Document:

EXHIBIT 4.1

                        SECURITIES PURCHASE AGREEMENT

                                 dated as of

                                April 11, 2001

                                by and between

                     Dial-Thru International Corporation
                                as the Issuer,

                                     and

                      Global Capital Funding Group, L.P.

<PAGE>

                 Securities Purchase Agreement
                         TABLE OF CONTENTS

 ARTICLE I.  DEFINITIONS.........................................1
      Section 1.1  Definitions...................................1
      Section 1.2  Accounting Terms and Determinations...........9

 ARTICLE II.  PURCHASE AND SALE OF SECURITIES...................10
      Section 2.1  Purchase and Sale of Convertible Debentures..10
      Section 2.2  Purchase Price...............................10
      Section 2.3  Closing and Mechanics of Payment.............10

 ARTICLE III.  PAYMENT TERMS OF CONVERTIBLE DEBENTURES..........10
      Section 3.1  Payment of Principal and Interest; Payment
                   Mechanics....................................10
      Section 3.2  Payment of Interest..........................11
      Section 3.3  Voluntary Prepayment.........................11
      Section 3.4  Mandatory Prepayments........................11
      Section 3.5  Prepayment Procedures........................12
      Section 3.6  Payment of Additional Amounts................13

 ARTICLE IV.  REPRESENTATIONS AND WARRANTIES....................14
      Section 4.1  Organization and Qualification...............14
      Section 4.2  Authorization and Execution..................15
      Section 4.3  Capitalization ..............................15
      Section 4.4  Governmental Authorization...................16
      Section 4.5  Issuance of Shares...........................16
      Section 4.6  No Conflicts.................................16
      Section 4.7  Financial Information........................17
      Section 4.8  Litigation...................................17
      Section 4.9  Compliance with ERISA and other Benefit
                    Plans.......................................17
      Section 4.10  Environmental Matters.......................18
      Section 4.11  Taxes.......................................18
      Section 4.12  Investments, Joint Ventures.................18
      Section 4.13  Not an Investment Company...................18
      Section 4.14  Full Disclosure.............................18
      Section 4.15  No Solicitation; No Integration with Other
                    Offerings...................................19
      Section 4.16  Permits.....................................19
      Section 4.17  Leases......................................19
      Section 4.18  Absence of Any Undisclosed Liabilities or
                    Capital Calls...............................19
      Section 4.19  Public Utility Holding Company..............19
      Section 4.20  Intellectual Property Rights................20
      Section 4.21  Insurance...................................20
      Section 4.22  Title to Properties.........................20
      Section 4.23  Internal Accounting Controls................20
      Section 4.24  Foreign Practices...........................20
      Section 4.25  Title to Certain Assets.....................20

 ARTICLE V.  REPRESENTATIONS AND WARRANTIES OF PURCHASER........21
      Section 5.1  Purchaser....................................21

 ARTICLE VI.  CONDITIONS PRECEDENT TO PURCHASE OF SECURITIES....22
      Section 6.1  Conditions Precedent to Purchaser's
                   Obligations to Purchase......................22
      Section 6.2  Conditions to the Company's Obligations......24

 ARTICLE VII.  AFFIRMATIVE COVENANTS............................24
      Section 7.1  Information..................................25
      Section 7.2  Payment of Obligations.......................25
      Section 7.3  Maintenance of Property; Insurance...........26
      Section 7.4  Maintenance of Existence.....................26
      Section 7.5  Compliance with Laws.........................26
      Section 7.6  Inspection of Property, Books and Records....26
      Section 7.7  Investment Company Act.......................26
      Section 7.8  Use of Proceeds..............................27
      Section 7.9  Compliance with Terms and Conditions of
                   Material Contracts...........................27
      Section 7.10  Reserved Shares and Listings................27
      Section 7.11  Transfer Agent Instructions.................28
      Section 7.12  Maintenance of Reporting Status;
                    Supplemental Information....................28
      Section 7.13  Form D; Blue Sky Laws.......................28

 ARTICLE VIII.  NEGATIVE COVENANTS..............................29
      Section 8.1  Limitations on Debt or Other Liabilities.....29
      Section 8.2  Transactions with Affiliates.................29
      Section 8.3  Merger or Consolidation......................29
      Section 8.4  Limitation on Asset Sales....................29
      Section 8.5  Restrictions on Certain Amendments...........30
      Section 8.6  Restrictions on Issuances of Securities......30
      Section 8.7  Limitation on Stock Repurchases..............31

 ARTICLE IX.  RESTRICTIVE LEGENDS...............................31
      Section 9.1  Restrictions on Transfer.....................31
      Section 9.2  Legends......................................32
      Section 9.3  Notice of Proposed Transfers.................32

 ARTICLE X.  ADDITIONAL AGREEMENTS AMONG THE PARTIES............32
      Section 10.1  Liquidated Damages..........................32
      Section 10.2  Conversion Notice...........................33
      Section 10.3  Conversion Limit............................33
      Section 10.4  Registration Rights.........................34

 ARTICLE XI.  ADJUSTMENT OF FIXED PRICE.........................35
      Section 11.1  Reorganization..............................35
      Section 11.2  Share Reorganization........................36
      Section 11.3  Rights Offering.............................36
      Section 11.4  Special Distribution........................37
      Section 11.5  Capital Reorganization......................38
      Section 11.6  Purchase Price Adjustments..................39
      Section 11.7  Adjustment Rules............................39
      Section 11.8  Certificate as to Adjustment................39
      Section 11.9  Notice to Holders...........................40

 ARTICLE XII.  EVENTS OF DEFAULT................................40
      Section 12.1  Events of Default...........................40
      Section 12.2  Powers and Remedies Cumulative..............42

 ARTICLE XIII.  MISCELLANEOUS...................................43
      Section 13.1  Notices.....................................43
      Section 13.2  No Waivers; Amendments......................43
      Section 13.3  Indemnification.............................44
      Section 13.4  Expenses:  Documentary Taxes................46
      Section 13.5  Payment.....................................46
      Section 13.6  Successors and Assigns......................46
      Section 13.7  Brokers.....................................46
      Section 13.8  Delaware Law; Submission to Jurisdiction;
                    Waiver of Jury Trial; Appointment of Agent..46
      Section 13.9  Entire Agreement............................47
      Section 13.10 Survival; Severability......................47
      Section 13.11 Title and Subtitles.........................47
      Section 13.12 Reporting Entity for the Common Stock.......47
      Section 13.13 Publicity...................................47

<PAGE>

                         LIST OF SCHEDULES

 Schedule 2.2        Allocation of Purchase Price
 Schedule 4.3        Capitalization
 Schedule 4.7        Financial Information
 Schedule 4.8        Litigation
 Schedule 4.12       Investments, Joint Ventures
 Schedule 4.15       No Solicitation; No Integration with Other Offerings
 Schedule 7.8        Use of Proceeds
 Schedule 8.2        Transactions with Affiliates

                         LIST OF EXHIBITS

 Exhibit A Form of Convertible Debentures
 Exhibit B Form of Registration Rights Agreement
 Exhibit C Form of Solvency Certificate
 Exhibit D Form of Officer's Certificate
 Exhibit E Form of Common Stock Purchase Warrant
 Exhibit F Security Agreement

<PAGE>

                       SECURITIES PURCHASE AGREEMENT

      AGREEMENT, dated as of April 11, 2001, between Dial-Thru  International
 Corporation  (the  "Company")  and   Global  Capital  Funding  Group,   L.P.
 ("Purchaser").

                              R E C I T A L S:

      WHEREAS, the Company desires to sell and issue to Purchaser, and
 Purchaser desires to purchase from the Company $1,000,000 principal amount
 of the Company's 6% Convertible Debentures due April 6, 2003 (the
 "Convertible Debentures") in accordance with the terms and conditions as set
 forth in the form of Convertible Debenture attached hereto as Exhibit A;

      WHEREAS, the Convertible Debentures will be convertible into shares of
 the Company's common stock, $.001 par value per share (the "Common Stock")
 and secured by certain assets of the Company as set forth in the Security
 Agreement attached hereto as Exhibit F ("Security Agreement");

      WHEREAS, in order to induce the Purchaser to enter into the
 transactions described in this Agreement, the Company desires to issue to
 the Purchaser up to an aggregate of 100,000 warrants to purchase shares of
 Common Stock upon the Closing (as defined herein) on the terms and
 conditions described in the form of the common stock purchase warrant
 attached hereto as Exhibit E (the "Warrants"); and

      WHEREAS, Purchaser will have certain registration rights with respect
 to such shares of Common Stock issuable as interest under, and upon
 conversion of, the Convertible Debentures (the "Debenture Shares") and upon
 exercise of the Warrants (the "Warrant Shares," the Debenture Shares and the
 Warrant Shares being collectively referred to herein as the "Conversion
 Shares")  as set forth in the Registration Rights Agreement in the form
 attached hereto as Exhibit B;

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

 ARTICLE 1.                  DEFINITIONS

 ARTICLE 1.1      Definitions.  The following terms, as used herein, have the
 following meanings:
      "Additional Shares of Common Stock" has the meaning set forth in
 Section 11.6.

      "Affiliate" means, with respect to any Person (the "Subject Person"),
 (i) any other Person (a "Controlling Person") that directly, or indirectly
 through one or more intermediaries, Controls the Subject Person or (ii) any
 other Person (other than the Subject Person or a Consolidated Subsidiary of
 the Subject Person) which is Controlled by or is under common Control with a
 Controlling Person.

      "Agreement" means this Securities Purchase Agreement, as amended,
 supplemented or otherwise modified from time to time in accordance with its
 terms.

      "Asset Sale" has the meaning set forth in Section 8.4.

      "Balance Sheet Date" has the meaning set forth in Section 4.7.

      "Benefit Arrangement" means at any time an employee benefit plan within
 the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer
 Plan and which is maintained or otherwise contributed to by the Company.

      "Benefit Plans" has the meaning set forth in Section 4.9(b).

      "Business Day" means any day except a Saturday, Sunday or other day on
 which commercial banks in the City of New York are authorized or required by
 law to close.

      "Capital Reorganization" has the meaning set forth in Section 11.5.

      "Change in Control" means (i) after the date of this Agreement, any
 person or group of persons (within the meaning of Sections 13 and 14 of the
 Exchange Act and the rules and regulations of the Commission relating to
 such sections) other than Purchaser shall have acquired beneficial ownership
 (within the meaning of Rules 13d-3 and 13d-5 promulgated by the Commission
 pursuant to the Exchange Act) of 33a% or more of the outstanding shares of
 Common Stock of the Company without the prior written consent of Purchaser;
 (ii) any sale or other disposition (other than by reason of death or
 disability) to any Person of more than 75,000 shares of Common Stock of the
 Company by any executive officers and/or employee directors of the Company
 without the prior written consent of Purchaser, except any disposition made
 by Roger Bryant in accordance with Rule 144 promulgated under the Securities
 Act; (iii) individuals constituting the Board of Directors of the Company on
 the date hereof (together with any new Directors whose election by such
 Board of Directors or whose nomination for election by the stockholders of
 the Company was approved by a vote of at least 50.1% of the Directors still
 in office who are either Directors as of the date hereof or whose election
 or nomination for election was previously so approved), cease for any reason
 to constitute at least two-thirds of the Board of Directors of the Company
 then in office, scheduled to be held in May, 2001, except changes in the
 Board of Directors made at the Company's Annual Meeting of Shareholders for
 2001.

      "Closing Bid Price" shall mean for any security as of any date, the
 lowest closing bid price as reported by Bloomberg, L.P. ("Bloomberg") on the
 principal securities exchange or trading market where such security is
 listed or traded or, if the foregoing does not apply, the lowest closing bid
 price of such security in the over-the-counter market on the electronic
 bulletin board for such security as reported by Bloomberg, or, if no lowest
 trading price is reported for such security by Bloomberg, then the average
 of the bid prices of any market makers for such securities as reported in
 the "Pink Sheets" by the National Quotation Bureau, Inc.  If the lowest
 closing bid price cannot be calculated for such security on such date on any
 of the foregoing bases, the lowest closing bid price of such security on
 such date shall be the fair market value as mutually determined by Purchaser
 and the Company for which the calculation of the closing bid price requires,
 and in the absence of such mutual determination, as determined by the Board
 of Directors of the Company in good faith.

      "Closing Date" means the date on which all of the conditions set forth
 in Sections 6.1 and 6.2 shall have been satisfied and Convertible Debentures
 in the aggregate principal amount of $1,000,000 are issued by the Company to
 Purchaser.

      "Code" means the Internal Revenue Code of 1986, as amended.

      "Commission" means the Securities and Exchange Commission or any entity
 succeeding to all of its material functions.

      "Common Stock" means common stock, $.001 par value per share, of the
 Company.

      "Company" means Dial-Thru International Corporation, a Delaware
 corporation, and its successors.

      "Company Corporate Documents" means the certificate of incorporation
 and bylaws of the Company.

      "Consolidated Net Worth" means at any date the total shareholder's
 equity which would appear on a consolidated balance sheet of the Company
 prepared as of such date.

      "Consolidated Subsidiary" means at any date with respect to any Person
 or Subsidiary or other entity, the accounts of which would be consolidated
 with those of such Person in its consolidated financial statements if such
 statements were prepared as of such date.

      "Control" (including, with correlative meanings, the terms
 "Controlling," "Controlled by" and under "common Control with"), as used
 with respect to any Person, means the possession, directly or indirectly, of
 the power to direct or cause the direction of the management and policies of
 that Person, whether through the ownership of voting securities, by contract
 or otherwise.

      "Conversion Date" shall mean the date of delivery (including delivery
 via telecopy) of a Notice of Conversion for all or a portion of a
 Convertible Debenture by the holder thereof to the Company as specified in
 each Convertible Debenture.

      "Conversion Price" has the meaning set forth in the Convertible
 Debentures.

      "Conversion Shares" has the meaning set forth in the Recitals.

      "Convertible Debentures" means the Company's 6% Convertible Debentures
 substantially in the form set forth as Exhibit A hereto.

      "Deadline" has the meaning set forth in Section 10.1.

      "Debt" of any Person means at any date, without duplication, (i) all
 obligations of such Person for borrowed money, (ii) all obligations of such
 Person evidenced by bonds, debentures, notes, or other similar instruments
 issued by such Person, (iii) all obligations of such Person as lessee which
 (y) are capitalized in accordance with GAAP or (z) arise pursuant to sale-
 leaseback transactions, (iv) all reimbursement obligations of such Person in
 respect of letters of credit or other similar instruments, (v) all Debt of
 others secured by a Lien on any asset of such Person, whether or not such
 Debt is otherwise an obligation of such Person and (vi) all Debt of others
 Guaranteed by such Person.

      "Default" means any event or condition which constitutes an Event of
 Default or which with the giving of notice or lapse of time or both would,
 unless cured or waived, become an Event of Default.

      "Derivative Securities" has the meaning set forth in Section 8.6.

      "Discounted Equity Offerings" has the meaning set forth in Section 8.6.

      "Directors" means the individuals then serving on the Board of
 Directors or similar such management council of the Company.

      "Environmental Laws" means any and all federal, state, local and
 foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
 decrees, permits, concessions, grants, franchises, licenses, agreements or
 other governmental restrictions relating to the environment or to emissions,
 discharges or releases of pollutants, contaminants, petroleum or petroleum
 products, chemicals or industrial, toxic or hazardous substances or wastes
 into the environment, including, without limitation, ambient air, surface
 water, ground water, or land, or otherwise relating to the manufacture,
 processing, distribution, use, treatment, storage, disposal, transport or
 handling of pollutants, contaminants, petroleum or petroleum products,
 chemicals or industrial, toxic or hazardous substances or wastes or the
 cleanup or other remediation thereof.

      "ERISA" means the Employee Retirement Income Security Act of 1974, as
 amended, or any successor statute.

      "ERISA Group" means the Company and each Subsidiary and all members of
 a controlled group of corporation and all trades or businesses (whether or
 not incorporated) under common control which, together with the Company or
 any Subsidiary, are treated as a single employer under the Code.

      "Event of Default" has the meaning set forth in Article XII hereof.

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

      "Financing" means a public or private financing consummated (meaning
 closing and funding) through the issuance of debt or equity securities (or
 securities convertible into or exchangeable for debt or equity securities)
 of the Company, other than Permitted Financings.

      "Fixed Price(s)" has the meaning set forth in Section 11.1.

      "GAAP" has the meaning set forth in Section 1.2.

      "Guarantee" by any Person means any obligation, contingent or
 otherwise, of such Person directly or indirectly guaranteeing (whether by
 virtue of partnership arrangements, by agreement to keep well, to purchase
 assets, goods, securities or services, to take-or-pay, or to maintain a
 minimum net worth, financial ratio or similar requirements, or otherwise)
 any Debt of any other Person and, without limiting the generality of the
 foregoing, any obligation, direct or indirect, contingent or otherwise, of
 such Person (i) to purchase or pay (or advance or supply funds for the
 purchase or payment of) such Debt or (ii) entered into for the purpose of
 assuring in any other manner the holder of such Debt of the payment thereof
 or to protect such holder against loss in respect thereof (in whole or in
 part); provided that the term Guarantee shall not include endorsements for
 collection or deposit in the ordinary course of business.  The term
 Guarantee used as a verb has a corresponding meaning.

      "Hazardous Materials" means any hazardous materials, hazardous wastes,
 hazardous constituents, hazardous or toxic substances or petroleum products
 (including crude oil or any derivative or fraction thereof), defined or
 regulated as such in or under any Environmental Laws.

      "Intellectual Property" has the meaning set forth in Section 4.20.

      "Investment" means any investment in any Person, whether by means of
 share purchase, partnership interest, capital contribution, loan, time
 deposit or otherwise.

      "Lien" means any lien, mechanic's lien, materialmen's lien, lease,
 easement, charge, encumbrance, mortgage, conditional sale agreement, title
 retention agreement, agreement to sell or convey, option, claim, title
 imperfection, encroachment or other survey defect, pledge, restriction,
 security interest or other adverse claim, whether arising by contract or
 under law or otherwise (including, without limitation, any financing lease
 having substantially the same economic effect as any of the foregoing, and
 the filing of any financing statement under the Uniform Commercial Code or
 comparable law of any jurisdiction in respect of any of the foregoing).

