Document:

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                                                                     EXHIBIT 4.7

                          REGISTRATION RIGHTS AGREEMENT

                  THIS REGISTRATION RIGHTS AGREEMENT, dated as of March 1, 2005
(this "Agreement"), is made by and between ADVANCED TECHNOLOGY INDUSTRIES, INC.,
a Delaware corporation, with headquarters located at 211 Madison Avenue, #28B,
New York, New York 10016 (the "Company"), and The Gross Foundation, Inc., (the
"Investor").

                              W I T N E S S E T H:

                  WHEREAS, upon the terms and subject to the conditions of the
Securities Purchase Agreement, dated as of March 1, 2005, between the Investor
and the Company (the "Securities Purchase Agreement"; capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Securities Purchase Agreement), the Company has agreed to issue and sell to the
Investor the Debentures; and

                  WHEREAS, the Debentures are convertible into shares of Common
Stock (the "Conversion Shares"; which term, for purposes of this Agreement,
shall include shares of Common Stock of the Company issuable in lieu of accrued
interest through the Maturity Date (as that term is defined in the Debentures))
upon the terms and subject to the conditions contained in the Debentures; and

                  WHEREAS, upon and subject to the terms of the Securities
Purchase Agreement, the Company has agreed to issue the Warrants to the Investor
in connection with the issuance of the Debentures, and the Warrants may be
exercised for the purchase of shares of Common Stock (the "Warrant Shares") upon
the terms and conditions of the Warrants; and

                  WHEREAS, to induce the Investor to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), with respect to the Registrable Securities (as defined
below);

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

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

                  (a) "Effective Date" means the date the SEC declares a
Registration Statement covering Registrable Securities and otherwise meeting the
conditions contemplated hereby to be effective.

                  (b) "Held Shares Value" means, for shares of Common Stock
acquired by the Investor upon a conversion of a Debenture within the thirty (30)
days preceding the Restricted Sale Date, but not yet sold by the Investor, the
principal amount of the Debentures converted into such Conversion Shares;
provided, however, that if the Investor effected more than one such conversion
during such thirty (30) day period and sold less than all of such shares, the
sold shares shall be deemed to be derived first from the conversions in the
sequence of such conversions (that is, for example, until the number of shares
from the first of such conversions have been sold, all shares shall be deemed to
be from the first conversion; thereafter, from the second conversion until all
such shares are sold).

                  (c) "Investor" means the Investor and any permitted transferee
or assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof and who holds Debentures, Warrants or
Registrable Securities.

                  (d) "Payment Shares" means shares of Common Stock issued by
the Company as provided in Section 2(b) below.

                  (e) "Potential Material Event" means any of the following: (i)
the possession by the Company of material information not ripe for disclosure in
a registration statement, which shall be evidenced by a determination in good
faith by the Board of Directors of the Company that disclosure of such
information in the registration statement would be detrimental to the business
and affairs of the Company or (ii) any material engagement or activity by the
Company which would, in the good faith determination of the Board of Directors
of the Company, be adversely affected by disclosure in a registration statement
at such time; in each case where such determination shall be accompanied by a
good faith determination by the Board of Directors of the Company that the
registration statement would be materially misleading absent the inclusion of
such information.

                  (f) "Register," "Registered," and "Registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").

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                  (g) "Registrable Securities" means, collectively, the
Conversion Shares, the Warrant Shares and the Payment Shares.

                  (h) "Registration Statement" means a registration statement of
the Company under the Securities Act covering Registrable Securities on Form
S-3, if the Company is then eligible to file using such form, and if not
eligible, on Form S-2 or other appropriate form which shall include only the
Registrable Securities and the such other securities as may be permitted by
Section 5(b) hereof.

                  (i) "Required Effective Date" means the relevant Initial
Required Effective Date or Increased Required Effective Date (as those terms are
defined below).

                  (j) "Required Filing Date" means May 31, 2005.

                  (k) "Restricted Sale Date" means the first date, other than a
date during a Permitted Suspension Period (as defined below), on which the
Investor is restricted from making sales of Registrable Securities covered by
any previously effective Registration Statement.

                  2. REGISTRATION.

                  (a) MANDATORY REGISTRATION.

                  (i) The Company shall prepare and file with the SEC, as soon
as practicable after the Certificate of Incorporation Amendment Filing Date,
either a Registration Statement or an amendment to an existing Registration
Statement, in either event registering for resale by the Investor a sufficient
number of shares of Common Stock for the Investor to sell the Registrable
Securities, but in no event less than the number of shares equal to one hundred
twenty five percent (125%) of the aggregate of (x) the number of shares into
which the Debentures and all interest thereon through the Maturity Date would be
convertible at the time of filing of such Registration Statement (assuming for
such purposes that all Debentures had been issued, had been eligible to be
converted, and had been converted, into Conversion Shares in accordance with
their terms, whether or not such issuance, eligibility, accrual of interest or
conversion had in fact occurred as of such date) and (y) the number of Warrant
Shares which would be issuable on exercise of the Warrants (assuming for such
purposes that all Warrants had been issued, had been eligible for exercise and
had been exercised for Warrant Shares in accordance with their terms, whether or
not such issuance, eligibility or exercise had in fact occurred as of such
date). Unless otherwise specifically agreed to in writing in advance by the
Investor, the Registration Statement shall state that, in accordance with Rule
416 and 457 under the Securities Act, it also covers such indeterminate number
of additional shares of Common Stock as may become issuable upon conversion of
the Debentures or exercise of the Warrants to prevent dilution resulting from
stock splits, or stock dividends. If the Certificate of Incorporation Amendment
Filing Date occurs the Company will use its reasonable best efforts to cause
such Registration Statement to be declared effective on a date (the "Initial
Required Effective Date") which is no later than the earlier of (Y) five (5)
days after oral or written notice by the SEC that it may be declared effective
or (Z) July 1, 2005.

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                  (ii) If at any time (an "Increased Registered Shares Date")
after a Registration Statement has been filed with the SEC, the number of shares
of Common Stock represented by the Registrable Shares, issued or to be issued as
contemplated by the Transaction Agreements, exceeds the aggregate number of
shares of Common Stock then registered or sought to be registered in a
Registration Statement which has not yet been declared effective, the Company
shall either

         (X) amend the relevant Registration Statement filed by the Company
         pursuant to the preceding provisions of this Section 2, if such
         Registration Statement has not been declared effective by the SEC at
         that time, to register, in the aggregate, at least the number of shares
         (the "Increased Shares Amount") equal to (A) the number of shares
         theretofore issued on conversion of the Debentures (including any
         interest paid on conversion by the issuance of Conversion Shares) ,
         plus (B) the number of shares theretofore issued on exercise of the
         Warrants, plus (C) the sum of:

                  (I) the number of shares into which the unconverted Debentures
                  and all interest thereon through the Maturity Date would be
                  convertible at the date of such filing (assuming for such
                  purposes that all such Debentures had been issued, had been
                  eligible to be converted, and had been converted, into
                  Conversion Shares in accordance with their terms, whether or
                  not such issuance eligibility, accrual of interest, or
                  conversion had in fact occurred as of such date), and

                  (II) the number of Warrant Shares which would be issuable on
                  exercise of the unexercised Warrants (assuming for such
                  purposes that all such Warrants had been issued, had been
                  eligible for exercise and had been exercised for Warrant
                  Shares in accordance with their terms, whether or not such
                  issuance, eligibility or exercise had in fact occurred as of
                  such date), or

         (Y) if such Registration Statement has been declared effective by the
         SEC at that time, file with the SEC an additional Registration
         Statement (an "Additional Registration Statement") to register the
         number of shares equal to the excess of the Increased Shares Amount
         over the aggregate number of shares of Common Stock already registered.

The Company will use its reasonable best efforts to cause such Registration
Statement to be declared effective on a date (each, an "Increased Required
Effective Date") which is no later than (q) with respect to a Registration
Statement under clause (X) of this subparagraph (ii), the Initial Required
Effective Date and (r) with respect to an Additional Registration Statement, the
earlier of (I) five (5) days after notice by the SEC that it may be declared
effective or (II) thirty (30) days after the Increased Registered Shares Date.

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                  (b) PAYMENTS BY THE COMPANY.

                           (i) If the Registration Statement covering the
Registrable Securities is not filed in proper form with the SEC by the Required
Filing Date, the Company will make payment to the Investor in such amounts and
at such times as shall be determined pursuant to this Section 2(b).

                           (ii) If the Registration Statement covering the
Registrable Securities is not effective by the relevant Required Effective Date
or if there is a Restricted Sale Date, then the Company will make payments to
the Investor in such amounts and at such times as shall be determined pursuant
to this Section 2(b).

                           (iii) The amount (the "Periodic Amount") to be paid
by the Company to the Investor shall be determined as of each Computation Date
(as defined below) and such amount shall be equal to the Periodic Amount
Percentage (as defined below) of the Purchase Price for all Debentures for the
period from the date following the relevant Required Filing Date or the Required
Effective Date or a Restricted Sale Date, as the case may be, to the first
relevant Computation Date, and thereafter to each subsequent Computation Date.
The "Periodic Amount Percentage" means (A) one percent (1%) of the Purchase
Price of all Debentures for the first two Computation Dates after the relevant
Required Filing Date; and (B) two percent (2%) of the Purchase Price of all
Debentures to any Computation Date thereafter. Anything in the preceding
provisions of this paragraph (iii) to the contrary notwithstanding, after the
relevant Effective Date the Purchase Price shall be deemed to refer to the sum
of (X) the principal amount of all Debentures not yet converted and (Y) the Held
Shares Value. By way of illustration and not in limitation of the foregoing, if
the Registration Statement is filed on or before the Required Filing Date, but
is not declared effective by August 5, 2005, the Periodic Amount will aggregate
two percent (2%).

                           (iv) Each Periodic Amount will be payable by the
Company, except as provided in the other provisions of subparagraph (v), in cash
or other immediately available funds to the Investor (1) on the day after the
Required Filing Date, the Required Effective Date or a Restricted Sale Date, as
the case may be, and (2) on the earlier of (A) each thirtieth day thereafter,
(B) the third business day after the date the Registration Statement is filed or
is declared effective, or (C) the third business day after the Registration
Statement has its restrictions removed after the relevant Effective Date, in
each case without requiring demand therefor by the Investor.

                           (v) Notwithstanding the provisions of the immediately
preceding subparagraph (iv),

         (i) at the option of the Company, exercisable in its discretion on the
         date the Periodic Amount is due; provided, however, that the Company
         may exercise this discretion if, but only if the Registration Statement
         covering the Payment Shares is then effective; or

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         (ii) at the option of the Investor, exercisable in its sole and
         absolute discretion by written notice to the Company at any time before
         the Periodic Amount is paid,

all or a portion of the Periodic Amount shall be paid by the issuance of
additional shares of Common Stock to the Investor ("Payment Shares") in an
amount equal to the Periodic Amount being paid thereby divided by the then
applicable Conversion Price; provided, further that the Delivery Date for the
Payment Shares shall be three (3) business days after the date the Periodic
Amount is due (if the election is made by the Company) or after the Investor
gives the notice contemplated by clause (ii) of this subparagraph.

                           (vi) The parties acknowledge that the damages which
may be incurred by the Investor if the Registration Statement is not filed by
the Required Filing Date or the Registration Statement has not been declared
effective by a Required Effective Date, including if the right to sell
Registrable Securities under a previously effective Registration Statement is
suspended or the shares of the Company's stock are not listed on the Principal
Trading Market, may be difficult to ascertain. The parties agree that the
amounts payable pursuant to the foregoing provisions of this Section 2(b)
represent a reasonable estimate on the part of the parties, as of the date of
this Agreement, of the amount of such damages.

