Document:

EXHIBIT 4.2

                        AMERICAN COMMERCE SOLUTIONS, INC.
       AMENDED NON-EMPLOYEE DIRECTORS AND CONSULTANTS RETAINER STOCK PLAN
                                FOR THE YEAR 2003

     1.   INTRODUCTION.  This  Plan  shall be known  as the  "American  Commerce
Solutions,  Inc. Amended  Non-Employee  Directors and Consultants Retainer Stock
Plan for the Year  2003",  and is  hereinafter  referred  to as the  "Plan." The
purposes  of this  Plan are to  enable  American  Commerce  Solutions,  Inc.,  a
Delaware  corporation (the  "Company"),  to promote the interests of the Company
and its  stockholders  by attracting  and retaining  non-employee  Directors and
Consultants  capable of  furthering  the future  success of the  Company  and by
aligning  their  economic  interests  more closely  with those of the  Company's
stockholders,  by  paying  their  retainer  or fees in the form of shares of the
Company's common stock, par value $0.002 per share (the "Common Stock").

     2.   DEFINITIONS.  The  following  terms shall have the  meanings set forth
below:

     "Board" means the Board of Directors of the Company.

     "Change of Control" has the meaning set forth in Paragraph 12(d) hereof.

     "Code" means the Internal  Revenue Code of 1986, as amended,  and the rules
and regulations  thereunder.  References to any provision of the Code or rule or
regulation  thereunder  shall be deemed to  include  any  amended  or  successor
provision, rule or regulation.

     "Committee"  means the committee that  administers this Plan, as more fully
defined in Paragraph 13 hereof.

     "Common Stock" has the meaning set forth in Paragraph 1 hereof.

     "Company" has the meaning set forth in Paragraph 1 hereof.

     "Deferral Election" has the meaning set forth in Paragraph 6 hereof.

     "Deferred  Stock  Account"  means a bookkeeping  account  maintained by the
Company for a Participant  representing the Participant's interest in the shares
credited to such Deferred Stock Account pursuant to Paragraph 7 hereof.

     "Delivery Date" has the meaning set forth in Paragraph 6 hereof.

     "Director" means an individual who is a member of the Board of Directors of
the Company.

     "Dividend  Equivalent" for a given dividend or other  distribution  means a
number of shares of the  Common  Stock  having a Fair  Market  Value,  as of the
record date for such dividend or distribution, equal to the amount of cash, plus
the Fair  Market  Value on the date of  distribution  of any  property,  that is
distributed  with  respect to one share of the  Common  Stock  pursuant  to such
dividend  or  distribution;  such  Fair  Market  Value to be  determined  by the
Committee in good faith.

     "Effective Date" has the meaning set forth in Paragraph 3 hereof.

     "Exchange Act" has the meaning set forth in Paragraph 13(b) hereof.

     "Fair Market Value" means the mean between the highest and lowest  reported
sales prices of the Common Stock on the New York Stock  Exchange  Composite Tape
or, if not listed on such exchange, on any other national securities exchange on
which the Common  Stock is listed or on The Nasdaq Stock  Market,  or, if not so
listed on any other  national  securities  exchange or The Nasdaq Stock  Market,

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then the  average  of the bid price of the  Common  Stock  during  the last five
trading days on the OTC Bulletin  Board  immediately  preceding the last trading
day  prior to the date with  respect  to which  the Fair  Market  Value is to be
determined.  If the  Common  Stock is not then  publicly  traded,  then the Fair
Market  Value of the Common  Stock  shall be the book value of the  Company  per
share as determined on the last day of March,  June,  September,  or December in
any year  closest  to the date  when the  determination  is to be made.  For the
purpose of determining book value  hereunder,  book value shall be determined by
adding as of the  applicable  date called for herein the capital,  surplus,  and
undivided  profits  of the  Company,  and after  having  deducted  any  reserves
theretofore  established;  the sum of these items shall be divided by the number
of shares of the Common Stock outstanding as of said date, and the quotient thus
obtained shall represent the book value of each share of the Common Stock of the
Company.

     "Participant" has the meaning set forth in Paragraph 4 hereof.

     "Payment  Time"  means  the time  when a Stock  Retainer  is  payable  to a
Participant  pursuant to Paragraph 5 hereof (without regard to the effect of any
Deferral Election).

     "Stock Retainer" has the meaning set forth in Paragraph 5 hereof.

     "Third Anniversary" has the meaning set forth in Paragraph 6 hereof.

     3.   EFFECTIVE  DATE OF THE  PLAN.  This  Plan  was  adopted  by the  Board
effective July 10, 2003 (the "Effective Date").

     4.   ELIGIBILITY.  Each  individual  who is a Director or Consultant on the
Effective  Date and  each  individual  who  becomes  a  Director  or  Consultant
thereafter   during  the  term  of  this  Plan,  shall  be  a  participant  (the
"Participant")  in this Plan, in each case during such period as such individual
remains a Director or Consultant and is not an employee of the Company or any of
its  subsidiaries.  Each credit of shares of the Common  Stock  pursuant to this
Plan shall be evidenced by a written agreement duly executed and delivered by or
on behalf of the Company and a Participant,  if such an agreement is required by
the Company to assure compliance with all applicable laws and regulations.

     5.   GRANTS OF SHARES.  Commencing  on the  Effective  Date,  the amount of
compensation for service to directors or consultants  shall be payable in shares
of the Common Stock (the "Stock  Retainer")  pursuant to this Plan at the deemed
issuance  price of the Fair Market  Value of the Common Stock on the date of the
issuance of such  shares.  As used herein,  "Fair  Market  Value" means the mean
between the highest and lowest  reported sales prices of the Common Stock on the
New York Stock Exchange  Composite  Tape or, if not listed on such exchange,  on
any other national securities exchange on which the Common Stock is listed or on
The Nasdaq Stock Market,  or, if not so listed on any other national  securities
exchange or The Nasdaq  Stock  Market,  then the average of the bid price of the
Common  Stock  during  the last  five  trading  days on the OTC  Bulletin  Board
immediately  preceding  the last  trading day prior to the date with  respect to
which the Fair Market Value is to be determined. If the Common Stock is not then
publicly  traded,  then the Fair Market  Value of the Common  Stock shall be the
book  value of the  Company  per share as  determined  on the last day of March,
June,  September,  or  December  in any  year  closest  to  the  date  when  the
determination  is  to be  made.  For  the  purpose  of  determining  book  value
hereunder,  book value shall be determined by adding as of the  applicable  date
called for herein the capital,  surplus,  and undivided  profits of the Company,
and after having deducted any reserves theretofore established; the sum of these
items shall be divided by the number of shares of the Common  Stock  outstanding
as of said date, and the quotient thus obtained  shall  represent the book value
of each share of the Common Stock of the Company.

     6.   DEFERRAL OPTION.  From and after the Effective Date, a Participant may
make an election (a "Deferral Election") on an annual basis to defer delivery of
the Stock Retainer specifying which one of the following ways the Stock Retainer
is to be delivered (a) on the date which is three years after the Effective Date
for which it was originally payable (the "Third  Anniversary"),  (b) on the date
upon which the Participant  ceases to be a Director or Consultant for any reason
(the "Departure  Date") or (c) in five equal annual  installments  commencing on
the Departure  Date (the "Third  Anniversary"  and  "Departure  Date" each being
referred to herein as a "Delivery Date"). Such Deferral Election shall remain in
effect for each  Subsequent  Year unless  changed,  provided  that, any Deferral

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Election  with  respect to a  particular  Year may not be changed  less than six
months prior to the beginning of such Year, and provided,  further, that no more
than one Deferral Election or change thereof may be made in any Year.