      "Listing Applications" has the meaning set forth in Section 4.4.

      "Majority Holders" means (i) as of the Closing Date, Purchaser and (ii)
 at any time thereafter, the holders of more than 50% in aggregate principal
 amount of the 6% Convertible Debentures dated April 11, 2001 outstanding at
 such time.

      "Market Price" shall mean the Closing Bid Price of the Common Stock on
 the date immediately preceding the date on which a determination of Market
 Price is required to be made in accordance with any section of this
 Agreement or any other Transaction Agreement.

      "Material Plan" means at any time a Plan or Plans having aggregate
 Unfunded Liabilities in excess of $500,000.

      "Maturity Date" shall mean the date of maturity of the Convertible
 Debentures.

      "Maximum Number of Shares" shall mean that percentage that the Company
 may issue without shareholder approval under the applicable rules of the
 National Market or the applicable OTC Bulletin Board or equivalent entity,
 of the then issued and outstanding shares of Common Stock of the Company as
 of the applicable date of determination, or such greater number of shares as
 the stockholders of the Company may have previously approved.

      "NASD" has the meaning set forth in Section 7.10.

      "Nasdaq Market" means the Nasdaq Stock Market's National Market System.

      "National Market" means the Nasdaq Market, the Nasdaq Small Cap Market,
 the New York Stock Exchange, Inc. or the American Stock Exchange, Inc.

      "Net Cash Proceeds" means, with respect to any transaction, the total
 amount of cash proceeds received by the Company or any Subsidiary less (i)
 reasonable underwriters' fees, brokerage commissions, reasonable
 professional fees and other customary out-of-pocket expenses payable in
 connection with such transaction, and (ii) in the case of dispositions of
 assets, (A) actual transfer taxes (but not income taxes) payable with
 respect to such dispositions, and (B) the amount of Debt, if any, secured by
 a Lien on the asset or assets disposed of and required to be, and actually
 repaid by the Company or any Subsidiary in connection therewith, and any
 trade payables specifically relating to such asset or assets sold by the
 Company or any Subsidiary that are not assumed by the purchaser of such
 asset or assets.

      "Notice of Conversion" means the form to be delivered by a holder of a
 Convertible Debenture upon conversion of all or a portion thereof to the
 Company substantially in the form of Exhibit A to the form of Convertible
 Debenture.

      "Notice of Exercise" means the form to be delivered by a holder of a
 Warrant upon exercise of all or a portion thereof to the Company
 substantially in the form of Exhibit A to the Warrant.

      "Officer's Certificate" shall mean a certificate executed by the
 president, chief executive officer or chief financial officer of the Company
 in the form of Exhibit D attached hereto.

      "OTC Bulletin Board" means the over-the-counter bulletin board operated
 by the NASD.

      "Other Taxes" has the meaning set forth in Section 3.6(b).

      "PBGC" means the Pension Benefit Guaranty Corporation or any entity
 succeeding to any or all of its functions under ERISA.

      "Permits" means all domestic and foreign licenses, franchises, grants,
 authorizations, permits, easements, variances, exemptions, consents,
 certificates, orders and approvals necessary to own, lease and operate the
 properties of, and to carry on the business of the Company and the
 Subsidiaries.

      "Permitted Financings" has the meaning set forth in Section 10.5.

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

      "Plan" means at any time an employee pension benefit plan which is
 covered by Title IV of ERISA or subject to the minimum funding standards
 under the Code and either (i) is maintained, or contributed to, by any
 member of the ERISA group for employees of any member of the ERISA group or
 (ii) has at any time within the preceding five years been maintained, or
 contributed to, by any Person which was at such time a member of the ERISA
 group for employees of the Person which was at such time a member of the
 ERISA Group.

      "Purchase Price" means the purchase price for the Securities set forth
 in Section 2.2 hereof.

      "Purchaser" means  the entity listed on the signature page hereto and
 its successors and assigns, including holders from time to time of the
 Convertible Debentures.

      "Recourse Financing" means Debt of the Company or any Subsidiary which,
 by its terms, does not bar the lender thereof from action against the
 Company or any Subsidiary, as borrower or guarantor, if the security value
 of the project or asset pledged in respect thereof falls below the amount
 required to repay such Debt.

      "Redemption Event" has the meaning set forth in Section 3.4.

      "Registrable Securities" has the meaning set forth in Section 10.4(a).

      "Registration Default" has the meaning set forth in Section 10.4(e).

      "Registration Maintenance Period" has the meaning set forth in Section
 10.4(c).

      "Registration Statement" has the meaning set forth in Section 10.4(b).

      "Registration Rights Agreement" means the agreement between the Company
 and Purchaser dated the date hereof substantially in the form set forth in
 Exhibit B attached hereto.

      "Required Effectiveness Date" has the meaning set forth in Section
 10.4(b).

      "Reserved Amount" has the meaning set forth in Section 7.10(a).

      "Restricted Payment" means, with respect to any Person, (i) any
 dividend or other distribution on any shares of capital stock of such Person
 (except dividends payable solely in shares of capital stock of the same or
 junior class of such Person and dividends from a wholly-owned direct or
 indirect Subsidiary of the Company to its parent corporation), (ii) any
 payment on account of the purchase, redemption, retirement or acquisition of
 (a) any shares of such Person's capital stock or (b) any option, warrant or
 other right to acquire shares of such Person's capital stock or (iii) any
 loan, or advance or capital contribution to any Person (a "Stockholder")
 owning any capital stock of such Person other than relocation, travel or
 like advances to officers and employees in the ordinary course of business,
 and other than reasonable compensation as determined by the Board of
 Directors.

      "Rights Offering" has the meaning set forth in Section 11.3.

      "Sale Event" has the meaning set forth in Section 3.4.

      "SEC Reports" has the meaning set forth in Section 7.1(a).

      "Securities" means the Convertible Debentures, the Warrants and, as
 applicable, the Conversion Shares.

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

      "Security Agreement" has the meaning set forth in the recitals.

      "Share Reorganization" has the meaning set forth in Section 11.2.

      "Solvency Certificate" shall mean a certificate executed by the chief
 financial officer or treasurer of the Company as to the solvency of the
 Company, the adequacy of its capital and its ability to pay its debts, all
 after giving effect to the issuance and sale of the Convertible Debentures
 and the completion of the offering (including without limitation the payment
 of any fees or expenses in connection therewith), which such Solvency
 Certificate shall be in the form of Exhibit C attached hereto.

      "Special Distribution" has the meaning set forth in Section 11.4.

      "Subsidiary" means, with respect to any Person, any corporation or
 other entity of which (x) a majority of the capital stock or other ownership
 interests having ordinary voting power to elect a majority of the Board of
 Directors or other persons performing similar functions are at the time
 directly or indirectly owned by such Person or (y) the results of
 operations, the assets and the liabilities of which are consolidated with
 such Person under GAAP.

      "Subsidiary Corporate Documents" means the certificates of
 incorporation and bylaws of each Subsidiary.

      "Taxes" has the meaning set forth in Section 3.6.

      "Trading Day" shall mean any Business Day in which the OTC Bulletin
 Board, National Market or other automated  quotation system or exchange on
 which the Common Stock is then traded is open for trading for at least four
 (4) hours.

      "Transaction Agreements" means this Agreement, the Convertible
 Debenture, the Warrants, the Registration Rights Agreement, the Security
 Agreement, and the other agreements contemplated by this Agreement.

      "Transaction Fee" has the meaning set forth in Section 13.4.

      "Transfer" means any disposition of Securities that would constitute a
 sale thereof under the Securities Act.

      "Unfunded Liabilities" means, with respect to any Plan at any time, the
 amount (if any) by which (i) the present value of all benefits under Plan
 exceeds (ii) the fair market value of all Plan assets allocable to such
 benefits (excluding any accrued but unpaid contributions), all determined as
 of the then most recent valuation date for such Plan, but only to the extent
 that such excess represents a potential liability of a member of the ERISA
 Group to the PBGC or any other Person under Title IV of ERISA.

      "Warrant" means the Common Stock Purchase Warrant substantially in the
 form set forth in Exhibit E hereto.

 ARTICLE 1.2      Accounting Terms and Determinations.  Unless otherwise
 specified herein, all accounting terms used herein shall be interpreted, all
 accounting determinations hereunder shall be made, and all financial
 statements required to be delivered hereunder shall be prepared, in
 accordance with generally accepted accounting principles as in effect from
 time to time, applied on a consistent basis (except for changes concurred in
 by the Company's independent public accountants) ("GAAP") and Regulation S-X
 promulgated under the Securities Act ("Regulation S-X").  All references to
 "dollars," "Dollars" or "$" are to United States dollars unless otherwise
 indicated.

 ARTICLE 2.        PURCHASE AND SALE OF SECURITIES

 ARTICLE 2.1      Purchase and Sale of Convertible Debentures.

 (a)            Subject to the terms and conditions set forth herein, the
 Company agrees to issue and sell to Purchaser, and Purchaser agrees to
 purchase from the Company, the Convertible Debenture.

 (b)            Purchaser shall acquire the Convertible Debenture on the
 Closing Date in an aggregate principal amount of One Million Dollars
 ($1,000,000.00).

 (c)            In connection with the Purchaser's agreement to purchase the
 Convertible Debentures specified in this Article II, the Company shall issue
 and deliver to the Purchaser on the Closing Date Warrants to purchase an
 aggregate of 100,000 shares of Common Stock.

 ARTICLE 2.2      Purchase Price.  The purchase price (the "Purchase Price")
 for the Convertible Debenture and the Warrants on the Closing Date shall be
 $1,000,000.00 and shall be allocated as set forth in Schedule 2.2.

 ARTICLE 2.3      Closing and Mechanics of Payment.

 (a)            The Purchase Price shall be paid on the Closing Date by wire
 transfer of immediately available funds.

 (b)            The Convertible Debentures and Warrants issued on the Closing
 Date shall be dated the date thereof.

 ARTICLE 3.    PAYMENT TERMS OF CONVERTIBLE DEBENTURES

 ARTICLE 3.1      Payment of Principal and Interest; Payment Mechanics.  The
 Company will pay all amounts due on each Convertible Debenture by the method
 and at the address specified for such purpose by Purchaser in writing,
 without the presentation or surrender of any Convertible Debenture or the
 making of any notation thereon, except that upon written request of the
 Company made concurrently with or reasonably promptly after payment or
 prepayment in full of this Convertible Debenture, the holder shall surrender
 the Convertible Debenture for cancellation, reasonably promptly after any
 such request, to the Company at its principal executive office.  Prior to
 any sale or other disposition of any Convertible Debenture, the holder
 thereof will, at its election, either endorse thereon the amount of
 principal paid thereon and the last date to which interest has been paid
 thereon or surrender the Convertible Debenture to the Company in exchange
 for a new Convertible Debenture or Convertible Debentures.  The Company will
 afford the benefits of this Section 3.1 to any direct or indirect transferee
 of the Convertible Debenture purchased under this Agreement and that has
 made the same agreement relating to this Convertible Debenture as Purchaser
 has in this Section 3.1; provided that such transferee is an "accredited
 investor" under Rule 501 of the Securities Act and that such transfer has
 been made in compliance with applicable securities laws.

 ARTICLE 3.2      Payment of Interest.  Interest shall accrue on the
 outstanding principal amount of each Convertible Debenture as of the date of
 issuance and shall be payable as specified therein.

 ARTICLE 3.3      Voluntary Prepayment.   For so long as no Event of Default
 shall have occurred or is continuing, the Company may, at its option, repay,
 in whole or in part, the Convertible Debentures, per the formula set forth
 in Section 3 of Exhibit A hereto, thereof following at least five (5)
 Business Days prior written notice to Purchaser (the expiration of such five
 (5) Business Day period being referred to as the "prepayment date");
 provided, however, that if such date is not a Business Day, the prepayment
 date shall be the next Business Day thereafter.

 ARTICLE 3.4      Mandatory Prepayments.

      (a)       Upon (i) the occurrence of a Change in Control of the
      Company, (ii) a transfer of all or substantially all of the assets of
      the Company to any Person in a single transaction or series of related
      transactions, or (iii) a consolidation, merger or amalgamation of the
      Company with or into another Person in which the Company is not the
      surviving entity (other than a merger which is effected solely to
      change the jurisdiction of incorporation of the Company and results in
      a reclassification, conversion or exchange of outstanding shares of
      Common Stock solely into shares of Common Stock) (each of items (i),
      (ii) and (iii) being referred to as a "Sale Event"), then, in each
      case, the Company shall, upon request of the Majority Holders, redeem
      the Convertible Debentures and Warrants, subject to the provisions of
      Section 5 of the Convertible Debentures and Section 13 of the Warrants,
      respectively.  The redemption price payable upon any such redemption
      shall be the Redemption Price in Section 5 of the Convertible
      Debentures and Section 13 of the Warrants, respectively (referred to
      herein as the "Formula Price").

      (b)       At the option of Purchaser, upon the consummation of one or
      more Financings following the first anniversary of the Closing Date,
      the Company shall use 25% of the Net Cash Proceeds therefrom (unless
      such Net Cash Proceeds from each such Financing is less than $250,000)
      to redeem the Convertible Debentures.

      (c)       Upon the issuance of the Maximum Number of Shares and the
      failure within 90 days of such issuance to obtain shareholder approval
      to issue additional shares of Common Stock (the "Redemption Event"),
      the Company shall redeem the outstanding balance of each Convertible
      Debenture and Warrant for the applicable Prepayment Price and the
      Warrant Formula Price, respectively.

 ARTICLE 3.5      Prepayment Procedures.

      (a)       Any permitted prepayment or redemption of the Convertible
      Debentures and Warrants, as applicable pursuant to Sections 3.3 or 3.4
      above shall be deemed to be effective and consummated (for purposes of
      determining the Prepayment Price, the Formula Price and the time at
      which Purchaser shall thereafter not be entitled to deliver a Notice of
      Conversion for the Convertible Debentures) as follows:

           (i)       A prepayment pursuant to Section 3.3, the "prepayment
           date" specified therein;

           (ii)      A redemption pursuant to Section 3.4(a), the date of
           consummation of the applicable Sale Event or the Registration
           Default;

           (iii)          A redemption pursuant to Section 3.4(b), three (3)
           Business Days following the date of consummation of the applicable
           Financing (meaning closing and funding); and

           (iv)      A redemption pursuant to Section 3.4(c), the date
           specified in each Convertible Debenture.

      (b)       On the Maturity Date and on the effective date of a
      prepayment or redemption of the Convertible Debentures and Warrants as
      specified in Section 3.5(a) above, the Company shall deliver by wire
      transfer of funds the prepayment/redemption price to Purchaser of the
      Convertible Debentures and Warrants subject to redemption.  Should
      Purchaser not receive payment of any amounts due on redemption of its
      Convertible Debentures and Warrants by reason of the Company's failure
      to make payment at the times prescribed above for any reason, the
      Company shall pay to the applicable holder on demand (x) interest on
      the sums not paid when due at an annual rate equal to 14%, until the
      applicable holder is paid in full and (y) all costs of collection,
      including, but not limited to, reasonable attorneys' fees and costs,
      whether or not suit or other formal proceedings are instituted.

      (c)       The Company shall select the Convertible Debentures and
      Warrants to be redeemed in any redemption in which not all of the
      Convertible Debentures and Warrants are to be redeemed so that the
      ratio of the Convertible Debentures and Warrants of each holder
      selected for redemption to the total Convertible Debentures and
      Warrants owned by that holder shall be the same as the ratio of all
      such Convertible Debentures and Warrants selected for redemption bears
      to the total of all then outstanding Convertible Debentures and
      Warrants.  Should any Convertible Debentures and Warrants required to
      be redeemed under the terms hereof not be redeemed solely by reason of
      limitations imposed by law, the applicable Convertible Debentures and
      Warrants shall be redeemed on the earliest possible dates thereafter to
      the maximum extent permitted by law.

      (d)       Any Notice of Conversion delivered by Purchaser (including
      delivery via telecopy) to the Company prior to the (x) Maturity Date or
      (y) effective date of a voluntary prepayment pursuant to Section 3.3 or
      a mandatory repayment pursuant to Section 3.4 as specified in Section
      3.5(a) above), shall be honored by the Company and the conversion of
      the Convertible Debentures shall be deemed effected on the Conversion
      Date.  In addition, between the effective date of a voluntary
      prepayment pursuant to Section 3.3 or a mandatory repayment pursuant to
      Section 3.4 as specified in Section 3.5(a) above and the date the
      Company is required to deliver the redemption proceeds in full to
      Purchaser, Purchaser may deliver a Notice of Conversion to the Company.
      Such notice will be (x) of no force or effect if the Company timely
      pays the redemption proceeds to Purchaser when due or (y) honored on or
      as of the date of the Notice of Conversion if the Company fails to
      timely pay the redemption proceeds to Purchaser when due.

 ARTICLE 3.6      Payment of Additional Amounts.

