EXHIBIT 10.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement dated as of June ___, 2008 (this “Agreement”)
is made by and between Last Mile Logistics Group, Inc., a Florida corporation,
with principal executive offices located at 6675 Anberton Drive, Elkridge, MD
21075 (the “Company”), and Golden Gate Investors, Inc. (“Holder”).

WHEREAS, Holder desires to purchase from the Company, and the Company desires to
issue and sell to Holder, upon the terms and subject to the conditions of this
Agreement, a Convertible Debenture of the Company in the aggregate principal
amount of $1,000,000 (the “Debenture”); and

WHEREAS, upon the terms and subject to the conditions set forth in the Debenture
the Debenture is convertible into shares of the Company’s Common Stock (the
“Common Stock”).

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto, intending to be legally bound, hereby
agree as follows:

I.

PURCHASE AND SALE OF DEBENTURE

A.

Transaction.  Holder hereby agrees to purchase from the Company, and the Company
has offered and hereby agrees to issue and sell to Holder in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended (the “Securities Act”), the Debenture.

B.

Purchase Price; Form of Payment.  The purchase price for the Debenture to be
purchased by Holder hereunder shall be $1,000,000 (the “Purchase Price”).
 Simultaneously with the execution of this Agreement, Holder shall pay the
Purchase Price by wire transfer of $100,000 in immediately available funds to
the Company and delivery to the Company of a Secured Promissory Note in the
principal amount of $900,000, in the form attached hereto as Exhibit A (the
“Promissory Note”).  Simultaneously with the execution of this Agreement, the
Company shall deliver the Debenture (which shall have been duly authorized,
issued and executed I/N/O Holder or, if the Company otherwise has been notified,
I/N/O Holder’s nominee) to the Holder.

C.

Second Debenture.  Provided that no Event of Default (as defined in the
Debenture) has occurred under the Debenture (provided that Holder may, in its
sole and absolute discretion waive the occurrence of such Event of Default with
respect to this Section), Holder shall, in Holder’s sole and absolute
discretion, select a date during the Second Debenture Period (as defined below)
(with such date as selected by Holder referred to herein as the “Second
Debenture Date”) at which the Company shall sell and the Holder shall purchase a
debenture in the principal amount of $1,000,000 in exchange for a purchase price
of $1,000,000 (the “Second Debenture”), with such purchase price paid via a cash
payment of $100,000 and the issuance of a promissory note in the principal
amount of $900,000 (the “Second Promissory Note”), with the form of and terms of
the Second Debenture and the Second Promissory Note and payment of the purchase
price subject to the same terms and conditions of this Agreement, the Debenture
and the Promissory Note, as applicable, including the entry into a Continuing
Personal Guaranty on the same terms as set forth in the Continuing Personal
Guaranty (as defined herein) entered

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into in connection with this Agreement and the Debenture, and when the Second
Debenture is issued, the term “Debenture” as used in this Agreement shall be
deemed to include the Second Debenture in all respects and when the Second
Promissory Note is issued, the term “Promissory Note” as used in this Agreement
shall be deemed to include the Second Promissory Note in all respects. The
closing of the purchase and sale of the Second Debenture and the issuance of the
Second Promissory Note shall occur within thirty days of the Second Debenture
Date.  For the purposes of this Agreement, the “Second Debenture Period” shall
mean the period that commences on the date hereof and terminates upon the date
that the remaining Principal Amount of the Debenture is equal to an amount not
greater than $250,000.

D.

Third Debenture.  Provided that no Event of Default (as defined in the
Debenture) has occurred under the Debenture (provided that Holder may, in its
sole and absolute discretion waive the occurrence of such Event of Default with
respect to this Section), Holder shall, in Holder’s sole and absolute
discretion, select a date during the Third Debenture Period (as defined below)
(with such date as selected by Holder referred to herein as the “Third Debenture
Date”) at which the Company shall sell and the Holder shall purchase a debenture
in the principal amount of $1,000,000 in exchange for a purchase price of
$1,000,000 (the “Third Debenture”), with such purchase price paid via a cash
payment of $100,000 and the issuance of a promissory note in the principal
amount of $900,000 (the “Third Promissory Note”), with the form of and terms of
the Third Debenture and the Third Promissory Note and payment of the purchase
price subject to the same terms and conditions of this Agreement, the Debenture
and the Promissory Note, as applicable, including the entry into a Continuing
Personal Guaranty on the same terms as set forth in the Continuing Personal
Guaranty entered into in connection with this Agreement and the Debenture, and
when the Third Debenture is issued, the term “Debenture” as used in this
Agreement shall be deemed to include the Third Debenture in all respects and
when the Third Promissory Note is issued, the term “Promissory Note” as used in
this Agreement shall be deemed to include the Third Promissory Note in all
respects. The closing of the purchase and sale of the Third Debenture and the
issuance of the Third Promissory Note shall occur within thirty days of the
Third Debenture Date.  For the purposes of this Agreement, the “Third Debenture
Period” shall mean the period that commences on the date of the issuance of the
Second Debenture to Holder and terminates upon the date that the remaining
Principal Amount of the Second Debenture is equal to an amount not greater than
$250,000.

E.

Fourth Debenture.  Provided that no Event of Default (as defined in the
Debenture) has occurred under the Debenture (provided that Holder may, in its
sole and absolute discretion waive the occurrence of such Event of Default with
respect to this Section), Holder shall, in Holder’s sole and absolute
discretion, select a date during the Fourth Debenture Period (as defined below)
(with such date as selected by Holder referred to herein as the “Fourth
Debenture Date”) at which the Company shall sell and the Holder shall purchase a
debenture in the principal amount of $1,000,000 in exchange for a purchase price
of $1,000,000 (the “Fourth Debenture”), with such purchase price paid via a cash
payment of $100,000 and the issuance of a promissory note in the principal
amount of $900,000 (the “Fourth Promissory Note”), with the form of and terms of
the Fourth Debenture and the Fourth Promissory Note and payment of the purchase
price subject to the same terms and conditions of this Agreement, the Debenture
and the Promissory Note, as applicable, including the entry into a Continuing
Personal Guaranty on the same terms as set forth in the Continuing Personal
Guaranty entered into in connection with this Agreement and the Debenture, and
when the Fourth Debenture is issued, the term

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“Debenture” as used in this Agreement shall be deemed to include the Fourth
Debenture in all respects and when the Fourth Promissory Note is issued, the
term “Promissory Note” as used in this Agreement shall be deemed to include the
Fourth Promissory Note in all respects. The closing of the purchase and sale of
the Fourth Debenture and the issuance of the Fourth Promissory Note shall occur
within thirty days of the Fourth Debenture Date.  For the purposes of this
Agreement, the “Fourth Debenture Period” shall mean the period that commences on
the date of the issuance of the Third Debenture to Holder and terminates upon
the date that the remaining Principal Amount of the Third Debenture is equal to
an amount not greater than $250,000.

F.

