Document:

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                                                                    EXHIBIT 10.1

                                                               EXECUTION VERSION

================================================================================

                              AMENDED AND RESTATED

                            ASSET PURCHASE AGREEMENT

                                  BY AND AMONG

                               VE HOLDINGS, INC.,

                                 SUNTRIPS, INC.,

                                 FS TOURS, INC.

                                       and

                                FS SUNTOURS, INC.

                                   Dated as of

                                October 31, 2003

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<S>                  <C>                                                                                       <C>
ARTICLE I             DEFINITIONS AND TERMS......................................................................1

         Section 1.1       Certain Definitions...................................................................1

         Section 1.2       Other Definitional Provisions.........................................................8

ARTICLE II            PURCHASE AND SALE OF ACQUIRED ASSETS.......................................................8

         Section 2.1       Purchase and Sale.....................................................................8

         Section 2.2       Acquired Assets and Excluded Assets...................................................8

         Section 2.3       Assumption of Liabilities............................................................11

         Section 2.4       Purchase Price.......................................................................11

         Section 2.5       Purchase Price Adjustment............................................................11

         Section 2.6       Allocation of the Purchase Price.....................................................12

         Section 2.7       Transfer Taxes.......................................................................13

ARTICLE III           CLOSING...................................................................................13

         Section 3.1       Closing..............................................................................13

         Section 3.2       Deliveries by Sellers................................................................13

         Section 3.3       Deliveries by Purchasers.............................................................14

         Section 3.4       Risk of Loss.........................................................................14

         Section 3.5       Simultaneous Transactions............................................................14

ARTICLE IV            REPRESENTATIONS AND WARRANTIES OF SELLERS.................................................14

         Section 4.1       Authority, Binding Effect............................................................14

         Section 4.2       Title to Property....................................................................16

         Section 4.3       No Violation.........................................................................16

         Section 4.4       Litigation;  Proceedings.............................................................16

         Section 4.5       Organization and Qualification.......................................................16

         Section 4.6       Financial Statements;  Undisclosed Liabilities.......................................16

         Section 4.7       Receivables..........................................................................17

         Section 4.8       Consents and Approvals...............................................................17

         Section 4.9       Permits/Compliance with Laws.........................................................17

         Section 4.10      Employee Benefit Plans;  ERISA.......................................................18

         Section 4.11      Contracts............................................................................18

         Section 4.12      Condition and Sufficiency of Acquired Assets.........................................19

         Section 4.13      Environmental Matters................................................................19
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<S>                       <C>                                                                                  <C>

         Section 4.14      Real Property........................................................................19

         Section 4.15      Labor Matters........................................................................20

         Section 4.16      Insurance............................................................................20

         Section 4.17      Intellectual Property................................................................20

         Section 4.18      Taxes................................................................................21

         Section 4.19      Customer Relationships...............................................................21

         Section 4.20      Customer Deposits and Pre-Paid Expenses..............................................21

         Section 4.21      Full Disclosure......................................................................22

ARTICLE V             REPRESENTATIONS AND WARRANTIES OF PURCHASERS..............................................22

         Section 5.1       Organization.........................................................................22

         Section 5.2       Authority, Binding Effect............................................................22

         Section 5.3       No Violation;  Consents and Approvals................................................23

         Section 5.4       Financial Sufficiency................................................................24

ARTICLE VI            COVENANTS.................................................................................24

         Section 6.1       Conduct of Business..................................................................24

         Section 6.2       Bulk Transfer Laws...................................................................24

         Section 6.3       Employees............................................................................24

         Section 6.4       Further Assurances...................................................................25

         Section 6.5       Confidentiality; Tax Disclosure......................................................25

         Section 6.6       Notification of Certain Matters......................................................26

         Section 6.7       Access to Books and Records Following the Closing....................................26

         Section 6.8       Change of Name.......................................................................26

         Section 6.9       MyTravel Names.......................................................................26

         Section 6.10      Non-Competition; Non-Solicitation....................................................27

         Section 6.11      Stub Period Financial Statements.....................................................27

         Section 6.12      Credit Card Processing...............................................................27

ARTICLE VII           INDEMNIFICATION OBLIGATIONS;  SURVIVAL....................................................28

         Section 7.1       Agreements to Indemnify..............................................................28

         Section 7.2       Third Party Claims Procedures........................................................28

         Section 7.3       Limitation of Liability..............................................................29

         Section 7.4       Method of Payment; Treatment of Indemnity Benefits...................................30
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<S>                       <C>                                                                                  <C>

         Section 7.5       Exclusive Remedy.....................................................................30

         Section 7.6       Survival.............................................................................30

ARTICLE VIII          CONDITIONS TO CLOSING; TERMINATION........................................................31

         Section 8.1       Mutual Conditions to the Obligations of the Parties..................................31

         Section 8.2       Conditions to the Obligations of Purchasers..........................................31

         Section 8.3       Conditions to the Obligations of Sellers.............................................32

         Section 8.4       Termination..........................................................................32

         Section 8.5       Effect of Termination................................................................32

         Section 8.6       Closing Failure Fee..................................................................32

         Section 8.7       Third Party Real Estate Consents.....................................................33

         Section 8.8       No Multiple Materiality Qualifiers...................................................33

ARTICLE IX            GENERAL...................................................................................33

         Section 9.1       Notices..............................................................................33

         Section 9.2       Amendment, Waiver....................................................................34

         Section 9.3       Assignment...........................................................................34

         Section 9.4       Entire Agreement.....................................................................34

         Section 9.5       Fulfillment of Obligations...........................................................34

         Section 9.6       Parties in Interest..................................................................35

         Section 9.7       Expenses.............................................................................35

         Section 9.8       Brokers..............................................................................35

         Section 9.9       Governing Law........................................................................35

         Section 9.10      Counterparts.........................................................................35

         Section 9.11      Headings.............................................................................35

         Section 9.12      Disclosure Schedules.................................................................35

         Section 9.13      Specific Performance.................................................................35

         Section 9.14      Publicity............................................................................35

         Section 9.15      Severability.........................................................................36

         Section 9.16      Rules of Construction................................................................36

         Section 9.17      Representations and Warranties Exclusive.............................................36

         Section 9.18      WAIVER OF JURY TRIAL.................................................................36
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EXHIBITS

Exhibit A - Pledge Agreement
Exhibit B - Purchase Agreement Supplement
Exhibit C - Purchase Price Note
Exhibit D - Bill of Sale
Exhibit E - Assumption Agreement
Exhibit F - Lease Assignments
Exhibit G - Transition Services Agreement
Exhibit H - Intellectual Property Assignments

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                              AMENDED AND RESTATED
                            ASSET PURCHASE AGREEMENT

         THIS AMENDED AND RESTATED ASSET PURCHASE AGREEMENT, dated as of October
31, 2003, by and among VE Holdings, Inc., a Delaware corporation ("VE Holdings")
and a  wholly-owned  subsidiary  of  MyTravel  USA  Holdings,  Inc.,  a  Florida
corporation ("MyTravel"),  SunTrips, Inc., a California corporation ("SunTrips")
and  a  wholly-owned   subsidiary  of  MyTravel,  FS  Tours,  Inc.,  a  Delaware
corporation ("FS Tours"), a wholly-owned direct subsidiary of Flightserv,  Inc.,
a Delaware corporation  ("Flightserv") and a wholly-owned indirect subsidiary of
eResource Capital Group, Inc., a Delaware  corporation ("ECG"), and FS SunTours,
Inc., a Delaware  corporation ("FS SunTours"),  a wholly-owned direct subsidiary
of Flightserv  and a  wholly-owned  indirect  subsidiary of ECG. VE Holdings and
SunTrips are each referred to herein  individually as "Seller" and  collectively
as "Sellers".  FS Tours and FS SunTours are each referred to herein individually
as a "Purchaser" and collectively as "Purchasers".

                                    RECITALS:

         WHEREAS,  Sellers and FS Tours entered into that certain Asset Purchase
Agreement,  dated as of October 17, 2003 (the "Original  Agreement") and Sellers
and FS Tours desire to amend and restate the Original  Agreement in its entirety
in order to provide for the purchase by FS SunTours of substantially  all of the
assets of SunTrips;

         WHEREAS,  Sellers  are  engaged  in the  business  of serving as public
charter airline operators (collectively the "Business"); and

         WHEREAS,  (i) SunTrips  wishes to sell to FS SunTours,  and FS SunTours
wishes to purchase from  SunTrips,  substantially  all of the assets of SunTrips
used  exclusively  or  principally  by or relating to the  Business,  subject to
certain liabilities in connection with the Business,  upon the terms and subject
to the  conditions of this  Agreement and (ii) VE Holdings  wishes to sell to FS
Tours,  and FS Tours wishes to purchase from VE Holdings,  substantially  all of
the assets of VE Holdings used  exclusively or principally by or relating to the
Business,  subject to certain liabilities in connection with the Business,  upon
the terms and subject to the  conditions of this  Agreement  (collectively,  the
"Asset Purchase").

         NOW,   THEREFORE,   in   consideration  of  the  mutual  covenants  and
undertakings  contained  herein,  and subject to and on the terms and conditions
herein set forth,  the  Original  Agreement is hereby  amended,  and the parties
hereto agree, as follows:

                                   ARTICLE I
                             DEFINITIONS AND TERMS

         Section 1.1 Certain  Definitions.  As used in this Agreement (including
the Schedules and hereto), the following terms have the meanings set forth or as
referenced below:

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         "Acquired Assets" has the meaning set forth in Section 2.2(a).

         "Action" means any claim, action, suit or proceeding,  arbitral action,
governmental inquiry, criminal prosecution or other investigation.

         "Affiliate" means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. The term "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as applied to any Person,
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or other ownership interest, as trustee or
executor, by contract, credit arrangement or otherwise.

         "Agreement" means this Agreement, as it may be amended or supplemented
from time to time in accordance with the terms hereof.

         "Ancillary Documents" means the Bill of Sale, the Assumption Agreement,
the  Purchase  Price  Note,  the  Lease  Assignment,   the  Transition  Services
Agreement,   the  Intellectual  Property  Assignments,   each  Other  Conveyance
Document,  the Replacement Letters of Credit, the Purchase Agreement Supplement,
the  Pledge  Agreement,  and  each  instrument,   agreement  or  other  document
contemplated by this Agreement as being executed and delivered by the applicable
party hereto.

         "Asset Purchase" has the meaning set forth in the recitals.

         "Assumed Liabilities" has the meaning set forth in Section 2.3(a).

         "Assumption Agreement" has the meaning set forth in Section 3.2(b).

         "Benefit  Plans" means any Plan that is maintained or contributed to by
Sellers (or any of their Affiliates) for the benefit of Employees.

         "Bill of Sale" has the meaning set forth in Section 3.2(a).

         "Business" has the meaning set forth in the recitals.

         "Business  Day" means any day other than a Saturday,  a Sunday or a day
on which banks in New York City or Atlanta,  Georgia are authorized or obligated
by law or executive order to close.

         "Business  Intellectual  Property" shall mean any Intellectual Property
that is owned by or  licensed  to Sellers  exclusively  or  principally  for the
benefit of the Business,  other than any such  Intellectual  Property that is an
Excluded Asset or provided pursuant to the Transition Services Agreement.

         "Closing" has the meaning set forth in Section 3.1.

         "Closing Date" has the meaning set forth in Section 3.1.

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         "Closing Statement" has the meaning set forth in Section 2.5(a).

         "Closing  Working  Capital  Amount"  means the  difference  between the
Current Assets and the Current Liabilities.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Competition  Laws"  means all Laws that are  designed  or  intended to
prohibit,  restrict  or  regulate  actions  having  the  purpose  or  effect  of
monopolization, lessening of competition or restraint of trade.

         "Consents" has the meaning set forth in Section 4.8

         "Contract"  means any written  contract,  agreement,  indenture,  note,
bond,  instrument,   lease,  conditional  sales  contract,   mortgage,  license,
franchise agreement,  concession agreement, insurance policy, security interest,
guaranty, binding commitment or other agreement or arrangement,  in each case to
which a Seller is a party and relating to the Business.

         "Current  Assets"  means the  Current  Assets  (as  defined by GAAP) of
Sellers as recorded in their books and records as of the Closing Date (including
the Surety Bonds), but excluding all Excluded Assets.

         "Current  Letters of Credit"  means the  Letters of Credit set forth on
Schedule 1.1(a).

         "Current  Liabilities"  means the  Current  Liabilities  (as defined by
GAAP) of Sellers as recorded in their books and records as of the Closing  Date,
but excluding all Excluded Liabilities.

         "Damages" has the meaning set forth in Section 7.1(a).

         "ECG" has the meaning set forth in the preamble.

         "Employee" means each employee of Sellers engaged in the Business as of
the Closing Date.

         "Environmental  Claim"  means  any  claim,  action,  cause  of  action,
investigation  or notice by any person or entity  alleging  potential  liability
(including,  without limitation,  potential  liability for investigatory  costs,
cleanup costs,  governmental response costs, natural resources damages, property
damages,  personal injuries, or penalties) arising out of, based on or resulting
from (a) the presence or Release of any  Hazardous  Materials  at any  location,
whether or not owned or operated by any Seller, or (b) circumstances forming the
basis of any violation of any Environmental Law.

         "Environmental  Laws"  means  all  Laws  and  regulations  relating  to
pollution or  protection  of human  health or the  environment,  including  Laws
relating to Releases or threatened  Releases of Hazardous Materials or otherwise
relating to the manufacture,  processing, distribution, use, treatment, storage,
disposal,  transport or handling of Hazardous Materials and all Laws with regard

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to recordkeeping, notification, disclosure and reporting requirements respecting
Hazardous Materials.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended.

         "Excluded Assets" has the meaning set forth in Section 2.2(b).

         "Excluded Contracts" has the meaning set forth in Section 2.2(b)(v).

         "Excluded Liabilities" has the meaning set forth in Section 2.3(b).

         "Financial Information" has the meaning set forth in Section 4.6(a).

         "Flightserv" has the meaning set forth in the preamble.

         "GAAP" means United States generally accepted accounting principles and
practices in effect from time to time as consistently applied.

         "Governmental Authority" has the meaning set forth in Section 4.8.

         "Governmental  Order"  means  any  statute,  rule,  regulation,  order,
judgment,  injunction,  decree, stipulation or determination issued, promulgated
or entered by or with any Governmental Authority of competent jurisdiction.

         "Hazardous  Materials" means all materials  regulated by law as capable
of causing  harm or injury to human  health or the  environment,  including  (a)
Hazardous Substances (as hereinafter  defined),  (b) friable asbestos containing
material, (c) polychlorinated  biphenyls,  (d) highly toxic materials as defined
by OSHA in 29  C.F.R.  ss.  1910.1200,  (d)  radioactive  materials  and (f) all
substances defined as Hazardous Substances,  Oils, Pollutants or Contaminants in
the National Oil and Hazardous Substances Pollution  Contingency Plan, 40 C.F.R.
ss. 300.5, or defined as such by, or regulated as such under, any  Environmental
Law.

         "Hazardous  Substances"  means  any  hazardous  substances  within  the
meaning of Section 101(14) of CERCLA,  42 U.S.C. ss. 9601(14),  or any pollutant
or constituent that is regulated under any Environmental Law.

         "Indemnified Party" has the meaning set forth in Section 7.2.

         "Indemnifying Party" has the meaning set forth in Section 7.2.

         "Independent  Accounting Firm" means (a) a certified public  accounting
firm in the United States of international  recognition  mutually  acceptable to
Sellers and  Purchasers,  which does not have a material  existing  relationship
with  either of Sellers or  Purchasers,  or (b) if Sellers  and  Purchasers  are
unable to agree upon such a firm,  then  Sellers  shall select one such firm and
Purchasers  shall  select one such firm and those two firms shall select a third
firm, in which event "Independent Accounting Firm" shall mean such third firm.

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         "Intellectual  Property"  means  any or all of the  following:  (i) all
patents and applications therefor and reissues, divisions, renewals, extensions,
provisionals,  continuations and continuations-in-part  thereof; (ii) inventions
(whether patentable or not), invention disclosures, improvements, trade secrets,
proprietary  information,  know-how,  technology,  technical  data and  customer
lists; (iii) copyrights, copyright registrations and applications therefor; (iv)
trade names, trade dress, logos, trademarks and service marks, and registrations
and applications therefor and the goodwill associated therewith;  (v) databases;
(viii)  computer  software,  including  all source code therefor and (ix) domain
names and all rights therein throughout the world.

         "Intellectual  Property  Assignments"  has the  meaning  set  forth  in
Section 3.2(e).

         "Knowledge  of Sellers",  "Sellers'  Knowledge"  and phrases of similar
import mean the actual knowledge after reasonable inquiry of any current officer
of either Seller.

         "Laws"  means  any  federal,  state,  local or  foreign  law,  statute,
ordinance, rule, regulation,  order, judgment or decree, administrative order or
decree,  administrative  or  judicial  decision,  and  any  other  executive  or
legislative proclamation.

         "Lease Assignments" has the meaning set forth in Section 3.2(a).

         "Leased Realty" has the meaning set forth in Section 4.14(b).

         "Leases" has the meaning set forth in Section 4.14(b).

         "Liens" means any lien, security interest,  mortgage, pledge, charge or
similar encumbrance.

         "Litigation" has the meaning set forth in Section 4.4.

         "Material Adverse Effect" means any change or effect that is materially
adverse to the financial condition, assets, liabilities or results of operations
of the Business,  with regard to either Seller individually or taken as a whole,
except for any such changes or effects resulting directly or indirectly from (a)
the transactions  contemplated by this Agreement,  (b) the announcement or other
disclosure of the transactions contemplated by this Agreement, (c) industry-wide
regulatory  changes,  or (d) an event or  circumstance  or  series  of events or
circumstances  affecting (i) the industry in which the Business  operates in any
country  in which  the  Business  operates  or (ii) the  United  States  economy
generally or the economy  generally  of any other  country in which the Business
operates.

         "Material Contracts" has the meaning set forth in Section 4.11(a).

         "MyTravel" means MyTravel USA Holdings, Inc., a Florida corporation.

         "MyTravel  Canada"  means  MyTravel  Canada  Holidays  Inc., a Canadian
corporation.

         "MyTravel   Names"  means  the  trademark   "MyTravel"  and  all  other
trademarks containing the word "MyTravel" or any derivatives thereof.

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         "Notice of Disagreement" has the meaning set forth in Section 2.5(b).

         "Other  Conveyance  Documents"  has the  meaning  set forth in  Section
3.2(f).

         "Permits" has the meaning set forth in Section 4.9.

         "Permitted  Liens"  means  (i)  mechanics',   carriers',  workmen's  or
repairmens'  Liens  arising or incurred in the ordinary  course of business with
respect to liabilities that are not yet due or delinquent, (ii) Liens arising by
operation of law for Taxes, assessments and other governmental charges which are
not due and payable or which may hereafter be paid without  penalty or which are
being contested in good faith by appropriate proceedings,  (iii) Liens set forth
on Schedule 1.1(b),  and (iv) other  imperfections of title or encumbrances,  if
any, which imperfections of title or other encumbrances,  individually or in the
aggregate, would not reasonably be expected to materially detract from the value
of the property or asset to which it relates or materially impair the ability to
use the property or asset to which it relates in  substantially  the same manner
as it was used prior to the Closing Date.

         "Person"  means  an  individual,  a  corporation,  a  partnership,   an
association, a trust or other entity or organization.

         "Plans" means any "employee benefit plan" within the meaning of Section
3(3) of ERISA.

         "Pledge  Agreement" means the Stock Pledge  Agreement,  dated as of the
Closing Date, between ECG and Sellers, in the form attached hereto as Exhibit A.

         "Post-Closing  Letters of  Credit"  means  those  Letters of Credit set
forth on Schedule 1.1(c).

         "Purchase   Agreement   Supplement"   means  the   Purchase   Agreement
Supplement,  dated as of the Closing Date,  between MyTravel Canada,  Flightserv
and Purchasers, in the form attached hereto as Exhibit B.

         "Purchase Price" has the meaning set forth in Section 2.4.

         "Purchase  Price Note" means the Secured  Promissory Note of Purchasers
and  Flightserv,  due  December  1, 2010,  issued to the  Sellers,  jointly  and
severally,   in  the  aggregate   principal   amount  of  Ten  Million   Dollars
($10,000,000)  (as may be adjusted from time to time pursuant to Sections 2.5(d)
and 7.4(a)), in the form attached hereto as Exhibit C.

         "Purchaser" has the meaning set forth in the preamble.

         "Purchaser Group" has the meaning set forth in Section 7.1(a).

         "Recipients" has the meaning set forth in Section 6.5(b).

         "Registered Intellectual Property" has the meaning set forth in Section
4.17(a).

