CONFIDENTIAL TREATMENT REQUESTED

 

                                                                   Exhibit 10.1

 

 

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                       CONFIDENTIAL TREATMENT REQUESTED

 

CONFIDENTIAL   TREATMENT   REQUESTED:   INFORMATION  FOR  WHICH   CONFIDENTIAL

TREATMENT HAS BEEN  REQUESTED IS OMITTED AND IS NOTED WITH THREE  ASTERICKS AS

FOLLOWS  "* * *." AN  UNREDACTED  VERSION  OF THIS  DOCUMENT  HAS  BEEN  FILED

SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

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      This  STOCK   PURCHASE   AND   REGISTRATION   RIGHTS   AGREEMENT   (this

"Agreement"),  is made and entered into as of March 21,  2005,  by and between

STARTECH  ENVIRONMENTAL  CORPORATION,  a Colorado corporation (the "Company"),

and  INTERCAPITAL  GROUP,  LLC a  California  Limited  Liability  Company (the

"Purchaser").

 

                                   RECITALS

                                   --------

 

      The  Company  desires  to issue and sell to the  Purchaser  in a private

placement  (the  "Offering"),  and the  Purchaser  desire to purchase from the

Company,  on the terms and subject to the  conditions  set forth  herein,  the

number of  shares of common  stock,  no par  value  ("Common  Stock"),  of the

Company set forth in Section 1(a) of this Agreement,  and an equivalent number

of  three-year  warrants to purchase  shares of Common  Stock (the  "Warrants"

and,  together  with  the  shares  of  Common  Stock  to  be  purchased,   the

"Securities"),  the terms of such  Warrants  being as set forth in the Warrant

Agreement  substantially  in the form  attached  as  Exhibit  A  hereto.  This

Agreement  and the Warrants  shall be referred to herein  collectively  as the

"Transaction Documents".

 

      The Purchaser  desires,  upon the terms and conditions set forth in this

Agreement, to purchase Securities in the Offering.

 

      The  Company  and  the  Purchaser  are  executing  and  delivering  this

Agreement in reliance upon the exemption from securities  regulation  afforded

by Section 4(2) of the Securities Act (as defined in Section 3  hereof),  Rule

506 of Regulation D.

 

      IN CONSIDERATION of the premises and mutual covenants  contained in this

Agreement  and  other  good  and  valuable   consideration   the  receipt  and

sufficiency  of which are hereby  acknowledged,  the Company and the Purchaser

agree as follows:

 

      1.    Purchase and Sale of Securities.

 

      (a)   Purchase and Sale of Shares.  Subject to the terms and  conditions

hereof,  at each Closing  identified  in Section 2 hereof,  the Company  shall

issue and sell to the  Purchaser,  and the Purchaser  shall  purchase from the

Company,  a number of shares of Common Stock (the  "Shares")  equal to (x) the

dollar  amount  invested by the  Purchaser  at such  Closing  (the  "Purchase

Price")  divided by (y) a price per share (the "Share Price") equal to * * * .

The  total  aggregate  amount  of the  Purchase  Price to be  invested  by the

Purchaser  at  all  Closings  shall  be  equal  to  Eleven   Million   Dollars

($11,000,000.00) (the "Aggregate Purchase Price").

 

      (b)   Purchase and Sale of Warrants.  In addition to the  foregoing  and

subject to the terms and  conditions  hereof,  at each Closing  identified  in

Section  2  hereof,  the  Company  shall  issue to the  Purchaser  one or more

Warrants to purchase shares of Common Stock on the following terms:

 

<PAGE>

 

Warrant Coverage:       The   Purchaser   will  be  entitled  to  warrants  to

                        purchase a number of shares of Common  Stock  equal to

                        the Shares (the  "Purchased  Warrants")  purchased  at

                        such  Closing.  The shares of Common  Stock into which

                        the Warrants are  exercisable  (the "Warrant  Shares")

                        will have  piggyback  registration  rights as provided

                        in Section 6 of this Agreement.

 

Term:                   Each  Purchased  Warrant  shall be  exercisable  for a

                        term of three-years  from the Closing Date (as defined

                        below).

