Document:

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                           NATURAL HEALTH TRENDS CORP.
                 (A Company existing under the laws of Florida)

                        SUBSCRIPTION AGREEMENT FOR UNITS

TO:       NATURAL HEALTH TRENDS CORP.

AND TO:   SPROTT SECURITIES INC. (THE "AGENT")

The undersigned (the "Buyer") hereby irrevocably subscribes for and agrees to
purchase from Natural Health Trends Corp. (the "Company") that number of units
of the Company (the "Units") set out below at a price of $12.595 per Unit. Each
Unit consists of one share of the common stock of the Company, par value $0.001
per share (a "Common Share") and one Common Share purchase warrant (each whole
Common Share purchase warrant a "Warrant"). Such Warrants shall be issued
substantially in the form of certificate attached hereto as Exhibit "C". The
Buyer agrees to be bound by the terms and conditions set forth in the attached
"Terms and Conditions of Subscription for Units" including without limitation
the representations, warranties and covenants set forth in the applicable
schedules attached thereto. The Buyer further agrees, without limitation, that
the Company and the Agent may rely upon the Buyer's representations, warranties
and covenants contained in such documents.

                       SUBSCRIPTION AND BUYER INFORMATION

      Please print all information (other than signatures), as applicable,
                          in the space provided below
______________________________________________    ________________________________________________
<S>                                                <C>
______________________________________________    Number of Units:________________________________
See Schedule of Buyers attached to Securities
and Purchase Agreement (Exhibit 10.1) for
list of buyers

(Name of Buyer)
Account Reference (if applicable):___________     Aggregate Purchase Price:_______________________
                                                                            (the "Purchase Price")
By: _________________________________________
    Authorized Signature                          ________________________________________________
                                                  If the Buyer is signing as agent for a principal
_____________________________________________     (beneficial purchaser) and is not purchasing as
(Official Capacity or Title - if the              trustee or agent for accounts fully managed by it,
 Buyer is not an individual)                      complete the following:

______________________________________________    ________________________________________________
(Name of individual whose signature appears       (Name of Principal)
above if different than the name of the
subscriber printed above.)

______________________________________________    ________________________________________________
(Buyer's Address, including Province)             (Principal's Address)

______________________________________________    ________________________________________________
(Telephone Number)         (Facsimile Number)

E-Mail:______________________________________
______________________________________________    ________________________________________________

______________________________________________    ________________________________________________

Account Registration Information:                 Delivery Instructions as set forth below:
---------------------------------                 -----------------------------------------

______________________________________________    [ ]  Same as registered address, or
(Name)

______________________________________________    ________________________________________________
(Account Reference, if applicable)                (Name)

______________________________________________    ________________________________________________
(Address, including Postal Code)                  (Account Reference, if applicable)

______________________________________________    ________________________________________________
                                                  (Address)

______________________________________________    ________________________________________________
                                                  (Contact Name and Telephone Number)

______________________________________________    ________________________________________________
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<PAGE>

                    TERMS AND CONDITIONS OF SUBSCRIPTION FOR
                                      UNITS

                           ARTICLE 1 - INTERPRETATION

1.1      Definitions

         Whenever used in this Subscription Agreement, unless there is something
in the subject matter or context inconsistent therewith, the following words and
phrases shall have the respective meanings ascribed to it as follows:

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

"Agent" means collectively, Sprott Securities Inc. and Sprott Securities (USA)
Limited and, where applicable in the context, either one of them.

"Business Day" means a day other than a Saturday, Sunday or any other day on
which the commercial banks located in the City of New York are not open for
business.

"Buyer" means the subscriber for Units as set out on the face page of this
Subscription Agreement.

"Closing" shall have the meaning ascribed to such term in Section 4.1.

"Closing Date" shall have the meaning ascribed to such term in Section 4.1.

"Closing Time" shall have the meaning ascribed to such term in Section 4.1.

"Common Share" or "share of Common Stock" means one share of the common stock of
the Company, par value $0.0001 per share.

"Control Person" means a person, company or combination of persons or companies
described in clause (c) of the definition of "distribution" in subsection 1(1)
of the Securities Act (Ontario).

"Company" means Natural Health Trends Corp. and includes any successor
corporation to or of the Company.

"Expiration Date" means October 6, 2009, being the date after which the Warrants
shall be void and of no further effect.

"Offering" means the offering of Units pursuant to this Subscription Agreement.

"person or Person" means any individual (whether acting as an executor, trustee
administrator, legal representative or otherwise), corporation, firm,
partnership, sole proprietorship, syndicate, joint venture, trustee, trust,
unincorporated organization or association, and pronouns have a similar extended
meaning.

"Purchase Price" shall have the meaning ascribed to such term on the face page
of this Subscription Agreement.

"Regulation D" means Regulation D pursuant to the 1933 Act.

"SEC" means the United States Securities and Exchange Commission.
<PAGE>

"Securities" means the Common Shares and Warrants offered hereunder.

"Securities Laws" means, as applicable, the securities laws, regulations, rules,
rulings and orders in each of the provinces of Canada, the applicable policy
statements issued by the securities regulators in each of the provinces of
Canada and by the SEC.

"Subscription Agreement" means this subscription agreement (including any
schedules hereto) and any instrument amending this Subscription Agreement;
"hereof", "hereto", "hereunder", "herein" and similar expressions mean and refer
to this Subscription Agreement and not to a particular Article or Section; and
the expression "Article" or "Section" followed by a number means and refers to
the specified Article or Section of this Subscription Agreement.

"United States" means the United Stated of America, its territories and
possessions, any State of the United States and the District of Columbia.

"Units" shall have the meaning ascribed to such term on the face page of this
Subscription Agreement.

"U.S. Person" as that term is defined in Rule 902(k) of Regulation S under the
1933 Act.

"Warrant Certificates" means the certificates representing the Warrants issued
by the Company.

"Warrants" shall have the meaning ascribed to such term on the face page of this
Subscription Agreement.

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

1.2      Gender and Number

         Words importing the singular number only shall include the plural and
vice versa, words importing the masculine gender shall include the feminine
gender and words importing persons shall include firms and corporations and vice
versa.

1.3      Currency

         Unless otherwise specified, all dollar amounts in this Subscription
Agreement, including the symbol "$", are expressed in U.S. dollars.

1.4      Subdivisions, Headings and Table of Contents

         The division of this Subscription Agreement into Articles, Sections,
Schedules and other subdivisions, the inclusion of headings and the provision of
a table of contents are for convenience of reference only and shall not affect
the construction or interpretation of this Subscription Agreement. The headings
in this Subscription Agreement are not intended to be full or precise
descriptions of the text to which they refer. Unless something in the subject
matter or context is inconsistent therewith, references herein to an Article,
Section, Subsection, paragraph, clause or Schedule are to the applicable
article, section, subsection, paragraph, clause or schedule of this Subscription
Agreement.

                       ARTICLE 2 - EXHIBITS AND SCHEDULES

2.1      Description of Exhibits

         The following are the Exhibits attached to and incorporated in this
Subscription Agreement by reference and deemed to be a part hereof:

                                       2
<PAGE>

         Exhibit  "A"     -    Certificate of an Accredited Investor (Ontario)
         Exhibit  "B"     -    Certificate of an Eligible Purchaser
         Exhibit  "C"     -    Form of Warrant Certificate
         Exhibit  "D"     -    Registration Rights Agreement
         Exhibit  "E"     -    Form of Irrevocable Transfer Agent Instructions
         Exhibit  "F"     -    Form of Company Counsel Opinion

2.2      Description of Schedules

         The following are the Schedules attached to and incorporated in this
Subscription Agreement by reference and deemed to be a part hereof:

         Schedule 5.1(a) Subsidiaries
         Schedule 5.1(e) Consents
         Schedule 5.1(j) Absence of Certain Changes
         Schedule 5.1(l) Conduct of Business; Regulatory Permits
         Schedule 5.1(o) Transactions with Affiliates
         Schedule 5.1(p) Capitalization
         Schedule 5.1(q) Indebtedness and Other Contracts
         Schedule 5.1(r) Litigation
         Schedule 5.1(s) Title
         Schedule 5.1(t) Intellectual Property

                  ARTICLE 3 - SUBSCRIPTION AND DESCRIPTION OF
                                      UNITS

3.1      Subscription for the Units

         The Buyer hereby confirms its irrevocable subscription for an offer to
purchase the Units from the Company, on and subject to the terms and conditions
set out in this Subscription Agreement, for the Purchase Price which is payable
as described in Article 4.

3.2      Description of Units

         Each Unit consists of one Common Share and one Warrant. Each Warrant
shall entitle the holder thereof to acquire one Warrant Share at a price of
$12.47 until the Expiration Date.

3.3      Acceptance and Rejection of Subscription by the Company

         The Buyer acknowledges and agrees that the Company reserves the right,
in its absolute discretion, to reject this subscription for Units, in whole or
in part, at any time prior to the Closing Time. If this subscription is rejected
in whole, any cheques or other forms of payment delivered to the Agent
representing the Purchase Price will be promptly returned to the Buyer without
interest or deduction. If this subscription is accepted only in part, a cheque
representing any refund of the Purchase Price for that portion of the
subscription for the Units which is not accepted, will be promptly delivered to
the Buyer without interest or deduction.

                                       3
<PAGE>

                              ARTICLE 4 - CLOSING

4.1      Closing

         Delivery and sale of the Units and payment of the Purchase Price will
be completed (the "Closing") concurrently at the offices of Brown Rudnick
Berlack Israels LLP, 120 West 45th Street, New York, New York 10036 at 4 p.m.
(New York time) (the "Closing Time") on October 6, 2004 or such other place or
date or time as the Company and the Agent may agree (the "Closing Date"). If,
prior to the Closing Time, the terms and conditions contained in this
Subscription Agreement have been complied with to the satisfaction of the Agent,
or waived by it, the Agent shall deliver to the Company all completed
Subscription Agreements and payment of the aggregate Purchase Price for all of
the Units sold against delivery by the Company of certificates representing the
Common Shares and Warrants and such other documentation as may be required
pursuant to the Subscription Agreement.

         If, prior to the Closing Time, the terms and conditions contained in
this Subscription Agreement (other than delivery by the Company to the Buyer of
certificates representing the Common Shares and Warrants) have not been complied
with to the satisfaction of the Agent, or waived by it, the Agent, the Company
and the Buyer will have no further obligations under this Subscription
Agreement.

4.2      Conditions of Closing

         The Buyer acknowledges and agrees that the obligations of the Company
hereunder are conditional on the accuracy of the representations and warranties
of the Buyer contained in this Subscription Agreement as of the date of this
Subscription Agreement, and as of the Closing Time as if made at and as of the
Closing Time, and the fulfillment of the following additional conditions as soon
as possible and in any event not later than the Closing Time:

         (a)      payment by the Buyer of the Purchase Price by certified
                  cheque, bank draft or other acceptable electronic means in
                  U.S. dollars payable to "Sprott Securities Inc.";

         (b)      the Buyer having properly completed, signed and delivered this
                  Subscription Agreement to:

                             Sprott Securities Inc.
                             Royal Bank Plaza
                             South Tower, Suite 2750
                             200 Bay Street
                             Toronto, Ontario  M5J 2J2

                             Attention:  Susan Samila-Moroz
                             Fax:        (416) 943-6496

         (c)      the Buyer having properly completed, signed and delivered one
                  of either Exhibit "B", "C" or "D", as applicable:

                  (i)      ALL ONTARIO BUYERS WHO ARE SUBSCRIBING AS "ACCREDITED
                           INVESTORS"

                           if the Buyer is resident in Ontario or otherwise
                           subject to the Securities Laws in the Province of
                           Ontario, a duly completed and executed certificate as
                           set forth in Exhibit "A" evidencing the Buyer's
                           status as an accredited investor; and

                                       4
<PAGE>

                  (ii)     ALL QUEBEC BUYERS AND OTHER ELIGIBLE PURCHASERS

                           if the Buyer is resident in the Province of Quebec or
                           is otherwise eligible to purchase the Units, a duly
                           completed and executed certificate as set forth in
                           Exhibit "B" evidencing the Buyer's (and, if the Buyer
                           is acting as agent for another person, such person's)
                           status as an eligible purchaser;

4.3      Authorization of the Agent

         The Buyer irrevocably authorizes the Agent in its discretion, to act as
the Buyer's representative at the Closing, and hereby appoints the Agent, with
full power of substitution, as its true and lawful attorney with full power and
authority in the Buyer's place and stead:

         (a)      to receive certificates representing the Common Shares and
                  Warrants, to execute in the Buyer's name and on its behalf all
                  closing receipts and required documents, to complete and
                  correct any errors or omissions in any form or document
                  provided by the Buyer in connection with the subscription for
                  the Units and to exercise any rights of termination contained
                  herein;

         (b)      to extend such time periods and to waive, in whole or in part,
                  any representations, warranties, covenants or conditions for
                  the Buyer's benefit contained in this Subscription Agreement
                  or any ancillary or related document;

         (c)      to terminate this Subscription Agreement if any condition
                  precedent is not satisfied, in such manner and on such terms
                  and conditions as the Agent in its sole discretion may
                  determine; and

         (d)      without limiting the generality of the foregoing, to
                  negotiate, settle, execute, deliver and amend the Registration
                  Rights Agreement and the form of Warrant Certificate.

