Stock Purchase Agreement

Stock Purchase Agreement

                                                                    Exhibit 10.1


                            STOCK PURCHASE AGREEMENT

                                 BY AND BETWEEN

                           CRESCENT INTERNATIONAL LTD.

                                       AND

                          INTERNATIONAL FIBERCOM, INC.

                            DATED AS OF JUNE 18, 2001

                                TABLE OF CONTENTS

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ARTICLE I      CERTAIN DEFINITIONS.............................................2

     Section 1.1.    "Affiliate"...............................................2

     Section 1.2.    "Capital Shares"..........................................2

     Section 1.3.    "Certificate of Designation"..............................2

     Section 1.4.    "Closing".................................................2

     Section 1.5.    "Closing Date"............................................2

     Section 1.6.    "Closing Statement".......................................2

     Section 1.7.    "Closing Trade Price".....................................2

     Section 1.8.    "Commitment Period".......................................2

     Section 1.9.    "Commitment Shares".......................................2

     Section 1.10.   "Common Stock"............................................3

     Section 1.11.   "Condition Satisfaction Date".............................3

     Section 1.12.   "Conversion Shares".......................................3

     Section 1.13.   "Daily Trading Value".....................................3

     Section 1.14.   "Damages".................................................3

     Section 1.15.   "Effective Date"..........................................3

     Section 1.16.   "Exchange Act"............................................3

     Section 1.17.   "First Sale"..............................................3

     Section 1.18.   "Incentive Warrant".......................................3

     Section 1.19.   "Incentive Warrant Shares"................................3

     Section 1.20.   "Investment Amount".......................................3

     Section 1.21.   "Legend"..................................................4

     Section 1.22.   "Material Adverse Effect".................................4

     Section 1.23.   "Maximum Commitment Amount"...............................4

     Section 1.24.   "Maximum Sale Amount".....................................4

     Section 1.25.   "Minimum Sale Amount".....................................4

     Section 1.26.   "Minimum Time Interval"...................................4

     Section 1.27.   "NASD"....................................................4

     Section 1.28.   "Outstanding".............................................4

     Section 1.29.   "Person"..................................................4

     Section 1.30.   "Preferred Stock".........................................4

     Section 1.31.   "Principal Market"........................................4

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     Section 1.32.   "Protective Warrant"......................................5

     Section 1.33.   "Protective Warrant Shares"...............................5

     Section 1.34.   "Purchase Price"..........................................5

     Section 1.35.   "Registrable Securities"..................................5

     Section 1.36.   "Registration Rights Agreement"...........................5

     Section 1.37.   "Registration Statement"..................................5

     Section 1.38.   "Regulation D"............................................5

     Section 1.39.   "Representative"..........................................5

     Section 1.40.   "Sale"....................................................5

     Section 1.41.   "Sale Date"...............................................6

     Section 1.42.   "Sale Fees"...............................................6

     Section 1.43.   "Sale Notice".............................................6

     Section 1.44.   "Sale Notice Date"........................................6

     Section 1.45.   "Sale Notice Period"......................................6

     Section 1.46.   "SEC".....................................................6

     Section 1.47.   "SEC Documents"...........................................6

     Section 1.48.   "Section 4(2)"............................................6

     Section 1.49.   "Securities Act"..........................................6

     Section 1.50.   "Short Sale"..............................................6

     Section 1.51.   "Strategic Investor"......................................6

     Section 1.52.   "Subscription Date".......................................6

     Section 1.53.   "Subscription Fee"........................................6

     Section 1.54.   "Subsequent Sale".........................................7

     Section 1.55.   "Subsequent Sale Shares"..................................7

     Section 1.56.   "Subsidiary"..............................................7

     Section 1.57.   "Trading Day".............................................7

     Section 1.58.   "Transfer Agent Instructions".............................7

     Section 1.59.   "Underwriter".............................................7

     Section 1.60.   "Warrants"................................................7

     Section 1.61.   "Warrant Shares"..........................................7

ARTICLE II     SALE AND PURCHASE OF COMMON STOCK, WARRANTS AND
               PREFERRED STOCK; TERMINATION OF OBLIGATIONS.....................7

     Section 2.1.    Sales.....................................................7

     Section 2.2.    Twenty Percent Limitation.................................8

     Section 2.3.    Sale Notice...............................................8

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     Section 2.4.    Closings..................................................8

     Section 2.5.    Termination of Agreement and Investment Obligation........9

ARTICLE III    REPRESENTATIONS AND WARRANTIES OF INVESTOR......................9

     Section 3.1.    Intent...................................................10

     Section 3.2.    Sophisticated Investor...................................10

     Section 3.3.    Authority................................................10

     Section 3.4.    Not an Affiliate.........................................10

     Section 3.5.    Organization and Standing................................10

     Section 3.6.    Absence of Conflicts.....................................10

     Section 3.7.    Disclosure; Access to Information........................11

     Section 3.8.    Manner of Sale...........................................11

     Section 3.9.    Resale Restrictions......................................11

ARTICLE IV     REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................11

     Section 4.1.    Organization of the Company..............................11

     Section 4.2.    Authority................................................12

     Section 4.3.    Corporate Documents......................................12

     Section 4.4.    Books and Records........................................12

     Section 4.5.    Capitalization...........................................12

     Section 4.6.    Registration and Listing of Common Stock.................13

     Section 4.7.    Financial Statements.....................................13

     Section 4.8.    SEC Documents............................................13

     Section 4.9.    Exemption from Registration; Valid Issuances;
                     New Issuances............................................14

     Section 4.10.   No General Solicitation or Advertising...................14

     Section 4.11.   No Conflicts.............................................14

     Section 4.12.   No Material Adverse Change...............................15

     Section 4.13.   No Undisclosed Liabilities...............................15

     Section 4.14.   No Undisclosed Events or Circumstances...................15

     Section 4.15.   No Integrated Offering...................................16

     Section 4.16.   Litigation and Other Proceedings.........................16

     Section 4.17.   No Misleading or Untrue Communication....................16

     Section 4.18.   Material Non-Public Information..........................16

ARTICLE V      COVENANTS OF THE INVESTOR......................................16

     Section 5.1.    Compliance...............................................16

     Section 5.2.    Short Sale...............................................16

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ARTICLE VI     COVENANTS OF THE COMPANY.......................................17

     Section 6.1.    Registration Rights......................................17

     Section 6.2.    Reservation of Common Stock..............................17

     Section 6.3.    Listing of Common Stock..................................17

     Section 6.4.    Exchange Act Registration................................17

     Section 6.5.    Legends..................................................17

     Section 6.6.    Corporate Existence......................................18

     Section 6.7.    Additional SEC Documents.................................18

     Section 6.8.    Notice of Certain Events Affecting Registration;
                     Suspension of Right to Make a Subsequent Sale............18

     Section 6.9.    Consolidation; Merger....................................18

     Section 6.10.   Issuance of Shares.......................................19

     Section 6.11.   Legal Opinions...........................................19

     Section 6.12.   No Similar Arrangement; Right of First Refusal...........19

     Section 6.13.   Public Announcements.....................................20

     Section 6.14.   Series A, Series B, and Series C Preferred Stock.........20

     Section 6.15.   Delivery of Share Certificates...........................20

ARTICLE VII    CONDITIONS TO DELIVERY OF SALE NOTICES AND CONDITIONS
               TO CLOSING.....................................................21

     Section 7.1.    Conditions Precedent to the Obligation of the
                     Company to Issue and Sell Preferred Stock and
                     Common Stock.............................................21

     Section 7.2.    Conditions Precedent to the Right of the Company
                     to Deliver a Sale Notice and the Obligation of
                     the Investor to Purchase Preferred Stock and
                     Common Stock.............................................21

     Section 7.3.    Due Diligence Review; Non-Disclosure of
                     Non-Public Information...................................24

ARTICLE VIII   LEGENDS........................................................25

     Section 8.1.    Legends..................................................25

     Section 8.2.    No Other Legend or Stock Transfer Restrictions...........26

     Section 8.3.    Investor's Compliance....................................26

ARTICLE IX     INDEMNIFICATION; ARBITRATION...................................27

     Section 9.1.    Indemnification..........................................27

     Section 9.2.    Method of Asserting Indemnification Claims...............27

     Section 9.3.    Arbitration..............................................30

ARTICLE X      MISCELLANEOUS..................................................31

     Section 10.1.   Fees and Transaction Costs...............................31

     Section 10.2.   Reporting Entity for the Common Stock....................32

     Section 10.3.   Brokerage................................................32

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     Section 10.4.   Conversion Notice........................................32

     Section 10.5.   Notices..................................................32

     Section 10.6.   Assignment...............................................33

     Section 10.7.   Amendment; No Waiver.....................................34

     Section 10.8.   Annexes and Exhibits; Entire Agreement...................34

     Section 10.9.   Survival.................................................34

     Section 10.10.  Severability.............................................34

     Section 10.11.  Title and Subtitles......................................34

     Section 10.12.  Counterparts.............................................34

     Section 10.13.  Choice of Law............................................34

     Section 10.14.  Other Expenses...........................................34

                                      -v-

                            STOCK PURCHASE AGREEMENT

                                 BY AND BETWEEN

                           CRESCENT INTERNATIONAL LTD.

                                       AND

                          INTERNATIONAL FIBERCOM, INC.

                            DATED AS OF JUNE 18, 2001

     This STOCK  PURCHASE  AGREEMENT is entered into as of the 18th day of June,
2001  (this  "AGREEMENT"),  by and  between  Crescent  International  Ltd.  (the
"INVESTOR"),  an entity  organized and existing  under the laws of Bermuda,  and
International  FiberCom,  Inc., a corporation  organized and existing  under the
laws of the State of Arizona (the "COMPANY").

     WHEREAS,  the  parties  desire  that,  upon the  terms and  subject  to the
conditions  contained herein,  the Company shall issue and sell to the Investor,
from time to time as provided  herein,  and the Investor shall  purchase,  up to
$20,000,000  worth of  securities,  including  (i)  shares of  Common  Stock (as
defined below) and (ii) shares of Preferred Stock (as defined below);

     WHEREAS,  pursuant  to the terms of and in  partial  consideration  for the
Investor  entering into this Agreement,  the Company is required to issue to the
Investor an Incentive Warrant (as defined below),  exercisable from time to time
within five years  following the date of issuance,  for the purchase of a number
of shares of  Common  Stock at a price to be  determined  as  described  in such
Incentive Warrant;

     WHEREAS,  pursuant  to the terms of and in  partial  consideration  for the
Investor  entering  into this  Agreement,  the  Company may be required to issue
Protective Warrants (as defined below) to the Investor, each of which may become
exercisable  from time to time, for the purchase of a number of shares of Common
Stock at a price to be determined as described in each such Protective  Warrant;
and

     WHEREAS,  such  investments will be made in reliance upon the provisions of
Section 4(2)  ("SECTION  4(2)") and  Regulation D  ("REGULATION  D") of the U.S.
Securities  Act of 1933,  as amended and the rules and  regulations  promulgated
thereunder  (the  "SECURITIES  ACT"),  and/or upon such other exemption from the
registration requirements of the Securities Act as may be available with respect
to any or all of the investments in Common Stock to be made hereunder.

     NOW,  THEREFORE,   in  consideration  of  the  premises,   representations,
warranties,  covenants and agreements  contained herein,  and for other good and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged,  intending to be legally bound hereby, the parties hereto agree as
follows:

                                   ARTICLE I

                               CERTAIN DEFINITIONS

     Section 1.1. "AFFILIATE" shall mean any Person that, directly or indirectly
through one or more  intermediaries,  controls or is controlled  by, or is under
direct or indirect  common  control with any other  Person.  For the purposes of
this  definition,  "control,"  when used with  respect to any Person,  means the
power to  direct  the  management  and  policies  of such  Person,  directly  or
indirectly,  whether through the ownership of voting securities,  by contract or
otherwise, and the term "controls" and "controlled" have meanings correlative to
the foregoing.

     Section 1.2.  "CAPITAL  SHARES" shall mean the Common Stock, and any shares
of any other class of common stock whether now or hereafter  authorized,  having
the right to participate in the distribution of dividends (as and when declared)
or assets (upon liquidation of the Company).

     Section 1.3. "CERTIFICATE OF DESIGNATION" shall mean the Statement pursuant
to Section 10-602 of the Arizona  Corporation Law, filed by the Company with the
Arizona  State  Corporation  Commission  prior to the Closing  Date of the First
Sale.

     Section  1.4.  "CLOSING"  shall mean one of the  closings of a purchase and
sale of the Preferred Stock or the Common Stock and the issuance of the Warrants
pursuant to Section 2.1 of this Agreement.

     Section 1.5. "CLOSING DATE" shall mean with respect to a Closing the second
Trading  Day  following  the Sale Date  related to such  Closing,  provided  all
conditions to such Closing have been satisfied on or before such Trading Day.

     Section 1.6.  "CLOSING  STATEMENT" shall mean the closing  statement in the
form of EXHIBIT A attached  hereto,  executed by the Company and the Investor on
the Subscription Date and on each Sale Date,  setting forth the actions taken by
the Company and the Investor on the Subscription  Date and on such Sale Date, as
applicable,  and  setting  forth the  actions to be taken by the Company and the
Investor on the  applicable  Closing  Date,  and the amounts due on such Closing
Date to the payee entities set forth on Schedule 10.1 hereto.

     Section  1.7.  "CLOSING  TRADE  PRICE"  shall mean,  with respect to Common
Stock,  the per share  closing  trade price for such Common Stock as reported by
Bloomberg L.P. in accordance with Section 10.2 of this Agreement.

     Section 1.8.  "COMMITMENT  PERIOD" shall mean the period  commencing on the
Subscription  Date and expiring on the earlier to occur of (i) the date on which
the Investor shall have purchased Commitment Shares and Preferred Stock pursuant
to this  Agreement  for an aggregate  Purchase  Price of the Maximum  Commitment
Amount,  (ii) the date this  Agreement  is  terminated  pursuant  to Section 2.5
hereof, or (iii) the date occurring 18 months from the Subscription Date.