      (a)       Any and all payments by the Company hereunder or under the
      Convertible Debentures to Purchaser and each "qualified assignee"
      thereof shall be made free and clear of and without deduction or
      withholding for any and all present or future taxes, levies, imposts,
      deductions, charges or withholdings, and all liabilities with respect
      thereto (all such taxes, levies, imposts, deductions, charges,
      withholdings and liabilities being hereinafter referred to as "Taxes")
      unless such Taxes are required by law or the administration thereof to
      be deducted or withheld.  If the Company shall be required by law or
      the administration thereof to deduct or withhold any Taxes from or in
      respect of any sum payable under the Convertible Debentures (i) the
      holders of the Convertible Debentures subject to such Taxes shall have
      the right, but not the obligation, for a period of thirty (30) days
      commencing upon the day it shall have received written notice from the
      Company that it is required to withhold Taxes to transfer all or any
      portion of the Convertible Debentures to a qualified assignee to the
      extent such transfer can be effected in accordance with the other
      provisions of this Agreement and applicable law; (ii) the Company shall
      make such deductions or withholdings; (iii) the sum payable shall be
      increased as may be necessary so that after making all required
      deductions or withholdings (including deductions or withholdings
      applicable to additional amounts paid under this Section 3.6) Purchaser
      receives an amount equal to the sum it would have received if no such
      deduction or withholding had been made; and (iv) the Company shall
      forthwith pay the full amount deducted or withheld to the relevant
      taxation or other authority in accordance with applicable law;
      provided, however the Company shall not be required to pay any taxes
      owed by Purchaser or any qualified assignee resulting from (x) the
      payment of interest on the Convertible Debentures by the Company or (y)
      any gain recognized from the transfer of the Convertible Debentures by
      the Purchaser or any qualified assignee.  A "qualified assignee" of a
      Purchaser is a Person that is organized under the laws of (i) the
      United States or (ii) any jurisdiction other than the United States or
      any political subdivision thereof and that (y) represents and warrants
      to the Company that payments of the Company to such assignee under the
      laws in existence on the date of this Agreement would not be subject to
      any Taxes and (z) from time to time, as and when requested by the
      Company, executes and delivers to the Company and the Internal Revenue
      Service forms, and provides the Company with any information necessary
      to establish such assignee's continued exemption from Taxes under
      applicable law.

      (b)       The Company shall forthwith pay any present or future stamp
      or documentary taxes or any other excise or property taxes, charges or
      similar levies (all such taxes, charges and levies hereinafter referred
      to as "Other Taxes") which arise from any payment made under any of the
      Transaction Agreements or from the execution, delivery or registration
      of, or otherwise with respect to, this Agreement other than Taxes
      payable solely as a result of the transfer from Purchaser to a Person
      of any Security.

      (c)       The Company shall indemnify Purchaser, or qualified assignee,
      for the full amount of Taxes or Other Taxes (including, without
      limitation, any Taxes or Other Taxes imposed by any jurisdiction on
      amounts payable under this Section 3.6) paid by Purchaser, or qualified
      assignee, and any liability (including penalties, interest and
      expenses) arising therefrom or with respect thereto, whether or not
      such Taxes or Other Taxes were correctly or legally asserted.  Payment
      under this indemnification shall be made within 30 days from the date
      Purchaser or assignee makes written demand therefor.  A certificate as
      to the amount of such Taxes or Other Taxes submitted to the Company by
      Purchaser or assignee shall be conclusive evidence of the amount due
      from the Company to such party.

      (d)       Within 30 days after the date of any payment of Taxes, the
      Company will furnish to Purchaser the original or a certified copy of a
      receipt evidencing payment thereof.

 ARTICLE 4.        REPRESENTATIONS AND WARRANTIES

      The Company represents and warrants to Purchaser, as of the Closing
 Date, the following:

 ARTICLE 4.1      Organization and Qualification.  The Company and each
 Subsidiary is a corporation (or other legal entity) duly organized, validly
 existing and in good standing under the laws of its jurisdiction of
 incorporation, with full power and authority to own, lease, use and operate
 its properties and to carry on its business as and where now owned, leased,
 used, operated and conducted.  The Company is qualified to conduct business
 as a foreign corporation and is in good standing in every jurisdiction in
 which the nature of the business conducted by it makes such qualification
 necessary, except where such failure would not have a Material Adverse
 Effect.  A "Material Adverse Effect" means any material adverse effect on
 the operations, results of operations, properties, assets or condition
 (financial or otherwise) of the Company or the Company and its Subsidiaries,
 taken as a whole, or on the transactions contemplated hereby or by the
 agreements or instruments to be entered into in connection herewith.

 ARTICLE 4.2      Authorization and Execution.

      (a)       The Company has all requisite corporate power and authority
      to enter into and perform each Transaction Agreement and to consummate
      the transactions contemplated hereby and thereby and to issue the
      Securities in accordance with the terms hereof and thereof.

      (b)       The execution, delivery and performance by the Company of
      each Transaction Agreement and the issuance by the Company of the
      Securities have been duly and validly authorized and no further consent
      or authorization of the Company, its Board of Directors or its
      shareholders is required.

      (c)       This Agreement has been duly executed and delivered by the
      Company.

      (d)       This Agreement constitutes, and upon execution and delivery
      thereof by the Company, each of the Transaction Agreements will
      constitute, a valid and binding agreement of the Company, in each case
      enforceable against the Company in accordance with its respective terms
      subject to (i) applicable bankruptcy, insolvency or similar laws
      affecting the enforceability of creditor's rights generally and (ii)
      equitable principles of general applicability.

 ARTICLE 4.3      Capitalization .  As of the date hereof, the authorized,
 issued and outstanding capital stock of the Company is as set forth on
 Schedule 4.3 hereto and except as set forth on Schedule 4.3 no other shares
 of capital stock of the Company will be outstanding as of the Closing Date.
 All of such outstanding shares of capital stock are, or upon issuance will
 be, duly authorized, validly issued, fully paid and nonassessable.  No
 shares of capital stock of the Company are subject to preemptive rights or
 similar rights of the stockholders of the Company or any liens or
 encumbrances imposed through the actions or failure to act of the Company.
 Other than as set forth on Schedule 4.3 hereto, as of the date hereof, (i)
 there are no outstanding options, warrants, scrip, rights to subscribe for,
 puts, calls, rights of first refusal, agreements, understandings, claims or
 other commitments or rights of any character whatsoever relating to, or
 securities or rights convertible into or exchangeable for any shares of
 capital stock of the Company or any of its Subsidiaries, or arrangements by
 which the Company or any of its Subsidiaries is or may become bound to issue
 additional shares of capital stock of the Company or any of its
 Subsidiaries, and (ii) there are no agreements or arrangements under which
 the Company or any of its Subsidiaries are obligated to register the sale of
 any of its or their securities under the Securities Act (except pursuant to
 the Registration Rights Agreement) and (iii) there are no anti-dilution or
 price adjustment provisions contained in any security issued by the Company
 (or in any agreement providing rights to security holders) that will be
 triggered by the issuance of the Convertible Debentures or Conversion
 Shares.  The Company has furnished to Purchaser true and correct copies of
 the Company's Corporate Documents, and the terms of all securities
 convertible into or exercisable for Common Stock and the material rights of
 the holders thereof in respect thereto.

 ARTICLE 4.4      Governmental Authorization.  The execution and delivery by
 the Company of the Transaction Agreements does not and will not, the
 issuance and sale by the Company of the Securities does not and will not,
 and the consummation of the transactions contemplated hereby and by the
 other Transaction Agreements will not, require any action by or in respect
 of, or filing with, any governmental body, agency or governmental official
 except (a) such actions or filings that have been undertaken or made prior
 to the date hereof and that will be in full force and effect (or as to
 which all applicable waiting periods have expired) on and as of the date
 hereof or which are not required to be filed on or prior to the Closing
 Date, (b) such actions or filings that, if not obtained, would not result in
 a Material Adverse Effect, (c) listing applications ("Listing Applications")
 to be filed with the OTC Bulletin Board or the National Market relating to
 the Conversion Shares of Common Stock issuable upon conversion of the
 Convertible Debentures, (d) the filing of a "Form D" as described in Section
 7.13 below, (e) the filing of one or more registration statements covering
 the Securities and such registration statement being declared effective and
 (f) compliance with applicable state securities laws provisions.

 ARTICLE 4.5      Issuance of Shares.  Upon conversion in accordance with the
 terms of the Convertible Debentures and exercise of the Warrants, the
 Conversion Shares shall be duly and validly issued and outstanding, fully
 paid and nonassessable, free and clear of any Taxes, Liens and charges with
 respect to issuance and shall not be subject to preemptive rights or similar
 rights of any other stockholders of the Company.  Assuming the
 representations and warranties of Purchaser herein are true and correct in
 all material respects, each of the Securities will have been issued in
 material compliance with all applicable U.S. federal and state securities
 laws.  The Company understands and acknowledges that, in certain
 circumstances, the issuance of Conversion Shares could dilute the ownership
 interests of other stockholders of the Company.  Subject to the provisions
 of this Agreement and the Transaction Agreements, the Company further
 acknowledges that its obligation to issue Conversion Shares upon conversion
 of the Convertible Debentures and exercise of the Warrants is absolute and
 unconditional regardless of the dilutive effect that such issuance may have
 on the ownership interests of other stockholders of the Company.

 ARTICLE 4.6      No Conflicts.  The execution and delivery by the Company of
 the Transaction Agreements to which it is a party did not and will not, the
 issuance and sale by the Company of the Securities did not and will not and
 the consummation of the transactions contemplated hereby and by the other
 Transaction Agreements will not, contravene or constitute a default under or
 violation of (i) any provision of applicable law or regulation, (ii) the
 Company Corporate Documents, (iii) any agreement, judgment, injunction,
 order, decree or other instrument binding upon the Company or any Subsidiary
 or any of their respective assets, or result in the creation or imposition
 of any Lien on any asset of the Company or any Subsidiary.  The Company and
 each Subsidiary is in compliance with and conforms to all statutes, laws,
 ordinances, rules, regulations, orders, restrictions and all other legal
 requirements of any domestic or foreign government or any instrumentality
 thereof having jurisdiction over the conduct of its businesses or the
 ownership of its properties, except where such failure would not have a
 Material Adverse Effect.

 ARTICLE 4.7      Financial Information. Since October 31, 2000 (the "Balance
 Sheet Date"), except as disclosed in Schedule 4.7, there has been (x) no
 material adverse change in the assets or liabilities, or in the business or
 condition, financial or otherwise, or in the results of operations or
 prospects, of the Company and its Subsidiaries, whether as a result of any
 legislative or regulatory change, revocation of any license or rights to do
 business, fire, explosion, accident, casualty, labor  trouble, flood,
 drought, riot, storm, condemnation, act of God, public force or otherwise
 and (y) no material adverse change in the assets or liabilities, or in the
 business or condition, financial or otherwise, or in the results of
 operations or prospects, of the Company and its subsidiaries except in the
 ordinary course of business; and no fact or condition exists or is
 contemplated or threatened which might cause such a change in the future.
 The audited and unaudited consolidated balance sheets of the Company and its
 Subsidiaries for the periods ending October 31, 2000 and January 31, 2001,
 respectively, and the related consolidated statements of income, changes in
 stockholders' equity and changes in cash flows for the periods then ended,
 including the footnotes thereto, except as indicated therein, (i) complied
 in all material respects with applicable accounting requirements and (ii)
 have been prepared in accordance with GAAP consistently applied throughout
 the periods indicated, except that the unaudited financial statements do not
 contain notes and may be subject to normal audit adjustments and normal
 annual adjustments.  Such financial statements fairly present the financial
 condition of the Company and its Subsidiaries at the dates indicated and the
 consolidated results of their operations and cash flows for the periods then
 ended and, except as indicated therein, reflect all claims against and all
 Debts and liabilities of the Company and its Subsidiaries, fixed or
 contingent.

 ARTICLE 4.8      Litigation.  Except as set forth on Schedule 4.8, there is
 no action, suit or proceeding pending or, to the knowledge of the Company,
 threatened against the Company or any Subsidiary, before any court or
 arbitrator or any governmental body, agency or official in which there is a
 reasonable possibility of an adverse decision which could materially
 adversely affect the business, condition (financial or otherwise),
 operations, performance, properties or prospects of the Company or which
 challenges the validity of any Transaction Agreements.

 ARTICLE 4.9      Compliance with ERISA and other Benefit Plans.

 (a)       Each member of the ERISA Group has fulfilled its obligations under
 the minimum funding standards of ERISA and the Code with respect to each
 Plan and is in compliance in all material respects with the presently
 applicable provisions of ERISA and the Code with respect to each Plan.  No
 member of the ERISA Group has (i) sought a waiver of the minimum funding
 standard under Section 412 of the Code in respect of any Plan, (ii) failed
 to make any required contribution or payment to any Plan or Multiemployer
 Plan or in respect of any Benefit Arrangement, or made any amendment to any
 Plan or Benefit Arrangement, which as resulted or could result in the
 imposition of a Lien or the posting of a bond or other security under ERISA
 or the Code or (iii) incurred any liability under Title IV of ERISA other
 than a liability to the PBGC for premiums under Section 4007 of ERISA.

 (b)       The benefit plans not covered under clause (a) above (including
 profit sharing, deferred compensation, stock option, employee stock
 purchase, bonus, retirement, health or insurance plans, collectively the
 "Benefit Plans") relating to the employees of the Company are duly
 registered where required by, and are in good standing in all material
 respects under, all applicable laws.  All required employer and employee
 contributions and premiums under the Benefit Plans to the date hereof have
 been made, the respective fund or funds established under the Benefit Plans
 are funded in accordance with applicable laws, and no past service funding
 liabilities exist thereunder.

 (c)       No Benefit Plans have any unfunded liabilities, either on a "going
 concern" or "winding up" basis and determined in accordance with all
 applicable laws and actuarial practices and using actuarial assumptions and
 methods that are reasonable in the circumstances.  No event has occurred and
 no condition exists with respect to any Benefit Plans that has resulted or
 could reasonably be expected to result in any pension plan having its
 registration revoked or wound up (in whole or in part) or refused for the
 purposes of any applicable laws or being placed under the administration of
 any relevant pension benefits regulatory authority or being required to pay
 any taxes or penalties (in any material amounts) under any applicable laws.

 ARTICLE 4.10     Environmental Matters.  The costs and liabilities
 associated with Environmental Laws (including the cost of compliance
 therewith) are unlikely to have a material adverse effect on the business,
 condition (financial or otherwise), operations, performance, properties or
 prospects of the Company or any Subsidiary.  Each of the Company and the
 Subsidiaries conducts its businesses in compliance in all material respects
 with all applicable Environmental Laws.

 ARTICLE 4.11     Taxes.  All United States federal, state, county,
 municipality, local or foreign  income tax returns and all other material
 tax returns (including foreign tax returns) which are required to be filed
 by or on behalf of the Company and each Subsidiary have been filed and all
 material taxes due pursuant to such returns or pursuant to any assessment
 received by the Company and each Subsidiary have been paid except those
 being disputed in good faith and for which adequate reserves have been
 established.  The charges, accruals and reserves on the books of the Company
 and each Subsidiary in respect of taxes and other governmental charges have
 been established in accordance with GAAP and Regulation S-X.

 ARTICLE 4.12     Investments, Joint Ventures.  Other than as set forth in
 Schedule 4.12, the Company has no Subsidiaries or other direct or indirect
 Investment in any Person, and the Company is not a party to any partnership,
 management, shareholders' or joint venture or similar agreement.

 ARTICLE 4.13     Not an Investment Company.  Neither the Company nor any
 Subsidiary is an "Investment Company" within the meaning of Investment
 Company Act of 1940, as amended.

 ARTICLE 4.14     Full Disclosure.  The information heretofore furnished by
 the Company to Purchaser for purposes of or in connection with this
 Agreement or any transaction contemplated hereby does not, and all such
 information hereafter furnished by the Company or any Subsidiary to
 Purchaser will not (in each case taken together and on the date as of which
 such information is furnished), contain any untrue statement of a material
 fact or omit to state a material fact necessary in order to make the
 statements contained therein, in the light of the circumstances under which
 they are made, not misleading.

 ARTICLE 4.15     No Solicitation; No Integration with Other Offerings.  No
 form of general solicitation or general advertising was used by the Company
 or, to the best of its actual knowledge, any other Person acting on behalf
 of the Company, in connection with the offer and sale of the Securities.
 Except as set forth on Schedule 4.15, neither the Company, nor, to its
 knowledge, any Person acting on behalf of the Company, has, either directly
 or indirectly, sold or offered for sale to any Person (other than Purchaser)
 any of the Securities or, within the six months prior to the date hereof,
 any other similar security of the Company except as contemplated by this
 Agreement, and the Company represents that neither itself nor any Person
 authorized to act on its behalf (except that the Company makes no
 representation as to Purchaser and their Affiliates) will sell or offer for
 sale any such security to, or solicit any offers to buy any such security
 from, or otherwise approach or negotiate in respect thereof with, any Person
 or Persons so as thereby to cause the issuance or sale of any of the
 Securities to be in violation of any of the provisions of Section 5 of the
 Securities Act.  The issuance of the Securities to Purchaser will not be
 integrated with any other issuance of the Company's securities (past,
 current or future) which requires stockholder approval under the rules of
 the OTC Bulletin Board.

 ARTICLE 4.16     Permits.  (a) Each of the Company and its Subsidiaries has
 all material Permits; (b) all such Permits are in full force and effect, and
 each of the Company and its Subsidiaries has fulfilled and performed all
 material obligations with respect to such Permits; (c) no event has occurred
 which allows, or after notice of lapse of time would allow, revocation or
 termination by the issuer thereof or which results in any other material
 impairment of the rights of the holder of any such Permit; and (d) the
 Company has no reason to believe that any governmental body or agency is
 considering limiting, suspending or revoking any such Permit.

 ARTICLE 4.17     Leases.  Neither the Company nor any Subsidiary is a party
 to any capital lease obligation with a value greater than $250,000 or to any
 operating lease with an aggregate annual rental greater than $250,000 during
 the life of such lease.

 ARTICLE 4.18     Absence of Any Undisclosed Liabilities or Capital Calls.
 There are no liabilities of the Company or any Subsidiary of any kind
 whatsoever, whether accrued, contingent, absolute, determined, determinable
 or otherwise, and there is no existing condition, situation or set of
 circumstances which would reasonably be expected to result in such a
 liability, other than (i) those liabilities provided for in the financial
 statements delivered pursuant to Section 4.7 and (ii) other undisclosed
 liabilities which, individually or in the aggregate, would not have a
 Material Adverse Effect.   Public Utility Holding Company.  Neither the
 Company nor any Subsidiary is, or will be upon issuance and sale of the
 Securities and the use of the proceeds described herein, subject to
 regulation under the Public Utility Holding Company Act of 1935, as amended,
 the Federal Power Act, the Interstate Commerce Act or to any federal or
 state statute or regulation limiting its ability to issue and perform its
 obligations under any Transaction Agreement.

