Document:

Exhibit 4.1

                          SECURITIES PURCHASE AGREEMENT

         This Securities Purchase Agreement (this "Agreement") is dated as of
January ___, 2006 among Navstar Media Holdings, Inc., a Nevada corporation (the
"Company"), and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a "Purchaser" and collectively the
"Purchasers").

         WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act") and Rule 506 promulgated thereunder, the Company desires
to issue and sell to each Purchaser, and each Purchaser, severally and not
jointly, desires to purchase from the Company, securities of the Company as more
fully described in this Agreement.

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

ARTICLE I.
                                   DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement:
(a) capitalized terms that are not otherwise defined herein have the meanings
given to such terms in the Debentures (as defined herein), and (b) the following
terms have the meanings indicated in this Section 1.1:

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

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

                  "Closing" means the closing of the purchase and sale of the
          Securities pursuant to Section 2.1.

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

                  "Commission" means the Securities and Exchange Commission.

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                  "Common Stock" means the common stock of the Company, par
         value $.001 per share, and any other class of securities into which
         such securities may hereafter have been reclassified or changed into.

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

                  "Company Counsel" means Baker & McKenzie LLP.

                  "Conversion Price" shall have the meaning ascribed to such
         term in the Debentures.

                  "Debentures" means, the 8% Convertible Debentures due, subject
         to the terms therein, 180 calendar days from their date of issuance,
         issued by the Company to the Purchasers hereunder, in the form of
         Exhibit A.

                  "Disclosure Schedules" shall have the meaning ascribed to such
         term in Section 3.1.

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

                  "Escrow Agent" means Signature Bank, a New York State
         chartered bank and having an office at, 261 Madison Avenue, New York,
         New York 10016.

                  "Escrow Agreement" shall mean the Escrow Agreement, dated on
         or about the date hereof, by and among vFinance, the Company and the
         Escrow Agent pursuant to which the Purchasers, prior to the date
         hereof, deposited Subscription Amounts with the Escrow Agent to be
         applied to the transactions contemplated hereunder.

                   "Evaluation Date" shall have the meaning ascribed to such
         term in Section 3.1(r).

                  "Exchange Act" means the Securities Exchange Act of 1934, as
         amended, and the rules and regulations promulgated thereunder.

                  "Exempt Issuance" means the issuance of (a) shares of Common
         Stock or options to employees, officers or directors of the Company
         pursuant to any stock or option plan duly adopted by a majority of the
         non-employee members of the Board of Directors of the Company or a
         majority of the members of a committee of non-employee directors
         established for such purpose, (b) securities upon the exercise or
         exchange of or conversion of any Securities issued hereunder and/or
         securities exercisable or exchangeable for or convertible into shares
         of Common Stock issued and outstanding on the date of this Agreement,
         provided that such securities have not been amended since the date of
         this Agreement to increase the number of such securities or to decrease
         the exercise, exchange or conversion price of any such securities, (c)
         securities issued pursuant to acquisitions or strategic transactions
         approved by a majority of the disinterested directors, provided any
         such issuance shall only be to a Person which is, itself or through its
         subsidiaries, an operating company in a business synergistic with the
         business of the Company and in which the Company receives benefits in
         addition to the investment of funds, but shall not include a
         transaction in which the Company is issuing securities primarily for
         the purpose of raising capital or to an entity whose primary business
         is investing in securities and (d) for purposes of Section 4.14 only,
         up to 15,000,000 shares of Common Stock or Common Stock Equivalents
         (subject to adjustment for forward and reverse stock splits, stock
         dividends, recapitalizations and the like) issued for cash
         consideration with vFinance as placement agent, which transactions
         shall have closed before the earlier of (i) the Filing Date (as defined
         in the Registration Rights Agreement) or (ii) the actual date the
         Registration Statement is filed with the Commission.

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                   "FW" means Feldman Weinstein LLP with offices located at 420
         Lexington Avenue, Suite 2620, New York, New York 10170-0002.

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

                  "Intellectual Property Rights" shall have the meaning ascribed
         to such term in Section 3.1(o).

                  "Legend Removal Date" shall have the meaning ascribed to such
         term in Section 4.1(c).

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

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

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

                  "Maximum Rate" shall have the meaning ascribed to such term in
         Section 5.17.

                  "Participation Maximum" shall have the meaning ascribed to
         such term in Section 4.13.

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

                  "Pre-Notice" shall have the meaning ascribed to such term in
         Section 4.13.

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

                  "Purchaser Party" shall have the meaning ascribed to such term
         in Section 4.11.

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

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

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

                  "Required Minimum" means, as of any date, the maximum
         aggregate number of shares of Common Stock then issued or potentially
         issuable in the future pursuant to the Transaction Documents, including
         any Underlying Shares issuable upon exercise or conversion in full of
         all Warrants and Debentures, ignoring any conversion or exercise limits
         set forth therein, and assuming that the Conversion Price is at all
         times on and after the date of determination 75% of the then Conversion
         Price on the Trading Day immediately prior to the date of
         determination.

                  "Rule 144" means Rule 144 promulgated by the Commission
         pursuant to the Securities Act, as such Rule may be amended from time
         to time, or any similar rule or regulation hereafter adopted by the
         Commission having substantially the same effect as such Rule.

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

                  "Securities" means the Debentures, the Shares, the Warrants,
         the Warrant Shares and the Underlying Shares.

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

                  "Shares" means the shares of Common Stock issued or issuable
         to each Purchaser pursuant to this Agreement.

                   "Short Sales" shall include all "short sales" as defined in
         Rule 200 of Regulation SHO under the Exchange Act (but shall not be
         deemed to include the location and/or reservation of borrowable shares
         of Common Stock).

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

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                  "Subsequent Financing" shall have the meaning ascribed to such
         term in Section 4.13.

                  "Subsequent Financing Notice" shall have the meaning ascribed
         to such term in Section 4.13.

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

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

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

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

                  "Underlying Shares" means the shares of Common Stock issued
         and issuable upon conversion of the Debentures and upon exercise of the
         Warrants.

                  "vFinance" means vFinance Investments, Inc., the placement
         agent for this transaction.

                  "VWAP" means, for any date, the price determined by the first
         of the following clauses that applies: (a) if the Common Stock is then
         listed or quoted on a Trading Market, the daily volume weighted average
         price of the Common Stock for such date (or the nearest preceding date)
         on the Trading Market on which the Common Stock is then listed or
         quoted as reported by Bloomberg Financial L.P. (based on a Trading Day
         from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b) if the
         Common Stock is not then listed or quoted on a Trading Market and if
         prices for the Common Stock are then reported in the "Pink Sheets"
         published by the Pink Sheets, LLC (or a similar organization or agency
         succeeding to its functions of reporting prices), the most recent bid
         price per share of the Common Stock so reported; or (c) in all other
         cases, the fair market value of a share of Common Stock as determined
         by an independent appraiser selected in good faith by the Purchasers
         and reasonably acceptable to the Company.

                  "Warrants" means collectively the Common Stock purchase
         warrants, in the form of Exhibit C delivered to the Purchasers at the
         Closing in accordance with Section 2.2(a) hereof, which Warrants shall
         be exercisable immediately and have a term of exercise equal to four
         years.

                  "Warrant Shares" means the shares of Common Stock issuable
         upon exercise of the Warrants.

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                                  ARTICLE II.
                                PURCHASE AND SALE

     2.1 Closing. On the Closing Date, upon the terms and subject to the
conditions set forth herein, concurrent with the execution and delivery of this
Agreement by the parties hereto, the Company agrees to sell, and each Purchaser
agrees to purchase in the aggregate, severally and not jointly, up to $1,000,000
of Debentures, Shares and Warrants. Each Purchaser shall deliver to the Escrow
Agent via wire transfer or a certified check immediately available funds equal
to their Subscription Amount and the Company shall deliver to each Purchaser
their respective Debenture, Shares and Warrants as determined pursuant to
Section 2.2(a) and the other items set forth in Section 2.2 issuable at the
Closing. Upon satisfaction of the conditions set forth in Sections 2.2 and 2.3,
the Closing shall occur at the offices of FW, or such other location as the
parties shall mutually agree.

     2.2 Deliveries.

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

               (i) this Agreement duly executed by the Company;

               (ii) a legal opinion of Company Counsel, in the form of Exhibit D
          attached hereto;

               (iii) a Debenture with a principal amount equal to such
          Purchaser's Subscription Amount, registered in the name of such
          Purchaser;

               (iv) a certificate evidencing a number of Shares equal to such
          Purchaser's Subscription Amount divided by five (5), registered in the
          name of such Purchaser;

               (v) a Warrant registered in the name of such Purchaser to
          purchase up to a number of shares of Common Stock equal to 100% of
          such Purchaser's Subscription Amount divided by $1.00, with an
          exercise price equal to $1.25, subject to adjustment therein; and

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

          (b) On the Closing Date, each Purchaser shall deliver or cause to be
     delivered to the Company (except as noted) the following:

               (i) this Agreement duly executed by such Purchaser;

               (ii) such Purchaser's Subscription Amount by wire transfer to the
          Escrow Agent; and

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

     2.3 Closing Conditions.

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

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

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

               (iii) the delivery by the Purchasers of the items set forth in
          Section 2.2(b) of this Agreement.

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

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

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

               (iii) the delivery by the Company of the items set forth in
          Section 2.2(a) of this Agreement;

               (iv) Forbe International Ltd. shall have delivered a leak out
          agreement regarding its shares of Common Stock to vFinance, in form
          and substance reasonably satisfactory to the Purchasers;

               (v) the Company shall have entered into an agreement with
          vFinance to be its exclusive financial advisor and placement agent for
          a term of not less than 90 days, which agreement shall have such other
          terms and conditions as are reasonably satisfactory to vFinance;

               (vi) there shall have been no Material Adverse Effect with
          respect to the Company since the date hereof; and

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               (vii) from the date hereof to the Closing Date, trading in the
          Common Stock shall not have been suspended by the Commission or the
          Company's principal Trading Market (except for any suspension of
          trading of limited duration agreed to by the Company, which suspension
          shall be terminated prior to the Closing), and, at any time prior to
          the Closing Date, trading in securities generally as reported by
          Bloomberg Financial Markets shall not have been suspended or limited,
          or minimum prices shall not have been established on securities whose
          trades are reported by such service, or on any Trading Market, nor
          shall a banking moratorium have been declared either by the United
          States or New York State authorities nor shall there have occurred any
          material outbreak or escalation of hostilities or other national or
          international calamity of such magnitude in its effect on, or any
          material adverse change in, any financial market which, in each case,
          in the reasonable judgment of each Purchaser, makes it impracticable
          or inadvisable to purchase the Debentures at the Closing.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

     3.1 Representations and Warranties of the Company. Except as set forth
under the corresponding section of the disclosure schedules delivered to the
Purchasers concurrently herewith (the "Disclosure Schedules") which Disclosure
Schedules shall be deemed a part hereof, the Company hereby makes the
representations and warranties set forth below to each Purchaser.

          (a) Subsidiaries. All of the direct and indirect subsidiaries of the
     Company are set forth on Schedule 3.1(a). The Company owns, directly or
     indirectly, all of the capital stock or other equity interests of each
     Subsidiary free and clear of any Liens, and all the issued and outstanding
     shares of capital stock of each Subsidiary are validly issued and are fully
     paid, non-assessable and free of preemptive and similar rights to subscribe
     for or purchase securities. If the Company has no subsidiaries, then
     references in the Transaction Documents to the Subsidiaries will be
     disregarded.

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

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

          (d) No Conflicts. The execution, delivery and performance of the
     Transaction Documents by the Company and the consummation by the Company of
     the other transactions contemplated hereby and thereby do not and will not:
     (i) conflict with or violate any provision of the Company's or any
     Subsidiary's certificate or articles of incorporation, bylaws or other
     organizational or charter documents, or (ii) conflict with, or constitute a
     default (or an event that with notice or lapse of time or both would become
     a default) under, result in the creation of any Lien upon any of the
     properties or assets of the Company or any Subsidiary, or give to others
     any rights of termination, amendment, acceleration or cancellation (with or
     without notice, lapse of time or both) of, any agreement, credit facility,
     debt or other instrument (evidencing a Company or Subsidiary debt or
     otherwise) or other understanding to which the Company or any Subsidiary is
     a party or by which any property or asset of the Company or any Subsidiary
     is bound or affected, or (iii) subject to the Required Approvals, conflict
     with or result in a violation of any law, rule, regulation, order,
     judgment, injunction, decree or other restriction of any court or
     governmental authority to which the Company or a Subsidiary is subject
     (including federal and state securities laws and regulations), or by which
     any property or asset of the Company or a Subsidiary is bound or affected;
     except in the case of each of clauses (ii) and (iii), such as could not
     have or reasonably be expected to result in a Material Adverse Effect.

          (e) Filings, Consents and Approvals. The Company is not required to
     obtain any consent, waiver, authorization or order of, give any notice to,
     or make any filing or registration with, any court or other federal, state,
     local or other governmental authority or other Person in connection with
     the execution, delivery and performance by the Company of the Transaction
     Documents, other than (i) filings required pursuant to Section 4.6, (ii)
     the filing with the Commission of the Registration Statement, (iii) the
     notice and/or application(s) to each applicable Trading Market for the
     issuance and sale of the Debentures and Warrants and the listing of the
     Shares and Underlying Shares for trading thereon in the time and manner
     required thereby and (iv) the filing of Form D with the Commission and such
     filings as are required to be made under applicable state securities laws
     (collectively, the "Required Approvals").

