Document:

Exhibit 4.02

     THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE
     NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. EXCEPT AS
     OTHERWISE  SET  FORTH HEREIN OR IN A SECURITIES PURCHASE AGREEMENT DATED AS
     OF  DECEMBER  28,  2001, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE
     SOLD,  TRANSFERRED  OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
     STATEMENT  FOR SUCH SECURITIES UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN
     FORM,  SUBSTANCE AND SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE
     TRANSACTIONS,  THAT  REGISTRATION  IS NOT REQUIRED UNDER SUCH ACT OR UNLESS
     SOLD  PURSUANT  TO  RULE  144  OR  REGULATION  S  UNDER  SUCH  ACT.

                                                                   Right to
                                                                   Purchase
                                                                   1,000,000
                                                                   Shares of
                                                                   Common
                                                                   Stock, par
                                                                   value $0.0001
                                                                   per share

                             STOCK PURCHASE WARRANT

     THIS  CERTIFIES  THAT, for value received, Bristol Investment Fund, Ltd. or
its  registered  assigns,  is  entitled  to  purchase from Amnis Systems Inc., a
Delaware  corporation  (the  "Company"), at any time or from time to time during
the  period  specified in Paragraph 2 hereof, One Million (1,000,000) fully paid
and  nonassessable  shares  of the Company's Common Stock, par value $0.0001 per
share  (the  "Common Stock"), at an exercise price per share equal to the lesser
of  (i)  $0.385  and (ii) the average of the lowest three (3) Trading Prices (as
defined  below)  during  the  twenty  (20)  Trading  Days  (as  defined  below)
immediately  prior  to  exercise,  discounted by 30% (the "Exercise Price"). The
term  "Warrant  Shares,"  as  used  herein, refers to the shares of Common Stock
purchasable  hereunder. The Warrant Shares and the Exercise Price are subject to
adjustment  as  provided  in  Paragraph 4 hereof. The term "Warrants" means this
Warrant  and  the  other  warrants  issued  pursuant  to that certain Securities
Purchase  Agreement,  dated  December 28, 2001, by and among the Company and the
Buyers  listed  on  the  execution  page  thereof  (the  "Securities  Purchase
Agreement"), including any additional warrants issuable pursuant to Section 4(l)
thereof.  "Trading  Price"  means, for any security as of any date, the intraday
trading  price  on the Over-the-Counter Bulletin Board (the "OTCBB") as reported
by  Bloomberg  Financial  Markets  or  an equivalent, reliable reporting service
mutually  acceptable  to  and  hereafter  designated  by  the Holder hereof, the
Company  ("Bloomberg")  or, if the OTCBB is not the principal trading market for
such  security,  the  intraday  trading  price of such security on the principal

                                       24
<PAGE>
securities exchange or trading market where such security is listed or traded as
reported  by  Bloomberg  or,  if  no  intraday trading price of such security is
available  in  any of the foregoing manners, the average of the intraday trading
prices  of  any  market  makers  for  such security that are listed in the "pink
sheets"  by  the  National Quotation Bureau, Inc. If the Trading Price cannot be
calculated  for  such  security  on  such date in the manner provided above, the
Trading  Price  shall  be  the  fair  market value as mutually determined by the
Company  and  the holder hereof being converted for which the calculation of the
Trading  Price  is  required  in order to determine the Conversion Price of such
Debentures. "Trading Day" shall mean any day on which the Common Stock is traded
for  any  period  on the OTCBB, or on the principal securities exchange or other
securities  market  on  which  the  Common  Stock  is  then  being  traded.

     This Warrant is subject to the following terms, provisions, and conditions:

     1.     MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
            ----------------------------------------------------------------
Subject to the provisions hereof, this Warrant may be exercised by the holder
hereof, in whole or in part, by the surrender of this Warrant, together with a
completed exercise agreement in the form attached hereto (the "Exercise
Agreement"), to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof), and upon (i)
payment to the Company in cash, by certified or official bank check or by wire
transfer for the account of the Company of the Exercise Price for the Warrant
Shares specified in the Exercise Agreement or (ii) if the resale of the Warrant
Shares by the holder is not then registered pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), delivery to the Company of a written notice of an election to
effect a "Cashless Exercise" (as defined in Section 11(c) below) for the Warrant
Shares specified in the Exercise Agreement. The Warrant Shares so purchased
shall be deemed to be issued to the holder hereof or such holder's designee, as
the record owner of such shares, as of the close of business on the date on
which this Warrant shall have been surrendered, the completed Exercise Agreement
shall have been delivered, and payment shall have been made for such shares as
set forth above. Certificates for the Warrant Shares so purchased, representing
the aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the holder hereof within a reasonable time, not exceeding three (3)
business days, after this Warrant shall have been so exercised. The certificates
so delivered shall be in such denominations as may be requested by the holder
hereof and shall be registered in the name of such holder or such other name as
shall be designated by such holder. If this Warrant shall have been exercised
only in part, then, unless this Warrant has expired, the Company shall, at its
expense, at the time of delivery of such certificates, deliver to the holder a
new Warrant representing the number of shares with respect to which this Warrant
shall not then have been exercised. In addition to all other available remedies
at law or in equity, if the Company fails to deliver certificates for the
Warrant Shares within three (3) business days after this Warrant is exercised,
then the Company shall pay to the holder in cash or, at the option of the
holder, in shares of Common Stock valued at the Exercise Price, an amount (the
"Default Amount") equal to 2% of the number of Warrant Shares that the Holder is
entitled to multiplied by the Market Price for each day that the Company fails
to deliver certificates for the Warrant Shares. For example, if the Holder is
entitled to 100,000 Warrant Shares and the Market Price is $2.00, then the
Company shall pay to the Holder $4,000 for each day that the Company fails to
deliver certificates for the Warrant Shares. The Default Amount shall be paid to
the Holder by the fifth day of the month following the month in which it has
accrued.

                                       25
<PAGE>
          Notwithstanding  anything in this Warrant to the contrary, in no event
shall  the  holder  of this Warrant be entitled to exercise a number of Warrants
(or  portions thereof) in excess of the number of Warrants (or portions thereof)
upon  exercise  of  which  the  sum  of (i) the number of shares of Common Stock
beneficially owned by the holder and its affiliates (other than shares of Common
Stock  which  may  be  deemed  beneficially  owned  through the ownership of the
unexercised  Warrants  and  the  unexercised or unconverted portion of any other
securities  of  the  Company  (including  the  Debentures  (as  defined  in  the
Securities  Purchase  Agreement))  subject  to  a  limitation  on  conversion or
exercise  analogous  to  the limitation contained herein) and (ii) the number of
shares  of  Common  Stock  issuable  upon  exercise of the Warrants (or portions
thereof) with respect to which the determination described herein is being made,
would  result  in  beneficial ownership by the holder and its affiliates of more
than  4.9%  of  the  outstanding  shares  of  Common  Stock. For purposes of the
immediately  preceding  sentence,  beneficial  ownership  shall be determined in
accordance  with  Section  13(d)  of  the  Securities  Exchange  Act of 1934, as
amended, and Regulation 13D-G thereunder, except as otherwise provided in clause
(i)  of  the  preceding  sentence.  The  holder  of  this  Warrant may waive the
limitations  set  forth  herein  by  sixty-one  (61)  days written notice to the
Company.  Notwithstanding  anything  to  the  contrary  contained  herein,  the
limitation  on  exercise  of  this  Warrant  set forth herein may not be amended
without  (i)  the  written consent of the holder hereof and the Company and (ii)
the  approval  of  a  majority  of  shareholders  of  the  Company.

     2.     PERIOD  OF  EXERCISE.  This Warrant is exercisable at any time or
            --------------------
from time to time on or after the date on which this Warrant is issued and
delivered pursuant to the terms of the Securities Purchase Agreement and before
5:00 p.m., Los Angeles, California time on the seventh (7th) anniversary of the
date of issuance (the "Exercise Period").

     3.     CERTAIN  AGREEMENTS  OF THE COMPANY. The Company hereby covenants
            -----------------------------------
and agrees as follows:

          (a)  SHARES  TO  BE  FULLY  PAID.  All  Warrant Shares will, upon
               ---------------------------
issuance in accordance with the terms of this Warrant, be validly issued, fully
paid, and nonassessable and free from all taxes, liens, and charges with respect
to the issue thereof.

          (b)  RESERVATION  OF  SHARES.  During  the  Exercise  Period, the
               -----------------------
Company shall at all times have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant, a sufficient number of shares of Common
Stock to provide for the exercise of this Warrant.

          (c)  LISTING.  The  Company  shall promptly secure the listing of
               -------
the shares of Common Stock issuable upon exercise of the Warrant upon each
national securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed (subject to official notice of issuance

                                       26
<PAGE>
upon exercise of this Warrant) and shall maintain, so long as any other shares
of Common Stock shall be so listed, such listing of all shares of Common Stock
from time to time issuable upon the exercise of this Warrant; and the Company
shall so list on each national securities exchange or automated quotation
system, as the case may be, and shall maintain such listing of, any other shares
of capital stock of the Company issuable upon the exercise of this Warrant if
and so long as any shares of the same class shall be listed on such national
securities exchange or automated quotation system.

          (d)  CERTAIN  ACTIONS  PROHIBITED.  The  Company  will  not,  by
               ----------------------------
amendment of its charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed by it hereunder, but will at all times in
good faith assist in the carrying out of all the provisions of this Warrant and
in the taking of all such action as may reasonably be requested by the holder of
this Warrant in order to protect the exercise privilege of the holder of this
Warrant against dilution or other impairment, consistent with the tenor and
purpose of this Warrant. Without limiting the generality of the foregoing, the
Company (i) will not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Exercise Price then in
effect, and (ii) will take all such actions as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant.

          (e)  SUCCESSORS  AND  ASSIGNS.  This Warrant will be binding upon
               ------------------------
any entity succeeding to the Company by merger, consolidation, or acquisition of
all or substantially all the Company's assets.

     4.     ANTIDILUTION  PROVISIONS.  During  the  Exercise  Period,  the
            ------------------------
Exercise Price and the number of Warrant Shares shall be subject to adjustment
from time to time as provided in this Paragraph 4.

     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 to the
nearest cent.

          (a)  ADJUSTMENT  OF  EXERCISE  PRICE  AND  NUMBER  OF SHARES UPON
               ------------------------------------------------------------
ISSUANCE OF COMMON STOCK. Except as otherwise provided in Paragraphs 4(c) and
------------------------
4(e) hereof, if and whenever on or after the date of issuance of this Warrant,
the Company issues or sells, or in accordance with Paragraph 4(b) hereof is
deemed to have issued or sold, any shares of Common Stock for no consideration
or for a consideration per share (before deduction of reasonable expenses or
commissions or underwriting discounts or allowances in connection therewith)
less than the Market Price (as hereinafter defined) on the date of issuance (a
"Dilutive Issuance"), then immediately upon the Dilutive Issuance, the Exercise
Price will be reduced to a price determined by multiplying the Exercise Price in
effect immediately prior to the Dilutive Issuance by a fraction, (i) the
numerator of which is an amount equal to the sum of (x) the number of shares of
Common Stock actually outstanding immediately prior to the Dilutive Issuance,

                                       27
<PAGE>
plus (y) the quotient of the aggregate consideration, calculated as set forth in
Paragraph 4(b) hereof, received by the Company upon such Dilutive Issuance
divided by the Market Price in effect immediately prior to the Dilutive
Issuance, and (ii) the denominator of which is the total number of shares of
Common Stock Deemed Outstanding (as defined below) immediately after the
Dilutive Issuance.

