Exhibit 10.12

                               CITY NETWORKS, INC.
                            PLACEMENT AGENT AGREEMENT


                                                    Dated as of: August 10, 2005

Monitor Capital Inc.
9171 Towne Centre Drive, Suite 465
San Diego, CA 92122


Ladies and Gentlemen:

     The undersigned,  City Network,  Inc a Nevada  corporation (the "Company"),
hereby agrees with Monitor  Capital,  Inc. (the  "PLACEMENT  AGENT") and Cornell
Capital  Partners,  LP, a Delaware  Limited  Partnership  (the  "INVESTOR"),  as
follows:

     1. OFFERING.  The Company hereby engages the Placement  Agent to act as its
exclusive  placement  agent in connection  with the Standby Equity  Distribution
Agreement dated the date hereof (the "STANDBY EQUITY  DISTRIBUTION  AGREEMENT"),
pursuant to which the Company shall issue and sell to the Investor, from time to
time, and the Investor  shall  purchase from the Company (the  "OFFERING") up to
Fifteen  Million  Dollars  ($15,000,000)  of the  Company's  common  stock  (the
"COMMITMENT  AMOUNT"),  par value $.001 per share (the "COMMON STOCK"), at price
per share equal to the  Purchase  Price,  as that term is defined in the Standby
Equity  Distribution  Agreement.  The Placement  Agent services shall consist of
reviewing the terms of the Standby  Equity  Distribution  Agreement and advising
the Company with respect to those terms.

     All  capitalized  terms used herein and not otherwise  defined herein shall
have the same  meaning  ascribed to them as in the Standby  Equity  Distribution
Agreement. The Investor will be granted certain registration rights with respect
to the Common Stock as more fully set forth in the Registration Rights Agreement
between the Company and the  Investor  dated the date hereof (the  "REGISTRATION
RIGHTS  AGREEMENT").  The  documents to be executed and  delivered in connection
with the Offering,  including,  but not limited,  to the Company's latest Annual
Report on Form  10-KSB or  Quarterly  Report  on Form  10-QSB as filed  with the
United States Securities and Exchange  Commission,  this Agreement,  the Standby
Equity Distribution Agreement, the Registration Rights Agreement, and the Escrow
Agreement  dated the date  hereof  (the  "ESCROW  AGREEMENT"),  are  referred to
sometimes  hereinafter  collectively as the "OFFERING  MATERIALS." The Company's
Common Stock  purchased by the Investor  hereunder or to be issued in connection
with the conversion of any  debentures are sometimes  referred to hereinafter as
the  "SECURITIES."  The  Placement  Agent  shall  not be  obligated  to sell any
Securities.

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     2.  COMPENSATION.  Upon the execution of this Agreement,  the Company shall
issue to the  Placement  Agent or its designee  45,455  shares of the  Company's
Common Stock (the  "PLACEMENT  AGENT'S  SHARES").  The Placement  Agent shall be
entitled  to  "piggy-back"  registration  rights with  respect to the  Placement
Agent's  Shares,  which shall be triggered  upon  registration  of any shares of
Common Stock by the Company pursuant to the Registration  Rights Agreement dated
the date hereof.

     3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLACEMENT AGENT.

     A. The Placement Agent represents, warrants and covenants as follows:

         (i) The  Placement  Agent has the  necessary  power to enter  into this
Agreement and to consummate the transactions contemplated hereby.

         (ii)  The  execution  and  delivery  by the  Placement  Agent  of  this
Agreement and the consummation of the transactions  contemplated herein will not
result in any  violation  of, or be in conflict  with,  or  constitute a default
under, any agreement or instrument to which the Placement Agent is a party or by
which the Placement Agent or its properties are bound, or any judgment,  decree,
order or, to the Placement Agent's  knowledge,  any statute,  rule or regulation
applicable to the Placement Agent. This Agreement when executed and delivered by
the Placement Agent, will constitute the legal, valid and binding obligations of
the Placement  Agent,  enforceable in accordance  with their  respective  terms,
except  to the  extent  that (a) the  enforceability  hereof or  thereof  may be
limited by bankruptcy,  insolvency,  reorganization,  moratorium or similar laws
from time to time in effect and affecting the rights of creditors generally, (b)
the enforceability hereof or thereof is subject to general principles of equity,
or (c) the  indemnification  provisions  hereof or thereof  may be held to be in
violation of public policy.

         (iii) Upon receipt and execution of this Agreement, the Placement Agent
will promptly forward copies of this Agreement to the Company or its counsel and
the Investor or its counsel.

         (iv) The Placement Agent will not intentionally take any action that it
reasonably  believes  would cause the Offering to violate the  provisions of the
Securities  Act of 1933,  as amended  (the  "SECURITIES  ACT"),  the  Securities
Exchange Act of 1934 (the "EXCHANGE  ACT"), the respective rules and regulations
promulgated  thereunder (the "RULES AND  REGULATIONS")  or applicable "Blue Sky"
laws of any state or jurisdiction.

         (v) The  Placement  Agent is a member of the  National  Association  of
Securities  Dealers,  Inc., and is a broker-dealer  registered as such under the
Exchange Act and under the securities laws of the states in which the Securities
will be offered or sold by the  Placement  Agent  unless an  exemption  for such
state  registration is available to the Placement  Agent. The Placement Agent is
in  material  compliance  with  the  rules  and  regulations  applicable  to the
Placement Agent generally and applicable to the Placement Agent's  participation
in the Offering.

