Document:

Exhibit 10.1

                  PRIVATE EQUITY LINE FUNDS ESCROW AGREEMENT

      This  Agreement  is dated as of the 19th  day of  December,  2001  among
Cyber  Digital,  Inc.,  a New  York  corporation  (the  "Company"),  Grenville
Finance Ltd. ("Investor"), and Grushko & Mittman, P.C. (the "Escrow Agent"):

                             W I T N E S S E T H:
                             - - - - - - - - - -

      WHEREAS, the Company and Investor have entered into a Private Equity Line
of Credit Agreement dated July 2, 2001 ("Credit Line Agreement") calling for the
sale by the Company to the Investor of shares of Common Stock; and

      WHEREAS, the parties hereto wish to arrange for the Company to deliver to
the Escrow Agent the Put Shares issued in connection with each Put and wish to
arrange for the Investor to deliver to the Escrow Agent the Investment Amount
specified in each Optional Purchase Notice; and

      WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant to
the terms and conditions of this Agreement;

      NOW THEREFORE, the parties agree as follows:

                                    ARTICLE I

                                 INTERPRETATION

      1.1.  Definitions.  Whenever  used  in  this  Agreement,  the  following
terms shall have the following respective meanings:

            (a)   "Agreement"  means this  Agreement and all  amendments  made
hereto and thereto by written agreement between the parties;

            (b) "Compliance Certificate" shall mean a completed signed
Compliance Certificate, a form of which is annexed to the Credit Line Agreement
as Exhibit C.

            (c)   "Finder's  Fee"  means  the  fee  to be  paid  to  Ladenburg
Thalmann & Co.,  Inc.  (the  "Finder")  as  described  in Section  13.4 of the
Credit Line Agreement which is equal to 5% of the Investment Amount.

            (d) "Company Documents" means, with respect to any Closing, the
Compliance Certificate, Put Shares, Optional Purchase Notice, and Finder's Fee
relating to that Closing.

      Terms employed in this Agreement shall have the same definitions employed
in the Credit Line Agreement, unless modified herein.

                                       1
<PAGE>

      1.2. Entire Agreement. This Agreement and the Credit Line Agreement
constitute the entire agreement between the parties hereto pertaining to the
Company Documents and Investment Amounts and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties. There are no warranties, representations and other agreements made by
the parties in connection with the subject matter hereof except as specifically
set forth in this Agreement and Credit Line Agreement.

      1.3. Extended Meanings. In this Agreement words importing the singular
number include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders. The word "person" includes an
individual, body corporate, partnership, trustee or trust or unincorporated
association, executor, administrator or legal representative.

      1.4. Waivers and Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by all parties, or, in the
case of a waiver, by the party waiving compliance. Except as expressly stated
herein, no delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any right, power or privilege hereunder preclude any
other or future exercise of any other right, power or privilege hereunder.

      1.5.  Headings.   The  division  of  this   Agreement   into   articles,
sections,  subsections  and  paragraphs  and the insertion of headings are for
convenience  of  reference  only and  shall not  affect  the  construction  or
interpretation of this Agreement.

      1.6. Law Governing this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Subject to Section 4.2, any action brought by
either party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the
federal courts located in the state of New York. All parties and the individuals
executing this Agreement and other agreements on behalf of the Company agree to
submit to the jurisdiction of such courts and waive trial by jury. The
prevailing party (which shall be the party which receives an award most closely
resembling the remedy or action sought) shall be entitled to recover from the
other party its reasonable attorney's fees and costs. In the event that any
provision of this Agreement or any other agreement delivered in connection
herewith is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of any agreement.

      1.7. Fees. The Company shall pay the Escrow Agent a fee of $800 in
connection with each Optional Purchase Notice. This fee shall be payable by
proportionate deduction from each Investment Amount, but only if the balance of
the Investment Amount is to be released to or on behalf of the Company pursuant
to this Agreement.

                                       2
<PAGE>

                                   ARTICLE II

                         DELIVERIES TO THE ESCROW AGENT

      2.1. Delivery of Company Documents to Escrow Agent. Prior to each Closing,
the Company shall deliver to the Escrow Agent the Company Documents relative to
such Closing. The Purchase Price and amount of Put Shares for each Closing will
be determined jointly by the Company and Escrow Agent consistant with Section
1.32 of the Credit Line Agreement.

      2.2 Delivery of Investment Amount to Escrow Agent. Subsequent to the
receipt of an Optional Purchase Notice, the Investor shall deliver to the bank
account of Escrow Agent identified below the Investment Amount stated in that
Optional Purchase Notice.

