Document:

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Exhibit 10.2

                  STOCK OPTION AND IRREVOCABLE PROXY AGREEMENT

         This Stock Option and  Irrevocable  Proxy Agreement is made as of April
__, 2003 by and between Gary F. McNear, trustee for the Gary F. McNear Revocable
Trust dated March 17, 1998 (the "Gary Trust"),  Susan M. McNear, trustee for the
Susan M. McNear Revocable Trust dated March 17, 1998 (the "Susan Trust"),  Craig
W.  Conklin,  trustee for the Craig W. Conklin  Revocable  Trust dated April 19,
2000 (the "Craig  Trust"),  Margaret  L.  Conklin,  trustee for the  Margaret L.
Conklin   Revocable   Trust  dated  April  19,  2000  (the  "Margaret   Trust"),
(collectively, the Gary Trust, the Susan Trust, the Craig Trust and the Margaret
Trust are referred to as the "Trusts") and Altos Bancorp Inc. (the "Optionee").

                                    RECITALS

         A.  Optionee  has entered  into an Advisory  Agreement  (the  "Advisory
Agreement") with Hy-Tech  Technologies Group, Inc. (the "Company"),  pursuant to
which there is a condition  that the Trusts  grant an option to the  Optionee to
acquire ten million  (10,000,000) shares of common stock held by the Trusts (the
"Option  Shares") and a proxy (the "Proxy') with respect to all of the shares of
common  stock held by the Trusts.  The Trusts  hereby agree to grant such option
for the Option Shares and Proxy as hereinafter provided.

NOW THEREFORE, specifically incorporating these recitals herein, it is agreed as
follows:

                                    AGREEMENT

                                   SECTION 1
                                GRANT OF OPTIONS

1.1 NUMBER OF SHARES. Subject to the terms and conditions of this Agreement, the
Trusts  grant to Optionee,  Options to purchase  from the Trusts an aggregate of
ten million  (10,000,000)  shares (the "Option  Shares") of the Company's common
stock.  Each of the Trusts  grants an option for the number of Option Shares set
forth next to its name on Schedule A attached hereto.

1.2 EXERCISE  PRICE.  Each Option Share is exercisable at a price of US $.01 per
share (the "Option Price").

1.3 TERM. The Expiration Date for all Options shall be the later of (a) the date
occurring  three (3) years from the date of this  Agreement or (b) the date that
this three (3) years after the date that this  Agreement is released to Optionee
under the terms of the Advisory Agreement.

1.4  VESTING.  The Options  granted  herein  fully vest upon  execution  of this
Agreement.

1.5 CONDITIONS OF OPTION. The Options may be exercised immediately upon delivery
to Optionee under the terms of the Advisory Agreement,  subject to the terms and
conditions as set forth in this Agreement.

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                                   SECTION 2
                               EXERCISE OF OPTION

2.1 DATE  EXERCISABLE.  The  Options  shall  become  exercisable  by Optionee in
accordance with Section 1.4 above.

2.2 MANNER OF EXERCISE OF OPTIONS AND PAYMENT FOR COMMON STOCK.  The Options may
be exercised by the Optionee,  in whole or in part, by giving  written notice to
the Trust or Trusts whose Option  Shares are subject to such  exercise,  setting
forth the number of Shares with respect to which Options are being exercised, in
the form attached  hereto as Exhibit A. The purchase  price of the Option Shares
upon  exercise  of the  Options by the  Optionee  shall be paid in full in cash,
except as provided in section 2.3 below.

2.3 CASHLESS  EXERCISE.  Optionee may, at its option, in lieu of paying cash for
the Option Shares,  exercise this Option by an exchange, in whole or in part (an
"Option  Exchange"),  by  delivery  of (i) a duly  executed  Notice of  Exercise
electing an Option  Exchange  and (ii) the Option  Agreement  representing  this
Option. In connection with any Option Exchange,  the Optionee shall be deemed to
have paid for the Option Shares an amount equal to the Fair Market Value of each
Option  delivered,  and the Options shall be deemed  exercised for the amount so
paid.  For this purpose,  the Fair Market Value of each Option is the difference
between the Market Value of a Share of Common  Stock and the  Exercise  Price on
the date of  delivery.  Market  Value  shall mean the average of the closing bid
price for a Share of common Stock  during the ten (10)  trading  days  preceding
delivery.  In no event shall the  Optionee be entitled to receive  more than the
total number of Option Shares granted hereunder.

2.4 STOCK  CERTIFICATES.  Promptly after any exercise in whole or in part of the
Options by Optionee,  the Trust or Trusts subject to such exercise shall deliver
to Optionee a certificate or certificates  for the number of Shares with respect
to which the Options were so exercised,  registered in Optionee's  name. In lieu
thereof,  if the certificates  for the Shares are held in escrow,  they shall be
delivered to Optionee by the escrow agent or comparable  party. The certificates
for the Shares shall bear a legend  referring to the  restrictions  set forth in
this Agreement and that the Shares are subject to the Option and Proxy set forth
in this Agreement..

                                   SECTION 3
                                 TRANSFERABILITY

3.1 NO RESTRICTION. The Options are transferable by Optionee.

                                   SECTION 4
                IRREVOCABLE PROXY; NO OTHER RIGHTS AS SHAREHOLDER
                               PRIOR TO EXERCISE

4.1 Each Trust,  being a holder of Shares of Common Stock of the  Company,  does
hereby  constitute and appoint  Optionee,  with full power of substitution,  the
true and lawful  attorney and proxy of such Trust for it and in its name,  place
and  stead,  to attend  and to vote as the proxy of such  Trust,  at any and all
meetings of shareholders of the Company or any adjournments  thereof, all of the
Common Stock eligible to vote which are held of record or beneficially,  by such
Trust,  on any and all matters,  proposals and  questions,  that may be lawfully
considered  there, and to execute any written consents of Shareholder  which may
be solicited as fully and with the same number of votes and with the same effect
as such Trust could do if personally present thereat or if personally  solicited

                                       2
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to  execute  such  written  consents.  Each Trust  hereby  revokes  all  proxies
heretofore  made by it. Each Trust hereby  ratifies all that the Optionee may or
shall lawfully do in voting the Common Stock in accordance  herewith at any such
meeting or adjournment  in respect of all matters,  proposals and questions that
may properly come before the shareholders  for  consideration  and action.  Each
Trust  acknowledges  that  this  proxy  is  coupled  with  an  interest  and  is
irrevocable  with  respect to all Common  Stock owned by such Trust for the term
set forth in the forms of proxy  attached  hereto.  The Gary Trust shall execute
and deliver  the form of  irrevocable  proxy  attached  hereto as  Schedule  B-1
simultaneously  with the  execution  of this  Agreement.  The Susan  Trust shall
execute and deliver the form of irrevocable  proxy attached  hereto as Schedules
B-2 and B-3 simultaneously with the execution of this Agreement. The Craig Trust
shall  execute and  deliver the form of  irrevocable  proxy  attached  hereto as
Schedule B-4 simultaneously  with the execution of this Agreement.  The Margaret
Trust shall execute and deliver the form of irrevocable proxy attached hereto as
Schedule B-5 and B-6 simultaneously with the execution of this Agreement.

4.2 Except for the  irrevocable  proxy set forth in section 4.1,  Optionee shall
not be deemed for any purpose to be a shareholder of Company with respect to any
shares  subject to the Options  under this  Agreement to which the Options shall
not have been exercised.

                                   SECTION 5
                                   ADJUSTMENTS

5.1 NO EFFECT ON CHANGES IN COMPANY'S  CAPITAL  STRUCTURE.  The existence of the
Options  shall not  affect in any way the right or power of the  Company  or its
shareholders   to  make  or   authorize   any   adjustments,   recapitalization,
reorganization,  or other  changes in the  Company's  capital  structure  or its
business,  or any merger or consolidation of the Company, or any issue of bonds,
debentures,  preferred or  preference  stocks  ahead of or affecting  the Option
Shares,  or the  dissolution  or  liquidation  of the  Company,  or any  sale or
transfer of all or any part of its assets or  business,  or any other  corporate
act or proceeding, whether of a similar character or otherwise.

5.2  ADJUSTMENT  TO OPTION  SHARES.  The Option Shares are subject to adjustment
upon recapitalization,  reclassification, consolidation, merger, reorganization,
stock  dividend,  reverse or forward  stock  split and the like.  If the Company
shall be  reorganized,  consolidated  or merged with another  Company,  Optionee
shall be entitled to receive upon the exercise of the Option the same number and
kind of shares of stock or the same amount of property,  cash or  securities  as
Optionee  would have been  entitled to receive  upon the  happening  of any such
corporate event as if Optionee had been,  immediately  prior to such event,  the
holder of the  number of Shares  covered by the  Option.  If the  Company  shall
declare  any  dividend  or  distribution  after  the date of  execution  of this
Agreement,  the Trust or Trusts  whose  Shares are  subject to the Option  shall
deliver such dividend or distribution to the Optionee along with the certificate
for such shares when the Option is exercised.

                                       3
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                                   SECTION 6
                            MISCELLANEOUS PROVISIONS

6.1 DISPUTES; CONSENT TO JURISDICTION.  All of the parties hereto hereby consent
to the  jurisdiction of the Federal and State courts located in New York, NY, in
any proceeding  arising out of or in connection with this Agreement.  The Trusts
each  waive  any  objection  to such  proceeding  based on  venue  or forum  non
conveniens.  The Optionee and the Trusts each waive personal  service of any and
all process upon them and consent that all such service may be made by certified
mail (return receipt requested) directed to them as provided in section 6.2.

6.2 NOTICES. Any notice that a party may be required or permitted to give to the
other shall be in writing, and may be delivered personally, by overnight courier
or by certified or registered mail, postage prepaid, addressed to the parties at
their current  principal  addresses,  or such other address as either party,  by
notice to the other, may designate in writing from time to time.

6.3 LAW  GOVERNING.  This  Agreement  shall  be  governed  by and  construed  in
accordance with the laws of the State of New York.

6.4 TITLES AND  CAPTIONS.  All  section  titles or  captions  contained  in this
Agreement are for  convenience  only and shall not be deemed part of the context
nor effect the interpretation of this Agreement.

6.5 ENTIRE AGREEMENT.  This Agreement contains the entire understanding  between
the parties and supersedes any prior  understandings and agreements between them
respecting the subject matter of this Agreement.

6.6  AGREEMENT  BINDING.  This  Agreement  shall  be  binding  upon  the  heirs,
executors, administrators, successors and assigns of the parties hereto.

6.7 PRONOUNS AND PLURALS.  All  pronouns  and any  variations  thereof  shall be
deemed to refer to the masculine,  feminine,  neuter, singular, or plural as the
identity of the person or persons may require.

6.8 FURTHER ACTION.  The parties hereto shall execute and deliver all documents,
provide  all  information  and take or  forbear  from all such  action as may be
necessary or appropriate to achieve the purposes of the Agreement.

6.9 PARTIES IN INTEREST.  Nothing herein shall be construed to be to the benefit
of any third  party,  nor is it  intended  that any  provision  shall be for the
benefit of any third party.

6.10 SAVINGS CLAUSE.  If any provision of this Agreement,  or the application of
such  provision  to any  person  or  circumstance,  shall be held  invalid,  the
remainder of this Agreement,  or the application of such provision to persons or
circumstances  other  than  those as to which it is held  invalid,  shall not be
affected thereby.

6.11 COUNTERPARTS.  This Agreement may be exercised in two or more counterparts,
all of which taken together shall be treated as one and the same agreement.

                                       4
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6.12  EFFECTIVE  DATE;  RELEASE  OF  AGREEMENT.   This  Agreement  shall  become
effective, and will be released to the Optionee and the Trusts, on the same date
that the Company receives not less than one million dollars ($1,000,000) in debt
financing.

                            [Signatures on Next Page]

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IN WITNESS  WHEREOF,  the parties  hereto have executed this Agreement as of the
day and year first written above.

                    ALTOS BANCORP, INC.

                    By: _____________________________
                    Martin Nielson, CEO

                    Gary F. McNear, trustee for the
                    Gary F. McNear Revocable Trust dated March 17, 1998

                    By: _____________________________
                             Gary F. McNear

                    Susan M. McNear, trustee for the
                    Susan M. McNear Revocable Trust dated March 17, 1998

                    By: _____________________________
                             Susan M. McNear

                    Craig W. Conklin, trustee for the
                    Craig W. Conklin Revocable Trust dated April 19, 2000

                    By: _____________________________
                             Craig W. Conklin

                    Margaret L. Conklin, trustee for the
                    Margaret L. Conklin Revocable Trust dated April 19, 2000

                    By: _____________________________
                             Margaret L. Conklin

                                       6
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                                    EXHIBIT A

                HY-TECH TECHNOLOGIES GROUP, INC. (the "Company")

                       NOTICE OF EXERCISE OF STOCK OPTION

The undersigned  hereby exercises the Stock Option granted by  _________________
(insert  name of Trust)  and seeks to  purchase  ____________________  shares of
Common Stock of the Company pursuant to said Option. The undersigned understands
that this  exercise  is  subject  to all the terms and  provisions  of the Stock
Option and Irrevocable Proxy Agreement dated as of April __,, 2003.

Enclosed is a check in the sum of US  $_____________________ in payment for such
shares.

-----------------------------------------------------
Signature of Optionee

Date:
       ----------------------------------------------

                                       7
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                                   SCHEDULE A

The  following  calculation  is upon the  assumption  that as of the date of the
execution of this contract, HYTT has approximately 27 million shares outstanding
on a  fully-diluted  basis  (assuming the certificate to Mercatus for 13,888,889
shares will be cancelled).