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         "Release"  means  any  release,  spill,  emission,   leaking,  pumping,
injection, deposit, disposal,  discharge,  dispersal, leaching or migration into
the  indoor or  outdoor  environment  (including  ambient  air,  surface  water,
groundwater and surface or subsurface  strata),  or into or out of any property,
including  the  movement of  Hazardous  Materials  through or in the air,  soil,
surface water, groundwater or property.

         "Replacement Letters of Credit" means the Letters of Credit obtained by
Purchasers  in  replacement  of the  Current  Letters  of Credit  other than the
Post-Closing Letters of Credit, issued to the same entities, in the same amounts
and securing the same  obligations  as such Current  Letters of Credit,  each in
form and substance,  and from a bank or other financial institution,  reasonably
satisfactory to Sellers and the Purchasers; provided, however that the Letter of
Credit obtained by Purchasers in replacement of the $3,000,000  Letter of Credit
issued for the benefit of Ryan  International  Airlines  Inc.  by Barclays  Bank
shall  be  in  the  amount  of  One  Million  Five  Hundred   Thousand   Dollars
($1,500,000).

         "Schedule"  means any disclosure  schedule  being  delivered by Sellers
concurrently with the execution of this Agreement.

         "Seller" has the meaning set forth in the preamble.

         "Seller Group" has the meaning set forth in Section 7.1(b).

         "SunTrips" has the meaning set forth in the preamble.

         "Surety  Bonds" means (i) the $200,000  Cash Surety  issued by National
City Bank in favor of the  Department  of  Transportation  for the benefit of VE
Holdings and (ii) the $200,000 Cash Surety issued by National City Bank in favor
of the Department of Transportation for the benefit of SunTrips.

         "Tax  Return"  means any return,  report,  information  return or other
document  (including  any related or  supporting  information)  with  respect to
Taxes, including any schedule or attachment thereto.

         "Taxes" means all taxes, charges,  fees, duties,  levies,  penalties or
other assessments imposed by any federal,  state, local or foreign  Governmental
Authority,  including,  but not  limited to,  income,  gross  receipts,  excise,
property,  sales,  gain,  use,  license,  capital  stock,  transfer,  franchise,
payroll, withholding, social security, value added or other taxes, including any
interest, penalties or additions attributable thereto.

         "Third Party Claim" has the meaning set forth in Section 7.2.

         "Transfer Taxes" means sales, use,  transfer,  real property  transfer,
recording,  documentary, stamp, registration,  stock transfer, and other similar
taxes and fees (including any penalties and interest).

         "Transferred Employee" has the meaning set forth in Section 6.3(a).

         "Transition  Services  Agreement"  has the meaning set forth in Section
3.2(d).

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<PAGE>

         "VE Holdings" has the meaning set forth in the preamble.

Section 1.2       Other Definitional Provisions.

                  (a) When a reference is made in this  Agreement to an Article,
         Section,  Exhibit or Schedule,  such reference  shall be to an Article,
         Section,  Exhibit  or  Schedule  of  this  Agreement  unless  otherwise
         indicated.

                  (b) The words "hereof,"  "herein,"  "hereto,"  "hereunder" and
         "hereinafter" and words of similar import,  when used in this Agreement
         refer to this Agreement as a whole and not to any particular  provision
         of this Agreement.

                  (c)  The  terms  defined  in the  singular  have a  comparable
         meaning when used in the plural, and vice versa.

                  (d) The term  "dollars"  and  character "$" mean United States
         dollars.

                  (e) The word "including" means including,  without limitation,
         and the words "include" and "includes" have corresponding meanings.

                                   ARTICLE II
                      PURCHASE AND SALE OF ACQUIRED ASSETS

         Section  2.1  Purchase  and Sale.  Upon the terms  and  subject  to the
conditions of this  Agreement,  (i) SunTrips agrees to sell,  assign,  transfer,
convey and deliver,  or cause to be sold,  assigned,  transferred,  conveyed and
delivered,  to FS SunTours and FS SunTours  agrees to  purchase,  on the Closing
Date,  all of the Acquired  Assets owned or  controlled  by SunTrips and (ii) VE
Holdings agrees to sell, assign,  transfer,  convey and deliver,  or cause to be
sold, assigned,  transferred,  conveyed and delivered,  to FS Tours and FS Tours
agrees to purchase,  on the Closing  Date,  all of the Acquired  Assets owned or
controlled  by VE  Holdings;  provided  that,  in any  event,  Purchasers  shall
collectively purchase hereunder all of the Acquired Assets,  notwithstanding any
specific division thereof set forth in this Section 2.1.

         Section 2.2 Acquired Assets and Excluded Assets.

                  (a) The term  "Acquired  Assets"  shall mean all the business,
         properties,  assets  and  rights of  Sellers  relating  exclusively  or
         principally  to the Business of whatever  kind and nature,  tangible or
         intangible,  other than the Excluded Assets, including, in each case as
         relating exclusively or principally to the Business:

                           (i) all right,  title and  interest  in, to and under
                  any Leased Realty;

                           (ii)  except to the extent any of the  following  are
                  Excluded  Assets,   all  inventory,   computer  equipment  and
                  hardware,  equipment,  supplies  and other  goods,  all office
                  furniture and  fixtures,  leasehold  improvements,  machinery,
                  owned vehicles, and other tangible personal property;

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<PAGE>

                           (iii) all right, title and interest of Sellers in, to
                  and under all  Contracts to which they are a party,  including
                  those listed on Schedule  4.11(a),  but excluding any Excluded
                  Contracts;

                           (iv)  except to the extent any of the  following  are
                  Excluded Assets, all accounts  receivable of the Business (net
                  of any reserves for bad debt), and notes payable to Sellers in
                  relation to the Business and all claims,  contract  rights and
                  judgments  relating thereto,  including all of Sellers' rights
                  to any proofs of claim filed against  account  debtors and any
                  negotiable instruments, letters of credit or any other writing
                  that   evidences   a  right  of  Sellers  to  the  payment  or
                  performance of a monetary obligation;

                           (v)   any   securities,   whether   certificated   or
                  uncertificated, held by Sellers;

                           (vi) all right,  title and interest of Sellers to and
                  under  all   Permits,   to  the  extent   such   Permits   are
                  transferable;

                           (vii)  all  prepaid  assets,  including  all  prepaid
                  rentals and all prepaid expenses,  bonds (including the Surety
                  Bonds), escrow accounts and deposits of Sellers;

                           (viii) the  originals  and all copies of all books of
                  account, sales and promotional materials,  general, financial,
                  accounting and personnel records,  files,  manuals,  invoices,
                  customers and suppliers  lists and other data owned or used by
                  Sellers,  but  excluding the  corporate  minute  books,  stock
                  records and organizational documents of Sellers;

                           (ix) all right,  title and interest of Sellers in, to
                  and under all Business  Intellectual  Property  (including the
                  trademarks,  tradenames  and names  "SunTrips"  and  "Vacation
                  Express"),  except to the  extent  any  Business  Intellectual
                  Property is an Excluded Asset;

                           (x) all of Sellers' right,  title and interest in and
                  to  telephone  numbers,   answering  service  numbers,  e-mail
                  addresses,  and other communication  codes, numbers or devices
                  (including the software  components for all internet  websites
                  other than the "MyTravel" website);

                           (xi) all of Sellers' right, title and interest in and
                  to all passenger  escrow  accounts  maintained  with a bank or
                  other financial institution;

                           (xii) all causes of action,  other than those related
                  to or  otherwise  arising in  connection  with,  the  Excluded
                  Assets or Excluded Liabilities;

                           (xiii)   all   goodwill   relating   exclusively   or
                  principally to the Business; and

                                       9
<PAGE>

                           (xiv)   any  other   assets   used   exclusively   or
                  principally  in the  Business on the Closing Date that are not
                  specifically listed above.

         (b) The term "Excluded Assets" shall mean:

                  (i) the  minute  books,  corporate  seal,  stock  records  and
         organizational documents of Sellers;

                  (ii)  copies of such  books of  account,  general,  financial,
         accounting and personnel records,  files, manuals,  invoices,  customer
         and  suppliers  lists and other  data as  Sellers  may be  required  by
         applicable  Laws to retain or as may be necessary to assist  Sellers in
         preparation of Sellers' Tax Returns;

                  (iii) all of Sellers' cash on hand,  cash  equivalents or cash
         held in any  financial  institution,  other than any  escrowed  cash or
         security deposits;

                  (iv) any demand,  money market,  time, savings,  passbook,  or
         similar account maintained with a bank or other financial institution;

                  (v) all right, title and interest in, to and under any Benefit
         Plans listed (or required to be listed) in Section 4.10;

                  (vi) those  Contracts that are listed on Schedule  2.2(b) (the
         "Excluded Contracts");

                  (vii) all of Sellers' right,  title and interest in and to Tax
         credits and other Tax benefits,  Tax refunds,  prepaid Taxes, insurance
         premium refunds, and insurance and other claims or rights to recoveries
         and similar  benefits  of and  relating  to the  Business  prior to the
         Closing Date;

                  (viii) all of  Sellers'  right,  title and  interest in and to
         this Agreement;

                  (ix) any notes, drafts,  accounts or other obligations for the
         payment of money,  made or owed to any Seller by any  current or former
         employees or Affiliates of any Seller;

                  (x) all accounts receivable of the Business or Sellers due and
         owing from any Affiliate of Sellers (other than as owed from one Seller
         to another);

                  (xi) all of Sellers'  right,  title and interest in and to the
         trademark, tradename or name "MyTravel" anywhere in the world;

                  (xii) all of Sellers' right,  title and interest in and to the
         reservation  system  commonly  referred to as  "Logibro"  and all other
         software  applications  licensed  from  third  parties  and used in the
         operation of the Sellers' websites; and

                  (xiii)  all of  Sellers'  right,  title  and  interest  to the
         computer  hardware and other equipment on which the SunTrips website is
         hosted and/or maintained.

                                       10
<PAGE>

         Section 2.3 Assumption of Liabilities.

                  (a) Upon the  terms  and  subject  to the  conditions  of this
         Agreement,  at the Closing,  (i) FS SunTours  shall assume and agree to
         pay, perform and discharge solely those  obligations and liabilities of
         Sellers set forth on Schedule  2.3(a) relating to the SunTrips and (ii)
         FS Tours shall assume and agree to pay,  perform and  discharge  solely
         those  obligations  and  liabilities  of Sellers  set forth on Schedule
         2.3(a) relating to VE Holdings; provided that, in any event, Purchasers
         shall, collectively, assume and agree to pay, perform and discharge all
         of the  obligations  and  liabilities  of Sellers set forth on Schedule
         2.3(a), notwithstanding any specific division thereof set forth in this
         Section 2.3. The foregoing  obligations,  liabilities and  commitments,
         and no  others,  shall  be  hereinafter  referred  to as  the  "Assumed
         Liabilities."

                  (b)  Purchasers  shall not  assume  or  become  liable to pay,
         perform or discharge any other  obligations  or  liabilities of Sellers
         (collectively, the "Excluded Liabilities").

                  (c)  Purchasers  shall  acquire the  Acquired  Assets free and
         clear of all Liens,  except for the Assumed  Liabilities  and Permitted
         Liens.

         Section 2.4 Purchase Price. Subject to the terms and conditions of this
Agreement,  in consideration of the sale,  assignment,  transfer and delivery of
the Acquired Assets to the Purchasers,  Purchasers agree, jointly and severally,
to pay to Sellers,  jointly and  severally,  an  aggregate  amount  equal to Ten
Million  Dollars  ($10,000,000)  (as  adjusted  pursuant  to  Section  2.5,  the
"Purchase Price"), which shall be represented by the Purchase Price Note.

         Section 2.5 Purchase Price Adjustment.

                  (a) Closing  Statement.  As promptly  as  practicable,  but no
         later than twenty (20) Business Days after the Closing Date, Purchasers
         shall  prepare  and  deliver  to  Sellers  a  statement  (the  "Closing
         Statement") setting forth the Closing Working Capital Amount,  together
         with  detail   regarding  the  method  of  calculation   thereof.   The
         calculations set forth on the Closing Statement will be prepared on the
         basis and using the same accounting policies, principles, methodologies
         and  estimates  used in preparing  the  Financial  Information.  At all
         reasonable   times  during  the  ten  (10)  Business  Days  immediately
         following Sellers' receipt of the Closing Statement,  Sellers and their
         representatives  will be  permitted  to review at  Purchasers'  offices
         Purchasers'  working papers  (including  work papers of accountants and
         other advisors)  relating to the Closing  Statement,  as well as all of
         the books and  records  relating  to the  operations  and  finances  of
         Sellers  with  respect to the period up to and  including  the  Closing
         Date, and Purchasers  shall make reasonably  available at their offices
         the  individuals   responsible  for  the  preparation  of  the  Closing
         Statement  in order to respond to the  reasonable  inquiries of Sellers
         related thereto.

                  (b) Notice of Disagreement. Sellers shall notify Purchasers in
         writing (the "Notice of  Disagreement")  within ten (10)  Business Days
         after  receiving  the Closing  Statement if Sellers  disagree  with any
         aspect of the Closing Statement or any of Purchasers' calculations with
         regard  to  the  Closing  Working  Capital  Amount,   which  Notice  of

                                       11
<PAGE>

         Disagreement  shall set forth in  reasonable  detail the basis for such
         dispute and Sellers'  good faith  calculations  of the Closing  Working
         Capital  Amount.  If Sellers do not deliver a Notice of Disagreement to
         Purchasers  within such ten (10) Business Day period,  then the Closing
         Statement  shall be deemed  to have been  accepted  by  Sellers,  shall
         become  final  and  binding  upon the  parties  and  shall be the final
         Closing Statement.

                  (c)  Dispute  Resolution.  During the ten (10)  Business  Days
         immediately following the delivery of a Notice of Disagreement, Sellers
         and Purchasers shall seek in good faith to resolve any differences that
         they may have with  respect  to any matter  specified  in the Notice of
         Disagreement.  If at the end of  such  ten  (10)  Business  Day  period
         Sellers and  Purchasers  have been unable to agree upon a final Closing
         Statement,  then Sellers and Purchasers shall submit to the Independent
         Accounting  Firm for review and  resolution  any and all  matters  that
         remain  in  dispute  with  respect  to  the  Notice  of   Disagreement.
         Purchasers and Sellers shall cause the  Independent  Accounting Firm to
         use  commercially  practicable  efforts  to make a final  determination
         (which  determination  shall be binding on the  parties  hereto) on the
         disputes so  submitted  as well as such  modifications,  if any, to the
         Closing Balance Sheet and the Closing Working Capital Amount within ten
         (10) Business Days from such submission,  and such final  determination
         shall be the  final  Closing  Statement.  The  cost of the  Independent
         Accounting Firm's review and  determination  shall be paid by the party
         whose  determination  of the  aggregate  amount of the Closing  Working
         Capital Amount differed by the greater amount from the aggregate amount
         of the  final  Closing  Working  Capital  Amount.  During  the ten (10)
         Business Day review by the Independent  Accounting Firm, Purchasers and
         Sellers will each make  available to the  Independent  Accounting  Firm
         interviews  with  such  individuals  and such  information,  books  and
         records as may be  reasonably  required by the  Independent  Accounting
         Firm to make its final determination.

                  (d) Adjustment. If the final Closing Working Capital Amount is
         negative,  Sellers and MyTravel Canada shall be obligated,  jointly and
         severally, within five (5) Business Days following the determination of
         the final  Closing  Working  Capital  Amount,  to pay to  Purchasers an
         aggregate  amount in cash equal to the  amount by which the  difference
         between the absolute value of such final Closing Working Capital Amount
         and zero (0)  exceeds Two Million  Dollars  ($2,000,000).  If the final
         Closing Working  Capital Amount is positive,  Purchasers may elect that
         either (i) Purchasers shall be obligated, jointly and severally, to pay
         to Sellers  within such five (5) Business  Days an amount in cash equal
         to equal to the  difference  between such final Working  Capital Amount
         and zero (0) or (ii) the  amount  outstanding  at such  time  under the
         Purchase  Price  Note  shall be  increased  by an  amount  equal to the
         difference  between such final Closing  Working Capital Amount and zero
         (0).

         Section 2.6  Allocation of the Purchase  Price.  The Purchase Price and
the amount of the Assumed  Liabilities  shall be  allocated  among the  Acquired
Assets in a manner  consistent  with values as set forth on Schedule  2.6.  Each
party hereto agrees that: (i) any such  allocation  shall be consistent with the
requirements  of section 1060 of the Code; (ii) it shall file Form 8594 with its
Federal income Tax Return  consistent  with such  allocation for the tax year in
which the Closing occurs;  and (iii) except as otherwise  required by applicable
Law, it will not take a position  on any income,  transfer or gains or other Tax

                                       12
<PAGE>

Return,  before any  Governmental  Authority  charged with the collection of any
such Tax or in any judicial proceeding,  that is in any manner inconsistent with
the terms of any such allocation without the consent of the other party hereto.

         Section  2.7  Transfer  Taxes.  Each of Sellers,  on the one hand,  and
Purchasers,  on the other hand,  shall pay fifty percent (50%) of all applicable
Transfer Taxes imposed in connection  with this  Agreement and the  transactions
contemplated by this Agreement.  The appropriate  party shall file all necessary
documentation  and Tax Returns with respect to such  Transfer  Taxes;  provided,
however,  that  Purchasers and Sellers shall  cooperate to prepare and file with
the appropriate  Governmental  Authority,  as and to the extent  necessary,  all
appropriate  Tax  exemption  certificates  or  similar  instruments  as  may  be
necessary to avoid the imposition of any Transfer Taxes.

                                  ARTICLE III
                                     CLOSING

         Section  3.1  Closing.  Subject  to the  satisfaction  or waiver of the
conditions  set forth in Article  VIII,  the closing of the Asset  Purchase (the
"Closing")  shall take place on October 31, 2003, at 10:00 a.m. (New York time),
or such other date and time as the parties hereto may agree, either in person at
the offices of Morgan Lewis & Bockius LLP, 101 Park Avenue,  New York,  New York
10178,  at such other location as the parties hereto may agree,  or by overnight
delivery  and  facsimile.  The date on which the  Closing  occurs is called  the
"Closing Date".

         Section  3.2  Deliveries  by Sellers.  At the  Closing,  Sellers  shall
deliver or cause to be delivered to Purchasers (unless delivered previously) the
following:

                  (a) a bill of sale  (the  "Bill  of  Sale")  for the  Acquired
         Assets, in the form attached hereto as Exhibit D, executed by Sellers;

                  (b) an assumption  agreement (the "Assumption  Agreement") for
         the  Assumed  Liabilities,  in the form  attached  hereto as Exhibit E,
         executed by Sellers;

                  (c)   assignments   and   assumptions  of  lease  (the  "Lease
         Assignments") with respect to the Leased Realty, each in the respective
         form attached hereto as Exhibit F, executed by the appropriate Sellers;
         provided, however, that in the event that any landlord under any of the
         Leases  objects to giving the  Certification  (as  defined in the Lease
         Assignments),  each Purchaser  hereby waives the  requirement to obtain
         such  Certification  and Sellers are hereby  authorized to unilaterally
         modify the Lease Assignments to remove solely those provisions relating
         to the Certification,  and the Lease Assignments, as so modified, shall
         be deemed  satisfactory  in form and substance for all purposes of this
         Agreement;

                  (d) a transition services agreement (the "Transition  Services
         Agreement"),  in the form attached hereto as Exhibit G, with respect to
         transitional  services to be provided to Purchasers by MyTravel Canada,
         executed by MyTravel Canada;

                                       13
<PAGE>

                  (e) certain trademark  assignments and domain name assignments
         (collectively,  the "Intellectual Property Assignments"),  in each case
         in the forms  attached  hereto as Exhibit H, executed by the applicable
         Sellers;

                  (f) the Purchase  Agreement  Supplement,  executed by MyTravel
         Canada, and the Pledge Agreement, executed by Sellers; and

                  (g) all such other agreements,  assignments,  endorsements and
         instruments   of   transfer   (collectively,   the  "Other   Conveyance
         Documents") as are reasonably necessary or appropriate to carry out the
         intent of this Agreement, each executed by Sellers.

         Section 3.3 Deliveries by Purchasers. At the Closing,  Purchasers shall
deliver or cause to be delivered to Sellers  (unless  delivered  previously) the
following:

                  (a) the Purchase  Price Note,  duly executed by Purchasers and
         Flightserv;

                  (b) the Bill of Sale, Assumption Agreement, Lease Assignments,
         Transition  Services  Agreement,   Intellectual  Property  Assignments,
         Purchase  Agreement  Supplement and Pledge Agreement,  each executed by
         Purchasers,  Flightserv and/or ECG, to the extent each of the foregoing
         is party thereto;

                  (c) the Replacement Letters of Credit,  executed by all of the
         parties  thereto  (other  than the  Replacement  Letter of Credit to be
         issued to Pace Airlines,  Inc.,  which shall be delivered no later than
         November 14, 2003); and

                  (d) all such  Other  Conveyance  Documents  as are  reasonably
         necessary  or  appropriate  to carry out the intent of this  Agreement,
         each executed by the Purchasers.