          (b)  EFFECT  ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes of
               -------------------------------------------
determining the adjusted Exercise Price under Paragraph 4(a) hereof, the
following will be applicable:

               (i)  ISSUANCE  OF  RIGHTS  OR OPTIONS. If the Company in any
                    --------------------------------
manner issues or grants any warrants, rights or options, whether or not
immediately exercisable, to subscribe for or to purchase Common Stock or other
securities convertible into or exchangeable for Common Stock ("Convertible
Securities") (such warrants, rights and options to purchase Common Stock or
Convertible Securities are hereinafter referred to as "Options") and the price
per share for which Common Stock is issuable upon the exercise of such Options
is less than the Market Price on the date of issuance or grant of such Options,
then the maximum total number of shares of Common Stock issuable upon the
exercise of all such Options will, as of the date of the issuance or grant of
such Options, be deemed to be outstanding and to have been issued and sold by
the Company for such price per share. For purposes of the preceding sentence,
the "price per share for which Common Stock is issuable upon the exercise of
such Options" is determined by dividing (i) the total amount, if any, received
or receivable by the Company as consideration for the issuance or granting of
all such Options, plus the minimum aggregate amount of additional consideration,
if any, payable to the Company upon the exercise of all such Options, plus, in
the case of Convertible Securities issuable upon the exercise of such Options,
the minimum aggregate amount of additional consideration payable upon the
conversion or exchange thereof at the time such Convertible Securities first
become convertible or exchangeable, by (ii) the maximum total number of shares
of Common Stock issuable upon the exercise of all such Options (assuming full
conversion of Convertible Securities, if applicable). No further adjustment to
the Exercise Price will be made upon the actual issuance of such Common Stock
upon the exercise of such Options or upon the conversion or exchange of
Convertible Securities issuable upon exercise of such Options.

               (ii) ISSUANCE  OF  CONVERTIBLE SECURITIES. If the Company in
                    ------------------------------------
any manner issues or sells any Convertible Securities, whether or not
immediately convertible (other than where the same are issuable upon the
exercise of Options) and the price per share for which Common Stock is issuable
upon such conversion or exchange is less than the Market Price on the date of
issuance, then the maximum total number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities will, as of the
date of the issuance of such Convertible Securities, be deemed to be outstanding
and to have been issued and sold by the Company for such price per share. For
the purposes of the preceding sentence, the "price per share for which Common
Stock is issuable upon such conversion or exchange" is determined by dividing
(i) the total amount, if any, received or receivable by the Company as
consideration for the issuance or sale of all such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if any, payable to the

                                       28
<PAGE>
Company upon the conversion or exchange thereof at the time such Convertible
Securities first become convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities. No further adjustment to the Exercise Price will be
made upon the actual issuance of such Common Stock upon conversion or exchange
of such Convertible Securities.

               (iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If there is
                     -----------------------------------------
a change at any time in (i) the amount of additional consideration payable to
the Company upon the exercise of any Options; (ii) the amount of additional
consideration, if any, payable to the Company upon the conversion or exchange of
any Convertible Securities; or (iii) the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock (other than
under or by reason of provisions designed to protect against dilution), the
Exercise Price in effect at the time of such change will be readjusted to the
Exercise Price which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold.

               (iv) TREATMENT  OF  EXPIRED  OPTIONS  AND  UNEXERCISED
                    -------------------------------------------------
CONVERTIBLE SECURITIES. If, in any case, the total number of shares of Common
----------------------
Stock issuable upon exercise of any Option or upon conversion or exchange of any
Convertible Securities is not, in fact, issued and the rights to exercise such
Option or to convert or exchange such Convertible Securities shall have expired
or terminated, the Exercise Price then in effect will be readjusted to the
Exercise Price which would have been in effect at the time of such expiration or
termination had such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination (other than in respect of
the actual number of shares of Common Stock issued upon exercise or conversion
thereof), never been issued.

               (v)  CALCULATION  OF  CONSIDERATION  RECEIVED. If any Common
                    ----------------------------------------
Stock, Options or Convertible Securities are issued, granted or sold for cash,
the consideration received therefor for purposes of this Warrant will be the
amount received by the Company therefor, before deduction of reasonable
commissions, underwriting discounts or allowances or other reasonable expenses
paid or incurred by the Company in connection with such issuance, grant or sale.
In case any Common Stock, Options or Convertible Securities are issued or sold
for a consideration part or all of which shall be other than cash, the amount of
the consideration other than cash received by the Company will be the fair value
of such consideration, except where such consideration consists of securities,
in which case the amount of consideration received by the Company will be the
Market Price thereof as of the date of receipt. In case any Common Stock,
Options or Convertible Securities are issued in connection with any acquisition,
merger or consolidation in which the Company is the surviving corporation, the
amount of consideration therefor will be deemed to be the fair value of such
portion of the net assets and business of the non-surviving corporation as is
attributable to such Common Stock, Options or Convertible Securities, as the
case may be. The fair value of any consideration other than cash or securities
will be determined in good faith by the Board of Directors of the Company.

                                       29
<PAGE>
               (vi) EXCEPTIONS  TO  ADJUSTMENT  OF  EXERCISE  PRICE.  No
                    -----------------------------------------------
adjustment to the Exercise Price will be made (i) upon the exercise of any
warrants, options or convertible securities granted, issued and outstanding on
the date of issuance of this Warrant; (ii) upon the grant or exercise of any
stock or options which may hereafter be granted or exercised under any employee
benefit plan, stock option plan or restricted stock plan of the Company now
existing or to be implemented in the future, so long as the issuance of such
stock or options is approved by a majority of the independent members of the
Board of Directors of the Company or a majority of the members of a committee of
independent directors established for such purpose; or (iii) upon the exercise
of the Warrants.

          (c)  SUBDIVISION  OR  COMBINATION OF COMMON STOCK. If the Company
               --------------------------------------------
at any time subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a greater number of shares, then, after the date of
record for effecting such subdivision, the Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced. If the Company at any
time combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) the shares of Common Stock acquirable hereunder
into a smaller number of shares, then, after the date of record for effecting
such combination, the Exercise Price in effect immediately prior to such
combination will be proportionately increased.

          (d)  ADJUSTMENT  IN NUMBER OF SHARES. Upon each adjustment of the
               -------------------------------
Exercise Price pursuant to the provisions of this Paragraph 4, the number of
shares of Common Stock issuable upon exercise of this Warrant shall be adjusted
by multiplying a number equal to the Exercise Price in effect immediately prior
to such adjustment by the number of shares of Common Stock issuable upon
exercise of this Warrant immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.

          (e)  CONSOLIDATION,  MERGER OR SALE. In case of any consolidation
               ------------------------------
of the Company with, or merger of the Company into any other corporation, or in
case of any sale or conveyance of all or substantially all of the assets of the
Company other than in connection with a plan of complete liquidation of the
Company, then as a condition of such consolidation, merger or sale or
conveyance, adequate provision will be made whereby the holder of this Warrant
will have the right to acquire and receive upon exercise of this Warrant in lieu
of the shares of Common Stock immediately theretofore acquirable upon the
exercise of this Warrant, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for the number of shares of
Common Stock immediately theretofore acquirable and receivable upon exercise of
this Warrant had such consolidation, merger or sale or conveyance not taken
place. In any such case, the Company will make appropriate provision to insure
that the provisions of this Paragraph 4 hereof will thereafter be applicable as
nearly as may be in relation to any shares of stock or securities thereafter
deliverable upon the exercise of this Warrant. The Company will not effect any
consolidation, merger or sale or conveyance unless prior to the consummation
thereof, the successor corporation (if other than the Company) assumes by
written instrument the obligations under this Paragraph 4 and the obligations to
deliver to the holder of this Warrant such shares of stock, securities or assets
as, in accordance with the foregoing provisions, the holder may be entitled to
acquire.

                                       30
<PAGE>
          (f)  DISTRIBUTION OF ASSETS. In case the Company shall declare or
               ----------------------
make any distribution of its assets (including cash) to holders of Common Stock
as a partial liquidating dividend, by way of return of capital or otherwise,
then, after the date of record for determining stockholders entitled to such
distribution, but prior to the date of distribution, the holder of this Warrant
shall be entitled upon exercise of this Warrant for the purchase of any or all
of the shares of Common Stock subject hereto, to receive the amount of such
assets which would have been payable to the holder had such holder been the
holder of such shares of Common Stock on the record date for the determination
of stockholders entitled to such distribution.

          (g)  NOTICE OF ADJUSTMENT. Upon the occurrence of any event which
               --------------------
requires any adjustment of the Exercise Price, then, and in each such case, the
Company shall give notice thereof to the holder of this Warrant, which notice
shall state the Exercise Price resulting from such adjustment and the increase
or decrease in the number of Warrant Shares purchasable at such price upon
exercise, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.  Such calculation shall be certified
by the Chief Financial Officer of the Company.

          (h)  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.

          (i)  NO  FRACTIONAL  SHARES. No fractional shares of Common Stock
               ----------------------
are to be issued upon the exercise of this Warrant, but the Company shall pay a
cash adjustment in respect of any fractional share which would otherwise be
issuable in an amount equal to the same fraction of the Market Price of a share
of Common Stock on the date of such exercise.

          (j)  OTHER  NOTICES.  In  case  at  any  time:
               --------------

               (i)  the  Company shall declare any dividend upon the Common
Stock payable in shares of stock of any class or make any other distribution
(including dividends or distributions payable in cash out of retained earnings)
to the holders of the Common Stock;

               (ii) the  Company  shall  offer for subscription pro rata to
the holders of the Common Stock any additional shares of stock of any class or
other rights;

                                       31
<PAGE>
               (iii)  there  shall  be  any  capital  reorganization of the
Company, or reclassification of the Common Stock, or consolidation or merger of
the Company with or into, or sale of all or substantially all its assets to,
another corporation or entity; or

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

then,  in  each  such case, the Company shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a record
shall  be  taken for determining the holders of Common Stock entitled to receive
any  such  dividend, distribution, or subscription rights or for determining the
holders  of Common Stock entitled to vote in respect of any such reorganization,
reclassification,  consolidation,  merger,  sale,  dissolution,  liquidation  or
winding-up  and  (b)  in  the case of any such reorganization, reclassification,
consolidation,  merger,  sale, dissolution, liquidation or winding up, notice of
the  date  (or,  if  not  then  known, a reasonable approximation thereof by the
Company)  when  the  same  shall take place.  Such notice shall also specify the
date  on  which  the  holders  of Common Stock shall be entitled to receive such
dividend, distribution, or subscription rights or to exchange their Common Stock
for  stock or other securities or property deliverable upon such reorganization,
reclassification,  consolidation,  merger,  sale,  dissolution,  liquidation, or
winding-up,  as  the  case  may be.  Such notice shall be given at least 30 days
prior  to the record date or the date on which the Company's books are closed in
respect  thereto.  Failure  to  give any such notice or any defect therein shall
not  affect  the  validity  of the proceedings referred to in clauses (i), (ii),
(iii)  and  (iv)  above.