 

Exercise Price:         The  Warrants  will  be  exercisable  into  shares  of

                        Common Stock at a price equal to * * * .

 

      (c)   Exemption.  The  purchase and sale of the  Securities  pursuant to

the terms hereof will be made in reliance upon the  provisions of Section 4(2)

of the Securities Act of 1933, as amended (the "Securities  Act"), Rule 506 of

Regulation  D  promulgated  thereunder  by the United  States  Securities  and

Exchange   Commission  (the  "SEC"),   or  such  other   exemptions  from  the

registration  requirements  of the  Securities  Act as may be  available  with

respect to the investment in the Securities to be made hereunder.

 

      2.    Closings and Deliverables.

 

      (a)   Payment.  At each  Closing,  the  Purchaser  will cause a wire

transfer payment to be made to the Company, to the account set forth on Exhibit

B hereto,  in an amount equal to the Purchase Price (in United States  dollars)

to be funded at such Closing, which Purchase Price shall entitle the Purchaser,

subject to the satisfaction of the terms and conditions  herein, to receive the

Shares and the Purchased Warrants  purchased at such Closing.  At or before the

First Closing (as defined below),  the Purchaser shall deliver to the Company a

fully  completed and executed copy of the Investor  Questionnaire,  in the form

attached as Exhibit C hereto (the "Investor Questionnaire").

 

      (b)   Closings.  The  Purchaser  shall be  unconditionally  obligated

to have funded the  Aggregate  Purchase  Price at one or more  Closings to take

place between the date of this  Agreement and March 31, 2005 (each, a "Closing"

and collectively,  the "Closings"),  the first of which shall take place within

five (5) banking days following execution and delivery of this Agreement by the

parties (the "First Closing").  Each Closing shall take place at the offices of

the Company or a location mutually agreed to by the parties hereto.

 

      (c)   Deliverables.  At each Closing, or as soon as is reasonably 

practicable  thereafter,  and  assuming  the Company has  received the Purchase

Price in respect of such  Closing,  the Company (or its  transfer  agent) shall

deliver to the Purchaser a stock certificate (or certificates) representing the

Shares  so  purchased  at  such  Closing,   as  well  as  a  Warrant  Agreement

representing  the Purchased  Warrants in respect of such Closing,  in each case

registered  in  the  name  of the  Purchaser,  and  such  other  documents  and

certificates as are required by this Agreement at such Closing.

 

                                       2

<PAGE>

 

      3.    Representations and Warranties by the Company.  The Company hereby

represents and warrants to the Purchaser as of the date hereof as follows:

 

      (a)   Incorporation  and  Qualification.  The Company has been duly

 

organized and is validly  existing as a Corporation and in good standing under

the laws of the  State of  Colorado  with the  requisite  corporate  power and

authority  to own  and use its  properties  and  assets  and to  carry  on its

business as currently conducted.

 

      (b)   Authority.  The Company has the requisite  corporate power and

authority to enter into this Agreement and to issue and deliver the Shares and

the  Warrant  Agreement  and  upon  exercise  of  the  Purchased  Warrants  in

accordance  with the terms  thereof,  the Warrant  Shares.  The  execution and

delivery of this Agreement and the issuance and delivery of the Shares and the

Warrant   Agreement   hereunder  and  the  consummation  of  the  transactions

contemplated  hereby have been duly and validly  authorized  by all  necessary

corporate action by the Company. This Agreement, when executed by the Company,

will have been duly and validly executed and delivered by and on behalf of the

Company and will constitute a valid, legal and binding agreement,  enforceable

against the Company in accordance with its terms, except as enforceability may

be limited by general equitable principles, bankruptcy, insolvency, fraudulent

conveyance,  reorganization,  moratorium  or other laws  affecting  creditors'

rights  generally.  Assuming payment of the Purchase Price, the Shares and the

Purchased  Warrants will be duly  authorized,  validly issued,  fully paid and

non-assessable.  Upon payment of the exercise price of the Purchased  Warrants

in full in accordance with the terms set forth in the Warrant  Agreement,  the

Warrant Shares, when issued by the Company,  will be duly authorized,  validly

issued,  fully paid and non-assessable.  The Shares and the Purchased Warrants

and upon  exercise  of the  Purchased  Warrants in  accordance  with the terms

thereof,  the Warrant  Shares,  do not subject the holders thereof to personal

liability by reason of being such holders.