    ARTICLE 5 - REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION

5.1      Representations and Warranties of the Company

         The Company acknowledges and agrees that the obligations of the Buyer
hereunder are conditional on the accuracy of the representations and warranties
of the Company contained in this Subscription Agreement as of the date of this
Subscription Agreement, and as of the Closing Time as if made at and as of the
Closing Time, and the fulfillment of the following additional conditions as soon
as possible and in any event not later than the Closing Time:

         (a)      Organization and Qualification. The Company and its
"Subsidiaries" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns capital stock or holds an equity or
similar interest) are corporations duly organized and validly existing in good
standing under the laws of the jurisdiction in which they are incorporated, and
have the requisite corporate power and authorization to own their properties and
to carry on their business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which its ownership of property or the
nature of the business conducted by it makes such qualification necessary,
except to the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect. As used in this Agreement, "Material
Adverse Effect" means any material adverse effect on the business, properties,
assets, operations, results of operations, condition (financial or otherwise) or

                                       5
<PAGE>

prospects of the Company and its Subsidiaries, taken as a whole, or on the
transactions contemplated hereby and the other Transaction Documents or by the
agreements and instruments to be entered into in connection herewith or
therewith, or on the authority or ability of the Company to perform its
obligations under the Transaction Documents (as defined below). The Company has
no Subsidiaries except as set forth on Schedule 5.1(a).

         (b)      Authorization; Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Warrant, the Registration Rights
Agreement, the Irrevocable Transfer Agent Instructions (as defined in Section
7(c)) and each of the other agreements entered into by the parties hereto in
connection with the transactions contemplated by this Agreement (collectively,
the "Transaction Documents") and to issue the Securities in accordance with the
terms hereof and thereof. The execution and delivery of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
the Common Shares, the Warrants and the reservation for issuance and the
issuance of the Warrant Shares issuable upon exercise thereof, have been duly
authorized by the Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
stockholders. This Agreement and the other Transaction Documents of even date
herewith have been duly executed and delivered by the Company, and constitute
the legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except as such enforceability
may be limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally, the enforcement of applicable creditors' rights and
remedies. As of the Closing, the Transaction Documents dated after the date
hereof and required to have been executed and delivered shall have been duly
executed and delivered by the Company, and shall constitute the legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their respective terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditor's rights and
remedies.

         (c)      Issuance of Securities. The Units are duly authorized and,
upon issuance in accordance with the terms hereof, shall be free from all taxes,
liens and charges with respect to the issue thereof. As of the Closing, a number
of shares of Common Stock shall have been duly authorized and reserved for
issuance which equals the number of shares of Common Stock issuable upon
exercise of the Warrants to be issued at the Closing. Upon exercise of the
Warrants, the Warrant Shares will be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, with the holders being entitled to all rights accorded to a
holder of Common Stock. The issuance by the Company of the Securities is exempt
from registration under the 1933 Act.

         (d)      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 will not (i) result in a violation
of the Articles of Incorporation, any certificate of designations, preferences
and rights of any outstanding series of preferred stock or bylaws of the Company
or any of its Subsidiaries or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, material agreement, indenture or instrument to which the
Company or any of its Subsidiaries is a party, or (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of The
Nasdaq OTC Bulletin Board (the "Principal Market")) 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.

         (e)      Consents. Except as disclosed in Schedule 5.1(e), the Company
is not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court, governmental agency or any regulatory or

                                       6
<PAGE>

self-regulatory agency or any other Person in order for it to execute, deliver
or perform any of its obligations under or contemplated by the Transaction
Documents, in each case in accordance with the terms hereof or thereof. All
consents, authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the Closing Date, and the Company and its Subsidiaries
are unaware of any facts or circumstances which might prevent the Company from
obtaining or effecting any of the registration, application or filings pursuant
to the preceding sentence. The Company is not in violation of the listing
requirements of the Principal Market and has no knowledge of any facts which
would reasonably lead to delisting or suspension of the Common Stock in the
foreseeable future.

         (f)      Acknowledgment Regarding Buyer's Purchase of Securities. The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of arm's length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that to the Company's knowledge
no Buyer is (i) an officer or director of the Company, (ii) an "affiliate" of
the Company (as defined in Rule 144) or (iii) a "beneficial owner" of more than
10% of the Common Stock (as defined for purposes of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended (the "1934 Act")). The Company further
acknowledges that no Buyer is acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated hereby and thereby, and any advice given by a
Buyer or any of its representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is merely
incidental to such Buyer's purchase of the Securities. The Company further
represents to each Buyer that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives.

         (g)      No General Solicitation; Placement Agent's Fees. 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) in connection with the offer or sale of the
Securities. The Company shall be responsible for the payment of any placement
agent's fees, financial advisory fees, or brokers' commissions (other than for
persons engaged by any Buyer or its investment advisor) relating to or arising
out of the transactions contemplated hereby. The Company shall pay, and hold
each Buyer harmless against, any liability, loss or expense (including, without
limitation, attorney's fees and out-of-pocket expenses) arising in connection
with any such claim. The Company acknowledges that it has engaged Avondale
Partners, LLC and Sprott Securities (USA) Limited as placement agents in
connection with the sale of the Units. Other than the such agents or their
affiliates, the Company has not engaged any placement agent or other agent in
connection with the sale of the Units.

         (h)      No Integrated Offering. None of the Company, its Subsidiaries,
any of their affiliates, and any Person acting on 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 require registration of any of
the Securities under the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of any exchange or automated quotation system on
which any of the securities of the Company are listed or designated. None of the
Company, its Subsidiaries, their affiliates and any Person acting on their
behalf will take any action or steps referred to in the preceding sentence that
would require registration of any of the Securities under the 1933 Act or cause
the offering of the Securities to be integrated with other offerings.

         (i)      SEC Documents; Financial Statements. Since December 31, 2003,
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to the date
hereof, or in connection with any Closing subsequent to the date hereof, filed
prior to the date of such Closing, and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC Documents"). The

                                       7
<PAGE>

Company has delivered to the Buyers or their respective representatives true,
correct and complete copies of the SEC Documents not available on the EDGAR
system. As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
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
SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, 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 exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Buyers which is not
included in the SEC Documents, including, without limitation, information
referred to in Section 6.1(q) of this Agreement, contains any untrue statement
of a material fact or omits to state any material fact necessary in order to
make the statements therein, in the light of the circumstance under which they
are or were made, not misleading.

         (j)      Absence of Certain Changes. Except as disclosed in Schedule
5.1(j), since December 31, 2003, there has been no material adverse change and
no material adverse development in the business, properties, operations,
condition (financial or otherwise), results of operations or prospects of the
Company or its Subsidiaries. Since December 31, 2003, the Company has not (i)
declared or paid any dividends, (ii) sold any assets, individually or in the
aggregate, in excess of $250,000 outside of the ordinary course of business or
(iii) had capital expenditures, individually or in the aggregate, in excess of
$250,000. The Company has not taken any steps to seek protection pursuant to any
bankruptcy law nor does the Company have any knowledge or reason to believe that
its creditors intend to initiate involuntary bankruptcy proceedings or any
actual knowledge of any fact which would reasonably lead a creditor to do so.
The Company is not as of the date hereof, and after giving effect to the
transactions contemplated hereby to occur at each Closing will not be, Insolvent
(as defined below). For purposes of this Section 3(j), "Insolvent" means (i) the
present fair saleable value of the Company's assets is less than the amount
required to pay the Company's total Indebtedness (as defined in Section 5.1(q)),
(ii) the Company is unable to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured, (iii) the Company intends to incur or believes that it will incur debts
that would be beyond its ability to pay as such debts mature or (iv) the Company
has unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted.

         (k)      No Undisclosed Events, Liabilities, Developments or
Circumstances. No event, liability, development or circumstance has occurred or
exists, or is contemplated to occur with respect to the Company or its
Subsidiaries or their respective business, properties, prospects, operations or
financial condition, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement on Form S-1 filed with
the SEC relating to an issuance and sale by the Company of its Common Stock and
which has not been publicly announced.

         (l)      Conduct of Business; Regulatory Permits. Neither the Company
nor its Subsidiaries is in violation of any term of or in default under its
Articles of Incorporation, any Certificate of Designations, Preferences and
Rights of any outstanding series of preferred stock of the Company or Bylaws or
their organizational charter or bylaws, respectively. Except as disclosed in
Schedule 5.1(l), neither the Company nor any of its Subsidiaries is in violation

                                       8
<PAGE>

of any judgment, decree or order or any statute, ordinance, rule or regulation
applicable to the Company or its Subsidiaries, and neither the Company nor any
of its Subsidiaries will conduct its business in violation of any of the
foregoing, except for possible violations which would not, individually or in
the aggregate, have a Material Adverse Effect. The Company and its Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, except where the failure to possess such certificates,
authorizations or permits would not have, individually or in the aggregate, a
Material Adverse Effect, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.

         (m)      Foreign Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other Person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.

         (n)      Sarbanes-Oxley Act. The Company is in compliance with any and
all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective
as of the date hereof, and any and all applicable rules and regulations
promulgated by the SEC thereunder that are effective as of the date hereof,
except where such noncompliance would not have, individually or in the
aggregate, a Material Adverse Effect.

         (o)      Transactions With Affiliates. Except as set forth on Schedule
5.1(o) and in the SEC Documents filed at least ten days prior to the date hereof
and other than the grant of stock options disclosed on Schedule 5.1(p), none of
the officers, directors or employees of the Company is presently a party to any
transaction with the Company or any of its Subsidiaries (other than for ordinary
course services as employees, officers or directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such officer, director or employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any such officer, director, or employee has a substantial interest or is
an officer, director, trustee or partner.

         (p)      Equity Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (x) 500,000,000 shares of Common Stock,
of which as of the date hereof, 5,449,869 are issued and outstanding, 1,225,000
shares are reserved for issuance pursuant to the Company's stock option and
purchase plans and 1,200,000 shares are reserved for issuance pursuant to
securities (other than the Warrants) exercisable or exchangeable for, or
convertible into, shares of Common Stock, and (y) 1,500,000 shares of preferred
stock, of which as of the date hereof, none are issued and outstanding. All of
such outstanding shares have been, or upon issuance will be, validly issued and
are fully paid and nonassessable. Except as disclosed in Schedule 5.1(p): (i) no
shares of the Company's capital stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by the
Company; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or

                                       9
<PAGE>

securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its Subsidiaries; (iii) there
are no outstanding debt securities, notes, credit agreements, credit facilities
or other agreements, documents or instruments evidencing Indebtedness of the
Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound; (iv) there are no financing statements
securing obligations in any material amounts, either singly or in the aggregate,
filed in connection with the Company; (v) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act (except the
Registration Rights Agreement); (vi) there are no outstanding securities or
instruments of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; (viii) the Company does not have any stock appreciation rights
or "phantom stock" plans or agreements or any similar plan or agreement; and
(ix) the Company and its Subsidiaries have no liabilities or obligations
required to be disclosed in the SEC Documents but not so disclosed in the SEC
Documents, other than those incurred in the ordinary course of the Company's or
its Subsidiaries' respective businesses and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect. The Company has
furnished to the Buyer true, correct and complete copies of the Company's
Articles of Incorporation, as amended and as in effect on the date hereof (the
"Articles of Incorporation"), and the Company's Bylaws, as amended and as in
effect on the date hereof (the "Bylaws"), and the terms of all securities
convertible into, or exercisable or exchangeable for, Common Shares and the
material rights of the holders thereof in respect thereto.

         (q)      Indebtedness and Other Contracts. Except as disclosed in
Schedule 5.1(q), neither the Company nor any of its Subsidiaries (i) has any
outstanding Indebtedness, (ii) is a party to any contract, agreement or
instrument, the violation of which, or default under which, by the other
party(ies) to such contract, agreement or instrument would result in a Material
Adverse Effect, (iii) is in violation of any term of or in default under any
contract, agreement or instrument relating to any Indebtedness, except where
such violations and defaults would not result, individually or in the aggregate,
in a Material Adverse Effect, or (iv) is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which, in the
judgment of the Company's officers, has or is expected to have a Material
Adverse Effect. Schedule 5.1(q) provides a detailed description of the material
terms of any such outstanding Indebtedness. For purposes of this Agreement: (x)
"Indebtedness" of any Person means, without duplication (A) all indebtedness for
borrowed money, (B) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (other than trade payables
entered into in the ordinary course of business), (C) all reimbursement or
payment obligations with respect to letters of credit, surety bonds and other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G)
above; (y) "Contingent Obligation" means, as to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to

                                       10
<PAGE>

any indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto; and (z)
"Person" means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.

         (r)      Absence of Litigation. Except for the pending investigation by
The Nasdaq Stock Market in connection with the Company's listing application,
there is no action, suit, proceeding, inquiry or investigation before or by the
Principal Market, any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company, the Common Stock or any of the Company's
Subsidiaries or any of the Company's or the Company's Subsidiaries' officers or
directors in their capacities as such, except as set forth in Schedule 5.1(r).

         (s)      Title. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 5.1(s) or such
as do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and any of
its Subsidiaries. Any real property and facilities held under lease by the
Company and any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.

         (t)      Intellectual Property Rights. Except as set forth in Schedule
3(t), the Company and its Subsidiaries own or possess adequate rights or
licenses to use all trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and other
intellectual property rights ("Intellectual Property Rights") necessary to
conduct their respective businesses as now conducted. Except as set forth in
Schedule 5.1(t), none of the Company's Intellectual Property Rights have expired
or terminated, or are expected to expire or terminate, within three years from
the date of this Agreement. The Company does not have any knowledge of any
infringement by the Company or its Subsidiaries of Intellectual Property Rights
of others. Except as set forth in Schedule 5.1(t), there is no claim, action or
proceeding being made or brought, or to the knowledge of the Company, being
threatened, against the Company or its Subsidiaries regarding its Intellectual
Property Rights. The Company is unaware of any facts or circumstances which
might give rise to any of the foregoing infringements or claims, actions or
proceedings. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties.

