Document:

JOINT VENTURE AGREEMENT

This Agreement is entered into by and between USProduction & Exploration, LLC
("USPX"), whose address is 20333 Southwest Freeway, #106, Sugar Land, Texas
77479, and Universal Property Development and Acquisition Corp ("UPDA"), whose
address is 14255 US Highway 1, Suite 2180, Juno Beach, Florida 33408, and Triple
Crown Consulting ("TCC") whose address is 1946 N. Oak Haven Circle, Miami Beach,
FL 33179. For the purpose of this Agreement and ease of reference all
aforementioned parties are hereinafter referred to collectively as "Parties" and
individually as "Party."

WHEREAS, the Parties have previously executed a Memorandum of Understanding
setting forth the basic principles on which they intended to proceed in a joint
venture; and

WHEREAS, the Parties have undertaken to proceed with such joint venture; and

WHEREAS, the Parties have discussed and negotiated various issues and the within
constitutes an amendment to the terms of the MOU and definitive agreement
relative to the proceedings of the joint venture; and

WHEREAS, the Parties have established a Nevada corporation known as Canyon Creek
Oil & Gas, Inc. (CCOG) to carry out their joint venture.

                                   AGREEMENTS

1.    UPDA will own sixty five percent (65%) of the capital stock in CCOG.

2.    USPX will own thirty percent (30%) of the capital stock in CCOG.

3.    TCC will own five percent (5%) of the capital stock in CCOG.

4.    UPDA will invest a minimum of One Million Two Hundred Thousand Dollars
      ($1,200,000.00) in cash and stock in CCOG on or before January 31, 2006.

5.    USPX has the right to pursue other oil and gas ventures as it deems
      necessary to carry out its business plan. USPX hereby grants to CCOG the
      first right of refusal to participate in any oil and gas venture USPX has
      elected to pursue. The election to participate shall be granted for a
      period of fifteen (15) days following a submittal in writing by USPX. The
      board members of CCOG shall notify USPX in writing within the time
      prescribed in this paragraph of its intent to participate in said oil and
      gas venture.

      In the event that UPDA has made previous commitments to fund projects
      selected by USPX that exceed available cash or cash call requirements,
      then any new projects can or may be offered to TCC for participation in
      whole or part.

      Paragraph 5 shall remain in force and effect for a period of one (1) year
      from the date of execution hereof, and so long thereafter as extended by
      consent of USPX.

6.    CCOG will have a Five member board of directors with two (2) chosen by
      UPDA, two (2) selected by USPX and one (1) selected by TCC.

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7.    CCOG will employ a financial/office manager approved by UPDA.

8.    USPX will be responsible for the day-to-day management of the oil and gas
      operations of CCOG and will pay all expenses associated therewith.

9.    USPX will be paid a management fee of seven and one half percent (7.5%) of
      net operating revenue. Net Operating Revenue is herein defined as the
      remainder after subtracting from the gross revenue the marketing,
      processing and transportation charges deducted by the oil and gas
      purchasers, severance taxes, royalty and overriding royalty, and monthly
      lease operating expenses.

10.   The books and records of CCOG will be subject to review and/or audit as
      directed by UPDA or required by law.

11.   The Parties will be granted preferred stock in CCOG in an amount equal to
      their investment therein and the parties agree and consent to the
      amendment of the articles of incorporation of CCOG to authorize and
      provide for the issuance of up to 100,000 shares of such preferred stock.

12.   On or before the expiration of ten (10) days from the execution hereof,
      USPX will be issued Five Hundred Thousand (500,000) restricted common
      shares of UPDA in consideration of its execution hereof.

13.   The parties agree that the within constitutes the entire agreement of the
      parties and that no modification hereof is effective unless evidenced by
      written agreement executed by all of the parties. The parties further
      agree that the terms of the within shall be interpreted according to their
      usual and customary meaning and that said terms shall not be strictly
      construed against any party hereto.

Executed on this 17th day of November, 2005.

Universal Property Development and Acquisition Corporation

By: Kamal Abdallah, CEO

USProduction and Exploration, LLC.

By: Donald Orr, Managing Member

Triple Crown Consulting

By: Ben KaplanEXHIBIT 10.1

                          SECURITIES PURCHASE AGREEMENT
                          -----------------------------

                            LAURUS MASTER FUND, LTD.

                                       and

                                ADAL GROUP, INC.

                         Dated as of: November 21, 2005

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                                TABLE OF CONTENTS

                                                                            Page

1.  Agreement to Sell and Purchase.............................................1

2.  Fees.......................................................................1

3.  Closing, Delivery and Payment..............................................2
    3.1      Closing...........................................................2
    3.2      Delivery..........................................................2

4.  Representations and Warranties of the Company..............................2
    4.1      Organization, Good Standing and Qualification.....................2
    4.2      Subsidiaries......................................................3
    4.3      Capitalization; Voting Rights.....................................3
    4.4      Authorization; Binding Obligations................................4
    4.5      Liabilities.......................................................4
    4.6      Agreements; Action................................................4
    4.7      Obligations to Related Parties....................................6
    4.8      Changes...........................................................7
    4.9      Title to Properties and Assets; Liens, Etc........................8
    4.10     Intellectual Property.............................................8
    4.11     Compliance with Other Instruments.................................9
    4.12     Litigation........................................................9
    4.13     Tax Returns and Payments.........................................10
    4.14     Employees........................................................10
    4.15     Registration Rights and Voting Rights............................11
    4.16     Compliance with Laws; Permits....................................11
    4.17     Environmental and Safety Laws....................................11
    4.18     Valid Offering...................................................12
    4.19     Full Disclosure..................................................12
    4.20     Insurance........................................................12
    4.21     SEC Reports......................................................12
    4.22     Listing..........................................................13
    4.23     No Integrated Offering...........................................13
    4.24     Patriot Act......................................................13
    4.25     ERISA............................................................14

5.  Representations and Warranties of the Purchaser...........................14
    5.1      No Shorting......................................................14
    5.2      Requisite Power and Authority....................................14
    5.3      Investment Representations.......................................14
    5.4      The Purchaser Bears Economic Risk................................15
    5.5      Acquisition for Own Account......................................15
    5.6      The Purchaser Can Protect Its Interest...........................15
    5.7      Accredited Investor..............................................15
    5.8      Legend...........................................................15

                                       i
<PAGE>

6.  Covenants of the Company..................................................16
    6.1      Listing..........................................................16
    6.2      Market Regulations...............................................16
    6.3      Reporting Requirements...........................................16
    6.4      Use of Funds.....................................................16
    6.5      Access to Facilities.............................................16
    6.6      Taxes............................................................17
    6.7      Insurance........................................................18
    6.8      Intellectual Property............................................19
    6.9      Properties.......................................................19
    6.10     Confidentiality..................................................19
    6.11     Required Approvals...............................................20
    6.12     Opinion..........................................................21
    6.13     Margin Stock.....................................................21
    6.14     No Limitations on Additional Financing...........................21

7.  Covenants of the Purchaser................................................21
    7.1      Confidentiality..................................................21
    7.2      Non-Public Information...........................................21
    7.3      Limitation on Acquisition of Common Stock of the Company.........22
    7.4      No Shorting......................................................22

8.  Covenants of the Company and the Purchaser Regarding Indemnification......22
    8.1      Company Indemnification..........................................22
    8.2      Purchaser's Indemnification......................................22
    8.3      Offering Restrictions............................................23

9.  Miscellaneous.............................................................23
    9.1      Governing Law, Jurisdiction and Waiver of Jury Trial.............23
    9.2      Severability.....................................................24
    9.3      Survival.........................................................24
    9.4      Successors.......................................................24
    9.5      Entire Agreement; Maximum Interest...............................25
    9.6      Amendment and Waiver.............................................25
    9.7      Delays or Omissions..............................................25
    9.8      Notices..........................................................25
    9.9      Attorneys' Fees..................................................26
    9.10     Titles and Subtitles.............................................27
    9.11     Facsimile Signatures; Counterparts...............................27
    9.12     Broker's Fees....................................................27
    9.13     Construction.....................................................27

                                       ii
<PAGE>

                                LIST OF EXHIBITS

Form of Term Note......................................................Exhibit A
Form of Opinion........................................................Exhibit B
Form of Escrow Agreement...............................................Exhibit C

                                      iii
<PAGE>

                          SECURITIES PURCHASE AGREEMENT

      THIS SECURITIES  PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of November  21,  2005,  by and between  ADAL  GROUP,  INC.,  a Delaware
corporation  (the  "Company"),  and LAURUS MASTER FUND,  LTD., a Cayman  Islands
company (the "Purchaser").

                                    RECITALS

      WHEREAS, the Company has authorized the sale to the Purchaser of a Secured
Term Note in the aggregate  principal  amount of Five Hundred  Thousand  Dollars
($500,000)  in the  form of  Exhibit  A  hereto  (as  amended,  modified  and/or
supplemented from time to time, the "Note");

      WHEREAS,  the  Purchaser  desires  to  purchase  the Note on the terms and
conditions set forth herein; and

      WHEREAS,  the Company  desires to issue and sell the Note to the Purchaser
on the terms and conditions set forth herein.

                                    AGREEMENT

      NOW, THEREFORE,  in consideration of the foregoing recitals and the mutual
promises,  representations,  warranties and covenants  hereinafter set forth and
for other good and valuable consideration,  the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

      1.  Agreement to Sell and Purchase.  Pursuant to the terms and  conditions
set forth in this Agreement,  on the Closing Date (as defined in Section 3), the
Company shall sell to the Purchaser,  and the Purchaser  shall purchase from the
Company,  the Note.  The sale of the Note on the Closing  Date shall be known as
the  "Offering."  The Note will mature on the  Maturity  Date (as defined in the
Note).

      2. Fees. On the Closing Date:

            (a) The Company shall  reimburse  the  Purchaser for its  reasonable
      expenses  (including legal fees and expenses)  incurred in connection with
      the  preparation  and  negotiation  of  this  Agreement  and  the  Related
      Agreements (as hereinafter  defined),  and expenses incurred in connection
      with  the  Purchaser's  due  diligence  review  of  the  Company  and  its
      Subsidiaries (as defined in Section 4.2) and all related matters.  Amounts
      required  to be paid under this  Section  2(b) will be paid on the Closing
      Date and shall be $10,000  (plus the expense  associated  UK local counsel
      for the Purchaser) for such expenses referred to in this Section 2(b).

            (b)  The  Closing  Payment  and  the  expenses  referred  to in  the
      preceding  clause (b) shall be paid at closing out of funds held  pursuant
      to the Escrow Agreement (as defined below) and a disbursement  letter (the
      "Disbursement Letter").

<PAGE>

      3. Closing, Delivery and Payment.

                  3.1 Closing.  Subject to the terms and conditions  herein, the
      closing of the transactions  contemplated  hereby (the  "Closing"),  shall
      take place on the date  hereof,  at such time or place as the  Company and
      the Purchaser may mutually agree (such date is hereinafter  referred to as
      the "Closing Date").

