Document:

THIS OPTION AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS OPTION
HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  OR ANY
STATE  SECURITIES  LAWS. THIS OPTION AND THE COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS OPTION MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE  REGISTRATION STATEMENT AS TO THIS OPTION UNDER SAID ACT
AND ANY APPLICABLE  STATE  SECURITIES  LAWS OR AN OPINION OF COUNSEL  REASONABLY
SATISFACTORY TO AMERICAN  TECHNOLOGIES GROUP,  INC.THAT SUCH REGISTRATION IS NOT
REQUIRED.

                  Right to Purchase up to 140,250,000 Shares of
                Common Stock of American Technologies Group, Inc.
                   (subject to adjustment as provided herein)

                                     OPTION

No. _________________                              Issue Date: September 7, 2005

      AMERICAN  TECHNOLOGIES GROUP, INC., a corporation organized under the laws
of the  State of  Nevada  (the  "Company"),  hereby  citifies  that,  for  value
received,  GSSF MASTER  FUND,  L.P.,  or assigns  (the  "Holder"),  is entitled,
subject to the terms set forth  below,  to purchase  from the  Company  from and
after  the  Issue  Date of this  Option,  up to the  numbers  of fully  paid and
nonassessable shares of Common Stock (as hereinafter defined), at the applicable
Exercise Price per share (as defined  below) as shall be determined  pursuant to
Section  1.1.  The number and  character  of such shares of Common Stock and the
applicable  Exercise  Price per share are  subject  to  adjustment  as  provided
herein.

      As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:

            (a) "Company" means American Technologies Group, Inc. and any person
      or entity which shall  succeed,  or assume the  obligations  of,  American
      Technologies Group, Inc. hereunder.

            (b) "Common Stock" means (i) the Company's  Common Stock,  par value
      $0.001 per share;  and (ii) any other  securities  into which or for which
      any  of the  securities  described  in the  preceding  clause  (i)  may be
      converted   or   exchanged   pursuant  to  a  plan  of   recapitalization,
      reorganization, merger, sale of assets or otherwise.

            (c) "Exercise Price" means $0.00001.

            (d) "Other Securities" means any stock (other than Common Stock) and
      other  securities  of  the  Company  or any  other  person  (corporate  or
      otherwise) which the holder of the Option at any time shall be entitled to
      receive, or shall have received, on the exercise of the Option, in lieu of
      or in addition to Common Stock,  or which at any time shall be issuable or
      shall have been issued in exchange for or in  replacement  of Common Stock
      or Other Securities pursuant to Section 4 or otherwise.

<PAGE>

            (e) "Security Agreement" means that certain Security Agreement dated
      as of the date  hereof  among the Holder,  the  Company  and the  Eligible
      Subsidiaries  named  and  as  defined  therein,   as  amended,   restated,
      supplemented and/or modified from time to time.

            1. Exercise of Option.

                  1.1 Number of Shares  Issuable upon  Exercise.  From and after
the date hereof through and including the  Expiration  Date, the Holder shall be
entitled  to  receive,  upon  exercise  of this  Option in whole or in part,  by
delivery of an original or fax copy of an exercise  notice in the form  attached
hereto as Exhibit A (the "Exercise Notice"),  140,250,000 shares of Common Stock
of the Company, subject to adjustment pursuant to Section 4.

                  1.2 Fair Market Value. For purposes  hereof,  the "Fair Market
Value" of a share of Common  Stock as of a particular  date (the  "Determination
Date") shall mean:

                  (a) If the  Company's  Common  Stock is traded on the American
      Stock Exchange or another  national  exchange or is quoted on the National
      or SmallCap Market of The Nasdaq Stock Market, Inc.  ("Nasdaq"),  then the
      closing or last sale price,  respectively,  reported for the last business
      day immediately preceding the Determination Date.

                  (b)  If the  Company's  Common  Stock  is  not  traded  on the
      American Stock Exchange or another national  exchange or on the Nasdaq but
      is traded on the NASD Over the Counter  Bulletin  Board,  then the mean of
      the  average of the  closing bid and asked  prices  reported  for the last
      business day immediately preceding the Determination Date.

                  (c) Except as provided in clause (d) below,  if the  Company's
      Common  Stock is not publicly  traded,  then as the Holder and the Company
      agree or in the absence of agreement by arbitration in accordance with the
      rules then in effect of the  American  Arbitration  Association,  before a
      single  arbitrator  to be  chosen  from a panel of  persons  qualified  by
      education and training to pass on the matter to be decided.

                  (d) If the  Determination  Date is the date of a  liquidation,
      dissolution  or  winding  up,  or any event  deemed  to be a  liquidation,
      dissolution  or winding up pursuant  to the  Company's  charter,  then all
      amounts to be payable per share to holders of the Common Stock pursuant to
      the charter in the event of such  liquidation,  dissolution or winding up,
      plus all other  amounts to be  payable  per share in respect of the Common
      Stock in liquidation under the charter,  assuming for the purposes of this
      clause  (d) that all of the  shares of Common  Stock  then  issuable  upon
      exercise of the Option are outstanding at the Determination Date.

                                       2
<PAGE>

                  1.3 Company  Acknowledgment.  The Company will, at the time of
the exercise of this Option,  upon the request of the holder hereof  acknowledge
in writing  its  continuing  obligation  to afford to such  holder any rights to
which  such  holder  shall  continue  to be  entitled  after  such  exercise  in
accordance with the provisions of this Option.  If the holder shall fail to make
any such request, such failure shall not affect the continuing obligation of the
Company to afford to such holder any such rights.

                  1.4  Trustee for Option  Holders.  In the event that a bank or
trust  company  shall have been  appointed  as trustee  for the  holders of this
Option pursuant to Subsection 3.2, such bank or trust company shall have all the
powers and duties of a Option agent (as hereinafter described) and shall accept,
in its own name for the account of the Company or such  successor  person as may
be  entitled  thereto,  all  amounts  otherwise  payable to the  Company or such
successor,  as the case may be, on  exercise  of this  Option  pursuant  to this
Section 1.

            2. Procedure for Exercise.

                  2.1  Delivery of Stock  Certificates,  Etc. on  Exercise.  The
Company  agrees that the shares of Common Stock  purchased upon exercise of this
Option  shall be deemed to be issued to the Holder as the  record  owner of such
shares as of the close of business  on the date on which this Option  shall have
been  surrendered  and payment made for such shares in accordance  herewith.  As
soon as practicable after the exercise of this Option in full or in part, and in
any event within three (3) business days thereafter,  the Company at its expense
(including  the payment by it of any  applicable  issue  taxes) will cause to be
issued in the name of and  delivered  to the  Holder,  or as such  Holder  (upon
payment  by  such  Holder  of any  applicable  transfer  taxes)  may  direct  in
compliance with applicable  securities  laws, a certificate or certificates  for
the number of duly and validly issued,  fully paid and  nonassessable  shares of
Common  Stock (or Other  Securities)  to which such Holder  shall be entitled on
such exercise,  plus, in lieu of any fractional share to which such holder would
otherwise be entitled,  cash equal to such fraction  multiplied by the then Fair
Market  Value  of one  full  share,  together  with  any  other  stock  or other
securities and property  (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.

                  2.2 Exercise.

                  (a) Payment may be made (i) either in cash or by  certified or
      official  bank  check  payable  to the order of the  Company  equal to the
      applicable  aggregate  Exercise Price, (ii) by delivery of Common Stock of
      the Company having a Fair Market Value equal to the Exercise Price,  (iii)
      by delivery of this Option,  or shares of Common Stock and/or Common Stock
      receivable upon exercise of this Option in accordance with the formula set
      forth in  subsection  (b) below,  or (iv) by a  combination  of any of the
      foregoing  methods,  for the  number of Common  Shares  specified  in such
      Exercise  Notice (as such exercise number shall be adjusted to reflect any
      adjustment  in the total number of shares of Common Stock  issuable to the
      Holder per the terms of this  Option) and the Holder  shall  thereupon  be
      entitled  to  receive  the  number  of duly  authorized,  validly  issued,
      fully-paid and non-assessable shares of Common Stock (or Other Securities)
      determined as provided herein.

                                       3
<PAGE>

                  (b) Notwithstanding any provisions herein to the contrary,  if
      the Fair  Market  Value of one share of Common  Stock is greater  than the
      Exercise Price (at the date of calculation as set forth below), in lieu of
      exercising  this Option for cash,  the Holder may elect to receive  shares
      equal to the value (as  determined  below) of this  Option (or the portion
      thereof  being  exercised)  by surrender  of this Option at the  principal
      office of the Company together with the properly  endorsed Exercise Notice
      in which event the Company shall issue to the Holder a number of shares of
      Common Stock computed using the following formula:

      X =                  Y(A-B)
                            ------

                              A

      Where X =  the number of shares of Common Stock to be issued to the Holder

      Y =        the number of shares of Common Stock purchasable under this
                 Warrant or, if only a portion of this  Warrant is being
                 exercised,  the portion of this Warrant being exercised (at the
                 date of such calculation)

      A =        the Fair Market Value of one share of the Company's Common
                 Stock (at the date of such calculation)

      B =        the Exercise Price per share (as adjusted to the date of such
                 calculation)

            3. Effect of Reorganization, Etc.; Adjustment of Exercise Price.

                  3.1 Reorganization, Consolidation, Merger, Etc. In case at any
time or from time to time,  the Company shall (a) effect a  reorganization,  (b)
consolidate  with or  merge  into  any  other  person,  or (c)  transfer  all or
substantially all of its properties or assets to any other person under any plan
or arrangement  contemplating the dissolution of the Company, then, in each such
case,  as a condition  to the  consummation  of such a  transaction,  proper and
adequate  provision  shall be made by the Company  whereby  the  Holder,  on the
exercise  hereof as provided in Section 1 at any time after the  consummation of
such  reorganization,  consolidation  or  merger or the  effective  date of such
dissolution,  as the case may be, shall receive, in lieu of the Common Stock (or
Other  Securities)  issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property  (including cash) to
which  such  Holder  would  have  been  entitled  upon such  consummation  or in
connection  with such  dissolution,  as the case may be, if such  Holder  had so
exercised  this  Option,  immediately  prior  thereto,  all  subject  to further
adjustment thereafter as provided in Section 4.

                  3.2  Dissolution.  In  the  event  of any  dissolution  of the
Company  following the transfer of all or substantially all of its properties or
assets, the Company,  concurrently with any distributions made to holders of its
Common  Stock,  shall at its  expense  deliver or cause to be  delivered  to the
Holder  the stock and other  securities  and  property  (including  cash,  where
applicable)  receivable by the Holder pursuant to Section 3.1, or, if the Holder
shall so instruct  the  Company,  to a bank or trust  company  specified  by the
Holder and having its principal  office in New York, New York as trustee for the
Holder (the "Trustee").

                                       4
<PAGE>

                  3.3   Continuation   of   Terms.   Upon  any   reorganization,
consolidation,  merger or transfer (and any dissolution  following any transfer)
referred  to in this  Section 3, this  Option  shall  continue in full force and
effect and the terms hereof shall be applicable to the shares of stock and other
securities  and property  receivable on the exercise after the  consummation  of
such   reorganization,   consolidation  or  merger  or  the  effective  date  of
dissolution  following  any such  transfer,  as the case  may be,  and  shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer,  the person acquiring all or substantially all of the
properties  or assets of the  Company,  whether  or not such  person  shall have
expressly  assumed  the terms as provided in Section 4. In the event this Option
does not  continue  in full  force  and  effect  after the  consummation  of the
transactions  described in this  Section 3, then the  Company's  securities  and
property  (including  cash, where  applicable)  receivable by the Holder will be
delivered to the Holder or the Trustee as contemplated by Section 3.2.

            4.  Extraordinary  Events  Regarding Common Stock. In the event that
the Company shall (a) issue additional  shares of the Common Stock as a dividend
or other  distribution on outstanding Common Stock or any preferred stock issued
by the Company,  (b) subdivide its  outstanding  shares of Common Stock,  or (c)
combine  its  outstanding  shares of the Common  Stock into a smaller  number of
shares of the Common  Stock (each of the  preceding  clauses  (a)  through  (c),
inclusive, an "Event"), then, in each such event, the number of shares of Common
Stock that the Holder shall  thereafter,  on the exercise  hereof as provided in
Section 1, be entitled to receive  shall be adjusted to a number  determined  by
multiplying the number of shares of Common Stock that would immediately prior to
such Event be issuable  upon the  exercise of this Option by a fraction of which
(a) the numerator is the number of issued and outstanding shares of Common Stock
immediately after such Event and (b) the denominator is the number of issued and
outstanding shares of Common Stock immediately prior to such Event. The Exercise
price, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive event or events described herein in this Section 4. The number
of shares of Common  Stock that the Holder  shall  thereafter,  on the  exercise
hereof as provided in Section 1, be entitled to receive shall be adjusted to the
number determined by multiplying the number of shares of Common Stock that would
otherwise  (but  for the  provisions  of this  Section  4) be  issuable  on such
exercise by a fraction of which (a) the  numerator  is the  Exercise  Price that
would otherwise (but for the provisions of this Section 4) be in effect, and (b)
the  denominator  is the Exercise  Price in effect on the date of such  exercise
(taking into account the provisions of this Section 4).

            5. Certificate as to Adjustments.  In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of this  Option,  the Company at its expense  will  promptly  cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or  readjustment  in  accordance  with the terms of this  Option  and  prepare a
certificate  setting forth such adjustment or readjustment and showing in detail
the facts upon which such  adjustment  or  readjustment  is based,  including  a
statement of (a) the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or sold or deemed
to have been issued or sold,  (b) the number of shares of Common Stock (or Other
Securities) outstanding or deemed to be outstanding,  and (c) the Exercise Price
and the number of shares of Common  Stock to be received  upon  exercise of this
Option,  in effect  immediately  prior to such adjustment or readjustment and as
adjusted or  readjusted as provided in this Option.  The Company will  forthwith
mail a copy of each such  certificate  to the Holder and any Option agent of the
Company (appointed pursuant to Section 11 hereof).

                                       5
<PAGE>

            6. Reservation of Stock,  Etc.,  Issuable on Exercise of Option. The
Company will at all times  reserve and keep  available,  solely for issuance and
delivery  on the  exercise  of this  Option,  shares of  Common  Stock (or Other
Securities) from time to time issuable on the exercise of this Option.

            7.  Assignment;  Exchange  of  Option.  Subject to  compliance  with
applicable securities laws, this Option, and the rights evidenced hereby, may be
transferred  by any  registered  holder hereof (a  "Transferor")  in whole or in
part.  On the  surrender  for  exchange of this  Option,  with the  Transferor's
endorsement  in  the  form  of  Exhibit  B  attached  hereto  (the   "Transferor
Endorsement  Form") and together with evidence  reasonably  satisfactory  to the
Company  demonstrating  compliance with applicable  securities laws, which shall
include,  without  limitation,  the  provision  of  a  legal  opinion  from  the
Transferor's  counsel (at the  Company's  expense)  that such transfer is exempt
from the registration requirements of applicable securities laws, the Company at
its expense  (but with  payment by the  Transferor  of any  applicable  transfer
taxes) will issue and deliver to or on the order of the Transferor thereof a new
Option of like tenor,  in the name of the  Transferor  and/or the  transferee(s)
specified in such Transferor Endorsement Form (each a "Transferee"),  calling in
the  aggregate  on the face or faces  thereof for the number of shares of Common
Stock  called  for on the face or  faces of the  Option  so  surrendered  by the
Transferor.

            8.  Replacement  of  Option.  On  receipt  of  evidence   reasonably
satisfactory  to the Company of the loss,  theft,  destruction  or mutilation of
this  Option  and, in the case of any such loss,  theft or  destruction  of this
Option,   on  delivery  of  an  indemnity   agreement  or  security   reasonably
satisfactory  in form and  amount  to the  Company  or,  in the case of any such
mutilation,  on surrender and  cancellation  of this Option,  the Company at its
expense will execute and deliver, in lieu thereof, a new Option of like tenor.

            9.  Registration   Rights.  The  Holder  has  been  granted  certain
registration rights by the Company. These registration rights are set forth in a
Registration Rights Agreement entered into by the Company and Holder dated as of
the date hereof, as the same may be amended,  modified and/or  supplemented from
time to time.

            10. Maximum Exercise.  Notwithstanding  anything contained herein to
the  contrary,  the Holder  shall not be  entitled  to  exercise  this Option in
connection  with that number of shares of Common  Stock  which would  exceed the
difference  between  (i) 4.99% of the  issued and  outstanding  shares of Common
Stock and (ii) the number of shares of Common  Stock  beneficially  owned by the
Holder  For the  purposes  of the  immediately  preceding  sentence,  beneficial
ownership  shall be determined in accordance  with Section 13(d) of the Exchange
Act, as amended,  and Regulation  13d-3  thereunder.  The conversion  limitation
described in this Section 10 shall automatically  become null and void following
notice to the Company upon the occurrence and during the continuance of an Event
of Default under and as defined in the Security Agreement, or upon 75 days prior
notice to the Company.