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          (f) Issuance of the Securities. The Securities are duly authorized
     and, when issued and paid for in accordance with the applicable Transaction
     Documents, will be duly and validly issued, fully paid and nonassessable,
     free and clear of all Liens imposed by the Company other than restrictions
     on transfer provided for in the Transaction Documents. The Underlying
     Shares, when issued in accordance with the terms of the Transaction
     Documents, will be validly issued, fully paid and nonassessable, free and
     clear of all Liens imposed by the Company. The Company has reserved from
     its duly authorized capital stock a number of shares of Common Stock for
     issuance of the Underlying Shares at least equal to 200 % of the Required
     Minimum on the date hereof.

          (g) Capitalization. The capitalization of the Company is as set forth
     on Schedule 3.1(g). Except as set forth on Schedule 3.1(g), the Company has
     not issued any capital stock since its most recently filed SEC Report,
     other than pursuant to the exercise of employee stock options under the
     Company's stock option plans, the issuance of shares of Common Stock to
     employees pursuant to the Company's employee stock purchase plan and
     pursuant to the conversion or exercise of outstanding Common Stock
     Equivalents. No Person has any right of first refusal, preemptive right,
     right of participation, or any similar right to participate in the
     transactions contemplated by the Transaction Documents. Except as a result
     of the purchase and sale of the Securities and as set forth on Schedule
     3.1(g), there are no outstanding options, warrants, script rights to
     subscribe to, calls or commitments of any character whatsoever relating to,
     or securities, rights or obligations convertible into or exercisable or
     exchangeable for, or giving any Person any right to subscribe for or
     acquire, any shares of Common Stock, or contracts, commitments,
     understandings or arrangements by which the Company or any Subsidiary is or
     may become bound to issue additional shares of Common Stock or Common Stock
     Equivalents. The issuance and sale of the Securities will not obligate the
     Company to issue shares of Common Stock or other securities to any Person
     (other than the Purchasers) and will not result in a right of any holder of
     Company securities to adjust the exercise, conversion, exchange or reset
     price under such securities. All of the outstanding shares of capital stock
     of the Company are validly issued, fully paid and nonassessable, have been
     issued in compliance with all federal and state securities laws, and none
     of such outstanding shares was issued in violation of any preemptive rights
     or similar rights to subscribe for or purchase securities. No further
     approval or authorization of any stockholder, the Board of Directors of the
     Company or others is required for the issuance and sale of the Securities.
     There are no stockholders agreements, voting agreements or other similar
     agreements with respect to the Company's capital stock to which the Company
     is a party or, to the knowledge of the Company, between or among any of the
     Company's stockholders.

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          (h) SEC Reports; Financial Statements. The Company has filed all
     reports, schedules, forms, statements and other documents required to be
     filed by it under the Securities Act and the Exchange Act, including
     pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the
     date hereof (or such shorter period as the Company was required by law to
     file such material) (the foregoing materials, including the exhibits
     thereto and documents incorporated by reference therein, being collectively
     referred to herein as the "SEC Reports") on a timely basis or has received
     a valid extension of such time of filing and has filed any such SEC Reports
     prior to the expiration of any such extension. As of their respective
     dates, the SEC Reports complied in all material respects with the
     requirements of the Securities Act and the Exchange Act and the rules and
     regulations of the Commission promulgated thereunder, and none of the SEC
     Reports, when filed, contained any untrue statement of a material fact or
     omitted to state a material fact required to be stated therein or necessary
     in order to make the statements therein, in the light of the circumstances
     under which they were made, not misleading. The financial statements of the
     Company included in the SEC Reports comply in all material respects with
     applicable accounting requirements and the rules and regulations of the
     Commission with respect thereto as in effect at the time of filing. Such
     financial statements have been prepared in accordance with United States
     generally accepted accounting principles applied on a consistent basis
     during the periods involved ("GAAP"), except as may be otherwise specified
     in such financial statements or the notes thereto and except that unaudited
     financial statements may not contain all footnotes required by GAAP, and
     fairly present in all material respects the financial position of the
     Company and its consolidated subsidiaries as of and for the dates thereof
     and the results of operations and cash flows for the periods then ended,
     subject, in the case of unaudited statements, to normal, immaterial,
     year-end audit adjustments.

          (i) Material Changes. Since December 31, 2005, except as specifically
     disclosed in the SEC Reports, (i) there has been no event, occurrence or
     development that has had or that could reasonably be expected to result in
     a Material Adverse Effect, (ii) the Company has not incurred any
     liabilities (contingent or otherwise) other than (A) trade payables and
     accrued expenses incurred in the ordinary course of business consistent
     with past practice and (B) liabilities not required to be reflected in the
     Company's financial statements pursuant to GAAP or required to be disclosed
     in filings made with the Commission, (iii) the Company has not altered its
     method of accounting, (iv) the Company has not declared or made any
     dividend or distribution of cash or other property to its stockholders or
     purchased, redeemed or made any agreements to purchase or redeem any shares
     of its capital stock and (v) the Company has not issued any equity
     securities to any officer, director or Affiliate, except pursuant to
     existing Company stock option plans. The Company does not have pending
     before the Commission any request for confidential treatment of
     information. Except for the issuance of the Securities contemplated by this
     Agreement or as set forth on Schedule 3.1(i), no event, liability or
     development has occurred or exists with respect to the Company or its
     Subsidiaries or their respective business, properties, operations or
     financial condition, that would be required to be disclosed by the Company
     under applicable securities laws at the time this representation is made
     that has not been publicly disclosed 1 Trading Day prior to the date that
     this representation is made.

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          (j) Litigation. There is no action, suit, inquiry, notice of
     violation, proceeding or investigation pending or, to the knowledge of the
     Company, threatened against or affecting the Company, any Subsidiary or any
     of their respective properties before or by any court, arbitrator,
     governmental or administrative agency or regulatory authority (federal,
     state, county, local or foreign) (collectively, an "Action") which (i)
     adversely affects or challenges the legality, validity or enforceability of
     any of the Transaction Documents or the Securities or (ii) could, if there
     were an unfavorable decision, have or reasonably be expected to result in a
     Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
     director or officer thereof, is or has been the subject of any Action
     involving a claim of violation of or liability under federal or state
     securities laws or a claim of breach of fiduciary duty. There has not been,
     and to the knowledge of the Company, there is not pending or contemplated,
     any investigation by the Commission involving the Company or any current or
     former director or officer of the Company. The Commission has not issued
     any stop order or other order suspending the effectiveness of any
     registration statement filed by the Company or any Subsidiary under the
     Exchange Act or the Securities Act. None of the Company's or its
     Subsidiaries' employees is a member of a union that relates to such
     employee's relationship with the Company, and neither the Company or any of
     its Subsidiaries is a party to a collective bargaining agreement, and the
     Company and its Subsidiaries believe that their relationships with their
     employees are good. No executive officer, to the knowledge of the Company,
     is, or is now expected to be, in violation of any material term of any
     employment contract, confidentiality, disclosure or proprietary information
     agreement or non-competition agreement, or any other contract or agreement
     or any restrictive covenant, and the continued employment of each such
     executive officer does not subject the Company or any of its Subsidiaries
     to any liability with respect to any of the foregoing matters. The Company
     and its Subsidiaries are in compliance with all U.S. federal, state, local
     and foreign laws and regulations relating to employment and employment
     practices, terms and conditions of employment and wages and hours, except
     where the failure to be in compliance could not, individually or in the
     aggregate, reasonably be expected to have a Material Adverse Effect.

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

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

                                       13
<PAGE>
          (m) Regulatory Permits. The Company and the Subsidiaries possess all
     certificates, authorizations and permits issued by the appropriate federal,
     state, local or foreign regulatory authorities necessary to conduct their
     respective businesses as described in the SEC Reports, except where the
     failure to possess such permits could not have or reasonably be expected to
     result in a Material Adverse Effect ("Material Permits"), and neither the
     Company nor any Subsidiary has received any notice of proceedings relating
     to the revocation or modification of any Material Permit.

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

          (o) Patents and Trademarks. The Company and the Subsidiaries have, or
     have rights to use, all patents, patent applications, trademarks, trademark
     applications, service marks, trade names, trade secrets, inventions,
     copyrights, licenses and other intellectual property rights similar rights
     necessary or material for use in connection with their respective
     businesses as described in the SEC Reports and which the failure to so have
     could have a Material Adverse Effect (collectively, the "Intellectual
     Property Rights"). Neither the Company nor any Subsidiary has received a
     notice (written or otherwise) that the Intellectual Property Rights used by
     the Company or any Subsidiary violates or infringes upon the rights of any
     Person. To the knowledge of the Company, all such Intellectual Property
     Rights are enforceable and there is no existing infringement by another
     Person of any of the Intellectual Property Rights of others. The Company
     and its Subsidiaries have taken reasonable security measures to protect the
     secrecy, confidentiality and value of all of their intellectual properties,
     except where failure to do so could not, individually or in the aggregate,
     reasonably be expect to have a Material Adverse Effect.

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

                                       13
<PAGE>
          (q) Transactions With Affiliates and Employees. Except as set forth in
     the SEC Reports, none of the officers or directors of the Company and, to
     the knowledge of the Company, none of the employees of the Company is
     presently a party to any transaction with the Company or any Subsidiary
     (other than for services as employees, officers and directors), including
     any contract, agreement or other arrangement providing for the furnishing
     of services to or by, providing for rental of real or personal property to
     or from, or otherwise requiring payments to or from any officer, director
     or such employee or, to the knowledge of the Company, any entity in which
     any officer, director, or any such employee has a substantial interest or
     is an officer, director, trustee or partner, in each case in excess of
     $60,000 other than (i) for payment of salary or consulting fees for
     services rendered, (ii) reimbursement for expenses incurred on behalf of
     the Company and (iii) for other employee benefits, including stock option
     agreements under any stock option plan of the Company.

          (r) Sarbanes-Oxley; Internal Accounting Controls. The Company is in
     material compliance with all provisions of the Sarbanes-Oxley Act of 2002
     which are applicable to it as of the Closing Date. The Company and the
     Subsidiaries maintain a system of internal accounting controls sufficient
     to provide reasonable assurance that (i) transactions are executed in
     accordance with management's general or specific authorizations, (ii)
     transactions are recorded as necessary to permit preparation of financial
     statements in conformity with GAAP and to maintain asset accountability,
     (iii) access to assets is permitted only in accordance with management's
     general or specific authorization, and (iv) the recorded accountability for
     assets is compared with the existing assets at reasonable intervals and
     appropriate action is taken with respect to any differences. The Company
     has established disclosure controls and procedures (as defined in Exchange
     Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
     disclosure controls and procedures to ensure that material information
     relating to the Company, including its Subsidiaries, is made known to the
     certifying officers by others within those entities, particularly during
     the period in which the Company's most recently filed periodic report under
     the Exchange Act, as the case may be, is being prepared. The Company's
     certifying officers have evaluated the effectiveness of the Company's
     controls and procedures as of the date prior to the filing date of the most
     recently filed periodic report under the Exchange Act (such date, the
     "Evaluation Date"). The Company presented in its most recently filed
     periodic report under the Exchange Act the conclusions of the certifying
     officers about the effectiveness of the disclosure controls and procedures
     based on their evaluations as of the Evaluation Date. Since the Evaluation
     Date, there have been no significant changes in the Company's internal
     controls (as such term is defined in Item 307(b) of Regulation S-K under
     the Exchange Act) or, to the knowledge of the Company, in other factors
     that could significantly affect the Company's internal controls.

                                       14
<PAGE>
          (s) Certain Fees. Other than the following amounts being paid or
     issued to vFinance (or its designees): (i) 2% of the gross proceeds
     hereunder as a management fee, (ii) 8% of the gross proceeds hereunder as
     cash commission and (iii) shares of Common Stock equal to 10% of the Shares
     and Underlying Shares, no brokerage or finder's fees or commissions are or
     will be payable by the Company to any broker, financial advisor or
     consultant, finder, placement agent, investment banker, bank or other
     Person with respect to the transactions contemplated by the Transaction
     Documents. The Purchasers shall have no obligation with respect to any fees
     or with respect to any claims made by or on behalf of other Persons for
     fees of a type contemplated in this Section that may be due in connection
     with the transactions contemplated by the Transaction Documents.

          (t) Private Placement. Assuming the accuracy of the Purchasers
     representations and warranties set forth in Section 3.2, no registration
     under the Securities Act is required for the offer and sale of the
     Securities by the Company to the Purchasers as contemplated hereby. The
     issuance and sale of the Securities hereunder does not contravene the rules
     and regulations of the Trading Market.

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

          (v) Registration Rights. Other than each of the Purchasers, no Person
     has any right to cause the Company to effect the registration under the
     Securities Act of any securities of the Company.

          (w) Listing and Maintenance Requirements. The Company's Common Stock
     is registered pursuant to Section 12(g) of the Exchange Act, and the
     Company has taken no action designed to, or which to its knowledge is
     likely to have the effect of, terminating the registration of the Common
     Stock under the Exchange Act nor has the Company received any notification
     that the Commission is contemplating terminating such registration. The
     Company has not, in the 12 months preceding the date hereof, received
     notice from any Trading Market on which the Common Stock is or has been
     listed or quoted to the effect that the Company is not in compliance with
     the listing or maintenance requirements of such Trading Market. The Company
     is, and has no reason to believe that it will not in the foreseeable future
     continue to be, in compliance with all such listing and maintenance
     requirements.

          (x) Application of Takeover Protections. The Company and its Board of
     Directors have taken all necessary action, if any, in order to render
     inapplicable any control share acquisition, business combination, poison
     pill (including any distribution under a rights agreement) or other similar
     anti-takeover provision under the Company's Certificate of Incorporation
     (or similar charter documents) or the laws of its state of incorporation
     that is or could become applicable to the Purchasers as a result of the
     Purchasers and the Company fulfilling their obligations or exercising their
     rights under the Transaction Documents, including without limitation as a
     result of the Company's issuance of the Securities and the Purchasers'
     ownership of the Securities.