     Any Deferral Election and any change or revocation thereof shall be made by
delivering  written  notice  thereof to the  Committee  no later than six months
prior to the beginning of the Year in which it is to be effected; provided that,
with respect to the Year beginning on the Effective Date, any Deferral  Election
or  revocation  thereof must be delivered no later than the close of business on
the 30th day after the Effective Date.

     7.   DEFERRED STOCK  ACCOUNTS.  The Company shall maintain a Deferred Stock
Account  for each  Participant  who makes a Deferral  Election to which shall be
credited,  as of the applicable Payment Time, the number of shares of the Common
Stock  payable  pursuant to the Stock  Retainer to which the  Deferral  Election
relates.  So long as any amounts in such  Deferred  Stock  Account have not been
delivered to the  Participant  under  Paragraph 8 hereof,  each  Deferred  Stock
Account  shall be credited as of the payment date for any dividend paid or other
distribution  made with respect to the Common Stock,  with a number of shares of
the Common  Stock equal to (a) the number of shares of the Common Stock shown in
such Deferred Stock Account on the record date for such dividend or distribution
multiplied by (b) the Dividend Equivalent for such dividend or distribution.

     8.   DELIVERY OF SHARES.

          (a) The shares of the Common Stock in a  Participant's  Deferred Stock
Account  with respect to any Stock  Retainer  for which a Deferral  Election has
been made (together with dividends  attributable to such shares credited to such
Deferred Stock  Account) shall be delivered in accordance  with this Paragraph 8
as soon as practicable  after the applicable  Delivery Date. Except with respect
to a Deferral  Election  pursuant to Paragraph 6(c) hereof,  or other  agreement
between the parties,  such shares shall be delivered at one time; provided that,
if the number of shares so delivered  includes a fractional  share,  such number
shall be rounded to the nearest whole number of shares.  If the  Participant has
in effect a Deferral  Election  pursuant to  Paragraph  6(c)  hereof,  then such
shares  shall be  delivered in five equal  annual  installments  (together  with
dividends  attributable to such shares credited to such Deferred Stock Account),
with the first such installment  being delivered on the first anniversary of the
Delivery  Date;  provided  that,  if in order  to  equalize  such  installments,
fractional  shares  would  have to be  delivered,  such  installments  shall  be
adjusted by rounding to the nearest  whole  share.  If any such shares are to be
delivered  after the Participant  has died or become legally  incompetent,  they
shall be delivered to the  Participant's  estate or legal guardian,  as the case
may be, in accordance with the foregoing; provided that, if the Participant dies
with a Deferral  Election  pursuant  to  Paragraph  6(c)  hereof in effect,  the
Committee shall deliver all remaining  undelivered  shares to the  Participant's
estate immediately.  References to a Participant in this Plan shall be deemed to
refer to the Participant's estate or legal guardian, where appropriate.

          (b) The Company may,  but shall not be required  to,  create a grantor
trust or utilize an existing  grantor trust (in either case,  "Trust") to assist
it in  accumulating  the  shares  of the  Common  Stock  needed to  fulfill  its
obligations  under  this  Paragraph  8.  However,  Participants  shall  have  no
beneficial  or other  interest  in the Trust and the assets  thereof,  and their
rights under this Plan shall be as general creditors of the Company,  unaffected
by the existence or nonexistence  of the Trust,  except that deliveries of Stock
Retainers  to  Participants  from the Trust  shall,  to the extent  thereof,  be
treated as satisfying the Company's obligations under this Paragraph 8.

     9.   SHARE  CERTIFICATES;  VOTING AND OTHER RIGHTS.  The  certificates  for
shares delivered to a Participant  pursuant to Paragraph 8 above shall be issued
in the name of the Participant, and from and after the date of such issuance the
Participant shall be entitled to all rights of a stockholder with respect to the
Common Stock for all such shares issued in his name, including the right to vote
the  shares,   and  the  Participant  shall  receive  all  dividends  and  other
distributions paid or made with respect thereto.

     10.  GENERAL RESTRICTIONS.

          (a)  Notwithstanding  any other  provision of this Plan or  agreements
made pursuant thereto, the Company shall not be required to issue or deliver any
certificate or certificates for shares of the Common Stock under this Plan prior
to fulfillment of all of the following conditions:

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               (i)  Listing or  approval  for listing  upon  official  notice of
issuance  of such  shares on the New York Stock  Exchange,  Inc.,  or such other
securities exchange as may at the time be a market for the Common Stock;

               (ii) Any registration or other qualification of such shares under
any state or federal law or regulation, or the maintaining in effect of any such
registration or other  qualification  which the Committee shall, upon the advice
of counsel, deem necessary or advisable; and

               (iii) Obtaining any other consent,  approval,  or permit from any
state or federal  governmental agency which the Committee shall, after receiving
the advice of counsel, determine to be necessary or advisable.

          (b) Nothing  contained  in this Plan shall  prevent  the Company  from
adopting other or additional compensation arrangements for the Participants.

     11.  SHARES AVAILABLE. Subject to Paragraph 12 below, the maximum number of
shares of the Common Stock which may in the aggregate be paid as Stock Retainers
pursuant to this Plan is 5,000,000.  Shares of the Common Stock  issueable under
this Plan may be taken from  treasury  shares of the Company or purchased on the
open market.

     12.  ADJUSTMENTS; CHANGE OF CONTROL.

          (a) In the event  that  there is, at any time  after the Board  adopts
this  Plan,  any  change in  corporate  capitalization,  such as a stock  split,
combination  of shares,  exchange  of shares,  warrants  or rights  offering  to
purchase   the  Common   Stock  at  a  price  below  its  Fair   Market   Value,
reclassification,  or recapitalization,  or a corporate transaction, such as any
merger,  consolidation,  separation,  including a spin-off,  stock dividend,  or
other  extraordinary  distribution  of stock or  property  of the  Company,  any
reorganization  (whether or not such reorganization  comes within the definition
of such term in Section 368 of the Code) or any partial or complete  liquidation
of the Company (each of the foregoing a "Transaction"),  in each case other than
any such Transaction  which  constitutes a Change of Control (as defined below),
(i) the Deferred  Stock  Accounts  shall be credited with the amount and kind of
shares or other  property  which  would  have been  received  by a holder of the
number of shares of the Common  Stock held in such  Deferred  Stock  Account had
such shares of the Common Stock been outstanding as of the  effectiveness of any
such  Transaction,  (ii) the number and kind of shares or other property subject
to  this  Plan  shall  likewise  be   appropriately   adjusted  to  reflect  the
effectiveness   of  any  such   Transaction,   and  (iii)  the  Committee  shall
appropriately  adjust any other  relevant  provisions  of this Plan and any such
modification by the Committee shall be binding and conclusive on all persons.

          (b) If the shares of the Common Stock  credited to the Deferred  Stock
Accounts  are  converted  pursuant  to  Paragraph  12(a)  into  another  form of
property,  references  in this Plan to the Common  Stock shall be deemed,  where
appropriate,  to  refer  to  such  other  form  of  property,  with  such  other
modifications as may be required for this Plan to operate in accordance with its
purposes.  Without  limiting the  generality  of the  foregoing,  references  to
delivery of certificates for shares of the Common Stock shall be deemed to refer
to delivery of cash and the incidents of ownership of any other property held in
the Deferred Stock Accounts.

          (c) In lieu of the adjustment  contemplated by Paragraph 12(a), in the
event of a Change  of  Control,  the  following  shall  occur on the date of the
Change of Control (i) the shares of the Common Stock held in each  Participant's
Deferred  Stock Account shall be deemed to be issued and  outstanding  as of the
Change of Control;  (ii) the Company shall forthwith deliver to each Participant
who has a Deferred  Stock  Account all of the shares of the Common  Stock or any
other property held in such Participant's Deferred Stock Account; and (iii) this
Plan shall be terminated.