         (u)      Environmental Laws. The Company and its Subsidiaries (i) are
in compliance with any and all Environmental Laws (as hereinafter defined), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect. The term "Environmental Laws" means
all federal, state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "Hazardous Materials") into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous

                                       11
<PAGE>

Materials, as well as all authorizations, codes, decrees, demands or demand
letters, injunctions, judgments, licenses, notices or notice letters, orders,
permits, plans or regulations issued, entered, promulgated or approved
thereunder.

         (v)      Subsidiary Rights. The Company or one of its Subsidiaries has
the unrestricted right to vote, and (subject to limitations imposed by
applicable law) to receive dividends and distributions on, all capital
securities of its material Subsidiaries as owned by the Company or such
Subsidiary.

         (w)      Tax Status. The Company and each of its Subsidiaries (i) has
made or filed all federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject, (ii) has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii) has set aside
on its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company know of no
basis for any such claim.

         (x)      Internal Accounting and Disclosure Controls. 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 generally accepted accounting principles and to
maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect to any
difference. The Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-14 under the 1934 Act) that are effective in
ensuring that information required to be disclosed by the Company in the reports
that it files or submits under the 1934 Act is recorded, processed, summarized
and reported, within the time periods specified in the rules and forms of the
SEC, including, without limitation, controls and procedures designed to ensure
that information required to be disclosed by the Company in the reports that it
files or submits under the 1934 Act is accumulated and communicated to the
Company's management, including its principal executive officer or officers and
its principal financial officer or officers, as appropriate, to allow timely
decisions regarding required disclosure.

5.2      Covenants of the Company

         (a)      Form D and Blue Sky. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D. The Company, on or
before the Closing Date, shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify the
Units for sale to the Buyers at the Closing pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United States (or
to obtain an exemption from such qualification), and shall provide evidence of
any such action so taken to the Buyers on or prior to the Closing Date. The
Company shall make all filings and reports relating to the offer and sale of the
Securities required under applicable securities or "Blue Sky" laws of the states
of the United States following the Closing Date.

         (b)      Reporting Status. Until the date on which the Investors (as
defined in the Registration Rights Agreement) shall have sold all the Warrant
Shares and none of the Warrants is outstanding (the "Reporting Period"), the
Company shall file all reports required to be filed with the SEC pursuant to the
1934 Act, and the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.

                                       12
<PAGE>

         (c)      Use of Proceeds. The Company will use the proceeds from the
sale of the Securities for working capital purposes and not for the (i)
repayment of any outstanding Indebtedness of the Company or any of its
Subsidiaries or (ii) redemption or repurchase of any of its equity securities.

         (d)      Financial Information. The Company agrees to send the
following to each Investor during the Reporting Period unless the following are
filed with the SEC through EDGAR and are available to the public through the
EDGAR system, within one (1) Business Day after the filing thereof with the SEC,
a copy of its Annual Reports on Form 10-K or on Form 10-KSB, as applicable, its
Quarterly Reports on Form 10-Q or Form 10-QSB, as applicable, any Current
Reports on Form 8-K and any registration statements (other than on Form S-8) or
amendments filed pursuant to the 1933 Act.

         (e)      Listing. The Company shall promptly secure the listing of all
of the Registrable Securities (as defined in the Registration Rights Agreement)
upon the primary national securities exchange and automated quotation system, if
any, upon which shares of Common Stock are then listed (subject to official
notice of issuance) and shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all Registrable Securities from time
to time issuable under the terms of the Transaction Documents. The Company shall
pay all fees and expenses in connection with satisfying its obligations under
this Section 5.2(e).

         (f)      Fees. The Company shall be responsible for the payment of any
placement agent's fees, financial advisory fees, or broker's commissions (other
than for Persons engaged by any Buyer) relating to or arising out of the
transactions contemplated hereby, including, without limitation, any fees or
commissions payable to the Agent. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation,
reasonable attorney's fees and out-of-pocket expenses) arising in connection
with any claim relating to any such payment. Except as otherwise set forth in
this Agreement or in the Transaction Documents, each party to this Agreement
shall bear its own expenses in connection with the sale of the Securities to the
Buyers.

         (g)      Pledge of Securities. The Company acknowledges and agrees that
the Securities may be pledged by an Investor (as defined in the Registration
Rights Agreement) in connection with a bona fide margin agreement or other loan
or financing arrangement that is secured by the Securities. The pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and each Investor effecting a pledge of Securities 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, including, without limitation, Section 6.2(k) hereof; provided that an
Investor and its pledgee shall be required to comply with the provisions of
Section 6.2(k) hereof in order to effect a sale, transfer or assignment of
Securities to such pledgee. The Company hereby agrees to execute and deliver
such documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by an Investor.

         (h)      Disclosure of Transactions and Other Material Information. On
or before 8:30 a.m., New York Time, on the fourth Business Day following the
Closing Date, the Company shall file a Current Report on Form 8-K describing the
terms of the transactions contemplated by the Transaction Documents in the form
required by the 1934 Act, and attaching the material Transaction Documents
(including, without limitation, this Agreement, the form of each of the
Warrants, and the Registration Rights Agreement) as exhibits to such filing
(including all attachments, the "8-K Filing"). From and after the filing of the
8-K Filing with the SEC, no Buyer shall be in possession of any material,
nonpublic information received from the Company, any of its Subsidiaries or any
of its respective officers, directors, employees or agents.

                                       13
<PAGE>

         (i)      Reservation of Shares. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, the number of Common Shares issuable upon exercise of the Warrants.

         (k)      Conduct of Business. The business of the Company and its
Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any governmental entity, except where such violations would not
result, either individually or in the aggregate, in a Material Adverse Effect.

          ARTICLE 6 - ACKNOWLEDGEMENTS, COVENANTS, REPRESENTATIONS AND
                            WARRANTIES OF THE BUYER

6.1      Acknowledgements, Representations, Warranties and Covenants of the
         Buyer

         The Buyer, on its own behalf and, if applicable, on behalf of others
for whom it is acting hereunder, hereby represents and warrants to, and
covenants with, the Company as follows and acknowledges that the Company and the
Agent are relying on such representations and warranties in connection with the
transactions contemplated herein:

         (a)      The Buyer and each beneficial person for whom it is acting is
                  a resident in the jurisdiction set out on the face page of
                  this Subscription Agreement. Such address was not created and
                  is not used solely for the purpose of acquiring the Units.

         (b)      The Buyer has properly completed, executed and delivered to
                  the Company within applicable time periods the applicable
                  certificate(s) (dated as of the date hereof) set forth in
                  Exhibit "A" or "B" and the information contained therein is
                  true and correct.

         (c)      The representations, warranties and covenants contained in the
                  applicable Schedules will be true and correct both as of the
                  date of execution of this Subscription Agreement and as of the
                  Closing Time.

         (d)      The Buyer or any person for whom it is acting is neither a
                  U.S. Person nor subscribing for the Units for the account of a
                  U.S. Person or for resale in the United States and the Buyer
                  confirms that the Units have not been offered to the Buyer in
                  the United States and that this Subscription Agreement has not
                  been signed in the United States.

         (e)      Neither the Buyer nor any person for whom it is acting will
                  offer, sell or otherwise dispose of the Common Shares,
                  Warrants or Warrant Shares in the United States or to a U.S.
                  Person unless the Company has consented to such offer, sale or
                  distribution and such offer, sale or disposition is made in
                  accordance with an exemption from the registration
                  requirements under the 1933 Act and the securities laws of all
                  applicable states of the United States or the U.S. Securities
                  and Exchange Commission has declared effective a registration
                  statement in respect of such securities.

         (f)      If the Buyer, or any beneficial person for whom it is acting,
                  is not a person resident in Canada, the subscription for the
                  Units by the Buyer, or such beneficial purchaser, does not
                  contravene any of the applicable securities legislation in the
                  jurisdiction in which the Buyer or such beneficial person
                  resides and does not give rise to any obligation of the
                  Company or the Agent to prepare and file a prospectus or
                  similar document or to register the Units or to be registered

                                       14
<PAGE>

                  with or to file any report or notice with any governmental or
                  regulatory authority.

         (g)      The execution and delivery of this Subscription Agreement, the
                  performance and compliance with the terms hereof, the
                  subscription for the Units and the completion of the
                  transactions described herein by the Buyer will not result in
                  any material breach of, or be in conflict with or constitute a
                  material default under, or create a state of facts which,
                  after notice or lapse of time, or both, would constitute a
                  material default under any term or provision of the constating
                  documents, by-laws or resolutions of the Buyer, the Securities
                  Laws or any other laws applicable to the Buyer, any agreement
                  to which the Buyer is a party, or any judgment, decree, order,
                  statute, rule or regulation applicable to the Buyer.

         (h)      The Buyer is subscribing for the Units as principal for its
                  own account and not for the benefit of any other person
                  (within the meaning of applicable Securities Laws) and not
                  with a view to resale or distribution of all or any of the
                  Units or if it is not subscribing as principal, it
                  acknowledges that the Company may be required by law to
                  disclose to certain regulatory authorities the identity of
                  each beneficial Buyer for the Units for whom it is acting.

         (i)      In the case of a subscription for the Units by the Buyer
                  acting as trustee or agent (including, for greater certainty,
                  a portfolio manager or comparable adviser) for a principal,
                  the Buyer is duly authorized to execute and deliver this
                  Subscription Agreement and all other necessary documentation
                  in connection with such subscription on behalf of each such
                  beneficial person, each of whom is subscribing as principal
                  for its own account, not for the benefit of any other person
                  and not with a view to the resale or distribution of the
                  Common Shares and Warrants, and this Subscription Agreement
                  has been duly authorized, executed and delivered by or on
                  behalf of and constitutes a legal, valid and binding agreement
                  of, such principal, and the Buyer acknowledges that the
                  Company and/or the Agent may be required by law to disclose
                  the identity of each beneficial Buyer for whom the Buyer is
                  acting.

         (j)      In the case of a subscription for the Units by the Buyer
                  acting as principal, this Subscription Agreement has been duly
                  authorized, executed and delivered by, and constitutes a
                  legal, valid and binding agreement of, the Buyer. This
                  Subscription Agreement is enforceable in accordance with its
                  terms against the Buyer and any beneficial purchasers on whose
                  behalf the Buyer is acting.

         (k)      If the Buyer, or (if applicable) any beneficial purchaser for
                  whom the Buyer is contacting hereunder, is:

                  (i)      a corporation, the Buyer is duly incorporated and is
                           validly subsisting under the laws of its jurisdiction
                           of incorporation and has all requisite legal and
                           corporate power and authority to execute and deliver
                           this Subscription Agreement, to subscribe for the
                           Units as contemplated herein and to carry out and
                           perform its obligations under the terms of this
                           Subscription Agreement;

                  (ii)     a partnership, syndicate or other form of
                           unincorporated organization, the Buyer has the
                           necessary legal capacity and authority to execute and
                           deliver this Subscription Agreement and to observe
                           and perform its covenants and obligations hereunder

                                       15
<PAGE>

                           and has obtained all necessary approvals in respect
                           thereof; or

                  (iii)    an individual, the Buyer is of the full age of
                           majority and is legally competent to execute this
                           Subscription Agreement and to observe and perform his
                           or her covenants and obligations hereunder.

         (l)      Other than the Agent, there is no person acting or purporting
                  to act in connection with the transactions contemplated herein
                  who is entitled to any brokerage or finder's fee. If any
                  person establishes a claim that any fee or other compensation
                  is payable in connection with this subscription for the Units,
                  the Buyer covenants to indemnify and hold harmless the Company
                  and the Agent with respect thereto and with respect to all
                  costs reasonably incurred in the defence thereof.

         (m)      The Buyer is not, with respect to the Company or any of its
                  affiliates, a Control Person.

         (n)      If required by applicable Securities Laws or the Company, the
                  Buyer will execute, deliver and file or assist the Company in
                  filing such reports, undertakings and other documents with
                  respect to the issue of the Common Shares, Warrants or the
                  Warrant Shares as may be required by any securities
                  commission, stock exchange or other regulatory authority.

         (o)      In addition to compliance with the restrictions on resale
                  under applicable Securities Laws to which the Common Shares,
                  Warrants and Warrant Shares may be subject, if the Buyer is a
                  resident of either Ontario at the time of such initial trade,
                  the Buyer is required to file with the Ontario Securities
                  Commission within 10 days of the initial trade (other than a
                  trade otherwise exempted from the prospectus requirements) in
                  any of the Common Shares, Warrants or Warrant Shares, a report
                  in Form 45-501F2, along with the applicable fee.

         (p)      The Buyer, and each beneficial person for whom it is
                  contracting hereunder, have been advised to consult its own
                  legal advisors with respect to trading in the Common Shares,
                  Warrants, and the Warrant Shares and with respect to the
                  resale restrictions imposed by the Securities Laws of the
                  province in which the Buyer resides and the Buyer is solely
                  responsible (and neither the Company nor the Agent are in any
                  way responsible) for compliance with applicable resale
                  restrictions and the Buyer is aware that it (or beneficial
                  persons for whom it is contracting hereunder) may not be able
                  to resell such securities except in accordance with limited
                  exemptions under the Securities Laws and other applicable
                  securities laws.

         (q)      The Buyer has not received or been provided with a prospectus,
                  offering memorandum, within the meaning of the Securities
                  Laws, or any sales or advertising literature in connection
                  with the Offering and the Buyer's decision to subscribe for
                  the Units was not based upon, and the Buyer has not relied
                  upon, any verbal or written representations as to fact made by
                  or on behalf of the Company or the Agent. The Buyer's decision
                  to subscribe for the Units was based solely upon the
                  information about the Company which is publicly available (any
                  such information having been obtained by the Buyer without
                  independent investigation or verification by the Agent).

                                       16
<PAGE>

         (r)      The Buyer is not purchasing Units with knowledge of material
                  information concerning the Company which has not been
                  generally disclosed.