                                       15
<PAGE>
          (y) Disclosure. The Company confirms that neither it nor any other
     Person acting on its behalf has provided any of the Purchasers or their
     agents or counsel with any information that constitutes or might constitute
     material, nonpublic information. The Company understands and confirms that
     the Purchasers will rely on the foregoing representations and covenants in
     effecting transactions in securities of the Company. All disclosure
     provided to the Purchasers regarding the Company, its business and the
     transactions contemplated hereby, including the Disclosure Schedules to
     this Agreement, furnished by or on behalf of the Company with respect to
     the representations and warranties made herein are true and correct with
     respect to such representations and warranties and do not contain any
     untrue statement of a material fact or omit to state any material fact
     necessary in order to make the statements made therein, in light of the
     circumstances under which they were made, not misleading. The Company
     acknowledges and agrees that no Purchaser makes or has made any
     representations or warranties with respect to the transactions contemplated
     hereby other than those specifically set forth in Section 3.2 hereof.

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

          (aa) Solvency. Based on the financial condition of the Company as of
     the Closing Date after giving effect to the receipt by the Company of the
     proceeds from the sale of the Securities hereunder, (i) the Company's fair
     saleable value of its assets exceeds the amount that will be required to be
     paid on or in respect of the Company's existing debts and other liabilities
     (including known contingent liabilities) as they mature; (ii) the Company's
     assets do not constitute unreasonably small capital to carry on its
     business for the current fiscal year as now conducted and as proposed to be
     conducted including its capital needs taking into account the particular
     capital requirements of the business conducted by the Company, and
     projected capital requirements and capital availability thereof; and (iii)
     the current cash flow of the Company, together with the proceeds the
     Company would receive, were it to liquidate all of its assets, after taking
     into account all anticipated uses of the cash, would be sufficient to pay
     all amounts on or in respect of its debt when such amounts are required to
     be paid. The Company does not intend to incur debts beyond its ability to
     pay such debts as they mature (taking into account the timing and amounts
     of cash to be payable on or in respect of its debt). The Company has no
     knowledge of any facts or circumstances which lead it to believe that it
     will file for reorganization or liquidation under the bankruptcy or
     reorganization laws of any jurisdiction within one year from the Closing
     Date. The SEC Reports set forth as of the dates thereof all outstanding
     secured and unsecured Indebtedness of the Company or any Subsidiary, or for
     which the Company or any Subsidiary has commitments. For the purposes of
     this Agreement, "Indebtedness" shall mean (a) any liabilities for borrowed
     money or amounts owed in excess of $100,000 (other than trade accounts
     payable incurred in the ordinary course of business), (b) all guaranties,
     endorsements and other contingent obligations in respect of Indebtedness of
     others, whether or not the same are or should be reflected in the Company's
     balance sheet (or the notes thereto), except guaranties by endorsement of
     negotiable instruments for deposit or collection or similar transactions in
     the ordinary course of business; and (c) the present value of any lease
     payments in excess of $50,000 due under leases required to be capitalized
     in accordance with GAAP. Neither the Company nor any Subsidiary is in
     default with respect to any Indebtedness.

                                       16
<PAGE>
          (bb) Tax Status. Except for matters that would not, individually or in
     the aggregate, have or reasonably be expected to result in a Material
     Adverse Effect, the Company and each Subsidiary has filed all necessary
     federal, state and foreign income and franchise tax returns and has paid or
     accrued all taxes shown as due thereon, and the Company has no knowledge of
     a tax deficiency which has been asserted or threatened against the Company
     or any Subsidiary.

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

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

          (ee) Accountants. The Company's principal independent public
     accountants are Moore Stephens Frazer and Torbet, LLP. To the knowledge of
     the Company, such accountants, who the Company expects will express their
     opinion with respect to the financial statements to be included in the
     Company's Annual Report on Form 10-KSB for the year ended December 31, 2005
     are a registered public accounting firm as required by the Securities Act.

          (ff) Seniority. As of the Closing Date, no indebtedness or other
     equity of the Company is senior to the Debentures in right of payment,
     whether with respect to interest or upon liquidation or dissolution, or
     otherwise, other than indebtedness secured by purchase money security
     interests (which is senior only as to underlying assets covered thereby)
     and capital lease obligations (which is senior only as to the property
     covered thereby).

                                       17
<PAGE>
          (gg) No Disagreements with Accountants and Lawyers. There are no
     disagreements of any kind presently existing, or reasonably anticipated by
     the Company to arise, between the accountants and lawyers formerly or
     presently employed by the Company and the Company is current with respect
     to any fees owed to its accountants and lawyers.

          (hh) Acknowledgment Regarding Purchasers' Purchase of Securities. The
     Company acknowledges and agrees that each of the Purchasers is acting
     solely in the capacity of an arm's length purchaser with respect to the
     Transaction Documents and the transactions contemplated hereby. The Company
     further acknowledges that no Purchaser is acting as a financial advisor or
     fiduciary of the Company (or in any similar capacity) with respect to this
     Agreement and the transactions contemplated hereby and any advice given by
     any Purchaser or any of their respective representatives or agents in
     connection with this Agreement and the transactions contemplated hereby is
     merely incidental to the Purchasers' purchase of the Securities. The
     Company further represents to each Purchaser that the Company's decision to
     enter into this Agreement has been based solely on the independent
     evaluation of the transactions contemplated hereby by the Company and its
     representatives.

          (ii) Acknowledgement Regarding Purchasers' Trading Activity. Anything
     in this Agreement or elsewhere herein to the contrary notwithstanding
     (except for Section 4.16 hereof), it is understood and agreed by the
     Company (i) that none of the Purchasers have been asked to agree, nor has
     any Purchaser agreed, to desist from purchasing or selling, long and/or
     short, securities of the Company, or "derivative" securities based on
     securities issued by the Company or to hold the Securities for any
     specified term; (ii) that past or future open market or other transactions
     by any Purchaser, including Short Sales, and specifically including,
     without limitation, Short Sales or "derivative" transactions, before or
     after the closing of this or future private placement transactions, may
     negatively impact the market price of the Company's publicly-traded
     securities; (iii) that any Purchaser, and counter parties in "derivative"
     transactions to which any such Purchaser is a party, directly or
     indirectly, presently may have a "short" position in the Common Stock, and
     (iv) that each Purchaser shall not be deemed to have any affiliation with
     or control over any arm's length counter-party in any "derivative"
     transaction. The Company further understands and acknowledges that (a) one
     or more Purchasers may engage in hedging activities at various times during
     the period that the Securities are outstanding, including, without
     limitation, during the periods that the value of the Underlying Shares
     deliverable with respect to Securities are being determined and (b) such
     hedging activities (if any) could reduce the value of the existing
     stockholders' equity interests in the Company at and after the time that
     the hedging activities are being conducted. The Company acknowledges that
     such aforementioned hedging activities do not constitute a breach of any of
     the Transaction Documents.

                                      18
<PAGE>
          (jj) Manipulation of Price. The Company has not, and to its knowledge
     no one acting on its behalf has, (i) taken, directly or indirectly, any
     action designed to cause or to result in the stabilization or manipulation
     of the price of any security of the Company to facilitate the sale or
     resale of any of the Securities, (ii) sold, bid for, purchased, or, paid
     any compensation for soliciting purchases of, any of the Securities (other
     than for the placement agent's placement of the Securities), or (iii) paid
     or agreed to pay to any person any compensation for soliciting another to
     purchase any other securities of the Company.

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

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

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

                                       19
<PAGE>
          (c) Purchaser Status. At the time such Purchaser was offered the
     Securities, it was, and at the date hereof it is, and on each date on which
     it exercises any Warrants or converts any Debentures it will be either: (i)
     an "accredited investor" as defined in Rule 501(a)(1), (a)(2), (a)(3),
     (a)(7) or (a)(8) under the Securities Act or (ii) a "qualified
     institutional buyer" as defined in Rule 144A(a) under the Securities Act.
     Such Purchaser is not required to be registered as a broker-dealer under
     Section 15 of the Exchange Act.

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

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

          (f) Short Sales and Confidentiality Prior To The Date Hereof. Other
     than the transaction contemplated hereunder, such Purchaser has not
     directly or indirectly, nor has any Person acting on behalf of or pursuant
     to any understanding with such Purchaser, executed any disposition,
     including Short Sales, in the securities of the Company during the period
     commencing from the time that such Purchaser first received a term sheet
     from the Company or any other Person setting forth the material terms of
     the transactions contemplated hereunder until the date hereof ("Discussion
     Time"). Notwithstanding the foregoing, in the case of a Purchaser that is a
     multi-managed investment vehicle whereby separate portfolio managers manage
     separate portions of such Purchaser's assets and the portfolio managers
     have no direct knowledge of the investment decisions made by the portfolio
     managers managing other portions of such Purchaser's assets, the
     representation set forth above shall only apply with respect to the portion
     of assets managed by the portfolio manager that made the investment
     decision to purchase the Securities covered by this Agreement. Other than
     to other Persons party to this Agreement, such Purchaser has maintained the
     confidentiality of all disclosures made to it in connection with this
     transaction (including the existence and terms of this transaction).

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

                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

4.1      Transfer Restrictions.

                                       20
<PAGE>
          (a) The Securities may only be disposed of in compliance with state
     and federal securities laws. In connection with any transfer of Securities
     other than pursuant to an effective registration statement or Rule 144, to
     the Company or to an affiliate of a Purchaser or in connection with a
     pledge as contemplated in Section 4.1(b), the Company may require the
     transferor thereof to provide to the Company an opinion of counsel selected
     by the transferor and reasonably acceptable to the Company, the form and
     substance of which opinion shall be reasonably satisfactory to the Company,
     to the effect that such transfer does not require registration of such
     transferred Securities under the Securities Act. As a condition of
     transfer, any such transferee shall agree in writing to be bound by the
     terms of this Agreement and shall have the rights of a Purchaser under this
     Agreement and the Registration Rights Agreement.

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

     [NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES
     ARE [EXERCISABLE] [CONVERTIBLE]] HAVE BEEN REGISTERED WITH THE SECURITIES
     AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
     RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
     1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
     OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
     UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN
     A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
     SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
     EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,
     THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE
     SECURITIES AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF
     THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
     ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

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

                                       21
<PAGE>
          (c) Certificates evidencing the Shares and Underlying Shares shall not
     contain any legend (including the legend set forth in Section 4.1(b)
     hereof): (i) while a registration statement (including the Registration
     Statement) covering the resale of such security is effective under the
     Securities Act, or (ii) following any sale of such Shares or Underlying
     Shares pursuant to Rule 144, or (iii) if such Shares or Underlying Shares
     are eligible for sale under Rule 144(k), or (iv) if such legend is not
     required under applicable requirements of the Securities Act (including
     judicial interpretations and pronouncements issued by the staff of the
     Commission). The Company shall cause its counsel to issue a legal opinion
     to the Company's transfer agent promptly after the Effective Date if
     required by the Company's transfer agent to effect the removal of the
     legend hereunder. If all or any portion of a Debenture or Warrant is
     converted or exercised (as applicable) at a time when there is an effective
     registration statement to cover the resale of the Underlying Shares, or if
     such Underlying Shares may be sold under Rule 144(k) or if such legend is
     not otherwise required under applicable requirements of the Securities Act
     (including judicial interpretations thereof) then such Underlying Shares
     shall be issued free of all legends. The Company agrees that following the
     Effective Date or at such time as such legend is no longer required under
     this Section 4.1(c), it will, no later than three Trading Days following
     the delivery by a Purchaser to the Company or the Company's transfer agent
     of a certificate representing Shares or Underlying Shares, as applicable,
     issued with a restrictive legend (such third Trading Day, the "Legend
     Removal Date"), deliver or cause to be delivered to such Purchaser a
     certificate representing such shares that is free from all restrictive and
     other legends. The Company may not make any notation on its records or give
     instructions to any transfer agent of the Company that enlarge the
     restrictions on transfer set forth in this Section. Certificates for
     Securities subject to legend removal hereunder shall be transmitted by the
     transfer agent of the Company to the Purchasers by crediting the account of
     the Purchaser's prime broker with the Depository Trust Company System.

          (d) In addition to such Purchaser's other available remedies, the
     Company shall pay to a Purchaser, in cash, as partial liquidated damages
     and not as a penalty, for each $1,000 of Shares and Underlying Shares
     (based on the VWAP of the Common Stock on the date such Securities are
     submitted to the Company's transfer agent) delivered for removal of the
     restrictive legend and subject to Section 4.1(c), $10 per Trading Day
     (increasing to $20 per Trading Day 5 Trading Days after such damages have
     begun to accrue) for each Trading Day after the second Trading Day
     following the Legend Removal Date until such certificate is delivered
     without a legend. Nothing herein shall limit such Purchaser's right to
     pursue actual damages for the Company's failure to deliver certificates
     representing any Securities as required by the Transaction Documents, and
     such Purchaser shall have the right to pursue all remedies available to it
     at law or in equity including, without limitation, a decree of specific
     performance and/or injunctive relief.

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

          (f) Until the six month anniversary of the Effective Date, the Company
     shall not undertake a reverse stock split without the prior written consent
     of the Purchasers holding a majority in principal amount outstanding of the
     Debentures.

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

     4.3 Furnishing of Information. As long as any Purchaser owns Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act. As long as any
Purchaser owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Securities under Rule 144. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell such Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.

