Document:

Exhibit 4.4

 

GLOBAL THERMOELECTRIC INC.

 AMENDED INCENTIVE STOCK OPTION PLAN

1.         INTERPRETATION

In this Plan (including this clause), unless
there is something in the subject or context inconsistent therewith, words
importing the singular number include the plural and vice versa, words
importing the masculine gender include the feminine and neuter genders and the
expressions following have the following meanings, respectively:

(a)        "Board" means the Board of Directors of the
Corporation;

(b)        "Common Share" means a voting common share in the
capital stock of the Corporation and, after the adjustments pursuant to Clause
7 hereof, means the shares or other securities or property which, as a result
of such adjustments and all prior adjustments pursuant to Clause 7, the holders
of Options are then entitled to receive on the exercise thereof;

(c)        "Committee" means a committee of Directors appointed
by the Board in accordance with Clause 3 hereof;

(d)        "Corporation" means Global Thermoelectric Inc. and any
successor or continuing corporation resulting from any form of corporate
reorganization;

(e)        "Early Termination Date" means, in respect of any
Option, 5:00 p.m. (Calgary time) on the date that an Option terminates prior to
the Normal Expiry Date;

(f)         "Exchange" means The Toronto Stock Exchange;

(g)        "Expiry Date" means the Normal Expiry Date or the
Early Termination Date, as the case may be;

(h)        "Normal Expiry Date" means, in respect of any Option, 5:00 p.m. (Calgary time) on the date determined by the Corporation on which the Option
would normally terminate which date may not be later than 5 years after the
Option Date;

(i)         "Option" means a right to purchase Common Shares
pursuant to the Plan and an Option Agreement;

(j)         "Option Agreement" means an agreement entered into
between the Corporation and a Participant pursuant to which an Option is
granted to a Participant and which contains such provisions not inconsistent
with the Plan as the Board or the Committee may determine;

 

 

(k)        "Option Date" means the date on which an Option is
granted by the Corporation to a Participant which for greater certainty is the
date on which the grant of the Option is approved by the Board or the
Committee, as the case may be;

(l)         "Option Shares" means the Common Shares which a
Participant is entitled to purchase under an Option whether or not the rights
to purchase all such Common Shares have vested in and to the Optionee;

(m)       "Optionee" means the Participant who has entered into
an Option Agreement with the Corporation;

(n)        "Participant" means, on any date, a person who is at
least one of the following:

(i)         a person who is regularly employed by the Corporation or one
of its subsidiaries on that date;

(ii)        an officer of the Corporation or one of its subsidiaries on
that date;

(iii)       a director of the Corporation or one of its subsidiaries on
that date; or

(iv)       a consultant who is providing ongoing services to the
Corporation or one of its subsidiaries on that date;

(o)        "Plan" means the Corporation's "Incentive Stock Option
Plan" as embodied herein as from time to time amended; and

(p)        "Purchase Price" means the purchase price of Option
Shares under the Option Agreement determined as provided in subclause 6(b) of
this Plan.

2.         PURPOSE OF THE PLAN

The purpose of the Plan is to develop the
interest of Optionees in the growth and development of the Corporation by
providing such persons with the opportunity to acquire an increased proprietary
interest in the Corporation and to better enable the Corporation and its
subsidiaries to attract and retain persons of desired experience and ability.

3.         ADMINISTRATION, PARTICIPANTS AND ALLOTMENTS

(a)        The Board will administer the Plan.  The Board may at any
time or from time to time delegate to the Committee the responsibility for
administering the Plan or elements thereof.  The Board, or the Committee if so
empowered, will determine from time to time those Participants to whom Options
should be granted, the Normal Expiry Date, the number of Common Shares which
should be optioned from time to time to any Participant (subject to subclause
3(d) and clause 4) and such other terms and conditions of the Option Agreement,
not inconsistent with the Plan, as the Board or the Committee in its discretion
may determine.  The Board or the Committee may prescribe rules and regulations
relating to the Plan and any Options granted hereunder and may approve the form
and content and prescribe the use of such forms of applications, directions,
powers of attorney, and other documents or instruments, either generally or in
specific cases, as may be deemed necessary or advisable, for the grant or
issuance of Options under the Plan and for the proper administration and
operation of the Plan.  The Board or the Committee will review the Plan from
time to time with a view to making revisions to it, granting additional Options
and, in the case of the Committee, making appropriate recommendations to the
Board.  Nothing contained in the Plan or in any resolution adopted or to be
adopted by the Board or by the Committee constitutes an Option hereunder.  An
Option granted by the Board to a Participant pursuant to the Plan is subject
to, and is of no force and effect until, the execution and delivery of, an
Option Agreement by both the Corporation and such Participant.

 

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(b)        The Corporation is responsible for all costs of
administration of the Plan.

(c)        The implementation of the Plan, the grant of any Options
pursuant to the Plan and, from time to time, the operation and administration
of the Plan is subject to receipt by the Corporation of all necessary
approvals, advance rulings, exemptions or registrations required or deemed
advisable under applicable law or regulation including without limiting the generality
of the foregoing, all necessary approvals or registrations required by any and
all stock exchanges upon which the Common Shares are listed.

(d)        The number of Option Shares that may be reserved for allotment
to one person pursuant to Options must not exceed 5% of the outstanding Common
Shares as at the date of grant.

4.         COMMON SHARES RESERVED

The Corporation reserves for issuance
3,050,000 Common Shares for the purposes of granting Options to Participants
pursuant to the Plan.  In no event may the number of Option Shares issued under
this Plan exceed the total number of Common Shares reserved by the Corporation
for issuance hereunder.  Any Option Shares covered by any Option which are not
purchased prior to the expiration or termination of such Option become part of
the Common Shares reserved for issuance in accordance with the terms of the
Plan but unallocated to any particular Option.

5.         PARTICIPATION VOLUNTARY

Participation in the Plan by a Participant is
entirely voluntary and does not affect the Participant's employment or
continued retainer by, or other engagement with, the Corporation or its
subsidiaries.  Neither the Plan nor any Options granted under the Plan of
itself gives any Participant the right to continue to be an employee, officer,
director or consultant of the Corporation or any subsidiary thereof.  None of
the terms and conditions governing the Option are affected by any change in the
Optionee's employment by or engagement with the Corporation so long as the
Optionee continues to be a Participant.

 

 

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6.         CERTAIN TERMS OF OPTION AGREEMENTS

An Option Agreement may, in respect of any
Option, specify a number or percentage of Option Shares that the Participant
may exercise in any specified period, year or number of years.  In addition,
Option Agreements are deemed to contain the following provisions with respect
to the exercise of Options under the Plan:

(a)        An Option under the Plan is only exercisable for a minimum of
100 Common Shares at any one time.

(b)       (i)         The Purchase Price shall be fixed by the Board or
the Committee on the Option Date and shall be no less than:

(A)       the closing price of Common Shares traded on the Exchange on
the last trading day immediately prior to the Option Date; or,

(B)       if the Common Shares did not trade on the Exchange on such
day, a price determined in respect of the Common Shares by the Board or the
Committee acting in goof faith,

subject always to a minimum Purchase Price of $0.10 per share.

(ii)        Upon exercise of the Option, the Purchase Price must be paid
in full in respect of those Option Shares being acquired in Canadian funds by
cash, certified checque or bank draft payable to or to the order of the
Corporation at the time of exercise.

(c)        Each Option terminates on its Normal Expiry Date but subject
always to the provisions of subclause 6(d).

(d)        If, after the Option Date and on or before the exercise if
full of the Option or the Normal Expiry Date, the Optionnee ceases to be a
Participant:

(i)         by reason of the Optionee's permanent physical or mental
disability (defined herein to mean when such person is unable to perform his or
her duties or when such person becomes entitled to long term disability
payments pursuant to the Corporation's disability insurance program), retirement
with the consent of Corporation or death, then such Optionee's Option may be
exercised to purchase the total number of Option Shares not previously
purchased by the Optionee whether or not the rights to purchase some or all of
those Option Shares have previously vested in and are exercisable by the
Optionee as at the date of such ceasing to be a Participant, provided such
exercise occurs at any time on or before the earlier of the Normal Expiry Date
and the date that is 90 days after the date the Optionee ceases to be a
Participant due to such permanent physical or mental disability, retirement
with the consent of the Corporation or death.  Thereafter, the Option and all
unexercised rights to acquire Option Shares thereunder cease and expire and are
of no further force and effect.  For greater certainty but without limiting the
generality of the foregoing, if the Optionee is deemed to be an employee of the
Corporation pursuant to a medical or disability plan of the Corporation or a
subsidiary thereof, the Optionee is deemed to be an employee for the purpose of
the Plan and the Option; or

 

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(ii)        for any reason other than the Optionee's permanent physical
or mental disability, retirement with the consent of the Corporation or death,
and the Optionee is terminated without notice, the Optionee may exercise the
Option to purchase Option Shares not previously purchased by the Optionee but
only to the extent that rights to purchase Option Shares have vested in and are
exercisable by the Optionee as at the date of such ceasing to be a Participant,
provided that such exercise occurs at the time on or before the earlier of the
Normal Expiry Date and the date that is 30 days after the Optionee ceases to be
a Participant.  Thereafter, the Option and all unexercised rights to acquire
Option Shares thereunder, whether or not such rights have bested to and in
favour of the Optionee, cease and expire and are of no further force and
effect; or

(iii)       for any reason other than the Optionee's permanent physical
or mental disability, retirement with consent of the Corporation, death, or
termination without notice, and the Optionee is entitled to reasonable notice
of termination of employment or compensation in lieu thereof, then:

(A)       the Optionee may exercise the Option to purchase Option Shares
not previously purchased by the Optionee but only to the extent that rights to
purchase Option Shares have vested in and are exercisable by the Optionee on or
before the date of such ceasing to be a Participant, provided that such
exercise occurs at the time on or before the earlier of the Normal Expiry Date
and the date that the Optionee ceases to be eligible to be a Participant; and

(B)       the Optionee is not entitled:

(1)        to further time to exercise the Option during such reasonable
notice period or during such specific notice period; or

(2)        to compensation in lieu thereof by way of general damages, or
special damages, whether in contract, tort or otherwise.

Thereafter,
the Option and all unexercised rights to acquire Option Shares thereunder, whether
or not such rights have vested to and in favour of the Optionee, cease and
expire and are of no further force and effect.

(e)        With respect to subclause 6(d)(i), the rights under the Option
exercisable after the death of the Optionee, as therein specified, may be
exercised by the person or persons to whom the Optionee's rights under the
Option Agreement pass by will or applicable law or, if no such person has such
right, by the deceased Optionee's legal representatives.

 

 

 

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(f)         An Optionee has no rights whatsoever as a shareholder in
respect of any of the Option Shares (including any right to receive dividends
or other distributions therefrom or thereon) other than in respect of Common
Shares in respect of which the Optionee has exercised his Option to purchase
thereunder, which the Optionee has actually taken up and paid for, and which
have been duly issued to the Optionee and are outstanding as fully paid and
non-assessable Common Shares.