         (s)      No person has made any written or oral representations:

                  (i)      that any person will resell or repurchase the Common
                           Shares, Warrants, or Warrant Shares;

                  (ii)     that any person will refund the Purchase Price; or

                  (iii)    as to the future price or value of the Common Shares,
                           the Warrants or the Warrant Shares.

         (t)      The subscription for the Units has not been made through or as
                  a result of, and the distribution of the Common Shares and
                  Warrants is not being accompanied by any advertisement,
                  including without limitation in printed public media, radio,
                  television or telecommunications, including electronic
                  display, or as part of a general solicitation.

         (u)      There are risks associated with the purchase of and investment
                  in the Common Shares, Warrants, and the Warrant Shares and the
                  Buyer, and each beneficial person for whom it is contracting
                  hereunder, is knowledgeable, sophisticated and experienced in
                  business and financial matters and is capable of evaluating
                  the merits and risks of an investment in the Common Shares,
                  Warrants, and the Warrant Shares, fully understands the
                  restrictions on resale of the Common Shares, Warrants, and the
                  Warrant Shares and is able to bear the economic risk of an
                  investment in the Common Shares and Warrants.

6.2      Acknowledgments of the Buyer

         The Buyer, on its own behalf and, if applicable, on behalf of others
for whom it is acting hereunder, acknowledges and agrees as follows:

         (a)      No securities commission, agency, governmental authority,
                  regulatory body, stock exchange or other regulatory body has
                  reviewed or passed on the merits of the Common Shares, the
                  Warrants or the Warrant Shares.

         (b)      The Common Shares and Warrants shall be, and the Warrant
                  Shares may be subject to statutory resale restrictions under
                  the Securities Laws of the province in which the Buyer resides
                  and under other applicable securities laws, and the Buyer
                  covenants that it will not resell the Common Shares, Warrants
                  or Warrant Shares except in compliance with such laws and the
                  Buyer acknowledges that it is solely responsible (and neither
                  the Company nor the Agent is in any way responsible) for such
                  compliance.

         (c)      The Buyer's ability to transfer the Common Shares, Warrants
                  and Warrant Shares is limited by, among other things,
                  applicable Securities Laws and by the provisions of the
                  Warrant Certificate.

         (d)      The certificates representing the Common Shares and Warrants
                  will bear, as of the Closing Date, legends substantially in
                  the following form and with the necessary information
                  inserted:

                                       17
<PAGE>

                           UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE
                           HOLDER OF THIS SECURITY SHALL NOT TRADE THE SECURITY
                           BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE
                           LATER OF (I) OCTOBER 6, 2004, AND (II) THE DATE THE
                           ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR
                           TERRITORY.

         (e)      In the event that holders of Warrants exercise the Warrants
                  prior to the expiry of the hold periods applicable to the
                  Warrants, the Warrant Shares will bear legends substantially
                  in the following form and with the necessary information
                  inserted:

                           UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE
                           HOLDER OF THIS SECURITY SHALL NOT TRADE THE SECURITY
                           BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE
                           LATER OF (I) OCTOBER 6, 2004, AND (II) THE DATE THE
                           ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR
                           TERRITORY.

                  In addition, the Common Shares and Warrants (and Warrant
                  Shares, if applicable) will also bear a legend substantially
                  in the following form:

                           NEITHER THE ISSUANCE AND SALE OF THE SECURITIES
                           REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES
                           INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE
                           BEEN] [THE SECURITIES REPRESENTED BY THIS CERTIFICATE
                           HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF
                           1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
                           LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
                           SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF
                           (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
                           SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
                           AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR (B)
                           AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE
                           FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID
                           ACT OR APPLICABLE STATE SECURITIES LAWS OR (II)
                           UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
                           NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
                           PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
                           OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
                           SECURITIES.

                  The legend set forth above shall be removed and the Company
                  shall issue a certificate without such legend to the holder of
                  the Securities upon which it is stamped, if, unless otherwise
                  required by state securities laws, (i) such Securities are
                  registered for resale under the 1933 Act, (ii) in connection
                  with a sale, assignment or other transfer, such holder
                  provides the Company with an opinion of counsel, in a
                  generally acceptable form, to the effect that such sale,
                  assignment or transfer of the Securities may be made without
                  registration under the applicable requirements of the 1933
                  Act, or (iii) such holder provides the Company with reasonable
                  assurance that the Securities can be sold, assigned or
                  transferred pursuant to Rule 144.

                                       18
<PAGE>

         (f)      The Agent and/or its directors, officers, employees, agents
                  and representatives assume no responsibility or liability of
                  any nature whatsoever for the accuracy or adequacy of any such
                  publicly available information concerning the Company or as to
                  whether all information concerning the Company that is
                  required to be disclosed or filed by the Company under the
                  Securities Laws has been so disclosed or filed.

         (g)      The Buyer, and each beneficial person for whom it is
                  contracting hereunder, shall execute, deliver, file and
                  otherwise assist the Company and the Agent with filing all
                  documentation required by the applicable Securities Laws to
                  permit the subscription for the Units and the issuance of the
                  Common Shares, Warrants and the Warrant Shares.

         (h)      The Company is relying on the representations, warranties and
                  covenants contained herein and in the applicable Schedules
                  attached hereto to determine the Buyer's eligibility to
                  subscribe for Units under applicable Securities Laws and the
                  Buyer agrees to indemnify the Company, the Agent and each of
                  its directors and officers against all losses, claims, costs,
                  expenses, damages or liabilities which any of it may suffer or
                  incur as a result of or arising from reliance thereon. The
                  Buyer undertakes to immediately notify the Company of any
                  change in any statement or other information relating to the
                  Buyer set forth in such applicable Schedules which takes place
                  prior to the Closing Time.

         (i)      The Company is relying on an exemption from the requirement to
                  provide the Buyer with a prospectus under the Securities Laws
                  and, as a consequence of acquiring the Common Shares and
                  Warrants pursuant to such exemption, certain protections,
                  rights and remedies provided by the Securities Laws, including
                  statutory rights of rescission or damages, will not be
                  available to the Buyer.

         (j)      The Common Shares, Warrants, and the Warrant Shares are being
                  offered pursuant to an exemption from the registration
                  requirements of the 1933 Act pursuant to Regulation S
                  promulgated thereunder. Such Buyer understands that except as
                  provided in the Registration Rights Agreement: (i) the
                  Securities have not been and are not being registered under
                  the 1933 Act or any state securities laws, and may not be
                  offered for sale, sold, assigned or transferred unless (A)
                  subsequently registered thereunder, (B) such Buyer shall have
                  delivered to the Company an opinion of counsel, in a generally
                  acceptable form, to the effect that such Securities to be
                  sold, assigned or transferred may be sold, assigned or
                  transferred pursuant to an exemption from such registration,
                  or (C) such Buyer provides the Company with reasonable
                  assurance that such Securities can be sold, assigned or
                  transferred pursuant to Rule 144 promulgated under the 1933
                  Act, as amended, (or a successor rule thereto) (collectively,
                  "Rule 144"); (ii) any sale of the Securities made in reliance
                  on Rule 144 may be made only in accordance with the terms of
                  Rule 144 and further, if Rule 144 is not applicable, any
                  resale of the Securities under circumstances in which the
                  seller (or the Person through whom the sale is made) may be
                  deemed to be an underwriter (as that term is defined in the
                  1933 Act) may require compliance with some other exemption
                  under the 1933 Act or the rules and regulations of the SEC
                  thereunder; and (iii) neither the Company nor any other Person
                  is under any obligation to register the Securities under the

                                       19
<PAGE>

                  1933 Act or any state securities laws or to comply with the
                  terms and conditions of any exemption thereunder.

         (k)      The Buyer acknowledges that the Warrants may not be exercised
                  in the United States by or on behalf of a U.S. Person, unless
                  the Common Shares, Warrants and Warrant Shares are registered
                  under the 1933 Act and applicable state securities law or
                  unless such exercise is made in accordance with an exemption
                  from the registration requirements under the 1933 Act and the
                  securities laws of all applicable states of the United States.

         (l)      The Buyer, and each beneficial person for whom it is
                  contracting hereunder, is responsible for obtaining such legal
                  and tax advice as it considers appropriate in connection with
                  the execution, delivery and performance of this Subscription
                  Agreement and the transactions contemplated under this
                  Subscription Agreement.

         (m)      There is no government or other insurance covering the Common
                  Shares, Warrants, or the Warrant Shares.

         (n)      There are risks associated with the purchase of the Common
                  Shares, Warrants, or the Warrant Shares.

         (o)      Upon execution and delivery by the Buyer of this Agreement and
                  acceptance by the Company thereof, the Buyer, or others for
                  whom the Buyer is contracting hereunder, shall be deemed to
                  become a party to and be bound by the terms of the
                  Registration Rights Agreement.

6.3      Reliance on Representations, Warranties, Covenants and Acknowledgements

         The Buyer acknowledges and agrees that the representations, warranties,
covenants and acknowledgements made by the Buyer in this Subscription Agreement
are made with the intention that they may be relied upon by the Company and the
Agent in determining the Buyer's eligibility (and, if applicable, the
eligibility of others for whom the Buyer is contracting hereunder) to purchase
the Units under Securities Laws. The Buyer further agrees that by accepting the
Units, the Buyer shall be representing and warranting that such representations,
warranties, acknowledgements and covenants are true as at the Closing Time with
the same force and effect as if they had been made by the Buyer at the Closing
Time and that they shall survive the purchase by the Buyer of the Units and
shall continue in full force and effect notwithstanding any subsequent
disposition by the Buyer of any of the Units, Common Shares, Warrants or Warrant
Shares.

                                       20
<PAGE>

               ARTICLE 7 - REGISTER; TRANSFER AGENT INSTRUCTIONS.

7.1      Register

         The Company shall maintain at its principal executive offices (or such
other office or agency of the Company as it may designate by notice to each
holder of Units), a register for the Units, in which the Company shall record
the name and address of the Person in whose name the Units have been issued
(including the name and address of each transferee), the number of Common Shares
and Warrants held by such Person and the number of Warrant Shares issuable upon
exercise of the Warrants held by such Person. The Company shall keep the
register open and available at all times during business hours for inspection of
any Buyer or its legal representatives.

7.2      Transfer Agent Instructions

         The Company shall issue irrevocable instructions to its transfer agent,
and any subsequent transfer agent, to issue certificates or credit shares to the
applicable balance accounts at The Depository Trust Company ("DTC"), registered
in the name of each Buyer or its respective nominee(s), for the Warrant Shares
in such amounts as specified from time to time by each Buyer to the Company upon
exercise of the Warrants (the "Irrevocable Transfer Agent Instructions"). The
Company represents and warrants that no instruction other than the Irrevocable
Transfer Agent Instructions referred to in this Section 7.2 and stop transfer
instructions to give effect to Section 5.1(h) hereof, will be given by the
Company to its transfer agent with respect to the Securities, and that the
Securities shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement and the other
Transaction Documents. If a Buyer effects a sale, assignment or transfer of the
Securities in accordance with Section 5.1(g), the Company shall permit the
transfer and shall promptly instruct its transfer agent to issue one or more
certificates or credit shares to the applicable balance accounts at DTC in such
name and in such denominations as specified by such Buyer to effect such sale,
transfer or assignment. In the event that such sale, assignment or transfer
involves Common Shares or Warrant Shares sold, assigned or transferred pursuant
to an effective registration statement or pursuant to Rule 144, the transfer
agent shall issue such shares to the Buyer, assignee or transferee, as the case
may be, without any restrictive legend. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to a Buyer.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 7.2 will be inadequate and agrees, in the event
of a breach or threatened breach by the Company of the provisions of this
Section 7.2, that a Buyer shall be entitled, in addition to all other available
remedies, to an order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required.

       ARTICLE 8 - SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

8.1      Survival of Representations, Warranties and Covenants of the Company

         The representations, warranties and covenants of the Company contained
in this Subscription Agreement shall survive the Closing and, notwithstanding
such Closing or any investigation made by or on behalf of the Buyer with respect
thereto, shall continue in full force and effect for the benefit of the Buyer
and the Agent.

8.2      Survival of Representations, Warranties and Covenants of the Buyer

         The representations, warranties and covenants of the Buyer contained in
this Subscription Agreement shall survive the Closing and, notwithstanding such
Closing or any investigation made by or on behalf of the Company or the Agent
with respect thereto, shall continue in full force and effect for the benefit of
the Company and the Agent.

                                       21
<PAGE>

                       ARTICLE 9 - CONDITIONS OF CLOSING

9.1      Conditions ot the Company's Obligation to Sell.

         The obligation of the Company hereunder to issue and sell the Units to
each Buyer at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion by providing each Buyer with prior written
notice thereof:

         (i)      Such Buyer shall have executed each of the Transaction
                  Documents to which it is a party and delivered the same to the
                  Company.

         (ii)     Such Buyer and each other Buyer shall have delivered to the
                  Company the Purchase Price for the Units being purchased by
                  such Buyer and each other Buyer at the Closing by wire
                  transfer of immediately available funds pursuant to the wire
                  instructions provided by the Company.

         (iii)    The representations and warranties of such Buyer shall be true
                  and correct in all material respects as of the date when made
                  and as of the Closing Date as though made at that time (except
                  for representations and warranties that speak as of a specific
                  date), and such Buyer shall have performed, satisfied and
                  complied in all material respects with the covenants,
                  agreements and conditions required by this Agreement to be
                  performed, satisfied or complied with by such Buyer at or
                  prior to the Closing Date.