 ARTICLE 4.20     Intellectual Property Rights.  Each of the Company and its
 Subsidiaries owns, or is licensed under, and has the rights to use, all
 material patents, trademarks, trade names, copyrights, technology, know-how
 and processes (collectively, "Intellectual Property") used in, or necessary
 for the conduct of its business; no claims have been asserted by any Person
 to the use of any such Intellectual Property or challenging or questioning
 the validity or effectiveness of any license or agreement related thereto.
 To the best of Company's and its Subsidiaries' knowledge, there is no valid
 basis for any such claim and the use of such Intellectual Property by the
 Company and its Subsidiaries will not infringe upon the rights of any
 Person.

 ARTICLE 4.21     Insurance.  The Company and its Subsidiaries maintain, with
 financially sound and reputable insurance companies, insurance in at least
 such amounts and against such risks such that any uninsured loss would not
 have a Material Adverse Effect.  All insurance coverages of the Company and
 its Subsidiaries are in full force and effect and there are no past due
 premiums in respect of any such insurance.

 ARTICLE 4.22     Title to Properties.  The Company and its Subsidiaries have
 good and marketable title to all their respective properties free and clear
 of all Liens.

 ARTICLE 4.23     Internal Accounting Controls.  The Company and each of its
 Subsidiaries maintain a system of internal accounting controls sufficient,
 in the judgment of the Company's Board of Directors, to provide reasonable
 assurance that (i) transactions are executed in accordance with managements'
 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.

 ARTICLE 4.24     Foreign Practices.  Neither the Company nor any of its
 Subsidiaries nor, to the Company's knowledge, any employee or agent of the
 Company or any Subsidiary has made any payments of funds of the Company or
 Subsidiary, or received or retained any funds, in each case  in violation of
 any law, rule or regulation.

 ARTICLE 4.25     Title to Certain Assets.  The Company owns the assets
 designated as collateral and described on Exhibit A to the Security
 Agreement, free and clear of any lien or encumbrance.

 ARTICLE 5.  REPRESENTATIONS AND WARRANTIES OF PURCHASER

 ARTICLE 5.1      Purchaser.  Purchaser hereby represents and warrants to the
 Company that:

      (a)       Purchaser is an "accredited investor" within the meaning of
      Rule 501(a) under the Securities Act and the Securities to be acquired
      by it pursuant to this Agreement are being acquired for its own account
      and, as of the date hereof, not with a view toward, or for sale in
      connection with, any distribution thereof except in compliance with
      applicable United States federal and state securities law;

      (b)       the execution, delivery and performance of this Agreement and
      the purchase of the Securities pursuant thereto are within Purchaser's
      corporate or partnership powers, as applicable, and have been duly and
      validly authorized by all requisite corporate or partnership action;
      and no further consent or authorization by the Purchaser, or its
      partners is required;

      (c)       this Agreement has been duly executed and delivered by
      Purchaser;

      (d)       the execution and delivery by Purchaser of the Transaction
      Agreements to which it is a party does not, and the consummation of the
      transactions contemplated hereby and thereby will not, contravene or
      constitute a default under or violation of (i) any provision of
      applicable law or regulation, or (ii) any agreement, judgment,
      injunction, order, decree or other instrument binding upon Purchaser;

      (e)       Purchaser understands that the Securities have not been
      registered under the Securities Act and may not be transferred or sold
      except as specified in this Agreement or the remaining Transaction
      Agreements;

      (f)       this Agreement constitutes a valid and binding agreement of
      Purchaser enforceable in accordance with its terms, subject to (i)
      applicable bankruptcy, insolvency or similar laws affecting the
      enforceability of creditors rights generally and (ii) equitable
      principles of general applicability;

      (g)       Purchaser has such knowledge and experience in financial and
      business matters so as to be capable of evaluating the merits and risks
      of its investment in the Securities and Purchaser is capable of bearing
      the economic risks of such investment;

      (h)       Purchaser is knowledgeable, sophisticated and experienced in
      business and financial matters; Purchaser fully understands the
      limitations on transfer described herein; Purchaser has been afforded
      access to information about the Company and the financial condition,
      results of operations, property, management and prospects of the
      Company sufficient to enable it to evaluate its investment in the
      Securities; Purchaser has been afforded the opportunity to ask such
      questions as it has deemed necessary of, and to receive answers from,
      representatives of the Company concerning the terms and conditions of
      the offering of the Securities and the merits and the risks of
      investing in the Securities; and Purchaser has been afforded the
      opportunity to obtain such additional information which the Company
      possesses or can acquire that is necessary to verify the accuracy and
      completeness of the information given to Purchaser concerning the
      Company.  The foregoing does not in any way relieve the Company of its
      representations and other undertakings hereunder, and shall not limit
      Purchaser's ability to rely thereon; and

      (i)       no part of the source of funds used by Purchaser to acquire
      the Securities constitutes assets allocated to any separate account
      maintained by Purchaser in which any employee benefit plan (or its
      related trust) has any interest.

 ARTICLE 6.  CONDITIONS PRECEDENT TO PURCHASE OF SECURITIES

 ARTICLE 6.1      Conditions Precedent to Purchaser's Obligations to
 Purchase.  The obligation of Purchaser hereunder to purchase the Convertible
 Debenture at the Closing is subject to the satisfaction, on or before the
 Closing Date, of each of the following conditions, provided that these
 conditions are for Purchaser's sole benefit and may be waived by Purchaser
 at any time in its sole discretion:

      (a)       The Company shall have duly executed this Agreement, the
      Convertible Debenture, the Warrant, the Registration Rights Agreement,
      the Security Agreement and all appropriate financing statements, and
      the Escrow Agreement and delivered the same to Purchaser;

      (b)       The Company shall have delivered to Purchaser duly executed
      certificates representing the Convertible Debentures and Warrants in
      accordance with Section 2.3 hereof;

      (c)       The Company shall have delivered the Solvency Certificate;

      (d)       The representations and warranties of the Company contained
      in each Transaction Agreement shall be true and correct in all material
      respects as of the date when made and as of the Closing Date as though
      made at such time (except for representations and warranties that speak
      as of a specified date) and the Company shall have performed, satisfied
      and complied with all covenants, agreements and conditions required by
      such Transaction Agreements to be performed, satisfied or complied with
      by it at or prior to the Closing Date.  Purchaser shall have received
      an Officer's Certificate executed by the chief executive officer of the
      Company, dated as of the Closing Date, to the foregoing effect and as
      to such other matters as may be reasonably requested by Purchaser,
      including but not limited to certificates with respect to the Company
      Corporate Documents, resolutions relating to the transactions
      contemplated hereby and the incumbencies of certain officers and
      directors of the Company.  The form of such certificate is attached
      hereto as Exhibit D;

      (e)       Except as set forth in Section 4.4 of this Agreement, the
      Company shall have received all governmental, Board of Directors,
      shareholders and third party consents and approvals necessary or
      desirable in connection with the issuance and sale of the Securities
      and the consummation of the transactions contemplated by the
      Transaction Agreements;

      (f)       All applicable waiting periods in respect to the issuance and
      sale of the Securities shall have expired without any action having
      been taken by any competent authority that could restrain, prevent or
      impose any materially adverse conditions thereon or that could seek or
      threaten any of the foregoing;

      (g)       No law or regulation shall have been imposed or enacted that,
      in the judgment of Purchaser, could adversely affect the transactions
      set forth herein or in the other Transaction Agreements, and no law or
      regulation shall have been proposed that in the reasonable judgment of
      Purchaser could reasonably have any such effect;

      (h)       Purchaser shall have received an opinion, dated the Closing
      Date, of counsel to the Company, in form and substance satisfactory to
      Purchaser;

      (i)       All fees and expenses due and payable by the Company prior to
      the Closing Date shall have been paid; provided that, all fees and
      expenses due and payable on the Closing Date shall be subtracted from
      the payment of the Purchase Price;

      (j)       The Company Corporate Documents and the Subsidiary Corporate
      Documents, if any, shall be in full force and effect and no term or
      condition thereof shall have been amended, waived or otherwise modified
      without the prior written consent of Purchaser;

      (k)       There shall have occurred no material adverse change in the
      business, condition (financial or otherwise), operations, performance,
      properties or prospects of the Company or any Subsidiary since January
      31, 2001;

      (l)       There shall exist no action, suit, investigation, litigation
      or proceeding pending or threatened in any court or before any
      arbitrator or governmental instrumentality that challenges the validity
      of or purports to affect this Agreement or any other Transaction
      Agreement, or other transaction contemplated hereby or thereby or that
      could reasonably be expected to have a Material Adverse Effect, or any
      material adverse effect on the enforceability of the Transaction
      Agreements or the Securities or the rights of the holders of the
      Securities or Purchaser hereunder;

      (m)       Purchaser shall have confirmed the receipt of the Convertible
      Debenture  and the Warrants to be issued, duly executed by the Company
      and registered in the name of Purchaser;

      (n)       There shall not have occurred any disruption or adverse
      change in the financial or capital markets generally, or in the market
      for the Common Stock (including but not limited to any suspension or
      delisting), which Purchaser reasonably deems material in connection
      with the purchase of the Securities;

      (o)       Immediately before and on the Closing Date, no Default or
      Event of Default shall have occurred and be continuing;

      (p)       Purchaser shall have received all other opinions,
      resolutions, certificates, instruments, agreements or other documents
      as they shall reasonably request;

      (q)       Company shall have delivered to Purchaser the Use of Proceeds
      Schedule 7.8.

 ARTICLE 6.2      Conditions to the Company's Obligations.  The obligations
 of the Company to issue and sell the Securities to Purchaser pursuant to
 this Agreement are subject to the satisfaction, at or prior to the Closing
 Date, of the following conditions:

      (a)       The representations and warranties of Purchaser contained
      herein shall be true and correct in all material respects on the
      Closing Date and Purchaser shall have performed and complied in all
      material respects with all agreements required by this Agreement to be
      performed or complied with by Purchaser at or prior to the Closing
      Date;

      (b)       The issue and sale of the Securities by the Company shall not
      be prohibited by any applicable law, court order or governmental
      regulation;

      (c)       Receipt by the Company of duly executed counterparts of this
      Agreement, the Security Agreement, the Escrow Agreement, and the
      Registration Rights Agreement signed by Purchaser;

      (d)       The Company shall have received payment of Purchase Price,
      less the Transaction Fee.

 ARTICLE 7.             AFFIRMATIVE COVENANTS

      The Company hereby agrees that, from and after the date hereof for so
 long as any Convertible Debentures remain outstanding and for the benefit of
 Purchaser:

 ARTICLE 7.1     Information.  The Company will deliver to each holder of the
 Convertible Debentures:

      (a)       promptly upon the filing thereof, copies of (i) all
      registration statements (other than the exhibits thereto and any
      registration statements on Form S-8 or its equivalent), and (ii) all
      reports of Forms 10-K, 10-Q and 8-K (or other equivalents) which the
      Company or any Subsidiary has filed with the Commission (collectively,
      "SEC Reports");

      (b)       simultaneously with the delivery of each item referred to in
      clause (a) above, a certificate from the chief financial officer of the
      Company certifying the accuracy of the financial statements contained
      in the Company's reports on Forms 10-K and 10-Q (or other equivalents)
      and stating that no Default or Event of Default has occurred and is
      continuing, or, if as of the date of such delivery a Default shall have
      occurred and be continuing, a certificate from the Company setting
      forth the details of such Default or Event of Default and the action
      which the Company is taking or proposes to take with respect thereto;

      (c)       within two (2) days after any officer of the Company obtains
      knowledge of a Default or Event of Default, or that any Person has
      given any notice or taken any action with respect to a claimed Default
      hereunder, a certificate of the chief financial officer of the Company
      setting forth the details thereof and the action which the Company is
      taking or proposed to take with respect thereto;

      (d)       promptly upon the mailing thereof to the shareholders of the
      Company generally, copies of all financial statements, reports and
      proxy statements so mailed and any other document generally distributed
      to shareholders;

      (e)       at least two (2) Business Days prior to the consummation of
      any Financing or other event requiring a repayment of the Convertible
      Debentures under Section 3.4, notice thereof together with a summary of
      all material terms thereof and copies of all documents and instruments
      associated therewith;

      (f)       notice promptly upon the occurrence of any event by which the
      Reserved Amount becomes less than the sum of (i) 1.5 times the maximum
      number of Conversion Shares issuable pursuant to the Transaction
      Agreements; and

      (g)       promptly following the commencement thereof, notice and a
      description in reasonable detail of any litigation or proceeding to
      which the Company or any Subsidiary is a party in which the amount
      involved is $250,000 or more and not covered by insurance or in which
      injunctive or similar relief is sought.

 ARTICLE 7.2      Payment of Obligations.  The Company will, and will cause
 each Subsidiary to, pay and discharge, at or before maturity, all their
 respective material obligations, including, without limitation, tax
 liabilities, except where the same may be contested in good faith by
 appropriate proceedings and will maintain, in accordance with GAAP,
 appropriate reserves for the accrual of any of the same.

 ARTICLE 7.3     Maintenance of Property; Insurance.  The Company will, and
 will cause each Subsidiary to, keep all property useful and necessary in its
 business in good working order and condition, ordinary wear and tear
 excepted.  In addition, the Company and each Subsidiary will maintain
 insurance in at least such amounts and against such risks as it has insured
 against as of the Closing Date.

 ARTICLE 7.4     Maintenance of Existence.  The Company will, and will cause
 each Subsidiary to, continue to engage in business of the same general type
 as now conducted by the Company and such Subsidiaries, and will preserve,
 renew and keep in full force and effect its respective corporate existence
 and their respective material rights, privileges and franchises necessary or
 desirable in the normal conduct of business.

 ARTICLE 7.5     Compliance with Laws.  The Company will, and will cause each
 Subsidiary to, comply, in all material respects, with all federal, state,
 municipal, local or foreign applicable laws, ordinances, rules, regulations,
 municipal by-laws, codes and requirements of governmental authorities
 (including, without limitation, Environmental Laws and ERISA and the rules
 and regulations thereunder) except (i) where compliance therewith is
 contested in good faith by appropriate proceedings or (ii) where non-
 compliance therewith could not reasonably be expected, in the aggregate, to
 have a material adverse effect on the business, condition (financial or
 otherwise), operations, performance, properties or prospects of the Company
 or such Subsidiary.

 ARTICLE 7.6      Inspection of Property, Books and Records.  The Company
 will, and will cause each Subsidiary to, keep proper books of record and
 account in which full, true and correct entries shall be made of all
 dealings and transactions in relation to their respective businesses and
 activities; and will permit, during normal business hours, Purchaser'
 Representative or an affiliate thereof, as representatives of Purchaser, and
 representatives of the Small Business Administration to visit and inspect
 any of their respective properties, upon reasonable prior notice, to examine
 and make abstracts from any of their respective books and records and to
 discuss their respective affairs, finances and accounts with their
 respective executive officers and independent public accountants (and by
 this provision the Company authorizes its independent public accountants to
 disclose and discuss with Purchaser the affairs, finances and accounts of
 the Company and its Subsidiaries in the presence of a representative of the
 Company; provided, however, that such discussions will not result in any
 unreasonable expense to the Company, without Company consent), all at such
 reasonable times.

 ARTICLE 7.7      Investment Company Act.  The Company will not be or become
 an open-end investment trust, unit investment trust or face-amount
 certificate company that is or is required to be registered under Section 8
 of the Investment Company Act of 1940, as amended.

 ARTICLE 7.8     Use of Proceeds.  The proceeds from the issuance and sale of
 the Convertible Debentures by the Company shall be used in accordance with
 Schedule 7.8 attached hereto.  None of the proceeds from the issuance and
 sale of the Convertible Debentures by the Company pursuant to this Agreement
 will be used directly or indirectly for the purpose, whether immediate,
 incidental or ultimate, of purchasing or carrying any "margin stock" within
 the meaning of Regulation G of the Board of Governors of the Federal Reserve
 System.

 ARTICLE 7.9      Compliance with Terms and Conditions of Material Contracts.
 The Company will, and will cause each Subsidiary to, comply, in all
 respects, with all terms and conditions of all material contracts to which
 it is subject.

 ARTICLE 7.10     Reserved Shares and Listings.

 (a)       The Company shall at all times have authorized, and reserved for
 the purpose of issuance, a sufficient number of shares of Common Stock to
 provide for the full conversion of the outstanding Convertible Debentures
 and exercise of the Warrants and issuance of the Conversion Shares (based on
 the conversion price of the Convertible Debentures in effect from time to
 time and the exercise price of the Warrants, respectively) (the "Reserved
 Amount").  The Company shall not reduce the Reserved Amount without the
 prior written consent of Purchaser.  With respect to all Securities which
 contain an indeterminate number of shares of Common Stock issuable in
 connection therewith (such as the Convertible Debentures), the Company shall
 include in the Reserve Amount, no less than two (2) times the number of
 shares that is then actually issuable upon conversion or exercise of such
 Securities.  If at any time the number of shares of Common Stock authorized
 and reserved for issuance is below the number of Conversion Shares issued or
 issuable upon conversion of the Convertible Debentures and exercise of the
 Warrants, the Company will promptly take all corporate action necessary to
 authorize and reserve a sufficient number of shares, including, without
 limitation, either (x) calling a special meeting of shareholders to
 authorize additional shares, in the case of an insufficient number of
 authorized shares or (y) in lieu thereof, consummating the immediate
 repurchase of the Convertible Debentures and the Warrants contemplated in
 Section 3.4(c) hereof.

 (b)       The Company shall promptly file the Listing Applications and
 secure the listing of the Conversion Shares upon each national securities
 exchange or automated quotation system, if any, upon which shares of Common
 Stock are then listed (subject to official notice of issuance) and shall
 maintain, so long as any other shares of Common Stock shall be so listed,
 such listing of all Conversion Shares from time to time issuable upon
 conversion or exercise of the Convertible Debentures and Warrants,
 respectively.  The Company will maintain the listing and trading of its
 Common Stock on the OTC Bulletin Board.  The Company will use its
 commercially reasonable best efforts to obtain as soon as practicable and
 maintain the listing and trading of its Common Stock on a National Market.
 The Company will comply in all respects with the Company's reporting, filing
 and other obligations under the bylaws or rules of the National Association
 of Securities Dealers, Inc. (the "NASD") and such exchanges, as applicable.
 The Company shall promptly provide to Purchaser copies of any notices it
 receives regarding the continued eligibility of the Common Stock for listing
 on the OTC Bulletin Board or any National Market.

