SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 8-K


                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


      Date of Report (date of earliest event reported): September 20, 2004


                             ENERGAS RESOURCES, INC.
                         ------ -----------------------
                 (Name of Small Business Issuer in its charter)


       Delaware                    0-33259                73-1620724
    --------------               -----------            ---------------
(State of incorporation)    (Commission File No.)       (IRS Employer
                                                      Identification No.)

                            800 Northeast 63rd Street
                          Oklahoma City, Oklahoma 73105
            ------------------------ ------------------------------
          (Address of principal executive offices, including Zip Code)


       Registrant's telephone number, including area code: (405)-879-1752


                                       N/A
                ------------------------------------------------
          (Former name or former address if changed since last report)




<PAGE>


Item 3.02   Unregistered Sales of Equity Securities

      On September 20, 2004 Energas entered into an equity line of credit
agreement with Dutchess Private Equities Fund II, L.P. The purpose of the equity
line of credit is to provide a possible source of funding for Energas' oil and
gas exploration and development activities and future acquisitions.

      Under the equity line of credit agreement, Dutchess Private Equities has
agreed to provide Energas with up to $10,000,000 of funding during the
thirty-six month period beginning with the date that the registration statement
Energas has agreed to file is declared effective by the Securities and Exchange
Commission. During this thirty-six month period, Energas may request a drawdown
under the equity line of credit by selling shares of its common stock to
Dutchess Private Equities, and Dutchess Private Equities will be obligated to
purchase the shares. The minimum and maximum amounts Energas can draw down at
any one time is determined using a formula contained in the equity line of
credit agreement. Energas is under no obligation to request any drawdowns under
the equity line of credit.

      On the day of the drawdown notice, a pricing period of five trading days
will begin. If any closing bid price of Energas' common stock during the pricing
period is less than ninety percent (90%) of the average closing bid price of
Energas' common stock during the ten trading days prior to the date of the
drawdown notice, Energas may elect, by sending written notice to Dutchess
Private Equities, to withdraw the drawdown, in which case no shares will be sold
during the pricing period.

      Energas relied upon the exemption provided by Section 4(2) of the
Securities Act of 1933 with respect to the equity line of credit. Energas has
agreed to file a registration statement with the Securities and Exchange
Commission in order that the shares of common stock purchased under the equity
line of credit by Dutchess Private Equities may be resold in the public market.


Item 9.01   Financial Statements and Exhibits

Exhibit No.    Description
----------     -----------

10.11          Equity Line of Credit Agreement
10.12          Registration Rights Agreement.


      No financial statements are filed with this report.






<PAGE>



                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


Date:   September 21, 2004                ENERGAS RESOURCES, INC.

                                          By: /s/ George G. Shaw
                                              ------------------------
                                              George G. Shaw, President and
                                              Chief Executive Officer






<PAGE>




                                 EXHIBIT 10.11











<PAGE>

                              INVESTMENT AGREEMENT

INVESTMENT  AGREEMENT (this  "AGREEMENT"),  dated as of September 20, 2004, by
and between Energas Resources,  Inc., a Delaware  corporation (the "Company"),
and Dutchess Private  Equities Fund, II, L.P., a Delaware limited  partnership
(the "Investor").

Whereas,  the  parties  desire  that,  upon  the  terms  and  subject  to  the
conditions  contained  herein,  the Investor shall invest up to $10,000,000 to
purchase the Company's  Common Stock,  $0.001 par value per share (the "Common
Stock");

Whereas, such investments will be made in reliance upon the provisions of
Section 4(2) under the  Securities  Act of 1933,  as amended (the "1933 Act"),
Rule  506  of  Regulation  D,  and  the  rules  and  regulations   promulgated
thereunder,   and/or  upon  such  other   exemption   from  the   registration
requirements  of the 1933 Act as may be  available  with respect to any or all
of the investments in Common Stock to be made hereunder; and

Whereas,  contemporaneously with the execution and delivery of this Agreement,
the  parties  hereto  are  executing  and  delivering  a  Registration  Rights
Agreement  substantially  in the form attached hereto as Exhibit A (as amended
from time to time, the "Registration  Rights Agreement") pursuant to which the
Company has agreed to provide certain  registration rights under the 1933 Act,
and the rules and regulations  promulgated  thereunder,  and applicable  state
securities laws.

NOW THEREFORE,  in  consideration  of the foregoing  recitals,  which shall be
considered an integral part of this  Agreement,  the covenants and  agreements
set forth hereafter,  and other good and valuable  consideration,  the receipt
and sufficiency of which is hereby acknowledged,  the Company and the Investor
hereby agree as follows:

SECTION 1. DEFINITIONS.

      As used in this Agreement,  the following terms shall have the following
meanings  specified or indicated  below,  and such  meanings  shall be equally
applicable to the singular and plural forms of such defined terms.

      "1933 Act" shall have the meaning set forth in the preamble, above.

      "1934 Act" shall mean the Securities  Exchange Act of 1934, as it may be
amended.

      "Affiliate" shall have the meaning specified in Section 5(h), below.

      "Agreement" shall mean this Investment Agreement.

      "Best Bid"  shall mean the highest posted bid price of the Common Stock.

      "Buy In" shall have the meaning specified in Section 6, below.

<PAGE>

      "Buy In Adjustment  Amount" shall have the meaning  specified in Section
6.

      "Closing" shall have the meaning specified in Section 2(h).

      "Closing  Date"  shall mean seven (7)  Trading  Days  following  the Put
Notice Date for each traunche.

      "Common  Stock" shall have the meaning set forth in the preamble to this
Agreement.

      "Control"  or  "Controls"  shall have the meaning  specified  in Section
5(h).

      "Covering Shares" shall have the meaning specified in Section 6.

      "Effective  Date" shall mean the date the SEC declares  effective  under
the 1933 Act the Registration Statement covering the Securities.

      "Environmental Laws" shall have the meaning specified in Section 4(m).

      "Execution  Date" shall mean the date  indicated in the preamble to this
Agreement.

      "Indemnities" shall have the meaning specified in Section 11.

      "Indemnified  Liabilities"  shall have the meaning  specified in Section
11.

      "Ineffective   Period"   shall   mean  any   period  of  time  that  the
Registration Statement or any Supplemental  Registration Statement (as defined
in the Registration  Rights Agreement) becomes  ineffective or unavailable for
use for the sale or resale,  as applicable,  of any or all of the  Registrable
Securities (as defined in the  Registration  Rights  Agreement) for any reason
(or in the event the  prospectus  under either of the above is not current and
deliverable)  during any time period  required under the  Registration  Rights
Agreement.

      "Investor"  shall have the  meaning  indicated  in the  preamble of this
Agreement.

      "Material  Adverse  Effect" shall have the meaning  specified in Section
4(a).

      "Maximum  Common  Stock  Issuance"  shall have the meaning  specified in
Section 2(I).

      "Minimum  Acceptable  Price"  with  respect to any Put Notice Date shall
mean 90% of the  average  closing  bid price for the ten  Trading  Day  period
immediately preceding such Put Notice Date.

      "Open  Period"  shall mean the period  beginning  on and  including  the
Trading  Day  immediately  following  the  Effective  Date and  ending  on the
earlier  to occur of (i) the date which is  thirty-six  (36)  months  from the
Effective  Date;  or (ii)  termination  of the  Agreement in  accordance  with
Section 9, below.


                                       2
<PAGE>

      "Pricing  Period" shall mean the period beginning on the Put Notice Date
and ending on and  including the date that is five (5) Trading Days after such
Put Notice Date.

      "Principal  Market" shall mean the American  Stock  Exchange,  Inc., the
National  Association of Securities Dealers,  Inc.  Over-the-Counter  Bulletin
Board,  the  Nasdaq  National  Market  System or the Nasdaq  SmallCap  Market,
whichever is the principal market on which the Common Stock is listed.

      "Prospectus"  shall  mean the  prospectus,  preliminary  prospectus  and
supplemental prospectus used in connection with the Registration Statement.

      "Purchase  Amount"  shall  mean  the  total  amount  being  paid  by the
Investor on a particular Closing Date to purchase the Securities.

      "Purchase  Price"  shall mean  ninety-five  percent  (95%) of the lowest
closing Best Bid price of the Common Stock during the Pricing Period.

      "Put Amount" shall have the meaning set forth in Section 2(b) hereof.

      "Put  Notice"  shall mean a written  notice sent to the  Investor by the
Company  stating  the Put  Amount in US dollars  pursuant  to the terms of the
Agreement and stating the current  number of Shares issued and  outstanding on
such date.

      "Put Notice Date" shall mean the Trading Day  immediately  following the
day on which the  Investor  receives a Put Notice,  however a Put Notice shall
be deemed  delivered  on (x) the Trading Day it is  received by  facsimile  or
otherwise by the Investor if such notice is received  prior to 9:00 am Eastern
Time,  or (y) the  immediately  succeeding  Trading  Day if it is  received by
facsimile  or  otherwise  after 9:00 am Eastern  Time on a Trading Day. No Put
Notice may be deemed delivered on a day that is not a Trading Day.

      "Put  Restriction"  shall mean the days  between  the end of the Pricing
Period and the date on which the  investor  deems the Put closed.  During this
time, the Company shall not be entitled to deliver another Put Notice.

      "Registration  Period" shall have the meaning specified in Section 5(c),
below.

      "Registration  Rights Agreement" shall have the meaning set forth in the
recitals, above.

      "Registration   Statement"  means  the  registration  statement  of  the
Company filed under the 1933 Act covering the Common Stock issuable hereunder.

      "Related Party" shall have the meaning specified in Section 5(h).

      "Resolution" shall have the meaning specified in Section 8(e).

      "SEC" shall mean the U.S. Securities & Exchange Commission.


                                       3
<PAGE>

      "SEC Documents" shall have the meaning specified in Section 4(f).

      "Securities"  shall mean the shares of Common Stock  issued  pursuant to
the terms of the Agreement.

      "Shares" shall mean the shares of the Company's Common Stock.

      "Sold Shares" shall have the meaning specified in Section 6.

      "Subsidiaries" shall have the meaning specified in Section 4(a).

      "Trading Day" shall mean any day on which the  Principal  Market for the
Common Stock is open for trading, from the hours of 9:30 am until 4:00 pm.

      "Transaction  Documents"  shall mean this  Agreement,  the  Registration
Rights  Agreement,  and  each  of the  other  agreements  entered  into by the
parties hereto in connection with this Agreement.

SECTION 2. PURCHASE AND SALE OF COMMON STOCK.

(A) PURCHASE  AND SALE OF COMMON  STOCK.  Subject to the terms and  conditions
set forth herein,  the Company  shall issue and sell to the Investor,  and the
Investor shall  purchase from the Company,  up to that number of Shares having
an aggregate Purchase Price of $10,000,000.

(B) DELIVERY OF PUT NOTICES.

(I) Subject to the terms and  conditions  of the  Transaction  Documents,  and
from  time to time  during  the Open  Period,  the  Company  may,  in its sole
discretion,  deliver a Put Notice to the Investor  which states the Put Amount
(designated in US dollars)  which the Company  intends to sell to the Investor
on a Closing  Date.  The Put Notice  shall be in the form  attached  hereto as
Exhibit F and  incorporated  herein by reference.  The amount that the Company
shall be entitled to Put to the  Investor  (the "Put  Amount")  shall be equal
to, at the  Company's  election,  either:  (A) up to 200% of the average daily
volume  (U.S.  market  only) of the Common Stock for the ten (10) Trading Days
prior to the  applicable  Put Notice  Date,  multiplied  by the average of the
three daily  closing bid prices  immediately  preceding  the Put Date,  or (B)
$50,000;  provided  that  in no  event  will  the  Put  Amount  be  more  than
$1,000,000  with  respect  to any single  Put.  During  the Open  Period,  the
Company  shall not be entitled to submit a Put Notice until after the previous
Closing  has  been  completed.   The  Purchase  Price  for  the  Common  Stock
identified  in the Put Notice shall be equal to  ninety-five  percent (95%) of
the lowest closing bid price of the Common Stock during the Pricing Period.

(II) If any  closing  bid price  during the  applicable  Pricing  Period  with
respect to that Put Notice is less than  ninety  percent  (90%) of the average
closing bid price of the Common  Stock for the ten  Trading  Days prior to the
Put  Notice  Date  (the  "Minimum  Acceptable  Price"),  the Put  Notice  will




                                       4
<PAGE>

terminate at the  Company's  request.  In the event that the closing bid price
for the applicable  Pricing Period is less than the Minimum  Acceptable Price,
the Company may elect,  by sending  written  notice to the  Investor to cancel
the Put Notice.

 (C)  RESERVED

 (D) INVESTOR'S  OBLIGATION TO PURCHASE SHARES.  Subject to the conditions set
forth  in this  Agreement,  following  the  Investor's  receipt  of a  validly
delivered  Put Notice,  the  Investor  shall be required to purchase  from the
Company during the related Pricing Period that number of Shares  determined by
dividing the lesser of:

     (i)  the Put  Amount set forth in the Put  Notice,  or
     (ii) 20% of the  aggregate  trading  volume of the Common  Stock during the
          applicable  Pricing Period  multiplied by the lowest closing bid price
          of the Company's Common Stock during the specified Pricing Period.

      by the Purchase Price.

      The  Investor  will be required  to purchase  the Shares so long as said
Shares  do  not  bear  any  legend  and  are  not  subject  to  stop  transfer
instructions.

(E) LIMITATION ON INVESTOR'S  OBLIGATION TO PURCHASE SHARES. In no event shall
the  Investor  purchase  Shares  (whether  from the  Company  or in  public or
private  secondary  transactions)  other than pursuant to this Agreement until
such date as this Agreement is terminated.

(F) CONDITIONS TO INVESTOR'S  OBLIGATION TO PURCHASE  SHARES.  Notwithstanding
anything to the contrary in this Agreement,  the Company shall not be entitled
to deliver a Put Notice and the  Investor  shall not be  obligated to purchase
any  Shares at a Closing  (as  defined  in Section  2(h))  unless  each of the
following conditions are satisfied:

(I) a  Registration  Statement  shall have been  declared  effective and shall
remain  effective  and  available  for  the  resale  of  all  the  Registrable
Securities  (as defined in the  Registration  Rights  Agreement)  at all times
until the Closing with respect to the subject Put Notice;

(II) at all times  during the period  beginning on the related Put Notice Date
and ending on and including the related  Closing Date,  the Common Stock shall
have been  listed on the  Principal  Market and shall not have been  suspended
from trading thereon for a period of five (5) consecutive  Trading Days during
the Open  Period and the Company  shall not have been  notified of any pending
or threatened  proceeding or other action to suspend the trading of the Common
Stock;

(III) the Company has complied  with its  obligations  and is otherwise not in
breach of a material  provision of, or in default under,  this Agreement,  the
Registration  Rights  Agreement or any other agreement  executed in connection
herewith  which has not been  corrected  prior to  delivery  of the Put Notice
Date;


                                       5
<PAGE>

(IV) no  injunction  shall have been  issued  and  remain in force,  or action
commenced by a governmental  authority which has not been stayed or abandoned,
prohibiting the purchase or the issuance of the Securities; and

(V) the issuance of the Securities will not violate any  shareholder  approval
requirements of the Principal Market.

If any of the events  described in clauses (i) through (v) above occurs during
a Pricing  Period,  then the Investor shall have no obligation to purchase the
Put Amount of Common Stock set forth in the applicable Put Notice.

(G) RESERVED

(H) MECHANICS OF PURCHASE OF SHARES BY INVESTOR.  Subject to the  satisfaction
of the  conditions  set forth in  Sections  2(f),  7 and 8, the closing of the
purchase  by the  Investor of Shares or the  Investor  deeming a Put closed (a
"Closing")  shall  occur on the date which is no later than seven (7)  Trading
Days  following the  applicable  Put Notice Date for each traunche or when the
Investor  deems a Put closed (each a "Closing  Date").  On each Closing  Date,
(I) the Company  shall  deliver to the  Investor  pursuant to this  Agreement,
certificates  representing  the  Shares to be issued to the  Investor  on such
date and  registered in the name of the Investor;  and (II) the Investor shall
deliver  to the  Company  the  Purchase  Price  to be paid  for  such  Shares,
determined  as set  forth in  Sections  2(b) and 2(d).  In lieu of  delivering
physical  certificates  representing  the  Securities  the Company may use the
Depository Trust Company ("DTC") Fast Automated  Securities  Transfer ("FAST")
program through it's transfer agent to electronically  transmit the Securities
by  crediting  the account of the  Investor's  prime  broker  (which  shall be
specified  by the Investor in a reasonably  sufficient  time in advance)  with
DTC through its Deposit  Withdrawal  Agent Commission  ("DWAC") system.  After
receipt of confirmation  of delivery of Shares to the Investor,  the Investor,
by  wire  transfer  of  immediately  available  funds  pursuant  to  the  wire
instructions  provided by the Company,  will  disburse the funds  constituting
the Purchase Amount.

The Company  understands that a delay in the issuance of Securities beyond the
Closing  Date  could  result  in  economic  loss to the  Investor.  After  the
Effective Date and as long as the Company  receives the Put  Settlement  Sheet
(Exhibit G) on or before 8:00 AM eastern on the day  following  the end of the
Pricing  Period,  as  compensation  to the Investor for such loss, the Company
agrees to pay late  payments to the Investor for late  issuance of  Securities
(delivery of Securities after the applicable  Closing Date) in accordance with
the following  schedule  (where "No. of Days Late" is defined as the number of
trading days beyond the Closing Date.  The Amounts are not cumulative.):

                  Late Payment for Each       $10,000 of
                   Number of Days Late       Common Stock

                          2                     $200
                          3                     $300
                          4                     $400


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<PAGE>

                          5                     $500
                          6                     $600
                          7                     $700
                          8                     $800
                          9                     $900
                         10                     $1,000
                     Over  10                   $1,000  +  $200  for  each
                                                business  day  late  beyond
                                                11  days

The Company shall pay any payments  incurred under this Section in immediately
available funds upon demand.  Nothing herein shall limit the Investor's  right
to pursue actual  damages for the  Company's  failure to issue and deliver the
Securities  to the  Investor,  except to the  extent  that such late  payments
shall  constitute  payment for and offset any such actual  damages  alleged by
the Investor, and any Buy In Adjustment Amount.

 (I)  OVERALL  LIMIT  ON  COMMON  STOCK  ISSUABLE.   Notwithstanding  anything
contained  herein to the  contrary,  if during  the Open  Period  the  Company
becomes  listed on an  exchange  that  limits  the  number of shares of Common
Stock  that may be issued  without  shareholder  approval,  then the number of
Shares issuable by the Company and purchasable by the Investor,  including the
shares of Common  Stock  issuable  to the  Investors,  shall not  exceed  that
number of the shares of Common Stock that may be issuable without  shareholder
approval,   subject  to  appropriate   adjustment  for  stock  splits,   stock
dividends,  combinations  or  other  similar  recapitalization  affecting  the
Common Stock (the  "Maximum  Common Stock  Issuance"),  unless the issuance of
Shares,  including any Common Stock to be issued to the Investors  pursuant to
Section  11(b),  in excess of the Maximum Common Stock Issuance shall first be
approved by the Company's  shareholders  in accordance with applicable law and
the By-laws  and Amended and  Restated  Certificate  of  Incorporation  of the
Company,  if such  issuance of shares of Common  Stock could cause a delisting
on the Principal Market.  The parties  understand and agree that the Company's
failure to seek or obtain such shareholder  approval shall in no way adversely
affect  the  validity  and  due  authorization  of the  issuance  and  sale of
Securities  or the  Investor's  obligation  in  accordance  with the terms and
conditions  hereof to purchase a number of Shares in the  aggregate  up to the
Maximum  Common Stock  Issuance  limitation,  and that such approval  pertains
only to the  applicability  of the Maximum  Common Stock  Issuance  limitation
provided in this Section 2(j).

SECTION 3. INVESTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS.

The Investor represents and warrants to the Company, and covenants, that:

(A)  SOPHISTICATED  INVESTOR.  The Investor has, by reason of its business and
financial  experience,  such  knowledge,   sophistication  and  experience  in
financial  and  business  matters and in making  investment  decisions of this
type  that  it is  capable  of (I)  evaluating  the  merits  and  risks  of an
investment in the Securities and making an informed investment decision;  (II)
protecting  its own  interest;  and (III)  bearing the  economic  risk of such
investment for an indefinite period of time.


                                       7
<PAGE>

(B)  AUTHORIZATION;  ENFORCEMENT.  This  Agreement  has been duly and  validly
authorized,  executed  and  delivered on behalf of the Investor and is a valid
and binding  agreement  of the  Investor  enforceable  against the Investor in
accordance with its terms,  subject as to enforceability to general principles
of  equity  and  to   applicable   bankruptcy,   insolvency,   reorganization,
moratorium,  liquidation  and other  similar  laws  relating  to, or affecting
generally, the enforcement of applicable creditors' rights and remedies.

(C)  SECTION  9 OF THE  1934  ACT.  During  the  term of this  Agreement,  the
Investor  will comply with the  provisions  of Section 9 of the 1934 Act,  and
the rules promulgated  thereunder,  with respect to transactions involving the
Common Stock. The Investor agrees not to short,  either directly or indirectly
through its  affiliates,  principals or advisors,  the Company's  common stock
during the term of this Agreement.

(D) ACCREDITED INVESTOR.  Investor is an "Accredited Investor" as that term is
defined in Rule 501(a)(3) of Regulation D of the 1933 Act.

(E) NO CONFLICTS.  The execution,  delivery and performance of the Transaction
Documents  by  the  Investor  and  the  consummation  by the  Investor  of the
transactions  contemplated  hereby and thereby  will not result in a violation
of Partnership  Agreement or other  organizational  documents of the Investor.
The Investor is not subject to any  investigation or inquiry by the Securities
and Exchange  Commission or any state securities  agency and, to the knowledge
of the Investor, no such investigation or inquiry is pending.

(F) OPPORTUNITY TO DISCUSS.  The Investor has received all materials  relating
to the Company's business,  finance and operations which it has requested. The
Investor  has had an  opportunity  to discuss  the  business,  management  and
financial affairs of the Company with the Company's management.

(G)  INVESTMENT  PURPOSES.  The Investor is purchasing  the Securities for its
own account for investment  purposes and not with a view towards  distribution
and  agrees  to  resell  or  otherwise  dispose  of the  Securities  solely in
accordance  with the  registration  provisions of the 1933 Act (or pursuant to
an exemption from such registration provisions).

(H) NO REGISTRATION AS A DEALER.  The Investor is not and will not be required
to be registered as a "dealer"  under the 1934 Act,  either as a result of its
execution  and  performance  of  its  obligations   under  this  Agreement  or
otherwise.

(I) GOOD  STANDING  The  Investor is a Limited  Partnership,  duly  organized,
validly existing and in good standing in the State of Delaware.

(J) TAX  ILABILITIES.  The Investor  understands that it is liable for its own
tax liabilities.

(K)  REGULATION M. The Investor  will comply with  Regulation M under the 1934
Act, if applicable.


                                       8
<PAGE>

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

Except as set forth in the Schedules  attached hereto,  or as disclosed on the
Company's SEC Documents,  the Company  represents and warrants to the Investor
that:

(A)   ORGANIZATION  AND  QUALIFICATION.  The  Company  is a  corporation  duly
organized and validly  existing in good  standing  under the laws of the State
of Delaware,  and has the requisite  corporate power and  authorization to own
its properties and to carry on its business as now being  conducted.  Both the
Company and the companies it owns or controls,  its  "Subsidiaries,"  are duly
qualified to do business  and are in good  standing in every  jurisdiction  in
which its ownership of property or the nature of the business  conducted by it
makes such qualification  necessary,  except to the extent that the failure to
be so  qualified  or be in good  standing  would not have a  Material  Adverse
Effect.  As  used in this  Agreement,  "Material  Adverse  Effect"  means  any
material  adverse  effect on the  business,  properties,  assets,  operations,
results of  operations,  financial  condition  or prospects of the Company and
its  Subsidiaries,   if  any,  taken  as  a  whole,  or  on  the  transactions
contemplated  hereby or by the agreements  and  instruments to be entered into
in  connection  herewith,  or on the  authority  or ability of the  Company to
perform  its  obligations  under the  Transaction  Documents  (as  defined  in
Section 1 and 4(b), below).

(B)   AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.

(I) The Company has the requisite  corporate power and authority to enter into
and perform this Agreement,  the Registration  Rights  Agreement,  and each of
the other  agreements  entered into by the parties  hereto in connection  with
the   transactions   contemplated   by  this  Agreement   (collectively,   the
"Transaction  Documents"),  and to issue the Securities in accordance with the
terms hereof and thereof.

(II) The  execution and delivery of the  Transaction  Documents by the Company
and  the  consummation  by it of  the  transactions  contemplated  hereby  and
thereby,  including  without  limitation the  reservation for issuance and the
issuance  of the  Securities  pursuant to this  Agreement,  have been duly and
validly  authorized by the Company's Board of Directors and no further consent
or  authorization is required by the Company,  its Board of Directors,  or its
shareholders.

(III)  The  Transaction  Documents  have been duly and  validly  executed  and
delivered by the Company.

(IV) The Transaction  Documents  constitute the valid and binding  obligations
of the  Company  enforceable  against  the  Company in  accordance  with their
terms,  except as such  enforceability may be limited by general principles of
equity  or  applicable  bankruptcy,  insolvency,  reorganization,  moratorium,
liquidation  or  similar  laws  relating  to,  or  affecting  generally,   the
enforcement of creditors' rights and remedies.


                                       9
<PAGE>

(C)   CAPITALIZATION.  As of August 31, 2004, the authorized  capital stock of
the Company consists of 100,000,000  shares of Common Stock,  $0.001 par value
per  share,  of  which  44,063,001  shares  are  issued  and  outstanding  and
8,987,000 shares are reserved for issuance  pursuant to options,  warrants and
other  convertible  securities.  All of such outstanding  shares have been, or
upon issuance will be, validly  issued and are fully paid and  non-assessable.
Except as disclosed in the  Company's  publicly  available  filings or in this
agreement,

 (I) no shares  of the  Company's  capital  stock are  subject  to  preemptive
rights or any other similar  rights or any liens or  encumbrances  suffered or
permitted  by the  Company;  (II) there are no  outstanding  debt  securities;
(III) there are no  outstanding  shares of capital stock,  options,  warrants,
scrip,  rights  to  subscribe  to,  calls  or  commitments  of  any  character
whatsoever  relating to, or securities or rights  convertible into, any shares
of capital  stock of the  Company or any of its  Subsidiaries,  or  contracts,
commitments,  understandings  or  arrangements  by which the Company or any of
its Subsidiaries is or may become bound to issue additional  shares of capital
stock of the Company or any of its Subsidiaries or options,  warrants,  scrip,
rights to  subscribe  to, calls or  commitments  of any  character  whatsoever
relating to, or securities or rights  convertible  into, any shares of capital
stock of the Company or any of its Subsidiaries;  (IV) there are no agreements
or  arrangements  under  which  the  Company  or any of  its  Subsidiaries  is
obligated to register the sale of any of their  securities  under the 1933 Act
(except  the  Registration  Rights  Agreement);  (V) there are no  outstanding
securities  of  the  Company  or any of its  Subsidiaries  which  contain  any
redemption or similar  provisions,  and there are no  contracts,  commitments,
understandings   or   arrangements   by  which  the  Company  or  any  of  its
Subsidiaries  is or may become  bound to redeem a security  of the  Company or
any  of  its  Subsidiaries;  (VI)  there  are  no  securities  or  instruments
containing  anti-dilution or similar  provisions that will be triggered by the
issuance of the Securities as described in this  Agreement;  (VII) the Company
does not have any  stock  appreciation  rights  or  "phantom  stock"  plans or
agreements  or any similar plan or  agreement;  and (VIII) there is no dispute
as to the  classification  of any shares of the Company's  capital stock.  The
Company has furnished to the Investor,  or the Investor has had access through
EDGAR to,  true and  correct  copies of the  Company's  Amended  and  Restated
Certificate  of   Incorporation,   as  in  effect  on  the  date  hereof  (the
"Certificate of  Incorporation"),  and the Company's By-laws,  as in effect on
the date hereof (the "By-laws"),  and the terms of all securities  convertible
into or  exercisable  for Common Stock and the material  rights of the holders
thereof in respect thereto.

(D)   ISSUANCE  OF SHARES.  The  Company has  reserved  10,000,000  Shares for
issuance  pursuant to this Agreement has been duly authorized and reserved for
issuance (subject to adjustment  pursuant to the Company's  covenant set forth
in  Section  5(f)  below)  pursuant  to  this  Agreement.   Upon  issuance  in
accordance with this Agreement,  the Securities will be validly issued,  fully
paid and  non-assessable  and free  from all  taxes,  liens and  charges  with
respect  to the issue  thereof.  In the event the  Company  cannot  register a
sufficient  number of Shares for  issuance  pursuant  to this  Agreement,  the
Company will use its best  efforts to  authorize  and reserve for issuance the
number  of  Shares  required  for  the  Company  to  perform  its  obligations
hereunder as soon as reasonably practicable.