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     4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

     A. The Company represents and warrants as follows:

         (i) The execution,  delivery and performance of each of this Agreement,
the  Standby  Equity  Distribution  Agreement,  the  Escrow  Agreement,  and the
Registration Rights Agreement has been or will be duly and validly authorized by
the  Company  and is, or with  respect to this  Agreement,  the  Standby  Equity
Distribution  Agreement,  the  Escrow  Agreement,  and the  Registration  Rights
Agreement, will be a valid and binding agreement of the Company,  enforceable in
accordance  with  its  respective  terms,  except  to the  extent  that  (a) the
enforceability  hereof or  thereof  may be limited  by  bankruptcy,  insolvency,
reorganization,  moratorium  or  similar  laws from  time to time in effect  and
affecting the rights of creditors  generally,  (b) the enforceability  hereof or
thereof is subject to general  principles  of equity or (c) the  indemnification
provisions  hereof or thereof may be held to be in violation  of public  policy.
The Securities to be issued  pursuant to the  transactions  contemplated by this
Agreement  and  the  Standby  Equity  Distribution   Agreement  have  been  duly
authorized and, when issued and paid for in accordance with this Agreement,  the
Standby   Equity   Distribution   Agreement  and  the   certificates/instruments
representing  such  Securities,  will be valid and  binding  obligations  of the
Company,  enforceable in accordance with their respective  terms,  except to the
extent  that  (1) the  enforceability  thereof  may be  limited  by  bankruptcy,
insolvency,  reorganization,  moratorium  or  similar  laws from time to time in
effect  and   affecting  the  rights  of  creditors   generally,   and  (2)  the
enforceability thereof is subject to general principles of equity. All corporate
action  required  to be taken for the  authorization,  issuance  and sale of the
Securities has been duly and validly taken by the Company.

         (ii)  The  Company  has  a  duly  authorized,  issued  and  outstanding
capitalization  as set  forth  herein  and in the  Standby  Equity  Distribution
Agreement.  The Company is not a party to or bound by any instrument,  agreement
or other  arrangement  providing  for it to issue  any  capital  stock,  rights,
warrants, options or other securities, except for this Agreement, the agreements
described herein and as described in the Standby Equity  Distribution  Agreement
and the agreements described therein.  All issued and outstanding  securities of
the Company, have been duly authorized and validly issued and are fully paid and
non-assessable;  the holders  thereof have no rights of rescission or preemptive
rights with respect thereto and are not subject to personal  liability solely by
reason of being security  holders;  and none of such  securities  were issued in
violation  of the  preemptive  rights  of any  holders  of any  security  of the
Company.

         (iii) The Common Stock to be issued in accordance  with this  Agreement
and the Standby Equity Distribution Agreement has been duly authorized and, when
issued  and paid for in  accordance  with this  Agreement,  the  Standby  Equity
Distribution Agreement, the Common Stock will be validly issued,  fully-paid and
non-assessable;  the holders  thereof will not be subject to personal  liability
solely by reason of being such holders;  such Securities are not and will not be
subject to the preemptive rights of any holder of any security of the Company.

         (iv) The  Company  has good  and  marketable  title  to,  or valid  and
enforceable  leasehold  estates  in,  all items of  material  real and  personal
property necessary to conduct its business (including,  without limitation,  any

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real or personal property stated in the Offering Materials to be owned or leased
by the Company),  free and clear of all liens,  encumbrances,  claims,  security
interests and defects of any material  nature  whatsoever,  other than those set
forth in the Offering Materials and liens for taxes not yet due and payable.

         (v) There is no litigation or  governmental  proceeding  pending or, to
the best of the  Company's  knowledge,  threatened  against,  or  involving  the
properties or business of the Company which would have a material  effect on the
business  or  financial  condition  of the  Company,  except as set forth in the
Offering Materials.

         (vi) The Company has been duly  organized and is validly  existing as a
corporation  in good standing  under the laws of the State of Nevada.  Except as
set  forth in the  Offering  Materials,  the  Company  does not own or  control,
directly  or  indirectly,  an interest  in any other  corporation,  partnership,
trust,  joint venture or other business entity. The Company is duly qualified or
licensed and in good standing as a foreign  corporation in each  jurisdiction in
which the character of its operations  requires such  qualification or licensing
and where  failure to so qualify  would  have a material  adverse  effect on the
Company.  The Company has all requisite  corporate power and authority,  and all
material and necessary authorizations, approvals, orders, licenses, certificates
and  permits  of and from  all  governmental  regulatory  officials  and  bodies
(domestic  and foreign) to conduct its  businesses  (and  proposed  business) as
described in the Offering Materials,  except as would not have a material effect
on the business or financial  condition of the Company.  Any  disclosures in the
Offering Materials concerning the effects of foreign,  federal,  state and local
regulation   on  the  Company's   businesses  as  currently   conducted  and  as
contemplated  are correct in all  material  respects  and do not omit to state a
material fact.  The Company has all corporate  power and authority to enter into
this Agreement,  the Standby Equity  Distribution  Agreement,  the  Registration
Rights  Agreement,  and the Escrow  Agreement,  to carry out the  provisions and
conditions hereof and thereof, and all consents,  authorizations,  approvals and
orders  required in connection  herewith and therewith  have been  obtained.  No
consent,  authorization  or order of, and no filing with, any court,  government
agency  or  other  body is  required  by the  Company  for the  issuance  of the
Securities  or  execution  and  delivery of the  Offering  Materials  except for
applicable federal and state securities laws. The Company,  since its inception,
has not incurred any liability  arising under or as a result of the  application
of any of the  provisions of the  Securities  Act, the Exchange Act or the Rules
and Regulations.

