Document:

Exhibit 4.2

                                                                      EXHIBIT C

NEITHER THESE  SECURITIES  NOR THE  SECURITIES  INTO WHICH THESE  SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE  COMMISSION OR
THE  SECURITIES  COMMISSION  OF ANY STATE IN  RELIANCE  UPON AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES  LAWS AS  EVIDENCED BY A LEGAL  OPINION OF COUNSEL TO THE  TRANSFEROR
REASONABLY  ACCEPTABLE  TO THE COMPANY TO SUCH  EFFECT,  THE  SUBSTANCE OF WHICH
SHALL  BE  REASONABLY  ACCEPTABLE  TO THE  COMPANY.  THESE  SECURITIES  AND  THE
SECURITIES  ISSUABLE  UPON  EXERCISE  OF  THESE  SECURITIES  MAY BE  PLEDGED  IN
CONNECTION  WITH A BONA  FIDE  MARGIN  ACCOUNT  OR OTHER  LOAN  SECURED  BY SUCH
SECURITIES.

                          COMMON STOCK PURCHASE WARRANT

                To Purchase __________ Shares of Common Stock of

                           RCG Companies Incorporated

      THIS COMMON STOCK PURCHASE  WARRANT (the  "Warrant")  certifies  that, for
value received,  _____________ (the "Holder"),  is entitled,  upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after the 181st day  following  the date hereof (the  "Initial
Exercise  Date")  and on or prior to the close of  business  on the  three  year
anniversary  of the  Initial  Exercise  Date (the  "Termination  Date")  but not
thereafter,  to subscribe for and purchase from RCG  Companies  Incorporated,  a
Delaware corporation (the "Company"), up to ______ shares (the "Warrant Shares")
of Common Stock, par value $0.04 per share, of the Company (the "Common Stock").
The Exercise Period shall be extended for the number of Trading Days during such
period in which (x)  trading in the Common  Stock is  suspended  by any  Trading
Market,  or (y) 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 Warrant Shares.  The purchase price
of one share of Common Stock under this  Warrant  shall be equal to the Exercise
Price, as defined under Section 2(b).

      Section 1.  Definitions.  Capitalized terms used and not otherwise defined
herein shall have the meanings  set forth in that  certain  Securities  Purchase
Agreement  (the  "Purchase  Agreement"),  dated  September  13, 2004,  among the
Company and the purchasers signatory thereto.

                                       1
<PAGE>

Section 2. Exercise.

      a) Exercise of Warrant.  Exercise of the purchase  rights  represented  by
this  Warrant may be made at any time or times on or after the Initial  Exercise
Date and on or before the Termination  Date by delivery to the Company of a duly
executed  facsimile  copy of the Notice of Exercise Form annexed hereto (or such
other  office or agency of the Company as it may  designate by notice in writing
to the registered Holder at the address of such Holder appearing on the books of
the Company);  provided,  however, within 5 Trading Days of the date said Notice
of Exercise is delivered to the Company,  the Holder shall have surrendered this
Warrant  to the  Company  and the  Company  shall have  received  payment of the
aggregate  Exercise  Price of the shares  thereby  purchased by wire transfer or
cashier's check drawn on a United States bank.

      b) Exercise Price.  The exercise price of each share of Common Stock under
this Warrant shall be $1.20,  subject to  adjustment  hereunder  (the  "Exercise
Price").

      c)  Cashless  Exercise.  If at any time  after  one year  from the date of
issuance  of  this  Warrant  there  is  no  effective   Registration   Statement
registering  the resale of the Warrant  Shares by the Holder,  then this Warrant
may also be  exercised  at such time by means of a "cashless  exercise" in which
the Holder shall be entitled to receive a certificate  for the number of Warrant
Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

            (A) = the VWAP on the Trading Day immediately  preceding the date of
such election;

            (B) = the Exercise Price of this Warrant, as adjusted; and

            (X) = the number of Warrant  Shares  issuable  upon exercise of this
Warrant in accordance with the terms of this Warrant by means of a cash exercise
rather than a cashless exercise.

      d) Holder's Restrictions.  The Holder shall not have the right to exercise
any portion of this  Warrant,  pursuant  to Section  2(c) or  otherwise,  to the
extent that after giving  effect to such  issuance  after  exercise,  the Holder
(together with the Holder's  affiliates),  as set forth on the applicable Notice
of Exercise,  would  beneficially own in excess of 4.99% of the number of shares
of the  Common  Stock  outstanding  immediately  after  giving  effect  to  such
issuance. For purposes of the foregoing sentence, the number of shares of Common
Stock  beneficially  owned by the Holder and its  affiliates  shall  include the
number of shares of Common  Stock  issuable  upon  exercise of this Warrant with
respect to which the  determination  of such  sentence is being made,  but shall
exclude the number of shares of Common  Stock  which would be issuable  upon (A)
exercise of the  remaining,  nonexercised  portion of this Warrant  beneficially
owned by the Holder or any of its  affiliates  and (B) exercise or conversion of
the unexercised or nonconverted  portion of any other  securities of the Company
(including,  without limitation,  any other Preferred Stock or Warrants) subject
to a limitation on conversion or exercise analogous to the limitation  contained
herein beneficially owned by the Holder or any of its affiliates.  Except as set
forth in the preceding sentence,  for purposes of this Section 2(d),  beneficial
ownership  shall be calculated in accordance  with Section 13(d) of the Exchange
Act, it being  acknowledged  by Holder that the Company is not  representing  to
Holder that such calculation is in compliance with Section 13(d) of the Exchange
Act and Holder is solely  responsible for any schedules  required to be filed in
accordance  therewith.  To the  extent  that the  limitation  contained  in this
Section 2(d) applies,  the  determination of whether this Warrant is exercisable
(in relation to other  securities owned by the Holder) and of which a portion of
this Warrant is exercisable shall be in the sole discretion of such Holder,  and
the  submission  of a Notice of  Exercise  shall be  deemed to be such  Holder's
determination  of whether  this  Warrant is  exercisable  (in  relation to other
securities  owned  by such  Holder)  and of which  portion  of this  Warrant  is
exercisable,  in each case subject to such aggregate percentage limitation,  and
the Company  shall have no  obligation to verify or confirm the accuracy of such
determination.  For purposes of this Section 2(d), in determining  the number of
outstanding  shares  of  Common  Stock,  the  Holder  may rely on the  number of
outstanding shares of Common Stock as reflected in (x) the Company's most recent
Form  10-Q  or  Form  10-K,  as  the  case  may  be,  (y) a more  recent  public
announcement  by the Company or (z) any other  written  notice by the Company or
the Company's  Transfer Agent setting forth the number of shares of Common Stock
outstanding.  Upon the written or oral request of the Holder,  the Company shall
within two Trading Days  confirm  orally and in writing to the Holder the number
of  shares  of  Common  Stock  then  outstanding.  In any  case,  the  number of
outstanding  shares of Common Stock shall be  determined  after giving effect to
the conversion or exercise of securities of the Company, including this Warrant,
by the  Holder  or its  affiliates  since  the date as of which  such  number of
outstanding shares of Common Stock was reported.

                                       2
<PAGE>

      e) Mechanics of Exercise.

            i.  Authorization of Warrant Shares.  The Company covenants that all
Warrant  Shares  which may be issued upon the  exercise of the  purchase  rights
represented  by  this  Warrant  will,  upon  exercise  of  the  purchase  rights
represented by this Warrant, be duly authorized,  validly issued, fully paid and
nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue).  The Company  covenants  that during the period the Warrant is
outstanding,  it will reserve from its  authorized  and unissued  Common Stock a
sufficient  number of shares to provide for the  issuance of the Warrant  Shares
upon the exercise of any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall  constitute  full authority to
its officers who are charged with the duty of executing  stock  certificates  to
execute and issue the  necessary  certificates  for the Warrant  Shares upon the
exercise of the purchase  rights under this  Warrant.  The Company will take all
such  reasonable  action as may be necessary to assure that such Warrant  Shares
may be issued as provided  herein  without  violation of any  applicable  law or
regulation,  or of any  requirements of the Trading Market upon which the Common
Stock may be listed.

            ii. Delivery of Certificates Upon Exercise. If there is an effective
Registration  Statement,  certificates for shares  purchased  hereunder shall be
transmitted  by the transfer agent of the Company to the Holder by crediting the
account of the Holder's  designated  broker with the  Depository  Trust  Company
through its Deposit Withdrawal Agent Commission ("DWAC") system within 3 Trading
Days from the delivery to the Company of the Notice of Exercise Form,  surrender
of this Warrant and payment of the aggregate  Exercise  Price as set forth above
("Warrant  Share  Delivery  Date").  This  Warrant  shall be deemed to have been
exercised on the date the Exercise Price is received by the Company. The Warrant
Shares  shall be deemed to have been  issued,  and Holder or any other person so
designated to be named therein shall be deemed to have become a holder of record
of such shares for all purposes,  as of the date the Warrant has been  exercised
by payment to the  Company of the  Exercise  Price and all taxes  required to be
paid by the Holder,  if any, pursuant to Section 2(e)(vii) prior to the issuance
of such shares, have been paid.

