Document:

SECURITIES PURCHASE AGREEMENT

     This  Securities  Purchase  Agreement  (this  "Agreement")  is  dated as of
December  22,  2006,  by  and  among  DigitalFX  International,  Inc., a Florida
corporation  (the  "Company"),  and  each  purchaser identified on the signature
pages  hereto  (each,  including  its  successors and assigns, a "Purchaser" and
collectively,  the  "Purchasers").

                                    RECITALS

          A.     The Company and each Purchaser is executing and delivering this
agreement  in  reliance upon the exemption from securities registration afforded
by  Section  4(2)  of  the  Securities  Act of 1933, as amended (the "Securities
Act"),  and  Rule  506  of  Regulation  D ("Regulation D") as promulgated by the
United  States  Securities  and  Exchange  Commission  under the Securities Act.

          B.     Each  Purchaser, severally and not jointly, wishes to purchase,
and  the  Company  wishes  to sell, upon the terms and conditions stated in this
Agreement, that aggregate number of shares of the Common Stock, par value $0.001
per share (the "Common Stock"), of the Company, set forth below such Purchaser's
name  on  the  signature  page of this Agreement (which aggregate amount for all
Purchasers  together  shall  be  1,000,000  shares  of Common Stock and shall be
collectively  referred  to  herein  as  the  "Shares"),  at $4.75 per share (the
"Purchase  Price").

          C.     The  Company  has  engaged  Roth  Capital  Partners, LLC as its
placement  agent  (the  "Placement  Agent")  for the offering of the Shares on a
"best  efforts"  basis.

          D.     Contemporaneously  with  the  execution  and  delivery  of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement,  in  the  form attached hereto as Exhibit A (the "Registration Rights
                                             ---------
Agreement"),  pursuant  to  which, among other things, the Company will agree to
provide  certain  registration  rights  with  respect  to  the  Shares under the
Securities  Act  and  applicable  state  securities  laws.

     NOW,  THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement,  and  for  other  good  and  valuable  consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers hereby
agree  as  follows:

                                   ARTICLE I.
                                   DEFINITIONS

     1.1     Definitions.  In  addition  to  the terms defined elsewhere in this
             -----------
Agreement,  for  all  purposes of this Agreement, the following terms shall have
the  meanings  indicated  in  this  Section  1.1:

          "Action"  means  any  action,  suit,  inquiry,  notice  of  violation,
proceeding  (including  any  partial  proceeding  such  as  a  deposition)  or
investigation  pending  or,  to  the  Company's Knowledge, threatened in writing
against  or  affecting  the  Company,  any Subsidiary or any of their respective
properties  before  or  by any court, arbitrator, governmental or administrative
agency,  regulatory  authority (federal, state, county, local or foreign), stock
market,  stock  exchange  or  trading  facility.

          "Affiliate"  means, with respect to any Person, any other Person that,
directly  or  indirectly  through  one  or  more  intermediaries,  Controls,  is
controlled  by  or  is  under common control with such Person, as such terms are
used  in  and  construed  under  Rule  144.  With  respect  to  a Purchaser, any
investment  fund  or

<PAGE>
managed  account that is managed on a discretionary basis by the same investment
manager  as  such Purchaser will be deemed to be an Affiliate of such Purchaser.

          "Business  Day" means a day, other than a Saturday or Sunday, on which
banks  in  New  York  City  are  open  for  the general transaction of business.

          "Buy-In"  has  the  meaning  set  forth  in  Section  4.1(f).

          "Buy-In  Price"  has  the  meaning  set  forth  in  Section  4.1(f).

          "Cash  Placement  Agent  Fee"  has  the  meaning  set forth in Section
3.1(w),  and  shall  be  paid subject to the engagement letter, dated October 3,
2006,  between  the Company, the Placement Agent and Craig-Hallum Capital Group.

          "Closing"  means  the  closing  of the purchase and sale of the Shares
pursuant  to  this  Agreement.

          "Closing  Date"  means  the  Trading  Day  when all of the Transaction
Documents  have  been  executed and delivered by the applicable parties thereto,
and  all  of  the  conditions  set  forth  in  Sections  2.1  and 2.2 hereof are
satisfied,  or  such  other  date  as  the  parties  may  agree.

          "Commission"  means  the  United  States  Securities  and  Exchange
Commission.

          "Common  Stock"  has  the  meaning set forth in the Recitals, and also
includes  any  securities  into  which  the  Common  Stock  may  hereafter  be
reclassified  or  changed.

          "Common  Stock Equivalents" means any securities of the Company or any
Subsidiary  which would entitle the holder thereof to acquire at any time Common
Stock,  including,  without  limitation,  any  debt,  preferred  stock,  rights,
options,  warrants  or  other instrument that is at any time convertible into or
exchangeable  for,  or  otherwise entitles the holder thereof to receive, Common
Stock  or  other  securities  that  entitle  the  holder to receive, directly or
indirectly,  Common  Stock.

          "Company  Deliverables"  has  the meaning set forth in Section 2.2(a).

          "Company's  Knowledge"  (or  words  of similar import, such as 'to the
Knowledge  of  the  Company')  means  with  respect to any statement made to the
knowledge  of  a party, that the statement is based upon the actual knowledge of
the  officers of such party having responsibility for the matter or matters that
are  the  subject  of  the  statement.

          "Control"  (including  the  terms  "controlling",  "controlled  by" or
"under  common  control  with") means the possession, direct or indirect, of the
power  to  direct  or  cause  the  direction of the management and policies of a
Person,  whether  through  the  ownership  of  voting securities, by contract or
otherwise.

          "Disclosure  Materials"  has  the meaning set forth in Section 3.1(h).

          "Effective  Date"  means  the  date  on which the initial Registration
Statement required by Section 2(a) of the Registration Rights Agreement is first
declared  effective  by  the  Commission.

          "Effectiveness  Deadline"  means  the  date  on  which  the  initial
Registration  Statement  is  required to be declared effective by the Commission
under  the  terms  of  the  Registration  Rights  Agreement.

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<PAGE>
          "Environmental  Laws"  has  the  meaning  set forth in Section 3.1(l).

          "Evaluation  Date"  has  the  meaning  set  forth  in  Section 3.1(v).

          "Exchange  Act" means the Securities Exchange Act of 1934, as amended,
or  any successor statute, and the rules and regulations promulgated thereunder.

          "Excluded Issuances"  means each of the following: (i) the issuance of
securities  upon  the exercise or conversion of any Common Stock or Common Stock
Equivalents  issued  by  the Company prior to the date hereof, (ii) the grant of
options,  warrants  or  other Common Stock Equivalents under any duly authorized
Company  stock  option, restricted stock plan or stock purchase plan whether now
existing  or  hereafter  approved  by  the  Company  and its stockholders in the
future,  and the issuance of Common Stock in respect thereof; (iii) the issuance
of  Common Stock pursuant to this Agreement; or (iv) the issuance of securities,
including,  without  limitation,  Common  Stock  or Common Stock Equivalents, in
connection  with  bona  fide,  arms'  length  (a) bank financings, (b) corporate
partnering  transactions,  (c)  equipment  leases  or  (d)  acquisitions  of
intellectual  property  rights  on  terms approved by a majority of the Board of
Directors; provided that such transactions are primarily for purposes other than
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equity  financing.

          "Florida  Counsel"  means  Jackson  L.  Morris,  Esq.

          "Full  Ratchet  Period"  means  the  period  of  time beginning on the
Closing  Date  and  ending  on  the  first  anniversary  thereof.

          "GAAP" means U.S. generally accepted accounting principles, as applied
by  the  Company.

          "Indemnified  Person"  has  the  meaning  set forth in Section 4.7(b).

          "Intellectual  Property"  has the meaning set forth in Section 3.1(r).

          "Irrevocable  Transfer  Agent Instructions" means, with respect to the
Company,  the Irrevocable Transfer Agent Instructions, in the form of Exhibit E,
                                                                      ---------
executed  by  the  Company  and  delivered to and acknowledged in writing by the
Transfer  Agent.

          "Lien"  means any lien, charge, claim, encumbrance, security interest,
right  of  first  refusal,  preemptive  right or other restrictions of any kind.

          "Lock-Up  Agreement"  means, with respect to the members of management
of  the  Company  (and  any  entities  owned  or Controlled by any of them), the
Lock-Up  Letter  Agreement, in the form of Exhibit F, executed by the members of
                                           ---------
management  of the Company (and any entities owned or Controlled by any of them)
set  forth on Schedule F annexed hereto and made a part hereof, and delivered to
              ----------
the  Placement  Agent.

          "Losses"  has  the  meaning  set  forth  in  Section  4.7(a).

          "Material  Adverse  Effect"  means  any  of (i) a material and adverse
effect  on the legality, validity or enforceability of any Transaction Document,
(ii)  a  material  and  adverse  effect  on  the  results of operations, assets,
prospects,  business or financial condition of the Company and the Subsidiaries,
taken  as  a  whole,  or  (iii) any material adverse impairment to the Company's
ability  to  perform  in  any material respect on a timely basis its obligations
under  any  Transaction  Document.

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<PAGE>
          "Material  Contract"  means any contract of the Company that was filed
as  an  exhibit to the SEC Filings pursuant to Item 601(b)(4) or Item 601(b)(10)
of  Regulation  S-K.

          "Material  Permits"  has  the  meaning  set  forth  in Section 3.1(p).

          "Net  Escrow  Amount"  means  the Escrow Amount (as defined in Section
2.3)  less  the  Cash  Placement  Agent  Fee  (as  defined  in  Section 3.1(w)).

          "New  York  Courts"  means the state and federal courts sitting in the
City  of  New  York,  Borough  of  Manhattan.

          "Outside  Date"  means  January  31,  2006.

          "Person"  means  an  individual,  corporation,  partnership,  limited
liability  company,  trust,  business  trust,  association, joint stock company,
joint  venture,  sole  proprietorship, unincorporated organization, governmental
authority  or  any  other  form  of  entity  not  specifically  listed  herein.

          "Placement  Agent  Counsel"  has the meaning set forth in Section 2.1.

          "Placement  Agent  Counsel  Fees" has the meaning set forth in Section
6.1.

          "Principal  Trading  Market"  means  the  Trading  Market on which the
Common  Stock  is  primarily  listed on and quoted for trading, which, as of the
Closing  Date,  shall  be  the  OTC  Bulletin  Board.

          "Proceeding" means an action, claim, suit, investigation or proceeding
(including,  without limitation, an investigation or partial proceeding, such as
a  deposition),  whether  commenced  or  threatened.

          "Purchaser  Deliverables" has the meaning set forth in Section 2.2(b).

          "Purchaser  Party"  has  the  meaning  set  forth  in  Section 4.7(a).

          "Registration  Rights  Agreement"  has  the  meaning  set forth in the
Recitals.

          "Registration  Statement"  means  a registration statement meeting the
requirements  set  forth  in  the Registration Rights Agreement and covering the
resale  by  the  Purchasers  of  the  Registrable  Securities (as defined in the
Registration  Rights  Agreement).

          "Required  Approvals"  has  the  meaning  set forth in Section 3.1(e).

          "Rule  144"  means  Rule 144 promulgated by the Commission pursuant to
the  Securities  Act,  as  such  Rule  may  be amended from time to time, or any
similar  rule  or  regulation  hereafter  adopted  by  the  Commission  having
substantially  the  same  effect  as  such  Rule.

          "SEC  Reports"  has  the  meaning  set  forth  in  Section  3.1(h).

          "Secretary's  Certificate"  has  the  meaning  set  forth  in  Section
2.2(a)(vi).

          "Securities  Act"  means  the  Securities  Act  of  1933,  as amended.

          "Securities  Counsel"  means  Stubbs  Alderton  &  Markiles,  LLP.

          "Short  Sales"  include,  without  limitation,  all  "short  sales" as
defined  in  Rule  200

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<PAGE>
promulgated  under Regulation SHO under the Exchange Act, whether or not against
the  box,  and  all  types  of  direct  and indirect stock pledges, forward sale
contracts,  options, puts, calls, short sales, swaps, "put equivalent positions"
(as  defined  in  Rule 16a-1(h) under the Exchange Act) and similar arrangements
(including  on  a  total return basis), and sales and other transactions through
non-US  broker  dealers  or  foreign  regulated  brokers.

          "Subscription  Amount"  means  with  respect  to  each  Purchaser, the
aggregate  amount  to be paid for the Shares purchased hereunder as indicated on
such Purchaser's signature page to this Agreement next to the heading "Aggregate
Purchase  Price  (Subscription  Amount)".

          "Subsidiary"  means  any  "significant  subsidiary" as defined in Rule
1-02(w)  of  Regulation S-X promulgated by the Commission under the Exchange Act
and  any  other  entity  required to be disclosed in the SEC Reports pursuant to
Item  601(b)(21)  of  Regulation  S-K.

          "Trading  Affiliate"  has  the  meaning  set  forth in Section 3.2(h).

          "Trading  Day"  means (i) a day on which the Common Stock is listed or
quoted  and  traded  on  its primary Trading Market (other than the OTC Bulletin
Board),  or  (ii)  if  the Common Stock is not listed on a Trading Market (other
than  the  OTC Bulletin Board), a day on which the Common Stock is traded in the
over-the-counter  market, as reported by the OTC Bulletin Board, or (iii) if the
Common  Stock  is  not  quoted  on any Trading Market, a day on which the Common
Stock  is  quoted  in  the  over-the-counter  market as reported by the National
Quotation  Bureau Incorporated (or any similar organization or agency succeeding
to  its  functions  of  reporting  prices); provided, that in the event that the
Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof,
then  Trading  Day  shall  mean  a  Business  Day.

          "Trading  Market"  means whichever of the New York Stock Exchange, the
American  Stock  Exchange,  the  NASDAQ  Global Select Market, the NASDAQ Global
Market,  the NASDAQ Capital Market or the OTC Bulletin Board on which the Common
Stock  is  listed  or  quoted  for  trading  on  the  date  in  question.

          "Transaction  Documents"  means  this  Agreement,  the  schedules  and
exhibits  attached  hereto,  the  Registration Rights Agreement, the Irrevocable
Transfer  Agent  Instructions, the Lock-Up Agreements and any other documents or
agreements  executed in connection with the transactions contemplated hereunder.

          "Transfer  Agent"  means Florida Atlantic Stock Transfer, Inc., or any
successor  transfer  agent  for  the  Company.

                                   ARTICLE II.
                                PURCHASE AND SALE

     2.1     Closing.  Subject  to  the  terms  and conditions set forth in this
             -------
Agreement,  at  the Closing, the Company shall issue and sell to each Purchaser,
and  each Purchaser shall, severally and not jointly, purchase from the Company,
such  number of shares of Common Stock, as indicated below such Purchaser's name
on  the  signature  page  of this Agreement, for an aggregate purchase price for
such Purchaser as indicated below such Purchaser's name on the signature page of
this  Agreement.  On  or  before  the Closing Date, the Company shall deliver to
Lowenstein  Sandler  PC  ("Placement Agent Counsel"), in trust, a certificate or
certificates,  registered in such name or names as the Purchasers may designate,
representing the Shares, to be held in escrow as contemplated under Section 2.3.
On  the  date  (the  "Closing  Date")  that  all  of the conditions set forth in
Sections  5.1  and  5.2  have been satisfied or duly waived, the Company and the
Placement Agent shall deliver written instructions to Placement Agent Counsel to
release  the Escrow Amount as provided in Section 2.1, whereupon Placement Agent
Counsel  shall  release  the  certificates  evidencing  the  Shares  then  it

                                        5
<PAGE>
its  possession  to  the Purchasers (the "Closing"). The Closing of the purchase
and sale of the Shares shall take place at the offices of Lowenstein Sandler PC,
1251  Avenue  of the Americas, New York, New York on the Closing Date or at such
other  locations or remotely by facsimile transmission or other electronic means
as  the  parties  may  mutually  agree.

     2.2     Closing  Deliveries.  (a)     On  or  prior  to  the  Closing,  the
             -------------------
Company  shall  issue,  deliver  or  cause to be delivered to each Purchaser the
following  (the  "Company  Deliverables"):

               (i)     This  Agreement,  duly  executed  by  the  Company;

               (ii)     One  or  more  stock certificates, free and clear of all
restrictive  and  other  legends  (except as provided in Section 4.1(b) hereof),
evidencing  a  number  of  Shares  indicated  below such Purchaser's name on the
signature  page  of  this  Agreement,  registered in the name of such Purchaser;

               (iii)     a  legal  opinion  of  Florida  Counsel,  in  the  form
attached  hereto  as  Exhibit D-1, executed by such counsel and addressed to the
                      -----------
Purchasers  and  the  Placement  Agent;

               (iv)     a  legal  opinion  of  Securities  Counsel,  in the form
attached  hereto  as  Exhibit D-2, executed by such counsel and addressed to the
                      -----------
Purchasers  and  the  Placement  Agent;

               (v)     the  Registration  Rights Agreement, duly executed by the
Company;

               (vi)     duly  executed  Irrevocable  Transfer Agent Instructions
acknowledged  in  writing  by  the  Transfer  Agent;

               (vii)     a  duly  executed  Lock-Up  Agreement by each member of
management  of  the  Company  set  forth  on  Schedule  F;
                                              -----------

               (viii)     a  certificate  of  the  Secretary of the Company (the
"Secretary's  Certificate"),  dated  as  of  the  Closing  Date,  certifying the
resolutions  adopted  by  the  Board  of  Directors of the Company approving the
transactions  contemplated by this Agreement and the other Transaction Documents
and  the  issuance  of  the  Shares,  certifying  the  current  versions  of the
certificate  or articles of incorporation, as amended and by-laws of the Company
and  certifying  as  to  the  signatures  and  authority  of persons signing the
Transaction  Documents  and  related  documents  on  behalf  of the Company; and

               (ix)     the  Compliance  Certificate  referred  to  in  Section
5.1(h).

          (b)     On  or  prior  to the Closing, each Purchaser shall deliver or
cause  to  be  delivered  to  the  Company  the  following  (the  "Purchaser
Deliverables"):

               (i)     This  Agreement,  duly  executed  by  such  Purchaser;

               (ii)     Its Subscription Amount, in United States dollars and in
immediately  available  funds,  in  the amount set forth as the "Purchase Price"
indicated  below  such  Purchaser's name on the applicable signature page hereto
pursuant  to  the  escrow  arrangements  set  forth  in  Section  2.3  below;

               (iii)     the  Registration  Rights  Agreement,  duly executed by
such  Purchaser;

               (iv)     a  fully completed and duly executed Selling Stockholder
Questionnaire  in  the  form  attached  as  Annex  B  to the Registration Rights
Agreement;  and

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<PAGE>
               (v)     a  fully  completed and duly executed Accredited Investor
Questionnaire  in  the  form  attached  hereto  as  Exhibit  C.
                                                    ----------

     2.3     Escrow  of  Purchase  Price.
             ---------------------------

          (a)     Simultaneously  with  the  execution  and  delivery  of  a
counterpart  to  this  Agreement  by  a Purchaser, such Purchaser shall promptly
cause a wire transfer of immediately available funds (U.S. dollars) in an amount
representing  such  Purchaser's  Subscription  Amount,  as  set  forth  on  such
Purchaser's  signature  page,  to  be  paid  to  the non-interest bearing escrow
account  of  Placement  Agent  Counsel,  set  forth  on  Exhibit  G  hereto (the
                                                         ----------
aggregate  amounts  being  held  in escrow are referred to herein as the "Escrow
Amount").  Placement  Agent Counsel shall hold the Escrow Amount in escrow until
(i)  Placement  Agent Counsel receives written instructions from the Company and
the  Placement  Agent authorizing the release of the Escrow Amount in accordance
with  Section 2.1, (ii) the Outside Date if the Closing shall not have occurred,
      -----------
or  (iii)  Placement  Agent  Counsel's  receipt of written instructions from the
Company  and/or  the  Placement  Agent that the Agreement has been terminated in
accordance  with  Section  6.18  (and,  in the case of (ii) and (iii), Placement
                  -------------
Agent  Counsel  shall  return to each Purchaser or terminating Purchaser, as the
case  may  be, the portion of the Escrow Amount each such Purchaser delivered to
Placement  Agent  Counsel).  The  Company  hereby authorizes the Placement Agent
Counsel  to  release  from  the  Escrow  Amount, at the Closing, without further
action  or deed (other than receipt of the written instructions from the Company
and  the  Placement Agent authorizing the release of the Escrow Amount), the (i)
Cash  Placement Agent Fee (as defined in Section 3.1(w)) to the Placement Agent,
                                         --------------
(ii)  the  Placement  Agent  Counsel Fee, and (iii) the Net Escrow Amount to the
Company.

          (b)     The  Company  and the Purchasers acknowledge and agree for the
benefit  of  Placement  Agent Counsel (which shall be deemed to be a third party
beneficiary  of  this  Section  2.3)  as  follows:
                       ------------

               (i)     Placement  Agent  Counsel  (i) is not responsible for the
performance  by  the  Company  or the Purchasers of this Agreement or any of the
Transaction  Documents  or  for  determining or compelling compliance therewith,
(ii)  is  only  responsible  for (A) holding the Escrow Amount in escrow pending
receipt  of  written  instructions  from the holders of a majority of the Shares
and/or the Company directing the release of the Escrow Amount in accordance with
Section  2.3 and (B) disbursing the Escrow Amount in accordance with the written
------------
instructions  from the Company and/or the holders of a majority of the Shares in
accordance  with  Section  2.3,  each of the responsibilities of Placement Agent
                  ------------
Counsel in clause (A) and (B) is ministerial in nature, and no implied duties or
obligations of any kind shall be read into this Agreement against or on the part
of Placement Agent Counsel (collectively, the "Placement Agent Counsel Duties"),
(iii)  shall  not be obligated to take any legal or other action hereunder which
might  in  its  judgment  involve  or cause it to incur any expense or liability
unless  it  shall  have been furnished with indemnification acceptable to it, in
its  sole  discretion,  (iv)  may  rely  on  and shall be protected in acting or
refraining  from acting upon any written notice, instruction (including, without
limitation,  wire transfer instructions, whether incorporated herein or provided
in  a separate written instruction), instrument, statement, certificate, request
or other document furnished to it hereunder and believed by it to be genuine and
to  have  been  signed  or  presented  by  the  proper Person, and shall have no
responsibility  for  making  inquiry as to, or for determining, the genuineness,
accuracy  or  validity  thereof,  or  of  the authority of the Person signing or
presenting  the  same  and  (v)  may consult counsel satisfactory to it, and the
written  opinion  or  advice  of  such counsel in any instance shall be full and
complete  authorization  and protection in respect of any action taken, suffered
or  omitted  by it hereunder in good faith and in accordance with the opinion or
advice  of  such  counsel.  Documents  and written materials referred to in this
Section  2.3  include,  without  limitation,  e-mail  and  other  electronic
   ---------
transmissions capable of being printed, whether or not they are in fact printed;
and  any  such e-mail or other electronic transmission may be deemed and treated
by  Placement Agent Counsel as having been signed or presented by a Person if it
bears,  as  sender,  the  Person's  e-mail  address.

