Document:

EXHIBIT 10.10

                          SECURITIES PURCHASE AGREEMENT

         THIS  SECURITIES  PURCHASE  AGREEMENT (this  "AGREEMENT"),  dated as of
October 2, 2006, by and among RADIAL  ENERGY,  INC., a Nevada  corporation  (the
"COMPANY"), and the Buyer listed on Schedule I attached hereto (the "BUYER").

                                   WITNESSETH

         WHEREAS,  the Company and the Buyer are executing and  delivering  this
Agreement in reliance upon an exemption from securities registration pursuant to
Section 4(2) and/or Rule 506 of Regulation D ("REGULATION  D") as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "SECURITIES ACT");

         WHEREAS,  the parties  desire  that,  upon the terms and subject to the
conditions  contained herein,  the Company shall issue and sell to the Buyer, as
provided  herein,  and the  Buyer  shall  purchase  up to Five  Million  Dollars
($5,000,000) of secured convertible  debentures (the "CONVERTIBLE  DEBENTURES"),
which shall be convertible  into shares of the Company's common stock, par value
$0.001 (the "COMMON STOCK") (as converted, the "CONVERSION SHARES") of which Two
Million  Dollars  ($2,000,000)  shall be funded  within  Five (5)  business  day
following  the date hereof  (the "FIRST  CLOSING"),  One  Million  Five  Hundred
Thousand  Dollars  ($1,500,000)  shall be  funded  on the date the  registration
statement  (the  "REGISTRATION  STATEMENT")  is filed,  pursuant to the Investor
Registration  Rights  Agreement  dated the date hereof,  with the United  States
Securities and Exchange  Commission (the "SEC") (the "SECOND CLOSING"),  and One
Million Five Hundred Thousand Dollars  ($1,500,000) shall be funded within three
(3)  business  days  after  the  date the  Registration  Statement  is  declared
effective  by the SEC  (the  "THIRD  CLOSING")  (individually  referred  to as a
"CLOSING"  collectively  referred to as the  "CLOSINGS"),  for a total  purchase
price of up to Five Million Dollars ($5,000,000),  (the "PURCHASE PRICE") in the
respective  amounts  set forth  opposite  the  Buyer's  name on  Schedule I (the
"SUBSCRIPTION AMOUNT"); and

         WHEREAS,  contemporaneously  with the  execution  and  delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement (the "INVESTOR  REGISTRATION RIGHTS AGREEMENT")  pursuant to which the
Company has agreed to provide certain  registration  rights under the Securities
Act and the rules and regulations  promulgated there under, and applicable state
securities laws; and

         WHEREAS,  contemporaneously  with the  execution  and  delivery of this
Agreement,  the Company,  the Buyers,  and each wholly owned  subsidiary  of the
Company  are  executing  and  delivering  a Security  Agreement  (the  "SECURITY
AGREEMENT")  pursuant  to which the Company  and its wholly  owned  subsidiaries
agreed to provide the Buyers a security  interest in Pledged  Property  (as this
term is defined in the Security  Agreement) to secure the Company's  obligations
under this Agreement, the Transaction Documents, or any other obligations of the
Company to the Buyer;

         WHEREAS,  contemporaneously  with the  execution  and  delivery of this
Agreement,  the Company and certain  officers of the Company are  executing  and
delivering  Pledge and Escrow Agreements  (collectively,  the "PLEDGE AND ESCROW
AGREEMENT")  pursuant  to which the Company  and  certain of its  officers  have

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agreed to provide the Buyer a security  interest in Pledged Shares (as this term
is  defined  in the  Pledge  and  Escrow  Agreement)  to  secure  the  Company's
obligations  under  this  Agreement,  the  Transaction  Documents,  or any other
obligations of the Company to the Buyer; and

         WHEREAS,  contemporaneously  with the  execution  and  delivery of this
Agreement,  the parties hereto are executing and delivering Irrevocable Transfer
Agent Instructions (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS").

         NOW,  THEREFORE,  in  consideration  of the mutual  covenants and other
agreements contained in this Agreement the Company and the Buyer hereby agree as
follows:

     1.   PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.

               (a)   PURCHASE  OF   CONVERTIBLE   DEBENTURES.   Subject  to  the
satisfaction  (or waiver) of the terms and  conditions  of this  Agreement,  the
Buyer  agrees to  purchase at each  Closing  and the Company  agrees to sell and
issue  to  the  Buyer  at  each  Closing,   Convertible  Debentures  in  amounts
corresponding  with the Subscription  Amount set forth opposite the Buyer's name
on Schedule I hereto.

               (b) CLOSING  DATE.  The First Closing of the purchase and sale of
the Convertible  Debentures shall take place at 10:00 a.m. Eastern Standard Time
on  the  fifth  (5th)  business  day  following  the  date  hereof,  subject  to
notification  of  satisfaction  of the conditions to the First Closing set forth
herein and in Sections 6 and 7 below (or such later date as is  mutually  agreed
to by the Company and the Buyer) (the "FIRST CLOSING DATE"),  the Second Closing
of the purchase and sale of the Convertible  Debentures shall take place at 4:00
p.m. Eastern Standard Time on the date the Registration  Statement is filed with
the SEC, subject to notification of satisfaction of the conditions to the Second
Closing set forth herein and in Sections 6 and 7 below (or such later date as is
mutually  agreed to by the Company and the Buyer) (the "SECOND  CLOSING  DATE"),
and the Third  Closing of the  purchase and sale of the  Convertible  Debentures
shall take place at 10:00 a.m. Eastern Standard Time on the third (3rd) business
day  immediately  following  the date the  Registration  Statement  is  declared
effective by the SEC,  subject to notification of satisfaction of the conditions
to the Third  Closing  set forth  herein and in  Sections 6 and 7 below (or such
earlier date as is mutually  agreed to by the Company and the Buyer) (the "THIRD
CLOSING DATE")  (collectively  referred to a the "CLOSING DATES").  Each Closing
shall  occur  on the  respective  Closing  Dates  at the  offices  of  Yorkville
Advisors, LLC, 3700 Hudson Street, Suite 3700, Jersey City, New Jersey 07302 (or
such other place as is mutually agreed to by the Company and the Buyer).

               (c) FORM OF PAYMENT. Subject to the satisfaction of the terms and
conditions of this Agreement, on each Closing Date, (i) the Buyers shall deliver
to the Company such  aggregate  proceeds for the  Convertible  Debentures  to be
issued  and  sold to the  Buyer,  minus  the fees to be paid  directly  from the
proceeds of the Closings as set forth herein, and (ii) the Company shall deliver
to the Buyer,  Convertible  Debentures  which the Buyer is purchasing in amounts
indicated  opposite the Buyer's  name on Schedule I, duly  executed on behalf of
the Company.

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     2.   BUYER'S REPRESENTATIONS AND WARRANTIES.

         The Buyer represents and warrants, severally and not jointly, that:

               (a) INVESTMENT  PURPOSE.  The Buyer is acquiring the  Convertible
Debentures  and,  upon  conversion  of  Convertible  Debentures,  the Buyer will
acquire the Conversion Shares then issuable,  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,  except pursuant to sales  registered or exempted
under the Securities Act; provided,  however, that by making the representations
herein, such Buyer reserves the right to dispose of the Conversion Shares at any
time in  accordance  with or pursuant  to an  effective  registration  statement
covering such Conversion  Shares or an available  exemption under the Securities
Act.

               (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
Convertible  Debentures 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 such Buyer's compliance with, the representations,  warranties,
agreements, acknowledgments and understandings of such Buyer set forth herein in
order to determine the  availability  of such  exemptions and the eligibility of
such Buyer to acquire such securities.

               (d)  INFORMATION.  The Buyer and its  advisors  (and his or,  its
counsel),  if any,  have  been  furnished  with all  materials  relating  to the
business,  finances  and  operations  of the Company and  information  he deemed
material to making an informed investment decision regarding his purchase of the
Convertible  Debentures and the Conversion Shares,  which have been requested by
such  Buyer.  The  Buyer  and its  advisors,  if any,  have  been  afforded  the
opportunity  to ask  questions of the Company and its  management.  Neither such
inquiries nor any other due diligence  investigations conducted by such Buyer or
its advisors,  if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's  representations and warranties contained
in Section 3 below. The Buyer understands that its investment in the Convertible
Debentures and the Conversion  Shares  involves a high degree of risk. The Buyer
is in a position  regarding the Company,  which,  based upon employment,  family
relationship  or economic  bargaining  power,  enabled and enables such Buyer to
obtain information from the Company in order to evaluate the merits and risks of
this investment. 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 Convertible Debentures and the Conversion Shares.

               (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  Convertible
Debentures  or the  Conversion  Shares,  or the fairness or  suitability  of the
investment in the Convertible Debentures or the Conversion Shares, nor have such
authorities  passed  upon  or  endorsed  the  merits  of  the  offering  of  the
Convertible Debentures or the Conversion Shares.

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               (f)  TRANSFER  OR RESALE.  The Buyer  understands  that except as
provided in the Investor  Registration  Rights  Agreement:  (i) the  Convertible
Debentures have not been and are not being  registered  under the Securities Act
or any state securities laws, and may not be offered for sale, sold, assigned or
transferred  unless (A) subsequently  registered  thereunder,  or (B) such Buyer
shall have  delivered  to the  Company an opinion  of  counsel,  in a  generally
acceptable  form,  to the effect that such  securities  to be sold,  assigned or
transferred may be sold,  assigned or transferred  pursuant to an exemption from
such  registration  requirements;  (ii)  any  sale  of such  securities  made in
reliance  on Rule 144 under the  Securities  Act (or a successor  rule  thereto)
("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 such  securities  under
circumstances  in which the seller (or the person through whom the sale is made)
may be deemed to be an  underwriter  (as that term is defined in the  Securities
Act) may require  compliance  with some other exemption under the Securities Act
or the rules and  regulations  of the SEC  thereunder;  and  (iii)  neither  the
Company nor any other person is under any obligation to register such securities
under the  Securities  Act or any state  securities  laws or to comply  with the
terms and conditions of any exemption thereunder. The Company reserves the right
to place stop transfer  instructions against the shares and certificates for the
Conversion Shares.

               (g) LEGENDS. The Buyer understands that the certificates or other
instruments representing the Convertible Debentures and or the Conversion Shares
shall bear a restrictive  legend in substantially the following form (and a stop
transfer order may be placed against transfer of such stock certificates):

          THE  SECURITIES   REPRESENTED  BY  THIS   CERTIFICATE  HAVE  NOT  BEEN
          REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
          STATE  SECURITIES  LAWS. THE SECURITIES  HAVE BEEN ACQUIRED SOLELY FOR
          INVESTMENT  PURPOSES AND NOT WITH A VIEW TOWARD  RESALE AND MAY NOT BE
          OFFERED FOR SALE,  SOLD,  TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
          EFFECTIVE   REGISTRATION   STATEMENT  FOR  THE  SECURITIES  UNDER  THE
          SECURITIES  ACT OF 1933, AS AMENDED,  OR APPLICABLE  STATE  SECURITIES
          LAWS, OR AN OPINION OF COUNSEL,  IN A GENERALLY  ACCEPTABLE FORM, THAT
          REGISTRATION  IS NOT  REQUIRED  UNDER  SAID  ACT OR  APPLICABLE  STATE
          SECURITIES LAWS.

The  legend set forth  above  shall be removed  and the  Company  within two (2)
business days shall issue a certificate without such legend to the holder of the
Conversion  Shares upon which it is stamped,  if, unless  otherwise  required by
state securities laws, (i) in connection with a sale  transaction,  provided the
Conversion  Shares are registered under the Securities Act or (ii) in connection
with a sale transaction,  after such holder provides the Company with an opinion
of counsel,  which opinion shall be in form,  substance and scope  customary for
opinions  of counsel in  comparable  transactions,  to the effect  that a public
sale,  assignment  or  transfer  of the  Conversion  Shares may be made  without
registration under the Securities Act.

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

               (i)  RECEIPT OF  DOCUMENTS.  The Buyer and his or its counsel has
received and read in their entirety: (i) this Agreement and each representation,
warranty and covenant set forth herein and the Transaction Documents (as defined
herein);  (ii) all due diligence and other  information  necessary to verify the
accuracy and  completeness  of such  representations,  warranties and covenants;
(iii) the  Company's  Form 10-KSB for the fiscal year ended  December  31, 2005;
(iv) the  Company's  Form 10-QSB for the fiscal  quarter ended June 30, 2006 and
(v) answers to all  questions  the Buyer  submitted to the Company  regarding an
investment in the Company; and the Buyer has relied on the information contained
therein and has not been furnished any other documents,  literature,  memorandum
or prospectus.

               (j) DUE FORMATION OF CORPORATE AND OTHER BUYERS.  If the Buyer is
a  corporation,  trust,  partnership  or other entity that is not an  individual
person, it has been formed and validly exists and has not been organized for the
specific purpose of purchasing the Convertible  Debentures and is not prohibited
from doing so.