          (d) For purposes of this Plan, Change of Control shall mean any of the
following events:

               (i) The  acquisition by any  individual,  entity or group (within
the meaning of Section  13(d)(3) or 14(d)(2) of the  Securities  Exchange Act of
1934,  as amended (the  "Exchange  Act")) (a "Person") of  beneficial  ownership

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(within  the meaning of Rule 13d-3  promulgated  under the  Exchange  Act) of 20
percent or more of either (1) the then outstanding shares of the Common Stock of
the Company (the "Outstanding Company Common Stock"), or (2) the combined voting
power of then  outstanding  voting  securities  of the Company  entitled to vote
generally  in  the  election  of  directors  (the  "Outstanding  Company  Voting
Securities");  provided,  however,  that the  following  acquisitions  shall not
constitute  a Change of Control (A) any  acquisition  directly  from the Company
(excluding an  acquisition  by virtue of the exercise of a conversion  privilege
unless the security  being so converted  was itself  acquired  directly from the
Company),  (B)  any  acquisition  by the  Company,  (C) any  acquisition  by any
employee  benefit plan (or related trust) sponsored or maintained by the Company
or any  corporation  controlled  by the  Company or (D) any  acquisition  by any
corporation pursuant to a reorganization, merger or consolidation, if, following
such  reorganization,  merger or  consolidation,  the  conditions  described  in
clauses  (A),  (B) and  (C) of  paragraph  (iii)  of this  Paragraph  12(d)  are
satisfied; or

               (ii) Individuals who, as of the date hereof, constitute the Board
of the Company (as of the date hereof,  "Incumbent  Board") cease for any reason
to  constitute  at least a majority of the Board;  provided,  however,  that any
individual becoming a director subsequent to the date hereof whose election,  or
nomination for election by the Company's stockholders, was approved by a vote of
at least a majority of the directors then  comprising the Incumbent  Board shall
be considered as though such  individual  were a member of the Incumbent  Board,
but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such  terms are used in Rule  14a-11 of  Regulation  14A  promulgated  under the
Exchange Act) or other actual or threatened  solicitation of proxies or consents
by or on behalf of a Person other than the Board; or

               (iii)  Approval  by  the   stockholders   of  the  Company  of  a
reorganization,   merger,  binding  share  exchange  or  consolidation,  unless,
following such reorganization,  merger,  binding share exchange or consolidation
(1) more than 60 percent of,  respectively,  then  outstanding  shares of common
stock of the corporation  resulting from such  reorganization,  merger,  binding
share  exchange  or  consolidation   and  the  combined  voting  power  of  then
outstanding voting securities of such corporation  entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners,  respectively,  of the Outstanding  Company Common Stock and Outstanding
Company Voting  Securities  immediately  prior to such  reorganization,  merger,
binding share exchange or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger, binding share
exchange  or  consolidation,   of  the  Outstanding  Company  Common  Stock  and
Outstanding  Company  Voting  Securities,  as the  case  may be,  (2) no  Person
(excluding  the  Company,  any employee  benefit plan (or related  trust) of the
Company or such corporation resulting from such reorganization,  merger, binding
share exchange or consolidation and any Person beneficially owning,  immediately
prior to such reorganization,  merger,  binding share exchange or consolidation,
directly or  indirectly,  20 percent or more of the  Outstanding  Company Common
Stock or Outstanding Company Voting Securities, as the case may be) beneficially
owns,  directly  or  indirectly,  20  percent  or more  of,  respectively,  then
outstanding  shares  of  common  stock of the  corporation  resulting  from such
reorganization,  merger, binding share exchange or consolidation or the combined
voting power of then outstanding voting securities of such corporation  entitled
to vote  generally in the election of directors,  and (3) at least a majority of
the members of the board of directors  of the  corporation  resulting  from such
reorganization,  merger, binding share exchange or consolidation were members of
the  Incumbent  Board  at the time of the  execution  of the  initial  agreement
providing  for  such   reorganization,   merger,   binding  share   exchange  or
consolidation; or

               (iv)  Approval  by  the  stockholders  of  the  Company  of (1) a
complete  liquidation or  dissolution  of the Company,  or (2) the sale or other
disposition of all or substantially all of the assets of the Company, other than
to  a  corporation,   with  respect  to  which  following  such  sale  or  other
disposition, (A) more than 60 percent of, respectively,  then outstanding shares
of  common  stock of such  corporation  and the  combined  voting  power of then
outstanding voting securities of such corporation  entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners,  respectively,  of the Outstanding  Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership,  immediately prior to such
sale  or  other  disposition,  of  the  Outstanding  Company  Common  Stock  and
Outstanding  Company  Voting  Securities,  as the  case  may be,  (B) no  Person
(excluding  the Company and any employee  benefit plan (or related trust) of the
Company or such  corporation  and any Person  beneficially  owning,  immediately
prior to such sale or other disposition,  directly or indirectly,  20 percent or
more of the  Outstanding  Company  Common Stock or  Outstanding  Company  Voting

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Securities,  as the case may be) beneficially owns,  directly or indirectly,  20
percent or more of,  respectively,  then  outstanding  shares of common stock of
such  corporation  and the  combined  voting  power of then  outstanding  voting
securities  of such  corporation  entitled to vote  generally in the election of
directors,  and (3) at least a majority of the members of the board of directors
of such  corporation  were  members  of the  Incumbent  Board at the time of the
execution  of the initial  agreement or action of the Board  providing  for such
sale or other disposition of assets of the Company.

     13.  ADMINISTRATION; AMENDMENT AND TERMINATION.

          (a) This Plan shall be administered  by a committee  consisting of two
members who shall be the current  directors  of the Company or senior  executive
officers or other directors who are not Participants as may be designated by the
Chief Executive  Officer (the  "Committee"),  which shall have full authority to
construe and  interpret  this Plan,  to  establish,  amend and rescind rules and
regulations  relating  to this Plan,  and to take all such  actions and make all
such  determinations  in connection  with this Plan as it may deem  necessary or
desirable.

          (b) The Board may from time to time make such amendments to this Plan,
including to preserve or come within any exemption from liability  under Section
16(b) of the Exchange Act, as it may deem proper and in the best interest of the
Company without further approval of the Company's  stockholders,  provided that,
to the extent required under Delaware law or to qualify  transactions under this
Plan for  exemption  under Rule 16b-3  promulgated  under the  Exchange  Act, no
amendment  to this  Plan  shall  be  adopted  without  further  approval  of the
Company's  stockholders  and,  provided,  further,  that  if and  to the  extent
required for this Plan to comply with Rule 16b-3  promulgated under the Exchange
Act,  no  amendment  to this Plan  shall be made more than once in any six month
period that would change the amount, price or timing of the grants of the Common
Stock  hereunder  other than to comport with  changes in the Code,  the Employee
Retirement  Income  Security  Act  of  1974,  as  amended,  or  the  regulations
thereunder.  The  Board  may  terminate  this  Plan  at any  time by a vote of a
majority of the members thereof.

     14.  MISCELLANEOUS.

          (a) Nothing in this Plan shall be deemed to create any  obligation  on
the part of the Board to nominate any Director for  reelection  by the Company's
stockholders or to limit the rights of the stockholders to remove any Director.

          (b) The Company shall have the right to require, prior to the issuance
or delivery  of any shares of the Common  Stock  pursuant  to this Plan,  that a
Participant make arrangements  satisfactory to the Committee for the withholding
of any taxes  required by law to be  withheld  with  respect to the  issuance or
delivery of such shares,  including,  without limitation,  by the withholding of
shares that would otherwise be so issued or delivered,  by withholding  from any
other payment due to the Participant, or by a cash payment to the Company by the
Participant.

     14.1 GOVERNING  LAW.  The Plan and all actions  taken  thereunder  shall be
governed by and construed in accordance with the laws of the State of Delaware.