7.         CHANGES IN STOCK

In the event:

(a)       of any change or proposed change in the Common Shares through
subdivision, consolidation, reclassification, amalgamation, merger or
otherwise;

(b)        of any insurance, dividend or distribution to all or
substantially all the holders of Common Shares of any shares, securities,
property or assets of the corporation other than in the ordinary course;

(c)        that as a result of any recapitalization, merger,
consolidation or otherwise the Common Shares are converted into a exchangeable
for any other shares or securities;

then in any such case:

(d)        the Board will proportionately adjust the number of Option
Shares available for Options, the number of Option Shares covered by
outstanding Options, the securities or other property that may be acquired upon
the exercise of an Option and the price per Option Share in such Option, or one
or more of the foregoing, to prevent substantial dilution or enlargement of the
rights granted to, or available for, Optionees.  No fractional shares shall be
issued and the Board may determine the manner in which fractional shares value
shall be treated; and

(e)        the Board, in its discretion, may determine that;

(i)         all or any part of the unexercised and unvested outstanding
Options granted under the Plan vest and are exercisable on a date specified by
the Board and the unexercised and unvested portion of such Options are
thereupon deemed to have been vested and are exercisable on and after the date
so specified in respect of any and all Option Shares for which the Optionee has
not exercised the Option (notwithstanding that an Option Agreement states that
those Options are exercisable only during the later period or year); or 

(ii)        such Options may be exercisable for a limited period of time
only and, if so, the Board will determine such period of time,

 

 

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and such
determination or limitation, once made or set, is deemed to be incorporated in
the applicable Option Agreement(s).

8.         TAKEOVER BID

Notwithstanding the terms of any Option
Agreement and Clause 6 of this Plan, upon the making of an Offer, all
unexercised and unvested outstanding Options granted under the Plan vest and
become immediately exercisable in respect of any and all Option Shares for
which the Optionee has not exercised the Option (notwithstanding that an Option
Agreement states that those Options are exercisable only during a later period
or year).  For the purposes hereof, "Offer" means an offer made generally to
the holders of the Corporation's voting securities in one or more jurisdictions
to acquire, directly or indirectly, voting securities of the Corporation and
which is n the nature of a "takeover bid" as defined in the Securities Act
(Alberta), as amended from time to time (the "Act") and, where the Common
Shares are listed and posted for trading on a stock exchange, not exempt from
the formal bid requirements of the Act.  Any Option remaining unexercised
following the earlier of the withdrawal of such Offer and the expiry of such
Offer in accordance with its terms again becomes vested or unvested subject to
the original terms of the Option Agreement as if the Offer had not been made.

9.         SALE OF ASSETS OR CHANGE IN CONTROL

Notwithstanding the terms of any Option
Agreement and Subclause 6(a) of this Plan, if:

(a)        the Corporation sells or otherwise disposes of all or substantially
all of its assets; or

(b)        any person who does not hold more than 20% of the issued and
outstanding Common Shares acquires more than 20% of the outstanding Common
Shares without the prior consent of the Board, in any way other than by way of
takeover bid (which circumstance is addressed in Clause 8 of this Plan),

all
unexercised and unvested outstanding Options granted under the Plan vest and
are immediately exercisable in respect of any and all Option Shares for which
the Optionee has not exercised the Option (notwithstanding that an Option
Agreement states that those Options are exercisable only during a later period
or year).  The Board, in its discretion, may determine whether such Options may
be exercisable for a limited period of time only and, if so, the Board will
determine such period of time and such determination or limitation, or made or
set, is deemed to be incorporated into the applicable Option Agreement(s).

10.       COMMON SHARES FULLY PAID AND NON-ASSESSABLE

All Common Shares issued upon the exercise of
any Option are to be issued as fully paid and non-assessable Common Shares.

11.       CONDITIONS OF ISSUANCE OF SHARES

 

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(a)        If at any time the Board determines, in its discretion that:

(i)         the registration or qualification of the Common Shares which
are the subject of any Option Agreement upon, or the consent or approval of,
any securities exchange or any stock exchange upon which the Common Shares are
listed;

(ii)        the registration or qualification under any laws of Canada
or any Province thereof or of the Untied States or any state thereof or the
consent or approval of any regulatory authority thereof;

(iii)       evidence (in form and content satisfactory to the Board) of
the investment intent of the Optionee; or

(iv)       an undertaking of the Optionee as to the sale or disposition
of such Option Shares that may be purchased pursuant to an Option Agreement to
the effect that such Option Shares once purchased are not to be traded by the
Optionee for a specified period of time;

is necessary
or desirable as a condition of the issuance of any Option Shares pursuant to
any Option Agreement, then the issuance of any Common Shares is not to be made
unless and until such registration, qualification, consent, approval, evidence
or undertaking has been effected or obtained free of any condition not
acceptable to the Board.

(b)        Any trade by the Optionee in any Common Shares issued to the
Optionee pursuant to the Plan including, without limiting the generality of the
foregoing, any sale or disposition for valuable consideration, and any
transfer, pledge or encumbrance of any Common Shares issued to an Optionee
pursuant to the Plan, is subject to such regulatory approvals as may be
required at the time of such trade.  Accordingly, the Corporation makes no
representation as to the ability of any Optionee to trade in such Common
Shares.

(c)        The Corporation cannot assure a profit or protect the
Optionee against a loss on the Common Shares purchased under the Plan.  The
Corporation assumes no responsibility relating to any tax liability of the
Optionee by reason of the exercise of any Option or any subsequent trade.

12.       ACCOUNTS AND STATEMENTS

The Corporation will maintain records
indicating the number of Options granted to each Optionee and the number of
Options exercised under the Plan.  Upon written request from an Optionee, the
Corporation will furnish to the Optionee a statement indicating the number of
Options held on his behalf.

13.       INTERPRETATION, AMENDMENT AND DISCONTINUANCE

The Board may interpret the Plan, prescribe,
amend or rescind rules and regulations relating to it, and make all other
determinations necessary or advisable for its administration.  In the event of
a conflict between the terms of the Plan and an Option Agreement, the terms of
the Plan prevail.  The Board may from time to time alter, suspend or
discontinue the Plan provided that such alteration, suspension or
discontinuance does not, except as specifically noted in this Plan or the
Option Agreement, alter or impair any Option such Optionee may have under any
Option Agreement previously executed and delivered by the Corporation and such
Optionee.  Any amendment to this Plan is subject to receipt of any necessary
regulatory approvals and any amendment required by Alberta law to be approved
by shareholders does not become effective until so approved.  Subject to the
foregoing provisions of this Clause, the Board may terminate the Plan at any
time and upon such termination any such outstanding Option remains exercisable
in accordance with its terms as specified herein and in the Option Agreement.

 

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14.       WAIVER

No waiver by the Corporation of any term of
this Plan or any breach thereof by an Optionee is effective or binding on the
Corporation unless the same is expressed in writing and any waiver so expressed
does not limit or affect its rights with respect to any other or future breach.

15.       NOTICES

The manner of giving notices to the
Corporation or to an Optionee is to be specified in the Option Agreement with
such Optionee.

16.       GENERAL

(a)        This Plan and each Option granted under the Plan are to be
governed by and construed in accordance with the laws of the Province of Alberta
and any Option Agreement entered into pursuant to the Plan is to be treated in
all respects as an Alberta contract.

(b)        Nothing contained herein restricts or limits or is deemed to
restrict or limit the rights or powers of the Board in connection with any
allotment and issuance of shares in the capital stock of the Corporation which
are not reserved for issuance hereunder.

(c)        The Plan and any Option Agreement entered into pursuant
hereto enure to the benefit of and are binding upon the Corporation, its
successors and assigns.  The interest of any Optionee hereunder or under any
Option Agreement is not transferable or alienable by the Optionee either by assignment
or in any other manner whatsoever and, during his lifetime, is vested only in
him, but, subject to the terms hereof and of the Option Agreement, enures to
the benefit of and is binding upon the legal personal representatives of the
Optionee.

17.       SHAREHOLDER APPROVAL AND EFFECTIVE DATE

Although this Plan is effective as and from,
and the effective date of the Plan is, December 12, 1996, each of the Option
Agreements in respect of Options granted pursuant to this Plan is to contain a
restriction to the effect that, where the Common Shares are listed and posted
for trading on a stock exchange, no Common Shares are to be issued pursuant to
the exercise of Option unless and until this Plan is approved by shareholders
of the Corporation (such restriction to be removed once shareholder approval is
obtained).

 

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DATED at Calgary, Alberta, the 12th
day of December, 1996 as amended the 11th day of August, 1997, the
17th day of July, 1998, the 2nd day of June, 1999, the 9th
day of August, 2000 and the 29th day of March, 2001.

 

On behalf of the Board of Directors of

GLOBAL THERMOELECTRIC INC.

                                                               

Jim Perry, President

 

 

 

 

 

 

10Exhibit 10.18.1

                          SECURITIES PURCHASE AGREEMENT

         THIS  SECURITIES  PURCHASE  AGREEMENT  (this  "Agreement")  is made and
entered  into as of October  29,  2003,  by and  between  INYX,  INC.,  a Nevada
corporation  (the  "Company"),  and INYX PHARMA LTD., a corporation  established
under the law of England and Wales (the  "Subsidiary")  and Laurus  Master Fund,
Ltd.,  a  Cayman  Islands  company  (the  "Purchaser").  (The  Company  and  the
Subsidiary are collectively referred to herein as the "Borrower").

                                    RECITALS

         WHEREAS,  the Borrower has  authorized  the sale to the  Purchaser of a
Convertible  Term Note in the  aggregate  principal  amount of  $4,500,000  (the
"Note"),  which Note is convertible  into shares of the Company's  common stock,
$.001 par value per share (the "Common  Stock") at a fixed  conversion  price of
$1.00 per share of Common Stock ("Fixed Conversion Price");

         WHEREAS,  the  Company  wishes to issue a warrant to the  Purchaser  to
purchase up to 1,350,000 shares of the Company's Common Stock in connection with
Purchaser's purchase of the Note;

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

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

                                    AGREEMENT

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

1.       AGREEMENT TO SELL AND  PURCHASE.  Pursuant to the terms and  conditions
set forth in this Agreement,  on the Closing Date (as defined in Section 3), the
Borrower  agrees to sell to the  Purchaser,  and the Purchaser  hereby agrees to
purchase  from the Borrower a Note in the amount of  $4,500,000  convertible  in
accordance  with the terms thereof into shares of the Company's  Common Stock in
accordance with the terms of the Note and this Agreement.  The Note purchased on
the Closing Date shall be known as the "Offering." A form of the Note is annexed
hereto as Exhibit A. The Note will have a Maturity Date (as defined in the Note)
thirty six (36) months  from the date of  issuance.  Collectively,  the Note and
Warrant  (as defined in Section 2) and Common  Stock  issuable in payment of the
Note,  upon conversion of the Note and upon exercise of the Warrant are referred
to as the "Securities".

