Exhibit 10.1
    

    
      

      

      

      

      SECURITIES PURCHASE AGREEMENT
    

    
      

      By and Between
    

    
      

      NET TALK.COM, INC.
    

    
      

      and
    

    
      

      VICIS CAPITAL MASTER FUND
    

    
      

      

      

      

      


    

    
      DATED FEBRUARY 24, 2010
    

    

    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    

    

    
      SECURITIES PURCHASE AGREEMENT
    

    
      This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated
      February 24, 2010, is made by and between NET TALK.COM, INC., a Florida
      corporation (the “Company”), and VICIS CAPITAL MASTER FUND
      (the “Purchaser”), a sub-trust of Vicis Capital Series
      Master Trust, a unit trust organized and existing under the laws of the
      Cayman Islands.
    

    
      R E C I T A L S
    

    
      WHEREAS, the Company wishes to undertake a financing, and pursuant to
      the terms and conditions of this Agreement, the Company wishes to issue
      and sell to the Purchaser, and the Purchaser wishes to acquire from the
      Company: (1) up to 500 shares (the “Preferred Shares”) of
      the Company’s newly-designated Series A Convertible Preferred Stock, par
      value $.001 per share (the “Series A Preferred Stock”),
      which are convertible into shares (the “Preferred Conversion
      Shares”) of common stock, par value $.001 per share (the “Common
      Stock”), of the Company, and which have such terms, rights and
      preferences as are set forth in the Certificate of Designation for the
      Series A Preferred Stock set forth on Exhibit A attached hereto;
      and (2) Series D Common Stock Purchase Warrants (each, a “Series
      D Warrant”) to purchase up to an aggregate of 20,000,000 shares of
      Common Stock of the Company, at an initial exercise price of $0.50 per
      share, in the form attached hereto as Exhibit B (collectively,
      the “New Warrants”).
    

    
      WHEREAS, the Purchaser is the holder of certain Series C Common Stock
      Purchase Warrants (“Series C Warrants”) issued by the
      Company, and the parties have agreed that the Series C Warrants will be
      exchanged for Series D Warrants with an initial exercise price of $0.50
      and having identical denominations and expiration dates as the Series C
      Warrants (the “Exchanged Warrants”, together with the New
      Warrants, the “Warrants”, and the shares of Common Stock
      underlying the Warrants, the “Warrant Shares”).
    

    
      WHEREAS, the Purchaser is the holder of: (1) a 12% Senior Secured
      Convertible Debenture due September 10, 2010 with a principal amount of
      $1,000,000 currently outstanding and accrued and unpaid interest of
      $210,000; (2) a 12% Senior Secured Convertible Debenture due September
      10, 2010 with a principal amount of $500,000 currently outstanding and
      accrued and unpaid interest of $105,000; (3) a 12% Senior Secured
      Convertible Debenture due January 30, 2011 with a principal amount of
      $500,000 currently outstanding and accrued and unpaid interest of
      $126,000; and (4) a 12% Senior Secured Convertible Debenture due January
      30, 2011 with a principal amount of $500,000 currently outstanding and
      accrued and unpaid interest of $105,000 (each a “Maturing
      Debenture” and collectively, the “Maturing Debentures”).
    

    
      WHEREAS, the Purchaser and the Company have agreed to extend the
      maturity dates of the Maturing Debentures until June 30, 2011,
      capitalize the accrued and unpaid interest thereunder, consolidate the
      loans, and amend and restate such debentures, which will be evidenced by
      a 12% Senior Secured Convertible Debenture due June 30, 2011 in the form
      attached hereto as Exhibit C-1 (the “June Debenture”).
    

    
      WHEREAS, the Purchaser is also the holder of: (1) a 12% Senior Secured
      Convertible Debenture due July 20, 2011 with a principal amount of
      $500,000 currently outstanding and accrued and unpaid interest of
      $87,166 (the “July Debenture”); and (2) a 12% Senior
      Secured Convertible Debenture due September 15, 2011 with a principal
      amount of $1,100,000 currently outstanding and accrued and unpaid
      interest of $165,607 (the “September Debenture”, together
      with the July Debenture and the Maturing Debentures, the “Old
      Debentures”).
    

    

    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    

    

    
      WHEREAS, the Purchaser and the Company have agreed to capitalize the
      accrued and unpaid interest under the July Debenture and September
      Debenture, and to amend and restate such debentures in the forms
      attached hereto as Exhibit C-2 and Exhibit C-3 (such
      amended and restated debentures, together with the June Debenture, the “New
      Debentures”; the shares of Common Stock issuable under the New
      Debentures, together with the Preferred Conversion Shares, the “Conversion
      Shares”; and the New Debentures together with the Preferred Shares,
      the Conversion Shares, the Warrants and the Warrant Shares,
      collectively, the “Securities”).
    

    
      NOW, THEREFORE,      the Company and the Purchaser hereby agree
      as follows:
    

    
      ARTICLE I  
PURCHASE AND SALE OF THE SECURITIES
    

    
         1.1  Purchase and Sale of the Securities.  Subject
      to the terms and conditions hereof and in reliance on the
      representations and warranties contained herein, or made pursuant
      hereto, the Company will issue and sell to the Purchaser, and the
      Purchaser will purchase from the Company at the closings of the
      transactions contemplated hereby (each a “Closing” and
      collectively, the “Closings”), the Preferred Shares and
      Warrants for $5,000,000 (the “Purchase Price”) in cash.
    

    
         1.2  Closings.  The initial Closing
      shall be deemed to occur at the offices of Quarles & Brady, LLP, 411
      East Wisconsin Avenue, Milwaukee, Wisconsin, at 5:00 p.m. CST on
      February 24, 2010, or at such other place, date or time as mutually
      agreeable to the parties (the “Initial Closing Date”).   Each
      other Closing, if any, shall occur at such place, date and time as
      mutually agreeable to the parties.
    

    
         1.3  Initial Closing Matters. On the
      Initial Closing Date, subject to the terms and conditions hereof, the
      following actions shall be taken:
    

    
             (a)  The Company, against delivery of payment of $3,000,000 (the “Closing
      Payment”) in accordance with Section 1.3(b), will deliver to the
      Purchaser the documents required to be delivered by Section 5.4 hereof.
    

    
             (b)  The Purchaser shall deliver to the Company the Closing
      Payment in immediately available funds by wire transfer of immediately
      available funds in accordance with the instructions of the Company and
      surrender for cancellation by the Company, the Old Debentures and the
      Series C Warrants.
    

    
         1.4  Holdback; Release.
    

    
             (a)  As soon as reasonably practicable after the date hereof but
      in no event later than the fifth business day thereafter, the Purchaser
      shall deposit an amount equal to $2,000,000 (together with any interest
      accruing thereon, the “Holdback Amount”) into the bank
      account identified on Schedule 1.4(a) hereto (the “Holdback
      Account”) until such time as funds may be released from the Holdback
      Account pursuant to the terms of this Section 1.4.  Any and all
      withdrawals from the Holdback Account shall require dual signatures, one
      signature being that of an officer of the Company and one signature
      being that of a duly authorized representative of the Purchaser.
    

    

    

    
      
        

        

      

      
        
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             (b)  Upon the Company’s written reasonable request to the
      Purchaser that it needs to increase its Available Cash (as defined
      below), the Company shall be entitled to receive from the Holdback
      Amount such amount as determined by the Purchaser in its reasonable sole
      discretion (a “Release Amount”).  Upon each such release,
      the Purchaser shall be entitled to the issuance of Preferred Shares and
      a Series D Warrant from the Company at a rate of 1 Preferred Share and a
      Series D Warrant to purchase 40,000 shares of Common Stock for each
      $10,000 released from the Holdback Account (each a “Tranche of
      Securities”). Upon each Closing of a transfer of a Release Amount to
      the Company: (i) the Purchaser shall authorize the bank to release such
      Release Amount to such other account specified by the Company; and (ii)
      the Company, against delivery of such Release Amount, will deliver to
      the Purchaser a Tranche of Securities calculated in accordance with this
      Section 1.4(b) and the documents required to be delivered by Section 5.4
      hereof. As used herein, the term “Available Cash” shall
      mean the aggregate amount of all immediately available funds that the
      Company has access to in bank accounts in its name.
    

    
             (c)  Notwithstanding anything to the contrary contained herein,
      if funds remain in the Holdback Account after 5:00 p.m. Eastern Time on
      June 30, 2011 (the “Holdback Account Termination Time”),
      and the Purchaser and Company have not mutually agreed to extend such
      Holdback Account Termination Time to a later time, the Purchaser shall
      be entitled to the return of the full amount of the Holdback Amount then
      remaining in the Holdback Account.  Upon written notice to the Company
      from the Purchaser of such termination, the Company shall promptly
      authorize the bank to release all such funds remaining in the Holdback
      Account to such other account specified by the Purchaser.    
    

    
             (d)  Each of the parties hereto acknowledges and agrees that
      irreparable damage would occur in the event that any of the provisions
      of this Section 1.4 were not performed by the Company, on the one hand,
      or the Purchaser on the other hand, in accordance with the terms hereof
      or were otherwise breached by the Company, on the one hand, or the
      Purchaser on the other hand. The parties further agree that the
      Purchaser or the Company, as the case may be, shall be entitled to an
      injunction or injunctions to prevent breaches of the provisions hereof
      and to compel specific performance of the terms hereof, in addition to
      any other remedy at law or equity.
    

    
         1.5  Most Favored Nations Exchange.   If
      the Company completes a private equity or equity-linked financing at any
      time while any share of Series A Preferred Stock is outstanding, the
      Purchaser will have the right to exchange all or any such shares at
      their stated value, plus all accrued but unpaid dividends thereon, for
      securities in such financing.
    

    
         1.6  Subsequent Financings.  
    

    
             (a)  Other than in connection with a Exempt Issuance (defined
      below),  for the one-year period following any Closing Date, the
      Purchaser shall have the right to participate up to 100% of each
      such subsequent financing that involves the sale of securities of the
      Company (each such financing, a “Subsequent Financing”). At
      least 15 days prior to the making or accepting of an offer for a
      Subsequent Financing, the Company shall deliver to the Purchaser a
      written notice of its intention to effect a Subsequent Financing and the
      details of such Subsequent Financing (a “Subsequent Financing
      Notice”). The Subsequent Financing Notice shall describe in
      reasonable detail the proposed terms of such Subsequent Financing, the
      amount of proceeds intended to be raised thereunder and the Person (as
      defined in Section 3.13) with whom such Subsequent Financing is proposed
      to be effected, and shall include, as an attachment thereto, a term
      sheet or similar document relating thereto, if any exists.   If the
      Purchaser elects to participate in the Subsequent Financing, the closing
      of such Subsequent Financing shall be as mutually agreed between the
      parties participating in such Subsequent Financing.  If by 6:30 p.m.
      (Eastern Time) on the fifteenth day after the Purchaser has received the
      Subsequent Financing Notice, the Purchaser fails to notify the Company
      of its election to participate or elects to participate in an amount
      that is less than the total amount of the Subsequent Financing, then the
      Company may effect the remaining portion of such Subsequent Financing on
      the terms and with the Persons set forth in the Subsequent Financing
      Notice.  The Company must provide the Purchaser with a second Subsequent
      Financing Notice, and the Purchaser will again have the right of
      participation set forth above in this Section 1.6(a), if the Subsequent
      Financing subject to the initial Subsequent Financing Notice is not
      consummated for any reason on the terms set forth in such Subsequent
      Financing Notice within 90 days after the date of the initial Subsequent
      Financing Notice.
    

    

    

    
      
        

        

      

      
        
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             (b)  Notwithstanding the foregoing, Section 1.6(a) shall not
      apply in respect to the issuance of the following (each, an “Exempt
      Issuance”):  
    

    
                 (i)  shares of Common Stock issued upon conversion or
      exercise of any Options or Convertible Securities (defined below) that
      are outstanding on the day immediately preceding the Initial Closing
      Date, provided that the terms of such Options or Convertible Securities
      are not amended, modified or changed on or after the Initial Closing
      Date to lower the conversion or exercise price thereof and so long as
      the number of shares of Common Stock underlying such securities is not
      otherwise increased;
    

    
                (ii)  Up to 10,000,000 shares of Common Stock in the aggregate
      that are issued under the Company’s stock option plan (the “SOP”)
      pursuant to the terms of the SOP in effect on the day immediately
      preceding the Initial Closing Date;
    

    
               (iii)  securities issued pursuant to acquisitions or strategic
      transactions approved by a majority of the directors of the Company not
      interested in the transaction, provided that any such issuance shall
      only be to a Person which is, itself or through its subsidiaries, an
      operating company in a business synergistic with the business of the
      Company and in which the Company receives benefits in addition to the
      investment of funds; provided that, an issuance of securities primarily
      for the purpose of raising capital or to an entity whose primary
      business is investing in securities shall not be an Exempt Issuance; and
    

    
                (iv)  shares of Common Stock issued in a best efforts
      underwritten public offering in which the gross cash proceeds to the
      Company (before underwriting discounts, commissions and fees) are at
      least $30,000,000.
    

    

    

    
      
        

        

      

      
        
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      For purposes of this Agreement, “Convertible Securities”
      means any stock or other securities (other than Options) directly or
      indirectly convertible into or exercisable or exchangeable for shares of
      Common Stock, and “Options” means any rights, warrants or
      options to subscribe for or purchase shares of Common Stock or
      Convertible Securities.
    

    
      ARTICLE II  
OTHER TRANSACTION DOCUMENTS
    

    
         2.1  Security Agreement.  All of the
      obligations of the Company under this Agreement and the Securities shall
      be secured pursuant to the terms of that certain Amended and Restated
      Security Agreement dated of even date herewith between the Company and
      the Purchaser in the form attached hereto as Exhibit D (the “Security
      Agreement”).
    

    
      ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
    

    
       The Company hereby represents and warrants to the Purchaser as of the
      date of this Agreement and at each Closing as follows:  
    

    
         3.1  Organization and Qualification.  The
      Company is a corporation duly organized and validly existing and in good
      standing under the laws of the jurisdiction in which it is incorporated,
      and has all requisite corporate power and authority to carry on its
      business as now conducted.   The Company is duly qualified as a foreign
      corporation to do business and is in good standing in every jurisdiction
      in which its ownership of property or the nature of the business
      conducted by it makes such qualification necessary, except to the extent
      that the failure to be so qualified or be in good standing would not
      have a Material Adverse Effect. As used in this Agreement, “Material
      Adverse Effect” means any material adverse effect on the business,
      properties, assets, operations, results of operations, or condition
      (financial or otherwise) of the Company and its Subsidiaries, taken as a
      whole, or on the transactions contemplated hereby or by the agreements
      and instruments to be entered into in connection herewith, or on the
      authority or ability of the Company to perform its obligations in all
      material respects under the Transaction Documents (as defined in Section
      3.6 hereof).
    