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

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

                                       23
<PAGE>
     4.6 Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m.
Eastern time on the Trading Day following the date hereof, issue a Current
Report on Form 8-K, reasonably acceptable to each Purchaser disclosing the
material terms of the transactions contemplated hereby, and shall attach the
Transaction Documents thereto. The Company and each Purchaser shall consult with
each other in issuing any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor any Purchaser shall issue any
such press release or otherwise make any such public statement without the prior
consent of the Company, with respect to any press release of any Purchaser, or
without the prior consent of each Purchaser, with respect to any press release
of the Company, which consent shall not unreasonably be withheld, except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide the other party with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Purchaser, except (i) as required by federal
securities law in connection with the registration statement contemplated by the
Registration Rights Agreement and (ii) to the extent such disclosure is required
by law or Trading Market regulations, in which case the Company shall provide
the Purchasers with prior notice of such disclosure permitted under subclause
(i) or (ii).

     4.7 Shareholder Rights Plan. No claim will be made or enforced by the
Company or, to the knowledge of the Company, any other Person that any Purchaser
is an "Acquiring Person" under any shareholder rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any Purchaser
could be deemed to trigger the provisions of any such plan or arrangement, by
virtue of receiving Securities under the Transaction Documents or under any
other agreement between the Company and the Purchasers. The Company shall
conduct its business in a manner so that it will not become subject to the
Investment Company Act.

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

     4.9 Use of Proceeds. Except as set forth on Schedule 4.9 attached hereto,
the Company shall use the net proceeds from the sale of the Securities hereunder
for (A) working capital purposes and (B) up to $600,000 in working capital
contribution relating to the Company's acquisition of Beijing Dong Fang Zheng Yi
Media, and not for the satisfaction of any portion of the Company's debt (other
than payment of trade payables in the ordinary course of the Company's business
and prior practices), to redeem any Common Stock or Common Stock Equivalents or
to settle any outstanding litigation.

                                       24
<PAGE>
     4.10 Reimbursement. If any Purchaser becomes involved in any capacity in
any Proceeding by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar transactions by
such Purchaser to or with any current stockholder), solely as a result of such
Purchaser's acquisition of the Securities under this Agreement, the Company will
reimburse such Purchaser for its reasonable legal and other expenses (including
the cost of any investigation preparation and travel in connection therewith)
incurred in connection therewith, as such expenses are incurred. The
reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any Affiliates of the Purchasers who are
actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may
be, of the Purchasers and any such Affiliate, and shall be binding upon and
inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Purchasers and any such Affiliate and any
such Person. The Company also agrees that neither the Purchasers nor any such
Affiliates, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company solely as a result of acquiring the Securities under
this Agreement.

     4.11 Indemnification of Purchasers. Subject to the provisions of this
Section 4.11, the Company will indemnify and hold each Purchaser and its
directors, officers, shareholders, members, partners, employees and agents (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, agents,
members, partners or employees (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding a lack of such
title or any other title) of such controlling person (each, a "Purchaser Party")
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys' fees and costs of
investigation that any such Purchaser Party may suffer or incur as a result of
or relating to (a) any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents or (b) any action instituted against a Purchaser, or any
of them or their respective Affiliates, by any stockholder of the Company who is
not an Affiliate of such Purchaser, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is based upon a
breach of such Purchaser's representations, warranties or covenants under the
Transaction Documents or any agreements or understandings such Purchaser may
have with any such stockholder or any violations by the Purchaser of state or
federal securities laws or any conduct by such Purchaser which constitutes
fraud, gross negligence, willful misconduct or malfeasance). If any action shall
be brought against any Purchaser Party in respect of which indemnity may be
sought pursuant to this Agreement, such Purchaser Party shall promptly notify
the Company in writing, and the Company shall have the right to assume the
defense thereof with counsel of its own choosing. Any Purchaser Party shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of
such separate counsel, a material conflict on any material issue between the
position of the Company and the position of such Purchaser Party. The Company
will not be liable to any Purchaser Party under this Agreement (i) for any
settlement by a Purchaser Party effected without the Company's prior written
consent, which shall not be unreasonably withheld or delayed; or (ii) to the
extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party's breach of any of the representations,
warranties, covenants or agreements made by the Purchasers in this Agreement or
in the other Transaction Documents.

                                       25
<PAGE>
     4.12 Reservation and Listing of Securities.

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

          (b) If, on any date, the number of authorized but unissued (and
     otherwise unreserved) shares of Common Stock is less than 150% of the
     Required Minimum on such date, then the Board of Directors of the Company
     shall use commercially reasonable efforts to amend the Company's
     certificate or articles of incorporation to increase the number of
     authorized but unissued shares of Common Stock to at least 200% of the
     Required Minimum at such time, as soon as possible and in any event not
     later than the 75th day after such date.

          (c) The Company shall, if applicable: (i) in the time and manner
     required by the Trading Market, prepare and file with such Trading Market
     an additional shares listing application covering a number of shares of
     Common Stock at least equal to the Required Minimum on the date of such
     application, (ii) take all steps necessary to cause such shares of Common
     Stock to be approved for listing on the Trading Market as soon as possible
     thereafter, (iii) provide to the Purchasers evidence of such listing, and
     (iv) maintain the listing of such Common Stock on any date at least equal
     to the Required Minimum on such date on such Trading Market or another
     Trading Market.

          4.13 Participation in Future Financing.

          (a) From the date hereof until the date that is the 6 month
     anniversary of the Effective Date, upon any financing by the Company or any
     of its Subsidiaries of Common Stock or Common Stock Equivalents (a
     "Subsequent Financing"), each Purchaser shall have the right to participate
     in up to an amount of the Subsequent Financing equal to 100% of the
     Subsequent Financing (the "Participation Maximum").

          (b) At least 5 Trading Days prior to the closing of the Subsequent
     Financing, the Company shall deliver to each Purchaser a written notice of
     its intention to effect a Subsequent Financing ("Pre-Notice"), which
     Pre-Notice shall ask such Purchaser if it wants to review the details of
     such financing (such additional notice, a "Subsequent Financing Notice").
     Upon the request of a Purchaser, and only upon a request by such Purchaser,
     for a Subsequent Financing Notice, the Company shall promptly, but no later
     than 1 Trading Day after such request, deliver a Subsequent Financing
     Notice to such Purchaser. The Subsequent Financing Notice shall describe in
     reasonable detail the proposed terms of such Subsequent Financing, the
     amount of proceeds intended to be raised thereunder, the Person with whom
     such Subsequent Financing is proposed to be effected, and attached to which
     shall be a term sheet or similar document relating thereto.

                                       26
<PAGE>
          (c) Any Purchaser desiring to participate in such Subsequent Financing
     must provide written notice to the Company by not later than 5:30 p.m. (New
     York City time) on the 5th Trading Day after all of the Purchasers have
     received the Pre-Notice that the Purchaser is willing to participate in the
     Subsequent Financing, the amount of the Purchaser's participation, and that
     the Purchaser has such funds ready, willing, and available for investment
     on the terms set forth in the Subsequent Financing Notice. If the Company
     receives no notice from a Purchaser as of such 5th Trading Day, such
     Purchaser shall be deemed to have notified the Company that it does not
     elect to participate.

          (d) If by 5:30 p.m. (New York City time) on the 5th Trading Day after
     all of the Purchasers have received the Pre-Notice, notifications by the
     Purchasers of their willingness to participate in the Subsequent Financing
     (or to cause their designees to participate) is, in the aggregate, less
     than the total amount of the Subsequent Financing, then the Company may
     effect the remaining portion of such Subsequent Financing on the terms and
     to the Persons set forth in the Subsequent Financing Notice.

          (e) If by 5:30 p.m. (New York City time) on the 5th Trading Day after
     all of the Purchasers have received the Pre-Notice, the Company receives
     responses to a Subsequent Financing Notice from Purchasers seeking to
     purchase more than the aggregate amount of the Participation Maximum, each
     such Purchaser shall have the right to purchase the greater of (a) their
     Pro Rata Portion (as defined below) of the Participation Maximum and (b)
     the difference between the Participation Maximum and the aggregate amount
     of participation by all other Purchasers. "Pro Rata Portion" is the ratio
     of (x) the Subscription Amount of Securities purchased on the Closing Date
     by a Purchaser participating under this Section 4.13 and (y) the sum of the
     aggregate Subscription Amounts of Securities purchased on the Closing Date
     by all Purchasers participating under this Section 4.13.

          (f) The Company must provide the Purchasers with a second Subsequent
     Financing Notice, and the Purchasers will again have the right of
     participation set forth above in this Section 4.13, if the Subsequent
     Financing subject to the initial Subsequent Financing Notice is not
     consummated for any reason on the terms set forth in such Subsequent
     Financing Notice within 60 Trading Days after the date of the initial
     Subsequent Financing Notice.

          (g) Notwithstanding the foregoing, this Section 4.13 shall not apply
     in respect of an Exempt Issuance.

     4.14 Subsequent Equity Sales.

                                       27
<PAGE>
          (a) From the date hereof until 90 days after the Effective Date,
     neither the Company nor any Subsidiary shall issue shares of Common Stock
     or Common Stock Equivalents; provided, however, the 90 day period set forth
     in this Section 4.14 shall be extended for the number of Trading Days
     during such period in which (i) trading in the Common Stock is suspended by
     any Trading Market, or (ii) following the Effective Date, the Registration
     Statement is not effective or the prospectus included in the Registration
     Statement may not be used by the Purchasers for the resale of the Shares
     and Underlying Shares.

          (b) From the date hereof until such time as no Purchaser holds any of
     the Securities, the Company shall be prohibited from effecting or entering
     into an agreement to effect any Subsequent Financing involving a "Variable
     Rate Transaction". The term "Variable Rate Transaction" shall mean a
     transaction in which the Company issues or sells (i) any debt or equity
     securities that are convertible into, exchangeable or exercisable for, or
     include the right to receive additional shares of Common Stock either (A)
     at a conversion, exercise or exchange rate or other price that is based
     upon and/or varies with the trading prices of or quotations for the shares
     of Common Stock at any time after the initial issuance of such debt or
     equity securities, or (B) with a conversion, exercise or exchange price
     that is subject to being reset at some future date after the initial
     issuance of such debt or equity security or upon the occurrence of
     specified or contingent events directly or indirectly related to the
     business of the Company or the market for the Common Stock or (ii) enters
     into any agreement, including, but not limited to, an equity line of
     credit, whereby the Company may sell securities at a future determined
     price.

          (c) Notwithstanding the foregoing, this Section 4.14 shall not apply
     in respect of an Exempt Issuance.

     4.15 Equal Treatment of Purchasers. No consideration shall be offered or
paid to any person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents. Further, the
Company shall not make any payment of principal or interest on the Debentures in
amounts which are disproportionate to the respective principal amounts
outstanding on the Debentures at any applicable time. For clarification
purposes, this provision constitutes a separate right granted to each Purchaser
by the Company and negotiated separately by each Purchaser, and is intended for
the Company to treat the Purchasers as a class and shall not in any way be
construed as the Purchasers acting in concert or as a group with respect to the
purchase, disposition or voting of Securities or otherwise.

                                       28
<PAGE>
     4.16 Short Sales and Confidentiality After The Date Hereof. Each Purchaser
severally and not jointly with the other Purchasers covenants that neither it
nor any affiliates acting on its behalf or pursuant to any understanding with it
will execute any Short Sales during the period after the Discussion Time and
ending on the earlier of the 180th calendar day following the date hereof or the
date that such Purchaser no longer owns any Debentures. Each Purchaser,
severally and not jointly with the other Purchasers, covenants that until such
time as the transactions contemplated by this Agreement are publicly disclosed
by the Company as described in Section 4.6, such Purchaser will maintain, the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction). Each
Purchaser understands and acknowledges, severally and not jointly with any other
Purchaser, that the Commission currently takes the position that coverage of
short sales of shares of the Common Stock "against the box" prior to the
Effective Date of the Registration Statement with the Securities is a violation
of Section 5 of the Securities Act, as set forth in Item 65, Section 5 under
Section A, of the Manual of Publicly Available Telephone Interpretations, dated
July 1997, compiled by the Office of Chief Counsel, Division of Corporation
Finance. Notwithstanding the foregoing, other than as set forth in this Section
4.16, no Purchaser makes any representation, warranty or covenant hereby that it
will not engage in Short Sales in the securities of the Company after the time
that the transactions contemplated by this Agreement are first publicly
announced as described in Section 4.6. Notwithstanding the foregoing, in the
case of a Purchaser that is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of such Purchaser's assets and the
portfolio managers have no direct knowledge of the investment decisions made by
the portfolio managers managing other portions of such Purchaser's assets, the
covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement.

     4.17 Form D; Blue Sky Filings. The Company agrees to timely file a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof, promptly upon request of any Purchaser. The Company shall, on or
before or after the Closing Date, take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to
qualify the Securities for, sale to the Purchasers at the Closing under
applicable securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of such actions promptly upon request of any Purchaser.

                                   ARTICLE V.
                                  MISCELLANEOUS

     5.1 Termination. This Agreement may be terminated by any Purchaser, as to
such Purchaser's obligations hereunder only and without any effect whatsoever on
the obligations between the Company and the other Purchasers, by written notice
to the other parties, if the Closing has not been consummated on or before
January 26, 2006; provided, however, that no such termination will affect the
right of any party to sue for any breach by the other party (or parties).

     5.2 Fees and Expenses. At the Closing, the Company has agreed to reimburse
vFinance the non-accountable sum of $20,000, for its actual, reasonable,
out-of-pocket legal fees and expenses, none of which has been paid prior to the
Closing. The Company shall deliver, prior to the Closing, a completed and
executed copy of the Closing Statement, attached hereto as Annex A. Except as
expressly set forth in the Transaction Documents to the contrary, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all transfer agent fees, stamp taxes and other taxes and
duties levied in connection with the delivery of any Securities.