Shares by McNear,  Conklin, and affiliates subject to option (10,000,000 shares)
and irrevocable proxy (15,838,448):

<TABLE>
<CAPTION>
                                                                      Shares Subject       Shares
                                                                      To Option            Subject to
                                                                                           Proxy*

<S>                                                                    <C>                  <C>
Gary F. McNear, trustee for the
Gary F. McNear Revocable Trust dated March 17, 1998                     3,959,612           3,959,612

Susan M. McNear, trustee for the
Susan M. McNear Revocable Trust dated March 17, 1998                    1,040,388           3,959,612

Craig W. Conklin, trustee for the
Craig W. Conklin Revocable Trust dated April 19, 2000                   3,959,612           3,959,612

Margaret L. Conklin, trustee for the
Margaret L. Conklin Revocable Trust dated April 19, 2000                1,040,388           3,959,612
                                                                       ----------           ---------

Total                                                                  10,000,000          15,838,444
</TABLE>

* The proxy will be  irrevocable  for (a) the term of the option with respect to
shares  that are  subject to the option and (b) six (6) months  with  respect to
shares that are not subject to the option.

                                       8
<PAGE>

                                  SCHEDULE B-1

                                IRREVOCABLE PROXY
                             EXECUTED April __, 2003

         THE UNDERSIGNED SHAREHOLDER  ("Shareholder"),  being a holder of shares
of common stock (the "Common Stock") of Hy-Tech  Technologies  Group,  Inc. (the
"Company"),  does hereby constitute and appoint Altos Bancorp Inc. (the "Proxy")
the true and lawful  attorney and proxy of  Shareholder  for it and in its name,
place and stead,  with full power of substitution,  to attend and to vote as the
proxy of Shareholder,  at any and all meetings of shareholders of the Company or
any  adjournments  thereof,  three  million nine hundred fifty nine thousand six
hundred and twelve (3,959,612) shares of the Common Stock eligible to vote which
are held of record or beneficially by Shareholder,  for the period ending on the
later of (a) the date  occurring  three (3) years from the date of this Proxy or
(b) the date that is three (3) years after the date that this Irrevocable  Proxy
is released to the Proxy under the terms of the Advisory  Agreement of even date
herewith of which the  undersigned is a signatory  (the "Term"),  on any and all
matters,  proposals and questions, that may be lawfully considered there, and to
execute any written  consents of Shareholder  which may be solicited  during the
Term,  as fully and with the same  number  of votes and with the same  effect as
Shareholder could do if personally present thereat or if personally solicited to
execute such written consents.

         Shareholder hereby revokes all proxies heretofore made by it.

         Shareholder hereby ratifies all that the Proxy may or shall lawfully do
in voting  the  Common  Stock in  accordance  herewith  at any such  meeting  or
adjournment in respect of all matters, proposals and questions that may properly
come before the shareholders for consideration and action.

         Shareholder acknowledges that this proxy is coupled with an interest as
to all of  Shareholder's  Common  Stock  that is  subject  to this  Proxy and is
irrevocable for the Term.

                            Gary F. McNear, trustee for the
                            Gary F. McNear Revocable Trust dated March 17, 1998

                            By:________________________
                                       Gary F. McNear

                                       9
<PAGE>

                                  SCHEDULE B-2

                                IRREVOCABLE PROXY
                             EXECUTED April __, 2003

         THE UNDERSIGNED SHAREHOLDER  ("Shareholder"),  being a holder of shares
of common stock (the "Common Stock") of Hy-Tech  Technologies  Group,  Inc. (the
"Company"),  does hereby constitute and appoint Altos Bancorp Inc. (the "Proxy")
the true and lawful  attorney and proxy of  Shareholder  for it and in its name,
place and stead,  with full power of substitution,  to attend and to vote as the
proxy of Shareholder,  at any and all meetings of shareholders of the Company or
any adjournments  thereof, one million forty thousand three hundred eighty eight
(1,040,388) shares of the Common Stock eligible to vote which are held of record
or beneficially  by  Shareholder,  for the period ending on the later of (a) the
date occurring  three (3) years from the date of this Proxy or (b) the date that
is three (3) years after the date that this Irrevocable Proxy is released to the
Proxy under the terms of the Advisory  Agreement of even date  herewith of which
the undersigned is a signatory (the "Term"),  on any and all matters,  proposals
and questions, that may be lawfully considered there, and to execute any written
consents of  Shareholder  which may be solicited  during the Term,  as fully and
with the same number of votes and with the same effect as  Shareholder  could do
if personally present thereat or if personally solicited to execute such written
consents.

         Shareholder hereby revokes all proxies heretofore made by it.

         Shareholder hereby ratifies all that the Proxy may or shall lawfully do
in voting  the  Common  Stock in  accordance  herewith  at any such  meeting  or
adjournment in respect of all matters, proposals and questions that may properly
come before the shareholders for consideration and action.

         Shareholder acknowledges that this proxy is coupled with an interest as
to all of  Shareholder's  Common  Stock  that is  subject  to this  Proxy and is
irrevocable for the Term.

                          Susan M. McNear, trustee for the
                          Susan M. McNear Revocable Trust dated March 17, 1998

                          By:________________________
                                  Susan M. McNear

                                       10
<PAGE>

                                  SCHEDULE B-3

                                IRREVOCABLE PROXY
                             EXECUTED April __, 2003

         THE UNDERSIGNED SHAREHOLDER  ("Shareholder"),  being a holder of shares
of common stock (the "Common Stock") of Hy-Tech  Technologies  Group,  Inc. (the
"Company"),  does hereby constitute and appoint Altos Bancorp Inc. (the "Proxy")
the true and lawful  attorney and proxy of  Shareholder  for it and in its name,
place and stead,  with full power of substitution,  to attend and to vote as the
proxy of Shareholder,  at any and all meetings of shareholders of the Company or
any adjournments thereof, two million nine hundred nineteen thousand two hundred
twenty four  (2,919,224)  shares of the Common Stock  eligible to vote which are
held of record or  beneficially  by  Shareholder,  for the period  ending on the
later of (a) the date  occurring  six (6) months  from the date of this Proxy or
(b) the date that is six (6) months after the date that this  Irrevocable  Proxy
is released to the Proxy under the terms of the Advisory  Agreement of even date
herewith of which the  undersigned is a signatory  (the "Term"),  on any and all
matters,  proposals and questions, that may be lawfully considered there, and to
execute any written  consents of Shareholder  which may be solicited  during the
Term,  as fully and with the same  number  of votes and with the same  effect as
Shareholder could do if personally present thereat or if personally solicited to
execute such written consents.

         Shareholder hereby revokes all proxies heretofore made by it.

         Shareholder hereby ratifies all that the Proxy may or shall lawfully do
in voting  the  Common  Stock in  accordance  herewith  at any such  meeting  or
adjournment in respect of all matters, proposals and questions that may properly
come before the shareholders for consideration and action.

         Shareholder acknowledges that this proxy is coupled with an interest as
to all of  Shareholder's  Common  Stock  that is  subject  to this  Proxy and is
irrevocable for the Term.

                          Susan M. McNear, trustee for the
                          Susan M. McNear Revocable Trust dated March 17, 1998

                          By:________________________
                                Susan M. McNear

                                       11
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                                  SCHEDULE B-4

                                IRREVOCABLE PROXY
                             EXECUTED April __, 2003

         THE UNDERSIGNED SHAREHOLDER  ("Shareholder"),  being a holder of shares
of common stock (the "Common Stock") of Hy-Tech  Technologies  Group,  Inc. (the
"Company"),  does hereby constitute and appoint Altos Bancorp Inc. (the "Proxy")
the true and lawful  attorney and proxy of  Shareholder  for it and in its name,
place and stead,  with full power of substitution,  to attend and to vote as the
proxy of Shareholder,  at any and all meetings of shareholders of the Company or
any  adjournments  thereof,  three  million nine hundred fifty nine thousand six
hundred and twelve (3,959,612) shares of the Common Stock eligible to vote which
are held of record or beneficially by Shareholder,  for the period ending on the
later of (a) the date  occurring  three (3) years from the date of this Proxy or
(b) the date that is three (3) years after the date that this Irrevocable  Proxy
is released to the Proxy under the terms of the Advisory  Agreement of even date
herewith of which the  undersigned is a signatory  (the "Term"),  on any and all
matters,  proposals and questions, that may be lawfully considered there, and to
execute any written  consents of Shareholder  which may be solicited  during the
Term,  as fully and with the same  number  of votes and with the same  effect as
Shareholder could do if personally present thereat or if personally solicited to
execute such written consents.

         Shareholder hereby revokes all proxies heretofore made by it.

         Shareholder hereby ratifies all that the Proxy may or shall lawfully do
in voting  the  Common  Stock in  accordance  herewith  at any such  meeting  or
adjournment in respect of all matters, proposals and questions that may properly
come before the shareholders for consideration and action.

         Shareholder acknowledges that this proxy is coupled with an interest as
to all of  Shareholder's  Common  Stock  that is  subject  to this  Proxy and is
irrevocable for the Term.

                          Craig W. Conklin, trustee for the
                          Craig W. Conklin Revocable Trust dated April 19, 2000

                          By:________________________
                                 Craig W. Conklin

                                       12
<PAGE>

                                  SCHEDULE B-5

                                IRREVOCABLE PROXY
                             EXECUTED April __, 2003

         THE UNDERSIGNED SHAREHOLDER  ("Shareholder"),  being a holder of shares
of common stock (the "Common Stock") of Hy-Tech  Technologies  Group,  Inc. (the
"Company"),  does hereby constitute and appoint Altos Bancorp Inc. (the "Proxy")
the true and lawful  attorney and proxy of  Shareholder  for it and in its name,
place and stead,  with full power of substitution,  to attend and to vote as the
proxy of Shareholder,  at any and all meetings of shareholders of the Company or
any adjournments  thereof, one million forty thousand three hundred eighty eight
(1,040,388) shares of the Common Stock eligible to vote which are held of record
or beneficially  by  Shareholder,  for the period ending on the later of (a) the
date occurring  three (3) years from the date of this Proxy or (b) the date that
is three (3) years after the date that this Irrevocable Proxy is released to the
Proxy under the terms of the Advisory  Agreement of even date  herewith of which
the undersigned is a signatory (the "Term"),  on any and all matters,  proposals
and questions, that may be lawfully considered there, and to execute any written
consents of  Shareholder  which may be solicited  during the Term,  as fully and
with the same number of votes and with the same effect as  Shareholder  could do
if personally present thereat or if personally solicited to execute such written
consents.

         Shareholder hereby revokes all proxies heretofore made by it.

         Shareholder hereby ratifies all that the Proxy may or shall lawfully do
in voting  the  Common  Stock in  accordance  herewith  at any such  meeting  or
adjournment in respect of all matters, proposals and questions that may properly
come before the shareholders for consideration and action.

         Shareholder acknowledges that this proxy is coupled with an interest as
to all of  Shareholder's  Common  Stock  that is  subject  to this  Proxy and is
irrevocable for the Term.

                      Margaret L. Conklin, trustee for the
                      Margaret L. Conklin Revocable Trust dated April 19, 2000

                      By:________________________
                             Margaret L. Conklin

                                       13
<PAGE>

                                  SCHEDULE B-6

                                IRREVOCABLE PROXY
                             EXECUTED April __, 2003

         THE UNDERSIGNED SHAREHOLDER  ("Shareholder"),  being a holder of shares
of common stock (the "Common Stock") of Hy-Tech  Technologies  Group,  Inc. (the
"Company"),  does hereby constitute and appoint Altos Bancorp Inc. (the "Proxy")
the true and lawful  attorney and proxy of  Shareholder  for it and in its name,
place and stead,  with full power of substitution,  to attend and to vote as the
proxy of Shareholder,  at any and all meetings of shareholders of the Company or
any adjournments thereof, two million nine hundred nineteen thousand two hundred
twenty four  (2,919,224)  shares of the Common Stock  eligible to vote which are
held of record or  beneficially  by  Shareholder,  for the period  ending on the
later of (a) the date  occurring  six (6) months  from the date of this Proxy or
(b) the date that is six (6) months after the date that this  Irrevocable  Proxy
is released to the Proxy under the terms of the Advisory  Agreement of even date
herewith of which the  undersigned is a signatory  (the "Term"),  on any and all
matters,  proposals and questions, that may be lawfully considered there, and to
execute any written  consents of Shareholder  which may be solicited  during the
Term,  as fully and with the same  number  of votes and with the same  effect as
Shareholder could do if personally present thereat or if personally solicited to
execute such written consents.

         Shareholder hereby revokes all proxies heretofore made by it.

         Shareholder hereby ratifies all that the Proxy may or shall lawfully do
in voting  the  Common  Stock in  accordance  herewith  at any such  meeting  or
adjournment in respect of all matters, proposals and questions that may properly
come before the shareholders for consideration and action.

         Shareholder acknowledges that this proxy is coupled with an interest as
to all of  Shareholder's  Common  Stock  that is  subject  to this  Proxy and is
irrevocable for the Term.

