Document:

Exhibit 4.1

                          SECURITIES PURCHASE AGREEMENT

         This Securities  Purchase  Agreement (this  "Agreement") is dated as of
January 10, 2005 among  United  Network  Marketing  Services,  Inc.,  a Delaware
corporation  (the  "Company"),  and each  purchaser  identified on the signature
pages hereto (each,  including its  successors  and assigns,  a "Purchaser"  and
collectively the "Purchasers").

         WHEREAS,  subject  to the  terms  and  conditions  set  forth  in  this
Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act") and Rule 506 promulgated thereunder,  the Company desires
to issue  and sell to each  Purchaser,  and each  Purchaser,  severally  and not
jointly,  desires to purchase  from the Company,  shares of Series B Convertible
Preferred Stock of the Company and Common Stock Purchase Warrants of the Company
on the Closing Date, as more fully described in this Agreement.

         WHEREAS,  the Company  intends to enter into an  Agreement  and Plan of
Merger among the Company, Knockout Acquisition Corp., a Delaware corporation and
a wholly owned subsidiary of the Company ("Merger Sub"), and The Knockout Group,
Inc., a Delaware corporation ("Knockout"), by which Knockout will merge with and
into Merger Sub and Knockout will be the surviving entity from the Merger.

         WHEREAS,  the Merger shall occur before the sale of the  Securities  by
the Company to the  Purchasers and the  Purchasers  are  accordingly  purchasing
Securities of the post-Merger Company under this Agreement.

         WHEREAS,  subsequent  to the Merger,  the  Company,  through its wholly
owned subsidiary, Knockout, will be engaged in the business of selling household
and automobile  cleaning products that are based on a proprietary  encapsulation
technology.

         NOW,  THEREFORE,  IN CONSIDERATION of the mutual covenants contained in
this Agreement,  and for other good and valuable  consideration  the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:

                                    ARTICLE I.
                                   DEFINITIONS

         1.1  Definitions.  In addition to the terms  defined  elsewhere in this
Agreement, the following terms have the meanings indicated in this Section 1.1:

                  "Action"  shall  have the  meaning  ascribed  to such  term in
         Section 3.1(j).

                  "Affiliate"  means any Person  that,  directly  or  indirectly
         through one or more intermediaries,  controls or is controlled by or is
         under  common  control  with a  Person,  as such  terms are used in and
         construed  under Rule 144 under the  Securities  Act. With respect to a
         Purchaser,  any investment fund or managed account that is managed on a

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         discretionary  basis by the same  investment  manager as such Purchaser
         will be deemed to be an Affiliate of such Purchaser.

                  "Closing"  means the closing of the  purchase  and sale of the
         Securities pursuant to Section 2.2.

                  "Closing  Date"  means  the date  when all of the  Transaction
         Documents  have been executed and delivered by the  applicable  parties
         thereto,   and  all  conditions   precedent  to  (i)  the   Purchasers'
         obligations  to pay the  Subscription  Amount  and (ii)  the  Company's
         obligations to deliver the Securities have been satisfied or waived.

                  "Commission" means the Securities and Exchange Commission.

                  "Common  Stock" means the common  stock of the Company,  $.001
         par value per share,  and any  securities  into which such common stock
         shall hereinafter have been reclassified into.

                  "Common Stock Equivalents" means any securities of the Company
         or the  Subsidiaries  which would  entitle the  Stockholder  thereof to
         acquire at any time Common Stock,  including  without  limitation,  any
         debt,  preferred stock, rights,  options,  warrants or other instrument
         that is at any time convertible into or exchangeable  for, or otherwise
         entitles the Stockholder thereof to receive, Common Stock.

                  "Company Counsel" means Sichenzia Ross Friedman Ference LLP.

                  "Conversion  Price"  shall  have the  meaning  as set forth in
         Section 2.7(b).

                  "Disclosure  Schedules" means the Disclosure  Schedules of the
         Company delivered concurrently herewith.

                   "Effective Date" means the date that the initial Registration
         Statement  filed by the  Company  pursuant to the  Registration  Rights
         Agreement is first declared effective by the Commission.

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

                  "Exempt  Issuance"  means the issuance of (a) shares of Common
         Stock or options to officers,  directors,  employees or  consultants of
         the  Company  pursuant  to any stock or option  plan duly  adopted by a
         majority of the members of the Board of  Directors  of the Company or a
         majority of the members of a committee  of  directors  established  for
         such purpose,  (b)  securities  upon the  conversion of any  securities
         issued hereunder,  convertible  securities,  options or warrants issued
         and  outstanding  on the date of this  Agreement,  provided  that  such
         securities  have not been amended  since the date of this  Agreement to
         increase  the  number of such  securities,  and (c)  securities  issued
         pursuant to acquisitions or strategic  transactions,  provided any such
         issuance  shall only be to a Person  which is,  itself or  through  its
         subsidiaries,  an operating company in a business  synergistic with the
         business of the Company and in which the Company  receives  benefits in
         addition  to  the  investment  of  funds,   but  shall  not  include  a

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         transaction  in which the Company is issuing  securities  primarily for
         the purpose of raising  capital or to an entity whose primary  business
         is investing in securities.

                  "GAAP" shall have the meaning ascribed to such term in Section
         3.1(h) hereof.

                  "Knockout  Offering"  shall  mean a private  placement  by The
         Knockout  Group,  Inc.,  a  Delaware  corporation  and a  wholly  owned
         subsidiary  of the  Company,  of up to an aggregate  of  $2,500,000  of
         Series C Convertible Preferred Stock of The Knockout Group, Inc., which
         shall have completed prior to the Closing Date.

                   "Liens" means a lien, charge, security interest, encumbrance,
         right of first refusal, preemptive right or other restriction.

                  "Material  Adverse Effect" shall have the meaning  assigned to
         such term in Section 3.1(b) hereof.

                  "Material  Permits"  shall have the  meaning  ascribed to such
         term in Section 3.1(m).

                  "Merger" shall mean the merger of The Knockout Group,  Inc., a
         Delaware  corporation,  with and into a wholly owned  subsidiary  ofthe
         Company.  "Person"  means an  individual or  corporation,  partnership,
         trust,  incorporated  or  unincorporated  association,  joint  venture,
         limited  liability  company,  joint stock  company,  government  (or an
         agency or subdivision thereof) or other entity of any kind.

                  "Preferred  Stock" means,  the Series B Convertible  Preferred
         Stock issued by the Company to the Purchasers hereunder, in the form of
         Exhibit A.

                  "Proceeding" means an action,  claim,  suit,  investigation or
         proceeding (including,  without limitation, an investigation or partial
         proceeding, such as a deposition), whether commenced or threatened.

                  "Registration  Rights Agreement" means the Registration Rights
         Agreement, dated the date hereof, among the Company and the Purchasers,
         in the form of Exhibit B attached hereto.

                  "Registration   Statement"  means  a  registration   statement
         meeting the requirements set forth in the Registration Rights Agreement
         and covering the resale of the  Underlying  Shares by each Purchaser as
         provided for in the Registration Rights Agreement.

                  "Required  Approvals"  shall have the meaning ascribed to such
         term in Section 3.1(e).

                  "Rule  144"  means  Rule  144  promulgated  by the  Commission
         pursuant to the  Securities  Act, as such Rule may be amended from time

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         to time,  or any similar rule or  regulation  hereafter  adopted by the
         Commission having substantially the same effect as such Rule.

                  "Securities" means the Preferred Stock, the Warrants and the
         Underlying Shares.

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

                  "Subscription  Amount"  means,  as  to  each  Purchaser,   the
         aggregate amount to be paid for the Preferred Stock purchased hereunder
         as specified below such  Purchaser's name on the signature page of this
         Agreement  and next to the  heading  "Subscription  Amount,"  in United
         States Dollars and in immediately available funds.

                  "Subsidiary"  means any subsidiary of the Company as set forth
         on Schedule 3.1(a).

                  "Trading  Day" means a day on which the Common Stock is traded
         on a Trading Market.

                  "Trading  Market" means the following  markets or exchanges on
         which the Common  Stock is listed or quoted for  trading on the date in
         question:  the Nasdaq SmallCap Market, the American Stock Exchange, the
         New York Stock Exchange, the Nasdaq National Market or the OTC Bulletin
         Board.

                   "Transaction  Documents" means this Agreement,  the Warrants,
         the   Registration   Rights   Agreement,    the   Accredited   Investor
         Questionnaire  and  any  other  documents  or  agreements  executed  in
         connection with the transactions contemplated hereunder.

                  "Underlying  Shares" means the shares of Common Stock issuable
         upon: (i) conversion of the Preferred  Stock,  and (ii) exercise of the
         Warrants.

                  "Warrants"  means the Common Stock Purchase  Warrants,  in the
         form of  Exhibit  C,  delivered  to the  Purchasers  at the  Closing in
         accordance  with Section  2.3(a)(iii)  hereof,  which warrants shall be
         exercisable immediately upon issuance for a term of 5 years and have an
         exercise  price  equal to $2.25,  subject  to  adjustment  as  provided
         therein.

                                  ARTICLE II.
                                PURCHASE AND SALE

         2.1 Purchase Price.  The purchase price of the Preferred Stock shall be
$46.8933 per share (the "Purchase Price"). For each one share of Preferred Stock
purchased  hereunder,  each Purchaser will receive  sixteen (16) Warrants.  Each
Purchaser hereby agrees to purchase such number of shares of Preferred Stock and
Warrants for the aggregate  Subscription  Amount indicated on the signature page
hereto.

         2.2  Closing.  On the Closing  Date,  upon the terms and subject to the
conditions set forth herein,  concurrent with the execution and delivery of this
Agreement by the parties hereto,  the Company agrees to sell, and each Purchaser
agrees  to  purchase  in the  aggregate,  severally  and not  jointly,  at least

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$100,000  principal amount of the Preferred Stock and Warrants.  Notwithstanding
the above,  the Company may in its sole  discretion  accept  purchases less than
$100,000  principal  amount of the Preferred Stock and Warrants.  Each Purchaser
shall  deliver to an escrow  account  set up for the  benefit of the Company via
wire transfer or a certified  check  immediately  available funds equal to their
Subscription  Amount  and the  Company  shall  deliver to each  Purchaser  their
respective  Preferred Stock Certificates and Warrants as determined  pursuant to
Section 2.3(a) and the other items set forth in Section  2.3(a)  issuable at the
Closing.  Upon  satisfaction  of the  conditions  set forth in Section  2.3, the
Closing shall occur at the offices of the Company, or such other location as the
parties shall mutually agree.

         2.3 Deliveries.

                  a)       On the Closing Date, the Company shall deliver to the
                           counsel  for such  Purchasers  with  respect  to each
                           Purchaser the following:

                           (i)      this Agreement duly executed by the Company;

                           (ii)     a Preferred Stock  Certificate  representing
                                    the number of shares of  Preferred  Stock so
                                    purchased, in the name of such Purchaser;

                           (iii)    within 3 Trading Days of the date hereof,  a
                                    Warrant,  registered  in the  name  of  such
                                    Purchaser,  pursuant to which such Purchaser
                                    shall  have the right to  acquire  up to the
                                    number of shares  of Common  Stock  equal to
                                    ____________________; and

                           (iv)     the   Registration   Rights  Agreement  duly
                                    executed by the Company.

                  b)       On the Closing Date,  each Purchaser shall deliver or
                           cause  to  be  delivered   to  Company   Counsel  the
                           following:

                           (i)      this   Agreement   duly   executed  by  such
                                    Purchaser;

                           (ii)     such Purchaser's Subscription Amount by wire
                                    transfer  to an escrow  account  established
                                    for  the   benefit   of  the   Company   and
                                    controlled by the Company;

                           (iii)    the   Registration   Rights  Agreement  duly
                                    executed by such Purchaser;

                           (iv)     a     completed      Accredited     Investor
                                    Questionnaire; and

                           (v)      a completed Form W-9 or W-8, as applicable.

                  c)       On the Closing  Date,  the Company  shall  notify the
                           escrow  agent to release  the funds being held to the
                           Company.

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         2.4 Closing Conditions.

                  a)       The   obligations   of  the  Company   hereunder   in
                           connection  with  the  Closing  are  subject  to  the
                           following conditions being met:

                           (i)      the accuracy in all material  respects  when
                                    made  and  on  the   Closing   Date  of  the
                                    representations   and   warranties   of  the
                                    Purchasers contained herein;

                           (ii)     all obligations, covenants and agreements of
                                    the  Purchasers  required to be performed at
                                    or prior to the Closing Date shall have been
                                    performed;

                           (iii)    the delivery by the  Purchasers of the items
                                    set   forth  in   Section   2.3(b)  of  this
                                    Agreement; and

                           (iv)     the Company shall have completed the Merger.

                  b)       The   respective   obligations   of  the   Purchasers
                           hereunder in connection  with the Closing are subject
                           to the following conditions being met:

                           (i)      the accuracy in all material respects on the
                                    Closing  Date  of  the  representations  and
                                    warranties of the Company contained herein;

                           (ii)     all obligations, covenants and agreements of
                                    the Company  required to be  performed at or
                                    prior to the  Closing  Date  shall have been
                                    performed;

                           (iii)    the Company shall have completed the Merger;

                           (iv)     the delivery by the Company of the items set
                                    forth in Section  2.3(a) of this  Agreement;
                                    and

                           (v)      there  shall have been no  Material  Adverse
                                    Effect with respect to the Company since the
                                    date hereof.

         2.5      Dividends.

                  a)       Payment of  Dividend in Cash.  The Company  shall pay
                           dividends on the  Preferred  Stock at the rate of 10%
                           per annum,  payable  quarterly on January 1, April 1,
                           July 1 and  October 1,  beginning  April 1, 2005,  in
                           cash  based on the  stated  value of all  unconverted
                           Preferred  Stock.  The dividend rate shall be subject
                           to an  adjustment  based on Section 2.10,  below.  No
                           dividends  shall  be  paid  on  previously  converted
                           Preferred Stock.

                  b)       Dividend Calculations.  Dividends shall be calculated
                           on the basis of a 360-day year and shall accrue daily
                           commencing on the date hereof.

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                  c)       Late Fee. All overdue accrued and unpaid dividends to
                           be paid hereunder shall entail a late fee at the rate
                           of 18% per annum of such accrued and unpaid dividend,
                           which will accrue  daily from the date such  dividend
                           is due  hereunder  through and  including the date of
                           payment.

         2.6  Investment  Representations.  The Preferred  Stock has been issued
subject  to  certain  investment  representations  set  forth  in  the  Purchase
Agreement  and may be  transferred  or  exchanged  only in  compliance  with the
Purchase  Agreement  and  applicable  federal  and  state  securities  laws  and
regulations.

         2.7. Conversion.

                  a)       Mandatory  Conversion.  Immediately after the Company
                           amends its Certificate of  Incorporation to authorize
                           an increase  in the  Company's  authorized  number of
                           shares  of  Common  Stock to a  sufficient  number of
                           shares  of  Common   Stock  so  that  all  shares  of
                           Preferred  Stock may be  converted  into Common Stock
                           (the  "Conversion  Date"),  the Preferred Stock shall
                           automatically    convert    into   fully   paid   and
                           nonassessable  shares of Common Stock (subject to the
                           limitations   on   conversion   set   forth  in  this
                           Agreement).  Immediately  after the Conversion  Date,
                           the Company shall cancel the Preferred Stock.

                  b)       Conversion   Price.   Subject  to  Section  2.7,  the
                           conversion  price in  effect on the  Conversion  Date
                           shall  equal   $.2931  per  share  (the   "Conversion
                           Price").

                  c)       Mechanics of Conversion

                           i.       Conversion  Shares  Issuable Upon Conversion
                                    of Preferred  Stock. The number of shares of
                                    Common  Stock  issuable  upon  a  conversion
                                    hereunder   shall  be   determined   by  the
                                    quotient obtained by dividing (x) the stated
                                    value  of the  Preferred  Stock  and (y) the
                                    Conversion Price.

                           ii.      Fractional   Shares.   Upon   a   conversion
                                    hereunder  the Company shall not be required
                                    to  issue  fractions  of  shares  of  Common
                                    Stock, but may if otherwise permitted,  make
                                    a cash  payment  in  respect  of  any  final
                                    fraction  of a  share  based  on the  stated
                                    value of the Preferred Stock. If the Company
                                    elects  not,  or is  unable,  to make such a
                                    cash  payment,   the   Purchaser   shall  be
                                    entitled  to  receive,  in lieu of the final
                                    fraction  of a  share,  one  whole  share of
                                    Common Stock.

         2.8. Certain Adjustments.

                  a)       Subsequent   Equity  Sales.   Other  than  an  Exempt
                           Issuance,  if the Company or any Subsidiary  thereof,
                           as applicable,  at any time while the Preferred Stock
                           is  outstanding,  shall  issue  any  Common  Stock or
                           Common Stock Equivalent for a per share or conversion
                           or  exercise  price per share  which is less than the
                           Conversion Price,  then, and thereafter  successively
                           upon each such issue,  the Conversion  Price shall be
                           reduced to such other lower per share price.