                           (vii) Notwithstanding the foregoing, the amounts
payable by the Company pursuant to this provision shall not be payable to the
extent any delay in the filing or effectiveness of the Registration Statement
occurs because of an act of, or a failure to act or to act timely by the
Investor or its counsel.

                           (viii) "Computation Date" means (A) the date which is
the earlier of (1) thirty (30) days after the Required Filing Date, any relevant
Required Effective Date or a Restricted Sale Date, as the case may be, or (2)
the date after the Required Filing Date, such Required Effective Date or
Restricted Sale Date on which the Registration Statement is filed (with respect
to payments due as contemplated by Section 2(b) hereof) or is declared effective
or has its restrictions removed or the shares of the Company's stock are listed
on the Principal Trading Market (with respect to payments due as contemplated by
Section 2(b)(ii) hereof), as the case may be, and (B) each date which is the
earlier of (1) thirty (30) days after the previous Computation Date or (2) the
date after the previous Computation Date on which the Registration Statement is
filed (with respect to payments due as contemplated by Section 2(b) hereof) or
is declared effective or has its restrictions removed or the shares of the
Company's stock are listed on the Principal Trading Market (with respect to
payments due as contemplated by Section 2(b)(ii) hereof), as the case may be.

                           (ix) Notwithstanding anything herein to the contrary
the remedy set forth in this Section 2(b) shall be the sole remedy for the
Investor if the Registration Statement covering the Registrable Securities is
not filed in proper form with the SEC by the Required Filing Date or if the
Registration Statement covering the Registrable Securities is not effective by
the relevant Required Effective Date or if there is a Restricted Sale Date.

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                  3. OBLIGATIONS OF THE COMPANY. In connection with the
registration of the Registrable Securities, the Company shall do each of the
following:

                  (a) Prepare promptly, and file with the SEC by the later of
(x) the Required Filing Date and (y) five business days after the Certificate of
Incorporation Amendment Filing Date, a Registration Statement with respect to
not less than the number of Registrable Securities provided in Section 2(a)
above, and thereafter use its reasonable best efforts to cause such Registration
Statement relating to Registrable Securities to become effective by the Required
Effective Date and keep the Registration Statement effective at all times, other
than during Permitted Suspension Periods, during the period (the "Registration
Period") continuing until the earlier of (i) the date when the Investor may sell
all Registrable Securities under Rule 144 without volume or other restrictions
or limits or (ii) the date the Investor no longer own any of the Registrable
Securities, which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading;

                  (b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period (except during Permitted Suspension Periods), and, during
the Registration Period, comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by the
Registration Statement until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof as set forth in the Registration Statement;

                  (c) Permit a single firm of counsel designated by the Investor
(which, until further notice, shall be deemed to be Krieger & Prager LLP, Attn:
Samuel Krieger, Esq., which firm has requested to receive such notification;
each, an "Investor's Counsel") to review the Registration Statement and all
amendments and supplements thereto a reasonable period of time (but not less
than three (3) business days) prior to their filing with the SEC, and not file
any document in a form to which such counsel reasonably objects, unless the
Company reasonably determines that such document is required by law to be so
filed;

                  (d) Notify the Investor and the Investor's Counsel and any
managing underwriters immediately (and, in the case of (i)(A) below, not less
than three (3) business days prior to such filing) and (if requested by any such
person) confirm such notice in writing no later than one (1) business day
following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be filed;
(B) whenever the SEC notifies the Company whether there will be a "review" of
such Registration Statement; (C) whenever the Company receives (or a
representative of the Company receives on its behalf) any oral or written
comments from the SEC in respect of a Registration Statement (copies or, in the
case of oral comments, summaries of such comments shall be promptly furnished by
the Company to the Investor); and (D) with respect to the Registration Statement

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or any post-effective amendment, when the same has become effective; (ii) of any
request by the SEC or any other Federal or state governmental authority for
amendments or supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement covering any or all
of the Registrable Securities or the initiation of any proceedings for that
purpose; (iv) if at any time any of the representations or warranties of the
Company contained in any agreement (including any underwriting agreement)
contemplated hereby ceases to be true and correct in all material respects; (v)
of the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose; and (vi) of the occurrence of any event that to the
best knowledge of the Company makes any statement made in the Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. In addition, the Company shall furnish the Investor's
Counsel with copies of all intended written responses to the comments
contemplated in clause (C) of this Section 3(d) not later than one (1) business
day in advance of the filing of such responses with the SEC so that the Investor
shall have the opportunity to comment thereon;

                  (e) Furnish to the Investor and to Investor's Counsel (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one (1) copy of the Registration Statement,
each preliminary prospectus and prospectus, and each amendment or supplement
thereto, and (ii) such number of copies of a prospectus, and all amendments and
supplements thereto and such other documents, as the Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor;

                  (f) As promptly as practicable after becoming aware thereof,
notify the Investor of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and, subject to Section 4(c), use its best efforts
promptly to prepare a supplement or amendment to the Registration Statement or
other appropriate filing with the SEC to correct such untrue statement or
omission, and deliver a number of copies of such supplement or amendment to the
Investor as the Investor may reasonably request;

                  (g) [intentionally omitted ]

                  (h) Comply with Regulation FD or any similar rule or
regulation regarding the dissemination of information regarding the Company, and
in furtherance of the foregoing, and not in limitation thereof, not disclose to
the Investor any non-public material information regarding the Company;

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                  (i) Use its reasonable efforts to secure and maintain the
designation of all the Registrable Securities covered by the Registration
Statement on the Principal Trading Market and the quotation of the Registrable
Securities on the Principal Trading Market;

                  (j) Provide a transfer agent ("Transfer Agent") and registrar,
which may be a single entity, for the Registrable Securities not later than the
initial Effective Date;

                  (k) Cooperate with the Investor who hold Registrable
Securities being offered to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates for the Registrable
Securities to be in such denominations or amounts as the case may be, as the
Investor may reasonably request, and, within five (5) business days after a
Registration Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal counsel
selected by the Company to deliver, to the Transfer Agent for the Registrable
Securities (with copies to the Investor whose Registrable Securities are
included in such Registration Statement) an appropriate instruction and opinion
of such counsel, which shall include, without limitation, directions to the
Transfer Agent to issue certificates of Registrable Securities (including
certificates for Registrable Securities to be issued after the Effective Date
and replacement certificates for Registrable Securities previously issued)
without legends or other restrictions, subject to compliance with applicable
law, including, without limitation, prospectus delivery requirements; and

                  (l) Take all other reasonable actions necessary to expedite
and facilitate disposition by the Investor of the Registrable Securities
pursuant to the Registration Statement.

                  4. OBLIGATIONS OF THE INVESTOR. In connection with the
registration of the Registrable Securities, the Investor shall have the
following obligations:

                  (a) The Investor, by the Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless the Investor has notified the Company
in writing of the Investor's election to exclude all of the Investor's
Registrable Securities from the Registration Statement;

                  (b) The Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section
3(d)(iii) or 3(f), above, the Investor will immediately discontinue disposition
of Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until the Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(d)(iii) or 3(f)
and, if so directed by the Company, the Investor shall deliver to the Company
(at the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in the Investor's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice;

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         (c) Notwithstanding anything in this Agreement to the contrary, if at
any time or from time to time after the date of effectiveness of the
Registration Statement, the Company notifies the Investor in writing that the
effectiveness of the Registration Statement is suspended for any reason, whether
due to a Potential Material Event or otherwise, the Investor shall not offer or
sell any Registrable Securities, or engage in any other transaction involving or
relating to the Registrable Securities, from the time of the giving of such
notice until such Investor receives written notice from the Company that such
the effectiveness of the Registration Statement has been restored, whether
because the Potential Material Event has been disclosed to the public or it no
longer constitutes a Potential Material Event or otherwise; PROVIDED, HOWEVER,
that the Company may not so suspend the right to such holders of Registrable
Securities during the periods the Registration Statement is required to be in
effect other than during a Permitted Suspension Period (and the applicable
provisions of Section 2(b) shall apply with respect to any such suspension other
than during a Permitted Suspension Period) . The term "Permitted Suspension
Period" means up to two such suspension periods during any consecutive 12-month
period, each of which suspension period shall not either (i) be for more than
ten (10) business days or (ii) begin less than ten (10) business days after the
last day of the preceding suspension (whether or not such last day was during or
after a Permitted Suspension Period)

                  5. EXPENSES OF REGISTRATION. (a) All reasonable expenses
(other than underwriting discounts and commissions of the Investor) incurred in
connection with registrations, filings or qualifications pursuant to Section 3,
but including, without limitation, all registration, listing, and qualifications
fees, printers and accounting fees, the fees and disbursements of counsel for
the Company shall be borne by the Company.

                  (b) Except for the Registration Rights Agreement dated as of
December 15, 2004 (the "LTDN Registration Statement") between the Company and
LTDnetwork, Inc., neither the Company nor any of its subsidiaries has, as of the
date hereof, nor shall the Company nor any of its subsidiaries, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Except for the LTDN Registration
Statement neither the Company nor any of its subsidiaries has previously entered
into any agreement granting any registration rights with respect to any of its
securities to any Person that is currently in effect. The Company shall be
entitled to include all the shares required to be registered hereunder, under
the LTDN Registration Statement and under any registration rights agreement
entered into after the date of this Agreement and prior to April 15, 2005, that
is not inconsistent with the rights granted to the Holders in this Agreement or
that otherwise conflicts with the provisions hereof on a single registration
statement under the Securities Act.

                  6. INDEMNIFICATION. In the event any Registrable Securities
are included in a Registration Statement under this Agreement:

                  (a) To the extent permitted by law, the Company will indemnify
and hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, if any, of such Investor, and
each Lender Control Person (each, an "Lender Indemnified Party"), against any
losses, claims, damages, liabilities or expenses (joint or several) incurred
(collectively, "Claims") to which any of them may become subject under the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange

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Act") or otherwise, insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any post-effective amendment thereof or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact contained in
the final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein
were made, not misleading or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation under the Securities Act, the Exchange Act or any state
securities law (the matters in the foregoing clauses (i) through (iii) being,
collectively referred to as "Violations"). Subject to clause (b) of this Section
6, the Company shall reimburse the Investor, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a) shall not
(I) apply to any Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of such Lender Indemnified Party expressly for use in
connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(b) hereof; (II) be available to
the extent such Claim is based on a failure of any Lender Indemnified Party to
deliver or cause to be delivered the prospectus made available by the Company or
the amendment or supplement thereto made available by the Company; (III) be
available to the extent such Claim is based on the delivery of a prospectus by
any Lender Indemnified Party after receiving notice from the Company under
Section 3(d)(iii) or 3(f) or Section 4(c) hereof (other than a notice regarding
the effectiveness of the Registration Statement or any amendment or supplement
thereto), or (IV) apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld or delayed. The Investor will
indemnify the Company and its officers, directors and agents and each Company
Control Person (each, an "Company Indemnified Party", and together with each
Lender Indemnified Party, each an "Indemnified Party") against any claims
arising out of or based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company, by or on behalf
of such Investor, expressly for use in connection with the preparation of the
Registration Statement or the amendment or supplement thereto, subject to such
limitations and conditions as are applicable to the indemnification provided by
the Company to this Section 6. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Party and shall survive the transfer of the Registrable Securities by the
Investor pursuant to Section 9.