          (k)  CERTAIN EVENTS. If any event occurs of the type contemplated
               --------------
by the adjustment provisions of this Paragraph 4 but not expressly provided for
by such provisions, the Company will give notice of such event as provided in
Paragraph 4(g) hereof, and the Company's Board of Directors will make an
appropriate adjustment in the Exercise Price and the number of shares of Common
Stock acquirable upon exercise of this Warrant so that the rights of the holder
shall be neither enhanced nor diminished by such event.

          (l)  CERTAIN  DEFINITIONS.
               --------------------

               (i)  "COMMON STOCK DEEMED OUTSTANDING" shall mean the number
                     -------------------------------
of shares of Common Stock actually outstanding (not including shares of Common
Stock held in the treasury of the Company), plus (x) pursuant to Paragraph
4(b)(i) hereof, the maximum total number of shares of Common Stock issuable upon
the exercise of Options, as of the date of such issuance or grant of such
Options, if any, and (y) pursuant to Paragraph 4(b)(ii) hereof, the maximum
total number of shares of Common Stock issuable upon conversion or exchange of
Convertible Securities, as of the date of issuance of such Convertible
Securities, if any.

                                       32
<PAGE>
               (ii) "MARKET  PRICE,"  as of any date, (i) means the average
                     -------------
of the last reported sale prices for the shares of Common Stock on the
Over-the-Counter Bulletin Board (the "OTC BB") for the five (5) Trading Days
immediately preceding such date as reported by Bloomberg, or (ii) if the OTC BB
is not the principal trading market for the shares of Common Stock, the average
of the last reported sale prices on the principal trading market for the Common
Stock during the same period as reported by Bloomberg, or (iii) if market value
cannot be calculated as of such date on any of the foregoing bases, the Market
Price shall be the fair market value as reasonably determined in good faith by
(a) the Board of Directors of the Company or, at the option of a
majority-in-interest of the holders of the outstanding Warrants by (b) an
independent investment bank of nationally recognized standing in the valuation
of businesses similar to the business of the corporation. The manner of
determining the Market Price of the Common Stock set forth in the foregoing
definition shall apply with respect to any other security in respect of which a
determination as to market value must be made hereunder.

               (iii)  "COMMON  STOCK,"  for  purposes  of this Paragraph 4,
                       -------------
includes the Common Stock, par value $0.0001 per share, and any additional class
of stock of the Company having no preference as to dividends or distributions on
liquidation, provided that the shares purchasable pursuant to this Warrant shall
include only shares of Common Stock, par value $0.0001 per share, in respect of
which this Warrant is exercisable, or shares resulting from any subdivision or
combination of such Common Stock, or in the case of any reorganization,
reclassification, consolidation, merger, or sale of the character referred to in
Paragraph 4(e) hereof, the stock or other securities or property provided for in
such Paragraph.

     5.   ISSUE  TAX.  The  issuance  of  certificates  for  Warrant Shares
          ----------
upon the exercise of this Warrant shall be made without charge to the holder of
this Warrant or such shares for any issuance tax or other costs in respect
thereof, provided that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issuance and delivery
of any certificate in a name other than the holder of this Warrant.

     6.   NO  RIGHTS  OR  LIABILITIES  AS  A  SHAREHOLDER.  This  Warrant
          -----------------------------------------------
shall not entitle the holder hereof to any voting rights or other rights as a
shareholder of the Company. No provision of this Warrant, in the absence of
affirmative action by the holder hereof to purchase Warrant Shares, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the Exercise Price or as a shareholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.

     7.   TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.
          -----------------------------------------------

          (a)  RESTRICTION ON TRANSFER. This Warrant and the rights granted
               -----------------------
to the holder hereof are transferable, in whole or in part, upon surrender of
this Warrant, together with a properly executed assignment in the form attached
hereto, at the office or agency of the Company referred to in Paragraph 7(e)
below, provided, however, that any transfer or assignment shall be subject to

                                       33
<PAGE>
the conditions set forth in Paragraph 7(f) hereof and to the applicable
provisions of the Securities Purchase Agreement. Until due presentment for
registration of transfer on the books of the Company, the Company may treat the
registered holder hereof as the owner and holder hereof for all purposes, and
the Company shall not be affected by any notice to the contrary. Notwithstanding
anything to the contrary contained herein, the registration rights described in
Paragraph 8 are assignable only in accordance with the provisions of that
certain Registration Rights Agreement, dated as of December 28, 2001, by and
among the Company and the other signatories thereto (the "Registration Rights
Agreement").

          (b)  WARRANT  EXCHANGEABLE  FOR  DIFFERENT  DENOMINATIONS.  This
               ----------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the holder hereof at the
office or agency of the Company referred to in Paragraph 7(e) below, for new
Warrants of like tenor representing in the aggregate the right to purchase the
number of shares of Common Stock which may be purchased hereunder, each of such
new Warrants to represent the right to purchase such number of shares as shall
be designated by the holder hereof at the time of such surrender.

          (c)  REPLACEMENT  OF WARRANT. Upon receipt of evidence reasonably
               -----------------------
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

          (d)  CANCELLATION;  PAYMENT  OF  EXPENSES.  Upon the surrender of
               ------------------------------------
this Warrant in connection with any transfer, exchange, or replacement as
provided in this Paragraph 7, this Warrant shall be promptly canceled by the
Company. The Company shall pay all taxes (other than securities transfer taxes)
and all other expenses (other than legal expenses, if any, incurred by the
holder or transferees) and charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Paragraph 7.

          (e)  REGISTER.  The  Company  shall  maintain,  at  its principal
               --------
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in which
the Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.

          (f)  EXERCISE  OR  TRANSFER WITHOUT REGISTRATION. If, at the time
               -------------------------------------------
of the surrender of this Warrant in connection with any exercise, transfer, or
exchange of this Warrant, this Warrant (or, in the case of any exercise, the
Warrant Shares issuable hereunder), shall not be registered under the Securities
Act of 1933, as amended (the "Securities Act") and under applicable state
securities or blue sky laws, the Company may require, as a condition of allowing

                                       34
<PAGE>
such exercise, transfer, or exchange, (i) that the holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of
counsel, which opinion and counsel are acceptable to the Company, to the effect
that such exercise, transfer, or exchange may be made without registration under
said Act and under applicable state securities or blue sky laws, (ii) that the
holder or transferee execute and deliver to the Company an investment letter in
form and substance acceptable to the Company and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a) promulgated under the Securities
Act; provided that no such opinion, letter or status as an "accredited investor"
shall be required in connection with a transfer pursuant to Rule 144 under the
Securities Act. The first holder of this Warrant, by taking and holding the
same, represents to the Company that such holder is acquiring this Warrant for
investment and not with a view to the distribution thereof.

     8.   REGISTRATION  RIGHTS.  The  initial  holder  of this Warrant (and
          --------------------
certain assignees thereof) is entitled to the benefit of such registration
rights in respect of the Warrant Shares as are set forth in Section 2 of the
Registration Rights Agreement.

     9.   NOTICES. All notices, requests, and other communications required
          -------
or permitted to be given or delivered hereunder to the holder of this Warrant
shall be in writing, and shall be personally delivered, or shall be sent by
certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed, to such holder at the address shown for such holder on
the books of the Company, or at such other address as shall have been furnished
to the Company by notice from such holder.  All notices, requests, and other
communications required or permitted to be given or delivered hereunder to the
Company shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed, to the office of the Company at 3450 Hillview Avenue,
Palo Alto, California 94304, Attention: President and Chief Executive Officer,
or at such other address as shall have been furnished to the holder of this
Warrant by notice from the Company.  Any such notice, request, or other
communication may be sent by facsimile, but shall in such case be subsequently
confirmed by a writing personally delivered or sent by certified or registered
mail or by recognized overnight mail courier as provided above.  All notices,
requests, and other communications shall be deemed to have been given either at
the time of the receipt thereof by the person entitled to receive such notice at
the address of such person for purposes of this Paragraph 9, or, if mailed by
registered or certified mail or with a recognized overnight mail courier upon
deposit with the United States Post Office or such overnight mail courier, if
postage is prepaid and the mailing is properly addressed, as the case may be.

     10.  GOVERNING  LAW.  THIS  WARRANT SHALL BE ENFORCED, GOVERNED BY AND
          --------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITH SUCH STATE, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICT OF LAWS.  THE PARTIES HERETO HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK,
NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS WARRANT, THE AGREEMENTS
ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR

                                       35
<PAGE>
THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.  BOTH PARTIES FURTHER AGREE THAT
SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING.  NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW.  BOTH PARTIES AGREE THAT A FINAL
NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL MANNER.  THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER
THIS WARRANT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING
ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH
DISPUTE.

     11.  MISCELLANEOUS.
          -------------

          (a)  AMENDMENTS.  This  Warrant and any provision hereof may only
               ----------
be amended by an instrument in writing signed by the Company and the holder
hereof.

          (b)  DESCRIPTIVE  HEADINGS.  The  descriptive  headings  of  the
               ---------------------
several paragraphs of this Warrant are inserted for purposes of reference only,
and shall not affect the meaning or construction of any of the provisions
hereof.

          (c)  CASHLESS  EXERCISE. Notwithstanding anything to the contrary
               ------------------
contained in this Warrant, if the resale of the Warrant Shares by the holder is
not then registered pursuant to an effective registration statement under the
Securities Act, this Warrant may be exercised by presentation and surrender of
this Warrant to the Company at its principal executive offices with a written
notice of the holder's intention to effect a cashless exercise, including a
calculation of the number of shares of Common Stock to be issued upon such
exercise in accordance with the terms hereof (a "Cashless Exercise").  In the
event of a Cashless Exercise, in lieu of paying the Exercise Price in cash, the
holder shall surrender this Warrant for that number of shares of Common Stock
determined by multiplying the number of Warrant Shares to which it would
otherwise be entitled by a fraction, the numerator of which shall be the
difference between the then current Market Price per share of the Common Stock
and the Exercise Price,  and the denominator of which shall be the then current
Market Price per share of Common Stock.  For example, if the holder is
exercising 100,000 Warrants with a per Warrant exercise price of $0.75 per share
through a cashless exercise when the Common Stock's current Market Price per
share is $2.00 per share, then upon such Cashless Exercise the holder will
receive 62,500 shares of Common Stock.

                                       36
<PAGE>
          (d)  REMEDIES.  The  Company  acknowledges that a breach by it of
               --------
its obligations hereunder will cause irreparable harm to the holder, by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Warrant will be inadequate and agrees, in the event of a
breach or threatened breach by the Company of the provisions of this Warrant,
that the holder shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the remedies set forth herein, to an
injunction or injunctions restraining, preventing or curing any breach of this
Warrant and to enforce specifically the terms and provisions thereof, without
the necessity of showing economic loss and without any bond or other security
being required.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       37
<PAGE>
     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly  authorized  officer.

                                          AMNIS SYSTEMS INC.

                                     By:
                                          --------------------------------------
                                          Michael  A.  Liccardo
                                          President  and Chief Executive Officer

Dated as of December 28, 2001

                                       38
<PAGE>
                           FORM OF EXERCISE AGREEMENT

                                                       Dated:             , 200
                                                               -------- --     -

To:  Amnis Systems Inc.