 ARTICLE 7.11     Transfer Agent Instructions.  Upon receipt of a Notice of
 Conversion or Notice of Exercise, as applicable, the Company shall
 immediately direct the Company's transfer agent to issue certificates,
 registered in the name of Purchaser or its nominee, for the Conversion
 Shares, in such amounts as specified from time to time by Purchaser to the
 Company upon proper conversion of the Convertible Debentures or exercise of
 the Warrants.  Upon conversion of any Convertible Debentures in accordance
 with their terms and/or exercise of any Warrants in accordance with their
 terms, the Company will, and will use its best lawful efforts to cause its
 transfer agent to, issue one or more certificates representing shares of
 Common Stock in such name or names and in such denominations specified by a
 Purchaser in a Notice of Conversion or Notice of Exercise, as the case may
 be.  As long as the Registration Statement contemplated by the Registration
 Rights Agreement shall remain effective, the shares of Common Stock issuable
 upon conversion of any Convertible Debentures or exercise of the Warrants
 shall be issued to any transferee of such shares from Purchaser without any
 restrictive legend upon appropriate evidence of transfer in compliance with
 the Securities Act and the rules and regulations of the Commission; provided
 that for so long as the Registration Statement is effective, no opinion of
 counsel will be required to effect any such transfer.  The Company further
 warrants and agrees that no instructions other than these instructions have
 been or will be given to its transfer agent.  Nothing in this Section 7.11
 shall affect in any way a Purchaser's obligation to comply with all
 securities laws applicable to Purchaser upon resale of such shares of Common
 Stock, including any prospectus delivery requirements.

 ARTICLE 7.12     Maintenance of Reporting Status; Supplemental Information.
 So long as any of the Securities are outstanding, the Company shall timely
 file all reports required to be filed with the Commission pursuant to the
 Exchange Act.  The Company shall not terminate its status as an issuer
 required to file reports under the Exchange Act, even if the Exchange Act or
 the rules and regulations thereunder would permit such termination.  If at
 anytime the Company is not subject to the requirements of Section 13 or
 15(d) of the Exchange Act, the Company will promptly furnish at its expense,
 upon request, for the benefit of the holders from time to time of
 Securities, and prospective purchasers of Securities, information satisfying
 the information requirements of Rule 144 under the Securities Act.

 ARTICLE 7.13     Form D; Blue Sky Laws.  The Company agrees to file a "Form
 D" with respect to the Securities as required under Regulation D of the
 Securities Act and to provide a copy thereof to Purchaser promptly after
 such filing.  The Company shall, on or before the Closing Date, take such
 action as the Company shall reasonably determine is necessary to qualify the
 Securities for sale to Purchaser at the Closing pursuant to this Agreement
 under applicable securities or "blue sky" laws of the states of the United
 States (or to obtain an exemption from such qualification), and shall
 provide evidence of any such action so taken to Purchaser on or prior to the
 Closing Date.

 ARTICLE 8.              NEGATIVE COVENANTS

      The Company hereby agrees that after the date hereof for so long as any
 Convertible Debentures remain outstanding and for the benefit of Purchaser:

 ARTICLE 8.1      Limitations on Debt or Other Liabilities.  Neither the
 Company nor any Subsidiary will create, incur, assume or suffer to exist (at
 any time after the Closing Date, after giving effect to the application of
 the proceeds of the issuance of the Securities), without the prior written
 consent of Purchaser, any Debt except (x) Debt incurred in a Permitted
 Financing, (y) Debt incurred in connection with equipment leases to which
 the Company or its Subsidiaries are a party incurred in the ordinary course
 of business; and (z) Debt incurred in connection with trade accounts
 payable, imbalances and refunds arising in the ordinary course of business.

 ARTICLE 8.2      Transactions with Affiliates.  The Company and each
 Subsidiary will not, directly or indirectly, pay any funds to or for the
 account of, make any investment (whether by acquisition or stock or
 indebtedness, by loan, advance, transfer of property, guarantee or other
 agreement to pay, purchase or service, directly or indirectly, and Debt, or
 otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
 tangible or intangible, to, or participate in, or effect any transaction in
 connection with any joint enterprise or other joint arrangement with, any
 Affiliate, except, (1) pursuant to those agreements specifically identified
 on Schedule 8.2 attached hereto (with a copy of such agreements annexed to
 such Schedule 8.2) and (2) on terms to the Company or such Subsidiary no
 less favorable than terms that could be obtained by the Company or such
 Subsidiary from a Person that is not an Affiliate of the Company upon
 negotiation at arms' length, as determined in good faith by the Board of
 Directors of the Company; provided that no determination of the Board of
 Directors shall be required with respect to any such transactions entered
 into in the ordinary course of business.

 ARTICLE 8.3      Merger or Consolidation.  The Company will not, in a single
 transaction or a series of related transactions (i) consolidate with or
 merge with or into any other Person, or (ii) permit any other Person to
 consolidate with or merge into it, unless the Company shall be the survivor
 of such merger or consolidation and (x) immediately before and immediately
 after given effect to such transaction (including any indebtedness incurred
 or anticipated to be incurred in connection with the transaction), no
 Default or Event of Default shall have occurred and be continuing; and (y)
 the Company has delivered to Purchaser an Officer's Certificate stating that
 such consolidation, merger or transfer complies with this Agreement, and
 that all conditions precedent in this Agreement relating to such transaction
 have been satisfied.

 ARTICLE 8.4      Limitation on Asset Sales.  Neither the Company nor any
 Subsidiary will consummate an Asset Sale of material assets of the Company
 or any Subsidiary without the prior written consent of Purchaser, which
 consent shall not be unreasonably withheld.  As used herein, "Asset Sale"
 means any sale, lease, transfer or other disposition (or series of related
 sales, leases, transfers or dispositions) or sales of capital stock of a
 Subsidiary (other than directors' qualifying shares), property or other
 assets (each referred to for the purpose of this definition as a
 "disposition"), including any disposition by means of a merger,
 consolidation or similar transaction other than a disposition of property or
 assets at fair market value in the ordinary course of business.

 ARTICLE 8.5      Restrictions on Certain Amendments.  Neither the Company
 nor any Subsidiary will waive any provision of, amend, or suffer to be
 amended, any provision of such entity's existing Debt, any material contract
 or agreement previously or hereafter filed by the Company with the
 Commission as part of its SEC Reports, any Company Corporate Document or
 Subsidiary Corporate Document if such amendment, in the Company's reasonable
 judgment, would materially adversely affect Purchaser or the holders of the
 Securities without the prior written consent of Purchaser.

 ARTICLE 8.6     Restrictions on Issuances of Securities.

      (a)       From the Closing Date and continuing until 120 days following
      the date on which the Registration Statement becomes effective, the
      Company agrees that it will not, without the prior written consent of
      Purchaser, issue any of its equity securities (or securities
      convertible into or exchangeable or exercisable for equity securities
      (the "Derivative Securities")) on terms that allow a holder thereof to
      acquire such equity securities (or Derivative Securities) at a discount
      to the Market Price of the Common Stock at the time of issuance or, in
      the case of Derivative Securities, at a conversion price based on any
      formula (other than standard anti-dilution provisions) based on the
      Market Price on a date later than the date of issuance which is below
      the Market Price on the date of issuance (each such event, a
      "Discounted Equity Offering") other than (i) borrowings under
      conventional credit facilities existing as of the date hereof, (ii)
      stock issued or credit facilities to be established in connection with
      acquisitions, (iii) equity securities or Derivative Securities in
      connection with employee and director stock option and stock purchase
      plans and (iv) securities issued under the Convertible Debenture or
      Warrants.  In addition, the Company shall not issue any equity
      securities in connection with a strategic alliance entered into by the
      Company unless such securities are the subject of a one year statutory
      or contractual hold period or, if not subject to such a hold period,
      unless the Purchaser has fully converted all outstanding Convertible
      Debentures and exercised all Warrants.  As used herein, "discount"
      shall include, but not be limited to, (i) any warrant, right or other
      security granted or offered in connection with such issuance which, on
      the applicable date of grant, is offered with an exercise or conversion
      price, as the case may be, at less than the then current Market Price
      of the Common Stock or, if such security has an exercise or conversion
      price based on any formula (other than standard anti-dilution
      provisions) based on the Market Price on a date later than the date of
      issuance, then at a price below the Market Price on such date of
      exercise or conversion, as the case may be, or (ii) any commissions,
      fees or other allowances paid in connection with such issuances (other
      than customary underwriter or placement agent commissions, fees or
      allowances).  For the purposes of determining the Market Price at which
      Common Stock is acquired under this Section, normal underwriting
      commissions and placement fees (including underwriters' warrants) shall
      be excluded.  Notwithstanding the foregoing, the Company may enter into
      the following types of transactions (collectively referred to as
      "Permitted Financings"):  (1) "permanent financing" transactions, which
      would include any form of debt or equity financing (other than an
      underwritten offering), which is followed by a reduction of the said
      financing commitment to zero and payment of all related fees and
      expenses; (2) "project financing" which provide for the issuance of
      recourse debt instruments in connection with the operation of the
      Company's business as presently conducted or as proposed to be
      conducted; (3) an underwritten offering of Common Stock, provided that
      such offering provides for the registration of the Conversion Shares if
      the Registration Statement has not been declared effective; and (4)
      other financing transactions specifically consented to in writing by
      the Purchaser.  The 120-day restrictive period set forth in this
      paragraph (a) of this Section 8.6 shall be increased by one day for
      each day a Registration Default has occurred and not been cured by the
      Company.

      (b)       Until such time as all of the Convertible Debentures have
      been either redeemed or converted into Conversion Shares in full, the
      Company agrees it will not issue any of its equity securities (or
      Derivative Securities), unless any shares of Common Stock issued or
      issuable in connection therewith are "restricted securities."  As used
      herein "restricted securities" shall mean securities which may not be
      sold prior to twelve (12) months following the date of issuance of such
      securities by virtue of contractual restrictions imposed by the Company
      or otherwise.

      (c)       Notwithstanding the foregoing, the restrictions contained in
      this Section 8.6 shall not apply to the issuance by the Company of (or
      the agreement to issue) Common Stock or securities convertible into
      Common Stock in connection with (i) the acquisition (including by
      merger) of a business or of assets otherwise permitted under this
      Agreement, or (ii) Company or Subsidiary stock option or other
      compensatory or employee benefit plans.

 ARTICLE 8.7      Limitation on Stock Repurchases.  Except as otherwise set
 forth in the Convertible Debentures and the Warrants, the Company shall not,
 without the written consent of the Majority Holders, redeem, repurchase or
 otherwise acquire (whether for cash or in exchange for property or other
 securities or otherwise) any shares of capital stock of the Company or any
 warrants, rights or options to purchase or acquire any such shares.

 ARTICLE 9.              RESTRICTIVE LEGENDS

 ARTICLE 9.1      Restrictions on Transfer.  From and after their respective
 dates of issuance, none of the Securities shall be transferable except upon
 the conditions specified in this Article IX, which conditions are intended
 to ensure compliance with the provisions of the Securities Act in respect of
 the Transfer of any of such Securities or any interest therein.  Purchaser
 will use its best efforts to cause any proposed transferee of any Securities
 held by it to agree to take and hold such Securities subject to the
 provisions and upon the conditions specified in this Article IX.

 ARTICLE 9.2      Legends.  The Convertible Debentures and Warrants shall
 bear restrictive legends in accordance with applicable securities laws.  The
 Conversion Shares, upon resale by the Purchaser pursuant to the Registration
 Statement, shall be freely tradeable and unrestricted.

 ARTICLE 9.3      Notice of Proposed Transfers.  Prior to any proposed
 Transfer of the Securities (other than a Transfer (i) registered or exempt
 from registration under the Securities Act, (ii) to an  affiliate of a
 Purchaser which is an "accredited investor" within the meaning of Rule
 501(a) under the Securities Act, provided that any such transferee shall
 agree to be bound by the terms of this Agreement and the Registration Rights
 Agreement, or (iii) to be made in reliance on Rule 144 under the Securities
 Act), the holder thereof shall give written notice to the Company of such
 holder's intention to effect such Transfer, setting forth the manner and
 circumstances of the proposed Transfer, which shall be accompanied by (a) an
 opinion of counsel reasonably acceptable to the Company, confirming that
 such transfer does not give rise to a violation of the Securities Act, (B)
 representation letters in form and substance reasonably satisfactory to the
 Company to ensure compliance with the provisions of the Securities Act and
 (C) letters in form and substance reasonably satisfactory to the Company
 from each such transferee stating such transferee's agreement to be bound by
 the terms of this Agreement and the Registration Rights Agreement.  Such
 proposed Transfer may be effected only if the Company shall have received
 such notice of transfer, opinion of counsel, representation letters and
 other letters referred to in the immediately preceding sentence, whereupon
 the holder of such Securities shall be entitled to Transfer such Securities
 in accordance with the terms of the notice delivered by the holder to the
 Company.

 ARTICLE 10.   ADDITIONAL AGREEMENTS AMONG THE PARTIES

 ARTICLE 10.1     Liquidated Damages.

      (a)       The Company shall cause its transfer agent to, issue and
      deliver shares of Common Stock consistent with Section 7.11 hereof
      within three (3) New York Stock Exchange Trading Days of delivery of a
      Notice of Conversion or Notice of Exercise, as applicable (the
      "Deadline") to Purchaser (or any party receiving Securities by transfer
      from Purchaser) at the address of Purchaser set forth in the Notice of
      Conversion or Notice of Exercise, as the case may be.  The Company
      understands that a delay in the issuance of such certificates after the
      Deadline could result in economic loss to Purchaser.

      (b)       Without in any way limiting Purchaser's right to pursue other
      remedies, including actual damages and/or equitable relief, the Company
      agrees that if delivery of the Conversion Shares is more than one (1)
      Business Day after the Deadline (other than a failure due to the
      circumstances described in Section 4.3 of the Convertible Debentures,
      which failure shall be governed by such Section) the Company shall pay
      to Purchaser, as liquidated damages and not as a penalty, $500 for each
      $100,000 of Convertible Debentures then outstanding per day in cash,
      for each of the first ten (10) days beyond the Deadline, and $1,000 for
      each $100,000 of Convertible Debentures then outstanding per day in
      cash for each day thereafter that the Company fails to deliver such
      Common Stock.  Such cash amount shall be paid to Purchaser upon demand,
      or at the option of Purchaser (by written notice to the Company by the
      first day of the week following the week in which it has accrued),
      shall be added to the principal amount of the Convertible Debenture (if
      then outstanding) payable to Purchaser, in which event interest shall
      accrue thereon in accordance with the terms of the Convertible
      Debentures and such additional principal amount shall be convertible
      into Common Stock in accordance with the terms of the Convertible
      Debentures.

 ARTICLE 10.2     Conversion Notice.  The Company agrees that, in addition to
 any other remedies which may be available to Purchaser, including, but not
 limited to, the remedies available under Section 10.1, in the event the
 Company fails for any reason (other than as a result of actions taken by a
 Purchaser in breach of this Agreement) to effect delivery to a Purchaser of
 certificates with or without restrictive legends as contemplated by Article
 IX representing the shares of Common Stock on or prior to the Deadline after
 conversion of any Convertible Debentures or exercise of the Warrants,
 Purchaser will be entitled, if prior to the delivery of such certificates,
 to revoke the Notice of Conversion or Notice of Exercise, as applicable, by
 delivering a notice to such effect to the Company whereupon the Company and
 Purchaser shall each be restored to their respective positions immediately
 prior to delivery of such Notice of Conversion or Notice of Exercise, as the
 case may be.

 ARTICLE 10.3     Conversion Limit.  Notwithstanding the conversion rights
 under the Convertible Debentures, unless Purchaser delivers a waiver in
 accordance with the immediately following sentence, in no event shall
 Purchaser be entitled to convert any portion of the Convertible Debentures,
 in excess of that portion of the Convertible Debentures, as applicable, of
 which the sum of (i) the number of shares of Common Stock beneficially owned
 by Purchaser and its Affiliates (other than shares of Common Stock which may
 be deemed beneficially owned through the ownership of the unconverted
 portion of the Convertible Debenture or other Derivative Securities
 convertible into or exchangeable for shares of Common Stock which contain a
 limitation similar to that set forth in this Section 10.3), and (ii) the
 number of shares of Common Stock issuable upon the conversion of the portion
 of the Convertible Debenture with respect to which this determination is
 being made, would result in beneficial ownership by Purchaser and its
 Affiliates of more than 4.99% of the outstanding shares of Common Stock.
 For purposes of Section 10.3(i) beneficial ownership shall be determined in
 accordance with Rule 13d-3 of the Exchange Act and Regulations 13 D-G
 thereunder, except as otherwise provided in this Section 10.3.  The
 foregoing limitation shall not apply and shall be of no further force or
 effect (i) immediately preceding and upon the occurrence of any voluntary or
 mandatory redemption or repayment transaction described herein or in the
 Convertible Debentures, (ii) immediately preceding and upon any Sale Event,
 (iii) on the Maturity Date or (iv) following the occurrence of any Event of
 Default which is not cured for a period of ten (10) calendar days.

 ARTICLE 10.4     Registration Rights.

      (a)       The Company shall grant Purchaser registration rights
      covering the Conversion Shares (the "Registrable Securities") on the
      terms set forth in the Registration Rights Agreement and herein.