                  (b) Promptly after receipt by an Indemnified Party under this
Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof

                                       11
<PAGE>

and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Party. In
case any such action is brought against any Indemnified Party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, assume the defense thereof,
subject to the provisions herein stated and after notice from the indemnifying
party to such Indemnified Party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such Indemnified Party
under this Section 6 for any legal or other reasonable out-of-pocket expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation, unless the indemnifying
party shall not pursue the action to its final conclusion. The Indemnified Party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and reasonable out-of-pocket
expenses of such counsel shall not be at the expense of the indemnifying party
if the indemnifying party has assumed the defense of the action with counsel
reasonably satisfactory to the Indemnified Party provided such counsel is of the
opinion that all defenses available to the Indemnified Party can be maintained
without prejudicing the rights of the indemnifying party. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Party under this Section 6, except to the extent
that the indemnifying party is prejudiced in its ability to defend such action.
The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and
payable.

                  7. CONTRIBUTION. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 6 to the fullest extent permitted by
law; PROVIDED, HOWEVER, that (a) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6; (b) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any seller
of Registrable Securities who was not guilty of such fraudulent
misrepresentation; and (c) except where the seller has committed fraud (other
than a fraud by reason of the information included or omitted from the
Registration Statement as to which the Company has not given notice as
contemplated under Section 3 hereof) or intentional misconduct, contribution by
any seller of Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such Registrable
Securities.

                  8. REPORTS UNDER SECURITIES ACT AND EXCHANGE ACT. With a view
to making available to the Investor the benefits of Rule 144 promulgated under
the Securities Act or any other similar rule or regulation of the SEC that may
at any time permit Investor to sell securities of the Company to the public
without Registration ("Rule 144"), for a period of two years after the date
hereof, the Company agrees to:

                                       12
<PAGE>

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

                  (b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and

                  (c) furnish to the Investor so long as the Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) if not available on the SEC's EDGAR
system, a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company and (iii) such other
information as may be reasonably requested to permit the Investor to sell such
securities pursuant to Rule 144 without Registration; and

                  (d) at the request of any Investor holding Registrable
Securities (a "Holder"), give its Transfer Agent instructions to the effect
that, upon the Transfer Agent's receipt from such Holder of

         (i) a certificate (a "Rule 144 Certificate") certifying (A) that the
         Holder's holding period (as determined in accordance with the
         provisions of Rule 144) for the shares of Registrable Securities which
         the Holder proposes to sell (the "Securities Being Sold") is not less
         than (1) year and (B) as to such other matters as may be appropriate in
         accordance with Rule 144 under the Securities Act, and

         (ii) an opinion of counsel acceptable to the Company for which purpose
         it is agreed that Investor's Counsel shall be deemed acceptable if not
         given by Ropes and Gray that, based on the Rule 144 Certificate,
         Securities Being Sold may be sold pursuant to the provisions of Rule
         144, even in the absence of an effective Registration Statement,

the Transfer Agent is to effect the transfer of the Securities Being Sold and
issue to the buyer(s) or transferee(s) thereof one or more stock certificates
representing the transferred Securities Being Sold without any restrictive
legend and without recording any restrictions on the transferability of such
shares on the Transfer Agent's books and records (except to the extent any such
legend or restriction results from facts other than the identity of the Holder,
as the seller or transferor thereof, or the status, including any relevant
legends or restrictions, of the shares of the Securities Being Sold while held
by the Holder). If the Transfer Agent reasonably requires any additional
documentation at the time of the transfer, the Company shall deliver or cause to
be delivered all such reasonable additional documentation as may be necessary to
effectuate the issuance of an unlegended certificate.

                  9. ASSIGNMENT OF THE REGISTRATION RIGHTS. The rights to have
the Company register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investor to any transferee of the Registrable
Securities (or all or any portion of any unconverted Debentures) only if the
Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, (b) the securities with respect to which such registration rights are
being transferred or assigned and (c) written evidence of the transferee's
assumption of the Investor's obligations under this Agreement.

                                       13
<PAGE>

                  10. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investor who
hold a eighty (80%) percent interest of the Registrable Securities (as
calculated by the stated value of the Debentures). Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon each Investor
and the Company.

                  11. MISCELLANEOUS.

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

                  (b) Notices required or permitted to be given hereunder shall
be given in the manner contemplated by the Securities Purchase Agreement, (i) if
to the Company or to the Investor, to their respective address contemplated by
the Securities Purchase Agreement, and (ii) if to any other Investor, at such
address as such Investor shall have provided in writing to the Company, or at
such other address as each such party furnishes by notice given in accordance
with this Section 11(b).

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

                  (d) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the City of New York
or the state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on FORUM NON COVENIENS, to the bringing of any such proceeding in such
jurisdictions.

                  (e) The Company and the Investor hereby waive a trial by jury
in any action, proceeding or counterclaim brought by either of the parties
hereto against the other in respect of any matter arising out of or in
connection with this Agreement or any of the other Transaction Agreements.

                                       14
<PAGE>

                  (f) If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.

                  (g) Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.

                  (h) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.

                  (i) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning thereof.

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

                  (k) Neither party shall be liable for consequential damages as
a result of any delay under this Agreement.

                  (l) This Agreement (including to the extent relevant the
provisions of other Transaction Agreements) constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       15
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.

                                           COMPANY:

                                           ADVANCED TECHNOLOGY  INDUSTRIES, INC.

                                           By:_____________________________
                                           Name:
                                           Title:

                                          THE GROSS FOUNDATION, INC.

                                           By:
                                           Name:
                                           Title:__________________________

                                       16<PAGE>

                                                                     EXHIBIT 4.8

                          SECURITIES PURCHASE AGREEMENT

                  THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of
acceptance set forth below, is entered into by and between ADVANCED TECHNOLOGY
INDUSTRIES, INC., a Delaware corporation, with headquarters located at 211
Madison Avenue, #28B, New York, New York 10016 (the "Company"), and each
individual or entity (other than the Company) named on a signature page hereto
(as used herein, each such signatory is referred to as the "Lender" or a
"Lender") under such agreement and the Transaction Agreements, as defined below,
referred to therein).

                              W I T N E S S E T H:

                  WHEREAS, the Company and the Lender are executing and
delivering this Agreement in accordance with and in reliance upon the exemption
from securities registration for offers and sales under Regulation D as
promulgated by the United States Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "1933 Act"), and/or Section
4(2) of the 1933 Act; and

                  WHEREAS, the Lender wishes to lend funds to the Company,
subject to and upon the terms and conditions of this Agreement and acceptance of
this Agreement by the Company, the repayment of which will be represented by 9%
Convertible Debentures of the Company (the "Convertible Debentures"), which
Convertible Debentures will be convertible into shares of Common Stock of the
Company (the "Common Stock"), upon the terms and subject to the conditions of
such Convertible Debentures, together with the Warrants (as defined below)
exercisable for the purchase of shares of Common Stock;

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

         1. AGREEMENT TO PURCHASE; PURCHASE PRICE.

                  a.       PURCHASE.

                  (i) Subject to the terms and conditions of this Agreement and
the other Transaction Agreements, the undersigned hereby agrees to loan to the
Company the principal amount set forth on the Lender's signature page of this
Agreement (the "Purchase Price"), out of the aggregate amount being loaned by
all Lenders of Two Hundred Thousand Dollars ($200,000.00). The obligation to
repay the loan from the Lender shall be evidenced by the Company's issuance of
one or more Convertible Debentures to the Lender in such principal amount (the
"Debentures"). Each Debenture (i) shall provide for a conversion price (the
"Conversion Price"), which price may be adjusted from time to as provided in the

                                       1
<PAGE>

Debenture or in the other Transaction Agreements, (ii) shall have the terms and
conditions of, and be substantially in the form attached hereto as ANNEX I and
(iii) shall have such number of Warrants attached as provided in Section 4(f)
below. The loan to be made by the Lender and the issuance of the Debentures and
Warrants to the Lender are sometimes referred to herein and in the other
Transaction Agreements as the purchase and sale of the Debentures and Warrants.

                  (ii) The Purchase Price to be paid by the Lender shall be
equal to the face amount of the Debentures being purchased on the relevant
Closing Date (as defined below) and shall be payable in United States Dollars.

                  b. CERTAIN DEFINITIONS. As used herein, each of the following
terms has the meaning set forth below, unless the context otherwise requires:

                  (i) "Affiliate" means, with respect to a specific Person
referred to in the erelevant provision, another Person who or which controls or
is controlled by or is under common control with such specified Person.

                  (ii) "Certificate of Incorporation Amendment" means an
amendment to the Company's Certificate of Incorporation to increase the
authorized capital stock of the Company in an amount sufficient such that all of
the Debentures can be converted into shares of Common Stock and all shares of
Common Stock subject to the Warrants can be issued upon exercise of the
Warrants.

                  (iii) "Certificate of Incorporation Amendment Filing Date"
means the date the Company files with the Secretary of State of the State of
Delaware the Certificate of Incorporation Amendment.

                  (iv) "Certificates" means the Debentures and the Warrants,
each duly executed by the Company and issued on the Closing Date (as defined
below) in the name of the Lender.

                  (v) "Closing Date" means as defined in Section 6 herein.

                  (vi) "Closing Price" means the closing bid price during
regular trading hours of the Common Stock (in U.S. Dollars) on the Principal
Trading Market, as reported by the Reporting Service.

                  (vii) "Company Control Person" means each current director,
executive officer, promoter, and such other Persons as may be deemed in control
of the Company pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934
Act (as defined below).

                  (viii) "Company Securities" means shares of Common Stock or
securities convertible into and/or rights exercisable for the issuance of shares
of Common Stock.

                                       2
<PAGE>

                  (ix) "Conversion Shares" means the shares of Common Stock
issuable upon conversion of the Debentures (including, if relevant, accrued
interest on the Debentures so converted).

                  (x) "Disclosure Letter" means a letter dated the date hereof
from the Company to the Lender arranged in sections corresponding to the
identified Sections of this Agreement; provided that any matter set forth in any
section of the Disclosure Letter shall, unless the context otherwise requires,
be deemed set forth for all purposes of the Disclosure Letter.

                  (xi) "Effective Date" means the effective date of the
Registration Statement.

                  (xi) "Escrow Agent" means the escrow agent identified in the
Joint Escrow Instructions attached hereto as ANNEX II (the "Joint Escrow
Instructions").

                  (xiii) "Escrow Funds" means the Purchase Price delivered to
the Escrow Agent as contemplated by Sections 1(c) and (d) hereof.

                  (xiv) "Escrow Property" means the Escrow Funds and the
Certificates delivered to the Escrow Agent as contemplated by Section 1(c)
hereof.

                  (xv) "Fixed Conversion Price" shall have the meaning ascribed
to it in the Debenture.

                  (xvi) "Holder" means the Person owning or having the right to
acquire Registrable Securities or any permitted transferee of a Holder.

                  (xvii) "Last Audited Date" means December 31, 2003.

                  (xviii) "Lender Control Person" means each current director,
executive officer, promoter, and such other Persons as may be deemed in control
of the Lender pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934
Act (as defined below).