                                      C-1
<PAGE>

2.       FEES AND WARRANT. On the Closing Date:

                  (a) The  Company  will issue and  deliver to the  Purchaser  a
Warrant to  purchase  1,350,000shares  of Common  Stock in  connection  with the
Offering  (the  "Warrant")  pursuant to Section 1 hereof.  The  Warrant  must be
delivered on the Closing Date. A form of Warrant is annexed hereto as Exhibit B.
All   the   representations,    covenants,    warranties,    undertakings,   and
indemnification,  and other  rights made or granted to or for the benefit of the
Purchaser  by the  Company  are hereby  also made and  granted in respect of the
Warrant and shares of the Company's  Common Stock  issuable upon exercise of the
Warrant (the "Warrant Shares").

                  (b) Upon  execution  and  delivery  of this  Agreement  by the
Company and Purchaser, the Company shall pay to Laurus Capital Management,  LLC,
manager of Purchaser  (i) a closing  payment in an amount equal to three and one
half percent (3.5%) of the aggregate principal amount of the Note. The foregoing
fee is referred to herein as the "Closing Payment".

                  (c)  The  Company  shall   reimburse  the  Purchaser  for  its
reasonable  legal  fees not to  exceed  $37,500  for  services  rendered  to the
Purchaser  in  preparation  of this  Agreement  and the Related  Agreements  (as
hereinafter  defined),  and  expenses in  connection  with the  Purchaser's  due
diligence review of the Company and relevant matters.

                  (d) The Closing  Payment,  legal fees and due  diligence  fees
(net of the $10,000  deposit  previously paid by the Company on October 7, 2003)
shall be paid at closing out of funds held pursuant to a Funds Escrow  Agreement
of even date  herewith  among the company,  Purchaser,  and an Escrow Agent (the
"Funds Escrow Agreement") and a disbursement letter (the "Disbursement Letter").

3.       CLOSING, DELIVERY AND PAYMENT.

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

         3.2      Delivery.  Pursuant to the Funds Escrow  Agreement in the form
attached  hereto as Exhibit C, at the Closing on the Closing Date,  the Borrower
will deliver to the Purchaser,  among other things,  a Note in the form attached
as Exhibit A  representing  the principal  amount of $4,500,000 and a Warrant in
the form attached as Exhibit B in the Purchaser's  name  representing  1,350,000
Warrant Shares and the Related Agreements (defined below) and the Purchaser will
deliver  to the  Company,  among  other  things,  the  amounts  set forth in the
Disbursement Letter by certified funds or wire transfer.

4.       REPRESENTATIONS AND WARRANTIES OF THE BORROWER .

         Each of the Company and the  Subsidiary  hereby  jointly and  severally
represents and warrants to the Purchaser as of the date of this Agreement as set
forth below which  disclosures are supplemented by, and subject to the Company's
filings under the Securities Exchange Act of 1934  (collectively,  the "Exchange
Act Filings"), copies of which have been provided to the Purchaser.

                                       C-2
<PAGE>

         4.1      Organization,  Good  Standing and  Qualification.  Each of the
Company and the Subsidiary (a) is a corporation duly organized, validly existing
and in  good  standing  under  the  laws of its  incorporation;  and (b) has the
corporate  power and authority to own and operate its properties and assets,  to
execute and deliver this Agreement, and the Note and the Warrant to be issued in
connection  with this  Agreement,  the security  agreement  relating to the Note
dated as of October 29, 2003 between the Borrower and the  Purchaser  (including
all  documentation  requested by the Purchaser in  connection  with granting and
perfection of a security  interest in the collateral of the Borrower  located in
the  United  Kingdom  (the  "Collateral")  (the "UK  Security  Agreements")  the
Registration Rights Agreement relating to the Securities dated as of October 29,
2003 between the Company and the Purchaser and all other agreements  referred to
herein (collectively,  the "Related Agreements"), to issue and sell the Note and
the  shares of Common  Stock  issuable  upon  conversion  of the Note (the "Note
Shares"), to issue and sell the Warrant and the Warrant Shares, and to carry out
the provisions of this Agreement and the Related  Agreements and to carry on its
business as presently conducted.  Each of the Company and the Subsidiary is duly
qualified  and is authorized to do business and is in good standing as a foreign
corporation  in all  jurisdictions  in which the nature of its activities and of
its  properties  (both owned and  leased)  makes such  qualification  necessary,
except  for  those  jurisdictions  in which  failure  to do so would  not have a
material  adverse  effect on the Company or the  subsidiary or their  respective
businesses.

         4.2      Subsidiaries. Except as set forth on Schedule 4.2, the Company
owns all of the issued and  outstanding  capital  stock of the  Subsidiary.  The
Company  does not own or control any equity  security  or other  interest of any
other corporation, limited partnership or other business entity.

         4.3      Capitalization; Voting Rights.

                  (a) The  authorized  capital  stock of the Company,  as of the
date hereof consists of  160,000,000shares,  of which  150,000,000 are shares of
Common Stock, par value $.001 per share,  25,450,000  shares of which are issued
and  outstanding,  and 10,000,000 are shares of preferred stock, par value $.001
per share of which no shares  are issued  outstanding.  The  authorized  capital
stock of the Subsidiary,  as of the date hereof consists of 1,250,000 shares, of
which 1,250,000 are shares of Common Stock,  par value 0.001 GB pence per share,
1,000,000 shares of which are issued and outstanding.

                  (b) Except as  disclosed on Schedule  4.3,  other than (i) the
shares reserved for issuance under the Borrower's  stock option plans;  and (ii)
shares  which  may be  granted  pursuant  to  this  Agreement  and  the  Related
Agreements,  there  are no  outstanding  options,  warrants,  rights  (including
conversion  or  preemptive  rights  and  rights  of  first  refusal),  proxy  or
stockholder  agreements,  or  arrangements  or  agreements  of any  kind for the
purchase or acquisition  from the Borrower of any of its  securities.  Except as
disclosed  on Schedule  4.3,  neither the offer,  issuance or sale of any of the
Note or Warrant,  or the  issuance of any of the Note Shares or Warrant  Shares,

                                       C-3
<PAGE>

nor the  consummation  of any transaction  contemplated  hereby will result in a
change in the price or number of any  securities  of the  Borrower  outstanding,
under  anti-dilution or other similar  provisions  contained in or affecting any
such securities.

                  (c) All issued and outstanding  shares of the Company's Common
Stock (i) have been duly  authorized  and validly  issued and are fully paid and
nonassessable  and (ii) were issued in compliance with all applicable  state and
federal laws concerning the issuance of securities.

                  (d) The rights,  preferences,  privileges and  restrictions of
the  shares of the  Common  Stock are as stated  in the  Company's  Articles  of
Incorporation (the "Charter"). The Note Shares and Warrant Shares have been duly
and validly reserved for issuance. When issued in compliance with the provisions
of this  Agreement and the Company's  Charter,  the  Securities  will be validly
issued,  fully  paid  and  nonassessable,  and  will  be free  of any  liens  or
encumbrances;   provided,  however,  that  the  Securities  may  be  subject  to
restrictions on transfer under state and/or federal securities laws as set forth
herein or as otherwise required by such laws at the time a transfer is proposed.

         4.4      Authorization;  Binding  Obligations.  All corporate action on
the  part  of the  Borrower  , its  officers  and  directors  necessary  for the
authorization of this Agreement and the Related  Agreements,  the performance of
all obligations of the Borrower hereunder at the Closing and, the authorization,
sale,  issuance  and  delivery of the Note and Warrant has been taken or will be
taken prior to the  Closing.  The  Agreement  and the Related  Agreements,  when
executed and  delivered and to the extent it is a party  thereto,  will be valid
and binding  obligations of the Borrower  enforceable  in accordance  with their
terms,   except   (a)  as   limited  by   applicable   bankruptcy,   insolvency,
reorganization,  moratorium  or  other  laws of  general  application  affecting
enforcement  of  creditors'  rights,  and (b) general  principles of equity that
restrict the  availability of equitable or legal remedies.  The sale of the Note
and the subsequent  conversion of the Note into Note Shares are not and will not
be subject to any  preemptive  rights or rights of first  refusal  that have not
been  properly  waived or  complied  with.  The  issuance of the Warrant and the
subsequent  exercise of the  Warrant for Warrant  Shares are not and will not be
subject to any  preemptive  rights or rights of first refusal that have not been
properly waived or complied with.

         4.5      Liabilities.  The Borrower, to the best of its knowledge,  has
no material contingent  liabilities,  except current liabilities incurred in the
ordinary  course of business  and  liabilities  disclosed  in any  Exchange  Act
Filings or as set forth on Schedule 4.5.

         4.6      Agreements;  Action. Except as set forth on Schedule 4.6 or as
disclosed in any Exchange Act Filings:

                  (a)  There  are no  agreements,  understandings,  instruments,
contracts,  proposed transactions,  judgments, orders, writs or decrees to which
the  Borrower  is a party or to its  knowledge  by which it is bound  which  may
involve (i)  obligations  (contingent  or  otherwise)  of, or  payments  to, the
Borrower in excess of $100,000  (other than  obligations of, or payments to, the
Borrower  arising from purchase or sale agreements  entered into in the ordinary
course of business),  or (ii) the transfer or license of any patent,  copyright,
trade  secret or other  proprietary  right to or from the  Borrower  (other than

                                       C-4
<PAGE>

licenses  arising  from the  purchase  of "off  the  shelf"  or  other  standard
products),  or (iii)  provisions  restricting  the  development,  manufacture or
distribution of the Borrower's products or services,  or (iv) indemnification by
the Borrower with respect to infringements of proprietary rights.

                  (b) Since June 30, 2003,  the Borrower has not (i) declared or
paid any dividends,  or authorized or made any distribution upon or with respect
to any class or series of its capital stock,  (ii) incurred any indebtedness for
money borrowed or any other liabilities (other than ordinary course obligations)
individually  in  excess of  $100,000  or,  in the case of  indebtedness  and/or
liabilities  individually  less than  $100,000,  in excess  of  $250,000  in the
aggregate,  (iii)  made any  loans or  advances  to any  person  not in  excess,
individually or in the aggregate, of $150,000,  other than ordinary advances for
travel  expenses,  or (iv) sold,  exchanged or otherwise  disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary course of
business.

