Document:

EXHIBIT 10.33

                         EQUITY LINE OF CREDIT AGEEMENT

      AGREEMENT dated as of the 14th day of June 2001, (the "AGREEMENT") between
Cornell  Capital  Partners,  L.P., a limited  partnership  (the  "Investor") and
Celerity Systems,  Inc., a corporation  organized and existing under the laws of
the State of Delaware (the "COMPANY").

      WHEREAS,  the  parties  desire  that,  upon the terms and  subject  to the
conditions  contained herein,  the Company shall issue and sell to the Investor,
from time to time as provided herein,  and the Investor shall purchase up to Ten
Million  ($10,000,000)  Dollars of the Company's  common stock, par value $0.001
per share  (the  "COMMON  STOCK"),  for a total  purchase  price of Ten  Million
($10,000,000) Dollars; and

      WHEREAS,  such investments will be made in reliance upon the provisions of
Regulation D ("REGULATION D") of the Securities Act of 1933, as amended, and the
regulations  promulgated  there under (the  "SECURITIES  ACT"), and or upon such
other exemption from the registration  requirements of the Securities Act as may
be available with respect to any or all of the investments to be made hereunder;
and

      WHEREAS, the Investor is a limited partnership and the business affairs of
the Investor are managed by Yorkville Advisors,  LLC ("YORKVILLE  Advisors"),  a
Delaware limited liability company.

      NOW, THEREFORE, the parties hereto agree as follows:

                                    ARTICLE I
                               CERTAIN DEFINITIONS

      Section  1.1  "ADVANCE"  shall mean the portion of the  Commitment  Amount
requested by the Company in the Advance Notice.

      Section 1.2  "ADVANCE  DATE"  shall mean the date Meir  Levin,  Esq./Chase
Manhattan  Escrow  Account is in receipt of the funds from the Investor and Meir
Levin, Esq., as the Investor's  Counsel, is in possession of free trading shares
from the Company and  therefore an Advance by the Investor to the Company can be
made and Meir Levin,  Esq. can release the free trading  shares to the Investor.
No Advance  Date shall be less than  twenty (20)  Trading  Days after an Advance
Notice Date.

      Section 1.3 "ADVANCE  NOTICE" shall mean a written  notice to the Investor
setting forth the Advance amount that the Company  requests from the Investor on
the Advance Date.

      Section  1.4  "ADVANCE  NOTICE  DATE"  shall  mean each  date the  Company
delivers to the  Investor an Advance  Notice  requiring  the Investor to advance
funds to the Company,  subject to the terms of this Agreement. No Advance Notice

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Date shall be less than twenty (20) Trading Days after the prior Advance  Notice
Date.

      Section 1.5 "ADVANCE NOTICE  WITHDRAWAL" shall mean that the Company shall
automatically withdraw that portion of the Advance Notice that does not meet the
Minimum Acceptable Price.

      Section 1.6 "AVERAGE  DAILY VOLUME" shall be computed using the Forty (40)
Trading Days prior to the relevant Advance Notice Date.

      Section 1.7 "BID PRICE" shall mean, on any date,  the average  closing bid
price (as  reported  by  Bloomberg  L.P.) of the Common  Stock on the  Principal
Market or if the Common Stock is not traded on a Principal  Market,  the average
reported  closing bid price for the Common  Stock,  as furnished by the National
Association of Securities Dealers,  Inc. for the lowest five (5) of the ten (10)
Trading Days in the applicable Pricing Period.

      Section 1.8  "CLOSING"  shall mean one of the  closings of a purchase  and
sale of Common Stock pursuant to Section 2.3.

      Section 1.9 "COMMITMENT  AMOUNT" shall mean the aggregate  amount of up to
Ten Million  Dollars  ($10,000,000)  which the Investor has agreed to provide to
the Company in order to purchase  the  Company's  Common  Stock  pursuant to the
terms and conditions of this Agreement.

      Section 1.10 "COMMITMENT  PERIOD" shall mean the period  commencing on the
earlier to occur of (i) the  Effective  Date,  or (ii) such  earlier date as the
Company and the  Investor  may  mutually  agree in writing,  and expiring on the
earliest to occur of (x) the date on which the Investor  shall have made payment
of Advances  pursuant to this  Agreement in the aggregate  amount of $10,000,000
(y) the date this  Agreement is  terminated  pursuant to Section 2.4, or (z) the
date occurring twenty four (24) months from the date hereof.

      Section 1.11 "COMMON  STOCK" shall mean the Company's  common  stock,  par
value $0.001 per share.

      Section  1.12  "CONDITION  SATISFACTION  DATE"  shall have the meaning set
forth in Section 7.2.

      Section 1.13 "CONSULTANT" shall mean Yorkville Advisors, LLC.

      Section 1.14  "DAMAGES"  shall mean any loss,  claim,  damage,  liability,
costs and expenses (including,  without limitation,  reasonable  attorney's fees
and disbursements and costs and expenses of expert witnesses and investigation).

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      Section 1.15  "EFFECTIVE  DATE" shall mean the date on which the SEC first
declares  effective  a  Registration  Statement  registering  the  resale of the
Registrable Securities as set forth in Section 7.2(a).

      Section 1.16      "ESCROW AGENT" shall mean Meir Levin, Attorney at Law.

      Section 1.17 "ESCROW  AGREEMENT" shall mean the escrow agreement among the
Company, the Investor, and Meir Levin, Esq. dated the date hereof.

      Section  1.18  "EXCHANGE  ACT" shall mean the  Securities  Exchange Act of
1934, as amended, and the rules and regulations promulgated there under.

      Section 1.19 "MARKET  PRICE" shall mean the average of the five (5) lowest
closing bid prices of the Common Stock during the Pricing Period.

      Section  1.20  "MATERIAL   ADVERSE   EFFECT"  shall  mean  any  condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to enter into and perform any of its obligations
under this  Agreement  or the  Registration  Rights  Agreement  in any  material
respect.

      Section 1.21  "MINIMUM  ACCEPTABLE  PRICE" shall mean seventy five percent
(75%) of the lowest  Closing  Bid Price of the  Company's  Common  Stock for the
twenty (20) Trading Days prior to a relevant Advance Notice Date.

      Section 1.22  "MAXIMUM  ADVANCE  AMOUNT" shall be equal to one hundred and
fifty percent  (150%) of the Average Daily Volume of the Company's  Common Stock
multiplied by the Purchase Price.

      Section  1.23 "NASD"  shall mean the National  Association  of  Securities
Dealers, Inc.

      Section  1.24  "PERSON"  shall  mean  an  individual,  a  corporation,   a
partnership, an association, a trust or other entity or organization,  including
a government or political subdivision or an agency or instrumentality thereof.

      Section 1.25  "PRICING  PERIOD" shall mean the ten (10) Trading Day period
beginning  on the first  Trading Day after an Advance  Notice Date and ending on
the Trading Day prior to the relevant Advance Date.

      Section 1.26 "PRINCIPAL MARKET" shall mean the Nasdaq National Market, the
Nasdaq SmallCap Market, the American Stock Exchange, the New York Stock Exchange
or the Over the Counter Bulletin Board  ("OTCBB"),  whichever is at the time the
principal trading exchange or market for the Common Stock.

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      Section 1.27 "PURCHASE  PRICE" shall be set at eighty two percent (82%) of
the Market Price during the Pricing Period.

      Section  1.28  "REGISTRABLE  SECURITIES"  shall  mean the shares of Common
Stock (i) in respect of which the  Registration  Statement has not been declared
effective by the SEC, (ii) which have not been sold under circumstances  meeting
all of the applicable  conditions of Rule 144 (or any similar  provision then in
force)  under the  Securities  Act  ("RULE  144") or (iii)  which  have not been
otherwise  transferred to a holder who may trade such shares without restriction
under the  Securities  Act, and the Company has delivered a new  certificate  or
other  evidence of  ownership  for such  securities  not  bearing a  restrictive
legend.

      Section 1.29  "REGISTRATION  RIGHTS AGREEMENT" shall mean the Registration
Rights Agreement dated the date hereof, regarding the filing of the Registration
Statement for the resale of the Registrable Securities, entered into between the
Company and the Investor.

      Section 1.30 "REGISTRATION  STATEMENT" shall mean a registration statement
on Form S-1 or Form S-3 (if use of such form is then  available  to the  Company
pursuant to the rules of the SEC and, if not, on such other form  promulgated by
the SEC for which the Company then  qualifies  and which counsel for the Company
shall deem appropriate,  and which form shall be available for the resale of the
Registrable  Securities  to be  registered  there under in  accordance  with the
provisions  of this  Agreement and the  Registration  Rights  Agreement,  and in
accordance with the intended method of distribution of such securities), for the
registration of the resale by the Investor of the Registrable  Securities  under
the Securities Act.

      Section  1.31  "REGULATION  D" shall  have the  meaning  set  forth in the
recitals of this Agreement.

      Section 1.32 "SEC" shall mean the Securities and Exchange Commission.

      Section  1.33  "SECURITIES  ACT" shall have the  meaning  set forth in the
recitals of this Agreement.

      Section  1.34 "SEC  DOCUMENTS"  shall mean Annual  Reports on Form 10-KSB,
Quarterly  Reports  on  Form  10-QSB,  Current  Reports  on Form  8-K and  Proxy
Statements  of the  Company as  supplemented  to the date  hereof,  filed by the
Company for a period of at least twelve (12) months  immediately  preceding  the
date  hereof or the  Advance  Date,  as the case may be,  until such time as the
Company  no  longer  has  an  obligation  to  maintain  the  effectiveness  of a
Registration Statement as set forth in the Registration Rights Agreement.

      Section  1.35  "SUBSCRIPTION  DATE"  shall  mean the  date on  which  this
Agreement is executed and delivered by the parties hereto.

      Section  1.36  "TRADING  DAY" shall mean any day during which the New York
Stock Exchange shall be open for business.

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                                   ARTICLE II
                                    ADVANCES

      Section 2.1 INVESTMENTS.
                  -----------

            (a)  ADVANCES.  Upon the  terms  and  conditions  set  forth  herein
(including,  without  limitation,  the provisions of Article VII hereof), on any
Advance  Notice Date the  Company may request an Advance by the  Investor by the
delivery  of an Advance  Notice.  The number of shares of Common  Stock that the
Investor  shall  receive for each Advance  shall be  determined  by dividing the
amount of the Advance by the  Purchase  Price.  No  fractional  shares  shall be
issued.  Fractional  shares  shall be rounded to the next higher whole number of
shares.  The aggregate maximum amount of all Advances that the Investor shall be
obligated to make under this Agreement shall not exceed the Commitment Amount.

      Section 2.2 MECHANICS.
                  ---------

            (a) ADVANCE NOTICE.  At any time during the Commitment  Period,  the
Company may deliver an Advance Notice to the Investor, subject to the conditions
set forth in Section 2.7 and Section 7.2; provided, however, the amount for each
Advance as designated by the Company in the applicable  Advance Notice shall not
be more than the Maximum  Advance Amount.  The aggregate  amount of the Advances
pursuant  to this  Agreement  shall not exceed  the  Commitment  Amount,  unless
otherwise agreed by the Investor in the Investor's sole and absolute discretion.
There will be a minimum of twenty (20) Trading Days between each Advance  Notice
Date.

            (b) DATE OF DELIVERY OF ADVANCE  NOTICE.  An Advance Notice shall be
deemed delivered on (i) the Trading Day it is received by facsimile or otherwise
by the Investor if such notice is received  prior to 12:00 noon Eastern Time, or
(ii) the  immediately  succeeding  Trading Day if it is received by facsimile or
otherwise after 12:00 noon Eastern Time on a Trading Day or at any time on a day
which is not a Trading Day. No Advance  Notice may be deemed  delivered on a day
that is not a Trading Day.

            (c) WITHDRAWAL OF ADVANCE  NOTICE.  The Company shall have the right
to withdraw that portion of an Advance that does not meet the Minimum Acceptable
Price.  For example if the lowest  Closing Bid Price of the Common Stock for the
twenty (20)  Trading  Days prior to the Advance  Notice Date is $0.20,  then the
Minimum  Acceptable  Price would be $0.15 (75% x $.20). For every day of the ten
(10)  Trading  Days after the Advance  Notice Date that the Closing Bid Price of
the Common Stock is below $0.15 the Advance  would be  automatically  reduced by
10%. If the number of shares to be issued in  connection  with the Advance  (not
taking  into  account  this  section) is 100,000  shares and the Common  Stock's
Closing Bid Price is below the Minimum  Acceptable  Price for two (2) of the ten
(10) Trading Days  following the Advance  Notice,  then upon written notice from
the Company,  the Advance would be reduced by twenty  percent (20%) (2 x 10%) or

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20,000  shares).  The  Advance  and the number of shares to be issued  under the
Advance would be reduced to eighty percent (80%) of the original Advance.