Fifth Debenture.  Provided that no Event of Default (as defined in the
Debenture) has occurred under the Debenture (provided that Holder may, in its
sole and absolute discretion waive the occurrence of such Event of Default with
respect to this Section), Holder shall, in Holder’s sole and absolute
discretion, select a date during the Fifth Debenture Period (as defined below)
(with such date as selected by Holder referred to herein as the “Fifth Debenture
Date”) at which the Company shall sell and the Holder shall purchase a debenture
in the principal amount of $1,000,000 in exchange for a purchase price of
$1,000,000 (the “Fifth Debenture”), with such purchase price paid via a cash
payment of $100,000 and the issuance of a promissory note in the principal
amount of $900,000 (the “Fifth Promissory Note”), with the form of and terms of
the Fifth Debenture and the Fifth Promissory Note and payment of the purchase
price subject to the same terms and conditions of this Agreement, the Debenture
and the Promissory Note, as applicable, including the entry into a Continuing
Personal Guaranty on the same terms as set forth in the Continuing Personal
Guaranty entered into in connection with this Agreement and the Debenture, and
when the Fifth Debenture is issued, the term “Debenture” as used in this
Agreement shall be deemed to include the Fifth Debenture in all respects and
when the Fifth Promissory Note is issued, the term “Promissory Note” as used in
this Agreement shall be deemed to include the Fifth Promissory Note in all
respects. The closing of the purchase and sale of the Fifth Debenture and the
issuance of the Fifth Promissory Note shall occur within thirty days of the
Fifth Debenture Date.  For the purposes of this Agreement, the “Fifth Debenture
Period” shall mean the period that commences on the date of the issuance of the
Fourth Debenture to Holder and terminates upon the date that the remaining
Principal Amount of the Fourth Debenture is equal to an amount not greater than
$250,000.

G.

Sixth Debenture.  Provided that no Event of Default (as defined in the
Debenture) has occurred under the Debenture (provided that Holder may, in its
sole and absolute discretion waive the occurrence of such Event of Default with
respect to this Section), Holder shall, in Holder’s sole and absolute
discretion, select a date during the Sixth Debenture Period (as defined below)
(with such date as selected by Holder referred to herein as the “Sixth Debenture
Date”) at which the Company shall sell and the Holder shall purchase a debenture
in the principal amount of $1,000,000 in exchange for a purchase price of
$1,000,000 (the “Sixth Debenture”), with such purchase price paid via a cash
payment of $100,000 and the issuance of a promissory note in the principal
amount of $900,000 (the “Sixth Promissory Note”), with the form of and terms of
the Sixth Debenture and the Sixth Promissory Note and payment of the purchase
price subject to the same terms and conditions of this Agreement, the Debenture
and the Promissory Note, as applicable, including the entry into a Continuing
Personal Guaranty on the same terms as set forth in the Continuing Personal
Guaranty entered into in connection with this Agreement and the Debenture, and
when the Sixth Debenture is issued, the term

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“Debenture” as used in this Agreement shall be deemed to include the Sixth
Debenture in all respects and when the Sixth Promissory Note is issued, the term
“Promissory Note” as used in this Agreement shall be deemed to include the Sixth
Promissory Note in all respects. The closing of the purchase and sale of the
Sixth Debenture and the issuance of the Sixth Promissory Note shall occur within
thirty days of the Sixth Debenture Date.  For the purposes of this Agreement,
the “Sixth Debenture Period” shall mean the period that commences on the date of
the issuance of the Fifth Debenture to Holder and terminates upon the date that
the remaining Principal Amount of the Fifth Debenture is equal to an amount not
greater than $250,000.

H.

Non-Funding Penalty.  Notwithstanding the foregoing requirements of Holder to
purchase each of the Second Debenture, Third Debenture, Fourth Debenture, Fifth
Debenture and Sixth Debenture (each, an “Additional Debenture” and collectively,
the “Additional Debentures”), in the event that Holder does not purchase any or
all of the Additional Debentures within 10 business days of the date that the
delivery of funds associated with such purchase would otherwise be due, upon 20
days’ prior written notice from the Company of such failure to so purchase any
or all of the Additional Debentures, Holder shall pay an amount equal to $25,000
(the “Non-Funding Penalty”) to the Company, provided however that in the event
that the Common Stock shall trade on the Trading Market (as defined in the
Debenture) at a price per share that is $0.049 per share or lower at any time
during the six month period commencing on the date hereof and ending on the six
month anniversary of the date hereof (as adjusted for any stock splits, stock
dividends, combinations, subdivisions, recapitalizations or the like), then the
Non-Funding Penalty shall be reduced to equal $5,000.  The amount payable by the
Holder to the Company in connection with any damages, losses, claims or other
amounts in connection with the failure of the Holder to purchase any or all of
the Additional Debentures shall not exceed $25,000 (or $5,000, subject to the
terms of this Section) in the aggregate.  Upon the payment of the Non-Funding
Penalty to the Company, the Holder shall have no further obligations or duties
under this Agreement, the Debenture or any agreements or debentures entered into
in connection with any of the Additional Debentures, if any, with respect to the
purchase of any Additional Debenture or other duties to deliver any additional
funds to the Company, provided however, that other than with respect to the
removal of the requirement to purchase and enter into any Additional Debenture,
the Company and the Holder shall remain obligated and bound by the remaining
terms and conditions of this Agreement, the Debenture, the Promissory Note and
any agreements or debentures previously entered into in connection with any
Additional Debenture.  The Company’s sole and exclusive remedy in the event that
the Holder fails to purchase any or all of the Additional Debentures shall be
the right of the Company to receive the Non-Funding Penalty from the Holder.  

I.

Non-Funding Election.  In the event that the Common Stock shall trade on the
Trading Market (as defined in the Debenture) at a price per share that is $0.049
per share or lower at any time during the six month period commencing on the
date hereof and ending on the six month anniversary of the date hereof (as
adjusted for any stock splits, stock dividends, combinations, subdivisions,
recapitalizations or the like), the Holder shall have the right, in the Holder’s
sole and absolute discretion, during the time period commencing on the date
hereof and ending on the six month anniversary of the date hereof, to terminate
the right and obligation of the Holder to purchase any or all of the Additional
Debentures through the delivery of written notice to the Company of such
termination in the manner provided in Section XVII hereof.  In the event that
Holder so terminates Holder’s right and obligation to purchase any or all of the

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Additional Debentures under the terms of this Section I.I., the Holder shall
have no obligation to pay any of the Non-Funding Penalty and shall have no
further obligations or duties under this Agreement, the Debenture or any
agreements or debentures entered into in connection with any of the Additional
Debentures, if any, with respect to the purchase of any Additional Debenture or
other duties to deliver any additional funds to the Company, provided however,
that other than with respect to the removal of the requirement to purchase and
enter into any Additional Debenture and pay any of the Non-Funding Penalty, the
Company and the Holder shall remain obligated and bound by the remaining terms
and conditions of this Agreement, the Debenture, the Promissory Note and any
agreements or debentures previously entered into in connection with any
Additional Debenture.  