(E)   NO  CONFLICTS.   The   execution,   delivery  and   performance  of  the
Transaction  Documents by the Company and the  consummation  by the Company of


                                       10
<PAGE>

the  transactions  contemplated  hereby and  thereby  will not (I) result in a
violation  of  the   Certificate   of   Incorporation,   any   Certificate  of
Designations,  Preferences and Rights of any  outstanding  series of preferred
stock of the Company or the By-laws;  or (II)  conflict  with, or constitute a
material  default  (or an event  which  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  of,  any  material
agreement,  contract, indenture mortgage,  indebtedness or instrument to which
the  Company  or any of  its  Subsidiaries  is a  party,  or to the  Company's
knowledge result in a violation of any law, rule, regulation,  order, judgment
or decree  (including  United  States  federal and state  securities  laws and
regulations  and  the  rules  and  regulations  of  the  Principal  Market  or
principal  securities  exchange or trading market on which the Common Stock is
traded or listed)  applicable to the Company or any of its  Subsidiaries or by
which any  property  or asset of the  Company  or any of its  Subsidiaries  is
bound or affected.  Except as disclosed in Schedule 4(e),  neither the Company
nor its  Subsidiaries is in violation of any term of, or in default under, the
Certificate of  Incorporation,  any Certificate of  Designations,  Preferences
and Rights of any outstanding  series of preferred stock of the Company or the
By-laws or their  organizational  charter  or  by-laws,  respectively,  or any
contract, agreement, mortgage, indebtedness,  indenture, instrument, judgment,
decree or order or any statute,  rule or regulation  applicable to the Company
or its Subsidiaries,  except for possible conflicts,  defaults,  terminations,
amendments,  accelerations,   cancellations  and  violations  that  would  not
individually or in the aggregate have a Material Adverse Effect.  The business
of the Company and its Subsidiaries is not being  conducted,  and shall not be
conducted,  in  violation  of any  law,  statute,  ordinance,  rule,  order or
regulation   of  any   governmental   authority  or  agency,   regulatory   or
self-regulatory   agency,  or  court,   except  for  possible  violations  the
sanctions for which either  individually  or in the aggregate would not have a
Material  Adverse  Effect.   Except  as  specifically   contemplated  by  this
Agreement and as required under the 1933 Act to the Company's  knowledge,  the
Company is not required to obtain any consent, authorization,  permit or order
of, or make any filing or  registration  (except the filing of a  registration
statement) with, any court,  governmental  authority or agency,  regulatory or
self-regulatory  agency  or other  third  party in  order  for it to  execute,
deliver or perform  any of its  obligations  under,  or  contemplated  by, the
Transaction  Documents in  accordance  with the terms  hereof or thereof.  All
consents,  authorizations,  permits,  orders,  filings and registrations which
the Company is required to obtain  pursuant  to the  preceding  sentence  have
been  obtained  or  effected  on or prior to the date  hereof  and are in full
force and effect as of the date hereof.  Except as disclosed in Schedule 4(e),
the Company  and its  Subsidiaries  are unaware of any facts or  circumstances
which might give rise to any of the  foregoing.  The Company is not,  and will
not be, in violation of the listing  requirements  of the Principal  Market as
in  effect  on the date  hereof  and on each of the  Closing  Dates and is not
aware of any facts  which would  reasonably  lead to  delisting  of the Common
Stock by the Principal Market in the foreseeable future.

(F)   SEC DOCUMENTS;  FINANCIAL STATEMENTS. As of August 31, 2004, the Company
has  filed all  reports,  schedules,  forms,  statements  and other  documents
required  to  be  filed  by  it  with  the  SEC  pursuant  to  the   reporting
requirements  of the 1934 Act (all of the  foregoing  filed  prior to the date
hereof  and  all  exhibits  included  therein  and  financial  statements  and
schedules  thereto and  documents  incorporated  by  reference  therein  being
hereinafter referred to as the "SEC Documents").  The Company has delivered to


                                       11
<PAGE>

the Investor or its  representatives,  or they have had access  through  EDGAR
to, true and  complete  copies of the SEC  Documents.  As of their  respective
dates,  the  SEC  Documents   complied  in  all  material  respects  with  the
requirements  of the  1934  Act  and  the  rules  and  regulations  of the SEC
promulgated  thereunder  applicable to the SEC Documents,  and none of the SEC
Documents,  at the time they were  filed  with the SEC,  contained  any untrue
statement of a material  fact or omitted to state a material  fact required to
be stated  therein or necessary to make the  statements  therein,  in light of
the  circumstances  under which they were made,  not  misleading.  As of their
respective dates, the financial  statements of the Company included in the SEC
Documents  complied  as to  form  in all  material  respects  with  applicable
accounting  requirements  and the published  rules and  regulations of the SEC
with  respect  thereto.  Such  financial  statements  have  been  prepared  in
accordance  with  generally  accepted  accounting   principles,   consistently
applied,  during  the  periods  involved  (except  (I)  as  may  be  otherwise
indicated in such financial  statements or the notes  thereto,  or (II) in the
case  of  unaudited  interim  statements,  to  the  extent  they  may  exclude
footnotes  or may be condensed or summary  statements)  and fairly  present in
all material  respects the  financial  position of the Company as of the dates
thereof and the results of its  operations and cash flows for the periods then
ended (subject, in the case of unaudited statements,  to normal year-end audit
adjustments).  No other  written  information  provided by or on behalf of the
Company  to  the  Investor  which  is  not  included  in  the  SEC  Documents,
including,  without  limitation,  information  referred to in Section  4(d) of
this Agreement,  contains any untrue  statement of a material fact or omits to
state any material  fact  necessary  to make the  statements  therein,  in the
light of the  circumstance  under which they are or were made, not misleading.
Neither  the  Company nor any of its  Subsidiaries  or any of their  officers,
directors,  employees or agents have  provided the Investor with any material,
nonpublic  information  which  was not  publicly  disclosed  prior to the date
hereof and any  material,  nonpublic  information  provided to the Investor by
the  Company  or  its  Subsidiaries  or  any  of  their  officers,  directors,
employees or agents  prior to any Closing Date shall be publicly  disclosed by
the Company prior to such Closing Date.

(G)   ABSENCE OF CERTAIN  CHANGES.  Except as set forth in the SEC  Documents,
the Company does not intend to change the business  operations  of the Company
in any  material  way.  The  Company  has not  taken any  steps,  and does not
currently  expect  to take  any  steps,  to seek  protection  pursuant  to any
bankruptcy law nor does the Company or its Subsidiaries  have any knowledge or
reason  to  believe  that  its  creditors   intend  to  initiate   involuntary
bankruptcy proceedings.

(H)   ABSENCE OF LITIGATION.  Except as set forth in the SEC Documents,  there
is no action,  suit,  proceeding,  inquiry or  investigation  before or by any
court, public board, government agency,  self-regulatory  organization or body
pending or, to the  knowledge of the  executive  officers of Company or any of
its  Subsidiaries,  threatened  against or affecting  the Company,  the Common
Stock or any of the  Company's  Subsidiaries  or any of the  Company's  or the
Company's  Subsidiaries' officers or directors in their capacities as such, in
which an adverse decision could have a Material Adverse Effect.

(I)   ACKNOWLEDGMENT  REGARDING  INVESTOR'S  PURCHASE  OF SHARES.  The Company
acknowledges  and agrees that the Investor is acting solely in the capacity of
arm's length  purchaser  with  respect to the  Transaction  Documents  and the
transactions   contemplated   hereby  and   thereby.   The   Company   further
acknowledges  that the  Investor  is not  acting  as a  financial  advisor  or


                                       12
<PAGE>

fiduciary  of the  Company (or in any similar  capacity)  with  respect to the
Transaction  Documents and the  transactions  contemplated  hereby and thereby
and any advice given by the Investor or any of its respective  representatives
or agents in connection  with the Transaction  Documents and the  transactions
contemplated  hereby  and  thereby  is  merely  incidental  to the  Investor's
purchase of the  Securities.  The Company  further  represents to the Investor
that the Company's  decision to enter into the Transaction  Documents has been
based  solely  on  the   independent   evaluation   by  the  Company  and  its
representatives.

(J)   NO  UNDISCLOSED  EVENTS,  LIABILITIES,  DEVELOPMENTS  OR  CIRCUMSTANCES.
Except as set forth in the SEC  Documents,  since August 20,  2004,  no event,
liability,  development  or  circumstance  has  occurred or exists,  or to the
Company's  knowledge is contemplated to occur,  with respect to the Company or
its Subsidiaries or their respective business,  properties, assets, prospects,
operations or financial  condition,  that would be required to be disclosed by
the Company  under  applicable  securities  laws on a  registration  statement
filed with the SEC  relating  to an  issuance  and sale by the  Company of its
Common Stock and which has not been publicly announced.

(K)   EMPLOYEE  RELATIONS.  Neither the Company nor any of its Subsidiaries is
involved in any union labor  dispute  nor, to the  knowledge of the Company or
any of its Subsidiaries,  is any such dispute threatened.  Neither the Company
nor any of its Subsidiaries is a party to a collective  bargaining  agreement,
and the  Company  and its  Subsidiaries  believe  that  relations  with  their
employees  are good.  No  executive  officer (as defined in Rule 501(f) of the
1933 Act) has  notified  the Company  that such  officer  intends to leave the
Company's  employ or otherwise  terminate such officer's  employment  with the
Company.

(L)   INTELLECTUAL  PROPERTY  RIGHTS.  The Company and its Subsidiaries own or
possess  adequate  rights or  licenses  to use all  trademarks,  trade  names,
service marks,  service mark  registrations,  service names,  patents,  patent
rights,   copyrights,    inventions,    licenses,   approvals,    governmental
authorizations,   trade   secrets  and  rights   necessary  to  conduct  their
respective  businesses  as now  conducted.  Except  as set  forth  in the  SEC
Documents,  none of the  Company's  trademarks,  trade names,  service  marks,
service  mark   registrations,   service   names,   patents,   patent  rights,
copyrights, inventions, licenses, approvals, government authorizations,  trade
secrets  or other  intellectual  property  rights  necessary  to  conduct  its
business as now or as proposed to be conducted have expired or terminated,  or
are  expected  to expire or  terminate  within two years from the date of this
Agreement.  The Company and its  Subsidiaries do not have any knowledge of any
infringement  by the  Company or its  Subsidiaries  of  trademark,  trade name
rights,  patents, patent rights,  copyrights,  inventions,  licenses,  service
names,  service  marks,  service  mark  registrations,  trade  secret or other
similar rights of others,  or of any such  development of similar or identical
trade secrets or technical  information by others and,  except as set forth in
the SEC  Documents,  there is no claim,  action or  proceeding  being  made or
brought against, or to the Company's knowledge,  being threatened against, the
Company or its Subsidiaries regarding trademark,  trade name, patents,  patent
rights, invention,  copyright,  license, service names, service marks, service
mark registrations,  trade secret or other  infringement;  and the Company and
its Subsidiaries  are unaware of any facts or  circumstances  which might give


                                       13
<PAGE>

rise to any of the  foregoing.  The  Company and its  Subsidiaries  have taken
commercially   reasonable   security   measures   to  protect   the   secrecy,
confidentiality and value of all of their intellectual properties.

(M)   ENVIRONMENTAL  LAWS.  The Company and its  Subsidiaries  (I) are, to the
knowledge  of  management  of the  Company,  in  compliance  with  any and all
applicable foreign,  federal, state and local laws and regulations relating to
the  protection of human health and safety,  the  environment  or hazardous or
toxic  substances  or  wastes,  pollutants  or  contaminants   ("Environmental
Laws");  (II) have, to the  knowledge of  management of the Company,  received
all permits,  licenses or other  approvals  required of them under  applicable
Environmental  Laws to conduct their respective  businesses;  and (III) are in
compliance,  to the knowledge of the Company, with all terms and conditions of
any such permit,  license or approval  where,  in each of the three  foregoing
cases, the failure to so comply would have,  individually or in the aggregate,
a Material Adverse Effect.

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

(O)   INSURANCE.  Each of the Company's  Subsidiaries  are insured by insurers
of recognized  financial  responsibility  against such losses and risks and in
such amounts as  management of the Company  reasonably  believes to be prudent
and customary in the businesses in which the Company and its  Subsidiaries are
engaged.  Neither  the Company nor any such  Subsidiary  has been  refused any
insurance  coverage sought or applied for and neither the Company nor any such
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 at a cost that would not have a Material Adverse Effect.

(P)   REGULATORY PERMITS.  The Company and its Subsidiaries have in full force
and effect all certificates,  approvals,  authorizations  and permits from the
appropriate  federal,  state,  local or  foreign  regulatory  authorities  and
comparable  foreign  regulatory  agencies,  necessary to own, lease or operate
their   respective   properties  and  assets  and  conduct  their   respective
businesses,  and neither the Company nor any such  Subsidiary has received any
notice of proceedings  relating to the revocation or  modification of any such
certificate,  approval, authorization or permit, except for such certificates,
approvals,   authorizations  or  permits  which  if  not  obtained,   or  such
revocations or modifications which, would not have a Material Adverse Effect.

(Q)   INTERNAL ACCOUNTING  CONTROLS.  The Company and each of its Subsidiaries
maintain  a system of  internal  accounting  controls  sufficient  to  provide


                                       14
<PAGE>

reasonable  assurance that (I)  transactions  are executed in accordance  with
management's  general  or  specific  authorizations;   (II)  transactions  are
recorded  as  necessary  to permit  preparation  of  financial  statements  in
conformity  with  generally  accepted  accounting  principles  and to maintain
asset  accountability;  (III) access to assets is permitted only in accordance
with  management's  general or specific  authorization;  and (IV) the recorded
accountability  for assets is compared with the existing  assets at reasonable
intervals and appropriate action is taken with respect to any differences.

(R)   NO MATERIALLY  ADVERSE  CONTRACTS,  ETC.  Neither the Company nor any of
its  Subsidiaries  is  subject  to  any  charter,  corporate  or  other  legal
restriction,  or any judgment,  decree, order, rule or regulation which in the
judgment of the Company's  officers has or is expected in the future to have a
Material Adverse Effect.  Neither the Company nor any of its Subsidiaries is a
party to any  contract or  agreement  which in the  judgment of the  Company's
officers has or is expected to have a Material Adverse Effect.

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

(T)   CERTAIN TRANSACTIONS.  Except as set forth in the SEC Documents filed at
least  ten  days  prior  to the  date  hereof  and  except  for  arm's  length
transactions  pursuant to which the  Company  makes  payments in the  ordinary
course of business upon terms no less  favorable than the Company could obtain
from third parties and other than the grant of stock options  disclosed in the
SEC Documents,  none of the officers,  directors,  or employees of the Company
is  presently  a party  to any  transaction  with  the  Company  or any of its
Subsidiaries  (other than for 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
corporation,  partnership,  trust  or  other  entity  in  which  any  officer,
director,  or any such employee has a  substantial  interest or is an officer,
director, trustee or partner.

(U)   DILUTIVE  EFFECT.  The Company  understands  and  acknowledges  that the
number of shares of Common  Stock  issuable  upon  purchases  pursuant to this
Agreement  will  increase  in  certain   circumstances   including,   but  not
necessarily  limited to, the  circumstance  wherein  the trading  price of the
Common Stock  declines  during the period  between the Effective  Date and the
end of the Open Period.  The Company's  executive  officers and directors have
studied and fully  understand the nature of the  transactions  contemplated by
this Agreement and recognize that they have a potential  dilutive effect.  The


                                       15
<PAGE>

Board of Directors of the Company has  concluded,  in its good faith  business
judgment  that such  issuance is in the best  interests  of the  Company.  The
Company  specifically  acknowledges  that,  subject to such limitations as are
expressly  set forth in the  Transaction  Documents,  its  obligation to issue
shares of Common Stock upon  purchases  pursuant to this Agreement is absolute
and  unconditional  regardless  of the dilutive  effect that such issuance may
have on the ownership interests of other shareholders of the Company.

(V)   RIGHT OF FIRST  REFUSAL.  During the term of this  Agreement the Company
shall not,  directly  or  indirectly,  without  the prior  written  consent of
Investor  which will not be  unreasonably  withheld,  enter into an additional
Equity Line of Credit  agreement (a  "Subsequent  Financing")  for a period of
one year  after  the  Effective  Date,  unless  (A) the  Company  delivers  to
Investor  a  written  notice  (the  "Subsequent   Financing  Notice")  of  its
intention to effect such  Subsequent  Financing,  which  Subsequent  Financing
Notice  shall  describe  in  reasonable  detail  the  proposed  terms  of such
Subsequent   Financing,   the  amount  of  proceeds   intended  to  be  raised
thereunder,  the person with whom such Subsequent Financing shall be effected,
and  attached  to which  shall be a term  sheet or similar  document  relating
thereto;  and (B)  Investor  shall not have  notified the Company by 5:00 p.m.
(New York time) on the fifth  Trading Day after its receipt of the  Subsequent
Financing  Notice of its  willingness  to provide,  subject to  completion  of
mutually acceptable  documentation,  financing to the Company on substantially
the terms set forth in the Subsequent  Financing Notice.If Investor shall fail
to notify the Company of its intention to enter into such negotiations  within
such time  period,  then the  Company  may  effect  the  Subsequent  Financing
substantially  upon the terms set forth in the  Subsequent  Financing  Notice;
provided  that the Company shall  provide  Investor  with a second  Subsequent
Financing  Notice,  and Investor  shall again have the right of first  refusal
set forth above in this Section,  if the Subsequent  Financing  subject to the
initial  Subsequent  Financing  Notice shall not have been consummated for any
reason  on the  terms set forth in such  Subsequent  Financing  Notice  within
thirty  Trading  Days  after  the  date of the  initial  Subsequent  Financing
Notice.  The rights granted to Investor in this Section are not subject to any
prior right of first refusal  given to any other person  disclosed on Schedule
4(c).

(W)   LOCK-UP. The Company shall cause its officers, insiders,  directors, and
affiliates or other related  parties under control of the Company,  to refrain
from selling Common Stock during each Pricing Period.

(X)   NO  GENERAL   SOLICITATION.   Neither  the  Company,   nor  any  of  its
affiliates,  nor any person  acting on its behalf,  has engaged in any form of
general  solicitation or general advertising (within the meaning of Regulation
D) in connection with the offer or sale of the Common Stock offered hereby.

(Y)   NO BROKERS,  FINDERS OR FINANCIAL  ADVISORY FEES OR COMMISSIONS  will be
payable by the Company with respect to the  transactions  contemplated by this
Agreement.


                                       16
<PAGE>

SECTION 5.  COVENANTS OF THE COMPANY

(A)   BEST EFFORTS.  The Company  shall use  commercially  reasonable  efforts
timely to satisfy each of the  conditions to be satisfied by it as provided in
Section 7 of this Agreement.

(B)   BLUE SKY. The Company shall, at its sole cost and expense,  on or before
each of the Closing  Dates,  take such action as the Company shall  reasonably
determine is necessary to qualify the Securities for, or obtain  exemption for
the Securities  for, sale to the Investor at each of the Closings  pursuant to
this Agreement under  applicable  securities or "Blue Sky" laws of such states
of the United States, as reasonably  specified by Investor,  and shall provide
evidence  of any  such  action  so taken  to the  Investor  on or prior to the
Closing Date.

(C)   REPORTING  STATUS.  Until the  earlier  to occur of (I) the  first  date
which is after the date this  Agreement  is  terminated  pursuant to Section 9
and on which the Holders (as that term is defined in the  Registration  Rights
Agreement)  may sell all of the  Securities  without  restriction  pursuant to
Rule 144(k)  promulgated under the 1933 Act (or successor  thereto);  and (II)
the date on which (A) the Holders shall have sold all the Securities;  and (B)
this Agreement has been  terminated  pursuant to Section 9 (the  "Registration
Period"),  the Company  shall file all  reports  required to be filed with the
SEC pursuant to the 1934 Act, and the Company  shall not  terminate its status
as a reporting company under the 1934 Act.

(D)   USE OF PROCEEDS.  The Company will use the proceeds from the sale of the
Shares  (excluding  amounts  paid by the  Company for fees as set forth in the
Transaction  Documents) for general corporate and working capital purposes and
acquisitions  or assets,  businesses or operations or for other  purposes that
the Board of Directors deem to be in the best interest of the Company.

(E)   FINANCIAL  INFORMATION.  The  Company  agrees to make  available  to the
Investor  via EDGAR or other  electronic  means the  following to the Investor
during the Registration  Period: (I) within five Trading Days after the filing
thereof  with  the SEC,  a copy of its  Annual  Reports  on Form  10-KSB,  its
Quarterly  Reports on Form  10-QSB,  any  Current  Reports on Form 8-K and any
Registration  Statements or amendments filed pursuant to the 1933 Act; (II) on
the same day as the release  thereof,  copies of all press releases  issued by
the Company or any of its Subsidiaries;  (III) copies of any notices and other
information  made  available  or  given  to the  shareholders  of the  Company
generally,  contemporaneously  with the making  available or giving thereof to
the  shareholders;  and (IV)  within two  calendar  days of filing or delivery
thereof,  copies of all documents filed with, and all correspondence  sent to,
the  Principal  Market,  any  securities  exchange or market,  or the National
Association of Securities  Dealers,  Inc., unless such information is material
nonpublic information.

(F)   RESERVATION OF SHARES.  Subject to the following  sentence,  the Company
shall take all action necessary to at all times have authorized,  and reserved
for the purpose of issuance,  a sufficient number of shares of Common Stock to
provide for the issuance of the  Securities  hereunder.  In the event that the
Company  determines  that it does not have a sufficient  number of  authorized
shares  of  Common  Stock  to  reserve  and keep  available  for  issuance  as
described  in this  Section  5(f),  the Company  shall use its best efforts to

                                       17
<PAGE>

increase  the  number  of  authorized   shares  of  Common  Stock  by  seeking
shareholder approval for the authorization of such additional shares.

(G)   LISTING.  The Company shall promptly  secure and maintain the listing of
all of the  Registrable  Securities  (as  defined in the  Registration  Rights
Agreement)  upon the  Principal  Market  and each  other  national  securities
exchange and automated  quotation  system, if any, upon which shares of Common
Stock are then  listed  (subject  to official  notice of  issuance)  and shall
maintain,  such  listing  of all  Registrable  Securities  from  time  to time
issuable  under the terms of the  Transaction  Documents.  Neither the Company
nor any of its  Subsidiaries  shall take any action which would be  reasonably
expected to result in the  delisting or  suspension of the Common Stock on the
Principal  Market  (excluding  suspensions  of not more than one  trading  day
resulting  from  business  announcements  by the  Company).  The Company shall
promptly  provide to the Investor  copies of any notices it receives  from the
Principal Market  regarding the continued  eligibility of the Common Stock for
listing  on such  automated  quotation  system  or  securities  exchange.  The
Company  shall pay all fees and expenses in  connection  with  satisfying  its
obligations under this Section 5(g).

(H)   TRANSACTIONS  WITH  AFFILIATES.  The Company  shall not, and shall cause
each of its Subsidiaries not to, enter into, amend,  modify or supplement,  or
permit  any  Subsidiary  to enter  into,  amend,  modify  or  supplement,  any
agreement,  transaction,  commitment  or  arrangement  with  any of its or any
Subsidiary's  officers,  directors,  persons who were officers or directors at
any time during the previous two years,  shareholders  who beneficially own 5%
or more of the Common Stock,  or affiliates or with any individual  related by
blood,  marriage  or  adoption  to any such  individual  or with any entity in
which any such  entity or  individual  owns a 5% or more  beneficial  interest
(each a "Related  Party"),  except for (I) customary  employment  arrangements
and benefit  programs on reasonable  terms,  (II) any agreement,  transaction,
commitment or arrangement  on an arms-length  basis on terms no less favorable
than terms  which  would have been  obtainable  from a person  other than such
Related Party, or (III) any agreement, transaction,  commitment or arrangement
which  is  approved  by a  majority  of  the  disinterested  directors  of the
Company.  For  purposes  hereof,  any  director  who is also an officer of the
Company  or  any  Subsidiary  of the  Company  shall  not  be a  disinterested
director  with  respect  to any such  agreement,  transaction,  commitment  or
arrangement.  "Affiliate"  for  purposes  hereof  means,  with  respect to any
person or entity,  another person or entity that, directly or indirectly,  (I)
has a 5% or more  equity  interest  in that  person or entity,  (II) has 5% or
more common  ownership with that person or entity,  (III) controls that person
or  entity,  or (IV) is under  common  control  with that  person  or  entity.
"Control" or "Controls" for purposes  hereof means that a person or entity has
the power,  direct or  indirect,  to conduct or govern the policies of another
person or entity.

(I)   FILING OF FORM 8-K.  On or before the date which is three  Trading  Days
after the Execution  Date, the Company shall file a Current Report on Form 8-K
with the SEC  describing  the  terms of the  transaction  contemplated  by the
Transaction  Documents in the form required by the 1934 Act, if such filing is
required.

(J)   CORPORATE EXISTENCE.  The Company shall use its best efforts to preserve
and continue the corporate existence of the Company.


                                       18
<PAGE>

(K)   NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION;  SUSPENSION OF RIGHT TO
MAKE A PUT. The Company shall promptly  notify Investor upon the occurrence of
any of the following events in respect of a Registration  Statement or related
prospectus  in respect of an  offering of the  Securities:  (I) receipt of any
request for  additional  information  by the SEC or any other federal or state
governmental  authority during the period of effectiveness of the Registration
Statement  for  amendments or  supplements  to the  Registration  Statement or
related  prospectus;  (II) the  issuance  by the SEC or any other  federal  or
state  governmental  authority of any stop order suspending the  effectiveness
of any  Registration  Statement or the initiation of any  proceedings for that
purpose;  (III) receipt of any notification  with respect to the suspension of
the  qualification  or exemption from  qualification  of any of the Securities
for sale in any  jurisdiction  or the  initiation or notice of any  proceeding
for such  purpose;  (IV) the  happening of any event that makes any  statement
made in such  Registration  Statement  or related  prospectus  or any document
incorporated or deemed to be incorporated  therein by reference  untrue in any
material   respect  or  that  requires  the  making  of  any  changes  in  the
Registration  Statement,  related prospectus or documents so that, in the case
of a  Registration  Statement,  it will not contain any untrue  statement of a
material  fact or omit to  state  any  material  fact  required  to be  stated
therein or necessary to make the statements  therein not misleading,  and that
in the  case  of the  related  prospectus,  it will  not  contain  any  untrue
statement of a material  fact or omit to state any material  fact  required to
be stated  therein or necessary to make the statements  therein,  in the light
of the circumstances  under which they were made, not misleading;  and (V) the
Company's  reasonable  determination  that a  post-effective  amendment to the
Registration  Statement would be  appropriate,  and the Company shall promptly
make  available  to Investor any such  supplement  or amendment to the related
prospectus.  The Company  shall not deliver to Investor any Put Notice  during
the continuation of any of the foregoing events.

(L)   REIMBURSEMENT.  If (I) Investor  becomes involved in any capacity in any
action,  proceeding  or  investigation  brought  by  any  shareholder  of  the
Company,  in  connection  with  or as a  result  of  the  consummation  of the
transactions  contemplated  by the  Transaction  Documents,  or if Investor is
impleaded  in any such  action,  proceeding  or  investigation  by any  person
(other  than as a result of a breach  of the  Investor's  representations  and
warranties set forth in this Agreement);  or (II)Investor  becomes involved in
any capacity in any action,  proceeding  or  investigation  brought by the SEC
against or involving the Company or in  connection  with or as a result of the
consummation of the  transactions  contemplated  by the Transaction  Documents
(other  than as a result of a breach  of the  Investor's  representations  and
warranties  set forth in this  Agreement),  or if Investor is impleaded in any
such  action,  proceeding  or  investigation  by any person,  then in any such
case, the Company will reimburse  Investor for its reasonable  legal and other
expenses  (including the cost of any investigation  and preparation)  incurred
in connection  therewith,  as such expenses are  incurred.  The  reimbursement
obligations  of the  Company  under this  section  shall be in addition to any
liability  which the Company may  otherwise  have,  shall extend upon the same
terms and  conditions to any affiliates of Investor that are actually named in
such action,  proceeding or investigation,  and partners,  directors,  agents,
employees, attorneys,  accountants, auditors and controlling persons (if any),
as the case may be, of Investor and any such  affiliate,  and shall be binding
upon and inure to the benefit of any  successors of the Company,  Investor and
any such affiliate and any such person.


                                       19
<PAGE>

SECTION 6.  COVER.

If the number of Shares  represented by any Put Notices  become  restricted or
are no longer freely trading for any reason,  and after the applicable Closing
Date, the Investor purchases, in an open market transaction or otherwise,  the
Company's  Common Stock (the  "Covering  Shares") in order to make delivery in
satisfaction  of a sale of Common Stock by the Investor  (the "Sold  Shares"),
which delivery such Investor  anticipated to make using the Shares represented
by the Put Notice (a  "Buy-In"),  the Company  shall pay to the  Investor  the
Buy-In Adjustment Amount (as defined below).  The "Buy-In  Adjustment  Amount"
is the  amount  equal  to the  excess,  if any,  of (A) the  Investor's  total
purchase  price  (including  brokerage  commissions,  if any) for the Covering
Shares  over  (B) the  net  proceeds  (after  brokerage  commissions,  if any)
received by the Investor  from the sale of the Sold Shares.  The Company shall
pay the Buy-In  Adjustment  Amount to the  Investor in  immediately  available
funds immediately upon demand by the Investor.  By way of illustration and not
in limitation of the foregoing,  if the Investor purchases Common Stock having
a total purchase price (including  brokerage  commissions) of $11,000 to cover
a  Buy-In  with  respect  to the  Common  Stock it sold  for net  proceeds  of
$10,000,  the Buy-In  Adjustment  Amount which the Company will be required to
pay to the Investor will be $1,000.

SECTION 7.  CONDITIONS OF THE COMPANY'S OBLIGATION TO SELL.

The  obligation  hereunder of the Company to issue and sell the  Securities to
the  Investor  is  further  subject  to the  satisfaction,  at or before  each
Closing  Date,  of each of the  following  conditions  set forth below.  These
conditions  are for the  Company's  sole  benefit  and  may be  waived  by the
Company at any time in its sole discretion.

(A)  The  Investor  shall  have  executed  each  of  this  Agreement  and  the
Registration Rights Agreement and delivered the same to the Company.

(B) The Investor  shall have  delivered to the Company the Purchase  Price for
the Securities  being purchased by the Investor between the end of the Pricing
Period and the Closing Date via a Put  Settlement  Sheet  (hereto  attached as
Exhibit G) After  receipt of  confirmation  of delivery of such  Securities to
the Investor,  the Investor,  by wire transfer of immediately  available funds
pursuant to the wire  instructions  provided by the Company will  disburse the
funds constituting the Purchase Amount.

(C)  No  statute,  rule,  regulation,   executive  order,  decree,  ruling  or
injunction  shall have been enacted,  entered,  promulgated or endorsed by any
court or governmental  authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.

