Document:

EXHIBIT 10.43

                             STOCK OPTION AGREEMENT
                             ----------------------

     THIS  STOCK  OPTION  AGREEMENT  is entered  into as of May 3, 2001,  by and
between  TSET,  Inc.,  a Nevada  corporation  ("TSET"),  and  Jeffrey D.  Wilson
("Wilson ").

                                  WITNESSETH:
                                  ----------

     WHEREAS,  pursuant to that certain  employment  agreement dated as of April
20, 1999 by and between  TSET (the  "Employment  Agreement"),  and Wilson,  TSET
desires to grant to Wilson an option to acquire up to 200,000  restricted shares
of TSET's common  stock,  par value $0.001 per share (the "Option  Shares"),  in
consideration  of Wilson's service to TSET as chairman of the board of directors
from  April  1999  through  April  2001,  the  parties  acknowledging  that  the
Employment  Agreement  provides  for such  consideration  at the rate of 100,000
shares annually; and

     WHEREAS, Wilson desires to accept such option.

     NOW,  THEREFORE,  for  and in  consideration  of the  premises  and  mutual
promises,  covenants,  and  agreements  set forth  herein and for other good and
valuable  consideration,  the delivery,  receipt,  and  sufficiency  of which is
hereby acknowledged, the parties hereto agree as follows:

     1.   GRANT OF OPTION. TSET hereby grants to Wilson an option (the "Option")
          to acquire the Option  Shares at an exercise  price of $0.71 per share
          (the "Exercise Price"). The Option shall immediately and fully vest in
          Wilson's  favor for all purposes  upon  execution and delivery of this
          Agreement by the parties.  The Option is personal to Wilson and may be
          exercised  only by  Wilson  during  his  lifetime.  The  Option  shall
          continue  in full  force and  effect for a period of 10 years from the
          date hereof (the  "Term"),  at which time the Option  shall expire and
          terminate unless previously  exercised by Wilson. The Option shall not
          be subject to forfeiture or termination,  except for Wilson's  failure
          to exercise the Option during the Term.

     2.   EXERCISE OF OPTION. The Option may be exercised by Wilson, in whole or
          in part,  at any time during the Term upon  receipt by TSET of written
          notice from Wilson (the "Exercise Notice").  The Exercise Notice shall
          specify the number of Option Shares Wilson desires to acquire pursuant
          thereto and provide any necessary or appropriate  instructions to TSET
          and its transfer  agent  regarding the  denomination  of  certificates
          representing the Option Shares and the name in which the Option Shares
          should  be  registered.  The  exercise  of the  Option  shall  be on a
          "cashless" basis, at Wilson's election, and if so elected Wilson shall
          not be required to remit to TSET any payment therefor.

     3.   RESERVATION  OF  THE  OPTION  SHARES.  To  ensure  fulfillment  of its
          obligations hereunder should Wilson elect to exercise the Option, TSET
          shall reserve from its authorized but unissued  capital that number of
          shares of its common stock equal to the Option Shares.

<PAGE>

     4.   RESTRICTIONS ON TRANSFER.  Wilson  acknowledges that the Option Shares
          are subject to certain restrictions upon transfer, and cannot be sold,
          assigned,  transferred, or conveyed (in any case, a "transfer") except
          in compliance  with such  restrictions  and  applicable  provisions of
          federal  and state  securities  laws.  Certificates  representing  the
          Option Shares shall bear appropriate  restrictive legends and notices.
          In the event Wilson desires to transfer any Option Shares prior to the
          expiration  of such  restrictions,  TSET shall be  entitled to receive
          from Wilson written undertakings, certifications, or opinions of legal
          counsel  evidencing  compliance  with such  restrictions.  The  Option
          Shares  shall  be  entitled  to all of the  benefits  provided  in the
          Employment  Agreement  relating to demand and piggy-back  registration
          rights with respect thereto.

     5.   TAX MATTERS.  Wilson  acknowledges  that treatment of the Option,  the
          Option Shares,  and events or transactions  with respect thereto,  for
          federal and state income and other tax  purposes,  is  dependent  upon
          various  factors  and  events,   which  are  not  determined  by  this
          Agreement.  TSET makes no  representations  to Wilson with respect to,
          and  hereby  disclaims  any and  all  responsibility  as to  such  tax
          treatment.  Wilson  shall be  solely  and  fully  responsible  for the
          payment of, and shall pay, any and all federal, state, and other taxes
          (including any and all  withholding  taxes) levied with respect to the
          grant of the  Option,  the  purchase  of the  Option  Shares,  and any
          subsequent  transfer thereof.  In the event the exercise of the Option
          or the  disposition  of the Option  Shares  following  exercise of the
          Option  results in Wilson's  realization  of income which for federal,
          state,  local,  or other income tax  purposes  is, in TSET's  opinion,
          subject to  withholding of tax, then at the election of TSET and prior
          to the  delivery  to Wilson of  certificates  representing  the Option
          Shares  acquired by him  pursuant to an  Exercise  Notice,  (a) Wilson
          shall pay to TSET an amount equal to such  withholding tax or (b) TSET
          may withhold such amount from any  compensation or other payments owed
          by TSET to Wilson.

     6.   NONQUALIFIED  STATUS.  The Option is not intended to be an  "incentive
          stock  option" as defined in the  Internal  Revenue  Code of 1986,  as
          amended, and shall not be treated as such whether or not, by the terms
          hereof,  it  meets  the  requirements  of  any  applicable  provisions
          thereof.

     7.   NOTICES.  All notices or other  communications given or made hereunder
          shall be in  writing  and may be  delivered  personally,  by  express,
          registered,  or certified mail (return receipt requested),  by special
          courier, or by facsimile transmission (to be followed by delivery of a
          written  original notice in the most expeditious  manner possible,  as
          aforesaid),  all  postage,  fees,  and  charges  prepaid,  to TSET and
          Wilson,  as the case may be, to the following  addresses (which may be
          changed by the parties from time to time upon written  notice given as
          aforesaid):

                  To TSET:          333 South State Street, PMB 111
                                    Lake Oswego, OR 97034

                                       2

<PAGE>

                  Attn:             Richard A. Papworth
                                    Chief Financial Officer

                                    Tel:    503.968.1547
                                    Fax:    503.968.0867

                  To Wilson:        333 South State Street, PMB 111
                                    Lake Oswego, OR 97035

                                    Tel:    503.380.5558
                                    Fax:    503.968.2337

          Notices hereunder shall be deemed given when delivered in person, upon
          confirmation of successful  transmission when sent by facsimile,  or 5
          days after being  mailed by express,  registered,  or  certified  mail
          (return receipt requested), postage and fees prepaid.

     8.   INTEGRATION, AMENDMENT, AND WAIVER.  When executed and delivered, this
          Agreement shall  constitute the entire  agreement  between the parties
          with respect to the subject matter hereof and shall  supersede any and
          all prior agreements and understandings with respect thereto. No other
          agreement,  whether  oral or  written,  shall  be used  to  modify  or
          contradict the provisions hereof unless the same is in writing, signed
          by the parties, and states that it is intended to amend the provisions
          of this  Agreement.  No waiver by either  party of any  breach of this
          Agreement in any particular  instance shall constitute a waiver of any
          other breach hereof in any other  circumstance  or any  relinquishment
          for the future of their  respective  rights to strictly enforce all of
          the  other  provisions  hereof  or  seek  all  remedies  which  may be
          available at law or in equity.

     9.   COUNTERPARTS;  BINDING  EFFECT.  This  Agreement  may be  executed  in
          multiple  counterparts (and by facsimile signature,  to be followed by
          manual signature),  each of which shall be deemed an original, and all
          of which  shall be  deemed  to  constitute  a single  agreement.  This
          Agreement  shall be  binding  upon and  inure  to the  benefit  of the
          parties' respective permitted heirs, successors, and assigns.

     10.  ASSIGNMENT.   This  Agreement  is  personal  to  the  parties  hereto.
          Accordingly,  Wilson  shall not  assign  or  transfer  this  Agreement
          without the prior written consent of TSET,  which consent shall not be
          unreasonably withheld,  conditioned,  or delayed;  provided,  however,
          that Wilson shall be permitted to assign or transfer this Agreement to
          a legal entity owned by Wilson  without such  consent.  Any  attempted
          assignment of this Agreement by Wilson without receipt of such consent
          from TSET shall be null and void.

                                       3

<PAGE>

     11.  SEVERABILITY.  If any provision (or portion thereof) of this Agreement
          is adjudged  unenforceable by a court of competent  jurisdiction,  the
          remaining  provisions  shall  nevertheless  continue in full force and
          effect  and the  provision  deemed  unenforceable  shall be  remade or
          interpreted by the parties in a manner that such  provisions  shall be
          enforceable to preserve, to the maximum extent possible,  the original
          intention  and meaning  thereof.  If  necessary to effect such intent,
          TSET and Wilson shall  negotiate in good faith to amend this Agreement
          to replace such provision with language  believed in good faith by the
          parties to be enforceable,  which as closely as possible reflects such
          intent.

     12.  NO THIRD PARTY  BENEFICIARIES.  This Agreement is for the sole benefit
          of the parties and their  permitted  successors,  heirs,  and assigns.
          Nothing  herein,  expressed or implied,  shall give or be construed to
          give any other  person,  other than the  parties  and their  permitted
          assigns, any legal or equitable rights hereunder. No finder's or other
          fees shall be payable by either  party with respect to the exercise of
          the Option or the  issuance  of the  Option  Shares  pursuant  to this
          Agreement.

     13.  STATE  SECURITIES  QUALIFICATIONS.  The  sale  of  the  Option  Shares
          pursuant to any exercise of the Option has not been qualified with the
          securities  regulatory  authorities in any state or other jurisdiction
          and the issuance of the Option Shares prior to such  qualification may
          be   unlawful   unless   such   transactions   are  exempt  from  such
          qualification  requirements.  The  rights of the  parties  hereto  are
          expressly  conditioned upon such qualification being obtained,  unless
          any such transaction is so exempt.

     14.  GOVERNING  LAW.   This Agreement shall be governed by and construed in
          accordance  with the laws of the  State of  Oregon,  exclusive  of its
          conflicts of laws principles.

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

TSET, Inc.