                  Citibank, N.A.
                  ABA Number: 0210-00089
                  For Credit to:    Grushko & Mittman
                                    IOLA Trust Account
                                    Account Number: 45208884

      2.3. Intention to Create Escrow Over Company Documents and Investment
Amounts. The Investor and Company intend that any Company Documents and any
Investment Amounts shall be held in escrow by the Escrow Agent pursuant to this
Agreement for their benefit as set forth herein.

      2.4.  Escrow  Agent  to  Deliver  Company   Documents  and  Investment
Amounts.  The Escrow  Agent shall hold and release any Company  Documents  and
any  Investment  Amounts only in accordance  with the terms and  conditions of
this Agreement.

      2.5. Delivery of Certificate. Not later than two days after the date of
the Optional Purchase Notice, the Company must provide a certificate of service
("Delivery Certificate") to the Escrow Agent regarding the service of the
Optional Purchase Notice on the Investor in the manner required pursuant to
Section 12.1 of the Credit Line Agreement. The Delivery Certificate must be
accompanied by a copy of the Optional Purchase Notice and a schedule setting
forth: (i) the manner in which the Investment Amount was determined; (ii) the
remaining amount of Common Stock included in the Registration Statement for the
Investor; and (iii) the amount of Common Stock available for issuance to the
Investor subject to the limitation set forth in Section 7.2(j) of the Credit
Line Agreement, stating the amount of Common Stock outstanding on the last day
prior to the date of the relevant Optional Purchase Notice.

                                   ARTICLE III

             RELEASE OF COMPANY DOCUMENTS AND INVESTMENT AMOUNTS

      3.1.  Release of Escrow.  Subject to the  provisions  of Section 4.2, in
connection  with any  Closing,  the Escrow  Agent  shall  release  the Company
Documents and Investment Amount relating to the Closing as follows:

                                       3
<PAGE>

            (a) Upon receipt by the Escrow Agent of the Company Documents and
the Investment Amount, the Escrow Agent will simultaneously release the Company
Documents to the Investor and release the Investment Amount to the Company
except that (i) the Finder's Fee will be delivered to the finders in proportion
to the funds released from escrow; and (ii) the fee described in Section 1.8
above will be released to the Escrow Agent. All funds to be delivered to the
Company will be delivered by wire transfer to:

                  The Bank of New York
                  4170 Veterans Memorial Hwy
                  Bohemia, New York
                  ABA Number: 021000018
                  For Credit to: Cyber Digital, Inc.
                  Account Number: 0144339620

            All funds to be delivered to the Finder will be delivered by wire
transfer as per instructrions to be given to the Escrow Agent in writing by the
Finder.

            The Escrow Agent is instructed to deduct actual bank wire transfer
fees from funds to be delivered to each recipient.

            (b) In the event the Escrow Agent does not receive any Company
Documents or the Investment Amount prior to the Closing, then the Escrow Agent
will promptly return the Company Documents to the Company, and promptly return
the Investment Amount to the Investor.

            (c) Upon receipt by the Escrow Agent of joint written instructions
("Joint Instructions") signed by the Company and the Investor, it shall deliver
the Company Documents and the Investment Amount in accordance with the terms of
the Joint Instructions.

            (d) Upon receipt by the Escrow Agent of a final and non-appealable
judgment, order, decree or award of a court of competent jurisdiction (a "Court
Order"), the Escrow Agent shall deliver the Company Documents and the Investment
Amount in accordance with the Court Order. Any Court Order shall be accompanied
by an opinion of counsel for the party presenting the Court Order to the Escrow
Agent (which opinion shall be satisfactory to the Escrow Agent) to the effect
that the court issuing the Court Order has competent jurisdiction and that the
Court Order is final and non-appealable.

            (e) The Escrow Agent is authorized to rely on any uncontradicted
calculation, notice or information provided by the Company or Investor or from
any source when determining the amount of Common Shares to be released on a
Closing Date.

      3.2. Acknowledgement of Company and Investor; Disputes. The Company and
the Investor acknowledge that the only terms and conditions upon which any
Company Documents and any Investment Amounts are to be released are set forth in
Sections 3 and 4 of this Agreement. The Company and the Investor reaffirm their
agreement to abide by the terms and conditions of this Agreement with respect to
the release of any Company Documents and any Investment Amounts. Any dispute
with respect to the release of any Company Documents and any Investment Amounts
shall be resolved pursuant to Section 4.2 or by agreement between the Company
and the Investor.