     14.2 INFORMATION TO SHAREHOLDERS.  The Company shall furnish to each of its

stockholders financial statements of the Company at least annually.

     IN WITNESS  WHEREOF,  this Plan has been executed  effective as of July 10,
2003.

                                        AMERICAN COMMERCE SOLUTIONS, INC.

                                        By /s/ Daniel L. Hefner
                                           -------------------------------------
                                           Daniel L. Hefner, President

                                       6Exhibit 10.1

                       BESTNET COMMUNICATIONS CORPORATION

                             UNIT PURCHASE AGREEMENT

          This UNIT PURCHASE AGREEMENT ("AGREEMENT") is dated as of the date set
forth on the signature page hereto, by and among BestNet Communications Corp., a
Nevada  corporation  (the  "COMPANY"),  and each person or entity who executes a
counterpart  signature  page to this  Agreement  and is listed as an investor on
SCHEDULE I attached to this Agreement.

                              W I T N E S S E T H:

          WHEREAS,  the Company  desires to sell and issue up to an aggregate of
4,500,000 units (collectively, the "UNITS" and individually a "UNIT"), each unit
consisting of the following  securities:  (a) three shares of Common Stock,  par
value $.001 per share,  of the Company  (the "COMMON  STOCK");  (b) one share of
Series A  Preferred  Stock,  par value  $.001 per  share,  of the  Company  (the
"PREFERRED STOCK"); and (c) three-year warrants (the "WARRANTS") to purchase one
share of  Common  Stock at a per share  exercise  price of $0.30  (the  "WARRANT
SHARES");.

          WHEREAS, the rights,  preferences,  privileges and restrictions of the
Series A Preferred Stock shall be set forth in a Certificate of Designations, in
the form and  substance  of  EXHIBIT A  attached  hereto  (the  "CERTIFICATE  OF
DESIGNATIONS");

          WHEREAS,  the Warrants shall be in the form and substance of EXHIBIT B
attached hereto;

          WHEREAS,  the  Company  intends  to offer the Units  during the period
commencing  immediately  and ending on March 30, 2003,  subject to the Company's
right to  unilaterally  extend such period one time for up to an  additional  30
days (the "OFFERING Period");

          WHEREAS, the purchase price of each Unit shall be $0.30.

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

          CERTAIN  DEFINITIONS.  As used in this Agreement,  the following terms
shall have the following respective meanings:

          "Closing" and "Closing Date" shall have the meanings  ascribed to such
terms in Section 1.3 herein.

          "Commission" shall mean the Securities and Exchange  Commission or any
other federal agency at the time administering the Securities Act.
<PAGE>
          "Common  Stock"  shall have the meaning  set forth in the  preamble of
this Agreement.

          "Holder"  and  "Holders"  shall  include  an  Investor  or  Investors,
respectively,  and any  transferee of the Common  Stock,  the Series A Preferred
Stock,  the Warrants or the Underlying  Shares,  which have been  transferred in
compliance thereof.

          "Regulation D" shall mean Regulation D as promulgated  pursuant to the
Securities Act, and as subsequently amended.

          "Securities"  shall mean the Units,  the Common  Stock,  the Preferred
Stock and the Common Stock issuable upon conversion of the Preferred  Stock, the
Warrants and the Warrant Shares.

          "Securities  Act" or "Act" shall mean the  Securities  Act of 1933, as
amended.

          "Underlying  Shares"  shall mean the shares of Common  Stock  issuable
upon conversion of the Preferred Shares and upon exercise of the Warrants.

                                    ARTICLE I

                   PURCHASE AND SALE OF THE STOCK AND WARRANTS

          Section 1.1 PURCHASE AND SALE.

          (a) Upon the following terms and  conditions,  the Company shall issue
and sell to each  Investor  listed on SCHEDULE I  severally,  and each  Investor
listed on SCHEDULE I  severally  and not  jointly  agrees to  purchase  from the
Company, that number of Units indicated next to such Investor's name on SCHEDULE
I attached hereto.

          (b) The  purchase  price  for each  Unit  shall be $0.30 per Unit (the
"UNIT  PURCHASE  PRICE").  The Company  shall have the right to determine in its
sole and  absolute  whether  to  require a  minimum  investment  amount  from an
Investor.

          (c) The Company  shall adopt and file with the  Secretary of State for
the Sate of Nevada on or before the Closing  (defined  below) the Certificate of
Designation.

          Section 1.2 THE CLOSING.

          (a) The date of this  Agreement  shall be the date this  Agreement  is
signed by the first  Investor(s) to acquire the Units hereunder.  It is expected
that there will be one or more closings of the sale of the Units hereunder until
such time as all of the Units  have been  acquired  or the  Offering  Period has
expired.  Each  closing of the  purchase  and sale of the Units (the  "CLOSING")
shall take place by facsimile  transmission  of  signature  pages to each of the
documents contemplated by this Agreement, following acceptance by the Company of
subscriptions  for Units being offered hereby,  which acceptance shall not occur
until the  conditions  set forth in Article IV hereof with  respect to each sale
shall be  fulfilled  or waived  in  accordance  herewith.  The date on which the
Closing occurs is referred to herein as the "CLOSING DATE."

                                        2
<PAGE>
          (b) On the Closing  Date,  the  Company,  upon receipt and clearing of
funds  by  check or wire  transfer  shall  deliver  to the  applicable  Investor
appropriate documents and certificates  representing the shares of Common Stock,
Preferred Stock and Warrants  comprising the Units  purchased  hereunder by such
Investor  registered in the name of such Investor.  Each party shall deliver all
documents,  instruments  and  writings  required to be  delivered  by such party
pursuant to this Agreement at or prior to the Closing Date.

                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

          Section 2.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby  makes  the  following  representations  and  warranties  to  each of the
Investors from and as of the date hereof through the Closing Date:

          (a)  ORGANIZATION  AND  QUALIFICATION;  MATERIAL  ADVERSE EFFECT.  The
Company is a corporation  duly organized,  validly existing and in good standing
under the laws of the State of  Nevada.  Except for the  Company's  subsidiaries
disclosed  in its Form 10-KSB for the fiscal  year ended  August 31, 2002 or its
subsequently filed Form 10-QSBs (the "COMPANY SEC FILINGS"),  there are no other
corporations  or  other  entities  (including  partnerships,  limited  liability
companies and joint  ventures) in which the Company  directly or indirectly owns
at least a majority of the voting power  represented by the outstanding  capital
stock or other voting securities or interests having voting power under ordinary
circumstances  to elect a majority of the  directors  or similar  members of the
governing  body, or otherwise to direct the  management  and  policies,  of such
corporation or entity. The Company has the requisite  corporate power to own its
properties and to carry on its business as now being  conducted.  The Company is
duly  qualified as a foreign  corporation to do business and is in good standing
in every  jurisdiction in which the nature of the business conducted or property
owned by it makes  such  qualification  necessary  other than those in which the
failure  so to qualify  would  not,  individually  or in the  aggregate,  have a
Material Adverse Effect.  "MATERIAL  ADVERSE EFFECT" means any adverse effect on
the business, operations,  properties,  prospects, or financial condition of the
entity  with  respect to which such term is used and which is  material  to such
entity and other entities  controlling or controlled by such entity,  taken as a
whole, and any material adverse effect on the  transactions  contemplated  under
the Agreement or any other agreement or document contemplated hereby.

