Document:

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                    EMPLOYMENT AGREEMENT
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Employment Agreement, between Pangea Petroleum Corporation
(the "Company") and Karen L. Cloud (the "Employee").
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     1.For good consideration, the Company employs the
Employee on the following terms and conditions.
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     2.Term of Employment:  Subject to the provisions of
termination set forth below this agreement will begin on
July 1, 1999, unless sooner terminated.
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     3.Salary/Benefits: The Company shall pay Employee a
salary of $39,000.00 per year, payable semi-monthly, for the
services of Employee, at regular payroll periods. The
Employee will also be awarded 1,000 options to purchase
Pangea Stock per month. The options will have a cost basis
of $1.00 per share. In addition, Company will provide
Medical Benefits for the Employee.
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     4.Duties and Position:  The Company hires the Employee
in the capacity of Corporate Secretary and Director of
Administration.  The Employee's duties may be reasonably
modified at the Company's direction from time to time.
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     5.Employee to Devote Full Time to Company:  The
Employee will devote full time, attention, and energies to
the business of the Company and during this employment, will
not engage in any other business activity, regardless of
whether such activity is pursued for profit, gain, or other
pecuniary advantage, unless approved by the Company.
Employee is not prohibited from making personal investments
in any other businesses provided those investments do not
require active involvement in the operation of said
companies.
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     6.Confidentiality of Proprietary Information:  Employee
agrees during or after the term of this employment, not to
reveal confidential information, or trade secrets to any
person, firm, corporation, or entity.  Should Employee
reveal or threaten to reveal this information, the Company
shall be entitled to an injunction restraining the Employee
from disclosing same, or from rendering any services to any
entity to whom said information has been or is threatened to
be disclosed.  The right to secure an injunction is not
exclusive, and the Company may pursue any other remedies it
has against the Employee for a breach or threatened breach
of this condition, including the recovery of damages from
the Employee.
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     7.Reimbursement of Expenses:  The Employee may incur
reasonable expenses for furthering the Company's business,
including expenses for entertainment, travel, and similar
items.  The Company shall reimburse Employee for all
business expenses after the Employee presents an itemized
account of expenditures, pursuant to Company policy.
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     8.Vacation:  The Employee shall be entitled to a yearly
vacation of four (4) weeks at full pay beginning the date of
employment.
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     9.Disability:  If Employee cannot perform the duties
because of illness or incapacity for a period of more than
ten (10) business days in succession, the compensation
otherwise due during said illness or incapacity will be
reduced by Seventy-five (75%) percent.  The Employee's full
compensation will be reinstated upon return to work.
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     10.Termination of Agreement:  With cause, the Company
may terminate this agreement at any time upon thirty day's
(30) written notice to the Employee.  If the Company
requests, the Employee will continue to perform his/her
duties and be paid his/her regular salary up to the date of
termination.  In addition, the Company will pay the Employee
on the date of termination a severance allowance of three
months pay less taxes and social security required to be
withheld.  Without cause, the Employee may terminate
employment upon 30 days' written notice to the company.
Employee may be required to perform his/her duties and will
be paid the regular salary to date of termination but shall
not receive a severance package allowance.  Notwithstanding
anything to the contrary contained in this agreement, the
Company may terminate the Employee's employment upon 30
days' notice to the Employee should any of the following
events occur:
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          a. The sale of substantially all of the Company's
assets to a single purchaser or group of associated
purchasers or
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          b. The sale, exchange, or other disposition, in
one transaction of the majority of the Company's outstanding
corporate shares or
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          c. The Company's decision to terminate its
business and liquidate its assets or the merger or
consolidation of the Company with another company or
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          d. Bankruptcy or Chapter 11 Reorganization.
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     11.Death Benefit:  Should Employee die during the term
of employment; the Company shall pay to Employee's estate
any compensation due through the end of the month in which
death occurred.
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     12.Restriction on Post Employment Compensation:  For a
period of one (1) year after the end of employment, the
Employee shall not control, consult to or be employed by any
business similar to that conducted by the Company, either by
soliciting any of its accounts or by operating within
Employer's general trading area.
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     13.Assistance in Litigation:  Employee shall upon
reasonable notice, furnish such information and proper
assistance to the Company as it may reasonably require in
connection with any litigation in which it is, or may
become, a party either during or after employment.
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     14.Effect of Prior Agreements:  This agreement
supersedes any prior agreement between the Company or any
predecessor of the Company and the Employee, except that
this agreement shall not affect or operate to reduce any
benefit or compensation inuring to the Employee of a kind
elsewhere provided and not expressly provided in this
agreement.
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     15.Arbitration:  Any claim or controversy that arises
out of or relates to this agreement, or the breach of it,
shall be settled by arbitration in accordance with the rules
of the American Arbitration Association.  Judgment upon the
award rendered may be entered in any court with
jurisdiction.
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     16.Limited Effect of Waiver by Company.  Should Company
waive breach of any provision of this agreement by the
Employee, that waiver will not operate of be construed as a
waiver of further breach by the Employee.
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     17.Severability:  If, for any reason, any provision of
this agreement is held invalid, all other provisions of this
agreement shall remain in effect.  If this agreement is held
invalid or cannot be enforced, then to the full extent
permitted by law any prior agreement between the Company (or
any predecessor thereof) and the Employee shall be deemed
reinstated as if this agreement had not been executed.
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     18.Assumption of Agreement by Company's Successors and
Assignees:  The Company's rights and obligations under this
agreement will inure to the benefit and be binding upon the
Company's successors and assignees.
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     19.Oral Modifications Not Binding:  This instrument is
the entire agreement of the Company and the Employee.  Oral
changes shall have no effect.  If may be altered only by a
written agreement signed by the party against whom
enforcement of any waiver, change, modification, extension,
or discharge is sought.
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Signed this 7th day of July, 1999.
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Pangea Petroleum Corp.       /s/ Karen L. Cloud
-------------------------    ---------------------------
      Company                        Employee
<P>SECURITIES PURCHASE AGREEMENT

     AGREEMENT,  dated as of September 26, 2000, between Creative Host Services,
Inc.  (the "Company") a California corporation and GCA Strategic Investment Fund
Limited  ("Purchaser"),  a  Bermuda  Corporation.

                                R E C I T A L S:

     WHEREAS,  the Company desires to sell and issue to Purchaser, and Purchaser
desires  to  purchase from the Company, $2,500,000 aggregate principal amount of
the Company's 7% Convertible Debentures due September 26, 2003 (the "Convertible
Debentures"),  with terms and conditions as set forth in the form of Convertible
Debenture  attached  hereto  as  Exhibit  A;

     WHEREAS,  the Convertible Debentures will be convertible into shares of the
Company's  common  stock,  no  par  value  per  share  (the  "Common  Stock");

     WHEREAS,  in  order  to induce the Purchaser to enter into the transactions
described  in  this  Agreement,  the Company desires to issue to the Purchaser a
warrant  to purchase 125,000 shares of Common Stock upon the Closing (as defined
herein)  on  the  terms and conditions described in the form of the common stock
purchase  warrant  attached  hereto  as  Exhibit  F  (the  "Warrants");  and

     WHEREAS,  Purchaser  will  have certain registration rights with respect to
such  shares of Common Stock issuable as interest under, and upon conversion of,
the  Convertible  Debentures  (the  "Debenture Shares") and upon exercise of the
Warrants  (the  "Warrant  Shares,"  the  Debenture Shares and the Warrant Shares
being  collectively referred to herein as the "Conversion Shares")  as set forth
in  the  Registration Rights Agreement in the form attached hereto as Exhibit C;

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

                                 1.  DEFINITIONS

     1.1.  DEFINITIONS.  The following terms, as used herein, have the following
meanings:

     "Additional  Shares  of  Common Stock" has the meaning set forth in Section
11.6.

     "Affiliate"  means,  with respect to any Person (the "Subject Person"), (i)
any  other  Person (a "Controlling Person") that directly, or indirectly through
one or more intermediaries, Controls the Subject Person or (ii) any other Person
(other  than  the  Subject  Person  or  a Consolidated Subsidiary of the Subject
Person)  which  is  Controlled  by or is under common Control with a Controlling
Person.

     "Agreement"  means  this  Securities  Purchase  Agreement,  as  amended,
supplemented  or  otherwise  modified  from  time to time in accordance with its
terms.

     "Asset  Sale"  has  the  meaning  set  forth  in  Section  8.4.

     "Balance  Sheet  Date"  has  the  meaning  set  forth  in  Section  4.7.

     "Benefit Arrangement" means at any time an employee benefit plan within the
meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and
which  is  maintained  or  otherwise  contributed  to  by  the  Company.

     "Benefit  Plans"  has  the  meaning  set  forth  in  Section  4.9(b).

     "Business  Day"  means  any  day  except a Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized or required by law
to  close.

     "Capital  Reorganization"  has  the  meaning  set  forth  in  Section 11.5.

     "Change  in Control" means (i) after the date of this Agreement, any person
or  group  of  persons (within the meaning of Sections 13 and 14 of the Exchange
Act  and  the rules and regulations of the Commission relating to such sections)
other  than  Purchaser  shall  have  acquired  beneficial  ownership (within the
meaning  of  Rules 13d-3 and 13d-5 promulgated by the Commission pursuant to the
Exchange  Act)  of  50% or more of the outstanding shares of Common Stock of the
Company;  or (ii) individuals constituting the Board of Directors of the Company
on the date hereof (together with any new Directors whose election by such Board
of Directors or whose nomination for election by the stockholders of the Company
was  approved  by  a vote of at least 50.1% of the Directors still in office who
are  either  Directors as of the date hereof or whose election or nomination for
election  was  previously  so  approved),  cease for any reason to constitute at
least  two-thirds  of  the  Board  of  Directors  of the Company then in office.

     "Closing  Bid Price" shall mean for any security as of any date, the lowest
closing  bid price as reported by Bloomberg, L.P. ("Bloomberg") on the principal
securities  exchange  or  trading market where such security is listed or traded
or,  if  the  foregoing  does  not  apply,  the lowest closing bid price of such
security  in  the  over-the-counter  market on the electronic bulletin board for
such  security  as  reported  by  Bloomberg,  or,  if no lowest trading price is
reported  for  such security by Bloomberg, then the average of the bid prices of
any  market  makers  for such securities as reported in the "Pink Sheets" by the
National  Quotation  Bureau,  Inc.  If  the  lowest  closing bid price cannot be
calculated  for  such  security  on such date on any of the foregoing bases, the
lowest  closing bid price of such security on such date shall be the fair market
value  as  mutually  determined  by  Purchaser  and  the  Company  for which the
calculation of the closing bid price requires, and in the absence of such mutual
determination,  as  determined  by the Board of Directors of the Company in good
faith.

     "Closing  Date"  means  the  date  hereof.

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

     "Commission"  means  the  Securities  and Exchange Commission or any entity
succeeding  to  all  of  its  material  functions.

     "Common  Stock"  means  the  common  stock,  no par value per share, of the
Company.

     "Company" means Creative Host Services, Inc., a California corporation, and
its  successors.

     "Company  Corporate  Documents"  means the certificate of incorporation and
bylaws  of  the  Company.

     "Consolidated  Net  Worth" means at any date the total shareholder's equity
which would appear on a consolidated balance sheet of the Company prepared as of
such  date.

     "Consolidated  Subsidiary"  means at any date with respect to any Person or
Subsidiary  or  other  entity,  the accounts of which would be consolidated with
those of such Person in its consolidated financial statements if such statements
were  prepared  as  of  such  date.

     "Control"  (including,  with correlative meanings, the terms "Controlling,"
"Controlled  by"  and  under "common Control with"), as used with respect to any
Person,  means the possession, directly or indirectly, of the power to direct or
cause  the  direction  of  the  management  and policies of that Person, whether
through  the  ownership  of  voting  securities,  by  contract  or  otherwise.

     "Conversion  Date"  shall mean the date of delivery (including delivery via
telecopy)  of  a  Notice  of  Conversion  for  all or a portion of a Convertible
Debenture  by the holder thereof to the Company as specified in each Convertible
Debenture.

     "Conversion Price" has the meaning set forth in the Convertible Debentures.

     "Conversion  Shares"  has  the  meaning  set  forth  in  the  Recitals.

     "Convertible  Debentures" means the Company's 7% Convertible Debentures due
September  26,  2003  substantially  in  the form set forth as Exhibit A hereto.

     "Deadline"  has  the  meaning  set  forth  in  Section  10.1.

     "Debt"  of  any  Person  means  at  any  date, without duplication, (i) all
obligations  of  such  Person  for  borrowed money, (ii) all obligations of such
Person  evidenced  by  bonds,  debentures,  notes,  or other similar instruments
issued  by such Person, (iii) all obligations of such Person as lessee which (y)
are  capitalized in accordance with GAAP or (z) arise pursuant to sale-leaseback
transactions,  (iv)  all  reimbursement obligations of such Person in respect of
letters  of  credit or other similar instruments, (v) all Debt of others secured
by  a Lien on any asset of such Person, whether or not such Debt is otherwise an
obligation of such Person and (vi) all Debt of others Guaranteed by such Person.

     "Default"  means  any  event  or  condition  which  constitutes an Event of
Default  or  which  with  the  giving  of notice or lapse of time or both would,
unless  cured  or  waived,  become  an  Event  of  Default.

     "Derivative  Securities"  has  the  meaning  set  forth  in  Section  8.6.

     "Discounted  Equity  Offerings"  has  the meaning set forth in Section 8.6.

     "Directors" means the individuals then serving on the Board of Directors or
similar  such  management  council  of  the  Company.

     "Environmental  Laws"  means  any and all federal, state, local and foreign
statutes,  laws,  regulations,  ordinances,  rules,  judgments, orders, decrees,
permits,  concessions,  grants,  franchises,  licenses,  agreements  or  other
governmental  restrictions  relating  to  the  environment  or  to  emissions,
discharges  or  releases  of  pollutants,  contaminants,  petroleum or petroleum
products,  chemicals or industrial, toxic or hazardous substances or wastes into
the  environment,  including,  without  limitation,  ambient air, surface water,
ground  water,  or  land,  or otherwise relating to the manufacture, processing,
distribution,  use,  treatment,  storage,  disposal,  transport  or  handling of
pollutants,  contaminants,  petroleum  or  petroleum  products,  chemicals  or
industrial,  toxic  or  hazardous  substances  or wastes or the cleanup or other
remediation  thereof.

     "ERISA"  means  the  Employee  Retirement  Income  Security Act of 1974, as
amended,  or  any  successor  statute.

     "ERISA  Group"  means  the Company and each Subsidiary and all members of a
controlled  group  of  corporations and all trades or businesses (whether or not
incorporated)  under  common  control  which,  together  with the Company or any
Subsidiary,  are  treated  as  a  single  employer  under  the  Code.

     "Event  of  Default"  has  the  meaning  set  forth  in Article XII hereof.

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

     "Expense  Reimbursement  Fee"  has  the  meaning set forth in Section 13.4.

     "Financing"  means  a  public  or  private  financing  consummated (meaning
closing  and  funding)  through  the  issuance  of debt or equity securities (or
securities  convertible  into  or exchangeable for debt or equity securities) of
the  Company,  other  than  Permitted  Financings.

     "Fixed  Price(s)"  has  the  meaning  set  forth  in  Section  11.1.

     "GAAP"  has  the  meaning  set  forth  in  Section  1.2.

     "Guarantee" by any Person means any obligation, contingent or otherwise, of
such  Person  directly  or  indirectly  guaranteeing  (whether  by  virtue  of
partnership  arrangements, by agreement to keep well, to purchase assets, goods,
securities  or  services,  to  take-or-pay,  or to maintain a minimum net worth,
financial  ratio  or  similar  requirements, or otherwise) any Debt of any other
Person  and,  without  limiting the generality of the foregoing, any obligation,
direct  or  indirect, contingent or otherwise, of such Person (i) to purchase or
pay  (or  advance  or  supply funds for the purchase or payment of) such Debt or
(ii)  entered into for the purpose of assuring in any other manner the holder of
such  Debt  of  the  payment  thereof  or to protect such holder against loss in
respect  thereof  (in  whole or in part); provided that the term Guarantee shall
not  include  endorsements  for  collection or deposit in the ordinary course of
business.  The  term  Guarantee  used  as  a  verb  has a corresponding meaning.

     "Hazardous  Materials"  means  any  hazardous  materials, hazardous wastes,
hazardous  constituents,  hazardous  or  toxic  substances or petroleum products
(including  crude  oil  or  any  derivative  or  fraction  thereof),  defined or
regulated  as  such  in  or  under  any  Environmental  Laws.

     "Intellectual  Property"  has  the  meaning  set  forth  in  Section  4.20.

     "Investment"  means any investment in any Person, whether by means of share
purchase,  partnership  interest,  capital  contribution,  loan, time deposit or
otherwise.

