Document:

Exhibit 4.2

                                    EXHIBIT A

              CERTIFICATE TO SET FORTH DESIGNATIONS, VOTING POWERS,
              PREFERENCES, LIMITATIONS, RESTRICTIONS, AND RELATIVE
                         RIGHTS OF SERIES A CONVERTIBLE
                   PREFERRED STOCK, $.001 PAR VALUE PER SHARE

     Pursuant to Title 7,  Chapter  78,  Section  78.1955 of the Nevada  Revised
Statutes

     It is hereby certified that:

     I.   The name of the  corporation  is  BestNet  Communications  Corp.  (the
"CORPORATION"), a Nevada corporation.

     II.  The  certificate  of  incorporation  of the  Corporation,  as amended,
authorizes the issuance of Ten Million  (10,000,000)  shares of Preferred Stock,
$.001 par value per share,  and expressly vests in the Board of Directors of the
Corporation the authority provided therein to issue all of said shares in one or
more series and by resolution or  resolutions to establish the  designation  and
number and to fix the  relative  rights  and  preferences  of each  series to be
issued.

     III. The Board of Directors of the  Corporation,  pursuant to the authority
expressly vested in it, has adopted the following  resolutions  creating a class
of Series A Convertible Preferred Stock:

     RESOLVED,  that a portion of the Ten Million (10,000,000) authorized shares
of Preferred Stock of the  Corporation  shall be designated as a separate series
possessing the rights and preferences set forth below:

     1.   DESIGNATION:  NUMBER OF  SHARES.  The  designation  of said  series of
Preferred  Stock shall be Series A  Convertible  Preferred  Stock (the "SERIES A
PREFERRED  STOCK").  The number of shares of Series A  Preferred  Stock shall be
4,500,000.  Each share of Series A  Preferred  Stock  shall have a stated  value
equal to $0.001 (as adjusted  for any stock  dividends,  combinations  or splits
with respect to such shares) (the "STATED VALUE"), and $.001 par value.

     2.   RANKING.  The  Series A  Preferred  Stock  shall rank (i) prior to the
Corporation's  common stock,  par value $.001 per share ("COMMON  STOCK");  (ii)
prior to any class or  series  of  capital  stock of the  Corporation  hereafter
created  (unless,  with the consent of the  holders of Series A Preferred  Stock
(which may be withheld in such holders'  reasonable  discretion),  such class or
series of capital  stock  specifically,  by its terms,  ranks  senior to or Pari
Passu with the  Series A  Preferred  Stock);  (iii) Pari Passu with any class or
series of capital stock of the Corporation  hereafter  created (with the consent
of the  holders of the Series A Preferred  Stock  (which may be withheld in such
holders' reasonable  discretion)  specifically  ranking, by its terms, on parity
with the Series A Preferred Stock ("PARI PASSU SECURITIES");  and (iv) junior to
any class or series of capital stock of the Corporation  hereafter created (with
the consent of the holders of Series A Preferred Stock (which may be withheld in
such  holders'  reasonable  discretion)  obtained in  accordance  with Section 8
hereof)  specifically  ranking,  by its terms,  senior to the Series A Preferred
Stock  ("SENIOR  Securities"),  in each case as to  distribution  of assets upon
liquidation,  dissolution or winding up of the Corporation, whether voluntary or
involuntary.
<PAGE>
     3.   DIVIDENDS.

          (a)  The  holders  of  shares  of Series A  Preferred  Stock  shall be
entitled to receive dividends  payable out of funds legally available  therefor.
Such  dividends  shall be payable only when, as, and if declared by the Board of
Directors and shall be noncumulative.

          (b)  No dividends shall be paid on any Common Stock of the Corporation
unless a dividend  (including  the amount of any dividends  paid pursuant to the
above provisions of this section) is paid with respect to all outstanding shares
of  Series A  Preferred  Stock in an  amount  for each  such  share of  Series A
Preferred Stock equal to or greater than the aggregate  amount of such dividends
for all shares of Common  Stock into which each such share of Series A Preferred
Stock could then be converted.

          (c)  The  Board  of   Directors   may  fix  a  record   date  for  the
determination  of  holders of shares of Series A  Preferred  Stock  entitled  to
receive payment of a dividend or  distribution  declared  thereon,  which record
date  shall be no more  than 30 days  prior to the date  fixed  for the  payment
thereof.

     4.   LIQUIDATION RIGHTS.

          (a)  Upon  the   dissolution,   liquidation   or   winding-up  of  the
Corporation,  whether  voluntary  or  involuntary,  the  Holders of the Series A
Preferred  Stock shall be entitled to receive before any payment or distribution
shall  be  made  on the  Common  Stock  or any  other  capital  stock  hereafter
authorized that ranks junior to the Series A Preferred Stock (collectively,  the
"JUNIOR STOCK"), out of the assets of the Corporation available for distribution
to stockholders,  the Stated Value per share of Series A Preferred Stock and all
accrued  and unpaid  dividends,  if any,  to and  including  the date of payment
thereof.  Upon the payment in full of all amounts due to Holders of the Series A
Preferred Stock the Holders of the Common Stock of the Corporation and any other
class of Junior  Stock shall  receive all  remaining  assets of the  Corporation
legally available for distribution.  If the assets of the Corporation  available
for  distribution  to the  Holders  of the  Series A  Preferred  Stock  shall be
insufficient  to permit  payment in full of the amounts  payable as aforesaid to
the Holders of Series A Preferred  Stock upon such  liquidation,  dissolution or
winding-up,  whether  voluntary  or  involuntary,  then all such  assets  of the
Corporation  shall be  distributed  to the exclusion of the Holders of shares of
Junior Stock ratably among the Holders of the Series A Preferred Stock.

          (b)  Neither the purchase nor the  redemption  by the  Corporation  of
shares of any class of stock nor the merger or  consolidation of the Corporation
with or into any other  corporation or corporations  nor the sale or transfer by
the  Corporation  of all or any  part of its  assets  shall  be  deemed  to be a
liquidation,  dissolution or winding-up of the  Corporation  for the purposes of
this paragraph 4.

     5.   CONVERSION INTO COMMON STOCK. Shares of Series A Preferred Stock shall
have the following conversion rights and obligations:

          (a)  Subject to the further  provisions and  restrictions set forth in
this  paragraph 5, each Holder of shares of Series A Preferred  Stock shall have
the right at any time  commencing  after the  issuance to the Holder of Series A
Preferred Stock and the Shareholder Approval (as defined below), to convert such
shares  into  fully  paid  and  non-assessable  shares  of  Common  Stock of the
Corporation  (as defined in paragraph 5(i) below)  determined in accordance with
the Conversion Price provided in paragraph 5(b) below (the  "CONVERSION  PRICE")
by  tendering to the Company the cash sum of $0.10  multiplied  by the number of
shares of Common  Stock into which such shares of Series A  Preferred  Stock are
then convertible. Such payment shall be made by certified check or wire transfer
of funds to an account  designated  by the  Company.  All issued or accrued  but
unpaid  dividends,  if any,  may be  converted  at the  election  of the  Holder
simultaneously with the conversion of principal amount of Stated Value of Series
A Preferred Stock being converted.
<PAGE>
     Notwithstanding  anything  herein to the  contrary,  the Series A Preferred
Stock shall not be  convertible  into Common  Stock until such time as there are
sufficient authorized but unissued shares of Common Stock of the Corporation for
such  purpose.  Promptly  following the issuance of shares of Series A Preferred
Stock,  the  Corporation  shall take such corporate  action as may be reasonably
necessary to increase its authorized but unissued shares of Common Stock to such
number  as  shall  be  sufficient  for  such  purpose,   including  engaging  in
commercially  reasonable  efforts to obtain the requisite  shareholder  approval
(the "SHAREHOLDER  APPROVAL");  provided,  however, that the rights contained in
this  Certificate  shall  constitute the Series A Preferred  Stock holders' sole
remedy  in the  event  that  the  Corporation  fails  to  obtain  the  requisite
shareholder approval to increase the number of authorized but unissued shares of
Common Stock in a manner  sufficient to effect the conversion of all outstanding
shares of Series A Preferred Stock.