          (b)  AUTHORIZATION;  ENFORCEMENT.  All corporate action on the part of
the Company and its respective  officers,  directors and stockholders  necessary
for the authorization, execution and delivery of this Agreement, the Certificate
of Designations,  the Registration  Rights Agreement,  which is substantially in
the form and substance  attached hereto as EXHIBIT C (the  "REGISTRATION  RIGHTS
AGREEMENT");  the  performance of all  obligations of the Company  hereunder and
thereunder; and the authorization,  issuance (or reservation for issuance), sale
and  delivery  of the  Securities  being sold  hereunder  and the  Common  Stock
issuable  upon  conversion  of the  Preferred  Stock  and upon  exercise  of the
Warrants  has  been  taken  or will be  taken  prior  to the  Closing,  and this
Agreement, the Certificate of Designations and the Registration Rights Agreement
constitute valid and legally binding obligations of the Company,  enforceable in
accordance  with their  respective  terms,  except (i) as limited by bankruptcy,
insolvency, fraudulent conveyance,  reorganization,  moratorium and similar laws
affecting  creditors,   rights  and  remedies  generally,  and  subject,  as  to

                                        3
<PAGE>
enforceability,  to  general  principles  of  equity,  including  principles  of
commercial  reasonableness,  good faith and fair dealing  (regardless of whether
enforcement  is sought in a proceeding  at law or in equity) and (ii) as limited
by laws relating to the availability of specific performance,  injunctive relief
or other  equitable  remedies.  The Common Stock,  Preferred  Stock and Warrants
being  purchased by Investors  hereunder,  when  issued,  sold and  delivered in
accordance  with the terms of this  Agreement  for the  consideration  expressed
herein, and the Common Stock issuable upon conversion of the Preferred Stock and
upon exercise of the Warrants (when issued in accordance with the Certificate of
Designation  and the Warrants,  as the case may be) (the  "CONVERSION  Shares"),
will be,  subject to the truth and accuracy of each  Investor's  representations
set forth in Section 2 of this  Agreement,  and the offer,  sale and issuance of
the Common Stock, Preferred Stock and Warrants as contemplated by this Agreement
are,  exempt from the  registration  requirements  of any  applicable  state and
federal  securities  laws. To the Company's  knowledge,  no person acting on its
behalf has taken any action (including,  without limitation, any offering of any
securities of the Company under  circumstances  which require the integration of
such  offering with the offering of the Units under the  Securities  Act and the
rules and  regulations of the SEC  thereunder)  that might subject the offering,
issuance or sale of the Units to the  registration  requirements of Section 5 of
the Securities Act.

          (c) CAPITALIZATION. Schedule 2.1(c) sets forth the outstanding capital
stock of the Company.  The issued and outstanding shares of capital stock of the
Company have been validly issued and are fully paid and  non-assessable.  Except
as set forth on Schedule  2.1(c),  there are no outstanding  options,  warrants,
rights to  subscribe  for,  calls or  commitments  of any  character  whatsoever
relating to, or securities  or rights  exchangeable  or  convertible  into,  any
ownership interest in the Company.

          (d) ISSUANCE OF  SECURITIES.  The Common  Stock,  Preferred  Stock and
Warrants  have  been  duly  authorized  and,  subject  to  the  increase  in the
authorized  shares of Common Stock  contemplated  in Section 3.6, the Underlying
Shares  will be,  as of the  Closing  Date,  reserved  for  issuance  and,  upon
conversion of the Preferred  Stock in accordance with the terms thereof and upon
exercise  of the  Warrants in  accordance  with terms  thereof,  will be validly
issued,  fully  paid and  non-assessable,  free and clear of any and all  liens,
claims and encumbrances,  except for liens,  claims and encumbrances placed upon
such Securities by an Investor.

          (e) NO CONFLICTS.  The  execution,  delivery and  performance  of this
Agreement  and  the  Registration  Rights  Agreement  by  the  Company  and  the
consummation by the Company of the transactions  contemplated hereby and thereby
do not and will not (i) result in a violation of the  organizational  documents,
as amended, of the Company or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default)  under,
or  give to  others  any  rights  of  termination,  amendment,  acceleration  or
cancellation of, any agreement,  indenture, patent, patent license or instrument
to which the Company is a party, or result in a violation of any Federal, state,
local or foreign law, rule,  regulation,  order,  judgment or decree  (including
Federal and state securities laws and regulations)  applicable to the Company or
by which  any  property  or  asset of the  Company  is  bound  (except  for such
conflicts, defaults, terminations, amendments, accelerations,  cancellations and
violations  as would  not,  individually  or in the  aggregate,  have a Material
Adverse  Effect);  provided,  that,  for purposes of such  representation  as to
Federal,  state, local or foreign law, rule or regulation,  no representation is

                                        4
<PAGE>
made herein with respect to any of the same  applicable  solely to the Investors
and not to the  Company.  The  business of the Company has not been,  is not now
being  conducted  in  violation  of any  law,  ordinance  or  regulation  of any
governmental  entity,  except  for  violations  which  either  singly  or in the
aggregate do not and will not have a Material Adverse Effect. The Company is not
required  under  Federal,  state,  local or foreign law,  rule or  regulation to
obtain  any  consent,  authorization  or  order  of,  or to make any  filing  or
registration with, any court or governmental  agency in order for it to execute,
deliver or perform any of its obligations  under this Agreement,  the Units, the
Investor  Warrants or issue and sell the Units or such  Warrants  in  accordance
with the terms hereof,  the Underlying  Shares  issuable upon  conversion of the
Units and upon  exercise of the  Warrants,  provided  that,  for purposes of the
representation  made in this sentence,  the Company is assuming and relying upon
the accuracy of the relevant  representations  and  agreements  of the Investors
herein.

          (f) NO MATERIAL  ADVERSE  CHANGE.  Since  November 30, 2002,  the date
through which the most recent  unaudited  financial  statements  (the "FINANCIAL
STATEMENTS") of the Company have been prepared, no event which,  individually or
in the aggregate, when considered with any other event, had or is likely to have
a Material  Adverse  Effect has  occurred or exists with respect to the Company,
except as otherwise  disclosed or  reflected  in  Financial  Statements,  and as
otherwise provided to the Investors prior to the date hereof.

          (g) NO  UNDISCLOSED  LIABILITIES.  Except  as  set  forth  in the  SEC
Filings,  the Company does not have any liabilities or obligations not disclosed
in the  Financial  Statements,  other than  those  liabilities  incurred  in the
ordinary  course of its business  since  November 30, 2002,  or  liabilities  or
obligations,  individually or in the aggregate, which do not or would not have a
Material Adverse Effect on the Company.

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

          (i) INTELLECTUAL PROPERTY. Except as set forth in the SEC Filings, the
Company  owns,  or has legal  and  valid  rights  by  license,  lease,  or other
agreement to use, all trademarks,  trade names,  service marks,  Internet domain
names,  logos,  assumed names,  copyrights,  patents,  trade secrets,  software,
databases and names,  likenesses and other information  concerning real persons,
and  all   registrations   and   applications   therefore   (collectively,   the
"INTELLECTUAL  PROPERTY  RIGHTS")  which are used or are needed to  conduct  its
business as it is now being conducted or as proposed to be conducted.  Except as
set forth in the SEC  Filings,  the  Company  has no reason to believe  that the
Intellectual  Property  Rights  owned  or used by the  Company  are  invalid  or
unenforceable  or that  the  use of such  Intellectual  Property  Rights  by the
Company  infringes upon or conflicts with any right of any third party,  and the
Company has no knowledge of a basis for such claim or has received notice of any
such  infringement or conflict.  All registrations and applications for material
Intellectual Property Rights owned by the Company are valid and subsisting,  and
standing  in the record  ownership  of the  Company.  There are no  settlements,
consents,  agreements to forebear or other similar agreements or arrangements to
which the Company is bound which  materially  affects its rights to own,  use or
enforce any Intellectual Property Rights.

                                        5
<PAGE>
          (j)  NO  LITIGATION.  Except  as set  forth  in the  SEC  Filings,  no
litigation or claim  (including  those for unpaid taxes)  against the Company is
pending  or, to the  Company's  knowledge,  threatened,  and no other  event has
occurred,  which if determined adversely would have a Material Adverse Effect on
the Company, or would materially adversely effect the transactions  contemplated
hereby.