    
         3.2  Subsidiaries.  The Company has
      no subsidiaries other than those disclosed on Schedule 2.2
      attached hereto (each a “Subsidiary”, and collectively, the
      “Subsidiaries’).  The Company owns, directly or
      indirectly, all of the capital stock of each Subsidiary, free and clear
      of any and all liens, and all the issued and outstanding shares of
      capital stock of each Subsidiary are validly issued and are fully paid,
      non-assessable and free of preemptive and similar rights.  Each
      Subsidiary is a corporation duly organized and validly existing and in
      good standing under the laws of the jurisdiction in which it is
      incorporated, and has all requisite corporate power and authority to
      carry on its business as now conducted.  Each Subsidiary is duly
      qualified as a foreign corporation to do business and is in good
      standing in every jurisdiction in which its ownership of property or the
      nature of the business conducted by it makes such qualification
      necessary, except to the extent that the failure to be so qualified or
      be in good standing would not have a Material Adverse Effect.  
    

    

    

    
      
        

        

      

      
        
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         3.3  Compliance.  
    

    
             (a)  Except as disclosed in Schedule
      3.3(a) attached hereto, neither the Company nor any Subsidiary
      (i) is in default under or in violation of (and no event has occurred
      that has not been waived that, with notice or lapse of time or both,
      would result in a default by the Company or any Subsidiary under), nor
      has the Company or any Subsidiary received notice of a claim that it is
      in default under or that it is in violation of, any indenture, loan or
      credit agreement or any other agreement or instrument to which it is a
      party or by which it or any of its properties is bound, except such
      that, individually or in the aggregate, such default(s) and
      violations(s) would not have or reasonably be expect to have a Material
      Adverse Effect, (ii) is in violation of any order of any court,
      arbitrator or governmental body, or (iii) is in violation of any of the
      provisions of its certificate or articles of incorporation, bylaws or
      other organizational or charter documents.
    

    
             (b)  The business of the Company and each Subsidiary is presently
      being conducted in accordance with all applicable foreign, federal,
      state and local governmental laws, rules, regulations and ordinances
      (including, without limitation, rules and regulations of each
      governmental and regulatory agency, self regulatory organization and
      Trading Market applicable to the Company or any Subsidiary), except such
      that, individually or in the aggregate, the noncompliance therewith
      would not have or reasonably be expect to have a Material Adverse
      Effect.  The Company has all franchises, permits, licenses, consents and
      other governmental or regulatory authorizations and approvals necessary
      for the conduct of its business as now being conducted by it unless the
      failure to possess such franchises, permits, licenses, consents and
      other governmental or regulatory authorizations and approvals,
      individually or in the aggregate, would not have or reasonably be expect
      to have a Material Adverse Effect, and the Company has not received any
      written notice of proceedings relating to the revocation or modification
      of any of the foregoing.   For purposes of this Agreement, “Trading
      Market” means the following markets or exchanges on which the Common
      Stock is listed or quoted for trading on the date in question: the NYSE
      Arca, the American Stock Exchange, the New York Stock Exchange, the
      Nasdaq Global Select Market, Nasdaq Global Market, the Nasdaq Capital
      Market, or any tier of the over-the-counter (“OTC”) market.
    

    
         3.4  Capitalization.
    

    
             (a)  The authorized capital stock of the Company, the number of
      shares of such capital stock issued and outstanding, and the number of
      shares of capital stock reserved for issuance upon the exercise or
      conversion of all outstanding warrants, stock options, and other
      securities issued by the Company, as of the date hereof, are set forth
      on Schedule 3.4(a) attached hereto.  All of such outstanding
      shares have been, or upon issuance will be, validly issued, are fully
      paid and nonassessable.
    

    
             (b)  Except as disclosed in Schedule
      3.4(b) attached hereto:
    

    
      (i)       no holder of shares of the Company’s capital stock has any
      preemptive rights or any other similar rights or has been granted or
      holds any Liens or encumbrances suffered or permitted by the Company;
    

    

    

    
      
        

        

      

      
        
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      (ii)      there are no outstanding options, warrants, scrip, rights to
      subscribe to, calls or commitments of any character whatsoever relating
      to, or securities or rights convertible into, or exercisable or
      exchangeable for, any shares of capital stock of the Company or any
      Subsidiary, or contracts, commitments, understandings or arrangements by
      which the Company or any Subsidiary is or may become bound to issue
      additional shares of capital stock of the Company or any Subsidiary or
      options, warrants, scrip, rights to subscribe to, calls or commitments
      of any character whatsoever relating to, or securities or rights
      convertible into, or exercisable or exchangeable for, any shares of
      capital stock of the Company or any Subsidiary;
    

    
      (iii)     there are no outstanding debt securities, notes, credit
      agreements, credit facilities or other agreements, documents or
      instruments evidencing Indebtedness (as defined in Section 3.13 hereof)
      of the Company or any Subsidiary in excess of $100,000 or by which the
      Company or any Subsidiary is or may become bound and involves
      Indebtedness in excess of $100,000;
    

    
      (iv)      there are no financing statements securing obligations in any
      material amounts, either singly or in the aggregate, filed in connection
      with the Company or its Subsidiaries;
    

    
      (v)       there are no agreements or arrangements under which the
      Company or any Subsidiary is obligated to register the sale of any of
      their securities under the Securities Act of 1933, as amended (the “Securities
      Act”);
    

    
      (vi)      there are no outstanding securities or instruments of the
      Company or any Subsidiary that contain any redemption or similar
      provisions, and there are no contracts, commitments, understandings or
      arrangements by which the Company or any Subsidiary is or may become
      bound to redeem a security of the Company or a Subsidiary;
    

    
      (vii)     there are no securities or instruments containing antidilution
      or similar provisions that will be triggered by the issuance of the
      Securities; and
    

    
      (viii)    the Company does not have any stock appreciation rights or
      “phantom stock” plans or agreements or any similar plan or agreement.
    

    
         3.5  Issuance of Securities.
    

    
             (a)  The Securities to be issued hereunder are duly authorized
      and, upon payment and issuance in accordance with the terms hereof,
      shall be free from all taxes, Liens and charges with respect to the
      issuance thereof. As of the Closing Date, the Company has authorized and
      has reserved free of preemptive rights and other similar contractual
      rights of stockholders, a number of its authorized but unissued shares
      of Common Stock equal to one hundred percent (100%) of the aggregate
      number of shares of Common Stock issuable upon the full conversion of
      the Preferred Shares and New Debentures and one hundred percent (100%)
      of the aggregate number of shares of Common Stock issuable upon the full
      exercise of the Warrants.
    

    
             (b)  The Conversion Shares and Warrant Shares, when issued and
      paid for upon conversion of the Preferred Shares and New Debentures and
      exercise of the Warrants, as the case may be, will be validly issued,
      fully paid and nonassessable and free from all taxes, Liens and charges
      with respect to the issue thereof, with the holders being entitled to
      all rights accorded to a holder of the Common Stock.
    

    

    

    
      
        

        

      

      
        
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             (c)  Assuming the accuracy of each of the representations and
      warranties made by the Purchaser and set forth in Article IV hereof (and
      assuming no change in applicable law and no unlawful distribution of the
      Securities by the Purchaser or other Persons), the issuance by the
      Company to the Purchaser of the Securities is exempt from registration
      under the Securities Act.
    

    
         3.6  Authorization; Enforcement; Validity.
      The Company has the requisite corporate power and authority to enter
      into and perform its obligations under this Agreement, the Amended and
      Restated Registration Rights Agreement to be entered into between the
      Company and the Purchaser on even date herewith in the form attached
      hereto as Exhibit E (the “Registration Rights Agreement”),
      the Certificate of Designation for the Series A Preferred Stock, the New
      Debentures, the Warrants, the Security Agreement, and each of the other
      agreements or instruments entered into or delivered by the parties
      hereto in connection with the transactions contemplated by this
      Agreement (collectively, the “Transaction Documents”) and
      to issue the Securities (including without limitation, the Conversion
      Shares and Warrant Shares) in accordance with the terms hereof and
      thereof. The execution and delivery of the Transaction Documents by the
      Company and the consummation by the Company of the transactions
      contemplated hereby and thereby, including, without limitation, the
      issuance of the Preferred Shares, New Debentures and the Warrants, have
      been duly authorized by the Board, and no further consent or
      authorization is required by the Company, the Board or its stockholders.
      This Agreement and the other Transaction Documents have been duly
      executed and delivered by the Company, and constitute the legal, valid
      and binding obligations of the Company enforceable against the Company
      in accordance with their respective terms, except (i) as limited by
      general equitable principles and applicable bankruptcy, insolvency,
      reorganization, moratorium, fraudulent conveyance and other laws of
      general application affecting enforcement of creditors’ rights and
      remedies generally, (ii) as limited by laws relating to the availability
      of specific performance, injunctive relief or other equitable remedies
      and (iii) insofar as indemnification and contribution provisions may be
      limited by applicable law or by principles of public policy thereunder.
    

    
         3.7  Dilutive Effect. The Company
      understands and acknowledges that its obligation to issue the Conversion
      Shares and Warrant Shares is absolute and unconditional regardless of
      the dilutive effect that such issuance may have on the ownership
      interests of other stockholders of the Company.
    

    
         3.8  No Conflicts. The execution,
      delivery and performance of the Transaction Documents by the Company and
      the consummation by the Company of the transactions contemplated hereby
      and thereby (including, without limitation, the reservation for issuance
      of the Conversion Shares and Warrant Shares) will not (i) result in a
      violation of any articles or certificate of incorporation, any
      certificate of designation, preferences and rights of any outstanding
      series of preferred stock, bylaws or similar charter or organizational
      document of the Company or any Subsidiary or (ii) conflict with, or
      constitute a default (or an event which with notice or lapse of time or
      both would become a default) under, or give to others any rights of
      termination, amendment, acceleration or cancellation of, any material
      agreement, indenture or instrument to which the Company or any
      Subsidiary is a party (except where such defaults, conflicts, rights of
      termination, amendment, acceleration or cancellation have been waived or
      postponed until the fulfillment of the Company’s obligations under the
      Transaction Documents), or (iii) result in a violation of any federal,
      state, local or foreign statute, rule, regulation, order, judgment or
      decree (including federal and state securities laws and regulations and
      rules and regulations of any governmental or any regulatory agency,
      self-regulatory organization, or Trading Market applicable to the
      Company) or by which any property or asset of the Company are bound or
      affected, except in the case of clauses (ii) and (iii), for such
      breaches, violations or defaults as would not be reasonably expected to
      have a Material Adverse Effect.  
    

    

    

    
      
        

        

      

      
        
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         3.9  Governmental Consents. Except
      for (i) the filing of a registration statement pursuant to the
      Registration Rights Agreement, (ii) application(s) to each Trading
      Market for the listing of the Conversion Shares and Warrant Shares for
      trading thereon in the time and manner required thereby, and (iii) the
      filing of Form D with the Commission and such filings as are required to
      be made under applicable state securities laws, the Company is not
      required to obtain any consent, authorization or order of, or make any
      filing or registration with, any court, governmental or any regulatory
      agency, self-regulatory organization or any other Person in order for it
      to execute, deliver or perform any of its obligations under or
      contemplated by the Transaction Documents, in each case, in accordance
      with the terms hereof or thereof. The Company is unaware of any facts or
      circumstances relating to the Company or its Subsidiaries which might
      prevent the Company from obtaining or effecting any of the foregoing.
    

    
        3.10  Registration and Approval of Sale of
      Securities.  Based in material part upon the representations and
      warranties herein (and in the other Transaction Documents) of the
      Purchaser, the Company has complied and will comply with all applicable
      federal and state securities laws in connection with the offer, issuance
      and sale of the Securities hereunder.  Assuming the accuracy of the
      representations and warranties in Article IV hereof (and assuming no
      change in applicable law and no unlawful distribution of the Securities
      by the Purchaser or other Persons), no registration under the Securities
      Act is required for the offer and sale of the Securities by the Company
      to the Purchaser as is contemplated hereby. Neither the Company nor any
      Person acting on its behalf, directly or indirectly, has or will sell,
      offer to sell or solicit offers to buy any of the Securities or similar
      securities to, or solicit offers with respect thereto from, or enter
      into any negotiations relating thereto with, any Person, or has taken or
      will take any action so as to either (a) bring the issuance and sale of
      any of the Securities under the registration provisions of the
      Securities Act or applicable state securities laws, or (b) trigger
      shareholder approval provisions under the rules or regulations of any
      Trading Market.  Neither the Company nor any of its affiliates that it
      controls, nor any Person acting on its or their behalf, has: (x) engaged
      in any form of general solicitation or general advertising (within the
      meaning of Regulation D under the Securities Act) in connection with the
      offer or sale of any of the Securities; or (y) directly or indirectly
      made any offers or sales of any security or solicited any offers to buy
      any security under circumstances that would cause the offering of the
      Securities pursuant to this Agreement to be integrated with prior
      offerings by the Company for purposes of the Securities Act in a manner
      that would prevent the Company from selling the Securities pursuant to
      Regulation D and Rule 506 thereof under the Securities Act, nor will the
      Company or any of its affiliates that it controls or Persons acting on
      its or their behalf engage in any form of general solicitation or take
      any action or steps that would cause the offering of the Securities to
      be integrated with other offerings.  
    

    

    

    
      
        

        

      

      
        
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        3.11  Placement Agent’s Fees.  Except
      as set forth on Schedule 3.11, no brokerage or finder’s fee or
      commission are or will be payable to any Person with respect to the
      transactions contemplated by this Agreement based upon arrangements made
      by the Company or any of its affiliates.  The Company agrees that it
      shall be responsible for the payment of any placement agent’s fees,
      financial advisory fees, or brokers’ commissions (other than for Persons
      engaged by the Purchaser or any of its affiliates) relating to or
      arising out of the transactions contemplated hereby. The Company shall
      pay, and hold the Purchaser harmless against, any liability, loss or
      expense (including, without limitation, reasonable attorney’s fees and
      out-of-pocket expenses) arising in connection with any claim for any
      such fees or commissions.
    

    
        3.12  Litigation.  Except as disclosed in Schedule
      3.12 attached hereto, there is no action, suit, written notice of
      violation, or written notice of any proceeding pending or, to the
      knowledge of the Company, threatened against or affecting the Common
      Stock or the Company, any Subsidiary or any of their respective
      executive officers, directors or properties before or by any court,
      arbitrator, governmental or administrative agency, regulatory
      authority  (federal, state, county, local or foreign), self regulatory
      authority or Trading Market  (collectively, an “Action”)
      which (i) adversely affects or challenges the legality, validity or
      enforceability of any of the Transaction Documents or the Securities or
      (ii) would, if there were an unfavorable decision, have or reasonably be
      expected to result in a Material Adverse Effect.  To the Company’s
      knowledge, neither the Company nor any Subsidiary, nor any director or
      executive officer thereof (in his/her capacity as such), is or, within
      the last five years, has been the subject of any Action involving a
      claim of violation of or liability under federal or state securities
      laws or a claim of breach of fiduciary duty.  To the knowledge of the
      Company, there has not been, and there is not pending or threatened in
      writing, any investigation by the United States Securities and Exchange
      Commission (the “Commission” or “SEC”)
      involving the Company or any current director or executive officer of
      the Company.  The Commission has not issued any stop order or other
      order suspending the effectiveness of any registration statement filed
      by the Company under the Securities Act.  There is no action, suit,
      claim, investigation, arbitration, alternate dispute resolution
      proceeding or other proceeding pending or, to the knowledge of the
      Company, threatened in writing against or involving the Company or any
      of its properties or assets, which individually or in the aggregate,
      would reasonably be expected to have a Material Adverse Effect.  There
      are no outstanding orders, judgments, injunctions, awards or decrees of
      any court, arbitrator or governmental or regulatory body against the
      Company or any executive officers or directors of the Company in their
      capacities as such, which individually or in the aggregate, would
      reasonably be expected to have a Material Adverse Effect.
    