                  (xix) "Material Adverse Effect" means an event or combination
of events, which individually or in the aggregate, would reasonably be expected
to (w) adversely affect the legality, validity or enforceability of the
Securities or any of the Transaction Agreements, (x) have or result in a
material adverse effect on the results of operations, assets, or financial
condition of the Company and its subsidiaries, taken as a whole, or (y)
adversely impair the Company's ability to perform fully on a timely basis its
obligations under any of the Transaction Agreements or the transactions
contemplated thereby.

                  (xx) "New Transaction" means the sale by the Company of
Securities consummated after the date hereof; provided that a New Transaction
shall not include (1) the issuance of Company Securities upon the exercise or
conversion of options, warrants or convertible securities outstanding on the
date hereof, (2) the sale of the Securities to the Lender , (3) the issuance of
Company Securities to employees or consultants of the Company or its
subsidiaries or (4) the sale of Company Securities set forth on Schedule 1
hereto.

                                       3
<PAGE>

                  (xxi) "Person" means any living person or any entity, such as,
but not necessarily limited to, a corporation, partnership or trust.

                  (xxii) "Principal Trading Market" means the OTC Electronic
Bulletin Board .

                  (xxiii) "Registrable Securities" shall have the meaning
ascribed to it in the Registration Rights Agreement.

                  (xxiv) "Registration Statement" means a registration statement
of the Company under the Securities Act covering Registrable Securities.

                  (xxv) "Reporting Service" means Bloomberg LP or if that
service is not then reporting the relevant information regarding the Common
Stock, a comparable reporting service of national reputation selected by the
Holders of more than 50% of the outstanding Debentures at such time and
reasonably acceptable to the Company.

                  (xxvi) "Securities" means the Debentures, the Warrants, and
the Shares.

                  (xxvii) "Shares" means the shares of Common Stock representing
any or all of the Conversion Shares and the Warrant Shares.

                  (xxviii) "State of Incorporation" means Delaware.

                  (xxix) "Trading Day" means any day during which the Principal
Trading Market shall be open for business.

                  (xxx) "Transaction Agreements" means the Securities Purchase
Agreement, the Debentures, the Joint Escrow Instructions, the Registration
Rights Agreement, and the Warrants and includes all ancillary documents referred
to in those agreements.

                  (xxxi) "Variable Conversion Rate" shall have the meaning
ascribed to it in the Debenture. (xxxii) "Warrant Shares" means the shares of
Common Stock issuable upon exercise of the Warrants.

                  c. FORM OF PAYMENT; DELIVERY OF CERTIFICATES.

                  (i) The Lender shall pay the Purchase Price by delivering
immediately available good funds in United States Dollars to the Escrow Agent no
later than the date prior to the Closing Date.

                                       4
<PAGE>

                  (ii) No later than the Closing Date, but in any event promptly
following payment by the Lender to the Escrow Agent of the Purchase Price, the
Company shall deliver the Certificates, each duly executed on behalf of the
Company and issued in the name of the Lender, to the Escrow Agent.

                  (iii) By signing this Agreement, each of the Lender and the
Company, subject to acceptance by the Escrow Agent, agrees to all of the terms
and conditions of, and becomes a party to, the Joint Escrow Instructions, all of
the provisions of which are incorporated herein by this reference as if set
forth in full.

                  d. METHOD OF PAYMENT. Payment into escrow of the Purchase
Price shall be made by wire transfer of funds to:

                           Bank of New York
                           350 Fifth Avenue
                           New York, New York 10001

                           ABA# 021000018
                           For credit to the account of Krieger & Prager LLP
                           Account No.:   637-2288475
                           Re:      AVDI Transaction

                  2. LENDER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.

                  The Lender represents and warrants to, and covenants and
agrees with, the Company as follows:

                  a. Without limiting Lender's right to sell the Shares pursuant
to a Registration Statement or otherwise to sell any of the Securities in
compliance with the 1933 Act, the Lender is purchasing the Securities and will
be acquiring the Shares for its own account for investment only and not with a
view towards the public sale or distribution thereof and not with a view to or
for sale in connection with any distribution thereof.

                  b. The Lender is (i) an "accredited investor" as that term is
defined in Rule 501 of the General Rules and Regulations under the 1933 Act by
reason of Rule 501(a)(3), (ii) experienced in making investments of the kind
described in this Agreement and the related documents, (iii) able, by reason of
the business and financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated in any way by
the Company or any of its Affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement, and
the related documents, and (iv) able to afford the loss of the entire Purchase
Price.

                                       5
<PAGE>

                  c. All subsequent offers and sales of the Securities by the
Lender shall be made pursuant to registration of the Shares under the 1933 Act
or pursuant to an exemption from registration.

                  d. The Lender understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of the 1933 Act and state securities laws and that the Company is
relying upon the truth and accuracy of, and the Lender's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Lender set forth herein in order to determine the availability of such
exemptions and the eligibility of the Lender to acquire the Securities.

                  e. The Lender and its advisors, if any, have been furnished
with or have been given access to all materials relating to the business,
finances and operations of the Company and materials relating to the offer and
sale of the Securities and the offer of the Shares which have been requested by
the Lender, including those set forth on ANNEX V hereto. The Lender and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company and have received complete and satisfactory answers to any such
inquiries. Without limiting the generality of the foregoing, the Lender has also
had the opportunity to obtain and to review the Company's filings on EDGAR
listed on ANNEX VII hereto (the documents listed on such Annex VII, to the
extent available on EDGAR or otherwise provided to the Lender as indicated on
said Annex VII, collectively, the "Company's SEC Documents").

                  f. The Lender understands that its investment in the
Securities involves a high degree of risk. In addition, the Lender understands
that the Debenture is not convertible into, and the Warrants are not exercisable
for, shares of Common Stock unless and until the shareholders of the company
holding a majority of the outstanding shares of Common Stock on the relevant
record date approve the Certificate of Incorporation Amendment and that such
shareholders have no obligation to effect such approval.

                  g. The Lender hereby represents that, in connection with its
purchase of the Securities, it has not relied on any statement or representation
by the Company or any of their respective officers, directors and employees or
any of their respective attorneys or agents, except as specifically set forth
herein.

                  h. The Lender understands that no United States federal or
state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Securities.

                  i. This Agreement and the other Transaction Agreements to
which the Lender is a party, and the transactions contemplated thereby, have
been duly and validly authorized, executed and delivered on behalf of the Lender
and are valid and binding agreements of the Lender enforceable in accordance
with their respective terms, subject as to enforceability to general principles
of equity and to bankruptcy, insolvency, moratorium and other similar laws
affecting the enforcement of creditors' rights generally.

                                       6
<PAGE>

                  j. The Lender has taken no action which would give rise to any
claim by any Person for brokerage commission, finder's fees or similar payments
by the Company relating to this Agreement or the transactions contemplated
hereby. The Company shall have no obligation with respect to such fees or with
respect to any claims made by or on behalf of other Persons for fees of a type
contemplated in this paragraph that may be due in connection with the
transactions contemplated hereby. The Lender shall indemnify and hold harmless
each of the Company, its employees, officers, directors, agents, and partners,
and their respective Affiliates, from and against all claims, losses, damages,
costs (including the costs of preparation and attorney's fees) and expenses
suffered in respect of any such claimed or existing fees, as and when incurred.

                  3. COMPANY REPRESENTATIONS, ETC. The Company represents and
warrants to the Lender as of the date hereof and as of the Closing Date that,
except as otherwise provided in the Disclosure Letter hereto or in the Company's
SEC Documents:

                  a. RIGHTS OF OTHERS AFFECTING THE TRANSACTIONS. There are no
preemptive rights of any shareholder of the Company, as such, to acquire the
Debentures, the Warrants or the Shares. No party other than a Lender has a
currently exercisable right of first refusal which would be applicable to any or
all of the transactions contemplated by the Transaction Agreements.

                  b. STATUS. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Incorporation and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. The Company is duly qualified as a
foreign corporation to do business and is in good standing in each jurisdiction
where the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have or result in a Material Adverse Effect. The Company
has registered its stock and is obligated to file reports pursuant to Section 12
or Section 15(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act"). The Common Stock is quoted on the Principal Trading Market. The Company
has received no notice, either oral or written, with respect to the continued
eligibility of the Common Stock for such quotation on the Principal Trading
Market, and the Company has maintained all requirements on its part for the
continuation of such quotation.

                  c. AUTHORIZED SHARES. The authorized capital stock of the
Company consists of (i) 100,000,000 shares of Common Stock, $0.0001 par value
per share, of which approximately 82,328,223 shares are outstanding as of March
1, 2005, and (ii) 1,000,000 shares of Preferred Stock. All issued and
outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid. After the Certificate of Incorporation Amendment Filing Date
the Company will have sufficient authorized and unissued shares of Common Stock
as may be necessary to effect the issuance of the Shares on such date. Except as
set forth on Schedule 3 (c ), there were no options, warrants, or rights to
subscribe to, securities, rights or obligations convertible into or exchangeable
for or giving any right to subscribe for any shares of capital stock of the
Company. All of the outstanding shares of Common Stock of the Company have been

                                       7
<PAGE>

duly and validly authorized and issued and are fully paid and nonassessable. On
the Certificate of Incorporation Amendment Filing Date the Shares will be duly
authorized and, when issued upon conversion of, or as interest on, the
Debentures or upon exercise of the Warrants, each in accordance with its
respective terms, will be duly and validly issued, fully paid and non-assessable
and, except to the extent, if any, provided by the law of the State of
Incorporation, will not subject the Holder thereof to personal liability by
reason of being such Holder.

                  d. TRANSACTION AGREEMENTS AND STOCK. This Agreement and each
of the other Transaction Agreements, and the transactions contemplated thereby,
have been duly and validly authorized by the Company, this Agreement has been
duly executed and delivered by the Company and this Agreement is, and the
Debentures, the Warrants and each of the other Transaction Agreements, when
executed and delivered by the Company, will be, valid and binding agreements of
the Company enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium, and other similar laws affecting the enforcement of creditors'
rights generally.

                  e. NON-CONTRAVENTION. The execution and delivery of this
Agreement and each of the other Transaction Agreements by the Company, the
issuance of the Debentures and the Warrants, and the consummation by the Company
of the other transactions contemplated by this Agreement, the Debentures, the
Warrants and the other Transaction Agreements do not and will not conflict with
or result in a breach by the Company of any of the terms or provisions of, or
constitute a default under (i) the certificate of incorporation or by-laws of
the Company, each as currently in effect, (ii) any indenture, mortgage, deed of
trust, or other material agreement or instrument to which the Company is a party
or by which it or any of its properties or assets are bound, including any
listing agreement for the Common Stock except as herein set forth, or (iii) to
its knowledge, any existing applicable law, rule, or regulation or any
applicable decree, judgment, or order of any court, United States federal or
state regulatory body, administrative agency, or other governmental body having
jurisdiction over the Company or any of its properties or assets, except such
conflict, breach or default which would not have or result in a Material Adverse
Effect.

                  f. APPROVALS. No authorization, approval or consent of any
court, governmental body, regulatory agency, self-regulatory organization, or
stock exchange or market or the shareholders of the Company is required to be
obtained by the Company for the issuance and sale of the Securities to the
Lender as contemplated by this Agreement, except for approval by the
shareholders of the Company holding a majority of the outstanding shares of
Common Stock on the relevant record date of the Certificate of Incorporation
Amendment and such authorizations, approvals and consents that have been
obtained.

                  g. FILINGS. None of the Company's SEC Documents contained, at
the time they were filed, any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements made therein in light of the circumstances under which they were
made, not misleading.