By:   /s/ Richard A. Papworth
     ------------------------------------------
      Richard A. Papworth
      Chief Financial Officer

 /s/ Jeffrey D. Wilson
-----------------------------------------------
Jeffrey D. Wilson

                                       4
<PAGE>Exhibit 10.44

                         COMMON STOCK PURCHASE AGREEMENT

         COMMON STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of June 19,
2001 by and between TSET, INC. a Nevada corporation (the "Company"),  and FUSION
CAPITAL  FUND II, LLC, an Illinois  limited  liability  company  (the  "Buyer").
Capitalized  terms used herein and not otherwise  defined  herein are defined in
Section 10 hereof.

                                    WHEREAS:

         Subject to the terms and  conditions set forth in this  Agreement,  the
Company  wishes  to sell to the  Buyer,  and the  Buyer  wishes  to buy from the
Company, up to Ten Million Dollars  ($10,000,000) of the Company's common stock,
par value $0.001 per share (the "Common  Stock").  The shares of Common Stock to
be purchased hereunder are referred to herein as the "Purchase Shares."

         NOW THEREFORE, the Company and the Buyer hereby agree as follows:

         1.  PURCHASE OF COMMON STOCK.

         Subject to the terms and  conditions  set forth in  Sections 6, 7 and 9
below,  the Company  hereby  agrees to sell to the Buyer,  and the Buyer  hereby
agrees to purchase from the Company, shares of Common Stock as follows:

         (a) COMMENCEMENT OF PURCHASES OF COMMON STOCK. The purchase and sale of
Common Stock  hereunder  shall  commence  (the  "Commencement")  within five (5)
Trading Days following the date of satisfaction (or waiver) of the conditions to
the  Commencement  set  forth  in  Sections  6 and 7  below  (the  date  of such
Commencement, the "Commencement Date").

         (b) BUYER'S PURCHASE RIGHTS AND  OBLIGATIONS.  Subject to the Company's
right to suspend  purchases  under  Section  1(d)(ii)  hereof,  the Buyer  shall
purchase  shares of Common Stock on each Trading Day during each Monthly  Period
equal to the Daily Base Amount at the Purchase Price. Within one (1) Trading Day
of receipt of  Purchase  Shares,  the Buyer  shall pay to the  Company an amount
equal to the  Purchase  Amount  with  respect  to such  Purchase  Shares as full
payment for the purchase of the Purchase  Shares so received.  The Company shall
not issue any fraction of a share of Common Stock upon any purchase.  All shares
of Common Stock  (including  fractions  thereof)  issuable upon a purchase under
this  Agreement  shall be  aggregated  for purposes of  determining  whether the
purchase  would result in the issuance of a fraction of a share of Common Stock.
If,  after the  aforementioned  aggregation,  the  issuance  would result in the
issuance of a fraction of a share of Common Stock,  the Company shall round such
fraction of a share of Common Stock up or down to the nearest  whole share.  All
payments made under this  Agreement  shall be made in lawful money of the United
States of America by check or wire transfer of  immediately  available  funds to
such account as the Company may from time to time designate by written notice in
accordance with the provisions of this Agreement.  Whenever any amount expressed
to be due by the terms of this Agreement is due on any day that is not a Trading
Day, the same shall instead be due on the next  succeeding day that is a Trading
Day.

         (c) COMPANY'S RIGHT TO DECREASE OR INCREASE THE DAILY BASE AMOUNT.
             ------------------------------------------------------------

             (i) COMPANY'S RIGHT TO DECREASE THE DAILY BASE AMOUNT.  The Company
         shall  always have the right at any time to decrease  the amount of the
         Daily Base Amount by  delivering  written  notice (a "Daily Base Amount
         Decrease Notice") to the Buyer which notice shall specify the amount of
         the new Daily Base Amount.  The decrease in the Daily Base Amount shall
         become  effective  one  Trading  Day after  receipt by the Buyer of the
         Daily Base Amount  Decrease  Notice.  Any  purchases by the Buyer which
         have a Purchase  Date on or prior to the first (1st)  Trading Day after
         receipt by the Buyer of a Daily Base  Amount  Decrease  Notice  must be
         honored by the Company as otherwise  provided  herein.  The decrease in
         the Daily Base Amount shall remain in effect until the Company delivers
         to the Buyer a Daily Base Amount Increase Notice (as defined below).

             (ii) COMPANY'S RIGHT TO INCREASE THE DAILY BASE AMOUNT. The Company
         shall  always have the right at any time to increase  the amount of the
         Daily Base Amount up to the  Original  Daily Base Amount by  delivering
         written  notice to the Buyer  stating  the new amount of the Daily Base
         Amount (a "Daily Base Amount  Increase  Notice").  If the Closing  Sale
         Price of the Common Stock on each of the five (5)  consecutive  Trading
         Days  immediately  prior to a Daily Base Amount  Increase  Notice is at
         least $3.00,  the Company  shall have the right to deliver a Daily Base
         Amount  Increase  Notice which  increases  the amount of the Daily Base
         Amount to any amount above the Original Daily Base Amount. A Daily Base
         Amount  Increase  Notice shall be  effective  one (1) Trading Day after
         receipt by the  Buyer.  Such  increase  in the amount of the Daily Base
         Amount  shall  continue in effect  until the delivery to the Buyer of a
         Daily Base  Amount  Decrease  Notice.  Notwithstanding  anything to the
         contrary,  if the Daily Base Amount then in effect is greater  than the
         Original  Daily Base  Amount  and the Sale  Price of the  Common  Stock
         during any Trading Day is less than $3.00, the amount of the Daily Base
         Amount for such Trading Day on which the Sale Price of the Common Stock
         is less than $3.00 and for each  Trading  Day  thereafter  shall be the
         Original  Daily Base Amount or such lesser  amount as  specified by the
         Company in a Daily Base Amount Decrease Notice. Thereafter, the Company
         shall  again  have the right to  increase  the amount of the Daily Base
         Amount to any amount above the  Original  Daily Base Amount only if the
         Closing  Sale  Price of the Common  Stock is at least  $3.00 on each of
         five (5) consecutive Trading Days.

         (d) LIMITATIONS ON PURCHASES.
             ------------------------

             (i)  LIMITATION  ON  BENEFICIAL  OWNERSHIP.  The Company  shall not
         effect any purchase  under this  Agreement and the Buyer shall not have
         the right to purchase  shares of Common  Stock under this  Agreement to
         the extent that after giving effect to such purchase the Buyer together
         with its  affiliates  would  beneficially  own in excess of 9.9% of the
         outstanding  shares of the Common Stock  following such  purchase.  For
         purposes  hereof,  the  number of shares of Common  Stock  beneficially
         owned by the Buyer and its  affiliates or acquired by the Buyer and its
         affiliates,  as the case may be, shall  include the number of shares of
         Common  Stock  issuable  in  connection  with  a  purchase  under  this
         Agreement  with respect to which the  determination  is being made, but
         shall  exclude  the  number of shares of Common  Stock  which  would be
         issuable  upon (1) a purchase of the remaining  Available  Amount which
         has not been submitted for purchase,  and (2) exercise or conversion of
         the unexercised or unconverted  portion of any other  securities of the
         Company  (including,  without  limitation,  any warrants)  subject to a
         limitation  on  conversion  or  exercise  analogous  to the  limitation
         contained herein beneficially owned by the Buyer and its affiliates. If
         the 9.9%  limitation is ever reached this shall not effect or limit the
         Buyer's  obligation  to purchase the Daily Base Amount or the Company's
         Mandatory Purchase Rights as otherwise provided in this Agreement.  For
         purposes of this  Section,  in  determining  the number of  outstanding
         shares of Common Stock the Buyer may rely on the number of  outstanding
         shares of Common Stock as reflected  in (1) the  Company's  most recent
         Form 10-Q or Form 10-K,  as the case may be, (2) a more  recent  public
         announcement by  the Company or (3) any  other written communication by

                                       2
<PAGE>

         the Company or its transfer agent setting forth the number of shares of
         Common Stock  outstanding.  Upon the reasonable written or oral request
         of the Buyer,  the Company shall promptly confirm orally and in writing
         to the Buyer the number of shares of Common Stock then outstanding.  In
         any case,  the number of  outstanding  shares of Common  Stock shall be
         determined after giving effect to any purchases under this Agreement by
         the Buyer since the date as of which such number of outstanding  shares
         of Common Stock was reported. Except as otherwise set forth herein, for
         purposes  of  this  Section  1(d)(i),  beneficial  ownership  shall  be
         determined in accordance with Section 13(d) of the Securities  Exchange
         Act of 1934, as amended.

             (ii) COMPANY'S RIGHT TO SUSPEND PURCHASES.  The Company may, at any
         time, give written notice (a "Purchase Suspension Notice") to the Buyer
         suspending  purchases by the Buyer under this  Agreement.  The Purchase
         Suspension  Notice shall be effective  only for  purchases  that have a
         Purchase  Date  later  than one (1)  Trading  Day after  receipt of the
         Purchase Suspension Notice by the Buyer. Any purchase by the Buyer that
         has a Purchase  Date on or prior to the first  (1st)  Trading Day after
         receipt by the Buyer of a Purchase  Suspension  Notice from the Company
         must be  honored by the  Company as  otherwise  provided  herein.  Such
         purchase  suspension  shall  continue in effect until a  revocation  in
         writing by the Company,  at its sole discretion.  So long as a Purchase
         Suspension  Notice is in effect,  the Buyer shall not be  obligated  to
         purchase any Purchase  Shares from the Company  under Section 1 of this
         Agreement.

             (iii) PURCHASE  PRICE FLOOR.  The Buyer shall not have the right or
         the obligation to purchase any Purchase  Shares under this Agreement in
         the event that the Purchase Price for any purchases of Purchase  Shares
         would be less than the Floor  Price.  The  Company may at any time give
         written  notice (a "Floor  Price  Notice") to the Buyer  increasing  or
         decreasing  the Floor Price.  The Floor Price Notice shall be effective
         only for purchases that have a Purchase Date later than one (1) Trading
         Day after receipt of the Floor Price Notice by the Buyer.  Any purchase
         by the Buyer that has a Purchase  Date on or prior to the first Trading
         Day after  receipt of a Floor Price  Notice  from the  Company  must be
         honored by the Company as otherwise provided herein.

