Document:

EXHIBIT 10.1

                          SECURITIES PURCHASE AGREEMENT

      This Securities Purchase Agreement (this "Agreement") is dated as of
February 28, 2006 between NEW CENTURY COMPANIES, INC., an Delaware corporation
whose principal place of business is located at 9835 Santa Fe Springs Rd., Santa
Fe Springs, CA 90670 (the "Company"), and each of the Purchaser(s) identified on
the signature pages hereto (including its successors and assigns, the
"Purchaser(s)").

      WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act") and Rule 506 promulgated thereunder, the Company desires to
issue and sell to the Purchasers, and each Purchaser desires to purchase from
the Company, securities of the Company as more fully described in this
Agreement.

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

                                   ARTICLE I.
                                   DEFINITIONS

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

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

            "Additional Investment Right" shall have the meaning ascribed to
      such term in Section 4.17.

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

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

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

            "Commission" means the Securities and Exchange Commission.

            "Common Stock" means the common stock of the Company, par value
      $0.10, and any securities into which such common stock shall hereinafter
      have been reclassified into.

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

                  "Company Counsel" means Troy & Gould, PC.

                  "Deeds of Trust" means those Deeds of Trust dated the date
         hereof and relating to the real property of the Company.

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

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

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

            "Escrow Account" means the escrow account set up pursuant to the
      Escrow Agreement.

            "Escrow Agreement" means the Escrow Agreement dated the date hereof,
      among the Company, the Purchaser and KMR, in the form of Exhibit F
      attached hereto.

            "Escrow Agreement Side Letter" means the Escrow Agreement Side
      Letter dated the date hereof, between the Company and the Purchaser, in
      the form of Exhibit G attached hereto.

            "Exchange Act" means the Securities Exchange Act of 1934, as
      amended.

            "Exempt Issuance" means the issuance of (a) shares of Common Stock
      or options to employees, officers or directors of the Company pursuant to
      any stock or option plan duly adopted by a majority of the non-employee
      members of the Board of Directors of the Company or a majority of the
      members of a committee of non-employee directors established for such
      purpose, or (b) securities upon the exercise of or conversion of any
      securities issued hereunder, convertible securities, options or warrants
      issued and outstanding on the date of this Agreement, provided that such
      securities have not been amended since the date of this Agreement to
      increase the number of such securities.

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

            "Headquarters" shall mean the Company's facilities at 9835 Santa Fe
      Springs Rd., Santa Fe Springs, CA 90670.

            "KMR" Katten Muchin Rosenman LLP.

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

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

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

            "Notes" means the 12% Senior Secured Convertible Notes due February
      28, 2009, subject to the terms therein, and issued by the Company to the
      Purchasers hereunder, in the form of Exhibit A.

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

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

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

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

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

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

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

            "Securities" means the Notes, the Warrants and the Underlying
      Shares.

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

            "Security Agreement" means the Security Agreement, dated the date
      hereof, between the Company, the Subidiaries and the Purchaser, in the
      form of Exhibit D attached hereto.

            "Security Documents" means the Security Agreement, the Subsidiary
      Guarantee(s) and any other documents and filings required thereunder in
      order to grant the Purchasers a perfected security interest in all of the
      assets of the Company, including all UCC-1 filing receipts.

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

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

            "Subsidiary Guarantee(s)" means the Subsidiary Guarantee(s), dated
      the date hereof, among each of the Subsidiaries and the Purchaser, in the
      form of Exhibit E attached hereto.

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

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

            "Transaction Documents" means this Agreement, the Notes, the
      Warrants, the Security Agreement, the Subsidiary Guarantee(s), the
      Registration Rights Agreement, the Deeds of Trust, the Escrow Agreement,
      the Escrow Agreement Side Letter and any other documents or agreements
      executed in connection with the transactions contemplated hereunder.

            "Underlying Shares" means the shares of Common Stock issuable upon
      conversion of the Notes and the Warrant Shares,

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

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

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

                                  ARTICLE II.
                                PURCHASE AND SALE

      2.1 Closing. On the Closing Date, upon the terms and subject to the
conditions set forth herein, concurrent with the execution and delivery of this
Agreement by the parties hereto, the Company agrees to sell, and the Purchasers
agree to purchase, up to $5,000,000 aggregate principal amount of the Notes (up
to $3,500,000 to be purchased at the Closing and up to an additional $1,500,000
to be purchased pursuant to the Additional Investment Right pursuant to Section
4.17_herein), secured by a first priority lien, more fully described in the
Security Agreement, on all assets of the Company and its current and future
Subsidiaries (including a pledge of the shares of the Company's current and
future Subsidiaries).

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The Purchaser shall deliver to the Company via wire transfer immediately
available funds equal to its Subscription Amount (it being understood that
$1,500,000 of the proceeds of the Notes shall be placed in the Escrow Account)
and the Company shall deliver to each Purchaser its Note and Warrants as
determined pursuant to Section 2.2(a), and the other items set forth in Section
2.2 issuable at the Closing. Upon satisfaction of the conditions set forth in
Section 2.2, the Closing shall occur at the offices of the Company, or such
other location as the parties shall mutually agree.

      2.2 Deliveries.

            a) On the Closing Date, the Company shall deliver to the counsel for
      the Purchaser with respect to the Purchaser the following:

            (i)   this Agreement duly executed by the Company;

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

            (iii) Warrants registered in the name of the Purchaser to purchase
                  3,476,190 shares of Common Stock of the Company with an
                  exercise price of $0.63 per share;

            (iv)  the Registration Rights Agreement duly executed by the
                  Company;

            (v)   the Security Agreement, duly executed by the Company and the
                  Subsidiaries, along with all the Security Documents;

            (vi)  the Subsidiary Guarantee(s), duly executed by the
                  Subsidiaries;

            (vii) the Escrow Agreement duly executed by the Company and KMR;

            (viii) the Escrow Agreement Side Letter duly executed by the
                  Company; and

            (ix)  a legal opinion of Company Counsel.

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

            (i)   this Agreement duly executed by such Purchaser;

            (ii)  the Purchaser's Subscription Amount by wire transfer to the
                  account of the Company (less $1,500,000 which shall be placed
                  in the Escrow Account);

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

            (iv)  the Security Agreement, duly executed by such Purchaser;

            (v)   the Escrow Agreement, duly executed by the Purchaser; and

            (vi)  the Escrow Agreement Side Letter, duly executed by the
                  Purchaser.

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      2.3 Closing Conditions.

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

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

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

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

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

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

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

            (iii) the Purchaser shall be satisfied with the results of its due
                  diligence investigation of the Company;

            (iv)  the Purchaser shall be satisfied with the Company's current
                  and projected uses of cash;

            (v)   the aggregate principal amount of existing debt shall have
                  been converted into equity, such that there shall be no debt
                  outstanding pro forma for the issuance of the Securities and
                  the application of the proceeds therefrom;

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

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

            (viii) No banking moratorium have been declared either by the United
                  States or New York State authorities nor shall there have
                  occurred any material outbreak or escalation of hostilities or
                  other national or international calamity of such magnitude in
                  its effect on, or any material adverse change in, any
                  financial markets which, in each case, in the reasonable
                  judgment of such Purchaser, makes it impracticable or
                  inadvisable to purchase the Notes at the Closing.

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<PAGE>

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

      3.1 Representations and Warranties of the Company. Except as set forth in
the Disclosure Schedule which Disclosure Schedule shall be deemed a part hereof,
each of the Company and its Subsidiaries hereby makes the representations and
warranties set forth below to the Purchaser.

            (a) Subsidiaries. All of the direct and indirect subsidiaries of the
      Company are set forth in the Disclosure Schedule. The Company owns,
      directly or indirectly, all of the capital stock or other equity interests
      of each Subsidiary free and clear of any Liens, and all the issued and
      outstanding shares of capital stock of each Subsidiary are validly issued
      and are fully paid, non-assessable and free of preemptive and similar
      rights to subscribe for or purchase securities.