                                       29
<PAGE>
     5.3 Entire Agreement. The Transaction Documents, together with the exhibits
and schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

     5.4 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 5:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the 2nd Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

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

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

     5.7 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser. Any Purchaser may assign
any or all of its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Securities, provided such transferee agrees
in writing to be bound, with respect to the transferred Securities, by the
provisions hereof that apply to the "Purchasers".

     5.8 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person other than vFinance, which shall be a third party
beneficiary of the representations, warranties and covenants of the parties
hereunder and other than as otherwise set forth in Section 4.11.

                                       30
<PAGE>
     5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. The parties hereby waive all
rights to a trial by jury. If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its attorneys' fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

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

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

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

                                       31
<PAGE>
     5.13 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights; provided,
however, in the case of a rescission of a conversion of a Debenture or exercise
of a Warrant, the Purchaser shall be required to return any shares of Common
Stock subject to any such rescinded conversion or exercise notice.

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

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

     5.16 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

     5.17 Usury. To the extent it may lawfully do so, the Company hereby agrees
not to insist upon or plead or in any manner whatsoever claim, and will resist
any and all efforts to be compelled to take the benefit or advantage of, usury
laws wherever enacted, now or at any time hereafter in force, in connection with
any claim, action or proceeding that may be brought by any Purchaser in order to
enforce any right or remedy under any Transaction Document. Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under the
Transaction Documents for payments in the nature of interest shall not exceed
the maximum lawful rate authorized under applicable law (the "Maximum Rate"),
and, without limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other sums in the
nature of interest that the Company may be obligated to pay under the
Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum
contract rate of interest allowed by law and applicable to the Transaction
Documents is increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate of interest
allowed by law will be the Maximum Rate applicable to the Transaction Documents
from the effective date forward, unless such application is precluded by
applicable law. If under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to any Purchaser with respect to
indebtedness evidenced by the Transaction Documents, such excess shall be
applied by such Purchaser to the unpaid principal balance of any such
indebtedness or be refunded to the Company, the manner of handling such excess
to be at such Purchaser's election.

                                       32
<PAGE>
     5.18 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with the Company through FW. FW does not represent any of
the Purchasers but only vFinance Investments, Inc., the placement agent. The
Company has elected to provide all Purchasers with the same terms and
Transaction Documents for the convenience of the Company and not because it was
required or requested to do so by the Purchasers.

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

     5.20 Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.

                            (Signature Pages Follow)

                                       33
<PAGE>

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

NAVSTAR MEDIA HOLDINGS, INC.                            Address for Notice:
                                                        -------------------

By:_________________________________
     Name:
     Title:

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

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

                                       34
<PAGE>

        [PURCHASER SIGNATURE PAGES TO NVMH SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: __________________________________________________
Signature of Authorized Signatory of Purchaser: _____________________
Name of Authorized Signatory: _______________________________________
Title of Authorized Signatory: ______________________________________
Email Address of Purchaser:__________________________________________

Address for Notice of Purchaser:

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

Subscription Amount:
Warrant Shares:
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

                                       35
<PAGE>

                                                                         Annex A

                                CLOSING STATEMENT

Pursuant to the attached Securities Purchase Agreement, dated as of the date
hereto, the purchasers shall purchase up to $1,000,000 of Shares, Debentures and
Warrants from Navstar Media Holdings, Inc. (the "Company"). All funds will be
wired into an escrow account maintained by Signature Bank. All funds will be
disbursed in accordance with this Closing Statement.

Disbursement Date:    January ___, 2006

I.   PURCHASE PRICE

                         Gross Proceeds to be Received in Escrow      $

II.  DISBURSEMENTS

                                                                      $

                         vFinance Investments, Inc.                   $
                          Feldman Weinstein LLP                       $20,000
                                                                      $

Total Amount Disbursed:                                               $

WIRE INSTRUCTIONS:

To: _____________________________________

To: _____________________________________

                                       36
<PAGE>Exhibit 4.2

                                                                       EXHIBIT A

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

Original Issue Date: January ___, 2006
Original Conversion Price (subject to adjustment herein): $1.00

                                                               $_______________

                            8% CONVERTIBLE DEBENTURE
                               DUE JULY ___, 2006

     THIS Convertible Debenture is one of a series of duly authorized and issued
8% Convertible Debentures of Navstar Media Holdings, Inc., a Nevada corporation,
having a principal place of business at _____________________________ (the
"Company"), designated as its 8% Convertible Debenture, due July [___, 2006
(this debenture, the "Debenture" and collectively with the other such series of
debentures, the "Debentures").

     FOR VALUE RECEIVED, the Company promises to pay to ________________________
or its registered assigns (the "Holder"), or shall have paid pursuant to the
terms hereunder, the principal sum of $_______________ by July ___, 2006 , or
such earlier date as this Debenture is required or permitted to be repaid as
provided hereunder (the "Maturity Date"), and to pay interest to the Holder on
the aggregate unconverted and then outstanding principal amount of this
Debenture in accordance with the provisions hereof. This Debenture is subject to
the following additional provisions:

     Section 1. Definitions. For the purposes hereof, in addition to the terms
defined elsewhere in this Debenture: (a) capitalized terms not otherwise defined
herein have the meanings given to such terms in the Purchase Agreement, and (b)
the following terms shall have the following meanings:

                                       1
<PAGE>
     "Alternate Consideration" shall have the meaning set forth in Section 5(d).

     "Base Conversion Price" shall have the meaning set forth in Section 5(b).

     "Business Day" means any day except Saturday, Sunday and any day which
shall be a federal legal holiday in the United States or a day on which banking
institutions in the State of New York are authorized or required by law or other
government action to close.

     "Buy-In" shall have the meaning set forth in Section 4(d)(v).

     "Change of Control Transaction" means the occurrence after the date hereof
of any of (i) an acquisition after the date hereof by an individual or legal
entity or "group" (as described in Rule 13d-5(b)(1) promulgated under the
Exchange Act) of effective control (whether through legal or beneficial
ownership of capital stock of the Company, by contract or otherwise) of in
excess of 33% of the voting securities of the Company, or (ii) the Company
merges into or consolidates with any other Person, or any Person merges into or
consolidates with the Company and, after giving effect to such transaction, the
stockholders of the Company immediately prior to such transaction own less than
66% of the aggregate voting power of the Company or the successor entity of such
transaction, or (iii) the Company sells or transfers its assets, as an entirety
or substantially as an entirety, to another Person and the stockholders of the
Company immediately prior to such transaction own less than 66% of the aggregate
voting power of the acquiring entity immediately after the transaction, (iv) a
replacement at one time or within a three year period of more than one-half of
the members of the Company's board of directors which is not approved by a
majority of those individuals who are members of the board of directors on the
date hereof (or by those individuals who are serving as members of the board of
directors on any date whose nomination to the board of directors was approved by
a majority of the members of the board of directors who are members on the date
hereof), or (v) the execution by the Company of an agreement to which the
Company is a party or by which it is bound, providing for any of the events set
forth above in (i) through (iv).

     "Closing Price" means on any particular date (a) the last reported closing
bid price per share of Common Stock on such date on the Trading Market (as
reported by Bloomberg L.P. at 4:15 PM (New York time)), or (b) if there is no
such price on such date, then the closing bid price on the Trading Market on the
date nearest preceding such date (as reported by Bloomberg L.P. at 4:15 PM (New
York time)), or (c) if the Common Stock is not then listed or quoted on the
Trading Market and if prices for the Common Stock are then reported in the "pink
sheets" published by the National Quotation Bureau Incorporated (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of the Common Stock so reported, or (d) if the
shares of Common Stock are not then publicly traded the fair market value of a
share of Common Stock as determined by an appraiser selected in good faith by
the Holders of a majority in interest of the principal amount of Debentures then
outstanding.
                                       2
<PAGE>
     "Common Stock" means the common stock, par value $0.001 per share, of the
Company and stock of any other class of securities into which such securities
may hereafter have been reclassified or changed into.

     "Conversion Date" shall have the meaning set forth in Section 4(a).

     "Conversion Price" shall have the meaning set forth in Section 4(b).

     "Conversion Shares" means the shares of Common Stock issuable upon
conversion of this Debenture.

     "Debenture Register" shall have the meaning set forth in Section 2(c).

     "Dilutive Issuance" shall have the meaning set forth in Section 5(b).

     "Dilutive Issuance Notice" shall have the meaning set forth in Section
5(b).

     "Effectiveness Period" shall have the meaning given to such term in the
Registration Rights Agreement.

     "Equity Conditions" shall mean, during the period in question, (i) the
Company shall have duly honored all conversions and redemptions scheduled to
occur or occurring by virtue of one or more Notice of Conversions of the Holder,
if any, (ii) all liquidated damages and other amounts owing to the Holder in
respect of this Debenture shall have been paid, (iii) there is an effective
Registration Statement pursuant to which the Holder is permitted to utilize the
prospectus thereunder to resell all of the shares issuable pursuant to the
Transaction Documents (and the Company believes, in good faith, that such
effectiveness will continue uninterrupted for the foreseeable future), (iv) the
Common Stock is trading on the Trading Market and all of the shares issuable
pursuant to the Transaction Documents are listed for trading on a Trading Market
(and the Company believes, in good faith, that trading of the Common Stock on a
Trading Market will continue uninterrupted for the foreseeable future), (v)
there is a sufficient number of authorized but unissued and otherwise unreserved
shares of Common Stock for the issuance of all of the shares issuable pursuant
to the Transaction Documents, (vi) there is then existing no Event of Default or
event which, with the passage of time or the giving of notice, would constitute
an Event of Default, (vii) the issuance of the shares in question (or, in the
case of a redemption, the shares issuable upon conversion in full of the
redemption amount) to the Holder would not violate the limitations set forth in
Section 4(c) and (viii) no public announcement of a pending or proposed
Fundamental Transaction, Change of Control Transaction or acquisition
transaction has occurred that has not been consummated.

     "Event of Default" shall have the meaning set forth in Section 8.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

                                       3
<PAGE>
     "Fundamental Transaction" shall have the meaning set forth in Section 5(d).

     "Late Fees" shall have the meaning set forth in Section 2(c).

     "Mandatory Default Amount" shall equal the sum of (i) the greater of: (A)
130% of the principal amount of this Debenture to be prepaid, plus all accrued
and unpaid interest thereon, or (B) the principal amount of this Debenture to be
prepaid, plus all other accrued and unpaid interest hereon, divided by the
Conversion Price on (x) the date the Mandatory Default Amount is demanded or
otherwise due or (y) the date the Mandatory Default Amount is paid in full,
whichever is less, multiplied by the VWAP on (x) the date the Mandatory Default
Amount is demanded or otherwise due or (y) the date the Mandatory Default Amount
is paid in full, whichever is greater, and (ii) all other amounts, costs,
expenses and liquidated damages due in respect of this Debenture.

     "New York Courts" shall have the meaning set forth in Section 9(d).

     "Notice of Conversion" shall have the meaning set forth in Section 4(a).

     "Optional Redemption" shall have the meaning set forth in Section 6(a).

     "Optional Redemption Amount" shall mean the sum of (i) 100% of the
principal amount of the Debenture then outstanding, (ii) accrued but unpaid
interest and (iii) all liquidated damages and other amounts due in respect of
the Debenture.

     "Optional Redemption Date" shall have the meaning set forth in Section
6(a).

     "Optional Redemption Notice" shall have the meaning set forth in Section
6(a).

     "Optional Redemption Notice Date" shall have the meaning set forth in
Section 6(a).

     "Original Issue Date" shall mean the date of the first issuance of the
Debentures regardless of the number of transfers of any Debenture and regardless
of the number of instruments which may be issued to evidence such Debenture.

     "Permitted Indebtedness" shall mean the Indebtedness existing on the
Original Issue Date and set forth on Schedule 3.1(gg) attached to the Purchase
Agreement.

     "Permitted Lien" shall mean the individual and collective reference to the
following: (a) Liens for taxes, assessments and other governmental charges or
levies not yet due or Liens for taxes, assessments and other governmental
charges or levies being contested in good faith and by appropriate proceedings
for which adequate reserves (in the good faith judgment of the management of the
Company) have been established in accordance with GAAP and (b) Liens imposed by
law which were incurred in the ordinary course of business, such as carriers',
warehousemen's and mechanics' Liens, statutory landlords' Liens, and other
similar Liens arising in the ordinary course of business, and (x) which do not
individually or in the aggregate materially detract from the value of such
property or assets or materially impair the use thereof in the operation of the
business of the Company and its consolidated Subsidiaries or (y) which are being
contested in good faith by appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the property or asset subject to
such Lien.
                                       4
<PAGE>
     "Person" means a corporation, an association, a partnership, organization,
a business, an individual, a government or political subdivision thereof or a
governmental agency.

     "Purchase Agreement" means the Securities Purchase Agreement, dated as of
January ____, 2006, to which the Company and the original Holder are parties, as
amended, modified or supplemented from time to time in accordance with its
terms.

     "Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the date of the Purchase Agreement, to which the Company and the
original Holder are parties, as amended, modified or supplemented from time to
time in accordance with its terms.

     "Registration Statement" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement, covering among
other things the resale of the Conversion Shares and naming the Holder as a
"selling stockholder" thereunder.

     "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

     "Subsidiary" shall have the meaning given to such term in the Purchase
Agreement.

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

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

     "Transaction Documents" shall have the meaning set forth in the Purchase
Agreement.