                                       8
<PAGE>

                  h. ABSENCE OF CERTAIN CHANGES. Since the Last Audited Date,
there has been no material adverse change and no Material Adverse Effect, except
as disclosed in the Company's SEC Documents. Since the Last Audited Date, except
as provided in the Company's SEC Documents, the Company has not (i) incurred or
become subject to any material liabilities (absolute or contingent) except
liabilities incurred in the ordinary course of business consistent with past
practices; (ii) discharged or satisfied any material lien or encumbrance or paid
any material obligation or liability (absolute or contingent), other than
current liabilities paid in the ordinary course of business consistent with past
practices; (iii) declared or made any payment or distribution of cash or other
property to shareholders with respect to its capital stock, or purchased or
redeemed, or made any agreements to purchase or redeem, any shares of its
capital stock; (iv) sold, assigned or transferred any other tangible assets, or
canceled any material debts owed to the Company by any third party or material
claims of the Company against a third party, except in the ordinary course of
business consistent with past practices; (v) suffered any substantial losses or
waived any rights of material value, whether or not in the ordinary course of
business, or suffered the loss of any material amount of existing business; (vi)
made any increases in employee compensation, except in the ordinary course of
business consistent with past practices; or (vii) experienced any material
problems with labor or management in connection with the terms and conditions of
their employment.

                  i. FULL DISCLOSURE. There is no fact known to the Company
(other than general economic conditions and other facts known to the public
generally or as disclosed in the Company's SEC Documents) that has not been
disclosed in writing to the Lender that would reasonably be expected to have or
result in a Material Adverse Effect.

                  j. ABSENCE OF LITIGATION. Except as disclosed in the Company's
SEC Documents, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board or body pending or, to the knowledge of the
Company, threatened against or affecting the Company before or by any
governmental authority or nongovernmental department, commission, board, bureau,
agency or instrumentality or any other person, wherein an unfavorable decision,
ruling or finding would have a Material Adverse Effect or which would adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, any of the Transaction Agreements. The
Company is not aware of any valid basis for any such claim that (either
individually or in the aggregate with all other such events and circumstances)
could reasonably be expected to have a Material Adverse Effect. Except as
disclosed in the Company's SEC Documents, there are no outstanding or
unsatisfied judgments, orders, decrees, writs, injunctions or stipulations to
which the Company is a party or by which it or any of its properties is bound,
that involve the transaction contemplated herein or that, alone or in the
aggregate, could reasonably be expect to have a Material Adverse Effect.

                  k. ABSENCE OF EVENTS OF DEFAULT. Except as disclosed in the
Company's SEC Documents, no Event of Default (or its equivalent term), as
defined in the respective agreement to which the Company is a party, and no
event which, with the giving of notice or the passage of time or both, would
become an Event of Default (or its equivalent term) (as so defined in such
agreement), has occurred and is continuing, which would have a Material Adverse
Effect.

                                       9
<PAGE>

                  l. ABSENCE OF CERTAIN COMPANY CONTROL PERSON ACTIONS OR
EVENTS. To the knowledge of the Company, none of the following has occurred
during the past five (5) years with respect to a Company Control Person:

                  (1) A petition under the federal bankruptcy laws or any state
         insolvency law was filed by or against, or a receiver, fiscal agent or
         similar officer was appointed by a court for the business or property
         of such Company Control Person, or any partnership in which he was a
         general partner at or within two years before the time of such filing,
         or any corporation or business association of which he was an executive
         officer at or within two years before the time of such filing;

                  (2) Such Company Control Person was convicted in a criminal
         proceeding or is a named subject of a pending criminal proceeding
         (excluding traffic violations and other minor offenses);

                  (3) Such Company Control Person was the subject of any order,
         judgment or decree, not subsequently reversed, suspended or vacated, of
         any court of competent jurisdiction, permanently or temporarily
         enjoining him from, or otherwise limiting, the following activities:

                           (i)      acting, as an investment advisor,
                                    underwriter, broker or dealer in securities,
                                    or as an affiliated person, director or
                                    employee of any investment company, bank,
                                    savings and loan association or insurance
                                    company, as a futures commission merchant,
                                    introducing broker, commodity trading
                                    advisor, commodity pool operator, floor
                                    broker, any other Person regulated by the
                                    Commodity Futures Trading Commission
                                    ("CFTC") or engaging in or continuing any
                                    conduct or practice in connection with such
                                    activity;

                           (ii)     engaging in any type of business practice;
                                    or

                           (iii)    engaging in any activity in connection with
                                    the purchase or sale of any security or
                                    commodity or in connection with any
                                    violation of federal or state securities
                                    laws or federal commodities laws;

                  (4) Such Company Control Person was the subject of any order,
         judgment or decree, not subsequently reversed, suspended or vacated, of
         any federal or state authority barring, suspending or otherwise
         limiting for more than 60 days the right of such Company Control Person
         to engage in any activity described in paragraph (3) of this item, or
         to be associated with Persons engaged in any such activity; or

                                       10
<PAGE>

                  (5) Such Company Control Person was found by a court of
         competent jurisdiction in a civil action or by the CFTC or SEC to have
         violated any federal or state securities law, and the judgment in such
         civil action or finding by the CFTC or SEC has not been subsequently
         reversed, suspended, or vacated.

                  m. PRIOR ISSUES. [Intentionally Omitted]

                  n. NO UNDISCLOSED LIABILITIES OR EVENTS. To the knowledge of
the Company, the Company has no liabilities or obligations other than those
disclosed in the Transaction Agreements or the Company's SEC Documents or those
incurred in the ordinary course of the Company's business since the Last Audited
Date, or which individually or in the aggregate, do not or would not have a
Material Adverse Effect. No event or circumstances has occurred or exists with
respect to the Company or its properties, business, operations, condition
(financial or otherwise), or results of operations, which, under applicable law,
rule or regulation, requires public disclosure or announcement prior to the date
hereof by the Company but which has not been so publicly announced or disclosed.
Except as disclosed in the Company's SEC Documents, there are no proposals
currently under consideration or currently anticipated to be under consideration
by the Board of Directors or the executive officers of the Company which
proposal would (X) change the certificate of incorporation or other charter
document or by-laws of the Company, each as currently in effect, with or without
shareholder approval, which change would reduce or otherwise adversely affect
the rights and powers of the shareholders of the Common Stock or (Y) materially
or substantially change the business, assets or capital of the Company,
including its interests in subsidiaries.

                  o. NO INTEGRATED OFFERING. Neither the Company nor any of its
Affiliates nor any person acting on its or their behalf has, directly or
indirectly, at any time within the past six months made any offer or sales of
any security or solicited any offers to buy any security under circumstances
that would eliminate the availability of the exemption from registration under
Regulation D in connection with the offer and sale of the Securities as
contemplated hereby.

                  p. DILUTION. The number of Shares issuable upon conversion of
the Debentures may have a dilutive effect on the ownership interests of the
other shareholders (and Persons having the right to become shareholders) of the
Company. The Company's executive officers and directors have studied and fully
understand the nature of the Securities being sold hereby and recognize that
they have such a potential dilutive effect. The board of directors of the
Company has concluded, in its good faith business judgment that such issuance is
in the best interests of the Company. The Company specifically acknowledges that
its obligation to issue the Shares upon conversion of the Debentures and upon
exercise of the Warrants is binding upon the Company and enforceable regardless
of the dilution such issuance may have on the ownership interests of other
shareholders of the Company, and the Company will honor every Notice of
Conversion (as defined in the Debentures) relating to the conversion of the
Debentures, and every Notice of Exercise (as contemplated by the Warrants),
unless the Company is subject to an injunction (which injunction was not sought
by the Company) prohibiting the Company from doing so.

                                       11
<PAGE>

                  r. TRADING IN SECURITIES. The Company specifically
acknowledges that, except to the extent specifically provided herein or in any
of the other Transaction Agreements (but limited in each instance to the extent
so specified), the Lender retains the right (but is not otherwise obligated) to
buy, sell, engage in hedging transactions or otherwise trade in the securities
of the Company, including, but not necessarily limited to, the Securities, at
any time before, contemporaneous with or after the execution of this Agreement
or from time to time, but only, in each case, in any manner whatsoever permitted
by applicable federal and state securities laws.

                  s. FEES TO BROKERS, FINDERS AND OTHERS. Except for payment of
fees to Persons previously disclosed to Lender, payment of which is the sole
responsibility of the Company pursuant to the terms of the Escrow Agreement, the
Company has taken no action which would give rise to any claim by any Person for
brokerage commission, finder's fees or similar payments by Lender relating to
this Agreement or the transactions contemplated hereby. Lender shall have no
obligation with respect to such fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this paragraph that
may be due in connection with the transactions contemplated hereby. The Company
shall indemnify and hold harmless each of Lender, its employees, officers,
directors, agents, and partners, and their respective Affiliates, from and
against all claims, losses, damages, costs (including the costs of preparation
and attorney's fees) and expenses suffered in respect of any such claimed or
existing fees, as and when incurred.

                  4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

                  a. TRANSFER RESTRICTIONS. The Lender acknowledges that (1) the
Securities have not been and are not being registered under the provisions of
the 1933 Act and, except as provided in the Registration Rights Agreement or
otherwise included in an effective registration statement, the Shares have not
been and are not being registered under the 1933 Act, and may not be transferred
unless (A) subsequently registered thereunder or (B) the Lender shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, to the effect that the Securities to be sold
or transferred may be sold or transferred pursuant to an exemption from such
registration; (2) any sale of the Securities made in reliance on Rule 144
promulgated under the 1933 Act may be made only in accordance with the terms of
said Rule and further, if said Rule is not applicable, any resale of such
Securities under circumstances in which the seller, or the Person through whom
the sale is made, may be deemed to be an underwriter, as that term is used in
the 1933 Act, may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (3) neither the
Company nor any other Person is under any obligation to register the Securities
(other than pursuant to the Registration Rights Agreement) under the 1933 Act or
to comply with the terms and conditions of any exemption thereunder.

                  b. RESTRICTIVE LEGEND. The Lender acknowledges and agrees
that, until such time as the Common Stock has been registered under the 1933 Act
and sold in accordance with an effective Registration Statement or otherwise in
accordance with another effective registration statement, the certificates and
other instruments representing any of the Securities (including the Shares)
shall bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of any such Securities):

                                       12
<PAGE>

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

                  c. FILINGS. The Company undertakes and agrees to make all
necessary filings required to be made by the Company in connection with the sale
of the Debentures and Warrants to the Lender under any United States laws and
regulations applicable to the Company, or by any domestic securities exchange or
trading market, and to provide a copy thereof to the Lender promptly after such
filing.

                  d. REPORTING STATUS. So long as the Lender beneficially owns
any of the Securities, the Company shall file all reports required to be filed
with the SEC pursuant to Section 13 or 15(d) of the 1934 Act in a time frame
that permits it to maintain the continued quotation and trading of its Common
Stock (including, without limitation, all Registrable Securities) on the
Principal Trading Market or a listing on the NASDAQ/Small Cap or National
Markets and, to the extent applicable to it, shall take all reasonable action
under its control to ensure that adequate current public information with
respect to the Company, as required in accordance with Rule 144(c)(2) of the
1933 Act, is publicly available, and shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would permit such termination. The Company will take
all reasonable action under its control to maintain the continued quotation and
trading of its Common Stock (including, without limitation, all Registrable
Securities) on the Principal Trading Market or a listing on the NASDAQ/Small Cap
or National Markets and, to the extent applicable to it, will comply in all
material respects with the Company's reporting, filing and other obligations
under the by-laws or rules of the Principal Trading Market and/or the National
Association of Securities Dealers, Inc., as the case may be, at least through
the date which is thirty (30) days after the later of the date on which all of
the Debentures have been converted or all of the Warrants have been exercised or
have expired.

                  e. USE OF PROCEEDS. The Company will use the proceeds received
hereunder (excluding amounts paid by the Company for legal fees, finder's fees
and escrow fees in connection with the sale of the Securities) for general
corporate purposes.

                  f. WARRANTS. For each $200,000 in Convertible Debentures
purchased by the Lender, the Company agrees to issue to the Lender pro rata on
each Closing Date transferable divisible warrants (the "Warrants") for (1) the
purchase of an aggregate of the Lender's pro rata portion of 2,857,142 Shares
(based on the amount loaned by the Lender to all amounts loaned hereunder) at an
exercise price of $.10. The Warrants will expire on the second annual
anniversary of the Effective Date. The Warrant shall be in the form annexed
hereto as ANNEX VI.

