Document:

Unassociated Document

    Exhibit
      4.9

    

    INGERSOLL-RAND
      COMPANY LIMITED

    

    Amended
      and Restated

    Incentive
      Stock Plan of 1998

    

    Section
      1. Purposes: The
      purposes of the Plan are (a) to provide additional incentives for Key Employees,
      by authorizing the payment of bonus or incentive compensation in shares of
      Common Stock and by encouraging Key Employees to invest in shares of Common
      Stock, thereby furthering their identity of interest with the interests of
      the
      Company’s members, increasing their stake in the future growth and prosperity of
      the Company and stimulating and sustaining constructive and imaginative
      thinking, and (b) to enable the Company, by offering incentives comparable
      to
      other organizations with which it competes in connection with the employment
      of
      senior level individuals, to induce the employment of the most highly-qualified
      individuals and the continued employment of Key Employees.

    

    Section
      2. Definitions:
      Unless
      otherwise required by the context, the following terms, when used in the Plan,
      shall have the meanings set forth in this Section 2:

    

    Act: The
      Securities Exchange Act of 1934, as amended.

    

    Affiliate:
      Used
      to
      indicate a relationship with a specified person, a person that directly, or
      indirectly through one or more intermediaries, controls, or is controlled by,
      or
      is under common control with, such a specified person.

    

    Associate:
      Used
      to
      indicate a relationship with a specified person, (a) any corporation or
      organization (other than the Company or a majority-owned Subsidiary of the
      Company) of which such specified person is an officer or partner, or is,
      directly or indirectly, the beneficial owner of 10% or more of any class of
      equity securities, (b) any trust or other estate in which such specified person
      has a substantial beneficial interest or as to which such specified person
      serves as trustee or in a similar capacity, (c) any relative or spouse of such
      specified person, or any relative of such spouse who has the same home as such
      specified person, or who is a director or officer of the Company or any of
      its
      parents or subsidiaries, and (d) any person who is a director, officer or
      partner of such specified person or of any corporation (other than the Company
      or any wholly-owned Subsidiary), partnership or other entity which is an
      Affiliate of such specified person.

    

    Beneficial
      Owner: As
      such
      term is defined by Rule 13d-3 under the Act (or any successor provision at
      the
      time in effect); provided,
      however, that
      any
      individual, corporation, partnership, group, association or other person or
      entity which has the right to acquire any of the Company’s outstanding
      securities entitled to vote generally in the election of directors at any time
      in the future, whether such right is contingent or absolute, pursuant to any
      agreement, arrangement or understanding or upon exercise of conversion rights,
      warrants or options, or otherwise, shall be deemed the Beneficial Owner of
      such
      securities.

    

    Board
      of Directors or Board: The
      Board
      of Directors of the Company.

    

    Change
      in Control of the Company: The
      occurrence of either of the following:

    

    
      	 	
              (a)

            	
              any
                individual, corporation, partnership, group, association or other
                person
                or entity, together with its Affiliates and Associates (other than
                a
                trustee or other fiduciary holding securities under an employee benefit
                plan of the Company or any of its Subsidiaries), is or becomes the
                Beneficial Owner of securities of the Company representing 20% or
                more of
                the combined voting power of the Company’s then outstanding securities
                entitled to vote generally in the election of directors, unless a
                majority
                of the Continuing Directors determines in their sole discretion that,
                for
                purposes of the Plan, a Change in Control of the Company has not
                occurred;
                or

            

    

    

    
      
        
        

      

      
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              (b)

            	
              the
                Continuing Directors shall at any time fail to constitute a majority
                of
                the members of the Board of
                Directors.

            

    

    

    Notwithstanding
      any other provision of this Section or any other Section of the Plan to the
      contrary, none of the transactions contemplated by the Merger Agreement which
      are undertaken by (i) Ingersoll-Rand Company or its Affiliates prior to or
      as of
      the Effective Time or (ii) Ingersoll-Rand Company Limited or its Affiliates
      on
      or after the Effective Time shall trigger, constitute or be deemed a Change
      in
      Control of the Company.

    

    Code:
      The
      Internal Revenue Code of 1986, as amended from time to time.

    

    Committee:
      Such
      committee or committees as shall be appointed by the Board of Directors to
      administer the Plan pursuant to the provisions of Section 12.

    

    Common
      Stock: The
      Class
      A common shares of the Company, par value $1.00 per share, or such other class
      of shares or other securities as may be applicable pursuant to the provisions
      of
      paragraph (a) of Section 10.

    

    Common
      Stock Equivalents: Such
      of
      the rights and benefits of the actual owner of shares of Common Stock as the
      Committee may determine, including the right to receive dividends and the right
      to receive the amount of appreciation in value, if any, on such shares of Common
      Stock from the date the grant of such Common Stock Equivalents becomes effective
      until they become payable to the holder.

    

    Company:
      Ingersoll-Rand
      Company Limited, a Bermuda company.

    

    Continuing
      Director: A
      director who either was a member of the Board on January 1, 2002, or who became
      a member of the Board subsequent to such date and whose election, or nomination
      for election by the Company’s shareholders, was Duly Approved by the Continuing
      Directors at the time of such nomination or election, either by a specific
      vote
      or by approval of the proxy statement issued by the Company on behalf of the
      Board in which such person is named as a nominee for director, provided,
      however, that
      no
      individual shall be considered a Continuing Director if such individual
      initially assumed office as a result of either an actual or threatened “Election
      Contest” (as described in Rule 14a-11 promulgated under the Act) or other actual
      or threatened solicitation of proxies or consents other than by or on behalf
      of
      the Board (a “Proxy Contest”), including by reason of any agreement intended to
      avoid or settle any Election Contest or Proxy Contest.

    

    Disability:
      Such
      term
      as defmed under the pension, retirement or appropriate benefit plan or plans
      of
      the Company or a Subsidiary applicable to the Key Employee.

    

    Dividend
      Equivalents: A
      right
      to receive immediately or on a deferred basis, whether or not subject to
      forfeiture, an amount equivalent to all or part of dividends paid or payable
      on
      a share of Common Stock subject to a Stock Incentive.

    

    Duly
      Approved by the Continuing Directors: An
      action
      approved by the vote of at least a majority of the Continuing Directors then
      on
      the Board, except, if the votes of such Continuing Directors in favor of such
      action would be insufficient to constitute an act of the Board if a vote by
      all
      of its members were to have been taken, then such term
      shall
      mean an action approved by the unanimous vote of the Continuing Directors then
      on the Board so long as there are at least three Continuing Directors on the
      Board at the time of such unanimous vote.

    

    
      
        
        

      

      
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    Effective
      Time: The
      Effective Time as such term is defined in the Merger Agreement.

    

    Fair
      Market Value: As
      applied to any date, the mean between the high and low sales prices of a share
      of Common Stock on such date in New York Stock Exchange Composite Transactions,
      as reported in The Wall Street Journal or another newspaper of general
      circulation, or, if no such sales were made on such date, on the next preceding
      date on which there were such sales so reported. If the Common Stock is not
      listed or admitted to trading on The New York Stock Exchange, the Fair Market
      Value of the Common Stock shall be the closing sales price of one share of
      Common Stock on the principal national securities exchange on which the Common
      Stock is listed or admitted to trading, or, if the Common Stock is not listed
      or
      admitted to trading on any national securities exchange, the last quoted sales
      price, or if not so quoted, the average of the high bid and low asked prices
      in
      the over-the-counter market of the Common Stock, as reported by the National
      Association of Securities Dealers Inc. Automated Quotations system or such
      other
      system then in use, or, if on any such date the Common Stock is not quoted
      by
      any such organization, the average of the closing bid and asked prices of the
      Common Stock as furnished by a professional market maker making a market in
      the
      Common Stock selected by the Board. If on any such date no market maker is
      making a market in the Common Stock, the Fair Market Value shall be determined
      in good faith by the Continuing Directors.

    

    Incentive
      Compensation: Bonuses,
      extra and other compensation payable in addition to a salary or other base
      amount, whether contingent or not, whether discretionary or required to be
      paid
      pursuant to an agreement, resolution, arrangement, plan or practice and whether
      payable currently or on a deferred basis, in cash, Common Stock or other
      property, awarded by the Company or a Subsidiary.

    

    Key
      Employee: An
      employee of the Company or a Subsidiary, including an officer or director who
      is
      an employee, who in the opinion of the Committee can contribute significantly
      to
      the growth and successful operations of the Company or such Subsidiary. The
      granting of a Stock Incentive to an employee pursuant to the Plan shall be
      deenied a determination that such employee is a Key Employee.