                     Margaret L. Conklin, trustee for the
                     Margaret L. Conklin Revocable Trust dated April 19, 2000

                     By:________________________

                        Margaret L.  Conklin

                                       14
<PAGE><PAGE>

Exhibit 10.3

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

                    CONVERTIBLE DEBENTURE PURCHASE AGREEMENT

                                     BETWEEN

                                 SANJAY HARYAMA

                                       AND

                           THE PURCHASER(S) LISTED ON
                                SCHEDULE 1 HERETO

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

                                 APRIL 21, 2003

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

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

<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

<S>                                                                                                              <C>
ARTICLE I           CERTAIN DEFINITIONS...........................................................................1
         1.1      CERTAIN DEFINITIONS.............................................................................1

ARTICLE II          PURCHASE AND SALE OF CONVERTIBLE DEBENTURES...................................................5
         2.1      PURCHASE AND SALE; PURCHASE PRICE...............................................................5
         2.2      EXECUTION AND DELIVERY OF DOCUMENTS; THE CLOSING................................................5
         2.3      THE POST-CLOSING................................................................................6

ARTICLE III          REPRESENTATIONS AND WARRANTIES...............................................................7
         3.1      REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.......................................7
         3.2      REPRESENTATIONS AND WARRANTIES OF THE PURCHASER................................................10

ARTICLE IV          OTHER AGREEMENTS OF THE PARTIES..............................................................12
         4.1      MANNER OF OFFERING.............................................................................12
         4.2      FURNISHING OF INFORMATION......................................................................12
         4.3      NOTICE OF CERTAIN EVENTS.......................................................................12
         4.4      COPIES AND USE OF DISCLOSURE DOCUMENTS AND NON-PUBLIC FILINGS..................................12
         4.5      MODIFICATION TO DISCLOSURE DOCUMENTS...........................................................12
         4.6      BLUE SKY LAWS..................................................................................13
         4.7      INTEGRATION....................................................................................13
         4.8      FURNISHING OF RULE 144(C) MATERIALS............................................................13
         4.9      SOLICITATION MATERIALS.........................................................................13
         4.10     SUBSEQUENT FINANCIAL STATEMENTS................................................................13
         4.11     PROHIBITION ON CERTAIN ACTIONS.................................................................13
         4.12     LISTING OF COMMON STOCK........................................................................14
         4.13     ESCROW.........................................................................................14
         4.14     CONVERSION PROCEDURES; MAINTENANCE OF ESCROW SHARES............................................14
         4.15     ATTORNEY-IN-FACT...............................................................................14
         4.16     INDEMNIFICATION................................................................................14
         4.17     EXCLUSIVITY....................................................................................16
         4.18     PURCHASER'S OWNERSHIP OF COMMON STOCK..........................................................16
         4.19     PURCHASER'S RIGHTS IF TRADING IN COMMON STOCK IS SUSPENDED.....................................17
         4.20     NO VIOLATION OF APPLICABLE LAW.................................................................18
         4.21     REDEMPTION RESTRICTIONS........................................................................18
         4.22     NO OTHER REGISTRATION RIGHTS...................................................................18
         4.23     MERGER OR CONSOLIDATION........................................................................18
         4.24     REGISTRATION OF ESCROW SHARES..................................................................19
         4.25     LIQUIDATED DAMAGES.............................................................................20
         4.26     SHORT SALES....................................................................................20
         4.27     FEES...........................................................................................21
         4.28     ADDITIONAL FEES................................................................................21
         4.29     CHANGES TO FEDERAL AND STATE SECURITIES LAWS...................................................21
         4.30     MERGER AGREEMENT...............................................................................21
</TABLE>

                                       i
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                                             <C>
ARTICLE V           TERMINATION..................................................................................22
         5.1      TERMINATION BY THE COMPANY OR THE PURCHASER....................................................22
         5.2.     REMEDIES.......................................................................................23

ARTICLE VI          LEGAL FEES AND DEFAULT INTEREST RATE.........................................................23

ARTICLE VII       MISCELLANEOUS................................................................................. 23
         7.1      FEES AND EXPENSES..............................................................................23
         7.2      ENTIRE AGREEMENT; AMENDMENTS...................................................................24
         7.3      NOTICES........................................................................................24
         7.4      AMENDMENTS; WAIVERS............................................................................25
         7.5      HEADINGS.......................................................................................25
         7.6      SUCCESSORS AND ASSIGNS.........................................................................25
         7.7      NO THIRD PARTY BENEFICIARIES...................................................................25
         7.8      GOVERNING LAW; VENUE; SERVICE OF PROCESS.......................................................25
         7.9      SURVIVAL.......................................................................................26
         7.10     COUNTERPART SIGNATURES.........................................................................26
         7.11     PUBLICITY......................................................................................26
         7.12     SEVERABILITY...................................................................................26
         7.13     LIMITATION OF REMEDIES.........................................................................26
         7.14     OMNIBUS PROVISION..............................................................................26
</TABLE>

LIST OF SCHEDULES:

Schedule 1        Purchaser(s)
Schedule 3.1(a)   Subsidiaries
Schedule 3.1(c)   Capitalization and Registration Rights
Schedule 3.1(d)   Equity and Equity Equivalent Securities
Schedule 3.1(e)   Conflicts
Schedule 3.1(f)   Consents and Approvals
Schedule 3.1(g)   Litigation
Schedule 3.1(h)   Defaults and Violations
Schedule 5.1      Form 8-K Disclosure Obligations

LIST OF EXHIBITS:

Exhibit A         Convertible Debenture
Exhibit B         Agreement and Plan of Merger
Exhibit C1        Articles of Merger
Exhibit C2        Certificate of Merger
Exhibit D         Conversion Procedures
Exhibit E         Escrow Agreement
Exhibit F         Power of Attorney
Exhibit G         Legal Opinion
Exhibit H         Rule 504 Legal Opinion
Exhibit I         Officer's Certificate

                                       ii
<PAGE>

         THIS CONVERTIBLE DEBENTURE PURCHASE AGREEMENT ("AGREEMENT") is made and
entered  into as of April  21,  2003,  between  SANJAY  HARYAMA,  a  corporation
organized and existing  under the laws of the State of Wyoming (the  "COMPANY"),
and the purchaser(s) listed on SCHEDULE 1 hereto (the "PURCHASER").

         WHEREAS,  subject  to the  terms  and  conditions  set  forth  in  this
Agreement,  the  Company  desires  to issue  and sell to the  Purchaser  and the
Purchaser  desires to acquire  from the Company  the  Company's  $1,000,000,  1%
Convertible  Debenture,  due April 20, 2008, at the price of One Million Dollars
($1,000,000)  (the "DEBENTURE  CONSIDERATION")  in the form of EXHIBIT A annexed
hereto and made a part hereof (the "DEBENTURES").

         IN CONSIDERATION  of the mutual covenants  contained in this Agreement,
the Company and each Purchaser agree as follows:

ARTICLE I

                               CERTAIN DEFINITIONS

         1.1  CERTAIN  DEFINITIONS.  As used in this  Agreement,  and unless the
context  requires a different  meaning,  the  following  terms have the meanings
indicated:

         "AFFILIATE"  means,  with  respect  to any  Person,  any  Person  that,
directly or  indirectly,  controls,  is controlled by or is under common control
with such Person.  For the purposes of this  definition,  "CONTROL"  (including,
with correlative  meanings,  the terms "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH") shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the  management  and policies of such Person,  whether
through the ownership of voting securities or by contract or otherwise.

         "AGREEMENT"  shall  have the  meaning  set  forth  in the  introductory
paragraph of this Agreement.

         "ATTORNEY-IN-FACT"   shall  have  the  meaning  set  forth  in  SECTION
2.3(B)(II) hereof.

         "BUSINESS DAY" means any day except Saturday,  Sunday and any day which
shall be a legal holiday or a day on which banking  institutions in the State of
New York are authorized or required by law or other government actions to close.

         "CLOSING" shall have the meaning set forth in SECTION 2.2(A).

         "CLOSING DATE" shall have the meaning set forth in SECTION 2.2(A).

         "COMMISSION" means the Securities and Exchange Commission.

         "COMMON STOCK" means shares now or hereafter authorized of the class of
common stock,  par value $0.001 per share, of the Company and stock of any other
class into which such shares may hereafter have been reclassified or changed.

                                       1
<PAGE>

         "COMPANY"  shall  have  the  meaning  set  forth  in  the  introductory
paragraph.

         "CONTROL  PERSON"  shall have the meaning set forth in SECTION  4.16(A)
hereof.

         "CONVERSION DATE" shall have the meaning set forth in the Debentures.

         "DEBENTURES" shall have the meaning set forth in the recital.

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

         "DISCLOSURE  DOCUMENTS" means (a) all documents and materials  provided
to the Purchaser and/or its  representatives  in connection with the Company and
this offering,  including,  but not limited to, the Company's  unaudited balance
sheet as at March 31,  2003 and  profit  and loss  statement  for the year ended
March  31,  2003  and (b)  the  Schedules  required  to be to  furnished  to the
Purchaser by or on behalf of the Company pursuant to SECTION 3.1 hereof.

         "EFFECTIVE  DATE"  shall mean the date on which the  articles of merger
and certificate of merger (collectively,  the "Articles of Merger"),  annexed as
EXHIBIT C1 AND EXHIBIT C2 hereto,  are filed with the  Secretary of State of the
States of  Wyoming  and  Delaware,  respectively,  to effect  the  merger of the
Company with and into  HY-TECH  TECHNOLOGY  GROUP INC.,  a Delaware  corporation
("HYTT"), (the "Merger") pursuant to the Agreement and Plan of Merger annexed as
EXHIBIT B hereto.

         "ESCROW  AGENT"  means  Kaplan  Gottbetter  &  Levenson,  LLP,  or  its
successors or assigns,  630 Third Avenue,  5th Floor,  New York, NY 10017;  Tel:
212-983-6900; Fax: 212-983-9210.

         "ESCROW  AGREEMENT"  shall have the meaning  set forth in SECTION  4.13
hereof.

         "ESCROW  SHARES"  means  the  certificates   representing  Ten  Million
(10,000,000) shares of duly issued Common Stock,  without restriction and freely
tradable upon resale pursuant to Rule 504 of Regulation D of the Securities Act,
in the share denominations specified by the Purchaser, registered in the name of
the Purchaser and/or its assigns to be held in escrow pursuant to this Agreement
and the  Escrow  Agreement.  The Escrow  Shares  are the  shares  into which the
Debentures  are  convertible  in  accordance  with  the  terms  hereof  and  the
Debentures.  For purposes of this Agreement,  such conversion shares may also be
referred to as the "UNDERLYING SHARES."

         "EVENT OF DEFAULT" shall have the meaning set forth in SECTION 5.

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

         "EXECUTION DATE" means the date of this Agreement first written above.

                                       2
<PAGE>

         "FULL  CONVERSION  SHARES"  shall have the meaning set forth in SECTION
4.14 hereof.

         "INDEMNIFIED PARTY" shall have the meaning set forth in SECTION 4.16(B)
hereof.

         "INDEMNIFYING  PARTY"  shall  have the  meaning  set  forth in  SECTION
4.16(B) hereof.

         "KGL" means Kaplan  Gottbetter & Levenson,  LLP, or its  successors  or
assigns.

         "LIMITATION ON CONVERSION"  shall have the meaning set forth in SECTION
4.18 hereof.

         "LOSSES" shall have the meaning set forth in SECTION 4.16(A) hereof.

         "MATERIAL"  shall  mean  having a  financial  consequence  in excess of
$100,000.

         "MATERIAL  ADVERSE  EFFECT" shall have the meaning set forth in SECTION
3.1(A).

         "MERGER  AGREEMENT" means the Agreement and Plan of Merger between HYTT
and the Company, annexed as EXHIBIT B hereto.

         "NASD" means the National Association of Securities Dealers, Inc.

         "NASDAQ" shall mean the Nasdaq Stock Market, Inc.(R)

         "NON-PUBLIC  FILINGS"  shall have the  meaning set forth in SECTION 4.2
hereof.

         "NOTICE OF  CONVERSION"  shall have the  meaning set forth in EXHIBIT D
annexed hereto.

         "ORIGINAL  ISSUANCE  DATE,"  shall  have the  meaning  set forth in the
Debentures.

         "OTCBB"  shall mean the NASD  over-the  counter  Bulletin  Board(R)  or
similar organization or agency succeeding to its functions.

         "PER DEBENTURE  CONSIDERATION"  shall have the meaning set forth in the
recital.

         "PER SHARE MARKET  VALUE" of the Common  Stock means on any  particular
date (a) the last sale  price of  shares of Common  Stock on such date or, if no
such sale takes place on such date, the last sale price on the most recent prior
date, in each case as officially  reported on the principal national  securities
exchange on which the Common Stock is then listed or admitted to trading, or (b)
if the Common  Stock is not then listed or  admitted to trading on any  national
securities  exchange,  the closing bid price per share as reported by Nasdaq, or
(c) if the Common Stock is not then listed or admitted to trading on the Nasdaq,
the closing bid price per share of the Common  Stock on such date as reported on
the OTCBB or if there is no such price on such date,  then the last bid price on
the date nearest  preceding  such date, or (d) if the Common Stock is not quoted
on the OTCBB,  the closing bid price for a share of Common Stock on such date in
the  over-the-counter  market as  reported  by the  Pinksheets  LLC (or  similar

                                       3
<PAGE>

organization  or agency  succeeding to its functions of reporting  prices) or if
there is no such price on such date, then the last bid price on the date nearest
preceding  such date, or (e) if the Common Stock is no longer  publicly  traded,
the fair  market  value  of a share of the  Common  Stock  as  determined  by an
Appraiser (as defined in Section  4(c)(iv) of the  Debentures)  selected in good
faith by the holders of a majority of the Debentures;  PROVIDED,  HOWEVER,  that
the Company,  after receipt of the  determination by such Appraiser,  shall have
the right to select an  additional  Appraiser,  in which  case,  the fair market
value  shall  be  equal  to the  average  of the  determinations  by  each  such
Appraiser.