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<PAGE>
               (ii)     Placement  Agent  Counsel  shall not be liable to anyone
for  any action taken or omitted to be taken by it hereunder, except in the case
of  Placement  Agent Counsel's gross negligence, or willful misconduct in breach
of  the  Placement  Agent  Counsel  Duties.  IN  NO  EVENT SHALL PLACEMENT AGENT
COUNSEL  BE  LIABLE  FOR  INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGE OR
LOSS  (INCLUDING  BUT NOT LIMITED TO LOST PROFITS) WHATSOEVER, EVEN IF PLACEMENT
AGENT  COUNSEL  HAS  BEEN  INFORMED OF THE LIKELIHOOD OF SUCH LOSS OR DAMAGE AND
REGARDLESS  OF  THE  FORM  OF  ACTION.

               (iii)     The  Company  and  the  Purchasers  hereby, jointly and
severally, indemnify and hold harmless Placement Agent Counsel from and against,
any  and  all  loss,  liability,  cost,  damage  and expense, including, without
limitation,  reasonable counsel fees and expenses, which Placement Agent Counsel
may suffer or incur by reason of any action, claim or proceeding brought against
Placement  Agent  Counsel  arising  out of or relating to the performance of the
Placement  Agent  Counsel Duties, unless such action, claim or proceeding is the
result  of  the  willful  misconduct,  or  gross  negligence  of Placement Agent
Counsel.

               (iv)     Placement  Agent  Counsel  has acted as legal counsel to
the  Placement Agent in connection with this Agreement and the other Transaction
Documents,  is  merely  acting  as  a  stakeholder  under this Agreement and is,
therefore,  hereby  authorized  to continue acting as legal counsel to Placement
Agent  including,  without limitation, with regard to any dispute arising out of
this  Agreement, the other Transaction Documents, the Escrow Amount or any other
matter.  Each  of  the  Company  and the Purchasers hereby expressly consents to
permit  Placement  Agent  Counsel to represent the Placement Agent in connection
with all matters relating to this Agreement, including, without limitation, with
regard  to  any  dispute  arising  out  of this Agreement, the other Transaction
Documents, the Escrow Amount or any other matter, and hereby waives any conflict
of  interest  or  appearance  of  conflict  or  impropriety with respect to such
representation.  Each  of  the Company and the Purchasers has consulted with its
own  counsel  specifically  about  this  Section  2.3  to the extent they deemed
                                         ------------
necessary,  and  has entered into this Agreement after being satisfied with such
advice.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

     3.1     Representations  and Warranties of the Company.  The Company hereby
             ----------------------------------------------
represents  and  warrants  to  the  Purchasers  and to the Placement Agent that,
except  as  set  forth  in  the  Schedules  delivered  herewith:

          (a)     Subsidiaries.  The  Company  has  no  direct  or  indirect
                  ------------
Subsidiaries other than those listed in the SEC Reports.  Except as disclosed in
the  SEC  Reports  hereto,  the Company owns, directly or indirectly, all of the
capital  stock  or comparable equity interests of each Subsidiary free and clear
of any and all Liens, and all the issued and outstanding shares of capital stock
or  comparable  equity  interest  of  each Subsidiary are validly issued and are
fully  paid,  non-assessable  and  free  of  preemptive  and  similar  rights to
subscribe  for  or  purchase  securities.

          (b)     Organization  and  Qualification.  The  Company  and  each
                  --------------------------------
Subsidiary  is  an  entity  duly  incorporated  or  otherwise organized, validly
existing  and  in  good  standing  under  the  laws  of  the jurisdiction of its
incorporation  or  organization  (as  applicable),  with the requisite power and
authority  to own or lease and use its properties and assets and to carry on its
business  as  currently conducted.  Neither the Company nor any Subsidiary is in
violation  of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.  Each of the
Company  and  the  Subsidiaries  is duly qualified to conduct business and is in
good  standing  as a foreign corporation or other entity in each jurisdiction in
which  the  nature  of the business conducted or property owned by it makes such

                                        8
<PAGE>
qualification  necessary, except where the failure to be so qualified or in good
standing,  as the case may be, could not have or reasonably be expected to, have
individually  or in the aggregate, resulted in a Material Adverse Effect, and no
Proceeding  has  been  instituted in any such jurisdiction revoking, limiting or
curtailing  or  seeking  to revoke, limit or curtail such power and authority or
qualification.

          (c)     Authorization;  Enforcement;  Validity.  The  Company  has the
                  --------------------------------------
requisite  corporate  power  and  authority  to enter into and to consummate the
transactions  contemplated by each of the Transaction Documents to which it is a
party  and otherwise to carry out its obligations hereunder and thereunder.  The
execution  and  delivery  of  each of the Transaction Documents to which it is a
party by the Company and the consummation by it of the transactions contemplated
hereby  and thereby (including, but not limited to, the sale and delivery of the
Shares)  have been duly authorized by all necessary corporate action on the part
of  the Company, and no further corporate action is required by the Company, its
Board  of  Directors  or  its shareholders in connection therewith other than in
connection  with  the  Required Approvals.  Each of the Transaction Documents to
which  it is a party has been (or upon delivery will have been) duly executed by
the  Company and is, or when delivered in accordance with the terms hereof, will
constitute  the  valid and binding obligation of the Company enforceable against
the  Company  in accordance with its terms, except as such enforceability may be
limited  by  applicable  bankruptcy,  insolvency,  reorganization,  moratorium,
liquidation  or similar laws relating to, or affecting generally the enforcement
of,  creditors'  rights and remedies or by other equitable principles of general
application.  Except  as  set forth on the SEC Reports, there are no shareholder
agreements, voting agreements, or other similar arrangements with respect to the
Company's  capital  stock  to  which the Company is a party or, to the Company's
Knowledge,  between  or  among  any  of  the  Company's  shareholders.

          (d)     No  Conflicts.  The execution, delivery and performance by the
                  -------------
Company of the Transaction Documents to which it is a party and the consummation
by  the  Company  of the transactions contemplated hereby or thereby (including,
without limitation, the issuance of the Shares) do not and will not (i) conflict
with  or  violate any provision of the Company's or any Subsidiary's certificate
or  articles  of  incorporation,  bylaws  or  other  organizational  or  charter
documents,  (ii)  conflict  with, or constitute a default (or an event that with
notice  or  lapse  of  time or both would become a default) under, result in the
creation  of any Lien upon any of the properties or assets of the Company or any
Subsidiary  or give to others any rights of termination, amendment, acceleration
or  cancellation  (with  or  without  notice,  lapse  of  time  or both) of, any
agreement,  credit  facility,  debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the Company or any
Subsidiary  is  a  party or by which any property or asset of the Company or any
Subsidiary  is  bound,  or affected, or (iii) subject to the Required Approvals,
conflict  with  or  result  in  a violation of any law, rule, regulation, order,
judgment,  injunction,  decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state  securities  laws  and regulations and the rules and regulations, assuming
the  correctness  of  the  representations and warranties made by the Purchasers
herein,  of  any  self-regulatory  organization  to  which  the  Company  or its
securities  are  subject, including all applicable Trading Markets), or by which
any  property  or  asset  of  the  Company or a Subsidiary is bound or affected,
except  in the case of clauses (ii) and (iii) such as would not, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect.

          (e)     Filings,  Consents and Approvals.  Neither the Company nor any
                  --------------------------------
Subsidiary is required to obtain any consent, waiver, authorization or order of,
give  any notice to, or make any filing or registration with, any court or other
federal,  state,  local  or  other  governmental  authority  or  other Person in
connection  with  the  execution, delivery and performance by the Company of the
Transaction Documents (including the issuance of the Shares), other than (i) the
filing  with the Commission of one or more Registration Statements in accordance
with  the  requirements  of  the  Registration  Rights  Agreement,  (ii) filings
required  by  applicable  state securities laws, (iii) the filing of a Notice of
Sale  of  Securities  on  Form  D  with the Commission under Regulation D of the
Securities  Act,  (iv)  the  filing  of  any  requisite  notices  and/or

                                        9
<PAGE>
application(s)  to the Principal Trading Market for the issuance and sale of the
Common  Stock  and  the listing of the Common Stock for trading or quotation, as
the  case  may  be,  thereon  in  the  time and manner required thereby, (v) the
filings required in accordance with Section 4.6 of this Agreement and (vi) those
that  have  been  made  or  obtained  prior  to  the  date  of  this  Agreement
(collectively,  the  "Required  Approvals").

          (f)     Issuance  of the Shares.  The Shares have been duly authorized
                  -----------------------
and,  when  issued  and paid for in accordance with the terms of the Transaction
Documents,  will  be duly and validly issued, fully paid and nonassessable, free
and  clear of all Liens, other than restrictions on transfer provided for in the
Transaction Documents or imposed by applicable securities laws, and shall not be
subject  to preemptive or similar rights of shareholders.  Assuming the accuracy
of  the  representations and warranties of the Purchasers in this Agreement, the
Shares  will  be  issued  in  compliance  with  all applicable federal and state
securities  laws.

          (g)     Capitalization.  The  number  of  shares  and  type  of  all
                  --------------
authorized,  issued  and outstanding capital stock, options and other securities
of  the  Company  (whether  or  not presently convertible into or exercisable or
exchangeable  for  shares  of  capital  stock  of  the  Company) is specified in
Schedule  3.1(g)  hereto.  All of the outstanding shares of capital stock of the
---------------
Company are duly authorized, validly issued, fully paid and non-assessable, have
been  issued  in compliance in all material respects with all applicable federal
and  state  securities  laws,  and none of such outstanding shares was issued in
violation  of  any  preemptive  rights  or  similar  rights  to subscribe for or
purchase  any  capital  stock  of  the Company.  Except as specified in Schedule
                                                                        --------
3.1(g)  hereto,  there  are  no outstanding options, warrants or scrip rights to
-----
subscribe  to,  calls or commitments of any character whatsoever relating to, or
securities,  rights  or  obligations  convertible  into  or exchangeable for, or
giving  any  Person  any  right  to  subscribe for or acquire, any shares of the
Company's  capital  stock,  or  contracts,  commitments,  understandings  or
arrangements  by  which  the Company or any Subsidiary is or may become bound to
issue  additional shares of capital stock of the Company, or options, securities
or  rights  convertible  or  exchangeable  into  shares  of capital stock of the
Company.  Except for customary adjustments as a result of stock dividends, stock
splits,  combinations  of  shares,  reorganizations,  recapitalizations,
reclassifications  or  other  similar events, or as disclosed in Schedule 3.1(g)
                                                                 ---------------
hereto or in any Schedule 13D or Schedule 13G or Company report on file with the
Commission,  there are no anti-dilution or price adjustment provisions contained
in  any  security issued by the Company (or in any agreement providing rights to
security holders), and the issuance and sale of the Shares will not, immediately
or  with  the  passage  of  time, obligate the Company to issue shares of Common
Stock or other securities to any Person (other than the Purchasers) and will not
result  in  a  right  of  any  holder  of  securities  to  adjust  the exercise,
conversion,  exchange  or  reset  price  under  such  securities.

          (h)      SEC  Reports.  The  Company has filed all reports, schedules,
                   ------------
forms,  statements  and  other  documents  required  to be filed by it under the
Exchange  Act, including pursuant to Section 13(a) or 15(d) thereof, for the two
years  preceding  the  date  hereof  (or  such shorter period as the Company was
required  by  law or regulation to file such material) (the foregoing materials,
including  the exhibits thereto and documents incorporated by reference therein,
being  collectively  referred  to  herein as the "SEC Reports" and together with
this  Agreement  and  the  Schedules to this Agreement (if any), the "Disclosure
Materials"), on a timely basis or has received a valid extension of such time of
filing  and  has  filed any such SEC Reports prior to the expiration of any such
extension.  As  of  the  date  hereof,  the  Company  is  not aware of any event
occurring  on  or  prior  to  the  Closing  Date  (other  than  the transactions
contemplated  by  the  Transaction Documents) that requires the filing of a Form
8-K after the Closing.  As of their respective dates, or to the extent corrected
by  a  subsequent restatement, the SEC Reports complied in all material respects
with  the  requirements of the Securities Act and the Exchange Act and the rules
and  regulations  of  the Commission promulgated thereunder, and none of the SEC
Reports,  when  filed,  contained  any  untrue  statement  of a material fact or
omitted  to  state a material fact required to be stated therein or necessary in
order  to make the statements therein, in light of the circumstances under which
they  were  made,  not  misleading.

                                       10
<PAGE>
          (i)     Financial  Statements.     The  financial  statements  of  the
                  ---------------------
Company  included  in  the  SEC  Reports  comply  in  all material respects with
applicable  accounting  requirements  and  the  rules  and  regulations  of  the
Commission  with  respect  thereto as in effect at the time of filing (or to the
extent  corrected  by a subsequent restatement).  Such financial statements have
been  prepared  in accordance with GAAP applied on a consistent basis during the
periods  involved,  except  as  may  be  otherwise  specified  in such financial
statements  or  the notes thereto and except that unaudited financial statements
may  not  contain  all  footnotes  required  by  GAAP, and fairly present in all
material  respects  the  financial  position of the Company and its consolidated
subsidiaries taken as a whole as of and for the dates thereof and the results of
operations  and  cash  flows for the periods then ended, subject, in the case of
unaudited  statements,  to  normal,  year-end  audit  adjustments.  All material
agreements  to  which  the  Company or any Subsidiary is a party or to which the
property  or assets of the Company or any Subsidiary are subject are included as
part  of  or  specifically  identified  in  the  SEC  Reports.

          (j)     Tax Matters.  Each of the Company and its Subsidiaries (i) has
                  -----------
accurately  and  timely prepared and filed all foreign, federal and state income
and all other tax returns, reports and declarations required by any jurisdiction
to  which  it  is  subject,  (ii)  has  paid  all  taxes  and other governmental
assessments  and  charges that are material in amount, shown or determined to be
due  on  such returns, reports and declarations, except those being contested in
good  faith,  with respect to which adequate reserves have been set aside on the
books  of the Company and (iii) has set aside on its books provisions reasonably
adequate  for  the payment of all taxes for periods subsequent to the periods to
which  such  returns,  reports  or  declarations  apply,  except, in the case of
clauses  (i)  and  (ii) above, where the failure to so pay or file any such tax,
assessment,  charge  or  return  would  not result in a Material Adverse Effect.
There  are  no  unpaid  taxes  in  any  material amount claimed to be due by the
Company  or any of its Subsidiaries by the taxing authority of any jurisdiction.

          (k)     Material  Changes.  Since  the  date  of  the  latest  audited
                  -----------------
financial  statements  included  within  the SEC Reports, except as specifically
disclosed  in  the  SEC  Reports  or as set forth in Schedule 3.1(k) hereto, (i)
                                                     ---------------
there  have  been  no  events, occurrences or developments that have had or that
could reasonably be expected to result, either individually or in the aggregate,
in  a Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent  or  otherwise)  other than (A) trade payables, accrued expenses and
other  liabilities  incurred  in the ordinary course of business consistent with
past  practice and (B) liabilities not required to be reflected in the Company's
financial  statements  pursuant  to  GAAP or required to be disclosed in filings
made  with  the  Commission,  (iii)  the  Company  has not altered its method of
accounting  or  the  manner  in which it keeps its accounting books and records,
(iv)  the  Company has not declared or made any dividend or distribution of cash
or  other  property  to  its  shareholders  or  purchased,  redeemed or made any
agreements  to purchase or redeem any shares of its capital stock (other than in
connection  with  repurchases  of  unvested  stock  issued  to  employees of the
Company)  and  (v)  the  Company  has  not  issued  any equity securities to any
officer,  director  or  Affiliate,  except  Common  Stock issued in the ordinary
course  as  dividends  on  outstanding  preferred  stock or pursuant to existing
Company stock option or stock purchase plans or executive and director corporate
arrangements  disclosed  in  the  SEC  Reports  and  (vi) there has not been any
material  change or amendment to, or any waiver of any material right under, any
contract under which the Company, any subsidiary thereof, or any of their assets
is  bound or subject. Except for the issuance of the Shares contemplated by this
Agreement  or  as  set  forth  in Schedule 3.1(k) hereto, no event, liability or
                                  ---------------
development  has  occurred  or  exists  with  respect  to  the  Company  or  its
Subsidiaries  or  their respective business, properties, operations or financial
condition that would be required to be disclosed by the Company under applicable
securities  laws  at  the  time  this  representation  is made that has not been
publicly  disclosed  at  least  one  Trading  Day  prior  to  the date that this
representation  is  made.

          (l)     Environmental  Matters.  To  the  Company's Knowledge, neither
                  ----------------------
the  Company  nor  any  Subsidiary  (i)  is  in  violation of any statute, rule,
regulation,  decision  or order of any governmental agency or body or any court,
domestic  or  foreign,  relating to the use, disposal or release of hazardous or
toxic

                                       11
<PAGE>
substances  or  relating  to the protection or restoration of the environment or
human  exposure  to  hazardous or toxic substances (collectively, "Environmental
Laws"),  (ii) owns or operates any real property contaminated with any substance
that is in violation of any Environmental Laws, (iii) is liable for any off-site
disposal  or  contamination  pursuant  to  any  Environmental  Laws, and (iv) is
subject  to  any  claim  relating  to  any  Environmental Laws; which violation,
contamination,  liability  or  claim  has had or could reasonably be expected to
have  a  Material Adverse Effect, individually or in the aggregate; and there is
no  pending  or, to the Company's Knowledge, threatened investigation that might
lead  to  such  a  claim.

          (m)     Litigation.  There is no Action which (i) adversely affects or
                  ----------
challenges  the  legality,  validity or enforceability of any of the Transaction
Documents  or  the  Shares  or  (ii) except as specifically disclosed in the SEC
Reports,  could,  if  there were an unfavorable decision, individually or in the
aggregate,  have  or  reasonably  be  expected  to  result in a Material Adverse
Effect.  Neither  the  Company  nor  any  Subsidiary,  nor,  to  the  Company's
Knowledge,  any  current  director  or  officer  thereof (in his or her capacity
thereof),  is  or has been during the five-year period prior to the Closing Date
the  subject  of any Action involving a claim of violation of or liability under
federal  or state securities laws or a claim of breach of fiduciary duty.  There
has  not  been  and,  to  the  Company's  Knowledge,  there  is  not  pending or
contemplated,  any  investigation by the Commission involving the Company or, to
the  Company's  Knowledge,  any  current  or  former  director or officer of the
Company  (in  his  or  her capacity as such).  The Commission has not issued any
stop  order  or  other  order  suspending  the effectiveness of any registration
statement  filed  by the Company or any subsidiary under the Exchange Act or the
Securities  Act.

          (n)     Employment  Matters.  No  material labor dispute exists or, to
                  -------------------
the  Knowledge  of the Company, is imminent with respect to any of the employees
of  the  Company  which  could  reasonably  be  expected to result in a Material
Adverse  Effect.  None  of  the  Company's  or  its Subsidiaries' employees is a
member of a union that relates to such employee's relationship with the Company,
and  neither  the Company nor any of its Subsidiaries is a party to a collective
bargaining  agreement,  and  the Company and its Subsidiaries believe that their
relationships  with  their  employees  are  good.  No  executive officer, to the
Knowledge  of  the  Company,  is,  or is now expected to be, in violation of any
material  term  of  any  employment  contract,  confidentiality,  disclosure  or
proprietary  information  agreement  or  non-competition agreement, or any other
contract  or agreement or any restrictive covenant, and the continued employment
of  each  such  executive  officer  does  not  subject the Company or any of its
Subsidiaries to any liability with respect to any of the foregoing matters.  The
Company  and  its  Subsidiaries  are in compliance with all U.S. federal, state,
local  and  foreign  laws  and regulations relating to employment and employment
practices,  terms and conditions of employment and wages and hours, except where
the  failure  to  be  in compliance could not, individually or in the aggregate,
reasonably  be  expected  to  have  a  Material  Adverse  Effect.

          (o)     Compliance.  Neither  the Company nor any Subsidiary (i) is in
                  ----------
default  under  or  in violation of (and no event has occurred that has not been
waived  that, with notice or lapse of time or both, would result in a default by
the  Company  or  any  Subsidiary  under), nor has the Company or any Subsidiary
received  notice  of  a  claim  that  it  is  in  default under or that it is in
violation  of, any indenture, loan or credit agreement or any other agreement or
instrument  to  which  it  is a party or by which it or any of its properties is
bound  (whether  or  not  such default or violation has been waived), (ii) is in
violation  of  any  order  of  any court, arbitrator or governmental body having
jurisdiction  over  the  Company or its properties or assets, or (iii) is or has
been  in  violation  of, or in receipt of notice that it is in violation of, any
statute,  rule  or  regulation  of  any governmental authority applicable to the
Company,  except  in  each  case as could not, individually or in the aggregate,
have  or  reasonably  be  expected  to  result  in  a  Material  Adverse Effect.

          (p)     Regulatory  Permits.  The Company and the Subsidiaries possess
                  -------------------
all  certificates, authorizations and permits issued by the appropriate federal,
state,  local  or  foreign  regulatory  authorities  necessary  to conduct their
respective  businesses as described in the SEC Reports, except where the failure
to possess such permits, individually or in the aggregate, has not and could not
reasonably  be  expected  to  result

                                       12
<PAGE>
in  a  Material Adverse Effect ("Material Permits"), and neither the Company nor
any Subsidiary has received any notice of proceedings relating to the revocation
or  modification  of  any  such  Material  Permits.

          (q)     Title  to  Assets.  Except as set forth on Schedule 3.1(q) and
                  -----------------
for  property  that  is  specifically  the  subject  of,  and  covered by, other
representations  and  warranties  as to ownership or title contained herein, the
Company and the Subsidiaries have good and marketable title in fee simple to all
real  property owned by them that is material to their respective businesses and
good  and  marketable  title  in  all  personal  property  owned by them that is
material  to  their  respective  businesses,  in each case free and clear of all
Liens,  except  for Liens as do not materially affect the value of such property
and  do  not  materially  interfere with the use made and proposed to be made of
such  property  by the Company and the Subsidiaries and Liens for the payment of
federal,  state  or  other taxes, the payment of which is neither delinquent nor
subject  to penalties.  Any real property and facilities held under lease by the
Company  and  the  Subsidiaries  are  held  by  them under valid, subsisting and
enforceable  leases  of  which  the Company and the Subsidiaries are in material
compliance.