    
        3.13  Indebtedness and Other Contracts.
      Except as disclosed in Schedule 3.13 attached hereto, neither the
      Company nor any Subsidiary (a) has any outstanding Indebtedness (as
      defined below in this Section 3.13), (b) is a party to any contract,
      agreement or instrument, the violation of which, or default under, by
      any other party to such contract, agreement or instrument would result
      in a Material Adverse Effect, (c) is in violation of any term of or in
      default under any contract, agreement or instrument relating to any
      Indebtedness, except where such violations and defaults would not
      result, individually or in the aggregate, in a Material Adverse Effect,
      or (d) is a party to any contract, agreement or instrument relating to
      any Indebtedness, the performance of which, in the judgment of the
      Company’s officers, has or is expected to have a Material Adverse
      Effect.  For purposes of this Agreement: (x) ”Indebtedness”
      of any Person means, without duplication (i) all indebtedness for
      borrowed money, (ii) all obligations issued, undertaken or assumed as
      the deferred purchase price of property or services (other than trade
      payables entered into in the ordinary course of business), (iii) all
      reimbursement or payment obligations with respect to letters of credit,
      surety bonds and other similar instruments, (iv) all obligations
      evidenced by notes, bonds, debentures or similar instruments, including
      obligations so evidenced incurred in connection with the acquisition of
      property, assets or businesses, (v) all indebtedness created or arising
      under any conditional sale or other title retention agreement, or
      incurred as financing, in either case with respect to any property or
      assets acquired with the proceeds of such indebtedness (even though the
      rights and remedies of the seller or bank under such agreement in the
      event of default are limited to repossession or sale of such property),
      (vi) all monetary obligations under any leasing or similar arrangement
      which, in connection with generally accepted accounting principles,
      consistently applied for the periods covered thereby, is classified as a
      capital lease, (vii) all indebtedness referred to in clauses (i) through
      (vi) above secured by (or for which the holder of such Indebtedness has
      an existing right, contingent or otherwise, to be secured by) any
      mortgage, Lien, pledge, change, security interest or other encumbrance
      upon or in any property or assets (including accounts and contract
      rights) owned by any Person, even though the Person which owns such
      assets or property has not assumed or become liable for the payment of
      such indebtedness, and (viii) all Contingent Obligations in respect of
      indebtedness or obligations of others of the kinds referred to in
      clauses (i) through (vii) above; (y) ”Contingent
      Obligation” means, as to any Person, any direct or indirect
      liability, contingent or otherwise, of that Person with respect to any
      indebtedness, lease, dividend or other obligation of another Person if
      the primary purpose or intent of the Person incurring such liability, or
      the primary effect thereof, is to provide assurance to the obligee of
      such liability that such liability will be paid or discharged, or that
      any agreements relating thereto will be complied with, or that the
      holders of such liability will be protected (in whole or in part)
      against loss with respect thereto; and (z) ”Person”
      means an individual, a limited liability company, a partnership, a joint
      venture, a corporation, a trust, an unincorporated organization and a
      government or any department or agency thereof.
    

    

    

    
      
        

        

      

      
        
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        3.14  Commission Documents, Financial Statements.  The
      Common Stock of the Company is registered pursuant to Section 12(g) of
      the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”), and the Company has filed all reports, schedules, forms,
      statements and other documents required to be filed by it with the
      Commission pursuant to the reporting requirements of the Exchange
      Act.  At the times of their respective filings, all of the
      aforementioned reports, schedules, forms, statements and other documents
      required to be filed by it with the Commission (the “Commission
      Documents”) complied in all material respects with the requirements
      of the Securities Act and the Exchange Act and the rules and regulations
      of the Commission promulgated thereunder, and did not contain any untrue
      statement of a material fact or omit 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.  Each registration statement and any amendment thereto filed
      by the Company during the two years preceding the date hereof pursuant
      to the Securities Act and the rules and regulations thereunder, as of
      the date such statement or amendment became effective, complied as to
      form in all material respects with the Securities Act and did not
      contain any untrue statement of a material fact or omit to state any
      material fact required to be stated therein or necessary in order to
      make the statements made therein not misleading; and each prospectus
      filed pursuant to Rule 424(b) under the Securities Act, as of its issue
      date and as of the closing of any sale of securities pursuant thereto
      did not contain any untrue statement of a material fact or omit to state
      any material fact required to be stated therein or necessary in order to
      make the statements made therein, in the light of the circumstances
      under which they were made, not misleading. As of their respective
      dates, the financial statements of the Company included in the
      Commission Documents complied as to form in all material respects with
      applicable accounting requirements and the published rules and
      regulations of the Commission.  Such financial statements have been
      prepared in accordance with generally accepted accounting principles (“GAAP”)
      applied on a consistent basis during the periods involved (except (i) as
      may be otherwise indicated in such financial statements or the notes
      thereto or (ii) in the case of unaudited interim statements, to the
      extent they may not include footnotes or year-end adjustments or may be
      condensed or summary statements), and fairly present in all material
      respects the financial position of the Company and its Subsidiaries as
      of the dates thereof and the results of operations and cash flows for
      the periods then ended (subject, in the case of unaudited statements, to
      normal year-end audit adjustments).
    

    

    

    
      
        

        

      

      
        
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        3.15  Absence of Certain Changes or Developments.  Except
      as disclosed in Schedule 3.15 attached hereto or as contemplated
      herein and in the Transaction Documents, since  September 10, 2008:
    

    
             (a)  there has been no Material Adverse Effect, and no event or
      circumstance has occurred or exists with respect to the Company or its
      businesses, properties, operations or financial condition, which, under
      the Exchange Act, Securities Act, or rules or regulations of any Trading
      Market, required or requires public disclosure or announcement by the
      Company, but which has not been so publicly announced or disclosed;
    

    
             (b)  the Company has not:
    

    
                 (i)  issued any stock, bonds or other corporate securities or
      any right, options or warrants with respect thereto, except pursuant to
      the exercise or conversion of securities outstanding as of such date;
    

    
                (ii)  borrowed any amount in excess of $100,000 or incurred or
      become subject to any other liabilities in excess of $100,000 (absolute
      or contingent) except current liabilities incurred in the ordinary
      course of business which are comparable in nature and amount to the
      current liabilities incurred in the ordinary course of business during
      the comparable portion of its prior fiscal year, as adjusted to reflect
      the current nature and volume of the business of the Company;
    

    
               (iii)  discharged or satisfied any Lien or encumbrance in
      excess of $100,000 or paid any obligation or liability (absolute or
      contingent) in excess of $100,000, other than current liabilities paid
      in the ordinary course of business and payments of principal;
    

    
                (iv)  declared or made any payment or distribution of cash or
      other property to stockholders with respect to its stock, or purchased
      or redeemed, or made any agreements so to purchase or redeem, any shares
      of its capital stock, in each case in excess of $50,000 individually or
      $100,000 in the aggregate;
    

    
                 (v)  sold, assigned or transferred any other tangible assets,
      or canceled any debts or claims, in each case in excess of $100,000,
      except in the ordinary course of business;
    

    

    

    
      
        

        

      

      
        
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                (vi)  sold, assigned or transferred any patent rights,
      trademarks, trade names, copyrights, trade secrets or other intangible
      assets or intellectual property rights in excess of $100,000, or
      disclosed any proprietary confidential information to any person except
      to customers in the ordinary course of business;
    

    
               (vii)  suffered any material losses or waived any rights of
      material value, whether or not in the ordinary course of business, or
      suffered the loss of any material amount of prospective business;
    

    
              (viii)  made any changes in employee compensation except in the
      ordinary course of business and consistent with past practices;
    

    
                (ix)  except for capital expenditures or commitments of up to
      $1,000,000 in the aggregate that are solely used for the interconnect
      site deployment, made capital expenditures or commitments therefor that
      aggregate in excess of $100,000;
    

    
                 (x)  entered into any material transaction outside the
      ordinary course of business;
    

    
                (xi)  made charitable contributions or pledges in excess of
      $10,000;
    

    
               (xii)  suffered any material damage, destruction or casualty
      loss, whether or not covered by insurance;
    

    
              (xiii)  experienced any material problems with labor or
      management in connection with the terms and conditions of their
      employment;
    

    
               (xiv)  altered its method of accounting, except to the extent
      required by GAAP;
    

    
                (xv)  issued any equity securities to any officer, director or
      affiliate (as such term is defined in Rule 144 of the Securities Act),
      except pursuant to existing Company stock, option, equity incentive or
      similar incentive plans; or
    

    
               (xvi)  entered into an agreement, written or otherwise, to take
      any of the foregoing actions.
    

    
        3.16  Solvency.  The Company has not taken,
      nor does it have any intention to take, any steps to seek protection
      pursuant to any bankruptcy or similar law.  The Company does not have
      any actual knowledge nor has it received any written notice that its
      creditors intend to initiate involuntary bankruptcy proceedings or any
      actual knowledge of any fact that, as of the date hereof, would
      reasonably lead a creditor to do so. After giving effect to the
      transactions contemplated hereby to occur at the Closing, the Company
      will not be Insolvent (as hereinafter defined). For purposes of this
      Agreement, “Insolvent” means (i) the present fair saleable
      value of the Company’s assets is less than the amount required to pay
      the Company’s total Indebtedness, contingent or otherwise, (ii) the
      Company is unable to pay its debts and liabilities, subordinated,
      contingent or otherwise, as such debts and liabilities become absolute
      and matured, (iii) the Company intends to incur or believes that it will
      incur debts that would be beyond its ability to pay as such debts mature
      or (iv) the Company has unreasonably small capital with which to conduct
      the business in which it is engaged as such business is now conducted
      and is proposed to be conducted.
    

    

    

    
      
        

        

      

      
        
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        3.17  Off-Balance Sheet Arrangements.  There
      is no transaction, arrangement, or other relationship between the
      Company and an unconsolidated or other off-balance sheet entity that is
      required to be disclosed by the Company in its Exchange Act filings and
      is not so disclosed or that if made or not made would be reasonably
      likely to have a Material Adverse Effect.
    

    
        3.18  Foreign Corrupt Practices.  None of
      the Company, any Subsidiary, nor any of their respective directors,
      officers, agents, employees or other Persons acting on behalf of such
      subsidiaries has, in the course of their respective actions for or on
      behalf of the Company or any of its subsidiaries (a) used any corporate
      funds for any unlawful contribution, gift, entertainment or other
      unlawful expenses relating to political activity, (b) made any direct or
      indirect unlawful payment to any foreign or domestic government official
      or employee from corporate funds, (c) violated or is in violation of any
      provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended
      or (d) made any unlawful bribe, rebate, payoff, influence payment,
      kickback or other unlawful payment to any foreign or domestic government
      official or employee.
    

    
        3.19  Transactions With Affiliates.  Except
      as disclosed in Schedule 3.19 attached hereto, none of the
      officers, directors or employees of the Company is presently a party to
      any transaction with the Company or any Subsidiary (other than for
      ordinary course services as employees, officers or directors), including
      any contract, agreement or other arrangement providing for the
      furnishing of services to or by, providing for rental of real or
      personal property to or from, or otherwise requiring payments to or from
      any such officer, director or employee or, to the knowledge of the
      Company, any corporation, partnership, trust or other entity in which
      any such officer, director, or employee has a substantial interest or is
      an officer, director, trustee or partner.
    

    
        3.20  Insurance.   Except as disclosed in Schedule
      3.20 attached hereto, the Company and each Subsidiary are insured by
      insurers of recognized financial responsibility against such losses and
      risks and in such amounts as management of the Company believes to be
      prudent and customary in the businesses in which the Company and each
      Subsidiary are engaged. Neither the Company nor any Subsidiary has been
      refused any insurance coverage sought or applied for and neither the
      Company nor any Subsidiary has any reason to believe that it will not be
      able to renew its existing insurance coverage as and when such coverage
      expires or to obtain similar coverage from similar insurers as may be
      necessary to continue its business at a cost that would not have a
      Material Adverse Effect.
    

    
        3.21  Employee Relations.  Neither the
      Company nor any Subsidiary is a party to any collective bargaining
      agreement or employs any member of a union. No Executive Officer of the
      Company (as defined in Rule 501(f) of the Securities Act) has notified
      the Company that such officer intends to leave the Company or otherwise
      terminate such officer’s employment with the Company. No Executive
      Officer of the Company, to the knowledge of the Company, is, or is now,
      in violation of any material term of any employment contract,
      confidentiality, disclosure or proprietary information agreement,
      non-competition agreement, or any other contract or agreement or any
      restrictive covenant, and, to the actual knowledge of the Company, the
      continued employment of each such executive officer does not subject the
      Company or any Subsidiary to any liability with respect to any of the
      foregoing matters. The Company and each Subsidiary are in compliance
      with all federal, state, local and foreign laws and regulations
      respecting employment and employment practices, terms and conditions of
      employment and wages and hours, except where failure to be in compliance
      would not, either individually or in the aggregate, reasonably be
      expected to result in a Material Adverse Effect.
    

    

    

    
      
        

        

      

      
        
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        3.22  Title.  Except as set forth in Schedule
      3.22, the Company and each Subsidiary have good and marketable title
      to all personal property owned by them which is material to their
      respective business, in each case free and clear of all Liens. Any real
      property and facilities held under lease by the Company or any
      Subsidiary are held by them under valid, subsisting and enforceable
      leases with such exceptions as are not material and do not interfere
      with the use made and proposed to be made of such property and buildings
      by the Company or any Subsidiary.
    

    
        3.23  Intellectual Property Rights.  The
      Company and its Subsidiaries own or possess the rights to use all
      patents, trademarks, domain names (whether or not registered) and any
      patentable improvements or copyrightable derivative works thereof,
      websites and intellectual property rights relating thereto, service
      marks, trade names, copyrights, licenses and authorizations which are
      necessary for the conduct of its business as now conducted
      (collectively, the “Intellectual Property Rights”) without
      any conflict with the rights of others, except any failures as,
      individually or in the aggregate, are not reasonably likely to have a
      Material Adverse Effect.  Neither the Company nor any Subsidiary has
      received a written notice that the Intellectual Property Rights used by
      the Company or any Subsidiary violates or infringes upon the rights of
      any Person.  To the knowledge of the Company, all such Intellectual
      Property Rights are enforceable and there is no existing infringement by
      another Person of any of the Intellectual Property Rights. The Company
      and its Subsidiaries have taken reasonable measures to protect the value
      of the Intellectual Property Rights.   
    