     "VWAP" means, for any date, the price determined by the first of the
following clauses that applies: (a) if the Common Stock is then listed or quoted
on a Trading Market, the daily volume weighted average price of the Common Stock
for such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg Financial L.P.
(based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time);
(b) if the Common Stock is not then listed or quoted on a Trading Market and if
prices for the Common Stock are then reported in the "Pink Sheets" published by
the Pink Sheets, LLC (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share of the
Common Stock so reported; or (c) in all other cases, the fair market value of a
share of Common Stock as determined by an independent appraiser selected in good
faith by the Holder and reasonably acceptable to the Company.

                                       5

<PAGE>
Section 2.    Interest.
----------    ---------

     a) Payment of Interest. The Company shall pay interest to the Holder on the
aggregate unconverted and then outstanding principal amount of this Debenture at
the rate of 8% per annum, payable on each Optional Redemption Date (as to that
principal amount being redeemed) and on the Maturity Date (except that, if any
such date is not a Business Day, then such payment shall be due on the next
succeeding Business Day) (each such date, an "Interest Payment Date"), in cash.

     b) Interest Calculations. Interest shall be calculated on the basis of a
360-day year and shall accrue daily commencing on the Original Issue Date until
payment in full of the principal sum, together with all accrued and unpaid
interest and other amounts which may become due hereunder, has been made.
Interest shall cease to accrue with respect to any principal amount converted,
provided that the Company in fact delivers the Conversion Shares within the time
period required by Section 4(d)(ii). Interest hereunder will be paid to the
Person in whose name this Debenture is registered on the records of the Company
regarding registration and transfers of this Debenture (the "Debenture
Register").

     c) Late Fee. All overdue accrued and unpaid interest to be paid hereunder
shall entail a late fee at the rate of 18% per annum (or such lower maximum
amount of interest permitted to be charged under applicable law) ("Late Fees")
which will accrue daily, from the date such interest is due hereunder through
and including the date of payment.

     d) Prepayment. Except as otherwise set forth in this Debenture, the Company
may not prepay any portion of the principal amount of this Debenture without the
prior written consent of the Holder.

Section 3.     Registration of Transfers and Exchanges.
----------     ----------------------------------------

     a) Different Denominations. This Debenture is exchangeable for an equal
aggregate principal amount of Debentures of different authorized denominations,
as requested by the Holder surrendering the same. No service charge will be made
for such registration of transfer or exchange.

     b) Investment Representations. This Debenture has been issued subject to
certain investment representations of the original Holder set forth in the
Purchase Agreement and may be transferred or exchanged only in compliance with
the Purchase Agreement and applicable federal and state securities laws and
regulations.

                                       6
<PAGE>
     c) Reliance on Debenture Register. Prior to due presentment to the Company
for transfer of this Debenture, the Company and any agent of the Company may
treat the Person in whose name this Debenture is duly registered on the
Debenture Register as the owner hereof for the purpose of receiving payment as
herein provided and for all other purposes, whether or not this Debenture is
overdue, and neither the Company nor any such agent shall be affected by notice
to the contrary.

Section 4.          Conversion.
----------          ----------

     a) Voluntary Conversion. At any time after the Original Issue Date until
this Debenture is no longer outstanding, this Debenture shall be convertible
into shares of Common Stock at the option of the Holder, in whole or in part at
any time and from time to time (subject to the limitations on conversion set
forth in Section 4(c) hereof). The Holder shall effect conversions by delivering
to the Company the form of Notice of Conversion attached hereto as Annex A (a
"Notice of Conversion"), specifying therein the principal amount of this
Debenture to be converted and the date on which such conversion is to be
effected (a "Conversion Date"). If no Conversion Date is specified in a Notice
of Conversion, the Conversion Date shall be the date that such Notice of
Conversion is provided hereunder. To effect conversions hereunder, the Holder
shall not be required to physically surrender this Debenture to the Company
unless the entire principal amount of this Debenture plus all accrued and unpaid
interest thereon has been so converted. Conversions hereunder shall have the
effect of lowering the outstanding principal amount of this Debenture in an
amount equal to the applicable conversion. The Holder and the Company shall
maintain records showing the principal amount converted and the date of such
conversions. The Company shall deliver any objection to any Notice of Conversion
within 1 Business Day of receipt of such notice. In the event of any dispute or
discrepancy, the records of the Holder shall be controlling and determinative in
the absence of manifest error. The Holder and any assignee, by acceptance of
this Debenture, acknowledge and agree that, by reason of the provisions of this
paragraph, following conversion of a portion of this Debenture, the unpaid and
unconverted principal amount of this Debenture may be less than the amount
stated on the face hereof.

     b) Conversion Price. The conversion price in effect on any Conversion Date
shall be equal to the lesser of (i) $1.00 (subject to adjustment herein) (the
"Set Price") or (ii) 75% of the average of the 5 consecutive Closing Prices
immediately prior to the applicable Conversion Date (subject to adjustment for
forward and reverse stock splits, stock dividends, recapitalizations and the
like) (the "Floor Price") (such lower price, the "Conversion Price").
Notwithstanding anything herein to the contrary, the Floor Price calculated
pursuant to Section 4(b)(ii) shall not be less than $0.50 (subject to adjustment
for forward and reverse stock splits, stock dividends, recapitalizations and the
like). For clarification, if the Set Price is reduced pursuant to Section 5(b)
to $0.40 due to a Dilutive Issuance, and 75% of the average of the 5 consecutive
Closing Prices immediately prior to the applicable Conversion Date is equal to
$0.50, the Conversion Price for such Conversion Date would equal $0.40.

                                       7
<PAGE>
     c) Conversion Limitations. The Company shall not effect any conversion of
this Debenture, and a Holder shall not have the right to convert any portion of
this Debenture to the extent that after giving effect to such conversion, such
Holder (together with such Holder's affiliates, and any other person or entity
acting as a group together with such Holder or any of such Holder's affiliates),
as set forth on the applicable Notice of Conversion, would beneficially own in
excess of the Beneficial Ownership Limitation (as defined below). For purposes
of the foregoing sentence, the number of shares of Common Stock beneficially
owned by such Holder and its affiliates shall include the number of shares of
Common Stock issuable upon conversion of this Debenture with respect to which
the determination of such sentence is being made, but shall exclude the number
of shares of Common Stock which would be issuable upon (A) conversion of the
remaining, nonconverted principal amount of this Debenture beneficially owned by
such Holder or any of its affiliates and (B) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the Company
(including, without limitation, any other Debentures or the Warrants) subject to
a limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by such Holder or any of its affiliates. Except as set
forth in the preceding sentence, for purposes of this Section 4(c), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. To the extent that the
limitation contained in this Section 4(c) applies, the determination of whether
this Debenture is convertible (in relation to other securities owned by such
Holder together with any affiliates) and of which amounts of this Debenture are
convertible shall be in the sole discretion of such Holder, and the submission
of a Notice of Conversion shall be deemed to be such Holder's determination of
whether this Debenture may be converted (in relation to other securities owned
by such Holder) and which amounts of this Debenture are convertible, in each
case subject to such aggregate percentage limitations. To ensure compliance with
this restriction, each Holder will be deemed to represent to the Company each
time it delivers a Notice of Conversion that such Notice of Conversion has not
violated the restrictions set forth in this paragraph and the Company shall have
no obligation to verify or confirm the accuracy of such determination. In
addition, a determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. For purposes of this Section 4(c), in
determining the number of outstanding shares of Common Stock, a Holder may rely
on the number of outstanding shares of Common Stock as reflected in the most
recent of the following: (A) the Company's most recent Form 10-QSB or Form
10-KSB, as the case may be, (B) a more recent public announcement by the Company
or (C) any other notice by the Company or the Company's transfer agent setting
forth the number of shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two Trading Days confirm orally
and in writing to such Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of
the Company, including this Debenture, by such Holder or its affiliates since
the date as of which such number of outstanding shares of Common Stock was
reported. The "Beneficial Ownership Limitation" shall be 4.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon conversion of this Debenture
held by the Holder. The Beneficial Ownership Limitation provisions of this
Section 4(c) may be waived by such Holder, at the election of such Holder, upon
not less than 61 days' prior notice to the Company to change the Beneficial
Ownership Limitation to 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock upon conversion of this Debenture held by the Holder, and the provisions
of this Section 4(c) shall continue to apply. Upon such a change by a Holder of
the Beneficial Ownership Limitation from such 4.99% limitation to such 9.99%
limitation, the Beneficial Ownership Limitation may not be waived by such
Holder. The provisions of this paragraph shall be implemented in a manner
otherwise than in strict conformity with the terms of this Section 4(c) to
correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation herein contained
or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a
successor holder of this Debenture.

                                       8
<PAGE>
     d) Mechanics of Conversion

          i. Conversion Shares Issuable Upon Conversion of Principal Amount. The
     number of shares of Common Stock issuable upon a conversion hereunder shall
     be determined by the quotient obtained by dividing (x) the outstanding
     principal amount of this Debenture to be converted by (y) the Conversion
     Price. i.

          ii. Delivery of Certificate Upon Conversion. Not later than three
     Trading Days after any Conversion Date, the Company will deliver or cause
     to be delivered to the Holder (A) a certificate or certificates
     representing the Conversion Shares which shall be free of restrictive
     legends and trading restrictions (other than those required by the Purchase
     Agreement) representing the number of shares of Common Stock being acquired
     upon the conversion of this Debenture and (B) a bank check in the amount of
     accrued and unpaid interest. The Company shall, if available and if allowed
     under applicable securities laws, use its best efforts to deliver any
     certificate or certificates required to be delivered by the Company under
     this Section electronically through the Depository Trust Corporation or
     another established clearing corporation performing similar functions.

          iii. Failure to Deliver Certificates. If in the case of any Notice of
     Conversion such certificate or certificates are not delivered to or as
     directed by the applicable Holder by the third Trading Day after a
     Conversion Date, the Holder shall be entitled by written notice to the
     Company at any time on or before its receipt of such certificate or
     certificates thereafter, to rescind such conversion, in which event the
     Company shall immediately return the certificates representing the
     principal amount of this Debenture tendered for conversion.

                                       9
<PAGE>
          iv. Obligation Absolute; Partial Liquidated Damages. If the Company
     fails for any reason to deliver to the Holder such certificate or
     certificates pursuant to Section 4(d)(ii) by the third Trading Day after
     the Conversion Date, the Company shall pay to such Holder, in cash, as
     liquidated damages and not as a penalty, for each $1000 of principal amount
     being converted, $10 per Trading Day (increasing to $20 per Trading Day
     after 5 Trading Days after such damages begin to accrue) for each Trading
     Day after such third Trading Day until such certificates are delivered. The
     Company's obligations to issue and deliver the Conversion Shares upon
     conversion of this Debenture in accordance with the terms hereof are
     absolute and unconditional, irrespective of any action or inaction by the
     Holder to enforce the same, any waiver or consent with respect to any
     provision hereof, the recovery of any judgment against any Person or any
     action to enforce the same, or any setoff, counterclaim, recoupment,
     limitation or termination, or any breach or alleged breach by the Holder or
     any other Person of any obligation to the Company or any violation or
     alleged violation of law by the Holder or any other person, and
     irrespective of any other circumstance which might otherwise limit such
     obligation of the Company to the Holder in connection with the issuance of
     such Conversion Shares; provided, however, such delivery shall not operate
     as a waiver by the Company of any such action the Company may have against
     the Holder. In the event the Holder of this Debenture shall elect to
     convert any or all of the outstanding principal amount hereof, the Company
     may not refuse conversion based on any claim that the Holder or any one
     associated or affiliated with the Holder has been engaged in any violation
     of law, agreement or for any other reason, unless, an injunction from a
     court, on notice, restraining and or enjoining conversion of all or part of
     this Debenture shall have been sought and obtained and the Company posts a
     surety bond for the benefit of the Holder in the amount of 150% of the
     principal amount of this Debenture outstanding, which is subject to the
     injunction, which bond shall remain in effect until the completion of
     arbitration/litigation of the dispute and the proceeds of which shall be
     payable to such Holder to the extent it obtains judgment. In the absence of
     an injunction precluding the same, the Company shall issue Conversion
     Shares or, if applicable, cash, upon a properly noticed conversion. Nothing
     herein shall limit a Holder's right to pursue actual damages or declare an
     Event of Default pursuant to Section 8 herein for the Company's failure to
     deliver Conversion Shares within the period specified herein and such
     Holder shall have the right to pursue all remedies available to it at law
     or in equity including, without limitation, a decree of specific
     performance and/or injunctive relief. The exercise of any such rights shall
     not prohibit the Holder from seeking to enforce damages pursuant to any
     other Section hereof or under applicable law.