     The  undersigned,  pursuant  to  the  provisions  set  forth  in the within
Warrant,  hereby  agrees  to purchase ________ shares of Common Stock covered by
such Warrant, and makes payment herewith in full therefor at the price per share
provided  by  such Warrant in cash or by certified or official bank check in the
amount  of,  or,  if  the  resale of such Common Stock by the undersigned is not
currently  registered  pursuant to an effective registration statement under the
Securities  Act  of  1933,  as amended, by surrender of securities issued by the
Company  (including a portion of the Warrant) having a market value (in the case
of a portion of this Warrant, determined in accordance with Section 11(c) of the
Warrant)  equal  to  $_________.  Please issue a certificate or certificates for
such  shares  of Common Stock in the name of and pay any cash for any fractional
share  to:

                                    Name:
                                         -----------------------------------

                                    Signature:
                                    Address:
                                            --------------------------------
                                            --------------------------------

                                    Note:    The  above  signature  should
                                             correspond exactly with the name on
                                             the  face of the within Warrant, if
                                             applicable.

and,  if  said  number  of  shares  of  Common Stock shall not be all the shares
purchasable  under the within Warrant, a new Warrant is to be issued in the name
of  said  undersigned  covering the balance of the shares purchasable thereunder
less  any  fraction  of  a  share  paid  in  cash.

                                       39
<PAGE>
                               FORM OF ASSIGNMENT

     FOR  VALUE  RECEIVED,  the undersigned hereby sells, assigns, and transfers
all  the rights of the undersigned under the within Warrant, with respect to the
number  of  shares  of  Common  Stock covered thereby set forth hereinbelow, to:

Name  of  Assignee               Address                         No  of  Shares
------------------               -------                         --------------

,  and  hereby  irrevocably  constitutes  and  appoints
                                                        ------------------------
                            as  agent  and  attorney-in-fact  to  transfer said
---------------------------
Warrant  on  the  books  of  the  within-named  corporation,  with full power of
substitution  in  the  premises.

Dated:            , 200
       -------- --     -

In  the presence of:
                                              ----------------------------------

                                       Name:
                                              ----------------------------------

                                      Signature:
                                                 -------------------------------

                                      Title of Signing Officer or Agent(if any):

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

                                      Address:
                                                 -------------------------------

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

                                    Note:    The  above  signature  should
                                             correspond exactly with the name on
                                             the  face of the within Warrant, if
                                             applicable.

                                       40
<PAGE>Exhibit 10.01

                          SECURITIES PURCHASE AGREEMENT

     SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of December 28,
2001, by and among Amnis Systems Inc., a Delaware corporation, with headquarters
located at 3450 Hillview Avenue, Palo Alto, California 94304 (the "COMPANY"),
and each of the purchasers set forth on the signature pages hereto (the
"BUYERS").

     WHEREAS:

     A.   The  Company  and  the  Buyers  are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the rules and regulations as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 ACT");

     B.   Buyers  desire  to  purchase and the Company desires to issue and
sell, upon the terms and conditions set forth in this Agreement (i) 12%
convertible debentures of the Company, in the form attached hereto as EXHIBIT
"A", in the aggregate principal amount of One Million Dollars ($1,000,000)
(together with any debenture(s) issued in replacement thereof or as a dividend
thereon or otherwise with respect thereto in accordance with the terms thereof,
the "DEBENTURES"), convertible into shares of common stock, $0.0001 par value
per share, of the Company (the "COMMON STOCK"), upon the terms and subject to
the limitations and conditions set forth in such Debentures and (ii) warrants,
in the form attached hereto as EXHIBIT "B", to purchase One Million (1,000,000)
shares of Common Stock (the "WARRANTS");

     C.   Each  Buyer  wishes  to  purchase,  upon the terms and conditions
stated in this Agreement, such principal amount of Debentures and number of
Warrants as is set forth immediately below its name on the signature pages
hereto; and

     D.   Contemporaneous  with  the  execution  and  delivery  of  this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement, in the form attached hereto as EXHIBIT "C" (the "REGISTRATION RIGHTS
AGREEMENT"), pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.

     NOW, THEREFORE, the Company and each of the Buyers severally (and not
jointly) hereby agree as follows:

     1.   PURCHASE  AND  SALE  OF  DEBENTURES  AND  WARRANTS.
          --------------------------------------------------

          a.   PURCHASE OF DEBENTURES AND WARRANTS. On the Closing Date (as
               -----------------------------------
defined below), the Company shall issue and sell to each Buyer and each Buyer
severally agrees to purchase from the Company such principal amount of
Debentures and number of Warrants as is set forth immediately below such Buyer's
name on the signature pages hereto.

                                       41
<PAGE>
          b.   FORM OF PAYMENT. On the Closing Date (as defined below), (i)
               ---------------
each Buyer shall pay the purchase price for the Debentures and the Warrants to
be issued and sold to it at the Closing (as defined below) (the "PURCHASE
PRICE") by wire transfer of immediately available funds to the Company, in
accordance with the Company's written wiring instructions, against delivery of
the Debentures in the principal amount equal to the Purchase Price and the
number of Warrants as is set forth immediately below such Buyer's name on the
signature pages hereto, and (ii) the Company shall deliver such Debentures and
Warrants duly executed on behalf of the Company, to such Buyer, against delivery
of such Purchase Price.

          c.   CLOSING  DATE.  Subject  to  the  satisfaction  (or  written
               -------------
waiver) of the conditions thereto set forth in Section 6 and Section 7 below,
the date and time of the issuance and sale of the Debentures and the Warrants
pursuant to this Agreement (the "CLOSING DATE") shall be 12:00 noon Pacific
Standard Time on December 28, 2001 or such other mutually agreed upon time. The
closing of the transactions contemplated by this Agreement (the "CLOSING") shall
occur on the Closing Date at such location as may be agreed to by the parties.

     2.   BUYERS' REPRESENTATIONS AND WARRANTIES. Each Buyer severally (and
          --------------------------------------
not jointly) represents and warrants to the Company solely as to such Buyer
that:

          a.   INVESTMENT  PURPOSE.  As  of  the  date hereof, the Buyer is
               -------------------
purchasing the Debentures and the shares of Common Stock issuable upon
conversion of or otherwise pursuant to the Debentures (including, without
limitation, such additional shares of Common Stock, if any, as are (i) issuable
pursuant to the investment options described in Section 1.1(b) of the Debentures
(the "INVESTMENT OPTIONS"), (ii) on account of interest on the Debentures, (iii)
as a result of the events described in Sections 1.3 and 1.4(g) of the Debentures
and Section 2(c) of the Registration Rights Agreement or (iv) in payment of the
Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant
to this Agreement, such shares of Common Stock being collectively referred to
herein as the "CONVERSION SHARES") and the Warrants and the shares of Common
Stock issuable upon exercise thereof (the "WARRANT SHARES" and, collectively
with the Debentures, Warrants and Conversion Shares, the "SECURITIES") for its
own account and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration under
the 1933 Act; provided, however, that by making the representations herein, the
Buyer does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the 1933 Act.

          b.   ACCREDITED  INVESTOR  STATUS.  The  Buyer  is an "accredited
               ----------------------------
investor" as that term is defined in Rule 501(a) of Regulation D (an "ACCREDITED
INVESTOR").

          c.   RELIANCE  ON  EXEMPTIONS.  The  Buyer  understands  that the
               ------------------------
Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Securities.

                                       42
<PAGE>
          d.     INFORMATION.  The Buyer and its advisors, if any, have been,
                 -----------
and for so long as the Debentures and Warrants remain outstanding will continue
to be, furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Securities which have been requested by the Buyer or its advisors.  The Buyer
and its advisors, if any, have been, and for so long as the Debentures and
Warrants remain outstanding will continue to be, afforded the opportunity to ask
questions of the Company.  Notwithstanding the foregoing, the Company has not
disclosed to the Buyer any material nonpublic information and will not disclose
such information unless such information is disclosed to the public prior to or
promptly following such disclosure to the Buyer.  Neither such inquiries nor any
other due diligence investigation conducted by Buyer or any of its advisors or
representatives shall modify, amend or affect Buyer's right to rely on the
Company's representations and warranties contained in Section 3 below.  The
Buyer understands that its investment in the Securities involves a significant
degree of risk.

          e.     GOVERNMENTAL REVIEW.  The Buyer understands that no United
                 -------------------
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.

          f.     TRANSFER OR RE-SALE.  The Buyer understands that (i) except as
                 -------------------
provided in the Registration Rights Agreement, the sale or re-sale of the
Securities has not been and is not being registered under the 1933 Act or any
applicable state securities laws, and the Securities may not be transferred
unless (a) the Securities are sold pursuant to an effective registration
statement under the 1933 Act, (b) the Buyer shall have delivered to the Company
an opinion of counsel that shall be in form, substance and scope customary for
opinions of counsel in comparable transactions to the effect that the Securities
to be sold or transferred may be sold or transferred pursuant to an exemption
from such registration, which opinion shall be accepted by the Company, (c) the
Securities are sold or transferred to an "affiliate" (as defined in Rule 144
promulgated under the 1933 Act (or a successor rule) ("RULE 144")) of the Buyer
who agrees to sell or otherwise transfer the Securities only in accordance with
this Section 2(f) and who is an Accredited Investor, (d) the Securities are sold
pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S
under the 1933 Act (or a successor rule) ("REGULATION S"), and the Buyer shall
have delivered to the Company an opinion of counsel that shall be in form,
substance and scope customary for opinions of counsel in corporate transactions,
which opinion shall be accepted by the Company; (ii) any sale of such Securities
made in reliance on Rule 144 may be made only in accordance with the terms of
said Rule and further, if said Rule is not applicable, any re-sale of such
Securities under circumstances in which the seller (or the person through whom
the sale is made) may be deemed to be an underwriter (as that term is defined in
the 1933 Act) may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (iii) neither the
Company nor any other person is under any obligation to register such Securities
under the 1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder (in each case, other than pursuant to the
Registration Rights Agreement).  Notwithstanding the foregoing or anything else
contained herein to the contrary, the Securities may be pledged as collateral in
connection with a bona fide margin account or other lending arrangement.  In the
                  ---- ----
event that the Company does not accept the opinion of counsel provided by the
Buyer with respect to the transfer of Securities pursuant to an exemption from
registration, such as Rule 144 or Regulation S, within three (3) business days
of delivery of the opinion to the Company, the Company shall pay to the Buyer

                                       43
<PAGE>
liquidated damages of three percent (3%) of the outstanding amount of the
Debentures per month plus accrued and unpaid interest on the Debentures,
prorated for partial months, in cash or shares at the option of the Buyer
("STANDARD LIQUIDATED DAMAGES AMOUNT").  If the Buyer elects to be paid the
Standard Liquidated Damages Amount in shares of Common Stock, such shares shall
be issued at the Conversion Price at the time of payment.

          g.     LEGENDS.  The Buyer understands that the Debentures and the
                 -------
Warrants and, until such time as the Conversion Shares and Warrant Shares have
been registered under the 1933 Act as contemplated by the Registration Rights
Agreement or otherwise may be sold pursuant to Rule 144 or Regulation S without
any restriction as to the number of securities as of a particular date that can
then be immediately sold, the Conversion Shares and Warrant Shares may bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Securities):

          "The securities represented by this certificate have
          not been registered under the Securities Act of 1933,
          as amended. The securities may not be sold, transferred
          or assigned in the absence of an effective registration
          statement for the securities under said Act, or an
          opinion of counsel, in form, substance and scope
          customary for opinions of counsel in comparable
          transactions, that registration is not required under
          said Act or unless sold pursuant to Rule 144 or
          Regulation S under said Act."

