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NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS 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 TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES

Warrant No. ___

                    REDEEMABLE COMMON STOCK PURCHASE WARRANT

                        To Purchase __________ Shares of
                     Common Stock of THE PROJECT GROUP, INC.

         THIS 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 ___, 2004 (the
"Initial Exercise Date") and on or prior to the close of business on the fourth
anniversary of the Initial Exercise Date (the "Termination Date") but not
thereafter, to subscribe for and purchase from THE PROJECT GROUP, INC., a
corporation incorporated in the State of Nevada (the "Company"), up to
____________ shares (the "Warrant Shares") of Common Stock, par value $0.001 per
share, of the Company (the "Common Stock"). The purchase price of one share of
Common Stock (the "Exercise Price") under this Warrant shall be $0.25, subject
to adjustment hereunder. The Exercise Price and the number of Warrant Shares for
which the Warrant is exercisable shall be subject to adjustment as provided
herein. Capitalized terms used and not otherwise defined herein shall have the
meanings set forth in that certain Securities Purchase Agreement (the "Purchase
Agreement"), dated March ___, 2004, between the Company and the investor
signatory thereto.

         1. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws, 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.

         2. Authorization of 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).

         3. Exercise of Warrant.

         (a) (i) Except as provided in Section 4 herein, 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 the
surrender of this Warrant and the Notice of Exercise Form annexed hereto duly

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executed, at the office of the Company (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) and upon payment
of the Exercise Price of the shares thereby purchased by wire transfer or
cashier's check drawn on a United States bank, the Holder shall be entitled to
receive a certificate for the number of Warrant Shares so purchased.
Certificates for shares purchased hereunder shall be delivered to the Holder
within FIVE (5) Trading Days after the date on which this Warrant shall have
been exercised as aforesaid (or such shorter period if the holder is required by
federal securities laws or regulations or exchange rules to deliver shares
earlier). This Warrant shall be deemed to have been exercised and such
certificate or certificates 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 5 prior
to the issuance of such shares, have been paid.

                  (ii) In the event that the Company has failed to obtain an
order of effectiveness from the Securities and Exchange Commission with respect
to the registration statement required to be filed by it under the Securities
Purchase Agreement between the Company and the original holder of this Warrant
within a date which is 12 months from date of this Warrant, then the Holder of
this Warrant shall have the right to exercise this Warrant by means of cashless
exercise as described in this clause (ii). 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 average of the high and low trading prices per
                           share of Common Stock on the trading day preceding
                           the date of such election;

                  (B)      = the Exercise Price of the Warrants; and

                  (X)      = the number of Warrant Shares issuable upon exercise
                           of the Warrants in accordance with the terms of this
                           Warrant.

                  (iii)    If the Company fails to deliver to the Holder a
certificate or certificates representing the Warrant Shares pursuant to this
Section 3(a) by the FIFTH Trading Day (or such shorter period if the holder is
required by federal securities laws or regulations or exchange rules to deliver
shares earlier after the date of exercise, then the Holder will have the right
to rescind such exercise. In addition to any other rights available to the
Holder, if the Company fails to deliver to the Holder a certificate or
certificates representing the Warrant Shares pursuant to an exercise by the
FIFTH Trading Day (or such shorter period if the holder is required by federal
securities laws or regulations or exchange rules to deliver shares earlier after
the date of exercise, and if after such FIFTH Trading Day (or such shorter
period if the holder is required by federal securities laws or regulations or
exchange rules to deliver shares earlier 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 closing bid price of the
Common Stock at the time of the obligation giving rise to such purchase
obligation, 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

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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 a
market price on the date of exercise totaled $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. 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. Notwithstanding anything
to the contrary herein, in the event a Holder is entitled to collect liquidated
damages hereunder and liquidated damages pursuant to Section 4.1(a) of the
Purchase Agreement, the Holder shall be limited to collect, at its option, of
such remedies, only one such remedy on any given occasion.

         (b) 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.

         (c) Notwithstanding anything herein to the contrary, in no event shall
the Holder be permitted to exercise this Warrant for Warrant Shares to the
extent that (i) the number of shares of Common Stock owned by such Holder (other
than Warrant Shares issuable upon exercise of this Warrant) plus (ii) the number
of Warrant Shares issuable upon exercise of this Warrant, would be equal to or
exceed 4.9999% of the number of shares of Common Stock then issued and
outstanding, including shares issuable upon exercise of this Warrant held by
such Holder after application of this Section 3(c). As used herein, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act. To the extent that the limitation contained in this Section 3(c) 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. Nothing
contained herein shall be deemed to restrict the right of a Holder to exercise
this Warrant into Warrant Shares at such time as such exercise will not violate
the provisions of this Section 3(c). The provisions of this Section 3(c) may be
waived by the Holder upon, at the election of the Holder, not less than 61 days'
prior notice to the Company, and the provisions of this Section 3(c) shall
continue to apply until such 61st day (or such later date, as determined by the
Holder, as may be specified in such notice of waiver). No exercise of this
Warrant in violation of this Section 3(c) but otherwise in accordance with this
Warrant shall affect the status of the Warrant hares as validly issued,
fully-paid and nonassessable.

         4. 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.

         5. 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

<PAGE>

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.

         6. Closing of Books. The Company will not close its stockholder books
or records in any manner which prevents the timely exercise of this Warrant.

         7. Transfer, Division and Combination.

                  (a) Subject to compliance with any applicable securities laws,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose, 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) 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 7(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; PROVIDED, HOWEVER, the holders of
this Warrant shall be limited to two (2) transfer requests. The Company shall
prepare, issue and deliver at its own expense (other than transfer taxes) the
new Warrant or Warrants under this Section 7.

                  (c) The Company agrees to maintain, at its aforesaid office,
books for the registration and the registration of transfer of the Warrants.

         8. 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.

         9. 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 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.

         10. 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.

<PAGE>

         11. Adjustments of Exercise Price and Number of Warrant Shares.

                  (a) Stock Splits, etc. The number and kind of securities
purchasable upon the exercise of this Warrant and the Exercise Price shall be
subject to adjustment from time to time upon the happening of any of the
following. In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock, or (iv) issue any shares
of its capital stock in a reclassification of the Common Stock, then the number
of Warrant Shares purchasable upon exercise of this Warrant immediately prior
thereto shall be adjusted so that the Holder shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which it
would have owned or have been entitled to receive had such Warrant been
exercised in advance thereof. Upon each such adjustment of the kind and number
of Warrant Shares or other securities of the Company which are purchasable
hereunder, the Holder shall thereafter be entitled to purchase the number of
Warrant Shares or other securities resulting from such adjustment at an Exercise
Price per Warrant Share or other security obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of Warrant
Shares purchasable pursuant hereto immediately prior to such adjustment and
dividing by the number of Warrant Shares or other securities of the Company
resulting from such adjustment. An adjustment made pursuant to this paragraph
shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.