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

         "POST-CLOSING" shall have the meaning set forth in SECTION 2.3(A).

         "POST-CLOSING DATE" shall have the meaning set forth in SECTION 2.3(A).

         "POWER OF ATTORNEY"  means the power of attorney in the form of EXHIBIT
F annexed hereto.

         "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.

         "PURCHASE PRICE" shall have the meaning set forth in SECTION 2.1.

         "PURCHASER"  shall  have the  meaning  set  forth  in the  introductory
paragraph.

         "REGISTRABLE  SECURITIES"  means the  Underlying  Shares and the Escrow
Shares entitled to registration pursuant to SECTION 4.24 and SECTION 4.29.

         "REPORTING  ISSUER"  means a company  that is subject to the  reporting
requirements of Section 13 or 15(d) of the Exchange Act.

         "REQUIRED  APPROVALS"  shall  have the  meaning  set  forth in  SECTION
3.1(F).

         "SECURITIES" means the Debentures, the Underlying Shares and the Escrow
Shares.

         "SEC" means the Securities and Exchange Commission.

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

         "SHORT SALE" shall have the meaning set forth in SECTION 4.26 hereof.

         "SUBSIDIARIES" shall have the meaning set forth in SECTION 3.1(A).

                                       4
<PAGE>

         "TRADING  DAY" means (a) a day on which the  Common  Stock is quoted on
Nasdaq,  the OTCBB or the principal stock exchange on which the Common Stock has
been listed,  or (b) if the Common  Stock is not quoted on Nasdaq,  the OTCBB or
any  stock  exchange,  a day  on  which  the  Common  Stock  is  quoted  in  the
over-the-counter  market,  as  reported  by the  Pinksheets  LLC (or any similar
organization or agency succeeding its functions of reporting prices).

         "TRANSACTION  DOCUMENTS"  means this  Agreement  and all  exhibits  and
schedules  hereto and all other  documents,  instruments  and writings  required
pursuant to this Agreement.

         "UNDERLYING  SHARES"  means the  shares of duly  issued  Common  Stock,
without  restriction  and freely  tradable  upon resale  pursuant to Rule 504 of
Regulation D of the Securities Act, into which the Debentures are convertible in
accordance with the terms hereof and the Debentures.
ARTICLE II

                   PURCHASE AND SALE OF CONVERTIBLE DEBENTURES

         2.1  PURCHASE  AND  SALE;  PURCHASE  PRICE.  Subject  to the  terms and
conditions set forth herein,  the Company shall issue and sell and the Purchaser
shall purchase an aggregate principal amount of One Million Dollars ($1,000,000)
(the  "PURCHASE  PRICE")  of the  Debentures.  The  Debentures  shall  have  the
respective  rights,  preferences  and  privileges  as set forth in the Debenture
annexed as EXHIBIT A hereto.

         2.2 EXECUTION AND DELIVERY OF DOCUMENTS; THE CLOSING.

                  (a) The  Closing of the  purchase  and sale of the  Debentures
(the "CLOSING") shall take place  simultaneously with the execution and delivery
of this  Agreement  (the "CLOSING  DATE").  On the Closing Date,

                           (i) the parties  shall execute and deliver the Escrow
                  Agreement;

                           (ii) the Company  shall  deliver to the Purchaser the
                  (A) a duly executed  copy of the Merger  Agreement and (B) the
                  legal opinions of counsel to the Company  substantially in the
                  form of Exhibit G and EXHIBIT H annexed  hereto,  addressed to
                  the Purchaser and dated the date hereof;

                           (iii) the Company  shall  deliver to the Escrow Agent
                  (A) original and duly  executed  Debentures  registered in the
                  name of the  Purchaser  in the amount set forth in SCHEDULE 1,
                  (B) an original  and duly  executed  Power of Attorney and (C)
                  the original Escrow Shares;

                           (iv) the  Company  shall  execute  and deliver to the
                  Purchaser  a  certificate  of its  President,  in the  form of
                  EXHIBIT I annexed hereto,  certifying that attached thereto is
                  a copy of  resolutions  duly adopted by the Board of Directors
                  of the Company  authorizing the Company to execute and deliver
                  the Transaction  Documents and to enter into the  transactions
                  contemplated thereby; and

                                       5
<PAGE>

                           (v) the  Purchaser  shall deliver to the Escrow Agent
                  the  Purchase  Price by wire  transfer of One Million  Dollars
                  ($1,000,000)  pursuant  to the Escrow  Agent's  wire  transfer
                  instructions.

                  (b) If this  Agreement is terminated  pursuant to SECTIONS 5.1
hereof, then, within two (2) Business Days from the date of termination,  either
the Company or the Purchaser shall notify the Escrow Agent of same, and

                  (i) the Escrow  Agent shall,  within two (2) Business  Days of
         its receipt of such notice,

                           (A)      return the Purchase  Price to the Purchaser;
                                    and

                           (B)      return the certificates representing (A) the
                                    Debentures  and

                       (B) the Escrow Shares to the Company.

         2.3 THE POST-CLOSING.

         (a) The  post-closing  of the purchase and sale of the Debentures  (the
"POST-CLOSING")  shall  take place  immediately  after the  Effective  Date (the
"POST-CLOSING DATE") at the offices of Kaplan Gottbetter & Levenson, LLP, or its
successors or assigns, 630 Third Avenue, New York, NY 10017; PROVIDED,  HOWEVER,
that all of the  transactions  contemplated by the Merger  Agreement  annexed as
EXHIBIT B hereto shall have been consummated in accordance with the terms of the
Merger  Agreement prior to the  Post-Closing;  and FURTHER,  PROVIDED,  that the
Post-Closing  may not occur  later  than ten (10) days  after the  Closing  Date
(except if such 10th day is not a Business  Day,  then the next  Business  Day),
unless the Purchaser agrees in writing in advance to an extension, which writing
shall set forth the new Closing  Date.  The Merger  Agreement  shall be executed
immediately after the Closing.

         (b) At the Post-Closing,

                  (i) the Escrow Agent shall deliver to the  Purchaser  original
         and duly executed  Debentures and/or its assigns in share denominations
         specified  by the  Purchaser  in the  amount  set forth in  SCHEDULE  1
         hereto;

                  (ii) the Company shall deliver to the Purchaser the following:

                           (A)  certified  copies of the  Articles  of Merger as
                  filed with the  Secretary  of State of the States of  Delaware
                  and Wyoming; and

                           (B) all other  documents,  instruments  and  writings
                  required to have been  delivered by the Company at or prior to
                  the Post-Closing pursuant to this Agreement.

         (c) Upon receipt by the  Purchaser of those items set forth in SECTIONS
2.3(B)(I)  AND (II) above,  the Escrow Agent shall  deliver the following to the
Company:

                                       6
<PAGE>

                  (i)  the  Purchase  Price  by  wire  transfer  of  immediately
         available  funds in the  amount  of One  Million  Dollars  ($1,000,000)
         pursuant to written wire transfer instructions delivered by the Company
         to the  Escrow  Agent at least  three (3)  Business  Days  prior to the
         Post-Closing Date; and

                  (ii) all documents, instruments, and writings required to have
         been  delivered  or necessary  at or prior to the  Post-Closing  by the
         Purchaser pursuant to this Agreement.

(d)      The Escrow Agent shall retain and hold the Escrow Shares,  all of which
         shall be held in  accordance  with the terms of this  Agreement and the
         Escrow Agreement.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

         3.1  REPRESENTATIONS,  WARRANTIES  AND  AGREEMENTS OF THE COMPANY.  The
Company  hereby  makes  the  following  representations  and  warranties  to the
Purchaser, all of which shall survive the Post-Closing:

         (a) ORGANIZATION AND QUALIFICATION.  The Company is a corporation, duly
incorporated,  validly existing and in good standing under the laws of the State
of Wyoming,  with the requisite corporate power and authority to own and use its
properties and assets and to carry on its business as currently  conducted.  The
Company has no subsidiaries  other than as set forth on SCHEDULE 3.1(A) attached
hereto  (collectively,  the  "SUBSIDIARIES").  Each  of  the  Subsidiaries  is a
corporation, duly incorporated,  validly existing and in good standing under the
laws of the jurisdiction of its incorporation, with the full corporate power and
authority to own and use its  properties and assets and to carry on its business
as  currently  conducted.  Each  of the  Company  and the  Subsidiaries  is duly
qualified to do business  and is in good  standing as a foreign  corporation  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, would not, individually or
in the aggregate,  have a material  adverse effect on the results of operations,
assets,  prospects,  or financial condition of the Company and the Subsidiaries,
taken as a whole (a "MATERIAL ADVERSE EFFECT").

         (b) AUTHORIZATION, ENFORCEMENT. The Company has the requisite corporate
power  and  authority  to  enter  into  and  to  consummate   the   transactions
contemplated  hereby and by each other Transaction  Document and to otherwise to
carry out its obligations  hereunder and thereunder.  The execution and delivery
of this Agreement and each of the other Transaction Documents by the Company and
the consummation by it of the transactions  contemplated  hereby and thereby has
been duly authorized by all necessary action on the part of the Company. Each of
this Agreement and each of the other  Transaction  Documents has been or will be
duly  executed by the Company and when  delivered in  accordance  with the terms
hereof or  thereof  will  constitute  the valid and  binding  obligation  of the
Company  enforceable against the Company in accordance with its terms, except as
such  enforceability  may  be  limited  by  applicable  bankruptcy,  insolvency,
reorganization,   moratorium,  liquidation  or  similar  laws  relating  to,  or

                                       7
<PAGE>

affecting  generally the  enforcement of,  creditors'  rights and remedies or by
other equitable principles of general application.

         (c)  CAPITALIZATION.  The authorized,  issued and  outstanding  capital
stock of the Company is set forth on SCHEDULE  3.1(C).  No Debentures  have been
issued  as of the date  hereof.  No  shares of  Common  Stock  are  entitled  to
preemptive or similar rights,  nor is any holder of the Common Stock entitled to
preemptive or similar rights arising out of any agreement or understanding  with
the Company by virtue of this Agreement.  Except as described in this Agreement,
or disclosed in SCHEDULE  3.1(C),  there are no outstanding  options,  warrants,
script, rights to subscribe to, registration rights, calls or commitments of any
character  whatsoever  relating  to, or,  except as a result of the purchase and
sale of the Debentures hereunder,  securities, rights or obligations convertible
into or  exchangeable  for, or 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. Neither the Company nor any Subsidiary
is in  violation  of any of the  provisions  of its  respective  Certificate  of
Incorporation, bylaws or other charter documents.

         (d) ISSUANCE OF  SECURITIES.  The Debentures and the Escrow Shares have
been duly and validly  authorized for issuance,  offer and sale pursuant to this
Agreement and, when issued and delivered as provided  hereunder  against payment
in accordance with the terms hereof,  shall be valid and binding  obligations of
the Company  enforceable in accordance with their respective  terms. The Company
has and at all times  while the  Debentures  are  outstanding  will  continue to
maintain an adequate  reserve of shares of Common  Stock to enable it to perform
its  obligations  under  this  Agreement  and the  Debentures.  When  issued  in
accordance  with the  terms  hereof,  the  Securities  will be duly  authorized,
validly issued,  fully paid and non-assessable.  Except as set forth in SCHEDULE
3.1(D) hereto, there is no equity,  equity equivalent  security,  debt or equity
lines of credit  outstanding  that is  substantially  similar to the Debentures,
including any security having a floating conversion price substantially  similar
to the Debentures; PROVIDED, HOWEVER, that, except as otherwise provided herein,
nothing  contained in this SECTION 3.1(D) shall be deemed to permit the issuance
of any convertible security or instrument or equity line of credit.

         (e) NO  CONFLICTS.  The  execution,  delivery and  performance  of this
Agreement  and  the  other   Transaction   Documents  by  the  Company  and  the
consummation by the Company of the transactions  contemplated hereby and thereby
do not  and  will  not  (i)  conflict  with  or  violate  any  provision  of its
Certificate of Incorporation or bylaws (each as amended through the date hereof)
or (ii) be subject  to  obtaining  any of the  consents  referred  to in SECTION
3.1(F), conflict with, or constitute a default (or an event which with notice or
lapse of time or both  would  become a  default)  under,  or give to others  any
rights  of  termination,   amendment,   acceleration  or  cancellation  of,  any
agreement,  indenture or  instrument  to which the Company is a party,  or (iii)
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 its Subsidiaries is subject (including,  but not limited to, those of
other countries and the federal and state securities laws and  regulations),  or
by which any  property or asset of the Company or its  Subsidiaries  is bound or
affected,  except  in  the  case  of  clause  (ii),  such  conflicts,  defaults,

                                       8
<PAGE>

terminations,  amendments, accelerations,  cancellations and violations as would
not,  individually  or in the aggregate,  have a Material  Adverse  Effect.  The
business of the Company and its Subsidiaries is not being conducted in violation
of any law, ordinance or regulation of any governmental authority.

         (f)  CONSENTS  AND  APPROVALS.  Except  as  specifically  set  forth in
SCHEDULE  3.1(F),  neither the Company nor any  Subsidiary is required to obtain
any  consent,  waiver,  authorization  or  order  of,  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 this Agreement and each of the other
Transaction Documents,  except for the filing of the Articles of Merger with the
Secretary  of State of the States of  Delaware  and Wyoming to effect the Merger
pursuant  to the Merger  Agreement,  which shall be filed no later than ten (10)
days  from  the  Execution   Date   (together   with  the   consents,   waivers,
authorizations,  orders, notices and filings referred to in SCHEDULE 3.1(F), the
"REQUIRED APPROVALS").