                                       6
<PAGE>

            11.  Option  Agent.  The Company may, by written  notice to the each
Holder of the Option,  appoint an agent for the purpose of issuing  Common Stock
(or Other  Securities)  on the  exercise of this  Option  pursuant to Section 1,
exchanging this Option pursuant to Section 7, and replacing this Option pursuant
to  Section  8, or any of the  foregoing,  and  thereafter  any  such  issuance,
exchange  or  replacement,  as the case may be,  shall be made at such office by
such agent.

            12.  Transfer  on  the  Company's   Books.   Until  this  Option  is
transferred  on the books of the Company,  the Company may treat the  registered
Holder hereof as the absolute owner hereof for all purposes, notwithstanding any
notice to the contrary.

            13.  Notices,  Etc.  All notices and other  communications  from the
Company to the Holder  shall be mailed by first class  registered  or  certified
mail, postage prepaid, at such address as may have been furnished to the Company
in writing by such Holder or, until any such Holder  furnishes to the Company an
address, then to, and at the address of, the last Holder who has so furnished an
address to the Company.

            14.  Miscellaneous.  This Option and any term hereof may be changed,
waived,  discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. THIS OPTION SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
ANY ACTION BROUGHT CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS OPTION SHALL
BE BROUGHT ONLY IN THE STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED
IN THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT THE HOLDER MAY CHOOSE TO WAIVE
THIS  PROVISION  AND  BRING  AN  ACTION  OUTSIDE  THE  STATE  OF NEW  YORK.  The
individuals  executing  this Option on behalf of the Company  agree to submit to
the  jurisdiction  of such courts and waive trial by jury. The prevailing  party
shall be entitled to recover from the other party its reasonable attorneys' fees
and  costs.  In the  event  that any  provision  of this  Option is  invalid  or
unenforceable  under any applicable  statute or rule of law, then such provision
shall be deemed  inoperative  to the extent that it may conflict  therewith  and
shall be deemed  modified to conform  with such statute or rule of law. Any such
provision  which  may prove  invalid  or  unenforceable  under any law shall not
affect the validity or enforceability of any other provision of this Option. The
headings in this Option are for purposes of reference  only, and shall not limit
or otherwise affect any of the terms hereof. The invalidity or  unenforceability
of any provision hereof shall in no way affect the validity or enforceability of
any  other  provision  hereof.  The  Company  acknowledges  that  legal  counsel
participated in the preparation of this Option and,  therefore,  stipulates that
the  rule of  construction  that  ambiguities  are to be  resolved  against  the
drafting  party  shall not be applied in the  interpretation  of this  Option to
favor any party against the other party.

                   [BALANCE OF PAGE INTENTIONALLY LEFT BLANK;
                             SIGNATURE PAGE FOLLOWS]

                                       7
<PAGE>

      IN WITNESS  WHEREOF,  the Company has executed  this Option as of the date
first written above.

WITNESS:                                    AMERICAN TECHNOLOGIES GROUP, INC.

                                            By: ________________________________
                                            Name: ______________________________
____________________________________        Title: _____________________________

                                       8
<PAGE>

                                    Exhibit A

                              FORM OF SUBSCRIPTION
                    (To Be Signed Only On Exercise Of Option)

TO:   American Technologies Group, Inc.

      _________________________________

      _________________________________

      Attention: Chief Financial Officer

      The  undersigned,  pursuant to the  provisions  set forth in the  attached
Option (No.____), hereby irrevocably elects to purchase (check applicable box):

            ________ ________ shares of the Common Stock covered by such Option;
      or

            ________  the maximum  number of shares of Common  Stock  covered by
      such  Option  pursuant to the  cashless  exercise  procedure  set forth in
      Section 2.

      The undersigned herewith makes payment of the full Exercise Price for such
shares  at  the  price  per  share  provided  for  in  such  Option,   which  is
$___________. Such payment takes the form of (check applicable box or boxes):

            ________ $__________ in lawful money of the United States; and/or

            ________ the  cancellation of such portion of the attached Option as
      is exercisable for a total of _______ shares of Common Stock (using a Fair
      Market  Value of $_______  per share for  purposes  of this  calculation);
      and/or

            ________ the  cancellation  of such number of shares of Common Stock
      as is necessary,  in accordance with the formula set forth in Section 2.2,
      to exercise  this Option with  respect to the maximum  number of shares of
      Common Stock purchasable  pursuant to the cashless exercise  procedure set
      forth in Section 2.

      The undersigned  requests that the  certificates for such shares be issued
in the name of, and delivered to  ______________________________________________
whose address is ______________________________________________________________.

      The  undersigned  represents  and Options that all offers and sales by the
undersigned of the securities  issuable upon exercise of the within Option shall
be made pursuant to registration of the Common Stock under the Securities Act of
1933,  as amended  (the  "Securities  Act") or  pursuant  to an  exemption  from
registration under the Securities Act.

Dated: __________                           ____________________________________
                                            (Signature must conform to name of
                                             holder as specified on the face of
                                             the Warrant)

                                            Address:____________________________

                                                    ____________________________

                                       9
<PAGE>

                                    Exhibit B

                         FORM OF TRANSFEROR ENDORSEMENT
                    (To Be Signed Only On Transfer Of Option)

      For value received,  the undersigned hereby sells,  assigns, and transfers
unto the  person(s)  named  below  under  the  heading  "Transferees"  the right
represented by the within Option to purchase the percentage and number of shares
of Common  Stock of American  Technologies  Group,  Inc.,  into which the within
Option relates specified under the headings "Percentage Transferred" and "Number
Transferred," respectively,  opposite the name(s) of such person(s) and appoints
each such  person  Attorney  to transfer  its  respective  right on the books of
American  Technologies  Group,  Inc.,  with full  power of  substitution  in the
premises.

                                             Percentage                Number
Transferees             Address              Transferred             Transferred
-----------             -------              -----------             -----------

Dated: __________                           ____________________________________
                                            (Signature must conform to name of
                                             holder as specified on the face of
                                             the Option)

                                            Address:____________________________

                                                    ____________________________

                                            SIGNED IN THE PRESENCE OF:

                                            ____________________________________
                                                           (Name)

ACCEPTED AND AGREED:
[TRANSFEREE]

________________________________
           (Name)Exhibit 10.1

                              COMMON STOCK PURCHASE

                                    AGREEMENT

                          Dated as of October 20, 2005

                                  by and among

                                 ROO GROUP, INC.

                                       and

                       THE PURCHASERS LISTED ON EXHIBIT A

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
ARTICLE I    Purchase and Sale of Common Stock...............................1
      Section 1.1   Purchase and Sale of Common Stock........................1
      Section 1.2   Purchase Price and Closing...............................1

ARTICLE II   Representations and Warranties..................................2
      Section 2.1   Representations and Warranties of the Company............2
      Section 2.2   Representations and Warranties of the Purchasers........12

ARTICLE III  Covenants......................................................20
      Section 3.1   Securities Compliance...................................20
      Section 3.2   Registration and Listing................................20
      Section 3.3   Inspection Rights.......................................21
      Section 3.4   Compliance with Laws....................................21
      Section 3.5   Keeping of Records and Books of Account.................21
      Section 3.6   Reporting Requirements..................................21
      Section 3.7   Other Agreements........................................22
      Section 3.8   Use of Proceeds.........................................16
      Section 3.9   Reporting Status........................................16
      Section 3.10  Disclosure of Transaction...............................16
      Section 3.11  Disclosure of Material Information......................17
      Section 3.12  Form D..................................................17
      Section 3.13  No Integrated Offerings.................................17
      Section 3.14  Pledge of Shares........................................17
      Section 3.15  Reverse Stock Split.....................................17
      Section 3.16  Conversion of Petty Promissory Note.....................17
      Section 3.17  Right of First Refusal..................................17

ARTICLE IV   Conditions.....................................................23
      Section 4.1   Conditions Precedent to the Obligation of the
                    Company to Close and to Sell the Shares.................23
      Section 4.2   Conditions Precedent to the Obligation of the
                    Purchasers to Close and to Purchase the Shares..........24

ARTICLE V    Certificate Legend.............................................27
      Section 5.1   Legend..................................................20

ARTICLE VI   Indemnification................................................28
      Section 6.1   General Indemnity.......................................28
      Section 6.2   Indemnification Procedure...............................29

ARTICLE VII  Miscellaneous..................................................30
      Section 7.1   Fees and Expenses.......................................30
      Section 7.2   Specific Performance; Consent to Jurisdiction; Venue....31
      Section 7.3   Entire Agreement; Amendment.............................31
      Section 7.4   Notices.................................................32
      Section 7.5   Waivers.................................................33

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

                                                                            Page
                                                                            ----
      Section 7.6   Headings................................................33
      Section 7.7   Successors and Assigns..................................33
      Section 7.8   No Third Party Beneficiaries............................33
      Section 7.9   Governing Law...........................................33
      Section 7.10  Survival................................................33
      Section 7.11  Counterparts............................................34
      Section 7.12  Publicity...............................................34
      Section 7.13  Severability............................................34
      Section 7.14  Further Assurances......................................34

<PAGE>

                         COMMON STOCK PURCHASE AGREEMENT

      This COMMON  STOCK  PURCHASE  AGREEMENT  this  ("Agreement"),  dated as of
October  20,  2005 by and among ROO Group,  Inc.,  a Delaware  corporation  (the
"Company"),  and the  purchasers  listed on Exhibit A hereto (each a "Purchaser"
and collectively, the "Purchasers"),  for the purchase and sale of shares of the
Company's  common stock, par value $0.0001 per share (the "Common Stock") by the
Purchasers.

      The parties hereto agree as follows:

                                    ARTICLE I

                        PURCHASE AND SALE OF COMMON STOCK

            Section 1.1 Purchase and Sale of Common  Stock.  Upon the  following
terms and conditions,  the Company shall issue and sell to the  Purchasers,  and
the Purchasers shall purchase from the Company, up to 1,500,000 shares of Common
Stock (the  "Shares")  at a price per share of $1.50  (the "Per  Share  Purchase
Price") for an  aggregate  purchase  price of up to  $2,250,000  (the  "Purchase
Price").  Each  Purchaser  shall invest a minimum of $100,000  provided that the
Company may accept  investments of less than $100,000 upon the mutual  agreement
of the Company and Burnham Hill Partners,  LLC, a division of Pali Capital, Inc.
The Company and the Purchasers  are executing and  delivering  this Agreement in
accordance with and in reliance upon the exemption from securities  registration
afforded by Section 4(2) of the U.S. Securities Act of 1933, as amended, and the
rules and regulations  promulgated  thereunder (the "Securities Act"), including
Regulation  D  ("Regulation  D"),  and/or  upon such  other  exemption  from the
registration requirements of the Securities Act as may be available with respect
to any or all of the investments to be made hereunder.

            Section 1.2 Purchase Price and Closing.  In  consideration of and in
express  reliance upon the  representations,  warranties,  covenants,  terms and
conditions  of this  Agreement,  the  Company  agrees  to issue  and sell to the
Purchasers  and,  in   consideration   of  and  in  express  reliance  upon  the
representations,  warranties, covenants, terms and conditions of this Agreement,
the  Purchasers,  severally  but not  jointly,  agree to purchase  the number of
Shares,  in each case, set forth opposite their  respective  names on Exhibit A.
The  closing  of the  purchase  and sale of the  Shares  to be  acquired  by the
Purchasers from the Company under this Agreement shall take place at the offices
of Kramer Levin  Naftalis & Frankel LLP, 1177 Avenue of the Americas,  New York,
New York 10036 (the "Closing") at 10:00 a.m. on October 21, 2005 or at such time
and on such date as the  Purchasers and the Company may agree upon (the "Closing
Date"),  provided, that all of the conditions set forth in Article IV hereof and
applicable  to the Closing  shall have been  fulfilled  or waived in  accordance
herewith.  At the Closing, the Company shall deliver or cause to be delivered to
each  Purchaser  (i) a  certificate  registered  in the  name  of the  Purchaser
representing  the  number of Shares  as is set forth  opposite  the name of such
Purchaser on Exhibit A and (ii) any other  deliveries as required by Article IV.
At the Closing,  each Purchaser  shall deliver its portion of the Purchase Price
by wire transfer to an account designated by the Company.

                                        1
<PAGE>

                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

            Section 2.1  Representations  and  Warranties  of the  Company.  The
Company hereby  represents and warrants to the Purchasers as follows,  as of the
date  hereof  and the  Closing  Date,  except  as set forth on the  Schedule  of
Exceptions  attached  hereto with each numbered  Schedule  corresponding  to the
section number herein:

            (a)  Organization,  Good  Standing  and  Power.  The  Company  is  a
corporation duly  incorporated,  validly existing and in good standing under the
laws of the State of  Delaware  and has the  requisite  corporate  power to own,
lease and operate its properties and assets and to conduct its business as it is
now being  conducted.  The Company does not have any Subsidiaries (as defined in
Section  2.1(g)) or own securities of any kind in any other entity except as set
forth on  Schedule  2.1(g)  hereto.  The Company  and each such  Subsidiary  (as
defined  in  Section  2.1(g))  is duly  qualified  to do  business  as a foreign
corporation 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  except for any  jurisdiction(s)  (alone or in the aggregate) in which
the failure to be so qualified will not have a Material Adverse Effect.  For the
purposes of this  Agreement,  "Material  Adverse Effect" means any effect on the
business,  results of operations,  prospects,  assets or condition (financial or
otherwise)  of the Company  that is material  and adverse to the Company and its
subsidiaries  and/or  any  condition,  circumstance,  or  situation  that  would
prohibit or otherwise  materially interfere with the ability of the Company from
entering  into and  performing  any of its  obligations  under  the  Transaction
Documents (as defined below) in any material respect.

            (b)  Authorization;  Enforcement.  The  Company  has  the  requisite
corporate  power and  authority  to enter into and perform this  Agreement,  the
Escrow Agreement by and among the Company,  the Purchasers and the escrow agent,
dated as of the date hereof,  substantially in the form of Exhibit B hereto (the
"Escrow Agreement") and that certain  Registration Rights Agreement by and among
the Company and the Purchasers,  dated as of the date hereof,  substantially  in
the form of Exhibit C attached hereto (the "Registration  Rights Agreement" and,
together  with  the  Escrow  Agreement  and  this  Agreement,  the  "Transaction
Documents") and to issue and sell the Shares in accordance with the terms hereof
and to complete the transactions  contemplated by the Transaction Documents. The
execution,  delivery and performance of the Transaction Documents by the Company
and the  consummation by it of the transactions  contemplated  thereby have been
duly and validly  authorized  by all necessary  corporate  action and no further
consent or authorization of the Company,  its Board of Directors or stockholders
is required. When executed and delivered by the Company, each of the Transaction
Documents  shall  constitute  a valid  and  binding  obligation  of the  Company
enforceable  against the Company in  accordance  with its terms,  except as such
enforceability  may  be  limited  by  applicable   bankruptcy,   reorganization,
moratorium, liquidation, conservatorship,  receivership or similar laws relating
to, or affecting generally the enforcement of, creditors' rights and remedies or
by other equitable principles of general application.

                                        2
<PAGE>

            (c)  Capitalization.  The authorized capital stock of the Company as
of  October  20,  2005  is set  forth  on  Schedule  2.1(c)  hereto.  All of the
outstanding shares of the Common Stock and any other outstanding security of the
Company have been duly and validly authorized and validly issued, fully paid and
nonassessable   and  were  issued  in  accordance   with  the   registration  or
qualification  provisions of the Securities Act, or pursuant to valid exemptions
therefrom.  Except as set forth in this  Agreement  and as set forth on Schedule
2.1(c)  hereto,  no shares of Common Stock or any other  security of the Company
are entitled to preemptive rights,  registration rights, rights of first refusal
or similar rights and there are no outstanding options,  warrants, scrip, rights
to subscribe to, call or commitments of any character whatsoever relating to, or
securities  or rights  convertible  into,  any  shares of  capital  stock of the
Company. Furthermore,  except as set forth in this Agreement and as set forth on
Schedule 2.1(c) hereto, there are no contracts, commitments,  understandings, or
arrangements  by which the  Company is or may become  bound to issue  additional
shares of the  capital  stock of the Company or  options,  securities  or rights
convertible  into shares of capital  stock of the Company.  Except for customary
transfer  restrictions  contained in  agreements  entered into by the Company in
order to sell  restricted  securities or as provided on Schedule  2.1(c) hereto,
the  Company  is not a party  to or  bound  by any  agreement  or  understanding
granting  registration or anti-dilution rights to any person with respect to any
of its equity or debt securities.  Except as set forth on Schedule  2.1(c),  the
Company  is not a  party  to,  and it has no  knowledge  of,  any  agreement  or
understanding  restricting  the voting or  transfer of any shares of the capital
stock of the Company.

