Document:

Asset Puchase Agreement

    
      
 

      

      

      

      ASSET
        PURCHASE AGREEMENT

      

      

      

      

      

      

      

      

      

      

      Between:

      

      

      SAMI
        SALABI

      

      

      And:

      

      

      THE
        TRADE SHOW MARKETING COMPANY LTD.

      
 

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      ASSET
        PURCHASE AGREEMENT

      

      

      

      THIS
        ASSET PURCHASE AGREEMENT
        is dated
        and made for reference as fully executed on this ___day of July, 2005 (the
        “Effective
        Date”).

      

      

      BETWEEN:

      SAMI
        SALABI,
        and/or
        corporate entities beneficially owned by Sami Salabi, having a mailing address
        at _______________________________

      (the
        “Vendor”);

      OF
        THE FIRST PART

      

      AND:

      

      , 

      THE
        TRADESHOW MARKETING COMPANY LTD.
        as a
        company duly incorporated under the laws of Nevada and having an address
        for
        notice and delivery located at ___________________________________,

      

      (the
        “Purchaser”);

      OF
        THE SECOND PART

      

      (the
        Vendor and the Purchaser being hereinafter singularly also referred to as
        a
“Party”
        and
        collectively referred to as the “Parties”
        as the
        context so requires).

      

      

      WHEREAS:

      

      A. The
        Vendor is the owner of two retail outlets (the “Outlets”) in or near Phoenix,
        Arizona, specifically located at Paradise Valley Mall and bearing license
        # E-16
        and Arrowhead Town Center bearing license # 2163, the Outlets containing
        certain
        business equipment, inventory, supplies, supply and contact lists, proprietary
        information, etc. (collectively, the “Assets”),
        a
        complete listing of such Assets of the Vendor being set forth in Schedule
“A”
        which is attached to this Agreement and which forms a material part
        hereof;

      

      B. The
        Purchaser is desirous of acquiring the Assets of the Vendor, and obtaining
        assignment of the leases at the Outlets.

      

      

      NOW
        THEREFORE THIS AGREEMENT WITNESSETH that,
        in
        consideration of the mutual covenants and provisos herein contained, THE
        PARTIES HERETO AGREE AS FOLLOWS:

       

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      Article
        I

      SCHEDULES
        AND INTERPRETATION

      

      

      1.2  Schedules. For
        the
        purposes of this Agreement, except as otherwise expressly provided or unless
        the
        context otherwise requires, the following shall represent the Schedules which
        are attached to this Agreement and which form a material part
        hereof:

      

       Schedule      Description

      

      Schedule
        “A”:   List
        of
        Assets being sold by the Vendor to the Purchaser

      Schedule
        “B”:   Assignment
        of Lease for Paradise Valley Mall outlet

      Schedule
        “C”:   Assignment
        of Lease for Arrowhead Town Center outlet

      

      

      1.3  Interpretation. For
        the
        purposes of this Agreement, except as otherwise expressly provided or unless
        the
        context otherwise requires,:

      

      
        	 	
                (a)

              	
                the
                  words “herein”, “hereof” and “hereunder” and other words of similar import
                  refer to this Agreement as a whole and not to any particular Article,
                  section or other subdivision of this
                  Agreement;

              

      

      

      
        	 	
                (b)

              	
                the
                  headings are for convenience only and do not form a part of this
                  Agreement
                  nor are they intended to interpret, define or limit the scope or
                  extent of
                  this or any provision of this
                  Agreement;

              

      

      

      
        	 	
                (c)

              	
                any
                  reference to an entity shall include and shall be deemed to be
                  a reference
                  to any entity that is a permitted successor to such entity;
                  and

              

      

      

      
        	 	
                (d)

              	
                words
                  in the singular include the plural and words in the masculine gender
                  include the feminine and neuter genders, and vice
                  versa.

              

      

      

      

      Article
        2

      PURCHASE
        AND SALE OF ASSETS

      

      

      2.1  Purchase
        and Sale.
        The
        Purchaser hereby purchases, without condition, and the Vendor hereby sells,
        without condition, the Assets for the sum of $55,000 USD (the “Purchase Price”)
        of which $25,000 USD shall be payable in cash, and $30.000 USD shall be payable
        in the common shares of The Tradeshow Marketing Company Ltd. (the “Shares”). The
        Shares shall be issued to the Vendor and/or his assign at a deemed price
        of
        $1.00 per share. If however, the share price is below $1.00 per share at
        the end
        of twelve (12) months from the date of this Agreement, then the Purchaser
        shall
        issue additional shares to the Vendor to ensure that the Shares issued under
        this have an aggregate market value of at least $30.000 USD. 

      

      Article
        3

      DUE
        DILIGENCE

      

      

      3.1  Due
        Diligence Period.
        The
        Vendor shall allow the Purchaser a period of ___ days in which the Purchaser
        shall be afforded the opportunity to verify the following:

       

      
 

      
        
          
          

        

        
          3

          
            

          

        

        
          
             

          

        

         

         

      

      
        	(a)  	
                The
                  form and general nature of the transaction in order to appropriately
                  address the Parties’ tax and securities
                  issues;

              

      

      

      
        	(b)  	
                 That
                  the retail locations and their inventories be free and clear of
                  any and
                  all liabilities, encumbrances, and creditor demands whatsoever,
                  and that
                  full and clear title can be delivered to The
                  Purchaser.

              

      

      

      
        	(c)  	
                That
                  the complete satisfactory due diligence, and that upon signing
                  of this
                  Agreement, that the Vendor allow the Purchaser or a representative
                  of the
                  Purchaser to examine and confirm all inventories, stock, book accounts,
                  records and any other such additional information as may be reasonably
                  requested by the Purchaser.; and

              

      

      

      
        	(d)  	
                That
                  the Parties successfully execute an assumption of lease agreement
                  for the
                  Outlets. 

              

      

      

      

      Article
        4

      REPRESENTATIONS,
        WARRANTIES AND COVENANTS BY THE VENDOR

      

      4.1  Representations,
        Warranties and Covenants by the Vendor.
        In
        order to induce the Purchaser to enter into and consummate this Agreement,
        the
        Vendor represents to and warrants to the Purchaser that, to the best of the
        informed knowledge, information and belief of the Vendor, after having made
        due
        inquiry:

      

      (a) the
        Vendor is duly incorporated under the laws of its jurisdiction of incorporation
        and is validly existing and in good standing with respect to all statutory
        filings required by the applicable corporate laws;

      

      (b) the
        Vendor is qualified to do business in those jurisdictions where it is necessary
        to fulfill its obligations under this Agreement and the Vendor has the full
        power and authority to enter into this Agreement and any agreement or instrument
        referred to or contemplated by this Agreement;

      

      
        	 	
                (c)

              	
                the
                  Vendor is the registered and beneficial owner of all interests
                  in the
                  Assets and has the requisite power, authority and capacity to own
                  and use
                  the Assets and the Vendor owns the right to develop and maintain
                  the
                  Assets;

              

      

      

      (d) the
        Vendor owns and possesses and has good and marketable title to and possession
        of
        all of the Assets free and clear of all actual or threatened liens, charges,
        options, encumbrances, voting agreements, voting trusts, demands, limitations
        and restrictions of any nature whatsoever;

      

      
        	 	
                (e)

              	
                no
                  person, firm or corporation has any written or oral agreement,
                  option,
                  understanding or commitment, or any right or privilege capable
                  of becoming
                  an agreement, for the purchase from the Vendor of any of the
                  Assets;

              

      

      

      
        	 	
                (f)

              	
                there
                  are no outstanding orders or directions relating to any matters
                  requiring
                  any work, repairs, construction or capital expenditures with respect
                  to
                  any of the Assets and the conduct of the operations related thereto,
                  nor
                  has the Vendor received any notice of
                  same;

              

      

       

       

       

      
        
          
          

        

        
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                (g)

              	
                there
                  is no adverse claim or challenge against or to the ownership of
                  or title
                  to any of the Assets or which may impede the development of any
                  of the
                  Assets, nor, to the best of the knowledge, information and belief
                  of the
                  Vendor, after having made due inquiry, is there any basis for any
                  potential claim or challenge, and, to the best of the knowledge,
                  information and belief of the Vendor, after having made due inquiry,
                  and
                  other than as provided for herein, no persons have any royalty,
                  net
                  profits or other interests whatsoever in revenues or sales from
                  any of the
                  Assets;

              

      

       

       

      
        	 	
                (h) 

              	
                there
                  are no actions, suits, proceedings or investigations (whether or
                  not
                  purportedly against or on behalf of the Vendor or the Assets),
                  pending or
                  threatened, which may affect, without limitation, the rights of
                  the Vendor
                  to transfer any of the Assets to the Purchaser at law or in equity,
                  or
                  before or by any federal, state, provincial, municipal or other
                  governmental department, commission, board, bureau, agency or
                  instrumentality, domestic or foreign, and, without limiting the
                  generality
                  of the foregoing, there are no claims or potential claims under
                  any
                  relevant family relations legislation or other equivalent legislation
                  affecting the Assets. In addition, the Vendor is not now aware
                  of any
                  existing ground on which any such action, suit or proceeding might
                  be
                  commenced with any reasonable likelihood of
                  success;

              

      

      

      
        	 	
                (i)

              	
                the
                  Vendor has not experienced, nor is the Vendor aware of, any occurrence
                  or
                  event which has had, or might reasonably be expected to have, a
                  materially
                  adverse affect on the Assets;

              

      

      

      
        	 	
                (j)

              	
                here
                  is not any proceeding, claim or, to the best of the knowledge,
                  information
                  and belief of the Vendor, after having made due inquiry, any investigation
                  by any federal, state or municipal taxation authority, or any matters
                  under discussion or dispute with such taxation authorities, in
                  respect of
                  taxes, governmental charges, assessments or reassessments in connection
                  with the Vendor or the Assets, and the Vendor is not aware of any
                  contingent tax liabilities or any grounds that could result in
                  an
                  assessment, reassessment, charge or potentially adverse determination
                  by
                  any federal, state or municipal taxation authority as against the
                  Vendor
                  or the Assets;

              

      

      

        
          	 	
                  (k)

                	
                  the
                    Vendor is not in breach of any provision or condition of, nor
                    has the
                    Vendor done or omitted to do anything that, with or without the
                    giving of
                    notice or lapse or both, would constitute a breach of any provision
                    or
                    condition of, or give rise to any right to terminate or cancel
                    or
                    accelerate the maturity of any payment under, any deed of trust,
                    contract,
                    certificate, consent, permit, license or other instrument to
                    which the
                    Vendor is a party, by which the Vendor is bound or from which
                    the Vendor
                    derives benefit, or any judgment, decree, order, rule or regulation
                    of any
                    Court or governmental authority to which the Vendor is subject,
                    or any
                    statute or regulation applicable to the Vendor, to an extent
                    that, in the
                    aggregate, has a material adverse affect on the Vendor or the
                    Assets;

                

        

         

      

      
        	 	
                (l)

              	
                the
                  Vendor is not required to obtain any authorizations, approvals,
                  or waivers
                  that may be necessary or desirable in connection with the transactions
                  contemplated in this Agreement;

              

      

      

      
        	 	
                (m)

              	
                the
                  Vendor has not committed to sell, license, distribute, option,
                  or
                  otherwise dispose of or grant any interest in all or any part of
                  the
                  Assets or agree to do or perform any act or enter into any transaction
                  or
                  negotiation which could reasonably be expected to interfere with
                  this
                  Agreement or which would render inaccurate any of the representations,
                  warranties or covenants set forth in this
                  Agreement;

              

      

      

      
        	 	
                (n)

              	
                the
                  execution and delivery of this Agreement and the agreements contemplated
                  hereby have been duly authorized by all necessary action, corporate
                  or
                  otherwise, or will have been so authorized at the relevant
                  time;

              

      

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

       

      
        	 	
                (o)

              	
                this
                  Agreement constitutes a legal, valid and binding obligation of
                  the Vendor
                  enforceable against it in accordance with its terms, except as
                  enforcement
                  may be limited by laws of general application affecting the rights
                  of
                  creditors;

              

      

       

      
        	 	
                (p)

              	
                no
                  proceedings are pending for, and the Vendor is unaware of, any
                  basis for
                  the institution of any proceedings leading to its respective dissolution
                  or winding up, or the placing of it in bankruptcy or subject to
                  any other
                  laws governing the affairs of insolvent
                  companies;

              

      

       

       

      
        
          	 	
                  (q)

                	
                  the
                    making of this Agreement and the completion of the transactions
                    contemplated hereby and the performance of and compliance with
                    the terms
                    hereof does not and will not:

                

        

         

         

        
          
             

            
              	 	 	(i) 	conflict with or result in a
                      breach of or
                      violate any of the terms, conditions or provisions of the Vendor’s
                      constating documents; 

            

             

            
              
                	 	 	(ii) 	conflict  with 
                        or result in a
                        breach of  or  violate any of  the  terms,
                        conditions
                        or provisions  of  any   law,
                        judgment, order,
                         injunction, decree, regulation or 
	