         (e) RECORDS OF PURCHASES. The Buyer and the Company shall each maintain
records  showing the remaining  Available  Amount at any give time and the dates
and  Purchase  Amounts  for each  purchase  or  shall  use  such  other  method,
reasonably satisfactory to the Buyer and the Company.

         (f) TAXES.  The Company shall pay any and all taxes that may be payable
with  respect to the  issuance and delivery of any shares of Common Stock to the
Buyer made under of this Agreement.

          (g) USE OF PROCEEDS.  The Buyer and Company  agree that the  Company's
wholly owned subsidiary,  Kronos Air Technologies,  Inc. ("KAT"),  will have the
right to $187,500 of the  proceeds  from the  purchase of the  Company's  common
shares  by  the  Buyer.  These  proceeds  will  be  used  exclusively  by KAT in
conjunction  with KAT's work effort on SBIR contract  N00167-01-C-0037  that was
awarded to KAT on May 23, 2001 and  subsequent  Phase II awards.  These proceeds
will  be  used  over  the  life  of  SBIR  contract   N00167-01-C-0037   towards
commercialization of Kronos Technology."

                                       3
<PAGE>

         2.  BUYER'S REPRESENTATIONS AND WARRANTIES.

         The Buyer represents and warrants to the Company that:

         (a) INVESTMENT  PURPOSE.  The Buyer is entering into this Agreement and
acquiring  the  Commitment  Shares (as  defined in Section  4(f)  hereof)  (this
Agreement and the Commitment  Shares are collectively  referred to herein as the
"Securities"),  for its own  account  for  investment  only  and not with a view
towards,  or for resale in  connection  with,  the public  sale or  distribution
thereof;  provided however, by making the representations herein, the Buyer does
not agree to hold any of the Securities for any minimum or other specific term.

         (b) ACCREDITED  INVESTOR STATUS. The Buyer is an "accredited  investor"
as that term is defined in Rule 501(a)(3) of Regulation D.

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

         (d)  INFORMATION.  The  Buyer  has been  furnished  with all  materials
relating to the business,  finances and  operations of the Company and materials
relating  to the offer  and sale of the  Securities  that  have been  reasonably
requested by the Buyer,  including,  without  limitation,  the SEC Documents (as
defined in Section 3(f) hereof).  The Buyer  understands  that its investment in
the Securities involves a high degree of risk. The Buyer (i) is able to bear the
economic risk of an investment in the  Securities  including a total loss,  (ii)
has such knowledge and  experience in financial and business  matters that it is
capable of  evaluating  the merits and risks of the proposed  investment  in the
Securities  and (iii) has had an  opportunity  to ask  questions  of and receive
answers from the officers of the Company concerning the financial  condition and
business of the  Company  and others  matters  related to an  investment  in the
Securities.  Neither such  inquiries nor any other due diligence  investigations
conducted by the Buyer or its representatives  shall modify, amend or affect the
Buyer's right to rely on the Company's  representations and warranties contained
in Section 3 below. The Buyer has sought such  accounting,  legal and tax advice
as it has  considered  necessary to make an informed  investment  decision  with
respect to its acquisition of the Securities.

         (e) NO GOVERNMENTAL REVIEW. The Buyer 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 or the
fairness  or  suitability  of the  investment  in the  Securities  nor have such
authorities  passed  upon  or  endorsed  the  merits  of  the  offering  of  the
Securities.

         (f) TRANSFER OR RESALE.  The Buyer  understands that except as provided
in the Registration  Rights  Agreement (as defined in Section 6(a) hereof):  (i)
the Securities have not been and are not being  registered under the 1933 Act or
any state securities  laws, and may not be offered for sale,  sold,  assigned or
transferred  unless (A) subsequently  registered  thereunder or (B) an exemption
exists  permitting such Securities to be sold,  assigned or transferred  without
such registration;  (ii) any sale of the Securities made in reliance on Rule 144
may be made only in accordance  with the terms of Rule 144 and further,  if Rule
144 is not applicable, any resale of the Securities under circumstances in which
the seller (or the person  through whom the sale is made) may be deemed to be an
underwriter  (as that term is  defined in the 1933 Act) may  require  compliance
with some other exemption under the 1933 Act or the rules and regulations of the

                                       4
<PAGE>

SEC thereunder;  and (iii) neither the Company nor any other person is under any
obligation to register the Securities under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder.

         (g) VALIDITY;  ENFORCEMENT.  This  Agreement has  been duly and validly
authorized,  executed  and  delivered  on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable  against the Buyer in accordance with
its terms,  subject as to enforceability to general  principles of equity and to
applicable bankruptcy, insolvency,  reorganization,  moratorium, liquidation and
other  similar laws  relating to, or affecting  generally,  the  enforcement  of
applicable creditors' rights and remedies.

         (h) RESIDENCY.  The Buyer is a resident of the State of Illinois.

         (i) NO PRIOR SHORT  SELLING.  The Buyer  represents and warrants to the
Company  that at no time  prior  to the  date of this  Agreement  has any of the
Buyer,  its agents,  associates,  representatives  or  affiliates  engaged in or
effected, in any manner whatsoever, directly or indirectly, any (i) "short sale"
(as such term is defined  in Rule 3b-3 of the 1934 Act) of the  Common  Stock or
(ii) hedging transaction, which establishes a net short position with respect to
the Common Stock.

         3.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to the Buyer that:

         (a) ORGANIZATION AND QUALIFICATION.  The Company and its "Subsidiaries"
(which for  purposes of this  Agreement  means any entity in which the  Company,
directly or indirectly, owns 50% or more of the voting stock or capital stock or
other similar  equity  interests)  are  corporations  duly organized and validly
existing in good standing under the laws of the  jurisdiction  in which they are
incorporated,  and have the requisite corporate power and authority to own their
properties  and to carry on their business as now being  conducted.  Each of the
Company and its  Subsidiaries  is duly qualified as a foreign  corporation to do
business and is in good standing in every jurisdiction in which its ownership of
property or the nature of the business  conducted by it makes such qualification
necessary,  except to the extent  that the failure to be so  qualified  or be in
good  standing  could not  reasonably  be  expected  to have a Material  Adverse
Effect. As used in this Agreement,  "Material Adverse Effect" means any material
adverse  effect on any of: (i) the  business,  properties,  assets,  operations,
results  of   operations   or  financial   condition  of  the  Company  and  its
Subsidiaries,  if any, taken as a whole, or (ii) the authority or ability of the
Company to perform its obligations  under the Transaction  Documents (as defined
in Section 3(b) hereof).  The Company has no Subsidiaries except as set forth on
Schedule 3(a).

         (b) AUTHORIZATION;  ENFORCEMENT;  VALIDITY.  (i)  The  Company  has the
requisite   corporate  power  and  authority  to  enter  into  and  perform  its
obligations under this Agreement,  the Registration Rights Agreement (as defined
in Section  6(a)  hereof) and each of the other  agreements  entered into by the
parties  on the  Commencement  Date and  attached  hereto  as  exhibits  to this
Agreement  (collectively,   the  "Transaction  Documents"),  and  to  issue  the
Securities in accordance  with the terms hereof and thereof,  (ii) the execution
and delivery of the Transaction Documents by the Company and the consummation by
it of the  transactions  contemplated  hereby  and  thereby,  including  without
limitation,  the  issuance  of the  Commitment  Shares and the  reservation  for
issuance and the issuance of the Purchase  Shares issuable under this Agreement,
have been duly  authorized  by the  Company's  Board of Directors and no further
consent or authorization  is required by the Company,  its Board of Directors or
its  shareholders,  (iii) this  Agreement has been,  and each other  Transaction
Document shall be on the  Commencement  Date, duly executed and delivered by the
Company and (iv) this Agreement constitutes, and each other Transaction Document

                                       5
<PAGE>

upon its  execution on behalf of the Company,  shall  constitute,  the valid and
binding obligations of the Company enforceable against the Company in accordance
with  their  terms,  except as such  enforceability  may be  limited  by general
principles  of  equity or  applicable  bankruptcy,  insolvency,  reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.

         (c) CAPITALIZATION. As of the date hereof, the authorized capital stock
of the Company  consists of (i) 500,000,000  shares of Common Stock, of which as
of the date hereof, 33,972,445 shares are issued and outstanding,  no shares are
held as treasury shares,  1,951,875 shares are reserved for issuance pursuant to
the  Company's  stock option plans of which no shares  remain  available  and no
shares are issuable and reserved for issuance pursuant to securities (other than
stock options issued pursuant to the Company's  stock option plans)  exercisable
or  exchangeable  for,  or  convertible  into,  shares of Common  Stock and (ii)
50,000,000  shares  of  Preferred  Stock,  no par  value of which as of the date
hereof no shares are issued and outstanding. All of such outstanding shares have
been,  or upon  issuance  will  be,  validly  issued  and  are  fully  paid  and
nonassessable.  Except  as  disclosed  in  Schedule  3(c),  (i) no shares of the
Company's  capital stock are subject to  preemptive  rights or any other similar
rights or any liens or encumbrances  suffered or permitted by the Company,  (ii)
there  are no  outstanding  debt  securities,  (iii)  there  are no  outstanding
options,  warrants,  scrip,  rights to subscribe to, calls or commitments of any
character  whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, or contracts,
commitments,  understandings  or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional  shares of capital stock
of the Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character  whatsoever  relating to, or
securities  or rights  convertible  into,  any  shares of  capital  stock of the
Company or any of its Subsidiaries, (iv) there are no agreements or arrangements
under which the Company or any of its  Subsidiaries is obligated to register the
sale of any of their  securities  under the 1933 Act  (except  the  Registration
Rights Agreement), (v) there are no outstanding securities or instruments of the
Company or any of its  Subsidiaries  which  contain  any  redemption  or similar
provisions,  and  there  are  no  contracts,   commitments,   understandings  or
arrangements  by which the Company or any of its  Subsidiaries  is or may become
bound to redeem a security of the Company or any of its Subsidiaries, (vi) there
are no securities or instruments containing  anti-dilution or similar provisions
that will be triggered by the  issuance of the  Securities  as described in this
Agreement and (vii) the Company does not have any stock  appreciation  rights or
"phantom  stock"  plans or  agreements  or any similar  plan or  agreement.  The
Company  has  furnished  to the Buyer true and correct  copies of the  Company's
Certificate  of  Incorporation,  as amended  and as in effect on the date hereof
(the "Certificate of Incorporation"),  and the Company's By-laws, as amended and
as in effect on the date hereof (the  "By-laws"),  and summaries of the terms of
all securities  convertible  into or exercisable  for Common Stock,  if any, and
copies of any documents containing the material rights of the holders thereof in
respect thereto.