    

    Outside
      Director: A
      member
      of the Board who is not an officer or employee of the Company, a Subsidiary
      or
      an Affiliate.

    

    Merger
      Agreement: That
      certain Agreement and Plan of Merger among Ingersoll-Rand Company,
      Ingersoll-Rand Company Limited, and IR Merger Corporation dated as of October
      31, 2001, pursuant to which Ingersoll-Rand Company became an indirect
      wholly-owned subsidiary of Ingersoll-Rand Company Limited.

    

    Option:
      An
      option
      to purchase a share of Common Stock.

    

    Plan:
      The
      Incentive Stock Plan of 1998 herein set forth as the same may from time to
      time
      be amended.

    

    Retirement:
      The
      termination of employment with the Company and its subsidiaries at or after
      the
      individual in question has attained age 55
      and
      served as such an employee for at least five years.

    

    Stock
      Appreciation Right: A
      right
      to receive a number of shares of Common Stock, or, with the approval of the
      Committee, cash, in either event based on the increase in the Fair Market Value
      of the number of shares of Common Stock subject to such right, as set forth
      in
      Section 7.

    

    
      
        
        

      

      
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    Stock
      Award: An
      issuance or transfer of shares of Common Stock at the time a Stock Incentive
      is
      granted or as soon thereafter as practicable, or an undertaking to issue or
      transfer such shares in the future. As provided in Section 5,
      Stock
      Awards may be designated as Employment Stock Awards or Performance Stock
      Awards.

    

    Stock
      Incentive: A
      Stock
      Incentive granted under the Plan in one of the forms provided for in Section
      3.

    

    Subsidiary:
      A
      corporation or other form of business association of which shares (or other
      ownership interests) having 50% or
      more
      of the voting power are owned or controlled, directly or indirectly, by the
      Company.

    

    Section
      3. Grants
      of Stock Incentives:

    

    (a) 
Subject
      to the provisions of the Plan, the Committee may at any time, and from time
      to
      time, grant Stock Incentives to, and only to, Key Employees.

    

    (b) 
Stock
      Incentives may be granted in the following forms:

    

    (i)
 
      a
      Stock
      Award, in accordance with Section 5, or

    

    (ii) 
an
      Option, in accordance with Section 6, or

    

    (iii) 
a
      Stock
      Appreciation Right, in accordance with Section 7, or

    

    (iv) 
any
      combination of the foregoing.

    

    Section
      4. Stock Subject to the Plan:

    

    (a) 
Subject
      to the provisions of paragraph (b) of this Section 4 and of paragraph (a) of
      Section 10, the aggregate number of shares of Common Stock which may be issued
      or transferred pursuant to Stock Incentives granted under the Plan shall not
      exceed 30,000,000 shares of Common Stock. Of the total available Stock
      Incentives not more than 20% shall be in the form of Stock Awards. No Key
      Employee shall be granted in the aggregate Stock Incentives (excluding Stock
      Awards) relating to more than 15% of
      the
      aggregate number of shares of Common Stock issuable or transferable under the
      Plan.

    

    (b) 
If
      any
      shares of Common Stock subject to a Stock Incentive shall not be issued or
      transferred and shall cease to be issuable or transferable because of the
      termination, in whole or in part, of such Stock Incentive, or, subject to the
      provisions of paragraph (j) of Section 6 and paragraph (d) of Section 7, for
      any
      other reason, or if any such shares shall, after issuance or transfer, be
      reacquired by the Company or a Subsidiary because of an employee’s failure to
      comply with the terms and conditions of a Stock Incentive, the shares not so
      issued or transferred, or the shares so reacquired by the Company or a
      Subsidiary, shall no longer be charged against the limitation provided for
      in
      paragraph (a) of this Section 4 and may again be made subject to Stock
      Incentives.

    

    Section
      5. Stock Awards:
      Stock
      Incentives in the form of Stock Awards shall be subject to the following
      provisions:

    

    (a) 
A
      Stock
      Award shall be granted only (i) in payment of Incentive Compensation that has
      been earned or (ii) as Incentive Compensation to be earned.

    

    
      
        
        

      

      
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    (b) 
Shares
      of
      Common Stock subject to a Stock Award may be issued or transferred to a Key
      Employee at the time the Stock Award is granted, or at any time subsequent
      thereto, or in installments from time to time, as the Committee shall determine.
      In the event that any such issuance or transfer shall not be made to the Key
      Employee at the time the Stock Award is granted, the Committee may provide
      for
      the payment or crediting to such Key Employee of Dividend Equivalents. Any
      amount payable in shares of Common Stock under the terms of a Stock Award may,
      in the discretion of the Committee, be paid in cash on each date on which
      delivery of shares would otherwise have been made, in an amount equal to the
      Fair Market Value on such date of the shares which would otherwise have been
      delivered.

    

    (c) 
A
      Stock
      Award shall contain such terms and conditions as the Committee shall determine
      with respect to payment or forfeiture of all or any part of the Stock Award
      upon
      termination of employment or the occurrence of other circumstances.

    

    (d) 
A
      Stock
      Award shall be subject to such other terms and conditions, including, without
      limitation, restriction on sale or other disposition of the Stock Award or
      of
      the shares issued or transferred pursuant to such Stock Award, as the Committee
      shall determine; provided,
      however, that
      upon
      the issuance or transfer of shares pursuant to a Stock Award, the recipient
      shall, with respect to such shares, be and become a shareholder of the Company
      fully entitled to receive dividends, to vote and to exercise all other rights
      of
      a shareholder except to the extent otherwise provided in the Stock Award. Each
      Stock Award shall be evidenced by a written instrument in such form as the
      Committee shall determine, provided the Stock Award is consistent with the
      Plan
      and incorporates it by reference.

    

    (e) 
All
      or
      part of a Stock Award may be designated as an Employment Stock Award, as to
      which the shares so designated shall only be issued if the Key Employee to
      whom
      such Stock Award has been granted meets the employment terms and conditions
      specified by the Committee at the time such Stock Award is granted.

    

    (f) 
All
      or
      part of a Stock Award may be designated as a Performance Stock Award, as to
      which the shares so designated shall only be issued if certain pre-established
      performance goals are met during the term of the grant. The Committee may
      establish such performance goals in writing at the time the Performance Stock
      Award is granted or it may establish such goals early in each year during the
      term of the grant, provided it indicates, at the time of grant, what portion
      of
      the Performance Stock Award will be available to be earned each year during
      the
      term of the award based on each year’s performance goals. The performance goals
      established by the Committee may be based, among other factors, upon the
      attainment of specified earnings per share, return on asset or asset management
      goals or upon the Company’s total return to shareholder ranking relative to a
      pre-established comparator group of companies. Shares subject to a Performance
      Stock Award granted to any individual whose compensation from the Company is
      covered by Section 162(m) of the Code shall be issued only after the Committee
      certifies in writing that the performance goals have been met.

    

    Section
      6. Options: Stock
      Incentives in the form of Options shall be subject to the following
      provisions:

    

    (a) 
The
      price
      per share at which a share subject to an Option may be purchased shall be
      determined by the Committee, but in no instance shall such price be less than
      the Fair Market Value of a share of Common Stock on the date such Option is
      granted.

    

    (b) 
Each
      Option shall expire at such time as the Committee may determine on the date
      such
      Option is granted, but no later than ten years from the date such Option is
      granted. The Committee may, at any time prior to the expiration of the Option,
      extend its term for a period ending not later than ten years from the date
      such
      Option is granted and any such extension shall not be deemed the grant of a
      new
      or additional Option for any purpose under the Plan.

    

    
      
        
        

      

      
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    (c) 
The
      Option may be exercised solely by the person to whom it is granted, except
      as
      hereinafter provided in the case of such person’s death or Disability. During
      the lifetime of the optionee, the Option and any rights and privileges
      pertaining thereto shall not be transferred, assigned, pledged or hypothecated
      in any way, whether by operation of law or otherwise, and shall not be subject
      to execution, attachment or similar process.

    

    (d) 
Each
      optionee must complete twelve months of continuous employment with the Company
      or Subsidiary, or both, before any part of the Option may be exercised by such
      optionee (subject to the provisions of paragraph (f) below).