                                       4
<PAGE>

                                   ARTICLE IV

                           CONCERNING THE ESCROW AGENT

      4.1.  Duties  and  Responsibilities  of the  Escrow  Agent.  The  Escrow
Agent's duties and  responsibilities  shall be subject to the following  terms
and conditions:

            (a) The Investor and Company acknowledge and agree that the Escrow
Agent (i) shall not be responsible for or bound by, and shall not be required to
inquire into whether either the Investor or Company is entitled to receipt of
the Company Documents and Investment Amount pursuant to, any other agreement or
otherwise; (ii) shall be obligated only for the performance of such duties as
are specifically assumed by the Escrow Agent pursuant to this Agreement; (iii)
may rely on and shall be protected in acting or refraining from acting upon any
written notice, instruction, instrument, statement, request or document
furnished to it hereunder and believed by the Escrow Agent in good faith to be
genuine and to have been signed or presented by the proper person or party,
without being required to determine the authenticity or correctness of any fact
stated therein or the propriety or validity or the service thereof; (iv) may
assume that any person purporting to give notice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so; (v) shall not be under any duty to give the property held
by Escrow Agent hereunder any greater degree of care than Escrow Agent gives its
own similar property; and (vi) may consult counsel satisfactory to Escrow Agent,
the opinion of such counsel to be full and complete authorization and protection
in respect of any action taken, suffered or omitted by Escrow Agent hereunder in
good faith and in accordance with the opinion of such counsel.

            (b) The Investor and Company acknowledge that the Escrow Agent is
acting solely as a stakeholder at their request and that the Escrow Agent shall
not be liable for any action taken by Escrow Agent in good faith and believed by
Escrow Agent to be authorized or within the rights or powers conferred upon
Escrow Agent by this Agreement, except in the case of gross negligence or
willful misconduct. The Investor and Company, jointly and severally, agree to
indemnify and hold harmless the Escrow Agent and any of Escrow Agent's partners,
employees, agents and representatives for any action taken or omitted to be
taken by Escrow Agent or any of them hereunder, including the fees of outside
counsel and other costs and expenses of defending itself against any claim or
liability under this Agreement, except in the case of gross negligence or
willful misconduct on Escrow Agent's part committed in its capacity as Escrow
Agent under this Agreement. The Escrow Agent shall owe a duty only to the
Investor and Company under this Agreement and to no other person.

            (c)   Intentionally Omitted.

            (d) The Escrow Agent may at any time resign as Escrow Agent
hereunder by giving five (5) days prior written notice of resignation to the
Investor and the Company. Prior to the effective date of the resignation as
specified in such notice, the Investor and Company will issue to the Escrow
Agent a Joint Instruction authorizing delivery of all Company Documents and all
Investment Amounts to a substitute Escrow Agent selected by the Investor and
Company. If no successor Escrow Agent is named by the Investor and Company, the
Escrow Agent may apply to a court of competent jurisdiction in

                                       5
<PAGE>

the  State of New York for  appointment  of a  successor  Escrow  Agent,  and to
deposit any Company  Documents and any Investment  Amounts with the clerk of any
such court.

            (e) The Escrow Agent does not have and will not have any interest in
any Company Documents and any Investment Amounts, but is serving only as escrow
agent, having only possession thereof.

            (f) This Agreement sets forth exclusively the duties of the Escrow
Agent with respect to any and all matters pertinent thereto and no implied
duties or obligations shall be read into this Agreement.

            (g) The Escrow Agent shall be permitted to act as counsel for the
Investor or the Company, as the case may be, in any dispute as to the
disposition of any Company Documents and or any Investment Amounts, in any other
dispute between the Investor and Company, whether or not the Escrow Agent is
then holding any Company Documents or any Investment Amounts and continues to
act as the Escrow Agent hereunder.

            (h) The provisions of this Section 4.1 shall survive the resignation
of the Escrow Agent or the termination of this Agreement.

      4.2.  Dispute  Resolution:  Judgments.  Resolution  of disputes  arising
under this Agreement shall be subject to the following terms and conditions:

            (a) If any dispute shall arise with respect to the delivery,
ownership, right of possession or disposition of any Company Documents or any
Investment Amounts, or if the Escrow Agent shall in good faith be uncertain as
to its duties or rights hereunder, the Escrow Agent shall be authorized, without
liability to anyone, to (i) refrain from taking any action other than to
continue to hold all Company Documents and Investment Amounts pending receipt of
a Joint Instruction from the Investor and Company, or (ii) deposit all Company
Documents and Investment Amounts with any court of competent jurisdiction in the
State of New York, in which event the Escrow Agent shall give written notice
thereof to the Investor and the Company and shall thereupon be relieved and
discharged from all further obligations pursuant to this Agreement. The Escrow
Agent may, but shall be under no duty to, institute or defend any legal
proceedings which relate to Company Documents or Investment Amounts. The Escrow
Agent shall have the right to retain counsel if it becomes involved in any
disagreement, dispute or litigation on account of this Agreement or otherwise
determines that it is necessary to consult counsel.