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

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

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

            (e) Filings, Consents and Approvals. Except as set forth in the
      Disclosure Schedule, the Company is not required to obtain any consent,
      waiver, authorization or order of, give any notice to, or make any filing
      or registration with, any court or other federal, state, local or other
      governmental authority or other Person in connection with the execution,
      delivery and performance by the Company of the Transaction Documents.

            (f) Issuance of the Securities. The Securities are duly authorized
      and, when issued and paid for in accordance with the applicable
      Transaction Documents, will be duly and validly issued, fully paid and
      nonassessable, free and clear of all Liens imposed by the Company other
      than restrictions on transfer provided for in the Transaction Documents.
      The Underlying Shares, when issued in accordance with the terms of the
      Transaction Documents, will be validly issued, fully paid and
      nonassessable, free and clear of all Liens imposed by the Company. The
      Company has reserved from its duly authorized capital stock a number of
      shares of Common Stock for issuance of the Underlying Shares at least
      equal to the Required Minimum on the date hereof. The Company has not, and
      to the knowledge of the Company, no Affiliate of the Company has sold,
      offered for sale or solicited offers to buy or otherwise negotiated in
      respect of any security (as defined in Section 2 of the Securities Act)
      that would be integrated with the offer or sale of the Securities in a
      manner that would require the registration under the Securities Act of the
      sale of the Securities to the Purchaser, or that would be integrated with
      the offer or sale of the Securities for purposes of the rules and
      regulations of any Trading Market.

            (g) Capitalization. The capitalization of the Company is as set
      forth in the Description of Securities section of the Disclosure Schedule.
      Other than as set forth on the Disclosure Schedule, the Company and the
      Subsidiaries have no indebtedness. The Company has not issued any capital
      stock since December 2005. No Person has any right of first refusal,
      preemptive right, right of participation, or any similar right to
      participate in the transactions contemplated by the Transaction Documents.
      Except as set forth in the Disclosure Schedule, as a result of the
      purchase and sale of the Securities, there are no outstanding options,
      warrants, script rights to subscribe to, calls or commitments of any
      character whatsoever relating to, or securities, rights or obligations
      convertible into or exchangeable for, or giving any Person any right to
      subscribe for or acquire, any shares of Common Stock, or contracts,
      commitments, understandings or arrangements by which the Company or any
      Subsidiary is or may become bound to issue additional shares of Common
      Stock, or securities or rights convertible or exchangeable into shares of
      Common Stock. The issuance and sale of the Securities will not obligate
      the Company to issue shares of Common Stock or other securities to any
      Person (other than the Purchaser) and will not result in a right of any
      holder of Company securities to adjust the exercise, conversion, exchange
      or reset price under such securities. All of the outstanding shares of
      capital stock of the Company are validly issued, fully paid and
      nonassessable, have been issued in compliance with all federal and state
      securities laws, and none of such outstanding shares was issued in
      violation of any preemptive rights or similar rights to subscribe for or
      purchase securities. No further approval or authorization of any
      stockholder, the Board of Directors of the Company or others is required
      for the issuance and sale of the Securities. There are no stockholders
      agreements, voting agreements or other similar agreements with respect to
      the Company's capital stock to which the Company is a party or, to the
      knowledge of the Company, between or among any of the Company's
      stockholders.

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

            (i) Material Changes. Since the date of the latest audited financial
      statements, (i) there has been no event, occurrence or development that
      has had or that could reasonably be expected to result in a Material
      Adverse Effect, (ii) the Company has not incurred any liabilities
      (contingent or otherwise) other than (A) trade payables and accrued
      expenses incurred in the ordinary course of business consistent with past
      practice and (B) liabilities not required to be reflected in the Company's
      financial statements pursuant to GAAP or required to be disclosed in
      filings made with the Commission, (iii) the Company has not altered its
      method of accounting, (iv) the Company has not declared or made any
      dividend or distribution of cash or other property to its stockholders or
      purchased, redeemed or made any agreements to purchase or redeem any
      shares of its capital stock and (v) the Company has not issued any equity
      securities to any officer, director or Affiliate, except pursuant to
      existing Company stock option plans. The Company does not have pending
      before the Commission any request for confidential treatment of
      information.

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            (j) Litigation. Other than as set forth in the Disclosure Schedule
      under the caption "Legal Proceedings," there is no action, suit, inquiry,
      notice of violation, proceeding or investigation pending or, to the
      knowledge of the Company, threatened against or affecting the Company, any
      Subsidiary or any of their respective properties before or by any court,
      arbitrator, governmental or administrative agency or regulatory authority
      (federal, state, county, local or foreign) (collectively, an "Action")
      which (i) adversely affects or challenges the legality, validity or
      enforceability of any of the Transaction Documents or the Securities or
      (ii) could, if there were an unfavorable decision, have or reasonably be
      expected to result in a Material Adverse Effect. Neither the Company nor
      any Subsidiary, nor any director or officer thereof, is or has been the
      subject of any Action involving a claim of violation of or liability under
      federal or state securities laws or a claim of breach of fiduciary duty.
      There has not been, and to the knowledge of the Company, there is not
      pending or contemplated, any investigation by the Commission involving the
      Company or any current or former director or officer of the Company. The
      Commission has not issued any stop order or other order suspending the
      effectiveness of any registration statement filed by the Company or any
      Subsidiary under the Exchange Act or the Securities Act.

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

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

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

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

            (o) Patents and Trademarks. The Company and the Subsidiaries have,
      or have rights to use, all patents, patent applications, trademarks,
      trademark applications, service marks, trade names, copyrights, licenses
      and other similar rights necessary or material for use in connection with
      their respective businesses and which the failure to so have could have a
      Material Adverse Effect (collectively, the "Intellectual Property
      Rights"). Neither the Company nor any Subsidiary has received a written
      notice that the Intellectual Property Rights used by the Company or any
      Subsidiary violates or infringes upon the rights of any Person. To the
      knowledge of the Company, all such Intellectual Property Rights are
      enforceable and there is no existing infringement by another Person of any
      of the Intellectual Property Rights of others.

                                    10 of 26
<PAGE>

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

            (q) Transactions With Affiliates and Employees. None of the officers
      or directors of the Company and, to the knowledge of the Company, none of
      the employees of the Company is presently a party to any transaction with
      the Company or any Subsidiary (other than for services as employees,
      officers and directors), including any contract, agreement or other
      arrangement providing for the furnishing of services to or by, providing
      for rental of real or personal property to or from, or otherwise requiring
      payments to or from any officer, director or such employee or, to the
      knowledge of the Company, any entity in which any officer, director, or
      any such employee has a substantial interest or is an officer, director,
      trustee or partner, in each case in excess of $50,000 other than (i) for
      payment of salary or consulting fees for services rendered on a basis no
      less favorable to the Company than that which could be received from an
      unaffiliated third party, (ii) reimbursement for expenses incurred on
      behalf of the Company and (iii) for other employee benefits, including
      stock option agreements under any stock option plan of the Company.

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

                                    11 of 26
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            (s) Certain Fees. Except as set forth in the Disclosure Schedule
      under the caption "Recent Sales of Unregistered Securities; Use of
      Proceeds from Registered Securities," no brokerage or finder's fees or
      commissions are or will be payable by the Company to any broker, financial
      advisor or consultant, finder, placement agent, investment banker, bank or
      other Person with respect to the transactions contemplated by this
      Agreement. The Purchaser shall have no obligation with respect to any fees
      or with respect to any claims made by or on behalf of other Persons for
      fees of a type contemplated in this Section that may be due in connection
      with the transactions contemplated by this Agreement.