    

    (e) 
After
      the
      completion of the required period of employment, the Option may be exercised,
      in
      whole or in part, and from time to time, during the balance of the term of
      the
      Option, subject to the terms and conditions specified in the Option or by the
      Committee.

    

    (f) 
Unless
      otherwise determined by the Committee each Option (to the extent then
      exercisable) shall terminate 90 days after the optionee shall terminate
      employment with the Company and its Subsidiaries, except that if the optionee
      shall die or become subject to a Disability while in the employ of the Company
      or of a Subsidiary, then the Option shall be exercisable within such period
      as
      shall be set forth in the Option, by the optionee or by such person or persons
      as shall have acquired the optionee’s rights under the Option by will or by the
      laws of descent and distribution, or by the optionee’s guardian, conservator or
      similar legal representative, but not later than three years after the date
      of
      death or Disability. In the event of the Retirement of the optionee, if the
      optionee shall have completed at least twelve months of continuous employment
      (or such shorter period as the Committee may determine) then the Option shall
      be
      exercisable within such period as shall be set forth in the Option but not
      later
      than three years after the date of Retirement (or such longer period as the
      Committee may determine).

    

    (g) 
Shares
      purchased under the Option shall be paid for in full at the time of the exercise
      of the Option as to such shares upon such terms as the Committee may approve,
      including cash, secured or unsecured indebtedness, by exchange for other
      property (including shares of Common Stock), by delivery of irrevocable
      instructions to a financial institution to deliver promptly to the Company
      the
      portion of sale or loan proceeds sufficient to pay the Option exercise price,
      or
      otherwise.

    

    (h) 
The
      Committee may at any time and from time to time provide for the payment to
      an
      optionee of Dividend Equivalents.

    

    (i) 
Except
      as
      otherwise provided in Section 10, in no event will the Committee decrease the
      price per share at which a share subject to an Option may be purchased after
      the
      date of grant or cancel outstanding Options and grant replacement Stock Options
      or Stock Appreciation Rights with a lower purchase price than that of the
      replaced Stock Options without first obtaining the approval of the shareholders
      of the Company.

    

    (j) 
The
      Option agreements or Option grants authorized by the Plan may contain such
      other
      provisions as the Committee shall deem advisable. Without limiting the
      foregoing, if so authorized by the Committee and subject to such terms and
      conditions as are specified in the Option or by the Committee, the Company
      may,
      with the consent of the holder of the Option, and at any time or from time
      to
      time, cancel all or a portion of the Option then subject to exercise and
      discharge its obligation in respect of the Option either by payment to the
      holder of an amount of money equal to the excess, if any, of the Fair Market
      Value, at such time or times, of the shares subject to the portion of the Option
      so cancelled over the aggregate purchase price of such shares, or by the
      issuance or transfer to the holder of shares of Common Stock with the Fair
      Market Value at such time or times equal to any such excess, or by a combination
      of cash and shares. The number of shares of Common Stock subject to the Option,
      or portion thereof, so cancelled shall, in the event that a payment of money
      or
      transfer of shares is made by the Company in respect of such cancellation,
      be
      charged against the maximum limitation set forth in paragraph (a) of Section
      4
      of the Plan.

    

    
      
        
        

      

      
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    (k) 
Options
      may be granted under the Plan from time to time in substitution for stock
      options held by employees of other corporations who are about to become
      employees of the Company or a Subsidiary as the result of a merger or
      consolidation of the employing corporation with the Company or a Subsidiary,
      or
      the acquisition by the Company or a Subsidiary of the assets of the employing
      corporation, or the acquisition by the Company or a Subsidiary of stock of
      the
      employing corporation as the result of which it becomes a Subsidiary. The terms
      and conditions of the substitute options so granted may vary from the terms
      and
      conditions set forth in this Section 6 to such extent as the Committee at the
      time of grant may deem appropriate to conform, in whole or in part, to the
      provisions of the options in substitution for which they are
      granted.

    

    Section
      7. Stock Appreciation Rights:

    

    (a) 
      Stock
      Appreciation Rights may be granted in connection with any Option granted under
      the Plan, either at the time of the grant of such Option or at any time
      thereafter during the term of the Option, or may be granted independently of
      the
      grant of an Option.

    

    (b) 
If
      granted in connection with an Option, Stock Appreciation Rights shall entitle
      the holder of the related Option, upon surrender of the Option, or any portion
      thereof, to exercise the Stock Appreciation Rights, to the extent unexercised,
      and to receive a number of shares of Common Stock, or cash, determined pursuant
      to paragraph (c) (iii) of this Section 7. Such Option shall, to the extent
      so
      surrendered, thereupon cease to be exercisable. If granted independently of
      an
      Option, Stock Appreciation Rights shall entitle the holder of the Stock
      Appreciation Rights to receive a number of shares of Common Stock, or cash,
      determined pursuant to paragraph (c) (iii) of this Section 7.

    

    (c)   Stock
      Appreciation Rights shall be subject to
      the following terms and conditions and to such other terms and conditions not
      inconsistent with the Plan as shall from time to time be approved by the
      Committee:

    

    (i)  
If
      granted in connection with an Option, Stock Appreciation Rights shall be
      exercisable at such time or times and to the extent, but only to the extent,
      that the Option to which they relate shall be exercisable, except that, at
      the
      time of granting such Stock Appreciation Rights, the Committee may provide
      that
      the period during which such Stock Appreciation Rights may be exercised shall
      expire prior to the expiration of the period during which the related Option
      may
      be exercised. If granted independently of an Option, Stock Appreciation Rights
      shall be exercisable at such time or times as shall be determined by the
      Committee at the time of the grant of the Stock Appreciation Rights but, unless
      otherwise determined by the Committee, in no event later than the date the
      employment of the holder of the Stock Appreciation Rights shall have terminated
      other than by reason of death, Disability or Retirement. In the event of
      termination of employment by reason of death or Disability, Stock Appreciation
      Rights shall be exercisable for such period as the Committee may specify at
      the
      time of granting of the Stock Appreciation Rights, but in no event later than
      three years after such termination of employment by the holder of the Stock
      Appreciation Rights or by the beneficiary designated pursuant to paragraph
      (1)
      of Section 13, and in the case of Retirement, no later than three years after
      the date of such Retirement. Unless otherwise determined by the Committee,
      each
      Stock Appreciation Right shall terminate if and when the holder thereof shall
      terminate employment with the Company and its Subsidiaries for reasons other
      than the death, Disability or Retirement of such holder.

    

    
      
        
        

      

      
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    (ii) 
Stock
      Appreciation Rights shall in no event be exercisable unless and until the holder
      of the Stock Appreciation Rights shall have completed at least twelve months
      of
      continuous service with the Company or a Subsidiary, or both, immediately
      following the date upon which the Stock Appreciation Rights shall have been
      granted.

    

    (iii)    
Upon
      exercise of Stock Appreciation
      Rights, the holder thereof shall be entitled to receive a number of shares
      equal
      in Fair Market Value on the date of exercise to the amount by which the Fair
      Market Value of one share of Common Stock on the date of such exercise shall
      exceed the Fair Market Value of a share of Common Stock on the date of grant
      of
      such Stock Appreciation Rights multiplied by the number of shares in respect
      of
      which the Stock Appreciation Rights shall have been exercised. The Company
      may
      determine, by action of the Committee, to settle all or any part of its
      obligation arising out of an exercise of Stock Appreciation Rights by the
      payment of cash equal to the aggregate value of shares of Common Stock (or
      a
      fraction of a share) that it would otherwise be obligated to deliver under
      the
      preceding sentence of this paragraph (c) (iii) of Section 7.

     

    (d)     
To
      the extent that Stock
      Appreciation Rights shall be exercised, an Option in connection with which
      such
      Stock Appreciation Rights shall have been granted shall be deemed to have been
      exercised for the purpose of the maximum limitation set forth in the Plan under
      which such Option shall have been granted. In the case of Stock Appreciation
      Rights granted independently of an Option, the number of shares of Common Stock
      in respect of which such Stock Appreciation Rights shall be exercised shall
      be
      charged against the maximum limitation set forth in paragraph (a) of Section
      4.

     

    (e)       
      If so directed by the Committee at any time and from time to time, the grant
      of
      Stock Appreciation Rights may provide for payment of Dividend Equivalents to
      the
      holder of the Stock Appreciation Rights.