          (b)  The number of shares of Common Stock issuable upon  conversion of
each share of Series A Preferred  Stock shall be two (2). The  Conversion  Price
per share shall be $0.10.

          (c)  Subject  to the  restrictions  set forth in this  Section  5, the
Holder  of any  certificate  representing  shares of  Series A  Preferred  Stock
desiring  to convert  any of such  shares  may give  notice of its  decision  to
convert the shares into Common Stock by  delivering or  telecopying  an executed
and  completed  notice of  conversion to the  Corporation  or the  Corporation's
Transfer  Agent and  delivering  within  three  business  days  thereafter,  the
original   certificate  for  the  Preferred  Stock  properly   endorsed  for  or
accompanied  by duly executed  instruments  of transfer (and such other transfer
papers as said Transfer Agent may reasonably  require) to the Corporation or the
Corporation's  Transfer  Agent, in addition to payment in full of the Conversion
Price  multiplied  by the  number of shares  of Common  Stock to be issued  upon
conversion. Each date on which a notice of conversion is delivered or telecopied
to the  Corporation or the  Corporation's  Transfer Agent in accordance with the
provisions  hereof  shall be  deemed a  Conversion  Date.  A form of  Notice  of
Conversion  that may be employed by a Holder is annexed hereto as Exhibit A. The
Corporation  will transmit the  certificates  representing  the shares of Common
Stock issuable upon  conversion of any Series A Preferred  Stock  (together with
the Series A  Preferred  Stock  representing  the shares not  converted)  to the
Holder via express  courier,  by electronic  transfer or otherwise,  within four
business  days after  receipt by the  Corporation  of the original or telecopied
notice of conversion and the Series A Preferred Stock representing the shares to
be converted  ("DELIVERY  DATE").  The Holder of the shares so  surrendered  for
conversion  shall be  entitled  to  receive  on or before  the  Delivery  Date a
certificate  or  certificates  that  shall be  expressed  to be  fully  paid and
non-assessable  for the number of shares of Common  Stock to which  such  Holder
shall be entitled  upon such  conversion  registered in the name of such Holder.
The  Corporation is obligated to deliver to the Holder  simultaneously  with the
aforedescribed  Common Stock, at the election of the Holder,  additional  Common
Stock  representing the conversion at the Conversion Price, of dividends accrued
on the Series A  Preferred  Stock being  converted.  In the case of any Series A
Preferred  Stock that is converted in part only the Holder of shares of Series A
Preferred   Stock  shall  upon  delivery  of  the  certificate  or  certificates
representing Common Stock also receive a new share certificate  representing the
unconverted  portion of the shares of Series A Preferred  Stock.  Nothing herein
shall be  construed  to give any  Holder of shares of Series A  Preferred  Stock
surrendering the same for conversion the right to receive any additional  shares
of Common Stock or other property which results from an adjustment in conversion
rights under the  provisions of paragraph  (d) or (e) of this  paragraph 5 until
Holders of Common  Stock are  entitled to receive  the shares or other  property
giving rise to the adjustment.
<PAGE>
     In the case of the exercise of the conversion rights set forth in paragraph
     5(a) the  conversion  privilege  shall be deemed to have been exercised and
     the shares of Common Stock issuable upon such conversion shall be deemed to
     have been  issued upon the date of receipt by the  Corporation  or Transfer
     Agent of the Notice of Conversion. The person or entity entitled to receive
     Common  Stock  issuable  upon  such  conversion  shall,  on the  date  such
     conversion  privilege is deemed to have been exercised and  thereafter,  be
     treated  for all  purposes as the record  Holder of such  Common  Stock and
     shall on the same date  cease to be treated  for any  purpose as the record
     Holder of such shares of Series A Preferred Stock so converted.

               Upon the conversion of any shares of Series A Preferred  Stock no
adjustment  or payment  shall be made with respect to such  converted  shares on
account of any  dividend  on the Common  Stock,  except  that the Holder of such
converted  shares shall be entitled to be paid any dividends  declared on shares
of Common Stock after conversion thereof.

               The  Corporation  shall not be required,  in connection  with any
conversion  of Series A Preferred  Stock,  and payment of  dividends on Series A
Preferred  Stock to issue a fraction of a share of its Series A Preferred  Stock
and  shall  instead  deliver a stock  certificate  representing  the next  whole
number.

               The  Corporation  and Holder may not  convert  that amount of the
Series A Preferred Stock on a Conversion Date in amounts  inconsistent  with the
limitations  set forth in the  Subscription  Agreement in  connection  with that
number of shares of Common  Stock which would be in excess of the sum of (i) the
number of shares of Common Stock  beneficially  owned by the  Subscriber and its
affiliates  on such  Conversion  Date,  and (ii) the  number of shares of Common
Stock issuable upon the conversion of the Series A Preferred  Stock with respect
to which the  determination  of this  proviso is being  made on such  Conversion
Date,  which  would  result  in  beneficial  ownership  by the  Holder  and  its
affiliates of more than 4.99% of the  outstanding  shares of Common Stock of the
Corporation.  For the  purposes  of the  proviso  to the  immediately  preceding
sentence,  beneficial  ownership  shall be determined in accordance with Section
13(d) of the Securities  Exchange Act of 1934, as amended,  and Regulation 13d-3
thereunder.  The Holder may revoke the conversion  limitation  described in this
Paragraph  upon 75 days  prior  notice  to the  Corporation  or upon an Event of
Default  hereunder.  The  Holder  may  allocate  which  of  the  equity  of  the
Corporation  deemed  beneficially  owned by the Holder  shall be included in the
4.99%  amount  described  above and which shall be allocated to the excess above
4.99%.

          (d)  The Conversion Price determined pursuant to 4(b) shall be subject
to adjustment from time to time as follows:

               (i)  In case the  Corporation  shall at any time (A)  declare any
dividend  or  distribution  on its  Common  Stock  or  other  securities  of the
Corporation  other than the Series A Preferred Stock, (B) split or subdivide the
outstanding  Common  Stock,  (C) combine  the  outstanding  Common  Stock into a
smaller number of shares, or (D) issue by  reclassification  of its Common Stock
any shares or other securities of the  Corporation,  then in each such event the
Conversion Price shall be adjusted proportionately so that the Holders of Series
A Preferred  Stock shall be entitled to receive the kind and number of shares or
other securities of the Corporation  which such Holders would have owned or have
been  entitled to receive  after the  happening  of any of the events  described
above had such shares of Series A  Preferred  Stock been  converted  immediately
prior to the happening of such event (or any record date with respect  thereto).
Such  adjustment  shall be made  whenever  any of the events  listed above shall
occur. An adjustment made to the Conversion  pursuant to this paragraph  5(d)(i)
shall  become  effective  immediately  after  the  effective  date of the  event
retroactive to the record date, if any, for the event.
<PAGE>
          (e)  (i) In case of any  merger  of the  Corporation  with or into any
other corporation (other than a merger in which the Corporation is the surviving
or  continuing  corporation  and which does not result in any  reclassification,
conversion, or change of the outstanding shares of Common Stock) then unless the
right to convert shares of Series A Preferred  Stock shall have  terminated,  as
part of such merger lawful  provision  shall be made so that Holders of Series A
Preferred Stock shall  thereafter have the right to convert each share of Series
A  Preferred  Stock  into the kind and  amount of shares of stock  and/or  other
securities or property  receivable upon such merger by a Holder of the number of
shares of Common Stock into which such shares of Series A Preferred  Stock might
have been converted  immediately  prior to such  consolidation  or merger.  Such
provision shall also provide for adjustments that shall be as nearly  equivalent
as may be practicable to the  adjustments  provided for in paragraph (d) of this
paragraph 5. The foregoing  provisions of this  paragraph  5(e) shall  similarly
apply to successive mergers.