            (d) Issuance of Shares.  The Shares to be issued at the Closing have
been duly  authorized by all necessary  corporate  action and, when paid for and
issued in accordance  with the terms hereof,  the Shares will be validly issued,
fully paid and nonassessable  and free and clear of all liens,  encumbrances and
rights of refusal of any kind and the  holders  shall be  entitled to all rights
accorded to a holder of Common Stock.

            (e) No Conflicts.  The  execution,  delivery and  performance of the
Transaction  Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not (i) violate any
provision of the Company's  Certificate of Incorporation (the  "Certificate") or
Bylaws (the "Bylaws"),  each as amended to date, or any Subsidiary's  comparable
charter  documents,  (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,  mortgage, deed of trust, indenture, note, bond,
license,  lease agreement,  instrument or obligation to which the Company or any
of  its  Subsidiaries  is a  party  or by  which  the  Company  or  any  of  its
Subsidiaries'  respective  properties or assets are bound,  or (iii) result in a
violation of any federal,  state,  local or foreign statute,  rule,  regulation,
order,  judgment  or decree  (including  federal and state  securities  laws and
regulations)  applicable to the Company or any of its  Subsidiaries  or by which
any  property  or asset of the  Company or any of its  Subsidiaries  is bound or
affected, except, in all cases, other than violations pursuant to clauses (i) or
(iii) (with respect to federal and state  securities  laws) above,  except,  for
such conflicts, defaults, terminations, amendments, acceleration,  cancellations
and violations as would not,  individually or in the aggregate,  have a Material
Adverse  Effect.  Neither the Company  nor any of its  Subsidiaries  is required
under  federal,  state,  foreign or local law,  rule or regulation to obtain any
consent, authorization or order of, or 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 the Transaction  Documents or issue and sell the Shares
in  accordance  with the terms  hereof  (other than any  filings,  consents  and
approvals which may be required to be made by the Company under applicable state
and federal  securities  laws,  rules or as may be  required  for the Company to
carry out its obligations under the Registration Rights Agreement).

                                        3
<PAGE>

            (f) Commission Documents,  Financial Statements. The Common Stock of
the Company is registered  pursuant to Section 12(b) or 12(g) of the  Securities
Exchange Act of 1934, as amended (the "Exchange Act"),  and, except as disclosed
on Schedule 2.1(f) hereto, the Company has timely filed all reports,  schedules,
forms,  statements  and  other  documents  required  to be  filed by it with the
Securities and Exchange Commission (the "Commission")  pursuant to the reporting
requirements of the Exchange Act, including pursuant to Sections 13, 14 or 15(d)
thereof (all of the  foregoing and all exhibits  included  therein and financial
statement and schedules  thereto,  including  filings  incorporated by reference
therein being referred to herein as the "Commission Documents"). At the times of
their  respective  filings,  the Form 10-QSB for the fiscal quarters ended March
31,  2005 and June 30,  2005,  (collectively,  the "Form  10-QSB")  and the Form
10-KSB for the fiscal year ended December 31, 2004 (the "Form 10-KSB")  complied
in all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission  promulgated  thereunder,  and the Form 10-QSB
and Form  10-KSB at the time of their  respective  filings  did not  contain any
untrue statement of a material fact or omit 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.  As of their
respective  dates,  the  financial  statements  of the  Company  included in the
Commission  Documents  were  complete and correct in all  material  respects and
complied with  applicable  accounting  requirements  and the published rules and
regulations of the Commission or other  applicable  rules and  regulations  with
respect thereto. Such financial statements have been prepared in accordance with
accounting  principles  generally accepted in the United States ("GAAP") applied
on a  consistent  basis  during  the  periods  involved  (except  (i)  as may be
otherwise indicated in such financial statements or the Notes thereto or (ii) in
the case of  unaudited  interim  statements,  to the extent they may not include
footnotes or may be condensed or summary statements),  and fairly present in all
material respects the financial  position of the Company and its Subsidiaries as
of 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
year-end audit adjustments).

            (g) Subsidiaries.  Schedule 2.1(g) hereto sets forth each Subsidiary
of the Company,  showing the  jurisdiction of its  incorporation or organization
and showing the percentage of each person's  ownership of the outstanding  stock
or other  interests  of such  Subsidiary.  For the  purposes of this  Agreement,
"Subsidiary"  shall mean any  corporation  or other  entity of which 100% of the
securities or other ownership  interest having ordinary voting power (absolutely
or  contingently)  for the  election of directors  or other  persons  performing
similar  functions  are at the time owned  directly or indirectly by the Company
and/or any of its other  Subsidiaries.  All of the outstanding shares of capital
stock of each Subsidiary  have been duly authorized and validly issued,  and are
fully paid and nonassessable. There are no outstanding preemptive, conversion or
other rights,  options,  warrants or agreements  granted or issued by or binding
upon any  Subsidiary  for the purchase or  acquisition  of any shares of capital
stock of any Subsidiary or any other securities  convertible into,  exchangeable
for or evidencing  the rights to subscribe for any shares of such capital stock.
Neither the Company nor any Subsidiary is subject to any obligation  (contingent
or otherwise)  to  repurchase  or otherwise  acquire or retire any shares of the
capital stock of any Subsidiary or any convertible securities,  rights, warrants
or options of the type described in the preceding  sentence  except as set forth
on Schedule  2.1(g) hereto.  Neither the Company nor any Subsidiary is party to,
nor has any knowledge of, any  agreement  restricting  the voting or transfer of
any shares of the capital stock of any Subsidiary.

                                        4
<PAGE>

            (h) No Material Adverse Change. Since December 31, 2004, the Company
has not experienced or suffered any Material Adverse Effect, except as disclosed
on Schedule 2.1(h) hereto.

            (i) No  Undisclosed  Liabilities.  Except as  disclosed  on Schedule
2.1(i)  hereto,  since  December  31,  2004,  neither the Company nor any of its
Subsidiaries  has  incurred  any  liabilities,  obligations,  claims  or  losses
(whether liquidated or unliquidated,  secured or unsecured,  absolute,  accrued,
contingent or otherwise) other than those incurred in the ordinary course of the
Company's or its Subsidiaries respective businesses or which, individually or in
the aggregate,  are not  reasonably  likely to have a Material  Adverse  Effect.
Since December 31, 2004,  except as disclosed in Commission  Documents,  none of
the  Company or any of its  Subsidiaries  has  participated  in any  transaction
material to the condition of the Company which is outside of the ordinary course
of its business.

            (j) No Undisclosed Events or Circumstances. Since December 31, 2004,
except as disclosed on Schedule  2.1(j)  hereto,  no event or  circumstance  has
occurred or exists  with  respect to the  Company or its  Subsidiaries  or their
respective  businesses,  properties,  operations or financial condition,  which,
under  applicable  law,  rule  or  regulation,  requires  public  disclosure  or
announcement  by the  Company but which has not been so  publicly  announced  or
disclosed.

            (k)  Indebtedness.  Schedule 2.1(k) hereto sets forth as of the date
hereof all outstanding secured and unsecured  Indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has commitments.  For the
purposes of this  Agreement,  "Indebtedness"  shall mean (a) any liabilities for
borrowed money or amounts owed in excess of $150,000  (other than trade accounts
payable  incurred  in the  ordinary  course of  business),  (b) all  guaranties,
endorsements  and other  contingent  obligations in respect of  liabilities  for
borrowed  money of others in excess of $150,000,  whether or not the same are or
should be  reflected  in the  Company's  balance  sheet (or the notes  thereto),
except  guaranties  by  endorsement  of  negotiable  instruments  for deposit or
collection or similar  transactions in the ordinary course of business;  and (c)
the present  value of any lease  payments in excess of $25,000 due under  leases
required to be capitalized in accordance with GAAP.  Neither the Company nor any
Subsidiary is in default with respect to any Indebtedness.

            (l) Title to Assets.  Each of the Company and the  Subsidiaries  has
good and valid title to all of its real and personal  property  reflected in the
Commission Documents, free and clear of any mortgages,  pledges, charges, liens,
security interests or other encumbrances, except for those indicated on Schedule
2.1(l) hereto or such that,  individually  or in the  aggregate,  do not cause a
Material  Adverse  Effect.  All  said  leases  of the  Company  and  each of its
Subsidiaries are valid and subsisting and in full force and effect.

                                        5
<PAGE>

            (m) Actions Pending. There is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or other proceeding pending
or, to the  knowledge  of the  Company,  threatened  against  the Company or any
Subsidiary  which  questions the validity of this  Agreement or any of the other
Transaction Documents or any of the transactions  contemplated hereby or thereby
or any action  taken or to be taken  pursuant  hereto or thereto.  Except as set
forth on Schedule 2.1(m) hereto, there is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or other proceeding pending
or, to the  knowledge  of the  Company,  threatened  against  or  involving  the
Company,  any Subsidiary or any of their respective  properties or assets, which
individually  or in the  aggregate,  could  reasonably  be  expected  to  have a
Material   Adverse  Effect.   There  are  no  outstanding   orders,   judgments,
injunctions,  awards or decrees  of any court,  arbitrator  or  governmental  or
regulatory  body  against  the  Company or any  Subsidiary  or any  officers  or
directors of the Company or any  Subsidiary in their  capacities as such,  which
individually  or in the  aggregate,  could  reasonably  be  expected  to  have a
Material Adverse Effect.

            (n)  Compliance  with  Law.  The  business  of the  Company  and the
Subsidiaries  has been and is presently  being  conducted in accordance with all
applicable  federal,  state and local governmental laws, rules,  regulations and
ordinances,  except  as set forth in the  Commission  Documents  or on  Schedule
2.1(n) hereto or such that, individually or in the aggregate,  the noncompliance
therewith  could not reasonably be expected to have a Material  Adverse  Effect.
The Company and each of its Subsidiaries have all franchises, permits, licenses,
consents and other  governmental  or  regulatory  authorizations  and  approvals
necessary  for the conduct of its  business as now being  conducted by it unless
the failure to possess such franchises,  permits,  licenses,  consents and other
governmental or regulatory authorizations and approvals,  individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

            (o)  Taxes.  Except  as set forth on  Schedule  2.1(o)  hereto,  the
Company  and each of the  Subsidiaries  has  accurately  prepared  and filed all
federal, state and other tax returns required by law to be filed by it, has paid
all  taxes  shown  to be  due  and  all  additional  assessments,  and  adequate
provisions  have  been and are  reflected  in the  financial  statements  of the
Company and the  Subsidiaries  for all current  taxes and other charges to which
the Company or any  Subsidiary  is subject and which are not  currently  due and
payable.  Except as disclosed  on Schedule  2.1(o)  hereto,  none of the federal
income tax  returns of the  Company or any  Subsidiary  has been  audited by the
Internal  Revenue  Service.  The  Company  has no  knowledge  of any  additional
assessments,  adjustments or contingent tax liability (whether federal or state)
of any nature  whatsoever,  whether pending or threatened against the Company or
any  Subsidiary  for any  period,  nor of any  basis  for any  such  assessment,
adjustment or contingency.

            (p) Certain Fees. Except as set forth on Schedule 2.1(p) hereto, the
Company has not employed any broker or finder or incurred any  liability for any
brokerage or investment banking fees,  commissions,  finders'  structuring fees,
financial advisory fees or other similar fees in connection with the Transaction
Documents.

                                        6
<PAGE>

            (q) Disclosure.  Neither this Agreement or the Schedules  hereto nor
any other documents,  certificates or instruments furnished to the Purchasers by
or  on  behalf  of  the  Company  or  any  Subsidiary  in  connection  with  the
transactions  contemplated by this Agreement  contains any untrue statement of a
material fact or omits to state a material  fact  necessary in order to make the
statements made herein or therein, in the light of the circumstances under which
they were made herein or therein, not misleading.

            (r)  Operation of Business.  Except as set forth on Schedule  2.1(r)
hereto, the Company and each of the Subsidiaries owns or possesses the rights to
use all patents,  trademarks,  domain names (whether or not  registered) and any
patentable improvements or copyrightable derivative works thereof,  websites and
intellectual  property  rights  relating  thereto,  service marks,  trade names,
copyrights,  licenses and authorizations  which are necessary for the conduct of
its  business as now  conducted  without any conflict or  infringement  with the
rights of others.

            (s) Environmental Compliance. Except as disclosed on Schedule 2.1(s)
hereto,  the Company and each of its  Subsidiaries  have  obtained  all material
approvals, authorization,  certificates,  consents, licenses, orders and permits
or other similar  authorizations  of all governmental  authorities,  or from any
other person,  that are required under any  Environmental  Laws.  "Environmental
Laws"  shall  mean  all  applicable  laws  relating  to  the  protection  of the
environment  including,  without  limitation,  all  requirements  pertaining  to
reporting,  licensing,  permitting,  controlling,  investigating  or remediating
emissions,  discharges, releases or threatened releases of hazardous substances,
chemical substances, pollutants,  contaminants or toxic substances, materials or
wastes, whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture,  processing,  distribution,
use,  treatment,   storage,   disposal,   transport  or  handling  of  hazardous
substances, chemical substances,  pollutants,  contaminants or toxic substances,
material or wastes,  whether solid,  liquid or gaseous in nature.  Except as set
forth on Schedule  2.1(s)  hereto,  the Company has all  necessary  governmental
approvals  required under all Environmental  Laws and used in its business or in
the business of any of its Subsidiaries,  except for such instances as would not
individually or in the aggregate have a Material Adverse Effect. The Company and
each of its  Subsidiaries  are also in  compliance  with all other  limitations,
restrictions,  conditions,  standards,  requirements,  schedules and  timetables
required or imposed under all  Environmental  Laws. Except for such instances as
would not individually or in the aggregate have a Material Adverse Effect, there
are no past or present events, conditions, circumstances,  incidents, actions or
omissions  relating to or in any way affecting  the Company or its  Subsidiaries
that  violate or would be  reasonably  likely to violate any  Environmental  Law
after  the  Closing  or that  would be  reasonably  likely  to give  rise to any
environmental  liability,  or  otherwise  form the basis of any  claim,  action,
demand,  suit,  proceeding,  hearing,  study  or  investigation  (i)  under  any
Environmental  Law or (ii) based on or related to the  manufacture,  processing,
distribution,   use,   treatment,   storage   (including,   without  limitation,
underground storage tanks),  disposal,  transport or handling,  or the emission,
discharge, release or threatened release of any hazardous substance.

                                        7
<PAGE>

            (t) Books and Records; Internal Accounting Controls. The records and
documents of the Company and its Subsidiaries accurately reflect in all material
respects  the  information  relating  to the  business  of the  Company  and its
Subsidiaries, the location and collection of their assets, and the nature of all
transactions  giving  rise to the  obligations  or  accounts  receivable  of the
Company or any Subsidiary.  The Company and each of its Subsidiaries  maintain a
system  of  internal   accounting  controls  sufficient  to  provide  reasonable
assurance that (i)  transactions  are executed in accordance  with  management's
general or specific authorizations,  (ii) transactions are recorded as necessary
to permit  preparation  of financial  statements in conformity  with GAAP and to
maintain  asset  accountability,  (iii)  access to assets is  permitted  only in
accordance  with  management's  general  or  specific  authorization,  (iv)  the
recorded  accountability  for assets is  compared  with the  existing  assets at
reasonable  intervals  and  appropriate  actions  are taken with  respect to any
differences  and (v)  accounts,  notes and other  receivables  and inventory are
recorded  accurately,  and proper and adequate  procedures  are  implemented  to
effect the collection thereof on a current and timely basis. Except as set forth
on Schedule  2.1(t) hereto,  there are no significant  deficiencies  or material
weaknesses  in the design or  operation  of  internal  controls  over  financial
reporting  that would  reasonably be expected to adversely  affect the Company's
ability to record,  process,  summarize and report  financial  information,  and
there is no fraud, whether or not material,  that involves management or, to the
knowledge of the Company,  other  employees who have a  significant  role in the
Company's internal controls and the Company has provided to the Purchaser copies
of any written materials relating to the foregoing.