         Section 3.4 Risk of Loss. On or prior to the Closing Date,  any loss of
or damage to the Acquired Assets from fire,  casualty or other occurrences shall
be entirely the  responsibility of Sellers.  Risk of loss to the Acquired Assets
following the Closing Date shall be entirely the responsibility of Purchasers.

         Section  3.5  Simultaneous   Transactions.   All  of  the  transactions
contemplated by this Agreement shall be deemed to occur  simultaneously,  and no
such  transaction  shall be  deemed  to have  been  consummated  until  all such
transactions have been consummated.

                                   ARTICLE IV
                    REPRESENTATIONS AND WARRANTIES OF SELLERS

         Sellers  hereby  represent  and warrant,  jointly and  severally,  and,
solely for  purposes  of Section  4.1(c) each of MyTravel  and  MyTravel  Canada
represents and warrants, to Purchasers, as of the date hereof, as follows:

         Section 4.1 Authority, Binding Effect.

                  (a) Each Seller has all requisite  corporate  power,  capacity
         and  authority  to execute and deliver this  Agreement,  to perform its
         obligations  hereunder and to consummate the transactions  contemplated

                                       14
<PAGE>

         hereby.  The execution,  delivery and performance of this Agreement and
         the consummation of the transactions contemplated hereby have been duly
         authorized  by all  necessary  corporate  action  on the  part  of each
         Seller, and no other corporate action on the part of such Seller or its
         stockholders  is required to  authorize  the  execution,  delivery  and
         performance   hereof,   and  the   consummation  of  the   transactions
         contemplated   hereby.  This  Agreement  has  been  duly  executed  and
         delivered  by  each  Seller  and  constitutes  the  valid  and  binding
         obligation of such Seller enforceable against such Seller in accordance
         with its  terms,  except  that such  enforcement  may be subject to any
         bankruptcy, insolvency, reorganization, moratorium or other laws now or
         hereafter in effect relating to or limiting creditors' rights generally
         and the remedy of specific  performance  and injunctive and other forms
         of  equitable  relief may be subject to  equitable  defenses and to the
         discretion  of the court before which any  proceedings  therefor may be
         brought.

                  (b) Each Seller has all requisite  corporate  power,  capacity
         and authority to execute and deliver each  Ancillary  Document to which
         it is a party, to perform its obligations  thereunder and to consummate
         the  transactions  contemplated  thereby.  The execution,  delivery and
         performance  of the  Ancillary  Documents and the  consummation  of the
         transactions  contemplated  thereby  have been duly  authorized  by all
         necessary  corporate  action on the part of each  Seller,  and no other
         corporate  action  on  the  part  of  such  Seller  or  its  respective
         stockholders  or  partners  is required  to  authorize  the  execution,
         delivery and performance of any Ancillary  Document  applicable to such
         Seller, and the consummation of the transactions  contemplated thereby.
         At Closing,  each  Ancillary  Document will have been duly executed and
         delivered by each Seller party  thereto and will  constitute  the valid
         and binding obligation of such Seller  enforceable  against such Seller
         in  accordance  with its terms,  except  that such  enforcement  may be
         subject to any bankruptcy,  insolvency,  reorganization,  moratorium or
         other  laws  now  or  hereafter  in  effect  relating  to  or  limiting
         creditors' rights generally and the remedy of specific  performance and
         injunctive  and other  forms of  equitable  relief  may be  subject  to
         equitable  defenses and to the discretion of the court before which any
         proceedings therefor may be brought.

                  (c) Each of MyTravel  and  MyTravel  Canada has all  requisite
         corporate  power,  capacity  and  authority to execute and deliver this
         Agreement,  to perform its obligations  hereunder and to consummate the
         transactions  contemplated  hereby,  in each case solely with regard to
         the provisions set forth under such entity's name on the signature page
         hereto.  The execution,  delivery and performance of the provisions set
         forth under  MyTravel's or MyTravel  Canada's name, as the case may be,
         on the signature page hereto this Agreement and the consummation of the
         transactions  contemplated  thereby  have been duly  authorized  by all
         necessary corporate action on the part of each of MyTravel and MyTravel
         Canada,  and no  other  corporate  action  on the part of  MyTravel  or
         MyTravel  Canada or their  stockholders  is required to  authorize  the
         execution,  delivery and performance  thereof,  and the consummation of
         the  transactions  contemplated  thereby.  This Agreement has been duly
         executed and  delivered  by each of MyTravel  and  MyTravel  Canada and
         constitutes  the valid and  binding  obligation  of each of such entity
         enforceable  against it in accordance with its terms,  except that such
         enforcement   may   be   subject   to   any   bankruptcy,   insolvency,

                                       15
<PAGE>

         reorganization,  moratorium  or other laws now or  hereafter  in effect
         relating to or limiting  creditors'  rights generally and the remedy of
         specific performance and injunctive and other forms of equitable relief
         may be subject to equitable defenses and to the discretion of the court
         before which any proceedings therefor may be brought.

         Section  4.2 Title to  Property.  Each  Seller  has good title to, or a
valid leasehold interest in, the Acquired Assets owned or leased by it, free and
clear of all Liens (other than the Assumed Liabilities, Permitted Liens or Liens
created by the acts of Purchasers).

         Section 4.3 No Violation.  The execution and delivery of this Agreement
by each Seller and each Ancillary  Document by each Seller party thereto and the
consummation by such Seller of the transactions  contemplated hereby and thereby
will not,  except as set forth on Schedule 4.3, (i) conflict with or violate the
certificate of  incorporation or bylaws of such Seller in each case as currently
in effect,  (ii) conflict with or violate any Laws  applicable to such Seller or
by which any of the Acquired Assets are bound or are subject, or (iii) result in
any breach of, or constitute a default (or an event that with notice or lapse of
time, or both, would constitute a default) under, or give to others any right of
termination,  amendment,  acceleration or cancellation  of, or require  payments
under,  or result in the creation of a Lien on any of the Acquired Assets under,
any note,  bond,  mortgage,  indenture,  contract,  agreement,  lease,  license,
permit,  franchise or other  instrument  or obligation to which such Seller is a
party or by which any of the Acquired Assets are bound or subject.

         Section 4.4  Litigation;  Proceedings.  Except as set forth in Schedule
4.4,  there is no Action  pending or, to the  Knowledge of Sellers,  threatened,
against,  by or  affecting  any  Seller,  the  Business or the  Acquired  Assets
("Litigation")  nor is  there  any  Governmental  Order  outstanding  which  (i)
adversely  affects or could adversely affect the Acquired Assets or the Business
or (ii) seeks to enjoin or prohibit any of the transactions contemplated by this
Agreement.

         Section  4.5   Organization  and   Qualification.   Each  Seller  is  a
corporation validly existing and in good standing under the laws of the state of
its  incorporation  and has all requisite  power and authority to own, lease and
operate all of its  properties  and assets and to conduct its  business as it is
now being conducted. Except as set forth in Schedule 4.5(a), each Seller is duly
qualified  or  licensed  and  in  good  standing  to do  business  as a  foreign
corporation  in each  jurisdiction  in which the nature of its business,  or the
ownership,  leasing  or  operation  of its  properties  or  assets,  makes  such
qualification  necessary,  except  where  such  failure  to be so  qualified  or
licensed could not result in a Material Adverse Effect.

         Section 4.6 Financial Statements; Undisclosed Liabilities.

                  (a) Sellers have  delivered to the  Purchasers  the  unaudited
         balance sheets for the Business dated  September 30, 2002 and September
         30, 2003 and the unaudited operating income statements for the Business
         for the  twelve  (12)  month  periods  ended  September  30,  2002  and
         September 30, 2003 (collectively, the "Financial Information").  Except
         as set forth on Schedule  4.6(a),  the Financial  Information  has been
         prepared in  conformity  with GAAP applied on a basis  consistent  with
         Sellers' past practice  (except for changes,  if any,  required by GAAP
         and disclosed  therein,  and except for the absence of notes and normal
         recurring  adjustments).  The Financial Information presents fairly and

                                       16
<PAGE>

         accurately  in all  material  respects  the  financial  position of the
         Sellers in the manner required by GAAP, for the applicable time periods
         covered thereby.

                  (b) Except as set forth in Schedule 4.6(b),  there has been no
         change in the business of the Business  since  September  30, 2003 that
         has resulted,  or could be reasonably expected to result, in a Material
         Adverse  Effect.  As of the date  hereof,  none of the  Sellers has any
         actual knowledge of the occurrence of any event or circumstance  that a
         reasonable  person would believe would  adversely  affect the financial
         projections,  dated August 2003,  provided by Sellers to Purchasers,  a
         copy of which has been attached to Schedule 4.6(b).

                  (c) The  Business  does not have any  liabilities  of the type
         required to be reflected as  liabilities on a balance sheet prepared in
         accordance  with  GAAP,  whether  accrued,   absolute,   contingent  or
         otherwise,  except such liabilities that (i) are reflected or disclosed
         in the Financial Information, or (ii) were incurred after September 30,
         2003 in the ordinary course of business by the Sellers  consistent with
         past practice.  Except as otherwise  disclosed herein (including on the
         Schedules  hereto),  the  Business  will not have at Closing  any other
         liabilities  that are  material to the  Business;  provided,  that this
         representation  and  warranty  shall not apply,  and there  shall be no
         breach of this representation and warranty, to the extent that any such
         liability is (i) unknown and upon  reasonable  investigation  could not
         have been known or (ii) disclosed.

                  (d)  The  Financial  Information  is  based  upon  information
         contained in the books and records of the Sellers, which such books and
         records have been kept in accordance with GAAP.

         Section  4.7  Receivables.  Except as set forth in  Schedule  4.7,  all
accounts  receivable  and  notes  receivable  of  the  Business  (i)  are  valid
obligations of the obligors, (ii) have arisen from bona fide transactions in the
ordinary  course of  business  consistent  with past  practice,  (iii)  are,  to
Sellers' Knowledge, collectible in the ordinary course of business and have been
adequately reserved for in the Financial Information.

         Section 4.8 Consents and Approvals.  The execution and delivery of this
Agreement and each Ancillary Document by each Seller party thereto does not, and
the performance by such Seller of this Agreement and each Ancillary  Document to
which such Seller is party and the consummation of the transactions contemplated
hereby and thereby  will not,  require  such  Seller to obtain (i) any  consent,
approval,  waiver,  authorization  or  permit  of,  or to  make  any  filing  or
registration  with  or  notification  to  ("Consents"),  any  court,  agency  or
commission, or other governmental entity, authority or instrumentality,  whether
domestic or foreign (each, a "Governmental  Authority"),  or (ii) any Consent of
any third  party  under any  Contract,  except  where the failure to obtain such
Consent would not have a Material Adverse Effect and except for the Consents set
forth in Schedule 4.8.

         Section 4.9 Permits/Compliance  with Laws. Sellers possess all material
franchises,  grants,  authorizations,  licenses, permits, easements,  variances,
exemptions, consents, certificates, approvals and orders necessary to own, lease
and operate  their  properties  and assets and to carry on the Business as it is
now  being  conducted  (collectively,  the  "Permits"),  and  there is no Action

                                       17
<PAGE>

pending or, to the  Knowledge of Sellers,  threatened  regarding  suspension  or
cancellation of any such Permits.  Except as set forth in Schedule 4.9,  Sellers
are in compliance  in all material  respects with such Permits and in compliance
with all material Laws  applicable to them or by or to which any of the Acquired
Assets are bound or subject.  Except as set forth in Schedule  4.9,  none of the
Permits will lapse,  terminate or expire as a result of the  performance of this
Agreement  by  Sellers  or the  consummation  of the  transactions  contemplated
hereby.

         Section 4.10 Employee  Benefit Plans;  ERISA.  Schedule 4.10 lists each
Benefit  Plan.  Except as set forth on Schedule  4.10, or to the extent that any
breach  of the  representations  set  forth in this  sentence  would  not have a
Material  Adverse  Effect:  (i) each  Benefit  Plan has  been  administered  and
operated in all respects in accordance with its terms and in accordance with the
applicable  provisions of the Code and ERISA; (ii) no Benefit Plan is subject to
Title IV of ERISA or subject to section 412 of the Code or section 302 of ERISA;
(iii)  neither  any  Seller  nor  to  the   Knowledge  of  Sellers,   any  other
"disqualified  person" or "party in interest" (as defined in section  4975(e)(2)
of the Code and  section  3(14)  of  ERISA,  respectively)  has  engaged  in any
transaction  in  connection  with any  Benefit  Plan that  could  reasonably  be
expected  to result in the  imposition  of a penalty  pursuant to section 502 of
ERISA or an excise tax  pursuant  to section  4975 of the Code;  (iv) no Benefit
Plan provides for  post-employment  or retiree welfare  benefits,  except to the
extent  required by Part 6 of Title I of ERISA or section 4980B of the Code; and
(v) no  Action  has been  made,  commenced  or,  to the  Knowledge  of  Sellers,
threatened  with  respect to any Benefit  Plan (other  than  routine  claims for
benefits payable in the ordinary course and appeals of denied claims).

         Section 4.11 Contracts.

                  (a) Set forth on Schedule 4.11(a) is a complete list of all of
         the following Contracts (the "Material Contracts"):  (i) noncompetition
         or other agreements restricting the ability of Sellers to engage in any
         line of business in any location, (ii) each Contract involving payments
         made by a Seller that are  expected to exceed  Fifty  Thousand  Dollars
         ($50,000) and (iii) each Contract  involving  payments made to a Seller
         that are expected to exceed Fifty Thousand Dollars ($50,000).

                  (b) Each Material  Contract is a valid and binding  obligation
         of Seller party thereto and is enforceable by such Seller in accordance
         with its terms  against  each other party  thereto.  Such Seller is not
         (with or without the lapse of time or the giving of notice, or both) in
         breach or default thereunder.  To the Knowledge of Sellers, none of the
         other parties to any Material Contract is (with or without the lapse of
         time or the giving of notice, or both) in breach or default  thereunder
         or has given  notification  of  cancellation  thereunder.  No defenses,
         offsets or counterclaims to any Material Contract have been asserted by
         any party thereto  other than Sellers,  and Sellers have not waived any
         rights under any Material Contract.

                  (c)  Except as set forth  specifically  on  Schedule  4.11(c),
         Sellers  are not party to, and none of the  Acquired  Assets is subject
         to, any agreement,  understanding or other  arrangement with respect to
         any:

                                       18
<PAGE>

                           (i)  Contracts  under  which  Sellers are a lessor or
                  sublessor  of, or makes  available for use by any third party,
                  (a) any real property  owned or leased by Sellers  exclusively
                  or principally in connection with the Business, or any portion
                  of premises otherwise occupied by Sellers, or (b) any material
                  personal  property  owned or leased by Sellers  exclusively or
                  principally in connection with the Business;

                           (ii)  Contracts  under which Sellers have borrowed or
                  loaned any money or issued any note, bond,  indenture or other
                  evidence of indebtedness or directly or indirectly  guaranteed
                  any  indebtedness,  liability or obligation of any third party
                  (other  than any loan  made to any  employee  for  relocation,
                  travel or other employment-related  purposes, in each case, in
                  the  ordinary   course  of  business   consistent   with  past
                  practice),  or  any  other  note,  bond,  indenture  or  other
                  evidence of indebtedness;

                           (iii)  Contracts  under  which any other  person  has
                  directly or indirectly guaranteed any indebtedness,  liability
                  or  obligation  of  Sellers,  or letter  of  credit  issued to
                  guarantee any obligation of Sellers, or any vendor or customer
                  of Sellers; or

                           (iv) Contracts with any Governmental Authority except
                  those  entered  into  in  the  ordinary   course  of  business
                  consistent  with past practice which do not involve  aggregate
                  payments  thereunder  by Sellers  in excess of Fifty  Thousand
                  Dollars ($50,000).

         Section  4.12  Condition  and  Sufficiency  of  Acquired  Assets.   The
buildings, plants, structures, and equipment included in the Acquired Assets are
in good operating condition and repair (ordinary wear and tear excepted) and are
adequate  for the uses to which  they are  being  employed.  Except  (i) for the
Excluded Assets, (ii) matters to be covered by the Transition Services Agreement
and (iii) as set forth on Schedule 4.12, the Acquired  Assets are sufficient for
the continued  conduct of the Business  after the Closing in  substantially  the
same manner as conducted prior to the Closing.

         Section  4.13  Environmental  Matters.  Except as set forth in Schedule
4.13(a),  there is no  Environmental  Claim  pending  or,  to the  Knowledge  of
Sellers,  threatened  against Sellers.  To the Knowledge of Sellers,  there have
been no Releases of Hazardous  Materials on, beneath or adjacent to any property
currently  or  formerly  owned,  operated,  or leased by Sellers  in  quantities
sufficient to form the basis for an Environmental Claim.

         Section 4.14 Real Property.

                           (a) There is no real property to which any Seller has
                  legal or equitable title.

                           (b)  Schedule  4.14(b) sets forth a true and complete
                  list of all real  property in which  Sellers  have a valid and
                  subsisting  leasehold or other interest (the "Leased Realty").
                  Seller which is the lessee of each particular  piece of Leased
                  Realty  possesses a valid and  subsisting  leasehold  or other
                  interest in such Leased Realty pursuant to the leases or other
                  instruments set forth in Schedule 4.14(b) (the "Leases"). Each
                  Lease  is in full  force  and  effect  and  Sellers  have  not

                                       19
<PAGE>

                  received any  outstanding  notice of default from the landlord
                  under  any such  Lease.  There has not  occurred  any event of
                  default  under any Lease or any event  which,  with or without
                  lapse  of  time,   shall   constitute   an  event  of  default
                  thereunder.

         Section 4.15 Labor Matters.

                           (a) Schedule  4.15(a)  sets forth a complete  list of
                  all Employees.

                           (b) Except as set forth in Schedule 4.15(b),  Sellers
                  are not a party to (i) any collective  bargaining agreement or
                  similar  agreement  with any labor  organization  or  employee
                  association, or (ii) any other written employment contract.

                           (c)  Except  as set  forth in  Schedule  4.15(c),  no
                  grievance or  arbitration  proceeding  arising out of or under
                  any collective  bargaining  agreement is pending,  and no such
                  grievance or proceeding is threatened.

                           (d) Except as set forth in  Schedule  4.15(d),  since
                  January 1, 2001,  there has not been,  nor is there pending or
                  threatened,  (i) any labor  dispute  between  Sellers  and any
                  labor organization,  or any strike,  slowdown,  jurisdictional
                  dispute,  work  stoppage  or  other  similar  organized  labor
                  activity  involving  any  employee  of  Sellers  or  affecting
                  Sellers or (ii) any union  organizing,  or  election  activity
                  involving, any employee of Sellers.

                           (e) There  exists no pending or to the  Knowledge  of
                  Sellers,  threatened  lawsuit,  administrative  proceeding  or
                  investigation  between  Sellers  and  any  current  or  former
                  director,  officer or employee of Sellers, including any claim
                  for  wrongful  termination,   breach  of  express  or  implied
                  contract of employment  or for  violation of equal  employment
                  opportunity laws.

                           (f) Except as set forth in  Schedule  4.15(f),  there
                  exists no pending or, to the Knowledge of Sellers,  threatened
                  lawsuit, administrative proceeding or investigation of Sellers
                  or any employee thereof regarding  allegations of hostile work
                  environment, sexual discrimination or racial discrimination.

                           (g) All bonuses due and payable to any Employee as of
                  the Closing Date have been paid.

         Section 4.16  Insurance.  Set forth in Schedule  4.16 is a complete and
accurate  list of all  primary,  excess and umbrella  policies,  bonds and other
forms of  insurance  currently  owned or held by or on  behalf  of or  providing
insurance coverage to the Business.  All policies set forth in Schedule 4.16 are
in full force and effect and shall  remain in full force and effect  through the
Closing Date and no pending notice of default,  cancellation  or termination has
been received by Sellers with respect to any such policy.

                                       20
<PAGE>

         Section 4.17 Intellectual Property.

                  (a) Schedule  4.17(a) sets forth all of the  following  United
         States and  foreign  Business  Intellectual  Property:  (i) patents and
         patent  applications   (including   provisional   applications);   (ii)
         trademark  registrations and trademark  applications;  (iii) registered
         copyrights and applications for copyright registration; and (iv) domain
         names (the items set forth in the  forgoing  clauses (i) through  (iv),
         collectively,  the "Registered Intellectual  Property").  All necessary
         registration,  maintenance  and renewal  fees in  connection  with such
         Registered  Intellectual Property that have come due have been paid and
         all necessary maintenance and renewal documents in connection with such
         Registered  Intellectual  Property  that have come due have been  filed
         with  the  relevant  patent,   copyright,   trademark  or  domain  name
         authorities in the United States or foreign jurisdictions,  as the case
         may be, for the purposes of maintaining  such  Registered  Intellectual
         Property.