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

         4.7      Obligations  to  Related  Parties.  Except  as  set  forth  on
Schedule 4.7 or in the Exchange Act  Filings,  there are no  obligations  of the
Borrower to officers, directors, stockholders or employees of the Borrower other
than (a) for payment of salary for services rendered and for bonus payments, (b)
reimbursement for reasonable  expenses  incurred on behalf of the Borrower,  (c)
for other standard employee  benefits made generally  available to all employees
(including  stock  option  agreements  outstanding  under any stock  option plan
approved by the Boards of Directors of the Borrower) and (d) obligations  listed
in the Borrower's  financial  statements or disclosed in any of its Exchange Act
Filings.  Except as  described  above or set forth on  Schedule  4.7,  or in the
Exchange  Act Filings  none of the  officers,  directors  or, to the best of the
Borrower's  knowledge,  key  employees  or  stockholders  of the Borrower or any
members of their immediate families, are indebted to the Borrower,  individually
or in the  aggregate,  in  excess of  $50,000  or have any  direct  or  indirect
ownership  interest  in any firm or  corporation  with  which  the  Borrower  is
affiliated or with which the Borrower has a business  relationship,  or any firm
or corporation which competes with the Borrower,  other than passive investments
in publicly traded companies  (representing  less than 1% of such company) which
may compete with the Borrower.  Except as described above, no officer,  director
or  stockholder,  or any member of their  immediate  families,  is,  directly or
indirectly,  interested  in any  material  contract  with  the  Borrower  and no
agreements, understandings or proposed transactions are contemplated between the
Borrower  and any such  person.  Except as set forth on  Schedule  4.7 or in the
Exchange Act  Filings,  the  Borrower is not a guarantor  or  indemnitor  of any
indebtedness of any other person, firm or corporation.

                                      C-5
<PAGE>

         4.8      Changes.  Since  June 30,  2003,  except as  disclosed  in any
Exchange  Act  Filings or in any  Schedule  to this  Agreement  or to any of the
Related Agreements, there has not been:

                  (a)  Any  change  in  the   assets,   liabilities,   financial
condition,  prospects or operations  of the Borrower,  other than changes in the
ordinary course of business,  none of which individually or in the aggregate has
had or is reasonably  expected to have a material adverse effect on such assets,
liabilities, financial condition, prospects or operations of the Borrower;

                  (b)  Any  resignation  or  termination  of  any  officer,  key
employee or group of employees of the Borrower;

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

                  (d) Any damage, destruction or loss, whether or not covered by
insurance,  materially  and  adversely  affecting  the  properties,  business or
prospects or financial condition of the Borrower;

                  (e) Any waiver by the  Borrower  of a  valuable  right or of a
material debt owed to it;

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

                  (g) Any material  change in any  compensation  arrangement  or
agreement with any employee, officer, director or stockholder;

                  (h) Any  declaration  or  payment  of any  dividend  or  other
distribution of the assets of the Borrower;

                  (i) Any labor organization activity related to the Borrower;

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

                  (k)  Any  sale,   assignment   or  transfer  of  any  patents,
trademarks, copyrights, trade secrets or other intangible assets;

                  (l) Any change in any material agreement to which the Borrower
is a party or by which it is bound which may materially and adversely affect the
business, assets, liabilities,  financial condition,  operations or prospects of
the Borrower;

                                      C-6
<PAGE>

                  (m) Any other event or condition of any character that, either
individually  or  cumulatively,  has or may materially and adversely  affect the
business, assets, liabilities,  financial condition,  prospects or operations of
the Borrower; or

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

         4.9      Title to  Properties  and Assets;  Liens,  Etc.  Except as set
forth on Schedule 4.9 ("Permitted Liens"), and except for non-material leases on
personal  property  involving  lease payments of less than $50,000 per year, the
Borrower has good and marketable  title to its  properties and assets,  and good
title to its  leasehold  estates,  in each case subject to no mortgage,  pledge,
lien,  lease,  encumbrance or charge,  other than (a) those resulting from taxes
which have not yet become delinquent,  (b) minor liens and encumbrances which do
not  materially  detract  from the  value of the  property  subject  thereto  or
materially  impair  the  operations  of the  Borrower,  and (c) those  that have
otherwise arisen in the ordinary course of business. All facilities,  machinery,
equipment,  fixtures, vehicles and other properties owned, leased or used by the
Borrower are in good  operating  condition and repair and are reasonably fit and
usable for the  purposes  for which they are being used.  Except as set forth on
Schedule  4.9, the  Borrower is in  compliance  with all material  terms of each
lease to which it is a party or is otherwise bound.

         4.10     Intellectual Property.

                  (a)  Schedule  4.10 lists all of the  Borrower's  intellectual
property. The Borrower owns or possesses sufficient legal rights to all patents,
trademarks,  service marks, trade names,  copyrights,  trade secrets,  licenses,
information  and  other  proprietary  rights  and  processes  necessary  for its
business as now conducted and to the Borrower's  knowledge as presently proposed
to be conducted (the "Intellectual Property"), without any known infringement of
the rights of others. There are no outstanding  options,  licenses or agreements
of any kind relating to the foregoing  proprietary  rights,  nor is the Borrower
bound by or a party to any  options,  licenses  or  agreements  of any kind with
respect to the patents,  trademarks,  service  marks,  trade names,  copyrights,
trade secrets, licenses,  information and other proprietary rights and processes
of any other person or entity  other than such  licenses or  agreements  arising
from the purchase of "off the shelf" or standard products.

                  (b) Except as set forth on Schedule 4.10, The Borrower has not
received any  communications  alleging that the Borrower has violated any of the
patents, trademarks,  service marks, trade names, copyrights or trade secrets or
other  proprietary  rights of any other  person or entity,  nor is the  Borrower
aware of any basis therefor.

                  (c) The  Borrower  does not believe it is or will be necessary
to utilize any  inventions,  trade secrets or proprietary  information of any of
its  employees  made  prior to their  employment  by the  Borrower,  except  for
inventions,  trade secrets or proprietary  information that have been rightfully
assigned to the Borrower.

         4.11     Compliance  with  Other  Instruments.  Except  as set forth on
Schedule  4.11,  the  Borrower is not in violation or default of any term of its
Charter or Bylaws,  or of any  material  provision of any  mortgage,  indenture,

                                      C-7
<PAGE>

contract, agreement,  instrument or contract to which it is party or by which it
is bound or of any judgment, decree, order or writ. The execution,  delivery and
performance of and compliance with this Agreement and the Related  Agreements to
which it is a party,  and the  issuance and sale of the Note by the Borrower and
the other  Securities by the Borrower each  pursuant  hereto,  will not, with or
without  the  passage of time or giving of notice,  result in any such  material
violation, or be in conflict with or constitute a default under any such term or
provision, or result in the creation of any mortgage,  pledge, lien, encumbrance
or  charge  upon  any  of the  properties  or  assets  of  the  Borrower  or the
suspension,  revocation,  impairment,  forfeiture  or  nonrenewal of any permit,
license,  authorization or approval applicable to the Borrower,  its business or
operations or any of its assets or properties.

         4.12     Litigation. Except as set forth on Schedule 4.12 hereto, there
is no action,  suit,  proceeding or investigation  pending or, to the Borrower's
knowledge,  currently threatened against the Borrower that prevents the Borrower
to enter into this  Agreement or the Related  Agreements,  or to consummate  the
transactions  contemplated  hereby or  thereby,  or which might  result,  either
individually or in the aggregate,  in any material adverse change in the assets,
condition,  affairs or prospects of the Borrower,  financially or otherwise,  or
any change in the current equity ownership of the Borrower,  nor is the Borrower
aware that there is any basis for any of the  foregoing.  The  Borrower is not a
party or subject to the provisions of any order, writ,  injunction,  judgment or
decree of any court or government agency or instrumentality. There is no action,
suit, proceeding or investigation by the Borrower currently pending or which the
Borrower intends to initiate.

         4.13     Tax Returns and  Payments.  The  Borrower has timely filed all
tax  returns  (federal,  state and local)  required to be filed by it. All taxes
shown to be due and payable on such returns, any assessments imposed, and to the
Borrower's  knowledge  all other  taxes due and  payable by the  Borrower  on or
before the Closing, have been paid or will be paid prior to the time they become
delinquent.  Except as set forth on Schedule  4.13,  the  Borrower  has not been
advised (a) that any of its returns,  federal,  state or other, have been or are
being audited as of the date hereof,  or (b) of any  deficiency in assessment or
proposed  judgment to its  federal,  state or other  taxes.  The Borrower has no
knowledge  of any  liability  of any tax to be imposed  upon its  properties  or
assets as of the date of this Agreement that is not adequately provided for.

         4.14     Employees.  Except as set forth on Schedule 4.14, the Borrower
has no collective bargaining  agreements with any of its employees.  There is no
labor  union  organizing  activity  pending  or,  to the  Borrower's  knowledge,
threatened with respect to the Borrower. Except as disclosed in the Exchange Act
Filings or on  Schedule  4.14,  the  Borrower  is not a party to or bound by any
currently effective  employment  contract,  deferred  compensation  arrangement,
bonus plan,  incentive plan, profit sharing plan,  retirement agreement or other
employee  compensation  plan  or  agreement.  To the  Borrower's  knowledge,  no
employee  of the  Borrower,  nor any  consultant  with  whom  the  Borrower  has
contracted, is in violation of any term of any employment contract,  proprietary
information  agreement or any other agreement  relating to the right of any such
individual to be employed by, or to contract with,  the Borrower  because of the
nature of the business to be conducted by the  Borrower;  and to the  Borrower's
knowledge the continued employment by the Borrower of its present employees, and
the performance of the Borrower's  contracts with its  independent  contractors,
will not result in any such violation. The Borrower is not aware that any of its
employees is  obligated  under any contract  (including  licenses,  covenants or

                                      C-8
<PAGE>

commitments  of any  nature) or other  agreement,  or  subject to any  judgment,
decree or order of any court or administrative agency, that would interfere with
their duties to the Borrower.  The Borrower has not received any notice alleging
that any such  violation has  occurred.  Except for employees who have a current
effective  employment  agreement with the Borrower,  no employee of the Borrower
has been  granted the right to  continued  employment  by the Borrower or to any
material  compensation  following  termination of employment  with the Borrower.
Except  as set forth on  Schedule  4.14,  the  Borrower  is not  aware  that any
officer,  key  employee or group of employees  intends to terminate  his, her or
their  employment  with  the  Borrower,  nor does the  Borrower  have a  present
intention to terminate the  employment of any officer,  key employee or group of
employees.

         4.15     Registration Rights and Voting Rights.  Except as set forth on
Schedule  4.15 and except as disclosed in Exchange Act Filings,  the Borrower is
presently not under any obligation,  and has not granted any rights, to register
any of the Borrower's presently outstanding  securities or any of its securities
that may hereafter be issued. Except as set forth on Schedule 4.15 and except as
disclosed in Exchange Act Filings, to the Borrower's  knowledge,  no stockholder
of the  Borrower has entered  into any  agreement  with respect to the voting of
equity securities of the Borrower.