                  3.2 Delivery. Pursuant to the Escrow Agreement, at the Closing
      on the Closing  Date,  the Company  will deliver to the  Purchaser,  among
      other  things,  the Note and the  Purchaser  will  deliver to the Company,
      among other things,  the amounts set forth in the  Disbursement  Letter by
      certified funds or wire transfer.

      4.  Representations  and  Warranties  of the Company.  The Company  hereby
represents and warrants to the Purchaser as follows (which  representations  and
warranties  are  made as of the date  hereof)  except  as set  forth  under  the
corresponding  section  of  the  Disclosure  Schedules  delivered   concurrently
herewith, the Company:

                  4.1 Organization, Good Standing and Qualification. Each of the
      Company and each of its  Subsidiaries  is a  corporation,  partnership  or
      limited  liability  company,  as the case may be, duly organized,  validly
      existing  and in good  standing  under  the  laws of its  jurisdiction  of
      organization.  Each of the  Company and each of its  Subsidiaries  has the
      corporate,  limited liability company or partnership,  as the case may be,
      power and  authority  to own and  operate its  properties  and assets and,
      insofar as it is or shall be a party  thereto,  to (1) execute and deliver
      (i) this  Agreement,  (ii) the Note to be issued in  connection  with this
      Agreement,  (iii) the Reaffirmation and Ratification Agreement dated as of
      the date  hereof  between  the  Company  and the  Purchaser  (as  amended,
      modified  and/or  supplemented  from  time  to  time,  the  "Reaffirmation
      Agreement"), pursuant to which the Company reaffirms its obligations under
      that certain Master Security Agreement,  dated as of June 29, 2005, by and
      between  the  Company  and the  Purchaser  (as  amended,  modified  and/or
      supplemented from time to time, the "Master Security  Agreement") (iv) the
      Funds Escrow Agreement dated as of the date hereof among the Company,  the
      Purchaser and the escrow agent referred to therein,  substantially  in the
      form of Exhibit C hereto (as amended,  modified and/or  supplemented  from
      time to  time,  the  "Escrow  Agreement"),  and (v) all  other  documents,
      instruments   and   agreements   entered  into  in  connection   with  the
      transactions  contemplated  hereby and thereby (the preceding clauses (ii)
      through (v), collectively,  the "Related Agreements");  (2) issue and sell
      the Note;  and (3)  carry out the  provisions  of this  Agreement  and the
      Related  Agreements  and to carry on its business as presently  conducted.
      Each of the Company and each of its  Subsidiaries is duly qualified and is
      authorized   to  do  business  and  is  in  good  standing  as  a  foreign
      corporation, partnership or limited liability company, as the case may be,
      in all jurisdictions in which the nature or location of its activities and
      of its  properties  (both  owned  and  leased)  makes  such  qualification
      necessary,  except for those  jurisdictions  in which failure to do so has
      not, or could not reasonably be expected to have,  individually  or in the
      aggregate, a material adverse effect on the business, assets, liabilities,
      condition (financial or otherwise), properties, operations or prospects of
      the Company and its  Subsidiaries,  taken  individually  and as a whole (a
      "Material Adverse Effect").

                                       2
<PAGE>

                  4.2 Subsidiaries.  Each direct and indirect  Subsidiary of the
      Company,  the direct owner of such Subsidiary and its percentage ownership
      thereof,  is set forth on Schedule 4.2. For the purpose of this Agreement,
      a  "Subsidiary"  of any person or entity means (i) a corporation  or other
      entity whose shares of stock or other ownership  interests having ordinary
      voting power (other than stock or other  ownership  interests  having such
      power  only by  reason  of the  happening  of a  contingency)  to  elect a
      majority  of the  directors  of such  corporation,  or  other  persons  or
      entities  performing  similar  functions  for such  person or entity,  are
      owned,  directly  or  indirectly,  by  such  person  or  entity  or (ii) a
      corporation or other entity in which such person or entity owns,  directly
      or indirectly,  more than 50% of the equity interests at such time. On the
      date  hereof,  AdAl  Engineering,  a company  organized  under the laws of
      Czechoslovakia  (the  "Immaterial  Subsidiary"),  does not own any  assets
      (other  than  immaterial  assets)  or have  any  liabilities  (other  than
      immaterial liabilities).

                  4.3 Capitalization; Voting Rights.

            (a) The  authorized  capital  stock of the  Company,  as of the date
      hereof consists of 101,000,000  shares, of which 100,000,000 are shares of
      Common Stock, par value $0.0001 per share,  22,161,832 shares of which are
      issued and outstanding as of the date of this Agreement, and 1,000,000 are
      shares of preferred stock, par value $0.01 per share of which there are no
      shares of  preferred  stock are issued and  outstanding  as of the date of
      this Agreement.  The authorized,  issued and outstanding  capital stock of
      each Subsidiary of the Company is set forth on Schedule 4.3.

            (b) Except as disclosed  in the  Exchange Act Filings (as  hereafter
      defined), other than, the shares reserved for issuance under the Company's
      stock option plans,  there are no outstanding  options,  warrants,  rights
      (including  conversion or preemptive  rights and rights of first refusal),
      proxy or stockholder agreements, or arrangements or agreements of any kind
      for the purchase or acquisition from the Company of any of its securities.
      Neither the offer,  issuance or sale of the Note, nor the  consummation of
      any transaction  contemplated hereby, will result in a change in the price
      or  number  of  any   securities   of  the  Company   outstanding,   under
      anti-dilution  or other similar  provisions  contained in or affecting any
      such securities.

            (c) All issued and outstanding shares of the Company's common stock,
      par value, $0.0001 (the "Common Stock"): (i) have been duly authorized and
      validly issued and are fully paid and nonassessable;  and (ii) were issued
      in compliance  with all applicable  state and federal laws  concerning the
      issuance of securities.

            (d) The rights,  preferences,  privileges  and  restrictions  of the
      shares of the Common Stock are as stated in the Company's  Certificate  of
      Incorporation  (the  "Charter") or as set forth under  Delaware  corporate
      law. When issued in compliance  with the  provisions of this Agreement and
      the Company's Charter, the Note may be subject to restrictions on transfer
      under  state  and/or  federal  securities  laws as set forth  herein or as
      otherwise required by such laws at the time a transfer is proposed.

                                       3
<PAGE>

                  4.4  Authorization;   Binding   Obligations.   All  corporate,
      partnership or limited  liability  company,  as the case may be, action on
      the part of the  Company  and each of its  Subsidiaries  (including  their
      respective officers and directors) necessary for the authorization of this
      Agreement and the Related  Agreements,  the performance of all obligations
      of the Company and its Subsidiaries  hereunder and under the other Related
      Agreements  at the Closing  and,  the  authorization,  sale,  issuance and
      delivery of the Note has been taken or will be taken prior to the Closing.
      This Agreement and the Related Agreements, when executed and delivered and
      to the extent it is a party thereto, will be valid and binding obligations
      of each of the Company and each of its Subsidiaries,  enforceable  against
      each such person or entity in accordance with their terms, except:

            (a) as limited by applicable bankruptcy, insolvency, reorganization,
      moratorium or other laws of general application  affecting  enforcement of
      creditors' rights; and

            (b) general  principles of equity that restrict the  availability of
      equitable or legal remedies.

The  sale of the  Note is not and will not be  subject  to any  rights  of first
refusal that have not been properly waived or complied with.

                  4.5   Liabilities.   Neither   the  Company  nor  any  of  its
      Subsidiaries has any liabilities,  except current liabilities  incurred in
      the ordinary  course of business and  liabilities  disclosed in any of the
      Company's filings, and any and all exhibits thereto,  under the Securities
      Exchange  Act of 1934  ("Exchange  Act")  made  prior  to the date of this
      Agreement (collectively, the "Exchange Act Filings"), copies of which have
      been provided to the Purchaser, upon written request of the Purchaser.

                  4.6  Agreements;  Action.  Except as disclosed in any Exchange
      Act Filings:

            (a) there are no agreements, understandings, instruments, contracts,
      proposed  transactions,  judgments,  orders, writs or decrees to which the
      Company  or any of its  Subsidiaries  is a party  or by  which it is bound
      which may involve:  (i)  obligations  (contingent  or  otherwise)  of, the
      Company  or any of its  Subsidiaries  in excess of  $250,000  (other  than
      obligations  of,  the  Company  or any of its  Subsidiaries  arising  from
      purchase  or sale  agreements  entered  into  in the  ordinary  course  of
      business); or (ii) the transfer or license of any patent, copyright, trade
      secret or other  proprietary  right to or from the  Company  or any of its
      Subsidiaries  (other than  licenses  arising from the purchase of "off the
      shelf" or other standard  products);  or (iii) provisions  restricting the
      development,  manufacture or  distribution  of the Company's or any of its
      Subsidiaries  products or services; or (iv) indemnification by the Company
      or any of its  Subsidiaries  with respect to  infringements of proprietary
      rights.

            (b) Since December 31, 2004 (the "Balance Sheet Date"),  neither the
      Company  nor  any of its  Subsidiaries  has:  (i)  declared  or  paid  any
      dividends,  or authorized or made any distribution upon or with respect to
      any class or series of its capital stock, except with respect to the stock
      dividend  paid on October 14, 2005 pursuant to the Form 8-K filed with the
      SEC on October 12, 2005; (ii) incurred any indebtedness for money borrowed
      or  any  other  liabilities  (other  than  ordinary  course   obligations)
      individually in excess of $100,000 or, in the case of indebtedness  and/or
      liabilities  individually less than $100,000, in excess of $200,000 in the
      aggregate; (iii) made any loans or advances to any person or entity not in
      excess, individually or in the aggregate, of $100,000, other than ordinary
      course advances for travel expenses;  or (iv) sold, exchanged or otherwise
      disposed  of any of its  assets  or  rights,  other  than  the sale of its
      inventory in the  ordinary  course of business and the sale of obsolete or
      worn out equipment.

                                       4
<PAGE>

            (c)  For  the  purposes  of  subsections  (a)  and  (b)  above,  all
      indebtedness,   liabilities,  agreements,   understandings,   instruments,
      contracts  and proposed  transactions  involving the same person or entity
      (including  persons  or  entities  the  Company or any  Subsidiary  of the
      Company  has  reason  to  believe  are  affiliated   therewith)  shall  be
      aggregated  for the  purpose  of meeting  the  individual  minimum  dollar
      amounts of such subsections.

            (d)  The  Company  maintains  reasonable   disclosure  controls  and
      procedures  ("Disclosure  Controls")  designed to ensure that  information
      required to be  disclosed  by the Company in the reports  that it files or
      submits  under the Exchange Act is recorded,  processed,  summarized,  and
      reported,  within the time periods specified in the rules and forms of the
      Securities and Exchange Commission ("SEC").