                  (b)  Schedule  4.17(b) sets forth any  proceedings  or actions
         before  any  court,  tribunal  challenging  the  validity  or  Sellers'
         ownership of any of the Registered Intellectual Property.

                  (c) Except as set forth on Schedule 4.17(c),  Sellers have not
         granted to any Person any rights in the Business Intellectual Property.

                  (d)  To  the  Knowledge  of  Sellers,  the  operation  of  the
         Business,  taken individually or as a whole, as such Business currently
         is  conducted,  does not infringe or  misappropriate  the  Intellectual
         Property of any other Person. Sellers have not received any notice from
         any Person that the provision of their respective  services,  infringes
         or misappropriates the Intellectual  Property of any Person.  Except as
         set forth on Schedule 4.17(d),  to the Knowledge of Sellers,  no Person
         is  infringing  or  misappropriating  any of the Business  Intellectual
         Property.

         Section  4.18  Taxes.  All Tax  Returns  required to have been filed by
Sellers with respect to the Business  have been filed,  and each such Tax Return
reflects the  liability for Taxes in all material  respects.  All Taxes shown on
such Tax Returns as owing have been (or will be) paid. There are no Liens on any
of the  Acquired  Assets that arose in  connection  with any failure (or alleged
failure) to pay any Tax, other than Permitted  Liens.  Sellers have withheld and
paid all  Taxes  required  to have been  withheld  and paid in  connection  with
amounts paid or owing to any third party in connection with the operation of the
Business.

         Section 4.19 Customer Relationships. To the Knowledge of Sellers, there
exists no condition,  state of facts or  circumstances  involving any customers,
suppliers, distributors or vendors of the Sellers (including airlines), that has
resulted in, or could be  reasonably  expected to result in, a Material  Adverse
Effect.

         Section 4.20  Customer  Deposits and  Pre-Paid  Expenses.  The customer
deposits and prepaid expenses of Sellers are reasonable in amount, were obtained
in the Sellers'  ordinary  course of business  and, to the Knowledge of Sellers,
can be used by Purchasers in the conduct of the Business  after the Closing Date
in substantially the same manner as conducted prior to the Closing Date.

                                       21
<PAGE>

         Section 4.21 Full Disclosure. None of the information contained in this
Agreement  (including  the  Schedules  and Exhibits  hereto) or in any Ancillary
Document to be  furnished  by any Seller (i)  contains an untrue  statement of a
material  fact as of the date when made or (ii) omits to state any material fact
necessary to be stated in order to make any other  statements  herein or therein
not misleading in light of the circumstances  under which they were made. Copies
of all  documents  referred to in any  Schedule  hereto have been  delivered  to
Purchasers  and are true,  correct and complete  copies  thereof,  including all
minutes, exhibits, schedules,  appendices,  supplements or modifications thereto
and all written waivers thereunder.

                                   ARTICLE V
                         REPRESENTATIONS AND WARRANTIES
                                  OF PURCHASERS

         Purchasers hereby represent and warrant,  jointly and severally,  as of
the date hereof, to each Seller as follows:

         Section  5.1  Organization.   Each  Purchaser  is  a  corporation  duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction  of its  incorporation  and has all requisite  corporate  power and
authority  to own,  lease and  operate all of its  properties  and assets and to
conduct its business as it is now being conducted.

         Section 5.2 Authority, Binding Effect.

                  (a) Each Purchaser has all requisite corporate power, capacity
         and  authority  to execute and deliver this  Agreement,  to perform its
         obligations  hereunder and to consummate the transactions  contemplated
         hereby.  The execution,  delivery and performance of this Agreement and
         the consummation of the transactions contemplated hereby have been duly
         authorized  by all  necessary  corporate  action  on the  part  of each
         Purchaser,  and no other corporate action on the part of such Purchaser
         or its  stockholders  is required to authorize the execution,  delivery
         and  performance  hereof,  and  the  consummation  of the  transactions
         contemplated   hereby.  This  Agreement  has  been  duly  executed  and
         delivered  by each  Purchaser  and  constitutes  the valid and  binding
         obligation of such  Purchaser,  enforceable  against such  Purchaser in
         accordance with its terms,  except that such enforcement may be subject
         to any bankruptcy, insolvency, reorganization, moratorium or other laws
         now or hereafter in effect  relating to or limiting  creditors'  rights
         generally and the remedy of specific  performance  and  injunctive  and
         other forms of equitable  relief may be subject to  equitable  defenses
         and to the  discretion  of  the  court  before  which  any  proceedings
         therefor may be brought.

                  (b)  Each  Purchaser  has  all  requisite  corporate,   power,
         capacity and authority to execute and deliver each  Ancillary  Document
         to which it is party,  to  perform  its  obligations  hereunder  and to
         consummate  the  transactions   contemplated   hereby.  The  execution,
         delivery  and   performance  of  such   Ancillary   Documents  and  the
         consummation  of the  transactions  contemplated  hereby have been duly
         authorized  by all  necessary  corporate  action  on the  part  of each
         Purchaser,  and no other corporate action on the part of such Purchaser
         or its  stockholders  is required to authorize the execution,  delivery
         and  performance  hereof,  and  the  consummation  of the  transactions
         contemplated  hereby.  At Closing,  such Ancillary  Documents will have

                                       22
<PAGE>

         been duly executed and delivered by each Purchaser and will  constitute
         the valid and binding obligation of such Purchaser, enforceable against
         such  Purchaser  in  accordance  with  its  terms,   except  that  such
         enforcement   may   be   subject   to   any   bankruptcy,   insolvency,
         reorganization,  moratorium  or other laws now or  hereafter  in effect
         relating to or limiting  creditors'  rights generally and the remedy of
         specific performance and injunctive and other forms of equitable relief
         may be subject to equitable defenses and to the discretion of the court
         before which any proceedings therefor may be brought.

         Section 5.3 No Violation; Consents and Approvals.

                  (a) The  execution  and  delivery  of this  Agreement  by each
         Purchaser  do  not,  and the  performance  of  this  Agreement  by such
         Purchaser and the consummation of the transactions  contemplated hereby
         will not, (i) conflict with or violate the certificate of incorporation
         or bylaws, in each case as currently in effect, of such Purchaser, (ii)
         conflict with or violate in any material respect any Laws applicable to
         such  Purchaser  or by or to which any of its  properties  or assets is
         bound or  subject,  or (iii)  result  in any  material  breach  of,  or
         constitute a material default (or an event that with notice or lapse of
         time or both would  constitute a material  default)  under,  or give to
         others   any  right  of   termination,   amendment,   acceleration   or
         cancellation of, or require payment under, or result in the creation of
         a Lien on any of the properties or assets of such Purchaser  under, any
         material  note,  bond,  mortgage,   indenture,   contract,   agreement,
         arrangement,  commitment,  lease, license,  permit,  franchise or other
         instrument or obligation to which such Purchaser is a party or by or to
         which such  Purchaser  or any of its  properties  or assets is bound or
         subject.

                  (b) The execution and delivery of each  Ancillary  Document to
         which it is party by each Purchaser do not, and the performance of such
         Ancillary  Documents  by such  Purchaser  and the  consummation  of the
         transactions contemplated hereby will not, (i) conflict with or violate
         the certificate of incorporation  or bylaws,  in each case as currently
         in effect,  of such  Purchaser,  (ii)  conflict  with or violate in any
         material  respect any Laws  applicable  to such  Purchaser  or by or to
         which any of its  properties  or assets is bound or  subject,  or (iii)
         result in any material breach of, or constitute a material  default (or
         an event that with notice or lapse of time or both would  constitute  a
         material  default)  under,  or give to others any right of termination,
         amendment,  acceleration or cancellation  of, or require payment under,
         or result in the creation of a Lien on any of the  properties or assets
         of such Purchaser under, any material note, bond, mortgage,  indenture,
         contract, agreement,  arrangement,  commitment, lease, license, permit,
         franchise or other  instrument or obligation to which such Purchaser is
         a party or by or to which such  Purchaser or any of its  properties  or
         assets is bound or subject.

                  (c)  The  execution  and  delivery  of this  Agreement  or any
         Ancillary  Document  by  Purchasers  do  not,  and the  performance  by
         Purchasers  of  this  Agreement  or  any  Ancillary  Document  and  the
         consummation of the transactions  contemplated  hereby and thereby will
         not, require any Purchaser to obtain any Consents from any Governmental
         Authority, or any third party.

                                       23
<PAGE>

         Section 5.4 Financial Sufficiency.  On and after the Closing Date, each
Purchaser  shall have such working capital as it deems  reasonably  necessary in
its sole  business  judgement to operate the Business as a going  concern and in
accordance with generally acknowledged sound business practices. Nothing in this
Section 5.4 shall  prohibit  any  Purchaser  from  terminating  any  contractual
relationship,  not  renewing  any Contract or other  agreement,  or  negotiating
modifications or otherwise  satisfying any Assumed  Liability for an amount less
than the entire amount of such Assumed Liability.

                                   ARTICLE VI
                                    COVENANTS

         Section 6.1 Conduct of Business.  Except as expressly permitted by this
Agreement or with the prior  written  consent of  Purchasers,  during the period
from the date hereof until the Closing Date,  Sellers shall conduct the Business
only in the ordinary course consistent with past practice (including maintaining
current  advertising  practices,  maintaining  salary levels as in effect on the
date hereof and refraining from hiring additional executive-level personnel) and
Sellers shall use commercially reasonable efforts to preserve intact its present
business  organization,  keep  available  the services of its present  officers,
employees  and  independent  contractors,  maintain the Acquired  Assets in good
condition and preserve its current  working  conditions and  relationships  with
customers, suppliers, creditors and business partners.

         Section 6.2 Bulk Transfer Laws. Each Purchaser hereby waives compliance
by Sellers with the provisions of any "bulk transfer law" of any jurisdiction in
connection  with the sale of the Acquired  Assets to  Purchasers;  provided that
such  Purchaser  shall be entitled to  indemnification  in connection  therewith
pursuant to Section 7.1(a).

         Section 6.3 Employees.

                  (a)  Purchasers  shall,  in the aggregate,  offer  employment,
         effective as of the Closing  Date,  to each  Employee  other than those
         listed on Schedule  6.3(a)  (whether  salaried  or hourly,  and whether
         full-time or part-time),  whether or not actively  employed on the date
         hereof  (e.g.,  including  Employees  on vacation and leave of absence,
         including maternity, family, sick or short-term disability leave). Each
         Employee  who  accepts  an  offer of  employment  from a  Purchaser  is
         hereinafter referred to as a "Transferred Employee".

                  (b) It is hereby  acknowledged  and  agreed  that the  Sellers
         shall  have no  liability  of any type or  nature  in  relation  to any
         Transferred  Employee or any  Employee  who does not accept an offer of
         employment from a Purchaser made pursuant to Section 6.3(a), other than
         any such  liabilities  arising  prior to the Closing Date and which are
         not  subject  to  indemnification  by  Purchasers  as set  forth in the
         following sentence.  Purchasers hereby agree, jointly and severally, to
         indemnify and hold  harmless  Sellers from any payments with respect to
         claims  for  severance,  bonus,  accrued  vacation,  or other  employee
         benefit  obligations  imposed  upon,  incurred  or  suffered by Sellers
         arising out of or relating  to (i) any  Employee  who does not does not
         accept an offer of employment from a Purchaser made pursuant to Section
         6.3(a)  (including  any claims  thereby for severance  payments,  bonus

                                       24
<PAGE>

         payments,  accrued vacation payments or benefits payments) and (ii) any
         of  Purchasers'  actions  with  regard  to  any  Transferred   Employee
         (including termination of employment thereof).

                  (c) Each Purchaser  hereby  acknowledges  and understands that
         Sellers  have issued  notice  under the  applicable  California  Worker
         Adjustment  and  Retraining  Notification  requirements  (Assembly Bill
         2957, Chapter 4, Part 4, Sections 1400-1408,  California Labor Code) on
         October 1, 2003  applicable  to a sixty (60) day period from such date.
         Each Purchaser hereby  acknowledges and agrees that the issuance of the
         notice referred to in the foregoing sentence and the legal requirements
         resulting therefrom do not constitute a Material Adverse Effect.

         Section 6.4 Further  Assurances.  From and after the Closing Date, each
party hereto shall take all actions (including  Sellers (i) granting  Purchasers
access to such books and records of Sellers for the period  prior to the Closing
Date as are necessary to allow  Purchasers to comply with applicable  securities
laws and  accounting  issues and (ii) providing  assistance to, and  cooperation
with, Purchasers in order to effect the full and legal transfer to Purchasers of
all of the  Sellers'  notes  payable  and the  Surety  Bonds)  and  execute  all
documents and instruments as may be reasonably necessary or appropriate in order
to carry out the purposes of this Agreement.

         Section 6.5 Confidentiality; Tax Disclosure.

                  (a) The  Confidentiality  Agreement,  dated as of September 2,
         2003,  between Travel  Services  International,  Inc. and ECG is hereby
         terminated and replaced by the provisions of Section 6.5(b).

                  (b) From and after the Closing,  Sellers shall,  and shall use
         reasonable  efforts  to  cause  its  Affiliates  and  their  respective
         officers,   directors,   employees  and  advisors  (collectively,   the
         "Recipients")  to, keep  confidential  any information  relating to the
         Business,  except for any such information that (i) is available to the
         public on the Closing Date,  (ii) thereafter  becomes  available to the
         public  other  than as a result of a  disclosure  by  Sellers or any of
         their Recipients, or (iii) is or becomes available to Sellers or any of
         their  Recipients  on a  non-confidential  basis from a source  that to
         Sellers'  or  such   Recipient's   knowledge  is  not  prohibited  from
         disclosing  such  information  to Sellers or such Recipient by a legal,
         contractual or fiduciary obligation to any other Person; provided, that
         nothing  contained in this Section 6.5(b) shall  prohibit  Sellers from
         disclosing any  information in connection with any Action by or against
         Sellers  or any of  their  Affiliates.  Should  a  Seller  or any  such
         Recipient be required to disclose any such information in response to a
         Governmental  Order or as otherwise  required by Law or  administrative
         process,  it shall inform the  Purchasers in writing of such request or
         obligation as soon as possible after Sellers are informed of it and, if
         possible,  before any  information  is disclosed,  so that a protective
         order or other appropriate remedy may be obtained by the Purchasers. If
         a Seller or such  Recipient is obligated  to make such  disclosure,  it
         shall  only  make  such  disclosure  to the  extent  to  which it is so
         obligated, but not further or otherwise.

                                       25
<PAGE>

                  (c)  Anything  herein to the  contrary  notwithstanding,  each
         party hereto (and each employee,  representative, or other agent of any
         party hereto) may disclose to any and all persons,  without  limitation
         of any kind,  the Federal  income tax treatment and Federal  income tax
         structure  of any and all  transaction(s)  contemplated  herein and all
         materials of any kind  (including  opinions or other tax analyses) that
         are  or  have  been   provided  to  any  party  (or  to  any  employee,
         representative,  or other  agent  of any  party)  relating  to such tax
         treatment or tax structure,  provided, however, that this authorization
         of disclosure shall not apply to restrictions  reasonably  necessary to
         comply with  securities  laws.  This  authorization  of  disclosure  is
         retroactively  effective  immediately  upon  commencement  of the first
         discussions  regarding the transactions  contemplated  herein,  and the
         parties aver and affirm that this tax disclosure authorization has been
         given on a date which is no later than  thirty (30) days from the first
         day that any party hereto (or any  employee,  representative,  or other
         agent of any party hereto) first made or provided a statement as to the
         potential  tax  consequences  that may  result  from  the  transactions
         contemplated hereby.

         Section 6.6 Notification of Certain Matters.  Sellers shall give prompt
notice to Purchasers, and Purchasers shall give prompt notice to Sellers, of the
occurrence, or non-occurrence,  of any event the occurrence or non-occurrence of
which would be reasonably  likely to cause any Seller or any  Purchaser,  as the
case may be,  to fail to comply  with or  satisfy  any  covenant,  condition  or
agreement to be complied with or satisfied by it hereunder;  provided,  however,
that the delivery of any notice  pursuant to this Section 6.6 shall not limit or
otherwise  affect the remedies  available  hereunder to the party receiving such
notice.

         Section  6.7  Access  to  Books  and  Records  Following  the  Closing.
Following  the Closing,  Purchasers  shall permit  Sellers and their  authorized
representatives,  during normal  business hours and upon reasonable  notice,  to
have reasonable access to, and examine and make copies of, all books and records
which  relate  to  transactions  or events  occurring  prior to the  Closing  or
transactions or events occurring  subsequent to the Closing which are related to
or arise out of transactions or events occurring prior to the Closing.

         Section  6.8 Change of Name.  Within  thirty  (30) days  following  the
Closing  Date,  each  Seller  shall (i) file an  amendment  to its  articles  of
incorporation in order to change its name as may be requested by Purchasers to a
name dissimilar to "Vacation Express", "SunTrips" or any other similar name (ii)
assign or  otherwise  transfer to FS Tours to the extent  legally  possible  and
commercially  practicable  the  filings  relating  to VE  Holdings'  conduct  of
business under the name "Vacation Express".  Each Seller shall do or cause to be
done all other  acts,  including  without  limitation  the  payment  of any fees
required in  connection  with such change of name,  to cause such  amendments to
become effective in its state of incorporation or formation and all other states
in which such Seller is qualified to transact business.  After the Closing Date,
neither Seller nor any of its Affiliates  shall transact  business as, or use in
the conduct of its  businesses or  otherwise,  the names  "Vacation  Express" or
"SunTrips" or any other similar name.

         Section 6.9 MyTravel  Names.  After the Closing,  Purchasers  will not,
directly or indirectly use or do business  under, or allow any of its respective
Affiliates or subsidiaries to use or do business under,  any trademark,  service
mark,  brand name or trade,  corporate or business name  consisting  of, derived
from,  including  or  incorporating  any  of the  MyTravel  Names  or any  other

                                       26
<PAGE>

trademark,  service  mark,  brand  name or trade,  corporate  or  business  name
confusingly  similar to any of the MyTravel Names. No later than forty-five (45)
days after the  Closing,  Purchasers  shall  have  removed  or  obliterated  all
trademarks,  service  marks,  brand names or trade,  corporate or business names
consisting  of,  derived from,  including or  incorporating  any of the MyTravel
Names that are contained in or on any of the Acquired Assets, other than printed
brochures existing as of the Closing Date.

         Section 6.10 Non-Competition; Non-Solicitation.

                  (a)  For  the  longer  of (A) a  period  of  three  (3)  years
         commencing  on the  Closing  Date  and  (B) the  term  of the  Purchase
         Agreement Supplement, none of Sellers, MyTravel, MyTravel Canada or any
         of their  subsidiaries  or Affiliates  shall directly or indirectly (i)
         engage in competition  with Purchasers  using the same gateways used by
         Sellers as of the Closing Date or (ii) have an  ownership  interest in,
         any person, firm, corporation,  association or other enterprise that is
         directly or indirectly  engaged in conducting public charter operations
         using the same  gateways  used by Sellers as of the  Closing  Date (the
         "Restricted  Activity");  provided,  however, that nothing contained in
         this Section 6.10 shall prohibit Sellers, MyTravel,  MyTravel Canada or
         any of their  subsidiaries or Affiliates from owning, in the aggregate,
         (x) three  percent (3%) or less of any class of capital  stock or other
         equity interest of any company engaged in any Restricted  Activity that
         has securities listed on a national or regional  securities exchange or
         traded in the  over-the-counter  market or (y) one percent (1%) or less
         of any class of capital  stock or other  equity  interest  of any other
         business enterprise engaged in any Restricted  Activity.  In connection
         with the  foregoing,  (i) each  Purchaser  hereby  represents  that the
         limitations  set forth herein are reasonable and are properly  required
         for the adequate  protection  of the Business and (ii) each of Sellers,
         MyTravel  and MyTravel  Canada  hereby  acknowledges  and agrees to the
         foregoing.

                  (b)  For  the  longer  of (A) a  period  of  three  (3)  years
         commencing  on the  Closing  Date  and  (B) the  term  of the  Purchase
         Agreement Supplement, none of Sellers, MyTravel, MyTravel Canada or any
         of their subsidiaries or Affiliates shall directly or indirectly induce
         or attempt to induce any  Transferred  Employee or other  employee of a
         Purchaser  to  leave  the  employ  of  such  Purchaser,  or in any  way
         interfere  with  the  relationship   between  such  Purchaser  and  any
         Transferred Employee or other employee thereof.