            (u) Material Agreements.  Except for the Transaction Documents (with
respect to clause (i) only), as disclosed in the Commission  Documents or as set
forth on Schedule 2.1(u) hereto,  or as would not be reasonably likely to have a
Material  Adverse  Effect,  (i) the  Company and each of its  Subsidiaries  have
performed  all  obligations  required to be  performed by them to date under any
written or oral contract, instrument, agreement, commitment, obligation, plan or
arrangement,  filed or required to be filed with the  Commission  (the "Material
Agreements"),  (ii) neither the Company nor any of its Subsidiaries has received
any notice of default under any Material Agreement and, (iii) to the best of the
Company's  knowledge,  neither  the Company  nor any of its  Subsidiaries  is in
default under any Material Agreement.

            (v) Transactions  with  Affiliates.  Except as set forth on Schedule
2.1(v)  hereto,  there  are no loans,  leases,  agreements,  contracts,  royalty
agreements,   management   contracts  or   arrangements   or  other   continuing
transactions  between (a) the Company, any Subsidiary or any of their respective
customers or suppliers on the one hand,  and (b) on the other hand, any officer,
employee,  consultant or director of the Company, or any of its Subsidiaries, or
any person  owning any  capital  stock of the Company or any  Subsidiary  or any
member of the immediate family of such officer, employee,  consultant,  director
or  stockholder or any  corporation or other entity  controlled by such officer,
employee,  consultant,  director or  stockholder,  or a member of the  immediate
family of such officer, employee, consultant,  director or stockholder which, in
each case,  is required to be  disclosed in the  Commission  Documents or in the
Company's most recently filed  definitive  proxy statement on Schedule 14A, that
is not so disclosed in the Commission Documents or in such proxy statement.

            (w)  Securities  Act of  1933.  Based  in  material  part  upon  the
representations  and  warranties  of the  Purchasers  contained  in Section  2.2
hereof, the Company has complied and will comply with all applicable federal and
state  securities  laws in connection  with the offer,  issuance and sale of the
Shares hereunder.  Neither the Company nor anyone acting on its behalf, directly
or indirectly,  has or will sell,  offer to sell or solicit offers to buy any of
the Shares or similar  securities  to, or solicit  offers with  respect  thereto
from, or enter into any negotiations  relating thereto with, any person,  or has
taken or will take any action so as to bring the issuance and sale of any of the
Shares under the  registration  provisions of the  Securities Act and applicable
state  securities  laws, and neither the Company nor any of its affiliates,  nor
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 under
the Securities Act) in connection with the offer or sale of any of the Shares.

                                        8
<PAGE>

            (x)  Governmental  Approvals.  Except  for the  filing of any notice
prior or subsequent to the Closing that may be required under  applicable  state
and/or federal  securities  laws (which if required,  shall be filed on a timely
basis), no authorization,  consent,  approval,  license, exemption of, filing or
registration  with any  court or  governmental  department,  commission,  board,
bureau, agency or instrumentality,  domestic or foreign, is or will be necessary
for, or in connection with, the execution or delivery of the Shares,  or for the
performance by the Company of its obligations under the Transaction Documents.

            (y)  Employees;  Labor  Relations.   Neither  the  Company  nor  any
Subsidiary has any collective bargaining arrangements or agreements covering any
of its employees,  except as set forth on Schedule 2.1(y) hereto or disclosed in
the  Commission  Documents.  Except as set forth on  Schedule  2.1(y)  hereto or
disclosed in the  Commission  Documents,  neither the Company nor any Subsidiary
has  any  employment  contract,  agreement  regarding  proprietary  information,
non-competition   agreement,    non-solicitation   agreement,    confidentiality
agreement,  or any other similar contract or restrictive  covenant,  relating to
the right of any officer,  employee or  consultant  to be employed or engaged by
the  Company or such  Subsidiary  required  to be  disclosed  in the  Commission
Documents  that is not so  disclosed.  Since  December  31,  2004,  no  officer,
consultant or key employee of the Company or any Subsidiary  whose  termination,
either  individually or in the aggregate,  would be reasonably  likely to have a
Material Adverse Effect, has terminated or, to the knowledge of the Company, has
any present  intention of terminating  his or her employment or engagement  with
the Company or any  Subsidiary.  Except as could not  reasonably  be expected to
have  a  Material  Adverse  Effect,  (i)  neither  the  Company  nor  any of its
Subsidiaries is engaged in any unfair labor  practice,  (ii) there is no strike,
labor dispute, slowdown or stoppage pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries, and (iii) neither the
Company  nor any of its  Subsidiaries  is a party to any  collective  bargaining
agreement or contract.

            (z) Absence of Certain Developments.  Except as provided on Schedule
2.1(z) hereto,  since December 31, 2004,  neither the Company nor any Subsidiary
has:

                  (i) issued any stock,  bonds or other corporate  securities or
any right, options or warrants with respect thereto;

                  (ii)  borrowed any amount in excess of $150,000 or incurred or
become  subject to any other  liabilities  in excess of  $150,000  (absolute  or
contingent)  except  current  liabilities  incurred  in the  ordinary  course of
business  which are  comparable in nature and amount to the current  liabilities
incurred in the ordinary course of business during the comparable portion of its
prior fiscal year,  as adjusted to reflect the current  nature and volume of the
business of the Company and its Subsidiaries;

                                        9
<PAGE>

                  (iii)  discharged  or  satisfied  any lien or  encumbrance  in
excess of $150,000 or paid any obligation or liability  (absolute or contingent)
in excess of  $150,000,  other than  current  liabilities  paid in the  ordinary
course of business;

                  (iv) declared or made any payment or  distribution  of cash or
other  property to  stockholders  with  respect to its stock,  or  purchased  or
redeemed,  or made any  agreements  so to purchase or redeem,  any shares of its
capital stock, in each case in excess of $50,000 individually or $100,000 in the
aggregate;

                  (v) sold,  assigned or transferred any other tangible  assets,
or canceled any debts or claims,  in each case in excess of $150,000,  except in
the ordinary course of business;

                  (vi)  sold,   assigned  or  transferred   any  patent  rights,
trademarks, trade names, copyrights, trade secrets or other intangible assets or
intellectual property rights in excess of $250,000, or disclosed any proprietary
confidential  information  to any person  except to  customers  in the  ordinary
course of business or to the Purchasers or their representatives;

                  (vii)  suffered  any  material  losses or waived any rights of
material value,  whether or not in the ordinary course of business,  or suffered
the loss of any material amount of prospective business;

                  (viii) made any changes in employee compensation except in the
ordinary course of business and consistent with past practices;

                  (ix) made capital  expenditures  or commitments  therefor that
aggregate in excess of $150,000;

                  (x) entered into any material  transaction,  whether or not in
the ordinary course of business;

                  (xi) made charitable contributions or pledges in excess of
$10,000;

                  (xii)  suffered any material  damage,  destruction or casualty
loss, whether or not covered by insurance;

                  (xiii)   experienced  any  material  problems  with  labor  or
management in connection with the terms and conditions of their employment; or

                  (xiv) entered into an agreement, written or otherwise, to take
any of the foregoing actions.

                                       10
<PAGE>

            (aa) Public Utility Holding  Company Act and Investment  Company Act
Status.  The Company is not a "holding company" or a "public utility company" as
such terms are defined in the Public  Utility  Holding  Company Act of 1935,  as
amended. The Company is not, and as a result of and immediately upon the Closing
will not be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.

            (bb) ERISA. No liability to the Pension Benefit Guaranty Corporation
has  been  incurred  with  respect  to any  Plan  by the  Company  or any of its
Subsidiaries  which is or would be  materially  adverse to the  Company  and its
Subsidiaries.  The execution and delivery of this Agreement and the issuance and
sale of the Shares  will not  involve  any  transaction  which is subject to the
prohibitions  of Section 406 of the Employee  Retirement  Income Security Act of
1974, as amended  ("ERISA") or in  connection  with which a tax could be imposed
pursuant  to Section  4975 of the  Internal  Revenue  Code of 1986,  as amended,
provided  that,  if any of the  Purchasers,  or any person or entity that owns a
beneficial  interest in any of the Purchasers,  is an "employee  pension benefit
plan"  (within the meaning of Section  3(2) of ERISA) with  respect to which the
Company is a "party in interest" (within the meaning of Section 3(14) of ERISA),
the requirements of Sections  407(d)(5) and 408(e) of ERISA, if applicable,  are
met. As used in this  Section  2.1(bb),  the term "Plan" shall mean an "employee
pension  benefit  plan" (as defined in Section 3 of ERISA)  which is or has been
established or maintained,  or to which  contributions are or have been made, by
the  Company  or any  Subsidiary  or by any trade or  business,  whether  or not
incorporated,  which,  together  with the  Company or any  Subsidiary,  is under
common control, as described in Section 414(b) or (c) of the Code.

            (cc)  Anti-takeover  Device.  Neither  the  Company  nor  any of its
Subsidiaries has any outstanding shareholder rights plan or "poison pill" or any
similar  arrangement.  There are no provisions of any  anti-takeover or business
combination  statute  applicable to the Company,  the Certificate and the Bylaws
which would preclude the issuance and sale of the Shares and the consummation of
the  other  transactions  contemplated  by this  Agreement  or any of the  other
Transaction Documents.

            (dd) Independent Nature of Purchasers. The Company acknowledges that
the obligations of each Purchaser  under the  Transaction  Documents 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 the  Transaction  Documents and the Company shall not be
excused  from  performance  of  its  obligations  to  any  Purchaser  under  the
Transaction  Documents  as a result  of  nonperformance  or  breach by any other
Purchaser.  The Company  acknowledges  that the  decision of each  Purchaser  to
purchase  Shares  pursuant  to this  Agreement  has been made by such  Purchaser
independently  of any other  purchaser  and  independently  of any  information,
materials,  statements  or opinions  as to the  business,  affairs,  operations,
assets, properties,  liabilities, results of operations, condition (financial or
otherwise)  or  prospects of the Company or of its  Subsidiaries  which may have
made or given by any other  Purchaser  or by any agent or  employee of any other
Purchaser,  and no Purchaser  or any of its agents or  employees  shall have any
liability to any Purchaser (or any other person) relating to or arising from any
such information,  materials,  statements or opinions.  The Company acknowledges
that nothing  contained herein,  or in any Transaction  Document,  and no action
taken by any Purchaser pursuant hereto or 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 Documents. The Company acknowledges
that 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. The Company acknowledges that for reasons of administrative convenience
only,  the  Transaction  Documents  have been prepared by counsel for one of the
Purchasers  and such counsel does not represent all of the  Purchasers  but only
such  Purchaser  and the other  Purchasers  have retained  their own  individual
counsel  with  respect to the  transactions  contemplated  hereby.  The  Company
acknowledges  that it 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.  The Company  acknowledges
that such procedure with respect to the Transaction  Documents in no way creates
a presumption that the Purchasers are in any way acting in concert or as a group
with  respect to the  Transaction  Documents  or the  transactions  contemplated
hereby or thereby.

                                       11
<PAGE>

            (ee) 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 the offering of the Shares
pursuant to this Agreement to be integrated  with prior offerings by the Company
for purposes of the  Securities Act which would prevent the Company from selling
the Shares  pursuant to Regulation D and Rule 506 thereof  under the  Securities
Act, or any applicable  exchange-related  stockholder approval  provisions,  nor
will the Company or any of its  affiliates  or  subsidiaries  take any action or
steps that would cause the  offering of the Shares to be  integrated  with other
offerings if such other offering, if integrated,  would cause the offer and sale
of the Shares not to be exempt from  registration  pursuant to  Regulation D and
Rule 506  thereof  under  the  Securities  Act.  The  Company  does not have any
registration  statement  pending  before the  Commission or currently  under the
Commission's review and, except as disclosed in Schedule 2.1(z),  since March 1,
2005,  the Company has not offered or sold any of its equity  securities or debt
securities convertible into shares of Common Stock.

            (ff)  Sarbanes-Oxley  Act.  The  Company is in  compliance  with the
applicable  provisions of the  Sarbanes-Oxley  Act of 2002 (the  "Sarbanes-Oxley
Act"), and the rules and regulations promulgated thereunder,  that are effective
and for which  compliance  by the  Company is required as of the date hereof and
intends to comply with other applicable  provisions of the  Sarbanes-Oxley  Act,
and the rules and regulations promulgated thereunder,  upon the effectiveness of
such  provisions  or the date by which  compliance  therewith  by the Company is
required.

            Section 2.2 Representations  and Warranties of the Purchasers.  Each
of the  Purchasers  hereby  represents  and warrants to the Company with respect
solely to itself and not with  respect to any other  Purchaser  as follows as of
the date hereof and as of the Closing Date:

                                       12
<PAGE>

            (a) Organization and Standing of the Purchasers. If the Purchaser is
an  entity,  such  Purchaser  is a  corporation,  limited  liability  company or
partnership  duly  incorporated  or  organized,  validly  existing  and in  good
standing  under  the  laws  of  the   jurisdiction  of  its   incorporation   or
organization.

            (b)  Authorization and Power. Such Purchaser has the requisite power
and  authority  to enter  into and  perform  the  Transaction  Documents  and to
purchase  the Shares being sold to it  hereunder.  The  execution,  delivery and
performance of the Transaction  Documents by such Purchaser and the consummation
by it of the transactions  contemplated  hereby have been duly authorized by all
necessary  corporate,  partnership  or other action,  and no further  consent or
authorization  of  such  Purchaser  or its  Board  of  Directors,  stockholders,
partners  or  members,  as the case  may be,  is  required.  When  executed  and
delivered by the Purchasers,  the other  Transaction  Documents shall constitute
valid  and  binding  obligations  of such  Purchaser  enforceable  against  such
Purchaser in accordance with their terms,  except as such  enforceability may be
limited  by  applicable  bankruptcy,  insolvency,  reorganization,   moratorium,
liquidation,  conservatorship,  receivership  or similar  laws  relating  to, or
affecting  generally the  enforcement of,  creditor's  rights and remedies or by
other equitable principles of general application.

            (c) No Conflict.  The  execution,  delivery and  performance  of the
Transaction  Documents by such Purchaser and the  consummation by such Purchaser
of the  transactions  contemplated  thereby  and  hereby do not and will not (i)
violate any provision of such Purchaser's  charter or organizational  documents,
(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,  mortgage,  deed of trust,  indenture,  note,  bond,  license,  lease
agreement,  instrument or  obligation  to which such  Purchaser is a party or by
which such  Purchaser's  respective  properties  or assets  are bound,  or (iii)
result in a violation of any federal,  state,  local or foreign  statute,  rule,
regulation,  order,  judgment or decree (including  federal and state securities
laws and  regulations)  applicable to such Purchaser or by which any property or
asset of such Purchaser are bound or affected,  except, in all cases, other than
violations  pursuant to clauses (i) or (iii) (with  respect to federal and state
securities laws) above, for such conflicts, defaults, terminations,  amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate,  materially and adversely affect such Purchaser's  ability to perform
its obligations under the Transaction Documents.

            (d)  Acquisition  for  Investment.  Such Purchaser is purchasing the
Shares  solely  for  its own  account  and  not  with a view  to or for  sale in
connection with  distribution.  Such Purchaser does not have a present intention
to sell any of the  Shares,  nor a present  arrangement  (whether or not legally
binding) or intention  to effect any  distribution  of any of the Shares,  to or
through  any  person  or  entity;   provided,   however,   that  by  making  the
representations herein, such Purchaser does not agree to hold the Shares for any
minimum or other  specific  term and reserves the right to dispose of the Shares
at any time in accordance  with Federal and state  securities laws applicable to
such disposition. Such Purchaser acknowledges that it (i) has such knowledge and
experience in financial and business  matters such that  Purchaser is capable of
evaluating the merits and risks of Purchaser's  investment in the Company,  (ii)
is able to bear the financial risks  associated with an investment in the Shares
and (iii) has been given full  access to such  records  of the  Company  and the
Subsidiaries  and to the officers of the Company and the  Subsidiaries as it has
deemed necessary or appropriate to conduct its due diligence investigation.

                                       13
<PAGE>

            (e) Rule 144.  Such  Purchaser  understands  that the Shares must be
held indefinitely  unless such Shares are registered under the Securities Act or
an exemption from  registration is available.  Such Purchaser  acknowledges that
such  person is  familiar  with Rule 144 of the  rules  and  regulations  of the
Commission, as amended, promulgated pursuant to the Securities Act ("Rule 144"),
and that such  Purchaser  has been  advised  that Rule 144 permits  resales only
under certain circumstances.  Such Purchaser understands that to the extent that
Rule 144 is not  available,  such  Purchaser  will be unable to sell any  Shares
without either registration under the Securities Act or the existence of another
exemption from such registration requirement.