      Section 2.3 CLOSINGS.  On each Advance Date,  which shall be thirteen (13)
Trading Days after an Advance  Notice Date, (i) the Company shall deliver to the
Investor's Counsel,  as defined pursuant to the Escrow Agreement,  shares of the
Company's  Common Stock,  representing the amount of the Advance by the Investor
pursuant to Section 2.1 herein,  registered  in the name of the  Investor  which
shall be delivered to the Investor,  or otherwise in accordance  with the Escrow
Agreement and (ii) the Investor  shall deliver to the Escrow Agent the amount of
the Advance  specified  in the Advance  Notice by wire  transfer of  immediately
available  funds  which shall be  delivered  to the  Company,  or  otherwise  in
accordance with the Escrow  Agreement.  In addition,  on or prior to the Advance
Date,  each of the Company and the Investor  shall  deliver to the other through
the Investor's  Counsel all documents,  instruments and writings  required to be
delivered or reasonably  requested by either of them pursuant to this  Agreement
in order to implement and effect the transactions  contemplated herein.  Payment
of funds to the  Company  and  delivery  of the  Company's  Common  Stock to the
Investor shall occur in accordance with the conditions set forth above and those
contained in the Escrow  Agreement;  PROVIDED,  HOWEVER,  that to the extent the
Company has not paid the fees,  expenses,  and  disbursements  of the Investor's
Counsel and the  Consultant in accordance  with Section 12.4, the amount of such
fees, expenses,  and disbursements may be deducted by the Investor (and shall be
paid to the relevant  party) from the amount of the Advance with no reduction in
the  amount of shares of the  Company's  Common  Stock to be  delivered  on such
Advance Date.

      Section 2.4  TERMINATION OF INVESTMENT.  The obligation of the Investor to
make an  Advance to the  Company  pursuant  to this  Agreement  shall  terminate
permanently  (including  with  respect  to an  Advance  Date  that  has  not yet
occurred)  in the event that (i) there shall occur any stop order or  suspension
of the  effectiveness  of the  Registration  Statement for an aggregate of fifty
(50)  Trading  Days,  other  than due to the acts of the  Investor,  during  the
Commitment  Period,  or (ii) the Company  shall at any time fail  materially  to
comply with the requirements of Section 6.3, 6.4 or 6.7; PROVIDED, HOWEVER, that
this  termination  provision  shall not apply to any period  commencing upon the
filing of a post-effective  amendment to such Registration  Statement and ending
upon the date on which such post  effective  amendment is declared  effective by
the SEC.

      Section 2.5 AGREEMENT TO ADVANCE FUNDS.
                  --------------------------

            (a) The  Investor  agrees to  advance  the amount  specified  in the
Advance  Notice to the Company  after the  completion  of each of the  following
conditions and the other conditions set forth in this Agreement:

            (i)   the  execution   and  delivery  by  the  Company,   and  the
      Investor, of this Agreement, and the Exhibits hereto;

            (ii)  Investor's  Counsel shall have received the shares of Common
      Stock applicable to the Advance;

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<PAGE>

            (iii) the  Company's  Registration  Statement  with  respect  to the
      resale of the  Registrable  Securities in accordance with the terms of the
      Registration  Rights  Agreement shall have been declared  effective by the
      SEC;

            (iv) the  Company  shall have  obtained  all  material  permits  and
      qualifications  required by any applicable state for the offer and sale of
      the Registrable  Securities,  or shall have the availability of exemptions
      there from. The sale and issuance of the Registrable  Securities  shall be
      legally  permitted  by all laws and  regulations  to which the  Company is
      subject;

            (v) the  Company  shall have filed with the  Commission  in a timely
      manner all reports,  notices and other documents  required of a "reporting
      company" under the Exchange Act and applicable Commission regulations;

            (vi) the fees as set forth in  Section  12.4  below  shall have been
      paid or can be withheld as provided in Section 2.3; and

            (vii)       the  conditions  set forth in  Section  7.2 shall have
been satisfied.

      Section 2.6 LOCK UP PERIOD.
                  ---------------

            (a)  During  the terms of this  Agreement,  the  Company  shall not,
without the prior  consent of the  Investor,  issue or sell (i) any Common Stock
without  consideration or for a consideration  per share less than the Bid Price
on the  date of  issuance  or (ii)  issue or sell any  warrant,  option,  right,
contract,  call, or other security or instrument granting the holder thereof the
right to acquire Common Stock without  consideration or for a consideration  per
share less than the Bid Price on the date of issuance.

            (b) On the date hereof,  the Company shall obtain from each officer,
director and Affiliate, as defined below, a lock-up agreement, as defined below,
in the  form  annexed  hereto  as  Schedule  2.6 (a)  agreeing  to only  sell in
compliance  with the volume  limitation  of Rule 144.  "AFFILIATE"  for purposes
hereof  means,  with respect to any person or entity,  another  person or entity
that,  directly  or  indirectly,  (i) has a 5% or more  equity  interest in that
person or  entity,  (ii) has 5% or more  common  ownership  with that  person or
entity, (iii) controls that person or entity, or (iv) shares common control with
that person or entity.  "CONTROL" or "CONTROLS" for purposes hereof means that a
person or entity has the  power,  direct or  indirect,  to conduct or govern the
policies of another person or entity.

      Section 2.7 SHAREHOLDER  APPROVAL.  The Company's  obligations  under this
Agreement  are  subject to approval  of the  shareholders  of the Company of the
increase in the  authorized  shares of the  Company's  Common Stock  pursuant to
Delaware corporate law.

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                                   ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF INVESTOR

      Investor  hereby  represents and warrants to, and agrees with, the Company
that the  following  are true and as of the date  hereof and as of each  Advance
Date:

      Section  3.1  ORGANIZATION  AND   AUTHORIZATION.   The  Investor  is  duly
incorporated  or  organized  and  validly  existing in the  jurisdiction  of its
incorporation  or  organization  and has all  requisite  power and  authority to
purchase and hold the securities issuable hereunder.  The decision to invest and
the execution and delivery of this Agreement by such Investor,  the  performance
by such  Investor of its  obligations  hereunder  and the  consummation  by such
Investor of the transactions  contemplated  hereby have been duly authorized and
requires no other  proceedings on the part of the Investor.  The undersigned has
the right,  power and  authority to execute and deliver this  Agreement  and all
other  instruments ( including,  without  limitations,  the Registration  Rights
Agreement), on behalf of the Investor. This Agreement has been duly executed and
delivered by the Investor and,  assuming the  execution and delivery  hereof and
acceptance thereof by the Company,  will constitute the legal, valid and binding
obligations of the Investor, enforceable against the Investor in accordance with
its terms.

      Section 3.2  EVALUATION  OF RISKS.  The  Investor has such  knowledge  and
experience in financial tax and business  matters as to be capable of evaluating
the  merits  and risks of,  and  bearing  the  economic  risks  entailed  by, an
investment  in the Company and of protecting  its  interests in connection  with
this  transaction.  It recognizes that its investment in the Company  involves a
high degree of risk.

      Section 3.3. NO LEGAL ADVICE FROM THE COMPANY.  The Investor  acknowledges
that it had the  opportunity  to  review  this  Agreement  and the  transactions
contemplated  by this Agreement with his or its own legal counsel and investment
and tax  advisors.  The Investor is relying  solely on such counsel and advisors
and  not on any  statements  or  representations  of the  Company  or any of its
representatives  or agents for legal,  tax or investment  advice with respect to
this  investment,  the  transactions  contemplated  by  this  Agreement  or  the
securities laws of any jurisdiction.

      Section 3.4 INVESTMENT PURPOSE.  The securities are being purchased by the
Investor  for its own  account,  for  investment  and  without  any  view to the
distribution, assignment or resale to others or fractionalization in whole or in
part.  The Investor  agrees not to assign or in any way transfer the  Investor's
rights to the  securities  or any  interest  therein and  acknowledges  that the
Company  will not  recognize  any  purported  assignment  or transfer  except in
accordance with applicable  Federal and state  securities  laws. No other person
has or will have a direct or indirect beneficial interest in the securities. The
Investor  agrees not to sell,  hypothecate or otherwise  transfer the Investor's
securities  unless the securities  are  registered  under Federal and applicable
state securities laws or unless,  in the opinion of counsel  satisfactory to the
Company, an exemption from such laws is available.

      Section 3.5 ACCREDITED INVESTOR.  Investor is an "ACCREDITED  INVESTOR" as
that term is defined in Rule 501(a)(3) of Regulation D of the Securities Act.

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      Section 3.6 INFORMATION.  The Investor and its advisors (and its counsel),
if any,  have  been  furnished  with all  materials  relating  to the  business,
finances and  operations of the Company and  information  it deemed  material to
making an informed investment decision.  The Investor and its advisors,  if any,
have been  afforded  the  opportunity  to ask  questions  of the Company and its
management.  Neither such  inquiries nor any other due diligence  investigations
conducted by such Investor or its advisors, if any, or its representatives shall
modify,  amend  or  affect  the  Investor's  right  to  rely  on  the  Company's
representations  and  warranties  contained  in  this  Agreement.  The  Investor
understands that its investment  involves a high degree of risk. The Investor is
in a position  regarding  the  Company,  which,  based upon  employment,  family
relationship or economic bargaining power,  enabled and enables such Investor to
obtain information from the Company in order to evaluate the merits and risks of
this investment. The Investor has sought such accounting,  legal and tax advice,
as it has  considered  necessary to make an informed  investment  decision  with
respect to this transaction.

      Section 3.7 RECEIPT OF DOCUMENTS.  The Investor and his or its counsel has
received and read in their entirety: (i) this Agreement and the Exhibits annexed
hereto;  (ii) all due  diligence and other  information  necessary to verify the
accuracy and  completeness  of such  representations,  warranties and covenants;
(iii) the Company's Form 10-KSB for the year ended year ended December 31, 2000,
and Form 10-QSB for the quarter  ended March 31,  2001,  and (iv) answers to all
questions the Investor submitted to the Company (if any) regarding an investment
in the Company; and the Investor has relied on the information contained therein
and has not been  furnished  any  other  documents,  literature,  memorandum  or
prospectus.

      Section  3.8  REGISTRATION  RIGHTS  AGREEMENT  AND ESCROW  AGREEMENT.  The
parties have  entered  into the  Registration  Rights  Agreement  and the Escrow
Agreement, each dated the date hereof.

      Section 3.9 NO GENERAL  SOLICITATION.  Neither the Company, nor any of its
affiliates,  nor any person  acting on its or their  behalf,  has engaged in any
form of general  solicitation  or general  advertising  (within  the  meaning of
Regulation D under the Securities  Act) in connection  with the offer or sale of
the shares of Common Stock offered hereby.

      Section 3.10 NOT AN AFFILIATE. The Investor is not an officer, director or
a person  that  directly,  or  indirectly  through  one or more  intermediaries,
controls or is controlled by, or is under common control with the Company or any
"  Affiliate"  of the  Company  (as  that  term is  defined  in Rule  405 of the
Securities  Act).  The Investor  agrees that it will not, and that it will cause
its  Affiliates  not to,  engage in any short sales of, or hedging  transactions
with respect to, the Common Stock.

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                                   ARTICLE IV
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

      Except as stated below or on the disclosure schedules attached hereto, the
Company hereby represents and warrants to, and covenants with, the Investor that
the following are true and correct as of the date hereof:

      Section  4.1   ORGANIZATION  AND   QUALIFICATION.   The  Company  is  duly
incorporated  or  organized  and  validly  existing in the  jurisdiction  of its
incorporation  or  organization  and  has  all  requisite  power  and  authority
corporate  power to own their  properties  and to carry on their business as now
being conducted. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the  business  conducted  by it makes such  qualification
necessary,  except to the extent  that the failure to be so  qualified  or be in
good standing  would not have a Material  Adverse  Effect on the Company and its
subsidiaries taken as a whole.

      Section   4.2.   AUTHORIZATION,   ENFORCEMENT,   COMPLIANCE   WITH   OTHER
INSTRUMENTS.  (i) The Company has the requisite corporate power and authority to
enter into and perform this Agreement, the Registration Rights Agreement and any
related  agreements,  in accordance with the terms hereof and thereof,  (ii) the
execution and delivery of this Agreement, the Registration Rights Agreement, the
Escrow Agreement and any related  agreements by the Company and the consummation
by it of the  transactions  contemplated  hereby  and  thereby,  have  been duly
authorized  by the  Company's  Board of  Directors  and no  further  consent  or
authorization  is  required  by the  Company,  its  Board  of  Directors  or its
stockholders,  (iii) except as disclosed in Section  4.3,  this  Agreement,  the
Registration  Rights Agreement,  the Escrow Agreement and any related agreements
have been duly executed and delivered by the Company,  (iv) this Agreement,  the
Registration  Rights Agreement,  the Escrow Agreement and assuming the execution
and delivery  thereof and acceptance by the Investor and any related  agreements
constitute the valid and binding  obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by general  principles of equity or applicable  bankruptcy,  insolvency,
reorganization,   moratorium,  liquidation  or  similar  laws  relating  to,  or
affecting generally, the enforcement of creditors' rights and remedies.