         (d) ISSUANCE  OF  SECURITIES.  The  Commitment  Shares  have  been duly
authorized  and,  upon  issuance  in  accordance  with  the  terms  hereof,  the
Commitment Shares shall be (i) validly issued, fully paid and non-assessable and
(ii) free from all taxes,  liens and charges with respect to the issue  thereof.
5,000,000  shares of Common  Stock have been duly  authorized  and  reserved for
issuance upon purchase under this Agreement. Upon issuance and payment therefore
in  accordance  with the terms and  conditions of this  Agreement,  the Purchase
Shares shall be validly issued,  fully paid and  nonassessable and free from all
taxes,  liens and charges  with respect to the issue  thereof,  with the holders
being entitled to all rights accorded to a holder of Common Stock.

         (e) NO CONFLICTS.  Except as disclosed in Schedule 3(e), the execution,
delivery and  performance  of the  Transaction  Documents by the Company and the
consummation by the Company of the transactions  contemplated hereby and thereby

                                       6
<PAGE>

(including, without limitation, the reservation for issuance and issuance of the
Purchase  Shares)  will not (i)  result in a  violation  of the  Certificate  of
Incorporation,  any Certificate of  Designations,  Preferences and Rights of any
outstanding  series of  preferred  stock of the  Company or the  By-laws or (ii)
conflict  with,  or constitute a default (or an event which with notice or lapse
of time or both would become a default)  under,  or give to others any rights of
termination,   amendment,   acceleration  or  cancellation  of,  any  agreement,
indenture or  instrument  to which the Company or any of its  Subsidiaries  is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree  (including  federal and state  securities  laws and  regulations and the
rules and regulations of the Principal  Market  applicable to the Company or any
of its  Subsidiaries) or by which any property or asset of the Company or any of
its Subsidiaries is bound or affected, except in the case of conflicts, defaults
and  violations  under clause (ii),  which could not  reasonably  be expected to
result in a Material  Adverse  Effect.  Except as  disclosed  in Schedule  3(e),
neither the Company nor its  Subsidiaries  is in  violation of any term of or in
default under its Certificate of Incorporation,  any Certificate of Designation,
Preferences  and  Rights of any  outstanding  series of  preferred  stock of the
Company or By-laws or their  organizational  charter or  by-laws,  respectively.
Except as  disclosed  in  Schedule  3(e),  neither  the  Company  nor any of its
Subsidiaries  is in violation of any term of or is in default under any material
contract, agreement, mortgage,  indebtedness,  indenture,  instrument, judgment,
decree or order or any statute,  rule or regulation applicable to the Company or
its  Subsidiaries,  except for possible  conflicts,  defaults,  terminations  or
amendments  which could not  reasonably  be expected to have a Material  Adverse
Effect. The business of the Company and its Subsidiaries is not being conducted,
and shall not be conducted,  in violation of any law,  ordinance,  regulation of
any governmental entity, except for possible violations, the sanctions for which
either individually or in the aggregate could not reasonably be expected to have
a Material Adverse Effect. Except as specifically contemplated by this Agreement
and as required  under the 1933 Act,  the Company is not  required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or  governmental  agency or any  regulatory or  self-regulatory  agency in
order for it to  execute,  deliver or perform  any of its  obligations  under or
contemplated by the Transaction Documents in accordance with the terms hereof or
thereof.  Except as disclosed in Schedule  3(e),  all consents,  authorizations,
orders,  filings  and  registrations  which the  Company is  required  to obtain
pursuant to the preceding  sentence shall be obtained or effected on or prior to
the Commencement  Date. Except as disclosed in Schedule 3(e), the Company is not
and has not been since January 1, 1999, in violation of the listing requirements
of the Principal Market.

         (f) SEC  DOCUMENTS;  FINANCIAL  STATEMENTS.  Except  as   disclosed  in
Schedule 3(f),  since January 1, 1999, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "1934 Act") (all of the foregoing  filed prior to the date
hereof and all exhibits included therein and financial  statements and schedules
thereto and  documents  incorporated  by  reference  therein  being  hereinafter
referred to as the "SEC  Documents").  As of their  respective  dates (except as
they have been correctly  amended),  the SEC Documents  complied in all material
respects with the  requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents,  and none of the
SEC Documents, at the time they were filed with the SEC (except as they may have
been properly  amended),  contained  any untrue  statement of a material fact or
omitted to state a material fact  required to be stated  therein or necessary in
order to make the statements  therein, in light of the circumstances under which
they were made, not  misleading.  As of their  respective  dates (except as they
have been properly amended), the financial statements of the Company included in
the SEC Documents  complied as to form in all material  respects with applicable
accounting  requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally  accepted  accounting  principles,  consistently  applied,  during the
periods  involved  (except (i) as may be otherwise  indicated in such  financial
statements  or the  notes  thereto  or (ii) in the  case  of  unaudited  interim
statements,  to the extent they may exclude  footnotes  or may be  condensed  or

                                       7
<PAGE>

summary  statements)  and fairly present in all material  respects the financial
position  of  the  Company  as of the  dates  thereof  and  the  results  of its
operations  and cash flows for the periods then ended  (subject,  in the case of
unaudited statements, to normal year-end audit adjustments).

         (g) ABSENCE OF CERTAIN  CHANGES.  Except as disclosed in Schedule 3(g),
since  September  30,  2000,  there has been no material  adverse  change in the
business, properties,  operations,  financial condition or results of operations
of the Company or its  Subsidiaries.  The  Company has not taken any steps,  and
does not currently expect to take any steps, to seek protection  pursuant to any
bankruptcy  law  nor  does  the  Company  or any of its  Subsidiaries  have  any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings.

         (h) ABSENCE  OF  LITIGATION.  There is  no  action,  suit,  proceeding,
inquiry  or  investigation  before or by any  court,  public  board,  government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company,
the Common Stock or any of the Company's Subsidiaries or any of the Company's or
the Company's  Subsidiaries'  officers or directors in their capacities as such,
which  could  reasonably  be  expected  to have a  Material  Adverse  Effect.  A
description of each action, suit, proceeding, inquiry or investigation before or
by any court, public board, government agency,  self-regulatory  organization or
body  which,  as of the date of this  Agreement,  is  pending or  threatened  in
writing  against  or  affecting  the  Company,  the  Common  Stock or any of the
Company's  Subsidiaries  or any of the Company's or the Company's  Subsidiaries'
officers or  directors  in their  capacities  as such,  is set forth in Schedule
3(h).

         (i) ACKNOWLEDGMENT  REGARDING BUYER'S STATUS. The Company  acknowledges
and  agrees  that the Buyer is acting  solely in the  capacity  of arm's  length
purchaser  with  respect  to the  Transaction  Documents  and  the  transactions
contemplated hereby and thereby. The Company further acknowledges that the Buyer
is not acting as a  financial  advisor or  fiduciary  of the  Company (or in any
similar capacity) with respect to the Transaction Documents and the transactions
contemplated  hereby and thereby and any advice given by the Buyer or any of its
representatives  or agents in connection with the Transaction  Documents and the
transactions contemplated hereby and thereby is merely incidental to the Buyer's
purchase of the Securities. The Company further represents to the Buyer that the
Company's decision to enter into the Transaction Documents has been based solely
on the  independent  evaluation  by the  Company  and  its  representatives  and
advisors.

         (j) NO  GENERAL  SOLICITATION.  Neither  the  Company,  nor  any of its
affiliates,  nor any person  acting on its or their  behalf,  has engaged in any
form of general  solicitation  or general  advertising  (within  the  meaning of
Regulation  D under  the 1933 Act) in  connection  with the offer or sale of the
Securities.

         (k) INTENTIONALLY OMITTED.

         (l) DILUTIVE EFFECT. The Company  understands and acknowledges that the
number of Purchase  Shares  purchasable  under this  Agreement  will increase in
certain  circumstances.  The Company further acknowledges that its obligation to
issue  Purchase  Shares under this  Agreement in  accordance  with the terms and
conditions  hereof is absolute  and  unconditional  regardless  of the  dilutive
effect  that  such  issuance  may  have  on the  ownership  interests  of  other
shareholders of the Company.

         (m) INTELLECTUAL  PROPERTY RIGHTS. The Company and its Subsidiaries own
or possess  adequate  rights or licenses to use all material  trademarks,  trade
names, service marks, service mark registrations, service names, patents, patent
rights,    copyrights,    inventions,    licenses,    approvals,    governmental
authorizations,  trade secrets and rights  necessary to conduct their respective
businesses as now conducted.  Except as set forth on Schedule 3(m),  none of the

                                       8
<PAGE>

Company's  material  trademarks,   trade  names,  service  marks,  service  mark
registrations,  service names, patents, patent rights,  copyrights,  inventions,
licenses,   approvals,   government  authorizations,   trade  secrets  or  other
intellectual  property  rights have expired or terminated,  or, by the terms and
conditions thereof,  could expire or terminate within two years from the date of
this  Agreement.  The Company and its  Subsidiaries do not have any knowledge of
any infringement by the Company or its  Subsidiaries of any material  trademark,
trade name rights, patents,  patent rights,  copyrights,  inventions,  licenses,
service names, service marks, service mark registrations,  trade secret or other
similar  rights of others,  or of any such  development  of similar or identical
trade  secrets or technical  information  by others and,  except as set forth on
Schedule  3(m),  there is no claim,  action or proceeding  being made or brought
against, or to the Company's knowledge, being threatened against, the Company or
its  Subsidiaries  regarding  trademark,  trade name,  patents,  patent  rights,
invention,  copyright,  license,  service  names,  service  marks,  service mark
registrations,  trade secret or other  infringement,  which could  reasonably be
expected to have a Material Adverse Effect.

         (n) ENVIRONMENTAL  LAWS. The Company  and its  Subsidiaries  (i) are in
compliance with any and all applicable  foreign,  federal,  state and local laws
and  regulations  relating to the  protection  of human  health and safety,  the
environment  or  hazardous  or  toxic   substances  or  wastes,   pollutants  or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable  Environmental Laws to conduct
their  respective  businesses  and  (iii) are in  compliance  with all terms and
conditions of any such permit, license or approval, except where, in each of the
three  foregoing  clauses,  the  failure to so comply  could not  reasonably  be
expected to have, individually or in the aggregate, a Material Adverse Effect.