                      	 	 	
                        ruling conflict
                          with or result in a breach
                          of or violate any of the terms, conditions or provisions
                          of any law,
                          judgment, order, injunction, decree, regulation or ruling
                          of any court or
                          governmental authority, domestic or foreign, to which the
                          Vendor is
                          subject, or constitute or result in a default under any
                          agreement,
                          contract or commitment to which the Vendor is a
                          party;

                      

              

               

            

          

        

      

      
        
          	 	 	(iii) 	
                  give
                    to any party the right of termination,
                    cancellation or acceleration in or with respect to any agreement,
                    contract
                    or commitment to which the Vendor is a
                    party;

                

        

         

      

      
        
          	 	 	(iv) 	give to  any government or
                  governmental
                  authority, or any  municipality or any subdivision 
                  thereof,  including any governmental department, 
                  commission, 
	 	 	 	
                  bureau,
                    board or administration agency, any
                    right of termination, cancellation or suspension of, or constitute
                    a
                    breach of or result in a default under, any permit, license,
                    control or
                    authority issued to the Vendor which is necessary or desirable
                    in
                    connection with the conduct and operations of its respective
                    Business and
                    the ownership or leasing of its respective Assets or other assets;
                    or
 

        

         

        
          
            	 	 	(v) 	constitute  a  default
                    by,  or
                    any event  which, with the giving of notice or lapse of
                    time or
                    both,  might constitute  an  event of default,
                    under any
                    agreement,
	
                  	 	 	
                    contract,
                      indenture or
                      other  constitute a default by, or any event
                      which, with the
                      giving of notice or lapse of time or both, might constitute
                      an event of
                      default, under any agreement, contract, indenture or other
                      instrument of
                      the Vendor which would give any party to that agreement, contract,
                      indenture or other instrument the right to terminate, accelerate,
                      modify,
                      or effect any act which would materially negatively affect
                      the
                      Assets; 

                  

          

           

          
            

            
              	 	
                      (r)

                    	
                      the
                        Vendor is not aware of any fact or circumstance which has
                        not been
                        disclosed to the Purchaser which should be disclosed in order
                        to prevent
                        the representations, warranties and covenants contained in
                        this section
                        from being misleading or which would likely affect the decision
                        of the
                        Purchaser to enter into this Agreement;

                    

            

          

           

           

          
            

            
              	 	
                      (s)

                    	
                      neither
                        this Agreement nor any other document, certificate or statement
                        furnished
                        to the Purchaser by or on behalf of the Vendor in connection
                        with the
                        transactions contemplated hereby knowingly or negligently
                        contains any
                        untrue or incomplete statement of material fact or omits
                        to state a
                        material fact necessary in order to make the statements therein
                        not
                        misleading which would likely affect the decision of the
                        Purchaser to
                        enter into this Agreement; and

                    

            

             

            
              

              
                	 	
                        (t)

                      	
                        the
                          Vendor will employ good faith, due diligence, and best
                          efforts to perform
                          its obligations of this Agreement and will enter into such
                          additional or
                          collateral agreements as may be reasonably required by
                          the Purchaser to
                          effect and complete the objects and intent of this
                          Agreement.

                      

              

               

               

              
                
                  
                  

                

                
                  6

                  
                    

                  

                

                
                  
                  

                

              

            

          

        

      

       

      4.2  Continuity
        of the Representations, Warranties and Covenants by the
        Vendor.
        The
        representations, warranties and covenants by the Vendor contained in this
        Article, or in any certificates or documents delivered pursuant to the
        provisions of this Agreement or in connection with the transactions contemplated
        hereby, will be true at and as of the Effective Date. Notwithstanding any
        investigations or inquiries made by the Purchaser or by the Purchaser’s
        professional advisors, or the waiver of any condition by the Purchaser, the
        representations, warranties and covenants of the Vendor contained in this
        Article shall continue in full force and effect for a period of twelve (12)
        months from the Effective Date; provided, however, that the Vendor shall
        not be
        responsible for the breach of any representation, warranty or covenant of
        the
        Vendor contained herein caused by any act or omission of the Purchaser. In
        the
        event that any of the representations, warranties or covenants of the Vendor
        are
        found by a Court of competent jurisdiction to be incorrect and such
        incorrectness results in any loss or damage sustained, directly or indirectly,
        by the Purchaser, then the Vendor will pay the amount of such loss or damage
        to
        the Purchaser within 30 calendar days of receiving notice of judgment therefor;
        provided that the Purchaser will not be entitled to make any claim unless
        the
        loss or damage suffered may exceed the amount of $10,000.

      

      

      Article
        5

      WARRANTIES,
        REPRESENTATIONS AND COVENANTS BY THE PURCHASER

      

      5.1  Warranties,
        Representations and Covenants by the Purchaser.
        In
        order to induce the Vendor to enter into and consummate this Agreement, the
        Purchaser hereby warrants to and represents to the Vendor that, to the best
        of
        the informed knowledge, information and belief of the Purchaser, after having
        made due inquiry:

      

      (a) the
        Purchaser is duly incorporated under the laws of its jurisdiction of
        incorporation and is validly existing and in good standing with respect to
        all
        statutory filings required by the applicable corporate laws;

      

      
        	 	
                (b)

              	
                the
                  execution and delivery of this Agreement and the agreements contemplated
                  hereby has been duly authorized by all necessary corporate action
                  on its
                  part;

              

      

      

      
        	 	
                (c)

              	
                there
                  are no consents, approvals or conditions precedent to the performance
                  of
                  this Agreement;

              

      

      

      
        	 	
                (d)

              	
                this
                  Agreement constitutes a legal, valid and binding obligation of
                  the
                  Purchaser enforceable against the Purchaser in accordance with
                  its terms,
                  except as enforcement may be limited by laws of general application
                  affecting the rights of creditors;

              

      

      

      
        	 	
                (e)

              	
                no
                  proceedings are pending for, and the Purchaser is unaware of, any
                  basis
                  for the institution of any proceedings leading to the dissolution
                  or
                  winding up of the Purchaser or the placing of the Purchaser in
                  bankruptcy
                  or subject to any other laws governing the affairs of insolvent
                  companies;

              

      

      

      
        	 	
                (f)

              	
                the
                  Purchaser is not in breach of any laws, ordinances, statutes, regulations,
                  by-laws, orders or decrees to which it is subject or which apply
                  to
                  it;

              

      

      

      
        	 	
                (g)

              	
                there
                  has been and there will be prepared and filed on a timely basis
                  all
                  federal and state income tax returns, elections and designations,
                  and all
                  other governmental returns, notices and reports of which the Purchaser
                  had, or ought reasonably to have had, knowledge required to be
                  or
                  reasonably capable of being filed with respect to the operations
                  of the
                  Purchaser, and no such returns, elections, designations, notices
                  or
                  reports contain or will contain any material misstatement or omit
                  any
                  material statement that should have been included, and each such
                  return,
                  election, designation, notice or report, including accompanying
                  schedules
                  and statements, is and will be true, correct and complete in all
                  material
                  respects;

              

      

       

       

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      
 

      
        	 	
                (h)

              	
                the
                  making of this Agreement and the completion of the transactions
                  contemplated hereby and the performance of and compliance with
                  the terms
                  hereof does not and will not:

              

      

      

      
        	 	 	
                (i)

              	
                conflict
                  with or result in a breach of or violate any of the terms, conditions
                  or
                  provisions of the constating documents of the
                  Purchaser;

              

      

      

      
        	 	 	
                (ii)

              	
                conflict
                  with or result in a breach of or violate any of the terms, conditions
                  or
                  provisions of any law, judgment, order, injunction, decree, regulation
                  or
                  ruling of any Court or governmental authority, domestic or foreign,
                  to
                  which the Purchaser is subject, or constitute or result in a default
                  under
                  any agreement, contract or commitment to which the Purchaser is
                  a
                  party;

              

      

      

      
        	 	 	
                (iii)

              	
                give
                  to any party the right of termination, cancellation or acceleration
                  in or
                  with respect to any agreement, contract or commitment to which
                  the
                  Purchaser is a party;

              

      

      

      
        	 	 	
                (iv)

              	
                give
                  to any government or governmental authority, or any municipality
                  or any
                  subdivision thereof, including any governmental department, commission,
                  bureau, board or administration agency, any right of termination,
                  cancellation or suspension of, or constitute a breach of or result
                  in a
                  default under, any permit, license, control or authority issued
                  to the
                  Purchaser which is necessary or desirable in connection with the
                  conduct
                  and operations of its business and the ownership or leasing of
                  its
                  business assets; or

              

      

      

      
        	 	 	
                (v)

              	
                constitute
                  a default by the Purchaser, or any event which, with the giving
                  of notice
                  or lapse of time or both, might constitute an event of default,
                  under any
                  agreement, contract, indenture or other instrument relating to
                  any
                  indebtedness of the Purchaser which would give any party to that
                  agreement, contract, indenture or other instrument the right to
                  accelerate
                  the maturity for the payment of any amount payable under that agreement,
                  contract, indenture or other
                  instrument;

              

      

      

      
        	 	
                (i)

              	
                neither
                  this Agreement nor any other document, certificate or statement
                  furnished
                  to the Vendor by or on behalf of the Purchaser in connection with
                  the
                  transactions contemplated hereby knowingly or negligently contains
                  any
                  untrue or incomplete statement of material fact or omits to state
                  a
                  material fact necessary in order to make the statements therein
                  not
                  misleading; 

              

      

       

      
        
          	 	
                  (j)

                	
                  the
                    Purchaser is not aware of any fact or circumstance which has
                    not been
                    disclosed to the Vendor which should be disclosed in order to
                    prevent the
                    representations, warranties and covenants contained in this section
                    from
                    being misleading or which would likely affect the decision of
                    the Vendor
                    to enter into this Agreement;
                    and

                

        

        
          	 	
                  (k)

                	
                  
                    the
                      Purchaser will employ good faith, due diligence, and best efforts
                      to
                      perform its obligations of this Agreement and will enter into
                      such
                      additional or collateral agreements as may be reasonably required
                      to
                      effect and complete the objects and intent of this
                      Agreement.

                  

                

        

         

         

         

        
          
            
            

          

          
            8

            
              

            

          

          
            
            

          

        

         

      

      5.2  Continuity
        of the Representations, Warranties and Covenants by the
        Purchaser.
        The
        representations, warranties and covenants of the Purchaser contained in this
        Article, or in any certificates or documents delivered pursuant to the
        provisions of this Agreement or in connection with the transactions contemplated
        hereby, will be true at and as of the Effective Date. Notwithstanding any
        investigations or inquiries made by the Vendor or by the Vendor’s respective
        professional advisors prior to the Effective Date, or the waiver of any
        condition by the Vendor, the representations, warranties and covenants of
        the
        Purchaser contained in this Article shall survive the Effective Date and
        shall
        continue in full force and effect for a period of twelve (12) months from
        the
        Effective Date; provided, however, that the Purchaser shall not be responsible
        for the breach of any representation, warranty or covenant of the Purchaser
        contained herein caused by any act or omission of the Vendor. In the event
        that
        any of the said representations, warranties or covenants are found by a Court
        of
        competent jurisdiction to be incorrect and such incorrectness results in
        any
        loss or damage sustained, directly or indirectly, by the Vendor, then the
        Purchaser will pay the amount of such loss or damage to the Vendor within
        30
        calendar days of receiving notice of judgment therefor; provided that the
        Vendor
        will not be entitled to make any claim unless the loss or damage suffered
        may
        exceed the amount of $10,000.

      

      

      

      Article
        6 

      ADDITIONAL
        TERMS

      

      

      6.1  Opinions,
        Reports and Advice of the Vendor.
        The
        Vendor hereby acknowledges and agrees that all written and oral opinions,
        reports, advice and materials provided by the Vendor to the Purchaser in
        connection with the Assets hereunder are intended solely for the Purchaser’s
        benefit and for the Purchaser’s use only, and that any such written and oral
        opinions, reports, advice and information are the exclusive property of the
        Purchaser. In this regard the Vendor hereby covenants and agrees that the
        Purchaser may utilize any such opinion, report, advice and materials for
        any
        other purpose whatsoever and, furthermore, may reproduce, disseminate, quote
        from and refer to, in whole or in part, at any time and in any manner, any
        such
        opinion, report, advice and materials in its sole and absolute
        discretion.