     The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
such Security is registered for sale under an effective registration statement
filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or
Regulation S without any restriction as to the number of securities as of a
particular date that can then be immediately sold, or (b) such holder provides
the Company with an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public
sale or transfer of such Security may be made without registration under the
1933 Act, which opinion shall be accepted by the Company so that the sale or
transfer is effected or (c) such holder provides the Company with reasonable
assurances that such Security can be sold pursuant to Rule 144 or Regulation S.
The Buyer agrees to sell all Securities, including those represented by a
certificate(s) from which the legend has been removed, in compliance with
applicable prospectus delivery requirements, if any.

          h.     AUTHORIZATION; ENFORCEMENT. This Agreement and the Registration
                 --------------------------
Rights Agreement have been duly and validly authorized.  This Agreement has been
duly executed and delivered on behalf of the Buyer, and this Agreement
constitutes, and upon execution and delivery by the Buyer of the Registration
Rights Agreement, such agreement will constitute, valid and binding agreements
of the Buyer enforceable in accordance with their terms.

          i.     RESIDENCY.  The Buyer is a resident of the jurisdiction set
                 ---------
forth immediately below such Buyer's name on the signature pages hereto.

                                       44
<PAGE>
     3.     REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company
            ---------------------------------------------
represents and warrants to each Buyer that:

          a.     ORGANIZATION AND QUALIFICATION.  The Company and each of its
                 ------------------------------
Subsidiaries (as defined below), if any, is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated, with full power and authority (corporate and other) to
own, lease, use and operate its properties and to carry on its business as and
where now owned, leased, used, operated and conducted.  SCHEDULE 3(A) sets forth
a list of all of the Subsidiaries of the Company and the jurisdiction in which
each is incorporated.  The Company and each of its Subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which its ownership or use of property or the nature of
the business conducted by it makes such qualification necessary except where the
failure to be so qualified or in good standing would not have a Material Adverse
Effect.  "MATERIAL ADVERSE EFFECT" means any material adverse effect on the
business, operations, assets, financial condition or prospects of the Company or
its Subsidiaries, if any, taken as a whole, or on the transactions contemplated
hereby or by the agreements or instruments to be entered into in connection
herewith.  "SUBSIDIARIES" means any corporation or other organization, whether
incorporated or unincorporated, in which the Company owns, directly or
indirectly, any equity or other ownership interest.

          b.     AUTHORIZATION; ENFORCEMENT.  (i) The Company has all requisite
                 --------------------------
corporate power and authority to enter into and perform this Agreement, the
Registration Rights Agreement, the Debentures and the Warrants and to consummate
the transactions contemplated hereby and thereby and to issue the Securities, in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Agreement, the Registration Rights Agreement, the Debentures and the
Warrants by the Company and the consummation by it of the transactions
contemplated hereby and thereby (including without limitation, the issuance of
the Debentures and the Warrants and the issuance and reservation for issuance of
the Conversion Shares and Warrant Shares issuable upon conversion or exercise
thereof) have been duly authorized by the Company's Board of Directors and no
further consent or authorization of the Company, its Board of Directors, or its
shareholders is required, (iii) this Agreement has been duly executed and
delivered by the Company by its authorized representative, and such authorized
representative is the true and official representative with authority to sign
this Agreement and the other documents executed in connection herewith and bind
the Company accordingly, and (iv) this Agreement constitutes, and upon execution
and delivery by the Company of the Registration Rights Agreement, the Debentures
and the Warrants, each of such instruments will constitute, a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms.

          c.     CAPITALIZATION.  As of the date hereof, the authorized capital
                 --------------
stock of the Company consists of (i) 100,000,000 shares of Common Stock, of
which 12,382,816 shares are issued and outstanding, 9,493,482 shares are
reserved for issuance pursuant to the Company's stock option plans, 1,402,301
shares are reserved for issuance pursuant to securities (other than the
Debentures and the Warrants) exercisable for, or convertible into or
exchangeable for shares of Common Stock and 12,400,000 shares are reserved for
issuance upon conversion of the Debentures and the Additional Debentures (as
defined in Section 4(l)) and exercise of the Warrants (subject to adjustment
pursuant to the Company's covenant set forth in Section 4(h) below); and (ii)

                                       45
<PAGE>
20,000,000 shares of preferred stock, of which none are issued and outstanding.
All of such outstanding shares of capital stock are, or upon issuance will be,
duly authorized, validly issued, fully paid and nonassessable.  No shares of
capital stock of the Company are subject to preemptive rights or any other
similar rights of the stockholders of the Company or any liens or encumbrances
imposed through the actions or failure to act of the Company.  Except as
disclosed in SCHEDULE 3(C), as of the effective date of this Agreement, (i)
there are no outstanding options, warrants, scrip, rights to subscribe for,
puts, calls, rights of first refusal, agreements, understandings, claims or
other commitments or rights of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for any shares of capital
stock of the Company or any of its Subsidiaries, or arrangements by which the
Company or any of its Subsidiaries is or may become bound to issue additional
shares of capital stock of the Company or any of its Subsidiaries, (ii) there
are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of its or their securities
under the 1933 Act (except the Registration Rights Agreement) and (iii) there
are no anti-dilution or price adjustment provisions contained in any security
issued by the Company (or in any agreement providing rights to security holders)
that will be triggered by the issuance of the Debentures, the Warrants, the
Conversion Shares or Warrant Shares.  The Company has furnished to the Buyer
true and correct copies of the Company's Certificate of Incorporation as in
effect on the date hereof ("CERTIFICATE OF INCORPORATION"), the Company's
By-laws, as in effect on the date hereof (the "BY-LAWS"), and the terms of all
securities convertible into or exercisable for Common Stock of the Company and
the material rights of the holders thereof in respect thereto.  The Company
shall provide the Buyer with a written update of this representation signed by
the Company's Chief Executive or Chief Financial Officer on behalf of the
Company as of the Closing Date.

          d.     ISSUANCE OF SHARES.  The Conversion Shares and Warrant Shares
                 ------------------
are duly authorized and reserved for issuance and, upon conversion of the
Debentures and exercise of the Warrants in accordance with their respective
terms and exercise of the Investment Options, will be validly issued, fully paid
and non-assessable, and free from all taxes, liens, claims and encumbrances with
respect to the issue thereof and shall not be subject to preemptive rights or
other similar rights of stockholders of the Company and will not impose personal
liability upon the holder thereof.

          e.     ACKNOWLEDGMENT OF DILUTION.  The Company understands and
                 --------------------------
acknowledges the potentially dilutive effect to the Common Stock upon the
issuance of the Conversion Shares and Warrant Shares upon conversion of the
Debenture and exercise of the Investment Options, or exercise of the Warrants.
The Company further acknowledges that its obligation to issue Conversion Shares
and Warrant Shares upon conversion of the Debentures and exercise of the
Investment Options or exercise of the Warrants in accordance with this
Agreement, the Debentures and the Warrants is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company.

          f.     NO CONFLICTS.  The execution, delivery and performance of this
                 ------------
Agreement, the Registration Rights Agreement, the Debentures and the Warrants by
the Company and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance and reservation
for issuance of the Conversion Shares and Warrant Shares) will not (i) conflict
with or result in a violation of any provision of the Certificate of

                                       46
<PAGE>
Incorporation or By-laws or (ii) violate or conflict with, or result in a breach
of any provision of, or constitute a default (or an event which with notice or
lapse of time or both could become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, patent license or instrument to which the Company
or any of its Subsidiaries is a party, or (iii)  result in a violation of any
law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and regulations of any self-regulatory
organizations to which the Company or its securities are subject) applicable to
the Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect).  Neither the Company nor any of its Subsidiaries is in
violation of its Certificate of Incorporation, By-laws or other organizational
documents and neither the Company nor any of its Subsidiaries is in default (and
no event has occurred which with notice or lapse of time or both could put the
Company or any of its Subsidiaries in default) under, and neither the Company
nor any of its Subsidiaries has taken any action or failed to take any action
that would give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party or by which any property or assets of the
Company or any of its Subsidiaries is bound or affected, except for possible
defaults as would not, individually or in the aggregate, have a Material Adverse
Effect. The businesses of the Company and its Subsidiaries, if any, are not
being conducted, and shall not be conducted so long as a Buyer owns any of the
Securities, in violation of any law, ordinance or regulation of any governmental
entity which would have a Material Adverse Effect.  Except as specifically
contemplated by this Agreement and as required under the 1933 Act and any
applicable state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court, governmental agency, regulatory agency, self regulatory organization or
stock market or any third party in order for it to execute, deliver or perform
any of its obligations under this Agreement, the Registration Rights Agreement,
the Debentures or the Warrants in accordance with the terms hereof or thereof or
to issue and sell the Debentures and Warrants in accordance with the terms
hereof and to issue the Conversion Shares upon conversion of the Debentures and
exercise of the Investment Options and the Warrant Shares upon exercise of the
Warrants.  Except as disclosed in SCHEDULE 3(F), all consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof.  The Company does not reasonably anticipate that the Common
Stock will be delisted by the Over-the-Counter Bulletin Board (the "OTCBB") in
the foreseeable future.  The Company and its Subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.

          g.     SEC DOCUMENTS; FINANCIAL STATEMENTS.  Since April 16, 2001, the
                 -----------------------------------
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934 ACT")
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents (other than
exhibits to such documents) incorporated by reference therein, being hereinafter
referred to herein as the "SEC DOCUMENTS").  The Company has delivered to each
Buyer true and complete copies of the SEC Documents, except for such exhibits
and incorporated documents.  As of their respective dates, the SEC Documents

                                       47
<PAGE>
complied in all material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.  None of the statements made in any such SEC Documents is, or
has been, required to be amended or updated under applicable law (except for
such statements as have been amended or updated in subsequent filings prior the
date hereof).  As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto.  Such financial statements have
been prepared in accordance with United States generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly present
in all material respects the consolidated financial position of the Company and
its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments).
Except as set forth in the financial statements of the Company included in the
SEC Documents, the Company has no liabilities, contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business subsequent to
April 16, 2001 and (ii) obligations under contracts and commitments incurred in
the ordinary course of business and not required under generally accepted
accounting principles to be reflected in such financial statements, which,
individually or in the aggregate, are not material to the financial condition or
operating results of the Company.

          h.     ABSENCE OF CERTAIN CHANGES.  Since April 16, 2001, there has
                 --------------------------
been no material adverse change and no material adverse development in the
assets, liabilities, business, properties, operations, financial condition,
results of operations or prospects of the Company or any of its Subsidiaries.

          i.     ABSENCE OF LITIGATION.  There is no action, suit, claim,
                 ---------------------
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company or any of its Subsidiaries, or their officers or directors
in their capacity as such, that could have a Material Adverse Effect.  SCHEDULE
3(I) contains a complete list and summary description of any pending or
threatened proceeding against or affecting the Company or any of its
Subsidiaries, without regard to whether it would have a Material Adverse Effect.
The Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing.

          j.     PATENTS, COPYRIGHTS, ETC.
                 ------------------------

               (i)     The Company and each of its Subsidiaries owns or
possesses the requisite licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets, trademarks,
trademark applications, service marks, service names, trade names and copyrights
("INTELLECTUAL PROPERTY") necessary to enable it to conduct its business as now

                                       48
<PAGE>
operated (and, except as set forth in SCHEDULE 3(J) hereof, to the best of the
Company's knowledge, as presently contemplated to be operated in the future);
there is no claim or action by any person pertaining to, or proceeding pending,
or to the Company's knowledge threatened, which challenges the right of the
Company or of a Subsidiary with respect to any Intellectual Property necessary
to enable it to conduct its business as now operated (and, except as set forth
in SCHEDULE 3(J) hereof, to the best of the Company's knowledge, as presently
contemplated to be operated in the future); to the best of the Company's
knowledge, the Company's or its Subsidiaries' current and intended products,
services and processes do not infringe on any Intellectual Property or other
rights held by any person; and the Company is unaware of any facts or
circumstances which might give rise to any of the foregoing.  The Company and
each of its Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of their Intellectual Property.