    

    (f)     
      Stock
      Appreciation Rights may provide that, upon exercise of such Stock Appreciation
      Rights, the shares or cash, as the case may be, which the holder of such Stock
      Appreciation Rights shall be entitled to receive, shall be distributed or paid
      in such installments and over such number of years as the Committee may direct,
      with distribution or payment of each such installment contingent upon continued
      services of the employee to the Company or a Subsidiary, or both (except for
      death, Disability, Retirement or termination of employment by the Company or
      with its consent), to the time for distribution or payment of such
      installment.

    

    (g)     
      Except as otherwise provided in Section 10, in no event will the Committee,
      for
      purposes of a Stock Appreciation Right, decrease the Fair Market Value of a
      share of Common Stock on the date of grant of a Stock Appreciation Right after
      the date of grant or cancel outstanding Stock Appreciation Rights and grant
      replacement Options or Stock Appreciation Rights with a lower Fair Market Value
      of a share of Common Stock on the date of grant.

    

    Section
      8. Dividend Equivalents:

    

    A
      grant
      of Dividend Equivalents shall be made subject to such terms and conditions
      as
      the Committee may determine, and may be awarded only in connection with a Stock
      Incentive granted under Section 5, 6 or 7. Dividend Equivalents may be awarded
      either at the time of grant of a Stock Incentive or at any time thereafter
      during the term of the Stock Incentive. Dividend Equivalents may be payable
      or
      credited either in cash, shares of Common Stock, or in Common Stock Equivalents.
      If credited in Common Stock or in Common Stock Equivalents, they shall be
      credited at the Fair Market Value of a share of Common Stock on the day of
      such
      crediting. The Committee may provide that any amounts representing dividends
      earned by Common Stock Equivalents may either be paid currently or credited
      in
      cash or in Common Stock or that they may be represented by further Common Stock
      Equivalents, or any combination thereof. The Committee may provide that when
      Common Stock Equivalents shall become payable to the holder, they may be paid
      in
      cash or in shares of Common Stock, or a combination of both. To the extent
      that
      any payment to the holder with respect to Dividend Equivalents is made in shares
      of Common Stock, the number of shares of Common Stock used for such payment
      shall be charged against the maximum limitation set forth in paragraph (a)
      of
      Section 4.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    Section
      9. Outside Directors’ Options:

    

    (a)     
      On the date of the first Board of Directors meeting after each annual general
      meeting of the shareholders through 2003, each Outside Director shall
      automatically be granted Options to purchase 2,250 shares of Common Stock.
      In
      the event an adjustment is made under the provisions of Section 10 in the
      outstanding unexercised Options granted to Outside Directors hereunder, a
      similar adjustment shall be made in the number of Options to be granted to
      Outside Directors subsequent to the effectiveness of such adjustment.
      Notwithstanding the foregoing, Options shall not be granted under the Plan
      to an
      Outside Director who on the date referred to above in this paragraph (a) of
      Section 9 is awarded Options under another Incentive Stock Plan of the
      Company.

    

    (b)     
      The price at which each share of Common Stock covered by Options granted to
      Outside Directors may be purchased shall be the Fair Market Value of the Common
      Stock on the date the Options are granted.

    

    (c)     
      Options granted to Outside Directors hereunder shall be fully vested on the
      date
      of grant and shall become exercisable on the first anniversary of such date
      of
      grant. Such Options may be exercised by the Outside Director during the period
      that the Outside Director remains a member of the Board and for a period of
      five
      years following retirement or resignation, provided that in no event shall
      any
      such Option be exercisable more than ten years after the date of
      grant.

    

    (d)     
      In the event of the death of an Outside Director, the Options shall be
      exercisable only within the three years next succeeding the date of death,
      and
      then only by the executor or administrator of the Outside Director’s estate or
      by the person or persons to whom the Outside Director’s rights under the Options
      shall pass by the Outside Director’s will or the laws of descent and
      distribution, provided that in no event shall the Option be exercisable more
      than ten years after the date of grant.

    

    (e)     
      Except as expressly provided in this Section 9, Options granted to Outside
      Directors shall be subject to the terms and conditions of Section 6 regarding
      the terms of Options and to the other relevant provisions of the
      Plan.

    

    Section
      10. Adjustment and Change in Control Provisions:

    

    (a)     
      In the event that any recapitalization, reclassification, split-up or
      consolidation of shares of Common Stock shall be effected, or the outstanding
      shares of Common Stock are, in connection with a merger or consolidation of
      the
      Company or a sale by the Company of all or a part of its assets, exchanged
      for a
      different number or class of shares of stock or other securities of the Company
      or for shares of the stock or other securities of any other corporation, or
      new,
      different or additional shares of other securities of the Company or of another
      corporation are received by the holders of Common Stock or any distribution
      is
      made to the holders of Common Stock other than a cash dividend, (i) the number
      and class of shares or other securities that may be issued or transferred
      pursuant to Stock Incentives, (ii) the number and class of shares or other
      securities which have not been issued or transferred under outstanding Stock
      Incentives, (iii) the purchase price to be paid per share under outstanding
      Options and other Stock Incentives, (iv) the Fair Market Value of a share of
      Common Stock on the date of grant of outstanding Stock Appreciation Rights,
      (v)
      the dates or events upon which Options and Stock Appreciation Rights may be
      exercised, which may, in appropriate instances, be related to specific dates
      or
      events under any of the aforesaid actions, and (vi) the price to be paid per
      share by the Company or a Subsidiary for shares or other securities issued
      or
      transferred pursuant to Stock Incentives which are subject to a right of the
      Company or a Subsidiary to reacquire such share or other securities, shall
      in
      each case be equitably adjusted. In addition, the Committee may, in its
      discretion, make the adjustments described above in this paragraph (a) of
      Section 10 in the event the Company pays a cash dividend in respect of the
      Common Stock other than a regular quarterly dividend.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (b)     
      Notwithstanding any other provision of the Plan to the contrary (and
      notwithstanding any requirement that conditions the receipt of benefits of
      a
      Stock Incentive granted hereunder on the completion of a specified period of
      employment by the holder thereof or on the attainment of certain performance
      goals by the Company or any group, Subsidiary or division thereof), in the
      event
      of a Change in Control of the Company the holders of Stock Incentives
      outstanding as of the date of the occurrence of the Change in Control of the
      Company shall have the right to surrender such Stock Incentives within the
      60-day period following the occurrence of the Change in Control of the Company
      and to receive cash as consideration for such surrender in accordance with
      the
      following:

    

    (i) 
A
      holder
      of a Stock Award being surrendered shall be entitled to the amount equal to
      the
      highest Fair Market Value of one share of Common Stock during the 60 days
      preceding the date on which the Change in Control of the Company occurs,
      multiplied by the number of shares in respect of which the Stock Award shall
      have been surrendered.

    

    (ii) 
A
      holder
      of Options being surrendered shall be entitled to the amount by which the
      highest Fair Market Value of one share of Common Stock during the 60 days
      preceding the date on which the Change in Control of the Company occurs exceeds
      the exercise price of one share of Common Stock subject to such Option,
      multiplied by the number of shares in respect of which the Option shall have
      been surrendered.

    

    (iii)      
      The holder of Stock Appreciation Rights being surrendered shall be entitled
      to
      the amount by which the highest Fair Market Value of one share of Common Stock
      during the 60 days preceding the date on which the Change in Control occurs
      exceeds the Fair Market Value of one share of Common Stock on the date of grant
      of such Stock Appreciation Rights (as adjusted, if applicable under the terms
      of
      the Plan), multiplied by the number of shares in respect of which the Stock
      Appreciation Rights shall have been surrendered. Stock Appreciation Rights
      granted in connection with the grant of Options may be surrendered only if
      surrendered together with the surrender of the related Options and the holder
      thereof shall be entitled to the payment described in this subparagraph (iii)
      only.

     

    (iv)      
      All payments to be made pursuant to this paragraph (b) of Section 10 shall
      be
      made within ten days of the delivery of written notice of such surrender by
      the
      holder to the Company.

    

    Section
      11. Term: The
      Plan
      shall be deemed adopted and shall become effective on the date it is approved
      by
      the shareholders of the Company. No Stock Incentives shall be granted under
      the
      Plan after May 31, 2007.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    Section
      12. Administration:

    

    (a)     
      The Plan shall be administered by the Committee which shall consist of not
      less
      than three directors of the Company designated by the Board; provided,
      however, that
      no
      director shall be designated as or continue to be a member of the Committee,
      unless such director shall be (i) a “Non-Employee Director” within the meaning
      of Rule 16b-3 under the Act (or any successor rule or regulation), (ii) an
      “outside director” within the meaning of Section 162(m) of the Code and the
      regulations promulgated thereunder (or any successor provisions, rules or
      regulations) and (iii) an independent director under the rules of The New York
      Stock Exchange.