 

      (c)   No Conflicts. The execution,  delivery and performance of this

Agreement by the Company and the  consummation  by the Company of the Offering

do not and will  not:  (i)  conflict  with or  violate  any  provision  of the

Company's  articles of incorporation  or bylaws,  or (ii) subject to obtaining

the Required  Approvals  (as defined  below),  conflict  with, or constitute a

material  default (or an event that with notice or lapse of time or both would

become a material default) under, 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 debt or otherwise) to which the Company is a party or by

which any  property  or asset of the  Company is bound or  affected,  or (iii)

result in a material violation of any law, rule, regulation,  order, judgment,

injunction, decree or other restriction of any court or governmental authority

as currently in effect to which the Company is subject  (including federal and

state securities laws and  regulations),  or by which any property or asset of

the Company is bound or  affected;  except in the case of each of clauses (ii)

and (iii),  such as could not,  individually or in the aggregate (x) adversely

affect the legality,  validity or enforceability of the Offering,  (y) have or

result in a material  adverse  effect on the  results of  operations,  assets,

business or condition  (financial  or  otherwise)  of the Company,  taken as a

whole  (other than any change,  effect,  event or  condition  that arises from

changes in general economic conditions or conditions affecting the industry of

the business of the Company generally,  or such changes,  events or conditions

resulting  directly  from  the  announcement  of or  the  consummation  of the

Offering  contemplated  hereby), or (z) adversely impair the Company's

 

                                      3

<PAGE>

 

ability  to  perform  fully on a  timely  basis  its  obligations  under  this

Agreement (any of (x), (y) or (z), a "Material Adverse Effect").

 

      (d)   Capital Stock; Fully Paid and Non-Assessable.

 

             (i)   As of  immediately  prior  to the  Closing,  the  authorized

capital stock of the Company consist of 10,000,000  shares of preferred stock,

no par value (the "Preferred Stock"), and 800,000,000 shares of Common Stock.

 

             (iii)      All such  outstanding  shares  of  Common  Stock  have

been,  and upon the  Closing and payment of the  Purchase  Price in full,  the

Shares will have been,  duly  authorized and validly issued and are fully paid

and  nonassessable  and issued in compliance  with all applicable  Federal and

state  securities  laws.  Except as  contemplated  by this Agreement or as set

forth in all forms,  reports and documents  filed with the SEC pursuant to the

Securities Act and Securities Exchange Act of 1934, as amended (the "Exchange

Act") since October 31, 2003  (collectively,  the "SEC Reports"),  the Company

has no  outstanding  subscription,  option,  warrant,  right of first refusal,

preemptive right, call, contract, demand, commitment,  convertible security or

other  instrument,  agreement  or  arrangement  of  any  character  or  nature

whatever  under  which the  Company  is or may be  obligated  to issue  Common

Stock,  Series A Preferred or any other  equity  security of any kind or which

otherwise relates to the Company's securities.

 

      (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 or entity in connection

with  the  execution,   delivery  and  performance  by  the  Company  of  this

Agreement,  other  than (i) the filing  with the SEC of a Form D  pursuant  to

Regulation D of the Securities Act, and (iii)  applicable state securities law

Blue Sky filings (collectively, the "Required Approvals").