      Section 4.3 CAPITALIZATION.  As of the date hereof, the authorized capital
stock of the Company  consists of 50,000,000  shares of Common Stock,  par value
$0.001 per share, of which 49,521,100 shares were issued and outstanding and 100
shares of Series B Preferred  Stock.  All of such  outstanding  shares have been
validly issued and are fully paid and nonassessable.  Except as disclosed in the
SEC Documents (as defined in Section 4.5 hereof),  no shares of Common Stock are
subject  to  preemptive  rights  or any  other  similar  rights  or any liens or
encumbrances  suffered or permitted  by the Company.  Except as disclosed in the
SEC  Documents,  as of the date hereof,  (i) there are no  outstanding  options,
warrants,  scrip,  rights to subscribe to, calls or commitments of any character
whatsoever  relating to, or securities or rights convertible into, any shares of
capital  stock  of  the  Company  or  any of  its  subsidiaries,  or  contracts,
commitments,  understandings  or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional  shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to

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<PAGE>

subscribe to, calls or commitments of any character  whatsoever  relating to, or
securities  or rights  convertible  into,  any  shares of  capital  stock of the
Company  or  any  of its  subsidiaries,  (ii)  there  are  no  outstanding  debt
securities  and (iii) there are no  agreements or  arrangements  under which the
Company or any of its  subsidiaries  is obligated to register the sale of any of
their  securities  under the Securities Act (except pursuant to the Registration
Rights   Agreement).   There  are  no  securities  or   instruments   containing
anti-dilution or similar  provisions that will be triggered by this Agreement or
any related  agreement or the consummation of the transactions  described herein
or therein..  The Company has furnished to the Investor true and correct  copies
of the Company's  Certificate of  Incorporation,  as amended and as in effect on
the date hereof (the "CERTIFICATE OF INCORPORATION"), and the Company's By-laws,
as in effect on the date hereof (the "BY-LAWS"), and the terms of all securities
convertible  into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.

      Section 4.4 NO CONFLICT.  Subject to Section 2.7, the execution,  delivery
and  performance  of this Agreement by the Company and the  consummation  by the
Company  of the  transactions  contemplated  hereby  will  not (i)  result  in a
violation of the Certificate of  Incorporation,  any certificate of designations
of any  outstanding  series of preferred stock of the Company or By-laws or (ii)
conflict with or constitute a default (or an event which with notice or lapse of
time or both  would  become a  default)  under,  or give to others any rights of
termination,   amendment,   acceleration  or  cancellation  of,  any  agreement,
indenture or  instrument  to which the Company or any of its  subsidiaries  is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree  (including  federal and state  securities  laws and  regulations and the
rules and  regulations  of the  Principal  Market on which the  Common  Stock is
quoted)  applicable  to the Company or any of its  subsidiaries  or by which any
material property or asset of the Company or any of its subsidiaries is bound or
affected and which would cause a Material Adverse Effect. Except as disclosed in
the SEC Documents,  neither the Company nor its  subsidiaries is in violation of
any term of or in default under its Certificate of  Incorporation  or By-laws or
their organizational charter or by-laws, respectively, or any material contract,
agreement, mortgage,  indebtedness,  indenture,  instrument, judgment, decree or
order or any  statute,  rule or  regulation  applicable  to the  Company  or its
subsidiaries.  The  business of the Company  and its  subsidiaries  is not being
conducted  in  violation  of any  material  law,  ordinance,  regulation  of any
governmental entity.  Except as specifically  contemplated by this Agreement and
as required under the Securities Act and any applicable  state  securities laws,
the Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental  agency in order
for  it to  execute,  deliver  or  perform  any  of  its  obligations  under  or
contemplated  by  this  Agreement  or  the  Registration   Rights  Agreement  in
accordance  with the terms  hereof or  thereof.  All  consents,  authorizations,
orders,  filings  and  registrations  which the  Company is  required  to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date  hereof.  The Company and its  subsidiaries  are unaware of any fact or
circumstance that might give rise to any of the foregoing.

      Section 4.5 SEC DOCUMENTS;  FINANCIAL  STATEMENTS.  Since January 1, 2000,
the  Company  has filed all  reports,  schedules,  forms,  statements  and other
documents required to be filed by it with the SEC under of the Exchange Act (all
of the foregoing  filed prior to the date hereof and all amendments  thereto and

                                       11
<PAGE>

all exhibits included therein and financial statements and schedules thereto and
documents  incorporated by reference therein,  being hereinafter  referred to as
the  "SEC  DOCUMENTS").  The  Company  has  delivered  to  the  Investor  or its
representatives,    or   made   available   through   the   SEC's   website   at
http://www.sec.gov,  true and complete copies of the SEC Documents.  As of their
respective  dates, the financial  statements of the Company disclosed in the SEC
Documents  (the  "FINANCIAL  STATEMENTS")  complied  as to form in all  material
respects with  applicable  accounting  requirements  and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared  in  accordance   with  generally   accepted   accounting   principles,
consistently  applied,  during  the  periods  involved  (except  (i)  as  may be
otherwise  indicated in such financial  statements or the notes thereto, or (ii)
in the case of  unaudited  interim  statements,  to the extent  they may exclude
footnotes or may be condensed or summary  statements)  and fairly present in all
material respects the financial  position of the Company as of the dates thereof
and the  results of its  operations  and cash flows for the  periods  then ended
(subject,  in the  case  of  unaudited  statements,  to  normal  year-end  audit
adjustments).  No other  information  provided by or on behalf of the Company to
the  Investor  which is not  included in the SEC  Documents  contains any untrue
statement of a material  fact or omits to state any material  fact  necessary in
order to make the statements  therein,  in the light of the circumstances  under
which they were made, not misleading.

      Section 4.6. 10B-5. The SEC Documents do not include any untrue statements
of material  fact,  nor do they omit to state any material  fact  required to be
stated  therein  necessary  to  make  the  statements  made,  in  light  of  the
circumstances under which they were made, not misleading.

      Section  4.7 NO  DEFAULT.  Except  as  disclosed  Section  4.4 or the  SEC
Documents, the Company is not in default in the performance or observance of any
material  obligation,   agreement,   covenant  or  condition  contained  in  any
indenture,  mortgage, deed of trust or other material instrument or agreement to
which it is a party or by which it is or its  property  is bound and neither the
execution,  nor the delivery by the Company,  nor the performance by the Company
of its  obligations  under this  Agreement or any of the exhibits or attachments
hereto will  conflict  with or result in the breach or  violation  of any of the
terms or  provisions  of, or  constitute  a default or result in the creation or
imposition  of any lien or charge on any  assets or  properties  of the  Company
under  its  Certificate  of  Incorporation,  By-Laws,  any  material  indenture,
mortgage, deed of trust or other material agreement applicable to the Company or
instrument  to which  the  Company  is a party or by which it is  bound,  or any
statute,  or any decree,  judgment,  order,  rules or regulation of any court or
governmental  agency  or  body  having  jurisdiction  over  the  Company  or its
properties,  in each  case  which  default,  lien or charge is likely to cause a
Material Adverse Effect on the Company's business or financial condition.

      Section 4.8 ABSENCE OF EVENTS OF DEFAULT.  Except for matters described in
the SEC Documents and/or this Agreement,  no Event of Default, as defined in the
respective  agreement to which the Company is a party, and no event which,  with
the giving of notice or the  passage of time or both,  would  become an Event of
Default (as so  defined),  has occurred  and is  continuing,  which would have a
Material  Adverse  Effect  on the  Company's  business,  properties,  prospects,
financial condition or results of operations.

                                       12
<PAGE>

      Section 4.9 INTELLECTUAL PROPERTY RIGHTS. The Company and its subsidiaries
own or possess adequate rights or licenses to use all material trademarks, trade
names, service marks, service mark registrations, service names, patents, patent
rights,    copyrights,    inventions,    licenses,    approvals,    governmental
authorizations,  trade secrets and rights  necessary to conduct their respective
businesses as now conducted.  The Company and its  subsidiaries  do not have any
knowledge of any  infringement by the Company or its  subsidiaries of trademark,
trade name rights, patents,  patent rights,  copyrights,  inventions,  licenses,
service names, service marks, service mark registrations,  trade secret or other
similar  rights of others,  and, to the  knowledge of the  Company,  there is no
claim,  action or proceeding being made or brought against,  or to the Company's
knowledge,  being threatened against, the Company or its subsidiaries  regarding
trademark,  trade name, patents, patent rights, invention,  copyright,  license,
service names, service marks, service mark registrations,  trade secret or other
infringement;  and the Company and its  subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.

      Section  4.10  EMPLOYEE  RELATIONS  Neither  the  Company  nor  any of its
subsidiaries  is involved in any labor  dispute  nor,  to the  knowledge  of the
Company or any of its subsidiaries,  is any such dispute threatened. None of the
Company's or its subsidiaries'  employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

      Section 4.11 ENVIRONMENTAL  LAWS. The Company and its subsidiaries are (i)
in compliance with any and all applicable material foreign,  federal,  state and
local  laws and  regulations  relating  to the  protection  of human  health and
safety,  the environment or hazardous or toxic substances or wastes,  pollutants
or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses
or other  approvals  required  of them under  applicable  Environmental  Laws to
conduct their  respective  businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval.

      Section 4.12 TITLE. Except as set forth in the SEC Documents,  the Company
has good and marketable title to its properties and material assets owned by it,
free and clear of any pledge,  lien,  security interest,  encumbrance,  claim or
equitable  interest  other than such as are not  material to the business of the
Company.  Any real property and  facilities  held under lease by the Company and
its subsidiaries are held by them under valid, subsisting and enforceable leases
with such  exceptions as are not material and do not interfere with the use made
and proposed to be made of such  property  and  buildings by the Company and its
subsidiaries.

      Section  4.13  INSURANCE.  The  Company and each of its  subsidiaries  are
insured by insurers of recognized financial  responsibility  against such losses
and risks and in such  amounts  as  management  of the  Company  believes  to be
prudent  and  customary  in  the   businesses  in  which  the  Company  and  its
subsidiaries  are engaged.  Neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such  subsidiary has any reason to believe that it will not be able to renew
its existing  insurance  coverage as and when such coverage expires or to obtain
similar  coverage  from  similar  insurers as may be  necessary  to continue its

                                       13
<PAGE>

business at a cost that would not materially and adversely affect the condition,
financial or otherwise,  or the earnings,  business or operations of the Company
and its subsidiaries, taken as a whole.

      Section 4.14 REGULATORY PERMITS.  The Company and its subsidiaries possess
all material certificates,  authorizations and permits issued by the appropriate
federal,  state or foreign  regulatory  authorities  necessary to conduct  their
respective  businesses,  and neither the  Company  nor any such  subsidiary  has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.

      Section 4.15  INTERNAL  ACCOUNTING  CONTROLS.  The Company and each of its
subsidiaries  maintain a system of internal  accounting  controls  sufficient to
provide  reasonable  assurance that (i)  transactions are executed in accordance
with  management's  general or specific  authorizations,  (ii)  transactions are
recorded  as  necessary  to  permit  preparation  of  financial   statements  in
conformity with generally accepted  accounting  principles and to maintain asset
accountability,  (iii) access to assets is  permitted  only in  accordance  with
management's   general  or  specific   authorization   and  (iv)  the   recorded
accountability  for assets is compared  with the existing  assets at  reasonable
intervals and appropriate action is taken with respect to any differences.

      Section 4.16 NO MATERIAL ADVERSE BREACHES, ETC. Except as set forth in the
SEC Documents, neither the Company nor any of its subsidiaries is subject to any
charter,  corporate or other legal restriction,  or any judgment, decree, order,
rule or  regulation  which in the judgment of the  Company's  officers has or is
expected  in the  future to have a  Material  Adverse  Effect  on the  business,
properties,  operations, financial condition, results of operations or prospects
of  the  Company  or  its  subsidiaries.  Neither  the  Company  nor  any of its
subsidiaries  is in breach of any contract or  agreement  which  breach,  in the
judgment  of the  Company's  officers,  has or is  expected  to have a  Material
Adverse Effect on the business,  properties,  operations,  financial  condition,
results of operations or prospects of the Company or its subsidiaries.

      Section  4.17  ABSENCE  OF  LITIGATION.  Except  as set  forth  in the SEC
Documents, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board, government agency,  self-regulatory  organization
or body pending against or affecting the Company, the Common Stock or any of the
Company's subsidiaries, wherein an unfavorable decision, ruling or finding would
(i) have a Material Adverse Effect on the transactions  contemplated hereby (ii)
adversely affect the validity or enforceability  of, or the authority or ability
of the Company to perform its  obligations  under,  this Agreement or any of the
documents contemplated herein, or (iii) except as expressly disclosed in the SEC
Documents,  have  a  Material  Adverse  Effect  on  the  business,   operations,
properties,  financial  condition or results of operation of the Company and its
subsidiaries taken as a whole.

      Section 4.18 SUBSIDIARIES.  Except as disclosed in the SEC Documents,  the
Company does not presently own or control, directly or indirectly,  any interest
in any other corporation, partnership, association or other business entity.

                                       14
<PAGE>

      Section 4.20 TAX STATUS. The Company and each of its subsidiaries has made
or filed all federal  and state  income and all other tax  returns,  reports and
declarations required by any jurisdiction to which it is subject and (unless and
only to the extent that the Company and each of its  subsidiaries  has set aside
on its books  provisions  reasonably  adequate for the payment of all unpaid and
unreported  taxes)  has paid all taxes and other  governmental  assessments  and
charges  that are  material  in amount,  shown or  determined  to be due on such
returns,  reports and  declarations,  except those being contested in good faith
and has set aside on its books provision  reasonably adequate for the payment of
all taxes for periods  subsequent to the periods to which such returns,  reports
or declarations  apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any  jurisdiction,  and the officers of the
Company know of no basis for any such claim.

      Section  4.21  CERTAIN  TRANSACTIONS.  Except  as set  forth  in  the  SEC
Documents,  none of the  officers,  directors,  or  employees  of the Company is
presently a party to any  transaction  with the Company (other than for services
as employees,  officers and  directors),  including  any contract,  agreement or
other  arrangement  providing for the furnishing of services to or by, providing
for rental of real or  personal  property  to or from,  or  otherwise  requiring
payments to or from any officer,  director or such employee or, to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any
officer,  director,  or any such  employee has a  substantial  interest or is an
officer, director, trustee or partner.