               (k) NO LEGAL  ADVICE FROM THE  COMPANY.  The Buyer  acknowledges,
that it had the  opportunity  to  review  this  Agreement  and the  transactions
contemplated  by this Agreement with his or its own legal counsel and investment
and tax advisors.  The Buyer is relying  solely on such counsel and advisors and
not  on  any  statements  or  representations  of  the  Company  or  any  of its
representatives  or agents for legal,  tax or investment  advice with respect to
this  investment,  the  transactions  contemplated  by  this  Agreement  or  the
securities laws of any jurisdiction.

               (l) NO  SHORT  POSITION.  The  Buyer,  together  with  any of its
affiliates,  does not have an open short  position  in the  Common  Stock of the
Company.

     3.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

     The Company  represents  and  warrants as of the date hereof to each of the
Buyers that,  except as set forth in the SEC Documents (as defined herein) or in
the Disclosure Schedule attached hereto (the "DISCLOSURE SCHEDULE"):

               (a)   ORGANIZATION  AND   QUALIFICATION.   The  Company  and  its
subsidiaries  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 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 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 would not have a material adverse effect on the
Company and its subsidiaries taken as a whole.

                                       5

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               (b)   AUTHORIZATION,    ENFORCEMENT,    COMPLIANCE   WITH   OTHER
INSTRUMENTS.  (i) The Company has the requisite corporate power and authority to
enter into and perform  this  Agreement,  the Security  Agreement,  the Investor
Registration  Rights Agreement,  the Irrevocable  Transfer Agent Agreement,  the
Pledge  and Escrow  Agreement,  and any  related  agreements  (collectively  the
"TRANSACTION  DOCUMENTS")  and to  issue  the  Convertible  Debentures  and  the
Conversion  Shares 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 Convertible  Debentures the
Conversion  Shares and the  reservation  for  issuance  and the  issuance of the
Conversion Shares issuable upon conversion or exercise  thereof,  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
stockholders,  (iii) the  Transaction  Documents  have been  duly  executed  and
delivered by the Company,  (iv) the Transaction  Documents  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.  The
authorized  officer of the Company executing the Transaction  Documents knows of
no reason why the Company  cannot file the  registration  statement  as required
under the Investor Registration Rights Agreement or perform any of the Company's
other obligations under such documents.

               (c)  CAPITALIZATION.  The authorized capital stock of the Company
consists of 75,000,000  shares of Common Stock,  of which  44,565,824  shares of
Common Stock are issued and  outstanding,  and no shares of preferred stock. All
of such  outstanding  shares  have been  validly  issued  and are fully paid and
nonassessable. No shares of Common Stock are subject to preemptive rights or any
other similar rights or any liens or  encumbrances  suffered or permitted by the
Company. As of the date of this Agreement, (i) 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,  (ii)  there  are  no  outstanding  debt
securities  and (iii) 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 Securities Act (except pursuant to the Registration
Rights Agreement) and (iv) there are no outstanding  registration statements and
there are no outstanding  comment  letters from the SEC or any other  regulatory
agency.  There are no  securities or  instruments  containing  anti-dilution  or
similar  provisions  that will be triggered  by the issuance of the  Convertible
Debentures  as described  in this  Agreement.  The Company has  furnished to the
Buyer true and correct  copies of the Company's  Articles of  Incorporation,  as
amended and as in effect on the date hereof (the  "ARTICLES OF  INCORPORATION"),
and the Company's By-laws, as in effect on the date hereof (the "BY-LAWS"),  and
the terms of all securities convertible into or exercisable for Common Stock and
the material  rights of the holders  thereof in respect thereto other than stock
options issued to employees and consultants.

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               (d) ISSUANCE OF SECURITIES.  The Convertible  Debentures are duly
authorized and, upon issuance in accordance with the terms hereof, shall be duly
issued, fully paid and nonassessable, are free from all taxes, liens and charges
with  respect  to  the  issue  thereof.  The  Conversion  Shares  issuable  upon
conversion of the Convertible  Debentures have been duly authorized and reserved
for issuance.  Upon  conversion or exercise in accordance  with the  Convertible
Debentures  the  Conversion   Shares  will  be  duly  issued,   fully  paid  and
nonassessable.

               (e) NO CONFLICTS. The execution,  delivery and performance of the
Transaction  Documents by the Company and the consummation by the Company of the
transactions  contemplated  hereby  will not (i)  result in a  violation  of the
Articles of  Incorporation,  any  certificate of designations 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  National  Association  of  Securities  Dealers  Inc.'s  OTC
Bulletin Board on which the Common Stock is quoted) 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.  Neither  the  Company  nor  its
subsidiaries  is in violation of any term of or in default under its Articles of
Incorporation   or  By-laws  or  their   organizational   charter  or   by-laws,
respectively,  or 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.  The business of the
Company and its subsidiaries is not being conducted,  and shall not be conducted
in violation of any material law,  ordinance,  or regulation of any governmental
entity.  Except as  specifically  contemplated by this Agreement and as required
under the Securities Act and any applicable  state  securities laws, the Company
is not  required to obtain any consent,  authorization  or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under or contemplated by this
Agreement or the  Registration  Rights  Agreement in  accordance  with the terms
hereof  or  thereof.   All  consents,   authorizations,   orders,   filings  and
registrations  which the Company is required to obtain pursuant to the preceding
sentence  have been  obtained or effected  on or prior to the date  hereof.  The
Company and its  subsidiaries  are unaware of any facts or  circumstance,  which
might give rise to any of the foregoing.

               (f) SEC DOCUMENTS:  FINANCIAL STATEMENTS.  Since January 1, 2005,
the  Company  has filed all  reports,  schedules,  forms,  statements  and other
documents required to be filed by it with the SEC under the Securities  Exchange
Act of 1934, as amended (the "EXCHANGE  Act") (all of the foregoing  filed prior
to the date hereof or amended  after 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").  The Company has delivered to the Buyers or their  representatives,
or made  available  through the SEC's website at  http://www.sec.gov.,  true and
complete  copies  of the  SEC  Documents.  As of  their  respective  dates,  the
financial  statements  of the  Company  disclosed  in  the  SEC  Documents  (the
"FINANCIAL  STATEMENTS")  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

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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  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).   No  other
information  provided  by or on behalf of the  Company to the Buyer which is not
included  in the  SEC  Documents,  including,  without  limitation,  information
referred to in this Agreement,  contains any untrue statement of a material fact
or omits to state any material  fact  necessary in order to make the  statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading.

               (g)  10(B)-5.  The  SEC  Documents  do  not  include  any  untrue
statements  of  material  fact,  nor do they  omit to state  any  material  fact
required to be stated therein necessary to make the statements made, in light of
the circumstances under which they were made, not misleading.

               (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 against or affecting the
Company,  the  Common  Stock or any of the  Company's  subsidiaries,  wherein an
unfavorable decision, ruling or finding would (i) have a material adverse effect
on the  transactions  contemplated  hereby (ii) adversely affect the validity or
enforceability  of, or the  authority  or ability of the  Company to perform its
obligations under, this Agreement or any of the documents  contemplated  herein,
or (iii) have a material adverse effect on the business, operations, properties,
financial condition or results of operations of the Company and its subsidiaries
taken as a whole.

               (i) ACKNOWLEDGMENT  REGARDING BUYER'S PURCHASE OF THE CONVERTIBLE
DEBENTURES.  The Company acknowledges and agrees that the Buyer is acting solely
in the capacity of an arm's length  purchaser with respect to this Agreement and
the transactions  contemplated hereby. 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 this  Agreement  and the  transactions
contemplated hereby and any advice given by the Buyer or any of their respective
representatives or agents in connection with this Agreement and the transactions
contemplated  hereby  is  merely  incidental  to such  Buyer's  purchase  of the
Convertible  Debentures or the Conversion Shares. The Company further represents
to the Buyer that the Company's  decision to enter into this  Agreement has been
based   solely  on  the   independent   evaluation   by  the   Company  and  its
representatives.

               (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 Securities  Act) in connection  with the offer or sale of
the Convertible Debentures or the Conversion Shares.

               (k) NO INTEGRATED  OFFERING.  Neither the Company, nor any of its
affiliates,  nor any  person  acting on its or their  behalf  has,  directly  or
indirectly,  made any offers or sales of any security or solicited any offers to

                                       8

<PAGE>

buy any security,  under  circumstances  that would require  registration of the
Convertible  Debentures or the  Conversion  Shares under the  Securities  Act or
cause this offering of the Convertible Debentures or the Conversion Shares to be
integrated  with prior  offerings by the Company for purposes of the  Securities
Act.

               (l)  EMPLOYEE  RELATIONS.  Neither  the  Company  nor  any of its
subsidiaries  is involved in any labor  dispute  nor,  to the  knowledge  of the
Company or any of its subsidiaries,  is any such dispute threatened. None of the
Company's or its subsidiaries'  employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

               (m)   INTELLECTUAL   PROPERTY   RIGHTS.   The   Company  and  its
subsidiaries  own or possess  adequate rights or licenses to use all 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.  The Company and its  subsidiaries  do not have any
knowledge of any  infringement by the Company or its  subsidiaries of 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,  and, to the  knowledge  of the  Company  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;  and the Company and its  subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.

               (n) ENVIRONMENTAL  LAWS. To the best of the Company's  knowledge,
the  Company  and  its  subsidiaries  are  (i) 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.

               (o) TITLE.  Any real property and facilities  held under lease by
the Company and its  subsidiaries  are held by them under valid,  subsisting and
enforceable leases with such exceptions as 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,

                                       9

<PAGE>

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.

               (r)  INTERNAL  ACCOUNTING  CONTROLS.  The Company and each of its
subsidiaries  maintain a system of internal  accounting  controls  sufficient to
provide  reasonable  assurance that (i)  transactions are executed in accordance
with  management's  general or specific  authorizations,  (ii)  transactions are
recorded  as  necessary  to  permit  preparation  of  financial   statements  in
conformity with generally accepted  accounting  principles and to maintain asset
accountability,  and (iii) the recorded  amounts for assets is compared with the
existing  assets at reasonable  intervals and  appropriate  action is taken with
respect to any differences.

               (s) NO MATERIAL  ADVERSE  BREACHES,  ETC. Neither the Company nor
any of its  subsidiaries  is subject to any  charter,  corporate  or other legal
restriction,  or any judgment,  decree,  order,  rule or regulation which in the
judgment of the  Company's  officers  has or is expected in the future to have a
material  adverse  effect on the  business,  properties,  operations,  financial
condition,   results  of   operations   or  prospects  of  the  Company  or  its
subsidiaries.  Neither the Company nor any of its  subsidiaries  is in breach of
any  contract or  agreement  which  breach,  in the  judgment  of the  Company's
officers,  has or is expected to have a material adverse effect on the business,
properties,  operations, financial condition, results of operations or prospects
of the Company or its subsidiaries.

               (t) TAX STATUS. The Company and each of its subsidiaries has made
and filed all federal and state  income and all other tax  returns,  reports and
declarations required by any jurisdiction to which it is subject and (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)  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. 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.

               (u) CERTAIN  TRANSACTIONS.  Except for arm's length  transactions
pursuant to which the Company makes payments in the ordinary  course of business
upon terms no less  favorable  than the Company  could obtain from third parties
and other than the grant of stock options  disclosed in the SEC Documents,  none
of the officers,  directors, or employees of the Company is presently a party to
any transaction with the Company (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

                                       10

<PAGE>

corporation,  partnership, trust or other entity in which any officer, director,
or any such  employee  has a  substantial  interest or is an officer,  director,
trustee or partner.

               (v)  FEES  AND  RIGHTS  OF  FIRST  REFUSAL.  The  Company  is not
obligated to offer the securities  offered hereunder on a right of first refusal
basis or otherwise to any third parties  including,  but not limited to, current
or former shareholders of the Company,  underwriters,  brokers,  agents or other
third parties.

     4.   COVENANTS.

               (a) BEST EFFORTS. Each party shall use its best efforts to timely
satisfy each of the  conditions  to be satisfied by it as provided in Sections 6
and 7 of this Agreement.

               (b) FORM D. The Company  agrees to file a Form D with  respect to
the  Conversion  Shares as  required  under  Regulation  D and to provide a copy
thereof to the Buyer promptly after such filing. The Company shall, on or before
the Closing Date, take such action as the Company shall reasonably  determine is
necessary  to qualify the  Conversion  Shares,  or obtain an  exemption  for the
Conversion  Shares  for  sale to the  Buyers  at the  Closing  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
Buyers on or prior to the Closing Date.

               (c)  REPORTING  STATUS.  Until the  earlier of (i) the date as of
which  the  Buyer  may sell all of the  Conversion  Shares  without  restriction
pursuant to Rule  144(k)  promulgated  under the  Securities  Act (or  successor
thereto),  or (ii) the date on  which  (A) the  Buyer  shall  have  sold all the
Conversion  Shares and (B) none of the  Convertible  Debentures are  outstanding
(the  "REGISTRATION  Period"),  the  Company  shall file in a timely  manner all
reports  required to be filed with the SEC  pursuant to the Exchange Act and the
regulations  of the SEC  thereunder,  and the Company  shall not  terminate  its
status as an issuer  required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would otherwise permit such
termination.