                                       3
<PAGE>

            iii.  Delivery of New Warrants Upon Exercise.  If this Warrant shall
have been exercised in part,  the Company shall,  at the time of delivery of the
certificate or certificates representing Warrant Shares, deliver to Holder a new
Warrant  evidencing  the rights of Holder to purchase  the  unpurchased  Warrant
Shares called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant.

            iv.  Rescission  Rights.  If the Company fails to cause its transfer
agent to  transmit  to the  Holder  through  the DWAC  system a  certificate  or
certificates  representing  the Warrant Shares pursuant to this Section 2(e)(iv)
by the  Warrant  Share  Delivery  Date,  then the Holder  will have the right to
rescind such exercise

            v. Buy-In Compensation. In addition to any other rights available to
the Holder,  if the Company fails to cause its transfer agent to transmit to the
Holder through the DWAC system a certificate or  certificates  representing  the
Warrant  Shares  pursuant to an exercise on or before the Warrant Share Delivery
Date,  and if after such date the Holder is  required  by its broker to purchase
(in an open market  transaction or otherwise)  shares of Common Stock to deliver
in  satisfaction  of a sale by the Holder of the Warrant Shares which the Holder
anticipated  receiving  upon such exercise (a "Buy-In"),  then the Company shall
(1) pay in cash to the  Holder  the  amount  by  which  (x) the  Holder's  total
purchase  price  (including  brokerage  commissions,  if any) for the  shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of Warrant  Shares that the Company was required to deliver to the Holder
in  connection  with the exercise at issue times (B) the price at which the sell
order  giving rise to such  purchase  obligation  was  executed,  and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant  Shares for which such  exercise was not honored or deliver to
the Holder the number of shares of Common  Stock that would have been issued had
the  Company  timely  complied  with  its  exercise  and  delivery   obligations
hereunder.  For  example,  if the Holder  purchases  Common Stock having a total
purchase  price of  $11,000  to  cover a Buy-In  with  respect  to an  attempted
exercise of shares of Common Stock with an  aggregate  sale price giving rise to
such  purchase  obligation  of  $10,000,  under  clause  (1) of the  immediately
preceding  sentence the Company shall be required to pay the Holder $1,000.  The
Holder shall provide the Company  written notice  indicating the amounts payable
to the Holder in respect of the Buy-In,  together with applicable  confirmations
and other  evidence  reasonably  requested by the Company.  Nothing herein shall
limit a Holder's right to pursue any other  remedies  available to it hereunder,
at  law or in  equity  including,  without  limitation,  a  decree  of  specific
performance  and/or  injunctive  relief with respect to the Company's failure to
timely deliver certificates representing shares of Common Stock upon exercise of
the Warrant as required pursuant to the terms hereof.

                                       4
<PAGE>

            vi. No Fractional  Shares or Scrip.  No  fractional  shares or scrip
representing  fractional  shares  shall  be  issued  upon the  exercise  of this
Warrant.  As to any fraction of a share which Holder would otherwise be entitled
to purchase  upon such  exercise,  the Company  shall pay a cash  adjustment  in
respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.

            vii.  Charges,  Taxes and  Expenses.  Issuance of  certificates  for
Warrant  Shares  shall be made  without  charge to the  Holder  for any issue or
transfer  tax or other  incidental  expense in respect of the  issuance  of such
certificate,  all of which taxes and expenses shall be paid by the Company,  and
such  certificates  shall be issued in the name of the Holder or in such name or
names as may be  directed by the Holder;  provided,  however,  that in the event
certificates  for Warrant  Shares are to be issued in a name other than the name
of the Holder,  this Warrant when  surrendered for exercise shall be accompanied
by the  Assignment  Form attached  hereto duly  executed by the Holder;  and the
Company may require, as a condition thereto,  the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto.

            viii.  Closing of Books.  The Company will not close its stockholder
books or records in any  manner  which  prevents  the  timely  exercise  of this
Warrant, pursuant to the terms hereof.

                                       5
<PAGE>

      f) Call  Provision.  Subject to the  provisions  of this Section  2(f), if
after the Effective Date the VWAP for each of 20  consecutive  Trading Days (the
"Measurement  Price",  which  period  shall not have  commenced  until after the
Effective  Date) exceeds 200% of the then Exercise  Price (subject to adjustment
as set forth herein) (the  "Threshold  Price),  then the Company may, within ten
Trading Days of such period, call for cancellation of all or any portion of this
Warrant for which a Notice of Exercise has not yet been delivered (such right, a
"Call").  To exercise  this right,  the  Company  must  deliver to the Holder an
irrevocable written notice (a "Call Notice"),  indicating therein the portion of
unexercised  portion  of this  Warrant  to which  such  notice  applies.  If the
conditions  set forth below for such Call are satisfied from the period from the
date of the Call Notice through and including the Call Date (as defined  below),
then any portion of this Warrant  subject to such Call Notice for which a Notice
of  Exercise  shall not have been  received  from and after the date of the Call
Notice will be cancelled at 6:30 p.m.  (New York City time) on the tenth Trading
Day after the date the Call  Notice is received  by the Holder  (such date,  the
"Call Date").  Any unexercised  portion of this Warrant to which the Call Notice
does not pertain will be unaffected by such Call Notice. In furtherance thereof,
the Company covenants and agrees that it will honor all Notices of Exercise with
respect to Warrant  Shares  subject to a Call Notice that are tendered  from the
time of delivery of the Call Notice  through  6:30 p.m.  (New York City time) on
the Call Date. The parties agree that any Notice of Exercise delivered following
a Call Notice shall first reduce to zero the number of Warrant Shares subject to
such Call Notice prior to reducing the remaining  Warrant  Shares  available for
purchase under this Warrant.  For example,  if (x) this Warrant then permits the
Holder to acquire 100 Warrant  Shares,  (y) a Call Notice pertains to 75 Warrant
Shares,  and (z)  prior to 6:30 p.m.  (New York City  time) on the Call Date the
Holder tenders a Notice of Exercise in respect of 50 Warrant Shares, then (1) on
the Call Date the right under this Warrant to acquire 25 Warrant  Shares will be
automatically  cancelled, (2) the Company, in the time and manner required under
this Warrant,  will have issued and delivered to the Holder 50 Warrant Shares in
respect  of the  exercises  following  receipt of the Call  Notice,  and (3) the
Holder may,  until the  Termination  Date,  exercise this Warrant for 25 Warrant
Shares  (subject to adjustment as herein provided and subject to subsequent Call
Notices).  Subject again to the provisions of this Section 3(e), the Company may
deliver  subsequent  Call  Notices for any portion of this Warrant for which the
Holder shall not have delivered a Notice of Exercise.  Notwithstanding  anything
to the  contrary set forth in this  Warrant,  the Company may not deliver a Call
Notice or require the  cancellation of this Warrant (and any Call Notice will be
void),  unless,  from the beginning of the 20  consecutive  Trading Days used to
determine  whether the Common Stock has achieved the Threshold Price through the
Call Date, the Equity  Conditions (as defined in the Certificate of Designation)
have  been met.  The  Company's  right to Call the  Warrant  shall be  exercised
ratably  among the  Purchasers  based on each  Purchaser's  initial  purchase of
Common Stock pursuant to the Purchase Agreement.

                                       6
<PAGE>

Section 3. Certain Adjustments.

      a) Stock  Dividends  and Splits.  If the  Company,  at any time while this
Warrant  is  outstanding:  (A)  pays  a  stock  dividend  or  otherwise  make  a
distribution or  distributions on shares of its Common Stock or any other equity
or equity equivalent  securities  payable in shares of Common Stock (which,  for
avoidance  of doubt,  shall not include any shares of Common Stock issued by the
Company pursuant to this Warrant),  (B) subdivides  outstanding shares of Common
Stock into a larger number of shares, (C) combines  (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares,
or (D) issues by  reclassification  of shares of the Common  Stock any shares of
capital  stock of the  Company,  then in each case the  Exercise  Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding  treasury shares, if any) outstanding  before such event
and of which the  denominator  shall be the  number  of  shares of Common  Stock
outstanding  after such event and the number of  Warrant  Shares  issuable  upon
exercise of this Warrant shall be proportionately  adjusted. Any adjustment made
pursuant to this  Section  3(a) shall  become  effective  immediately  after the
record date for the  determination  of  stockholders  entitled  to receive  such
dividend  or  distribution  and shall  become  effective  immediately  after the
effective date in the case of a subdivision, combination or re-classification.

      b) Subsequent Equity Sales. If the Company or any Subsidiary  thereof,  as
applicable, at any time while this Warrant is outstanding, shall sell, grant any
option to  purchase,  sell or grant  any right to  reprice  its  securities,  or
otherwise  dispose  of or issue any  Common  Stock or Common  Stock  Equivalents
entitling any Person to acquire  shares of Common Stock,  at an effective  price
per share less than the then Exercise  Price (such lower price,  the "Base Share
Price" and such  issuances  collectively,  a "Dilutive  Issuance"),  as adjusted
hereunder  (if the holder of the Common  Stock or Common  Stock  Equivalents  so
issued shall at any time,  whether by operation of purchase  price  adjustments,
reset provisions, floating conversion, exercise or exchange prices or otherwise,
or due to  warrants,  options or rights per share which is issued in  connection
with such  issuance,  be  entitled  to  receive  shares  of  Common  Stock at an
effective price per share which is less than the Exercise  Price,  such issuance
shall be deemed to have occurred for less than the Exercise  Price),  then,  the
Exercise  Price  shall be  reduced  to equal  the Base  Share  Price;  provided,
however,  in no event shall the  Exercise  Price be less than $1.00,  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 the Purchase Agreement.  Such adjustment shall be made whenever such
Common Stock or Common Stock  Equivalents  are issued.  The Company shall notify
the Holder in  writing,  no later  than the second  Trading  Day  following  the
issuance  of any  Common  Stock or  Common  Stock  Equivalents  subject  to this
section,  indicating  therein the applicable  issuance  price,  or of applicable
reset price, exchange price, conversion price and other pricing terms.