         Section  6.11 Stub  Period  Financial  Statements.  After the  Closing,
Sellers  shall  deliver to  Purchasers  financial  statements of Sellers for the
period commencing on October 1, 2003 and ending October 31, 2003, as prepared by
Sellers in  accordance  with GAAP and  delivered at such time,  containing  such
information,  and  presented  in such format as is in  accordance  with  Sellers
ordinary  course  business  practice  prior to the  Closing  Date with regard to
delivery of monthly financial statements.

         Section 6.12 Credit Card Processing. During the period between the date
hereof and the Closing Date, Sellers shall be responsible for conducting, and/or
ensuring the conduct of, all credit card processing relating to the Business.

                                       27
<PAGE>

                                  ARTICLE VII
                      INDEMNIFICATION OBLIGATIONS; SURVIVAL

         Section 7.1 Agreements to Indemnify.

                  (a) Subject to the terms and  conditions  of this Article VII,
         from and  after the  Closing,  each of  Sellers  and  MyTravel  Canada,
         jointly and severally,  shall indemnify,  defend and hold harmless each
         Purchaser, its Affiliates,  and each of their respective successors and
         permitted assigns,  directors,  officers,  employees,  representatives,
         agents, Affiliates and associates (collectively, the "Purchaser Group")
         from and against any and all losses, liabilities of any kind or nature,
         expenses  (including  reasonable  attorneys' fees),  claims and damages
         (collectively,  "Damages")  imposed upon or incurred or suffered by the
         Purchaser Group, or any one of them,  arising out of, relating to or in
         connection  with  (i)  any  breach  of  any  representation,  warranty,
         covenant or agreement of either Seller contained in or made pursuant to
         this Agreement or any Ancillary Document,  (ii) any Excluded Liability,
         (iii) the  Litigation  set forth on Schedule  4.4,  (iv) any claim made
         against a Purchaser by any creditor of, or claimant against, Sellers as
         a result of the waiver  granted by such  Purchaser  in Section 6.2, and
         (v) all costs  pertaining  to the  DC-10  aircraft  referred  to in the
         Charter  Agreement,  dated  as  of  December  12,  1997,  between  Ryan
         International Airlines and Sunquest Holdings, U.S.A., Inc., in the case
         of each of clauses (i) through (v) above, whether asserted by one party
         hereto against another or by a third party.

                  (b) Subject to the terms and  conditions  of this Article VII,
         from and after the Closing,  Purchasers,  jointly and severally,  shall
         indemnify, defend and hold harmless Sellers, their Affiliates, and each
         of their respective successors and permitted assigns, and each of their
         respective directors,  officers,  employees,  representatives,  agents,
         Affiliates and associates  (collectively,  the "Seller Group") from and
         against  any and all  Damages  imposed  upon or incurred or suffered by
         Seller  Group,  or any one of them,  arising out of,  relating to or in
         connection  with  (i)  any  breach  of  any  representation,  warranty,
         covenant or agreement of any Purchaser contained in or made pursuant to
         this Agreement or any Ancillary  Document,  (ii) any Assumed  Liability
         and (iii) the employee benefit obligations described in Section 6.3(b),
         in the  case  of each of  clauses  (i)  through  (iii)  above,  whether
         asserted by one party hereto against another or by a third party.

         Section 7.2 Third Party Claims  Procedures.  If any Person other than a
party hereto shall assert a claim (each, a "Third Party Claim")  against or with
respect to a party entitled to  indemnification  pursuant to this Agreement (the
"Indemnified  Party"),  then such Indemnified  Party shall notify the party from
whom  indemnification  is sought  (the  "Indemnifying  Party") in writing of the
Third Party Claim within a  reasonable  time after  receipt by such  Indemnified
Party of written notice of such Third Party Claim;  provided,  however, that the
failure to give such  notice  shall not relieve  the  Indemnifying  Party of its
obligations  hereunder  except  to the  extent  that the  Indemnifying  Party is
prejudiced  by such  failure to give  notice.  The notice (i) shall  state (with
reasonable  specificity) the basis on which  indemnification  is being asserted,
(ii) shall set forth the amount of Damages  for which  indemnification  is being
asserted and (iii) in the case of third party claims,  shall be  accompanied  by
copies  of all  relevant  pleadings,  demands  and  other  papers  served on the
Indemnified Party. Each Indemnifying  Party shall, at its own expense,  have the

                                       28
<PAGE>

right to defend, contest or otherwise protect against any Third Party Claim, and
each  Indemnifying  Party shall receive from the Indemnified Party all necessary
and reasonable  cooperation in said defense  including,  but not limited to, the
services  of  employees  of the  Indemnified  Party  who are  familiar  with the
transactions  out of which  any such  Third  Party  Claim may have  arisen.  The
Indemnifying Party shall have the right to control the defense of any such Third
Party Claim unless it is relieved of its liability  hereunder by the Indemnified
Party. The Indemnifying  Party shall have the right, at its option,  and, unless
so relieved, to compromise or defend, at its own expense by its own counsel, any
such Third Party Claim  involving  monetary  damages but may not  compromise  or
settle any  matter  involving  equitable  or  injunctive  recourse  against  the
Indemnified  Party without such party's written  consent.  In the event that the
Indemnifying  Party shall undertake to compromise or defend any such Third Party
Claim, it shall promptly notify the Indemnified Party of its intention to do so,
and in any event  shall not  settle or  compromise  any such Third  Party  Claim
unless in so settling or compromising the Indemnified  Party is  unconditionally
released from liability therefor. In the event that an Indemnifying Party, after
written notice from an Indemnified  Party, fails to take timely action to defend
a Third Party Claim,  the  Indemnified  Party shall have the right to defend the
same  by  counsel  of its own  choosing,  but at the  cost  and  expense  of the
Indemnifying  Party.  In the event that the  Indemnified  Party  defends a Third
Party  Claim,  it shall not  compromise  any such Third Party Claim  without the
written consent of the Indemnifying  Party,  such consent not to be unreasonably
withheld or delayed.

         Section 7.3 Limitation of Liability.

                  (a)    Anything   in   this    Agreement   to   the   contrary
         notwithstanding,   in  no  event  will  the  aggregate  amount  of  the
         Indemnifying  Party's obligations pursuant to Section 7.1 hereof exceed
         an amount equal to Ten Million Dollars ($10,000,000).

                  (b) The obligations set forth in Section 7.1 will be effective
         as to any Indemnifying  Party only after the aggregate amount for which
         such  Indemnifying  Party is liable  under  such  Section  exceeds  One
         Hundred Thousand Dollars ($100,000) and then only in the amount of such
         excess.

                  (c) Sections  7.3(a) and 7.3(b) shall not be applicable to (i)
         the  obligations to indemnify  under Section  7.1(a)(ii),  7.1(a)(iii),
         7.1(a)(iv), 7.1(a)(v), 7.1(b)(ii), and Section 7.1(b)(iii) and (ii) any
         obligation to indemnify for breaches of Sections 4.2, 4.4, 4.10,  4.13,
         4.18 and Section 6.10.

                  (d) Notwithstanding anything herein to the contrary,  payments
         by the  Indemnifying  Party pursuant to Section 7.1 shall be limited to
         the amount of Damages,  if any, that remains after deducting  therefrom
         any insurance proceeds and any indemnity, contribution or other similar
         payment  actually  recovered by the Indemnified  Parties from any third
         party with respect  thereto;  provided,  however,  that nothing in this
         Section  7.3(d) shall require that an  Indemnified  Party seek recovery
         under any insurance policy.

                  (e)   Anything   in   this   Section   7.3  to  the   contrary
         notwithstanding,   in  no  event  shall  Sellers,  MyTravel  Canada  or
         Purchasers be liable for punitive,  consequential,  special,  indirect,

                                       29
<PAGE>

         incidental  or  exemplary  damages,  whether  for  lost  profits,  lost
         revenues, injury to property, injury to reputation,  loss of data, loss
         of use or otherwise.

                  Section  7.4  Method  of  Payment;   Treatment   of  Indemnity
         Benefits.

                  (a) Each payment made by Sellers and/or  MyTravel Canada to or
         for  the  benefit  of  a  Purchaser  pursuant  to  any  indemnification
         obligations  under this Agreement shall be made, at Sellers'  election,
         either (i) in cash or (ii) by decreasing the amount outstanding at such
         time  under the  Purchase  Price  Note by the  amount of such  payment;
         provided,   however,  that  notwithstanding  the  foregoing,  all  such
         payments   with  respect  to   indemnification   pursuant  to  Sections
         7.1(a)(iii),  7.1(a)(iv) and 7.1(a)(v) and indemnification for breaches
         of Sections 4.2, 4.4, 4.10, 4.13 and 4.18 shall be made in cash.

                  (b) Each  payment made by a Purchaser to or for the benefit of
         Sellers  pursuant  to  any   indemnification   obligations  under  this
         Agreement  shall be made by increasing  the amount  outstanding at such
         time under the Purchase Price Note by the amount of such payment.

                  (c) All payments made by Sellers or MyTravel  Canada to or for
         the benefit of a Purchaser or by  Purchasers to or for the benefit of a
         Seller pursuant to any indemnification obligations under this Agreement
         shall be treated as adjustments to the Purchase Price for Tax purposes,
         unless otherwise required by applicable Law.

         Section 7.5 Exclusive Remedy.  The parties hereto acknowledge and agree
that, except (i) with regard to fraud or intentional  misrepresentation and (ii)
the remedies of specific  performance or injunctive or other  equitable  relief,
the sole and exclusive  remedy of the  Indemnified  Parties,  from and after the
Closing  with  respect  to  Damages  and any and all  claims  for any  breach or
liability under this Agreement,  the Ancillary Documents or any other agreement,
instrument or  certificate  executed or entered into in  connection  herewith or
otherwise  relating  to the  subject  matter of this  Agreement,  the  Ancillary
Documents or the transactions  contemplated hereby or thereby shall be solely in
accordance  with,  and limited by, the  indemnification  provisions set forth in
this Article VII. In  furtherance  of the  foregoing,  the parties hereto hereby
waive on their own  behalf and on behalf of each  other  applicable  Indemnified
Party, to the fullest extent permitted under applicable Law, any and all rights,
claims  and  causes  of  action it or they may have  against  the other  parties
hereto, arising under or based upon any Law.

         Section 7.6 Survival.  The representations,  warranties,  covenants and
agreements made by any party and contained in or made pursuant to this Agreement
or any Ancillary Document shall survive the Closing; provided, however that such
representations  and warranties  shall expire on the date which is eighteen (18)
months after the Closing  Date;  provided,  further,  that  notwithstanding  the
foregoing,  (i) Section 6.10 shall survive in accordance with the terms thereof,
(ii) the representations and warranties  contained in Section 4.13 shall survive
the  Closing  and expire on the date which is eight (8) years  after the Closing
Date, (iii) the  representations  and warranties  contained in Section 4.4 shall
survive  the  Closing  and expire on the date which is three (3) years after the
Closing Date and (iii) the representations  and warranties  contained in Section

                                       30
<PAGE>

4.18 shall survive to the end of the statutes of limitations applicable thereto;
provided,  further,  that any  representation  or warranty which is fraudulently
given shall not be subject to any  limitation  contained  in this  Section  7.6.
Notwithstanding  the foregoing,  if written notice is properly given pursuant to
this  Article  VII with  respect  to any  alleged  breach  of a  representation,
warranty,  covenant  or  agreement  to  which  such  party  is  entitled  to  be
indemnified hereunder prior to the expiration of such representation,  warranty,
covenant or agreement shall survive,  with respect to the subject matter of such
written  notice  only,  until  the  applicable  claim  is  finally  resolved  in
accordance with the provisions of this Article VII.

                                  ARTICLE VIII
                       CONDITIONS TO CLOSING; TERMINATION

         Section 8.1 Mutual  Conditions to the  Obligations of the Parties.  The
respective  obligations  of each party  hereto to  consummate  the  transactions
contemplated  by this Agreement are subject to the  satisfaction or waiver at or
prior to the  Closing of the  condition  that no  temporary  restraining  order,
preliminary or permanent injunction or other judgment, order or decree issued by
a court  of  competent  jurisdiction  which  prevents  the  consummation  of the
transactions  contemplated  hereby  shall have been issued and remain in effect,
and no statute,  rule or  regulation  shall have been  enacted,  promulgated  or
enforced  by any  Governmental  Authority  which makes the  consummation  of the
transactions  contemplated  hereby  illegal;  provided,  that the parties hereto
shall use their  reasonable  best efforts to have any  temporary or  preliminary
order or injunction lifted.

         Section 8.2 Conditions to the Obligations of Purchasers. The obligation
of Purchasers to consummate the  transactions  contemplated by this Agreement is
subject  to the  satisfaction  at or  prior  to  the  Closing  of the  following
conditions  (unless  waived,  to the extent  permitted  by  applicable  Law,  by
Purchasers):

                  (a)  Representations  and Warranties.  The representations and
         warranties of Sellers contained in Article IV shall be true and correct
         in all material respects as of the Closing Date.

                  (b) Performance.  Sellers shall have performed and complied in
         all material  respects with all agreements,  conditions,  covenants and
         obligations required by this Agreement to be performed or complied with
         by Sellers on or prior to the Closing Date.

                  (c) No Change of Circumstances. There shall not have occurred,
         during the period  between the date hereof and the  Closing  Date,  any
         circumstance or event constituting a Material Adverse Effect.

                  (d) Consents.  All Consents to assignment  required  under the
         Contracts set forth on Schedule  8.2(d) shall have been obtained (other
         than with regard to any Leases  subject to Section 8.7);  provided that
         no change shall be required to any of such  Contracts as a  consequence
         of  obtaining  such  Consents  unless such change has been  approved in
         advance  by  Purchasers  or any  other  condition  which  would  have a
         Material Adverse Effect on Purchasers or the Business as proposed to be
         conducted by Purchasers as of the Closing Date.

                                       31
<PAGE>

         Section 8.3 Conditions to the Obligations of Sellers. The obligation of
Sellers to consummate the transactions contemplated by this Agreement is subject
to the  satisfaction  at or prior to the  Closing  of the  following  conditions
(unless waived, to the extent permitted by applicable Law, by Sellers):

                  (a)  Representations  and Warranties.  The representations and
         warranties  of  Purchasers  contained  in  Article  V shall be true and
         correct in all material respects as of the Closing Date.

                  (b) Performance.  Purchasers shall have performed and complied
         in all material respects with all agreements, conditions, covenants and
         obligations required by this Agreement to be performed or complied with
         by Purchasers on or prior to the Closing Date.

         Section 8.4  Termination.  This  Agreement  may be  terminated  and the
transactions  contemplated  hereby  may be  abandoned  at any time  prior to the
Closing:

                  (a) by mutual written agreement of Purchasers and Sellers; or

                  (b) at any time after  November  5, 2003 by  Purchasers  or by
         Sellers,  by giving  written  notice of such  termination  to the other
         parties,  if the  Closing  shall not have  occurred on or prior to such
         date (unless the failure to  consummate  the Closing by such date shall
         be due to or have  resulted from any breach of the  representations  or
         warranties made by, or the failure to perform or comply with any of the
         agreements  or covenants  hereof to be performed or complied with prior
         to the Closing by, the party seeking to terminate this Agreement).

         Section 8.5 Effect of  Termination.  In the event of the termination of
this  Agreement in  accordance  with Section 8.4 hereof,  this  Agreement  shall
thereafter  become  void and have no effect  and the  transactions  contemplated
hereby shall be  abandoned,  and no party hereto will have any  liability to the
other  party  hereto or their  respective  Affiliates,  directors,  officers  or
employees,  except for the  obligations of the parties hereto  contained in this
Section 8.5 and in Section 6.5,  Section 8.6 and Sections  9.1,  9.7,  9.8. 9.9,
9.13,  9.14 and 9.18, and except that nothing herein will relieve any party from
liability for an intentional  breach of any provision of this Agreement or limit
or restrict the rights or remedies of any party  hereto  against the other party
for any breach of this  Agreement,  subject only to the  limitation set forth in
Section 8.6.

         Section 8.6 Closing Failure Fee. In the event that the Closing does not
occur on or prior to October 31, 2003 for any reason  (other than the failure of
Sellers to satisfy,  or obtain a waiver of, any of the conditions to the Closing
set forth in Section 8.2), Purchasers shall, within ten (10) Business Days, have
the joint and  several  obligation  to pay to  Sellers a fee  consisting  of the
transfer  from  Purchasers  or an  Affiliate  thereof to MyTravel  Canada of Two
Hundred Fifty Thousand (250,000)  restricted shares of common stock of Lifestyle
Innovations,  Inc. (otcbb: LFSI.OB). The fee described in this Section 8.6 shall
not restrict or preclude  Sellers  from  asserting  monetary  breach of contract
claims pursuant to this Agreement;  provided, however, that any damages asserted
against  Purchasers in connection  with such claims shall be limited to damages,

                                       32
<PAGE>

if any,  that remain after  deducting  therefrom  any  insurance  proceeds  with
respect thereto. Sellers and MyTravel shall have a duty to take all commercially
reasonable actions to mitigate any and all such damages.

         Section 8.7 Third Party Real  Estate  Consents.  To the extent that any
Lease is not  assignable  without  the  consent,  waiver or  approval of another
Person and such consent,  waiver or approval has not been obtained  before or at
the Closing,  this Agreement  shall not constitute an assignment or an attempted
assignment  of such  Lease  by the  applicable  Seller  or an  assumption  or an
attempted  assumption  of such Lease by any  Purchaser.  Sellers shall use their
commercially  reasonable efforts to obtain such consents,  waivers and approvals
with regard to each Lease as soon as  practicable  following the date hereof and
Purchasers  shall  cooperate  with and assist  Sellers to this end to the extent
commercially  reasonable.  If any such consent,  waiver or approval shall not be
obtained  with regard to such Lease  before or at the  Closing,  then until such
consent, waiver or approval is obtained, Sellers shall cooperate with Purchasers
in any reasonable  arrangement (including  indemnification)  designed to provide
the  applicable  Purchaser  with the  benefits  intended  to be assigned to such
Purchaser with respect to the underlying  Lease,  including  enforcement for the
account of such  Purchaser of any and all rights of the Seller against any other
party to such Lease arising out of the breach,  nonfulfillment  or  cancellation
thereof by such other party or otherwise.

         Section  8.8 No  Multiple  Materiality  Qualifiers.  To the  extent any
representation, warranty or covenant in this Agreement is qualified by reference
to materiality (including any qualification related to a Material Adverse Effect
or to a  particular  level or extent of  permissible  deviation  from a standard
(including  deviation  from  the  absolute)),   no  corresponding  reference  to
materiality  or  permissible  deviation  from a  standard  in  these  conditions
precedent or in Article VII shall be of any effect.

                                   ARTICLE IX
                                     GENERAL

         Section 9.1  Notices.  All notices and other  communications  hereunder
shall be in writing  and shall be deemed  given if  delivered  personally  or by
Federal Express (or other internationally recognized courier), to the parties at
the  following  addresses  (or at such  other  address  for a party  as shall be
specified by like notice):

                  To either Seller
                  MyTravel, or
                  MyTravel Canada: c/o MyTravel Group plc
                                   Parkway One
                                   Parkway Business Centre
                                   300 Princess Road
                                   Manchester, M14 7QU
                                   United Kingdom
                                   Attn:  Greg McMahon, Group Company Secretary
                                   Fax:  44-161-232-6909

                                       33
<PAGE>

                  with a copy to:  Morgan, Lewis & Bockius LLP
                                   101 Park Avenue
                                   New York, New York 10178
                                   Attn: Paul M. Vogt
                                   Fax:  212-309-6273

                  To either
                  Purchaser:       FS Tours, Inc.  or
                                   FS SunTours, Inc.
                                   2970 Clairmont Road, Suite 280
                                   Atlanta, Georgia 30329
                                   Attn: Kent Elsbree
                                   Fax: (770) 986-9792

                  with a copy to:  Adorno & Yoss, P.A.
                                   350 East Las Olas Boulevard
                                   Suite 1700
                                   Fort Lauderdale, Florida 33301
                                   Attn: Joel D. Mayersohn, Esq.
                                   Fax: (954) 766-7800

         Any notice  that is  delivered  personally  or by courier in the manner
provided  herein shall be deemed to have been duly given to the party to whom it
is directed upon receipt by such party in the case of personal delivery, or upon
receipt of delivery thereof in the case of delivery by courier.

         Section 9.2 Amendment,  Waiver.  Any provision of this Agreement may be
amended or waived if, and only if,  such  amendment  or waiver is in writing and
signed, in the case of an amendment,  by Purchasers,  each Seller and each other
party  against which such  amendment is to be effective and enforced,  or in the
case of a waiver,  by the party against whom the waiver is to be  effective.  No
failure  or delay by any  party in  exercising  any  right,  power or  privilege
hereunder  will  operate  as a waiver  thereof  nor will any  single or  partial
exercise  thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.