     "Lien"  means  any  lien,  mechanic's  lien,  materialmen's  lien,  lease,
easement,  charge,  encumbrance,  mortgage,  conditional  sale  agreement, title
retention  agreement,  agreement  to  sell  or  convey,  option,  claim,  title
imperfection, encroachment or other survey defect, pledge, restriction, security
interest  or  other  adverse  claim, whether arising by contract or under law or
otherwise  (including,  without  limitation,  any  financing  lease  having
substantially  the  same economic effect as any of the foregoing, and the filing
of  any  financing statement under the Uniform Commercial Code or comparable law
of  any  jurisdiction  in  respect  of  any  of  the  foregoing).

     "Listing  Applications"  has  the  meaning  set  forth  in  Section  4.4.

     "Majority  Holders" means (i) as of the Closing Date, Purchaser and (ii) at
any  time thereafter, the holders of more than 50% in aggregate principal amount
of  the  7%  Convertible  Debentures  due September 26, 2003 outstanding at such
time.

     "Market  Price"  shall  mean  the  Closing  Bid  Price  of the Common Stock
preceding  the  date  of  determination.

     "Material Plan" means at any time a Plan or Plans having aggregate Unfunded
Liabilities  in  excess  of  $500,000.

     "Maturity  Date"  shall  mean  the  date  of  maturity  of  the Convertible
Debentures.

     "Maximum  Number of Shares" shall mean that percentage that the Company may
issue  without  shareholder  approval under the applicable rules of the National
Market  or  the  applicable OTC Bulletin Board or equivalent entity, of the then
issued  and  outstanding  shares  of  Common  Stock  of  the  Company  as of the
applicable  date  of  determination,  or  such  greater  number of shares as the
stockholders  of  the  Company  may  have  previously  approved.

     "NASD"  has  the  meaning  set  forth  in  Section  7.10.

     "Nasdaq  Market"  means  the  Nasdaq Stock Market's National Market System.

     "National Market" means the Nasdaq Market, the Nasdaq Small Cap Market, the
New  York  Stock  Exchange,  Inc.  or  the  American  Stock  Exchange,  Inc.

     "Net  Cash  Proceeds"  means,  with  respect  to any transaction, the total
amount  of  cash  proceeds  received  by  the Company or any Subsidiary less (i)
reasonable  underwriters'  fees,  brokerage commissions, reasonable professional
fees  and other customary out-of-pocket expenses payable in connection with such
transaction, and (ii) in the case of dispositions of assets, (A) actual transfer
taxes  (but not income taxes) payable with respect to such dispositions, and (B)
the amount of Debt, if any, secured by a Lien on the asset or assets disposed of
and  required  to  be,  and  actually repaid by the Company or any Subsidiary in
connection therewith, and any trade payables specifically relating to such asset
or  assets  sold  by  the  Company or any Subsidiary that are not assumed by the
purchaser  of  such  asset  or  assets.

     "Notice  of  Conversion"  means  the  form to be delivered by a holder of a
Convertible Debenture upon conversion of all or a portion thereof to the Company
substantially  in  the  form  of Exhibit A to the form of Convertible Debenture.

     "Notice  of  Exercise"  means  the  form  to  be delivered by a holder of a
Warrant  upon  exercise of all or a portion thereof to the Company substantially
in  the  form  of  Exhibit  A  to  the  Warrant.

     "Officer's Certificate" shall mean a certificate executed by the president,
chief executive officer or chief financial officer of the Company in the form of
Exhibit  F     Form  of  Officer's  CertificateExhibit  D  attached  hereto.

     "OTC  Bulletin Board" means the over-the-counter bulletin board operated by
the  NASD.

     "Other  Taxes"  has  the  meaning  set  forth  in  Section  3.6(b).

     "PBGC"  means  the  Pension  Benefit  Guaranty  Corporation  or  any entity
succeeding  to  any  or  all  of  its  functions  under  ERISA.

     "Permits"  means  all  domestic  and  foreign licenses, franchises, grants,
authorizations,  permits,  easements,  variances,  exemptions,  consents,
certificates,  orders  and  approvals  necessary  to  own, lease and operate the
properties of, and to carry on the business of the Company and the Subsidiaries.

     "Permitted  Financings"  has  the  meaning  set  forth  in  Section  10.5.

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

     "Plan"  means at any time an employee pension benefit plan which is covered
by  Title IV of ERISA or subject to the minimum funding standards under the Code
and  either  (i)  is  maintained,  or contributed to, by any member of the ERISA
Group  for  employees  of  any member of the ERISA Group or (ii) has at any time
within  the  preceding  five  years  been  maintained, or contributed to, by any
Person  which  was at such time a member of the ERISA Group for employees of the
Person  which  was  at  such  time  a  member  of  the  ERISA  Group.

     "Purchase  Price"  means the purchase price for the Securities set forth in
Section  2.2  hereof.

     "Purchaser"  means  the  entity listed on the signature page hereto and its
successors  and  assigns, including holders from time to time of the Convertible
Debentures.

     "Recourse  Financing" means Debt of the Company or any Subsidiary which, by
its  terms,  does  not bar the lender thereof from action against the Company or
any  Subsidiary,  as borrower or guarantor, if the security value of the project
or  asset  pledged  in  respect thereof falls below the amount required to repay
such  Debt.

     "Redemption  Event"  has  the  meaning  set  forth  in  Section  3.4.

     "Registrable  Securities"  has  the  meaning  set forth in Section 10.4(a).

     "Registration  Default"  has  the  meaning  set  forth  in Section 10.4(e).

     "Registration  Maintenance  Period"  has  the  meaning set forth in Section
10.4(e).

     "Registration  Statement"  has  the  meaning  set forth in Section 10.4(b).

     "Registration Rights Agreement" means the agreement between the Company and
Purchaser dated the date hereof substantially in the form set forth in Exhibit B
attached  hereto.

     "Required Effectiveness Date" has the meaning set forth in Section 10.4(b).

     "Reserved  Amount"  has  the  meaning  set  forth  in  Section  7.10(a).

     "Restricted Payment" means, with respect to any Person, (i) any dividend or
other  distribution  on  any  shares  of  capital  stock  of such Person (except
dividends  payable solely in shares of capital stock of the same or junior class
of  such  Person and dividends from a wholly-owned direct or indirect Subsidiary
of  the  Company  to its parent corporation), (ii) any payment on account of the
purchase,  redemption,  retirement  or  acquisition  of  (a)  any shares of such
Person's  capital  stock  or  (b)  any option, warrant or other right to acquire
shares  of  such Person's capital stock or (iii) any loan, or advance or capital
contribution  to  any  Person (a "Stockholder") owning any capital stock of such
Person  other than relocation, travel or like advances to officers and employees
in  the  ordinary  course of business, and other than reasonable compensation as
determined  by  the  Board  of  Directors.

     "Rights  Offering"  has  the  meaning  set  forth  in  Section  11.3.

     "Sale  Event"  has  the  meaning  set  forth  in  Section  3.4.

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

     "Securities"  means  the  Convertible  Debentures,  the  Warrants  and,  as
applicable,  the  Conversion  Shares.

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

     "Share  Reorganization"  has  the  meaning  set  forth  in  Section  11.2.

     "Solvency  Certificate"  shall mean a certificate executed by the treasurer
of  the  Company  as to the solvency of the Company, the adequacy of its capital
and  its  ability  to pay its debts, all after giving effect to the issuance and
sale of the Convertible Debentures and the completion of the offering (including
without limitation the payment of any fees or expenses in connection therewith),
which  such  Solvency  Certificate shall be in the form of Exhibit E attached
hereto.

     "Special  Distribution"  has  the  meaning  set  forth  in  Section  11.4.

     "Subsidiary"  means,  with  respect to any Person, any corporation or other
entity of which (x) a majority of the capital stock or other ownership interests
having  ordinary  voting  power to elect a majority of the Board of Directors or
other  persons  performing  similar  functions  are  at  the  time  directly  or
indirectly owned by such Person or (y) the results of operations, the assets and
the  liabilities  of  which  are  consolidated  with  such  Person  under  GAAP.

     "Subsidiary  Corporate  Documents"  means the certificates of incorporation
and  bylaws  of  each  Subsidiary.

     "Taxes"  has  the  meaning  set  forth  in  Section  3.6.

     "Trading  Day" shall mean any Business Day in which the OTC Bulletin Board,
National  Market  or  other automated  quotation system or exchange on which the
Common  Stock  is  then  traded is open for trading for at least four (4) hours.

     "Transaction  Agreements" means this Agreement, the Convertible Debentures,
the  Warrant, the Registration Rights Agreement, the Security Agreement, and the
other  agreements  contemplated  by  this  Agreement.

     "Transfer" means any disposition of Securities that would constitute a sale
thereof  under  the  Securities  Act.

     "Unfunded  Liabilities"  means,  with  respect to any Plan at any time, the
amount  (if  any)  by  which  (i)  the  present value of all benefits under Plan
exceeds (ii) the fair market value of all Plan assets allocable to such benefits
(excluding  any accrued but unpaid contributions), all determined as of the then
most  recent  valuation  date  for  such  Plan, but only to the extent that such
excess  represents  a  potential liability of a member of the ERISA Group to the
PBGC  or  any  other  Person  under  Title  IV  of  ERISA.

     "Warrant" means the Common Stock Purchase Warrant substantially in the form
set  forth  in  Exhibit  F  hereto.

     1.2.  ACCOUNTING  TERMS  AND  DETERMINATIONS.  Unless  otherwise  specified
herein,  all  accounting  terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be  delivered hereunder shall be prepared, in accordance with generally accepted
accounting  principles  as  in effect from time to time, applied on a consistent
basis  with the Company's prior practice (except for changes concurred in by the
Company's  independent  public  accountants)  ("GAAP").  All  references  to
"dollars,"  "Dollars"  or  "$"  are  to  United  States dollars unless otherwise
indicated.

                       2.  PURCHASE AND SALE OF SECURITIES

     2.1.  PURCHASE  AND  SALE  OF  CONVERTIBLE  DEBENTURES.

          2.1.1.     Subject  to  the terms and conditions set forth herein, the
Company  agrees to issue and sell to Purchaser, and Purchaser agrees to purchase
from  the  Company,  Convertible Debentures in the aggregate principal amount of
Two  Million  Five  Hundred  Thousand  Dollars  ($2,500,000.00).

          2.1.2.     In  connection  with  the Purchaser's agreement to purchase
the Convertible Debentures specified in this Article II, the Company shall issue
and  deliver  to  the  Purchaser  on  the  Closing Date a Warrant to purchase an
aggregate  of  125,000  shares  of  Common  Stock.

     2.2.  PURCHASE  PRICE.  The  purchase  price for the Convertible Debentures
shall  be 95% of the principal amount thereof.  No part of the purchase price of
the  Convertible  Debentures  shall be allocated to the Warrant.  Therefore, the
aggregate  consideration payable by Purchaser to the Company for the Convertible
Debentures and Warrants shall be Two Million Three Hundred Seventy Five Thousand
Dollars  ($2,375,000.00)  (the  "Purchase  Price").

     2.3.  CLOSING  AND  MECHANICS  OF  PAYMENT.

          2.3.1.     The  Purchase  Price  shall  be  paid  as  follows:

               (i)  $1,900,000.00  of  the  Purchase  Price shall be paid on the
Closing  Date  by  wire  transfer  of  immediately  available  funds;  and

               (ii)  $  475,000.00  of  the  Purchase Price shall be paid on the
Filing  Date  (as defined in Section 10.4 of this Agreement) by wire transfer of
immediately  available  funds.

          2.3.2.     The  Convertible Debentures and Warrants shall be issued as
follows:

               (i)  The  Company  will  issue  Convertible  Debentures  in  the
Principal  Amount  of  $2,000,000.00  and  the Warrants on the Closing Date; and

               (ii)  On  the  Filing  Date,  the  Company will issue Convertible
Debentures  in  the  Principal  Amount  of  $500,000.00.

          The  Convertible  Debentures  will be dated as of the Closing Date and
interest  shall  begin to accrue on the Convertible Debentures as of the Closing
Date.

                   3.  PAYMENT TERMS OF CONVERTIBLE DEBENTURES

     3.1.  PAYMENT  OF  PRINCIPAL  AND INTEREST; PAYMENT MECHANICS.  The Company
will  pay all amounts due on each Convertible Debenture by the method and at the
address  specified  for  such  purpose  by  Purchaser  in  writing,  without the
presentation  or  surrender  of  any  Convertible Debenture or the making of any
notation  thereon,  except  that  upon  written  request  of  the  Company  made
concurrently  with or reasonably promptly after payment or prepayment in full of
this Convertible Debenture, the holder shall surrender the Convertible Debenture
for  cancellation, reasonably promptly after any such request, to the Company at
its  principal  executive office.  Prior to any sale or other disposition of any
Convertible  Debenture, the holder thereof will, at its election, either endorse
thereon the amount of principal paid thereon and the last date to which interest
has  been  paid thereon or surrender the Convertible Debenture to the Company in
exchange for a new Convertible Debenture or Convertible Debentures.  The Company
will  afford  the  benefits  of  this  Section  3.1  to  any  direct or indirect
transferee  of the Convertible Debenture purchased under this Agreement and that
has  made the same agreement relating to this Convertible Debenture as Purchaser
has  in  this  Section  3.1;  provided  that  such  transferee is an "accredited
investor"  under  Rule  501  of  the  Securities  Act.

     3.2.  PAYMENT  OF  INTEREST.  Interest  shall  accrue  on  the  outstanding
principal amount of each Convertible Debenture and shall be payable as specified
therein.

     3.3.  VOLUNTARY PREPAYMENT.   For so long as no Event of Default shall have
occurred  and  is continuing, the Company may, at its option, repay, in whole or
in  part,  the  Convertible Debentures, in accordance with Sections 3 and 5.1 of
Exhibit A hereto, following at least five (5) Business Days prior written notice
to Purchaser (the expiration of such five (5) Business Day period being referred
to  as  the  "prepayment  date");  provided, however, that if such date is not a
Business  Day,  the  prepayment  date shall be the next Business Day thereafter.

     3.4.  MANDATORY  PREPAYMENTS.

     3.4.1.     Upon  (i)  the occurrence of a Change in Control of the Company,
(ii)  a transfer of all or substantially all of the assets of the Company to any
Person  in  a  single  transaction  or  series  of related transactions, (iii) a
consolidation, merger or amalgamation of the Company with or into another Person
in  which  the Company is not the surviving entity (other than a merger which is
effected  solely  to change the jurisdiction of incorporation of the Company and
results  in  a reclassification, conversion or exchange of outstanding shares of
Common  Stock  solely  into shares of Common Stock) (each of items (i), (ii) and
(iii)  being  referred  to  as  a  "Sale  Event"),  or  (iv) the occurrence of a
Registration  Default  which continues uncured for a period of twenty (20) days,
then,  in  each  case,  the Company shall, upon request of the Majority Holders,
redeem  the  Convertible  Debentures  and Warrants, subject to the provisions of
Section  5  of  the  Convertible  Debentures  and  Section  13  of the Warrants,
respectively.  The  redemption  price  payable upon any such redemption shall be
the  Redemption  Price in Section 5 of the Convertible Debentures and Section 13
of  the  Warrants,  respectively  (referred  to  herein as the "Formula Price").

     3.4.2.     At the option of Purchaser, upon the consummation of one or more
Financings, the Company shall use 25% of the Net Cash Proceeds therefrom (unless
such Net Cash Proceeds from each such Financing is less than $250,000) to redeem
the  Convertible  Debentures.

     3.4.3.     Upon  the  issuance  of  the  Maximum  Number  of Shares and the
failure  within 40 days of such issuance to obtain shareholder approval to issue
additional  shares  of  Common Stock (the "Redemption Event"), the Company shall
redeem the outstanding balance of each Convertible Debenture and Warrant for the
Formula  Price.

     3.4.4.     In the event that there is an insufficient number of authorized,
issuable,  unlegended  and  freely  tradeable  shares of Common Stock registered
under  the  Registration  Statement  filed  by  the Company to fully convert the
Convertible Debentures and exercise all Warrants held by Purchaser and sell such
shares  issued  thereon, then the Company shall immediately file an amendment to
the  then current registration statement to register a sufficient number of such
shares  to  convert  said Convertible Debentures and Warrants.  Upon the failure
within  twenty (20) Trading Days to register a sufficient number of such shares,
the  Company  shall redeem the outstanding balance of each Convertible Debenture
and  Warrant  for  the  Formula  Price.  In  addition, failure of the Company to
register  a  sufficient  number of such shares to fully convert said Convertible
Debentures  and  exercise  such  Warrants  shall be a Registration Default under
Section  10.4(e)  from  the  date of the Notice of Conversion to the date of the
earlier  of  (i)  the  redemption  of the outstanding balance of the Convertible
Debentures  and  exercise  of  all  such Warrants or (ii) full conversion of the
Convertible  Debentures  and  exercise  of  all  such  Warrants.