                  (b) Anti-Dilution/ Prohibition on Financings. The Exercise
Price shall be subject to adjustment from time to time as provided in this
Section 11(b). In the event that any adjustment of the Exercise Price as
required herein results in a fraction of a cent, such Exercise Price shall be
rounded up or down to the nearest whole cent. Notwithstanding anything to the
contrary contained herein, the Company undertakes and covenants that until the
earlier to occur of (i) the registration statement described in the Securities
Purchase Agreement covering the Warrant Shares having been effective for 90days
days, or (ii) until all the Warrant Shares have been resold pursuant to said
registration statement, the Company will not issue any shares of Common Stock,
or securities convertible into Common Stock; provided, however, the Company may
(X) issue options or shares or other securities to its employees and other
eligible persons under its existing employee option plans (which the Company may
increase by an additional 1,500,000 shares); (Y) issue warrants or other
securities to consultants or advisors provided such securities have an exercise
or conversion price in excess of $0.14 per share and (Z) may issue shares of
Common Stock in connection with the exercise or conversion of convertible
securities outstanding on the date hereof in accordance with the terms thereof.
In the event that the Company issues securities in violation of this clause (b),
the Exercise Price of this Warrant shall be reduced to reflect the issue or
conversion or exercise price of such securities.

                  (c) Exceptions to Adjustment of Exercise Price. No adjustment
to the Exercise Price will be made upon (i) the grant or exercise of any
Convertible Securities which may hereafter be granted or exercised under any
employee benefit plan of the Company now existing or to be implemented in the
future, so long as the issuance of such Convertible Securities is approved by a
majority of the non-employee members of the Board of Directors of the Company or
a majority of the members of a committee of non- employee directors established
for such purpose, (ii) the issuance of up to 850,000 warrants to First Montauk
Securities Corp as compensation for its services in connection with the Stock
Purchase Agreement, (iii) upon the exercise of this Warrant or any other warrant
of this series or of any other series or security issued by the Company in
connection with the offer and sale of this Company's securities pursuant to the
Purchase Agreement; or (iv) upon the exercise of or conversion of any
Convertible Securities, options or warrants issued and outstanding on the
initial issuance date of this Warrant.

<PAGE>

                  (d) Minimum Adjustment of Exercise Price. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.

                  12. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets.

         In case the Company shall reorganize its capital, reclassify its
capital stock, consolidate or merge with or into another corporation (where the
Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of the Company), or sell, transfer
or otherwise dispose of all or substantially all its property, assets or
business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then the Holder shall have the right thereafter to receive 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 Other Property 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. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of Warrant Shares
for which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 12. For purposes of
this Section 12, "common stock of the successor or acquiring corporation" shall
include stock of such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such corporation and which
is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions of
this Section 12 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.

                  13.      Redemption of Warrant

                  The Warrants are redeemable by the Company, on not less than
20 business days' (Redemption Period") at a redemption price of $0.001 per
Warrant ("Redemption Price") at any time commencing after the original date of
issuance; provided that (i) the average closing bid quotation for the Common
Stock for the 20 consecutive trading days prior to the day on which the Company
gives notice of redemption has been at least $0.60 per share and (ii) there is
an effective registration statement under the Securities Act of 1933 covering
the offer and sale of the Warrant Shares upon exercise of the Warrants. The
redemption notice shall be mailed to the holders of the Warrants at their
addresses appearing in the Warrant register. Holders of the Warrants will have
exercise rights until the close of business on the date fixed for redemption.
Upon the expiration of the 20 day period, all Warrants not exercised by the
holder shall terminate and shall solely represent the right to receive the
Redemption Price. The redemption Price shall be paid in immediately available
funs and be delivered to each holder with ten (10) business days of expiration
of the Redemption Period. The Company may not redeem less than all of the
Warrants then outstanding.

<PAGE>

                  14. Registration Rights. The holder of this Warrant shall be
entitled to the registration rights as provided in the Securities Purchase
Agreement entered into between the Company and the original holder of this
Warrant.

                  15. Voluntary Adjustment by the 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.

                  16. Notice of Adjustment. Whenever the number of Warrant
Shares or number or kind of securities or other property purchasable upon the
exercise of this Warrant or the Exercise Price is adjusted, as herein provided,
the Company shall promptly mail by registered or certified mail, return receipt
requested, to the Holder notice of such adjustment or adjustments setting forth
the number of Warrant Shares (and other securities or property) purchasable upon
the exercise of this Warrant and the Exercise Price of such Warrant Shares (and
other securities or property) after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Such notice, in the absence of
manifest error, shall be conclusive evidence of the correctness of such
adjustment.

                  17. Notice of Corporate Action. If at any time:

                           (a) the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them to receive a dividend or
other distribution, or any right to subscribe for or purchase any evidences of
its indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or

                           (b) there shall be any capital reorganization of the
Company, any reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company with, or any sale,
transfer or other disposition of all or substantially all the property, assets
or business of the Company to, another corporation or,

                           (c) there shall be a voluntary or involuntary
dissolution, liquidation or winding
up of the Company;

         then, in any one or more of such cases, the Company shall give to
Holder (i) at least 20 days' prior written notice of the date on which a record
date shall be selected for such dividend, distribution or right or for
determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
liquidation or winding up, and (ii) in the case of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up, at least 20 days' prior written notice
of the date when the same shall take place. Such notice in accordance with the
foregoing clause also shall specify (i) the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, the date on
which the holders of Common Stock shall be entitled to any such dividend,
distribution or right, and the amount and character thereof, and (ii) the date
on which any such reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up is to take place
and the time, if any such time is to be fixed, as of which the holders of Common
Stock shall be entitled to exchange their Warrant Shares for securities or other
property deliverable upon such disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder
at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 19(d).

<PAGE>

                  18. 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 Principal Market
upon which the Common Stock may be listed.

                  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 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.

                  19. Miscellaneous.

                  (a) Jurisdiction. This Warrant shall constitute a contract
under the laws of New York, without regard to its conflict of law, principles or
rules.

                  (b) 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.

                  (c) 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 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.

                  (d) 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.

                  (e) Limitation of Liability. No provision hereof, in the
absence of affirmative action by Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of Holder, shall

<PAGE>

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.

                  (f) 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.

                  (g) 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.

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

                  (i) 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.

                  (j) Warrant Solicitation Fee. Th e holder of this Warrant
hereby acknowledges that the Company has agreed to pay a warrant solicitation
fee to First Montauk Securities Corp., an NASD member brokerage firm, in
connection with the solicitation of the exercise of this Warrant. Such fee shall
equal 5% of the aggregate exercise price and is payable only in accordance with
NASD rules, and which requirements are disclosed in Schedule 5(bb) of the
Securities Purchase Agreement.