         Section 9.3  Assignment.  No party to this  Agreement may assign any of
its rights or obligations under this Agreement without the prior written consent
of the other parties  hereto;  provided that each of Purchasers  and Sellers may
assign their rights or obligations under this Agreement to an Affiliate thereof.
Any assignment in contravention of this provision is void.

         Section 9.4 Entire  Agreement.  This Agreement  amends and restates the
Original  Agreement in its entirety and supercedes the Original Agreement in all
respects.  This Agreement (including all Schedules and Exhibits hereto) contains
the entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings,  oral or written,
with respect to thereto.

         Section 9.5 Fulfillment of Obligations.  Any obligation of any party to
any other party under this Agreement,  which obligation is performed,  satisfied
or  fulfilled  by an  Affiliate  of such  party,  will be  deemed  to have  been
performed, satisfied or fulfilled by such party.

                                       34
<PAGE>

         Section  9.6  Parties in  Interest.  This  Agreement  will inure to the
benefit  of  and be  binding  upon  the  parties  hereto  and  their  respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is  intended to confer  upon any Person  other than the parties  hereto or their
successors or permitted  assigns,  any rights or remedies  under or by reason of
this Agreement,  other than any Person entitled to indemnification under Article
VII.

         Section 9.7 Expenses.  Except as otherwise  expressly  provided in this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions  contemplated  hereby  (including all fees and disbursements of
financial  advisors,  counsel  and  accountants)  shall be  borne  by the  party
incurring such expenses.

         Section  9.8  Brokers.  The fees of any  broker,  finder or  investment
banker  hired by any party  hereto or any of such  party's  Affiliates  shall be
borne by such party.

         Section 9.9  Governing  Law.  This  Agreement  is to be governed by and
construed in accordance  with the laws of the State of Delaware  without  giving
effect to the choice of law provisions thereof.

         Section 9.10 Counterparts.  This Agreement may be executed by facsimile
and in one or more counterparts,  each of which shall be deemed an original, but
all of which together shall constitute but one and the same instrument.

         Section 9.11 Headings.  The heading  references herein and in the table
of contents hereto are for  convenience  purposes only, do not constitute a part
of this  Agreement  and  shall  not be  deemed  to  limit or  affect  any of the
provisions hereof.

         Section 9.12 Disclosure  Schedules.  Disclosure of any matter in any of
such Schedules  shall not constitute an expression of a view that such matter is
material or is  required to be  disclosed  pursuant  to this  Agreement.  To the
extent that any  representation  or warranty in Article IV of this  Agreement is
qualified by  materiality  or "Material  Adverse  Effect",  the inclusion of any
matter in any  Schedule in Article IV of this  Agreement  does not  constitute a
determination by any Seller that any such matter is material.

         Section 9.13 Specific Performance.  Each party hereto acknowledges that
money  damages would be both  incalculable  and an  insufficient  remedy for any
breach of this  Agreement by such party and that any such breach would cause the
other party hereto irreparable harm. Accordingly,  each party hereto also agrees
that, in the event of any breach or threatened  breach of the provisions of this
Agreement  by such party,  the other party hereto shall be entitled to equitable
relief without the requirement of posting a bond or other security, including in
the form of injunctions and orders for specific performance.

         Section  9.14  Publicity.  Each party hereto shall not, and shall cause
each of their  Affiliates  not to issue or make,  or allow to be issued or made,
any  press  release  or  public   announcement   concerning   the   transactions
contemplated  by this Agreement  without the prior written  consent of the other
party hereto, except as otherwise required by applicable Law or the rules of any
applicable  stock  exchange,  but in any event only after giving the other party
hereto a reasonable  opportunity to comment on such release or  announcement  in
advance, consistent with such applicable legal requirements.

                                       35
<PAGE>

         Section 9.15  Severability.  If any term or provision of this Agreement
or the application  thereof to any situation or circumstance shall be held to be
invalid or unenforceable,  the remainder of this Agreement or the application of
such term or provision to  situations  or  circumstances  other than those as to
which it shall  have  been held to be  invalid  or  unenforceable,  shall not be
affected  and  such  remaining  terms  of this  Agreement  shall be valid to the
fullest  extent  permitted by applicable  law. In addition,  the parties  hereto
shall in good faith  endeavor to reach  agreement  on a provision to replace the
invalid  provision which, as nearly as possible,  will reflect the intent of the
original provision.

         Section 9.16 Rules of Construction.  The parties hereto agree that they
have been  represented  by  counsel  during  the  negotiation,  preparation  and
execution of this Agreement and,  therefore,  waive the  application of any law,
regulation,  holding or rule of  construction  providing that  ambiguities in an
agreement or other  document will be construed  against the party  drafting such
agreement or document.

         Section   9.17   Representations   and   Warranties   Exclusive.    The
representations,   warranties,  covenants  and  agreements  set  forth  in  this
Agreement,  the Ancillary Documents and the Financial Information constitute all
of the  representations,  warranties,  covenants  and  agreements of the parties
hereto  and  their  respective  shareholders,  directors,  officers,  employees,
affiliates,  advisors  (including  financial,  legal and  accounting  advisors),
agents and  representatives  and upon which the parties have relied. The parties
expressly disclaim any implied warranties.  In particular,  and without limiting
the generality of the foregoing,  each  Purchaser  acknowledges  and agrees that
except as expressly  contemplated hereby, in making its decision to purchase the
Acquired Assets and assume the Assumed Liabilities, it is not relying on (a) any
information set forth in any information or offering  memorandum  distributed in
connection  with the proposed sale of the Acquired Assets or the Business or the
assumption of Assumed  Liabilities,  (b) any  information or materials,  oral or
written,  distributed  or made  available  to such  Purchaser  prior to the date
hereof other than matters set forth in this  Agreement,  including the Schedules
hereto or any Ancillary Document, or (c) except as set forth in Section 4.6, any
financial projection,  forecast or business plan relating to the Business.  With
respect to any  projection,  forecast or business plan delivered by or on behalf
of  Sellers  or  any  of  their  Affiliates  to any  Purchaser,  each  Purchaser
acknowledges  that (w) there are  uncertainties  inherent in  attempting to make
such   projections,   forecasts  and  plans,   (x)  it  is  familiar  with  such
uncertainties,  (y) except as expressly  represented  by Sellers  herein,  it is
taking full  responsibility  for making its own  evaluation  of the adequacy and
accuracy of all such projections, forecasts and plans so furnished to it and (z)
it shall have no claim of any kind  whatsoever  against any Person with  respect
thereto,  other than  claims  pursuant  to  Article  VII and claims for fraud or
intentional misrepresentation.

         Section 9.18 WAIVER OF JURY TRIAL.  EACH PARTY HERETO  IRREVOCABLY  AND
UNCONDITIONALLY  WAIVES  ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN  RESPECT OF
ANY  LITIGATION  DIRECTLY  OR  INDIRECTLY  ARISING  OUT OF OR  RELATING  TO THIS
AGREEMENT  AND ANY OF THE  AGREEMENTS  DELIVERED IN  CONNECTION  HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

                             Signature Page Follows

                                       36
<PAGE>

         IN WITNESS WHEREOF, each party has caused this Agreement to be executed
by its  duly  authorized  representative  as of the day  and  year  first  above
written.

SELLERS
-------

VE HOLDINGS, INC.

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

SUNTRIPS, INC.

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

ACCEPTED AND AGREED solely for purposes of Sections 4.1(c),  6.10 and Article IX
hereof:

MYTRAVEL USA HOLDINGS, INC.

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

ACCEPTED  AND AGREED
solely for  purposes  of  Sections  2.5
4.1(c),  6.10 and Articles VII and IX hereof:

MYTRAVEL CANADA HOLIDAYS INC.

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

PURCHASERS
----------

FS TOURS, INC.

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

FS SUNTOURS, INC.

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

         SIGNATURE PAGE TO AMENDED AND RESTATED ASSET PURCHASE AGREEMENT<PAGE>

                                                                    EXHIBIT 10.2

                         SECURITIES PURCHASE AGREEMENT

         This Securities Purchase Agreement (this "Agreement") is dated as of
October ___, 2003, among eResource Capital Group, Inc., a Delaware corporation
(the "Company"), and the purchasers identified on the signature pages hereto
(each a "Purchaser" and collectively the "Purchasers"); and

         WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act (as defined below),
and Rule 506 promulgated thereunder, the Company desires to issue and sell to
the Purchasers, and each Purchaser, severally and not jointly, desires to
purchase from the Company in the aggregate, up to $4,000,000 of Common Stock and
Warrants on the Closing Date.

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

                                  ARTICLE I.
                                 DEFINITIONS

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

            "Action" shall have the meaning ascribed to such term in Section
      3.1(j).

            "Affiliate" means any Person that, directly or indirectly through
      one or more intermediaries, controls or is controlled by or is under
      common control with a Person as such terms are used in and construed
      under Rule 144. With respect to a Purchaser, any investment fund or
      managed account that is managed on a discretionary basis by the same
      investment manager as such Purchaser will be deemed to be an Affiliate
      of such Purchaser.

            "Business Day" means any day except Saturday, Sunday and any day
      which shall be a federal legal holiday or a day on which banking
      institutions in the State of New York are authorized or required by law
      or other governmental action to close.

            "Closing" means the closing of the purchase and sale of the Common
      Stock and the Warrants pursuant to Section 2.1.

            "Closing Date" means the Trading Day when all of the Transaction
      Documents have been executed and delivered by the applicable parties
      thereto, and all conditions precedent to (i) the Purchasers' obligations
      to pay the Subscription Amount and (ii) the Company's obligations to
      deliver the Securities have been satisfied or waived.

            "Closing Price" means on any particular date (a) the last reported
      closing bid price per share of Common Stock on such date on the Trading
      Market (as reported by Bloomberg L.P. at 4:15 PM (New York time), or (b)
      if there is no such price on such date, then the closing bid price on
      the Trading Market on the date nearest preceding such

                                      1
<PAGE>

      date (as reported by Bloomberg L.P. at 4:15 PM (New York time) for the
      closing bid price for regular session trading on such day), or (c) if
      the Common Stock is not then listed or quoted on the Trading Market and
      if prices for the Common Stock are then reported in the "pink sheets"
      published by the National Quotation Bureau Incorporated (or a similar
      organization or agency succeeding to its functions of reporting prices),
      the most recent bid price per share of the Common Stock so reported, or
      (d) if the shares of Common Stock are not then publicly traded the fair
      market value of a share of Common Stock as determined by an appraiser
      selected in good faith by the Purchasers of a majority in interest of
      the Shares then outstanding.

            "Commission" means the Securities and Exchange Commission.

            "Common Stock" means the common stock of the Company, $0.04 par
      value per share, and any securities into which such common stock may
      hereafter be reclassified.

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

            "Company Counsel" means __________________________.

            "Disclosure Schedules" means the Disclosure Schedules delivered
      concurrently herewith.

            "Effective Date" means the date that the Registration Statement is
      first declared effective by the Commission.

            "Escrow Agent" shall have the meaning set forth in the Escrow
      Agreement.

            "Escrow Agreement" shall mean the Escrow Agreement in
      substantially the form of Exhibit B hereto executed and delivered
      contemporaneously with this Agreement.

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

            "FW" means Feldman Weinstein LLP with offices located at 420
      Lexington Avenue, New York, New York 10170-0002.

            "Intellectual Property Rights" shall have the meaning ascribed to
      such term in Section 3.1(o).

            "Liens" means a lien, charge, security interest, encumbrance,
      right of first refusal, preemptive right or other restriction.

            "Material Adverse Effect" shall have the meaning ascribed to such
      term in Section 3.1(b).

            "Material Permits" shall have the meaning ascribed to such term in
      Section 3.1(m).

                                      2
<PAGE>

            "Per Share Purchase Price" equals $1.60, subject to adjustment for
      reverse and forward stock splits, stock dividends, stock combinations
      and other similar transactions of the Common Stock that occur after the
      date of this Agreement.

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

            "Registration Statement" means a registration statement meeting
      the requirements set forth in the Registration Rights Agreement and
      covering the resale by the Purchasers of the Shares and the Warrant
      Shares.

            "Registration Rights Agreement" means the Registration Rights
      Agreement, dated as of the date of this Agreement, among the Company and
      each Purchaser, in the form of Exhibit A hereto.

            "Required Approvals" shall have the meaning ascribed to such term
      in Section 3.1(e).

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

            "SEC Reports" shall have the meaning ascribed to such term in
      Section 3.1(h).

            "Securities" means the Shares, the Warrants and the Warrant
      Shares.

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

            "Shares" means the shares of Common Stock issued or issuable to
      each Purchaser pursuant to this Agreement.

            "Subscription Amount" means, as to each Purchaser, the amounts set
      forth below such Purchaser's signature block on the signature page
      hereto, in United States dollars and in immediately available funds.

            "Subsidiary" shall mean the subsidiaries of the Company, if any,
      set forth on Schedule 3.1(a).

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

                                      3
<PAGE>

            "Trading Market" means the following markets or exchanges on which
      the Common Stock is listed or quoted for trading on the date in
      question: the American Stock Exchange, the New York Stock Exchange, the
      Nasdaq National Market or the Nasdaq SmallCap Market.

            "Transaction Documents" means this Agreement, the Escrow
      Agreement, the Warrants and the Registration Rights Agreement and any
      other documents or agreements executed in connection with the
      transactions contemplated hereunder.

            "Warrants" means the Common Stock Purchase Warrants, in the form
      of Exhibit C, issuable to the Purchasers at the Closing, which warrants
      shall be exercisable on or after the 6-month anniversary of their date
      of issuance for an exercise term of 3 years and have an exercise price
      equal to $____1.

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

                                 ARTICLE II.
                             PURCHASE AND SALE

    2.1   Closing. On the Closing Date, each Purchaser shall purchase from the
Company, severally and not jointly with the other Purchasers, and the Company
shall issue and sell to each Purchaser, (a) a number of Shares equal to such
Purchaser's Subscription Amount divided by the Per Share Purchase Price and
(b) the Warrants as determined pursuant to Section 2.2(a)(iii). The aggregate
Subscription Amounts for Shares sold hereunder shall be up to $4,000,000. Upon
satisfaction of the conditions set forth in Section 2.2, the Closing shall
occur at the offices of the Escrow Agent, or such other location as the
parties shall mutually agree.

    2.2   Closing Conditions.

          (a)  On the Closing Date, the Company shall deliver or cause to be
      delivered to the Escrow Agent with respect to each Purchaser the
      following:

               (i) this Agreement duly executed by the Company;

               (ii) a certificate evidencing a number of Shares equal to such
          Purchaser's Subscription Amount divided by the Per Share Purchase
          Price, registered in the name of such Purchaser;

               (iii) a Warrant, registered in the name of such Purchaser,
          pursuant to which such Purchaser shall have the right to acquire up
          to the number of shares of Common Stock equal to the Shares to be
          issued to such Purchaser at the Closing;

               (iv) the Registration Rights Agreement duly executed by the
          Company;

               (v) the Escrow Agreement duly executed by the Company; and

-------------------
1    110% of the Closing Price on the Trading Day immediately prior to the
     date hereof.

                                      4
<PAGE>

               (vi) a legal opinion of Company Counsel, in the form of Exhibit
          C attached hereto.

          (b) On the Closing Date, each Purchaser shall deliver or cause to be
      delivered to the Escrow Agent the following:

               (i) this Agreement duly executed by such Purchaser;

               (ii) such Purchaser's Subscription Amount by wire transfer to
          the account of the Escrow Agent;

               (iii) the Escrow Agreement duly executed by such Purchaser; and

               (iv) the Registration Rights Agreement duly executed by such
          Purchaser.

          (c) All representations and warranties of the other party contained
      herein shall remain true and correct as of the Closing Date.

          (d) As of the Closing Date, there shall have been no Material
      Adverse Effect with respect to the Company since the date hereof.

          (e) From the date hereof to the Closing Date, trading in the Common
      Stock shall not have been suspended by the Commission (except for any
      suspension of trading of limited duration agreed to by the Company,
      which suspension shall be terminated prior to the Closing), and, at any
      time prior to the Closing Date, trading in securities generally as
      reported by Bloomberg Financial Markets shall not have been suspended or
      limited, or minimum prices shall not have been established on securities
      whose trades are reported by such service, or on any Trading Market, nor
      shall a banking moratorium have been declared either by the United
      States or New York State authorities nor shall there have occurred any
      material outbreak or escalation of hostilities or other national or
      international calamity of such magnitude in its effect on, or any
      material adverse change in, any financial market which, in each case, in
      the reasonable judgment of each Purchaser, makes it impracticable or
      inadvisable to purchase the Shares at the such Closing.

                                 ARTICLE III.
                       REPRESENTATIONS AND WARRANTIES

      3.1 Representations and Warranties of the Company. Except as set forth
under the corresponding section of the Disclosure Schedules delivered
concurrently herewith, the Company hereby makes the following representations
and warranties as of the date hereof and as of the Closing Date to each
Purchaser:

          (a) Subsidiaries. All of the subsidiaries of the Company are set
      forth on Schedule 3.1(a). The Company owns, directly or indirectly, all
      of the capital stock or other equity interests of each Subsidiary free
      and clear of any Liens, and all the issued and outstanding shares of
      capital stock of each Subsidiary (other than Lifestyle Innovations,
      Inc.) are validly issued and are fully paid, non-assessable and free of

                                      5
<PAGE>

      preemptive and similar rights. If the Company has no subsidiaries, then
      references in the Transaction Documents to the Subsidiaries will be
      disregarded.

          (b) Organization and Qualification. Each of the Company and the
      Subsidiaries (other than Lifestyle Innovations, Inc.) is an entity duly
      incorporated or otherwise organized, validly existing and in good
      standing under the laws of the jurisdiction of its incorporation or
      organization (as applicable), with the requisite power and authority to
      own and use its properties and assets and to carry on its business as
      currently conducted. Neither the Company nor any Subsidiary (other than
      Lifestyle Innovations, Inc.) is in violation of any of the provisions of
      its respective certificate or articles of incorporation, bylaws or other
      organizational or charter documents. Each of the Company and the
      Subsidiaries (other than Lifestyle Innovations, Inc.) is duly qualified
      to conduct business and is in good standing as a foreign corporation or
      other entity in each jurisdiction in which the nature of the business
      conducted or property owned by it makes such qualification necessary,
      except where the failure to be so qualified or in good standing, as the
      case may be, could not have or reasonably be expected to result in (i) a
      material adverse effect on the legality, validity or enforceability of
      any Transaction Document, (ii) a material adverse effect on the results
      of operations, assets, business, prospects or financial condition of the
      Company and the Subsidiaries, taken as a whole, or (iii) a material
      adverse effect on the Company's ability to perform in any material
      respect on a timely basis its obligations under any Transaction Document
      (any of (i), (ii) or (iii), a "Material Adverse Effect").

          (c) Authorization; Enforcement. The Company has the requisite
      corporate power and authority to enter into and to consummate the
      transactions contemplated by each of the Transaction Documents and
      otherwise to carry out its obligations thereunder. The execution and
      delivery of each of the Transaction Documents by the Company and the
      consummation by it of the transactions contemplated thereby have been
      duly authorized by all necessary action on the part of the Company and
      no further action is required by the Company in connection therewith
      other than in connection with the Required Approvals. Each Transaction
      Document has been (or upon delivery will have been) duly executed by the
      Company and, when delivered in accordance with the terms hereof, will
      constitute the valid and binding obligation of the Company enforceable
      against the Company in accordance with its terms except (i) as limited
      by applicable bankruptcy, insolvency, reorganization, moratorium and
      other laws of general application affecting enforcement of creditors'
      rights generally and (ii) as limited by laws relating to the
      availability of specific performance, injunctive relief or other
      equitable remedies.

          (d) No Conflicts. The execution, delivery and performance of the
      Transaction Documents by the Company and the consummation by the Company
      of the transactions contemplated thereby do not and will not (i)
      conflict with or violate any provision of the Company's or any
      Subsidiary (other than Lifestyle Innovations, Inc.)'s certificate or
      articles of incorporation, bylaws or other organizational or charter
      documents, or (ii) conflict with, or constitute a default (or an event
      that 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 (with or without notice, lapse of time or both) of, any
      agreement, credit facility, debt or other instrument (evidencing a
      Company or Subsidiary (other than Lifestyle Innovations, Inc.) debt or
      otherwise) or other understanding to

                                      6
<PAGE>

      which the Company or any Subsidiary (other than Lifestyle Innovations,
      Inc.) is a party or by which any property or asset of the Company or any
      Subsidiary (other than Lifestyle Innovations, Inc.) is bound or
      affected, or (iii) subject to the Required Approvals, result in a
      violation of any law, rule, regulation, order, judgment, injunction,
      decree or other restriction of any court or governmental authority to
      which the Company or a Subsidiary (other than Lifestyle Innovations,
      Inc.) is subject (including federal and state securities laws and
      regulations), or by which any property or asset of the Company or a
      Subsidiary (other than Lifestyle Innovations, Inc.) is bound or
      affected; except in the case of each of clauses (ii) and (iii), such as
      could not have or reasonably be expected to result in a Material Adverse
      Effect.