    
        3.24  Environmental Laws.  The Company and
      each of its Subsidiaries (a) are in compliance with any and all
      Environmental Laws (as hereinafter defined), (b) have received all
      permits, licenses or other approvals required of them under applicable
      Environmental Laws to conduct their respective businesses and (c) are in
      compliance with all terms and conditions of any such permit, license or
      approval where, in each of the foregoing clauses (a), (b) and (c), the
      failure to so comply could be reasonably expected to have, individually
      or in the aggregate, a Material Adverse Effect. The term “Environmental
      Laws” means all federal, state, local or foreign laws relating to
      pollution or protection of human health or the environment (including,
      without limitation, ambient air, surface water, groundwater, land
      surface or subsurface strata), including, without limitation, laws
      relating to emissions, discharges, releases or threatened releases of
      chemicals, pollutants, contaminants, or toxic or hazardous substances or
      wastes (collectively, “Hazardous Materials”) into the
      environment, or otherwise relating to the manufacture, processing,
      distribution, use, treatment, storage, disposal, transport or handling
      of Hazardous Materials, as well as all authorizations, codes, decrees,
      demands or demand letters, injunctions, judgments, licenses, notices or
      notice letters, orders, permits, plans or regulations issued, entered,
      promulgated or approved thereunder.
    

    

    

    
      
        

        

      

      
        
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        3.25  Tax Matters.  The Company and each of
      its Subsidiaries (a) have made or filed all federal and state income and
      all other tax returns, reports and declarations required by any
      jurisdiction to which it is subject, (b) have 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 (c) have set aside on its
      books reasonably adequate provision for the payment of all taxes for
      periods subsequent to the periods to which such returns, reports or
      declarations apply, except where such failure would not have a Material
      Adverse Effect. 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.
    

    
        3.26  Internal Accounting and Disclosure
      Controls.  The Company is in compliance in all material respects
      with the requirements of the Sarbanes-Oxley Act of 2002 that are
      effective as of the date hereof and applicable to it, and any and all
      rules and regulations promulgated by the SEC thereunder that are
      effective and applicable to it as of the date hereof to the best of its
      abilities.  The Company maintains a system of internal accounting
      controls and disclosure controls and procedures that it believes are
      appropriate given the size and circumstances of the Company.  The
      Company maintains and will continue to maintain a standard system of
      accounting established and administered in accordance with GAAP and the
      applicable requirements of the Exchange Act.
    

    
        3.27  Investment Company Status.  The
      Company is not, and immediately after receipt of payment for the
      Securities will not be, an “investment company,” an “affiliated person”
      of, “promoter” for or “principal underwriter” for, or an entity
      “controlled” by an “investment company,” within the meaning of the
      Investment Company Act of 1940, as amended.
    

    
        3.28  Material Contracts.  Each contract of
      the Company that involves expenditures or receipts in excess of $250,000
      (each, a “Material Contract”) is in full force and effect
      and is valid and enforceable in accordance with its terms. The Company
      is and has been in material compliance with all applicable terms and
      requirements of each Material Contract and no event has occurred or
      circumstance exists that (with or without notice or lapse of time) may
      contravene, conflict with or result in a violation or breach of, or give
      the Company or any other entity the right to declare a default or
      exercise any remedy under, or to accelerate the maturity or performance
      of, or to cancel, terminate or modify any Material Contract. The Company
      has not given or received from any other Person any notice or other
      communication (whether oral or written) regarding any actual, alleged,
      possible or potential violation or breach of, or default under, any
      Material Contract.
    

    
        3.29  Inventory.  All inventory of the
      Company consists of a quality and quantity usable and salable in the
      ordinary course of business, except for obsolete items and items of
      below-standard quality, all of which have been or will be written off or
      written down to net realizable value on the audited consolidated balance
      sheet of the Company and its Subsidiaries as of September 30, 2009.  The
      quantities of each type of inventory (whether raw materials,
      work-in-process, or finished goods) are not excessive, but are
      reasonable and warranted in the present circumstances of the Company.
    

    

    

    
      
        

        

      

      
        
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        3.30  No Disagreements with Accountants.
      There are no disagreements of any kind presently existing, or reasonably
      anticipated by the Company to arise, between the Company and the
      accountants formerly or presently employed by the Company.
    

    
        3.31  Ranking of Series A Preferred Stock.  No
      capital stock or other security (except for the Old Debentures
      outstanding on the date hereof) issued by the Company is senior to the
      Series A Preferred Stock or New Debentures in right of payment, whether
      with respect of payment of redemptions, interest, damages or upon
      liquidation or dissolution or otherwise.
    

    
        3.32  Manipulation of Price.  The Company
      has not, and to its knowledge no one acting on its behalf has, taken,
      directly or indirectly, any action designed to cause or to result or
      that could reasonably be expected to cause or result, in the
      stabilization or manipulation of the price of any security of the
      Company to facilitate the sale or resale of any of the Securities.
    

    
        3.33  Listing and Maintenance Requirements.   The
      Company has not, in the 12 months preceding the date hereof, received
      notice from any Trading Market on which the Common Stock is or has been
      listed or quoted to the effect that the Company is not in compliance
      with the listing or maintenance requirements of such Trading Market. The
      Company is in compliance with all such maintenance requirements.
    

    
        3.34  Application of Takeover Protections.  The
      Company and its Board of Directors have taken all necessary action, if
      any, in order to render inapplicable any control share acquisition,
      business combination, poison pill (including any distribution under a
      rights agreement) or other similar anti-takeover provision under the
      Company’s Certificate of Incorporation (or similar charter documents) or
      the laws of its state of incorporation that is or could become
      applicable to the Purchaser as a result of the Purchaser and the Company
      fulfilling their obligations or exercising their rights under the
      Transaction Documents, including without limitation the Company’s
      issuance of the Securities and the Purchaser’s ownership of the
      Securities.
    

    
        3.35  OFAC.  Neither the issuance of the
      Securities to the Purchaser, nor the use of the respective proceeds
      thereof by the Company, shall cause the Company to violate the U.S. Bank
      Secrecy Act, as amended, and any applicable regulations thereunder or
      any of the sanctions programs administered by the U.S. Department of the
      Treasury’s Office of Foreign Assets Control (“OFAC”)
      of the United States Department of Treasury, any regulations promulgated
      thereunder by OFAC or under any affiliated or successor governmental or
      quasi-governmental office, bureau or agency and any enabling legislation
      or executive order relating thereto. Without limiting the foregoing, the
      Lender (i) is not a person whose property or interests in property are
      blocked or subject to blocking pursuant to Section 1 of Executive Order
      13224 of September 23, 200l Blocking Property and Prohibiting
      Transactions With Persons Who Commit, Threaten to Commit, or Support
      Terrorism (66 Fed. Reg. 49079 (2001)), (ii) does not engage in any
      dealings or transactions prohibited by Section 2 of such executive
      order, or is otherwise associated with any such person in any manner
      violative of Section 2, or (iii) is not a person on the list of
      Specially Designated Nationals and Blocked Persons or subject to the
      limitations or prohibitions under any other OFAC regulation or executive
      order.
    

    

    

    
      
        

        

      

      
        
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        3.36  Disclosure. All disclosure provided
      to the Purchaser regarding the Company, its business and the
      transactions contemplated hereby, including the Schedules to this
      Agreement, furnished by or on behalf of the Company are true and correct
      and do not contain any untrue statement of a material fact or omit to
      state any material fact necessary in order to make the statements made
      therein, in light of the circumstances under which they were made, not
      misleading; provided however, the Company makes no representation as to
      studies and reports prepared by third parties not engaged by the Company
      and included in the materials delivered to Purchaser.
    

    
      ARTICLE IV  
REPRESENTATIONS AND WARRANTIES OF THE
      PURCHASER
    

    
      The Purchaser hereby represents and warrants to the Company as of the
      date of this Agreement as follows:
    

    
         4.1  Organization; Authority.  The
      Purchaser is an entity duly organized, validly existing and in good
      standing under the laws of the jurisdiction of its organization with
      full right, corporate or partnership power and authority to enter into
      and to consummate the transactions contemplated by the Transaction
      Documents and otherwise to carry out its obligations thereunder. The
      execution, delivery and performance by the Purchaser of the transactions
      contemplated by this Agreement have been duly authorized by all
      necessary corporate or similar action on the part of the
      Purchaser.  Each Transaction Document to which it is a party has been
      duly executed by the Purchaser, and when delivered by the Purchaser in
      accordance with the terms hereof, will constitute the valid and legally
      binding obligation of the Purchaser, enforceable against it in
      accordance with its terms, except (i) as limited by general equitable
      principles and applicable bankruptcy, insolvency, reorganization,
      moratorium and other laws of general application affecting enforcement
      of creditors’ rights generally, (ii) as limited by laws relating to the
      availability of specific performance, injunctive relief or other
      equitable remedies and (iii) insofar as indemnification and contribution
      provisions may be limited by applicable law.
    

    
         4.2  Own Account.  The Purchaser
      understands that the Securities are “restricted securities” and have not
      been registered under the Securities Act or any applicable state
      securities law and is acquiring the Securities as principal for its own
      account and not with a view to or for distributing or reselling such
      Securities or any part thereof except in compliance with the Securities
      Act, has no present intention of distributing any of such Securities and
      has no arrangement or understanding with any other persons regarding the
      distribution of such Securities (this representation and warranty not
      limiting the Purchaser’s right to sell the Securities pursuant to a
      registration statement or otherwise in compliance with applicable
      federal and state securities laws), except in compliance with the
      Securities Act. The Purchaser is acquiring the Securities hereunder in
      the ordinary course of its business. The Purchaser does not have any
      agreement or understanding, directly or indirectly, with any Person to
      distribute any of the Securities.
    

    
         4.3  Purchaser Status.  At the time
      the Purchaser was offered the Securities, it was, and at the date hereof
      it is, either: (i) an “accredited investor” as defined in Rule
      501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or
      (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under
      the Securities Act.    
    

    

    

    
      
        

        

      

      
        
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         4.4  Experience of Such Purchaser.  The
      Purchaser, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial
      matters so as to be capable of evaluating the merits and risks of the
      prospective investment in the Securities, and has so evaluated the
      merits and risks of such investment.  The Purchaser is able to bear the
      economic risk of an investment in the Securities and, at the present
      time, is able to afford a complete loss of such investment.
    

    
         4.5  General Solicitation.  The
      Purchaser is not purchasing the Securities as a result of any
      advertisement, article, notice or other communication regarding the
      Securities published in any newspaper, magazine or similar media or
      broadcast over television or radio or presented at any seminar or any
      other general solicitation or general advertisement.
    

    
      ARTICLE V  
CONDITIONS TO CLOSING OF THE PURCHASER
    

    
      The obligation of the Purchaser to purchase Preferred Shares and
      Warrants at a Closing is subject to the fulfillment to the Purchaser’s
      satisfaction on or prior to each Closing Date of each of the following
      conditions, any of which may be waived by such Purchaser:
    

    
         5.1  Representations and Warranties
      Correct.  The representations and warranties in Article III hereof
      shall be true and correct when made, and shall be true and correct on
      each Closing Date with the same force and effect as if they had been
      made on and as of such Closing Date.
    

    
         5.2  Performance.  All covenants,
      agreements and conditions contained in this Agreement to be performed or
      complied with by the Company on or prior to such Closing Date shall have
      been performed or complied with by the Company in all material respects.
    

    
         5.3  No Impediments.  Neither the
      Company nor the Purchaser shall be subject to any order, decree or
      injunction of a court or administrative agency of competent jurisdiction
      that prohibits the transactions contemplated hereby or would impose any
      material limitation on the ability of such Purchaser to exercise full
      rights of ownership of the Securities.  At the time of such Closing, the
      purchase of the Securities to be purchased by the Purchaser hereunder
      shall be legally permitted by all laws and regulations to which the
      Purchaser and the Company are subject.
    

    
         5.4  Other Agreements and Documents.  The
      Company shall have delivered the following agreements and documents:
    

    
             (a)  A certificate, registered in the name of the Purchaser,
      representing the number Preferred Shares corresponding to the applicable
      Release Amount as determined in accordance with Section 1.4(b) hereof;
    

    
             (b)  A Series D Warrant in the form of Exhibit
      B attached hereto, registered in the name of the Purchaser,
      entitling the Purchaser to acquire the number of shares of Common Stock
      corresponding to the applicable Release Amount as determined in
      accordance with Section 1.4(b) hereof;
    

    

    

    
      
        

        

      

      
        
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             (c)  An opinion of counsel to the Company, dated the date of such
      Closing, in a form as shall be reasonably acceptable to counsel to the
      Purchaser;
    

    
             (d)  A Certificate of Good Standing from the state of
      incorporation of the Company as of a recent date; and
    

    
             (e)  A certificate of an officer of the Company, dated such
      Closing Date, certifying (i) the fulfillment of the conditions specified
      in Sections 5.1 and 5.2 of this Agreement, (ii) the Board resolutions
      approving this Agreement and the transactions contemplated hereby, (iii)
      the articles of incorporation and bylaws of the Company, each as amended
      as of such Closing Date; (iv) the names of each officer and director of
      the Company as of such Closing Date; and (v) such other matters as the
      Purchaser shall reasonably request.
    

    
             (f)  With respect to the Initial Closing only:
    

    
                 (i)  A certificate, registered in the name of the Purchaser,
      representing 300 Preferred Shares;
    

    
                (ii)  A Series D Warrant in the form of Exhibit
      B attached hereto, registered in the name of the Purchaser,
      entitling the Purchaser to acquire 12,000,000 shares of Common Stock;
    

    
               (iii)  Exchanged Warrants, registered in the name of the
      Purchaser, having an exercise price of $0.50 and having identical
      denominations and expiration dates as the Series C Warrants being
      surrendered for cancellation;
    

    
                (iv)  The Registration Rights Agreement in the form of Exhibit
      E hereto, executed by the Company;
    

    
                 (v)  The Security Agreement in the form of Exhibit
      D hereto, executed by the Company; and
    

    
                (vi)  The New Debentures in the forms set forth in Exhibits
      C-1, Exhibits C-2, and Exhibits C-3, attached hereto.
    

    
         5.5  Certificate of Designation.  The
      Company shall have filed the Certificate of Designation for the Series A
      Preferred Stock in the form attached hereto as Exhibit A with the
      Florida Secretary of State.
    

    
         5.6  Trading Markets.  The listing or
      trading of the Conversion Shares and Warrant Shares on each Trading
      Market shall have been approved by such Trading Market authority.
    

    
         5.7  Due Diligence Investigation.  No
      fact shall have been discovered, whether or not reflected in the
      Schedules hereto, which in the Purchaser’s determination would make the
      consummation of the transactions contemplated by this Agreement not in
      the Purchaser’s best interests.
    