         (g)  LITIGATION;  PROCEEDINGS.  Except  as  specifically  disclosed  in
SCHEDULE 3.1(G),  there is no action,  suit, notice of violation,  proceeding or
investigation  pending  or, to the best  knowledge  of the  Company,  threatened
against or  affecting  the  Company or any of its  Subsidiaries  or any of their
respective  properties  before or by any court,  governmental or  administrative
agency or regulatory authority (federal,  state, county, local or foreign) which
(i) relates to or challenges the legality,  validity or enforceability of any of
the Transaction Documents,  the Debentures or the Underlying Shares, (ii) could,
individually or in the aggregate, have a Material Adverse Effect or (iii) could,
individually or in the aggregate,  materially  impair the ability of the Company
to  perform  fully on a timely  basis  its  obligations  under  the  Transaction
Documents.

         (h) NO DEFAULT OR  VIOLATION.  Except as set forth in  SCHEDULE  3.1(H)
hereto,  neither the Company nor any  Subsidiary  (i) is in default  under or 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,  except such  conflicts  or  defaults  as do not have a Material  Adverse
Effect,  (ii)  is in  violation  of  any  order  of  any  court,  arbitrator  or
governmental  body, except for such violations as do not have a Material Adverse
Effect,  or (iii) is in  violation  of any statute,  rule or  regulation  of any
governmental  authority  which  could  (individually  or in the  aggregate)  (x)
adversely affect the legality, validity or enforceability of this Agreement, (y)
have a Material Adverse Effect or (z) adversely impair the Company's  ability or
obligation  to  perform  fully on a timely  basis  its  obligations  under  this
Agreement.

         (i) CERTAIN FEES. No fees or commission  will be payable by the Company
to any investment  banker,  broker,  placement agent or bank with respect to the
consummation  of the  transactions  contemplated  hereby  except as  provided in
SECTION 4.27 hereof.

         (j) DISCLOSURE DOCUMENTS.  The Disclosure Documents are accurate in all
material  respects 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.

                                       9
<PAGE>

         (k) MANNER OF OFFERING.  The  Securities  are being offered and sold to
the  Purchaser  without  registration  under  the  Securities  Act in a  private
placement that is exempt from registration  pursuant to Rule 504 of Regulation D
of the Securities Act and without registration under the Colorado Securities Act
of the Colorado Revised Statues (the "COLORADO ACT") upon the exemption provided
by Section  11-51-308 of the Colorado Act and  regulation  51-3.13B  promulgated
thereunder. Accordingly, the Securities are being issued without restriction and
may be freely  traded upon resale  pursuant to Rule 504 of  Regulation  D of the
Securities Act.

         (l) NON-REGISTERED OFFERING.  Neither the Company nor any Person acting
on its behalf has taken or will take any action (including,  without limitation,
any offering of any  securities of the Company under  circumstances  which would
require the  integration  of such offering  with the offering of the  Securities
under the Securities Act) which might subject the offering,  issuance or sale of
the Securities to the  registration  requirements of Section 5 of the Securities
Act.

         (m) NOT A REPORTING COMPANY; ELIGIBILITY TO USE EXEMPTION UNDER 504(B).
The  Company  is not  subject  to the  reporting  requirements  of Section 13 or
Section 15(d) of the Exchange Act. The Company has not sold any securities under
Rule 504(b) in the last twelve months,  except as disclosed in Schedule  3.1(m).
The Company is eligible to issue securities exempt from registration pursuant to
Rule 504 of Regulation D promulgated under the Securities Act.

The Purchaser  acknowledges and agrees that the Company makes no  representation
or warranty  with  respect to the  transactions  contemplated  hereby other than
those specifically set forth in SECTION 3.1 hereof.

         3.2  REPRESENTATIONS  AND  WARRANTIES OF THE  PURCHASER.  The Purchaser
hereby represents and warrants to the Company as follows:

         (a)  ORGANIZATION;  AUTHORITY.  The  Purchaser  is a limited  liability
company, duly organized, validly existing and in good standing under the laws of
the  jurisdiction  of its formation  with the  requisite  power and authority to
enter into and to consummate  the  transactions  contemplated  hereby and by the
other Transaction Documents and otherwise to carry out its obligations hereunder
and  thereunder.  The  acquisition  of the  Debentures  to be  purchased  by the
Purchaser hereunder has been duly authorized by all necessary action on the part
of the  Purchaser.  This  Agreement  has been duly executed and delivered by the
Purchaser  and  constitutes  the valid and  legally  binding  obligation  of the
Purchaser,  enforceable  against it in accordance with its terms, except as such
enforceability   may  be   limited   by   applicable   bankruptcy,   insolvency,
reorganization,  moratorium or similar laws relating to, or affecting  generally
the enforcement of, creditors rights and remedies or by other general principles
of equity.

         (b) INVESTMENT  INTENT. The Purchaser is acquiring the Debentures to be
purchased by it hereunder,  and will acquire the Underlying  Shares  relating to
such Debentures for its own account for investment  purposes only and not with a
view to or for distributing or reselling such Debentures or Underlying Shares or
any part  thereof or  interest  therein,  without  prejudice,  however,  to such
Purchaser's right, subject to the provisions of this Agreement,  at all times to

                                       10
<PAGE>

sell or otherwise  dispose of all or any part of such  Debentures  or Underlying
Shares in compliance with applicable federal and state securities laws.

         (c)  PURCHASER  STATUS.  At the  time the  Purchaser  was  offered  the
Debentures to be acquired by it hereunder,  it was and at the date hereof, it is
an "accredited investor" as defined in Rule 501(a) under the Securities Act.

         (d) EXPERIENCE OF PURCHASER.  The  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 an investment in the securities to be acquired by it hereunder, and has
so evaluated the merits and risks of such investment.

         (e) ABILITY OF PURCHASER TO BEAR RISK OF  INVESTMENT.  The Purchaser is
able to bear the economic risk of an investment in the securities to be acquired
by it hereunder  and, at the present  time, is able to afford a complete loss of
such investment.

         (f)  PROHIBITED  TRANSACTIONS.  The  securities  to be  acquired by the
Purchaser  hereunder are not being  acquired,  directly or indirectly,  with the
assets of any "employee benefit plan," within the meaning of Section 3(3) of the
Employment Retirement Income Security Act of 1974, as amended.

         (g) ACCESS TO INFORMATION.  The Purchaser  acknowledges  receipt of the
Disclosure  Documents and further acknowledges that it has been afforded (i) the
opportunity to ask such questions as it has deemed  necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the  securities  offered  hereunder  and the merits and risks of investing in
such securities;  (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment in such securities;
and (iii)  the  opportunity  to obtain  such  additional  information  which the
Company possesses or can acquire without  unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the investment
and to verify the accuracy and completeness of the information  contained in the
Disclosure Documents.

         (h) RELIANCE.  The Purchaser  understands and acknowledges that (i) the
Debentures  being  offered and sold to it hereunder  are being  offered and sold
without  registration  under the Securities  Act in a private  placement that is
exempt from the registration provisions of the Securities Act under Section 4(2)
of the Securities  Act and (ii) the  availability  of such exemption  depends in
part on, and that the Company will rely upon the accuracy and  truthfulness  of,
the  foregoing  representations  and  such  Purchaser  hereby  consents  to such
reliance.

         The  Company  acknowledges  and  agrees  that  the  Purchaser  makes no
representations  or  warranties  with respect to the  transactions  contemplated
hereby other than those specifically set forth in this SECTION 3.2.

                                       11
<PAGE>

                                   ARTICLE IV

                         OTHER AGREEMENTS OF THE PARTIES

         4.1 MANNER OF OFFERING.  The  Securities  are being issued  pursuant to
Rule 504 (b) of  Regulation  D of the  Securities  Act. The  Securities  will be
exempt from restrictions on transfer,  and will carry no restrictive legend with
respect to the exemption from registration under the Securities Act. The Company
will use its best  efforts  to  insure  that no  actions  are taken  that  would
jeopardize the availability of the exemption from registration under Rule 504(b)
for the Securities  and, if for any reason such exemption  becomes  unavailable,
shall cause the Securities to be registered under the Securities Act as required
by SECTION 4.29.

         4.2 FURNISHING OF INFORMATION. As long as the Purchaser owns any of the
Securities,  the Company will  promptly  furnish to the Purchaser all annual and
quarterly reports  comparable to those required by Section 13(a) or 15(d) of the
Exchange Act (the "NON-PUBLIC FILINGS").

         4.3 NOTICE OF CERTAIN EVENTS. The Company shall, on a continuing basis,
(i)  advise the  Purchaser  promptly  after  obtaining  knowledge  of,  and,  if
requested by the Purchaser,  confirm such advice in writing, of (A) the issuance
by  any  state   securities   commission  of  any  stop  order   suspending  the
qualification  or  exemption  from   qualification  of  the  Debentures  or  the
Underlying Shares,  for offering or sale in any jurisdiction,  or the initiation
of any proceeding for such purpose by any state  securities  commission or other
regulatory  authority,  or (B) any event that makes any  statement of a material
fact made by the Company in SECTION 3.1 or in the Disclosure Documents untrue or
that  requires the making of any additions to or changes in SECTION 3.1 in or in
the Disclosure  Documents in order to make the statements  therein, in the light
of the  circumstances  under which they are made, not  misleading,  (ii) use its
best efforts to prevent the issuance of any stop order or order  suspending  the
qualification or exemption from  qualification of the Securities under any state
securities  or Blue Sky  laws,  and  (iii) if at any time any  state  securities
commission or other  regulatory  authority  shall issue an order  suspending the
qualification  or exemption from  qualification of the Securities under any such
laws, and use its best efforts to obtain the withdrawal or lifting of such order
at the earliest possible time.

         4.4 COPIES AND USE OF DISCLOSURE  DOCUMENTS AND NON-PUBLIC FILINGS. The
Company  shall  furnish the  Purchaser,  without  charge,  as many copies of the
Disclosure   Documents  and  the  Non-Public   Filings  and  any  amendments  or
supplements  thereto  as the  Purchaser  may  reasonably  request.  The  Company
consents to the use of the Disclosure  Documents and the Non-Public  Filings and
any  amendments  and  supplements  to any of them by the Purchaser in connection
with resales of the Securities.

         4.5 MODIFICATION TO DISCLOSURE DOCUMENTS. If any event shall occur as a
result of which, in the reasonable judgment of the Company or the Purchaser,  it
becomes  necessary  or advisable to amend or  supplement  any of the  Disclosure
Documents or the Non-Public Filings in order to make the statements  therein, in
the light of the  circumstances  at the time such  Disclosure  Documents  or the
Non-Public  Filings were delivered to the Purchaser,  not  misleading,  or if it
becomes necessary to amend or supplement any of the Disclosure  Documents or the
Non-Public  Filings to comply with  applicable  law, the Company shall  promptly
prepare an appropriate amendment or supplement to each such document in form and
substance reasonably  satisfactory to both the Purchaser and Company so that (i)

                                       12
<PAGE>

as so amended or  supplemented,  each such  document  will not include an untrue
statement of material fact or omit to state a material  fact  necessary in order
to make the statements  therein,  in the light of the circumstances  existing at
the  time  it is  delivered  to the  Purchaser,  not  misleading  and  (ii)  the
Disclosure Documents and the Non-Public Filings will comply with applicable law.

         4.6 BLUE SKY LAWS.  The Company shall  cooperate  with the Purchaser in
connection  with the exemption from  registration  of the  Securities  under the
securities or Blue Sky laws of such jurisdictions as the Purchasers may request;
PROVIDED,  HOWEVER,  that  neither  the Company  nor its  Subsidiaries  shall be
required in connection  therewith to qualify as a foreign corporation where they
are not now so qualified.  The Company agrees that it will execute all necessary
documents  and pay all  necessary  state  filing  or notice  fees to enable  the
Company to sell the Securities to the Purchasers.

         4.7  INTEGRATION.  The Company shall not and shall use its best efforts
to ensure that no Affiliate shall 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 Purchaser.

         4.8 FURNISHING OF RULE 144(C) MATERIALS. The Company shall, for so long
as any of the Securities  remain  outstanding and during any period in which the
Company  is not  subject  to  Section  13 or 15(d)  of the  Exchange  Act,  make
available to any registered holder of the Securities  ("Holder" or "Holders") in
connection  with  any  sale  thereof  and  any  prospective  purchaser  of  such
Securities  from such Person,  such  information in accordance  with Rule 144(c)
promulgated under the Securities Act as is required to sell the Securities under
Rule 144 promulgated under the Securities Act.

         4.9  SOLICITATION  MATERIALS.  The Company shall not (i) distribute any
offering materials in connection with the offering and sale of the Debentures or
the Underlying Shares other than the Disclosure Documents and any amendments and
supplements thereto prepared in compliance herewith or (ii) solicit any offer to
buy or sell the  Debentures  or the  Underlying  Shares  by means of any form of
general solicitation or advertising.

         4.10  SUBSEQUENT  FINANCIAL  STATEMENTS.   If  not  otherwise  publicly
available,  the Company  shall  promptly  furnish to the Purchaser a copy of all
financial  statements  for any period  subsequent  to the period  covered by the
financial  statements  included  in the  Disclosure  Documents  until  the  full
conversion of the Debentures..

         4.11 PROHIBITION ON CERTAIN  ACTIONS.  From the date hereof through the
Post-Closing  Date, the Company shall not and shall cause the  Subsidiaries  not
to,  without  the  prior  written  consent  of  the  Purchaser,  (i)  amend  its
certificate or articles of incorporation,  by-laws or other charter documents so
as to  adversely  affect any rights of the  Purchaser;  (ii)  split,  combine or
reclassify its outstanding capital stock; (iii) declare, authorize, set aside or
pay any dividend or other  distribution  with respect to the Common Stock;  (iv)
redeem,  repurchase or offer to repurchase  or otherwise  acquire  shares of its
Common  Stock;  or (v)  enter  into any  agreement  with  respect  to any of the
foregoing.

                                       13
<PAGE>

         4.12 LISTING OF COMMON  STOCK.  If the Common Stock shall become listed
on the OTCBB or on another exchange,  the Company shall (a) use its best efforts
to maintain the listing of its Common Stock on the OTCBB or such other  exchange
on which the Common Stock is then listed until expiration of each of the periods
during which the Shares may be converted  and (b) shall provide to the Purchaser
evidence of such listing.

         4.13  ESCROW.  The  Company  and the  Purchaser  agree to  execute  and
deliver,  simultaneously with the execution and delivery of this Agreement,  the
escrow agreement  attached hereto and made part hereof as EXHIBIT D (the "ESCROW
AGREEMENT"),  and to issue into escrow the certificates to be held by the Escrow
Agent,  registered  in the name of the  Purchaser  and without  any  restrictive
legend of any kind, pursuant to the terms of such escrow.

         4.14  CONVERSION  PROCEDURES;  MAINTENANCE OF ESCROW SHARES.  EXHIBIT D
attached hereto and made a part hereof sets forth the procedures with respect to
the conversion of the Debentures,  including the form of Notice of Conversion to
be provided upon  conversion,  instructions  as to the procedures for conversion
and such other  information and  instructions as may be reasonably  necessary to
enable the  Purchaser or its  permitted  transferee(s)  to exercise the right of
conversion smoothly and expeditiously.  The Company agrees that, at any time the
conversion price of the Debentures is such that the number of Escrow Shares with
respect  to the  Debentures  is less than 200% of the number of shares of Common
Stock that would be needed to satisfy full  conversion of all of the  Debentures
given the then current  conversion  price (the "FULL CONVERSION  SHARES"),  upon
five (5) Business Days written notice of such circumstance to the Company by the
Purchaser  and/or the Escrow  Agent,  the Company shall issue  additional  share
certificates  in the name of the Purchaser  and/or its assigns in  denominations
specified by the Purchaser,  and deliver same to the Escrow Agent, such that the
new number of Escrow  Shares with respect to the  Debentures is equal to 200% of
the Full Conversion Shares.

         4.15  ATTORNEY-IN-FACT.  To effectuate the terms and provisions of this
Agreement and the Escrow Agreement, the Company hereby agrees to give a power of
attorney as is evidenced by EXHIBIT F annexed  hereto.  All acts done under such
power  of  attorney   are  hereby   ratified   and   approved  and  neither  the
Attorney-in-Fact  nor any designee or agent thereof shall be liable for any acts
of commission or omission,  for any error of judgment or for any mistake of fact
or law, as long as the  Attorney-in-Fact  is  operating  within the scope of the
power of attorney and this  Agreement and its  exhibits.  The power of attorney,
being coupled with an interest, shall be irrevocable while any of the Debentures
remain  unconverted  or any portion of this  Agreement  or the Escrow  Agreement
remains  unsatisfied.  In addition,  the Company shall give the Attorney-in-Fact
resolutions  executed by the Board of Directors of the Company  which  authorize
transfers of the  Debentures and future  issuances of the Underlying  Shares for
the Debentures,  and which resolutions state that they are irrevocable while any
of the  Debentures  remain  unconverted  or any portion of this Agreement or the
Escrow Agreement remains unsatisfied.

         4.16 INDEMNIFICATION.

             (a)      Indemnification

                  (i) The Company  shall,  notwithstanding  termination  of this
         Agreement  and  without  limitation  as to  time,  indemnify  and  hold
         harmless the Purchaser and its officers,  directors,  agents, employees
         and  affiliates,  each Person who  controls the  Purchaser  (within the

                                       14
<PAGE>

         meaning  of  Section  15 of the  Securities  Act or  Section  20 of the
         Exchange Act) (each such Person, a "CONTROL  PERSON") and the officers,
         directors,  agents,  employees  and  affiliates  of each  such  Control
         Person,  to the fullest  extent  permitted by applicable  law, from and
         against  any  and  all  losses,  claims,  damages,  liabilities,  costs
         (including,  without  limitation,  costs of preparation  and attorneys'
         fees) and expenses (collectively,  "LOSSES"), as incurred,  arising out
         of,  or  relating  to,  a breach  or  breaches  of any  representation,
         warranty,  covenant or agreement by the Company under this Agreement or
         any other Transaction Document.

                  (ii) The Purchaser shall,  notwithstanding termination of this
         Agreement  and  without  limitation  as to  time,  indemnify  and  hold
         harmless the Company,  its officers,  directors,  agents and employees,
         each Control Person and the officers,  directors,  agents and employees
         of each Control Person,  to the fullest extent permitted by application
         law, from and against any and all Losses, as incurred,  arising out of,
         or relating to, a breach or breaches of any  representation,  warranty,
         covenant or  agreement  by the  Purchaser  under this  Agreement or the
         other Transaction Documents.

                  (b) 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  promptly shall notify the
Person from whom indemnity is sought (the "INDEMNIFYING  PARTY") in writing, and
the  Indemnifying  Party  shall  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 it  shall be  finally
determined  by a court of competent  jurisdiction  (which  determination  is not
subject to appeal or further  review) that such failure  shall have  proximately
and materially adversely prejudiced the Indemnifying Party.

                  An Indemnified  Party shall have the right to employ  separate
counsel in any such  Proceeding and to participate in 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 to
pay such fees and  expenses;  or (2) the  Indemnifying  Party  shall have failed
promptly  to  assume  the  defense  of such  Proceeding  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 impeded parties) include
both such  Indemnified  Party and the  Indemnifying  Party, and such Indemnified
Party shall have been  advised by counsel  that a conflict of interest is likely
to 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 of the claim against the Indemnified  Party but will

                                       15
<PAGE>

retain the right to control the overall Proceedings out of which the claim arose
and such counsel  employed by the  Indemnified  Party shall be at the expense of
the  Indemnifying  Party).  The  Indemnifying  Party shall not be liable for any
settlement of any such Proceeding  effected without its written  consent,  which
consent shall not be unreasonably withheld. 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 fees and  expenses of the  Indemnified  Party to which the
Indemnified Party is entitled hereunder (including  reasonable fees and expenses
to the extent incurred in connection with  investigating  or preparing to defend
such Proceeding in a manner not inconsistent with this Section) shall be paid to
the  Indemnified  Party,  as incurred,  within ten (10) Business Days of written
notice thereof to the Indemnifying Party.

                  No right of  indemnification  under this Section 4.16 shall be
available  as to a  particular  Indemnified  Party if there is a  non-appealable
final judicial determination that such Losses arise solely out of the negligence
or bad faith of such  Indemnified  Party in performing  the  obligations of such
Indemnified  Party under this Agreement or a breach by such Indemnified Party of
its obligations under this Agreement.

                  (c) CONTRIBUTION.  If a claim for  indemnification  under this
Section  4.16(a) is unavailable to an Indemnified  Party or is  insufficient  to
hold such  Indemnified  Party  harmless  for any Losses in respect of which this
Section  4.16  would  apply by its terms  (other  than by  reason of  exceptions
provided in this Section  4.16(c)),  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  benefits received by the Indemnifying
Party on the one hand and the  Indemnified  Party on the other and the  relative
fault of the  Indemnifying  Party and  Indemnified  Party in connection with the
actions 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 there was a judicial determination that such Losses arise in part out of
the  negligence  or bad  faith  of  the  Indemnified  Party  in  performing  the
obligations of such  Indemnified  Party under this Agreement or the  Indemnified
Party's  breach of its  obligations  under this  Agreement.  The amount  paid or
payable  by a party as a result of any  Losses  shall be deemed to  include  any
attorneys' or other 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.

                  (d) NON-EXCLUSIVITY. The indemnity and contribution agreements
contained in this Section are in addition to any  obligation  or liability  that
the Indemnifying Parties may have to the Indemnified Parties.

         4.17  EXCLUSIVITY.  During  the  five  year  period  commencing  on the
Original  Issuance  Date (as  defined in the  Debentures),  the  Company and its
Affiliates  shall not offer or issue any  convertible  security or instrument or
any equity line of credit, other than to the Purchaser or any of its Affiliates.

         4.18  PURCHASER'S  OWNERSHIP OF COMMON STOCK. In addition to and not in
lieu  of  the  limitations  on  conversion  set  forth  in the  Debentures,  the
conversion rights of the Purchaser set forth in the Debentures shall be limited,
solely  to the  extent  required,  from  time to time,  such  that,  unless  the

                                       16
<PAGE>

Purchaser  gives  written  notice  75  days in  advance  to the  Company  of the
Purchaser's  intention to exceed the Limitation on Conversion as defined herein,
with  respect  to  all  or  a  specified   amount  of  the  Debentures  and  the
corresponding  number  of  the  Underlying  Shares,  in no  instance  shall  the
Purchaser (singularly, together with any Persons who in the determination of the
Purchaser,  together with the  Purchaser,  constitute a group as defined in Rule
13d-5 of the Exchange  Act) be entitled to convert the  Debentures to the extent
such conversion would result in the Purchaser beneficially owning more than five
percent (5%) of the outstanding shares of Common Stock of the Company. For these
purposes,  beneficial  ownership  shall be defined and  calculated in accordance
with Rule 13d-3,  promulgated under the Exchange Act (the foregoing being herein
referred to as the  "LIMITATION ON  CONVERSION");  PROVIDED,  HOWEVER,  that the
Limitation on Conversion  shall not apply to any forced or automatic  conversion
pursuant to this Agreement or the Debentures; and PROVIDED, FURTHER that if such
Purchaser  shall have  declared  an Event of Default  and,  if a cure  period is
provided,  the  Company  shall not have  properly  and fully cured such Event of
Default  within any such cure period,  the provisions of this Section 4.18 shall
be null and void from and after such date. The Company shall,  promptly upon its
receipt  of a Notice  of  Conversion  tendered  by such  Purchaser  (or its sole
designee)  for  the  Debentures,  notify  such  Purchaser  by  telephone  and by
facsimile of the number of shares of Common Stock  outstanding  on such date and
the number of  Underlying  Shares which would be issuable to such  Purchaser (or
its  sole  designee,  as the case may be) if the  conversion  requested  in such
Notice of Conversion  were effected in full,  whereupon,  in accordance with the
Debentures notwithstanding anything to the contrary set forth in the Debentures,
such  Purchaser  may within one (1)  Business  Day of its receipt of the Company
notice required by this Section 4.18 by facsimile  revoke such conversion to the
extent (in whole or in part) that such Purchaser determines that such conversion
would  result in the  ownership  by such  Purchaser of shares of Common Stock in
excess of the Limitation on Conversion.

         4.19 PURCHASER'S RIGHTS IF TRADING IN COMMON STOCK IS SUSPENDED. If the
Common Stock is listed on any exchange,  then at any time after the Post-Closing
if trading in the shares of the Common  Stock is suspended  (and not  reinstated
within ten (10)  Trading  Days) on such stock  exchange or market upon which the
Common  Stock  is  then  listed  for  trading  (other  than as a  result  of the
suspension  of trading in  securities  on such  market  generally  or  temporary
suspensions pending the release of material information), or the Common Stock is
delisted from the OTCBB (and not reinstated within ten (10) Trading Days), then,
at the  option of the  Purchaser  exercisable  by giving  written  notice to the
Company (the "Redemption Notice"), the Company shall redeem, as applicable,  all
of the Debentures and Underlying  Shares owned by such Purchaser at an aggregate
purchase price equal to the sum of:

         (i) the product of (1) the average Per Share  Market Value for the five
(5) Trading Days  immediately  preceding (a) the date of the Redemption  Notice,
(b) the date of payment in full of the repurchase  price under this SECTION 4.19
recalculated  as of  such  date,  or (c) the  day  when  the  Common  Stock  was
suspended, delisted or deleted from trading, whichever is greater, multiplied by
(2) the  aggregate  number  of  Underlying  Shares  then  held and owned by such
Purchaser;

         (ii) the greater of (A) the  outstanding  principal  amount and accrued
and  unpaid  interest  on the  Debentures  owned by such  Purchaser  and (B) the
product of (1) the average Per Share  Market Value for the five (5) Trading Days
immediately  preceding (a) the date of the  Redemption  Notice,  (b) the date of

                                       17
<PAGE>

payment in full of the repurchase price under this SECTION 4.19  recalculated as
of such date,  or (c) the day when the Common Stock was  suspended,  delisted or
deleted from  trading,  whichever is greater,  multiplied  by (B) the  aggregate
number of  Underlying  Shares  issuable upon the  conversion of the  outstanding
Debentures then held and owned by the Purchaser(without  taking into account the
Limitation on Conversion described in Section 4.18 hereof); and

         (iii)  interest on such amounts set forth in (i) - (ii) above  accruing
from the seventh  (7th) day after the date of the  Redemption  Notice  until the
repurchase price under this Section 4.19 is paid in full, at the rate of fifteen
percent (15%) per annum.

         4.20 NO VIOLATION OF APPLICABLE LAW.  Notwithstanding  any provision of
this  Agreement to the  contrary,  if the  redemption  of the  Debentures or the
Underlying  Shares  otherwise  required  under this  Agreement or the Debentures
would be prohibited by the relevant  provisions of Wyoming law, such  redemption
shall be effected as soon as it is permitted under such law; PROVIDED,  HOWEVER,
that interest  payable by the Company with respect to any such redemption  shall
accrue in accordance with SECTION 4.19.