      

      6.2  Additional
        Documents and Acts by Vendor.
        The
        Vendor will also cause or deliver, or cause to be delivered, to the Purchaser,
        at the times stipulated, the following:

      

      
        	 	
                (a)

              	
                upon
                  the request of the Purchaser, all documentation as may be necessary
                  and as
                  may be required by counsel for the Purchaser, acting reasonably,
                  to ensure
                  that all of the Assets have been duly transferred, assigned and
                  are
                  registerable in the name of and for the benefit of the Purchaser
                  under
                  applicable corporate laws and including, without limitation, all
                  necessary
                  deeds, conveyances, bills of sale, assurances, transfers, contract
                  assignments, sales agreement assignments, development agreement
                  assignments, royalty assignments, license assignments, manufacturing
                  agreement assignments, supply agreement assignments, consents and
                  any
                  other documents necessary or reasonably required effectively to
                  transfer
                  all of the Assets and the business of the Assets to the Purchaser
                  with a
                  good and marketable title, free and clear of all mortgages, liens,
                  charges, pledges, claims, security interests or encumbrances
                  whatsoever;

              

      

      

      
        	 	
                (b)

              	
                within
                  10 days of the Effective Date, a certified copy of the resolutions
                  of the
                  directors and shareholders of the Vendor authorizing the transfer
                  by the
                  Vendor to the Purchaser of all of the Assets in accordance with
                  the terms
                  of this Agreement;

              

      

      

      
        	 	
                (c)

              	
                within
                  30 days of the Effective Date, all necessary consents and approvals
                  in
                  writing to the completion of the transactions contemplated herein
                  and
                  including, without limitation, approval from all Regulatory Authorities
                  having jurisdiction over the Vendor and the Assets or a certificate
                  of
                  counsel of the Vendor that no such consents are required;
                  and

              

      

       

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      
 

      
        	 	
                (d)

              	
                within
                  30 days of the Effective Date all records, engineering specifications
                  and
                  reports, patents, books, and other documentation pertinent to the
                  Assets
                  and all molds, inventory, customer lists, supply contracts, manufacturing
                  contracts, and all and every part of such matters pertaining to
                  the
                  Assets.

              

      

      

      

      6.3  Additional
        Documents and Acts by Purchaser.
        The
        Purchaser will also cause or deliver, or cause to be delivered, to the Vendor
        or
        the Shareholders, as appropriate, at the times stipulated, the
        following:

      

      (a) within
        ___ days of the date of this Agreement, the Purchaser shall pay
        $____________________, and shall issue ______________________ shares into
        the
        name of ____________________________.

      

      

      6.4  Non-disclosure.
        The
        Parties hereto, for themselves, their officers, directors, shareholders,
        consultants, employees and agents, agree that they each will not disseminate
        or
        disclose, or knowingly allow, permit or cause others to disseminate or disclose
        to third parties who are not subject to express or implied covenants of
        confidentiality, without the other Parties’ express written consent, either: (i)
        the fact or existence of this Agreement or discussions and/or negotiations
        between them involving, inter
        alia,
        possible business transactions; (ii) the possible substance or content of
        those
        discussions; (iii) the possible terms and conditions of any proposed
        transaction; (iv) any statements or representations (whether verbal or written)
        made by either Party in the course of or in connection with those discussions;
        or (v) any written material generated by or on behalf of any Party and such
        contacts, other than such disclosure as may be required under applicable
        securities legislation or regulations, pursuant to any order of a Court or
        on a
“need to know” basis to each of the Parties’ respective professional
        advisors.

      

      

      6.5  Confidential
        Information.
        Each
        Party hereto acknowledges that any and all information which a Party may
        obtain
        from, or have disclosed to it, about the other Parties constitutes valuable
        trade secrets and proprietary confidential information of the other Parties
        (collectively, the “Confidential
        Information”).
        No
        such Confidential Information shall be published by any Party without the
        prior
        written consent of the other Parties hereto, however, such consent in respect
        of
        the reporting of factual data shall not be unreasonably withheld, and shall
        not
        be withheld in respect of information required to be publicly disclosed pursuant
        to applicable securities or corporation laws. Furthermore, each Party hereto
        undertakes not to disclose the Confidential Information to any third party
        without the prior written approval of the other Parties and to ensure that
        any
        third party to which the Confidential Information is disclosed shall execute
        an
        agreement and undertaking on the same terms as contained herein.

      

      6.6      Impact
        of Breach of Confidentiality.
        The
        Parties hereto acknowledge that the Confidential Information is important
        to the
        respective businesses of each of the Parties and that, in the event of
        disclosure of the Confidential Information, except as authorized hereunder,
        the
        damage to each of the Parties hereto, or to either of them, may be irreparable.
        For the purposes of the foregoing sections the Parties recognize and hereby
        agree that a breach by any of the Parties of any of the covenants therein
        contained would result in irreparable harm and significant damage to each
        of the
        other Parties that would not be adequately compensated for by monetary award.
        Accordingly, the Parties agree that in the event of any such breach, in addition
        to being entitled as a matter of right to apply to a Court of competent
        equitable jurisdiction for relief by way of restraining order, injunction,
        decree or otherwise as may be appropriate to ensure compliance with the
        provisions hereof, any such Party will also be liable to the other Parties,
        as
        liquidated damages, for an amount equal to the amount received and earned
        by
        such Party as a result of and with respect to any such breach. The Parties
        also
        acknowledge and agree that if any of the aforesaid restrictions, activities,
        obligations or periods are considered by a Court of competent jurisdiction
        as
        being unreasonable, the Parties agree that said Court shall have authority
        to
        limit such restrictions, activities or periods as the court deems proper
        in the
        circumstances. In addition, the Parties further acknowledge and agree that
        all
        restrictions or obligations in this Agreement are necessary and fundamental
        to
        the protection of the respective businesses of each of the Parties and are
        reasonable and valid, and all defenses to the strict enforcement thereof
        by
        either of the Parties are hereby waived by the other Parties.

      

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      6.7  Events.
        If any
        Party hereto is at any time prevented or delayed in complying with any
        provisions of this Agreement by reason of strikes, walk-outs, labour shortages,
        power shortages, fires, wars, acts of God, earthquakes, storms, floods,
        explosions, accidents, protests or demonstrations by environmental lobbyists
        or
        native rights groups, delays in transportation, breakdown of machinery,
        inability to obtain necessary materials in the open market, unavailability
        of
        equipment, governmental regulations restricting normal operations, shipping
        delays or any other reason or reasons beyond the control of that Party, then
        the
        time limited for the performance by that Party of its respective obligations
        hereunder shall be extended by a period of time equal in length to the period
        of
        each such prevention or delay.

      

      6.8  Notice.
        A Party
        shall, within seven calendar days, give notice to the other Party of each
        event
        of force
        majeure
        under
        section “14.1” hereinabove, and upon cessation of such event shall furnish the
        other Party with notice of that event together with particulars of the number
        of
        days by which the obligations of that Party hereunder have been extended
        by
        virtue of such event of force
        majeure
        and all
        preceding events of force
        majeure.

      

      

      6.9  Default.
        The
        Parties hereto agree that if any Party hereto is in default with respect
        to any
        of the provisions of this Agreement (herein called the “Defaulting
        Party”),
        the
        non-defaulting Party (herein called the “Non-Defaulting
        Party”)
        shall
        give notice to the Defaulting Party designating such default, and within
        10
        calendar days after its receipt of such notice, the Defaulting Party shall
        cure
        such default, or commence proceedings to cure such default and prosecute
        the
        same to completion without undue delay.

      

      

      6.10  Indemnification.
        The
        Parties hereto agree to indemnify and save harmless the other Party hereto,
        including its respective affiliates and their respective directors, officers,
        employees and agents (each such party being an “Indemnified
        Party”)
        from
        and against any and all losses, claims, actions, suits, proceedings, damages,
        liabilities or expenses of whatever nature or kind, including any investigation
        expenses incurred by any Indemnified Party, to which an Indemnified Party
        may
        become subject by reason of an act or inaction of the other Party.

      

      6.11  Claim
        of Indemnification.
        The
        Parties hereto agree to waive any right they might have of first requiring
        the
        Indemnified Party to proceed against or enforce any other right, power, remedy,
        security or claim payment from any other person before claiming this
        indemnity.

      

      6.12  Notice
        of Claim.
        In case
        any action is brought against an Indemnified Party in respect of which indemnity
        may be sought against any of the Parties hereto, the Indemnified Party will
        give
        the relevant Party hereto prompt written notice of any such action of which
        the
        Indemnified Party has knowledge and such Party will undertake the investigation
        and defense thereof on behalf of the Indemnified Party, including the prompt
        retaining of counsel acceptable to the Indemnified Party affected and the
        payment of all expenses. Failure by the Indemnified Party to so notify shall
        not
        relieve any Party hereto of such Party’s obligation of indemnification hereunder
        unless (and only to the extent that) such failure results in a forfeiture
        by any
        Party hereto of substantive rights or defenses.

      

      6.13  Settlement.
        No
        admission of liability and no settlement of any action shall be made without
        the
        consent of the Indemnified Party affected, such consent not to be unreasonably
        withheld.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      6.14  Legal
        Proceedings.
        Notwithstanding that the relevant Party hereto will undertake the investigation
        and defense of any action, an Indemnified Party will have the right to employ
        separate counsel in any such action and participate in the defense thereof,
        but
        the fees and expenses of such counsel will be at the expense of the Indemnified
        Party unless:

      

      
        	 	
                (a)

              	
                such
                  counsel has been authorized by the relevant Party
                  hereto;

              

      

      

      
        	 	
                (b)

              	
                the
                  relevant Party hereto has not assumed the defense of the action
                  within a
                  reasonable period of time after receiving notice of the
                  action;

              

      

      

      
        	 	
                (c)

              	
                the
                  named parties to any such action include that any Party hereto
                  and the
                  Indemnified Party shall have been advised by counsel that there
                  may be a
                  conflict of interest between any Party hereto and the Indemnified
                  Party;
                  or

              

      

      

      
        	 	
                (d)

              	
                there
                  are one or more legal defenses available to the Indemnified Party
                  which
                  are different from or in addition to those available to any Party
                  hereto.

              

      

      

      

      6.15  Notice.
        Each
        notice, demand or other communication required or permitted to be given under
        this Agreement shall be in writing and shall be sent by prepaid registered
        mail
        addressed to the Party entitled to receive the same, or delivered to such
        Party,
        at the address for such Party specified above. The date of receipt of such
        notice, demand or other communication shall be the date of delivery thereof
        if
        delivered, or, if given by registered mail as aforesaid, shall be deemed
        conclusively to be the third calendar day after the same shall have been
        so
        mailed, except in the case of interruption of postal services for any reason
        whatsoever, in which case the date of receipt shall be the date on which
        the
        notice, demand or other communication is actually received by the addressee.
        Either Party may at any time and from time to time notify the other Party
        in
        writing of a change of address and the new address to which notice shall
        be
        given to it thereafter until further change.

      

      

      Article
        7

      GENERAL
        PROVISIONS

      

      7.1  Entire
        Agreement.
        This
        Agreement constitutes the entire agreement to date between the Parties hereto
        and supersedes every previous agreement, communication, expectation,
        negotiation, representation or understanding, whether oral or written, express
        or implied, statutory or otherwise, between the Parties hereto with respect
        to
        the subject matter of this Agreement.

      

      7.2  Enurement.
        This
        Agreement will enure to the benefit of and will be binding upon the Parties
        hereto, their respective heirs, executors, administrators and
        assigns.

      

      7.3  Schedules.
        The
        Schedules to this Agreement are hereby incorporated by reference into this
        Agreement in its entirety.

      

      7.4  Time
        of the Essence.
        Time
        will be of the essence of this Agreement.

      

      7.5  Representation
        and Costs.
        It is
        hereby acknowledged by each of the Parties hereto that, as between the Parties
        hereto, John D. Briner Law Corporation, acts solely for the Purchaser, and
        that
        the Vendor has been advised to obtain independent legal advice with respect
        to
        their respective reviews and execution of this Agreement. In addition, it
        is
        hereby further acknowledged and agreed by the Parties hereto that each Party
        to
        this Agreement will bear and pay its own costs, legal and otherwise, in
        connection with its respective preparation, review and execution of this
        Agreement and, in particular, that the costs involved in the preparation
        of this
        Agreement, and all documentation necessarily incidental thereto, shall be
        at the
        cost of the Purchaser.

       

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      
7.6  Applicable
        Law.
        The
        situs of this Agreement is Phoenix, Arizona, and for all purposes this Agreement
        will be governed exclusively by and construed and enforced in accordance
        with
        the laws and Courts prevailing in the State of Arizona.

      

      7.7  Further
        Assurances.
        The
        Parties hereto hereby, jointly and severally, covenant and agree to forthwith,
        upon request, execute and deliver, or cause to be executed and delivered,
        such
        further and other deeds, documents, assurances and instructions as may be
        required by the Parties hereto or their respective counsel in order to carry
        out
        the true nature and intent of this Agreement.

      

      7.8  Currency.
        Unless
        otherwise stipulated, all payments required to be made pursuant to the
        provisions of this Agreement and all money amount references contained herein
        are in lawful currency of the U.S.A.

