriate opinion letters within five (5)
business days of request via e-mail notification or facsimile notification by
Executive.

         D. If Magnitude fails to timely provide or approve a legal opinion
pursuant to Paragraph "C" of this Article "7" of this Agreement, Magnitude
agrees to pay Executive five hundred ($500.00) dollars per day for each day that
said opinion or approval is delayed.

         E. Magnitude shall increase its number of authorized shares on or
before February 18, 2007 so that it shall have sufficient authorized and
unissued shares to issue and deliver all of the Warrant Shares and the Suspended
Options and Warrants.

8. Legal Work and Fees. Due to Executive's increased ownership in Magnitude as a
result of the Conversion, Magnitude shall, at its cost, evaluate Executive's
equity percentage position in Magnitude to determine if Executive is required to
file any forms or otherwise report to the Securities and Exchange Commission
regarding his percentage ownership of Magnitude. In the event that it is
determined that Executive must file any such forms or otherwise report,
Magnitude shall provide legal services to Executive to effect such requirements
at its cost.

9. Miscellaneous.

         A. Headings. Headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

                Initials: Magnitude ELM, Executive SR Page 6 of 8

<PAGE>

         B. Enforceability. If any provision which is contained in this
Agreement should, for any reason, be held to be invalid or unenforceable in any
respect under the laws of any jurisdiction, such invalidity or unenforceability
shall not affect any other provision of this Agreement and this Agreement shall
be construed as if such invalid or unenforceable provision had not been
contained herein.

         C. Notices. Any notice or other communication required or permitted
hereunder shall be sufficiently given if sent by (i) mail by (a) certified mail,
postage prepaid, return receipt requested and (b) first class mail, postage
prepaid (ii) overnight delivery with confirmation of delivery or (iii) facsimile
transmission with an original mailed by first class mail, postage prepaid,
addressed as follows:

To Executive:  Steven D. Rudnik, 2 Hilltop Road, Mendham, New Jersey, 07945

To Magnitude:  Magnitude Information Systems, Inc.
               1250 Route 28, Suite 309, Branchburg, New Jersey 08876
               Attn: Chief Executive Officer

With a copy to:Joseph J. Tomasek, Esq., 75-77 N Bridge St., Somerville, NJ 08876
               Fax No: (908) 429-0040

or in each case to such other address and facsimile number as shall have last
been furnished by like notice. If all of the methods of notice set forth in this
Paragraph "C" of this Article "9" of this Agreement are impossible for any
reason, notice shall be in writing and personally delivered to the aforesaid
addresses. Each notice or communication shall be deemed to have been given as of
the date so mailed or delivered as the case may be; provided, however, that any
notice sent by facsimile shall be deemed to have been given as of the date so
sent if a copy thereof is also mailed by first class mail on the date sent by
facsimile. If the date of mailing is not the same as the date of sending by
facsimile, then the date of mailing by first class mail shall be deemed to be
the date upon which notice is given; provided further, however, that any notice
sent by overnight delivery shall be deemed to have been given as of the date of
delivery.

         D. Governing Law; Disputes. This Agreement shall in all respects be
construed, governed, applied and enforced in accordance with the laws of the
State of New Jersey applicable to contracts made and to be performed therein,
without giving effect to the principles of conflicts of law. The parties hereby
consent to and irrevocably and exclusively submit to personal jurisdiction over
each of them by the Courts of the State of New Jersey in any action or
proceeding, irrevocably waive trial by jury and personal service of any and all
process and specifically consent that in any such action or proceeding, any
service of process may be effectuated upon any of them by certified mail, return
receipt requested, in accordance with Paragraph "C" of this Article "9" of this
Agreement. In the event Executive commences legal action to enforce any of the
terms of this Agreement, Magnitude shall pay all legal fees and costs incurred
by Executive with respect to this Agreement.

         E. Entire Agreement. This Agreement and all documents and instruments
referred to herein (i) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and thereof, and (ii) are not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder. Each party hereto agrees that, except for the representations and
warranties contained in this Agreement, neither party makes any other
representations or warranties, and each hereby disclaims any other
representations and warranties made by itself or any of its officers, directors,
employees, agents, financial and legal advisors or other representatives, with
respect to the execution and delivery of this Agreement or the transactions
contemplated hereby, notwithstanding the delivery or disclosure of any
documentation or other information with respect to any one or more of the
foregoing.

         F. Further Assurances. The parties agree to execute any and all such
other further instruments and documents, and to take any and all such further
actions which are reasonably required to effectuate this Agreement and the
intents and purposes hereof.

                Initials: Magnitude ELM, Executive SR Page 7 of 8

<PAGE>

         G. Binding Agreement. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their heirs, executors, administrators,
personal representatives, successors and assigns.

         H. Non-Waiver. Except as otherwise expressly provided herein, no waiver
of any covenant, condition, or provision of this Agreement shall be deemed to
have been made unless expressly in writing and signed by the party against whom
such waiver is charged; and (i) the failure of any party to insist in any one or
more cases upon the performance of any of the provisions, covenants or
conditions of this Agreement or to exercise any option herein contained shall
not be construed as a waiver or relinquishment for the future of any such
provisions, covenants or conditions, (ii) the acceptance of performance of
anything required by this Agreement to be performed with knowledge of the breach
or failure of a covenant, condition or provision hereof shall not be deemed a
waiver of such breach or failure, and (iii) no waiver by any party of one breach
by another party shall be construed as a waiver of any other or subsequent
breach.

         I. Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

         J. Facsimile Signatures. Any signature which is delivered via facsimile
shall be deemed to be an original and have the same force and effect as if such
facsimile signature were the original thereof.

         K. Modifications. This Agreement may not be changed, modified,
extended, terminated or discharged orally, except by a written agreement
specifically referring to this Agreement which is signed by all of the parties
to this Agreement.

         L. Exhibits. All Exhibits annexed or attached to this Agreement are
incorporated into this Agreement by reference thereto and constitute an integral
part of this Agreement.

         M. Severability. The provisions of this Agreement shall be deemed
separable. Therefore, if any part of this Agreement is rendered void, invalid or
unenforceable, such rendering shall not affect the validity or enforceability of
the remainder of this Agreement; provided, however, that if the part or parts
which are void, invalid or unenforceable as aforesaid shall substantially impair
the value of this whole Agreement to any party, that party may cancel, and
terminate this Agreement by giving written notice to the other party.

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

         Steven D. Rudnik                    Magnitude Information Systems, Inc.

         By: /s/ Steven D. Rudnik            By: /s/ Edward L. Marney
             --------------------                ------------------------
         Name: Steven D. Rudnik                  Name: Edward L. Marney
                                                 Title: President

                Initials: Magnitude ELM, Executive SR Page 8 of 8

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