      Section 4.22 FEES AND RIGHTS OF FIRST REFUSAL.  Except as set forth in the
SEC  Documents,  the Company is not  obligated to offer the  securities  offered
hereunder on a right of first  refusal  basis or otherwise to any third  parties
including,  but not limited to, current or former  shareholders  of the Company,
underwriters, brokers, agents or other third parties.

      Section 4.23 USE OF PROCEEDS. The Company represents that the net proceeds
from this offering will be used for working  capital  purposes.  However,  in no
event shall the net proceeds  from this  offering be used by the Company for the
payment (or loaned to any such person for the payment) of any judgment, or other
liability,  incurred by any executive officer, officer, director, or employee of
the Company.

      Section 4.24 FURTHER  REPRESENTATION AND WARRANTIES OF THE Company. For so
long  as  any  securities   issuable  hereunder  held  by  the  Investor  remain
outstanding, the Company acknowledges,  represents,  warrants and agrees that it
will use commercially  reasonable  efforts to maintain the listing of its Common
Stock on the Principal Market

      Section 4.25 OPINION OF COUNSEL.  Investor shall receive an opinion letter
from counsel to the Company on the date hereof.

      Section 4.26 OPINION OF COUNSEL. The Company will obtain for the Investor,
at the  Company's  expense,  any  and  all  opinions  of  counsel  which  may be
reasonably  required in order to sell the securities  issuable hereunder without
restriction.

                                       15
<PAGE>

      Section 4.27 DILUTION. The Company is aware and acknowledges that issuance
of shares of the  Company's  Common  Stock  could  cause  dilution  to  existing
shareholders and could  significantly  increase the outstanding number of shares
of Common Stock.

                                    ARTICLE V
                                 INDEMNIFICATION

      The Investor and the Company  represent  to the other the  following  with
respect to itself:

      Section  5.1  INDEMNIFICATION.  (a) In  consideration  of  the  Investor's
execution  and  delivery  of  this  Agreement,  and  in  addition  to all of the
Company's  other  obligations  under this  Agreement,  the Company shall defend,
protect,  indemnify and hold harmless the  Investor,  and all of it's  officers,
directors,  partners, employees and agents (including, without limitation, those
retained in connection  with the  transactions  contemplated  by this Agreement)
(collectively, the "INVESTOR INDEMNITEES") from and against any and all actions,
causes of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith  (irrespective of whether any such
Investor Indemnitee is a party to the action for which indemnification hereunder
is sought),  and including  reasonable  attorneys' fees and  disbursements  (the
"INDEMNIFIED LIABILITIES"),  incurred by the Investor Indemnitees or any of them
as a result of, or arising out of, or relating to (a) any  misrepresentation  or
breach of any  representation  or warranty made by the Company in this Agreement
or the  Registration  Rights Agreement or any other  certificate,  instrument or
document  contemplated  hereby  or  thereby,  (b) any  breach  of any  covenant,
agreement  or  obligation  of the Company  contained  in this  Agreement  or the
Registration  Rights Agreement or any other certificate,  instrument or document
contemplated  hereby  or  thereby,  or (c) any  cause of  action,  suit or claim
brought or made against such Investor  Indemnitee  not arising out of any action
or inaction of an Investor Indemnitee,  and arising out of or resulting from the
execution,  delivery,  performance or enforcement of this Agreement or any other
instrument,  document  or  agreement  executed  pursuant  hereto  by  any of the
Investor  Indemnitees.  To the  extent  that the  foregoing  undertaking  by the
Company may be unenforceable for any reason,  the Company shall make the maximum
contribution  to the  payment  and  satisfaction  of  each  of  the  Indemnified
Liabilities, which is permissible under applicable law.

      (b) In  consideration  of the  Company's  execution  and  delivery of this
Agreement, and in addition to all of the Investor's other obligations under this
Agreement,  the Investor shall defend, protect,  indemnify and hold harmless the
Company and all of its officers, directors,  shareholders,  employees and agents
(including,   without   limitation,   those  retained  in  connection  with  the
transactions  contemplated  by  this  Agreement)  (collectively,   the  "COMPANY
INDEMNITEES") from and against any and all Indemnified  Liabilities  incurred by
the  Company  Indemnitees  or any of them as a result of, or arising  out of, or
relating  to (a)  any  misrepresentation  or  breach  of any  representation  or
warranty  made  by the  Investor  in this  Agreement,  the  Registration  Rights
Agreement, or any instrument or document contemplated hereby or thereby executed
by the Investor, (b) any breach of any covenant,  agreement or obligation of the
Investor(s)  contained in this Agreement,  the Registration  Rights Agreement or
any other  certificate,  instrument or document  contemplated  hereby or thereby

                                       16
<PAGE>

executed by the Investor,  or (c) any cause of action,  suit or claim brought or
made against such Company  Indemnitee  based on  misrepresentations  or due to a
breach by the  Investor  and arising  out of or  resulting  from the  execution,
delivery,  performance or enforcement of this Agreement or any other instrument,
document  or  agreement   executed   pursuant  hereto  by  any  of  the  Company
Indemnitees. To the extent that the foregoing undertaking by the Investor may be
unenforceable for any reason,  the Investor shall make the maximum  contribution
to the payment and satisfaction of each of the Indemnified Liabilities, which is
permissible under applicable law.

                                   ARTICLE VI
                            COVENANTS OF THE COMPANY

      Section 6.1 REGISTRATION  RIGHTS. The Company shall cause the Registration
Rights Agreement to remain in full force and effect and the Company shall comply
in all material respects with the terms thereof.

      Section 6.2 LISTING OF COMMON STOCK. The Company shall maintain the Common
Stock's authorization for quotation on the OTCBB.

      Section 6.3 EXCHANGE ACT  REGISTRATION.  The Company will cause its Common
Stock to continue to be registered under Section 12(g) of the Exchange Act, will
file in a timely  manner all  reports  and other  documents  required of it as a
reporting  company  under the  Exchange Act and will not take any action or file
any document  (whether or not permitted by Exchange Act or the rules there under
to  terminate  or suspend  such  registration  or to  terminate  or suspend  its
reporting and filing obligations under said Exchange Act.

      Section  6.4  TRANSFER  AGENT  INSTRUCTIONS.  Upon  each  Closing  and the
effectiveness  of the  Registration  Statement and resale of the Common Stock by
the Investor,  the Company will deliver  instructions  to its transfer  agent to
issue shares of Common Stock free of restrictive legends.

      Section 6.5 CORPORATE EXISTENCE. The Company will take all steps necessary
to preserve and continue the corporate existence of the Company.

      Section 6.6 NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF
RIGHT TO MAKE AN ADVANCE.  The Company will immediately notify the Investor upon
its becoming aware of the  occurrence of any of the following  events in respect
of a  registration  statement or related  prospectus  relating to an offering of
Registrable Securities: (i) receipt of any request for additional information by
the SEC or any other Federal or state  governmental  authority during the period
of effectiveness of the Registration  Statement for amendments or supplements to
the registration  statement or related prospectus;  (ii) the issuance by the SEC
or  any  other  Federal  or  state  governmental  authority  of any  stop  order
suspending the effectiveness of the Registration  Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the  Registrable  Securities for sale in any  jurisdiction  or the initiation or
threatening of any proceeding for such purpose;  (iv) the happening of any event
that  makes  any  statement  made  in  the  Registration  Statement  or  related
prospectus of any document  incorporated or deemed to be incorporated therein by

                                       17
<PAGE>

reference  untrue in any  material  respect or that  requires  the making of any
changes in the Registration Statement,  related prospectus or documents so that,
in the case of the  Registration  Statement,  it will  not  contain  any  untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements  therein not misleading,  and
that in the case of the  related  prospectus,  it will not  contain  any  untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements  therein, in the light of the
circumstances under which they were made, not misleading;  and (v) the Company's
reasonable  determination  that a  post-effective  amendment to the Registration
Statement would be appropriate;  and the Company will promptly make available to
the Investor any such  supplement  or amendment to the related  prospectus.  The
Company  shall not  deliver  to the  Investor  any  Advance  Notice  during  the
continuation of any of the foregoing events.

      Section 6.7 EXPECTATIONS  REGARDING ADVANCE NOTICES.  Within ten (10) days
after the  commencement  of each calendar  quarter  occurring  subsequent to the
commencement of the Commitment Period, the Company must notify the Investor,  in
writing, as to its reasonable expectations as to the dollar amount it intends to
raise  during such  calendar  quarter,  if any,  through the issuance of Advance
Notices.  Such  notification  shall  constitute  only the  Company's  good faith
estimate and shall in no way  obligate the Company to raise such amount,  or any
amount,  or otherwise limit its ability to deliver Advance Notices.  The failure
by the  Company  to comply  with this  provision  can be cured by the  Company's
notifying  the  Investor,   in  writing,  at  any  time  as  to  its  reasonable
expectations with respect to the current calendar quarter.

      Section 6.8  CONSOLIDATION;  MERGER.  The  Company  shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into,  or a transfer  of all or  substantially  all the assets of the Company to
another  entity (a  "CONSOLIDATION  EVENT")  unless the  resulting  successor or
acquiring  entity  (if  not the  Company)  assumes  by  written  instrument  the
obligation to deliver to the Investor such shares of stock and/or  securities as
the Investor is entitled to receive pursuant to this Agreement.

      Section 6.9 ISSUANCE OF THE COMPANY'S COMMON STOCK. The sale of the shares
of Common Stock shall be made in accordance with the provisions and requirements
of Regulation D and any applicable state securities law.

                                   ARTICLE VII
               CONDITIONS FOR ADVANCE AND CONDITIONS TO CLOSING

      Section 7.1 CONDITIONS  PRECEDENT TO THE  OBLIGATIONS OF THE COMPANY.  The
obligation hereunder of the Company to issue and sell the shares of Common Stock
to the  Investor  incident to each  Closing is subject to the  satisfaction,  or
waiver by the Company, at or before each such Closing, of each of the conditions
set forth below.

                                       18
<PAGE>

            (a)   ACCURACY OF THE INVESTOR'S REPRESENTATION AND WARRANTIES.  The
representations  and warranties of the Investor shall be true and correct in all
material respects.

            (b) PERFORMANCE BY THE INVESTOR.  The Investor shall have performed,
satisfied  and  complied in all  respects  with all  covenants,  agreements  and
conditions  required by this Agreement and the Registration  Rights Agreement to
be  performed,  satisfied  or complied  with by the Investor at or prior to such
Closing.

      Section 7.2 CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO DELIVER AN
ADVANCE NOTICE AND THE  OBLIGATION OF THE INVESTOR TO PURCHASE  SHARES OF COMMON
STOCK.  The right of the Company to deliver an Advance Notice and the obligation
of the Investor  hereunder to acquire and pay for shares of the Company's Common
Stock  incident  to a Closing is subject  to the  satisfaction  or waiver by the
Investor,  on (i) the  date of  delivery  of such  Advance  Notice  and (ii) the
applicable Advance Date (each a "CONDITION  SATISFACTION  DATE"), of each of the
following conditions:

            (a) REGISTRATION OF THE COMMON STOCK WITH THE SEC. The Company shall
have filed with the SEC a  Registration  Statement with respect to the resale of
the  Registrable  Securities  in accordance  with the terms of the  Registration
Rights  Agreement.  As set  forth  in the  Registration  Rights  Agreement,  the
Registration  Statement shall have previously  become effective and shall remain
effective on each  Condition  Satisfaction  Date and (i) neither the Company nor
the Investor  shall have  received  notice that the SEC has issued or intends to
issue a stop order with  respect to the  Registration  Statement or that the SEC
otherwise  has  suspended or withdrawn  the  effectiveness  of the  Registration
Statement, either temporarily or permanently, or intends or has threatened to do
so (unless the SEC's concerns have been addressed and the Investor is reasonably
satisfied that the SEC no longer is considering or intends to take such action),
and (ii) no other  suspension of the use or withdrawal of the  effectiveness  of
the Registration  Statement or related  prospectus shall exist. The Registration
Statement  must  have  been  declared  effective  by the SEC  prior to the first
Advance Notice Date.

            (b)  AUTHORITY.  The  Company  shall have  obtained  all permits and
qualifications   required  by  any  applicable  state  in  accordance  with  the
Registration  Rights  Agreement  for the offer and sale of the  shares of Common
Stock,  or shall have the  availability  of exemptions  there from. The sale and
issuance of the shares of Common  Stock shall be legally  permitted  by all laws
and regulations to which the Company is subject.

            (c)  NO  FUNDAMENTAL CHANGES.  There shall not exist any fundamental
changes to the information set forth in the  Registration  Statement which would
require  the  Company to file a  post-effective  amendment  to the  Registration
Statement.

            (d)  PERFORMANCE BY THE COMPANY.  The Company shall have  performed,
satisfied and complied in all material  respects with all covenants,  agreements
and conditions  required by this Agreement and the Registration Rights Agreement
to be  performed,  satisfied or complied with by the Company at or prior to each
Condition Satisfaction Date.