            (e) The Company makes and keep books,  records, and accounts,  that,
      in  reasonable   detail,   accurately  and  fairly  reflect  any  and  all
      transactions in, and dispositions  of, the Company's  assets.  The Company
      maintains reasonable internal control over financial reporting ("Financial
      Reporting  Controls")  designed  by,  or under  the  supervision  of,  the
      Company's  principal  executive  and  principal  financial  officers,  and
      effected  by the  Company's  board of  directors,  management,  and  other
      personnel,  to provide reasonable  assurance  regarding the reliability of
      financial  reporting  and the  preparation  of  financial  statements  for
      external  purposes  in  accordance  with  generally  accepted   accounting
      principles ("GAAP"), including that:

                  (i) transactions are executed in accordance with  management's
            general or specific authorization;

                  (ii)  unauthorized  acquisition,  use, or  disposition  of the
            Company's  assets that could have a material effect on the financial
            statements are prevented or timely detected;

                  (iii)   transactions  are  recorded  as  necessary  to  permit
            preparation  of financial  statements in accordance  with GAAP,  and
            that the Company's  receipts and expenditures are being made only in
            accordance with authorizations of the Company's management and board
            of directors;

                                       5
<PAGE>

                  (iv)  transactions  are  recorded  as  necessary  to  maintain
            accountability for assets; and

                  (v) the recorded  accountability  for assets is compared  with
            the existing assets at reasonable intervals,  and appropriate action
            is taken with respect to any differences.

            (f) To the Company's  knowledge,  there is no weakness in any of the
      Company's  Disclosure  Controls or Financial  Reporting  Controls  that is
      required to be disclosed in any of the Exchange Act Filings,  except as so
      disclosed.

                  4.7 Obligations to Related  Parties.  There are no obligations
      of  the  Company  or  any  of its  Subsidiaries  to  officers,  directors,
      stockholders or employees of the Company or any of its Subsidiaries  other
      than:

            (a) for  payment  of  salary  for  services  rendered  and for bonus
      payments;

            (b) reimbursement for reasonable  expenses incurred on behalf of the
      Company and its Subsidiaries;

            (c) for other standard employee benefits made generally available to
      all employees  (including stock option  agreements  outstanding  under any
      stock  option plan  approved by the Board of  Directors of the Company and
      each Subsidiary of the Company, as applicable);

            (d) obligations listed in the Company's and each of its Subsidiary's
      financial statements or disclosed in any of the Exchange Act Filings; and

            (e) obligations to any stockholders  required under the Charter,  as
      in effect on the date hereof, and applicable law.

None of the officers,  directors or, to the best of the Company's knowledge, key
employees  or  stockholders  of the  Company or any of its  Subsidiaries  or any
members of their immediate  families,  are indebted to the Company or any of its
Subsidiaries, individually or in the aggregate, in excess of $50,000 or have any
direct or indirect  ownership interest in any firm or corporation with which the
Company or any of its  Subsidiaries  is  affiliated or with which the Company or
any of its Subsidiaries has a business relationship,  or any firm or corporation
which competes with the Company or any of its  Subsidiaries,  other than passive
investments in publicly  traded  companies  (representing  less than one percent
(1%)  of  such  company)  which  may  compete  with  the  Company  or any of its
Subsidiaries.  Except as described above, no officer, director or stockholder of
the  Company  or any of its  Subsidiaries,  or any  member  of  their  immediate
families,  is, directly or indirectly,  interested in any material contract with
the Company or any of its  Subsidiaries  and no  agreements,  understandings  or
proposed  transactions  are  contemplated  between  the  Company  or  any of its
Subsidiaries  and  any  such  person.   Neither  the  Company  nor  any  of  its
Subsidiaries  is a guarantor  or  indemnitor  of any  indebtedness  of any other
person or entity.

                                       6
<PAGE>

                  4.8 Changes. Since the Balance Sheet Date, except as disclosed
      in any Exchange Act Filing or in any Schedule to this  Agreement or to any
      of the Related Agreements, there has not been:

            (a) any  change  in the  business,  assets,  liabilities,  condition
      (financial  or  otherwise),  properties,  operations  or  prospects of the
      Company or any of its Subsidiaries, which individually or in the aggregate
      has had, or could  reasonably be expected to have,  individually or in the
      aggregate, a Material Adverse Effect;

            (b) any  resignation or termination of any officer,  key employee or
      group of employees of the Company or any of its Subsidiaries;

            (c) any material change,  except in the ordinary course of business,
      in the contingent obligations of the Company or any of its Subsidiaries by
      way of guaranty, endorsement, indemnity, warranty or otherwise;

            (d) any  damage,  destruction  or loss,  whether  or not  covered by
      insurance,  which  has  had,  or could  reasonably  be  expected  to have,
      individually or in the aggregate, a Material Adverse Effect;

            (e)  any  waiver  by the  Company  or any of its  Subsidiaries  of a
      material right or of a material debt owed to it;

            (f) any direct or  indirect  loans made by the Company or any of its
      Subsidiaries  to any  stockholder,  employee,  officer or  director of the
      Company  or any of its  Subsidiaries,  other  than  advances  made  in the
      ordinary course of business;

            (g) any material change in any compensation arrangement or agreement
      with any employee,  officer, director or stockholder of the Company or any
      of its Subsidiaries;

            (h) any declaration or payment of any dividend or other distribution
      of the assets of the Company or any of its Subsidiaries;

            (i) any labor organization activity related to the Company or any of
      its Subsidiaries;

            (j)  any  debt,   obligation  or  liability  incurred,   assumed  or
      guaranteed  by the Company or any of its  Subsidiaries,  except  those for
      immaterial  amounts and for current  liabilities  incurred in the ordinary
      course of business;

            (k) any sale,  assignment  or transfer of any  patents,  trademarks,
      copyrights,  trade secrets or other intangible assets owned by the Company
      or any of its Subsidiaries;

            (l) any change in any material agreement to which the Company or any
      of its  Subsidiaries  is a party or by which  either the Company or any of
      its  Subsidiaries  is bound which either  individually or in the aggregate
      has had, or could  reasonably be expected to have,  individually or in the
      aggregate, a Material Adverse Effect;

                                       7
<PAGE>

            (m) any other  event or  condition  of any  character  that,  either
      individually or in the aggregate, has had, or could reasonably be expected
      to have, individually or in the aggregate, a Material Adverse Effect; or

            (n) any  arrangement  or  commitment  by the  Company  or any of its
      Subsidiaries to do any of the acts described in subsection (a) through (m)
      above.

                  4.9 Title to Properties  and Assets;  Liens,  Etc. Each of the
      Company and each of its  Subsidiaries has good and marketable title to its
      properties and assets, and good title to its leasehold interests,  in each
      case subject to no mortgage,  pledge, lien, lease,  encumbrance or charge,
      other than:

            (a) those resulting from taxes which have not yet become delinquent;

            (b) minor liens and  encumbrances  which do not  materially  detract
      from the value of the property  subject  thereto or materially  impair the
      operations of the Company or any of its  Subsidiaries,  so long as in each
      such case, such liens and encumbrances have no effect on the lien priority
      of the Purchaser in such property;

            (c) those  that have  otherwise  arisen  in the  ordinary  course of
      business,  so long as they  have no  effect  on the lien  priority  of the
      Purchaser therein;

            (d) liens in favor of Purchaser; and

            (e)  liens  of  warehousemen,   mechanics,   materialmen,   workers,
      repairmen,  common carriers, or landlords, liens for taxes, assessments or
      other governmental  charges,  and other similar liens arising by operation
      of law, in each case  arising in the  ordinary  course of business and for
      amounts  that are not yet due and payable or which are being  contested in
      good faith by appropriate  proceedings  promptly instituted and diligently
      conducted and for which an adequate reserve or other appropriate provision
      shall  have  been  made  to the  extent  required  by  generally  accepted
      accounting principals.

All facilities,  machinery,  equipment,  fixtures, vehicles and other properties
owned, leased or used by the Company and its Subsidiaries are in reasonably good
operating  condition  and  repair  and are  reasonably  fit and  usable  for the
purposes for which they are being used. Except as set forth on Schedule 4.9, the
Company and its  Subsidiaries  are in compliance with all material terms of each
lease to which it is a party or is otherwise bound.

                  4.10 Intellectual Property.

            (a)  Each  of the  Company  and  each  of its  Subsidiaries  owns or
      possesses  sufficient  legal  rights to all patents,  trademarks,  service
      marks, trade names, copyrights,  trade secrets, licenses,  information and
      other proprietary  rights and processes  necessary for its business as now
      conducted  and, to the Company's  knowledge,  as presently  proposed to be
      conducted (the "Intellectual Property"), without any known infringement of
      the  rights of  others.  There are no  outstanding  options,  licenses  or
      agreements of any kind relating to the foregoing  proprietary  rights, nor
      is the  Company  or any of its  Subsidiaries  bound  by or a party  to any
      options,   licenses  or  agreements  of  any  kind  with  respect  to  the
      Intellectual  Property  of any  other  person or  entity  other  than such
      licenses or  agreements  arising  from the  purchase of "off the shelf" or
      standard products.

                                       8
<PAGE>

            (b) Neither the Company nor any of its Subsidiaries has received any
      communications  alleging that the Company or any of its  Subsidiaries  has
      violated any of the  Intellectual  Property of any other person or entity,
      nor is the Company or any of its Subsidiaries aware of any basis therefor.

            (c) The  Company  does not  believe  it is or will be  necessary  to
      utilize any  Intellectual  Property of any of its employees  made prior to
      their  employment  by the Company or any of its  Subsidiaries,  except for
      Intellectual  Property that has been rightfully assigned to the Company or
      any of its Subsidiaries.

                  4.11  Compliance with Other  Instruments.  Neither the Company
      nor any of its  Subsidiaries is in violation or default of (x) any term of
      its Charter or Bylaws, or (y) any provision of any indebtedness, mortgage,
      indenture,  contract,  agreement or  instrument to which it is party or by
      which it is  bound  or of any  judgment,  decree,  order  or  writ,  which
      violation  or default,  in the case of this clause (y),  has had, or could
      reasonably be expected to have, either individually or in the aggregate, a
      Material  Adverse Effect.  The execution,  delivery and performance of and
      compliance with this Agreement and the Related Agreements to which it is a
      party,  and the  issuance  and  sale of the Note by the  Company  pursuant
      hereto  and  thereto,  will not,  with or without  the  passage of time or
      giving of notice, result in any such material violation, or be in conflict
      with or constitute a default  under any such term or provision,  or result
      in the creation of any mortgage,  pledge, lien (other than a lien in favor
      of Purchaser),  encumbrance or charge upon any of the properties or assets
      of the Company or any of its  Subsidiaries or the suspension,  revocation,
      impairment, forfeiture or nonrenewal of any permit, license, authorization
      or approval  applicable to the Company,  its business or operations or any
      of its assets or properties.