     3.5.  PREPAYMENT  PROCEDURES.

     3.5.1.     Any  permitted  prepayment  or  redemption  of  the  Convertible
Debentures  and  Warrants,  as  applicable pursuant to Sections 3.3 or 3.4 above
shall be deemed to be effective and consummated (for purposes of determining the
Formula  Price  and the time at which Purchaser shall thereafter not be entitled
to  deliver  a  Notice of Conversion for the Convertible Debentures) as follows:

     3.5.1.1.     A  prepayment  pursuant  to Section 3.3, the "prepayment date"
specified  therein;

     3.5.1.2.     A  redemption  pursuant  to  Section  3.4(a),  the  date  of
consummation  of  the  applicable  Sale  Event  or  the  Registration  Default;

     3.5.1.3.     A  redemption  pursuant  to Section 3.4(b), three (3) Business
Days  following  the  date  of consummation of the applicable Financing (meaning
closing  and  funding);  and

     3.5.1.4.     A redemption pursuant to Section 3.4(c), the date specified in
each  Convertible  Debenture.

     3.5.2.     On  the  Maturity Date and on the effective date of a prepayment
or redemption of the Convertible Debentures and Warrants as specified in Section
3.5(a)  above,  the  Company  shall  deliver  by  wire  transfer  of  funds  the
prepayment/redemption  price  to  Purchaser  of  the  Convertible Debentures and
Warrants  subject  to  prepayment  or  redemption.  Should Purchaser not receive
payment  of  any  amounts  due  on  prepayment  or redemption of its Convertible
Debentures  and  Warrants  by reason of the Company's failure to make payment at
the  times  prescribed  above  for  any  reason,  the  Company  shall pay to the
applicable  holder  on  demand  (x) interest on the sums not paid when due at an
annual rate equal to the greater of (I) the maximum lawful rate and (II) 18% per
annum,  compounded  at  the  end  of each thirty (30) days, until the applicable
holder  is  paid  in  full  and  (y) all costs of collection, including, but not
limited  to,  reasonable attorneys' fees and costs, whether or not suit or other
formal  proceedings  are  instituted.

     3.5.3.     The Company shall select the Convertible Debentures and Warrants
to  be redeemed in any redemption in which not all of the Convertible Debentures
and  Warrants are to be redeemed so that the ratio of the Convertible Debentures
and  Warrants  of  each  holder selected for redemption to the total Convertible
Debentures  and  Warrants owned by that holder shall be the same as the ratio of
all  such  Convertible  Debentures and Warrants selected for redemption bears to
the  total  of all then outstanding Convertible Debentures and Warrants.  Should
any  Convertible Debentures and Warrants required to be redeemed under the terms
hereof  not  be  redeemed  solely  by  reason of limitations imposed by law, the
applicable Convertible Debentures and Warrants shall be redeemed on the earliest
possible  dates  thereafter  to  the  maximum  extent  permitted  by  law.

     3.5.4.     Any  Notice  of  Conversion  delivered  by  Purchaser (including
delivery  via  telecopy)  to  the  Company prior to the (x) Maturity Date or (y)
effective  date of a voluntary prepayment pursuant to Section 3.3 or a mandatory
prepayment  pursuant to Section 3.4 as specified in Section 3.5(a) above), shall
be honored by the Company and the conversion of the Convertible Debentures shall
be  deemed  effected on the Conversion Date.  In addition, between the effective
date of a voluntary prepayment pursuant to Section 3.3 or a mandatory prepayment
pursuant  to  Section  3.4 as specified in Section 3.5(a) above and the date the
Company  is  required  to  deliver the redemption proceeds in full to Purchaser,
Purchaser  may  deliver a Notice of Conversion to the Company.  Such notice will
be  (x)  of  no  force  or  effect  if the Company timely pays the prepayment or
redemption proceeds to Purchaser when due or (y) honored on or as of the date of
the  Notice  of  Conversion if the Company fails to timely pay the prepayment or
redemption  proceeds  to  Purchaser  when  due.

     3.6.  PAYMENT  OF  ADDITIONAL  AMOUNTS.

     3.6.1.     Any  and  all  payments  by  the  Company hereunder or under the
Convertible  Debentures to Purchaser and each "qualified assignee" thereof shall
be  made  free and clear of and without deduction or withholding for any and all
present  or  future taxes, levies, imposts, deductions, charges or withholdings,
and  all  liabilities  with  respect  thereto  (all such taxes, levies, imposts,
deductions,  charges, withholdings and liabilities being hereinafter referred to
as  "Taxes") unless such Taxes are required by law or the administration thereof
to  be  deducted  or  withheld.  If  the Company shall be required by law or the
administration thereof to deduct or withhold any Taxes from or in respect of any
sum  payable under the Convertible Debentures (i) the holders of the Convertible
Debentures  subject  to such Taxes shall have the right, but not the obligation,
for  a period of thirty (30) days commencing upon the day it shall have received
written  notice  from  the  Company  that  it  is  required to withhold Taxes to
transfer  all  or  any  portion  of  the  Convertible  Debentures to a qualified
assignee  to  the  extent  such  transfer can be effected in accordance with the
other  provisions  of  this Agreement and applicable law; (ii) the Company shall
make  such  deductions or withholdings; (iii) the sum payable shall be increased
as may be necessary so that after making all required deductions or withholdings
(including  deductions  or  withholdings  applicable  to additional amounts paid
under  this  Section 3.6) Purchaser receives an amount equal to the sum it would
have  received  if  no such deduction or withholding had been made; and (iv) the
Company shall forthwith pay the full amount deducted or withheld to the relevant
taxation  or  other  authority  in  accordance  with  applicable.  A  "qualified
assignee" of a Purchaser is a Person that is organized under the laws of (i) the
United  States  or  (II)  any  jurisdiction  other than the United States or any
political  subdivision  thereof  and  that  (y)  represents  and warrants to the
Company  that  payments  of  the  Company  to  such  assignee  under the laws in
existence  on  the  date of this Agreement would not be subject to any Taxes and
(z)  from  time  to  time,  as  and  when requested by the Company, executes and
delivers to the Company and the Internal Revenue Service forms, and provides the
Company  with  any  information necessary to establish such assignee's continued
exemption  from  Taxes  under  applicable  law.

     3.6.2.     The  Company  shall forthwith pay any present or future stamp or
documentary  taxes  or  any  other  excise or property taxes, charges or similar
levies  (all  such  taxes,  charges and levies hereinafter referred to as "Other
Taxes")  which  arise  from  any  payment  made  under  any  of  the Transaction
Agreements or from the execution, delivery or registration of, or otherwise with
respect  to,  this  Agreement other than Taxes payable solely as a result of the
transfer  from  Purchaser  to  a  Person  of  any  Security.

     3.6.3.     The  Company  shall  indemnify Purchaser, or qualified assignee,
for  the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes  or  Other Taxes imposed by any jurisdiction on amounts payable under this
Section  3.6)  paid  by  Purchaser,  or  qualified  assignee,  and any liability
(including  penalties,  interest and expenses) arising therefrom or with respect
thereto,  whether  or  not  such  Taxes or Other Taxes were correctly or legally
asserted.  Payment  under this indemnification shall be made within 30 days from
the  date Purchaser or assignee makes written demand therefor.  A certificate as
to the amount of such Taxes or Other Taxes submitted to the Company by Purchaser
or  qualified  assignee  shall be conclusive evidence of the amount due from the
Company  to  such  party.

     3.6.4.     Within  30  days  after  the  date  of any payment of Taxes, the
Company  will furnish to Purchaser the original or a certified copy of a receipt
evidencing  payment  thereof.

     3.6.5.     Purchaser  shall provide to the Company a form W-8, stating that
it  is  a  non-U.S.  person, together with any additional tax forms which may be
required  under  the  Code,  as amended after the date hereof, to allow interest
payments  to  be  made  to  it  without  deduction.

                       4.  REPRESENTATIONS AND WARRANTIES

     The Company represents and warrants to Purchaser as of the Closing Date the
following:

     4.1.  ORGANIZATION AND QUALIFICATION.  The Company and each Subsidiary is a
corporation (or other legal entity) duly organized, validly existing and in good
standing  under  the  laws of its jurisdiction of incorporation, with full power
and  authority to own, lease, use and operate its properties and to carry on its
business  as  and  where  now  owned, leased, used, operated and conducted.  The
Company is qualified to conduct business as a foreign corporation and is in good
standing  in every jurisdiction in which the nature of the business conducted by
it  makes such qualification necessary, except where such failure would not have
a  Material  Adverse  Effect.  A  "Material  Adverse  Effect" means any material
adverse  effect  on the operations, results of operations, properties, assets or
condition  (financial  or  otherwise)  of  the  Company  or  the Company and its
Subsidiaries, taken as a whole, or on the transactions contemplated hereby or by
the  agreements  or  instruments  to  be  entered  into  in connection herewith.

     4.2.  AUTHORIZATION  AND  EXECUTION.

     4.2.1.     The  Company  has all requisite corporate power and authority to
enter  into  and  perform  each  Transaction  Agreement  and  to  consummate the
transactions  contemplated  hereby  and  thereby  and to issue the Securities in
accordance  with  the  terms  hereof  and  thereof.

     4.2.2.     The  execution,  delivery and performance by the Company of each
Transaction  Agreement  and  the  issuance by the Company of the Securities have
been  duly and validly authorized by the Board of Director of the Company and no
further  consent  or authorization of the Company, its Board of Directors or its
shareholders  is  required.

     4.2.3.     This  Agreement  has  been  duly  executed  and delivered by the
Company.

     4.2.4.     This  Agreement  constitutes,  and  upon  execution and delivery
thereof  by  the  Company, each of the Transaction Agreements will constitute, a
valid and binding agreement of the Company, in each case enforceable against the
Company  in  accordance  with  its  respective  terms.

     4.3.  CAPITALIZATION  .  As  of the date hereof, the authorized, issued and
outstanding  capital  stock  of  the  Company  is  as  set forth on Schedule 4.3
Capitalization  Schedule  4.3  hereto and except as set forth on Schedule 4.3 no
other  shares  of  capital  stock  of  the Company will be outstanding as of the
Closing Date.  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
similar  rights  of the stockholders of the Company or any liens or encumbrances
imposed through the actions or failure to act of the Company.  Other than as set
forth  on  Schedule  4.3  hereto,  as  of  the  date  hereof,  (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, and (ii) there are no agreements or
arrangements under which the Company or any of its Subsidiaries are obligated to
register the  sale  of  any  of its or their securities under the Securities Act
(except  pursuant  to  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 Convertible Debentures or Conversion Shares.
The Company  has furnished to Purchaser true and correct copies of the Company's
Corporate  Documents,  and  the  terms  of  all  securities  convertible into or
exercisable for Common  Stock and the material rights  of the holders thereof in
respect thereto.

     4.4.  GOVERNMENTAL  AUTHORIZATION.  The  execution  and  delivery  by  the
Company  of  the  Transaction Agreements does not and will not, the issuance and
sale  by  the  Company  of  the  Securities  does  not  and  will  not,  and the
consummation  of  the  transactions  contemplated  hereby  and  by  the  other
Transaction  Agreements  will  not,  require  any action by or in respect of, or
filing  with,  any governmental body, agency or governmental official except (a)
such  actions  or  filings  that  have been undertaken or made prior to the date
hereof and that will be in full force and effect (or as to  which all applicable
waiting  periods  have  expired)  on  and as of the date hereof or which are not
required  to  be  filed  on  or  prior  to the Closing Date, (b) such actions or
filings  that,  if  not obtained, would not result in a Material Adverse Effect,
(c)  listing  applications  ("Listing  Applications")  to  be filed with the OTC
Bulletin Board or the National Market relating to the Conversion Shares issuable
upon conversion of the Convertible Debentures, if applicable, and (d) the filing
of  a  "Form  D"  as  described  in  Section  7.13  below.

     4.5.  ISSUANCE  OF SHARES.  Upon conversion in accordance with the terms of
the  Convertible  Debentures and exercise of the Warrants, the Conversion Shares
shall  be duly and validly issued and outstanding, fully paid and nonassessable,
free and clear of any Taxes, Liens and charges issuance and shall not be subject
to preemptive rights or similar rights of any other stockholders of the Company.
Assuming  the  representations  and  warranties of Purchaser herein are true and
correct  in  all material respects, each of the Securities will have been issued
in  material  compliance  with  all applicable U.S. federal and state securities
laws.  The  Company understands and acknowledges that, in certain circumstances,
the  issuance of Conversion Shares could dilute the ownership interests of other
stockholders  of  the  Company.  The  Company  further  acknowledges  that  its
obligation  to  issue  Conversion  Shares  upon  conversion  of  the Convertible
Debentures and exercise of 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.

     4.6.  NO  CONFLICTS.  The  execution  and  delivery  by  the Company of the
Transaction Agreements to which it is a party did not and will not, the issuance
and  sale  by  the  Company  of  the  Securities  did  not  and will not and the
consummation  of  the  transactions  contemplated  hereby  and  by  the  other
Transaction  Agreements  will  not,  contravene or constitute a default under or
violation  of  (i)  any  provision  of applicable law or regulation known by the
Company  to be applicable to it, (ii) the Company Corporate Documents, (iii) any
agreement,  judgment, injunction, order, decree or other instrument binding upon
the  Company  or  any Subsidiary or any of their respective assets, or result in
the  creation  or  imposition  of  any  Lien  on any asset of the Company or any
Subsidiary.  The  Company and each Subsidiary is in compliance with and conforms
to  all statutes, laws, ordinances, rules, regulations, orders, restrictions and
all  other  legal  requirements  of  any  domestic  or foreign government or any
instrumentality  thereof  having jurisdiction over the conduct of its businesses
or  the  ownership of its properties, except where such failure would not have a
Material  Adverse  Effect.

     4.7.  FINANCIAL  INFORMATION.  Since  June  30,  2000  (the  "Balance Sheet
Date"),  except  as  disclosed  in  Schedule 4.7, there has been (x) no material
adverse  change  in  the assets or liabilities, or in the business or condition,
financial  or  otherwise,  or  in the results of operations or prospects, of the
Company  and  its  Subsidiaries,  whether  as  a  result  of  any legislative or
regulatory  change,  revocation  of  any license or rights to do business, fire,
explosion,  accident,  casualty,  labor  trouble,  flood,  drought, riot, storm,
condemnation,  act of God, public force or otherwise and (y) no material adverse
change  in the assets or liabilities, or in the business or condition, financial
or  otherwise,  or in the results of operations or prospects, of the Company and
its subsidiaries except in the ordinary course of business; and to the knowledge
of  the  Company  no  fact  or condition exists or is contemplated or threatened
which  might  cause  such  a  change  in  the future.  The audited and unaudited
consolidated  balance sheets of the Company and its Subsidiaries for the periods
ending  December  31,  1999,  and  June  30, 2000, respectively, and the related
consolidated  statements  of income, changes in stockholders' equity and changes
in  cash  flows  for  the  periods  then ended, including the footnotes thereto,
except  as  indicated  therein,  (i)  complied  in  all  material  respects with
applicable  accounting  requirements  and  (ii) have been prepared in accordance
with GAAP consistently applied throughout the periods indicated, except that the
unaudited financial statements do not contain notes and may be subject to normal
audit  adjustments  and  normal  annual  adjustments.  Such financial statements
fairly  present  the  financial condition of the Company and its Subsidiaries at
the  dates  indicated  and the consolidated results of their operations and cash
flows  for  the periods then ended and, except as indicated therein, reflect all
claims  against  and  all  Debts  and  liabilities  of  the  Company  and  its
Subsidiaries,  fixed  or  continency  required  to  be  reflected  therein.

     4.8.  LITIGATION.  Except as set forth on Schedule 4.8, there is no action,
suit  or  proceeding  pending  or,  to  the knowledge of the Company, threatened
against  the  Company  or  any Subsidiary, before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable possibility
of  an  adverse  decision  which could be reasonably expected to have a Material
Adverse  Effect  or which challenges the validity of any Transaction Agreements.

     4.9.  COMPLIANCE  WITH  ERISA  AND  OTHER  BENEFIT  PLANS.

     4.9.1.     Each  member  of  the  ERISA Group has fulfilled its obligations
under  the  minimum funding standards of ERISA and the Code with respect to each
Plan and is in compliance in all material respects with the presently applicable
provisions  of  ERISA  and the Code with respect to each Plan.  No member of the
ERISA  Group  has  (i)  sought  a  waiver  of the minimum funding standard under
Section 412 of the Code in respect of any Plan, (ii) failed to make any required
contribution  or  payment to any Plan or Multiemployer Plan or in respect of any
Benefit  Arrangement,  or made any amendment to any Plan or Benefit Arrangement,
which  as resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Code or (iii) incurred any liability
under  Title  IV  of ERISA other than a liability to the PBGC for premiums under
Section  4007  of  ERISA.

     4.9.2.     The  benefit plans not covered under clause (a) above (including
profit  sharing,  deferred  compensation, stock option, employee stock purchase,
bonus,  retirement, health or insurance plans, collectively the "Benefit Plans")
relating  to the employees of the Company are duly registered where required by,
and  are  in  good standing in all material respects under, all applicable laws.
All  required employer and employee contributions and premiums under the Benefit
Plans  to  the  date  hereof  have  been  made,  the  respective  fund  or funds
established  under  the  Benefit  Plans are funded in accordance with applicable
laws,  and  no  past  service  funding  liabilities  exist  thereunder.