[signature page appears next]

<PAGE>

                  (k) 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.

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

Dated:  March __, 2004
                                               THE PROJECT GROUP, INC.

                                               By:  /s/ Craig Crawford
                                               --------------------------------
                                               Name:    Craig Crawford
                                               Title:   President

Witness:

--------------------------------
Secretary

<PAGE>

NOTICE OF EXERCISE

To:       THE PROJECT GROUP, INC., 333 N. Sam Houston Parkway, Houston TX 77060

FAX NO.  713-622-1103 ATTN: Craig Crawford

The undersigned hereby elects to purchase ________ Warrant Shares (the "Common
Stock"), of The Project Group, Inc., pursuant to the terms of the attached
Warrant, and tenders herewith payment of the exercise price in full, together
with all applicable transfer taxes, if any.

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:

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

| |      BY CHECKING THIS BOX, THE UNDERSIGNED ADVISES THAT THE EXERCISE OF THIS
WARRANT WAS SOLICITED BY THE BROKERAGE FIRM OF _________________________________
AND UNDERSTANDS THAT SUCH FIRM WILL BE ENTITLED TO COMPENSATION FROM THE PROJECT
GROUP INC. FOR ITS WARRANT SOLICITATION SERVICES

The Warrant Shares shall be delivered to the following:

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

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

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

Social Security/Fed ID#
                        --------------------------------------------------------

                  (3) The undersigned hereby represents and warrants to the
Company and its transfer agent that it has complied with or will comply with any
prospectus delivery requirements under the applicable securities laws in
connection with any sale or transfer of the aforesaid Warrant Shares.

                                          [PURCHASER]
                                                --------------------------------

                                          By:   /s/ Craig Crawford
                                                --------------------------------
                                                Name:    Craig Crawford
                                                Title:   President

                                          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.The Project Group, Inc.

                             SELLING AGENT AGREEMENT

                                                       Dated as of March 1, 2004

First Montauk Securities Corp.
Parkway 109 Office Center
328 Newman Springs Road
Red Bank, New Jersey 07701

Gentlemen:

                  The Project Group, Inc. (the "Company") proposes to offer for
sale (the "Offering") in a private offering pursuant to Section 4(2) of the
Securities Act of 1933, as amended (the "Act"), and/or Regulation D promulgated
by the Securities and Exchange Commission thereunder, an aggregate of up to
$1,500,000 of units comprised of up to 1,500 shares of preferred stock and
common stock warrants, at a subscription price of $1000.00 per unit (the
"Securities"). The Offering and terms of the securities are more fully described
in the Term Sheet date as of February 18, 2004 executed by the Company and First
Montauk Securities Corp. Offers and sales of the Securities shall be to
Accredited Investors (as defined in Regulation D.) This letter agreement shall
confirm our agreement concerning First Montauk Securities Corp. acting as
exclusive selling or placement agent (the "Selling Agent" or "FMSC")) in
connection with the sale of the Securities.

                  l. Appointment of Selling Agent.

                  On the basis of the representations and warranties contained
herein, and subject to the terms and conditions set forth herein, the Company
hereby appoints First Montauk Securities Corp. as exclusive selling
agent/placement agent and grants to FMSC the right to offer, as its agent, the
Securities pursuant to the terms of this Agreement. On the basis of such
representations and warranties, and subject to such conditions, FMSC hereby
accepts such appointment and agree to use its reasonable best efforts to secure
subscriptions to purchase up to $1,500,000 of subscriptions for Securities. The
Company understands that the Selling Agent is being retained to obtain
subscriptions on a "best efforts" basis and has not guaranteed the sale of any
Securities.

                  2. Terms of the Offering.

                           (a) The Offering shall consist of up to $1,500,000 of
units, consisting of (i) 1,500 shares of Series B 4% Redeemable Preferred Stock,
with an issue price of $1,000 per share and (ii) 6,500 redeemable common stock
warrants for each share of preferred stock, all as more described in the term
sheet, which is deemed a part hereof. The Offering is being made on a "best
efforts" basis with no minimum offering amount. The offering shall be completed
in two tranches of up to $750,000 each, as more fully described in the Term
Sheet. In the event a subscription is not accepted, such rejected subscription
funds will be returned to the subscriber without interest or deduction.

                           (b) The Company has prepared a Securities Purchase
Agreement, Certificate of Designation for the Series B Stock and form of Warrant
to be delivered to all prospective investors. The Securities Purchase Agreement,
Certificate of Designation and form of Warrant, including all supplements,
exhibits and appendices thereto and documents delivered therewith, are referred
to herein as the "Documents" and shall include any supplements or amendments in

                                        1

<PAGE>

accordance with this Agreement. The Offering shall commence on the date hereof,
and shall expire at 5:00 p.m., New York time, on March 12, 2004, and may be
extended by mutual agreement of FMSC and the Company until March 17, 2004. Such
period, as same may be so extended, shall hereinafter be referred to as the
"Offering Period."

                           (c) Each prospective investor ("Prospective
Investor") who desires to purchase Securities shall deliver to the Selling Agent
the Securities Purchase Agreement and immediately available funds in the amount
necessary to purchase the number of Securities such Prospective Investor desires
to purchase. The Selling Agent shall not have any obligation to independently
verify the accuracy or completeness of any information contained in any Purchase
Agreement or the authenticity, sufficiency, or validity of any check delivered
by any Prospective Investor in payment for Securities.

                           (d) The Selling Agent shall deliver each check (or
wire of funds) received from a Prospective Investor to the Selling Agent (or
directly to the escrow bank) for deposit in a segregated escrow account
maintained at Signature Bank in New York, New York (or in the alternative, the
funds may be deposited in an attorney escrow account) and shall deliver the
executed copies of the subscription agreement received from such Prospective
Investor to the Company. All funds shall be held in the segregated bank account
pending acceptance of the subscription. The Company shall notify the Selling
Agent promptly of the acceptance or rejection or any subscription.

                  3. Escrow; Closings; Release of Funds.

                           (a) All funds shall be placed into an escrow account
at Signature Bank pursuant to the terms of an escrow agreement to be executed
between the Company, Selling Agent and the bank (or in the alternative, the
funds may be deposited in an attorney escrow account). Funds shall not bear
interest. In the event that a subscription is returned to an investor, it will
be returned without interest or deduction. No funds shall be released without a
written notice executed by the Company and FMSC and delivered to the escrow
agent.

                           (b) The date that the initial subscriptions for the
first tranche of $750,000 are accepted by the Company and funds are released
from the segregated account shall be deemed the "Initial Closing". At least one
(1) day prior to the release of funds, FMSC and the Company shall send written
notice to each other confirming the amount of funds to be released, the name and
address of each subscriber whose subscription has been accepted, and the amount
of each subscription.

