<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>ex10-1.txt
<DESCRIPTION>EX-10.1
<TEXT>
                                                                    EXHIBIT 10.1


                          SECURITIES PURCHASE AGREEMENT

         This Securities  Purchase  Agreement (this  "AGREEMENT") is dated as of
February 28, 2007, among MPLC, Inc., a Delaware corporation (the "COMPANY"), and
each  purchaser  identified on the signature  pages hereto (each,  including its
successors and assigns, a "PURCHASER" and collectively the "PURCHASERS").

         WHEREAS,  subject  to the  terms  and  conditions  set  forth  in  this
Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "SECURITIES ACT"), and Rule 506 promulgated thereunder, the Company desires
to issue  and sell to each  Purchaser,  and each  Purchaser,  severally  and not
jointly, desires to purchase from the Company, securities of the Company as more
fully described in this Agreement.

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


                                    ARTICLE I
                                   DEFINITIONS

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

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

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

                  "APPROVED  CHARTER  AMENDMENT"  means,  pursuant  to  Delaware
         General  Corporation  Law, the affirmative  vote by the shareholders of
         the  Corporation to amend the articles or certificate of  incorporation
         of the  Corporation  (i) to effect a 1:300  reverse  stock split of the
         Common  Stock and (ii) to increase the number of  authorized  shares of
         Common Stock of the Corporation from 75,000,000 to 100,000,000.

                  "BUSINESS DAY" means any day except Saturday,  Sunday, any day
         which shall be a federal  legal holiday in the United States or any day
         on which banking  institutions  in the State of New York are authorized
         or required by law or other governmental action to close.

                  "CERTIFICATE   OF   DESIGNATION"   means  the  Certificate  of
         Designation to be filed prior


<PAGE>


         to the Closing by the Company with the  Secretary of State of Delaware,
         in the form of EXHIBIT A attached hereto.

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

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

                  "COMMISSION" means the Securities and Exchange Commission.

                  "COMMON  STOCK"  means the common  stock of the  Company,  par
         value  $0.01 per share,  and any other class of  securities  into which
         such securities may hereafter be reclassified or changed into.

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

                  "COMPANY COUNSEL" means Stubbs Alderton & Markiles,  LLP, with
         offices located at 15260 Ventura Boulevard,  20th Floor,  Sherman Oaks,
         CA 91403.

                  "CONVERSION  PRICE"  shall have the  meaning  ascribed to such
         term in the Certificate of Designation.

                  "DISCLOSURE SCHEDULES" shall have the meaning ascribed to such
         term in Section 3.1.

                  "EFFECTIVE DATE" means the date that the initial  Registration
         Statement  filed by the  Company  pursuant to the  Registration  Rights
         Agreement is first declared effective by the Commission.

                  "ELECTION OF DIRECTORS"  means,  pursuant to Delaware  General
         Corporation  Law, (i) the affirmative  vote by the  shareholders of the
         Corporation to elect Ray Musci,  Drew Larner and Burton Katz as members
         of the board of  directors of the  Corporation  and (ii) the seating of
         such persons as directors.

                  "ESCROW  AGENT"  means   Signature  Bank,  a  New  York  State
         chartered bank, with offices located at 950 Third Avenue, New York, New
         York 10022.

                  "ESCROW  AGREEMENT" means the Escrow Deposit Agreement entered
         into prior to the date hereof,  by and among the Company and the Escrow
         Agent  pursuant to which the  Purchasers,  shall  deposit  Subscription
         Amounts with the Escrow Agent to be applied to


                                       2
<PAGE>


         the transactions contemplated hereunder.

                  "EVALUATION DATE" shall have the meaning ascribed to such term
         in Section 3.1(r).

                  "EXCHANGE ACT" means the  Securities  Exchange Act of 1934, as
         amended, and the rules and regulations promulgated thereunder.

                  "EXEMPT  ISSUANCE"  means the issuance of (a) shares of Common
         Stock or options to  employees,  officers or  directors  of the Company
         pursuant to any stock or option plan duly adopted for such purpose by a
         majority of the  non-employee  members of the Board of Directors of the
         Company or a majority  of the members of a  committee  of  non-employee
         directors established,  (b) securities upon the exercise or exchange of
         or  conversion  of  any  Securities   issued   hereunder  and/or  other
         securities  exercisable or exchangeable  for or convertible into shares
         of Common Stock issued and  outstanding on the date of this  Agreement,
         provided that such  securities  have not been amended since the date of
         this Agreement to increase the number of such securities or to decrease
         the exercise,  exchange or conversion price of such securities, and (c)
         securities  issued pursuant to  acquisitions or strategic  transactions
         approved by a majority of the  disinterested  directors of the Company,
         provided  that any such  issuance  shall only be to a Person  which is,
         itself or through its subsidiaries,  an operating company in a business
         synergistic  with the  business of the Company and in which the Company
         receives benefits in addition to the investment of funds, but shall not
         include  a  transaction  in which the  Company  is  issuing  securities
         primarily  for the  purpose  of raising  capital or to an entity  whose
         primary business is investing in securities.

                  "FWS"  means  Feldman  Weinstein  & Smith  LLP,  with  offices
         located  at 420  Lexington  Avenue,  Suite  2620,  New  York,  New York
         10170-0002.

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

                  "INDEBTEDNESS" shall have the meaning ascribed to such term in
         Section 3.1(aa).

                  "INTELLECTUAL PROPERTY RIGHTS" shall have the meaning ascribed
         to such term in Section 3.1(o).

                  "LEGEND REMOVAL DATE" shall have the meaning  ascribed to such
         term in Section 4.1(c).

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

                  "MATERIAL  ADVERSE EFFECT" shall have the meaning  ascribed to
         such term in Section 3.1(b).

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


                                       3
<PAGE>


                  "MAXIMUM RATE" shall have the meaning ascribed to such term in
         Section 5.17.

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

                  "PLACEMENT  AGENT" means Sanders Morris  Harris,  with offices
         located at 527 Madison Avenue, 14th Floor, New York, New York 10022.

                  "PREFERRED  STOCK"  means the  maximum of 8,334  shares of the
         Company's  Series D 8% Convertible  Preferred  Stock issued  hereunder,
         having  the  rights,  preferences  and  privileges  set  forth  in  the
         Certificate of Designation, in the form of EXHIBIT A hereto.

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

                  "REGISTRATION  RIGHTS AGREEMENT" means the Registration Rights
         Agreement, dated the date hereof, among the Company and the Purchasers,
         in the form of EXHIBIT B attached hereto.

                  "REGISTRATION   STATEMENT"  means  a  registration   statement
         meeting the requirements set forth in the Registration Rights Agreement
         and covering the resale of the  Underlying  Shares by each Purchaser as
         provided for in the Registration Rights Agreement.

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

                  "REQUIRED   MINIMUM"  means,  as  of  any  date,  the  maximum
         aggregate  number of shares of Common Stock then issued or  potentially
         issuable in the future pursuant to the Transaction Documents, including
         any Underlying Shares issuable upon conversion in full of all shares of
         Preferred Stock.

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

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

                  "SECURITIES"  means the  Preferred  Stock  and the  Underlying
         Shares.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended,
         and the rules and regulations promulgated thereunder.


                                       4
<PAGE>


                  "SHAREHOLDER  APPROVAL"  means,  collectively,   the  Approved
         Charter Amendment and the Election of Directors.

                  "SHORT  SALES" means all "short  sales" as defined in Rule 200
         of  Regulation  SHO under the  Exchange Act (but shall not be deemed to
         include the location and/or  reservation of borrowable shares of Common
         Stock).

                  "STATED VALUE" means $1,200.00 per share of Preferred Stock.

                  "SUBSCRIPTION  AMOUNT" shall mean, as to each  Purchaser,  the
         aggregate amount to be paid for the Preferred Stock purchased hereunder
         as specified below such  Purchaser's name on the signature page of this
         Agreement  and next to the  heading  "Subscription  Amount,"  in United
         States dollars and in immediately available funds.

                  "SUBSIDIARY"  means any subsidiary of the Company as set forth
         on SCHEDULE 3.1(A), and shall include, without limitation,  New Motion,
         Inc., a Delaware corporation.

