Palladium Capital Advisors, LLC
230 Park Avenue, Suite 539
New York, New York 10169

Tel (646) 485-7297 Fax (646) 390-6328

Email jp@palladiumcapital.com

May 15, 2007

Frank T. Matarazzo
President
Microwave Satellite Technologies, Inc.
259-263 Goffle Road
Hawthorne, New Jersey 07506

Re: Placement Agent Agreement

Dear Frank:
 
This letter agreement (the “Agreement”) confirms our understanding with respect
to the engagement by Microwave Satellite Technologies, Inc. (the “Company”) of
Palladium Capital Advisors, LLC (“PCA”) as placement agent in connection with
the sale of up to $12.5 million of equity or equity-linked securities on a best
efforts basis through a private placement or similar unregistered transaction on
terms that have been or will be determined by the Company and its advisors as
set forth in the Company’s Confidential Private Placement Memorandum dated May
7, 2007, as may be revised by the Company from time to time (the “Transaction”)
to investors (the “Investors”). For purposes hereof, the term “Transaction” also
includes a convertible loan or other type of investment convertible into or
exchangeable for or otherwise linked to the equity of the Company. The term of
the Agreement (the “Term”) shall be for a period of twelve (12) months from the
date hereof or until earlier terminated by either party as described below in
Section 7.
 

1.
Scope. The Company hereby engages PCA to act as placement agent during the Term
in connection with the Transaction(s). The goal of the engagement is to raise up
to $12.5 million in capital for the Company to be used for growth opportunities
and general working capital purposes. PCA shall assist the Company and shall, on
behalf of the Company, contact such potential investors as PCA and the Company
agree in advance. PCA shall assist the Company in effecting the Transaction(s),
and shall use its best efforts to offer and sell the securities in accordance
with this Agreement. PCA shall market to those, and only those investors listed
in Addendum A hereto, as may be amended by mutual agreement of the parties from
time to time, and the Company shall retain the right, in its sole discretion, to
accept or reject investors identified by PCA. PCA’s engagement by the Company
shall be exclusive solely as to the potential investors included in Addendum A.
PCA shall receive written approval from the Company prior to marketing to any
other investors who have not been included on Addendum A. It is anticipated that
the Company shall also engage its own legal counsel and may require the services
of an accounting firm.

 

2.
Company Information. The Company shall cooperate with PCA in connection with its
financial review and analysis of the Company and shall provide PCA with such
information concerning the Company as PCA deems necessary or appropriate for
such review and analysis (collectively, the “Information”).

 

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Microwave Satellite Technologies, Inc.
May 15, 2007
 
PCA shall keep in confidence and shall use only for the purposes of performing
its obligations pursuant to this Agreement, and shall not, without the Company's
consent, disclose to any person any non-public Information furnished by the
Company to PCA except (a) its own counsel and other advisors on a confidential
basis, (b) to the Investors approved by the Company in accordance with the terms
hereof and (c) to such other persons as such counsel has advised is required by
applicable law, and then only after informing the Company of such legal
requirement and providing the Company sufficient time to seek a protective order
or otherwise prevent or restrict such disclosure.
 
All Information provided by the Company shall be accurate and complete in all
material respects and shall not contain any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not false or misleading.
PCA does not assume responsibility for the accuracy or completeness of the
Information, including but not limited to any disclosure materials related to
the Transaction(s) except for such information that is provided in writing by
PCA to the Company that is independently produced by PCA and not based on
Information provided by the Company or information available from generally
recognized public sources. The Company acknowledges and agrees that PCA will
rely primarily on the Information and on information available from generally
recognized public sources in performing its services hereunder, without having
any obligation to independently verify the same and that PCA has no obligation
to undertake an independent evaluation, appraisal or physical inspection of any
assets or liabilities of the Company. If at any time prior to the completion of
a Transaction an event occurs which would cause the Information (as supplemented
or amended) to contain an untrue statement of a material fact or to omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, the
Company will notify PCA immediately of such event.
 