         (o) TITLE.  The Company and its  Subsidiaries  have good and marketable
title in fee simple to all real  property and good and  marketable  title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects  except  such  as are  described  in  Schedule  3(o)  or  such as do not
materially  affect the value of such property and do not interfere  with the use
made and  proposed  to be made of such  property  by the  Company and any of its
Subsidiaries.  Any real property and facilities  held under lease by the Company
and any of its  Subsidiaries  are  held  by them  under  valid,  subsisting  and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such  property and buildings by the
Company and its Subsidiaries.

         (p) INSURANCE.  The Company and each of its Subsidiaries are insured by
insurers of recognized  financial  responsibility  against such losses and risks
and in such  amounts as  management  of the  Company  believes to be prudent and
customary  in the  businesses  in which the  Company  and its  Subsidiaries  are
engaged.  Neither  the  Company  nor any such  Subsidiary  has been  refused any
insurance  coverage  sought or applied  for and neither the Company nor any such
Subsidiary  has any  reason  to  believe  that it will not be able to renew  its
existing  insurance  coverage  as and when such  coverage  expires  or to obtain
similar  coverage  from  similar  insurers as may be  necessary  to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise,  or the earnings,  business or operations of the Company
and its Subsidiaries, taken as a whole.

         (q) REGULATORY  PERMITS.  The Company and its Subsidiaries  possess all
material  certificates,  authorizations  and permits  issued by the  appropriate
federal,  state or foreign  regulatory  authorities  necessary to conduct  their
respective  businesses,  and neither the  Company  nor any such  Subsidiary  has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.

                                       9
<PAGE>

         (r) TAX STATUS.  The Company and each of its  Subsidiaries  has made or
filed, with the exceptions indicated, all federal and state income and all other
material tax returns,  reports and declarations  required by any jurisdiction to
which it is subject  (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions  reasonably  adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental  assessments  and charges  that are  material  in amount,  shown or
determined to be due on such  returns,  reports and  declarations,  except those
being  contested  in good  faith  and  has  set  aside  on its  books  provision
reasonably  adequate for the payment of all taxes for periods  subsequent to the
periods to which such returns,  reports or declarations apply. The Company is in
the process of filing its single entity federal and state income tax returns for
the calendar years 1998 and 1999. The returns will show net operating losses and
no tax due.  The  federal  and state  consolidated  income tax  returns  for the
Company and its subsidiaries for the calendar year 2000 are on extension.  There
are no unpaid  taxes in any  material  amount  claimed  to be due by the  taxing
authority of any jurisdiction,  and the officers of the Company know of no basis
for any such claim.

         (s) TRANSACTIONS WITH AFFILIATES.  Except as set forth on Schedule 3(s)
and other than the grant or  exercise  of stock  options  disclosed  on Schedule
3(c), none of the officers,  directors, or employees of the Company is presently
a party to any transaction  with the Company or any of its  Subsidiaries  (other
than for services as employees, officers and directors), including any contract,
agreement or other  arrangement  providing for the  furnishing of services to or
by,  providing for rental of real or personal  property to or from, or otherwise
requiring payments to or from any officer,  director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any  officer,  director,  or any such  employee  has an  interest or is an
officer, director, trustee or partner.

         (t) APPLICATION OF TAKEOVER  PROTECTIONS.  The Company and its board of
directors have taken or will take prior to the  Commencement  Date all necessary
action, if any, in order to render  inapplicable any control share  acquisition,
business  combination,  poison pill (including any  distribution  under a rights
agreement) or other similar  anti-takeover  provision  under the  Certificate of
Incorporation  or the laws of the state of its  incorporation  which is or could
become  applicable to the Buyer as a result of the transactions  contemplated by
this Agreement,  including,  without  limitation,  the Company's issuance of the
Securities and the Buyer's ownership of the Securities.

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

                                       10
<PAGE>

         4.  COVENANTS.

         (a) FILING OF REGISTRATION STATEMENT.  The Company shall within 30 days
from the date hereof file a new registration  statement  covering the sale of at
least 5,640,000  shares of Common Stock.  The Buyer and its counsel shall have a
reasonable opportunity to review and comment upon such registration statement or
amendment to such registration statement and any related prospectus prior to its
filing  with the SEC.  The  Company  shall  use its best  efforts  to have  such
registration  statement  or  amendment  declared  effective  by  the  SEC at the
earliest possible date.

         (b) BLUE SKY. The Company shall,  on or before the  Commencement  Date,
take such action, if any, as the Company shall reasonably determine is necessary
in order to obtain an exemption for or to qualify the Commitment  Shares and the
Purchase  Shares  for  sale  to the  Buyer  pursuant  to  this  Agreement  under
applicable securities or "Blue Sky" laws of the states of the United States, and
shall  provide  evidence of any such action so taken to the Buyer on or prior to
the  Commencement  Date. The Company shall make all filings and reports relating
to the offer and sale of the Commitment  Shares and the Purchase Shares required
under  applicable  securities  or "Blue  Sky" laws of the  states of the  United
States following the Commencement Date.

         (c) NO  VARIABLE  PRICED  FINANCING.   Other   than  pursuant  to  this
Agreement,  the Company  agrees that beginning on the date of this Agreement and
ending on the date of  termination  of this  Agreement  (as  provided in Section
11(k) hereof),  neither the Company nor any of its Subsidiaries  shall,  without
the prior  written  consent of the  Buyer,  contract  for any  equity  financing
(including  any debt  financing  with an equity  component)  or issue any equity
securities  of the  Company  or any  Subsidiary  or  securities  convertible  or
exchangeable  into or for equity  securities  of the  Company or any  Subsidiary
(including debt securities with an equity  component) which, in any case (i) are
convertible into or exchangeable for an indeterminate number of shares of common
stock,  (ii) are convertible  into or  exchangeable  for Common Stock at a price
which  varies  with the market  price of the Common  Stock,  (iii)  directly  or
indirectly  provide  for any  "re-set"  or  adjustment  of the  purchase  price,
conversion  rate or exercise  price after the issuance of the security,  or (iv)
contain any  "make-whole"  provision  based upon,  directly or  indirectly,  the
market  price of the Common Stock after the  issuance of the  security,  in each
case, other than reasonable and customary anti-dilution adjustments for issuance
of shares  of Common  Stock at a price  which is below the  market  price of the
Common Stock.

         (d) LISTING.  The Company shall  promptly  secure the listing of all of
the Purchase Shares and Commitment Shares upon each national securities exchange
and automated  quotation  system,  if any, upon which shares of Common Stock are
then listed (subject to official notice of issuance) and shall maintain, so long
as any other shares of Common Stock shall be so listed, such listing of all such
securities  from  time to time  issuable  under  the  terms  of the  Transaction
Documents.  The Company  shall  maintain the Common  Stock's  authorization  for
quotation  on  the  Principal  Market.  Neither  the  Company  nor  any  of  its
Subsidiaries  shall take any action that would be reasonably  expected to result
in the delisting or suspension of the Common Stock on the Principal Market.  The
Company shall  promptly,  and in no event later than the following  Trading Day,
provide to the Buyer copies of any notices it receives from the Principal Market
regarding  the  continued  eligibility  of the Common  Stock for listing on such
automated  quotation  system or securities  exchange.  The Company shall pay all
fees and expenses in  connection  with  satisfying  its  obligations  under this
Section.

         (e) LIMITATION  ON  SHORT  SALES AND  HEDGING  TRANSACTIONS.  The Buyer
agrees that  beginning on the date of this  Agreement  and ending on the date of
termination of this  Agreement as provided in Section  11(k),  the Buyer and its
agents,  representatives and affiliates shall not in any manner whatsoever enter
into or effect,  directly or  indirectly,  any (i) "short sale" (as such term is
defined  in Rule  3b-3 of the 1934  Act) of the  Common  Stock  or (ii)  hedging

                                       11
<PAGE>

transaction,  which  establishes a net short position with respect to the Common
Stock;  provided,  however,  that such  restrictions  shall not apply (i) if the
Buyer submits after a sale of shares of Common Stock a Purchase Notice entitling
the Buyer to  receive a number of shares of Common  Stock at least  equal to the
number of shares so sold or (ii) if an Event of Default has occurred,  including
any failure by the Company to timely  issue any Purchase  Shares  required to be
issued pursuant to the terms of this Agreement.

         (f) ISSUANCE OF  COMMITMENT  SHARES;  LIMITATION ON SALES OF COMMITMENT
SHARES.  Immediately  upon the  execution of this  Agreement,  the Company shall
issue to the Buyer 640,000 shares of Common Stock (the "Commitment Shares"). The
Commitment  Shares  shall be  issued to the Buyer  with a  restrictive  transfer
legend in form  reasonably  acceptable  to the Buyer.  The Buyer agrees that the
Buyer shall not transfer or sell the Commitment  Shares until the earlier of 800
Trading  Days (40  Monthly  Periods)  from the date hereof or date on which this
Agreement has been terminated,  provided,  however, that such restrictions shall
not apply:  (i) in  connection  with any  transfers to or among  affiliates  (as
defined in the Securities Exchange Act of 1934, as amended),  (ii) in connection
with any pledge in connection with a bona fide loan or margin account,  or (iii)
if an Event of Default has  occurred,  or any event which,  after notice  and/or
lapse of time,  would become an Event of Default,  including  any failure by the
Company to timely issue Purchase  Shares under this  Agreement.  Notwithstanding
the forgoing, the Buyer may transfer Commitment Shares to a third party in order
to settle a sale  made by the Buyer  where  the  Buyer  reasonably  expects  the
Company to deliver  Purchase Shares to the Buyer under this Agreement so long as
the Buyer  maintains  ownership of the same  overall  number of shares of Common
Stock by "replacing" the Commitment  Shares so transferred  with Purchase Shares
when the Purchase Shares are actually issued by the Company to the Buyer.

         (g) DUE DILIGENCE. The Buyer shall have the right, from time to time as
the Buyer may reasonably deem appropriate,  to perform  reasonable due diligence
on the Company during normal business hours, upon 24 hours' prior written notice
by the Buyer.  The Company  and its  officers  and  employees  shall  reasonably
cooperate with the Buyer in connection with any reasonable  request by the Buyer
related to the Buyer's due diligence of the Company.