                  "TRADING  DAY" means a day on which the Common Stock is traded
         on a Trading Market.

                   "TRADING MARKET" means the following  markets or exchanges on
         which the Common  Stock is listed or quoted for  trading on the date in
         question:  the American Stock Exchange,  the Nasdaq Capital Market, the
         Nasdaq Global  Market,  the Nasdaq Global Select  Market,  the New York
         Stock Exchange or the OTC Bulletin Board.

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

                  "UNDERLYING  SHARES"  means the shares of Common  Stock issued
         and issuable upon conversion of the Preferred Stock.

                  "VWAP" means,  for any date, the price determined by the first
         of the following clauses that applies:  (a) if the Common Stock is then
         listed or quoted on a Trading Market, the daily volume weighted average
         price of the Common Stock for such date (or the nearest preceding date)
         on the  Trading  Market on which  the  Common  Stock is then  listed or
         quoted as reported by Bloomberg L.P.  (based on a Trading Day from 9:30
         a.m. (New York City time) to 4:02 p.m. (New York City time); (b) if the
         OTC Bulletin Board is not a Trading Market, the volume weighted average
         price of the Common Stock for such date (or the nearest preceding date)
         on the OTC Bulletin  Board;  (c) if the Common Stock is not then quoted
         for  trading  on the OTC  Bulletin  Board and if prices  for the Common
         Stock are then reported in the "Pink Sheets"  published by Pink Sheets,
         LLC (or a similar organization or agency succeeding to its functions of
         reporting  prices),  the most  recent bid price per share of the Common
         Stock so reported; or (d) in all other cases, the


                                       5
<PAGE>


         fair  market  value of a share of  Common  Stock  as  determined  by as
         determined by the Board of Directors of the Corporation in good faith.


                                   ARTICLE II
                                PURCHASE AND SALE

         2.1  CLOSING.  On the Closing  Date,  upon the terms and subject to the
conditions  set forth herein,  substantially  concurrent  with the execution and
delivery of this  Agreement by the parties  hereto,  the Company agrees to sell,
and each  Purchaser,  severally  and not jointly,  agrees to purchase,  up to an
aggregate of $10,000,800 of shares of Preferred  Stock with an aggregate  Stated
Value equal to such  Purchaser's  Subscription  Amount.  The aggregate number of
shares of Preferred  Stock sold hereunder  shall be up to 8,334.  Each Purchaser
shall  deliver to the Escrow  Agent via wire  transfer or a  certified  check of
immediately  available funds equal to their Subscription  Amount and the Company
shall deliver to each  Purchaser  its  respective  shares of Preferred  Stock as
determined  pursuant to Section  2.2(a) and the other items set forth in Section
2.2 issuable at the Closing.  Upon  satisfaction  of the conditions set forth in
Sections  2.2 and 2.3,  the  Closing  shall  occur at the offices of FWS or such
other  location  as the  parties  shall  mutually  agree and the Company and the
Placement  Agent  shall  deliver to the Escrow  Agent the duly  executed  Escrow
Release Notice (as defined in the Escrow Agreement).

         2.2      DELIVERIES.

         (a)      On the Closing Date,  the Company shall deliver or cause to be
                  delivered to each Purchaser the following:

                  (i)      this Agreement duly executed by the Company;

                  (ii)     a legal  opinion of Company  Counsel,  in the form of
                           EXHIBIT C attached hereto;

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

                  (iv)     a  certificate,   executed  by  the  Chief  Executive
                           Officer or the Chief Financial Officer of the Company
                           certifying that, on the day immediately preceding the
                           date hereof,  the Company  holds cash and  marketable
                           securities  of an  aggregate  value  that  equals  or
                           exceeds $10,000,000; and

                  (v)      the  Registration  Rights  Agreement duly executed by
                           the Company.

         (b)      On or before the Closing Date, each Purchaser shall deliver or
                  cause to be delivered to the Company the following:

                  (i)      this Agreement duly executed by such Purchaser;


                                       6
<PAGE>


                  (ii)     such Purchaser's Subscription Amount by wire transfer
                           or certified check to the Escrow Agent; and

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

         2.3      CLOSING CONDITIONS.

         (a)      The  obligations of the Company  hereunder in connection  with
                  the Closing are subject to the following conditions being met:

                  (i)      the accuracy in all material  respects  when made and
                           on  the  Closing  Date  of  the  representations  and
                           warranties of the Purchasers contained herein;

                  (ii)     all  obligations,  covenants  and  agreements  of the
                           Purchasers  required to be  performed  at or prior to
                           the Closing Date shall have been performed;

                  (iii)    the delivery by the Purchasers of the items set forth
                           in Section 2.2(b) of this Agreement; and

                  (iv)     the Company shall have  completed the  acquisition of
                           New Motion, Inc., a Delaware corporation.

         (b)      The  respective  obligations  of the  Purchasers  hereunder in
                  connection  with the  Closing  are  subject  to the  following
                  conditions being met:

                  (i)      the accuracy in all material  respects  when made and
                           on  the  Closing  Date  of  the  representations  and
                           warranties of the Company contained herein;

                  (ii)     all  obligations,  covenants  and  agreements  of the
                           Company  required to be  performed at or prior to the
                           Closing Date shall have been performed;

                  (iii)    the delivery by the Company of the items set forth in
                           Section 2.2(a) of this Agreement;

                  (iv)     the aggregate  Subscription Amounts payable hereunder
                           shall equal or exceed $8,000,000;

                  (v)      the Company shall have  completed the  acquisition of
                           New Motion, Inc., a Delaware corporation;

                  (vi)     there shall have been no Material Adverse Effect with
                           respect to the Company since the date hereof; and

                  (vii)    from the date hereof to the Closing Date,  trading in
                           the Common Stock shall not have been suspended by the
                           Commission or the Company's


                                       7
<PAGE>


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


                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

         3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  Except as set forth
under the  corresponding  section of the disclosure  schedules  delivered to the
Purchasers concurrently herewith (the "DISCLOSURE Schedules"),  which Disclosure
Schedules  shall be deemed a part  hereof and to qualify any  representation  or
warranty  otherwise  made herein to the extent of such  disclosure,  the Company
hereby makes the following representations and warranties to each Purchaser:

         (a)      SUBSIDIARIES.   The   Company   has  no  direct  or   indirect
                  Subsidiaries  other  than  those  listed  in the SEC  Reports.
                  Except as  disclosed  in the SEC  Reports,  the Company  owns,
                  directly  or  indirectly,  all of the  capital  stock or other
                  equity  interests  of each  Subsidiary  free and  clear of any
                  Liens, and all of the issued and outstanding shares of capital
                  stock or other equity interests of each Subsidiary are validly
                  issued  and  are  fully  paid,   non-assessable  and  free  of
                  preemptive  and similar  rights to  subscribe  for or purchase
                  securities.  If the  Company  has no  subsidiaries,  all other
                  references  to  the   Subsidiaries  or  any  of  them  in  the
                  Transaction Documents shall be disregarded.

         (b)      ORGANIZATION  AND  QUALIFICATION.  The Company and each of the
                  Subsidiaries  is an  entity  duly  incorporated  or  otherwise
                  organized,  validly  existing and in good  standing  under the
                  laws of the jurisdiction of its  incorporation or organization
                  (as applicable), with the requisite power and authority to own
                  or lease and use its properties and assets and to carry on its
                  business as currently  conducted.  Neither the Company nor any
                  Subsidiary is in violation or default of any of the provisions
                  of its respective  certificate  or articles of  incorporation,
                  bylaws or other  organizational or charter documents.  Each of
                  the Company and the  Subsidiaries is duly qualified to conduct
                  business and is in good standing as a foreign  corporation  or
                  other entity in each  jurisdiction  in which the nature of the
                  business   conducted  or  property  owned  by  it  makes  such
                  qualification  necessary,  except  where the  failure to be so
                  qualified or in good  standing,  as the case may be, could not
                  have or  reasonably  be  expected  to result in (i) a material
                  adverse effect on the legality,  validity or enforceability of
                  any Transaction  Document,  (ii) a material  adverse effect on
                  the results of operations, assets, business or


                                       8
<PAGE>


                  condition  (financial  or  otherwise)  of the  Company and the
                  Subsidiaries,  taken as a whole,  or (iii) a material  adverse
                  effect on the  Company's  ability to  perform in any  material
                  respect  on  a  timely   basis  its   obligations   under  any
                  Transaction  Document (any of (i), (ii) or (iii),  a "MATERIAL
                  ADVERSE  EFFECT") and no Proceeding has been instituted in any
                  such jurisdiction revoking,  limiting or curtailing or seeking
                  to  revoke,  limit or  curtail  such  power and  authority  or
                  qualification.