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

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

            (v) Registration Rights. Except as contemplated by the transactions
      hereunder, no Person has any right to cause the Company to effect the
      registration under the Securities Act of any securities of the Company.

            (w) Reserved.

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

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

                                    12 of 26
<PAGE>

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

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

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

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

                                    13 of 26
<PAGE>

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

            (ee) Accountants. The Company's accountants are Squar Milner Reehl &
      Williamson, LP. To the Company's knowledge, such accountants, who the
      Company expects will express their opinion with respect to the financial
      statements for the year ending December 31, 2005, are a registered public
      accounting firm as required by the Securities Act.

            (ff) Seniority. As of the Closing Date, no indebtedness or other
      equity of the Company is senior to, or pari passu with, the Notes in right
      of payment, whether with respect to interest or upon liquidation or
      dissolution, or otherwise.

            (gg) No Disagreements with Accountants and Lawyers. There are no
      disagreements of any kind presently existing, or reasonably anticipated by
      the Company to arise, between the accountants and lawyers formerly or
      presently employed by the Company and the Company is current with respect
      to any fees owed to its accountants and lawyers. By making this
      representation the Company does not, in any manner, waive the
      attorney/client privilege or the confidentiality of the communications
      between the Company and its lawyers.

            (hh) Acknowledgment Regarding Purchaser's Purchase of Securities.
      The Company acknowledges and agrees that each Purchaser is acting solely
      in the capacity of an arm's length purchaser with respect to the
      Transaction Documents and the transactions contemplated hereby. The
      Company further acknowledges that no Purchaser is acting as a financial
      advisor or fiduciary of the Company (or in any similar capacity) with
      respect to this Agreement and the transactions contemplated hereby and any
      advice given by any Purchaser or any of their respective representatives
      or agents in connection with this Agreement and the transactions
      contemplated hereby is merely incidental to the Purchaser's purchase of
      the Securities. The Company further represents to the Purchasers that the
      Company's decision to enter into this Agreement has been based solely on
      the independent evaluation of the transactions contemplated hereby by the
      Company and its representatives. The Company further acknowledges that in
      addition to purchasing Securities, the Purchasers or their affiliates may
      directly or indirectly own Common Stock and Preferred Stock in the Company
      and that such parties, exercising their rights hereunder may adversely
      impact their other holdings as well as the other equity holders in the
      Company.

            (ii) Lock-Up Agreement. The Company shall obtain from each officer,
      director, and 5% shareholder of the Company, a lock-up agreement
      satisfactory to the Purchaser, which prohibits the sale of stock in the
      Company for one year from the date of the effective of the Registration
      Statement.

            (jj) Marketing. The Company agrees to spend reasonable amounts to
      market the Company, and it will use an investor relations firm and
      investor service program satisfactory to the Purchaser. The Company will
      issue a press release or file a form 8-K publicly announcing the material
      terms of this deal within one Trading Day of the Closing Date.

                                    14 of 26
<PAGE>

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

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

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

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

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

            (e) No Shorting. The Purchaser has not engaged (and will not engage)
      in any short sales of the Common Stock prior to the public announcement of
      the consummation of the transaction contemplated hereunder.

                                    15 of 26
<PAGE>

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

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

                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

      4.1 Transfer Restrictions.

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

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

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

                                    16 of 26
<PAGE>

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

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

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

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

                                    17 of 26
<PAGE>

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

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

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

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

      4.6 Securities Laws Disclosure; Publicity. The Company and the Purchasers
shall consult with each other in issuing any other press releases with respect
to the transactions contemplated hereby, and neither the Company nor the
Purchasers shall issue any such press release or otherwise make any such public
statement without the prior consent of the Company, with respect to any press
release of the Purchasers, or without the prior consent of the Purchasesr, with
respect to any press release of the Company, which consent shall not
unreasonably be withheld, except if such disclosure is required by law, in which
case the disclosing party shall promptly provide the other party with prior
notice of such public statement or communication. Notwithstanding the foregoing,
the Company shall not publicly disclose the name of any Purchaser, or include
the name of any Purchaser in any filing with the Commission or any regulatory
agency or Trading Market, without the prior written consent of such Purchaser,
except (i) as required by federal securities law in connection with a
registration statement and (ii) to the extent such disclosure is required by law
or Trading Market regulations, in which case the Company shall provide such
Purchaser with prior notice of such disclosure permitted under subclause (i) or
(ii).

                                    18 of 26
<PAGE>

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

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

      4.9 Use of Proceeds. The Company shall use the net proceeds from the sale
of the Securities hereunder for the retirement of $900,000 of existing debt, the
acquisition of certain identified companies and working capital purposes.

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

      4.11 Indemnification of Purchasers. Subject to the provisions of this
Section 4.11, the Company will indemnify and hold each Purchaser and its
directors, officers, shareholders, partners, employees and agents (each, a
"Purchaser Party") harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys' fees and
costs of investigation that any Purchaser Party may suffer or incur as a result
of or relating to (a) any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents or (b) any action instituted against a Purchaser, or any
of them or their respective Affiliates, by any stockholder of the Company who is
not an Affiliate of the Purchaser, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is based upon a
breach of the Purchaser's representation, warranties or covenants under the
Transaction Documents or any agreements or understandings the Purchaser may have
with any such stockholder or any violations by the Purchaser of state or federal
securities laws or any conduct by the Purchaser which constitutes fraud, gross

                                    19 of 26
<PAGE>

negligence, willful misconduct or malfeasance). If any action shall be brought
against any Purchaser Party in respect of which indemnity may be sought pursuant
to this Agreement, the Purchaser Party shall promptly notify the Company in
writing, and the Company shall have the right to assume the defense thereof with
counsel of its own choosing. Any Purchaser Party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the Purchaser
Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or (iii)
in such action there is, in the reasonable opinion of such separate counsel, a
material conflict on any material issue between the position of the Company and
the position of the Purchaser Party. The Company will not be liable to any
Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party
effected without the Company's prior written consent, which shall not be
unreasonably withheld or delayed; or (ii) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchaser Party's
breach of any of the representations, warranties, covenants or agreements made
by the Purchaser in this Agreement or in the other Transaction Documents.

      4.12 Reservation and Listing of Securities.

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

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

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

      4.13 Subsequent Equity Sales. In addition to the limitations set forth
herein, from the date hereof until such time as no Purchaser holds any of the
Securities, the Company shall be prohibited from effecting or entering into an
agreement to effect any Subsequent Financing involving a "Variable Rate
Transaction" or an "MFN Transaction" (each as defined below). The term "Variable
Rate Transaction" shall mean a transaction in which the Company issues or sells
(i) any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional shares of Common
Stock either (A) at a conversion, exercise or exchange rate or other price that
is based upon and/or varies with the trading prices of or quotations for the
shares of Common Stock at any time after the initial issuance of such debt or
equity securities, or (B) with a conversion, exercise or exchange price that is
subject to being reset at some future date after the initial issuance of such
debt or equity security or upon the occurrence of specified or contingent events
directly or indirectly related to the business of the Company or the market for

                                    20 of 26
<PAGE>

the Common Stock. The term "MFN Transaction" shall mean a transaction in which
the Company issues or sells any securities in a capital raising transaction or
series of related transactions which grants to an investor the right to receive
additional shares based upon future transactions of the Company on terms more
favorable than those granted to such investor in such offering. Any Purchaser
shall be entitled to obtain injunctive relief against the Company to preclude
any such issuance, which remedy shall be in addition to any right to collect
damages. Notwithstanding the foregoing, this Section 4.13 shall not apply in
respect of an Exempt Issuance, except that no Variable Rate Transaction or MFN
Transaction shall be an Exempt Issuance.

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

      4.15 Most Favored Nation Provision. Any time the Company effects a
subsequent financing, each Purchaser may elect, in its sole discretion, to
exchange all or some of its Notes and Warrants (treated for this purpose only as
a unit) then held by it for the securities issued in a subsequent financing
based on the then outstanding principal amount of the Note plus any other fees
then owed by the Company to the Purchaser, and the effective price at which such
securities are sold in such subsequent financing.