               (d) USE OF PROCEEDS.  The Company will use the proceeds  from the
sale of the  Convertible  Debentures for general  corporate and working  capital
purposes.

               (e) RESERVATION OF SHARES. On the date hereof,  the Company shall
reserve  for  issuance  to  the  Buyers  16,000,000  shares  for  issuance  upon
conversions of the Convertible  Dentures and 9,166,667  shares for issuance upon
exercise  of the  Warrants  (collectively,  the "SHARE  RESERVE").  The  Company
represents that it has sufficient authorized and unissued shares of Common Stock
available to create the Share Reserve after  considering  all other  commitments
that may require the issuance of Common Stock. The Company shall take all action
reasonably  necessary  to at all times have  authorized,  and  reserved  for the
purpose of issuance, such number of shares of Common Stock as shall be necessary
to  effect  the  full  conversion  of the  Convertible  Debentures  and the full
exercise of the Warrants.  If at any time the Share Reserve is  insufficient  to
effect the full conversion of the Convertible Debentures or the full exercise of
the Warrants,  the Company shall increase the Share Reserve accordingly.  If the

                                       11

<PAGE>

Company does not have sufficient  authorized and unissued shares of Common Stock
available  to increase  the Share  Reserve,  the  Company  shall call and hold a
special meeting of the shareholders  within thirty (30) days of such occurrence,
for the sole  purpose  of  increasing  the  number  of  shares  authorized.  The
Company's  management  shall  recommend to the  shareholders to vote in favor of
increasing  the number of shares of Common Stock  authorized.  Management  shall
also vote all of its  shares in favor of  increasing  the  number of  authorized
shares of Common Stock.

               (f) LISTINGS OR QUOTATION.  The  Company's  Common Stock shall be
listed or quoted for trading on any of (a) the American Stock Exchange,  (b) New
York Stock  Exchange,  (c) the Nasdaq  National  Market,  (d) the Nasdaq Capital
Market,  or (e) the Nasdaq OTC Bulletin Board ("OTC") (each, a "PRIMARY MARKET")
and the Company shall promptly secure the listing or quotation of the Conversion
Shares and Warrant  Shares for trading on the same Primary Market upon which the
shares of Common Stock are then listed or quoted.

               (g) FEES AND EXPENSES.

                    (i) Each of the  Company  and the Buyer  shall pay all costs
and  expenses  incurred  by such  party  in  connection  with  the  negotiation,
investigation, preparation, execution and delivery of the Transaction Documents.
The Company shall pay Yorkville Advisors LLC a fee equal to ten percent (10%) of
the Purchase Price directly from the proceeds of each Closing.

                    (ii) The Company  shall pay a  structuring  fee to Yorkville
Advisors LLC of Twenty Two Thousand  Five Hundred  Dollars  ($22,500),  of which
Eleven Thousand Two Hundred Fifty Thousand  Dollars  ($11,250) has been paid and
the remaining Eleven Thousand Two Hundred Fifty Thousand Dollars ($11,250) shall
be paid directly from the proceeds of the First Closing.

                    (iii) The Company  shall issue to the Buyer (a) on the First
Closing  Date the A  Warrants,  B Warrants,  and C Warrants,  in the amounts set
forth next to the Buyer's  name set forth  below,  and (b) on the Third  Closing
Date the D Warrants (the A, B, C, and D Warrants  collectively,  the "WARRANTS")
in the amounts set forth next to the Buyer's name set forth  below.  Each of the
Warrants shall be in the form of the Warrant  attached  hereto as Exhibit A. The
shares  of Common  Stock  issuable  under the  Warrants  shall  collectively  be
referred to as the "WARRANT SHARES".

                                                              Warrant
                                   Warrant      Warrant       Exercise
Buyer                              Series       Shares        Price
______________________________________________________________________

Cornell Capital Partners, LP.     A Warrant     3,333,333      $0.75
______________________________________________________________________

Cornell Capital Partners, LP.     B Warrant     2,500,000      $1.00
______________________________________________________________________

Cornell Capital Partners, LP.     C Warrant     2,333,333      $1.50
______________________________________________________________________

Cornell Capital Partners, LP.     D Warrant     1,000,000      $1.50
______________________________________________________________________

Total Warrant Shares                            9,166,667

                                       12

<PAGE>

               (h)  CORPORATE  EXISTENCE.  So  long  as any  of the  Convertible
Debentures remain outstanding,  the Company shall not directly or indirectly, in
one or more related transactions, (i) consolidate or merge with or into (whether
or not the Company is the surviving  corporation)  another entity, or (ii) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the
properties  or assets of the  Company  to  another  entity or  person,  or (iii)
consummate a stock purchase agreement or other business combination  (including,
without limitation, a reorganization,  recapitalization,  spin-off) with another
entity whereby such other entity  acquires more than the 50% of the  outstanding
shares of Common Stock,  or (iv)  reorganize,  recapitalize  or  reclassify  its
Common Stock (each such transaction,  an "ORGANIZATIONAL  CHANGE") unless, prior
to the consummation an  Organizational  Change,  the Company obtains the written
consent  of the Buyer.  In any such  case,  the  Company  will make  appropriate
provision with respect to such holders'  rights and interests to insure that the
provisions of this Section 4(h) will thereafter be applicable to the Convertible
Debentures.

               (i)  TRANSACTIONS  WITH  AFFILIATES.  So long as any  Convertible
Debentures are  outstanding,  the Company shall not, and shall cause each of its
subsidiaries  not to, enter into,  amend,  modify or  supplement,  or permit any
subsidiary  to  enter  into,   amend,   modify  or  supplement   any  agreement,
transaction,  commitment,  or  arrangement  with any of its or any  subsidiary's
officers,  directors,  person who were  officers or directors at any time during
the previous two (2) years,  stockholders who beneficially own five percent (5%)
or more of the  Common  Stock,  or  Affiliates  (as  defined  below) or with any
individual  related by blood,  marriage,  or adoption to any such  individual or
with any entity in which any such entity or individual  owns a five percent (5%)
or more beneficial  interest (each a "RELATED PARTY"),  except for (a) customary
employment  arrangements  and benefit  programs  on  reasonable  terms,  (b) any
investment  in an  Affiliate  of the Company,  (c) any  agreement,  transaction,
commitment,  or arrangement  on an arms-length  basis on terms no less favorable
than  terms  which  would  have been  obtainable  from a person  other than such
Related Party, (d) any agreement, transaction,  commitment, or arrangement which
is approved by a majority of the  disinterested  directors of the  Company;  for
purposes  hereof,  any  director  who is also an officer  of the  Company or any
subsidiary of the Company shall not be a disinterested  director with respect to
any such agreement,  transaction,  commitment,  or arrangement.  "AFFILIATE" for
purposes hereof means,  with respect to any person or entity,  another person or
entity that, directly or indirectly,  (i) has a ten percent (10%) or more equity
interest  in that person or entity,  (ii) has ten  percent  (10%) or more common
ownership with that person or entity,  (iii) controls that person or entity,  or
(iv) shares common  control with that person or entity.  "CONTROL" or "CONTROLS"
for  purposes  hereof  means that a person or entity  has the  power,  direct or
indirect, to conduct or govern the policies of another person or entity.

               (j) TRANSFER AGENT. The Company covenants and agrees that, in the
event that the Company's agency  relationship  with the transfer agent should be
terminated  for any  reason  prior to a date  which is two (2)  years  after the
Closing Date,  the Company shall  immediately  appoint a new transfer  agent and
shall  require that the new transfer  agent execute and agree to be bound by the
terms of the Irrevocable Transfer Agent Instructions (as defined herein).

               (k) RESTRICTION ON ISSUANCE OF THE CAPITAL STOCK.  Except for the
issuance of Excluded Securities (as defined in the Convertible  Debentures),  so
long as any  Convertible  Debentures  are  outstanding,  the Company  shall not,

                                       13

<PAGE>

without  the prior  written  consent  of the  Buyer (i) issue or sell  shares of
Common Stock or Preferred Stock without consideration or for a consideration per
share less than a twenty  percent (20%)  discount to the bid price of the Common
Stock  determined  immediately  prior to its issuance,  (ii) issue any preferred
stock, warrant,  option, right, contract,  call, or other security or instrument
granting  the  holder   thereof  the  right  to  acquire  Common  Stock  without
consideration  or for a  consideration  per share  less a twenty  percent  (20%)
discount to the bid price of the Common Stock  determined  immediately  prior to
its issuance, or (iii) file any registration statement on Form S-8.

               (l) The Buyer  agrees  that it shall not,  and that it will cause
its affiliates not to, engage in any short sales of or hedging transactions with
respect to the Common Stock as long as any Convertible  Debentures  shall remain
outstanding.

               (m) RIGHTS OF FIRST  NEGOTIATION.  For a period of 18 months from
the date  hereof,  if the  Company  intends to raise  additional  capital by the
issuance or sale of capital stock of the Company,  including without  limitation
shares of any class of common  stock,  any class of  preferred  stock,  options,
warrants  or any other  securities  convertible  or  exercisable  into shares of
common stock  (whether  the  offering is conducted by the Company,  underwriter,
placement  agent or any third party) the Company  shall be obligated to offer to
the Buyers such issuance or sale of capital  stock,  by providing in writing the
principal  amount of capital it  intends  to raise and  outline of the  material
terms of such  capital  raise,  prior to the offering  such  issuance or sale of
capital stock to any third  parties  including,  but not limited to,  current or
former officers or directors, current or former shareholders and/or investors of
the obligor,  underwriters,  brokers,  agents or other third parties. The Buyers
shall have five (5)  business  days from  receipt of such  notice of the sale or
issuance of capital  stock to accept or reject all or a portion of such  capital
raising offer.

               (n) LOCK UP  AGREEMENTS.  On the date hereof,  the Company  shall
obtain from each officer and  director a lock up agreement in the form  attached
hereto as EXHIBIT B.

     5.   TRANSFER AGENT INSTRUCTIONS.

     The Company shall issue the Irrevocable  Transfer Agent Instructions to its
transfer agent  irrevocably  appointing  David  Gonzalez,  Esq. as the Company's
agent for purpose of having certificates  issued,  registered in the name of the
Buyer or its respective nominee(s),  for the Conversion Shares representing such
amounts of Convertible Debentures as specified from time to time by the Buyer to
the Company upon  conversion of the  Convertible  Debentures,  for interest owed
pursuant to the Convertible  Debenture,  and for any and all Liquidated  Damages
(as this term is defined in the Investor  Registration Rights Agreement).  David
Gonzalez,  Esq.  shall be paid a cash  fee of  Fifty  Dollars  ($50)  for  every
occasion they act pursuant to the Irrevocable  Transfer Agent Instructions.  The
Company shall not change its transfer agent without the express  written consent
of the Buyer,  which may be withheld by the Buyer in its sole discretion.  Prior
to  registration  of the Conversion  Shares under the  Securities  Act, all such
certificates shall bear the restrictive legend specified in Section 2(g) of this
Agreement.  The Company warrants that no instruction  other than the Irrevocable
Transfer  Agent  Instructions  referred to in this Section 5, and stop  transfer
instructions  to  give  effect  to  Section  2(g)  hereof  (in  the  case of the

                                       14

<PAGE>

Conversion Shares prior to registration of such shares under the Securities Act)
will be given by the  Company  to its  transfer  agent  and that the  Conversion
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  Investor
Registration Rights Agreement. Nothing in this Section 5 shall affect in any way
the Buyer's  obligations and agreement to comply with all applicable  securities
laws upon resale of Conversion Shares. If the Buyer provides the Company with an
opinion of counsel,  in form,  scope and  substance  customary  for  opinions of
counsel in comparable  transactions to the effect that  registration of a resale
by the  Buyer  of any  of the  Conversion  Shares  is  not  required  under  the
Securities  Act, the Company  shall within two (2)  business  days  instruct its
transfer  agent  to  issue  one or more  certificates  in such  name and in such
denominations as specified by the Buyer. The Company  acknowledges that a breach
by it of its obligations  hereunder will cause  irreparable harm to the Buyer by
vitiating  the  intent  and  purpose  of the  transaction  contemplated  hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations  under this Section 5 will be inadequate and agrees, in the event of
a breach or threatened  breach by the Company of the  provisions of this Section
5,  that the  Buyer  shall be  entitled,  in  addition  to all  other  available
remedies,  to an  injunction  restraining  any  breach and  requiring  immediate
issuance  and  transfer,  without the  necessity  of showing  economic  loss and
without any bond or other security being required.