          (r)     Patents and Trademarks.  The Company and its Subsidiaries own,
                  ----------------------
possess,  license  or have other rights to use all foreign and domestic patents,
patent  applications,  trade  and  service  marks,  trade  and  service  mark
registrations,  trade  names,  copyrights,  licenses, inventions, trade secrets,
technology,  Internet  domain  names,  know-how  and other intellectual property
(collectively,  the  "Intellectual Property") necessary for the conduct of their
respective  businesses  as now conducted or as proposed to be conducted.  Except
as  set  forth  in  the  SEC  Reports  and  except  where  such  violations  or
infringements would not reasonably be expected to result, either individually or
in the aggregate, in a Material Adverse Effect, (a) there are no rights of third
parties to any such Intellectual Property; (b) to the Company's Knowledge, there
is no infringement by third parties of any such Intellectual Property; (c) there
is  no  pending  or,  to  the  Company's  Knowledge,  threatened  action,  suit,
proceeding  or  claim  by others challenging the Company's and its Subsidiaries'
rights  in  or  to any such Intellectual Property, and the Company is unaware of
any  facts  which would form a reasonable basis for any such claim; (d) there is
no  pending  or, to the Company's Knowledge, threatened action, suit, proceeding
or  claim  by  others challenging the validity or scope of any such Intellectual
Property; and (e) there is no pending or, to the Company's Knowledge, threatened
action,  suit,  proceeding or claim by others that the Company and/or any of its
Subsidiaries  infringe  or  otherwise  violate any patent, trademark, copyright,
trade  secret  or other proprietary rights of others, and the Company is unaware
of  any  other  fact  which  would  form  a reasonable basis for any such claim.

          (s)     Insurance.  The  Company  and  the Subsidiaries are insured by
                  ---------
insurers  of  recognized  financial responsibility against such losses and risks
and  in such amounts as are prudent and customary in the businesses and location
in  which the Company and the Subsidiaries are engaged.  Neither the Company nor
any  Subsidiary  has  any Knowledge that it will be unable to renew its existing
insurance  coverage  for  the  Company  and  the  Subsidiaries  as and when such
coverage  expires  or to obtain similar coverage from similar insurers as may be
necessary  to  continue  its  business  without  a significant increase in cost.

          (t)     Transactions  With  Affiliates  and  Employees.  Except as set
                  ----------------------------------------------
forth  in  the  SEC  Reports  made  on  or prior to the date hereof, none of the
officers  or  directors  of the Company and, to the Company's Knowledge, none of
the  employees  of the Company, is presently a party to any transaction with the
Company or any Subsidiary or to a presently contemplated transaction (other than
for  services as employees, officers and directors) that would be required to be
disclosed  pursuant  to  Item  404  of  Regulation  S-K  promulgated  under  the
Securities  Act.

          (u)     Internal  Accounting  Controls.  The  Company  and  the
                  ------------------------------
Subsidiaries  maintain  a  system  of internal accounting controls sufficient to
provide  reasonable  assurance  that (i) transactions are executed in accordance
with  management's  general  or  specific  authorizations, (ii) transactions are
recorded  as  necessary  to  permit  preparation  of  financial  statements  in
conformity  with  GAAP  and  to  maintain  asset  accountability,

                                       13
<PAGE>
(iii) access to assets is permitted only in accordance with management's general
or  specific  authorization,  and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is  taken  with  respect  to  any  differences.

          (v)     Sarbanes-Oxley;  Disclosure  Controls.  The  Company  is  in
                  -------------------------------------
compliance  in  all  material  respects  with  all  of  the  provisions  of  the
Sarbanes-Oxley  Act  of  2002 which are applicable to it as of the Closing Date.
The  Company  has  established disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure  controls and procedures to ensure that material information relating
to  the  Company is made known to the certifying officers by others within those
entities,  particularly  during  the period in which the Company's most recently
filed  periodic  report under the Exchange Act is being prepared.  The Company's
certifying officers have evaluated the effectiveness of the Company's disclosure
controls  and  procedures  as  of  the end of the most recent periodic reporting
period  under  the Exchange Act (such date, the "Evaluation Date").  The Company
presented  in its most recently filed periodic report under the Exchange Act the
conclusions of the certifying officers about the effectiveness of the disclosure
controls  and  procedures  based on their evaluations as of the Evaluation Date.
Since  the  Evaluation  Date,  there  have  been  no  significant changes in the
Company's internal controls over financial reporting (as such term is defined in
Exchange  Act  Rules 13a-15(f) and 15d-15(f)) or, to the Company's Knowledge, in
other  factors  that  could  reasonably  be  expected  to  materially affect the
Company's  internal  controls  over  financial  reporting.

          (w)     Certain  Fees.  Except  for  the  fees and commissions payable
                  -------------
from the Company to the Placement Agent (the "Cash Placement Agent Fee") and the
Placement  Agent  Counsel Fee, with respect to the offer and sale of the Shares,
no  person  or entity will have, as a result of the transactions contemplated by
this  Agreement,  any valid right, interest or claim against or upon the Company
or  a  Purchaser  for  any commission, fee or other compensation pursuant to any
agreement,  arrangement  or  understanding  entered  into by or on behalf of the
Company.  The  Company  shall pay, and hold each Purchaser harmless against, any
liability,  loss  or expense (including, without limitation, attorneys' fees and
out-of-pocket  expenses)  arising in connection with any such right, interest or
claim.

          (x)     Private  Placement.     Assuming  the  accuracy  of  the
                  ------------------
Purchasers'  representations  and  warranties  set  forth in Section 3.2 of this
Agreement,  no  registration  under the Securities Act is required for the offer
and  sale  of  the Shares by the Company to the Purchasers under the Transaction
Documents.   Other  than  each  of  the  Purchasers  or as set forth in Schedule
                                                                        --------
3.1(x)  hereto,  no  Person  has  any  right  to cause the Company to effect the
------
registration  under  the  Securities  Act of any securities of the Company other
than  those  securities  which  are  currently  registered  on  an  effective
registration  statement  on  file  with  the  Commission.

          (y)     No  Directed Selling Efforts or General Solicitation.  Neither
                  ----------------------------------------------------
the  Company,  nor  any of its Affiliates, nor any Person acting on its or their
behalf  has  conducted  any  "general solicitation" or "general advertising" (as
those  terms  are  used in Regulation D) in connection with the offer or sale of
any  of  the  Shares.

          (z)     No  Integrated  Offering.  Assuming  the  accuracy  of  the
                  ------------------------
Purchasers' representations and warranties set forth in Section 3.2, neither the
Company,  its Subsidiaries nor any of their Affiliates, nor any Person acting on
its or their behalf has, directly or indirectly, at any time within the past six
months, made any offers or sales of any Company security or solicited any offers
to  buy  any  security  under  circumstances  that  would  (i)  eliminate  the
availability  of  the  exemption  from registration under Regulation D under the
Securities  Act  in  connection  with  the  offer and sale by the Company of the
Shares  as contemplated hereby or (ii) cause the offering of the Shares pursuant
to  the  Transaction  Documents  to  be  integrated  with prior offerings by the
Company  for  purposes of any applicable law, regulation or shareholder approval

                                       14
<PAGE>
provisions,  including,  without  limitation, under the rules and regulations of
any  Trading  Market on which any of the securities of the Company are listed or
designated.

          (aa)     Listing  and  Maintenance Requirements.  The Company's Common
                   --------------------------------------
Stock  is  registered  pursuant  to  Section  12(g) of the Exchange Act, and the
Company has taken no action designed to terminate the registration of the Common
Stock  under the Exchange Act nor has the Company received any notification that
the  Commission  is  contemplating  terminating  such  registration.  Except  as
specified  in  the  SEC Reports, the Company has not, in the two years preceding
the  date  hereof, received written notice  from any Trading Market on which the
Common  Stock  is or has been listed or quoted to the effect that the Company is
not  in  compliance with the listing or maintenance requirements of such Trading
Market.  The  Company  is,  and has no reason to believe that it will not in the
foreseeable  future  continue to be, in compliance in all material respects with
the  listing  and  maintenance  requirements for continued trading of the Common
Stock  on  the  Principal  Trading  Market.

          (bb)     Investment  Company.  Neither  the  Company  nor  any  of its
                   -------------------
Subsidiaries  is  required  to be registered as, and is not an Affiliate of, and
immediately  following  the  Closing  will  not  be  required to register as, an
"investment  company"  within the meaning of the Investment Company Act of 1940,
as  amended.

          (cc)     Questionable  Payments.  Neither  the  Company nor any of its
                   ----------------------
Subsidiaries,  nor,  to  the  Company's  Knowledge,  any  directors,  officers,
employees, agents or other Persons acting on behalf of the Company or any of its
Subsidiaries  has,  in  the  course  of  its  actions  for, or on behalf of, the
Company:  (a)  directly  or  indirectly,  used  any corporate funds for unlawful
contributions,  gifts,  entertainment  or  other  unlawful  expenses relating to
foreign or domestic political activity; (b) made any direct or indirect unlawful
payments  to  any  foreign or domestic governmental officials or employees or to
any foreign or domestic political parties or campaigns from corporate funds; (c)
violated  in any material respect any provision of the Foreign Corrupt Practices
Act  of  1977, as amended, or (d) made any other unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government  official  or  employee.

          (dd)     Application  of  Takeover  Protections.  The  Company and its
                   --------------------------------------
board  of  directors have taken all necessary action, if any, in order to render
inapplicable  any  control  share acquisition, business combination, poison pill
(including  any  distribution  under  a  rights  agreement)  or  other  similar
anti-takeover provision under the Company's charter documents or the laws of its
state  of  incorporation  that  is  or  could  reasonably  be expected to become
applicable  to  any  of  the  Purchasers  as  a result of the Purchasers and the
Company  fulfilling  their  obligations  or  exercising  their  rights under the
Transaction  Documents, including, without limitation, the Company's issuance of
the  Shares  and  the  Purchasers'  ownership  of  the  Shares.

          (ee)     Disclosure.  The  Company confirms that neither it nor any of
                   ----------
its officers or directors nor any other Person acting on its or their behalf has
provided,  and  it  has  not  authorized  the  Placement  Agent  to provide, any
Purchaser  with any information that it believes constitutes or could reasonably
be expected to constitute material, non-public information except insofar as the
existence,  provisions  and  terms of the Transaction Documents and the proposed
transactions  hereunder  may  constitute  such information, all of which will be
disclosed  by  the  Company  in the Press Release as contemplated by Section 4.6
hereof.  The  Company  understands and confirms that the Purchasers will rely on
the  foregoing  representations  in  effecting transactions in securities of the
Company.  All  disclosure  provided to the Purchasers regarding the Company, its
business  and  the  transactions contemplated hereby furnished by the Company or
authorized  by the Company and furnished by the Placement Agent on behalf of the
Company  (including  the  Company's  representations and warranties set forth in
this Agreement) are true and correct in all material respects and do not contain
any  untrue  statement  of  a  material  fact or omit to state any material fact
necessary  in  order  to  make  the  statements  made  therein,  in light of the
circumstances  under  which  they  were  made,  not  misleading.

                                       15
<PAGE>
No  event or circumstance has occurred or information exists with respect to the
Company  or  any  of  its  Subsidiaries  or  its  or their business, properties,
operations  or  financial  conditions,  which,  under  applicable  law,  rule or
regulation,  requires public disclosure or announcement by the Company but which
has  not been so publicly announced or disclosed, except for the announcement of
this  Agreement  and  related  transactions.

          (ff)     Off  Balance  Sheet  Arrangements.  There  is no transaction,
                   ---------------------------------
arrangement,  or other relationship between the Company and an unconsolidated or
other  off  balance sheet entity that is required to be disclosed by the Company
in  its  Exchange Act filings and is not so disclosed or that otherwise would be
reasonably  likely  to  have  a  Material  Adverse  Effect.

          (gg)     Consultation  with  Auditors.  The  Company has consulted its
                   ----------------------------
independent  auditors  concerning  the  accounting treatment of the transactions
contemplated  by  the  Transaction  Documents  and  in  connection therewith has
furnished  such  auditors  complete  copies  of  the Transaction Documents.  The
Company  intends  to  account  for  the gross proceeds raised from the financing
which  is  the  subject of this Agreement as equity in its financial statements.

          (hh)     No  Additional  Agreements.     The Company does not have any
                   --------------------------
agreement  or  understanding with any Purchaser with respect to the transactions
contemplated  by  the  Transaction  Documents  other  than  as  specified in the
Transaction  Documents.

     3.2     Representations  and  Warranties of the Purchasers.  Each Purchaser
             --------------------------------------------------
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company and the Placement Agent as
follows:

          (a)     Organization;  Authority.  Such  Purchaser  is  an entity duly
                  ------------------------
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction  of  its  organization  with the requisite corporate or partnership
power  and  authority  to  enter  into  and  to  consummate  the  transactions
contemplated  by the applicable Transaction Documents and otherwise to carry out
its  obligations  hereunder  and  thereunder.  The  execution,  delivery  and
performance by such Purchaser of the transactions contemplated by this Agreement
have  been  duly  authorized by all necessary corporate or, if such Purchaser is
not  a  corporation,  such  partnership,  limited  liability  company  or  other
applicable  like  action, on the part of such Purchaser.  Each of this Agreement
and  the Registration Rights Agreement has been duly executed by such Purchaser,
and  when  delivered  by  such  Purchaser  in accordance with terms hereof, will
constitute  the  valid  and  legally  binding  obligation  of  such  Purchaser,
enforceable  against  it  in  accordance  with  its  terms,  except  as  such
enforceability  may  be  limited  by  applicable  bankruptcy,  insolvency,
reorganization,  moratorium,  liquidation  or  similar  laws  relating  to,  or
affecting  generally  the  enforcement  of, creditors' rights and remedies or by
other  equitable  principles  of  general  application.

          (b)     Investment Intent.  Such Purchaser understands that the Shares
                  -----------------
are  "restricted  securities"  and have not been registered under the Securities
Act  or  any applicable state securities law and is acquiring the Shares for its
own account and not with a view to, or for distributing or reselling such Shares
or  any  part thereof in violation of the Securities Act or any applicable state
securities  laws, without prejudice, however, to such Purchaser's right, subject
to  the  provisions  of this Agreement and the Registration Rights Agreement, at
all  times  to  sell  or  otherwise  dispose  of  all or any part of such Shares
pursuant  to  an  effective  registration  statement under the Securities Act or
under  an  exemption  from  such  registration and in compliance with applicable
federal  and  state  securities  laws.  Such  Purchaser  is acquiring the Shares
hereunder  in  the  ordinary  course  of  its  business. Such Purchaser does not
presently  have  any  agreement,  plan or understanding, directly or indirectly,
with  any  Person  to distribute or effect any distribution of any of the Shares
(or  any  securities  which are derivatives thereof) to or through any person or
entity;  provided,  however,  that  by  making  the representations herein, such
Purchaser  does  not  agree  to hold any of the Shares for any minimum period of
time.

                                       16
<PAGE>
          (c)     Purchaser  Status.  At the time such Purchaser was offered the
                  -----------------
Shares, it was, and at the date hereof it is an "accredited investor" as defined
in  Rule  501(a)  under  the Securities Act.  Such Purchaser is not a registered
broker-dealer  under  Section  15  of  the  Exchange  Act.

          (d)     General Solicitation.  Such  Purchaser  is  not purchasing the
                  --------------------
Shares  as a result of any advertisement, article, notice or other communication
regarding  the  Shares  published in any newspaper, magazine or similar media or
broadcast  over  television  or  radio  or presented at any seminar or any other
general  advertisement.

          (e)     Experience of Such Purchaser.  Such Purchaser, either alone or
                  ----------------------------
together  with  its  representatives,  has  such  knowledge,  sophistication and
experience  in  business and financial matters so as to be capable of evaluating
the  merits  and  risks  of the prospective investment in the Shares, and has so
evaluated  the  merits  and risks of such investment.  Such Purchaser is able to
bear  the economic risk of an investment in the Shares and, at the present time,
is  able  to  afford  a  complete  loss  of  such  investment.

          (f)     Access  to  Information.  Such  Purchaser acknowledges that it
                  -----------------------
has had the opportunity to review the Disclosure Materials and has been afforded
(i)  the opportunity to ask such questions as it has deemed necessary of, and to
receive  answers  from,  representatives of the Company concerning the terms and
conditions  of  the offering of the Shares and the merits and risks of investing
in  the  Shares;  (ii)  access  to  information  (other than material non-public
information)  about  the  Company  and  the  Subsidiaries  and  their respective
financial condition, results of operations, business, properties, management and
prospects  sufficient  to  enable  it  to evaluate its investment; and (iii) the
opportunity  to obtain such additional information that the Company possesses or
can  acquire without unreasonable effort or expense that is necessary to make an
informed  investment  decision  with  respect  to  the  investment. Neither such
inquiries  nor  any  other  investigation  conducted  by  or  on  behalf of such
Purchaser  or  its representatives or counsel shall modify, amend or affect such
Purchaser's  right  to  rely  on  the  truth,  accuracy  and completeness of the
Disclosure  Materials and the Company's representations and warranties contained
in  the  Transaction  Documents.

          (g)     Certain  Trading  Activities.  Other  than  with  respect  to
                  ----------------------------
the transactions contemplated herein, since the earlier to occur of (1) the time
that  such  Purchaser was first contacted by the Company, the Placement Agent or
any  other  Person  regarding  this  investment in the Company and (2) the tenth
(10th)  day  prior  to the date of this Agreement, neither the Purchaser nor any
Affiliate  of  such  Purchaser  which  (x)  had  knowledge  of  the transactions
contemplated  hereby,  (y) has or shares discretion relating to such Purchaser's
investments  or  trading or information concerning such Purchaser's investments,
including  in  respect  of  the  Shares,  and (z) is subject to such Purchaser's
review  or  input  concerning  such  Affiliate's  investments  or  trading
(collectively,  "Trading  Affiliates")  has  directly or indirectly, nor has any
Person  acting on behalf of or pursuant to any understanding with such Purchaser
or  Trading  Affiliate,  effected  or  agreed  to effect any transactions in the
securities  of  the  Company  (including,  without  limitation,  any Short Sales
involving  the Company's securities). Notwithstanding the foregoing, in the case
of a Purchaser and/or Trading Affiliate that is, individually or collectively, a
multi-managed  investment  vehicle  whereby  separate  portfolio managers manage
separate  portions  of  such  Purchaser's  or Trading Affiliate's assets and the
portfolio  managers have no direct knowledge of the investment decisions made by
the  portfolio  managers  managing other portions of such Purchaser's or Trading
Affiliate's  assets,  the  representation  set forth above shall apply only with
respect  to  the  portion  of  assets managed by the portfolio manager that have
knowledge about the financing transaction contemplated by this Agreement.  Other
than to other Persons party to this Agreement, such Purchaser has maintained the
confidentiality  of  all  disclosures  made  to  it  in  connection  with  this
transaction  (including  the  existence  and  terms  of  this  transaction).
Notwithstanding  the  foregoing, no Purchaser makes any representation, warranty
or  covenant  hereby that it will not engage in Short Sales in the securities of
the  Company after the time that the transactions contemplated by this Agreement
are  first  publicly  announced  as  described  in  Section  4.6.

                                       17
<PAGE>
          (h)     Brokers  and Finders.  No Person will have, as a result of the
                  --------------------
transactions  contemplated by this Agreement, any valid right, interest or claim
against  or  upon  the Company or any Purchaser for any commission, fee or other
compensation  pursuant  to  any  agreement, arrangement or understanding entered
into  by  or  on  behalf  of  the  Purchaser.

          (i)     Independent  Investment  Decision.  Such  Purchaser  has
                  ---------------------------------
independently  evaluated  the merits of its decision to purchase Shares pursuant
to the Transaction Documents, and such Purchaser confirms that it has not relied
on  the  advice of any other Purchaser's business and/or legal counsel in making
such decision.  Such Purchaser understands that nothing in this Agreement or any
other  materials  presented  by  or on behalf of the Company to the Purchaser in
connection  with the purchase of the Shares constitutes legal, tax or investment
advice.  Such Purchaser has consulted such legal, tax and investment advisors as
it,  in  its  sole discretion, has deemed necessary or appropriate in connection
with  its purchase of the Shares.  Such Purchaser understands that the Placement
Agent  has  acted  solely  as  the agent of the Company in this placement of the
Shares  and such Purchaser has not relied on the business or legal advice of the
Placement  Agent  or  any  of  its  agents,  counsel or Affiliates in making its
investment  decision  hereunder, and confirms that none of such Persons has made
any  representations  or  warranties  to  such  Purchaser in connection with the
transactions  contemplated  by  the  Transaction  Documents.  Such  Purchaser
acknowledges  and  agrees  that  it has not asked for, and has not received, any
advice  from  Placement  Agent  Counsel  with  respect  to this Agreement or the
transactions  contemplated  hereby.

          (j)     Reliance  on  Exemptions.  Such Purchaser understands that the
                  ------------------------
Shares  being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that  the  Company  is  relying in part upon the truth and accuracy of, and such
Purchaser's  compliance  with,  the  representations,  warranties,  agreements,
acknowledgements  and understandings of such Purchaser set forth herein in order
to  determine  the  availability  of such exemptions and the eligibility of such
Purchaser  to  acquire  the  Shares.

          (k)     No  Governmental  Review.  Such  Purchaser understands that no
                  ------------------------
United  States  federal  or state agency or any other government or governmental
agency  has passed on or made any recommendation or endorsement of the Shares or
the  fairness  or  suitability  of  the  investment  in the Shares nor have such
authorities  passed  upon  or endorsed the merits of the offering of the Shares.

The  Company  acknowledges  and  agrees  that no Purchaser has made or makes any
representations  or  warranties  with  respect  to the transactions contemplated
hereby  other  than  those  specifically  set  forth  in  this  Section  3.2.

                                   ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

     4.1     (a)     Compliance  with Laws.  Notwithstanding any other provision
                     ---------------------
of  this Article IV, each Purchaser covenants that the Shares may be disposed of
only  pursuant  to  an effective registration statement under, and in compliance
with  the  requirements  of,  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 compliance with any applicable state
and  federal  securities  laws.  In  connection  with any transfer of the Shares
other  than  (i)  pursuant  to  an effective registration statement, (ii) to the
Company,  (iii)  to  an  Affiliate  of  a  Purchaser,  (iv) pursuant to Rule 144
(provided that the Purchaser provides the Company with reasonable assurances (in
the  form  of  seller  and broker representation letters) that the Shares may be
sold pursuant to such rule, (v) pursuant to Rule 144(k) following the applicable
holding  period or (vi) in connection with a bona fide pledge as contemplated in
Section  4.1(b),  except  as  otherwise  provided  herein,  the  Company  may

                                       18
<PAGE>
require  the  transferor thereof to provide to the Company an opinion of counsel
selected  by  the  transferor and reasonably acceptable to the Company, the form
and  substance of which opinion shall be reasonably satisfactory to the Company,
to  the  effect  that  such  transfer  does  not  require  registration  of such
transferred  Shares  under  the Securities Act.  As a condition of transfer, any
such  transferee  shall  agree  in  writing  to  be  bound  by the terms of this
Agreement  and shall have the rights of a Purchaser under this Agreement and the
Registration  Rights  Agreement.