            (f) General.  Such Purchaser  understands  that the Shares are being
offered and sold in reliance on a transactional  exemption from the registration
requirements  of federal  and state  securities  laws and the Company is relying
upon the truth and  accuracy  of the  representations,  warranties,  agreements,
acknowledgments  and  understandings of such Purchaser set forth herein in order
to determine the  applicability  of such  exemptions and the suitability of such
Purchaser  to acquire  the Shares.  Such  Purchaser  understands  that no United
States  federal or state agency or any  government  or  governmental  agency has
passed upon or made any recommendation or endorsement of the Shares.

            (g) No General  Solicitation.  Such Purchaser  acknowledges that the
Shares  were not  offered to such  Purchaser  by means of any form of general or
public   solicitation   or  general   advertising,   or  publicly   disseminated
advertisements or sales literature,  including (i) any  advertisement,  article,
notice or other communication  published in any newspaper,  magazine, or similar
media,  or broadcast over television or radio, or (ii) any seminar or meeting to
which  such   Purchaser   was  invited  by  any  of  the   foregoing   means  of
communications.  Such Purchaser,  in making the decision to purchase the Shares,
has relied upon independent  investigation  made by it and the  representations,
warranties  and agreements  set forth in the  Transaction  Documents and has not
relied on any information or representations made by third parties.

            (h) Accredited Investor.  Such Purchaser is an "accredited investor"
(as defined in Rule 501 of Regulation D), and such Purchaser has such experience
in business and financial  matters that it is capable of  evaluating  the merits
and risks of an investment in the Shares.  Such  Purchaser is not required to be
registered  as a  broker-dealer  under  Section 15 of the  Exchange Act and such
Purchaser is not a broker-dealer. Such Purchaser acknowledges that an investment
in the Shares is speculative  and involves a high degree of risk. Such Purchaser
has completed or caused to be completed the Investor Questionnaire Certification
attached  hereto as  Exhibit D  certifying  as to its  status as an  "accredited
investor"  and  understands  that the  Company  is  relying  upon the  truth and
accuracy of such  information  set forth therein to determine the suitability of
such Purchaser to acquire the Shares.

            (i) Certain  Fees.  The  Purchasers  have not employed any broker or
finder or incurred any liability  for any brokerage or investment  banking fees,
commissions, finders' structuring fees, financial advisory fees or other similar
fees in connection with the Transaction Documents.

                                       14
<PAGE>

            (j) Independent Investment.  No Purchaser has agreed to act with any
other  Purchaser for the purpose of acquiring,  holding,  voting or disposing of
the Shares purchased  hereunder for purposes of Section 13(d) under the Exchange
Act, and each Purchaser is acting  independently  with respect to its investment
in the Shares.

            (k) 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 (as defined below) during the period after the date that
such Purchaser  first received a term sheet from the Company or any other person
or entity  setting  forth the material  terms of the  transactions  contemplated
hereunder  until the date that the  transactions  contemplated by this Agreement
are first publicly  announced as described in Section 3.10. For purposes hereof,
"Short  Sales"  shall  include  all  "short  sales"  as  defined  in Rule 200 of
Regulation SHO under the Exchange Act.

                                   ARTICLE III

                                    COVENANTS

      The Company covenants with each Purchaser as follows,  which covenants are
for the benefit of each Purchaser and their respective permitted assignees.

            Section 3.1  Securities  Compliance.  The Company  shall  notify the
Commission in accordance  with its rules and  regulations,  of the  transactions
contemplated  by any of the  Transaction  Documents  and  shall  take all  other
necessary  action and proceedings as may be required and permitted by applicable
law, rule and regulation,  for the legal and valid issuance of the Shares to the
Purchasers, or their respective subsequent holders.

            Section 3.2  Registration  and Listing.  The Company shall cause its
Common Stock to continue to be registered  under  Sections 12(b) or 12(g) of the
Exchange  Act,  to  comply  in  all  respects  with  its  reporting  and  filing
obligations  under the Exchange Act, to comply with all requirements  related to
any registration statement filed pursuant to this Agreement, and to not take any
action or file any document  (whether or not permitted by the  Securities Act or
the rules  promulgated  thereunder) to terminate or suspend such registration or
to terminate or suspend its reporting and filing  obligations under the Exchange
Act or Securities  Act,  except as permitted  herein.  The Company will take all
action  necessary  to continue the listing or trading of its Common Stock on the
OTC  Bulletin  Board  or any  successor  market.  Subject  to the  terms  of the
Transaction  Documents,  the Company  further  covenants  that it will take such
further  action as the  Purchasers  may  reasonably  request,  all to the extent
required from time to time to enable the  Purchasers to sell the Shares  without
registration  under the  Securities  Act within the limitation of the exemptions
provided by Rule 144  promulgated  under the Securities Act. Upon the request of
the  Purchasers,   the  Company  shall  deliver  to  the  Purchasers  a  written
certification  of a duly  authorized  officer as to whether it has complied with
such requirements.

                                       15
<PAGE>

            Section 3.3  Inspection  Rights.  The Company shall  permit,  during
normal business hours and upon reasonable  request and reasonable  notice,  each
Purchaser or any employees,  agents or representatives  thereof, so long as such
Purchaser  shall  be  obligated  hereunder  to  purchase  the  Shares  or  shall
beneficially own any Shares, for purposes reasonably related to such Purchaser's
interests as a stockholder to examine and make reasonable  copies of the records
and  books of  account  of,  and  visit  and  inspect  the  properties,  assets,
operations  and business of the Company and any  Subsidiary,  and to discuss the
affairs, finances and accounts of the Company and any Subsidiary with any of its
officers, consultants, directors, and key employees.

            Section 3.4  Compliance  with Laws.  The Company shall  comply,  and
cause each Subsidiary to comply,  with all applicable laws,  rules,  regulations
and  orders,  noncompliance  with  which  would be  reasonably  likely to have a
Material Adverse Effect.

            Section 3.5  Keeping of Records  and Books of  Account.  The Company
shall keep and cause  each  Subsidiary  to keep  adequate  records  and books of
account,  in  which  complete  entries  will  be made in  accordance  with  GAAP
consistently applied,  reflecting all financial  transactions of the Company and
its Subsidiaries.

            Section 3.6 Reporting  Requirements.  If the Company  ceases to file
its periodic  reports with the  Commission,  or if the Commission  ceases making
these  periodic  reports  available via the Internet  without  charge,  then the
Company shall, promptly after filing with the Commission,  furnish the following
to each  Purchaser so long as such  Purchaser  shall be  obligated  hereunder to
purchase the Shares or shall beneficially own Shares:

            (a) Quarterly Reports filed with the Commission on Form 10-QSB;

            (b) Annual Reports filed with the Commission on Form 10-KSB; and

            (c)  Copies of all  notices,  information  and proxy  statements  in
connection  with any  meetings,  that are, in each case,  provided to holders of
shares of Common Stock,  contemporaneously  with the delivery of such notices or
information to such holders of Common Stock.

            Section 3.7 Other  Agreements.  The Company shall not enter into any
agreement  in which the terms of such  agreement  would  restrict  or impair the
right or ability of the Company or any  Subsidiary  to perform  its  obligations
under any Transaction Document.

            Section 3.8 Use of Proceeds.  The net proceeds  from the sale of the
Shares will be used by the Company  for  working  capital and general  corporate
purposes.

            Section 3.9 Reporting  Status.  So long as a Purchaser  beneficially
owns any of the Shares, the Company shall timely file all reports required to be
filed with the  Commission  pursuant to the Exchange  Act, and the Company shall
not  terminate  its  status  as an issuer  required  to file  reports  under the
Exchange Act even if the Exchange  Act or the rules and  regulations  thereunder
would permit such termination.

                                       16
<PAGE>

            Section 3.10  Disclosure of  Transaction.  The Company shall issue a
press release  describing  the material terms of the  transactions  contemplated
hereby (the "Press Release") as soon as practicable  after the Closing but in no
event later than twenty-four hours after the Closing; provided, however, that if
the Closing occurs after 4:00 P.M.  Eastern Time on any Trading Day, the Company
shall issue the Press Release no later than 9:00 A.M.  Eastern Time on the first
Trading Day  following  the Closing  Date.  The Company shall also file with the
Commission a Current Report on Form 8-K (the "Form 8-K") describing the material
terms of the transactions contemplated hereby (and attaching as exhibits thereto
this Agreement, the Registration Rights Agreement, the Escrow Agreement, and the
Press  Release) as soon as  practicable  following  such  Closing Date but in no
event more than two (2) Trading Days  following  such Closing Date,  which Press
Release  and Form 8-K  shall be  subject  to prior  review  and  comment  by the
Purchasers.  "Trading Day" means any day during which the OTC Bulletin Board (or
other principal  exchange on which the Common Stock is traded) shall be open for
trading.

            Section  3.11  Disclosure  of  Material  Information.   The  Company
covenants  and agrees that neither it nor any other person  acting on its behalf
has  provided or 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.

            Section  3.12  Form  D.  The  Company  agrees  to file a Form D with
respect to the Shares as required by Rule 506 under  Regulation D and to provide
a copy thereof to the Purchasers promptly after such filing.

            Section 3.13 No Integrated Offerings. The Company shall not make any
offers or sales of any  security  (other than the Shares  being  offered or sold
hereunder)  under  circumstances  that would require  registration of the Shares
being offered or sold hereunder under the Securities Act.

            Section 3.14 Pledge of Shares.  The Company  acknowledges and agrees
that the Shares may be pledged by a  Purchaser  in  connection  with a bona fide
margin  agreement or other loan or financing  arrangement that is secured by the
Common  Stock.  The pledge of Common Stock shall not be deemed to be a transfer,
sale or assignment of the Common Stock hereunder,  and no Purchaser  effecting a
pledge of Common  Stock shall be required to provide the Company with any notice
thereof or otherwise make any delivery to the Company pursuant to this Agreement
or any other  Transaction  Document;  provided  that a Purchaser and its pledgee
shall be required to comply with the  provisions of Article V hereof in order to
effect a sale,  transfer or assignment  of Common Stock to such pledgee.  At the
Purchasers'  expense,  the Company  hereby  agrees to execute  and deliver  such
documentation  as a pledgee  of the  Common  Stock  may  reasonably  request  in
connection with a pledge of the Common Stock to such pledgee by a Purchaser.

                                       17
<PAGE>

                                   ARTICLE IV

                                   CONDITIONS

            Section 4.1 Conditions Precedent to the Obligation of the Company to
Close and to Sell the Shares.  The obligation  hereunder of the Company to close
and issue and sell the Shares to the  Purchasers  at the Closing Date is subject
to the  satisfaction  or waiver,  at or before the Closing 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 Purchasers'  Representations and Warranties. The
representations  and warranties of each  Purchaser  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 are
expressly made as of a particular  date,  which shall be true and correct in all
material respects as of such date.

            (b)  Performance  by  the  Purchasers.  Each  Purchaser  shall  have
performed,  satisfied and complied in all material  respects with all covenants,
agreements and conditions required by this Agreement to be performed,  satisfied
or complied with by such Purchaser 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) Delivery of Purchase Price.  The Purchasers shall have delivered
to the  Company  the  Purchase  Price  for the  Shares to be  purchased  by each
Purchaser.

            (e) Delivery of Transaction Documents.  The Transaction Documents to
which the Purchasers are a party shall have been duly executed by the Purchasers
and delivered to the Company.

            (f) Escrow Agreement.  The Escrow Agreement shall have been executed
and delivered by the Purchasers and the escrow agent to the Company.

            Section 4.2 Conditions Precedent to the Obligation of the Purchasers
to Close and to Purchase the Shares. The obligation  hereunder of each Purchaser
to purchase the Shares and  consummate  the  transactions  contemplated  by this
Agreement  is subject to the  satisfaction  or waiver,  at or before the Closing
Date, of each of the  conditions set forth below.  These  conditions are for the
Purchaser's  sole benefit and may be waived by the  Purchaser at any time in its
sole discretion.

            (a) Accuracy of the Company's  Representations and Warranties.  Each
of the  representations  and warranties of the Company in this Agreement and the
Registration  Rights  Agreement  shall be true and correct in all respects as of
the Closing Date, except for  representations  and warranties that speak as of a
particular  date,  which  shall be true and  correct in all  respects as of such
date.

                                       18
<PAGE>

            (b)  Performance by the Company.  The Company shall have  performed,
satisfied and complied in all material  respects with all covenants,  agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing Date.

            (c) No Suspension,  Etc.  Trading in the Common Stock shall not have
been  suspended  by the  Commission  or the OTC Bulletin  Board  (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  ("Bloomberg")  shall not have been suspended or limited,  or
minimum prices shall not have been  established  on securities  whose trades are
reported by Bloomberg,  or on the New York Stock  Exchange,  nor shall a banking
moratorium  have been  declared  either by the  United  States or New York State
authorities.

            (d) 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.

            (e) No  Proceedings  or  Litigation.  No action,  suit or proceeding
before any arbitrator or any  governmental  authority shall have been commenced,
and no investigation  by any governmental  authority shall have been threatened,
against the Company or any  Subsidiary,  or any of the  officers,  directors  or
affiliates  of the Company or any  Subsidiary  seeking to  restrain,  prevent or
change the  transactions  contemplated by this Agreement,  or seeking damages in
connection with such transactions.

            (f)  Opinion of  Counsel.  The  Purchasers  shall have  received  an
opinion of counsel to the Company, dated the date of such Closing, substantially
in the form of Exhibit E hereto,  with such  exceptions and limitations as shall
be reasonably acceptable to counsel to the Purchasers.

            (g)  Shares.  At or prior to the  Closing,  the  Company  shall have
delivered  to the  Purchasers  certificates  representing  the  Shares  (in such
denominations as each Purchaser may request) being acquired by the Purchasers at
the Closing.

            (h) Secretary's Certificate. The Company shall have delivered to the
Purchasers a  secretary's  certificate,  dated as of the Closing Date, as to (i)
the  resolutions  adopted by the Board of Directors  approving the  transactions
contemplated  hereby, (ii) the Certificate,  (iii) the Bylaws, each as in effect
at the Closing,  and (iv) the  authority  and  incumbency of the officers of the
Company executing the Transaction  Documents and any other documents required to
be executed or delivered in connection therewith.

            (i) Officer's  Certificate.  On the Closing Date,  the Company shall
have delivered to the Purchasers a certificate signed by an executive officer on
behalf of the Company, dated as of such Closing Date, confirming the accuracy of
the Company's  representations,  warranties and its compliance with covenants as
of the Closing  Date and  confirming  the  compliance  by the  Company  with the
conditions  precedent set forth in paragraphs  (b)-(e) of this Section 4.2 as of
the Closing Date (provided  that,  with respect to the matters in paragraphs (d)
and (e) of this Section 4.2, such  confirmation  shall be based on the knowledge
of the executive officer after due inquiry).

                                       19
<PAGE>

            (j)  Registration  Rights  Agreement.  As of the Closing  Date,  the
Company shall have duly executed and delivered the Registration Rights Agreement
in the form of Exhibit C attached hereto.

            (k) Material  Adverse Effect.  No Material Adverse Effect shall have
occurred at or before the Closing Date.

            (l) Escrow  Agreement.  As of the Closing Date,  the Company and the
escrow  agent shall have  executed  and  delivered  the Escrow  Agreement to the
Purchasers.

            (m) Conversion of Petty  Promissory Note. At or prior to the Closing
Date,  Robert Petty,  the Company's  Chief Executive  Officer,  shall convert at
least  $600,000 of a  promissory  note  issued on May 18, 2005 in the  aggregate
principal  amount of  $1,100,000  at a price  per  share  equal to the Per Share
Purchase Price.