               (ii)     All of the Company's computer software and computer
hardware, and other similar or related items of automated, computerized or
software systems that are used or relied on by the Company in the conduct of its
business or that were, or currently are being, sold or licensed by the Company
to customers (collectively, "INFORMATION TECHNOLOGY"), are Year 2000 Compliant.
For purposes of this Agreement, the term "YEAR 2000 COMPLIANT" means, with
respect to the Company's Information Technology, that the Information Technology
is designed to be used prior to, during and after the calendar Year 2000, and
the Information Technology used during each such time period will accurately
receive, provide and process date and time data (including, but not limited to,
calculating, comparing and sequencing) from, into and between the 20th and 21st
centuries, including the years 1999 and 2000, and leap-year calculations, and
will not malfunction, cease to function, or provide invalid or incorrect results
as a result of the date or time data, to the extent that other information
technology, used in combination with the Information Technology, properly
exchanges date and time data with it.  The Company has delivered to the Buyers
true and correct copies of all analyses, reports, studies and similar written
information, whether prepared by the Company or another party, relating to
whether the Information Technology is Year 2000 Compliant, if any.

          k.     NO MATERIALLY ADVERSE CONTRACTS, ETC.  Neither the Company nor
                 ------------------------------------
any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a
Material Adverse Effect.  Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.

          l.     TAX STATUS.  Except as set forth on SCHEDULE 3(L), the Company
                 ----------
and each of its Subsidiaries has made or filed all federal, state and foreign
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply.  There are no unpaid taxes in any material amount claimed to be due by

                                       49
<PAGE>
the taxing authority of any jurisdiction, and the officers of the Company know
of no basis for any such claim.  The Company has not executed a waiver with
respect to the statute of limitations relating to the assessment or collection
of any foreign, federal, state or local tax.  Except as set forth on SCHEDULE
3(L), none of the Company's tax returns is presently being audited by any taxing
authority.

          m.     CERTAIN TRANSACTIONS.  Except as set forth on SCHEDULE 3(M) and
                 --------------------
except for arm's length transactions pursuant to which the Company or any of its
Subsidiaries makes payments in the ordinary course of business upon terms no
less favorable than the Company or any of its Subsidiaries could obtain from
third parties and other than the grant of stock options disclosed on SCHEDULE
3(C), none of the officers, directors, or employees of the Company is presently
a party to any transaction with the Company or any of its Subsidiaries (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.

          n.     DISCLOSURE.  All information relating to or concerning the
                 ----------
Company or any of its Subsidiaries set forth in this Agreement and provided to
the Buyers pursuant to Section 2(d) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all material respects
and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under
which they were made, not misleading.  No event or circumstance has occurred or
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed (assuming for this purpose that the Company's reports filed under the
1934 Act are being incorporated into an effective registration statement filed
by the Company under the 1933 Act).

          o.     ACKNOWLEDGMENT REGARDING BUYERS' PURCHASE OF SECURITIES.  The
                 -------------------------------------------------------
Company acknowledges and agrees that the Buyers are acting solely in the
capacity of arm's length purchasers with respect to this Agreement and the
transactions contemplated hereby.  The Company further acknowledges that no
Buyer is acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any statement made by any Buyer or any of their
respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is not advice or a recommendation and is merely
incidental to the Buyers' purchase of the Securities.  The Company further
represents to each Buyer that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation of the Company and
its representatives.

          p.     NO INTEGRATED OFFERING.  Neither the Company, nor any of its
                 ----------------------
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any offers to
buy any security under circumstances that would require registration under the

                                       50
<PAGE>
1933 Act of the issuance of the Securities to the Buyers.  The issuance of the
Securities to the Buyers will not be integrated with any other issuance of the
Company's securities (past, current or future) for purposes of any stockholder
approval provisions applicable to the Company or its securities.

          q.     NO BROKERS.  The Company has taken no action which would give
                 ----------
rise to any claim by any person for brokerage commissions, transaction fees or
similar payments relating to this Agreement or the transactions contemplated
hereby.

          r.     PERMITS; COMPLIANCE.  The Company and each of its Subsidiaries
                 -------------------
is in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the "COMPANY PERMITS"), and there is
no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits.  Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or violation of,
any of the Company Permits, except for any such conflicts, defaults or
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.  Since April 16, 2001, neither the
Company nor any of its Subsidiaries has received any notification with respect
to possible conflicts, defaults or violations of applicable laws, except for
notices relating to possible conflicts, defaults or violations, which conflicts,
defaults or violations would not have a Material Adverse Effect.

          s.     ENVIRONMENTAL MATTERS.
                 ---------------------

               (i)     Except as set forth in SCHEDULE 3(S), there are, to the
Company's knowledge, with respect to the Company or any of its Subsidiaries or
any predecessor of the Company, no past or present violations of Environmental
Laws (as defined below), releases of any material into the environment, actions,
activities, circumstances, conditions, events, incidents, or contractual
obligations which may give rise to any common law environmental liability or any
liability under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 or similar federal, state, local or foreign laws and
neither the Company nor any of its Subsidiaries has received any notice with
respect to any of the foregoing, nor is any action pending or, to the Company's
knowledge, threatened in connection with any of the foregoing.  The term
"ENVIRONMENTAL LAWS" means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants contaminants, or toxic
or hazardous substances or wastes (collectively, "HAZARDOUS MATERIALS") into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.

               (ii)     Other than those that are or were stored, used or
disposed of in compliance with applicable law, no Hazardous Materials are
contained on or about any real property currently owned, leased or used by the

                                       51
<PAGE>
Company or any of its Subsidiaries, and no Hazardous Materials were released on
or about any real property previously owned, leased or used by the Company or
any of its Subsidiaries during the period the property was owned, leased or used
by the Company or any of its Subsidiaries, except in the normal course of the
Company's or any of its Subsidiaries' business.

               (iii)     Except as set forth in SCHEDULE 3(S), there are no
underground storage tanks on or under any real property owned, leased or used by
the Company or any of its Subsidiaries that are not in compliance with
applicable law.

          t.     TITLE TO PROPERTY.  The Company and its Subsidiaries have good
                 -----------------
and marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in SCHEDULE 3(T) or such
as would not have a Material Adverse Effect.  Any real property and facilities
held under lease by the Company and its Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as would not have
a Material Adverse Effect.

          u.     INSURANCE.  The Company and each of its Subsidiaries are
                 ---------
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged.  Neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.  The Company has provided to Buyer
true and correct copies of all policies relating to directors' and officers'
liability coverage, errors and omissions coverage, and commercial general
liability coverage.

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

          w.     FOREIGN CORRUPT PRACTICES.  Neither the Company, nor any of its
                 -------------------------
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any Subsidiary has, in the course of his actions
for, or on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,

                                       52
<PAGE>
as amended, or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or
employee.

          x.     [RESERVED]

          y.     NO INVESTMENT COMPANY.  The Company is not, and upon the
                 ---------------------
issuance and sale of the Securities as contemplated by this Agreement will not
be an "investment company" required to be registered under the Investment
Company Act of 1940 (an "INVESTMENT COMPANY").  The Company is not controlled by
an Investment Company.

          z.     BREACH OF REPRESENTATIONS AND WARRANTIES BY THE COMPANY.  If
                 --------------------------------------------------------
the Company breaches any of the representations or warranties set forth in this
Section 3, and in addition to any other remedies available to the Buyers
pursuant to this Agreement, the Company shall pay to the Buyer the Standard
Liquidated Damages Amount in cash or in shares of Common Stock at the option of
the Buyer, until such breach is cured.  If the Buyers elect to be paid the
Standard Liquidated Damages Amounts in shares of Common Stock, such shares shall
be issued at the Conversion Price at the time of payment.

          4.     COVENANTS.
                 ---------

               a.     BEST EFFORTS.  The parties shall use their best efforts to
                      ------------
satisfy timely each of the conditions described in Section 6 and 7 of this
Agreement.

               b.     BLUE SKY LAWS.  The Company shall, on or before the
                      -------------
Closing Date, take such action as the Company shall reasonably determine is
necessary to qualify the Securities for sale to the Buyers at the applicable
closing pursuant to this Agreement under applicable securities or "blue sky"
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to each
Buyer on or prior to the Closing Date.

               c.     REPORTING STATUS; ELIGIBILITY TO USE FORM SB-2 OR FORM
                      ------------------------------------------------------
S-1.  The Company's Common Stock is registered under Section 12(g) of the 1934
Act. The Company represents and warrants that it meets the requirements for the
use of Form SB-2 or Form S-1 and may use the form of registration for which it
is eligible at that time for registration of the sale by the Buyer of the
Registrable Securities (as defined in the Registration Rights Agreement).  So
long as the Buyer beneficially owns any of the Securities, the Company shall
timely file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would permit such termination.  The Company further
agrees to file all reports required to be filed by the Company with the SEC in a
timely manner so as to become eligible, and thereafter to maintain its
eligibility, for the use of Form S-3.  The Company shall issue a press release
describing the materials terms of the transaction contemplated hereby as soon as
practicable following the Closing Date but in no event more than two (2)
business days of the Closing Date, which press release shall be subject to prior
review by the Buyers.  The Company agrees that such press release shall not
disclose the name of the Buyers unless expressly consented to in writing by the
Buyers or unless required by applicable law or regulation, and then only to the
extent of such requirement.