          (b)     Legends.  Certificates  evidencing  the  Shares shall bear any
                  -------
legend  as required by the "blue sky" laws of any state and a restrictive legend
in  substantially  the  following form, until such time as they are not required
under  Section  4.1(c):

          NEITHER  THESE  SECURITIES  NOR  THE  SECURITIES  ISSUABLE  UPON
          EXERCISE  OF  THESE SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES
          HAVE  NOT 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
          OR  BLUE  SKY  LAWS  AS  SATISFACTORY  TO  THE  COMPANY.

          The  Company acknowledges and agrees that a Purchaser may from time to
time  pledge,  and/or  grant a security interest in, some or all of the legended
Shares  in  connection  with applicable securities laws, pursuant to a bona fide
margin  agreement  in  compliance  with  a bona fide margin loan.  Such a pledge
would  not be subject to approval or consent of the Company and no legal opinion
of  legal  counsel to the pledgee, secured party or pledgor shall be required in
connection  with  the  pledge,  but  such  legal  opinion  shall  be required in
connection  with  a  subsequent transfer or foreclosure following default by the
Purchaser transferee of the pledge.  No notice shall be required of such pledge,
but  Purchaser's  transferee  shall  promptly  notify  the  Company  of any such
subsequent  transfer  or  foreclosure.  Each  Purchaser  acknowledges  that  the
Company  shall  not  be responsible for any pledges relating to, or the grant of
any  security interest in, any of the Shares or for any agreement, understanding
or  arrangement  between any Purchaser and its pledgee or secured party.  At the
applicable  Purchaser's  expense,  the  Company  will  execute  and deliver such
reasonable  documentation as a pledgee or secured party of Shares may reasonably
request  in  connection  with  a pledge or transfer of the Shares, including the
preparation  and  filing  of  any  required  prospectus  supplement  under  Rule
423(b)(3)  of the Securities Act or other applicable provision of the Securities
Act  to  appropriately  amend the list of Selling Stockholders thereunder.  Each
Purchaser  acknowledges and agrees that, except as otherwise provided in Section
4.1(c),  any  Shares subject to a pledge or security interest as contemplated by
this  Section 4.1(b) shall continue to bear the legend set forth in this Section
4.1(b)  and  be  subject  to  the  restrictions on transfer set forth in Section
4.1(a).

          (c)     Removal  of  Legends.  The  legend set forth in Section 4.1(b)
                  --------------------
above  shall  be  removed and the Company shall issue a certificate without such
legend  to  the  holder  of the Shares upon which it is stamped or issue to such
holder  by  electronic  delivery  at  the  applicable  balance  account  at  The
Depository  Trust  Company ("DTC"), if (i) such Shares are registered for resale
under  the  Securities Act, (ii) such Shares are sold or transferred pursuant to
Rule  144  (assuming the transferor is not an Affiliate of the Company, or (iii)
such  Shares  are  eligible for sale under Rule 144(k).  The Company shall cause
its  counsel  to issue the legal opinion referred to in the Irrevocable Transfer
Agent  Instructions  to the Company's transfer agent on the Effective Date.  Any
fees  (with  respect to the Transfer Agent, counsel to the Company or otherwise)

                                       19
<PAGE>
associated with the issuance of such opinion or the removal of such legend shall
be borne by the Company.  The Company shall not make any notation on its records
or  give  instructions  to  the  Transfer Agent that enlarge the restrictions on
transfer  set  forth  in  this  Section.

          (d)     Irrevocable  Transfer  Agent  Instructions.  The Company shall
                  ------------------------------------------
issue  irrevocable  instructions  to  its  transfer  agent,  and  any subsequent
transfer agent, to issue certificates or credit shares to the applicable balance
accounts  at  DTC,  registered  in  the name of each Purchaser or its respective
nominee(s),  for  the  Shares  in such amounts as specified from time to time by
each  Purchaser  to  the  Company  in the form of Exhibit E attached hereto (the
                                                  ---------
"Irrevocable  Transfer  Agent  Instructions").  The  Company  warrants  that  no
 ------------------------------------------
instruction  other  than the Irrevocable Transfer Agent Instructions referred to
in  this  Section  4.1(d)  will be given by the Company to its transfer agent in
connection  with  this  Agreement, and that the Shares shall otherwise be freely
transferable  on  the  books  and  records  of  the Company as and to the extent
provided  in  this  Agreement  and  the other Transaction Documents. The Company
acknowledges  that  a  breach by it of its obligations under this Section 4.1(d)
will  cause  irreparable  harm  to  a  Purchaser.  Accordingly,  the  Company
acknowledges  that  the remedy at law for a breach of its obligations under this
Section  4.1(d)  will  be  inadequate  and  agrees,  in the event of a breach or
threatened  breach by the Company of the provisions of this Section 4.1(d), that
a  Purchaser  shall be entitled, in addition to all other available remedies, to
an  order  and/or  injunction  restraining  any  breach  and requiring immediate
issuance  and  transfer,  without  the  necessity  of  showing economic loss and
without  any  bond  or  other  security  being  required.

          (e)     Acknowledgement.  Each  Purchaser  hereunder  acknowledges its
                  ---------------
primary  responsibilities under the Securities Act and accordingly will not sell
the  Shares  or  any interest therein without complying with the requirements of
the  Securities  Act.  While the above-referenced registration statement remains
effective,  each  Purchaser hereunder may sell the shares in accordance with the
plan  of  distribution contained in the registration statement and if it does so
it  will  comply therewith and with the related prospectus delivery requirements
unless  an  exemption therefrom is available.  Each Purchaser, severally and not
jointly  with the other Purchasers, agrees that if it is notified by the Company
at  any  time  after  the  date any legend is removed pursuant to Section 4.1(c)
                                                                  --------------
hereof  that  the registration statement registering the resale of the Shares is
not  effective or that the prospectus included in such registration statement no
longer  complies  with the requirements of Section 10 of the Securities Act, the
Purchaser  will  refrain  from  selling  such  Shares and until such time as the
Purchaser  is  notified  by  the  Company  that  such  registration statement is
effective  or  such prospectus is compliant with Section 10 of the Exchange Act,
unless  such  Purchaser  is  able  to, and does, sell such Shares pursuant to an
available  exemption  from  the  registration  requirements  of Section 5 of the
Securities  Act.  Both  the Company and its transfer agent, and their respective
directors,  officers,  employees and agents, may rely on this subsection (e) and
each  Purchaser  hereunder will indemnify and hold harmless each of such persons
from  any  breaches  or  violations  of  this  paragraph.

          (f)     Buy-In.  If  the  Company  shall fail for any reason or for no
                  ------
reason  to issue to the holder of the Shares within three (3) Trading Days after
the  occurrence  of  any  of (c)(i) through (c)(iii) above a certificate without
such  legend  to the holder or to issue such Shares to such holder by electronic
delivery  at  the  applicable  balance  account  at DTC, and if on or after such
Trading  Date  the  Purchaser  purchases  (in  an  open  market  transaction  or
otherwise)  shares  of  Common Stock to deliver in satisfaction of a sale by the
Purchaser  of  shares  of  Common Stock that the Purchaser anticipated receiving
from  the  Company without any restrictive legend (a "Buy-In"), then the Company
shall,  within  three  (3) Trading Days after the Purchaser's request and in the
Purchaser's  sole  discretion, either (i) pay cash to the Purchaser in an amount
equal  to the Purchaser's total purchase price (including brokerage commissions,
if  any)  for  the  shares of Common Stock so purchased (the "Buy-In Price"), at
which point the Company's obligation to deliver such certificate shall terminate
and  such  shares  shall  be cancelled, or (ii) promptly honor its obligation to
deliver  to the Purchaser a certificate or certificates representing such number
of  shares  of  Common  Stock  that would have been issued if the Company timely
complied  with  its  obligations  hereunder  and  pay  cash  to

                                       20
<PAGE>
Purchaser in an amount equal to the excess (if any) of the Buy-In Price over the
product  of  (a)  such  number  of  shares  of Common Stock that the Company was
required to deliver to the Purchaser on the Delivery Date, multiplied by (b) the
closing  bid  price  of the Common Stock on the date of the event giving rise to
the  Company's  obligation  to  deliver  such  certificate,  as the case may be.

     4.2     Reservation  of Common Stock.  The Company shall maintain a reserve
             ----------------------------
from  its  duly  authorized  shares of Common Stock for issuance pursuant to the
Transaction  Documents  in  such  amount  as  may  be  required  to  fulfill its
obligations  in  full under the Transaction Documents.  In the event that at any
time the then authorized shares of Common Stock are insufficient for the Company
to  satisfy its obligations in full under the Transaction Documents, the Company
shall  promptly  take  such actions as may be required to increase the number of
authorized  shares.

     4.3     Furnishing  of  Information.  As  long  as  any  Purchaser owns the
             ---------------------------
Shares,  the  Company  covenants to timely file (or obtain extensions in respect
thereof  and file within the applicable grace period) all reports required to be
filed  by  the  Company  after the date hereof pursuant to the Exchange Act.  As
long  as  any  Purchaser  owns  Shares,  if  the Company is not required to file
reports pursuant to such laws, it will prepare and furnish to the Purchasers and
make  publicly  available  in accordance with Rule 144(c) such information as is
required  for  the  Purchasers  to  sell  the Shares under Rule 144. The Company
further  covenants that it will take such further action as any holder of Shares
may  reasonably  request, all to the extent required from time to time to enable
such  Person  to  sell  the Shares without registration under the Securities Act
within  the  limitation  of  the  exemptions  provided  by  Rule  144.

     4.4     No  Integration.  The  Company  shall  not,  and shall use its best
             ---------------
efforts  to  ensure that no Affiliate of the Company shall, sell, offer for sale
or  solicit  offers to buy or otherwise negotiate in respect of any security (as
defined  in  Section  2  of the Securities Act) that will be integrated with the
offer  or  sale  of  the  Shares in a manner that would require the registration
under  the  Securities  Act of the sale of the Shares to the Purchasers, or that
will  be  integrated  with  the  offer or sale of the Shares for purposes of the
rules  and  regulations  of  any  Trading  Market  such  that  it  would require
shareholder  approval  prior  to  the  closing  of such other transaction unless
shareholder  approval  is  obtained  before  the  closing  of  such  subsequent
transaction.

     4.5     Subsequent  Registrations.  Other than pursuant to the Registration
             -------------------------
Statement, prior to the date occurring sixty (60) days after the Effective Date,
the  Company  shall not file any registration statement (other than on Form S-8)
or,  in  connection  with  an acquisition, on Form S-4) with the Commission with
respect  to  any  securities  of  the  Company.

     4.6     Securities  Laws  Disclosure;  Publicity.  By  9:00 a.m.  (New York
             ----------------------------------------
City  time)  on  the  Trading  Day  immediately  following the execution of this
Agreement,  the  Company  shall  issue  a  press  release  (the "Press Release")
                                                                 -------------
reasonably  acceptable  to  the Placement Agent disclosing all material terms of
the  transactions  contemplated  hereby.  On  or before 9:00 a.m. (New York City
time)  on  the  Trading  Day following the Closing Date, the Company will file a
Current  Report  on  Form  8-K  with  the Commission describing the terms of the
Transaction  Documents (and including as exhibits to such Current Report on Form
8-K  the  material  Transaction  Documents  (including, without limitation, this
Agreement  and  the  Registration  Rights  Agreement)).  Notwithstanding  the
foregoing,  the Company shall not publicly disclose the name of any Purchaser or
an  Affiliate  of  any  Purchaser,  or  include  the name of any Purchaser or an
Affiliate  of  any  Purchaser in any press release or filing with the Commission
(other  than  the  Registration  Statement)  or any regulatory agency or Trading
Market,  without  the  prior  written  consent  of such Purchaser, except to the
extent  such  disclosure  is  required  by  law,  request  of  the  Staff of the
Commission  or  Trading  Market regulations.  From and after the issuance of the
Press  Release,  no Purchaser shall be in possession of any material, non-public
information  received  from  the  Company, any of its Subsidiaries or any of its
respective  officers,  directors,  employees or agents, that is not disclosed in
the  Press  Release.  The  Company  shall  not,

                                       21
<PAGE>
and  shall cause each of its Subsidiaries and each of their respective officers,
directors,  employees  and  agents,  not  to,  provide  any  Purchaser  with any
material,  non-public  information  regarding  the  Company  or  any  of  its
Subsidiaries  from and after the filing of the Press Release without the express
written  consent  of  such Purchaser.  In the event of a breach of the foregoing
covenant  by  the  Company,  and  provided  that  the  Company shall have failed
(following  proper  written  request  therefor)  to  make  an appropriate public
disclosure  promptly  following  such  written  request  consistent  with  the
requirements  of  Regulation  FD,  any  Subsidiary,  or each of their respective
officers,  directors,  employees  and  agents,  in  addition to any other remedy
provided  herein  or  in  the  Transaction Documents, a Purchaser shall have the
right  to  make  a  public  disclosure,  in  the form of a press release, public
advertisement  or otherwise, of such material non-public information without the
prior  approval  by  the  Company,  its  Subsidiaries,  or  any  of its or their
respective  officers,  directors,  employees or agents.  No Purchaser shall have
any  liability  to  the  Company,  its  Subsidiaries, or any of their respective
officers,  directors,  employees  or  agents  for  any  such  disclosure.  Each
Purchaser,  severally  and not jointly with the other Purchasers, covenants that
until  such time as the transactions contemplated by this Agreement are publicly
disclosed  by  the  Company  as  described  in  Section 4.6, such Purchaser will
maintain  the  confidentiality  of all disclosures made to it in connection with
this  transaction  (including  the  existence  and  terms  of this transaction).

     4.7     Indemnification.
             ----------------

          (a)     Indemnification  of  Purchasers.  In addition to the indemnity
                  -------------------------------
provided  in  the  Registration Rights Agreement, the Company will indemnify and
hold  the  Purchasers  and  their  Affiliates  and  their  respective directors,
officers, shareholders, partners, members, managers, employees and agents (each,
a "Purchaser Party") harmless from any and all losses, liabilities, obligations,
claims,  contingencies,  damages,  costs  and expenses, including all judgments,
amounts  paid  in  settlements,  court  costs and reasonable attorneys' fees and
costs  of  investigation (collectively, "Losses"), that any such Purchaser Party
may  suffer or incur as a result of or relating to any misrepresentation, breach
or inaccuracy of any representation, warranty, covenant or agreement made by the
Company  in  any  Transaction  Document.  In addition to the indemnity contained
herein, the Company will reimburse each Purchaser Party for its reasonable legal
and  other  expenses  (including  the cost of any investigation, preparation and
travel  in  connection  therewith)  incurred  in  connection  therewith, as such
expenses  are  incurred.  If  and  to  the  extent  that such indemnification is
unenforceable for any reason, the Company shall make the maximum contribution to
the  payment  and  satisfaction of such losses permissible under applicable law.

          (b)     Conduct  of  Indemnification  Proceedings.  Promptly  after
                  -----------------------------------------
receipt  by any Person (the "Indemnified Person") of notice of any demand, claim
or  circumstances  which would or might give rise to a claim or the commencement
of  any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 4.7(a), such Indemnified Person shall promptly notify
                   --------------
the  Company  in  writing  and  the  Company  shall  assume the defense thereof,
including  the employment of counsel reasonably satisfactory to such Indemnified
Person,  and  shall  assume  the  payment  of  all  fees and expenses; provided,
                                                                       --------
however,  that  the  failure  of any Indemnified Person so to notify the Company
-------
shall  not relieve the Company of its obligations hereunder except to the extent
that  the  Company  is  actually  and  materially  prejudiced by such failure to
notify.  In  any such proceeding, any Indemnified Person shall have the right to
retain  its  own  counsel, but the fees and expenses of such counsel shall be at
the  expense  of  such  Indemnified  Person  unless:  (i)  the  Company  and the
Indemnified  Person shall have mutually agreed to the retention of such counsel;
or  (ii)  in  the  reasonable  judgment  of  counsel to such Indemnified Person,
representation of both parties by the same counsel would be inappropriate due to
actual  or potential differing interests between them.  The Company shall not be
liable  for  any  settlement  of  any  proceeding  effected  without its written
consent,  which  consent  shall  not  be  unreasonably  withheld,  delayed  or
conditioned.  Without the prior written consent of the Indemnified Person, which
consent  shall not be unreasonably withheld, delayed or conditioned, the Company
shall  not  effect  any  settlement  of  any pending or threatened proceeding in
respect  of  which  any  Indemnified  Person  is  or could have been a party and
indemnity  could  have  been  sought  hereunder  by  such  Indemnified

                                       22
<PAGE>
Party,  unless  such  settlement  includes  an  unconditional  release  of  such
Indemnified  Person  from  all  liability  arising  out  of  such  proceeding.

     4.8     Listing of Shares.  Promptly following the date hereof, the Company
             -----------------
shall  take  all  necessary action to cause the Shares to be listed upon the OTC
Bulletin  Board.  Further,  if  the  Company applies to have its Common Stock or
other  securities  listed  on any other Trading Market, it shall include in such
application  the Shares and will take such other action as is necessary to cause
the Shares to be listed on such other Trading Market as promptly as practicable.

     4.9     Use  of Proceeds.  The Company intends to use the net proceeds from
             ----------------
the  sale  of  the  Shares  hereunder  for working capital and general corporate
purposes  and  not  to redeem any Common Stock or Common Stock Equivalents or to
settle  any  outstanding  Action.

     4.10     Short  Sales  and  Confidentiality  After  The  Date Hereof.  Such
              -----------------------------------------------------------
Purchaser  shall  not,  and  shall  cause its Trading Affiliates not to, engage,
directly  or  indirectly,  in  any transactions in the securities of the Company
(including,  without  limitation,  any  Short  Sales)  involving  the  Company's
securities  during  the  period  from  the date hereof until one (1) Trading Day
after such time as (i) the transactions contemplated by this Agreement are first
publicly  announced  as  described  in  Section  4.6  or  (ii) this Agreement is
terminated  in full pursuant to Section 6.18.  Notwithstanding the foregoing, in
the  case  of  a  Purchaser  that  is a multi-managed investment vehicle whereby
separate  portfolio managers manage separate portions of such Purchaser's assets
and  the portfolio managers have no direct knowledge of the investment decisions
made  by  the  portfolio  managers  managing  other portions of such Purchaser's
assets,  the representation set forth above shall apply only with respect to the
portion of assets managed by the portfolio manager that have knowledge about the
financing  transaction  contemplated  by  this  Agreement.  Each  Purchaser
understands  and  acknowledges,  severally  and  not  jointly  with  any  other
Purchaser,  that  the  Commission  currently  takes the position that covering a
short  position  established  prior  to  effectiveness  of a resale registration
statement  with  shares  included  in  such  registration  statement  would be a
violation of Section 5 of the Securities Act, as set forth in Item 65, Section 5
under  Section A, of the Manual of Publicly Available Telephone Interpretations,
dated  July  1997,  compiled  by  the  Office  of  Chief  Counsel,  Division  of
Corporation  Finance.

     4.11     Certain  Adjustments.
              --------------------

          (a)     Except  with  respect  to  Excluded  Issuances, if at any time
during  the  Full-Ratchet  Period,  the  Company shall issue or sell or agree to
issue  or  sell  any  shares  of Common Stock or Common Stock Equivalents to any
Person  for a price per share (as determined in accordance with Section 4.11(b))
less than the Purchase Price (the "Lower Per Share Purchase Price"), then and in
each  such  case  (a "Trigger Issuance"), the Company shall issue, in connection
with  such  Trigger  Issuance,  a number of additional shares of Common Stock to
each  Purchaser  equal to the difference of (A) the quotient of such Purchaser's
Subscription  Amount  divided  by  the  Lower  Per  Share  Price in such Trigger
Issuance,  minus  (B)  the  number  of  shares  of  Common  Stock issued to such
           -----
Purchaser  on the Closing Date.  The price per share at which the Company issues
or  sells  or  agrees  to  issue  or sell shares of Common Stock or Common Stock
Equivalents  shall  be  determined  in accordance with the provisions of Section
4.11(b).  For  the  avoidance of doubt, the issuance of Common Stock Equivalents
(and  not the actual conversion or exercise of such Common Stock Equivalent into
shares  of  Common Stock) is the event that gives rise to the issuance of shares
under  this Section 4.11.  Promptly after each Trigger Issuance (but in no event
more than two (2) Business Days thereafter), the Company shall issue irrevocable
instructions  authorizing  its transfer agent to issue the Common Stock required
by  this  Section  4.11.

          (b)     For  purposes  of this Section 4.11, the following subsections
(b)(l) to (b)(4) shall apply:

                                       23
<PAGE>
          (b)(1)  Issuance of Rights or Options. In case at any time the Company
     shall  in  any  manner grant (directly and not by assumption in a merger or
     otherwise) any warrants or other rights to subscribe for or to purchase, or
     any  options  for  the  purchase  of, Common Stock or any stock or security
     convertible into or exchangeable for Common Stock (such warrants, rights or
     options  being  called "Options" and such convertible or exchangeable stock
     or  securities  being  called "Convertible Securities") whether or not such
     Options or the right to convert or exchange any such Convertible Securities
     are  immediately  exercisable,  then  the  price per share for which Common
     Stock  is issuable upon the exercise of such Options or upon the conversion
     or  exchange of such Convertible Securities shall be determined by dividing
     (i)  the  sum  (which sum shall constitute the applicable consideration) of
     (x)  the  total  amount,  if  any, received or receivable by the Company as
     consideration  for  the  granting  of  such Options, plus (y) the aggregate
     amount of additional consideration payable to the Company upon the exercise
     of  all such Options, plus (z), in the case of such Options which relate to
     Convertible  Securities,  the aggregate amount of additional consideration,
     if  any,  payable upon the issue or sale of such Convertible Securities and
     upon  the  conversion or exchange thereof, by (ii) the total maximum number
     of  shares  of  Common  Stock issuable upon the exercise of such Options or
     upon the conversion or exchange of all such Convertible Securities issuable
     upon  the  exercise  of  such  Options.