      

      7.9  Severability
        and Construction.
        Each
        Article, section, paragraph, term and provision of this Agreement, and any
        portion thereof, shall be considered severable, and if, for any reason, any
        portion of this Agreement is determined to be invalid, contrary to or in
        conflict with any applicable present or future law, rule or regulation in
        a
        final unappealable ruling issued by any court, agency or tribunal with valid
        jurisdiction in a proceeding to any of the Parties hereto is a party, that
        ruling shall not impair the operation of, or have any other effect upon,
        such
        other portions of this Agreement as may remain otherwise intelligible (all
        of
        which shall remain binding on the Parties and continue to be given full force
        and agreement as of the date upon which the ruling becomes final).

      

      7.10  Captions.
        The
        captions, section numbers and Article numbers appearing in this Agreement
        are
        inserted for convenience of reference only and shall in no way define, limit,
        construe or describe the scope or intent of this Agreement nor in any way
        affect
        this Agreement.

      

      7.11  Counterparts.
        This
        Agreement may be signed by the Parties hereto in as many counterparts as
        may be
        necessary and, if required, by facsimile, each of which so signed being deemed
        to be an original, and such counterparts together shall constitute one and
        the
        same instrument and notwithstanding the date of execution will be deemed
        to bear
        the Execution Date as set forth on the front page of this Agreement.

      

      7.12  Consents
        and Waivers.
        No
        consent or waiver expressed or implied by either Party hereto in respect
        of any
        breach or default by any other Party in the performance by such other of
        its
        obligations hereunder shall:

      

      
        	 	
                (a)

              	
                be
                  valid unless it is in writing and stated to be a consent or waiver
                  pursuant to this section;

              

      

      

      
        	 	
                (b)

              	
                be
                  relied upon as a consent to or waiver of any other breach or default
                  of
                  the same or any other obligation;

              

      

      

      
        	 	
                (c)

              	
                constitute
                  a general waiver under this Agreement;
                  or

              

      

      

      
        	 	
                (d)

              	
                eliminate
                  or modify the need for a specific consent or waiver pursuant to
                  this
                  section in any other or subsequent
                  instance.

              

      

       

       

      
 

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      

      IN
        WITNESS WHEREOF
        each of
        the Parties hereto has set their respective hands and seals in the presence
        of
        their duly authorized signatories as of the Execution Date determined
        hereinabove.

                                
)

                                                                                        
        )

      SAMI
        SALABI                                               
        )

      

      

      

      

      The
        COMMON SEAL of    )

      THE
        TRADESHOW MARKETING ) 

      COMPANY
        LTD     )

      the
        Purchaser
        herein,                                                )

      was
        hereunto affixed in the presence of:  )   (C/S)

                                                                                         
         )

                                                                                          
        )

                                                                                          
        )

      Authorized
        Signatory                                            
          )

      

      

      

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      

      SCHEDULE
        “A”

      

      

      THIS
        IS SCHEDULE “A”
        to the
        Asset Purchase Agreement dated the ___ day of _____________, 2005.

      

      

      

      

      The
        Assets

      

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      Schedule
        “B”:

      Assignment
        of Lease for Paradise Valley Mall outlet

       

       

       

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      Schedule
        “C”:

      Assignment
        of Lease for Arrowhead Town Center outlet

       

       

       

      17<PAGE>
                                                                     EXHIBIT 4.1

                          SECURITIES PURCHASE AGREEMENT

          THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of acceptance
set forth below, is entered into by and among ADVANCED TECHNOLOGY INDUSTRIES,
INC., a Delaware corporation, with headquarters located at 211 Madison Avenue,
#28B, New York, New York 10016 (the "Company"), and the entity (other than the
Company) named on a signature page hereto (as used herein, such signatory is
referred to as the "Lender").

                              W I T N E S S E T H:

          WHEREAS, the Company and the Lender are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from securities
registration for offers and sales under Regulation D as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 Act"), and/or Section 4(2) of the
1933 Act; and

          WHEREAS, the Lender wishes to lend funds to the Company, subject to
and upon the terms and conditions of this Agreement (and acceptance of this
Agreement by the Company, the repayment of which will be represented by 9%
Convertible Debentures of the Company (the "Convertible Debentures"), which
Convertible Debentures will be convertible into shares of Common Stock of the
Company (the "Common Stock"), upon the terms and subject to the conditions of
such Convertible Debentures) together with the Warrants (as defined below)
exercisable for the purchase of shares of Common Stock;

          NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

     1. AGREEMENT TO PURCHASE; PURCHASE PRICE.

          A. PURCHASE.

          (i) Subject to the terms and conditions of this Agreement and the
other Transaction Agreements, the undersigned hereby agrees to loan to the
Company One Hundred Fifty Thousand ($150,000) Dollars (the "Purchase Price").
The obligation to repay the loan from the Lender shall be evidenced by the
Company's issuance of one or more Convertible Debentures to the Lender in such
principal amount (the "Debentures"). Each Debenture (i) shall provide for a
conversion price (the "Conversion Price"), which price may be adjusted from time
to as provided in the Debenture or in the other Transaction Agreements, (ii)

<PAGE>

shall have the terms and conditions of, and be substantially in the form
attached hereto as ANNEX I and (iii) shall have such number of Warrants attached
as provided in Section 4(f) below. The loan to be made by the Lender and the
issuance of the Debentures and Warrants to the Lender are sometimes referred to
herein and in the other Transaction Agreements as the purchase and sale of the
Debentures and Warrants.

          (ii) The Purchase Price to be paid by the Lender shall be equal to the
face amount of the Debentures being purchased on the relevant Closing Date (as
defined below) and shall be payable in United States Dollars.

          B. CERTAIN DEFINITIONS. As used herein, each of the following terms
has the meaning set forth below, unless the context otherwise requires:

          (i) "Affiliate" means, with respect to a specific Person referred to
in the relevant provision, another Person who or which controls or is controlled
by or is under common control with such specified Person.

          (ii) "Certificates" means the Debentures and the Warrants, each duly
executed by the Company and issued on the Closing Date (as defined below) in the
name of the Lender.

          (iii) "Closing Date" means as defined in Section 6 herein.

          (iv) "Closing Price" means the closing bid price during regular
trading hours of the Common Stock (in U.S. Dollars) on the Principal Trading
Market, as reported by the Reporting Service.

          (v) "Company Control Person" means each current director, executive
officer, promoter, and such other Persons as may be deemed in control of the
Company pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act
(as defined below).

          (vi) "Company Securities" means shares of Common Stock or securities
convertible into and/or rights exercisable for the issuance of shares of Common
Stock.

          (vii) "Conversion Shares" means the shares of Common Stock issuable
upon conversion of the Debentures (including, if relevant, accrued interest on
the Debentures so converted).

          (viii) "Disclosure Letter" means a letter dated the date hereof from
the Company to the Lender arranged in sections corresponding to the identified
Sections of this Agreement; provided that any matter set forth in any section of
the Disclosure Letter shall, unless the context otherwise requires, be deemed
set forth for all purposes of the Disclosure Letter.

          (ix) "Effective Date" means the effective date of the Registration
Statement.

                                       2
<PAGE>

          (x) "Escrow Agent" means the escrow agent identified in the Joint
Escrow Instructions attached hereto as ANNEX II (the "Joint Escrow
Instructions").

          (xi) "Escrow Funds" means the Purchase Price delivered to the Escrow
Agent as contemplated by Sections 1(c) and (d) hereof.

          (xii) "Escrow Property" means the Escrow Funds and the Certificates
delivered to the Escrow Agent as contemplated by Section 1(c) hereof.

          (xiii) "Fixed Conversion Price" shall have the meaning ascribed to it
in the Debenture.

          (xiv) "Holder" means the Person owning or having the right to acquire
Registrable Securities or any permitted transferee of a Holder.

          (xv) "Last Audited Date" means December 31, 2004.

          (xvi) "Lender Control Person" means each current director, executive
officer, promoter, and such other Persons as may be deemed in control of the
Lender pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act (as
defined below).

          (xvii) "Material Adverse Effect" means an event or combination of
events, which individually or in the aggregate, would reasonably be expected to
(w) adversely affect the legality, validity or enforceability of the Securities
or any of the Transaction Agreements, (x) have or result in a material adverse
effect on the results of operations, assets, or financial condition of the
Company and its subsidiaries, taken as a whole, or (y) adversely impair the
Company's ability to perform fully on a timely basis its obligations under any
of the Transaction Agreements or the transactions contemplated thereby.

          (xviii) "New Transaction" means the sale by the Company of Securities
consummated after the date hereof; provided that a New Transaction shall not
include (1) the issuance of Company Securities upon the exercise or conversion
of options, warrants or convertible securities outstanding on the date hereof,
(2) the sale of the Securities to the Lender, (3) the issuance of Company
Securities to employees or consultants of the Company or its subsidiaries or (4)
the sale of Company Securities set forth on Schedule 1 hereto.

          (xix) "Person" means any living person or any entity, such as, but not
necessarily limited to, a corporation, partnership or trust.

          (xx) "Principal Trading Market" means the OTC Electronic Bulletin
Board .

          (xxi) "Registrable Securities" shall have the meaning ascribed to it
in the Registration Rights Agreement.

                                       3
<PAGE>

          (xxii) "Registration Rights Agreement" means the Registration Rights
Agreement attached hereto as Annex IV.

          (xxiii) "Registration Statement" means a registration statement or an
amendment thereto of the Company under the Securities Act covering Registrable
Securities.

          (xxiv) "Reporting Service" means Bloomberg LP or if that service is
not then reporting the relevant information regarding the Common Stock, a
comparable reporting service of national reputation selected by the Holders of
more than 50% of the outstanding Debentures at such time and reasonably
acceptable to the Company.

          (xxv) "Securities" means the Debentures, the Warrants, and the Shares.

          (xxvi) "Security Agreement" means the Security Agreement attached
hereto as Annex VIII.

          (xxvii) "Shares" means the shares of Common Stock representing any or
all of the Conversion Shares and the Warrant Shares.

          (xxviii) "State of Incorporation" means Delaware.

          (xxix) "Trading Day" means any day during which the Principal Trading
Market shall be open for business.

          (xxx) "Transaction Agreements" means the Securities Purchase
Agreement, the Debentures, the Joint Escrow Instructions, the Security
Agreement, the Registration Rights Agreement, and the Warrants and includes all
ancillary documents referred to in those agreements.

          (xxxi) "Variable Conversion Rate" shall have the meaning ascribed to
it in the Debenture.

          (xxxii) "Warrant Shares" means the shares of Common Stock issuable
upon exercise of the Warrants.

          C. FORM OF PAYMENT; DELIVERY OF CERTIFICATES.

     (i) The Lender shall pay the Lender's applicable Purchase Price by
delivering immediately available good funds in United States Dollars to the
Escrow Agent no later than the date prior to the Closing Date.

          (ii) No later than the Closing Date, but in any event promptly
following payment by the Lender to the Escrow Agent of the Purchase Price, the
Company shall deliver the Certificates, each duly executed on behalf of the
Company and issued in the name of the Lender, to the Escrow Agent.

                                       4
<PAGE>

          (iii) By signing this Agreement, the Lender and the Company, subject
to acceptance by the Escrow Agent, agrees to all of the terms and conditions of,
and becomes a party to, the Joint Escrow Instructions, all of the provisions of
which are incorporated herein by this reference as if set forth in full.

          D. METHOD OF PAYMENT. Payment into escrow of the Purchase Price shall
be made by wire transfer of funds to:

             Bank of New York
             350 Fifth Avenue
             New York, New York 10001

             ABA# 021000018
             For credit to the account of Krieger & Prager LLP
             Account No.: 637-2288475
             Re: AVDI Transaction

          2. LENDER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.

          The Lender represents and warrants to, and covenants and agrees with,
the Company as follows:

          A. Without limiting the Lender's right to sell the Shares pursuant to
a Registration Statement or otherwise to sell any of the Securities in
compliance with the 1933 Act, the Lender is purchasing the Securities and will
be acquiring the Shares for its own account for investment only and not with a
view towards the public sale or distribution thereof and not with a view to or
for sale in connection with any distribution thereof.

          B. The Lender is (i) an "accredited investor" as that term is defined
in Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3), (ii) experienced in making investments of the kind described in
this Agreement and the related documents, (iii) able, by reason of the business
and financial experience of its officers (if an entity) and professional
advisors (who are not affiliated with or compensated in any way by the Company
or any of its Affiliates or selling agents), to protect its own interests in
connection with the transactions described in this Agreement, and the related
documents, and (iv) able to afford the loss of the entire Purchase Price.

          C. All subsequent offers and sales of the Securities by the Lender
shall be made pursuant to registration of the Shares under the 1933 Act or
pursuant to an exemption from registration.

                                       5
<PAGE>

          D. The Lender understands that the Securities are being offered and
sold to it in reliance on specific exemptions from the registration requirements
of the 1933 Act and state securities laws and that the Company is relying upon
the truth and accuracy of, and the Lender's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Lender set forth herein in order to determine the availability of such
exemptions and the eligibility of the Lender to acquire the Securities.