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                  b)       Calculations. All calculations under this Section 2.8
                           shall  be made  to the  nearest  cent or the  nearest
                           1/100th of a share, as the case may be. The number of
                           shares of Common Stock  outstanding at any given time
                           shall not  include  shares of Common  Stock  owned or
                           held by or for the  account of the  Company,  and the
                           description  of any such shares of Common Stock shall
                           be considered  on issue or sale of Common Stock.  For
                           purposes of this Section 2.8, the number of shares of
                           Common Stock deemed to be issued and  outstanding  as
                           of a given  date  shall be the sum of the  number  of
                           shares of Common Stock (excluding treasury shares, if
                           any) issued and outstanding.

                  c)       Adjustment   to   Conversion   Price.   Whenever  the
                           Conversion   Price  is  adjusted   pursuant  to  this
                           Section,  the  Company  shall  promptly  mail to each
                           Stockholder  a notice  setting  forth the  Conversion
                           Price after such adjustment and setting forth a brief
                           statement of the facts requiring such adjustment.  If
                           the  Company  issues a variable  rate  security,  the
                           Company  shall be deemed to have issued  Common Stock
                           or Common Stock  Equivalents  at the lowest  possible
                           conversion or exercise price at which such securities
                           may be converted or exercised.

         2.9.  Optional  Redemption.  At the option of the Company,  at any time
after March 31,  2005,  the Company may redeem all of the  Preferred  Stock at a
purchase  price  equal to the  stated  value of the  Preferred  Stock,  plus all
accrued, but unpaid dividends.  The Company shall give the Stockholders at least
10 days prior written notice of its intention to redeem the Preferred Stock.

         2.10.  Dividend  Adjustment.  In the event that the Preferred Stock has
not  converted  into Common  Stock  pursuant  to Section  2.7(a) or has not been
redeemed by the Company as described in Section 2.9,  above,  within 180 days of
the Closing Date, the dividend rate shall increase to 20% per annum.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

         3.1 Representations and Warranties of the Company.  Except as set forth
in the Disclosure  Schedules,  which shall be deemed a part hereof,  the Company
hereby  makes  the  representations  and  warranties  set  forth  below  to each
Purchaser.

                  (a)      Subsidiaries.   All  of  the  direct   and   indirect
                           subsidiaries  of the  Company  are set  forth  in the
                           Disclosure  Schedules.  The Company owns, directly or
                           indirectly,  all of the capital stock or other equity
                           interests  of each  Subsidiary  free and clear of any
                           Liens,  and all the issued and outstanding  shares of
                           capital stock of each  Subsidiary  are validly issued
                           and  are  fully  paid,  non-assessable  and  free  of
                           preemptive  and similar  rights to  subscribe  for or
                           purchase   securities.   If   the   Company   has  no
                           subsidiaries,  then  references  in  the  Transaction
                           Documents to the Subsidiaries will be disregarded.

                  (b)      Organization and  Qualification.  Each of the Company
                           and the  Subsidiaries is an entity duly  incorporated
                           or otherwise organized,  validly existing and in good

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                           standing  under the laws of the  jurisdiction  of its
                           incorporation or organization  (as applicable),  with
                           the requisite  power and authority to own and use its
                           properties and assets and to carry on its business as
                           currently  conducted.  Neither  the  Company  nor any
                           Subsidiary  is in  violation or default of any of the
                           provisions of its respective  certificate or articles
                           of incorporation,  bylaws or other  organizational or
                           charter  documents.  Each  of  the  Company  and  the
                           Subsidiaries  is duly  qualified to conduct  business
                           and is in good standing as a foreign  corporation  or
                           other entity in each jurisdiction in which the nature
                           of the  business  conducted  or property  owned by it
                           makes such qualification necessary,  except where the
                           failure to be so  qualified or in good  standing,  as
                           the case may be,  could  not  have or  reasonably  be
                           expected to result in (i) a material  adverse  effect
                           on the legality,  validity or  enforceability  of any
                           Transaction Documents, (ii) a material adverse effect
                           on  the  results  of  operations,  assets,  business,
                           prospects or  financial  condition of the Company and
                           the  Subsidiaries,  taken  as a  whole,  or  (iii)  a
                           material  adverse effect on the Company's  ability to
                           perform in any material respect on a timely basis its
                           obligations  under any  Transaction  Document (any of
                           (i), (ii) or (iii), a "Material  Adverse Effect") and
                           no  Proceeding  has  been   instituted  in  any  such
                           jurisdiction  revoking,  limiting  or  curtailing  or
                           seeking  to revoke,  limit or curtail  such power and
                           authority or qualification.

                  (c)      Authorization;   Enforcement.  The  Company  has  the
                           requisite corporate power and authority to enter into
                           and to consummate the  transactions  contemplated  by
                           each of the  Transaction  Documents  and otherwise to
                           carry out its obligations  thereunder.  The execution
                           and delivery of each of the Transaction  Documents by
                           the  Company  and  the  consummation  by  it  of  the
                           transactions  contemplated  thereby  have  been  duly
                           authorized by all necessary action on the part of the
                           Company  and no  further  action is  required  by the
                           Company  in  connection   therewith   other  than  in
                           connection   with  the   Required   Approvals.   Each
                           Transaction  Document has been (or upon delivery will
                           have been) duly  executed  by the Company  and,  when
                           delivered in accordance  with the terms hereof,  will
                           constitute  the valid and binding  obligation  of the
                           Company enforceable against the Company in accordance
                           with its terms  except (i) as  limited by  applicable
                           bankruptcy,  insolvency,  reorganization,  moratorium
                           and  other  laws  of  general  application  affecting
                           enforcement of creditors'  rights  generally and (ii)
                           as limited by laws  relating to the  availability  of
                           specific  performance,  injunctive  relief  or  other
                           equitable remedies.

                  (d)      No Conflicts. The execution, delivery and performance
                           of the  Transaction  Documents by the Company and the
                           consummation by the Company of the other transactions
                           contemplated   thereby  do  not  and  will  not:  (i)
                           conflict   with  or  violate  any  provision  of  the
                           Company's or any Subsidiary's certificate or articles
                           of incorporation,  bylaws or other  organizational or
                           charter   documents,   or  (ii)  conflict   with,  or
                           constitute a default (or an event that with notice or
                           lapse of time or both would become a default)  under,
                           result  in the  creation  of any Lien upon any of the
                           properties   or   assets  of  the   Company   or  any
                           Subsidiary,   or  give  to  others   any   rights  of
                           termination,  amendment, acceleration or cancellation
                           (with or without  notice,  lapse of time or both) of,
                           any  agreement,   credit  facility,   debt  or  other
                           instrument  (evidencing a Company or Subsidiary  debt
                           or  otherwise)  or other  understanding  to which the
                           Company or any  Subsidiary is a party or by which any
                           property or asset of the Company or any Subsidiary is
                           bound or affected,  or (iii)  subject to the Required

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                           Approvals,  conflict with or result in a violation of
                           any   law,   rule,   regulation,   order,   judgment,
                           injunction,  decree or other restriction of any court
                           or  governmental  authority to which the Company or a
                           Subsidiary  is subject  (including  federal and state
                           securities  laws and  regulations),  or by which  any
                           property or asset of the Company or a  Subsidiary  is
                           bound  or  affected;  except  in the  case of each of
                           clauses  (ii) and  (iii),  such as could  not have or
                           reasonably  be  expected  to  result  in  a  Material
                           Adverse Effect.

                  (e)      Filings,  Consents and Approvals.  The Company is not
                           required to obtain any consent, waiver, authorization
                           or order of,  give any  notice to, or make any filing
                           or  registration  with,  any court or other  federal,
                           state, local or other governmental authority or other
                           Person in connection with the execution, delivery and
                           performance   by  the  Company  of  the   Transaction
                           Documents,   other  than  (i)  the  filing  with  the
                           Commission of the  Registration  Statement,  (ii) the
                           notice  and/or   application(s)  to  each  applicable
                           Trading  Market  for  the  issuance  and  sale of the
                           Preferred  Stock and the  listing  of the  Underlying
                           Shares  for  trading  thereon  in the time and manner
                           required  thereby and (iii) the filing of Form D with
                           the Commission and such filings as are required to be
                           made   under   applicable   state   securities   laws
                           (collectively,     the     "Required     Approvals").

                  (f)      Issuance of the  Securities.  The Securities are duly
                           authorized   and,   when   issued  and  paid  for  in
                           accordance with the applicable Transaction Documents,
                           will be duly  and  validly  issued,  fully  paid  and
                           nonassessable, free and clear of all Liens imposed by
                           the  Company  other  than  restrictions  on  transfer
                           provided  for  in  the  Transaction  Documents.   The
                           Underlying Shares, when issued in accordance with the
                           terms of the Transaction  Documents,  will be validly
                           issued, fully paid and nonassessable,  free and clear
                           of all Liens imposed by the Company.  The Company has
                           reserved  from its duly  authorized  capital  stock a
                           number of shares of Common  Stock for issuance of the
                           Underlying  Shares at least equal to the Common Stock
                           that  would  result  from  full   conversion  of  all
                           Preferred  Stock on the date hereof.  The Company has
                           not,  and  to  the  knowledge  of  the  Company,   no
                           Affiliate  of the Company has sold,  offered for sale
                           or solicited offers to buy or otherwise negotiated in
                           respect of any  security  (as defined in Section 2 of
                           the Securities Act) that would be integrated with the
                           offer  or sale of the  Securities  in a  manner  that
                           would require the  registration  under the Securities
                           Act of the sale of the Securities to the  Purchasers,
                           or that would be integrated with the offer or sale of
                           the   Securities   for  purposes  of  the  rules  and
                           regulations of any Trading Market.

                  (g)      Capitalization.  The capitalization of the Company is
                           as set forth in the Disclosure Schedules. The Company
                           has not issued any capital  stock other than pursuant
                           to the exercise of employee  stock  options under the
                           Company's stock option plans,  the issuance of shares
                           of  Common  Stock  to   employees   pursuant  to  the
                           Company's  employee  stock purchase plan and pursuant
                           to the conversion or exercise of  outstanding  Common
                           Stock  Equivalents.  No Person has any right of first
                           refusal, preemptive right, right of participation, or
                           any similar right to participate in the  transactions
                           contemplated by the Transaction Documents.  Except as
                           set forth in the Disclosure Schedules, as a result of
                           the purchase and sale of the Securities, there are no
                           outstanding  options,   warrants,  script  rights  to
                           subscribe to, calls or  commitments  of any character
                           whatsoever  relating  to,  or  securities,  rights or
                           obligations  convertible into or exchangeable for, or

                                       10
<PAGE>

                           giving  any  Person  any  right to  subscribe  for or
                           acquire,  any shares of Common  Stock,  or contracts,
                           commitments,  understandings or arrangements by which
                           the Company or any  Subsidiary is or may become bound
                           to  issue  additional  shares  of  Common  Stock,  or
                           securities or rights convertible or exchangeable into
                           shares of Common Stock.  The issuance and sale of the
                           Securities  will not  obligate  the  Company to issue
                           shares of  Common  Stock or other  securities  to any
                           Person  (other  than  the  Purchasers)  and  will not
                           result  in a  right  of any  Stockholder  of  Company
                           securities  to  adjust  the   exercise,   conversion,
                           exchange or reset price under such securities. All of
                           the  outstanding  shares  of  capital  stock  of  the
                           Company   are   validly   issued,   fully   paid  and
                           nonassessable,  have been issued in  compliance  with
                           all federal and state  securities  laws,  and none of
                           such  outstanding  shares was issued in  violation of
                           any preemptive  rights or similar rights to subscribe
                           for or purchase  securities.  No further  approval or
                           authorization  of  any  Stockholder,   the  Board  of
                           Directors  of the Company or others is  required  for
                           the issuance and sale of the Securities.

                  (h)      Financial    Statements.    The   audited   financial
                           statements  of the  Company as of and for the periods
                           ended  December 31, 2003 and 2002 have been  prepared
                           in accordance with United States  generally  accepted
                           accounting  principles  applied on a consistent basis
                           during the periods involved  ("GAAP"),  except as may
                           be otherwise  specified in such financial  statements
                           and except that such unaudited  financial  statements
                           may not contain all footnotes  required by GAAP,  and
                           fairly present in all material respects the financial
                           position  of  the   Company   and  its   consolidated
                           subsidiaries  as of and for the dates thereof and the
                           results of operations  and cash flows for the periods
                           then  ended,   subject,  in  the  case  of  unaudited
                           statements,  to normal,  immaterial,  year-end  audit
                           adjustments.

                  (i)      Material   Changes.   Except  as   described  in  the
                           Disclosure  Schedules,  since the date of the  latest
                           fiscal  year (i) there has been no event,  occurrence
                           or development  that has had or that could reasonably
                           be expected to result in a Material  Adverse  Effect,
                           (ii) the Company  has not  incurred  any  liabilities
                           (contingent  or  otherwise)   other  than  (A)  trade
                           payables  and  accrued   expenses   incurred  in  the
                           ordinary  course  of  business  consistent  with past
                           practice  and  (B)  liabilities  not  required  to be
                           reflected  in  the  Company's  financial   statements
                           pursuant  to GAAP,  (iii) the Company has not altered
                           its method of  accounting,  (iv) the  Company has not
                           declared or made any dividend or distribution of cash
                           or other property to its  Stockholders  or purchased,
                           redeemed or made any agreements to purchase or redeem
                           any shares of its  capital  stock and (v) the Company
                           has not issued any equity  securities to any officer,
                           director or  Affiliate,  except  pursuant to existing
                           Company stock option plans.

                  (j)      Litigation. Other than as set forth in the Disclosure
                           Schedules,  there is no action, suit, inquiry, notice
                           of violation, proceeding or investigation pending or,
                           to the knowledge of the Company,  threatened  against
                           or affecting  the Company,  any  Subsidiary or any of
                           their respective  properties  before or by any court,
                           arbitrator,  governmental or administrative agency or
                           regulatory  authority (federal,  state, county, local
                           or foreign)  (collectively,  an  "Action")  which (i)
                           adversely   affects  or   challenges   the  legality,
                           validity or  enforceability of any of the Transaction
                           Documents or the  Securities or (ii) could,  if there
                           were an unfavorable  decision,  have or reasonably be

                                       11
<PAGE>

                           expected  to result  in a  Material  Adverse  Effect.
                           Neither  the  Company  nor  any  Subsidiary,  nor any
                           director  or  officer  thereof,  is or has  been  the
                           subject of any Action  involving a claim of violation
                           of or  liability  under  federal or state  securities
                           laws or a claim of breach of  fiduciary  duty.  There
                           has not been,  and to the  knowledge  of the Company,
                           there   is   not   pending   or   contemplated,   any
                           investigation by the Commission involving the Company
                           or any  current or former  director or officer of the
                           Company.

                  (k)      Labor Relations. No material labor dispute exists or,
                           to the  knowledge  of the Company,  is imminent  with
                           respect to any of the  employees of the Company which
                           could  reasonably be expected to result in a Material
                           Adverse Effect.

                  (l)      Compliance.  Neither the  Company nor any  Subsidiary
                           (i) is in default  under or in  violation  of (and no
                           event has  occurred  that has not been  waived  that,
                           with notice or lapse of time or both, would result in
                           a default by the  Company or any  Subsidiary  under),
                           nor has the Company or any Subsidiary received notice
                           of a claim that it is in default  under or that it is
                           in  violation  of,  any  indenture,  loan  or  credit
                           agreement  or any other  agreement or  instrument  to
                           which  it is a  party  or by  which  it or any of its
                           properties  is bound  (whether or not such default or
                           violation has been  waived),  (ii) is in violation of
                           any order of any court,  arbitrator  or  governmental
                           body,  or (iii) is in violation of any statute,  rule
                           or   regulation   of  any   governmental   authority,
                           including  without  limitation all foreign,  federal,
                           state  and  local  laws  applicable  to its  business
                           except  in each  case as could  not  have a  Material
                           Adverse Effect.

                  (m)      Regulatory Permits.  The Company and the Subsidiaries
                           possess all certificates,  authorizations and permits
                           issued by the appropriate  federal,  state,  local or
                           foreign regulatory  authorities  necessary to conduct
                           their respective businesses, except where the failure
                           to possess such permits  could not have or reasonably
                           be  expected to result in a Material  Adverse  Effect
                           ("Material Permits"), and neither the Company nor any
                           Subsidiary  has  received  any notice of  proceedings
                           relating to the  revocation  or  modification  of any
                           Material Permit.

                  (n)      Title to Assets.  The  Company  and the  Subsidiaries
                           have good and  marketable  title in fee simple to all
                           real  property  owned by them that is material to the
                           business of the Company and the Subsidiaries and good
                           and marketable  title in all personal  property owned
                           by  them  that is  material  to the  business  of the
                           Company and the  Subsidiaries,  in each case free and
                           clear  of  all  Liens,  except  for  Liens  as do not
                           materially  affect the value of such  property and do
                           not  materially  interfere  with  the  use  made  and
                           proposed  to be made of such  property by the Company
                           and the  Subsidiaries  and Liens for the  payment  of
                           federal,  state or other taxes,  the payment of which
                           is neither  delinquent nor subject to penalties.  Any
                           real property and facilities  held under lease by the
                           Company and the  Subsidiaries  are held by them under
                           valid, subsisting and enforceable leases of which the
                           Company and the Subsidiaries are in compliance.