                                       7
<PAGE>

      c) Pro  Rata  Distributions.  If the  Company,  at any  time  prior to the
Termination  Date,  shall  distribute to all holders of Common Stock (and not to
Holders of the Warrants)  evidences of its  indebtedness  or assets or rights or
warrants to subscribe  for or purchase any security  other than the Common Stock
(which  shall be subject to Section  3(b)),  then in each such case the Exercise
Price shall be adjusted by multiplying the Exercise Price in effect  immediately
prior to the record date fixed for  determination  of  stockholders  entitled to
receive such  distribution by a fraction of which the  denominator  shall be the
VWAP  determined  as of the  record  date  mentioned  above,  and of  which  the
numerator  shall be such VWAP on such  record  date less the then per share fair
market  value at such  record  date of the portion of such assets or evidence of
indebtedness so distributed  applicable to one  outstanding  share of the Common
Stock as determined by the Board of Directors in good faith.  In either case the
adjustments  shall be  described  in a statement  provided to the Holders of the
portion  of  assets  or  evidences  of   indebtedness  so  distributed  or  such
subscription  rights  applicable to one share of Common Stock.  Such  adjustment
shall be made whenever any such  distribution is made and shall become effective
immediately after the record date mentioned above.

      d) Calculations.  All  calculations  under this Section 3 shall be made to
the  nearest  cent or the  nearest  1/100th of a share,  as the case may be. For
purposes of this Section 3, the number of shares of Common Stock  outstanding as
of a given  date  shall be the sum of the  number  of  shares  of  Common  Stock
(excluding treasury shares, if any) outstanding.

e)       Notice to Holders.

            i.  Adjustment  to Exercise  Price.  Whenever the Exercise  Price is
adjusted  pursuant to this Section 3, the Company  shall  promptly  mail to each
Holder a notice  setting  forth the  Exercise  Price after such  adjustment  and
setting forth a brief statement of the facts requiring such  adjustment.  If the
Company issues a variable rate security,  despite the prohibition thereon in the
Purchase  Agreement,  the Company shall be deemed to have issued Common Stock or
Common Stock Equivalents at the lowest possible  conversion or exercise price at
which such  securities  may be  converted or exercised in the case of a Variable
Rate Transaction (as defined in the Purchase Agreement).

            ii.  Notice to Allow  Exercise by Holder.  If (A) the Company  shall
declare a dividend  (or any other  distribution)  on the Common  Stock;  (B) the
Company shall declare a special nonrecurring cash dividend on or a redemption of
the Common Stock; (C) the Company shall authorize the granting to all holders of
the Common Stock  rights or warrants to subscribe  for or purchase any shares of
capital  stock  of  any  class  or of  any  rights;  (D)  the  approval  of  any
stockholders   of  the  Company  shall  be  required  in  connection   with  any
reclassification  of the Common Stock, any  consolidation or merger to which the
Company is a party,  any sale or  transfer  of all or  substantially  all of the
assets of the Company, of any compulsory share exchange whereby the Common Stock
is converted  into other  securities,  cash or property;  (E) the Company  shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company;  then,  in each case,  the Company shall cause to be
mailed to the Holder at its last  addresses  as it shall appear upon the Warrant
Register  of the  Company,  at least 20  calendar  days prior to the  applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the  purpose of such  dividend,  distribution,
redemption,  rights or warrants,  or if a record is not to be taken, the date as
of which the  holders  of the  Common  Stock of record  to be  entitled  to such
dividend, distributions,  redemption, rights or warrants are to be determined or
(y) the  date on  which  such  reclassification,  consolidation,  merger,  sale,
transfer or share  exchange is expected to become  effective  or close,  and the
date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or
other property deliverable upon such  reclassification,  consolidation,  merger,
sale, transfer or share exchange; provided, that the failure to mail such notice
or any defect therein or in the mailing thereof shall not affect the validity of
the  corporate  action  required to be specified  in such notice.  The Holder is
entitled to exercise this Warrant  during the 20-day period  commencing the date
of such notice to the effective date of the event triggering such notice

                                       8
<PAGE>

      f)  Fundamental  Transaction.  If,  at any  time  while  this  Warrant  is
outstanding,  (A) the Company effects any merger or consolidation of the Company
with or into another Person,  in which the Company is not the surviving  entity,
or the  Company's  then  existing  shareholders  will own  less  than 51% of the
surviving  entity,  (B) the Company effects any sale of all or substantially all
of its assets in one or a series of related  transactions,  (C) any tender offer
or  exchange  offer  (whether  by the  Company or another  Person) is  completed
pursuant to which  holders of Common  Stock are  permitted to tender or exchange
their shares for other securities,  cash or property, or (D) the Company effects
any  reclassification  of the  Common  Stock or any  compulsory  share  exchange
pursuant to which the Common Stock is  effectively  converted  into or exchanged
for  other  securities,  cash or  property  (in any such  case,  a  "Fundamental
Transaction"),  ------------------------ then, upon any subsequent conversion of
this Warrant, the Holder shall have the right to receive, for each Warrant Share
that  would  have been  issuable  upon such  exercise  absent  such  Fundamental
Transaction, at the option of the Holder, (a) upon exercise of this Warrant, the
number of shares of Common Stock of the successor or acquiring corporation or of
the Company,  if it is the surviving  corporation,  and Alternate  Consideration
receivable upon or as a result of such reorganization, reclassification, merger,
consolidation  or  disposition  of assets by a Holder of the number of shares of
Common Stock for which this  Warrant is  exercisable  immediately  prior to such
event  or (b)  only  in  the  event  the  Company  is  acquired  in an all  cash
acquisition, cash equal to the value of this Warrant as determined in accordance
with the Black-Scholes  option pricing formula (the "Alternate  Consideration").
For purposes of any such ------------------------ exercise, the determination of
the Exercise  Price shall be  appropriately  adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such  Fundamental  Transaction,  and the Company
shall  apportion  the  Exercise  Price among the  Alternate  Consideration  in a
reasonable manner  reflecting the relative value of any different  components of
the Alternate Consideration.  If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it  receives  upon any  exercise  of this  Warrant  following  such  Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions, any
successor to the Company or  surviving  entity in such  Fundamental  Transaction
shall issue to the Holder a new warrant consistent with the foregoing provisions
and  evidencing  the Holder's  right to exercise  such  warrant  into  Alternate
Consideration  upon the payment thereof.  The terms of any agreement pursuant to
which a Fundamental  Transaction is effected  shall include terms  requiring any
such  successor  or  surviving  entity to  comply  with the  provisions  of this
paragraph (f) and insuring that this Warrant (or any such replacement  security)
will be  similarly  adjusted  upon any  subsequent  transaction  analogous  to a
Fundamental Transaction.

      g)  Exempt  Issuance.   Notwithstanding  the  foregoing,  no  adjustments,
Alternate  Consideration  nor notices  shall be made,  paid or issued under this
Section 3 in respect of an Exempt Issuance.

      h) Voluntary Adjustment By Company. The Company may at any time during the
term of this Warrant  reduce the then current  Exercise  Price to any amount and
for any  period of time  deemed  appropriate  by the Board of  Directors  of the
Company.

Section 4. Transfer of Warrant.

      a) Transferability.  Subject to compliance with any applicable  securities
laws and the  conditions  set forth in Sections  5(a) and 4(d) hereof and to the
provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights
hereunder are transferable,  in whole or in part, upon surrender of this Warrant
at the principal  office of the Company,  together with a written  assignment of
this Warrant  substantially  in the form  attached  hereto duly  executed by the
Holder or its agent or attorney and funds  sufficient to pay any transfer  taxes
payable upon the making of such transfer.  Upon such surrender and, if required,
such payment, the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the  denomination or  denominations
specified in such  instrument of  assignment,  and shall issue to the assignor a
new Warrant  evidencing  the portion of this Warrant not so  assigned,  and this
Warrant shall promptly be cancelled.  A Warrant,  if properly  assigned,  may be
exercised by a new holder for the purchase of Warrant  Shares  without  having a
new Warrant issued.

      b) New  Warrants.  This  Warrant  may be  divided or  combined  with other
Warrants  upon  presentation  hereof at the  aforesaid  office  of the  Company,
together with a written notice  specifying the names and  denominations in which
new  Warrants  are to be issued,  signed by the Holder or its agent or attorney.
Subject  to  compliance  with  Section  4(a),  as to any  transfer  which may be
involved in such division or combination,  the Company shall execute and deliver
a new Warrant or Warrants in exchange  for the Warrant or Warrants to be divided
or combined in accordance with such notice.

      c) Warrant Register. The Company shall register this Warrant, upon records
to be maintained by the Company for that purpose (the  "Warrant  Register"),  in
the name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any  distribution  to the Holder,  and for all
other purposes, absent actual notice to the contrary.

                                       9
<PAGE>

      d) Transfer Restrictions. If, at the time of the surrender of this Warrant
in connection  with any transfer of this  Warrant,  the transfer of this Warrant
shall not be registered  pursuant to an effective  registration  statement under
the Securities Act and under  applicable  state securities or blue sky laws, the
Company may  require,  as a condition  of allowing  such  transfer  (i) that the
Holder or transferee of this Warrant, as the case may be, furnish to the Company
a written  opinion of counsel  (which  opinion  shall be in form,  substance and
scope  customary  for  opinions of counsel in  comparable  transactions)  to the
effect that such transfer may be made without  registration under the Securities
Act and under applicable state securities or blue sky laws, (ii) that the holder
or transferee  execute and deliver to the Company an  investment  letter in form
and  substance  acceptable  to the Company and (iii) that the  transferee  be an
"accredited investor" as defined in Rule 501(a)(1),  (a)(2),  (a)(3), (a)(7), or
(a)(8) promulgated under the Securities Act or a qualified  institutional  buyer
as defined in Rule 144A(a) under the Securities Act.