          E. The Lender and its advisors, if any, have been furnished with or
have been given access to all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Securities and the offer of the Shares which have been requested by the Lender,
including those set forth on ANNEX V hereto. The Lender and its advisors, if
any, have been afforded the opportunity to ask questions of the Company and have
received complete and satisfactory answers to any such inquiries. Without
limiting the generality of the foregoing, the Lender has also had the
opportunity to obtain and to review the Company's filings on EDGAR listed on
ANNEX VII hereto (the documents listed on such Annex VII, to the extent
available on EDGAR or otherwise provided to the Lender as indicated on said
Annex VII, collectively, the "Company's SEC Documents").

          F. The Lender understands that its investment in the Securities
involves a high degree of risk.

          G. The Lender hereby represents that, in connection with its purchase
of the Securities, it has not relied on any statement or representation by the
Company or any of their respective officers, directors and employees or any of
their respective attorneys or agents, except as specifically set forth herein.

          H. The Lender 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 Securities.

          I. This Agreement and the other Transaction Agreements to which the
Lender is a party, and the transactions contemplated thereby, have been duly and
validly authorized, executed and delivered on behalf of the Lender and are valid
and binding agreements of the Lender enforceable in accordance with their
respective terms, subject as to enforceability to general principles of equity
and to bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally.

          J. The Lender has taken no action which would give rise to any claim
by any Person for brokerage commission, finder's fees or similar payments by the
Company relating to this Agreement or the transactions contemplated hereby. The
Company shall have no obligation with respect to such fees or with respect to
any claims made by or on behalf of other Persons for fees of a type contemplated
in this paragraph that may be due in connection with the transactions

                                       6
<PAGE>

contemplated hereby. The Lender shall indemnify and hold harmless each of the
Company, its employees, officers, directors, agents, and partners, and their
respective Affiliates, from and against all claims, losses, damages, costs
(including the costs of preparation and attorney's fees) and expenses suffered
in respect of any such claimed or existing fees, as and when incurred.

          3. COMPANY REPRESENTATIONS, ETC. The Company represents and warrants
to the Lender as of the date hereof and as of the Closing Date that, except as
otherwise provided in the Disclosure Letter hereto or in the Company's SEC
Documents:

          A. RIGHTS OF OTHERS AFFECTING THE TRANSACTIONS. There are no
preemptive rights of any shareholder of the Company, as such, to acquire the
Debentures, the Warrants or the Shares. No party other than the Lender has a
currently exercisable right of first refusal which would be applicable to any or
all of the transactions contemplated by the Transaction Agreements.

          B. STATUS. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Incorporation and
has the requisite corporate power to own its properties and to carry on its
business as now being conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in each jurisdiction where
the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have or result in a Material Adverse Effect. The Company
has registered its stock and is obligated to file reports pursuant to Section 12
or Section 15(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act"). The Common Stock is quoted on the Principal Trading Market. The Company
has received no notice, either oral or written, with respect to the continued
eligibility of the Common Stock for such quotation on the Principal Trading
Market, and the Company has maintained all requirements on its part for the
continuation of such quotation.

          C. AUTHORIZED SHARES. The authorized capital stock of the Company
consists of (i) 800,000,000 shares of Common Stock, $0.0001 par value per share,
of which approximately 196,486,890 shares are outstanding as of September 30,
2005, and (ii) 1,000,000 shares of Preferred Stock, none of which are
outstanding. All issued and outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid. The Company has sufficient
authorized and unissued shares of Common Stock as may be necessary to effect the
issuance of the Shares on such date. Except as set forth on Schedule 3 (c),
there were no options, warrants, or rights to subscribe to, securities, rights
or obligations convertible into or exchangeable for or giving any right to
subscribe for any shares of capital stock of the Company. All of the outstanding
shares of Common Stock of the Company have been duly and validly authorized and
issued and are fully paid and nonassessable. The Shares are duly authorized and,
when issued upon conversion of, or as interest on, the Debentures or upon
exercise of the Warrants, each in accordance with its respective terms, will be
duly and validly issued, fully paid and non-assessable and, except to the
extent, if any, provided by the law of the State of Incorporation, will not
subject the Holder thereof to personal liability by reason of being such Holder.

                                       7
<PAGE>

          D. TRANSACTION AGREEMENTS AND STOCK. This Agreement and each of the
other Transaction Agreements, and the transactions contemplated thereby, have
been duly and validly authorized by the Company, this Agreement has been duly
executed and delivered by the Company and this Agreement is, and the Debentures,
the Warrants and each of the other Transaction Agreements, when executed and
delivered by the Company, will be, valid and binding agreements of the Company
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium, and other similar laws affecting the enforcement of creditors'
rights generally.

          E. NON-CONTRAVENTION. The execution and delivery of this Agreement and
each of the other Transaction Agreements by the Company, the issuance of the
Debentures and the Warrants, and the consummation by the Company of the other
transactions contemplated by this Agreement, the Debentures, the Warrants and
the other Transaction Agreements do not and will not conflict with or result in
a breach by the Company of any of the terms or provisions of, or constitute a
default under (i) the certificate of incorporation or by-laws of the Company,
each as currently in effect, (ii) any indenture, mortgage, deed of trust, or
other material agreement or instrument to which the Company is a party or by
which it or any of its properties or assets are bound, including any listing
agreement for the Common Stock except as herein set forth, or (iii) to its
knowledge, any existing applicable law, rule, or regulation or any applicable
decree, judgment, or order of any court, United States federal or state
regulatory body, administrative agency, or other governmental body having
jurisdiction over the Company or any of its properties or assets, except such
conflict, breach or default which would not have or result in a Material Adverse
Effect.

          F. APPROVALS. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the shareholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities to the Lender as
contemplated by this Agreement.

          G. FILINGS. None of the Company's SEC Documents contained, at the time
they were filed, any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
made therein in light of the circumstances under which they were made, not
misleading

          H. ABSENCE OF CERTAIN CHANGES. Since the Last Audited Date, there has
been no material adverse change and no Material Adverse Effect, except as
disclosed in the Company's SEC Documents. Since the Last Audited Date, except as
provided in the Company's SEC Documents, the Company has not (i) incurred or
become subject to any material liabilities (absolute or contingent) except
liabilities incurred in the ordinary course of business consistent with past
practices; (ii) discharged or satisfied any material lien or encumbrance or paid
any material obligation or liability (absolute or contingent), other than
current liabilities paid in the ordinary course of business consistent with past
practices; (iii) declared or made any payment or distribution of cash or other
property to shareholders with respect to its capital stock, or purchased or
redeemed, or made any agreements to purchase or redeem, any shares of its
capital stock; (iv) sold, assigned or transferred any other tangible assets, or

                                       8
<PAGE>

canceled any material debts owed to the Company by any third party or material
claims of the Company against a third party, except in the ordinary course of
business consistent with past practices; (v) suffered any substantial losses or
waived any rights of material value, whether or not in the ordinary course of
business, or suffered the loss of any material amount of existing business; (vi)
made any increases in employee compensation, except in the ordinary course of
business consistent with past practices; or (vii) experienced any material
problems with labor or management in connection with the terms and conditions of
their employment.

          I. FULL DISCLOSURE. There is no fact known to the Company (other than
general economic conditions and other facts known to the public generally or as
disclosed in the Company's SEC Documents) that has not been disclosed in writing
to the Lender that would reasonably be expected to have or result in a Material
Adverse Effect.

          J. ABSENCE OF LITIGATION. Except as disclosed in the Company's SEC
Documents, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board or body pending or, to the knowledge of the
Company, threatened against or affecting the Company before or by any
governmental authority or nongovernmental department, commission, board, bureau,
agency or instrumentality or any other person, wherein an unfavorable decision,
ruling or finding would have a Material Adverse Effect or which would adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, any of the Transaction Agreements. The
Company is not aware of any valid basis for any such claim that (either
individually or in the aggregate with all other such events and circumstances)
could reasonably be expected to have a Material Adverse Effect. Except as
disclosed in the Company's SEC Documents, there are no outstanding or
unsatisfied judgments, orders, decrees, writs, injunctions or stipulations to
which the Company is a party or by which it or any of its properties is bound,
that involve the transaction contemplated herein or that, alone or in the
aggregate, could reasonably be expect to have a Material Adverse Effect.

          K. ABSENCE OF EVENTS OF DEFAULT. Except as disclosed in the Company's
SEC Documents, no Event of Default (or its equivalent term), as defined in the
respective agreement to which the Company is a party, and no event which, with
the giving of notice or the passage of time or both, would become an Event of
Default (or its equivalent term) (as so defined in such agreement), has occurred
and is continuing, which would have a Material Adverse Effect.

          L. ABSENCE OF CERTAIN COMPANY CONTROL PERSON ACTIONS OR EVENTS. To the
knowledge of the Company, none of the following has occurred during the past
five (5) years with respect to a Company Control Person:

          (1) A petition under the federal bankruptcy laws or any state
     insolvency law was filed by or against, or a receiver, fiscal agent or
     similar officer was appointed by a court for the business or property of
     such Company Control Person, or any partnership in which he was a general
     partner at or within two years before the time of such filing, or any
     corporation or business association of which he was an executive officer at
     or within two years before the time of such filing;

                                       9
<PAGE>

          (2) Such Company Control Person was convicted in a criminal proceeding
     or is a named subject of a pending criminal proceeding (excluding traffic
     violations and other minor offenses);

          (3) Such Company Control Person was the subject of any order, judgment
     or decree, not subsequently reversed, suspended or vacated, of any court of
     competent jurisdiction, permanently or temporarily enjoining him from, or
     otherwise limiting, the following activities:

               (i)  acting, as an investment advisor, underwriter, broker or
                    dealer in securities, or as an affiliated person, director
                    or employee of any investment company, bank, savings and
                    loan association or insurance company, as a futures
                    commission merchant, introducing broker, commodity trading
                    advisor, commodity pool operator, floor broker, any other
                    Person regulated by the Commodity Futures Trading Commission
                    ("CFTC") or engaging in or continuing any conduct or
                    practice in connection with such activity;

               (ii) engaging in any type of business practice; or

               (iii) engaging in any activity in connection with the purchase or
                    sale of any security or commodity or in connection with any
                    violation of federal or state securities laws or federal
                    commodities laws;

          (4) Such Company Control Person was the subject of any order, judgment
     or decree, not subsequently reversed, suspended or vacated, of any federal
     or state authority barring, suspending or otherwise limiting for more than
     60 days the right of such Company Control Person to engage in any activity
     described in paragraph (3) of this item, or to be associated with Persons
     engaged in any such activity; or

          (5) Such Company Control Person was found by a court of competent
     jurisdiction in a civil action or by the CFTC or SEC to have violated any
     federal or state securities law, and the judgment in such civil action or
     finding by the CFTC or SEC has not been subsequently reversed, suspended,
     or vacated.

          M. PRIOR ISSUES. [Intentionally Omitted]

                                       10
<PAGE>

          N. NO UNDISCLOSED LIABILITIES OR EVENTS. To the knowledge of the
Company, the Company has no liabilities or obligations other than those
disclosed in the Transaction Agreements or the Company's SEC Documents or those
incurred in the ordinary course of the Company's business since the Last Audited
Date, or which individually or in the aggregate, do not or would not have a
Material Adverse Effect. No event or circumstances has occurred or exists with
respect to the Company or its properties, business, operations, condition
(financial or otherwise), or results of operations, which, under applicable law,
rule or regulation, requires public disclosure or announcement prior to the date
hereof by the Company but which has not been so publicly announced or disclosed.
Except as disclosed in the Company's SEC Documents, there are no proposals
currently under consideration or currently anticipated to be under consideration
by the Board of Directors or the executive officers of the Company which
proposal would (X) change the certificate of incorporation or other charter
document or by-laws of the Company, each as currently in effect, with or without
shareholder approval, which change would reduce or otherwise adversely affect
the rights and powers of the shareholders of the Common Stock or (Y) materially
or substantially change the business, assets or capital of the Company,
including its interests in subsidiaries.

          O. NO INTEGRATED OFFERING. Neither the Company nor any of its
Affiliates nor any person acting on its or their behalf has, directly or
indirectly, at any time within the past six months made any offer or sales of
any security or solicited any offers to buy any security under circumstances
that would eliminate the availability of the exemption from registration under
Regulation D in connection with the offer and sale of the Securities as
contemplated hereby.

          P. DILUTION. The number of Shares issuable upon conversion of the
Debentures may have a dilutive effect on the ownership interests of the other
shareholders (and Persons having the right to become shareholders) of the
Company. The Company's executive officers and directors have studied and fully
understand the nature of the Securities being sold hereby and recognize that
they have such a potential dilutive effect. The board of directors of the
Company has concluded, in its good faith business judgment that such issuance is
in the best interests of the Company. The Company specifically acknowledges that
its obligation to issue the Shares upon conversion of the Debentures and upon
exercise of the Warrants is binding upon the Company and enforceable regardless
of the dilution such issuance may have on the ownership interests of other
shareholders of the Company, and the Company will honor every Notice of
Conversion (as defined in the Debentures) relating to the conversion of the
Debentures, and every Notice of Exercise (as contemplated by the Warrants),
unless the Company is subject to an injunction (which injunction was not sought
by the Company) prohibiting the Company from doing so.