               (ii) In case of any  sale or  conveyance  to  another  person  or
entity of the property of the Corporation as an entirety, or substantially as an
entirety,  in connection with which shares or other  securities or cash or other
property  shall  be  issuable,   distributable,   payable,  or  deliverable  for
outstanding  shares of Common  Stock,  then,  unless the right to  convert  such
shares shall have terminated, lawful provision shall be made so that the Holders
of Series A Preferred  Stock  shall  thereafter  have the right to convert  each
share of the  Series A  Preferred  Stock  into the kind and  amount of shares of
stock or other  securities  or property  that shall be issuable,  distributable,
payable,  or deliverable upon such sale or conveyance with respect to each share
of Common Stock immediately prior to such conveyance.

          (f)  Whenever the number of shares to be issued upon conversion of the
Series  A  Preferred  Stock is  required  to be  adjusted  as  provided  in this
paragraph 5, the  Corporation  shall  forthwith  compute the adjusted  number of
shares to be so issued and prepare a  certificate  setting  forth such  adjusted
conversion  amount and the facts upon which such  adjustment is based,  and such
certificate  shall  forthwith be filed with the Transfer  Agent for the Series A
Preferred  Stock and the Common Stock;  and the  Corporation  shall mail to each
Holder of record of Series A Preferred Stock notice of such adjusted  conversion
price.

          (g)  In case at any time the Corporation shall propose:

               (i)  to pay any dividend or  distribution  payable in shares upon
its Common Stock or make any  distribution  (other than cash  dividends)  to the
Holders of its Common Stock; or

               (ii) to offer for subscription to the Holders of its Common Stock
any additional shares of any class or any other rights; or

               (iii) any  capital  reorganization  or  reclassification  of  its
shares or the merger of the Corporation with another  corporation  (other than a
merger in which the  Corporation is the surviving or continuing  corporation and
which  does not  result in any  reclassification,  conversion,  or change of the
outstanding shares of Common Stock); or

               (iv) the voluntary dissolution,  liquidation or winding-up of the
Corporation;  then, and in any one or more of said cases, the Corporation  shall
cause at least fifteen (15) days prior notice of the date on which (A) the books
of the  Corporation  shall  close or a record be taken for such stock  dividend,
distribution,  or  subscription  rights,  or (B)  such  capital  reorganization,
reclassification,  merger,  dissolution,  liquidation  or winding-up  shall take
place,  as the case may be, to be mailed to the Transfer  Agent for the Series A
Preferred  Stock and for the  Common  Stock and to the  Holders of record of the
Series A Preferred Stock.
<PAGE>
          (h)  So long as any shares of Series A Preferred  Stock  shall  remain
outstanding  and the Holders thereof shall have the right to convert the same in
accordance  with  provisions of this  paragraph 5 the  Corporation  shall at all
times  reserve from the  authorized  and  unissued  shares of its Common Stock a
sufficient  number of shares to  provide  for such  conversions,  subject to the
Corporation's obligation to seek shareholder approval to increase its authorized
but unissued Common Stock as set forth in paragraph 5(a).

          (i)  The term Common Stock as used in this  paragraph 5 shall mean the
$.001 par value Common Stock of the  Corporation as such stock is constituted at
the date of issuance thereof or as it may from time to time be changed or shares
of stock of any class of other securities  and/or property into which the shares
of Series A Preferred Stock shall at any time become convertible pursuant to the
provisions of this paragraph 5.

          (j)  The  Corporation  shall pay the amount of any and all issue taxes
(but not income  taxes) which may be imposed in respect of any issue or delivery
of stock upon the conversion of any shares of Series A Preferred  Stock, but all
transfer  taxes and income taxes that may be payable in respect of any change of
ownership of Series A Preferred  Stock or any rights  represented  thereby or of
stock receivable upon conversion  thereof shall be paid by the person or persons
surrendering such stock for conversion.

          (k)  In the event a Holder shall elect to convert any shares of Series
A Preferred Stock as provided herein,  the Corporation may not refuse conversion
based on any claim that such Holder or any one  associated  or  affiliated  with
such Holder has been  engaged in any  violation  of law, or for any other reason
unless,  an injunction  from a court,  on notice,  restraining  and or enjoining
conversion of all or part of said shares of Series A Preferred  Stock shall have
been  issued and the  Corporation  posts a surety  bond for the  benefit of such
Holder in the amount of 150% of the Stated Value of the Series A Preferred Stock
and dividends sought to be converted, which is subject to the injunction,  which
bond shall remain in effect until the  completion of  arbitration/litigation  of
the  dispute  and the  proceeds  of which shall be payable to such Holder in the
event it obtains judgment.

     6.   MANDATORY  CONVERSION.  The  shares  of Series A  Preferred  Stock and
dividends may not be converted without the consent of the Holder.

     7.   VOTING RIGHTS.  The shares of Series A Preferred  Stock shall not have
voting rights.

     8.   STATUS OF CONVERTED OR REDEEMED  STOCK. In case any shares of Series A
Preferred  Stock shall be redeemed or otherwise  repurchased or reacquired,  the
shares  so  redeemed,  converted,  or  reacquired  shall  resume  the  status of
authorized  but  unissued  shares  of  Preferred  Stock  and  shall no longer be
designated as Series A Preferred Stock.

Dated: ___________ ___, 2003

                                        BESTNET COMMUNICATIONS CORP.

                                        By: ____________________________________
<PAGE>
                                    EXHIBIT A

                              NOTICE OF CONVERSION

(To Be  Executed  By the  Registered  Holder in Order to  Convert  the  Series A
Convertible Preferred Stock of BestNet Communications Corp.)

     The undersigned hereby irrevocably elects to convert  ______________ shares
of the above Series A Convertible Preferred Stock into shares of Common Stock of
BestNet  Communications  Corp. (the  "Corporation")  according to the conditions
hereof, as of the date written below.

Date of Conversion: ____________________________________________________________

Conversion Cost Per Share: $.10

Dollar Amount Paid to the Company for Conversion: ______________________________

Number of Common Shares Issuable Upon This Conversion: _________________________

Signature: _____________________________________________________________________

Print Name: ____________________________________________________________________

Address: _______________________________________________________________________

________________________________________________________________________________

Deliveries Pursuant to this Notice of Conversion Should Be Made to:

________________________________________________________________________________

________________________________________________________________________________Exhibit 10.1

                       BESTNET COMMUNICATIONS CORPORATION

                             UNIT PURCHASE AGREEMENT

          This UNIT PURCHASE AGREEMENT ("AGREEMENT") is dated as of the date set
forth on the signature page hereto, by and among BestNet Communications Corp., a
Nevada  corporation  (the  "COMPANY"),  and each person or entity who executes a
counterpart  signature  page to this  Agreement  and is listed as an investor on
SCHEDULE I attached to this Agreement.