         4.16     Compliance with Laws; Permits. Except as set forth on Schedule
4.16, to its knowledge, the Borrower is not in violation in any material respect
of any  applicable  statute,  rule,  regulation,  order  or  restriction  of any
domestic  or foreign  government  or any  instrumentality  or agency  thereof in
respect of the conduct of its business or the ownership of its properties  which
violation  would   materially  and  adversely   affect  the  business,   assets,
liabilities,  financial condition,  operations or prospects of the Borrower.  No
governmental  orders,  permissions,  consents,  approvals or authorizations  are
required to be obtained and no  registrations or declarations are required to be
filed in connection  with the  execution and delivery of this  Agreement and the
issuance  of any of the  Securities,  except  such as has been duly and  validly
obtained or filed,  or with  respect to any filings  that must be made after the
Closing,  as will be filed in a timely  manner.  The  Borrower  has all material
franchises,  permits,  licenses  and any  similar  authority  necessary  for the
conduct of its  business as now being  conducted  by it, the lack of which would
materially and adversely affect the business, properties, prospects or financial
condition of the Borrower.

         4.17     Environmental   and  Safety  Laws.  The  Borrower  is  not  in
violation  of  any  applicable  statute,  law  or  regulation  relating  to  the
environment or occupational health and safety, and to its knowledge, no material
expenditures  are or will be required in order to comply with any such  existing
statute,  law or regulation.  Except as set forth on Schedule 4.17, no Hazardous
Materials (as defined below) are used or have been used,  stored, or disposed of
by the Borrower or, to the Borrower's  knowledge,  by any other person or entity
on any property owned,  leased or used by the Borrower.  For the purposes of the
preceding  sentence,  "Hazardous  Materials"  shall mean (a) materials which are
listed or  otherwise  defined as  "hazardous"  or "toxic"  under any  applicable
local,  state,  federal  and/or  foreign  laws and  regulations  that govern the
existence  and/or remedy of  contamination  on property,  the  protection of the
environment  from  contamination,  the  control of  hazardous  wastes,  or other
activities involving hazardous substances,  including building materials, or (b)
any petroleum products or nuclear materials.

                                      C-9
<PAGE>

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

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

         4.20     Insurance.  The  Borrower  has  general  commercial,   product
liability,  fire and  casualty  insurance  policies  with  coverages  which  the
Borrower believes are customary for companies similarly situated to the Borrower
in the same or similar business.

         4.21     SEC  Reports.  Except  as set  forth  on  Schedule  4.21,  the
Borrower has filed all proxy statements, reports and other documents required to
be filed by it under the Exchange  Act. The Borrower has furnished the Purchaser
with  copies of (i) its Annual  Report on Form  10-KSB for the fiscal year ended
December 31, 2002 and (ii) its  Quarterly  Reports on Form 10-QSB for the fiscal
quarters  ended March 31, 2003 and June 30, 2003, and the Form 8-K filings which
is has made during 2003 to date (collectively, the "SEC Reports"). Except as set
forth on Schedule  4.21,  each SEC Report  was,  at the time of its  filing,  in
substantial  compliance with the requirements of its respective form and none of
the SEC Reports,  nor the financial  statements (and the notes thereto) included
in the SEC Reports,  as of their respective  filing dates,  contained any untrue
statement of a material  fact or omitted to state a material fact required to be
stated  therein or necessary  to make the  statements  therein,  in light of the
circumstances under which they were made, not misleading.

         4.22     Listing. The Company's Common Stock is traded on the NASD Over
the Counter  Bulletin  Board  ("OTCBB") and satisfies all  requirements  for the
continuation  of such trading.  The Company has not received any notice that its
Common  Stock will be deleted  from the OTCBB or that its Common  Stock does not
meet all requirements for trading.

         4.23     No Integrated Offering.  Neither the Borrower,  nor any of its
affiliates,  nor any  person  acting on its or their  behalf,  has  directly  or
indirectly  made any offers or sales of any security or solicited  any offers to
buy any  security  under  circumstances  that would  cause the  offering  of the
Securities  pursuant to this Agreement to be integrated  with prior offerings by
the Borrower for purposes of the Securities Act which would prevent the Borrower
from selling the Securities  pursuant to Rule 506 under the  Securities  Act, or

                                      C-10
<PAGE>

any applicable  exchange-related  stockholder approval provisions,  nor will the
Borrower or any of its affiliates or subsidiaries  take any action or steps that
would  cause  the  offering  of  the  Securities  to be  integrated  with  other
offerings.

         4.24     Stop Transfer.  The Securities are restricted securities as of
the date of this  Agreement.  The Company will not issue any stop transfer order
or other order  impeding the sale and delivery of any of the  Securities at such
time as the  Securities  are  registered  for public sale or an  exemption  from
registration  is available,  except as required by state and federal  securities
laws.

         4.25     Dilution.  The  Company  specifically  acknowledges  that  its
obligation  to issue the shares of Common Stock upon  conversion of the Note and
exercise of the Warrant is binding upon the Company and  enforceable  regardless
of the  dilution  such  issuance  may have on the  ownership  interests of other
shareholders of the Company.

         4.26     Collateral  Representations,  Warranties  and  Covenants.  The
Borrower hereby jointly and severally  represents and warrants to Purchaser that
Units  1-3,  5-11 and sites 12, 13 and 18  Arkwright  Road,  Astmoor  Industrial
Estates, Runcorn,  Cheshire,  England (the "Real Estate") as of the date hereof,
the Real  Estate has an  appraised  liquidation  value of at least five  million
dollars  ($5,000,000)  and further that, a real  property  valuation of the Real
Estate has been conducted  within sixty days of the day hereof.  The Company has
submitted to Purchaser a true, correct and complete copy of such valuation.

         4.27     All of the  Collateral  (i) is  owned by the  Company  and the
Subsidiary  respectively  free and clear of all Liens  (including  any claims of
infringement)  except those in Purchaser's favor and Permitted Liens and (ii) is
not subject to any  agreement  prohibiting  the  granting of a lien or requiring
notice of or consent to the granting of a Lien.

         4.28     The liens granted pursuant to the UK Security Agreements, upon
completion of the filings and other actions  (which,  in the case of all filings
and other  documents  have been  delivered to Purchaser in duly  executed  form)
constitute valid perfected  security interests in all of the Collateral in favor
of Purchaser as security for the prompt and complete  payment and performance of
the all of the  obligations  of the Company and the  Subsidiary to the Purchaser
hereunder, pursuant to the Note and the Related Agreements (the "Obligations") ,
enforceable in accordance with the terms hereof against any and all creditors of
and any purchasers from the Company and the Subsidiary, except (a) as limited by
applicable bankruptcy, insolvency,  reorganization,  moratorium or other laws of
general application  affecting enforcement of creditors' rights, and (b) general
principles  of equity that  restrict  the  availability  of  equitable  or legal
remedies,  and such security  interest is prior to all other  Permitted Liens in
existence on the date hereof.

To the Company's knowledge,  except for liens held by ABN AMRO/Venture  Finance,
no effective security agreement,  mortgage,  deed of trust, financing statement,
equivalent security or lien instrument or continuation statement covering all or
any part of the  Collateral  is or will be on file or of  record  in any  public
office,  except those  relating to  Permitted  Liens or those that would fail to
have a material adverse effect.

                                      C-11
<PAGE>

5.       REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.

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

         5.1      No  Shorting.  The  Purchaser  or any of  its  affiliates  and
investment  partners will not and will not cause any person or entity,  directly
or indirectly,  to engage in "short sales" of the Company's  Common Stock for so
long as the Note shall be outstanding or such persons hold more than two and one
half percent (2.5%) of the then outstanding Common Stock of the Company.

         5.2      Requisite  Power and  Authority.  Purchaser  has all necessary
power and  authority  under all  applicable  provisions  of law to  execute  and
deliver  this  Agreement  and the  Related  Agreements  and to carry  out  their
provisions.  All corporate  action on  Purchaser's  part required for the lawful
execution and delivery of this Agreement and the Related Agreements have been or
will be  effectively  taken  prior to the  Closing.  Upon  their  execution  and
delivery,  this Agreement and the Related  Agreements  will be valid and binding
obligations of Purchaser, enforceable in accordance with their terms, except (a)
as limited by applicable bankruptcy, insolvency,  reorganization,  moratorium or
other laws of general  application  affecting  enforcement of creditors' rights,
and  (b)  as  limited  by  general   principles  of  equity  that  restrict  the
availability of equitable and legal remedies.

         5.3      Investment  Representations.  Purchaser  understands  that the
Securities are being offered and sold pursuant to an exemption from registration
contained in the Securities Act based in part upon  Purchaser's  representations
contained in the Agreement, including, without limitation, that the Purchaser is
an "accredited investor" within the meaning of Regulation D under the Securities
Act of 1933, as amended (the "Securities  Act"). The Purchaser  confirms that it
has  received  or has had  full  access  to all  the  information  it  considers
necessary or appropriate to make an informed investment decision with respect to
the Note and the Warrant to be purchased by it under this Agreement and the Note
Shares and the Warrant Shares acquired by it upon the conversion of the Note and
the exercise of the Warrant,  respectively.  The Purchaser further confirms that
it has had an opportunity to ask questions and receive  answers from the Company
regarding the Company's business, management and financial affairs and the terms
and conditions of the Offering,  the Note, the Warrant and the Securities and to
obtain  additional  information  (to  the  extent  the  Company  possessed  such
information  or  could  acquire  it  without  unreasonable  effort  or  expense)
necessary to verify any  information  furnished to the Purchaser or to which the
Purchaser had access.

         5.4      Purchaser  Bears  Economic  Risk.  Purchaser  has  substantial
experience in  evaluating  and investing in private  placement  transactions  of
securities  in  companies  similar  to the  Company  so  that it is  capable  of
evaluating  the merits and risks of its  investment  in the  Company and has the
capacity to protect its own interests.  Purchaser must bear the economic risk of
this  investment  until the  Securities  are sold  pursuant to (i) an  effective
registration  statement  under the  Securities  Act, or (ii) an  exemption  from
registration is available with respect to such sale.

                                      C-12
<PAGE>

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

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

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

         5.8      Legends.

                  (a) The Note shall bear substantially the following legend:

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

                  (b) The Note Shares and the Warrant  Shares,  if not issued by
DWAC  system (as  hereinafter  defined),  shall bear a legend  which shall be in
substantially  the following  form until such shares are covered by an effective
registration statement filed with the SEC:

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

                                      C-13
<PAGE>

                  (c) The Warrant shall bear substantially the following legend:

         "THIS  WARRANT AND THE COMMON  SHARES  ISSUABLE  UPON  EXERCISE OF THIS
         WARRANT HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
         AMENDED,  OR ANY APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE
         COMMON  SHARES  ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
         OFFERED  FOR  SALE,  PLEDGED  OR  HYPOTHECATED  IN  THE  ABSENCE  OF AN
         EFFECTIVE  REGISTRATION  STATEMENT AS TO THIS WARRANT OR THE UNDERLYING
         SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE  STATE  SECURITIES
         LAWS OR AN OPINION OF COUNSEL  REASONABLY  SATISFACTORY  TO INYX,  INC.
         THAT SUCH REGISTRATION IS NOT REQUIRED."