          R. TRADING IN SECURITIES. The Company specifically acknowledges that,
except to the extent specifically provided herein or in any of the other
Transaction Agreements (but limited in each instance to the extent so
specified), the Lender retains the right (but are not otherwise obligated) to
buy, sell, engage in hedging transactions or otherwise trade in the securities
of the Company, including, but not necessarily limited to, the Securities, at
any time before, contemporaneous with or after the execution of this Agreement
or from time to time, but only, in each case, in any manner whatsoever permitted
by applicable federal and state securities laws.

                                       11
<PAGE>

          S. FEES TO BROKERS, FINDERS AND OTHERS. Except for payment of fees to
Persons previously disclosed to the Lender, payment of which is the sole
responsibility of the Company pursuant to the terms of the Escrow Agreement, the
Company has taken no action which would give rise to any claim by any Person for
brokerage commission, finder's fees or similar payments by the Lender relating
to this Agreement or the transactions contemplated hereby. The Lender shall have
no obligation with respect to such fees or with respect to any claims made by or
on behalf of other Persons for fees of a type contemplated in this paragraph
that may be due in connection with the transactions contemplated hereby. The
Company shall indemnify and hold harmless each of the Lender, its employees,
officers, directors, agents, and partners, and their respective Affiliates, from
and against all claims, losses, damages, costs (including the costs of
preparation and attorney's fees) and expenses suffered in respect of any such
claimed or existing fees, as and when incurred.

          4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

          A. TRANSFER RESTRICTIONS. The Lender acknowledges that (1) the
Securities have not been and are not being registered under the provisions of
the 1933 Act and, except as provided in the Registration Rights Agreement or
otherwise included in an effective registration statement, the Shares have not
been and are not being registered under the 1933 Act, and may not be transferred
unless (A) subsequently registered thereunder or (B) the Lender shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, to the effect that the Securities to be sold
or transferred may be sold or transferred pursuant to an exemption from such
registration; (2) any sale of the Securities made in reliance on Rule 144
promulgated under the 1933 Act may be made only in accordance with the terms of
said Rule and further, if said Rule is not applicable, any resale of such
Securities under circumstances in which the seller, or the Person through whom
the sale is made, may be deemed to be an underwriter, as that term is used in
the 1933 Act, may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (3) neither the
Company nor any other Person is under any obligation to register the Securities
(other than pursuant to the Registration Rights Agreement) under the 1933 Act or
to comply with the terms and conditions of any exemption thereunder.

          B. RESTRICTIVE LEGEND. The Lender acknowledges and agrees that, until
such time as the Common Stock has been registered under the 1933 Act and sold in
accordance with an effective Registration Statement or otherwise in accordance
with another effective registration statement, the certificates and other
instruments representing any of the Securities (including the Shares) shall bear
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of any such Securities):

                                       12
<PAGE>

     THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
     1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
     SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
     STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER
     EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
     REQUIRED.

          C. FILINGS. The Company undertakes and agrees to make all necessary
filings required to be made by the Company in connection with the sale of the
Debentures and Warrants to the Lender under any United States laws and
regulations applicable to the Company, or by any domestic securities exchange or
trading market, and to provide a copy thereof to the Lender promptly after such
filing.

          D. REPORTING STATUS. So long as the Lender beneficially owns any of
the Securities, the Company shall file all reports required to be filed with the
SEC pursuant to Section 13 or 15(d) of the 1934 Act in a time frame that permits
it to maintain the continued quotation and trading of its Common Stock
(including, without limitation, all Registrable Securities) on the Principal
Trading Market or a listing on the NASDAQ/Small Cap or National Markets and, to
the extent applicable to it, shall take all reasonable action under its control
to ensure that adequate current public information with respect to the Company,
as required in accordance with Rule 144(c)(2) of the 1933 Act, is publicly
available, and shall not terminate its status as an issuer required to file
reports under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would permit such termination. The Company will take all reasonable
action under its control to maintain the continued quotation and trading of its
Common Stock (including, without limitation, all Registrable Securities) on the
Principal Trading Market or a listing on the NASDAQ/Small Cap or National
Markets and, to the extent applicable to it, will comply in all material
respects with the Company's reporting, filing and other obligations under the
by-laws or rules of the Principal Trading Market and/or the National Association
of Securities Dealers, Inc., as the case may be, at least through the date which
is thirty (30) days after the later of the date on which all of the Debentures
have been converted or all of the Warrants have been exercised or have expired.

          E. USE OF PROCEEDS. The Company will use the proceeds received
hereunder (excluding amounts paid by the Company for legal fees, finder's fees
and escrow fees in connection with the sale of the Securities) for general
corporate purposes.

          F. WARRANTS. The Company agrees to issue to the Lender on the Closing
Date transferable divisible warrants (the "Warrants") for the purchase of
2,142,857 Shares at an exercise price of $.10. The Warrants will expire on the
second annual anniversary of the Effective Date. The Warrant shall be in the
form annexed hereto as ANNEX VI.

          G. AVAILABLE SHARES. The Company shall have at all times authorized
and reserved for issuance, free from preemptive rights, a number of shares at
least equal to the sum of (x) one hundred and fifty percent (150%) of the number
of shares of Common Stock issuable as may be required to satisfy the conversion
rights of the Holders of all outstanding Convertible Debentures (including
interest thereon), plus (y) the number of shares issuable upon exercise of all

                                       13
<PAGE>

outstanding Warrants held by all Holders (in each case, whether such Convertible
Debentures or Warrants were originally issued to the Holder, the Lender or to
any other Holder). For the purposes of such calculations, the Company should
assume that all such Debentures were then convertible and all Warrants were then
exercisable without regard to any restrictions which might limit the Lender's
right to convert any of the Convertible Debentures or exercise any of the
Warrants held by any Holder.

          H. PUBLICITY, FILINGS, RELEASES, ETC. Each of the parties agrees that
it will not disseminate any information relating to the Transaction Agreements
or the transactions contemplated thereby, including issuing any press releases,
holding any press conferences or other forums, or filing any reports
(collectively, "Publicity"), without giving the other party reasonable advance
notice and an opportunity to comment on the contents thereof. Neither party will
include in any such Publicity any statement or statements or other material to
which the other party reasonably objects, unless the inclusion of such statement
is required, in the opinion of legal counsel for such party, in order for such
party to comply with its disclosure obligations under applicable law. In
furtherance of the foregoing, the Company will provide to the Lender drafts of
the applicable text of any filing intended to be made with the SEC which refers
to the Transaction Agreements or the transactions contemplated thereby as soon
as practicable (but at least two (2) business days before such filing will be
made) and will not include in such filing any statement or statements or other
material to which the other party reasonably objects , unless the inclusion of
such statement is required, in the opinion of legal counsel for such party, in
order for such party to comply with its disclosure obligations under applicable
law. Notwithstanding the foregoing, each of the parties hereby consents to the
inclusion of the text of the Transaction Agreements in filings made with the SEC
(but any descriptive text accompanying or part of such filing shall be subject
to the other provisions of this paragraph). Notwithstanding, but subject to, the
foregoing, the Company intends to file within four business days following the
Closing Date a Current Report on Form 8-K referring to the transactions
contemplated by the Transaction Documents.

          i. HEDGING TRANSACTIONS. The Lender agrees that as long as it or any
of its Affiliates holds any Securities it shall not, and the Lender shall cause
it Affiliates not to, hold any short sale position or any hedging position with
respect to any Company Securities in excess of $25,000; provided that,
notwithstanding the foregoing, the Lender or such Affiliates may enter into any
such short position or hedging position (i) prior to the Effective Date, at any
time during any period that that the bid price for the Common Stock as reported
by the Reporting Service is equal to or greater than $0.25 (and the Lender or
such Affiliate shall be entitled to hold such short position or hedging position
entered into pursuant to this clause (i) even if the bid price for the Common
Stock declines to less than $0.25) and (ii) in connection with a conversion
under the Debenture or an exercise of the Warrants. The Lender agrees that it
shall not transfer any Securities unless the transferee thereof explicitly
agrees in writing to be bound by the terms hereof, except in connection with

                                       14
<PAGE>

transfers of Shares that are not Registrable Securities. The Company agrees that
unless and until (i) the Company has affirmatively demonstrated by the use of
specific clear and convincing evidence that the Lender has traded in securities
of the Company in violation of applicable federal securities laws and (ii) there
has been issued against the Lender a final non-appealable decision from a court
of competent jurisdiction to the effect that the Lender has violated applicable
federal securities laws with respect to its trading of the Company's securities,
the Lender shall be assumed to be in compliance with such laws and the Company
shall remain obligated to fulfill all of its obligations under each of the
Transaction Agreements; provided, further, that the Company shall under no
circumstances be entitled to request or demand that the Lender affirmatively
demonstrate that it has not engaged in any such violations as a condition to the
Company's fulfillment of its obligations under any of the Transaction Agreements
and shall not assert, whether as an affirmative claim or a defense to any claim
made against the Company, that the Lender's failure to demonstrate such absence
of such violations (including, but not limited to, its failure to provide any
trading or other records, it being specifically agreed that the Company,
directly or indirectly, will request the Lender or any of its agents, advisors,
brokers or representatives to provide such records in any forum) serves either
as a defense to any breach of the Company's obligations under any of the
Transaction Agreements or otherwise reflects adversely in any manner on the
legality of any action taken by the Lender.

          J. CERTAIN AGREEMENTS.

          (i) (A) The term "Lower Price Transaction" means a New Transaction
     consummated during the period (the "New Transaction Period") from the
     Closing Date and continuing through and including the Final Lock-up Date
     (as defined below), where (x) either the lowest fixed purchase price of any
     shares of Common Stock contemplated in the New Transaction or the lowest
     fixed conversion price of any securities of the Company convertible or
     exchangeable into Common Stock which would be applicable under the terms of
     the New Transaction is, or by its terms is, below the Fixed Conversion
     Price or (y) if such purchase price or conversion price is determined by
     multiplying a market price of the Common Stock by a percentage, such
     percentage is below the Variable Conversion Rate (the "Lower Percentage").

          (B) The term "Final Lock-up Date" means the date which is the number
     of days after the Effective Date equal to the sum of (X) ninety (90) days,
     plus (Y) the number of days, if any, during which sale of Registrable
     Securities was suspended after the Effective Date.

          (ii) The Company covenants and agrees that, if there is a Lower Price
Transaction during the New Transaction Period, then;

          (A) if such transaction is of the type contemplated by Section
     4(j)(i)(A)(x), then the Fixed Conversion Price on any principal amount of
     the Debentures which has not been converted as of the relevant date shall
     be adjusted to an amount (the "Adjusted Conversion Price") equal to the
     lower of (1) the lowest fixed purchase price of any shares of the Common
     Stock contemplated in the Lower Price Transaction or (2) the lowest fixed
     conversion price of any securities of the Company convertible or
     exchangeable into Common Stock which would be applicable under the terms of
     the Lower Price Transaction;

                                       15
<PAGE>

          (B) if such transaction is of the type contemplated by Section
     4(j)(ii)(A)(y), then the Variable Conversion Rate on any principal amount
     of the Debentures which has not been converted as of the relevant date
     shall be adjusted to an amount equal to the Lower Percentage; and

          (C) the exercise price on all unexercised Warrants (unless the
     Adjusted Exercise Price (as defined in the Warrants) is then in effect)
     shall be adjusted to equal the lowest of (1) the then existing applicable
     exercise price of such Warrant, and (2) 143% of the Adjusted Conversion
     Price.

          (iii) For purposes of this Section 4(j), the conversion price for
which each share of Common Stock shall be deemed to be issued upon issuance or
sale of any securities convertible, exercisable or exchangeable into Common
Stock shall be determined by dividing (x) the total consideration, if any,
received by the Company as consideration for such securities plus the minimum
aggregate of additional consideration, if any, ever payable to the Company upon
the conversion, exercise or exchange of such securities by (y) the maximum
number of shares of Common Stock ever issuable (except pursuant to anti-dilution
provisions associated with such securities on account of events that are unknown
on such date) upon conversion, exercise or exchange of such securities

          5. TRANSFER AGENT INSTRUCTIONS.

          (a) The Company warrants that, with respect to the Securities, other
than the stop transfer instructions to give effect to Section 4(a) hereof, it
will give its transfer agent no instructions inconsistent with instructions to
issue Common Stock from time to time upon conversion of the Debentures in such
amounts as specified from time to time by the Company to the transfer agent,
bearing the restrictive legend specified in Section 4(b) of this Agreement prior
to registration of the Shares under the 1933 Act, registered in the name of the
Lender or its nominee and in such denominations to be specified by the Lender in
connection with each conversion of the Debentures. Except as so provided, 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 Registration
Rights Agreement. Nothing in this Section shall affect in any way the Lender's
obligations and agreement to comply with all applicable securities laws upon
resale of the Securities. If the Lender provides the Company with an opinion of
counsel reasonably satisfactory to the Company that registration of a resale by
the Lender of any of the Securities in accordance with clause (1)(B) of Section
4(a) of this Agreement is not required under the 1933 Act, the Company shall
(except as provided in clause (2) of Section 4(a) of this Agreement) permit the
transfer of the Securities and, in the case of the Conversion Shares, promptly
instruct the Company's transfer agent to issue one or more certificates for
Common Stock without legend in such name and in such denominations as specified
by the Lender.