3.
Fees. The Company shall pay PCA the following amounts:

 

a.
Private Placement Fee. PCA shall be paid upon consummation of the Transaction(s)
a transaction fee, payable in cash, of 7.0% of the Gross Proceeds (as defined
below) from the capital received, directly or indirectly, by the Company solely
from investors identified on Addendum A, with respect to a Transaction (the
“Transaction Fee”). For purposes hereof, “Gross Proceeds” shall mean the fair
market value of all of the consideration (including, without limitation, cash,
securities, other assets and contingent payment amounts actually paid, plus debt
and liabilities assumed (including, without limitation, indebtedness for
borrowed money, pension liabilities and guarantees, license fees, royalty fees,
joint venture interests or other property, obligations or services, but
excluding payments made to exercise any convertible securities) received by the
Company or any of its security holders in connection with any Transaction,
directly or indirectly, from the sale or exchange of the Company’s securities
issued in a Transaction before the deduction of expenses related to such
Transaction, including but not limited to the fee payable to PCA. All cash
compensation payable by the Company to PCA hereunder shall be paid by wire
transfer.

 

 
b.
Placement Warrants. Upon consummation of a Transaction, the Company will issue
to PCA five-year stock purchase warrants (the “Placement Agent Warrants”),
equivalent to 7% of the shares issued in the Transaction to investors listed in
Addendum A, taking into consideration any increase in shares under a ratchet or
similar provision pursuant to which the number of shares initially purchased is
subsequently increased, with an “exercise price” equal to 100% of the exercise
price of the warrants issued in the Transaction. The exercise price is defined
as the price at which PCA may convert the Placement Agent Warrants into common
stock of the Company. In addition to the exercise price, PCA shall pay a
“warrant cost” of $0.001 per share (one-tenth of a cent) to the Company upon the
issuance of Placement Agent Warrants.

 
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Microwave Satellite Technologies, Inc.
May 15, 2007
 
A separate Placement Agent Warrant Agreement shall be prepared after
consummation of the Transaction, and shall take the form of PCA’s standard
warrant agreement, but shall be acceptable to the Company, which contains the
following terms, among others: the Placement Agent Warrants are not transferable
by the warrantholder other than to a limited number of employees and affiliates
of PCA subject to compliance with all applicable securities laws; the Placement
Agent Warrants may be exercised as to all or any lesser number of shares of
equity securities commencing immediately after the date of the consummation of
the Transaction; the Placement Agent Warrants may be exercised on a cash-less
basis if not registered within 1 year of the closing of the Transaction and be
redeemable on the same terms as the Transaction warrants; and the warrant
agreement will contain provisions for change of control, weighted average based
anti-dilution and customary piggy-back registration rights.
 

c.
In the event consideration is to be paid in whole or in part by installment
payments, the portion of PCA’s fee relating thereto shall be calculated and paid
when and as such installment payments are made.

 

d.
Consideration received by the Company paid in whole or in part in the form of
securities or other noncash consideration will be valued at its fair market
value, as reasonably determined by an independent third party to be mutually
agreed upon by the Company and PCA, as of the day prior to the closing of the
Transaction (or later date on which a contingent payment is made), provided,
however, that if such consideration consists of securities with an existing
trading market, such securities will be valued at the average of the last sales
price for such securities on the five trading days prior to the date of the
closing (or later date on which a contingent payment is made).

 

e.
The foregoing fees (including the Placement Agent Warrants) are payable for any
Transaction that occurs during the Term or within 12 months thereafter with
respect to investors included in Addendum A.

 
4.
Expenses. In addition to the Transaction Fee and the Warrants, the Company
agrees to reimburse PCA for its reasonable expenses incurred in connection with
this engagement approved in advance in writing by Company. These expenses
generally include travel costs and other customary expenses for this type of
transaction. Such expenses shall not exceed $25,000 in the aggregate without the
prior written consent of the Company. Legal fees incurred by PCA to prepare,
review and finalize this letter agreement will not be reimbursable by the
Company.

 
5.
Advertisements. Upon a closing of a Transaction, the Company agrees that PCA has
the right to place advertisements in financial and other newspapers and journals
(whether in print or on the internet), and to publicize on its website and in
its marketing materials, at its sole expense, describing its services to the
Company hereunder, provided that the Company has the right to review, comment on
and approve all such advertisements, website postings and publications prior to
publication.