                                       10
<PAGE>
          v. Compensation for Buy-In on Failure to Timely Deliver Certificates
     Upon Conversion. In addition to any other rights available to the Holder,
     if the Company fails for any reason to deliver to the Holder such
     certificate or certificates pursuant to Section 4(d)(ii) by the fifth
     Trading Day after the Conversion Date, and if after such fifth Trading Day
     the Holder is required by its brokerage firm to purchase (in an open market
     transaction or otherwise) Common Stock to deliver in satisfaction of a sale
     by such Holder of the Conversion Shares which the Holder anticipated
     receiving upon such conversion (a "Buy-In"), then the Company shall (A) pay
     in cash to the Holder (in addition to any remedies available to or elected
     by the Holder) the amount by which (x) the Holder's total purchase price
     (including brokerage commissions, if any) for the Common Stock so purchased
     exceeds (y) the product of (1) the aggregate number of shares of Common
     Stock that such Holder anticipated receiving from the conversion at issue
     multiplied by (2) the actual sale price of the Common Stock at the time of
     the sale (including brokerage commissions, if any) giving rise to such
     purchase obligation and (B) at the option of the Holder, either reissue (if
     surrendered) this Debenture in a principal amount equal to the principal
     amount of the attempted conversion or deliver to the Holder the number of
     shares of Common Stock that would have been issued had the Company timely
     complied with its delivery requirements under Section 4(d)(ii). For
     example, if the Holder purchases Common Stock having a total purchase price
     of $11,000 to cover a Buy-In with respect to an attempted conversion of
     this Debenture with respect to which the actual sale price of the
     Conversion Shares at the time of the sale (including brokerage commissions,
     if any) giving rise to such purchase obligation was a total of $10,000
     under clause (A) of the immediately preceding sentence, the Company shall
     be required to pay the Holder $1,000. The Holder shall provide the Company
     written notice indicating the amounts payable to the Holder in respect of
     the Buy-In.

          vi. Reservation of Shares Issuable Upon Conversion. The Company
     covenants that it will at all times reserve and keep available out of its
     authorized and unissued shares of Common Stock solely for the purpose of
     issuance upon conversion of this Debenture, free from preemptive rights or
     any other actual contingent purchase rights of persons other than the
     Holder (and the other holders of the Debentures), not less than such number
     of shares of the Common Stock as shall (subject to the terms and conditions
     set forth in the Purchase Agreement) be issuable (taking into account the
     adjustments and restrictions of Section 5) upon the conversion of the
     outstanding principal amount of this Debenture. The Company covenants that
     all shares of Common Stock that shall be so issuable shall, upon issue, be
     duly and validly authorized, issued and fully paid, nonassessable and, if
     the Registration Statement is then effective under the Securities Act,
     registered for public sale in accordance with such Registration Statement.

          vii. Fractional Shares. Upon a conversion hereunder the Company shall
     not be required to issue stock certificates representing fractions of
     shares of the Common Stock, but may if otherwise permitted, make a cash
     payment in respect of any final fraction of a share based on the VWAP at
     such time. If the Company elects not, or is unable, to make such a cash
     payment, the Holder shall be entitled to receive, in lieu of the final
     fraction of a share, one whole share of Common Stock.

                                       11
<PAGE>
          viii. Transfer Taxes. The issuance of certificates for shares of the
     Common Stock on conversion of this Debenture shall be made without charge
     to the Holder hereof for any documentary stamp or similar taxes that may be
     payable in respect of the issue or delivery of such certificate, provided
     that the Company shall not be required to pay any tax that may be payable
     in respect of any transfer involved in the issuance and delivery of any
     such certificate upon conversion in a name other than that of the Holder of
     this Debenture so converted and the Company shall not be required to issue
     or deliver such certificates unless or until the person or persons
     requesting the issuance thereof shall have paid to the Company the amount
     of such tax or shall have established to the satisfaction of the Company
     that such tax has been paid.

Section 5.        Certain Adjustments.
----------        --------------------

     a) Stock Dividends and Stock Splits. If the Company, at any time while this
Debenture is outstanding: (A) pays a stock dividend or otherwise makes a
distribution or distributions on shares of its Common Stock or any other equity
or equity equivalent securities payable in shares of Common Stock (which, for
avoidance of doubt, shall not include any shares of Common Stock issued by the
Company pursuant to this Debenture), (B) subdivides outstanding shares of Common
Stock into a larger number of shares, (C) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares,
or (D) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then the Set Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made pursuant to this
Section shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.

                                       12
<PAGE>
     b) Subsequent Equity Sales. If the Company or any Subsidiary thereof, as
applicable, at any time while this Debenture is outstanding, shall offer, sell,
grant any option to purchase or offer, sell or grant any right to reprice its
securities, or otherwise dispose of or issue (or announce any offer, sale, grant
or any option to purchase or other disposition) any Common Stock or Common Stock
Equivalents entitling any Person to acquire shares of Common Stock, at an
effective price per share less than the then Set Price (such lower price, the
"Base Conversion Price" and such issuances collectively, a "Dilutive Issuance"),
as adjusted hereunder (if the holder of the Common Stock or Common Stock
Equivalents so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due to warrants, options or rights per share which is issued in
connection with such issuance, be entitled to receive shares of Common Stock at
an effective price per share which is less than the Set Price, such issuance
shall be deemed to have occurred for less than the Set Price on such date of the
Dilutive Issuance), then the Set Price shall be reduced to equal the Base
Conversion Price. Such adjustment shall be made whenever such Common Stock or
Common Stock Equivalents are issued. Notwithstanding the foregoing, no
adjustment will be made under this Section 5(b) in respect of an Exempt
Issuance. The Company shall notify the Holder in writing, no later than the
Business Day following the issuance of any Common Stock or Common Stock
Equivalents subject to this section, indicating therein the applicable issuance
price, or of applicable reset price, exchange price, conversion price and other
pricing terms (such notice the "Dilutive Issuance Notice"). For purposes of
clarification, whether or not the Company provides a Dilutive Issuance Notice
pursuant to this Section 5(b), upon the occurrence of any Dilutive Issuance,
after the date of such Dilutive Issuance the Holder is entitled to receive a
number of Conversion Shares based upon the Base Conversion Price regardless of
whether the Holder accurately refers to the Base Conversion Price in the Notice
of Conversion.

     c) Pro Rata Distributions. If the Company, at any time while this Debenture
is outstanding, shall distribute to all holders of Common Stock (and not to the
holders of the Debenture) evidences of its indebtedness or assets (including
cash and cash dividends) or rights or warrants to subscribe for or purchase any
security, then in each such case the Set Price shall be adjusted by multiplying
such Set Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a
fraction of which the denominator shall be the VWAP determined as of the record
date mentioned above, and of which the numerator shall be such VWAP on such
record date less the then fair market value at such record date of the portion
of such assets or evidence of indebtedness so distributed applicable to one
outstanding share of the Common Stock as determined by the Board of Directors in
good faith. In either case the adjustments shall be described in a statement
provided to the Holder of the portion of assets or evidences of indebtedness so
distributed or such subscription rights applicable to one share of Common Stock.
Such adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.

                                       13
<PAGE>
     d) Fundamental Transaction. If, at any time while this Debenture is
outstanding, (A) the Company effects any merger or consolidation of the Company
with or into another Person, (B) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions, (C)
any tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (D) the Company
effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such case, a
"Fundamental Transaction"), then upon any subsequent conversion of this
Debenture, the Holder shall have the right to receive, for each Conversion Share
that would have been issuable upon such conversion immediately prior to the
occurrence of such Fundamental Transaction, the same kind and amount of
securities, cash or property as it would have been entitled to receive upon the
occurrence of such Fundamental Transaction if it had been, immediately prior to
such Fundamental Transaction, the holder of one share of Common Stock (the
"Alternate Consideration"). For purposes of any such conversion, the
determination of the Set Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate Consideration issuable
in respect of one share of Common Stock in such Fundamental Transaction, and the
Company shall apportion the Set Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any conversion of this Debenture following such Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions, any
successor to the Company or surviving entity in such Fundamental Transaction
shall issue to the Holder a new debenture consistent with the foregoing
provisions and evidencing the Holder's right to convert such debenture into
Alternate Consideration. The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this paragraph
(d) and insuring that this Debenture (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.

     e) Calculations. All calculations under this Section 5 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 5, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding treasury shares, if any) issued and outstanding.

     f) Notice to the Holder.

          i. Adjustment to Set Price. Whenever the Set Price is adjusted
     pursuant to any of this Section 5, the Company shall promptly mail to each
     Holder a notice setting forth the Set Price after such adjustment and
     setting forth a brief statement of the facts requiring such adjustment. If
     the Company issues a variable rate security, despite the prohibition
     thereon in the Purchase Agreement, the Company shall be deemed to have
     issued Common Stock or Common Stock Equivalents at the lowest possible
     conversion or exercise price at which such securities may be converted or
     exercised in the case of a Variable Rate Transaction (as defined in the
     Purchase Agreement).

                                       14
<PAGE>
          ii. Notice to Allow Conversion by Holder. If (A) the Company shall
     declare a dividend (or any other distribution) on the Common Stock; (B) the
     Company shall declare a special nonrecurring cash dividend on or a
     redemption of the Common Stock; (C) the Company shall authorize the
     granting to all holders of the Common Stock rights or warrants to subscribe
     for or purchase any shares of capital stock of any class or of any rights;
     (D) the approval of any stockholders of the Company shall be required in
     connection with any reclassification of the Common Stock, any consolidation
     or merger to which the Company is a party, any sale or transfer of all or
     substantially all of the assets of the Company, of any compulsory share
     exchange whereby the Common Stock is converted into other securities, cash
     or property; (E) the Company shall authorize the voluntary or involuntary
     dissolution, liquidation or winding up of the affairs of the Company; then,
     in each case, the Company shall cause to be filed at each office or agency
     maintained for the purpose of conversion of this Debenture, and shall cause
     to be mailed to the Holder at its last addresses as it shall appear upon
     the stock books of the Company, at least 20 calendar days prior to the
     applicable record or effective date hereinafter specified, a notice stating
     (x) the date on which a record is to be taken for the purpose of such
     dividend, distribution, redemption, rights or warrants, or if a record is
     not to be taken, the date as of which the holders of the Common Stock of
     record to be entitled to such dividend, distributions, redemption, rights
     or warrants are to be determined or (y) the date on which such
     reclassification, consolidation, merger, sale, transfer or share exchange
     is expected to become effective or close, and the date as of which it is
     expected that holders of the Common Stock of record shall be entitled to
     exchange their shares of the Common Stock for securities, cash or other
     property deliverable upon such reclassification, consolidation, merger,
     sale, transfer or share exchange; provided, that the failure to mail such
     notice or any defect therein or in the mailing thereof shall not affect the
     validity of the corporate action required to be specified in such notice.
     The Holder is entitled to convert this Debenture during the 20-day period
     commencing the date of such notice to the effective date of the event
     triggering such notice.

Section 6.        Redemption.
---------         ----------

          a) Optional Redemption at Election of Company. Subject to the
     provisions of this Section 6, at any time after the Effective Date, the
     Company may deliver a notice to the Holder (an "Optional Redemption Notice"
     and the date such notice is deemed delivered hereunder, the "Optional
     Redemption Notice Date") of its irrevocable election to redeem some or all
     of the then outstanding Debentures, for an amount, in cash, equal to the
     Optional Redemption Amount on the 20th Trading Day following the Optional
     Redemption Notice Date (such date, the "Optional Redemption Date" and such
     redemption, the "Optional Redemption"). The Optional Redemption Amount is
     due in full on the Optional Redemption Date. The Company may only effect an
     Optional Redemption if during the period commencing on the Optional
     Redemption Notice Date through to the Optional Redemption Date and through
     and including the date such shares of Common Stock are issued to the
     Holder, each of the Equity Conditions shall have been met. If any of the
     Equity Conditions shall cease to be satisfied at any time during the
     required period, then the Holder may elect to nullify the Optional
     Redemption Notice by notice to the Company within 3 Trading Days after the
     first day on which any such Equity Condition has not been met (provided
     that if, by a provision of the Transaction Documents, the Company is
     obligated to notify the Holder of the non-existence of an Equity Condition,
     such notice period shall be extended to the third Trading Day after proper
     notice from the Company) in which case the Optional Redemption Notice shall
     be null and void, ab initio. The Company covenants and agrees that it will
     honor all Notices of Conversion tendered from the time of delivery of the
     Optional Redemption Notice through the date all amounts owing thereon are
     due and paid in full.

                                       15
<PAGE>
          b) Redemption Procedure. The payment of cash pursuant to an Optional
     Redemption shall be made on the Optional Redemption Date. If any portion of
     the cash payment for an Optional Redemption shall not be paid by the
     Company by the respective due date, interest shall accrue thereon at the
     rate of 18% per annum (or the maximum rate permitted by applicable law,
     whichever is less) until the payment of the Optional Redemption Amount,
     plus all amounts owing thereon is paid in full. Alternatively, if any
     portion of the Optional Redemption Amount remains unpaid after such date,
     the Holders subject to such redemption may elect, by written notice to the
     Company given at any time thereafter, to invalidate ab initio such
     redemption, notwithstanding anything herein contained to the contrary, and,
     with respect the failure to honor the Optional Redemption as applicable,
     the Company shall have no further right to exercise such Optional
     Redemption. Notwithstanding anything to the contrary in this Section 6, the
     Company's determination to redeem in cash or its elections under Section
     6(b) shall be applied among the Holders of Debentures ratably. The Holder
     may elect to convert the outstanding principal amount of the Debenture
     pursuant to Section 4 prior to actual payment in cash for any redemption
     under this Section 6 by fax delivery of a Notice of Conversion to the
     Company.

     Section 7. Negative Covenants. So long as any portion of this Debenture is
outstanding, the Company will not and will not permit any of its Subsidiaries to
directly or indirectly:

          a) other than Permitted Indebtedness, enter into, create, incur,
     assume, guarantee or suffer to exist any indebtedness for borrowed money of
     any kind, including but not limited to, a guarantee, on or with respect to
     any of its property or assets now owned or hereafter acquired or any
     interest therein or any income or profits therefrom;

          b) other than Permitted Liens, enter into, create, incur, assume or
     suffer to exist any liens of any kind, on or with respect to any of its
     property or assets now owned or hereafter acquired or any interest therein
     or any income or profits therefrom;

          c) amend its certificate of incorporation, bylaws or other charter
     documents so as to materially and adversely affect any rights of the
     Holder;

                                       16
<PAGE>
          d) repay, repurchase or offer to repay, repurchase or otherwise
     acquire more than a de minimis number of shares of its Common Stock or
     Common Stock Equivalents other than as to the Conversion Shares to the
     extent permitted or required under the Transaction Documents or as
     otherwise permitted by the Transaction Documents;

          e) enter into any agreement with respect to any of the foregoing; or

          f) pay cash dividends or distributions on any equity securities of the
     Company.