                                       13
<PAGE>

                  g. AVAILABLE SHARES. After the Certificate of Incorporation
Amendment Filing Date the Company shall have at all times authorized and
reserved for issuance, free from preemptive rights, a number of shares at least
equal to the sum of (x) one hundred and fifty percent (150%) of the number of
shares of Common Stock issuable as may be required to satisfy the conversion
rights of the Holders of all outstanding Convertible Debentures (including
interest thereon) , plus (y) the number of shares issuable upon exercise of all
outstanding Warrants held by all Holders (in each case, whether such Convertible
Debentures or Warrants were originally issued to the Holder, the Lender or to
any other Holder or Lender). For the purposes of such calculations, the Company
should assume that all such Debentures were then convertible and all Warrants
were then exercisable without regard to any restrictions which might limit any
Lender's right to convert any of the Convertible Debentures or exercise any of
the Warrants held by any Holder.

                  h. PUBLICITY, FILINGS, RELEASES, ETC. Each of the parties
agrees that it will not disseminate any information relating to the Transaction
Agreements or the transactions contemplated thereby, including issuing any press
releases, holding any press conferences or other forums, or filing any reports
(collectively, "Publicity"), without giving the other party reasonable advance
notice and an opportunity to comment on the contents thereof. Neither party will
include in any such Publicity any statement or statements or other material to
which the other party reasonably objects, unless the inclusion of such statement
is required, in the opinion of legal counsel for such party, in order for such
party to comply with its disclosure obligations under applicable law. In
furtherance of the foregoing, the Company will provide to the Lender drafts of
the applicable text of any filing intended to be made with the SEC which refers
to the Transaction Agreements or the transactions contemplated thereby as soon
as practicable (but at least two (2) business days before such filing will be
made and will not include in such filing any statement or statements or other
material to which the other party reasonably objects , unless the inclusion of
such statement is required, in the opinion of legal counsel for such party, in
order for such party to comply with its disclosure obligations under applicable
law. Notwithstanding the foregoing, each of the parties hereby consents to the
inclusion of the text of the Transaction Agreements in filings made with the SEC
(but any descriptive text accompanying or part of such filing shall be subject
to the other provisions of this paragraph). Notwithstanding, but subject to, the
foregoing, the Company intends to file within four business days following the
Closing Date a Current Report on Form 8-K referring to the transactions
contemplated by the Transaction Documents.

                  i. HEDGING TRANSACTIONS. Lender agrees that as long as it or
any of its Affiliates holds any Securities it shall not, and Lender shall cause
it Affiliates not to, hold any short sale position or any hedging position with
respect to any Company Securities in excess of $25,000; provided that any such
short sale or hedging transaction may only be made in connection with a
conversion under the Debenture or an exercise of the Warrants. Lender agrees
that it shall not transfer any Securities unless the transferee thereof
explicitly agrees in writing to be bound by the terms hereof, except in
connection with transfers of Shares that are not Registrable Securities. The

                                       14
<PAGE>

Company agrees that unless and until (i) the Company has affirmatively
demonstrated by the use of specific clear and convincing evidence that the
Lender has traded in securities of the Company in violation of applicable
federal securities laws and (ii) there has been issued against the Lender a
final non-appealable decision from a court of competent jurisdiction to the
effect that the Lender has violated applicable federal securities laws with
respect to its trading of the Company's securities, the Lender shall be assumed
to be in compliance with such laws and the Company shall remain obligated to
fulfill all of its obligations under each of the Transaction Agreements;
provided, further, that the Company shall under no circumstances be entitled to
request or demand that the Lender affirmatively demonstrate that it has not
engaged in any such violations as a condition to the Company's fulfillment of
its obligations under any of the Transaction Agreements and shall not assert,
whether as an affirmative claim or a defense to any claim made against the
Company, that the Lender's failure to demonstrate such absence of such
violations (including, but not limited to, its failure to provide any trading or
other records, it being specifically agreed that the Company, directly or
indirectly, will request the Lender or any of its agents, advisors, brokers or
representatives to provide such records in any forum) serves either as a defense
to any breach of the Company's obligations under any of the Transaction
Agreements or otherwise reflects adversely in any manner on the legality of any
action taken by the Lender.

                   j.      CERTAIN AGREEMENTS.

                  (i) (A) The term "Lower Price Transaction" means a New
         Transaction consummated during the period (the "New Transaction
         Period") from the Closing Date and continuing through and including the
         Final Lock-up Date (as defined below), where (x) either the lowest
         fixed purchase price of any shares of Common Stock contemplated in the
         New Transaction or the lowest fixed conversion price of any securities
         of the Company convertible or exchangeable into Common Stock which
         would be applicable under the terms of the New Transaction is, or by
         its terms, is below the Fixed Conversion Price or (y) if such purchase
         price or conversion price is determined by multiplying a market price
         of the Common Stock by a percentage, such percentage is below the
         Variable Conversion Rate (the "Lower Percentage").

                           (B) The term "Final Lock-up Date" means the date
         which is the number of days after the Effective Date equal to the sum
         of (X) ninety (90) days, plus (Y) the number of days, if any, during
         which sale of Registrable Securities was suspended after the Effective
         Date.

                           (ii) The Company covenants and agrees that, if there
is a Lower Price Transaction during the New Transaction Period, then;

                           (A) if such transaction is of the type contemplated
         by Section 4(j)(i)(A)(x), then the Fixed Conversion Price on any
         principal amount of the Debentures which has not been converted as of
         the relevant date shall be adjusted to an amount (the "Adjusted
         Conversion Price") equal to the lower of (1) the lowest fixed purchase
         price of any shares of the Common Stock contemplated in the Lower Price
         Transaction or (2) the lowest fixed conversion price of any securities
         of the Company convertible or exchangeable into Common Stock which
         would be applicable under the terms of the Lower Price Transaction;

                                       15
<PAGE>

                           (B) if such transaction is of the type contemplated
         by Section 4(j)(ii)(A)(y), then the Variable Conversion Rate on any
         principal amount of the Debentures which has not been converted as of
         the relevant date shall be adjusted to an amount equal to the Lower
         Percentage; and

                           (C) the exercise price on all unexercised Warrants
         (unless the Adjusted Exercise Price (as defined in the Warrants) is
         then in effect) shall be adjusted to equal the lowest of (1) the then
         existing applicable exercise price of such Warrant, and (2) 143% of the
         Adjusted Conversion Price.

                           (iii) For purposes of this Section 4(j), the
conversion price for which each share of Common Stock shall be deemed to be
issued upon issuance or sale of any securities convertible, exercisable or
exchangeable into Common Stock shall be determined by dividing (x) the total
consideration, if any, received by the Company as consideration for such
securities plus the minimum aggregate of additional consideration, if any, ever
payable to the Company upon the conversion, exercise or exchange of such
securities by (y) the maximum number of shares of Common Stock ever issuable
(except pursuant to anti-dilution provisions associated with such securities on
account of events that are unknown on such date) upon conversion, exercise or
exchange of such securities

                  5. TRANSFER AGENT INSTRUCTIONS.

                  (a) The Company warrants that, with respect to the Securities,
other than the stop transfer instructions to give effect to Section 4(a) hereof,
it will give its transfer agent no instructions inconsistent with instructions
to issue Common Stock from time to time upon conversion of the Debentures in
such amounts as specified from time to time by the Company to the transfer
agent, bearing the restrictive legend specified in Section 4(b) of this
Agreement prior to registration of the Shares under the 1933 Act, registered in
the name of the Lender or its nominee and in such denominations to be specified
by the Lender in connection with each conversion of the Debentures. Except as so
provided, the Shares shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement and the
Registration Rights Agreement. Nothing in this Section shall affect in any way
the Lender's obligations and agreement to comply with all applicable securities
laws upon resale of the Securities. If the Lender provides the Company with an
opinion of counsel reasonably satisfactory to the Company that registration of a
resale by the Lender of any of the Securities in accordance with clause (1)(B)
of Section 4(a) of this Agreement is not required under the 1933 Act, the
Company shall (except as provided in clause (2) of Section 4(a) of this
Agreement) permit the transfer of the Securities and, in the case of the
Conversion Shares, promptly instruct the Company's transfer agent to issue one
or more certificates for Common Stock without legend in such name and in such
denominations as specified by the Lender.

                                       16
<PAGE>

                  (b) Subject to the provisions of this Agreement, the Company
will permit the Lender to exercise its right to convert the Debentures in the
manner contemplated by the Debentures and to exercise the Warrants in the manner
contemplated by the Warrants.

                  c. (i) The Company understands that a delay in the issuance of
the Shares beyond the Delivery Date (as defined in the Debenture) could result
in economic loss to the Lender. As compensation to the Lender for such loss, the
Company agrees, commencing thirty (30) days after the Certificate of
Incorporation Amendment Filing Date, to pay late payments to the Lender for late
issuance of Shares upon conversion in accordance with the following schedule
(where "No. Business Days Late" refers to the number of Trading Days which is
beyond four (4) Trading Days after the Delivery Date): (991)

         NO. BUSINESS DAYS LATE           LATE PAYMENT FOR EACH $10,000
         ----------------------           -----------------------------
                                    OF PRINCIPAL OR INTEREST BEING CONVERTED
                                    ----------------------------------------

                 1                              $100
                 2                              $200
                 3                              $300
                 4                              $400
                 5                              $500
                 6                              $600
                 7                              $700
                 8                              $800
                 9                              $900
                 10                             $1,000
                 >10                            $1,000 + $200  for each Business
                                                Day Late beyond 10 days

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

1 Example: Notice of Conversion is delivered on Monday, March 6, 2006. The
Delivery Date would be Thursday March 9 (the third Trading Day after such
delivery). If the certificate is delivered by Wednesday, March 15 (4 Trading
Days after the Delivery Date), no payment under this provision is due. If the
certificates are delivered on March 16, that is 1 "Business Day Late" in the
table below; if delivered on March 21, that is 4 "Business Days Late" in the
table.