         (vii)  There has been no  material  adverse  change in the  business or
financial  condition of the Company,  financial  or  otherwise,  from the latest
dates as of which such business or financial  condition,  respectively,  are set
forth in the Offering Materials,  and the outstanding debt, the property and the
business of the Company  conform in all  material  respects to the  descriptions
thereof contained in the Offering Materials.

         (viii)  Except as set forth in the Offering  Materials,  the Company is
not in breach of, or in default  under,  any term or provision of any indenture,
mortgage,  deed of trust,  lease,  note,  loan or  Standby  Equity  Distribution
Agreement or any other  agreement or instrument  evidencing  an  obligation  for
borrowed money,  or any other material  agreement or instrument to which it is a
party or by which it or any of its properties may be bound or affected except as
would not have a material  effect on the business or financial  condition of the

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Company.  The Company is not in  violation  of any  provision of its articles of
incorporation  or by-laws or in violation  of any  franchise,  license,  permit,
judgment,  decree or order,  or in violation of any  material  statute,  rule or
regulation. Neither the execution and delivery of the Offering Materials nor the
issuance and sale or delivery of the Securities,  nor the consummation of any of
the  transactions  contemplated in the Offering  Materials nor the compliance by
the Company with the terms and provisions hereof or thereof, has conflicted with
or will conflict  with, or has resulted in or will result in a breach of, any of
the terms and  provisions of, or has  constituted  or will  constitute a default
under,  or has resulted in or will result in the creation or  imposition  of any
lien,  charge or  encumbrance  upon any  property  or assets of the  Company  or
pursuant to the terms of any indenture,  mortgage,  deed of trust, note, loan or
any other  agreement or instrument  evidencing an obligation for borrowed money,
or any other  agreement  or  instrument  to which the Company may be bound or to
which any of the  property or assets of the Company is subject  except (a) where
such default,  lien,  charge or  encumbrance  would not have a material  adverse
effect on the Company and (b) as described in the Offering  Materials;  nor will
such  action  result in any  violation  of the  provisions  of the  articles  of
incorporation  or the by-laws of the Company or, assuming the due performance by
the Placement  Agent of its obligations  hereunder,  any statute or any material
order,  rule or  regulation  applicable  to the  Company  of any court or of any
foreign,  federal,  state or other regulatory authority or other government body
having  jurisdiction over the Company except as would not have a material effect
on the business or financial condition of the Company.

         (ix)  Subsequent to the dates as of which  information  is given in the
Offering  Materials,  and except as may  otherwise be indicated or  contemplated
herein or  therein  or in its  public  filings  with the SEC and the  securities
offered pursuant to the Securities Purchase Agreement dated the date hereof, the
Company  has  not (a)  issued  any  securities  or  incurred  any  liability  or
obligation,  direct or contingent,  for borrowed  money, or (b) entered into any
transaction  other than in the ordinary  course of business,  or (c) declared or
paid any dividend or made any other distribution on or in respect of its capital
stock.  Except as  described  in the  Offering  Materials,  the  Company  has no
outstanding obligations to any officer or director of the Company.

         (x) There are no claims for  services  in the  nature of a finder's  or
origination  fee with  respect  to the  sale of the  Common  Stock or any  other
arrangements, agreements or understandings that may affect the Placement Agent's
compensation,  as determined by the National  Association of Securities Dealers,
Inc.

         (xi) The  Company  owns or  possesses,  free and  clear of all liens or
encumbrances  and rights  thereto or therein  by third  parties,  the  requisite
licenses  or other  rights to use all  trademarks,  service  marks,  copyrights,
service names, trade names, patents,  patent applications and licenses necessary
to conduct its business  (including,  without  limitation,  any such licenses or
rights  described in the  Offering  Materials as being owned or possessed by the
Company) and, except as set forth in the Offering  Materials,  there is no claim
or action by any person  pertaining  to, or  proceeding,  pending or threatened,
which  challenges  the  exclusive  rights of the  Company  with  respect  to any
trademarks,  service marks,  copyrights,  service names,  trade names,  patents,
patent applications and licenses used in the conduct of the Company's businesses
(including,  without  limitation,  any such licenses or rights  described in the
Offering  Materials as being owned or possessed by the Company) except any claim

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or action  that would not have a material  adverse  effect on the  Company;  the
Company's  current  products,  services or processes do not infringe or will not
infringe on the patents currently held by any third party.

         (xii) Except as described in the Offering Materials, the Company is not
under any  obligation  to pay  royalties or fees of any kind  whatsoever  to any
third party with respect to any trademarks,  service marks, copyrights,  service
names, trade names, patents, patent applications,  licenses or technology it has
developed,  uses,  employs  or  intends  to use or  employ,  other than to their
respective licensors.

         (xiii)  Subject  to the  performance  by  the  Placement  Agent  of its
obligations  hereunder,  the offer and sale of the Securities complies, and will
continue to comply,  in all material  respects with the requirements of Rule 506
of Regulation D promulgated  by the SEC pursuant to the  Securities  Act and any
other  applicable  federal  and state laws,  rules,  regulations  and  executive
orders.  Neither the Offering  Materials nor any amendment or supplement thereto
nor any documents  prepared by the Company in connection  with the Offering will
contain any untrue  statement  of a material  fact or omit to state any material
fact required to be stated therein or necessary to make the statements  therein,
in light of the  circumstances  under which they were made, not misleading.  All
statements of material  facts in the Offering  Materials are true and correct as
of the date of the Offering Materials.