6.       COVENANTS OF THE COMPANY.  The Company and the  Subsidiary  jointly and
severally covenants and agrees, as applicable with the Purchaser as follows:

         6.1      Stop-Orders.  The Company will advise the Purchaser,  promptly
after it receives  notice of issuance by the Securities and Exchange  Commission
(the "SEC"), any state securities  commission or any other regulatory  authority
of any stop order or of any order  preventing or suspending  any offering of any
securities  of the Company,  or of the  suspension of the  qualification  of the
Common  Stock of the Company for  offering or sale in any  jurisdiction,  or the
initiation of any proceeding for any such purpose.

         6.2      Listing. If applicable,  the Company shall promptly secure the
listing of the shares of Common Stock  issuable upon  conversion of the Note and
upon the exercise of the Warrant on the OTCBB or other  exchange  upon which the
Common  Stock is traded (the  "Principal  Market")  upon which  shares of Common
Stock are traded  (subject to official  notice of issuance)  and shall  maintain
such listing so long as any other shares of Common Stock shall be so listed. The
Company will maintain the trading of its Common Stock on the  Principal  Market,
and will comply in all material  respects with the Company's  reporting,  filing
and other obligations  under the bylaws or rules of the National  Association of
Securities Dealers ("NASD") and such exchanges, as applicable.

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

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

                                      C-14
<PAGE>

         6.5      Use of  Funds.  The  Borrower  agrees  that  it  will  use the
proceeds  of the sale of the Note and Warrant  for  general  corporate  purposes
only.

         6.6      Access  to   Facilities.   The   Borrower   will   permit  any
representatives designated by the Purchaser (or any successor of the Purchaser),
upon  reasonable  notice and during  normal  business  hours,  at such  person's
expense and accompanied by a  representative  of the Borrower , to (a) visit and
inspect any of the  properties  of the  Borrower,  (b) examine the corporate and
financial  records of the Borrower  (unless such examination is not permitted by
federal,  state or local law or by contract) and make copies thereof or extracts
therefrom  and (c) discuss the  affairs,  finances  and accounts of the Borrower
with the  directors,  officers  and  independent  accountants  of the  Borrower.
Notwithstanding  the  foregoing,  the  Borrower  will not provide any  material,
non-public   information  to  the  Purchaser   unless  the  Purchaser   signs  a
confidentiality  agreement and otherwise  complies with Regulation FD, under the
federal securities laws.

         6.7      Taxes. The Borrower will promptly pay and discharge,  or cause
to be paid and discharged,  when due and payable, all lawful taxes,  assessments
and governmental charges or levies imposed upon the income, profits, property or
business of the  Borrower;  provided,  however,  that any such tax,  assessment,
charge or levy  need not be paid if the  validity  thereof  shall  currently  be
contested in good faith by  appropriate  proceedings  and if the Borrower  shall
have set  aside  on its  books  adequate  reserves  with  respect  thereto,  and
provided,  further,  that the  Borrower  will pay all such  taxes,  assessments,
charges or levies  forthwith upon the  commencement  of proceedings to foreclose
any lien which may have attached as security therefor.

         6.8      Insurance.  The Borrower  will keep its assets which are of an
insurable  character insured by financially sound and reputable insurers against
loss or damage by fire, explosion and other risks customarily insured against by
companies  in similar  business  similarly  situated  as the  Borrower;  and the
Borrower will maintain, with financially sound and reputable insurers, insurance
against  other  hazards and risks and  liability  to persons and property to the
extent and in the manner which the Borrower reasonably believes is customary for
companies  in similar  business  similarly  situated as the  Borrower and to the
extent available on commercially reasonable terms.

         6.9      Intellectual  Property.  The Borrower  shall  maintain in full
force and effect its corporate existence, rights and franchises and all licenses
and other  rights to use  Intellectual  Property  owned or  possessed  by it and
reasonably deemed to be necessary to the conduct of its business.

         6.10     Properties.  The  Borrower  will keep its  properties  in good
repair, working order and condition, reasonable wear and tear excepted, and from
time to time  make all  needful  and  proper  repairs,  renewals,  replacements,
additions and  improvements  thereto;  and the Borrower will at all times comply
with  each  provision  of all  leases  to which it is a party or under  which it
occupies  property if the breach of such provision could  reasonably be expected
to have a material adverse effect.

                                      C-15
<PAGE>

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

         6.12     Required Approvals. For so long as 25% of the principal amount
of the Note is outstanding,  the Borrower,  without the prior written consent of
the Purchaser, shall not:

                  (a) directly or indirectly declare or pay any dividends, other
than dividends with respect to its preferred stock;

                  (b) liquidate, dissolve or effect a material reorganization;

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

                  (d)  materially  alter or change the scope of the  business of
the Borrower.

         6.13     Reissuance  of  Securities.  The  Company  agrees  to  reissue
certificates  representing  the  Securities  without  the  legends  set forth in
Section 5.8 above at such time as (a) the holder thereof is permitted to dispose
of such Securities pursuant to Rule 144(k) under the Securities Act, or (b) upon
resale subject to an effective  registration statement after such Securities are
registered  under the  Securities  Act. The Company agrees to cooperate with the
Purchaser in connection with all resales pursuant to Rule 144(d) and Rule 144(k)
and provide legal opinions  necessary to allow such resales provided the Company
and its counsel receive reasonably  requested  representations  from the selling
Purchaser and broker, if any.

         6.14     Opinion.  On the Closing Date, the Company will deliver to the
Purchaser  an opinion  acceptable  to the  Purchaser  from the  Company's  legal
counsel.  The Company will provide,  at the Company's expense,  such other legal
opinions in the future as are  reasonably  necessary  for the  conversion of the
Note and exercise of the Warrant.

         6.15     Neither  the  Company  nor  the  Subsidiary   shall  encumber,
mortgage,  pledge,  assign or grant any lien in any Collateral of the Company or
the Subsidiary any of the Company's or the  Subsidiary's  other assets to anyone
other than Purchaser and except for Permitted Liens.

         6.16     Neither the Company nor the Subsidiary shall dispose of any of
the Collateral whether by sale, lease or otherwise except in the ordinary course
of  business  and for the  disposition  or transfer  in the  ordinary  course of
business  during any fiscal year of obsolete  and worn-out  Equipment  having an
aggregate fair market value of not more than $75,000 and only to the extent that
(i) the  proceeds  of any  such  disposition  are  used to  acquire  replacement
Equipment which is subject to Purchaser's  first priority  security  interest or
equivalent  or (ii) the proceeds of which are remitted to Purchaser in reduction
of the Obligations.

                                      C-16
<PAGE>

         6.17     Each of the Company and the Subsidiary shall defend the right,
title and interest of Purchaser in and to the Collateral  against the claims and
demands of all persons  whomsoever,  and take such  actions,  including  (i) all
actions  necessary  to grant  Purchaser  "control" of the  Collateral,  with any
agreements  establishing  control to be in form and  substance  satisfactory  to
Purchaser,  (ii) the prompt (but in no event later than five (5)  Business  Days
following  Purchaser's  request therefor)  delivery to Purchaser of all original
instruments,  chattel  paper,  and  negotiable  documents  which are part of the
Collateral and owned by the Company or the Subsidiary (in each case, accompanied
by stock powers,  allonges or other  instruments of transfer executed in blank),
(iii) notification of Purchaser's interest in Collateral at Purchaser's request,
and (iv) the institution of litigation against third parties as shall be prudent
in order to protect and preserve the Company's, the Subsidiary's and Purchaser's
respective and several interests in the Collateral.

         6.18     Each of the Company and the Subsidiary shall promptly,  and in
any event within four (4) Business Days after the same is acquired by it, notify
Purchaser of any commercial tort claim (as defined in the UCC), directly related
to the Collateral,  acquired by it and unless otherwise  consented by Purchaser,
the  Company  and or the  Subsidiary  shall  enter  into a  supplement  to  this
Agreement granting to Purchaser a lien in such commercial tort claim.

         6.19     The Company and the  Subsidiary  shall  place  notations  upon
their  books  and  records  and  any  consolidated  or  consolidating  financial
statement of Company to disclose Purchaser's lien on the Collateral.

         6.20     The Company and the  Subsidiary  shall perform in a reasonable
time all other steps  requested by Purchaser  to obtain  termination  of the ABN
AMRO/Venture Finance liens, and create and maintain in Purchaser's favor a valid
perfected first lien (or equivalent  thereof) in all Collateral  subject only to
Permitted Liens.

         6.21     The  Company  and/or the  Subsidiary  Guarantor  shall  notify
Purchaser  promptly  and in any  event  within  five  (5)  Business  Days  after
obtaining  actual  knowledge of any loss,  damage or  destruction  of any of the
Collateral.

         6.22     Each of the Company and the Subsidiary shall keep and maintain
its equipment in good  operating  condition,  except for ordinary wear and tear,
and shall make all necessary repairs and replacements  thereof so that the value
and operating efficiency shall, consistent with industry practices, at all times
be maintained  and preserved.  Each of the Company the Subsidiary  shall use its
best  efforts to avoid  having any such items become a fixture to real estate or
accessions to other personal property.

         6.23     The  Company  hereby  grants  to  Purchaser  a first  priority
security  interest in its trademarks  and will deliver an appropriate  financing
statement to Purchaser to perfect such security interest.

         6.24     The Company and the Subsidiary will bear the full risk of loss
from any loss of any nature  whatsoever with respect to the  Collateral.  At the
Company's  own  cost  and  expense  in  amounts  and  with  carriers  reasonably

                                      C-17
<PAGE>

acceptable to Purchaser, the Company and the Subsidiary Guarantor shall (i) keep
all its insurable  properties and properties in which it has an interest insured
against the hazards of fire, flood,  sprinkler leakage, those hazards covered by
extended coverage insurance and such other hazards,  and for such amounts, as is
customary  in the  case  of  companies  engaged  in  businesses  similar  to the
Company's or the Subsidiary's  including business interruption  insurance;  (ii)
maintain a bond in such amounts as is customary in the case of companies engaged
in businesses  similar to the  Company's or the  Subsidiary's  insuring  against
larceny,  embezzlement or other criminal  misappropriation of insured's officers
and  employees  who may either  singly or jointly  with  others at any time have
access  to the  assets  or funds  of the  Company  either  directly  or  through
governmental  authority  to draw upon  such  funds or to  direct  generally  the
disposition  of  such  assets;  (iii)  maintain  public  and  product  liability
insurance against claims for personal injury,  death or property damage suffered
by others; (iv) maintain all such worker's  compensation or similar insurance as
may be required under the laws of any state or jurisdiction in which the Company
or the  Subsidiary is engaged in business;  and (v) furnish  Purchaser  with (x)
copies of all policies and evidence of the maintenance of such policies at least
thirty  (30) days  before any  expiration  date,  (y)  excepting  the  Company's
workers' compensation policy,  endorsements to such policies naming Purchaser as
"co-insured" or "additional  insured" and appropriate loss payable  endorsements
in form and substance satisfactory to Purchaser, naming Purchaser as loss payee,
and (z)  evidence  that as to  Purchaser  the  insurance  coverage  shall not be
impaired or  invalidated  by any act or neglect of the Company or the Subsidiary
Guarantor and the insurer will provide  Purchaser with at least thirty (30) days
notice prior to cancellation.  The Company and the Subsidiary shall instruct the
insurance carriers that in the event of any loss thereunder,  the carriers shall
make payment for such loss to the Company  and/or the  Subsidiary  and Purchaser
jointly.  All loss recoveries  received by Purchaser upon any such insurance may
be applied to the Obligations, in such order as per the terms of this Agreement.
Any  surplus  shall be paid by  Purchaser  to the  Company  or applied as may be
otherwise  required by law. Any deficiency  thereon shall be paid by the Company
or the Subsidiary, as applicable, to Purchaser, on demand.