II.

HOLDER’S REPRESENTATIONS AND WARRANTIES

Holder represents and warrants to and covenants and agrees with the Company as
follows:

1.

Holder is purchasing the Debenture and the Common Stock issuable upon conversion
or redemption of the Debenture (the “Conversion Shares” and, collectively with
the Debenture, the “Securities”) for its own account, for investment purposes
only and not with a view towards or in connection with the public sale or
distribution thereof in violation of the Securities Act.

2.

Holder is (i) an “accredited investor” within the meaning of Rule 501 of
Regulation D under the Securities Act, (ii) experienced in making investments of
the kind contemplated by this Agreement, (iii) capable, by reason of its
business and financial experience, of evaluating the relative merits and risks
of an investment in the Securities, and (iv) able to afford the loss of its
investment in the Securities.

3.

Holder understands that the Securities are being offered and sold by the Company
in reliance on an exemption from the registration requirements of the Securities
Act and equivalent state securities and “blue sky” laws, and that the Company is
relying upon the accuracy of, and Holder’s compliance with, Holder’s
representations, warranties and covenants set forth in this Agreement to
determine the availability of such exemption and the eligibility of Holder to
purchase the Securities;

4.

Holder understands that the Securities have not been approved or disapproved by
the Securities and Exchange Commission (the “Commission”) or any state or
provincial securities commission.

5.

This Agreement has been duly and validly authorized, executed and delivered by
Holder and is a valid and binding agreement of Holder enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally and except as rights to indemnity and
contribution may be limited by federal or state securities laws or the public
policy underlying such laws.

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III.

THE COMPANY’S REPRESENTATIONS

The Company represents and warrants as of the date hereof to the Holder that,
except as set forth on Schedule III attached hereto, the statements contained in
this Section 3 are complete and accurate as of the date of this Agreement.  As
used in this Section 3, the term “Knowledge” shall mean the knowledge of the
members of the board of directors of the Company and/or the officers or
employees of the Company after reasonable investigation.

A.

Capitalization.

1.

The authorized capital stock of the Company consists of  __________ shares of
Common Stock and _________ shares of Series A Preferred Stock of which
__________ shares and __________ shares, respectively, are issued and
outstanding as of the date hereof and are fully paid and nonassessable.  The
amount, exercise, conversion or subscription price and expiration date for each
outstanding option and other security or agreement to purchase shares of Common
Stock is accurately set forth on Schedule III.A.1.

2.

The Conversion Shares have been duly and validly authorized and reserved for
issuance by the Company, and, when issued by the Company upon conversion of the
Debenture, will be duly and validly issued, fully paid and nonassessable and
will not subject the holder thereof to personal liability by reason of being
such holder.

3.

Except as disclosed on Schedule III.A.3., there are no preemptive, subscription,
“call,” right of first refusal or other similar rights to acquire any capital
stock of the Company or other voting securities of the Company that have been
issued or granted to any person and no other obligations of the Company to
issue, grant, extend or enter into any security, option, warrant, “call,” right,
commitment, agreement, arrangement or undertaking with respect to any of their
respective capital stock.

B.

Organization; Reporting Company Status.

1.

The Company is a corporation duly organized, validly existing and in good
standing under the laws of the state or jurisdiction in which it is incorporated
and is duly qualified as a foreign corporation in all jurisdictions in which the
failure so to qualify would reasonably be expected to have a material adverse
effect on the business, properties, prospects, condition (financial or
otherwise) or results of operations of the Company or on the consummation of any
of the transactions contemplated by this Agreement (a “Material Adverse
Effect”).

2.

The Company is subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”).  The Common Stock is traded on the
OTC Bulletin Board service of the National Association of Securities Dealers,
Inc. (“OTCBB”) and the Company has not received any notice regarding, and to its
Knowledge there is no threat of, the termination or discontinuance of the
eligibility of the Common Stock for such trading.

C.

Authorization.  The Company (i) has duly and validly authorized and reserved for
issuance shares of Common Stock, which is a number sufficient for the conversion
of the Debenture in full and (ii) at all times from and after the date hereof
shall have a sufficient

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number of shares of Common Stock duly and validly authorized and reserved for
issuance to satisfy the conversion of the Debenture in full.  The Company
understands and acknowledges the potentially dilutive effect on the Common Stock
of the issuance of the Conversion Shares.  The Company further acknowledges that
its obligation to issue Conversion Shares upon conversion of the Debenture in
accordance with this Agreement is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests of other
stockholders of the Company and notwithstanding the commencement of any case
under 11 U.S.C. § 101 et seq. (the “Bankruptcy Code”).  In the event the Company
is a debtor under the Bankruptcy Code, the Company hereby waives to the fullest
extent permitted any rights to relief it may have under 11 U.S.C. § 362 in
respect of the conversion of the Debenture.  The Company agrees, without cost or
expense to Holder, to take or consent to any and all action necessary to
effectuate relief under 11 U.S.C. § 362.

D.

Authority; Validity and Enforceability.  The Company has the requisite corporate
power and authority to enter into the Documents (as such term is hereinafter
defined) and to perform all of its obligations hereunder and thereunder
(including the issuance, sale and delivery to Holder of the Securities).  The
execution, delivery and performance by the Company of the Documents and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Debenture and the issuance
and reservation for issuance of the Conversion Shares) have been duly and
validly authorized by all necessary corporate action on the part of the Company
and no further filing, consent, or authorization is required by the Company, its
board of directors, or its stockholders.  Each of the Documents has been duly
and validly executed and delivered by the Company and each Document constitutes
a valid and binding obligation of the Company enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally and except as rights to indemnity and
contribution may be limited by federal or state securities laws or the public
policy underlying such laws.  The Securities have been duly and validly
authorized for issuance by the Company and, when executed and delivered by the
Company, will be valid and binding obligations of the Company enforceable
against it in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies generally.  For purposes
of this Agreement, the term “Documents” means (i) this Agreement; (ii) the
Debenture; (iii) the Promissory Note; and (iv) the Continuing Personal Guaranty
dated as of the date hereof between the Holder and the parties listed on the
signature pages thereto (the “Continuing Personal Guaranty”).

E.

Validity of Issuance of the Securities.  The Debenture and the Conversion Shares
upon their issuance in accordance with the Debenture, will be validly issued and
outstanding, fully paid and nonassessable, and not subject to any preemptive
rights, rights of first refusal, tag-along rights, drag-along rights or other
similar rights.

F.