         (xiv) All material  amounts of taxes which are due and payable from the
Company  have been  paid in full or  adequate  provision  has been made for such
taxes on the books of the Company, except for those taxes disputed in good faith
by the Company

         (xv) None of the Company nor any of its officers, directors,  employees
or agents,  nor any other person acting on behalf of the Company,  has, directly
or indirectly, given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or agent of a customer or supplier, or official
or employee of any  governmental  agency or  instrumentality  of any  government
(domestic or foreign) or any political  party or candidate for office  (domestic
or foreign) or other person who is or may be in a position to help or hinder the
business of the Company (or assist it in connection  with any actual or proposed
transaction) which (A) might subject the Company to any damage or penalty in any
civil, criminal or governmental litigation or proceeding, or (B) if not given in
the past, might have had a materially adverse effect on the assets,  business or
operations  of the  Company  as  reflected  in any of the  financial  statements
contained  in the  Offering  Materials,  or (C) if not  continued in the future,
might  adversely  affect the assets,  business,  operations  or prospects of the
Company in the future.

     5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR.

     A. The Investor represents, warrants and covenants as follows:

         (i) The Investor has the necessary  power to enter into this  Agreement
and to consummate the transactions contemplated hereby.

         (ii) The execution  and delivery by the Investor of this  Agreement and
the consummation of the transactions  contemplated herein will not result in any
violation  of, or be in  conflict  with,  or  constitute  a default  under,  any

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agreement  or  instrument  to which  the  Investor  is a party  or by which  the
Investor or its properties are bound, or any judgment,  decree, order or, to the
Investor's  knowledge,  any  statute,  rule  or  regulation  applicable  to  the
Investor.  This  Agreement  when executed and  delivered by the  Investor,  will
constitute the legal, valid and binding obligations of the Investor, enforceable
in accordance  with their  respective  terms,  except to the extent that (a) the
enforceability  hereof or  thereof  may be limited  by  bankruptcy,  insolvency,
reorganization,  moratorium  or  similar  laws from  time to time in effect  and
affecting the rights of creditors  generally,  (b) the enforceability  hereof or
thereof is subject to general  principles of equity, or (c) the  indemnification
provisions hereof or thereof may be held to be in violation of public policy.

         (iii) The  Investor  will  promptly  forward  copies of any and all due
diligence questionnaires compiled by the Investor to the Placement Agent.

         (iv) The  Investor is an  Accredited  Investor  (as  defined  under the
Securities Act).

         (v) The Investor is acquiring the  Securities  for the  Inventor's  own
account as principal,  not as a nominee or agent, for investment  purposes only,
and not  with a view  to,  or for,  resale,  distribution  or  fractionalization
thereof  in  whole  or in part and no other  person  has a  direct  or  indirect
beneficial interest in such Securities.  Further, the Investor does not have any
contract,  undertaking,  agreement  or  arrangement  with  any  person  to sell,
transfer or grant  participations  to such person or to any third  person,  with
respect to any of the Securities.

         (vi) The Investor  acknowledges the Investor's  understanding  that the
offering and sale of the  Securities is intended to be exempt from  registration
under the Securities Act by virtue of Section 3(b) of the Securities Act and the
provisions  of  Regulation  D  promulgated   thereunder   ("REGULATION  D").  In
furtherance thereof, the Investor represents and warrants as follows:

         (a) The Investor has the financial ability to bear the economic risk of
the Investor's  investment,  has adequate means for providing for the Inventor's
current  needs and personal  contingencies  and has no need for  liquidity  with
respect to the Investor's investment in the Company; and

         (b) The Investor has such  knowledge  and  experience  in financial and
business  matters  as to be capable  of  evaluating  the merits and risks of the
prospective  investment.  The Inventor also represents it has not been organized
for the purpose of acquiring the Securities.

         (vii) The Investor has been given the opportunity for a reasonable time
prior to the date hereof to ask  questions  of, and receive  answers  from,  the
Company  or its  representatives  concerning  the  terms and  conditions  of the
Offering,  and other matters  pertaining to this investment,  and has been given
the  opportunity  for a reasonable  time prior to the date hereof to obtain such
additional  information in connection with the Company in order for the Investor
to evaluate  the merits and risks of purchase of the  Securities,  to the extent
the Company  possesses such  information or can acquire it without  unreasonable
effort or expense.  The Investor is not relying on the Placement Agent or any of

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its  affiliates  with  respect to the accuracy or  completeness  of the Offering
Materials or for any economic considerations involved in this investment.

     6. CERTAIN COVENANTS AND AGREEMENTS OF THE COMPANY.

     The Company  covenants and agrees at its expense and without any expense to
the Placement Agent as follows:

     A. To advise the Placement  Agent and the Investor of any material  adverse
change in the Company's  financial  condition or business or of any  development
materially  affecting the Company or rendering untrue or misleading any material
statement  in the  Offering  Materials  occurring at any time as promptly as the
circumstances allow as the Company is either informed or becomes aware thereof.

     B. To use its  commercially  reasonable  efforts to cause the Common  Stock
issuable in  connection  with the Standby  Equity  Distribution  Agreement to be
qualified or registered  for sale on terms  consistent  with those stated in the
Registration   Rights   Agreement  and  under  the   securities   laws  of  such
jurisdictions as the Placement Agent and the Investor shall reasonably  request.
Qualification,  registration and exemption charges and fees shall be at the sole
cost and expense of the Company.