          (k) BROKERS.  During the Offering Period, the Company may elect to pay
brokerage  commissions  to  registered  broker-dealers  who,  at  the  Company's
request,  assist  in the  sale of the  Units.  The  commissions  will be up to a
maximum of five percent (5%) of any proceeds received from the Units offered and
sold by an authorized broker-dealer.

          Section 2.2 REPRESENTATIONS  AND WARRANTIES OF THE INVESTORS.  Each of
the   Investors,   severally  and  not  jointly,   hereby  makes  the  following
representations  and  warranties to the Company as of the date hereof and on the
Closing Date:

          (a)  AUTHORIZATION;  ENFORCEMENT.  (i) Such Investor has the requisite
power and authority,  or the legal  capacity,  as the case may be, to enter into
and perform this  Agreement  and to purchase the  Securities  being sold to such
Investor  hereunder,  (ii) the execution and delivery of this  Agreement by such
Investor and the consummation by it of the transactions contemplated hereby have
been duly  authorized  by all  necessary  corporate or  partnership  action,  as
required,  and (iii) this Agreement constitutes the valid and binding obligation
of such Investor  enforceable  against such  Investor in  accordance  its terms,
except  as  such  enforceability  may  be  limited  by  applicable   bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting  generally the enforcement of creditors'  rights and remedies or by
other equitable principles of general application.

          (b) NO CONFLICTS.  The  execution,  delivery and  performance  of this
Agreement and the consummation by such Investor of the transactions contemplated
hereby  do not and  will  not  (i)  result  in a  violation  of such  Investor's
organizational  documents,  or (ii) conflict with any agreement,  indenture,  or
instrument to which such Investor is a party,  or (iii) result in a violation of
any law,  rule, or  regulation or any order,  judgment or decree of any court or
governmental  agency applicable to such Investor.  Such Investor is not required
to obtain any consent or authorization  of any governmental  agency in order for
it to perform its obligations under this Agreement.

          (c)  INVESTMENT  REPRESENTATION.   Such  Investor  is  purchasing  the
Securities  purchased  hereunder  for its  own  account  and not  with a view to
distribution  in violation of any securities  laws. With respect to the purchase
of the  Securities  pursuant  to this  Agreement,  Investor  is not acting as an
"underwriter" within the meaning of Section 2(a)(11) of the Securities Act. Such
Investor has no present intention to sell the Securities purchased hereunder and
such  Investor has no present  arrangement  (whether or not legally  binding) to
sell the Securities purchased hereunder to or through any person or entity.

          (d) ACCREDITED INVESTOR.  Such Investor is an "ACCREDITED INVESTOR" as
defined in Rule 501 promulgated  under the Securities Act. The Investor has such
knowledge  and  experience  in  financial  and  business  matters in general and
investments in particular,  so that such Investor is able to evaluate the merits
and risks of an investment in the Securities  purchased hereunder and to protect

                                        6
<PAGE>
its own interests in connection with such  investment.  In addition (but without
limiting the effect of the Company's  representations  and warranties  contained
herein),  such Investor has reviewed the Company's SEC Filings and received such
information  as it considers  necessary or appropriate  for deciding  whether to
purchase the Securities purchased hereunder.  Notwithstanding the foregoing, the
Investor has not been  provided and is not  otherwise in  possession of material
nonpublic information pertaining to the Company.

          (e) RULE  144.  Such  Investor  understands  that  there is no  public
trading  market for the Units as a whole,  the shares of Preferred  Stock or the
Warrants,  that none is expected to develop,  and that the Units and each of the
Securities  that  comprise  the  Units  must be held  indefinitely  unless  such
Securities  are  registered  under  the  Securities  Act  or an  exemption  from
registration is available.  Such Investor understands that any Underlying Shares
issued upon  conversion of the Preferred Stock and upon exercise of the Warrants
must be held indefinitely unless such Securities are registered under the Act or
an exemption from  registration is available.  Such Investor has been advised or
is aware of the provisions of Rule 144 promulgated under the Act.

          (f) BROKERS.  Investor has taken no action that would give rise to any
claim by any person for brokerage commissions, finder's fees or similar payments
by the  Company  relating to this  Agreement  or the  transactions  contemplated
hereby.

          (g) RELIANCE BY THE COMPANY.  Such Investor understands that the Units
and the  Securities  that  comprise  the  Units are  being  offered  and sold in
reliance on a  transactional  exemption from the  registration  requirements  of
Federal and state securities laws and that the Company is relying upon the truth
and accuracy of the representations, warranties, agreements, acknowledgments and
understandings  of such  Investor  set forth  herein in order to  determine  the
applicability of such exemptions and the suitability of such Investor to acquire
the Securities.

                                   ARTICLE III

                                    COVENANTS

          Section 3.1  CERTIFICATES  ON  CONVERSION  OR  EXERCISE.  Upon (i) the
conversion of any shares of Preferred  Stock in accordance  with the Certificate
of  Designations or exercise of any Warrants in accordance with the terms of the
Warrants,  the Company  shall issue and  deliver to such  Investor  (or the then
holder) within five (5) business days of the exercise date, (x) a Certificate or
Certificates  representing the Underlying Shares issuable upon exercise, and (y)
in the case of the Warrants,  a new certificate or certificates for the Warrants
of such  Investor (or holder)  which have not yet been  exercised  but which are
evidenced in part by the  certificate(s)  submitted to the Company in connection
with  such  exercise  (with  the  number  of  and   denomination   of  such  new
certificate(s) designated by such Investor or holder).

          Section 3.2 REPLACEMENT CERTIFICATES.  The certificate(s) representing
any of the Securities comprising the Units held by any Investor (or then holder)
may be exchanged by such  Investor (or such holder) at any time and from time to
time for certificates with different denominations  representing an equal amount
of such  Securities,  as reasonably  requested by such Investor (or such holder)

                                        7
<PAGE>
upon   surrendering   the  same.  No  service  charge  will  be  made  for  such
registration, transfer or exchange.

          Section  3.3  NOTICES.  The  Company  agrees to provide all holders of
Securities  with  copies of all  notices  and  information,  including,  without
limitation,  notices and proxy  statements in connection  with any meetings that
are provided to the holders of Common  Stock of the  Company,  contemporaneously
with the delivery of such notices or information to such existing members.

          Section 3.4  RESERVATION OF UNDERLYING  SHARES ISSUABLE UPON EXERCISE.
Subject to the increase in the authorized shares of Common Stock contemplated in
Section 3.6, the Company shall at all times reserve and keep  available,  solely
for the purpose of effecting the conversion of the Preferred  Stock and exercise
of the Warrants,  such number of Underlying Shares as shall from time to time be
sufficient to effect the conversion or exercise of such Securities.

          Section 3.5 NO  IMPAIRMENT.  The Company will not, by amendment of its
organizational  documents  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  to  be  observed  or  performed  by it  under  this  Agreement,  the
Certificate  of  Designations  and the  Warrants,  but will at all times in good
faith assist in the carrying out of all the  provisions of such  agreements  and
instruments.

          Section 3.6 INCREASE IN AUTHORIZED CAPITAL.  The Company hereby agrees
to  take  such  action  as is  reasonably  necessary  to call a  meeting  of its
shareholders  for the purpose of  submitting  a proposal to amend the  Company's
certificate  of  incorporation  to increase the number of  authorized  shares of
Common Stock to a number that will allow the holders of the Preferred  Stock and
the Warrants to convert or exercise such  Securities  in  accordance  with their
terms.