    

    (b)     
      The Committee shall have full authority to act for the Company under the Plan,
      except the authority to amend or discontinue the Plan, which power shall be
      solely that of the Board.

    

    (c)     
      The Committee may establish such rules and regulations not inconsistent with
      the
      provisions of the Plan as it deems necessary to determine eligibility to
      participate in the Plan and for the proper administration of the Plan, and
      may
      amend or revoke any rule or regulation so established. The Committee may make
      such determinations and interpretations under or in connection with the Plan
      as
      it deems necessary or advisable. All such rules, regulations, determinations
      and
      interpretations shall be binding and conclusive upon the Company, its
      Subsidiaries, its shareholders and all employees, and upon their respective
      legal representatives, beneficiaries, successors and assigns and upon all other
      persons claiming under or through any of them.

    

    (d)     
      Any action required or permitted to be taken by the Committee under the Plan
      shall require the affirmative vote of a majority of all the members of the
      Committee. The Committee may act by written determination instead of by
      affirmative vote at a meeting, provided that any written determination shall
      be
      signed by all of the members of the Committee, and any such written
      determination shall be as fully effective as a unanimous vote at a
      meeting.

    

    (e)     
      Members of the Committee acting under the Plan shall be fully protected in
      relying in good faith upon the advice of counsel and shall incur no liability
      except for gross negligence or willful misconduct in the performance of their
      duties.

    

    Section
      13. General Provisions:

    

    (a)     
      With respect to any shares of Common Stock issued or transferred under any
      provision of the Plan, such shares may be issued or transferred subject to
      such
      conditions, in addition to those specifically provided in the Plan, as the
      Committee may direct and, without limiting the generality of the foregoing,
      provision may be made in the grant of Stock Incentives that shares issued or
      transferred upon their grant or exercise shall be subject to forfeiture upon
      failure to comply with conditions and restrictions imposed in the grant of
      such
      Stock Incentives.

    

    (b)     
      The Committee may fix a uniform date, within any specified period, either before
      or after the date so fixed, as of which any exercise of an Option or Stock
      Appreciation Rights shall be deemed to be effective.

    

    (c)     
      The Committee may, in its discretion, in the event of termination of employment
      with the consent of the Company or the death, Retirement or Disability of the
      holder of a Stock Incentive, reduce the period of employment required before
      such Stock Incentive may be exercised.

    

    (d)     
      In the event of the termination of employment with the consent of the Company
      of
      an optionee or a Key Employee who is a holder of Stock Appreciation Rights,
      other than by death, Retirement or Disability, the Committee may extend the
      period during which such Options or Stock Appreciation Rights may be exercised
      after the date of termination of employment but not beyond the expiration date
      of the term of the Options or Stock Appreciation Rights.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (e)     
      Whether an authorized leave of absence or an absence for military or government
      service shall constitute termination of employment or interruption of required
      additional continuous employment for the purpose of the Plan shall be determined
      by the Committee.

    

    (f)     
      Nothing
      in the Plan nor in any instrument executed pursuant thereto shall confer upon
      any employee any right to continue in the employ of the Company or any
      Subsidiary or shall affect the right of the Company or of a Subsidiary to
      terminate the employment of any employee with or without cause.

    

    (g)     
      No shares of Common Stock shall be issued or transferred pursuant to a Stock
      Incentive unless and until all legal requirements applicable to the issuance
      or
      transfer of such shares have, in the opinion of counsel to the Company, been
      complied with. In connection with any such issuance or transfer, the person
      acquiring the shares shall, if requested by the Company, give assurances
      satisfactory to counsel to the Company that the shares are being acquired for
      investment and not with a view to resale or distribution thereof and assurances
      in respect of such other matters as the Company or a Subsidiary may deem
      desirable to assure compliance with applicable legal requirements.

    

    (h)     
      No holder of a Stock Incentive (individually or as a member of a group), and
      no
      beneficiary or other person claiming under or through such holder, shall have
      any right, title or interest in or to any shares of Common Stock allocated
      or
      reserved for the purposes of the Plan or subject to any Stock Incentive except
      as to such shares of Common Stock, if any, as shall have been issued or
      transferred to such individual.

    

    (i)     
      The Company or a Subsidiary may, with the approval of the Committee, enter
      into
      an agreement or other commitment to grant a Stock Incentive in the future to
      a
      person who is or will be a Key Employee at the time of grant, and,
      notwithstanding any other provision of the Plan, any such agreement or
      commitment shall not be deemed the grant of a Stock Incentive until the date
      on
      which the Committee takes action to implement such agreement or
      commitment.

    

    (j)     
      In the case of a grant of a Stock Incentive to any employee of a Subsidiary,
      such grant may, if the Committee so directs, be implemented by the Company
      issuing or transferring the shares, if any, covered by the Stock Incentive
      to
      the Subsidiary, for such lawful consideration as the Committee may specify,
      upon
      the condition or understanding that the Subsidiary will transfer the shares
      to
      the employee in accordance with the terms of the Stock Incentive specified
      by
      the Committee pursuant to the provisions of the Plan. Notwithstanding any other
      provision hereof, such Stock Incentive may be issued by and in the name of
      the
      Subsidiary and shall be deemed granted on the date it is approved by the
      Committee, on the date it is
      delivered by the Subsidiary, or on such other date between such two dates,
      as
      the Committee shall specify.

    

    (k)     
      The Company or a Subsidiary may make such provisions as it may deem appropriate
      for the withholding of any taxes which the Company or Subsidiary determines
      it
      is required to withhold in connection with any Stock Incentive.

    

    (l)     
      No Stock Incentive and no rights under the Plan, contingent or otherwise, shall
      be assignable or subject to any encumbrance, pledge or charge of any nature
      except that, under such rules and regulations as the Committee may establish,
      a
      beneficiary may be designated in respect of a Stock Incentive in the event
      of
      the death of the holder of such Stock Incentive and except that if such
      beneficiary shall be the executor or administrator of the estate of the holder
      of such Stock Incentive, any rights in respect of such Stock Incentive may
      be
      transferred to the person or persons or entity (including a trust) entitled
      thereto under the will of the holder of such Stock Incentive or, in the case
      of
      intestacy, under the laws relating to intestacy. A Stock Incentive shall be
      exercisable during the lifetime of the holder thereof only by the holder or
      by
      the holder’s guardian, conservator or similar legal representative.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (m)     
      Nothing in the Plan is intended to be a substitute for, or shall preclude or
      limit the establishment or continuation of, any other plan, practice or
      arrangement for the payment of compensation or fringe benefits to employees
      generally, or to any class or group of employees, which the Company or any
      Subsidiary now has or may hereafter lawfully put into effect, including, without
      limitation, any retirement, pension, insurance, stock purchase, incentive
      compensation or bonus plan.

    

    (n)     
      The place of administration of the Plan shall conclusively be deemed to be
      within the State of New Jersey and the validity, construction, interpretation
      and administration of the Plan and of any rules and regulations or
      determinations or decisions made thereunder, and the rights of any and all
      persons having or claiming to have any interest therein or thereunder, shall
      be
      governed by, and determined exclusively and solely in accordance with, the
      laws
      of the State of New Jersey. Without limiting the generality of the foregoing,
      the period within which any action must be commenced arising under or in
      connection with the Plan, or any payment or award made or purportedly made
      under
      or in connection therewith, shall be governed by the laws of the State of New
      Jersey, irrespective of the place where the act or omission complained of took
      place and of the residence of any party to such action and irrespective of
      the
      place where the action may be brought.

    

    Section 14.
      Amendment or Discontinuance of Plan:

    

    (a)     
      The Plan may be amended by the Board at any time; provided,
      however, that,
      without the approval of the shareholders of the Company, no amendment shall
      be
      made which (i) increases the aggregate number of shares of Common Stock that
      may
      be issued or transferred pursuant to Stock Incentives as provided in paragraph
      (a) of Section 4, (ii) amends the provisions of paragraph (a) of Section 12
      with
      respect to the eligibility of the members of the Committee, (iii) permits any
      person to be granted a Stock Incentive who is not at the time of such grant
      a
      Key Employee or an Outside Director, (iv) amends Section 11 to extend the term
      of the Plan, or (v) amends this Section 14.