         5.  TRANSFER AGENT INSTRUCTIONS.

         On the  Commencement  Date,  the Company  shall  cause any  restrictive
legend on the Commitment  Shares to be removed and all of the Purchase Shares to
be issued under this Agreement shall be issued without any  restrictive  legend.
The Company shall issue irrevocable  instructions to the Transfer Agent, and any
subsequent transfer agent, to issue Purchase Shares in the name of the Buyer for
the Purchase Shares (the "Irrevocable Transfer Agent Instructions"). The Company
warrants to the Buyer that no instruction  other than the  Irrevocable  Transfer
Agent  Instructions  referred to in this Section 5, will be given by the Company
to the  Transfer  Agent  with  respect  to the  Purchase  Shares  and  that  the
Commitment Shares and the Purchase 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  subject to the provisions of
Section 4(f) hereof in the case of the Commitment Shares.

         6.  CONDITIONS TO THE COMPANY'S OBLIGATION TO COMMENCE
             SALES OF SHARES OF COMMON STOCK.

         The  obligation  of the  Company  hereunder  to  commence  sales of the
Purchase  Shares  is  subject  to the  satisfaction  of  each  of the  following
conditions  on or before the  Commencement  Date (the date that sales begin) and

                                       12
<PAGE>

once such  conditions  have been  initially  satisfied,  there  shall not be any
ongoing  obligation  to  satisfy  such  conditions  after the  Commencement  has
occurred;  provided that these conditions are for the Company's sole benefit and
may be waived by the Company at any time in its sole discretion by providing the
Buyer with prior written notice thereof:

         (a) The Buyer shall have executed each of the Transaction  Documents to
which  it is a party  and  delivered  the  same  to the  Company  including  the
Registration Rights Agreement substantially in the form of EXHIBIT A hereto (the
"Registration Rights Agreement").

         (b) Subject  to  the  Company's   compliance   with   Section  4(a),  a
registration  statement covering the sale of all of the Commitment Shares and at
least  5,000,000  Purchase  Shares shall have been declared  effective under the
1933 Act by the SEC and no stop order with respect to the Registration Statement
shall be pending or threatened by the SEC.

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

         7.  CONDITIONS TO THE BUYER'S OBLIGATION TO COMMENCE
             PURCHASES OF SHARES OF COMMON STOCK.

         The  obligation of the Buyer to commence  purchases of Purchase  Shares
under this  Agreement is subject to the  satisfaction  of each of the  following
conditions  on or before the  Commencement  Date (the date that sales begin) and
once such  conditions  have been  initially  satisfied,  there  shall not be any
ongoing  obligation  to  satisfy  such  conditions  after the  Commencement  has
occurred;  provided that these  conditions  are for the Buyer's sole benefit and
may be waived by the Buyer at any time in its sole  discretion  by providing the
Company with prior written notice thereof:

         (a) The Company shall have executed each of the  Transaction  Documents
and delivered the same to the Buyer including the Registration  Rights Agreement
substantially in the form of EXHIBIT A hereto.

         (b) The Company shall have removed the restrictive transfer legend from
the Commitment Shares.

         (c) The Common Stock shall be authorized for quotation on the Principal
Market, trading in the Common Stock shall not have been within the last 365 days
suspended by the SEC or the  Principal  Market and the  Purchase  Shares and the
Commitment Shares shall be approved for listing upon the Principal Market.

         (d) The Buyer shall have received the opinions of the  Company's  legal
counsel  dated as of the  Commencement  Date in the form of  EXHIBIT B  attached
hereto.

         (e) The representations and warranties of the Company shall be true and
correct  in all  material  respects  (except  to the  extent  that  any of  such
representations and warranties is already qualified as to materiality in Section

                                       13
<PAGE>

3 above, in which case, such  representations  and warranties  shall be true and
correct  without further  qualification)  as of the date when made and as of the
Commencement  Date as though made at that time (except for  representations  and
warranties  that  speak  as of a  specific  date)  and the  Company  shall  have
performed, satisfied and complied with the covenants,  agreements and conditions
required by the  Transaction  Documents to be  performed,  satisfied or complied
with by the Company at or prior to the  Commencement  Date. The Buyer shall have
received a  certificate,  executed by the CEO,  President or CFO of the Company,
dated as of the Commencement  Date, to the foregoing effect in the form attached
hereto as EXHIBIT C.

         (f) The  Board  of  Directors  of   the  Company   shall  have  adopted
resolutions  in the form  attached  hereto as  EXHIBIT D which  shall be in full
force  and  effect  without  any  amendment  or  supplement  thereto  as of  the
Commencement Date.

         (g) As of the Commencement Date, the Company shall have reserved out of
its  authorized and unissued  Common Stock,  solely for the purpose of effecting
purchases of Purchase  Shares  hereunder,  at least  5,000,000  shares of Common
Stock.

         (h) The Irrevocable Transfer Agent Instructions,  in form acceptable to
the Buyer  shall  have been  delivered  to and  acknowledged  in  writing by the
Company and the Company's Transfer Agent.

         (i) The  Company  shall  have  delivered  to the  Buyer  a  certificate
evidencing  the  incorporation  and good standing of the Company in the State of
Nevada  issued  by the  Secretary  of State of the  State of Nevada as of a date
within ten (10) Trading Days of the Commencement Date.

         (j) The Company shall have  delivered to the Buyer a certified  copy of
the Certificate of  Incorporation  as certified by the Secretary of State of the
State of Nevada within ten (10) Trading Days of the Commencement Date.

         (k) The  Company  shall  have  delivered  to the  Buyer  a  secretary's
certificate  executed  by  the  Secretary  of  the  Company,  dated  as  of  the
Commencement Date, in the form attached hereto as EXHIBIT E.

         (l) A registration statement covering the sale of all of the Commitment
Shares and at least 5,000,000 Purchase Shares shall have been declared effective
under the 1933 Act by the SEC and no stop order with respect to the registration
statement  shall be pending or  threatened  by the SEC.  The Company  shall have
prepared and delivered to the Buyer a final form of prospectus to be used by the
Buyer in  connection  with any sales of any  Commitment  Shares or any  Purchase
Shares. The Company shall have made all filings under all applicable federal and
state  securities  laws  necessary to consummate  the issuance of the Commitment
Shares and the Purchase  Shares  pursuant to this  Agreement in compliance  with
such laws.

         (m) No Event of Default has occurred,  or any event which, after notice
and/or lapse of time, would become an Event of Default has occurred.

         (n) On or prior to the  Commencement  Date,  the Company shall take all
necessary action, if any, and such actions as reasonably requested by the Buyer,
in  order  to  render  inapplicable  any  control  share  acquisition,  business
combination,  shareholder rights plan or poison pill (including any distribution
under a rights  agreement) or other similar  anti-takeover  provision  under the
Certificate of Incorporation or the laws of the state of its incorporation which
is or could  become  applicable  to the  Buyer as a result  of the  transactions

                                       14
<PAGE>

contemplated by this Agreement,  including,  without  limitation,  the Company's
issuance of the Securities and the Buyer's ownership of the Securities.

         8.  INDEMNIFICATION.

         In  consideration  of  the  Buyer's   execution  and  delivery  of  the
Transaction  Documents and acquiring the Securities hereunder and in addition to
all of the Company's  other  obligations  under the Transaction  Documents,  the
Company shall defend, protect,  indemnify and hold harmless the Buyer and all of
its  affiliates,  shareholders,  officers,  directors,  employees  and direct or
indirect   investors  and  any  of  the  foregoing   person's  agents  or  other
representatives  (including,  without  limitation,  those retained in connection
with  the  transactions  contemplated  by  this  Agreement)  (collectively,  the
"Indemnitees")  from and against any and all actions,  causes of action,  suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith  (irrespective of whether any such Indemnitee is a party to
the  action  for which  indemnification  hereunder  is  sought),  and  including
reasonable  attorneys' fees and disbursements  (the "Indemnified  Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any  misrepresentation  or breach of any  representation or warranty made by the
Company in the  Transaction  Documents or any other  certificate,  instrument or
document  contemplated  hereby  or  thereby,  (b) any  breach  of any  covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby, or
(c) any cause of action,  suit or claim brought or made against such  Indemnitee
and arising out of or resulting  from the  execution,  delivery,  performance or
enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby,  other than with respect to Indemnified
Liabilities  which  directly and primarily  result from the gross  negligence or
willful  misconduct  of  the  Indemnitee.  To  the  extent  that  the  foregoing
undertaking  by the Company  may be  unenforceable  for any reason,  the Company
shall make the maximum  contribution to the payment and  satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law.

         9.  EVENTS OF DEFAULT.

         An "Event of Default"  shall be deemed to have  occurred at any time as
any of the following events occurs:

         (a) while any  registration  statement  is  required  to be  maintained
effective  pursuant  to the  terms of the  Registration  Rights  Agreement,  the
effectiveness of such registration  statement lapses for any reason  (including,
without limitation, the issuance of a stop order) or is unavailable to the Buyer
for sale of all of the  Registrable  Securities (as defined in the  Registration
Rights  Agreement)  in  accordance  with the  terms of the  Registration  Rights
Agreement,  and such lapse or unavailability  continues for a period of ten (10)
consecutive  Trading  Days or for more than an  aggregate of thirty (30) Trading
Days in any 365-day period;

         (b) the  suspension  from  trading or failure of the Common Stock to be
listed on the Principal Market for a period of ten (10) consecutive Trading Days
or for more than an aggregate of thirty (30) Trading Days in any 365-day period;

         (c) the  failure of the  Company or the Common  Stock to fully meet the
requirements  for continued  listing on the Principal Market for a period of ten
(10)  consecutive  Trading  Days or for more than an  aggregate  of thirty  (30)
Trading Days in any 365-day period;

                                       15
<PAGE>

         (d) the failure for any reason by the Transfer  Agent to issue Purchase
Shares to the Buyer within five (5) Trading Days after the  applicable  Purchase
Date which the Buyer is entitled to receive;

         (e) [INTENTIONALLY OMITTED];

         (f) the Company  breaches  any  representation,  warranty,  covenant or
other term or condition under any Transaction Document if such breach could have
a  Material  Adverse  Effect and  except,  in the case of a breach of a covenant
which is reasonably  curable,  only if such breach  continues for a period of at
least ten (10) Trading Days;

         (g) except as set forth on Schedule 9(g), any payment default under any
contract  whatsoever  or any  acceleration  prior to maturity  of any  mortgage,
indenture,  contract or  instrument  under which there may be issued or by which
there may be secured or evidenced  any  indebtedness  for money  borrowed by the
Company  or for money  borrowed  the  repayment  of which is  guaranteed  by the
Company,  whether such  indebtedness or guarantee now exists or shall be created
hereafter, which, with respect to any such payment default or acceleration prior
to maturity, is in excess of $1,000,000;

         (h) if any Person commences a  proceeding against the Company  pursuant
to or within the meaning of any Bankruptcy Law;

         (i) if the Company  pursuant to or within the meaning of any Bankruptcy
Law; (A) commences a voluntary  case,  (B) consents to the entry of an order for
relief against it in an involuntary  case, (C) consents to the  appointment of a
Custodian of it or for all or  substantially  all of its  property,  (D) makes a
general assignment for the benefit of its creditors,  (E) becomes insolvent,  or
(F) is generally unable to pay its debts as the same become due; or

         (j) a court of competent  jurisdiction  enters an order or decree under
any  Bankruptcy Law that (A) is for relief against the Company in an involuntary
case, (B) appoints a Custodian of the Company or for all or substantially all of
its property, or (C) orders the liquidation of the Company or any Subsidiary.