                  (o)      Patents   and   Trademarks.   The   Company  and  the
                           Subsidiaries   have,  or  have  rights  to  use,  all
                           patents, patent applications,  trademarks,  trademark
                           applications, service marks, trade names, copyrights,
                           licenses  and  other  similar  rights   necessary  or

                                       12
<PAGE>

                           material for use in connection with their  respective
                           businesses  and which the  failure  to so have  could
                           have a Material  Adverse  Effect  (collectively,  the
                           "Intellectual Property Rights").  Neither the Company
                           nor any Subsidiary has received a written notice that
                           the Intellectual  Property Rights used by the Company
                           or any  Subsidiary  violates  or  infringes  upon the
                           rights  of  any  Person.  To  the  knowledge  of  the
                           Company,  all such  Intellectual  Property Rights are
                           enforceable and there is no existing  infringement by
                           another  Person of any of the  Intellectual  Property
                           Rights of others.

                  (p)      Insurance.  The  Company  and  the  Subsidiaries  are
                           insured   by   insurers   of   recognized   financial
                           responsibility  against  such losses and risks and in
                           such  amounts as are  prudent  and  customary  in the
                           businesses in which the Company and the  Subsidiaries
                           are engaged, including, but not limited to, directors
                           and  officers  insurance.  To the  best of  Company's
                           knowledge,  such insurance contracts and policies are
                           accurate  and  complete.  Neither the Company nor any
                           Subsidiary has any reason to believe that it will not
                           be able to renew its existing  insurance  coverage as
                           and when such coverage  expires or to obtain  similar
                           coverage from similar insurers as may be necessary to
                           continue its business without a significant  increase
                           in cost.

                  (q)      Transactions With Affiliates and Employees. Except as
                           set forth in the  Disclosure  Schedules,  none of the
                           officers  or  directors  of the  Company  and, to the
                           knowledge  of the Company,  none of the  employees of
                           the Company is  presently a party to any  transaction
                           with the  Company or any  Subsidiary  (other than for
                           services  as  employees,   officers  and  directors),
                           including   any   contract,    agreement   or   other
                           arrangement  providing for the furnishing of services
                           to or by,  providing  for rental of real or  personal
                           property to or from, or otherwise  requiring payments
                           to or from any officer, director or such employee or,
                           to the knowledge of the Company,  any entity in which
                           any  officer,  director,  or any such  employee has a
                           substantial  interest  or  is an  officer,  director,
                           trustee or partner, in each case in excess of $50,000
                           other than (i) for  payment  of salary or  consulting
                           fees for services  rendered,  (ii)  reimbursement for
                           expenses  incurred on behalf of the Company and (iii)
                           for other employee  benefits,  including stock option
                           agreements   under  any  stock  option  plan  of  the
                           Company.

                  (r)      Intentionally Omitted.

                  (s)      Certain Fees.  Except for fees owed to Duncan Capital
                           LLC  and/or  the  Wright  Group in  relation  to this
                           Offering,   no   brokerage   or   finder's   fees  or
                           commissions  are or will be payable by the Company to
                           any broker, financial advisor or consultant,  finder,
                           placement  agent,  investment  banker,  bank or other
                           Person with respect to the transactions  contemplated
                           by  this  Agreement.  The  Purchasers  shall  have no
                           obligation  with  respect to any fees or with respect
                           to any claims  made by or on behalf of other  Persons
                           for fees of a type  contemplated in this Section that
                           may  be  due  in  connection  with  the  transactions
                           contemplated by this Agreement.

                  (t)      Private  Placement.  Assuming  the  accuracy  of  the
                           Purchasers  representations  and warranties set forth
                           in Section 3.2, no registration  under the Securities
                           Act  is  required  for  the  offer  and  sale  of the

                                       13
<PAGE>

                           Securities  by  the  Company  to  the  Purchasers  as
                           contemplated  hereby.  The  issuance  and sale of the
                           Securities  hereunder  does not  contravene the rules
                           and regulations of the Trading Market.

                  (u)      Investment Company. The Company is not, and is not an
                           Affiliate  of,  and  immediately   after  receipt  of
                           payment  for  the  Securities,  will  not be or be an
                           Affiliate  of, an  "investment  company"  within  the
                           meaning of the  Investment  Company  Act of 1940,  as
                           amended.  The Company shall conduct its business in a
                           manner  so that it will  not  become  subject  to the
                           Investment Company Act.

                  (v)      Registration  Rights.  Except  as  set  forth  on the
                           Disclosure Schedules,  and other than the Purchasers,
                           no  Person  has any  right to cause  the  Company  to
                           effect the  registration  under the Securities Act of
                           any securities of the Company.

                  (w)      Intentionally Omitted.

                  (x)      Intentionally Omitted.

                  (y)      Disclosure. All disclosure provided to the Purchasers
                           regarding   the   Company,   its   business  and  the
                           transactions   contemplated  hereby,   including  the
                           Disclosure Schedules to this Agreement,  furnished by
                           or on  behalf  of the  Company  with  respect  to the
                           representations  and warranties  made herein are true
                           and correct with respect to such  representations and
                           warranties and do not contain any untrue statement of
                           a material  fact or omit to state any  material  fact
                           necessary  in  order  to  make  the  statements  made
                           therein,  in light of the  circumstances  under which
                           they  were  made,   not   misleading.   The   Company
                           acknowledges  and agrees that no  Purchaser  makes or
                           has  made  any  representations  or  warranties  with
                           respect to the transactions contemplated hereby other
                           than  those  specifically  set forth in  Section  3.2
                           hereof.

                  (z)      No Integrated Offering.  Assuming the accuracy of the
                           Purchasers'  representations and warranties set forth
                           in Section 3.2,  neither the Company,  nor any of its
                           affiliates,  nor any  Person  acting  on its or their
                           behalf has,  directly or indirectly,  made any offers
                           or sales of any security or  solicited  any offers to
                           buy any  security,  under  circumstances  that  would
                           cause  this   offering  of  the   Securities   to  be
                           integrated  with prior  offerings  by the Company for
                           purposes  of the  Securities  Act  or any  applicable
                           Stockholder approval provisions,  including,  without
                           limitation,  under the rules and  regulations  of any
                           exchange or automated  quotation  system on which any
                           of  the  securities  of the  Company  are  listed  or
                           designated.

                  (aa)     Intentionally Omitted.

                  (bb)     Tax  Status.  Except  for  matters  that  would  not,
                           individually or in the aggregate,  have or reasonably
                           be expected to result in a Material  Adverse  Effect,
                           the  Company  and  each   Subsidiary  has  filed  all
                           necessary  federal,  state  and  foreign  income  and
                           franchise  tax  returns  and has paid or accrued  all
                           taxes  shown as due  thereon,  and the Company has no
                           knowledge of a tax deficiency which has been asserted
                           or threatened against the Company or any Subsidiary.

                                       14
<PAGE>

                  (cc)     No General Solicitation.  Neither the Company nor any
                           person acting on behalf of the Company has offered or
                           sold any of the  Securities  by any  form of  general
                           solicitation or general advertising.  The Company has
                           offered   the   Securities   for  sale  only  to  the
                           Purchasers and certain other  "accredited  investors"
                           within the  meaning of Rule 501 under the  Securities
                           Act.

                  (dd)     Foreign Corrupt Practices.  Neither the Company,  nor
                           to the  knowledge of the Company,  any agent or other
                           person  acting  on  behalf  of the  Company,  has (i)
                           directly or  indirectly,  used any corrupt  funds for
                           unlawful contributions, gifts, entertainment or other
                           unlawful  expenses  related to  foreign  or  domestic
                           political activity, (ii) made any unlawful payment to
                           foreign or domestic government officials or employees
                           or to any  foreign or domestic  political  parties or
                           campaigns  from  corporate  funds,  (iii)  failed  to
                           disclose fully any  contribution  made by the Company
                           (or made by any person  acting on its behalf of which
                           the Company is aware)  which is in  violation of law,
                           or  (iv)   violated  in  any  material   respect  any
                           provision  of the Foreign  Corrupt  Practices  Act of
                           1977, as amended.

                  (ee)     Accountants.  Knockout is in the process of retaining
                           BDO Seidman, LLP as its accountants. Knockout expects
                           that such accountants will express their opinion with
                           respect to the  financial  statements of Knockout for
                           the year ended  December  31, 2003 and will provide a
                           review of the  financial  statements  of Knockout for
                           the period ended September 30, 2004.

                  (ff)     Intentionally Omitted.

                  (gg)     Intentionally Omitted.

                  (hh)     Acknowledgment   Regarding  Purchasers'  Purchase  of
                           Securities.  The Company acknowledges and agrees that
                           each  of  the  Purchasers  is  acting  solely  in the
                           capacity of an arm's length purchaser with respect to
                           the  Transaction   Documents  and  the   transactions
                           contemplated hereby. The Company further acknowledges
                           that no Purchaser is acting as a financial advisor or
                           fiduciary of the Company (or in any similar capacity)
                           with respect to this  Agreement and the  transactions
                           contemplated  hereby  and  any  advice  given  by any
                           Purchaser or any of their respective  representatives
                           or agents in connection  with this  Agreement and the
                           transactions contemplated hereby is merely incidental
                           to the Purchasers'  purchase of the  Securities.  The
                           Company further represents to each Purchaser that the
                           Company's  decision to enter into this  Agreement has
                           been based solely on the  independent  evaluation  of
                           the transactions  contemplated  hereby by the Company
                           and  its   representatives.   The   Company   further
                           acknowledges   that   in   addition   to   purchasing
                           Securities,  the  Purchasers or their  affiliates may
                           directly or indirectly own Common Stock and Preferred
                           Stock  in  the   Company   and  that  such   parties,
                           exercising   their  rights  hereunder  may  adversely
                           impact  their  other  holdings  as well as the  other
                           equity Stockholders in the Company.

                                       15
<PAGE>

         3.2  Representations  and Warranties of the Purchasers.  Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:

                  (a)      Organization;   Authority.   Such   Purchaser  is  an
                           accredited  investor and in the case of an entity, as
                           opposed  to  and  individual,  such  entity  is  duly
                           organized,  validly  existing  and in  good  standing
                           under   the   laws   of  the   jurisdiction   of  its
                           organization   with   full   right,    corporate   or
                           partnership  power and authority to enter into and to
                           consummate  the  transactions   contemplated  by  the
                           Transaction  Documents and otherwise to carry out its
                           obligations thereunder.  The execution,  delivery and
                           performance  by such  Purchaser  of the  transactions
                           contemplated   by  this   Agreement  have  been  duly
                           authorized  by all  necessary  corporate  or  similar
                           action   on  the   part  of  such   Purchaser.   Each
                           Transaction  Document to which it is a party has been
                           duly executed by such  Purchaser,  and when delivered
                           by  such  Purchaser  in  accordance  with  the  terms
                           hereof, will constitute the valid and legally binding
                           obligation of such Purchaser,  enforceable against it
                           in accordance  with its terms,  except (i) as limited
                           by  general   equitable   principles  and  applicable
                           bankruptcy,  insolvency,  reorganization,  moratorium
                           and  other  laws  of  general  application  affecting
                           enforcement of creditors' rights  generally,  (ii) as
                           limited  by  laws  relating  to the  availability  of
                           specific  performance,  injunctive  relief  or  other
                           equitable    remedies    and   (iii)    insofar    as
                           indemnification  and  contribution  provisions may be
                           limited by applicable law.

                  (b)      Purchaser Representation.  Such Purchaser understands
                           that the Securities are  "restricted  securities" and
                           have not been registered  under the Securities Act or
                           any applicable  state securities law and is acquiring
                           the  Securities  as principal for its own account and
                           not with a view to or for  distributing  or reselling
                           such  Securities or any part thereof,  has no present
                           intention of distributing  any of such Securities and
                           has no  arrangement or  understanding  with any other
                           persons regarding the distribution of such Securities
                           (this  representation  and warranty not limiting such
                           Purchaser's right to sell the Securities  pursuant to
                           the Registration Statement or otherwise in compliance
                           with applicable  federal and state securities  laws).
                           Such Purchaser is acquiring the Securities  hereunder
                           in  the  ordinary   course  of  its  business.   Such
                           Purchaser    does   not   have   any   agreement   or
                           understanding,   directly  or  indirectly,  with  any
                           Person to distribute any of the Securities.

                  (c)      Purchaser  Status.  At the time  such  Purchaser  was
                           offered  the  Securities,  it  was,  and at the  date
                           hereof  it is,  and on  each  date  it  converts  any
                           Preferred  Stock or exercises any Warrants it will be
                           either:  (i) an  "accredited  investor" as defined in
                           Rule  501(a)(1),  (a)(2),  (a)(3),  (a)(7)  or (a)(8)
                           under  the   Securities  Act  or  (ii)  a  "qualified
                           institutional buyer" as defined in Rule 144A(a) under
                           the Securities Act. Such Purchaser is not required to
                           be registered as a broker-dealer  under Section 15 of
                           the Exchange Act.

                  (d)      Experience of Such Purchaser. Such Purchaser,  either
                           alone or together with its representatives,  has such
                           knowledge,  sophistication and experience in business
                           and  financial   matters  so  as  to  be  capable  of
                           evaluating  the merits  and risks of the  prospective
                           investment  in the  Securities,  and has so evaluated
                           the  merits  and  risks  of  such  investment.   Such
                           Purchaser  is able to bear  the  economic  risk of an

                                       16
<PAGE>

                           investment  in the  Securities  and,  at the  present
                           time,  is  able to  afford  a  complete  loss of such
                           investment.

                  (e)      General   Solicitation.   Such   Purchaser   is   not
                           purchasing   the   Securities  as  a  result  of  any
                           advertisement, article, notice or other communication
                           regarding the Securities  published in any newspaper,
                           magazine   or  similar   media  or   broadcast   over
                           television  or radio or  presented  at any seminar or
                           any   other   general    solicitation    or   general
                           advertisement.

                  (f)      Registration   Required.    Each   Purchaser   hereby
                           covenants  with the  Company  not to make any sale of
                           the Securities  without complying with the provisions
                           hereof and of the Registration Rights Agreement,  and
                           without  effectively  causing the prospectus delivery
                           requirement  under the Securities Act to be satisfied
                           (unless such Purchaser is selling such  Securities in
                           a transaction not subject to the prospectus  delivery
                           requirement),  and such Purchaser  acknowledges  that
                           the  certificates  evidencing the  Underlying  Shares
                           will be imprinted with a legend that prohibits  their
                           transfer except in accordance therewith.

                  The Company  acknowledges  and agrees that each Purchaser does
         not make or has not made any representations or warranties with respect
         to the transactions  contemplated  hereby other than those specifically
         set forth in this Section 3.2.

                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

         4.1 Transfer Restrictions.

                  (a)      The  Securities may only be disposed of in compliance
                           with state and federal securities laws. In connection
                           with any transfer of  Securities  other than pursuant
                           to an effective  registration  statement or Rule 144,
                           to the Company or to an  affiliate  of a Purchaser or
                           in  connection  with  a  pledge  as  contemplated  in
                           Section   4.1(b),   the   Company   may  require  the
                           transferor  thereof  to  provide  to the  Company  an
                           opinion of counsel  selected  by the  transferor  and
                           reasonably  acceptable  to the Company,  the form and
                           substance  of  which   opinion  shall  be  reasonably
                           satisfactory to the Company,  to the effect that such
                           transfer  does  not  require   registration  of  such
                           transferred Securities under the Securities Act. As a
                           condition  of  transfer,  any such  transferee  shall
                           agree in  writing  to be  bound by the  terms of this
                           Agreement  and shall have the  rights of a  Purchaser
                           under  this  Agreement  and the  Registration  Rights
                           Agreement.

                  (b)      The Purchasers agree to the imprinting, so long as is
                           required by this Section  4.1(b),  of a legend on any
                           of the Securities in the following form:

         NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES
         ARE  CONVERTIBLE  HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
         COMMISSION OR THE  SECURITIES  COMMISSION OF ANY STATE IN RELIANCE UPON
         AN EXEMPTION  FROM  REGISTRATION  UNDER THE  SECURITIES ACT OF 1933, AS
         AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR

                                       17
<PAGE>

         SOLD EXCEPT PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT UNDER THE
         SECURITIES  ACT OR PURSUANT TO AN  AVAILABLE  EXEMPTION  FROM,  OR IN A
         TRANSACTION  NOT  SUBJECT  TO,  THE  REGISTRATION  REQUIREMENTS  OF THE
         SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE  STATE SECURITIES LAWS
         AS EVIDENCED BY A LEGAL  OPINION OF COUNSEL TO THE  TRANSFEROR  TO SUCH
         EFFECT,  THE SUBSTANCE OF WHICH SHALL BE  REASONABLY  ACCEPTABLE TO THE
         COMPANY.  THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF
         THESE  SECURITIES MAY BE PLEDGED IN CONNECTION  WITH A BONA FIDE MARGIN
         ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

                  The Company  acknowledges and agrees that a Purchaser may from
         time to time pledge  pursuant to a bona fide  margin  agreement  with a
         registered broker-dealer or grant a security interest in some or all of
         the  Securities  to a  financial  institution  that  is an  "accredited
         investor"  as defined in Rule 501(a) under the  Securities  Act and who
         agrees  to be  bound  by the  provisions  of  this  Agreement  and  the
         Registration  Rights Agreement and, if required under the terms of such
         arrangement,  such Purchaser may transfer pledged or secured Securities
         to the pledgees or secured parties. Such a pledge or transfer would not
         be subject to approval  of the  Company  and no legal  opinion of legal
         counsel of the pledgee,  secured  party or pledgor shall be required in
         connection  therewith.  Further,  no notice  shall be  required of such
         pledge.  At the  appropriate  Purchaser's  expense,  the  Company  will
         execute  and  deliver  such  reasonable  documentation  as a pledgee or
         secured party of Securities may reasonably request in connection with a
         pledge or transfer of the Securities,  including, if the Securities are
         subject to registration  pursuant to the Registration Rights Agreement,
         the preparation and filing of any required prospectus  supplement under
         Rule 424(b)(3) under the Securities Act or other  applicable  provision
         of the  Securities  Act to  appropriately  amend  the  list of  Selling
         Stockholders thereunder.