      4.16 Additional Participation Right. During the term of the Notes, each
Purchaser shall have the right to participate in up to 100% of any debt or
equity financing of the Company on the same terms as those offered to such third
party providing the financing.

      4.17 Additional Investment Right. The Company agrees that the Purchasers
shall have the right (at their sole option), on or prior to the 360th day from
the Closing Date, to cause the Company to issue to the Purchasers additional
notes in an aggregate principal amount of up to $1,500,000 on the same terms and
conditions (including, without limitation, the same interest rate, Conversion
Price then in effect, proportionate warrant coverage (at the same exercise
prices), amortization schedule, fees, expenses, etc.) as set forth in the
Transaction Documents.

                                   ARTICLE V.
                                  MISCELLANEOUS

      5.1 Termination. This Agreement may be terminated by any Purchaser, by
written notice to the other parties, if the Closing has not been consummated on
or before March 7, 2006; provided that no such termination will affect the right
of any party to sue for any breach by the other party (or parties).

      5.2 Fees. At the Closing, the Company has agreed to (i) pay to Centrecourt
Asset Management LLC ("CAM") $15,000, the balance of its legal fees and expenses
of counsel, (ii) reimburse CAM's reasonable out-of-pocket expenses (including
the cost of any third party field audit or any required appraisals), and (iii)
pay CAM $122,500 as a structuring fee. Except as expressly set forth in the
Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all transfer agent fees, stamp taxes and other taxes and duties levied
in connection with the issuance of any Securities.

                                    21 of 26
<PAGE>

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

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

      5.5 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of amendments, by the
Company and Purchasers holding a majority of the principal amount of Notes then
outstanding, or, in the case of a waiver, by the party against whom enforcement
of any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.

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

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

      5.8 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.11.

      5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of New York. Each party hereby irrevocably submits to the exclusive

                                    22 of 26
<PAGE>

jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. The parties hereby waive all
rights to a trial by jury. If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its attorneys' fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

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

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

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

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

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

                                    23 of 26
<PAGE>

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

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

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

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

                            (Signature Pages Follow)

                                    24 of 26
<PAGE>

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

NEW CENTURY COMPANIES, INC.                      Address for Notice:
                                                 -------------------

------------------------------------             Telephone:
Name:                                            Facsimile:
Title:

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

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

                                    25 of 26
<PAGE>

     [PURCHASER SIGNATURE PAGE TO NEW CENTURY SECURITIES PURCHASE AGREEMENT]

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

Name of Investing Entity:  CAMOFI Master LDC
Signature of Authorized Signatory of Investing Entity: _________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Email Address of Authorized Entity:_____________________________________________

Address for Notice of Investing Entity:

c/o Centrecourt Asset Management LLC
350 Madison Avenue
8th Floor
New York, NY 10017

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

Subscription Amount:  $3,500,000
Warrant Shares:
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                                    26 of 26EXHIBIT 10.2

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

Original Issue Date: February 28, 2006
Original Conversion Price (subject to adjustment herein): $0.63

                       12% SENIOR SECURED CONVERTIBLE NOTE
                              DUE FEBRUARY 28, 2009

      THIS NOTE is one of a series of duly authorized and issued Secured
Convertible Notes of NEW CENTURY COMPANIES, INC., a Delaware corporation, having
a principal place of business at 9835 Santa Fe Springs Rd., Santa Fe Springs, CA
90670 (the "Company"), designated as its 12% Senior Secured Convertible Notes,
due February 28, 2009 (the "Note(s)").

      FOR VALUE RECEIVED, the Company promises to pay to CAMOFI MASTER LDC or
its registered assigns (the "Holder"), the principal sum of $3,500,000 on
February 28, 2009 or such earlier date as the Notes are required or permitted to
be repaid as provided hereunder (the "Maturity Date"), and to pay interest to
the Holder on the aggregate unconverted and then outstanding principal amount of
this Note in accordance with the provisions hereof. This Note is subject to the
following additional provisions:

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

            "Alternate Consideration" shall have the meaning set forth in
      Section 5(e)(iii).

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

<PAGE>

            "Change of Control Transaction" means the occurrence after the date
      hereof, of any of (i) an acquisition after the date hereof by an
      individual or legal entity or "group" (as described in Rule 13d5(b)(1)
      promulgated under the Exchange Act) of effective control (whether through
      legal or beneficial ownership of capital stock of the Company, by contract
      or otherwise) of in excess of 33% of the voting securities of the Company,
      (ii) a replacement at one time or within a three year period of more than
      one-half of the members of the Company's board of directors which is not
      approved by a majority of those individuals who are members of the board
      of directors on the date hereof (or by those individuals who are serving
      as members of the board of directors on any date whose nomination to the
      board of directors was approved by a majority of the members of the board
      of directors who are members on the date hereof), (iii) David Duquette
      shall no longer be employed on a full time basis by the Company or (iv)
      the execution by the Company of an agreement to which the Company is a
      party or by which it is bound, providing for any of the events set forth
      above in (i), (ii) or (iii).

            "Common Stock" means the common stock, $0.10 par value, of the
      Company and stock of any other class into which such shares may hereafter
      have been reclassified or changed.

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

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

            "Conversion Shares" means the shares of Common Stock issuable upon
      conversion of Notes or as payment of interest in accordance with the terms
      hereof.

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

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

            "Equity Conditions" shall mean, during the period in question, (i)
      the Company shall have duly honored all conversions and redemptions
      scheduled to occur or occurring by virtue of one or more Notice of
      Conversions, if any, (ii) all liquidated damages and other amounts owing
      in respect of the Notes shall have been paid; (iii) there is an effective
      Registration Statement pursuant to which the Holder is permitted to
      utilize the prospectus thereunder to resell all of the shares issuable
      pursuant to the Transaction Documents (and the Company believes, in good
      faith, that such effectiveness will continue uninterrupted for the
      foreseeable future), (iv) the Common Stock is trading on the Trading
      Market and all of the shares issuable pursuant to the Transaction
      Documents are listed for trading on a Trading Market (and the Company
      believes, in good faith, that trading of the Common Stock on a Trading
      Market will continue uninterrupted for the foreseeable future), (v) there
      is a sufficient number of authorized but unissued and otherwise unreserved
      shares of Common Stock for the issuance of all of the shares issuable
      pursuant to the Transaction Documents, (vi) there is then existing no
      Event of Default or event which, with the passage of time or the giving of
      notice, would constitute an Event of Default, (vii) all of the shares
      issued or issuable pursuant to the transaction proposed would not violate
      the limitations set forth in Section 4(d), (viii) no public announcement
      of a pending or proposed Fundamental Transaction, Change of Control
      Transaction or acquisition transaction has occurred that has not been
      consummated and (ix) the closing price for the Common Stock is at least
      115% of the Conversion Price (as adjusted).

            "Event of Default" shall have the meaning set forth in Section 9.

            "Exchange Act" means the Securities Exchange Act of 1934, as
      amended.

                                    2 of 22
<PAGE>

            "Fundamental Transaction" shall have the meaning set forth in
      Section 5(e)(iii) hereof.

            "Interest Conversion Rate" means 85% of the volume-weighted average
      closing price for the 10 Trading Days immediately prior to the applicable
      Interest Payment Date.

            "Late Fees" shall have the meaning set forth in the second paragraph
      to this Note.

            "Mandatory Prepayment Amount" for any Notes shall equal the sum of
      (i) 120% of the principal amount of Notes to be prepaid, plus all accrued
      and unpaid interest thereon, and (ii) all other amounts, costs, expenses
      and liquidated damages due in respect of such Notes.