                                       19
<PAGE>

            (e) NO INJUNCTION.  No statute, rule,  regulation,  executive order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by any court or governmental  authority of competent  jurisdiction that
prohibits or directly and adversely affects any of the transactions contemplated
by this Agreement, and no proceeding shall have been commenced that may have the
effect  of   prohibiting  or  adversely   affecting  any  of  the   transactions
contemplated by this Agreement.

            (f) NO SUSPENSION  OF TRADING IN OR DELISTING OF COMMON  STOCK.  The
trading of the Common Stock is not suspended by the SEC or the Principal  Market
(if the Common Stock is traded on a Principal Market). The issuance of shares of
Common Stock with respect to the applicable  Closing,  if any, shall not violate
the shareholder  approval  requirements  of the Principal  Market (if the Common
Stock is traded on a Principal market).  The Company shall not have received any
notice  threatening  the continued  listing of the Common Stock on the Principal
Market (if the Common Stock is traded on a Principal Market).

            (g)  MAXIMUM ADVANCE AMOUNT. The amount of the advance requested by
the Company does not exceed the Maximum Advance Amount.

            (h)  NO  KNOWLEDGE.  The  Company has no knowledge of any event more
likely than not to have the effect of causing such Registration  Statement to be
suspended or otherwise ineffective.

            (i) OTHER. On each Condition  Satisfaction  Date, the Investor shall
have received and been  reasonably  satisfied with such other  certificates  and
documents as shall have been  reasonably  requested by the Investor in order for
the Investor to confirm the Company's  satisfaction  of the conditions set forth
in this Section 7.2, including, without limitation, a certificate executed by an
executive  officer of the Company and to the effect that all the  conditions  to
such Closing shall have been  satisfied as at the date of each such  certificate
substantially in the form annexed hereto on EXHIBIT A.

                                  ARTICLE VIII
         DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION

      Section 8.1 DUE DILIGENCE REVIEW.  Prior to the filing of the Registration
Statement the Company  shall make  available  for  inspection  and review by the
Investor,  advisors to and  representatives  of the  Investor,  any  underwriter
participating in any disposition of the Registrable  Securities on behalf of the
Investor pursuant to the Registration Statement, any such registration statement
or amendment or supplement  thereto or any blue sky,  NASD or other filing,  all
financial and other  records,  all SEC Documents and other filings with the SEC,
and all other  corporate  documents  and  properties  of the  Company  as may be
reasonably  necessary  for the purpose of such review,  and cause the  Company's
officers,  directors  and  employees to supply all such  information  reasonably
requested by the Investor or any such representative,  advisor or underwriter in
connection with such Registration Statement (including,  without limitation,  in

                                       20
<PAGE>

response to all questions and other  inquiries  reasonably  made or submitted by
any of them),  prior to and from time to time after the filing and effectiveness
of the Registration  Statement for the sole purpose of enabling the Investor and
such representatives, advisors and underwriters and their respective accountants
and attorneys to conduct  initial and ongoing due diligence  with respect to the
Company and the accuracy of the Registration Statement.

      Section 8.2 NON-DISCLOSURE OF NON-PUBLIC INFORMATION.
                  ----------------------------------------

            (a) The Company  shall not disclose  non-public  information  to the
Investor,  advisors  to or  representatives  of the  Investor  unless  prior  to
disclosure of such information the Company  identifies such information as being
non-public   information   and  provides  the   Investor,   such   advisors  and
representatives  with the  opportunity  to  accept  or  refuse  to  accept  such
non-public information for review. The Company may, as a condition to disclosing
any  non-public  information  hereunder,  require the  Investor's  advisors  and
representatives  to enter into a  confidentiality  agreement in form  reasonably
satisfactory to the Company and the Investor.

            (b) Nothing herein shall require the Company to disclose  non-public
information to the Investor or its advisors or representatives,  and the Company
represents that it does not disseminate  non-public information to any investors
who purchase stock in the Company in a public offering,  to money managers or to
securities analysts,  provided, however, that notwithstanding anything herein to
the contrary, the Company will, as hereinabove provided,  immediately notify the
advisors and representatives of the Investor and, if any,  underwriters,  of any
event or the existence of any  circumstance  (without any obligation to disclose
the specific  event or  circumstance)  of which it becomes  aware,  constituting
non-public  information (whether or not requested of the Company specifically or
generally  during  the course of due  diligence  by such  persons or  entities),
which, if not disclosed in the prospectus included in the Registration Statement
would  cause such  prospectus  to include a material  misstatement  or to omit a
material  fact  required to be stated  therein in order to make the  statements,
therein,  in light of the circumstances in which they were made, not misleading.
Nothing  contained  in this  Section  8.2 shall be  construed  to mean that such
persons or entities other than the Investor  (without the written consent of the
Investor  prior to disclosure  of such  information)  may not obtain  non-public
information  in the course of conducting  due  diligence in accordance  with the
terms of this  Agreement  and nothing  herein shall  prevent any such persons or
entities  from  notifying  the Company of their  opinion  that based on such due
diligence by such persons or entities,  that the Registration Statement contains
an untrue  statement of material  fact or omits a material  fact  required to be
stated  in the  Registration  Statement  or  necessary  to make  the  statements
contained  therein,  in light of the  circumstances in which they were made, not
misleading.

                                       21
<PAGE>

                                   ARTICLE IX
                       GOVERNING LAW; RESTRICTIVE LEGENDS

      Section  9.1  GOVERNING  LAW.  This  Agreement  shall be  governed  by and
interpreted in accordance  with the laws of the State of New York without regard
to the principles of conflict of laws. The parties further agree that any action
between them shall be heard in New York City, New York, and expressly consent to
the  jurisdiction  and  venue of the  Supreme  Court of New York and the  United
States District Court for the Southern District of New York for the adjudication
of any civil action asserted pursuant to this paragraph.

      Section 9.2 All shares of common stock issued pursuant to the terms hereof
shall bear a legend in substantially the following form:

                THESE  SECURITIES AND THE SHARES  ISSUABLE UPON CONVERSION
                HEREOF HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT
                OF  1933,  AS  AMENDED  (THE  "SECURITIES  ACT"),  OR  THE
                SECURITIES  LAWS  OF ANY  STATE  AND  MAY  NOT BE  SOLD OR
                OFFERED   FOR  SALE  IN  THE   ABSENCE  OF  AN   EFFECTIVE
                REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF
                COUNSEL OR OTHER  EVIDENCE  ACCEPTABLE TO THE  CORPORATION
                THAT SUCH REGISTRATION IS NOT REQUIRED.

                                    ARTICLE X
                             ASSIGNMENT; TERMINATION

      Section 10.1 ASSIGNMENT.  Neither  this  Agreement  nor any  rights of the
Company hereunder may be assigned to any other Person.

      Section 10.2 TERMINATION. The obligations of the Investor to make Advances
under Article II hereof shall terminate 24 months after the date hereof.

                                   ARTICLE XI
                                     NOTICES

      Section  11.1  NOTICES.   Any  notices,   consents,   waivers,   or  other
communications  required  or  permitted  to be  given  under  the  terms of this
Agreement  must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered  personally;  (ii) upon receipt, when sent by facsimile,
provided a copy is mailed by U.S.  certified  mail,  return  receipt  requested;
(iii) three (3) days after being sent by U.S.  certified  mail,  return  receipt
requested,  or (iv)  one (1) day  after  deposit  with a  nationally  recognized
overnight  delivery  service,  in each case  properly  addressed to the party to
receive the same.  The addresses and facsimile  numbers for such  communications
shall be:

                                       22
<PAGE>

       If to Investor:        Cornell Capital Partners L.P.
                              c/o Yorkville Advisors, LLC
                              521 Fifth Avenue, 17th Floor
                              New York, New York 10175
                              Attention:  Mark Angelo
                              Telephone:  (212) 775-7400
                              Facsimile:  212 775 8166

       with a copy to:        Meir Levin, Esq.
                              521 Fifth Avenue, 17th Floor
                              New York, New York 12175
                              Telephone:  (212) 292-4209
                              Facsimile:  (718) 380-5731

       If to the Company, to: Celerity Systems, Inc.
                              122 Perimeter Park Drive
                              Knoxville, TN  37922
                              Attention:  Kenneth D. Van Meter
                              Telephone:  (865) 539-5300
                              Facsimile:  (865) 539-3500

       with a copy to:        Kirkpatrick  & Lockhart LLP
                              201 South Biscayne Boulevard
                              Suite 2000
                              Miami, FL  33131
                              Attention:  Clayton E. Parker, Esq.
                              Telephone:  (305) 539-3306
                              Facsimile:  (305) 358-7095

Each party shall provide five (5) days' prior written  notice to the other party
of any change in address or facsimile number.

                                   ARTICLE XII
                                  MISCELLANEOUS

      Section 12.1  COUNTERPARTS.  This Agreement may be executed in two or more
identical  counterparts,  all of  which  shall  be  considered  one and the same
agreement and shall become effective when  counterparts have been signed by each
party and  delivered  to the other  party.  In the event any  signature  page is
delivered  by  facsimile  transmission,  the party  using such means of delivery
shall  cause  four  (4)  additional  original  executed  signature  pages  to be
physically  delivered to the other party  within five (5) days of the  execution
and delivery hereof.

                                       23
<PAGE>

      Section 12.2 ENTIRE AGREEMENT;  AMENDMENTS.  This Agreement supersedes all
other prior oral or written agreements between the Investor,  the Company, their
affiliates  and  persons  acting on their  behalf  with  respect to the  matters
discussed  herein,  and this  Agreement and the  instruments  referenced  herein
contain  the entire  understanding  of the parties  with  respect to the matters
covered  herein and therein  and,  except as  specifically  set forth  herein or
therein,  neither  the  Company  nor  the  Investor  makes  any  representation,
warranty,  covenant or undertaking with respect to such matters. No provision of
this  Agreement  may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.

      Section 12.3 REPORTING  ENTITY FOR THE COMMON STOCK.  The reporting entity
relied upon for the  determination of the trading price or trading volume of the
Common Stock on any given Trading Day for the purposes of this  Agreement  shall
be Bloomberg,  L.P. or any successor thereto.  The written mutual consent of the
Investor and the Company shall be required to employ any other reporting entity.

      Section 12.4 FEES AND  EXPENSES.  The  Company  hereby  agrees  to pay the
following fees:

            (a)  LEGAL  FEES.  Each of the  parties  shall  pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or others
engaged by such party) in connection  with this  Agreement and the  transactions
contemplated  hereby,  except  that  the  Company  will  pay the sum of  Fifteen
Thousand Dollars  ($15,000) to Meir Levin, Esq. for legal,  administrative,  and
escrow fees, upon execution of this Agreement, which fees were paid on March 21,
2001.  Subsequently on each Advance Date, the Company will pay Meir Levin, Esq.,
the sum of Five  Hundred  ($500)  Dollars for legal,  administrative  and escrow
fees.

            (b)  CONSULTING  FEES.  Upon the  execution  of the  Agreement,  the
Company will issue a warrant to purchase  three  million  five hundred  thousand
(3,500,000) shares of Common Stock at an exercise price of ten cents ($0.10) per
share (the "WARRANT") to Yorkville  Advisors,  LLC, a Delaware limited liability
company (the  "CONSULTANT").  As long as the shares of Common Stock to be issued
upon  exercise  of  the  Warrant  are   registered   pursuant  to  an  effective
Registration Statement, the Consultant shall only exercise the Warrant for cash.
In the  event  at any  time  no  such  effective  Registration  Statement  is in
existence, whether as a result of the issuance of a stop order or the suspension
of the  Registration  Statement by the SEC or for any other  reason  whatsoever,
then the Warrant may be exercised by a "CASHLESS EXERCISE" pursuant to the terms
of the Warrant.  The Warrant will have a life of five (5) years from the date of
issuance. Upon each Closing, an amount equal to ten percent (10%) of the Advance
shall be wired to the Consultant in accordance  with the terms and conditions of
the Consulting  Services  Agreement,  of even date herewith,  by and between the
Company and the Consultant.  The Company hereby agrees that if such payment,  as
is described above, is not made by the Company on the Advance Date, such payment
will be made at the  direction  of the  Investor  as  outlined  and  mandated by
Section 2.3 of this Agreement.

      Section 12.5 BROKERAGE.  Each of the parties hereto represents that it has
had no dealings in connection  with this  transaction  with any finder or broker
who will demand  payment of any fee or  commission  from the other party,  other
than the Consultant. The Company on the one hand, and the Investor, on the other

                                       24
<PAGE>

hand,  agree to indemnify the other against and hold the other harmless from any
and all  liabilities to any person  claiming  brokerage  commissions or finder's
fees on account of  services  purported  to have been  rendered on behalf of the
indemnifying  party  in  connection  with  this  Agreement  or the  transactions
contemplated hereby.

      Section  12.6   CONFIDENTIALITY.   If  for  any  reason  the  transactions
contemplated by this Agreement are not  consummated,  each of the parties hereto
shall keep  confidential  any information  obtained from any other party (except
information  publicly  available  or in such  party's  domain  prior to the date
hereof,  and except as required by court order) and shall promptly return to the
other  parties  all  schedules,  documents,  instruments,  work  papers or other
written information without retaining copies thereof, previously furnished by it
as a result of this Agreement or in connection herein.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       25
<PAGE>

      IN WITNESS  WHEREOF,  the  parties  hereto have caused this Equity Line of
Credit Agreement to be executed by the  undersigned,  thereunto duly authorized,
as of the date first set forth above.

                                   COMPANY:
                                   --------
                                   CELERITY SYSTEMS, INC.

                                   By:
                                      ----------------------------
                                   Name:   Kenneth D. Van Meter
                                   Title:  President

                                   INVESTOR:
                                   ---------
                                   CORNELL CAPITAL PARTNER, L.P.

                                   By:   Yorkville Advisors, LLC,
                                         Its General Partner

                                         By:
                                            ----------------------------
                                         Name: Mark A. Angelo
                                         Title:      Fund Manager

                                       26
<PAGE>
                                    EXHIBIT A

                      ADVANCE NOTICE/COMPLIANCE CERTIFICATE
                      -------------------------------------

                             CELERITY SYSTEMS, INC.

            The undersigned,  ________________________________ hereby certifies,
with  respect to the sale of shares of Common  Stock of Celerity  Systems,  Inc.
(the  "COMPANY")  issuable in connection with this Advance Notice and Compliance
Certificate dated ___________________ (the "NOTICE"),  delivered pursuant to the
Equity Line of Credit Agreement (the "AGREEMENT"), as follows:

            1.    The undersigned is the duly elected Chief Executive  Officer
of the Company.

            2.    There are no fundamental  changes to the information set forth
                  in the  Registration  Statement that would require the Company
                  to  file  a  post  effective  amendment  to  the  Registration
                  Statement.

            3.    The  Company  has  performed  in  all  material  respects  all
                  covenants and  agreements to be performed by the Company on or
                  prior  to the  Advance  Date  related  to the  Notice  and has
                  complied in all material  respects  with all  obligations  and
                  conditions contained in the Agreement.

            4.    The Advance requested is _____________________.

            The  undersigned  has executed this  Certificate  this ____ day of

_________________.

                                         CELERITY SYSTEMS, INC.

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

                                       27
<PAGE>

                                 SCHEDULE 2.6(A)

                             CELERITY SYSTEMS, INC.

      The  undersigned  hereby  agrees that for a period  commencing on the date
hereof and expiring on the termination of the Agreement  dated  ________________
between  Celerity  Systems,  Inc. (the "COMPANY") and Cornell Capital  Partners,
L.P., (the "INVESTOR") (the "LOCK-UP PERIOD"),  he, she or it will not, directly
or indirectly,  without the prior written consent of the Investor, issue, offer,
agree or offer to sell,  sell,  grant an  option  for the  purchase  or sale of,
transfer,  pledge,  assign,  hypothecate,  distribute  or otherwise  encumber or
dispose of except  pursuant  to Rule 144 of the  General  Rules and  Regulations
under the  Securities  Act of 1933,  any  securities  of the Company,  including
common  stock or  options,  rights,  warrants  or other  securities  underlying,
convertible  into,  exchangeable  or exercisable  for or evidencing any right to
purchase or subscribe for any common stock (whether or not beneficially owned by
the  undersigned),  or  any  beneficial  interest  therein  (collectively,   the
"SECURITIES").

      In order to enable the aforesaid covenants to be enforced, the undersigned
hereby consents to the placing of legends and/or  stop-transfer  orders with the
transfer agent of the Company's securities with respect to any of the Securities
registered  in  the  name  of  the  undersigned  or  beneficially  owned  by the
undersigned, and the undersigned hereby confirms the undersigned's investment in
the Company.

Dated: _______________, 2001            Signature

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

                                        Address:
                                                ------------------------------
                                        City, State, Zip Code:
                                                              ----------------

                                        --------------------------------------
                                        Print Social Security Number
                                        or Taxpayer I.D. NumberEXHIBIT 10.34

                          REGISTRATION RIGHTS AGREEMENT

        REGISTRATION RIGHTS AGREEMENT (this  "AGREEMENT"),  dated as of June 14,
2001,  by and  between  CELERITY  SYSTEMS,  INC.,  a Delaware  corporation  (the
"COMPANY"), and CORNELL CAPITAL PARTNERS L.P. (the "INVESTOR").

        WHEREAS:

        A. In connection with the Equity Line of Credit Agreement by and between
the  parties   hereto  of  even  date  herewith  (the  "EQUITY  LINE  OF  CREDIT
AGREEMENT"),  the  Company  has  agreed,  upon  the  terms  and  subject  to the
conditions  of the  Equity  Line of Credit  Agreement,  to issue and sell to the
Investor that number of shares of the Company's  common stock,  par value $0.001
per share (the "COMMON STOCK"),  which can be purchased pursuant to the terms of
the Equity Line Credit  Agreement for an aggregate  purchase  price of up to Ten
Million Dollars $10,000,000. Capitalized terms not defined herein shall have the
meaning ascribed to them in the Equity Line of Credit Agreement.

        B. To induce the  Investor  to execute  and  deliver  the Equity Line of
Credit Agreement,  the Company has agreed to provide certain registration rights
under the  Securities  Act of 1933,  as amended,  and the rules and  regulations
there under, or any similar  successor statute  (collectively,  the "1933 ACT"),
and applicable state securities laws.

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

        1.     DEFINITIONS.

               As used in this  Agreement,  the  following  terms shall have the
following meanings:

               a.  "INVESTOR"  means the Investor and any transferee or assignee
thereof to whom the  Investor  assigns its rights under this  Agreement  and who
agrees to become bound by the  provisions of this  Agreement in accordance  with
Section 9.

               b. "PERSON" means a corporation,  a limited liability company, an
association,  a partnership,  an  organization,  a business,  an  individual,  a
governmental or political subdivision thereof or a governmental agency.

               c.  "REGISTER,"  "REGISTERED,"  and  "REGISTRATION"  refer  to  a
registration   effected  by  preparing  and  filing  one  or  more  Registration
Statements  (as defined  below) in compliance  with the 1933 Act and pursuant to
Rule 415  under  the 1933  Act or any  successor  rule  providing  for  offering
securities on a continuous or delayed basis ("RULE 415"), and the declaration or

<PAGE>

ordering of effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").

               d.  "REGISTRABLE  SECURITIES"  means the  shares of Common  Stock
issuable to Investors pursuant to the Credit Agreement.

               e. "REGISTRATION  STATEMENT" means a registration statement under
the 1933 Act which covers the Registrable Securities.

        2.     REGISTRATION.

               a.  MANDATORY  REGISTRATION.  The Company  shall prepare and file
with the SEC a Registration  Statement on Form S-3 covering the resale of all of
the Registrable Securities. In the event that Form S-3 is unavailable for such a
registration,  the Company  shall use such other form as is available for such a
registration. The Company shall cause such Registration Statement to be declared
effective  by the SEC  prior to the first  sale to  Investors  of the  Company's
Common Stock pursuant to the Equity Line of Credit Agreement.

               b.  INELIGIBILITY FOR FORM S-3. In the event that Form S-3 is not
available for the registration of Registrable Securities hereunder,  the Company
shall (i) register the sale of the Registrable Securities on another appropriate
form and (ii)  undertake to register the  Registrable  Securities on Form S-3 as
soon as such form is available,  provided  that the Company  shall  maintain the
effectiveness of the Registration  Statement then in effect until such time as a
Registration  Statement on Form S-3 covering the Registrable Securities has been
declared effective by the SEC.

               c.  SUFFICIENT  NUMBER  OF  SHARES  REGISTERED.  In the event the
number of shares  available  under a  Registration  Statement  filed pursuant to
Section 2(a) is insufficient to cover all of the  Registrable  Securities  which
the Investor has purchased pursuant to the Equity Line of Credit Agreement,  the
Company  shall  amend the  Registration  Statement,  or file a new  Registration
Statement (on the short form available therefore, if applicable), or both, so as
to cover all of such  Registrable  Securities  which the Investor has  purchased
pursuant to the Equity Line of Credit  Agreement as soon as practicable,  but in
any event not later than fifteen (15) days after the necessity therefore arises.
The  Company  shall use it best  efforts  to cause  such  amendment  and/or  new
Registration  Statement to become effective as soon as practicable following the
filing thereof.  For purposes of the foregoing  provision,  the number of shares
available under a Registration  Statement shall be deemed "insufficient to cover
all of the  Registrable  Securities"  if at any time the  number of  Registrable
Securities  issuable  on an Advance  Notice  Date is greater  than the number of
shares available for resale under such Registration Statement.

                                       2
<PAGE>

        3.     RELATED OBLIGATIONS.

               a. The Company shall keep the  Registration  Statement  effective
pursuant  to Rule 415 at all times  until the date on which the  Investor  shall
have sold all the Registrable  Securities covered by such Registration Statement
(the  "REGISTRATION  PERIOD"),   which  Registration  Statement  (including  any
amendments or supplements thereto and prospectuses  contained therein) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein,  or necessary to make the statements  therein, in
light of the circumstances in which they were made, not misleading.

               b.  The  Company  shall  prepare  and  file  with  the  SEC  such
amendments   (including   post-effective   amendments)   and  supplements  to  a
Registration   Statement  and  the  prospectus  used  in  connection  with  such
Registration  Statement,  which  prospectus is to be filed  pursuant to Rule 424
promulgated  under the 1933 Act, as may be necessary  to keep such  Registration
Statement  effective at all times during the  Registration  Period,  and, during
such  period,  comply with the  provisions  of the 1933 Act with  respect to the
disposition  of all  Registrable  Securities  of the  Company  covered  by  such
Registration  Statement  until such time as all of such  Registrable  Securities
shall  have  been  disposed  of in  accordance  with  the  intended  methods  of
disposition by the seller or sellers  thereof as set forth in such  Registration
Statement. In the case of amendments and supplements to a Registration Statement
which are required to be filed pursuant to this Agreement (including pursuant to
this Section  3(b)) by reason of the  Company's  filing a report on Form 10-KSB,
Form 10-QSB or Form 8-K or any analogous  report under the  Securities  Exchange
Act of 1934, as amended (the "1934 ACT"),  the Company  shall have  incorporated
such report by reference into the  Registration  Statement,  if  applicable,  or
shall file such amendments or supplements  with the SEC on the same day on which
the 1934 Act report is filed which  created the  requirement  for the Company to
amend or supplement the Registration Statement.

               c. The Company shall furnish to the Investor without charge,  (i)
at least one copy of such  Registration  Statement as declared  effective by the
SEC and any amendment(s) thereto,  including financial statements and schedules,
all  documents  incorporated  therein  by  reference,   all  exhibits  and  each
preliminary prospectus, (ii) ten (10) copies of the final prospectus included in
such Registration  Statement and all amendments and supplements thereto (or such
other number of copies as such Investor may  reasonably  request) and (iii) such
other  documents as such  Investor may  reasonably  request from time to time in
order to facilitate the disposition of the Registrable  Securities owned by such
Investor.

               d. The Company  shall use its best  efforts to (i)  register  and
qualify the  Registrable  Securities  covered by a Registration  Statement under
such other  securities  or "blue sky" laws of such  jurisdictions  in the United
States as the  Investor  reasonably  requests,  (ii)  prepare  and file in those
jurisdictions,   such  amendments  (including  post-effective   amendments)  and
supplements  to such  registrations  and  qualifications  as may be necessary to
maintain the effectiveness  thereof during the Registration  Period,  (iii) take
such other  actions as may be  necessary  to  maintain  such  registrations  and
qualifications in effect at all times during the Registration  Period,  and (iv)
take all  other  actions  reasonably  necessary  or  advisable  to  qualify  the

                                       3
<PAGE>

Registrable Securities for sale in such jurisdictions;  provided,  however, that
the  Company  shall not be required in  connection  therewith  or as a condition
thereto to (w) make any change to its certificate of  incorporation  or by-laws,
(x) qualify to do business in any  jurisdiction  where it would not otherwise be
required to qualify but for this  Section  3(d),  (y) subject  itself to general
taxation in any such  jurisdiction,  or (z) file a general consent to service of
process in any such jurisdiction. The Company shall promptly notify the Investor
of the receipt by the Company of any notification with respect to the suspension
of the registration or  qualification  of any of the Registrable  Securities for
sale under the securities or "blue sky" laws of any  jurisdiction  in the United
States or its  receipt  of  actual  notice  of the  initiation  or threat of any
proceeding for such purpose.

               e. As promptly as practicable  after becoming aware of such event
or  development,  the  Company  shall  notify  the  Investor  in  writing of the
happening  of any  event  as a result  of which  the  prospectus  included  in a
Registration  Statement,  as then in effect,  includes an untrue  statement of a
material fact or omission 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  (provided  that in no event  shall such
notice  contain any material,  nonpublic  information),  and promptly  prepare a
supplement  or amendment to such  Registration  Statement to correct such untrue
statement  or  omission,  and  deliver  ten (10)  copies of such  supplement  or
amendment to each Investor.  The Company shall also promptly notify the Investor
in writing (i) when a prospectus or any prospectus  supplement or post-effective
amendment   has  been  filed,   and  when  a   Registration   Statement  or  any
post-effective   amendment   has   become   effective   (notification   of  such
effectiveness shall be delivered to the Investor by facsimile on the same day of
such  effectiveness),  (ii)  of  any  request  by  the  SEC  for  amendments  or
supplements  to a  Registration  Statement  or  related  prospectus  or  related
information,  and  (iii)  of  the  Company's  reasonable  determination  that  a
post-effective amendment to a Registration Statement would be appropriate.

               f. The Company shall use its best efforts to prevent the issuance
of any  stop  order or  other  suspension  of  effectiveness  of a  Registration
Statement,  or the  suspension of the  qualification  of any of the  Registrable
Securities for sale in any jurisdiction within the United States of America and,
if such an order or suspension is issued, to obtain the withdrawal of such order
or suspension at the earliest  possible moment and to notify the Investor of the
issuance  of such  order and the  resolution  thereof  or its  receipt of actual
notice of the initiation or threat of any proceeding for such purpose.

               g. At the reasonable  request of the Investor,  the Company shall
furnish to the Investor,  on the date of the  effectiveness  of the Registration
Statement  and  thereafter  from time to time on such dates as the  Investor may
reasonably request (i) a letter, dated such date, from the Company's independent
certified  public  accountants in form and substance as is customarily  given by
independent  certified  public  accountants to  underwriters  in an underwritten
public  offering,  and  (ii) an  opinion,  dated  as of such  date,  of  counsel
representing the Company for purposes of such Registration  Statement,  in form,
scope and substance as is customarily given in an underwritten  public offering,
addressed to the Investor.