9.2      Conditions to the Buyer's Obligation to Purchase

         The obligation of each Buyer hereunder to purchase the Units at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for each Buyer's
sole benefit and may be waived by such Buyer at any time in its sole discretion
by providing the Company with prior written notice thereof:

         (i)      The Company shall have executed and delivered to such Buyer
                  (i) each of the Transaction Documents and (ii) the Warrants
                  (in such principal amounts as such Buyer shall request) being
                  purchased by such Buyer at the Closing pursuant to this
                  Agreement.

         (ii)     The Company shall have delivered to such Buyer a copy of the
                  Irrevocable Transfer Agent Instructions, in the form of
                  Exhibit "E" attached hereto, which instructions shall have
                  been delivered to and acknowledged in writing by the Company's
                  transfer agent; provided however, that the Company shall
                  deliver to each Buyer the original of such Certificates
                  representing the Common Shares purchased by such Buyer within
                  four (4) business days following the Closing Date.

         (iii)    Such Buyer shall have received the opinion of Brown Rudnick
                  Berlack Israels LLP, the Company's outside counsel, dated as
                  of the Closing Date, in substantially the form of Exhibit "F"
                  attached hereto.

         (iv)     The Company shall have delivered to such Buyer a certificate
                  evidencing the incorporation and good standing of the Company
                  and each of its U.S. Subsidiaries in such corporation's state
                  of incorporation issued by the Secretary of State of such
                  state of incorporation, as of a date within 10 days of the
                  Closing Date.

                                       22
<PAGE>

         (v)      The Company shall have delivered to such Buyer a certificate
                  evidencing the Company's qualification as a foreign
                  corporation and good standing issued by the Secretary of State
                  of the State of Texas, as of a date within 10 days of the
                  Closing Date.

         (vi)     The Company shall have delivered to such Buyer a copy of the
                  Articles of Incorporation as certified by the Secretary of
                  State of the State of Florida within 10 days of the Closing
                  Date.

         (vii)    The Company shall have delivered to such Buyer a certificate,
                  executed by the Secretary of the Company and dated as of the
                  Closing Date, as to (i) the resolutions consistent with
                  Section 5.1(b) as adopted by the Company's Board of Directors
                  in a form reasonably acceptable to such Buyer (the
                  "Resolutions"), (ii) the Articles of Incorporation and (iii)
                  the Bylaws, each as in effect at the Closing.

         (viii)   The representations and warranties of the Company shall be
                  true and correct in all material respects as of the date when
                  made and as of the Closing Date as though made at that time
                  (except for representations and warranties that speak as of a
                  specific date) and the Company shall have performed, satisfied
                  and complied in all respects with the covenants, agreements
                  and conditions required by the Transaction Documents to be
                  performed, satisfied or complied with by the Company at or
                  prior to the Closing Date. Such Buyer shall have received a
                  certificate, executed by the Chief Executive Officer of the
                  Company, dated as of the Closing Date, to the foregoing effect
                  and as to such other matters as may be reasonably requested by
                  such Buyer.

         (ix)     The Company shall have obtained all governmental, regulatory
                  or third party consents and approvals, if any, necessary for
                  the sale of the Units.

                            ARTICLE 10 - TERMINATION

10.1     In the event that the Closing shall not have occurred with respect to a
Buyer on or before five (5) Business Days from the date hereof due to the
Company's or such Buyer's failure to satisfy the conditions set forth in Article
9 above (and the nonbreaching party's failure to waive such unsatisfied
condition(s)), the nonbreaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business on such
date without liability of any party to any other party; provided, however, this
if this Agreement is terminated pursuant to this Section 10.1, the Company shall
remain obligated to reimburse the non-breaching Buyers for the expenses
described in Section 5.2(f) above.

                             ARTICLE 11 - INDEMNITY

11.1     In consideration of each Buyer's execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and in addition to
all of the Company's other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless each Buyer and each
other holder of the Securities and all of their stockholders, partners, members,
officers, directors, employees and direct or indirect investors and any of the
foregoing Persons' agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the "Indemnitees") from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and out-of-pocket expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "Indemnified Liabilities"), incurred by any Indemnitee as
a result of, or arising out of, or relating to (a) any material
misrepresentation or material breach of any representation or warranty made by
the Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any material breach of any
covenant, agreement or obligation of the Company contained in the Transaction

                                       23
<PAGE>

Documents or any other certificate, instrument or document contemplated hereby
or thereby or (c) any cause of action, suit or claim brought or made against
such Indemnitee by a third party (including for these purposes a derivative
action brought on behalf of the Company) and arising out of or resulting from
the execution, delivery, performance or enforcement of the Transaction Documents
or any other certificate, instrument or document contemplated hereby or thereby.
Except as otherwise set forth herein, the mechanics and procedures with respect
to the rights and obligations under this Section 10.1 shall be the same as those
set forth in Section 6 of the Registration Rights Agreement.

                           ARTICLE 12 - MISCELLANEOUS

12.1     Further Assurances

         Each of the parties hereto upon the request of each of the other
parties hereto, whether before or after the Closing Time, shall do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged and
delivered all such further acts, deeds, documents, assignments, transfers,
conveyances, powers of attorney and assurances as may reasonably be necessary or
desirable to complete the transactions contemplated herein.

12.2     Notices

         (a)      Any notice, direction or other instrument required or
                  permitted to be given to any party hereto shall be in writing
                  and shall be sufficiently given if delivered personally, or
                  transmitted by facsimile tested prior to transmission to such
                  party, as follows:

                  (i)      in the case of the Company, to:

                           Natural Health Trends Corp.
                           12901 Hutton Drive
                           Dallas, Texas 75234

                           Attention:
                           Tel:        (972) 241 6525
                           Fax:        (972) 243 5430

                           with a copy to :

                           Brown Rudnick Berlack Israels LLP
                           120 West 45th Street
                           New York, New York 10036

                           Attention:  Alan N. Forman, Esq.
                           Tel:        (212) 209-4812
                           Fax:        (212) 704-0196

                                       24
<PAGE>

                           in the case of the Transfer Agent:

                           Continental Stock Transfer and Trust Company
                           17 Battery Place
                           New York, NY 10004

                           Attention:  Roger Bernhammer
                           Tel:        (212) 509-4000
                           Fax:        (212) 516-7616

                  If to the Buyer, to the address as set forth on the first page
                  of this Agreement or to such other address and/or facsimile
                  number and/or to the attention of such other person as the
                  recipient party has specified by written notice gove to each
                  other party five days prior to the effectiveness of such
                  change, with a copy to:

                           Sprott Securities Inc.
                           Suite 2750, South Tower
                           Royal Bank Plaza
                           200 Bay Street
                           Toronto, Ontario M5J 2J2

                           Attention:  Jeff Kennedy
                           Tel:        (416) 943-6401
                           Fax:        (416) 943-6496

         (b)      Any such notice, direction or other instrument, if delivered
                  personally, shall be deemed to have been given and received on
                  the day on which it was delivered, provided that if such day
                  is not a Business Day then the notice, direction or other
                  instrument shall be deemed to have been given and received on
                  the first Business Day next following such day and if
                  transmitted by fax, shall be deemed to have been given and
                  received on the day of its transmission, provided that if such
                  day is not a Business Day or if it is transmitted or received
                  after the end of normal business hours then the notice,
                  direction or other instrument shall be deemed to have been
                  given and received on the first Business Day next following
                  the day of such transmission.

         (c)      Any party hereto may change its address for service from time
                  to time by notice given to each of the other parties hereto in
                  accordance with the foregoing provisions.

12.3     No Strict Construction

         The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.

12.4     Remedies

         Each Buyer and each holder of the Securities shall have all rights and
remedies set forth in the Transaction Documents and all rights and remedies
which such holders have been granted at any time under any other agreement or
contract and all of the rights which such holders have under any law. Any Person
having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security), to

                                       25
<PAGE>

recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights granted by law. Furthermore, the Company recognizes
that in the event that it fails to perform, observe, or discharge any or all of
its obligations under the Transaction Documents, any remedy at law may prove to
be inadequate relief to the Buyers. The Company therefore agrees that the Buyers
shall be entitled to seek temporary and permanent injunctive relief in any such
case without the necessity of proving actual damages and without posting a bond
or other security.

12.5     Independent Nature of Buyers' Obligations and Rights

         The obligations of each Buyer under any Transaction Document are
several and not joint with the obligations of any other Buyer, and no Buyer
shall be responsible in any way for the performance of the obligations of any
other Buyer under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Buyer pursuant hereto or
thereto, shall be deemed to constitute the Buyers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Buyers are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Buyer confirms that it has independently participated in the
negotiation of the transaction contemplated hereby with the advice of its own
counsel and advisors. Each Buyer shall be entitled to independently protect and
enforce its rights, including, without limitations, the rights arising out of
this Agreement or out of any other Transaction Documents, and it shall not be
necessary for any other Buyer to be joined as an additional party in any
proceeding for such purpose.

12.6     Time of the Essence

         Time shall be of the essence of this Subscription Agreement and every
part hereof.

12.7     Costs and Expenses

         All costs and expenses (including, without limitation, the fees and
disbursements of legal counsel) incurred in connection with this Subscription
Agreement and the transactions herein contemplated shall be paid and borne by
the party incurring such costs and expenses.

12.8     Applicable Law

         All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

                                       26
<PAGE>

12.9     Counterparts

         This Subscription Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same Subscription Agreement. Counterparts
may be delivered either in original or faxed form and the parties adopt any
signature received by a receiving fax machine as original signatures of the
parties.

12.10    Assignment

         This Subscription Agreement may not be assigned by either party except
with the prior written consent of the other party hereto.

12.11    Enurement

         This Subscription Agreement shall enure to the benefit of and be
binding upon the parties hereto and its respective heirs, executors, successors
(including any successor by reason of the amalgamation or merger of any party),
administrators and permitted assigns.

12.12    Language

         Each of the Company and the Buyer hereby acknowledges that it has
consented and requested that all documents evidencing or relating in any way to
the Units and this Subscription Agreement be drawn up in the English language
only. Nous sousignes reconnaissons par les presentes avoir consenti et demande
que tous les documents faisant foi ou se rapportant de quelque maniere aux
unites et a la presente convention de souscription soient rediges en anglais
seulement.

         The Company hereby accepts the subscription for Units as set forth on
the face page of this Subscription Agreement on the terms and conditions
contained in the Subscription Agreement (including all applicable schedules)
this 6 day of October, 2004.

                                       NATURAL HEALTH TRENDS CORP.

                                       Per: /s/ MARK D. WOODBURN
                                            ------------------------------------
                                            Name:   Mark D. Woodburn
                                            Title:  President

                                       27
<PAGE>

                                  SCHEDULE "A"

                       CERTIFICATE OF ACCREDITED INVESTOR
                                    (Ontario)

TO:      Natural Health Trends Corp.

AND TO:  Sprott Securities Inc.

         The Buyer is a resident of or otherwise subject to the securities
legislation of the Province of Ontario and is an "accredited investor", as such
term is defined in Ontario Securities Commission Rule 45-501 ("Rule 45-501"),
because, at the Closing Time, the Buyer falls within one or more of the
following categories:

Note: Please check one or more boxes, as applicable.

[ ]      (a)      a bank listed in Schedule I or II of the Bank Act (Canada), or
                  an authorized foreign bank listed in Schedule III of that Act;

[ ]      (b)      the Business Development Bank incorporated under the Business
                  Development Bank Act (Canada);

[ ]      (c)      a loan corporation or trust corporation registered under the
                  Loan and Trust Companys Act (Ontario) or under the Trust and
                  Loan Companies Act (Canada), or under comparable legislation
                  in any other jurisdiction;

[ ]      (d)      a co-operative credit society, credit union central,
                  federation of caisses populaires, credit union or league, or
                  regional caisse populaire, or an association under the
                  Cooperative Credit Associations Act (Canada), in each case,
                  located in Canada;

[ ]      (e)      a company licensed to do business as an insurance company in
                  any province or territory of Canada;

[ ]      (f)      a subsidiary of any company referred to in paragraph (a), (b),
                  (c), (d) or (e), where the company owns all of the voting
                  shares of the subsidiary;

[ ]      (g)      a person or company registered under the Securities Act
                  (Ontario) or securities legislation in another province or
                  territory of Canada as an adviser or dealer, other than a
                  limited market dealer;

[ ]      (h)      the government of Canada or of any province or territory of
                  Canada, or any Crown corporation, instrumentality or agency of
                  a Canadian federal, provincial or territorial government;

[ ]      (i)      any Canadian municipality or any Canadian provincial or
                  territorial capital city;

[ ]      (j)      any national, federal, state, provincial, territorial or
                  municipal government of or in any country, or political
                  subdivision of a country, other than Canada, or any
                  instrumentality or agency thereof;

[ ]      (k)      a pension fund that is regulated by either the Office of the
                  Superintendent of Financial Institutions (Canada) or a
                  provincial pension commission or similar regulatory authority;

[ ]      (l)      a registered charity under the Income Tax Act (Canada);
<PAGE>

[ ]      (m)      an individual who beneficially owns, or who together with a
                  spouse beneficially own, financial assets having an aggregate
                  realizable value that, before taxes but net of any related
                  liabilities (as defined below), exceeds $1,000,000;

[ ]      (n)      an individual whose net income before taxes exceeded $200,000
                  in each of the two most recent years or whose net income
                  before taxes combined with that of a spouse exceeded $300,000
                  in each of those years and who, in either case, has a
                  reasonable expectation of exceeding the same net income level
                  in the current year;

[ ]      (o)      an individual who has been granted registration under the
                  Securities Act (Ontario) or securities legislation in another
                  province or territory of Canada as a representative of a
                  person or company referred to in paragraph (g), whether or not
                  the individual's registration is still in effect;

[ ]      (p)      a promoter of the issuer or an affiliated entity of a promoter
                  of the issuer;

[ ]      (q)      a spouse, parent, grandparent or child of an officer, director
                  or promoter of the issuer;

[ ]      (r)      a person or company that, in relation to the issuer, is an
                  affiliated entity or a person or company referred to in clause
                  (c) of the definition of distribution in subsection 1(1) of
                  the Securities Act (Ontario);

[ ]      (s)      an issuer that is acquiring securities of its own issue;

[ ]      (t)      a company, limited partnership, limited liability partnership,
                  trust or estate, other than a mutual fund or non-redeemable
                  investment fund, that had net assets of at least $5,000,000 as
                  reflected in its most recently prepared financial statements;

[ ]      (u)      a person or company that is recognized by the Ontario
                  Securities Commission as an accredited investor;

[ ]      (v)      a mutual fund or non-redeemable investment fund that, in
                  Ontario, distributes its securities only to persons or
                  companies that are accredited investors;

[ ]      (w)      a mutual fund or non-redeemable investment fund that, in
                  Ontario, distributes its securities under a prospectus for
                  which a receipt has been granted by the Director;

[ ]      (x)      a managed account if it is acquiring a security that is not a
                  security of a mutual fund or non-redeemable investment fund;

[ ]      (y)      an account that is fully managed by a trust corporation
                  registered under the Loan and Trust Companys Act (Ontario);

[ ]      (z)      an entity organized outside of Canada that is analogous to any
                  of the entities referred to in paragraphs (a) through (g) and
                  paragraph (k) in form and function; and

[ ]      (aa)     a person or company in respect of which all of the owners of
                  interests, direct or indirect, legal or beneficial, are
                  persons or companies that are accredited investors.