 

      (f)   SEC Reports;  Financial  Statements.  Since October 31, 2004,  the

Company  has  filed  (i) all  reports  required  to be filed  by it under  the

Securities Act;  (ii) all  annual reports on Form 10-K, all quarterly  reports

on Form 10-Q,  and all current  reports on Form 8-K required to be filed by it

under the Exchange Act,  including pursuant to Section 13(a) or 15(d) thereof,

in order for it to satisfy its filing  requirements under the Exchange Act for

the  periods  to  which  each  such  report  relates.  The  Company  has  made

available to the Purchaser a copy of all SEC Reports.  As of their  respective

dates,   the  SEC  Reports   complied  in  all  material   respects  with  the

requirements  of the  Securities  Act and the  Exchange  Act and the rules and

regulations of the SEC  promulgated  thereunder,  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 light of the circumstances  under which they

were made, not misleading.  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 SEC with respect thereto as

in  effect  at the  time  of  filing.  Such  financial  statements  have  been

prepared in accordance with 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

fairly present in all material respects the financial  position of the Company

and its  consolidated  subsidiaries  as of and for the

 

                                      4

<PAGE>

 

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.

 

      (g)   No  Legal  Proceedings.  Except  as may be  described  in the  SEC

Reports,  there is no action, suit or proceeding before or by any court or any

governmental  agency or body,  domestic  or  foreign,  now  pending or, to the

actual knowledge  (without the need for inquiry or special  investigation)  of

the  Chief  Financial  Officer  or Chief  Executive  Officer  of the  Company,

threatened  against or affecting  the  Company,  or any of its  properties  or

assets,  which is  reasonably  likely  to have a  material  adverse  change or

effect,  respectively,  on  the  business,  assets,  liabilities,  properties,

income,   operations,   results  of  operations  or  condition  (financial  or

otherwise) of the Company, taken as a whole.

 

      4.    Representations  and  Warranties of the  Purchaser.  The Purchaser

represents  and warrants to the Company as of the date hereof,  and as of each

Closing Date, as follows:

 

      (a)   Power.  The Purchaser has been duly organized,  is validly  existing

and is in good  standing  under  the  laws of its  state  or  jurisdiction  of

incorporation,  with limited  liability,  partnership  or corporate  power and

authority, as the case may be, to execute, deliver and perform its obligations

under the Agreement.

 

      (b)   Authority.  The Purchaser has the requisite power and authority to

enter  into this  Agreement  and to  purchase  the  Shares  and the  Purchased

Warrants and, upon exercise of the Purchased  Warrants in accordance  with the

terms  thereof,  the  Warrant  Shares.  The  execution  and  delivery  of this

Agreement and the purchase of the Shares and the Purchased  Warrants hereunder

and the  consummation of the transactions  contemplated  hereby have been duly

and  validly  authorized  by  all  necessary  action  by the  Purchaser.  This

Agreement has been duly and validly  executed and delivered by or on behalf of

the  Purchaser  and  constitutes  a  valid,   legal  and  binding   agreement,

enforceable  against the  Purchaser in  accordance  with its terms,  except as

enforceability  may be limited by general  equitable  principles,  bankruptcy,

insolvency,  fraudulent conveyance,  reorganization,  moratorium or other laws

affecting creditors' rights generally.

 

      (c)   No Conflicts. The execution,  delivery and performance of this

Agreement  by the  Purchaser  and the  consummation  by the  Purchaser  of the

purchase of the Securities hereunder do not and will not: (i) conflict with or

violate any provision of the Purchaser's articles of incorporation,  bylaws or

other  organizational  or  charter  documents,   or  (ii)  conflict  with,  or

constitute  a material  default (or an event that with notice or lapse of time

or both would become a material  default)  under, 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 debt or otherwise) to which the

Purchaser  is a party or by which any  property or asset of the  Purchaser  is

bound  or  affected,  or  (iii)  result  in a  violation  of  any  law,  rule,

regulation,  order, judgment,  injunction,  decree or other restriction of any

court or governmental  authority as currently in effect to which the Purchaser

is subject (including  federal and state securities laws and regulations),  or

by which any property or asset of the  Purchaser is bound or affected;  except

in the case of each of clauses (ii) and (iii), such as could not, individually

or in the aggregate result in a Material Adverse Effect.