            (b) The Escrow Agent is hereby expressly authorized to comply with
and obey any Court Order. In case the Escrow Agent obeys or complies with a
Court Order, the Escrow Agent shall not be liable to the Investor and Company or
to any other person, firm, corporation or entity by reason of such compliance.

                                    ARTICLE V

                                 GENERAL MATTERS

                                       6
<PAGE>

      5.1. Termination. This escrow shall terminate upon termination of the
Credit Line Agreement and the release of all Company Documents and Investment
Amounts then being held in escrow by the Escrow Agent or at any time upon the
agreement in writing of the Investor and Company.

      5.2. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be sent by
telecopy (with the sender's facsimile machine confirming transmission and a copy
of the notice delivered by overnight courier, regular or certified mail) and
shall be deemed to have been duly given (a) one (1) day after being sent, if
sent by 5:00 P.M., New York time on a business day, or (b) the next business day
if sent at any other time

(a)   If to the Company, to:

            Cyber Digital, Inc.
            400 Oser Avenue, Suite 1650
            Hauppauge, New York 11788
            Telecopier: (631) 231-1446

      With a copy to (which communication shall not constitute notice):

            Kramer Levin Naftalis & Frankel LLP
            919 Third Avenue
            New York, New York 10022-3852
            Attn: Scott S. Rosenblum, Esq. and Kenneth A. Adams, Esq.
            Telecopier: (212) 715-8000

(b)   If to the Investor, to:

            Grenville Finance Ltd.
            Trident Chambers
            P.O. Box 146
            Road Town, Tortola, B.V.I.
            Telecopier: 011-411-201-4800

(c)   If to the Finder, to:

            Ladenburg Thalmann & Co., Inc.
            590 Madison Avenue
            New York, New York 10022
            Telecopier: (212)

(d)   If to the Escrow Agent, to:

            Grushko & Mittman, P.C.
            Attorneys at Law
            551 Fifth Avenue, Suite 1601
            New York, New York 10176
            Telecopier: (212) 697-3575

                                       7
<PAGE>

or to such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.

      5.3.  Interest.   The  Investment  Amounts  shall  not  be  held  in  an
interest bearing account nor will interest be payable in connection therewith.

      5.4. Assignment; Binding Agreement. Neither this Agreement nor any right
or obligation hereunder shall be assignable by any party without the prior
written consent of the other parties hereto. This Agreement shall enure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.

      5.5. Resale/Issuance. Each Investor hereby notifies the Company that
unless the Company is otherwise advised prior to a Closing Date, each Investor
will have sold, pledged or otherwise transferred or agreed to sell, pledge or
otherwise transfer all Put Shares in a bona fide transaction to a third party
that is not an affiliate of the Company, and that the Investor will have caused
the prospectus delivery requirements to have been satisfied. Accordingly, the
Company agrees to deliver all Put Shares to the Escrow Agent without restrictive
legend pursuant to the requirements of Article IX of the Credit Line Agreement.

      5.6. Invalidity. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal, or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.

      5.7. Counterparts/Execution. This Agreement may be executed in any number
of counterparts and by different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument. This Agreement
may be executed by facsimile transmission.

                                       8
<PAGE>

      5.8.  Agreement.  Each of the  undersigned  states  that he has read the
            ---------
foregoing Credit Line Funds Escrow Agreement and understands and agrees to it.

                                    CYBER DIGITAL, INC. - the "Company"

                                    By: /s/ J.C. Chatpar
                                    --------------------------------------

                                    By: Grenville Finance Ltd.
                                    --------------------------------------
                                    Investor - GRENVILLE FINANCE LTD.

                                    ESCROW AGENT:

                                    By: /s/ Grushko & Mittman, P.C.
                                    --------------------------------------
                                    GRUSHKO & MITTMAN, P.C.