     Section 1.9.  "COMMITMENT  SHARES" shall mean the Conversion Shares and the
Subsequent Sale Shares, collectively.

     Section 1.10.  "COMMON STOCK" shall mean the Company's common stock, no par
value per share.

     Section  1.11.  "CONDITION  SATISFACTION  DATE"  shall have the meaning set
forth in Section 7.2 of this Agreement.

     Section  1.12.  "CONVERSION  SHARES"  shall mean all shares of Common Stock
into which shares of Preferred Stock are or may be converted.

     Section  1.13.  "DAILY  TRADING  VALUE" shall mean, on any Trading Day, the
Closing Trade Price multiplied by the trading volume of the Common Stock.

     Section 1.14.  "DAMAGES"  shall mean any and all losses,  claims,  damages,
liabilities,  costs and expenses  (including,  without  limitation,  any and all
investigative,  legal and other expenses reasonably incurred in connection with,
and any and all amounts paid in defense or  settlement  of, any action,  suit or

                                       -2-

proceeding  between any indemnified party and any indemnifying  party or between
any indemnified party and any third party, or otherwise, or any claim asserted).

     Section  1.15.  "EFFECTIVE  DATE" with respect to each Sale of  Registrable
Securities  or  Preferred  Stock  shall  mean the  earlier  to occur of: (i) the
applicable date on which the SEC has declared effective a Registration Statement
registering  resale of Registrable  Securities as set forth in the  Registration
Rights  Agreement and (ii) the date on which such  Registrable  Securities first
become eligible for resale pursuant to Rule 144 of the Securities Act.

     Section 1.16. "EXCHANGE ACT" shall mean the U.S. Securities Exchange Act of
1934, as amended and the rules and regulations promulgated thereunder.

     Section  1.17.  "FIRST  SALE"  shall have the  meaning set forth in Section
2.1(a) of this Agreement.

     Section 1.18.  "INCENTIVE  WARRANT" shall mean the Incentive Warrant in the
form of Exhibit B hereto issued  pursuant to Section  2.1(d) of this  Agreement,
together with any new or replacement warrant issued in accordance with the terms
of the Incentive Warrant.

     Section 1.19.  "INCENTIVE  WARRANT  SHARES" shall mean all shares of Common
Stock issued or issuable pursuant to exercise of the Incentive Warrant.

     Section  1.20.  "INVESTMENT  AMOUNT"  shall  mean the  dollar  amount to be
invested by the Investor to purchase  (i)  Preferred  Stock  pursuant to Section
2.1(a)  hereof or (ii)  Subsequent  Sale Shares with respect to any Sale Date as
notified by the Company to the Investor in  accordance  with Section 2.3 hereof.
With respect to any Subsequent Sale, the Investment  Amount (A) shall not exceed
the lesser of (i) twice the average of the Daily  Trading  Values  during the 22
Trading Day period  immediately  preceding the  applicable  Sale Notice Date and
(ii) the Maximum  Sale  Amount,  and (B) shall not be less than the Minimum Sale
Amount;  provided,  however, that if the Closing Trade Price on each Trading Day
during any Sale  Notice  Period is less than $1.00 or the  Investment  Amount as
calculated  pursuant  to clause (A) above  would be less than the  Minimum  Sale
Amount, the Investment Amount shall be $25,000.

     Section 1.21.  "LEGEND" shall have the meaning  specified in Section 8.1 of
this Agreement.

     Section  1.22.  "MATERIAL  ADVERSE  EFFECT"  shall  mean any  effect on the
business,  operations,  properties,  prospects,  or  financial  condition of the
Company  that is material  and adverse to the Company or to the Company and such
other  entities  controlling  or  controlled  by the Company,  taken as a whole,
and/or  any  condition,  circumstance,  or  situation  that  would  prohibit  or
otherwise  interfere  with the  ability of the Company to enter into and perform
its obligations  under any of (i) this Agreement,  (ii) the Registration  Rights
Agreement and (iii) the Warrants.

     Section 1.23. "MAXIMUM COMMITMENT AMOUNT" shall mean $20,000,000.

     Section 1.24. "MAXIMUM SALE AMOUNT" shall mean $2,500,000,  unless a higher
amount is agreed  to by the  Investor;  provided,  however,  that the  aggregate
amount of all Sales shall not exceed the Maximum Commitment Amount.

     Section 1.25.  "MINIMUM SALE AMOUNT" shall mean  $200,000,  unless a lesser
amount is agreed to by the Investor.

     Section 1.26.  "MINIMUM TIME INTERVAL"  shall mean (i) 22 Trading Days from
the Effective Date relating the First Sale, (ii) if the previous Sale related to
the sale of  unregistered  Common Stock, 22 Trading Days from the Effective Date
relating  to such  Sale or (iii) if the  previous  Sale  related  to the sale of
registered Common Stock, 22 Trading Days from the previous Sale Date.

     Section  1.27.  "NASD" shall mean the National  Association  of  Securities
Dealers, Inc.

                                      -3-

     Section  1.28.  "OUTSTANDING"  when used with  reference to Common Stock or
Capital Shares (collectively the "SHARES"),  shall mean, at any date as of which
the  number of such  Shares is to be  determined,  all  issued  and  outstanding
Shares,  and shall  include all such Shares  issuable in respect of  outstanding
scrip or any  certificates  representing  fractional  interests  in such Shares;
provided,  however,  that "Outstanding"  shall not refer to any such Shares then
directly or indirectly owned or held by or for the account of the Company.

     Section  1.29.  "PERSON"  shall  mean  an  individual,  a  corporation,   a
partnership, an association, a trust or other entity or organization,  including
a government or political subdivision or an agency or instrumentality thereof.

     Section  1.30.   "PREFERRED  STOCK"  shall  mean  the  Company's  series  D
convertible preferred stock, $0.01 par value per share.

     Section 1.31. "PRINCIPAL MARKET" shall mean the Nasdaq National Market, the
Nasdaq SmallCap  Market,  the American Stock Exchange,  the Electronic  Bulletin
Board or the New York Stock  Exchange,  whichever  is at the time the  principal
trading exchange or market for the Common Stock.

     Section 1.32.  "PROTECTIVE WARRANT" or "PROTECTIVE WARRANTS" shall mean any
and all Protective Warrant(s) in the form of Exhibit C hereto issued pursuant to
Section 2.1(c) of this Agreement.

     Section 1.33.  "PROTECTIVE  WARRANT SHARES" shall mean all shares of Common
Stock issued or issuable pursuant to exercise of the Protective Warrants.

     Section  1.34.  "PURCHASE  PRICE"  shall mean (i) with respect to the First
Sale, $100 per share of Preferred  Stock,  and (ii) with respect to a Subsequent
Sale,  the average of the lowest three  consecutive  Closing Trade Prices during
the 22 Trading Day period  immediately  preceding the  applicable  Sale Date and
(iii) with  respect  to an  Effective  Date,  the  average  of the lowest  three
consecutive  Closing Trade Prices  during the 22 Trading Day period  immediately
preceding such Effective Date.

     Section  1.35.  "REGISTRABLE  SECURITIES"  shall  mean  (i) the  Commitment
Shares, (ii) the Warrant Shares and (iii) any securities issued or issuable with
respect to any of the  foregoing  by way of  exchange,  stock  dividend or stock
split or in connection with a combination of shares,  recapitalization,  merger,
consolidation  or  other  reorganization  or  otherwise.  As to  any  particular
Registrable   Securities,   once  issued  such  securities  shall  cease  to  be
Registrable  Securities when (w) the applicable  Registration Statement has been
declared  effective  by the SEC and all such  Registrable  Securities  have been
disposed of  pursuant to the  applicable  Registration  Statement,  (x) all such
Registrable Securities have been sold under circumstances under which all of the
applicable conditions of Rule 144 (or any similar provision then in force) under
the Securities  Act ("RULE 144") are met, (y) such time as all such  Registrable
Securities have been otherwise  transferred to holders who may trade such shares
without  restriction  under the Securities  Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive  legend or (z) in the  opinion  of  counsel  to the  Company,  which
counsel shall be reasonably  acceptable  to the Investor,  all such  Registrable
Securities  may be sold by the  Investor  without  registration  and without any
time,  volume or manner  limitations  pursuant  to Rule  144(k) (or any  similar
provision then in effect) under the Securities Act.

     Section 1.36.  "REGISTRATION  RIGHTS AGREEMENT" shall mean the registration
rights  agreement  by and between the Company and the  Investor,  in the form of
Exhibit D hereto.

     Section 1.37. "REGISTRATION  STATEMENT" or "Registration  Statements" shall
have the meaning set forth in the Registration Rights Agreement.

     Section  1.38.  "REGULATION  D" shall  have the  meaning  set  forth in the
recitals of this Agreement.

     Section 1.39. "REPRESENTATIVE" of a party shall mean any officer, director,
employee,  agent, counsel,  accountant,  financial advisor,  consultant or other
representative of such party.

     Section 1.40.  "SALE" shall mean the First Sale,  together with any and all
Subsequent Sales.

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     Section  1.41.  "SALE DATE" shall mean with respect to the First Sale,  the
Subscription  Date,  and with respect to  Subsequent  Sales,  the Trading Day on
which a Sale Notice Period expires.

     Section  1.42.  "SALE  FEES" shall have the  meaning  specified  in Section
10.1(b) hereof.

     Section 1.43.  "SALE NOTICE" shall mean a written notice to the Investor in
the form of Exhibit E hereto,  setting forth,  INTER ALIA, the intended  Closing
Date,  the  Investment  Amount and the number of shares of Common Stock that the
Company  intends to require the  Investor  to purchase  pursuant to the terms of
this Agreement.

     Section  1.44.  "SALE  NOTICE  DATE"  shall mean the Trading Day during the
Commitment  Period upon which a Sale Notice to sell Common Stock to the Investor
is deemed delivered pursuant to Section 2.3(b) hereof.

     Section 1.45.  "SALE NOTICE PERIOD" shall mean a period beginning on a Sale
Notice Date and ending 7 Trading Days after a Sale Notice Date.

     Section 1.46. "SEC" shall mean the U.S. Securities and Exchange Commission.

     Section 1.47. "SEC DOCUMENTS"  shall mean the Company's latest Form 10-K as
of the time in question, all Forms 10-Q and 8-K filed thereafter,  and the Proxy
Statement for its latest fiscal year as of the time in question  until such time
the Company no longer has an  obligation  to  maintain  the  effectiveness  of a
Registration Statement as set forth in the Registration Rights Agreement.

     Section  1.48.  "SECTION  4(2)"  shall  have the  meaning  set forth in the
recitals of this Agreement.

     Section  1.49.  "SECURITIES  ACT" shall have the  meaning  set forth in the
recitals of this agreement.

     Section 1.50. "SHORT SALE" shall have the meaning specified in Rule 3b-3 of
the Exchange Act.

     "STRATEGIC  INVESTOR" shall mean any Person (i) that intends to participate
in the corporate  governance of the Company or in the conduct of its business or
(ii) as to whom the  Company's  Board of Directors has made a  determination  in
good faith that such Person will develop a material strategic  relationship with
the Company,  including  without  limitation an acquisition of another entity or
assets,  in  connection  with and  related  to the  Company's  present or future
business.

     Section  1.51.  "SUBSCRIPTION  DATE"  shall  mean the  date on  which  this
Agreement is executed and delivered by the parties hereto.

     Section  1.52.  "SUBSCRIPTION  FEE"  shall  have the  meaning  set forth in
Section 10.1(a) hereof.

     Section 1.53. "SUBSEQUENT SALE" shall have the meaning set forth in Section
2.1(b) of this Agreement.

     Section 1.54.  "SUBSEQUENT SALE SHARES" shall have the meaning set forth in
Section 2.1(b) of this Agreement.

     Section  1.55.  "SUBSIDIARY"  shall mean any  Person in which the  Company,
directly or indirectly through Subsidiaries or otherwise, beneficially owns more
than 50% of either  the equity  interests  in, or the voting  control  of,  such
Person.

     Section  1.56.  "TRADING DAY" shall mean any day during which the Principal
Market shall be open for business.

     Section  1.57.  "TRANSFER  AGENT  INSTRUCTIONS"  shall have the meaning set
forth in Section 2.4(a) of this Agreement.

                                      -5-

Section 1.58.  "UNDERWRITER"  shall mean any  underwriter  participating  in any
disposition of the Registrable  Securities on behalf of the Investor pursuant to
a Registration Statement.

     Section 1.59.  "WARRANTS" shall mean the Protective  Warrants and Incentive
Warrant.

     Section 1.60. "WARRANT SHARES" shall mean the Protective Warrant Shares and
the Incentive Warrant Shares.

                                   ARTICLE II

        SALE AND PURCHASE OF COMMON STOCK, WARRANTS AND PREFERRED STOCK;
                           TERMINATION OF OBLIGATIONS

     Section 2.1. SALES.

          (a)  FIRST SALE.  In  accordance  with  the terms and  conditions  set
               forth herein  (including  without  limitation  the  provisions of
               Article VII hereof),  the Sale Date of the First Sale shall occur
               on the  Subscription  Date.  On the Closing Date  relating to the
               First Sale,  the  Company  shall issue and sell and, if so issued
               and sold, the Investor shall purchase 100,000 shares of Preferred
               Stock at a  Purchase  Price of $100 per share  for an  Investment
               Amount of $10,000,000  (such transaction is referred to herein as
               the "FIRST SALE").