                                       53
<PAGE>
               d.     USE OF PROCEEDS.  The Company shall use the proceeds from
                      ---------------
the sale of the Debentures and the Warrants in the manner set forth in SCHEDULE
4(D) attached hereto and made a part hereof  and shall not, directly or
indirectly, use such proceeds for any loan to or investment in any other
corporation, partnership, enterprise or other person (except in connection with
its currently existing direct or indirect Subsidiaries)

               e.     FUTURE OFFERINGS.  Subject to the exceptions described
                      ----------------
below, the Company will not, without the prior written consent of a
majority-in-interest of the Buyers, not to be unreasonably withheld, negotiate
or contract with any party to obtain additional equity financing (including debt
financing with an equity component) that involves (A) the issuance of Common
Stock at a discount to the market price of the Common Stock on the date of
issuance (taking into account the value of any warrants or options to acquire
Common Stock issued in connection therewith) or (B) the issuance of convertible
securities that are convertible into an indeterminate number of shares of Common
Stock or (C) the issuance of warrants during the period (the "LOCK-UP PERIOD")
beginning on the Closing Date and ending on the later of (i) two hundred seventy
(270) days from the Closing Date and (ii) one hundred eighty  (180) days from
the date the Registration Statement (as defined in the Registration Rights
Agreement) is declared effective (plus any days in which sales cannot be made
thereunder).  In addition, subject to the exceptions described below, the
Company will not conduct any equity financing (including debt with an equity
component) ("FUTURE OFFERINGS") during the period beginning on the Closing Date
and ending two (2) years after the end of the Lock-up Period unless it shall
have first delivered to each Buyer, at least twenty (20) business days prior to
the closing of such Future Offering, written notice describing the proposed
Future Offering, including the terms and conditions thereof and proposed
definitive documentation to be entered into in connection therewith, and
providing each Buyer an option during the fifteen (15) day period following
delivery of such notice to purchase its pro rata share (based on the ratio that
the aggregate principal amount of Debentures purchased by it hereunder bears to
the aggregate principal amount of Debentures purchased hereunder) of the
securities being offered in the Future Offering on the same terms as
contemplated by such Future Offering (the limitations referred to in this
sentence and the preceding sentence are collectively referred to as the "CAPITAL
RAISING LIMITATIONS").  In the event the terms and conditions of a proposed
Future Offering are amended in any respect after delivery of the notice to the
Buyers concerning the proposed Future Offering, the Company shall deliver a new
notice to each Buyer describing the amended terms and conditions of the proposed
Future Offering and each Buyer thereafter shall have an option during the
fifteen (15) day period following delivery of such new notice to purchase its
pro rata share of the securities being offered on the same terms as contemplated
by such proposed Future Offering, as amended.  The foregoing sentence shall
apply to successive amendments to the terms and conditions of any proposed
Future Offering.  The Capital Raising Limitations shall not apply to any
transaction involving (i) issuances of securities in a firm commitment
underwritten public offering (excluding a continuous offering pursuant to Rule
415 under the 1933 Act) or (ii) issuances of securities as consideration for a
merger, consolidation or purchase of assets, or in connection with any strategic
partnership or joint venture (the primary purpose of which is not to raise
equity capital), or in connection with the disposition or acquisition of a
business, product or license by the Company.  The Capital Raising Limitations
also shall not apply to the issuance of securities upon exercise or conversion
of the Company's options, warrants or other convertible securities outstanding
as of the date hereof or to the grant of additional options or warrants, or the
issuance of additional securities, under any Company stock option or restricted

                                       54
<PAGE>
stock plan approved by the Stockholders of the Company.  In the event that the
Company completes a Future Offering on terms more favorable to another investor
than the transaction contemplated hereby, the terms of the Debentures and the
Warrants will be amended to reflect such more favorable terms.

               f.     EXPENSES.  At the Closing, the Company shall reimburse
                      --------
Buyers for expenses incurred by it in connection with the negotiation,
preparation, execution, delivery and performance of this Agreement and the other
agreements to be executed in connection herewith ("Documents"), including,
without limitation, attorneys' and consultants' fees and expenses, transfer
agent fees, fees for stock quotation services, fees relating to any amendments
or modifications of the Documents or any consents or waivers of provisions in
the Documents, fees for the preparation of opinions of counsel, escrow fees, and
costs of restructuring the transactions contemplated by the Documents.  When
possible, the Company must pay these fees directly, otherwise the Company must
make immediate payment for reimbursement to the Buyers for all fees and expenses
immediately upon written notice by the Buyer or the submission of an invoice by
the Buyer  If the Company fails to reimburse the Buyer in full within three (3)
business days of the written notice or submission of invoice by the Buyer, the
Company shall pay interest on the total amount of fees to be reimbursed at a
rate of 15% per annum.

               g.     FINANCIAL INFORMATION.  The Company agrees to send the
                      ---------------------
following reports to each Buyer until such Buyer transfers, assigns, or sells
all of the Securities: (i) within ten (10) days after the filing with the SEC, a
copy of its Annual Report on Form 10-KSB, its Quarterly Reports on Form 10-QSB
and any Current Reports on Form 8-K; (ii) within one (1) day after release,
copies of all press releases issued by the Company or any of its Subsidiaries;
and (iii) contemporaneously with the making available or giving to the
stockholders of the Company, copies of any notices or other information the
Company makes available or gives to such stockholders.

               h.     AUTHORIZATION AND RESERVATION OF SHARES.  The Company
                      ---------------------------------------
shall at all times have authorized, and reserved for the purpose of issuance, a
sufficient number of shares of Common Stock to provide for the full conversion
or exercise of the outstanding Debentures and Warrants and issuance of the
Conversion Shares and Warrant Shares in connection therewith (based on the
Conversion Price of the Debentures or Exercise Price of the Warrants in effect
from time to time) and as otherwise required by the Debentures (including
sufficient shares to provide for the full exercise of the Investment Options).
The Company shall not reduce the number of shares of Common Stock reserved for
issuance upon conversion of Debentures and exercise of the Warrants without the
consent of each Buyer.  The Company shall  at all times maintain the number of
shares of Common Stock so reserved for issuance at an amount ("RESERVED AMOUNT")
equal to no less than two (2) times the number that is then actually issuable
upon full conversion of the Debentures and Additional Debentures (and exercise
of the Investment Options) and upon exercise of the Warrants (based on the
Conversion Price of the Debentures and assuming full exercise of the Investment
Options or the Exercise Price of the Warrants in effect from time to time).  If
at any time the number of shares of Common Stock authorized and reserved for
issuance ("AUTHORIZED AND RESERVED SHARES") is below the Reserved Amount, the
Company will promptly take all corporate action necessary to authorize and
reserve a sufficient number of shares, including, without limitation, calling a
special meeting of stockholders to authorize additional shares to meet the

                                       55
<PAGE>
Company's obligations under this Section 4(h), in the case of an insufficient
number of authorized shares, obtain stockholder approval of an increase in such
authorized number of shares, and voting the management shares of the Company in
favor of an increase in the authorized shares of the Company to ensure that the
number of authorized shares is sufficient to meet the Reserved Amount.  If the
Company fails to obtain such shareholder approval within thirty (30) days
following the date on which the number of Authorized and Reserved Shares exceeds
the Reserved Amount, the Company shall pay to the Borrower the Standard
Liquidated Damages Amount, in cash or in shares of Common Stock at the option of
the Buyer.  If the Buyer elects to be paid the Standard Liquidated Damages
Amount in shares of Common Stock, such shares shall be issued at the Conversion
Price at the time of payment.  In order to ensure that the Company has
authorized a sufficient amount of shares to meet the Reserved Amount at all
times, the Company must deliver to the Buyer at the end of every month a list
detailing (1) the current amount of shares authorized by the Company and
reserved for the Buyer; and (2) amount of shares issuable upon conversion of the
Debentures and upon exercise of the Warrants and as payment of interest accrued
on the Debentures for one year.  If the Company fails to provide such list
within five (5) business days of the end of each month, the Company shall pay
the Standard Liquidated Damages Amount, in cash or in shares of Common Stock at
the option of the Buyer, until the list is delivered.  If the Buyer elects to be
paid the Standard Liquidated Damages Amount in shares of Common Stock, such
shares shall be issued at the Conversion Price at the time of payment.

               i.     LISTING.  The Company shall promptly secure the listing of
                      -------
the Conversion Shares and Warrant Shares upon each national securities exchange
or automated quotation system, if any, upon which shares of Common Stock are
then listed (subject to official notice of issuance) and, so long as any Buyer
owns any of the Securities, shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Conversion Shares and
Warrant Shares from time to time issuable upon conversion of the Debentures
(including upon exercise of the Investment Options) or exercise of the Warrants.
The Company will obtain and, so long as any Buyer owns any of the Securities,
maintain the listing and trading of its Common Stock on the OTCBB, the Nasdaq
National Market ("NASDAQ"), the Nasdaq SmallCap Market ("NASDAQ SMALLCAP"), the
New York Stock Exchange ("NYSE"), or the American Stock Exchange ("AMEX") and
will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the National Association of Securities
Dealers ("NASD") and such exchanges, as applicable.  The Company shall promptly
provide to each Buyer copies of any notices it receives from the OTCBB and any
other exchanges or quotation systems on which the Common Stock is then listed
regarding the continued eligibility of the Common Stock for listing on such
exchanges and quotation systems.

               j.     CORPORATE EXISTENCE.  So long as a Buyer beneficially owns
                      -------------------
any Debentures or Warrants, the Company shall maintain its corporate existence
and shall not sell all or substantially all of the Company's assets, except in
the event of a merger or consolidation or sale of all or substantially all of
the Company's assets, where the surviving or successor entity in such
transaction (i) assumes the Company's obligations hereunder and under the
agreements and instruments entered into in connection herewith and (ii) is a
publicly traded corporation whose Common Stock is listed for trading on the
OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX.

                                       56
<PAGE>
               k.     NO INTEGRATION.  The Company shall not make any offers or
                      --------------
sales of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder under the
1933 Act or cause the offering of the Securities to be integrated with any other
offering of securities by the Company for the purpose of any stockholder
approval provision applicable to the Company or its securities.

               l.     SUBSEQUENT INVESTMENT.  The Company and the Buyers agree
                      ---------------------
that, upon the declaration of effectiveness of the Registration Statement to be
filed pursuant to the Registration Rights Agreement (the "EFFECTIVE DATE"), the
Buyers shall purchase additional debentures ("ADDITIONAL DEBENTURES") in the
aggregate principal amount of Five Hundred Thousand Dollars ($500,000) for an
aggregate purchase price of Five Hundred Thousand Dollars ($500,000), with the
closing of such purchase to occur within ten (10) business days of the Effective
Date; provided, however, that the obligation of each Buyer to purchase the
      --------  -------
Additional Debentures is subject to the satisfaction, at or before the closing
of such purchase and sale, of the conditions set forth in Section 7; and,
provided, further, that there shall not have been a Material Adverse Effect as
--------  -------
of such effective date.  The terms of the Additional Debentures shall be
identical to the terms of the Debentures to be issued on the Closing Date.  The
Common Stock underlying the Additional Debentures shall be Registrable
Securities (as defined in the Registration Rights Agreement) and shall be
included in the Registration Statement to be filed pursuant to the Registration
Rights Agreement.

               m.     BREACH OF COVENANTS.  If the Company breaches any of the
                      -------------------
covenants set forth in this Section 4, and in addition to any other remedies
available to the Buyers pursuant to this Agreement, the Company shall pay to the
Buyers the Standard Liquidated Damages Amount, in cash or in shares of Common
Stock at the option of the Buyer, until such breach is cured.  If the Buyers
elect to be paid the Standard Liquidated Damages Amount in shares, such shares
shall be issued at the Conversion Price at the time of payment.

               n.     LIMITATIONS ON SHORT SALES.  The Buyers agree that they
                      --------------------------
will not enter into any Short Sales (as hereinafter defined) from the period
commencing on the Closing Date and ending on the date which all of the
Debentures have been converted and all of the Warrants have been exercised and
such Conversion Shares and Warrant Shares are covered by the Registration
Statement (as defined in the Registration Rights Agreement).  For purposes of
this Section 4(n), a "SHORT SALE" by a Buyer shall mean a sale of Common Stock
by a Buyer that is marked as a short sale and that is made at a time when there
is no equivalent offsetting long position in Common Stock held by such Buyer.
For purposes of determining whether there is an equivalent offsetting long
position in Common Stock held by a Buyer, Conversion Shares that have not yet
been converted pursuant to the Debentures (including Conversion Shares issuable
upon exercise of the Investment Options) and Warrant Shares that have not yet
been issued upon exercise of the Warrants shall be deemed to be held long by
such Buyer, and the amount of shares of Common Stock held in a long position
shall be the number of Conversion Shares issuable upon conversion of the
Debentures assuming such holder converted all the outstanding principal amount
of the Debentures on such date and with respect to Warrant Shares, the number of
Warrant Shares issuable upon exercise of the Warrants assuming such holder
exercised all of the Warrants on such date.