          (e) Filings, Consents and Approvals. The Company is not required to
      obtain any consent, waiver, authorization or order of, give any notice
      to, or make any filing or registration with, any court or other federal,
      state, local or other governmental authority or other Person in
      connection with the execution, delivery and performance by the Company
      of the Transaction Documents, other than (i) filings required pursuant
      to Section 4.6 of this Agreement, (ii) the filing with the Commission of
      the Registration Statement, (iii) application(s) to each applicable
      Trading Market for the listing of the Shares and Warrant Shares for
      trading thereon in the time and manner required thereby, and (iv) the
      filing of Form D with the Commission and such filings as are required to
      be made under applicable state securities laws (collectively, the
      "Required Approvals").

          (f) Issuance of the Securities. The Securities are duly authorized
      and, when issued and paid for in accordance with the Transaction
      Documents, will be duly and validly issued, fully paid and
      nonassessable, free and clear of all Liens. The Company has reserved
      from its duly authorized capital stock the maximum number of shares of
      Common Stock issuable pursuant to this Agreement and the Warrants.

          (g) Capitalization. The capitalization of the Company is as
      described in the Company's most recent periodic report filed with the
      Commission. The Company has not issued any capital stock since such
      filing other than pursuant to the exercise of employee stock options
      under the Company's stock option plans, the issuance of shares of Common
      Stock to employees pursuant to the Company's employee stock purchase
      plan and pursuant to the conversion or exercise of outstanding Common
      Stock Equivalents. No Person has any right of first refusal, preemptive
      right, right of participation, or any similar right to participate in
      the transactions contemplated by the Transaction Documents. Except as a
      result of the purchase and sale of the Securities or the granting of
      options to employees, officers and directors of the Company pursuant to
      any stock option plan duly adopted by a majority of the non-employee
      members of the Board of Directors of the Company or a majority of the
      members of a committee of non-employee directors established for such
      purpose, there are no outstanding options, warrants, script rights to
      subscribe to, calls or commitments of any character whatsoever relating
      to, or securities, rights or obligations convertible into or
      exchangeable for, or giving any Person any right to subscribe for or
      acquire, any shares of Common Stock, or contracts, commitments,
      understandings or arrangements by which the Company or any Subsidiary is
      or may become bound to issue additional shares of Common Stock, or
      securities or rights convertible or exchangeable into shares of Common
      Stock. The issue and sale of the Securities will not obligate the
      Company to issue shares of Common Stock

                                      7
<PAGE>

      or other securities to any Person (other than the Purchasers) and will
      not result in a right of any holder of Company securities to adjust the
      exercise, conversion, exchange or reset price under such securities.

          (h) SEC Reports; Financial Statements. The Company has filed all
      reports required to be filed by it under the Securities Act and the
      Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
      the two years preceding the date hereof (or such shorter period as the
      Company was required by law to file such material) (the foregoing
      materials, including the exhibits thereto, being collectively referred
      to herein as the "SEC Reports") on a timely basis or has received a
      valid extension of such time of filing and has filed any such SEC
      Reports prior to the expiration of any such extension. As of their
      respective dates, the SEC Reports complied in all material respects with
      the requirements of the Securities Act and the Exchange Act and the
      rules and regulations of the Commission promulgated thereunder, and none
      of the SEC Reports, when filed, contained any untrue statement of a
      material fact or omitted to state a material fact required to be stated
      therein or necessary in order to make the statements therein, in light
      of the circumstances under which they were made, not misleading. The
      financial statements of the Company included in the SEC Reports comply
      in all material respects with applicable accounting requirements and the
      rules and regulations of the Commission with respect thereto as in
      effect at the time of filing. Such financial statements have been
      prepared in accordance with United States generally accepted accounting
      principles applied on a consistent basis during the periods involved
      ("GAAP"), except as may be otherwise specified in such financial
      statements or the notes thereto and except that unaudited financial
      statements may not contain all footnotes required by GAAP, and fairly
      present in all material respects the financial position of the Company
      and its consolidated subsidiaries as of and for the dates thereof and
      the results of operations and cash flows for the periods then ended,
      subject, in the case of unaudited statements, to normal, immaterial,
      year-end audit adjustments.

          (i) Material Changes. Since the date of the latest audited financial
      statements included within the SEC Reports, except as disclosed in the
      SEC Reports, (i) there has been no event, occurrence or development that
      has had or that could reasonably be expected to result in a Material
      Adverse Effect, (ii) the Company has not incurred any liabilities
      (contingent or otherwise) other than (A) trade payables and accrued
      expenses incurred in the ordinary course of business consistent with
      past practice and (B) liabilities not required to be reflected in the
      Company's financial statements pursuant to GAAP or required to be
      disclosed in filings made with the Commission, (iii) the Company has not
      altered its method of accounting, (iv) the Company has not declared or
      made any dividend or distribution of cash or other property to its
      stockholders or purchased, redeemed or made any agreements to purchase
      or redeem any shares of its capital stock and (v) the Company has not
      issued any equity securities to any officer, director or Affiliate,
      except pursuant to existing Company stock option plans. The Company does
      not have pending before the Commission any request for confidential
      treatment of information.

          (j) Litigation. Except as disclosed in the SEC Reports, there is no
      action, suit, inquiry, notice of violation, proceeding or investigation
      pending or, to the knowledge of the Company, threatened against or
      affecting the Company, any Subsidiary

                                      8
<PAGE>

      (other than Lifestyle Innovations, Inc.) or any of their respective
      properties before or by any court, arbitrator, governmental or
      administrative agency or regulatory authority (federal, state, county,
      local or foreign) (collectively, an "Action") which (i) adversely
      affects or challenges the legality, validity or enforceability of any of
      the Transaction Documents or the Securities or (ii) could, if there were
      an unfavorable decision, have or reasonably be expected to result in a
      Material Adverse Effect. Neither the Company nor any Subsidiary (other
      than Lifestyle Innovations, Inc.), nor any director or officer thereof,
      is or has been the subject of any Action involving a claim of violation
      of or liability under federal or state securities laws or a claim of
      breach of fiduciary duty. There has not been, and to the knowledge of
      the Company, there is not pending or contemplated, any investigation by
      the Commission involving the Company or any current or former director
      or officer of the Company. The Commission has not issued any stop order
      or other order suspending the effectiveness of any registration
      statement filed by the Company or any Subsidiary (other than Lifestyle
      Innovations, Inc.) under the Exchange Act or the Securities Act.

          (k) Labor Relations. No material labor dispute exists or, to the
      knowledge of the Company, is imminent with respect to any of the
      employees of the Company which could reasonably be expected to result in
      a Material Adverse Effect.

          (l) Compliance. Except as disclosed in the SEC Reports, neither the
      Company nor any Subsidiary (other than Lifestyle Innovations, Inc.) (i)
      is in default under or in violation of (and no event has occurred that
      has not been waived that, with notice or lapse of time or both, would
      result in a default by the Company or any Subsidiary (other than
      Lifestyle Innovations, Inc.) under), nor has the Company or any
      Subsidiary (other than Lifestyle Innovations, Inc.) received notice of a
      claim that it is in default under or that it is in violation of, any
      indenture, loan or credit agreement or any other agreement or instrument
      to which it is a party or by which it or any of its properties is bound
      (whether or not such default or violation has been waived), (ii) is in
      violation of any order of any court, arbitrator or governmental body, or
      (iii) is or has been in violation of any statute, rule or regulation of
      any governmental authority, including without limitation all foreign,
      federal, state and local laws applicable to its business except in each
      case as could not have a Material Adverse Effect.

          (m) Regulatory Permits. The Company and the Subsidiaries (other than
      Lifestyle Innovations, Inc.) possess all certificates, authorizations
      and permits issued by the appropriate federal, state, local or foreign
      regulatory authorities necessary to conduct their respective businesses
      as described in the SEC Reports, except where the failure to possess
      such permits could not have or reasonably be expected to result in a
      Material Adverse Effect ("Material Permits"), and neither the Company
      nor any Subsidiary (other than Lifestyle Innovations, Inc.) has received
      any notice of proceedings relating to the revocation or modification of
      any Material Permit.

          (n) Title to Assets. The Company and the Subsidiaries (other than
      Lifestyle Innovations, Inc.) have good and marketable title in fee
      simple to all real property owned by them that is material to the
      business of the Company and the Subsidiaries (other than Lifestyle
      Innovations, Inc.) and good and marketable title in all personal
      property owned by them that is material to the business of the Company
      and the Subsidiaries (other than

                                      9
<PAGE>

      Lifestyle Innovations, Inc.), in each case free and clear of all Liens,
      except for Liens as do not materially affect the value of such property
      and do not materially interfere with the use made and proposed to be
      made of such property by the Company and the Subsidiaries (other than
      Lifestyle Innovations, Inc.) and Liens for the payment of federal, state
      or other taxes, the payment of which is neither delinquent nor subject
      to penalties. Any real property and facilities held under lease by the
      Company and the Subsidiaries (other than Lifestyle Innovations, Inc.)
      are held by them under valid, subsisting and enforceable leases of which
      the Company and the Subsidiaries (other than Lifestyle Innovations,
      Inc.) are in compliance.

          (o) Patents and Trademarks. To the knowledge of the Company and each
      Subsidiary (other than Lifestyle Innovations, Inc.), the Company and the
      Subsidiaries (other than Lifestyle Innovations, Inc.) have, or have
      rights to use, all patents, patent applications, trademarks, trademark
      applications, service marks, trade names, copyrights, licenses and other
      similar rights that are necessary or material for use in connection with
      their respective businesses as described in the SEC Reports and which
      the failure to so have could have or reasonably be expected to result in
      a Material Adverse Effect (collectively, the "Intellectual Property
      Rights"). Neither the Company nor any Subsidiary (other than Lifestyle
      Innovations, Inc.) has received a written notice that the Intellectual
      Property Rights used by the Company or any Subsidiary (other than
      Lifestyle Innovations, Inc.) violates or infringes upon the rights of
      any Person. To the knowledge of the Company, all such Intellectual
      Property Rights are enforceable.

          (p) Insurance. The Company and the Subsidiaries (other than
      Lifestyle Innovations, Inc.) are insured by insurers of recognized
      financial responsibility against such losses and risks and in such
      amounts as are prudent and customary in the businesses in which the
      Company and the Subsidiaries (other than Lifestyle Innovations, Inc.)
      are engaged. Neither the Company nor any Subsidiary (other than
      Lifestyle Innovations, Inc.) 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 without a significant increase
      in cost.

          (q) Transactions With Affiliates and Employees. Except as set forth
      in the SEC Reports, none of the officers or directors of the Company
      and, to the knowledge of the Company, none of the employees of the
      Company is presently a party to any transaction with the Company or any
      Subsidiary (other than Lifestyle Innovations, Inc.) (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 entity in which any
      officer, director, or any such employee has a substantial interest or is
      an officer, director, trustee or partner, in each case in excess of
      $60,000 other than (i) for payment of salary or consulting fees for
      services rendered, (ii) reimbursement for expenses incurred on behalf of
      the Company and (iii) for other employee benefits, including stock
      option agreements under any stock option plan of the Company.

                                      10
<PAGE>

          (r) Internal Accounting Controls. The Company and each of its
      Subsidiaries (other than Lifestyle Innovations, Inc.) maintains a system
      of internal accounting controls sufficient to provide reasonable
      assurance that (i) transactions are executed in accordance with
      management's general or specific authorizations, (ii) transactions are
      recorded as necessary to permit preparation of financial statements in
      conformity with GAAP and to maintain asset accountability, (iii) access
      to assets is permitted only in accordance with management's general or
      specific authorization, and (iv) the recorded accountability for assets
      is compared with the existing assets at reasonable intervals and
      appropriate action is taken with respect to any differences. The Company
      has established disclosure controls and procedures (as defined in
      Exchange Act Rules 13a-14 and 15d-14) for the Company and designed such
      disclosure controls and procedures to ensure that material information
      relating to the Company, including its Subsidiaries (other than
      Lifestyle Innovations, Inc.), is made known to the certifying officers
      by others within those entities, particularly during the period in which
      the Company's most recently filed period report under the Exchange Act,
      as the case may be, is being prepared. The Company's certifying officers
      have evaluated the effectiveness of the Company's controls and
      procedures as of a date within 90 days prior to the filing date of the
      most recently filed periodic report under the Exchange Act (such date,
      the "Evaluation Date"). The Company presented in its most recently filed
      period report under the Exchange Act the conclusions of the certifying
      officers about the effectiveness of the disclosure controls and
      procedures based on their evaluations as of the Evaluation Date. Since
      the Evaluation Date, there have been no significant changes in the
      Company's internal controls (as such term is defined in Item 307(b) of
      Regulation S-K under the Exchange Act) or, to the Company's knowledge,
      in other factors that could significantly affect the Company's internal
      controls.

          (s) Certain Fees. No brokerage or finder's fees or commissions are
      or will be payable by the Company to any broker, financial advisor or
      consultant, finder, placement agent, investment banker, bank or other
      Person with respect to the transactions contemplated by this Agreement.
      The Purchasers shall have no obligation with respect to any fees or with
      respect to any claims made by or on behalf of other Persons for fees of
      a type contemplated in this Section that may be due in connection with
      the transactions contemplated by this Agreement.

          (t) Private Placement. Assuming the accuracy of the Purchasers
      representations and warranties set forth in Section 3.2, no registration
      under the Securities Act is required for the offer and sale of the
      Securities by the Company to the Purchasers as contemplated hereby. The
      issuance and sale of the Securities hereunder does not contravene the
      rules and regulations of the Trading Market.

          (u) Investment Company. The Company is not, and is not an Affiliate
      of, an "investment company" within the meaning of the Investment Company
      Act of 1940, as amended.

          (v) Registration Rights. Except as set forth on the disclosure
      schedule to the Registration Rights Agreement, no Person has any right
      to cause the Company to effect the registration under the Securities Act
      of any securities of the Company.

                                      11
<PAGE>

          (w) Listing and Maintenance Requirements. The Company has not, in
      the 12 months preceding the date hereof, received notice from any
      Trading Market on which the Common Stock is or has been listed or quoted
      to the effect that the Company is not in compliance with the listing or
      maintenance requirements of such Trading Market. The Company is, and has
      no reason to believe that it will not in the foreseeable future continue
      to be, in compliance with all such listing and maintenance requirements.

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

          (y) Disclosure. Other than the terms of the transaction contemplated
      by this Agreement, the Company confirms that, neither the Company nor
      any other Person acting on its behalf has provided any of the Purchasers
      or their agents or counsel with any information that constitutes or
      might constitute material, non-public information. The Company
      understands and confirms that the Purchasers will rely on the foregoing
      representations and covenants in effecting transactions in securities of
      the Company. All disclosure provided to the Purchasers regarding the
      Company, its business and the transactions contemplated hereby,
      including the Disclosure Schedules to this Agreement, furnished by or on
      behalf of the Company are true and correct and do not contain any untrue
      statement of a material fact or omit to state any material fact
      necessary in order to make the statements made therein, in light of the
      circumstances under which they were made, not misleading.

          (z) No Integrated Offering. Assuming the accuracy of the Purchasers'
      representations and warranties set forth in Section 3.2, 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 buy any security, under
      circumstances that would cause this offering of the Securities to be
      integrated with prior offerings by the Company for purposes of the
      Securities Act or any applicable shareholder approval provisions,
      including, without limitation, under the rules and regulations of any
      exchange or automated quotation system on which any of the securities of
      the Company are listed or designated.

          (aa) Solvency. Based on the financial condition of the Company as of
      the Closing Date after giving effect to the receipt by the Company of
      the proceeds from the sale of the Securities hereunder, (i) the
      Company's fair saleable value of its assets exceeds the amount that will
      be required to be paid on or in respect of the Company's existing debts
      and other liabilities (including known contingent liabilities) as they
      mature; (ii) the Company's assets do not constitute unreasonably small
      capital to carry on its business for the current fiscal year as now
      conducted and as proposed to be conducted including its capital needs
      taking into account the particular capital requirements of the business

                                      12
<PAGE>

      conducted by the Company, and projected capital requirements and capital
      availability thereof; and (iii) the current cash flow of the Company,
      together with the proceeds the Company would receive, were it to
      liquidate all of its assets, after taking into account all anticipated
      uses of the cash, would be sufficient to pay all amounts on or in
      respect of its debt when such amounts are required to be paid. The
      Company does not intend to incur debts beyond its ability to pay such
      debts as they mature (taking into account the timing and amounts of cash
      to be payable on or in respect of its debt).

          (bb) Form S-3 Eligibility. The Company is eligible to register the
      resale of its Common Stock by the Purchasers under Form S-3 promulgated
      under the Securities Act.

      Each Purchaser acknowledges and agrees that the Company does not make or
has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
this Section 3.1.

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

          (a) Organization; Authority. Such Purchaser is an entity duly
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its organization with full right, corporate or
      partnership power and authority to enter into and to consummate the
      transactions contemplated by the Transaction Documents and otherwise to
      carry out its obligations thereunder. The execution, delivery and
      performance by such Purchaser of the transactions contemplated by this
      Agreement have been duly authorized by all necessary corporate action on
      the part of such Purchaser. Each Transaction Document to which it is
      party has been duly executed by such Purchaser, and when delivered by
      such Purchaser in accordance with the terms hereof, will constitute the
      valid and legally binding obligation of such Purchaser, enforceable
      against it in accordance with its terms, except (i) as limited by
      general equitable principles and applicable bankruptcy, insolvency,
      reorganization, moratorium and other laws of general application
      affecting enforcement of creditors' rights generally, (ii) as limited by
      laws relating to the availability of specific performance, injunctive
      relief or other equitable remedies and (iii) insofar as indemnification
      and contribution provisions may be limited by applicable law.

          (b) Investment Intent. Such Purchaser understands that the
      Securities are "restricted securities" and have not been registered
      under the Securities Act or any applicable state securities law and is
      acquiring the Securities as principal for its own account for investment
      purposes only and not with a view to or for distributing or reselling
      such Securities or any part thereof, has no present intention of
      distributing any of such Securities and has no arrangement or
      understanding with any other persons regarding the distribution of such
      Securities (this representation and warranty not limiting such
      Purchaser's right to sell the Securities pursuant to the Registration
      Statement or otherwise in compliance with applicable federal and state
      securities laws). Such Purchaser is acquiring the Securities hereunder
      in the ordinary course of its business. Such Purchaser does not have any
      agreement or understanding, directly or indirectly, with any Person to
      distribute any of the Securities.

                                      13
<PAGE>

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

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

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

          (f) Access to Information. Such Purchaser acknowledges and agrees
      that it has access to the Company's SEC Reports and has reviewed such
      filings as such Purchaser has deemed necessary or desirable including
      the Company's Annual Report on Form 10-KSB for the fiscal year ended
      June 30, 2003. Each Purchaser and its respective representatives have
      been afforded an opportunity to ask such questions of the officers,
      employees, agents, accountants and representatives of the Company
      concerning the business, operations, financial condition, assets,
      liabilities, and other relevant matters as such Purchaser and its
      representatives have deemed necessary or desirable, and each Purchaser
      hereby confirms that it or its agents have been given all such
      information as has been requested in order to evaluate the merits and
      risks of the prospective investment contemplated hereby and that it does
      not desire any additional information. Without limiting the foregoing,
      each Purchaser specifically acknowledges that it has had the opportunity
      to review the Company's SEC Reports.

          (g) Risk Factors. Such Purchaser understands and acknowledges that
      an investment in the Shares is highly speculative and includes a high
      degree of risk including, but not limited to, those risks specifically
      set forth in the Company's Annual Report on Form 10-KSB for the period
      ended June 30, 2003, which, by its signature below, each Purchaser
      acknowledges it has reviewed.

      The Company acknowledges and agrees that each Purchaser does not make or
has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
this Section 3.2.

                                 ARTICLE IV.
                      OTHER AGREEMENTS OF THE PARTIES

    4.1   Transfer Restrictions.

          (a) The Securities may only be disposed of in compliance with state
      and federal securities laws. In connection with any transfer of
      Securities other than pursuant

                                      14
<PAGE>

      to an effective registration statement, to the Company, to an Affiliate
      of a Purchaser or in connection with a pledge as contemplated in Section
      4.1(b), the Company may require the transferor thereof to provide to the
      Company an opinion of counsel selected by the transferor, the form and
      substance of which opinion shall be reasonably satisfactory to the
      Company, to the effect that such transfer does not require registration
      of such transferred Securities under the Securities Act. As a condition
      of transfer, any such transferee shall agree in writing to be bound by
      the terms of this Agreement and shall have the rights of a Purchaser
      under this Agreement and the Registration Rights Agreement.