                  (c)      Certificates  evidencing the Underlying  Shares shall
                           not  contain  any  legend  (including  the legend set
                           forth  in  Section  4.1(b)   hereof):   (i)  while  a
                           registration  statement  (including the  Registration
                           Statement)  covering  the resale of such  security is
                           effective under the Securities Act, or (ii) following
                           any sale of such  Underlying  Shares pursuant to Rule
                           144, or (iii) if such Underlying  Shares are eligible
                           for sale under Rule 144(k), or (iv) if such legend is
                           not required  under  applicable  requirements  of the
                           Securities  Act (including  judicial  interpretations
                           and  pronouncements   issued  by  the  staff  of  the
                           Commission).  The Company  shall cause its counsel to
                           issue a legal opinion to the Company's transfer agent
                           promptly  after the Effective Date if required by the
                           Company's transfer agent to effect the removal of the
                           legend  hereunder.  If  all  or  any  portion  of the
                           Preferred   Stock  is  converted  or  exercised   (as
                           applicable)  at a time  when  there  is an  effective
                           registration  statement  to cover  the  resale of the
                           Underlying  Shares,  or if such Underlying Shares may
                           be sold  under Rule  144(k) or if such  legend is not
                           otherwise  required under applicable  requirements of
                           the    Securities     Act     (including     judicial
                           interpretations  thereof) then such Underlying Shares
                           shall be  issued  free of all  legends.  The  Company
                           agrees that  following the Effective  Date or at such

                                       18
<PAGE>

                           time as such legend is no longer  required under this
                           Section  4.1(c),  it will, no later than five Trading
                           Days  following  the  delivery by a Purchaser  to the
                           Company  or  the  Company's   transfer   agent  of  a
                           certificate   representing   Underlying   Shares,  as
                           applicable,  issued with a  restrictive  legend (such
                           fifth  Trading  Day,  the  "Legend   Removal  Date"),
                           deliver or cause to be delivered to such  Purchaser a
                           certificate  representing  such  shares  that is free
                           from all restrictive  and other legends.  The Company
                           may not  make any  notation  on its  records  or give
                           instructions  to any  transfer  agent of the  Company
                           that enlarge the  restrictions  on transfer set forth
                           in this Section.

                  (d)      Each  Purchaser,  severally  and not jointly with the
                           other  Purchasers,  agrees  that the  removal  of the
                           restrictive  legend  from  certificates  representing
                           Securities  as  set  forth  in  this  Section  4.1 is
                           predicated  upon  the  Company's  reliance  that  the
                           Purchaser will sell any Securities pursuant to either
                           the registration  requirements of the Securities Act,
                           including   any   applicable    prospectus   delivery
                           requirements, or an exemption therefrom.

         4.2  Acknowledgment  of  Dilution.  The Company  acknowledges  that the
issuance of the Securities may result in dilution of the  outstanding  shares of
Common Stock, which dilution may be substantial under certain market conditions.
The Company  further  acknowledges  that its  obligations  under the Transaction
Documents,  including without  limitation its obligation to issue the Underlying
Shares pursuant to the Transaction Documents, are unconditional and absolute and
not  subject  to any  right  of  set  off,  counterclaim,  delay  or  reduction,
regardless  of the effect of any such dilution or any claim the Company may have
against any Purchaser and  regardless of the dilutive  effect that such issuance
may have on the ownership of the other Stockholders of the Company.

         4.3 Intentionally Omitted.

         4.4 Integration.  The Company shall not sell, offer for sale or solicit
offers to buy or  otherwise  negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the  Securities  in a manner that would  require the  registration  under the
Securities  Act of the sale of the Securities to the Purchasers or that would be
integrated  with the offer or sale of the  Securities  for purposes of the rules
and regulations of any Trading Market.

         4.5 Conversion and Exercise Procedures.  No additional legal opinion or
other information or instructions shall be required of the Purchasers to convert
their  Preferred  Stock or exercise  their  Warrants.  The  Company  shall honor
conversions  of the  Preferred  Stock and  exercise  of the  Warrants  and shall
deliver  Underlying  Shares in accordance  with the terms,  conditions  and time
periods set forth in the Transaction Documents.

         4.6 Intentionally Omitted.

         4.7  Stockholder  Rights Plan. No claim will be made or enforced by the
Company or, to the knowledge of the Company, any other Person that any Purchaser
is an "Acquiring  Person" under any  Stockholder  rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any Purchaser

                                       19
<PAGE>

could be deemed to trigger the  provisions of any such plan or  arrangement,  by
virtue of  receiving  Securities  under the  Transaction  Documents or under any
other  agreement  between  the  Company and the  Purchasers.  The Company  shall
conduct  its  business  in a manner so that it will not  become  subject  to the
Investment Company Act.

         4.8  Non-Public  Information.  The  Company  covenants  and agrees that
neither it nor any other Person  acting on its behalf will provide any Purchaser
or its  agents  or  counsel  with  any  information  that the  Company  believes
constitutes material non-public information, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Purchaser shall
be  relying  on the  foregoing  representations  in  effecting  transactions  in
securities of the Company.

         4.9 Use of Proceeds.  The Company  shall use the net proceeds  from the
sale  of  the  Securities   hereunder   substantially  in  accordance  with  the
description in the Disclosure Schedules attached hereto.

         4.10 Intentionally Omitted.

         4.11  Indemnification of Purchasers.  Subject to the provisions of this
Section  4.11,  the Company will  indemnify  and hold the  Purchasers  and their
directors,  officers,  stockholders,  partners,  employees and agents  (each,  a
"Purchaser Party") harmless from any and all losses,  liabilities,  obligations,
claims,  contingencies,  damages,  costs and expenses,  including all judgments,
amounts paid in  settlements,  court costs and  reasonable  attorneys'  fees and
costs of  investigation  that any such Purchaser  Party may suffer or incur as a
result  of or  relating  to (a)  any  breach  of  any  of  the  representations,
warranties,  covenants or agreements made by the Company in this Agreement or in
the  other  Transaction  Documents  or  (b)  any  action  instituted  against  a
Purchaser, or any of them or their respective Affiliates,  by any stockholder of
the Company who is not an  Affiliate of such  Purchaser,  with respect to any of
the transactions  contemplated by the Transaction  Documents (unless such action
is  based  upon a  breach  of such  Purchaser's  representation,  warranties  or
covenants  under the Transaction  Documents or any agreements or  understandings
such  Purchaser  may have with any such  stockholder  or any  violations  by the
Purchaser of state or federal  securities  laws or any conduct by such Purchaser
which constitutes fraud,  gross negligence,  willful misconduct or malfeasance).
If any action shall be brought  against any Purchaser  Party in respect of which
indemnity may be sought pursuant to this  Agreement,  such Purchaser Party shall
promptly notify the Company in writing,  and the Company shall have the right to
assume the defense thereof with counsel of its own choosing. Any Purchaser Party
shall  have  the  right to  employ  separate  counsel  in any  such  action  and
participate  in the defense  thereof,  but the fees and expenses of such counsel
shall be at the expense of such  Purchaser  Party  except to the extent that (i)
the  employment  thereof  has been  specifically  authorized  by the  Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such  defense  and to employ  counsel or (iii) in such  action  there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue  between the  position of the Company and the  position of such  Purchaser
Party.  The  Company  will not be  liable  to any  Purchaser  Party  under  this
Agreement  (i) for any  settlement  by a Purchaser  Party  effected  without the
Company's prior written  consent,  which shall not be  unreasonably  withheld or
delayed;  or (ii) to the  extent,  but only to the  extent  that a loss,  claim,

                                       20
<PAGE>

damage or liability is  attributable  to any Purchaser  Party's breach of any of
the representations,  warranties, covenants or agreements made by the Purchasers
in this Agreement or in the other Transaction Documents.

         4.12 Reservation of Securities.

                  (a)      The Company  shall  maintain a reserve  from its duly
                           authorized   shares  of  Common  Stock  for  issuance
                           pursuant to the Transaction  Documents in such amount
                           as may be required to fulfill its obligations in full
                           under  the   Transaction   Documents  (the  "Required
                           Minimum").

                  (b)      If,  on  any  date,  the  number  of  authorized  but
                           unissued (and otherwise  unreserved) shares of Common
                           Stock is less than the Required Minimum on such date,
                           then the Board of Directors of the Company  shall use
                           commercially   reasonable   efforts   to  amend   the
                           Company's certificate or articles of incorporation to
                           increase the number of authorized but unissued shares
                           of Common  Stock to at least the  number of shares of
                           Common   Stock  that  would   result  from  the  full
                           conversion of the Preferred Stock and exercise of the
                           Warrants at such time, as soon as possible and in any
                           event not later than the 75th day after such date.

         4.13 Intentionally Omitted.

         4.14 Equal Treatment of Purchasers.  No consideration  shall be offered
or paid to any  person to amend or consent  to a waiver or  modification  of any
provision of any of the Transaction  Documents unless the same  consideration is
also  offered  to  all  of  the  parties  to  the  Transaction  Documents.   For
clarification  purposes,  this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated  separately by each Purchaser,  and
is intended to treat for the Company the Preferred Stock Stockholders as a class
and shall not in any way be construed as the Purchasers  acting in concert or as
a group with respect to the  purchase,  disposition  or voting of  Securities or
otherwise.

         4.15 Most Favored Nation Provision.  Other than an Exempt Issuance,  if
at any time while the Preferred Stock is outstanding,  the Company issues Common
Stock or Common Stock  Equivalents to any Person at a per share or conversion or
exercise  price per  share  which is less than the  Conversion  Price,  then the
Company shall issue, for each such occasion,  additional  shares of Common Stock
to each  Purchaser  so that the  Conversion  Price is equal to such other  lower
price per share.

         4.16 Adjustment to Knockout Offering. The Purchasers hereby acknowledge
and  agree  that  upon  Closing,   investors  in  the  Knockout   Offering  will
automatically receive Warrants to purchase shares of Common Stock of the Company
in accordance with their respective subscription amount on the same terms of the
Warrants as set forth in this Agreement.

                                       21
<PAGE>

                                   ARTICLE V.
                                  MISCELLANEOUS

         5.1 Termination.  This Agreement may be terminated by any Purchaser, by
written notice to the other parties,  if the Closing has not been consummated on
or before January 31, 2005;  provided that no such  termination  will affect the
right of any party to sue for any breach by the other party (or parties).

         5.2 Legal  Fees.  Except  as  expressly  set  forth in the  Transaction
Documents  to the  contrary,  each party shall pay the fees and  expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party  incident  to the  negotiation,  preparation,  execution,
delivery and performance of this  Agreement.  The Company shall pay all transfer
agent fees, stamp taxes and other taxes and duties levied in connection with the
issuance of any Securities.

         5.3 Entire  Agreement.  The  Transaction  Documents,  together with the
exhibits and schedules thereto,  contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

         5.4 Notices.  Any and all notices or other communications or deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of  transmission,  if
such notice or  communication is delivered via facsimile at the facsimile number
set forth on the signature  pages  attached  hereto prior to 5:30 p.m. (New York
City  time)  on a  Trading  Day,  (b) the next  Trading  Day  after  the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the second  Trading Day following the date of mailing,  if sent by U.S.
nationally  recognized  overnight courier service, or (d) upon actual receipt by
the party to whom such  notice is  required  to be given.  The  address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

         5.5 Amendments;  Waivers.  No provision of this Agreement may be waived
or amended except in a written  instrument  signed, in the case of an amendment,
by the  Company  and each  Purchaser  or, in the case of a waiver,  by the party
against whom enforcement of any such waiver is sought.  No waiver of any default
with respect to any provision,  condition or requirement of this Agreement shall
be deemed to be a continuing  waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise  any right  hereunder in
any manner impair the exercise of any such right.

         5.6 Construction.  The headings herein are for convenience only, do not
constitute a part of this  Agreement  and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent,  and no
rules of strict construction will be applied against any party.

         5.7  Successors and Assigns.  This Agreement  shall be binding upon and
inure to the benefit of the parties and their successors and permitted  assigns.
The Company may not assign this Agreement or any rights or obligations hereunder

                                       22
<PAGE>

without the prior written  consent of each  Purchaser.  Any Purchaser may assign
any or all of its  rights  under  this  Agreement  to any  Person  to whom  such
Purchaser  assigns or transfers any Securities,  provided such transferee agrees
in  writing to be bound,  with  respect to the  transferred  Securities,  by the
provisions hereof that apply to the "Purchasers".

         5.8 No  Third-Party  Beneficiaries.  This Agreement is intended for the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.11.

         5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance  with the internal laws of the State of
New York,  without  regard to the  principles of conflicts of law thereof.  Each
party  agrees  that  all  legal  proceedings   concerning  the  interpretations,
enforcement and defense of the  transactions  contemplated by this Agreement and
any other Transaction  Documents  (whether brought against a party hereto or its
respective affiliates,  directors, officers, stockholders,  employees or agents)
shall be commenced  exclusively  in the state and federal  courts sitting in the
City of New  York.  Each  party  hereby  irrevocably  submits  to the  exclusive
jurisdiction  of the state and federal  courts  sitting in the City of New York,
borough  of  Manhattan  for the  adjudication  of any  dispute  hereunder  or in
connection  herewith or with any  transaction  contemplated  hereby or discussed
herein  (including  with respect to the  enforcement  of any of the  Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action  or  proceeding,  any  claim  that it is not  personally  subject  to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding.  Each party hereby irrevocably waives
personal  service of process and  consents to process  being  served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or  overnight  delivery  (with  evidence of  delivery) to such party at the
address in effect for  notices to it under this  Agreement  and agrees that such
service  shall  constitute  good and  sufficient  service of process  and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve  process in any manner  permitted by law. The parties  hereby waive all
rights  to a trial  by jury.  If  either  party  shall  commence  an  action  or
proceeding to enforce any  provisions  of the  Transaction  Documents,  then the
prevailing  party in such action or proceeding  shall be reimbursed by the other
party for its  attorneys'  fees and other costs and expenses  incurred  with the
investigation, preparation and prosecution of such action or proceeding.

         5.10 Survival.  The  representations  and warranties  contained  herein
shall survive the Closing and the delivery,  exercise  and/or  conversion of the
Securities, as applicable for the applicable statue of limitations.

         5.11  Execution.  This  Agreement  may  be  executed  in  two  or  more
counterparts,  all of which when taken  together shall be considered one and the
same agreement and shall become effective when  counterparts have been signed by
each party and  delivered  to the other  party,  it being  understood  that both
parties need not sign the same  counterpart.  In the event that any signature is
delivered by facsimile  transmission,  such  signature  shall create a valid and
binding  obligation of the party executing (or on whose behalf such signature is

                                       23
<PAGE>

executed)  with the same force and effect as if such  facsimile  signature  page
were an original thereof.

         5.12  Severability.  If any  provision of this  Agreement is held to be
invalid or unenforceable in any respect,  the validity and enforceability of the
remaining  terms  and  provisions  of  this  Agreement  shall  not in any way be
affected or impaired  thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor,  and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

         5.13 Rescission and Withdrawal Right.  Notwithstanding  anything to the
contrary  contained in (and  without  limiting  any similar  provisions  of) the
Transaction  Documents,  whenever  any  Purchaser  exercises a right,  election,
demand or option  under a  Transaction  Document and the Company does not timely
perform its related  obligations within the periods therein provided,  then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice,  demand or election in whole
or in part  without  prejudice  to its  future  actions  and  rights;  provided,
however, in the case of a rescission of a conversion of the Preferred Stock, the
Purchaser  shall be required to return any shares of Common Stock subject to any
such rescinded conversion or exercise notice.

         5.14  Replacement  of  Securities.  If any  certificate  or  instrument
evidencing any Securities is mutilated,  lost, stolen or destroyed,  the Company
shall  issue or cause to be issued in  exchange  and  substitution  for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument,  but only upon receipt of evidence reasonably satisfactory to the
Company  of such  loss,  theft  or  destruction  and  customary  and  reasonable
indemnity,  if requested.  The  applicants  for a new  certificate or instrument
under  such  circumstances  shall  also  pay any  reasonable  third-party  costs
associated with the issuance of such replacement Securities.