    

    

    
      
        

        

      

      
        
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      ARTICLE VI  
CONDITIONS TO CLOSING OF THE COMPANY
    

    
      The Company’s obligation to sell the Securities at each Closing is
      subject to the fulfillment to its satisfaction on or prior to such
      Closing Date of each of the following conditions:
    

    
         6.1  Representations.  The
      representations made by the Purchaser pursuant to Article VI hereof
      shall be true and correct when made and shall be true and correct on
      such Closing Date.
    

    
         6.2  No Impediments.  Neither the
      Company nor the Purchaser shall be subject to any order, decree or
      injunction of a court or administrative agency of competent jurisdiction
      that prohibits the transactions contemplated hereby or would impose any
      material limitation on the ability of the Purchaser to exercise full
      rights of ownership of the Securities.  At the time of the Closing, the
      purchase of the Securities to be purchased by the Purchaser hereunder
      shall be legally permitted by all laws and regulations to which the
      Purchaser and the Company are subject.
    

    
      ARTICLE VII  
AFFIRMATIVE COVENANTS
    

    
      The Company hereby covenants and agrees, so long as any Preferred Share
      remains outstanding, as follows:
    

    
         7.1  Maintenance of Corporate Existence.  The
      Company shall and shall cause its subsidiaries to, maintain in full
      force and effect its corporate existence, rights and franchises and all
      material terms of licenses and other rights to use licenses, trademarks,
      trade names, service marks, copyrights, patents or processes owned or
      possessed by it and necessary to the conduct of its business, except
      where the failure to maintain such corporate existence, rights,
      franchises, licenses and rights to use licenses, trademarks, trade
      names, service marks, copyrights, patents or processes would not (a)
      result in a Material Adverse Effect or (b) materially adversely affect
      the rights of Purchaser under any Transaction Document.
    

    
         7.2  Maintenance of Properties.  The
      Company shall and shall cause its subsidiaries to, keep each of its
      properties necessary to the conduct of its business in good repair,
      working order and condition, reasonable wear and tear excepted, and from
      time to time make all needful and proper repairs, renewals,
      replacements, additions and improvements thereto; and the Company shall
      and shall cause its subsidiaries to at all times comply with each
      material provision of all material leases to which it is a party or
      under which it occupies property.
    

    
         7.3  Payment of Taxes.  The Company
      shall and shall cause its subsidiaries to, promptly pay and discharge,
      or cause to be paid and discharged when due and payable, all lawful
      taxes, assessments and governmental charges or levies imposed upon the
      income, profits, assets, property or business of the Company and its
      subsidiaries; provided, however, that any such tax, assessment, charge
      or levy need not be paid if the validity thereof shall be contested
      timely and in good faith by appropriate proceedings, if the Company or
      its subsidiaries shall have set aside on its books adequate reserves
      with respect thereto, and the failure to pay shall not be prejudicial in
      any material respect to the holders of the Securities, and provided,
      further, that the Company or its subsidiaries will pay or cause to be
      paid any such tax, assessment, charge or levy forthwith upon the
      commencement of proceedings to foreclose any Lien which may have
      attached as security therefor.  
    

    

    

    
      
        

        

      

      
        
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         7.4  Payment of Indebtedness.  The
      Company shall, and shall cause its subsidiaries to, pay or cause to be
      paid when due all Indebtedness incident to the operations of the Company
      or its subsidiaries (including, without limitation, claims or demands of
      workmen, materialmen, vendors, suppliers, mechanics, carriers,
      warehousemen and landlords) which, if unpaid might become a Lien (except
      for Permitted Liens) upon the assets or property of the Company or its
      subsidiaries, except where the Company (or its subsidiary, as the case
      may be) disputes the payment of such Indebtedness in good faith by
      appropriate proceedings.
    

    
         7.5  Reservation of Common Stock.  The
      Company shall continue to reserve, free of preemptive rights and other
      similar contractual rights of stockholders, a number of its authorized
      but unissued shares of Common Stock not less than one hundred percent
      (100%) of the aggregate number of shares of Common Stock issuable upon
      the full conversion of the Preferred Shares and New Debentures and one
      hundred percent (100%) of the aggregate number of shares of Common Stock
      issuable upon the full exercise of the Warrant.
    

    
         7.6  Maintenance of Insurance.  The
      Company shall and shall cause its subsidiaries to, keep its assets which
      are of an insurable character insured by financially sound and reputable
      insurers against loss or damage by theft, fire, explosion and other
      risks customarily insured against by companies in the line of business
      of the Company or its subsidiaries, in amounts sufficient to prevent the
      Company and its subsidiaries from becoming a co-insurer of the property
      insured; and the Company shall and shall cause its subsidiaries to
      maintain, with financially sound and reputable insurers, insurance
      against other hazards and risks and liability to persons and property to
      the extent and in the manner customary for companies in similar
      businesses similarly situated or as may be required by law, including,
      without limitation, general liability, fire and business interruption
      insurance, and product liability insurance as may be required pursuant
      to any license agreement to which the Company or its subsidiaries is a
      party or by which it is bound.
    

    
         7.7  Notice of Adverse Change.  The
      Company shall promptly give notice to all holders of any Securities (but
      in any event within seven (7) days) after becoming aware of the
      existence of any condition or event which constitutes, or the occurrence
      of, any of the following:
    

    
             (a)  any event of noncompliance by the Company or its
      subsidiaries under this Agreement in any material respect;
    

    
             (b)  the institution of an action, suit or proceeding against the
      Company or any subsidiary before any court, administrative agency or
      arbitrator, including, without limitation, any action of a foreign
      government or instrumentality, which, if adversely decided, would result
      in a Material Adverse Effect whether or not arising in the ordinary
      course of business; or
    

    
             (c)  any information relating to the Company or any subsidiary
      which would reasonably be expected to result in a material adverse
      effect on its inability to perform its obligations of under any
      Transaction  Document.  
    

    

    

    
      
        

        

      

      
        
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      Any notice given under this Section 7.7 shall specify the nature and
      period of existence of the condition, event, information, development or
      circumstance, the anticipated effect thereof and what actions the
      Company has taken and/or proposes to take with respect thereto.
    

    
         7.8  Compliance With Agreements.  The
      Company shall and shall cause its subsidiaries to comply in all material
      respects, with the terms and conditions of all material agreements,
      commitments or instruments to which the Company or any of its
      subsidiaries is a party or by which it or they may be bound.  
    

    
         7.9  Other Agreements.  The Company
      shall not enter into any agreement in which the terms of such agreement
      would restrict or impair the right or ability to perform of the Company
      under any Transaction Document.
    

    
        7.10  Compliance With Laws.  The Company
      shall and shall cause each of its subsidiaries to duly comply in all
      material respects with any material laws, ordinances, rules and
      regulations of any foreign, federal, state or local government or any
      agency thereof, or any writ, order or decree, and conform to all valid
      requirements of governmental authorities relating to the conduct of
      their respective businesses, properties or assets.
    

    
        7.11  Protection of Licenses, etc.  The
      Company shall and shall cause its subsidiaries to, maintain, defend and
      protect to the best of their ability licenses and sublicenses (and to
      the extent the Company or a subsidiary is a licensee or sublicensee
      under any license or sublicense, as permitted by the license or
      sublicense agreement), trademarks, trade names, service marks, patents
      and applications therefor and other proprietary information owned or
      used by it or them, (except where the failure to defend and protect such
      licenses and sublicenses would not (a) result in a Material Adverse
      Effect or (b) materially adversely affect the rights of Purchaser under
      any Transaction Document) and shall keep duplicate copies of any
      licenses, trademarks, service marks or patents owned or used by it, if
      any, at a secure place selected by the Company.
    

    
        7.12  Accounts and Records; Inspections.
    

    
             (a)  The Company shall keep true records and books of account in
      which full, true and correct entries will be made of all dealings or
      transactions in relation to the business and affairs of the Company and
      its subsidiaries in accordance with GAAP applied on a consistent basis.
    

    
             (b)  The Company shall permit each holder of any Securities or
      any of such holder’s officers, employees or representatives during
      regular business hours of the Company, upon reasonable notice and as
      often as such holder may reasonably request, to visit and inspect the
      offices and properties of the Company and its subsidiaries and to make
      extracts or copies of the books, accounts and records of the Company or
      its subsidiaries at such holder’s expense.
    

    
             (c)  Nothing contained in this Section 7.12 shall be construed to
      limit any rights which a holder of any Securities may otherwise have
      with respect to the books and records of the Company and its
      subsidiaries, to inspect its properties or to discuss its affairs,
      finances and accounts.
    

    

    

    
      
        

        

      

      
        
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        7.13  Maintenance of Office.  The Company
      will maintain its principal office at the address of the Company set
      forth in Section 12.6 of this Agreement where notices, presentments and
      demands in respect of this Agreement and any of the Securities may be
      made upon the Company, until such time as the Company shall notify the
      holders of the Securities in writing, at least thirty (30) days prior
      thereto, of any change of location of such office.
    

    
        7.14  Payments.  The Company shall pay (a)
      the dividends on, and redeem, the Preferred Shares, in the time, the
      manner and the form as provided in the Certificate of Designation for
      the Series A Preferred Stock; (b) the interest and principal amount when
      due as required by the terms of the New Debentures; and (c) any other
      amounts as may be required by the Transaction Documents.
    

    
        7.15  SEC Reporting Requirements.  For so
      long as the Purchaser beneficially owns any of the Securities, and until
      such time as all the Conversion Shares and Warrant Shares are saleable
      by the Purchaser without restriction as to volume or manner of sale
      under Rule 144 under the Securities Act, the Company shall, once it has
      filed a registration statement pursuant to the Registration Rights
      Agreement, timely file all reports required to be filed with the
      Commission pursuant to the Exchange Act, and 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 permit such termination.  As long as the Purchaser owns
      Securities, Conversion Shares or Warrant Shares, the Company will
      prepare and furnish to the Purchaser and make publicly available in
      accordance with Rule 144 or any successor rule such information as is
      required for the Purchaser to sell the Securities under Rule 144 without
      regard to the volume and manner of sale limitations.  The Company
      further covenants that it will take such further action as any holder of
      Securities, Conversion Shares or Warrant Shares may reasonably request,
      all to the extent required from time to time to enable such Person to
      sell such Securities, Conversion Shares or Warrant Shares without
      registration under the Securities Act within the limitation of the
      exemptions provided by Rule 144 or any successor rule thereto.
    

    
        7.16  Listing Maintenance.  The Company
      hereby agrees to use best efforts to maintain the listing or trading of
      the Common Stock on a Trading Market. The Company further agrees, if the
      Company applies to have the Common Stock traded on any other Trading
      Market, it will include in such application all of the Conversion Shares
      and Warrant Shares, and will take such other action as is necessary to
      cause all of the Conversion Shares and Warrant Shares to be listed on
      such other Trading Market as promptly as possible.  The Company will
      take all action reasonably necessary to continue the listing and trading
      of its Common Stock on, and will comply in all respects with the
      Company’s reporting, filing and other obligations under the bylaws or
      rules of, each such Trading Market on which the Company’s Common Stock
      is listed or trades.  
    

    
        7.17  Further Assurances.  From time to
      time the Company shall execute and deliver to the Purchaser and the
      Purchaser shall execute and deliver to the Company such other
      instruments, certificates, agreements and documents and take such other
      action and do all other things as may be reasonably requested by the
      other party in order to implement or effectuate the terms and provisions
      of this Agreement and any of the Securities.
    

    

    

    
      
        

        

      

      
        
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        7.18  Use of Proceeds.  The Company shall
      use the first $2,300,000 of the net proceeds from the sale of the
      Securities hereunder for production of approximately 110,000 TK6000
      units, the next $700,000 of such net proceeds for interconnect deposits,
      marketing costs and deployment network to 24 new states located in the
      United States, and the remainder for working capital purposes and not
      for the satisfaction of any portion of the Company's debt (other than
      payment of trade payables in the ordinary course of the Company's
      business and prior practices), to redeem any security or to settle any
      outstanding litigation.
    

    
      For purposes of Articles VII–IX, the term “subsidiary” shall be deemed
      to include each Subsidiary and any subsidiary of the Company acquired or
      formed after the date hereof.
    

    
      ARTICLE VIII  
NEGATIVE COVENANTS
    

    
      The Company hereby covenants and agrees, so long as any Preferred Share
      remains outstanding, it will not (and not allow any subsidiary to),
      without the prior written consent of the holder(s) of more than 662/3%
      of the number of shares of Series A Preferred Stock outstanding (the “Majority
      Holders”), directly or indirectly:  
    

    
         8.1  Distributions and Redemptions.  (i) Except
      with respect to the Series A Preferred Stock, or forward stock splits in
      the form of a dividend, declare or pay any dividends or make any
      distributions to any holder(s) of any shares of capital stock of the
      Company or (ii) purchase, redeem or otherwise acquire for value,
      directly or indirectly, any security issued by Company, except as may be
      required by the terms of such security.
    

    
         8.2  Reclassification.  Effect any
      reclassification, combination or reverse stock split of the Common Stock.
    

    
         8.3  Liens.  Except as otherwise
      provided in this Agreement, create, incur, assume or permit to exist any
      mortgage, lien, pledge, charge, security interest or other encumbrance,
      or any interest or title of any vendor, lessor, lender or other secured
      party to or of the Company or any subsidiary under any conditional sale
      or other title retention agreement or any capital lease, upon or with
      respect to any property or asset of the Company or any Subsidiary (each
      a “Lien” and collectively, “Liens”),
      except that the foregoing restrictions shall not apply to:
    

    
             (a)  liens for taxes, assessments and other governmental charges,
      if payment thereof shall not at the time be required to be made, and
      provided such reserve as shall be required by generally accepted
      accounting principles consistently applied shall have been made therefor;
    

    
             (b)  liens of workmen, materialmen, vendors, suppliers,
      mechanics, carriers, warehouseman and landlords or other like liens,
      incurred in the ordinary course of business for sums not then due or
      being contested in good faith, if an adverse decision in which contest
      would not materially affect the business of the Company;
    

    
             (c)  liens securing indebtedness of the Company or any
      subsidiaries which is in an aggregate principal amount not exceeding
      $100,000 and which liens are subordinate to liens on the same assets
      held by the Purchaser;
    

    

    

    
      
        

        

      

      
        
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             (d)  statutory liens of landlords, statutory liens of banks and
      rights of set-off, and other liens imposed by law, in each case incurred
      in the ordinary course of business (i) for amounts not yet overdue or
      (ii) for amounts that are overdue and that are being contested in good
      faith by appropriate proceedings, so long as such reserves or other
      appropriate provisions, if any, as shall be required by generally
      accepted accounting principles shall have been made for any such
      contested amounts;
    

    
             (e)  liens incurred or deposits made in the ordinary course of
      business in connection with workers’ compensation, unemployment
      insurance and other types of social security, or to secure the
      performance of tenders, statutory obligations, surety and appeal bonds,
      bids, leases, government contracts, trade contracts, performance and
      return-of-money bonds and other similar obligations (exclusive of
      obligations for the payment of borrowed money);
    

    
             (f)  any attachment or judgment lien not constituting an Event of
      Default (as defined below);
    

    
             (g)  easements, rights-of-way, restrictions, encroachments, and
      other minor defects or irregularities in title, in each case which do
      not and will not interfere in any material respect with the ordinary
      conduct of the business of the Company or any of its subsidiaries;
    

    
             (h)  any (i) interest or title of a lessor or sublessor under any
      lease, including liens relating to Indebtedness identified in Section
      8.4(f), (ii) restriction or encumbrance that the interest or title of
      such lessor or sublessor may be subject to, or (iii) subordination of
      the interest of the lessee or sublessee under such lease to any
      restriction or encumbrance referred to in the preceding clause (ii), so
      long as the holder of such restriction or encumbrance agrees to
      recognize the rights of such lessee or sublessee under such lease;
    

    
             (i)  liens in favor of customs and revenue authorities arising as
      a matter of law to secure payment of customs duties in connection with
      the importation of goods;
    

    
             (j)  any zoning or similar law or right reserved to or vested in
      any governmental office or agency to control or regulate the use of any
      real property;
    

    
             (k)  liens securing obligations (other than obligations
      representing debt for borrowed money) under operating, reciprocal
      easement or similar agreements entered into in the ordinary course of
      business of the Company and its subsidiaries;
    

    
             (l)  the replacement, extension or renewal of any lien permitted
      by this Section upon or in the same property theretofore subject or the
      replacement, extension or renewal (without increase in the amount or
      change in any direct or contingent obligor) of the indebtedness secured
      thereby; and
    

    
            (m) a customer’s interest in or possession of the Company’s
      inventory;  provided that such inventory is subject to a valid and
      binding consignment agreement having terms that are commercially
      reasonable; and further provided that no more than 50% of the Company’s
      inventory in the aggregate is at any time subject to consignment.
    