                  4.12  Litigation.  There is no  action,  suit,  proceeding  or
      investigation pending or, to the Company's knowledge, currently threatened
      against the Company or any of its  Subsidiaries  that prevents the Company
      or any of its Subsidiaries  from entering into this Agreement or the other
      Related  Agreements,  or from  consummating the transactions  contemplated
      hereby or thereby,  or which has had, or could  reasonably  be expected to
      have, either  individually or in the aggregate,  a Material Adverse Effect
      or any change in the current equity ownership of the Company or any of its
      Subsidiaries,  nor is the Company  aware that there is any basis to assert
      any of the foregoing. Neither the Company nor any of its Subsidiaries is a
      party to or subject to the  provisions  of any  order,  writ,  injunction,
      judgment or decree of any court or government  agency or  instrumentality.
      There is no action,  suit,  proceeding or  investigation by the Company or
      any of its Subsidiaries  currently  pending or which the Company or any of
      its Subsidiaries intends to initiate.

                  4.13 Tax Returns and Payments. Each of the Company and each of
      its  Subsidiaries  has timely  filed all tax returns  (federal,  state and
      local)  required to be filed by it under  applicable  law or has filed all
      necessary  extensions  under applicable law. All taxes shown to be due and
      payable on such returns,  any assessments imposed, and all other taxes due
      and  payable by the  Company or any of its  Subsidiaries  on or before the
      Closing,  have  been paid or will be paid  prior to the time  they  become
      delinquent.  Neither  the  Company  nor any of its  Subsidiaries  has been
      advised:

                                       9
<PAGE>

            (a) that any of its returns,  federal,  state or other, have been or
      are being audited as of the date hereof; or

            (b) of any adjustment,  deficiency,  assessment or court decision in
      respect of its federal, state or other taxes.

The Company  has no  knowledge  of any  liability  for any tax imposed  upon its
properties  or assets as of the date of this  Agreement  that is not  adequately
provided for.

                  4.14   Employees.   Neither   the   Company  nor  any  of  its
      Subsidiaries  has any  collective  bargaining  agreements  with any of its
      employees.  There is no labor union organizing activity pending or, to the
      Company's knowledge,  threatened with respect to the Company or any of its
      Subsidiaries. Except as disclosed in the Exchange Act Filings, neither the
      Company  nor  any  of its  Subsidiaries  is a  party  to or  bound  by any
      currently   effective   employment   contract,    deferred    compensation
      arrangement,  bonus plan, incentive plan, profit sharing plan,  retirement
      agreement  or  other  employee  compensation  plan  or  agreement.  To the
      Company's   knowledge,   no   employee  of  the  Company  or  any  of  its
      Subsidiaries,  nor any  consultant  with  whom the  Company  or any of its
      Subsidiaries  has contracted,  is in violation of any material term of any
      employment  contract,  proprietary  information  agreement  or  any  other
      agreement  relating to the right of any such individual to be employed by,
      or to contract with, the Company or any of its Subsidiaries because of the
      nature  of the  business  to be  conducted  by the  Company  or any of its
      Subsidiaries;  and to the Company's knowledge the continued  employment by
      the Company  and its  Subsidiaries  of their  present  employees,  and the
      performance  of the Company's  and its  Subsidiaries'  contracts  with its
      independent  contractors,  will not result in any such violation.  Neither
      the Company nor any of its Subsidiaries is aware that any of its employees
      is  obligated  under  any  contract  (including  licenses,   covenants  or
      commitments of any nature) or other agreement, or subject to any judgment,
      decree or order of any court or administrative agency that would interfere
      with the operations of the Company or any of its Subsidiaries. Neither the
      Company nor any of its  Subsidiaries has received any notice alleging that
      any such  violation has occurred.  Except for employees who have a current
      effective   employment   agreement   with  the   Company  or  any  of  its
      Subsidiaries,  no employee of the Company or any of its  Subsidiaries  has
      been  granted the right to continued  employment  by the Company or any of
      its Subsidiaries or to any material compensation  following termination of
      employment with the Company or any of its Subsidiaries. The Company is not
      aware that any  officer,  key  employee or group of  employees  intends to
      terminate  his,  her or their  employment  with the  Company or any of its
      Subsidiaries,  nor  does the  Company  or any of its  Subsidiaries  have a
      present intention to terminate the employment of any officer, key employee
      or group of employees.

                  4.15  Registration   Rights  and  Voting  Rights.   Except  as
      disclosed  in  Exchange  Act  Filings,  neither the Company nor any of its
      Subsidiaries is presently  under any  obligation,  and neither the Company
      nor any of its Subsidiaries has granted any rights, to register any of the
      Company's or its Subsidiaries'  presently outstanding securities or any of
      its  securities  that may  hereafter  be issued.  Except as  disclosed  in
      Exchange Act Filings,  to the Company's  knowledge,  no stockholder of the
      Company or any of its  Subsidiaries  has entered into any  agreement  with
      respect to the voting of equity  securities  of the  Company or any of its
      Subsidiaries.

                                       10
<PAGE>

                  4.16  Compliance with Laws;  Permits.  Neither the Company nor
      any  of  its  Subsidiaries  is  in  violation  of  any  provision  of  the
      Sarbanes-Oxley  Act of 2002 or any SEC related  regulation  or rule or any
      rule of the Principal Market (as hereafter defined) promulgated thereunder
      or any other applicable statute, rule, regulation, order or restriction of
      any  domestic  or  foreign  government  or any  instrumentality  or agency
      thereof in respect of the conduct of its business or the  ownership of its
      properties which has had, or could reasonably be expected to have,  either
      individually  or  in  the  aggregate,   a  Material  Adverse  Effect.   No
      governmental orders,  permissions,  consents,  approvals or authorizations
      are  required to be obtained  and no  registrations  or  declarations  are
      required to be filed in connection with the execution and delivery of this
      Agreement  or any other  Related  Agreement  and the issuance of the Note,
      except  such as have  been duly and  validly  obtained  or filed,  or with
      respect to any  filings  that must be made after the  Closing,  as will be
      filed in a timely manner. Each of the Company and its Subsidiaries has all
      material franchises, permits, licenses and any similar authority necessary
      for the conduct of its business as now being  conducted by it, the lack of
      which  could,  either  individually  or in the  aggregate,  reasonably  be
      expected to have a Material Adverse Effect.

                  4.17  Environmental  and Safety Laws.  Neither the Company nor
      any of its Subsidiaries is in violation of any applicable statute,  law or
      regulation  relating to the environment or occupational health and safety,
      except  where the  failure to be in  compliance  could not  reasonably  be
      expected  to have a Material  Adverse  Effect,  and to its  knowledge,  no
      material  expenditures are or will be required in order to comply with any
      such  existing  statute,  law or  regulation.  No Hazardous  Materials (as
      defined below) are used or have been used,  stored,  or disposed of by the
      Company  or  any of  its  Subsidiaries  in  violation  of  any  applicable
      environmental law or, to the Company's  knowledge,  by any other person or
      entity on any property owned,  leased or used by the Company or any of its
      Subsidiaries.  For the  purposes  of the  preceding  sentence,  "Hazardous
      Materials" shall mean:

            (a) materials  which are listed or otherwise  defined as "hazardous"
      or "toxic" under any applicable local, state,  federal and/or foreign laws
      and regulations  that govern the existence  and/or remedy of contamination
      on property,  the protection of the environment  from  contamination,  the
      control of  hazardous  wastes,  or other  activities  involving  hazardous
      substances, including building materials; or

            (b) any petroleum products or nuclear materials.

                  4.18   Valid   Offering.   Assuming   the   accuracy   of  the
      representations   and  warranties  of  the  Purchaser  contained  in  this
      Agreement,  the offer,  sale and  issuance of the Note will be exempt from
      the  registration  requirements  of the Securities Act of 1933, as amended
      (the "Securities Act"), and will have been registered or qualified (or are
      exempt from registration and qualification) under the registration, permit
      or qualification requirements of all applicable state securities laws.

                                       11
<PAGE>

                  4.19  Full  Disclosure.  Each of the  Company  and each of its
      Subsidiaries has provided the Purchaser with all information  requested by
      the  Purchaser  in  connection  with its  decision to  purchase  the Note.
      Neither this Agreement, the Related Agreements, the exhibits and schedules
      hereto and thereto nor any other document  delivered by the Company or any
      of its  Subsidiaries to Purchaser or its attorneys or agents in connection
      herewith or  therewith  or with the  transactions  contemplated  hereby or
      thereby, contain any untrue statement of a material fact nor omit to state
      a material fact necessary in order to make the statements contained herein
      or  therein,  in light of the  circumstances  in which they are made,  not
      misleading.  Any financial projections and other estimates provided to the
      Purchaser  by the  Company  or any of its  Subsidiaries  were based on the
      Company's  and  its  Subsidiaries'  experience  in  the  industry  and  on
      assumptions  of fact and opinion as to future  events which the Company or
      any of its  Subsidiaries,  at the date of the issuance of such projections
      or estimates, believed to be reasonable.

                  4.20   Insurance.   Each  of  the  Company  and  each  of  its
      Subsidiaries has general commercial,  product liability, fire and casualty
      insurance policies with coverages which the Company believes are customary
      for companies  similarly  situated to the Company and its  Subsidiaries in
      the same or similar business.

                  4.21 SEC Reports.  The Company has filed all proxy statements,
      reports and other documents  required to be filed by it under the Exchange
      Act. The Company,  upon request of the Purchaser,  will furnish copies of:
      (i) its Annual  Report on Form 10-KSB for its fiscal  year ended  December
      31,  2004;  (ii) its  Quarterly  Reports  on Form  10-QSB  for its  fiscal
      quarters  ended March 31, 2005 and June 30,  2005;  and (iii) the Form 8-K
      filings  which  it  has  made,  to  date,  during  the  fiscal  year  2005
      (collectively, the "SEC Reports"). Each SEC Report was, at the time of its
      filing, in substantial  compliance with the requirements of its respective
      form and none of the SEC Reports,  nor the financial  statements  (and the
      notes thereto) included in the SEC Reports,  as of their respective filing
      dates,  contained  any untrue  statement of a material  fact or omitted to
      state a material fact  required to be stated  therein or necessary to make
      the statements  therein,  in light of the  circumstances  under which they
      were made, not misleading.

                  4.22  Listing.  The  Common  Stock is  listed  or  quoted,  as
      applicable, on a Principal Market (as hereafter defined) and satisfies and
      at all times hereafter will satisfy, all requirements for the continuation
      of such listing or quotation, as applicable.  The Company has not received
      any notice  that its  Common  Stock will be  delisted  from,  or no longer
      quoted on, as  applicable,  the Principal  Market or that its Common Stock
      does  not  meet  all  requirements  for  such  listing  or  quotation,  as
      applicable.  For purposes  hereof,  the term "Principal  Market" means the
      NASD Over The Counter  Bulletin  Board,  NASDAQ  SmallCap  Market,  NASDAQ
      National Market System, American Stock Exchange or New York Stock Exchange
      (whichever of the foregoing is at the time the principal  trading exchange
      or market for the Common Stock).