7.       COVENANTS OF THE PURCHASER. The Purchaser covenants and agrees with the
Company as follows:

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

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

8.       COVENANTS OF THE COMPANY AND PURCHASER REGARDING INDEMNIFICATION.

         8.1      Borrower  Indemnification.  The Borrower  agrees to indemnify,
hold harmless,  reimburse and defend  Purchaser,  each of Purchaser's  officers,

                                      C-18
<PAGE>

directors,  agents,  affiliates,  control persons,  and principal  shareholders,
against  any  claim,  cost,  expense,  liability,  obligation,  loss  or  damage
(including reasonable legal fees) of any nature, incurred by or imposed upon the
Purchaser   which   results,   arises   out  of  or  is   based   upon  (i)  any
misrepresentation  by  Borrower  or breach of any  warranty  by Borrower in this
Agreement  or in any  exhibits  or  schedules  attached  hereto  or any  Related
Agreement,  or (ii) any breach or  default in  performance  by  Borrower  of any
covenant or  undertaking  to be  performed by Borrower  hereunder,  or any other
agreement entered into by the Borrower and Purchaser relating hereto.

         8.2      Purchaser's  Indemnification.  Purchaser  agrees to indemnify,
hold  harmless,  reimburse  and defend the Borrower  and each of the  Borrower's
officers,   directors,   agents,  affiliates,   control  persons  and  principal
shareholders,  at  all  times  against  any  claim,  cost,  expense,  liability,
obligation,  loss or damage  (including  reasonable  legal  fees) of any nature,
incurred by or imposed  upon the  Borrower  which  results,  arises out of or is
based upon (i) any  misrepresentation  by Purchaser or breach of any warranty by
Purchaser in this Agreement or in any exhibits or schedules  attached  hereto or
any Related Agreement; or (ii) any breach or default in performance by Purchaser
of any covenant or  undertaking to be performed by Purchaser  hereunder,  or any
other agreement entered into by the Borrower and Purchaser relating hereto.

         8.3      Procedures.  The  procedures  and  limitations  set  forth  in
Section  10.2(c)  and (d)  shall  apply  to the  indemnifications  set  forth in
Sections 8.1 and 8.2 above.

9.       CONVERSION OF CONVERTIBLE NOTE.

         9.1      Mechanics of Conversion.

                  (a)  Provided  the  Purchaser  has notified the Company of the
Purchaser's  intention  to sell the Note Shares and the Note Shares are included
in an effective registration statement or are otherwise exempt from registration
when sold:  (i) Upon the  conversion  of the Note or part  thereof,  the Company
shall,  at its own cost and expense,  take all necessary  action  (including the
issuance of an opinion of counsel) to assure that the Company's  transfer  agent
shall issue shares of the  Company's  Common Stock in the name of the  Purchaser
(or its  nominee)  or such  other  persons as  designated  by the  Purchaser  in
accordance with Section 9.1(b) hereof and in such  denominations to be specified
representing the number of Note Shares issuable upon such  conversion;  and (ii)
the Company  warrants that no instructions  other than these  instructions  have
been or will be given to the transfer  agent of the  Company's  Common Stock and
that after the Effective  Date (as  hereinafter  defined) the Note Shares issued
will be freely transferable  subject to the prospectus delivery  requirements of
the Securities Act and the provisions of this Agreement,  and will not contain a
legend restricting the resale or transferability of the Note Shares.

         (b)      The Company shall upon the earlier to occur of (i) ninety (90)
days of the  date  hereof  and (ii) the  date  that the  registration  statement
required  to be  filed  by  the  Company  pursuant  to the  Registration  Rights
Agreement is declared  effective by the Securities  Exchange  Commission  become
eligible  to  electronically  transfer  shares of its Common  Stock via the DWAC
system  (as  defined  below).  Purchaser  will give  notice of its  decision  to
exercise  its  right to  convert  the Note or part  thereof  by  telecopying  or
otherwise delivering an executed and completed notice of the number of shares to
be converted to the Company (the "Notice of Conversion"). The Purchaser will not

                                      C-19
<PAGE>

be required to surrender the Note until the  Purchaser  receives a credit to the
account of the  Purchaser's  prime  broker  through  the DWAC system (as defined
below), representing the Note Shares or until the Note has been fully satisfied.
Each date on which a Notice of  Conversion  is  telecopied  or  delivered to the
Company in accordance  with the provisions  hereof shall be deemed a "Conversion
Date."  Pursuant to the terms of the Notice of  Conversion,  the  Borrower  will
issue  instructions  to the transfer agent  accompanied by an opinion of counsel
within one (1)  business  day of the date of the  delivery  to  Borrower  of the
Notice  of  Conversion  and shall  cause  the  transfer  agent to  transmit  the
certificates  representing the Conversion  Shares to the Holder by crediting the
account of the  Purchaser's  prime  broker  with the  Depository  Trust  Company
("DTC") through its Deposit  Withdrawal Agent Commission  ("DWAC") system within
three (3) business days after receipt by the Company of the Notice of Conversion
(the "Delivery Date").

                  (c) The Company  understands  that a delay in the  delivery of
the Note Shares in the form  required  pursuant  to Section 9 hereof  beyond the
Delivery Date could result in economic loss to the Purchaser.  In the event that
the Company fails to direct its transfer agent to deliver the Note Shares to the
Purchaser via the DWAC system within the time frame set forth in Section  9.1(b)
above and the Note Shares are not  delivered  to the  Purchaser  by the Delivery
Date, as  compensation to the Purchaser for such loss, the Company agrees to pay
late  payments to the Purchaser for late issuance of the Note Shares in the form
required  pursuant to Section 9 hereof upon conversion of the Note in the amount
equal to the greater of (i) $500 per  business  day after the  Delivery  Date or
(ii) the Purchaser's actual damages from such delayed delivery.  Notwithstanding
the  foregoing,  the Company will not owe the Purchaser any late payments if the
delay in the delivery of the Note Shares  beyond the Delivery Date is solely out
of the control of the  Company  and the  Company is actively  trying to cure the
cause of the delay.  The  Company  shall pay any  payments  incurred  under this
Section in  immediately  available  funds upon demand and, in the case of actual
damages,  accompanied by reasonable documentation of the amount of such damages.
Such documentation shall show the number of shares of Common Stock the Purchaser
is  forced to  purchase  (in an open  market  transaction)  which the  Purchaser
anticipated  receiving  upon such  conversion,  and shall be  calculated  as the
amount by which (A) the Purchaser's  total purchase price  (including  customary
brokerage  commissions,  if any) for the  shares  of Common  Stock so  purchased
exceeds (B) the aggregate  principal  and/or  interest  amount of the Note,  for
which such Conversion Notice was not timely honored.

         Nothing  contained  herein  or in any  document  referred  to herein or
delivered  in  connection  herewith  shall be deemed to establish or require the
payment  of a rate of  interest  or  other  charges  in  excess  of the  maximum
permitted by applicable law. In the event that the rate of interest or dividends
required  to be paid or  other  charges  hereunder  exceed  the  maximum  amount
permitted by such law, any payments in excess of such maximum  shall be credited
against  amounts  owed by the  Company to a Purchaser  and thus  refunded to the
Company.

         9.2      Maximum  Conversion.  The  Purchaser  shall not be entitled to
convert on a Conversion  Date, nor shall the Company be permitted to require the
Purchaser  to accept,  that amount of a Note in  connection  with that number of
shares of Common  Stock which would be in excess of the sum of (i) the number of
shares of Common Stock beneficially owned by the Purchaser on a Conversion Date,
and (ii) the number of shares of Common Stock  issuable  upon the  conversion of
the Note with respect to which the  determination  of this proviso is being made

                                      C-20
<PAGE>

on a  Conversion  Date,  which  would  result  in  beneficial  ownership  by the
Purchaser  of more than 4.99% of the  outstanding  shares of Common Stock of the
Company on such Conversion  Date. For the purposes of the immediately  preceding
sentence,  beneficial  ownership  shall be determined in accordance with Section
13(d) of the  Exchange Act and  Regulation  13d-3  thereunder.  Upon an Event of
Default  under the Note,  the  conversion  limitation  in this Section 9.2 shall
become null and void.

10.      REGISTRATION RIGHTS.

         10.1     Registration   Rights  Granted.   The  Company  hereby  grants
registration rights to the Purchaser pursuant to a Registration Rights Agreement
dated as of even date herewith between the Company and the Purchaser.

         10.2     Indemnification and Contribution.

                  (a)  In  the  event  of  a  registration  of  any  Registrable
Securities  under  the  Securities  Act  pursuant  to  the  Registration  Rights
Agreement,  the Company will indemnify and hold harmless the Purchaser,  and its
officers,  directors and each other  person,  if any, who controls the Purchaser
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities,  joint or  several,  to which the  Purchaser,  or such  persons may
become subject under the  Securities  Act or otherwise,  insofar as such losses,
claims,  damages or liabilities (or actions in respect  thereof) arise out of or
are based upon any untrue  statement or alleged untrue statement of any material
fact  contained  in any  registration  statement  under  which such  Registrable
Securities were registered under the Securities Act pursuant to the Registration
Rights  Agreement,  any  preliminary  prospectus or final  prospectus  contained
therein,  or any amendment or supplement  thereof,  or arise out of or are based
upon the omission or alleged  omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Purchaser,  and each such person for any reasonable legal
or other expenses incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action;  provided,  however, that the
Company  will not be liable in any such case if and to the extent  that any such
loss,  claim,  damage  or  liability  arises  out of or is based  upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity  with  information  furnished by or on behalf of the Purchaser or any
such person in writing specifically for use in any such document.