         (c)      AUTHORIZATION;  ENFORCEMENT.  The  Company  has the  requisite
                  corporate  power and authority to enter into and to consummate
                  the  transactions  contemplated  by  each  of the  Transaction
                  Documents and otherwise to carry out its obligations hereunder
                  and  thereunder.  The  execution  and  delivery of each of the
                  Transaction  Documents by the Company and the  consummation by
                  it of the  transactions  contemplated  hereby and thereby have
                  been duly  authorized by all  necessary  action on the part of
                  the Company and no further  action is required by the Company,
                  its  board of  directors  or its  stockholders  in  connection
                  therewith other than in connection with the Required Approvals
                  and the  adoption of the  Approved  Charter  Amendments.  Each
                  Transaction  Document  has been (or upon  delivery  will  have
                  been) duly  executed by the Company  and,  when  delivered  in
                  accordance with the terms hereof and thereof,  will constitute
                  the valid and binding  obligation  of the Company  enforceable
                  against the Company in accordance with its terms except (i) as
                  limited  by  general   equitable   principles  and  applicable
                  bankruptcy, insolvency,  reorganization,  moratorium and other
                  laws  of  general   application   affecting   enforcement   of
                  creditors' rights generally,  (ii) as limited by laws relating
                  to the availability of specific performance, injunctive relief
                  or   other   equitable   remedies   and   (iii)   insofar   as
                  indemnification and contribution  provisions may be limited by
                  applicable law.

         (d)      NO CONFLICTS.  The execution,  delivery and performance of the
                  Transaction  Documents by the Company and the  consummation by
                  the Company of the other transactions  contemplated hereby and
                  thereby do not and will not: (i) conflict  with or violate any
                  provision of the Company's or any Subsidiary's  certificate or
                  articles of incorporation,  bylaws or other  organizational or
                  charter documents, (ii) conflict with, or constitute a default
                  (or an event  that with  notice or lapse of time or both would
                  become a default)  under,  result in the  creation of any Lien
                  upon any of the  properties  or assets of the  Company  or any
                  Subsidiary,  or give to  others  any  rights  of  termination,
                  amendment,  acceleration  or  cancellation  (with  or  without
                  notice,  lapse of time or both) of,  any  material  agreement,
                  credit  facility,  debt  or  other  instrument  (evidencing  a
                  Company   or   Subsidiary   debt  or   otherwise)   or   other
                  understanding  (as determined  pursuant to Item  601(b)(10) of
                  Regulation  SB) to which the  Company or any  Subsidiary  is a
                  party or by which any  property or asset of the Company or any
                  Subsidiary  is bound or  affected,  or  (iii)  subject  to the
                  Required Approvals,  conflict with or result in a violation of
                  any law, rule, regulation, order, judgment, injunction, decree
                  or other restriction of any court or governmental authority to
                  which  the  Company  or a  Subsidiary  is  subject  (including
                  federal  and state  securities  laws and  regulations),  or by
                  which any property or asset of the Company or a Subsidiary  is
                  bound or affected;  except in the case of each of clauses (ii)
                  and (iii), such as could not have or reasonably be expected to
                  result in a Material Adverse Effect.


                                       9
<PAGE>


         (e)      FILINGS,  CONSENTS AND APPROVALS.  The Company is not required
                  to obtain any consent, waiver, authorization or order of, give
                  any notice to, or make any filing or  registration  with,  any
                  court or other  federal,  state,  local or other  governmental
                  authority or other Person in  connection  with the  execution,
                  delivery  and  performance  by the Company of the  Transaction
                  Documents,   other  than  (i)  filings  with  the   Commission
                  disclosing  the  transactions  contemplated  hereby,  (ii) the
                  filing  with the  Commission  of the  Registration  Statement,
                  (iii)  the  notice  and/or  application(s)  (if  any)  to each
                  applicable  Trading  Market for the  issuance  and sale of the
                  Securities  and  the  listing  of the  Underlying  Shares  for
                  trading  thereon in the time and manner  required  thereby and
                  (iv) the filing of Form D with the Commission and such filings
                  as are required to be made under  applicable  state securities
                  laws (collectively, the "REQUIRED APPROVALS").

         (f)      ISSUANCE OF THE SECURITIES. The Securities are duly authorized
                  and,  when  issued  and  paid  for  in  accordance   with  the
                  applicable  Transaction  Documents,  will be duly and  validly
                  issued,  fully paid and  nonassessable,  free and clear of all
                  Liens  imposed  by the  Company  other  than  restrictions  on
                  transfer  provided  for  in  the  Transaction  Documents.  The
                  Underlying Shares, when issued in accordance with the terms of
                  the Transaction Documents,  will be validly issued, fully paid
                  and nonassessable,  free and clear of all Liens imposed by the
                  Company.  The Company will reserve,  following the adoption of
                  the  Approved  Charter  Amendments,  from its duly  authorized
                  capital  stock a number of shares of Common Stock for issuance
                  of the  Underlying  Shares  at  least  equal  to the  Required
                  Minimum on the date hereof.

         (g)      CAPITALIZATION.  The  capitalization  of the Company is as set
                  forth on SCHEDULE  3.1(G),  which  SCHEDULE  3.1(G) shall also
                  include   the   number  of  shares  of  Common   Stock   owned
                  beneficially,  and of record,  by Affiliates of the Company as
                  of the date  hereof.  The  Company  has not issued any capital
                  stock since its most recently filed periodic  report under the
                  Exchange Act,  other than pursuant to the exercise of employee
                  stock  options under the  Company's  stock option  plans,  the
                  issuance of shares of Common  Stock to  employees  pursuant to
                  the Company's employee stock purchase plan and pursuant to the
                  conversion or exercise of Common Stock Equivalents outstanding
                  as of the  date of the most  recently  filed  periodic  report
                  under the Exchange Act. To the Company's knowledge,  no Person
                  has any right of first  refusal,  preemptive  right,  right of
                  participation,  or any  similar  right to  participate  in the
                  transactions contemplated by the Transaction Documents. Except
                  as a result  of the  purchase  and sale of the  Securities  or
                  except for Common Stock Equivalents outstanding as of the date
                  of the most recently filed periodic  report under the Exchange
                  Act, there are no outstanding options,  warrants, scrip rights
                  to  subscribe  to,  calls  or  commitments  of  any  character
                  whatsoever  relating to, or securities,  rights or obligations
                  convertible into or exercisable or exchangeable for, or giving
                  any Person any right to subscribe  for or acquire,  any shares
                  of Common Stock, or contracts, commitments,  understandings or
                  arrangements  by which the Company or any Subsidiary is or may
                  become  bound to issue  additional  shares of Common  Stock or
                  Common Stock  Equivalents.  To the  Company's  knowledge,  the
                  issuance  and sale of the  Securities  will not  obligate  the
                  Company to issue shares of Common Stock or other securities to
                  any Person (other than the  Purchasers) and will not result in
                  a right of any  holder of  Company  securities  to adjust  the
                  exercise, conversion, exchange or reset price


                                       10
<PAGE>


                  under any of such securities. All of the outstanding shares of
                  capital  stock of the Company are validly  issued,  fully paid
                  and  nonassessable,  have been issued in  compliance  with all
                  federal  and  state   securities   laws,   and  none  of  such
                  outstanding  shares was issued in violation of any  preemptive
                  rights  or  similar   rights  to  subscribe  for  or  purchase
                  securities.  Other than the adoption of the  Approved  Charter
                  Amendment,   no  further  approval  or  authorization  of  any
                  stockholder,  the Board of  Directors of the Company or others
                  is required for the issuance and sale of the Securities. There
                  are no  stockholders  agreements,  voting  agreements or other
                  similar agreements with respect to the Company's capital stock
                  to which the  Company is a party or, to the  knowledge  of the
                  Company, between or among any of the Company's stockholders.