            "Monthly Conversion Price" shall have the meaning set forth in
      Section 6(a) hereof.

            "Monthly Redemption" shall mean the redemption of the Note pursuant
      to Section 6(a) hereof.

            "Monthly Redemption Amount" shall mean, as to a Monthly Redemption,
      1/30th of the original principal amount of the Notes.

            "Monthly Redemption Date" means the 1st of each month, commencing on
      the first day of September 2006, unless sooner as provided herein.

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

            "Person" means a corporation, an association, a partnership,
      organization, a business, an individual, a government or political
      subdivision thereof or a governmental agency.

            "Purchase Agreement" means the Securities Purchase Agreement, dated
      as of February 28, 2006, to which the Company and the original Holders are
      parties, as amended, modified or supplemented from time to time in
      accordance with its terms.

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

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

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

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

            "Target" shall mean Quilite International LLC.

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

                                    3 of 22
<PAGE>

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

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

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

      Section 2. Interest.

            a) Payment of Interest in Cash or Kind. The Company shall pay
      interest to the Holder on the aggregate unconverted and then outstanding
      principal amount of this Note at the Interest Rate, payable monthly in
      arrears beginning on the first day of the first month after the Original
      Issue Date and on each Conversion Date (as to that principal amount then
      being converted) and on the Maturity Date (except that, if any such date
      is not a Business Day, then such payment shall be due on the next
      succeeding Business Day) and on each Monthly Redemption Date (as to that
      principal amount then being redeemed) (each such date, an "Interest
      Payment Date"), in cash or shares of Common Stock at the Interest
      Conversion Rate, or a combination thereof; provided, however, payment in
      shares of Common Stock may only occur if during the 20 Trading Days
      immediately prior to the applicable Interest Payment Date all of the
      Equity Conditions have been met, the payment in shares of Common Stock
      would not exceed 25% of the volume for any of the previous 20 Trading Days
      and the Company shall have given the Holder notice in accordance with the
      notice requirements set forth below.

            b) Company's Election to Pay Interest in Kind. Subject to the terms
      and conditions herein, the decision whether to pay interest hereunder in
      shares of Common Stock or cash shall be at the discretion of the Company.
      Should the Company elect to pay interest in kind, it shall be paid in
      registered shares of Common Stock valued at the Interest Conversion Rate.
      Not less than 10 Trading Days prior to each Interest Payment Date, the
      Company shall provide the Holder with written notice of its election to
      pay interest hereunder either in cash or shares of Common Stock (the
      Company may indicate in such notice that the election contained in such
      notice shall continue for later periods until revised). Within 10 Trading
      Days prior to an Interest Payment Date, the Company's election (whether
      specific to an Interest Payment Date or continuous) shall be irrevocable
      as to such Interest Payment Date. Subject to the aforementioned
      conditions, failure to timely provide such written notice shall be deemed
      an election by the Company to pay the interest on such Interest Payment
      Date in cash.

                                    4 of 22
<PAGE>

            c) Interest Calculations. Interest shall be calculated on the basis
      of a 360-day year and shall accrue daily commencing on the Original Issue
      Date until payment in full of the principal sum, together with all accrued
      and unpaid interest and other amounts which may become due hereunder, has
      been made. Interest shall be compounded monthly. Payment of interest in
      shares of Common Stock shall otherwise occur pursuant to Section 4(e)(ii)
      and only for purposes of the payment of interest in shares, the Interest
      Payment Date shall be deemed the Conversion Date. Interest shall cease to
      accrue with respect to any principal amount converted, provided that the
      Company in fact delivers the Conversion Shares within the time period
      required by Section 4(e)(ii). Interest hereunder will be paid to the
      Person in whose name this Note is registered on the records of the Company
      regarding registration and transfers of Notes (the "Note Register").
      Except as otherwise provided herein, if at any time the Company pays
      interest partially in cash and partially in shares of Common Stock, then
      such payment shall be distributed ratably among the Holders based upon the
      principal amount of Notes held by each Holder.

            d) Late Fee. All overdue accrued and unpaid interest to be paid
      hereunder shall entail a late fee at the rate of 20% per annum (or such
      lower maximum amount of interest permitted to be charged under applicable
      law) ("Late Fee") which will accrue daily, from the date such interest is
      due hereunder through and including the date of payment. Notwithstanding
      anything to the contrary contained herein, if on any Interest Payment Date
      the Company has elected to pay interest in Common Stock and is not able to
      pay accrued interest in the form of Common Stock because it does not then
      satisfy the conditions for payment in the form of Common Stock set forth
      above, then, at the option of the Holder, the Company, in lieu of
      delivering either shares of Common Stock pursuant to this Section 2 or
      paying the regularly scheduled cash interest payment, shall deliver,
      within three Trading Days of each applicable Interest Payment Date, an
      amount in cash equal to the product of the number of shares of Common
      Stock otherwise deliverable to the Holder in connection with the payment
      of interest due on such Interest Payment Date and the highest VWAP during
      the period commencing on the Interest Payment Date and ending on the
      Trading Day prior to the date such payment is made.

            e) Optional Prepayment. The Company will have the right to prepay in
      cash all or a portion of the Notes at 120% of the principal amount thereof
      plus accrued interest to the date of repayment.

            f) Mandatory Repayment. In the event that (i) the Company shall sell
      all or a portion of its assets, (ii) the Company shall be subject to a
      Change of Control Transaction or (iii) Target's audited financial
      statement are materially worse than its unaudited financial statements the
      Company shall be required to repay the Notes at 120% of the principal
      amount thereof plus accrued interest to the date of repayment.

      Section 3. Registration of Transfers and Exchanges.

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

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

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

                                    5 of 22
<PAGE>

      Section 4. Conversion.

            a) Voluntary Conversion. At any time after the Original Issue Date
      until this Note is no longer outstanding, this Note shall be convertible
      into shares of Common Stock at the option of the Holder, in whole or in
      part at any time and from time to time (subject to the limitations on
      conversion set forth in Section 4(d) hereof). The Holder shall effect
      conversions by delivering to the Company the form of Notice of Conversion
      attached hereto as Annex A (a "Notice of Conversion"), specifying therein
      the principal amount of Notes to be converted and the date on which such
      conversion is to be effected (a "Conversion Date"). If no Conversion Date
      is specified in a Notice of Conversion, the Conversion Date shall be the
      date that such Notice of Conversion is provided hereunder. To effect
      conversions hereunder, the Holder shall not be required to physically
      surrender Notes to the Company unless the entire principal amount of this
      Note plus all accrued and unpaid interest thereon has been so converted.
      Conversions hereunder shall have the effect of lowering the outstanding
      principal amount of this Note in an amount equal to the applicable
      conversion. The Holder and the Company shall maintain records showing the
      principal amount converted and the date of such conversions. The Company
      shall deliver any objection to any Notice of Conversion within 3 Business
      Days of receipt of such notice. In the event of any dispute or
      discrepancy, the records of the Holder shall be controlling and
      determinative in the absence of manifest error. The Holder and any
      assignee, by acceptance of this Note, acknowledge and agree that, by
      reason of the provisions of this paragraph, following conversion of a
      portion of this Note, the unpaid and unconverted principal amount of this
      Note may be less than the amount stated on the face hereof. However, at
      the Company's request, the Holder shall surrender the Note to the Company
      within five (5) Trading Days following such request so that a new Note
      reflecting the correct principal amount may be issued to Holder.

            b) Conversion Price. Subject to the provisions of Section 5(b), the
      initial conversion price in effect on any Conversion Date shall be $0.63.

            c) Reserved.