Section 5. Miscellaneous.

      a) Title  to  Warrant.  Prior  to the  Termination  Date  and  subject  to
compliance with applicable laws and Section 4 of this Warrant,  this Warrant and
all rights  hereunder  are  transferable,  in whole or in part, at the office or
agency of the  Company by the Holder in person or by duly  authorized  attorney,
upon surrender of this Warrant  together with the Assignment Form annexed hereto
properly  endorsed.  The transferee shall sign an investment  letter in form and
substance reasonably satisfactory to the Company.

      b) No Rights as Shareholder Until Exercise.  This Warrant does not entitle
the Holder to any voting rights or other rights as a shareholder  of the Company
prior to the exercise hereof. Upon the surrender of this Warrant and the payment
of the  aggregate  Exercise  Price  (or by means of a  cashless  exercise),  the
Warrant  Shares so purchased  shall be and be deemed to be issued to such Holder
as the record  owner of such  shares as of the close of business on the later of
the date of such surrender or payment.

      c)  Loss,  Theft,  Destruction  or  Mutilation  of  Warrant.  The  Company
covenants that upon receipt by the Company of evidence  reasonably  satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate  relating  to the  Warrant  Shares,  and in case of  loss,  theft or
destruction,  of indemnity or security reasonably  satisfactory to it (which, in
the case of the  Warrant,  shall not include the posting of any bond),  and upon
surrender and cancellation of such Warrant or stock  certificate,  if mutilated,
the Company  will make and deliver a new  Warrant or stock  certificate  of like
tenor  and  dated  as of such  cancellation,  in lieu of such  Warrant  or stock
certificate.

      d) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the  expiration of any right  required or granted herein
shall be a Saturday, Sunday or a legal holiday, then such action may be taken or
such right may be exercised on the next succeeding day not a Saturday, Sunday or
legal holiday.

      e) Authorized Shares.

      The Company  covenants that during the period the Warrant is  outstanding,
it will  reserve  from its  authorized  and  unissued  Common Stock a sufficient
number of shares to provide  for the  issuance  of the  Warrant  Shares upon the
exercise  of any  purchase  rights  under  this  Warrant.  The  Company  further
covenants that its issuance of this Warrant shall  constitute  full authority to
its officers who are charged with the duty of executing  stock  certificates  to
execute and issue the  necessary  certificates  for the Warrant  Shares upon the
exercise of the purchase  rights under this  Warrant.  The Company will take all
such  reasonable  action as may be necessary to assure that such Warrant  Shares
may be issued as provided  herein  without  violation of any  applicable  law or
regulation,  or of any  requirements of the Trading Market upon which the Common
Stock may be listed.

                                       10
<PAGE>

      Except  and to the extent as waived or  consented  to by the  Holder,  the
Company shall not by any action,  including,  without  limitation,  amending its
certificate of incorporation or through any reorganization,  transfer of assets,
consolidation,  merger,  dissolution,  issue or sale of  securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this  Warrant,  but will at all times in good  faith  assist in the
carrying  out of all such terms and in the taking of all such  actions as may be
necessary  or  appropriate  to protect the rights of Holder as set forth in this
Warrant against  impairment.  Without  limiting the generality of the foregoing,
the Company will (a) not increase the par value of any Warrant  Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value,  (b) take all such action as may be necessary or appropriate in order
that the Company may  validly  and  legally  issue fully paid and  nonassessable
Warrant  Shares upon the  exercise  of this  Warrant,  and (c) use  commercially
reasonable  efforts to obtain all such  authorizations,  exemptions  or consents
from any public regulatory body having jurisdiction  thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.

      Before taking any action which would result in an adjustment in the number
of Warrant  Shares for which this  Warrant  is  exercisable  or in the  Exercise
Price, the Company shall obtain all such  authorizations or exemptions  thereof,
or consents  thereto,  as may be necessary  from any public  regulatory  body or
bodies having jurisdiction thereof.

      f)  Jurisdiction.  All questions  concerning the  construction,  validity,
enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the Purchase Agreement.

      g) Restrictions.  The Holder acknowledges that the Warrant Shares acquired
upon the exercise of this Warrant,  if not  registered,  will have  restrictions
upon resale imposed by state and federal securities laws.

      h) Nonwaiver and Expenses. No course of dealing or any delay or failure to
exercise any right  hereunder on the part of Holder shall operate as a waiver of
such  right  or  otherwise  prejudice  Holder's  rights,   powers  or  remedies,
notwithstanding  the fact that all rights hereunder terminate on the Termination
Date. If the Company  willfully and knowingly fails to comply with any provision
of this  Warrant,  which  results in any  material  damages to the  Holder,  the
Company  shall pay to Holder such  amounts as shall be  sufficient  to cover any
costs and expenses  including,  but not limited to, reasonable  attorneys' fees,
including those of appellate  proceedings,  incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights,  powers
or remedies hereunder.

                                       11
<PAGE>

      i) Notices. Any notice, request or other document required or permitted to
be given or  delivered  to the  Holder  by the  Company  shall be  delivered  in
accordance with the notice provisions of the Purchase Agreement.

      j)  Limitation of Liability.  No provision  hereof,  in the absence of any
affirmative  action by Holder to  exercise  this  Warrant  or  purchase  Warrant
Shares, and no enumeration  herein of the rights or privileges of Holder,  shall
give rise to any liability of Holder for the purchase  price of any Common Stock
or as a stockholder  of the Company,  whether such  liability is asserted by the
Company or by creditors of the Company.

      k) Remedies.  Holder, in addition to being entitled to exercise all rights
granted by law,  including  recovery  of  damages,  will be entitled to specific
performance  of its rights under this Warrant.  The Company agrees that monetary
damages would not be adequate  compensation for any loss incurred by reason of a
breach by it of the  provisions  of this Warrant and hereby  agrees to waive the
defense  in any action for  specific  performance  that a remedy at law would be
adequate.

      l) Successors and Assigns.  Subject to applicable  securities  laws,  this
Warrant  and the rights and  obligations  evidenced  hereby  shall  inure to the
benefit of and be binding upon the  successors of the Company and the successors
and permitted assigns of Holder.  The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.

      m)  Amendment.  This Warrant may be modified or amended or the  provisions
hereof waived with the written consent of the Company and the Holder.

      n) Severability.  Wherever possible,  each provision of this Warrant shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any  provision of this Warrant  shall be  prohibited  by or invalid under
applicable  law,  such  provision  shall be  ineffective  to the  extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.

      o) Headings.  The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.

                              ********************

                                       12
<PAGE>

      IN WITNESS WHEREOF,  the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.

Dated:  September __, 2004

                                        RCG Companies Incorporated

                                        By:_____________________________________
                                        Name:
                                        Title:

                                       13
<PAGE>

                               NOTICE OF EXERCISE

To: RCG Companies Incorporated

      (1)The  undersigned  hereby elects to purchase  ________ Warrant Shares of
the Company  pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.

      (2)Payment shall take the form of (check applicable box):

            |_| in lawful money of the United States; or

            |_|  the  cancellation  of  such  number  of  Warrant  Shares  as is
            necessary,  in  accordance  with the formula set forth in subsection
            2(c), to exercise this Warrant with respect to the maximum number of
            Warrant  Shares  purchasable   pursuant  to  the  cashless  exercise
            procedure set forth in subsection 2(c).

      (3)Please  issue a certificate or certificates  representing  said Warrant
Shares in the name of the  undersigned  or in such  other  name as is  specified
below:

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

The Warrant Shares shall be delivered to the following:

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

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

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

      (4) Accredited  Investor.  The undersigned is an "accredited  investor" as
defined  in  Regulation  D  promulgated  under the  Securities  Act of 1933,  as
amended.

                                                [PURCHASER]

                                                By: ____________________________
                                                    Name:
                                                    Title:

                                                Dated:  ________________________

<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

      FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to

_______________________________________________ whose address is

---------------------------------------------------------------.

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

                                      Dated:  ______________, _______

             Holder's Signature: _____________________________

             Holder's Address:_____________________________

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

Signature Guaranteed:  ___________________________________________

NOTE: The signature to this  Assignment Form must correspond with the name as it
appears on the face of the Warrant,  without  alteration or  enlargement  or any
change whatsoever,  and must be guaranteed by a bank or trust company.  Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.EXHIBIT 4.3

                                                                       EXHIBIT E

NEITHER THESE  SECURITIES  NOR THE  SECURITIES  INTO WHICH THESE  SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE  COMMISSION OR
THE  SECURITIES  COMMISSION  OF ANY STATE IN  RELIANCE  UPON AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES  LAWS AS  EVIDENCED BY A LEGAL  OPINION OF COUNSEL TO THE  TRANSFEROR
REASONABLY  ACCEPTABLE  TO THE COMPANY TO SUCH  EFFECT,  THE  SUBSTANCE OF WHICH
SHALL  BE  REASONABLY  ACCEPTABLE  TO THE  COMPANY.  THESE  SECURITIES  AND  THE
SECURITIES  ISSUABLE  UPON  EXERCISE  OF  THESE  SECURITIES  MAY BE  PLEDGED  IN
CONNECTION  WITH A BONA  FIDE  MARGIN  ACCOUNT  OR OTHER  LOAN  SECURED  BY SUCH
SECURITIES.

                           ADDITIONAL INVESTMENT RIGHT

                To Purchase __________ Shares of Common Stock of

                           RCG COMPANIES INCORPORATED

      THIS  ADDITIONAL  INVESTMENT  RIGHT (the  "Additional  Investment  Right")
certifies that, for value received,  _____________ (the "Holder"),  is entitled,
upon the terms and subject to the  limitations  on exercise  and the  conditions
hereinafter  set  forth,  at any time on or after  the  181st day after the date
hereof (the "Initial Exercise Date") and on or prior to the close of business on
the earlier of (a) the later of (i) the 181st day after the  Effective  Date and
(ii)  the  181st  day  after  the  Initial  Exercise  Date  and (b) the 2nd year
anniversary of the date of the Purchase  Agreement (the  "Termination  Date" and
the period from the Initial  Exercise Date until the  Termination  Date shall be
the "Exercise  Period") but not  thereafter,  to subscribe for and purchase from
RCG  Companies  Incorporated,  a Delaware  corporation  (the  "Company"),  up to
______________  shares  (the  "Additional  Investment  Right  Shares") of Common
Stock,  par value $0.04 per share,  of the Company  (the  "Common  Stock").  The
Exercise  Period  shall be extended  for the number of Trading  Days during such
period in which (x)  trading in the Common  Stock is  suspended  by any  Trading
Market,  or (y) 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 Additional Investment Right Shares.
The purchase price of one share of Common Stock under this Additional Investment
Right shall be equal to the Exercise Price, as defined under Section 2(b).