                                       2
<PAGE>

         For the purposes hereof, the following definitions are included for
convenience:

"company" means any corporation, incorporated association, incorporated
syndicate or other incorporated organization;

"entity" means a company, syndicate, partnership, trust or unincorporated
organization;

"financial assets" means cash, securities, or any contract of insurance or
deposit or evidence thereof that is not a security for the purposes of the
Securities Act (Ontario);

"managed account" means an investment portfolio account of a client established
in writing with a portfolio adviser who makes investment decisions for the
account and has full discretion to trade in securities of the account without
requiring the client's express consent to a transaction;

"mutual fund" includes an issuer of securities that entitle the holder to
receive on demand, or within a specified period after demand, an amount computed
by reference to the value of a proportionate interest in the whole or in a part
of the net assets, including a separate fund or trust account, of the issuer of
the securities;

"non-redeemable investment fund" means an issuer:

         (a)      whose primary purpose is to invest money provided by its
                  security holders;

         (b)      that does not invest for the purpose of exercising effective
                  control, seeking to exercise effective control, or being
                  actively involved in the management of the issuers in which it
                  invests, other than other mutual funds or non-redeemable
                  investment funds; and

         (c)      that is not a mutual fund;

"person" means an individual, partnership, unincorporated association,
unincorporated syndicate, unincorporated organization, trust, trustee, executor,
administrator, or other legal representative;

"portfolio adviser" means:

         (a)      a portfolio manager; or

         (b)      a broker or investment dealer exempted from registration as an
                  adviser under subsection 148(1) of the regulation made under
                  the Securities Act (Ontario) if that broker or investment
                  dealer is not exempt from the by-laws or regulations of The
                  Toronto Stock Exchange or the Investment Dealers' Association
                  of Canada referred to in that subsection;

"related liabilities" means liabilities incurred or assumed for the purpose of
financing the acquisition or ownership of financial assets and liabilities that
are secured by financial assets; and

"spouse", in relation to an individual, means another individual to whom that
individual is married, or another individual of the opposite sex or the same sex
with whom that individual is living in a conjugal relationship outside marriage.

         In Rule 45-501, a person or company is considered to be an affiliated
         entity of another person or company if one is a subsidiary entity of
         the other, or if both are subsidiary entities of the same person or
         company, or if each of it is controlled by the same person or company.

                                       3
<PAGE>

         In Rule 45-501, a person or company is considered to be controlled by a
         person or company if:

         (a)      in the case of a person or company,

                  (i)      voting securities of the first-mentioned person or
                           company carrying more than 50 percent of the votes
                           for the election of directors are held, otherwise
                           than by way of security only, by or for the benefit
                           of the other person or company, and

                  (ii)     the votes carried by the securities are entitled, if
                           exercised, to elect a majority of the directors of
                           the first-mentioned person or company;

         (b)      in the case of a partnership that does not have directors,
                  other than a limited partnership, the second-mentioned person
                  or company holds more than 50 percent of the interests in the
                  partnership; or

         (c)      in the case of a limited partnership, the general partner is
                  the second-mentioned person or company.

         In Rule 45-501, a person or company is considered to be a subsidiary
         entity of another person or company if:

         (a)      it is controlled by,

                  (i)      that other,

                  (ii)     that other and one or more persons or companies each
                           of which is controlled by that other, or

                  (iii)    two or more persons or companies, each of which is
                           controlled by that other; or

         (b)      it is a subsidiary entity of a person or company that is the
                  other's subsidiary entity.

The foregoing representations indicated in this certificate are true an accurate
as of the date of this certificate and will be true and accurate as of the
Closing Time. If any such representations shall not be true and accurate prior
to the Closing Time, the undersigned shall give immediate written notice of such
fact to the Company.

Dated:____________________________     Signed:_________________________________

__________________________________     ________________________________________
Witness (If Purchaser is an            Print the name of Purchaser
Individual)

__________________________________     ________________________________________
Print Name of Witness                  If Purchaser is a Company,
                                       print name and title of
                                       Authorized Signing Officer

                                       4
<PAGE>

                                  SCHEDULE "B"

                      CERTIFICATE OF AN ELIGIBLE PURCHASER

The undersigned (the "Buyer") hereby represents, warrants and covenants to
Natural Health Trends Corp. (the "Company") that the Buyer is resident in the
Province of Quebec, is subscribing for the securities of the Company as
principal or as agent for a disclosed principal and is an eligible purchaser by
virtue of satisfying one of the eligibility criteria set out below (Please check
one or more, as applicable).

Minimum Purchase Price Exemption:

[ ]      (a)      The aggregate acquisition cost (each of the below amounts
                  being the "Minimum Purchase Price in the Province") to the
                  Buyer, and if applicable to each beneficial person for whom it
                  is acting, for the securities is not less than $150,000 and:

                  (A)      if the Buyer is a corporation, it was not
                           incorporated solely and has not been used primarily
                           to permit the purchase of securities without a
                           prospectus or, if incorporated or used primarily for
                           such a purpose, each shareholder of the corporation
                           is an individual who has contributed at least the
                           Minimum Purchase Price in the Province to the
                           corporation for the purpose of investment by the
                           corporation in the securities and all such
                           contributions have been invested in the securities by
                           the corporation; or

                  (B)      if the Buyer is not a corporation or an individual
                           but is a syndicate, partnership, trust or other form
                           of unincorporated organization, it has not been
                           created solely or used primarily to permit the
                           purchase of securities without a prospectus or, if
                           the purchaser is a syndicate, partnership, trust or
                           other form of unincorporated organization created or
                           used primarily for such purpose, each member of the
                           syndicate, partnership, trust or other form of
                           unincorporated organization is an individual whose
                           individual share of the aggregate acquisition cost
                           for the securities is not less than the Minimum
                           Purchase Price.

Portfolio Manager/Managed Account Exemption:

[ ]      (b)      If the Buyer is acting as trustee, agent or adviser purchasing
                  for fully managed accounts that are resident in or otherwise
                  subject to the Securities Laws of the Province of Quebec, then
                  the Buyer is a trust company licensed under the Act respecting
                  trust companies and savings companies (Quebec), an insurance
                  company holding a license under the Act respecting insurance
                  (Quebec) or a dealer or adviser registered in conformity with
                  section 148 of the Securities Act (Quebec) and is purchasing
                  the securities for the portfolio of a third person managed
                  solely by the Buyer.

Exempt Purchaser Designation:

Other Eligible Purchaser Exemptions:

[ ]      (d)      A bank or an authorized foreign bank listed in Schedule I, II
                  or III to the Bank Act (Canada);

[ ]      (e)      The Business Development Bank of Canada continued under the
                  Business Development Bank Act (Canada);

[ ]      (f)      A subsidiary of one of the entities referred to in paragraphs
                  (d), or (e), above where the bank, or the Business Development
                  Bank of Canada, as the case may be, beneficially owns all of
                  the voting securities of that subsidiary (other than for a
                  Buyer in the Province of New Brunswick or Manitoba);
<PAGE>

[ ]      (g)      The Government of Canada or the government of any province or
                  territory of Canada;

[ ]      (h)      For a Buyer resident in or otherwise subject to the Securities
                  Laws in the Province of Quebec, a public agency or body
                  established pursuant to an Act of the Government of Canada or
                  of the government of a Canadian province;

[ ]      (i)      If the Buyer, or any person for whom it is acting is a
                  resident of or is otherwise subject to the Securities Laws in
                  the province of Quebec, a pension fund with assets of over
                  $100,000,000 and governed by the Supplemental Pension Plans
                  Act (Quebec) or the Pension Benefits Standards Act, 1985
                  (Canada);

[ ]      (j)      If the Buyer, or any person for whom it is acting is a
                  resident of or is otherwise subject to the Securities Laws in
                  the province of Quebec, a company all of the voting securities
                  of which belong to the Gouvernement du Quebec or its
                  departments or agencies that are mandataries of the State, to
                  the Government of Canada or the government of a Canadian
                  province, or to one of its departments or agencies.

The foregoing representations indicated in this certificate are true an accurate
as of the date of this certificate and will be true and accurate as of the
Closing Time. If any such representations shall not be true and accurate prior
to the Closing Time, the undersigned shall give immediate written notice of such
fact to the Company.

Dated:____________________________     Signed:_________________________________

__________________________________     ________________________________________
Witness (If Purchaser is an            Print the name of Purchaser
Individual)

__________________________________     ________________________________________
Print Name of Witness                  If Purchaser is a Company,
                                       print name and title of
                                       Authorized Signing Officer

                                       2
<PAGE>

                                   EXHIBIT "C"

                           NATURAL HEALTH TRENDS CORP.
                            Form of Warrant Agreement

<PAGE>

                                   EXHIBIT "D"

                          REGISTRATION RIGHTS AGREEMENT

<PAGE>

                                   EXHIBIT "E"

                 FORM OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

<PAGE>

                                   EXHIBIT "F"

                         FORM OF COMPANY COUNSEL OPINION<PAGE>
EXHIBIT 10.1

                              FOURTH AMENDMENT TO
                          SECOND AMENDED AND RESTATED
                          LOAN AND SECURITY AGREEMENT
                          ---------------------------

         THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT is dated October 6, 2004, to be effective as of September 26, 2004
(this "AMENDMENT"), by and among OVERHILL FARMS, INC., a Nevada corporation
("BORROWER"), and PLEASANT STREET INVESTORS, LLC, a California limited liability
company ("LENDER").

                                R E C I T A L S
                                ---------------

         A. Borrower and Lender are parties to that certain Second Amended and
Restated Loan and Security Agreement dated as of April 16, 2003, as amended by a
First Amendment to Second Amended and Restated Loan and Security Agreement dated
as of May 16, 2003, a Second Amendment to Second Amended and Restated Loan and
Security Agreement dated as of June 19, 2003, and a Third Amendment to Second
Amended and Restated Loan and Security Agreement dated as of October 31, 2003
(as so amended, the "LOAN AGREEMENT"). Unless otherwise indicated, capitalized
terms used and not otherwise defined herein have the meanings ascribed to them
in the Loan Agreement.

         B. On May 27, 2004, Lender agreed to permit Borrower to (i) exclude
$150,000 of Capital Expenditures incurred by Borrower in the Fiscal Quarter
ended June 27, 2004, in connection with the purchase and relocation of spiral
freezers, from Fixed Charges for purposes of calculating the minimum Fixed
Charge Coverage Ratio for the trailing three consecutive Fiscal Quarters ended
June 27, 2004, and (ii) increase the maximum amount of Capital Expenditures
permitted to be incurred by Borrower in the Fiscal Quarter ended June 27, 2004,
by such $150,000 of Capital Expenditures.

         C. Borrower has requested that Lender eliminate the application of any
Interest Rate Event to the Fiscal Quarters ending September 26, 2004 and January
2, 2005 (by revising the definition of Interest Rate Measurement Period), modify
certain terms of the Senior B Term Loan and amend certain financial covenants as
provided for herein, and Lender is willing to do so, but only on the terms and
subject to the conditions set forth herein.

         D. In addition, the Senior Subordinated Creditor and Borrower are
entering into certain amendments to the Securities Purchase Agreement as
provided for therein.

                               A G R E E M E N T
                               -----------------

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

<PAGE>

         1. AMENDMENTS TO LOAN AGREEMENT. Effective on and as of the Fourth
Amendment Effective Date (as defined in the Loan Agreement, as amended by this
Amendment), pursuant to Section 10.1 of the Loan Agreement, the Loan Agreement
shall be amended as follows:

                  (a) Clause (b) of Section 1.8 (Repayment and Prepayment) of
the Loan Agreement shall be amended to read in its entirety as follows:

                  "(b) SENIOR TERM B LOAN MATURITY. The Senior Term B Loan shall
         be repaid by Borrower as follows: Borrower shall make monthly
         installment payments of principal of the Senior Term B Loan on the last
         Business Day of each calendar month (or portion thereof) in the amounts
         set forth opposite each such last Business Day (it being understood
         that each such installment payment shall be due and payable on each
         such corresponding Business Day):

                                                      Installment
               Last Business Day of:                   Payment
               ---------------------                   -------
               September 2004......................   $  69,445
               October 2004........................     254,445
               November 2004.......................     254,445
               December 2004 ......................     274,445
               January 2005 .......................     254,445
               February 2005 ......................     254,445
               March 2005 .........................     274,445
               April 2005 and each calendar
               month thereafter ...................     266,945

                  Any principal balance of the Senior Term B Loan remaining
         outstanding on the Senior Term B Maturity Date shall be paid on the
         Senior Term B Maturity Date. Interest on the Senior Term B Loan shall
         accrue and be paid in accordance with Section 1.5."