          (b) The Purchasers agree to the imprinting, so long as is required
      by this Section 4.1(b), of a legend on any of the Securities in the
      following form:

              THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES
              AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
              STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
              SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
              ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
              EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
              PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
              SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
              AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
              EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
              SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
              ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN
              CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED
              BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS
              AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a) UNDER THE
              SECURITIES ACT.

              The Company acknowledges and agrees that a Purchaser may from
      time to time pledge pursuant to a bona fide margin agreement with a
      registered broker-dealer or grant a security interest in some or all of
      the Securities to a financial institution that is an "accredited
      investor" as defined in Rule 501(a) under the Securities Act and who
      agrees to be bound by the provisions of this Agreement and the
      Registration rights Agreement and, if required under the terms of such
      arrangement, such Purchaser may transfer pledged or secured Securities
      to the pledgees or secured parties. Such a pledge or transfer would not
      be subject to approval of the Company and no legal opinion of legal
      counsel of the pledgee, secured party or pledgor shall be required in
      connection therewith. Further, no notice shall be required of such
      pledge. At the appropriate Purchaser's expense, the Company will execute
      and deliver such reasonable documentation as a pledgee or secured party
      of Securities may reasonably request in connection with a pledge or
      transfer of the Securities, including, if the Securities are subject to
      registration pursuant to the Registration Rights Agreement, the
      preparation and filing of any required prospectus supplement under Rule
      424(b)(3) under the Securities Act or other applicable provision of the
      Securities Act to appropriately amend the list of Selling Stockholders
      thereunder.

                                      15
<PAGE>

          (c) Certificates evidencing the Shares and Warrant Shares shall not
      contain any legend (including the legend set forth in Section 4.1(b)),
      (i) while a registration statement (including the Registration
      Statement) covering the resale of such security is effective under the
      Securities Act, or (ii) following any sale of such Shares or Warrant
      Shares pursuant to Rule 144, or (iii) if such Shares or Warrant Shares
      are eligible for sale under Rule 144(k), or (iv) if such legend is not
      required under applicable requirements of the Securities Act (including
      judicial interpretations and pronouncements issued by the Staff of the
      Commission). The Company shall cause its counsel to issue a legal
      opinion to the Company's transfer agent promptly after the Effective
      Date if required by the Company's transfer agent to effect the removal
      of the legend hereunder. If all or any portion of a Warrant is exercised
      at a time when there is an effective registration statement to cover the
      resale of the Warrant Shares, such Warrant Shares shall be issued free
      of all legends. The Company agrees that following the Effective Date or
      at such time as such legend is no longer required under this Section
      4.1(c), it will, no later than three Trading Days following the delivery
      by a Purchaser to the Company or the Company's transfer agent of a
      certificate representing Shares or Warrant Shares, as the case may be,
      issued with a restrictive legend (such date, the "Legend Removal Date"),
      deliver or cause to be delivered to such Purchaser a certificate
      representing such Securities that is free from all restrictive and other
      legends. The Company may not make any notation on its records or give
      instructions to any transfer agent of the Company that enlarge the
      restrictions on transfer set forth in this Section.

          (d) In addition to such Purchaser's other available remedies, the
      Company shall pay to a Purchaser, in cash, as liquidated damages and not
      as a penalty, for each $1,000 of Shares or Warrant Shares (based on the
      Closing Price of the Common Stock on the date such Securities are
      submitted to the Company's transfer agent) subject to Section 4.1(c),
      $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading
      Days after such damages have begun to accrue) for each Trading Day after
      such third Trading Day after the Legend Removal Date until such
      certificate is delivered. Nothing herein shall limit such Purchaser's
      right to pursue actual damages for the Company's failure to deliver
      certificates representing any Securities as required by the Transaction
      Documents, and such Purchaser 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.

          (e) Each Purchaser, severally and not jointly with the other
      Purchasers, agrees that the removal of the restrictive legend from
      certificates representing Securities as set forth in this Section 4.1 is
      predicated upon the Company's reliance that the Purchaser will sell any
      Securities pursuant to either the registration requirements of the
      Securities Act, including any applicable prospectus delivery
      requirements, or an exemption therefrom.

          (f) Until the date that each Purchaser holds less than 20% of the
      Shares initially purchased hereunder by such Purchaser, the Company
      shall not undertake a reverse or forward stock split or reclassification
      of the Common Stock without the prior written consent of the Purchasers
      holding a majority in interest of the Shares.

      4.2 Furnishing of Information. As long as any Purchaser owns Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the

                                      16
<PAGE>

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

      4.3 Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or
sale of the Securities in a manner that would require the registration under
the Securities Act of the sale of the Securities to the Purchasers or that
would be integrated with the offer or sale of the Securities for purposes of
the rules and regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction unless
shareholder approval is obtained before the closing of such subsequent
transaction.

      4.4 Securities Laws Disclosure; Publicity. The Company shall, by 8:30
a.m. Eastern time on the Trading Day following the Closing Date, issue a press
release or file a Current Report on Form 8-K, in each case reasonably
acceptable to each Purchaser disclosing the transactions contemplated hereby.
The Company and each Purchaser shall consult with each other in issuing any
press releases with respect to the transactions contemplated hereby, and
neither the Company nor any Purchaser shall issue any such press release or
otherwise make any such public statement without the prior consent of the
Company, with respect to any press release of any Purchaser, or without the
prior consent of each Purchaser, with respect to any press release of the
Company, which consent shall not unreasonably be withheld, except if such
disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in
any filing with the Commission or any regulatory agency or Trading Market,
without the prior written consent of such Purchaser, except (i) as required by
federal securities law in connection with the registration statement
contemplated by the Registration Rights Agreement and (ii) to the extent such
disclosure is required by law or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure
permitted under subclause (i) or (ii).

      4.5 Shareholders Rights Plan. No claim will be made or enforced by the
Company or, to the knowledge of the Company, any other Person that any
Purchaser is an "Acquiring Person" under any shareholders rights plan or
similar plan or arrangement in effect or hereafter adopted by the Company, or
that any Purchaser could be deemed to trigger the provisions of any such plan
or arrangement, by virtue of receiving Securities under the Transaction
Documents or under any other agreement between the Company and the Purchasers.

      4.6 Non-Public Information. The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide any
Purchaser or its agents or counsel with any information that the Company
believes constitutes material non-public information, unless prior thereto
such Purchaser shall have executed a written agreement regarding the
confidentiality and

                                      17
<PAGE>

use of such information. The Company understands and confirms that each
Purchaser shall be relying on the foregoing representations in effecting
transactions in securities of the Company.

      4.7 Use of Proceeds. Except as set forth on Schedule 4.7 attached
hereto, the Company shall use the net proceeds from the sale of the Securities
hereunder for working capital purposes and not for the satisfaction of any
portion of the Company's debt (other than payment of trade payables in the
ordinary course of the Company's business and prior practices), to redeem any
Company equity or equity-equivalent securities or to settle any outstanding
litigation.

      4.8 Reimbursement. If any Purchaser becomes involved in any capacity in
any Proceeding by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar transactions
by such Purchaser to or with any current stockholder), solely as a result of
such Purchaser's acquisition of the Securities under this Agreement, the
Company will reimburse such Purchaser for its reasonable legal and other
expenses (including the cost of any investigation preparation and travel in
connection therewith) incurred in connection therewith, as such expenses are
incurred. The reimbursement obligations of the Company under this paragraph
shall be in addition to any liability which the Company may otherwise have,
shall extend upon the same terms and conditions to any Affiliates of the
Purchasers who are actually named in such action, proceeding or investigation,
and partners, directors, agents, employees and controlling persons (if any),
as the case may be, of the Purchasers and any such Affiliate, and shall be
binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Company, the Purchasers and any such Affiliate
and any such Person. The Company also agrees that neither the Purchasers nor
any such Affiliates, partners, directors, agents, employees or controlling
persons shall have any liability to the Company or any Person asserting claims
on behalf of or in right of the Company solely as a result of acquiring the
Securities under this Agreement.

      4.9 Indemnification of Purchasers. The Company will indemnify and hold
the Purchasers and their directors, officers, shareholders, partners,
employees and agents (each, a "Purchaser Party") harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs
and reasonable attorneys' fees and costs of investigation that any such
Purchaser Party may suffer or incur as a result of or relating to: (a) any
misrepresentation, breach or inaccuracy, or any allegation by a third party
that, if true, would constitute a breach or inaccuracy, of any of the
representations, warranties, covenants or agreements made by the Company in
this Agreement or in the other Transaction Documents; or (b) any cause of
action, suit or claim brought or made against such Purchaser Party and arising
solely out of or solely resulting from the execution, delivery, performance or
enforcement of this Agreement or any of the other Transaction Documents and
without causation by any other activity, obligation, condition or liability
pertaining to such Purchaser. The Company will reimburse such Purchaser for
its reasonable legal and other expenses (including the cost of any
investigation, preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred.

      4.10 Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common
Stock for the purpose of enabling the Company

                                      18
<PAGE>

to issue Shares pursuant to this Agreement and Warrant Shares pursuant to any
exercise of the Warrants.

      4.11 Listing of Common Stock. The Company hereby agrees to use
commercially reasonably efforts to maintain the listing of the Common Stock on
the Trading Market, and as soon as reasonably practicable following the
Closing (but not later than the earlier of the Effective Date and the first
anniversary of the Closing Date) to list all of the Shares and Warrant Shares
on the Trading Market. The Company further agrees, if the Company applies to
have the Common Stock traded on any other Trading Market, it will include in
such application all of the Shares and Warrant Shares, and will take such
other action as is necessary to cause the Shares and Warrant Shares to be
listed on such other Trading Market as promptly as possible. The Company will
take all action reasonably necessary to continue the listing and trading of
its Common Stock on a Trading Market and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
the Trading Market.

      4.12 Participation in Future Financing. From the date hereof until 12
months after the Effective Date, the Company shall not effect a financing of
its Common Stock or Common Stock Equivalents (a "Subsequent Financing") unless
(i) the Company delivers to each of such Purchasers a written notice at least
3 Trading Days prior to the closing of such Subsequent Financing (the
"Subsequent Financing Notice") of its intention to effect such Subsequent
Financing, which Subsequent Financing Notice shall describe in reasonable
detail the proposed terms of such Subsequent Financing, the amount of proceeds
intended to be raised thereunder, the Person with whom such Subsequent
Financing is proposed to be effected, and attached to which shall be a term
sheet or similar document relating thereto and (ii) such Purchaser shall not
have notified the Company by 6:30 p.m. (New York City time) on the third (3rd)
Trading Day after its receipt of the Subsequent Financing Notice of its
willingness to provide (or to cause its designee to provide), subject to
completion of mutually acceptable documentation, all or part of such financing
to the Company on the same terms set forth in the Subsequent Financing Notice.
If one or more Purchasers shall fail to so notify the Company of their
willingness to participate in the Subsequent Financing, the Company may effect
the remaining portion of such Subsequent Financing on the terms and to the
Persons set forth in the Subsequent Financing Notice; provided that the
Company must provide the Purchasers with a second Subsequent Financing Notice,
and the Purchasers will again have the right of first refusal set forth above
in this Section 4.12, if the Subsequent Financing subject to the initial
Subsequent Financing Notice is not consummated for any reason on the terms set
forth in such Subsequent Financing Notice within 60 Trading Days after the
date of the initial Subsequent Financing Notice with the Person identified in
the Subsequent Financing Notice. In the event the Company receives responses
to Subsequent Financing Notices from Purchasers seeking to purchase more than
the financing sought by the Company in the Subsequent Financing such
Purchasers shall have the right to purchase their Pro Rata Portion (as defined
below) of the Common Stock or Common Stock Equivalents to be issued in such
Subsequent Financing. "Pro Rata Portion" is the ratio of (x) such Purchaser's
Subscription Amount and (y) the aggregate sum of all of the Subscription
Amounts. Notwithstanding anything to the contrary herein, this Section 4.12
shall not apply to the following (a) the granting of options to employees,
officers and directors of the Company pursuant to any stock option plan duly
adopted by a majority of the non-employee members of the Board of Directors of
the Company or a majority of the members of a committee of non-employee
directors established for such purpose, or (b) the exercise of any security
issued by the Company in connection with the offer and sale of the Company's
securities pursuant to this

                                      19
<PAGE>

Agreement, or (c) the exercise of or conversion of any convertible securities,
options or warrants issued and outstanding on the date hereof, provided such
securities have not been amended since the date hereof, or (d) acquisitions or
strategic investments, the primary purpose of which is not to raise capital,
(e) the reasonable and customary issuance of Common Stock or Common Stock
Equivalents to service providers of the Company, the primary purpose of which
is not to raise capital.

      4.13 Subsequent Equity Sales. From the date hereof until 90 days after
the Effective Date, neither the Company nor any Subsidiary shall issue shares
of Common Stock or Common Stock Equivalents; provided, however, the 90 day
period set forth in this Section 4.13 shall be extended for the number of
Trading Days during such period in which (y) trading in the Common Stock is
suspended by any Trading Market, or (z) following the Effective Date, the
Registration Statement is not effective or the prospectus included in the
Registration Statement may not be used by the Purchasers for the resale of the
Shares and Warrant Shares. Notwithstanding anything to the contrary herein,
this Section 4.13 shall not apply to the following (a) the granting of options
to employees, officers and directors of the Company pursuant to any stock
option plan duly adopted by a majority of the non-employee members of the
Board of Directors of the Company or a majority of the members of a committee
of non-employee directors established for such purpose, or (b) the exercise of
any security issued by the Company in connection with the offer and sale of
the Company's securities pursuant to this Agreement, or (c) the exercise of or
conversion of any convertible securities, options or warrants issued and
outstanding on the date hereof, provided such securities have not been amended
since the date hereof, or (d) acquisitions or strategic investments, the
primary purpose of which is not to raise capital, or (e) the reasonable and
customary issuance of Common Stock or Common Stock Equivalents to service
providers of the Company, the primary purpose of which is not to raise
capital.

      4.14 Equal Treatment of Purchasers. No consideration shall be offered or
paid to any person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents.

                                  ARTICLE V.
                                MISCELLANEOUS

      5.1 Fees and Expenses. Except as otherwise set forth in this Agreement,
each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all stamp and other taxes
and duties levied in connection with the sale of the Securities.

      5.2 Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits
and schedules.

      5.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective

                                      20
<PAGE>

on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto prior to 6:30 p.m. (New York City time) on
a Trading Day, (b) the next Trading Day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
number set forth on the signature pages attached hereto on a day that is not a
Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day,
(c) the second Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages
attached hereto.

      5.3 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and each Purchaser or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver
of any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such
right.

      5.4 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.

      5.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of each Purchaser. Any
Purchaser may assign any or all of its rights under this Agreement to any
Person to whom such Purchaser assigns or transfers any Securities, provided
such transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions hereof that apply to the "Purchasers".

      5.6 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other Person, except as otherwise set forth in Section 4.8.

      5.7 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed
by and construed and enforced in accordance with the internal laws of the
State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting
in the City of New York, New York for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the

                                      21
<PAGE>

enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by delivering a copy thereof via
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law. Each party hereto (including its
affiliates, agents, officers, directors and employees) hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right
to trial by jury in any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of a Transaction
Document, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorneys' fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
action or proceeding.

      5.8 Survival. The representations and warranties herein shall survive
the Closing and delivery of the Shares and Warrant Shares.

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

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

      5.11 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary
and reasonable indemnity, if requested. The applicants for a new certificate
or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Securities.

      5.12 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any

                                      22
<PAGE>

action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

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

      5.14 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall
be responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association,
a joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out
of the other Transaction Documents, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser was introduced to the Company HPC Capital Management,
which has acted solely as agent for the Company and not for any Purchaser.
Each Purchaser has been represented by its own separate legal counsel in their
review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with the Company through FW. FW does not represent all
of the Purchasers but only the placement agent, HPC Capital Management. The
Company has elected to provide all Purchasers with the same terms and
Transaction Documents for the convenience of the Company and not because it
was required or requested to do so by the Purchasers.

                            (Signature Page Follows)

                                      23
<PAGE>

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

ERESOURCE CAPITAL GROUP, INC.                                Address for Notice:
                                                             ------------------

By:_____________________________________
     Name:
     Title:                                                  Attn:
                                                             Tel:
                                                             Fax:
With copy to (which shall not constitute notice):

[COMPANY COUNSEL]

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

                                      24
<PAGE>

          IN WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

PALISADES MASTER FUND L.P.                           Address for Notice:
                                                     ------------------
By: PEF ADVISORS, LLC, its authorized agent          C/o PEF Advisors, LLC
                                                     200 Mansell Court East
By: ____________________________________             Ste. 550
         Name:                                       Roswell GA  30076
         Title:                                      Attn: Paul T. Mannion, Jr.

Subscription Amount:  $
Shares:
Warrant Shares:

With a copy to for benefit of Placement Agent:
---------------------------------------------
                                                     Feldman Weinstein LLP
                                                     420 Lexington Avenue
                                                     New York, New York 10170
                                                     Attn:  Robert F. Charron
                                                     Tel:  (212) 869-7000
                                                     Fax:  (212) 401-4741

                       [RCG SPA SIGNATURE PAGE CONTINUED]

                                      25
<PAGE>

                 PURCHASER'S RCG SPA SIGNATURE PAGE (CONT. . . )

CRESCENT INTERNATIONAL LTD.            Address for Notice:
                                       ------------------
                                       c/o GreenLight (Switzerland) SA
                                       84, Avenue Louis-Casai
                                       CH 1216 Cointrin, Geneva
By: ____________________________       Switzerland
      Name:                            Attention: Mel Craw / Maxi Brezzi
      Title:                           Tel.: + 41 22 791 7170 / +41 22 791 7256
                                       Fax : +41 22 929 5394

Subscription Amount: $
Shares:
Warrant Shares:

                           [SIGNATURE PAGE CONTINUED]

                                      26
<PAGE>

                 PURCHASER'S RCG SPA SIGNATURE PAGE (CONT. . . )

ALPHA CAPITAL AG                                          Address for Notice:
                                                          ------------------
                                                          Lettstrasse 32
                                                          Furstentum 9490
By:  __________________________                           Vaduz, Liechtenstein
        Name:                                             Fax: 011-423 232 3196
        Title:                                            Attn: Director

Subscription Amount:  $
Shares:
Warrant Shares:

                           [SIGNATURE PAGE CONTINUED]

                                      27
<PAGE>

                 PURCHASER'S RCG SPA SIGNATURE PAGE (CONT. . . )

BRISTOL INVESTMENT FUND, LTD.                  Address for Notice:
                                               ------------------
                                               c/o Bristol DLP, LLC
                                               6363 Sunset Boulevard, 5th Floor
                                               Hollywood, California 90028
By:_________________________                   Attn:  Amy Wang, Esq.
       Name:                                   Fax:  (323) 468-8307
       Title:

Subscription Amount: $
Shares:
Warrant Shares:

                           [SIGNATURE PAGE CONTINUED]

                                      28
<PAGE>

                 PURCHASER'S RCG SPA SIGNATURE PAGE (CONT. . . )

GRYPHON MASTER FUND, LP

By:  ___________________________
         Name:
         Title:

Subscription Amount: $
Shares:
Warrant Shares:

Address for Notice:
------------------

500 Crescent Court, Suite #270
Dallas, Texas 75201
Tel: (214) 871-6783
Fax: (214) 871-6909
Attn: Ryan Wolters

                           [SIGNATURE PAGE CONTINUED]

                                      29
<PAGE>

                 PURCHASER'S RCG SPA SIGNATURE PAGE (CONT. . . )

CRESTVIEW CAPITAL FUND II, LP

By: _____________________________
         Name:
         Title:

Subscription Amount: $
Shares:
Warrant Shares:

Address for Notice:
------------------

c/o Kingsport Capital, LLC
95 Revere Drive, Suite F
Northbrook, Illinois 60062
Attn:  Richard Levy, Esq.
Fax:  (847) 559-0060

                           [SIGNATURE PAGE CONTINUED]

                                      30
<PAGE>

                 PURCHASER'S RCG SPA SIGNATURE PAGE (CONT. . . )

STONESTREET L.P.                                    Address for Notice:
                                                    ------------------
                                                    260 Town Centre Blvd.
                                                    Suite 201
By:_________________________                        Markham, ON L3R 8H8 Canada
     Name:                                          Attn: Fund Manager
     Title:

Subscription Amount:  $
Shares:
Warrant Shares:

                                      31

<PAGE>

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