                                       1
<PAGE>

      Section 1.  Definitions.  Capitalized terms used and not otherwise defined
herein shall have the meanings  set forth in that  certain  Securities  Purchase
Agreement  (the  "Purchase  Agreement"),  dated  September  13, 2004,  among the
Company and the purchasers signatory thereto.

      Section 2. Exercise.

            a)    Exercise  of  Additional  Investment  Right.  Exercise  of the
purchase rights  represented by this Additional  Investment Right may be made at
any time or times on or after the  Initial  Exercise  Date and on or before  the
Termination Date by delivery to the Company of a duly executed facsimile copy of
the Notice of Exercise  Form  annexed  hereto (or such other office or agency of
the Company as it may designate by notice in writing to the registered Holder at
the address of such Holder  appearing  on the books of the  Company);  provided,
however,  within 5 Trading Days of the date said Notice of Exercise is delivered
to the Company,  the Holder shall have  surrendered  this Additional  Investment
Right  to the  Company  and the  Company  shall  have  received  payment  of the
aggregate  Exercise  Price of the shares  thereby  purchased by wire transfer or
cashier's check drawn on a United States bank.

            b)    Exercise  Price.  The  exercise  price of each share of Common
Stock  under  this  Additional  Investment  Right  shall be  $1.03,  subject  to
adjustment hereunder (the "Exercise Price").

            c)    Intentionally omitted.

            d)    Holder's Restrictions.  The Holder shall not have the right to
exercise any portion of this Additional  Investment  Right,  pursuant to Section
2(c) or otherwise, to the extent that after giving effect to such issuance after
exercise,  the Holder (together with the Holder's  affiliates),  as set forth on
the applicable Notice of Exercise,  would beneficially own in excess of 4.99% of
the number of shares of the Common Stock  outstanding  immediately  after giving
effect to such issuance.  For purposes of the foregoing sentence,  the number of
shares of Common Stock beneficially owned by the Holder and its affiliates shall
include  the number of shares of Common  Stock  issuable  upon  exercise of this
Additional  Investment  Right with  respect to which the  determination  of such
sentence is being made,  but shall  exclude the number of shares of Common Stock
which would be issuable upon (A) exercise of the remaining, nonexercised portion
of this Additional  Investment Right  beneficially owned by the Holder or any of
its affiliates and (B) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company  (including,  without limitation,
any  other  Preferred  Stock  or  Additional  Investment  Rights)  subject  to a
limitation  on  conversion  or exercise  analogous to the  limitation  contained
herein beneficially owned by the Holder or any of its affiliates.  Except as set
forth in the preceding sentence,  for purposes of this Section 2(d),  beneficial
ownership  shall be calculated in accordance  with Section 13(d) of the Exchange
Act, it being  acknowledged  by Holder that the Company is not  representing  to
Holder that such calculation is in compliance with Section 13(d) of the Exchange
Act and Holder is solely  responsible for any schedules  required to be filed in
accordance  therewith.  To the  extent  that the  limitation  contained  in this

                                       2
<PAGE>

Section 2(d) applies,  the  determination of whether this Additional  Investment
Right is exercisable (in relation to other  securities  owned by the Holder) and
of which a portion of this Additional  Investment Right is exercisable  shall be
in the sole  discretion  of such  Holder,  and the  submission  of a  Notice  of
Exercise  shall be deemed to be such  Holder's  determination  of  whether  this
Additional  Investment  Right is  exercisable  (in relation to other  securities
owned by such Holder) and of which portion of this Additional  Investment  Right
is exercisable,  in each case subject to such aggregate  percentage  limitation,
and the Company  shall have no  obligation  to verify or confirm the accuracy of
such determination. For purposes of this Section 2(d), in determining the number
of  outstanding  shares of Common  Stock,  the  Holder may rely on the number of
outstanding shares of Common Stock as reflected in (x) the Company's most recent
Form  10-Q  or  Form  10-K,  as  the  case  may  be,  (y) a more  recent  public
announcement  by the Company or (z) any other  written  notice by the Company or
the Company's  Transfer Agent setting forth the number of shares of Common Stock
outstanding.  Upon the written or oral request of the Holder,  the Company shall
within two Trading Days  confirm  orally and in writing to the Holder the number
of  shares  of  Common  Stock  then  outstanding.  In any  case,  the  number of
outstanding  shares of Common Stock shall be  determined  after giving effect to
the  conversion  or  exercise  of  securities  of the  Company,  including  this
Additional  Investment  Right, by the Holder or its affiliates since the date as
of which such number of outstanding shares of Common Stock was reported.

            e)    Mechanics of Exercise.

                        i. Authorization of Additional  Investment Right Shares.
                  The Company  covenants  that all Additional  Investment  Right
                  Shares  which may be issued upon the  exercise of the purchase
                  rights  represented by this Additional  Investment Right will,
                  upon  exercise  of the  purchase  rights  represented  by this
                  Additional  Investment  Right,  be  duly  authorized,  validly
                  issued,  fully paid and nonassessable and free from all taxes,
                  liens and charges in respect of the issue thereof  (other than
                  taxes in respect of any transfer  occurring  contemporaneously
                  with such issue). The Company covenants that during the period
                  the  Additional  Investment  Right  is  outstanding,  it  will
                  reserve  from  its  authorized  and  unissued  Common  Stock a
                  sufficient number of shares to provide for the issuance of the
                  Additional  Investment  Right  Shares upon the exercise of any
                  purchase rights under this Additional  Investment  Right.  The
                  Company further covenants that its issuance of this Additional
                  Investment  Right  shall  constitute  full  authority  to  its
                  officers  who are  charged  with the duty of  executing  stock
                  certificates  to execute and issue the necessary  certificates
                  for the Additional  Investment  Right Shares upon the exercise
                  of the purchase rights under this Additional Investment Right.
                  The  Company  will take all such  reasonable  action as may be
                  necessary  to assure  that such  Additional  Investment  Right
                  Shares may be issued as provided  herein without  violation of
                  any applicable law or regulation,  or of any  requirements  of
                  the Trading Market upon which the Common Stock may be listed.

                                       3
<PAGE>

                        ii. Delivery of Certificates Upon Exercise.  If there is
                  an effective Registration  Statement,  certificates for shares
                  purchased hereunder shall be transmitted by the transfer agent
                  of the Company to the Holder by  crediting  the account of the
                  Holder's  designated  broker with the Depository Trust Company
                  through  its  Deposit  Withdrawal  Agent  Commission  ("DWAC")
                  system  within 3 Trading Days from the delivery to the Company
                  of the Notice of Exercise Form,  surrender of this  Additional
                  Investment  Right and payment of the aggregate  Exercise Price
                  as  set  forth  above  ("Additional   Investment  Right  Share
                  Delivery  Date").  This Additional  Investment  Right shall be
                  deemed to have been  exercised on the date the Exercise  Price
                  is received by the Company.  The Additional  Investment  Right
                  Shares shall be deemed to have been issued,  and Holder or any
                  other person so designated to be named therein shall be deemed
                  to have  become a holder  of  record  of such  shares  for all
                  purposes,  as of the date the Additional  Investment Right has
                  been exercised by payment to the Company of the Exercise Price
                  and all  taxes  required  to be paid  by the  Holder,  if any,
                  pursuant to Section  2(e)(vii)  prior to the  issuance of such
                  shares, have been paid.

                        iii.  Delivery of New Additional  Investment Rights Upon
                  Exercise.  If this Additional Investment Right shall have been
                  exercised in part, the Company shall,  at the time of delivery
                  of the  certificate or  certificates  representing  Additional
                  Investment  Right Shares,  deliver to Holder a new  Additional
                  Investment  Right  evidencing the rights of Holder to purchase
                  the unpurchased  Additional Investment Right Shares called for
                  by this  Additional  Investment  Right,  which new  Additional
                  Investment Right shall in all other respects be identical with
                  this Additional Investment Right.