Non-contravention.  The execution and delivery by the Company of the Documents,
the issuance of the Securities, and the consummation by the Company of the other
transactions contemplated hereby and thereby do not, and compliance with the
provisions of this Agreement and other Documents will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination,

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cancellation or acceleration of any obligation or loss of a material benefit
under, or result in the creation of any Lien (as such term is hereinafter
defined) upon any of the properties or assets of the Company or any of its
Subsidiaries under, or result in the termination of, or require that any consent
be obtained or any notice be given with respect to (i) the Articles or
Certificate of Incorporation or By-Laws of the Company or the comparable charter
or organizational documents of any of its Subsidiaries, in each case as amended
to the date of this Agreement, (ii) any loan or credit agreement, debenture,
bond, mortgage, indenture, lease, contract or other agreement, instrument or
permit applicable to the Company or any of its Subsidiaries or their respective
properties or assets or (iii) any statute, law, rule or regulation applicable
to, or any judgment, decree or order of any court or government body having
jurisdiction over, the Company or any of its Subsidiaries or any of their
respective properties or assets.  A “Lien” means any assignment, transfer,
pledge, mortgage, security interest or other encumbrance of any nature, or an
agreement to do so, or the ownership or acquisition or agreement to acquire any
asset or property of any character subject to any of the foregoing encumbrances
(including any conditional sale contract or other title retention agreement).

G.

Approvals.  No authorization, approval or consent of any court or public or
governmental authority is required to be obtained by the Company for the
issuance and sale of the Securities to Holder as contemplated by this Agreement,
except such authorizations, approvals and consents as have been obtained by the
Company prior to the date hereof.

H.

Commission Filings.  The Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act.  The Company has properly and timely
filed with the Commission all reports, proxy statements, forms and other
documents required to be filed with the Commission under the Securities Act and
the Exchange Act since becoming subject to such Acts (the “Commission Filings”),
including without limitation the timely filing of all required reports under
Section 13 or 15(d) of the Exchange Act during the 12 months prior to the date
hereof (or for such shorter period that the Company was required to file such
reports).  As of their respective dates, (i) the Commission Filings complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the
Commission promulgated thereunder applicable to such Commission Filings and (ii)
none of the Commission Filings contained at the time of its filing any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.  The financial
statements of the Company included in the Commission Filings, as of the dates of
such documents, were true and complete in all material respects and complied
with applicable accounting requirements and the published rules and regulations
of the Commission with respect thereto, were prepared in accordance with
generally accepted accounting principles in the United States (“GAAP”) (except
in the case of unaudited statements permitted by Form 10-QSB under the Exchange
Act) applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly presented the consolidated financial
position of the Company and its Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments that in the aggregate are not material and to any other adjustment
described therein).

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I.

Full Disclosure.  There is no fact known to the Company (other than general
economic or industry conditions known to the public generally) that has not been
fully disclosed in the Commission Filings that (i) reasonably could be expected
to have a Material Adverse Effect or (ii) reasonably could be expected to
materially and adversely affect the ability of the Company to perform its
obligations pursuant to the Documents.

J.

Absence of Events of Default.  No “Event of Default” (as defined in any
agreement or instrument to which the Company is a party) and no event which,
with notice, lapse of time or both, would constitute an Event of Default (as so
defined), has occurred and is continuing.

K.

Securities Law Matters.  Assuming the accuracy of the representations and
warranties of Holder set forth in Article II, the offer and sale by the Company
of the Securities is exempt from (i) the registration and prospectus delivery
requirements of the Securities Act and the rules and regulations of the
Commission thereunder and (ii) the registration and/or qualification provisions
of all applicable state and provincial securities and “blue sky” laws.  The
Company shall not directly or indirectly take, and shall not permit any of its
directors, officers or Affiliates directly or indirectly to take, any action
(including, without limitation, any offering or sale to any person or entity of
any security similar to the Debenture) which will make unavailable the exemption
from Securities Act registration being relied upon by the Company for the offer
and sale to Holder of the Debenture and the Conversion Shares, as contemplated
by this Agreement.  No form of general solicitation or advertising has been used
or authorized by the Company or any of its officers, directors or Affiliates in
connection with the offer or sale of the Debenture (and the Conversion Shares),
as contemplated by this Agreement or any other agreement to which the Company is
a party.  As used in the Documents, “Affiliate” has the meaning ascribed to such
term in Rule 12b-2 under the Exchange Act.

L.

Registration Rights.  Except as set forth on Schedule III.L., no Person has, and
as of the Closing (as such term is hereinafter defined), no Person shall have,
any demand, “piggy-back” or other rights to cause the Company to file any
registration statement under the Securities Act relating to any of its
securities or to participate in any such registration statement.

M.

Interest.  The timely payment of interest on the Debenture is not prohibited by
the Articles or Certificate of Incorporation or By-Laws of the Company, in each
case as amended to the date of this Agreement, or any agreement, contract,
document or other undertaking to which the Company is a party.

N.

No Misrepresentation.  No representation or warranty of the Company contained in
this Agreement or any of the other Documents, any schedule, annex or exhibit
hereto or thereto or any agreement, instrument or certificate furnished by the
Company to Holder pursuant to this Agreement contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.

O.

Finder’s Fee.  There is no finder’s fee, brokerage commission or like payment in
connection with the transactions contemplated by this Agreement for which Holder
is liable or responsible.

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P.

Subsidiaries.  Other than the Subsidiaries, the Company does not presently own
or control, directly or indirectly, any interest in any other corporation,
association, or other business entity.  The Company is not a participant in any
joint venture, partnership, or similar arrangement.

Q.

Litigation.  Other than as disclosed in the Commission Filings, there is no
action, suit, proceeding or investigation pending or, to the Company’s
knowledge, currently threatened against the Company or its Subsidiaries that
questions the validity of this Agreement, the Documents, or the right of the
Company to enter into such agreements, or to consummate the transactions
contemplated hereby or thereby, or that might result, either individually or in
the aggregate, in any material adverse changes in the business, assets or
condition of the Company and its Subsidiaries, taken as a whole, financially or
otherwise, or any change in the current equity ownership of the Company or its
Subsidiaries.  Neither the Company nor its Subsidiaries are parties or subject
to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality.  There is no action, suit,
proceeding or investigation by the Company or its Subsidiaries currently pending
or that the Company or its Subsidiaries intends to initiate.

R.

Agreements.  Except for agreements explicitly contemplated hereby, or disclosed
in the Commission Filings, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, Affiliates,
or any affiliate thereof.

S.

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

T.

Acknowledgment Regarding Holder’s Purchase of Securities.  The Company
acknowledges and agrees that the Holder is acting solely in the capacity of an
arm's length purchaser with respect to this Agreement and the transactions
contemplated hereby.  The Company further acknowledges that Holder is not acting
as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby and any
statement made by Holder or any of its representatives or agents in connection
with this Agreement and the transactions contemplated hereby is not advice or a
recommendation and is merely incidental to the Holder’s purchase of the
Securities.  The Company further represents to Holder that the Company's
decision to enter into this Agreement has been based solely on the independent
evaluation of the Company and its representatives.

U.

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 in any

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security or solicited any offers to buy any security under circumstances that
would require registration under the Securities Act of the issuance of the
Securities to the Holder.  The issuance of the Securities to the Holder will not
be integrated with any other issuance of the Company's securities (past, current
or future) for purposes of any shareholder approval provisions applicable to the
Company or its securities.