                           (c) The closing for the second tranche of $750,000
("Final Closing") shall be
made within five business days following the effective date of the registration
statement required to be filed by the Company in accordance with the terms of
the Securities Purchase Agreement. References herein to a "Closing" shall mean
the Initial Closing or the Final Closing, as the context requires, and the date
thereof shall be referred to as a "Closing Date."

                  4. Representations and Warranties of the Selling Agent.

                  The Selling Agent represents and warrants to the Company as
                  follows:

                           (a) The Selling Agent is duly incorporated and
validly existing and in good standing under the laws of its State of
incorporation.

                                        2

<PAGE>

                           (b) The Selling Agent is, and at the time of each
Closing will be, a member in good standing of the NASD.

                           (c) Offers and Sales of Securities by the Selling
Agent will only be made in such jurisdictions in which the Selling Agent is a
registered broker-dealer or where an applicable exemption from such registration
exists.

                           (d) Offers and sales of Securities by the Selling
Agent will be made only in accordance with this Placement Agreement and in
compliance with the provisions of Rule 506 of Regulation D (it being understood
and agreed that the Selling Agent shall be entitled to rely upon the information
and statements provided by the Prospective Investor in the Purchase Agreement
and/or Section 4(2) of the Securities Act of 1933), and the Selling Agent will
furnish to each investor a copy of the Documents prior to accepting any
subscription for the Securities.

                  5. Compensation.

                           (a) The Selling Agent shall be entitled, on each
Closing Date, as compensation for its services as Selling Agent under this
Agreement, to (i) selling Commissions equal to 10 % of the gross subscription
proceeds received by the Company through subscriptions made by investors
introduced by FMSC.

                           (b) In addition to the compensation payable to the
Selling Agent set forth in clause (a) above, the Company shall grant the Selling
Agent (or its assigns) warrants to purchase up to 850,000 shares of Common Stock
with an exercise price of $0.30 per share based upon 425,000 warrants for each
tranche of the Offering ("Selling Agent Warrants"). The Selling Agent Warrants
shall be exercisable for a period of three (3) years from the Final Closing Date
and the Selling Agent shall be entitled to registration rights with respect to
the shares of Common Stock underlying the Selling Agent Warrants on the same
terms as provided to investors in the Offering. The Selling Agent Warrants shall
not be redeemable. In addition, the Selling Agent shall have the right to
require the Company amend the terms of the Selling Agent Warrants in the event
that the NASD, Inc. Department of Corporate Finance requires amendments thereto
so as to comply with the NASD rules regarding compensation. In the event that
the Prospective Investors breach their commitment to provide the funds for the
2nd investment tranche, all of the Selling Agent Warrants shall be deemed
immediately terminated.

                           (c) In the event that the Company seeks to redeem the
Warrants , FMSC shall also be entitled to a warrant solicitation fee in
connection with the solicitation of the exercise of the Warrants equal to 5% of
the aggregate exercise price of any Warrant which is exercised through the
efforts of the Selling Agent as solicitation agent evidenced by written
acknowledgment of the warrant holder and provided that the warrant solicitation
is conducted in accordance with the rules of the NASD. The fee shall be payable
only in accordance with NASD Rule 2710(6)(xii). In the event that the Company
seeks to redeem the Warrants, then the Selling Agent shall be entitled to serve
as warrant solicitation agent The Company may not employ any other broker dealer
or agent in connection with any Warrant redemption and may not redeem the
warrants, or solicit their exercise, without employing FMSC. FMSC shall have the
right to deliver any warrant redemption notice on the Company's behalf and shall
be named in any press release or public disclosure regarding the warrant
redemption.

                  6. Representations and Warranties of the Company.

                           (a) The Company represents and warrants to, and
agrees with, the Selling
Agent that:

                                        3

<PAGE>

                                    (i) Assuming the accuracy of the
representations and warranties of the Prospective Investors set forth in the
Purchase Agreement and the representations and warranties of the Selling Agent
set forth herein, the Documents (a) contain, and at all times during the period
from the date hereof to and including each Closing Date, will contain all
information required to be contained therein, if any, pursuant to Rules 502 and
506 of Regulation D and all applicable federal and/or state securities and "blue
sky" laws, and (b) do not, and during such period will not, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances made therein not misleading.

                                    (ii) No Documents or information provided by
the Company to Prospective Investors, including, without limitation the SEC
Reports (as defined in the Documents), shall contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein in light of circumstances made
therein not misleading.

                                    (iii) The Company is, and at all times
during the period from the date hereof to and including each Closing Date will
be, a corporation duly organized, validly existing, and in good standing under
the laws of the State of Nevada, with full corporate power and authority, and
has obtained all necessary consents, authorizations, approvals, orders,
licenses, certificates, and permits and declarations of and from, and has made
filings with, all federal, state and local authorities, to own, lease, license,
and use its properties and assets and to conduct its business as presently
conducted as described in the Documents and/or in any such case where the
failure to have any of the foregoing would not have a material adverse effect on
the Company's presently conducted business. As of the date hereof, the Company
is, and at all times during the period from the date hereof to and including
each Closing Date, duly qualified to do business and is in good standing in
every jurisdiction in which its ownership, leasing, licensing, or use of
property and assets or the conduct of its business makes such qualification
necessary except where the failure to be so qualified would not have a material
adverse effect on the Company's business.

                                    (iv) The Company has made, or shall make,
during the Offering Period all required filings with the SEC and/or blue sky
authorities of the appropriate states in connection with the offer and sale of
the Securities so as to comply with the requirements of Regulation D and /or the
laws of the various states.

                                    (v) The financial statements (the "Financial
Statements") of the Company included in the SEC Documents fairly present in
accordance with generally accepted accounting principles the financial position,
the results of operations, and the other information with respect to the Company
purported to be shown therein at the respective dates and for the respective
periods to which they apply. The Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, are correct and complete, and are in accordance
with the books and records of the Company. There has at no time been a material
adverse change in the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company from the
latest information set forth in the Documents, except as may be properly
described in the Documents as having occurred or as may occur and except for
continued deterioration in the Company's cash position and total assets and
continued losses from operations.

                                        4

<PAGE>

                                    (vi) As of the date hereof, except as
disclosed in the Documents, there is no, and as of each Closing Date there shall
not be any, litigation, arbitration, claim, governmental or other proceeding
(formal or informal), or investigation pending or to the Company's knowledge
threatened, with respect to the Company, or its respective operations,
businesses, properties, or assets, except as properly described in the Documents
or such as individually or in the aggregate do not now have and will not in the
future have a material adverse effect upon the operations, business, properties,
or assets of the Company. The Company is not, nor as of each Closing Date shall
be, in violation of, or in default with respect to, any law, rule, regulation,
order, judgment, or decree, except as properly described in the Documents or
such as individually or in the aggregate do not have and will not in the future
have a material adverse effect upon the operations, business, properties, or
assets of the Company; nor is the Company required to take any action in order
to avoid any such violation or default.