    

    (b)     
      The Board may by resolution adopted by a majority of the entire Board
      discontinue the Plan.

    

    (c)     
      No amendment or discontinuance of the Plan shall adversely affect any Stock
      Incentive theretofore granted without the consent of the holder
      thereof.

    

    
      
        
        

      

      13SECURITIES PURCHASE AGREEMENT

      This  Securities  Purchase  Agreement  (this  "Agreement")  is dated as of
November 29, 2005, by and among Accupoll  Holding  Corp.,  a Nevada  corporation
(the  "Company"),  and the purchasers  identified on the signature  pages hereto
(each,  including its successors and assigns, a "Purchaser" and collectively the
"Purchasers").

      WHEREAS,  subject to the terms and  conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act (as defined below),  and Rule
506  promulgated  thereunder,  the  Company  desires  to issue  and sell to each
Purchaser,  and each Purchaser,  severally and not jointly,  desires to purchase
from the  Company in the  aggregate,  up to $3 million  of  Preferred  Stock and
Warrants on the Closing Date.

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

                                    ARTICLE I
                                   DEFINITIONS

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

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

            "Actual Minimum" means, as of any date, the maximum aggregate number
      of shares of Common  Stock  then  issued or  potentially  issuable  in the
      future  pursuant to the  Transaction  Documents,  including any Underlying
      Shares  issuable  upon  exercise or conversion in full of all Warrants and
      shares of Preferred Stock,  ignoring any conversion or exercise limits set
      forth  therein,  and assuming that any  previously  unconverted  shares of
      Preferred  Stock are held until the fifth  anniversary of the Closing Date
      and all  dividends  are paid in shares of Common  Stock  until  such third
      anniversary,  subject to the  limitation on the number of shares of Common
      Stock issuable hereunder set forth in Section 5(a)(iii) of the Certificate
      of Designation.

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

<PAGE>

            "Certificate of Designation" means the Certificate of Designation to
      be filed prior to the Closing by the Company  with the  Secretary of State
      of Delaware, in the form of Exhibit A attached hereto.

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

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

            "Commission" means the Securities and Exchange Commission.

            "Common  Stock"  means the common  stock of the  Company,  par value
      $0.001 per share,  and any  securities  into which such common stock shall
      hereinafter been reclassified into.

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

            "Company Counsel" means Sichenzia Ross Friedman Ference LLP.

            "Disclosure Schedules" means the Disclosure Schedules of the Company
      delivered concurrently herewith.

            "Discussion Time" shall mean 9 P.M. (New York Time) on such calendar
      day when the Purchaser was first contacted  regarding an investment in the
      Company.

            "Effective Date" means the date that the  Registration  Statement is
      first declared effective by the Commission.

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

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

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

                                        2
<PAGE>

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

            "Losses"  means any and all losses,  claims,  damages,  liabilities,
      settlement  costs and  expenses,  including  without  limitation  costs of
      preparation and reasonable attorneys' fees.

            "Majority in Interest" shall mean, at any time of determination, the
      majority in interest  (based on  then-outstanding  Stated Value amounts of
      Preferred Stock at the time of such determination) of the Purchasers.

            "Market  Price"  shall mean the average of the 10 VWAPs  immediately
      prior to the date in question.

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

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

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

            "Preferred  Stock"  means the up to 30,000  shares of the  Company's
      Series A Convertible  Preferred Stock issued  hereunder having the rights,
      preferences and privileges set forth in the Certificate of Designation.

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

            "Registration   Rights  Agreement"  means  the  Registration  Rights
      Agreement, dated the date hereof, among the Company and each Purchaser, in
      the form of Exhibit B.

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

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

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

                                        3
<PAGE>

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

            "Securities"  means  the  Preferred  Stock,  the  Warrants  and  the
      Underlying Shares.

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

            "Set  Price"  shall have the  meaning  ascribed  to such term in the
      Certificate of Designations.

            "Shareholder Approval" means such approval as may be required by the
      applicable  rules and  regulations of the Trading Market (or any successor
      entity)  from  the  shareholders  of  the  Company  with  respect  to  the
      transactions  contemplated  by the  Transaction  Documents,  including the
      issuance  of all of the  Underlying  Shares  and  shares of  Common  Stock
      issuable upon exercise of the Warrants in excess of 19.9% of the Company's
      issued and outstanding Common Stock on the Closing Date.

            "Short Sales" shall include,  without limitation,  all "short sales"
      as defined in Rule 3b-3 of the Exchange Act.

            "Stated Value" means $100 per share of Preferred Stock.

            "Subscription  Amount" shall mean, as to each Purchaser,  the amount
      to be paid for the Preferred Stock purchased  hereunder as specified below
      such Purchaser's  name on the signature page of this Agreement,  in United
      States Dollars.

            "Subsidiary" means any subsidiary of the Company that is required to
      be listed in Schedule 3.1(a).

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

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

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

            "Underlying  Shares" means the shares of Common Stock  issuable upon
      conversion  of the  Preferred  Stock,  upon  exercise of the  Warrants and
      issued  and  issuable  in lieu of the cash  payment  of  dividends  on the
      Preferred Stock.

                                        4
<PAGE>

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

            "Warrants" means the Common Stock Purchase Warrants,  in the form of
      Exhibit C, delivered to the  Purchasers at the Closing in accordance  with
      Section 2.2 hereof,  which warrants shall be exercisable  immediately upon
      issuance for a term of 3 years

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

                                   ARTICLE II
                                PURCHASE AND SALE

      2.1 Closing.  On the Closing Date,  each Purchaser shall purchase from the
Company,  severally and not jointly with the other  Purchasers,  and the Company
shall issue and sell to each  Purchaser,  (a) shares of Preferred  Stock with an
aggregate Stated Value equal to such Purchaser's  Subscription  Amount;  and (b)
the Warrants as determined  pursuant to Section 2.2(a).  The aggregate number of
shares of Preferred Stock sold hereunder shall be up to 30,000.

      Upon  satisfaction of the conditions set forth in Section 2.2, the Closing
shall occur at the offices of Sichenzia Ross Friedman  Ference LLP or such other
location as the parties shall mutually agree.

      2.2 Conditions to Closing.  The Closing is subject to the  satisfaction or
waiver by the party to be benefited thereby of the following conditions:

            (a) The Company  shall have  delivered  or caused to be delivered to
      each Purchaser the following:

                  (i) this Agreement duly executed by the Company;

                  (ii) a certificate  evidencing a number of shares of Preferred
            Stock equal to such Purchaser's  Subscription Amount divided by 100,
            registered in the name of such Purchaser;

                                        5
<PAGE>

                  (iii) a Warrant  registered  in the name of such  Purchaser to
            purchase  up to a number of shares  of  Common  Stock  equal to such
            Purchaser's  Subscription  Amount divided by 100 and then multiplied
            by 1,000, with an exercise price equal $0.10 per share;

                  (iv) a Warrant  registered  in the name of such  Purchaser  to
            purchase  up to a number of shares  of  Common  Stock  equal to such
            Purchaser's  Subscription  Amount divided by 100 and then multiplied
            by 1,000, with an exercise price equal $0.125 per share

                  (v) the  Registration  Rights  Agreement  duly executed by the
            Company; and

                  (vi) the Escrow Agreement duly executed by the Company; and

                  (vii) a legal  opinion  of  Company  Counsel,  in the  form of
            Exhibit D attached hereto, addressed to each Purchaser.

            (b) At the Closing, each Purchaser shall have delivered or caused to
      be delivered to the Company the following:

                  (i) this Agreement duly executed by such Purchaser;

                  (ii) the Escrow Agreement duly executed by such Purchaser;

                  (iii) such Purchaser's Subscription Amount by wire transfer to
            the account as specified in writing by the Company; and

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

            (c) All  representations and warranties of the other party contained
      herein  shall  remain  true and  correct  as of the  Closing  Date and all
      covenants  of the other  party shall have been  performed  if due prior to
      such date.