     4.9.3.     No  Benefit  Plans  have  any  unfunded liabilities, either on a
"going  concern"  or  "winding  up"  basis and determined in accordance with all
applicable  laws  and  actuarial  practices  and using actuarial assumptions and
methods  that are reasonable in the circumstances.  No event has occurred and no
condition  exists  with  respect to any Benefit Plans that has resulted or could
reasonably  be  expected  to  result in any pension plan having its registration
revoked  or  wound  up  (in whole or in part) or refused for the purposes of any
applicable laws or being placed under the administration of any relevant pension
benefits  regulatory  authority  or being required to pay any taxes or penalties
(in  any  material  amounts)  under  any  applicable  laws.

     4.10.  ENVIRONMENTAL  MATTERS.  The  costs  and liabilities associated with
Environmental  Laws (including the cost of compliance therewith) are unlikely to
have  a  material  adverse  effect  on  the  business,  condition  (financial or
otherwise),  operations,  performance, properties or prospects of the Company or
any  Subsidiary.  Each  of  the  Company  and  the  Subsidiaries  conducts  its
businesses  in  compliance  in  all  material  respects  with  all  applicable
Environmental  Laws.

     4.11.  TAXES.  All  United  States  federal,  state,  county, municipality,
local  or  foreign  income  tax  returns  and  all  other  material  tax returns
(including  foreign  tax returns) which are required to be filed by or on behalf
of  the  Company  and each Subsidiary have been filed and all material taxes due
pursuant  to  such returns or pursuant to any assessment received by the Company
and each Subsidiary have been paid except those being disputed in good faith and
for  which  adequate  reserves have been established.  The charges, accruals and
reserves on the books of the Company and each Subsidiary in respect of taxes and
other  governmental  charges  have  been  established  in  accordance with GAAP.

     4.12.  INVESTMENTS,  JOINT  VENTURES.  Other  than as set forth in Schedule
4.12,  the Company has no Subsidiaries or other direct or indirect Investment in
any  Person,  and  the  Company  is  not a party to any partnership, management,
shareholders'  or  joint  venture  or  similar  agreement.

     4.13.  NOT  AN  INVESTMENT COMPANY.  Neither the Company nor any Subsidiary
is an "Investment Company" within the meaning of Investment Company Act of 1940,
as  amended.

     4.14.  FULL  DISCLOSURE.  The  information  heretofore  furnished  by  the
Company to Purchaser for purposes of or in connection with this Agreement or any
transaction  contemplated  hereby  does  not, and all such information hereafter
furnished  by  the Company or any Subsidiary to Purchaser will not (in each case
taken  together  and  on  the  date  as of which such information is furnished),
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein, in the light of the
circumstances  under  which  they  are  made,  not  misleading.

     4.15.  NO  SOLICITATION;  NO  INTEGRATION WITH OTHER OFFERINGS.  No form of
general  solicitation  or general advertising was used by the Company or, to the
best  of its actual knowledge, any other Person acting on behalf of the Company,
in connection with the offer and sale of the Securities.  The Company represents
that  neither itself nor any Person authorized to act on its behalf (except that
the  Company  makes no representation as to Purchaser and their Affiliates) will
sell  or  offer  for sale any such security to, or solicit any offers to buy any
such  security from, or otherwise approach or negotiate in respect thereof with,
any  Person or Persons so as thereby to cause the issuance or sale of any of the
Securities  to  be  in  violation  of  any of the provisions of Section 5 of the
Securities  Act.  The  issuance  of  the  Securities  to  Purchaser  will not be
integrated with any other issuance of the Company's securities (past, current or
future)  which  requires  stockholder  approval  under the rules of any National
Market.

     4.16.  PERMITS.  (a)  Each  of  the  Company  and  its Subsidiaries has all
material Permits; (b) all such Permits are in full force and effect, and each of
the  Company  and  its  Subsidiaries  has  fulfilled  and performed all material
obligations  with  respect  to  such  Permits;  (c)  no event has occurred which
allows,  or after notice of lapse of time would allow, revocation or termination
by  the  issuer thereof or which results in any other material impairment of the
rights  of  the  holder of any such Permit; and (d) the Company has no reason to
believe that any governmental body or agency is considering limiting, suspending
or  revoking any such Permit, except in each case or in the aggregate that could
not  be  reasonably  expected  to  have  a  Material  Adverse  Effect.

     4.17.  LEASES.  Neither  the  Company  nor any Subsidiary is a party to any
capital  lease obligation with a value greater than $250,000 or to any operating
lease  with  an aggregate annual rental greater than $250,000 during the life of
such  lease.

     4.18.  ABSENCE  OF ANY UNDISCLOSED LIABILITIES OR CAPITAL CALLS.  There are
no  liabilities of the Company or any Subsidiary of any kind whatsoever, whether
accrued,  contingent, absolute, determined, determinable or otherwise, and there
is  no  existing  condition,  situation  or  set  of  circumstances  which would
reasonably  be  expected  to  result  in  such a liability, other than (i) those
liabilities  provided  for  in  the  financial  statements delivered pursuant to
Section 4.7 and (ii) other undisclosed liabilities which, individually or in the
aggregate,  would  not  have  a  Material  Adverse  Effect.

     4.19.  PUBLIC  UTILITY  HOLDING  COMPANY.  Neither  the  Company  nor  any
Subsidiary  is,  or will be upon issuance and sale of the Securities and the use
of the proceeds described herein, subject to regulation under the Public Utility
Holding  Company  Act of 1935, as amended, the Federal Power Act, the Interstate
Commerce  Act  or  to  any  federal  or state statute or regulation limiting its
ability  to  issue  and perform its obligations under any Transaction Agreement.

     4.20.  INTELLECTUAL  PROPERTY  RIGHTS.  Each  of  the  Company  and  its
Subsidiaries owns, or is licensed under, and has the rights to use, all material
to  the  knowledge of the Company, patents, trademarks, trade names, copyrights,
technology,  know-how and processes (collectively, "Intellectual Property") used
in,  or  necessary for the conduct of its business; no claims have been asserted
by  any  Person  to  the use of any such Intellectual Property or challenging or
questioning  the  validity  or effectiveness of any license or agreement related
thereto.  To  the best of Company's and its Subsidiaries' knowledge, there is no
valid  basis for any such claim and the use of such Intellectual Property by the
Company  and  its  Subsidiaries will not infringe upon the rights of any Person.

     4.21.  INSURANCE.  The  Company  and  its  Subsidiaries  maintain,  with
financially  sound and reputable insurance companies, insurance in at least such
amounts  and  against  such  risks such that any uninsured loss would not have a
Material  Adverse  Effect.  All  insurance  coverages  of  the  Company  and its
Subsidiaries  are in full force and effect and there are no past due premiums in
respect  of  any  such  insurance.

     4.22.  TITLE TO PROPERTIES.  The Company and its Subsidiaries have good and
marketable  title  to all their respective properties reflected on the financial
statements  referred  to  in Section 4.7, free and clear of all Liens other than
the  Permitted  Liens.

     4.23.  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 managements'
general  or specific authorizations, (ii) transactions are recorded as necessary
to  permit  preparation  of  financial statements in conformity with GAAP and to
maintain  asset  accountability,  (iii)  access  to  assets is permitted only in
accordance  with  management's  general  or specific authorization, and (iv) the
recorded  accountability  for  assets  is  compared  with the existing assets at
reasonable  intervals  and  appropriate  action  is  taken  with  respect to any
differences.

     4.24.  YEAR  2000  COMPLIANCE.

     4.24.1.     COMPUTER  AND  OTHER SYSTEMS.    (i)  All software programs and
computer  hardware  that  are  owned, leased or licensed by the Company and each
Subsidiary,  or  used  by  third  parties  on  behalf  of  the  Company and each
Subsidiary  ("Computer Systems"), are designated to be used prior to, during and
after  the  calendar  year  2000  A.D.,  including  leap  years;  (ii) all other
operational  systems  that  use software or equipment that are owned, leased, or
licensed  by the Company and each Subsidiary, or used by third parties on behalf
of  the Company and each Subsidiary ("Other Systems"), are designated to be used
prior  to,  during  or  after the calendar year 2000 A.D., including leap years;
(iii)  the  Computer systems and Other Systems will properly operate during each
such period without error or degradation of performance caused by a lack of Year
2000 Capabilities; and (iv) the Computer Systems and Other Systems will properly
operate  during  each such period without requiring intervention or modification
to  Date  Data.

     4.24.2.     CAPABILITIES  OF SUPPLIERS, VENDORS AND LANDLORDS.  To the best
of  the  Company's  knowledge  after  specific  inquiry  of  all of its material
suppliers,  vendors  and  landlords,  the  Company  and each Subsidiary will not
suffer a loss from interruption or cessation of business operations, in whole or
in  part, as a result of such suppliers, vendors or landlords failing to provide
materials,  labor,  supplies  or access to leased space for the operation of the
Company  and each Subsidiary as a result of such suppliers or vendors not having
Year  2000  Capabilities.

     4.24.3.     CAPABILITIES.  For  purposes  of this Agreement, (x) "Year 2000
Capabilities"  means  the  ability to:  (i) manage and manipulate data involving
dates, including single century formulas and multi-century formulas, in a manner
that  will  not cause an abnormally ending scenario or generate incorrect values
or  invalid  results involving such dates; (ii) include the indication of proper
century  dates in all date-related user interface functions and date fields; and
(iii)  operate  with  proper  century dates in date-related software or hardware
interface  functions;  and  (y)  "Date Data" means any existing data or input of
date  which  includes  an  indication  of  or  reference  to  date.

     4.25.  FOREIGN  PRACTICES.  Neither the Company nor any of its Subsidiaries
nor,  to  the  Company's  knowledge, any employee or agent of the Company or any
Subsidiary  has  made  any  payments  of  funds of the Company or Subsidiary, or
received  or  retained any funds, in each case  in violation of any law, rule or
regulation.

     4.26.  TITLE  TO CERTAIN ASSETS.  The Company owns the assets designated as
collateral and described on Exhibit A to that certain Security Agreement between
the  Company  and  Purchaser  of even date herewith in substantially the form of
Exhibit  G hereto (the "Security Agreement"), free and clear of any lien, except
Permitted  Liens.

                 5.  REPRESENTATIONS AND WARRANTIES OF PURCHASER

     5.1.  PURCHASER.  Purchaser  hereby  represents and warrants to the Company
that:

     5.1.1.     Purchaser is an "accredited investor" within the meaning of Rule
501(a) under the Securities Act and the Securities to be acquired by it pursuant
to  this  Agreement  are  being acquired for its own account and, as of the date
hereof, not with a view toward, or for sale in connection with, any distribution
thereof  except  in  compliance  with applicable United States federal and state
securities  law;  provided that the disposition of Purchaser's property shall at
all  times  be  and  remain  within  its  control;

     5.1.2.     the  execution,  delivery  and performance of this Agreement and
the purchase of the Securities pursuant thereto are within Purchaser's corporate
or  partnership powers, as applicable, and have been duly and validly authorized
by  all  requisite  corporate  or  partnership  action;

     5.1.3.     this  Agreement  has  been  duly  executed  and  delivered  by
Purchaser;

     5.1.4.     the  execution  and  delivery  by  Purchaser  of the Transaction
Agreements  to  which  it  is  a  party  does  not,  and the consummation of the
transactions  contemplated hereby and thereby will not, contravene or constitute
a  default  under  or  violation  of  (i)  any  provision  of  applicable law or
regulation,  or (ii) any agreement, judgment, injunction, order, decree or other
instrument  binding  upon  Purchaser;

     5.1.5.     Purchaser  understands  that  the  Securities  have  not  been
registered under the Securities Act and may not be transferred or sold except as
specified  in  this  Agreement  or  the  remaining  Transaction  Agreements;

     5.1.6.     this  Agreement  constitutes  a  valid  and binding agreement of
Purchaser  enforceable  in  accordance with its terms, subject to (i) applicable
bankruptcy, insolvency or similar laws affecting the enforceability of creditors
rights  generally  and  (ii)  equitable  principles  of  general  applicability;

     5.1.7.     Purchaser  has  such  knowledge  and experience in financial and
business  matters  so as to be capable of evaluating the merits and risks of its
investment  in  the  Securities and Purchaser is capable of bearing the economic
risks  of  such  investment;

     5.1.8.     Purchaser  is  knowledgeable,  sophisticated  and experienced in
business  and financial matters; Purchaser has previously invested in securities
similar  to  the  Securities  and  fully understands the limitations on transfer
described  herein;  Purchaser  has been afforded access to information about the
Company and the financial condition, results of operations, property, management
and  prospects of the Company sufficient to enable it to evaluate its investment
in  the  Securities;  Purchaser  has  been  afforded the opportunity to ask such
questions  as  it  has  deemed  necessary  of,  and  to  receive  answers  from,
representatives  of  the  Company  concerning  the  terms  and conditions of the
offering  of  the  Securities  and  the merits and the risks of investing in the
Securities;  and  Purchaser  has  been  afforded  the opportunity to obtain such
additional  information  which  the  Company  possesses  or  can acquire that is
necessary  to  verify  the accuracy and completeness of the information given to
Purchaser concerning the Company.  The foregoing does not in any way relieve the
Company  of  its representations and other undertakings hereunder, and shall not
limit  Purchaser's  ability  to  rely  thereon;

     5.1.9.     no  part of the source of funds used by Purchaser to acquire the
Securities  constitutes  assets  allocated to any separate account maintained by
Purchaser  in  which  any  employee  benefit plan (or its related trust) has any
interest;  and

     5.1.10.     Purchaser is a corporation organized under the laws of Bermuda.

               6.  CONDITIONS PRECEDENT TO PURCHASE OF SECURITIES

     6.1.  CONDITIONS  PRECEDENT  TO  PURCHASER'S  OBLIGATIONS TO PURCHASE.  The
obligation  of Purchaser hereunder to purchase the Convertible Debentures at the
Closing  is  subject to the satisfaction, on or before the Closing Date, of each
of  the following conditions, provided that these conditions are for Purchaser's
sole  benefit and may be waived by Purchaser at any time in its sole discretion:

     6.1.1.     The  Company  shall  have  duly  executed  this  Agreement,  the
Warrant,  the  Registration Rights Agreement, and the Security Agreement and all
other  appropriate  financing  statements,  and delivered the same to Purchaser;

     6.1.2.     The  Company  shall  have delivered to Purchaser a duly executed
certificate  representing  the  Convertible Debenture in accordance with Section
2.3  hereof;

     6.1.3.     The  Company  shall  have  delivered  the  Solvency Certificate;

     6.1.4.     The  representations  and warranties of the Company contained in
each Transaction Agreement 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 specified date)
and the Company shall have performed, satisfied and complied with all covenants,
agreements  and  conditions  required  by  such  Transaction  Agreements  to  be
performed,  satisfied  or  complied  with by it at or prior to the Closing Date.
Purchaser  shall  have  received  an Officer's Certificate 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 Purchaser,
including  but not limited to certificates with respect to the Company Corporate
Documents,  resolutions relating to the transactions contemplated hereby and the
incumbencies of certain officers and Directors of the Company.  The form of such
certificate  is  attached  hereto  as  Exhibit  D;

     6.1.5.     The  Company  shall  have  received  all  governmental, Board of
Directors,  shareholders  and  third  party  consents and approvals necessary or
desirable  in  connection  with  the issuance and sale of the Securities and the
consummation  of  the  transactions  contemplated by the Transaction Agreements;

     6.1.6.     All  applicable  waiting  periods in respect to the issuance and
sale  of  the Securities shall have expired without any action having been taken
by any competent authority that could restrain, prevent or impose any materially
adverse  conditions thereon or that could seek or threaten any of the foregoing;

     6.1.7.     No law or regulation shall have been imposed or enacted that, in
the  judgment  of  Purchaser,  could adversely affect the transactions set forth
herein  or  in  the other Transaction Agreements, and no law or regulation shall
have been proposed that in the reasonable judgment of Purchaser could reasonably
have  any  such  effect;

     6.1.8.     Purchaser  shall  have  received  an  opinion, dated the Closing
Date,  of  counsel  to  the  Company,  in  form  and  substance  satisfactory to
Purchaser;

     6.1.9.     All fees and expenses due and payable by the Company on or prior
to  the  Closing  Date  shall  have  been  paid;

     6.1.10.     The  Company  Corporate  Documents and the Subsidiary Corporate
Documents,  if  any,  shall be in full force and effect and no term or condition
thereof  shall have been amended, waived or otherwise modified without the prior
written  consent  of  Purchaser;

     6.1.11.     There  shall  have  occurred  no material adverse change in the
business,  condition  (financial  or  otherwise),  operations,  performance,
properties  or  prospects  of the Company or any Subsidiary since June 30, 2000;

     6.1.12.     There shall exist no action, suit, investigation, litigation or
proceeding  pending  or  threatened  in  any  court  or before any arbitrator or
governmental  instrumentality  that  challenges  the  validity of or purports to
affect  this  Agreement or any other Transaction Agreement, or other transaction
contemplated  hereby  or  thereby or that could reasonably be expected to have a
Material Adverse Effect, or any material adverse effect on the enforceability of
the Transaction Agreements or the Securities or the rights of the holders of the
Securities  or  Purchaser  hereunder;

     6.1.13.     Purchaser  shall  have confirmed the receipt of the Convertible
Debentures  and  the  Warrants to be issued, duly executed by the Company in the
denominations  and  registered  in  the  name  of  Purchaser;

     6.1.14.     There  shall not have occurred any disruption or adverse change
in  the  financial or capital markets generally, or in the market for the Common
Stock  (including  but  not  limited  to  any  suspension  or  delisting), which
Purchaser  reasonably  deems  material  in  connection  with the purchase of the
Securities;

     6.1.15.     Immediately  before  and  as of the Closing Date, no Default or
Event  of  Default  shall  have  occurred  and  be  continuing;

     6.1.16.     An Escrow Agreement, substantially in the form of Exhibit E, by
and between the Company and Purchaser, and accepted by the Law Offices of Kim T.
Stephens  as escrow agent (the "Escrow Agent"), shall have been duly executed by
the  said  parties.