                                    ARTICLE V

                               CERTIFICATE LEGEND

            Section 5.1 Legend.  Each certificate  representing the Shares shall
be stamped or otherwise  imprinted with a legend  substantially in the following
form (in addition to any legend required by applicable state securities or "blue
sky" laws):

      THE SECURITIES  REPRESENTED BY THIS CERTIFICATE  (THE  "SECURITIES")
      HAVE  NOT BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933,  AS
      AMENDED (THE "SECURITIES  ACT") OR ANY STATE SECURITIES LAWS AND MAY
      NOT BE SOLD,  TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED
      UNDER THE SECURITIES ACT AND UNDER  APPLICABLE STATE SECURITIES LAWS
      OR ROO GROUP,  INC.  SHALL HAVE  RECEIVED AN OPINION OF COUNSEL THAT
      REGISTRATION OF SUCH  SECURITIES  UNDER THE SECURITIES ACT AND UNDER
      THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

      The Company agrees to reissue certificates representing any of the Shares,
without the legend set forth above if at such time, prior to making any transfer
of any such Shares, such holder thereof shall give written notice to the Company
describing  the manner and terms of such transfer and removal as the Company may
reasonably  request.  Such  proposed  transfer  and removal will not be effected
until: (a) either (i) the Company has received an opinion of counsel  reasonably
satisfactory to the Company,  to the effect that the  registration of the Shares
under the  Securities  Act is not  required  in  connection  with such  proposed
transfer,  (ii) a registration  statement under the Securities Act covering such
proposed  disposition  has been filed by the Company with the Commission and has
become and remains  effective  under the  Securities  Act, (iii) the Company has
received  other  evidence  reasonably  satisfactory  to the  Company  that  such
registration  and  qualification  under the Securities Act and state  securities
laws are not required,  or (iv) the holder  provides the Company with reasonable
assurances  that  such  security  can be sold  pursuant  to Rule 144  under  the
Securities  Act;  and (b)  either (i) the  Company  has  received  an opinion of
counsel reasonably  satisfactory to the Company, to the effect that registration
or  qualification  under the  securities  or "blue sky" laws of any state is not
required in connection with such proposed  disposition,  or (ii) compliance with
applicable  state  securities  or "blue sky" laws has been  effected  or a valid
exemption  exists with  respect  thereto.  The Company  will respond to any such
notice from a holder within five (5) business  days. In the case of any proposed
transfer  under this Section 5.1,  the Company  will use  reasonable  efforts to
comply with any such applicable  state  securities or "blue sky" laws, but shall
in no event be required,  (x) to qualify to do business in any state where it is
not then qualified, or (y) to take any action that would subject it to tax or to
the general  service of process in any state where it is not then  subject.  The
restrictions on transfer  contained in this Section 5.1 shall be in addition to,
and not by way of limitation of, any other restrictions on transfer contained in
any other section of this  Agreement.  Whenever a certificate  representing  the
Shares is  required  to be issued to a  Purchaser  without a legend,  in lieu of
delivering physical certificates representing the Shares, provided the Company's
transfer agent is  participating  in the Depository  Trust Company  ("DTC") Fast
Automated Securities Transfer program, the Company shall use its reasonable best
efforts to cause its transfer agent to  electronically  transmit the Shares to a
Purchaser by  crediting  the account of such  Purchaser's  Prime Broker with DTC
through its Deposit  Withdrawal Agent Commission  ("DWAC") system (to the extent
not inconsistent with any provisions of this Agreement).

                                       20
<PAGE>

                                   ARTICLE VI

                                 INDEMNIFICATION

            Section 6.1 General  Indemnity.  The Company agrees to indemnify and
hold  harmless  the  Purchasers  (and  their  respective  directors,   officers,
affiliates, agents, successors and assigns) from and against any and all losses,
liabilities,  deficiencies,  costs,  damages and  expenses  (including,  without
limitation,  reasonable attorneys' fees, charges and disbursements)  incurred by
the Purchasers and their directors, officers, affiliates, agents, successors and
assigns  as a result of any  inaccuracy  in or  breach  of the  representations,
warranties or covenants made by the Company herein. Each Purchaser severally but
not jointly agrees to indemnify and hold harmless the Company and its directors,
officers,  affiliates,  agents,  successors and assigns from and against any and
all losses, liabilities,  deficiencies,  costs, damages and expenses (including,
without  limitation,  reasonable  attorneys'  fees,  charges and  disbursements)
incurred  by the  Company  and  its  directors,  officers,  affiliates,  agents,
successors  and assigns as a direct result of any inaccuracy in or breach of the
representations,  warranties or covenants  made by such  Purchaser  herein.  The
maximum aggregate  liability of each Purchaser  pursuant to its  indemnification
obligations  under this  Article VI shall not exceed the portion of the Purchase
Price paid by such Purchaser hereunder.

                                       21
<PAGE>

            Section  6.2  Indemnification   Procedure.  Any  party  entitled  to
indemnification under this Article VI (an "indemnified party") will give written
notice  to the  indemnifying  party of any  matters  giving  rise to a claim for
indemnification;  provided,  that the failure of any  indemnified  party to give
notice as  provided  herein  shall not  relieve  the  indemnifying  party of its
obligations  under this  Article VI except to the extent  that the  indemnifying
party is actually  prejudiced  by such failure to give notice.  In case any such
action,  proceeding or claim is brought against an indemnified  party in respect
of which  indemnification  is sought hereunder,  the indemnifying party shall be
entitled  to  participate  in and,  unless  in the  reasonable  judgment  of the
indemnifying  party a conflict of interest between it and the indemnified  party
exists  with  respect  to such  action,  proceeding  or claim (in which case the
indemnifying  party shall be responsible for the reasonable fees and expenses of
one separate counsel for the indemnified parties), to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. In the event that
the  indemnifying  party advises an  indemnified  party that it will not contest
such a claim for indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification  notice to notify, in writing, such person of its
election to defend,  settle or  compromise,  at its sole cost and  expense,  any
action,  proceeding or claim (or  discontinues  its defense at any time after it
commences such defense),  then the indemnified party may, at its option, defend,
settle or otherwise compromise or pay such action or claim. In any event, unless
and until the indemnifying  party elects in writing to assume and does so assume
the defense of any such claim,  proceeding or action,  the  indemnified  party's
costs and expenses  arising out of the defense,  settlement or compromise of any
such action,  claim or  proceeding  shall be losses  subject to  indemnification
hereunder.  The indemnified  party shall  cooperate fully with the  indemnifying
party in connection  with any negotiation or defense of any such action or claim
by the  indemnifying  party  and shall  furnish  to the  indemnifying  party all
information  reasonably available to the indemnified party which relates to such
action or claim. The indemnifying  party shall keep the indemnified  party fully
apprised  at  all  times  as to the  status  of the  defense  or any  settlement
negotiations  with respect thereto.  If the indemnifying  party elects to defend
any such  action or claim,  then the  indemnified  party  shall be  entitled  to
participate  in such  defense  with  counsel  of its choice at its sole cost and
expense.  The  indemnifying  party shall not be liable for any settlement of any
action,  claim or proceeding  effected  without its prior written  consent which
consent shall not be  unreasonably  withheld.  Notwithstanding  anything in this
Article VI to the  contrary,  the  indemnifying  party  shall not,  without  the
indemnified  party's prior written  consent,  settle or compromise  any claim or
consent to entry of any  judgment in respect  thereof  which  imposes any future
obligation  on  the  indemnified  party  or  which  does  not  include,   as  an
unconditional  term thereof,  the giving by the claimant or the plaintiff to the
indemnified  party of a release from all liability in respect of such claim. The
indemnification  required by this Article VI shall be made by periodic  payments
of the amount thereof during the course of investigation or defense, as and when
bills are received or expense, loss, damage or liability is incurred, so long as
the  indemnified  party  irrevocably  agrees  to  refund  such  moneys  if it is
ultimately  determined by a court of competent  jurisdiction that such party was
not entitled to indemnification. The indemnity agreements contained herein shall
be in addition to (a) any cause of action or similar  rights of the  indemnified
party against the  indemnifying  party or others,  and (b) any  liabilities  the
indemnifying party may be subject to pursuant to the law.

                                       22
<PAGE>

                                  ARTICLE VII

                                  MISCELLANEOUS

            Section  7.1 Fees and  Expenses.  Each party  shall pay the fees and
expenses of its advisors,  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,  provided
that the Company shall pay all actual  attorneys'  fees and expenses  (including
disbursements  and  out-of-pocket  expenses)  up to a maximum of $10,000 for one
counsel to the Purchasers  incurred by the Purchasers in connection with (i) the
preparation, negotiation, execution and delivery of this Agreement and the other
Transaction  Documents  and  the  transactions  contemplated  thereunder,  which
payment  shall  be  made  at  Closing,   (ii)  the  filing  and  declaration  of
effectiveness by the Commission of the Registration Statement (as defined in the
Registration  Rights  Agreement)  and (iii)  any  amendments,  modifications  or
waivers  of  this  Agreement  or any  of the  other  Transaction  Documents.  In
addition, the Company shall pay all reasonable fees and expenses incurred by the
Purchasers in connection  with the  enforcement  of this Agreement or any of the
other  Transaction  Documents,  including,  without  limitation,  all reasonable
attorneys' fees and expenses.

            Section 7.2 Specific Performance; Consent to Jurisdiction; Venue.

            (a) The  Company  and the  Purchasers  acknowledge  and  agree  that
irreparable  damage would occur in the event that any of the  provisions of this
Agreement or the other  Transaction  Documents  are not  performed in accordance
with their specific terms or are 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  or the other  Transaction
Documents  and to  enforce  specifically  the  terms  and  provisions  hereof or
thereof,  this being in addition to any other remedy to which any of them may be
entitled by law or equity.

            (b) The parties agree that venue for any dispute  arising under this
Agreement  will lie  exclusively  in the state or federal  courts located in New
York  County,  New York,  and the parties  irrevocably  waive any right to raise
forum non  conveniens  or any  other  argument  that New York is not the  proper
venue. The parties irrevocably consent to personal jurisdiction in the state and
federal courts of the state of New York. The Company and each Purchaser  consent
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 Section 7.2 shall affect
or limit any right to serve  process in any other  manner  permitted by law. The
Company and the Purchasers  hereby agree that the prevailing  party in any suit,
action or proceeding arising out of or relating to the Shares, this Agreement or
the  Registration  Rights  Agreement,  shall be  entitled to  reimbursement  for
reasonable legal fees from the non-prevailing party.

            Section 7.3 Entire  Agreement;  Amendment.  This  Agreement  and the
Transaction  Documents  contain the entire  understanding  and  agreement of the
parties with respect to the matters  covered hereby and,  except as specifically
set forth herein or in the other Transaction Documents,  neither the Company nor
any Purchaser make any  representation,  warranty,  covenant or undertaking with
respect  to such  matters,  and they  supersede  all  prior  understandings  and
agreements with respect to said subject matter,  all of which are merged herein.
Following the Closing,  no provision of this  Agreement may be waived or amended
other than by a written  instrument  signed by the  Company  and the  Purchasers
holding  at least a  majority  of all Shares  then held by the  Purchasers.  Any
amendment  or waiver  effected  in  accordance  with this  Section  7.3 shall be
binding upon each Purchaser (and their permitted assigns) and the Company.

                                       23
<PAGE>

            Section 7.4 Notices. Any notice,  demand,  request,  waiver or other
communication  required or permitted to be given  hereunder  shall be in writing
and shall be  effective  (a) upon hand  delivery by telecopy or facsimile at the
address or number designated below (if delivered on a business day during normal
business  hours where such notice is to be received),  or the first business day
following such delivery (if delivered other than on a business day during normal
business  hours  where  such  notice  is to be  received)  or (b) on the  second
business day following  the date of mailing by express  courier  service,  fully
prepaid,  addressed to such  address,  or upon actual  receipt of such  mailing,
whichever shall first occur. The addresses for such communications shall be:

      If to the Company:        Robert Petty
                                c/o ROO Group, Inc.
                                228 East 45th Street, 8th Floor
                                New York, NY 10017
                                Tel. No.: (646) 352-0260
                                Fax No.: (646) 619-4074

      with copies to (which shall not constitute notice):

                                Sichenzia Ross Friedman Ference LLP
                                1065 Avenue of the Americas
                                New York, NY 10018
                                Attention: Richard A. Friedman, Esq.
                                Tel No.: (212) 930-9700
                                Fax No.: (212) 930-9725

      If to any Purchaser:      At the  address of such  Purchaser  set forth on
                                Exhibit A to this Agreement.

      with copies to:           Kramer Levin Naftalis & Frankel LLP
                                1177 Avenue of the Americas
                                New York, New York 10036
                                Attention: Christopher S. Auguste
                                Tel No.: (212) 715-9100
                                Fax No.: (212) 715-8000

                                       24
<PAGE>

      Any party  hereto may from time to time  change its address for notices by
giving written notice of such changed address to the other parties hereto.

            Section  7.5  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 7.6 Headings.  The article,  section and subsection headings
in this  Agreement are for  convenience  only and shall not constitute a part of
this  Agreement for any other purpose and shall not be deemed to limit or affect
any of the provisions hereof.

            Section 7.7 Successors and Assigns.  This Agreement shall be binding
upon and inure to the benefit of the parties and their  successors  and assigns.
After the Closing,  the  assignment  by a party to this  Agreement of any rights
hereunder  shall not affect the  obligations of such party under this Agreement.
Subject to Section  5.1 hereof and subject to Section  7(h) of the  Registration
Rights Agreement, the Purchasers may assign the Shares and its rights under this
Agreement  and the other  Transaction  Documents and any other rights hereto and
thereto without the consent of the Company.

            Section 7.8 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.

            Section 7.9 Governing Law. This  Agreement  shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving  effect to any of the conflicts of law  principles  which would result in
the application of the substantive law of another  jurisdiction.  This Agreement
shall not be  interpreted or construed  with any  presumption  against the party
causing this Agreement to be drafted.

            Section 7.10  Survival.  The  representations  and warranties of the
Company and the Purchasers  shall survive the execution and delivery  hereof and
the  Closing  until  the  third  anniversary  of the  Closing  Date  except  the
agreements  and  covenants  set forth in  Articles I, III, V, VI and VII of this
Agreement shall survive the execution and delivery hereof and the Closing.

            Section 7.11  Counterparts.  This  Agreement  may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and shall become effective when counterparts have been signed by
each party and delivered to the other parties hereto,  it being  understood that
all parties need not sign the same counterpart.

            Section 7.12  Publicity.  Except as  discussed  in the  Registration
Statement (as defined in the Registration Rights Agreement),  the Company agrees
that it will not disclose, and will not include in any public announcement,  the
names of the  Purchasers  without the consent of the  Purchasers,  which consent
shall  not be  unreasonably  withheld  or  delayed,  or unless  and  until  such
disclosure is required by law, rule or applicable  regulation,  and then only to
the extent of such requirement.

                                       25
<PAGE>

            Section 7.13  Severability.  The  provisions  of this  Agreement are
severable  and,  in the event  that any court of  competent  jurisdiction  shall
determine  that  any  one or more of the  provisions  or part of the  provisions
contained  in this  Agreement  shall,  for any  reason,  be held to be  invalid,
illegal  or  unenforceable  in  any  respect,  such  invalidity,  illegality  or
unenforceability  shall not affect any other provision or part of a provision of
this  Agreement  and this  Agreement  shall be reformed and construed as if such
invalid or illegal or unenforceable  provision,  or part of such provision,  had
never been contained herein,  so that such provisions would be valid,  legal and
enforceable to the maximum extent possible.

            Section  7.14  Further  Assurances.  From and after the date of this
Agreement,  upon the request of the  Purchasers or the Company,  the Company and
each Purchaser shall execute and deliver such  instruments,  documents and other
writings as may be  reasonably  necessary  or desirable to confirm and carry out
and to  effectuate  fully the  intent and  purposes  of this  Agreement  and the
Registration Rights Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       26
<PAGE>

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

                                    ROO GROUP, INC.

                                    By:
                                       -------------------------------------
                                       Name: Robin Smyth
                                       Title: Chief Financial Officer

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

                                       27
<PAGE>

                                    EXHIBIT A
                               LIST OF PURCHASERS

Names and Addresses                                   Number of Shares
of Purchasers                                         Purchased
-------------------                                   ----------------

                                        i
<PAGE>

                                    EXHIBIT B
                                ESCROW AGREEMENT

                                       ii
<PAGE>

                                    EXHIBIT C
                      FORM OF REGISTRATION RIGHTS AGREEMENT

                                       iii
<PAGE>

                                    EXHIBIT D
                      INVESTOR QUESTIONNAIRE CERTIFICATION

                                 ROO GROUP, INC.
                             INVESTOR QUESTIONNAIRE
                (ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)

To:   ROO Group, Inc.

This  Investor  Questionnaire   ("Questionnaire")  must  be  completed  by  each
potential  investor  in  connection  with the  offer  and sale of the  shares of
restricted common stock of ROO Group, Inc. (the "Shares").  The Shares are being
offered and sold by ROO Group, Inc. (the "Company")  without  registration under
the Securities Act of 1933, as amended (the "Act"),  and the securities  laws of
certain states,  in reliance on the exemptions  contained in Section 4(2) of the
Act and on  Regulation  D  promulgated  thereunder  and in  reliance  on similar
exemptions  under  applicable  state laws.  The Company  must  determine  that a
potential  investor meets certain  suitability  requirements  before offering or
selling Shares to such investor.  The purpose of this Questionnaire is to assure
the  Company  that  each   investor   will  meet  the   applicable   suitability
requirements.  The  information  supplied  by you  will be  used in  determining
whether  you  meet  such  criteria,  and  reliance  upon  the  private  offering
exemptions  from  registration  is  based  in  part  on the  information  herein
supplied.