SECTION 8. FURTHER CONDITIONS OF THE INVESTOR'S OBLIGATION TO PURCHASE.

The obligation of the Investor  hereunder to purchase Shares is subject to the
satisfaction,  on or  before  each  Closing  Date,  of each  of the  following
conditions set forth below.


                                       20
<PAGE>

(A) The Company  shall have  executed  each of the  Transaction  Documents and
delivered the same to the Investor.

(B) The Common  Stock  shall be  authorized  for  quotation  on the  Principal
Market and trading in the Common  Stock shall not have been  suspended  by the
Principal  Market or the SEC,  at any time  beginning  on the date  hereof and
through and including the respective  Closing Date  (excluding  suspensions of
not more than one Trading Day  resulting  from business  announcements  by the
Company,  provided that such suspensions occur prior to the Company's delivery
of the Put Notice related to such Closing).

(C) The  representations  and  warranties  of the  Company  shall  be true and
correct  as of the date when  made and as of the  applicable  Closing  Date as
though made at that time (except for (I)  representations  and warranties that
speak as of a specific date and (II) with respect to the representations  made
in Sections  4(g),  (h) and (j) and the third sentence of Section 4(k) hereof,
events which occur on or after the date of this  Agreement  and are  disclosed
in SEC  filings  made by the  Company at least ten  Trading  Days prior to the
applicable  Put Notice Date) and the Company shall have  performed,  satisfied
and complied with the covenants,  agreements  and  conditions  required by the
Transaction  Documents  to be  performed,  satisfied  or complied  with by the
Company on or before such Closing Date.  The Investor may request an update as
of such Closing Date  regarding the  representation  contained in Section 4(c)
above.

(D) The  Company  shall  have  executed  and  delivered  to the  Investor  the
certificates  representing,  or have executed  electronic  book-entry transfer
of, the  Securities  (in such  denominations  as such Investor  shall request)
being purchased by the Investor at such Closing.

(E) The Board of  Directors  of the  Company  shall have  adopted  resolutions
consistent  with  Section   4(b)(ii)  above  (the   "Resolutions")   and  such
Resolutions  shall not have been  amended or  rescinded  prior to such Closing
Date.

(F) reserved

(G)  No  statute,  rule,  regulation,   executive  order,  decree,  ruling  or
injunction  shall have been enacted,  entered,  promulgated or endorsed by any
court or governmental  authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.

(H) The Registration  Statement shall be effective on each Closing Date and no
stop order suspending the  effectiveness  of the Registration  statement shall
be in effect or to the  Company's  knowledge  shall be pending or  threatened.
Furthermore,  on each Closing Date (I) neither the Company nor Investor  shall
have received  notice that the SEC has issued or intends to issue a stop order
with  respect to such  Registration  Statement or that the SEC  otherwise  has
suspended or  withdrawn  the  effectiveness  of such  Registration  Statement,
either  temporarily  or  permanently,  or intends or has  threatened  to do so
(unless the SEC's  concerns  have been  addressed  and Investor is  reasonably
satisfied  that the SEC no  longer  is  considering  or  intends  to take such
action),  and  (II)  no  other  suspension  of the  use or  withdrawal  of the
effectiveness  of such  Registration  Statement  or related  prospectus  shall
exist.


                                       21
<PAGE>

(I) At the  time  of  each  Closing,  the  Registration  Statement  (including
information  or  documents   incorporated   by  reference   therein)  and  any
amendments or supplements  thereto shall not contain any untrue statement of a
material  fact or omit to  state  any  material  fact  required  to be  stated
therein or necessary to make the  statements  therein not  misleading or which
would require public disclosure or an update supplement to the prospectus.

(J) If  applicable,  the  shareholders  of the Company shall have approved the
issuance  of any Shares in excess of the  Maximum  Common  Stock  Issuance  in
accordance  with Section 2(i) or the Company shall have  obtained  appropriate
approval  pursuant  to the  requirements  of  Delaware  law and the  Company's
Articles of Incorporation and By-laws.

(K) The  conditions  to such Closing set forth in Section 2(f) shall have been
satisfied on or before such Closing Date.

(L) The Company  shall have  certified to the Investor the number of Shares of
Common Stock outstanding when a Put Notice is given to the Investor.

SECTION 9.  TERMINATION.  This  Agreement  shall  terminate  upon  any  of the
following events:

(I) when the Investor has purchased an aggregate of  $10,000,000 in the Common
Stock of the Company pursuant to this Agreement;

(II)  on the  date  which  is  thirty-six  (36)  months  after  the  Effective
Date;SECTION 10.  SUSPENSION

This Agreement shall be suspended upon any of the following events,  and shall
remain suspended until such event is rectified:

      (I) the  trading  of the  Common  Stock is  suspended  by the  SEC,  the
Principal  Market or the NASD for a period of five  consecutive  Trading  Days
during the Open Period;

      (II) The  Common  Stock  ceases to be  registered  under the 1934 Act or
listed or traded on the Principal  Market.  Upon the  occurrence of one of the
above-described  events,  the Company shall send written  notice of such event
to the Investor.

SECTION 11.       INDEMNIFICATION.

In  consideration  of  the  parties  mutual   obligations  set  forth  In  the
Transaction   Documents,   each  of  the   parties  (in  such   capacity,   an
"Indemnitor")  shall  defend,  protect,  indemnify and hold harmless the other
and all of the other party's  shareholders,  officers,  directors,  employees,
counsel,  and direct or indirect  investors and any of the foregoing  person's
agents  or  other  representatives  (including,   without  limitation,   those
retained in connection with the  transactions  contemplated by this Agreement)
(collectively,  the  "Indemnitees")  from  and  against  any and all  actions,


                                       22
<PAGE>

causes of action, suits, claims, losses, costs,  penalties,  fees, liabilities
and damages, and reasonable expenses in connection therewith  (irrespective of
whether   any  such   Indemnitee   is  a  party  to  the   action   for  which
indemnification  hereunder is sought),  and  including  reasonable  attorneys'
fees  and  disbursements  (the  "Indemnified  Liabilities"),  incurred  by any
Indemnitee  as a  result  of,  or  arising  out  of,  or  relating  to (I) any
misrepresentation  or breach of any  representation  or  warranty  made by the
Indemnitor  or any other  certificate,  instrument  or  document  contemplated
hereby  (except  to the  extent  that the  transaction  documents  breach  any
agreements  to which the  Investor is subject) or thereby;  (II) any breach of
any  covenant,  agreement or  obligation  of the  Indemnitor  contained in the
Transaction  Documents  or  any  other  certificate,  instrument  or  document
contemplated  hereby or thereby;  or (III) any cause of action,  suit or claim
brought or made  against such  Indemnitee  by a third party and arising out of
or resulting from the execution,  delivery,  performance or enforcement of the
Transaction  Documents  or  any  other  certificate,  instrument  or  document
contemplated hereby or thereby,  except insofar as any such misrepresentation,
breach or any untrue statement, alleged untrue statement,  omission or alleged
omission  is  made  in  reliance  upon  and  in  conformity  with  information
furnished  to  Indemnitor  which  is  specifically  intended  for  use  in the
preparation  of  any  such  Registration  Statement,  preliminary  prospectus,
prospectus or amendments to the  prospectus.  To the extent that the foregoing
undertaking  by the  Indemnitor  may be  unenforceable  for  any  reason,  the
Indemnitor   shall  make  the   maximum   contribution   to  the  payment  and
satisfaction  of each of the  Indemnified  Liabilities  which  is  permissible
under  applicable law. The indemnity  provisions  contained herein shall be in
addition to any cause of action or similar  rights  Indemnitor  may have,  and
any liabilities the Indemnitor or the Indemnitees may be subject to.

SECTION 12. GOVERNING LAW; MISCELLANEOUS.

(A) GOVERNING  LAW. This  Agreement  shall be governed by and  interpreted  in
accordance with the laws of the Commonwealth of  Massachusetts  without regard
to the principles of conflict of laws. Each party hereby  irrevocably  submits
to the exclusive  jurisdiction  of the state and federal courts sitting in the
City of  Boston,  County  of  Suffolk,  for the  adjudication  of any  dispute
hereunder  or in  connection  herewith  or with any  transaction  contemplated
hereby or discussed herein, and hereby  irrevocably  waives, and agrees not to
assert in any suit, action or proceeding,  any claim that it is not personally
subject to the  jurisdiction  of any such  court,  that such  suit,  action or
proceeding  is  brought  in an  inconvenient  forum or that the  venue of such
suit, action or proceeding is improper.  Each party hereby  irrevocably waives
personal  service of process and consents to process  being served in any such
suit,  action or  proceeding  by  mailing a copy  thereof to such party at the
address  for such  notices to it under  this  Agreement  and agrees  that such
service shall  constitute  good and  sufficient  service of process and notice
thereof.  Nothing  contained  herein  shall be  deemed to limit in any way any
right to serve  process in any manner  permitted  by law. If any  provision of
this Agreement shall be invalid or  unenforceable  in any  jurisdiction,  such
invalidity   or   unenforceability   shall  not   affect   the   validity   or
enforceability  of the remainder of this Agreement in that jurisdiction or the
validity or  enforceability  of any  provision of this  Agreement in any other
jurisdiction.

(B) LEGAL FEES; AND  MISCELLANEOUS  FEES. Except as otherwise set forth in the
Transaction  Documents,  each  party  shall pay the fees and  expenses  of its
advisers,  counsel,  the accountants and other experts,  if any, and all other
expenses  incurred  by such party  incident to the  negotiation,  preparation,


                                       23
<PAGE>

execution,  delivery and  performance of this  Agreement.  Any attorneys' fees
and expenses  incurred by either the Company or by the Investor in  connection
with the  preparation,  negotiation,  execution and delivery of any amendments
to this  Agreement or relating to the  enforcement of the rights of any party,
after the  occurrence of any breach of the terms of this  Agreement by another
party  or any  default  by  another  party  in  respect  of  the  transactions
contemplated  hereunder,  shall be paid on demand by the party which  breached
the Agreement and/or defaulted,  as the case may be. The Company shall pay all
stamp and other taxes and duties  levied in  connection  with the  issuance of
any Securities.

(C)  COUNTERPARTS.  This  Agreement  may be executed in two or more  identical
counterparts,  all of which 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;  provided  that a facsimile  signature  shall be
considered due execution and shall be binding upon the signatory  thereto with
the  same  force  and  effect  as if the  signature  were an  original,  not a
facsimile signature.

(D)  HEADINGS;  SINGULAR/PLURAL.  The  headings  of  this  Agreement  are  for
convenience   of  reference  and  shall  not  form  part  of,  or  affect  the
interpretation  of, this Agreement.  Whenever  required by the context of this
Agreement,  the singular shall include the plural and masculine  shall include
the feminine.

(E)  SEVERABILITY.  If any  provision  of this  Agreement  shall be invalid or
unenforceable in any jurisdiction,  such invalidity or unenforceability  shall
not affect the validity or  enforceability  of the remainder of this Agreement
in that  jurisdiction  or the validity or  enforceability  of any provision of
this Agreement in any other jurisdiction.

(F) ENTIRE AGREEMENT;  AMENDMENTS.  This Agreement  supersedes all other prior
oral  or  written  agreements  between  the  Investor,   the  Company,   their
affiliates  and persons  acting on their  behalf  with  respect to the matters
discussed  herein,  and this Agreement and the instruments  referenced  herein
(including the other Transaction  Documents) contain the entire  understanding
of the parties  with  respect to the matters  covered  herein and therein and,
except as  specifically  set forth herein or therein,  neither the Company nor
the Investor makes any representation,  warranty, covenant or undertaking with
respect to such matters.  No provision of this  Agreement may be amended other
than by an instrument in writing  signed by the Company and the Investor,  and
no  provision  hereof  may be waived  other than by an  instrument  in writing
signed by the party against whom enforcement is sought.

(G) NOTICES. Any notices or other  communications  required or permitted to be
given under the terms of this  Agreement must be in writing and will be deemed
to have been delivered (I) upon receipt, when delivered personally;  (II) upon
receipt,  when sent by facsimile  (provided  confirmation  of  transmission is
mechanically  or  electronically  generated  and  kept on file by the  sending
party); or (III) one day after deposit with a nationally  recognized overnight
delivery service,  in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:


                                       24
<PAGE>

        If to the Company:

                Energas Resources, Inc.
                800 Northeast 63rd Street
                3rd Floor
                Oklahoma City, Oklahoma  73105

                Telephone: (405) 879-1752
                Facsimile:   (405) 879-0175

        If to the Investor:

                Dutchess Private Equities fund, LP, II
                312 Stuart Street
                Boston, MA 02116

                Telephone: 617-960-3582
                Facsimile: 617-960-3772

Each party shall  provide five days' prior  written  notice to the other party
of any change in address or facsimile number.

(H) NO ASSIGNMENT. This Agreement may not be assigned.

(I) NO THIRD PARTY  BENEFICIARIES.  This Agreement is intended for the benefit
of the parties  hereto and is not for the  benefit  of, nor may any  provision
hereof be enforced by, any other person.

(J)  SURVIVAL.  The  representations  and  warranties  of the  Company and the
Investor  contained  in Sections 2 and 3, the  agreements  and  covenants  set
forth in  Sections 4 and 5, and the  indemnification  provisions  set forth in
Section 10, shall  survive each of the  Closings and the  termination  of this
Agreement.

 (K)  PUBLICITY.  The Company and  Investor  shall  consult with each other in
issuing any press releases or otherwise making public  statements with respect
to the  transactions  contemplated  hereby and no party  shall  issue any such
press release or otherwise  make any such public  statement  without the prior
consent  of the  other  parties,  which  consent  shall  not  be  unreasonably
withheld or delayed,  except that no prior  consent  shall be required if such
disclosure is required by law, in which such case the  disclosing  party shall
provide  the  other  parties  with  prior  notice  of such  public  statement.
Notwithstanding  the  foregoing,  the Company shall not publicly  disclose the
name of Investor  without the prior  consent of such  Investor,  except to the
extent required by law.  Investor  acknowledges that this Agreement and all or
part of the Transaction  Documents may be deemed to be "material contracts" as
that term is  defined  by Item  601(b)(10)  of  Regulation  S-B,  and that the
Company  may  therefore  be  required  to file such  documents  as exhibits to
reports or registration  statements  filed under the 1933 Act or the 1934 Act.
Investor  further  agrees that the status of such  documents  and materials as
material contracts shall be determined solely by the Company,  in consultation
with its counsel.


                                       25
<PAGE>

(L) FURTHER  ASSURANCES.  Each party shall do and perform, or cause to be done
and  performed,  all such  further  acts and  things,  and shall  execute  and
deliver all such other  agreements,  certificates,  instruments and documents,
as the other  party may  reasonably  request  in order to carry out the intent
and  accomplish  the purposes of this  Agreement and the  consummation  of the
transactions contemplated hereby.

(M) reserved

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

(O)  REMEDIES.  The  Investor  and each  holder of the  Shares  shall have all
rights and remedies set forth in this  Agreement and the  Registration  Rights
Agreement and all rights and remedies  which such holders have been granted at
any time under any other  agreement  or contract  and all of the rights  which
such  holders  have  under any law.  Any person  having  any rights  under any
provision  of  this  Agreement  shall  be  entitled  to  enforce  such  rights
specifically  (without posting a bond or other  security),  to recover damages
by  reason  of any  default  or breach  of any  provision  of this  Agreement,
including  the  recovery  of  reasonable  attorneys  fees  and  costs,  and to
exercise all other rights granted by law.

(P)  PAYMENT  SET ASIDE.  To the extent  that the  Company  makes a payment or
payments to the Investor  hereunder or the  Registration  Rights  Agreement or
the Investor  enforces or exercises its rights  hereunder or  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.

(Q) PRICING OF COMMON  STOCK.  For purposes of this  Agreement,  the bid price
of the Common Stock in this Agreement shall be as reported on Bloomberg.com.



                                    * * *







                                       26
<PAGE>


                    SIGNATURE PAGE OF INVESTMENT AGREEMENT

Your  signature on this Signature Page evidences your agreement to be bound by
the terms and  conditions of the  Investment  Agreement  and the  Registration
Rights Agreement as of the date first written above.

The undersigned  signatory  hereby  certifies that he has read and understands
the Investment  Agreement,  and the representations made by the undersigned in
this  Investment  Agreement are true and  accurate,  and agrees to be bound by
its terms.


                   DUTCHESS PRIVATE EQUITIES FUND, II, L.P.
                           BY ITS GENERAL PARTNER,
                       DUTCHESS CAPITAL MANAGEMENT, LLC



By: /s/ Douglas H. Leighton
    ------------------------------------
    Douglas H. Leighton, Managing Member



                           Energas Resources, Inc.


By: /s/ George Shaw
    -------------------------------
    George Shaw, President
















                                       27
<PAGE>


                              LIST OF EXHIBITS

                  EXHIBIT  A          Registration  Rights  Agreement
                  EXHIBIT  B          Opinion  of  Company's  Counsel
                  EXHIBIT  C          [reserved]
                  EXHIBIT  D          [reserved]
                  EXHIBIT  E          Board  Resolution
                  EXHIBIT  F          Put  Notice
                  EXHIBIT  G          Put  Settlement  Sheet



















<PAGE>

                                  EXHIBIT F

Date:

RE: Put Notice Number __

Dear Mr. Leighton,

This is to inform you that as of today,  Energas  Resources,  Inc., a Delaware
corporation (the  "Company"),  hereby elects to exercise its right pursuant to
the Investment  Agreement to require  Dutchess  Private Equities Fund, II, LP.
to purchase shares of its common stock. The Company hereby certifies that:

The amount of this put is $__________.

The Pricing Period runs from ________ until _______.

The current number of shares issued and outstanding as of the Company are:
____________


Regards,

George Shaw
President
Energas Resources, Inc.







<PAGE>

                                  EXHIBIT G
                             PUT SETTLEMENT SHEET

Date:

Douglas,

Pursuant  to the Put given by Energas  Resources,  Inc.  to  Dutchess  Private
Equities Fund, II, L.P. on  _________________  200x, we are now submitting the
amount of common shares for you to issue to Dutchess.

Please have a certificate  bearing no restrictive  legend totaling  __________
shares issued to Dutchess  Private  Equities Fund, II, LP immediately and send
via DWAC to the following account:

XXXXXX

If not DWAC eligible, please send FedEx Priority Overnight to:

XXXXXX

Once these  shares  are  received  by us, we will have the funds  wired to the
Company.


Regards,

Douglas H. Leighton






<PAGE>



                  DATE                           PRICE

                  Date of Day 1               Closing Bid of Day 1
                  Date of Day 2               Closing Bid of Day 2
                  Date of Day 3               Closing Bid of Day 3
                  Date of Day 4               Closing Bid of Day 4
                  Date of Day 5               Closing Bid of Day 5


                  LOWEST 1 (ONE) CLOSING BID IN PRICING PERIOD
                                  ------------

                  PUT AMOUNT
                                  ------------

                  AMOUNT WIRED TO COMPANY
                                  ------------

                  PURCHASE PRICE (95% (NINETY-FIVE PERCENT))
                                  ------------

                  AMOUNT OF SHARES DUE
                                  ------------



The undersigned has completed this Put as of this ___th day of _________,
20xx.

Energas Resources, Inc.

George Shaw, President





<PAGE>









                                 EXHIBIT 10.12













<PAGE>

                        REGISTRATION RIGHTS AGREEMENT

      Registration  Rights Agreement (the "Agreement"),  dated as of September
20, 2004, by and between  Energas  Resources,  Inc., a  corporation  organized
under the laws of State of Delaware,  with its principal  executive  office at
Energas Resources,  Inc., 800 Northeast 63rd Street,  Oklahoma City, Oklahoma,
73105,  (the  "Company"),  and Dutchess  Private  Equities  Fund,  II, L.P., a
Delaware  limited  partnership with its principal office at 312 Stuart Street,
Boston, MA 02116 (the "Holder").

      Whereas, in connection with the Investment  Agreement by and between the
Company and the Investor of even date herewith (the  "Investment  Agreement"),
the  Company  has agreed to issue and sell to the  Investor  an  indeterminate
number of shares of the  Company's  Common  Stock,  $0.001 par value per share
(the "Common  Stock"),  to be  purchased  pursuant to the terms and subject to
the conditions set forth in the Investment Agreement; and

      Whereas,  to induce the  Investor to execute and deliver the  Investment
Agreement,  the  Company  has agreed to provide  certain  registration  rights
under the  Securities Act of 1933, as amended,  and the rules and  regulations
thereunder,  or any similar successor statute (collectively,  the "1933 Act"),
and applicable  state  securities  laws,  with respect to the shares of Common
Stock issuable pursuant to the Investment Agreement.

      Now  therefore,  in  consideration  of the  foregoing  premises  and the
mutual   covenants   contained   hereinafter   and  other  good  and  valuable
consideration,  the receipt and sufficiency of which are hereby  acknowledged,
the Company and the Investor hereby agree as follows:

Section 1.  DEFINITIONS.

      As used in this Agreement,  the following terms shall have the following
meanings:

      "Execution Date" means the date first written above.

      "Investor"  means  Dutchess  Private  Equities  Fund,  L.P.,  a Delaware
limited partnership.

      "Person"  means  a  corporation,   a  limited  liability   company,   an
association,  a partnership,  an organization,  a business,  an individual,  a
governmental or political subdivision thereof or a governmental agency.

      "Potential  Material  Event"  means  any  of  the  following:   (i)  the
possession by the Company of material  information  not ripe for disclosure in
a Registration  Statement,  which shall be evidenced by determinations in good
faith  by the  Board of  Directors  of the  Company  that  disclosure  of such
information  in  the  Registration  Statement  would  be  detrimental  to  the
business  and  affairs of the  Company,  or (ii) any  material  engagement  or
activity by the Company which would,  in the good faith  determination  of the
Board of Directors of the Company,  be adversely  affected by  disclosure in a
Registration  Statement at such time, which determination shall be accompanied
by a good faith  determination  by the Board of  Directors of the Company that
the  Registration   Statement  would  be  materially   misleading  absent  the
inclusion of such information.

<PAGE>

      "Principal  Market"  shall mean The American  Stock  Exchange,  National
Association of Securities Dealer's, Inc. Over-the-Counter  electronic bulletin
board,  the Nasdaq National Market or The Nasdaq SmallCap Market  whichever is
the principal market on which the Common Stock is listed.

      "Register,"  "Registered,"  and  "Registration"  refer to a registration
effected  by  preparing  and filing  one or more  Registration  Statements  in
compliance  with the 1933 Act and  pursuant  to Rule 415 under the 1933 Act or
any successor  rule  providing for offering  securities on a continuous  basis
("Rule  415"),  and the  declaration  or  ordering  of  effectiveness  of such
Registration  Statement(s)  by  the  United  States  Securities  and  Exchange
Commission (the "SEC").

      "Registrable  Securities" means (i) the shares of Common Stock issued or
issuable pursuant to the Investment Agreement,  and (ii) any shares of capital
stock issued or issuable with respect to such shares of Common Stock,  if any,
as a result of any stock split, stock dividend, recapitalization,  exchange or
similar  event  or   otherwise,   which  have  not  been  (x)  included  in  a
Registration  Statement  that has been  declared  effective  by the SEC or (y)
sold under circumstances  meeting all of the applicable conditions of Rule 144
(or any similar provision then in force) under the 1933 Act.

      "Registration  Statement" means a registration  statement of the Company
filed under the 1933 Act covering the Registrable Securities.

      All capitalized  terms used in this Agreement and not otherwise  defined
herein  shall  have the same  meaning  ascribed  to them as in the  Investment
Agreement.

      Section 2.  REGISTRATION.

      (a) On or before the  execution  of this  Agreement,  the Company  shall
have provided a draft of the Registration  Statement  covering the Registrable
Securities to the Investor.  The Company shall,  as soon as  practicable,  but
not  later  than  fifteen  calendar  days  following  the  Execution  of  this
agreement,  file  with  the  SEC  a  Registration  Statement  or  Registration
Statements  (as is  necessary)  on Form SB-2 (or, if such form is  unavailable
for  such a  registration,  on such  other  form as is  available  for  such a
registration),  covering  the  resale  of all of the  Registrable  Securities,
which Registration  Statement(s) shall state that, in accordance with Rule 416
promulgated under the 1933 Act, such  Registration  Statement also covers such
indeterminate  number  of  additional  shares of  Common  Stock as may  become
issuable  upon stock  splits,  stock  dividends or similar  transactions.  The
Company shall initially  register for resale 10,000,000 shares of Common Stock
which would be issuable on the date  preceding the filing of the  Registration
Statement  based on the closing  bid price of the  Company's  Common  Stock on
such date and the amount  reasonably  calculated that represents  Common Stock
issuable to other parties as set forth in the Investment  Agreement  except to
the  extent  that  the SEC  requires  the  share  amount  to be  reduced  as a
condition of effectiveness.


                                       2
<PAGE>

      (b) The Company shall use  commercially  reasonable  efforts to have the
Registration  Statement(s)  declared  effective  by the SEC within 90 calendar
days after the Execution Date.

      (c) The  Company  agrees  not to  include  any other  securities  in the
Registration  Statement covering the Registrable Securities without Investor's
prior  written  consent  which  Investor may withhold in its sole  discretion.
Furthermore,  the Company agrees that it will not file any other  Registration
Statement  for  other  securities,   until  thirty  calendar  days  after  the
Registration  Statement for the Registrable  Securities is declared  effective
by the SEC.

      Section 3.  RELATED OBLIGATIONS.

      At  such  time  as the  Company  is  obligated  to  prepare  and  file a
Registration  Statement  with the SEC  pursuant to Section  2(a),  the Company
will effect the registration of the Registrable  Securities in accordance with
the intended  method of  disposition  thereof and, with respect  thereto,  the
Company shall have the following obligations:

      (a) The  Company  shall use  commercially  reasonable  efforts  to cause
such Registration  Statement relating to the Registrable  Securities to become
effective  within  90 days  after  the  Execution  Date and  shall  keep  such
Registration  Statement  effective  until the earlier to occur of (i) the date
as of which the Investor may sell all of the  Registrable  Securities  without
restriction  pursuant  to Rule  144(k)  promulgated  under  the  1933  Act (or
successor  thereto);  or (ii) the date on which (A) the  Investor  shall  have
sold all the  Registrable  Securities;  and (B) the  Investor  has no right to
acquire any additional  shares of Common Stock under the Investment  Agreement
(the  "Registration   Period").  The  Registration  Statement  (including  any
amendments or supplements  thereto and prospectuses  contained  therein) shall
not  contain  any  untrue  statement  of a  material  fact or omit to  state a
material  fact  required  to be  stated  therein,  or  necessary  to make  the
statements  therein,  in light of the  circumstances  in which they were made,
not  misleading.  The Company shall use its best efforts to respond to all SEC
comments  within  seven  business  days from  receipt of such  comments by the
Company.  The  Company  shall use its best  efforts to cause the  Registration
Statement relating to the Registrable  Securities to become effective no later
than three  business  days  after  notice  from the SEC that the  Registration
Statement  may be  declared  effective.  The  Investor  agrees to provide  all
information  which it is required by law to provide to the Company,  including
the intended  method of disposition  of the  Registrable  Securities,  and the
Company's  obligations  set forth above shall be conditioned on the receipt of
such information.

      (b) The  Company  shall  prepare  and file with the SEC such  amendments
(including  post-effective  amendments)  and  supplements  to  a  Registration
Statement  and  the  prospectus  used in  connection  with  such  Registration
Statement,  which  prospectus is to be filed pursuant to Rule 424  promulgated
under the 1933 Act, as may be  necessary to keep such  Registration  Statement
effective  during the  Registration  Period,  and, during such period,  comply
with the  provisions  of the 1933 Act with respect to the  disposition  of all
Registrable  Securities of the Company covered by such Registration  Statement
until  such  time  as all of  such  Registrable  Securities  shall  have  been
disposed of in  accordance  with the intended  methods of  disposition  by the
Investor  thereof as set forth in such  Registration  Statement.  In the event
the  number of shares of Common  Stock  covered  by a  Registration  Statement
filed pursuant to this Agreement is at any time  insufficient  to cover all of


                                       3
<PAGE>

the  Registrable  Securities,   the  Company  shall  amend  such  Registration
Statement,  or file a new Registration  Statement (on the short form available
therefor,  if  applicable),  or both,  so as to cover  all of the  Registrable
Securities,  in each case, as soon as practicable,  but in any event within 30
calendar days after the necessity  therefor arises (based on the then Purchase
Price of the Common  Stock and other  relevant  factors  on which the  Company
reasonably  elects to rely),  assuming the Company has  sufficient  authorized
shares at that time,  and if it does not,  within 30 calendar  days after such
shares are authorized.  The Company shall use commercially  reasonable efforts
to cause such amendment and/or new Registration  Statement to become effective
as soon as practicable following the filing thereof.

      (c) The Company shall make available to the Investor  whose  Registrable
Securities  are included in any  Registration  Statement and its legal counsel
without  charge (i) promptly after the same is prepared and filed with the SEC
at  least  one  copy  of such  Registration  Statement  and  any  amendment(s)
thereto,   including  financial   statements  and  schedules,   all  documents
incorporated  therein by reference and all exhibits,  the prospectus  included
in such Registration  Statement  (including each preliminary  prospectus) and,
with regards to such Registration  Statement(s),  any  correspondence by or on
behalf  of  the  Company  to  the  SEC  or  the  staff  of  the  SEC  and  any
correspondence  from  the SEC or the  staff of the SEC to the  Company  or its
representatives;  (ii) upon the  effectiveness of any Registration  Statement,
the Company shall make  available  copies of the  prospectus  included in such
Registration  Statement and all amendments and supplements  thereto; and (iii)
such  other   documents,   including   copies  of  any  preliminary  or  final
prospectus,  as the Investor may reasonably request from time to time in order
to facilitate the disposition of the Registrable Securities.