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

         (i)      MATERIAL   CHANGES  Since  the  date  of  the  latest  audited
                  financial  statements included within the SEC Reports,  except
                  as  specifically  disclosed in a  subsequent  SEC Report filed
                  prior  to the  date  hereof,  (i)  there  has  been no  event,
                  occurrence  or   development   that  has  had  or  that  could
                  reasonably be expected to result in a Material Adverse Effect,
                  (ii) the Company has not incurred any liabilities  (contingent
                  or  otherwise)  other  than (A)  trade  payables  and  accrued
                  expenses   incurred  in  the   ordinary   course  of  business
                  consistent with past practice and (B) liabilities not required
                  to be reflected in the Company's financial statements pursuant
                  to GAAP or disclosed in filings


                                       11
<PAGE>


                  made with the  Commission,  (iii) the  Company has not altered
                  its method of accounting, (iv) the Company has not declared or
                  made any dividend or distribution of cash or other property to
                  its stockholders or purchased, redeemed or made any agreements
                  to purchase or redeem any shares of its capital  stock and (v)
                  the  Company  has not  issued  any  equity  securities  to any
                  officer,  director or Affiliate,  except  pursuant to existing
                  Company stock option plans.  The Company does not have pending
                  before the Commission any request for  confidential  treatment
                  of  information.  Except for the  issuance  of the  Securities
                  contemplated  by this  Agreement  or as set forth on  SCHEDULE
                  3.1(I),  no event,  liability or  development  has occurred or
                  exists  with  respect to the  Company or its  Subsidiaries  or
                  their respective business, properties, operations or financial
                  condition,  that  would be  required  to be  disclosed  by the
                  Company  under  applicable  securities  laws at the time  this
                  representation is made that has not been publicly disclosed at
                  least 1 Trading Day prior to the date that this representation
                  is made.

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

         (k)      LABOR  RELATIONS.  No material labor dispute exists or, to the
                  knowledge of the Company,  is imminent  with respect to any of
                  the  employees  of  the  Company  which  could  reasonably  be
                  expected to result in a Material  Adverse Effect.  None of the
                  Company's  or its  Subsidiaries'  employees  is a member  of a
                  union that relates to such  employee's  relationship  with the
                  Company, and neither the Company or any of its Subsidiaries is
                  a party to a collective bargaining agreement,  and the Company
                  and its  Subsidiaries  believe that their  relationships  with
                  their  employees  are  good.  No  executive  officer,  to  the
                  knowledge  of the  Company,  is, or is now  expected to be, in
                  violation of any  material  term of any  employment  contract,
                  confidentiality,   disclosure   or   proprietary   information
                  agreement or non-competition  agreement, or any other contract
                  or agreement or any  restrictive  covenant,  and the continued
                  employment of each such executive officer does not subject the
                  Company  or any  of its  Subsidiaries  to any  liability  with
                  respect to any of the foregoing  matters.  The Company and its
                  Subsidiaries are in compliance with all U.S.  federal,  state,
                  local and foreign laws and regulations  relating to employment
                  and


                                       12
<PAGE>


                  employment  practices,  terms and conditions of employment and
                  wages and hours,  except where the failure to be in compliance
                  could not,  individually  or in the  aggregate,  reasonably be
                  expected to have a Material Adverse Effect.

         (l)      COMPLIANCE.  Neither the Company nor any  Subsidiary (i) is in
                  default  under or in  violation  of (and no event has occurred
                  that has not been waived that, with notice or lapse of time or
                  both,  would  result  in a  default  by  the  Company  or  any
                  Subsidiary  under),  nor has  the  Company  or any  Subsidiary
                  received notice of a claim that it is in default under or that
                  it is in violation of, any indenture, loan or credit agreement
                  or any other agreement or instrument to which it is a party or
                  by which it or any of its  properties is bound (whether or not
                  such  default  or  violation  has  been  waived),  (ii)  is in
                  violation   of  any  order  of  any   court,   arbitrator   or
                  governmental body having  jurisdiction over the Company or its
                  properties or assets,  or (iii) is or has been in violation of
                  any statute, rule or regulation of any governmental authority,
                  except  in each  case as  could  not  have  or  reasonably  be
                  expected to result in a Material Adverse Effect.

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

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

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


                                       13
<PAGE>


                  another Person of any of the Intellectual Property Rights. The
                  Company and its Subsidiaries  have taken  reasonable  security
                  measures to protect the secrecy,  confidentiality and value of
                  all of their intellectual properties,  except where failure to
                  do so could not, individually or in the aggregate,  reasonably
                  be expected to have a Material Adverse Effect.

         (p)      INSURANCE.  The  Company and the  Subsidiaries  are insured by
                  insurers of recognized financial  responsibility  against such
                  losses  and  risks  and in such  amounts  as are  prudent  and
                  customary  in the  businesses  in which  the  Company  and the
                  Subsidiaries   are  engaged.   Neither  the  Company  nor  any
                  Subsidiary  has any reason to believe that it will not be able
                  to renew  its  existing  insurance  coverage  as and when such
                  coverage  expires or to obtain  similar  coverage from similar
                  insurers as may be necessary to continue its business  without
                  a significant increase in cost.

         (q)      TRANSACTIONS  WITH  AFFILIATES  AND  EMPLOYEES.  Except as set
                  forth in the SEC Reports, none of the officers or directors of
                  the Company and, to the knowledge of the Company,  none of the
                  employees   of  the  Company  is  presently  a  party  to  any
                  transaction with the Company or any Subsidiary (other than for
                  services as employees, officers and directors),  including any
                  contract,  agreement or other  arrangement  providing  for the
                  furnishing of services to or by,  providing for rental of real
                  or  personal  property  to or  from,  or  otherwise  requiring
                  payments to or from any officer, director or such employee or,
                  to the  knowledge  of the  Company,  any  entity  in which any
                  officer,  director,  or any such  employee  has a  substantial
                  interest or is an officer,  director,  trustee or partner,  in
                  each case in excess of $60,000  other than for (i)  payment of
                  salary  or  consulting  fees  for  services   rendered,   (ii)
                  reimbursement  for expenses  incurred on behalf of the Company
                  and (iii) other  employee  benefits,  including  stock  option
                  agreements under any stock option plan of the Company.

         (r)      SARBANES-OXLEY;   DISCLOSURE  CONTROLS.   The  Company  is  in
                  material  compliance with all provisions of the Sarbanes-Oxley
                  Act of 2002 which are applicable to it as of the Closing Date.
                  The Company has established disclosure controls and procedures
                  (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for
                  the  Company  and  designed  such   disclosure   controls  and
                  procedures to ensure that information required to be disclosed
                  by the  Company in the  reports it files or submits  under the
                  Exchange Act is recorded, processed,  summarized and reported,
                  within the time periods  specified in the  Commission's  rules
                  and forms.  The Company's  certifying  officers have evaluated
                  the  effectiveness  of the Company's  disclosure  controls and
                  procedures  as of  the  end  of  the  period  covered  by  the
                  Company's  most  recently  filed  periodic  report  under  the
                  Exchange Act (such date, the "EVALUATION  DATE").  The Company
                  presented in its most recently filed periodic report under the
                  Exchange Act the conclusions of the certifying  officers about
                  the  effectiveness  of the disclosure  controls and procedures
                  based on their  evaluations as of the Evaluation Date.  Except
                  as set forth in Schedule  3.1(r) of the  Disclosure  Schedule,
                  since the Evaluation  Date,  there have been no changes in the
                  Company's  internal control over financial  reporting (as such
                  term is  defined  in the  Exchange  Act)  that has  materially
                  affected,  or is reasonably likely to materially  affect,  the
                  Company's internal control over financial reporting.