                                       9Exhibit 4.1

                          SECURITIES PURCHASE AGREEMENT

                                   dated as of

                                January 28, 2002

                                 by and between

                        Dial-Thru International Corporation
                                 as the Issuer,

                                      and

                       GCA Strategic Investment Fund Limited

<PAGE>

                            TABLE OF CONTENTS

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

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

                            LIST OF SCHEDULES

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

                            LIST OF EXHIBITS

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

<PAGE>

                        SECURITIES PURCHASE AGREEMENT

      AGREEMENT,  dated   as  of   January   28,  2002,   between   Dial-Thru
 International Corporation (the "Company") and GCA Strategic Investment  Fund
 Limited ("Purchaser").

                               R E C I T A L S:

      WHEREAS, the  Company  desires to  sell  and issue  to  Purchaser,  and
 Purchaser desires to purchase from the Company $550,000 principal amount  of
 the  Company's  6%  Convertible  Debentures   due  January  28,  2003   (the
 "Convertible Debentures") in accordance with the terms and conditions as set
 forth in the form of Convertible Debenture attached hereto as Exhibit A;

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

      WHEREAS,  in  order  to  induce  the   Purchaser  to  enter  into   the
 transactions described in this  Agreement, the Company  desires to issue  to
 the Purchaser up to  an aggregate of 50,000  warrants to purchase shares  of
 Common Stock  upon  the  Closing  (as  defined  herein)  on  the  terms  and
 conditions described  in  the form  of  the common  stock  purchase  warrant
 attached hereto as Exhibit E (the "Warrants"); and

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

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

      ARTICLE I.  DEFINITIONS

      Section 1.1 Definitions.  The following terms, as used herein, have the
 following meanings:

      "Additional Shares  of  Common Stock"  has  the meaning  set  forth  in
 Section 11.6.

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

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

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

      "Balance Sheet Date" has the meaning set forth in Section 4.7.
      "Benefit Arrangement" means at any time an employee benefit plan within
 the meaning of Section 3(3) of ERISA which is not a Plan or a  Multiemployer
 Plan and which is maintained or otherwise contributed to by the Company.

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

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

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

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

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

      "Closing Date" means the date on which all of the conditions set  forth
 in Sections 6.1 and 6.2 shall have been satisfied and Convertible Debentures
 in the aggregate principal amount of  $550,000 are issued by the Company  to
 Purchaser.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

      "Listing Applications" has the meaning set forth in Section 4.4.
      "Majority Holders"  means (i) as  of the  Closing Date,  Purchaser  and
 (ii) at any  time thereafter,  the holders  of more  than 50%  in  aggregate
 principal amount of  the 6% Convertible  Debentures dated  January 28,  2003
 outstanding at such time.

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

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

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

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

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

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

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

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

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

      "Notice of Exercise" means the  form to be delivered  by a holder of  a
 Warrant  upon  exercise  of  all  or  a  portion  thereof  to  the   Company
 substantially in the form of Exhibit A to the Warrant.
      "Officer's Certificate"  shall  mean  a  certificate  executed  by  the
 president, chief executive officer or chief financial officer of the Company
 in the form of Exhibit D attached hereto.

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

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

      "PBGC" means the  Pension Benefit  Guaranty Corporation  or any  entity
 succeeding to any or all of its functions under ERISA.
      "Permits" means all domestic and foreign licenses, franchises,  grants,
 authorizations,  permits,   easements,  variances,   exemptions,   consents,
 certificates, orders and approvals necessary to  own, lease and operate  the
 properties of,  and  to  carry  on  the business  of  the  Company  and  the
 Subsidiaries.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

      ARTICLE II.  PURCHASE AND SALE OF SECURITIES

      Section 2.1  Purchase and Sale of Convertible Debentures.

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

           (b)  Purchaser shall  acquire  the Convertible  Debenture  on  the
 Closing Date in  an aggregate  principal amount  of Five  Hundred and  Fifty
 Thousand Dollars ($550,000.00).

           (c)  In connection with the Purchaser's agreement to purchase  the
 Convertible Debentures specified in this Article II, the Company shall issue
 and deliver to  the Purchaser on  the Closing Date  Warrants to purchase  an
 aggregate of 50,000 shares of Common Stock.

      Section 2.2  Purchase Price.  The purchase price (the "Purchase Price")
 for the Convertible Debenture and the Warrants on the Closing Date shall  be
 $522,500.00 or 95% of the principal amount of the Convertible Debenture.

      Section 2.3  Closing and Mechanics of Payment.

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

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

      ARTICLE III.  PAYMENT TERMS OF CONVERTIBLE DEBENTURES

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

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

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

      Section 3.4  Mandatory Prepayments.

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

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

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

      Section 3.5  Prepayment Procedures.