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

                                       6
<PAGE>

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

      3.1 Representations and Warranties of the Company.  Except as set forth in
the SEC Reports or under the corresponding  section of the Disclosure  Schedules
which  Disclosure  Schedules  shall be deemed a part hereof , the Company hereby
makes the representations and warranties set forth below to each Purchaser:

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

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

            (c)  Authorization;  Enforcement.  The  Company  has  the  requisite
      corporate  power  and  authority  to  enter  into  and to  consummate  the
      transactions  contemplated  by  each  of  the  Transaction  Documents  and
      otherwise  to carry  out its  obligations  hereunder  or  thereunder.  The
      execution and delivery of each of the Transaction Documents by the Company
      and the  consummation  by it of the  transactions  contemplated  hereby or
      thereby have been duly  authorized by all necessary  action on the part of
      the  Company  and no further  consent or action is required by the Company
      other than Required Approvals.  Each of the Transaction Documents has been
      (or  upon  delivery  will be)  duly  executed  by the  Company  and,  when
      delivered in accordance  with the terms hereof,  will constitute the valid
      and binding obligation of the Company  enforceable  against the Company in
      accordance with its terms, subject to applicable  bankruptcy,  insolvency,
      fraudulent  conveyance,   reorganization,   moratorium  and  similar  laws
      affecting  creditors' rights and remedies generally and general principles
      of equity.  Neither the Company nor any  Subsidiary is in violation of any
      of  the   provisions  of  its   respective   certificate  or  articles  of
      incorporation, by-laws or other organizational or charter documents except
      where  such  violation  could  not,  individually  or  in  the  aggregate,
      constitute a Material Adverse Effect.

                                       7
<PAGE>

            (d) Issuance of the  Securities.  The Securities are duly authorized
      and,  when  issued  and  paid  for  in  accordance   with  the  applicable
      Transaction  Documents,  will be duly and validly  issued,  fully paid and
      nonassessable,  free and clear of all Liens. The Company has reserved from
      its duly  authorized  capital stock a number of shares of Common Stock for
      issuance of the Underlying  Shares at least equal to the Actual Minimum on
      the date hereof.

            (e)  Capitalization.   The  capitalization  of  the  Company  is  as
      described  in the  Company's  most recent  periodic  report filed with the
      Commission. The Company has not issued any capital stock since such filing
      other than  pursuant to the exercise of employee  stock  options under the
      Company's  stock option  plans,  the issuance of shares of Common Stock to
      employees  pursuant to the  Company's  employee  stock  purchase  plan and
      pursuant  to the  conversion  or  exercise  of  outstanding  Common  Stock
      Equivalents. No further approval or authorization of any stockholder,  the
      Board of  Directors  of the Company or others is required for the issuance
      and sale of the shares of Preferred Stock.  Except as disclosed in the SEC
      Reports, there are no stockholders agreements,  voting agreements or other
      similar  agreements  with respect to the Company's  capital stock to which
      the Company is a party or, to the  knowledge  of the  Company,  between or
      among any of the Company's stockholders.

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

                                       8
<PAGE>

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

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

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

                                       9
<PAGE>

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

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

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

            (m) Transactions With Affiliates and Employees.  Except as set forth
      in the SEC Reports,  none of the officers or directors of the Company and,
      to the  knowledge of the Company,  none of the employees of the Company is
      presently a party to any  transaction  with the Company or any  Subsidiary
      (other than for services as employees, officers and directors),  including
      any contract,  agreement or other arrangement providing for the furnishing
      of services to or by, providing for rental of real or personal property to
      or from, or otherwise requiring payments to or from any officer,  director
      or such employee or, to the knowledge of the Company,  any entity in which
      any officer,  director, or any such employee has a substantial interest or
      is an officer,  director,  trustee or  partner,  in each case in excess of
      $200,000  other  than (i) for  payment  of salary or  consulting  fees for
      services  rendered,  (ii) reimbursement for expenses incurred on behalf of
      the Company and (iii) for other employee benefits,  including stock option
      agreements under any stock option plan of the Company.

                                       10
<PAGE>

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

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

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

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

            (r) No  Integrated  Offering.  Neither the  Company,  nor any of its
      Affiliates,  nor any Person acting on its or their behalf has, directly or
      indirectly,  made any offers or sales of any  security  or  solicited  any
      offers to buy any  security,  under  circumstances  that would  cause this
      offering of the  Securities to be integrated  with prior  offerings by the
      Company for  purposes  of the  Securities  Act or which could  violate any
      applicable shareholder approval provisions, including, without limitation,
      under the rules and regulations of the Trading Market.

                                       11
<PAGE>

            (s) Tax Status. The Company and each of its Subsidiaries has made or
      filed all  federal,  state and foreign  income and all other tax  returns,
      reports  and  declarations  required  by any  jurisdiction  to which it is
      subject  (unless  and only to the extent  that the Company and each of its
      Subsidiaries has set aside on its books provisions reasonably adequate for
      the payment of all unpaid and unreported taxes) and has paid all taxes and
      other  governmental  assessments  and charges that are material in amount,
      shown or determined to be due on such returns,  reports and  declarations,
      except those being  contested in good faith and has set aside on its books
      provisions  reasonably  adequate  for the payment of all taxes for periods
      subsequent to the periods to which such returns,  reports or  declarations
      apply.  There are no unpaid taxes in any material amount claimed to be due
      by the taxing  authority  of any  jurisdiction,  and the  officers  of the
      Company know of no basis for any such claim.  The Company has not executed
      a waiver  with  respect to the  statute  of  limitations  relating  to the
      assessment  or collection  of any foreign,  federal,  statue or local tax.
      None of the Company's tax returns is presently being audited by any taxing
      authority.

            (t) No  General  Solicitation  or  Advertising  in  Regard  to  this
      Transaction. Neither the Company nor, to the knowledge of the Company, any
      of its directors or officers (i) has conducted or will conduct any general
      solicitation  (as that  term is used in Rule  502(c) of  Regulation  D) or
      general advertising with respect to the sale of the Preferred Stock or the
      Warrants,  or (ii) made any offers or sales of any  security or  solicited
      any offers to buy any security under any circumstances  that would require
      registration of the Preferred Stock, the Underlying Shares or the Warrants
      under the Securities Act or made any "directed selling efforts" as defined
      in Rule 902 of Regulation S.

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

            (w) Acknowledgment Regarding Purchasers' Purchase of Securities. The
      Company  acknowledges  and agrees that the Purchasers are acting solely in
      the capacity of arm's length purchasers with respect to this Agreement and
      the transactions  contemplated  hereby.  The Company further  acknowledges
      that no  Purchaser  is acting as a financial  advisor or  fiduciary of the
      Company (or in any similar  capacity)  with respect to this  Agreement and
      the  transactions  contemplated  hereby  and  any  statement  made  by any
      Purchaser  or  any  of  their  respective  representatives  or  agents  in
      connection with this Agreement and the transactions contemplated hereby is
      not advice or a recommendation and is merely incidental to the Purchasers'
      purchase  of the  Securities.  The  Company  further  represents  to  each
      Purchaser  that the  Company's  decision to enter into this  Agreement has
      been based  solely on the  independent  evaluation  of the Company and its
      representatives.

                                       12
<PAGE>

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

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

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

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

                                       13
<PAGE>

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

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

            (f) Short Sales.  Each  Purchaser  covenants that neither it nor any
      affiliates acting on its behalf or pursuant to any  understanding  with it
      will  execute any Short Sales during the period from the  Discussion  Time
      until  prior  to the  time  that  the  transactions  contemplated  by this
      Agreement  are first  publicly  announced  as  described  in Section  4.7.
      Notwithstanding  the  foregoing,  no Purchaser  makes any  representation,
      warranty or covenant  hereby that it will not engage in Short Sales in the
      securities   of  the  Company   after  the  time  that  the   transactions
      contemplated  by this Agreement are first publicly  announced as described
      in Section 4.7.

            (g) Risk Factors. Each Purchaser represents and warrants that it has
      read and understands the attached Risk Factors relating to the Company

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

                                   ARTICLE IV
                         OTHER AGREEMENTS OF THE PARTIES

      4.1   Transfer Restrictions.

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

                                       14
<PAGE>

            (b) Each Purchaser agrees to the imprinting,  so long as is required
      by  this  Section  4.1(b),  of the  following  legend  on any  certificate
      evidencing Securities:

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

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

                                       15
<PAGE>

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

            (d) In addition to such Purchaser's  other available  remedies,  the
      Company shall pay to a Purchaser,  in cash, as partial  liquidated damages
      and not as a penalty, for each $100,000 of Underlying Shares (based on the
      VWAP on the date such  Securities are submitted to the Company's  transfer
      agent) delivered for removal of the restrictive legend and subject to this
      Section  4.1(c),  $10 per Trading Day  (increasing  to $20 per Trading Day
      five (5) Trading  Days after such  damages  have begun to accrue) for each
      Trading  Day after the  Legend  Removal  Date until  such  certificate  is
      delivered.  Nothing  herein shall limit such  Purchaser's  right to pursue
      actual  damages  for  the  Company's   failure  to  deliver   certificates
      representing any Securities as required by the Transaction Documents,  and
      such Purchaser shall have the right to pursue all remedies available to it
      at law or in equity including,  without  limitation,  a decree of specific
      performance and/or injunctive relief.