    

    

    
      
        

        

      

      
        
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      All of the Foregoing Liens described in subsections (a) – (m) above
      shall be referred to as “Permitted Liens”.
    

    
         8.4  Indebtedness.  Create, incur,
      assume, suffer, permit to exist, or guarantee, directly or indirectly,
      any Indebtedness, excluding, however, from the operation of this
      covenant:
    

    
             (a)  Indebtedness to the extent existing on the date hereof or
      any replacement Indebtedness not to exceed the amount of such existing
      Indebtedness;
    

    
             (b)  Indebtedness which may, from time to time be incurred or
      guaranteed by the Company which in the aggregate principal amount does
      not exceed $100,000;
    

    
             (c)  the endorsement of instruments for the purpose of deposit or
      collection in the ordinary course of business;
    

    
             (d)  Indebtedness relating to contingent obligations of the
      Company and its subsidiaries under guaranties in the ordinary course of
      business of the obligations of suppliers, customers, and licensees of
      the Company and its subsidiaries, including Indebtedness of up to
      $500,000 in the aggregate associated with standby letters of credit
      issued to manufacturers of the Company’s products;
    

    
             (e)  Indebtedness relating to loans from the Company to its
      subsidiaries;
    

    
             (f)  Indebtedness relating to equipment leases in an amount not
      to exceed $500,000, and Indebtedness relating to capital leases in an
      amount not to exceed $100,000;
    

    
             (g)  accounts or notes payable arising out of the purchase of
      merchandise, supplies, equipment, software, computer programs or
      services in the ordinary course of business;
    

    
             (h)  Common Stock issued or issuable to financial institutions,
      or lessors, pursuant to a commercial credit arrangement, equipment
      financing transaction, accounts receivable factoring, or a similar
      transaction; or
    

    
             (i)  Indebtedness of up to $1,000,000 in the aggregate, the
      proceeds of which is solely used for the interconnect site deployment.
    

    
      The foregoing Indebtedness described in subsections (a) – (h) above
      shall be referred to as “Permitted Indebtedness”.
    

    
         8.5  Capital Stock.  Except for
      issuances to the Purchaser and issuances required by securities issued
      and outstanding on the date hereof, issue any security that is senior to
      or ranks pari passu with the Series A Preferred Stock, whether
      with respect to right of payment of redemptions, interest, damages or
      upon liquidation or dissolution or otherwise.
    

    
         8.6  Liquidation or Sale.  Sell,
      transfer, lease or otherwise dispose of 20% or more of its consolidated
      assets (as shown on the most recent financial statements of the Company
      or the subsidiary, as the case may be) in any single transaction or
      series of related transactions (other than the sale of inventory in the
      ordinary course of business), or liquidate, dissolve, recapitalize or
      reorganize in any form of transaction.
    

    

    

    
      
        

        

      

      
        
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         8.7  Change of Control Transaction.  Enter
      into a Change in Control Transaction. For purposes of this Agreement, “Change
      in Control Transaction” means the occurrence after the date hereof
      of any of (i) an acquisition after the date hereof by an individual or
      legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated
      under the Exchange Act) of effective control (whether through legal or
      beneficial ownership of capital stock of the Company, by contract or
      otherwise) of in excess of 45% of the voting securities of the Company
      (other than by means of conversion or exercise of the Securities by the
      Purchaser), or (ii) the Company merges into or consolidates with any
      other Person, or any Person merges into or consolidates with the Company
      and, after giving effect to such transaction, the stockholders of the
      Company immediately prior to such transaction own less than 55% of the
      aggregate voting power of the Company or the successor entity of such
      transaction, or (iii) the Company sells or transfers all or
      substantially all of its assets to another Person and the stockholders
      of the Company immediately prior to such transaction own less than 55%
      of the aggregate voting power of the acquiring entity immediately after
      the transaction, or (iv) a replacement at one time or within a two-year
      period of more than one-half of the members of the Company’s board of
      directors (except as such replacement may be required pursuant to the
      rules and regulations of a Trading Market) which is not approved by a
      majority of those individuals who are members of the board of directors
      on the date hereof (or by those individuals who are serving as members
      of the board of directors on any date whose nomination to the board of
      directors was approved by a majority of the members of the board of
      directors who are members on the date hereof), (v) the merger or
      consolidation of the Company or any subsidiary of the Company in one or
      a series of related transactions with or into another entity (except in
      connection with a merger involving the Company solely for the purpose,
      and with the sole effect, of reorganizing the Company under the laws of
      another jurisdiction; provided that the articles of incorporation and
      bylaws (or similar charter or organizational documents) of the surviving
      entity are substantively identical to those of the Company and do not
      otherwise adversely impair the rights of the Purchaser), or (vi) the
      execution by the Company of an agreement to which the Company  is a
      party or by which it is bound, providing for any of the events set forth
      in clauses (i) through (v) above.
    

    
         8.8  Amendment to Company Documents.  
    

    
             (a)  Amend or waive any provision of its Articles of
      Incorporation or Bylaws in any way that materially adversely affects the
      rights of the Purchaser without the prior written consent of the
      Purchaser; or
    

    
             (b)  Amend, modify or change the SOP to increase the number of
      shares or other securities issuable under the SOP or otherwise in such a
      manner that adversely affects the rights of Purchaser under the
      Transaction Documents, as is determined by the Purchaser in its sole
      discretion.
    

    

    

    
      
        

        

      

      
        
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         8.9  Transactions with Affiliates.  Permit
      any of its Affiliates, officers, directors or employees to:
    

    
             (a)  enter into any transaction with the Company or any
      subsidiary (other than for services as employees, officers and
      directors), including entering into any contract, agreement or other
      arrangement providing for the furnishing of services to or by, providing
      for rental of real or personal property to or from, or otherwise
      requiring payments to or from any officer, director or other Affiliates
      or any entity in which any officer, director, or other Affiliates has a
      substantial interest or is an officer, director, trustee or partner; or
    

    
             (b)  divert (or permit anyone to divert) any business or
      opportunity of the Company or subsidiary to any other corporate or
      business entity; or
    

    
             (c)  enter into any, or modify any existing, severance, golden
      parachute, change in control or similar agreement with the Company or
      any of its subsidiaries.
    

    
      Further, on an annualized basis, none of the officers of the Company or
      a subsidiary shall receive an increase in salary or bonus in excess of
      15% of the prior year’s salary or bonus, as applicable; provided that
      the foregoing restriction shall not apply to the extent inconsistent
      with that certain employment agreement between the Company and Mr.
      Anastasios Kyriakides as in effect as of the  Initial Closing Date.
    

    
        8.10  Registration Statements.  File any
      registration statement with the Commission until the earlier of: (i) 60
      Trading Days (defined below) following the date that a registration
      statement or registration statements registering all the Conversion
      Shares, Warrant Shares and other Registrable Securities (as that term is
      defined in the Registration Rights Agreement) is declared effective by
      the Commission; and (ii) the date the Conversion Shares and Warrant
      Shares are saleable by Purchaser under Rule 144 under the Securities Act
      without limitation as to volume or manner of sale; provided that this
      Section shall not prohibit the Company from filing a registration
      statement on Form S-4 or other applicable form for securities to be
      issued in connection with acquisitions of businesses by the Company or
      its subsidiaries, or post effective amendments to registration
      statements that were declared effective prior to the date hereof or to a
      registration statement filed with the Commission on Forms S-4 or S-8.  “Trading
      Day” means a day on which the principal Trading Market is open for
      business.
    

    
        8.11  Non-Public Information. Except with
      respect to the material terms and conditions of the transactions
      contemplated by the Transaction Documents, provide the Purchaser or its
      agents or counsel with any information that the Company believes
      constitutes material, nonpublic information, unless prior thereto the
      Purchaser shall have executed a written agreement regarding the
      confidentiality and use of such information.
    

    
      ARTICLE IX  
EVENTS OF DEFAULT
    

    
         9.1  Events of Default.  The
      occurrence and continuance of any of the following events shall
      constitute an event of default under this Agreement (each, an “Event
      of Default” and, collectively, “Events of Default”):
    

    

    

    
      
        

        

      

      
        
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             (a)  if the Company shall default in the payment of any dividend
      on or redemption of any Preferred Share when the same shall become due
      and payable; and in each case such default shall have continued without
      cure for five (5) Trading Days after written notice (a “Default
      Notice”) is given to the Company of such default;
    

    
             (b)  the suspension from listing, without subsequent listing on
      any one of, or the failure of the Common Stock to be listed or quoted on
      at least one of the following: the OTC Bulletin Board or Pink Sheets
      Market, the American Stock Exchange, the Nasdaq Global Market, the
      Nasdaq Capital Market or The New York Stock Exchange, Inc. for a period
      of ten (10) consecutive Trading Days and such suspension from listing
      (or listing on an alternate exchange or quotation system) is not cured
      within ten (10) days after the tenth (10th) consecutive day
      of such suspension from listing;
    

    
             (c)  the Company shall fail to (i) timely deliver the shares of
      Common Stock upon conversion of the Preferred Shares or exercise of a
      Warrant by the tenth (10th) Trading Day after the date of delivery
      required therefor or otherwise in accordance with the provisions of the
      Transaction Documents, (ii) make the payment of any fees and/or
      liquidated damages under this Agreement or any Transaction Document,
      which failure in the case of item (i) of this Section is not remedied
      within ten (10) Trading Days after the incurrence thereof and, solely
      with respect to item (ii) above, ten (10) Trading Days after the
      Purchaser delivers a Default Notice to the Company of the incurrence
      thereof;
    

    
             (d)  while a registration statement is required to be maintained
      effective pursuant to the terms of the Registration Rights Agreement,
      the effectiveness of the registration statement lapses for any reason
      (including, without limitation, the issuance of a stop order) or is
      unavailable to the Purchaser for sale of the Registrable Securities (as
      defined in the Registration Rights Agreement) in accordance with the
      terms of the Registration Rights Agreement, and such lapse or
      unavailability continues for a period of ten (10) consecutive Trading
      Days;
    

    
             (e)  the Company’s notice to the Holder, including by way of
      public announcement, at any time, of its inability to comply for any
      reason or its intention not to comply with proper requests for issuance
      of, or its failure to timely deliver, Conversion Shares or Warrant
      Shares;
    

    
             (f)  if the Company or any subsidiary shall default in the
      performance of any of the covenants contained in the Securities, this
      Agreement or the Transaction Documents and (i) such default shall have
      continued without cure for ten (10) Trading Days after a Default Notice
      is given to the Company or (ii) such default shall have materially
      adversely affected the Purchaser regardless of any action taken by the
      Company to cure such default
    

    
             (g)  if any of the Company or its subsidiaries shall default in
      the observance or performance of any term or provision of a material
      agreement to which it is a party or by which it is bound, which default
      will have or could reasonably be expected to have a Material Adverse
      Effect and such default is not waived or cured within the applicable
      grace period provided for in such agreement;
    

    

    

    
      
        

        

      

      
        
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             (h)  if any representation or warranty made in this Agreement,
      any Transaction Document or in or any certificate delivered by the
      Company or its subsidiaries pursuant hereto or thereto shall prove to
      have been incorrect in any material respect when made;
    

    
             (i)  the Company shall (i) default in any payment of any amount
      or amounts of principal of or interest on any Indebtedness and the
      aggregate principal amount of which Indebtedness is in excess of $250,000
      or (ii) default in the observance or performance of any other
      agreement or condition relating to any such Indebtedness or contained in
      any instrument or agreement evidencing, securing or relating thereto, or
      any other event shall occur or condition exist, the effect of which
      default or other event or condition is to cause, or to permit the holder
      or holders or beneficiary or beneficiaries of such Indebtedness to cause
      with the giving of notice if required, such Indebtedness to become due
      prior to its stated maturity;
    

    
             (j)  if a final judgment which, either alone or together with
      other outstanding final judgments against the Company and its
      subsidiaries, exceeds an aggregate of $100,000 shall be rendered against
      the Company or any subsidiary and such judgment shall have continued
      undischarged or unstayed for thirty-five (35) days after entry thereof;
    

    
             (k)  the Company or any of its subsidiaries shall (i) apply for
      or consent to the appointment of, or the taking of possession by, a
      receiver, custodian, trustee or liquidator of itself or of all or a
      substantial part of its property or assets, (ii) make a general
      assignment for the benefit of its creditors, (iii) commence a voluntary
      case under the United States Bankruptcy Code (as now or hereafter in
      effect) or under the comparable laws of any jurisdiction (foreign or
      domestic), (iv) file a petition seeking to take advantage of any
      bankruptcy, insolvency, moratorium, reorganization or other similar law
      affecting the enforcement of creditors’ rights generally, (v) acquiesce
      in writing to any petition filed against it in an involuntary case under
      United States Bankruptcy Code (as now or hereafter in effect) or under
      the comparable laws of any jurisdiction (foreign or domestic), or admit
      in writing its inability to pay its debts (vi) issue a notice of
      bankruptcy or winding down of its operations or issue a press release
      regarding same, or (vii) take any action under the laws of any
      jurisdiction (foreign or domestic) analogous to any of the foregoing; or
    

    
             (l)  a proceeding or case shall be commenced in respect of the
      Company o r any of its subsidiaries, without its application or consent,
      in any court of competent jurisdiction, seeking (i) the liquidation,
      reorganization, moratorium, dissolution, winding up, or composition or
      readjustment of its debts, (ii) the appointment of a trustee, receiver,
      custodian, liquidator or the like of it or of all or any substantial
      part of its assets in connection with the liquidation or dissolution of
      the Company or any of its subsidiaries or (iii) similar relief in
      respect of it under any law providing for the relief of debtors, and
      such proceeding or case described in clause (i), (ii) or (iii) shall
      continue undismissed, or unstayed and in effect, for a period of sixty
      (60) days or any order for relief shall be entered in an involuntary
      case under United States Bankruptcy Code (as now or hereafter in effect)
      or under the comparable laws of any jurisdiction (foreign or domestic)
      against the Company or any of its subsidiaries or action under the laws
      of any jurisdiction (foreign or domestic) analogous to any of the
      foregoing shall be taken with respect to the Company or any of its
      subsidiaries  and shall continue undismissed, or unstayed and in effect
      for a period of sixty (60) days.
    