V.

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

W.

Foreign Corrupt Practices.  Neither the Company, nor any of its Subsidiaries,
nor any director, officer, agent, employee or other person acting on behalf of
the Company or any Subsidiary has, in the course of his actions for, or on
behalf of, the Company, used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to political activity;
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.

X.

Solvency.  The Company (after giving effect to the transactions contemplated by
this Agreement) is solvent (i.e., its assets have a fair market value in excess
of the amount required to pay its probable liabilities on its existing debts as
they become absolute and matured) and currently the Company has no information
that would lead it to reasonably conclude that the Company would not, after
giving effect to the transaction contemplated by this Agreement, have the
ability to, nor does it intend to take any action that would impair its ability
to, pay its debts from time to time incurred in connection therewith as such
debts mature.  The Company did not receive a qualified opinion from its auditors
with respect to its most recent fiscal year end and, after giving effect to the
transactions contemplated by this Agreement, does not anticipate or know of any
basis upon which its auditors might issue a qualified opinion in respect of its
current fiscal year.

Y.

No Shell Company.  The Company is not, nor at any time during the twelve month
period immediately preceding the date hereof has the Company been a “shell
company,” as such term is defined in Rule 405 promulgated under the Securities
Act.

Z.

No Investment Company.  The Company is not, and upon the issuance and sale of
the Securities as contemplated by this Agreement will not be an "investment
company" required to be registered under the Investment Company Act of 1940 (an
"Investment Company").  The Company is not controlled by an Investment Company.

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IV.

CERTAIN COVENANTS AND ACKNOWLEDGMENTS

A.

Filings.  The Company shall take all actions and make all necessary Commission
Filings and “blue sky” filings required to be made by the Company in connection
with the sale of the Securities to Holder as required by all applicable laws,
including without limitation such action as the Company shall reasonably
determine is necessary to qualify the Securities, or obtain an exemption for the
Securities for sale to the Holder at the Closing pursuant to this Agreement
under all applicable laws, and shall provide a copy thereof to Holder promptly
after such filing.

B.

Reporting Status.  With a view to making available to the Holder the benefits of
Rule 144 promulgated under the Securities Act or any similar rule or regulation
of the Commission that may at any time permit Holder to sell securities of the
Company to the public without registration (“Rule 144”), and as a material
inducement to the Holder’s purchase of the Securities, the Company represents,
warrants, and covenants to the following:

1.

The Company's Common Stock is registered under Section 12(g) of the Exchange
Act;

2.

The Company is not and for at least the last 12 months prior to the date hereof
has not been a "shell company," as defined in paragraph (i)(1)(i) of Rule 144 or
Rule 12b-2 of the Exchange Act;

3.

The Company is subject to the reporting requirements of section 13 or 15(d) of
the Exchange Act and has filed all required reports under section 13 or 15(d) of
the Exchange Act during the 12 months prior to the date hereof (or for such
shorter period that the issuer was required to file such reports), other than
Form 8-K reports;

4.

from the date hereof until all the Securities either have been sold by the
Holder, or may permanently be sold by the Holder without any restrictions
pursuant to Rule 144, (the "Registration Period") the Company shall file with
the SEC in a timely manner all required reports under section 13 or 15(d) of the
Exchange Act and such reports shall conform to the requirements of the Exchange
Act and the SEC for filing thereunder;

5.

During the Registration Period the Company shall not become a "shell company,"
as defined in paragraph (i)(1)(i) of Rule 144 or Rule 12b-2 of the Exchange Act;

6.

The Company shall furnish to the Holder so long as the Holder owns Securities,
promptly upon request, (i) a written statement by the Company that it has
complied with the reporting requirements of Rule 144, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Holders to sell such securities pursuant to
Rule 144 without registration; and

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7.

During the Registration Period the Company shall not terminate its status as an
issuer required to file reports under the Exchange Act even if the Exchange Act
or the rules and regulations thereunder would otherwise permit such termination.

C.

8-K Filing.  On or before the fourth Business Day following the date hereof, the
Company shall file a Current Report on Form 8-K describing the terms of the
transactions contemplated by the Documents in the form required by the Exchange
Act and attaching the material Documents (including, without limitation, this
Agreement and the Debenture) as exhibits to such filing (the “8-K Filing”).  In
the event that the Company does not file the 8-K Filing within four Business
Days following the date hereof, the Discount Multiplier (as defined in the
Debenture) under the Debenture shall decrease by one percentage point (1%) for
each period of five Business Days that the 8-K Filing is not filed by the
Company following the date hereof for all conversions of the Debenture
thereafter.

D.

Listing.  Except to the extent the Company lists its Common Stock on The New
York Stock Exchange, The American Stock Exchange or The Nasdaq Stock Market, the
Company shall use its best efforts to maintain its listing of the Common Stock
on OTCBB.  If the Common Stock is delisted from OTCBB, the Company will use its
best efforts to list the Common Stock on the most liquid national securities
exchange or quotation system that the Common Stock is qualified to be listed on.

E.

Reserved Conversion Common Stock.  The Company at all times from and after the
date hereof shall have such number of shares of Common Stock duly and validly
authorized and reserved for issuance as shall be sufficient for the conversion
in full of the Debenture.  The Company shall take all action reasonably
necessary to at all times have authorized, and reserved for the purpose of
issuance, such number of shares of Common Stock as shall be necessary to effect
the full conversion of the Debenture and the Additional Debentures outstanding,
if any.  If at any time the number of authorized shares of Common Stock of the
Company is insufficient to effect the full conversion of the Debenture and the
Additional Debentures outstanding, if any, the Company shall call and hold a
special meeting of the shareholders of the Company within thirty (30) days of
such occurrence, for the sole purpose of increasing the number of authorized
shares of the Common Stock. The Company's management shall recommend to the
shareholders to vote in favor of increasing the number of shares of authorized
Common Stock.  Management shall also vote all of its shares in favor of
increasing the number of authorized shares of Common Stock.

F.

Information.  Each of the parties hereto acknowledges and agrees that Holder
shall not be provided with, nor be given access to, any material non-public
information relating to the Company.

G.

Accounting and Reserves.  The Company shall maintain a standard and uniform
system of accounting and shall keep proper books and records and accounts in
which full, true, and correct entries shall be made of its transactions, all in
accordance with GAAP applied on consistent basis through all periods, and shall
set aside on such books for each fiscal year all such reserves for depreciation,
obsolescence, amortization, bad debts and other purposes in connection with its
operations as are required by such principles so applied.

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H.