            d) Conversion Limitations; Holder's Restriction on Conversion. The
      Company shall not effect any conversion of this Note, and the Holder shall
      not have the right to convert any portion of this Note, pursuant to
      Section 4(a) or otherwise, to the extent that after giving effect to such
      conversion, the Holder (together with the Holder's affiliates), as set
      forth on the applicable Notice of Conversion, would beneficially own in
      excess of 4.99% of the number of shares of the Common Stock outstanding
      immediately after giving effect to such conversion. For purposes of the
      foregoing sentence, the number of shares of Common Stock beneficially
      owned by the Holder and its affiliates shall include the number of shares
      of Common Stock issuable upon conversion of this Note with respect to
      which the determination of such sentence is being made, but shall exclude
      the number of shares of Common Stock which would be issuable upon (A)
      conversion of the remaining, nonconverted portion of this Note
      beneficially owned by the Holder or any of its affiliates and (B) exercise
      or conversion of the unexercised or nonconverted portion of any other
      securities of the Company (including, without limitation, any other Notes
      or the Warrants) subject to a limitation on conversion or exercise
      analogous to the limitation contained herein beneficially owned by the
      Holder or any of its affiliates. Except as set forth in the preceding
      sentence, for purposes of this Section 4(d), beneficial ownership shall be

                                    6 of 22
<PAGE>

      calculated in accordance with Section 13(d) of the Exchange Act. To the
      extent that the limitation contained in this section applies, the
      determination of whether this Note is convertible (in relation to other
      securities owned by the Holder) and of which a portion of this Note is
      convertible shall be in the sole discretion of such Holder. To ensure
      compliance with this restriction, the Holder will be deemed to represent
      to the Company each time it delivers a Notice of Conversion that such
      Notice of Conversion has not violated the restrictions set forth in this
      paragraph and the Company shall have no obligation to verify or confirm
      the accuracy of such determination. For purposes of this Section 4(d), in
      determining the number of outstanding shares of Common Stock, the Holder
      may rely on the number of outstanding shares of Common Stock as reflected
      in (x) the Company's most recent Form 10-QSB or Form 10-KSB (or such
      related form), as the case may be, (y) a more recent public announcement
      by the Company or (z) any other notice by the Company or the Company's
      Transfer Agent setting forth the number of shares of Common Stock
      outstanding. Upon the written or oral request of the Holder, the Company
      shall within two Trading Days confirm orally and in writing to the Holder
      the number of shares of Common Stock then outstanding. In any case, the
      number of outstanding shares of Common Stock shall be determined after
      giving effect to the conversion or exercise of securities of the Company,
      including this Note, by the Holder or its affiliates since the date as of
      which such number of outstanding shares of Common Stock was reported. The
      provisions of this Section 4(d) may be waived by the Holder upon, at the
      election of the Holder, not less than 61 days' prior notice to the
      Company, and the provisions of this Section 4(d) shall continue to apply
      until such 61st day (or such later date, as determined by the Holder, as
      may be specified in such notice of waiver).

            e) Mechanics of Conversion

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

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

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

                                    7 of 22
<PAGE>

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

                  v. Compensation for Buy-In on Failure to Timely Deliver
            Certificates Upon Conversion. In addition to any other rights
            available to the Holder, if the Company fails for any reason to
            deliver to the Holder such certificate or certificates pursuant to
            Section 4(d)(ii) by the third Trading Day after the Conversion Date,
            and if after such third Trading Day the Holder is required by its
            brokerage firm to purchase (in an open market transaction or
            otherwise) Common Stock to deliver in satisfaction of a sale by such
            Holder of the Conversion Shares which the Holder anticipated
            receiving upon such conversion (a "Buy-In"), then the Company shall
            (A) pay in cash to the Holder (in addition to any remedies available
            to or elected by the Holder) the amount by which (x) the Holder's
            total purchase price (including brokerage commissions, if any) for
            the Common Stock so purchased exceeds (y) the product of (1) the
            aggregate number of shares of Common Stock that such Holder
            anticipated receiving from the conversion at issue multiplied by (2)
            the actual sale price of the Common Stock at the time of the sale
            (including brokerage commissions, if any) giving rise to such
            purchase obligation and (B) at the option of the Holder, either
            reissue Notes in principal amount equal to the principal amount of
            the attempted conversion or deliver to the Holder the number of

                                    8 of 22
<PAGE>

            shares of Common Stock that would have been issued had the Company
            timely complied with its delivery requirements under Section
            4(e)(ii). For example, if the Holder purchases Common Stock having a
            total purchase price of $11,000 to cover a Buy-In with respect to an
            attempted conversion of Notes with respect to which the actual sale
            price of the Conversion Shares at the time of the sale (including
            brokerage commissions, if any) giving rise to such purchase
            obligation was a total of $10,000 under clause (A) of the
            immediately preceding sentence, the Company shall be required to pay
            the Holder $1,000. The Holder shall provide the Company written
            notice indicating the amounts payable to the Holder in respect of
            the Buy-In. Notwithstanding anything contained herein to the
            contrary, if a Holder requires the Company to make payment in
            respect of a Buy-In for the failure to timely deliver certificates
            hereunder and the Company timely pays in full such payment, the
            Company shall not be required to pay such Holder liquidated damages
            under Section 4(d)(iv) in respect of the certificates resulting in
            such Buy-In.

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

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

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

      Section 5. Certain Adjustments.

                                    9 of 22
<PAGE>

            a) Stock Dividends and Stock Splits. If the Company, at any time
      while the Notes are outstanding: (A) shall pay a stock dividend or
      otherwise make a distribution or distributions on shares of its Common
      Stock or any other equity or equity equivalent securities payable in
      shares of Common Stock (which, for avoidance of doubt, shall not include
      any shares of Common Stock issued by the Company pursuant to this Note,
      including as interest thereon), (B) subdivide outstanding shares of Common
      Stock into a larger number of shares, (C) combine (including by way of
      reverse stock split) outstanding shares of Common Stock into a smaller
      number of shares, or (D) issue by reclassification of shares of the Common
      Stock any shares of capital stock of the Company, then the Conversion
      Price shall be multiplied by a fraction of which the numerator shall be
      the number of shares of Common Stock (excluding treasury shares, if any)
      outstanding before such event and of which the denominator shall be the
      number of shares of Common Stock outstanding after such event. Any
      adjustment made pursuant to this Section shall become effective
      immediately after the record date for the determination of stockholders
      entitled to receive such dividend or distribution and shall become
      effective immediately after the effective date in the case of a
      subdivision, combination or reclassification.

            b) Subsequent Equity Sales. Notwithstanding the provisions of
      Section 4(b), if the Company or any Subsidiary thereof, as applicable, at
      any time while this Note is outstanding, shall offer, sell, grant any
      option to purchase or offer, sell or grant any right to reprice its
      securities, or otherwise dispose of or issue (or announce any offer, sale,
      grant or any option to purchase or other disposition) any Common Stock or
      Common Stock Equivalents entitling any Person to acquire shares of Common
      Stock, at an effective price per share less than the then Conversion Price
      (such lower price, the "Base Share Price" and such issuances collectively,
      a "Dilutive Issuance"), as adjusted hereunder (if the holder of the Common
      Stock or Common Stock Equivalents so issued shall at any time, whether by
      operation of purchase price adjustments, reset provisions, floating
      conversion, exercise or exchange prices or otherwise, or due to warrants,
      options or rights per share which is issued in connection with such
      issuance, be entitled to receive shares of Common Stock at an effective
      price per share which is less than the Conversion Price, such issuance
      shall be deemed to have occurred for less than the Conversion Price),
      then, the Conversion Price shall be reduced to equal the Base Share Price
      and the number of Conversion Shares issuable hereunder shall be increased.
      Such adjustment shall be made whenever such Common Stock or Common Stock
      Equivalents are issued. The Company shall notify the Holder in writing, no
      later than the Trading Day following the issuance of any Common Stock or
      Common Stock Equivalents subject to this section, indicating therein the
      applicable issuance price, or of applicable reset price, exchange price,
      conversion price and other pricing terms (such notice the "Dilutive
      Issuance Notice"). For purposes of clarification, whether or not the
      Company provides a Dilutive Issuance Notice pursuant to this Section 5(b),
      upon the occurrence of any Dilutive Issuance, after the date of such
      Dilutive Issuance the Holder is entitled to receive a number of Conversion
      Shares based upon the Base Share Price regardless of whether the Holder
      accurately refers to the Base Share Price in the Notice of Conversion.