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

                                       16
<PAGE>

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

      4.3  Integration.  The Company  shall not sell,  offer for sale or solicit
offers to buy or  otherwise  negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the  Securities  in a manner that would  require the  registration  under the
Securities  Act of the sale of the Securities to the Purchasers or that would be
integrated  with the offer or sale of the  Securities  for purposes of the rules
and  regulations  of any Trading  Market such that it would require  shareholder
approval  prior to the  closing of such  other  transaction  unless  shareholder
approval is obtained before the closing of such subsequent transaction.

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

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

                                       17
<PAGE>

      4.6 Use of Proceeds. See Schedule 4.7.

      4.7 Reservation and Listing of Securities.

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

            (b) If, on any date,  the number of  authorized  but  unissued  (and
      otherwise  unreserved) shares of Common Stock is less than 130% of (i) the
      Actual  Minimum  on such  date,  minus (ii) the number of shares of Common
      Stock previously  issued pursuant to the Transaction  Documents,  then the
      Board of  Directors  of the  Company  shall  use  commercially  reasonable
      efforts to amend the Company's certificate or articles of incorporation to
      increase the number of authorized  but unissued  shares of Common Stock to
      at least the Actual  Minimum  at such time  (minus the number of shares of
      Common Stock previously issued pursuant to the Transaction Documents),  as
      soon as  possible  and in any event not later than the 75th day after such
      date;  provided  that  the  Company  will not be  required  at any time to
      authorize  a number of shares of Common  Stock  greater  than the  maximum
      remaining  number of shares of Common Stock that could  possibly be issued
      after such time pursuant to the Transaction Documents.

            (c) The Company  shall:  (i) in the time and manner  required by the
      Trading  Market,  prepare and file with such Trading  Market an additional
      shares listing application  covering a number of shares of Common Stock at
      least equal to the Actual  Minimum on the date of such  application,  (ii)
      take all steps  necessary  to cause  such  shares  of  Common  Stock to be
      approved for listing on the Trading Market as soon as possible thereafter,
      (iii) provide to each  Purchaser  evidence of such  listing,  and (iv) use
      reasonable  efforts to maintain  the listing of such Common  Stock on such
      Trading Market or another Trading Market.  In addition,  the Company shall
      hold a special  meeting of  shareholders  (which may also be at the annual
      meeting of shareholders)  at the earliest  practical date, for the purpose
      of  obtaining  Shareholder  Approval,   with  the  recommendation  of  the
      Company's  Board of  Directors  that such  proposal be  approved,  and the
      Company  shall  solicit  proxies  from  its   shareholders  in  connection
      therewith  in the same manner as all other  management  proposals  in such
      proxy statement and all management-appointed proxyholders shall vote their
      proxies in favor of such proposal.

      4.11 Conversion and Exercise Procedures.  The form of Election to Purchase
included in the  Warrants  and the forms of  Conversion  Notice  included in the
Certificate of Designation set forth the totality of the procedures  required in
order to exercise the Warrants or convert the  Preferred  Stock.  No  additional
legal opinion or other information or instructions  shall be necessary to enable
each Purchaser to exercise their Warrants or convert their Preferred  Stock. The
Company shall honor  exercises of the Warrants and  conversions of the Preferred
Stock  and  shall  deliver  Underlying  Shares  in  accordance  with the  terms,
conditions and time periods set forth in the Transaction Documents.  The Company
acknowledges  that the issuance of the  Securities may result in dilution of the
outstanding  shares of Common Stock,  which  dilution may be  substantial  under
certain market conditions. The Company further acknowledges that its obligations
under  the  Transaction  Documents,   including  its  obligation  to  issue  the
Underlying Shares pursuant to the Transaction  Documents,  are unconditional and
absolute  and not  subject  to any  right  of set  off,  counterclaim,  delay or
reduction,  regardless  of the  effect  of any such  dilution  or any  claim the
Company may have against any  Purchaser and  regardless  of the dilutive  effect
that such  issuance may have on the ownership of the other  stockholders  of the
Company.

                                       18
<PAGE>

      4.12 Future Right to  Participate.  For a period of time commencing on the
Effective Date and ending 180 calendar days  thereafter,  each  Purchaser  shall
have the right to  subscribe  for an amount of  Preferred  Stock  equaled to its
Subscription Amount on the same terms and conditions contained herein.

      4.13 Participation in Future Financing.

            From the date  hereof  until the date that is the 90 days  after the
      Effective  Date,  upon  any  financing  by  the  Company  or  any  of  its
      Subsidiaries  of Common Stock or Common Stock  Equivalents  (a "Subsequent
      Financing"),  such  Purchaser  shall have the right to  participate in the
      Subsequent  Financing in an amount  equal to up to 100% of the  Subsequent
      Financing,   subject  to  rights  of  refusal   previously   granted  (the
      "Participation Maximum").

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

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

                                       19
<PAGE>

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

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

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

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

                                    ARTICLE V
                                  MISCELLANEOUS

      5.1 Fees and Expenses.  Except as otherwise  set forth in this  Agreement,
each party shall pay the fees and expenses of its advisers, counsel, accountants
and  other  experts,  if any,  and all other  expenses  incurred  by such  party
incident to the negotiation, preparation, execution, delivery and performance of
this  Agreement.  The  Company  shall pay all stamp and other  taxes and  duties
levied in connection with the sale of the Securities.

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

      5.3 Notices.  Any and all notices or other  communications  or  deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of  transmission,  if
such notice or  communication is delivered via facsimile at the facsimile number
specified  on the  signature  page prior to 5:30 p.m.  (New York City time) on a
Trading  Day and an  electronic  confirmation  of  delivery  is  received by the
sender, (b) the next Trading Day after the date of transmission,  if such notice
or communication is delivered via facsimile at the facsimile number specified in
this  Section on a day that is not a Trading  Day or later  than 5:30 p.m.  (New
York City time) on any Trading Day, (c) three Trading Days following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or (d)
upon  actual  receipt by the party to whom such  notice is required to be given.
The  addresses  for such notices and  communications  are those set forth on the
signature  pages  hereof,  or such other address as may be designated in writing
hereafter, in the same manner, by such Person.

                                       20
<PAGE>

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

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

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

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

                                       21
<PAGE>

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

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

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

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

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

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

                                       22
<PAGE>

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

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

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

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

                                       23
<PAGE>

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

                            [SIGNATURE PAGE FOLLOWS]
      <PAGE>

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

ACCUPOLL HOLDING CORP.                                   Address for Notice:

By: /s/ William E. Nixon
    -----------------------------------------------
     Name:  William E. Nixon                                15101 Red Hill Ave.,
     Title:    President and Chief Executive Officer        Suite 220
                                                            Tustin, CA 92780
                                                            (949) 200-4000
With a copy to (which shall not constitute notice):

Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
T 212-930-9700
F 212-930-9725

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

                                       24
<PAGE>

        [PURCHASER SIGNATURE PAGES TO ACUP SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: ALLESANDRO CHIODI
Signature of Authorized Signatory of Purchaser:  /s/ Allesandro Chiodi
                                                 ---------------------
Name of Authorized Signatory:
                              -------------------------------
Title of Authorized Signatory:
                              -------------------------------
Email Address of Authorized Signatory:
                                       -------------------------------
Address for Notice of Investing Entity:

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

Subscription Amount:       USD 15'000
Shares of Preferred Stock: -150-
Warrant Shares:            -150-
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

                                       25
<PAGE>

        [PURCHASER SIGNATURE PAGES TO ACUP SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: LUCIANO ANSELMI
Signature of Authorized Signatory of Purchaser:  /s/ Luciano Anselmi
                                                 -------------------
Name of Authorized Signatory:
                             -------------------------------
Title of Authorized Signatory:
                             -------------------------------
Email Address of Authorized Signatory:
                                      -------------------------------
Address for Notice of Investing Entity:

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

Subscription Amount:       USD 25'000
Shares of Preferred Stock: -250-
Warrant Shares:            -250-
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

                                       26

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