 

 

                                      5

<PAGE>

 

      (d)   Investment in Securities.  The Purchaser represents and warrants to,

and covenants with, the Company that: (i) the Purchaser,  either individually,

or together with a purchaser representative,  is knowledgeable,  sophisticated

and experienced in making, and is qualified to make, decisions with respect to

investments  in  securities  representing  an  investment  decision  like that

involved  in  the  purchase  of  the  Securities,   including  investments  in

securities issued by the Company and comparable  entities,  and has requested,

received,  reviewed and considered all information it deems relevant in making

an  informed  decision to  purchase  the  Securities;  (ii) the  Purchaser  is

acquiring  the  Securities,  and upon  exercise of the  Warrants,  the Warrant

Shares,  in the  ordinary  course of its  business and for its own account for

investment  only and with no present  intention or view toward the public sale

or distribution  thereof,  and no arrangement or understanding exists with any

other  persons   regarding  the  public  sale  or  distribution  of  any  such

securities;  (iii) the Purchaser will not,  directly or indirectly,  except in

compliance  with the  Securities  Act, the rules and  regulations  promulgated

thereunder  and such other  securities or blue sky laws as may be  applicable,

offer, sell,  pledge,  transfer or otherwise dispose of (or solicit any offers

to  buy,  purchase  or  otherwise  acquire  or  take a  pledge  of) any of the

Securities  or the  Warrant  Shares,  or engage in any Short Sale (as  defined

below);  (iv) the  Purchaser  has  completed  or  caused to be  completed  the

Investor  Questionnaire  and the  answers  thereto are true and correct in all

respects  as of the date  hereof and the  Purchaser  will  notify the  Company

immediately  of any material  change in any such  information  provided in the

Investor Questionnaire; (v) the Purchaser has, in connection with its decision

to purchase  Securities,  relied  solely upon the  documents  delivered to the

Purchaser  by the Company and the SEC  Reports;  and (vi) the  Purchaser is an

"accredited  investor"  within the  meaning  of Rule  501(a) of  Regulation  D

promulgated under the Securities Act.

 

      (e)   Short Sales.  Neither the  Purchaser  nor any affiliate of the

Purchaser   (as   defined  in  Rule  405  of  the   Securities   Act  (each  a

"Purchaser/Affiliate")  and which  (i) had  knowledge  about the  transactions

contemplated hereby, (ii) has or shares discretion relating to the Purchaser's

investments  or trading or  information  concerning  Purchaser's  investments,

including the  Securities,  or (iii) is subject to the  Purchaser's  review or

input  concerning  such  Purchaser/Affiliate's  investments or trading) has or

will,  directly or  indirectly,  engage (A) in any "short sale" (as defined in

Rule 3b-3 promulgated under the Exchange Act), including,  without limitation,

the  maintaining  of any short  position  with  respect  to,  establishing  or

maintaining a "put equivalent  position"  (within the meaning of Rule 16a-1(h)

under the Exchange Act) with respect to,  entering  into any swap,  derivative

transaction  or  other  arrangement  (whether  any such  transaction  is to be

settled  by  delivery  of  Common  Stock,  other  securities,  cash  or  other

consideration)  that  transfers  to another,  in whole or in part,  any of the

economic  consequences  of  ownership,  or  otherwise  dispose  of, any of the

Securities  by  the  Purchaser  or  (B)  in  any  hedging   transaction  which

establishes a net short position with respect to the  Securities  (clauses (A)

and  (B)  together,  a  "Short  Sale");  except  for  (1)  Short  Sales  by  a

Purchaser/Affiliate  which was,  prior to the date on which the  Purchaser was

first  notified  that the  Company  intended  to  engage  in the  transactions

contemplated by this Agreement,  a market maker for the Common Stock, provided

that such Short Sales are in the ordinary course of such Purchaser/Affiliate's

business  and are in  compliance  with the  Securities  Act, and the rules and

regulations promulgated thereunder, and such other securities or blue sky laws

as may be  applicable  or (2) Short  Sales by a  Purchaser/Affiliate  which by

virtue of the  procedures of the  Purchaser are made without  knowledge of the

transactions contemplated in this Agreement and were not induced or encouraged

by the Purchaser).