      (d)  The  Company  shall  use  commercially  reasonable  efforts  to (i)
register  and qualify the  Registrable  Securities  covered by a  Registration
Statement  under such other  securities  or "blue sky" laws of such  states in
the United States as any Investor reasonably  requests;  (ii) prepare and file
in those jurisdictions,  such amendments (including post-effective amendments)
and supplements to such  registrations and  qualifications as may be necessary
to maintain the effectiveness  thereof during the Registration  Period;  (iii)
take such other  actions as may be  necessary to maintain  such  registrations
and qualifications in effect at all times during the Registration  Period, and
(iv) take all other actions  reasonably  necessary or advisable to qualify the
Registrable  Securities  for sale in such  jurisdictions;  provided,  however,
that the  Company  shall  not be  required  in  connection  therewith  or as a
condition  thereto to (x) qualify to do business in any jurisdiction  where it
would not  otherwise be required to qualify but for this Section  3(d), or (y)
subject  itself to general  taxation  in any such  jurisdiction.  The  Company
shall promptly  notify each Investor who holds  Registrable  Securities of the
receipt by the Company of any  notification  with respect to the suspension of
the  registration or  qualification  of any of the Registrable  Securities for
sale  under  the  securities  or "blue  sky" laws of any  jurisdiction  in the
United  States  or  its  receipt  of  actual  notice  of  the   initiation  or
threatening of any proceeding for such purpose.

      (e) As promptly as practicable  after becoming aware of such event,  the
Company  shall notify each  Investor in writing of the  happening of any event
as a result of which the prospectus included in a Registration  Statement,  as
then in effect,  includes an untrue  statement of a material  fact or omission
to state a material  fact  required to be stated  therein or necessary to make


                                       4
<PAGE>

the statements  therein,  in light of the circumstances  under which they were
made, not misleading  ("Registration Default") and use all diligent efforts to
promptly prepare a supplement or amendment to such Registration  Statement and
take any other necessary steps to cure the Registration  Default,  (which,  if
such  Registration  Statement  is on Form S-3, may consist of a document to be
filed by the Company  with the SEC  pursuant to Section  13(a),  13(c),  14 or
15(d) of the 1934 Act (as defined below) and to be  incorporated  by reference
in the  prospectus)  to correct such untrue  statement  or omission,  and make
available  copies  of such  supplement  or  amendment  to each  Investor.  The
Company shall also promptly  notify each Investor (i) when a prospectus or any
prospectus  supplement or post-effective  amendment has been filed, and when a
Registration  Statement or any  post-effective  amendment has become effective
(the Company will prepare  notification of such  effectiveness  which shall be
delivered  to the  Investor  on the  same  day of  such  effectiveness  and by
overnight  mail),  additionally,  the  Company  will  promptly  provide to the
Investor  a copy of the  effectiveness  order  prepared  by the SEC once it is
received  by the  Company;  (ii) of any request by the SEC for  amendments  or
supplements  to a  Registration  Statement  or related  prospectus  or related
information,   (iii)  of  the  Company's   reasonable   determination  that  a
post-effective  amendment to a Registration  Statement  would be  appropriate,
(iv) in the event the Registration  Statement is no longer  effective,  or (v)
if  Registration  Statement is stale as a result of the  Company's  failure to
timely file its  financials or otherwise.  The Company  acknowledges  that its
failure to cure the  Registration  Default within ten business days will cause
the  Investor  to suffer  damages  in an  amount  that  will be  difficult  to
ascertain.  Accordingly,  the parties agree that it is  appropriate to include
a provision for liquidated  damages.  The parties  acknowledge  and agree that
the  liquidated  damages  provision set forth in this section  represents  the
parties' good faith effort to quantify  such damages and, as such,  agree that
the form and amount of such  liquidated  damages are  reasonable  and will not
constitute  a  penalty.  It is the  intention  of the  parties  that  interest
payable under any of the terms of this Agreement  shall not exceed the maximum
amount  permitted  under any  applicable  law. If a law, which applies to this
Agreement which sets the maximum  interest amount,  is finally  interpreted so
that the interest in  connection  with this  Agreement  exceeds the  permitted
limits,  then: (1) any such interest shall be reduced by the amount  necessary
to reduce  the  interest  to the  permitted  limit;  and (2) any sums  already
collected (if any) from the Company which exceed the permitted  limits will be
refunded  to the  Company.  The  Investor  may  choose to make this  refund by
reducing the amount that the Company owes under this  Agreement or by making a
direct  payment  to the  Company.  If a refund  reduces  the  amount  that the
Company  owes  the  Investor,  the  reduction  will be  treated  as a  partial
payment.  In case  any  provision  of  this  Agreement  is held by a court  of
competent  jurisdiction  to be  excessive  in scope or  otherwise  invalid  or
unenforceable,  such  provision  shall be  adjusted  rather  than  voided,  if
possible,  so that it is enforceable to the maximum extent  possible,  and the
validity and  enforceability  of the remaining  provisions  of this  Agreement
will not in any way be affected or impaired thereby.

      (f) The Company  shall use  commercially  reasonable  efforts to prevent
the  issuance  of any stop order or other  suspension  of  effectiveness  of a
Registration  Statement,  or the suspension of the qualification of any of the
Registrable  Securities for sale in any jurisdiction  and, if such an order or
suspension  is issued,  to obtain the  withdrawal  of such order or suspension
at the  earliest  possible  moment  and  to  notify  the  Investor  who  holds
Registrable  Securities  being  sold of the  issuance  of such  order  and the
resolution  thereof  or its  receipt  of actual  notice of the  initiation  or
threat of any proceeding for such  purpose.


                                       5
<PAGE>

      (g) The  Company  shall  permit  the  Investor  and one  legal  counsel,
designated  by the  Investor,  to  review  and  comment  upon  a  Registration
Statement and all amendments and  supplements  thereto at least seven business
days prior to their  filing with the SEC,  and not file any document in a form
to which such counsel reasonably  objects.  The Company may request to shorten
the Investor's  review period and the Investor  will, if possible,  attempt to
comply with the  accelerated  review  period.  The Company shall not submit to
the SEC a request for  acceleration  of the  effectiveness  of a  Registration
Statement or file with the SEC a  Registration  Statement or any  amendment or
supplement thereto without the prior approval of such counsel,  which approval
shall not be unreasonably withheld.

      (h) At the  request  of the  Investor,  the  Company  shall  cause to be
furnished  to  such  Investor,   on  the  date  of  the   effectiveness  of  a
Registration  Statement,  a legal  opinion,  in form and substance  reasonably
acceptable  to  Investor's  counsel,   dated  as  of  such  date,  of  counsel
representing the Company for purposes of such Registration Statement.

      (i)  The  Company  shall  make  available  for  inspection  by  (i)  the
Investor  and (ii) one  legal  counsel  and one firm of  accountants  or other
agents  retained  by  the  Investor  (collectively,   the  "Inspectors"),  all
pertinent  financial and other records,  and pertinent corporate documents and
properties  of  the  Company  (collectively,   the  "Records"),  as  shall  be
reasonably  deemed  necessary  by each  Inspector,  and  cause  the  Company's
officers,  directors  and  employees  to  supply  all  information  which  any
Inspector may  reasonably  request;  provided,  however,  that each  Inspector
shall hold in strict  confidence and shall not make any disclosure  (except to
a  Investor)  or use of any  Record or other  information  which  the  Company
determines in good faith to be confidential,  and of which  determination  the
Inspectors  are so  notified,  unless (a) the  disclosure  of such  Records is
necessary to avoid or correct a misstatement  or omission in any  Registration
Statement  or is  otherwise  required  under the 1933 Act,  (b) the release of
such Records is ordered pursuant to a final,  non-appealable subpoena or order
from a  court  or  government  body  of  competent  jurisdiction,  or (c)  the
information  in such Records has been made  generally  available to the public
other than by disclosure in violation of this or any other  agreement of which
the  Inspector  has  knowledge.  Each  Investor  agrees  that it  shall,  upon
learning  that  disclosure  of such  Records  is  sought  in or by a court  or
governmental  body of competent  jurisdiction  or through  other  means,  give
prompt  notice to the  Company  and  allow the  Company,  at its  expense,  to
undertake  appropriate  action  to  prevent  disclosure  of,  or to  obtain  a
protective order for, the Records deemed confidential.

      (j) The Company  shall hold in  confidence  and not make any  disclosure
of  information  concerning  a Investor  provided  to the  Company  unless (i)
disclosure  of such  information  is necessary to comply with federal or state
securities  laws,  (ii) the  disclosure  of such  information  is necessary to
avoid or correct a  misstatement  or omission in any  Registration  Statement,
(iii) the  release of such  information  is ordered  pursuant to a subpoena or
other  final,  non-appealable  order  from a  court  or  governmental  body of
competent  jurisdiction,  or (iv) such  information  has been  made  generally
available  to the  public  other  than  by  disclosure  in  violation  of this
Agreement  or any other  agreement.  The Company  agrees  that it shall,  upon
learning that disclosure of such  information  concerning a Investor is sought
in or by a court or  governmental  body of competent  jurisdiction  or through


                                       6
<PAGE>

other  means,  give  prompt  written  notice to such  Investor  and allow such
Investor,  at the  Investor's  expense,  to  undertake  appropriate  action to
prevent disclosure of, or to obtain a protective order for, such information.

      (k) The Company shall use  commercially  reasonable  efforts to maintain
designation  and quotation of all the  Registrable  Securities  covered by any
Registration  Statement on the  Principal  Market.  If,  despite the Company's
best  efforts,  the  Company  is  unsuccessful  in  satisfying  the  preceding
sentence,  it shall  use  commercially  reasonable  efforts  to cause  all the
Registrable  Securities covered by any Registration  Statement to be listed on
each other national  securities  exchange and automated  quotation  system, if
any,  on which  securities  of the same class or series  issued by the Company
are then  listed,  if any, if the listing of such  Registrable  Securities  is
then permitted  under the rules of such exchange or system.  The Company shall
pay all fees and expenses in connection with  satisfying its obligation  under
this Section 3(k).

      (l) The Company  shall  cooperate  with the Investor to  facilitate  the
prompt  preparation and delivery of certificates  (not bearing any restrictive
legend)  representing  the Registrable  Securities to be offered pursuant to a
Registration   Statement   and  enable  such   certificates   to  be  in  such
denominations  or amounts,  as the case may be, as the Investor may reasonably
request.

      (m) The Company shall provide a transfer  agent for all the  Registrable
Securities  not  later  than  the  effective  date of the  first  Registration
Statement filed pursuant hereto.

      (n) If  requested  by the  Investor,  the  Company  shall (i) as soon as
reasonably practical  incorporate in a prospectus supplement or post-effective
amendment such  information as such Investor  reasonably  determine  should be
included  therein  relating  to  the  sale  and  distribution  of  Registrable
Securities,  including,  without  limitation,  information with respect to the
offering of the Registrable Securities to be sold in such offering;  (ii) make
all  required  filings  of  such  prospectus   supplement  or   post-effective
amendment as soon as reasonably  possible  after being notified of the matters
to be incorporated in such prospectus supplement or post-effective  amendment;
and (iii)  supplement  or make  amendments  to any  Registration  Statement if
reasonably requested by such Investor.

      (o) The Company shall use commercially  reasonable  efforts to cause the
Registrable Securities covered by the applicable  Registration Statement to be
registered   with  or  approved  by  such  other   governmental   agencies  or
authorities  as may  be  necessary  to  consummate  the  disposition  of  such
Registrable Securities.

      (p) The Company shall otherwise use commercially  reasonable  efforts to
comply with all  applicable  rules and  regulations  of the SEC in  connection
with any registration hereunder.

      (q) Within  one  business  day after the  Registration  Statement  which
includes Registrable  Securities is declared effective by the SEC, the Company
shall  deliver to the transfer  agent for such  Registrable  Securities,  with
copies to the  Investor,  confirmation  that such  Registration  Statement has
been declared effective by the SEC.

      (r)  reserved

      (s) The Company  shall take all other  reasonable  actions  necessary to
expedite and facilitate  disposition by the Investor of Registrable Securities
pursuant to a Registration Statement.


                                       7
<PAGE>

      Section 4.  RESERVED


      Section 5.  EXPENSES OF REGISTRATION.

      All expenses,  other than  underwriting  discounts and  commissions  and
other than as set forth in the  Investment  Agreement,  incurred in connection
with registrations  including comments,  filings or qualifications pursuant to
Sections 2 and 3, including,  without  limitation,  all registration,  listing
and  qualifications   fees,   printing  and  accounting  fees,  and  fees  and
disbursements of counsel for the Company shall be paid by the Company.

      Section 6.  INDEMNIFICATION.

      In the event any  Registrable  Securities are included in a Registration
Statement under this Agreement:

      (a) To the  fullest  extent  permitted  by law,  the Company  will,  and
hereby does, indemnify,  hold harmless and defend each Investor who holds such
Registrable  Securities,  the  directors,   officers,   partners,   employees,
counsel,  agents,  representatives  of, and each Person, if any, who controls,
any  Investor  within the meaning of the 1933 Act or the  Securities  Exchange
Act of 1934,  as amended (the "1934 Act")  (each,  an  "Indemnified  Person"),
against  any  losses,  claims,   damages,   liabilities,   judgments,   fines,
penalties,  charges,  costs,  attorneys'  fees,  amounts paid in settlement or
expenses,   joint   or   several   (collectively,   "Claims"),   incurred   in
investigating,  preparing  or  defending  any action,  claim,  suit,  inquiry,
proceeding,  investigation or appeal taken from the foregoing by or before any
court or governmental,  administrative or other regulatory agency, body or the
SEC, whether pending or threatened,  whether or not an indemnified party is or
may be a party  thereto  ("Indemnified  Damages"),  to  which  any of them may
become  subject  insofar as such  Claims (or actions or  proceedings,  whether
commenced or threatened,  in respect  thereof) arise out of or are based upon:
(i) any untrue  statement or alleged untrue  statement of a material fact in a
Registration  Statement  or any  post-effective  amendment  thereto  or in any
filing made in connection  with the  qualification  of the offering  under the
securities or other "blue sky" laws of any  jurisdiction in which the Investor
has  requested  in writing  that the  Company  register  or qualify the Shares
("Blue Sky Filing"),  or the omission or alleged  omission to state a material
fact  required  to be  stated  therein  or  necessary  to make the  statements
therein,  in light of the  circumstances  under which the  statements  therein
were made,  not  misleading,  (ii) any  untrue  statement  or  alleged  untrue
statement of a material fact contained in the final  prospectus (as amended or
supplemented,  if the  Company  files  any  amendment  thereof  or  supplement
thereto  with the SEC) or the  omission or alleged  omission to state  therein
any material fact necessary to make the statements  made therein,  in light of
the  circumstances   under  which  the  statements   therein  were  made,  not
misleading,  or (iii) any violation or alleged violation by the Company of the
1933 Act,  the 1934 Act, any other law,  including,  without  limitation,  any
state  securities  law, or any rule or regulation  thereunder  relating to the
offer  or  sale  of the  Registrable  Securities  pursuant  to a  Registration
Statement  (the  matters in the  foregoing  clauses (i) through  (iii)  being,


                                       8
<PAGE>

collectively,   "Violations").  Subject  to  the  restrictions  set  forth  in
Section  6(c)  the  Company  shall   reimburse  the  Investor  and  each  such
controlling  person,  promptly as such  expenses  are incurred and are due and
payable,  for any reasonable legal fees or other reasonable  expenses incurred
by  them in  connection  with  investigating  or  defending  any  such  Claim.
Notwithstanding    anything   to   the   contrary    contained   herein,   the
indemnification  agreement contained in this Section 6(a): (i) shall not apply
to a Claim  arising  out of or  based  upon a  Violation  which  is due to the
inclusion in the  Registration  Statement of the information  furnished to the
Company by any  Indemnified  Person  expressly for use in connection  with the
preparation of the  Registration  Statement or any such  amendment  thereof or
supplement  thereto;  (ii) shall not be  available to the extent such Claim is
based on (a) a failure of the  Investor to deliver or to cause to be delivered
the prospectus made available by the Company or (b) the  Indemnified  Person's
use of an incorrect  prospectus  despite being promptly  advised in advance by
the  Company  in  writing  not to use such  incorrect  prospectus;  (iii)  any
claims  based  on the  manner  of sale of the  Registrable  Securities  by the
Investor  or  of  the  Investor's  failure  to  register  as  a  dealer  under
applicable  securities  laws;  (iv) any omission of the Investor to notify the
Company  of any  material  fact that  should  be  stated  in the  Registration
Statement or  prospectus  relating to the Investor or the manner of sale;  and
(v) any  amounts  paid in  settlement  of any  Claim  if  such  settlement  is
effected  without the prior  written  consent of the  Company,  which  consent
shall  not be  unreasonably  withheld.  Such  indemnity  shall  remain in full
force and effect regardless of any  investigation  made by or on behalf of the
Indemnified   Person  and  shall   survive  the  resale  of  the   Registrable
Securities by the Investor pursuant to the Registration Statement.

      (b) In connection  with any  Registration  Statement in which a Investor
is  participating,   each  such  Investor  agrees  to  severally  and  jointly
indemnify,  hold  harmless  and  defend,  to the same  extent  and in the same
manner as is set forth in Section 6(a),  the Company,  each of its  directors,
each of its officers who signs the  Registration  Statement,  each Person,  if
any, who  controls the Company  within the meaning of the 1933 Act or the 1934
Act and the Company's  agents  (collectively  and together with an Indemnified
Person, an "Indemnified  Party"),  against any Claim or Indemnified Damages to
which any of them may  become  subject,  under  the 1933 Act,  the 1934 Act or
otherwise,  insofar as such Claim or  Indemnified  Damages arise out of or are
based upon any Violation,  in each case to the extent, and only to the extent,
that such Violation is due to the inclusion in the  Registration  Statement of
the written  information  furnished to the Company by such Investor  expressly
for use in  connection  with such  Registration  Statement;  and,  subject  to
Section  6(c),  such  Investor  will  reimburse  any  legal or other  expenses
reasonably  incurred by them in connection with investigating or defending any
such Claim; provided,  however, that the indemnity agreement contained in this
Section  6(b) and the  agreement  with  respect to  contribution  contained in
Section 7 shall not apply to amounts paid in  settlement  of any Claim if such
settlement  is effected  without the prior written  consent of such  Investor,
which consent shall not be unreasonably withheld;  provided, further, however,
that the  Investor  shall be  liable  under  this  Section  6(b) for only that
amount of a Claim or  Indemnified  Damages as does not exceed the net proceeds
to such Investor as a result of the sale of  Registrable  Securities  pursuant
to such  Registration  Statement.  Such  indemnity  shall remain in full force
and  effect  regardless  of any  investigation  made by or on  behalf  of such
Indemnified  Party and shall survive the resale of the Registrable  Securities
by the  Investor  pursuant  to  the  Registration  Statement.  Notwithstanding


                                       9
<PAGE>

anything to the  contrary  contained  herein,  the  indemnification  agreement
contained  in this Section  6(b) with  respect to any  preliminary  prospectus
shall  not  inure  to the  benefit  of any  Indemnified  Party  if the  untrue
statement  or  omission  of  material  fact   contained  in  the   preliminary
prospectus  were  corrected  on a  timely  basis  in the  prospectus,  as then
amended  or   supplemented.   This   indemnification   provision  shall  apply
separately  to each Investor and  liability  hereunder  shall not be joint and
several.

      (c)  Promptly  after  receipt by an  Indemnified  Person or  Indemnified
Party  under  this  Section 6 of notice of the  commencement  of any action or
proceeding  (including  any  governmental  action or  proceeding)  involving a
Claim,  such  Indemnified  Person or  Indemnified  Party shall,  if a Claim in
respect  thereof  is to be made  against  any  indemnifying  party  under this
Section  6,  deliver  to  the  indemnifying  party  a  written  notice  of the
commencement  thereof,  and the  indemnifying  party  shall  have the right to
participate in, and, to the extent the indemnifying party so desires,  jointly
with any other indemnifying party similarly noticed,  to assume control of the
defense thereof with counsel mutually  satisfactory to the indemnifying  party
and the  Indemnified  Person  or the  Indemnified  Party,  as the case may be;
provided,  however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel  with the fees and  expenses to be paid by
the indemnifying  party, if, in the reasonable  opinion of counsel retained by
the Indemnified  Person or Indemnified Party, the representation by counsel of
the Indemnified  Person or Indemnified Party and the indemnifying  party would
be inappropriate due to actual or potential  differing  interests between such
Indemnified  Person or  Indemnified  Party and any other party  represented by
such counsel in such  proceeding.  The  indemnifying  party shall pay for only
one separate  legal  counsel for the  Indemnified  Persons or the  Indemnified
Parties,  as  applicable,  and such counsel shall be selected by the Investor,
if the Investor are entitled to indemnification  hereunder, or the Company, if
the Company is entitled  to  indemnification  hereunder,  as  applicable.  The
Indemnified  Party  or  Indemnified  Person  shall  cooperate  fully  with the
indemnifying  party in connection  with any negotiation or defense of any such
action  or  Claim  by  the  indemnifying   party  and  shall  furnish  to  the
indemnifying  party all  information  reasonably  available to the Indemnified
Party or  Indemnified  Person  which  relates  to such  action or  Claim.  The
indemnifying  party shall keep the  Indemnified  Party or  Indemnified  Person
fully  appraised  at  all  times  as to  the  status  of  the  defense  or any
settlement  negotiations with respect thereto.  No indemnifying party shall be
liable for any settlement of any action,  claim or proceeding effected without
its written consent, provided,  however, that the indemnifying party shall not
unreasonably  withhold,  delay or condition its consent. No indemnifying party
shall,  without the consent of the  Indemnified  Party or Indemnified  Person,
consent  to  entry of any  judgment  or enter  into  any  settlement  or other
compromise which does not include as an unconditional  term thereof the giving
by the claimant or plaintiff to such Indemnified  Party or Indemnified  Person
of  a  release  from  all  liability  in  respect  to  such  Claim.  Following
indemnification  as provided for hereunder,  the  indemnifying  party shall be
surrogated to all rights of the Indemnified  Party or Indemnified  Person with
respect to all third  parties,  firms or  corporations  relating to the matter
for which  indemnification  has been made.  The  failure  to  deliver  written
notice to the indemnifying  party within a reasonable time of the commencement
of any such action shall not relieve such indemnifying  party of any liability
to the  Indemnified  Person or Indemnified  Party under this Section 6, except
to the extent  that the  indemnifying  party is  prejudiced  in its ability to
defend such action.

      (d) The indemnity  agreements  contained  herein shall be in addition to
(i) any  cause  of  action  or  similar  right  of the  Indemnified  Party  or


                                       10
<PAGE>

Indemnified  Person  against the  indemnifying  party or others,  and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

      Section 7.  CONTRIBUTION.

      To  the  extent  any   indemnification   by  an  indemnifying  party  is
prohibited  or  limited  by law,  the  indemnifying  party  agrees to make the
maximum  contribution with respect to any amounts for which it would otherwise
be liable under Section 6 to the fullest  extent  permitted by law;  provided,
however,  that: (i) no contribution  shall be made under  circumstances  where
the maker  would  not have been  liable  for  indemnification  under the fault
standards  set forth in  Section 6; (ii) no seller of  Registrable  Securities
guilty of  fraudulent  misrepresentation  (within the meaning of Section 11(f)
of the 1933  Act)  shall be  entitled  to  contribution  from  any  seller  of
Registrable  Securities  who was not guilty of  fraudulent  misrepresentation;
and (iii)  contribution  by any  seller  of  Registrable  Securities  shall be
limited in amount to the net amount of  proceeds  received by such seller from
the sale of such Registrable Securities.

      Section 8.  REPORTS UNDER THE 1934 ACT.

      With a view to making  available  to the  Investor  the benefits of Rule
144 promulgated  under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time  permit the  Investor to sell  securities  of the
Company to the public without  registration  ("Rule 144"),  the Company agrees
to:

      (a)   make and keep  public  information  available,  as those terms are
understood and  defined in Rule 144;

      (b)   file  with  the SEC in a  timely  manner  all  reports  and  other
documents  required of the Company under the 1933 Act and the 1934 Act so long
as the Company remains subject to such  requirements (it being understood that
nothing  herein shall limit the  Company's  obligations  under Section 5(c) of
the Investment  Agreement) and the filing of such reports and other  documents
is required for the applicable provisions of Rule 144; and

      (c)   furnish to the  Investor,  promptly  upon  request,  (i) a written
statement by the Company that it has complied with the reporting  requirements
of Rule  144,  the 1933 Act and the 1934 Act,  (ii) a copy of the most  recent
annual  or  quarterly  report  of the  Company  and  such  other  reports  and
documents so filed by the Company,  and (iii) such other information as may be
reasonably  requested to permit the Investor to sell such securities  pursuant
to Rule 144 without registration.

      Section 9.  NO ASSIGNMENT OF REGISTRATION RIGHTS.

      The rights under this Agreement shall not be assignable.


                                       11
<PAGE>

      Section 10.  AMENDMENT OF REGISTRATION RIGHTS.

      Provisions  of this  Agreement  may be  amended  only  with the  written
consent of the Company and Investor.  No such amendment  shall be effective to
the  extent  that  it  applies  to  less  than  all  of  the  Investor  of the
Registrable Securities.

      Section 11.  MISCELLANEOUS.

      (a) Any  notices or other  communications  required or  permitted  to be
given  under  the terms of this  Agreement  that  must be in  writing  will be
deemed to have been  delivered (i) upon receipt,  when  delivered  personally;
(ii)  upon  receipt,  when  sent by  facsimile  (provided  a  confirmation  of
transmission is mechanically or  electronically  generated and kept on file by
the  sending  party);  or  (iii)  one  day  after  deposit  with a  nationally
recognized  overnight delivery service, in each case properly addressed to the
party to receive  the same.  The  addresses  and  facsimile  numbers  for such
communications shall be:

            If to the Company:

                  Energas Resources, Inc.
                  800 Northeast 63rd Street
                  3rd Floor
                  Oklahoma City, Oklahoma  73105

                  Telephone:  405-879-1752
                  Facsimile:  405-879-0175

            If to the Investor:

                  Dutchess Private Equities Fund, LP
                  312 Stuart St, Third Floor
                  Boston, MA 02116

                  Telephone:  617-960-3570
                  Facsimile:  617-960-3772

      Each party shall  provide five  business  days prior notice to the other
party of any change in address, phone number or facsimile number.

      (b)  Failure  of any party to  exercise  any right or remedy  under this
Agreement  or  otherwise,  or  delay by a party in  exercising  such  right or
remedy, shall not operate as a waiver thereof.

      (c) The laws of the  Commonwealth  of  Massachusetts  shall  govern  all
issues  arising  from or  related  to this  Agreement  without  regard  to the
principles of conflict of laws. Each party hereby  irrevocably  submits to the
exclusive  jurisdiction of the state and federal courts sitting in the City of


                                       12
<PAGE>

Boston,  County of Suffolk,  for the adjudication of any dispute  hereunder or
in  connection  herewith  or  with  any  transaction  contemplated  hereby  or
discussed herein, and hereby  irrevocably  waives, and agrees not to assert in
any suit,  action or proceeding,  any claim that it is not personally  subject
to the  jurisdiction of any such court,  that such suit,  action or proceeding
is brought in an inconvenient  forum or that the venue of such suit, action or
proceeding is improper.  Each party hereby irrevocably waives personal service
of process and consents to process  being  served in any such suit,  action or
proceeding  by mailing a copy  thereof to such party at the  address  for such
notices  to it under  this  Agreement  and  agrees  that  such  service  shall
constitute good and sufficient service of process and notice thereof.  Nothing
contained  herein  shall be  deemed  to  limit  in any way any  right to serve
process in any manner  permitted by law. If any  provision  of this  Agreement
shall be invalid or  unenforceable  in any  jurisdiction,  such  invalidity or
unenforceability  shall not  affect  the  validity  or  enforceability  of the
remainder  of  this  Agreement  in  that   jurisdiction  or  the  validity  or
enforceability of any provision of this Agreement in any other jurisdiction.

      (d) This Agreement and the Transaction  Documents  constitute the entire
agreement  among the parties  hereto with respect to the subject matter hereof
and   thereof.   There   are  no   restrictions,   promises,   warranties   or
undertakings, other than those set forth or referred to herein and therein.

      (e) This  Agreement and the  Transaction  Documents  supersede all prior
agreements  and  understandings  among the parties  hereto with respect to the
subject matter hereof and thereof.

      (f) The  headings in this  Agreement  are for  convenience  of reference
only and shall not limit or  otherwise  affect the  meaning  hereof.  Whenever
required by the context of this  Agreement,  the  singular  shall  include the
plural and masculine  shall include the feminine.  This Agreement shall not be
construed as if it had been  prepared by one of the parties,  but rather as if
all the parties had prepared the same.

      (g)  This   Agreement   may  be  executed  in  two  or  more   identical
counterparts,  each of which  shall be  deemed  an  original  but all of which
shall  constitute one and the same agreement.  This  Agreement,  once executed
by a  party,  may  be  delivered  to  the  other  party  hereto  by  facsimile
transmission  of a copy of this  Agreement  bearing the signature of the party
so delivering this Agreement.

      (h)  Each  party  shall  do  and  perform,  or  cause  to  be  done  and
performed,  all such  further acts and things,  and shall  execute and deliver
all such other  agreements,  certificates,  instruments and documents,  as the
other  party  may  reasonably  request  in order to carry out the  intent  and
accomplish  the  purposes  of  this  Agreement  and  the  consummation  of the
transactions contemplated hereby.


                                    * * *



                                       13
<PAGE>

               SIGNATURE PAGE OF REGISTRATION RIGHTS AGREEMENT


      Agreed as of the date first written above.

                                    DUTCHESS PRIVATE EQUITIES FUND, L.P.,
                                    BY ITS GENERAL PARTNER,
                                    DUTCHESS CAPITAL MANAGEMENT, LLC



                                    By: /s/ Douglas H. Leighton
                                        ----------------------------------
                                        Douglas H. Leighton, Managing Member



ENERGAS RESOURCES, INC.



By:  /s/ George Shaw
     ---------------------------
     George Shaw, President
[{"type": "8-K", "sequence": "1", "filename": "form8ksept04.txt", "secsgml_size_bytes": 144734}]
{"company-data": {"conformed-name": "ENERGAS RESOURCES INC", "cik": "0001029402", "assigned-sic": "1382", "irs-number": "731620724", "state-of-incorporation": "DE", "fiscal-year-end": "0131"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-33259", "film-number": "041041266"}, "business-address": {"street1": "800 NE 63RD STREET", "street2": "THIRD FLOOR", "city": "OKLAHOMA CITY", "state": "OK", "zip": "73105", "phone": "4058791752"}, "mail-address": {"street1": "800 NE 63RD STREET", "street2": "THIRD FLOOR", "city": "OKLAHOMA CITY", "state": "OK", "zip": "73105"}}
SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

      Date of Report (date of earliest event reported): September 20, 2004

                             ENERGAS RESOURCES, INC.
                         ------ -----------------------
                 (Name of Small Business Issuer in its charter)

       Delaware                    0-33259                73-1620724
    --------------               -----------            ---------------
(State of incorporation)    (Commission File No.)       (IRS Employer
                                                      Identification No.)

                            800 Northeast 63rd Street
                          Oklahoma City, Oklahoma 73105
            ------------------------ ------------------------------
          (Address of principal executive offices, including Zip Code)

       Registrant's telephone number, including area code: (405)-879-1752

                                       N/A
                ------------------------------------------------
          (Former name or former address if changed since last report)
Item 3.02   Unregistered Sales of Equity Securities

      On September 20, 2004 Energas entered into an equity line of credit
agreement with Dutchess Private Equities Fund II, L.P. The purpose of the equity
line of credit is to provide a possible source of funding for Energas' oil and
gas exploration and development activities and future acquisitions.

      Under the equity line of credit agreement, Dutchess Private Equities has
agreed to provide Energas with up to $10,000,000 of funding during the
thirty-six month period beginning with the date that the registration statement
Energas has agreed to file is declared effective by the Securities and Exchange
Commission. During this thirty-six month period, Energas may request a drawdown
under the equity line of credit by selling shares of its common stock to
Dutchess Private Equities, and Dutchess Private Equities will be obligated to
purchase the shares. The minimum and maximum amounts Energas can draw down at
any one time is determined using a formula contained in the equity line of
credit agreement. Energas is under no obligation to request any drawdowns under
the equity line of credit.

      On the day of the drawdown notice, a pricing period of five trading days
will begin. If any closing bid price of Energas' common stock during the pricing
period is less than ninety percent (90%) of the average closing bid price of
Energas' common stock during the ten trading days prior to the date of the
drawdown notice, Energas may elect, by sending written notice to Dutchess
Private Equities, to withdraw the drawdown, in which case no shares will be sold
during the pricing period.

      Energas relied upon the exemption provided by Section 4(2) of the
Securities Act of 1933 with respect to the equity line of credit. Energas has
agreed to file a registration statement with the Securities and Exchange
Commission in order that the shares of common stock purchased under the equity
line of credit by Dutchess Private Equities may be resold in the public market.

Item 9.01   Financial Statements and Exhibits

Exhibit No.    Description
----------     -----------

10.11          Equity Line of Credit Agreement
10.12          Registration Rights Agreement.

      No financial statements are filed with this report.
SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

Date:   September 21, 2004                ENERGAS RESOURCES, INC.

                                          By: /s/ George G. Shaw
                                              ------------------------
                                              George G. Shaw, President and
                                              Chief Executive Officer
EXHIBIT 10.11
INVESTMENT AGREEMENT

INVESTMENT  AGREEMENT (this  "AGREEMENT"),  dated as of September 20, 2004, by
and between Energas Resources,  Inc., a Delaware  corporation (the "Company"),
and Dutchess Private  Equities Fund, II, L.P., a Delaware limited  partnership
(the "Investor").

Whereas,  the  parties  desire  that,  upon  the  terms  and  subject  to  the
conditions  contained  herein,  the Investor shall invest up to $10,000,000 to
purchase the Company's  Common Stock,  $0.001 par value per share (the "Common
Stock");

Whereas, such investments will be made in reliance upon the provisions of
Section 4(2) under the  Securities  Act of 1933,  as amended (the "1933 Act"),
Rule  506  of  Regulation  D,  and  the  rules  and  regulations   promulgated
thereunder,   and/or  upon  such  other   exemption   from  the   registration
requirements  of the 1933 Act as may be  available  with respect to any or all
of the investments in Common Stock to be made hereunder; and

Whereas,  contemporaneously with the execution and delivery of this Agreement,
the  parties  hereto  are  executing  and  delivering  a  Registration  Rights
Agreement  substantially  in the form attached hereto as Exhibit A (as amended
from time to time, the "Registration  Rights Agreement") pursuant to which the
Company has agreed to provide certain  registration rights under the 1933 Act,
and the rules and regulations  promulgated  thereunder,  and applicable  state
securities laws.

NOW THEREFORE,  in  consideration  of the foregoing  recitals,  which shall be
considered an integral part of this  Agreement,  the covenants and  agreements
set forth hereafter,  and other good and valuable  consideration,  the receipt
and sufficiency of which is hereby acknowledged,  the Company and the Investor
hereby agree as follows:

SECTION 1. DEFINITIONS.

      As used in this Agreement,  the following terms shall have the following
meanings  specified or indicated  below,  and such  meanings  shall be equally
applicable to the singular and plural forms of such defined terms.

      "1933 Act" shall have the meaning set forth in the preamble, above.

      "1934 Act" shall mean the Securities  Exchange Act of 1934, as it may be
amended.

      "Affiliate" shall have the meaning specified in Section 5(h), below.

      "Agreement" shall mean this Investment Agreement.

      "Best Bid"  shall mean the highest posted bid price of the Common Stock.

      "Buy In" shall have the meaning specified in Section 6, below.
"Buy In Adjustment  Amount" shall have the meaning  specified in Section
6.

      "Closing" shall have the meaning specified in Section 2(h).

      "Closing  Date"  shall mean seven (7)  Trading  Days  following  the Put
Notice Date for each traunche.

      "Common  Stock" shall have the meaning set forth in the preamble to this
Agreement.

      "Control"  or  "Controls"  shall have the meaning  specified  in Section
5(h).

      "Covering Shares" shall have the meaning specified in Section 6.

      "Effective  Date" shall mean the date the SEC declares  effective  under
the 1933 Act the Registration Statement covering the Securities.

      "Environmental Laws" shall have the meaning specified in Section 4(m).

      "Execution  Date" shall mean the date  indicated in the preamble to this
Agreement.

      "Indemnities" shall have the meaning specified in Section 11.

      "Indemnified  Liabilities"  shall have the meaning  specified in Section
11.

      "Ineffective   Period"   shall   mean  any   period  of  time  that  the
Registration Statement or any Supplemental  Registration Statement (as defined
in the Registration  Rights Agreement) becomes  ineffective or unavailable for
use for the sale or resale,  as applicable,  of any or all of the  Registrable
Securities (as defined in the  Registration  Rights  Agreement) for any reason
(or in the event the  prospectus  under either of the above is not current and
deliverable)  during any time period  required under the  Registration  Rights
Agreement.

      "Investor"  shall have the  meaning  indicated  in the  preamble of this
Agreement.

      "Material  Adverse  Effect" shall have the meaning  specified in Section
4(a).

      "Maximum  Common  Stock  Issuance"  shall have the meaning  specified in
Section 2(I).

      "Minimum  Acceptable  Price"  with  respect to any Put Notice Date shall
mean 90% of the  average  closing  bid price for the ten  Trading  Day  period
immediately preceding such Put Notice Date.

      "Open  Period"  shall mean the period  beginning  on and  including  the
Trading  Day  immediately  following  the  Effective  Date and  ending  on the
earlier  to occur of (i) the date which is  thirty-six  (36)  months  from the
Effective  Date;  or (ii)  termination  of the  Agreement in  accordance  with
Section 9, below.

                                       2
"Pricing  Period" shall mean the period beginning on the Put Notice Date
and ending on and  including the date that is five (5) Trading Days after such
Put Notice Date.

      "Principal  Market" shall mean the American  Stock  Exchange,  Inc., the
National  Association of Securities Dealers,  Inc.  Over-the-Counter  Bulletin
Board,  the  Nasdaq  National  Market  System or the Nasdaq  SmallCap  Market,
whichever is the principal market on which the Common Stock is listed.

      "Prospectus"  shall  mean the  prospectus,  preliminary  prospectus  and
supplemental prospectus used in connection with the Registration Statement.

      "Purchase  Amount"  shall  mean  the  total  amount  being  paid  by the
Investor on a particular Closing Date to purchase the Securities.

      "Purchase  Price"  shall mean  ninety-five  percent  (95%) of the lowest
closing Best Bid price of the Common Stock during the Pricing Period.

      "Put Amount" shall have the meaning set forth in Section 2(b) hereof.

      "Put  Notice"  shall mean a written  notice sent to the  Investor by the
Company  stating  the Put  Amount in US dollars  pursuant  to the terms of the
Agreement and stating the current  number of Shares issued and  outstanding on
such date.

      "Put Notice Date" shall mean the Trading Day  immediately  following the
day on which the  Investor  receives a Put Notice,  however a Put Notice shall
be deemed  delivered  on (x) the Trading Day it is  received by  facsimile  or
otherwise by the Investor if such notice is received  prior to 9:00 am Eastern
Time,  or (y) the  immediately  succeeding  Trading  Day if it is  received by
facsimile  or  otherwise  after 9:00 am Eastern  Time on a Trading Day. No Put
Notice may be deemed delivered on a day that is not a Trading Day.

      "Put  Restriction"  shall mean the days  between  the end of the Pricing
Period and the date on which the  investor  deems the Put closed.  During this
time, the Company shall not be entitled to deliver another Put Notice.

      "Registration  Period" shall have the meaning specified in Section 5(c),
below.

      "Registration  Rights Agreement" shall have the meaning set forth in the
recitals, above.

      "Registration   Statement"  means  the  registration  statement  of  the
Company filed under the 1933 Act covering the Common Stock issuable hereunder.

      "Related Party" shall have the meaning specified in Section 5(h).

      "Resolution" shall have the meaning specified in Section 8(e).

      "SEC" shall mean the U.S. Securities & Exchange Commission.

                                       3
"SEC Documents" shall have the meaning specified in Section 4(f).

      "Securities"  shall mean the shares of Common Stock  issued  pursuant to
the terms of the Agreement.

      "Shares" shall mean the shares of the Company's Common Stock.

      "Sold Shares" shall have the meaning specified in Section 6.

      "Subsidiaries" shall have the meaning specified in Section 4(a).

      "Trading Day" shall mean any day on which the  Principal  Market for the
Common Stock is open for trading, from the hours of 9:30 am until 4:00 pm.

      "Transaction  Documents"  shall mean this  Agreement,  the  Registration
Rights  Agreement,  and  each  of the  other  agreements  entered  into by the
parties hereto in connection with this Agreement.

SECTION 2. PURCHASE AND SALE OF COMMON STOCK.

(A) PURCHASE  AND SALE OF COMMON  STOCK.  Subject to the terms and  conditions
set forth herein,  the Company  shall issue and sell to the Investor,  and the
Investor shall  purchase from the Company,  up to that number of Shares having
an aggregate Purchase Price of $10,000,000.

(B) DELIVERY OF PUT NOTICES.

(I) Subject to the terms and  conditions  of the  Transaction  Documents,  and
from  time to time  during  the Open  Period,  the  Company  may,  in its sole
discretion,  deliver a Put Notice to the Investor  which states the Put Amount
(designated in US dollars)  which the Company  intends to sell to the Investor
on a Closing  Date.  The Put Notice  shall be in the form  attached  hereto as
Exhibit F and  incorporated  herein by reference.  The amount that the Company
shall be entitled to Put to the  Investor  (the "Put  Amount")  shall be equal
to, at the  Company's  election,  either:  (A) up to 200% of the average daily
volume  (U.S.  market  only) of the Common Stock for the ten (10) Trading Days
prior to the  applicable  Put Notice  Date,  multiplied  by the average of the
three daily  closing bid prices  immediately  preceding  the Put Date,  or (B)
$50,000;  provided  that  in no  event  will  the  Put  Amount  be  more  than
$1,000,000  with  respect  to any single  Put.  During  the Open  Period,  the
Company  shall not be entitled to submit a Put Notice until after the previous
Closing  has  been  completed.   The  Purchase  Price  for  the  Common  Stock
identified  in the Put Notice shall be equal to  ninety-five  percent (95%) of
the lowest closing bid price of the Common Stock during the Pricing Period.

(II) If any  closing  bid price  during the  applicable  Pricing  Period  with
respect to that Put Notice is less than  ninety  percent  (90%) of the average
closing bid price of the Common  Stock for the ten  Trading  Days prior to the
Put  Notice  Date  (the  "Minimum  Acceptable  Price"),  the Put  Notice  will

                                       4
terminate at the  Company's  request.  In the event that the closing bid price
for the applicable  Pricing Period is less than the Minimum  Acceptable Price,
the Company may elect,  by sending  written  notice to the  Investor to cancel
the Put Notice.

 (C)  RESERVED

 (D) INVESTOR'S  OBLIGATION TO PURCHASE SHARES.  Subject to the conditions set
forth  in this  Agreement,  following  the  Investor's  receipt  of a  validly
delivered  Put Notice,  the  Investor  shall be required to purchase  from the
Company during the related Pricing Period that number of Shares  determined by
dividing the lesser of:

     (i)  the Put  Amount set forth in the Put  Notice,  or
     (ii) 20% of the  aggregate  trading  volume of the Common  Stock during the
          applicable  Pricing Period  multiplied by the lowest closing bid price
          of the Company's Common Stock during the specified Pricing Period.

      by the Purchase Price.

      The  Investor  will be required  to purchase  the Shares so long as said
Shares  do  not  bear  any  legend  and  are  not  subject  to  stop  transfer
instructions.

(E) LIMITATION ON INVESTOR'S  OBLIGATION TO PURCHASE SHARES. In no event shall
the  Investor  purchase  Shares  (whether  from the  Company  or in  public or
private  secondary  transactions)  other than pursuant to this Agreement until
such date as this Agreement is terminated.

(F) CONDITIONS TO INVESTOR'S  OBLIGATION TO PURCHASE  SHARES.  Notwithstanding
anything to the contrary in this Agreement,  the Company shall not be entitled
to deliver a Put Notice and the  Investor  shall not be  obligated to purchase
any  Shares at a Closing  (as  defined  in Section  2(h))  unless  each of the
following conditions are satisfied:

(I) a  Registration  Statement  shall have been  declared  effective and shall
remain  effective  and  available  for  the  resale  of  all  the  Registrable
Securities  (as defined in the  Registration  Rights  Agreement)  at all times
until the Closing with respect to the subject Put Notice;

(II) at all times  during the period  beginning on the related Put Notice Date
and ending on and including the related  Closing Date,  the Common Stock shall
have been  listed on the  Principal  Market and shall not have been  suspended
from trading thereon for a period of five (5) consecutive  Trading Days during
the Open  Period and the Company  shall not have been  notified of any pending
or threatened  proceeding or other action to suspend the trading of the Common
Stock;

(III) the Company has complied  with its  obligations  and is otherwise not in
breach of a material  provision of, or in default under,  this Agreement,  the
Registration  Rights  Agreement or any other agreement  executed in connection
herewith  which has not been  corrected  prior to  delivery  of the Put Notice
Date;

                                       5
(IV) no  injunction  shall have been  issued  and  remain in force,  or action
commenced by a governmental  authority which has not been stayed or abandoned,
prohibiting the purchase or the issuance of the Securities; and

(V) the issuance of the Securities will not violate any  shareholder  approval
requirements of the Principal Market.

If any of the events  described in clauses (i) through (v) above occurs during
a Pricing  Period,  then the Investor shall have no obligation to purchase the
Put Amount of Common Stock set forth in the applicable Put Notice.

(G) RESERVED

(H) MECHANICS OF PURCHASE OF SHARES BY INVESTOR.  Subject to the  satisfaction
of the  conditions  set forth in  Sections  2(f),  7 and 8, the closing of the
purchase  by the  Investor of Shares or the  Investor  deeming a Put closed (a
"Closing")  shall  occur on the date which is no later than seven (7)  Trading
Days  following the  applicable  Put Notice Date for each traunche or when the
Investor  deems a Put closed (each a "Closing  Date").  On each Closing  Date,
(I) the Company  shall  deliver to the  Investor  pursuant to this  Agreement,
certificates  representing  the  Shares to be issued to the  Investor  on such
date and  registered in the name of the Investor;  and (II) the Investor shall
deliver  to the  Company  the  Purchase  Price  to be paid  for  such  Shares,
determined  as set  forth in  Sections  2(b) and 2(d).  In lieu of  delivering
physical  certificates  representing  the  Securities  the Company may use the
Depository Trust Company ("DTC") Fast Automated  Securities  Transfer ("FAST")
program through it's transfer agent to electronically  transmit the Securities
by  crediting  the account of the  Investor's  prime  broker  (which  shall be
specified  by the Investor in a reasonably  sufficient  time in advance)  with
DTC through its Deposit  Withdrawal  Agent Commission  ("DWAC") system.  After
receipt of confirmation  of delivery of Shares to the Investor,  the Investor,
by  wire  transfer  of  immediately  available  funds  pursuant  to  the  wire
instructions  provided by the Company,  will  disburse the funds  constituting
the Purchase Amount.

The Company  understands that a delay in the issuance of Securities beyond the
Closing  Date  could  result  in  economic  loss to the  Investor.  After  the
Effective Date and as long as the Company  receives the Put  Settlement  Sheet
(Exhibit G) on or before 8:00 AM eastern on the day  following  the end of the
Pricing  Period,  as  compensation  to the Investor for such loss, the Company
agrees to pay late  payments to the Investor for late  issuance of  Securities
(delivery of Securities after the applicable  Closing Date) in accordance with
the following  schedule  (where "No. of Days Late" is defined as the number of
trading days beyond the Closing Date.  The Amounts are not cumulative.):

                  Late Payment for Each       $10,000 of
                   Number of Days Late       Common Stock

                          2                     $200
                          3                     $300
                          4                     $400

                                       6
5                     $500
                          6                     $600
                          7                     $700
                          8                     $800
                          9                     $900
                         10                     $1,000
                     Over  10                   $1,000  +  $200  for  each
                                                business  day  late  beyond
                                                11  days

The Company shall pay any payments  incurred under this Section in immediately
available funds upon demand.  Nothing herein shall limit the Investor's  right
to pursue actual  damages for the  Company's  failure to issue and deliver the
Securities  to the  Investor,  except to the  extent  that such late  payments
shall  constitute  payment for and offset any such actual  damages  alleged by
the Investor, and any Buy In Adjustment Amount.

 (I)  OVERALL  LIMIT  ON  COMMON  STOCK  ISSUABLE.   Notwithstanding  anything
contained  herein to the  contrary,  if during  the Open  Period  the  Company
becomes  listed on an  exchange  that  limits  the  number of shares of Common
Stock  that may be issued  without  shareholder  approval,  then the number of
Shares issuable by the Company and purchasable by the Investor,  including the
shares of Common  Stock  issuable  to the  Investors,  shall not  exceed  that
number of the shares of Common Stock that may be issuable without  shareholder
approval,   subject  to  appropriate   adjustment  for  stock  splits,   stock
dividends,  combinations  or  other  similar  recapitalization  affecting  the
Common Stock (the  "Maximum  Common Stock  Issuance"),  unless the issuance of
Shares,  including any Common Stock to be issued to the Investors  pursuant to
Section  11(b),  in excess of the Maximum Common Stock Issuance shall first be
approved by the Company's  shareholders  in accordance with applicable law and
the By-laws  and Amended and  Restated  Certificate  of  Incorporation  of the
Company,  if such  issuance of shares of Common  Stock could cause a delisting
on the Principal Market.  The parties  understand and agree that the Company's
failure to seek or obtain such shareholder  approval shall in no way adversely
affect  the  validity  and  due  authorization  of the  issuance  and  sale of
Securities  or the  Investor's  obligation  in  accordance  with the terms and
conditions  hereof to purchase a number of Shares in the  aggregate  up to the
Maximum  Common Stock  Issuance  limitation,  and that such approval  pertains
only to the  applicability  of the Maximum  Common Stock  Issuance  limitation
provided in this Section 2(j).

SECTION 3. INVESTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS.

The Investor represents and warrants to the Company, and covenants, that:

(A)  SOPHISTICATED  INVESTOR.  The Investor has, by reason of its business and
financial  experience,  such  knowledge,   sophistication  and  experience  in
financial  and  business  matters and in making  investment  decisions of this
type  that  it is  capable  of (I)  evaluating  the  merits  and  risks  of an
investment in the Securities and making an informed investment decision;  (II)
protecting  its own  interest;  and (III)  bearing the  economic  risk of such
investment for an indefinite period of time.

                                       7
(B)  AUTHORIZATION;  ENFORCEMENT.  This  Agreement  has been duly and  validly
authorized,  executed  and  delivered on behalf of the Investor and is a valid
and binding  agreement  of the  Investor  enforceable  against the Investor in
accordance with its terms,  subject as to enforceability to general principles
of  equity  and  to   applicable   bankruptcy,   insolvency,   reorganization,
moratorium,  liquidation  and other  similar  laws  relating  to, or affecting
generally, the enforcement of applicable creditors' rights and remedies.

(C)  SECTION  9 OF THE  1934  ACT.  During  the  term of this  Agreement,  the
Investor  will comply with the  provisions  of Section 9 of the 1934 Act,  and
the rules promulgated  thereunder,  with respect to transactions involving the
Common Stock. The Investor agrees not to short,  either directly or indirectly
through its  affiliates,  principals or advisors,  the Company's  common stock
during the term of this Agreement.

(D) ACCREDITED INVESTOR.  Investor is an "Accredited Investor" as that term is
defined in Rule 501(a)(3) of Regulation D of the 1933 Act.

(E) NO CONFLICTS.  The execution,  delivery and performance of the Transaction
Documents  by  the  Investor  and  the  consummation  by the  Investor  of the
transactions  contemplated  hereby and thereby  will not result in a violation
of Partnership  Agreement or other  organizational  documents of the Investor.
The Investor is not subject to any  investigation or inquiry by the Securities
and Exchange  Commission or any state securities  agency and, to the knowledge
of the Investor, no such investigation or inquiry is pending.

(F) OPPORTUNITY TO DISCUSS.  The Investor has received all materials  relating
to the Company's business,  finance and operations which it has requested. The
Investor  has had an  opportunity  to discuss  the  business,  management  and
financial affairs of the Company with the Company's management.

(G)  INVESTMENT  PURPOSES.  The Investor is purchasing  the Securities for its
own account for investment  purposes and not with a view towards  distribution
and  agrees  to  resell  or  otherwise  dispose  of the  Securities  solely in
accordance  with the  registration  provisions of the 1933 Act (or pursuant to
an exemption from such registration provisions).

(H) NO REGISTRATION AS A DEALER.  The Investor is not and will not be required
to be registered as a "dealer"  under the 1934 Act,  either as a result of its
execution  and  performance  of  its  obligations   under  this  Agreement  or
otherwise.

(I) GOOD  STANDING  The  Investor is a Limited  Partnership,  duly  organized,
validly existing and in good standing in the State of Delaware.

(J) TAX  ILABILITIES.  The Investor  understands that it is liable for its own
tax liabilities.

(K)  REGULATION M. The Investor  will comply with  Regulation M under the 1934
Act, if applicable.

                                       8
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

Except as set forth in the Schedules  attached hereto,  or as disclosed on the
Company's SEC Documents,  the Company  represents and warrants to the Investor
that:

(A)   ORGANIZATION  AND  QUALIFICATION.  The  Company  is a  corporation  duly
organized and validly  existing in good  standing  under the laws of the State
of Delaware,  and has the requisite  corporate power and  authorization to own
its properties and to carry on its business as now being  conducted.  Both the
Company and the companies it owns or controls,  its  "Subsidiaries,"  are duly
qualified to do business  and are in good  standing in every  jurisdiction  in
which its ownership of property or the nature of the business  conducted by it
makes such qualification  necessary,  except to the extent that the failure to
be so  qualified  or be in good  standing  would not have a  Material  Adverse
Effect.  As  used in this  Agreement,  "Material  Adverse  Effect"  means  any
material  adverse  effect on the  business,  properties,  assets,  operations,
results of  operations,  financial  condition  or prospects of the Company and
its  Subsidiaries,   if  any,  taken  as  a  whole,  or  on  the  transactions
contemplated  hereby or by the agreements  and  instruments to be entered into
in  connection  herewith,  or on the  authority  or ability of the  Company to
perform  its  obligations  under the  Transaction  Documents  (as  defined  in
Section 1 and 4(b), below).

(B)   AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.

(I) The Company has the requisite  corporate power and authority to enter into
and perform this Agreement,  the Registration  Rights  Agreement,  and each of
the other  agreements  entered into by the parties  hereto in connection  with
the   transactions   contemplated   by  this  Agreement   (collectively,   the
"Transaction  Documents"),  and to issue the Securities in accordance with the
terms hereof and thereof.

(II) The  execution and delivery of the  Transaction  Documents by the Company
and  the  consummation  by it of  the  transactions  contemplated  hereby  and
thereby,  including  without  limitation the  reservation for issuance and the
issuance  of the  Securities  pursuant to this  Agreement,  have been duly and
validly  authorized by the Company's Board of Directors and no further consent
or  authorization is required by the Company,  its Board of Directors,  or its
shareholders.

(III)  The  Transaction  Documents  have been duly and  validly  executed  and
delivered by the Company.

(IV) The Transaction  Documents  constitute the valid and binding  obligations
of the  Company  enforceable  against  the  Company in  accordance  with their
terms,  except as such  enforceability may be limited by general principles of
equity  or  applicable  bankruptcy,  insolvency,  reorganization,  moratorium,
liquidation  or  similar  laws  relating  to,  or  affecting  generally,   the
enforcement of creditors' rights and remedies.

                                       9
(C)   CAPITALIZATION.  As of August 31, 2004, the authorized  capital stock of
the Company consists of 100,000,000  shares of Common Stock,  $0.001 par value
per  share,  of  which  44,063,001  shares  are  issued  and  outstanding  and
8,987,000 shares are reserved for issuance  pursuant to options,  warrants and
other  convertible  securities.  All of such outstanding  shares have been, or
upon issuance will be, validly  issued and are fully paid and  non-assessable.
Except as disclosed in the  Company's  publicly  available  filings or in this
agreement,

 (I) no shares  of the  Company's  capital  stock are  subject  to  preemptive
rights or any other similar  rights or any liens or  encumbrances  suffered or
permitted  by the  Company;  (II) there are no  outstanding  debt  securities;
(III) there are no  outstanding  shares of capital stock,  options,  warrants,
scrip,  rights  to  subscribe  to,  calls  or  commitments  of  any  character
whatsoever  relating to, or securities or rights  convertible into, any shares
of capital  stock of the  Company or any of its  Subsidiaries,  or  contracts,
commitments,  understandings  or  arrangements  by which the Company or any of
its Subsidiaries is or may become bound to issue additional  shares of capital
stock of the Company or any of its Subsidiaries or options,  warrants,  scrip,
rights to  subscribe  to, calls or  commitments  of any  character  whatsoever
relating to, or securities or rights  convertible  into, any shares of capital
stock of the Company or any of its Subsidiaries;  (IV) there are no agreements
or  arrangements  under  which  the  Company  or any of  its  Subsidiaries  is
obligated to register the sale of any of their  securities  under the 1933 Act
(except  the  Registration  Rights  Agreement);  (V) there are no  outstanding
securities  of  the  Company  or any of its  Subsidiaries  which  contain  any
redemption or similar  provisions,  and there are no  contracts,  commitments,
understandings   or   arrangements   by  which  the  Company  or  any  of  its
Subsidiaries  is or may become  bound to redeem a security  of the  Company or
any  of  its  Subsidiaries;  (VI)  there  are  no  securities  or  instruments
containing  anti-dilution or similar  provisions that will be triggered by the
issuance of the Securities as described in this  Agreement;  (VII) the Company
does not have any  stock  appreciation  rights  or  "phantom  stock"  plans or
agreements  or any similar plan or  agreement;  and (VIII) there is no dispute
as to the  classification  of any shares of the Company's  capital stock.  The
Company has furnished to the Investor,  or the Investor has had access through
EDGAR to,  true and  correct  copies of the  Company's  Amended  and  Restated
Certificate  of   Incorporation,   as  in  effect  on  the  date  hereof  (the
"Certificate of  Incorporation"),  and the Company's By-laws,  as in effect on
the date hereof (the "By-laws"),  and the terms of all securities  convertible
into or  exercisable  for Common Stock and the material  rights of the holders
thereof in respect thereto.

(D)   ISSUANCE  OF SHARES.  The  Company has  reserved  10,000,000  Shares for
issuance  pursuant to this Agreement has been duly authorized and reserved for
issuance (subject to adjustment  pursuant to the Company's  covenant set forth
in  Section  5(f)  below)  pursuant  to  this  Agreement.   Upon  issuance  in
accordance with this Agreement,  the Securities will be validly issued,  fully
paid and  non-assessable  and free  from all  taxes,  liens and  charges  with
respect  to the issue  thereof.  In the event the  Company  cannot  register a
sufficient  number of Shares for  issuance  pursuant  to this  Agreement,  the
Company will use its best  efforts to  authorize  and reserve for issuance the
number  of  Shares  required  for  the  Company  to  perform  its  obligations
hereunder as soon as reasonably practicable.