                                       14
<PAGE>


         (s)      CERTAIN  FEES.  Except  for fees  payable  to  Sanders  Morris
                  Harris,  no brokerage or finder's fees or  commissions  are or
                  will  be  payable  by the  Company  to any  broker,  financial
                  advisor or consultant,  finder,  placement  agent,  investment
                  banker,  bank or other Person with respect to the transactions
                  contemplated  by the  Transaction  Documents.  The  Purchasers
                  shall  have no  obligation  with  respect  to any fees or with
                  respect  to any claims  made by or on behalf of other  Persons
                  for fees of a type  contemplated  in this  Section that may be
                  due in connection  with the  transactions  contemplated by the
                  Transaction Documents.

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

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

         (v)      REGISTRATION RIGHTS. Other than each of the Purchasers, to the
                  Company's  knowledge,  no  Person  has any  right to cause the
                  Company to effect the registration under the Securities Act of
                  any securities of the Company.

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

         (x)      DISCLOSURE.  Except  with  respect to the  material  terms and
                  conditions of the transactions contemplated by the Transaction
                  Documents,  the Company confirms that neither it nor any other
                  Person acting on its behalf has provided any of the Purchasers
                  or  their  agents  or  counsel  with any  information  that it
                  believes constitutes or might constitute  material,  nonpublic
                  information.  The Company  understands  and confirms  that the
                  Purchasers  will  rely  on  the  foregoing  representation  in
                  effecting  transactions  in  securities  of the  Company.  All
                  disclosure  furnished  by or on behalf of the  Company  to the
                  Purchasers   regarding  the  Company,  its  business  and  the
                  transactions  contemplated  hereby,  including the  Disclosure
                  Schedules  to this  Agreement,  is  true  and  correct  in all


                                       15
<PAGE>


                  material respects and does not contain any untrue statement of
                  a material fact or omit to state any material  fact  necessary
                  in order to make the statements made therein,  in light of the
                  circumstances  under which they were made, not misleading.  To
                  the Company's  knowledge,  the press releases  disseminated by
                  the Company  during the twelve  months  preceding  the date of
                  this  Agreement  taken as a whole do not  contain  any  untrue
                  statement of a material  fact or omit to state a material fact
                  required to be stated  therein or  necessary  in order to make
                  the statements, in light of the circumstances under which they
                  were  made  and  when  made,  not   misleading.   The  Company
                  acknowledges  and agrees that no  Purchaser  makes or has made
                  any   representations   or  warranties  with  respect  to  the
                  transactions contemplated hereby other than those specifically
                  set forth in Section 3.2 hereof.

         (y)      NO   INTEGRATED   OFFERING.   Assuming  the  accuracy  of  the
                  Purchasers'   representations  and  warranties  set  forth  in
                  Section 3.2,  neither the Company,  nor any of its Affiliates,
                  nor any Person acting on its or their behalf has,  directly or
                  indirectly,  made  any  offers  or sales  of any  security  or
                  solicited any offers to buy any security,  under circumstances
                  that  would  cause  this  offering  of  the  Securities  to be
                  integrated with prior offerings by the Company for purposes of
                  the  Securities  Act or any  applicable  shareholder  approval
                  provision of any Trading Market on which any of the securities
                  of the Company are listed or designated.

         (z)      TAX STATUS. Except for matters that would not, individually or
                  in the aggregate,  have or reasonably be expected to result in
                  a Material Adverse Effect, the Company and each Subsidiary has
                  filed all  necessary  federal,  state and  foreign  income and
                  franchise  tax returns and has paid or accrued all taxes shown
                  as due  thereon,  and the  Company has no  knowledge  of a tax
                  deficiency  which has been asserted or threatened  against the
                  Company or any Subsidiary.

         (aa)     NO GENERAL  SOLICITATION.  Neither  the Company nor any person
                  acting on behalf of the Company has offered or sold any of the
                  Securities  by any form of  general  solicitation  or  general
                  advertising.  The Company has offered the  Securities for sale
                  only  to  the   Purchasers   and  certain  other   "accredited
                  investors" within the meaning of Rule 501 under the Securities
                  Act.

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

         (cc)     ACKNOWLEDGMENT  REGARDING  PURCHASERS' PURCHASE OF SECURITIES.
                  The  Company   acknowledges   and  agrees  that  each  of  the
                  Purchasers is acting solely in the


                                       16
<PAGE>


                  capacity  of an arm's  length  purchaser  with  respect to the
                  Transaction   Documents  and  the  transactions   contemplated
                  thereby. The Company further acknowledges that no Purchaser is
                  acting as a financial  advisor or fiduciary of the Company (or
                  in any  similar  capacity)  with  respect  to the  Transaction
                  Documents and the  transactions  contemplated  thereby and any
                  advice  given  by any  Purchaser  or any of  their  respective
                  representatives  or agents in connection  with the Transaction
                  Documents and the transactions  contemplated thereby is merely
                  incidental to the Purchasers' purchase of the Securities.  The
                  Company   further   represents  to  each  Purchaser  that  the
                  Company's  decision to enter into this Agreement and the other
                  Transaction Documents has been based solely on the independent
                  evaluation  of the  transactions  contemplated  hereby  by the
                  Company and its representatives.

         (dd)     ACKNOWLEDGEMENT   REGARDING   PURCHASERS'   TRADING  ACTIVITY.
                  Anything in this Agreement or elsewhere herein to the contrary
                  notwithstanding  (except for Sections  3.2(f) and 4.5 hereof),
                  it is understood and acknowledged by the Company (i) that none
                  of the  Purchasers  have  been  asked  to  agree,  nor has any
                  Purchaser agreed,  to desist from purchasing or selling,  long
                  and/or  short,  securities  of the  Company,  or  "derivative"
                  securities  based on  securities  issued by the  Company or to
                  hold the Securities for any specified  term; (ii) that past or
                  future open  market or other  transactions  by any  Purchaser,
                  including Short Sales,  and  specifically  including,  without
                  limitation,  Short Sales or "derivative" transactions,  before
                  or after  the  closing  of this or  future  private  placement
                  transactions,  may  negatively  impact the market price of the
                  Company's   publicly-traded   securities;   (iii)   that   any
                  Purchaser, and counter-parties in "derivative" transactions to
                  which any such  Purchaser is a party,  directly or indirectly,
                  presently may have a "short" position in the Common Stock; and
                  (iv)  that  each  Purchaser  shall  not be  deemed to have any
                  affiliation   with  or   control   over   any   arm's   length
                  counter-party  in any  "derivative"  transaction.  The Company
                  further  understands  and  acknowledges  that  (a) one or more
                  Purchasers  may engage in hedging  activities at various times
                  during  the  period  that  the  Securities  are   outstanding,
                  including,  without  limitation,  during the periods  that the
                  value of the  Underlying  Shares  deliverable  with respect to
                  Securities   are  being   determined   and  (b)  such  hedging
                  activities  (if any) could  reduce  the value of the  existing
                  stockholders' equity interests in the Company at and after the
                  time that the  hedging  activities  are being  conducted.  The
                  Company   acknowledges   that  such   aforementioned   hedging
                  activities   do  not   constitute  a  breach  of  any  of  the
                  Transaction Documents.

         (ee)     NO DISAGREEMENTS  WITH  ACCOUNTANTS AND LAWYERS.  There are no
                  disagreements  of any kind presently  existing,  or reasonably
                  anticipated  by the Company to arise,  between the Company and
                  the accountants and lawyers formerly or presently  employed by
                  the  Company and the  Company is current  with  respect to any
                  fees owed to its accountants and lawyers.

         (ff)     REGULATION  M  COMPLIANCE.  The  Company  has not,  and to its
                  knowledge no one acting on its behalf has, (i) taken, directly
                  or  indirectly,  any action  designed to cause or to result in
                  the stabilization or manipulation of the price of any security
                  of the Company to facilitate  the sale or resale of any of the
                  Securities,  (ii)  sold,  bid  for,  purchased,  or  paid  any
                  compensation   for   soliciting   purchases  of,  any  of  the
                  securities of


                                       17
<PAGE>


                  the Company,  or (iii) paid or agreed to pay to any Person any
                  compensation  for  soliciting  another to  purchase  any other
                  securities of the Company,  other than, in the case of clauses
                  (ii) and (iii),  compensation paid to the Company's  placement
                  agent in connection with the placement of the Securities.