Transactions with Affiliates.  So long as the Debenture is outstanding, neither
the Company nor any of its Subsidiaries shall, directly or indirectly, enter
into any material transaction or agreement with any stockholder, officer,
director or Affiliate of the Company or family member of any officer, director
or Affiliate of the Company, unless the transaction or agreement is (i) reviewed
and approved by a majority of Disinterested Directors (as such term is
hereinafter defined) and (ii) on terms no less favorable to the Company or the
applicable Subsidiary than those obtainable from a nonaffiliated person.  A
“Subsidiary” means any entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are owned directly or indirectly by
the Company.  A “Disinterested Director” shall mean a director of the Company
who is not and has not been an officer or employee of the Company and who is not
a member of the family of, controlled by or under common control with, any such
officer or employee.

I.

Certain Restrictions.  So long as the Debenture is outstanding, no dividends
shall be declared or paid or set apart for payment nor shall any other
distribution be declared or made upon any capital stock of the Company, nor
shall any capital stock of the Company be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of shares of
Common Stock made for purposes of an employee incentive or benefit plan
(including a stock option plan) of the Company or pursuant to any of the
security agreements listed on Schedule IV.I) for any consideration by the
Company, directly or indirectly, nor shall any moneys be paid to or made
available for a sinking fund for the redemption of any Common Stock.  So long as
the Debenture remains outstanding, the Company shall not, without the prior
written consent of the Buyer, (i) issue or sell shares of Common Stock or
Preferred Stock without consideration or for a consideration per share less than
the bid price as determined on the Trading Market (the “Bid Price”) of the
Common Stock determined immediately prior to its issuance, (ii) issue any
preferred stock, warrant, option, right, contract, call, or other security or
instrument granting the holder thereof the right to acquire Common Stock without
consideration or for a consideration less than such Common Stock's Bid Price
determined immediately prior to its issuance, or (iii) file any registration
statements on Form S-8 valued at more than $500,000 in the aggregate.

J.

Short Selling.

  So long as the Debenture is outstanding, Holder agrees and covenants on its
behalf and on behalf of its affiliates that neither Holder nor its affiliates
shall at any time engage in any short sales with respect to the Company’s Common
Stock, or sell put options or similar instruments with respect to the Company’s
Common Stock. The parties acknowledge that Holder shall be entitled to sell the
Common Stock from each Debenture conversion immediately upon submission of the
applicable Debenture Conversion Notice, and payment of the purchase price, to
the Company for such Common Stock.

V.

ISSUANCE OF COMMON STOCK

A.

The Company undertakes and agrees that no instruction other than the
instructions referred to in this Article V shall be given to its transfer agent
for the Conversion Shares and that the Conversion Shares shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and applicable law.  Nothing contained in this
Section V.A. shall affect in any way Holder’s obligations and agreement to
comply with all applicable securities laws upon resale of such Common Stock.

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B.

Holder shall have the right to convert the Debenture by telecopying an executed
and completed Conversion Notice (as such term is defined in the Debenture) to
the Company.  Each date on which a Conversion Notice is telecopied to and
received by the Company in accordance with the provisions hereof shall be deemed
a Conversion Date (as such term is defined in the Debenture).  The Company shall
cause the transfer agent to transmit the certificates evidencing the Common
Stock issuable upon conversion of the Debenture (together with a new debenture,
if any, representing the principal amount of the Debenture not being so
converted) to Holder via express courier, or if a Registration Statement
covering the Common Stock has been declared effective by the SEC by electronic
transfer, within two (2) business days after receipt by the Company of the
Conversion Notice, as applicable (the “Delivery Date”).

C.

Upon the conversion of the Debenture or respective part thereof, the Company
shall, at its own cost and expense, take all necessary action (including the
issuance of an opinion of counsel) to assure that the Company's transfer agent
shall issue stock certificates in the name of Holder (or its nominee) or such
other persons as designated by Holder and in such denominations to be specified
at conversion or exercise representing the number of shares of common stock
issuable upon such conversion or exercise. The Company warrants that the
Conversion Shares will be unlegended, free-trading, and freely transferable, and
will not contain a legend restricting the resale or transferability of the
Company Common Stock provided the Conversion Shares, as applicable, are being
sold pursuant to an effective registration statement covering the Common Stock
to be sold or is otherwise exempt from registration when sold.

D.

The Company understands that a delay in the delivery of the Common Stock in the
form required pursuant to this section, or the Mandatory Redemption Amount
described in Section E hereof, beyond the Delivery Date or Mandatory Redemption
Payment Date (as hereinafter defined) could result in economic loss to the
Holder. As compensation to the Holder for such loss, the Company agrees to pay
late payments to the Holder for late issuance of Common Stock in the form
required pursuant to Section E hereof upon Conversion of the Debenture or late
payment of the Mandatory Redemption Amount, in the amount of $100 per business
day after the Delivery Date or Mandatory Redemption Payment Date, as the case
may be, for each $10,000 of Debenture principal amount being converted or
redeemed. The Company shall pay any payments incurred under this Section in
immediately available funds upon demand. Furthermore, in addition to any other
remedies which may be available to the Holder, in the event that the Company
fails for any reason to effect delivery of the Common Stock by the Delivery Date
or make payment by the Mandatory Redemption Payment Date, the Holder will be
entitled to revoke all or part of the relevant Notice of Conversion or rescind
all or part of the notice of Mandatory Redemption by delivery of a notice to
such effect to the Company whereupon the Company and the Holder shall each be
restored to their respective positions immediately prior to the delivery of such
notice, except that late payment charges described above shall be payable
through the date notice of revocation or rescission is given to the Company.

E.

Mandatory Redemption. In the event the Company is prohibited from issuing Common
Stock, or fails to timely deliver Common Stock on a Delivery Date, or upon the
occurrence of an Event of Default (as defined in the Debenture) or for any
reason other than pursuant to the limitations set forth herein, then at the
Holder's election, the Company must pay to the Holder ten (10) business days
after request by the Holder or on the Delivery Date (if

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requested by the Holder) a sum of money determined by multiplying up to the
outstanding Principal Amount (as defined in the Debenture) of the Debenture
designated by the Holder by 150%, together with accrued but unpaid interest
thereon ("Mandatory Redemption Payment"). The Mandatory Redemption Payment must
be received by the Holder on the same date as the Company Common Stock otherwise
deliverable or within ten (10) business days after request, whichever is sooner
("Mandatory Redemption Payment Date"). Upon receipt of the Mandatory Redemption
Payment, the corresponding Debenture principal and interest will be deemed paid
and no longer outstanding.

F.

Buy-In. In addition to any other rights available to the Holder, if the Company
fails to deliver to the Holder such Common Stock issuable upon conversion of a
Debenture by the Delivery Date and if ten (10) days after the Delivery Date the
Holder purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the Common Stock
which the Holder anticipated receiving upon such conversion (a "Buy-In"), then
the Company shall pay in cash to the Holder (in addition to any remedies
available to or elected by the Holder) the amount by which (A) the Holder's
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (B) the aggregate principal and/or interest
amount of the Debenture for which such conversion was not timely honored,
together with interest thereon at a rate of 15% per annum, accruing until such
amount and any accrued interest thereon is paid in full (which amount shall be
paid as liquidated damages and not as a penalty). For example, if the Holder
purchases shares of Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted conversion of $10,000 of Debenture
principal, the Company shall be required to pay the Holder $1,000, plus
interest. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In.