                                    (vii) As of the date hereof, the Company is
not, and at all times during the period from the date hereof to and including
the Final Closing Date, shall not be, in violation or breach of, or in default
with respect to complying with any material provision of any material contract,
agreement, instrument, lease, license, arrangement, other than any such
violation or breach which would not have, individually or in the aggregate, a
material adverse effect on the Company's business, and each such contract,
agreement, instrument, lease, license, arrangement, and under- standing is in
full force and effect and is the legal, valid, and binding obligation of the
parties thereto enforceable as to them in accordance with its terms. The Company
enjoys peaceful and undisturbed possession under all leases and licenses under
which it is operating as of the date hereof. As of the date hereof, the Company
is not a party to or bound by any contract, agreement, instrument, lease,
license, arrangement, or understanding, or subject to any charter or other
restriction, which has had or may in the future have a material adverse effect
on the financial condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company. The Company is not in violation
or breach of, or in default with respect to, any term of its Certificate of
Incorporation or By- Laws.

                                    (viii) To its best knowledge, the Company
has not infringed, is not infringing, or has not received notice of infringement
with respect to asserted Intangibles of others. To the best knowledge of the
Company, none of the patents, patent applications, trademarks, service marks,
trade names and copyrights, and licenses and rights to the foregoing presently
owned or held by the Company, materially infringe upon any like right of any
other person or entity. The Company (i) owns or has the right to use, free and
clear of all liens, charges, claims, encumbrances, pledges, security interests,
defects or other restrictions of any kind whatsoever, sufficient patents,
trademarks, service marks, trade names, copyrights, licenses and right with
respect to the foregoing, to conduct its business as presently conducted except
as set forth in the Documents, and (ii) except as set forth in the Documents, is
not obligated or under any liability whatsoever to make any payments by way of
royalties, fees or otherwise to any owner or licensee of, or other claimant to,
any patent, trademark, service mark, trade name, copyright, know-how, technology
or other intangible asset, with respect to the use thereof or in connection with
the conduct of its business as now conducted or otherwise. The Company has
direct ownership of title to all its intellectual property (including all United
States and foreign patent applications and patents), other proprietary rights,
confidential information and know-how; owns all the rights to its Intangibles as
are currently used in or have potential for use in its business.

                                    (ix) The Company has all requisite corporate
power and authority to execute, deliver, and perform this Agreement and to
consummate the transactions contemplated hereby. All necessary corporate
proceedings of the Company have been duly taken to authorize the execution,
delivery, and performance by the Company of this Agreement and the consummation
of the transactions contemplated hereby. This Agreement has been duly

                                        5

<PAGE>

authorized, executed, and delivered by the Company, is a legal, valid, and
binding obligation of the Company, and is enforceable as to the Company in
accordance with its terms. Assuming the accuracy of the representations and
warranties of the Prospective Investors set forth in the Purchase Agreements and
the representations and warranties of the Selling Agent set forth herein, no
consent, authorization, approval, order, license, certificate, or permit of or
from, or registration, qualification, declaration, or filing with, any federal,
state, local, foreign, or other governmental authority or any court or other
tribunal is required by the Company for the execution, delivery, or performance
by the Company of this Agreement, the consummation of the transactions
contemplated hereby and thereby, except the filing of a Notice of Sales of
Securities on Form D pursuant to Regulation D, and such consents,
authorizations, approvals, registrations, and qualifications as may be required
under all applicable federal and/or securities or "blue sky" laws in connection
with the issuance, sale, and delivery of the Securities pursuant to this
Agreement. No consent of any party to any material contract, agreement,
instrument, lease, license, arrangement, or understanding to which the Company
is a party, or to which any of its properties or assets are subject, is required
for the execution, delivery, or performance of this Agreement, and the
consummation of the transactions contemplated hereby and thereby, and such
execution, delivery and performance will not violate, result in a breach of,
conflict with, or (with or without the giving of notice or the passage of time
or both) entitle any party to terminate or call a default under any such
contract, agreement, instrument, lease, license, arrangement, or understanding,
violate or result in a breach of any term of the certificate of incorporation or
by-laws of the Company, or assuming the accuracy of the representations and
warranties of the Prospective Investors set forth in the Purchase Agreements and
the representations and warranties of the Selling Agent set forth herein,
violate, result in a breach of, or conflict with any law, rule, regulation,
order, judgment, or decree binding on the Company or to which any of its
operations, businesses, properties, or assets are subject.

                                    (xi) The Securities conform to all
statements relating thereto as contained in the Documents. The Securities, when
issued and delivered to the Prospective Investor pursuant to the terms of the
Offering shall be duly authorized, validly issued, fully paid and non-
assessable, without any personal liability attaching to the ownership thereof
solely by being such holder and shall not have been issued in violation of any
preemptive rights of stockholders.

                                    (xii) Neither the Company nor any of its
officers, directors, or affiliates, has engaged or will engage, directly or
indirectly, in any act or activity that may jeopardize the status of the
offering and sale of the Securities as an exempt transaction under the Act or
under all applicable federal and/or state securities or "blue sky" laws of any
jurisdiction in which the Securities may be offered or sold.

                  7. Covenants of the Company.

                           The Company covenants that it will:

                           (a) Notify you immediately, and confirm such notice
in writing, (i) when any event shall have occurred during the period commencing
on the date hereof and ending on the Final Closing Date, as a result of which
the Documents would include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (ii) of the receipt of any notification with respect to the
modification, rescission, withdrawal, or suspension of the qualification or
registration of the Securities, or of an exemption from such registration or
qualification, in any jurisdiction. The Company will use its best efforts to
prevent the issuance of any such modification, rescission, withdrawal, or
suspension and if you so request, to obtain the lifting thereof as promptly as
possible.

                                        6

<PAGE>

                           (b) Not make any supplement or amendment to the
Documents unless such supplement or amendment complies with the requirements of
the Act and Regulation D and the applicable federal and/or state securities and
"blue sky' laws and unless FMSC shall have received copies of same. If, at any
time during the period commencing on the date hereof and ending on the Final
Closing Date, any event shall have occurred as a result of which the Documents
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, or if, in the opinion of counsel to the Company or counsel to
the Selling Agent, it is necessary at any time to supplement or amend the
Documents to comply with the Act, Regulation D, or any applicable securities or
"blue sky" laws, the Company will promptly prepare an appropriate supplement or
amendment (in form and substance satisfactory to FMSC) which will correct such
statement or omission or which will effect such compliance. The Company shall
deliver copies of the FMSC Supplement to all Prospective Investors.