         3.2  REPRESENTATIONS  AND WARRANTIES OF THE PURCHASERS.  Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:

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

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

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


                                       18
<PAGE>


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

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

         (f)      SHORT  SALES  AND  CONFIDENTIALITY  PRIOR TO THE DATE  HEREOF.
                  Other  than  the  transaction  contemplated  hereunder,   such
                  Purchaser has not directly or  indirectly,  nor has any Person
                  acting on behalf of or pursuant to any understanding with such
                  Purchaser, executed any disposition, including Short Sales, in
                  the  securities  of the Company  during the period  commencing
                  from the time that such Purchaser  first received a term sheet
                  (written or oral) from the Company or any other Person setting
                  forth  the  material  terms of the  transactions  contemplated
                  hereunder   until  the  date   hereof   ("DISCUSSION   TIME").
                  Notwithstanding the foregoing, in the case of a Purchaser that
                  is  a  multi-managed   investment   vehicle  whereby  separate
                  portfolio   managers   manage   separate   portions   of  such
                  Purchaser's  assets and the portfolio  managers have no direct
                  knowledge of the  investment  decisions  made by the portfolio
                  managers  managing other portions of such Purchaser's  assets,
                  the  representation  set forth  above  shall  only  apply with
                  respect  to the  portion of assets  managed  by the  portfolio
                  manager  that made the  investment  decision to  purchase  the
                  Securities  covered  by this  Agreement.  Other  than to other
                  Persons party to this Agreement, such Purchaser has maintained
                  the   confidentiality   of  all  disclosures  made  to  it  in
                  connection with this transaction  (including the existence and
                  terms of this transaction).


                                   ARTICLE IV
                         OTHER AGREEMENTS OF THE PARTIES

         4.1      TRANSFER RESTRICTIONS.

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


                                       19
<PAGE>


                  bound by the terms of this Agreement and shall have the rights
                  of a  Purchaser  under  this  Agreement  and the  Registration
                  Rights Agreement.

         (b)      The Purchasers agree to the imprinting, so long as is required
                  by this Section 4.1, of a legend on any of the  Securities  in
                  the following form:

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

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

         (c)      Certificates   evidencing  the  Underlying  Shares  shall  not
                  contain any legend  (including the legend set forth in Section
                  4.1(b) hereof): (i) while a registration  statement (including
                  the  Registration  Statement)  covering  the  resale  of  such
                  security is effective


                                       20
<PAGE>


                  under the  Securities  Act, or (ii) following any sale of such
                  Underlying  Shares  pursuant  to Rule  144,  or  (iii) if such
                  Underlying  Shares are eligible for sale under Rule 144(k), or
                  (iv)  if  such  legend  is  not  required   under   applicable
                  requirements   of  the  Securities  Act  (including   judicial
                  interpretations and pronouncements  issued by the staff of the
                  Commission).  The  Company  shall cause its counsel to issue a
                  legal opinion to the Company's  transfer  agent promptly after
                  the Effective Date if required by the Company's transfer agent
                  to effect the removal of the legend  hereunder.  If all or any
                  shares of Preferred  Stock are  converted at a time when there
                  is an effective  registration statement to cover the resale of
                  the Underlying  Shares,  or if such  Underlying  Shares may be
                  sold  under  Rule  144(k) or if such  legend is not  otherwise
                  required under  applicable  requirements of the Securities Act
                  (including judicial  interpretations and pronouncements issued
                  by the staff of the Commission)  then such  Underlying  Shares
                  shall be issued free of all legends.  The Company  agrees that
                  following the Effective Date or at such time as such legend is
                  no longer  required  under this Section  4.1(c),  it will,  no
                  later than three  Trading  Days  following  the  delivery by a
                  Purchaser to the Company or the Company's  transfer agent of a
                  certificate  representing  Underlying  Shares,  as applicable,
                  issued with a restrictive  legend (such third Trading Day, the
                  "LEGEND  REMOVAL  Date"),  deliver or cause to be delivered to
                  such Purchaser a certificate  representing such shares that is
                  free from all restrictive  and other legends.  The Company may
                  not make any notation on its records or give  instructions  to
                  any   transfer   agent  of  the  Company   that   enlarge  the
                  restrictions   on   transfer   set  forth  in  this   Section.
                  Certificates  for Underlying  Shares subject to legend removal
                  hereunder  shall be  transmitted  by the transfer agent of the
                  Company to the  Purchasers  by  crediting  the  account of the
                  Purchaser's  prime broker with the  Depository  Trust  Company
                  System.  The Company shall  reimburse a Purchaser for any loss
                  occasioned by any "buy-in" suffered by a Purchaser as a result
                  of the  Company's  failure to deliver or cause to be delivered
                  Underlying  Shares  without a legend on or before  the  Legend
                  Removal Date.

         (d)      Each  Purchaser,  severally  and not  jointly  with the  other
                  Purchasers,  agrees that the removal of the restrictive legend
                  from certificates representing Securities as set forth in this
                  Section 4.1 is predicated upon the Company's reliance that the
                  Purchaser  will sell any  Securities  pursuant  to either  the
                  registration requirements of the Securities Act, including any
                  applicable prospectus delivery  requirements,  or an exemption
                  therefrom,  and  that if  Securities  are sold  pursuant  to a
                  Registration  Statement,  they will be sold in compliance with
                  the plan of distribution set forth therein.

         4.2  ACKNOWLEDGMENT  OF  DILUTION.  The Company  acknowledges  that the
issuance of the Securities may result in dilution of the  outstanding  shares of
Common Stock, which dilution may be substantial under certain market conditions.
The Company  further  acknowledges  that its  obligations  under the Transaction
Documents,  including without  limitation its obligation to issue the Underlying
Shares pursuant to the Transaction Documents, are unconditional and absolute and
not  subject  to any  right  of  set  off,  counterclaim,  delay  or  reduction,
regardless  of the effect of any such dilution or any claim the Company may have
against any Purchaser and  regardless of the dilutive  effect that such issuance
may have on the ownership of the other stockholders of the Company.


                                       21
<PAGE>


         4.3 USE OF  PROCEEDS.  Except as set  forth on  SCHEDULE  4.3  attached
hereto,  the Company shall use the net proceeds from the sale of the  Securities
hereunder for working  capital  purposes and shall not use such proceeds for the
satisfaction  of any portion of the Company's  debt (other than payment of trade
payables in the ordinary course of the Company's  business and prior practices),
or to redeem  any  Common  Stock or Common  Stock  Equivalents  or to settle any
outstanding litigation.

         4.4 EQUAL TREATMENT OF PURCHASERS. No consideration shall be offered or
paid to any  Person  to amend or  consent  to a waiver  or  modification  of any
provision of any of the Transaction  Documents unless the same  consideration is
also  offered  to  all  of  the  parties  to  the  Transaction  Documents.   For
clarification  purposes,  this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated  separately by each Purchaser,  and
is intended for the Company to treat the  Purchasers as a class and shall not in
any way be  construed  as the  Purchasers  acting in  concert or as a group with
respect to the purchase, disposition or voting of Securities or otherwise.