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

                                    10 of 22
<PAGE>

            d) Calculations. All calculations under this Section 5 shall be made
      to the nearest cent or the nearest 1/100th of a share, as the case may be.
      The number of shares of Common Stock outstanding at any given time shall
      not includes shares of Common Stock owned or held by or for the account of
      the Company, and the description of any such shares of Common Stock shall
      be considered on issue or sale of Common Stock. For purposes of this
      Section 5, the number of shares of Common Stock deemed to be issued and
      outstanding as of a given date shall be the sum of the number of shares of
      Common Stock (excluding treasury shares, if any) issued and outstanding.

            e) Notice to Holders.

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

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

                                    11 of 22
<PAGE>

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

                  iv. Exempt Issuance. Notwithstanding the foregoing, no
            adjustment will be made under this Section 5 in respect of an Exempt
            Issuance.

      Section 6. Monthly Redemption

            a) Monthly Redemption. Beginning on September 1, 2006, on each
      Monthly Redemption Date the Company shall redeem the Holder's Monthly
      Redemption Amount plus accrued but unpaid interest, the sum of all
      liquidated damages and any other amounts then owing to such Holder in
      respect of the Note. The Monthly Redemption Amount due on each Monthly
      Redemption Date shall be paid in cash equal to 105% of such amount;
      provided, however, as to any Monthly Redemption and upon 10 Trading Days'
      prior written irrevocable notice, in lieu of a cash redemption payment,
      the Company may elect to pay 100% of a Monthly Redemption in Conversion
      Shares based on a conversion price equal to 85% of the average of the 10
      consecutive VWAPs immediately prior to the applicable Monthly Redemption

                                    12 of 22
<PAGE>

      Date (subject to adjustment for any stock dividend, stock split, stock
      combination or other similar event affecting the Common Stock during such
      20 Trading Day period) (the "Monthly Conversion Price"); provided,
      however, that the Company may not pay the Monthly Redemption Amount in
      Conversion Shares unless, on the Monthly Redemption Date and during the 20
      Trading Day period immediately prior to the Monthly Redemption Date, the
      Equity Conditions have been satisfied and the payment in shares of Common
      Stock would not exceed 25% of the volume for any of the previous 20
      Trading Days. The Holder may convert, pursuant to Section 4(a), any
      principal amount of the Note subject to a Monthly Redemption at any time
      prior to the date that the Monthly Redemption Amount and all amounts owing
      thereon are due and paid in full. Unless otherwise indicated by the Holder
      in the applicable Notice of Conversion, any principal amount of Note
      converted during any 20 day period until the date the Monthly Redemption
      Amount is paid shall be first applied to the principal amount subject to
      the Monthly Redemption and such Holder's cash payment of the Monthly
      Redemption Amount on such Monthly Redemption Date shall be reduced
      accordingly, and any remaining principal amount so converted shall be
      applied against the next principal scheduled to be repaid. The Company
      covenants and agrees that it will honor all Notice of Conversions tendered
      up until such amounts are paid in full. The Company's determination to pay
      a Monthly Redemption in cash or shares of Common Stock shall be applied
      ratably to all Holders based on their initial purchases of Notes pursuant
      to the Purchase Agreement.

            b) Redemption Procedure. The payment of cash and/or issuance of
      Common Stock, as the case may be, pursuant to a Monthly Redemption shall
      be made on the Monthly Redemption Date. If any portion of the cash payment
      for a Monthly Redemption shall not be paid by the Company by the
      respective due date, interest shall accrue thereon at the rate of 20% per
      annum (or the maximum rate permitted by applicable law, whichever is less)
      until the payment of the Monthly Redemption Amount, plus all amounts owing
      thereon is paid in full. Alternatively, if any portion of the Monthly
      Redemption Amount remains unpaid after such date, the Holders subject to
      such redemption may elect, by written notice to the Company given at any
      time thereafter, to invalidate ab initio such redemption, notwithstanding
      anything herein contained to
         the contrary.

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

            a) enter into, create, incur, assume or suffer to exist any
      indebtedness or liens of any kind, on or with respect to any of its
      property or assets now owned or hereafter acquired or any interest therein
      or any income or profits therefrom that is senior to or pari passu with,
      in any respect or subordinated to (unless on terms satisfactory in all
      respects to the Purchasers), the Company's obligations under the Notes;

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

            c) repay, repurchase or offer to repay, repurchase or otherwise
      acquire or make any dividend or distribution in respect of any of its
      Common Stock, Preferred Stock, or other equity securities other than as to
      the Conversion Shares to the extent permitted or required under the
      Transaction Documents;

            d) engage in any transactions with any officer, director, employee
      or any affiliate of the Company, including any contract, agreement or
      other arrangement providing for the furnishing of services to or by,
      providing for rental of real or personal property to or from, or otherwise
      requiring payments to or from any officer, director or such employee or,
      to the knowledge of the Company, any entity in which any officer,
      director, or any such employee has a substantial interest or is an
      officer, director, trustee or partner, in each case in excess of $10,000
      other than (i) for payment of salary or consulting fees for services
      rendered, (ii) reimbursement for expenses incurred on behalf of the
      Company and (iii) for other employee benefits, including stock option
      agreements under any stock option plan of the Company;

                                    13 of 22
<PAGE>

            e) create or acquire any Subsidiary after the date hereof unless (i)
      such Subsidiary is a whollyowned Subsidiary of the Company and (ii) such
      Subsidiary becomes party to the Security Agreement and the Subsidiary
      Guaranty (either by executing a counterpart thereof or an assumption or
      joinder agreement in respect thereof) and satisfied each condition of this
      Agreement and the Transaction Documents as if such Subsidiary were a
      Subsidiary on the Closing Date;

            f) sell, transfer or otherwise dispose of any of its assets on terms
      where it is or may be leased to or reacquired or acquired by the Company
      or any of its Subsidiaries;

            g) dispose, in a single transaction, or in a series of transactions
      all or any part of its assets unless such disposal is (i) in the ordinary
      course of business, (ii) for fair market value, (iii) for cash and (iv)
      approved by the board of directors of the Company;

            h) authorize or approve any reverse or forward stock split of the
      Common Stock; or

            i) enter into any agreement with respect to any of the foregoing.

      Section 8. Affirmative Covenants. So long as any portion of this Note is
outstanding, the Company will deliver to the Purchaser the following:

            a) as soon as practicable, but in any event within 90 days after the
      end of each fiscal year of the, an income statement for such fiscal year,
      a balance sheet of the Company and statement of stockholder's equity as of
      the end of such year, and a statement of cash flows for such year, such
      yearend financial reports to be in reasonable detail, prepared in
      accordance with generally accepted accounting principles ("GAAP"), and
      audited and certified by independent public accountants and an unqualified
      (except for contingent liabilities) certified audit report from the
      Company's auditors;

            b) as soon as practicable, but in any event within 45 days after the
      end of each of the first three quarters of each fiscal year of the
      Company, an unaudited income statement, statement of cash flows for such
      fiscal quarter and an unaudited balance sheet as of the end of such fiscal
      quarter;

            c) within 60 days after the closing of the acquisition of the
      Target, audited financial statements of the Target;

            d) within 60 days of the Closing Date, evidence of a key man life
      insurance policy on the life of David Duquette in an amount not less than
      the aggregate principal amount of the Notes which policy shall remain in
      full force and effect until at least the Maturity Date;

                                    14 of 22
<PAGE>

            e) within 60 days of the Closing Date, the Company shall have
      renewed or extended the lease on its Headquarters to a date no earlier
      than March 31, 2009

      Section 9. Events of Default.