      (b)       The Company shall prepare and file within sixty (60) days
      following the Closing Date (the "Filing Date") a registration statement
      or amendment thereto (the "Registration Statement") covering the resale
      of the Registrable Securities.  The Company shall use its best efforts
      to cause the Registration Statement to be declared effective by the
      Commission and the necessary Listing Applications to be filed on the
      earlier of (i) 180 days of the Closing Date, (ii) ten days following
      the receipt of a "No Review" Letter from the Commission or (iii) the
      first day following the day the Commission determines the Registration
      Statement eligible to be declared effective (the "Required
      Effectiveness Date").  The Company shall pay all expenses of
      registration (other than underwriting fees and discounts, if any, in
      respect of Registrable Securities offered and sold under each
      registration statement by Purchaser).

      (c)       If the Registration Statement is not filed by the Filing
      Date, the Company shall pay to Purchaser, as liquidated damages and not
      as a penalty, an amount equal to two percent (2%) of the principal
      amount of Convertible Debentures outstanding for each 30-day period
      (prorated) until the Registration Statement is filed with the
      Commission.  If the Registration Statement is not declared effective by
      the Commission by the Required Effectiveness Date, the Formula
      Conversion Price (as defined in the Convertible Debenture) shall be
      amended so that the percentage used in the denominator of the Formula
      Conversion Price shall be reduced by ten percent (10%) for each 30-day
      period the Registration Statement is not declared effective by the
      Commission through the 360th day following the Closing Date.  (By way
      of example, if the Registration Statement is not declared effective by
      the Commission on the 240th day following the Closing Date, the Formula
      Conversion Price for the Convertible Debenture would be the formula
      F/P, where:

           F = Principal amount of the Convertible Debenture being converted,
           together with the accrued and unpaid interest through the date of
           conversion, and

           P = 60% of the average of the 5 lowest volume weighted average
           sales prices, as reported by Bloomberg LP, during the 20 Trading
           Days immediately preceding the date of the related notice of
           conversion.)

 In the event the Company fails to obtain a valid registration statement by
 the 360th day following the Closing Date, the Purchaser may require the
 Company to redeem the Convertible Debentures and the Warrants as set forth
 in Section 5 of the Convertible Debentures and Section 13 of the Warrants,
 respectively.  Additionally, the Company will grant to Purchaser first
 priority piggyback registration rights in the event the Company proposes to
 effect a registered offering of Common Stock or warrants or both prior to
 the filing of the Registration Statement referenced above.

      (d)       Any such liquidated damages shall be paid in cash by the
      Company to Purchaser by wire transfer in immediately available funds on
      the last day of each calendar week following the event requiring its
      payment.

      (e)       If, following the declaration of effectiveness of the
      Registration Statement  the Registration Statement (or any prospectus
      or supplemental prospectus contained therein) shall cease to be
      effective for any reason (including but not limited to the occurrence
      of any event that results in any prospectus or supplemental prospectus
      containing an untrue statement of a material fact or omitting 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 Company fails to file required
      amendments to the Registration Statement in order to allow the
      Purchaser to exercise its rights to receive unrestricted, unlegended,
      freely tradeable shares of Common Stock, or if for any reason there are
      insufficient shares of such shares of Common Stock registered under the
      then current Registration Statement to effect full conversion of the
      Convertible Debentures or exercise of the Warrants (each a
      "Registration Default"), the Company shall immediately take all
      necessary steps to cause the Registration Statement to be amended or
      supplemented so as to cure the Registration Default.  Failure to cure a
      Registration Default within ten (10) Business Days shall result in the
      Company paying to Purchaser liquidated damages at the rate of one
      percent (1%) of the outstanding principal amount of Convertible
      Debentures for each 30-day period (prorated) the Registration Default
      remains uncured.

      (f)       In the event that there is an insufficient number of
      authorized, issuable, unlegended and freely tradeable shares of Common
      Stock registered under the Registration Statement filed by the Company
      to fully convert the Convertible Debentures and exercise all Warrants
      held by Purchaser and sell such shares issued thereon, then the Company
      shall immediately file an amendment to the then current registration
      statement to register a sufficient number of such shares to convert
      said Convertible Debentures and Warrants.  The failure of the Company
      to register a sufficient number of such shares to fully convert said
      Convertible Debentures and exercise such Warrants shall be a
      Registration Default under Section 10.4(e) above from the date of the
      Notice of Conversion to the date of the earlier of (i) the redemption
      of the outstanding balance of the Convertible Debentures and exercise
      of all such Warrants or (ii) full conversion of the Convertible
      Debentures and exercise of all such Warrants

 ARTICLE 11.          ADJUSTMENT OF FIXED PRICE

 ARTICLE 11.1     Reorganization.  The Conversion Price and the exercise
 price of the Warrants (collectively, the "Fixed Prices") shall be adjusted,
 as applicable, as hereafter provided.

 ARTICLE 11.2     Share Reorganization.  If and whenever the Company shall:

      (i)       subdivide the outstanding shares of Common Stock into a
      greater number of shares;

      (ii)      consolidate the outstanding shares of Common Stock into a
      smaller number of shares;

      (iii)          issue Common Stock or securities convertible into or
      exchangeable for shares of Common Stock as a stock dividend to all or
      substantially all the holders of Common Stock; or

      (iv)      make a distribution on the outstanding Common Stock to all or
      substantially all the holders of Common Stock payable in Common Stock
      or securities convertible into or exchangeable for Common Stock;

 any of such events being herein called a "Share Reorganization," then in
 each such case the applicable Fixed Price shall be adjusted, effective
 immediately after the record date at which the holders of Common Stock are
 determined for the purposes of the Share Reorganization or, if no record
 date is fixed, the effective date of the Share Reorganization, by
 multiplying the applicable Fixed Price in effect on such record or effective
 date, as the case may be, by a fraction of which:

           (i)  the numerator shall be the number of shares of Common Stock
      outstanding on such record or effective date (without giving effect to
      the transaction); and

           (II) the denominator shall be the number of shares of Common Stock
      outstanding after giving effect to such Share Reorganization,
      including, in the case of a distribution of securities convertible into
      or exchangeable for shares of Common Stock, the number of shares of
      Common Stock that would have been outstanding if such securities had
      been converted into or exchanged for Common Stock on such record or
      effective date.

 ARTICLE 11.3     Rights Offering.  If and whenever the Company shall issue
 to all or substantially all the holders of Common Stock, rights, options or
 warrants under which such holders are entitled, during a period expiring not
 more than 45 days after the record date of such issue, to subscribe for or
 purchase Common Stock (or Derivative Securities), at a price per share (or,
 in the case of securities convertible into or exchangeable for Common Stock,
 at an exchange or conversion price per share at the date of issue of such
 securities) of less than 95% of the Market Price of the Common Stock as of
 the record date (any such event being herein called a "Rights Offering"),
 then in each such case the applicable Fixed Price shall be adjusted,
 effective immediately after the record date at which holders of Common Stock
 are determined for the purposes of the Rights Offering, by multiplying the
 applicable Fixed Price in effect on such record date by a fraction of which:

 (i)       the numerator shall be the sum of:

           (I)  the number of shares of Common Stock outstanding on such
 record date; and

           (II) a number obtained by dividing:

 (A)            either,

                (x)  the product of the total number of shares of Common
      Stock so offered for subscription or purchase and the price at which
      such shares are so offered, or

                (y)  the product of the maximum number of shares of Common
      Stock into or for which the convertible or exchangeable securities so
      offered for subscription or purchase may be converted or exchanged and
      the conversion or exchange price of such securities, or, as the case
      may be, by

 (B)            the Market Price of the Common Stock as of the record date;
 and

 (ii)      the denominator shall be the sum of:

           (I)  the number of shares of Common Stock outstanding on such
      record date; and

           (II) the number of shares of Common Stock so offered for
      subscription or purchase (or, in the case of Derivative Securities, the
      maximum number of shares of Common Stock for or into which the
      securities so offered for subscription or purchase may be converted or
      exchanged).

 To the extent that such rights, options or warrants are not exercised prior
 to the expiry time thereof, the applicable Fixed Price shall be readjusted
 effective immediately after such expiry time to the applicable Fixed Price
 which would then have been in effect upon the number of shares of Common
 Stock (or Derivative Securities) actually delivered upon the exercise of
 such rights, options or warrants.

 ARTICLE 11.4          Special Distribution.  If and whenever the Company
 shall issue or distribute to all or substantially all the holders of Common
 Stock:

      (i)       shares of the Company of any class, other than Common Stock;

      (ii)      rights, options or warrants; or

      (iii)          any other assets (excluding cash dividends and
      equivalent dividends in shares paid in lieu of cash dividends in the
      ordinary course);

 and if such issuance or distribution does not constitute a Share
 Reorganization or a Rights Offering (any such event being herein called a
 "Special Distribution"), then in each such case the applicable Fixed Price
 shall be adjusted, effective immediately after the record date at which the
 holders of Common Stock are determined for purposes of the Special
 Distribution, by multiplying the applicable Fixed Price in effect on such
 record date by a fraction of which:

           (I)  the numerator shall be the difference between:

      (A)       the product of the number of shares of Common Stock
      outstanding on such record date and the Market Price of the Common
      Stock as of such date; and

      (B)       the fair market value, as determined by the Directors (whose
      determination shall be conclusive), to the holders of Common Stock of
      the shares, rights, options, warrants, evidences of indebtedness or
      other assets issued or distributed in the Special Distribution (net of
      any consideration paid therefor by the holders of Common Stock), and

           (II) the denominator shall be the product of the number of shares
      of Common Stock outstanding on such record date and the Market Price of
      the Common Stock as of such date.

 ARTICLE 11.5    Capital Reorganization.  If and whenever there shall occur:

      (i)       a reclassification or redesignation of the shares of Common
      Stock or any change of the shares of Common Stock into other shares,
      other than in a Share Reorganization;

      (ii)      a consolidation, merger or amalgamation of the Company with,
      or into another body corporate; or

      (iii)          the transfer of all or substantially all of the assets
      of the Company to another body corporate;

 (any such event being herein called a "Capital Reorganization"), then in
 each such case the holder who exercises the right to convert Convertible
 Debentures after the effective date of such Capital Reorganization shall be
 entitled to receive and shall accept, upon the exercise of such right, in
 lieu of the number of shares of Common Stock to which such holder was
 theretofore entitled upon the exercise of the conversion privilege, the
 aggregate number of shares or other securities or property of the Company or
 of the body corporate resulting from such Capital Reorganization that such
 holder would have been entitled to receive as a result of such Capital
 Reorganization if, on the effective date thereof, such holders had been the
 holder of the number of shares of Common Stock to which such holder was
 theretofore entitled upon conversion; provided, however, that no such
 Capital Reorganization shall be consummated in effect unless all necessary
 steps shall have been taken so that such holders shall thereafter be
 entitled to receive such number of shares or other securities of the Company
 or of the body corporate resulting from such Capital Reorganization, subject
 to adjustment thereafter in accordance with provisions the same, as nearly
 as may be possible, as those contained above.

 ARTICLE 11.6     Purchase Price Adjustments.  In case at any time and from
 time to time the Company shall issue any shares of Common Stock or
 Derivative Securities convertible or exercisable for shares of Common Stock
 (the number of shares so issued, or issuable upon conversion or exercise of
 such Derivative Securities, as applicable, being referred to as "Additional
 Shares of Common Stock") for consideration less than the then Market Price
 as of the date of issuance of such shares of Common Stock or such Derivative
 Securities, in each such case the Conversion Price shall, concurrently with
 such issuance, be adjusted by multiplying the Conversion Price immediately
 prior to such event by a fraction: (i) the numerator of which shall be the
 number of shares of Common Stock outstanding immediately prior to the
 issuance of such Additional Shares of Common Stock plus the number of shares
 of Common Stock that the aggregate consideration received by the Company for
 the total number of such Additional Shares of Common Stock so issued would
 purchase at the Market Price and (ii) the denominator of which shall be the
 number of shares of Common Stock outstanding immediately prior to the
 issuance of Additional Shares of Common Stock plus the number of such
 Additional Shares of Common Stock so issued or sold.

 ARTICLE 11.7     Adjustment Rules. The following rules and procedures shall
 be applicable to adjustments made in this Article XI:

      (a)       no adjustment in the applicable Fixed Price shall be required
      unless such adjustment would result in a change of at least 1% in the
      applicable Fixed Price then in effect, provided, however, that any
      adjustments which, but for the provisions of this clause would
      otherwise have been required to be made, shall be carried forward and
      taken into account in any subsequent adjustment;

      (b)       if any event occurs of the type contemplated by the
      adjustment provisions of this Article XI but not expressly provided for
      by such provisions, the Company will give notice of such event as
      provided herein, and the Company's board of directors will make an
      appropriate adjustment in the Fixed Price so that the rights of the
      holders of the applicable Security shall not be diminished by such
      event; and

      (c)       if a dispute shall at any time arise with respect to any
      adjustment of the applicable Fixed Price, such dispute shall be
      conclusively determined by the auditors of the Company or, if they are
      unable or unwilling to act, by a firm of independent chartered
      accountants selected by the Directors and any such determination shall
      be binding upon the Company and Purchaser.

 ARTICLE 11.8     Certificate as to Adjustment.  The Company shall from time
 to time promptly after the occurrence of any event which requires an
 adjustment in the applicable Fixed Price deliver to Purchaser a certificate
 specifying the nature of the event requiring the adjustment, the amount of
 the adjustment necessitated thereby, the applicable Fixed Price after giving
 effect to such adjustment and setting forth, in reasonable detail, the
 method of calculation and the facts upon which such calculation is based.

 ARTICLE 11.9     Notice to Holders.  If the Company shall fix a record date
 for:

      (a)       any Share Reorganization (other than the subdivision of
      outstanding Common Stock into a greater number of shares or the
      consolidation of outstanding Common Stock into a smaller number of
      shares),

      (b)       any Rights Offering,

      (c)       any Special Distribution,

      (d)       any Capital Reorganization (other than a reclassification or
      redesignation of the Common Stock into other shares),

      (e)       Sale Event; or

      (f)       any cash dividend,

 the Company shall, not less than 10 days prior to such record date or, if no
 record date is fixed, prior to the effective date of such event, give to
 Purchaser notice of the particulars of the proposed event or the extent that
 such particulars have been determined at the time of giving the notice.

 ARTICLE 12.              EVENTS OF DEFAULT

 ARTICLE 12.1     Events of Default.  If one or more of the following events
 (each an "Event of Default") shall have occurred and be continuing:

      (a)       failure by the Company to pay or repay when due, all or any
      part of the principal on any of the Convertible Debentures (whether by
      virtue of the agreements specified in this Agreement or the Convertible
      Debentures);

      (b)       failure by the Company to pay (i) within five (5) Business
      Days of the due date thereof any interest on any Convertible Debentures
      or (ii) within five (5) Business Days following the delivery of notice
      to the Company of any fees or any other amount payable (not otherwise
      referred to in (a) above or this clause (b)) by the Company under this
      Agreement or any other Transaction Agreement;

      (c)       reserved;

      (d)       failure on the part of the Company to observe or perform any
      covenant contained in Article VIII of this Agreement;

      (e)       failure on the part of the Company to observe or perform any
      covenant or agreement contained in any Transaction Agreement (other
      than those covered by clauses (a), (b), (c), or (d) above) for 30 days
      from the date of such occurrence;

      (f)       the trading in the Common Stock shall have been suspended by
      the Commission, OTC Bulletin Board or any National Market (except for
      any suspension of trading of limited duration solely to permit
      dissemination of material information regarding the Company and except
      if, at the time there is any suspension on any National Market, the
      Common Stock is then listed and approved for trading on another
      National Market within ten (10) Trading Days thereof);

      (g)       reserved;

      (h)       the Company shall have its Common Stock delisted from the OTC
      Bulletin Board or a National Market for at least ten (10) consecutive
      Trading Days and is unable to obtain a listing on a National Market
      within such ten (10) Trading Days;

      (i)       the effectiveness of the Registration Statement shall not be
      maintained for the Registration Maintenance Period, which results in
      the Company incurring the liquidated damages or a default fee for a
      period in excess of 30 days;

      (j)       the Company or any Subsidiary has commenced a voluntary case
      or other proceeding seeking liquidation, winding-up, reorganization or
      other relief with respect to itself or its debts under any bankruptcy,
      insolvency, moratorium or other similar law now or hereafter in effect
      or seeking the appointment of a trustee, receiver, liquidator,
      custodian or other similar official of it or any substantial part of
      its property, or has consented to any such relief or to the appointment
      of or taking possession by any such official in an involuntary case or
      other proceeding commenced against it, or has made a general assignment
      for the benefit of creditors, or has failed generally to pay its debts
      as they become due, or has taken any corporate action to authorize any
      of the foregoing;

      (k)       an involuntary case or other proceeding has been commenced
      against the Company or any Subsidiary seeking liquidation, winding-up,
      reorganization or other relief with respect to it or its debts under
      any bankruptcy, insolvency, moratorium or other similar law now or
      hereafter in effect or seeking the appointment of a trustee, receiver,
      liquidator, custodian or other similar official of it or any
      substantial part of its property, and such involuntary case or other
      proceeding shall remain undismissed and unstayed for a period of 60
      days, or an order for relief has been entered against the Company or
      any Subsidiary under the federal bankruptcy laws as now or hereafter in
      effect;

      (l)       default in any provision (including payment) or any agreement
      governing the terms of any Debt of the Company or any Subsidiary in
      excess of $500,000, which has not been cured within any applicable
      period of grace associated therewith;

      (m)       judgments or orders for the payment of money which in the
      aggregate at any one time exceed $1,000,000 and are not covered by
      insurance have been rendered against the Company or any Subsidiary by a
      court of competent jurisdiction and such judgments or orders shall
      continue unsatisfied and unstayed for a period of 60 days; or

      (n)       any representation, warranty, certification or statement made
      by the Company in any Transaction Agreement or which is contained in
      any certificate, document or financial or other statement furnished at
      any time under or in connection with any Transaction Agreement shall
      prove to have been untrue in any material respect when made.

 then, and in every such occurrence, Purchaser may, with respect to an Event
 of Default specified in paragraphs (a) or (b), and the Majority Holders may,
 with respect to any other Event of Default, by notice to the Company,
 declare the Convertible Debentures to be, and the Convertible Debentures
 shall thereon become immediately due and payable; provided that in the case
 of any of the Events of Default specified in paragraph (j) or (k) above with
 respect to the Company or any Subsidiary, then, without any notice to the
 Company or any other act by Purchaser, the entire amount of the Convertible
 Debentures shall become immediately due and payable, provided, further, if
 any Event of Default has occurred and is continuing, and irrespective of
 whether any Convertible Debenture has been declared immediately due and
 payable hereunder, any Purchaser of Convertible Debentures may proceed to
 protect and enforce the rights of Purchaser by an action at law, suit in
 equity or other appropriate proceeding, whether for the specific performance
 of any agreement contained herein or in any Convertible Debenture, or for an
 injunction against a violation of any of the terms hereof or thereof, or in
 aid of the exercise of any power granted hereby or thereby or by law or
 otherwise, and provided further, in the case of any Event of Default, the
 amount declared due and payable on the Convertible Debentures shall be the
 Formula Price.