         4.5  SHORT  SALES  AND  CONFIDENTIALITY  AFTER  THE DATE  HEREOF.  Each
Purchaser  severally and not jointly with the other  Purchasers  covenants  that
neither  it  nor  any  Affiliate  acting  on  its  behalf  or  pursuant  to  any
understanding  with it will execute any Short Sales during the period commencing
at the Discussion Time and ending at the time that the transactions contemplated
by this Agreement are first publicly  announced.  Each Purchaser,  severally and
not jointly  with the other  Purchasers,  covenants  that until such time as the
transactions  contemplated  by this  Agreement  are  publicly  disclosed  by the
Company,  such Purchaser will maintain the  confidentiality  of all  disclosures
made to it in  connection  with this  transaction  (including  the existence and
terms  of  this  transaction).  Each  Purchaser  understands  and  acknowledges,
severally  and not  jointly  with  any  other  Purchaser,  that  the  Commission
currently  takes the  position  that  coverage  of short  sales of shares of the
Common Stock "against the box" prior to the Effective  Date of the  Registration
Statement with the Securities is a violation of Section 5 of the Securities Act,
as set  forth  in Item  65,  Section  A, of the  Manual  of  Publicly  Available
Telephone  Interpretations,  dated  July 1997,  compiled  by the Office of Chief
Counsel,  Division of Corporation  Finance.  Notwithstanding  the foregoing,  no
Purchaser makes any representation, warranty or covenant hereby that it will not
engage in Short Sales in the  securities  of the Company after the time that the
transactions  contemplated  by this  Agreement  are  first  publicly  announced.
Notwithstanding   the  foregoing,   in  the  case  of  a  Purchaser  that  is  a
multi-managed  investment  vehicle whereby  separate  portfolio  managers manage
separate portions of such Purchaser's  assets and the portfolio managers have no
direct  knowledge of the  investment  decisions  made by the portfolio  managers
managing other portions of such Purchaser's assets, the covenant set forth above
shall only apply with respect to the portion of assets  managed by the portfolio
manager that made the investment  decision to purchase the Securities covered by
this Agreement.

         4.6  FURNISHING  OF   INFORMATION.   As  long  as  any  Purchaser  owns
Securities,  the  Company  covenants  to timely  file (or obtain  extensions  in
respect  thereof  and file  within the  applicable  grace  period)  all  reports
required  to be filed by the  Company  after  the date  hereof  pursuant  to the
Exchange Act. As long as any Purchaser  owns  Securities,  if the Company is not
required to file  reports  pursuant  to the  Exchange  Act, it will  prepare and
furnish to the


                                       22
<PAGE>


Purchasers  and make  publicly  available  in  accordance  with Rule 144(c) such
information as is required for the Purchasers to sell the Securities  under Rule
144. The Company further  covenants that it will take such further action as any
holder of Securities may reasonably request, to the extent required from time to
time to enable such Person to sell such Securities  without  registration  under
the Securities  Act within the  requirements  of the exemption  provided by Rule
144.

         4.7 FORM D; BLUE SKY FILINGS.  The Company agrees to timely file a Form
D with respect to the Securities as required under Regulation D and to provide a
copy  thereof,  promptly upon request of any  Purchaser.  The Company shall take
such action as the Company shall  reasonably  determine is necessary in order to
obtain  an  exemption  for,  or to  qualify  the  Securities  for,  sale  to the
Purchasers at the Closing under applicable  securities or "Blue Sky" laws of the
states of the United States, and shall provide evidence of such actions promptly
upon request of any Purchaser.

         4.8 SHAREHOLDER APPROVAL.  As soon as reasonably  practicable following
the date  hereof,  the  Company  shall use best  efforts  to obtain  Shareholder
Approval by: (a) obtaining a written  consent of or holding a special meeting of
shareholders of the Company at the earliest practical date to obtain Shareholder
Approval; (b) providing an information statement, or soliciting proxies from its
shareholders in connection with  Shareholder  Approval in the same manner as the
Company has  solicited  proxies for other  management  proposals in recent proxy
statements of the Company; and (c) if applicable,  voting all management proxies
in favor of  Shareholder  Approval.  If the Company does not obtain  Shareholder
Approval at the first special meeting of shareholders,  the Company shall call a
special meeting every four months thereafter to seek Shareholder Approval.

         4.9 SECURITIES  LAWS  DISCLOSURE;  PUBLICITY.  The Company shall file a
Current Report on Form 8-K,  disclosing  the material terms of the  transactions
contemplated hereby and including the Transaction  Documents as exhibits thereto
within the time required by the Exchange Act. Notwithstanding the foregoing, the
Company shall not publicly  disclose the name of any  Purchaser,  or include the
name of any Purchaser in any filing with the Commission or any regulatory agency
or Trading Market,  without the prior written consent of such Purchaser,  except
(i)  as  required  by  federal   securities  law  in  connection  with  (A)  any
registration statement contemplated by the Registration Rights Agreement and (B)
the filing of final Transaction  Documents  (including  signature pages thereto)
with the Commission and (ii) to the extent such disclosure is required by law or
Trading  Market  regulations,  in  which  case the  Company  shall  provide  the
Purchasers with prior notice of such  disclosure  permitted under this subclause
(ii).

         4.10 NON-PUBLIC INFORMATION.  Except with respect to the material terms
and conditions of the  transactions  contemplated by the Transaction  Documents,
the Company  covenants and agrees that neither it nor any other Person acting on
its  behalf  will  provide  any  Purchaser  or its  agents or  counsel  with any
information  that  the  Company   believes   constitutes   material   non-public
information,  unless prior thereto such Purchaser  shall have executed a written
agreement regarding the confidentiality and use of such information. The Company
understands  and confirms that each Purchaser  shall be relying on the foregoing
representations in effecting transactions in securities of the Company.


                                       23
<PAGE>


         4.11  INDEMNIFICATION OF PURCHASERS.  Subject to the provisions of this
Section  4.11,  the  Company  will  indemnify  and hold each  Purchaser  and its
directors, officers, shareholders,  members, partners, employees and agents (and
any other Persons with a functionally  equivalent  role of a Person holding such
titles notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser  (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers,  shareholders,
agents,   members,   partners  or  employees  (and  any  other  Persons  with  a
functionally  equivalent role of a Person holding such titles  notwithstanding a
lack of such  title or any other  title) of such  controlling  person  (each,  a
"PURCHASER PARTY") harmless from any and all losses,  liabilities,  obligations,
claims,  contingencies,  damages,  costs and expenses,  including all judgments,
amounts paid in  settlements,  court costs and  reasonable  attorneys'  fees and
costs of  investigation  that any such Purchaser  Party may suffer or incur as a
result  of or  relating  to (a)  any  breach  of  any  of  the  representations,
warranties,  covenants or agreements made by the Company in this Agreement or in
the  other  Transaction  Documents  or  (b)  any  action  instituted  against  a
Purchaser, or any of them or their respective Affiliates,  by any stockholder of
the Company who is not an  Affiliate of such  Purchaser,  with respect to any of
the transactions  contemplated by the Transaction  Documents (unless such action
is based  upon a  breach  of such  Purchaser's  representations,  warranties  or
covenants  under the Transaction  Documents or any agreements or  understandings
such  Purchaser  may have with any such  stockholder  or any  violations  by the
Purchaser of state or federal  securities  laws or any conduct by such Purchaser
which constitutes fraud,  gross negligence,  willful misconduct or malfeasance).
If any action shall be brought  against any Purchaser  Party in respect of which
indemnity may be sought pursuant to this  Agreement,  such Purchaser Party shall
promptly notify the Company in writing,  and the Company shall have the right to
assume  the  defense  thereof  with  counsel  of  its  own  choosing  reasonably
acceptable to the Purchaser  Party.  Any Purchaser Party shall have the right to
employ  separate  counsel in any such  action  and  participate  in the  defense
thereof,  but the fees and expenses of such  counsel  shall be at the expense of
such Purchaser  Party except to the extent that (i) the  employment  thereof has
been  specifically  authorized  by the Company in writing,  (ii) the Company has
failed  after a  reasonable  period of time to assume such defense and to employ
counsel  or (iii) in such  action  there is, in the  reasonable  opinion of such
separate counsel, a material conflict on any material issue between the position
of the  Company  and the  position of such  Purchaser  Party,  in which case the
Company shall be  responsible  for the  reasonable  fees and expenses of no more
than one such separate counsel.  The Company will not be liable to any Purchaser
Party under this Agreement (i) for any settlement by a Purchaser  Party effected
without the Company's  prior written  consent,  which shall not be  unreasonably
withheld or delayed;  or (ii) to the extent, but only to the extent that a loss,
claim,  damage or liability is attributable  to any Purchaser  Party's breach of
any of the  representations,  warranties,  covenants or agreements  made by such
Purchaser Party in this Agreement or in the other Transaction Documents.