         5.15  Remedies.  In addition to being  entitled to exercise  all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Purchasers  and the Company will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that  monetary  damages  may not be
adequate  compensation  for  any  loss  incurred  by  reason  of any  breach  of
obligations  described in the  foregoing  sentence and hereby agrees to waive in
any action for specific  performance  of any such  obligation the defense that a
remedy at law would be adequate.

         5.16 Intentionally Omitted.

         5.17 Intentionally Omitted.

         5.18  Independent  Nature of Purchasers'  Obligations  and Rights.  The
obligations of each Purchaser under any Transaction Document are several and not
joint with the  obligations of any other  Purchaser,  and no Purchaser  shall be
responsible  in any way for the  performance  of the  obligations  of any  other
Purchaser under any Transaction  Document.  Nothing  contained  herein or in any
Transaction  Document,  and no action taken by any Purchaser  pursuant  thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint  venture  or any other kind of entity,  or create a  presumption  that the
Purchasers  are in any way acting in concert or as a group with  respect to such

                                       24
<PAGE>

obligations or the transactions  contemplated by the Transaction Document.  Each
Purchaser  shall be  entitled to  independently  protect and enforce its rights,
including without  limitation the rights arising out of this Agreement or out of
the other  Transaction  Documents,  and it shall not be necessary  for any other
Purchaser  to be  joined  as an  additional  party  in any  proceeding  for such
purpose.  Each Purchaser has been  represented by its own separate legal counsel
in their review and  negotiation of the  Transaction  Documents.  For reasons of
administrative  convenience only,  Purchasers and their respective  counsel have
chosen to  communicate  with the Company  through  Duncan  Capital  LLC.  Duncan
Capital  LLC does not  represent  all of the  Purchasers  but only  itself.  The
Company  has  elected  to  provide  all  Purchasers  with  the  same  terms  and
Transaction  Documents for the convenience of the Company and not because it was
required or requested to do so by the Purchasers.

         5.19 Liquidated Damages.  The Company's  obligations to pay any partial
liquidated  damages or other amounts owing under the Transaction  Documents is a
continuing  obligation of the Company and shall not  terminate  until all unpaid
partial liquidated damages and other amounts have been paid  notwithstanding the
fact that the instrument or security  pursuant to which such partial  liquidated
damages or other amounts are due and payable shall have been canceled.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       25
<PAGE>

         IN WITNESS  WHEREOF,  the parties  hereto  have caused this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

UNITED NETWORK MARKETING SERVICES, INC.    Address for Notice:
                                           -------------------

/s/ John Bellamy                           100 W. Whitehall Ave.
------------------------------
Name: John Bellamy                         Northlake, IL 60164
Title: Chief Executive Officer

                                           Telephone: (708) 273-6900
                                           Facsimile: (708) 273-6901

With a copy to (which shall not
constitute notice):

Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, NY 10018                         Telephone: (212) 930-9700
                                           Facsimile: (212) 930-9725

                                           Attention: Gregory Sichenzia, Esq.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

                                       26
<PAGE>

[PURCHASER SIGNATURE PAGES TO UNITED NETWORK MARKETING SERVICES, INC. SECURITIES
                              PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Investor: DCOFI Master, LDC
                  --------------------------------------------------------------
Signature of Authorized Signatory
  (if Investor is an Entity): /s/ Richard Smithline
                              --------------------------------------------------
Name of Authorized Signatory: Richard Smithline
                              --------------------------------------------------
Title of Authorized Signatory: Director
                               -------------------------------------------------
Email Address of Authorized Entity: rc@dcfunds.com
                                    --------------------------------------------

Address for Notice of Investor:
         c/o M&C Corporate Services Limited
         P.O. Box 309GT
         Ugland House, Georgetown, Grand Cayman

Address for Delivery of Securities for Investor (if not same as above):
         830 Third Avenue, 14th Fl.
         New York, NY 10022

Subscription Amount: $600,000
Shares of Preferred Stock: 12,795
Warrants: 204,720
Social Security Number (EIN Number if Investor is an Entity):

                           [SIGNATURE PAGES CONTINUE]

                                       27
<PAGE>

[PURCHASER SIGNATURE PAGES TO UNITED NETWORK MARKETING SERVICES, INC. SECURITIES
                              PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Investor: Bridges & Pipes LLC
                  --------------------------------------------------------------
Signature of Authorized Signatory(if Investor is an Entity): /s/ David Fuchs
                                                             -------------------
Name of Authorized Signatory: David Fuchs
                              --------------------------------------------------
Title of Authorized Signatory: Managing Member
                               -------------------------------------------------
Email Address of Authorized Entity:
                                    --------------------------------------------

Address for Notice of Investor:
         830 3rd Avenue, 14th Floor
         New York, NY 10022

Address for Delivery of Securities for Investor (if not same as above):

         same

Subscription Amount: $65,000
Shares of Preferred Stock: 1,386
Warrants: 22,176
Social Security Number (EIN Number if Investor is an Entity):

                                       27
<PAGE>

[PURCHASER SIGNATURE PAGES TO UNITED NETWORK MARKETING SERVICES, INC. SECURITIES
                              PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Investor: H T Ardinger & Sons
                  --------------------------------------------------------------
Signature of Authorized Signatory(if Investor is an Entity): /s/ H T Ardinger
                                                             -------------------
Name of Authorized Signatory: H T Ardinger
                              --------------------------------------------------
Title of Authorized Signatory:
                               -------------------------------------------------
Email Address of Authorized Entity:
                                    --------------------------------------------

Address for Notice of Investor:

Address for Delivery of Securities for Investor (if not same as above):

Subscription Amount: $100,000
Shares of Preferred Stock: 2,133
Warrants: 34,128
Social Security Number (EIN Number if Investor is an Entity):

                                       27
<PAGE>

[PURCHASER SIGNATURE PAGES TO UNITED NETWORK MARKETING SERVICES, INC. SECURITIES
                              PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Investor: BushidoCapital Master Fund L.P.
                  --------------------------------------------------------------
Signature of Authorized Signatory(if Investor is an Entity): /s/ Louis Rabman
                                                             -------------------
Name of Authorized Signatory: Louis Rabman
                              --------------------------------------------------
Title of Authorized Signatory: President
                               -------------------------------------------------
Email Address of Authorized Entity: rabman@bushidocapital.com
                                    --------------------------------------------

Address for Notice of Investor:
275 Seventh Avenue
Suite 200
New York,  NY 10001

Address for Delivery of Securities for Investor (if not same as above):

Subscription Amount:  $250,000
Shares of Preferred Stock: 5,331
Warrants:  85,296
Social Security Number (EIN Number if Investor is an Entity):

                           [SIGNATURE PAGES CONTINUE]

                                       27
<PAGE>

[PURCHASER SIGNATURE PAGES TO UNITED NETWORK MARKETING SERVICES, INC. SECURITIES
                              PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Investor: Gamma Opportunity Capital Partners, LP
                  --------------------------------------------------------------
Signature of Authorized Signatory
  (if Investor is an Entity): /s/ Jonathon P. Knight
                              --------------------------------------------------
Name of Authorized Signatory: Jonathon P. Knight
                              --------------------------------------------------
Title of Authorized Signatory: President
                               -------------------------------------------------
Email Address of Authorized Entity: Jonathon@siamus.com
                                    --------------------------------------------

Address for Notice of Investor:
605 Crescent Executive Court
Suite 416
Lake Mary,  FL  32746

Address for Delivery of Securities for Investor (if not same as above):

Subscription Amount: $250,000
Shares of Preferred Stock: 5,331
Warrants: 85,296
Social Security Number (EIN Number if Investor is an Entity):

                           [SIGNATURE PAGES CONTINUE]

                                       27
<PAGE>

[PURCHASER SIGNATURE PAGES TO UNITED NETWORK MARKETING SERVICES, INC. SECURITIES
                              PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Investor: Bristol Investments Funds, Ltd
                  --------------------------------------------------------------
Signature of Authorized Signatory(if Investor is an Entity): /s/ Paul Kessler
                                                             -------------------
Name of Authorized Signatory: Paul Kessler
                              --------------------------------------------------
Title of Authorized Signatory: Director
                               -------------------------------------------------
Email Address of Authorized Entity: pkessler@bristolcompanies.net
                                    --------------------------------------------

Address for Notice of Investor:
Bristol Capital Advisors, LLC
Attn: Amy Wang
10990 Wilshire Blvd., Suite 1410
Los Angeles, CA 90024

Address for Delivery of Securities for Investor (if not same as above):

Subscription Amount:  $250,000
Shares of Preferred Stock:  5,331
Warrants:  85,296
Social Security Number (EIN Number if Investor is an Entity):

                           [SIGNATURE PAGES CONTINUE]

                                       27
<PAGE>

[PURCHASER SIGNATURE PAGES TO UNITED NETWORK MARKETING SERVICES, INC. SECURITIES
                              PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Investor: AJW Qualified Partners, LLC
                  --------------------------------------------------------------
Signature of Authorized Signatory(if Investor is an Entity): /s/ Corey Ribotsky
                                                             -------------------
Name of Authorized Signatory: Corey Ribotsky
                              --------------------------------------------------
Title of Authorized Signatory: Manager
                               -------------------------------------------------
Email Address of Authorized Entity: cribotsky@nirgroup.com
                                    --------------------------------------------

Address for Notice of Investor:
1044 Northern Blvd, Suite 302
Roslyn, NY  11576

Address for Delivery of Securities for Investor (if not same as above):

Subscription Amount:  $90,000
Shares of Preferred Stock:  1,919
Warrants:  30,704
Social Security Number (EIN Number if Investor is an Entity):

                           [SIGNATURE PAGES CONTINUE]

                                       27
<PAGE>

[PURCHASER SIGNATURE PAGES TO UNITED NETWORK MARKETING SERVICES, INC. SECURITIES
                              PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Investor: AJW Offshore LTD
                  --------------------------------------------------------------
Signature of Authorized Signatory(if Investor is an Entity): /s/ Corey Ribotsky
                                                             -------------------
Name of Authorized Signatory: Corey Ribotsky
                              --------------------------------------------------
Title of Authorized Signatory: Manager, First Street Mgr II, LLC
                               -------------------------------------------------

Email Address of Authorized Entity: cribotsky@nirgroup.com
                                    --------------------------------------------

Address for Notice of Investor:
1044 Northern Blvd, Suite 302
Roslyn,  NY  11576

Address for Delivery of Securities for Investor (if not same as above):

Subscription Amount: $78,000
Shares of Preferred Stock:  1,663
Warrants:  26,608
Social Security Number (EIN Number if Investor is an Entity):

                           [SIGNATURE PAGES CONTINUE]

                                       27
<PAGE>

[PURCHASER SIGNATURE PAGES TO UNITED NETWORK MARKETING SERVICES, INC. SECURITIES
                              PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Investor: New Millenium Capital Partners II, LLC
                  --------------------------------------------------------------
Signature of Authorized Signatory(if Investor is an Entity): /s/ Corey Ribotsky
                                                             -------------------
Name of Authorized Signatory: Corey Ribotsky
                              --------------------------------------------------
Title of Authorized Signatory: Manager, First Street Manager II, LLC
                               -------------------------------------------------
Email Address of Authorized Entity: cribostky@nirgroup.com
                                    --------------------------------------------

Address for Notice of Investor:
1044 Northern Blvd, Suite 302
Roslyn,  NY  11576

Address for Delivery of Securities for Investor (if not same as above):

Subscription Amount:  $4,000
Shares of Preferred Stock:  85
Warrants:  1,360
Social Security Number (EIN Number if Investor is an Entity):

                           [SIGNATURE PAGES CONTINUE]

                                       27
<PAGE>

[PURCHASER SIGNATURE PAGES TO UNITED NETWORK MARKETING SERVICES, INC. SECURITIES
                              PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Investor: AJW Partners, LLC
                  --------------------------------------------------------------
Signature of Authorized Signatory(if Investor is an Entity): /s/ Corey Ribotsky
                                                             -------------------
Name of Authorized Signatory: Corey Ribotsky
                              --------------------------------------------------
Title of Authorized Signatory: Manager, SMS Manager, LLC
                               -------------------------------------------------
Email Address of Authorized Entity: cribotsky@nirgroup.com
                                    --------------------------------------------

Address for Notice of Investor:
1044 Northern Blvd.
Suite 302
Roslyn, NY 11576

Address for Delivery of Securities for Investor (if not same as above):

Subscription Amount: $28,000
Shares of Preferred Stock:  597
Warrants:  9,552
Social Security Number (EIN Number if Investor is an Entity):

                           [SIGNATURE PAGES CONTINUE]

                                       27
<PAGE>

[PURCHASER SIGNATURE PAGES TO UNITED NETWORK MARKETING SERVICES, INC. SECURITIES
                              PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Investor: Anasazi Partners, LLC
                  --------------------------------------------------------------
Signature of Authorized Signatory
  (if Investor is an Entity): /s/ Christopher P. Baker
                              --------------------------------------------------
Name of Authorized Signatory: Christopher P. Baker
                              --------------------------------------------------
Title of Authorized Signatory: Manager, CP Baker LLC, ITS Manager
                               -------------------------------------------------
Email Address of Authorized Entity: Chris@cpbaker.com
                                    --------------------------------------------

Address for Notice of Investor:
303 Congress St. Suite 301
Boston,  MA  02210

Address for Delivery of Securities for Investor (if not same as above):

Subscription Amount:  $75,000
Shares of Preferred Stock:  1,599
Warrants:  25,584
Social Security Number (EIN Number if Investor is an Entity):

                           [SIGNATURE PAGES CONTINUE]

                                       27
<PAGE>

[PURCHASER SIGNATURE PAGES TO UNITED NETWORK MARKETING SERVICES, INC. SECURITIES
                              PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Investor: Christopher P. Baker
                  --------------------------------------------------------------
Signature of Authorized Signatory
  (if Investor is an Entity): /s/ Christopher P. Baker
                              --------------------------------------------------
Name of Authorized Signatory: n/a
                              --------------------------------------------------
Title of Authorized Signatory: n/a
                               -------------------------------------------------
Email Address of Authorized Entity:
                                    --------------------------------------------

Address for Notice of Investor:
303 Congress St. Suite 301
Boston,  MA  02210

Address for Delivery of Securities for Investor (if not same as above):

Subscription Amount: $150,000
Shares of Preferred Stock: 3,199
Warrants: 51,184
Social Security Number (EIN Number if Investor is an Entity):

                           [SIGNATURE PAGES CONTINUE]

                                       27
<PAGE>

[PURCHASER SIGNATURE PAGES TO UNITED NETWORK MARKETING SERVICES, INC. SECURITIES
                              PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Investor: Anasazi Partners III Offshore, LTD
                  --------------------------------------------------------------
Signature of Authorized Signatory(if Investor is an Entity): s/Christopher Baker
                                                             -------------------
Name of Authorized Signatory: Christopher P. Baker
                              --------------------------------------------------
Title of Authorized Signatory: Manager, CP Baker LLC, ITS Manager
                               -------------------------------------------------
Email Address of Authorized Entity: Chris@cpbaker.com
                                    --------------------------------------------

Address for Notice of Investor:
303 Congress St. Suite 301
Boston,  MA  02210

Address of Record
Romasco Place
Wiehamas Cay 1
Road Town, Tortola, BVI

Address for Delivery of Securities for Investor (if not same as above):

303 Congress St. Suite 301
Boston,  MA  02210

Subscription Amount:  $75,000
Shares of Preferred Stock:  1,599
Warrants:  25,584
Social Security Number (EIN Number if Investor is an Entity):

                           [SIGNATURE PAGES CONTINUE]

                                       27
<PAGE>

[PURCHASER SIGNATURE PAGES TO UNITED NETWORK MARKETING SERVICES, INC. SECURITIES
                              PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Investor: Royal Capital Value Fund, LP
                  --------------------------------------------------------------
Signature of Authorized Signatory(if Investor is an Entity): /s/ Yale Fergong
                                                             -------------------
Name of Authorized Signatory: Yale Fergong
                              --------------------------------------------------
Title of Authorized Signatory: Managing Partner
                               -------------------------------------------------
Email Address of Authorized Entity: yfergong@royalcap.com
                                    --------------------------------------------

Address for Notice of Investor:
575 Lexington Avenue,  4th Floor
New York, NY 10022

Address for Delivery of Securities for Investor (if not same as above):

Subscription Amount: $71,369
Shares of Preferred Stock: 1,522
Warrants:  24,352
Social Security Number (EIN Number if Investor is an Entity):

                           [SIGNATURE PAGES CONTINUE]

                                       27
<PAGE>

[PURCHASER SIGNATURE PAGES TO UNITED NETWORK MARKETING SERVICES, INC. SECURITIES
                              PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Investor: Royal Capital Value Fund (QP), LP
                  --------------------------------------------------------------
Signature of Authorized Signatory(if Investor is an Entity): /s/ Yale Fergong
                                                             -------------------
Name of Authorized Signatory: Yale Fergong
                              --------------------------------------------------
Title of Authorized Signatory: Managing Partner
                               -------------------------------------------------
Email Address of Authorized Entity: yfergong@royalcap.com
                                    --------------------------------------------

Address for Notice of Investor:
575 Lexington Avenue,  4th Floor
New York, NY 10022