                              W I T N E S S E T H:

          WHEREAS,  the Company  desires to sell and issue up to an aggregate of
4,500,000 units (collectively, the "UNITS" and individually a "UNIT"), each unit
consisting of the following  securities:  (a) three shares of Common Stock,  par
value $.001 per share,  of the Company  (the "COMMON  STOCK");  (b) one share of
Series A  Preferred  Stock,  par value  $.001 per  share,  of the  Company  (the
"PREFERRED STOCK"); and (c) three-year warrants (the "WARRANTS") to purchase one
share of  Common  Stock at a per share  exercise  price of $0.30  (the  "WARRANT
SHARES");.

          WHEREAS, the rights,  preferences,  privileges and restrictions of the
Series A Preferred Stock shall be set forth in a Certificate of Designations, in
the form and  substance  of  EXHIBIT A  attached  hereto  (the  "CERTIFICATE  OF
DESIGNATIONS");

          WHEREAS,  the Warrants shall be in the form and substance of EXHIBIT B
attached hereto;

          WHEREAS,  the  Company  intends  to offer the Units  during the period
commencing  immediately  and ending on March 30, 2003,  subject to the Company's
right to  unilaterally  extend such period one time for up to an  additional  30
days (the "OFFERING PERIOD");

          WHEREAS, the purchase price of each Unit shall be $0.30.

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

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

          "Closing" and "Closing Date" shall have the meanings  ascribed to such
terms in Section 1.3 herein.

          "Commission" shall mean the Securities and Exchange  Commission or any
other federal agency at the time administering the Securities Act.
<PAGE>
          "Common  Stock"  shall have the meaning  set forth in the  preamble of
this Agreement.

          "Holder"  and  "Holders"  shall  include  an  Investor  or  Investors,
respectively,  and any  transferee of the Common  Stock,  the Series A Preferred
Stock,  the Warrants or the Underlying  Shares,  which have been  transferred in
compliance thereof.

          "Regulation D" shall mean Regulation D as promulgated  pursuant to the
Securities Act, and as subsequently amended.

          "Securities"  shall mean the Units,  the Common  Stock,  the Preferred
Stock and the Common Stock issuable upon conversion of the Preferred  Stock, the
Warrants and the Warrant Shares.

          "Securities  Act" or "Act" shall mean the  Securities  Act of 1933, as
amended.

          "Underlying  Shares"  shall mean the shares of Common  Stock  issuable
upon conversion of the Preferred Shares and upon exercise of the Warrants.

                                    ARTICLE I

                   PURCHASE AND SALE OF THE STOCK AND WARRANTS

          Section 1.1 PURCHASE AND SALE.

          (a)  Upon the following terms and conditions,  the Company shall issue
and sell to each  Investor  listed on SCHEDULE I  severally,  and each  Investor
listed on SCHEDULE I  severally  and not  jointly  agrees to  purchase  from the
Company, that number of Units indicated next to such Investor's name on SCHEDULE
I attached hereto.

          (b)  The  purchase  price for each  Unit  shall be $0.30 per Unit (the
"UNIT  PURCHASE  PRICE").  The Company  shall have the right to determine in its
sole and  absolute  whether  to  require a  minimum  investment  amount  from an
Investor.

          (c)  The Company  shall adopt and file with the Secretary of State for
the Sate of Nevada on or before the Closing  (defined  below) the Certificate of
Designation.

          Section 1.2 THE CLOSING.

          (a)  The date of this  Agreement  shall be the date this  Agreement is
signed by the first  Investor(s) to acquire the Units hereunder.  It is expected
that there will be one or more closings of the sale of the Units hereunder until
such time as all of the Units  have been  acquired  or the  Offering  Period has
expired.  Each  closing of the  purchase  and sale of the Units (the  "CLOSING")
shall take place by facsimile  transmission  of  signature  pages to each of the
documents contemplated by this Agreement, following acceptance by the Company of
subscriptions  for Units being offered hereby,  which acceptance shall not occur
until the  conditions  set forth in Article IV hereof with  respect to each sale
shall be  fulfilled  or waived  in  accordance  herewith.  The date on which the
Closing occurs is referred to herein as the "CLOSING DATE."

                                        2
<PAGE>
          (b)  On the Closing  Date,  the Company,  upon receipt and clearing of
funds  by  check or wire  transfer  shall  deliver  to the  applicable  Investor
appropriate documents and certificates  representing the shares of Common Stock,
Preferred Stock and Warrants  comprising the Units  purchased  hereunder by such
Investor  registered in the name of such Investor.  Each party shall deliver all
documents,  instruments  and  writings  required to be  delivered  by such party
pursuant to this Agreement at or prior to the Closing Date.

                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

          Section 2.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby  makes  the  following  representations  and  warranties  to  each of the
Investors from and as of the date hereof through the Closing Date:

          (a)  ORGANIZATION  AND  QUALIFICATION;  MATERIAL  ADVERSE EFFECT.  The
Company is a corporation  duly organized,  validly existing and in good standing
under the laws of the State of  Nevada.  Except for the  Company's  subsidiaries
disclosed  in its Form 10-KSB for the fiscal  year ended  August 31, 2002 or its
subsequently filed Form 10-QSBs (the "COMPANY SEC FILINGS"),  there are no other
corporations  or  other  entities  (including  partnerships,  limited  liability
companies and joint  ventures) in which the Company  directly or indirectly owns
at least a majority of the voting power  represented by the outstanding  capital
stock or other voting securities or interests having voting power under ordinary
circumstances  to elect a majority of the  directors  or similar  members of the
governing  body, or otherwise to direct the  management  and  policies,  of such
corporation or entity. The Company has the requisite  corporate power to own its
properties and to carry on its business as now being  conducted.  The Company is
duly  qualified as a foreign  corporation to do business and is in good standing
in every  jurisdiction in which the nature of the business conducted or property
owned by it makes  such  qualification  necessary  other than those in which the
failure  so to qualify  would  not,  individually  or in the  aggregate,  have a
Material Adverse Effect.  "MATERIAL  ADVERSE EFFECT" means any adverse effect on
the business, operations,  properties,  prospects, or financial condition of the
entity  with  respect to which such term is used and which is  material  to such
entity and other entities  controlling or controlled by such entity,  taken as a
whole, and any material adverse effect on the  transactions  contemplated  under
the Agreement or any other agreement or document contemplated hereby.

          (b)  AUTHORIZATION;  ENFORCEMENT.  All corporate action on the part of
the Company and its respective  officers,  directors and stockholders  necessary
for the authorization, execution and delivery of this Agreement, the Certificate
of Designations,  the Registration  Rights Agreement,  which is substantially in
the form and substance  attached hereto as EXHIBIT C (the  "REGISTRATION  RIGHTS
AGREEMENT");  the  performance of all  obligations of the Company  hereunder and
thereunder; and the authorization,  issuance (or reservation for issuance), sale
and  delivery  of the  Securities  being sold  hereunder  and the  Common  Stock
issuable  upon  conversion  of the  Preferred  Stock  and upon  exercise  of the
Warrants  has  been  taken  or will be  taken  prior  to the  Closing,  and this
Agreement, the Certificate of Designations and the Registration Rights Agreement
constitute valid and legally binding obligations of the Company,  enforceable in
accordance  with their  respective  terms,  except (i) as limited by bankruptcy,
insolvency, fraudulent conveyance,  reorganization,  moratorium and similar laws
affecting  creditors,   rights  and  remedies  generally,  and  subject,  as  to