                  (b) The preamble to Section 4.3 (Financial Covenants) of the
Loan Agreement shall be amended to read in its entirety as follows:

                  "4.3 FINANCIAL COVENANTS. Until the monetary Obligations under
         the Senior Term A Note and the Senior Term B Note have been paid in
         full, Borrower shall perform, comply with and observe each of the
         covenants set forth in this Section 4.3 (it being understood that
         references to the 'Period' covering the 'Trailing four consecutive
         Fiscal Quarters ending in December 2004' are in fact references to the
         'Period' covering the 'Trailing four consecutive Fiscal Quarters ending
         January 2, 2005').

                                      -2-
<PAGE>

                  (c) Clause (b) (Minimum Fixed Charge Coverage Ratio) of
Section 4.3 (Financial Covenants) of the Loan Agreement shall be amended by
adding the following sentence immediately following the table set forth therein:

                  "For purposes of calculating the Fixed Charge Coverage Ratio
         for any of the "Periods" set forth in the foregoing table that includes
         the Fiscal Quarter ended June 27, 2004, there shall be excluded from
         Fixed Charges for such Fiscal Quarter up to $150,000 of Capital
         Expenditures incurred by Borrower in such Fiscal Quarter solely in
         connection with the purchase and relocation of spiral freezers. For
         purposes of calculating the Fixed Charge Coverage Ratio for any of the
         "Periods" set forth in the foregoing table that includes the Fiscal
         Quarter ending September 26, 2004, there shall be excluded from Fixed
         Charges for such Fiscal Quarter up to $350,000 of Capital Expenditures
         incurred by Borrower in such Fiscal Quarter solely in connection with
         the purchase and relocation of spiral freezers."

                  (d) Clause (d) (Maximum Capital Expenditures) of Section 4.3
(Financial Covenants) of the Loan Agreement shall be amended to read in its
entirety as follows:

                  "(d) MAXIMUM CAPITAL EXPENDITURES. Capital Expenditures shall
         not exceed $300,000 in any Fiscal Quarter; PROVIDED, HOWEVER, that:

                           (i) if (A) Borrower prepares and furnishes to Lender
                  a "payback" analysis of Capital Expenditures it proposes to
                  make or incur in any Fiscal Quarter in excess of such maximum
                  Fiscal Quarterly amount, (B) Lender has at least five (5)
                  Business Days to review such analysis and (C) if satisfied
                  with such analysis in its sole discretion, Lender consents in
                  writing to such excess amount(s) prior to the incurrence
                  thereof, then Borrower may make or incur such excess Capital
                  Expenditures in such Fiscal Quarter; and

                           (ii) in addition to the $300,000 of Capital
                  Expenditures Borrower may incur in any Fiscal Quarter as
                  provided above, (A) Borrower may incur an aggregate of
                  $850,000 of Capital Expenditures in the Fiscal Year ending
                  September 26, 2004, to expand its "mandarin chicken"
                  manufacturing line, (B) Borrower may incur an aggregate of
                  $150,000 of Capital Expenditures in the Fiscal Quarter ended
                  June 27, 2004, solely in connection with the purchase and
                  relocation of spiral freezers and (C) Borrower may incur an
                  aggregate of $350,000 of Capital Expenditures in the Fiscal
                  Quarter ending September 26, 2004, solely in connection with
                  the purchase and relocation of such spiral freezers."

                                      -3-
<PAGE>

                  (e) Clause (g) (Minimum Net Working Capital) of Section 4.3
(Financial Covenants) of the Loan Agreement shall be amended to read in its
entirety as follows:

                  "(g) MINIMUM NET WORKING CAPITAL. For each of the Fiscal
         Months listed in the table below, Net Working Capital at the end of
         each such Fiscal Month shall not be less than the amount set forth
         opposite each such Fiscal Month:

                                                    Minimum Net
               Fiscal Month                       Working Capital
               ------------                       ---------------
               September 2004.................    $  11,165,000
               October 2004...................       11,067,500
               November 2004..................       10,970,000
               December 2004 .................       10,972,500
               January 2005 ..................       10,775,000
               February 2005 .................       11,044,445
               March 2005 ....................       11,413,890
               April 2005 ....................       11,583,335
               May 2005 ......................       11,852,780
               June 2005 .....................       12,322,225
               July 2005 .....................       12,391,670
               August 2005 ...................       12,661,115
               September 2005.................       13,030,560
               October 2005...................       12,400,005
               November 2005..................       12,500,005
               December 2005 .................       12,700,005
               January 2006 ..................       12,500,005
               February 2006 .................       12,600,005
               March 2006 ....................       13,000,005
               April 2006 ....................       13,200,005
               May 2006 ......................       13,400,005
               June 2006 .....................       13,700,005
               July 2006 .....................       13,800,005
               August 2006 ...................       14,000,005
               September 2006.................       14,300,005

                                      -4-
<PAGE>

                  (f) Schedule A (Definitions and Rules of Construction) of the
Loan Agreement shall be amended by adding the following new definitions to
Schedule A in alphabetical order:

                  "'FOURTH AMENDMENT' shall mean that certain Fourth Amendment
         to Second Amended and Restated Loan and Security Agreement dated
         October 6, 2004, to be effective as of September 26, 2004."

                  "'FOURTH AMENDMENT EFFECTIVE DATE' shall mean September 26,
         2004."

                  "'INCREMENTAL SENIOR TERM B LOAN PRINCIPAL PAYDOWN' shall mean
         scheduled payments of principal on the Senior Term B Loan in excess of
         $69,445."

                  "'LIBOR BUSINESS DAY' shall mean any Business Day on which
         commercial banks are open for international business (including
         dealings in interbank U.S Dollar deposits) in London, England."

                  "'LIBOR INTEREST PERIOD' shall mean, with respect to the
         Senior Term B Loan, (i) the period commencing on September 27, 2004,
         and ending November 25, 2004, and (ii) each sixty (60) day period
         thereafter, as determined by Lender, each of which periods shall
         commence on the last day of the immediately preceding LIBOR Interest
         Period; PROVIDED, HOWEVER, that (A) any LIBOR Interest Period (1) that
         would otherwise end on a day that is not a LIBOR Business Day shall be
         extended to the next succeeding LIBOR Business Day, unless such
         succeeding LIBOR Business Day falls into another calendar month, in
         which case such LIBOR Interest Period shall end on the next preceding
         LIBOR Business Day or (2) that begins on the last LIBOR Business Day of
         a calendar month (or on a day for which there is no numerically
         corresponding day in the calendar month, at the end of such LIBOR
         Interest Period) shall end on the last LIBOR Business Day of a calendar
         month, (B) no LIBOR Interest Period shall end after the Senior Term B
         Loan Maturity Date."

                  "'LIBOR RATE' shall mean, with respect to each LIBOR Interest
         Period and at the time of determination, a variable rate of interest
         (rounded upwards, if necessary, to the nearest 1/100 of 1.0%) equal to
         the rate of interest determined by Lender at which deposits in United
         States dollars are offered for such LIBOR Interest Period by Bank of
         America's principal office in London, England, to prime banks in the
         London interbank market at approximately 11:00 a.m. (London time) on
         the day which is two (2) Business Days prior to the first day of such
         LIBOR Interest Period."

                                      -5-
<PAGE>

                  (g) Schedule A (Definitions and Rules of Construction) of the
Loan Agreement shall be amended by amending the following existing definitions
to read in their entirety as follows:

                  "'ADJUSTED CURRENT LIABILITIES' shall mean, at any time, (i)
         all Indebtedness and other liabilities of Borrower that are classified
         as 'current liabilities' at such time in accordance with GAAP, MINUS
         (ii) all Indebtedness owing to Levine Leichtman Capital Partners, II,
         L.P., in its capacity as the Senior Subordinated Creditor, at such
         time, if and only to the extent such Indebtedness is classified at such
         time as a 'current liability' in accordance with GAAP."

                  "'APPLICABLE RATE' shall mean:

                           (i) With respect to the Senior Term A Loan, a rate
                  per annum accruing on the Senior Term A Loan equal to the
                  greater of (A) five and one-half percent (5.5%) and (B) the
                  Prime Rate in effect from time to time plus one and one-half
                  percent (1.5%); PROVIDED, HOWEVER, that if for any Performance
                  Week the outstanding principal balance of the Senior Term A
                  Loan exceeds the In-Formula Amount as shown on the Borrowing
                  Base Certificate pertaining to that Performance Week, then,
                  with respect to such excess, the Applicable Rate for the
                  Application Week to which that Performance Week relates shall
                  be a rate per annum equal to the greater of (A) eight percent
                  (8.0%) and (B) the Prime Rate in effect from time to time PLUS
                  four percent (4.0%); and

                           (ii) With respect to the Senior Term B Loan, a rate
                  per annum accruing on the Senior Term B Loan equal to the
                  LIBOR Rate PLUS 750 basis points.

                  In addition, if, for any Interest Rate Measurement Period, an
         Interest Rate Event occurs, the Applicable Rate for the Fiscal Quarter
         immediately succeeding such Interest Rate Event Measurement Period
         shall be equal to the rate of interest determined, with respect to the
         Senior Term A Loan, under clause (i) and, with respect to the Senior
         Term B Loan, under clause (ii), in each case PLUS 200 basis points."

                  "'FIXED CHARGES' shall mean, for any period and without
         duplication, the sum of (i) Cash Interest Expense; (ii) scheduled
         payments of principal on any Indebtedness of Borrower and its
         Subsidiaries, excluding (a) scheduled payment at maturity of principal
         on the Term Loans and (b) the Incremental Senior Term B Loan Principal
         Paydown; (iii) scheduled Capitalized Lease Obligations of Borrower or
         any of its Subsidiaries for such period representing principal; (iv)
         Taxes estimated to be paid by Borrower and its Subsidiaries (after
         giving effect to the net

                                      -6-
<PAGE>

         operating loss carryforward of TreeCon, if any, for any period ending
         on or prior to the Spin-Off Effective Date); (v) cash dividends or
         distributions, if any, paid by Borrower or any of its Subsidiaries;
         (vi) Capital Expenditures; and (vii) with respect to any period ended
         on or before the Spin-Off Effective Date, all Tax Sharing Cash
         Payments, in each of clauses (i) through (vii) for such period."

                  "'INTERCREDITOR AGREEMENT' shall mean a Second Amended and
         Restated Intercreditor and Subordination Agreement dated as of April
         16, 2003, between Lender and Senior Subordinated Creditor, as amended
         by a First Amendment to and Consent under Second Amended and Restated
         Intercreditor and Subordination Agreement dated as of October 31, 2003,
         and as supplemented by a Consent under Second Amended and Restated
         Intercreditor and Subordination Agreement dated October 6, 2004, to be
         effective as of September 26, 2004, as further amended or supplemented
         from time to time."

                  "'INTEREST RATE MEASUREMENT PERIOD' shall mean each of the
         measurement "Periods" described in Sections 4.3(a), 4.3(b) and 4.3(c),
         as applicable, other than, in each such case, (i) the trailing four
         consecutive Fiscal Quarters ending September 26, 2004, and (ii) the
         trailing four consecutive Fiscal Quarters ending January 2, 2005."

                  "'SECURITIES PURCHASE AGREEMENT' shall mean that certain
         Second Amended and Restated Securities Purchase Agreement dated as of
         April 16, 2003, as amended by a First Amendment to Second Amended and
         Restated Securities Purchase Agreement dated as of May 16, 2003, a
         Second Amendment to Second Amended and Restated Securities Purchase
         Agreement dated as of June 19, 2003, a Third Amendment to Second
         Amended and Restated Securities Purchase Agreement dated as of October
         31, 2003, and a Fourth Amendment to Second Amended and Restated
         Securities Purchase Agreement dated October 6, 2004, to be effective as
         of September 26, 2004, as further amended from time to time."

                  "'SENIOR TERM B MATURITY DATE'" means the earliest of (a)
         January 31, 2006, (b) the date Lender's obligation to make Loans is
         terminated and the Obligations are declared to be due and payable
         pursuant to Section 7.2, and (c) the date of prepayment in full by
         Borrower of the Obligations in accordance with the provisions of
         Section 1.10."

                  (h) Each of the Disclosure Schedules to the Loan Agreement
listed in EXHIBIT A attached hereto shall be amended by the Disclosure Schedules
attached to such EXHIBIT A as provided for in such amended Disclosure Schedules
(it being understood that such amended Disclosure Schedules shall update the
corresponding Disclosure Schedules through and including the Fourth Amendment
Effective Date).

                                      -7-
<PAGE>

         2. CONDITIONS PRECEDENT TO AMENDMENTS. The effectiveness of the
amendments set forth in Section 1 as of the Fourth Amendment Effective Date
shall be subject to the satisfaction, in Lender's sole discretion, of each of
the following conditions precedent:

                  (a) FOURTH AMENDMENT EFFECTIVE DATE. All of the conditions
precedent set forth in this Section 2 shall have been satisfied effective as of
the Fourth Amendment Effective Date.

                  (b) Amended Loan Documents. Lender shall have received the
following closing documents, each dated as of the Fourth Amendment Effective
Date (collectively, and together with this Amendment, the "FOURTH AMENDMENT LOAN
DOCUMENTS"):

                           (i) AMENDMENT TO INTERCREDITOR AGREEMENT. A Second
Amendment to and Consent Under Second Amended and Restated Intercreditor and
Subordination Agreement, duly executed by Senior Subordinated Creditor and
Borrower.