(E)   NO  CONFLICTS.   The   execution,   delivery  and   performance  of  the
Transaction  Documents by the Company and the  consummation  by the Company of

                                       10
the  transactions  contemplated  hereby and  thereby  will not (I) result in a
violation  of  the   Certificate   of   Incorporation,   any   Certificate  of
Designations,  Preferences and Rights of any  outstanding  series of preferred
stock of the Company or the By-laws;  or (II)  conflict  with, or constitute a
material  default  (or an event  which  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  of,  any  material
agreement,  contract, indenture mortgage,  indebtedness or instrument to which
the  Company  or any of  its  Subsidiaries  is a  party,  or to the  Company's
knowledge result in a violation of any law, rule, regulation,  order, judgment
or decree  (including  United  States  federal and state  securities  laws and
regulations  and  the  rules  and  regulations  of  the  Principal  Market  or
principal  securities  exchange or trading market on which the Common Stock is
traded or listed)  applicable to the Company or any of its  Subsidiaries or by
which any  property  or asset of the  Company  or any of its  Subsidiaries  is
bound or affected.  Except as disclosed in Schedule 4(e),  neither the Company
nor its  Subsidiaries is in violation of any term of, or in default under, the
Certificate of  Incorporation,  any Certificate of  Designations,  Preferences
and Rights of any outstanding  series of preferred stock of the Company or the
By-laws or their  organizational  charter  or  by-laws,  respectively,  or any
contract, agreement, mortgage, indebtedness,  indenture, instrument, judgment,
decree or order or any statute,  rule or regulation  applicable to the Company
or its Subsidiaries,  except for possible conflicts,  defaults,  terminations,
amendments,  accelerations,   cancellations  and  violations  that  would  not
individually or in the aggregate have a Material Adverse Effect.  The business
of the Company and its Subsidiaries is not being  conducted,  and shall not be
conducted,  in  violation  of any  law,  statute,  ordinance,  rule,  order or
regulation   of  any   governmental   authority  or  agency,   regulatory   or
self-regulatory   agency,  or  court,   except  for  possible  violations  the
sanctions for which either  individually  or in the aggregate would not have a
Material  Adverse  Effect.   Except  as  specifically   contemplated  by  this
Agreement and as required under the 1933 Act to the Company's  knowledge,  the
Company is not required to obtain any consent, authorization,  permit or order
of, or make any filing or  registration  (except the filing of a  registration
statement) with, any court,  governmental  authority or agency,  regulatory or
self-regulatory  agency  or other  third  party in  order  for it to  execute,
deliver or perform  any of its  obligations  under,  or  contemplated  by, the
Transaction  Documents in  accordance  with the terms  hereof or thereof.  All
consents,  authorizations,  permits,  orders,  filings and registrations which
the Company is required to obtain  pursuant  to the  preceding  sentence  have
been  obtained  or  effected  on or prior to the date  hereof  and are in full
force and effect as of the date hereof.  Except as disclosed in Schedule 4(e),
the Company  and its  Subsidiaries  are unaware of any facts or  circumstances
which might give rise to any of the  foregoing.  The Company is not,  and will
not be, in violation of the listing  requirements  of the Principal  Market as
in  effect  on the date  hereof  and on each of the  Closing  Dates and is not
aware of any facts  which would  reasonably  lead to  delisting  of the Common
Stock by the Principal Market in the foreseeable future.

(F)   SEC DOCUMENTS;  FINANCIAL STATEMENTS. As of August 31, 2004, the Company
has  filed all  reports,  schedules,  forms,  statements  and other  documents
required  to  be  filed  by  it  with  the  SEC  pursuant  to  the   reporting
requirements  of the 1934 Act (all of the  foregoing  filed  prior to the date
hereof  and  all  exhibits  included  therein  and  financial  statements  and
schedules  thereto and  documents  incorporated  by  reference  therein  being
hereinafter referred to as the "SEC Documents").  The Company has delivered to

                                       11
the Investor or its  representatives,  or they have had access  through  EDGAR
to, true and  complete  copies of the SEC  Documents.  As of their  respective
dates,  the  SEC  Documents   complied  in  all  material  respects  with  the
requirements  of the  1934  Act  and  the  rules  and  regulations  of the SEC
promulgated  thereunder  applicable to the SEC Documents,  and none of the SEC
Documents,  at the time they were  filed  with the SEC,  contained  any untrue
statement of a material  fact or omitted to state a material  fact required to
be stated  therein or necessary to make the  statements  therein,  in light of
the  circumstances  under which they were made,  not  misleading.  As of their
respective dates, the financial  statements of the Company included in the SEC
Documents  complied  as to  form  in all  material  respects  with  applicable
accounting  requirements  and the published  rules and  regulations of the SEC
with  respect  thereto.  Such  financial  statements  have  been  prepared  in
accordance  with  generally  accepted  accounting   principles,   consistently
applied,  during  the  periods  involved  (except  (I)  as  may  be  otherwise
indicated in such financial  statements or the notes  thereto,  or (II) in the
case  of  unaudited  interim  statements,  to  the  extent  they  may  exclude
footnotes  or may be condensed or summary  statements)  and fairly  present in
all material  respects the  financial  position of the Company as of the dates
thereof and the results of its  operations and cash flows for the periods then
ended (subject, in the case of unaudited statements,  to normal year-end audit
adjustments).  No other  written  information  provided by or on behalf of the
Company  to  the  Investor  which  is  not  included  in  the  SEC  Documents,
including,  without  limitation,  information  referred to in Section  4(d) of
this Agreement,  contains any untrue  statement of a material fact or omits to
state any material  fact  necessary  to make the  statements  therein,  in the
light of the  circumstance  under which they are or were made, not misleading.
Neither  the  Company nor any of its  Subsidiaries  or any of their  officers,
directors,  employees or agents have  provided the Investor with any material,
nonpublic  information  which  was not  publicly  disclosed  prior to the date
hereof and any  material,  nonpublic  information  provided to the Investor by
the  Company  or  its  Subsidiaries  or  any  of  their  officers,  directors,
employees or agents  prior to any Closing Date shall be publicly  disclosed by
the Company prior to such Closing Date.

(G)   ABSENCE OF CERTAIN  CHANGES.  Except as set forth in the SEC  Documents,
the Company does not intend to change the business  operations  of the Company
in any  material  way.  The  Company  has not  taken any  steps,  and does not
currently  expect  to take  any  steps,  to seek  protection  pursuant  to any
bankruptcy law nor does the Company or its Subsidiaries  have any knowledge or
reason  to  believe  that  its  creditors   intend  to  initiate   involuntary
bankruptcy proceedings.

(H)   ABSENCE OF LITIGATION.  Except as set forth in the SEC Documents,  there
is no action,  suit,  proceeding,  inquiry or  investigation  before or by any
court, public board, government agency,  self-regulatory  organization or body
pending or, to the  knowledge of the  executive  officers of Company or any of
its  Subsidiaries,  threatened  against or affecting  the Company,  the Common
Stock or any of the  Company's  Subsidiaries  or any of the  Company's  or the
Company's  Subsidiaries' officers or directors in their capacities as such, in
which an adverse decision could have a Material Adverse Effect.

(I)   ACKNOWLEDGMENT  REGARDING  INVESTOR'S  PURCHASE  OF SHARES.  The Company
acknowledges  and agrees that the Investor is acting solely in the capacity of
arm's length  purchaser  with  respect to the  Transaction  Documents  and the
transactions   contemplated   hereby  and   thereby.   The   Company   further
acknowledges  that the  Investor  is not  acting  as a  financial  advisor  or

                                       12
fiduciary  of the  Company (or in any similar  capacity)  with  respect to the
Transaction  Documents and the  transactions  contemplated  hereby and thereby
and any advice given by the Investor or any of its respective  representatives
or agents in connection  with the Transaction  Documents and the  transactions
contemplated  hereby  and  thereby  is  merely  incidental  to the  Investor's
purchase of the  Securities.  The Company  further  represents to the Investor
that the Company's  decision to enter into the Transaction  Documents has been
based  solely  on  the   independent   evaluation   by  the  Company  and  its
representatives.

(J)   NO  UNDISCLOSED  EVENTS,  LIABILITIES,  DEVELOPMENTS  OR  CIRCUMSTANCES.
Except as set forth in the SEC  Documents,  since August 20,  2004,  no event,
liability,  development  or  circumstance  has  occurred or exists,  or to the
Company's  knowledge is contemplated to occur,  with respect to the Company or
its Subsidiaries or their respective business,  properties, assets, prospects,
operations or financial  condition,  that would be required to be disclosed by
the Company  under  applicable  securities  laws on a  registration  statement
filed with the SEC  relating  to an  issuance  and sale by the  Company of its
Common Stock and which has not been publicly announced.

(K)   EMPLOYEE  RELATIONS.  Neither the Company nor any of its Subsidiaries is
involved in any union labor  dispute  nor, to the  knowledge of the Company or
any of its Subsidiaries,  is any such dispute threatened.  Neither the Company
nor any of its Subsidiaries is a party to a collective  bargaining  agreement,
and the  Company  and its  Subsidiaries  believe  that  relations  with  their
employees  are good.  No  executive  officer (as defined in Rule 501(f) of the
1933 Act) has  notified  the Company  that such  officer  intends to leave the
Company's  employ or otherwise  terminate such officer's  employment  with the
Company.

(L)   INTELLECTUAL  PROPERTY  RIGHTS.  The Company and its Subsidiaries own or
possess  adequate  rights or  licenses  to use all  trademarks,  trade  names,
service marks,  service mark  registrations,  service names,  patents,  patent
rights,   copyrights,    inventions,    licenses,   approvals,    governmental
authorizations,   trade   secrets  and  rights   necessary  to  conduct  their
respective  businesses  as now  conducted.  Except  as set  forth  in the  SEC
Documents,  none of the  Company's  trademarks,  trade names,  service  marks,
service  mark   registrations,   service   names,   patents,   patent  rights,
copyrights, inventions, licenses, approvals, government authorizations,  trade
secrets  or other  intellectual  property  rights  necessary  to  conduct  its
business as now or as proposed to be conducted have expired or terminated,  or
are  expected  to expire or  terminate  within two years from the date of this
Agreement.  The Company and its  Subsidiaries do not have any knowledge of any
infringement  by the  Company or its  Subsidiaries  of  trademark,  trade name
rights,  patents, patent rights,  copyrights,  inventions,  licenses,  service
names,  service  marks,  service  mark  registrations,  trade  secret or other
similar rights of others,  or of any such  development of similar or identical
trade secrets or technical  information by others and,  except as set forth in
the SEC  Documents,  there is no claim,  action or  proceeding  being  made or
brought against, or to the Company's knowledge,  being threatened against, the
Company or its Subsidiaries regarding trademark,  trade name, patents,  patent
rights, invention,  copyright,  license, service names, service marks, service
mark registrations,  trade secret or other  infringement;  and the Company and
its Subsidiaries  are unaware of any facts or  circumstances  which might give

                                       13
rise to any of the  foregoing.  The  Company and its  Subsidiaries  have taken
commercially   reasonable   security   measures   to  protect   the   secrecy,
confidentiality and value of all of their intellectual properties.

(M)   ENVIRONMENTAL  LAWS.  The Company and its  Subsidiaries  (I) are, to the
knowledge  of  management  of the  Company,  in  compliance  with  any and all
applicable foreign,  federal, state and local laws and regulations relating to
the  protection of human health and safety,  the  environment  or hazardous or
toxic  substances  or  wastes,  pollutants  or  contaminants   ("Environmental
Laws");  (II) have, to the  knowledge of  management of the Company,  received
all permits,  licenses or other  approvals  required of them under  applicable
Environmental  Laws to conduct their respective  businesses;  and (III) are in
compliance,  to the knowledge of the Company, with all terms and conditions of
any such permit,  license or approval  where,  in each of the three  foregoing
cases, the failure to so comply would have,  individually or in the aggregate,
a Material Adverse Effect.

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

(O)   INSURANCE.  Each of the Company's  Subsidiaries  are insured by insurers
of recognized  financial  responsibility  against such losses and risks and in
such amounts as  management of the Company  reasonably  believes to be prudent
and customary in the businesses in which the Company and its  Subsidiaries are
engaged.  Neither  the Company nor any such  Subsidiary  has been  refused any
insurance  coverage sought or applied for and neither the Company nor any such
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 at a cost that would not have a Material Adverse Effect.

(P)   REGULATORY PERMITS.  The Company and its Subsidiaries have in full force
and effect all certificates,  approvals,  authorizations  and permits from the
appropriate  federal,  state,  local or  foreign  regulatory  authorities  and
comparable  foreign  regulatory  agencies,  necessary to own, lease or operate
their   respective   properties  and  assets  and  conduct  their   respective
businesses,  and neither the Company nor any such  Subsidiary has received any
notice of proceedings  relating to the revocation or  modification of any such
certificate,  approval, authorization or permit, except for such certificates,
approvals,   authorizations  or  permits  which  if  not  obtained,   or  such
revocations or modifications which, would not have a Material Adverse Effect.

(Q)   INTERNAL ACCOUNTING  CONTROLS.  The Company and each of its Subsidiaries
maintain  a system of  internal  accounting  controls  sufficient  to  provide

                                       14
reasonable  assurance that (I)  transactions  are executed in accordance  with
management's  general  or  specific  authorizations;   (II)  transactions  are
recorded  as  necessary  to permit  preparation  of  financial  statements  in
conformity  with  generally  accepted  accounting  principles  and to maintain
asset  accountability;  (III) access to assets is permitted only in accordance
with  management's  general or specific  authorization;  and (IV) the recorded
accountability  for assets is compared with the existing  assets at reasonable
intervals and appropriate action is taken with respect to any differences.

(R)   NO MATERIALLY  ADVERSE  CONTRACTS,  ETC.  Neither the Company nor any of
its  Subsidiaries  is  subject  to  any  charter,  corporate  or  other  legal
restriction,  or any judgment,  decree, order, rule or regulation which in the
judgment of the Company's  officers has or is expected in the future to have a
Material Adverse Effect.  Neither the Company nor any of its Subsidiaries is a
party to any  contract or  agreement  which in the  judgment of the  Company's
officers has or is expected to have a Material Adverse Effect.

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

(T)   CERTAIN TRANSACTIONS.  Except as set forth in the SEC Documents filed at
least  ten  days  prior  to the  date  hereof  and  except  for  arm's  length
transactions  pursuant to which the  Company  makes  payments in the  ordinary
course of business upon terms no less  favorable than the Company could obtain
from third parties and other than the grant of stock options  disclosed in the
SEC Documents,  none of the officers,  directors,  or employees of the Company
is  presently  a party  to any  transaction  with  the  Company  or any of its
Subsidiaries  (other than for 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
corporation,  partnership,  trust  or  other  entity  in  which  any  officer,
director,  or any such employee has a  substantial  interest or is an officer,
director, trustee or partner.

(U)   DILUTIVE  EFFECT.  The Company  understands  and  acknowledges  that the
number of shares of Common  Stock  issuable  upon  purchases  pursuant to this
Agreement  will  increase  in  certain   circumstances   including,   but  not
necessarily  limited to, the  circumstance  wherein  the trading  price of the
Common Stock  declines  during the period  between the Effective  Date and the
end of the Open Period.  The Company's  executive  officers and directors have
studied and fully  understand the nature of the  transactions  contemplated by
this Agreement and recognize that they have a potential  dilutive effect.  The

                                       15
Board of Directors of the Company has  concluded,  in its good faith  business
judgment  that such  issuance is in the best  interests  of the  Company.  The
Company  specifically  acknowledges  that,  subject to such limitations as are
expressly  set forth in the  Transaction  Documents,  its  obligation to issue
shares of Common Stock upon  purchases  pursuant to this Agreement is absolute
and  unconditional  regardless  of the dilutive  effect that such issuance may
have on the ownership interests of other shareholders of the Company.

(V)   RIGHT OF FIRST  REFUSAL.  During the term of this  Agreement the Company
shall not,  directly  or  indirectly,  without  the prior  written  consent of
Investor  which will not be  unreasonably  withheld,  enter into an additional
Equity Line of Credit  agreement (a  "Subsequent  Financing")  for a period of
one year  after  the  Effective  Date,  unless  (A) the  Company  delivers  to
Investor  a  written  notice  (the  "Subsequent   Financing  Notice")  of  its
intention to effect such  Subsequent  Financing,  which  Subsequent  Financing
Notice  shall  describe  in  reasonable  detail  the  proposed  terms  of such
Subsequent   Financing,   the  amount  of  proceeds   intended  to  be  raised
thereunder,  the person with whom such Subsequent Financing shall be effected,
and  attached  to which  shall be a term  sheet or similar  document  relating
thereto;  and (B)  Investor  shall not have  notified the Company by 5:00 p.m.
(New York time) on the fifth  Trading Day after its receipt of the  Subsequent
Financing  Notice of its  willingness  to provide,  subject to  completion  of
mutually acceptable  documentation,  financing to the Company on substantially
the terms set forth in the Subsequent  Financing Notice.If Investor shall fail
to notify the Company of its intention to enter into such negotiations  within
such time  period,  then the  Company  may  effect  the  Subsequent  Financing
substantially  upon the terms set forth in the  Subsequent  Financing  Notice;
provided  that the Company shall  provide  Investor  with a second  Subsequent
Financing  Notice,  and Investor  shall again have the right of first  refusal
set forth above in this Section,  if the Subsequent  Financing  subject to the
initial  Subsequent  Financing  Notice shall not have been consummated for any
reason  on the  terms set forth in such  Subsequent  Financing  Notice  within
thirty  Trading  Days  after  the  date of the  initial  Subsequent  Financing
Notice.  The rights granted to Investor in this Section are not subject to any
prior right of first refusal  given to any other person  disclosed on Schedule
4(c).

(W)   LOCK-UP. The Company shall cause its officers, insiders,  directors, and
affiliates or other related  parties under control of the Company,  to refrain
from selling Common Stock during each Pricing Period.

(X)   NO  GENERAL   SOLICITATION.   Neither  the  Company,   nor  any  of  its
affiliates,  nor any person  acting on its behalf,  has engaged in any form of
general  solicitation or general advertising (within the meaning of Regulation
D) in connection with the offer or sale of the Common Stock offered hereby.

(Y)   NO BROKERS,  FINDERS OR FINANCIAL  ADVISORY FEES OR COMMISSIONS  will be
payable by the Company with respect to the  transactions  contemplated by this
Agreement.

                                       16
SECTION 5.  COVENANTS OF THE COMPANY

(A)   BEST EFFORTS.  The Company  shall use  commercially  reasonable  efforts
timely to satisfy each of the  conditions to be satisfied by it as provided in
Section 7 of this Agreement.

(B)   BLUE SKY. The Company shall, at its sole cost and expense,  on or before
each of the Closing  Dates,  take such action as the Company shall  reasonably
determine is necessary to qualify the Securities for, or obtain  exemption for
the Securities  for, sale to the Investor at each of the Closings  pursuant to
this Agreement under  applicable  securities or "Blue Sky" laws of such states
of the United States, as reasonably  specified by Investor,  and shall provide
evidence  of any  such  action  so taken  to the  Investor  on or prior to the
Closing Date.

(C)   REPORTING  STATUS.  Until the  earlier  to occur of (I) the  first  date
which is after the date this  Agreement  is  terminated  pursuant to Section 9
and on which the Holders (as that term is defined in the  Registration  Rights
Agreement)  may sell all of the  Securities  without  restriction  pursuant to
Rule 144(k)  promulgated under the 1933 Act (or successor  thereto);  and (II)
the date on which (A) the Holders shall have sold all the Securities;  and (B)
this Agreement has been  terminated  pursuant to Section 9 (the  "Registration
Period"),  the Company  shall file all  reports  required to be filed with the
SEC pursuant to the 1934 Act, and the Company  shall not  terminate its status
as a reporting company under the 1934 Act.

(D)   USE OF PROCEEDS.  The Company will use the proceeds from the sale of the
Shares  (excluding  amounts  paid by the  Company for fees as set forth in the
Transaction  Documents) for general corporate and working capital purposes and
acquisitions  or assets,  businesses or operations or for other  purposes that
the Board of Directors deem to be in the best interest of the Company.

(E)   FINANCIAL  INFORMATION.  The  Company  agrees to make  available  to the
Investor  via EDGAR or other  electronic  means the  following to the Investor
during the Registration  Period: (I) within five Trading Days after the filing
thereof  with  the SEC,  a copy of its  Annual  Reports  on Form  10-KSB,  its
Quarterly  Reports on Form  10-QSB,  any  Current  Reports on Form 8-K and any
Registration  Statements or amendments filed pursuant to the 1933 Act; (II) on
the same day as the release  thereof,  copies of all press releases  issued by
the Company or any of its Subsidiaries;  (III) copies of any notices and other
information  made  available  or  given  to the  shareholders  of the  Company
generally,  contemporaneously  with the making  available or giving thereof to
the  shareholders;  and (IV)  within two  calendar  days of filing or delivery
thereof,  copies of all documents filed with, and all correspondence  sent to,
the  Principal  Market,  any  securities  exchange or market,  or the National
Association of Securities  Dealers,  Inc., unless such information is material
nonpublic information.

(F)   RESERVATION OF SHARES.  Subject to the following  sentence,  the Company
shall take all action necessary to at all times have authorized,  and reserved
for the purpose of issuance,  a sufficient number of shares of Common Stock to
provide for the issuance of the  Securities  hereunder.  In the event that the
Company  determines  that it does not have a sufficient  number of  authorized
shares  of  Common  Stock  to  reserve  and keep  available  for  issuance  as
described  in this  Section  5(f),  the Company  shall use its best efforts to

                                       17
increase  the  number  of  authorized   shares  of  Common  Stock  by  seeking
shareholder approval for the authorization of such additional shares.

(G)   LISTING.  The Company shall promptly  secure and maintain the listing of
all of the  Registrable  Securities  (as  defined in the  Registration  Rights
Agreement)  upon the  Principal  Market  and each  other  national  securities
exchange and automated  quotation  system, if any, upon which shares of Common
Stock are then  listed  (subject  to official  notice of  issuance)  and shall
maintain,  such  listing  of all  Registrable  Securities  from  time  to time
issuable  under the terms of the  Transaction  Documents.  Neither the Company
nor any of its  Subsidiaries  shall take any action which would be  reasonably
expected to result in the  delisting or  suspension of the Common Stock on the
Principal  Market  (excluding  suspensions  of not more than one  trading  day
resulting  from  business  announcements  by the  Company).  The Company shall
promptly  provide to the Investor  copies of any notices it receives  from the
Principal Market  regarding the continued  eligibility of the Common Stock for
listing  on such  automated  quotation  system  or  securities  exchange.  The
Company  shall pay all fees and expenses in  connection  with  satisfying  its
obligations under this Section 5(g).

(H)   TRANSACTIONS  WITH  AFFILIATES.  The Company  shall not, and shall cause
each of its Subsidiaries not to, enter into, amend,  modify or supplement,  or
permit  any  Subsidiary  to enter  into,  amend,  modify  or  supplement,  any
agreement,  transaction,  commitment  or  arrangement  with  any of its or any
Subsidiary's  officers,  directors,  persons who were officers or directors at
any time during the previous two years,  shareholders  who beneficially own 5%
or more of the Common Stock,  or affiliates or with any individual  related by
blood,  marriage  or  adoption  to any such  individual  or with any entity in
which any such  entity or  individual  owns a 5% or more  beneficial  interest
(each a "Related  Party"),  except for (I) customary  employment  arrangements
and benefit  programs on reasonable  terms,  (II) any agreement,  transaction,
commitment or arrangement  on an arms-length  basis on terms no less favorable
than terms  which  would have been  obtainable  from a person  other than such
Related Party, or (III) any agreement, transaction,  commitment or arrangement
which  is  approved  by a  majority  of  the  disinterested  directors  of the
Company.  For  purposes  hereof,  any  director  who is also an officer of the
Company  or  any  Subsidiary  of the  Company  shall  not  be a  disinterested
director  with  respect  to any such  agreement,  transaction,  commitment  or
arrangement.  "Affiliate"  for  purposes  hereof  means,  with  respect to any
person or entity,  another person or entity that, directly or indirectly,  (I)
has a 5% or more  equity  interest  in that  person or entity,  (II) has 5% or
more common  ownership with that person or entity,  (III) controls that person
or  entity,  or (IV) is under  common  control  with that  person  or  entity.
"Control" or "Controls" for purposes  hereof means that a person or entity has
the power,  direct or  indirect,  to conduct or govern the policies of another
person or entity.

(I)   FILING OF FORM 8-K.  On or before the date which is three  Trading  Days
after the Execution  Date, the Company shall file a Current Report on Form 8-K
with the SEC  describing  the  terms of the  transaction  contemplated  by the
Transaction  Documents in the form required by the 1934 Act, if such filing is
required.

(J)   CORPORATE EXISTENCE.  The Company shall use its best efforts to preserve
and continue the corporate existence of the Company.

                                       18
(K)   NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION;  SUSPENSION OF RIGHT TO
MAKE A PUT. The Company shall promptly  notify Investor upon the occurrence of
any of the following events in respect of a Registration  Statement or related
prospectus  in respect of an  offering of the  Securities:  (I) receipt of any
request for  additional  information  by the SEC or any other federal or state
governmental  authority during the period of effectiveness of the Registration
Statement  for  amendments or  supplements  to the  Registration  Statement or
related  prospectus;  (II) the  issuance  by the SEC or any other  federal  or
state  governmental  authority of any stop order suspending the  effectiveness
of any  Registration  Statement or the initiation of any  proceedings for that
purpose;  (III) receipt of any notification  with respect to the suspension of
the  qualification  or exemption from  qualification  of any of the Securities
for sale in any  jurisdiction  or the  initiation or notice of any  proceeding
for such  purpose;  (IV) the  happening of any event that makes any  statement
made in such  Registration  Statement  or related  prospectus  or any document
incorporated or deemed to be incorporated  therein by reference  untrue in any
material   respect  or  that  requires  the  making  of  any  changes  in  the
Registration  Statement,  related prospectus or documents so that, in the case
of a  Registration  Statement,  it will not contain any untrue  statement of a
material  fact or omit to  state  any  material  fact  required  to be  stated
therein or necessary to make the statements  therein not misleading,  and that
in the  case  of the  related  prospectus,  it will  not  contain  any  untrue
statement of a material  fact or omit to state any material  fact  required to
be stated  therein or necessary to make the statements  therein,  in the light
of the circumstances  under which they were made, not misleading;  and (V) the
Company's  reasonable  determination  that a  post-effective  amendment to the
Registration  Statement would be  appropriate,  and the Company shall promptly
make  available  to Investor any such  supplement  or amendment to the related
prospectus.  The Company  shall not deliver to Investor any Put Notice  during
the continuation of any of the foregoing events.

(L)   REIMBURSEMENT.  If (I) Investor  becomes involved in any capacity in any
action,  proceeding  or  investigation  brought  by  any  shareholder  of  the
Company,  in  connection  with  or as a  result  of  the  consummation  of the
transactions  contemplated  by the  Transaction  Documents,  or if Investor is
impleaded  in any such  action,  proceeding  or  investigation  by any  person
(other  than as a result of a breach  of the  Investor's  representations  and
warranties set forth in this Agreement);  or (II)Investor  becomes involved in
any capacity in any action,  proceeding  or  investigation  brought by the SEC
against or involving the Company or in  connection  with or as a result of the
consummation of the  transactions  contemplated  by the Transaction  Documents
(other  than as a result of a breach  of the  Investor's  representations  and
warranties  set forth in this  Agreement),  or if Investor is impleaded in any
such  action,  proceeding  or  investigation  by any person,  then in any such
case, the Company will reimburse  Investor for its reasonable  legal and other
expenses  (including the cost of any investigation  and preparation)  incurred
in connection  therewith,  as such expenses are  incurred.  The  reimbursement
obligations  of the  Company  under this  section  shall be in addition to any
liability  which the Company may  otherwise  have,  shall extend upon the same
terms and  conditions to any affiliates of Investor that are actually named in
such action,  proceeding or investigation,  and partners,  directors,  agents,
employees, attorneys,  accountants, auditors and controlling persons (if any),
as the case may be, of Investor and any such  affiliate,  and shall be binding
upon and inure to the benefit of any  successors of the Company,  Investor and
any such affiliate and any such person.

                                       19
SECTION 6.  COVER.

If the number of Shares  represented by any Put Notices  become  restricted or
are no longer freely trading for any reason,  and after the applicable Closing
Date, the Investor purchases, in an open market transaction or otherwise,  the
Company's  Common Stock (the  "Covering  Shares") in order to make delivery in
satisfaction  of a sale of Common Stock by the Investor  (the "Sold  Shares"),
which delivery such Investor  anticipated to make using the Shares represented
by the Put Notice (a  "Buy-In"),  the Company  shall pay to the  Investor  the
Buy-In Adjustment Amount (as defined below).  The "Buy-In  Adjustment  Amount"
is the  amount  equal  to the  excess,  if any,  of (A) the  Investor's  total
purchase  price  (including  brokerage  commissions,  if any) for the Covering
Shares  over  (B) the  net  proceeds  (after  brokerage  commissions,  if any)
received by the Investor  from the sale of the Sold Shares.  The Company shall
pay the Buy-In  Adjustment  Amount to the  Investor in  immediately  available
funds immediately upon demand by the Investor.  By way of illustration and not
in limitation of the foregoing,  if the Investor purchases Common Stock having
a total purchase price (including  brokerage  commissions) of $11,000 to cover
a  Buy-In  with  respect  to the  Common  Stock it sold  for net  proceeds  of
$10,000,  the Buy-In  Adjustment  Amount which the Company will be required to
pay to the Investor will be $1,000.

SECTION 7.  CONDITIONS OF THE COMPANY'S OBLIGATION TO SELL.

The  obligation  hereunder of the Company to issue and sell the  Securities to
the  Investor  is  further  subject  to the  satisfaction,  at or before  each
Closing  Date,  of each of the  following  conditions  set forth below.  These
conditions  are for the  Company's  sole  benefit  and  may be  waived  by the
Company at any time in its sole discretion.

(A)  The  Investor  shall  have  executed  each  of  this  Agreement  and  the
Registration Rights Agreement and delivered the same to the Company.