                                        3
<PAGE>
enforceability,  to  general  principles  of  equity,  including  principles  of
commercial  reasonableness,  good faith and fair dealing  (regardless of whether
enforcement  is sought in a proceeding  at law or in equity) and (ii) as limited
by laws relating to the availability of specific performance,  injunctive relief
or other  equitable  remedies.  The Common Stock,  Preferred  Stock and Warrants
being  purchased by Investors  hereunder,  when  issued,  sold and  delivered in
accordance  with the terms of this  Agreement  for the  consideration  expressed
herein, and the Common Stock issuable upon conversion of the Preferred Stock and
upon exercise of the Warrants (when issued in accordance with the Certificate of
Designation  and the Warrants,  as the case may be) (the  "Conversion  Shares"),
will be,  subject to the truth and accuracy of each  Investor's  representations
set forth in Section 2 of this  Agreement,  and the offer,  sale and issuance of
the Common Stock, Preferred Stock and Warrants as contemplated by this Agreement
are,  exempt from the  registration  requirements  of any  applicable  state and
federal  securities  laws. To the Company's  knowledge,  no person acting on its
behalf has taken any action (including,  without limitation, any offering of any
securities of the Company under  circumstances  which require the integration of
such  offering with the offering of the Units under the  Securities  Act and the
rules and  regulations of the SEC  thereunder)  that might subject the offering,
issuance or sale of the Units to the  registration  requirements of Section 5 of
the Securities Act.

          (c)  CAPITALIZATION.   Schedule  2.1(c)  sets  forth  the  outstanding
capital stock of the Company. The issued and outstanding shares of capital stock
of the Company have been validly  issued and are fully paid and  non-assessable.
Except as set  forth on  Schedule  2.1(c),  there  are no  outstanding  options,
warrants,  rights  to  subscribe  for,  calls or  commitments  of any  character
whatsoever  relating to, or securities  or rights  exchangeable  or  convertible
into, any ownership interest in the Company.

          (d)  ISSUANCE OF  SECURITIES.  The Common Stock,  Preferred  Stock and
Warrants  have  been  duly  authorized  and,  subject  to  the  increase  in the
authorized  shares of Common Stock  contemplated  in Section 3.6, the Underlying
Shares  will be,  as of the  Closing  Date,  reserved  for  issuance  and,  upon
conversion of the Preferred  Stock in accordance with the terms thereof and upon
exercise  of the  Warrants in  accordance  with terms  thereof,  will be validly
issued,  fully  paid and  non-assessable,  free and clear of any and all  liens,
claims and encumbrances,  except for liens,  claims and encumbrances placed upon
such Securities by an Investor.

          (e)  NO CONFLICTS.  The  execution,  delivery and  performance of this
Agreement  and  the  Registration  Rights  Agreement  by  the  Company  and  the
consummation by the Company of the transactions  contemplated hereby and thereby
do not and will not (i) result in a violation of the  organizational  documents,
as amended, of the Company or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default)  under,
or  give to  others  any  rights  of  termination,  amendment,  acceleration  or
cancellation of, any agreement,  indenture, patent, patent license or instrument
to which the Company is a party, or result in a violation of any Federal, state,
local or foreign law, rule,  regulation,  order,  judgment or decree  (including
Federal and state securities laws and regulations)  applicable to the Company or
by which  any  property  or  asset of the  Company  is  bound  (except  for such
conflicts, defaults, terminations, amendments, accelerations,  cancellations and
violations  as would  not,  individually  or in the  aggregate,  have a Material
Adverse  Effect);  provided,  that,  for purposes of such  representation  as to
Federal,  state, local or foreign law, rule or regulation,  no representation is

                                        4
<PAGE>
made herein with respect to any of the same  applicable  solely to the Investors
and not to the  Company.  The  business of the Company has not been,  is not now
being  conducted  in  violation  of any  law,  ordinance  or  regulation  of any
governmental  entity,  except  for  violations  which  either  singly  or in the
aggregate do not and will not have a Material Adverse Effect. The Company is not
required  under  Federal,  state,  local or foreign law,  rule or  regulation to
obtain  any  consent,  authorization  or  order  of,  or to make any  filing  or
registration with, any court or governmental  agency in order for it to execute,
deliver or perform any of its obligations  under this Agreement,  the Units, the
Investor  Warrants or issue and sell the Units or such  Warrants  in  accordance
with the terms hereof,  the Underlying  Shares  issuable upon  conversion of the
Units and upon  exercise of the  Warrants,  provided  that,  for purposes of the
representation  made in this sentence,  the Company is assuming and relying upon
the accuracy of the relevant  representations  and  agreements  of the Investors
herein.

          (f)  NO MATERIAL  ADVERSE  CHANGE.  Since  November 30, 2002, the date
through which the most recent  unaudited  financial  statements  (the "FINANCIAL
STATEMENTS") of the Company have been prepared, no event which,  individually or
in the aggregate, when considered with any other event, had or is likely to have
a Material  Adverse  Effect has  occurred or exists with respect to the Company,
except as otherwise  disclosed or  reflected  in  Financial  Statements,  and as
otherwise provided to the Investors prior to the date hereof.

          (g)  NO  UNDISCLOSED  LIABILITIES.  Except  as set  forth  in the  SEC
Filings,  the Company does not have any liabilities or obligations not disclosed
in the  Financial  Statements,  other than  those  liabilities  incurred  in the
ordinary  course of its business  since  November 30, 2002,  or  liabilities  or
obligations,  individually or in the aggregate, which do not or would not have a
Material Adverse Effect on the Company.

          (h)  NO  GENERAL  SOLICITATION.   Neither  the  Company  nor,  to  the
Company's knowledge,  any of its affiliates or any person acting on its or their
behalf has engaged in any form of general  solicitation  or general  advertising
(within the meaning of Regulation D) in connection with the offer or sale of the
Securities.

          (i)  INTELLECTUAL  PROPERTY.  Except as set forth in the SEC  Filings,
the Company  owns,  or has legal and valid  rights by license,  lease,  or other
agreement to use, all trademarks,  trade names,  service marks,  Internet domain
names,  logos,  assumed names,  copyrights,  patents,  trade secrets,  software,
databases and names,  likenesses and other information  concerning real persons,
and  all   registrations   and   applications   therefore   (collectively,   the
"INTELLECTUAL  PROPERTY  RIGHTS")  which are used or are needed to  conduct  its
business as it is now being conducted or as proposed to be conducted.  Except as
set forth in the SEC  Filings,  the  Company  has no reason to believe  that the
Intellectual  Property  Rights  owned  or used by the  Company  are  invalid  or
unenforceable  or that  the  use of such  Intellectual  Property  Rights  by the
Company  infringes upon or conflicts with any right of any third party,  and the
Company has no knowledge of a basis for such claim or has received notice of any
such  infringement or conflict.  All registrations and applications for material
Intellectual Property Rights owned by the Company are valid and subsisting,  and
standing  in the record  ownership  of the  Company.  There are no  settlements,
consents,  agreements to forebear or other similar agreements or arrangements to
which the Company is bound which  materially  affects its rights to own,  use or
enforce any Intellectual Property Rights.

                                        5
<PAGE>
          (j)  NO  LITIGATION.  Except  as set  forth  in the  SEC  Filings,  no
litigation or claim  (including  those for unpaid taxes)  against the Company is
pending  or, to the  Company's  knowledge,  threatened,  and no other  event has
occurred,  which if determined adversely would have a Material Adverse Effect on
the Company, or would materially adversely effect the transactions  contemplated
hereby.

          (k)  BROKERS. During the Offering Period, the Company may elect to pay
brokerage  commissions  to  registered  broker-dealers  who,  at  the  Company's
request,  assist  in the  sale of the  Units.  The  commissions  will be up to a
maximum of five percent (5%) of any proceeds received from the Units offered and
sold by an authorized broker-dealer.