                                       12
<PAGE>

                  4.23 No Integrated  Offering.  Neither the Company, nor any of
      its  Subsidiaries  or  affiliates,  nor any person  acting on its or their
      behalf,  has  directly  or  indirectly  made  any  offers  or sales of any
      security or solicited any offers to buy any security  under  circumstances
      that would cause the  offering of the Note  pursuant to this  Agreement or
      any of the Related Agreements to be integrated with prior offerings by the
      Company for purposes of the Securities Act which would prevent the Company
      from selling the Note  pursuant to Rule 506 under the  Securities  Act, or
      any applicable exchange-related  stockholder approval provisions, nor will
      the Company or any of its  affiliates or  Subsidiaries  take any action or
      steps that would  cause the  offering  of the Note to be  integrated  with
      other offerings.

                  4.24 Patriot Act. The Company  certifies  that, to the best of
      Company's  knowledge,  neither the Company nor any of its Subsidiaries has
      been designated,  nor is or shall be owned or controlled,  by a "suspected
      terrorist"  as  defined in  Executive  Order  13224.  The  Company  hereby
      acknowledges  that the Purchaser  seeks to comply with all applicable laws
      concerning  money  laundering  and related  activities.  In furtherance of
      those efforts, the Company hereby represents, warrants and covenants that:
      (i)  none  of  the  cash  or  property  that  the  Company  or  any of its
      Subsidiaries  will pay or will  contribute  to the  Purchaser  has been or
      shall be derived from, or related to, any activity that is deemed criminal
      under  United  States  law;  and (ii) no  contribution  or  payment by the
      Company or any of its  Subsidiaries  to the Purchaser,  to the extent that
      they are within the Company's and/or its Subsidiaries' control shall cause
      the  Purchaser to be in  violation of the United  States Bank Secrecy Act,
      the United States  International  Money Laundering  Control Act of 1986 or
      the  United   States   International   Money   Laundering   Abatement  and
      Anti-Terrorist  Financing Act of 2001. The Company shall  promptly  notify
      the  Purchaser if any of these  representations,  warranties  or covenants
      ceases  to be  true  and  accurate  regarding  the  Company  or any of its
      Subsidiaries.  The Company  shall  provide the  Purchaser  all  additional
      information  regarding  the  Company or any of its  Subsidiaries  that the
      Purchaser  deems  necessary or  convenient to ensure  compliance  with all
      applicable laws concerning  money laundering and similar  activities.  The
      Company  understands  and agrees that if at any time it is discovered that
      any  of  the  foregoing  representations,   warranties  or  covenants  are
      incorrect,  or if  otherwise  required  by  applicable  law or  regulation
      related to money  laundering  or similar  activities,  the  Purchaser  may
      undertake  appropriate actions to ensure compliance with applicable law or
      regulation,  including but not limited to segregation and/or redemption of
      the Purchaser's investment in the Company. The Company further understands
      that the Purchaser may release confidential  information about the Company
      and its Subsidiaries and, if applicable, any underlying beneficial owners,
      to proper authorities if the Purchaser, in its sole discretion, determines
      that it is in the best  interests  of the  Purchaser  in light of relevant
      rules and regulations under the laws set forth in subsection (ii) above.

                  4.25 ERISA. Based upon the Employee Retirement Income Security
      Act of 1974 ("ERISA"),  and the regulations and published  interpretations
      thereunder:  (i) to the extent applicable,  neither the Company nor any of
      its Subsidiaries has engaged in any Prohibited Transactions (as defined in
      Section  406 of ERISA and Section  4975 of the  Internal  Revenue  Code of
      1986, as amended (the  "Code"));  (ii) each of the Company and each of its
      Subsidiaries  has met all applicable  minimum funding  requirements  under
      Section  302 of ERISA in respect of its plans;  (iii)  neither the Company
      nor any of its  Subsidiaries  has any knowledge of any event or occurrence
      which would cause the Pension  Benefit  Guaranty  Corporation to institute
      proceedings  under Title IV of ERISA to  terminate  any  employee  benefit
      plan(s);  (iv)  neither the Company  nor any of its  Subsidiaries  has any
      fiduciary responsibility for investments with respect to any plan existing
      for the benefit of persons other than the  Company's or such  Subsidiary's
      employees;  and (v) neither the  Company nor any of its  Subsidiaries  has
      withdrawn,  completely or partially,  from any multi-employer pension plan
      so as to incur liability under the  Multiemployer  Pension Plan Amendments
      Act of 1980.

                                       13
<PAGE>

      5.  Representations and Warranties of the Purchaser.  The Purchaser hereby
represents  and  warrants to the Company as follows  (such  representations  and
warranties do not lessen or obviate the  representations  and  warranties of the
Company set forth in this Agreement):

                  5.1 No Shorting.  The Purchaser or any of its  affiliates  and
      investment  partners  has not,  will not and will not cause any  person or
      entity, to directly engage in "short sales" of the Common Stock as long as
      the Note shall be outstanding.

                  5.2  Requisite  Power and  Authority.  The  Purchaser  has all
      necessary  power and authority  under all applicable  provisions of law to
      execute and deliver this Agreement and the Related Agreements and to carry
      out  their  provisions.  All  corporate  action  on the  Purchaser's  part
      required for the lawful  execution and delivery of this  Agreement and the
      Related  Agreements  have been or will be  effectively  taken prior to the
      Closing. Upon their execution and delivery, this Agreement and the Related
      Agreements  will  be  valid  and  binding  obligations  of the  Purchaser,
      enforceable in accordance with their terms, except:

            (a) as limited by applicable bankruptcy, insolvency, reorganization,
      moratorium or other laws of general application  affecting  enforcement of
      creditors' rights; and

            (b) as limited by general  principles  of equity that  restrict  the
      availability of equitable and legal remedies.

                  5.3 Investment Representations. The Purchaser understands that
      the  Note  is  being  offered  and  sold  pursuant  to an  exemption  from
      registration  contained  in the  Securities  Act  based  in part  upon the
      Purchaser's  representations  contained  in  this  Agreement,   including,
      without limitation,  that the Purchaser is an "accredited investor" within
      the  meaning of  Regulation  D under the  Securities  Act.  The  Purchaser
      confirms  that  it has  received  or  has  had  full  access  to  all  the
      information  it  considers  necessary or  appropriate  to make an informed
      investment  decision  with respect to the Note to be purchased by it under
      this  Agreement.  The  Purchaser  further  confirms  that  it  has  had an
      opportunity  to  ask  questions  and  receive  answers  from  the  Company
      regarding the Company's and its  Subsidiaries'  business,  management  and
      financial  affairs and the terms and  conditions  of the  Offering and the
      Note and to obtain  additional  information  (to the  extent  the  Company
      possessed such information or could acquire it without unreasonable effort
      or expense) necessary to verify any information furnished to the Purchaser
      or to which the Purchaser had access.

                                       14
<PAGE>

                  5.4 The  Purchaser  Bears  Economic  Risk.  The  Purchaser has
      substantial  experience in evaluating  and investing in private  placement
      transactions of securities in companies  similar to the Company so that it
      is capable of  evaluating  the merits and risks of its  investment  in the
      Company and has the capacity to protect its own  interests.  The Purchaser
      must bear the economic risk of this  investment  until the full  principal
      amount of the Note is repaid.

                  5.5  Acquisition  for Own Account.  The Purchaser is acquiring
      the Note for the Purchaser's own account for investment only, and not as a
      nominee or agent and not with a view  towards or for resale in  connection
      with their distribution.

                  5.6 The  Purchaser  Can Protect Its  Interest.  The  Purchaser
      represents  that by reason of its, or of its  management's,  business  and
      financial  experience,  the  Purchaser  has the  capacity to evaluate  the
      merits  and risks of its  investment  in the Note and to  protect  its own
      interests  in  connection  with  the  transactions  contemplated  in  this
      Agreement and the Related Agreements.  Further,  the Purchaser is aware of
      no publication of any  advertisement  in connection with the  transactions
      contemplated in the Agreement or the Related Agreements.

                  5.7 Accredited  Investor.  The Purchaser represents that it is
      an  accredited  investor  within  the  meaning of  Regulation  D under the
      Securities Act.

                  5.8 Legend.  The Note shall bear  substantially  the following
      legend:

            "THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
            AS AMENDED,  OR ANY APPLICABLE  STATE SECURITIES LAWS. THIS NOTE MAY
            NOT BE SOLD,  OFFERED  FOR  SALE,  PLEDGED  OR  HYPOTHECATED  IN THE
            ABSENCE OF AN  EFFECTIVE  REGISTRATION  STATEMENT AS TO THIS NOTE OR
            SUCH SHARES UNDER SAID ACT AND APPLICABLE  STATE  SECURITIES LAWS OR
            AN OPINION OF COUNSEL  REASONABLY  SATISFACTORY TO ADAL GROUP,  INC.
            THAT SUCH REGISTRATION IS NOT REQUIRED."

      6.  Covenants of the Company.  The Company  covenants  and agrees with the
Purchaser as follows:

                  6.1  Listing.   The  Company  will  maintain  the  listing  or
      quotation, as applicable, of its Common Stock on the Principal Market, and
      will comply in all material respects with the Company's reporting,  filing
      and  other   obligations  under  the  bylaws  or  rules  of  the  National
      Association  of  Securities  Dealers  ("NASD")  and  such  exchanges,   as
      applicable.

                  6.2 Market Regulations. The Company shall notify the SEC, NASD
      and applicable state authorities,  in accordance with their  requirements,
      of the  transactions  contemplated by this  Agreement,  and shall take all
      other necessary action and proceedings as may be required and permitted by
      applicable law, rule and  regulation,  for the legal and valid issuance of
      the Note to the  Purchaser  and  promptly  provide  copies  thereof to the
      Purchaser.

                                       15
<PAGE>

                  6.3 Reporting Requirements. The Company shall timely file with
      the SEC all reports  required to be filed pursuant to the Exchange Act and
      refrain from  terminating its status as an issuer required by the Exchange
      Act to file  reports  thereunder  even if the Exchange Act or the rules or
      regulations thereunder would permit such termination.

                  6.4 Use of Funds.  The Company  shall use the  proceeds of the
      sale of the Note for general working capital purposes.

                  6.5 Access to Facilities.  Each of the Company and each of its
      Subsidiaries will permit any  representatives  designated by the Purchaser
      (or any successor of the  Purchaser),  upon  reasonable  notice and during
      normal  business  hours,  at such person's  expense and  accompanied  by a
      representative  of the Company or any  Subsidiary  (provided  that no such
      prior notice shall be required to be given and no such  representative  of
      the Company or any Subsidiary shall be required to accompany the Purchaser
      in the event the  Purchaser  believes such access is necessary to preserve
      or protect the Collateral (as defined in the Master Security Agreement) or
      following the occurrence and during the continuance of an Event of Default
      (as defined in the Note)), to:

            (a) visit and inspect any of the properties of the Company or any of
      its Subsidiaries;

            (b) examine the corporate  and  financial  records of the Company or
      any of its  Subsidiaries  (unless  such  examination  is not  permitted by
      federal,  state or local law or by  contract)  and make copies  thereof or
      extracts therefrom; and

            (c) discuss the affairs, finances and accounts of the Company or any
      of  its  Subsidiaries   with  the  directors,   officers  and  independent
      accountants of the Company or any of its Subsidiaries.