                           (c) Deliver without charge to the Selling Agent such
number of copies of the Documents and any supplement or amendment thereto as may
reasonably be requested by the Selling Agent.

                           (d) Use its best efforts to establish an exemption
from such qualification or registration under, the securities or "blue sky" laws
of such jurisdictions as requested by the Selling Agent; provided, however, that
the Company will not be obligated to qualify to do business as a dealer in
securities in any jurisdiction in which it is not so qualified. The Company will
not consummate any sale of Securities in any jurisdiction or in any manner in
which such sale may not be lawfully made.

                           (e) At all times during the period commencing on the
date hereof and ending on the Final Closing Date, provide to each Prospective
Investor or his Purchaser Representative (as defined in Regulation D), if any,
on request, such information (in addition to that contained in the Documents)
concerning the Offering, the Company and any other relevant matters, as it
possesses or can acquire without unreasonable effort or expense, and to extend
to each Prospective Investor or his Purchaser Representative, if any, the
opportunity to ask questions of, and receive answers from officers of the
Company concerning the terms and conditions of the Offering and the business of
the Company and to obtain any other additional information, to the extent it
possesses the same or can acquire it without reasonable effort or expense, as
such Prospective Investor or Purchaser Representative may consider necessary in
making an informed investment decision or in order to verify the accuracy of the
information furnished to such Prospective Investor or Purchaser Representative,
as the case may be.

                           (f) Notify you promptly of the acceptance or
rejection of any subscription. The Company shall not (i) accept subscriptions
from, or make sales of Securities to, any Prospective Investors who are not, to
the Company's knowledge, accredited investors, or (ii) unreasonably reject any
subscription for Securities.

                           (g) File five copies of a Notice of Sales of
Securities on Form D with the Securities and Exchange Commission (the
"Commission") and each state regulatory agency no later than 15 days after the
first sale of the Securities; provided, however, the Company shall make the
required filings with the State of New York prior to commencement of any offer
or sales activities in the State of New York. The Company shall file promptly
such amendments to such Notice on Form D as shall become necessary and, as
requested by you, shall also comply with any filing requirement imposed by the
laws of any state or jurisdiction in which offers and sales are made. The
Company shall furnish FMSC with copies of all such filings (including copies of
cover letters and filing receipts). All filing and other expenses incurred by
the Company in connection with such filings shall be borne by the Company

                                        7

<PAGE>

                           (h) Not, directly or indirectly, engage in any act or
activity which may jeopardize the status of the offering and sale of the
Securities as exempt transactions under the Act or under the securities or "blue
sky" laws of any jurisdiction in which the Offering maybe made. Without limiting
the generality of the foregoing, and notwithstanding anything contained herein
to the contrary, the Company shall not, directly or indirectly, engage in any
offering of securities which, if integrated with the Offering in the manner
prescribed by Rule 502(a) of Regulation D and applicable releases of the
Commission, may jeopardize the status of the offering and sale of the Securities
as exempt transactions under Regulation D.

                           (i) Not, during the period commencing on the date
hereof and ending on the Final Closing Date, issue any press release or other
communication, or hold any press conference with respect to the Company, its
financial condition, results of operations, business, properties, assets, or
liabilities, or the Offering, without your prior written consent, except as
required by applicable securities laws and except as may be related to the
marketing and sale of its products in the normal course of business.

                           (j) The Company shall deliver to First Montauk
Securities Corp., as agent for the Subscribers duly executed copies of lockup
agreements ("Lockup Agreements") as follows: (i) officer and directors of the
Company shall agree not to sell, transfer, assign, pledge or hypothecate in any
manner any securities of the Company beneficially owned by them (as determined
in accordance with Section 13d of the Securities and Exchange Act of 1934 and
the rules promulgated thereunder) or to engage in any "short sales" for a period
commencing on the date hereof and ending on a date which is one year from the
date of funding of 2nd tranche of the Purchase Price, provided, however,
officers and directors shall be allowed to exercise currently outstanding
options for which the shares underlying such options were previously registered
on a Form S-8 registration statement and, beginning 90 days after the Effective
Date, shall be allowed to sell up to 30,000 shares per month as long as the sale
price of any sale of Common Stock by the undersigned is equal to or exceeds
$0.25 per share and (ii) "founding shareholders" (as set forth on Schedule 8(p))
of the Securities Purchase Agreement beneficially owning approximately 7,000,000
shares of Common Stock of the Company shall agree not to sell, transfer, assign,
pledge or hypothecate in any manner any securities of the Company beneficially
owned by them (as determined in accordance with Section 13d of the Securities
and Exchange Act of 1934 and the rules promulgated thereunder) or to engage in
any "short sales" for a period commencing on the date hereof and ending on a
date which is 90 days after the Effective Date (as defined in Section 10 of the
Securities Purchase Agreement); provided however, the founding shareholders
shall each be allowed to sell up to 50,000 shares per month as long as the sale
price of any sale of Common Stock by such persons is equal to or exceeds $0.25
per share.

                  8. Payment of Expenses.

                  The Company hereby agrees to pay all fees, charges, and
expenses incident to the performance by the Company of its obligations
hereunder, including, without limitation, all fees, charges, and expenses in
connection with:(i) the preparation and printing of the Documents and all other
documents relating to the offering, purchase, sale, and delivery of the
Securities, and any supplements or amendments thereto, including the cost of all
copies thereof; (ii) the issuance, sale, transfer, and delivery of the
Securities, including any transfer or other taxes payable thereon and the fees
of any transfer agent or registrar; (iii) the registration or qualification of
the Securities or the securing of an exemption therefrom under state or foreign
"blue sky" or securities laws, including without limitation, filing fees payable
in the jurisdictions in which such registration or qualification or exemption
therefrom is sought and disbursements in connection therewith; and (v) the fees
of counsel to the Selling Agent in the amount of $15,000, of which $2,500 has
been delivered previously as a non- refundable advance. $10,000 shall be paid at
the Initial Closing and the remainder at the Final Closing.

                                        8

<PAGE>

                  9. Conditions of Selling Agent's Obligations.

                           The obligations of the Selling Agent pursuant to this
Agreement shall be subject, in its discretion, to the continuing accuracy of the
representations and warranties of the Company contained herein and in each
certificate and document contemplated under this Agreement to be delivered to
the Selling Agent, as of the date hereof and as of each Closing Date, with
respect to the performance by the Company of its obligations hereunder, and to
the following conditions:

                           (a) At each Closing, the Selling Agent shall have
received a certificate of the
chief executive officer and of the chief financial officer of the Company, dated
the applicable Closing Date to the effect that, as of the date of this Agreement
and as of the applicable Closing Date the representations and warranties of the
Company contained herein were and are accurate, and that as of the Closing Date
the obligations to be performed by the Company hereunder on or prior thereto
have been fully performed. Notwithstanding the foregoing, the Company hereby
represents and warrants that at each Closing, the representations and warranties
contained herein shall be true and correct in all respects.