This  Questionnaire does not constitute an offer to sell or a solicitation of an
offer to buy any  security.  Your  answers will be kept  strictly  confidential.
However, by signing this  Questionnaire,  you will be authorizing the Company to
provide a completed  copy of this  Questionnaire  to such parties as the Company
deems  appropriate in order to ensure that the offer and sale of the Shares will
not result in a  violation  of the Act or the  securities  laws of any state and
that you otherwise satisfy the suitability standards applicable to purchasers of
the Shares.  All potential  investors must answer all  applicable  questions and
complete, date and sign this Questionnaire.  Please print or type your responses
and attach  additional  sheets of paper if necessary to complete your answers to
any item.

A. BACKGROUND INFORMATION

Name:___________________________________________________________________________

Address of Principal Residence (or Principal Place of Business if investor is an
entity):

________________________________________________________________________________
                        (Number and Street)

________________________________________________________________________________
(City)                  (State)                         (Zip Code)

Telephone Number: _____________________________

If an individual:
Age: __________   Citizenship: ____________

If a  corporation,  partnership,  limited  liability  company,  trust or other
entity:
Type of entity:_______________________________________________________________

State of formation:______________________ Date of formation: ___________________

Social Security or Taxpayer Identification No.________________________________

B. STATUS AS ACCREDITED INVESTOR

The  undersigned  is an  "accredited  investor"  as  such  term  is  defined  in
Regulation  D under the Act, and at the time of the offer and sale of the Shares
the  undersigned  falls  and  will  fall  within  one or more  of the  following
categories (Please initial one or more, as applicable): (1)

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

      (1) As used in this  Questionnaire,  the term "net worth" means the excess
of total assets over total  liabilities.  In computing net worth for the purpose
of  subsection  (4), the  principal  residence of the investor must be valued at
cost,  including  cost of  improvements,  or at recently  appraised  value by an
institutional lender making a secured loan, net of encumbrances.  In determining
income,  the investor  should add to the  investor's  adjusted  gross income any
amounts attributable to tax exempt income received,  losses claimed as a limited
partner in any limited partnership,  contributions to an IRA or KEOGH retirement
plan,  alimony  payments,  and any amount by which income from long-term capital
gains has been reduced in arriving at adjusted gross income.

                                       iv
<PAGE>

____ (1) a bank as defined in Section  3(a)(2) of the Act, or a savings and loan
association  or other  institution  as defined in Section  3(a)(5)(A) of the Act
whether  acting in its  individual  or  fiduciary  capacity;  a broker or dealer
registered  pursuant to Section 15 of the  Securities  Exchange Act of 1934;  an
insurance company as defined in Section 2(13) of the Act; an investment  company
registered  under the Investment  Company Act of 1940 or a business  development
company as defined in Section 2(a)(48) of that Act; a Small Business  Investment
Company licensed by the U.S. Small Business  Administration under Section 301(c)
or (d) of the Small  Business  Investment  Act of 1958; a plan  established  and
maintained  by  a  state,   its  political   subdivisions,   or  any  agency  or
instrumentality of a state or its political  subdivisions for the benefit of its
employees,  if such plan has total assets in excess of  $5,000,000;  an employee
benefit plan within the meaning of the Employee  Retirement  Income Security Act
of 1974, if the investment  decision is made by a plan fiduciary,  as defined in
Section 3(21) of such Act, which is either a bank, savings and loan association,
insurance company, or registered  investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a self-directed  plan, with
the investment decisions made solely by persons that are accredited investors;

____ (2) a private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940;

____ (3) an organization  described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, corporation,  Massachusetts or similar business trust,
or  partnership,  not formed for the specific  purpose of  acquiring  the Shares
offered, with total assets in excess of $5,000,000;

____ (4) a natural person whose  individual  net worth,  or joint net worth with
that  person's  spouse,  at the time of such  person's  purchase  of the  Shares
exceeds $1,000,000;

____ (5) a natural person who had an individual  income in excess of $200,000 in
each of the two most recent years or joint income with that  person's  spouse in
excess of $300,000 in each of those years and has a  reasonable  expectation  of
reaching the same income level in the current year;

____ (6) a trust, with total assets in excess of $5,000,000,  not formed for the
specific purpose of acquiring the Shares offered,  whose purchase is directed by
a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D; and

____ (7) an entity in which all of the equity  owners are  accredited  investors
(as defined above).

IN WITNESS WHEREOF,  the undersigned has executed this  Questionnaire  this ____
day of  __________,  2005,  and  declares  under  oath that it is  truthful  and
correct.

                                    __________________________________________
                                    Print Name

                                    By: ______________________________________

                                    Signature

                                    Title: ___________________________________
                                           (required for any purchaser  that is
                                           a corporation,  partnership, limited
                                           liability  company,  trust  or other
                                           entity)

                                        v
<PAGE>

                                    EXHIBIT E
                                 FORM OF OPINION

      1. The Company is a corporation duly incorporated, validly existing and in
good  standing  under the laws of the State of  Delaware  and has the  requisite
corporate  power to own,  lease and operate its  properties  and assets,  and to
carry on its business as presently conducted. The Company is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the failure to so qualify would have a Material Adverse Effect.

      2. The Company has the  requisite  corporate  power and authority to enter
into and perform its obligations  under the  Transaction  Documents and to issue
the Shares.  The execution,  delivery and performance of each of the Transaction
Documents  by  the  Company  and  the  consummation  by it of  the  transactions
contemplated  thereby  have been duly and validly  authorized  by all  necessary
corporate  action and no further consent or  authorization  of the Company,  its
Board of Directors or its  stockholders  is  required.  Each of the  Transaction
Documents  have been duly  executed and  delivered  and each of the  Transaction
Documents  constitutes  a legal,  valid and  binding  obligation  of the Company
enforceable  against the Company in accordance  with its respective  terms.  The
Shares  are not  subject  to any  preemptive  rights  under the  Certificate  of
Incorporation or the Bylaws.

      3. The Shares have been duly  authorized  and,  the Shares when  delivered
against payment in full as provided in the Purchase  Agreement,  will be validly
issued, fully paid and nonassessable.

      4. The execution,  delivery and  performance  of and  compliance  with the
terms of the  Transaction  Documents  and the  issuance of the Shares do not (a)
violate  any  provision  of the  Certificate  of  Incorporation  or Bylaws,  (b)
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 material agreement,
mortgage,  deed of trust,  indenture,  note,  bond,  license,  lease  agreement,
instrument  or  obligation to which the Company is a party and which is known to
us, (c) create or impose a lien,  charge or  encumbrance  on any property of the
Company under any agreement or any  commitment  known to us to which the Company
is a party or by which the  Company  is bound or by which any of its  respective
properties  or assets are bound,  or (d) result in a violation  of any  Federal,
state, local or foreign statute, rule, regulation,  order, judgment,  injunction
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 or  affected,  except,  in all cases  other than  violations  pursuant  to
clauses  (a)  and  (d)  above,  for  such  conflicts,   default,   terminations,
amendments,   acceleration,   cancellations   and   violations   as  would  not,
individually or in the aggregate, have a Material Adverse Effect.

      5. No consent, approval or authorization of or designation, declaration or
filing with any  governmental  authority  on the part of the Company is required
under  Federal,  state or local law, rule or  regulation in connection  with the
valid execution,  delivery and performance of the Transaction Documents,  or the
offer,  sale or issuance of the Shares  other than filings as may be required by
applicable Federal and state securities laws.

                                       vi
<PAGE>

      6. To our knowledge,  there is no action,  suit,  claim,  investigation or
proceeding  pending or  threatened  against  the  Company  which  questions  the
validity of the Agreement or the transactions contemplated thereby or any action
taken  or to be  taken  pursuant  thereto.  There  is no  action,  suit,  claim,
investigation or proceeding pending, or to our knowledge, threatened, against or
involving the Company or any of its properties or assets and which, if adversely
determined,  is reasonably likely to result in a Material Adverse Effect.  There
are no  outstanding  orders,  judgments,  injunctions,  awards or decrees of any
court,  arbitrator or governmental or regulatory body against the Company or any
officers or directors of the Company in their capacities as such.

      7.  The  offer,  issuance  and  sale of the  Shares  are  exempt  from the
registration requirements of the Securities Act of 1933, as amended.

      8. The Company is not,  and as a result of and  immediately  upon  Closing
will not be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.

                                       vii
<PAGE>

                             Schedule of Exceptions
                                       to
                         Common Stock Purchase Agreement

(Prepared in connection with Shares sold by the Company to the Purchasers  under
the Common Stock  Purchase  Agreement  dated October 20, 2005 (the "October 2005
Purchase  Agreement").  Capitalized  terms not  defined  herein  shall  have the
meaning given to such terms in the October 2005 Purchase Agreement.)

                                October 21, 2005

<PAGE>

                                 Schedule 2.1(c)
                                 Capitalization

Authorized Capital Stock:

      As of October  20,  2005,  the  authorized  capital  stock of the  Company
consists  of (i)  500,000,000  shares of Common  Stock,  of which  approximately
8,963,156  shares are  issued and  outstanding;  and (ii)  20,000,000  shares of
preferred stock, of which 10,000,000 shares are designated as Series A Preferred
Stock of which 9,500,000 shares are issued and outstanding.

Outstanding Options:

<TABLE>
<CAPTION>
                                                             Exercise
Name                                                qty      Price($)          Notes
----------------------------------------------   ---------   --------   -------------------
<S>                                              <C>         <C>        <C>
Options issued under Company Stock Option Plan

Robert Petty                                       120,000       2.00   Chairman CEO

Robin Smyth                                         60,000       2.00   Director & CFO

Robert Petty and Robin Smyth to be                                      Upon meeting
issued against agreed milestones                   600,000       2.00   selected Milestones

                                                                        Upon meeting
Daniel Aharonoff                                   120,000       2.00   selected Milestones

Other Staff Members                                 99,050       2.00

Other Staff to be issued                                                Upon meeting
against agreed milestones                          784,000       2.00   selected Milestones

Options not under Plan

Kensington Capital                                  40,000       2.50

Legend Merchant                                     30,000       2.50

Legend Merchant                                     50,000       5.00

Rubin Family Trust                                  13,500       5.00

Brian Joffe                                          4,000       5.00

Strategic Growth                                   140,000       5.00

Total Options Issued                             2,060,550
                                                 =========
</TABLE>

Debt Conversion:

      Pursuant to a Common Stock Purchase  Agreement  dated August 19, 2005, the
Company's  Chairman and Chief Executive  Officer is required to convert at least
$600,000  of a  $1,100,000  principal  amount  promissory  note held by him into
shares of the  Company's  Common Stock at a price of $1.50 per share within five
business days of October 3, 2005.

Warrants:

      As  of  October  20,  2005,   the  Company  had  the  following   warrants
outstanding:

      Warrants to  purchase  an  aggregate  of 383,333  shares of Common  Stock,
exercisable  until five years from the date of issuance  (August 23,  2005) at a
purchase  price  of $1.50  per  share,  as  adjusted  (the  "August  2005  $1.50
Warrants").  The warrant holders may exercise these warrants on a cashless basis
if the shares of Common Stock  underlying  the warrants are not then  registered
pursuant to an effective registration statement.

<PAGE>

      Warrants  to  purchase  an  aggregate  of 48,000  shares of Common  Stock,
exercisable  until five years from the date of issuance  (August 23,  2005) at a
purchase  price  of $1.25  per  share,  as  adjusted  (the  "August  2005  $1.25
Warrants").  The warrant holders may exercise these warrants on a cashless basis
if the shares of Common Stock  underlying  the warrants are not then  registered
pursuant to an effective registration statement.

      Warrants  to  purchase  an  aggregate  of 22,000  shares of Common  Stock,
exercisable  until  five years from the date of  issuance  (July 18,  2005) at a
purchase price of $10.00 per share, as adjusted (the "July 2005 Warrants").  The
warrant holders may exercise these warrants on a cashless basis if the shares of
Common Stock  underlying  the warrants  are not then  registered  pursuant to an
effective registration statement. These warrants have antidilution rights.

      Warrants  to  purchase  an  aggregate  of 60,000  shares  of Common  Stock
exercisable  until  five  years  from  the date of  issuance  (1/3  were  issued
September  10,  2004,  1/3 were  issued  November  23,  2004 and 1/3 were issued
February  3, 2005) at a  purchase  price of $5.00 per share,  as  adjusted.  The
holders may exercise  these warrants on a cashless basis if the shares of Common
Stock  underlying the warrants are not then registered  pursuant to an effective
registration statement. These warrants have antidilution rights.

      Pursuant to an Omnibus Consent and Waiver agreement dated August 18, 2005,
the Company is required to issue to certain security holders warrants  entitling
such holders to purchase 60,000 shares of Common Stock within five business days
after October 3, 2005.  These  warrants will have an exercise price of $1.50 per
share  and will be  exercisable  for a period  of five  years  after the date of
issuance.  The holders may exercise  these  warrants on a cashless  basis if the
shares of Common Stock underlying the warrants are not then registered  pursuant
to an effective registration statement.

Outstanding Preferred Stock:

      On March  17,  2005,  the  Company  issued  6,000,000  shares  of Series A
Preferred  Stock to its Chief  Executive  Officer,  Robert Petty,  and 1,500,000
shares of Series A Preferred Stock to its Chief Financial Officer,  Robin Smyth.
These shares have a combined valuation of $750,000.  These shares were issued as
a performance  bonus to Messrs.  Petty and Smyth for, among other things,  their
role in helping expand and grow the Company's business operations.

      Also on March 17,  2005,  the Company  issued an  aggregate  of  2,000,000
shares of Series A Preferred Stock to two accredited  investors as consideration
for  investor  relations  services.  These  shares have a combined  valuation of
$200,000.

<PAGE>

      Beginning  two years from the date of  issuance  of the Series A Preferred
Stock, each one share of Series A Preferred Stock is convertible,  at the option
of the holder, into 0.04 shares of the Company's common stock. However,  holders
cannot convert any share of Series A Preferred  Stock if the market price of the
Company's common stock is below $3.00 per share.

Registration Rights:

      The Company is required to file a registration  statement  registering the
resale of  shares  of  Common  Stock  issuable  upon  exercise  of the July 2005
Warrants,  within 30 days from  receipt  of a written  demand  from the  warrant
holders for the Company to do so.

      As described under "Robert Petty Note Purchase  Agreement"  under Schedule
2.1(i)  hereof,  the Company has agreed to register  the resale of Common  Stock
issuable  by  Robert  Petty  to  certain  security   holders.   The  Company  is
contractually  obligated  to file such  registration  statement  by November 25,
2005. This transaction will be included in the registration  statement  required
to be filed by the Company pursuant to the Registration Rights Agreement.

      The Company has agreed to register the resale of  approximately  3,833,333
shares of Common  Stock sold to  investors  on August 23,  2005.  The Company is
contractually  obligated to file such registration statement by October 7, 2005.
This transaction will be included in the registration  statement  required to be
filed by the Company pursuant to the Registration Rights Agreement.

      The August 2005 $1.25  Warrants  and the August 2005 $1.50  Warrants  have
piggyback  registration  rights.  This  transaction  will  be  included  in  the
registration  statement  required  to be filed by the  Company  pursuant  to the
Registration Rights Agreement.

      The shares  underlying the placement agent warrants  described in Schedule
2.1(p) will have standard  piggyback  registration  rights, a cashless  exercise
provision,  will be  non-redeemable  and will be  included  in the  registration
statement  required  to be filed by the  Company  pursuant  to the  Registration
Rights Agreement.

<PAGE>

                                 Schedule 2.1(e)
                                  No Conflicts

      The  Registration   Rights   Agreement   conflicts  with  certain  of  the
registration rights described in Schedule 2.1(c).

<PAGE>

                                 Schedule 2.1(f)
                   Commission Documents; Financial Statements

      The Company  untimely  filed a current  report on Form 8-K  reporting  the
purchase of all of the  outstanding  shares of common  stock of Bickhams  Media,
Inc., a Delaware corporation.

      The Company untimely filed a current report on Form 8-K reporting entering
into a new lease agreement and changing the location of its principal  executive
office in New York.

<PAGE>

                                 Schedule 2.1(g)
                                  Subsidiaries

ROO Media Corporation, a Delaware corporation and wholly owned subsidiary of the
Company

ROO Media (Aust.) Pty Ltd., an Australia corporation and wholly owned subsidiary
of the Company

ROO Broadcasting  Ltd., an Australia  corporation and wholly owned subsidiary of
the Company

Undercover  Media  (Aust.) Pty Ltd., an Australia  corporation  and wholly owned
subsidiary of the Company

ROO TV Pty Ltd.,  an Australia  corporation  and wholly owned  subsidiary of the
Company

Bickhams Media, Inc., a Delaware  corporation and wholly owned subsidiary of the
Company

VideoDome.com Networks,  Inc., a wholly owned subsidiary of Bickhams Media, Inc.
and a California corporation

<PAGE>

                                 Schedule 2.1(h)
                           No Material Adverse Change

      None.