     6.1.17.     Company  shall  have delivered to Purchaser the Use of Proceeds
Schedule  7.8.

     6.2.  CONDITIONS  TO  THE  COMPANY'S  OBLIGATIONS.  The  obligations of the
Company to issue and sell the Securities to Purchaser pursuant to this Agreement
are  subject  to  the  satisfaction,  at  or  prior  to any Closing Date, of the
following  conditions:

     6.2.1.     The  representations  and  warranties  of Purchaser contained in
each Transaction Agreement 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 specified date)
and Purchaser shall have performed, satisfied  and complied with in all material
respects  with  all  covenants,  agreements,  and  conditions  required  by such
Transaction  Agreements to be performed, satisfied or complied with by Purchaser
at  or  prior  to  the  Closing  Date;

     6.2.2.     The issue and sale of the Securities by the Company shall not be
prohibited  by  any  applicable  law,  court  order  or governmental regulation;

     6.2.3.     Receipt  by  the  Company  of duly executed counterparts of this
Agreement,  the  Security Agreement and the Registration Rights Agreement signed
by  Purchaser;

     6.2.4.     The  Company  shall  have received payment of the portion of the
Purchase  Price  set  forth  in  Section  2.3(a)  hereto,  less  the  Expense
Reimbursement  Fee.

     (e)     All  applicable waiting periods in respect to the issuance and sale
of the Securities shall have expired without any action having been taken by any
competent  authority  that  could  restrain,  prevent  or  impose any materially
adverse  conditions thereon or that could seek or threaten any of the foregoing;

     (f)     No  law  or  regulation shall have been imposed or enacted that, in
the  judgment  of  Company,  could  adversely  affect the transactions set forth
herein  or  in  the other Transaction Agreements, and no law or regulation shall
have  been  proposed that in the reasonable judgment of Company could reasonably
have  any  such  effect;

     (g)     There  shall  not have occurred any disruption or adverse change in
the  financial  or  capital  markets  generally, or in the market for the Common
Stock  (including but not limited to any suspension or delisting), which Company
reasonably  deems  material  in  connection with the purchase of the Securities;

     (h)     An Escrow Agreement, substantially in the form of Exhibit E, by and
between  the  Company  and  Purchaser, and accepted by the Law Offices of Kim T.
Stephens  as escrow agent (the "Escrow Agent"), shall have been duly executed by
the  said  parties.

                            7.  AFFIRMATIVE COVENANTS

     The  Company hereby agrees that, from and after the date hereof for so long
as  any  Convertible  Debentures  remain  outstanding  and  for  the  benefit of
Purchaser:

     7.1.  INFORMATION.  The  Company  will  deliver  to  each  holder  of  the
Convertible  Debentures:

     7.1.1.     Reserved

     7.1.2.     Reserved

     7.1.3.     within  five  (5)  days after any officer of the Company obtains
knowledge  of  a  Default  or Event of Default, or that any Person has given any
notice  or  taken  any  action  with  respect  to a claimed Default hereunder, a
certificate  of  the  chief  financial  officer of the Company setting forth the
details  thereof  and the action which the Company is taking or proposed to take
with  respect  thereto;

     7.1.4.     promptly  upon  the  mailing  thereof to the shareholders of the
Company  generally,  copies  of  all  financial  statements,  reports  and proxy
statements  so  mailed  and  any  other  document  generally  distributed  to
shareholders;

     7.1.5.     at  least two (2) Business Days prior to the consummation of any
Financing  or  other  event  requiring a repayment of the Convertible Debentures
under  Section 3.4, notice thereof together with a summary of all material terms
thereof  and  copies  of  all  documents  and  instruments associated therewith;

     7.1.6.     notice  promptly  upon  the occurrence of any event by which the
Reserved Amount becomes less than the sum of (i) 1.5 times the maximum number of
Conversion  Shares  issuable  pursuant  to  the  Transaction  Agreements;  and

     7.1.7.     promptly  following  the  commencement  thereof,  notice  and  a
description  in  reasonable  detail of any litigation or proceeding to which the
Company or any Subsidiary is a party in which the amount involved is $250,000 or
more  and  not  covered by insurance or in which injunctive or similar relief is
sought.

     7.2.  PAYMENT  OF  OBLIGATIONS.  The  Company  will,  and  will  cause each
Subsidiary  to,  pay  and discharge, at or before maturity, all their respective
material  obligations,  including,  without  limitation, tax liabilities, except
where  the  same may be contested in good faith and will maintain, in accordance
with  GAAP,  appropriate  reserves  for  the  accrual  of  any  of  the  same.

     7.3.  MAINTENANCE OF PROPERTY; INSURANCE.  The Company will, and will cause
each  Subsidiary  to,  keep all property useful and necessary in its business in
good working order and condition, ordinary wear and tear excepted.  In addition,
the Company and each Subsidiary will maintain insurance in at least such amounts
and  against  such  risks  as  it  has  insured  against as of the Closing Date.

     7.4.  MAINTENANCE  OF  EXISTENCE.  The  Company  will,  and will cause each
Subsidiary  to,  continue  to engage in business of the same general type as now
conducted  by  the  Company  and such Subsidiaries, and will preserve, renew and
keep  in  full  force  and  effect  its respective corporate existence and their
respective  material rights, privileges and franchises necessary or desirable in
the  normal  conduct  of  business.

     7.5.  COMPLIANCE  WITH  LAWS.  The  Company  will,  and  will  cause  each
Subsidiary  to,  comply,  in  all  material  respects,  with all federal, state,
municipal,  local  or  foreign  applicable laws, ordinances, rules, regulations,
municipal  by-laws,  codes  and  requirements  of  governmental  authorities
(including,  without  limitation, Environmental Laws and ERISA and the rules and
regulations  thereunder)  except  (i) where compliance therewith is contested in
good  faith  by  appropriate  proceedings or (ii) where non-compliance therewith
could  not  reasonably be expected, in the aggregate, to have a material adverse
effect  on  the  business,  condition  (financial  or  otherwise),  operations,
performance,  properties  or  prospects  of  the  Company  or  such  Subsidiary.

     7.6.  INSPECTION  OF  PROPERTY,  BOOKS  AND RECORDS.  The Company will, and
will  cause each Subsidiary to, keep proper books of record and account in which
full, true and correct entries shall be made of all dealings and transactions in
relation  to their respective businesses and activities; and will permit, during
normal  business  hours,  Purchaser's Representative or an affiliate thereof, as
representatives  of  Purchaser,  to  visit  and  inspect any of their respective
properties, upon reasonable prior notice, to examine and make abstracts from any
of  their  respective books and records and to discuss their respective affairs,
finances  and  accounts with their respective executive officers and independent
public accountants (and by this provision the Company authorizes its independent
public  accountants to disclose and discuss with Purchaser the affairs, finances
and  accounts  of  the  Company  and  its  Subsidiaries  in  the  presence  of a
representative of the Company; provided, however, that such discussions will not
result in any unreasonable expense to the Company, without Company consent), all
at  such  reasonable  times.

     7.7.  INVESTMENT  COMPANY  ACT.  The  Company  will  not  be  or  become an
open-end  investment  trust,  unit  investment  trust or face-amount certificate
company  that  is  or  is  required  to  be  registered  under  Section 8 of the
Investment  Company  Act  of  1940,  as  amended.

     7.8.  USE  OF  PROCEEDS.  The  proceeds  from  the issuance and sale of the
Convertible  Debentures by the Company shall be used in accordance with Schedule
7.8  attached  hereto.  None  of  the proceeds from the issuance and sale of the
Convertible  Debentures  by  the Company pursuant to this Agreement will be used
directly  or  indirectly  for  the  purpose,  whether  immediate,  incidental or
ultimate,  of  purchasing  or  carrying any "margin stock" within the meaning of
Regulation  G  of  the  Board  of  Governors  of  the  Federal  Reserve  System.

     7.9.  COMPLIANCE  WITH  TERMS  AND  CONDITIONS  OF MATERIAL CONTRACTS.  The
Company  will,  and  will  cause  each  Subsidiary  to,  comply, in all material
respects, with all terms and conditions of all material contracts to which it is
subject.

     7.10.  RESERVED  SHARES  AND  LISTINGS.

     7.10.1.     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 of the outstanding Convertible Debentures and
exercise  of  the  Warrants  and issuance of the Conversion Shares (based on the
conversion  price  of the Convertible Debentures in effect from time to time and
the  exercise price of the Warrants, respectively) (the "Reserved Amount").  The
Company  shall  not reduce the Reserved Amount without the prior written consent
of  Purchaser.  With  respect  to  all Securities which contain an indeterminate
number  of  shares of Common Stock issuable in connection therewith (such as the
Convertible  Debentures),  the  Company  shall include in the Reserve Amount, no
less than two (2) times the number of shares that is then actually issuable upon
conversion  or exercise of such Securities.  If at any time the number of shares
of  Common  Stock  authorized  and  reserved for issuance is below the number of
Conversion  Shares  issued  or  issuable  upon  conversion  of  the  Convertible
Debentures  and  exercise  of  the  Warrants, the Company will promptly take all
corporate  action  necessary  to  authorize  and  reserve a sufficient number of
shares,  including,  without limitation, either (x) calling a special meeting of
shareholders  to  authorize  additional  shares,  in the case of an insufficient
number  of  authorized shares or (y) in lieu thereof, consummating the immediate
repurchase  of  the  Convertible  Debentures  and  the  Warrants contemplated in
Sections  3.4(c)  and  10.3  hereof,  respectively.

     7.10.2.     The  Company  shall  promptly file the Listing Applications and
secure  the  listing  of  the  Conversion  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 shall
maintain,  so  long as any other shares of Common Stock shall be so listed, such
listing  of  all Conversion Shares from time to time issuable upon conversion or
exercise  of the Convertible Debentures and Warrants, respectively.  The Company
will  maintain  the  listing and trading of its Common Stock on the Nasdaq Small
Cap  Market.  The  Company  will use its commercially reasonable best efforts to
obtain as soon as practicable and maintain the listing and trading of its Common
Stock  on  a  National Market.  The Company 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,  Inc. (the "NASD") and such
exchanges,  as  applicable.  The  Company  shall  promptly  provide to Purchaser
copies  of  any  notices  it receives regarding the continued eligibility of the
Common  Stock for listing on the Nasdaq Small Cap Market or any National Market.

     7.11.  TRANSFER AGENT INSTRUCTIONS.  Upon receipt of a Notice of Conversion
or  Notice  of Exercise, as applicable, the Company shall immediately direct the
Company's  transfer  agent  to  issue  certificates,  registered  in the name of
Purchaser  or  its  nominee,  for  the  Conversion  Shares,  in  such amounts as
specified  from  time to time by Purchaser to the Company upon proper conversion
of  the  Convertible Debentures or exercise of the Warrants.  Upon conversion of
any Convertible Debentures in accordance with their terms and/or exercise of any
Warrants in accordance with their terms, the Company will, and will use its best
lawful  efforts  to  cause its transfer agent to, issue one or more certificates
representing  shares  of  Common  Stock  in  such  name  or  names  and  in such
denominations  specified  by  a Purchaser in a Notice of Conversion or Notice of
Exercise,  as  the  case  may  be.  As  long  as  the  Registration  Statement
contemplated  by  the  Registration Rights Agreement shall remain effective, the
shares of Common Stock issuable upon conversion of any Convertible Debentures or
exercise  of  the Warrants shall be issued to any transferee of such shares from
Purchaser  without  any restrictive legend upon appropriate evidence of transfer
in  compliance  with  the  Securities  Act  and the rules and regulations of the
Commission;  provided  that  for  so  long  as  the  Registration  Statement  is
effective,  no  opinion of counsel will be required to effect any such transfer.
The  Company  further  warrants and agrees that no instructions other than these
instructions  have been or will be given to its transfer agent.  Nothing in this
Section 7.11 shall affect in any way a Purchaser's obligation to comply with all
securities  laws  applicable  to  Purchaser upon resale of such shares of Common
Stock,  including  any  prospectus  delivery  requirements.

     7.12.  MAINTENANCE  OF REPORTING STATUS; SUPPLEMENTAL INFORMATION.  So long
as  any  of  the  Securities  are outstanding, the Company shall timely file all
reports  required  to be filed with the Commission pursuant to the Exchange Act.
The Company shall not terminate its status as an issuer required to file reports
under  the  Exchange  Act, even if the Exchange Act or the rules and regulations
thereunder  would  permit  such  termination.  If  at anytime the Company is not
subject  to  the  requirements  of  Section 13 or 15(d) of the Exchange Act, the
Company  will  promptly furnish at its expense, upon request, for the benefit of
the  holders  from  time  to  time  of Securities, and prospective purchasers of
Securities,  information  satisfying  the  information  requirements of Rule 144
under  the  Securities  Act.

     7.13.  FORM  D;  BLUE SKY LAWS.  The Company agrees to file a "Form D" with
respect  to  the Securities as required under Regulation D of the Securities Act
and  to  provide  a  copy  thereof to Purchaser promptly after such filing.  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
Purchaser  at the 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  Purchaser  on  or  prior  to  the  Closing  Date.

                             8.  NEGATIVE COVENANTS

     The  Company  hereby  agrees  that after the date hereof for so long as any
Convertible  Debentures  remain  outstanding  and  for the benefit of Purchaser:

     8.1.  LIMITATIONS  ON  DEBT  OR OTHER LIABILITIES.  Neither the Company nor
any  Subsidiary will create, incur, assume or suffer to exist (at any time after
the  Closing Date, after giving effect to the application of the proceeds of the
issuance of the Securities) (i) any Debt except (x) Debt incurred in a Permitted
Financing,  (y)  Debt  incurred in connection with equipment leases to which the
Company  or  its  Subsidiaries  are  a  party incurred in the ordinary course of
business;  and  (z)  Debt  incurred  in  connection with trade accounts payable,
imbalances  and  refunds arising in the ordinary course of business and (ii) any
equity securities (including Derivative Securities) (other than those securities
that are issuable (x) under or pursuant to stock option plans, warrants or other
rights  programs  that  exist  as of the date hereof, (z) in connection with the
acquisition (including by merger) of a business or of assets otherwise permitted
under this Agreement), unless the Company complies with the mandatory prepayment
terms  of  Section  3.4(b)  hereof.

     8.2.  TRANSACTIONS  WITH  AFFILIATES.  The Company and each Subsidiary will
not,  directly  or  indirectly, pay any funds to or for the account of, make any
investment  (whether  by acquisition or stock or indebtedness, by loan, advance,
transfer  of property, guarantee or other agreement to pay, purchase or service,
directly  or  indirectly,  and  Debt, or otherwise) in, lease, sell, transfer or
otherwise  dispose of any assets, tangible or intangible, to, or participate in,
or effect any transaction in connection with any joint enterprise or other joint
arrangement  with,  any  Affiliate,  except,  (1)  pursuant  to those agreements
specifically  identified  on  Schedule  8.2 attached hereto (with a copy of such
agreements annexed to such Schedule 8.2) and (2) on terms to the Company or such
Subsidiary no less favorable than terms that could be obtained by the Company or
such  Subsidiary  from  a  Person  that  is not an Affiliate of the Company upon
negotiation  at  arms'  length,  as  determined  in  good  faith by the Board of
Directors  of  the  Company;  provided  that  no  determination  of the Board of
Directors  shall  be required with respect to any such transactions entered into
in  the  ordinary  course  of  business.

     8.3.  MERGER  OR  CONSOLIDATION.  The  Company  will  not,  in  a  single
transaction  or  a  series of related transactions (i) consolidate with or merge
with  or  into  any other Person, or (ii) permit any other Person to consolidate
with  or  merge into it, unless the Company shall be the survivor of such merger
or  consolidation  and (x) immediately before and immediately after given effect
to  such  transaction  (including any indebtedness incurred or anticipated to be
incurred  in  connection  with  the transaction), no Default or Event of Default
shall  have  occurred  and  be  continuing; and (y) the Company has delivered to
Purchaser  an  Officer's  Certificate stating that such consolidation, merger or
transfer complies with this Agreement, and that all conditions precedent in this
Agreement  relating  to  such  transaction  have  been  satisfied.