          (b)  SUBSEQUENT  SALES. If the Company elects to exercise a Subsequent
               Sale,  in  accordance  with the  terms and  conditions  set forth
               herein (including,  without limitation, the provisions of Article
               VII hereof), on any Sale Notice Date the Company shall exercise a
               Subsequent Sale by the delivery of a Sale Notice.  On the Closing
               Date relating to each  Subsequent  Sale,  the Company shall issue
               and sell and the Investor shall purchase such number of shares of
               Common  Stock that are  determined  by  dividing  the  Investment
               Amount  stated in the  applicable  Sale Notice by the  applicable
               Purchase Price (each such  transaction is referred to herein as a
               "SUBSEQUENT  SALE," and all such shares are referred to herein as
               the "SUBSEQUENT SALE SHARES").

          (c)  PROTECTIVE  WARRANTS.  In partial  consideration for the Investor
               entering  into this  Agreement if the Company  elects to exercise
               its right with  respect to any Sale to require  the  Investor  to
               purchase  shares of Common Stock that, at the time of the Closing
               Date, have not been previously  registered and are not covered by
               a  Registration  Statement  that has been filed with and declared
               effective by the SEC, on each Closing Date  relating to each such
               Sale,  the  Company  shall  issue and  deliver to the  Investor a
               Protective Warrant with an exercise price of $0.01 for each share
               of Common  Stock,  for the  purchase  of such number of shares of
               Common Stock as described in such Protective Warrant.

          (d)  INCENTIVE  WARRANT.  In partial  consideration  for the  Investor
               entering  into this  Agreement,  on the Closing Date of the First
               Sale,  the Company  shall issue and deliver to the  Investor  the
               Incentive  Warrant  for the  purchase of such number of shares of
               Common  Stock and with an  exercise  price as  described  in such
               Incentive Warrant.

     Section 2.2.  TWENTY  PERCENT  LIMITATION.  Unless the Company  obtains the
requisite  approval of its shareholders in accordance with the corporate laws of
Arizona and the applicable rules of the Principal  Market, no more than 19.9% of
the Outstanding shares of Common Stock may be issued and sold pursuant to Sales,
the Warrants and upon  conversion of the Preferred  Stock;  PROVIDED,  that with
respect to the issuance of more than 19.9% of the  Outstanding  shares of Common
Stock  pursuant  to the  Warrants,  the  Investor  has the right to require  the
Company to seek such  shareholder  approval and upon the written  request of the
Investor the Company shall as soon as practicable after such request prepare and
file with the SEC a proxy  statement to be  distributed to  shareholders  of the
Company  for the purpose of  soliciting  proxies for use at an annual or special
meeting of  shareholders  of the Company at which such  shareholder  approval is
sought,  and  in  which  proxy  statement  the  Company  will  recommend  to its
shareholders the foregoing approval.

                                      -6-

     Section 2.3. SALE NOTICE.

          (a)  TIMING. At any time during the Commitment Period, the Company may
               deliver a Sale Notice to the Investor,  subject to the conditions
               set forth in Section 7.2.

          (b)  DATE OF DELIVERY OF SALE  NOTICE.  A Sale Notice  shall be deemed
               delivered  on (i) the Trading Day it is received by  facsimile or
               otherwise  by the  Investor if such  notice is received  prior to
               12:00  noon New York  time,  or (ii) the  immediately  succeeding
               Trading Day if it is received by  facsimile  or  otherwise  after
               12:00 noon New York time on a Trading Day or at any time on a day
               which  is not a  Trading  Day.  No Sale  Notice  will  be  deemed
               delivered, on a day that is not a Trading Day.

     Section 2.4. CLOSINGS.

     SUBSCRIPTION  DATE.  On the  Subscription  Date  (i)  the  Company  and the
Investor shall execute the  Registration  Rights  Agreement and (ii) the Company
shall execute and deliver irrevocable instructions to the transfer agent, in the
form of  Exhibit F attached  hereto  (the  "TRANSFER  AGENT  INSTRUCTIONS"),  to
prepare and deliver to the  Investor,  following  each Sale or conversion of the
Preferred  Stock,  a share  certificate  in the name of the  Investor and in the
amount of the applicable Commitment Shares, the transfer agent shall confirm and
accept such instructions,  and a copy of such instructions shall be delivered to
the Investor's legal counsel. In addition, on or prior to the Subscription Date,
each of the Company and the Investor  shall deliver to the other all  documents,
instruments  and writings  required to be delivered or  reasonably  requested by
either of them  pursuant to this  Agreement in order to implement and effect the
transactions contemplated herein.

     CLOSING  DATE. On each Closing Date (i) the Company shall issue and deliver
to the Investor a Protective Warrant, if required by Section 2.1(c) hereof, (ii)
with  respect to the First  Sale,  the  Company  shall  issue and deliver to the
Investor the Incentive  Warrant,  (iii) the Company shall  instruct the transfer
agent to prepare and deliver to the Investor a share  certificate in the name of
the Investor and in the amount of the  applicable  Common  Stock,  in accordance
with the  Transfer  Agent  Instructions,  and the  Company  shall take all other
actions necessary to ensure the prompt delivery of such share certificate to the
Investor,  (iv) with respect to the First Sale,  the Company  shall  prepare and
deliver to the Investor a share  certificate  in the name of the Investor and in
the amount of the shares of Preferred  Stock,  (v) the Investor shall deliver to
the Company  and the Company  shall  execute a Closing  Statement,  and (vi) the
Investor  shall deliver to the Company the  Investment  Amount  specified in the
Closing Statement,  less applicable fees and costs determined in accordance with
Section  10.1, by wire transfer of  immediately  available  funds to the account
designated  in  writing in the Sale  Notice.  In  addition,  on or prior to each
Closing  Date,  each of the Company and the Investor  shall deliver to the other
all documents,  instruments and writings  required to be delivered or reasonably
requested by either of them pursuant to this Agreement in order to implement and
effect the transactions contemplated herein.

     Section  2.5.  TERMINATION  OF AGREEMENT  AND  INVESTMENT  OBLIGATION.  The
Company  shall have the right to  terminate  this  Agreement at any time upon 30
days'  written  notice to the  Investor.  The  Investor  shall have the right to
immediately terminate this Agreement (including with respect to any Sale, notice
of which has been given but the applicable Closing Date has not yet occurred) in
accordance  with  Section  6.12  or in the  event  that:  (i)  any  Registration
Statement has not been declared  effective by the SEC within the applicable time
periods set forth in Section 1.1 of the Registration Rights Agreement, PROVIDED,
that the Investor shall not be permitted to terminate this Agreement pursuant to
this clause (i) if the Company has, as solely  determined by the Investor,  used
its best efforts to obtain the  effectiveness  of such  Registration  Statement,
(ii) there shall occur any stop order or suspension of the  effectiveness of any
Registration Statement for an aggregate of 30 Trading Days during the Commitment
Period,  or  (iii)  the  Company  shall  at any  time  fail to  comply  with the
requirements of Section 6.2, 6.3, 6.4, 6.5, 6.6, 6.8 or 6.9.

                                  ARTICLE III

                   REPRESENTATIONS AND WARRANTIES OF INVESTOR

The Investor represents and warrants to the Company that:

                                      -7-

     Section 3.1.  INTENT.  The Investor is entering into this Agreement for its
own account, and the Investor has no view to the distribution of the Registrable
Securities, Preferred Stock, or Warrants and has no present arrangement (whether
or not legally binding) at any time to sell, assign, transfer, pledge, encumber,
hypothecate or otherwise dispose of the Registrable Securities,  Preferred Stock
or  Warrants  to or through  any person or entity;  provided,  however,  that by
making  the  representations  herein,  the  Investor  does not agree to hold the
Registrable  Securities,  Preferred  Stock or Warrants  for any minimum or other
specific term and reserves the right to dispose of the  Registrable  Securities,
Preferred Stock or Warrants at any time pursuant to the  Registration  Statement
and in  accordance  with federal and state  securities  laws  applicable to such
disposition.

     Section  3.2.  SOPHISTICATED  INVESTOR.  The  Investor  is a  sophisticated
investor (as described in Rule  506(b)(2)(ii) of Regulation D) and an accredited
investor  (as defined in Rule 501 of  Regulation  D), and the  Investor has such
experience  in business and  financial  matters that it is capable of evaluating
the merits and risks of an  investment  in the  Common  Stock and the  Preferred
Stock. The Investor  acknowledges that an investment in the Common Stock and the
Preferred Stock is speculative and involves a high degree of risk.

     Section 3.3. AUTHORITY.  Each of this Agreement and the Registration Rights
Agreement  has been duly  authorized by all  necessary  corporate  action and no
further consent or authorization  of the Investor,  or its Board of Directors or
stockholders  is required.  Each of this Agreement and the  Registration  Rights
Agreement was validly executed and delivered by the Investor and each is a valid
and binding agreement of the Investor  enforceable against it in accordance with
its terms,  subject  to  applicable  bankruptcy,  insolvency,  or  similar  laws
relating to, or affecting  generally the enforcement of,  creditors'  rights and
remedies or by other equitable principles of general application.

     Section 3.4. NOT AN AFFILIATE. The Investor is not an officer,  director or
"affiliate"  (as that term is defined in Rule 405 of the Securities  Act) of the
Company.

     Section 3.5.  ORGANIZATION  AND STANDING.  The Investor is duly  organized,
validly existing, and in good standing under the laws of Bermuda.

     Section  3.6.  ABSENCE OF  CONFLICTS.  The  execution  and delivery of this
Agreement and any other  document or  instrument  contemplated  hereby,  and the
consummation of the transactions  contemplated  thereby, and compliance with the
requirements  thereof, will not to the Investor's knowledge (a) violate any law,
rule, regulation, order, writ, judgment,  injunction, decree or award binding on
the  Investor,  (b)  violate  any  provision  of any  indenture,  instrument  or
agreement  to which  the  Investor  is a party or is  subject,  or by which  the
Investor  or any of its  assets is bound,  (c)  conflict  with or  constitute  a
material  default  thereunder,  (d) result in the creation or  imposition of any
lien pursuant to the terms of any such  indenture,  instrument or agreement,  or
constitute  a breach of any  fiduciary  duty owed by the  Investor  to any third
party,  or (e)  require  the  approval  of any  third-party  (that  has not been
obtained)  pursuant to any material contract to which the Investor is subject or
to which any of its assets, operations or management may be subject.

     Section 3.7. DISCLOSURE;  ACCESS TO INFORMATION.  The Investor has received
or had access to all documents,  records, books and other information pertaining
to Investor's  investment  in the Company that have been  requested by Investor.
The Investor has received and reviewed copies of the SEC Documents.  Neither the
receipt by the Investor of such  information,  nor the access of the Investor to
such information shall modify, amend or affect the Investor's right to rely upon
the representations and warranties made by the Company pursuant to Article IV of
this Agreement.

     Section  3.8.  MANNER OF SALE.  At no time was Investor  presented  with or
solicited  by or through any leaflet,  public  promotional  meeting,  television
advertisement or any other form of general solicitation or advertising.

     Section  3.9.  RESALE   RESTRICTIONS.   Investor   acknowledges   that  any
Registrable Securities,  Preferred Stock and Warrants to be acquired by Investor
have not been  registered  under the federal  securities  laws or any applicable
state  securities laws in reliance upon  exemptions  available for non-public or
limited offerings.  Investor understands that it  must bear the economic risk of
the  investment  in the  Registrable  Securities,  Preferred  Stock and Warrants
because the Registrable  Securities,  Preferred Stock and Warrants have not been
so registered and therefore are subject to restrictions  upon transfer such that
they  may not be sold or  otherwise  transferred  unless  registered  under  the
applicable  securities laws or an exemption from such registration is available.
The  Investor  will not  reoffer,  sell,  assign,  transfer,  pledge,  encumber,

                                      -8-

hypothecate or otherwise dispose of any Registrable Securities,  Preferred Stock
or  the  Warrants  in  the  absence  of  an  effective  registration  statement,
qualification  or  authorization  relating  thereto under federal and applicable
state  securities  laws or an opinion of qualified  counsel  satisfactory to the
Company  to  the  effect  that  the  proposed  transaction  in  the  Registrable
Securities, Preferred Stock or the Warrants will neither constitute or result in
any violation of the federal or state securities laws. Subject to Section 8.1 of
this   Agreement,   any  certificate  or  other  document  that  may  be  issued
representing  any  shares  of  Registrable  Securities,  Preferred  Stock or the
Warrants may be endorsed with a legend to this effect.

                                   ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company  represents  and warrants to the Investor on the  Subscription  Date
that,  and will represent and warrant to the Investor on each Effective Date and
each Closing Date that:

     Section 4.1. ORGANIZATION OF THE COMPANY. The Company is a corporation duly
organized,  validly existing and in good standing under the laws of the State of
Arizona and has all requisite  power and authority to own, lease and operate its
properties  and to carry on its business as now being  conducted.  Except as set
forth in the SEC  Documents  and except as set forth on  SCHEDULE  4.1  attached
hereto, the Company does not own more than 50% of the outstanding  capital stock
of or control  any other  Person.  The  Company is duly  qualified  as a foreign
corporation  to do business  and is in good  standing in every  jurisdiction  in
which the nature of the business  conducted  or property  owned by it makes such
qualification  necessary,  other than  those in which the  failure so to qualify
would not have a Material Adverse Effect.

     Section 4.2.  AUTHORITY.  (i) The Company has the requisite corporate power
and authority to enter into and perform its  obligations  under this  Agreement,
the  Registration  Rights Agreement and the Warrants and to issue the Commitment
Shares,  the  Preferred  Stock,  the Warrants and the Warrant  Shares;  (ii) the
execution and delivery of this Agreement and the Registration  Rights Agreement,
and the execution, issuance and delivery of the Warrants, by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly  authorized by all necessary  corporate  action,  and no further consent or
authorization  of the  Company  or its Board of  Directors  or  stockholders  is
required; and (iii) each of this Agreement and the Registration Rights Agreement
has been duly executed and delivered,  and the Warrants have been duly executed,
issued  and  delivered,   by  the  Company  and  constitute  valid  and  binding
obligations of the Company  enforceable  against the Company in accordance  with
their  respective  terms,  except  as  such  enforceability  may be  limited  by
applicable  bankruptcy,  insolvency,  or similar laws  relating to, or affecting
generally  the  enforcement  of,  creditors'  rights  and  remedies  or by other
equitable principles of general application.