Address for Delivery of Securities for Investor (if not same as above):

Subscription Amount:  $656,173
Shares of Preferred Stock: 13,993
Warrants:  223,888
Social Security Number (EIN Number if Investor is an Entity):

                           [SIGNATURE PAGES CONTINUE]

                                       27
<PAGE>

[PURCHASER SIGNATURE PAGES TO UNITED NETWORK MARKETING SERVICES, INC. SECURITIES
                              PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Investor: Royal Capital Value Fund LTD
                  --------------------------------------------------------------
Signature of Authorized Signatory(if Investor is an Entity): /s/ Yale Fergong
                                                             -------------------
Name of Authorized Signatory: Yale Fergong
                              --------------------------------------------------
Title of Authorized Signatory: Managing Partner
                               -------------------------------------------------
Email Address of Authorized Entity: yfergong@royalcap.com
                                    --------------------------------------------

Address for Notice of Investor:
575 Lexington Avenue,  4th Floor
New York, NY 10022

Address for Delivery of Securities for Investor (if not same as above):

Subscription Amount:  $272,458
Shares of Preferred Stock: 5,810
Warrants:  92,960
Social Security Number (EIN Number if Investor is an Entity):

                           [SIGNATURE PAGES CONTINUE]

                                       27
<PAGE>

[PURCHASER SIGNATURE PAGES TO UNITED NETWORK MARKETING SERVICES, INC. SECURITIES
                              PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Investor: Vicis Capital Master Fund
                  --------------------------------------------------------------
Signature of Authorized Signatory(if Investor is an Entity): /s/ Richard Han
                                                             -------------------
Name of Authorized Signatory: Richard Han
                              --------------------------------------------------
Title of Authorized Signatory: Portfolio Manager
                               -------------------------------------------------
Email Address of Authorized Entity: rhan@ viciscapital.com
                                    --------------------------------------------

Address for Notice of Investor:
25 East 78th Street, 4th floor
New York,  NY  10023

Address for Delivery of Securities for Investor (if not same as above):

Subscription Amount:  $250,000
Shares of Preferred Stock:  5,331
Warrants:  85,296
Social Security Number (EIN Number if Investor is an Entity):

                           [SIGNATURE PAGES CONTINUE]

                                       27

<PAGE>

                              DISCLOSURE SCHEDULES
                                       TO
                          SECURITIES PURCHASE AGREEMENT

(Prepared in connection with Series B Preferred Stock sold by the Company to the
Purchasers under the Securities  Purchase  Agreement dated January __, 2005 (the
"2005  Securities  Purchase  Agreement").  Capitalized  terms not defined herein
shall  have the  meaning  given to such  terms in the 2005  Securities  Purchase
Agreement.)

                                JANUARY __, 2005

<PAGE>

                                 SCHEDULE 3.1(a)

                                  SUBSIDIARIES

         The Knockout Group, Inc., a Delaware corporation ("Knockout")

<PAGE>

                                 SCHEDULE 3.1(g)

                                 CAPITALIZATION

         The  Company's  authorized  capital  consists of  20,000,000  shares of
common  stock,  par value $.001 per share,  and  1,000,000  shares of  preferred
stock,  par value $.001 per share,  of which 865,000 shares have been designated
as Series A Convertible  Preferred Stock and 135,000 shares have been designated
as Series B Convertible  Preferred  Stock. As of the date of the Agreement,  the
Company has  8,165,752  shares of common stock  outstanding,  855,980  shares of
Series A Convertible  Preferred  Stock  outstanding  and zero shares of Series B
Convertible Preferred Stock outstanding.

         After the Company amends its Certificate of  Incorporation to authorize
the issuance of a sufficient number of shares of common stock so that all shares
of Series A Convertible  Preferred  Stock may be fully  converted,  the Series A
Convertible  Preferred  Stock  will  immediately  convert  into  fully  paid and
nonassessable  shares of common  stock of the Company in an amount  equal to the
stated  value  of such  Series  A  Convertible  Preferred  Stock,  which  equals
$46.8933, divided by $.2931, subject to adjustment.

<PAGE>

                                 SCHEDULE 3.1(i)

                                MATERIAL CHANGES

         In September  2004,  Knockout  issued a $600,000  principal  amount 10%
promissory  note (the  "$600K  Note") to Galt  Ventures.  The $600K  Note  bears
interest at 10% per annum from the date the  principal  amount of the $600K Note
is advanced to Knockout  until  Knockout pays the $600K Note in full. All unpaid
principal  and  interest  on the $600K Note is due and payable on the earlier of
(i) December 23, 2004 or (ii) the date that Knockout has raised  $2,500,000 from
the sale of securities.

         In September 2004,  Knockout issued a $1,000,000  principal  amount 10%
promissory  note (the "$1M Note") to Galt Ventures.  The $1M Note bears interest
at 10% per annum from the date the principal  amount of the $1M Note is advanced
to Knockout until  Knockout pays the $1M Note in full. All unpaid  principal and
interest  on the $1M Note is due and  payable on the earlier of April 1, 2005 or
the date of exercise of the Warrants.

         In November 2004, Knockout sold a $500,000 principal amount convertible
note (the "500K Note") to the Taylor  Group.  The term of the $500K Note is nine
months.  The  principal of the $500K Note is  convertible  into 83,463 shares of
common  stock of  Knockout.  In  connection  with the  sale of the  $500K  Note,
Knockout  issued  the  Taylor  Group  warrants  to  purchase  43,546  shares  of
Knockout's common stock at an exercise price of $0.01 per share.

         Seven  of  Knockout's   employees  and  one   consultant   have  family
relationships  with John  Bellamy,  Knockout's  Chief  Executive  Officer  and a
Director.

         In  recognition  of the service and  assistance  provided by Knockout's
Board members, key management personnel,  and key consultants,  Knockout's Board
of Directors authorized and approved the following transactions:

         Re-priced the exercise  price of options to purchase  134,000 shares of
Knockout's  common  stock to $0.01 per share  issued to Dr.  Isaac  Horton.  Dr.
Horton  is a  member  of  Knockout's  Board of  Directors  and a  Consultant  to
Knockout.

         Re-priced  the exercise  price of options to purchase  84,875 shares of
Knockout's  common stock to $0.01 per share issued to Tony Weiss. Mr. Weiss is a
member of the Knockout's Board of Directors.

         Re-priced  the exercise  price of options to purchase  71,598 shares of
Knockout's common stock to $0.01 per share issued to Cole Peterson. Mr. Peterson
is a member of Knockout's Board of Directors.

<PAGE>

         Re-priced the exercise price of warrants to purchase  390,100 shares of
Knockout's  common  stock  to  $0.01  per  share  issued  to  Kevin  Waltzer  in
consideration for agreeing to certain amendments to terms of Knockout's Series A
Preferred  Stock in favor of investors in Knockout's  Series C Preferred  Stock.
Mr. Waltzer is the holder of Knockout's outstanding Series A Preferred Stock and
is also a member of Knockout's Board of Directors.

         Re-priced the exercise  price of warrants to purchase  37,500 shares of
Knockout's   common  stock  to  $0.01  per  share  issued  to  David  Rights  in
consideration  for  agreeing to certain  amendments  to the terms of  Knockout's
Series B Preferred Stock in favor of investors in Knockout's  Series C Preferred
Stock. Mr. Rights is a holder of Knockout's outstanding Series B Preferred Stock
and is also a member of Knockout's Board of Directors.

         Re-priced the exercise  price of options to purchase  108,620 shares of
Knockout's common stock to $0.01 per share issued to Oscar Turner. Mr. Turner is
Knockout's  Chief  Financial  Officer  and  a  member  of  Knockout's  Board  of
Directors.

         Re-priced  the exercise  price of options to purchase  67,888 shares of
Knockout's common stock to $0.01 per share issued to Ahmed Shaikh. Mr. Shaikh is
Knockout's Chief Operating Officer.

<PAGE>

                                 SCHEDULE 3.1(j)

                                   LITIGATION

         None.

<PAGE>

                                 SCHEDULE 3.1(q)

                   TRANSACTIONS WITH AFFILIATES AND EMPLOYEES

         Knockout  has  retained  Artistic   Communication   Center  ("ACC"),  a
multi-media video and audio production company, to produce Knockout's  household
and  automotive  infomercials  for  television  broadcast.   Knockout's  current
contract with ACC provides  that ACC will be  compensated  at "cost,  plus 10%."
Through September 30, 2004, Knockout has paid a total of $894,000 to ACC for two
infomercials.   Knockout's  Chief  Executive  Officer,  John  Bellamy,  has  the
principal ownership position of ACC.

         In consideration  for the assignment of pending  trademarks and pending
patents to  Knockout,  Knockout  has agreed to pay Dr.  Isaac  Horton a total of
$400,000 as follows:  $200,000 by December 31, 2004 and the  remaining  $200,000
over the following twelve months. Knockout also issued Dr. Horton 354,608 shares
of common  stock as partial  consideration  for the  assignment  of the  pending
trademarks and pending patents. In addition,  Dr. Horton acts as a consultant to
Knockout's  executive  officers,  advising  Knockout  on  fundraising,   quality
control, product development,  business strategy, licensing, patent development,
and personnel  matters.  As part of his agreement with Knockout,  Dr. Horton has
agreed not to develop  or  contribute  any  intellectual  property  to any other
company,  either now or in the future,  that competes in the "cleaning" products
segment.  Dr. Horton's  consulting  services are billed to Knockout at an hourly
rate of $350.00 per hour.  Notwithstanding this hourly rate, Knockout has agreed
to pay Dr.  Horton a minimum  amount of $2,500 per month.  Dr.  Horton is also a
member of Knockout's Board of Directors.

         In  recognition  of the service and  assistance  provided by Knockout's
Board members, key management personnel,  and key consultants,  Knockout's Board
of Directors authorized and approved the following transactions:

         Re-priced the exercise  price of options to purchase  134,000 shares of
Knockout's  common  stock to $0.01 per share  issued to Dr.  Isaac  Horton.  Dr.
Horton  is a  member  of  Knockout's  Board of  Directors  and a  Consultant  to
Knockout.

         Re-priced  the exercise  price of options to purchase  84,875 shares of
Knockout's  common stock to $0.01 per share issued to Tony Weiss. Mr. Weiss is a
member of the Knockout's Board of Directors.

         Re-priced  the exercise  price of options to purchase  71,598 shares of
Knockout's common stock to $0.01 per share issued to Cole Peterson. Mr. Peterson
is a member of Knockout's Board of Directors.

<PAGE>

         Re-priced the exercise price of warrants to purchase  390,100 shares of
Knockout's  common  stock  to  $0.01  per  share  issued  to  Kevin  Waltzer  in
consideration for agreeing to certain amendments to terms of Knockout's Series A
Preferred  Stock in favor of investors in Knockout's  Series C Preferred  Stock.
Mr. Waltzer is the holder of Knockout's outstanding Series A Preferred Stock and
is also a member of Knockout's Board of Directors.

         Re-priced the exercise  price of warrants to purchase  37,500 shares of
Knockout's   common  stock  to  $0.01  per  share  issued  to  David  Rights  in
consideration  for  agreeing to certain  amendments  to the terms of  Knockout's
Series B Preferred Stock in favor of investors in Knockout's  Series C Preferred
Stock. Mr. Rights is a holder of Knockout's outstanding Series B Preferred Stock
and is also a member of Knockout's Board of Directors.

         Re-priced the exercise  price of options to purchase  108,620 shares of
Knockout's common stock to $0.01 per share issued to Oscar Turner. Mr. Turner is
Knockout's  Chief  Financial  Officer  and  a  member  of  Knockout's  Board  of
Directors.

         Re-priced  the exercise  price of options to purchase  67,888 shares of
Knockout's common stock to $0.01 per share issued to Ahmed Shaikh. Mr. Shaikh is
Knockout's Chief Operating Officer.

<PAGE>

                                 SCHEDULE 3.1(v)

                               REGISTRATION RIGHTS

         The following Persons have the right to cause the Company to effect the
registration under the Securities Act of securities of the Company:

         Pursuant to an  Investor  Rights  Agreement  dated June 30,  2004,  any
holder or holders who, in the aggregate hold not less than 25% of Knockout's (i)
Series A Preferred  Stock (or Common Stock into which  Series A Preferred  Stock
has been  converted),  (ii) Series B Preferred Stock (or Common Stock into which
Series B Preferred Stock has been converted) and (iii) Common Stock held by John
Bellamy,   upon  written  request,   may  require  the  Company  to  effect  the
registration of such securities on a "best efforts" basis.

         Pursuant to a Registration  Rights  Agreement  entered into in December
2004, the Company must register with the Securities and Exchange  Commission the
common stock that was issued upon conversion of Knockout's  Series C Convertible
Preferred Stock. Immediately before the Merger, all of the outstanding shares of
Knockout's Series C Convertible Preferred Stock were converted into common stock
of Knockout.  Upon effectiveness of the Merger,  this common stock was exchanged
for  Series  A  Preferred  Stock  of  the  Company.  The  Company  must  file  a
registration  statement  to register  the common  stock of the  Company  that is
beneficially  owned by the  prior  owners  of  Knockout's  Series C  Convertible
Preferred  Stock and which was  acquired as a result of the  conversion  of such
Series C Convertible Preferred Stock.

         The Company has agreed to include  250,000 shares of common stock owned
by Kenneth Levy in the next  registration  statement  that the Company  files on
Form SB-2.

<PAGE>

         SCHEDULE 4.9

                                 USE OF PROCEEDS

         The following use of proceeds  table assumes  receipt by the Company of
gross proceeds of $6,000,000.

                  Use of Proceeds                       Amount
                  ---------------                       ------
                  Placement Agent Fees               $   300,000
                  Repayment of Debt                  $   600,000
                  Legal and Accounting Fees          $   100,000
                  Other Transaction Costs            $    32,600
                  Marketing                          $ 2,500,000
                  Inventory                          $ 2,000,000
                  Operations                         $   467,400

                  TOTAL                              $ 6,000,000Exhibit 4.2

                          REGISTRATION RIGHTS AGREEMENT

         This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of January 10, 2005, by and among UNITED NETWORK MARKETING
SERVICES, INC. (the "COMPANY"), and the investors signatory hereto (each a
"PURCHASER" and collectively, the "PURCHASERS").

         This Agreement is made pursuant to the Securities Purchase Agreement,
dated as of the date hereof by and among the Company and the Purchasers (the
"PURCHASE AGREEMENT").

         The Company and the Purchasers hereby agree as follows:

1. Definitions. Capitalized terms used and not otherwise defined herein that are
defined in the Purchase Agreement shall have the meanings given such terms in
the Purchase Agreement. As used in this Agreement, the following terms shall
have the following meanings:

         "CLOSING DATE" shall have the meaning of such term as set forth in the
Purchase Agreement.

          "COMMON STOCK" means the common stock, $.001 par value, of the
Company.

         "CONVERTIBLE PREFERRED STOCK" means the Series B Convertible Preferred
Stock issued by the Company to the Purchasers pursuant to the Purchase
Agreement.

         "EFFECTIVENESS DATE" means, with respect to the Registration Statement
required to be filed pursuant to Section 2(a), the earlier of (a) the 90th
calendar day from the Filing Date (or the 120th day if reviewed by the
Commission), and (b) the date on which the Commission declares the effectiveness
of the Registration Statement.

         "EFFECTIVENESS PERIOD" shall have the meaning set forth in Section
2(a).

         "FILING DATE" means, with respect to the Registration Statement
required to be filed hereunder, the date ninety (90) calendar days from the
Closing Date.

         "HOLDER" or "HOLDERS" means the holder or holders, as the case may be,
from time to time of Registrable Securities (including any permitted assignee).

         "HOLDERS' REPRESENTATIVE" means Duncan Capital LLC, or any other person
that has been appointed by the Holders of a majority of the Registrable
Securities to act as representative of the Holders for purposes of this
Agreement.

         "INDEMNIFIED PARTY" shall have the meaning set forth in Section 5(c).

         "INDEMNIFYING PARTY" shall have the meaning set forth in Section 5(c).

         "LOSSES" shall have the meaning set forth in Section 5(a).

<PAGE>

          "PROCEEDING" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

         "PROSPECTUS" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

         "REGISTRABLE SECURITIES" means the shares of Common Stock issuable upon
any conversion of the Convertible Preferred Stock and exercise of the Warrants,
and any stock split, dividend or other distribution, recapitalization or similar
event with respect to the foregoing.

         "REGISTRATION STATEMENT" means the registration statements required to
be filed hereunder, including (in each case) the Prospectus, amendments and
supplements to the registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in the registration
statement.

         "RULE 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

         "RULE 424" means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

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

         "TRADING DAY" means (i) a day on which the Common Stock is traded or
quoted on a Trading Market, or (ii) if the Common Stock is not traded or quoted
on a Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting price); provided, that in the event that the Common Stock is not
traded or quoted as set forth in (i), and (ii) hereof, that Trading Day shall
mean a Business Day.

         "WARRANTS" means the warrants issued by the Company to the Purchasers
pursuant to the Purchase Agreement.