     8.4.  LIMITATION  ON  ASSET  SALES.  Neither the Company nor any Subsidiary
will  consummate  an  Asset  Sale  of  material  assets  of  the  Company or any
Subsidiary  without  the prior written consent of Purchaser, which consent shall
not  be  unreasonably  withheld.  As  used  herein, "Asset Sale" means any sale,
lease,  transfer  or  other  disposition  (or  series  of related sales, leases,
transfers or dispositions) or sales of capital stock of a Subsidiary (other than
directors'  qualifying  shares),  property or other assets (each referred to for
the purpose of this definition as a "disposition"), including any disposition by
means of a merger, consolidation or similar transaction other than a disposition
of  property  or assets at fair market value in the ordinary course of business.

     8.5.  RESTRICTIONS  ON  CERTAIN  AMENDMENTS.  Neither  the  Company nor any
Subsidiary  will  waive  any  provision  of, amend, or suffer to be amended, any
provision  of  such  entity's  existing Debt, any material contract or agreement
previously  or hereafter filed by the Company with the Commission as part of its
SEC  Reports, any Company Corporate Document or Subsidiary Corporate Document if
such amendment, in the Company's reasonable judgment, would materially adversely
affect  Purchaser  or  the  holders  of the Securities without the prior written
consent  of  Purchaser.

     8.6.  PROHIBITION  ON  DISCOUNTED  EQUITY  OFFERINGS;  REGISTRATION RIGHTS.

     8.6.1.     In  addition  to  and  not  in lieu of the covenant specified in
Section  8.1  above, beginning on the Closing Date and continuing until 180 days
following  the date on which the Registration Statement is declared effective by
the  Commission  (the  "Effective  Date")  or  until  such  time  as  all of the
Convertible  Debentures  have  been either redeemed or converted into Conversion
Shares in full, whichever is later to occur, the Company agrees that it will not
issue  any  of  its  equity  securities  (or  securities  convertible  into  or
exchangeable or exercisable for equity securities (the "Derivative Securities"))
on  terms  that  allow  a  holder  thereof to acquire such equity securities (or
Derivative  Securities) at a discount to the Market Price of the Common Stock at
the  time  of  issuance or, in the case of Derivative Securities at a conversion
price  based on any formula (other than standard anti-dilution provisions) based
on  the  Market  Price on a date later than the date of issuance so long as such
conversion  is  not  below  the  Market Price on the date of issuance (each such
event,  a  "Discounted  Equity  Offering").  As  used  herein,  "discount" shall
include, but not be limited to, (i) any warrant, right or other security granted
or  offered  in  connection  with such issuance which, on the applicable date of
grant,  is  offered with an exercise or conversion price, as the case may be, at
less than the then current Market Price of the Common Stock or, if such security
has  an  exercise  or conversion price based on any formula (other than standard
anti-dilution  provisions)  based  on  the Market Price on a date later than the
date  of  issuance,  then  at  a  price  below  the Market Price on such date of
exercise  or  conversion,  as  the case may be, or (ii) any commissions, fees or
other  allowances  paid  in connection with such issuances (other than customary
underwriter  or  placement  agent  commissions,  fees  or  allowances).  For the
purposes of determining the Market Price at which Common Stock is acquired under
this  Section,  normal  underwriting  commissions  and placement fees (including
underwriters'  warrants)  shall  be  excluded.

     8.6.2.     Beginning  on  the  Closing  Date  and continuing until 180 days
following  the  Effective  Date  or  until  such  time as all of the Convertible
Debentures  have  been  either  redeemed  or converted into Conversion Shares in
full,  whichever  is later to occur, the Company agrees it will not issue any of
its  equity  securities  (or Derivative Securities), unless any shares of Common
Stock  issued  or  issuable in connection therewith are "restricted securities."
As  used  herein  "restricted securities" shall mean securities which may not be
sold  by virtue of contractual restrictions imposed by the Company or otherwise,
in  each case prior to twelve (12) months following the date of issuance of such
securities.

     8.6.3.     The  restrictions  contained in this Section 8.6 shall not apply
to  the  issuance  by the Company of (or the agreement to issue) Common Stock or
Derivative  Securities  in  connection  with  (i)  the acquisition (including by
merger)  of a business or of assets otherwise permitted under this Agreement, or
(ii)  stock  option  or  other  compensatory  plans.

     8.7.  LIMITATION  ON  STOCK  REPURCHASES.  Except as otherwise set forth in
the  Convertible Debentures and the Warrants, the Company shall not, without the
written consent of the Majority Holders, redeem, repurchase or otherwise acquire
(whether  for cash or in exchange for property or other securities or otherwise)
any shares of capital stock of the Company or any warrants, rights or options to
purchase  or  acquire  any  such  shares.

     8.8.  LIMITATION  ON  SALES  BY  OFFICERS  AND  DIRECTORS.   The  executive
officers  and  employee  directors  of  the  Company  will not sell or otherwise
dispose  of  (other  than  by reason of death or disability) to any other Person
shares  of  Common  Stock unless such disposition is made in accordance with the
provisions  of  Rule  144  of  the Securities Act regardless of whether Rule 144
would  apply  to  such  disposition.

          9.  RESTRICTIVE  LEGENDS

     9.1.  RESTRICTIONS  ON  TRANSFER.  From and after their respective dates of
issuance,  none  of  the  Securities  shall  be  transferable  except  upon  the
conditions specified in this Article IX, which conditions are intended to ensure
compliance  with the provisions of the Securities Act in respect of the Transfer
of  any of such Securities or any interest therein.  Each Purchaser will use its
best  efforts  to  cause any proposed transferee of any Securities held by it to
agree  to  take  and hold such Securities subject to the provisions and upon the
conditions  specified  in  this  Article  IX.

     9.2.  NOTICE  OF PROPOSED TRANSFERS.  Prior to any proposed Transfer of the
Securities  (other  than  a  Transfer (i) registered or exempt from registration
under  the  Securities  Act,  (ii)  to  an  affiliate of a Purchaser which is an
"accredited  investor"  within  the  meaning of Rule 501(a) under the Securities
Act,  provided  that any such transferee shall agree to be bound by the terms of
this  Agreement  and  the  Registration Rights Agreement, or (iii) to be made in
reliance  on  Rule  144 under the Securities Act), the holder thereof shall give
written  notice  to  the  Company  of  such  holder's  intention  to effect such
Transfer,  setting  forth the manner and circumstances of the proposed Transfer,
which shall be accompanied by (A) an opinion of counsel reasonably acceptable to
the  Company, confirming that such transfer does not give rise to a violation of
the  Securities Act, (B) representation letters in form and substance reasonably
satisfactory  to  the  Company  to  ensure compliance with the provisions of the
Securities  Act and (C) letters in form and substance reasonably satisfactory to
the  Company from each such transferee stating such transferee's agreement to be
bound  by  the  terms  of  this Agreement and the Registration Rights Agreement.
Such  proposed  Transfer may be effected only if the Company shall have received
such  notice  of  transfer, opinion of counsel, representation letters and other
letters  referred to in the immediately preceding sentence, whereupon the holder
of  such  Securities shall be entitled to Transfer such Securities in accordance
with  the  terms  of  the  notice  delivered  by  the  holder  to  the  Company.

                  10.  ADDITIONAL AGREEMENTS AMONG THE PARTIES

     10.1.  LIQUIDATED  DAMAGES.

     10.1.1.     The  Company  shall  cause  its  transfer  agent  to, issue and
deliver  shares of Common Stock consistent with Section 7.11 hereof within three
(3)  New  York Stock Exchange Trading Days of delivery of a Notice of Conversion
or Notice of Exercise, as applicable (the "Deadline") to Purchaser (or any party
receiving Securities by transfer from Purchaser) at the address of Purchaser set
forth  in  the  Notice  of Conversion or Notice of Exercise, as the case may be.
The  Company understands that a delay in the issuance of such certificates after
the  Deadline  could  result  in  economic  loss  to  Purchaser.

     10.1.2.     Without  in  any way limiting Purchaser's right to pursue other
remedies,  including  actual damages and/or equitable relief, the Company agrees
that  if  delivery  of  the  Conversion Shares is more than one (1) Business Day
after  the  Deadline (other than a failure due to the circumstances described in
Section  4.3  of  the Convertible Debentures, which failure shall be governed by
such  Section) the Company shall pay to Purchaser, as liquidated damages and not
as  a penalty, $500 for each $100,000 principal amount of Convertible Debentures
then  outstanding  per day in cash, for each of the first ten days following the
Deadline  that  the  Company  fails to deliver such Common Stock, and $1,000 for
each  $100,000  principal  amount of Convertible Debentures then outstanding per
day  in  cash,  for each day thereafter the Company fails to deliver such Common
Stock.  Such cash amount shall be paid to Purchaser upon demand, or if no demand
is made, by the last day of the calendar week following the week in which it has
accrued  or, at the option of Purchaser (by written notice to the Company by the
first  day  of  the  week  following the week in which it has accrued), shall be
added to the principal amount of the Convertible Debenture (if then outstanding)
payable to Purchaser, in which event interest shall accrue thereon in accordance
with  the  terms  of  the  Convertible  Debentures and such additional principal
amount  shall  be  convertible into Common Stock in accordance with the terms of
the  Convertible  Debentures.

     10.2.  CONVERSION  NOTICE.  The  Company  agrees  that,  in addition to any
other  remedies  which may be available to Purchaser, including, but not limited
to,  the  remedies  available under Section 10.1, in the event the Company fails
for any reason (other than as a result of actions taken by a Purchaser in breach
of  this  Agreement)  to  effect delivery to a Purchaser of certificates with or
without  restrictive  legends  as  contemplated  by  Article IX representing the
shares  of  Common  Stock  on  or  prior to the Deadline after conversion of any
Convertible  Debentures or exercise of the Warrants, Purchaser will be entitled,
if  prior  to  the  delivery  of  such  certificates,  to  revoke  the Notice of
Conversion  or Notice of Exercise, as applicable, by delivering a notice to such
effect to the Company whereupon the Company and Purchaser shall each be restored
to  their  respective  positions immediately prior to delivery of such Notice of
Conversion  or  Notice  of  Exercise,  as  the  case  may  be.

     10.3.  CONVERSION  LIMIT.  Notwithstanding  the conversion rights under the
Convertible  Debentures,  unless  Purchaser  delivers  a  waiver  which  will be
effective  on the 61st day after it is given by Purchaser in accordance with the
immediately  following  sentence,  in  no  event  shall Purchaser be entitled to
convert  any portion of the Convertible Debentures, in excess of that portion of
the Convertible Debentures, as applicable, of which the sum of (i) the number of
shares of Common Stock beneficially owned by Purchaser and its Affiliates (other
than  shares  of Common Stock which may be deemed beneficially owned through the
ownership  of  the  unconverted  portion  of  the Convertible Debenture or other
Derivative  Securities  convertible  into  or  exchangeable for shares of Common
Stock  which  contain  a  limitation  similar  to that set forth in this Section
10.3),  and  (ii)  the  number  of  shares  of  Common  Stock  issuable upon the
conversion  of  the  portion  of the Convertible Debenture with respect to which
this  determination  is  being  made,  would  result  in beneficial ownership by
Purchaser  and  its  Affiliates  of more than 4.99% of the outstanding shares of
Common  Stock.  For  purposes  of  Section 10.3(i) beneficial ownership shall be
determined  in accordance with Rule 13d-3 of the Exchange Act and Regulations 13
D-G  thereunder,  except  as  otherwise  provided  in  this  Section  10.3.  The
foregoing  limitation shall not apply and shall be of no further force or effect
(i)  immediately preceding and upon the occurrence of any voluntary or mandatory
redemption  or  repayment  transaction  described  herein  or in the Convertible
Debentures,  (ii)  immediately  preceding  and upon any Sale Event, (iii) on the
Maturity  Date or (iv) following the occurrence of any Event of Default which is
not  cured  for  a  period  of  ten  (10)  calendar  days.

     10.4.  REGISTRATION  RIGHTS.

     10.4.1.     The  Company shall grant Purchaser registration rights covering
the  Conversion  Shares (the "Registrable Securities") on the terms set forth in
the  Registration  Rights  Agreement  and  herein.

     10.4.2.     The  Company  shall  prepare and file on or before the 60th day
following  the  Closing  Date (the "Filing Date"), a registration statement (the
"Registration Statement") covering the resale of the Registrable Securities.  In
the  event  the  Company  fails to file the Registration statement by the Filing
Date,  the  Company  shall  pay  Purchaser  as  liquidated damages, and not as a
penalty,  an  amount  of  cash  equal  to one percent of the aggregate principal
amount of Convertible Debentures then outstanding per day until the Registration
Statement  is filed with the Commission.  The Company shall use its best efforts
to  cause  the Registration Statement to be declared effective by the Commission
or the earlier of (i) 45 days following the Filing Date, (ii) ten days following
the  receipt  of a "No Review" Letter from the Commission or (iii) the first day
following  the day the Commission determines the Registration Statement eligible
to be declared effective (the "Required Effectiveness Date").  The Company shall
pay all expenses of registration (other than underwriting fees and discounts, if
any,  in  respect  of  Registrable  Securities  offered  and  sold  under  the
registration  statement  by  Purchaser).

     10.4.3.     If the Registration Statement  is not declared effective by the
Commission  by  the  Required  Effectiveness  Date,  the  Company  shall  pay to
Purchaser,  as liquidated damages and not as a penalty, an amount equal to 2% of
the  outstanding  principal  amount of the Convertible Debentures, prorated, for
each  30  day period the Registration Statement is not declared effective by the
Commission,  which  amount  will be increased to 3% of the outstanding principal
amount  of  the  Convertible  Debentures  in  the  event  that  the Registration
Statement  is  not  declared  effective  by the Commission within 75 days of the
Filing Date.  In the event the Company fails to obtain an effective registration
statement  by  the  135th day following the Filing Date, the Company will redeem
the  Convertible  Debentures  and  the Warrants as set forth in Section 5 of the
Convertible  Debentures  and  Section  13  of  the  Warrants,  respectively.
Additionally, the Company will grant to Purchaser certain piggyback registration
rights  in  the  event  the  Company proposes to effect a registered offering of
Common  Stock  or  warrants  or  both  prior  to  the filing of the Registration
Statement  referenced  above.

     10.4.4.     Any  such  liquidated  damages  shall  be  paid  in cash by the
Company to Purchaser by wire transfer in immediately available funds on the last
day  of  each  calendar  week  following  the  event  requiring  its  payment.

     10.4.5.     If,  following  the  declaration  of  effectiveness  of  the
Registration  Statement,  such  registration  statement  (or  any  prospectus or
supplemental  prospectus  contained therein) shall cease to be effective for any
reason (including but not limited to the occurrence of any event that results in
any  prospectus  or  supplemental prospectus containing an untrue statement of a
material  fact  or  omitting  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) for the period required in the
Registration  Rights  Agreement  (the  "Registration  Maintenance  Period"), the
Company fails to file required amendments to the Registration Statement in order
to  allow  the  Purchaser  to  exercise  its  rights  to  receive  unrestricted,
unlegended,  freely tradeable shares of Common Stock, or if for any reason there
are insufficient shares of such shares of Common Stock registered under the then
current  Registration  Statement  to  effect  full conversion of the Convertible
Debentures  or  exercise of the Warrants (a "Registration Default"), the Company
shall  immediately  take all necessary steps to cause the Registration Statement
to  be amended or supplemented so as to cure such Registration Default.  Failure
to cure a Registration Default within ten (10) business days shall result in the
Company  paying  to  Purchaser  liquidated damages at the rate of $1,000 per day
from  the  date  of  such Registration Default until the Registration Default is
cured.

     10.5.  RESTRICTION  ON  ISSUANCE  OF  SECURITIES.  Beginning on the Closing
Date  and  continuing  for  a period of 180 days following the Effective Date or
until the Convertible Debentures have been fully converted into shares of Common
Stock, whichever is later to occur, the Company will not sell, or offer to sell,
any  securities  (including  credit  facilities  which  are  convertible  into
securities  which  may be issued at a discount to the then current Market Price)
other  than  borrowings  under conventional credit facilities existing as of the
date  hereof,  stock issued or credit facilities to be established in connection
with  acquisitions, employee and director stock options of the Company, existing
rights  and  warrants of the Company and securities issued under the Convertible
Debentures or Warrants.  In addition, the Company shall not issue any securities
in  connection with a strategic alliance entered into by the Company unless such
securities  are  the  subject of a one year statutory or contractual hold period
or,  if  not  subject  to  such  a  hold  period, unless the Purchaser has fully
converted  all  outstanding  Convertible  Debentures and exercised all Warrants.
Notwithstanding the foregoing, the Company may enter into the following types of
transactions  (collectively  referred  to  as  "Permitted  Financings"):  (1)
"permanent  financing"  transactions,  which  would  include any form of debt or
equity  financing  (other than an underwritten offering), which is followed by a
reduction  of  the  said financing commitment to zero and payment of all related
fees  and  expenses;  (2)  "project financing" which provide for the issuance of
recourse  debt  instruments  in  connection  with the operation of the Company's
business  as  presently  conducted  or  as  proposed  to  be  conducted;  (3) an
underwritten  offering of Common Stock, provided that such offering provides for
the  registration of the Common Stock to be received by Purchaser as a result of
the  conversion  of  the Convertible Debentures and the exercise of the Warrants
held  by  the  Purchaser  to  the  extent there is not an effective Registration
Statement  for  the  sale  of the Conversion Shares in place at the time of such
offering;  and  (4)  other  financing  transactions specifically consented to in
writing  by  the  Purchaser.