     Section  4.3.  CORPORATE  DOCUMENTS.  The  Company  has  furnished  or made
available to the Investor true and correct  copies of the Company's  Articles of
Incorporation, as amended and in effect on the date hereof (the "ARTICLES"), and
the  Company's  By-Laws,  as  amended  and in  effect  on the date  hereof  (the
"BY-LAWS").

     Section 4.4. BOOKS AND RECORDS.  The minute books and other similar records
of the Company and its  subsidiaries  as made available to Investor prior to the
execution of this Agreement  contain a true and complete record, in all material
respects,  of all action taken at all  meetings  and by all written  consents in
lieu of meetings of the stockholders,  the boards of directors and committees of
the boards of directors of the Company and the subsidiaries.  The stock transfer
ledgers and other similar  records of the Company and the  subsidiaries  as made
available  to  Investor  prior to the  execution  of this  Agreement  accurately
reflect all record  transfers  prior to the  execution of this  Agreement in the
capital stock of the Company and the  subsidiaries.  Neither the Company nor any
subsidiary  has  any of its  books  or  records  recorded,  stored,  maintained,
operated  or  otherwise  wholly  or partly  dependent  upon or held by any means
(including  any  electronic,   mechanical  or  photographic   process,   whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the  exclusive  ownership  and direct  control of the Company or a
subsidiary.

     Section 4.5.  CAPITALIZATION.  The authorized  capital stock of the Company
consists of 100,000,000  shares of Common Stock, of which 36,162,542  shares are
issued and outstanding,  and 10,000,000  shares of preferred stock designated as

                                      -9-

Series A, Series B, and Series C, of which none are issued and outstanding.  All
shares of the Company's  preferred  stock  designated as Series A, Series B, and
Series C have been  retired by the  Company.  Except for (i) options to purchase
not more than  8,046,819  shares of Common Stock with  purchase  prices  between
$0.94 and $19.94 per share;  and (ii) warrants to purchase not more than 150,000
shares of Common Stock with a purchase  prices of $7.50 per share and, except as
set forth on Schedule  4.5  attached  hereto,  there are no  options,  warrants,
preemptive  rights  for,  or  rights  to  subscribe  to,  securities,  rights or
obligations  convertible  into  or  exchangeable  for or  giving  any  right  to
subscribe for any shares of capital stock of the Company. Except as set forth on
Schedule 4.5 attached  hereto,  there are no  anti-dilution  or price adjustment
provisions  contained in any security issued by the Company (or in any agreement
providing rights to security  holders) that will be triggered by the issuance of
Common  Stock  or  Preferred  Stock  pursuant  to  this  Agreement.  All  of the
outstanding  shares of Common  Stock of the  Company  have been duly and validly
authorized and issued and are fully paid and nonassessable.

     Section 4.6.  REGISTRATION  AND LISTING OF COMMON  STOCK.   The Company has
registered  its Common Stock  pursuant to Section 12(b) or 12(g) of the Exchange
Act and is in full  compliance  with all reporting  requirements of the Exchange
Act, and the Company has maintained all requirements  for the continued  listing
or quotation of its Common Stock,  and such Common Stock is currently  listed or
quoted on the Principal Market.  As of the date hereof,  the Principal Market is
the Nasdaq National Market.

     Section  4.7.  FINANCIAL  STATEMENTS.   Prior  to  the  execution  of  this
Agreement, the Company has delivered to the Investor true and complete copies of
the following financial statements:

          (a) the audited  balance  sheets of the  Company and its  consolidated
subsidiaries  as of December  31,  2000,  and the related  audited  consolidated
statements of  operations,  stockholders'  equity and cash flows for each of the
fiscal years then ended,  together with a true and correct copy of the report on
such  audited  information  by BDO  Seidman  LLP,  and  all  letters  from  such
accountants with respect to the results of such audits; and

          (b) the unaudited  balance sheets of the Company and its  consolidated
subsidiaries  as of March  31,  2001,  and the  related  unaudited  consolidated
statements of operations and stockholders'  equity for the portion of the fiscal
year then ended.

     The financial statements of the Company delivered to the Investor have been
prepared in accordance with generally accepted accounting  principles applied on
a consistent  basis 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 not include 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 operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).

     Section 4.8. SEC DOCUMENTS.  The Company has timely filed all SEC Documents
and has delivered or made available to the Investor true and complete  copies of
the SEC Documents (including,  without limitation, audited financial statements,
proxy information and solicitation  materials).  The Company has not provided to
the  Investor  any  information  that,  according  to  applicable  law,  rule or
regulation,  should have been disclosed publicly prior to the date hereof by the
Company, but which has not been so disclosed.  As of their respective dates, the
SEC Documents  complied as to form and  substance in all material  respects with
the  requirements of the Securities Act or the Exchange Act, as the case may be,
and other federal,  state and local laws,  rules and  regulations  applicable to
such SEC Documents, and none of the SEC Documents contained any untrue statement
of a material  fact or omitted to state a material  fact  required  to be stated
therein or necessary in order to make the  statements  therein,  in light of the
circumstances under which they were made, not misleading. None of the statements
made in any such SEC  Documents  is,  or has been,  required  to be  amended  or
updated under applicable law (except for such statements as have been amended or
updated  in  subsequent  filings  prior  to  the  date  hereof).  The  financial
statements of the Company  included in the SEC  Documents  comply as to form and
substance in all material respects with applicable  accounting  requirements and
the published  rules and  regulations of the SEC or other  applicable  rules and
regulations with respect thereto.  Such financial  statements have been prepared

                                      -10-

in  accordance  with  generally  accepted  accounting  principles  applied  on a
consistent  basis  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 include summary notes
and 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 operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).

     Section 4.9. EXEMPTION FROM REGISTRATION;  VALID ISSUANCES;  NEW ISSUANCES.
The sale and issuance of the Warrants,  the Warrant Shares,  the Preferred Stock
and the Commitment  Shares in accordance  with the terms and on the basis of the
representations  and  warranties  set forth in this  Agreement,  may and will be
properly  issued  pursuant to Section 4(2),  Regulation D and/or any  applicable
state law. When issued and paid for as provided herein and in the Warrants,  the
Warrant Shares,  the Commitment  Shares and the Preferred Stock will be duly and
validly issued,  fully paid, and nonassessable.  Except as set forth on Schedule
4.9 attached hereto,  neither the sales of the Commitment  Shares, the Preferred
Stock,  the  Warrants,  or the Warrant  Shares  pursuant  to, nor the  Company's
performance of its obligations  under, this Agreement,  the Registration  Rights
Agreement or the Warrants  will (i) result in the creation or  imposition of any
liens,  charges,  claims or other  encumbrances upon the Commitment  Shares, the
Preferred  Stock,  the Warrant Shares,  or any of the assets of the Company,  or
(ii) entitle the holders of  Outstanding  Capital Shares or holders of preferred
stock of the Company to  preemptive  or other  rights to subscribe to or acquire
the Capital Shares, such preferred stock or other securities of the Company. The
Commitment  Shares, the Preferred Stock, and the Warrant Shares will not subject
the  Investor to personal  liability  by reason of the  ownership  thereof.  The
Commitment  Shares,  the  Preferred  Stock  and  Warrant  Shares  have been duly
authorized by the Company, but have not been issued (whether or not subsequently
repurchased  by the  Company) to any Person,  and when issued to the Investor in
accordance  with this  Agreement  and the  Warrants  will not have  been  issued
(whether or not  subsequently  repurchased  by the  Company) to any Person other
than the Investor.

     Section  4.10. NO GENERAL  SOLICITATION  OR  ADVERTISING.  In regard to the
transactions  contemplated hereby, neither the Company nor any of its Affiliates
nor  any  distributor  or any  person  acting  on its or  their  behalf  (i) has
conducted or will conduct any general solicitation (as that term is used in Rule
502(c) of  Regulation  D) or  general  advertising  with  respect  to any of the
Commitment Shares, the Preferred Stock, the Warrants,  or the Warrant Shares, or
(ii) made any offers or sales of any security or solicited any offers to buy any
security under any circumstances  that would require  registration of the Common
Stock under the Securities Act.

     Section 4.11. NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby, including without limitation the issuance of the Commitment
Shares, the Preferred Stock, the Warrants and the Warrant Shares do not and will
not (i) result in a violation of the Articles or By-Laws or (ii) conflict  with,
or constitute a material  default (or an event that with notice or lapse of time
or both  would  become  a  default)  under,  or give to  others  any  rights  of
termination, amendment, acceleration or cancellation of, any material agreement,
indenture,  instrument or any "lock-up" or similar provision of any underwriting
or  similar  agreement  to which the  Company is a party,  or (iii)  result in a
violation of any federal, state, local or foreign law, rule, regulation,  order,
judgment or decree (including federal and state securities laws and regulations,
or any rule,  regulation,  order,  judgment  or  decree  of any  self-regulatory
organization having authority over the matters contemplated  hereby,  applicable
to the  Company  or by which any  property  or asset of the  Company is bound or
affected  (except  for  such  conflicts,  defaults,  terminations,   amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate,  have a Material  Adverse  Effect)  nor is the Company  otherwise  in
violation of, conflict with or in default under any of the foregoing;  provided,
however, that for purposes of the Company's representations and warranties as to
violations of foreign law, rule or regulation  referenced in clause (iii),  such
representations  and  warranties  are  made  only to the  best of the  Company's
knowledge  insofar as the execution,  delivery and performance of this Agreement
by the  Company  and  the  consummation  by  the  Company  of  the  transactions
contemplated  hereby are or may be affected by the status of the Investor  under
or pursuant to any such foreign  law,  rule or  regulation.  The business of the
Company is not being conducted in violation of any law,  ordinance or regulation
of any governmental or self-regulatory  entity,  except for possible  violations
that  either  singly  or in the  aggregate  do not and will not have a  Material
Adverse  Effect.  The Company is not required under any federal,  state or local
law, rule or regulation,  order, judgment or decree (including federal and state
securities laws and regulations),  or any rule,  regulation,  order, judgment or
decree of any  self-regulatory  organization  having  authority over the matters
contemplated  hereby, to obtain any consent,  authorization or order of, or make
any filing or registration  with, any court or governmental  agency in order for

                                      -11-

it to execute, deliver or perform any of its obligations under this Agreement or
issue and sell the Commitment Shares, the Preferred Stock, the Warrants,  or the
Warrant Shares in accordance  with the terms hereof (other than any SEC, NASD or
state  securities  filings  that  may be  required  to be  made  by the  Company
subsequent to any Closing, any registration statement that may be filed pursuant
hereto,  and any  shareholder  approval  required  by the  rules  applicable  to
companies  whose common stock trades on the Nasdaq  National  Market);  provided
that, for purposes of the representation  made in this sentence,  the Company is
assuming  and relying  upon the  accuracy of the  relevant  representations  and
agreements of the Investor herein.

     Section  4.12.  NO MATERIAL  ADVERSE  CHANGE.  Since  December 31, 2000 and
except as set forth on SCHEDULE 4.12 attached hereto, no event has occurred that
would have a Material Adverse Effect on the Company.

     Section 4.13. NO UNDISCLOSED  LIABILITIES.  Except as set forth on SCHEDULE
4.13 hereto,  the Company has no liabilities  or obligations  that are material,
individually  or in the  aggregate,  other than those  incurred in the  ordinary
course  of  the  Company's   businesses  since  December  31,  2000  and  which,
individually  or in the aggregate,  do not or would not have a Material  Adverse
Effect on the Company.

     Section 4.14. NO UNDISCLOSED  EVENTS OR  CIRCUMSTANCES.  Since December 31,
2000,  no event or  circumstance  has  occurred  or exists  with  respect to the
Company  or its  businesses,  properties,  prospects,  operations  or  financial
condition,  that,  under  applicable  law, rule or regulation,  requires  public
disclosure or announcement prior to the date hereof by the Company but which has
not been so publicly disclosed or announced.

     Section 4.15. NO INTEGRATED  OFFERING.  Neither the Company, nor any of its
Affiliates,  nor any  person  acting on its or their  behalf  has,  directly  or
indirectly,  made any offers or sales of any security or solicited any offers to
buy any security  under  circumstances  that would require  registration  of the
Commitment Shares, the Preferred Stock, the Warrants or the Warrant Shares under
the Securities Act.

     Section 4.16.  LITIGATION  AND OTHER  PROCEEDINGS.  To the knowledge of the
Company after due inquiry,  except as set forth in the SEC Documents,  there are
no lawsuits or proceedings  pending or threatened  against the Company,  nor has
the  Company  received  any  written or oral  notice of any such  action,  suit,
proceeding  or  investigation,  which have had or might have a Material  Adverse
Effect.  Except as set forth in the SEC  Documents,  no judgment,  order,  writ,
injunction  or decree or award has been  issued by or, so far as is known by the
Company,  requested of any court,  arbitrator or  governmental  agency which has
resulted in or might result in a Material Adverse Effect.

     Section  4.17.  NO MISLEADING  OR UNTRUE  COMMUNICATION.  The Company,  any
Person representing the Company, and, to the knowledge of the Company, any other
Person selling or offering to sell the Commitment  Shares,  the Preferred Stock,
the  Warrants  or  the  Warrant  Shares  in  connection  with  the  transactions
contemplated  by  this  Agreement,   have  not  made,  at  any  time,  any  oral
communication  in connection  with the offer or sale of the same which contained
any untrue  statement of a material  fact or omitted to state any material  fact
necessary  in order to make the  statements,  in the light of the  circumstances
under which they were made, not misleading.