 
6.
Indemnification. The Company shall indemnify PCA, its agents and affiliates in
accordance with Annex A attached hereto and made a part hereof.

 
7.
Termination; Survival. This Agreement may be terminated at any time by either
party hereto upon five days prior written notice to the other party, effective
upon receipt of such notice to that effect by the other party, or automatically
upon the consummation of the Transaction. Upon termination or expiration of this
Agreement, the Company shall have no further obligation to PCA other than with
respect to fees payable to PCA as provided herein, provided that the provisions
of Sections 3 through 9, inclusive, and PCA’s obligation to preserve the
confidential information provided to it by Company for an indefinite period,
shall survive any such expiration or termination. The indemnification provisions
in Annex A shall survive the termination or expiration of this Agreement for the
earlier of (i) forty months after such termination or expiration or (ii) the
applicable statute of limitations period.

 
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Microwave Satellite Technologies, Inc.
May 15, 2007
 
8.
Venue. The Company and PCA agree that any legal suit, action, or proceeding
arising out of or relating to this Agreement and/or the transactions
contemplated by this Agreement shall be instituted exclusively in the state or
federal courts located in New York County, New York. The parties further
irrevocably consent to the service of any complaint, summons, notice or other
process relating to any such action or proceeding by delivery thereof to such
party by hand or by registered or certified mail in the manner prescribed in
Section 9(f) hereof. The parties further irrevocably consent that any judgment
rendered by such court in the State of New York may be entered in other courts
having competent jurisdiction thereof. Without in any way limiting the
indemnification provisions in Annex A hereto, the prevailing party shall have
the right to recover any costs, including reasonable attorneys’ fees, in the
event of any action brought to enforce any of the terms or provisions of this
Agreement. The parties agree that service may be made by overnight mail at its
address set forth herein in any action to enforce any of the provisions herein.
Without in any way limiting the indemnification provision in Annex A hereto, and
subject to Section 7 hereof, any action arising under or related to this
Agreement for compensation must be brought prior to six months following the
later of (i) the closing of the Transaction, (ii) notice of the claim giving
rise to such action, or (iii) termination of this Agreement, or such action
shall be barred as untimely.

 

9.
Miscellaneous.

 

a.
Successors and Assigns. This Agreement shall be binding on and inure to the
benefit of each party's agents, affiliates, successors and assigns, but may not
be assigned without the prior written consent of the other party.

 

b.
Governing Law. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York, without regard to conflicts of
laws or principles thereof.

 

c.
Amendment. This Agreement may not be modified or amended except in writing
signed by the parties hereto.

 

 
d.
PCA’s Obligations. The obligations of PCA and the Company hereunder are solely
corporate obligations, and no officer, director, employee, agent, member,
shareholder, or controlling person shall be subject to any personal liability
whatsoever to any person, nor will any such claim be asserted by or on behalf of
PCA or the Company or any of their respective affiliates. The Company
acknowledges and agrees that PCA is acting as an independent contractor under
this Agreement and that the engagement of PCA is not intended to confer rights
on any person or entity other than the Company and PCA. Nothing contained in
this Agreement shall limit or restrict the right of PCA or of any member,
employee, agent or representative of PCA, to be a member, shareholder, partner,
director, officer, employee, agent or representative of, or to engage in, any
other business, whether of a similar nature or not, nor to limit or restrict the
right of PCA to render services of any kind to any other corporation, company,
firm, individual or association. PCA is a registered broker-dealer in good
standing with the SEC under the Securities Act of 1934 and in all jurisdictions
in which the nature of its activities or the substance of its actions would
require such registration or qualification pursuant to the blue-sky laws of such
jurisdiction. PCA will comply with all laws, rules and regulations related to
its activities on behalf of Company pursuant to this Agreement. All consents,
authorizations, and approvals necessary or appropriate for PCA to undertake its
obligations set forth in this Agreement have been obtained by PCA prior to
execution of this Agreement and PCA shall immediately use its best efforts to
secure investors for the Company as set forth herein.