                         11.  ADJUSTMENT OF FIXED PRICE

     11.1.  REORGANIZATION.  The  Conversion Price and the exercise price of the
Warrants (collectively, the "Fixed Prices") shall be adjusted, as applicable, as
hereafter  provided.

     11.2.  SHARE  REORGANIZATION.  If  and  whenever  the  Company  shall:

     11.2.0.1.     subdivide  the  outstanding  shares  of  Common  Stock into a
greater  number  of  shares;

     11.2.0.2.     consolidate  the  outstanding  shares  of Common Stock into a
smaller  number  of  shares;

     11.2.0.3.     issue  Common  Stock  or  securities  convertible  into  or
exchangeable  for  shares  of  Common  Stock  as  a  stock  dividend  to  all or
substantially  all  the  holders  of  Common  Stock;  or

     11.2.0.4.     make a distribution on the outstanding Common Stock to all or
substantially  all  the  holders  of  Common  Stock  payable  in Common Stock or
securities  convertible  into  or  exchangeable  for  Common  Stock;

any  of  such  events being herein called a "Share Reorganization," then in each
such  case  the  applicable Fixed Price shall be adjusted, effective immediately
after  the  record  date at which the holders of Common Stock are determined for
the  purposes  of  the  Share Reorganization or, if no record date is fixed, the
effective  date of the Share Reorganization, by multiplying the applicable Fixed
Price  in  effect  on  such  record  or effective date, as the case may be, by a
fraction  of  which:

     (i)     the  numerator  shall  be  the  number  of  shares  of Common Stock
outstanding  on  such  record  or  effective  date (without giving effect to the
transaction);  and

     (II)     the  denominator  shall  be  the  number of shares of Common Stock
outstanding  after giving effect to such Share Reorganization, including, in the
case of a distribution of securities convertible into or exchangeable for shares
of  Common  Stock,  the  number  of  shares of Common Stock that would have been
outstanding  if  such securities had been converted into or exchanged for Common
Stock  on  such  record  or  effective  date.

     11.3.  RIGHTS  OFFERING.  If and whenever the Company shall issue to all or
substantially all the holders of Common Stock, rights, options or warrants under
which  such holders are entitled, during a period expiring not more than 45 days
after  the  record date of such issue, to subscribe for or purchase Common Stock
(or  Derivative Securities), at a price per share (or, in the case of securities
convertible  into or exchangeable for Common Stock, at an exchange or conversion
price per share at the date of issue of such securities) of less than 95% of the
Market  Price  of  the  Common  Stock  on such record date (any such event being
herein  called a "Rights Offering"), then in each such case the applicable Fixed
Price  shall  be  adjusted, effective immediately after the record date at which
holders  of Common Stock are determined for the purposes of the Rights Offering,
by  multiplying  the  applicable  Fixed Price in effect on such record date by a
fraction  of  which:

     11.3.0.1.     the  numerator  shall  be  the  sum  of:

          (i)     the  number  of  shares  of  Common  Stock outstanding on such
record  date;  and

          (II)     a  number  obtained  by  dividing:

          11.3.0.1.0.1.     either,

          (x)     the  product  of the total number of shares of Common Stock so
offered  for  subscription or purchase and the price at which such shares are so
offered,  or

          (y)     the  product  of  the maximum number of shares of Common Stock
into  or  for  which  the  convertible or exchangeable securities so offered for
subscription  or  purchase  may  be converted or exchanged and the conversion or
exchange  price  of  such  securities,  or,  as  the  case  may  be,  by

          11.3.0.1.0.2.     the  Market Price of the Common Stock on such record
date;  and

     11.3.0.2.     the  denominator  shall  be  the  sum  of:

     11.3.0.2.0.0.1.(i)     the  number of shares of Common Stock outstanding on
such  record  date;  and

     (II)     the  number  of shares of Common Stock so offered for subscription
or  purchase  (or,  in  the case of Derivative Securities, the maximum number of
shares  of  Common  Stock  for  or  into  which  the  securities  so offered for
subscription  or  purchase  may  be  converted  or  exchanged).

To  the  extent that such rights, options or warrants are not exercised prior to
the  expiry  time  thereof,  the  applicable  Fixed  Price  shall  be readjusted
effective immediately after such expiry time to the applicable Fixed Price which
would  then  have  been  in effect upon the number of shares of Common Stock (or
Derivative  Securities)  actually  delivered  upon  the exercise of such rights,
options  or  warrants.

          11.4.  SPECIAL  DISTRIBUTION.  If and whenever the Company shall issue
or  distribute  to  all  or  substantially  all  the  holders  of  Common Stock:

     11.4.0.1.     shares  of the Company of any class, other than Common Stock;

     11.4.0.2.     rights,  options  or  warrants;  or

     11.4.0.3.     any  other  assets  (excluding  cash dividends and equivalent
dividends  in  shares  paid  in  lieu of cash dividends in the ordinary course);

and  if such issuance or distribution does not constitute a Share Reorganization
or  a  Rights  Offering  (any  such  event  being  herein  called  a  "Special
Distribution"),  then  in  each  such  case  the applicable Fixed Price shall be
adjusted,  effective  immediately  after the record date at which the holders of
Common  Stock  are  determined  for  purposes  of  the  Special Distribution, by
multiplying  the  applicable  Fixed  Price  in  effect  on such record date by a
fraction  of  which:

     11.4.0.4.     the  numerator  shall  be  the  difference  between:

     11.4.0.4.0.1.     the  product  of  the  number  of  shares of Common Stock
outstanding on such record date and the Market Price of the Common Stock on such
date;  and

     11.4.0.4.0.2.     the  fair  market  value,  as determined by the Directors
(whose determination shall be conclusive), to the holders of Common Stock of the
shares,  rights,  options,  warrants,  evidences of indebtedness or other assets
issued or distributed in the Special Distribution (net of any consideration paid
therefor  by  the  holders  of  Common  Stock),  and

     11.4.0.5.     the  denominator shall be the product of the number of shares
of  Common  Stock  outstanding  on  such record date and the Market Price of the
Common  Stock  on  such  date.

     11.5.  CAPITAL  REORGANIZATION.  If  and  whenever  there  shall  occur:

     11.5.0.1.     a  reclassification  or redesignation of the shares of Common
Stock  or any change of the shares of Common Stock into other shares, other than
in  a  Share  Reorganization;

     11.5.0.2.     a  consolidation, merger or amalgamation of the Company with,
or  into  another  body  corporate;  or

     11.5.0.3.     the transfer of all or substantially all of the assets of the
Company  to  another  body  corporate;

(any  such  event  being herein called a "Capital Reorganization"), then in each
such  case  the holder who exercises the right to convert Convertible Debentures
after  the  effective  date  of such Capital Reorganization shall be entitled to
receive and shall accept, upon the exercise of such right, in lieu of the number
of shares of Common Stock to which such holder was theretofore entitled upon the
exercise  of  the  conversion privilege, the aggregate number of shares or other
securities  or  property  of the Company or of the body corporate resulting from
such Capital Reorganization that such holder would have been entitled to receive
as  a  result  of such Capital Reorganization if, on the effective date thereof,
such  holders  had  been  the  holder of the number of shares of Common Stock to
which  such  holder was theretofore entitled upon conversion; provided, however,
that  no  such  Capital Reorganization shall be consummated in effect unless all
necessary  steps  shall have been taken so that such holders shall thereafter be
entitled  to receive such number of shares or other securities of the Company or
of  the  body  corporate  resulting from such Capital Reorganization, subject to
adjustment  thereafter  in accordance with provisions the same, as nearly as may
be  possible,  as  those  contained  above.

     11.6.  PURCHASE  PRICE  ADJUSTMENTS.  In  case at any time and from time to
time the Company shall issue any shares of Common Stock or Derivative Securities
convertible  or  exercisable for shares of Common Stock (the number of shares so
issued,  or  issuable upon conversion or exercise of such Derivative Securities,
as  applicable,  being  referred  to as "Additional Shares of Common Stock") for
consideration  less  than  the then Market Price at the date of issuance of such
shares  of  Common  Stock  or  such Derivative Securities, in each such case the
Conversion  Price  shall,  concurrently  with  such  issuance,  be  adjusted  by
multiplying  the Conversion Price immediately prior to such event by a fraction:
(i)  the  numerator  of  which  shall  be  the  number of shares of Common Stock
outstanding  immediately  prior  to  the  issuance  of such Additional Shares of
Common  Stock  plus  the  number  of  shares  of Common Stock that the aggregate
consideration  received  by  the Company for the total number of such Additional
Shares of Common Stock so issued would purchase at the Market Price and (ii) the
denominator  of  which shall be the number of shares of Common Stock outstanding
immediately  prior to the issuance of Additional Shares of Common Stock plus the
number  of  such  Additional  Shares  of  Common  Stock  so  issued  or  sold.

     11.7.  ADJUSTMENT  RULES.  The  following  rules  and  procedures  shall be
applicable  to  adjustments  made  in  this  Article  XI:

     11.7.1.     no  adjustment  in the applicable Fixed Price shall be required
unless such adjustment would result in a change of at least 1% in the applicable
Fixed  Price  then in effect, provided, however, that any adjustments which, but
for the provisions of this clause would otherwise have been required to be made,
shall  be  carried  forward and taken into account in any subsequent adjustment;

     11.7.2.     if  any event occurs of the type contemplated by the adjustment
provisions of this Article XI but not expressly provided for by such provisions,
the Company will give notice of such event as provided herein, and the Company's
board  of  directors  will  make an appropriate adjustment in the Fixed Price so
that  the  rights  of  the  holders  of  the  applicable  Security  shall not be
diminished  by  such  event;  and

     11.7.3.     if  a  dispute  shall  at  any  time  arise with respect to any
adjustment  of  the  applicable  Fixed Price, such dispute shall be conclusively
determined by the auditors of the Company or, if they are unable or unwilling to
act,  by  a  firm of independent chartered accountants selected by the Directors
and  any  such  determination  shall  be binding upon the Company and Purchaser.

     11.8.  CERTIFICATE  AS  TO ADJUSTMENT.  The Company shall from time to time
promptly  after  the occurrence of any event which requires an adjustment in the
applicable  Fixed Price deliver to Purchaser a certificate specifying the nature
of the event requiring the adjustment, the amount of the adjustment necessitated
thereby,  the  applicable Fixed Price after giving effect to such adjustment and
setting  forth,  in  reasonable  detail, the method of calculation and the facts
upon  which  such  calculation  is  based.

     11.9.  NOTICE  TO  HOLDERS.  If  the  Company  shall fix a record date for:

     11.9.1.     any  Share  Reorganization  (other  than  the  subdivision  of
outstanding Common Stock into a greater number of shares or the consolidation of
outstanding  Common  Stock  into  a  smaller  number  of  shares),

     11.9.2.     any  Rights  Offering,

     11.9.3.     any  Special  Distribution,

     11.9.4.     any  Capital  Reorganization  (other than a reclassification or
redesignation  of  the  Common  Stock  into  other  shares),

     11.9.5.     Sale  Event;  or

     11.9.6.     any  cash  dividend,

the  Company  shall,  not  less than 10 days prior to such record date or, if no
record  date  is  fixed,  prior  to  the  effective  date of such event, give to
Purchaser  notice  of  the  particulars of the proposed event or the extent that
such  particulars  have  been  determined  at  the  time  of  giving the notice.

                             12.  EVENTS OF DEFAULT

     12.1.  EVENTS  OF DEFAULT.  If one or more of the following events (each an
"Event  of  Default")  shall  have  occurred  and  be  continuing:

     12.1.1.     failure  by  the  Company  to pay or repay when due, all or any
part of the principal on any of the Convertible Debentures (whether by virtue of
the  agreements  specified  in  this  Agreement  or the Convertible Debentures);

     12.1.2.     failure by the Company to pay (i) within five (5) Business Days
of  the  due  date  thereof  any  interest on any Convertible Debentures or (ii)
within five (5) Business Days following the delivery of notice to the Company of
any  fees or any other amount payable (not otherwise referred to in (a) above or
this  clause  (b))  by the Company under this Agreement or any other Transaction
Agreement;

     12.1.3.     failure  by  the Company to timely comply with the requirements
of  Section  7.11  or  10.1  hereof,  which failure is not cured within five (5)
Business  Days  of  such  failure;

     12.1.4.     failure  on  the  part of the Company to observe or perform any
covenant  contained  in  Section  7.10  or  Article  VIII  of  this  Agreement;

     12.1.5.     failure  on  the  part of the Company to observe or perform any
covenant  or  agreement contained in any Transaction Agreement (other than those
covered by clauses (a), (b), (c) or (d) above) for 30 days from the date of such
occurrence;

     12.1.6.     the  trading  in  the Common Stock shall have been suspended by
the  Commission  or any National Market (except for any suspension of trading of
limited  duration  solely  to  permit  dissemination  of  material  information
regarding  the Company and except if, at the time there is any suspension on any
National  Market,  the  Common  Stock is then listed and approved for trading on
another  National  Market  within  ten  (10)  Trading  Days  thereof);

     12.1.7.     failure  of  the  Company to file the Listing Applications when
the Company is eligible within twenty (20) Business Days of the Closing Date, as
applicable,  which  failure  is  not cured within five (5) Business Days of such
failure;

     12.1.8.     the  Company  shall  have  its  Common  Stock  delisted  from a
National  Market for at least ten (10) consecutive Trading Days and is unable to
obtain  a  listing  on  a  National  Market  within  such ten (10) Trading Days;

     12.1.9.     the  Registration  Statement  shall  not  have  been  declared
effective  by  the  Commission  by  the  Required  Effectiveness  Date,  or such
effectiveness  shall  not be maintained for the Registration Maintenance Period,
in  each  case  which  results  in  the Company incurring the registration for a
period  in  excess  of  10  days;

     12.1.10.     the  Company  or any Subsidiary has commenced a voluntary case
or  other  proceeding  seeking  liquidation, winding-up, reorganization or other
relief  with  respect  to  itself or its debts under any bankruptcy, insolvency,
moratorium  or  other  similar  law  now  or  hereafter in effect or seeking the
appointment  of  a  trustee,  receiver,  liquidator,  custodian or other similar
official  of it or any substantial part of its property, or has consented to any
such  relief  or to the appointment of or taking possession by any such official
in  an  involuntary case or other proceeding commenced against it, or has made a
general  assignment for the benefit of creditors, or has failed generally to pay
its debts as they become due, or has taken any corporate action to authorize any
of  the  foregoing;

     12.1.11.     an  involuntary  case  or  other proceeding has been commenced
against  the  Company  or  any  Subsidiary  seeking  liquidation,  winding-up,
reorganization  or  other  relief  with  respect  to  it  or its debts under any
bankruptcy,  insolvency,  moratorium  or  other  similar law now or hereafter in
effect  or seeking the appointment of a trustee, receiver, liquidator, custodian
or  other  similar  official  of it or any substantial part of its property, and
such  involuntary case or other proceeding shall remain undismissed and unstayed
for  a  period  of  60 days, or an order for relief has been entered against the
Company  or any Subsidiary under the federal bankruptcy laws as now or hereafter
in  effect;

     12.1.12.     default  in any provision (including payment) or any agreement
governing  the  terms  of any Debt of the Company or any Subsidiary in excess of
$500,000,  which  has  not  been  cured  within  any  applicable period of grace
associated  therewith;

     12.1.13.     judgments  or  orders  for  the  payment of money which in the
aggregate  at  any  one  time exceed $1,000,000 and are not covered by insurance
have been rendered against the Company or any Subsidiary by a court of competent
jurisdiction  and  such  judgments  or  orders  shall  continue  unsatisfied and
unstayed  for  a  period  of  60  days;  or

     12.1.14.     any  representation, warranty, certification or statement made
by  the  Company  in  any  Transaction  Agreement  or  which is contained in any
certificate,  document  or  financial  or  other statement furnished at any time
under  or  in connection with any Transaction Agreement shall prove to have been
untrue  in  any  material  respect  when  made.

then,  and  in every such occurrence, Purchaser may, with respect to an Event of
Default  specified  in paragraphs (a) or (b), and the Majority Holders may, with
respect  to  any  other  Event of Default, by notice to the Company, declare the
Convertible  Debentures  to  be,  and  the  Convertible Debentures shall thereon
become  immediately  due  and  payable;  provided that in the case of any of the
Events  of  Default  specified in paragraph (j) or (k) above with respect to the
Company  or any Subsidiary, then, without any notice to the Company or any other
act  by  Purchaser, the entire amount of the Convertible Debentures shall become
immediately  due  and  payable,  provided,  further, if any Event of Default has
occurred  and  is  continuing,  and  irrespective  of  whether  any  Convertible
Debenture has been declared immediately due and payable hereunder, any Purchaser
of  Convertible  Debentures  may  proceed  to  protect and enforce the rights of
Purchaser  by  an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Convertible  Debenture,  or  for an injunction against a violation of any of the
terms  hereof  or thereof, or in aid of the exercise of any power granted hereby
or  thereby  or  by  law  or otherwise, and provided further, in the case of any
Event  of  Default,  the  amount  declared  due  and  payable on the Convertible
Debentures  shall  be  the  Formula  Price  thereof.