(B) The Investor  shall have  delivered to the Company the Purchase  Price for
the Securities  being purchased by the Investor between the end of the Pricing
Period and the Closing Date via a Put  Settlement  Sheet  (hereto  attached as
Exhibit G) After  receipt of  confirmation  of delivery of such  Securities to
the Investor,  the Investor,  by wire transfer of immediately  available funds
pursuant to the wire  instructions  provided by the Company will  disburse the
funds constituting the Purchase Amount.

(C)  No  statute,  rule,  regulation,   executive  order,  decree,  ruling  or
injunction  shall have been enacted,  entered,  promulgated or endorsed by any
court or governmental  authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.

SECTION 8. FURTHER CONDITIONS OF THE INVESTOR'S OBLIGATION TO PURCHASE.

The obligation of the Investor  hereunder to purchase Shares is subject to the
satisfaction,  on or  before  each  Closing  Date,  of each  of the  following
conditions set forth below.

                                       20
(A) The Company  shall have  executed  each of the  Transaction  Documents and
delivered the same to the Investor.

(B) The Common  Stock  shall be  authorized  for  quotation  on the  Principal
Market and trading in the Common  Stock shall not have been  suspended  by the
Principal  Market or the SEC,  at any time  beginning  on the date  hereof and
through and including the respective  Closing Date  (excluding  suspensions of
not more than one Trading Day  resulting  from business  announcements  by the
Company,  provided that such suspensions occur prior to the Company's delivery
of the Put Notice related to such Closing).

(C) The  representations  and  warranties  of the  Company  shall  be true and
correct  as of the date when  made and as of the  applicable  Closing  Date as
though made at that time (except for (I)  representations  and warranties that
speak as of a specific date and (II) with respect to the representations  made
in Sections  4(g),  (h) and (j) and the third sentence of Section 4(k) hereof,
events which occur on or after the date of this  Agreement  and are  disclosed
in SEC  filings  made by the  Company at least ten  Trading  Days prior to the
applicable  Put Notice Date) and the Company shall have  performed,  satisfied
and complied with the covenants,  agreements  and  conditions  required by the
Transaction  Documents  to be  performed,  satisfied  or complied  with by the
Company on or before such Closing Date.  The Investor may request an update as
of such Closing Date  regarding the  representation  contained in Section 4(c)
above.

(D) The  Company  shall  have  executed  and  delivered  to the  Investor  the
certificates  representing,  or have executed  electronic  book-entry transfer
of, the  Securities  (in such  denominations  as such Investor  shall request)
being purchased by the Investor at such Closing.

(E) The Board of  Directors  of the  Company  shall have  adopted  resolutions
consistent  with  Section   4(b)(ii)  above  (the   "Resolutions")   and  such
Resolutions  shall not have been  amended or  rescinded  prior to such Closing
Date.

(F) reserved

(G)  No  statute,  rule,  regulation,   executive  order,  decree,  ruling  or
injunction  shall have been enacted,  entered,  promulgated or endorsed by any
court or governmental  authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.

(H) The Registration  Statement shall be effective on each Closing Date and no
stop order suspending the  effectiveness  of the Registration  statement shall
be in effect or to the  Company's  knowledge  shall be pending or  threatened.
Furthermore,  on each Closing Date (I) neither the Company nor Investor  shall
have received  notice that the SEC has issued or intends to issue a stop order
with  respect to such  Registration  Statement or that the SEC  otherwise  has
suspended or  withdrawn  the  effectiveness  of such  Registration  Statement,
either  temporarily  or  permanently,  or intends or has  threatened  to do so
(unless the SEC's  concerns  have been  addressed  and Investor is  reasonably
satisfied  that the SEC no  longer  is  considering  or  intends  to take such
action),  and  (II)  no  other  suspension  of the  use or  withdrawal  of the
effectiveness  of such  Registration  Statement  or related  prospectus  shall
exist.

                                       21
(I) At the  time  of  each  Closing,  the  Registration  Statement  (including
information  or  documents   incorporated   by  reference   therein)  and  any
amendments or supplements  thereto shall not contain any untrue statement of a
material  fact or omit to  state  any  material  fact  required  to be  stated
therein or necessary to make the  statements  therein not  misleading or which
would require public disclosure or an update supplement to the prospectus.

(J) If  applicable,  the  shareholders  of the Company shall have approved the
issuance  of any Shares in excess of the  Maximum  Common  Stock  Issuance  in
accordance  with Section 2(i) or the Company shall have  obtained  appropriate
approval  pursuant  to the  requirements  of  Delaware  law and the  Company's
Articles of Incorporation and By-laws.

(K) The  conditions  to such Closing set forth in Section 2(f) shall have been
satisfied on or before such Closing Date.

(L) The Company  shall have  certified to the Investor the number of Shares of
Common Stock outstanding when a Put Notice is given to the Investor.

SECTION 9.  TERMINATION.  This  Agreement  shall  terminate  upon  any  of the
following events:

(I) when the Investor has purchased an aggregate of  $10,000,000 in the Common
Stock of the Company pursuant to this Agreement;

(II)  on the  date  which  is  thirty-six  (36)  months  after  the  Effective
Date;SECTION 10.  SUSPENSION

This Agreement shall be suspended upon any of the following events,  and shall
remain suspended until such event is rectified:

      (I) the  trading  of the  Common  Stock is  suspended  by the  SEC,  the
Principal  Market or the NASD for a period of five  consecutive  Trading  Days
during the Open Period;

      (II) The  Common  Stock  ceases to be  registered  under the 1934 Act or
listed or traded on the Principal  Market.  Upon the  occurrence of one of the
above-described  events,  the Company shall send written  notice of such event
to the Investor.

SECTION 11.       INDEMNIFICATION.

In  consideration  of  the  parties  mutual   obligations  set  forth  In  the
Transaction   Documents,   each  of  the   parties  (in  such   capacity,   an
"Indemnitor")  shall  defend,  protect,  indemnify and hold harmless the other
and all of the other party's  shareholders,  officers,  directors,  employees,
counsel,  and direct or indirect  investors and any of the foregoing  person's
agents  or  other  representatives  (including,   without  limitation,   those
retained in connection with the  transactions  contemplated by this Agreement)
(collectively,  the  "Indemnitees")  from  and  against  any and all  actions,

                                       22
causes of action, suits, claims, losses, costs,  penalties,  fees, liabilities
and damages, and reasonable expenses in connection therewith  (irrespective of
whether   any  such   Indemnitee   is  a  party  to  the   action   for  which
indemnification  hereunder is sought),  and  including  reasonable  attorneys'
fees  and  disbursements  (the  "Indemnified  Liabilities"),  incurred  by any
Indemnitee  as a  result  of,  or  arising  out  of,  or  relating  to (I) any
misrepresentation  or breach of any  representation  or  warranty  made by the
Indemnitor  or any other  certificate,  instrument  or  document  contemplated
hereby  (except  to the  extent  that the  transaction  documents  breach  any
agreements  to which the  Investor is subject) or thereby;  (II) any breach of
any  covenant,  agreement or  obligation  of the  Indemnitor  contained in the
Transaction  Documents  or  any  other  certificate,  instrument  or  document
contemplated  hereby or thereby;  or (III) any cause of action,  suit or claim
brought or made  against such  Indemnitee  by a third party and arising out of
or resulting from the execution,  delivery,  performance or enforcement of the
Transaction  Documents  or  any  other  certificate,  instrument  or  document
contemplated hereby or thereby,  except insofar as any such misrepresentation,
breach or any untrue statement, alleged untrue statement,  omission or alleged
omission  is  made  in  reliance  upon  and  in  conformity  with  information
furnished  to  Indemnitor  which  is  specifically  intended  for  use  in the
preparation  of  any  such  Registration  Statement,  preliminary  prospectus,
prospectus or amendments to the  prospectus.  To the extent that the foregoing
undertaking  by the  Indemnitor  may be  unenforceable  for  any  reason,  the
Indemnitor   shall  make  the   maximum   contribution   to  the  payment  and
satisfaction  of each of the  Indemnified  Liabilities  which  is  permissible
under  applicable law. The indemnity  provisions  contained herein shall be in
addition to any cause of action or similar  rights  Indemnitor  may have,  and
any liabilities the Indemnitor or the Indemnitees may be subject to.

SECTION 12. GOVERNING LAW; MISCELLANEOUS.

(A) GOVERNING  LAW. This  Agreement  shall be governed by and  interpreted  in
accordance with the laws of the Commonwealth of  Massachusetts  without regard
to the principles of conflict of laws. Each party hereby  irrevocably  submits
to the exclusive  jurisdiction  of the state and federal courts sitting in the
City of  Boston,  County  of  Suffolk,  for the  adjudication  of any  dispute
hereunder  or in  connection  herewith  or with any  transaction  contemplated
hereby or discussed herein, and hereby  irrevocably  waives, and agrees not to
assert in any suit, action or proceeding,  any claim that it is not personally
subject to the  jurisdiction  of any such  court,  that such  suit,  action or
proceeding  is  brought  in an  inconvenient  forum or that the  venue of such
suit, action or proceeding is improper.  Each party hereby  irrevocably waives
personal  service of process and consents to process  being served in any such
suit,  action or  proceeding  by  mailing a copy  thereof to such party at the
address  for such  notices to it under  this  Agreement  and agrees  that such
service shall  constitute  good and  sufficient  service of process and notice
thereof.  Nothing  contained  herein  shall be  deemed to limit in any way any
right to serve  process in any manner  permitted  by law. If any  provision of
this Agreement shall be invalid or  unenforceable  in any  jurisdiction,  such
invalidity   or   unenforceability   shall  not   affect   the   validity   or
enforceability  of the remainder of this Agreement in that jurisdiction or the
validity or  enforceability  of any  provision of this  Agreement in any other
jurisdiction.

(B) LEGAL FEES; AND  MISCELLANEOUS  FEES. Except as otherwise set forth in the
Transaction  Documents,  each  party  shall pay the fees and  expenses  of its
advisers,  counsel,  the accountants and other experts,  if any, and all other
expenses  incurred  by such party  incident to the  negotiation,  preparation,

                                       23
execution,  delivery and  performance of this  Agreement.  Any attorneys' fees
and expenses  incurred by either the Company or by the Investor in  connection
with the  preparation,  negotiation,  execution and delivery of any amendments
to this  Agreement or relating to the  enforcement of the rights of any party,
after the  occurrence of any breach of the terms of this  Agreement by another
party  or any  default  by  another  party  in  respect  of  the  transactions
contemplated  hereunder,  shall be paid on demand by the party which  breached
the Agreement and/or defaulted,  as the case may be. The Company shall pay all
stamp and other taxes and duties  levied in  connection  with the  issuance of
any Securities.

(C)  COUNTERPARTS.  This  Agreement  may be executed in two or more  identical
counterparts,  all of which 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;  provided  that a facsimile  signature  shall be
considered due execution and shall be binding upon the signatory  thereto with
the  same  force  and  effect  as if the  signature  were an  original,  not a
facsimile signature.

(D)  HEADINGS;  SINGULAR/PLURAL.  The  headings  of  this  Agreement  are  for
convenience   of  reference  and  shall  not  form  part  of,  or  affect  the
interpretation  of, this Agreement.  Whenever  required by the context of this
Agreement,  the singular shall include the plural and masculine  shall include
the feminine.

(E)  SEVERABILITY.  If any  provision  of this  Agreement  shall be invalid or
unenforceable in any jurisdiction,  such invalidity or unenforceability  shall
not affect the validity or  enforceability  of the remainder of this Agreement
in that  jurisdiction  or the validity or  enforceability  of any provision of
this Agreement in any other jurisdiction.

(F) ENTIRE AGREEMENT;  AMENDMENTS.  This Agreement  supersedes all other prior
oral  or  written  agreements  between  the  Investor,   the  Company,   their
affiliates  and persons  acting on their  behalf  with  respect to the matters
discussed  herein,  and this Agreement and the instruments  referenced  herein
(including the other Transaction  Documents) contain the entire  understanding
of the parties  with  respect to the matters  covered  herein and therein and,
except as  specifically  set forth herein or therein,  neither the Company nor
the Investor makes any representation,  warranty, covenant or undertaking with
respect to such matters.  No provision of this  Agreement may be amended other
than by an instrument in writing  signed by the Company and the Investor,  and
no  provision  hereof  may be waived  other than by an  instrument  in writing
signed by the party against whom enforcement is sought.

(G) NOTICES. Any notices or other  communications  required or permitted to be
given under the terms of this  Agreement must be in writing and will be deemed
to have been delivered (I) upon receipt, when delivered personally;  (II) upon
receipt,  when sent by facsimile  (provided  confirmation  of  transmission is
mechanically  or  electronically  generated  and  kept on file by the  sending
party); or (III) one day after deposit with a nationally  recognized overnight
delivery service,  in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:

                                       24
If to the Company:

                Energas Resources, Inc.
                800 Northeast 63rd Street
                3rd Floor
                Oklahoma City, Oklahoma  73105

                Telephone: (405) 879-1752
                Facsimile:   (405) 879-0175

        If to the Investor:

                Dutchess Private Equities fund, LP, II
                312 Stuart Street
                Boston, MA 02116

                Telephone: 617-960-3582
                Facsimile: 617-960-3772

Each party shall  provide five days' prior  written  notice to the other party
of any change in address or facsimile number.

(H) NO ASSIGNMENT. This Agreement may not be assigned.

(I) NO THIRD PARTY  BENEFICIARIES.  This Agreement is intended for the benefit
of the parties  hereto and is not for the  benefit  of, nor may any  provision
hereof be enforced by, any other person.

(J)  SURVIVAL.  The  representations  and  warranties  of the  Company and the
Investor  contained  in Sections 2 and 3, the  agreements  and  covenants  set
forth in  Sections 4 and 5, and the  indemnification  provisions  set forth in
Section 10, shall  survive each of the  Closings and the  termination  of this
Agreement.

 (K)  PUBLICITY.  The Company and  Investor  shall  consult with each other in
issuing any press releases or otherwise making public  statements with respect
to the  transactions  contemplated  hereby and no party  shall  issue any such
press release or otherwise  make any such public  statement  without the prior
consent  of the  other  parties,  which  consent  shall  not  be  unreasonably
withheld or delayed,  except that no prior  consent  shall be required if such
disclosure is required by law, in which such case the  disclosing  party shall
provide  the  other  parties  with  prior  notice  of such  public  statement.
Notwithstanding  the  foregoing,  the Company shall not publicly  disclose the
name of Investor  without the prior  consent of such  Investor,  except to the
extent required by law.  Investor  acknowledges that this Agreement and all or
part of the Transaction  Documents may be deemed to be "material contracts" as
that term is  defined  by Item  601(b)(10)  of  Regulation  S-B,  and that the
Company  may  therefore  be  required  to file such  documents  as exhibits to
reports or registration  statements  filed under the 1933 Act or the 1934 Act.
Investor  further  agrees that the status of such  documents  and materials as
material contracts shall be determined solely by the Company,  in consultation
with its counsel.

                                       25
(L) FURTHER  ASSURANCES.  Each party shall do and perform, or cause to be done
and  performed,  all such  further  acts and  things,  and shall  execute  and
deliver all such other  agreements,  certificates,  instruments and documents,
as the other  party may  reasonably  request  in order to carry out the intent
and  accomplish  the purposes of this  Agreement and the  consummation  of the
transactions contemplated hereby.

(M) reserved

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

(O)  REMEDIES.  The  Investor  and each  holder of the  Shares  shall have all
rights and remedies set forth in this  Agreement and the  Registration  Rights
Agreement and all rights and remedies  which such holders have been granted at
any time under any other  agreement  or contract  and all of the rights  which
such  holders  have  under any law.  Any person  having  any rights  under any
provision  of  this  Agreement  shall  be  entitled  to  enforce  such  rights
specifically  (without posting a bond or other  security),  to recover damages
by  reason  of any  default  or breach  of any  provision  of this  Agreement,
including  the  recovery  of  reasonable  attorneys  fees  and  costs,  and to
exercise all other rights granted by law.

(P)  PAYMENT  SET ASIDE.  To the extent  that the  Company  makes a payment or
payments to the Investor  hereunder or the  Registration  Rights  Agreement or
the Investor  enforces or exercises its rights  hereunder or  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.

(Q) PRICING OF COMMON  STOCK.  For purposes of this  Agreement,  the bid price
of the Common Stock in this Agreement shall be as reported on Bloomberg.com.

                                    * * *

                                       26
SIGNATURE PAGE OF INVESTMENT AGREEMENT

Your  signature on this Signature Page evidences your agreement to be bound by
the terms and  conditions of the  Investment  Agreement  and the  Registration
Rights Agreement as of the date first written above.

The undersigned  signatory  hereby  certifies that he has read and understands
the Investment  Agreement,  and the representations made by the undersigned in
this  Investment  Agreement are true and  accurate,  and agrees to be bound by
its terms.

                   DUTCHESS PRIVATE EQUITIES FUND, II, L.P.
                           BY ITS GENERAL PARTNER,
                       DUTCHESS CAPITAL MANAGEMENT, LLC

By: /s/ Douglas H. Leighton
    ------------------------------------
    Douglas H. Leighton, Managing Member

                           Energas Resources, Inc.

By: /s/ George Shaw
    -------------------------------
    George Shaw, President

                                       27
LIST OF EXHIBITS

                  EXHIBIT  A          Registration  Rights  Agreement
                  EXHIBIT  B          Opinion  of  Company's  Counsel
                  EXHIBIT  C          [reserved]
                  EXHIBIT  D          [reserved]
                  EXHIBIT  E          Board  Resolution
                  EXHIBIT  F          Put  Notice
                  EXHIBIT  G          Put  Settlement  Sheet
EXHIBIT F

Date:

RE: Put Notice Number __

Dear Mr. Leighton,

This is to inform you that as of today,  Energas  Resources,  Inc., a Delaware
corporation (the  "Company"),  hereby elects to exercise its right pursuant to
the Investment  Agreement to require  Dutchess  Private Equities Fund, II, LP.
to purchase shares of its common stock. The Company hereby certifies that:

The amount of this put is $__________.

The Pricing Period runs from ________ until _______.

The current number of shares issued and outstanding as of the Company are:
____________

Regards,

George Shaw
President
Energas Resources, Inc.
EXHIBIT G
                             PUT SETTLEMENT SHEET

Date:

Douglas,

Pursuant  to the Put given by Energas  Resources,  Inc.  to  Dutchess  Private
Equities Fund, II, L.P. on  _________________  200x, we are now submitting the
amount of common shares for you to issue to Dutchess.

Please have a certificate  bearing no restrictive  legend totaling  __________
shares issued to Dutchess  Private  Equities Fund, II, LP immediately and send
via DWAC to the following account:

XXXXXX

If not DWAC eligible, please send FedEx Priority Overnight to:

XXXXXX

Once these  shares  are  received  by us, we will have the funds  wired to the
Company.

Regards,

Douglas H. Leighton
DATE                           PRICE

                  Date of Day 1               Closing Bid of Day 1
                  Date of Day 2               Closing Bid of Day 2
                  Date of Day 3               Closing Bid of Day 3
                  Date of Day 4               Closing Bid of Day 4
                  Date of Day 5               Closing Bid of Day 5

                  LOWEST 1 (ONE) CLOSING BID IN PRICING PERIOD
                                  ------------

                  PUT AMOUNT
                                  ------------

                  AMOUNT WIRED TO COMPANY
                                  ------------

                  PURCHASE PRICE (95% (NINETY-FIVE PERCENT))
                                  ------------

                  AMOUNT OF SHARES DUE
                                  ------------

The undersigned has completed this Put as of this ___th day of _________,
20xx.

Energas Resources, Inc.

George Shaw, President
EXHIBIT 10.12
REGISTRATION RIGHTS AGREEMENT

      Registration  Rights Agreement (the "Agreement"),  dated as of September
20, 2004, by and between  Energas  Resources,  Inc., a  corporation  organized
under the laws of State of Delaware,  with its principal  executive  office at
Energas Resources,  Inc., 800 Northeast 63rd Street,  Oklahoma City, Oklahoma,
73105,  (the  "Company"),  and Dutchess  Private  Equities  Fund,  II, L.P., a
Delaware  limited  partnership with its principal office at 312 Stuart Street,
Boston, MA 02116 (the "Holder").

      Whereas, in connection with the Investment  Agreement by and between the
Company and the Investor of even date herewith (the  "Investment  Agreement"),
the  Company  has agreed to issue and sell to the  Investor  an  indeterminate
number of shares of the  Company's  Common  Stock,  $0.001 par value per share
(the "Common  Stock"),  to be  purchased  pursuant to the terms and subject to
the conditions set forth in the Investment Agreement; and

      Whereas,  to induce the  Investor to execute and deliver the  Investment
Agreement,  the  Company  has agreed to provide  certain  registration  rights
under the  Securities Act of 1933, as amended,  and the rules and  regulations
thereunder,  or any similar successor statute (collectively,  the "1933 Act"),
and applicable  state  securities  laws,  with respect to the shares of Common
Stock issuable pursuant to the Investment Agreement.

      Now  therefore,  in  consideration  of the  foregoing  premises  and the
mutual   covenants   contained   hereinafter   and  other  good  and  valuable
consideration,  the receipt and sufficiency of which are hereby  acknowledged,
the Company and the Investor hereby agree as follows:

Section 1.  DEFINITIONS.

      As used in this Agreement,  the following terms shall have the following
meanings:

      "Execution Date" means the date first written above.

      "Investor"  means  Dutchess  Private  Equities  Fund,  L.P.,  a Delaware
limited partnership.

      "Person"  means  a  corporation,   a  limited  liability   company,   an
association,  a partnership,  an organization,  a business,  an individual,  a
governmental or political subdivision thereof or a governmental agency.

      "Potential  Material  Event"  means  any  of  the  following:   (i)  the
possession by the Company of material  information  not ripe for disclosure in
a Registration  Statement,  which shall be evidenced by determinations in good
faith  by the  Board of  Directors  of the  Company  that  disclosure  of such
information  in  the  Registration  Statement  would  be  detrimental  to  the
business  and  affairs of the  Company,  or (ii) any  material  engagement  or
activity by the Company which would,  in the good faith  determination  of the
Board of Directors of the Company,  be adversely  affected by  disclosure in a
Registration  Statement at such time, which determination shall be accompanied
by a good faith  determination  by the Board of  Directors of the Company that
the  Registration   Statement  would  be  materially   misleading  absent  the
inclusion of such information.
"Principal  Market"  shall mean The American  Stock  Exchange,  National
Association of Securities Dealer's, Inc. Over-the-Counter  electronic bulletin
board,  the Nasdaq National Market or The Nasdaq SmallCap Market  whichever is
the principal market on which the Common Stock is listed.

      "Register,"  "Registered,"  and  "Registration"  refer to a registration
effected  by  preparing  and filing  one or more  Registration  Statements  in
compliance  with the 1933 Act and  pursuant  to Rule 415 under the 1933 Act or
any successor  rule  providing for offering  securities on a continuous  basis
("Rule  415"),  and the  declaration  or  ordering  of  effectiveness  of such
Registration  Statement(s)  by  the  United  States  Securities  and  Exchange
Commission (the "SEC").

      "Registrable  Securities" means (i) the shares of Common Stock issued or
issuable pursuant to the Investment Agreement,  and (ii) any shares of capital
stock issued or issuable with respect to such shares of Common Stock,  if any,
as a result of any stock split, stock dividend, recapitalization,  exchange or
similar  event  or   otherwise,   which  have  not  been  (x)  included  in  a
Registration  Statement  that has been  declared  effective  by the SEC or (y)
sold under circumstances  meeting all of the applicable conditions of Rule 144
(or any similar provision then in force) under the 1933 Act.

      "Registration  Statement" means a registration  statement of the Company
filed under the 1933 Act covering the Registrable Securities.

      All capitalized  terms used in this Agreement and not otherwise  defined
herein  shall  have the same  meaning  ascribed  to them as in the  Investment
Agreement.

      Section 2.  REGISTRATION.

      (a) On or before the  execution  of this  Agreement,  the Company  shall
have provided a draft of the Registration  Statement  covering the Registrable
Securities to the Investor.  The Company shall,  as soon as  practicable,  but
not  later  than  fifteen  calendar  days  following  the  Execution  of  this
agreement,  file  with  the  SEC  a  Registration  Statement  or  Registration
Statements  (as is  necessary)  on Form SB-2 (or, if such form is  unavailable
for  such a  registration,  on such  other  form as is  available  for  such a
registration),  covering  the  resale  of all of the  Registrable  Securities,
which Registration  Statement(s) shall state that, in accordance with Rule 416
promulgated under the 1933 Act, such  Registration  Statement also covers such
indeterminate  number  of  additional  shares of  Common  Stock as may  become
issuable  upon stock  splits,  stock  dividends or similar  transactions.  The
Company shall initially  register for resale 10,000,000 shares of Common Stock
which would be issuable on the date  preceding the filing of the  Registration
Statement  based on the closing  bid price of the  Company's  Common  Stock on
such date and the amount  reasonably  calculated that represents  Common Stock
issuable to other parties as set forth in the Investment  Agreement  except to
the  extent  that  the SEC  requires  the  share  amount  to be  reduced  as a
condition of effectiveness.

                                       2
(b) The Company shall use  commercially  reasonable  efforts to have the
Registration  Statement(s)  declared  effective  by the SEC within 90 calendar
days after the Execution Date.

      (c) The  Company  agrees  not to  include  any other  securities  in the
Registration  Statement covering the Registrable Securities without Investor's
prior  written  consent  which  Investor may withhold in its sole  discretion.
Furthermore,  the Company agrees that it will not file any other  Registration
Statement  for  other  securities,   until  thirty  calendar  days  after  the
Registration  Statement for the Registrable  Securities is declared  effective
by the SEC.

      Section 3.  RELATED OBLIGATIONS.

      At  such  time  as the  Company  is  obligated  to  prepare  and  file a
Registration  Statement  with the SEC  pursuant to Section  2(a),  the Company
will effect the registration of the Registrable  Securities in accordance with
the intended  method of  disposition  thereof and, with respect  thereto,  the
Company shall have the following obligations:

      (a) The  Company  shall use  commercially  reasonable  efforts  to cause
such Registration  Statement relating to the Registrable  Securities to become
effective  within  90 days  after  the  Execution  Date and  shall  keep  such
Registration  Statement  effective  until the earlier to occur of (i) the date
as of which the Investor may sell all of the  Registrable  Securities  without
restriction  pursuant  to Rule  144(k)  promulgated  under  the  1933  Act (or
successor  thereto);  or (ii) the date on which (A) the  Investor  shall  have
sold all the  Registrable  Securities;  and (B) the  Investor  has no right to
acquire any additional  shares of Common Stock under the Investment  Agreement
(the  "Registration   Period").  The  Registration  Statement  (including  any
amendments or supplements  thereto and prospectuses  contained  therein) shall
not  contain  any  untrue  statement  of a  material  fact or omit to  state a
material  fact  required  to be  stated  therein,  or  necessary  to make  the
statements  therein,  in light of the  circumstances  in which they were made,
not  misleading.  The Company shall use its best efforts to respond to all SEC
comments  within  seven  business  days from  receipt of such  comments by the
Company.  The  Company  shall use its best  efforts to cause the  Registration
Statement relating to the Registrable  Securities to become effective no later
than three  business  days  after  notice  from the SEC that the  Registration
Statement  may be  declared  effective.  The  Investor  agrees to provide  all
information  which it is required by law to provide to the Company,  including
the intended  method of disposition  of the  Registrable  Securities,  and the
Company's  obligations  set forth above shall be conditioned on the receipt of
such information.

      (b) The  Company  shall  prepare  and file with the SEC such  amendments
(including  post-effective  amendments)  and  supplements  to  a  Registration
Statement  and  the  prospectus  used in  connection  with  such  Registration
Statement,  which  prospectus is to be filed pursuant to Rule 424  promulgated
under the 1933 Act, as may be  necessary to keep such  Registration  Statement
effective  during the  Registration  Period,  and, during such period,  comply
with the  provisions  of the 1933 Act with respect to the  disposition  of all
Registrable  Securities of the Company covered by such Registration  Statement
until  such  time  as all of  such  Registrable  Securities  shall  have  been
disposed of in  accordance  with the intended  methods of  disposition  by the
Investor  thereof as set forth in such  Registration  Statement.  In the event
the  number of shares of Common  Stock  covered  by a  Registration  Statement
filed pursuant to this Agreement is at any time  insufficient  to cover all of

                                       3
the  Registrable  Securities,   the  Company  shall  amend  such  Registration
Statement,  or file a new Registration  Statement (on the short form available
therefor,  if  applicable),  or both,  so as to cover  all of the  Registrable
Securities,  in each case, as soon as practicable,  but in any event within 30
calendar days after the necessity  therefor arises (based on the then Purchase
Price of the Common  Stock and other  relevant  factors  on which the  Company
reasonably  elects to rely),  assuming the Company has  sufficient  authorized
shares at that time,  and if it does not,  within 30 calendar  days after such
shares are authorized.  The Company shall use commercially  reasonable efforts
to cause such amendment and/or new Registration  Statement to become effective
as soon as practicable following the filing thereof.

      (c) The Company shall make available to the Investor  whose  Registrable
Securities  are included in any  Registration  Statement and its legal counsel
without  charge (i) promptly after the same is prepared and filed with the SEC
at  least  one  copy  of such  Registration  Statement  and  any  amendment(s)
thereto,   including  financial   statements  and  schedules,   all  documents
incorporated  therein by reference and all exhibits,  the prospectus  included
in such Registration  Statement  (including each preliminary  prospectus) and,
with regards to such Registration  Statement(s),  any  correspondence by or on
behalf  of  the  Company  to  the  SEC  or  the  staff  of  the  SEC  and  any
correspondence  from  the SEC or the  staff of the SEC to the  Company  or its
representatives;  (ii) upon the  effectiveness of any Registration  Statement,
the Company shall make  available  copies of the  prospectus  included in such
Registration  Statement and all amendments and supplements  thereto; and (iii)
such  other   documents,   including   copies  of  any  preliminary  or  final
prospectus,  as the Investor may reasonably request from time to time in order
to facilitate the disposition of the Registrable Securities.