         2. Registration.

                  (a) Mandatory Registration. No later than the Filing Date, the
Company shall prepare and file with the Commission the Registration Statement
covering the resale of all of the Registrable Securities which a Holder has
requested to be included in such Registration Statement and for which such

                                      -2-
<PAGE>

Holder has provided the Company with a completed Selling Securityholder
Questionnaire, which offering shall be made on a continuous basis pursuant to
Rule 415. The Registration Statement required hereunder shall be on Form SB-2
(or other applicable form). The Registration Statement required hereunder shall
contain (except if otherwise directed by the Holders) the "PLAN OF DISTRIBUTION"
substantially in the form attached hereto as ANNEX A (which may be modified as
required by the Securities Act and the rules and regulations thereunder and to
respond to comments, if any, received by the Commission). The Company shall use
its commercially reasonable efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof and shall use its commercially reasonable efforts to keep the
Registration Statement continuously effective under the Securities Act until the
date when all Registrable Securities covered by the Registration Statement (a)
have been sold pursuant to the Registration Statement or an exemption from the
registration requirements of the Securities Act or (b) may be sold without any
volume or other restrictions pursuant to Rule 144(k) (the "EFFECTIVENESS
PERIOD").

                  (b) Filing Default Liquidation Damages. If a Registration
Statement is not filed on or prior to the Filing Date, then the Company shall
pay to each Holder an amount in cash until the earlier of the date a
Registration Statement is filed and the Registrable Securities may be sold
pursuant to Rule 144(k), as liquidated damages and not as a penalty, equal to
(i) one (1%) percent of the aggregate purchase price paid by such Holder
pursuant to the Purchase Agreement for the first thirty (30) days (or a pro rata
portion of one (1%) percent for any part thereof) following the Company's
failure to file, and (ii) an additional one (1%) percent of the aggregate
purchase paid by such Holder thereunder for each thirty (30) day period
subsequent thereto (or a pro rata portion of one (1%) percent for any part
thereof), such payment(s) to be made in immediately available funds no later
than five (5) business days after the first date of each thirty (30) day period
(or any part thereof), as the case may be, during the Company's failure to file.

                  (c) Effectiveness Default Liquidation Damages. In addition to
any liquidated damages paid, accrued and/or to be paid pursuant to Section 2(b),
if (1) a Registration Statement is not declared effective on or prior to ninety
(90) days from the Filing Date (or one hundred twenty (120) days if reviewed by
the Commission), or (2) if a Registration Statement has been declared effective
and subsequent thereto is not effective for any period of time until the date no
Holder owns any Registrable Securities (an "EFFECTIVENESS DEFAULT"), then the
Company shall pay to each Holder an amount in cash until the date a Registration
Statement is declared effective (and permits the resale of the Registrable
Securities covered thereby)(or if previously declared effective until the date
the Registration Statement becomes effective (and otherwise permits the resale
of the Registrable Securities covered thereby) again), as liquidated damages and
not as a penalty, equal to (i) one (1%) percent of the aggregate purchase price
paid by such Holder pursuant to the Purchase Agreement for the first thirty (30)
days (or a pro rata portion of one percent (1%) for any part thereof), and (ii)
an additional one percent (1%) of the aggregate purchase price paid by such
Holder thereunder for each thirty (30) day period subsequent thereto (or a pro
rata portion of one percent (1%) for any part thereof) until the earlier of (a)
such date the Registration Statement is declared effective (or if previously
declared effective until the date the Registration Statement becomes effective
(and otherwise permits the resale of the Registrable Securities covered thereby)
again), and (b) the Registrable Securities may be sold pursuant to Rule 144(k);
provided, however, for purposes of this subsection (c), it shall not be
considered an Effectiveness Default during any such period in which there is a

                                      -3-
<PAGE>

Material Development Condition (as defined below) which is permitted pursuant to
Section 6(o). Any such payment(s) shall be made in immediately available funds
no later than five (5) days after the first day of each 30 day period of each
such Effectiveness Default.

                  (d) Piggyback Registrations Rights.

                           (i) If, at any time during the Effectiveness Period,
         there is not an effective Registration Statement covering all of the
         Registrable Securities (other than the Registrable Securities of a
         Holder that failed to comply with its obligations under Section 2(d) or
         Section 3(j)), and the Company shall determine to prepare and file with
         the Commission a registration statement relating to an offering for its
         own account or the account of others under the Securities Act of any of
         its equity securities (other than on Form S-4 or Form S-8 (each as
         promulgated under the Securities Act) or their then equivalents
         relating to equity securities to be issued solely in connection with
         any acquisition of any entity or business or equity securities issuable
         in connection with stock option or other employee or consultant benefit
         plans), then the Company shall send to each Holder a written notice of
         such determination and, if within ten (10) days after receipt by a
         Holder, the Company shall receive a request in writing from any such
         Holder, the Company shall include in such registration statement all or
         any part of such Registrable Securities such Holder requests to be
         registered; provided, however, that (A) if, at any time after giving
         written notice of its intention to register any securities and prior to
         the effective date of the registration statement filed in connection
         with such registration, the Company determines for any reason not to
         proceed with such registration, the Company will be relieved of its
         obligation to register any Registrable Securities in connection with
         such registration, and (B) in case of a determination by the Company to
         delay registration of its securities, the Company will be permitted to
         delay the registration of Registrable Securities for the same period as
         the delay in registering such other securities, in any such case
         without any obligation or liability to any Holder. Any Holder who
         elects to include Registrable Securities in a registration statement
         pursuant to this Section 2(d) shall sell such Registrable Securities on
         the same terms and conditions as the equity securities of the Company
         or others (other than other Holders) are being sold pursuant to such
         registration statement. Notwithstanding the foregoing, nothing in this
         Section 2(d) shall permit the Company to file a registration statement
         in contravention of the restrictions in Section 6(b).

                           (ii) Notwithstanding anything in this Section 2(d) to
         the contrary, with respect to any registration described in this
         Section 2(d) that is an underwritten registration of the Company's
         securities for the Company's own account, if the managing underwriter
         advises the Company that the inclusion of some or all of the
         Registrable Securities requested to be included in such registration
         would interfere with the successful marketing (including pricing) of
         the equity securities of the Company to be registered by the Company,
         then the number of shares to be included in any such registration shall
         be included in the following order: (A) first, the shares to be
         registered by the Company; and (B) second, the Registrable Securities
         of the Holders requested to be included in such registration pursuant
         to Section 2(d)(i), on a pro-rata basis based on the Holders'
         respective percentage ownership of the Company on a fully-diluted
         basis, and (C) third, Registrable Securities of all other holders who

                                      -4-
<PAGE>

         are entitled to include securities in such registration, on a pro-rata
         basis based on such holders' respective percentage ownership of the
         Company on a fully-diluted basis.

                           (iii) Notwithstanding anything in this Section 2(d)
         to the contrary, with respect to any registration described in this
         Section 2(d) that is an underwritten registration of the Company's
         securities for the account of other holders of such securities ("the
         "Demanding Holders"), if the managing underwriter advises the Company
         that the inclusion of some or all of the Registrable Securities
         requested to be included in such registration pursuant to clause (i) of
         this Section 2(d) would interfere with the successful marketing
         (including pricing) of the equity securities of the Company to be
         registered by the Company, then the number of shares to be included in
         any such registration shall be included in the following order: (A)
         first, the securities of the Demanding Holders, (B) second, the
         Registrable Securities of the Holders requested to be included in such
         registration pursuant to Section 2(d)(i), on a pro-rata basis based on
         the Holders' respective percentage ownership of the Company on a
         fully-diluted basis, (C) third, any shares to be registered by the
         Company for its own account, and (D) fourth, Registrable Securities of
         all other holders who are entitled to include securities in such
         registration, on a pro-rata basis based on such holders' respective
         percentage ownership of the Company on a fully-diluted basis.

                  (e) Sufficient Number of Shares Registered. In the event the
number of shares of Common Stock covered under a Registration Statement filed
pursuant to Section 2(a) or Section 2(d) is insufficient to cover all of the
Registrable Securities which such Registration Statement is required to cover,
the Company shall amend the Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or both, so as
to cover at least 100% of the Registrable Securities, in each case, as soon as
practicable, but in any event not later than ten (10) business days after the
necessity therefor arises. The Company shall use its commercially reasonable
efforts to cause such amendment and/or new Registration Statement to become
effective as soon as practicable following the filing thereof.

                  (f) Participation in Underwritten Registrations. No Holder may
participate in any underwritten registration with respect to the Registrable
Securities unless such Holder completes and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements, lock-up letters and other
documents reasonably required under the terms of such underwriting agreements.

                  (g) Other Requirements. In connection with any Registration
Statement under Section 2(a) or any registration statement under Section 2(d),
Holders whose Registrable Securities are included therein shall provide such
information and shall execute and deliver to the Company such documents,
including, but not limited to, a selling securityholder questionnaire in
customary form and substance reasonably satisfactory to the Company, as the
Company may reasonably request in order to effect such registration pursuant to
this Agreement and in accordance with applicable securities laws.

         3. Registration Procedures. In connection with the Company's
registration obligations hereunder, the Company shall:

                                      -5-
<PAGE>

                  (a) Not less than three (3) Trading Days prior to the filing
of the Registration Statement or any related Prospectus or any amendment or
supplement thereto, (i) furnish to the Holders' Representative copies of all
such documents substantially in the form proposed to be filed (including
documents incorporated or deemed incorporated by reference to the extent
requested by such Person) which documents will be subject to the review of the
Holders' Representative, and (ii) subject, if appropriate, to the execution of
confidentiality agreements in form acceptable to the Company, cause its officers
and directors, counsel and independent certified public accountants to respond
to such inquiries as shall be necessary, in the reasonable opinion of respective
counsel to conduct a reasonable investigation within the meaning of the
Securities Act.

                  (b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424; and (iii) respond as
promptly as reasonably practicable to any comments received from the Commission
with respect to the Registration Statement or any amendment thereto and, as
promptly as reasonably practicable, upon request, provide the Holders'
Representative true and complete copies of all correspondence from and to the
Commission relating to the Registration Statement (subject, if appropriate, to
the execution of confidentiality agreements in form acceptable to the Company).

                  (c) Notify the Holders of Registrable Securities to be sold as
promptly as reasonably possible (and, in the case of (i)(A) below, not less than
three (3) Trading Days prior to such filing) and (if requested by any such
Person) confirm such notice in writing promptly following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement is proposed to be filed; (B) when the Commission notifies
the Company whether there will be a "review" of the Registration Statement and
whenever the Commission comments in writing on the Registration Statement (the
Company shall upon request provide true and complete copies thereof and all
written responses thereto to the Holders' Representative, subject, if
appropriate, to the execution of confidentiality agreements in form acceptable
to the Company); and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other federal or state governmental authority
during the period of effectiveness of the Registration Statement for amendments
or supplements to the Registration Statement or Prospectus or for additional
information; (iii) of the issuance by the Commission or any other federal or
state governmental authority of any stop order suspending the effectiveness of
the Registration Statement covering any or all of the Registrable Securities or
the initiation of any Proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that makes
the financial statements included in the Registration Statement ineligible for
inclusion therein or any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of

                                      -6-
<PAGE>

the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

                  (d) Use its commercially reasonable efforts to avoid the
issuance of, or, if issued, obtain the withdrawal of (i) any order suspending
the effectiveness of the Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.

                  (e) Promptly deliver to each Holder no later than five (5)
business days after the Effectiveness Date, without charge, two (2) copies of
the Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto (and, upon the request of the Holder such
additional copies as such Persons may reasonably request in connection with
resales by the Holder of Registrable Securities). The Company hereby consents to
the use of such Prospectus and each amendment or supplement thereto by each of
the selling Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto,
except after the giving of any notice pursuant to Section 3(c).

                  (f) Prior to any resale of Registrable Securities by a Holder,
use its commercially reasonable efforts to register or qualify or cooperate with
the selling Holders in connection with the registration or qualification (or
exemption from the registration or qualification) of such Registrable Securities
for the resale by the Holder under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder reasonably requests in
writing, to keep such registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts or
things reasonably necessary to enable the disposition in such jurisdictions of
the Registrable Securities covered by the Registration Statement; provided,
however, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified, subject the
Company to any material tax in any such jurisdiction where it is not then so
subject or file a general consent to service of process in any such
jurisdiction.

                  (g) If requested by the Holders, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to the
Registration Statement, which certificates shall be free, to the extent
permitted by the Purchase Agreement, of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in such
names as any such Holders may request.

                  (h) Upon the occurrence of any event contemplated by Section
3(c)(v), as promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

                                      -7-
<PAGE>

                  (i) Use its reasonable commercial efforts to comply in all
material respects with all applicable rules and regulations of the Commission
relating to the registration of the Registrable Securities pursuant to the
Registration Statement or otherwise.

                  (j) The Company shall not be required to include in any
Registration Statement the Registrable Securities of any Holder that does not
complete a Selling Shareholder Questionnaire.

                  (k) The Company shall use its commercially reasonable efforts
to maintain at least two (2) market makers that are registered with the National
Association of Securities Dealers, Inc. ("NASD") as such with respect to such
Registrable Securities. The Company shall pay all fees and expenses in
connection with satisfying its obligation under this Section 3(k).

                  (l) The Company shall make all documents, files, books,
records, officers, directors and employees of the Company reasonably available
to the Holders' Representative, one legal counsel to the Holders and one firm of
accountants retained by the Holders (collectively, the "INSPECTORS"), and make
such other accommodations as are reasonably necessary for the Inspectors, if
any, to perform a due diligence review of the Company; provided, however, that
all such information ("CONFIDENTIAL INFORMATION") will be kept confidential and
not utilized by the Inspectors except as contemplated herein and except as
required by law or court order. The term Confidential Information also includes
any information included in a draft Registration Statement or any related
Prospectus or any amendment or supplement thereto provided to a Holder pursuant
to Section 3(a); for the avoidance of doubt, however, as noted in Section 3(a)
above, the Company shall not furnish to Holders, without their prior approval,
any information that constitutes or might constitute material, non-public
information. The term Confidential Information does not include information that
(a) is already in possession of such other party (other than that which is
subject to another confidentiality agreement or unless obtained from a third
party where the receiving party knows that the third party was subject to a
confidentiality agreement), (b) becomes generally available to the public, or
(c) becomes available on a non-confidential basis from a source other than the
Company unless obtained from a third party where the receiving party knows that
the third party was subject to a confidentiality agreement. Each Holder agrees
that it shall, upon learning that disclosure of such Confidential Information is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow the Company, at
its expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, the information deemed confidential.

                  (m) The Company shall hold in confidence and not make any
disclosure of information concerning any Holder provided to the Company unless
(a) such information is already in possession of the Company, (b) such
information becomes available to the Company on a non-confidential basis from a
person other than such Holder who is not known by the Company to be otherwise
bound by a confidentiality or comparable agreement with such Holder (c)
disclosure of such information is necessary to comply with federal or state
securities laws, (d) the disclosure of such information is necessary to avoid or
correct a misstatement or omission in any Registration Statement or Prospectus,
(e) the release of such information is ordered pursuant to a subpoena or other
final, non-appealable order from a court or governmental body of competent
jurisdiction, (f) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other

                                      -8-
<PAGE>

agreement to which the Company is a party, or (g) such Holder consents to the
form and content of any such disclosure (the Holders shall be deemed to consent
to the inclusion of any information provided in the Selling Shareholder
Questionnaire, in the Registration Statement, any Prospectus related thereto,
and any amendments or supplements thereto). The Company agrees that it shall,
upon learning that disclosure of such information concerning any Holder is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt written notice to such Holder and allow such
Holder, at the Holder's expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.

                  (n) The Company covenants that it shall file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder so long as the Holder owns
any Registrable Securities, but in no event longer than two (2) years; provided,
however, the Company may delay any such filing but only pursuant to Rule 12b-25
under the Exchange Act, and the Company shall use commercially reasonable
efforts to take such further action as any Holder of Registrable Securities may
reasonably request (including without limitation, promptly obtaining any
required legal opinions from Company counsel necessary to effect the sale of
Registrable Securities under Rule 144 and paying the related fees and expenses
of such counsel), all to the extent required from time to time to enable such
Holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the Commission. Upon the request
of any Holder of Registrable Securities, the Company will deliver to such Holder
a written statement as to whether it has complied with such requirements.

         4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement, other than fees and expenses of counsel or any other
advisor retained by the Holders and discounts, fees and commissions with respect
to the sale of any Registrable Securities by the Holders. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees and expenses
(A) with respect to filings required to be made with the Trading Market on which
the Common Stock is then listed for trading, and (B) to effect compliance with
applicable state securities or Blue Sky laws), (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing Prospectuses), (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the Company,
(v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange or other trading market as required hereunder.