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

     The obligation of the Company  hereunder to issue and sell the  Convertible
Debentures  to the Buyer at the Closings is subject to the  satisfaction,  at or
before the Closing  Dates,  of each of the following  conditions,  provided that
these  conditions  are for the  Company's  sole benefit and may be waived by the
Company at any time in its sole discretion:

               (a) The Buyer shall have executed the  Transaction  Documents and
delivered them to the Company.

               (b) The Buyer shall have  delivered  to the Company the  Purchase
Price for  Convertible  Debentures  in the amount set forth next to the  Buyer's
name as  outlined  on  Schedule  I  attached  hereto,  minus any fees to be paid
directly from the proceeds the Closings as set forth herein, by wire transfer of
immediately  available U.S. funds pursuant to the wire instructions  provided by
the Company.

               (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
Closing  Dates 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 Closing Dates.

     7.   CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

               (a)  The  obligation  of the  Buyer  hereunder  to  purchase  the
Convertible  Debentures at the First Closing is subject to the satisfaction,  at
or before the First Closing Date, of each of the following conditions:

                                       15

<PAGE>

                    (i)  The  Company  shall  have   executed  the   Transaction
Documents and delivered the same to the Buyer.

                    (ii) The Common Stock shall be  authorized  for quotation on
the OTCBB and trading in the Common Stock shall not have been  suspended for any
reason.

                    (iii) 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  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 First  Closing  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  in all  material
respects  with  the  covenants,  agreements  and  conditions  required  by  this
Agreement to be performed, satisfied or complied with by the Company at or prior
to the First Closing Date

                    (iv) The Company  shall have  executed and  delivered to the
Buyer the  Convertible  Debentures in the respective  amounts set forth opposite
the Buyer's name on Schedule I attached hereto.

                    (v) The Buyer shall have received an opinion of counsel from
counsel to the Company in a form satisfactory to the Buyer.

                    (vi)  The  Company  shall  have  provided  to  the  Buyer  a
certificate of good standing from the secretary of state from the state in which
the company is incorporated.

                    (vii) The  Company  or the  Buyers  shall  have filed a form
UCC-1 or such other forms as may be required to perfect the Buyer's  interest in
the Pledged Property as detailed in the Security Agreement dated the date hereof
and provided proof of such filing to the Buyers.

                    (viii) The Pledged  Shares as well as executed and medallion
guaranteed stock powers as required  pursuant to the Pledge and Escrow Agreement
shall have been delivered to the Escrow Agent.

                    (ix)  The  Company  shall  have  provided  to the  Buyer  an
acknowledgement,   to  the  satisfaction  of  the  Buyer,   from  the  Company's
independent  certified  public  accountants  as to its  ability to  provide  all
consents  required in order to file a registration  statement in connection with
this transaction.

                    (x) The Company  shall have  reserved out of its  authorized
and unissued Common Stock, solely for the purpose of effecting the conversion of
the Convertible  Debentures,  shares of Common Stock to effect the conversion of
all of the Conversion Shares then outstanding.

                    (xi) The Irrevocable  Transfer Agent  Instructions,  in form
and  substance  satisfactory  to the  Buyer,  shall have been  delivered  to and
acknowledged in writing by the Company's transfer agent.

                                       16

<PAGE>

               (b)  The  obligation  of  the  Buyer   hereunder  to  accept  the
Convertible Debentures at the Second Closing is subject to the satisfaction,  at
or before the Second Closing Date, of each of the following conditions:

                    (i) The Common Stock shall be  authorized  for  quotation on
the OTCBB and trading in the Common Stock shall not have been  suspended for any
reason.

                    (ii) 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 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  Second   Closing   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 in all material  respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied  or  complied  with by the  Company at or prior to the Second  Closing
Date.

                    (iii) The Company  shall have  executed and delivered to the
Buyers the Convertible  Debentures in the respective  amounts set forth opposite
the Buyer's name on Schedule I attached hereto.

                    (iv) The Company shall have filed the registration statement
with the SEC in compliance with the rules and regulations promulgated by the SEC
for filing thereof on the Second Closing Date.

                    (v) The  Company  shall  have  certified,  in a  certificate
executed by two officers of the Company and dated as of the Second Closing Date,
that all conditions to the Second Closing have been satisfied.

               (c)  The  obligation  of  the  Buyer   hereunder  to  accept  the
Convertible  Debentures at the Third Closing is subject to the satisfaction,  at
or before the Third Closing Date, of each of the following conditions:

                    (i) The Common Stock shall be  authorized  for  quotation on
the OTCBB and trading in the Common Stock shall not have been  suspended for any
reason.

                    (ii) 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 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  Third   Closing   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 in all material  respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Third Closing Date.

                                       17

<PAGE>

                    (iii) The Company  shall have  executed and delivered to the
Buyers the Convertible  Debentures in the respective  amounts set forth opposite
the Buyer's name on Schedule I attached hereto.

                    (iv) The  Registration  Statement  shall have been  declared
effective by the SEC.

                    (v) The  Company  shall  have  certified,  in a  certificate
executed by two officers of the Company and dated as of the Third  Closing Date,
that all conditions to the Third Closing have been satisfied.

     8.   INDEMNIFICATION.

               (a) In  consideration  of the Buyer's  execution  and delivery of
this  Agreement and  acquiring the  Convertible  Debentures  and the  Conversion
Shares  hereunder,  and in addition to all of the  Company's  other  obligations
under this  Agreement,  the Company  shall defend,  protect,  indemnify and hold
harmless the Buyer and each other holder of the  Convertible  Debentures and the
Conversion  Shares, and all of their officers,  directors,  employees and agents
(including,   without   limitation,   those  retained  in  connection  with  the
transactions   contemplated  by  this  Agreement)   (collectively,   the  "BUYER
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 Buyer  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 the Buyer Indemnitees or any of them as a result of,
or arising  out of, or relating  to (i) any  misrepresentation  or breach of any
representation  or  warranty  made  by  the  Company  in  this  Agreement,   the
Convertible  Debentures  or the Investor  Registration  Rights  Agreement or any
other certificate,  instrument or document  contemplated hereby or thereby, (ii)
any breach of any covenant,  agreement or obligation of the Company contained in
this  Agreement,  or the  Investor  Registration  Rights  Agreement or any other
certificate, instrument or document contemplated hereby or thereby, or (iii) any
cause of action,  suit or claim brought or made against such Indemnitee based on
material  misrepresentations  or due to a material  breach and arising out of or
resulting  from the  execution,  delivery,  performance  or  enforcement of this
Agreement  or any other  instrument,  document or  agreement  executed  pursuant
hereto by any of the parties hereto, any transaction  financed or to be financed
in whole or in part,  directly or indirectly,  with the proceeds of the issuance
of the  Convertible  Debentures  or the  status  of the  Buyer or  holder of the
Convertible  Debentures  the  Conversion  Shares,  as  a  Buyer  of  Convertible
Debentures in the Company.  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.

               (b) In consideration  of the Company's  execution and delivery of
this Agreement,  and in addition to all of the Buyer's other  obligations  under
this Agreement, the Buyer shall defend, protect, indemnify and hold harmless the
Company and all of its officers,  directors,  employees  and agents  (including,
without   limitation,   those  retained  in  connection  with  the  transactions
contemplated by this Agreement)  (collectively,  the "COMPANY INDEMNITEES") from
and against any and all Indemnified  Liabilities  incurred by the Indemnitees or
any of  them  as a  result  of,  or  arising  out  of,  or  relating  to (i) any

                                       18

<PAGE>

misrepresentation  or breach of any representation or warranty made by the Buyer
in this  Agreement,  instrument  or  document  contemplated  hereby  or  thereby
executed by the Buyer, (ii) any breach of any covenant,  agreement or obligation
of the Buyer  contained  in this  Agreement,  the Investor  Registration  Rights
Agreement or any other certificate,  instrument or document  contemplated hereby
or thereby  executed by the Buyer,  or (iii) any cause of action,  suit or claim
brought  or  made   against   such   Company   Indemnitee   based  on   material
misrepresentations  or due to a material  breach and arising out of or resulting
from the execution,  delivery, performance or enforcement of this Agreement, the
Investor  Registration  Rights  Agreement or any other  instrument,  document or
agreement  executed  pursuant hereto by any of the parties hereto. To the extent
that the foregoing undertaking by the Buyer may be unenforceable for any reason,
the Buyer shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities, which is permissible under applicable law.

     9.   GOVERNING LAW: MISCELLANEOUS.

               (a)  GOVERNING  LAW.  This  Agreement  shall be  governed  by and
interpreted  in  accordance  with the laws of the  State of New  Jersey  without
regard to the principles of conflict of laws. The parties further agree that any
action between them shall be heard in Hudson County,  New Jersey,  and expressly
consent  to the  jurisdiction  and venue of the  Superior  Court of New  Jersey,
sitting in Hudson County and the United States  District  Court for the District
of New Jersey sitting in Newark,  New Jersey for the  adjudication  of any civil
action asserted pursuant to this Paragraph.

               (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.  In the event any  signature  page is
delivered  by  facsimile  transmission,  the party  using such means of delivery
shall  cause  four  (4)  additional  original  executed  signature  pages  to be
physically  delivered to the other party  within five (5) days of the  execution
and delivery hereof.

               (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 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 any Buyer makes any representation,  warranty,
covenant or  undertaking  with  respect to such  matters.  No  provision of this
Agreement may be waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.

                                       19

<PAGE>

               (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 confirmation of receipt, when sent
by  facsimile;  (iii)  three (3) days after being sent by U.S.  certified  mail,
return  receipt  requested,  or (iv) one (1) 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, to:                  Radial Energy, Inc.
                                        1313 East Maple Street, Suite 223
                                        Bellingham, WA  98225
                                        Attn:    Chief Financial Officer
                                        Telephone:        (360) 685-4240
                                        Facsimile:

With a copy (which copy shall not       Greenberg Traurig, LLP
constitute notice) to:                  650 Town Center Drive, Suite 1700
                                        Costa Mesa, CA  92626
                                        Attn:    Raymond Lee, Esq.
                                        Telephone:        (714) 708-6510

         If to the Buyer,  to its  address and  facsimile  number on Schedule I,
with copies to the Buyer's  counsel as set forth on Schedule I. Each party shall
provide five (5) days' prior written  notice to the other party of any change in
address or facsimile number.

               (g) SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon
and inure to the  benefit of the  parties and their  respective  successors  and
assigns.  Neither the Company nor any Buyer shall  assign this  Agreement or any
rights or obligations  hereunder  without the prior written consent of the other
party hereto.

               (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) SURVIVAL.  Unless this Agreement is terminated  under Section
9(l), the  representations and warranties of the Company and the Buyer contained
in Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and
9, and the indemnification  provisions set forth in Section 8, shall survive the
Closing  for a  period  of six  (6)  months  following  the  date on  which  the
Convertible  Debentures  are converted in full.  The Buyer shall be  responsible
only  for  its  own  representations,   warranties,   agreements  and  covenants
hereunder.

               (j) PUBLICITY.  The Company and the Buyer shall have the right to
approve,  before  issuance any press release or any other public  statement with
respect to the  transactions  contemplated  hereby made by any party;  provided,
however,  that the Company shall be entitled,  without the prior approval of the

                                       20

<PAGE>

Buyer,  to issue any press  release or other public  disclosure  with respect to
such  transactions  required  under  applicable  securities  or  other  laws  or
regulations  (the  Company  shall use its best  efforts to consult  the Buyer in
connection with any such press release or other public  disclosure  prior to its
release and Buyer shall be provided with a copy thereof upon release thereof).

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

               (l)  TERMINATION.  In the event that the First  Closing shall not
have  occurred  with respect to the Buyers on or before five (5)  business  days
from the date hereof due to the Company's or the Buyer's  failure to satisfy the
conditions  set forth in Sections 6 and 7 above (and the  non-breaching  party's
failure to waive such unsatisfied  condition(s)),  the non-breaching party shall
have the option to terminate this Agreement with respect to such breaching party
at the close of  business  on such date  without  liability  of any party to any
other party.

               (m)  BROKERAGE.  The Company  represents  that no broker,  agent,
finder  or  other  party  has  been  retained  by  it  in  connection  with  the
transactions  contemplated  hereby and that no other fee or commission  has been
agreed  by the  Company  to be  paid  for  or on  account  of  the  transactions
contemplated hereby.

               (n) 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.

                    [REMAINDER PAGE INTENTIONALLY LEFT BLANK]

                                       21

<PAGE>

         IN  WITNESS  WHEREOF,  the  Buyer and the  Company  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed as of the date first written above.

                                    COMPANY:
                                    RADIAL ENERGY, INC.

                                    By: /s/ G. LEIGH LYONS
                                        ___________________
                                    Name:    G. Leigh Lyons
                                    Title: President

                                       22

<PAGE>

         IN  WITNESS  WHEREOF,  the  Buyer and the  Company  have  caused  their
respective  signature  page to this  Securities  Purchase  Agreement  to be duly
executed as of the date first written above.