    

    

    
      
        

        

      

      
        
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         9.2  Remedies.  
    

    
             (a)  Upon the occurrence and continuance of an Event of Default,
      the Purchaser may at any time (unless all defaults shall theretofore
      have been remedied) at its option, by written notice or notices to the
      Company require the Company to immediately redeem in cash all or a
      portion of the Preferred Shares held by the Purchaser (plus all accrued
      and unpaid dividends thereon at the time of such request) at the
      Mandatory Default Amount.  
    

    
             (b)  The “Mandatory
      Default Amount” means the sum of:
    

    
                 (i)  the greater of (A) 110% of the aggregate stated value of
      the Preferred Shares plus all declared and unpaid dividends thereon, or
      (B) the aggregate stated value of the Preferred Shares plus all declared
      and unpaid dividends thereon, divided by the Conversion Price on the
      date the Mandatory Default Amount is either (I) demanded (if demand or
      notice is required to create an Event of Default) or otherwise due or
      (II) paid in full, whichever has a lower Conversion Price, multiplied by
      the VWAP on the date the Mandatory Default Amount is either (I) demanded
      or otherwise due or (II) paid in full, whichever has a higher VWAP; and
    

    
                (ii)  all other amounts, costs, expenses and liquidated
      damages due Purchaser.  
    

    
      VWAP” means, for any date, the price determined by the first of
      the following clauses that applies: (a) if the Common Stock is then
      listed or quoted on a Trading Market, the daily volume weighted average
      price of the Common Stock for such date (or the nearest preceding date)
      on the Trading Market on which the Common Stock is then listed or quoted
      for trading as reported by Bloomberg L.P. (based on a Trading Day from
      9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)); (b) 
      if the OTC Bulletin Board is not a Trading Market, the volume weighted
      average price of the Common Stock for such date (or the nearest
      preceding date) on the OTC Bulletin Board; (c) if the Common Stock is
      not then quoted for trading on the OTC Bulletin Board and if prices for
      the Common Stock are then reported in the “Pink Sheets” published by
      Pink Sheets, LLC (or a similar organization or agency succeeding to its
      functions of reporting prices), the most recent bid price per share of
      the Common Stock so reported; or (d) in all other cases, the fair market
      value of a share of Common Stock as determined by an independent
      appraiser selected in good faith by the Holder and reasonably acceptable
      to the Company.   
    

    
             (c)  The Purchaser, by written notice or notices to the Company,
      may in its own discretion waive an Event of Default and its consequences
      and rescind or annul such declaration; provided that, no such waiver
      shall extend to or affect any subsequent Event of Default or impair any
      right resulting therefrom.
    

    
             (d)  In case any one or more Events of Default shall occur and be
      continuing, the Purchaser may proceed to protect and enforce its rights
      by an action at law, suit in equity or other appropriate proceeding,
      whether for the specific performance of any agreement contained herein
      or in any Transaction Document or for an injunction against a violation
      of any of the terms hereof or thereof, or in aid of the exercise of any
      power granted hereby or thereby or by law.  In case of a default in the
      payment of any dividend on or redemption of any Preferred Share, the
      Company will pay to the Purchaser such further amount as shall be
      sufficient to cover the cost and the expenses of collection, including,
      without limitation, actual attorney’s fees, expenses and
      disbursements.  No course of dealing and no delay on the part of a
      Purchaser in exercising any rights shall operate as a waiver thereof or
      otherwise prejudice such Purchaser’s rights.  
    

    

    

    
      
        

        

      

      
        
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             (e)  Any remedy conferred by this Section shall not be exclusive
      of any other remedy provided by this Agreement or any other Transaction
      Document or now or hereafter available at law, in equity, by statute or
      otherwise.
    

    
      ARTICLE X
CERTIFICATE LEGENDS
    

    
        10.1  Legend.  Each certificate
      representing the Securities shall be stamped or otherwise imprinted with
      a legend substantially in the following form (in addition to any legend
      required by applicable state securities or “blue sky” laws):
    

    
      NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
      CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
      CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
      AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE
      OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF
      (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A
      FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT
      REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
      144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY
      BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
      OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
    

    
      Prior to registration of the Conversion Shares and the Warrant Shares
      under the Securities Act, all such certificates shall bear the
      restrictive legend specified in this Section 10.1. Certificates
      evidencing the Conversion Shares and Warrant Shares shall not contain
      any legend (including the legend set forth in Section 10.1 hereof),
      (i) while a registration statement covering the resale of such security
      is effective under the Securities Act, or (ii) following any sale of
      such Conversion Shares or Warrant Shares pursuant to Rule 144, or
      (iii) if such Conversion Shares or Warrant Shares are eligible for sale
      under Rule 144 by the Purchaser without limitation as to volume or
      manner of sale, or (iv) if such legend is not required under applicable
      requirements of the Securities Act (including judicial interpretations
      and pronouncements issued by the Staff of the Commission).  The Company
      shall cause its counsel to issue a legal opinion to the Company’s
      transfer agent promptly after the effective date of a registration
      statement covering such Conversion Shares or Warrant Shares, if required
      by the Company’s transfer agent, to effect the removal of the legend
      hereunder.  If all or any portion of the Preferred Shares, New
      Debentures or a Warrant is exercised at a time when there is an
      effective registration statement to cover the resale of the Conversion
      Shares or the Warrant Shares, such Conversion Shares and Warrant Shares,
      as the case may be, shall be issued free of all legends.  The Company
      agrees that following the effective date of the registration statement
      covering Conversion Shares or Warrant Shares or at such time as such
      legend is no longer required under this Section 10.1, it will, no later
      than five (5) Trading Days following the delivery by the Purchaser to
      the Company or the Company’s transfer agent of a certificate
      representing Conversion Shares or Warrant Shares, as the case may be,
      issued with a restrictive legend (such date, the “Delivery Date”),
      deliver or cause to be delivered to the Purchaser a certificate
      representing such Securities that is free from all restrictive and other
      legends.  The Company may not make any notation on its records or give
      instructions to any transfer agent of the Company that enlarge the
      restrictions on transfer set forth in this Section. Whenever a
      certificate representing the Conversion Shares or Warrant Shares is
      required to be issued to the Purchaser without a legend, in lieu of
      delivering physical certificates representing the Conversion Shares or
      Warrant Shares, provided the Company’s transfer agent is participating
      in the Depository Trust Company (“DTC”) Fast Automated
      Securities Transfer program, the Company shall use its reasonable best
      efforts to cause its transfer agent to electronically transmit the
      Conversion Shares or Warrant Shares to the Purchaser by crediting the
      account of such Purchaser’s Prime Broker with DTC through its Deposit
      Withdrawal Agent Commission (“DWAC”) system (to the extent
      not inconsistent with any provisions of this Agreement).  
    

    

    

    
      
        

        

      

      
        
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        10.2  Liquidated Damages.  The Company
      understands that a delay in the delivery of unlegended certificates for
      the Conversion Shares or the Warrant Shares as set forth in Section 5.1
      hereof beyond the Delivery Date could result in economic loss to the
      Purchaser.  If the Company fails to deliver to a Purchaser such shares
      via DWAC or a certificate or certificates pursuant to this
      Section hereunder by the Delivery Date, the Company shall pay to the
      Purchaser, in cash, as partial liquidated damages and not as a penalty,
      for each $1,000 of Conversion Shares or Warrant Shares (based on the
      closing price of the Common Stock reported by the principal Trading
      Market on the date such Securities are submitted to the Company’s
      transfer agent) subject to Section 10.1, $10 per Trading Day (increasing
      to $20 per Trading Day ten (10) Trading Days after such damages have
      begun to accrue) for each Trading Day after the Legend Removal Date
      until such certificate is delivered.  Nothing herein shall limit the
      Purchaser’s right to pursue actual damages for the Company’s failure to
      deliver certificates representing any Securities as required by the
      Transaction Documents, and the Purchaser shall have the right to pursue
      all remedies available to it at law or in equity including, without
      limitation, a decree of specific performance and/or injunctive relief.
    

    
        10.3  Sales by the Purchaser.  The
      Purchaser agrees that the removal of the restrictive legend from
      certificates representing Securities as set forth in Section 10.1 is
      predicated upon the Company’s reliance that the Purchaser will sell any
      Securities pursuant to either the registration requirements of the
      Securities Act, including any applicable prospectus delivery
      requirements, or an exemption therefrom.
    

    

    

    
      
        

        

      

      
        
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      ARTICLE XI
INDEMNIFICATION
    

    

    

    
        11.1  Indemnification by the Company.  The
      Company agrees to defend, indemnify and hold harmless the Purchaser and
      shall reimburse the Purchaser for, from and against each claim, loss,
      liability, cost and expense (including without limitation, interest,
      penalties, costs of preparation and investigation, and the actual fees,
      disbursements and expenses of attorneys, accountants and other
      professional advisors) (collectively, “Losses”) directly or
      indirectly relating to, resulting from or arising out of (a) any untrue
      representation, misrepresentation, breach of warranty or non-fulfillment
      of any covenant, agreement or other obligation by or of the Company
      contained in any Transaction Document or in any certificate, document,
      or instrument delivered by the Company to the Purchaser; or (b) any
      action instituted against the Purchaser or its affiliates, by any
      stockholder of the Company who is not an affiliate of the Purchaser,
      with respect to any of the transactions contemplated by the Transaction
      Documents (unless such action is based upon a breach of the Purchaser’s
      representations, warranties or covenants under the Transaction Documents
      or any agreements or understandings the Purchaser may have with any such
      stockholder or any violations by the Purchaser of state or federal
      securities laws or any conduct by the Purchaser which constitutes fraud,
      gross negligence, willful misconduct or malfeasance).
    

    
        11.2  Procedure.
    

    
             (a)  The indemnified party shall promptly notify the indemnifying
      party of any claim, demand, action or proceeding for which
      indemnification will be sought under this Agreement; provided, that the
      failure of any party entitled to indemnification hereunder to give
      notice as provided herein shall not relieve the indemnifying party of
      its obligations under this Article XI except to the extent that the
      indemnifying party is actually prejudiced by such failure to give
      notice.  
    

    
             (b)  In case any such action, proceeding or claim is brought
      against an indemnified party in respect of which indemnification is
      sought hereunder, the indemnifying party shall be entitled to
      participate in and, unless in the reasonable, good-faith judgment of the
      indemnified party a conflict of interest between it and the indemnifying
      party exists with respect to such action, proceeding or claim (in which
      case the indemnifying party shall be responsible for the reasonable fees
      and expenses of one separate counsel for the indemnified party), to
      assume the defense thereof with counsel reasonably satisfactory to the
      indemnified party. If the indemnifying party elects to defend any such
      action or claim, then the indemnified party shall be entitled to
      participate in such defense (but not control) with counsel of its choice
      at its sole cost and expense (except that the indemnifying party shall
      remain responsible for the reasonable fees and expenses of one separate
      counsel for the indemnified party in the event in the reasonable,
      good-faith judgment of the indemnified party a conflict of interest
      between it and the indemnifying party exists).
    

    
             (c)  In the event that the indemnifying party advises an
      indemnified party that it will contest such a claim for indemnification
      hereunder, or fails, within thirty (30) days of receipt of any
      indemnification notice to notify, in writing, such person of its
      election to defend, settle or compromise, at its sole cost and expense,
      any action, proceeding or claim (or discontinues its defense at any time
      after it commences such defense), then the indemnified party may, at its
      option, defend, settle or otherwise compromise or pay such action or
      claim.  In any event, unless and until the indemnifying party elects in
      writing to assume and does so assume the defense of any such claim,
      proceeding or action, the indemnified party’s costs and expenses arising
      out of the defense, settlement or compromise of any such action, claim
      or proceeding shall be Losses subject to indemnification hereunder. 
    

    

    

    
      
        

        

      

      
        
          35
        

        
          


        

      

      
        

        

      

    

    
              (d)  The parties shall cooperate fully with each other in
      connection with any negotiation or defense of any such action or claim
      and shall furnish to the other party all information reasonably
      available to such party which relates to such action or claim.  Each
      party shall keep the other party fully apprised at all times as to the
      status of the defense or any settlement negotiations with respect
      thereto.  
    

    
             (e)  Notwithstanding anything in this Article XI to the contrary,
      the indemnifying party shall not, without the indemnified party’s prior
      written consent, settle or compromise any claim or consent to entry of
      any judgment in respect thereof which imposes any future obligation on
      the indemnified party or which does not include, as an unconditional
      term thereof, the giving by the claimant or the plaintiff to the
      indemnified party of a release from all liability in respect of such
      claim.  The indemnification obligations to defend the indemnified party
      required by this Article XI shall be made by periodic payments of the
      amount thereof during the course of investigation or defense, as and
      when the Loss is incurred, so long as the indemnified party shall refund
      such moneys if it is ultimately determined by a court of competent
      jurisdiction that such party was not entitled to indemnification.  The
      indemnity agreements contained herein shall be in addition to (i) any
      cause of action or similar rights of the indemnified party against the
      indemnifying party or others, and (ii) any liabilities the indemnifying
      party may be subject to pursuant to the law.  
    

    
        11.3  Reimbursement. If any Purchaser
      becomes involved in any capacity in any Proceeding by or against any
      Person who is a stockholder of the Company (except as a result of sales,
      pledges, margin sales and similar transactions by such Purchaser to or
      with any other stockholder), solely as a result of such Purchaser's
      acquisition of the Securities from the Company under this Agreement, the
      Company will reimburse such Purchaser for its reasonable legal and other
      expenses (including the cost of any investigation preparation and travel
      in connection therewith) incurred in connection therewith, as such
      expenses are incurred. The reimbursement obligations of the Company
      under this paragraph shall be in addition to any liability which the
      Company may otherwise have, shall extend upon the same terms and
      conditions to any Affiliates of the Purchasers who are actually named in
      such action, proceeding or investigation, and partners, directors,
      agents, employees and controlling persons (if any), as the case may be,
      of the Purchasers and any such Affiliate, and shall be binding upon and
      inure to the benefit of any successors, assigns, heirs and personal
      representatives of the Company, the Purchasers and any such Affiliate
      and any such Person. The Company also agrees that neither the Purchasers
      nor any such Affiliates, partners, directors, agents, employees or
      controlling persons shall have any liability to the Company or any
      Person asserting claims on behalf of or in right of the Company solely
      as a result of acquiring the Securities under this Agreement.
    