      (d)  The  Company  shall  use  commercially  reasonable  efforts  to (i)
register  and qualify the  Registrable  Securities  covered by a  Registration
Statement  under such other  securities  or "blue sky" laws of such  states in
the United States as any Investor reasonably  requests;  (ii) prepare and file
in those jurisdictions,  such amendments (including post-effective amendments)
and supplements to such  registrations and  qualifications as may be necessary
to maintain the effectiveness  thereof during the Registration  Period;  (iii)
take such other  actions as may be  necessary to maintain  such  registrations
and qualifications in effect at all times during the Registration  Period, and
(iv) take all other actions  reasonably  necessary or advisable to qualify the
Registrable  Securities  for sale in such  jurisdictions;  provided,  however,
that the  Company  shall  not be  required  in  connection  therewith  or as a
condition  thereto to (x) qualify to do business in any jurisdiction  where it
would not  otherwise be required to qualify but for this Section  3(d), or (y)
subject  itself to general  taxation  in any such  jurisdiction.  The  Company
shall promptly  notify each Investor who holds  Registrable  Securities of the
receipt by the Company of any  notification  with respect to the suspension of
the  registration or  qualification  of any of the Registrable  Securities for
sale  under  the  securities  or "blue  sky" laws of any  jurisdiction  in the
United  States  or  its  receipt  of  actual  notice  of  the   initiation  or
threatening of any proceeding for such purpose.

      (e) As promptly as practicable  after becoming aware of such event,  the
Company  shall notify each  Investor in writing of the  happening of any event
as a result of which the prospectus included in a Registration  Statement,  as
then in effect,  includes an untrue  statement of a material  fact or omission
to state a material  fact  required to be stated  therein or necessary to make

                                       4
the statements  therein,  in light of the circumstances  under which they were
made, not misleading  ("Registration Default") and use all diligent efforts to
promptly prepare a supplement or amendment to such Registration  Statement and
take any other necessary steps to cure the Registration  Default,  (which,  if
such  Registration  Statement  is on Form S-3, may consist of a document to be
filed by the Company  with the SEC  pursuant to Section  13(a),  13(c),  14 or
15(d) of the 1934 Act (as defined below) and to be  incorporated  by reference
in the  prospectus)  to correct such untrue  statement  or omission,  and make
available  copies  of such  supplement  or  amendment  to each  Investor.  The
Company shall also promptly  notify each Investor (i) when a prospectus or any
prospectus  supplement or post-effective  amendment has been filed, and when a
Registration  Statement or any  post-effective  amendment has become effective
(the Company will prepare  notification of such  effectiveness  which shall be
delivered  to the  Investor  on the  same  day of  such  effectiveness  and by
overnight  mail),  additionally,  the  Company  will  promptly  provide to the
Investor  a copy of the  effectiveness  order  prepared  by the SEC once it is
received  by the  Company;  (ii) of any request by the SEC for  amendments  or
supplements  to a  Registration  Statement  or related  prospectus  or related
information,   (iii)  of  the  Company's   reasonable   determination  that  a
post-effective  amendment to a Registration  Statement  would be  appropriate,
(iv) in the event the Registration  Statement is no longer  effective,  or (v)
if  Registration  Statement is stale as a result of the  Company's  failure to
timely file its  financials or otherwise.  The Company  acknowledges  that its
failure to cure the  Registration  Default within ten business days will cause
the  Investor  to suffer  damages  in an  amount  that  will be  difficult  to
ascertain.  Accordingly,  the parties agree that it is  appropriate to include
a provision for liquidated  damages.  The parties  acknowledge  and agree that
the  liquidated  damages  provision set forth in this section  represents  the
parties' good faith effort to quantify  such damages and, as such,  agree that
the form and amount of such  liquidated  damages are  reasonable  and will not
constitute  a  penalty.  It is the  intention  of the  parties  that  interest
payable under any of the terms of this Agreement  shall not exceed the maximum
amount  permitted  under any  applicable  law. If a law, which applies to this
Agreement which sets the maximum  interest amount,  is finally  interpreted so
that the interest in  connection  with this  Agreement  exceeds the  permitted
limits,  then: (1) any such interest shall be reduced by the amount  necessary
to reduce  the  interest  to the  permitted  limit;  and (2) any sums  already
collected (if any) from the Company which exceed the permitted  limits will be
refunded  to the  Company.  The  Investor  may  choose to make this  refund by
reducing the amount that the Company owes under this  Agreement or by making a
direct  payment  to the  Company.  If a refund  reduces  the  amount  that the
Company  owes  the  Investor,  the  reduction  will be  treated  as a  partial
payment.  In case  any  provision  of  this  Agreement  is held by a court  of
competent  jurisdiction  to be  excessive  in scope or  otherwise  invalid  or
unenforceable,  such  provision  shall be  adjusted  rather  than  voided,  if
possible,  so that it is enforceable to the maximum extent  possible,  and the
validity and  enforceability  of the remaining  provisions  of this  Agreement
will not in any way be affected or impaired thereby.

      (f) The Company  shall use  commercially  reasonable  efforts to prevent
the  issuance  of any stop order or other  suspension  of  effectiveness  of a
Registration  Statement,  or the suspension of the qualification of any of the
Registrable  Securities for sale in any jurisdiction  and, if such an order or
suspension  is issued,  to obtain the  withdrawal  of such order or suspension
at the  earliest  possible  moment  and  to  notify  the  Investor  who  holds
Registrable  Securities  being  sold of the  issuance  of such  order  and the
resolution  thereof  or its  receipt  of actual  notice of the  initiation  or
threat of any proceeding for such  purpose.

                                       5
(g) The  Company  shall  permit  the  Investor  and one  legal  counsel,
designated  by the  Investor,  to  review  and  comment  upon  a  Registration
Statement and all amendments and  supplements  thereto at least seven business
days prior to their  filing with the SEC,  and not file any document in a form
to which such counsel reasonably  objects.  The Company may request to shorten
the Investor's  review period and the Investor  will, if possible,  attempt to
comply with the  accelerated  review  period.  The Company shall not submit to
the SEC a request for  acceleration  of the  effectiveness  of a  Registration
Statement or file with the SEC a  Registration  Statement or any  amendment or
supplement thereto without the prior approval of such counsel,  which approval
shall not be unreasonably withheld.

      (h) At the  request  of the  Investor,  the  Company  shall  cause to be
furnished  to  such  Investor,   on  the  date  of  the   effectiveness  of  a
Registration  Statement,  a legal  opinion,  in form and substance  reasonably
acceptable  to  Investor's  counsel,   dated  as  of  such  date,  of  counsel
representing the Company for purposes of such Registration Statement.

      (i)  The  Company  shall  make  available  for  inspection  by  (i)  the
Investor  and (ii) one  legal  counsel  and one firm of  accountants  or other
agents  retained  by  the  Investor  (collectively,   the  "Inspectors"),  all
pertinent  financial and other records,  and pertinent corporate documents and
properties  of  the  Company  (collectively,   the  "Records"),  as  shall  be
reasonably  deemed  necessary  by each  Inspector,  and  cause  the  Company's
officers,  directors  and  employees  to  supply  all  information  which  any
Inspector may  reasonably  request;  provided,  however,  that each  Inspector
shall hold in strict  confidence and shall not make any disclosure  (except to
a  Investor)  or use of any  Record or other  information  which  the  Company
determines in good faith to be confidential,  and of which  determination  the
Inspectors  are so  notified,  unless (a) the  disclosure  of such  Records is
necessary to avoid or correct a misstatement  or omission in any  Registration
Statement  or is  otherwise  required  under the 1933 Act,  (b) the release of
such Records is ordered pursuant to a final,  non-appealable subpoena or order
from a  court  or  government  body  of  competent  jurisdiction,  or (c)  the
information  in such Records has been made  generally  available to the public
other than by disclosure in violation of this or any other  agreement of which
the  Inspector  has  knowledge.  Each  Investor  agrees  that it  shall,  upon
learning  that  disclosure  of such  Records  is  sought  in or by a court  or
governmental  body of competent  jurisdiction  or through  other  means,  give
prompt  notice to the  Company  and  allow the  Company,  at its  expense,  to
undertake  appropriate  action  to  prevent  disclosure  of,  or to  obtain  a
protective order for, the Records deemed confidential.

      (j) The Company  shall hold in  confidence  and not make any  disclosure
of  information  concerning  a Investor  provided  to the  Company  unless (i)
disclosure  of such  information  is necessary to comply with federal or state
securities  laws,  (ii) the  disclosure  of such  information  is necessary to
avoid or correct a  misstatement  or omission in any  Registration  Statement,
(iii) the  release of such  information  is ordered  pursuant to a subpoena or
other  final,  non-appealable  order  from a  court  or  governmental  body of
competent  jurisdiction,  or (iv) such  information  has been  made  generally
available  to the  public  other  than  by  disclosure  in  violation  of this
Agreement  or any other  agreement.  The Company  agrees  that it shall,  upon
learning that disclosure of such  information  concerning a Investor is sought
in or by a court or  governmental  body of competent  jurisdiction  or through

                                       6
other  means,  give  prompt  written  notice to such  Investor  and allow such
Investor,  at the  Investor's  expense,  to  undertake  appropriate  action to
prevent disclosure of, or to obtain a protective order for, such information.

      (k) The Company shall use  commercially  reasonable  efforts to maintain
designation  and quotation of all the  Registrable  Securities  covered by any
Registration  Statement on the  Principal  Market.  If,  despite the Company's
best  efforts,  the  Company  is  unsuccessful  in  satisfying  the  preceding
sentence,  it shall  use  commercially  reasonable  efforts  to cause  all the
Registrable  Securities covered by any Registration  Statement to be listed on
each other national  securities  exchange and automated  quotation  system, if
any,  on which  securities  of the same class or series  issued by the Company
are then  listed,  if any, if the listing of such  Registrable  Securities  is
then permitted  under the rules of such exchange or system.  The Company shall
pay all fees and expenses in connection with  satisfying its obligation  under
this Section 3(k).

      (l) The Company  shall  cooperate  with the Investor to  facilitate  the
prompt  preparation and delivery of certificates  (not bearing any restrictive
legend)  representing  the Registrable  Securities to be offered pursuant to a
Registration   Statement   and  enable  such   certificates   to  be  in  such
denominations  or amounts,  as the case may be, as the Investor may reasonably
request.

      (m) The Company shall provide a transfer  agent for all the  Registrable
Securities  not  later  than  the  effective  date of the  first  Registration
Statement filed pursuant hereto.

      (n) If  requested  by the  Investor,  the  Company  shall (i) as soon as
reasonably practical  incorporate in a prospectus supplement or post-effective
amendment such  information as such Investor  reasonably  determine  should be
included  therein  relating  to  the  sale  and  distribution  of  Registrable
Securities,  including,  without  limitation,  information with respect to the
offering of the Registrable Securities to be sold in such offering;  (ii) make
all  required  filings  of  such  prospectus   supplement  or   post-effective
amendment as soon as reasonably  possible  after being notified of the matters
to be incorporated in such prospectus supplement or post-effective  amendment;
and (iii)  supplement  or make  amendments  to any  Registration  Statement if
reasonably requested by such Investor.

      (o) The Company shall use commercially  reasonable  efforts to cause the
Registrable Securities covered by the applicable  Registration Statement to be
registered   with  or  approved  by  such  other   governmental   agencies  or
authorities  as may  be  necessary  to  consummate  the  disposition  of  such
Registrable Securities.

      (p) The Company shall otherwise use commercially  reasonable  efforts to
comply with all  applicable  rules and  regulations  of the SEC in  connection
with any registration hereunder.

      (q) Within  one  business  day after the  Registration  Statement  which
includes Registrable  Securities is declared effective by the SEC, the Company
shall  deliver to the transfer  agent for such  Registrable  Securities,  with
copies to the  Investor,  confirmation  that such  Registration  Statement has
been declared effective by the SEC.

      (r)  reserved

      (s) The Company  shall take all other  reasonable  actions  necessary to
expedite and facilitate  disposition by the Investor of Registrable Securities
pursuant to a Registration Statement.

                                       7
Section 4.  RESERVED

      Section 5.  EXPENSES OF REGISTRATION.

      All expenses,  other than  underwriting  discounts and  commissions  and
other than as set forth in the  Investment  Agreement,  incurred in connection
with registrations  including comments,  filings or qualifications pursuant to
Sections 2 and 3, including,  without  limitation,  all registration,  listing
and  qualifications   fees,   printing  and  accounting  fees,  and  fees  and
disbursements of counsel for the Company shall be paid by the Company.

      Section 6.  INDEMNIFICATION.

      In the event any  Registrable  Securities are included in a Registration
Statement under this Agreement:

      (a) To the  fullest  extent  permitted  by law,  the Company  will,  and
hereby does, indemnify,  hold harmless and defend each Investor who holds such
Registrable  Securities,  the  directors,   officers,   partners,   employees,
counsel,  agents,  representatives  of, and each Person, if any, who controls,
any  Investor  within the meaning of the 1933 Act or the  Securities  Exchange
Act of 1934,  as amended (the "1934 Act")  (each,  an  "Indemnified  Person"),
against  any  losses,  claims,   damages,   liabilities,   judgments,   fines,
penalties,  charges,  costs,  attorneys'  fees,  amounts paid in settlement or
expenses,   joint   or   several   (collectively,   "Claims"),   incurred   in
investigating,  preparing  or  defending  any action,  claim,  suit,  inquiry,
proceeding,  investigation or appeal taken from the foregoing by or before any
court or governmental,  administrative or other regulatory agency, body or the
SEC, whether pending or threatened,  whether or not an indemnified party is or
may be a party  thereto  ("Indemnified  Damages"),  to  which  any of them may
become  subject  insofar as such  Claims (or actions or  proceedings,  whether
commenced or threatened,  in respect  thereof) arise out of or are based upon:
(i) any untrue  statement or alleged untrue  statement of a material fact in a
Registration  Statement  or any  post-effective  amendment  thereto  or in any
filing made in connection  with the  qualification  of the offering  under the
securities or other "blue sky" laws of any  jurisdiction in which the Investor
has  requested  in writing  that the  Company  register  or qualify the Shares
("Blue Sky Filing"),  or the omission or alleged  omission to state a material
fact  required  to be  stated  therein  or  necessary  to make the  statements
therein,  in light of the  circumstances  under which the  statements  therein
were made,  not  misleading,  (ii) any  untrue  statement  or  alleged  untrue
statement of a material fact contained in the final  prospectus (as amended or
supplemented,  if the  Company  files  any  amendment  thereof  or  supplement
thereto  with the SEC) or the  omission or alleged  omission to state  therein
any material fact necessary to make the statements  made therein,  in light of
the  circumstances   under  which  the  statements   therein  were  made,  not
misleading,  or (iii) any violation or alleged violation by the Company of the
1933 Act,  the 1934 Act, any other law,  including,  without  limitation,  any
state  securities  law, or any rule or regulation  thereunder  relating to the
offer  or  sale  of the  Registrable  Securities  pursuant  to a  Registration
Statement  (the  matters in the  foregoing  clauses (i) through  (iii)  being,

                                       8
collectively,   "Violations").  Subject  to  the  restrictions  set  forth  in
Section  6(c)  the  Company  shall   reimburse  the  Investor  and  each  such
controlling  person,  promptly as such  expenses  are incurred and are due and
payable,  for any reasonable legal fees or other reasonable  expenses incurred
by  them in  connection  with  investigating  or  defending  any  such  Claim.
Notwithstanding    anything   to   the   contrary    contained   herein,   the
indemnification  agreement contained in this Section 6(a): (i) shall not apply
to a Claim  arising  out of or  based  upon a  Violation  which  is due to the
inclusion in the  Registration  Statement of the information  furnished to the
Company by any  Indemnified  Person  expressly for use in connection  with the
preparation of the  Registration  Statement or any such  amendment  thereof or
supplement  thereto;  (ii) shall not be  available to the extent such Claim is
based on (a) a failure of the  Investor to deliver or to cause to be delivered
the prospectus made available by the Company or (b) the  Indemnified  Person's
use of an incorrect  prospectus  despite being promptly  advised in advance by
the  Company  in  writing  not to use such  incorrect  prospectus;  (iii)  any
claims  based  on the  manner  of sale of the  Registrable  Securities  by the
Investor  or  of  the  Investor's  failure  to  register  as  a  dealer  under
applicable  securities  laws;  (iv) any omission of the Investor to notify the
Company  of any  material  fact that  should  be  stated  in the  Registration
Statement or  prospectus  relating to the Investor or the manner of sale;  and
(v) any  amounts  paid in  settlement  of any  Claim  if  such  settlement  is
effected  without the prior  written  consent of the  Company,  which  consent
shall  not be  unreasonably  withheld.  Such  indemnity  shall  remain in full
force and effect regardless of any  investigation  made by or on behalf of the
Indemnified   Person  and  shall   survive  the  resale  of  the   Registrable
Securities by the Investor pursuant to the Registration Statement.

      (b) In connection  with any  Registration  Statement in which a Investor
is  participating,   each  such  Investor  agrees  to  severally  and  jointly
indemnify,  hold  harmless  and  defend,  to the same  extent  and in the same
manner as is set forth in Section 6(a),  the Company,  each of its  directors,
each of its officers who signs the  Registration  Statement,  each Person,  if
any, who  controls the Company  within the meaning of the 1933 Act or the 1934
Act and the Company's  agents  (collectively  and together with an Indemnified
Person, an "Indemnified  Party"),  against any Claim or Indemnified Damages to
which any of them may  become  subject,  under  the 1933 Act,  the 1934 Act or
otherwise,  insofar as such Claim or  Indemnified  Damages arise out of or are
based upon any Violation,  in each case to the extent, and only to the extent,
that such Violation is due to the inclusion in the  Registration  Statement of
the written  information  furnished to the Company by such Investor  expressly
for use in  connection  with such  Registration  Statement;  and,  subject  to
Section  6(c),  such  Investor  will  reimburse  any  legal or other  expenses
reasonably  incurred by them in connection with investigating or defending any
such Claim; provided,  however, that the indemnity agreement contained in this
Section  6(b) and the  agreement  with  respect to  contribution  contained in
Section 7 shall not apply to amounts paid in  settlement  of any Claim if such
settlement  is effected  without the prior written  consent of such  Investor,
which consent shall not be unreasonably withheld;  provided, further, however,
that the  Investor  shall be  liable  under  this  Section  6(b) for only that
amount of a Claim or  Indemnified  Damages as does not exceed the net proceeds
to such Investor as a result of the sale of  Registrable  Securities  pursuant
to such  Registration  Statement.  Such  indemnity  shall remain in full force
and  effect  regardless  of any  investigation  made by or on  behalf  of such
Indemnified  Party and shall survive the resale of the Registrable  Securities
by the  Investor  pursuant  to  the  Registration  Statement.  Notwithstanding

                                       9
anything to the  contrary  contained  herein,  the  indemnification  agreement
contained  in this Section  6(b) with  respect to any  preliminary  prospectus
shall  not  inure  to the  benefit  of any  Indemnified  Party  if the  untrue
statement  or  omission  of  material  fact   contained  in  the   preliminary
prospectus  were  corrected  on a  timely  basis  in the  prospectus,  as then
amended  or   supplemented.   This   indemnification   provision  shall  apply
separately  to each Investor and  liability  hereunder  shall not be joint and
several.

      (c)  Promptly  after  receipt by an  Indemnified  Person or  Indemnified
Party  under  this  Section 6 of notice of the  commencement  of any action or
proceeding  (including  any  governmental  action or  proceeding)  involving a
Claim,  such  Indemnified  Person or  Indemnified  Party shall,  if a Claim in
respect  thereof  is to be made  against  any  indemnifying  party  under this
Section  6,  deliver  to  the  indemnifying  party  a  written  notice  of the
commencement  thereof,  and the  indemnifying  party  shall  have the right to
participate in, and, to the extent the indemnifying party so desires,  jointly
with any other indemnifying party similarly noticed,  to assume control of the
defense thereof with counsel mutually  satisfactory to the indemnifying  party
and the  Indemnified  Person  or the  Indemnified  Party,  as the case may be;
provided,  however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel  with the fees and  expenses to be paid by
the indemnifying  party, if, in the reasonable  opinion of counsel retained by
the Indemnified  Person or Indemnified Party, the representation by counsel of
the Indemnified  Person or Indemnified Party and the indemnifying  party would
be inappropriate due to actual or potential  differing  interests between such
Indemnified  Person or  Indemnified  Party and any other party  represented by
such counsel in such  proceeding.  The  indemnifying  party shall pay for only
one separate  legal  counsel for the  Indemnified  Persons or the  Indemnified
Parties,  as  applicable,  and such counsel shall be selected by the Investor,
if the Investor are entitled to indemnification  hereunder, or the Company, if
the Company is entitled  to  indemnification  hereunder,  as  applicable.  The
Indemnified  Party  or  Indemnified  Person  shall  cooperate  fully  with the
indemnifying  party in connection  with any negotiation or defense of any such
action  or  Claim  by  the  indemnifying   party  and  shall  furnish  to  the
indemnifying  party all  information  reasonably  available to the Indemnified
Party or  Indemnified  Person  which  relates  to such  action or  Claim.  The
indemnifying  party shall keep the  Indemnified  Party or  Indemnified  Person
fully  appraised  at  all  times  as to  the  status  of  the  defense  or any
settlement  negotiations with respect thereto.  No indemnifying party shall be
liable for any settlement of any action,  claim or proceeding effected without
its written consent, provided,  however, that the indemnifying party shall not
unreasonably  withhold,  delay or condition its consent. No indemnifying party
shall,  without the consent of the  Indemnified  Party or Indemnified  Person,
consent  to  entry of any  judgment  or enter  into  any  settlement  or other
compromise which does not include as an unconditional  term thereof the giving
by the claimant or plaintiff to such Indemnified  Party or Indemnified  Person
of  a  release  from  all  liability  in  respect  to  such  Claim.  Following
indemnification  as provided for hereunder,  the  indemnifying  party shall be
surrogated to all rights of the Indemnified  Party or Indemnified  Person with
respect to all third  parties,  firms or  corporations  relating to the matter
for which  indemnification  has been made.  The  failure  to  deliver  written
notice to the indemnifying  party within a reasonable time of the commencement
of any such action shall not relieve such indemnifying  party of any liability
to the  Indemnified  Person or Indemnified  Party under this Section 6, except
to the extent  that the  indemnifying  party is  prejudiced  in its ability to
defend such action.

      (d) The indemnity  agreements  contained  herein shall be in addition to
(i) any  cause  of  action  or  similar  right  of the  Indemnified  Party  or

                                       10
Indemnified  Person  against the  indemnifying  party or others,  and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

      Section 7.  CONTRIBUTION.

      To  the  extent  any   indemnification   by  an  indemnifying  party  is
prohibited  or  limited  by law,  the  indemnifying  party  agrees to make the
maximum  contribution with respect to any amounts for which it would otherwise
be liable under Section 6 to the fullest  extent  permitted by law;  provided,
however,  that: (i) no contribution  shall be made under  circumstances  where
the maker  would  not have been  liable  for  indemnification  under the fault
standards  set forth in  Section 6; (ii) no seller of  Registrable  Securities
guilty of  fraudulent  misrepresentation  (within the meaning of Section 11(f)
of the 1933  Act)  shall be  entitled  to  contribution  from  any  seller  of
Registrable  Securities  who was not guilty of  fraudulent  misrepresentation;
and (iii)  contribution  by any  seller  of  Registrable  Securities  shall be
limited in amount to the net amount of  proceeds  received by such seller from
the sale of such Registrable Securities.

      Section 8.  REPORTS UNDER THE 1934 ACT.

      With a view to making  available  to the  Investor  the benefits of Rule
144 promulgated  under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time  permit the  Investor to sell  securities  of the
Company to the public without  registration  ("Rule 144"),  the Company agrees
to:

      (a)   make and keep  public  information  available,  as those terms are
understood and  defined in Rule 144;

      (b)   file  with  the SEC in a  timely  manner  all  reports  and  other
documents  required of the Company under the 1933 Act and the 1934 Act so long
as the Company remains subject to such  requirements (it being understood that
nothing  herein shall limit the  Company's  obligations  under Section 5(c) of
the Investment  Agreement) and the filing of such reports and other  documents
is required for the applicable provisions of Rule 144; and

      (c)   furnish to the  Investor,  promptly  upon  request,  (i) a written
statement by the Company that it has complied with the reporting  requirements
of Rule  144,  the 1933 Act and the 1934 Act,  (ii) a copy of the most  recent
annual  or  quarterly  report  of the  Company  and  such  other  reports  and
documents so filed by the Company,  and (iii) such other information as may be
reasonably  requested to permit the Investor to sell such securities  pursuant
to Rule 144 without registration.

      Section 9.  NO ASSIGNMENT OF REGISTRATION RIGHTS.

      The rights under this Agreement shall not be assignable.

                                       11
Section 10.  AMENDMENT OF REGISTRATION RIGHTS.

      Provisions  of this  Agreement  may be  amended  only  with the  written
consent of the Company and Investor.  No such amendment  shall be effective to
the  extent  that  it  applies  to  less  than  all  of  the  Investor  of the
Registrable Securities.

      Section 11.  MISCELLANEOUS.

      (a) Any  notices or other  communications  required or  permitted  to be
given  under  the terms of this  Agreement  that  must be in  writing  will be
deemed to have been  delivered (i) upon receipt,  when  delivered  personally;
(ii)  upon  receipt,  when  sent by  facsimile  (provided  a  confirmation  of
transmission is mechanically or  electronically  generated and kept on file by
the  sending  party);  or  (iii)  one  day  after  deposit  with a  nationally
recognized  overnight delivery service, in each case properly addressed to the
party to receive  the same.  The  addresses  and  facsimile  numbers  for such
communications shall be:

            If to the Company:

                  Energas Resources, Inc.
                  800 Northeast 63rd Street
                  3rd Floor
                  Oklahoma City, Oklahoma  73105

                  Telephone:  405-879-1752
                  Facsimile:  405-879-0175

            If to the Investor:

                  Dutchess Private Equities Fund, LP
                  312 Stuart St, Third Floor
                  Boston, MA 02116

                  Telephone:  617-960-3570
                  Facsimile:  617-960-3772

      Each party shall  provide five  business  days prior notice to the other
party of any change in address, phone number or facsimile number.

      (b)  Failure  of any party to  exercise  any right or remedy  under this
Agreement  or  otherwise,  or  delay by a party in  exercising  such  right or
remedy, shall not operate as a waiver thereof.

      (c) The laws of the  Commonwealth  of  Massachusetts  shall  govern  all
issues  arising  from or  related  to this  Agreement  without  regard  to the
principles of conflict of laws. Each party hereby  irrevocably  submits to the
exclusive  jurisdiction of the state and federal courts sitting in the City of

                                       12
Boston,  County of Suffolk,  for the adjudication of any dispute  hereunder or
in  connection  herewith  or  with  any  transaction  contemplated  hereby  or
discussed herein, and hereby  irrevocably  waives, and agrees not to assert in
any suit,  action or proceeding,  any claim that it is not personally  subject
to the  jurisdiction of any such court,  that such suit,  action or proceeding
is brought in an inconvenient  forum or that the venue of such suit, action or
proceeding is improper.  Each party hereby irrevocably waives personal service
of process and consents to process  being  served in any such suit,  action or
proceeding  by mailing a copy  thereof to such party at the  address  for such
notices  to it under  this  Agreement  and  agrees  that  such  service  shall
constitute good and sufficient service of process and notice thereof.  Nothing
contained  herein  shall be  deemed  to  limit  in any way any  right to serve
process in any manner  permitted by law. If any  provision  of this  Agreement
shall be invalid or  unenforceable  in any  jurisdiction,  such  invalidity or
unenforceability  shall not  affect  the  validity  or  enforceability  of the
remainder  of  this  Agreement  in  that   jurisdiction  or  the  validity  or
enforceability of any provision of this Agreement in any other jurisdiction.

      (d) This Agreement and the Transaction  Documents  constitute the entire
agreement  among the parties  hereto with respect to the subject matter hereof
and   thereof.   There   are  no   restrictions,   promises,   warranties   or
undertakings, other than those set forth or referred to herein and therein.

      (e) This  Agreement and the  Transaction  Documents  supersede all prior
agreements  and  understandings  among the parties  hereto with respect to the
subject matter hereof and thereof.

      (f) The  headings in this  Agreement  are for  convenience  of reference
only and shall not limit or  otherwise  affect the  meaning  hereof.  Whenever
required by the context of this  Agreement,  the  singular  shall  include the
plural and masculine  shall include the feminine.  This Agreement shall not be
construed as if it had been  prepared by one of the parties,  but rather as if
all the parties had prepared the same.

      (g)  This   Agreement   may  be  executed  in  two  or  more   identical
counterparts,  each of which  shall be  deemed  an  original  but all of which
shall  constitute one and the same agreement.  This  Agreement,  once executed
by a  party,  may  be  delivered  to  the  other  party  hereto  by  facsimile
transmission  of a copy of this  Agreement  bearing the signature of the party
so delivering this Agreement.

      (h)  Each  party  shall  do  and  perform,  or  cause  to  be  done  and
performed,  all such  further acts and things,  and shall  execute and deliver
all such other  agreements,  certificates,  instruments and documents,  as the
other  party  may  reasonably  request  in order to carry out the  intent  and
accomplish  the  purposes  of  this  Agreement  and  the  consummation  of the
transactions contemplated hereby.

                                    * * *

                                       13
SIGNATURE PAGE OF REGISTRATION RIGHTS AGREEMENT

      Agreed as of the date first written above.

                                    DUTCHESS PRIVATE EQUITIES FUND, L.P.,
                                    BY ITS GENERAL PARTNER,
                                    DUTCHESS CAPITAL MANAGEMENT, LLC

                                    By: /s/ Douglas H. Leighton
                                        ----------------------------------
                                        Douglas H. Leighton, Managing Member

ENERGAS RESOURCES, INC.

By:  /s/ George Shaw
     ---------------------------
     George Shaw, President