 

                                      6

<PAGE>

 

      (f)   Exemptions.  The Purchaser  understands  that the  Securities,  and

upon issuance, the Warrant Shares, are being offered and sold to the Purchaser

in reliance upon specific  exemptions  from the  registration  requirements of

Securities Act, the rules and regulations and state  securities laws, and that

the Company is relying  upon the truth and  accuracy  of, and the  Purchaser's

compliance with, the representations,  warranties, agreements, acknowledgments

and understandings of the Purchaser set forth herein in order to determine the

availability  of such  exemptions  and the  eligibility  of the  Purchaser  to

acquire the Securities, and upon issuance, the Warrant Shares.

 

      (g)   Use of  Information.  The  Purchaser  has used and will  continue

to use all  non-public  information  regarding  the Company and its  business,

operations and financial  condition (the  "Confidential  Information") for the

sole purpose of evaluating an investment in the  Securities  and the Purchaser

hereby acknowledges that it has not, and after the Closing, is prohibited from

reproducing or distributing any such Confidential Information, or divulging or

discussing any of its contents except to its advisors and  representatives for

the purpose of evaluating an investment.  The foregoing  agreements  shall not

apply to any  information  that is or becomes  publicly  available  through no

fault of the Purchaser, or that the Purchaser is legally required to disclose;

provided,  however,  that if the Purchaser is requested or ordered to disclose

any such  information  pursuant to any court or other  government order or any

other  applicable  legal  procedure,  it shall provide the Company with prompt

notice of any such request or order in time  sufficient  to enable the Company

to seek an  appropriate  protective  order and shall  provide the Company with

reasonable assistance in obtaining such protective order.

 

      (h)   Investment  Risk. The Purchaser  understands  that its investment

in the Securities  and the Warrants  Shares  involves a significant  degree of

risk and that the market price of the Common  Stock has been and  continues to

be volatile,  that no  representation  is being made as to the future value of

the Common Stock and that the Purchaser has carefully  read and considered the

matters set forth under the caption  "Risk  Factors" in the SEC  Reports.  The

Purchaser has the knowledge and  experience in financial and business  matters

as to be capable of  evaluating  the merits and risks of an  investment in the

Securities  and has the ability to bear the economic risks of an investment in

the  Securities  and the Warrant  Shares.  The  Purchaser has had a reasonable

opportunity to ask questions of the Company and its  representatives;  and the

Company has  answered all  inquiries  that the  Purchaser  or the  Purchaser's

representatives  have put to it, and all such  inquiries have been answered to

the full satisfaction of the Purchaser.

 

      (i)   Reliance.  The  Purchaser  is not  relying on the  Company or any

of its  employees  or agents  with  respect to the legal,  tax,  economic  and

related  considerations  as  to an  investment  in  the  Securities,  and  the

Purchaser  has relied on the advice of, or has  consulted  with,  only his own

advisors as it deems necessary or advisable.

 

      (j)   No General  Solicitation.  The  Purchaser  is  unaware  of, is in

no way relying on, and did not become aware of the offering of the  Securities

through  or as a  result  of,  any form of  general  solicitation  or  general

advertising including,  without limitation, any article, notice, advertisement

or other communication  published in any newspaper,  magazine or similar media

or broadcast  over  television or radio,  in connection  with the offering and

sale of the  Securities  and is not  subscribing  for  Securities  and did not

become aware of the Offering  through or as a result of any seminar or meeting

to which the Purchaser was invited by, or any  solicitation  of a

 

                                      7

<PAGE>

 

subscription  by, a person not previously known to the Purchaser in connection

with investments in securities generally.

 

      (k)   No Endorsement of Securities.  The Purchaser  understands that no

United States federal or state agency or any other  government or governmental

agency  has  passed  upon or made any  recommendation  or  endorsement  of the

Securities or the Warrant Shares.