                  (c) AMENDMENT TO SECURITIES PURCHASE AGREEMENT. Senior
Subordinated Creditor and Borrower shall have entered into a fourth amendment to
the Securities Purchase Agreement, in form and substance satisfactory to Lender.

                  (d) REPRESENTATIONS AND WARRANTIES. Lender shall have received
from Borrower an Officers' Certificate, in form and substance satisfactory to
Lender, dated as of the Fourth Amendment Effective Date and duly executed by the
President and Chief Executive Officer and the Chief Financial Officer of
Borrower, to the effect that (i) after giving effect to the execution, delivery
and performance of this Amendment and the other Fourth Amendment Loan Documents
and the amended Disclosure Schedules attached as Exhibit A hereto, each of the
representations and warranties of Borrower contained in the Loan Agreement was
true and correct on and as of the date made and was true and correct on and as
of the Fourth Amendment Effective Date, with the same effect as if made on and
as of the Fourth Amendment Effective Date; (ii) each of the covenants and
agreements of Borrower required to be performed or satisfied under this
Amendment on or before the Fourth Amendment Effective Date has been performed or
satisfied on or before the Fourth Amendment Effective Date; (iii) Borrower has
satisfied or fulfilled each of the conditions precedent set forth in this
Section 2; (iv) no Default or Event of Default has occurred and is continuing or
will result from the execution, delivery or performance of this Amendment or the
other Fourth Amendment Loan Documents and (v) since September 28, 2003, no
Material Adverse Change has occurred other than as previously disclosed to
Lender in writing or as previously disclosed in Borrower's SEC Documents.

                  (e) AMENDMENT FEE. Lender shall have received from Borrower a
nonrefundable amendment fee, payable in cash, in the amount of $11,325.

                  (f) [INTENTIONALLY OMITTED.]

                  (g) REIMBURSEMENT OF FEES AND EXPENSES. Borrower shall have
reimbursed Lender for all actual and estimated fees, costs and expenses,
including attorneys' fees and expenses, incurred or to be incurred by Lender and
remaining unpaid as of the Fourth Amendment Effective Date, as required under
Section 10.2 of the Loan Agreement,

                                      -8-
<PAGE>

including the fees and expenses incurred or to be incurred in connection with
the preparation, execution, delivery and performance of this Amendment and the
other Fourth Amendment Loan Documents and the consummation of the transactions
contemplated hereby and thereby.

                  (h) CONSENTS. Borrower shall have obtained or made all
Consents required to be obtained from all Governmental Authorities and other
Persons (including the amendment referred to in Section 2(b)(i) above) in
connection with the execution, delivery and performance of this Amendment and
the other Fourth Amendment Loan Documents, and Lender shall have approved the
terms and conditions thereof.

                  (i) CERTIFIED BOARD RESOLUTIONS. Lender shall have received a
Secretary's Certificate from Borrower, in form and substance satisfactory to
Lender, duly executed by the Secretary of Borrower and dated as of the Fourth
Amendment Effective Date, certifying as to (i) the charter of Borrower, as
amended, (ii) the Bylaws of Borrower, as amended, and (iii) the resolutions of
the Board of Directors of Borrower approving the execution, delivery and
performance of this Amendment and each of the other Fourth Amendment Loan
Documents and the consummation of the transactions contemplated hereby and
thereby.

                  (j) GOOD STANDING CERTIFICATES. Lender shall have received (i)
a corporate good standing certificate and a tax good standing certificate, if
available, for Borrower from the Secretary of State of the State of Nevada and
Nevada taxing authority, (ii) a corporate good standing certificate and a tax
good standing certificate for Borrower from the Secretary of State of the State
of California and the Franchise Tax Board of the State of California,
respectively, and (iii) a corporate good standing certificate and a tax good
standing certificate, if available, of Borrower from the Secretaries of State or
similar governmental authority of each jurisdiction in which Borrower is
required to be qualified to transact business as a foreign corporation or other
entity, in each case dated as of a recent practicable date.

                  (k) CERTIFIED FINANCIAL PROJECTIONS. Borrower shall have
delivered to Lender, and Lender shall have approved, consolidated financial
projections of Borrower for the two-year period commencing September 27, 2004,
and ending on the last day of the Fiscal Year ending in September 2006. Such
financial projections shall be prepared in accordance with the requirements of
Section 5.1(f) of the Loan Agreement and, among other things, shall specify the
assumptions on which they are based and shall be made in good faith. The
financial projections shall be accompanied by an Officers' Certificate, in form
and substance satisfactory to Lender, duly executed by the President and Chief
Executive Officer and the Chief Financial Officer of Borrower, certifying as to
the assumptions on which such financial projections are based.

                  (l) LEGAL PROHIBITIONS. The consummation of the transactions
contemplated by this Amendment and the other Fourth Amendment Loan Documents
shall not be prohibited by or violate any Applicable Laws and shall not subject
any party to any Tax, penalty or liability, under or pursuant to any Applicable
Laws.

                                      -9-
<PAGE>

         3. REPRESENTATIONS AND WARRANTIES OF BORROWER. In order to induce
Lender to enter into this Amendment, Borrower represents and warrants to Lender
as follows:

                  (a) AUTHORIZATION; BINDING EFFECT. Borrower has the full power
and authority to enter into, deliver and perform its obligations under this
Amendment and the other Fourth Amendment Loan Documents. The execution, delivery
and performance by Borrower of this Amendment and the other Fourth Amendment
Loan Documents and the consummation of the other transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary action
on the part of Borrower. This Amendment has been, and as of the Fourth Amendment
Effective Date each of the other Fourth Amendment Loan Documents will be, duly
executed and delivered by Borrower. This Amendment constitutes, and as of the
Fourth Amendment Effective Date each of the other Fourth Amendment Loan
Documents will constitute, the legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or conveyance or similar laws relating to or limiting creditors' rights
generally or by equitable principles relating to enforceability and except as
rights of indemnity or contribution may be limited by federal or state
securities or other laws or the public policy underlying such laws.

                  (b) NO CONFLICT. The execution, delivery and performance by
Borrower of this Amendment and the other Fourth Amendment Loan Documents and the
consummation of the transactions contemplated hereby and thereby do not and will
not violate or conflict with, or cause a default under, or give rise to a right
of termination under, (i) the charter or bylaws of Borrower, as in effect on the
date hereof; (ii) any Applicable Laws; or (iii) any term of any material
contract, indenture, note, mortgage, instrument, agreement or other document to
which Borrower is a party or by which any of its properties or assets are bound.

                  (c) RANK; OBLIGATIONS. The Senior Term A Loan ranks PARI PASSU
with the Senior Term B Loan, and no other Indebtedness of Borrower ranks senior
to, or PARI PASSU with, the Senior Term A Loan or the Senior Term B Loan.
Immediately following the closing of the transactions contemplated hereby, there
will be no agreement, indenture, instrument or other document to which Borrower
is a party or by which it or they are bound that requires the subordination in
right of payment or rights upon liquidation of any Obligations to the repayment
of any other existing or future Indebtedness of Borrower.

                  (d) NO CONSENTS. Other than the Consent of the Senior
Subordinated Lender and those obtained or made pursuant to Section 2(h) above,
neither Borrower nor any of its Affiliates is required to obtain from or make
with any Governmental Authority or any other Person any Consent in connection
with execution, delivery or performance of this Amendment or any other Fourth
Amendment Loan Documents or for the purpose of maintaining in full force and
effect any Licenses and Permits of Borrower, except where the failure to obtain
such consent or maintain any such License or Permit, as the case may be, could
not have a Material Adverse Effect. There are no orders, decrees, judgments,
injunctions or rulings of any Governmental Authority against Borrower or any of
its assets.

                                      -10-
<PAGE>

                  (e) REPRESENTATIONS AND WARRANTIES. After giving effect to the
updated Disclosure Schedules attached as EXHIBIT A hereto, each of the
representations and warranties of Borrower contained in the Loan Agreement is
true and correct in all material respects (it being understood that Overhill
Ventures has been liquidated, wound up and dissolved and Borrower has no
Subsidiaries).

                  (f) NO DEFAULT. No Default or Event of Default has occurred
and is continuing or will result from the execution and delivery of this
Amendment or the other Fourth Amendment Loan Documents or the consummation of
the transactions contemplated hereby or thereby.

                  (g) COLLATERAL SECURITY. The Liens granted in favor of Lender
under the Collateral Documents continue to constitute valid, enforceable,
perfected and continuing security interests and Liens in, on and to the
Collateral to secure the payment and performance in full of all Obligations,
including the Senior Term A Loan and the Senior Term B Loan, and such security
interests and liens are subject, as to priority, only to the Permitted Liens to
the extent entitled to priority under Applicable Law.

                  (h) PRINCIPAL BALANCES. As of the date hereof, the principal
amount of the Senior Term A Loan is $17,800,000 and the principal amount of the
Senior Term B Loan is $4,305,550.

         4. CONFIRMATION; FULL FORCE AND EFFECT. The amendments set forth in
Section 1 shall amend the Loan Agreement on and as of the Fourth Amendment
Effective Date, and the Loan Agreement shall otherwise remain in full force and
effect, as amended thereby, from and after the Fourth Amendment Effective Date
in accordance with its terms. Borrower hereby ratifies, approves and affirms in
all respects each of the Loan Agreement, as amended hereby, the Senior Term A
Note, the Senior Term B Note, the Collateral Documents (including the Liens
granted in favor of Lender under the Collateral Documents) and each of the other
Loan Documents, the terms and other provisions hereof and thereof and the
Obligations hereunder and thereunder.

         5. NO OTHER AMENDMENTS. This Amendment is being delivered without
prejudice to the rights, remedies or powers of Lender under or in connection
with the Loan Agreement, the Senior Term A Note, the Senior Term B Note, the
Collateral Documents and the other Loan Documents, Applicable Laws or otherwise
and, except as expressly provided in Section 1 above, shall not constitute or be
deemed to constitute an amendment or other modification of, or a supplement to,
the Loan Agreement or any Loan Document or the obligations of Borrower
thereunder. In addition, nothing contained in this Amendment is intended to
constitute, or shall be construed as, a waiver of any Interest Rate Event,
Default or Event of Default, or other breach or violation of the Loan Agreement,
the Senior Term A Note, the Senior Term B Note, the Collateral Documents or any
other Loan Document, whether past, present or future, or a forbearance by Lender
of any of its rights, remedies or powers against Borrower or the Collateral.
Lender hereby expressly reserves all of its rights, powers and remedies under or
in connection with the Loan Agreement, the Senior Term A Note, the Senior Term B
Note, the Collateral Documents and the other Loan

                                      -11-
<PAGE>

Documents, whether at law or in equity, including, without limitation, the right
to declare all Obligations to be due and payable.

         6. MISCELLANEOUS.

                  (a) ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Amendment
and the other Fourth Amendment Loan Documents constitute the entire
understanding and agreement with respect to the subject matter hereof and
supersede all prior oral and written, and all contemporaneous oral, agreements
and understandings with respect thereto. This Amendment shall inure to the
benefit of, and be binding upon, the parties and their respective successors and
permitted assigns.

                  (b) Governing Law. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE (WITHOUT
REGARD TO THE CHOICE OF LAW OR CONFLICTS OF LAW PROVISIONS THEREOF).

                  (c) COUNTERPARTS. This Amendment may be executed in one or
more counterparts and by facsimile transmission, each of which shall be deemed
an original and all of which taken together shall constitute one and the same
instrument.

                    [REST OF PAGE INTENTIONALLY LEFT BLANK]

                                      -12-
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed and delivered by their duly authorized representatives on the first
date written above, to be effective as of the Fourth Amendment Effective Date.

                                      BORROWER
                                      --------

                                      OVERHILL FARMS, INC., a Nevada corporation

                                      By: /s/ James Rudis
                                          --------------------------------------
                                          James Rudis
                                          President and Chief Executive Officer

                                      By: /s/ John Steinbrun
                                          --------------------------------------
                                          John Steinbrun
                                          Senior Vice President and Chief
                                            Financial Officer

                                     LENDER
                                     ------

                                     PLEASANT STREET INVESTORS, LLC, a
                                     California limited liability company

                                     By: Levine Leichtman Capital Partners,
                                         Inc., its Manager

                                         By: /s/ Steven E. Hartman
                                             -----------------------------------
                                             Steven E. Hartman
                                             Vice President

                                      -13-
<PAGE>

                                    EXHIBIT A

                          Amended Disclosure Schedules
                          ----------------------------

         Attached hereto are amended, updated versions of the following
Disclosure Schedules, which Disclosure Schedules are amended and updated through
and including the Fourth Amendment Effective Date (it being understood that all
other Disclosure Schedules shall remain unamended and in full force and effect):

     Schedule 3.5 --               Conflicts with Other Instruments; Existing
                                   Defaults; Rank
     Schedule 3.10 --              SEC Documents
     Schedule 3.12(a)(i) --        Existing Indebtedness
     Schedule 3.12(a)(iv) --       UCC Financing Statements
     Schedule 3.12(a)(v) --        Payables Aging Schedule
     Schedule 3.14 --              Material Contracts
     Schedule 3.20 --              Legal Action
     Schedule 3.23 --              Licenses and Permits
     Schedule 3.25 --              Real Property
     Schedule 3.31 --              Insurance
     Schedule 3.32 --              Customers
     Schedule 3.33 --              Suppliers
     Schedule 3.35 --              Personal Property Leases
     Schedule 3.36 --              Employment Agreements
     Schedule 3.46 --              Executive Offices; Corporate or Other Names
     Schedule C --                 Non-Standard Concentration Account Debtors

                                      -14-

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