Notwithstanding  the foregoing,  neither the Company nor any of its Subsidiaries
will provide any material,  non-public  information to the Purchaser  unless the
Purchaser  signs  a  confidentiality   agreement  and  otherwise  complies  with
Regulation FD, under the federal securities laws.

                  6.6  Taxes.   (a)  Each  of  the   Company  and  each  of  its
      Subsidiaries  will  promptly  pay and  discharge,  or cause to be paid and
      discharged,  when due and payable, all taxes, assessments and governmental
      charges or levies imposed upon the income,  profits,  property or business
      of the Company and its Subsidiaries; provided, however, that any such tax,
      assessment,  charge or levy need not be paid currently if (i) the validity
      thereof  shall  currently  and  diligently  be  contested in good faith by
      appropriate proceedings,  (ii) such tax, assessment,  charge or levy shall
      have no effect on the lien  priority of the  Purchaser  in any property of
      the Company or any of its  Subsidiaries  and (iii) if the  Company  and/or
      such Subsidiary  shall have set aside on its books adequate  reserves with
      respect thereto in accordance with GAAP; and provided,  further,  that the
      Company and its Subsidiaries will pay all such taxes, assessments, charges
      or levies  forthwith upon the commencement of proceedings to foreclose any
      lien which may have attached as security therefor.

                                       16
<PAGE>

            (b) If Company or any of its  Subsidiaries  shall be required by law
      to deduct or withhold  in respect of any and all present or future  taxes,
      levies,   imposts,   deductions   and  other   governmental   charges   or
      withholdings,  and all  interest,  penalties  and other  liabilities  with
      respect thereto, imposed by any jurisdiction (or any political subdivision
      thereof)  ("Taxes") other than,  with respect to the Purchaser,  any Taxes
      (including  income,  branch  profits  or  franchise  taxes)  imposed on or
      measured by its net income ("Indemnified Taxes") from or in respect of any
      sum payable hereunder to the Purchaser, then:

            (c) the sum payable  shall be  increased by such  additional  amount
      (the  "Additional  Amount") as necessary so that after making all required
      deductions  and  withholdings   (including   deductions  and  withholdings
      applicable to such  Additional  Amount) the  Purchaser  receives an amount
      equal  to the  sum it  would  have  received  had no  such  deductions  or
      withholdings been made;

            (d) the  Company  or such  Subsidiary  shall  make  the  appropriate
      deductions  or  withholdings  and shall pay the full  amount  deducted  or
      withheld to the relevant taxing authority or other authority in accordance
      with applicable law;

            (e) within thirty (30) days after the date of such payment, upon the
      Purchaser's  request,  the Company or such Subsidiary shall furnish to the
      Purchaser the original or a certified copy of a receipt evidencing payment
      thereof,  or other  evidence  of payment  reasonably  satisfactory  to the
      Purchaser;

            (f) if the  Company  or such  Subsidiary  fails  to pay  amounts  in
      accordance with paragraph (b) above,  the Company or such Subsidiary shall
      indemnify the Purchaser for any incremental Indemnified Taxes that is paid
      by the Purchaser as a result of the failure;

            (g) the Company will  indemnify the Purchaser for the full amount of
      any Taxes  imposed  by any  jurisdiction  and paid by the  Purchaser  with
      respect to any Additional  Amount payable  pursuant to paragraph (a) above
      and any liability  (including  penalties,  interest and expenses)  arising
      therefrom or with respect thereto, whether or not such Taxes are correctly
      asserted; and

            (h) the indemnification contemplated in paragraphs (d) and (e) above
      shall be made  within 30 days from the date the  Purchaser  makes  written
      demand  therefor  (which  demand  shall  identify the nature and amount of
      Taxes for which  indemnification  is being sought and shall include a copy
      of the relevant  portion of any written  assessment from the  governmental
      authority demanding payment of such Taxes).

                                       17
<PAGE>

                  6.7 Insurance.  Each of the Company and its Subsidiaries  will
      keep its assets which are of an insurable character insured by financially
      sound and reputable insurers against loss or damage by fire, explosion and
      other risks  customarily  insured against by companies in similar business
      similarly  situated as the Company and its  Subsidiaries;  and the Company
      and its Subsidiaries  will maintain,  with financially sound and reputable
      insurers,  insurance  against  other  hazards and risks and  liability  to
      persons  and  property  to the extent and in the manner  which the Company
      reasonably  believes  is  customary  for  companies  in  similar  business
      similarly  situated as the Company and its  Subsidiaries and to the extent
      available on commercially  reasonable terms. The Company,  and each of its
      Subsidiaries,  will jointly and severally  bear the full risk of loss from
      any loss of any nature  whatsoever  with respect to the assets  pledged to
      the Purchaser as security for their respective  obligations  hereunder and
      under  the  Related   Agreements.   At  the  Company's  and  each  of  its
      Subsidiaries'  joint and  several  cost and  expense in  amounts  and with
      carriers reasonably  acceptable to the Purchaser,  each of the Company and
      each of its Subsidiaries  shall (i) keep all its insurable  properties and
      properties  in which it has an  interest  insured  against  the hazards of
      fire, flood, sprinkler leakage, those hazards covered by extended coverage
      insurance and such other hazards, and for such amounts, as is customary in
      the case of companies  engaged in  businesses  similar to the Company's or
      the respective  Subsidiary's  including business  interruption  insurance;
      (ii)  maintain  a bond in such  amounts  as is  customary  in the  case of
      companies engaged in businesses similar to the Company's or the respective
      Subsidiary's  insuring  against  larceny,  embezzlement  or other criminal
      misappropriation of insured's officers and employees who may either singly
      or jointly  with  others at any time have access to the assets or funds of
      the  Company  or  any of  its  Subsidiaries  either  directly  or  through
      governmental  authority to draw upon such funds or to direct generally the
      disposition of such assets;  (iii) maintain  public and product  liability
      insurance  against claims for personal  injury,  death or property  damage
      suffered  by others;  (iv)  maintain  all such  worker's  compensation  or
      similar  insurance  as may be  required  under  the  laws of any  state or
      jurisdiction in which the Company or the respective  Subsidiary is engaged
      in business; and (v) furnish the Purchaser with (x) copies of all policies
      and evidence of the maintenance of such policies at least thirty (30) days
      before  any  expiration   date,  (y)  excepting  the  Company's   workers'
      compensation policy, endorsements to such policies naming the Purchaser as
      "co-insured"  or  "additional   insured"  and  appropriate   loss  payable
      endorsements in form and substance  satisfactory to the Purchaser,  naming
      the Purchaser as loss payee, and (z) evidence that as to the Purchaser the
      insurance  coverage  shall not be  impaired or  invalidated  by any act or
      neglect of the Company or any  Subsidiary and the insurer will provide the
      Purchaser with at least thirty (30) days notice prior to cancellation. The
      Company and each Subsidiary shall instruct the insurance  carriers that in
      the event of any loss thereunder, the carriers shall make payment for such
      loss to the Company and/or the Subsidiary  and the Purchaser  jointly.  In
      the event that as of the date of receipt  of each loss  recovery  upon any
      such  insurance,  the  Purchaser has not declared an event of default with
      respect  to this  Agreement  or any of the  Related  Agreements,  then the
      Company  and/or  such   Subsidiary   shall  be  permitted  to  direct  the
      application of such loss recovery  proceeds toward investment in property,
      plant and  equipment  that  would  comprise  "Collateral"  secured  by the
      Purchaser's  security interest pursuant to the Master Security  Agreement,
      any other Related  Agreement or such other security  agreement as shall be
      required by the  Purchaser,  with any surplus  funds to be applied  toward
      payment of the  obligations of the Company to the Purchaser.  In the event
      that the Purchaser has properly  declared an event of default with respect
      to  this  Agreement  or any of  the  Related  Agreements,  then  all  loss
      recoveries  received by the Purchaser upon any such  insurance  thereafter
      may be applied to the  obligations of the Company  hereunder and under the
      Related  Agreements,  in such order as the  Purchaser may  determine.  Any
      surplus  (following   satisfaction  of  all  Company  obligations  to  the
      Purchaser) shall be paid by the Purchaser to the Company or applied as may
      be otherwise  required by law. Any deficiency thereon shall be paid by the
      Company or the Subsidiary, as applicable, to the Purchaser, on demand.

                                       18
<PAGE>

                  6.8 Intellectual Property. Each of the Company and each of its
      Subsidiaries shall maintain in full force and effect its existence, rights
      and  franchises  and all  licenses  and other  rights to use  Intellectual
      Property owned or possessed by it and reasonably deemed to be necessary to
      the conduct of its business.

                  6.9   Properties.   Each  of  the  Company  and  each  of  its
      Subsidiaries  will keep its properties in reasonably good repair,  working
      order and condition,  reasonable wear and tear excepted,  and from time to
      time  make  all  needful  and  proper  repairs,  renewals,   replacements,
      additions  and  improvements  thereto to the extent  such  properties  are
      necessary to the continued  operations  of the  business;  and each of the
      Company and each of its  Subsidiaries  will at all times  comply with each
      provision  of all leases to which it is a party or under which it occupies
      property if the breach of such provision could,  either individually or in
      the aggregate, reasonably be expected to have a Material Adverse Effect.

                  6.10  Confidentiality.  The  Company  will  not,  and will not
      permit any of its Subsidiaries  to, disclose,  and will not include in any
      public announcement, the name of the Purchaser, unless expressly agreed to
      by the Purchaser or unless and until such disclosure is required by law or
      applicable  regulation,  and then only to the extent of such  requirement.
      Notwithstanding  the foregoing,  the Company may disclose the  Purchaser's
      identity and the terms of this  Agreement  to its current and  prospective
      debt and equity financing sources.