                                       4
<PAGE>

               h. The Company  shall make  available  for  inspection by (i) the
Investor  and (ii) one firm of  accountants  or  other  agents  retained  by the
Investors  (collectively,  the "INSPECTORS")  all pertinent  financial and other
records,  and  pertinent  corporate  documents  and  properties  of the  Company
(collectively,  the "RECORDS"),  as shall be reasonably deemed necessary by each
Inspector,  and cause the Company's officers,  directors and employees to supply
all information which any Inspector may reasonably request;  provided,  however,
that each Inspector  shall agree,  and the Investor  hereby  agrees,  to hold in
strict  confidence and shall not make any disclosure  (except to an Investor) or
use of any Record or other  information  which the  Company  determines  in good
faith to be  confidential,  and of which  determination  the  Inspectors  are so
notified,  unless (a) the  disclosure  of such  Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement or is otherwise
required under the 1933 Act, (b) the release of such Records is ordered pursuant
to a final,  non-appealable subpoena or order from a court or government body of
competent  jurisdiction,  or (c) the  information  in such Records has been made
generally  available to the public other than by disclosure in violation of this
or any other  agreement of which the Inspector  and the Investor has  knowledge.
The Investor agrees that it shall, upon learning that disclosure of such Records
is sought in or by a court or  governmental  body of competent  jurisdiction  or
through other means, give prompt notice to the Company and allow the Company, at
its expense,  to undertake  appropriate  action to prevent  disclosure of, or to
obtain a protective order for, the Records deemed confidential.

               i.  The  Company  shall  hold  in  confidence  and not  make  any
disclosure of information concerning the Investor provided to the Company unless
(i) disclosure of such  information is necessary to comply with federal or state
securities  laws, (ii) the disclosure of such  information is necessary to avoid
or correct a misstatement or omission in any Registration  Statement,  (iii) the
release of such  information  is ordered  pursuant to a subpoena or other final,
non-appealable   order  from  a  court  or   governmental   body  of   competent
jurisdiction,  or (iv) such information has been made generally available to the
public other than by  disclosure  in  violation  of this  Agreement or any other
agreement.  The Company agrees that it shall,  upon learning that  disclosure of
such  information  concerning  the  Investor  is  sought  in  or by a  court  or
governmental body of competent  jurisdiction or through other means, give prompt
written  notice  to the  Investor  and  allow the  Investor,  at the  Investor's
expense, to undertake  appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

               j. The Company shall use its best efforts either to cause all the
Registrable  Securities covered by a Registration  Statement (i) to be listed on
each securities  exchange on which securities of the same class or series issued
by the Company  are then  listed,  if any,  if the  listing of such  Registrable
Securities is then  permitted  under the rules of such exchange or to secure the
inclusion for quotation on the National Association of Securities Dealers,  Inc.
OTC Bulletin Board for such  Registrable  Securities.  The Company shall pay all
fees and  expenses in  connection  with  satisfying  its  obligation  under this
Section 3(j).

               k. The Company  shall  cooperate  with the Investor to the extent
applicable,  to facilitate the timely  preparation  and delivery of certificates
(not bearing any restrictive legend) representing the Registrable  Securities to
be offered pursuant to a Registration  Statement and enable such certificates to

                                       5
<PAGE>

be in such  denominations  or amounts,  as the case may be, as the  Investor may
reasonably request and registered in such names as the Investor may request.

               l.  The  Company   shall  use  its  best  efforts  to  cause  the
Registrable  Securities covered by the applicable  Registration  Statement to be
registered with or approved by such other  governmental  agencies or authorities
as  may  be  necessary  to  consummate  the  disposition  of  such   Registrable
Securities.

               m. The Company  shall make  generally  available  to its security
holders  as soon as  practical,  but not later than  ninety  (90) days after the
close of the period covered  thereby,  an earnings  statement (in form complying
with the  provisions  of Rule 158 under the 1933 Act)  covering  a  twelve-month
period  beginning not later than the first day of the Company's  fiscal  quarter
next following the effective date of the Registration Statement.

               n. The Company  shall  otherwise  use its best  efforts to comply
with all  applicable  rules and  regulations  of the SEC in connection  with any
registration hereunder.

               o. Within two (2) business  days after a  Registration  Statement
which covers Registrable Securities is ordered effective by the SEC, the Company
shall deliver,  and shall cause legal counsel for the Company to deliver, to the
transfer  agent for such  Registrable  Securities  (with copies to the Investor)
confirmation that such Registration Statement has been declared effective by the
SEC in the form attached hereto as EXHIBIT A.

               p. The Company shall take all other reasonable  actions necessary
to  expedite  and  facilitate   disposition  by  the  Investors  of  Registrable
Securities pursuant to a Registration Statement.

        4.     OBLIGATIONS OF THE INVESTOR.

               The  Investor  agrees  that,  upon receipt of any notice from the
Company of the  happening of any event of the kind  described in Section 3(f) or
the  first  sentence  of  3(e),  the  Investor  will   immediately   discontinue
disposition of Registrable Securities pursuant to any Registration  Statement(s)
covering such Registrable  Securities until the Investor's receipt of the copies
of the  supplemented  or amended  prospectus  contemplated  by  Section  3(e) or
receipt of notice that no supplement  or amendment is required.  Notwithstanding
anything to the contrary,  the Company shall cause its transfer agent to deliver
unlegended  certificates  for  shares of  Common  Stock to a  transferee  of the
Investor in accordance with the terms of the Equity Line of Credit  Agreement in
connection  with any sale of  Registrable  Securities  with respect to which the
Investor has entered into a contract for sale prior to the Investor's receipt of
a notice from the Company of the happening of any event of the kind described in
Section  3(f) or the first  sentence of 3(e) and for which the  Investor has not
yet settled.

                                       6
<PAGE>

        5.     EXPENSES OF REGISTRATION.

               All expenses incurred in connection with  registrations,  filings
or qualifications  pursuant to Sections 2 and 3, including,  without limitation,
all  registration,   listing  and  qualifications  fees,  printers,   legal  and
accounting fees shall be paid by the Company.

        6.     INDEMNIFICATION.

               With respect to  Registrable  Securities  which are included in a
Registration Statement under this Agreement:

               a. To the fullest extent  permitted by law, the Company will, and
hereby does,  indemnify,  hold harmless and defend the Investor,  the directors,
officers, partners,  employees, agents,  representatives of, and each Person, if
any, who  controls  the Investor  within the meaning of the 1933 Act or the 1934
Act (each,  an  "INDEMNIFIED  PERSON"),  against  any losses,  claims,  damages,
liabilities,  judgments, fines, penalties, charges, costs, reasonable attorneys'
fees,  amounts paid in settlement or expenses,  joint or several  (collectively,
"CLAIMS") incurred in investigating,  preparing or defending any action,  claim,
suit, inquiry,  proceeding,  investigation or appeal taken from the foregoing by
or before any court or governmental,  administrative or other regulatory agency,
body or the SEC,  whether  pending or threatened,  whether or not an indemnified
party is or may be a party thereto ("INDEMNIFIED DAMAGES"), to which any of them
may become subject  insofar as such Claims (or actions or  proceedings,  whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any  untrue  statement  or alleged  untrue  statement  of a  material  fact in a
Registration Statement or any post-effective  amendment thereto or in any filing
made in connection with the  qualification  of the offering under the securities
or other "blue sky" laws of any jurisdiction in which Registrable Securities are
offered  ("BLUE SKY  FILING"),  or the  omission or alleged  omission to state a
material fact required to be stated  therein or necessary to make the statements
therein not misleading; (ii) any untrue statement or alleged untrue statement of
a material fact contained in any final  prospectus (as amended or  supplemented,
if the Company files any amendment  thereof or supplement  thereto with the SEC)
or the omission or alleged omission to state therein any material fact necessary
to make the statements made therein,  in light of the circumstances  under which
the  statements  therein were made,  not  misleading;  or (iii) any violation or
alleged  violation  by the Company of the 1933 Act, the 1934 Act, any other law,
including,  without  limitation,  any  state  securities  law,  or any  rule  or
regulation  there  under  relating  to the  offer  or  sale  of the  Registrable
Securities  pursuant to a  Registration  Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively,  "VIOLATIONS"). The Company shall
reimburse  the  Investor  and each  such  controlling  person  promptly  as such
expenses  are  incurred  and  are  due  and  payable,  for  any  legal  fees  or
disbursements or other reasonable  expenses  incurred by them in connection with
investigating  or  defending  any such  Claim.  Notwithstanding  anything to the
contrary  contained  herein,  the  indemnification  agreement  contained in this
Section 6(a):  (x) shall not apply to a Claim by an  Indemnified  Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information  furnished in writing to the Company by such Indemnified Person
expressly  for  use in  connection  with  the  preparation  of the  Registration
Statement or any such amendment thereof or supplement thereto;  (y) shall not be
available  to the extent  such Claim is based on a failure  of the  Investor  to
deliver  or to  cause to be  delivered  the  prospectus  made  available  by the

                                       7
<PAGE>

Company, if such prospectus was timely made available by the Company pursuant to
Section 3(e); and (z) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity shall remain in
full force and effect  regardless of any  investigation  made by or on behalf of
the  Indemnified  Person  and shall  survive  the  transfer  of the  Registrable
Securities by the Investor pursuant to Section 9.

               b. In  connection  with a  Registration  Statement,  the Investor
agrees to severally and not jointly indemnify,  hold harmless and defend, to the
same extent and in the same manner as is set forth in Section 6(a), the Company,
each of its directors, each of its officers who signs the Registration Statement
and each Person, if any, who controls the Company within the meaning of the 1933
Act or the  1934  Act  (each  an  "INDEMNIFIED  PARTY"),  against  any  Claim or
Indemnified Damages to which any of them may become subject, under the 1933 Act,
the 1934 Act or otherwise,  insofar as such Claim or  Indemnified  Damages arise
out of or is based upon any Violation,  in each case to the extent,  and only to
the extent,  that such Violation  occurs in reliance upon and in conformity with
written  information  furnished to the Company by the Investor expressly for use
in connection with such  Registration  Statement;  and, subject to Section 6(d),
the Investor will reimburse any legal or other expenses  reasonably  incurred by
them in connection  with  investigating  or defending any such Claim;  provided,
however,  that the  indemnity  agreement  contained in this Section 6(b) and the
agreement with respect to contribution contained in Section 7 shall not apply to
amounts paid in settlement of any Claim if such  settlement is effected  without
the  prior  written  consent  of  the  Investor,  which  consent  shall  not  be
unreasonably withheld;  provided,  further,  however, that the Investor shall be
liable under this  Section  6(b) for only that amount of a Claim or  Indemnified
Damages as does not exceed the net  proceeds to the  Investor as a result of the
sale of Registrable  Securities  pursuant to such Registration  Statement.  Such
indemnity shall remain in full force and effect  regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer of
the   Registrable   Securities   by  the   Investor   pursuant   to  Section  9.
Notwithstanding  anything to the contrary contained herein, the  indemnification
agreement  contained in this Section 6(b) with respect to any  prospectus  shall
not inure to the benefit of any  Indemnified  Party if the untrue  statement  or
omission of material fact contained in the prospectus was corrected and such new
prospectus  was  delivered to the Investor  prior to the  Investor's  use of the
prospectus to which the Claim relates.

               c. Promptly after receipt by an Indemnified Person or Indemnified
Party  under  this  Section  6 of notice of the  commencement  of any  action or
proceeding  (including any governmental action or proceeding) involving a Claim,
such  Indemnified  Person or  Indemnified  Party  shall,  if a Claim in  respect
thereof is to be made  against  any  indemnifying  party  under this  Section 6,
deliver to the indemnifying party a written notice of the commencement  thereof,
and the  indemnifying  party shall have the right to participate in, and, to the
extent the indemnifying  party so desires,  jointly with any other  indemnifying
party similarly  noticed,  to assume control of the defense thereof with counsel
mutually  satisfactory to the indemnifying  party and the Indemnified  Person or
the  Indemnified  Party,  as  the  case  may  be;  provided,  however,  that  an
Indemnified  Person or Indemnified  Party shall have the right to retain its own
counsel  with the fees  and  expenses  of not  more  than one  counsel  for such
Indemnified  Person or Indemnified  Party to be paid by the indemnifying  party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the