          Section 2.2 REPRESENTATIONS  AND WARRANTIES OF THE INVESTORS.  Each of
the   Investors,   severally  and  not  jointly,   hereby  makes  the  following
representations  and  warranties to the Company as of the date hereof and on the
Closing Date:

          (a)  AUTHORIZATION;  ENFORCEMENT.  (i) Such Investor has the requisite
power and authority,  or the legal  capacity,  as the case may be, to enter into
and perform this  Agreement  and to purchase the  Securities  being sold to such
Investor  hereunder,  (ii) the execution and delivery of this  Agreement by such
Investor and the consummation by it of the transactions contemplated hereby have
been duly  authorized  by all  necessary  corporate or  partnership  action,  as
required,  and (iii) this Agreement constitutes the valid and binding obligation
of such Investor  enforceable  against such  Investor in  accordance  its terms,
except  as  such  enforceability  may  be  limited  by  applicable   bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting  generally the enforcement of creditors'  rights and remedies or by
other equitable principles of general application.

          (b)  NO CONFLICTS.  The  execution,  delivery and  performance of this
Agreement and the consummation by such Investor of the transactions contemplated
hereby  do not and  will  not  (i)  result  in a  violation  of such  Investor's
organizational  documents,  or (ii) conflict with any agreement,  indenture,  or
instrument to which such Investor is a party,  or (iii) result in a violation of
any law,  rule, or  regulation or any order,  judgment or decree of any court or
governmental  agency applicable to such Investor.  Such Investor is not required
to obtain any consent or authorization  of any governmental  agency in order for
it to perform its obligations under this Agreement.

          (c)  INVESTMENT  REPRESENTATION.   Such  Investor  is  purchasing  the
Securities  purchased  hereunder  for its  own  account  and not  with a view to
distribution  in violation of any securities  laws. With respect to the purchase
of the  Securities  pursuant  to this  Agreement,  Investor  is not acting as an
"underwriter" within the meaning of Section 2(a)(11) of the Securities Act. Such
Investor has no present intention to sell the Securities purchased hereunder and
such  Investor has no present  arrangement  (whether or not legally  binding) to
sell the Securities purchased hereunder to or through any person or entity.

          (d)  ACCREDITED INVESTOR. Such Investor is an "ACCREDITED INVESTOR" as
defined in Rule 501 promulgated  under the Securities Act. The Investor has such
knowledge  and  experience  in  financial  and  business  matters in general and
investments in particular,  so that such Investor is able to evaluate the merits
and risks of an investment in the Securities  purchased hereunder and to protect

                                        6
<PAGE>
its own interests in connection with such  investment.  In addition (but without
limiting the effect of the Company's  representations  and warranties  contained
herein),  such Investor has reviewed the Company's SEC Filings and received such
information  as it considers  necessary or appropriate  for deciding  whether to
purchase the Securities purchased hereunder.  Notwithstanding the foregoing, the
Investor has not been  provided and is not  otherwise in  possession of material
nonpublic information pertaining to the Company.

          (e)  RULE  144.  Such  Investor  understands  that  there is no public
trading  market for the Units as a whole,  the shares of Preferred  Stock or the
Warrants,  that none is expected to develop,  and that the Units and each of the
Securities  that  comprise  the  Units  must be held  indefinitely  unless  such
Securities  are  registered  under  the  Securities  Act  or an  exemption  from
registration is available.  Such Investor understands that any Underlying Shares
issued upon  conversion of the Preferred Stock and upon exercise of the Warrants
must be held indefinitely unless such Securities are registered under the Act or
an exemption from  registration is available.  Such Investor has been advised or
is aware of the provisions of Rule 144 promulgated under the Act.

          (f)  BROKERS. Investor has taken no action that would give rise to any
claim by any person for brokerage commissions, finder's fees or similar payments
by the  Company  relating to this  Agreement  or the  transactions  contemplated
hereby.

          (g)  RELIANCE BY THE COMPANY. Such Investor understands that the Units
and the  Securities  that  comprise  the  Units are  being  offered  and sold in
reliance on a  transactional  exemption from the  registration  requirements  of
Federal and state securities laws and that the Company is relying upon the truth
and accuracy of the representations, warranties, agreements, acknowledgments and
understandings  of such  Investor  set forth  herein in order to  determine  the
applicability of such exemptions and the suitability of such Investor to acquire
the Securities.

                                   ARTICLE III

                                    COVENANTS

          Section 3.1  CERTIFICATES  ON  CONVERSION  OR  EXERCISE.  Upon (i) the
conversion of any shares of Preferred  Stock in accordance  with the Certificate
of  Designations or exercise of any Warrants in accordance with the terms of the
Warrants,  the Company  shall issue and  deliver to such  Investor  (or the then
holder) within five (5) business days of the exercise date, (x) a Certificate or
Certificates  representing the Underlying Shares issuable upon exercise, and (y)
in the case of the Warrants,  a new certificate or certificates for the Warrants
of such  Investor (or holder)  which have not yet been  exercised  but which are
evidenced in part by the  certificate(s)  submitted to the Company in connection
with  such  exercise  (with  the  number  of  and   denomination   of  such  new
certificate(s) designated by such Investor or holder).

          Section 3.2 REPLACEMENT CERTIFICATES.  The certificate(s) representing
any of the Securities comprising the Units held by any Investor (or then holder)
may be exchanged by such  Investor (or such holder) at any time and from time to
time for certificates with different denominations  representing an equal amount
of such  Securities,  as reasonably  requested by such Investor (or such holder)
upon   surrendering   the  same.  No  service  charge  will  be  made  for  such
registration, transfer or exchange.

                                        7
<PAGE>
          Section  3.3  NOTICES.  The  Company  agrees to provide all holders of
Securities  with  copies of all  notices  and  information,  including,  without
limitation,  notices and proxy  statements in connection  with any meetings that
are provided to the holders of Common  Stock of the  Company,  contemporaneously
with the delivery of such notices or information to such existing members.

          Section 3.4  RESERVATION OF UNDERLYING  SHARES ISSUABLE UPON EXERCISE.
Subject to the increase in the authorized shares of Common Stock contemplated in
Section 3.6, the Company shall at all times reserve and keep  available,  solely
for the purpose of effecting the conversion of the Preferred  Stock and exercise
of the Warrants,  such number of Underlying Shares as shall from time to time be
sufficient to effect the conversion or exercise of such Securities.

          Section 3.5 NO  IMPAIRMENT.  The Company will not, by amendment of its
organizational  documents  or through  any  reorganization,  transfer of assets,
consolidation,  merger,  dissolution,  issue or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the  terms  to  be  observed  or  performed  by it  under  this  Agreement,  the
Certificate  of  Designations  and the  Warrants,  but will at all times in good
faith assist in the carrying out of all the  provisions of such  agreements  and
instruments.

          Section 3.6 INCREASE IN AUTHORIZED CAPITAL.  The Company hereby agrees
to  take  such  action  as is  reasonably  necessary  to call a  meeting  of its
shareholders  for the purpose of  submitting  a proposal to amend the  Company's
certificate  of  incorporation  to increase the number of  authorized  shares of
Common Stock to a number that will allow the holders of the Preferred  Stock and
the Warrants to convert or exercise such  Securities  in  accordance  with their
terms.

          Section 3.7 TRADING OF UNDERLYING SECURITIES. Each Investor, severally
and not  jointly,  hereby  acknowledges  and agrees that such  Investor may only
trade the Common Stock, Preferred Stock and the Underlying Shares upon the prior
written  consent of the Company,  which consent may be withheld in the Company's
sole and absolute  discretion.  Until the Company gives such  consent,  only the
Units may be traded by an Investor.