 
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Microwave Satellite Technologies, Inc.
May 15, 2007
 

 
e.
Entire Agreement. This Agreement embodies the entire agreement and understanding
of the parties hereto with respect to the subject matter hereof and supersedes
any and all prior agreements, arrangements and understandings whether written or
oral, relating to matters provided herein, including the Placement Agent
Agreement, dated May 9, 2007, between the parties hereto. This Agreement is
entered into by each of the parties hereto without reliance on any statement,
representation, promise, inducement or agreement not expressly contained within
this Agreement. Except as set forth in Annex A hereof, nothing in this Agreement
is intended to confer upon any other person (including the stockholders,
employees or creditors of the Company) any rights or remedies hereunder or by
reason hereof. In case any provision of this Agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.

 

 
f.
Notices. All notices or communications hereunder shall be in writing and mailed,
sent by fascimile or delivered to the Company and to PCA at their respective
addresses set forth above (with a copy (if to the Company) to Harvey J. Kesner,
Esq., Haynes and Boone, LLP, 153 East 53rd Street, New York, NY 10022,
facsimile: (212)-884-8233).

 

 
g.
Opinions and Advice. PCA is acting as financial advisor and is not an expert on,
and cannot render opinions regarding, legal, accounting, regulatory or tax
matters. The Company should consult with its other professional advisors
concerning these matters before undertaking the proposed Transaction. PCA will
not have any rights or obligations in connection with the sale and purchase of
the securities contemplated by this Agreement except as expressly provided in
this Agreement. In no event will PCA be obligated to purchase the securities for
its own account or for the accounts of its customers.

 

 
h.
No Waiver. The failure or neglect of the parties hereto to insist, in any one or
more instances, upon the strict performance of any of the terms or conditions of
this Agreement, or their waiver of strict performance of any of the terms or
conditions of this Agreement, shall not be construed as a waiver or
relinquishment in the future of such term or condition, but the same shall
continue in full force and effect.

 

 
i.
Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which taken together shall
be deemed one and the same instrument.

 
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Microwave Satellite Technologies, Inc.
May 15, 2007
 
If the foregoing correctly sets forth your understanding and intentions, please
so indicate by returning to us a signed copy of this letter.

       
Sincerely,
Palladium Capital Advisors, LLC
 
   
   
    By:   /s/ Joel Padowitz  

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Joel Padowitz, Chief Executive Officer

APPROVED AND ACCEPTED

On May 15, 2007:

MICROWAVE SATELLITE TECHNOLOGIES, INC.
 
By:   /s/ Frank T. Matarazzo

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Print name: Frank T. Matarazzo
Title: President
 
[Addendum A and Annex A follow]
 
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Microwave Satellite Technologies, Inc.
May 15, 2007
 
ANNEX A
 
The Company agrees that it will indemnify and hold harmless PCA, its affiliates,
and their respective directors, members, officers, employees, agents,
representatives and controlling persons (collectively “PCA” and each such entity
or person being an “Indemnified Party”) from and against any and all losses,
claims, damages and liabilities, joint or several, as incurred, to which such
Indemnified Party may become subject, and related to or arising out of the
engagement of PCA hereunder, the activities performed or omitted by or on behalf
of an Indemnified Party pursuant to this Agreement, the Transactions
contemplated thereby or PCA’s role in connection therewith; provided that the
Company will not be liable to the extent that any loss, claim, damage or
liability is found in a final judgment (not subject to further appeal) by a
court to have resulted primarily from actions taken or omitted to be taken by
PCA in bad faith or from PCA's gross negligence or willful misconduct in
performing the services described above. The Company also agrees to reimburse
any Indemnified Party for all expenses (including reasonable counsel fees and
disbursements) as they are incurred in connection with the investigation of,
preparation for or defense of any pending or threatened claim, or any action,
investigation, suit or proceeding arising therefrom, whether or not such
Indemnified Party is a party, whether or not liability resulted and whether or
not such claim, action or proceeding is initiated or brought by or on behalf of
the Company. The Company also agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company or its security holders or creditors related to or arising out of the
engagement of PCA pursuant to, or the performance by PCA of the services
contemplated by, this Agreement except to the extent that any loss, claim,
damage or liability is found in a final judgment (not subject to further appeal)
by a court to have resulted primarily from actions taken or omitted to be taken
by PCA in bad faith or from PCA's gross negligence or willful misconduct.
 