     Section  4.18.  MATERIAL  NON-PUBLIC  INFORMATION.  The  Company  is not in
possession of, nor has the Company or its agents disclosed to the Investor,  any
material  non-public  information  that  (i)  if  disclosed,   would,  or  could
reasonably  be expected to have,  an effect on the price of the Common  Stock or
(ii) according to applicable law, rule or regulation, should have been disclosed
publicly  by the  Company  prior to the date  hereof  but  which has not been so
disclosed.

                                   ARTICLE V

                            COVENANTS OF THE INVESTOR

     Section 5.1. COMPLIANCE.  The Investor's trading activities with respect to
shares of the Company's  Common Stock will be in compliance  with all applicable
state and  federal  securities  laws,  rules and  regulations  and the rules and
regulations  of the  Principal  Market on which the  Company's  Common  Stock is
listed.

                                      -12-

     Section 5.2.  SHORT SALE.  Neither the  Investor nor any of its  Affiliates
will directly or indirectly engage in any Short Sale of the Commitment Shares or
the Warrant Shares during the Commitment Period.

                                   ARTICLE VI

                            COVENANTS OF THE COMPANY

     Section 6.1. REGISTRATION RIGHTS.  The Company shall cause the Registration
Rights  Agreement  to remain in full force and  effect,  and the  Company  shall
comply in all respects with the terms thereof.

     Section  6.2.  RESERVATION  OF COMMON  STOCK.  As of the date  hereof,  the
Company has available  and the Company  shall reserve and keep  available at all
times,  free of  preemptive  rights,  shares of Common  Stock for the purpose of
enabling the Company to satisfy any  obligation to issue the  Commitment  Shares
and the Warrant  Shares,  such  amount of shares of Common  Stock to be reserved
shall be  calculated  based upon the Floor Price (as such term is defined in the
Certificate of  Designation) of the Preferred  Stock,  and the Exercise Price of
the  Incentive  Warrant  and the maximum  number of  Protective  Warrant  Shares
issuable pursuant to the Protective  Warrants.  The number of shares so reserved
from time to time, as theretofore  increased or reduced as hereinafter provided,
may be reduced by the number of shares actually delivered.

     Section 6.3. LISTING OF COMMON STOCK.  During the Commitment Period and for
so long as the  Investor  holds or owns any  Registrable  Securities,  Preferred
Stock or  Warrants,  the Company  shall  exercise  best  efforts to maintain the
listing or quotation of the Common Stock on a Principal  Market,  and as soon as
practicable (but in any event prior to the Closing Date for any Sale) will cause
the  Commitment  Shares  and the  Warrant  Shares to be listed on the  Principal
Market.  The Company  further shall,  if the Company  applies to have the Common
Stock traded on any other  Principal  Market,  include in such  application  the
Commitment Shares and the Warrant Shares, and shall take such other action as is
necessary  or desirable in the opinion of the Investor to cause the Common Stock
to be listed on such other Principal Market as promptly as possible. The Company
shall use commercially reasonable efforts to continue the listing and trading of
its  Common  Stock  on the  Principal  Market  (including,  without  limitation,
maintaining sufficient net tangible assets) and will comply in all respects with
the Company's reporting,  filing and other obligations under the bylaws or rules
of the NASD and the Principal Market.

     Section 6.4. EXCHANGE ACT  REGISTRATION.  The Company shall comply with all
applicable   requirements  set  forth  in  the  Registration  Rights  Agreement,
including without limitation its obligation to file each Registration  Statement
with the SEC within the  applicable  time periods set forth in the  Registration
Rights Agreement.  After each  Registration  Statement  becomes  effective,  the
Company shall cause the Common Stock covered by such  Registration  Statement to
continue to be registered under Section 12(g) or 12(b) of the Exchange Act, will
comply in all  respects  with its  reporting  and filing  obligations  under the
Exchange Act, and will not take any action or file any document  (whether or not
permitted by the Exchange Act or the rules  thereunder)  to terminate or suspend
such   registration  or  to  terminate  or  suspend  its  reporting  and  filing
obligations under the Exchange Act.

     Section  6.5.  LEGENDS.  The  certificates  evidencing  the  Warrants,  the
Commitment  Shares, the Preferred Stock, and the Warrant Shares shall be free of
legends, except as provided for in Article VIII.

     Section 6.6. CORPORATE  EXISTENCE.  During the Commitment Period and for so
long as the Investor holds or owns any Registrable  Securities,  Preferred Stock
or Warrants, the Company shall take all steps necessary to preserve and continue
the  corporate  existence  of  the  Company  or  its  successors  by  merger  or
consolidation.

     Section 6.7.  ADDITIONAL SEC DOCUMENTS.  Until all  Registrable  Securities
issued or issuable to the Investor pursuant to this Agreement may be sold by the
Investor without registration and without any time, volume or manner limitations
pursuant  to Rule  144(k) (or any similar  provision  then in effect)  under the
Securities  Act,  the  Company  shall,  as and when the  originals  thereof  are
submitted  to the SEC for  filing,  notify  the  Investor  in writing of any SEC
Documents  furnished  or  submitted  to the SEC,  and upon  the  request  of the
Investor the Company shall  deliver to the  Investor,  as and when the originals
thereof are  submitted  to the SEC for filing,  copies of all SEC  Documents  so
furnished or submitted to the SEC.

                                      -13-

     Section 6.8. NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF
RIGHT TO MAKE A  SUBSEQUENT  Sale.  The  Company  shall  immediately  notify the
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
Registrable 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 a 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  Registrable  Securities for sale in any  jurisdiction  or the initiation or
threatening 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; (v) the declaration by
the SEC of the effectiveness of a Registration Statement; and (vi) 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
the Investor any such  supplement  or amendment to the related  prospectus.  The
Company   shall  not  deliver  to  the  Investor  any  Sale  Notice  during  the
continuation of any of the foregoing events, except for (v) above.

     Section 6.9. CONSOLIDATION; MERGER. During the Commitment Period and for so
long as the Investor holds or owns any Registrable  Securities,  Preferred Stock
or Warrants,  the Company  shall not, at any time after the date hereof,  effect
any merger or consolidation of the Company with or into, or a transfer of all or
substantially  all of the assets of the Company to,  another  entity  unless the
resulting  successor or acquiring entity (if not the Company) executes a written
instrument  acknowledging  and assuming the obligation to issue to the Investor,
upon any Sale,  upon  conversion of the Preferred  Stock or upon the exercise of
any Warrant,  in lieu of each share of Common Stock  theretofore  issuable  upon
such Sale, upon such conversion of the Preferred  Stock, or upon exercise of any
such Warrant,  other securities,  money or property receivable upon such merger,
consolidation  or transfer had the Sale,  conversion of the  Preferred  Stock or
exercise  of  such   Warrant   occurred   immediately   prior  to  such  merger,
consolidation or transfer.

     Section  6.10.  ISSUANCE OF SHARES.  The issuance and sale of the Preferred
Stock and the Subsequent Sale Shares, the issuance of the Warrants, the issuance
of the Warrant  Shares  pursuant to exercise of the Warrants and the issuance of
the Conversion  Shares upon conversion of the Preferred Stock,  shall be made in
accordance  with  the  provisions  and  requirements  of  Regulation  D and  any
applicable state law. Issuance of the Warrant Shares pursuant to exercise of the
Warrants  through  a  cashless  exercise  shall be made in  accordance  with the
provisions and  requirements of Section 3(a)(9) under the Securities Act and any
applicable state law.

     Section  6.11.  LEGAL  OPINIONS.  The Company's  independent  counsel shall
deliver  to the  Investor  on the  Closing  Date  relating  to the First Sale an
opinion in the form of Exhibit G, except for paragraph 7 thereof.  The Company's
independent counsel shall deliver to the Investor,  within 2 Trading Days of the
effective date of each Registration Statement, an opinion in the form of Exhibit
G hereto, including paragraph 7 thereof.

     Section 6.12. NO SIMILAR ARRANGEMENT;  RIGHT OF FIRST REFUSAL.  The Company
shall  refrain  from  entering  into  any  other  agreements,   arrangements  or
understandings  granting  to  the  Company  the  right  to  sell  shares  of its
securities to one or more investors,  other than a Strategic  Investor and other
than the Investor,  in placements exempt from registration  under the Securities
Act until 60  calendar  days after this  Agreement  is  terminated  pursuant  to
Section  2.5 hereof or the  earlier  expiration  of the  Commitment  Period (the
"EXCLUSIVITY  PERIOD").  If the  Company,  for  the  purpose  of  obtaining  any
additional  financing,  wishes to sell shares of its  securities  in  placements
exempt from registration  under the Securities Act during the Exclusivity Period
(a "THIRD PARTY SALE") to a party other than a Strategic Investor and other than
the Investor (the "THIRD PARTY"), the Company shall first offer (the "OFFER") to
the  Investor,  in  writing,  the right to purchase  such  shares (the  "OFFERED
SHARES") at the bona fide price offered by the Third Party (the "OFFER  PRICE").
The  Offer  shall  grant  the  Investor  the right  during  the 5  Trading  Days
immediately  following  the date of the Offer to elect to purchase any or all of
the Offered  Shares.  The Company,  in connection  with such a Third Party Sale,

                                      -14-

shall refrain from  circumventing  or attempting  to circumvent  the  Investor's
right of first  refusal by way of making  such a Third  Party Sale to any of its
Affiliates  without  first making an Offer to the  Investor.  If the Investor so
exercises its right to purchase any or all of the Offered  Shares,  the purchase
will be treated as a  Subsequent  Sale  except that the  purchase  price for the
Offered Shares shall be the Offer Price. The closing and method of payment shall
be as provided  for in Sections 2.3 and 2.4 hereof and the Closing Date shall be
7 Trading Days after the Investor exercises such right. If the Investor fails to
exercise its right to purchase any or all of the Offered Shares, then during the
60 calendar days immediately following the expiration of such right, the Company
shall be free to sell any or all of the  Offered  Shares  to a  purchaser  for a
purchase  price not lower than the Offer Price  payable on terms and  conditions
that are not more favorable to such purchaser than those contained in the Offer.
In the event that the  Company  effects a Third  Party Sale,  the  Investor  may
immediately terminate this Agreement.  Notwithstanding  anything in this Section
6.12 to the contrary,  the restriction  contained in this Section 6.12 shall not
apply to: (i) securities  issued by the Company  pursuant to agreements  entered
into by the Company in connection with acquisitions of businesses related to the
business  of  the  Company  at  the  time  of  such  acquisition  (whether  such
acquisitions are structured as mergers,  stock purchases,  asset purchases or as
other forms of  acquisitions),  or (ii) securities  issued by the Company to its
employees,  consultants,  or its  officers  or  directors  pursuant to any stock
option plan of the Company,  stock purchase plan of the Company,  or stock bonus
plan of the Company.

     Section 6.13. PUBLIC  ANNOUNCEMENTS.  The Company,  its Representatives and
legal advisors, and the Investor will not issue or make any reports,  statements
or releases to the public or to any third party with  respect to this  Agreement
or the transactions  contemplated hereby without the consent of both the Company
and the Investor,  which consent shall not be unreasonably  withheld or delayed.
The Company, its Representatives and legal advisers,  and the Investor also will
obtain  the other  party's  prior  approval  of any press  release  to be issued
announcing the consummation of the  transactions  contemplated by this Agreement
or in any way referring to the other party or affiliates of the other party.  If
either party is unable to obtain the approval of its public  report,  statement,
or press or other  release from the other party and such report,  statement,  or
press or other  release  is, in the  opinion  of legal  counsel  to such  party,
required by applicable law or by any rule or regulation of the Principal  Market
in order to discharge such party's disclosure  obligations,  then such party may
make or issue the legally required report,  statement, or press or other release
and promptly furnish the other party with a copy thereof.

     Section  6.14.  SERIES A,  SERIES B, AND  SERIES C  PREFERRED  STOCK.   The
Company shall not reissue any shares of the Company's preferred stock designated
as Series A, Series B and Series C. With respect to any shares of the  Company's
preferred  stock  designated  as Series A, Series B, or Series C which have been
authorized  but have never been issued by the  Company,  the  Company  shall not
issue such shares.

     Section  6.15.  DELIVERY OF SHARE  CERTIFICATES.  The Company shall use its
best  efforts  to cause  its  transfer  agent to  dispatch,  using a  nationally
recognized and reputable overnight courier, (i) share certificates  representing
all Conversion Shares issuable upon a conversion of Preferred Stock within three
(3) Trading Days following the Conversion Date (as defined in the Certificate of
Designation) relating to such conversion,  (ii) share certificates  representing
shares of Common  Stock issued  pursuant to a  Subsequent  Sale within three (3)
Trading Days  following the Closing Date relating to such  Subsequent  Sale, and
(iii) share  certificates  representing  Warrant Shares issuable  pursuant to an
exercise of the Incentive  Warrant or the Protective  Warrant within (3) Trading
Days  following the Exercise  Date (as defined in the  Incentive  Warrant or the
Protective Warrant, as applicable) relating to such exercise,  all in accordance
with  the  provisions  of the  Transfer  Agent  Instructions  (except  that  the
provisions in the Transfer Agent Instructions which permit the transfer agent to
dispatch  such share  certificates  after a longer  period has elapsed shall not
apply with respect to the obligations of the Company hereunder).

                                  ARTICLE VII

                            CONDITIONS TO DELIVERY OF
                     SALE NOTICES AND CONDITIONS TO CLOSING

     Section 7.1. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE
AND SELL  PREFERRED  STOCK AND COMMON  STOCK.  The  obligation  hereunder of the
Company to issue and sell the Preferred Stock or Common Stock, as applicable, to
the  Investor  incident to each  Closing is subject to the  satisfaction,  at or
before each such Closing, of each of the conditions set forth below.