                                       16
<PAGE>

          (b) Subject to the provisions of this Agreement, the Company will
permit the Lender to exercise its right to convert the Debentures in the manner
contemplated by the Debentures and to exercise the Warrants in the manner
contemplated by the Warrants.

          C. (i) The Company understands that a delay in the issuance of the
Shares beyond the Delivery Date (as defined in the Debenture) could result in
economic loss to the Lender. As compensation to the Lender for such loss, the
Company agrees, commencing December 27, 2005, to pay late payments to the Lender
for late issuance of Shares upon conversion in accordance with the following
schedule (where "No. Business Days Late" refers to the number of Trading Days
which is beyond four (4) Trading Days after the Delivery Date): (1)

            No. Business Days Late         Late Payment For Each $10,000
            ----------------------         -----------------------------
                                     of Principal or Interest Being Converted
                                     ----------------------------------------

                     1                              $100
                     2                              $200
                     3                              $300
                     4                              $400
                     5                              $500
                     6                              $600
                     7                              $700
                     8                              $800
                     9                              $900
                     10                             $1,000
                     >10                            $1,000 + $200 for each
                                                    Business Day Late beyond
                                                    10 days

-------------
(1) Example: Notice of Conversion is delivered on Monday, March 6, 2006. The
Delivery Date would be Thursday March 9 (the third Trading Day after such
delivery). If the certificate is delivered by Wednesday, March 15 (4 Trading
Days after the Delivery Date), no payment under this provision is due. If the
certificates are delivered on March 16, that is 1 "Business Day Late" in the
table below; if delivered on March 21, that is 4 "Business Days Late" in the
table.

                                       17
<PAGE>

The Company shall pay any payments incurred under this Section in immediately
available funds upon demand as the Lender's exclusive remedy (other than the
following provisions of this Section 5(c), the provisions of the immediately
following Section 5(d) of this Agreement and Section 12(c) of the Debenture) for
such delay. Furthermore, in addition to any other remedies which may be
available to the Lender, in the event that the Company fails for any reason to
effect delivery of such shares of Common Stock by close of business on the
Delivery Date, the Lender will be entitled to revoke the relevant Notice of
Conversion by delivering a notice to such effect to the Company, whereupon the
Company and the Lender shall each be restored to their respective positions
immediately prior to delivery of such Notice of Conversion; provided, however,
that an amount equal to any payments contemplated by this Section 5(c) which
have accrued through the date of such revocation notice shall remain due and
owing to the Converting Holder (as defined below) notwithstanding such
revocation. Anything in the foregoing provisions of this paragraph (c) to the
contrary notwithstanding, the total amount payable by the Company under this
paragraph (c) shall be reduced by an amount equal to fifty percent (50%) of any
Buy-In Adjustment Amount (as defined below) actually paid by the Company to the
Holder (but not by more than the total amount due without regard to the
provisions of this sentence).

          (d) If, by the relevant Delivery Date, commencing December 27, 2005,
the Company fails for any reason to deliver the Shares to be issued upon
conversion of a Debenture and after such Delivery Date, the Holder of the
Debentures being converted (a "Converting Holder") purchases, in an arm's-length
open market transaction or otherwise, shares of Common Stock (the "Covering
Shares") in order to make delivery in satisfaction of a sale of Common Stock by
the Converting Holder (the "Sold Shares"), which delivery such Converting Holder
anticipated to make using the Shares to be issued upon such conversion (a
"Buy-In"), the Converting Holder shall have the right, to require the Company to
pay to the Converting Holder, in addition to and not in lieu of the amounts due
under Section 5(c) hereof (but in addition to all other amounts contemplated in
other provisions of the Transaction Agreements, and not in lieu of any such
other amounts), the Buy-In Adjustment Amount (as defined below). The "Buy-In
Adjustment Amount" is the amount equal to the excess, if any, of (x) the
Converting Holder's total purchase price (including brokerage commissions, if
any) for the Covering Shares over (y) the net proceeds (after brokerage
commissions, if any) received by the Converting Holder from the sale of the Sold
Shares. The Company shall pay the Buy-In Adjustment Amount to the Company in
immediately available funds immediately upon demand by the Converting Holder. By
way of illustration and not in limitation of the foregoing, if the Converting
Holder purchases shares of Common Stock having a total purchase price (including
brokerage commissions) of $11,000 to cover a Buy-In with respect to shares of
Common Stock it sold for net proceeds of $10,000, the Buy-In Adjustment Amount
which Company will be required to pay to the Converting Holder will be $1,000.

          (e) In lieu of delivering physical certificates representing the
Common Stock issuable upon conversion, provided the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program, upon request of the Holder and its compliance with the
provisions contained in this paragraph, so long as the certificates therefor do
not bear a legend and the Holder thereof is not obligated to return such
certificate for the placement of a legend thereon, the Company shall use its
best efforts to cause its transfer agent to electronically transmit the Common
Stock issuable upon conversion to the Holder by crediting the account of
Holder's Prime Broker with DTC through its Deposit Withdrawal Agent Commission
system.

                                       18
<PAGE>

          (f) The holder of any Debentures shall be entitled to exercise its
conversion privilege with respect to the Debentures notwithstanding the
commencement of any case under 11 U.S.C. ss.101 et seq. (the "Bankruptcy Code").
In the event the Company is a debtor under the Bankruptcy Code, the Company
hereby waives, to the fullest extent permitted, any rights to relief it may have
under 11 U.S.C. ss.362 in respect of such holder's conversion privilege. The
Company hereby waives, to the fullest extent permitted, any rights to relief it
may have under 11 U.S.C. ss.362 in respect of the conversion of the Debentures.
The Company agrees, without cost or expense to such holder, to take or to
consent to any and all action necessary to effectuate relief under 11 U.S.C.
ss.362.

          (g) The Company will authorize its transfer agent to give information
relating to the Company directly to the Lender or the Lender's representatives
upon the request of the Lender or any such representative, to the extent such
information relates to (i) the status of shares of Common Stock issued or
claimed to be issued to the Lender in connection with a Notice of Conversion or
exercise of a Warrant, or (ii) the number of outstanding shares of Common Stock
of all shareholders as of a current or other specified date. On the Closing
Date, the Company will provide the Lender with a copy of the authorization so
given to the transfer agent.

          6. CLOSING DATE.

          A. The closing date (the "Closing Date") shall occur on the date which
is the first Trading Day after each of the conditions contemplated by Sections 7
and 8 hereof shall have either been satisfied or been waived by the party in
whose favor such conditions run.

          Each closing of the purchase and issuance of Debentures and Warrants
shall occur on the relevant Closing Date at the offices of the Escrow Agent and
shall take place no later than 3:00 P.M., New York time, on such day or such
other time as is mutually agreed upon by the Company and the Lender.

          Notwithstanding anything to the contrary contained herein, the Escrow
Agent will be authorized to release the relevant Escrow Funds to the Company and
to release the other relevant Escrow Property on the relevant Closing Date upon
satisfaction of the conditions set forth in Sections 7 and 8 hereof and as
provided in the Joint Escrow Instructions.

          7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

          The Lender understands that the Company's obligation to sell the
Debentures and the Warrants to the Lender pursuant to this Agreement on the
relevant Closing Date is conditioned upon:

                                       19
<PAGE>

          The execution and delivery of this Agreement and the Registration
Rights Agreement by the Lender;

          Delivery by the Lender to the Escrow Agent of good funds as payment in
full of an amount equal to the Purchase Price for the Securities in accordance
with this Agreement;

          The accuracy on such Closing Date of the representations and
warranties of the Lender contained in this Agreement, each as if made on such
date, and the performance by the Lender on or before such date of all covenants
and agreements of the Lender required to be performed on or before such date;
and

          There shall not be in effect any law, rule or regulation prohibiting
or restricting the transactions contemplated hereby, or requiring any consent or
approval which shall not have been obtained.

          8. CONDITIONS TO THE LENDER'S OBLIGATION TO PURCHASE.

          The Company understands that the Lender's obligation to purchase the
Debentures and the Warrants on the relevant Closing Date is conditioned upon:

          The execution and delivery of this Agreement and the other Transaction
Agreements by the Company; and

          Delivery by the Company to the Escrow Agent of the Certificates in
accordance with this Agreement;

          On the Closing Date, the Lender shall have received a Secretary's
Certificate and Officer's Certificate from the Company, dated the Closing Date
in form, scope and substance reasonably satisfactory to the Lender,
substantially to the effect set forth in ANNEX III attached hereto;

          The accuracy in all material respects on such Closing Date of the
representations and warranties of the Company contained in this Agreement, each
as if made on such date, and the performance by the Company on or before such
date of all covenants and agreements of the Company required to be performed on
or before such date;

          There shall not be in effect any law, rule or regulation prohibiting
or restricting the transactions contemplated hereby, or requiring any consent or
approval which shall not have been obtained; and

          From and after the date hereof to and including such Closing Date,
each of the following conditions will remain in effect: (i) the trading of the
Common Stock shall not have been suspended by the SEC or on the Principal
Trading Market; (ii) trading in securities generally on the Principal Trading
Market shall not have been suspended or limited; (iii), no minimum prices shall
been established for securities traded on the Principal Trading Market; and (iv)
there shall not have been any material adverse change in any financial market
that, in the reasonable judgment of the Lender, makes it impracticable or
inadvisable to purchase the Debentures.

                                       20
<PAGE>

          9. INDEMNIFICATION.

          A. (i) The Company agrees to indemnify and hold harmless the Lender
and its officers, directors, employees, and agents, and each Lender Control
Person from and against any losses, claims, damages, liabilities or expenses
incurred (collectively, "Damages"), joint or several, and any action in respect
thereof to which the Lender, its partners, Affiliates, officers, directors,
employees, and duly authorized agents, and any such Lender Control Person
becomes subject to, resulting from, arising out of or relating to any
misrepresentation, breach of warranty or nonfulfillment of or failure to perform
any covenant or agreement on the part of Company contained in this Agreement, as
such Damages are incurred, except to the extent such Damages result primarily
from the Lender's failure to perform any covenant or agreement contained in this
Agreement or the Lender's or its officers, directors, employees, agents or
Lender Control Persons negligence, recklessness or bad faith in performing its
obligations under this Agreement.

               (ii) If (x) the Lender becomes involved in any capacity in any
action, proceeding or investigation brought by any stockholder of the Company,
in connection with or as a result of the consummation of the transactions
contemplated by this Agreement or the other Transaction Agreements (other than
the Registration Rights Agreement), or if the Lender is impleaded in any such
action, proceeding or investigation by any Person, or (y) the Lender becomes
involved in any capacity in any action, proceeding or investigation brought by
the SEC, any self-regulatory organization or other body having jurisdiction,
against or involving the Company or in connection with or as a result of the
consummation of the transactions contemplated by this Agreement or the other
Transaction Agreements (other than the Registration Rights Agreement), or if the
Lender is impleaded in any such action, proceeding or investigation by any
Person, then in any such case, other than by reason of the Lender's actions
(other than the Lender's execution of the Transaction Agreements to which it is
a signatory, the payment of the Purchase Price, and/or the exercise of any of
the Lender's rights under any one or more of the Transaction Agreements), the
Company hereby agrees to indemnify, defend and hold harmless the Lender from and
against and in respect of all Damages resulting from, imposed upon or incurred
by the Lender, directly or indirectly, and reimburse the Lender for its
reasonable legal and other expenses (including the cost of any investigation and
preparation) for a single firm of counsel incurred in connection therewith, as
such expenses are incurred. The indemnification and reimbursement obligations of
the Company under this paragraph shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions to
any Affiliates of the Lender who are actually named in such action, proceeding
or investigation, and partners, directors, agents, employees and Lender Control
Persons (if any), as the case may be, of the Lender and any such Affiliate, and
shall be binding upon and inure to the benefit of any successors, assigns, heirs
and personal representatives of the Company, the Lender, any such Affiliate and
any such Person. The Company also agrees that neither the Lender nor any such
Affiliate, partner, director, agent, employee or Lender Control Person shall

                                       21
<PAGE>

have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company in connection with or as a result of the consummation of
this Agreement or the other Transaction Agreements, other than by reason of the
Lender's actions (other than the Lender's execution of the Transaction
Agreements to which it is a signatory, the payment of the Purchase Price, and/or
the exercise of the Lender's rights under any one or more of the Transaction
Agreements).