                  (b)  In  the  event  of  a  registration  of  the  Registrable
Securities  under  the  Securities  Act  pursuant  to  the  Registration  Rights
Agreement,  the Purchaser will indemnify and hold harmless the Company,  and its
officers,  directors  and each other  person,  if any,  who controls the Company
within the meaning of the Securities Act, against all losses, claims, damages or
liabilities,  joint or several,  to which the Company or such persons may become
subject under the Securities Act or otherwise,  insofar as such losses,  claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue  statement or alleged  untrue  statement  of any  material  fact
contained in the registration  statement under which such Registrable Securities
were  registered  under the Securities Act pursuant to the  Registration  Rights
Agreement,  any preliminary prospectus or final prospectus contained therein, or
any  amendment  or  supplement  thereof,  or arise out of or are based  upon the

                                      C-21
<PAGE>

omission or alleged  omission to state  therein a material  fact  required to be
stated therein or necessary to make the statements  therein not misleading,  and
will  reimburse  the Company and each such  person for any  reasonable  legal or
other expenses  incurred by them in connection with  investigating  or defending
any such loss, claim, damage, liability or action,  provided,  however, that the
Purchaser  will be liable in any such  case if and only to the  extent  that any
such loss,  claim,  damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information  furnished in writing to the Company by or on behalf
of the Purchaser specifically for use in any such document.

                  (c) Promptly after receipt by an indemnified  party  hereunder
of notice of the commencement of any action,  such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof,  but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such  indemnified  party other than under this Section 10.2(c) and shall only
relieve it from any liability which it may have to such indemnified  party under
this Section 10.2(c) if and to the extent the  indemnifying  party is prejudiced
by such  omission.  In case  any  such  action  shall  be  brought  against  any
indemnified party and it shall notify the indemnifying party of the commencement
thereof,  the indemnifying party shall be entitled to participate in and, to the
extent it shall wish, to assume and  undertake the defense  thereof with counsel
satisfactory to such indemnified  party, and, after notice from the indemnifying
party to such  indemnified  party of its election so to assume and undertake the
defense thereof,  the indemnifying party shall not be liable to such indemnified
party under this Section 10.2(c) for any legal expenses subsequently incurred by
such  indemnified  party  in  connection  with  the  defense  thereof;   if  the
indemnified party retains its own counsel,  then the indemnified party shall pay
all fees, costs and expenses of such counsel,  provided,  however,  that, if the
defendants  in any such  action  include  both  the  indemnified  party  and the
indemnifying  party and the indemnified  party shall have  reasonably  concluded
that there may be reasonable  defenses  available to it which are different from
or additional to those available to the  indemnifying  party or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests
of the indemnifying  party, the indemnified party shall have the right to select
one  separate  counsel  and to assume  such  legal  defenses  and  otherwise  to
participate in the defense of such action, with the reasonable expenses and fees
of such separate counsel and other expenses related to such  participation to be
reimbursed by the indemnifying party as incurred.

                  (d) In order to provide for just and equitable contribution in
the  event of joint  liability  under  the  Securities  Act in any case in which
either (i) the Purchaser,  or any controlling  person of the Purchaser,  makes a
claim for  indemnification  pursuant to this Section  10.2 but it is  judicially
determined  (by the entry of a final  judgment or decree by a court of competent
jurisdiction  and the  expiration  of time to appeal  or the  denial of the last
right of appeal)  that such  indemnification  may not be  enforced  in such case
notwithstanding  the fact that this Section 10.2 provides for indemnification in
such case, or (ii) contribution  under the Securities Act may be required on the
part of the Purchaser or  controlling  person of the Purchaser in  circumstances
for which indemnification is provided under this Section 10.2; then, and in each
such case,  the Company  and the  Purchaser  will  contribute  to the  aggregate
losses,  claims,  damages or  liabilities  to which  they may be subject  (after
contribution   from  others)  in  such  proportion  so  that  the  Purchaser  is
responsible  only for the portion  represented by the percentage that the public
offering price of its securities offered by the registration  statement bears to

                                      C-22
<PAGE>

the  public  offering  price  of all  securities  offered  by such  registration
statement, provided, however, that, in any such case, (A) the Purchaser will not
be required to contribute  any amount in excess of the public  offering price of
all such securities offered by it pursuant to such registration  statement;  and
(B) no person  or entity  guilty of  fraudulent  misrepresentation  (within  the
meaning of  Section 10 of the Act) will be  entitled  to  contribution  from any
person or entity who was not guilty of such fraudulent misrepresentation.

         10.3     OFFERING  RESTRICTIONS.  Except as previously disclosed in the
SEC Reports or in the Exchange Act Filings, or stock or stock options granted to
employees or directors  of the Company;  or shares of preferred  stock issued to
pay dividends in respect of the  Company's  preferred  stock;  or equity or debt
issued in connection with an acquisition of a business or assets by the Company;
or the issuance by the Company of stock in connection with the  establishment of
a  joint  venture   partnership  or  licensing   arrangement  (these  exceptions
hereinafter referred to as the "Excepted Issuances"), the Company will not issue
any securities with a continuously  variable/floating  conversion  feature which
are or could be (by conversion or  registration)  free-trading  securities (i.e.
common stock subject to a registration statement) prior to the full repayment or
conversion of the Note (the "Exclusion Period").

11.      MISCELLANEOUS.

         11.1     Governing  Law.  THIS  AGREEMENT  SHALL  BE  GOVERNED  BY  AND
CONSTRUED IN ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK,  WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.  ANY ACTION  BROUGHT BY EITHER PARTY AGAINST
THE OTHER  CONCERNING THE  TRANSACTIONS  CONTEMPLATED BY THIS AGREEMENT SHALL BE
BROUGHT ONLY IN THE STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN
THE STATE OF NEW YORK. BOTH PARTIES AND THE INDIVIDUALS EXECUTING THIS AGREEMENT
AND  OTHER  AGREEMENTS  ON  BEHALF  OF  THE  COMPANY  AGREE  TO  SUBMIT  TO  THE
JURISDICTION  OF SUCH  COURTS  AND WAIVE  TRIAL BY JURY.  IN THE EVENT  THAT ANY
PROVISION OF THIS  AGREEMENT  OR ANY OTHER  AGREEMENT  DELIVERED  IN  CONNECTION
HEREWITH IS INVALID OR  UNENFORCEABLE  UNDER ANY  APPLICABLE  STATUTE OR RULE OF
LAW, THEN SUCH PROVISION  SHALL BE DEEMED  INOPERATIVE TO THE EXTENT THAT IT MAY
CONFLICT  THEREWITH AND SHALL BE DEEMED MODIFIED TO CONFORM WITH SUCH STATUTE OR
RULE OF LAW. ANY SUCH PROVISION WHICH MAY PROVE INVALID OR  UNENFORCEABLE  UNDER
ANY LAW SHALL NOT AFFECT THE VALIDITY OR  ENFORCEABILITY  OF ANY OTHER PROVISION
OF ANY AGREEMENT.

         11.2     Survival.  The  representations,   warranties,  covenants  and
agreements made herein shall survive any investigation made by the Purchaser and
the  closing of the  transactions  contemplated  hereby to the  extent  provided
therein.  All statements as to factual  matters  contained in any certificate or
other  instrument  delivered by or on behalf of the Company  pursuant  hereto in
connection  with the  transactions  contemplated  hereby  shall be  deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.

                                      C-23
<PAGE>

         11.3     Successors. Except as otherwise expressly provided herein, the
provisions  hereof  shall  inure to the  benefit  of, and be binding  upon,  the
successors,  heirs, executors and administrators of the parties hereto and shall
inure to the benefit of and be  enforceable by each person who shall be a holder
of the  Securities  from time to time,  other than the  holders of Common  Stock
which  has been  sold by the  Purchaser  pursuant  to Rule  144 or an  effective
registration  statement.  Purchaser  may not assign its  rights  hereunder  to a
competitor of the Company.

         11.4     Entire Agreement.  This Agreement,  the exhibits and schedules
hereto, the Related Agreements and the other documents delivered pursuant hereto
constitute the full and entire  understanding  and agreement between the parties
with regard to the subjects  hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.

         11.5     Severability.  In case any provision of the Agreement shall be
invalid, illegal or unenforceable,  the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

         11.6     Amendment and Waiver.

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

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

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

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

         11.8     Notices.  All notices required or permitted hereunder shall be
in writing and shall be deemed  effectively given: (a) upon personal delivery to
the party to be notified,  (b) when sent by  confirmed  facsimile if sent during
normal  business hours of the recipient,  if not, then on the next business day,
(c) three (3) business  days after having been sent by  registered  or certified
mail, return receipt  requested,  postage prepaid,  or (d) one day after deposit
with a nationally  recognized  overnight courier,  specifying next day delivery,
with written  verification of receipt.  All communications  shall be sent to the
Company  at the  address  as set  forth on the  signature  page  hereof,  to the
Purchaser  at the  address  set  forth on the  signature  page  hereto  for such
Purchaser,  with a copy in the case of the  Purchaser  to John E. Tucker , Esq.,
825 Third Avenue,  14th Floor, New York, New York 10022,  facsimile number (212)
541-4434, or at such other address as the Company or the Purchaser may designate
by written notice to the other parties hereto given in accordance herewith.

                                      C-24
<PAGE>

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

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

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

         11.12    Broker's  Fees.  Except as set forth on Schedule 11.12 hereof,
Each party hereto  represents  and warrants  that no agent,  broker,  investment
banker,  person or firm acting on behalf of or under the authority of such party
hereto is or will be  entitled  to any  broker's  or  finder's  fee or any other
commission   directly  or  indirectly  in  connection   with  the   transactions
contemplated  herein.  Each party hereto  further agrees to indemnify each other
party for any  claims,  losses or  expenses  incurred  by such other  party as a
result of the representation in this Section 11.12 being untrue.

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

                                      C-25
<PAGE>

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

COMPANY:                                      SUBSIDIARY:

INYX, INC.                                    INYX PHARMA, LTD.

By:        /S/ Jack Kachkar                   By:     /S/ Steven Handley
   -------------------------------------           -----------------------
   Jack Kachkar, Chairman                          Steven Handley, President
Address: 801 Brickell Avenue 9th floor        Address: 37 Parkland Drive
         Miami, Florida   33131, and                   Elton, Chester
         4141 Yonge Street, Suite 205                  Cheshire, England CH2 4PG
         Toronto, Ontario
         Canada  M2P2A8

PURCHASER:

LAURUS MASTER FUND, LTD.

By:    /S/ Eugene Grin
   -------------------------------------
   Eugene Grin, Director
Address: c/o Ironshore Corporate Services Ltd.
         P.O. Box 1234 G.T.,
         Queensgate House, South Church Street
         Grand Cayman, Cayman Islands

                   Schedules are omitted and will be supplied
                         to the Securities and Exchange
                             Commission upon request

                                      C-26

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