                                       17
<PAGE>

The Company shall pay any payments incurred under this Section in immediately
available funds upon demand as the Lender's exclusive remedy (other than the
following provisions of this Section 5(c) ,,the provisions of the immediately
following Section 5(d) of this Agreement and Section 12(c) of the Debenture) for
such delay. Furthermore, in addition to any other remedies which may be
available to the Lender, in the event that the Company fails for any reason to
effect delivery of such shares of Common Stock by close of business on the
Delivery Date, the Lender will be entitled to revoke the relevant Notice of
Conversion by delivering a notice to such effect to the Company, whereupon the
Company and the Lender shall each be restored to their respective positions
immediately prior to delivery of such Notice of Conversion; provided, however,
that an amount equal to any payments contemplated by this Section 5(c) which
have accrued through the date of such revocation notice shall remain due and
owing to the Converting Holder (as defined below) notwithstanding such
revocation. Anything in the foregoing provisions of this paragraph (c) to the
contrary notwithstanding, the total amount payable by the Company under this
paragraph (c) shall be reduced by an amount equal to fifty percent (50%) of any
Buy-In Adjustment Amount (as defined below) actually paid by the Company to the
Holder (but not by more than the total amount due without regard to the
provisions of this sentence).

                  (d) If, by the relevant Delivery Date, commencing thirty (30)
days after the Certificate of Incorporation Amendment Filing Date, the Company
fails for any reason to deliver the Shares to be issued upon conversion of a
Debenture and after such Delivery Date, the Holder of the Debentures being
converted (a "Converting Holder") purchases, in an arm's-length open market
transaction or otherwise, shares of Common Stock (the "Covering Shares") in
order to make delivery in satisfaction of a sale of Common Stock by the
Converting Holder (the "Sold Shares"), which delivery such Converting Holder
anticipated to make using the Shares to be issued upon such conversion (a
"Buy-In"), the Converting Holder shall have the right, to require the Company to
pay to the Converting Holder, in addition to and not in lieu of the amounts due
under Section 5(c) hereof (but in addition to all other amounts contemplated in
other provisions of the Transaction Agreements, and not in lieu of any such
other amounts), the Buy-In Adjustment Amount (as defined below). The "Buy-In
Adjustment Amount" is the amount equal to the excess, if any, of (x) the
Converting Holder's total purchase price (including brokerage commissions, if
any) for the Covering Shares over (y) the net proceeds (after brokerage
commissions, if any) received by the Converting Holder from the sale of the Sold
Shares. The Company shall pay the Buy-In Adjustment Amount to the Company in
immediately available funds immediately upon demand by the Converting Holder. By
way of illustration and not in limitation of the foregoing, if the Converting
Holder purchases shares of Common Stock having a total purchase price (including
brokerage commissions) of $11,000 to cover a Buy-In with respect to shares of
Common Stock it sold for net proceeds of $10,000, the Buy-In Adjustment Amount
which Company will be required to pay to the Converting Holder will be $1,000.

                  (e) In lieu of delivering physical certificates representing
the Common Stock issuable upon conversion, provided the Company's transfer agent
is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer program, upon request of the Holder and its compliance with
the provisions contained in this paragraph, so long as the certificates therefor

                                       18
<PAGE>

do not bear a legend and the Holder thereof is not obligated to return such
certificate for the placement of a legend thereon, the Company shall use its
best efforts to cause its transfer agent to electronically transmit the Common
Stock issuable upon conversion to the Holder by crediting the account of
Holder's Prime Broker with DTC through its Deposit Withdrawal Agent Commission
system.

                  (f) The holder of any Debentures shall be entitled to exercise
its conversion privilege with respect to the Debentures notwithstanding the
commencement of any case under 11 U.S.C. ss.101 ET SEQ. (the "Bankruptcy Code").
In the event the Company is a debtor under the Bankruptcy Code, the Company
hereby waives, to the fullest extent permitted, any rights to relief it may have
under 11 U.S.C. ss.362 in respect of such holder's conversion privilege. The
Company hereby waives, to the fullest extent permitted, any rights to relief it
may have under 11 U.S.C. ss.362 in respect of the conversion of the Debentures.
The Company agrees, without cost or expense to such holder, to take or to
consent to any and all action necessary to effectuate relief under 11 U.S.C.
ss.362.

                  (g) The Company will authorize its transfer agent to give
information relating to the Company directly to the Lender or the Lender's
representatives upon the request of the Lender or any such representative, to
the extent such information relates to (i) the status of shares of Common Stock
issued or claimed to be issued to the Lender in connection with a Notice of
Conversion or exercise of a Warrant, or (ii) the number of outstanding shares of
Common Stock of all shareholders as of a current or other specified date. On the
Closing Date, the Company will provide the Lender with a copy of the
authorization so given to the transfer agent.

                  6. CLOSING DATE.

                  a. The Closing Date shall occur on the date which is the first
Trading Day after each of the conditions contemplated by Sections 7 and 8 hereof
shall have either been satisfied or been waived by the party in whose favor such
conditions run.

                  Each closing of the purchase and issuance of Debentures and
Warrants shall occur on the relevant Closing Date at the offices of the Escrow
Agent and shall take place no later than 3:00 P.M., New York time, on such day
or such other time as is mutually agreed upon by the Company and the Lender.

                  Notwithstanding anything to the contrary contained herein, the
Escrow Agent will be authorized to release the relevant Escrow Funds to the
Company and to release the other relevant Escrow Property on the relevant
Closing Date upon satisfaction of the conditions set forth in Sections 7 and 8
hereof and as provided in the Joint Escrow Instructions.

                                       19
<PAGE>

                  7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

                  The Lender understands that the Company's obligation to sell
the Debentures and the Warrants to the Lender pursuant to this Agreement on the
relevant Closing Date is conditioned upon:

                  The execution and delivery of this Agreement and the
Registration Rights Agreement by the
Lender;

                  Delivery by the Lender to the Escrow Agent of good funds as
payment in full of an amount equal to the Purchase Price for the Securities in
accordance with this Agreement;

                  The accuracy on such Closing Date of the representations and
warranties of the Lender contained in this Agreement, each as if made on such
date, and the performance by the Lender on or before such date of all covenants
and agreements of the Lender required to be performed on or before such date;
and

                  There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.

                  8. CONDITIONS TO THE LENDER'S OBLIGATION TO PURCHASE.

                  The Company understands that the Lender's obligation to
purchase the Debentures and the Warrants on the relevant Closing Date is
conditioned upon:

                  The execution and delivery of this Agreement and the other
Transaction Agreements by the
Company;

                  Delivery by the Company to the Escrow Agent of the
Certificates in accordance with this Agreement;

         [On the Closing Date, the Lender shall have received a Secretary's
Certificate and Officer's Certificate from the Company, dated the Closing Date
in form, scope and substance reasonably satisfactory to the Lender,
substantially to the effect set forth in ANNEX III attached hereto;]

                  The accuracy in all material respects on such Closing Date of
the representations and warranties of the Company contained in this Agreement,
each as if made on such date, and the performance by the Company on or before
such date of all covenants and agreements of the Company required to be
performed on or before such date;

                  There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained; and

                                       20
<PAGE>

                  From and after the date hereof to and including such Closing
Date, each of the following conditions will remain in effect: (i) the trading of
the Common Stock shall not have been suspended by the SEC or on the Principal
Trading Market; (ii) trading in securities generally on the Principal Trading
Market shall not have been suspended or limited; (iii), no minimum prices shall
been established for securities traded on the Principal Trading Market; and (iv)
there shall not have been any material adverse change in any financial market
that, in the reasonable judgment of the Lender, makes it impracticable or
inadvisable to purchase the Debentures.

                  9. INDEMNIFICATION.

                  a. (i) The Company agrees to indemnify and hold harmless
Lender and its officers, directors, employees, and agents, and each Lender
Control Person from and against any losses, claims, damages, liabilities or
expenses incurred (collectively, "Damages"), joint or several, and any action in
respect thereof to which the Lender, its partners, Affiliates, officers,
directors, employees, and duly authorized agents, and any such Lender Control
Person becomes subject to, resulting from, arising out of or relating to any
misrepresentation, breach of warranty or nonfulfillment of or failure to perform
any covenant or agreement on the part of Company contained in this Agreement, as
such Damages are incurred, except to the extent such Damages result primarily
from Lender's failure to perform any covenant or agreement contained in this
Agreement or Lender's or its officers, directors, employees, agents or Lender
Control Persons negligence, recklessness or bad faith in performing its
obligations under this Agreement.

                           (ii) If (x) the Lender becomes involved in any
capacity in any action, proceeding or investigation brought by any stockholder
of the Company, in connection with or as a result of the consummation of the
transactions contemplated by this Agreement or the other Transaction Agreements
(other than the Registration Rights Agreement), or if the Lender is impleaded in
any such action, proceeding or investigation by any Person, or (y) the Lender
becomes involved in any capacity in any action, proceeding or investigation
brought by the SEC, any self-regulatory organization or other body having
jurisdiction, against or involving the Company or in connection with or as a
result of the consummation of the transactions contemplated by this Agreement or
the other Transaction Agreements (other than the Registration Rights Agreement),
or if the Lender is impleaded in any such action, proceeding or investigation by
any Person, then in any such case, other than by reason of the Lender's actions
(other than the Lender's execution of the Transaction Agreements to which it is
a signatory, the payment of the Purchase Price, and/or the exercise of any of
the Lender's rights under any one or more of the Transaction Agreements), the
Company hereby agrees to indemnify, defend and hold harmless the Lender from and
against and in respect of all Damages resulting from, imposed upon or incurred
by the Lender, directly or indirectly, and reimburse such Lender for its
reasonable legal and other expenses (including the cost of any investigation and
preparation) for a single firm of counsel incurred in connection therewith, as
such expenses are incurred. The indemnification and 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 Lender who are actually named in such action, proceeding
or investigation, and partners, directors, agents, employees and Lender Control

                                       21
<PAGE>

Persons (if any), as the case may be, of the Lender 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 Lender, any such Affiliate and
any such Person. The Company also agrees that neither the Lender nor any such
Affiliate, partner, director, agent, employee or Lender Control Person shall
have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company in connection with or as a result of the consummation of
this Agreement or the other Transaction Agreements, other than by reason of the
Lender's actions (other than the Lender's execution of the Transaction
Agreements to which it is a signatory, the payment of the Purchase Price, and/or
the exercise of any of the Lender's rights under any one or more of the
Transaction Agreements).

                  b. All claims for indemnification by any Indemnified Party (as
defined below) under this Section 9 shall be asserted and resolved as follows:

                  (i) In the event any claim or demand in respect of which any
Person claiming indemnification under any provision of this Section 9 (an
"Indemnified Party") might seek indemnity under Section 9(a) is asserted against
or sought to be collected from such Indemnified Party by a Person other than a
party hereto or an Affiliate thereof (a "Third Party Claim"), the Indemnified
Party shall deliver a written notification, enclosing a copy of all papers
served, if any, and specifying the nature of and basis for such Third Party
Claim and for the Indemnified Party's claim for indemnification that is being
asserted under any provision of this Section 9 against any Person (the
"Indemnifying Party"), together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such Third
Party Claim (a "Claim Notice") with reasonable promptness to the Indemnifying
Party. If the Indemnified Party fails to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party shall not be obligated to indemnify the
Indemnified Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been prejudiced by such failure of
the Indemnified Party. The Indemnifying Party shall notify the Indemnified Party
as soon as practicable within the period ending thirty (30) calendar days
following receipt by the Indemnifying Party of either a Claim Notice or an
Indemnity Notice (as defined below) (the "Dispute Period") whether the
Indemnifying Party disputes its liability or the amount of its liability to the
Indemnified Party under this Section 9 and whether the Indemnifying Party
desires, at its sole cost and expense, to defend the Indemnified Party against
such Third Party Claim. The following provisions shall also apply.