                                    BUYERS:
                                    CORNELL CAPITAL PARTNERS, LP

                                    By:      Yorkville Advisors, LLC
                                    Its:     General Partner

                                    By:      /s/ MARK ANGELO
                                       _____________________________
                                    Name:    Mark Angelo
                                    Its:     Portfolio Manager

                                       23

<PAGE>

<TABLE>
<CAPTION>

                                   SCHEDULE I

                               SCHEDULE OF BUYERS

              (1)                     (2)                 (3)                 (4)            (5)                (6)
             BUYER                                SUBSCRIPTION AMOUNT                       TOTAL      LEGAL REPRESENTATIVE'S
                                                                                           PURCHASE    ADDRESS AND FACSIMILE
                                                                                            PRICE              NUMBER
                                 FIRST CLOSING      SECOND CLOSING       THIRD CLOSING
<S>                               <C>                 <C>                 <C>             <C>          <C>

CORNELL CAPITAL PARTNERS, LP      $2,000,000          $1,500,000          $1,500,000      $5,000,000   Troy Rillo, Esq.
                                                                                                       101 Hudson Street, Suite 3700
101 Hudson Street, Suite 3700                                                                          Jersey City, New Jersey 07302
Jersey City, NJ  07303                                                                                 Telephone: (201) 985-8300
Attention: Mark Angelo                                                                                 Facsimile: (201) 985-8266
Telephone: (201) 985-8300
Facsimile: (201) 985-8266
Residence:  Delaware

</TABLE>

<PAGE>

                               DISCLOSURE SCHEDULE

<PAGE>

                                    EXHIBIT A

                                FORM OF WARRANTS

                                       2

<PAGE>

                                    EXHIBIT B

                                LOCK UP AGREEMENT

         The undersigned  hereby agrees that for a period  commencing on October
2,  2006 and  expiring  on the date  thirty  (30)  days  after the date that all
amounts owed to Cornell Capital Partners, LP (the "INVESTOR"), under the Secured
Convertible  Debentures  issued  to the  Investor  pursuant  to  the  Securities
Purchase Agreement between Radial Energy,  Inc. (the "COMPANY") and the Investor
dated October 2, 2006 have been paid (the "LOCK-UP PERIOD"),  he, she or it will
not, directly or indirectly,  without the prior written consent of the Investor,
issue,  offer, agree or offer to sell, sell, grant an option for the purchase or
sale of, transfer, pledge, assign, hypothecate, distribute or otherwise encumber
or dispose of any securities of the Company,  including common stock or options,
rights, warrants or other securities underlying,  convertible into, exchangeable
or  exercisable  for or  evidencing  any right to purchase or subscribe  for any
common stock  (whether or not  beneficially  owned by the  undersigned),  or any
beneficial  interest  therein   (collectively,   the  "SECURITIES")   except  in
accordance  with the volume  limitations set forth in Rule 144(e) of the General
Rules and Regulations under the Securities Act of 1933, as amended.

         In  order  to  enable  the  aforesaid  covenants  to be  enforced,  the
undersigned  hereby  consents  to the  placing of legends  and/or  stop-transfer
orders with the transfer agent of the Company's  securities  with respect to any
of the  Securities  registered in the name of the  undersigned  or  beneficially
owned by the undersigned,  and the undersigned hereby confirms the undersigned's
investment in the Company.

Dated: _______________, 2006

                                         Signature

                                         _______________________________________
                                         Name: _________________________________
                                         Address:_______________________________
                                         City, State, Zip Code:_________________

                                         _______________________________________
                                         Print Social Security Number
                                         or Taxpayer I.D. Number

                                       3EXHIBIT 10.11

                                                     DATED:  SEPTEMBER ___, 2006

         NEITHER THIS DEBENTURE NOR THE SECURITIES  INTO WHICH THIS DEBENTURE IS
         CONVERTIBLE  HAVE BEEN  REGISTERED  WITH THE  SECURITIES  AND  EXCHANGE
         COMMISSION OR THE  SECURITIES  COMMISSION OF ANY STATE IN RELIANCE UPON
         AN EXEMPTION  FROM  REGISTRATION  UNDER THE  SECURITIES ACT OF 1933, AS
         AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
         SOLD EXCEPT PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT UNDER THE
         SECURITIES  ACT OR PURSUANT TO AN  AVAILABLE  EXEMPTION  FROM,  OR IN A
         TRANSACTION  NOT  SUBJECT  TO,  THE  REGISTRATION  REQUIREMENTS  OF THE
         SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

No. RENG-1-1                                                          $2,000,000

                               RADIAL ENERGY INC.

                          SECURED CONVERTIBLE DEBENTURE

                            DUE: SEPTEMBER ____, 2009

         This  Secured  Convertible  Debenture  (the  "DEBENTURE")  is issued by
RADIAL ENERGY INC., a Nevada  corporation  (the  "COMPANY"),  to CORNELL CAPITAL
PARTNERS,  LP (the  "HOLDER"),  pursuant  to that  certain  Securities  Purchase
Agreement (the "SECURITIES PURCHASE AGREEMENT") dated September___, 2006.

         FOR VALUE RECEIVED, the Company hereby promises to pay to the Holder or
its successors and assigns the principal sum of Two Million Dollars ($2,000,000)
together with accrued but unpaid interest on or before  September ___, 2009 (the
"MATURITY DATE") in accordance with the following terms:

         SECTION 1.        GENERAL TERMS

         (a)  INTEREST.  Interest  shall  accrue  on the  outstanding  principal
balance hereof at an annual rate equal to seven percent (7%).  Interest shall be
calculated on the basis of a 365-day year and the actual number of days elapsed,
to the extent permitted by applicable law.  Interest  hereunder shall be paid on
the Maturity  Date (or sooner as provided  herein) to the Holder or its assignee
in whose  name this  Debenture  is  registered  on the  records  of the  Company
regarding  registration  and  transfers of Debentures in cash or in Common Stock
(valued at the Closing Bid Price on the  Trading  Day  immediately  prior to the
date paid) at the option of the Company.

         (b)  SECURITY.  This  Debenture  is  secured  by a  Pledge  and  Escrow
Agreement (the "PLEDGE  AGREEMENT") dated September ___, 2006 among the Company,
and  the  Holder,   the  Escrow  Agent,  a  Pledge  and  Escrow  Agreement  (the
"_______PLEDGE  AGREEMENT") dated September ___, 2006 among __________,  and the

<PAGE>

Holder,  the Escrow Agent, and a Security  Agreement (the "SECURITY  AGREEMENT")
dated September ___, 2006 between the Company,  its wholly owned subsidiaries of
the Company and the Holder.

         SECTION 2.        EVENTS OF DEFAULT.

         (a) An "EVENT OF DEFAULT",  wherever used herein,  means any one of the
following  events  (whatever  the reason and  whether it shall be  voluntary  or
involuntary or effected by operation of law or pursuant to any judgment,  decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

             (i) Any default in the payment of the principal of,  interest on or
other charges in respect of this Debenture,  free of any claim of subordination,
as and when the same shall  become due and  payable  whether  upon a an Optional
Redemption (as defined in SECTION 3(a)), the Maturity Date or by acceleration or
otherwise;

             (ii) The Company or any  subsidiary of the Company shall  commence,
or there shall be commenced against the Company or any subsidiary of the Company
under any applicable bankruptcy or insolvency laws as now or hereafter in effect
or any  successor  thereto,  or the  Company or any  subsidiary  of the  Company
commences any other proceeding under any reorganization, arrangement, adjustment
of debt,  relief of debtors,  dissolution,  insolvency or liquidation or similar
law of any  jurisdiction  whether  now or  hereafter  in effect  relating to the
Company or any  subsidiary  of the  Company or there is  commenced  against  the
Company or any  subsidiary  of the Company any such  bankruptcy,  insolvency  or
other proceeding which remains  undismissed for a period of ninety (90) days; or
the  Company or any  subsidiary  of the  Company  is  adjudicated  insolvent  or
bankrupt;  or any  order of  relief or other  order  approving  any such case or
proceeding is entered;  or the Company or any subsidiary of the Company  suffers
any  appointment of any custodian,  private or court  appointed  receiver or the
like for it or any substantial part of its property which continues undischarged
or unstayed for a period of ninety (90) days;  or the Company or any  subsidiary
of the Company makes a general  assignment for the benefit of creditors;  or the
Company or any  subsidiary of the Company shall fail to pay, or shall state that
it is unable to pay,  or shall be unable  to pay,  its debts  generally  as they
become due; or the Company or any subsidiary of the Company shall call a meeting
of  its  creditors  with  a view  to  arranging  a  composition,  adjustment  or
restructuring  of its debts;  or the  Company or any  subsidiary  of the Company
shall by any act or failure to act expressly  indicate its consent to,  approval
of or acquiescence in any of the foregoing;  or any corporate or other action is
taken by the  Company  or any  subsidiary  of the  Company  for the  purpose  of
effecting any of the foregoing;

             (iii) The Company or any subsidiary of the Company shall default in
any of its  obligations  under  any  other  debenture  or any  mortgage,  credit
agreement or other facility,  indenture agreement,  factoring agreement or other
instrument under which there may be issued,  or by which there may be secured or
evidenced any  indebtedness  for borrowed money or money due under any long term
leasing or factoring arrangement of the Company or any subsidiary of the Company
in an amount exceeding  $100,000,  whether such indebtedness now exists or shall
hereafter be created and such default shall result in such indebtedness becoming
or being declared due and payable prior to the date on which it would  otherwise
become due and payable;

<PAGE>

             (iv) The  Common  Stock  shall  cease to be quoted  for  trading or
listing  for trading on any of (a) the  American  Stock  Exchange,  (b) New York
Stock Exchange,  (c) the Nasdaq National Market,  (d) the Nasdaq Capital Market,
or (e) the Nasdaq OTC Bulletin  Board  ("OTC")  (each,  a "PRIMARY  MARKET") and
shall not again be quoted or listed for  trading on any  Primary  Market  within
five (5) Trading Days of such delisting;

             (v) The Company or any  subsidiary  of the Company shall be a party
to any Change of Control Transaction (as defined in SECTION 6);

             (vi)  The  Company  shall  fail  to  file  the  Underlying   Shares
Registration Statement (as defined in SECTION 6) with the Commission (as defined
in SECTION 6), or the Underlying  Shares  Registration  Statement shall not have
been declared effective by the Commission,  in each case within the time periods
set forth in the Investor  Registration Rights Agreement  ("REGISTRATION  RIGHTS
AGREEMENT") dated September ___, 2006 between the Company and the Holder;

             (vii) If while the  Underlying  Shares  Registration  Statement  is
required  to be  maintained  effective  pursuant  to the  terms of the  Investor
Registration  Rights  Agreement,  the  effectiveness  of the  Underlying  Shares
Registration Statement lapses for any reason (including, without limitation, the
issuance of a stop order) or is unavailable to the Holder for sale of all of the
Holder's Registrable  Securities (as defined in the Investor Registration Rights
Agreement)  in  accordance  with the terms of the Investor  Registration  Rights
Agreement,  and such lapse or unavailability continues for a period of more than
ten (10)  consecutive  Trading Days (other than days during an  Allowable  Grace
Period (as  defined in the  Registration  Rights  Agreement)or  for more than an
aggregate of twenty (20) days (other than days during an Allowable  Grace Period
(as defined in the Registration  Rights  Agreement) in any 365-day period (which
need not be consecutive);

             (viii) The  Company  shall  fail for any  reason to deliver  Common
Stock  certificates  to a Holder  prior to the fifth  (5th)  Trading Day after a
Conversion Date, or the Company shall provide notice to the Holder, including by
way of public  announcement,  at any time,  of its  intention not to comply with
requests for conversions, in accordance with the terms hereof;

             (ix) The  Company  shall fail for any reason to deliver the payment
in cash  pursuant to a Buy-In (as defined  herein)  within  three (3) days after
notice is claimed delivered hereunder;

             (x) The  Company  shall  fail  to  observe  or  perform  any  other
covenant,  agreement or warranty contained in, or otherwise commit any breach or
default of any provision of this Debenture  (except as may be covered by SECTION
2(A)(I)  THROUGH  2(A)(IX)  hereof) or any  Transaction  Document (as defined in
SECTION  6)  which is not  cured  with in the  time  prescribed,  or an Event of
Default under any other  debenture  issued to the Holder in connection  with the
Securities Purchase Agreement shall occur;

          (b) During the time that any portion of this Debenture is outstanding,
if any  Event of  Default  has  occurred,  the  full  principal  amount  of this
Debenture, together with interest and other amounts owing in respect thereof, to

<PAGE>

the date of acceleration shall become at the Holder's election,  immediately due
and payable in cash, PROVIDED HOWEVER, the Holder may request (but shall have no
obligation  to request)  payment of such amounts in Common Stock of the Company.
Furthermore,  in addition to any other remedies, the Holder shall have the right
(but not the  obligation)  to convert  this  Debenture  at any time (x) after an
Event of Default or (y) on or before the Maturity Date at the  Conversion  Price
then  in-effect.  The Holder need not provide and the Company  hereby waives any
presentment,  demand,  protest or other  notice of any kind,  and the Holder may
immediately  and without  expiration of any grace period  enforce any and all of
its rights and remedies  hereunder and all other remedies  available to it under
applicable law. Such  declaration may be rescinded and annulled by Holder at any
time prior to payment  hereunder.  No such  rescission or annulment shall affect
any subsequent Event of Default or impair any right consequent thereon.  Upon an
Event of Default,  notwithstanding  any other provision of this Debenture or any
Transaction  Document,  the Holder  shall have no  obligation  to comply with or
adhere to any  limitations,  if any, on the  conversion of this Debenture or the
sale  of the  Underlying  Shares  except  as may be  provided  under  applicable
securities laws.