          B. All claims for indemnification by any Indemnified Party (as defined
below) under this Section 9 shall be asserted and resolved as follows:

          (i) In the event any claim or demand in respect of which any Person
claiming indemnification under any provision of this Section 9 (an "Indemnified
Party") might seek indemnity under Section 9(a) is asserted against or sought to
be collected from such Indemnified Party by a Person other than a party hereto
or an Affiliate thereof (a "Third Party Claim"), the Indemnified Party shall
deliver a written notification, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party Claim and for the
Indemnified Party's claim for indemnification that is being asserted under any
provision of this Section 9 against any Person (the "Indemnifying Party"),
together with the amount or, if not then reasonably ascertainable, the estimated
amount, determined in good faith, of such Third Party Claim (a "Claim Notice")
with reasonable promptness to the Indemnifying Party. If the Indemnified Party
fails to provide the Claim Notice with reasonable promptness after the
Indemnified Party receives notice of such Third Party Claim, the Indemnifying
Party shall not be obligated to indemnify the Indemnified Party with respect to
such Third Party Claim to the extent that the Indemnifying Party's ability to
defend has been prejudiced by such failure of the Indemnified Party. The
Indemnifying Party shall notify the Indemnified Party as soon as practicable
within the period ending thirty (30) calendar days following receipt by the
Indemnifying Party of either a Claim Notice or an Indemnity Notice (as defined
below) (the "Dispute Period") whether the Indemnifying Party disputes its
liability or the amount of its liability to the Indemnified Party under this
Section 9 and whether the Indemnifying Party desires, at its sole cost and
expense, to defend the Indemnified Party against such Third Party Claim. The
following provisions shall also apply.

     (x) If the Indemnifying Party notifies the Indemnified Party within
     the Dispute Period that the Indemnifying Party desires to defend the
     Indemnified Party with respect to the Third Party Claim pursuant to
     this Section 9(b), then the Indemnifying Party shall have the right to
     defend, with counsel reasonably satisfactory to the Indemnified Party,
     at the sole cost and expense of the Indemnifying Party, such Third
     Party Claim by all appropriate proceedings, which proceedings shall be
     vigorously and diligently prosecuted by the Indemnifying Party to a
     final conclusion or will be settled at the discretion of the
     Indemnifying Party (but only with the consent of the Indemnified Party
     in the case of any settlement that provides for any relief other than
     the payment of monetary damages or that provides for the payment of
     monetary damages as to which the Indemnified Party shall not be
     indemnified in full pursuant to Section 9(a)). The Indemnifying Party
     shall have full control of such defense and proceedings, including any
     compromise or settlement thereof; provided, however, that the

                                    22
<PAGE>

     Indemnified Party may, at the sole cost and expense of the Indemnified
     Party, at any time prior to the Indemnifying Party's delivery of the
     notice referred to in the first sentence of this subparagraph (x),
     file any motion, answer or other pleadings or take any other action
     that the Indemnified Party reasonably believes to be necessary or
     appropriate to protect its interests; and provided further, that if
     requested by the Indemnifying Party, the Indemnified Party will, at
     the sole cost and expense of the Indemnifying Party, provide
     reasonable cooperation to the Indemnifying Party in contesting any
     Third Party Claim that the Indemnifying Party elects to contest. The
     Indemnified Party may participate in, but not control, any defense or
     settlement of any Third Party Claim controlled by the Indemnifying
     Party pursuant to this subparagraph (x), and except as provided in the
     preceding sentence, the Indemnified Party shall bear its own costs and
     expenses with respect to such participation. Notwithstanding the
     foregoing, the Indemnified Party may take over the control of the
     defense or settlement of a Third Party Claim at any time if it
     irrevocably waives its right to indemnity under Section 9(a) with
     respect to such Third Party Claim.

     (y) If the Indemnifying Party fails to notify the Indemnified Party
     within the Dispute Period that the Indemnifying Party desires to
     defend the Third Party Claim pursuant to Section 9(b), or if the
     Indemnifying Party gives such notice but fails to prosecute vigorously
     and diligently or settle the Third Party Claim, or if the Indemnifying
     Party fails to give any notice whatsoever within the Dispute Period,
     then the Indemnified Party shall have the right to defend, at the sole
     cost and expense of the Indemnifying Party, the Third Party Claim by
     all appropriate proceedings, which proceedings shall be prosecuted by
     the Indemnified Party in a reasonable manner and in good faith or will
     be settled at the discretion of the Indemnified Party (with the
     consent of the Indemnifying Party, which consent will not be
     unreasonably withheld). The Indemnified Party will have full control
     of such defense and proceedings, including any compromise or
     settlement thereof; provided, however, that if requested by the
     Indemnified Party, the Indemnifying Party will, at the sole cost and
     expense of the Indemnifying Party, provide reasonable cooperation to
     the Indemnified Party and its counsel in contesting any Third Party
     Claim which the Indemnified Party is contesting. Notwithstanding the
     foregoing provisions of this subparagraph (y), if the Indemnifying
     Party has notified the Indemnified Party within the Dispute Period
     that the Indemnifying Party disputes its liability or the amount of
     its liability hereunder to the Indemnified Party with respect to such
     Third Party Claim and if such dispute is resolved in favor of the
     Indemnifying Party in the manner provided in subparagraph (z) below,
     the Indemnifying Party will not be required to bear the costs and
     expenses of the Indemnified Party's defense pursuant to this
     subparagraph (y) or of the Indemnifying Party's participation therein
     at the Indemnified Party's request, and the Indemnified Party shall
     reimburse the Indemnifying Party in full for all reasonable costs and
     expenses incurred by the Indemnifying Party in connection with such
     litigation. The Indemnifying Party may participate in, but not
     control, any defense or settlement controlled by the Indemnified Party
     pursuant to this subparagraph (y), and the Indemnifying Party shall
     bear its own costs and expenses with respect to such participation.

                                    23
<PAGE>

     (z) If the Indemnifying Party notifies the Indemnified Party that it
     does not dispute its liability or the amount of its liability to the
     Indemnified Party with respect to the Third Party Claim under Section
     9(a) or fails to notify the Indemnified Party within the Dispute
     Period whether the Indemnifying Party disputes its liability or the
     amount of its liability to the Indemnified Party with respect to such
     Third Party Claim, the amount of Damages specified in the Claim Notice
     shall be conclusively deemed a liability of the Indemnifying Party
     under Section 9(a) and the Indemnifying Party shall pay the amount of
     such Damages to the Indemnified Party on demand. If the Indemnifying
     Party has timely disputed its liability or the amount of its liability
     with respect to such claim, the Indemnifying Party and the Indemnified
     Party shall proceed in good faith to negotiate a resolution of such
     dispute; provided, however, that if the dispute is not resolved within
     thirty (30) days after the Claim Notice, the Indemnifying Party shall
     be entitled to institute such legal action as it deems appropriate.

          (ii) In the event any Indemnified Party should have a claim under
Section 9(a) against the Indemnifying Party that does not involve a Third Party
Claim, the Indemnified Party shall deliver a written notification of a claim for
indemnity under Section 9(a) specifying the nature of and basis for such claim,
together with the amount or, if not then reasonably ascertainable, the estimated
amount, determined in good faith, of such claim (an "Indemnity Notice") with
reasonable promptness to the Indemnifying Party. The failure by any Indemnified
Party to give the Indemnity Notice shall not impair such party's rights
hereunder except to the extent that the Indemnifying Party demonstrates that it
has been irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim or the amount of the claim
described in such Indemnity Notice or fails to notify the Indemnified Party
within the Dispute Period whether the Indemnifying Party disputes the claim or
the amount of the claim described in such Indemnity Notice, the amount of
Damages specified in the Indemnity Notice will be conclusively deemed a
liability of the Indemnifying Party under Section 9(a) and the Indemnifying
Party shall pay the amount of such Damages to the Indemnified Party on demand.
If the Indemnifying Party has timely disputed its liability or the amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such dispute;
provided, however, that if the dispute is not resolved within thirty (30) days
after the Indemnity Notice, the Indemnifying Party shall be entitled to
institute such legal action as it deems appropriate.

          The indemnity agreements contained herein shall be in addition to (i)
any cause of action or similar rights of the indemnified party against the
indemnifying party or others, and (ii) any liabilities the indemnifying party
may be subject to.

          10. JURY TRIAL WAIVER. The Company and the Lender hereby waive a trial
by jury in any action, proceeding or counterclaim brought by either of the
Parties hereto against the other in respect of any matter arising out or in
connection with the Transaction Agreements.

                                       24
<PAGE>

          11. GOVERNING LAW: MISCELLANEOUS.

          This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York for contracts to be wholly performed in such
state and without giving effect to the principles thereof regarding the conflict
of laws. Each of the parties consents to the exclusive jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement or any of the other
Transaction Agreements and hereby waives, to the maximum extent permitted by
law, any objection, including any objection based on FORUM NON CONVENIENS, to
the bringing of any such proceeding in such jurisdictions. To the extent
determined by such court, the Company shall reimburse the Lender for any
reasonable legal fees and disbursements incurred by the Lender in enforcement of
or protection of any of its rights under any of the Transaction Agreements.

          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.

          This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.

          All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.

          A facsimile transmission of this signed Agreement shall be legal and
binding on all parties hereto.

          This Agreement may be signed in one or more counterparts, each of
which shall be deemed an original.

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

          If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.

          This Agreement may be amended only by an instrument in writing signed
by the party to be charged with enforcement thereof.

          This Agreement supersedes all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof.

                                       25
<PAGE>

          12. NOTICES. Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of

          (a) the date delivered, if delivered by personal delivery as against
          written receipt therefor or by confirmed facsimile transmission,

          (b) the seventh business day after deposit, postage prepaid, in the
          United States Postal Service by registered or certified mail, or

          (c) the third business day after mailing by domestic or international
          express courier, with delivery costs and fees prepaid,

in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
ten (10) days' advance written notice similarly given to each of the other
parties hereto):

Company:          Advanced Technology Industries, Inc.
                  211 Madison Avenue, #28B
                  New York, New York 10016
                  Attn: Allan Klepfisz
                  Telephone No.:  (212) 532-2736
                  Telecopier No.:  (212) 532-2904

                  with a copy to:
                  Anthony J. Norris , Esq.

                  Ropes & Gray LLP
                  45 Rockefeller Plaza
                  New York, NY 10111
                  Tel: 212-841-0659
                  Fax: 212-841-5725

Lender:           At the address set forth on the signature page of this
                  Agreement.

                  with a copy to:

                  Krieger & Prager LLP, Esqs.
                  39 Broadway
                  Suite 1440
                  New York, NY 10006
                  Attn: Samuel M. Krieger, Esq.
                  Telephone No.: (212) 363-2900
                  Telecopier No.  (212) 363-2999

                                       26
<PAGE>

Escrow Agent:     Krieger & Prager LLP
                  39 Broadway
                  Suite 1440
                  New York, NY 10006
                  Attn: Samuel Krieger, Esq.
                  New York, New York 10016
                  Telephone No.: (212) 363-2900
                  Telecopier No.  (212) 363-2999

          13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's and the
Lender's representations and warranties herein shall survive the execution and
delivery of this Agreement and the delivery of the Certificates and the payment
of the Purchase Price for a period of two years after the Closing Date, and
shall inure to the benefit of the Lender and the Company and their respective
successors and assigns.

                   [BALANCE OF PAGE INTENTIONALLY LEFT BLANK.]

                                       27
<PAGE>

          IN WITNESS WHEREOF, this Agreement has been duly executed by each
Lender (if an entity, by one of its officers thereunto duly authorized) as of
the date set forth below.

                              SIGNATURES FOR LENDER

          IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf as of this 28th day of November,
2005.

                               HARBORVIEW MASTER FUND L.P.

                               By:  NAVIGATOR MANGEMENT LTD.

                                    By:_____________________________
                                         David Sims

                               PURCHASE PRICE:                         $150,000
                               NUMBER OF WARRANTS:                    2,142,857

                               HARBOR HOUSE
                               WATERFRONT DRIVE
                               P.O. BOX 972
                               ROAD TOWN, TORTOLLA
                               BRITISH VIRGIN ISLANDS

                                       28
<PAGE>

As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its behalf.

ADVANCED TECHNOLOGY INDUSTRIES, INC.

By:________________________

Title:______________________

Date: November 28, 2005

                                       29
<PAGE>

         ANNEX I           FORM OF DEBENTURE

         ANNEX II          JOINT ESCROW INSTRUCTIONS

         ANNEX III         SECRETARY'S CERTIFICATE

         ANNEX IV          REGISTRATION RIGHTS AGREEMENT

         ANNEX V           COMPANY DISCLOSURE MATERIALS

         ANNEX VI-         FORM OF WARRANT

         ANNEX VII         COMPANY'S SEC DOCUMENTS AVAILABLE ON EDGAR

         ANNEX VIII        SECURITY AGREEMENT

                                       30

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