<PAGE>

                                 Schedule 2.1(i)
                           No Undisclosed Liabilities

Robert Petty Note Purchase Agreement:

      On May 18, 2005, the Company  entered into a note purchase  agreement with
Robert  Petty,  the  Company's   Chairman  and  Chief  Executive   Officer.   In
consideration  for gross  proceeds  of  $600,000,  the  Company  incurred a debt
payable to Mr.  Petty in the amount of $600,000.  The Company  paid  transaction
fees  totaling  $92,500,  which  includes  a  $60,000  placement  agent  fee  in
connection  with the sale by Mr. Petty of $600,000  principal  amount of secured
convertible  promissory  notes  (described  below) and  $32,500 in legal fees in
connection with the below  transactions.  As evidence of the $600,000 debt and a
prior existing  $500,000 debt payable to Mr. Petty, the Company issued Mr. Petty
a promissory  note in the principal  amount of $1,100,000.  The principal sum of
$1,100,000 plus interest at the rate of 10% per annum calculated  beginning June
1, 2005 is due to be re-paid on December 31,  2005.  The  Company's  obligations
under the promissory note are secured by a subordinated security interest in all
of the Company's  assets.  Pursuant to a Common Stock Purchase  Agreement  dated
August 19, 2005, the Company's  Chairman and Chief Executive Officer is required
to convert at least $600,000 of the $1,100,000  principal amount promissory note
into shares of the  Company's  Common Stock at a price of $1.50 per share within
five business days of October 3, 2005.

      On May 19,  2005,  the  Company  applied  $200,000 of the  $600,000  gross
proceeds  from Mr.  Petty's  loan to  redeem  $142,857  principal  amount of the
Company's   outstanding   $3,000,000   principal   amount  of  callable  secured
convertible  notes issued to the NIR Group. As consideration for the redemption,
the holders of the callable secured  convertible notes agreed not to convert any
amount due under the callable  secured  convertible  notes at a conversion price
less than $0.10 per share for a 60-day  period  ending July 18, 2005. A complete
description of the material terms of the Company's agreement with the holders of
the  callable  secured  convertible  notes is  described in a Form 8-K which was
filed with the Securities and Exchange Commission on May 12, 2005.

      In connection with the above loan from Mr. Petty to the Company, Mr. Petty
personally sold an aggregate of $600,000 principal amount of secured convertible
promissory notes to certain investors.  The secured convertible promissory notes
are  convertible  into  common  stock held by Mr.  Petty at a price of $1.25 per
share,  as  adjusted.  Mr.  Petty's  obligations  under the secured  convertible
promissory notes are secured by a security interest in the $1,100,000  principal
amount  promissory  note  payable  by the  Company  to Mr.  Petty.  The  secured
convertible promissory notes bear interest at a rate of 8% per annum.

<PAGE>

      As partial  consideration for the loan from Mr. Petty, the Company entered
into a registration  rights  agreement,  pursuant to which the Company agreed to
prepare and file a registration statement providing for the resale of the shares
of common stock issuable upon conversion of the secured  convertible  promissory
notes,  including shares of common stock that may be issued as interest payments
under the secured convertible promissory notes. If the registration statement is
not filed by November 25, 2005 or declared  effective by December 25, 2005,  Mr.
Petty must pay  liquidated  damages  equal to 2% per  calendar  month or portion
thereof  of  aggregate  $600,000  aggregate  principal  amount  of  the  secured
convertible  promissory notes. Any liquidated damages may be paid in Mr. Petty's
option in cash or shares of common  stock of the Company  which are owned by Mr.
Petty.

July 2005 Securities Purchase Agreement:

      On July 18, 2005, the Company entered into a Securities Purchase Agreement
with  four  accredited  investors  (the NIR  Group)  for the sale of up to:  (i)
$2,500,000 in callable secured  convertible notes; and (ii) warrants to purchase
up to 5,000,000  shares of Common Stock.  The investors are obligated to provide
the Company with the funds as follows:  (i)  $550,000 was  disbursed on July 19,
2005;  and (ii)  approximately  $177,273 will be disbursed on the final business
day of each month  beginning in August 2005 and ending June 2006.  However,  the
entire  $2,500,000  must be funded by the  investors  within five  business days
after effectiveness of a registration statement covering the number of shares of
Common Stock underlying the callable secured convertible notes and the warrants.
All outstanding  callable secured  convertible  notes held by the NIR Group were
repaid on August 23, 2005.

      The warrants are exercisable until five years from the date of issuance at
a purchase  price of $10.00 per share,  as adjusted.  The investors may exercise
the warrants on a cashless  basis if the shares of Common Stock  underlying  the
warrants  are  not  then  registered  pursuant  to  an  effective   registration
statement. The warrants have antidilution rights.

<PAGE>

                                 Schedule 2.1(j)
                     No Undisclosed Events and Circumstances

      None.

<PAGE>

                                 Schedule 2.1(k)
                                  Indebtedness

      See the  disclosure  under "Robert Petty Note  Purchase  Agreement"  under
Schedule 2.1(i).

<PAGE>

                                 Schedule 2.1(l)
                                 Title to Assets

      As  described  in  Schedule  2.1(i)  under  "Robert  Petty  Note  Purchase
Agreement,"  the  Company  has  granted a  security  interest  in certain of the
Company's  assets to Robert Petty,  the Company's  Chairman and Chief  Executive
Officer, in connection with a $1.1 million principal amount promissory note.

<PAGE>

                                 Schedule 2.1(m)
                                 Actions Pending

      None.

<PAGE>

                                 Schedule 2.1(n)
                               Compliance with Law

      None.

<PAGE>

                                 Schedule 2.1(o)
                                      Taxes

      None.

<PAGE>

                                 Schedule 2.1(p)
                                  Certain Fees

      The Company has entered  into an  agreement  with  Burnham  Hill  Partners
("Burnham"),  pursuant to which, in connection  with the Transaction  Documents,
the Company must pay Burnham a cash fee equal to 10% of the gross proceeds up to
$3 million and 8% of the gross  proceeds in excess of $3 million.  In  addition,
the Company must issue  Burnham or its assigns  placement  agent  warrants in an
amount equal to 10% of the securities  issued in connection with the Transaction
Documents.  The placement  agent  warrants will be  exercisable at the Per Share
Purchase  Price  and  will  expire  five  years  from the  issuance  date of the
placement  agent  warrants.  The shares  underlying the placement agent warrants
will have standard piggyback registration rights, a cashless exercise provision,
will be  non-redeemable  and  will be  included  in the  registration  statement
required  to be  filed  by  the  Company  pursuant  to the  Registration  Rights
Agreement.

<PAGE>

                                 Schedule 2.1(r)
                              Operation of Business

      See the disclosure under Schedule 2.1(l).

<PAGE>

                                 Schedule 2.1(s)
                            Environmental Compliance

      None.

<PAGE>

                                 Schedule 2.1(t)
                 Books and Records; Internal Accounting Controls

      None.

<PAGE>

                                 Schedule 2.1(u)
                               Material Agreements

      None.

<PAGE>

                                 Schedule 2.1(v)
                          Transactions with Affiliates

January 7, 2003 Loan Agreement:

      On  January  7,  2003,  ROO  Media  Corporation  entered  into a new  loan
agreement  with Mr. Robert Petty to replace a loan  agreement  entered into with
Mr. Petty dated July 29, 2001. The interest on the loan is 10% per annum and the
outstanding balance as of June 30, 2004 was $516,000.  Mr. Petty has agreed that
no demand for payment will be made to the company through  December 13, 2004 and
any  principal  repayment  during any month above  $20,000  will  require  board
approval.  The loan is secured  by all of the assets of ROO Media.  This loan is
evidenced  partially by the promissory  note described below under "Robert Petty
Note Purchase Agreement."

Reality Group Pty Ltd.

      Pursuant to a Stock Purchase  Agreement dated as of March 11, 2004 between
the Company and the shareholders  (the "RGP  Shareholders") of Reality Group Pty
Ltd., a  corporation  formed under the laws of  Australia  ("RGP"),  the Company
purchased 80% of the outstanding  ordinary shares of RPG. As  consideration  for
this  purchase,  the  Company  issued  8,360,000  shares  (167,200  shares  post
one-for-50 reverse split) of common stock to the RGP Shareholders.

      During the period ending twelve months after the RGP Shareholders may sell
their  Company  shares  under  Rule  144  (the  "Guarantee  Period"),   the  RGP
Shareholders have the option (the "Buy-back Option") to buy back an aggregate of
29 RGP shares,  or such  number of RGP shares as shall  decrease  the  ownership
percentage  of the  Company  in RGP to 51%  (the  "Buy-back  Shares"),  from the
Company.  The  consideration  for such  Buy-back  Shares  shall  be 2,280  (post
one-for-50 reverse split) Company shares.

      Pursuant  to the March 11,  2004 Stock  Purchase  Agreement,  the  Company
guaranteed  (the  "Guarantee")  that the RGP  Shareholders  will be able to sell
their Company shares, pursuant to the volume restrictions set forth in Rule 144,
for greater than or equal to US$0.30 per share (pre  one-for-50  reverse  split)
during the Guarantee  Period.  In the event that the RGP Shareholders are unable
to sell their Company shares for greater than or equal to US$0.30 per share (pre
one-for-50  reverse  split) during the Guarantee  Period,  a share variance (the
"Share  Variance")  will be determined  based on the difference  between (a) the
number of  Company  shares  to be sold  multiplied  by  US$0.30  per share  (pre
one-for-50  reverse  split)  and (b) the  number  of  Company  shares to be sold
multiplied by the closing sale price of the Company's  shares on the trading day
immediately prior to the day that a RGP Shareholder  notifies the Company of its
enforcement of the Guarantee.  In the event that a RGP Shareholder  enforces the
Guarantee,  the Company,  in its sole discretion,  may pay the Share Variance to
the RGP  Shareholder in one of the following  ways: (1) in cash; (2) the Company
shall  authorize  the  Escrow  Agent (as  defined  in the March 11,  2004  Stock
Purchase  Agreement) to return to the RGP  Shareholders on a pro rata basis that
amount of  Company  shares,  based on a share  valuation  of  US$20,900  per RGP
ordinary share,  that shall  constitute the Share  Variance;  or (3) if mutually
agreeable  to the RGP  Shareholders,  in shares of common  stock of the  Company
based on the average closing sale price of shares of common stock of the Company
during the  previous  fifteen  (15)  trading  days.  The shares  issuable by the
Company as payment of the Share  Variance  will be included in the  registration
statement  required  to be filed by the  Company  pursuant  to the  Registration
Rights Agreement.

<PAGE>

Purchase of Bickhams Media, Inc.:

      On September 10, 2004,  the Company  entered into an agreement to purchase
of all of the outstanding  shares of common stock of Bickhams  Media,  Inc. from
Avenue Group,  Inc.  Avenue Group is a founding  shareholder  of the Company and
currently  owns  approximately  17% of the Company's  outstanding  common stock.
Also, in connection with the purchase of Bickhams  Media,  the Company agreed to
guaranty  all of  the  obligations  of  VideoDome.com  Networks,  Inc.  under  a
promissory  note of VideoDome that was issued to Avenue Group in October 2003 in
the principal amount of $290,000.  These  obligations are required to be re-paid
by the Company  twelve  months after the date of the  agreement.  The  Company's
management  believes  that  the  terms  of this  transaction  were at  least  as
favorable as could have been obtained from an unrelated third party.

Series A Preferred Stock:

      On March  17,  2005,  the  Company  issued  6,000,000  shares  of Series A
Preferred  Stock to its Chief  Executive  Officer,  Robert Petty,  and 1,500,000
shares of Series A Preferred Stock to its Chief Financial Officer,  Robin Smyth.
These shares have a combined valuation of $750,000.  These shares were issued as
a performance  bonus to Messrs.  Petty and Smyth for, among other things,  their
role in helping expand and grow the Company's business operations.

Robert Petty Note Purchase Agreement:

      See the disclosure under Schedule 2.1(i) under "Robert Petty Note Purchase
Agreement."

<PAGE>

                                 Schedule 2.1(y)
                           Employees; Labor Relations

      None.

<PAGE>

                                 Schedule 2.1(z)
                         Absence of Certain Developments

Corporate Securities:

      The Company has  borrowed an  aggregate  gross  amount of  $1,550,000  and
issued an aggregate  principal amount of $1,550,000 callable secured convertible
notes and  related  warrants to purchase an  aggregate  of 42,000  shares  (post
one-for-50  reverse  split)  of Common  Stock,  and  Common  Stock  pursuant  to
conversions of outstanding  callable  secured  convertible  notes. On August 23,
2005, all  outstanding  callable  secured  convertible  notes were repaid by the
Company totaling in excess of $3,000,000. A related lien on the Company's assets
was terminated on August 23, 2005.

      The Company has issued shares of Series A Preferred  Stock described under
"Outstanding Preferred Stock" under Schedule 2.1(c).

      The Company has issued a promissory  note to Robert  Petty,  the Company's
Chairman  and Chief  Executive  Officer,  described  under  "Robert  Petty  Note
Purchase Agreement" under Schedule 2.1(i).

      In addition to the above, the Company has issued the following  securities
since December 31, 2004:

      On March 1, 2005 the  Company  issued  140,000  options  (post  one-for-50
reverse split) to Strategic Growth with an exercise price of $5.00, as adjusted,
valued  under the  Black-Scholes  method as  $190,456  as payment  for  investor
relations consulting services.

      On May 9,  2005 the  requirements  of the  second  milestone  in the stock
purchase  agreement  with Bickhams Media and Daniel and Vardit  Aharonoff  dated
November  1, 2004 being  Commercial  Launch of combined  platform  ROO Media and
VideoDome  Media Manager  platform  having been met the Company  authorized  the
payment of $100,000 and that 40,000 shares (post  one-for-50  reverse  split) of
common stock of the Company be issued.

      On August 23, 2005, the Company sold approximately  3,833,333 shares (post
one-for-50 reverse split) of Common Stock to accredited  investors at a price of
$1.50 per share, as adjusted.

      On August 23, 2005, the Company  issued  warrants to purchase an aggregate
of approximately 383,333 shares (post one-for-50 reverse split) of Common Stock,
exercisable  until five years from the date of issuance  at a purchase  price of
$1.50 per share, as adjusted.

<PAGE>

      On August 23, 2005, the Company  issued  warrants to purchase an aggregate
of 48,000 shares (post  one-for-50  reverse split) of Common Stock,  exercisable
until  five  years from the date of  issuance  at a purchase  price of $1.25 per
share, as adjusted.

      Within five business days after  October 3, 2005,  the Company's  Chairman
and Chief  Executive  Officer is  required  to convert  at least  $600,000  of a
$1,100,000  principal  amount  promissory  note  held by him into  shares of the
Company's Common Stock at a price of $1.50 per share, as adjusted.

      Within five business  days after October 3, 2005,  the Company is required
to issue warrants to certain security holders entitling such holders to purchase
60,000 shares (post  one-for-50  reverse split) of Common Stock.  These warrants
will  have an  exercise  price of $1.50  per  share,  as  adjusted,  and will be
exercisable for a period of five years after the date of issuance.

Material Transactions Not Described Elsewhere in this Schedule 2.1(z):

      On March 9, 2005, the Company amended its certificate of  incorporation to
designate the rights of Series A Preferred Stock.

      On April 1, 2005,  the Company  entered into a sublease for and on June 7,
2005 moved its principal  executive  office to premises located at 228 East 45th
Street 8th Floor New York, NY 10017.

      On September 30, 2005, the Company filed a certificate of amendment to its
certificate  of  incorporation  to  effect  a  one-for-50  reverse  split of the
outstanding  shares of the  Company's  Common Stock.  The effective  date of the
reverse stock split was October 3, 2005.

      Section 7.15 On September 30, 2005,  the Company  amended the terms of its
Series A  Preferred  Stock to provide  that:  (1) the  holders  thereof  may not
convert  shares of Series A  Preferred  Stock if the market  price of the Common
Stock is below $3.00 per share;  and (2) removing the following  restriction  on
the  holders  thereof  from  converting  shares  of  Series  A  Preferred  Stock
immediately prior to a change in control of the Company:

            "if at the time of a  conversion  under this  Section  5.2 the
      market price of the Common Stock is below $0.40 per share, then each
      share of Series A Preferred  Stock shall convert into such number of
      shares of Common Stock equal to (x) two (2),  multiplied  by (y) the
      closing  price  of the  Common  Stock  on  the  date  of  the  event
      triggering an automatic conversion under this Section 5.2 divided by
      $0.20."

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