         SECTION 3.        REDEMPTIONS.

         (a) COMPANY'S OPTIONAL CASH REDEMPTION. The Company at its option shall
have the right to redeem ("OPTIONAL  Redemption") from time to time a portion or
all amounts outstanding under this Debenture prior to the Maturity Date provided
that as of the date of the Holder's  receipt of a Redemption  Notice (as defined
herein) the Underlying Share Registration  Statement is effective,  and no Event
of  Default  has  occurred  by (i)  paying  the  Holder an  amount  equal to the
principal  amount being redeemed plus the applicable  redemption  premium as set
forth below (the  "REDEMPTION  PREMIUM"),  and accrued  interest,  (collectively
referred to as the "REDEMPTION AMOUNT"),  and (ii) providing the Holder with the
applicable  period  of  advanced  written  notice  of its  intention  to  make a
redemption (the  "REDEMPTION  NOTICE PERIOD") as set forth below. If the Closing
Bid Price of the of the Common Stock, as reported by Bloomberg, LP, is less than
the Fixed  Conversion Price on the date the Holder receives the Company's notice
of its  intention  to make a  redemption  (the  "REDEMPTION  NOTICE")  then  the
applicable  Redemption  Premium  shall be twenty  percent (20%) of the principal
amount  being  redeemed  and the  Redemption  Notice  Period  shall be three (3)
Trading Days.  If the Closing Bid Price of the of the Common Stock,  as reported
by Bloomberg,  LP, is greater than or equal to the Fixed Conversion Price on the
date the Holder  receives a  Redemption  Notice then the  applicable  Redemption
Premium shall be thirty percent (30%) of the principal amount being redeemed and
the Redemption  Notice Period shall be forty five (45) days.  After receipt of a
Redemption Notice and during the applicable Redemption Notice Period, the Holder
shall have the absolute  right,  in its sole  discretion,  to convert all or any
portion of this Debenture, subject to the limitations set forth in SECTION 4(B).
Upon the  expiration of the Redemption  Notice Period,  the Company shall pay to
the Holder in immediately  available  funds the  Redemption  Amount after giving
effect to conversions effected during the Redemption Notice Period.

         SECTION 4.        CONVERSION.

         (a) CONVERSION AT OPTION OF HOLDER.

<PAGE>

                  (i) This Debenture shall be convertible  into shares of Common
Stock at the option of the Holder, in whole or in part at any time and from time
to time, after the Original Issue Date (as defined in SECTION 6) (subject to the
limitations  on  conversion  set forth in SECTION  4(B)  hereof).  The number of
shares of Common Stock issuable upon a conversion  hereunder equals the quotient
obtained  by  dividing  (x)  the  outstanding  amount  of this  Debenture  to be
converted  by (y) the  Conversion  Price (as  defined in SECTION  4(C)(I)).  The
Company shall deliver Common Stock certificates to the Holder prior to the Fifth
(5th) Trading Day after a Conversion Date.

                  (ii)  Notwithstanding   anything  to  the  contrary  contained
herein,  if on any Conversion  Date: (1) the number of shares of Common Stock at
the time  authorized,  unissued  and  unreserved  for all  purposes,  or held as
treasury  stock,  is  insufficient  to pay principal  and interest  hereunder in
shares of Common Stock; (2) the Common Stock is not listed or quoted for trading
on the OTC or on a  Primary  Market;  or (3) the  Company  has  failed to timely
satisfy a conversion; then, at the option of the Holder, the Company, in lieu of
delivering  shares of Common Stock pursuant to SECTION  4(A)(I),  shall deliver,
within three (3) Trading Days of each applicable  Conversion  Date, an amount in
cash equal to the product of the  outstanding  principal  amount to be converted
divided by the  applicable  Conversion  Price,  and  multiplied  by the  highest
Closing Bid Price of the stock from date of the conversion  notice till the date
that such cash payment is made.

         Further,  if the  Company  shall  not  have  delivered  any cash due in
respect of conversion of this Debenture by the fifth (5th) Trading Day after the
Conversion  Date, the Holder may, by notice to the Company,  require the Company
to issue shares of Common Stock  pursuant to SECTION 4(C),  except that for such
purpose  the  Conversion  Price  applicable  thereto  shall be the lesser of the
Conversion  Price on the Conversion Date and the Conversion Price on the date of
such Holder  demand.  Any such shares will be subject to the  provisions of this
Section.

                  (iii) The Holder shall effect conversions by delivering to the
Company  a  completed  notice  in the  form  attached  hereto  as  Exhibit  A (a
"CONVERSION NOTICE").  The date on which a Conversion Notice is delivered is the
"CONVERSION  DATE." Unless the Holder is converting the entire  principal amount
outstanding  under this  Debenture,  the Holder is not  required  to  physically
surrender  this  Debenture  to the  Company  in  order  to  effect  conversions.
Conversions  hereunder  shall  have  the  effect  of  lowering  the  outstanding
principal  amount of this Debenture plus all accrued and unpaid interest thereon
in an amount  equal to the  applicable  conversion.  The Holder and the  Company
shall maintain  records showing the principal  amount  converted and the date of
such conversions. In the event of any dispute or discrepancy, the records of the
Holder,  verified  by an  independent  third  party,  shall be  controlling  and
determinative in the absence of manifest error.

         (b) CERTAIN CONVERSION RESTRICTIONS.

                  (i) The  Company  shall not  effect  any  conversions  of this
Debenture and the Holder shall not have the right to convert any portion of this
Debenture or receive shares of Common Stock as payment of interest  hereunder to
the extent that after giving  effect to such such  conversion or receipt of such
interest  payment,  the  Holder,  together  with any  affiliate  thereof,  would
beneficially own (as determined in accordance with Section 13(d) of the Exchange

<PAGE>

Act and the rules  promulgated  thereunder)  in excess of 4.99% of the number of
shares of Common  Stock  outstanding  immediately  after  giving  effect to such
conversion  or receipt of shares as payment of  interest.  Since the Holder will
not be  obligated  to report to the Company the number of shares of Common Stock
it may hold at the time of a  conversion  hereunder,  unless the  conversion  at
issue would  result in the issuance of shares of Common Stock in excess of 4.99%
of the then  outstanding  shares of  Common  Stock  without  regard to any other
shares which may be  beneficially  owned by the Holder or an affiliate  thereof,
the Holder shall have the  authority  and  obligation  to determine  whether the
restriction  contained  in this  Section  will limit any  particular  conversion
hereunder  and to the extent  that the  Holder  determines  that the  limitation
contained in this Section  applies,  the  determination  of which portion of the
principal  amount of this Debenture is convertible  shall be the  responsibility
and  obligation of the Holder.  If the Holder has delivered a Conversion  Notice
for a  principal  amount of this  Debenture  that,  without  regard to any other
shares that the Holder or its affiliates may  beneficially  own, would result in
the issuance in excess of the  permitted  amount  hereunder,  the Company  shall
notify the Holder of this fact and shall  honor the  conversion  for the maximum
principal amount permitted to be converted on such Conversion Date in accordance
with the periods described in SECTION 4(A)(I) and, any principal amount tendered
for  conversion  in  excess  of the  permitted  amount  hereunder  shall  remain
outstanding  under this Debenture.  The provisions of this Section may be waived
by a Holder  (but only as to itself and not to any other  Holder)  upon not less
than 65 days prior notice to the Company.  Other  Holders shall be unaffected by
any such waiver.

         (c) CONVERSION PRICE AND ADJUSTMENTS TO CONVERSION PRICE.

                  (i) The  conversion  price in  effect on any  Conversion  Date
shall be equal to the  lesser of (a)  [insert  120% of VWAP on the  trading  day
immediately  prior to the closing  date] (the "FIXED  CONVERSION  PRICE") or (b)
ninety  percent (90%) of the lowest daily Volume  Weighted  Average Price during
the fifteen (15) Trading Days  immediately  preceding the  Conversion  Date (the
"MARKET CONVERSION PRICE"). The Fixed Conversion Price and the Market Conversion
Price are  collectively  referred to as the  "CONVERSION  PRICE." The Conversion
Price may be adjusted pursuant to the other terms of this Debenture.

                   (ii) If the  Company,  at any time  while this  Debenture  is
outstanding,  shall (a) pay a stock dividend or otherwise make a distribution or
distributions  on  shares  of its  Common  Stock or any  other  equity or equity
equivalent   securities  payable  in  shares  of  Common  Stock,  (b)  subdivide
outstanding  shares of Common Stock into a larger number of shares,  (c) combine
(including  by way of reverse  stock split)  outstanding  shares of Common Stock
into a smaller number of shares, or (d) issue by  reclassification  of shares of
the Common Stock any shares of capital stock of the Company, then the Conversion
Price  shall be  multiplied  by a fraction of which the  numerator  shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding
before such event and of which the denominator  shall be the number of shares of
Common Stock  outstanding after such event. Any adjustment made pursuant to this
Section  shall  become  effective  immediately  after  the  record  date for the
determination of stockholders  entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.

                  (iii) If the  Company,  at any time  while this  Debenture  is
outstanding,  shall issue  rights,  options or warrants to all holders of Common
Stock (and not to the Holder) entitling them to subscribe for or purchase shares

<PAGE>

of Common Stock at a price per share less than the  Conversion  Price,  then the
Conversion  Price shall be  multiplied by a fraction,  of which the  denominator
shall be the number of shares of the Common Stock (excluding treasury shares, if
any)  outstanding  on the date of issuance of such rights or warrants  (plus the
number  of  additional  shares of  Common  Stock  offered  for  subscription  or
purchase),  and of which  the  numerator  shall be the  number  of shares of the
Common Stock  (excluding  treasury  shares,  if any)  outstanding on the date of
issuance  of such  rights or  warrants,  plus the  number  of  shares  which the
aggregate offering price of the total number of shares so offered would purchase
at the Conversion  Price.  Such adjustment shall be made whenever such rights or
warrants are issued,  and shall become  effective  immediately  after the record
date for the  determination  of  stockholders  entitled to receive  such rights,
options or warrants.  However,  upon the expiration of any such right, option or
warrant to purchase shares of the Common Stock the issuance of which resulted in
an  adjustment in the  Conversion  Price  pursuant to this Section,  if any such
right,  option or warrant  shall expire and shall not have been  exercised,  the
Conversion  Price shall  immediately  upon such  expiration  be  recomputed  and
effective  immediately  upon such  expiration be increased to the price which it
would have been (but  reflecting any other  adjustments in the Conversion  Price
made  pursuant to the  provisions  of this  Section  after the  issuance of such
rights or warrants)  had the  adjustment of the  Conversion  Price made upon the
issuance of such rights,  options or warrants been made on the basis of offering
for  subscription  or purchase  only that  number of shares of the Common  Stock
actually  purchased  upon the  exercise  of such  rights,  options  or  warrants
actually  exercised.  No adjustment under this Section shall be made as a result
of issuances of Excluded Securities.

                  (iv) If the Company or any subsidiary  thereof, as applicable,
at any time while this  Debenture is  outstanding,  shall issue shares of Common
Stock  or  rights,  warrants,  options  or  other  securities  or debt  that are
convertible  into or  exchangeable  for shares of Common  Stock  ("COMMON  STOCK
EQUIVALENTS") entitling any Person to acquire shares of Common Stock, at a price
per share less than the  Conversion  Price (if the holder of the Common Stock or
Common Stock  Equivalent  so issued  shall at any time,  whether by operation of
purchase price adjustments, reset provisions,  floating conversion,  exercise or
exchange  prices or otherwise,  or due to warrants,  options or rights per share
which is issued in connection with such issuance,  be entitled to receive shares
of Common  Stock at a price per share which is less than the  Conversion  Price,
such  issuance  shall be deemed to have  occurred  for less than the  Conversion
Price),  then, at the sole option of the Holder,  the Conversion  Price shall be
adjusted to mirror the  conversion,  exchange or purchase  price for such Common
Stock or Common Stock  Equivalents  (including any reset provisions  thereof) at
issue.  Such adjustment shall be made whenever such Common Stock or Common Stock
Equivalents are issued. The Company shall notify the Holder in writing, no later
than one (1) business day  following  the issuance of any Common Stock or Common
Stock  Equivalent  subject to this Section,  indicating  therein the  applicable
issuance price, or of applicable reset price,  exchange price,  conversion price
and other pricing  terms.  No  adjustment  under this Section shall be made as a
result of issuances of Excluded Securities.