     C. Upon written  request,  to provide and continue to provide the Placement
Agent and the Investor copies of all quarterly financial  statements and audited
annual  financial  statements  prepared  by or on behalf of the  Company,  other
reports  prepared by or on behalf of the Company for public  disclosure  and all
documents delivered to the Company's stockholders.

     D. To comply with the terms of the Offering Materials.

     E. To ensure that any transactions  between or among the Company, or any of
its officers,  directors and affiliates be on terms and  conditions  that are no
less  favorable  to the  Company,  than the terms and  conditions  that would be
available in an "arm's length" transaction with an independent third party.

     7. INDEMNIFICATION AND LIMITATION OF LIABILITY.

     A. The Company  hereby agrees that it will indemnify and hold the Placement
Agent and each officer, director, shareholder, employee or representative of the
Placement  Agent and each  person  controlling,  controlled  by or under  common
control  with the  Placement  Agent  within  the  meaning  of  Section 15 of the
Securities  Act or  Section  20 of the  Exchange  Act or  the  SEC's  Rules  and
Regulations promulgated thereunder (the "RULES AND REGULATIONS"),  harmless from
and  against  any  and all  loss,  claim,  damage,  liability,  cost or  expense
whatsoever (including, but not limited to, any and all reasonable legal fees and
other  expenses and  disbursements  incurred in connection  with  investigating,
preparing to defend or defending any action,  suit or proceeding,  including any
inquiry or investigation, commenced or threatened, or any claim whatsoever or in
appearing  or  preparing  for  appearance  as a witness in any  action,  suit or
proceeding,  including any inquiry, investigation or pretrial proceeding such as
a deposition)  to which the Placement  Agent or such  indemnified  person of the
Placement  Agent may become subject under the Securities  Act, the Exchange Act,

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the Rules and  Regulations,  or any other  federal  or state law or  regulation,
common law or otherwise,  arising out of or based upon (i) any untrue  statement
or alleged  untrue  statement of a material  fact  contained in (a) Section 4 of
this  Agreement,  (b) the Offering  Materials  (except those written  statements
relating to the Placement  Agent or the Investor given by the Placement Agent or
the Investor,  respectively for inclusion therein), (c) any application or other
document or written communication  executed by the Company or based upon written
information  furnished  by the  Company  filed in any  jurisdiction  in order to
qualify  the  Common  Stock  under the  securities  laws  thereof,  or any state
securities commission or agency (except those written statements relating to the
Placement  Agent or the Investor  given by the Placement  Agent or the Investor,
respectively for inclusion therein);  (ii) the omission or alleged omission from
documents described in clauses (a), (b) or (c) above of a material fact required
to be stated therein or necessary to make the statements therein not misleading;
or (iii) the breach of any representation,  warranty, covenant or agreement made
by the Company in this Agreement. The Company further agrees that upon demand by
an  indemnified  person,  at any  time or from  time to time,  it will  promptly
reimburse such indemnified person for any loss, claim, damage,  liability,  cost
or expense  actually and reasonably paid by the  indemnified  person as to which
the Company has indemnified  such person pursuant  hereto.  Notwithstanding  the
foregoing  provisions of this Paragraph 7(A), any such payment or  reimbursement
by the Company of fees,  expenses or  disbursements  incurred by an  indemnified
person  in any  proceeding  in which a final  judgment  by a court of  competent
jurisdiction  (after all appeals or the expiration of time to appeal) is entered
against the  Placement  Agent or such  indemnified  person  based upon  specific
finding of fact that the  Placement  Agent or such  indemnified  person's  gross
negligence or willful misfeasance will be promptly repaid to the Company.

     B. The Placement  Agent hereby  agrees that it will  indemnify and hold the
Company and each officer, director,  shareholder,  employee or representative of
the Company, and each person controlling,  controlled by or under common control
with the  Company  within the  meaning of  Section 15 of the  Securities  Act or
Section 20 of the Exchange Act or the Rules and  Regulations,  harmless from and
against any and all loss, claim, damage,  liability,  cost or expense whatsoever
(including,  but not  limited  to, any and all  reasonable  legal fees and other
expenses and disbursements incurred in connection with investigating,  preparing
to defend or defending any action, suit or proceeding,  including any inquiry or
investigation,  commenced or threatened, or any claim whatsoever or in appearing
or preparing  for  appearance  as a witness in any action,  suit or  proceeding,
including  any  inquiry,   investigation  or  pretrial   proceeding  such  as  a
deposition) to which the Company or such  indemnified  person of the Company may
become  subject  under the  Securities  Act,  the  Exchange  Act,  the Rules and
Regulations,  or any other  federal  or state law or  regulation,  common law or
otherwise,  arising  out  of or  based  upon  (i)  the  material  breach  of any
representation,  warranty,  covenant or agreement made by the Placement Agent in
this  Agreement,  or (ii) any false or  misleading  information  provided to the
Company  in  writing  by  one  of  the  Placement  Agent's  indemnified  persons
specifically for inclusion in the Offering Materials or (iii) any application or
other document or written communication executed by the Placement Agent or based
upon  written  information  furnished  by  the  Placement  Agent  filed  in  any
jurisdiction  in order to qualify  the Common  Stock under the  securities  laws
thereof, or any state securities commission or agency.