 ARTICLE 12.2     Powers and Remedies Cumulative.  No right or remedy herein
 conferred upon or reserved to Purchaser is intended to be exclusive of any
 other right or remedy, and every right and remedy shall, to the extent
 permitted by law, be cumulative and in addition to every other right and
 remedy given hereunder or now hereafter existing at law or in equity or
 otherwise.  The assertion or employment of any right or remedy hereunder, or
 otherwise, shall not prevent the concurrent assertion or employment of any
 other appropriate right or remedy.  Every power and remedy given by the
 Convertible Debentures or by law may be exercised from time to time, and as
 often as shall be deemed expedient, by Purchaser.

 ARTICLE 13.                MISCELLANEOUS

 ARTICLE 13.1     Notices.  All notices, demands and other communications to
 any party hereunder shall be in writing (including telecopier or similar
 writing) and shall be given to such party at its address set forth on the
 signature pages hereof, or such other address as such party may hereafter
 specify for the purpose to the other parties.  Each such notice, demand or
 other communication shall be effective (i) if given by telecopy, when such
 telecopy is transmitted to the telecopy number specified on the signature
 page hereof, (ii) if given by mail, four days after such  communication is
 deposited in the mail with first class postage prepaid, addressed as
 aforesaid or (iii) if given by any other means, when delivered at the
 address specified in or pursuant to this Section.

 ARTICLE 13.2     No Waivers; Amendments.

      (a)       No failure or delay on the part of any party in exercising
      any right, power or remedy hereunder shall operate as a waiver thereof,
      nor shall any single or partial exercise of any such right, power or
      remedy preclude any other or further exercise thereof or the exercise
      of any other right, power or remedy.

      (b)       Any provision of this Agreement may be amended, supplemented
      or waived if, but only if, such amendment, supplement or waiver is in
      writing and is signed by the Company and the Majority Holders;
      provided, that without the consent of each holder of any Convertible
      Debenture affected thereby, an amendment or waiver may not (a) reduce
      the aggregate principal amount of Convertible Debentures whose holders
      must consent to an amendment or waiver, (b) reduce the rate or extend
      the time for payment of interest on any Convertible Debenture, (c)
      reduce the principal amount of or extend the stated maturity of any
      Convertible Debenture or (d) make any Convertible Debenture payable in
      money or property other than as stated in such Convertible Debenture.
      In determining whether the holders of the requisite principal amount of
      Convertible Debentures have concurred in any direction, consent, or
      waiver as provided in any Transaction Agreement, Convertible Debentures
      which are owned by the Company or any other obligor on or guarantor of
      the convertible Debentures, or by any Person Controlling, Controlled
      by, or under common Control with any of the foregoing, shall be
      disregarded and deemed not to be outstanding for the purpose of any
      such determination; and provided further that no such amendment,
      supplement or waiver which affects the rights of Purchaser and their
      affiliates otherwise than solely in their capacities as holders of
      Convertible Debentures shall be effective with respect to them without
      their prior written consent.

 ARTICLE 13.3    Indemnification.

      (a)       The Company agrees to indemnify and hold harmless Purchaser,
      its Affiliates, and each Person, if any, who controls Purchaser, or any
      of its Affiliates, within the meaning of the Securities Act or the
      Exchange Act (each, a "Controlling Person"), and the respective
      partners, agents, employees, officers and Directors of Purchaser, their
      Affiliates and any such Controlling Person (each an "Indemnified
      Party") and collectively, the "Indemnified Parties"), from and against
      any and all losses, claims, damages, liabilities and expenses
      (including, without limitation and as incurred, reasonable costs of
      investigating, preparing or defending any such claim or action, whether
      or not such Indemnified Party is a party thereto, provided that the
      Company shall not be obligated to advance such costs to any Indemnified
      Party other than Purchaser unless it has received from such Indemnified
      Party an undertaking to repay to the Company the costs so advanced if
      it should be determined by final judgment of a court of competent
      jurisdiction that such Indemnified Party was not entitled to
      indemnification hereunder with respect to such costs) which may be
      incurred by such Indemnified Party in connection with any
      investigative, administrative or judicial proceeding brought or
      threatened that relates to or arises out of, or is in connection with
      any activities contemplated by any Transaction Agreement or any other
      services rendered in connection herewith; provided that the Company
      will not be responsible for any claims, liabilities, losses, damages or
      expenses that are determined by final judgment of a court of competent
      jurisdiction to result from such Indemnified Party's gross negligence,
      willful misconduct or bad faith.

      (b)       If any action shall be brought against an Indemnified Party
      with respect to which indemnity may be sought against the Company under
      this Agreement, such Indemnified Party shall promptly notify the
      Company in writing and the Company, at its option, may, assume the
      defense thereof, including the employment of counsel reasonably
      satisfactory to such Indemnified Party and payment of all reasonable
      fees and expenses.  The failure to so notify the Company shall not
      affect any obligations the Company may have to such Indemnified Party
      under this Agreement or otherwise unless the Company is materially
      adversely affected by such failure.  Such Indemnified Party shall have
      the right to employ separate counsel in such action and participate in
      the defense thereof, but the fees and expenses of such counsel shall be
      at the expense of such Indemnified Party, unless (i) the Company has
      failed to assume the defense and employ counsel or (ii) the named
      parties to any such action (including any impleaded parties) include
      such Indemnified Party and the Company, and such Indemnified Party
      shall have been advised by counsel that there may be one or more legal
      defenses available to it which are different from or additional to
      those available to the Company, in which case, if such Indemnified
      Party notifies the Company in writing that it elects to employ separate
      counsel at the expense of the Company, the Company shall not have the
      right to assume the defense of such action or proceeding on behalf of
      such Indemnified Party, provided, however, that the Company shall not,
      in connection with any one such action or proceeding or separate but
      substantially similar or related actions or proceedings in the same
      jurisdiction arising out of the same general allegations or
      circumstances, be responsible hereunder for the reasonable fees and
      expenses of more than one such firm of separate counsel, in addition to
      any local counsel, which counsel shall be designated by Purchaser.  The
      Company shall not be liable for any settlement of any such action
      effected without the written consent of the Company (which shall not be
      unreasonably withheld) and the Company agrees to indemnify and hold
      harmless each Indemnified Party from and against any loss or liability
      by reason of settlement of any action effected with the consent of the
      Company.  In addition, the Company will not, without the prior written
      consent of Purchaser, settle or compromise or consent to the entry of
      any judgment in or otherwise seek to terminate any pending or
      threatened action, claim, suit or proceeding in respect to which
      indemnification or contribution may be sought hereunder (whether or not
      any Indemnified Party is a party thereto) unless such settlement,
      compromise, consent or termination includes an express unconditional
      release of Purchaser and the other Indemnified Parties, satisfactory in
      form and substance to Purchaser, from all liability arising out of such
      action, claim, suit or proceeding.

      (c)       If for any reason the foregoing indemnity is unavailable
      (otherwise than pursuant to the express terms of such indemnity) to an
      Indemnified Party or insufficient to hold an Indemnified Party
      harmless, then in lieu of indemnifying such Indemnified Party, the
      Company shall contribute to the amount paid or payable by such
      Indemnified Party as a result of such claims, liabilities, losses,
      damages, or expenses (i) in such proportion as is appropriate to
      reflect the relative benefits received by the Company on the one hand
      and by Purchaser on the other from the transactions contemplated by
      this Agreement or (ii) if the allocation provided by clause (i) is not
      permitted under applicable law, in such proportion as is appropriate to
      reflect not only the relative benefits received by the Company on the
      one hand and Purchaser on the other, but also the relative fault of the
      Company and Purchaser as well as any other relevant equitable
      considerations.  Notwithstanding the provisions of this Section 13.3,
      the aggregate contribution of all Indemnified Parties shall not exceed
      the amount of interest and fees actually received by Purchaser pursuant
      to this Agreement.  It is hereby further agreed that the relative
      benefits to the Company on the one hand and Purchaser on the other with
      respect to the transactions contemplated hereby shall be determined by
      reference to, among other things, whether any untrue or alleged untrue
      statement of material fact or the omission or alleged omission to state
      a material fact related to information supplied by the Company or by
      Purchaser and the parties' relative intent, knowledge, access to
      information and opportunity to correct or prevent such statement or
      omission.  No Person guilty of fraudulent misrepresentation (within the
      meaning of Section 11(f) of the Securities Act) shall be entitled to
      contribution from any Person who was not guilty of such fraudulent
      misrepresentation.

      (d)       The indemnification, contribution and expense reimbursement
      obligations set forth in this Section 13.3 (i) shall be in addition to
      any liability the Company may have to any Indemnified Party at common
      law or otherwise; (ii) shall survive the termination of this Agreement
      and the other Transaction Agreements and the payment in full of the
      Convertible Debentures and (iii) shall remain operative and in full
      force and effect regardless of any investigation made by or on behalf
      of Purchaser or any other Indemnified Party.

 ARTICLE 13.4     Expenses:  Documentary Taxes. The Company agrees to pay to
 Global Capital Advisors, Ltd., on the Closing Date, a fee of $40,000.00 (the
 "Transaction Fee") in full satisfaction of all obligations of the Company to
 Purchaser and its agents in connection with the negotiation and preparation
 of the Transaction Agreements, relevant due diligence, and fees and
 disbursements of legal counsel.  In addition, the Company agrees to pay any
 and all stamp, transfer and other similar taxes, assessments or charges
 payable in connection with the execution and delivery of any Transaction
 Agreement or the issuance of the Securities to Purchaser, excluding their
 assigns.

 ARTICLE 13.5     Payment.  The Company agrees that, so long as Purchaser
 shall own any Convertible Debentures purchased by it from the Company
 hereunder, the Company will make payments to Purchaser of all amounts due
 thereon by wire transfer by 4:00 P.M. (E.S.T.).

 ARTICLE 13.6    Successors and Assigns.  This Agreement shall be binding
 upon the Company and upon Purchaser and its respective successors and
 assigns; provided that the Company shall not assign or otherwise transfer
 its rights or obligations under this Agreement to any other Person without
 the prior written consent of the Majority Holders.  All provisions hereunder
 purporting to give rights to Purchaser and its affiliates or to holders of
 Securities are for the express benefit of such Persons and their successors
 and assigns.

 ARTICLE 13.7    Brokers.  The Closing, the Company represents and warrants
 that it has not employed any broker, finder, financial advisor or investment
 banker who would be entitled to any brokerage, finder's or other fee or
 commission payable by the Company or Purchaser in connection with the sale
 of the Securities.

 ARTICLE 13.8   Delaware Law; Submission to Jurisdiction; Waiver of Jury
 Trial; Appointment of Agent.  THIS AGREEMENT SHALL BE CONSTRUED IN
 ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.  EACH
 PARTY HERETO HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED
 STATES DISTRICT COURT FOR DELAWARE AND OF ANY FEDERAL DISTRICT COURT SITTING
 IN DELAWARE FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING
 TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH PARTY
 HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
 OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
 ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
 PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
 FORUM. EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO THE SERVICE OF
 PROCESS IN ANY SUCH PROCEEDING BY THE MAILING OF COPIES THEREOF BY
 REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS
 SET FORTH HEREIN.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO
 SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.  EACH PARTY WAIVES ITS
 RIGHT TO A TRIAL BY JURY.

 ARTICLE 13.9       Entire Agreement.  This Agreement, the Exhibits or
 Schedules hereto, which include, but are not limited to the Convertible
 Debenture, the Warrant, the Registration Rights Agreement and the Security
 Agreement, set forth the entire agreement and understanding of the parties
 relating to the subject matter hereof and supersedes all prior and
 contemporaneous agreements, negotiations and understandings between the
 parties, both oral and written relating to the subject matter hereof. The
 terms and conditions of all Exhibits and Schedules to this Agreement are
 incorporated herein by this reference and shall constitute part of this
 Agreement as is fully set forth herein.

 ARTICLE 13.10       Survival; Severability. The representations, warranties,
 covenants and agreements of the parties hereto shall survive the Closing
 hereunder. In the event that any provision of this Agreement becomes or is
 declared by a court of competent jurisdiction to be illegal, unenforceable
 or void, this Agreement shall continue in full force and effect without said
 provision; provided that such severability shall be ineffective if it
 materially changes the economic benefit of this Agreement to any party.

 ARTICLE 13.11       Title and Subtitles.  The titles and subtitles used in
 this Agreement are used for convenience only and are not to be considered in
 construing or interpreting this Agreement.

 ARTICLE 13.12       Reporting Entity for the Common Stock.  The reporting
 entity relied upon for the determination of the trading price or trading
 volume of the Common Stock on any given Trading Day for the purposes of this
 Agreement and all Exhibits shall be Bloomberg, L.P. or any successor
 thereto. The written mutual consent of the Purchaser and the Company shall
 be required to employ any other reporting entity.

 ARTICLE 13.13       Publicity.  The Company and the Purchaser shall consult
 with each other in issuing any press releases or otherwise making public
 statements with respect to the transactions contemplated hereby and no party
 shall issue any such press release or otherwise make any such public
 statement without the prior written consent of the other parties, which
 consent shall not be unreasonably withheld or delayed, except that no prior
 consent shall be required if such disclosure is required by law, in which
 such case the disclosing party shall provide the other parties with prior
 notice of such public statement.  Notwithstanding the foregoing, the Company
 shall not publicly disclose the name of Purchaser without the prior written
 consent of Purchaser, except to the extent required by law, in which case
 the Company shall provide Purchaser with prior written notice of such public
 disclosure.
                             [signature page follows]

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

                               DIAL-THRU INTERNATIONAL CORPORATION

                                  By: John A. Jenkins /S/
                                      -------------------
                                Name: John A. Jenkins
                               Title: President

                             Address: Dial-Thru International Corporation
                                      700 South Flower
                                      Suite 2950
                                      Los Angeles, CA 90017

                                      Fax:  (323) 210-2091
                                      Telephone:  (213) 627-7599

                               GLOBAL CAPITAL FUNDING GROUP, L.P.

                               By its General Partner,  Global Capital
                               Management Services, Inc.

                                  By: Lewis N Lester /S/
                                      ------------------
                                Name: Lewis N. Lester
                               Title: President

                             Address: 106 Colony Park Drive
                                      Suite 900
                                      Cumming, Georgia 30040

                                      Fax: 678-947-6499
                                      Tel.:   678-947-0028

<PAGE>

                                 Schedule 2.2

                         Allocation of Purchase Price

 1.        $1,000,000 Principal Amount 6% Convertible Debentures for a
      purchase price equal to $990,000.00

 2.        Warrant to purchase 100,000 shares of Common Stock of the Company
      for a purchase price equal to $10,000.00

<PAGE>

                           Schedule 7.8

                          Use of Proceeds

                     VolP Equipment - 5 Cities             25%

                     Build out Facilities - 5 Cities       35%

                     Switch Upgrade                        10%

                     SS-7 Signal Upgrade                   10%

                     Software Upgrade                       7.5%

                     Hardware Upgrade                       7.5%

                     Marketing of Dial Around Svc.          5%
           ________________________________________________________
                                                          100%<PAGE>

                                                                     Exhibit 4.1
                                                                     -----------

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN EXEMPTION FROM SUCH REQUIREMENT UNDER SUCH ACT.

                                                                 37,402 Warrants

No. 001

                        CONTROL DELIVERY SYSTEMS, INC.
                       COMMON STOCK WARRANT CERTIFICATE

                         DEUTSCHE BANK SECURITIES INC.

          THIS CERTIFIES that, for valued received, Deutsche Bank Securities
Inc., or its registered successors and assigns (the "Warrant Holder"), is the
                                                     --------------
owner of the number of warrants (the "Warrants") set forth above, each to
                                      --------
purchase from Control Delivery Systems, Inc., a Delaware corporation (the
"Company"), at any time or from time to time but in any event no later than the
earlier to occur of (a) April 7, 2002 or (b) the date one year following the
closing of the Company's initial public offering of its Common Stock ("Common
                                                                       ------
Stock"), par value $0.01 per share (the "Expiration Date"), one share of Common
-----                                    ---------------
Stock at an initial exercise price of $53.74, subject to adjustment from time to
time pursuant to the provisions of Section 2 hereof.  For purposes of this
Warrant Certificate, the term "Common Shares" shall mean the class of capital
                               -------------
stock of the Company designated Common Stock, par value $0.01, pursuant to the
Company's Certificate of Incorporation, as amended, and any other class of
capital stock of the Company resulting from successive changes or
reclassification of the Common Stock.

          1.   Exercise of Warrants. The Warrants evidenced hereby may be
               --------------------
     exercised at any time through the Expiration Date by the registered holder
     hereof, in whole or in part, by (a) the surrender of this Warrant
     Certificate, duly endorsed (unless endorsement is waived by the Company),
     at the principal office of the Company (or at such other office or agency
     of the Company as it may designate by notice in writing to the registered
     holder hereof at such holder's last address appearing on the books of the
     Company), (b) the delivery of a completed and executed Notice of Exercise
     in the form of Exhibit A and (c) upon payment of the aggregate Exercise
                    ---------
     Price (as defined below) of the Common Shares purchased. The certificate(s)
     for such Common Shares shall be delivered to the registered holder hereof
     within a reasonable time after Warrants evidenced hereby shall have been so
     exercised and a new Warrant Certificate evidencing the number of Warrants,
     if any, remaining unexercised shall also be issued to the registered holder
     within such time unless such Warrants have expired. No fractional Common
     Shares of the Company, or scrips for any such fractional shares, shall be
     issued upon the exercise of any Warrants; but the holder

                                       1
<PAGE>

hereof shall be entitled to cash equal to such fraction multiplied by the Market
Price on the date of exercise.