                                       8
<PAGE>

representation  by such counsel of the Indemnified  Person or Indemnified  Party
and the  indemnifying  party would be  inappropriate  due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party  represented  by such counsel in such  proceeding.  The  Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection  with any  negotiation  or defense of any such action or claim by the
indemnifying  party and shall furnish to the indemnifying  party all information
reasonably  available  to the  Indemnified  Party or  Indemnified  Person  which
relates  to such  action  or  claim.  The  indemnifying  party  shall  keep  the
Indemnified  Party or  Indemnified  Person fully apprised at all times as to the
status of the defense or any settlement  negotiations  with respect thereto.  No
indemnifying  party shall be liable for any  settlement of any action,  claim or
proceeding effected without its prior written consent,  provided,  however, that
the indemnifying party shall not unreasonably  withhold,  delay or condition its
consent.  No indemnifying party shall,  without the prior written consent of the
Indemnified  Party or  Indemnified  Person,  consent to entry of any judgment or
enter into any  settlement  or other  compromise  which  does not  include as an
unconditional  term  thereof  the giving by the  claimant or  plaintiff  to such
Indemnified  Party or  Indemnified  Person of a release  from all  liability  in
respect to such claim or litigation.  Following  indemnification as provided for
hereunder,  the  indemnifying  party  shall be  subrogated  to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations  relating to the matter for which indemnification has been made.
The  failure  to  deliver  written  notice to the  indemnifying  party  within a
reasonable  time of the  commencement  of any such action shall not relieve such
indemnifying  party of any liability to the  Indemnified  Person or  Indemnified
Party under this Section 6, except to the extent that the indemnifying  party is
prejudiced in its ability to defend such action.

               d. The  indemnification  required by this Section 6 shall be made
by  periodic   payments  of  the  amount   thereof  during  the  course  of  the
investigation or defense,  as and when bills are received or Indemnified Damages
are incurred.

               e. The indemnity agreements contained herein shall be in addition
to (i) any  cause  of  action  or  similar  right  of the  Indemnified  Party or
Indemnified  Person  against  the  indemnifying  party or  others,  and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

        7.     CONTRIBUTION.

               To the extent any  indemnification  by an  indemnifying  party is
prohibited or limited by law, the indemnifying  party agrees to make the maximum
contribution  with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable  Securities guilty of fraudulent  misrepresentation
(within  the  meaning of Section  11(f) of the 1933 Act)  shall be  entitled  to
contribution  from any seller of  Registrable  Securities  who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds  received by
such seller from the sale of such Registrable Securities.

                                       9
<PAGE>

        8.     REPORTS UNDER THE 1934 ACT.

               With a view to making  available to the Investors the benefits of
Rule 144 promulgated under the 1933 Act or any similar rule or regulation of the
SEC that may at any time permit the Investors to sell  securities of the Company
to the public without registration ("RULE 144") the Company agrees to:

               a. make and keep public information available, as those terms are
understood and defined in Rule 144;

               b. file with the SEC in a timely  manner  all  reports  and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company  remains  subject to such  requirements  (it being  understood  that
nothing herein shall limit the Company's  obligations  under Section 4(c) of the
Equity  Line of  Credit  Agreement)  and the  filing of such  reports  and other
documents is required for the applicable provisions of Rule 144; and

               c.  furnish  to  the  Investor  so  long  as  the  Investor  owns
Registrable  Securities,  promptly upon request,  (i) a written statement by the
Company that it has complied  with the reporting  requirements  of Rule 144, the
1933 Act and the 1934 Act,  (ii) a copy of the most recent  annual or  quarterly
report of the  Company  and such other  reports  and  documents  so filed by the
Company,  and (iii) such other  information  as may be  reasonably  requested to
permit  the  Investor  to sell  such  securities  pursuant  to Rule 144  without
registration.

        10.    AMENDMENT OF REGISTRATION RIGHTS.

               Provisions of this  Agreement  may be amended and the  observance
thereof may be waived (either  generally or in a particular  instance and either
retroactively  or  prospectively),  only with the written consent of the Company
and the  Investor.  Any  amendment or waiver  effected in  accordance  with this
Section 10 shall be binding upon the Investor and the Company.  No consideration
shall be  offered  or paid to any  Person  to amend or  consent  to a waiver  or
modification  of  any  provision  of any  of  this  Agreement  unless  the  same
consideration also is offered to all of the parties to this Agreement.

        11.    MISCELLANEOUS.

               a. A Person is deemed  to be a holder of  Registrable  Securities
whenever  such  Person  owns or is  deemed  to own of  record  such  Registrable
Securities.  If  the  Company  receives  conflicting  instructions,  notices  or
elections  from  two or  more  Persons  with  respect  to the  same  Registrable
Securities,  the  Company  shall act upon the basis of  instructions,  notice or
election received from the registered owner of such Registrable Securities.

               b.  Any  notices,   consents,  waivers  or  other  communications
required or permitted to be given under the terms of this  Agreement  must be in
writing  and will be deemed  to have  been  delivered:  (i) upon  receipt,  when
delivered  personally;  (ii)  upon  receipt,  when sent by  facsimile  (provided
confirmation of transmission  is  mechanically or  electronically  generated and
kept on file by the sending party); or (iii) one business day after deposit with
a  nationally  recognized  overnight  delivery  service,  in each case  properly

                                       10
<PAGE>

addressed to the party to receive the same. The addresses and facsimile  numbers
for such communications shall be:

          If to the Company:          Celerity Systems, Inc.
                                      122 Perimeter Park Drive
                                      Knoxville, TN 37922
                                      Attention:     Kenneth D. Van Meter,
                                                     President
                                      Telephone:     (865) 539-5300
                                      Facsimile:     (865) 539-3500

          With a copy to:             Kirkpatrick  & Lockhart LLP
                                      201 South Biscayne Boulevard.
                                      Suite 2000
                                      Miami, FL  33131
                                      Attention:     Clayton E. Parker, Esq.
                                      Telephone:     (305) 539-3306
                                      Facsimile:     (305) 358-7095

          If to Investor:             Cornell Capital Partners L.P.
                                      c/o Yorkville Advisors, LLC
                                      521 Fifth Avenue, 17th Floor
                                      New York, New York 10175
                                      Attention:  Mark Angelo
                                      Telephone:  (212) 775-7400
                                      Facsimile:  212 775 8166

If to the Investor, to its address and facsimile number on the Schedule attached
hereto, with copies the Investor's  representatives as set forth on the Schedule
or to such other address and/or facsimile number and/or to the attention of such
other person as the  recipient  party has  specified by written  notice given to
each other party five days prior to the  effectiveness  of such change.  Written
confirmation  of receipt (A) given by the  recipient  of such  notice,  consent,
waiver or other communication,  (B) mechanically or electronically  generated by
the sender's  facsimile machine containing the time, date,  recipient  facsimile
number and an image of the first page of such  transmission or (C) provided by a
courier or overnight  courier  service shall be rebuttable  evidence of personal
service,  receipt by facsimile or receipt from a nationally recognized overnight
delivery   service  in  accordance   with  clause  (i),  (ii)  or  (iii)  above,
respectively.

               c.  Failure of any party to  exercise  any right or remedy  under
this  Agreement or otherwise,  or delay by a party in  exercising  such right or
remedy, shall not operate as a waiver thereof.

               d. The  corporate  laws of the State of Florida  shall govern all
issues concerning the relative rights of the Company and the Investor. All other
questions concerning the construction,  validity, enforcement and interpretation
of this  Agreement  shall be governed by the  internal  laws of the State of New
York, without giving effect to any choice of law or conflict of law provision or
rule  (whether  of the State of New York or any other  jurisdiction)  that would

                                       11
<PAGE>

cause the  application of the laws of any  jurisdiction  other than the State of
New  York.  Each  party  hereby   irrevocably   submits  to  the   non-exclusive
jurisdiction  of the state and federal  courts  sitting in the City of New York,
Borough of  Manhattan,  for the  adjudication  of any  dispute  hereunder  or in
connection  herewith or with any  transaction  contemplated  hereby or discussed
herein,  and hereby  irrevocably  waives,  and agrees not to assert in any suit,
action  or  proceeding,  any  claim  that it is not  personally  subject  to the
jurisdiction of any such court,  that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each party hereby  irrevocably waives personal service of process and
consents  to process  being  served in any such suit,  action or  proceeding  by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall be deemed
to limit in any way any right to serve  process in any manner  permitted by law.
If any  provision of this  Agreement  shall be invalid or  unenforceable  in any
jurisdiction,  such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or  enforceability  of any  provision  of this  Agreement  in any other
jurisdiction.  EACH PARTY HEREBY  IRREVOCABLY  WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES  NOT TO  REQUEST,  A JURY  TRIAL  FOR  THE  ADJUDICATION  OF ANY  DISPUTE
HEREUNDER  OR IN  CONNECTION  HEREWITH OR ARISING OUT OF THIS  AGREEMENT  OR ANY
TRANSACTION CONTEMPLATED HEREBY.

               e. This  Agreement,  the Equity Line of Credit  Agreement and the
Escrow  Agreement  constitute the entire agreement among the parties hereto with
respect to the subject  matter  hereof and thereof.  There are no  restrictions,
promises, warranties or undertakings,  other than those set forth or referred to
herein and therein. This Agreement,  the Equity Line of Credit Agreement and the
Escrow  Agreement  supersede all prior agreements and  understandings  among the
parties hereto with respect to the subject matter hereof and thereof.

               f. Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.

               g.  The  headings  in  this  Agreement  are  for  convenience  of
reference only and shall not limit or otherwise affect the meaning hereof.

               h. This Agreement may be executed in identical counterparts, each
of which shall be deemed an original but all of which shall  constitute  one and
the same agreement.  This Agreement,  once executed by a party, may be delivered
to the other party hereto by facsimile  transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

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

                                       12
<PAGE>

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

               k. This  Agreement  is  intended  for the  benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

                   [REMAINDER OF PAGE INTENIONALLY LEFT BLANK]

                                       13
<PAGE>

                                       14
        IN WITNESS  WHEREOF,  the parties have caused this  Registration  Rights
Agreement to be duly executed as of day and year first above written.

                                           CELERITY SYSTEMS, INC.

                                       By:
                                           -------------------------------------
                                           Name:   Kenneth D. Van Meter
                                           Title:  President

                                           CORNELL CAPITAL PARTNERS, L.P.

                                           By:     Yorkville Advisors, LLC,
                                                   Its General Partner

                                                   By:
                                                      --------------------------
                                                   Name:  Mark A. Angelo
                                                   Title: Fund Manager

                                       14
<PAGE>

<TABLE>
<CAPTION>
                              SCHEDULE OF INVESTORS

                                                                INVESTOR'S REPRESENTATIVES'
                                 INVESTOR ADDRESS                         ADDRESS
    INVESTOR NAME              AND FACSIMILE NUMBER                AND FACSIMILE NUMBER
    -------------              --------------------                --------------------
<S>                        <C>                               <C>
Cornell Capital            c/o Yorkville Advisors, LLC       c/o Yorkville Advisors, LLC
Partners, L.P.             521 Fifth Avenue - 17th Floor     521 Fifth Avenue - 17th Floor
                           New York, NY 10175                New York, NY 10175

</TABLE>

                                       15
<PAGE>

                                    EXHIBIT A
                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

[TRANSFER AGENT]
ATTN:
     ------------------------

               Re:    CELERITY SYSTEMS, INC.

Ladies and Gentlemen:

        We are counsel to Celerity  Systems,  Inc., a Delaware  corporation (the
"COMPANY"),  and have  represented  the Company in connection  with that certain
Equity Line of Credit Agreement (the "EQUITY LINE OF CREDIT AGREEMENT")  entered
into  by and  between  the  Company  and  Cornell  Capital  Partners  L.P.  (the
"INVESTOR")  pursuant to which the Company issued to the Investor  shares of its
Common Stock, par value $0.001 per share (the "COMMON  STOCK").  Pursuant to the
Equity  Line  of  Credit  Agreement,   the  Company  also  has  entered  into  a
Registration  Rights  Agreement  with the  Investor  (the  "REGISTRATION  RIGHTS
AGREEMENT")  pursuant  to which the  Company  agreed,  among  other  things,  to
register  the  Registrable  Securities  (as defined in the  Registration  Rights
Agreement)  under the  Securities  Act of 1933, as amended (the "1933 ACT").  In
connection  with  the  Company's   obligations  under  the  Registration  Rights
Agreement,  on ____________ ____, the Company filed a Registration  Statement on
Form ________ (File No.  333-_____________) (the "REGISTRATION  STATEMENT") with
the Securities and Exchange  Commission  (the "SEC") relating to the Registrable
Securities which names the Investor as a selling stockholder thereunder.

        In  connection  with the  foregoing,  we advise you that a member of the
SEC's  staff has  advised  us by  telephone  that the SEC has  entered  an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF  EFFECTIVENESS]  on [ENTER DATE OF  EFFECTIVENESS]  and we have no knowledge,
after  telephonic  inquiry of a member of the SEC's  staff,  that any stop order
suspending its  effectiveness  has been issued or that any  proceedings for that
purpose  are  pending  before,  or  threatened  by, the SEC and the  Registrable
Securities  are  available  for  resale  under  the  1933  Act  pursuant  to the
Registration Statement.

                                            Very truly yours,

                                            [ISSUER'S COUNSEL]

                                            By:
                                               --------------------------------
cc:     CORNELL CAPITAL PARTNERS L.P.

                                       16

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