         4.21  REDEMPTION  RESTRICTIONS.  Notwithstanding  any provision of this
Agreement to the contrary, if any redemption of the Debentures or the Underlying
Shares  otherwise  required  under this  Agreement  or the  Debentures  would be
prohibited  in the  absence of consent  from any lender to the Company or any of
the  Subsidiaries,  or by the holders of any class of securities of the Company,
the Company  shall use its best  efforts to obtain  such  consent as promptly as
practicable  after any such  redemption  is  required.  Interest  payable by the
Company with respect to any such  redemption  shall  accrue in  accordance  with
SECTION 4.19 until such consent is obtained.  Nothing  contained in this SECTION
4.21 shall be construed  as a waiver by the  Purchaser of any rights it may have
by virtue of any breach of any  representation or warranty of the Company herein
as to the absence of any requirement to obtain any such consent.

         4.22 NO OTHER REGISTRATION RIGHTS.  During the period commencing on the
date hereof and ending on the Post-Closing  Date, the Company shall not file any
registration  statement that provides for the  registration  of shares of Common
Stock to be sold by security  holders of the Company,  other than the  Purchaser
and/or its respective  Affiliates or assigns,  without the prior written consent
of the Purchaser or its assigns,  provided,  however, that the limitation on the
right to file registration  statements  contained in this SECTION 4.22 shall not
apply to registration  statements relating solely to (i) employee benefit plans,
notwithstanding  the inclusion of a resale  prospectus for  securities  received
under  any  such  employee  benefit  plan,  or (ii)  business  combinations  not
otherwise  prohibited  by the terms of this  Agreement or the other  Transaction
Documents.

         4.23  MERGER  OR  CONSOLIDATION.  Until  the  earlier  of (a) the  full
conversion of the  Debentures  and (b) the Maturity Date of the  Debentures  (as
that term is defined in the  Debentures),  the Company and each  Subsidiary will
not,  in  a  single  transaction  or  a  series  of  related  transactions,  (i)
consolidate  with or merge  with or into any other  Person,  or (ii)  permit any
other  Person to  consolidate  with or merge into it,  unless (w) either (A) the
Company  shall  be the  survivor  of such  merger  or  consolidation  or (B) the
surviving  Person shall expressly  assume by  supplemental  agreement all of the
obligations  of the Company under the  Debentures,  this Agreement and the other

                                       18
<PAGE>

Transaction  Documents;  (x)  immediately  before and  immediately  after giving
effect to such transactions  (including any indebtedness incurred or anticipated
to be incurred in connection with the  transactions),  no Event of Default shall
have occurred and be continuing; (y) if the Company is not the surviving entity,
such  surviving  entity's  common  shares  will be listed on either The New York
Stock  Exchange,  American  Stock  Exchange,  Nasdaq  National  Market or Nasdaq
SmallCap Market, or the OTCBB on or prior to the closing of such  transaction(s)
and  (z)  the  Company  shall  have  delivered  to the  Purchaser  an  officers*
certificate and opinion of counsel, each stating that such consolidation, merger
or transfer complies with this Agreement, that the surviving Person agrees to be
bound thereby and that all conditions  precedent in this  Agreement  relating to
such transaction(s) have been satisfied.

         4.24 REGISTRATION OF ESCROW SHARES. (a) So long as the Purchaser and/or
its assigns owns any of the Securities  and the  Underlying  Shares would not be
freely  transferable  without  registration,  the  Company  agrees not to file a
registration statement with the SEC, other than on Form 10, Form S-4 (except for
a public  reoffering or resale) or Form S-8 without first having  registered the
Registrable Securities for resale under the Securities Act and in such states of
the United States as the holders thereof shall reasonably request.

         (b) If the Company shall propose to file with the SEC any  registration
statement  other than a Form 10,  Form S-4 (except  for a public  reoffering  or
resale)  or Form S-8 which  would  cause,  or have the  effect of  causing,  the
Company to become a Reporting Issuer or to take any other action, other than the
sale of the Debentures to the Purchaser hereunder,  the effect of which would be
to cause the  Underlying  Shares to be  restricted  securities  (as such term is
defined in Rule 144 promulgated under the Securities Act), the Company agrees to
give written  notification of such to the holders of the Securities at least two
weeks  prior to such  filing  or taking of the  proposed  action.  If any of the
Securities  are  then  outstanding,  the  Company  agrees  to  include  in  such
registration  statement the Registrable  Securities unless the Underlying Shares
would be freely  transferable  upon  conversion of the  Debentures  without such
registration, so as to permit the public resale thereof.

         If  the  registration  of  which  the  Company  gives  notice  is for a
registered public offering involving an underwriting, the Company will so advise
the holders of the Securities. In such event, these registration rights shall be
conditioned  upon  such  holder's  participation  in such  underwriting  and the
inclusion of such holder's  Registrable  Securities in the  underwriting  to the
extent provided herein.  All holders  proposing to distribute their  Registrable
Securities through such underwriting shall enter into an underwriting  agreement
in customary  form with the  underwriter  selected by the Company.  In the event
that the lead or managing underwriter in its good faith judgment determines that
material  adverse market factors require a limitation on the number of shares to
be underwritten, the underwriter may limit the number of Registrable Securities.
In such event, the Company shall so advise all holders of securities  requesting
registration,  and the number of shares of  securities  that are  entitled to be
included in the registration and underwriting  shall be allocated pro rata among
all holders and other  participants,  including the Company,  in proportion,  as
nearly as practicable,  to the respective amounts of Registrable  Securities and
other  securities  which they had requested to be included in such  registration
statement  at the time of  filing  the  registration  statement.  If any  holder
disapproves  of the terms of any such  underwriting,  he may  elect to  withdraw
there from by written notice to the Company and the  underwriter,  provided such
notice is delivered  within sixty (60) days of full  disclosure of such terms to

                                       19
<PAGE>

such holder,  without thereby  affecting the right of such holder to participate
in subsequent offerings hereunder.

         (c) Notwithstanding the foregoing,  if the Company for any reason shall
have taken any action,  other than the sale of the  Debentures  to the Purchaser
hereunder,  the effect of which would be to cause the Registrable  Securities to
be restricted  securities (as such term is defined in Rule 144 promulgated under
the Securities  Act),  the Company  agrees to immediately  file with the SEC and
cause to become effective a registration statement which would permit the public
resale of the Registrable Securities under the Securities Act and in such states
of the United States as the holders thereof shall reasonably request.

         (d) The Company agrees to keep any  registration  required  pursuant to
this SECTION 4.24 continuously  effective under the Securities Act and with such
states of the United States as the holders of the Registrable  Securities  shall
reasonably  request  until  the  earlier  of (i) the  date on  which  all of the
Registrable  Securities  covered by any such  registration  have been sold, (ii)
five (5) years from the effective  date of any such  registration,  or (iii) the
date on which all of the Registrable  Securities may be sold without restriction
pursuant to Rule 144 of the  Securities  Act. All costs and expenses of any such
registration   and  related   Blue  Sky  filings  and   maintaining   continuous
effectiveness of such registration and filings shall be borne by the Company.

         (e) The Escrow  Shares  shall be  registered  by the Company  under the
Securities Act if required by Section 4.29 and subject to the conditions  stated
therein.

         4.25  LIQUIDATED  DAMAGES.  The Company  understands  and agrees that a
breach by the Company of Section 4.1, Section 4.24,  Section 4.29,  Section 4.30
or an  Event  of  Default  as  contained  in this  Agreement  and/or  any  other
Transaction  Document will result in substantial economic loss to the Purchaser,
which loss will be extremely  difficult to calculate with precision.  Therefore,
if, for any reason,  the Company breaches  Sections 4.1,  Section 4.24,  Section
4.29,  Section  4.30 or fails to cure any Event of Default  within the time,  if
any, given to cure such Event of Default, as compensation and liquidated damages
for such breach or default,  and NOT as a penalty, the Company agrees to pay the
Purchaser an amount  obtained by  multiplying  the Purchase Price times two (2).
The Company shall,  upon demand,  pay the Purchaser such  liquidated  damages by
wire transfer of  immediately  available  funds to an account  designated by the
Purchaser.  Nothing  herein  shall  limit the right of the  Purchaser  to pursue
actual damages (less the amount of any liquidated  damages received  pursuant to
the foregoing) for the Company's  breach of Section 4.1,  Section 4.24,  Section
4.29,  Section 4.30 or failure to cure an Event of Default,  consistent with the
terms of this Agreement.  NOTWITHSTANDING  ANYTHING TO THE CONTRARY CONTAINED IN
THIS AGREEMENT OR THE OTHER  TRANSACTION  DOCUMENTS,  THE COMPANY'S  OBLIGATIONS
UNDER THIS SECTION SHALL SURVIVE ANY  TERMINATION OF THIS AGREEMENT OR THE OTHER
TRANSACTION DOCUMENTS.

         4.26 SHORT SALES.  The Purchaser agrees that it will not enter into any
Short Sales (as hereinafter defined) until the earlier to occur of the date that
the Purchaser no longer owns the  Debentures  and the Maturity Date. For purpose
hereof,  a "SHORT SALE" shall mean a sale of Common Stock by the Purchaser  that
is marked as a short sale and that is made at a time when there is no equivalent
offsetting long position in the Common Stock by the Purchaser.  For the purposes

                                       20
<PAGE>

of determining  whether there is an equivalent  offsetting  long position in the
Common  Stock  held by the  Purchaser,  shares of  Common  Stock  issuable  upon
conversion  of the  Debentures  shall be deemed to be held long by the Purchaser
with  respect  to the  Underlying  Shares  for which a Notice of  Conversion  is
delivered  within two (2) Trading Days following the Trading Day that such short
sale is entered into.

         4.27 FEES.  The Company  will pay the  following  fees and  expenses in
connection with the transactions  contemplated hereby: (a) to KGL (i) legal fees
for  document  production  in the amount of $25,000  and (ii) all  out-of-pocket
expenses incurred in connection with such document production; (b) to the Escrow
Agent,  $5,000 for the escrow agent fee; and (c) to Hand & Hand, a  Professional
Corporation,  $5,000 for legal fees.  Unless paid prior,  all fees and  expenses
will be paid at Post-Closing  and the Company and the Purchaser hereby authorize
and direct the  Escrow  Agent to deduct  such fees and  expenses  directly  from
escrow prior to  distributing  any funds to the Company.  Except with respect to
the fees set forth in  subparagraphs  (b) and (c) of this SECTION 4.27, all fees
and expenses shall be paid regardless of whether the  transactions  contemplated
hereby are closed or otherwise  completed.  All fees to be paid hereunder  shall
have no offsets, are non-refundable and non-cancelable.

         4.28  ADDITIONAL  FEES. If the Company or any of its Affiliates  enters
into any future  financing  with any  prospective  purchaser  introduced  by the
Purchaser  within a period of two (2) years from the date  hereof,  the  Company
agrees to pay to the Purchaser simultaneously with the closing of such financing
an amount equal to four percent (4%) of the  aggregate  amount of the portion of
such financing purchased by or for the account of such Person.

         4.29  CHANGES  TO  FEDERAL  AND STATE  SECURITIES  LAWS.  If any of the
Securities require  registration with or approval of any governmental  authority
under any federal  (including  but not limited to the  Securities Act or similar
federal  statute  then in  force)  or state  law,  or  listing  on any  national
securities  exchange,  before  they may be resold  or  transferred  without  any
restrictions on their resale or transfer for reasons including,  but not limited
to, a  material  change  in Rule  504 of  Regulation  D  promulgated  under  the
Securities  Act or a  change  to the  exemption  for  sales  made to  Accredited
Investors in the state in which the Purchaser resides,  the Company will, at its
expense, (a) as expeditiously as possible cause the Registrable Securities to be
duly  registered  or  approved  or listed on the  relevant  national  securities
exchange,  as the  case may be,  and (b) keep  such  registration,  approval  or
listing, as the case may be, continuously effective until the earlier of (i) the
date on which all of the  Registrable  Securities  have been sold, (ii) five (5)
years from the  effective  date of any such  registration,  or (iii) the date on
which all of the Registerable Shares may be sold without restriction pursuant to
Rule 144 of the Securities Act. The Registrable  Securities  shall be registered
by the Company under the  Securities Act if required by Section 4.24 and subject
to the conditions stated therein.

         4.30 MERGER AGREEMENT.  Immediately upon the Effective Date, all of the
transactions  contemplated by the Merger  Agreement  annexed hereto as EXHIBIT B
shall be consummated in accordance with the terms thereof.

         4.31 FUTURE  FINANCING.  If, at any time the Debenture is  outstanding,
the Company, or its successors in interest due to mergers, consolidations and/or
acquisitions  (the  "Successors-in-Interest"),  is funded an amount  equal to or
exceeding Five Million United States  dollars  ($5,000,000),  the Company or the
Successors-in-Interest,  as the  case may be,  agrees  to pay the  Purchaser  an

                                       21
<PAGE>

amount  equal to One  Hundred  Fifty  Percent  (150%)  of the  then  outstanding
Debenture (the "Lump Sum Payment"). Upon the Purchaser's receipt of the Lump Sum
Payment, any and all remaining  obligations then outstanding between the Company
or the  Successors-in-Interest,  as the case may be, and Purchaser in connection
with  this  Agreement  shall  be deem  satisfied,  and the  Agreement  shall  be
terminated. This provision shall survive both Closing and Post-Closing.