    

    

    
      
        

        

      

      
        
          36
        

        
          


        

      

      
        

        

      

    

    
      ARTICLE XII  
MISCELLANEOUS
    

    
        12.1  Governing Law.  This Agreement and
      the rights of the parties hereunder shall be governed in all respects by
      the laws of the State of New York wherein the terms of this Agreement
      were negotiated.
    

    
        12.2  Survival.  Except as specifically
      provided herein, the representations, warranties, covenants and
      agreements made herein shall survive the Closing.
    

    
        12.3  Amendment.  This Agreement may not be
      amended, discharged or terminated (or any provision hereof waived)
      without the written consent of the Company and the Purchaser.  
    

    
        12.4  Successors and Assigns.  Except as
      otherwise expressly provided herein, the provisions hereof shall inure
      to the benefit of, and be binding upon and enforceable by and against,
      the successors, assigns, heirs, executors and administrators of the
      parties hereto.  The Purchaser may assign its rights hereunder, and the
      Company may not assign its rights or obligations hereunder without the
      consent of the Purchaser.  
    

    
        12.5  Entire Agreement.  This Agreement,
      the Transaction Documents and the other documents delivered pursuant
      hereto and simultaneously herewith constitute the full and entire
      understanding and agreement between the parties with regard to the
      subject matter hereof and thereof.
    

    
        12.6  Notices, etc.  All notices, demands
      or other communications given hereunder shall be in writing and shall be
      sufficiently given if delivered either personally, by facsimile, or by a
      nationally recognized courier service marked for next business day
      delivery or sent in a sealed envelope by first class mail, postage
      prepaid and either registered or certified with return receipt,
      addressed as follows:
    

    
      if to the Company:
    

    
    	
           
        	
          Net Talk.com
1100 NW 163rd Drive
Miami, FL 33169
Phone:
          (305) 621-1200
Fax: (305) 621-1201
Attn: Mr. Anastasios
          Kyriakides
        	

        
	

        	

        	
           
        
	

        	
          with a copy to:
        	

        
	

        	

        	
           
        
	

        	
          Mitchell L. Perlstein, P.A.
4400 N. Federal Hwy Suite 210
Boca
          Raton, FL 33431
Phone: (561) 368-0831
Fax: (877)-fax-2mlp
Attn:
          Mitchell L. Perlstein, Esq.
        	

        


    

    

    

    
      
        

        

      

      
        
          37
        

        
          


        

      

      
        

        

      

    

    
      if to the Purchaser:
    

    
    	
           
        	
          Vicis Capital Master Fund
445 Park Avenue, 16th Floor
New
          York, NY 10022
Phone: (212) 909-4600
Fax: (212) 909-4601
Attn:
          Shad Stastney
        	

        
	

        	

        	
           
        
	

        	
          with a copy to:
        	

        
	

        	

        	
           
        
	

        	
          Andrew D. Ketter, Esq.
Quarles & Brady LLP
411 East
          Wisconsin Avenue
Milwaukee, WI 53202
Phone: (414) 277-5629
Fax:
          (414) 978-8972
        	

        


    

    
      Such communications shall be effective immediately if delivered in
      person or by confirmed facsimile, upon the date acknowledged to have
      been received in return receipt, or upon the next business day if sent
      by overnight courier service.
    

    
        12.7  Delays or Omissions.  No delay or
      omission to exercise any right, power or remedy accruing to any holder
      of any Securities upon any breach or default of the Company under this
      Agreement shall impair any such right, power or remedy of such holder
      nor shall it be construed to be a waiver of any such breach or default,
      or an acquiescence, therein, or of or in any similar breach or default
      thereafter occurring; nor shall any waiver of any single breach or
      default be deemed a waiver of any other breach or default theretofore or
      thereafter occurring.  Any waiver, permit, consent or approval of any
      kind or character on the part of any holder of any breach or default
      under this Agreement, or any waiver on the part of any holder of any
      provisions or conditions of this Agreement must be, made in writing and
      shall be effective only to the extent specifically set forth in such
      writing.  All remedies, either under this Agreement or by law or
      otherwise afforded to any holder, shall be cumulative and not
      alternative.
    

    
        12.8  Severability.  The invalidity of any
      provision or portion of a provision of this Agreement shall not affect
      the validity of any other provision of this Agreement or the remaining
      portion of the applicable provision.  It is the desire and intent of the
      parties hereto that the provisions of this Agreement shall be enforced
      to the fullest extent permissible under the laws and public policies
      applied in each jurisdiction in which enforcement is
      sought.  Accordingly, if any particular provision of this Agreement
      shall be adjudicated to be invalid or unenforceable, such provision
      shall be deemed amended to delete therefrom the portion thus adjudicated
      to be invalid or unenforceable, such deletion to apply only with respect
      to the operation of such provision in the particular jurisdiction in
      which such adjudication is made.
    

    
        12.9  Expenses.  The Company shall bear its
      own expenses and legal fees incurred on its behalf with respect to the
      negotiation, execution and consummation of the transactions contemplated
      by this Agreement and shall pay all documentary stamp or similar taxes
      imposed by any authority upon the transactions contemplated by this
      Agreement or any Transaction Document.  The Company shall pay all
      reasonable, documented third-party fees and expenses incurred by the
      Purchaser in connection with the enforcement of this Agreement or any of
      the other Transaction Documents, including, without limitation, all
      actual reasonable attorneys’ fees and expenses.
    

    

    

    
      
        

        

      

      
        
          38
        

        
          


        

      

      
        

        

      

    

    
       12.10  Consent to Jurisdiction; Waiver of Jury Trial.  EACH
      OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY
      SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS
      LOCATED IN THE CITY AND STATE OF NEW YORK FOR PURPOSES OF ALL LEGAL
      PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE
      TRANSACTION DOCUMENTS.  EACH OF THE PARTIES TO THIS AGREEMENT
      IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
      OBJECTION WHICH SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
      THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN ANY SUCH COURTS AND ANY
      CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN ANY SUCH COURTS HAS BEEN
      BROUGHT IN AN INCONVENIENT FORUM.  EACH OF THE PARTIES HERETO
      IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO
      TRIAL BY JURY IN ANY SUCH LEGAL PROCEEDING.  EACH OF THE PARTIES TO THIS
      AGREEMENT HEREBY CONSENTS TO SERVICE OF PROCESS BY NOTICE IN THE MANNER
      SPECIFIED IN SECTION 12.6 AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
      PERMITTED BY LAW, ANY OBJECTION SUCH PARTY MAY NOW OR HEREAFTER HAVE TO
      SERVICE OF PROCESS IN SUCH MANNER.
    

    
       12.11  Titles and Subtitles.  The titles of the
      articles, sections and subsections of this Agreement are for convenience
      of reference only and are not to be considered in construing this
      Agreement.
    

    
       12.12  Execution.  This Agreement may be executed
      in two or more counterparts, all of which when taken together shall be
      considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other
      party, it being understood that both parties need not sign the same
      counterpart.  In the event that any signature is delivered by facsimile
      transmission, such signature shall create a valid and binding obligation
      of the party executing (or on whose behalf such signature is executed)
      with the same force and effect as if such facsimile signature page were
      an original thereof.
    

    
      [Signature Page Follows]
    

    

    

    
      
        

        

      

      
        
          39
        

        
          


        

      

      
        

        

      

    

    

    

    
      IN WITNESS WHEREOF, the parties hereto have duly executed this
      Securities Purchase Agreement, as of the day and year first above
      written.
    

    
    	
           
        	
          
            COMPANY:
          

        
	

        	
          NET TALK.COM, INC.
        
	

        	
           
        
	

        	
           
        
	

        	
          
            By: /s/ Anastasios Kyriakides
          

        
	

        	
          
            Name: Anastasios Kyriakides
          

        
	

        	
          
            Title: CEO and President
          

        
	

        	
           
        
	

        	
           
        
	

        	
          
            PURCHASER:
          

        
	

        	
          VICIS CAPITAL MASTER FUND,
        
	

        	
          a sub-trust of Vicis Capital Series Master Trust
        
	

        	
          By: Vicis Capital LLC
        
	

        	
           
        
	

        	
           
        
	

        	
          
            By: /s/ Shad Stastney
          

        
	

        	
          
            Name: Shad Stastney
          

        
	

        	
          
            Title: Member
          

        


    

    

    

    
      
        

        

      

      
        
          40
        

        
          


        

      

      
        

        

      

    

    
      EXHIBIT A
    

    
      


    

    
      FORM OF CERTIFICATE OF DESIGNATION OF
SERIES A CONVERTIBLE
      PREFERRED STOCK
    

    

    

    
      
        

        

      

      
        
          41
        

        
          


        

      

      
        

        

      

    

    
      EXHIBIT B
    

    
      


    

    
      FORM OF SERIES D WARRANT
    

    

    

    
      
        

        

      

      
        
          42
        

        
          


        

      

      
        

        

      

    

    
      EXHIBIT C-1
    

    
      


    

    
      FORM OF DEBENTURE
    

    

    

    
      
        

        

      

      
        
          43
        

        
          


        

      

      
        

        

      

    

    
      EXHIBIT C-2
    

    
      


    

    
      FORM OF DEBENTURE
    

    

    

    
      
        

        

      

      
        
          44
        

        
          


        

      

      
        

        

      

    

    
      EXHIBIT C-3
    

    
      


    

    
      FORM OF DEBENTURE
    

    

    

    
      
        

        

      

      
        
          45
        

        
          


        

      

      
        

        

      

    

    
      EXHIBIT D
    

    
      


    

    
      FORM OF SECURITY AGREEMENT
    

    

    

    
      
        

        

      

      
        
          46
        

        
          


        

      

      
        

        

      

    

    
      EXHIBIT E
    

    
      


    

    
      FORM OF REGISTRATION RIGHTS AGREEMENT
    

    

    

    

    

    
      
        

        

      

      
        
          47
        

        
          


        

      

      
        

        

      

    

    

    

    
      Nettalk.com, Inc.                                 Schedule 1.4 (a)
    

    

    

    
      New bank account – Escrow   TO BE OPENED BY NETTALK.
    

    
      
        

        

      

      
        
          48
        

        
          


        

      

      
        

        

      

    

    

    

    
      Nettalk.com, Inc.                                 Schedule 3.4 (a)
    

    

    

    
      Outstanding shares, as follows:
    

    
      Preferred stock, $.001 par value, 10,000,000 shares authorized, none
      issued.
    

    
      Common stock, $.001 par value, 300,000,000 shares authorized, 9,719,800
      issued and outstanding.
    

    

    

    
      
        

        

      

      
        
          49
        

        
          


        

      

      
        

        

      

    

    

    

    
      Nettalk.com, Inc.                                 Schedule 3.4 (b)
    

    

    

    
      The following items are exempt from limitation as defined in Article
      III, Section 3.4 (b) of Security Purchase Agreement, dated February 23,
      2010:
    

    
      1.  Nettalk Employee Stock Option Plan, as adopted.
    

    
      2.  Employment Agreement between Nettalk.com, Inc. and Anastasios
      Kyriakides, as adopted.
    

    
      3.  Share based common stock issued to directors and officers prior to
      February 23, 2010.
    

    
      4.  Share based common stock issued to non officers prior to February
      23, 2010.
    

    
      5.  Capital expenditures incurred in deployment of our network
      infrastructure, including operating and capital leases.
    

    

    

    
      
        

        

      

      
        
          50
        

        
          


        

      

      
        

        

      

    

    

    

    
      Nettalk.com, Inc.                                 Schedule 3.11
    

    

    

    
      Placement agent:    NONE
    

    
      
        

        

      

      
        
          51
        

        
          


        

      

      
        

        

      

    

    

    

    
      Nettalk.com, Inc.                                 Schedule 3.12
    

    

    

    
      Pending litigations:     NONE.
    

    
      
        

        

      

      
        
          52
        

        
          


        

      

      
        

        

      

    

    

    

    
      Nettalk.com, Inc.                                 Schedule 3.13
    

    

    

    
      Indebtedness and other contracts:             NONE.
    

    
      
        

        

      

      
        
          53
        

        
          


        

      

      
        

        

      

    

    

    

    
      Nettalk.com, Inc.                                 Schedule 3.15
    

    

    

    
      None
    

    
      
        

        

      

      
        
          54
        

        
          


        

      

      
        

        

      

    

    

    

    
      Nettalk.com, Inc.                                 Schedule 3.19
    

    

    

    
      Related party transactions:
    

    
      Effective September 10, 2008, we issued 1,000,000 shares to Apogee
      Financial Investments, Inc. in connection with certain consulting
      services rendered to us. Mr. Richard Diamond is president of Apogee
      Financial Investments, Inc. and served as a member of our board of
      directors until his resignation on November 23, 2009. On the date of the
      issuance, Mr. Diamond was not a member of our board of directors.  
    

    
      Midtown Partners & Co., LLC (“Midtown Partners”), an FINRA registered
      broker dealer, acted as the placement agent in connection with multiple
      Convertible Debt Offerings.  In connection with these offerings, we paid
      Midtown Partners a cash commission equal to $198,000; issued Series BD
      Common Stock Purchase Warrant to Midtown Partners entitling Midtown
      Partners to purchase 1,080,000 shares of our common stock at an initial
      exercise price of  $0.50 per share; and issued Series BD Common Stock
      Purchase Warrant to Midtown Partners entitling Midtown Partners to
      purchase 1,080,000 shares of our common stock at an initial exercise
      price of $0.25 per share. Midtown Partners is a wholly-owned subsidiary
      of Apogee Financial Investments, Inc.  
    

    
      A company owned or controlled by a major shareholder of NetTalk.com,
      Inc., provided services to us, as follows:
    

    
      In June 2009, we incurred advertising expense for the creation of an
      infomercial. The infomercial is presently running weekly in some US
      markets.
    

    
      
        

        

      

      
        
          55
        

        
          


        

      

      
        

        

      

    

    

    

    
      Nettalk.com, Inc.                                 Schedule 3.20
    

    

    

    
      Insurance:
    

    
      ADP Total Source provides our workers compensation insurance.
    

    
      Taxton Barclay provides our casualty and property insurance.
    

    
      Vicis Capital Master Fund will be added as “named” insure on our
      casualty and property  policies.
    

    

    

    
      
        

        

      

      
        
          56
        

        
          


        

      

      
        

        

      

    

    

    

    
      Nettalk.com, Inc.                                 Schedule 3.22
    

    

    

    
      Title/ownership:
    

    
      Fixed and intangible assets owned by Nettalk.com, Inc. are listed on
      depreciation schedule attached.
    

    

    

    

    

    
      57