If the Market Price of a share of Common Stock exceeds the Exercise Price on the
business day immediately prior to the exercise of the Warrant, the registered
holder may exercise the Warrants held by such holder, without the payment of any
additional consideration, for a number of shares of Common Stock determined by
dividing (i) the result of the difference between such Market Price and the
Exercise Price times the number of shares of Common Stock into which the
Warrants held by such Holder are exercisable, by (ii) such Market Price. No
fractional shares will be issued, and the Company will pay the registered holder
in cash for any such fractional share otherwise issuable. The Market Price for
any day shall be the last reported sale price regular way or, in case no such
reported sale takes place on such day, the average of the closing bid and asked
prices regular way for such day, in each case (1) on the principal national
securities exchange on which the shares of Common Stock are listed or to which
such shares are admitted to trading or (2) if the Common Stock is not listed or
admitted to trading on a national securities exchange, in the over-the-counter
market as reported by NASDAQ or any comparable system or (3) if the Common Stock
is not listed on NASDAQ or a comparable system, or if for any other reason the
Market Price cannot be determined pursuant to the foregoing provisions, as
determined in good faith by the Board of Directors of the Company.

     2.  Adjustment in Exercise Price and Number of Shares. The initial exercise
price of $53.74 per share shall be subject to adjustment from time to time as
hereinafter provided (such initial exercise price, as last adjusted, the
"Exercise Price"). Upon each adjustment of the Exercise Price, the holder of
this Warrant Certificate shall thereafter be entitled to purchase at the
Exercise Price resulting from such adjustment, the number of shares obtained by
dividing (a) the product of (x) the number of Common Shares purchasable pursuant
hereto immediately prior to such adjustment and (y) the Exercise Price
immediately preceding such adjustment by (b) the Exercise Price resulting from
such adjustment.

         (a)   Subdivision or Combination of Stock. If and whenever the Company
     shall at any time subdivide its outstanding Common Shares into a greater
     number of shares, the Exercise Price in effect immediately prior to such
     subdivision shall be proportionately reduced, and conversely, in case the
     outstanding Common Shares of the Company shall be combined into a smaller
     number of shares, the Exercise Price in effect immediately prior to such
     combination shall be proportionately increased.

         (b)   Stock Dividends. If and whenever at any time the Company shall
     declare a dividend or make any other distribution upon any class or series
     of stock of the Company payable in Common Shares, the Exercise Price in
     effect immediately prior to such dividend or distribution shall be
     proportionately reduced as if such dividend or distribution had been made
     by way of a subdivision pursuant to Section 2(a) above.

                                       2
<PAGE>

          (c)  Reorganization, Reclassification, Consolidation, Merger. If any
               -------------------------------------------------------
     capital reorganization, reclassification of the capital stock of the
     Company, consolidation or merger of the Company with another corporation,
     or sale, transfer or other disposition of all or substantially all of the
     Company's properties to another corporation shall be effected, then, lawful
     and adequate provision shall be made whereby each holder of Warrants shall
     thereafter have the right to purchase and receive upon the basis and upon
     the terms and conditions herein specified and in lieu of the Common Shares
     immediately theretofore issuable upon exercise or the Warrants, such shares
     of stock, securities or properties (including cash paid as partial
     consideration) (collectively, the "Substitute Securities") as may be
     issuable or payable with respect to or in exchange for a number of
     outstanding Common Shares equal to the number of Common Shares issuable
     upon exercise of the Warrants immediately prior to such reorganization,
     reclassification, consolidation, merger, sale, transfer or other
     disposition, and in any such case, appropriate provision shall be made with
     respect to the rights and interests of each holder of Warrants to the end
     that the provisions hereof shall thereafter be applicable, as nearly
     equivalent as may be practicable in relation to any Substitute Securities
     thereafter deliverable upon the exercise thereof. The above provisions of
     this Subsection 2(c) shall similarly apply to successive reorganizations,
     reclassification, consolidations, mergers, sales, transfers or
     dispositions.

     3.  Company to Provide Stock. The Company covenants and agrees that all the
         ------------------------
Common Shares which may be issued upon the exercise of the Warrants evidenced
hereby upon the due exercise, including the receipt by the Company of the
aggregate Exercise Price for all Warrants exercised, will be duly authorized,
validly issued and fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issue thereof to the registered holder hereof
other than those which the Company shall promptly pay or discharge. The Company
further covenants and agrees that during the period within which the Warrants
evidenced hereby may be exercised, the Company will at all times reserve such
number of Common Shares as may be sufficient to permit the exercise in full of
the Warrants hereby.

     4.  Representations and Warranties of the Warrant Holder. The Warrant
         ----------------------------------------------------
Holder hereby represents and warrants to the Company as follows:

         (a)   Purchase For Own Account.  The Warrants issued to the Warrant
               ------------------------
     Holder pursuant to this Warrant Certificate, and the Common Shares to be
     issued upon exercise thereof, are being or will be acquired for the Warrant
     Holder's own account and with no intention of distributing or reselling
     such securities or any part thereof in any transaction that would be in
     violation of the securities laws of the United States.

         (b)   Restricted Securities.  The Warrant Holder understands that the
               ---------------------
     Warrants are not, and the Common Shares issuable upon exercise of the
     Warrants will not be, registered at the time of their issuance under the
     Securities Act for the reason that the sale provided for in this Warrant
     Certificate is exempt pursuant to Section 4(2) of the Securities Act and
     that reliance of the Company on such exemption is predicated in

                                       3
<PAGE>

     part on such Warrant Holder's representations set forth herein. The Warrant
     Holder represents that it is experienced in evaluating companies such as
     the Company, has such knowledge and experience in financial and business
     matters as to be capable of evaluating the merits and risks of its
     investment and has the ability to suffer the total loss of the investment.
     The Warrant Holder further represents that it has had the opportunity to
     ask questions of and receive answers from the Company concerning the terms
     and conditions of the Warrants, the business of the Company, and to obtain
     additional information to such Warrant Holder's satisfaction. The Warrant
     Holder also understands that shares of Common Stock issued upon exercise of
     Warrants shall be stamped or imprinted with a legend in substantially the
     following form:

      "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
      1933, AS AMENDED, OR ANY STATE SECURITIES LAW. THEY MAY NOT BE SOLD OR
      OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE
      ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNDER SAID
      ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY HAS
      RECEIVED AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED TO
      EFFECTUATE SUCH TRANSACTION."

          (c)  Accredited Investor.  The Warrant Holder is an "Accredited
               -------------------
     Investor" within the meaning of Rule 501 of Regulation D under the
     Securities Act, as presently in effect.

     5.   Other Notices. If any time prior to the earlier to occur of (i) the
          -------------
Expiration of the Warrants evidenced hereby and (ii) the Company's initial
public offering of its Common Stock:

          (a)  The Company shall declare any dividend on the Common Shares
     payable in shares of capital stock of the Company other than Common Shares;
     or

          (b)  The Company shall issue any options, warrants or rights pro rata
     to all holders of Common Shares entitling them to subscribe for or purchase
     any shares of stock of the Company or to receive any other rights; or

          (c)  The Company shall distribute pro rata to all holders of Common
     Shares of evidences of its indebtedness or assets (excluding cash
     distributions paid out of retained earnings or retained surplus); or

          (d)  There shall occur any reclassification of the Common Shares, or
     any consolidation or merger of the Company with or into another corporation
     (other than a consolidation or merger in which the Company is the
     continuing corporation and which does not result in any reclassification of
     the Common Stock) or a sale or transfer to another corporation of all or
     substantially all of the properties of the Company; or

                                       4
<PAGE>

          (e)  There shall occur the voluntary or involuntary liquidation,
     dissolution or winding up of the affairs of the Company;

then, and in each of such cases, the Company shall use commercially reasonable
efforts to mail to the registered holder hereof at its last address appearing on
the books of the Company, a reasonable time prior to the applicable record date
(or determination date) mentioned below, a notice stating, to the extent such
information is available, (i) the date on which a record is to be taken for the
purpose of such dividend, distribution or rights, or, if a record is not to be
taken, the date as of which the holders of Common Shares or of record to be
entitled to such dividend, distribution or rights are to be determined, or (ii)
the date on which such liquidation, dissolution or winding up is expected to
become effective and the date as of which it is expected that holders of Common
Shares of record shall be entitled to exchange their Common Shares for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding up.

     6.   Replacement of Warrants.  On receipt of evidence reasonably
          -----------------------
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant Certificate, and in the case of any such loss, theft or destruction
of this Warrant Certificate, on delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to the Company or, in the case of any
such mutilation, on surrender and cancellation of such Warrant Certificate,
unless the Company has received notice that any such Warrant Certificate has
been acquired by a bona fide purchase, the Company at its expense will execute
and deliver, in lieu thereof, a new Warrant Certificate of like tenor.

     7.   Registered Holder.  The registered holder of this Warrant Certificate
          -----------------
shall be deemed the owner hereof and of the Warrants evidenced hereby for all
purposes.  The registered holder of this Warrant Certificate shall not be
entitled by virtue of ownership of this Warrant Certificate to any rights
whatsoever as a shareholder of the Company.

     8.   Amendments and Waivers. Any provision in this Warrant Certificate to
          ----------------------
the contrary notwithstanding, changes in or additions to this Warrant
Certificate may be made and compliance with any covenant or provision herein set
forth may be omitted or waived if the Company shall obtain consent thereto in
writing from persons holding at least a majority of the aggregate of the then
outstanding Warrants. The Company shall, in each such case, deliver copies of
such consent in writing to any holders who did not execute the same.

     9.   Transfer.
          --------

          (a)  None of (a) this Warrant Certificate, (b) the Warrants evidenced
     hereby or (c) any Common Shares issued upon exercise hereof may be sold,
     transferred, pledged, hypothecated or otherwise disposed of unless and
     until:  (i) (x) there is then in effect a registration statement under the
     Securities Act of 1933, as amended (the "Securities Act"), covering such
     proposed disposition and

                                       5
<PAGE>

     such disposition is made in accordance with such registration statement and
     all applicable state securities laws; or (y) (A) the transferor shall have
     notified the Company of the proposed disposition and shall have furnished
     the Company with a statement of the circumstances surrounding the proposed
     disposition, and (B) if reasonably requested by the Company, such
     transferor shall have furnished the Company with an opinion of counsel,
     reasonably satisfactory to the Company, that such disposition will not
     require registration of such securities under the Securities Act and that
     all requisite action has been or will, on a timely basis, be taken under
     any applicable state securities laws in connection with such disposition;
     and (ii) the proposed transferee shall have agreed in writing to be bound
     by the terms and provisions of this Section 9.

          (b)  Notwithstanding the provisions of paragraphs (i) above, no such
     registration statement or opinion of counsel shall be necessary for a
     transfer pursuant to Rule 144(k) promulgated under the Securities Act, or a
     transfer to an entity wholly owned by such transferor, if the transferee
     agrees in writing to be subject to the terms hereof to the same extent as
     if such transferee were an original holder of this certificate.

     10.  Miscellaneous.
          -------------

          (a)  Registration Rights.  With respect to Common Shares issued upon
     exercise of this Warrant Certificate, Warrant Holder will be entitled to
     Incidental Registration Rights pursuant to Section 3 of that certain
     Registration Rights Agreement, dated as of August 8, 2000 (the
     "Registration Rights Agreement"), by and among the Company and the Holders
      -----------------------------
     (as defined therein), as if (a) Warrant Holder was a Stockholder (as
     defined in the Registration Rights Agreement) and (b) the Common Shares
     acquired upon exercise of Warrants were Registrable Securities (as defined
     in the Registration Rights Agreement and as used herein). In addition,
     Warrant Holder agrees to (i) be subject to all of the Limitations, (ii)
     abide by all of the procedures and (iii) be governed by all other
     provisions of the Registration Rights Agreement otherwise applicable to a
     Stockholder participating in an Incidental Registration pursuant to Section
     3 of the Registration Rights Agreement. Any Common Shares deemed
     Registrable Securities pursuant to this Section shall cease to be deemed
     Registrable Securities when Registrable Securities cease to be Registrable
     Securities under the Registration Rights Agreement.

          (b)  Notices. All notices, requests, consents, demands and other
               -------
     communications hereunder shall be in writing and mailed, faxed or delivered
     to each party as follows:

if to the Company: Control Delivery Systems, Inc., 313 Pleasant St., Watertown,
MA 02472, facsimile: 617.926.2313, Attention: Paul Ashton, with a copy to: Ropes
& Gray, One International Place, Boston, MA 02110, facsimile: (617) 951-7050,
Attention: Mary E. Weber, Esq.; and if to the Warrant Holder: Deutsche Bank
Securities Inc., facsimile: (410) 895-4582, Attention: Thomas J. DeRosa.

All such notices, requests, demands and other communications shall be effective,
(a) when mailed (which mailing must be accomplished by certified or registered
mail, return receipt

                                       6
<PAGE>

requested, postage prepaid), five days after deposited in the mails, (b) when
sent by express overnight courier service one day after properly deposited with
such courier service, or (c) when faxed upon confirmed transmission by
facsimile.

          (c)  Successors and Assigns; Third Party Beneficiaries. This Warrant
     Certificate shall inure to the benefit of and be binding upon the
     successors and permitted assigns of the parties hereto.

          (d)  Counterparts. This Warrant Certificate may be executed in any
               ------------
     number of counterparts and by the parties hereto in separate counterparts,
     each of which when so executed shall be deemed to be an original and all of
     which taken together shall constitute one and the same agreement.

          (e)  Governing Law.  THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY AND
               -------------
     CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
     REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW OF ANY JURISDICTION.  Any
     judicial proceeding brought with respect to this Warrant Certificate must
     be brought in any court of competent jurisdiction in The Commonwealth of
     Massachusetts, and, by execution and delivery of this Warrant Certificate,
     the Company and the Warrant Holder each (i) accept generally and
     unconditionally, the exclusive jurisdiction of such courts, and irrevocably
     agree to be bound by any judgment rendered thereby in connection with this
     Warrant Certificate and (ii) irrevocably waive any objection it may now or
     hereafter have as to the venue of any such suit, action or proceeding
     brought in such a court or that such court is an inconvenient forum.

          (f)  Severability. If any one or more of the provisions contained
               ------------
     herein, or the application thereof in any circumstance, is held invalid,
     illegal or unenforceable in any respect for any reason, the validity,
     legality and enforceability of any such provision in every other respect
     and of the remaining provisions hereof shall not be in any way impaired,
     unless the provisions held invalid, illegal or unenforceable shall
     substantially impair the benefits of the remaining provisions hereof.

          (g)  Entire Agreement.
               ----------------

               (i)  This Warrant Certificate, together with the exhibits and
          schedules hereto is intended by the parties as a final expression of
          their agreement and intended to be a complete and exclusive statement
          of the agreement and understanding of the parties hereto in respect of
          the subject matter contained herein and therein. There are no
          restrictions, promises, warranties or undertakings, other than those
          set forth or referred to herein or therein. This Warrant Certificate,
          together with the exhibits and schedules, supersedes all prior
          agreements and understandings between the parties with respect to such
          subject matter.

               (ii) The parties hereto agree and acknowledge that this Warrant
          Certificate and the Warrants issued hereunder are the warrants
          referred to in

                                       7
<PAGE>

       Section 4 of the letter agreement, dated as of April 7, 2000 (the
       "Engagement Letter"), between the Company and Deutsche Bank Securities
        -----------------
       Inc. The parties further agree that following execution and delivery of
       this Warrant Certificate, the Company shall have no further obligations
       to Deutsche Bank Securities Inc. pursuant to Section 4 of the Engagement
       Letter.

       (h)  Further Assurances. Each of the parties shall execute such
            ------------------
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person, and otherwise fulfilling, or causing the fulfillment of, the
various obligations made herein), as may be reasonably required or desirable to
carry out or to perform the provisions of this Warrant Certificate and to
consummate and make effective as promptly as possible the transactions
contemplated by this Warrant Certificate.

                 [Remainder of Page Intentionally left Blank]

                                       8
<PAGE>

     IN WITNESS WHEREOF, CONTROL DELIVERY SYSTEMS, INC. has caused this Warrant
Certificate to be signed by a duly authorized officer under seal, and the
undersigned Warrant Holder hereby agrees and accepts the terms of this Warrant
Certificate to be dated January 12, 2001.

COMPANY:                      CONTROL DELIVERY SYSTEMS, INC.

                              By: /s/ Paul Ashton
                                  -------------------------------
                                  Name:   Paul Ashton
                                  Title:  President and CEO

ACCEPTED AND AGREED:

WARRANT HOLDER:               DEUTSCHE BANK SECURITIES INC.

DATE: January 12, 2001        By: /s/ Thomas J. DeRosa
      ----------------            -------------------------------
                                  Name:   Thomas J. DeRosa
                                  Title:  Managing Director

                                       9
<PAGE>

                                                                       EXHIBIT A
                                                                       ---------

                              NOTICE OF EXERCISE

    To:  Control Delivery Systems, Inc.

    1.   The undersigned hereby elects to purchase __________ shares of the
         Common Stock of Control Delivery Systems, Inc. pursuant to the terms of
         the Warrant Certificate, dated as of August 8, 2000, by and between
         Control Delivery Systems, Inc. and the undersigned and tenders herewith
         payment of the purchase price of such shares in full.

    2.   Please issue a certificate or certificates representing said shares in
         the name of the undersigned.

                                                   DEUTSCHE BANK SECURITIES INC.

                                                   By:  _______________________
                                                        Name:
                                                        Title:

Date:  _____________________

                                       10

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