         5. Indemnification

                                      -9-
<PAGE>

                  (a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents and employees of each of them, each
Person who controls any such Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers, directors,
agents and employees of each such controlling Person, to the fullest extent
permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable
attorneys' fees) and expenses (including the cost (including without limitation,
reasonable attorneys' fees) and expenses relating to an Indemnified Party's
actions to enforce the provisions of this Section 5) (collectively, "LOSSES"),
as incurred, to the extent arising out of or relating to any untrue or alleged
untrue statement of a material fact contained in any Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that (1) such untrue (or alleged untrue) statements or omissions (or alleged
omissions) are based solely upon information regarding such Holder furnished (or
in the case of an omission, not furnished) in writing to the Company by or on
behalf of such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed by such Holder expressly
for use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto (it being understood that
the Holder has reviewed Annex A hereto for this purpose), (2) in the case of an
occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by
such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such Holder of the Advice contemplated in Section 6(d),
or (3) the failure of the Holder to deliver a Prospectus as amended or
supplemented prior to the confirmation of a sale. The Company shall notify the
Holders promptly of the institution, threat or assertion of any Proceeding of
which the Company is aware in connection with the transactions contemplated by
this Agreement.

                  (b) Indemnification by Holders. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses, as
incurred, to the extent arising out of or based upon: (x) such Holder's failure
to comply with the prospectus delivery requirements of the Securities Act or (y)
any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of
the Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading (i) to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information so furnished (or in the case of an omission, not furnished) in
writing by or on behalf of such Holder to the Company specifically for inclusion

                                      -10-
<PAGE>

in the Registration Statement or such Prospectus or (ii) to the extent that (1)
such untrue statements or omissions are based solely upon information regarding
such Holder furnished (or in the case of an omission, not furnished) in writing
to the Company by or on behalf of such Holder expressly for use therein, or to
the extent that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was reviewed by
such Holder expressly for use in the Registration Statement (it being understood
that the Holder has reviewed Annex A hereto for this purpose), such Prospectus
or such form of Prospectus or in any amendment or supplement thereto, or (2) in
the case of an occurrence of an event of the type specified in Section
3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(d), or (3) the failure of the Holder to deliver a
Prospectus prior to the confirmation of a sale. In no event shall the liability
of any selling Holder hereunder be greater in amount than the gross proceeds
received by the Holder with respect to the sale of its Registrable Securities.

                  (c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify the
Person from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing, and
the Indemnifying Party shall have the right to assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, that the failure of any Indemnified Party to give
such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that
such failure shall have materially prejudiced the Indemnifying Party.

         An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in (but not control) the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; (2) the Indemnifying Party shall have
failed to assume the defense of such Proceeding in a timely manner and to employ
counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel in writing
that a conflict of interest would exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
the reasonable fees and expenses of one separate counsel for all Indemnified
Parties in any matters related on a factual basis shall be at the expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding affected without its written consent. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.

         All reasonable fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not

                                      -11-
<PAGE>

inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within fifteen (15) Trading Days of written notice thereof to the
Indemnifying Party; provided, that the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is not entitled to
indemnification hereunder, determined based upon the relative faults of the
parties.

                  (d) Contribution. If a claim for indemnification under Section
5(a) or Section 5(b) is unavailable to an Indemnified Party (by reason of public
policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.

                  (e) The parties hereto agree that it would not be just and
equitable if contribution pursuant to Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in Section 5(d). Notwithstanding the
provisions of Section 5(d), no Holder shall be required to indemnify or
contribute, in the aggregate, pursuant to this Article 5, any amount in excess
of the amount by which the proceeds actually received by such Holder from the
sale of the Registrable Securities subject to the Proceeding exceeds the amount
of any damages that such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, except
in the case of fraud by such Holder. The indemnity and contribution agreements
contained in this Section are in addition to any liability that the Indemnifying
Parties may have to the Indemnified Parties. No party guilty of fraudulent
misrepresentation pursuant to Section 11(f) of the Securities Act shall be
entitled to contribution from any other party.

         6. Miscellaneous.

                  (a) Remedies. In the event of a breach by the Company or by a
Holder of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement will be entitled to specific
performance of its rights under this Agreement. The Company and each Holder
agree that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for

                                      -12-
<PAGE>

specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

                  (b) No Piggyback on Registrations. Other than those securities
that may be issued to Holders and/or any placement agent and/or its designee(s),
the securities set forth on Schedule 3.1(v) of the Purchase Agreement and such
other securities as may be consented to in writing by such placement agent,
neither the Company nor any of its security holders may include securities of
the Company in a Registration Statement filed pursuant to Section 2(a) hereof.
Other than pursuant to rights granted to any placement agent and/or to Holders
in this Agreement, no Person has any right to cause the Company to effect a
registration under the Securities Act of any securities of the Company.

                  (c) Compliance. Each Holder covenants and agrees that it will
comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the Registration Statement.

                  (d) Discontinued Disposition. Each Holder agrees by its
acquisition of such Registrable Securities that, upon receipt of a notice from
the Company of the occurrence of any event of the kind described in Section
3(c), such Holder will forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder's receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement or
until it is advised in writing (the "ADVICE") by the Company that the use of the
applicable Prospectus may be resumed, and, in either case, has received copies
of any additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph.

                  (e) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of at least sixty-six percent (66%) of the then outstanding
Registrable Securities (assuming the conversion of all Convertible Preferred
Stock and exercise of all Warrants, whether converted or exercised or not),
whereupon such amendment, modification, supplement or waiver shall be binding on
all Holders; provided, however, that no consideration shall be offered or paid
to any Holder to amend or consent to a waiver or modification of any provision
of this Agreement unless the same consideration (on a pro-rata basis) is also
offered to all of the Holders under this Agreement.

                  (f) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the Trading Day
following the date of mailing, if sent by nationally recognized overnight
courier service, or (ii) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
delivered and addressed as set forth in the Purchase Agreement

                  (g) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. Each Holder may
assign their respective rights hereunder in the manner and to the Persons as
permitted under the Purchase Agreement.

                                      -13-
<PAGE>

                  (h) Execution and Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and, all of which taken together shall constitute one and the
same Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.

                  (i) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York without
regard to the conflicts of laws principles thereof. The parties hereto hereby
irrevocably agree that any suit or proceeding arising directly and/or indirectly
pursuant to or under this Agreement, shall be brought solely in a federal or
state court located in the City, County and State of New York. By its execution
hereof, the parties hereby covenant and irrevocably submit to the in personam
jurisdiction of the federal and state courts located in the City, County and
State of New York and agree that any process in any such action may be served
upon any of them personally, or by certified mail or registered mail upon them
or their agent, return receipt requested, with the same full force and effect as
if personally served upon them in New York City. The parties hereto waive any
claim that any such jurisdiction is not a convenient forum for any such suit or
proceeding and any defense or lack of in personam jurisdiction with respect
thereto.

                  (j) Cumulative Remedies. Subject to the first sentence of
Section 6(a), the remedies provided herein are cumulative and not exclusive of
any remedies provided by law.

                  (k) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

                  (l) Headings; Section References. The headings in this
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof. References to Sections mean Sections of this
Agreement unless otherwise stated.

                  (m) Independent Nature of Purchasers' Obligations and Rights.
The obligations of each Purchaser hereunder is several and not joint with the
obligations of any other Purchaser hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to independently protect and enforce its
rights, including without limitation the rights arising out of this Agreement,

                                      -14-
<PAGE>

and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose. Each Purchaser represents
that it has been represented by its own separate legal counsel in its review and
negotiation of this Agreement. The Company has elected to provide all Purchasers
with the same terms and documents for the convenience of the Company and not
because it was required to do so by the Purchasers.

                  (n) Assignment of Registration Rights. The rights under this
Agreement shall be automatically assignable by any Holder to any permitted
transferee of all or any portion of Registrable Securities if: (a) such Holder
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment; (b) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (i) the name and
address of such transferee or assignee, and (ii) the securities with respect to
which such registration rights are being transferred or assigned; and (c) at or
before the time the Company receives the written notice contemplated by clause
(b) of this sentence the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein.

                  (o) Deferral Period. With respect to any Registration
Statement filed or to be filed pursuant to Section 2, if the Company determines
that, in its good faith judgment, it would (because of the existence of, or in
reasonable anticipation of, any acquisition or corporate reorganization or other
transaction, financing activity, stock repurchase or other material development
involving the Company or any subsidiary, or the unavailability for reasons
beyond the Company's control of any required financial statements or other
material information, or any other event or condition material to the Company or
any subsidiary) be materially disadvantageous to the Company to proceed with
such Registration Statement or that the Company is required by applicable law,
rules or regulations not to proceed with the Registration Statement (a "MATERIAL
DEVELOPMENT CONDITION"), then the Company shall, notwithstanding any other
provisions of this Agreement, be entitled, upon the giving of a written notice
that a Material Development Condition has occurred (a "DELAY NOTICE") from an
officer of the Company to the Holders' Representative, as the representative of
the Purchasers, (i) to cause sales of Registrable Securities by the Purchasers
pursuant to such Registration Statement to cease, (ii) to cause such
Registration Statement to be withdrawn and the effectiveness of such
Registration Statement suspended, or (iii) in the event no such Registration
Statement has yet been filed or declared effective, to delay filing or
effectiveness of any such Registration Statement until, in the good faith
judgment of the Company, such Material Development Condition shall be disclosed
or no longer exists (notice of which the Company shall promptly deliver to the
Placement Agent, as the representative of the Purchasers). Notwithstanding the
foregoing provisions of this Section 6(o), (1) in no event may such cessation or
delay be for a period of more than sixty (60) consecutive days from giving of
its Delay Notice to the Purchasers with respect to such Material Development
Condition, as above provided, or more than one hundred twenty (120) days in any
twelve (12) months; and (2) in the event a Registration Statement is filed and
subsequently withdrawn by reason of any existing or anticipated Material
Development Condition as provided above, the Company shall cause a new
Registration Statement covering the Registrable Securities to be filed with the
Commission as soon as reasonably practicable after such Material Development
Condition ceases to exist or, if sooner, as soon as practicable after the
expiration of such sixty (60) day period.

                                      -15-
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.

                                     UNITED NETWORK MARKETING SERVICES, INC.

                                     By: /s/ John Bellamy
                                         ----------------------------------
                                         Name:  John Bellamy
                                         Title:  Chief Executive Officer

                                      -16-
<PAGE>

         (PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

                                            DCOFI Master LDC
                                            ----------------------------------

                                            By: /s/ Richard Smithline
                                                ------------------------------
                                                Name: Richard Smithline
                                                Title:  Director

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

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

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

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

<PAGE>

         (PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

                                            Bridges & Pipes LLC
                                            ----------------------------------

                                            By: /s/ David Fuchs
                                                ------------------------------
                                                Name: David Fuchs
                                                Title:  Managing Member

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

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

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

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

<PAGE>

         (PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

                                            H T Ardinger & Sons
                                            ----------------------------------

                                            By: /s/ H T Ardinger
                                                ------------------------------
                                                Name: H T Ardinger
                                                Title:

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

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

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

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

<PAGE>

         (PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

                                            Bushido Capital Master Fund L.P.
                                            ----------------------------------

                                            By: /s/ Louis Rabman
                                                ------------------------------
                                                Name: Louis Rabman
                                                Title:  President

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

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

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

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

<PAGE>

         (PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

                                          Gamma Opportunity Capital Partners, LP
                                          --------------------------------------

                                          By: /s/ Jonathon P. Knight
                                              ----------------------------------
                                              Name: Jonathon P. Knight
                                              Title:  President

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

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

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

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

<PAGE>

         (PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

                                            Bristol Investment Fund, Ltd.
                                            ----------------------------------

                                            By: /s/ Paul Kessler
                                                ------------------------------
                                                Name: Paul Kessler
                                                Title:  Director

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

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

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

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

<PAGE>

         (PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

                                            AJW QUALIFIED PARTNERS, LLC
                                            ----------------------------------

                                            By: /s/ Corey Ribotsky
                                                ------------------------------
                                                Name: Corey Ribotsky
                                                Title:  Manager,
                                                        AJW Manager, LLC

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

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

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

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

<PAGE>

         (PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

                                            AJW OFFSHORE LTD
                                            ----------------------------------

                                            By: /s/ Corey Ribotsky
                                                ------------------------------
                                                Name: Corey Ribotsky
                                                Title: Manager,
                                                       First Street Mgr II, LLC

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

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

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

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

<PAGE>

         (PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

                                          NEW MILLENIUM CAPITAL PARTNERS II, LLC
                                          --------------------------------------

                                          By: /s/ Corey Ribotsky
                                              ----------------------------------
                                              Name: Corey Ribotsky
                                              Title: Manager,
                                                     First Street Mgr II, LLC

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

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

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

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

<PAGE>

         (PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

                                            AJW PARTNERS, LLC
                                            ----------------------------------

                                            By: /s/ Corey Ribotsky
                                                ------------------------------
                                                Name: Corey Ribotsky
                                                Title: Manager,
                                                       SMS Manager, LLC

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

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

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

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

<PAGE>

         (PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

                                            ANASAZI PARTNERS III LLC
                                            ----------------------------------

                                            By: /s/ Christopher P. Baker
                                                ------------------------------
                                                Name: Christopher P. Baker
                                                Title: Manager,
                                                       CP Baker LLC, ITS Mgr

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

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

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

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

<PAGE>

         (PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

                                            CHRISTOPHER P. BAKER
                                            ----------------------------------

                                            By: /s/ Christopher P. Baker
                                                ------------------------------
                                                Name: Christopher P. Baker
                                                Title:  Individual

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

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

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

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

<PAGE>

         (PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

                                            ANASAZI PARTNERS III OFFSHORE LTD
                                            ----------------------------------

                                            By: /s/ Christopher P. Baker
                                                ------------------------------
                                                Name: Christopher P. Baker
                                                Title: Manager,
                                                       CP Baker LLC, ITS Mgr

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

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

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

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

<PAGE>

         (PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

                                            ROYAL CAPITAL VALUE FUND, LP
                                            ----------------------------------

                                            By: /s/ Yale Fergong
                                                ------------------------------
                                                Name: Yale Fergong
                                                Title: Managing Partner

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

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

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

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

<PAGE>

         (PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

                                            ROYAL CAPITAL VALUE FUND (QP) LP
                                            ----------------------------------

                                            By: /s/ Yale Fergong
                                                ------------------------------
                                                Name: Yale Fergong
                                                Title: Managing Partner

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

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

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

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

<PAGE>

         (PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

                                            ROYALCAP VALUE FUND, LTD.
                                            ----------------------------------

                                            By: /s/ Yale Fergong
                                                ------------------------------
                                                Name: Yale Fergong
                                                Title: Managing Partner

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

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

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

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

<PAGE>

         (PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

                                            VICIS CAPITAL MASTER FUND
                                            ----------------------------------

                                            By: /s/ Richard Han
                                                ------------------------------
                                                Name: Richard Han
                                                Title: Portfolio Manager

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

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

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

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

<PAGE>

                                     ANNEX A

                              PLAN OF DISTRIBUTION

         The Selling Stockholders and any of their pledgees, donees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of Common Stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The Selling Stockholders may use any one or more of
the following methods when selling shares:

         o        ordinary brokerage transactions and transactions in which the
                  broker/dealer solicits purchasers;

         o        block trades in which the broker/dealer will attempt to sell
                  the shares as agent but may position and resell a portion of
                  the block as principal to facilitate the transaction;

         o        purchases by a broker/dealer as principal and resale by the
                  broker/dealer for its account;

         o        an exchange distribution in accordance with the rules of the
                  applicable exchange;

         o        privately negotiated transactions;

         o        put or call options transactions;

         o        settlement of short sales;

         o        broker/dealers may agree with the Selling Stockholders to sell
                  a specified number of such shares at a stipulated price per
                  share;

         o        a combination of any such methods of sale; and

         o        any other method permitted by applicable law.

         The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

         Broker/dealers engaged by the Selling Stockholders may arrange for
other brokers/dealers to participate in sales. Broker/dealers may receive
commissions from the Selling Stockholders (or, if any broker/dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions to exceed
what is customary in the types of transactions involved.

         The Selling Stockholders may from time to time pledge or grant a
security interest in some or all of the shares of common stock owned by them
and, if they default in the performance of their secured obligations, the

<PAGE>

donees, pledgees or secured parties may offer and sell the shares of common
stock from time to time under this prospectus, or under an amendment to this
prospectus under Rule 424(b)(3) or other applicable provision of the Securities
Act of 1933 amending the list of Selling Stockholders to include the donee,
pledgee, transferee or other successors in interest as Selling Stockholders
under this prospectus.

         The Selling Stockholders and any broker/dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker/dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions under the Securities Act. The Selling Stockholders have informed the
Company that it does not have any agreement or understanding, directly or
indirectly, with any person to distribute the Common Stock.

         At the time a particular offering of securities is made, to the extent
required, a prospectus supplement will be distributed which will set forth the
number of securities being offered and the terms of the offering, including the
purchase price or the public offering price, the name or names of any
underwriters, dealers or agents, the purchase price paid by any underwriters for
securities purchased from the Selling Stockholders, any discounts, commissions
and other items constituting compensation from the selling security holders and
any discounts, commissions or concessions allowed or reallowed or paid to
dealers.

         Pursuant to applicable rules and regulations under the Exchange Act,
any person engaged in the distribution of the securities offered under this
prospectus may not simultaneously engage in market activities for the shares of
common stock for a period of five business days prior to the commencement of
such distribution. In addition, each Selling Stockholder and any other person
who participates in a distribution of the securities will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
may affect the marketability of the securities and the ability of any person to
engage in market activities for the shares of common stock.

         The Company is required to pay all fees and expenses incident to the
registration of the shares. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.

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