                  6.11  Required  Approvals.  (i)  For so  long  as  twenty-five
      percent  (25%) of the  principal  amount of the Note is  outstanding,  the
      Company,  without the prior written  consent of the Purchaser,  shall not,
      and shall not permit any of its Subsidiaries to:

            (a) (x) directly or indirectly  declare or pay any dividends,  other
      than   dividends   paid  to  the  Company  or  any  of  its   wholly-owned
      Subsidiaries, (y) issue any preferred stock that is manditorily redeemable
      prior to the one year anniversary of Maturity Date (as defined in the Note
      or (z) redeem any of its preferred stock or other equity interests;

            (b)  liquidate,  dissolve  or effect a material  reorganization  (it
      being  understood  that  in no  event  shall  the  Company  or  any of its
      Subsidiaries dissolve,  liquidate or merge with any other person or entity
      (unless,  in the case of such a  merger,  the  Company  or, in the case of
      merger not involving the Company, such Subsidiary,  as applicable,  is the
      surviving entity);

                                       19
<PAGE>

            (c) become  subject to  (including,  without  limitation,  by way of
      amendment to or modification  of) any agreement or instrument which by its
      terms would (under any circumstances) restrict the Company's or any of its
      Subsidiaries,  right to perform  the  provisions  of this  Agreement,  any
      Related Agreement or any of the agreements contemplated hereby or thereby;

            (d)  materially  alter or change  the scope of the  business  of the
      Company and its Subsidiaries taken as a whole; or

            (e)  create,  incur,  assume or  suffer  to exist  any  indebtedness
      whether  secured  or  unsecured  other  than  (w)  unsecured  subordinated
      indebtedness  of the  Company or any  Subsidiary  thereof in an  aggregate
      principal amount not to exceed US$3,000,000 at any time outstanding, which
      indebtedness  referred to in this clause (w) shall be  subordinated to the
      indebtedness  incurred  by the  Company  and its  Subsidiaries  under this
      Agreement  and the Related  Agreements,  and solely  with  respect to such
      subordination,   on  terms  and   subject  to   documentation   reasonably
      satisfactory to the Purchaser;  (x) the Company's  obligations owed to the
      Purchaser,  (y) indebtedness set forth on Schedule 6.11(e) attached hereto
      and made a part hereof and any  refinancings  or  replacements  thereof on
      terms no less  favorable  to the  Purchaser  than the  indebtedness  being
      refinanced or replaced,  and (z) any  indebtedness  incurred in connection
      with the purchase of assets (other than  equipment) in the ordinary course
      of business,  or any refinancings or replacements thereof on terms no less
      favorable to the  Purchaser  than the  indebtedness  being  refinanced  or
      replaced,  so long as any lien  relating  thereto  shall only encumber the
      fixed assets so purchased and no other assets of the Company or any of its
      Subsidiaries;  (ii)  cancel  any  indebtedness  owing to it in  excess  of
      $50,000  in the  aggregate  during  any 12  month  period;  (iii)  assume,
      guarantee,  endorse or otherwise become directly or contingently liable in
      connection with any obligations of any other person or entity,  except the
      endorsement  of negotiable  instruments  by the Company or any  Subsidiary
      thereof for deposit or collection or similar  transactions in the ordinary
      course of business or guarantees of indebtedness otherwise permitted to be
      outstanding pursuant to this clause (e); and

                  (ii) The  Company,  without the prior  written  consent of the
            Purchaser,  shall not, and shall not permit any of its  Subsidiaries
            to:

            (a) create or acquire any  Subsidiary  after the date hereof  unless
      (i) such  Subsidiary is a wholly-owned  Subsidiary of the Company and (ii)
      such Subsidiary  becomes a party to the Master  Security  Agreement or the
      foreign  equivalent  thereof  in form and  substance  satisfactory  to the
      Purchaser and its legal counsel (either by executing a counterpart thereof
      or an  assumption  or joinder  agreement in respect  thereof)  and, to the
      extent  required  by the  Purchaser,  satisfies  each  condition  of  this
      Agreement  and  the  Related  Agreements  as if  such  Subsidiary  were  a
      Subsidiary on the Closing Date; or

            (b) make  investments in, make any loans or advances to, or transfer
      assets to, the Immaterial Subsidiary or (ii) permit any Subsidiary to make
      investments  in, make any loans or advances to, or transfer assets to, the
      Immaterial Subsidiary.

                                       20
<PAGE>

                  6.12 Opinion. On the Closing Date, the Company will deliver to
      the Purchaser an opinion  acceptable  to the Purchaser  from the Company's
      external legal counsel.

                  6.13  Margin  Stock.  The  Company  will not permit any of the
      proceeds  of the Note,  the Option or the  Warrant to be used  directly or
      indirectly  to  "purchase"   or  "carry"   "margin   stock"  or  to  repay
      indebtedness  incurred to "purchase" or "carry"  "margin stock" within the
      respective  meanings of each of the quoted terms under Regulation U of the
      Board of Governors of the Federal  Reserve  System as now and from time to
      time hereafter in effect.

                  6.14 No Limitations on Additional Financing.  The Company will
      not,  and  will  not  permit  its  Subsidiaries  to,  agree,  directly  or
      indirectly,  to any restriction with any person or entity which limits the
      ability of the Purchaser to consummate  an Additional  Financing  with the
      Company or any of its Subsidiaries.  "Additional Financing" shall mean the
      incurrence of any additional  indebtedness by the Company, and/or the sale
      of any equity  interests of the Company or any of its  Subsidiaries to the
      Purchaser.

      7. Covenants of the Purchaser. The Purchaser covenants and agrees with the
Company as follows:

                  7.1 Confidentiality. The Purchaser will not disclose, and will
      not include in any public  announcement,  the name of the Company,  unless
      expressly  agreed to by the Company or unless and until such disclosure is
      required by law or applicable  regulation,  and then only to the extent of
      such requirement.

                  7.2 Non-Public Information.  The Purchaser will not effect any
      sales in the shares of the Common Stock while in  possession  of material,
      non-public  information  regarding the Company if such sales would violate
      applicable securities law.

                  7.3  Limitation on Acquisition of Common Stock of the Company.
      Notwithstanding  anything to the contrary contained in this Agreement, any
      Related Agreement or any document, instrument or agreement entered into in
      connection  with any other  transactions  between  the  Purchaser  and the
      Company,  the Purchaser  may not acquire stock in the Company  (including,
      without limitation,  pursuant to a contract to purchase,  by exercising an
      option or warrant,  by converting  any other  security or  instrument,  by
      acquiring  or  exercising  any other right to acquire,  shares of stock or
      other  security  convertible  into  shares  of  stock in the  Company,  or
      otherwise,  and such  contracts,  options,  warrants,  conversion or other
      rights shall not be enforceable or  exercisable)  to the extent such stock
      acquisition  would  cause  any  interest  (including  any  original  issue
      discount)  payable by the  Company to Laurus not to qualify as  "portfolio
      interest"  within the meaning of Section  881(c)(2) of the Code, by reason
      of Section  881(c)(3) of the Code,  taking into  account the  constructive
      ownership  rules  under  Section  871(h)(3)(C)  of the  Code  (the  "Stock
      Acquisition   Limitation").   The  Stock   Acquisition   Limitation  shall
      automatically  become null and void without any notice to the Company upon
      the earlier to occur of either (a) the Company's delivery to the Purchaser
      of a Notice of Redemption (as defined in the Note) or (b) the existence of
      an Event of Default  (as  defined in the Note) at a time when the  average
      closing  price of the Common Stock as reported by  Bloomberg,  L.P. on the
      Principal  Market  for the  immediately  preceding  five  trading  days is
      greater than or equal to 150% of the Fixed Conversion Price (as defined in
      that certain Secured Convertible Term Note, dated June 29, 2005, issued by
      the Company to the Purchaser).

                                       21
<PAGE>

                  7.4  No  Shorting.  Neither  the  Purchaser,  nor  any  of its
      affiliates  and  investment  partners  will,  nor will cause any person or
      entity, to directly engage in "short sales" of the Common Stock as long as
      the Note shall be outstanding.

      8. Covenants of the Company and the Purchaser Regarding Indemnification.

                  8.1 Company Indemnification.  The Company agrees to indemnify,
      hold harmless, reimburse and defend the Purchaser, each of the Purchaser's
      officers,  directors,  agents, affiliates,  control persons, and principal
      shareholders,   against  all   claims,   costs,   expenses,   liabilities,
      obligations,  losses or damages  (including  reasonable legal fees) of any
      nature, incurred by or imposed upon the Purchaser which do not result from
      the Purchaser's  gross negligence or willful  misconduct and which result,
      arise out of or are based upon: (i) any  misrepresentation  by the Company
      or any of its Subsidiaries or breach of any warranty by the Company or any
      of its Subsidiaries in this Agreement,  any other Related  Agreement or in
      any exhibits or schedules  attached hereto or thereto;  or (ii) any breach
      or default in  performance  by Company or any of its  Subsidiaries  of any
      covenant  or  undertaking  to be  performed  by  Company  or  any  of  its
      Subsidiaries  hereunder,  under any other  Related  Agreement or any other
      agreement  entered into by the Company and/or any of its  Subsidiaries and
      the Purchaser relating hereto or thereto.

                  8.2  Purchaser's  Indemnification.  The  Purchaser  agrees  to
      indemnify, hold harmless, reimburse and defend the Company and each of the
      Company's officers,  directors,  agents,  affiliates,  control persons and
      principal shareholders,  at all times against any claims, costs, expenses,
      liabilities,  obligations,  losses or damages (including  reasonable legal
      fees) of any nature,  incurred by or imposed upon the Company which do not
      result from the  Company's  gross  negligence or willful  misconduct  and,
      which result, arise out of or are based upon: (i) any misrepresentation by
      the Purchaser or breach of any warranty by the Purchaser in this Agreement
      or in any exhibits or schedules  attached hereto or any Related Agreement;
      or (ii) any breach or  default  in  performance  by the  Purchaser  of any
      covenant or undertaking to be performed by the Purchaser hereunder, or any
      other  Related  Agreements  or any  other  agreement  entered  into by the
      Company and the Purchaser relating hereto or thereto.

                  8.3 Offering  Restrictions.  Except as previously disclosed in
      the SEC Reports or in the Exchange Act Filings,  or stock or stock options
      granted  to  employees  or  directors  of the  Company  (these  exceptions
      hereinafter referred to as the "Excepted Issuances"),  neither the Company
      nor any of its Subsidiaries  will, prior to the full repayment of the Note
      (together with all accrued and unpaid interest and fees related  thereto),
      (x) enter into any equity line of credit agreement or similar agreement or
      (y) issue,  or enter into any agreement to issue,  any  securities  with a
      variable/floating  conversion and/or pricing feature which are or could be
      (by conversion or registration) free trading securities (i.e. common stock
      subject to a registration statement).