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

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

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

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

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

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

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

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

      Section 3.6  Payment of Additional Amounts.

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

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

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

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

      ARTICLE IV.  REPRESENTATIONS AND WARRANTIES

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

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

      Section 4.2  Authorization and Execution.

           (a)  The Company has all  requisite corporate power and  authority
 to enter into and perform each  Transaction Agreement and to consummate  the
 transactions contemplated hereby and thereby and to issue the Securities  in
 accordance with the terms hereof and thereof.
           (b)  The execution,  delivery and  performance by  the Company  of
 each Transaction Agreement and the issuance by the Company of the Securities
 have  been  duly  and   validly  authorized  and   no  further  consent   or
 authorization of the Company, its Board of Directors or its shareholders  is
 required.

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

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

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

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

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

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

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

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

      Section 4.9  Compliance with ERISA and other Benefit Plans.

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

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

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

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

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

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

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

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

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

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

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

      Section 4.18  Absence of Any Undisclosed Liabilities or Capital  Calls.
 There are  no liabilities  of the  Company  or any  Subsidiary of  any  kind
 whatsoever, whether accrued, contingent, absolute, determined,  determinable
 or otherwise,  and there  is  no existing  condition,  situation or  set  of
 circumstances which  would  reasonably  be expected  to  result  in  such  a
 liability, other than (i)  those liabilities provided  for in the  financial
 statements delivered  pursuant to  Section 4.7  and (ii)  other  undisclosed
 liabilities which,  individually  or in  the  aggregate, would  not  have  a
 Material Adverse Effect.

      Section 4.19  Public Utility Holding Company.  Neither the Company  nor
 any Subsidiary is, or will be upon  issuance and sale of the Securities  and
 the use of the  proceeds described herein, subject  to regulation under  the
 Public Utility Holding Company  Act of 1935, as  amended, the Federal  Power
 Act, the  Interstate Commerce  Act or  to any  federal or  state statute  or
 regulation limiting its ability to issue  and perform its obligations  under
 any Transaction Agreement.

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

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

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

      Section 4.23  Internal  Accounting Controls.  The  Company and each  of
 its  Subsidiaries  maintain  a   system  of  internal  accounting   controls
 sufficient, in the judgment of the Company's Board of Directors, to  provide
 reasonable assurance that (i) transactions  are executed in accordance  with
 managements' general  or  specific  authorizations,  (ii)  transactions  are
 recorded as  necessary  to permit  preparation  of financial  statements  in
 conformity with GAAP and to maintain  asset accountability, (iii) access  to
 assets is permitted only in accordance with management's general or specific
 authorization, and (iv) the recorded  accountability for assets is  compared
 with the existing assets at reasonable  intervals and appropriate action  is
 taken with respect to any differences.

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

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

      ARTICLE V.  REPRESENTATIONS AND WARRANTIES OF PURCHASER

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

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

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

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

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

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

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

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

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

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

           (j)  Purchaser is not  a U.S. Person  as such term  is defined  in
 Rule 902 of the Securities Act of 1933, as amended; and

           (k)  Purchaser agrees to comply with  Rules 901 - 905,  inclusive,
 of the Securities Act of 1933, as amended with respect to the resale of  the
 Securities.

      ARTICLE VI.  CONDITIONS PRECEDENT TO PURCHASE OF SECURITIES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

           (r)  The Registration Statement required  to be filed pursuant  to
 that certain Registration  Rights Agreement between  the Company and  Global
 Capital Funding  Group, L.P.  dated as  of April  11, 2001  shall have  been
 declared effective by the Commission and  shall continue to be effective  as
 of the Closing Date.

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

           (a)  The representations  and  warranties of  Purchaser  contained
 herein shall be  true and correct  in all material  respects on the  Closing
 Date and  Purchaser  shall  have performed  and  complied  in  all  material
 respects with all agreements required by  this Agreement to be performed  or
 complied with by Purchaser at or prior to the Closing Date;
           (b)  The issue and sale of the Securities by the Company shall not
 be prohibited by any applicable law, court order or governmental regulation;

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

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

      ARTICLE VII.  AFFIRMATIVE COVENANTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

      Section 7.10  Reserved Shares and Listings.

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

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

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

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

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

      ARTICLE VIII.  NEGATIVE COVENANTS

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

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

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

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

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

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

      Section 8.6 Restrictions on Issuances of Securities.