Section 8.        Events of Default.
---------         -----------------

          a) "Event of Default", wherever used herein, means any one of the
     following events (whatever the reason and whether it shall be voluntary or
     involuntary or effected by operation of law or pursuant to any judgment,
     decree or order of any court, or any order, rule or regulation of any
     administrative or governmental body):

               i. any default in the payment of (A) the principal amount of any
          Debenture, or (B) interest (including Late Fees) on, or liquidated
          damages in respect of, any Debenture, as and when the same shall
          become due and payable (whether on a Conversion Date or the Maturity
          Date or by acceleration or otherwise) which default, solely in the
          case of an interest payment or other default under clause (B) above,
          is not cured, within 3 Trading Days;

               ii. the Company shall fail to observe or perform any other
          covenant or agreement contained in this Debenture or any other
          Debenture (other than a breach by the Company of its obligations to
          deliver shares of Common Stock to the Holder upon conversion which
          breach is addressed in clause (xi) below) which failure is not cured,
          if possible to cure, within the earlier to occur of (A) 5 Trading Days
          after notice of such default sent by the Holder or by any other Holder
          and (B)10 Trading Days after the Company shall become or should have
          become aware of such failure;

               iii. a default or event of default (subject to any grace or cure
          period provided for in the applicable agreement, document or
          instrument) shall occur under (A) any of the Transaction Documents, or
          (B) any other material agreement, lease, document or instrument to
          which the Company or any Subsidiary is bound;

               iv. any representation or warranty made herein, in any other
          Transaction Documents, in any written statement pursuant hereto or
          thereto, or in any other report, financial statement or certificate
          made or delivered to the Holder or any other holder of Debentures
          shall be untrue or incorrect in any material respect as of the date
          when made or deemed made;

                                       17
<PAGE>
               v. (i) the Company or any of its Subsidiaries shall commence a
          case, as debtor, a case under any applicable bankruptcy or insolvency
          laws as now or hereafter in effect or any successor thereto, or the
          Company or any Subsidiary commences any other proceeding under any
          reorganization, arrangement, adjustment of debt, relief of debtors,
          dissolution, insolvency or liquidation or similar law of any
          jurisdiction whether now or hereafter in effect relating to the
          Company or any Subsidiary thereof or (ii) there is commenced a case
          against the Company or any Subsidiary thereof, under any applicable
          bankruptcy or insolvency laws, as now or hereafter in effect or any
          successor thereto which remains undismissed for a period of 60 days;
          or (iii) the Company or any Subsidiary thereof is adjudicated by a
          court of competent jurisdiction insolvent or bankrupt; or any order of
          relief or other order approving any such case or proceeding is
          entered; or (iv) the Company or any Subsidiary thereof suffers any
          appointment of any custodian or the like for it or any substantial
          part of its property which continues undischarged or unstayed for a
          period of 60 days; or (v) the Company or any Subsidiary thereof makes
          a general assignment for the benefit of creditors; or (vi) the Company
          shall fail to pay, or shall state that it is unable to pay, or shall
          be unable to pay, its debts generally as they become due; or (vii) the
          Company or any Subsidiary thereof shall call a meeting of its
          creditors with a view to arranging a composition, adjustment or
          restructuring of its debts; or (viii) the Company or any Subsidiary
          thereof shall by any act or failure to act expressly indicate its
          consent to, approval of or acquiescence in any of the foregoing; or
          (ix) any corporate or other action is taken by the Company or any
          Subsidiary thereof for the purpose of effecting any of the foregoing;

               vi. the Company or any Subsidiary shall default in any of its
          obligations under any mortgage, credit agreement or other facility,
          indenture agreement, factoring agreement or other instrument under
          which there may be issued, or by which there may be secured or
          evidenced any indebtedness for borrowed money or money due under any
          long term leasing or factoring arrangement of the Company in an amount
          exceeding $150,000, whether such indebtedness now exists or shall
          hereafter be created and such default shall result in such
          indebtedness becoming or being declared due and payable prior to the
          date on which it would otherwise become due and payable;

               vii. the Common Stock shall not be eligible for quotation on or
          quoted for trading on a Trading Market and shall not again be eligible
          for and quoted or listed for trading thereon within five Trading Days;

               viii. the Company shall be a party to any Change of Control
          Transaction or Fundamental Transaction, shall agree to sell or dispose
          of all or in excess of 33% of its assets in one or more transactions
          (whether or not such sale would constitute a Change of Control
          Transaction) or shall redeem or repurchase more than a de minimis
          number of its outstanding shares of Common Stock or other equity
          securities of the Company (other than redemptions of Conversion Shares
          and repurchases of shares of Common Stock or other equity securities
          of departing officers and directors of the Company; provided such
          repurchases shall not exceed $100,000, in the aggregate, for all
          officers and directors during the term of this Debenture);

                                       18
<PAGE>
               ix. a Registration Statement shall not have been declared
          effective by the Commission on or prior to the 210th calendar day
          after the Closing Date;

               x. if, during the Effectiveness Period (as defined in the
          Registration Rights Agreement), the effectiveness of the Registration
          Statement lapses for any reason or the Holder shall not be permitted
          to resell Registrable Securities (as defined in the Registration
          Rights Agreement) under the Registration Statement, in either case,
          for more than 20 consecutive Trading Days or 30 non-consecutive
          Trading Days during any 12 month period; provided, however, that in
          the event that the Company is negotiating a merger, consolidation,
          acquisition or sale of all or substantially all of its assets or a
          similar transaction and in the written opinion of counsel to the
          Company, the Registration Statement, would be required to be amended
          to include information concerning such transactions or the parties
          thereto that is not available or may not be publicly disclosed at the
          time, the Company shall be permitted an additional 10 consecutive
          Trading Days during any 12 month period relating to such an event;

               xi. the Company shall fail for any reason to deliver certificates
          to a Holder prior to the third Trading Day after a Conversion Date
          pursuant to and in accordance with Section 4(d) or the Company shall
          provide notice to the Holder, including by way of public announcement,
          at any time, of its intention not to comply with requests for
          conversions of any Debentures in accordance with the terms hereof; or

               xii. any monetary judgment, writ or similar final process shall
          be entered or filed against the Company, any Subsidiary or any of
          their respective property or other assets for than $50,000, and shall
          remain unvacated, unbonded or unstayed for a period of 45 calendar
          days.

          b) Remedies Upon Event of Default. If any Event of Default occurs, the
     full principal amount of this Debenture, together with interest and other
     amounts owing in respect thereof, to the date of acceleration shall become,
     at the Holder's election, immediately due and payable in cash. The
     aggregate amount payable upon an Event of Default shall be equal to the
     Mandatory Default Amount. Commencing 5 days after the occurrence of any
     Event of Default that results in the eventual acceleration of this
     Debenture, the interest rate on this Debenture shall accrue at the rate of
     18% per annum, or such lower maximum amount of interest permitted to be
     charged under applicable law. Upon the payment in full of the Mandatory
     Default Amount on this entire Debenture the Holder shall promptly surrender
     this Debenture to or as directed by the Company. The Holder need not
     provide and the Company hereby waives any presentment, demand, protest or
     other notice of any kind, and the Holder may immediately and without
     expiration of any grace period enforce any and all of its rights and
     remedies hereunder and all other remedies available to it under applicable
     law. Such declaration may be rescinded and annulled by Holder at any time
     prior to payment hereunder and the Holder shall have all rights as a
     Debenture holder until such time, if any, as the full payment under this
     Section shall have been received by it. No such rescission or annulment
     shall affect any subsequent Event of Default or impair any right consequent
     thereon.

                                       19
<PAGE>

Section 9.        Miscellaneous.
----------        --------------

     a) Notices. Any and all notices or other communications or deliveries to be
provided by the Holder hereunder, including, without limitation, any Notice of
Conversion, shall be in writing and delivered personally, by facsimile, sent by
a nationally recognized overnight courier service, addressed to the Company, at
the address set forth above, facsimile number ______________, Attn:
______________________________________or such other address or facsimile number
as the Company may specify for such purposes by notice to the Holder delivered
in accordance with this Section. Any and all notices or other communications or
deliveries to be provided by the Company hereunder shall be in writing and
delivered personally, by facsimile, sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile telephone number or
address of such Holder appearing on the books of the Company, or if no such
facsimile telephone number or address appears, at the principal place of
business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 5:30 p.m. (New
York City time), (ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 5:30 p.m. (New York City time) on any date
and earlier than 11:59 p.m. (New York City time) on such date, (iii) the second
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.

     b) Absolute Obligation. Except as expressly provided herein, no provision
of this Debenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, interest and liquidated
damages (if any) on, this Debenture at the time, place, and rate, and in the
coin or currency, herein prescribed. This Debenture is a direct debt obligation
of the Company. This Debenture ranks pari passu with all other Debentures now or
hereafter issued under the terms set forth herein.

     c) Lost or Mutilated Debenture. If this Debenture shall be mutilated, lost,
stolen or destroyed, the Company shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated Debenture, or in lieu of
or in substitution for a lost, stolen or destroyed Debenture, a new Debenture
for the principal amount of this Debenture so mutilated, lost, stolen or
destroyed but only upon receipt of evidence of such loss, theft or destruction
of such Debenture, and of the ownership hereof, and indemnity, if requested, all
reasonably satisfactory to the Company.

                                       20
<PAGE>
     d) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Debenture shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by any of the Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and
federal courts sitting in the City of New York, Borough of Manhattan (the "New
York Courts"). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, or such New York Courts are improper or
inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Debenture and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Debenture or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Debenture,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.

     e) Waiver. Any waiver by the Company or the Holder of a breach of any
provision of this Debenture shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Debenture. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Debenture on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Debenture. Any waiver
must be in writing.

                                       21
<PAGE>
     f) Severability. If any provision of this Debenture is invalid, illegal or
unenforceable, the balance of this Debenture shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder violates
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.
The Company covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on this Debenture as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this indenture, and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefits or advantage of any
such law, and covenants that it will not, by resort to any such law, hinder,
delay or impeded the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has
been enacted.

     g) Next Business Day. Whenever any payment or other obligation hereunder
shall be due on a day other than a Business Day, such payment shall be made on
the next succeeding Business Day.

     h) Headings. The headings contained herein are for convenience only, do not
constitute a part of this Debenture and shall not be deemed to limit or affect
any of the provisions hereof.

     i) Assumption. Any successor to the Company or surviving entity in a
Fundamental Transaction shall (i) assume in writing all of the obligations of
the Company under this Debenture and the other Transaction Documents pursuant to
written agreements in form and substance satisfactory to the Holder (such
approval not to be unreasonably withheld or delayed) prior to such Fundamental
Transaction and (ii) to issue to the Holder a new debenture of such successor
entity evidenced by a written instrument substantially similar in form and
substance to this Debenture, including, without limitation, having a principal
amount and interest rate equal to the principal amounts and the interest rates
of the Debentures held by the Holder and having similar ranking to this
Debenture, and satisfactory to the Holder (any such approval not to be
unreasonably withheld or delayed). The provisions of this Section 9(i) shall
apply similarly and equally to successive Fundamental Transactions and shall be
applied without regard to any limitations of this Debenture.

                              *********************

                                       22
<PAGE>

     IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed by a duly authorized officer as of the date first above indicated.

                                          NAVSTAR MEDIA HOLDINGS, INC.

                                          By:__________________________________
                                               Name:
                                               Title:

                                       23
<PAGE>

                                     ANNEX A

                              NOTICE OF CONVERSION

         The undersigned hereby elects to convert principal under the 8%
Convertible Debenture of Navstar Media Holdings, Inc., a Nevada corporation (the
"Company"), due on July ___, 2006, into shares of common stock, par value $.001
per share (the "Common Stock"), of the Company according to the conditions
hereof, as of the date written below. If shares are to be issued in the name of
a person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by the Company in accordance therewith. No fee
will be charged to the holder for any conversion, except for such transfer
taxes, if any.

         By the delivery of this Notice of Conversion the undersigned represents
and warrants to the Company that its ownership of the Common Stock does not
exceed the amounts determined in accordance with Section 13(d) of the Exchange
Act, specified under Section 4 of this Debenture.

         The undersigned agrees to comply with the prospectus delivery
requirements under the applicable securities laws in connection with any
transfer of the aforesaid shares of Common Stock.

Conversion calculations:
                                Date to Effect Conversion:

                                Principal Amount of Debenture to be Converted:

                                Number of shares of Common Stock to
be issued:

                                Signature:

                                Name:

                                Address:

                                       24
<PAGE>

                                   Schedule 1

                               CONVERSION SCHEDULE

The 8% Convertible Debentures due on July ___, 2006, in the aggregate principal
amount of $____________ issued by Navstar Media Holdings, Inc. This Conversion
Schedule reflects conversions made under Section 4 of the above referenced
Debenture.

                                     Dated:
<TABLE>
<CAPTION>

                                                           Aggregate Principal
                                                             Amount Remaining
      Date of Conversion                                      Subsequent to
(or for first entry, Original                                   Conversion
         Issue Date)              Amount of Conversion         (or original              Company Attest
                                                            Principal Amount)
------------------------------- ------------------------- ----------------------- ---------------------
<S>                             <C>                        <C>                    <C>

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

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

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

------------------------------- ------------------------- ----------------------- ---------------------
</TABLE>

                                       25
<PAGE>

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