                                       9
<PAGE>
     C. The Investor hereby agrees that it will indemnify and hold the Placement
Agent and each officer, director, shareholder, employee or representative of the
Placement  Agent,  and each person  controlling,  controlled  by or under common
control  with the  Placement  Agent  within  the  meaning  of  Section 15 of the
Securities  Act or Section 20 of the Exchange Act or the Rules and  Regulations,
harmless from and against any and all loss, claim,  damage,  liability,  cost or
expense whatsoever (including,  but not limited to, any and all reasonable legal
fees  and  other  expenses  and   disbursements   incurred  in  connection  with
investigating,  preparing to defend or defending any action, suit or proceeding,
including any inquiry or  investigation,  commenced or threatened,  or any claim
whatsoever  or in  appearing  or preparing  for  appearance  as a witness in any
action,  suit or proceeding,  including any inquiry,  investigation  or pretrial
proceeding  such  as  a  deposition)  to  which  the  Placement  Agent  or  such
indemnified  person  of  the  Placement  Agent  may  become  subject  under  the
Securities  Act,  the  Exchange  Act,  the Rules and  Regulations,  or any other
federal or state law or regulation,  common law or otherwise,  arising out of or
based  upon (i) the  conduct  of the  Investor  or its  officers,  employees  or
representatives  in its  acting  as the  Investor  for the  Offering,  (ii)  the
material breach of any representation,  warranty,  covenant or agreement made by
the  Investor  in the  Offering  Materials,  or (iii)  any  false or  misleading
information provided to the Placement Agent by one of the Investor's indemnified
persons.

     D. The Placement  Agent hereby  agrees that it will  indemnify and hold the
Investor and each officer, director, shareholder,  employee or representative of
the Investor, and each person controlling, controlled by or under common control
with the  Investor  within the  meaning of Section 15 of the  Securities  Act or
Section 20 of the Exchange Act or the Rules and  Regulations,  harmless from and
against any and all loss, claim, damage,  liability,  cost or expense whatsoever
(including,  but not  limited  to, any and all  reasonable  legal fees and other
expenses and disbursements incurred in connection with investigating,  preparing
to defend or defending any action, suit or proceeding,  including any inquiry or
investigation,  commenced or threatened, or any claim whatsoever or in appearing
or preparing  for  appearance  as a witness in any action,  suit or  proceeding,
including  any  inquiry,   investigation  or  pretrial   proceeding  such  as  a
deposition) to which the Investor or such indemnified person of the Investor may
become  subject  under the  Securities  Act,  the  Exchange  Act,  the Rules and
Regulations,  or any other  federal  or state law or  regulation,  common law or
otherwise,   arising  out  of  or  based  upon  the   material   breach  of  any
representation,  warranty,  covenant or agreement made by the Placement Agent in
this Agreement.

     E. Promptly after receipt by an indemnified party of notice of commencement
of any  action  covered  by  Section  7(A),  (B),  (C) or (D),  the  party to be
indemnified shall,  within five (5) business days, notify the indemnifying party
of the  commencement  thereof;  the omission by one (1) indemnified  party to so
notify the indemnifying  party shall not relieve the  indemnifying  party of its
obligation to indemnify any other  indemnified  party that has given such notice
and shall not relieve the  indemnifying  party of any liability  outside of this
indemnification  if not  materially  prejudiced  thereby.  In the event that any
action is brought against the indemnified  party, the indemnifying party will be
entitled to participate  therein and, to the extent it may desire, to assume and
control  the  defense  thereof  with  counsel  chosen by it which is  reasonably
acceptable to the indemnified party. After notice from the indemnifying party to
such  indemnified  party of its election to so assume the defense  thereof,  the
indemnifying  party  will not be liable to such  indemnified  party  under  such
Section  7(A),  (B),  (C), or (D) for any legal or other  expenses  subsequently

                                       10
<PAGE>
incurred by such indemnified  party in connection with the defense thereof,  but
the  indemnified  party may, at its own expense,  participate in such defense by
counsel  chosen by it,  without,  however,  impairing the  indemnifying  party's
control  of  the  defense.   Subject  to  the  proviso  of  this   sentence  and
notwithstanding  any other  statement  to the  contrary  contained  herein,  the
indemnified  party or  parties  shall  have the right to choose its or their own
counsel  and  control  the  defense  of any  action,  all at the  expense of the
indemnifying  party  if (i) the  employment  of such  counsel  shall  have  been
authorized in writing by the  indemnifying  party in connection with the defense
of  such  action  at  the  expense  of  the  indemnifying  party,  or  (ii)  the
indemnifying  party shall not have employed counsel  reasonably  satisfactory to
such  indemnified  party to have charge of the  defense of such action  within a
reasonable  time  after  notice of  commencement  of the  action,  or (iii) such
indemnified  party or parties shall have reasonably  concluded that there may be
defenses available to it or them which are different from or additional to those
available  to one  or  all  of the  indemnifying  parties  (in  which  case  the
indemnifying  parties  shall not have the right to direct  the  defense  of such
action on behalf of the  indemnified  party or parties),  in any of which events
such  fees  and  expenses  of one  additional  counsel  shall  be  borne  by the
indemnifying party; provided, however, that the indemnifying party shall not, in
connection with any one action or separate but substantially  similar or related
actions in the same jurisdiction  arising out of the same general allegations or
circumstance,  be liable for the  reasonable  fees and expenses of more than one
separate  firm of attorneys  at any time for all such  indemnified  parties.  No
settlement of any action or  proceeding  against an  indemnified  party shall be
made without the consent of the indemnifying party.