                        iv. Rescission Rights. If the Company fails to cause its
                  transfer  agent to  transmit  to the Holder  through  the DWAC
                  system  a  certificate  or   certificates   representing   the
                  Additional  Investment  Right Shares  pursuant to this Section
                  2(e)(iv) by the  Additional  Investment  Right Share  Delivery
                  Date,  then the  Holder  will have the right to  rescind  such
                  exercise

                        v. Buy-In Compensation.  In addition to any other rights
                  available  to the Holder,  if the  Company  fails to cause its
                  transfer  agent to  transmit  to the Holder  through  the DWAC
                  system  a  certificate  or   certificates   representing   the
                  Additional  Investment Right Shares pursuant to an exercise on
                  or before the Additional Investment Right Share Delivery Date,
                  and if after such date the Holder is required by its broker to
                  purchase (in an open market  transaction or otherwise)  shares
                  of Common  Stock to deliver in  satisfaction  of a sale by the
                  Holder of the  Additional  Investment  Right  Shares which the
                  Holder anticipated  receiving upon such exercise (a "Buy-In"),
                  then  the  Company  shall  (1) pay in cash to the  Holder  the
                  amount  by  which  (x)  the  Holder's   total  purchase  price
                  (including  brokerage  commissions,  if any) for the shares of
                  Common Stock so purchased  exceeds (y) the amount  obtained by

                                       4
<PAGE>

                  multiplying  (A) the  number of  Additional  Investment  Right
                  Shares that the Company was  required to deliver to the Holder
                  in  connection  with the exercise at issue times (B) the price
                  at  which  the  sell  order  giving  rise  to  such   purchase
                  obligation was executed,  and (2) at the option of the Holder,
                  either  reinstate  the  portion of the  Additional  Investment
                  Right and  equivalent  number of Additional  Investment  Right
                  Shares for which such  exercise  was not honored or deliver to
                  the  Holder  the  number of shares of Common  Stock that would
                  have been  issued had the  Company  timely  complied  with its
                  exercise and delivery obligations  hereunder.  For example, if
                  the Holder  purchases  Common  Stock  having a total  purchase
                  price  of  $11,000  to  cover  a  Buy-In  with  respect  to an
                  attempted exercise of shares of Common Stock with an aggregate
                  sale price giving rise to such purchase obligation of $10,000,
                  under  clause (1) of the  immediately  preceding  sentence the
                  Company shall be required to pay the Holder $1,000. The Holder
                  shall  provide  the  Company  written  notice  indicating  the
                  amounts  payable  to the  Holder  in  respect  of the  Buy-In,
                  together  with  applicable  confirmations  and other  evidence
                  reasonably  requested  by the  Company.  Nothing  herein shall
                  limit a Holder's right to pursue any other remedies  available
                  to it  hereunder,  at  law  or in  equity  including,  without
                  limitation, a decree of specific performance and/or injunctive
                  relief with respect to the Company's failure to timely deliver
                  certificates representing shares of Common Stock upon exercise
                  of the Additional Investment Right as required pursuant to the
                  terms hereof.

                        vi. No Fractional  Shares or Scrip. No fractional shares
                  or scrip  representing  fractional shares shall be issued upon
                  the exercise of this  Additional  Investment  Right. As to any
                  fraction of a share which Holder  would  otherwise be entitled
                  to purchase upon such  exercise,  the Company shall pay a cash
                  adjustment  in  respect of such  final  fraction  in an amount
                  equal to such fraction multiplied by the Exercise Price.

                        vii.   Charges,   Taxes  and   Expenses.   Issuance   of
                  certificates  for Additional  Investment Right Shares shall be
                  made  without  charge to the Holder for any issue or  transfer
                  tax or other incidental  expense in respect of the issuance of
                  such  certificate,  all of which taxes and  expenses  shall be
                  paid by the Company,  and such certificates shall be issued in
                  the  name of the  Holder  or in such  name or  names as may be
                  directed by the Holder;  provided,  however, that in the event
                  certificates for Additional  Investment Right Shares are to be
                  issued  in a name  other  than  the name of the  Holder,  this
                  Additional  Investment  Right when  surrendered  for  exercise
                  shall be accompanied by the  Assignment  Form attached  hereto
                  duly executed by the Holder; and the Company may require, as a
                  condition  thereto,   the  payment  of  a  sum  sufficient  to
                  reimburse it for any transfer tax incidental thereto.

                                       5
<PAGE>

                        viii.  Closing of Books.  The Company will not close its
                  stockholder  books or records in any manner which prevents the
                  timely exercise of this Additional  Investment Right, pursuant
                  to the terms hereof.

            f)    Call  Provision.  Subject to the  provisions  of this  Section
2(f), if after the Effective  Date the VWAP for each of 20  consecutive  Trading
Days (the "Measurement Price", which period shall not have commenced until after
such  anniversary  date) is greater  than or equal to 160% of the then  Exercise
Price (subject to adjustment as set forth herein) (the "Threshold Price"),  then
the Company may, in its sole discretion, within ten Trading Days of such period,
call for cancellation of all or any portion of this Additional  Investment Right
for  which a Notice  of  Exercise  has not yet been  delivered  (such  right,  a
"Call").  To exercise  this right,  the  Company  must  deliver to the Holder an
irrevocable written notice (a "Call Notice"),  indicating therein the portion of
unexercised  portion of this  Additional  Investment  Right to which such notice
applies.  If the conditions set forth below for such Call are satisfied from the
period from the date of the Call Notice  through and including the Call Date (as
defined below), then any portion of this Additional  Investment Right subject to
such Call  Notice for which a Notice of  Exercise  shall not have been  received
from and after the date of the Call Notice will be cancelled  at 6:30 p.m.  (New
York City  time) on the  tenth  Trading  Day  after the date the Call  Notice is
received by the Holder (such date, the "Call Date"). Any unexercised  portion of
this Additional  Investment Right to which the Call Notice does not pertain will
be unaffected by such Call Notice. In furtherance thereof, the Company covenants
and agrees that it will honor all Notices of Exercise with respect to Additional
Investment Right Shares subject to a Call Notice that are tendered from the time
of  delivery of the Call Notice  through  6:30 p.m.  (New York City time) on the
Call Date. The parties agree that any Notice of Exercise  delivered  following a
Call Notice shall first reduce to zero the number of Additional Investment Right
Shares  subject to such Call Notice prior to reducing the  remaining  Additional
Investment Right Shares available for purchase under this Additional  Investment
Right.  For example,  if (x) this Additional  Investment  Right then permits the
Holder to acquire 100  Additional  Investment  Right  Shares,  (y) a Call Notice
pertains to 75 Additional  Investment  Right Shares,  and (z) prior to 6:30 p.m.
(New York City time) on the Call Date the Holder tenders a Notice of Exercise in
respect of 50 Additional  Investment Right Shares, then (1) on the Call Date the
right under this Additional Investment Right to acquire 25 Additional Investment
Right Shares will be automatically  cancelled,  (2) the Company, in the time and
manner required under this  Additional  Investment  Right,  will have issued and
delivered to the Holder 50 Additional  Investment Right Shares in respect of the
exercises  following  receipt of the Call Notice,  and (3) the Holder may, until
the  Termination  Date,  exercise  this  Additional   Investment  Right  for  25
Additional Investment Right Shares (subject to adjustment as herein provided and
subject to subsequent  Call  Notices).  Subject again to the  provisions of this
Section 3(e), the Company may deliver subsequent Call Notices for any portion of
this Additional Investment Right for which the Holder shall not have delivered a
Notice of Exercise.  Notwithstanding  anything to the contrary set forth in this
Additional  Investment  Right,  the  Company  may not  deliver a Call  Notice or
require  the  cancellation  of this  Additional  Investment  Right (and any Call
Notice will be void),  unless,  from the beginning of the 20 consecutive Trading
Days used to determine whether the Common Stock has achieved the Threshold Price
through the Call Date, the Equity  Conditions have been met. The Company's right
to Call the  Additional  Investment  Right shall be exercised  ratably among the
Purchasers based on each  Purchaser's  initial purchase of Common Stock pursuant
to the Purchase Agreement.

                                       6
<PAGE>

      Section 3. Certain Adjustments.

            a)    Stock Dividends and Splits. If the Company,  at any time while
this Additional  Investment  Right is outstanding:  (A) pays a stock dividend or
otherwise make a distribution or  distributions on shares of its Common Stock or
any other  equity or equity  equivalent  securities  payable in shares of Common
Stock  (which,  for  avoidance of doubt,  shall not include any shares of Common
Stock issued by the Company pursuant to this Additional  Investment  Right), (B)
subdivides  outstanding  shares of Common Stock into a larger  number of shares,
(C) combines  (including  by way of reverse stock split)  outstanding  shares of
Common Stock into a smaller number of shares, or (D) issues by  reclassification
of shares of the Common Stock any shares of capital  stock of the Company,  then
in each case the Exercise  Price shall be  multiplied by a fraction of which the
numerator  shall be the  number of shares of Common  Stock  (excluding  treasury
shares, if any) outstanding before such event and of which the denominator shall
be the  number of shares of Common  Stock  outstanding  after such event and the
number of  Additional  Investment  Right Shares  issuable  upon exercise of this
Additional  Investment Right shall be proportionately  adjusted.  Any adjustment
made pursuant to this Section 3(a) shall become effective  immediately after the
record date for the  determination  of  stockholders  entitled  to receive  such
dividend  or  distribution  and shall  become  effective  immediately  after the
effective date in the case of a subdivision, combination or re-classification.

            b)    Intentionally Omitted.

            c)    Pro Rata  Distributions.  If the Company, at any time prior to
the Termination  Date,  shall distribute to all holders of Common Stock (and not
to Holders of the Additional Investment Rights) evidences of its indebtedness or
assets or rights or  Additional  Investment  Rights to subscribe for or purchase
any  security  other than the Common  Stock  (which  shall be subject to Section
3(b)),  then in  each  such  case  the  Exercise  Price  shall  be  adjusted  by
multiplying  the Exercise Price in effect  immediately  prior to the record date
fixed for determination of stockholders entitled to receive such distribution by
a  fraction  of which the  denominator  shall be the VWAP  determined  as of the
record date mentioned  above,  and of which the numerator  shall be such VWAP on
such record  date less the then per share fair market  value at such record date
of the  portion  of such  assets or  evidence  of  indebtedness  so  distributed
applicable  to one  outstanding  share of the Common Stock as  determined by the
Board of  Directors  in good  faith.  In either  case the  adjustments  shall be
described  in a  statement  provided  to the Holders of the portion of assets or
evidences of indebtedness so distributed or such subscription  rights applicable
to one share of Common Stock.  Such  adjustment  shall be made whenever any such
distribution  is made and shall become  effective  immediately  after the record
date mentioned above.

                                       7
<PAGE>

            d)    Calculations.  All calculations  under this Section 3 shall be
made to the nearest cent or the nearest  1/100th of a share, as the case may be.
For purposes of this Section 3, the number of shares of Common Stock outstanding
as of a given  date  shall be the sum of the  number of  shares of Common  Stock
(excluding treasury shares, if any) outstanding.

            e)    Notice to Holders.