         (x) If the Indemnifying Party notifies the Indemnified Party within the
         Dispute Period that the Indemnifying Party desires to defend the
         Indemnified Party with respect to the Third Party Claim pursuant to
         this Section 9(b), then the Indemnifying Party shall have the right to
         defend, with counsel reasonably satisfactory to the Indemnified Party,
         at the sole cost and expense of the Indemnifying Party, such Third
         Party Claim by all appropriate proceedings, which proceedings shall be
         vigorously and diligently prosecuted by the Indemnifying Party to a
         final conclusion or will be settled at the discretion of the
         Indemnifying Party (but only with the consent of the Indemnified Party
         in the case of any settlement that provides for any relief other than
         the payment of monetary damages or that provides for the payment of
         monetary damages as to which the Indemnified Party shall not be

                                       22
<PAGE>

         indemnified in full pursuant to Section 9(a)). The Indemnifying Party
         shall have full control of such defense and proceedings, including any
         compromise or settlement thereof; provided, however, that the
         Indemnified Party may, at the sole cost and expense of the Indemnified
         Party, at any time prior to the Indemnifying Party's delivery of the
         notice referred to in the first sentence of this subparagraph (x), file
         any motion, answer or other pleadings or take any other action that the
         Indemnified Party reasonably believes to be necessary or appropriate to
         protect its interests; and provided further, that if requested by the
         Indemnifying Party, the Indemnified Party will, at the sole cost and
         expense of the Indemnifying Party, provide reasonable cooperation to
         the Indemnifying Party in contesting any Third Party Claim that the
         Indemnifying Party elects to contest. The Indemnified Party may
         participate in, but not control, any defense or settlement of any Third
         Party Claim controlled by the Indemnifying Party pursuant to this
         subparagraph (x), and except as provided in the preceding sentence, the
         Indemnified Party shall bear its own costs and expenses with respect to
         such participation. Notwithstanding the foregoing, the Indemnified
         Party may take over the control of the defense or settlement of a Third
         Party Claim at any time if it irrevocably waives its right to indemnity
         under Section 9(a) with respect to such Third Party Claim.

         (y) If the Indemnifying Party fails to notify the Indemnified Party
         within the Dispute Period that the Indemnifying Party desires to defend
         the Third Party Claim pursuant to Section 9(b), or if the Indemnifying
         Party gives such notice but fails to prosecute vigorously and
         diligently or settle the Third Party Claim, or if the Indemnifying
         Party fails to give any notice whatsoever within the Dispute Period,
         then the Indemnified Party shall have the right to defend, at the sole
         cost and expense of the Indemnifying Party, the Third Party Claim by
         all appropriate proceedings, which proceedings shall be prosecuted by
         the Indemnified Party in a reasonable manner and in good faith or will
         be settled at the discretion of the Indemnified Party (with the consent
         of the Indemnifying Party, which consent will not be unreasonably
         withheld). The Indemnified Party will have full control of such defense
         and proceedings, including any compromise or settlement thereof;
         provided, however, that if requested by the Indemnified Party, the
         Indemnifying Party will, at the sole cost and expense of the
         Indemnifying Party, provide reasonable cooperation to the Indemnified
         Party and its counsel in contesting any Third Party Claim which the
         Indemnified Party is contesting. Notwithstanding the foregoing
         provisions of this subparagraph (y), if the Indemnifying Party has
         notified the Indemnified Party within the Dispute Period that the
         Indemnifying Party disputes its liability or the amount of its
         liability hereunder to the Indemnified Party with respect to such Third
         Party Claim and if such dispute is resolved in favor of the
         Indemnifying Party in the manner provided in subparagraph (z) below,

                                       23
<PAGE>

         the Indemnifying Party will not be required to bear the costs and
         expenses of the Indemnified Party's defense pursuant to this
         subparagraph (y) or of the Indemnifying Party's participation therein
         at the Indemnified Party's request, and the Indemnified Party shall
         reimburse the Indemnifying Party in full for all reasonable costs and
         expenses incurred by the Indemnifying Party in connection with such
         litigation. The Indemnifying Party may participate in, but not control,
         any defense or settlement controlled by the Indemnified Party pursuant
         to this subparagraph (y), and the Indemnifying Party shall bear its own
         costs and expenses with respect to such participation.

         (z) If the Indemnifying Party notifies the Indemnified Party that it
         does not dispute its liability or the amount of its liability to the
         Indemnified Party with respect to the Third Party Claim under Section
         9(a) or fails to notify the Indemnified Party within the Dispute Period
         whether the Indemnifying Party disputes its liability or the amount of
         its liability to the Indemnified Party with respect to such Third Party
         Claim, the amount of Damages specified in the Claim Notice shall be
         conclusively deemed a liability of the Indemnifying Party under Section
         9(a) and the Indemnifying Party shall pay the amount of such Damages to
         the Indemnified Party on demand. If the Indemnifying Party has timely
         disputed its liability or the amount of its liability with respect to
         such claim, the Indemnifying Party and the Indemnified Party shall
         proceed in good faith to negotiate a resolution of such dispute;
         provided, however, that if the dispute is not resolved within thirty
         (30) days after the Claim Notice, the Indemnifying Party shall be
         entitled to institute such legal action as it deems appropriate.

                  (ii) In the event any Indemnified Party should have a claim
under Section 9(a) against the Indemnifying Party that does not involve a Third
Party Claim, the Indemnified Party shall deliver a written notification of a
claim for indemnity under Section 9(a) specifying the nature of and basis for
such claim, together with the amount or, if not then reasonably ascertainable,
the estimated amount, determined in good faith, of such claim (an "Indemnity
Notice") with reasonable promptness to the Indemnifying Party. The failure by
any Indemnified Party to give the Indemnity Notice shall not impair such party's
rights hereunder except to the extent that the Indemnifying Party demonstrates
that it has been irreparably prejudiced thereby. If the Indemnifying Party
notifies the Indemnified Party that it does not dispute the claim or the amount
of the claim described in such Indemnity Notice or fails to notify the
Indemnified Party within the Dispute Period whether the Indemnifying Party
disputes the claim or the amount of the claim described in such Indemnity
Notice, the amount of Damages specified in the Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under Section 9(a) and
the Indemnifying Party shall pay the amount of such Damages to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed its liability or
the amount of its liability with respect to such claim, the Indemnifying Party
and the Indemnified Party shall proceed in good faith to negotiate a resolution
of such dispute; provided, however, that if the dispute is not resolved within
thirty (30) days after the Indemnity Notice, the Indemnifying Party shall be
entitled to institute such legal action as it deems appropriate.

                  The indemnity agreements contained herein shall be in addition
to (i) any cause of action or similar rights of the indemnified party against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to.

                                       24
<PAGE>

                  10. JURY TRIAL WAIVER. The Company and the Lender hereby waive
a trial by jury in any action, proceeding or counterclaim brought by either of
the Parties hereto against the other in respect of any matter arising out or in
connection with the Transaction Agreements.

                  11. GOVERNING LAW: MISCELLANEOUS.

                  This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the exclusive
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement or
any of the other Transaction Agreements and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on FORUM NON
CONVENIENS, to the bringing of any such proceeding in such jurisdictions. To the
extent determined by such court, the Company shall reimburse the Lender for any
reasonable legal fees and disbursements incurred by the Lender in enforcement of
or protection of any of its rights under any of the Transaction Agreements.

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

                  This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties hereto.

                  All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.

                  A facsimile transmission of this signed Agreement shall be
legal and binding on all parties hereto.

                  This Agreement may be signed in one or more counterparts, each
of which shall be deemed an original.

                  The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.

                  If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.

                  This Agreement may be amended only by an instrument in writing
signed by the party to be charged with enforcement thereof.

                                       25
<PAGE>

                  This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.

                  12. NOTICES. Any notice required or permitted hereunder shall
be given in writing (unless otherwise specified herein) and shall be deemed
effectively given on the earliest of

                  (a) the date delivered, if delivered by personal delivery as
                  against written receipt therefor or by confirmed facsimile
                  transmission,

                  (b) the seventh business day after deposit, postage prepaid,
                  in the United States Postal Service by registered or certified
                  mail, or

                  (c) the third business day after mailing by domestic or
                  international express courier, with delivery costs and fees
                  prepaid,

in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
ten (10) days' advance written notice similarly given to each of the other
parties hereto):

Company:                   Advanced Technology Industries, Inc.
                           211 Madison Avenue, #28B
                           New York, New York 10016
                           Attn: Allan Klepfisz
                           Telephone No.:  (212) 532-2736
                           Telecopier No.:  (212) 532-2904

                           with a copy to:
                           Anthony J. Norris , Esq.

                           Ropes & Gray LLP
                           45 Rockefeller Plaza
                           New York, NY 10111
                           Tel: 212-841-0659
                           Fax: 212-841-5725

Lender:        At the address set forth on the signature page of this Agreement.

                                       26
<PAGE>

                           with a copy to:

                           Krieger & Prager LLP, Esqs.
                           39 Broadway
                           Suite 1440
                           New York, NY 10006
                           Attn: Samuel M. Krieger, Esq.
                           Telephone No.: (212) 363-2900
                           Telecopier No.  (212) 363-2999

Escrow Agent:              Krieger & Prager LLP
                           39 Broadway
                           Suite 1440
                           New York, NY 10006
                           Attn: Samuel Krieger, Esq.
                           New York, New York 10016
                           Telephone No.: (212) 363-2900
                           Telecopier No.  (212) 363-2999

                  13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's
and the Lender's representations and warranties herein shall survive the
execution and delivery of this Agreement and the delivery of the Certificates
and the payment of the Purchase Price for a period of two years after the
Closing Date, and shall inure to the benefit of the Lender and the Company and
their respective successors and assigns.

                   [BALANCE OF PAGE INTENTIONALLY LEFT BLANK.]

                                       27
<PAGE>

                  IN WITNESS WHEREOF, this Agreement has been duly executed by
the Lender (if an entity, by one of its officers thereunto duly authorized) as
of the date set forth below.

PURCHASE PRICE:                                      $ 200,000.00
NUMBER OF WARRANTS:                                  2,875,142

                             SIGNATURES FOR LENDERS

                  IN WITNESS WHEREOF, the undersigned represents that the
foregoing statements are true and correct and that it has caused this Securities
Purchase Agreement to be duly executed on its behalf this ____ day of April,
2005.

                                               DOUBLE U MASTER FUND, L.P.

                                               By:  NAVIGATOR MANAGEMENT LTD.

                                                    By: /S/ David Sims
                                                        ------------------------
                                                             David Sims
Double U Master Fund, L.P.
Harbour House, Waterfront Drive, POB 972
Road Town, Tortola, British Virgin Islands
Attention:  David Sims
Telelphone: (284) 494-4770
Facsimile:  (284) 494-4771

As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its behalf.

ADVANCED TECHNOLOGY INDUSTRIES, INC.

By:

Title:______________________

Date: _____________________, 2005

                                       28
<PAGE>

         ANNEX I           FORM OF DEBENTURE

         ANNEX II          JOINT ESCROW INSTRUCTIONS

         ANNEX III         SECRETARY'S CERTIFICATE

         ANNEX IV          REGISTRATION RIGHTS AGREEMENT

         ANNEX V           COMPANY DISCLOSURE MATERIALS

         ANNEX VI-         FORM OF WARRANT

         ANNEX VII         COMPANY'S SEC DOCUMENTS AVAILABLE ON EDGAR

                                       29

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