                           (b) All proceedings taken in connection with the
issuance, sale, and delivery of the Securities shall be satisfactory in form and
substance to FMSC. Certificates representing the Securities subscribed by
persons introduced to the Company by FMSC shall be delivered to FMSC within 5
business days after the release of subscription funds to the Company.

                           (d) There shall not have occurred after the date
hereof, at any time prior to each Closing: (A) any domestic or international
event, act, or occurrence which has materially disrupted, or in your opinion
will in the immediate future materially disrupt the securities markets; (B) a
general suspension of, or a general limitation on prices for, trading in
securities on the Nasdaq SmallCap Market or the over-the-counter market; (C) any
banking moratorium declared by a state or federal authority; (D) any material
interruption in the mail service or other means of communication within the
United States; (E) any material adverse change in the business, properties,
assets, results of operations, or financial condition of the Company; or (F) any
change in the market for securities in general or in political, financial, or
economic conditions which, in your judgment, makes it inadvisable to proceed
with the offering, sale, and delivery of the Securities.

                           (e) The Company shall have caused its legal counsel
to deliver a legal opinion in form and substance acceptable to the Selling Agent
and the investors in the Offering, substantially in the form of Exhibit A
annexed hereto.

                           Any certificate or other document signed by any
officer of the Company and delivered to you or to your counsel at a Closing
shall be deemed a representation and warranty by the Company hereunder as to the
statements made therein. If any condition to your obligations hereunder has not
been fulfilled as and when required to be so fulfilled, you may terminate this
Agreement or, if you so elect, in writing waive any such conditions which have
not been fulfilled or extend the time for their fulfillment. In the event that
you elect to terminate this Agreement, you shall notify the Company of such
election in writing. Upon such termination, neither party shall have any further
liability or obligation to the other except as provided in Section 10 hereof.

                                        9

<PAGE>

                  10.      Termination.

                           This Agreement may be terminated by the Selling Agent
(i) at anytime in the event the Selling Agent has determined, in good faith,
that the Documents fail to contain a material fact required to be stated therein
or necessary to make the statements therein not misleading or (ii) upon three
days written notice. In the event that the Agreement is terminated as the result
of a material breach by the Company of any covenant, representation or warranty
contained in this Agreement then, in that event, and provided the Selling Agent
is not in breach hereunder, the Company shall be liable for the Selling Agent's
reasonable expenses, including counsel fees up to $15,000. The Company may not
terminate this Agreement in the absence of a material breach of any covenant,
representation or warranty contained in this Agreement made by the Selling
Agent.

                  11. Indemnification and Contribution.

                           (a) The Company agrees to indemnify and hold harmless
the Selling Agent, its officers, directors, partners, employees, agents, and
counsel, and each person, if any, who controls the Selling Agent within the
meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), against any and all loss, liability,
claim, damage, and expense whatsoever (which shall include, for all purposes of
this Section 11, but not be limited to, attorneys' fees and any and all expense
whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation) as and when incurred
arising out of, based upon, or in connection with (A) any untrue statement or
alleged untrue statement of a material fact contained in the Documents, or (B)
in any application or other document or communication (it being understood that
neither the Company nor any officer, director or employee shall provide any
information to any Prospective Investor which is not contained in the Documents)
(in this Section 11 collectively called an "application") executed by or on
behalf of the Company or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction in order to register or qualify
the Securities under the "blue sky" or securities laws thereof or in order to
secure an exemption from such registration or qualification or filed with the
Commission; or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company as stated in
Section 11(b) with respect to the Selling Agent expressly for inclusion in the
Documents or in any application, as the case may be; or (ii) any breach of any
representation, warranty, covenant, or agreement of the Company contained in
this Agreement. The foregoing agreement to indemnify shall be in addition to any
liability the Company may otherwise have, including liabilities arising under
this Agreement.

                           If any action is brought against the Selling Agent or
any of its officers, directors, partners, employees, agent, or counsel, or any
controlling persons of the Selling Agent (an "indemnified party"), in respect of
which indemnify may be sought against the Company pursuant to the foregoing
paragraph, such indemnified party or parties shall promptly notify the Company
(the "indemnifying party") in writing of the institution of such action (but the
failure so to notify shall not relieve the indemnifying party from any liability
it may have other than pursuant to this Section 11(a)) and the indemnifying
party shall promptly assume the defense of such action, including the employment
of counsel (reasonably satisfactory to such indemnified party or parties) and
payment of expenses. Such indemnified party shall have the right to employ its
own counsel in any such case, but the fees and expense of such counsel shall be
at the expense of such indemnified party unless the employment of such counsel
shall have been authorized in writing by the indemnifying party in connection
with the defense of such action or the indemnifying party shall not have
promptly employed counsel satisfactory to such indemnified party or parties to

                                       10

<PAGE>

have charge of the defense of such action or such indemnified party or parties
shall have reasonably concluded that there may be one or more legal defenses
available to it or them or to other indemnified parties which are different from
or additional to those available to one or more of the indemnifying parties, in
any of which events such fees and expenses of one such counsel shall be borne by
the indemnifying party and the indemnifying party shall not have the right to
direct the defense of such action on behalf of the indemnified party or parties.
Anything in this paragraph to the contrary notwithstanding, the indemnifying
party shall not be liable for any settlement of any such claim or action
effected without its written consent. The Company agrees promptly to notify the
Selling Agent of the commencement of any litigation or proceedings against the
Company or any of its officers or directors in connection with the sale of the
Securities, the Documents, or any application.

                           (b) The Selling Agent agrees to indemnify and hold
harmless the Company, its officers, directors, employees, agents, and counsel,
and each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, to the same extent
as the foregoing indemnity from the Company to the Selling Agent in Section
11(a), with respect to any and all loss, liability, claim, damage, and expense
whatsoever (which shall include, for all purposes of this Section 11, but not be
limited to, attorneys' fees and any and all expense whatsoever incurred in
investigating, preparing, or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in settlement
of any claim or litigation) as and when incurred arising out of, based upon, or
in connection with (i) statements or omissions, if any, made in the Documents in
reliance upon and in conformity with written information furnished to the
Company as stated in this Section 11 with respect to the Selling Agent expressly
for inclusion in the Documents, and (ii) the failure of the Selling Agent to
comply with the provisions of Section 2(c) hereof or with the "blue sky" or
securities laws of the jurisdictions in which the Selling Agent solicits offers
to buy or offers to sell any Securities or any breach of any representation,
warranty, covenant or agreement of the Selling Agent contained in this
Agreement. The foregoing agreement to indemnify shall be in addition to any
liability the Selling Agent may otherwise have, including liabilities arising
under this Agreement. If any action shall be brought against the Company or any
other person so indemnified based on the Documents and in respect of which
indemnity may be sought against the Selling Agent pursuant to this Section 12,
the Selling Agent shall have the rights and duties given to the indemnifying
party, and the Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the provisions of Section
11(a) hereof.