                                       22
<PAGE>

      9. Miscellaneous.

                  9.1 Governing Law, Jurisdiction and Waiver of Jury Trial.

            (a)  THIS  AGREEMENT  AND THE  OTHER  RELATED  AGREEMENTS  SHALL  BE
      GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE  WITH THE LAWS OF THE
      STATE OF NEW YORK  APPLICABLE  TO  CONTRACTS  MADE AND  PERFORMED  IN SUCH
      STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

            (b) THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
      COURTS  LOCATED  IN THE  COUNTY OF NEW YORK,  STATE OF NEW YORK SHALL HAVE
      EXCLUSIVE  JURISDICTION  TO HEAR AND  DETERMINE  ANY  CLAIMS  OR  DISPUTES
      BETWEEN THE  COMPANY,  ON THE ONE HAND,  AND THE  PURCHASER,  ON THE OTHER
      HAND,  PERTAINING TO THIS AGREEMENT OR ANY OF THE RELATED AGREEMENTS OR TO
      ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER
      RELATED  AGREEMENTS;   PROVIDED,   THAT  THE  PURCHASER  AND  THE  COMPANY
      ACKNOWLEDGE  THAT ANY APPEALS  FROM THOSE COURTS MAY HAVE TO BE HEARD BY A
      COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK,  STATE OF NEW YORK. ; AND
      FURTHER  PROVIDED,  THAT  NOTHING  IN THIS  AGREEMENT  SHALL BE  DEEMED OR
      OPERATE TO PRECLUDE THE PURCHASER FROM BRINGING SUIT OR TAKING OTHER LEGAL
      ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON
      THE COLLATERAL (AS DEFINED IN THE MASTER SECURITY  AGREEMENT) OR ANY OTHER
      SECURITY  FOR  THE   OBLIGATIONS   (AS  DEFINED  IN  THE  MASTER  SECURITY
      AGREEMENT),  OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
      PURCHASER.  THE COMPANY  EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
      JURISDICTION  IN ANY ACTION OR SUIT  COMMENCED IN ANY SUCH COURT,  AND THE
      COMPANY  HEREBY WAIVES ANY OBJECTION  WHICH IT MAY HAVE BASED UPON LACK OF
      PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. THE COMPANY
      HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
      ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
      COMPLAINT AND OTHER  PROCESS MAY BE MADE BY  REGISTERED OR CERTIFIED  MAIL
      ADDRESSED  TO THE COMPANY AT THE ADDRESS SET FORTH IN SECTION 9.8 AND THAT
      SERVICE  SO MADE  SHALL  BE  DEEMED  COMPLETED  UPON  THE  EARLIER  OF THE
      COMPANY'S  ACTUAL  RECEIPT  THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
      U.S. MAILS, PROPER POSTAGE PREPAID.

            (c) THE PARTIES  DESIRE  THAT THEIR  DISPUTES BE RESOLVED BY A JUDGE
      APPLYING SUCH APPLICABLE LAWS. THEREFORE,  TO ACHIEVE THE BEST COMBINATION
      OF THE BENEFITS OF THE  JUDICIAL  SYSTEM AND OF  ARBITRATION,  THE PARTIES
      HERETO  WAIVE  ALL  RIGHTS  TO  TRIAL  BY JURY  IN ANY  ACTION,  SUIT,  OR
      PROCEEDING  BROUGHT TO RESOLVE ANY DISPUTE,  WHETHER  ARISING IN CONTRACT,
      TORT, OR OTHERWISE  BETWEEN THE PURCHASER  AND/OR THE COMPANY  ARISING OUT
      OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP  ESTABLISHED
      BETWEEN  THEM  IN  CONNECTION  WITH  THIS  AGREEMENT,  ANY  OTHER  RELATED
      AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

                                       23
<PAGE>

                  9.2  Severability.  Wherever  possible each  provision of this
      Agreement and the Related  Agreements  shall be interpreted in such manner
      as to be effective and valid under applicable law, but if any provision of
      this Agreement or any Related  Agreement shall be prohibited by or invalid
      or illegal under applicable law such provision shall be ineffective to the
      extent  of  such   prohibition  or  invalidity  or   illegality,   without
      invalidating  the remainder of such provision or the remaining  provisions
      thereof which shall not in any way be affected or impaired thereby.

                  9.3 Survival. The representations,  warranties,  covenants and
      agreements  made  herein  shall  survive  any  investigation  made  by the
      Purchaser and the closing of the transactions  contemplated  hereby to the
      extent provided therein. All statements as to factual matters contained in
      any  certificate  or other  instrument  delivered  by or on  behalf of the
      Company pursuant hereto in connection with the  transactions  contemplated
      hereby shall be deemed to be representations and warranties by the Company
      hereunder  solely as of the date of such  certificate or  instrument.  All
      indemnities  set forth herein shall  survive the  execution,  delivery and
      termination of this Agreement and the Note and the making and repayment of
      the  obligations  arising  hereunder,  under  the Note and under the other
      Related Agreements.

                  9.4 Successors. Except as otherwise expressly provided herein,
      the provisions  hereof shall inure to the benefit of, and be binding upon,
      the successors,  heirs, executors and administrators of the parties hereto
      and shall  inure to the  benefit of and be  enforceable  by each person or
      entity  which  shall  be a  holder  of the Note  from  time to  time.  The
      Purchaser  may not assign  its rights  hereunder  to a  competitor  of the
      Company,  unless an Event of Default, as defined in the Note, has occurred
      and is continuing.

                  9.5 Entire Agreement;  Maximum Interest.  This Agreement,  the
      Related Agreements,  the exhibits and schedules hereto and thereto and the
      other documents  delivered  pursuant hereto constitute the full and entire
      understanding  and  agreement  between  the  parties  with  regard  to the
      subjects  hereof and no party shall be liable or bound to any other in any
      manner by any representations, warranties, covenants and agreements except
      as specifically  set forth herein and therein.  Nothing  contained in this
      Agreement,  any Related Agreement or in any document referred to herein or
      delivered in connection  herewith  shall be deemed to establish or require
      the  payment  of a rate of  interest  or other  charges  in  excess of the
      maximum rate  permitted by  applicable  law. In the event that the rate of
      interest  or  dividends  required  to be paid or other  charges  hereunder
      exceed the maximum  rate  permitted by such law, any payments in excess of
      such maximum shall be credited  against amounts owed by the Company to the
      Purchaser and thus refunded to the Company.

                                       24
<PAGE>

                  9.6 Amendment and Waiver.

            (a) This  Agreement may be amended or modified only upon the written
      consent of the Company and the Purchaser.

            (b) The  obligations  of the Company and the rights of the Purchaser
      under this  Agreement  may be waived only with the written  consent of the
      Purchaser.

            (c) The  obligations  of the Purchaser and the rights of the Company
      under this  Agreement  may be waived only with the written  consent of the
      Company.

                  9.7  Delays  or  Omissions.  It is  agreed  that no  delay  or
      omission to  exercise  any right,  power or remedy  accruing to any party,
      upon any  breach,  default or  noncompliance  by another  party under this
      Agreement or the Related Agreements, shall impair any such right, power or
      remedy,  nor  shall it be  construed  to be a waiver  of any such  breach,
      default or  noncompliance,  or any acquiescence  therein,  or of or in any
      similar  breach,  default  or  noncompliance   thereafter  occurring.  All
      remedies, either under this Agreement or the Related Agreements, by law or
      otherwise afforded to any party, shall be cumulative and not alternative.

                  9.8 Notices. All notices required or permitted hereunder shall
      be in writing and shall be deemed effectively given:

            (a) upon personal delivery to the party to be notified;

            (b) when sent by confirmed  facsimile if sent during normal business
      hours of the recipient, if not, then on the next business day;

            (c) three (3) business  days after having been sent by registered or
      certified mail, return receipt requested, postage prepaid; or

            (d) one (1) day after deposit with a nationally recognized overnight
      courier,  specifying  next day  delivery,  with  written  verification  of
      receipt.

All communications shall be sent as follows:

         If to the Company, to:       Adal Group, Inc.
                                      Billhurst Studio
                                      P.O. Box 177
                                      Lingfield Common Rd.
                                      Lingfield, Surrey, United Kingdom
                                      RH7 6B7
                                      Attention: Chief Financial Officer
                                      Facsimile: 44-1342-833875

                                       25
<PAGE>

                                      with a copy to:

                                      Loeb & Loeb LLP
                                      345 Park Avenue
                                      New York, New York 10154
                                      Attention: Mitchell S. Nussbaum, Esq.
                                      Facsimile: 212-407-4990

         If to the Purchaser, to:     Laurus Master Fund, Ltd.
                                      c/o M&C Corporate Services Limited
                                      P.O. Box 309 GT
                                      Ugland House
                                      George Town
                                      South Church Street
                                      Grand Cayman, Cayman Islands
                                      Facsimile: 345-949-8080

                                      with a copy to:

                                      John E. Tucker, Esq.
                                      825 Third Avenue 14th Floor
                                      New York, NY 10022
                                      Facsimile: 212-541-4434

or at such  other  address as the  Company or the  Purchaser  may  designate  by
written notice to the other parties hereto given in accordance herewith.

                  9.9  Attorneys'  Fees. In the event that any suit or action is
      instituted  to enforce  any  provision  in this  Agreement  or any Related
      Agreement,  the  prevailing  party in such  dispute  shall be  entitled to
      recover  from the losing  party all fees,  costs and expenses of enforcing
      any right of such prevailing party under or with respect to this Agreement
      and/or  such  Related  Agreement,   including,  without  limitation,  such
      reasonable  fees and expenses of attorneys  and  accountants,  which shall
      include, without limitation, all fees, costs and expenses of appeals.

                  9.10  Titles and  Subtitles.  The titles of the  sections  and
      subsections  of this  Agreement are for  convenience of reference only and
      are not to be considered in construing this Agreement.

                  9.11 Facsimile Signatures; Counterparts. This Agreement may be
      executed by facsimile  signatures and in any number of counterparts,  each
      of which shall be an original,  but all of which together shall constitute
      one agreement.

                  9.12  Broker's  Fees.  Except  as set forth on  Schedule  9.12
      hereof,  each party hereto represents and warrants that no agent,  broker,
      investment  banker,  person  or firm  acting  on  behalf  of or under  the
      authority  of such party  hereto is or will be entitled to any broker's or
      finder's fee or any other commission  directly or indirectly in connection
      with the  transactions  contemplated  herein.  Each party  hereto  further
      agrees to  indemnify  each other party for any claims,  losses or expenses
      incurred  by such other  party as a result of the  representation  in this
      Section 9.12 being untrue.

                                       26
<PAGE>

                  9.13  Construction.  Each  party  acknowledges  that its legal
      counsel  participated in the preparation of this Agreement and the Related
      Agreements and,  therefore,  stipulates that the rule of construction that
      ambiguities  are to be resolved  against the  drafting  party shall not be
      applied in the  interpretation  of this Agreement or any Related Agreement
      to favor any party against the other.

                  9.14 Composite and Guarantee Charge.  Each party  acknowledges
      that this Agreement,  the Note and the Reaffirmation Agreement are Related
      Agreements,  as that term is defined in the Composite Guarantee and Charge
      dated as of June 29, 2005 by and between the Company and the Purchaser.

             [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK

                                       27
<PAGE>

IN WITNESS  WHEREOF,  the parties hereto have executed the  SECURITIES  PURCHASE
AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                             PURCHASER:

ADAL GROUP, INC.                                     LAURUS MASTER FUND, LTD.

By: /s/ Nicholas Shrager                             By: /s/ Eugene Grin

Name: Nicholas Shrager                               Name: Eugene Grin

Title: Chief Executive Officer and President         Title: Director

                                       28
<PAGE>

                                    EXHIBIT A

                                FORM OF TERM NOTE

                                       A-1
<PAGE>

                                    EXHIBIT B

                                 FORM OF OPINION

                                      B-1
<PAGE>

                                    EXHIBIT C

                            FORM OF ESCROW AGREEMENT

                                      C-1

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