                                   ARTICLE IV

                                   CONDITIONS

          Section 4.1  CONDITIONS  PRECEDENT TO THE OBLIGATION OF THE COMPANY TO
ISSUE AND SELL THE UNITS.  The obligation  hereunder of the Company to issue and
sell the Units to the Investors is subject to the satisfaction, at or before the
Closing Date, of each of the  conditions set forth below.  These  conditions are
for the  Company's  sole benefit and may be waived by the Company at any time in
its sole discretion.

          (a)  ACCURACY OF THE INVESTORS'  REPRESENTATIONS  AND WARRANTIES.  The
representations and warranties of each Investor shall be true and correct in all
material  respects as of the date when made and as of the Closing Date as though

                                        8
<PAGE>
made at that time (except for  representations and warranties that speak as of a
particular date, which shall be true and correct in all material  respects as of
such other date).

          (b)  PERFORMANCE BY THE INVESTORS.  Each Investor shall have performed
all agreements and satisfied all conditions  required  hereby to be performed or
satisfied by such Investor at or prior to the Closing Date.

          (c)  NO INJUNCTION.  No statute,  rule,  regulation,  executive order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by any court or governmental  authority of competent jurisdiction which
prohibits  the  consummation  of any of the  transactions  contemplated  by this
Agreement.

          (d)  APPROVALS.   The  Company   shall  have  obtained  the  requisite
consents/approvals  with  respect  to  the  transactions  contemplated  by  this
Agreement in accordance with the Company's organizational documents,  including,
without limitation, receipt of approval of the Company's board of directors.

          Section 4.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE INVESTORS TO
PURCHASE THE UNITS. The obligation hereunder of each Investor to acquire and pay
for the Units is subject to the satisfaction,  at or before the Closing Date, of
each of the conditions set forth below. These conditions are for each Investor's
sole  benefit  and  may be  waived  by each  Investor  at any  time in its  sole
discretion.

          (a)  ACCURACY OF THE COMPANY'S  REPRESENTATIONS  AND  WARRANTIES.  The
representation  and  warranties  of the Company shall be true and correct in all
material  respects as of the date when made and as of the Closing Date as though
made at that time (except for  representations and warranties that speak as of a
particular  date which shall be true and correct in all material  respects as of
such other date),  and except that all  representations  and warranties  that by
their  terms are  qualified  by  reference  to  "materiality"  or to a "Material
Adverse Effect" shall be, or have been, true and correct in all respects.

          (b)  PERFORMANCE BY THE COMPANY.  The Company shall have performed all
agreements and satisfied all conditions required to be performed or satisfied by
the Company at or prior to the Closing Date.

          (c)  NO INJUNCTION.  No statute,  rule,  regulation,  executive order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by any court or governmental  authority or competent jurisdiction which
prohibits  the  consummation  of any of the  transactions  contemplated  by this
Agreement.

          (d)  OFFICER'S  CERTIFICATE.  The Company shall have  delivered to the
Investors a certificate  in form and substance  reasonably  satisfactory  to the
Investors, executed by the Secretary or an Assistant Secretary of the Company on
behalf  of the  Company,  certifying  as to  the  satisfaction  of  all  closing
conditions,  incumbency of signing officers,  charter, Bylaws, good standing and
authorizing resolutions of the Company.

                                        9
<PAGE>
                                    ARTICLE V

                      LEGEND AND STOCK; REGISTRATION RIGHTS

          Section 5.1 LEGEND AND STOCK. Each certificate representing the Common
Stock,  Preferred Stock,  Warrants and the Underlying Shares shall be stamped or
otherwise imprinted with a legend substantially in the following form:

          THESE  SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933,  AS AMENDED (THE  "SECURITIES  ACT"),  AND THEY MAY NOT BE OFFERED,  SOLD,
PLEDGED,  HYPOTHECATED,  ASSIGNED  OR  TRANSFERRED  EXCEPT  (I)  PURSUANT  TO  A
REGISTRATION  STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME  EFFECTIVE AND
IS CURRENT  WITH  RESPECT TO THESE  SECURITIES  OR (II)  PURSUANT  TO A SPECIFIC
EXEMPTION FROM  REGISTRATION  UNDER THE  SECURITIES  ACT, BUT ONLY UPON A HOLDER
HEREOF  FIRST  HAVING  OBTAINED  THE  WRITTEN  OPINION  OF  COUNSEL   REASONABLY
ACCEPTABLE TO THE ISSUER THAT THE PROPOSED  DISPOSITION  IS CONSISTENT  WITH ALL
APPLICABLE PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY APPLICABLE "BLUE SKY"
OR SIMILAR SECURITIES LAW.

          The Company may also place such legends on the  Securities as it shall
determine in its reasonable  discretion are necessary to ensure  compliance with
the trading limitations set forth in Section 3.7.

          Section 5.2  REGISTRATION  RIGHTS.  The Units and the Securities  that
comprise each Unit shall be entitled to the registration rights set forth in the
Registration Rights Agreement.

                                   ARTICLE VI

                                   TERMINATION

          Section 6.1  TERMINATION  BY MUTUAL  CONSENT.  This  Agreement  may be
terminated at any time prior to the Closing Date by the mutual  written  consent
of the Company and the Investors.

          Section 6.2 OTHER TERMINATION. This Agreement may be terminated by the
Company or by any of the  Investors  at any time if the  Closing  Date shall not
have occurred by the fifth  business day  following the date of this  Agreement;
provided, however, that the right to terminate this Agreement under this Section
6.2 shall not be available to any party whose failure to fulfill any  obligation
under this  Agreement  has been the cause of, or resulted in, the failure of the
Closing Date to have occurred on or prior to such date.

                                   ARTICLE VII

                                  MISCELLANEOUS

          Section 7.1 STAMP TAXES;  AGENT FEES.  The Company shall pay all stamp
and other  taxes  and  duties  levied in  connection  with the  issuance  of the

                                       10
<PAGE>
Securities   comprising  the  Units,  and  the  Underlying  Shares  issued  upon
conversion of the Preferred Stock and upon exercise of the Warrants.

          Section 7.2 SPECIFIC ENFORCEMENT; CONSENT TO JURISDICTION.

          (a)  The  Company  and  the  Investors   acknowledge  and  agree  that
irreparable  damage would occur in the event that any of the  provisions of this
Agreement  were not performed in accordance  with their  specific  terms or were
otherwise breached.  It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in  addition  to any other  remedy to which any of them may be entitled by
law or equity.

          (b)  The  Company  and each of the  Investors  (i) hereby  irrevocably
submits to the exclusive  jurisdiction  of the United States  District Court for
the District of Arizona, the Arizona State courts and other courts of the United
States sitting in Maricopa County,  Arizona for the purposes of any suit, action
or  proceeding  arising  out of or relating  to this  Agreement  and (ii) hereby
waives,  and agrees not to assert in any such suit,  action or  proceeding,  any
claim that it is not personally  subject to the jurisdiction of such court, that
the suit,  action or proceeding is brought in an inconvenient  forum or that the
venue of the suit, action or proceeding is improper. The Company and each of the
Investors  consents  to  process  being  served  in any  such  suit,  action  or
proceeding  by mailing a copy thereof 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 in this
paragraph  shall affect or limit any right to serve  process in any other manner
permitted by law.