          (b)(2)  Issuance  of Convertible Securities. In case the Company shall
     in  any  manner  issue  (directly  and  not  by  assumption  in a merger or
     otherwise) or sell any Convertible Securities, whether or not the rights to
     exchange  or  convert  any  such  Convertible  Securities  are  immediately
     exercisable,  then  the  price per share for which Common Stock is issuable
     upon  such  conversion  or exchange shall be determined by dividing (i) the
     sum  (which  sum  shall constitute the applicable consideration) of (x) the
     total amount received or receivable by the Company as consideration for the
     issue or sale of such Convertible Securities, plus (y) the aggregate amount
     of  additional  consideration,  if  any,  payable  to  the Company upon the
     conversion  or  exchange  thereof,  by  (ii)  the total number of shares of
     Common  Stock  issuable  upon  the  conversion  or  exchange  of  all  such
     Convertible  Securities).

          (b)(3)  Stock  Dividends. In case the Company shall declare a dividend
     or  make  any  other distribution upon any stock of the Company (other than
     the  Common  Stock)  payable  in  Common  Stock,  Options  or  Convertible
     Securities,  then  any  Common Stock, Options or Convertible Securities, as
     the case may be, issuable in payment of such dividend or distribution shall
     be  deemed  to  have  been  issued  or  sold  for  $0.01  per  share.

          (b)(4)  Consideration  for  Stock. In case any shares of Common Stock,
     Options  or  Convertible  Securities  shall be issued or sold for cash, the
     consideration  received  therefor  shall  be  deemed to be the gross amount
     received  by  the  Company  therefor,  before  deduction  therefrom  of any
     expenses  incurred  or  any underwriting commissions or concessions paid or
     allowed  by  the  Company  in  connection  therewith. In case any shares of
     Common  Stock,  Options  or  Convertible  Securities  shall  be

                                       24
<PAGE>
     issued  or  sold  for  a  consideration  other than cash, the amount of the
     consideration other than cash received by the Company shall be deemed to be
     the  fair  value  of  such consideration as determined in good faith by the
     Board  of  Directors  of  the  Company,  before  deduction  of any expenses
     incurred  or any underwriting commissions or concessions paid or allowed by
     the Company in connection therewith. In case any Options shall be issued in
     connection  with  the  issue  and  sale of other securities of the Company,
     together  comprising  one  integral  transaction  in  which  no  specific
     consideration  is  allocated  to  such Options by the parties thereto, such
     Options  shall  be  deemed  to  have  been issued for such consideration as
     determined  in  good  faith  by  the  Board of Directors of the Company. If
     Common  Stock, Options or Convertible Securities shall be issued or sold by
     the  Company  and,  in  connection  therewith, other Options or Convertible
     Securities  (the  "Additional  Rights")  are issued, then the consideration
     received  or  deemed  to be received by the Company shall be reduced by the
     fair  market  value  of  the  Additional  Rights  (as  determined using the
     Black-Scholes  option pricing model or another method mutually agreed to by
     the  Company  and  the  Purchasers).  The Board of Directors of the Company
     shall  respond  promptly, in writing, to an inquiry by the Purchasers as to
     the fair market value of the Additional Rights. In the event that the Board
     of Directors of the Company and the Purchasers are unable to agree upon the
     fair  market value of the Additional Rights, the Company and the Purchasers
     shall  jointly select an appraiser, who is experienced in such matters. The
     decision  of  such appraiser shall be final and conclusive, and the cost of
     such  appraiser  shall  be  borne evenly by the Company and the Purchasers.

                                   ARTICLE V.
                         CONDITIONS PRECEDENT TO CLOSING

     5.1     Conditions  Precedent  to  the  Obligations  of  the  Purchasers to
             -------------------------------------------------------------------
Purchase  Shares.  The  obligation  of  each  Purchaser to acquire Shares at the
----------------
Closing  is  subject  to  the fulfillment to such Purchase's satisfaction, on or
prior to the Closing Date, of each of the following conditions, any of which may
be  waived  by  such  Purchaser  (as  to  itself  only):

          (a)     Representations  and  Warranties.  The  representations  and
                  --------------------------------
warranties  of  the  Company  contained  herein shall be true and correct in all
material respects (except to the extent that any such representation or warranty
is  already qualified by materiality, in which case it shall be true and correct
in  all respects) as of the date when made and as of the Closing Date, as though
made  on  and  as  of  such  date;.

          (b)     Performance.  The  Company and each other Purchaser shall have
                  -----------
performed,  satisfied  and complied in all material respects with all covenants,
agreements and conditions required by the Transaction Documents to be performed,
satisfied  or  complied  with  by  it  at  or  prior  to  the  Closing;

          (c)     No Injunction.  No statute, rule, regulation, executive order,
                  -------------
decree,  ruling  or  injunction shall have been enacted, entered, promulgated or
endorsed  by  any court or governmental authority of competent jurisdiction that
prohibits  the  consummation  of  any  of  the  transactions contemplated by the
Transaction  Documents;

          (d)     Consents.  The Company shall have obtained in a timely fashion
                  --------
any and all consents, permits, approvals, registrations and waivers necessary or
appropriate  for  consummation  of  the  purchase and sale of the Shares, all of
which  shall  be  and  remain  so  long  as  necessary in full force and effect;

          (e)     Adverse  Changes.  Since  the  date  of  execution  of  this
                  ----------------
Agreement,  no  event  or  series  of events shall have occurred that reasonably
could  have  or  result  in  a  Material  Adverse  Effect;

          (f)     No  Suspensions  of Trading in Common Stock; Listing.  Trading
                  ----------------------------------------------------
in  the  Common  Stock  shall  not  have been suspended by the Commission or any
Trading  Market  (except  for  any  suspensions  of trading of not more than one
Trading Day solely to permit dissemination of material information regarding the
Company)  at  any  time  since  the date of execution of this Agreement, and the
Common  Stock shall have been at all times since such date listed for trading on
a  Trading  Market;

          (g)     Company  Deliverables.  The  Company  shall have delivered the
                  ---------------------
Company  Deliverables  in  accordance  with  Section  2.2(a);

                                       25
<PAGE>
          (h)     Compliance  Certificate.  The  Company shall have delivered to
                  -----------------------
each  Purchaser  a  certificate,  dated as of the Closing Date and signed by its
Chief  Executive Officer or its Chief Financial Officer, dated as of the Closing
Date,  certifying  to  the  fulfillment  of the conditions specified in Sections
5.1(a),  (b),  (c),  (d)  and  (f);

          (i)     Lock-Up.  Each  of  the  Persons  identified on Schedule F has
                  -------                                         ----------
executed  and  delivered  to  the  Placement  Agent  a  Lock-Up  Agreement;

          (j)     Termination.  This Agreement shall not have been terminated as
                  -----------
to  such  Purchaser  in  accordance  with  Section  6.18  herein.

     5.2     Conditions  Precedent  to  the  Obligations  of the Company to sell
             -------------------------------------------------------------------
Shares.  The Company's obligation to sell and issue the Shares at the Closing is
------
subject to the fulfillment to the satisfaction of the Company on or prior to the
Closing  Date  of  the  following  conditions, any of which may be waived by the
Company:

          (a)     Representations  and  Warranties.  The  representations  and
                  --------------------------------
warranties  made  by  the  Purchasers  in  Section  3.2 hereof shall be true and
                                           ------------
correct in all material respects as of the date when made, and as of the Closing
Date  as  though  made  on  and  as  of  such  date;

          (b)     Performance.  The  Purchasers  shall have performed, satisfied
                  -----------
and  complied  in  all  material  respects  with  all  covenants, agreements and
conditions  required  by the Transaction Documents to be performed, satisfied or
complied  with  by  the  Purchasers  at  or  prior  to  the  Closing;

          (c)     No Injunction.  No statute, rule, regulation, executive order,
                  -------------
decree,  ruling  or  injunction shall have been enacted, entered, promulgated or
endorsed  by  any court or governmental authority of competent jurisdiction that
prohibits  the  consummation  of  any  of  the  transactions contemplated by the
Transaction  Documents;

          (d)     Purchasers  Deliverables.  Each Purchaser shall have delivered
                  ------------------------
its  Purchaser  Deliverables  in  accordance  with  Section  2.2(b);  and

          (e)     Termination.  This Agreement shall not have been terminated as
                  -----------
to  such  Purchaser  in  accordance  with  Section  6.18  herein.

                                   ARTICLE VI.
                                  MISCELLANEOUS

     6.1     Fees  and  Expenses.  At  Closing,  the Company shall reimburse the
             -------------------
Placement  Agent  for  the  reasonable  fees and expenses in connection with the
transactions  contemplated  by  this  Agreement,  which the Company agrees shall
include  the  reasonable fees and expenses of the Placement Agent Counsel (which
fees  shall  include,  without limitation, the fees and expenses associated with
the  negotiation,  preparation  and execution and delivery of this Agreement and
the  other  Transaction  Documents  and any amendments, modifications or waivers
thereto)  (the  "Placement  Agent  Counsel  Fees"),  which reimbursable fees and
expenses  shall not exceed, without the Company's prior written consent, the sum
of $50,000.  The Company and the Purchasers shall each pay the fees and expenses
of  their  respective  advisers, counsel, accountants and other experts, if any,
and  all  other  expenses  incurred  by  such  party  in  connection  with  the
negotiation, preparation, execution, delivery and performance of this Agreement.
The  Company  shall pay all Transfer Agent fees, stamp taxes and other taxes and
duties  levied  in  connection  with  the sale and issuance of the Shares to the
Purchasers.  Each  party  acknowledges  that  Lowenstein Sandler PC has rendered
legal  advice  to

                                       26
<PAGE>
the  Placement  Agent  and not to such party in connection with the transactions
contemplated  hereby,  and  that  such  party has relied for such matters on the
advice  of  its  own  respective  counsel.

     6.2     Entire  Agreement.  The  Transaction  Documents,  together with the
             -----------------
Exhibits  and Schedules thereto, contain the entire understanding of the parties
with  respect  to  the subject matter hereof and supersede all prior agreements,
understandings,  discussions  and representations, oral or written, with respect
to  such  matters,  which  the  parties  acknowledge  have been merged into such
documents, exhibits and schedules.  At or after the Closing, and without further
consideration,  the  Company  and the Purchasers will execute and deliver to the
other  such  further  documents  as may be reasonably requested in order to give
practical  effect  to  the  intention  of  the  parties  under  the  Transaction
Documents.

     6.3     Notices.  Any and all notices or other communications or deliveries
             -------
required  or permitted to be provided hereunder shall be in writing and shall be
deemed  given  and effective on the earliest of (a) the date of transmission, if
such  notice  or  communication  is delivered via facsimile (provided the sender
receives  a  machine-generated  confirmation  of successful transmission) at the
facsimile  number  specified  in  this Section prior to 5:00 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission,
if  such  notice  or  communication  is delivered via facsimile at the facsimile
number  specified  in  this  Section on a day that is not a Trading Day or later
than  5:00  p.m.  (New  York  City time) on any Trading Day, (c) the Trading Day
following  the  date of mailing, if sent by U.S. nationally recognized overnight
courier  service with next day delivery specified, or (d) upon actual receipt by
the  party  to  whom  such notice is required to be given.  The address for such
notices  and  communications  shall  be  as  follows:

     If to the Company:     DigitalFX International, Inc.
                            3035 East Patrick Lane
                            Suite 9
                            Las Vegas, NV 89120
                            Telephone No.: (702) 938-9300
                            Facsimile No.: (702)
                            Attention:

     With a copy to:        Stubbs Alderton & Markiles, LLP
                            15260 Ventura Boulevard
                            Sherman Oaks, CA 91403
                            Telephone No.: (818) 444-4500
                            Facsimile No.: (818) 444-4520
                            Attention: Greg Akselrud

                            Jackson L. Morris, Esq.
                            3116 West North A Street
                            Tampa, Florida 33609-1544
                            Telephone No.: 813-874-8854
                            Facsimile No.: 800-310-1695

     If to a Purchaser:     To the address set forth under such Purchaser's name
                       on the signature page hereof;

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

                                       27
<PAGE>
     6.4     Amendments;  Waivers; No Additional Consideration.  No provision of
             -------------------------------------------------
this  Agreement  may be waived or amended except in a written instrument signed,
in  the  case  of an amendment, by the Company and each of the Purchasers or, in
the  case  of a waiver, by the party against whom enforcement of any such waiver
is sought.  No waiver of any default with respect to any provision, condition or
requirement  of  this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either party
to  exercise  any  right hereunder in any manner impair the exercise of any such
right.  No  consideration  shall be offered or paid to any Purchaser to amend or
consent to a waiver or modification of any provision of any Transaction Document
unless  the  same  consideration is also offered to all Purchasers who then hold
Shares.

     6.5     Construction.  The headings herein are for convenience only, do not
             ------------
constitute  a  part of this Agreement and shall not be deemed to limit or affect
any  of  the  provisions  hereof.  The  language  used in this Agreement will be
deemed  to be the language chosen by the parties to express their mutual intent,
and  no  rules  of  strict construction will be applied against any party.  This
Agreement  shall  be  construed  as  if  drafted  jointly by the parties, and no
presumption  or burden of proof shall arise favoring or disfavoring any party by
virtue  of  the  authorship  of  any  provisions of this Agreement or any of the
Transaction  Documents.

     6.6     Successors  and  Assigns.  The  provisions  of this Agreement shall
             ------------------------
inure to the benefit of and be binding upon the parties and their successors and
permitted  assigns.  This Agreement, or any rights or obligations hereunder, may
not  be  assigned  by  the  Company  without  the  prior  written consent of the
Purchasers.  Any  Purchaser  may assign its rights hereunder in whole or in part
to  any  Person  to  whom  such  Purchaser  assigns  or  transfers any Shares in
compliance  with  this  agreement  and  applicable law, provided such transferee
shall  agree  in writing to be bound, with respect to the transferred Shares, by
the  terms  and  conditions  of  this  Agreement that apply to the "Purchasers".

     6.7     No  Third-Party  Beneficiaries.  This Agreement is intended for the
             ------------------------------
benefit  of  the  parties  hereto  and their respective successors and permitted
assigns  and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except (i) each Purchaser Party is an intended third party
beneficiary  of  Section  4.7, (ii) Placement Agent Counsel is an intended third
party  beneficiary  of  this Agreement, and (iii) Placement Agent is an intended
third  party  beneficiary of Article III hereof, and each Purchaser Party or the
Placement Agent, as the case may be, may enforce the provisions of such Sections
directly  against  the  parties  with  obligations  thereunder  .

     6.8     Governing  Law.  All  questions  concerning  the  construction,
             --------------
validity,  enforcement and interpretation of this Agreement shall be governed by
and  construed and enforced in accordance with the internal laws of the State of
New  York,  without  regard to the principles of conflicts of law thereof.  Each
party  agrees  that  all Proceedings concerning the interpretations, enforcement
and  defense  of  the  transactions contemplated by this Agreement and any other
Transaction  Documents (whether brought against a party hereto or its respective
Affiliates,  employees or agents) shall be commenced exclusively in the New York
Courts.  Each  party  hereto  hereby  irrevocably  submits  to  the  exclusive
jurisdiction  of  the  New  York  Courts  for  the  adjudication  of any dispute
hereunder  or in connection herewith or with any transaction contemplated hereby
or  discussed  herein  (including  with respect to the enforcement of any of the
Transaction  Documents), and hereby irrevocably waives, and agrees not to assert
in  any  Proceeding,  any  claim  that  it  is  not  personally  subject  to the
jurisdiction  of  any  such  New  York  Court,  or that such Proceeding has been
commenced  in  an  improper  or  inconvenient  forum.  Each  party hereto hereby
irrevocably  waives  personal  service  of process and consents to process being
served  in  any  such  Proceeding  by  mailing  a copy thereof via registered or
certified  mail  or overnight delivery (with evidence of delivery) to such party
at  the address in effect for notices to it under this Agreement and agrees that
such  service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to  serve  process  in  any  manner  permitted by law.  Each party hereto hereby
irrevocably  waives,  to  the  fullest  extent

                                       28
<PAGE>
permitted  by  applicable  law,  any and all right to trial by jury in any legal
proceeding  arising  out  of  or  relating to this Agreement or the transactions
contemplated hereby.  If either party shall commence a Proceeding to enforce any
provisions  of  a  Transaction  Document,  then  the  prevailing  party  in such
Proceeding  shall be reimbursed by the other party for its reasonable attorneys'
fees  and  other costs and expenses incurred with the investigation, preparation
and  prosecution  of  such  Proceeding.

     6.9     Survival.  Subject  to  applicable  statute  of  limitations,  the
             --------
representations,  warranties,  agreements  and  covenants contained herein shall
survive  the  Closing  and  the  delivery  of  the  Shares.

     6.10     Execution.  This  Agreement  may  be  executed  in  two  or  more
              ---------
counterparts,  all  of which when taken together shall be considered one and the
same  agreement and shall become effective when counterparts have been signed by
each  party  and  delivered  to  the  other party, it being understood that both
parties  need not sign the same counterpart.  In the event that any signature is
delivered  by  facsimile  transmission,  or by e-mail delivery of a "pdf" format
data  file,  such  signature  shall create a valid and binding obligation of the
party  executing  (or  on whose behalf such signature is executed) with the same
force  and  effect as if such facsimile signature page were an original thereof.

     6.11     Severability.  If  any  provision  of this Agreement is held to be
              ------------
invalid  or unenforceable in any respect, the validity and enforceability of the
remaining  terms  and  provisions  of  this  Agreement  shall  not in any way be
affected  or impaired thereby and the parties will attempt to agree upon a valid
and  enforceable provision that is a reasonable substitute therefor, and upon so
agreeing,  shall  incorporate  such  substitute  provision  in  this  Agreement.

     6.12     Rescission  and Withdrawal Right.  Notwithstanding anything to the
              --------------------------------
contrary  contained  in  (and  without  limiting  any similar provisions of) the
Transaction  Documents,  whenever  any  Purchaser  exercises  a right, election,
demand  or  option  under a Transaction Document and the Company does not timely
perform  its  related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written  notice to the Company, any relevant notice, demand or election in whole
or  in  part  without  prejudice  to  its  future  actions  and  rights

     6.13     Replacement  of  Shares.  If  any  certificate  or  instrument
              -----------------------
evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall
issue  or  cause  to  be  issued  in  exchange  and  substitution  for  and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or  instrument, but only upon receipt of evidence reasonably satisfactory to the
Company  and  the  Transfer  Agent  of  such  loss, theft or destruction and the
execution  by  the  holder  thereof of a customary lost certificate affidavit of
that  fact  and  an agreement to indemnify and hold harmless the Company and the
Transfer  Agent  for  any  losses in connection therewith or, if required by the
Transfer  Agent, a bond in such form and amount as is reasonably required by the
Transfer  Agent.  The  applicants for a new certificate or instrument under such
circumstances  shall  also  pay any reasonable third-party costs associated with
the  issuance  of  such  replacement  Shares.  If  a  replacement certificate or
instrument  evidencing  any Shares is requested due to a mutilation thereof, the
Company  may  require  delivery of such mutilated certificate or instrument as a
condition  precedent  to  any  issuance  of  a  replacement.

     6.14     Remedies.  In  addition  to  being entitled to exercise all rights
              --------
provided  herein  or  granted by law, including recovery of damages, each of the
Purchasers  and  the  Company will be entitled to specific performance under the
Transaction  Documents.  The  parties  agree  that  monetary  damages may not be
adequate  compensation  for  any  loss  incurred  by  reason  of  any  breach of
obligations described in the foregoing sentence and hereby agree to waive in any
action for specific performance of any such obligation (other than in connection
with  any action for a temporary restraining order) the defense that a remedy at
law  would  be  adequate.

                                       29
<PAGE>
     6.15     Payment Set Aside.  To the extent that the Company makes a payment
              -----------------
or payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds  of  such  enforcement or exercise or any part thereof are subsequently
invalidated,  declared  to  be  fraudulent or preferential, set aside, recovered
from,  disgorged by or are required to be refunded, repaid or otherwise restored
to  the  Company,  a  trustee,  receiver  or  any  other  person  under  any law
(including, without limitation, any bankruptcy law, state or federal law, common
law  or  equitable  cause of action), then to the extent of any such restoration
the  obligation  or  part  thereof  originally intended to be satisfied shall be
revived  and  continued in full force and effect as if such payment had not been
made  or  such  enforcement  or  setoff  had  not  occurred.

     6.16     Adjustments  in  Share  Numbers  and  Prices.  In the event of any
              --------------------------------------------
stock  split,  subdivision, dividend or distribution payable in shares of Common
Stock  (or  other securities or rights convertible into, or entitling the holder
thereof  to  receive directly or indirectly shares of Common Stock), combination
or other similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall  be  amended  to  appropriately  account  for  such  event.

     6.17     Independent  Nature  of  Purchasers'  Obligations and Rights.  The
              ------------------------------------------------------------
obligations of each Purchaser under any Transaction Document are several and not
joint  with  the  obligations  of any other Purchaser, and no Purchaser shall be
responsible  in  any  way  for  the  performance of the obligations of any other
Purchaser  under  any  Transaction  Document.  The decision of each Purchaser to
purchase  Shares  pursuant  to  the  Transaction Documents has been made by such
Purchaser  independently  of  any  other  Purchaser  and  independently  of  any
information,  materials,  statements  or  opinions  as to the business, affairs,
operations,  assets,  properties,  liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or any Subsidiary which may
have  been  made  or given by any other Purchaser or by any agent or employee of
any  other  Purchaser, and no Purchaser and any of its agents or employees shall
have  any  liability to any other Purchaser (or any other Person) relating to or
arising  from  any  such information, materials, statement or opinions.  Nothing
contained  herein  or  in  any  Transaction Document, and no action taken by any
Purchaser  pursuant  thereto,  shall be deemed to constitute the Purchasers as a
partnership,  an  association,  a  joint venture or any other kind of entity, or
create  a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction  Documents.  Each Purchaser acknowledges that no other Purchaser has
acted  as  agent  for  such  Purchaser  in connection with making its investment
hereunder  and  that  no  Purchaser will be acting as agent of such Purchaser in
connection  with monitoring its investment in the Shares or enforcing its rights
under  the  Transaction  Documents.  Each  Purchaser  shall  be  entitled  to
independently  protect  and enforce its rights, including without limitation the
rights  arising out of this Agreement or out of the other Transaction Documents,
and  it  shall  not  be  necessary  for  any  other Purchaser to be joined as an
additional  party  in any proceeding for such purpose.  The Company acknowledges
that  each  of  the  Purchasers  has  been  provided  with  the same Transaction
Documents  for the purpose of closing a transaction with multiple Purchasers and
not  because  it  was  required  or  requested  to  do  so by any Purchaser. The
Company's  obligations  to  each Purchaser under this Agreement are identical to
its  obligations  to  each other Purchaser other than such differences resulting
solely  from the number of Shares purchased by such Purchaser, but regardless of
whether such obligations are memorialized herein or in another agreement between
the  Company  and  a  Purchaser.