 

      (l)   No  Registration  of  Securities.  Except as  otherwise  provided

for in Section 6 hereof, the Purchaser understands that the Securities and the

Warrant  Shares have not been and will not be registered  under the Securities

Act and that the  Purchaser  will not  sell,  offer to sell,  assign,  pledge,

hypothecate  or otherwise  transfer any of the  Securities  or Warrant  Shares

unless  (i)  pursuant  to  an  effective   registration  statement  under  the

Securities  Act,  (ii) the  Purchaser  provides the Company with an opinion of

counsel, in a generally acceptable form, to the effect that a sale, assignment

or  transfer  of  the  Securities  or  Warrant  Shares  may  be  made  without

registration under the Securities Act and the transferee agrees to be bound by

the terms and conditions of this Agreement,  (iii) the Purchaser  provides the

Company  with  evidence  of  compliance  with Rule 144  promulgated  under the

Securities Act ("Rule 144"),  including reasonable  assurances (in the form of

seller and  broker  representation  letters)  that the  Securities  or Warrant

Shares  can be sold  pursuant  to Rule  144 or (iv)  pursuant  to Rule  144(k)

following the applicable holding period.

 

      (m)   Legend.   The  Purchaser   understands   that,  until  such  time 

as a registration  statement has been declared effective or the Securities and

the Warrant  Shares have been sold the Securities and the Warrant Shares shall

bear  a  restrictive  legend  in  substantially  the  following  form  (and  a

stop-transfer order may be placed against transfer of the certificates for the

Securities and the Warrant Shares):

 

      "THE  SECURITIES  REPRESENTED  BY THIS  CERTIFICATE  HAVE NOT BEEN

      REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS  AMENDED  (THE

      "SECURITIES  ACT"),  OR UNDER  THE  SECURITIES  LAWS OF ANY  OTHER

      JURISDICTION.  THE  SECURITIES  MAY NOT BE  SOLD,  TRANSFERRED  OR

      ASSIGNED IN THE  ABSENCE OF AN  EFFECTIVE  REGISTRATION  STATEMENT

      FOR THE SECURITIES  UNDER THE SECURITIES ACT AND APPLICABLE  STATE

      SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN FORM,  SUBSTANCE AND

      SCOPE REASONABLY  ACCEPTABLE TO THE COMPANY,  THAT REGISTRATION IS

      NOT  REQUIRED  UNDER  THE  SECURITIES  ACT  AND  APPLICABLE  STATE

      SECURITIES  LAWS OR UNLESS SOLD  PURSUANT  TO  RULE 144  UNDER THE

      SECURITIES ACT."

 

      The Purchaser further  acknowledges that as required pursuant to Section

25102(a)  of  the  California  Corporate  Securities  Law  of  1968,  for  any

Purchaser that is located in the State of  California,  the  certificates  for

the  Securities  and the Warrant  Shares  shall bear a  restrictive  legend in

substantially  the  following  form (and a  stop-transfer  order may be placed

against  transfer  of the  certificates  for the  Securities  and the  Warrant

Shares):

 

 

                                      8

<PAGE>

 

      "THE  SALE  OF  THE  SECURITIES  THAT  ARE  THE  SUBJECT  OF  THIS

      AGREEMENT  HAS  NOT  BEEN  QUALIFIED  WITH  THE   COMMISSIONER  OF

      CORPORATIONS  OF THE STATE OF  CALIFORNIA  AND THE ISSUANCE OF THE

      SECURITIES   OR  THE  PAYMENT  OR  RECEIPT  OF  ANY  PART  OF  THE

      CONSIDERATION  THEREFOR  PRIOR TO THE  QUALIFICATION  IS UNLAWFUL,

      UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE  QUALIFICATION BY

      SECTION  25100,  25102,  OR 25105 OF THE  CALIFORNIA  CORPORATIONS

      CODE.  THE RIGHTS OF ALL PARTIES TO THIS  AGREEMENT  ARE EXPRESSLY

      CONDITIONED  UPON THE  QUALIFICATION  BEING  OBTAINED,  UNLESS THE

      SALE IS SO EXEMPT."

 

      (l)   Executive  Offices;   Residence.  The  Purchaser's  principal 

executive  offices (if an entity) or primary  residence (if an individual) are

in the  jurisdiction set forth  immediately  below the Purchaser's name on the

signature pages hereto.

 

      (m)   Brokers and Finders.  There is no investment banker,  broker, 

finder or other  intermediary  which has been  retained by or is authorized to

act on behalf of the  Purchaser who might be entitled to any fee or commission

from the  Purchaser,  the Company,  any of their  respective