                                   ARTICLE V

                                   TERMINATION

         5.1  TERMINATION BY THE COMPANY OR THE PURCHASER.  This Agreement shall
be  terminated as follows upon the  occurrence  of any of the  following  events
(each an "Event of Default"):

                  (a) Automatically terminated prior to Post-Closing if:

                           (i) there shall be in effect any statute,  rule,  law
                  or  regulation,  including an amendment to  Regulation D or an
                  interpretive  release  promulgated or issued thereunder,  that
                  prohibits  the  consummation  of  the  Post-Closing  or if the
                  consummation   of   the   Post-Closing   would   violate   any
                  non-appealable  final  judgment,   order,  decree,  ruling  or
                  injunction of any court of or  governmental  authority  having
                  competent jurisdiction;

                           (ii) the Post-Closing  shall not have occurred by the
                  Post-Closing Date;

                           (iii)  the  common  stock  of HYTT is not  registered
                  under Section 12 of the Exchange Act;

                           (iv) HYTT is not current in its reporting obligations
                  under Section 13 or 15(d) of the Exchange Act;

                           (v)  an  event  occurs  prior  to  the   Post-Closing
                  requiring HYTT to report such event to the SEC on Form 8-K and
                  not otherwise set forth in SCHEDULE  5.1,  provided,  however,
                  such event shall only include the  following  items under Form
                  8-K:  Item 1; Item 2 to the extent  that any event is reported
                  under  Item 2 that  involves  a change in the nature of HYTT's
                  business; Item 3; or Item 4 (provided further, that as to Item
                  4,  only if the  event  requires  disclosure  under  Item  304
                  (a)(1)(iv) under Regulation S-B);

                           (vi)  trading  in the  common  stock of HYTT has been
                  suspended,  delisted, or otherwise ceased by the Commission or
                  the NASD or other exchange or the Nasdaq (whether the National
                  Market or otherwise),  except for any suspension of trading of
                  limited  duration solely to permit  dissemination  of material
                  information regarding HYTT, and not reinstated within ten (10)
                  Trading Days; or

                                       22
<PAGE>

                           (vii) the  Company  fails to  deliver or caused to be
                  delivered the  Debentures and Escrow Shares as required by and
                  by the date set forth in Section 2.2 hereof.

                  (b) Prior to Post-Closing by the Purchaser,  by giving written
         notice  of  such  termination  to  the  Company,  if  the  Company  has
         materially breached any representation, warranty, covenant or agreement
         contained in this Agreement or the other Transaction Documents and such
         breach is not cured within five (5) Business Days following  receipt by
         the Company of notice of such breach.

                  (c) Prior to  Post-Closing  by the Company,  by giving written
         notice of such  termination  to the  Purchaser,  if the  Purchaser  has
         materially breached any representation, warranty, covenant or agreement
         contained in this Agreement or the other Transaction Documents and such
         breach is not cured within five (5) Business Days following  receipt by
         the Purchaser of notice of such breach.

         5.2 REMEDIES.  Notwithstanding  anything else  contained  herein to the
contrary,  if an Event of Default has occurred pursuant to Section 5.1, and only
with  respect to  Section  5.1(b)  has not been  cured  within  the cure  period
provided for therein, the defaulting party shall be deemed in default hereof and
the  non-defaulting  party  shall be  entitled  to pursue all  available  rights
without further notice.  The defaulting  party shall pay all attorney's fees and
costs incurred in enforcing this Agreement and the other Transaction  Documents.
In  addition,  all unpaid  amounts  shall  accrue  interest at a rate of 15% per
annum.

                                   ARTICLE VI

                      LEGAL FEES AND DEFAULT INTEREST RATE

         In the event any party  hereto  commences  legal  action to enforce its
rights  under  this   Agreement   or  any  other   Transaction   Document,   the
non-prevailing  party shall pay all reasonable costs and expenses (including but
not limited to reasonable attorney's fees,  accountant's fees,  appraiser's fees
and  investigative  fees) incurred in enforcing such rights.  In the event of an
uncured Event of Default by any party  hereunder,  interest  shall accrue on all
unpaid amounts due the aggrieved party at the rate of 15% per annum,  compounded
annually.

                                  ARTICLE VII

                                  MISCELLANEOUS

         7.1 FEES AND  EXPENSES.  Except  as set forth in this  Agreement,  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 the fees of the Escrow Agent and all stamp and
other taxes and duties levied in connection  with the issuance of the Debentures
(and, upon conversion,  the Underlying  Shares)  pursuant hereto.  The Purchaser
shall be responsible  for any taxes payable by the Purchaser that may arise as a
result of the  investment  hereunder or the  transactions  contemplated  by this

                                       23
<PAGE>

Agreement or any other  Transaction  Document.  Whether or not the  transactions
contemplated hereby and thereby are consummated or this Agreement is terminated,
the Company shall pay (i) all costs,  expenses,  fees and all taxes  incident to
and in connection  with: (A) the  preparation,  printing and distribution of any
registration  statement  required  hereunder and all amendments and  supplements
thereto (including, without limitation,  financial statements and exhibits), and
all  preliminary  and  final  Blue  Sky  memoranda  and  all  other  agreements,
memoranda,   correspondence  and  other  documents  prepared  and  delivered  in
connection  herewith,  (B) the issuance and delivery of the Securities,  (C) the
exemption  from  registration  of the  Securities  for  offer  and  sale  to the
Purchaser under the securities or Blue Sky laws of the applicable  jurisdiction,
(D) furnishing such copies of any registration statement required hereunder, the
preliminary and final  prospectuses and all amendments and supplements  thereto,
as may  reasonably  be  requested  for use in  connection  with  resales  of the
Securities,   and  (E)  the  preparation  of  certificates  for  the  Securities
(including,  without limitation,  printing and engraving thereof), (ii) all fees
and  expenses of counsel and  accountants  of the Company and (iii) all expenses
and fees of listing on securities exchanges, if any.

         7.2 ENTIRE AGREEMENT;  AMENDMENTS. This Agreement, together with all of
the Exhibits and Schedules annexed hereto,  and any other  Transaction  Document
contains  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.  This Agreement  shall be deemed to have
been drafted and  negotiated by both parties  hereto and no  presumptions  as to
interpretation,  construction  or  enforceability  shall  be made by or  against
either party in such regard.

         7.3 NOTICES. Any notice or other communication required or permitted to
be given  hereunder  shall be in  writing  and shall be deemed to have been duly
given  upon  facsimile  transmission  (with  written  transmission  confirmation
report) at the number  designated  below (if  delivered on a Business Day during
normal  business  hours  where  such  notice  is to be  received),  or the first
Business Day following such delivery (if delivered  other than on a Business Day
during  normal  business  hours where such notice is to be  received)  whichever
shall first occur. The addresses for such communications shall be:

                  If to the Company:    Sanjay Haryama
                                        24351 Pasto Road, Suite B
                                        Dana Point, California 92629
                                        Attn:  Jay Hand
                                        Tel:    (949) 489-2400
                                        Fax:    (949) 489-0034

                  With copies to:       Kaplan Gottbetter & Levenson, LLP, or
                                        its successors or assigns
                                        630 Third Avenue
                                        New York, NY 10017-6705
                                        Attn:  Adam S. Gottbetter, Esq.
                                        Tel: (212) 983-6900
                                        Fax: (212) 983-9210

                                       24
<PAGE>

                  If to the Purchaser:  See SCHEDULE 1 attached hereto

                  With copies to:       Kaplan Gottbetter & Levenson, LLP, or
                                        its successors or assigns
                                        630 Third Avenue
                                        New York, NY 10017-6705
                                        Attn:  Adam S. Gottbetter, Esq.
                                        Tel: (212) 983-6900
                                        Fax: (212) 983-9210

                  If to Escrow Agent:   Kaplan Gottbetter & Levenson, LLP, or
                                        its successors or assigns
                                        630 Third Avenue
                                        New York, NY 10017-6705
                                        Attn:  Adam S. Gottbetter, Esq.
                                        Tel: (212) 983-6900
                                        Fax: (212) 983-9210

or such other address as may be designated hereafter by notice given pursuant to
the terms of this Section 7.3.

         7.4 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 both the Company and the 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 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 accruing to it thereafter.

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

         7.6  SUCCESSORS AND ASSIGNS.  This Agreement  shall be binding upon and
inure  to the  benefit  of the  parties  and  their  respective  successors  and
permitted  assigns.  This  Agreement  and  any  of  the  rights,   interests  or
obligations  hereunder may be assigned by the  Purchaser  without the consent of
the Company.  This  Agreement  and any of the rights,  interests or  obligations
hereunder may not be assigned by the Company  without the prior written  consent
of the Purchaser.

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

         7.8  GOVERNING  LAW;  VENUE;  SERVICE OF PROCESS.  The  parties  hereto
acknowledge  that  the  transactions  contemplated  by  this  Agreement  and the

                                       25
<PAGE>

exhibits hereto bear a reasonable relation to the State of New York. The parties
hereto agree that the  internal  laws of the State of New York shall govern this
Agreement  and the exhibits  hereto,  including,  but not limited to, all issues
related to usury.  Any action to enforce the terms of this  Agreement  or any of
its exhibits  shall be brought  exclusively  in the state and/or  federal courts
situate in the County and State of New York. Service of process in any action by
the  Purchaser to enforce the terms of this  Agreement  may be made by serving a
copy of the summons and complaint,  in addition to any other relevant documents,
by  commercial  overnight  courier to the Company at its  principal  address set
forth in this Agreement.

         7.9 SURVIVAL. The representations and warranties of the Company and the
Purchaser  contained  in Article III and the  agreements  and  covenants  of the
parties  contained  in  Article  IV and  this  Article  VII  shall  survive  the
Post-Closing (or any earlier termination of this Agreement).

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

         7.11  PUBLICITY.  The Company and the Purchaser shall consult with each
other in issuing any press releases or otherwise  making public  statements with
respect to the  transactions  contemplated  hereby and neither party shall issue
any such press release or otherwise make any such public  statement  without the
prior written  consent of the other,  which  consent  shall not be  unreasonably
withheld or delayed,  unless counsel for the disclosing  party deems such public
statement to be required by applicable  federal  and/or state  securities  laws.
Except as otherwise  required by applicable law or regulation,  the Company will
not disclose to any third party the names of the Purchaser.

         7.12  SEVERABILITY.  In case any one or more of the  provisions of this
Agreement  shall 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  which shall be a reasonable  substitute
therefore,  and upon so agreeing, shall incorporate such substitute provision in
this Agreement.

         7.13  LIMITATION OF REMEDIES.  With respect to claims by the Company or
any person  acting by or through the  Company  for  remedies at law or at equity
relating to or arising  out of a breach of this  Agreement,  liability,  if any,
shall, in no event, include loss of profits or incidental,  indirect, exemplary,
punitive, special or consequential damages of any kind.

         7.14  OMNIBUS  PROVISION.  Anything  contained  herein  or in the other
Transaction Documents notwithstanding,  in the event that the Common Stock shall
become listed on the OTCBB and  subsequently  ceases to be listed for trading on
the OTCBB, then any reference thereto in this Agreement or the other Transaction
Documents  shall be  deemed  to be a  reference  to (a) the  principal  national
securities  exchange  on which the Common  Stock is then  listed or  admitted to

                                       26
<PAGE>

trading, or (b) if the Common Stock is not then listed or admitted to trading on
any national securities exchange, Nasdaq, or (c) if the Common Stock is not then
listed or  admitted  to  trading  on Nasdaq,  then the  over-the-counter  market
reported by the Pinksheets LLC (or similar  organization or agency succeeding to
its functions of reporting prices).

                            [SIGNATURE PAGE FOLLOWS]

                                       27
<PAGE>

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

                                            Company:

                                            Sanjay Haryama

                                            By:  ________________________
                                                 Name:     Jay Hand
                                                 Title:    President

                                            Purchaser:

                                            HEM Mutual Assurance LLC

                                            By:  ________________________
                                                 Name:     Pierce Loughran
                                                 Title:    Manager

                                       28
<PAGE>

                                   Schedule 1

                                  PURCHASER(S)

          --------------------------------------- -----------------------------
              Name and Address of Purchaser        Full Amount of Debentures
                                                        to be Purchased
          --------------------------------------- -----------------------------
          HEM Mutual Assurance LLC
          One Tabor Center                                 $1,000,000
          1200 17th Street
          Suite 1000
          Denver, CO  80202
          --------------------------------------- -----------------------------

                                       29
<PAGE>

                                 Schedule 3.1(a)

                                  SUBSIDIARIES

None.

                                       30
<PAGE>

                                 Schedule 3.1(c)

                     CAPITALIZATION AND REGISTRATION RIGHTS

The articles of incorporation provide for unlimited  authorization of the number
of shares of Common Stock and Preferred Stock.  1,000 shares of Common Stock are
outstanding.

                                       31
<PAGE>

                                 Schedule 3.1(d)

                     EQUITY AND EQUITY EQUIVALENT SECURITIES

None.

                                       32
<PAGE>

                                 Schedule 3.1(e)

                                    CONFLICTS

None.

                                       33
<PAGE>

                                 Schedule 3.1(f)

                             CONSENTS AND APPROVALS

SEC Filing - Form D

Colorado Blue Sky Filing (or exemption therefrom)

                                       34
<PAGE>

                                 Schedule 3.1(g)

                                   LITIGATION

None.

                                       35
<PAGE>

                                 Schedule 3.1(h)

                             DEFAULTS AND VIOLATIONS

None.

                                       36
<PAGE>

                                  Schedule 5.1

                         FORM 8-K DISCLOSURE OBLIGATIONS

None.

                                       37
<PAGE>

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