G.

The Securities shall be delivered by the Company to the Holder pursuant to
Section I.B. hereof on a “delivery-against-payment basis” at the Closing.

VI.

CLOSING DATE

The “Closing” shall occur by the delivery: (i) to the Holder of the documents
evidencing the Debenture and all other Documents, and (ii) to the Company the
Purchase Price, including the Promissory Note, and the date on which the Closing
occurs shall be referred to herein as the “Closing Date”.

VII.

CONDITIONS TO THE COMPANY’S OBLIGATIONS

Holder understands that the Company’s obligation to sell the Debenture on the
Closing Date to Holder pursuant to this Agreement is conditioned upon:

A.

Delivery by Holder to the Company of the Purchase Price, including the
Promissory Note evidencing such applicable portion of the Purchase Price;

B.

The accuracy on the Closing Date of the representations and warranties of Holder
contained in this Agreement as if made on the Closing Date (except for
representations and warranties which, by their express terms, speak as of and
relate to a specified date, in which case such accuracy shall be measured as of
such specified date) and the performance by Holder in all

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material respects on or before the Closing Date of all covenants and agreements
of Holder required to be performed by it pursuant to this Agreement on or before
the Closing Date; and

C.

There shall not be in effect any law or order, ruling, judgment or writ of any
court or public or governmental authority restraining, enjoining or otherwise
prohibiting any of the transactions contemplated by this Agreement.

VIII.

CONDITIONS TO HOLDER’S OBLIGATIONS

The Company understands that Holder’s obligation to purchase the Securities on
the Closing Date pursuant to this Agreement is conditioned upon:

A.

Delivery by the Company of the Debenture (I/N/O Holder or I/N/O Holder’s
nominee) to Holder;

B.

The accuracy on the Closing Date of the representations and warranties of the
Company contained in this Agreement as if made on the Closing Date (except for
representations and warranties which, by their express terms, speak as of and
relate to a specified date, in which case such accuracy shall be measured as of
such specified date) and the performance by the Company in all respects on or
before the Closing Date of all covenants and agreements of the Company required
to be performed by it pursuant to this Agreement on or before the Closing Date,
all of which shall be confirmed to Holder by delivery of the certificate of the
chief executive officer of the Company to that effect;

C.

The Company shall have delivered to the Holder a certificate of the Company
executed by an officer of the Company, dated as of the Closing, certifying
the resolutions adopted by the Company’s board of directors authorizing the
execution of the Documents, the issuance of the Securities, and the transactions
contemplated hereby, and copies of any required third party consents, approvals
and filings required in connection with the consummation of the transactions
contemplated by this Agreement;

D.

There not having occurred (i) any general suspension of trading in, or
limitation on prices listed for, the Common Stock on the OTCBB/Pink Sheet, (ii)
the declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States, (iii) the commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States or any of its territories, protectorates or
possessions or (iv) in the case of the foregoing existing at the date of this
Agreement, a material acceleration or worsening thereof;

E.

There not having occurred any event or development, and there being in existence
no condition, having or which reasonably and foreseeably could have a Material
Adverse Effect;

F.

There shall not be in effect any law, order, ruling, judgment or writ of any
court or public or governmental authority restraining, enjoining or otherwise
prohibiting any of the transactions contemplated by this Agreement;

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G.

The Company shall have obtained all consents, approvals or waivers from
governmental authorities and third persons necessary for the execution, delivery
and performance of the Documents and the transactions contemplated thereby;

H.

Holder shall have received such additional documents, certificates, payment,
assignments, transfers and other deliveries as it or its legal counsel may
reasonably request and as are customary to effect a closing of the matters
herein contemplated;

I.

Delivery by the Company of a legal opinion with respect to the enforceability of
this Agreement and the transactions contemplated hereunder from its outside
counsel in form and substance satisfactory to Holder;

J.

Delivery by the Company of a valid waiver of any preemptive rights held by the
individuals and/or parties listed on Schedule III.A.3 hereto in form and
substance satisfactory to Holder; and

K.

Delivery to the Holder of the fully executed Continuing Personal Guaranty.

IX.

SURVIVAL; INDEMNIFICATION

A.

The representations, warranties and covenants made by each of the Company and
Holder in this Agreement, the annexes, schedules and exhibits hereto and in each
instrument, agreement and certificate entered into and delivered by them
pursuant to this Agreement shall survive the Closing and the consummation of the
transactions contemplated hereby.  In the event of a breach or violation of any
of such representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all rights
and remedies for such breach or violation available to it under the provisions
of this Agreement or otherwise, whether at law or in equity, irrespective of any
investigation made by or on behalf of such party on or prior to the Closing
Date.

B.

The Company hereby agrees to indemnify and hold harmless Holder, its affiliates
and their respective officers, directors, employees, consultants, partners,
members and attorneys (collectively, the “Holder Indemnitees”) from and against
any and all losses, claims, damages, judgments, penalties, liabilities and
deficiencies (collectively, “Losses”) and agrees to reimburse Holder Indemnitees
for all reasonable out-of-pocket expenses (including the reasonable fees and
expenses of legal counsel), in each case promptly as incurred by Holder
Indemnitees and to the extent arising out of or in connection with:

1.

any misrepresentation, omission of fact or breach of any of the Company’s
representations or warranties contained in this Agreement or the other
Documents, or the annexes, schedules or exhibits hereto or thereto or any
instrument, agreement or certificate entered into or delivered by the Company
pursuant to this Agreement or the other Documents;

2.

any failure by the Company to perform any of its covenants, agreements,
undertakings or obligations set forth in this Agreement or the other Documents
or any instrument, certificate or agreement entered into or delivered by the
Company pursuant to this Agreement or the other Documents;

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3.

the purchase of the Debenture, the conversion of the Debenture, the payment of
interest on the Debenture, the consummation of the transactions contemplated by
this Agreement and the other Documents, the use of any of the proceeds of the
Purchase Price by the Company, the purchase or ownership of any or all of the
Securities, the performance by the parties hereto of their respective
obligations hereunder and under the Documents or any claim, litigation,
investigation, proceedings or governmental action relating to any of the
foregoing, whether or not Holder is a party thereto; and/or

4.

resales of the Common Stock by Holder in the manner and as contemplated by this
Agreement and the Documents.

C.