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

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

                  ii. the Company or any of its Subsidiaries shall fail to
            observe or perform any other covenant or agreement contained in this
            Note or any of the other Transaction Documents which failure is not
            cured, if possible to cure, within the earlier to occur of (A) 5
            Trading Days after notice of such default sent by the Holder or by
            any other Holder and (B)10 Trading Days after the Company shall
            become or should have become aware of such failure;

                  iii. a default or event of default (subject to any grace or
            cure period provided for in the applicable agreement, document or
            instrument) shall occur under (A) any of the Transaction Documents
            other than the Notes, or (B) any other material agreement, lease,
            document or instrument to which the Company or any Subsidiary is
            bound, which default, solely in the case of a default under clause
            (B) above, is not cured, within 10 Trading Days;

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

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

                                    15 of 22
<PAGE>

                  vi. the Company or any Subsidiary shall default in any of its
            obligations under any mortgage, credit agreement or other facility,
            indenture agreement, factoring agreement or other instrument under
            which there may be issued, or by which there may be secured or
            evidenced any indebtedness for borrowed money or money due under any
            long term leasing or factoring arrangement of the Company in an
            amount exceeding $50,000, whether such indebtedness now exists or
            shall hereafter be created and such default shall result in such
            indebtedness becoming or being declared due and payable prior to the
            date on which it would otherwise become due and payable;

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

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

                  ix. if, during the Effectiveness Period (as defined in the
            Registration Rights Agreement), the effectiveness of the
            Registration Statement lapses for any reason or the Holder shall not
            be permitted to resell Registrable Securities (as defined in the
            Registration Rights Agreement) under the Registration Statement, in
            either case, for more than 10 consecutive Trading Days or 15
            nonconsecutive Trading Days during any 12 month period; provided,
            however, that in the event that the Company is negotiating a merger,
            consolidation, acquisition or sale of all or substantially all of
            its assets or a similar transaction and in the written opinion of
            counsel to the Company, the Registration Statement, would be
            required to be amended to include information concerning such
            transactions or the parties thereto that is not available or may not
            be publicly disclosed at the time, the Company shall be permitted an
            additional 10 consecutive Trading during any 12 month period
            relating to such an event;

                  x. an Event (as defined in the Registration Rights Agreement)
            shall not have been cured to the satisfaction of the Holder prior to
            the expiration of thirty days from the Event Date (as defined in the
            Registration Rights Agreement) relating thereto (other than an Event
            resulting from a failure of an Registration Statement to be declared
            effective by the Commission on or prior to the Effectiveness Date
            (as defined in the Registration Rights Agreement), which shall be
            covered by Section 9(a)(ix);

                                    16 of 22
<PAGE>

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

                  xii. the Company shall fail for any reason to pay in full the
            amount of cash due pursuant to a BuyIn within 5 Trading Days after
            notice therefor is delivered hereunder or shall fail to pay all
            amounts owed on account of an Event of Default within five days of
            the date due. i.

            b) Remedies Upon Event of Default. If any Event of Default occurs,
      the full principal amount of this Note, together with interest and other
      amounts owing in respect thereof, to the date of acceleration shall
      become, at the Holder's election, immediately due and payable in cash. The
      aggregate amount payable upon an Event of Default shall be equal to the
      Mandatory Prepayment Amount. Commencing 5 days after the occurrence of any
      Event of Default that results in the eventual acceleration of this Note,
      the interest rate on this Note shall accrue at the rate of 20% per annum,
      or such lower maximum amount of interest permitted to be charged under
      applicable law. All Notes for which the full Mandatory Prepayment Amount
      hereunder shall have been paid in accordance herewith shall promptly be
      surrendered to or as directed by the Company. The Holder need not provide
      and the Company hereby waives any presentment, demand, protest or other
      notice of any kind, and the Holder may immediately and without expiration
      of any grace period enforce any and all of its rights and remedies
      hereunder and all other remedies available to it under applicable law.
      Such declaration may be rescinded and annulled by Holder at any time prior
      to payment hereunder and the Holder shall have all rights as a Note holder
      until such time, if any, as the full payment under this Section shall have
      been received by it. No such rescission or annulment shall affect any
      subsequent Event of Default or impair any right consequent thereon.

      Section 10. Miscellaneous.

            a) Notices. Any and all notices or other communications or
      deliveries to be provided by the Holders hereunder, including, without
      limitation, any Notice of Conversion, shall be in writing and delivered
      personally, by facsimile, sent by a nationally recognized overnight
      courier service, addressed to the Company, at the address set forth above,
      facsimile number, 5629068459, ATTN: DAVID DUQUETTE, or such other address
      or facsimile number as the Company may specify for such purposes by notice
      to the Holders delivered in accordance with this Section. Any and all
      notices or other communications or deliveries to be provided by the
      Company hereunder shall be in writing and delivered personally, by
      facsimile, sent by a nationally recognized overnight courier service
      addressed to each Holder at the facsimile telephone number or address of
      such Holder appearing on the books of the Company, or if no such facsimile
      telephone number or address appears, at the principal place of business of
      the Holder. Any notice or other communication or deliveries hereunder
      shall be deemed given and effective on the earliest of (i) the date of
      transmission, if such notice or communication is delivered via facsimile
      at the facsimile telephone number specified in this Section prior to 5:30
      p.m. (New York City time), (ii) the date after the date of transmission,
      if such notice or communication is delivered via facsimile at the
      facsimile telephone number specified in this Section later than 5:30 p.m.
      (New York City time) on any date and earlier than 11:59 p.m. (New York
      City time) on such date, (iii) the second Business Day following the date
      of mailing, if sent by nationally recognized overnight courier service, or
      (iv) upon actual receipt by the party to whom such notice is required to
      be given.

                                    17 of 22
<PAGE>

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

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

            d) Security Interest. This Note is a direct debt obligation of the
      Company and, pursuant to the Security Agreement is secured by a first
      priority perfected security interest in all of the assets of the Company
      and the Subsidiaries for the benefit of the Holders.

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

                                    18 of 22
<PAGE>

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

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

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

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

            j) Seniority. This Note is senior in right of payment to any and all
      other indebtedness of the Company.

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

                                    19 of 22
<PAGE>

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

                           NEW CENTURY COMPANIES, INC.

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

                                    20 of 22
<PAGE>

                                     ANNEX A

                              NOTICE OF CONVERSION

      The undersigned hereby elects to convert principal under the Senior
Subordinated Secured Convertible Note of New Century Companies, Inc., a Delaware
corporation (the "Company"), due on February 28, 2009, into shares of common
stock, par value $0.10 (the "Common Stock"), of the Company according to the
conditions hereof, as of the date written below. If shares are to be issued in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the holder for any conversion, except for
such transfer taxes, if any.

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

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

Conversion calculations:
                              Date to Effect Conversion:

                              Principal Amount of Notes to be Converted:

                              Payment of Interest in Common Stock __ yes  __ no
                                       If yes,  $_____ of Interest  Accrued
                                       Account of Conversion at Issue.

                              Number of shares of Common Stock to be issued:

                              Signature:

                              Name:

                              Address:

                                    21 of 22
<PAGE>

                                   SCHEDULE 1

                               CONVERSION SCHEDULE

The Senior Secured Convertible Notes due on February 28, 2009, in the aggregate
principal amount of $3,500,000 issued by New Century Companies, Inc., a Delaware
corporation. This Conversion Schedule reflects conversions made under Section 4
of the above referenced Note.

                                     Dated:

<TABLE>
<CAPTION>
=============================== ========================= ======================= ==============================

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

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

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

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</TABLE>

                                    22 of 22

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}]]