                  (v) If the  Company,  at any  time  while  this  Debenture  is
outstanding,  shall  distribute  to all holders of Common  Stock (and not to the
Holder)  evidences  of its  indebtedness  or assets or  rights  or  warrants  to
subscribe  for or purchase any security,  then in each such case the  Conversion
Price  at  which  this  Debenture  shall  thereafter  be  convertible  shall  be
determined by multiplying the Conversion  Price in effect  immediately  prior to
the record date fixed for determination of stockholders entitled to receive such

<PAGE>

distribution  by a fraction  of which the  denominator  shall be the Closing Bid
Price  determined  as of the  record  date  mentioned  above,  and of which  the
numerator shall be such Closing Bid Price on such record date less the then fair
market  value at such  record  date of the portion of such assets or evidence of
indebtedness so distributed  applicable to one  outstanding  share of the Common
Stock as determined by the Board of Directors in good faith.  In either case the
adjustments  shall be  described  in a  statement  provided to the Holder of the
portion  of  assets  or  evidences  of   indebtedness  so  distributed  or  such
subscription  rights  applicable to one share of Common Stock.  Such  adjustment
shall be made whenever any such  distribution is made and shall become effective
immediately after the record date mentioned above.

                  (vi) In case of any  reclassification  of the Common  Stock or
any compulsory  share  exchange  pursuant to which the Common Stock is converted
into  other  securities,  cash or  property,  the  Holder  shall  have the right
thereafter to, at its option, (A) convert the then outstanding principal amount,
together  with all accrued but unpaid  interest and any other amounts then owing
hereunder  in  respect  of this  Debenture  into the  shares  of stock and other
securities, cash and property receivable upon or deemed to be held by holders of
the Common Stock  following such  reclassification  or share  exchange,  and the
Holder of this  Debenture  shall be  entitled  upon such event to  receive  such
amount of securities,  cash or property as the shares of the Common Stock of the
Company into which the then  outstanding  principal  amount,  together  with all
accrued  but unpaid  interest  and any other  amounts  then owing  hereunder  in
respect of this Debenture  could have been converted  immediately  prior to such
reclassification or share exchange would have been entitled,  or (B) require the
Company to prepay the outstanding  principal amount of this Debenture,  plus all
interest and other amounts due and payable thereon.  The entire prepayment price
shall  be paid in cash.  This  provision  shall  similarly  apply to  successive
reclassifications or share exchanges.

                  (vii)  Whenever the Conversion  Price is adjusted  pursuant to
SECTION 4 hereof, the Company shall promptly mail to the Holder a notice setting
forth the  Conversion  Price after such  adjustment  and  setting  forth a brief
statement of the facts requiring such adjustment.

                  (viii) If (A) the  Company  shall  declare a dividend  (or any
other distribution) on the Common Stock; (B) the Company shall declare a special
nonrecurring  cash  dividend on or a  redemption  of the Common  Stock;  (C) the
Company  shall  authorize the granting to all holders of the Common Stock rights
or warrants to  subscribe  for or  purchase  any shares of capital  stock of any
class or of any  rights;  (D) the  approval of any  stockholders  of the Company
shall be required in connection with any  reclassification  of the Common Stock,
any  consolidation  or  merger  to which  the  Company  is a party,  any sale or
transfer  of all or  substantially  all of the  assets  of the  Company,  of any
compulsory  share  exchange  whereby the Common  Stock is  converted  into other
securities,  cash or property;  or (E) the Company shall authorize the voluntary
or  involuntary  dissolution,  liquidation  or winding up of the  affairs of the
Company;  then, in each case, the Company shall cause to be filed at each office
or agency maintained for the purpose of conversion of this Debenture,  and shall
cause to be mailed to the Holder at its last address as it shall appear upon the
stock books of the  Company,  at least  twenty (20)  calendar  days prior to the
applicable record or effective date hereinafter  specified, a notice stating (x)
the date on which a record  is to be taken  for the  purpose  of such  dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to

<PAGE>

such  dividend,  distributions,   redemption,  rights  or  warrants  are  to  be
determined  or (y)  the  date on  which  such  reclassification,  consolidation,
merger,  sale,  transfer or share  exchange is expected to become  effective  or
close,  and the date as of which it is expected that holders of the Common Stock
of record  shall be entitled to exchange  their  shares of the Common  Stock for
securities,  cash or other  property  deliverable  upon  such  reclassification,
consolidation,  merger,  sale,  transfer or share exchange,  provided,  that the
failure to mail such  notice or any defect  therein  or in the  mailing  thereof
shall not affect the validity of the corporate  action  required to be specified
in such  notice.  The Holder is entitled to convert  this  Debenture  during the
20-day calendar period  commencing the date of such notice to the effective date
of the event triggering such notice.

                  (ix) In case of any (1) merger or consolidation of the Company
or any subsidiary of the Company with or into another Person, or (2) sale by the
Company or any  subsidiary of the Company of more than one-half of the assets of
the Company in one or a series of related transactions,  a Holder shall have the
right to (A) exercise any rights under SECTION  2(B),  (B) convert the aggregate
amount of this  Debenture  then  outstanding  into the shares of stock and other
securities, cash and property receivable upon or deemed to be held by holders of
Common Stock following such merger, consolidation or sale, and such Holder shall
be entitled  upon such event or series of related  events to receive such amount
of  securities,  cash and property as the shares of Common Stock into which such
aggregate   principal  amount  of  this  Debenture  could  have  been  converted
immediately  prior to such  merger,  consolidation  or  sales  would  have  been
entitled, or (C) in the case of a merger or consolidation, require the surviving
entity to issue to the Holder a convertible  Debenture  with a principal  amount
equal to the  aggregate  principal  amount of this  Debenture  then held by such
Holder,  plus all accrued and unpaid  interest and other amounts owing  thereon,
which such  newly  issued  convertible  Debenture  shall  have  terms  identical
(including with respect to conversion) to the terms of this Debenture, and shall
be entitled to all of the rights and  privileges of the Holder of this Debenture
set forth  herein and the  agreements  pursuant  to which this  Debentures  were
issued. In the case of clause (C), the conversion price applicable for the newly
issued shares of convertible preferred stock or convertible  Debentures shall be
based upon the amount of securities, cash and property that each share of Common
Stock  would  receive in such  transaction  and the  Conversion  Price in effect
immediately prior to the effectiveness or closing date for such transaction. The
terms of any such merger,  sale or consolidation  shall include such terms so as
to  continue to give the Holder the right to receive  the  securities,  cash and
property set forth in this Section upon any  conversion or redemption  following
such event. This provision shall similarly apply to successive such events.

         (d)      OTHER PROVISIONS.

                  (i) The Company shall at all times reserve and keep  available
out of its  authorized  Common  Stock the full number of shares of Common  Stock
issuable upon  conversion of all outstanding  amounts under this Debenture;  and
within  three (3)  Business  Days  following  the  receipt  by the  Company of a
Holder's  notice  that  such  minimum  number  of  Underlying  Shares  is not so
reserved,  the Company shall promptly  reserve a sufficient  number of shares of
Common Stock to comply with such requirement.

                  (ii) All  calculations  under  this SECTION 4 shall be rounded
up to the nearest $0.0001 or whole share.

<PAGE>

                  (iiii) The Company covenants that it will at all times reserve
and keep  available out of its  authorized  and unissued  shares of Common Stock
solely for the purpose of issuance upon conversion of this Debenture and payment
of interest on this  Debenture,  each as herein  provided,  free from preemptive
rights or any other actual contingent  purchase rights of persons other than the
Holder,  not less than  such  number  of  shares  of the  Common  Stock as shall
(subject to any additional requirements of the Company as to reservation of such
shares set forth in this Debenture or in the Transaction  Documents) be issuable
(taking into account the adjustments and restrictions set forth herein) upon the
conversion of the outstanding  principal amount of this Debenture and payment of
interest  hereunder.  The Company covenants that all shares of Common Stock that
shall be so issuable shall, upon issue, be duly and validly  authorized,  issued
and  fully  paid,  nonassessable  and,  if the  Underlying  Shares  Registration
Statement has been declared  effective under the Securities Act,  registered for
public sale in accordance with such Underlying Shares Registration Statement.

                  (iv) Upon a  conversion  hereunder  the  Company  shall not be
required to issue stock  certificates  representing  fractions  of shares of the
Common Stock, but may if otherwise permitted,  make a cash payment in respect of
any final  fraction of a share  based on the Closing Bid Price at such time.  If
the Company  elects not, or is unable,  to make such a cash payment,  the Holder
shall be  entitled  to receive,  in lieu of the final  fraction of a share,  one
whole share of Common Stock.

                  (v) The  issuance  of  certificates  for  shares of the Common
Stock on conversion of this Debenture shall be made without charge to the Holder
thereof  for any  documentary  stamp or  similar  taxes  that may be  payable in
respect of the issue or delivery of such certificate,  provided that the Company
shall not be  required  to pay any tax that may be  payable  in  respect  of any
transfer  involved in the  issuance and  delivery of any such  certificate  upon
conversion  in a name  other  than  that  of the  Holder  of such  Debenture  so
converted  and the  Company  shall  not be  required  to issue or  deliver  such
certificates  unless or until the  person or  persons  requesting  the  issuance
thereof  shall  have paid to the  Company  the  amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.

                  (vi)  Nothing  herein  shall limit a Holder's  right to pursue
actual  damages or declare an Event of Default  pursuant to SECTION 2 herein for
the  Company 's failure to deliver  certificates  representing  shares of Common
Stock upon conversion  within the period  specified herein and such Holder shall
have the  right to  pursue  all  remedies  available  to it at law or in  equity
including,   without  limitation,   a  decree  of  specific  performance  and/or
injunctive relief, in each case without the need to post a bond or provide other
security.  The  exercise of any such rights  shall not  prohibit the Holder from
seeking  to  enforce  damages  pursuant  to any  other  Section  hereof or under
applicable law.

                  (vii) In addition to any other rights available to the Holder,
if the Company fails to deliver to the Holder such  certificate or  certificates
pursuant to SECTION  4(A)(I) by the fifth (5th) Trading Day after the Conversion
Date, and if after such fifth (5th) Trading Day the Holder purchases (in an open
market  transaction or otherwise)  Common Stock to deliver in  satisfaction of a
sale by such  Holder  of the  Underlying  Shares  which the  Holder  anticipated
receiving upon such  conversion (a "BUY-IN"),  then the Company shall (A) pay in
cash to the Holder (in addition to any  remedies  available to or elected by the
Holder) the amount by which (x) the Holder's  total  purchase  price  (including

<PAGE>

brokerage commissions, if any) for the Common Stock so purchased exceeds (y) the
product of (1) the  aggregate  number of shares of Common Stock that such Holder
anticipated  receiving from the conversion at issue multiplied by (2) the market
price of the Common  Stock at the time of the sale giving rise to such  purchase
obligation  and (B) at the option of the Holder,  either  reissue a Debenture in
the principal amount equal to the principal  amount of the attempted  conversion
or deliver  to the  Holder the number of shares of Common  Stock that would have
been issued had the Company timely complied with its delivery requirements under
SECTION  4(A)(I).  For example,  if the Holder  purchases  Common Stock having a
total  purchase  price of $11,000 to cover a Buy-In with respect to an attempted
conversion  of  Debentures  with  respect  to  which  the  market  price  of the
Underlying  Shares on the date of conversion was a total of $10,000 under clause
(A) of the immediately preceding sentence,  the Company shall be required to pay
the  Holder  $1,000.  The  Holder  shall  provide  the  Company  written  notice
indicating the amounts payable to the Holder in respect of the Buy-In.

         SECTION  5.   NOTICES.   Any  notices,   consents,   waivers  or  other
communications  required or permitted to be given under the terms hereof 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 (1) 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, to:               Radial Energy Inc.

                                     Attention:
                                     Telephone:
                                     Facsimile:

With a copy to:

                                     Telephone:
                                     Facsimile:

If to the Holder:                    Cornell Capital Partners, LP
                                     101 Hudson Street, Suite 3700
                                     Jersey City, NJ  07303
                                     Attention:        Mark Angelo
                                     Telephone:        (201) 985-8300

<PAGE>

With a copy to:                      Troy Rillo, Esq.
                                     101 Hudson Street - Suite 3700
                                     Jersey City, NJ 07302
                                     Telephone:        (201) 985-8300
                                     Facsimile:        (201) 985-8266

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)  business  days prior to the  effectiveness  of such
change.  Written  confirmation  of receipt  (i) given by the  recipient  of such
notice,   consent,   waiver  or  other   communication,   (ii)  mechanically  or
electronically  generated by the sender's facsimile machine containing the time,
date,  recipient  facsimile  number  and an  image  of the  first  page  of such
transmission  or (iii) 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.