          Section 3.7 TRADING OF UNDERLYING SECURITIES. Each Investor, severally
and not  jointly,  hereby  acknowledges  and agrees that such  Investor may only
trade the Common Stock, Preferred Stock and the Underlying Shares upon the prior
written  consent of the Company,  which consent may be withheld in the Company's
sole and absolute  discretion.  Until the Company gives such  consent,  only the
Units may be traded by an Investor.

                                   ARTICLE IV

                                   CONDITIONS

          Section 4.1  CONDITIONS  PRECEDENT TO THE OBLIGATION OF THE COMPANY TO
ISSUE AND SELL THE UNITS.  The obligation  hereunder of the Company to issue and
sell the Units to the Investors is subject to the satisfaction, at or before the
Closing Date, of each of the  conditions set forth below.  These  conditions are
for the  Company's  sole benefit and may be waived by the Company at any time in
its sole discretion.

          (a) ACCURACY OF THE INVESTORS'  REPRESENTATIONS  AND  WARRANTIES.  The
representations and warranties of each Investor shall be true and correct in all
material  respects as of the date when made and as of the Closing Date as though

                                        8
<PAGE>
made at that time (except for  representations and warranties that speak as of a
particular date, which shall be true and correct in all material  respects as of
such other date).

          (b)  PERFORMANCE BY THE INVESTORS.  Each Investor shall have performed
all agreements and satisfied all conditions  required  hereby to be performed or
satisfied by such Investor at or prior to the Closing Date.

          (c) NO INJUNCTION.  No statute,  rule,  regulation,  executive  order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by any court or governmental  authority of competent jurisdiction which
prohibits  the  consummation  of any of the  transactions  contemplated  by this
Agreement.

          (d)   APPROVALS.   The  Company  shall  have  obtained  the  requisite
consents/approvals  with  respect  to  the  transactions  contemplated  by  this
Agreement in accordance with the Company's organizational documents,  including,
without limitation, receipt of approval of the Company's board of directors.

          Section 4.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE INVESTORS TO
PURCHASE THE UNITS. The obligation hereunder of each Investor to acquire and pay
for the Units is subject to the satisfaction,  at or before the Closing Date, of
each of the conditions set forth below. These conditions are for each Investor's
sole  benefit  and  may be  waived  by each  Investor  at any  time in its  sole
discretion.

          (a) ACCURACY OF THE  COMPANY'S  REPRESENTATIONS  AND  WARRANTIES.  The
representation  and  warranties  of the Company shall be true and correct in all
material  respects as of the date when made and as of the Closing Date as though
made at that time (except for  representations and warranties that speak as of a
particular  date which shall be true and correct in all material  respects as of
such other date),  and except that all  representations  and warranties  that by
their  terms are  qualified  by  reference  to  "materiality"  or to a "Material
Adverse Effect" shall be, or have been, true and correct in all respects.

          (b)  PERFORMANCE BY THE COMPANY.  The Company shall have performed all
agreements and satisfied all conditions required to be performed or satisfied by
the Company at or prior to the Closing Date.

          (c) NO INJUNCTION.  No statute,  rule,  regulation,  executive  order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by any court or governmental  authority or competent jurisdiction which
prohibits  the  consummation  of any of the  transactions  contemplated  by this
Agreement.

          (d) OFFICER'S  CERTIFICATE.  The Company  shall have  delivered to the
Investors a certificate  in form and substance  reasonably  satisfactory  to the
Investors, executed by the Secretary or an Assistant Secretary of the Company on
behalf  of the  Company,  certifying  as to  the  satisfaction  of  all  closing
conditions,  incumbency of signing officers,  charter, Bylaws, good standing and
authorizing resolutions of the Company.

                                        9
<PAGE>
                                    ARTICLE V

                      LEGEND AND STOCK; REGISTRATION RIGHTS

          Section 5.1 LEGEND AND STOCK. Each certificate representing the Common
Stock,  Preferred Stock,  Warrants and the Underlying Shares shall be stamped or
otherwise imprinted with a legend substantially in the following form:

          THESE  SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933,  AS AMENDED (THE  "SECURITIES  ACT"),  AND THEY MAY NOT BE OFFERED,  SOLD,
PLEDGED,  HYPOTHECATED,  ASSIGNED  OR  TRANSFERRED  EXCEPT  (I)  PURSUANT  TO  A
REGISTRATION  STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME  EFFECTIVE AND
IS CURRENT  WITH  RESPECT TO THESE  SECURITIES  OR (II)  PURSUANT  TO A SPECIFIC
EXEMPTION FROM  REGISTRATION  UNDER THE  SECURITIES  ACT, BUT ONLY UPON A HOLDER
HEREOF  FIRST  HAVING  OBTAINED  THE  WRITTEN  OPINION  OF  COUNSEL   REASONABLY
ACCEPTABLE TO THE ISSUER THAT THE PROPOSED  DISPOSITION  IS CONSISTENT  WITH ALL
APPLICABLE PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY APPLICABLE "BLUE SKY"
OR SIMILAR SECURITIES LAW.

          The Company may also place such legends on the  Securities as it shall
determine in its reasonable  discretion are necessary to ensure  compliance with
the trading limitations set forth in Section 3.7.

          Section 5.2  REGISTRATION  RIGHTS.  The Units and the Securities  that
comprise each Unit shall be entitled to the registration rights set forth in the
Registration Rights Agreement.

                                   ARTICLE VI

                                   TERMINATION

          Section 6.1  TERMINATION  BY MUTUAL  CONSENT.  This  Agreement  may be
terminated at any time prior to the Closing Date by the mutual  written  consent
of the Company and the Investors.

          Section 6.2 OTHER TERMINATION. This Agreement may be terminated by the
Company or by any of the  Investors  at any time if the  Closing  Date shall not
have occurred by the fifth  business day  following the date of this  Agreement;
provided, however, that the right to terminate this Agreement under this Section
6.2 shall not be available to any party whose failure to fulfill any  obligation
under this  Agreement  has been the cause of, or resulted in, the failure of the
Closing Date to have occurred on or prior to such date.

                                   ARTICLE VII

                                  MISCELLANEOUS

          Section 7.1 STAMP TAXES;  AGENT FEES.  The Company shall pay all stamp
and other  taxes  and  duties  levied in  connection  with the  issuance  of the
Securities   comprising  the  Units,  and  the  Underlying  Shares  issued  upon
conversion of the Preferred Stock and upon exercise of the Warrants.

                                       10
<PAGE>
          Section 7.2 SPECIFIC ENFORCEMENT; CONSENT TO JURISDICTION.

          (a)  The  Company  and  the  Investors   acknowledge  and  agree  that
irreparable  damage would occur in the event that any of the  provisions of this
Agreement  were not performed in accordance  with their  specific  terms or were
otherwise breached.  It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in  addition  to any other  remedy to which any of them may be entitled by
law or equity.

          (b) The  Company  and each of the  Investors  (i)  hereby  irrevocably
submits to the exclusive  jurisdiction  of the United States  District Court for
the District of Arizona, the Arizona State courts and other courts of the United
States sitting in Maricopa County,  Arizona for the purposes of any suit, action
or  proceeding  arising  out of or relating  to this  Agreement  and (ii) hereby
waives,  and agrees not to assert in any such suit,  action or  proceeding,  any
claim that it is not personally  subject to the jurisdiction of such court, that
the suit,  action or proceeding is brought in an inconvenient  forum or that the
venue of the suit, action or proceeding is improper. The Company and each of the
Investors  consents  to  process  being  served  in any  such  suit,  action  or
proceeding  by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and  sufficient  service of process  and  notice  thereof.  Nothing in this
paragraph  shall affect or limit any right to serve  process in any other manner
permitted  by law.  Section  7.3 ENTIRE  AGREEMENT;  AMENDMENT.  This  Agreement
together  with the  agreements  and documents  executed in connection  herewith,
contains  the entire  understanding  of the parties  with respect to the matters
covered hereby and, except as specifically set forth herein, neither the Company
nor any Investor  makes any  representation,  warranty,  covenant or undertaking
with respect to such  matters.  No provision of this  Agreement may be waived or
amended  other than by a written  instrument  signed by the party  against  whom
enforcement of any such amendment or waiver is sought.