     12.2.  POWERS AND REMEDIES CUMULATIVE.  No right or remedy herein conferred
upon  or reserved to Purchaser is intended to be exclusive of any other right or
remedy,  and  every  right  and remedy shall, to the extent permitted by law, be
cumulative  and  in  addition to every other right and remedy given hereunder or
now  hereafter  existing  at  law  or  in equity or otherwise.  The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent  assertion  or  employment  of any other appropriate right or remedy.
Every  power  and  remedy  given  by the Convertible Debentures or by law may be
exercised  from  time  to  time,  and  as often as shall be deemed expedient, by
Purchaser.

                               13.  MISCELLANEOUS

     13.1.  NOTICES.  All notices, demands and other communications to any party
hereunder  shall  be  in  writing  (including telecopier or similar writing) and
shall  be  given  to  such party at its address set forth on the signature pages
hereof,  or  such  other  address  as  such  party may hereafter specify for the
purpose  to  the other parties.  Each such notice, demand or other communication
shall  be  effective (i) if given by telecopy, when such telecopy is transmitted
to  the telecopy number specified on the signature page hereof, (ii) if given by
mail,  four  days  after such  communication is deposited in the mail with first
class  postage  prepaid,  addressed  as aforesaid or (iii) if given by any other
means,  when  delivered at the address specified in or pursuant to this Section.

     13.2.  NO  WAIVERS;  AMENDMENTS.

     13.2.1.     No  failure or delay on the part of any party in exercising any
right,  power  or  remedy hereunder shall operate as a waiver thereof, nor shall
any  single  or partial exercise of any such right, power or remedy preclude any
other  or  further exercise thereof or the exercise of any other right, power or
remedy.

     13.2.2.     Any provision of this Agreement may be amended, supplemented or
waived  if,  but only if, such amendment, supplement or waiver is in writing and
is  signed  by  the Company and the Majority Holders; provided, that without the
consent  of  each  holder  of  any  Convertible  Debenture  affected thereby, an
amendment  or  waiver  may  not  (a)  reduce  the  aggregate principal amount of
Convertible Debentures whose holders must consent to an amendment or waiver, (b)
reduce  the  rate  or extend the time for payment of interest on any Convertible
Debenture,  (c)  reduce the principal amount of or extend the stated maturity of
any Convertible Debenture or (d) make any Convertible Debenture payable in money
or  property other than as stated in such Convertible Debenture.  In determining
whether  the holders of the requisite principal amount of Convertible Debentures
have  concurred  in  any  direction,  consent,  or  waiver  as  provided  in any
Transaction  Agreement, Convertible Debentures which are owned by the Company or
any  other  obligor  on  or  guarantor  of the convertible Debentures, or by any
Person  Controlling,  Controlled  by,  or  under  common Control with any of the
foregoing, shall be disregarded and deemed not to be outstanding for the purpose
of  any  such  determination;  and  provided  further  that  no  such amendment,
supplement  or waiver which affects the rights of Purchaser and their affiliates
otherwise  than  solely in their capacities as holders of Convertible Debentures
shall  be  effective  with  respect to them without their prior written consent.

     13.3.  INDEMNIFICATION.

     13.3.1.     The  Company  agrees  to indemnify and hold harmless Purchaser,
its  Affiliates,  and each Person, if any, who controls Purchaser, or any of its
Affiliates,  within the meaning of the Securities Act or the Exchange Act (each,
a  "Controlling  Person"),  and  the  respective  partners,  agents,  employees,
officers  and  Directors of Purchaser, their Affiliates and any such Controlling
Person  (each  an  "Indemnified  Party")  and  collectively,  the  "Indemnified
Parties"), from and against any and all losses, claims, damages, liabilities and
expenses  (including,  without  limitation  and as incurred, reasonable costs of
investigating,  preparing  or defending any such claim or action, whether or not
such  Indemnified  Party is a party thereto, provided that the Company shall not
be obligated to advance such costs to any Indemnified Party other than Purchaser
unless  it  has  received from such Indemnified Party an undertaking to repay to
the  Company  the costs so advanced if it should be determined by final judgment
of  a  court  of  competent  jurisdiction  that  such  Indemnified Party was not
entitled  to  indemnification hereunder with respect to such costs) which may be
incurred  by  such  Indemnified  Party  in  connection  with  any investigative,
administrative  or  judicial proceeding brought or threatened that relates to or
arises  out  of,  or  is  in  connection with any activities contemplated by any
Transaction  Agreement  or  any  other services rendered in connection herewith;
provided  that  the Company will not be responsible for any claims, liabilities,
losses,  damages or expenses that are determined by final judgment of a court of
competent jurisdiction to result from such Indemnified Party's gross negligence,
willful  misconduct  or  bad  faith.

     13.3.2.     If  any  action  shall  be brought against an Indemnified Party
with  respect  to  which  indemnity may be sought against the Company under this
Agreement,  such  Indemnified Party shall promptly notify the Company in writing
and  the  Company, at its option, may, assume the defense thereof, including the
employment  of  counsel  reasonably  satisfactory  to such Indemnified Party and
payment  of  all  reasonable  fees  and  expenses.  The failure to so notify the
Company  shall  not  affect  any  obligations  the  Company  may  have  to  such
Indemnified  Party  under  this  Agreement  or  otherwise  unless the Company is
materially  adversely  affected  by  such failure.  Such Indemnified Party shall
have  the right to employ separate counsel in such action and participate in the
defense  thereof,  but  the  fees  and  expenses of such counsel shall be at the
expense  of  such Indemnified Party, unless (i) the Company has failed to assume
the  defense  and  employ  counsel  or (ii) the named parties to any such action
(including  any  impleaded  parties)  include  such  Indemnified  Party  and the
Company,  and  such  Indemnified  Party  shall have been advised by counsel that
there may be one or more legal defenses available to it which are different from
or  additional  to  those  available  to  the  Company,  in  which case, if such
Indemnified  Party  notifies  the  Company  in  writing that it elects to employ
separate  counsel  at the expense of the Company, the Company shall not have the
right  to  assume  the  defense  of  such action or proceeding on behalf of such
Indemnified  Party, provided, however, that the Company shall not, in connection
with  any one such action or proceeding or separate but substantially similar or
related  actions or proceedings in the same jurisdiction arising out of the same
general  allegations  or  circumstances,  be  responsible  hereunder  for  the
reasonable  fees and expenses of more than one such firm of separate counsel, in
addition  to  any local counsel, which counsel shall be designated by Purchaser.
The  Company  shall not be liable for any settlement of any such action effected
without  the  written  consent  of  the Company (which shall not be unreasonably
withheld) and the Company agrees to indemnify and hold harmless each Indemnified
Party  from  and  against  any  loss or liability by reason of settlement of any
action  effected with the consent of the Company.  In addition, the Company will
not,  without  the  prior  written consent of Purchaser, settle or compromise or
consent  to  the  entry  of  any  judgment in or otherwise seek to terminate any
pending  or  threatened  action,  claim,  suit or proceeding in respect to which
indemnification  or  contribution  may  be  sought hereunder (whether or not any
Indemnified  Party  is  a  party  thereto)  unless  such settlement, compromise,
consent  or  termination  includes an express unconditional release of Purchaser
and  the  other  Indemnified  Parties,  satisfactory  in  form  and substance to
Purchaser,  from  all  liability  arising  out  of  such  action, claim, suit or
proceeding.

     13.3.3.     If  for  any  reason  the  foregoing  indemnity  is unavailable
(otherwise  than  pursuant  to  the  express  terms  of  such  indemnity)  to an
Indemnified Party or insufficient to hold an Indemnified Party harmless, then in
lieu of indemnifying such Indemnified Party, the Company shall contribute to the
amount  paid  or  payable  by such Indemnified Party as a result of such claims,
liabilities,  losses,  damages,  or  expenses  (i)  in  such  proportion  as  is
appropriate  to reflect the relative benefits received by the Company on the one
hand  and  by  Purchaser on the other from the transactions contemplated by this
Agreement  or  (ii)  if  the  allocation provided by clause (i) is not permitted
under  applicable  law, in such proportion as is appropriate to reflect not only
the  relative  benefits received by the Company on the one hand and Purchaser on
the  other,  but also the relative fault of the Company and Purchaser as well as
any  other relevant equitable considerations.  Notwithstanding the provisions of
this  Section  13.3, the aggregate contribution of all Indemnified Parties shall
not  exceed  the  amount  of  interest  and  fees actually received by Purchaser
pursuant  to  this  Agreement.  It  is  hereby  further agreed that the relative
benefits  to the Company on the one hand and Purchaser on the other with respect
to  the  transactions  contemplated  hereby shall be determined by reference to,
among  other  things, whether any untrue or alleged untrue statement of material
fact  or  the  omission  or alleged omission to state a material fact related to
information  supplied  by  the Company or by Purchaser and the parties' relative
intent,  knowledge,  access to information and opportunity to correct or prevent
such  statement  or  omission.  No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution  from  any  Person  who  was  not  guilty  of  such  fraudulent
misrepresentation.

     13.3.4.     The  indemnification,  contribution  and  expense reimbursement
obligations  set  forth  in  this  Section  13.3 (i) shall be in addition to any
liability  the  Company  may  have  to  any  Indemnified  Party at common law or
otherwise;  (ii)  shall  survive the termination of this Agreement and the other
Transaction Agreements and the payment in full of the Convertible Debentures and
(iii)  shall  remain  operative  and  in full force and effect regardless of any
investigation  made by or on behalf of Purchaser or any other Indemnified Party.

     13.4.  EXPENSES:  DOCUMENTARY TAXES. The Company agrees to pay to Purchaser
a  fee  of  $25,000.00 (the "Expense Reimbursement Fee") in full satisfaction of
all  obligations  of  the Company to Purchaser and its agents in connection with
the  negotiation  and  preparation  of  the Transaction Agreements, relevant due
diligence,  and  fees  and  disbursements  of  legal  counsel.  In addition, the
Company  agrees  to  pay  any  and  all stamp, transfer and other similar taxes,
assessments  or charges payable in connection with the execution and delivery of
any  Transaction  Agreement  or  the  issuance  of  the Securities to Purchaser,
excluding  their  assigns.

     13.5.  PAYMENT.  The  Company  agrees  that, so long as Purchaser shall own
any  Convertible  Debentures  purchased  by  it  from the Company hereunder, the
Company  will  make  payments  to  Purchaser  of all amounts due thereon by wire
transfer  by  4:00  P.M.  (E.S.T.).

     13.6.  SUCCESSORS  AND  ASSIGNS.  This  Agreement shall be binding upon the
Company  and  upon Purchaser and its respective successors and assigns; provided
that  the  Company  shall  not  assign  or  otherwise  transfer  its  rights  or
obligations  under  this Agreement to any other Person without the prior written
consent  of  the  Majority Holders.  All provisions hereunder purporting to give
rights  to  Purchaser and its affiliates or to holders of Securities are for the
express  benefit  of  such  Persons  and  their  successors  and  assigns.

     13.7.  BROKERS.  Except  for  a  cash fee payable to DP Securities, Inc. in
the  form  of 3% of the principal amount of the Convertible Debentures purchased
on  the  Closing  Date by Purchaser, the Company represents and warrants that it
has  not employed any broker, finder, financial advisor or investment banker who
would  be entitled to any brokerage, finder's or other fee or commission payable
by  the  Company  or  Purchaser  in  connection with the sale of the Securities.

     13.8.  CALIFORNIA  LAW;  SUBMISSION  TO JURISDICTION; WAIVER OF JURY TRIAL;
APPOINTMENT  OF AGENT.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED  BY  THE  LAWS  OF  THE  STATE OF CALIFORNIA.  EACH PARTY HERETO HEREBY
SUBMITS  TO  THE  EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE  CENTRAL DISTRICT OF CALIFORNIA AND OF ANY FEDERAL DISTRICT COURT SITTING IN
CALIFORNIA  FOR  PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS  AGREEMENT  OR  THE  TRANSACTIONS  CONTEMPLATED  HEREBY.  EACH PARTY HERETO
IRREVOCABLY  WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT  MAY  NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT  HAS  BEEN  BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY TO THIS AGREEMENT
IRREVOCABLY  CONSENTS  TO  THE  SERVICE OF PROCESS IN ANY SUCH PROCEEDING BY THE
MAILING  OF  COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
SUCH  PARTY  AT  ITS  ADDRESS SET FORTH HEREIN.  NOTHING HEREIN SHALL AFFECT THE
RIGHT  OF ANY PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.  EACH
PARTY  WAIVES  ITS  RIGHT  TO  A  TRIAL  BY  JURY.

     13.9.     ENTIRE  AGREEMENT.  This  Agreement,  the  Exhibits  or Schedules
hereto,  which  include,  but  are not limited to the Convertible Debenture, the
Warrant, the Registration Rights Agreement and the Security Agreement, set forth
the  entire  agreement  and understanding of the parties relating to the subject
matter  hereof  and  supercedes  all  prior  and  contemporaneous  agreements,
negotiations  and  understandings  between  the  parties,  both oral and written
relating  to the subject matter hereof. The terms and conditions of all Exhibits
and  Schedules  to  this Agreement are incorporated herein by this reference and
shall  constitute  part  of  this  Agreement  as  is  fully  set  forth  herein.

     13.10.     SURVIVAL;  SEVERABILITY.  The  representations,  warranties,
covenants  and  agreements  of  the  parties  hereto  shall  survive the Closing
hereunder.  In  the  event  that  any  provision of this Agreement becomes or is
declared  by  a  court of competent jurisdiction to be illegal, unenforceable or
void,  this  Agreement  shall  continue  in  full  force and effect without said
provision; provided that such severability shall be ineffective if it materially
changes  the  economic  benefit  of  this  Agreement  to  any  party.

     13.11.     TITLE  AND  SUBTITLES.  The  titles  and  subtitles used in this
Agreement  are  used  for  convenience  only  and  are  not  to be considered in
construing  or  interpreting  this  Agreement.

     13.12.     REPORTING  ENTITY  FOR  THE  COMMON STOCK.  The reporting entity
relied  upon for the determination of the trading price or trading volume of the
Common Stock on any given Trading Day for the purposes of this Agreement and all
Exhibits  shall  be Bloomberg, L.P. or any successor thereto. The written mutual
consent  of  the Purchaser and the Company shall be required to employ any other
reporting  entity.

     13.13.     PUBLICITY.  The  Company  and  the  Purchaser shall consult with
each  other  in issuing any press releases or otherwise making public statements
with  respect  to  the transactions contemplated hereby and no party shall issue
any  such  press release or otherwise make any such public statement without the
prior  written  consent  of  the  other  parties,  which  consent  shall  not be
unreasonably withheld or delayed, except that no prior consent shall be required
if  such  disclosure is required by law, in which such case the disclosing party
shall  provide  the  other  parties  with prior notice of such public statement.
Notwithstanding  the foregoing, the Company shall not publicly disclose the name
of  Purchaser  without  the  prior  written  consent of Purchaser, except to the
extent  required  by law, in which case the Company shall provide Purchaser with
prior  written  notice  of  such  public  disclosure.
<PAGE>
     IN  WITNESS  WHEREOF,  the  parties hereto have caused this Agreement to be
duly  executed  by  their  respective  authorized officers, as of the date first
above  written.

                              CREATIVE  HOST  SERVICES,  INC.

                              By: /s/
                              Name:     _______________________________
                              Title:     _______________________________

         Address:             Creative  Host  Services,  Inc.
                              6335  Ferris  Square
                              Suite  G
                              San  Diego,  CA  92126
                              Fax:
                              Tel.:

                              GCA STRATEGIC INVESTMENT FUND LIMITED

                              By: /s/
                              Name:     Lewis  N.  Lester
                              Title:     Director

         Address:             c/o  Prime  Management  Limited
                              Mechanics  Building
                              12  Church  Street
                              Hamilton  HM  II,  Bermuda
                              Fax:     441-295-3926
                              Tel.:     441-295-0329

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