         SECTION 6.        DEFINITIONS.  For  the purposes hereof, the following
terms shall have the following meanings:

         "APPROVED  STOCK PLAN" means a stock option plan that has been approved
by the Board of  Directors  of the Company  prior to the date of the  Securities
Purchase  Agreement,  pursuant to which the Company's  securities  may be issued
only to any employee, officer or director for services provided to the Company.

         "BUSINESS DAY" means any day except Saturday,  Sunday and any day which
shall be a federal  legal holiday in the United States or a day on which banking
institutions  are  authorized or required by law or other  government  action to
close.

         "CHANGE  OF  CONTROL  TRANSACTION"  means  the  occurrence  of  (a)  an
acquisition  after the date hereof by an  individual  or legal entity or "group"
(as  described  in Rule  13d-5(b)(1)  promulgated  under  the  Exchange  Act) of
effective  control  (whether  through legal or  beneficial  ownership of capital
stock of the Company,  by contract or  otherwise)  of in excess of fifty percent
(50%) of the voting  securities of the Company  (except that the  acquisition of
voting  securities  by the  Holder  shall not  constitute  a Change  of  Control
Transaction for purposes hereof),  (b) a replacement at one time or over time of
more than one-half of the members of the board of directors of the Company which
is not approved by a majority of those  individuals who are members of the board
of  directors  on the date  hereof (or by those  individuals  who are serving as
members of the board of directors on any date whose  nomination  to the board of
directors  was  approved by a majority of the members of the board of  directors
who are members on the date hereof),  (c) the merger,  consolidation  or sale of
fifty  percent  (50%) or more of the assets of the Company or any  subsidiary of
the  Company in one or a series of  related  transactions  with or into  another
entity, or (d) the execution by the Company of an agreement to which the Company
is a party or by which it is bound,  providing  for any of the  events set forth
above in (a), (b) or (c).

<PAGE>

         "CLOSING  BID  PRICE"  means the  price per share in the last  reported
trade of the  Common  Stock on a  Primary  Market or on the  exchange  which the
Common Stock is then listed as quoted by Bloomberg, LP.

         "COMMISSION" means the Securities and Exchange Commission.

         "COMMON STOCK" means the common stock,  par value $.001, of the Company
and stock of any other class into which such shares may  hereafter be changed or
reclassified.

         "CONVERSION  DATE" shall mean the date upon which the Holder  gives the
Company  notice of their  intention to effectuate a conversion of this Debenture
into shares of the Company's Common Stock as outlined herein.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

         "EXCLUDED  SECURITIES"  means, (a) shares issued or deemed to have been
issued by the Company  pursuant  to an Approved  Stock Plan (b) shares of Common
Stock issued or deemed to be issued by the Company upon the conversion, exchange
or exercise of any right, option, obligation or security outstanding on the date
prior to date of the Securities Purchase  Agreement,  provided that the terms of
such right, option, obligation or security are not amended or otherwise modified
on or after the date of the Securities Purchase Agreement, and provided that the
conversion price,  exchange price, exercise price or other purchase price is not
reduced, adjusted or otherwise modified and the number of shares of Common Stock
issued or issuable is not  increased  (whether by operation of, or in accordance
with, the relevant governing documents or otherwise) on or after the date of the
Securities  Purchase  Agreement,  and (c) the shares of Common  Stock  issued or
deemed to be issued by the Company upon conversion of this Debenture.

         "ORIGINAL ISSUE DATE" shall mean the date of the first issuance of this
Debenture  regardless of the number of transfers and regardless of the number of
instruments, which may be issued to evidence such Debenture.

         "PERSON"  means  a   corporation,   an   association,   a  partnership,
organization,  a business, an individual,  a government or political subdivision
thereof or a governmental agency.

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

         "TRADING  DAY"  means a day on which the  shares  of  Common  Stock are
quoted on the OTC or quoted or traded on such Primary Market on which the shares
of Common Stock are then quoted or listed;  provided, that in the event that the
shares of Common  Stock are not listed or quoted,  then Trading Day shall mean a
Business Day.

         "TRANSACTION  DOCUMENTS" means the Securities Purchase Agreement or any
other agreement  delivered in connection with the Securities Purchase Agreement,
including,  without limitation, the Security Agreement, the Irrevocable Transfer
Agent Instructions, and the Registration Rights Agreement, the Pledge Agreement,
and the ______ Pledge Agreement.

<PAGE>

         "UNDERLYING  SHARES"  means the shares of Common  Stock  issuable  upon
conversion of this  Debenture or as payment of interest in  accordance  with the
terms hereof.

         "UNDERLYING  SHARES   REGISTRATION   STATEMENT"  means  a  registration
statement  meeting  the  requirements  set  forth  in  the  Registration  Rights
Agreement,  covering among other things the resale of the Underlying  Shares and
naming the Holder as a "selling stockholder" thereunder.

         SECTION 7. Except as expressly  provided  herein,  no provision of this
Debenture  shall  alter or impair  the  obligations  of the  Company,  which are
absolute and unconditional,  to pay the principal of, interest and other charges
(if any) on, this  Debenture at the time,  place,  and rate,  and in the coin or
currency,  herein  prescribed.  This  Debenture  is a direct  obligation  of the
Company.  This  Debenture  ranks  pari passu  with all other  Debentures  now or
hereafter issued under the terms set forth herein.  As long as this Debenture is
outstanding,  the Company shall not and shall cause their  subsidiaries  not to,
without the consent of the Holder,  (i) amend its certificate of  incorporation,
bylaws or other  charter  documents so as to adversely  affect any rights of the
Holder;  (ii)  repay,  repurchase  or offer to repay,  repurchase  or  otherwise
acquire shares of its Common Stock or other equity  securities  other than as to
the Underlying  Shares to the extent permitted or required under the Transaction
Documents;  or  (iii)  enter  into  any  agreement  with  respect  to any of the
foregoing.

         SECTION 8. This  Debenture  shall not  entitle the Holder to any of the
rights of a stockholder of the Company,  including without limitation, the right
to vote, to receive dividends and other distributions,  or to receive any notice
of, or to attend,  meetings  of  stockholders  or any other  proceedings  of the
Company,  unless  and to the extent  converted  into  shares of Common  Stock in
accordance with the terms hereof.

         SECTION 9. If this Debenture is mutilated,  lost,  stolen or destroyed,
the Company shall execute and deliver, in exchange and substitution for and upon
cancellation of the mutilated Debenture,  or in lieu of or in substitution for a
lost, stolen or destroyed Debenture, a new Debenture for the principal amount of
this Debenture so mutilated,  lost, stolen or destroyed but only upon receipt of
evidence  of such  loss,  theft or  destruction  of such  Debenture,  and of the
ownership hereof, and indemnity,  if requested,  all reasonably  satisfactory to
the Company.

         SECTION 10. Excepted for any Permitted  Indebtedness (as defined in the
Security  Agreement) no  indebtedness of the Company is senior to this Debenture
in  right  of  payment,  whether  with  respect  to  interest,  damages  or upon
liquidation  or  dissolution  or otherwise.  Without the Holder's  consent,  the
Company will not and will not permit any of their  subsidiaries  to, directly or
indirectly,   enter  into,  create,   incur,  assume  or  suffer  to  exist  any
indebtedness  of any kind,  on or with  respect to any of its property or assets
now owned or hereafter acquired or any interest therein or any income or profits
there from that is senior in any respect to the obligations of the Company under
this Debenture.

         SECTION  11. This  Debenture  shall be  governed  by and  construed  in
accordance  with the laws of the State of New Jersey,  without  giving effect to
conflicts of laws thereof.  Each of the parties  consents to the jurisdiction of
the Superior  Courts of the State of New Jersey  sitting in Hudson  County,  New
Jersey and the U.S.  District  Court for the  District of New Jersey  sitting in
Newark,  New Jersey in connection  with any dispute arising under this Debenture

<PAGE>

and hereby  waives,  to the maximum  extent  permitted  by law,  any  objection,
including  any  objection  based on FORUM NON  CONVENIENS to the bringing of any
such proceeding in such jurisdictions.

         SECTION 12. If the Company  fails to strictly  comply with the material
terms of this  Debenture,  then the Company shall  reimburse the Holder promptly
for all fees, costs and expenses, including, without limitation, attorneys' fees
and  expenses  incurred  by the  Holder in any  action in  connection  with this
Debenture,  including,  without  limitation,  those  incurred:  (i)  during  any
workout,  attempted  workout,  and/or in connection  with the rendering of legal
advice as to the Holder's rights, remedies and obligations,  (ii) collecting any
sums  which  become  due to the  Holder,  (iii)  defending  or  prosecuting  any
proceeding  or any  counterclaim  to any  proceeding  or  appeal;  or  (iv)  the
protection, preservation or enforcement of any rights or remedies of the Holder.

         SECTION  13. Any waiver by the Holder of a breach of any  provision  of
this Debenture  shall not operate as or be construed to be a waiver of any other
breach  of such  provision  or of any  breach  of any  other  provision  of this
Debenture. The failure of the Holder to insist upon strict adherence to any term
of this Debenture on one or more  occasions  shall not be considered a waiver or
deprive that party of the right  thereafter  to insist upon strict  adherence to
that term or any other term of this Debenture. Any waiver must be in writing.

         SECTION 14. If any provision of this  Debenture is invalid,  illegal or
unenforceable,  the balance of this Debenture shall remain in effect, and if any
provision is inapplicable to any person or circumstance,  it shall  nevertheless
remain applicable to all other persons and  circumstances.  If it shall be found
that any interest or other amount deemed  interest due  hereunder  shall violate
applicable laws governing  usury,  the applicable rate of interest due hereunder
shall  automatically be lowered to equal the maximum permitted rate of interest.
The Company  covenants  (to the extent that it may lawfully do so) that it shall
not at any time insist upon,  plead, or in any manner  whatsoever  claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would  prohibit  or forgive  the  Company  from paying all or any portion of the
principal of or interest on this  Debenture  as  contemplated  herein,  wherever
enacted,  now or at any time  hereafter  in  force,  or  which  may  affect  the
covenants or the performance of this  indenture,  and the Company (to the extent
it may lawfully do so) hereby  expressly waives all benefits or advantage of any
such law,  and  covenants  that it will not, by resort to any such law,  hinder,
delay or impeded the  execution of any power herein  granted to the Holder,  but
will  suffer and permit  the  execution  of every such as though no such law has
been enacted.

         SECTION 15. Whenever any payment or other obligation hereunder shall be
due on a day other than a Business  Day,  such payment shall be made on the next
succeeding Business Day.

         SECTION 16.  This  Debenture  is  exchangeable  for an equal  aggregate
principal  amount  of  Debentures  of  different  authorized  denominations,  as
requested by the Holder  surrendering  the same. No service  charge will be made
for such registration of transfer or exchange.

         SECTION 17. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE  THE  RIGHT  ANY OF THEM  MAY HAVE TO A TRIAL  BY JURY IN  RESPECT  OF ANY

<PAGE>

LITIGATION  BASED  HEREON OR ARISING OUT OF,  UNDER OR IN  CONNECTION  WITH THIS
AGREEMENT  OR ANY  TRANSACTION  DOCUMENT  OR ANY  COURSE OF  CONDUCT,  COURSE OF
DEALING,  STATEMENTS  (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS
PROVISION  IS  A  MATERIAL  INDUCEMENT  FOR  THE  PARTIES'  ACCEPTANCE  OF  THIS
AGREEMENT.

                   [REMAINDER OF PAGE INTENTIONLLY LEFT BLANK]

<PAGE>

         IN WITNESS  WHEREOF,  the Company has caused this  Secured  Convertible
Debenture to be duly  executed by a duly  authorized  officer as of the date set
forth above.

                               COMPANY:
                               RADIAL ENERGY INC.

                               By:_________________________________________
                               Name:
                               Title:

<PAGE>

                                    EXHIBIT A

                                CONVERSION NOTICE

        (TO BE EXECUTED BY THE HOLDER IN ORDER TO CONVERT THE DEBENTURE)

TO:

         The undersigned hereby irrevocably elects to convert $_________________
of the principal amount of Debenture No. RENG-1-1 into Shares of Common Stock of
RADIAL  ENERGY  INC.,  according to the  conditions  stated  therein,  as of the
Conversion Date written below.

CONVERSION DATE:               _________________________________________________
AMOUNT TO BE CONVERTED:        $________________________________________________
CONVERSION PRICE:              $________________________________________________
NUMBER OF  SHARES OF COMMON
STOCK TO BE ISSUED:            _________________________________________________
AMOUNT OF DEBENTURE
UNCONVERTED:                   $________________________________________________

PLEASE  ISSUE  THE  SHARES  OF  COMMON  STOCK IN THE  FOLLOWING  NAME AND TO THE
FOLLOWING ADDRESS: ISSUE TO:

AUTHORIZED SIGNATURE:          _________________________________________________
NAME:                          _________________________________________________
TITLE:                         _________________________________________________
BROKER DTC PARTICIPANT CODE:
ACCOUNT NUMBER:

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