          Section  7.4  NOTICES.  Any  notices,   consents,   waivers  or  other
communications  required  or  permitted  to be  given  under  the  terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt,  when delivered  personally;  (ii) upon receipt, when sent by facsimile
(provided   confirmation  of  transmission  is  mechanically  or  electronically
generated  and kept on file by the sending  party);  or (iii) one  business  day
after deposit with a nationally  recognized  overnight delivery service, in each
case  properly  addressed to the party to receive the same.  The  addresses  and
facsimile numbers for such communications shall be:

     to the Company:     BestNet Communications Corp.
                         5075 Cascade Road SE, Suite A
                         Grand Rapids, Michigan  49546
                         Telephone: (616) 977-9933
                         Facsimile: (616) 977-9955
                         Attn: Robert A. Blanchard

                                       11
<PAGE>
     with copies to:     Squire, Sanders & Dempsey L.L.P.
                         Two Renaissance Square
                         40 North Central Avenue, Suite 2700
                         Phoenix, Arizona  85004-4498
                         Telephone: 602-528-4134
                         Facsimile: 602-253-8129
                         Attn: Gregory R. Hall, Esq.

     to the Investors:   To each Investor at the addresses set forth on
                         SCHEDULE I of this Agreement.

Any party  hereto may from time to time change its address for notices by giving
at least  five (5) days  written  notice of such  changed  address  to the other
parties  hereto.  Written  confirmation of receipt (A) given by the recipient of
such  notice,  consent,  waiver  or other  communication,  (B)  mechanically  or
electronically  generated by the sender's facsimile machine containing the time,
date,  recipient  facsimile  number  and an  image  of the  first  page  of such
transmission  or (C)  provided by a  nationally  recognized  overnight  delivery
service shall be rebuttable  evidence of personal service,  receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above.

          Section 7.5  INDEMNITY.  Each party shall  indemnify,  defend and hold
harmless  each  other  party  against  any  loss,  cost  or  damages  (including
reasonable  attorney's fees) incurred as a result of such parties' breach of any
representation, warranty, covenant or agreement in this Agreement.

          Section  7.6  WAIVERS.  No  waiver by any  party of any  default  with
respect to any provision,  condition or  requirement of this Agreement  shall be
deemed  to be a  continuing  waiver  in the  future  or a  waiver  of any  other
provision,  condition or requirement  hereof, nor shall any delay or omission of
any party to exercise any right  hereunder in any manner  impair the exercise of
any such right accruing to it thereafter.

          Section 7.7 HEADINGS. The headings herein are for convenience only, do
not  constitute  a part of this  Agreement  and  shall not be deemed to limit or
affect any of the provisions hereof.

          Section 7.8  SUCCESSORS  AND  ASSIGNS.  Except as  otherwise  provided
herein,  this  Agreement  shall be binding  upon and inure to the benefit of the
parties and their successors and permitted assigns. The parties hereto may amend
this Agreement  without notice to or the consent of any third party. No Investor
may assign  this  Agreement  (in whole or in part) or any rights or  obligations
hereunder  without the  Company's  prior written  consent,  which consent may be
withheld for any reason in the Company's sole discretion.

          Section 7.9 NO THIRD PARTY  BENEFICIARIES.  This Agreement is intended
for the benefit of the parties hereto and their respective  permitted successors
and  assigns  and is not for the  benefit  of, nor may any  provision  hereof be
enforced by, any other person.

                                       12
<PAGE>
          Section 7.10 GOVERNING  LAW. This  Agreement  shall be governed by and
construed  and enforced in  accordance  with the  internal  laws of the State of
Nevada without regard to such State's principles of conflict of laws.

          Section 7.11  SURVIVAL.  The  representations  and  warranties and the
agreements and covenants of the Company and each Investor contained herein shall
survive the Closing.

          Section 7.12 EXECUTION.  This Agreement may be executed in two or more
counterparts,  all of which shall be considered one and the same  agreement,  it
being understood that all parties need not sign the same counterpart.

          Section 7.13 PUBLICITY. The Company agrees that it will not include in
any public announcement the name of any Investor without its consent, unless and
until such disclosure is required by law or applicable regulation, and then only
to the extent of such requirement.

          Section 7.14 SEVERABILITY.  The parties acknowledge and agree that all
representations, warranties, covenants and agreements of the Investors hereunder
are several and not joint,  that no Investor  shall have any  responsibility  or
liability for the representations,  warrants,  agreements,  acts or omissions of
any other Investor,  and that any rights granted to "Investors"  hereunder shall
be enforceable by each Investor hereunder.

          Section 7.15 LIKE TREATMENT OF HOLDERS. Neither the Company nor any of
its  affiliates  shall,  directly  or  indirectly,  pay or  cause to be paid any
consideration,  whether by way of interest,  fee,  payment for the redemption or
exchange of Securities, or otherwise, to any holder of Securities,  for or as an
inducement to, or in connection with the solicitation of, any consent, waiver or
amendment of any terms or provisions of the Securities or this Agreement, unless
such  consideration is required to be paid to all holders of Securities bound by
such consent,  waiver or amendment whether or not such holders so consent, waive
or agree to amend and whether or not such holders  tender their  Securities  for
redemption or exchange.  The Company shall not,  directly or indirectly,  redeem
any  Securities  unless such offer of redemption is made pro rata to all holders
of Securities on identical terms.

          Section 7.16 EXPENSES.  Each party shall pay its own expenses incident
to the preparation and performance of this Agreement and the documents  provided
for herein.

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed as of the date first above written.

                                       13
<PAGE>
BESTNET COMMUNICATIONS CORP., a Nevada corporation;

By:___________________________

Name:_________________________

Title:________________________

INVESTOR:

By:___________________________

Name:_________________________

Title:________________________

Amount Invested: $____________________ USD    Number of Units Purchased:________

Wiring instructions are as follows:
Account Name: BestNet Communications
Bank information: Bank One
4717 Cascade Rd. SE, Grand Rapids, MI 49546
(616)-771-7024
Account #: 638262634
ABA/routing#: 072000326

Checks should be made payable to:
BestNet Communications Corporation
5075 Cascade Road, SE
Suite A
Grand Rapids, MI 49546
(616)-977-9933

ALL INVESTORS MUST INITIAL THE FOLLOWING LINE:

______ I understand that the representations contained in Section 2.2 (a through
g) are made for the purpose of qualifying  me as an accredited  investor as that
term is defined by the  Securities  and Exchange  Commission  for the purpose of
inducing a sale of  securities to me. I hereby  represent  that the statement or
statements are true and correct in all respects.

                            [Investor Signature Page]

                                       14
<PAGE>
                             EXHIBITS AND SCHEDULES

Schedule I                                 Investor Information

Schedule 2.1(C)                            Capitalization

Exhibit A                                  Form of Certificate of Designations

Exhibit B                                  Form of Warrant

Exhibit C                                  Form of Registration Rights Agreement

                                       15
<PAGE>
                                   SCHEDULE I

                           INVESTOR INFORMATION SHEET

NAME:__________________________________     Number of Units Purchased:__________

TITLE:_________________________________

CORPORATION:___________________________

ADDRESS:_______________________________

_______________________________________

_______________________________________

TAXPAYER ID# or SSN:___________________

                                       16
<PAGE>
                                 SCHEDULE 2.1(C)

                                 CAPITALIZATION

Outstanding Shares of Capital Stock                                   19,199,825

Warrants Outstanding                                                   8,173,380

Options Outstanding                                                    4,385,669

                                       17

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