                        i. Adjustment to Exercise  Price.  Whenever the Exercise
                  Price is  adjusted  pursuant  to this  Section 3, the  Company
                  shall  promptly mail to each Holder a notice setting forth the
                  Exercise Price after such adjustment and setting forth a brief
                  statement of the facts requiring such adjustment.

                        ii.  Notice  to Allow  Exercise  by  Holder.  If (A) the
                  Company shall  declare a dividend (or any other  distribution)
                  on the Common  Stock;  (B) the Company shall declare a special
                  nonrecurring  cash  dividend on or a redemption  of the Common
                  Stock;  (C) the Company  shall  authorize  the granting to all
                  holders of the Common  Stock rights or  Additional  Investment
                  Rights to  subscribe  for or  purchase  any  shares of capital
                  stock of any class or of any rights;  (D) the  approval of any
                  stockholders  of the Company  shall be required in  connection
                  with  any   reclassification   of  the   Common   Stock,   any
                  consolidation  or merger to which the Company is a party,  any
                  sale or transfer of all or substantially  all of the assets of
                  the Company,  of any  compulsory  share  exchange  whereby the
                  Common  Stock is  converted  into  other  securities,  cash or
                  property;  (E) the Company  shall  authorize  the voluntary or
                  involuntary  dissolution,  liquidation  or  winding  up of the
                  affairs of the Company;  then, in each case, the Company shall
                  cause to be mailed to the Holder at its last  addresses  as it
                  shall appear upon the Additional  Investment Right Register of
                  the Company, at least 20 calendar days prior to the applicable
                  record  or  effective  date  hereinafter  specified,  a notice
                  stating  (x) the date on which a record is to be taken for the
                  purpose of such dividend, distribution,  redemption, rights or
                  Additional  Investment  Rights,  or if a  record  is not to be
                  taken, the date as of which the holders of the Common Stock of
                  record  to  be  entitled  to  such  dividend,   distributions,
                  redemption,  rights or Additional  Investment Rights are to be
                  determined  or (y) the  date on which  such  reclassification,
                  consolidation,  merger,  sale,  transfer or share  exchange is
                  expected  to become  effective  or  close,  and the date as of
                  which it is  expected  that  holders  of the  Common  Stock of
                  record  shall be  entitled  to  exchange  their  shares of the
                  Common   Stock  for   securities,   cash  or  other   property
                  deliverable upon such reclassification, consolidation, merger,
                  sale, transfer or share exchange;  provided,  that the failure
                  to mail such  notice or any defect  therein or in the  mailing
                  thereof shall not affect the validity of the corporate  action
                  required  to be  specified  in  such  notice.  The  Holder  is
                  entitled to exercise this Additional  Investment  Right during
                  the 20-day  period  commencing  the date of such notice to the
                  effective date of the event triggering such notice

                                       8
<PAGE>

            f)    Fundamental Transaction. If, at any time while this Additional
Investment  Right  is  outstanding,  (A)  the  Company  effects  any  merger  or
consolidation  of the Company with or into another Person,  in which the Company
is not the surviving  entity,  or the Company's then existing  shareholders will
own less than 51% of the surviving  entity,  (B) the Company effects any sale of
all  or  substantially  all  of  its  assets  in  one  or a  series  of  related
transactions,  (C) any tender offer or exchange offer (whether by the Company or
another  Person) is  completed  pursuant  to which  holders of Common  Stock are
permitted  to tender or  exchange  their  shares for other  securities,  cash or
property, or (D) the Company effects any reclassification of the Common Stock or
any compulsory share exchange  pursuant to which the Common Stock is effectively
converted into or exchanged for other securities,  cash or property (in any such
case, a "Fundamental Transaction"), then, upon any subsequent conversion of this
Additional  Investment  Right,  the Holder shall have the right to receive,  for
each Additional  Investment  Right Share that would have been issuable upon such
exercise absent such Fundamental  Transaction,  at the option of the Holder, (a)
upon  exercise  of this  Additional  Investment  Right,  the number of shares of
Common Stock of the successor or acquiring  corporation or of the Company, if it
is the surviving corporation,  and Alternate Consideration receivable upon or as
a result of such  reorganization,  reclassification,  merger,  consolidation  or
disposition  of assets by a Holder of the  number of shares of Common  Stock for
which this Additional Investment Right is exercisable  immediately prior to such
event  or (b)  only  in  the  event  the  Company  is  acquired  in an all  cash
acquisition,  cash  equal to the value of this  Additional  Investment  Right as
determined in accordance  with the  Black-Scholes  option  pricing  formula (the
"Alternate Consideration"). For purposes of any such exercise, the determination
of the Exercise Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such  Fundamental  Transaction,  and the Company
shall  apportion  the  Exercise  Price among the  Alternate  Consideration  in a
reasonable manner  reflecting the relative value of any different  components of
the Alternate Consideration.  If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Additional Investment Right following such
Fundamental  Transaction.  To the extent  necessary to effectuate  the foregoing
provisions, any successor to the Company or surviving entity in such Fundamental
Transaction  shall  issue  to  the  Holder  a new  Additional  Investment  Right
consistent  with the foregoing  provisions  and evidencing the Holder's right to
exercise such Additional Investment Right into Alternate  Consideration upon the
payment  thereof.  The terms of any  agreement  pursuant to which a  Fundamental
Transaction  is effected  shall  include terms  requiring any such  successor or
surviving  entity  to  comply  with the  provisions  of this  paragraph  (f) and
insuring  that  this  Additional  Investment  Right  (or  any  such  replacement
security) will be similarly adjusted upon any subsequent  transaction  analogous
to a Fundamental Transaction.

            g)    Exempt   Issuance.    Notwithstanding   the   foregoing,    no
adjustments,  Alternate  Consideration nor notices shall be made, paid or issued
under this Section 3 in respect of an Exempt Issuance.

                                       9
<PAGE>

            h)    Voluntary  Adjustment By Company.  The Company may at any time
during the term of this  Additional  Investment  Right  reduce the then  current
Exercise  Price to any amount and for any period of time deemed  appropriate  by
the Board of Directors of the Company.

      Section 4. Transfer of Additional Investment Right.

            a)    Transferability.  Subject to  compliance  with any  applicable
securities  laws and the  conditions  set forth in Sections 5(a) and 4(d) hereof
and to the provisions of Section 4.1 of the Purchase Agreement,  this Additional
Investment Right and all rights hereunder are transferable, in whole or in part,
upon surrender of this Additional  Investment  Right at the principal  office of
the Company,  together with a written  assignment of this Additional  Investment
Right  substantially  in the form attached hereto duly executed by the Holder or
its agent or attorney and funds  sufficient  to pay any transfer  taxes  payable
upon the making of such transfer.  Upon such  surrender  and, if required,  such
payment, the Company shall execute and deliver a new Additional Investment Right
or Additional  Investment Rights in the name of the assignee or assignees and in
the  denomination or  denominations  specified in such instrument of assignment,
and shall issue to the assignor a new Additional Investment Right evidencing the
portion of this Additional Investment Right not so assigned, and this Additional
Investment Right shall promptly be cancelled.  A Additional Investment Right, if
properly  assigned,  may be  exercised  by a new  holder  for  the  purchase  of
Additional  Investment  Right Shares without having a new Additional  Investment
Right issued.

            b)    New Additional  Investment Rights. This Additional  Investment
Right may be divided or combined with other  Additional  Investment  Rights upon
presentation  hereof at the  aforesaid  office of the Company,  together  with a
written notice  specifying the names and  denominations  in which new Additional
Investment  Rights  are to be  issued,  signed  by the  Holder  or its  agent or
attorney.  Subject to compliance with Section 4(a), as to any transfer which may
be  involved in such  division or  combination,  the Company  shall  execute and
deliver a new Additional  Investment  Right or Additional  Investment  Rights in
exchange for the Additional  Investment Right or Additional Investment Rights to
be divided or combined in accordance with such notice.

            c)    Additional  Investment  Right  Register.   The  Company  shall
register this Additional  Investment Right, upon records to be maintained by the
Company for that purpose (the "Additional  Investment Right  Register"),  in the
name of the record  Holder  hereof  from time to time.  The Company may deem and
treat the registered Holder of this Additional  Investment Right as the absolute
owner hereof for the purpose of any exercise  hereof or any  distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.

            d)    Transfer  Restrictions.  If, at the time of the  surrender  of
this  Additional  Investment  Right  in  connection  with any  transfer  of this
Additional  Investment  Right, the transfer of this Additional  Investment Right
shall not be registered  pursuant to an effective  registration  statement under
the Securities Act and under  applicable  state securities or blue sky laws, the
Company may  require,  as a condition  of allowing  such  transfer  (i) that the

                                       10
<PAGE>

Holder or transferee of this  Additional  Investment  Right, as the case may be,
furnish to the Company a written  opinion of counsel  (which opinion shall be in
form,  substance  and scope  customary  for  opinions  of counsel in  comparable
transactions) to the effect that such transfer may be made without  registration
under the Securities Act and under applicable state securities or blue sky laws,
(ii) that the  holder or  transferee  execute  and  deliver  to the  Company  an
investment letter in form and substance acceptable to the Company and (iii) that
the transferee be an "accredited investor" as defined in Rule 501(a)(1), (a)(2),
(a)(3),  (a)(7),  or (a)(8)  promulgated under the Securities Act or a qualified
institutional buyer as defined in Rule 144A(a) under the Securities Act.