                                      -15-

          (a)  ACCURACY OF THE INVESTOR'S  REPRESENTATION  AND WARRANTIES.   The
               representations  and warranties of the Investor shall be true and
               correct in all material respects as of the date of this Agreement
               and as of the date of each such  Closing  as though  made at each
               such time.

          (b)  PERFORMANCE BY THE INVESTOR.  The Investor shall have  performed,
               satisfied  and  complied  in all  respects  with  all  covenants,
               agreements  and  conditions  required  by  this  Agreement  to be
               performed, satisfied or complied with by the Investor at or prior
               to such Closing.

     Section 7.2. CONDITIONS  PRECEDENT TO THE RIGHT OF THE COMPANY TO DELIVER A
SALE NOTICE AND THE OBLIGATION OF THE INVESTOR TO PURCHASE  PREFERRED  STOCK AND
COMMON STOCK. The right of the Company to deliver a Sale Notice, in the event of
a Subsequent  Sale, and the obligation of the Investor  hereunder to acquire and
pay for the  Preferred  Stock or Common  Stock,  as  applicable,  incident  to a
Closing is subject to the satisfaction,  on (i) the Subscription  Date, (ii) the
applicable  Sale  Notice  Date and (iii) the  applicable  Closing  Date  (each a
"CONDITION  SATISFACTION DATE"), of each of the following conditions;  provided,
however,  that with respect to the Subscription Date and the Closing relating to
the First Sale only, the Investor  waives the conditions set forth in paragraphs
(a), (b) and (k) of this Section 7.2:

          (a)  FILING OF  REGISTRATION  STATEMENTS  WITH THE SEC.  In accordance
               with  the  provisions  set  forth  in  the  Registration   Rights
               Agreement, the Company shall have filed with the SEC Registration
               Statements covering the resale of Registrable Securities relating
               to all prior Sales.

          (b)  EFFECTIVE  REGISTRATION  STATEMENTS.  (1) The Company  shall have
               notified the Investor in accordance  with Section 6.8 hereof that
               all prior Registration Statements covering Registrable Securities
               relating  to the First  Sale and any  Subsequent  Sales have been
               declared  effective  by the  SEC.  (2)  In  accordance  with  the
               Registration Rights Agreement,  all such Registration  Statements
               shall remain effective on each Condition  Satisfaction  Date. (3)
               Neither the Company nor the Investor  shall have received  notice
               that the SEC has  issued or  intends  to issue a stop  order with
               respect to a Registration Statement or that the SEC otherwise has
               suspended  or  withdrawn  the  effectiveness  of  a  Registration
               Statement,  either temporarily or permanently,  or intends or has
               threatened  to  do  so  (unless  the  SEC's  concerns  have  been
               addressed and the Investor is reasonably  satisfied  that the SEC
               no longer is considering or intends to take such action).  (4) No
               other suspension of the use or withdrawal of the effectiveness of
               such Registration Statement or related prospectus shall exist.

          (c)  ACCURACY OF THE COMPANY'S  REPRESENTATIONS  AND WARRANTIES.   The
               representations  and  warranties of the Company shall be true and
               correct as of each Condition  Satisfaction Date as though made at
               each  such  time  (except  for   representations  and  warranties
               specifically made as of a particular date).

          (d)  PERFORMANCE  BY THE COMPANY.   The Company shall have  performed,
               satisfied  and  complied  in all  respects  with  all  covenants,
               agreements  and  conditions  required  by  this  Agreement,   the
               Registration  Rights  Agreement and the Warrants to be performed,
               satisfied  or  complied  with by the  Company at or prior to each
               Condition Satisfaction Date.

          (e)  NO INJUNCTION.  No statute,  rule,  regulation,  executive order,
               decree,  ruling or injunction  shall have been enacted,  entered,
               promulgated or adopted by any court or governmental  authority of
               competent    jurisdiction   that   prohibits   the   transactions
               contemplated  by  this  Agreement  or  otherwise  has a  Material
               Adverse Effect, and no actions,  suits or proceedings shall be in
               progress,  pending  or  threatened  by any  Person,  that seek to
               enjoin  or  prohibit  the   transactions   contemplated  by  this
               Agreement or  otherwise  could  reasonably  be expected to have a
               Material  Adverse Effect.  For purposes of this paragraph (e), no
               proceeding  shall be deemed  pending or threatened  unless one of
               the parties has  received  written or oral  notification  thereof
               prior to the applicable Closing Date.

          (f)  NO  SUSPENSION  OF TRADING IN OR DELISTING OF COMMON  STOCK.  The
               trading of the Common Stock shall not have been  suspended by the
               SEC, the Principal Market or the NASD, and the Common Stock shall
               have been approved for listing or quotation on and shall not have

                                      -16-

               been delisted from the Principal  Market.  The issuance of shares
               of Common Stock with respect to the applicable  Closing shall not
               violate the  shareholder  approval  requirements of the Principal
               Market.

          (g)  LEGAL OPINION.  On each Closing Date relating to each  Subsequent
               Sale,  the  Company  shall  have  caused to be  delivered  to the
               Investor,  an opinion of the Company's independent counsel in the
               form of Exhibit K hereto, addressed to the Investor.

          (h)  DUE  DILIGENCE.  No dispute  between the Company and the Investor
               shall exist  pursuant  to Section  7.3 as to the  adequacy of the
               disclosure contained in the Registration Statement.

          (i)  TEN  PERCENT  LIMITATION.  On each  Closing  Date,  the number of
               Commitment  Shares then to be purchased by the Investor shall not
               exceed the number of such shares that,  when  aggregated with all
               other  shares of Common  Stock and  Registrable  Securities  then
               owned by the Investor  beneficially or deemed  beneficially owned
               by the Investor,  as determined in accordance with the definition
               of  beneficial  ownership  in Rule  13d-3  promulgated  under the
               Exchange  Act,  would result in the Investor  owning no more than
               9.9% of all of such Common Stock as would be  outstanding on such
               Closing Date,  as determined in accordance  with Section 13(d) of
               the Exchange Act and the regulations promulgated thereunder.  For
               purposes of this Section,  in the event that the amount of Common
               Stock  outstanding as determined in accordance with Section 13(d)
               of the Exchange Act and the regulations promulgated thereunder is
               greater on a Closing Date than on the Sale Notice Date associated
               with such Closing Date, the amount of Common Stock outstanding on
               such  Closing  Date shall  govern  for  purposes  of  determining
               whether the Investor,  when  aggregating  all purchases of Common
               Stock made pursuant to this Agreement and, if any, Warrant Shares
               would own more  than  9.9% of the  Common  Stock  following  such
               Closing Date.

          (j)  NO  KNOWLEDGE.  The Company  shall have no knowledge of any event
               more   likely  than  not  to  have  the  effect  of  causing  any
               Registration  Statement to be suspended or otherwise  ineffective
               (which  event is more likely than not to occur within the fifteen
               Trading  Days  following  the Trading Day on which such notice is
               deemed delivered).

          (k)  MINIMUM  TIME  INTERVAL.  The Minimum  Time  Interval  shall have
               elapsed.

          (l)  SHAREHOLDER VOTE. The issuance of Commitment Shares, with respect
               to  the  applicable  Closing,  if  any,  shall  not  violate  the
               shareholder  approval  requirements of the Principal Market. Each
               Sale  Notice  shall  provide  the  Investor  with  the  following
               information as of the applicable  Sale Notice Date: (i) the total
               number of shares of Outstanding  Common Stock, (ii) the number of
               Subsequent  Sale Shares  issuable with respect to the  applicable
               Closing,  (iii) the number of Protective Warrant Shares issuable,
               if any, with respect to the applicable  Closing,  (iv) the number
               of shares of Commitment Shares issued pursuant to previous Sales,
               (v) the  number of  Incentive  Warrant  Shares  issued,  (vi) the
               number of Protective Warrant Shares previously issued pursuant to
               previous  Sales,  and  (vii)  the  number  of  Conversion  Shares
               previously  issued and issuable upon  conversion of the Preferred
               Stock.  If the  issuance  by the Company of a number of shares of
               Commitment  Shares  equal  to the sum of the  amounts  stated  in
               clauses (ii) through (vii),  inclusive,  hereof would result in a
               violation by the Company of the shareholder approval requirements
               of the  Principal  Market,  the  applicable  Sale Notice shall be
               deemed null and void.

          (m)  CERTIFICATE  OF  DESIGNATION.  The Company,  prior to the Closing
               Date  relating to the First Sale only,  shall have duly filed the
               Certificate   of  Designation   with,  and  the   Certificate  of
               Designation  shall  have been  approved  by, the State of Arizona
               Corporation Commission.

          (n)  OTHER.  On each Condition  Satisfaction  Date, the Investor shall
               have  received  and been  reasonably  satisfied  with such  other
               certificates   and  documents  as  shall  have  been   reasonably
               requested  by the  Investor in order for the  Investor to confirm
               the Company's  satisfaction  of the  conditions set forth in this
               Section 7.2.,  including,  without  limitation,  a certificate in
               substantially  the  form  and  substance  of  Exhibit  H  hereto,
               executed  in either case by an  executive  officer of the Company

                                      -17-

               and to the effect that all the  conditions  to such Closing shall
               have been satisfied as at the date of each such certificate.

          (o)  CERTAIN  EVENTS.  The Company shall not be permitted to deliver a
               Sale Notice  during any period in which the events  described  in
               Section 6.8, except for clause (v) thereof, continue to occur.

     Section  7.3.  DUE   DILIGENCE   REVIEW;   NON-DISCLOSURE   OF   NON-PUBLIC
INFORMATION.

          (a)  The Company shall make available for inspection and review by the
               Investor,  advisors to and  representatives  of the Investor (who
               may or may  not be  affiliated  with  the  Investor  and  who are
               reasonably acceptable to the Company),  and any Underwriter,  any
               Registration  Statement or amendment or supplement thereto or any
               blue sky, NASD or other filing,  all financial and other records,
               all SEC  Documents  and other filings with the SEC, and all other
               corporate  documents  and  properties  of the  Company  as may be
               reasonably  necessary  for the purpose of such review,  and cause
               the  Company's  officers,  directors  and employees to supply all
               such information reasonably requested by the Investor or any such
               representative,  advisor or Underwriter  in connection  with such
               Registration   Statement  (including,   without  limitation,   in
               response to all questions and other inquiries  reasonably made or
               submitted  by any of them),  prior to and from time to time after
               the filing and effectiveness of such  Registration  Statement for
               the   sole   purpose   of   enabling   the   Investor   and  such
               representatives,  advisors and  Underwriters and their respective
               accountants  and  attorneys  to conduct  initial  and ongoing due
               diligence  with  respect to the Company and the  accuracy of such
               Registration Statement.

          (b)  None of the  Company,  its  officers,  directors,  employees  and
               agents shall in any event disclose non-public  information to the
               Investor,  advisors to or  representatives of the Investor unless
               prior to disclosure of such  information  the Company  identifies
               such information as being non-public information and provides the
               Investor,  such advisors and representatives with the opportunity
               to accept or refuse to accept  such  non-public  information  for
               review.  As a condition to disclosing any non-public  information
               hereunder,   the  Company  may  require  the   Investor  and  the
               Investor's   advisors  and   representatives   to  enter  into  a
               confidentiality  agreement in form reasonably satisfactory to the
               Company and the Investor.

          (c)  Nothing  herein shall require the Company to disclose  non-public
               information  to the Investor or its advisors or  representatives,
               and  the  Company   represents   that  it  does  not  disseminate
               non-public information to any investors who purchase stock in the
               Company in a public offering,  to money managers or to securities
               analysts; provided, however, that notwithstanding anything herein
               to the contrary,  the Company  shall,  as  hereinabove  provided,
               immediately  notify  the  advisors  and  representatives  of  the
               Investor and any  Underwriters  of any event or the  existence of
               any circumstance (without any obligation to disclose the specific
               event or  circumstance)  of which it becomes aware,  constituting
               non-public  information  (whether or not requested of the Company
               specifically  or generally  during the course of due diligence by
               such  persons  or  entities),  which,  if  not  disclosed  in the
               prospectus  included  in the  applicable  Registration  Statement
               would cause such prospectus to include a material misstatement or
               to omit a material fact required to be stated therein in order to
               make the statements,  therein,  in light of the  circumstances in
               which they were made, not misleading.  Nothing  contained in this
               Section  7.3 shall be  construed  to mean that  such  persons  or
               entities other than the Investor  (without the written consent of
               the Investor  prior to  disclosure of such  information)  may not
               obtain  non-public  information  in the course of conducting  due
               diligence in  accordance  with the terms and  conditions  of this
               Agreement  and nothing  herein shall  prevent any such persons or
               entities  from  notifying the Company of their opinion that based
               on such due  diligence  by such  persons or  entities,  that such
               Registration Statement contains an untrue statement of a material
               fact or omits a  material  fact  required  to be  stated  in such
               Registration  Statement  or  necessary  to  make  the  statements
               contained  therein,  in light of the  circumstances in which they
               were made, not misleading.

                                      -18-

                                  ARTICLE VIII

                                     LEGENDS

     Section 8.1. LEGENDS. Each of the Warrants, the Preferred Stock and, unless
otherwise provided below, each certificate  representing  Registrable Securities
will bear the following legend (the "LEGEND"):

     "THE  SECURITIES  EVIDENCED BY THIS  CERTIFICATE  HAVE NOT BEEN  REGISTERED
     UNDER THE U.S.  SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES  ACT"),
     OR ANY OTHER  APPLICABLE  SECURITIES  LAWS AND HAVE BEEN ISSUED IN RELIANCE
     UPON AN EXEMPTION FROM THE REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT
     AND SUCH OTHER SECURITIES  LAWS.  NEITHER THIS SECURITY NOR ANY INTEREST OR
     PARTICIPATION  HEREIN  MAY  BE  REOFFERED,  SOLD,  ASSIGNED,   TRANSFERRED,
     PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT
     TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
     TO A TRANSACTION THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
     THE HOLDER OF THIS CERTIFICATE IS THE BENEFICIARY OF CERTAIN OBLIGATIONS OF
     THE COMPANY SET FORTH IN A STOCK PURCHASE  AGREEMENT,  DATED AS OF JUNE 18,
     2001, BETWEEN INTERNATIONAL  FIBERCOM, INC. AND CRESCENT INTERNATIONAL LTD.
     A  COPY  OF  THE  PORTION  OF  THE  AFORESAID  AGREEMENT   EVIDENCING  SUCH
     OBLIGATIONS MAY BE OBTAINED FROM INTERNATIONAL  FIBERCOM,  INC.'S EXECUTIVE
     OFFICES."