     6.18     Termination.  This  Agreement  may  be terminated and the sale and
              -----------
purchase  of the Shares abandoned at any time prior to the Closing by either the
Company  or  any  Purchaser (with respect to itself only) upon written notice to
the other, if the Closing has not been consummated on or prior to 5:00 p.m. (New
York  City  time)  on  the  Outside  Date;  provided, however, that the right to
terminate  this  Agreement under this Section 6.18 shall not be available to any
                                      ------------
Person  whose  failure  to  comply with its obligations under this Agreement has
been  the  cause  of  or  resulted  in the failure of the Closing to occur on or
before  such  time.  Nothing in this Section 6.18 shall be deemed to release any
                                     ------------
party  from  any  liability  for  any

                                       30
<PAGE>
breach  by such party of the terms and provisions of this Agreement or the other
Transaction  Documents  or  to  impair the right of any party to compel specific
performance  by  any  other party of its obligations under this Agreement or the
other  Transaction  Documents.  In  the  event of a termination pursuant to this
Section, the Company shall promptly notify all non-terminating Purchasers.  Upon
a  termination  in accordance with this Section, the Company and the terminating
Purchaser(s)  shall  not  have  any  further  obligation or liability (including
arising  from  such  termination)  to  the other, and no Purchaser will have any
liability  to  any  other  Purchaser under the Transaction Documents as a result
therefrom.

                                       31
<PAGE>
     IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement  to  be duly executed by their respective authorized signatories as of
the  date  first  indicated  above.

                                          DigitalFX International, Inc.

                                          By:  /s/ Lorne Walker
                                             ---------------------------------
                                             Name: Lorne Walker
                                             Title: Chief Financial Officer

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
                     [SIGNATURE PAGES FOR PURCHASERS FOLLOW]

                                       32
<PAGE>
                  NAME OF PURCHASER: Kingdon Associates
                  By: Kingdon Capital Management, LLC

                  By:   /s/ Alan Winters
                  ------------------------------------------
                  Name: Alan Winters
                  Title: Chief Operating Officer of Kingdon Capital Management,
                         LLC, the Investment Advisor to Kingdon Associates

                  Aggregate Purchase Price (Subscription Amount): $1,277,750

                  Number of Shares to be acquired: 269,000

                  Tax ID No.:
                             -------------------------------

                  Address for Notice:

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

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

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

                  Telephone No.:
                                ----------------------------

                  Facsimile No.:
                                ----------------------------

                  Attention:
                                ----------------------------

Delivery  Instructions:
(if  different  than  above)

c/o
   -------------------------------------

Street:
       ---------------------------------

City/State/Zip:
               -------------------------

Attention:
          ------------------------------

Telephone  No.:
               -------------------------

                                       33
<PAGE>
                  NAME OF PURCHASER: Kingdon Family Partnership, L.P.
                  By: Kingdon Capital Management, LLC

                  By:   /s/ Alan Winters
                  ------------------------------------------
                  Name: Alan Winters
                  Title: Chief Operating Officer of Kingdon Capital Management,
                         LLC, the Investment Advisor to Kingdon Associates

                  Aggregate Purchase Price (Subscription Amount): $204,250

                  Number of Shares to be acquired: 43,000

                  Tax ID No.:
                             -------------------------------

                  Address for Notice:

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

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

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

                  Telephone No.:
                                ----------------------------

                  Facsimile No.:
                                ----------------------------

                  Attention:
                                ----------------------------

Delivery  Instructions:
(if  different  than  above)

c/o
   -------------------------------------

Street:
       ---------------------------------

City/State/Zip:
               -------------------------

Attention:
          ------------------------------

Telephone  No.:
               -------------------------

                                       34
<PAGE>
                  NAME OF PURCHASER: M. Kingdon Offshore Ltd.
                  By: Kingdon Capital Management, LLC

                  By:   /s/ Alan Winters
                  ------------------------------------------
                  Name: Alan Winters
                  Title: Chief Operating Officer of Kingdon Capital Management,
                         LLC, the Investment Advisor to Kingdon Associates

                  Aggregate Purchase Price (Subscription Amount): $3,268,000

                  Number of Shares to be acquired: 688,000

                  Tax ID No.:
                             -------------------------------

                  Address for Notice:

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

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

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

                  Telephone No.:
                                ----------------------------

                  Facsimile No.:
                                ----------------------------

                  Attention:
                                ----------------------------

Delivery  Instructions:
(if  different  than  above)

c/o
   -------------------------------------

Street:
       ---------------------------------

City/State/Zip:
               -------------------------

Attention:
          ------------------------------

Telephone  No.:
               -------------------------

                                       35
<PAGE>
EXHIBITS:
--------

A:     Form  of  Registration  Rights  Agreement

B:     Instruction  Sheet  for  Purchasers

C:     Accredited  Investor  Questionnaire

D-1:   Opinion  of  Florida  Counsel

D-2:   Opinion  of  Securities  Counsel

E:     Irrevocable  Transfer  Agent  Instructions

F:     Form  of  Lock-Up  Agreement

G:     Escrow  Wire  Instructions

ANNEXES:
-------

I:     Form  of  Notice  of  Effectiveness  of  Registration  Statement

SCHEDULES:
---------

3.1(a)  Subsidiaries

3.1(c)  Authorization;  Enforcement

3.1(g)  Capitalization

3.1(k)  Material  Changes

3.1(q)  Title  to  Assets

3.1(x)  Registration  Rights

                                       36REGISTRATION RIGHTS AGREEMENT

          This  Registration  Rights  Agreement  (this  "Agreement") is made and
entered  into  as  of  December  27, 2006, by and among DigitalFX International,
Inc.,  a  Florida  corporation  (the  "Company"),  and  the  several  purchasers
signatory  hereto  (each  a  "Purchaser"  and  collectively,  the "Purchasers").

          This  Agreement is made pursuant to the Securities Purchase Agreement,
dated  as  of  the  date  hereof  between  the  Company  and each Purchaser (the
"Purchase  Agreement").

          NOW,  THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this  Agreement,  and for other good and valuable consideration, the receipt and
adequacy  of which are hereby acknowledged, the Company and the Purchasers agree
as  follows:

     1.     Definitions.  Capitalized  terms  used  and  not  otherwise  defined
            -----------
herein  that are defined in the Purchase Agreement shall have the meanings given
such  terms in the Purchase Agreement.  As used in this Agreement, the following
terms  shall  have  the  respective  meanings  set  forth  in  this  Section  1:

          "Advice"  shall  have  the  meaning  set  forth  in  Section  6(f).

          "Affiliate"  means, with respect to any person, any other person which
directly  or  indirectly  controls, is controlled by, or is under common control
with,  such  person.

          "Business  Day" means a day, other than a Saturday or Sunday, on which
banks  in  New  York  City  are  open  for  the general transaction of business.

          "Closing"  has  the  meaning  set  forth  in  the  Purchase Agreement.

          "Closing  Date"  has  the meaning set forth in the Purchase Agreement.

          "Commission"  means  the  Securities  and  Exchange  Commission.

          "Common  Stock"  means  the  common  stock  of  the Company, par value
$0.0001  per  share,  and  any  securities  into  which  such  common  stock may
hereinafter  be  reclassified.

          "Effective  Date" means the date that the Registration Statement filed
pursuant  to  Section  2(a)  is  first  declared  effective  by  the Commission.

          "Effectiveness  Deadline"  means,  with  respect  to  the Registration
Statement  required  to  be  filed  to  cover  the  resale by the Holders of the
Registrable  Securities, the earlier of: (i) the 90th calendar day following the
Closing Date; provided, that, if the Commission reviews and has written comments
to  the filed Registration Statement, then the Effectiveness Deadline under this
clause  (i) shall be the 135th calendar day following the Closing Date, and (ii)
the  fifth (5th) Trading Day following the date on which the Company is notified
by  the Commission that the Registration Statement will not be reviewed or is no
longer  subject  to  further  review  and  comments and the effectiveness of the
Registration  Statement  may  be  accelerated.

          "Effectiveness  Period"  shall  have  the meaning set forth in Section
2(b).

          "Event"  shall  have  the  meaning  set  forth  in  Section  2(c).

<PAGE>
          "Event  Date"  shall  have  the  meaning  set  forth  in Section 2(c).

          "Exchange  Act" means the Securities Exchange Act of 1934, as amended,
and  the  rules  and  regulations  promulgated  thereunder.

          "Filing  Deadline"  means,  with respect to the Registration Statement
required  to  be filed pursuant to Section 2(a), the 35th calendar day following
the  Closing  Date.

          "Holder" or "Holders" means the holder or holders, as the case may be,
from  time  to  time  of  Registrable  Securities.

          "Indemnified  Party" shall have the meaning set forth in Section 5(c).

          "Indemnifying Party" shall have the meaning set forth in Section 5(c).

          "Losses"  shall  have  the  meaning  set  forth  in  Section  5(a).

          "New  York  Courts"  means the state and federal courts sitting in the
City  of  New  York,  Borough  of  Manhattan.

          "Person"  means  an  individual  or  corporation,  partnership, trust,
incorporated  or  unincorporated  association,  joint venture, limited liability
company,  joint  stock company, government (or an agency or subdivision thereof)
or  other  entity  of  any  kind.

          "Placement  Agent"  means Roth Capital Partners, LLC and any permitted
assigns.

          "Principal  Trading  Market"  means  the  Trading  Market on which the
Common  Stock  is  primarily  listed on and quoted for trading, which, as of the
Closing  Date,  shall  be  the  OTC  Bulletin  Board.

          "Proceeding" means an action, claim, suit, investigation or proceeding
(including,  without limitation, an investigation or partial proceeding, such as
a  deposition),  whether  commenced  or  threatened.

          "Prospectus" means the prospectus included in a Registration Statement
(including,  without  limitation,  a  prospectus  that  includes any information
previously  omitted from a prospectus filed as part of an effective registration
statement  in  reliance upon Rule 430A promulgated under the Securities Act), as
amended  or supplemented by any prospectus supplement, with respect to the terms
of  the  offering  of  any  portion  of  the Registrable Securities covered by a
Registration  Statement,  and  all  other  amendments  and  supplements  to  the
Prospectus,  including  post-effective amendments, and all material incorporated
by  reference  or  deemed  to  be  incorporated by reference in such Prospectus.

          "Register,"  "registered"  and  "registration" refer to a registration
made  by  preparing  and  filing a Registration Statement or similar document in
compliance  with  the  Securities  Act,  and  the  declaration  or  ordering  of
effectiveness  of  such  Registration  Statement  or  document.

          "Registrable Securities" means all of (i) the Shares issuable and (ii)
any  securities  issued  or  issuable  upon  any  stock split, dividend or other
distribution,  recapitalization  or similar event; provided, that the Holder has
completed  and delivered to the Company a Selling Shareholder Questionnaire; and
provided,  further,  that  a  Holder's  security  shall  cease to be Registrable
Securities  upon the earliest to occur of the following:  (A) sale pursuant to a
Registration  Statement  or  Rule  144  under  the  Securities  Act

                                        2
<PAGE>
(in  which  case,  only  such  security  sold  shall  cease  to be a Registrable
Security);  or  (B)  such  security  becoming  eligible  for  sale by the Holder
pursuant  to  Rule  144(k).

          "Registration  Statement"  means  any  registration  statement  of the
Company  filed  under  the  Securities  Act that covers the resale of any of the
Registrable  Securities pursuant to the provisions of this Agreement, amendments
and  supplements  to  such  Registration  Statement,  including  post-effective
amendments, all exhibits and all material incorporated by reference or deemed to
be  incorporated  by  reference  in  such  Registration  Statement.

          "Rule  144"  means  Rule 144 promulgated by the Commission pursuant to
the  Securities  Act,  as  such  Rule  may  be amended from time to time, or any
similar  rule  or  regulation  hereafter  adopted  by  the  Commission  having
substantially  the  same  effect  as  such  Rule.

          "Rule  415"  means  Rule 415 promulgated by the Commission pursuant to
the  Securities  Act,  as  such  Rule  may  be amended from time to time, or any
similar  rule  or  regulation  hereafter  adopted  by  the  Commission  having
substantially  the  same  effect  as  such  Rule.

          "Rule  424"  means  Rule 424 promulgated by the Commission pursuant to
the  Securities  Act,  as  such  Rule  may  be amended from time to time, or any
similar  rule  or  regulation  hereafter  adopted  by  the  Commission  having
substantially  the  same  effect  as  such  Rule.

          "Securities Act" means the Securities Act of 1933, as amended, and the
rules  and  regulations  promulgated  thereunder.

          "Selling  Shareholder Questionnaire" means a questionnaire in the form
attached  as  Annex  B  hereto,  or  such  other  form  of  questionnaire as may
              --------
reasonably  be  adopted  by  the  Company  from  time  to  time.

          "Shares"  means  the  shares of Common Stock issued or issuable to the
Purchasers  pursuant  to  the  Purchase  Agreement.

          "Subscription  Amount" means $4.75 (as subject to adjustment for stock
splits, stock dividends, and stock combinations affecting the Shares), being the
per  Share purchase price paid by each Purchaser for the securities purchased by
such  Purchaser  pursuant  to  the  Purchase  Agreement.

          "Trading  Day"  means (i) a day on which the Common Stock is listed or
quoted  and  traded  on  its primary Trading Market (other than the OTC Bulletin
Board),  or  (ii)  if  the Common Stock is not listed on a Trading Market (other
than  the  OTC Bulletin Board), a day on which the Common Stock is traded in the
over-the-counter  market, as reported by the OTC Bulletin Board, or (iii) if the
Common  Stock  is  not  quoted  on any Trading Market, a day on which the Common
Stock  is  quoted  in  the  over-the-counter  market as reported by the National
Quotation  Bureau Incorporated (or any similar organization or agency succeeding
to  its  functions  of  reporting  prices); provided, that in the event that the
Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof,
then  Trading  Day  shall  mean  a  Business  Day.

          "Trading  Market"  means whichever of the New York Stock Exchange, the
American  Stock  Exchange,  the  NASDAQ  Global Select Market, the NASDAQ Global
Market,  the  NASDAQ  Capital  Market  or OTC Bulletin Board on which the Common
Stock  is  listed  or  quoted  for  trading  on  the  date  in  question.

                                        3
<PAGE>
     2.     Registration.

          (a)     On  or prior to the Filing Deadline, the Company shall prepare
and file with the Commission a Registration Statement covering the resale of all
Registrable  Securities  not  already  covered  by  an  existing  and  effective
Registration Statement for an offering to be made on a continuous basis pursuant
to  Rule  415.  The  Registration  Statement shall be on Form S-3 (except if the
Company  is  not then eligible to register for resale the Registrable Securities
on  Form  S-3,  in  which case such registration shall be on another appropriate
form  in  accordance  with  the  Securities  Act and the Exchange Act) and shall
contain (except if otherwise required pursuant to written comments received from
the  Commission  upon  a  review  of  such  Registration Statement) the "Plan of
Distribution"  attached  hereto  as  Annex  A.

          (b)     The  Company  shall  use  its  best  efforts  to  cause  the
Registration  Statement  to  be  declared effective by the Commission as soon as
practicable  and,  in  any  event,  no  later  than  the  Effectiveness Deadline
(including  filing  with  the  Commission  a  request  for  acceleration  of
effectiveness  in  accordance with Rule 461 promulgated under the Securities Act
within  five  (5)  Business  Days  after  the  date that the Company is notified
(orally  or  in  writing,  whichever  is  earlier)  by  the  Commission  that  a
Registration  Statement  will  not  be  "reviewed," or not be subject to further
review  and  the effectiveness of the Registration Statement may be accelerated)
and  shall  use  its  reasonable best efforts to keep the Registration Statement
continuously  effective  under the Securities Act until the earlier of (i)  such
time as all of the Registrable Securities covered by such Registration Statement
have  been  publicly  sold by the Holders, or (ii) the date that all Registrable
Securities  covered  by the Registration Statement may be sold by non-affiliates
without  volume restrictions pursuant to Rule 144(k) as determined by counsel to
the  Company  pursuant to a written opinion letter to such effect, addressed and
acceptable  to  the  Company's  transfer  agent  and  the  affected Holders (the
"Effectiveness  Period").  The  Company  shall  ensure  that  each  Registration
Statement  (including  any  amendments  or  supplements thereto and prospectuses
contained  therein) shall not contain any untrue statement of a material fact or
omit  to  state  a  material fact required to be stated therein, or necessary to
make  the  statements  therein (in the case of prospectuses, in the light of the
circumstances  in  which  they  were  made)  not  misleading.  Such Registration
Statement shall also cover, to the extent allowable under the Securities Act and
the rules promulgated thereunder (including Rule 416), such indeterminate number
of  additional  shares  of  Common  Stock  resulting  from  stock  splits, stock
dividends  or  similar  transactions with respect to the Registrable Securities.
The  Company  shall  telephonically  request  effectiveness  of  a  Registration
Statement  as  of  5:00  pm  Eastern  Time on a Trading Day.   The Company shall
immediately notify the Holders via facsimile or e-mail of the effectiveness of a
Registration  Statement  on the same Trading Day that the Company telephonically
confirms  effectiveness  with  the Commission, which shall be the date requested
for  effectiveness  of  a Registration Statement.  The Company shall, by 9:30 am
Eastern  Time  on  the  Trading  Day after the Effective Date (as defined in the
Purchase  Agreement),  file  a  final Prospectus with the Commission pursuant to
Rule  424.  Failure  to  so  notify  the  Holder  within  1  Trading Day of such
notification or effectiveness or failure to file a final Prospectus as aforesaid
shall  be  deemed  an  Event  under  Section  2(c).

          (c)     If: (i) the Registration Statement is not filed on or prior to
the  Filing Deadline, (ii) a Registration Statement is not declared effective by
the  Commission  (or  otherwise  does  not  become effective) on or prior to its
Effectiveness  Deadline  or  (iii)  after  its Effective Date, such Registration
Statement  ceases  for  any  reason (including without limitation by reason of a
stop  order, or the Company's failure to update the Registration Statement), but
excluding the inability of any Holder to sell the Registrable Securities covered
thereby due to market conditions, to remain continuously effective and available
to the Holders as to all Registrable Securities to which it is required to cover
at any time prior to the expiration of the Effectiveness Period for an aggregate
of  more  than  30  consecutive Trading Days or for more than an aggregate of 60
Trading  Days  in any 12-month period (which need not be consecutive), (any such
failure  or  breach  in clauses (i), (ii) or (iii) above being referred to as an
"Event,"  and, for purposes of clauses (i) or (ii), the date on which such Event
occurs,  or  for purposes of clause (iii), the date which such 30 consecutive or
60  Trading  Day period (as applicable) is exceeded, being referred to as "Event
Date"),  then  in  addition to any other rights available to the Holders: (x) on
such  Event  Date  the

                                        4
<PAGE>
Company  shall  pay  to  each  Holder  an  amount in cash, as partial liquidated
damages and not as a penalty, equal to 1.0% of the aggregate purchase price paid
by such Holder pursuant to the Purchase Agreement for any Registrable Securities
then  held  by  such  Holder  (which  remedy shall not be exclusive of any other
remedies available under this Agreement); and (y) on each monthly anniversary of
each  such Event Date thereof (if the applicable Event shall not have been cured
by such date) until the applicable Event is cured, the Company shall pay to each
Holder  an  amount  in cash, as partial liquidated damages and not as a penalty,
equal  to  1.0%  of the aggregate purchase price paid by such Holder pursuant to
the  Purchase  Agreement for any Registrable Securities then held by such Holder
(which  remedy shall not be exclusive of any other remedies available under this
Agreement).  If the Company fails to pay any partial liquidated damages pursuant
to  this  Section  in full within seven days after the date payable, the Company
will  pay  interest  thereon  at a rate of 10% per annum (or such lesser maximum
amount  that  is permitted to be paid by applicable law) to the Holder, accruing
daily  from the date such partial liquidated damages are due until such amounts,
plus  all  such  interest  thereon,  are  paid  in full.  The partial liquidated
damages  pursuant  to the terms hereof shall apply on a daily pro-rata basis for
any  portion of a month prior to the cure of an Event, except in the case of the
first Event Date. Notwithstanding the foregoing, the maximum payment to a Holder
associated  with  all Events in the aggregate shall not exceed (i) in any 30-day
period,  an  aggregate of 1.0% of the purchase price paid by such Holder for its
Registrable  Securities  (plus interest accrued thereon, if applicable) and (ii)
18.0%  of  the purchase price paid by such Holder for its Registrable Securities
in  any  12  month  period,  unless,  as a result of this clause (ii), Generally
Accepted  Accounting Principles ("GAAP"), including without limitation, FAS 133,
EITF  00-19  or  any  other  interpretation  of  GAAP,  require  the Registrable
Securities  to  be  treated  as a derivative security, or as any other financial
component  other  than in stockholders equity, in which case, the maximum amount
payable  under  this  Section  2(c) shall not exceed 18.0% of the purchase price
paid  by  such  Holder  for  its  Registrable  Securities.

     (d)     The  Company  shall  not,  from  the  date  hereof  until  the date
occurring  sixty  (60)  days  after  the  Effective  Date  of  the  Registration
Statement,  prepare  and  file  with  the  Commission  a  registration statement
relating  to  an offering for its own account or the account of others under the
Securities  Act  of  any  of  its  equity  securities  other than a registration
statement  on  Form  S-8  or,  in  connection  with an acquisition, on Form S-4.

     (e)     Each  Holder  agrees  to  furnish  to  the  Company a completed and
executed  Selling  Shareholder Questionnaire.  The Company shall not be required
to  include  the  Registrable Securities of a Holder in a Registration Statement
and  shall  not be required to pay any liquidated or other damages under Section
2(c)  to  any  Holder  who fails to furnish to the Company a fully completed and
executed  Selling  Shareholder  Questionnaire at least two Trading Days prior to
the  Filing  Deadline  (subject  to the requirements set forth in Section 3(a)).

     (f)     It  is  agreed  and understood that the Company shall, from time to
time,  be  obligated  to  file an additional Registration Statement to cover any
Registrable  Securities  which  are  not  registered  for  resale  pursuant to a
pre-existing  Registration  Statement.

     (g)     Notwithstanding  anything in this Agreement to the contrary, if the
Commission  refuses  to  declare a Registration Statement filed pursuant to this
Agreement  effective  as  a  valid  secondary offering under Rule 415 due to the
number  of  Registrable  Securities  included  in  such  Registration  Statement
relative  to the outstanding number of shares of Common Stock, then, without any
obligation  to pay any amount under Section 2(c) with respect to, or any further
obligation to register, such excess Registrable Securities, the Company shall be
permitted  to  reduce  the  number  of  Registrable  Securities included in such
Registration  Statement  to  an  amount  that does not exceed an amount that the
Commission  allows  for  the offering thereunder to qualify as a valid secondary
offering  under  Rule  415.

                                        5
<PAGE>
     3.     Registration  Procedures
            ------------------------

          In  connection  with the Company's registration obligations hereunder,
the  Company  shall:

          (a)     Not  less  than  three  Trading  Days prior to the filing of a
Registration  Statement or any related Prospectus or any amendment or supplement
thereto,  furnish  to  each  Holder  copies  of  such  Registration  Statement,
Prospectus  or  amendment  or supplement thereto, as proposed to be filed, which
documents  will  be  subject to the review of such Holder (it being acknowledged
and  agreed that if a Holder does not object to or comment on the aforementioned
documents  within such three Trading Day period, then the Holder shall be deemed
to have consented to and approved the use of such documents).  The Company shall
not  file  a  Registration  Statement,  any  Prospectus  or  any  amendments  or
supplements  thereto  in which the "Selling Stockholder" section thereof differs
from  the  disclosure  received  from  a  Holder  in  its  Selling  Shareholder
Questionnaire  (as amended or supplemented), except as may otherwise be required
by  applicable  securities  law  or  the  Commission.

          (b)     (i)  Prepare  and  file  with  the Commission such amendments,
including  post-effective  amendments,  to  each  Registration Statement and the
Prospectus  used  in  connection  therewith  as  may  be  necessary to keep such
Registration  Statement  continuously effective as to the applicable Registrable
Securities for its Effectiveness Period and prepare and file with the Commission
such  additional  Registration  Statements in order to register for resale under
the  Securities  Act  all  of the Registrable Securities; (ii) cause the related
Prospectus  to be amended or supplemented by any required Prospectus supplement,
and  as  so  supplemented  or  amended  to  be filed pursuant to Rule 424; (iii)
respond  as promptly as reasonably practicable, and in any event within ten (10)
Trading  Days, to any comments received from the Commission with respect to each
Registration  Statement  or any amendment thereto and, as promptly as reasonably
possible,  provide  the  Holders  true and complete copies of all correspondence
from and to the Commission relating to such Registration Statement that pertains
to the Holders as Selling Stockholders but not any comments that would result in
the  disclosure to the Holders of material and non-public information concerning
the  Company;  and (iv) comply with the provisions of the Securities Act and the
Exchange  Act  with  respect  to  the  disposition of all Registrable Securities
covered  by  each  Registration  Statement.

          (c)     Notify the Holders as promptly as reasonably possible (and, in
the case of (i)(A) below, not less than three Trading Days prior to such filing,
in  the  case  of (iii) and (iv) below, not more than one Trading Day after such
issuance  or  receipt and, in the case of (v) below, not less than three Trading
Days  prior  to  the financial statements in any Registration Statement becoming
ineligible  for inclusion therein) and (if requested by any such Person) confirm
such  notice  in  writing no later than one Trading Day following the day (i)(A)
when  a Prospectus or any Prospectus supplement or post-effective amendment to a
Registration Statement is proposed to be filed; (B) when the Commission notifies
the  Company whether there will be a "review" of such Registration Statement and
whenever  the  Commission  comments in writing on any Registration Statement (in
which  case  the  Company shall provide true and complete copies thereof and all
written  responses thereto to each of the Holders that pertain to the Holders as
a  Selling Stockholder or to the Plan of Distribution, but not information which
the  Company believes would constitute material and non-public information); and
(C) with respect to each Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the Commission or any
other Federal or state governmental authority for amendments or supplements to a
Registration Statement or Prospectus or for additional information that pertains
to the Holders as Selling Stockholders or the Plan of Distribution; (iii) of the
issuance  by the Commission or any other federal or state governmental authority
of  any  stop  order  suspending  the  effectiveness of a Registration Statement
covering  any  or  all  of  the  Registrable Securities or the initiation of any
Proceedings  for  that  purpose;  (iv)  of  the  receipt  by  the Company of any
notification  with  respect  to the suspension of the qualification or exemption
from  qualification  of  any  of  the  Registrable  Securities  for  sale in any
jurisdiction,  or  the

                                        6
<PAGE>
initiation  or  threatening  of  any Proceeding for such purpose; and (v) of the
occurrence  of  any event or passage of time that makes the financial statements
included  in  a  Registration  Statement ineligible for inclusion therein or any
statement  made  in  such  Registration  Statement or Prospectus or any document
incorporated  or  deemed  to  be incorporated therein by reference untrue in any
material  respect or that requires any revisions to such Registration Statement,
Prospectus  or  other  documents  so  that,  in  the  case  of such Registration
Statement  or the Prospectus, as the case may be, it will not contain any untrue
statement  of  a material fact or omit to state any material fact required to be
stated  therein  or necessary to make the statements therein (in the case of any
Prospectus,  form  of  prospectus  or  supplement  thereto,  in  light  of  the
circumstances  under  which  they  were  made),  not  misleading.

          (d)     Use  reasonable  best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of a
Registration  Statement,  or  (ii)  any  suspension  of  the  qualification  (or
exemption  from  qualification) of any of the Registrable Securities for sale in
any  jurisdiction,  as  soon  as  practicable.

          (e)     If  requested  by  a  Holder,  furnish to such Holder, without
charge,  at  least  one  conformed  copy of each Registration Statement and each
amendment  thereto  and  all  exhibits  to  the  extent requested by such Person
(including  those  previously  furnished  or incorporated by reference) promptly
after  the  filing  of  such  documents  with the Commission; provided, that the
Company shall have no obligation to provide any document pursuant to this clause
that  is  available  on  the  Commission's  EDGAR  system.

          (f)     Upon  notification  by  the  Commission  that  a  Registration
Statement  will  not  be  reviewed or is no longer subject to further review and
comments,  the Company shall request acceleration of such Registration Statement
within  five (5) Business Days after receipt of such notice such that it becomes
effective  no  later than 5:00 p.m. New York City time on the Effective Date and
file  a  prospectus supplement for any Registration Statement, whether or not it
is  required  under Rule 424 (or otherwise), by 9:00 a.m. New York City time the
day  after  the  Effective  Date.

          (g)     Prior  to  any  public  offering  of  Registrable  Securities,
register  or  qualify  such  Registrable Securities for offer and sale under the
securities  or  Blue  Sky laws of such jurisdictions within the United States as
any  Holder  reasonably  requests  in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and  to  do  any and all other acts or things reasonably necessary to enable the
disposition  in  such jurisdictions of the Registrable Securities covered by the
Registration  Statements;  provided,  that  the Company shall not be required to
qualify  generally  to  do  business in any jurisdiction where it is not then so
qualified  or  to  take  any  action  that  would subject the Company to general
service  of  process  in  any  jurisdiction  where  it is not then so subject or
subject the Company to any material tax in any such jurisdiction where it is not
then  so  subject.

          (h)     If  requested  by  the  Holders, cooperate with the Holders to
facilitate  the  timely  preparation  and  delivery of certificates representing
Registrable  Securities  to  be  delivered  to  a  transferee  pursuant  to  the
Registration  Statement,  which  certificates  shall  be  free,  to  the  extent
permitted  by  the Purchase Agreement and under law, of all restrictive legends,
and  to  enable  such  Registrable  Securities  to  be in such denominations and
registered  in  such  names  as  any  such  Holders  may reasonably request.  In
connection  therewith,  if required by the Company's transfer agent, the Company
shall  promptly  after  the effectiveness of the Registration Statement cause an
opinion  of  counsel as to the effectiveness of the Registration Statement to be
delivered  to  and  maintained  with its transfer agent, together with any other
authorizations,  certificates  and  directions  required  by the transfer agent,
which  authorize  and  direct  the  transfer  agent  to  issue  such Registrable
Securities  without legend upon sale by the holder of such shares of Registrable
Securities  under  the  Registration  Statement.

                                        7
<PAGE>
          (i)     Following  the occurrence of any event contemplated by Section
3(c)(v),  as promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the affected Registration Statements or
a supplement to the related Prospectus or any document incorporated or deemed to
be  incorporated  therein  by reference, and file any other required document so
that, as thereafter delivered, no Registration Statement nor any Prospectus will
contain  an untrue statement of a material fact or omit to state a material fact
required  to  be  stated therein or necessary to make the statements therein (in
the  case  of any Prospectus, form of prospectus or supplement thereto, in light
of  the  circumstances  under  which  they  were  made),  not  misleading.

          (j)     (i)  In  the time and manner required by the Principal Trading
Market,  prepare  and file with such Trading Market an additional shares listing
application  covering  all  of  the  Registrable Securities, (ii) take all steps
necessary to cause such Registrable Securities to be approved for listing on the
Principal  Trading  Market as soon as possible thereafter, (iii) if requested by
any  Holder,  provide  such Holder evidence of such listing, and (iv) during the
Effectiveness Period, maintain the listing of such Registrable Securities on the
Principal  Trading  Market.

          (k)     As  long  as  any Holder owns Shares, the Company covenants to
timely  file  (or  obtain  extensions  in  respect  thereof  and file within the
applicable  grace  period) all reports required to be filed by the Company after
the  date hereof pursuant to Section 13(a) or 15(d) of the Exchange Act. As long
as  any  Holder  owns  Shares,  if  the  Company is not required to file reports
pursuant  to  Section  13(a)  or  15(d) of the Exchange Act, it will prepare and
furnish  to  the  Holders  and  make  publicly available in accordance with Rule
144(c)  promulgated  under  the  Securities  Act  annual and quarterly financial
statements, together with a discussion and analysis of such financial statements
in  form  and  substance  substantially similar to those that would otherwise be
required  to  be  included  in reports required by Section 13(a) or 15(d) of the
Exchange  Act,  as  well  as any other information required thereby, in the time
period  that  such  filings would have been required to have been made under the
Exchange  Act.  The  Company  further  covenants  that it will take such further
action  as  any  Holder  may reasonably request, all to the extent required from
time to time to enable such Person to sell Shares without registration under the
Securities  Act  within  the  limitation  of the exemptions provided by Rule 144
promulgated  under  the Securities Act, including compliance with the provisions
of  the  Purchase  Agreement  relating  to  the  transfer  of  the  Shares.

          (l)     The  Company may require each selling Holder to furnish to the
Company  a  certified  statement  as  to  the  number  of shares of Common Stock
beneficially  owned  by such Holder and any Affiliate thereof and as to any NASD
affiliations and of any natural persons who have the power to vote or dispose of
the  Common  Stock.

     4.     Registration  Expenses.  All  fees  and  expenses  incident  to  the
            ----------------------
Company's performance of or compliance with its obligations under this Agreement
(excluding any underwriting discounts and selling commissions and all legal fees
and  expenses  of  legal  counsel  for any Holder) shall be borne by the Company
whether  or  not  any Registrable Securities are sold pursuant to a Registration
Statement.  The  fees  and  expenses referred to in the foregoing sentence shall
include,  without  limitation,  (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made  with the securities exchanges on which the Common Stock is then listed for
trading,  and  (B)  in  compliance  with applicable state securities or Blue Sky
laws),  (ii)  printing  expenses  (including,  without  limitation,  expenses of
printing certificates for Registrable Securities and of printing prospectuses if
the  printing  of  prospectuses  is  reasonably  requested  by  the Holders of a
majority  of the Registrable Securities included in the Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel  for the Company, (v) Securities Act liability insurance, if the Company
so  desires  such  insurance,  and  (vi)  fees and expenses of all other Persons
retained  by the Company in connection with the consummation of the transactions
contemplated  by  this  Agreement.  In  addition,  the

                                        8
<PAGE>
Company  shall  be  responsible  for  all  of  its internal expenses incurred in
connection  with  the  consummation  of  the  transactions  contemplated by this
Agreement  (including,  without  limitation,  all  salaries  and expenses of its
officers  and  employees  performing legal or accounting duties), the expense of
any  annual  audit  and  the  fees  and expenses incurred in connection with the
listing  of  the  Registrable  Securities on any securities exchange as required
hereunder.  In  no  event  shall  the  Company  be responsible for any broker or
similar  commissions  or  any  legal  fees  or  other  costs  of  the  Holders.

     5.     Indemnification.
            ---------------

          (a)     Indemnification  by  the  Company.  The  Company  shall,
                  ---------------------------------
notwithstanding  any  termination of this Agreement, indemnify and hold harmless
each  Holder,  the  officers,  directors,  agents,  partners, members, managers,
shareholders, Affiliates and employees of each of them, each Person who controls
any  such  Holder  (within  the  meaning  of Section 15 of the Securities Act or
Section  20 of the Exchange Act) and the officers, directors, partners, members,
managers, shareholders, agents and employees of each such controlling Person, to
the  fullest  extent  permitted  by applicable law, from and against any and all
losses,  claims,  damages,  liabilities,  costs  (including, without limitation,
reasonable  costs  of  preparation  and  investigation and reasonable attorneys'
fees)  and  expenses  (collectively,  "Losses"),  as incurred, arising out of or
relating  to  (i)  any  untrue  or  alleged  untrue statement of a material fact
contained  in  any  Registration  Statement,  any  Prospectus  or  any  form  of
prospectus  or  in any amendment or supplement thereto (it being understood that
the  Holder  has approved Annex A hereto for this purpose) or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a  material  fact  required  to  be  stated  therein  or  necessary  to make the
statements  therein  (in  the  case  of  any Prospectus or form of prospectus or
supplement  thereto,  in  light of the circumstances under which they were made)
not misleading, or (ii) any violation or alleged violation by the Company of the
Securities  Act,  Exchange  Act  or  any  state  securities  law, or any rule or
regulation  thereunder,  in  connection  with the performance of its obligations
under  this  Agreement,  except  to the extent, but only to the extent, that (A)
such  untrue  statements,  alleged  untrue  statements,  omissions  or  alleged
omissions  are  based solely upon information regarding such Holder furnished in
writing  to  the  Company  by  such  Holder expressly for use therein, or to the
extent  that  such  information relates to such Holder or such Holder's proposed
method  of  distribution of Registrable Securities and was reviewed and approved
by  such Holder expressly for use in the Registration Statement, such Prospectus
or  such  form of Prospectus or in any amendment or supplement thereto (it being
understood that each Holder has approved Annex A hereto for this purpose) or (B)
in  the  case  of  an  occurrence  of  an event of the type specified in Section
3(c)(ii)-(v),  the  use by a Holder of an outdated or defective Prospectus after
the  Company has notified such Holder in writing that the Prospectus is outdated
or  defective  and  prior to the receipt by such Holder of Advice (as defined in
Section 6(f) below), but only if and to the extent that following the receipt of
the Advice the misstatement or omission giving rise to such Loss would have been
corrected;  provided,  however,  that  the indemnity agreement contained in this
Section 5(a) shall not apply to amounts paid in settlement of any Losses if such
settlement  is  effected without the prior written consent of the Company, which
consent  shall  not  be  unreasonably  withheld.  Each  Holder  shall notify the
Company  promptly  of  the institution, threat or assertion of any Proceeding of
which  the  Holder  is aware in connection with the transactions contemplated by
this Agreement.  Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of an Indemnified Party (as defined in
Section  5(c))  and  shall survive the transfer of the Registrable Securities by
the  Holders.

          (b)     Indemnification by Holders. Each Holder shall, notwithstanding
                  --------------------------
any termination of this Agreement, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and  Section  20  of  the  Exchange Act), and the directors, officers, agents or
employees  of  such  controlling  Persons,  to  the  fullest extent permitted by
applicable  law, from and against all Losses, as incurred, arising solely out of
or  based  solely  upon  any  untrue  or  alleged  untrue  statement  of

                                        9
<PAGE>
a  material fact contained in any Registration Statement, any Prospectus, or any
form of prospectus, or in any amendment or supplement thereto, or arising solely
out  of or based solely upon any omission or alleged omission of a material fact
required  to  be  stated therein or necessary to make the statements therein (in
the  case of any Prospectus, or any form of prospectus or supplement thereto, in
light  of  the  circumstances  under which they were made) not misleading to the
extent,  but  only  to  the extent that, such untrue statements or omissions are
based  solely upon information regarding such Holder furnished in writing to the
Company  by  such  Holder expressly for use therein, or  to the extent that such
information  relates  to  such  Holder  or  such  Holder's  proposed  method  of
distribution  of  Registrable  Securities  and was reviewed and approved by such
Holder expressly for use in the Registration Statement (it being understood that
the  Holder  has  approved  Annex A hereto for this purpose), such Prospectus or
such  form  of  Prospectus  or in any amendment or supplement thereto; provided,
however,  that  the indemnity agreement contained in this Section 5(b) shall not
apply to amounts paid in settlement of any Losses if such settlement is effected
without  the  prior  written  consent  of the Holder, which consent shall not be
unreasonably  withheld.  In  no  event shall the liability of any selling Holder
hereunder  be  greater  in  amount  than  the  dollar amount of the net proceeds
received  by such Holder upon the sale of the Registrable Securities giving rise
to  such  indemnification  obligation.

          (c)     Conduct  of  Indemnification  Proceedings.  If  any Proceeding
                  -----------------------------------------
shall  be brought or asserted against any Person entitled to indemnity hereunder
(an  "Indemnified  Party"),  such  Indemnified  Party  shall promptly notify the
Person  from whom indemnity is sought (the "Indemnifying Party") in writing, and
the  Indemnifying  Party  shall  have  the  right to assume the defense thereof,
including  the  employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all reasonable fees and expenses incurred in connection
with  defense  thereof;  provided,  that the failure of any Indemnified Party to
give  such notice shall not relieve the Indemnifying Party of its obligations or
liabilities  pursuant to this Agreement, except (and only) to the extent that it
shall  be  finally  determined  by  a  court  of  competent  jurisdiction (which
determination  is  not  subject  to  appeal or further review) that such failure
shall  have  proximately  and  materially  adversely prejudiced the Indemnifying
Party.

          An  Indemnified  Party shall have the right to employ separate counsel
in  any  such Proceeding and to participate in the defense thereof, but the fees
and  expenses  of such counsel shall be at the expense of such Indemnified Party
or Parties unless:  (1) the Indemnifying Party has agreed in writing to pay such
fees  and  expenses;  (2)  the  Indemnifying Party shall have failed promptly to
assume  the  defense  of  such  Proceeding  and  to  employ  counsel  reasonably
satisfactory  to such Indemnified Party in any such Proceeding; or (3) the named
parties  to  any  such Proceeding (including any impleaded parties) include both
such  Indemnified  Party  and the Indemnifying Party, and such Indemnified Party
shall  have  been  advised  by  counsel that a conflict of interest is likely to
exist  if  the  same  counsel  were  to represent such Indemnified Party and the
Indemnifying  Party  (in  which  case,  if  such  Indemnified Party notifies the
Indemnifying  Party  in writing that it elects to employ separate counsel at the
expense  of  the  Indemnifying  Party, the Indemnifying Party shall not have the
right  to assume the defense thereof and such counsel shall be at the expense of
the  Indemnifying  Party);  provided,  that  the Indemnifying Party shall not be
liable  for the fees and expenses of more than one separate firm of attorneys at
any  time  for  all  Indemnified  Parties.  The  Indemnifying Party shall not be
liable  for  any  settlement of any such Proceeding effected without its written
consent,  which  consent  shall  not  be  unreasonably  withheld,  delayed  or
conditioned.  No  Indemnifying Party shall, without the prior written consent of
the  Indemnified  Party,  effect  any  settlement  of  any pending Proceeding in
respect  of  which  any  Indemnified  Party  is  a party, unless such settlement
includes  an  unconditional release of such Indemnified Party from all liability
on  claims  that  are  the  subject  matter  of  such  Proceeding.

          All  fees  and expenses of the Indemnified Party (including reasonable
fees  and  expenses  to  the extent incurred in connection with investigating or
preparing  to  defend  such  Proceeding  in  a manner not inconsistent with this
Section)  shall  be  paid  to  the  Indemnified  Party,  as  incurred,  within

                                       10
<PAGE>
twenty  Trading  Days  of  written  notice  thereof  to  the  Indemnifying Party
(regardless  of whether it is ultimately determined that an Indemnified Party is
not entitled to indemnification hereunder; provided, that the Indemnifying Party
may  require  such Indemnified Party to undertake to reimburse all such fees and
expenses to the extent it is finally judicially determined that such Indemnified
Party  is  not  entitled  to  indemnification  hereunder).

          (d)     Contribution.  If  a  claim  for indemnification under Section
                  ------------
5(a)  or 5(b) is unavailable to an Indemnified Party (by reason of public policy
or  otherwise),  then  each  Indemnifying  Party,  in  lieu of indemnifying such
Indemnified  Party,  shall  contribute  to  the  amount  paid or payable by such
Indemnified  Party  as  a  result  of  such  Losses,  in  such  proportion as is
appropriate  to  reflect  the  relative  fault  of  the  Indemnifying  Party and
Indemnified  Party  in connection with the actions, statements or omissions that
resulted  in such Losses as well as any other relevant equitable considerations.
The  relative  fault  of  such Indemnifying Party and Indemnified Party shall be
determined  by reference to, among other things, whether any action in question,
including  any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information  supplied  by, such Indemnifying Party or Indemnified Party, and the
parties'  relative  intent,  knowledge, access to information and opportunity to
correct  or  prevent  such  action,  statement  or omission.  The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable  fees  or  expenses  incurred  by  such  party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses  if  the  indemnification provided for in this Section was available to
such  party  in  accordance  with  its  terms.

          The  parties  hereto  agree that it would not be just and equitable if
contribution  pursuant  to  this  Section  5(d)  were  determined  by  pro  rata
allocation  or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
net  proceeds  actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder  has  otherwise  been required to pay by reason of such untrue or alleged
untrue  statement  or  omission  or  alleged  omission.  No  person  guilty  of
fraudulent  misrepresentation  (within  the  meaning  of  Section  11(f)  of the
Securities  Act)  shall  be entitled to contribution from any Person who was not
guilty  of  such  fraudulent  misrepresentation.

          The  indemnity  and  contribution agreements contained in this Section
are  in  addition to any liability that the Indemnifying Parties may have to the
Indemnified  Parties  and  are  not  in  diminution  or  limitation  of  the
indemnification  provisions  under  the  Purchase  Agreement.

     6.     Miscellaneous
            -------------

          (a)     Remedies.  In  the  event  of  a breach by the Company or by a
                  --------
Holder  of  any  of  their  obligations under this Agreement, each Holder or the
Company,  as  the  case  may  be,  in addition to being entitled to exercise all
rights  granted  by law and under this Agreement, including recovery of damages,
will  be  entitled  to  specific performance of its rights under this Agreement.
The  Company  and  each  Holder  agree  that  monetary damages would not provide
adequate compensation for any losses incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it shall waive
the  defense  that  a  remedy  at  law  would  be  adequate.

                                       11
<PAGE>
          (b)     No  Piggyback  on  Registrations.  Except  and  to  the extent
                  --------------------------------
specified  in Schedule 3.1(x) to the Purchase Agreement, neither the Company nor
              ---------------
any  of  its  security holders (other than the Holders in such capacity pursuant
hereto)  may include securities of the Company in a Registration Statement other
than  the  Registrable  Securities,  and  the  Company  shall  not  prior to the
Effective  Date  enter  into any agreement providing any such right to any of it
security  holders.

          (c)     Entire  Agreement.  This  Agreement is intended by the parties
                  -----------------
as  a  final  expression  of  their  agreement and intended to be a complete and
exclusive  statement of the agreement and understanding of the parties hereto in
respect  of  the subject matter contained herein.  This Agreement supersedes all
prior  agreements  and  understandings  between the parties with respect to such
subject  matter,  except  for,  and  as  provided  in the Transaction Documents.

          (d)     Benefits  of  the Agreement.  The terms and conditions of this
                  ---------------------------
Agreement  shall  inure  to  the  benefit  of and be binding upon the respective
permitted  successors  and  assigns  of the parties.  Nothing in this Agreement,
express  or implied, is intended to confer upon any party other than the parties
hereto  or  their  respective  successors  and  assigns  any  rights,  remedies,
obligations,  or  liabilities  under  or  by reason of this Agreement, except as
expressly  provided  in  this  Agreement.

          (e)     Compliance.  Each  Holder  covenants  and  agrees that it will
                  ----------
comply  with  the  prospectus  delivery  requirements  of  the Securities Act as
applicable to it (unless an exemption therefrom is available) in connection with
sales of Registrable Securities pursuant to the Registration Statement and shall
sell the Registrable Securities only in accordance with a method of distribution
described  in  the  Registration  Statement.

          (f)     Discontinued  Disposition.  Each  Holder further agrees by its
                  -------------------------
acquisition  of  such Registrable Securities that, upon receipt of a notice from
the  Company  of  the  occurrence  of any event of the kind described in Section
3(c)(ii)-(v),  such  Holder  will  forthwith  discontinue  disposition  of  such
Registrable  Securities  under the Registration Statement until it is advised in
writing  (the "Advice") by the Company that the use of the applicable Prospectus
may  be  resumed,  and, in either case, has received copies of any additional or
supplemental  filings  that  are  incorporated  or  deemed to be incorporated by
reference in such Prospectus or Registration Statement.  The Company may provide
appropriate  stop  orders  to  enforce  the  provisions  of  this  paragraph.

          (g)     Piggy-Back  Registrations.  If  at  any  time  during  the
                  -------------------------
Effectiveness  Period  there is not an effective Registration Statement covering
all of the Registrable Securities and the Company shall determine to prepare and
file  with  the  Commission a registration statement relating to an offering for
its  own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the  Securities  Act) or their then equivalents relating to equity securities to
be issued solely in connection with any acquisition of any entity or business or
equity  securities issuable in connection with stock option or other employee or
director  benefit  plans,  then  the  Company  shall send to each Holder written
notice  of  such determination and, if within fifteen days after receipt of such
notice,  any  such Holder shall so request in writing, the Company shall include
in  such  registration  statement all or any part of such Registrable Securities
such holder requests to be registered, subject to customary underwriter cutbacks
applicable  to all holders of registration rights on a pro rata basis; provided,
that if at any time after giving written notice of its intention to register any
securities  and  prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its  election,  give  written  notice  of such determination to such Holder and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of  its  obligation  to  register  any  Registrable  Securities pursuant to this
Section  6(g)  in connection with such registration (but not from its obligation
to  pay expenses in accordance with Section 4 hereof), and (ii) in the case of a
determination  to  delay

                                       12
<PAGE>
registering,  shall be permitted to delay registering any Registrable Securities
being  registered pursuant to this Section 6(g) for the same period as the delay
in  registering  such  other  securities.

          (h)     Amendments and Waivers.  This Agreement may be amended only by
                  ----------------------
a  writing signed by all of the parties hereto.  The Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it,  only  if  the  Company  shall  have  obtained  the  written consent to such
amendment,  action or omission to act, of each Purchaser. No consideration shall
be offered or paid to any Holder to amend or consent to a waiver or modification
of any provision of this Agreement unless the same consideration also is offered
to  all  of  the  Holders.  Failure of any party to exercise any right or remedy
under  this  Agreement or otherwise or delay by a party in exercising such right
or  remedy  shall  not  operate  as  a  waiver  thereof.

          (i)     Notices.  Any  and  all  notices  or  other  communications or
                  -------
deliveries  required  or  permitted to be provided hereunder shall be in writing
and  shall  be  deemed  given  and  effective on the earliest of (i) the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number  specified  in  this Section prior to 5:00 p.m. (New York City
time)  on  a  Trading  Day,  (ii)  the  next  Trading  Day  after  the  date  of
transmission,  if  such  notice  or  communication is delivered via facsimile or
e-mail  to the facsimile number or e-mail addressed specified in this Section on
a  day that is not a Trading Day or later than 5:00 p.m. (New York City time) on
any  Trading  Day, (iii) the Business Day following the date of mailing, if sent
by  nationally  recognized  overnight  courier  service  with  next day delivery
specified,  or  (iv)  upon  actual  receipt  by the party to whom such notice is
required  to  be  given.

          The address for such notices and communications shall be as follows:

  If to the Company:          DigitalFX International, Inc.
                              3035 East Patrick Lane, Suite 9
                              Las Vegas, NV 89120
                              Facsimile:
                              Attn:

    With a copy to:           Stubbs Alderton & Markiles, LLP
                              15260 Ventura Boulevard, 20th Floor
                              Sherman Oaks, CA 91403
                              Facsimile: (818) 444-4520
                              Attn: Greg Akselrud

                              Jackson L. Morris, Esq
                              3116 West North A Street
                              Tampa, FL 33609-1544
                              Facsimile: 800-310-1695

    If to a Purchaser:        To the address set forth under such
                              Purchaser's name on the signature pages
                              hereto.

    If to any other Person    To the address of such Holder as it
    who is then the           appears in the stock transfer books of the
    registered Holder:

                                       13
<PAGE>
                              Company or such other address as may
                              be designated in writing hereafter, in the
                              same manner, by such Person.

provided, that any party may change its address for notices by providing written
notice to the other parties in the manner prescribed by this Section.

          (j)     Successors  and  Assigns.  This  Agreement  shall inure to the
                  ------------------------
benefit  of  and be binding upon the successors and permitted assigns of each of
the  parties and shall inure to the benefit of each Holder.  The Company may not
assign  its rights or obligations hereunder without the prior written consent of
each  Holder.  The  rights of the Holders hereunder, including the right to have
the  Company  register Registrable Securities pursuant to this Agreement, may be
assigned by each Holder to transferees or assignees of all or any portion of the
Registrable  Securities,  but  only if (i) the Holder agrees in writing with the
transferee  or  assignee  to assign such rights, and a copy of such agreement is
furnished  to  the  Company within a reasonable time after such assignment, (ii)
the  Company  is,  within  a  reasonable time after such transfer or assignment,
furnished  with  written  notice  of  the name and address of such transferee or
assignee  and  the securities with respect to which such registration rights are
being  transferred or assigned, (iii) at or before the time the Company received
the  written notice contemplated by clause (ii) of this sentence, the transferee
or  assignee  agrees  in  writing  with  the  Company  to be bound by all of the
provisions contained herein and (iv) the transferee is an "accredited investor,"
as  that  term  is  defined  in  Rule  501  of  Regulation  D.

          (k)     Execution and Counterparts.  This Agreement may be executed in
                  --------------------------
any number of counterparts, each of which when so executed shall be deemed to be
an  original  and, all of which taken together shall constitute one and the same
Agreement.  In  the  event  that  any  signature  is  delivered  by  facsimile
transmission,  such  signature  shall  create  a valid binding obligation of the
party  executing  (or  on whose behalf such signature is executed) the same with
the  same  force  and  effect  as  if such facsimile signature were the original
thereof.

          (l)     Governing  Law.  All  questions  concerning  the construction,
                  --------------
validity,  enforcement and interpretation of this Agreement shall be governed by
and  construed and enforced in accordance with the internal laws of the State of
New  York,  without  regard to the principles of conflicts of law thereof.  Each
party  agrees  that  all Proceedings concerning the interpretations, enforcement
and  defense of the transactions contemplated by this Agreement (whether brought
against  a  party hereto or its respective Affiliates, employees or agents) will
be  commenced  in  the  New  York  Courts.  Each party hereto hereby irrevocably
submits  to  the  exclusive  jurisdiction  of  the  New  York  Courts  for  the
adjudication  of  any  dispute  hereunder  or in connection herewith or with any
transaction  contemplated  hereby  or  discussed  herein, and hereby irrevocably
waives,  and  agrees  not  to assert in any Proceeding, any claim that it is not
personally  subject  to  the  jurisdiction  of  any New York Court, or that such
Proceeding  has been commenced in an improper or inconvenient forum.  Each party
hereto  hereby  irrevocably  waives  personal service of process and consents to
process  being  served  in  any  such  Proceeding  by mailing a copy thereof via
registered  or  certified mail or overnight delivery (with evidence of delivery)
to  such  party  at the address in effect for notices to it under this Agreement
and  agrees  that  such  service shall constitute good and sufficient service of
process  and  notice thereof.  Nothing contained herein shall be deemed to limit
in  any  way  any  right  to serve process in any manner permitted by law.  Each
party  hereto  hereby  irrevocably  waives,  to  the fullest extent permitted by
applicable law, any and all right to trial by jury in any Proceeding arising out
of  or  relating  to this Agreement or the transactions contemplated hereby.  If
any  party  shall  commence  a  Proceeding  to  enforce  any  provisions of this
Agreement,  then  the prevailing party in such Proceeding shall be reimbursed by
the  other  parties  for  its

                                       14
<PAGE>
attorneys'  fees  and  other costs and expenses incurred with the investigation,
preparation  and  prosecution  of  such  Proceeding.

          (m)     Cumulative  Remedies.  The  remedies  provided  herein  are
                  --------------------
cumulative  and  not  exclusive  of  any  remedies  provided  by  law.

          (n)     Severability.  If any term, provision, covenant or restriction
                  ------------
of  this  Agreement  is held by a court of competent jurisdiction to be invalid,
illegal,  void  or  unenforceable,  the  remainder  of  the  terms,  provisions,
covenants  and  restrictions  set  forth  herein  shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto  shall  use  their  reasonable  efforts to find and employ an alternative
means  to achieve the same or substantially the same result as that contemplated
by  such  term, provision, covenant or restriction.  It is hereby stipulated and
declared  to  be  the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such  that  may  be  hereafter declared invalid, illegal, void or unenforceable.

          (o)     Headings.  The  headings in this Agreement are for convenience
                  --------
of  reference  only  and shall not limit or otherwise affect the meaning hereof.

          (p)     Independent Nature of Purchasers' Obligations and Rights.  The
                  --------------------------------------------------------
obligations  of  each  Purchaser  under this Agreement are several and not joint
with the obligations of any other Purchaser hereunder, and no Purchaser shall be
responsible  in  any  way  for  the  performance of the obligations of any other
Purchaser  hereunder.  The  decision  of  each  Purchaser to purchase Securities
pursuant  to  the Transaction Documents has been made independently of any other
Purchaser.  Nothing  contained  herein  or  in  any  other agreement or document
delivered  at  any closing, and no action taken by any Purchaser pursuant hereto
or  thereto,  shall  be deemed to constitute the Purchasers as a partnership, an
association,  a  joint  venture  or  any  other  kind  of  entity,  or  create a
presumption that the Purchasers are in any way acting in concert with respect to
such  obligations  or  the  transactions  contemplated  by this Agreement.  Each
Purchaser  acknowledges  that  no  other  Purchaser  has acted as agent for such
Purchaser  in  connection  with  making  its  investment  hereunder  and that no
Purchaser  will  be  acting  as  agent  of  such  Purchaser  in  connection with
monitoring  its  investment  in the Securities or enforcing its rights under the
Transaction  Documents.  Each Purchaser shall be entitled to protect and enforce
its  rights,  including,  without  limitation,  the  rights  arising out of this
Agreement, and it shall not be necessary for any other Purchaser to be joined as
an  additional  party  in  any  Proceeding  for  such  purpose.  The  Company
acknowledges  that  each  of  the  Purchasers  has  been  provided with the same
Registration  Rights  Agreement  for  the  purpose of closing a transaction with
multiple Purchasers and not because it was required or requested to do so by any
Purchaser.

          (q)     Currency.     Unless  otherwise  indicated, all dollar amounts
                  --------
referred  to  in this Agreement are in United States Dollars.  All amounts owing
under  this  Agreement are in United States Dollars.  All amounts denominated in
other  currencies  shall  be  converted  in  the United States dollar equivalent
amount  in accordance with the applicable exchange rate in effect on the date of
calculation.

          (r)     Further Assurances.  The parties shall execute and deliver all
                  ------------------
such  further  instruments  and documents and take all such other actions as may
reasonably  be required to carry out the transactions contemplated hereby and to
evidence  the  fulfillment  of  the  agreements  herein  contained.

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                           SIGNATURE PAGES TO FOLLOW]

                                       15
<PAGE>
          IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement  as  of  the  date  first  written  above.

                                        DIGITALFX INTERNATIONAL, INC.

                                        By:  /s/ Lorne Walker
                                           --------------------------------
                                           Name: Lorne Walker
                                           Title: Chief Financial Officer

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGES OF HOLDERS TO FOLLOW]

<PAGE>
          IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.

                                        KINGDON ASSOCIATES

                                        By: Kingdon Capital Management, LLC

                                        By:  /s/ Alfred Barbagalo
                                           --------------------------------
                                        Name: Alfred Barbagalo
                                        Title: General Counsel

                                        Address for Notice:

                                        KINGDON FAMILY PARTNERSHIP, L.P.

                                        By: Kingdon Capital Management, LLC

                                        By:  /s/ Alfred Barbagalo
                                           --------------------------------
                                        Name: Alfred Barbagalo
                                        Title: General Counsel

                                        Address for Notice:

                                        M. KINGDON OFFSHORE LTD.

                                        By: Kingdon Capital Management, LLC

                                        By:  /s/ Alfred Barbagalo
                                           --------------------------------
                                        Name: Alfred Barbagalo
                                        Title: General Counsel

                                        Address for Notice:

                                       2
<PAGE>
                                                                         Annex A
                              PLAN OF DISTRIBUTION

     We  are  registering  the  shares  of  Common  Stock  issued to the selling
shareholders to permit the resale of these shares of Common Stock by the holders
of  the  shares  of  Common  Stock  from  time  to  time  after the date of this
prospectus.  We  will  not  receive  any  of  the  proceeds from the sale by the
selling  shareholders  of the shares of Common Stock.  We will bear all fees and
expenses  incident  to  our  obligation  to register the shares of Common Stock.

     The  selling shareholders may sell all or a portion of the shares of Common
Stock  beneficially  owned by them and offered hereby from time to time directly
or through one or more underwriters, broker-dealers or agents.  If the shares of
Common  Stock  are  sold  through  underwriters  or  broker-dealers, the selling
shareholders  will  be  responsible for underwriting discounts or commissions or
agent's  commissions.  The  shares  of  Common  Stock may be sold in one or more
transactions  at  fixed  prices,  at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
These  sales may be effected in transactions, which may involve crosses or block
transactions.  The Selling Stockholders may use any one or more of the following
methods  when  selling  shares:

-    on any  national  securities  exchange  or  quotation  service on which the
     securities  may  be  listed  or  quoted  at  the  time  of  sale;

-    in the  over-the-counter  market;

-    in transactions  otherwise  than  on  these  exchanges or systems or in the
     over-the-counter  market;

-    through  the  writing  of  options,  whether  such options are listed on an
     options  exchange  or  otherwise;

-    ordinary brokerage transactions and transactions in which the broker-dealer
     solicits  purchasers;

-    block trades  in which the broker-dealer will attempt to sell the shares as
     agent  but  may  position and resell a portion of the block as principal to
     facilitate  the  transaction;

-    purchases  by  a broker-dealer as principal and resale by the broker-dealer
     for  its  account;

-    an exchange  distribution  in  accordance  with the rules of the applicable
     exchange;

-    privately  negotiated  transactions;

-    short sales;

-    broker-dealers  may  agree  with  the  selling  securityholders  to  sell a
     specified  number  of  such  shares  at  a  stipulated  price  per  share;

-    a combination  of  any  such  methods  of  sale;  and

-    any other  method  permitted  pursuant  to  applicable  law.

     The  selling  stockholders  may  also  sell shares under Rule 144 under the
Securities  Act,  if  available,  rather  than  under  this  prospectus.

                                       3
<PAGE>
     Broker-dealers  engaged  by  the selling stockholders may arrange for other
brokers-dealers to participate in sales. If the selling shareholders effect such
transactions  by  selling  shares  of  Common  Stock to or through underwriters,
broker-dealers  or  agents,  such  underwriters,  broker-dealers  or  agents may
receive  commissions  in  the form of discounts, concessions or commissions from
the  selling shareholders or commissions from purchasers of the shares of Common
Stock  for whom they may act as agent or to whom they may sell as principal. The
selling  stockholders  do not expect these discounts, commissions or concessions
to  exceed  what  is  customary  in  the  types  of  transactions  involved

     In  connection  with  sales of the shares of Common Stock or otherwise, the
selling  shareholders may enter into hedging transactions with broker-dealers or
other  financial  institutions,  which  may in turn engage in short sales of the
shares  of  Common Stock in the course of hedging in positions they assume.  The
selling  shareholders  may  also  sell  shares of Common Stock short and if such
short  sale  shall take place after the date that this Registration Statement is
declared  effective  by  the  Commission,  the  selling stockholders may deliver
shares  of  Common Stock covered by this prospectus to close out short positions
and  to return borrowed shares in connection with such short sales.  The selling
shareholders  may  also  loan or pledge shares of Common Stock to broker-dealers
that  in turn may sell such shares. The selling stockholders may also enter into
option or other transactions with broker-dealers or other financial institutions
or  the creation of one or more derivative securities which require the delivery
to  such  broker-dealer or other financial institution of shares offered by this
prospectus,  which  shares such broker-dealer or other financial institution may
resell  pursuant  to this prospectus (as supplemented or amended to reflect such
transaction).

     The selling shareholders may pledge or grant a security interest in some or
all  of  the  shares  of  Common Stock owned by them and, if they default in the
performance  of  their  secured obligations, the pledgees or secured parties may
offer  and  sell  the  shares of Common Stock from time to time pursuant to this
prospectus  or  any  amendment  to this prospectus under Rule 424(b)(3) or other
applicable  provision  of  the  Securities Act of 1933, as amended, amending, if
necessary,  the  list of selling shareholders to include the pledgee, transferee
or  other  successors in interest as selling shareholders under this prospectus.
The selling shareholders also may transfer and donate the shares of Common Stock
in  other circumstances in which case the transferees, donees, pledgees or other
successors  in  interest  will  be the selling beneficial owners for purposes of
this  prospectus.

     The  selling  shareholders  and  any  broker-dealer  participating  in  the
distribution  of  the  shares of Common Stock may be deemed to be "underwriters"
within  the  meaning  of  the  Securities  Act,  and any commission paid, or any
discounts  or concessions allowed to, any such broker-dealer may be deemed to be
underwriting  commissions  or discounts under the Securities Act.  At the time a
particular  offering  of  the  shares  of  Common  Stock  is  made, a prospectus
supplement,  if  required, will be distributed which will set forth (i) the name
of each such selling stockholder and of the participating broker-dealer(s), (ii)
the  number  of  shares  involved,  (iii)  the price at which such the shares of
Common  Stock  were  sold, (iv) the commissions paid or discounts or concessions
allowed  to  such  broker-dealer(s),  where  applicable,  (v)  that  such
broker-dealer(s) did not conduct any investigation to verify the information set
out  or  incorporated  by  reference  in  this  prospectus, and (vi) other facts
material  to  the  transaction.  In addition, upon the Company being notified in
writing  by  a  Selling Stockholder that a donee or pledgee intends to sell more
than  500  shares of Common Stock, a supplement to this prospectus will be filed
if  then  required  in  accordance  with  applicable  securities  law.

     Under the securities laws of some states, the shares of Common Stock may be
sold  in such states only through registered or licensed brokers or dealers.  In
addition,  in some states the shares of Common Stock may not be sold unless such
shares  have been registered or qualified for sale in such state or an exemption
from  registration  or  qualification  is  available  and  is  complied  with.

     There can be no assurance that any selling shareholder will sell any or all
of  the  shares  of  Common  Stock registered pursuant to the shelf registration
statement,  of  which  this  prospectus  forms  a  part.

                                       4
<PAGE>
     The  selling  shareholders  and  any  other  person  participating  in such
distribution will be subject to applicable provisions of the Securities Exchange
Act  of  1934,  as amended, and the rules and regulations thereunder, including,
without limitation, Regulation M of the Exchange Act, which may limit the timing
of  purchases  and  sales  of  any  of the shares of Common Stock by the selling
shareholders and any other participating person.  Regulation M may also restrict
the  ability  of  any person engaged in the distribution of the shares of Common
Stock to engage in market-making activities with respect to the shares of Common
Stock.  All  of  the  foregoing  may  affect  the marketability of the shares of
Common  Stock and the ability of any person or entity to engage in market-making
activities  with  respect  to  the  shares  of  Common  Stock.

     We  will pay all expenses of the registration of the shares of Common Stock
pursuant  to  the  registration rights agreement, including, without limitation,
Securities  and  Exchange Commission filing fees and expenses of compliance with
state  securities  or  "blue  sky"  laws;  provided,  however,  that  a  selling
shareholder  will pay all underwriting discounts and selling commissions, if any
and  any  related  legal expenses incurred by it.  We will indemnify the selling
shareholders  against  liabilities,  including  some  liabilities  under  the
Securities  Act,  in  accordance with the registration rights agreements, or the
selling shareholders will be entitled to contribution.  We may be indemnified by
the  selling shareholders against civil liabilities, including liabilities under
the  Securities Act, that may arise from any written information furnished to us
by  the  selling  shareholder  specifically  for  use  in  this  prospectus,  in
accordance  with  the  related  registration  rights  agreements,  or  we may be
entitled  to  contribution.

                                       5

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