          Section 7.3 ENTIRE AGREEMENT;  AMENDMENT. This Agreement together with
the  agreements  and  documents  executed in connection  herewith,  contains the
entire  understanding  of the parties with respect to the matters covered hereby
and,  except as  specifically  set forth  herein,  neither  the  Company nor any
Investor  makes any  representation,  warranty,  covenant  or  undertaking  with
respect to such matters. No provision of this Agreement may be waived or amended
other than by a written  instrument signed by the party against whom enforcement
of any such amendment or waiver is sought.

          Section  7.4  NOTICES.  Any  notices,   consents,   waivers  or  other
communications  required  or  permitted  to be  given  under  the  terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt,  when delivered  personally;  (ii) upon receipt, when sent by facsimile
(provided   confirmation  of  transmission  is  mechanically  or  electronically
generated  and kept on file by the sending  party);  or (iii) one  business  day
after deposit with a nationally  recognized  overnight delivery service, in each
case  properly  addressed to the party to receive the same.  The  addresses  and
facsimile numbers for such communications shall be:

     to the Company:   BestNet Communications Corp.
                       5075 Cascade Road SE, Suite A
                       Grand Rapids, Michigan  49546
                       Telephone: (616) 977-9933
                       Facsimile: (616) 977-9955
                       Attn: Robert A. Blanchard

                                       11
<PAGE>
     with copies to:   Squire, Sanders & Dempsey L.L.P.
                       Two Renaissance Square
                       40 North Central Avenue, Suite 2700
                       Phoenix, Arizona  85004-4498
                       Telephone: 602-528-4134
                       Facsimile: 602-253-8129
                       Attn: Gregory R. Hall, Esq.

     to the Investors: To each Investor at the addresses set forth on SCHEDULE I
                       of this Agreement.

Any party  hereto may from time to time change its address for notices by giving
at least  five (5) days  written  notice of such  changed  address  to the other
parties  hereto.  Written  confirmation of receipt (A) given by the recipient of
such  notice,  consent,  waiver  or other  communication,  (B)  mechanically  or
electronically  generated by the sender's facsimile machine containing the time,
date,  recipient  facsimile  number  and an  image  of the  first  page  of such
transmission  or (C)  provided by a  nationally  recognized  overnight  delivery
service shall be rebuttable  evidence of personal service,  receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above.

          Section 7.5  INDEMNITY.  Each party shall  indemnify,  defend and hold
harmless  each  other  party  against  any  loss,  cost  or  damages  (including
reasonable  attorney's fees) incurred as a result of such parties' breach of any
representation, warranty, covenant or agreement in this Agreement.

          Section  7.6  WAIVERS.  No  waiver by any  party 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  other
provision,  condition or requirement  hereof, nor shall any delay or omission of
any party to exercise any right  hereunder in any manner  impair the exercise of
any such right accruing to it thereafter.

          Section 7.7 HEADINGS. The headings herein are for convenience only, do
not  constitute  a part of this  Agreement  and  shall not be deemed to limit or
affect any of the provisions hereof.

          Section 7.8  SUCCESSORS  AND  ASSIGNS.  Except as  otherwise  provided
herein,  this  Agreement  shall be binding  upon and inure to the benefit of the
parties and their successors and permitted assigns. The parties hereto may amend
this Agreement  without notice to or the consent of any third party. No Investor
may assign  this  Agreement  (in whole or in part) or any rights or  obligations
hereunder  without the  Company's  prior written  consent,  which consent may be
withheld for any reason in the Company's sole discretion.

          Section 7.9 NO THIRD PARTY  BENEFICIARIES.  This Agreement is intended
for the benefit of the parties hereto and their respective  permitted successors
and  assigns  and is not for the  benefit  of, nor may any  provision  hereof be
enforced by, any other person.

                                       12
<PAGE>
          Section 7.10 GOVERNING  LAW. This  Agreement  shall be governed by and
construed  and enforced in  accordance  with the  internal  laws of the State of
Nevada without regard to such State's principles of conflict of laws.

          Section 7.11  SURVIVAL.  The  representations  and  warranties and the
agreements and covenants of the Company and each Investor contained herein shall
survive the Closing.

          Section 7.12 EXECUTION.  This Agreement may be executed in two or more
counterparts,  all of which shall be considered one and the same  agreement,  it
being understood that all parties need not sign the same counterpart.

          Section 7.13 PUBLICITY. The Company agrees that it will not include in
any public announcement the name of any Investor without its consent, unless and
until such disclosure is required by law or applicable regulation, and then only
to the extent of such requirement.

          Section 7.14 SEVERABILITY.  The parties acknowledge and agree that all
representations, warranties, covenants and agreements of the Investors hereunder
are several and not joint,  that no Investor  shall have any  responsibility  or
liability for the representations,  warrants,  agreements,  acts or omissions of
any other Investor,  and that any rights granted to "Investors"  hereunder shall
be enforceable by each Investor hereunder.

          Section 7.15 LIKE TREATMENT OF HOLDERS. Neither the Company nor any of
its  affiliates  shall,  directly  or  indirectly,  pay or  cause to be paid any
consideration,  whether by way of interest,  fee,  payment for the redemption or
exchange of Securities, or otherwise, to any holder of Securities,  for or as an
inducement to, or in connection with the solicitation of, any consent, waiver or
amendment of any terms or provisions of the Securities or this Agreement, unless
such  consideration is required to be paid to all holders of Securities bound by
such consent,  waiver or amendment whether or not such holders so consent, waive
or agree to amend and whether or not such holders  tender their  Securities  for
redemption or exchange.  The Company shall not,  directly or indirectly,  redeem
any  Securities  unless such offer of redemption is made pro rata to all holders
of Securities on identical terms.

          Section 7.16 EXPENSES.  Each party shall pay its own expenses incident
to the preparation and performance of this Agreement and the documents  provided
for herein.

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

                                       13
<PAGE>
BESTNET COMMUNICATIONS CORP., a Nevada corporation;

By: ______________________________

Name: ____________________________

Title: ___________________________

INVESTOR:

By: ______________________________

Name: ____________________________

Title: ___________________________

Amount Invested: $____________________USD     Number of Units Purchased:________

Wiring instructions are as follows:
Account Name: BestNet Communications
Bank information: Bank One
4717 Cascade Rd. SE, Grand Rapids, MI 49546
(616)-771-7024
Account #: 638262634
ABA/routing#: 072000326

Checks should be made payable to:
BestNet Communications Corporation
5075 Cascade Road, SE
Suite A
Grand Rapids, MI 49546
(616)-977-9933

ALL INVESTORS MUST INITIAL THE FOLLOWING LINE:

______ I understand that the representations contained in Section 2.2 (a through
g) are made for the purpose of qualifying  me as an accredited  investor as that
term is defined by the  Securities  and Exchange  Commission  for the purpose of
inducing a sale of  securities to me. I hereby  represent  that the statement or
statements are true and correct in all respects.

                            [Investor Signature Page]

                                       14
<PAGE>
                             EXHIBITS AND SCHEDULES

     Schedule I          Investor Information

     Schedule 2.1(C)     Capitalization

     Exhibit A           Form of Certificate of Designations

     Exhibit B           Form of Warrant

     Exhibit C           Form of Registration Rights Agreement

                                       15
<PAGE>
                                   SCHEDULE I

                           INVESTOR INFORMATION SHEET

NAME: ________________________________     Number of Units Purchased: __________

TITLE: _______________________________

CORPORATION: _________________________

ADDRESS: _____________________________

______________________________________

______________________________________

TAXPAYER ID# or SSN: _________________

                                       16
<PAGE>
                                 SCHEDULE 2.1(C)

                                 CAPITALIZATION

     Outstanding Shares of Capital Stock                         19,199,825

     Warrants Outstanding                                         8,173,380

     Options Outstanding                                          4,385,669

                                       17

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