                                    ARTICLE V
                                  MISCELLANEOUS

         5.1 TERMINATION.  This Agreement may be terminated by any Purchaser, as
to such Purchaser's obligations hereunder only and without any effect whatsoever
on the  obligations  between the Company  and the other  Purchasers,  by written
notice to the other  parties,  if the  Closing  has not been  consummated  on or
before February 28, 2007; PROVIDED, HOWEVER, that


                                       24
<PAGE>


such termination will not affect the right of any party to sue for any breach by
the other party (or parties).

         5.2 FEES AND  EXPENSES.  At the  Closing,  the  Company  has  agreed to
reimburse the Placement Agent the  non-accountable  sum of $______ for its legal
fees and expenses. Except as expressly set forth in the Transaction Documents to
the  contrary,  each  party  shall pay the fees and  expenses  of its  advisers,
counsel,  accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation,  preparation, execution, delivery and
performance  of this  Agreement.  The Company shall pay all transfer agent fees,
stamp taxes and other taxes and duties levied in connection with the delivery of
any Securities to the Purchasers.

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

         5.4 NOTICES.  Any and all notices or other communications or deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of  transmission,  if
such notice or  communication is delivered via facsimile at the facsimile number
set forth on the signature  pages  attached  hereto prior to 5:30 p.m. (New York
City  time)  on a  Trading  Day,  (b) the next  Trading  Day  after  the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day,  (c) the 2nd Trading  Day  following  the date of mailing,  if sent by U.S.
nationally  recognized  overnight courier service, or (d) upon actual receipt by
the party to whom such  notice is  required  to be given.  The  address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

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

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

         5.7  SUCCESSORS AND ASSIGNS.  This Agreement  shall be binding upon and
inure to the benefit of the parties and their successors and permitted  assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by merger).  Any
Purchaser may assign any or all of its rights under this Agreement to any Person
to whom such Purchaser assigns or transfers any Securities, provided


                                       25
<PAGE>


such transferee  agrees in writing to be bound,  with respect to the transferred
Securities,  by the  provisions of the  Transaction  Documents that apply to the
"Purchasers".

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

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

         5.10 SURVIVAL.  The  representations  and warranties  shall survive the
Closing and the delivery of Securities for the applicable statue of limitations.

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


                                       26
<PAGE>


         5.12 SEVERABILITY.  If any term, provision,  covenant or restriction of
this  Agreement  is held by a court of  competent  jurisdiction  to be  invalid,
illegal,  void  or  unenforceable,  the  remainder  of  the  terms,  provisions,
covenants  and  restrictions  set forth  herein  shall  remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto  shall use their  commercially  reasonable  efforts to find and employ an
alternative  means to achieve the same or substantially  the same result as that
contemplated  by such term,  provision,  covenant or  restriction.  It is hereby
stipulated  and declared to be the intention of the parties that they would have
executed the remaining terms,  provisions,  covenants and  restrictions  without
including any of such that may be hereafter declared invalid,  illegal,  void or
unenforceable.

         5.13 RESCISSION AND WITHDRAWAL RIGHT.  Notwithstanding  anything to the
contrary  contained in (and without  limiting any similar  provisions of) any of
the other  Transaction  Documents,  whenever  any  Purchaser  exercises a right,
election, demand or option under a Transaction Document and the Company does not
timely perform its related obligations within the periods therein provided, then
such Purchaser may rescind or withdraw, in its sole discretion from time to time
upon written notice to the Company,  any relevant notice,  demand or election in
whole or in part without prejudice to its future actions and rights.

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

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

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


                                       27
<PAGE>


         5.17 USURY.  To the extent it may  lawfully  do so, the Company  hereby
agrees not to insist upon or plead or in any manner  whatsoever  claim, and will
resist any and all efforts to be compelled to take the benefit or advantage  of,
usury  laws  wherever  enacted,  now or at  any  time  hereafter  in  force,  in
connection  with any  claim,  action or  proceeding  that may be  brought by any
Purchaser  in  order to  enforce  any  right or  remedy  under  any  Transaction
Document.  Notwithstanding  any  provision  to  the  contrary  contained  in any
Transaction  Document,  it is  expressly  agreed  and  provided  that the  total
liability of the Company  under the  Transaction  Documents  for payments in the
nature of interest  shall not exceed the maximum  lawful rate  authorized  under
applicable law (the "MAXIMUM RATE"), and, without limiting the foregoing,  in no
event  shall any rate of  interest or default  interest,  or both of them,  when
aggregated with any other sums in the nature of interest that the Company may be
obligated to pay under the Transaction Documents exceed such Maximum Rate. It is
agreed  that  if the  maximum  contract  rate  of  interest  allowed  by law and
applicable to the Transaction  Documents is increased or decreased by statute or
any official  governmental action subsequent to the date hereof, the new maximum
contract rate of interest  allowed by law will be the Maximum Rate applicable to
the  Transaction  Documents  from  the  effective  date  forward,   unless  such
application  is  precluded  by  applicable  law.  If  under  any   circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to any
Purchaser with respect to indebtedness  evidenced by the Transaction  Documents,
such excess shall be applied by such Purchaser to the unpaid  principal  balance
of any such  indebtedness or be refunded to the Company,  the manner of handling
such excess to be at such Purchaser's election.

         5.18  INDEPENDENT  NATURE OF PURCHASERS'  OBLIGATIONS  AND RIGHTS.  The
obligations of each Purchaser under any Transaction Document are several and not
joint with the  obligations of any other  Purchaser,  and no Purchaser  shall be
responsible in any way for the performance or non-performance of the obligations
of any other Purchaser under any Transaction Document.  Nothing contained herein
or in any  other  Transaction  Document,  and no action  taken by any  Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an  association,  a joint  venture  or any  other  kind of  entity,  or create a
presumption  that the  Purchasers are in any way acting in concert or as a group
with  respect  to  such  obligations  or the  transactions  contemplated  by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation,  the rights arising out of
this Agreement or out of the other  Transaction  Documents,  and it shall not be
necessary  for any other  Purchaser to be joined as an  additional  party in any
proceeding  for such purpose.  Each  Purchaser has been  represented  by its own
separate  legal  counsel in their  review  and  negotiation  of the  Transaction
Documents. For reasons of administrative  convenience only, Purchasers and their
respective  counsel have chosen to communicate with the Company through FWS. FWS
does not  represent any of the  Purchasers  but only the  Placement  Agent.  The
Company  has  elected  to  provide  all  Purchasers  with  the  same  terms  and
Transaction  Documents for the convenience of the Company and not because it was
required or requested to do so by the Purchasers.

         5.19  CONSTRUCTION.  The parties  agree that each of them and/or  their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the


                                       28
<PAGE>


drafting party shall not be employed in the  interpretation  of the  Transaction
Documents or any amendments hereto.



                            [Signature Page Follows]


                                       29
<PAGE>


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


MPLC, INC.                              ADDRESS/FACSIMILE NUMBER/E-MAIL ADDRESS
                                        FOR NOTICE:
By:  /s/ Raymond Musci                  42 CORPORATE PARK, SUITE 250
     ------------------------           IRVINE, CA 92606
     Name:  Raymond Musci               FACSIMILE: _________________
     Title: President                   E-MAIL: ____________________
                                        ATTENTION: _________________
With a copy to (which shall not
constitute notice):







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


                                       30
<PAGE>


        [PURCHASER SIGNATURE PAGES TO MPLC SECURITIES PURCHASE AGREEMENT]

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


Name of Purchaser: _____________________________________________________________

SIGNATURE OF AUTHORIZED SIGNATORY OF PURCHASER: ________________________________

Name of Authorized Signatory: __________________________________________________

Title of Authorized Signatory: _________________________________________________

Email Address of Authorized Signatory: _________________________________________

Fax Number of Authorized Signatory: ____________________________________________


Address for Notice of Purchaser:




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





Subscription Amount: $____________

Shares of Preferred Stock: ____________

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]



                           [SIGNATURE PAGES CONTINUE]


                                       31

</TEXT>
</DOCUMENT>