           (a)  From the Closing Date and continuing until 180 days following
 the date on which the Registration Statement becomes effective, the  Company
 agrees that it  will not, without  the prior written  consent of  Purchaser,
 issue any  of  its equity  securities  (or securities  convertible  into  or
 exchangeable  or  exercisable   for  equity   securities  (the   "Derivative
 Securities")) on terms that  allow a holder thereof  to acquire such  equity
 securities (or Derivative Securities) at a  discount to the Market Price  of
 the Common Stock  at the  time of  issuance or,  in the  case of  Derivative
 Securities, at a conversion price based on any formula (other than  standard
 anti-dilution provisions) based on the Market Price on a date later than the
 date of issuance which  is below the  Market Price on  the date of  issuance
 (each such event, a "Discounted Equity Offering") other than (i)  borrowings
 under conventional credit facilities  existing as of  the date hereof,  (ii)
 stock issued  or credit  facilities to  be  established in  connection  with
 acquisitions, (iii) equity securities or Derivative Securities in connection
 with employee and director  stock option and stock  purchase plans and  (iv)
 securities issued under the Convertible Debenture or Warrants.  In addition,
 the Company  shall not  issue any  equity securities  in connection  with  a
 strategic alliance entered into  by the Company  unless such securities  are
 the subject of a one  year statutory or contractual  hold period or, if  not
 subject to such a hold period, unless the Purchaser has fully converted  all
 outstanding Convertible  Debentures and  exercised all  Warrants.   As  used
 herein, "discount" shall include,  but not be limited  to, (i) any  warrant,
 right or other security granted or offered in connection with such  issuance
 which, on  the applicable  date of  grant, is  offered with  an exercise  or
 conversion price, as the case may be,  at less than the then current  Market
 Price of the Common Stock or, if such security has an exercise or conversion
 price based on  any formula (other  than standard anti-dilution  provisions)
 based on the Market Price on a date later than the date of issuance, then at
 a price below the Market  Price on such date  of exercise or conversion,  as
 the case may be, or (ii) any  commissions, fees or other allowances paid  in
 connection  with  such  issuances  (other  than  customary  underwriter   or
 placement agent  commissions, fees  or allowances).    For the  purposes  of
 determining the Market Price  at which Common Stock  is acquired under  this
 Section, normal  underwriting  commissions  and  placement  fees  (including
 underwriters' warrants) shall be  excluded.  Notwithstanding the  foregoing,
 the Company may enter into the following types of transactions (collectively
 referred  to  as  "Permitted   Financings"):    (1)  "permanent   financing"
 transactions, which  would include  any form  of  debt or  equity  financing
 (other than an underwritten offering), which  is followed by a reduction  of
 the said financing commitment  to zero and payment  of all related fees  and
 expenses; (2) "project financing" which provide for the issuance of recourse
 debt instruments in connection with the operation of the Company's  business
 as presently conducted or as proposed  to be conducted; (3) an  underwritten
 offering of  Common Stock,  provided that  such  offering provides  for  the
 registration of the Conversion Shares if the Registration Statement has  not
 been declared effective; and  (4) other financing transactions  specifically
 consented to in writing  by the Purchaser.   The 180-day restrictive  period
 set forth in this paragraph  (a) of this Section  8.6 shall be increased  by
 one day for each day a Registration Default has occurred and not been  cured
 by the Company.

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

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

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

      ARTICLE IX.  RESTRICTIVE LEGENDS

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

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

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

      ARTICLE X.  ADDITIONAL AGREEMENTS AMONG THE PARTIES

      Section 10.1  Liquidated Damages.

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

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

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

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

      Section 10.4  Registration Rights.

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

           (b)  The Company shall prepare and  file within fifteen (15)  days
 following the Closing Date (the "Filing  Date") a registration statement  or
 amendment thereto (the "Registration Statement") covering the resale of  the
 Registrable Securities.  The Company shall use its best efforts to cause the
 Registration Statement to be  declared effective by  the Commission and  the
 necessary Listing Applications to be filed on the earlier of (i) 60 days  of
 the Closing  Date, (ii)  ten days  following the  receipt of  a "No  Review"
 Letter from the  Commission or  (iii) the first  day following  the day  the
 Commission determines  the Registration  Statement eligible  to be  declared
 effective (the  "Required Effectiveness  Date"); provided,  however, in  the
 event the  Company is  not eligible  to use  Form S-3  for the  Registration
 Statement, the Filing Date  shall be extended for  30 days and the  Required
 Effectiveness Date shall be extended for 30 days.  The Company shall pay all
 expenses of registration  (other than  underwriting fees  and discounts,  if
 any, in  respect  of Registrable  Securities  offered and  sold  under  each
 registration statement by Purchaser).