Promptly after receipt by a party seeking indemnification pursuant to this
Article IX (an “Indemnified Party”) of written notice of any investigation,
claim, proceeding or other action in respect of which indemnification is being
sought (each, a “Claim”), the Indemnified Party promptly shall notify the
Company against whom indemnification pursuant to this Article IX is being sought
(the “Indemnifying Party”) of the commencement thereof, but the omission so to
notify the Indemnifying Party shall not relieve it from any liability that it
otherwise may have to the Indemnified Party except to the extent that the
Indemnifying Party is materially prejudiced and forfeits substantive rights or
defenses by reason of such failure.  In connection with any Claim as to which
both the Indemnifying Party and the Indemnified Party are parties, the
Indemnifying Party shall be entitled to assume the defense thereof.
 Notwithstanding the assumption of the defense of any Claim by the Indemnifying
Party, the Indemnified Party shall have the right to employ separate legal
counsel and to participate in the defense of such Claim, and the Indemnifying
Party shall bear the reasonable fees, out-of-pocket costs and expenses of such
separate legal counsel to the Indemnified Party if (and only if): (x) the
Indemnifying Party shall have agreed to pay such fees, out-of-pocket costs and
expenses, (y) the Indemnified Party and the Indemnifying Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal counsel would not be appropriate due to actual or, as
reasonably determined by legal counsel to the Indemnified Party, potentially
differing interests between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are in addition to or disparate from those available to the Indemnifying Party
or (z) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim.  If the Indemnified Party
employs separate legal counsel in circumstances other than as described in
clauses (x), (y) or (z) above, the fees, costs and expenses of such legal
counsel shall be borne exclusively by the Indemnified Party.  Except as provided
above, the Indemnifying Party shall not, in connection with any Claim in the
same jurisdiction, be liable for the fees and expenses of more than one firm of
legal counsel for the Indemnified Party (together with appropriate local
counsel).  The Indemnifying Party shall not, without the prior written consent
of the Indemnified Party (which consent shall not unreasonably be withheld),
settle or compromise any Claim or consent to the entry of any judgment that does
not include an unconditional release of the Indemnified Party from all
liabilities with respect to such Claim or judgment.

D.

In the event one party hereunder should have a claim for indemnification that
does not involve a claim or demand being asserted by a third party, the
Indemnified Party

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promptly shall deliver notice of such claim to the Indemnifying Party.  If the
Indemnifying Party disputes the claim, such dispute shall be resolved by mutual
agreement of the Indemnified Party and the Indemnifying Party or by binding
arbitration conducted in accordance with the procedures and rules of the
American Arbitration Association.  Judgment upon any award rendered by any
arbitrators may be entered in any court having competent jurisdiction thereof.

X.

GOVERNING LAW

This Agreement shall be governed by and interpreted in accordance with the laws
of the State of California, without regard to the conflicts of law principles of
such state.

XI.

SUBMISSION TO JURISDICTION

Each of the parties hereto consents to the exclusive jurisdiction of the federal
courts whose districts encompass any part of the City of San Diego or the state
courts of the State of California sitting in the City of San Diego in connection
with any dispute arising under this Agreement and the other Documents.  Each
party hereto hereby irrevocably and unconditionally waives, to the fullest
extent it may effectively do so, any defense of an inconvenient forum or
improper venue to the maintenance of such action or proceeding in any such court
and any right of jurisdiction on account of its place of residence or domicile.
 Each party hereto irrevocably and unconditionally consents to the service of
any and all process in any such action or proceeding in such courts by the
mailing of copies of such process by registered or certified mail (return
receipt requested), postage prepaid, at its address specified in Article XVII.
 Each party hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.

XII.

WAIVER OF JURY TRIAL

TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OTHER DOCUMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS AGREEMENT AND OTHER DOCUMENTS.  EACH PARTY HERETO (i)
CERTIFIES THAT NEITHER OF THEIR RESPECTIVE REPRESENTATIVES, AGENTS OR ATTORNEYS
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT
IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.

XIII.

COUNTERPARTS; EXECUTION

This Agreement may be executed in counterparts, each of which when so executed
and delivered shall be an original, but both of which counterparts shall
together constitute one and

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the same instrument.  A facsimile transmission of this signed Agreement shall be
legal and binding on both parties hereto.

XIV.

HEADINGS

The headings of this Agreement are for convenience of reference and shall not
form part of, or affect the interpretation of, this Agreement.

XV.

SEVERABILITY

In the event any one or more of the provisions contained in this Agreement or in
the other Documents should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein or therein shall not in any way be affected or impaired
thereby.  The parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions, the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

XVI.

ENTIRE AGREEMENT; REMEDIES, AMENDMENTS AND WAIVERS

This Agreement and the Documents constitute the entire agreement between the
parties hereto pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of such parties.  No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by both parties.  No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.

XVII.

NOTICES

Any notices, consents, waivers, or other communications required or permitted to
be given under the terms of this Agreement must be in writing and will be deemed
to have been delivered (i) upon receipt, when delivered personally; (ii) upon
confirmation of receipt, when sent by facsimile; (iii) three (3) days after
being sent by U.S. certified mail, return receipt requested, or (iv) one (1) day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:

A.

If to the Company, to:

Last Mile Logistics Group, Inc.

6675 Anberton Drive

Elkridge, MD 21075

Telephone:

301-931-1771

Facsimile:

301-937-6810

B.

If to Holder, to:

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Golden Gate Investors, Inc.
1150 Silverado Street, Suite 220
La Jolla, California 92037
Telephone:

858-551-8789
Facsimile:

858-551-8779

The Company or Holder may change the foregoing address by notice given pursuant
to this Article XVII.

XVIII.

CONFIDENTIALITY

Each of the Company and Holder agrees to keep confidential and not to disclose
to or use for the benefit of any third party the terms of this Agreement or any
other information which at any time is communicated by the other party as being
confidential without the prior written approval of the other party; provided,
however, that this provision shall not apply to information which, at the time
of disclosure, is already part of the public domain (except by breach of this
Agreement) and information which is required to be disclosed by law (including,
without limitation, pursuant to Item 601(b)(10) of Regulation S-K under the
Securities Act and the Exchange Act).

XIX.

MAXIMUM INTEREST RATE

Notwithstanding anything herein to the contrary, if at any time the applicable
interest rate as provided for herein shall exceed the maximum lawful rate which
may be contracted for, charged, taken or received by the Holder in accordance
with any applicable law (the “Maximum Rate”), the rate of interest applicable to
this Agreement shall be limited to the Maximum Rate.  To the greatest extent
permitted under applicable law, the Company hereby waives and agrees not to
allege or claim that any provisions of this Agreement could give rise to or
result in any actual or potential violation of any applicable usury laws.

XX.

ASSIGNMENT

This Agreement shall not be assignable by the Company without the prior written
consent of the Holder.  The Holder may assign this Agreement upon 10 days prior
written notice to the Company.

IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement to be
executed and delivered on the date first above written.

Last Mile Logistics Group, Inc.

Golden Gate Investors, Inc.

By: __________________________

By: __________________________

Title: _________________________

Title: _________________________

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SCHEDULE III.A.1

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SCHEDULE III.A.3

PREEMPTIVE RIGHTS

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SCHEDULE III.L.

REGISTRATION RIGHTS

Name

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SCHEDULE IV.I.

SECURITY AGREEMENTS

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EXHIBIT A

SECURED PROMISSORY NOTE

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