In addition  to any other  rights and  remedies  under  applicable  law and this
Agreement, including the Buyer termination rights under Section 11(k) hereof, so
long as an Event of Default  has  occurred  and is  continuing,  or if any event
which, after notice and/or lapse of time, would become an Event of Default,  has
occurred  and is  continuing,  or so long as the  Purchase  Price is  below  the
Purchase Price Floor, the Buyer shall not be obligated to purchase any shares of
Common Stock under this  Agreement.  If pursuant to or within the meaning of any
Bankruptcy Law, the Company commences a voluntary case or any Person commences a
proceeding  against the Company, a Custodian is appointed for the Company or for
all or  substantially  all of its  property,  or the  Company  makes  a  general
assignment for the benefit of its creditors,  (any of which would be an Event of
Default as described  in Sections  9(h),  9(i) and 9(j)  hereof) this  Agreement
shall  automatically  terminate  without any liability or payment to the Company
without  further  action or notice by any Person.  No such  termination  of this
Agreement  under  Section  11(k)(i)  shall  affect the  Company's or the Buyer's
obligations  under this  Agreement  with  respect to pending  purchases  and the
Company and the Buyer shall complete their  respective  obligations with respect
to any pending purchases under this Agreement.

                                       16
<PAGE>

         10. CERTAIN DEFINED TERMS.

         For  purposes of this  Agreement,  the  following  terms shall have the
following meanings:

         (a) "1933 Act" means the Securities Act of 1933, as amended.

         (b) "Available   Amount"   means   initially    Ten   Million   Dollars
($10,000,000)  in the  aggregate  which  amount shall be reduced by the Purchase
Amount each time the Buyer purchases  shares of Common Stock pursuant to Section
1 hereof.

         (c) "Bankruptcy Law" means Title  11, U.S. Code, or any similar federal
or state law for the relief of debtors.

         (d) "Closing Sale Price" means,  for any security as of any date,  the
last closing trade price for such  security on the Principal  Market as reported
by  Bloomberg,  or,  if the  Principal  Market is not the  principal  securities
exchange or trading  market for such  security,  the last closing trade price of
such security on the principal  securities exchange or trading market where such
security is listed or traded as reported by Bloomberg.

         (e) "Custodian" means  any receiver,  trustee, assignee,  liquidator or
similar official under any Bankruptcy Law.

         (f) "Daily Base Amount" means  initially  Twelve  Thousand Five Hundred
Dollars  ($12,500)  per Trading Day,  which amount may be increased or decreased
from time to time pursuant to Section 1(c) hereof.

         (g) "Floor Price" means initially $0.00,  which amount may be increased
or decreased from time to time pursuant to Section 1(d)(iii) hereof.

         (h) "Maturity Date" means the date that is 800 Trading Days (40 Monthly
Periods) from the Commencement  Date which such date may be extended by up to an
additional Six (6) Monthly Periods by the Company,  in its sole  discretion,  by
written notice to the Buyer.

         (i) "Monthly Base  Amount" means  Two  Hundred Fifty  Thousand  Dollars
($250,000) per Monthly Period.

         (j) "Monthly  Period"  means  each  successive  20  Trading  Day period
commencing with the Commencement Date.

         (k) "Original Daily  Base Amount"  means Twelve  Thousand Five  Hundred
Dollars ($12,500) per Trading Day.

         (l) "Person"  means  an  individual  or entity  including  any  limited
liability  company, a partnership,  a joint venture, a corporation,  a trust, an
unincorporated  organization  and a  government  or  any  department  or  agency
thereof.

         (m) "Principal  Market" means  The Nasdaq OTC/  Bulletin  Board market,
provided,  however,  that in the event the Company's Common Stock is ever listed
for  trading  on the  Nasdaq  National  Market,  Nasdaq  SmallCap  Market or the
American  Stock  Exchange,  than the  "Principal  Market"  shall mean such other
market on which the Company's Common Stock is then listed, and (ii) for purposes
of Section 9(c) hereof only,  "Principal  Market" shall mean The Nasdaq SmallCap
Market in respect of the  requirements  for  continued  listing on the Principal
Market.

                                       17
<PAGE>

         (n) "Purchase  Amount"  means the  portion of the  Available  Amount to
be  purchased  by the Buyer  pursuant to Section 1 hereof.

         (o) "Purchase Date" means  the actual  date that  the  Buyer is  to buy
Purchase Shares pursuant to Section 1 hereof.

         (p) "Purchase  Price"  means,  as of any Purchase Date the lower of the
(A) the lowest Sale Price of the Common Stock on the Purchase Date or such other
date of  determination  and (B) the  arithmetic  average of the three (3) lowest
Closing  Sale Prices for the Common  Stock  during the twelve  (12)  consecutive
Trading Days ending on the Trading Day immediately  preceding such Purchase Date
or  other  date  of  determination   (to  be  appropriately   adjusted  for  any
reorganization,  recapitalization,  non-cash  dividend,  stock  split  or  other
similar transaction).

         (q) "Sale  Price"  means,  for any  security as of any date,  any trade
price for such security on the Principal Market as reported by Bloomberg, or, if
the Principal Market is not the principal  securities exchange or trading market
for such security,  the trade price of such security on the principal securities
exchange or trading  market where such  security is listed or traded as reported
by Bloomberg.

         (r) "SEC" means the United States Securities and Exchange Commission.

         (s) "Trading Day" means any  day on which the  Principal Market is open
for customary trading.

         11. MISCELLANEOUS.

         (a) GOVERNING LAW; JURISDICTION;  JURY TRIAL. The corporate laws of the
State of Nevada shall govern all issues  concerning  the relative  rights of the
Company and its shareholders.  All other questions  concerning the construction,
validity,  enforcement  and  interpretation  of this  Agreement  and  the  other
Transaction  Documents  shall be governed by the  internal  laws of the State of
Illinois,  without  giving  effect  to any  choice  of law  or  conflict  of law
provision or rule (whether of the State of Illinois or any other  jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of  Illinois.  Each party  hereby  irrevocably  submits  to the  exclusive
jurisdiction of the state and federal courts sitting in the City of Chicago, for
the  adjudication  of any  dispute  hereunder  or under  the  other  Transaction
Documents  or in  connection  herewith  or  therewith,  or with any  transaction
contemplated  hereby or discussed herein,  and hereby  irrevocably  waives,  and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or  proceeding  is  brought in an  inconvenient  forum or that the venue of such
suit,  action or proceeding is improper.  Each party hereby  irrevocably  waives
personal  service of process and  consents to process  being  served in any such
suit,  action or  proceeding  by  mailing a copy  thereof  to such  party at the
address for such notices to it under this Agreement and agrees that such service
shall  constitute  good and  sufficient  service of process and notice  thereof.
Nothing  contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST,  A JURY TRIAL FOR THE ADJUDICATION
OF ANY  DISPUTE  HEREUNDER  OR IN  CONNECTION  HEREWITH  OR ARISING  OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

                                       18
<PAGE>

         (b) COUNTERPARTS.  This  Agreement  may  be  executed  in  two or  more
identical  counterparts,  all of  which  shall  be  considered  one and the same
agreement and shall become effective when  counterparts have been signed by each
party and  delivered to the other  party;  provided  that a facsimile  signature
shall be  considered  due  execution  and shall be  binding  upon the  signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.

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

         (d) SEVERABILITY.  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 in
that  jurisdiction  or the validity or  enforceability  of any provision of this
Agreement in any other jurisdiction.

         (e) ENTIRE AGREEMENT;  AMENDMENTS.  This Agreement supersedes all other
prior  oral  or  written  agreements  between  the  Buyer,  the  Company,  their
affiliates  and  persons  acting on their  behalf  with  respect to the  matters
discussed herein,  and this Agreement,  the other Transaction  Documents and the
instruments  referenced  herein contain the entire  understanding of the parties
with  respect  to  the  matters  covered  herein  and  therein  and,  except  as
specifically  set forth  herein or  therein,  neither  the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters.  No  provision  of  this  Agreement  may be  amended  other  than by an
instrument  in writing  signed by the  Company and the Buyer,  and no  provision
hereof may be waived other than by an instrument in writing  signed by the party
against whom enforcement is sought.

         (f) NOTICES.  Any notices,  consents,  waivers or other  communications
required or permitted to be given under the terms of this  Agreement  must be in
writing  and will be deemed  to have  been  delivered:  (i) upon  receipt,  when
delivered  personally;  (ii)  upon  receipt,  when sent by  facsimile  (provided
confirmation of transmission  is  mechanically or  electronically  generated and
kept on file by the sending party);  or (iii) one Trading Day after deposit with
a  nationally  recognized  overnight  delivery  service,  in each case  properly
addressed to the party to receive the same. The addresses and facsimile  numbers
for such communications shall be:

         If to the Company:
                  TSET, Inc.
                  333 South State Street, PMB 111
                  Lake Oswego, Oregon 97034
                  Telephone:        503-968-1547
                  Facsimile:        503-968-2337
                  Attention:        Jeffrey D. Wilson

         With a copy to:
                  Kirkpatrick & Lockhart LLP
                  201 Sout Biscayne Boulevard, Suite 2000
                  Miami, FL 33131
                  Telephone:        305-539-3300
                  Facsimile:        305-358-7095
                  Attention:        Clayton E. Parker, Esq.