      Section 5. Miscellaneous.

            a)    Title to Additional Investment Right. Prior to the Termination
Date and  subject  to  compliance  with  applicable  laws and  Section 4 of this
Additional  Investment  Right,  this Additional  Investment Right and all rights
hereunder are transferable,  in whole or in part, at the office or agency of the
Company by the Holder in person or by duly authorized  attorney,  upon surrender
of this  Additional  Investment  Right together with the Assignment Form annexed
hereto properly endorsed. The transferee shall sign an investment letter in form
and substance reasonably satisfactory to the Company.

            b)    No Rights  as  Shareholder  Until  Exercise.  This  Additional
Investment  Right does not  entitle  the  Holder to any  voting  rights or other
rights as a shareholder  of the Company prior to the exercise  hereof.  Upon the
surrender of this Additional  Investment  Right and the payment of the aggregate
Exercise Price, the Additional Investment Right Shares so purchased shall be and
be deemed to be issued to such  Holder as the record  owner of such shares as of
the close of business on the later of the date of such surrender or payment.

            c)    Loss,   Theft,   Destruction   or   Mutilation  of  Additional
Investment  Right.  The Company  covenants  that upon  receipt by the Company of
evidence  reasonably  satisfactory  to it of the  loss,  theft,  destruction  or
mutilation of this Additional Investment Right or any stock certificate relating
to the  Additional  Investment  Right  Shares,  and in case of  loss,  theft  or
destruction,  of indemnity or security reasonably  satisfactory to it (which, in
the case of the Additional  Investment  Right,  shall not include the posting of
any bond),  and upon surrender and  cancellation of such  Additional  Investment
Right or stock  certificate,  if mutilated,  the Company will make and deliver a
new Additional  Investment Right or stock certificate of like tenor and dated as
of such  cancellation,  in lieu of such  Additional  Investment  Right  or stock
certificate.

            d)    Saturdays,  Sundays,  Holidays,  etc. If the last or appointed
day for the  taking of any action or the  expiration  of any right  required  or
granted herein shall be a Saturday,  Sunday or a legal holiday, then such action
may be taken or such right may be  exercised  on the next  succeeding  day not a
Saturday, Sunday or legal holiday.

                                       11
<PAGE>

            e)    Authorized Shares.

                  The Company  covenants  that during the period the  Additional
            Investment Right is outstanding, it will reserve from its authorized
            and unissued  Common Stock a sufficient  number of shares to provide
            for the issuance of the Additional  Investment Right Shares upon the
            exercise of any  purchase  rights under this  Additional  Investment
            Right.  The  Company  further  covenants  that its  issuance of this
            Additional  Investment  Right shall constitute full authority to its
            officers  who  are  charged   with  the  duty  of  executing   stock
            certificates to execute and issue the necessary certificates for the
            Additional Investment Right Shares upon the exercise of the purchase
            rights under this Additional Investment Right. The Company will take
            all such  reasonable  action as may be necessary to assure that such
            Additional  Investment Right Shares may be issued as provided herein
            without  violation of any applicable  law or  regulation,  or of any
            requirements  of the Trading  Market upon which the Common Stock may
            be listed.

                  Except  and to the  extent as waived  or  consented  to by the
            Holder,  the  Company  shall not by any action,  including,  without
            limitation, amending its certificate of incorporation or through any
            reorganization,   transfer   of   assets,   consolidation,   merger,
            dissolution,  issue or sale of  securities  or any  other  voluntary
            action,  avoid or seek to avoid the observance or performance of any
            of the terms of this Additional  Investment  Right,  but will at all
            times in good faith assist in the carrying out of all such terms and
            in the taking of all such actions as may be necessary or appropriate
            to  protect  the  rights of  Holder as set forth in this  Additional
            Investment Right against impairment. Without limiting the generality
            of the foregoing, the Company will (a) not increase the par value of
            any  Additional  Investment  Right Shares  above the amount  payable
            therefor  upon such exercise  immediately  prior to such increase in
            par  value,  (b)  take  all  such  action  as  may be  necessary  or
            appropriate  in order that the Company may validly and legally issue
            fully paid and nonassessable Additional Investment Right Shares upon
            the  exercise  of  this  Additional  Investment  Right,  and (c) use
            commercially  reasonable efforts to obtain all such  authorizations,
            exemptions  or  consents  from any  public  regulatory  body  having
            jurisdiction  thereof as may be  necessary  to enable the Company to
            perform its obligations under this Additional Investment Right.

                  Before  taking any action which would result in an  adjustment
            in the number of Additional  Investment  Right Shares for which this
            Additional Investment Right is exercisable or in the Exercise Price,
            the  Company  shall  obtain all such  authorizations  or  exemptions
            thereof,  or consents  thereto,  as may be necessary from any public
            regulatory body or bodies having jurisdiction thereof.

            f)    Jurisdiction.   All  questions  concerning  the  construction,
validity,  enforcement and  interpretation  of this Additional  Investment Right
shall be determined in accordance with the provisions of the Purchase Agreement.

            g)    Restrictions.  The  Holder  acknowledges  that the  Additional
Investment Right Shares acquired upon the exercise of this Additional Investment
Right, if not registered,  will have  restrictions  upon resale imposed by state
and federal securities laws.

                                       12
<PAGE>

            h)    Nonwaiver and  Expenses.  No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding  the fact that all rights hereunder terminate on the Termination
Date. If the Company  willfully and knowingly fails to comply with any provision
of this Additional  Investment  Right,  which results in any material damages to
the Holder,  the Company shall pay to Holder such amounts as shall be sufficient
to cover  any costs and  expenses  including,  but not  limited  to,  reasonable
attorneys' fees, including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise  enforcing any of its
rights, powers or remedies hereunder.

            i)    Notices.  Any notice,  request or other  document  required or
permitted  to be  given or  delivered  to the  Holder  by the  Company  shall be
delivered in accordance with the notice provisions of the Purchase Agreement.

            j)    Limitation of Liability.  No provision  hereof, in the absence
of any affirmative action by Holder to exercise this Additional Investment Right
or purchase Additional Investment Right Shares, and no enumeration herein of the
rights or privileges  of Holder,  shall give rise to any liability of Holder for
the  purchase  price of any Common  Stock or as a  stockholder  of the  Company,
whether  such  liability  is  asserted  by the  Company or by  creditors  of the
Company.

            k)    Remedies.  Holder,  in addition to being  entitled to exercise
all rights granted by law,  including  recovery of damages,  will be entitled to
specific  performance of its rights under this Additional  Investment Right. The
Company agrees that monetary damages would not be adequate  compensation for any
loss incurred by reason of a breach by it of the  provisions of this  Additional
Investment  Right and  hereby  agrees to waive the  defense  in any  action  for
specific performance that a remedy at law would be adequate.

            l)    Successors and Assigns. Subject to applicable securities laws,
this Additional Investment Right and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the  successors of the Company
and the  successors  and  permitted  assigns of Holder.  The  provisions of this
Additional  Investment  Right are  intended to be for the benefit of all Holders
from time to time of this Additional  Investment  Right and shall be enforceable
by any such Holder or holder of Additional Investment Right Shares.

            m)    Amendment. This Additional Investment Right may be modified or
amended or the provisions  hereof waived with the written consent of the Company
and the Holder.

            n)    Severability.   Wherever  possible,  each  provision  of  this
Additional  Investment  Right  shall  be  interpreted  in such  manner  as to be
effective  and  valid  under  applicable  law,  but if  any  provision  of  this
Additional  Investment  Right shall be prohibited by or invalid under applicable
law, such provision  shall be  ineffective to the extent of such  prohibition or
invalidity,  without  invalidating  the  remainder  of  such  provisions  or the
remaining provisions of this Additional Investment Right.

                                       13
<PAGE>

            o)    Headings.  The  headings  used in this  Additional  Investment
Right are for the  convenience of reference only and shall not, for any purpose,
be deemed a part of this Additional Investment Right.

                              ********************

                                       14
<PAGE>

      IN WITNESS  WHEREOF,  the Company has caused  this  Additional  Investment
Right to be executed by its officer thereunto duly authorized.

Dated:  September  __, 2004

                                               RCG COMPANIES INCORPORATED

                                               By:______________________________
                                                  Name:
                                                  Title:

                                       15
<PAGE>

                               NOTICE OF EXERCISE

To:   RCG Companies Incorporated

      (1)   The  undersigned  hereby  elects  to  purchase  ________  Additional
Investment  Right  Shares of the Company  pursuant to the terms of the  attached
Additional  Investment  Right (only if exercised in full),  and tenders herewith
payment of the exercise  price in full,  together with all  applicable  transfer
taxes, if any.

      (2)   Payment shall take the form of lawful money of the United States.

      (3)   Please  issue  a  certificate  or  certificates   representing  said
Additional  Investment  Right Shares in the name of the  undersigned  or in such
other name as is specified below:

            ___________________________________

The Additional Investment Right Shares shall be delivered to the following:

            ___________________________________

            ___________________________________

            ___________________________________

      (4)   Accredited Investor.  The undersigned is an "accredited investor" as
defined  in  Regulation  D  promulgated  under the  Securities  Act of 1933,  as
amended.

                                               [PURCHASER]

                                               By:______________________________
                                                  Name:
                                                  Title:

                                               Dated:___________________________

<PAGE>

                                 ASSIGNMENT FORM

              (To assign the foregoing Additional Investment Right,
               execute this form and supply required information.
       Do not use this form to exercise the Additional Investment Right.)

      FOR VALUE  RECEIVED,  the foregoing  Additional  Investment  Right and all
rights       evidenced       thereby      are      hereby       assigned      to
_______________________________________________       whose      address      is
____________________________________________________________.

____________________________________________________________

                                               Dated:______________, _______

                               Holder's Signature:______________________________

                               Holder's Address:________________________________

                                                ________________________________

Signature Guaranteed:___________________________________________

NOTE: The signature to this  Assignment Form must correspond with the name as it
appears on the face of the Additional  Investment Right,  without  alteration or
enlargement or any change whatsoever,  and must be guaranteed by a bank or trust
company.  Officers of  corporations  and those  acting in a  fiduciary  or other
representative  capacity  should file proper evidence of authority to assign the
foregoing Additional Investment Right.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}]]