                           (c) To provide for just and equitable contribution,
if (i) an indemnified party makes a claim for indemnification pursuant to
Section 11(a) or 11(b) hereof but it is found in a final judicial determination,
not subject to further appeal, that such indemnification may not be enforced in
such case, even though this Agreement expressly provides for indemnification in
such case, or (ii) any indemnified or indemnifying party seeks contribution
under the Act, the Exchange Act, or otherwise, then the Company (including for
this purpose any contribution made by or on behalf of any officer, director,
employee, agent, or counsel of the Company, or any controlling person of the
Company), on the one hand, and the Selling Agent (including for this purpose any
contribution by or on behalf of an indemnified party), on the other hand, shall
contribute to the losses, liabilities, claims, damages, and expenses whatsoever
to which any of them may be subject, in such proportions as are appropriate to
reflect the relative benefits received by the Company, on the one hand, and the
Selling Agent, on the other hand; provided, however, that if applicable law does
not permit such allocation, then other relevant equitable considerations such as
the relative fault of the Company and the Selling Agent in connection with the
facts which resulted in such losses, liabilities, claims, damages, and expenses
shall also be considered. The relative benefits received by the Company, on the
one hand, and the Selling Agent, on the other hand, shall be deemed to be in the
same proportion as (x) the total proceeds from the Offering (net of compensation
payable to the Placement Agent pursuant to Section 5(a) hereof but before
deducting expenses) received by the Company, and (y) the compensation received
by the Selling Agent pursuant to Section 5(a) hereof.

                                       11

<PAGE>

                           The relative fault, in the case of an untrue
statement, alleged untrue statement, omission, or alleged omission, shall be
determined by, among other things, whether such statement, alleged statement,
omission, or alleged omission relates to information supplied by the Company or
by the Selling Agent, and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement, alleged
statement, omission, or alleged omission. The Company and the Selling Agent
agree that it would be unjust and inequitable if the respective obligations of
the Company and the Selling Agent for contribution were determined by pro rata
or per capita allocation of the aggregate losses, liabilities, claims, damages,
and expenses or by any other method of allocation that does not reflect the
equitable considerations referred to in this Section 11(c). In no case shall the
Selling Agent by responsible for a portion of the contribution obligation in
excess of the compensation received by it pursuant to Section 5(a) hereof. No
person guilty of a fraudulent misrepresentation shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 11(c), each person, if any, who
controls the Selling Agent within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and each officer, director, partners,
employee, agent, and counsel of the Selling Agent, shall have the same rights to
contribution as the Selling Agent, and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and each officer, director, employee, agent, and counsel of the
Company, shall have the same rights to contribution as the Company, subject in
each case to the provisions of this Section 11(c). Anything in this Section
11(c) to the contrary notwithstanding, no party shall be liable for contribution
with respect to the settlement of any claim or action effected without its
written consent.

                  12. Non-Solicitation.

                  The Company agrees that, for a period of 36 months from the
date hereof, it shall not solicit any offer to buy from or offer to sell to any
person introduced to the Company by the Selling Agent in connection with the
Offering, directly or indirectly, any securities of the Company or of any other
entity, or provide the name of any such person to any other securities broker or
dealer or selling agent. In the event that the Company or any of its affiliates,
directly or indirectly, solicits, offers to buy from or offers to sell to any
such person any such securities, or provides the name of any such person to any
other securities broker or dealer or selling agent, and such person purchases
such securities or purchases securities from any other securities broker or
dealer or selling agent, the Company shall pay to the Selling Agent an amount
equal to 10% of the aggregate purchase price of the securities so purchased by
such person. Upon receipt of written request by the Selling Agent, the Company
shall promptly deliver to the Selling Agent the terms of any financing completed
within the 36 month period, as well as the names of the investors.

                  13. Representations and Agreements to Survive Delivery.

                  All representations, warranties, covenants, and agreements
contained in this Agreement shall be deemed to be representations, warranties,
covenants, and agreements at the Closing Date and, such representations,
warranties, covenants, and agreements, including the indemnification and
contribution agreements contained in Section 11, shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Selling Agent or any indemnified person, or by or on behalf of the Company
or any person or entity which is entitled to be indemnified under Section 11(b),
and shall survive termination of this Agreement or the issuance, sale, and
delivery of the Securities. In addition, notwithstanding any election hereunder
or any termination of this Agreement, and whether or not the terms of this
Agreement are otherwise carried out, the provisions of Sections 6, 11 and 12
shall survive termination of this Agreement and shall not be affected in any way
by such election or termination or failure to carry out the terms of this
Agreement or any part thereof.

                                       12

<PAGE>

                  14. Notices.

                  All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and shall be either (i) mailed
by first class mail in which case delivery shall be deemed to be made three days
following deposit in the United States mail; or (ii) sent by overnight courier
service in case delivery shall be deemed to be made upon receipt, to: First
Montauk Securities Corp., Parkway 109 Office Center, 328 Newman Springs Road,
Red Bank, New Jersey 07701 Attention: Ernest Pellegrino, with a copy to
Goldstein & DiGioia LLP, 45 Broadway, New York, New York 10006 Attn: Brian C.
Daughney, Esq.; The Project Group, Inc. 333 N. Sam Houston Parkway, Houston, TX
77060 Attn: Craig Crawford, President, with a copy to Seth Farbman, Esq. 150
West 46th Street, New York, New York 10036.

                  15. Parties.

                  This Agreement shall inure solely to the benefit of, and shall
be binding upon, the Selling Agent and the Company and the persons and entities
referred to in Section 11 who are entitled to indemnification or contribution,
and their respective successors, legal representatives, and assigns (which shall
not include any purchaser, as such, of Securities), and no other person shall
have or be construed to have any legal or equitable right remedy, or claim under
or in respect of or by virtue of this Agreement or any provision herein
contained.

                  16. Construction.

                  This Agreement shall be construed in accordance with the laws
of the State of New York, without giving effect to conflict of laws.

[signature page appears next]

                                       13

<PAGE>

                  17. Counterparts.

                  This Agreement may be executed in counterparts, each of which
shall constitute an original and all of which, when taken together, shall
constitute one agreement.

                  If the foregoing correctly sets forth the understanding
between us, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among us.

                                               Very truly yours,

                                               The Project Group, Inc.

                                          By:   /s/ Craig Crawford
                                                --------------------------------
                                                Name:    Craig Crawford
                                                Title:   President
Accepted as of the date first above written:

FIRST MONTAUK SECURITIES CORP.

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

                                       14

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