                                       19
<PAGE>

         If to the Buyer:
                  Fusion Capital Fund II, LLC
                  222 Merchandise Mart Plaza, Suite 9-112
                  Chicago, IL 60654
                  Telephone:        312-644-6644
                  Facsimile:        312-644-6244
                  Attention:        Steven G. Martin

         If to the Transfer Agent:
                  Merit Transfer Company
                  68 South Main Street, Suite 708
                  Salt Lake City, UT 84101
                  Telephone:        801-531-7558
                  Facsimile:        801-531-7558
                  Attention:        Duane Ford

or at such other address and/or facsimile number and/or to the attention of such
other person as the  recipient  party has  specified by written  notice given to
each other  party  three (3)  Trading  Days prior to the  effectiveness  of such
change.  Written  confirmation  of receipt  (A) given by the  recipient  of such
notice,   consent,   waiver  or  other   communication,   (B)   mechanically  or
electronically  generated by the sender's facsimile machine containing the time,
date, and recipient facsimile number or (C) provided by a nationally  recognized
overnight  delivery service,  shall be rebuttable  evidence of personal service,
receipt by facsimile or receipt from a nationally  recognized overnight delivery
service in accordance with clause (i), (ii) or (iii) above, respectively.

         (g) SUCCESSORS AND ASSIGNS.  This Agreement  shall be  binding upon and
inure to the benefit of the parties and their respective successors and assigns.
The  Company  shall not  assign  this  Agreement  or any  rights or  obligations
hereunder without the prior written consent of the Buyer, including by merger or
consolidation.  The Buyer may not assign its  rights or  obligations  under this
Agreement.

         (h) NO THIRD PARTY  BENEFICIARIES.  This Agreement is  intended for the
benefit of the parties  hereto and their  respective  permitted  successors  and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

         (i) PUBLICITY.  The  Buyer  shall  have  the  right to  approve  before
issuance  any press  releases  or any other  public  disclosure  (including  any
filings  with the SEC) with  respect to the  transactions  contemplated  hereby;
provided,  however,  that the  Company  shall be  entitled,  without  the  prior
approval  of any Buyer,  to make any press  release or other  public  disclosure
(including  any filings  with the SEC) with respect to such  transactions  as is
required  by  applicable  law and  regulations  (although  the  Buyer  shall  be
consulted  by the  Company in  connection  with any such press  release or other
public  disclosure  prior  to its  release  and  shall be  provided  with a copy
thereof).

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

         (k) TERMINATION.  This Agreement may be terminated only as follows:

             (i) By the Buyer any time an Event of Default  exists  without  any
         liability or payment to the Company.  However, if pursuant to or within
         the meaning of any  Bankruptcy  Law, the Company  commences a voluntary

                                       20
<PAGE>

         case or any Person  commences  a  proceeding  against  the  Company,  a
         Custodian is appointed for the Company or for all or substantially  all
         of its  property,  or the Company  makes a general  assignment  for the
         benefit of its creditors, (any of which would be an Event of Default as
         described in Sections 9(h),  9(i) and 9(j) hereof) this Agreement shall
         automatically terminate without any liability or payment to the Company
         without further action or notice by any Person.  No such termination of
         this Agreement  under this Section  11(k)(i) shall affect the Company's
         or the Buyer's obligations under this Agreement with respect to pending
         purchases and the Company and the Buyer shall complete their respective
         obligations with respect to any pending purchases under this Agreement.

             (ii) In the event that the  Commencement  shall not have  occurred,
         the Company shall have the option to terminate  this  Agreement for any
         reason or for no  reason  without  liability  of any party to any other
         party.

             (iii) In the event that the Commencement shall not have occurred on
         or before August 31, 2001, due to the failure to satisfy the conditions
         set forth in  Sections 6 and 7 above with  respect to the  Commencement
         (and  the  nonbreaching  party's  failure  to  waive  such  unsatisfied
         condition(s)),   the  nonbreaching  party  shall  have  the  option  to
         terminate  this  Agreement  at the  close of  business  on such date or
         thereafter without liability of any party to any other party.

             (iv) If by the Maturity Date  (including  any extension  thereof by
         the Company pursuant to Section 10(g) hereof), for any reason or for no
         reason the full  Available  Amount  under this  Agreement  has not been
         purchased as provided for in Section 1 of this Agreement,  by the Buyer
         without any liability or payment to the Company.

             (v) At any time after the Commencement Date, the Company shall have
         the option to terminate  this Agreement for any reason or for no reason
         by  delivering  notice (a  "Company  Termination  Notice") to the Buyer
         electing to terminate this  Agreement  without any liability or payment
         to the Buyer.  The Company  Termination  Notice  shall not be effective
         until one (1) Trading Day after it has been received by the Buyer.

             (vi) This Agreement shall automatically  terminate on the date that
         the  Company  sells  and  the  Buyer   purchases  Ten  Million  Dollars
         ($10,000,000) as provided  herein,  without any action or notice on the
         part of any party.

Except as set forth in Sections 11(k)(i) and 11(k)(vi),  any termination of this
Agreement  pursuant to this  Section  11(k) shall be effected by written  notice
from the Company to the Buyer, or the Buyer to the Company,  as the case may be,
setting forth the basis for the  termination  hereof.  The  representations  and
warranties  of the Company and the Buyer  contained  in Sections 2 and 3 hereof,
the indemnification  provisions set forth in Section 8 hereof and the agreements
and covenants set forth in Section 11, shall  survive the  Commencement  and any
termination of this Agreement. No termination of this Agreement shall affect the
Company's  or the  Buyer's  obligations  under this  Agreement  with  respect to
pending  purchases and the Company and the Buyer shall complete their respective
obligations with respect to any pending purchases under this Agreement.

         (l) NO  FINANCIAL  ADVISOR,  PLACEMENT  AGENT,  BROKER OR  FINDER.  The
Company acknowledges that it has retained Dutchess Advisors,  Ltd., as financial
advisor in connection with the  transactions  contemplated  hereby.  The Company
represents and warrants to the Buyer that it has not engaged any other financial
advisor,  placement agent,  broker or finder in connection with the transactions
contemplated  hereby.  The Buyer  represents and warrants to the Company that it
has not engaged any  financial  advisor,  placement  agent,  broker or finder in

                                       21
<PAGE>

connection  with the  transactions  contemplated  hereby.  The Company  shall be
responsible for the payment of any fees or commissions, if any, of any financial
advisor,  placement  agent,  broker or finder  relating to or arising out of the
transactions  contemplated  hereby.  The Company  shall pay,  and hold the Buyer
harmless against, any liability, loss or expense (including, without limitation,
attorneys' fees and out of pocket expenses)  arising in connection with any such
claim.

         (m) NO STRICT  CONSTRUCTION.  The language used  in this Agreement will
be deemed  to be the  language chosen  by the  parties to  express their  mutual
intent, and no rules of strict construction will be applied against any party.

         (n) REMEDIES,  OTHER  OBLIGATIONS,  BREACHES AND INJUNCTIVE RELIEF. The
Buyer's remedies  provided in this Agreement shall be cumulative and in addition
to all other remedies available to the Buyer under this Agreement,  at law or in
equity  (including  a decree of specific  performance  and/or  other  injunctive
relief),  no remedy of the Buyer  contained  herein  shall be deemed a waiver of
compliance  with the  provisions  giving rise to such remedy and nothing  herein
shall limit the Buyer's  right to pursue  actual  damages for any failure by the
Company to comply with the terms of this  Agreement.  The  Company  acknowledges
that a breach by it of its obligations  hereunder will cause irreparable harm to
the Buyer and that the remedy at law for any such breach may be inadequate.  The
Company  therefore  agrees that,  in the event of any such breach or  threatened
breach,  the  Buyer  shall be  entitled,  in  addition  to all  other  available
remedies,  to an  injunction  restraining  any breach,  without the necessity of
showing economic loss and without any bond or other security being required.

         (o) CHANGES TO THE TERMS OF THIS  AGREEMENT.  This  Agreement  and  any
provision  hereof may only be amended by an instrument in writing  signed by the
Company and the Buyer. The term "Agreement" and all reference  thereto,  as used
throughout this instrument,  shall mean this instrument as originally  executed,
or if later amended or supplemented, then as so amended or supplemented.

         (p) ENFORCEMENT  COSTS.  If: (i) this Agreement is  placed by the Buyer
in the hands of an attorney for  enforcement or is enforced by the Buyer through
any legal proceeding;  or (ii) an attorney is retained to represent the Buyer in
any  bankruptcy,  reorganization,  receivership or other  proceedings  affecting
creditors'  rights  and  involving  a claim  under this  Agreement;  or (iii) an
attorney is retained to represent the Buyer in any other proceedings  whatsoever
in connection with this  Agreement,  then the Company shall pay to the Buyer, as
incurred by the Buyer,  all reasonable costs and expenses  including  attorneys'
fees  incurred in  connection  therewith,  in addition to all other  amounts due
hereunder.

         (q) FAILURE  OR  INDULGENCE  NOT  WAIVER.  No  failure or delay  in the
exercise of any power,  right or privilege  hereunder  shall operate as a waiver
thereof,  nor shall any single or partial  exercise of any such power,  right or
privilege  preclude  other or further  exercise  thereof or of any other  right,
power or privilege.

                                    * * * * *

                                       22
<PAGE>

         IN WITNESS  WHEREOF,  the Buyer and the Company have caused this Common
Stock Purchase Agreement to be duly executed as of the date first written above.

                                    THE COMPANY:

                                    TSET, INC.

                                    By:____________________________________
                                    Name:
                                    Title:

                                    BUYER:

                                    FUSION CAPITAL FUND II, LLC
                                    BY: FUSION CAPITAL PARTNERS, LLC
                                    BY: SGM HOLDINGS CORP.

                                    By:____________________________________
                                    Name: Steven G. Martin
                                    Title: President

<PAGE>

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