           (c)  If the  Registration Statement  is not  filed by  the  Filing
 Date, the Company shall pay to Purchaser, as liquidated damages and not as a
 penalty, an amount  equal to  one percent (1%)  of the  principal amount  of
 Convertible Debentures outstanding for  each 30-day period (prorated)  until
 the  Registration  Statement  is  filed  with   the  Commission.    If   the
 Registration Statement is not  declared effective by  the Commission by  the
 Required Effectiveness  Date,    the Company  shall  pay  to  Purchaser,  as
 liquidated damages  and not  as a  penalty, an  amount equal  to 2%  of  the
 outstanding principal amount  of the Convertible  Debentures, prorated,  for
 each 30-day period the Registration period is not declared effective by  the
 Commission.  The liquidated damages will  increase to 3% of the  outstanding
 principal amount of the Convertible Debentures in the event the Registration
 Statement is not declared  effective by the 90th  day following the  Closing
 Date.  In the event the Registration Statement is not declared effective  by
 the 150th day following the Closing Date, Purchaser shall have the right  to
 require the Company to redeem the Convertible Debentures and Warrants.

 Additionally, the Company will grant  to Purchaser first priority  piggyback
 registration rights in the event the Company proposes to effect a registered
 offering of Common  Stock or warrants  or both prior  to the  filing of  the
 Registration Statement referenced above.

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

           (e)  If,  following  the  declaration  of  effectiveness  of   the
 Registration Statement   the Registration  Statement (or  any prospectus  or
 supplemental prospectus contained therein) shall  cease to be effective  for
 any reason (including but  not limited to the  occurrence of any event  that
 results in any  prospectus or supplemental  prospectus containing an  untrue
 statement of a  material fact  or omitting a  material fact  required to  be
 stated therein or  necessary in  order to  make the  statements therein,  in
 light of the circumstances under which they were made, not misleading),  the
 Company fails to file required amendments  to the Registration Statement  in
 order to allow the Purchaser to exercise its rights to receive unrestricted,
 unlegended, freely tradeable shares  of Common Stock, or  if for any  reason
 there are  insufficient shares  of such  shares of  Common Stock  registered
 under the then current Registration Statement  to effect full conversion  of
 the Convertible Debentures or exercise of the Warrants (each a "Registration
 Default"), the Company shall immediately take  all necessary steps to  cause
 the Registration Statement to be amended  or supplemented so as to cure  the
 Registration Default.   Failure to cure  a Registration  Default within  ten
 (10)  Business  Days  shall  result  in  the  Company  paying  to  Purchaser
 liquidated damages  at the  rate of  $1,000 for  each day  the  Registration
 Default remains uncured.

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

      ARTICLE XI.  ADJUSTMENT OF FIXED PRICE

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

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

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

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

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

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

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

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

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

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

      (i)  the numerator shall be the sum of:

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

           (II) a number obtained by dividing:

           (A)  either,

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

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

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

      (ii) the denominator shall be the sum of:

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

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

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

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

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

           (ii) rights, options or warrants; or

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

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

           (I)  the numerator shall be the difference between:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

           (b)  any Rights Offering,

           (c)  any Special Distribution,

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

           (e)  Sale Event; or

           (f)  any cash dividend,

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

      ARTICLE XII.  EVENTS OF DEFAULT

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

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

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

           (c)  failure by the Company to timely comply with the requirements
 of Section 7.11 or 10.1 hereof, which  failure is not cured within five  (5)
 Business Days of such failure;

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

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

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

           (g)  failure  of  the  Company   to  file  the  required   Listing
 Applications, if any, within twenty (20) Business Days of the Closing  Date,
 which failure is not cured within five (5) Business Days of such failure;

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

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

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

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

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

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

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

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

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

      ARTICLE XIII.  MISCELLANEOUS

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

      Section 13.2  No Waivers; Amendments.

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

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

      Section 13.3  Indemnification.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

      [signature page follows]

<PAGE>

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

                               DIAL-THRU INTERNATIONAL CORPORATION

                               By:
                               Name:     ________________________________
                               Title:    ________________________________

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

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

                                        GCA STRATEGIC INVESTMENT FUND LIMITED

                                        By:
                                        Name:     Lewis N. Lester
                                        Title:    Director

                                        Address:  c\o Prime Management
                                                  Mechanics Building
                                                  12 Church Street
                                                  Hamilton, Bermuda HM11

                                        Fax:      441-295-3926
                                        Tel.:     441-295-0329

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