     On the Subscription  Date the Company shall issue to the transfer agent for
its Common Stock (and to any  substitute or  replacement  transfer agent for its
Common  Stock  upon  the  Company's   appointment  of  any  such  substitute  or
replacement  transfer  agent)  Transfer Agent  Instructions,  with a copy to the
Investor. Other than as required as a result of change in law, such instructions
shall be  irrevocable  by the Company from and after the date hereof or from and
after the issuance thereof to any such substitute or replacement transfer agent,
as the case may be, except as otherwise  expressly  provided in the Registration
Rights Agreement. It is the intent and purpose of such instructions, as provided
therein,  to require the  transfer  agent for the Common Stock from time to time
upon transfer of  Registrable  Securities by the Investor to issue  certificates
evidencing such  Registrable  Securities free of the Legend during the following
periods and under the following  circumstances  and without  consultation by the
transfer  agent with the  Company or its  counsel  and  without the need for any
further advice or instruction or  documentation to the transfer agent by or from
the Company or its counsel or the Investor, and the Company agrees that it will,
and will cause its  counsel  to,  provide  the  transfer  agent with any and all
documentation requested or required by the transfer agent, the Investor or their
respective   counsel,   including  without   limitation  the  documentation  and
confirmations referenced in the Transfer Agent Instructions:

          (a)  At any time after the applicable  Effective  Date, upon surrender
               of one or more  certificates  evidencing  Registrable  Securities
               that  bear the  Legend,  to the  extent  accompanied  by a notice
               requesting the issuance of new certificates free of the Legend to
               replace  those  surrendered;  provided  that  (i) the  applicable
               Registration  Statement  shall  then  be  effective  and  (ii) if
               reasonably  requested by the transfer agent the Investor confirms
               to the  transfer  agent that the  Investor  has  transferred  the
               Registrable  Securities  pursuant to such Registration  Statement
               and has complied with the prospectus delivery requirement; or

                                      -19-

          (b)  At any  time  upon  any  surrender  of one or  more  certificates
               evidencing  Registrable  Securities that bear the Legend,  to the
               extent  accompanied  by a notice  requesting  the issuance of new
               certificates  free of the Legend to replace those surrendered and
               containing  representations  that the  Investor is  permitted  to
               dispose of such Registrable  Securities  without limitation as to
               amount  or  manner  of sale  pursuant  to Rule  144(k)  under the
               Securities Act.

     Section  8.2. NO OTHER  LEGEND OR STOCK  TRANSFER  RESTRICTIONS.  No legend
other than the one  specified  in Section 8.1 has been or shall be placed on the
share  certificates  representing  the Registrable  Securities and the Preferred
Stock, and no instructions or "stop transfer orders," so called, "stock transfer
restrictions,"  or  other  restrictions  have  been or  shall  be  given  to the
Company's  transfer agent with respect thereto other than as expressly set forth
in this Article VIII.

     Section  8.3.  INVESTOR'S  COMPLIANCE.   Nothing in this Article VIII shall
affect  in any way the  Investor's  obligations  to comply  with all  applicable
securities laws.

                                   ARTICLE IX

                          INDEMNIFICATION; ARBITRATION

     Section 9.1. INDEMNIFICATION.

          (a)  The Company  agrees to indemnify  and hold harmless the Investor,
               its partners,  Affiliates,  officers,  directors,  employees, and
               duly authorized  agents,  and each Person or entity,  if any, who
               controls  the  Investor  within the  meaning of Section 15 of the
               Securities  Act or Section 20 of the Exchange Act,  together with
               its  controlling  persons from and against any Damages,  joint or
               several, and any action in respect thereof to which the Investor,
               its partners,  Affiliates,  officers,  directors,  employees, and
               duly authorized  agents,  and any such controlling person becomes
               subject  to,  resulting  from,  arising out of or relating to any
               misrepresentation,  breach of  warranty or  nonfulfillment  of or
               failure to  perform  any  covenant  or  agreement  on the part of
               Company  contained  in  this  Agreement,   as  such  Damages  are
               incurred,   unless  such  Damages   result   primarily  from  the
               Investor's  gross  negligence,   recklessness  or  bad  faith  in
               performing  its  obligations  under  this  Agreement;   provided,
               however,  that the  maximum  aggregate  liability  of the Company
               shall be limited to the amount actually  invested by the Investor
               under this  Agreement,  and provided,  further,  that in no event
               shall   this   provision   be  deemed  to  limit  any  rights  to
               indemnification arising under the Registration Rights Agreement.

          (b)  The Investor  agrees to indemnify  and hold harmless the Company,
               its  Affiliates,   officers,   directors,   employees,  and  duly
               authorized agents from and against any Damages, joint or several,
               and any  action in  respect  thereof  to which the  Company,  its
               Affiliates,  officers, directors,  employees, and duly authorized
               agents  becomes  subject to,  resulting  from,  arising out of or
               relating  to  any   misrepresentation,   breach  of  warranty  or
               nonfulfillment of or failure to perform any covenant or agreement
               on the part of the Investor contained in this Agreement,  as such
               Damages are incurred,  unless such Damages result  primarily from
               the  Company's  gross  negligence,  recklessness  or bad faith in
               performing  its  obligations  under  this  Agreement;   provided,
               however,  that the maximum  aggregate  liability  of the Investor
               shall be limited to the amount by which the total  price at which
               the Registrable  Securities held by the Investor were sold to the
               public  exceeds the amount  actually  paid by the Investor  under
               this  Agreement  for  such  Registrable  Securities  sold  to the
               public,  and  provided,  further,  that in no  event  shall  this
               provision  be  deemed  to limit  any  rights  to  indemnification
               arising under the Registration Rights Agreement.

     Section 9.2.  METHOD OF ASSERTING  INDEMNIFICATION  CLAIMS.  All claims for
indemnification  by any  Indemnified  Party (as defined below) under Section 9.1
shall be asserted and resolved as follows:

                                      -20-

          (a)  In the event any claim or demand in  respect  of which any person
               claiming  indemnification  under any provision of Section 9.1 (an
               "INDEMNIFIED  PARTY") might seek  indemnity  under Section 9.1 is
               asserted  against or sought to be collected from such Indemnified
               Party by a person  other than the  Company,  the  Investor or any
               Affiliate of the Company (a "THIRD PARTY CLAIM"), the Indemnified
               Party shall deliver a written  notification,  enclosing a copy of
               all papers served, if any, and specifying the nature of and basis
               for such Third Party Claim and for the Indemnified  Party's claim
               for indemnification that is being asserted under any provision of
               Section  9.1  against  any  person  (the  "INDEMNIFYING  PARTY"),
               together   with  the   amount   or,   if  not   then   reasonably
               ascertainable, the estimated amount, determined in good faith, of
               such  Third  Party  Claim  (a  "CLAIM  NOTICE")  with  reasonable
               promptness to the  Indemnifying  Party. If the Indemnified  Party
               fails to provide  the Claim  Notice  with  reasonable  promptness
               after the  Indemnified  Party receives notice of such Third Party
               Claim, the Indemnifying Party shall not be obligated to indemnify
               the  Indemnified  Party with respect to such Third Party Claim to
               the extent that the  Indemnifying  Party's  ability to defend has
               been  irreparably  prejudiced by such failure of the  Indemnified
               Party. The Indemnifying  Party shall notify the Indemnified Party
               as soon as practicable  within the period ending 30 calendar days
               following  receipt  by the  Indemnifying  Party of either a Claim
               Notice or an Indemnity  Notice (as defined  below) (the  "DISPUTE
               PERIOD") whether the Indemnifying Party disputes its liability or
               the  amount  of its  liability  to the  Indemnified  Party  under
               Section 9.1 and whether the  Indemnifying  Party desires,  at its
               sole cost and expense,  to defend the  Indemnified  Party against
               such Third Party Claim.

               (i)  If the  Indemnifying  Party notifies the  Indemnified  Party
                    within  the  Dispute  Period  that  the  Indemnifying  Party
                    desires to defend the Indemnified  Party with respect to the
                    Third Party Claim pursuant to this Section 9.2(a),  then the
                    Indemnifying  Party  shall  have the right to  defend,  with
                    counsel reasonably satisfactory to the Indemnified Party, at
                    the sole cost and expense of the  Indemnifying  Party,  such
                    Third  Party  Claim by all  appropriate  proceedings,  which
                    proceedings shall be vigorously and diligently prosecuted by
                    the  Indemnifying  Party  to a final  conclusion  or will be
                    settled at the  discretion  of the  Indemnifying  Party (but
                    only with the consent of the  Indemnified  Party in the case
                    of any  settlement  that  provides for any relief other than
                    the payment of  monetary  damages or that  provides  for the
                    payment  of  monetary  damages  as to which the  Indemnified
                    Party shall not be  indemnified  in full pursuant to Section
                    9.1). The Indemnifying Party shall have full control of such
                    defense  and   proceedings,   including  any  compromise  or
                    settlement thereof; provided,  however, that the Indemnified
                    Party may, at the sole cost and  expense of the  Indemnified
                    Party,  at  any  time  prior  to  the  Indemnifying  Party's
                    delivery of the notice  referred to in the first sentence of
                    this clause (i), file any motion,  answer or other pleadings
                    or  take  any  other  action  that  the  Indemnified   Party
                    reasonably  believes  to  be  necessary  or  appropriate  to
                    protect  its  interests;   and  provided  further,  that  if
                    requested by the Indemnifying  Party, the Indemnified  Party
                    will,  at the sole  cost  and  expense  of the  Indemnifying
                    Party,  provide  reasonable  cooperation to the Indemnifying
                    Party  in   contesting   any  Third  Party  Claim  that  the
                    Indemnifying Party elects to contest.  The Indemnified Party
                    may  participate  in,  but  not  control,   any  defense  or
                    settlement  of  any  Third  Party  Claim  controlled  by the
                    Indemnifying  Party  pursuant to this clause (i), and except
                    as provided in the preceding sentence, the Indemnified Party
                    shall bear its own costs and  expenses  with respect to such
                    participation.    Notwithstanding    the   foregoing,    the
                    Indemnified  Party may take over the  control of the defense
                    or  settlement  of a Third  Party  Claim  at any  time if it
                    irrevocably  waives its right to indemnity under Section 9.1
                    with respect to such Third Party Claim.

               (ii) If the  Indemnifying  Party fails to notify the  Indemnified
                    Party within the Dispute Period that the Indemnifying  Party
                    desires to defend the Third Party Claim  pursuant to Section
                    9.2(a),  or if the Indemnifying  Party gives such notice but
                    fails to prosecute  vigorously  and diligently or settle the
                    Third Party  Claim,  or if the  Indemnifying  Party fails to
                    give any notice whatsoever  within the Dispute Period,  then
                    the Indemnified Party shall have the right to defend, at the
                    sole cost and expense of the  Indemnifying  Party, the Third
                    Party   Claim   by  all   appropriate   proceedings,   which
                    proceedings  shall be prosecuted by the Indemnified Party in

                                      -21-

                    a reasonable  manner and in good faith or will be settled at
                    the discretion of the Indemnified Party (with the consent of
                    the   Indemnifying   Party,   which   consent  will  not  be
                    unreasonably withheld). The Indemnified Party will have full
                    control  of such  defense  and  proceedings,  including  any
                    compromise or settlement thereof; provided, however, that if
                    requested by the Indemnified  Party, the Indemnifying  Party
                    will,  at the sole  cost  and  expense  of the  Indemnifying
                    Party,  provide  reasonable  cooperation to the  Indemnified
                    Party and its  counsel in  contesting  any Third Party Claim
                    which the Indemnified  Party is contesting.  Notwithstanding
                    the  foregoing  provisions  of  this  clause  (ii),  if  the
                    Indemnifying Party has notified the Indemnified Party within
                    the Dispute Period that the Indemnifying  Party disputes its
                    liability  or the amount of its  liability  hereunder to the
                    Indemnified  Party with  respect to such Third Party  Claim,
                    and if such dispute is resolved in favor of the Indemnifying
                    Party in the manner  provided  in clause  (iii)  below,  the
                    Indemnifying  Party will not be  required  to bear the costs
                    and expenses of the Indemnified  Party's defense pursuant to
                    this   clause   (ii)   or  of   the   Indemnifying   Party's
                    participation  therein at the Indemnified  Party's  request,
                    and the Indemnified  Party shall reimburse the  Indemnifying
                    Party in full for all reasonable costs and expenses incurred
                    by  the   Indemnifying   Party  in   connection   with  such
                    litigation.  The Indemnifying  Party may participate in, but
                    not control,  any defense or  settlement  controlled  by the
                    Indemnified  Party  pursuant  to this clause  (ii),  and the
                    Indemnifying  Party  shall  bear its own costs and  expenses
                    with respect to such participation.