     F. In order to provide for just and equitable contribution in circumstances
in which the  indemnification  provided  for in  Section  7(A) or 7(B) is due in
accordance  with  its  terms  but  is for  any  reason  held  by a  court  to be
unavailable  on grounds of policy or  otherwise,  the Company and the  Placement
Agent shall contribute to the aggregate losses,  claims, damages and liabilities
(including  legal or other expenses  reasonably  incurred in connection with the
investigation  or defense of same) which the other may incur in such  proportion
so that the  Placement  Agent  shall be  responsible  for  such  percent  of the
aggregate of such losses,  claims,  damages and  liabilities  as shall equal the
percentage of the gross  proceeds  paid to the  Placement  Agent and the Company
shall be responsible for the balance;  provided,  however, that no person guilty
of  fraudulent  misrepresentation  within the  meaning  of Section  11(f) of the
Securities  Act shall be  entitled to  contribution  from any person who was not
guilty of such fraudulent misrepresentation.  For purposes of this Section 7(F),
any person controlling, controlled by or under common control with the Placement
Agent, or any partner, director, officer, employee,  representative or any agent
of any  thereof,  shall have the same rights to  contribution  as the  Placement
Agent and each person  controlling,  controlled by or under common  control with
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the  Exchange  Act and each  officer of the Company and each  director of the
Company  shall have the same rights to  contribution  as the Company.  Any party
entitled to contribution will,  promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for  contribution  may be made against the other party under this Section  7(D),
notify such party from whom  contribution may be sought,  but the omission to so
notify  such party shall not  relieve  the party from whom  contribution  may be
sought from any  obligation  they may have  hereunder  or otherwise if the party
from whom contribution may be sought is not materially prejudiced thereby.

                                       11
<PAGE>
     G. The indemnity and  contribution  agreements  contained in this Section 7
shall  remain  operative  and  in  full  force  and  effect  regardless  of  any
investigation  made by or on behalf of any indemnified person or any termination
of this Agreement.

     H. The Company hereby waives,  to the fullest extent  permitted by law, any
right to or claim of any punitive,  exemplary,  incidental,  indirect,  special,
consequential or other damages (including,  without limitation, loss of profits)
against the Placement Agent and each officer, director, shareholder, employee or
representative of the placement agent and each person controlling, controlled by
or under common  control with the Placement  Agent within the meaning of Section
15 of the  Securities  Act or  Section 20 of the  Exchange  Act or the Rules and
Regulations  arising out of any cause whatsoever (whether such cause be based in
contract,    negligence,   strict   liability,   other   tort   or   otherwise).
Notwithstanding  anything  to  the  contrary  contained  herein,  the  aggregate
liability  of the  Placement  Agent  and each  officer,  director,  shareholder,
employee or representative  of the Placement Agent and each person  controlling,
controlled  by or under  common  control  with the  Placement  Agent  within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act or
the Rules and  Regulations  shall not exceed the  compensation  received  by the
Placement Agent pursuant to Section 2 hereof. This limitation of liability shall
apply  regardless of the cause of action,  whether  contract,  tort  (including,
without  limitation,  negligence)  or breach of  statute  or any other  legal or
equitable obligation.

     8. PAYMENT OF EXPENSES.

     The Company  hereby agrees to bear all of the expenses in  connection  with
the Offering, including, but not limited to the following: filing fees, printing
and duplicating costs, advertisements, postage and mailing expenses with respect
to the  transmission of Offering  Materials,  registrar and transfer agent fees,
escrow agent fees and expenses,  fees of the Company's  counsel and accountants,
issue and transfer taxes, if any.

     9. CONDITIONS OF CLOSING.

     The Closing  shall be held at the offices of the  Investor or its  counsel.
The  obligations  of the  Placement  Agent  hereunder  shall be  subject  to the
continuing accuracy of the representations and warranties of the Company and the
Investor  herein  as of the  date  hereof  and as of the  Date of  Closing  (the
"CLOSING DATE") with respect to the Company or the Investor, as the case may be,
as if it had been made on and as of such Closing Date; the accuracy on and as of
the Closing Date of the  statements of the officers of the Company made pursuant
to the provisions hereof; and the performance by the Company and the Investor on
and as of the Closing Date of its covenants and obligations hereunder and to the
following further conditions:

     A. Upon the effectiveness of a registration  statement covering the Standby
Equity  Distribution  Agreement,  the  Investor  and the  Placement  Agent shall
receive the  opinion of Counsel to the  Company,  dated as of the date  thereof,
which  opinion  shall be in form and substance  reasonably  satisfactory  to the
Investor, their counsel and the Placement Agent.

     B. At or prior to the Closing,  the Investor and the Placement  Agent shall
have  been  furnished  such  documents,  certificates  and  opinions  as it  may
reasonably  require for the purpose of enabling  them to review or pass upon the
matters referred to in this Agreement and the Offering Materials, or in order to

                                       12
<PAGE>
evidence   the   accuracy,   completeness   or   satisfaction   of  any  of  the
representations, warranties or conditions herein contained.

     C. At and prior to the  Closing,  (i)  there  shall  have been no  material
adverse change nor development  involving a prospective  change in the condition
or the  business  activities,  financial or  otherwise,  of the Company from the
latest dates as of which such condition is set forth in the Offering  Materials;
(ii)  there  shall  have  been no  transaction,  not in the  ordinary  course of
business except the transactions  pursuant to the Securities  Purchase Agreement
entered into by the Company on the date hereof  which has not been  disclosed in
the Offering Materials or to the Placement Agent in writing; (iii) except as set
forth in the Offering  Materials,  the Company shall not be in default under any
provision of any instrument relating to any outstanding indebtedness for which a
waiver or extension has not been otherwise  received  except if such default has
no  material  adverse  effect on the  business  or  financial  condition  of the
Company;  (iv) except as set forth in the Offering Materials,  the Company shall
not have issued any securities (other than those to be issued as provided in the
Offering Materials) or declared or paid any dividend or made any distribution of
its  capital  stock of any class and there shall not have been any change in the
indebtedness  (long or short term) or  liabilities or obligations of the Company
(contingent or otherwise) and trade payable debt; (v) no material  amount of the
assets of the Company shall have been pledged or mortgaged,  except as indicated
in the Offering Materials;  and (v) no action, suit or proceeding,  at law or in
equity,  against the Company or affecting  any of its  properties  or businesses
shall be  pending  or  threatened  before  or by any court or  federal  or state
commission,  board or other administrative agency, domestic or foreign,  wherein
an unfavorable decision, ruling or finding could materially adversely affect the
businesses or financial condition or income of the Company,  except as set forth
in the Offering Materials.

     D. If  requested  at Closing the  Investor  and the  Placement  Agent shall
receive a certificate  of the Company  signed by an executive  officer and chief
financial officer,  dated as of the applicable  Closing,  to the effect that the
conditions set forth in subparagraph  (C) above have been satisfied and that, as
of the applicable closing, the representations and warranties of the Company set
forth herein are true and correct.

     E. The  Placement  Agent  shall have no  obligation  to insure that (x) any
check,  note,  draft or other  means of  payment  for the  Common  Stock will be
honored,  paid or enforceable against the Investor in accordance with its terms,
or (y) subject to the performance of the Placement  Agent's  obligations and the
accuracy of the Placement Agent's representations and warranties hereunder,  (1)
the Offering is exempt from the registration  requirements of the Securities Act
or any  applicable  state "Blue Sky" law or (2) the  Investor  is an  Accredited
Investor.

     10. TERMINATION.

     This Agreement shall be co-terminus with, and terminate upon the same terms
and conditions as those set forth in, the Standby Equity Distribution Agreement.
The  rights  of the  Investor  and the  obligations  of the  Company  under  the
Registration  Rights  Agreement,  and the rights of the Placement  Agent and the
obligations  of the Company  shall  survive the  termination  of this  Agreement
unabridged.

                                       13
<PAGE>
     11. MISCELLANEOUS.

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

     B. 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 or by a nationally  recognized overnight or world wide courier;  (ii)
upon  confirmation  of receipt,  when sent by facsimile;  or (iii) ten (10) days
after being sent by U.S. certified mail, return receipt requested,  in each case
properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be::

If to Placement Agent, to:     Monitor Capital Inc.
                               9171 Towne Centre Drive, Suite 465
                               San Diego, CA 92122
                               Attention:
                               Telephone:
                               Facsimile:

If to the Company, to:         City Network, Inc
                               6F-3, No.16, Jian Ba Road
                               Jhonghe City, Taipei County, 235
                               Taiwan, ROC F5 235
                               Attention: Mr Tiao-Tsan Lai
                               Telephone: 886-2-8226-5566
                               Facsimile: 886-2-8226-8585

With a copy to:                Loeb & Loeb, LLP
                               345 Park Avenue
                               New York, NY 10154-0037
                               Attention: Mitchell Nussbaum, Esq.
                               Telephone: (212) 407-4159
                               Facsimile: (212) 407-4990

If to the Investor:            Cornell Capital Partners, LP
                               101 Hudson Street - Suite 3700
                               Jersey City, New Jersey  07302
                               Attention: Mark A. Angelo
                                          Portfolio Manager
                               Telephone: (201) 985-8300
                               Facsimile: (201) 985-8266

                                       14
<PAGE>

With copies to:                David Gonzalez, Esq.
                               101 Hudson Street - Suite 3700
                               Jersey City, NJ 07302
                               Telephone: (201) 985-8300
                               Facsimile: (201) 985-8266

     C. This Agreement  shall be governed by and  interpreted in accordance with
the laws of the State of New Jersey without regard to the principles of conflict
of laws.  The parties  further agree that any action between them shall be heard
in Hudson County,  New Jersey,  and expressly  consent to the  jurisdiction  and
venue of the  Superior  Court of New  Jersey,  sitting in Hudson  County and the
United States  District  Court for the District of New Jersey sitting in Newark,
New Jersey for the  adjudication of any civil action  asserted  pursuant to this
Paragraph.

     D. This Agreement and the other  agreements  referenced  herein contain the
entire  understanding  between  the  parties  hereto and may not be  modified or
amended except by a writing duly signed by the party against whom enforcement of
the modification or amendment is sought.

     E. If any  provision  of this  Agreement  shall  be held to be  invalid  or
unenforceable,  such invalidity or  unenforceability  shall not affect any other
provision of this Agreement.



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                                       15
<PAGE>
     IN WITNESS  WHEREOF,  the parties hereto have executed this Placement Agent
Agreement as of the date first written above.

                                COMPANY:
                                City Network, Inc


                                By: /s/ Tiao-Tsan Lai
                                   ----------------------------------
                                Name:  Mr Tiao-Tsan Lai
                                Title: Chief Executive Officer


                                PLACEMENT AGENT:
                                MONITOR CAPITAL, INC.


                                By: /s/ Hsiao-Wen Kao
                                   ----------------------------------
                                Name:  Hsiao-Wen Kao
                                Title: President


                                INVESTOR:
                                CORNELL CAPITAL PARTNERS, LP

                                By:  Yorkville Advisors, LLC
                                Its: General Partner


                                By: /s/ Mark A. Angelo
                                   ----------------------------------
                                Name:  Mark A. Angelo
                                Title: Portfolio Manager

                                       16