If the indemnification provided for in this Agreement is for any reason held
unenforceable, the Company agrees to contribute to the losses, claims, damages
and liabilities, as incurred by any Indemnified Person, for which such
indemnification is held unenforceable in such proportion as is appropriate to
reflect the relative benefits to the Company, on the one hand, and PCA, on the
other hand, of the Transaction (whether or not the Transaction is consummated).
The Company agrees that for the purposes of this paragraph the relative benefits
to the Company and PCA of the Transaction shall be deemed to be in the same
proportion that the total value of the Transaction or contemplated Transaction
by the Company as a result of or in connection with the proposed Transaction
bears to the fee paid or to be paid to PCA under this Agreement; provided that,
to the extent permitted by applicable law, in no event shall the Indemnified
Parties be required to contribute an aggregate amount in excess of the aggregate
fees actually paid to PCA under this Agreement.
 
Promptly after receipt by an Indemnified Party of notice of any claim or the
commencement of any action, suit or proceeding with respect to which an
Indemnified Party may be entitled to indemnity hereunder, such Indemnified Party
will notify the Company in writing of such claim or of the commencement of such
action or proceeding, and the Company will assume the defense of such action,
suit or proceeding and will employ counsel satisfactory to the Indemnified
Parties and will pay the fees and disbursements of such counsel, as incurred.
Notwithstanding the preceding sentence, any Indemnified Party will be entitled
to employ counsel separate from counsel for the Company and from any other party
in such action if such Indemnified Party reasonably determines that a conflict
of interest exists which makes representation by counsel chosen by the Company
not advisable or if such Indemnified Party reasonably determines that the
Company’s assumption of the defense does not adequately represent its interest.
In such event, the fees and disbursements of such separate counsel will be paid
by the Company, but in no event will the Company be liable for the fees and
expenses of more than one counsel (in addition to local) for all Indemnified
Parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general claims or
circumstances.
 
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Microwave Satellite Technologies, Inc.
May 15, 2007
 
The Company agrees that, without PCA’s prior written consent, it will not
settle, compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding in respect of which indemnification could
be sought under the indemnification provision of this Agreement (whether or not
PCA or any other Indemnified Party is an actual or potential party to such
claim, action or proceeding), unless such settlement, compromise or consent
includes an unconditional release of each Indemnified Party from all liability
arising out of such claim, action or proceeding. PCA agrees that, without the
Company’s prior written consent, it will not settle, compromise or consent to
the entry of any judgment in any pending or threatened claim, action or
proceeding in respect of which indemnification could be sought under the
indemnification provision of this Agreement (whether or not the Company is an
actual or potential party to such claim, action or proceeding), unless such
settlement, compromise or consent includes an unconditional release of each
Indemnified Party from all liability arising out of such claim, action or
proceeding.
 
In the event any Indemnified Party is requested or required to appear as a
witness in any action, suit or proceeding brought by or on behalf of or against
the Company or any affiliate or any participant in a Transaction covered hereby
in which such Indemnified Party is not named as a defendant, the Company agrees
to reimburse PCA and such Indemnified Party for all reasonable disbursements
incurred by them in connection with such Indemnified Party’s appearing and
preparing to appear as a witness, including, without limitation, the reasonable
fees and disbursements of their legal counsel, and to compensate PCA and such
Indemnified Party in an amount to be mutually agreed upon.
 
In the event that any amounts due under these indemnification provisions
contained in this Annex A are not paid within thirty days after written notice
of such event giving rise to the indemnification obligations, such amounts shall
bear interest at a rate of 1.5% per month or at the highest rate permitted under
the laws of the State of New York, whichever rate is lower.
 
The provisions of Annex A shall be in addition to any liability which the
Company may otherwise have. These provisions shall be governed by the law of the
State of New York and shall be operative, in full force and in full effect,
regardless of any termination or expiration of this agreement, subject to
Sections 7 and 8 of the Agreement.

       
PALLADIUM CAPITAL
ADVISORS, LLC
   
MICROWAVE SATELLITE 
TECHNOLOGIES, INC.
        By:  /s/ Joel Padowitz     By:  /s/ Frank T.Matarazzo

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Joel Padowitz, CEO
   

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Frank T.Matarazzo, President 

 
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