                                       57
<PAGE>
          5.     TRANSFER AGENT INSTRUCTIONS.  The Company shall issue
                 ---------------------------
irrevocable instructions to its transfer agent to issue certificates, registered
in the name of each Buyer or its nominee, for the Conversion Shares and Warrant
Shares in such amounts as specified from time to time by each Buyer to the
Company upon conversion of the Debentures (including upon exercise of the
Investment Options) or exercise of the Warrants in accordance with the terms
thereof (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS").  Prior to registration
of the Conversion Shares and Warrant Shares under the 1933 Act or the date on
which the Conversion Shares and Warrant Shares may be sold pursuant to Rule 144
without any restriction as to the number of Securities as of a particular date
that can then be immediately sold, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement.  The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof (in the case of the Conversion Shares and
Warrant Shares, prior to registration of the Conversion Shares and Warrant
Shares under the 1933 Act or the date on which the Conversion Shares and Warrant
Shares may be sold pursuant to Rule 144 without any restriction as to the number
of Securities as of a particular date that can then be immediately sold), will
be given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the Registration Rights Agreement.
Nothing in this Section shall affect in any way the Buyer's obligations and
agreement set forth in Section 2(g) hereof to comply with all applicable
prospectus delivery requirements, if any, upon re-sale of the Securities.  If a
Buyer provides the Company with (i) an opinion of counsel in form, substance and
scope customary for opinions in comparable transactions, to the effect that a
public sale or transfer of such Securities may be made without registration
under the 1933 Act and such sale or transfer is effected or (ii) the Buyer
provides reasonable assurances that the Securities can be sold pursuant to Rule
144, the Company shall permit the transfer, and, in the case of the Conversion
Shares and Warrant Shares, promptly instruct its transfer agent to issue one or
more certificates, free from restrictive legend, in such name and in such
denominations as specified by such Buyer.  The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
Buyers, by vitiating the intent and purpose of the transactions contemplated
hereby.  Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 5 may be inadequate and agrees, in
the event of a breach or threatened breach by the Company of the provisions of
this Section, that the Buyers shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach and requiring
immediate transfer, without the necessity of showing economic loss and without
any bond or other security being required.

          6.     CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.  The obligation
                 ----------------------------------------------
of the Company hereunder to issue and sell the Debentures and Warrants to a
Buyer at the Closing is subject to the satisfaction, at or before the Closing
Date of each of the following conditions thereto, provided that these conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion:

               a.     The applicable Buyer shall have executed this Agreement
and the Registration Rights Agreement, and delivered the same to the Company.

                                       58
<PAGE>
               b.     The applicable Buyer shall have delivered the Purchase
Price in accordance with Section 1(b) above.

               c.     The representations and warranties of the applicable Buyer
shall be true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and the applicable Buyer shall
have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the applicable Buyer at or prior to the Closing
Date.

               d.     No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.

          7.     CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.  The
                 -------------------------------------------------
obligation of each Buyer hereunder to purchase the Debentures and Warrants at
the Closing is subject to the satisfaction, at or before the Closing Date of
each of the following conditions, provided that these conditions are for such
Buyer's sole benefit and may be waived by such Buyer at any time in its sole
discretion:

               a.     The Company shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to the Buyer.

               b.     The Company shall have delivered to such Buyer duly
executed Debentures (in such denominations as the Buyer shall request) and
Warrants in accordance with Section 1(b) above.

               c.     The Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to a majority-in-interest of the Buyers, shall have been
delivered to and acknowledged in writing by the Company's Transfer Agent.

               d.     The representations and warranties of the Company shall be
true and correct in all material respects as of the date when made and as of the
Closing Date as though made at such time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date.  The Buyer
shall have received a certificate or certificates, executed by the chief
executive officer of the Company, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by such Buyer
including, but not limited to certificates with respect to the Company's
Certificate of Incorporation, By-laws and Board of Directors' resolutions
relating to the transactions contemplated hereby.

               e.     No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction

                                       59
<PAGE>
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.

               f.     No event shall have occurred which could reasonably be
expected to have a Material Adverse Effect on the Company.

               g.     The Conversion Shares and Warrant Shares shall have been
authorized for quotation on the OTCBB and trading in the Common Stock on the
OTCBB  shall not have been suspended by the SEC or the OTCBB.

               h.     The Buyer shall have received an opinion of the Company's
counsel, dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to the Buyer and in substantially the same form as EXHIBIT "D"
attached hereto.

               i.     The Buyer shall have received an officer's certificate
described in Section 3(c) above, dated as of the Closing Date.

          8.     GOVERNING LAW; MISCELLANEOUS.
                 ----------------------------

               a.     GOVERNING LAW.  THIS AGREEMENT SHALL BE ENFORCED, GOVERNED
                      -------------
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITH SUCH STATE, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS.  THE PARTIES HERETO HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK,
NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE
AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.  BOTH PARTIES FURTHER AGREE
THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING.  NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW.  BOTH PARTIES AGREE THAT A FINAL
NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL MANNER.  THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER
THIS AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING
ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH
DISPUTE.

               b.     COUNTERPARTS; SIGNATURES BY FACSIMILE.  This Agreement may
                      -------------------------------------
be executed in one or more counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered
to the other party.  This Agreement, once executed by a party, may be delivered

                                       60
<PAGE>
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

               c.     HEADINGS.  The headings of this Agreement are for
                      --------
convenience of reference only and shall not form part of, or affect the
interpretation of, this Agreement.

               c.     SEVERABILITY.  In the event that any provision of this
                      ------------
Agreement is invalid or enforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law.  Any provision hereof which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other
provision hereof.

               e.     ENTIRE AGREEMENT; AMENDMENTS.  This Agreement and the
                      ----------------------------
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters.  No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the party to be charged with enforcement.

               f.     NOTICES.  Any notices required or permitted to be given
                      -------
under the terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile and shall be effective
five days after being placed in the mail, if mailed by regular United States
mail, or upon receipt, if delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile, in each case addressed
to a party.  The addresses for such communications shall be:

          If to the Company:

               Amnis Systems Inc.
               3450 Hillview Avenue
               Palo Alto, California  94304
               Attention:  President and Chief Executive Officer
               Telephone:  650-850-0200
               Facsimile:  650-354-8854
               Email:  Liccardo@amnisinc.com

          With copy to:

               Leland, Parachini, Steinberg, Matzger & Melnick, LLP
               333 Market Street, 27th Floor
               San Francisco, California 94105
               Attention:  Edward V. Pollack, Esq.

                                       61
<PAGE>
               Telephone:  415-957-1800
               Facsimile:  415-974-1520
               Email:  epollack@lpslaw.com

     If to a Buyer: To the address set forth immediately below such Buyer's name
on the signature pages hereto.

          With copy to:

               Bristol DLP, LLC
               Investment Manager
               6363 Sunset Blvd., Fifth Floor
               Hollywood,  California 90028
               Attention: Amy Wang, Esq.
               Telephone:  323-769-2852
               Facsimile: 323-468-8307
               Email:  amy@bristolcompanies.net

     Each party shall provide notice to the other party of any change in
address.

               g.     SUCCESSORS AND ASSIGNS.  This Agreement shall be binding
                      ----------------------
upon and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor any Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, subject to Section 2(f), any Buyer may assign its
rights hereunder to any person that purchases Securities in a private
transaction from a Buyer or to any of its "affiliates," as that term is defined
under the 1934 Act, without the consent of the Company.

               h.     THIRD PARTY BENEFICIARIES.  This Agreement is intended for
                      -------------------------
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

               i.     SURVIVAL.  The representations and warranties of the
                      --------
Company and the agreements and covenants set forth in Sections 3, 4, 5 and 8
shall survive the closing hereunder notwithstanding any due diligence
investigation conducted by or on behalf of the Buyers.  The Company agrees to
indemnify and hold harmless each of the Buyers and all their officers,
directors, employees and agents for loss or damage arising as a result of or
related to any breach or alleged breach by the Company of any of its
representations, warranties and covenants set forth in Sections 3 and 4 hereof
or any of its covenants and obligations under this Agreement or the Registration
Rights Agreement, including advancement of expenses as they are incurred.

               j.     PUBLICITY.  The Company and each of the Buyers shall have
                      ---------
the right to review a reasonable period of time before issuance of any press
releases, SEC, OTCBB or NASD filings, or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
                                                 --------  -------
Company shall be entitled, without the prior approval of each of the Buyers, to

                                       62
<PAGE>
make any press release or SEC, OTCBB (or other applicable trading market) or
NASD filings with respect to such transactions as is required by applicable law
and regulations (although each of the Buyers shall be consulted by the Company
in connection with any such press release prior to its release and shall be
provided with a copy thereof and be given an opportunity to comment thereon).

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

               l.     NO STRICT CONSTRUCTION.  The language used in this
                      ----------------------
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.

               m.     REMEDIES.  The Company acknowledges that a breach by it of
                      --------
its obligations hereunder will cause irreparable harm to the Buyers by vitiating
the intent and purpose of the transaction contemplated hereby.  Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Agreement will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement, that the
Buyers shall be entitled, in addition to all other available remedies at law or
in equity, and in addition to the penalties assessable herein, to an injunction
or injunctions restraining, preventing or curing any breach of this Agreement
and to enforce specifically the terms and provisions hereof, without the
necessity of showing economic loss and without any bond or other security being
required.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       63
<PAGE>
     IN WITNESS WHEREOF, the undersigned Buyers and the Company have caused this
Agreement to be duly executed as of the date first above written.

AMNIS SYSTEMS INC.

By:     ________________________________
        Michael A. Liccardo
        President and Chief Executive Officer

BRISTOL INVESTMENT FUND, LTD.

By:     ________________________________
        Diane Derycz Kessler
        Director

RESIDENCE:   Cayman Islands

ADDRESS:     Caledonian House
             Jennett Street
             George Town
             Grand Cayman, Cayman Islands
             Facsimile:     441-295-2305
             Telephone:     441-298-5067

AGGREGATE SUBSCRIPTION AMOUNT:

      Aggregate Principal Amount of Debentures:                      $  500,000
      Number of Warrants:                                             1,000,000
      Aggregate Purchase Price:                                      $  500,000

                                       64
<PAGE>
                                    EXHIBITS

Exhibit A - Form of Debenture
Exhibit B - Form of Warrant
Exhibit C - Form of Registration Rights Agreement

<PAGE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}]]