               (iii)If the  Indemnifying  Party notifies the  Indemnified  Party
                    that it does not dispute its  liability or the amount of its
                    liability to the Indemnified Party with respect to the Third
                    Party  Claim  under  Section  9.1 or  fails  to  notify  the
                    Indemnified  Party  within the  Dispute  Period  whether the
                    Indemnifying  Party  disputes its liability or the amount of
                    its liability to the Indemnified  Party with respect to such
                    Third Party  Claim,  the Damages in the amount  specified in
                    the Claim Notice shall be conclusively deemed a liability of
                    the   Indemnifying   Party   under   Section   9.1  and  the
                    Indemnifying  Party shall pay the amount of such  Damages to
                    the Indemnified Party on demand.  If the Indemnifying  Party
                    has  timely  disputed  its  liability  or the  amount of its
                    liability with respect to such claim, the Indemnifying Party
                    and the  Indemnified  Party  shall  proceed in good faith to
                    negotiate a resolution of such dispute,  and if not resolved
                    through  negotiations  within the period of 30 calendar days
                    immediately following the Dispute Period, such dispute shall
                    be resolved by arbitration in accordance with Section 9.3.

          (b)  In the event any  Indemnified  Party  should  have a claim  under
               Section 9.1 against the Indemnifying  Party that does not involve
               a Third  Party  Claim,  the  Indemnified  Party  shall  deliver a
               written  notification  of a claim for indemnity under Section 9.1
               specifying the nature of and basis for such claim,  together with
               the  amount  or,  if  not  then  reasonably  ascertainable,   the
               estimated  amount,  determined  in good faith,  of such claim (an
               "INDEMNITY   NOTICE")   with   reasonable   promptness   to   the
               Indemnifying  Party. The failure by any Indemnified Party to give
               the  Indemnity  Notice  shall  not  impair  such  party's  rights
               hereunder  except  to the  extent  that  the  Indemnifying  Party
               demonstrates that it has been irreparably  prejudiced thereby. If
               the  Indemnifying  Party notifies the  Indemnified  Party that it
               does not dispute  the claim or the amount of the claim  described
               in such Indemnity Notice or fails to notify the Indemnified Party
               within the Dispute Period whether the Indemnifying Party disputes
               the claim or the amount of the claim  described in such Indemnity
               Notice,  the  Damages in the amount  specified  in the  Indemnity
               Notice  will  be   conclusively   deemed  a   liability   of  the
               Indemnifying  Party under Section 9.1 and the Indemnifying  Party
               shall pay the amount of such Damages to the Indemnified  Party on
               demand.  If  the  Indemnifying  Party  has  timely  disputed  its
               liability  or the amount of its  liability  with  respect to such
               claim,  the  Indemnifying  Party and the Indemnified  Party shall
               proceed in good faith to negotiate a resolution  of such dispute,
               and if not resolved through  negotiations within the period of 30
               calendar  days  immediately  following the Dispute  Period,  such
               dispute  shall be  resolved by  arbitration  in  accordance  with
               Section 9.3.

                                      -22-

     Section 9.3. ARBITRATION.  Any controversy, claim or dispute arising out of
or in connection with this Agreement,  the Registration  Rights Agreement or the
Warrants,   including   any  question   regarding   its   existence,   validity,
interpretation,  breach,  or  termination,  shall  be  referred  to and  finally
resolved in accordance with the International  Arbitration Rules of the American
Arbitration  Association,  and judgment upon the award  rendered by the arbitral
tribunal  may be  entered  by any court  having  jurisdiction  thereof or having
jurisdiction over any party or any party's assets.

          (a)  The  tribunal  shall  consist of three  arbitrators,  two of whom
               shall be appointed by the respective  parties and the third,  who
               shall  be  the   chairperson   of  the   tribunal,   by  the  two
               party-appointed  arbitrators  within 30 days of the last of their
               appointments.  Save that,  if either party should fail to appoint
               an arbitrator  within 30 days of receiving  written notice of the
               appointment  of an  arbitrator  by the other  party,  the  second
               arbitrator  shall,  at the written request of the party which has
               already  made  an  appointment,  be  appointed  forthwith  by the
               American    Arbitration    Association.    Likewise,    if    the
               party-appointed  arbitrators  fail to make an agreed  appointment
               for  the  chairperson  within  30  days  of  the  last  of  their
               appointments,  the  chairperson  shall, at the written request of
               either party, be appointed forthwith by the American  Arbitration
               Association.

               The place of arbitration shall be New York, New York.

               This   arbitration   clause  and  the  conduct  of  the  arbitral
               proceedings  shall be governed by the Federal  Arbitration Act, 9
               U.S.C.A. sec. 1 et seq.

               The language of the arbitration shall be English.

               Nothing in these dispute resolution provisions shall be construed
               as preventing  either party from seeking  conservatory or similar
               interim relief in any court of competent jurisdiction.

               To the extent practicable, the arbitral tribunal shall render its
               award no more than 60 calendar  days from the date that the three
               member tribunal is constituted.  The arbitral  tribunal shall not
               lose jurisdiction over the matter based on a failure to render an
               award within this time period.

                                   ARTICLE X

                                  MISCELLANEOUS

     Section 10.1. FEES AND TRANSACTION  COSTS. In connection with the execution
of this  agreement  the  following  Sale  Fees,  Investor  Legal  Fees,  and Due
Diligence  Costs (as  defined  below) are  payable  by the  Company to the payee
entities  listed in Schedule  10.1. The Investor is authorized by the Company to
deduct such amounts from any sums due to the Company on the  applicable  Closing
Date.

          (a)  SUBSCRIPTION  FEE.  On the first Closing Date,  the Company shall
               pay to the Investor the  subscription fee in the amount set forth
               in Schedule 10.1 (the "SUBSCRIPTION FEE").

          (b)  SALE FEES.  On each Closing  Date,  the Company  shall pay to the
               Investor an amount  calculated in  accordance  with Schedule 10.1
               (the "SALE FEE").

          (c)  TRANSACTION  COSTS. The fees,  expenses and  disbursements of the
               Investor's  counsel (the "INVESTOR  LEGAL FEES") shall be paid as
               follows:  (i) the  Investor  shall  pay the  initial  $10,000  of
               Investor  Legal Fees and (ii) the Company  shall pay all Investor
               Legal  Fees in  excess  of  $10,000.  The  Company  shall pay the
               Investor due diligence costs in connection with the  consummation
               of this Agreement and the transactions  contemplated  hereby (the
               "DUE  DILIGENCE  COSTS") up to a maximum  amount of $10,000.  The
               Company  shall pay to the  Investor  the  Company's  share of the
               Investor Legal Fees and Due Diligence  Costs on the  Subscription
               Date, to the extent such share of the Investor Legal Fees and Due
               Diligence Costs can be determined on the  Subscription  Date. The
               Company shall pay its share of the remaining  Investor Legal Fees
               and Due  Diligence  Costs to the  Investor not later than 10 days

                                      -23-

               after  receipt of notice  from the  Investor  that such amount is
               due. The Company  agrees to pay its own expenses  incident to the
               performance of its obligations hereunder.

     Section 10.2.  REPORTING  ENTITY FOR THE COMMON STOCK. The reporting entity
relied upon for the  determination  of the Closing Trade Price or trading volume
of the Common  Stock on the  Principal  Market on any given  Trading Day for the
purposes of this  Agreement  shall be the  Bloomberg  L.P.  The  written  mutual
consent of the  Investor  and the Company  shall be required to employ any other
reporting entity.

     Section 10.3.  BROKERAGE.  Except as disclosed in Section 10.1, each of the
parties hereto  represents  that it has had no dealings in connection  with this
transaction  with any finder or broker which would impose a legal  obligation to
pay any fee or commission. The Company on the one hand, and the Investor, on the
other hand,  agree to indemnify  the other  against and hold the other  harmless
from any and all liabilities to any persons  claiming  brokerage  commissions or
finder's  fees on account of services  purported to have been rendered on behalf
of the indemnifying  party in connection with this Agreement or the transactions
contemplated hereby.

     Section 10.4.  CONVERSION  NOTICE.  Any  conversion of the Preferred  Stock
shall be effected in accordance  with the Certificate of Designation and (i) any
conversion  notice delivered  thereunder by the Investor to the Company shall be
in the form of  Exhibit  I  hereto,  and (ii) any  conversion  notice  delivered
thereunder  by the  Company  to the  Investor  shall be in the form of Exhibit J
hereto.

     Section 10.5. NOTICES. All notices, demands, requests, consents, approvals,
and other  communications  required or permitted  hereunder  shall be in writing
and, unless otherwise  specified herein,  shall be (i) personally  served,  (ii)
deposited  in the mail,  registered  or  certified,  return  receipt  requested,
postage  prepaid,  (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other  address as such party shall have  specified
most  recently by written  notice given in  accordance  herewith.  Any notice or
other communication  required or permitted to be given hereunder shall be deemed
effective  (a) upon hand  delivery or delivery  by  facsimile  at the address or
number  designated  below (if delivered on a Trading Day during normal  business
hours where such notice is to be  received),  or the first Trading Day following
such delivery (if delivered  other than on a Trading Day during normal  business
hours  where such  notice is to be  received)  or (b) on the third  Trading  Day
following  the date of  mailing  by  express  courier  service,  fully  prepaid,
addressed to such address,  or upon actual  receipt of such  mailing,  whichever
shall first occur. The addresses for such communications shall be:

If to the Company:

          International FiberCom, Inc.
          3410 E. University Drive
          Suite 180
          Phoenix, AZ 85034
          Attention: Joseph P. Kealy
          Telephone: (602) 387-4000
          Facsimile: (602) 276-0567

with a copy (which shall not constitute notice) to:

          Quarles & Brady Streich Lang LLP
          Renaissance One Building
          2 North Central Avenue
          Phoenix, AZ  85004-2391
          Attention: Christian J. Hoffman III, Esq.
          Telephone: (602) 229-5200
          Facsimile: (602) 229-5690

                                      -24-

if to the Investor:

          Crescent International Ltd.
          c/o GreenLight (Switzerland) SA
          84, av Louis-Casai
          1216 Geneva, Cointrin
          Switzerland
          Attention: Mel Craw/Maxi Brezzi
          Telephone: +41 22 791 71 69
          Facsimile: +41 22 929 53 94

with a copy (which shall not constitute notice) to:

          Clifford Chance Rogers & Wells LLP
          200 Park Avenue
          New York, NY  10166
          Attention: Earl S. Zimmerman, Esq.
          Telephone: (212) 878-8000
          Facsimile: (212) 878-8375

     Either  party  hereto from time to time may change its address or facsimile
     number for notices  under this Section by giving at least ten (10) calendar
     days' prior written notice of such changed  address or facsimile  number to
     the other party hereto.

     Section  10.6.  ASSIGNMENT.  Neither this  Agreement  nor any rights of the
Investor or the Company  hereunder  may be assigned by either party to any other
Person. Notwithstanding the foregoing, the Investor's interest in this Agreement
may be  assigned  at any  time,  in whole or in part,  to any  Affiliate  of the
Investor upon the prior written consent of the Company,  which consent shall not
to be  unreasonably  withheld  provided,  however,  that any such  assignment or
transfer shall relieve the Investor of its duties under this Agreement only upon
performance thereof by any such assignee or transferee.

     Section 10.7.  AMENDMENT;  NO WAIVER.  No party shall be liable or bound to
any other party in any manner by any  warranties,  representations  or covenants
except as specifically set forth in this Agreement. Except as expressly provided
in this  Agreement,  neither this  Agreement nor any term hereof may be amended,
waived,  discharged or terminated other than by a written  instrument  signed by
both  parties  hereto.  The  failure  of the  either  party to  insist on strict
compliance  with this  Agreement,  or to exercise any right or remedy under this
Agreement,  shall not  constitute  a waiver of any  rights  provided  under this
Agreement,  nor estop the parties from  thereafter  demanding  full and complete
compliance nor prevent the parties from exercising such a right or remedy in the
future.

     Section  10.8.  ANNEXES AND  EXHIBITS;  ENTIRE  AGREEMENT.  All annexes and
exhibits  to this  Agreement  are  incorporated  herein by  reference  and shall
constitute  part  of  this  Agreement.  This  Agreement,  the  Warrants  and the
Registration  Rights Agreement set forth the entire agreement and  understanding
of the parties  relating to the subject  matter hereof and thereof and supersede
all  prior  and  contemporaneous  agreements,  negotiations  and  understandings
between the  parties,  both oral and  written,  relating  to the subject  matter
hereof.

     Section 10.9. SURVIVAL.  The provisions of Articles VI, VIII, IX and X, and
of Section 7.3, shall survive the termination of this Agreement.

     Section  10.10.  SEVERABILITY.  In the  event  that any  provision  of this
Agreement  becomes or is declared  by a court of  competent  jurisdiction  to be
illegal,  unenforceable or void, this Agreement shall continue in full force and
effect  without  said  provision;  provided  that  such  severability  shall  be
ineffective if it materially  changes the economic  benefit of this Agreement to
any party.

                                      -25-

     Section 10.11.  TITLE AND SUBTITLES.  The titles and subtitles used in this
Agreement are used for the convenience of reference and are not to be considered
in construing or interpreting this Agreement.

     Section  10.12.  COUNTERPARTS.  This  Agreement may be executed in multiple
counterparts,  each of which may be executed by less than all of the parties and
shall be deemed to be an original  instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together shall
constitute one and the same instrument.

     Section 10.13.  CHOICE OF LAW. This Agreement  shall be construed under the
laws of the State of New York.

     Section  10.14.  OTHER  EXPENSES.  In the event that a dispute  between the
parties is not determined by a Board of Arbitration, the non-prevailing party in
any action,  suit or proceeding  shall bear all  investigative,  legal and other
expenses reasonably incurred in connection with, and any and all amounts paid in
defense or settlement of such action, suit or proceeding.

                                      -26-

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.


                                     CRESCENT INTERNATIONAL LTD.


                                     By: _______________________________
                                         Name:
                                         Title:


                                     INTERNATIONAL FIBERCOM, INC.


                                     By: _______________________________
                                         Name:
                                         Title: