Unassociated Document


    
      EXCHANGE
        AGREEMENT

      


      dated
        as
        of

      


      October
        14, 2005

      


      by
        and
        between

      


      SPEEDEMISSIONS,
        INC. 

      as
        the
        Issuer,

      


      and

      


      GCA
        Strategic Investment Fund Limited

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXCHANGE
        AGREEMENT

      


      AGREEMENT,
        dated as of October 14, 2005, among Speedemissions, Inc., a Florida corporation
        (the “Company”),
        and
        GCA Strategic Investment Fund Limited (the “Purchaser”).

      


      R
        E C I T A L S:

      


      WHEREAS,
        the Company desires and Purchaser has agreed to exchange the following debt
        and
        rights held by Purchaser: (i) 6% Secured Promissory Note in the Principal
        amount
        of $300,000 dated August 2, 2001 (the “$300,000 Note”); (ii) 12% Secured
        Promissory Note in the principal amount of $110,000 dated August 7, 2004
        (the
“$110,000 Note”); (iii) 6% Secured Promissory Note in the Principal amount of
        $350,000 dated January 26, 2005 (the “$350,000 Note”) and (iv) $302,847.53 in
        cumulative dividends (the “Dividends”) due and owing under the existing 2,500
        shares of the Company’s Series A Convertible Preferred Stock (the “Preferred
        Shares”
        or
“Preferred
        Stock”)
        (the
        $300,000 Note, the $110,000 Note, the $350,000 Note and the Dividends,
        collectively the “Obligations”) for 1,224 of the Company’s Preferred Shares and
        the Preferred Stock Warrants, on the terms and subject to the conditions
        set
        forth in this Agreement; and

      


      WHEREAS,
        in connection with the issuance of the Preferred Shares to the Purchaser,
        the
        Company, Purchaser and Barron Partners, LP, a Delaware limited partnership
        (“Barron”) intend to enter into that certain Settlement Agreement and General
        Release (the “Settlement Agreement”) dated effective as of the date hereof;
        and

      


      WHEREAS,
        the Preferred Shares will be convertible upon terms and conditions as set
        forth
        in the Certificate of Designations as amended and of record with the Office
        of
        the Secretary of State for the State of Florida, into shares of the Company’s
        common stock, no par value per share (the “Common
        Stock”);
        and

      


      WHEREAS,
        Purchaser will have certain registration rights with respect to such shares
        of
        Common Stock issuable hereunder upon conversion of the Preferred Shares (the
        “Conversion
        Shares”)
        as set
        forth in the Registration Rights Agreement in the form attached hereto as
        Exhibit
        B;

      


      NOW,
        THEREFORE, in consideration of the foregoing premises and the covenants
        contained herein and other good and valuable consideration, the receipt and
        sufficiency of which are hereby acknowledged, the parties hereto agree as
        follows: 

      


      1. DEFINITIONS

      


      1.1 Definitions.
        The
        following terms, as used herein, have the following meanings:

      


      “Affiliate”
        means,
        with respect to any Person (the “Subject
        Person”),
        (i)
        any other Person (a “Controlling
        Person”)
        that
        directly, or indirectly through one or more intermediaries, Controls the
        Subject
        Person or (ii) any other Person (other than the Subject Person or a Consolidated
        Subsidiary of the Subject Person) which is Controlled by or is under common
        Control with a Controlling Person.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      “Agreement”
        means
        this Exchange Agreement, as amended, supplemented or otherwise modified from
        time to time in accordance with its terms. 

      


      “Asset
        Sale”
        has the
        meaning set forth in Section
        8.4.

      


      “Balance
        Sheet Date”
        has the
        meaning set forth in Section
        4.7.

      


      “Business
        Day”
        means
        any day except a Saturday, Sunday or other day on which commercial banks
        in the
        City of New York are authorized or required by law to close. 

      


      “Certificate
        of Designation”
        means
        the Certificate of Designation, Preference and Rights of Series A Convertible
        Preferred Stock of Speedemissions, Inc., as amended and of record with the
        Office of the Secretary of State for the State of Florida.

      


      “Change
        in Control”
        means
        (i) after the date of this Agreement, any person or group of persons (within
        the
        meaning of Sections 13 and 14 of the Exchange Act and the rules and regulations
        of the Commission relating to such sections) other than Purchaser shall have
        acquired beneficial ownership (within the meaning of Rules 13d-3 and 13d-5
        promulgated by the Commission pursuant to the Exchange Act) of 33 1/3% or
        more
        of the outstanding shares of Common Stock of the Company without the prior
        written consent of Purchaser; (ii) any sale or other disposition (other than
        by
        reason of death or disability) to any Person of more than 75,000 shares of
        Common Stock of the Company by any executive officers and/or employee directors
        of the Company without the prior written consent of Purchaser; (iii) individuals
        constituting the Board of Directors of the Company on the date hereof (together
        with any new Directors whose election by such Board of Directors or whose
        nomination for election by the stockholders of the Company was approved by
        a
        vote of at least 50.1% of the Directors still in office who are either Directors
        as of the date hereof or whose election or nomination for election was
        previously so approved), cease for any reason to constitute at least two-thirds
        of the Board of Directors of the Company then in office.

      


      “Closing
        Bid Price”
        shall
        mean for any security as of any date, the lowest closing bid price as reported
        by Bloomberg, L.P. (“Bloomberg”)
        on the
        principal securities exchange or trading market where such security is listed
        or
        traded or, if the foregoing does not apply, the lowest closing bid price
        of such
        security in the over-the-counter market on the electronic bulletin board
        for
        such security as reported by Bloomberg, or, if no lowest trading price is
        reported for such security by Bloomberg, then the average of the bid prices
        of
        any market makers for such securities as reported in the “Pink Sheets” by the
        National Quotation Bureau, Inc. If the lowest closing bid price cannot be
        calculated for such security on such date on any of the foregoing bases,
        the
        lowest closing bid price of such security on such date shall be the fair
        market
        value as mutually determined by Purchaser and the Company for which the
        calculation of the closing bid price requires, and in the absence of such
        mutual
        determination, as determined by the Board of Directors of the Company in
        good
        faith. 

      


      “Closing”
        and
“Closing
        Date”
        means
        the first Business Day upon which all the conditions set forth in Section
        6 have
        been are fulfilled or deemed to be fulfilled (or such other date unanimously
        agreed by the parties), and upon which this Agreement becomes unconditional.
        

      


      “Code”
        means
        the Internal Revenue Code of 1986, as amended. 

       

      
        
          
          

        

        
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      “Commission”
        means
        the Securities and Exchange Commission or any entity succeeding to all of
        its
        material functions.

      


      “Common
        Stock”
        means
        common stock, $0.001 par value per share, of the Company.

      


      “Company”
        means
        Speedemissions, Inc., a Florida corporation, and its successors.

      


      “Company
        Corporate Documents”
        means
        the articles of incorporation (as amended, supplemented or restated) and
        bylaws
        of the Company.

      


      “Control”
        (including, with correlative meanings, the terms “Controlling,”“Controlled by”
        and under “common Control with”), as used with respect to any Person, means the
        possession, directly or indirectly, of the power to direct or cause the
        direction of the management and policies of that Person, whether through
        the
        ownership of voting securities, by contract or otherwise.

      


      “Conversion
        Date”
        shall
        mean the date of delivery (including delivery via telecopy) of a Notice of
        Conversion for all or a portion of the shares of Preferred Stock by the holder
        thereof to the Company.

      


      “Conversion
        Price”
        has the
        meaning set forth in the terms of the Certificate of Designation.

      


      “Conversion
        Shares”
        means
        the shares of common stock issuable upon conversion of the Preferred Shares
        and
        the exercise of the Warrants.

      


      “Derivative
        Securities”
        has the
        meaning set forth in Section
        8.6.

      


      “Directors”
        means
        the individuals then serving on the Board of Directors of the Company or
        similar
        management council of the Company.

      


      “Environmental
        Laws”
        means
        any and all federal, state, local and foreign statutes, laws, regulations,
        ordinances, rules, judgments, orders, decrees, permits, concessions, grants,
        franchises, licenses, agreements or other governmental restrictions relating
        to
        the environment or to emissions, discharges or releases of Hazardous Materials
        into the environment, including, without limitation, ambient air, surface
        water,
        ground water, or land, or otherwise relating to the manufacture, processing,
        distribution, use, treatment, storage, disposal, transport or handling of
        Hazardous Materials or the cleanup or other remediation thereof. 

      


      “Event
        of Default”
        has the
        meaning set forth in Section
        13.1.

      


      “Exchange
        Act”
        means
        the Securities Exchange Act of 1934, as amended.

      


      “GAAP”
        has the
        meaning set forth in Section
        1.2.

      


      “Hazardous
        Materials”
        means
        any hazardous materials, hazardous wastes, hazardous constituents, hazardous
        or
        toxic substances or petroleum products (including crude oil or any derivative
        or
        fraction thereof), defined or regulated as such in or under any Environmental
        Laws. 

       

      
        
          
          

        

        
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      “Intellectual
        Property”
        has the
        meaning set forth in Section
        4.20.

      


      “Lien”
        means
        any lien, mechanic’s lien, materialmen’s lien, lease, easement, charge,
        encumbrance, mortgage, conditional sale agreement, title retention agreement,
        agreement to sell or convey, option, claim, title imperfection, encroachment
        or
        other survey defect, pledge, restriction, security interest or other adverse
        claim, whether arising by contract or under law or otherwise (including,
        without
        limitation, any financing lease having substantially the same economic effect
        as
        any of the foregoing, and the filing of any financing statement under the
        Uniform Commercial Code or comparable law of any jurisdiction in respect
        of any
        of the foregoing).

      


      “Market
        Price”
        means
        the volume weighted average sales price as reported by Bloomberg, L.P. for
        the
        three consecutive trading days immediately prior to the date of
        determination.

      


      “Material
        Adverse Effect”
        means
        any material adverse effect on the operations, results of operations,
        properties, assets or condition (financial or otherwise) of the Company or
        the
        Company and its Subsidiaries, taken as a whole, or on the transactions
        contemplated hereby or by the agreements or instruments to be entered into
        in
        connection herewith.

      


      “NASD”
        has the
        meaning set forth in Section
        7.10.

      


      “Nasdaq
        Stock Market”
        means
        the Nasdaq Stock Market’s National Market System.

      


      “National
        Market”
        means
        the Nasdaq Stock Market, the Nasdaq Small Cap Market, the New York Stock
        Exchange, Inc. or the American Stock Exchange, Inc.

      


      “Notice
        of Conversion”
        means
        the notice to be delivered to the Company by a holder of Preferred Shares
        upon
        conversion of all or a portion thereof.

      


      “Notice
        of Exercise”
        means
        the notice to be delivered by a holder of the Warrant upon exercise of all
        or a
        portion thereof to the Company.

      


      “Officer’s
        Certificate”
        shall
        mean a certificate executed by the President of the Company dated the date
        hereof and substantially in the form set forth in Exhibit
        C.

      


      “OTC
        Bulletin Board”
        means
        the over-the-counter bulletin board operated by the NASD.

      


      “Permits”
        means
        all domestic and foreign licenses, franchises, grants, authorizations, permits,
        easements, variances, exemptions, consents, certificates, orders and approvals
        necessary to own, lease and operate the properties of, and to carry on the
        business of the Company and the Subsidiaries.

      


      “Person”
        means
        an individual, corporation, limited liability company, partnership, trust,
        incorporated or unincorporated association, joint venture, joint stock company,
        government (or any agency or political subdivision thereof) or other entity
        of
        any kind.

       

      
        
          
          

        

        
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      “Preferred
        Shares”
        or
“Preferred
        Stock”
        has the
        meaning set forth in the recitals to this Agreement.

      


      “Preferred
        Stock Warrant”
        or
“Preferred
        Stock Warrants”
        have
        the meanings set forth in Section
        2.3.

      


      “Purchase
        Price”
        means
        the purchase price for the Securities set forth in Section 2.1
        hereof.

      


      “Purchaser”
        means
        the entity listed on the signature page hereto and its successors and assigns,
        including holders from time to time of the Preferred Shares and
        Warrants.

      


      “Registration
        Rights Agreement”
        means
        the agreement between the Company and the Purchaser, to be executed and
        delivered on or before the Closing Date, substantially in the form set forth
        in
Exhibit
        B attached
        hereto.

      


      “Securities”
        means
        the Preferred Shares, the Warrants, the Warrant Shares and the Conversion
        Shares.

      


      “Securities
        Act”
        means
        the Securities Act of 1933, as amended.

      


      “Solvency
        Certificate”
        shall
        mean a certificate executed by the Chief Financial Officer of the Company
        dated
        the date hereof and substantially in the form set forth in Exhibit
        D.

      


      “Subsidiary”
        means,
        with respect to any Person, any corporation or other entity of which (x)
        a
        majority of the capital stock or other ownership interests having ordinary
        voting power to elect a majority of the Board of Directors or other persons
        performing similar functions are at the time directly or indirectly owned
        by
        such Person or (y) the results of operations, the assets and the liabilities
        of
        which are consolidated with such Person under GAAP.

      


      “Subsidiary
        Corporate Documents”
        means
        the certificates of incorporation and bylaws of each Subsidiary.

      


      “Taxes”
        shall
        mean all taxes, charges, fees, levies or other assessments, including income,
        alternative
        or add-on minimum, profits, gross income, gross
        receipts, excise, property, ad
        valorem, sales,
        use,
        value added, withholding,
        occupation, use, service, license, payroll, employment,
        severance, social
        security, Medicare,
        unemployment,
        franchise, license,
        stamp, environmental or windfall profit tax, premium, custom duty,
        transfer
        or recording taxes, fees and charges, imposed by the United States or any
        state,
        local or foreign government or subdivision or agency thereof, whether computed
        on a separate, consolidated, unitary, combined or any other basis; and such
        term
        shall include any interest, fines, penalties, addition to tax or additional
        amounts attributable to or imposed with respect to any such taxes, charges,
        fees, levies or other assessments.

      


      “Trading
        Day”
        shall
        mean any Business Day in which the OTC Bulletin Board, National Market or
        other
        automated quotation system or exchange on which the Common Stock is then
        traded
        is open for trading for at least four hours.

       

      
        
          
          

        

        
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      “Transaction
        Agreements”
        means
        this Agreement and any other agreement, instrument or document executed,
        or
        contemplated herein to be executed, in relation to the issuance of the
        Securities described herein. 

      


      “Transfer”
        means
        any disposition of the Securities that would constitute a sale thereof under
        the
        Securities Act or otherwise result in a violation of the Securities
        Act.

      


      “Warrant
        Shares”
        means
        shares of Common Stock of the Company issued upon exercise of the Preferred
        Stock Warrant.

      


      1.2 Accounting
        Terms and Determinations.
        Unless
        otherwise specified herein, all accounting terms used herein shall be
        interpreted, all accounting determinations hereunder shall be made, and all
        financial statements required to be delivered hereunder shall be prepared,
        in
        accordance with generally accepted accounting principles as in effect from
        time
        to time, applied on a consistent basis (except for changes concurred in by
        the
        Company’s independent public accountants) (“GAAP”).
        All
        references to “dollars,”“Dollars” or “$” are to United States dollars unless
        otherwise indicated.

      


      2. PURCHASE
        AND SALE OF SECURITIES

      


      2.1 Purchase
        and Sale of Preferred Shares.
        Subject
        to the terms and conditions set forth herein, Purchaser agrees to exchange
        the
        Obligations and all accrued and unpaid interest thereunder, and to cancel
        obligations of the Company arising thereunder or under any documents executed
        in
        connection therewith, and the Company agrees to issue to Purchaser, One Thousand
        Two Hundred Twenty Four (1,224) Preferred Shares, at an exchange price equal
        to
        One Thousand Dollars ($1,000.00) per share.

      


      2.2 Intentionally
        Omitted.
        

      


      2.3 Preferred
        Stock Warrant.
        In
        consideration for, and as an inducement to, Purchaser’s exchange for the
        Preferred Shares hereunder, the Company will issue to Purchaser upon Closing,
        in
        connection with and in addition to the applicable number of Preferred Shares,
        a
        Warrant (in the form attached hereto as Exhibit
        E,
        (the
“Preferred
        Stock Warrant”)
        to
        purchase 16,000,000 shares of the Company’s Common Stock.

      


      2.4 Adoption
        of Certificate of Designation. The
        Company shall adopt and file the Amended Certificate of Designation, Preference
        and Rights of Series A Convertible Preferred Stock of Speedemissions, Inc.
        in
        substantially the form attached hereto as Exhibit
        A
        (the
“Certificate of Designation”) with the Secretary of State of the State of
        Florida on or promptly following the Closing Date. 

      


      3. 
        PAYMENT TERMS OF CUMULATIVE CONVERTIBLE PREFERRED

       

      3.1 Payment
        Mechanics.
        The
        Company will pay all amounts due on each Preferred Share by the method and
        at
        the address specified for such purpose by Purchaser in writing, without the
        presentation or surrender of any Preferred Share or the making of any notation
        thereon. The Company will afford the benefits of this Section 3.1 to any
        direct
        or indirect transferee of the Preferred Share purchased under this Agreement
        and
        that has made the same agreement relating to the Preferred Shares as Purchaser
        has in this Section 3.1; provided that such transferee is an “accredited
        investor” under Rule 501 of the Securities Act.

       

      
        
          
          

        

        
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      3.2 
        Payment of Dividend.
        Intentionally Omitted.

       

      3.3 
        Redemption.
        The
        redemption provisions of Section 6 of the Certificate of Designations shall
        apply. 

      


      3.4 Payment
        of Additional Amounts.

       

      (a)  Any
        and
        all payments by the Company hereunder or under the Preferred Shares to Purchaser
        and each “qualified assignee” thereof shall be made free and clear of and
        without deduction or withholding for any and all present or future taxes,
        levies, imposts, deductions, charges or withholdings, and all liabilities
        with
        respect thereto (all such taxes, levies, imposts, deductions, charges,
        withholdings and liabilities being hereinafter referred to as “Taxes”) unless
        such Taxes are required by law or the administration thereof to be deducted
        or
        withheld. If the Company shall be required by law or the administration thereof
        to deduct or withhold any Taxes from or in respect of any sum payable under
        the
        Preferred Shares (i) the holders of the Preferred Shares subject to such
        Taxes
        shall have the right, but not the obligation, for a period of thirty (30)
        days
        commencing upon the day it shall have received written notice from the Company
        that it is required to withhold Taxes to transfer all or any portion of the
        Preferred Shares to a qualified assignee to the extent such transfer can
        be
        effected in accordance with the other provisions of this Agreement and
        applicable law; (ii) the Company shall make such deductions or withholdings;
        (iii) the sum payable shall be increased as may be necessary so that after
        making all required deductions or withholdings (including deductions or
        withholdings applicable to additional amounts paid under this Section 3.6)
        Purchaser receives an amount equal to the sum it would have received if no
        such
        deduction or withholding had been made; and (iv) the Company shall forthwith
        pay
        the full amount deducted or withheld to the relevant taxation or other authority
        in accordance with applicable law; provided, however, the Company shall not
        be
        required to pay any taxes owed by Purchaser or any qualified assignee resulting
        from (x) the payment of dividends on the Preferred Shares by the Company
        or (y)
        any gain recognized from the transfer of the Preferred Shares by the Purchaser
        to a qualified assignee. A “qualified assignee” of a Purchaser is a Person that
        is organized under the laws of (i) the United States or (II) any jurisdiction
        other than the United States or any political subdivision thereof and that
        (y)
        represents and warrants to the Company that payments of the Company to such
        assignee under the laws in existence on the date of this Agreement would
        not be
        subject to any Taxes and (z) from time to time, as and when requested by
        the
        Company, executes and delivers to the Company and the Internal Revenue Service
        forms, and provides the Company with any information necessary to establish
        such
        assignee’s continued exemption from Taxes under applicable law.

      


      (b)  The
        Company shall forthwith pay any present or future stamp or documentary taxes
        or
        any other excise or property taxes, charges or similar levies (all such taxes,
        charges and levies hereinafter referred to as “Other Taxes”) which arise from
        any payment made under any of the Transaction Agreements or from the execution,
        delivery or registration of, or otherwise with respect to, this Agreement
        other
        than Taxes payable solely as a result of the transfer from Purchaser to a
        Person
        of any Security.

      


      
        
          
          

        

        
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      (c)  The
        Company shall indemnify Purchaser, or qualified assignee, for the full amount
        of
        Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes
        imposed by any jurisdiction on amounts payable under this Section 3.6) paid
        by
        Purchaser, or qualified assignee, and any liability (including penalties,
        interest and expenses) arising therefrom or with respect thereto, whether
        or not
        such Taxes or Other Taxes were correctly or legally asserted. Payment under
        this
        indemnification shall be made within 30 days from the date Purchaser or assignee
        makes written demand therefor. A certificate as to the amount of such Taxes
        or
        Other Taxes submitted to the Company by Purchaser or assignee shall be
        conclusive evidence of the amount due from the Company to such
        party.

      


      (d)  Within
        30
        days after the date of any payment of Taxes, the Company will furnish to
        Purchaser the original or a certified copy of a receipt evidencing payment
        thereof.

      


      (e)  Purchaser
        shall provide to the Company a form W-8, stating that it is a non-U.S. person,
        together with any additional tax forms which may be required under the Code,
        as
        amended after the date hereof, to allow interest payments to be made to it
        without deduction.

      


      4. 
        REPRESENTATIONS AND WARRANTIES

       

      The
        Company represents and warrants to Purchaser, as of the Closing Date, the
        following:

      


      4.1 
        Organization and Qualification.
        The
        Company and each Subsidiary is a corporation (or other legal entity) duly
        organized, validly existing and in good standing under the laws of its
        jurisdiction of incorporation, with full power and authority to own, lease,
        use
        and operate its properties and to carry on its business as and where now
        owned,
        leased, used, operated and conducted. The Company is qualified to conduct
        business as a foreign corporation and is in good standing in every jurisdiction
        in which the nature of the business conducted by it makes such qualification
        necessary, except where such failure would not have a Material Adverse Effect.
        

       

      4.2 
        Authorization
        and Execution.


      (a)  The
        Company has all requisite corporate power and authority to enter into and
        perform each Transaction Agreement and to consummate the transactions
        contemplated hereby and thereby and to issue the Securities in accordance
        with
        the terms hereof and thereof.

      


      (b)  The
        execution, delivery and performance by the Company of each Transaction Agreement
        and the issuance by the Company of the Securities have been duly and validly
        authorized and no further consent or authorization of the Company, its Board
        of
        Directors or its shareholders is required.

      


      (c)  This
        Agreement has been duly executed and delivered by the Company.

      


      
        
          
          

        

        
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      (d)  This
        Agreement constitutes, and upon execution and delivery thereof by the Company,
        each of the Transaction Agreements will constitute, a valid and binding
        agreement of the Company, in each case enforceable against the Company in
        accordance with its respective terms.

      


      4.3 
        Capitalization As
        of the
        date hereof, the authorized, issued and outstanding capital stock of the
        Company
        is as set forth on Schedule
        4.3
        hereto
        and except as set forth on Schedule
        4.3
        no other
        shares of capital stock of the Company will be outstanding as of the Closing
        Date. All of such outstanding shares of capital stock are, or upon issuance
        will
        be, duly authorized, validly issued, fully paid and nonassessable. No shares
        of
        capital stock of the Company are subject to preemptive rights or similar
        rights
        of the stockholders of the Company (other than those rights in favor of holders
        of the Preferred Stock) or any liens or encumbrances imposed through the
        actions
        or failure to act of the Company. Other than as set forth on Schedule
        4.3
        hereto,
        as of the date hereof, (i) there are no outstanding options, warrants, scrip,
        rights to subscribe for, puts, calls, rights of first refusal, agreements,
        understandings, claims or other commitments or rights of any character
        whatsoever relating to, or securities or rights convertible into or exchangeable
        for any shares of capital stock of the Company or any of its Subsidiaries,
        or
        arrangements by which the Company or any of its Subsidiaries is or may become
        bound to issue additional shares of capital stock of the Company or any of
        its
        Subsidiaries, and (ii) there are no agreements or arrangements under which
        the
        Company or any of its Subsidiaries are obligated to register the sale of
        any of
        its or their securities under the Securities Act (except pursuant to the
        Registration Rights Agreement) and (iii) there are no anti-dilution or price
        adjustment provisions contained in any security issued by the Company (or
        in any
        agreement providing rights to security holders) that will be triggered by
        the
        issuance of the Securities. The Company has furnished to Purchaser true and
        correct copies of the Company’s Corporate Documents, and the terms of all
        securities convertible into or exercisable for Common Stock and the material
        rights of the holders thereof in respect thereto.

      


      4.4 
        Governmental Authorization.
        The
        execution and delivery by the Company of the Transaction Agreements does
        not and
        will not, the issuance and sale by the Company of the Securities does not
        and
        will not, and the consummation of the transactions contemplated hereby and
        by
        the other Transaction Agreements will not, require any action by or in respect
        of, or filing with, any governmental body, agency or governmental official
        except (a) such actions or filings that have been undertaken or made prior
        to
        the date hereof and that will be in full force and effect (or as to which
        all
        applicable waiting periods have expired) on and as of the date hereof or
        which
        are not required to be filed on or prior to the Closing Date, (b) such actions
        or filings that, if not obtained, would not result in a Material Adverse
        Effect
        and (c) the filing of a “Form D” as described in Section 7.13.

      


      4.5 
        Issuance of Shares.
        Upon
        conversion in accordance with the terms of the Preferred Shares, the Conversion
        Shares shall be duly and validly issued and outstanding, fully paid and
        nonassessable, free and clear of any Taxes, Liens and charges with respect
        to
        issuance and shall not be subject to preemptive rights or similar rights
        of any
        other stockholders of the Company. Assuming the representations and warranties
        of Purchaser herein are true and correct in all material respects, each of
        the
        Securities will have been issued in material compliance with all applicable
        U.S.
        federal and state securities laws. The Company understands and acknowledges
        that, in certain circumstances, the issuance of Conversion Shares could dilute
        the ownership interests of other stockholders of the Company. The Company
        further acknowledges that its obligation to issue Conversion Shares upon
        conversion of the Preferred 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.

      


      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      The
        Company shall have a sufficient number of shares of Common Stock authorized
        and
        reserved to provide for the conversion of the Preferred Shares into the
        Company’s Common Stock and for the exercise of the Warrants.

      


      4.6 
        No Conflicts.
        The
        execution and delivery by the Company of the Transaction Agreements to which
        it
        is a party did not and will not, the issuance and sale by the Company of
        the
        Securities did not and will not and the consummation of the transactions
        contemplated hereby and by the other Transaction Agreements will not, contravene
        or constitute a default under or violation of (i) any provision of applicable
        law or regulation, (ii) the Company Corporate Documents, (iii) any agreement,
        judgment, injunction, order, decree or other instrument binding upon the
        Company
        or any Subsidiary or any of their respective assets, or result in the creation
        or imposition of any Lien on any asset of the Company or any Subsidiary.
        The
        Company and each Subsidiary is in compliance with and conforms to all statutes,
        laws, ordinances, rules, regulations, orders, restrictions and all other
        legal
        requirements of any domestic or foreign government or any instrumentality
        thereof having jurisdiction over the conduct of its businesses or the ownership
        of its properties, except where such failure would not have a Material Adverse
        Effect.

      


      4.7 
        Financial Information.
        Since
        December 31, 2004 (the “Balance Sheet Date”), except as disclosed in
Schedule
        4.7,
        or as
        disclosed in the Company’s filings with the Commission, there has been (x) no
        material adverse change in the assets or liabilities, or in the business
        or
        condition, financial or otherwise, or in the results of operations or prospects,
        of the Company and its Subsidiaries, whether as a result of any legislative
        or
        regulatory change, revocation of any license or rights to do business, fire,
        explosion, accident, casualty, labor, trouble, flood, drought, riot, storm,
        condemnation, act of God, public force or otherwise and (y) no material adverse
        change in the assets or liabilities, or in the business or condition, financial
        or otherwise, or in the results of operations or prospects, of the Company
        and
        its subsidiaries except in the ordinary course of business; and no fact or
        condition exists or is contemplated or threatened which might cause such
        a
        change in the future. The consolidated balance sheets of the Company and
        its
        Subsidiaries for the period ending June 30, 2005, and the related consolidated
        statements of income, changes in stockholders’ equity and changes in cash flows
        for the periods then ended, including the footnotes thereto, except as indicated
        therein, (i) complied in all material respects with applicable accounting
        requirements and (ii) have been prepared in accordance with GAAP consistently
        applied throughout the periods indicated, except that the unaudited financial
        statements do not contain notes and may be subject to normal audit adjustments
        and normal annual adjustments. Such financial statements fairly present the
        financial condition of the Company and its Subsidiaries at the dates indicated
        and the consolidated results of their operations and cash flows for the periods
        then ended and, except as indicated therein, reflect all claims against and
        all
        Debts and liabilities of the Company and its Subsidiaries, fixed or contingent.
        

      


      4.8 
        Litigation.
        Except
        as set forth on Schedule
        4.8,
        or as
        disclosed in the Company’s filings with the Commission, there is no action, suit
        or proceeding pending or, to the knowledge of the Company, threatened against
        the Company or any Subsidiary, before any court or arbitrator or any
        governmental body, agency or official in which there is a reasonable possibility
        of an adverse decision which could materially adversely affect the business,
        condition (financial or otherwise), operations, performance, properties or
        prospects of the Company or which challenges the validity of any Transaction
        Agreements.

      


      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      4.9 
        Compliance with ERISA and other Benefit Plans.

       

      (a)  Each
        member of the ERISA Group has fulfilled its obligations under the minimum
        funding standards of ERISA and the Code with respect to each Plan and is
        in
        compliance in all material respects with the presently applicable provisions
        of
        ERISA and the Code with respect to each Plan. No member of the ERISA Group
        has
        (i) sought a waiver of the minimum funding standard under Section 412 of
        the
        Code in respect of any Plan, (ii) failed to make any required contribution
        or
        payment to any Plan or Multiemployer Plan or in respect of any Benefit
        Arrangement, or made any amendment to any Plan or Benefit Arrangement, which
        as
        resulted or could result in the imposition of a Lien or the posting of a
        bond or
        other security under ERISA or the Code or (iii) incurred any liability under
        Title IV of ERISA other than a liability to the PBGC for premiums under Section
        4007 of ERISA.

      


      (b)  The
        benefit plans not covered under clause (a) above (including profit sharing,
        deferred compensation, stock option, employee stock purchase, bonus, retirement,
        health or insurance plans, collectively the “Benefit Plans”) relating to the
        employees of the Company are duly registered where required by, and are in
        good
        standing in all material respects under, all applicable laws. All required
        employer and employee contributions and premiums under the Benefit Plans
        to the
        date hereof have been made, the respective fund or funds established under
        the
        Benefit Plans are funded in accordance with applicable laws, and no past
        service
        funding liabilities exist thereunder.

      


      (c)  No
        Benefit Plans have any unfunded liabilities, either on a “going concern” or
“winding up” basis and determined in accordance with all applicable laws and
        actuarial practices and using actuarial assumptions and methods that are
        reasonable in the circumstances. No event has occurred and no condition exists
        with respect to any Benefit Plans that has resulted or could reasonably be
        expected to result in any pension plan having its registration revoked or
        wound
        up (in whole or in part) or refused for the purposes of any applicable laws
        or
        being placed under the administration of any relevant pension benefits
        regulatory authority or being required to pay any taxes or penalties (in
        any
        material amounts) under any applicable laws.

      


      4.10 
        Environmental Matters.
        The
        costs and liabilities associated with Environmental Laws (including the cost
        of
        compliance therewith) are unlikely to have a material adverse effect on the
        business, condition (financial or otherwise), operations, performance,
        properties or prospects of the Company or any Subsidiary. Each of the Company
        and the Subsidiaries conducts its businesses in compliance in all material
        respects with all applicable Environmental Laws.

      


      4.11 
        Taxes.
        All
        United States federal, state, county, municipality, local or foreign income
        tax
        returns and all other material tax returns (including foreign tax returns)
        which
        are required to be filed by or on behalf of the Company and each Subsidiary
        have
        been filed and all material taxes due pursuant to such returns or pursuant
        to
        any assessment received by the Company and each Subsidiary have been paid
        except
        those being disputed in good faith and for which adequate reserves have been
        established. The charges, accruals and reserves on the books of the Company
        and
        each Subsidiary in respect of taxes and other governmental charges have been
        established in accordance with GAAP.

      


      4.12 
        Investments, Joint Ventures.
        Other
        than as set forth in Schedule
        4.12,
        or as
        disclosed in the Company’s filings with the Commission, the Company has no
        Subsidiaries or other direct or indirect Investment in any Person, and the
        Company is not a party to any partnership, management, shareholders’ or joint
        venture or similar agreement.

      


      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      4.13 
        Not an Investment Company.
        Neither
        the Company nor any Subsidiary is an “Investment Company” within the meaning of
        Investment Company Act of 1940, as amended.

      


      4.14 
        Full Disclosure.
        The
        information heretofore furnished by the Company to Purchaser for purposes
        of or
        in connection with this Agreement or any transaction contemplated hereby
        does
        not, and all such information hereafter furnished by the Company or any
        Subsidiary to Purchaser will not (in each case taken together and on the
        date as
        of which such information is furnished), contain any untrue statement of
        a
        material fact or omit to state a material fact necessary in order to make
        the
        statements contained therein, in the light of the circumstances under which
        they
        are made, not misleading.

      


      4.15 
        No Solicitation; No Integration with Other Offerings.
        No form
        of general solicitation or general advertising was used by the Company or,
        to
        the best of its actual knowledge, any other Person acting on behalf of the
        Company, in connection with the offer and sale of the Securities. Neither
        the
        Company, nor, to its knowledge, any Person acting on behalf of the Company,
        has,
        either directly or indirectly, sold or offered for sale to any Person (other
        than Purchaser) any of the Securities or, within the six months prior to
        the
        date hereof, any other similar security of the Company except as contemplated
        by
        this Agreement, and the Company represents that neither itself nor any Person
        authorized to act on its behalf (except that the Company makes no representation
        as to Purchaser and their Affiliates) will sell or offer for sale any such
        security to, or solicit any offers to buy any such security from, or otherwise
        approach or negotiate in respect thereof with, any Person or Persons so as
        thereby to cause the issuance or sale of any of the Securities to be in
        violation of any of the provisions of Section 5 of the Securities Act.


       

      4.16 
        Permits.
        (a)
        Each of the Company and its Subsidiaries has all material Permits; (b) all
        such
        Permits are in full force and effect, and each of the Company and its
        Subsidiaries has fulfilled and performed all material obligations with respect
        to such Permits; (c) no event has occurred which allows, or after notice
        of
        lapse of time would allow, revocation or termination by the issuer thereof
        or
        which results in any other material impairment of the rights of the holder
        of
        any such Permit; and (d) the Company has no reason to believe that any
        governmental body or agency is considering limiting, suspending or revoking
        any
        such Permit.

       

      4.17 
        Leases.
        Neither
        the Company nor any Subsidiary is a party to any capital lease obligation
        with a
        value greater than $250,000 or to any operating lease with an aggregate annual
        rental greater than $250,000 during the life of such lease.

       

      4.18 
        Absence of Any Undisclosed Liabilities or Capital Calls.
        There
        are no liabilities of the Company or any Subsidiary of any kind whatsoever,
        whether accrued, contingent, absolute, determined, determinable or otherwise,
        and there is no existing condition, situation or set of circumstances which
        would reasonably be expected to result in such a liability, other than (i)
        those
        liabilities provided for in the financial statements delivered pursuant to
        Section 4.7 and (ii) other undisclosed liabilities which, individually or
        in the
        aggregate, would not have a Material Adverse Effect.

       

      4.19 
        Public Utility Holding Company.
        Neither
        the Company nor any Subsidiary is, or will be upon issuance and sale of the
        Securities and the use of the proceeds described herein, subject to regulation
        under the Public Utility Holding Company Act of 1935, as amended, the Federal
        Power Act, the Interstate Commerce Act or to any federal or state statute
        or
        regulation limiting its ability to issue and perform its obligations under
        any
        Transaction Agreement.

      


      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      4.20 
        Intellectual Property Rights.
        Each of
        the Company and its Subsidiaries owns, or is licensed under, and has the
        rights
        to use, all material patents, trademarks, trade names, copyrights, technology,
        know-how and processes (collectively, “Intellectual Property”) used in, or
        necessary for the conduct of its business; no claims have been asserted by
        any
        Person to the use of any such Intellectual Property or challenging or
        questioning the validity or effectiveness of any license or agreement related
        thereto. To the best of Company’s and its Subsidiaries’ knowledge, there is no
        valid basis for any such claim and the use of such Intellectual Property
        by the
        Company and its Subsidiaries will not infringe upon the rights of any
        Person.

       

      4.21 Proprietary
        Information of Third Parties. To
        the
        best of the Company’s knowledge, no Person has claimed or has reason to claim
        that any employee of the Company or any Subsidiary has (a) violated or may
        be
        violating any of the terms or conditions of his employment, non-competition
        or
        non-disclosure agreement with such Person, (b) disclosed or may be disclosing
        or
        utilized or may be utilizing any trade secret or proprietary information
        or
        documentation of such Person or (c) interfered or may be interfering in the
        employment relationship between such Person and any of its present or former
        employees. No Person has requested information from the Company which suggests
        that such a claim might be contemplated. To the best of the Company’s knowledge,
        no employee of the Company or any Subsidiary has employed or proposes to
        employ
        any trade secret or any information of documentation proprietary to any former
        employer, and to the best of the Company’s knowledge, no employee of the Company
        or any Subsidiary, has violated any confidential relationship which such
        Person
        may have had with any Person, in connection with the development or sale
        of any
        service or proposed service of the Company or any Subsidiary, and the Company
        or
        any Subsidiary has no reason to believe there will be any such employment
        or
        violation. To the best of the Company’s knowledge, none of the execution or
        delivery of this Agreement, or the carrying on of the business of the Company
        or
        any Subsidiary as officer, employee or agent by any officer, director or
        key
        employee of the Company or any Subsidiary, or the conduct or proposed conduct
        of
        the business of the Company or any Subsidiary, will conflict with or result
        in a
        breach of the terms, conditions or provisions of or constitute a default
        under
        any contract, covenant or instrument under which such Person is
        obligated.

      


      4.22 Insurance.
        The
        Company and its Subsidiaries maintain, with financially sound and reputable
        insurance companies, insurance in at least such amounts and against such
        risks
        such that any uninsured loss would not have a Material Adverse Effect. All
        insurance coverages of the Company and its Subsidiaries are in full force
        and
        effect and there are no past due premiums in respect of any such
        insurance.

       

      4.23 
        Title to Properties.
        The
        Company and its Subsidiaries have good and marketable title to all their
        respective properties free and clear of all Liens.

       

      4.24 
        Internal Accounting Controls.
        The
        Company and each of its Subsidiaries maintain a system of internal accounting
        controls sufficient, in the judgment of the Company’s Board of Directors, to
        provide reasonable assurance that (i) transactions are executed in accordance
        with managements’ general or specific authorizations, (ii) transactions are
        recorded as necessary to permit preparation of financial statements in
        conformity with GAAP and to maintain asset accountability, (iii) access to
        assets is permitted only in accordance with management’s general or specific
        authorization, and (iv) the recorded accountability for assets is compared
        with
        the existing assets at reasonable intervals and appropriate action is taken
        with
        respect to any differences.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      4.25 
        Brokers.
        The
        Company has no contract, arrangement or understanding with any broker, finder
        or
        similar agent with respect to the transactions contemplated by this
        Agreement.

      


      4.26 
        Foreign Practices.
        Neither
        the Company nor any of its Subsidiaries nor, to the Company’s knowledge, any
        employee or agent of the Company or any Subsidiary has made any payments
        of
        funds of the Company or Subsidiary, or received or retained any funds, in
        each
        case in violation of any law, rule or regulation.

      


      5. REPRESENTATIONS
        AND WARRANTIES OF PURCHASER

       

      5.1 
        Purchaser.
        Purchaser hereby represents and warrants to the Company that:

      (a)  Purchaser
        is an “accredited investor” within the meaning of Rule 501(a) under the
        Securities Act and the Securities to be acquired by it pursuant to this
        Agreement are being acquired for its own account and, as of the date hereof,
        not
        with a view toward, or for sale in connection with, any distribution thereof
        except in compliance with applicable United States federal and state securities
        law; provided that the disposition of Purchaser’s property shall at all times be
        and remain within its control;

      


      (b)  the
        execution, delivery and performance of this Agreement and the purchase of
        the
        Securities pursuant thereto are within Purchaser’s corporate or partnership
        powers, as applicable, and have been duly and validly authorized by all
        requisite corporate or partnership action;

      


      (c)  this
        Agreement has been duly executed and delivered by Purchaser;

      


      (d)  the
        execution and delivery by Purchaser of the Transaction Agreements to which
        it is
        a party does not, and the consummation of the transactions contemplated hereby
        and thereby will not, contravene or constitute a default under or violation
        of
        (i) any provision of applicable law or regulation, or (ii) any agreement,
        judgment, injunction, order, decree or other instrument binding upon
        Purchaser;

      


      (e)  Purchaser
        understands that the Securities have not been registered under the Securities
        Act and may not be transferred or sold except as specified in this Agreement
        or
        the remaining Transaction Agreements;

      


      (f)  this
        Agreement constitutes a valid and binding agreement of Purchaser enforceable
        in
        accordance with its terms, subject to (i) applicable bankruptcy, insolvency
        or
        similar laws affecting the enforceability of creditors rights generally and
        (ii)
        equitable principles of general applicability;

      


      (g)  Purchaser
        has such knowledge and experience in financial and business matters so as
        to be
        capable of evaluating the merits and risks of its investment in the Securities
        and Purchaser is capable of bearing the economic risks of such
        investment;

      


      (h)  Purchaser
        is knowledgeable, sophisticated and experienced in business and financial
        matters; Purchaser has previously invested in securities similar to the
        Securities and fully understands the limitations on transfer described herein;
        Purchaser has been afforded access to information about the Company and the
        financial condition, results of operations, property, management and prospects
        of the Company sufficient to enable it to evaluate its investment in the
        Securities; Purchaser has been afforded the opportunity to ask such questions
        as
        it has deemed necessary of, and to receive answers from, representatives
        of the
        Company concerning the terms and conditions of the offering of the Securities
        and the merits and the risks of investing in the Securities; and Purchaser
        has
        been afforded the opportunity to obtain such additional information which
        the
        Company possesses or can acquire that is necessary to verify the accuracy
        and
        completeness of the information given to Purchaser concerning the Company.
        The
        foregoing does not in any way relieve the Company of its representations
        and
        other undertakings hereunder, and shall not limit Purchaser’s ability to rely
        thereon;

      


      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      (i)  no
        part
        of the source of funds used by Purchaser to acquire the Securities constitutes
        assets allocated to any separate account maintained by Purchaser in which
        any
        employee benefit plan (or its related trust) has any interest; and

      


      (j)  Purchaser
        is a corporation organized under the laws of Bermuda.

      


      6. CONDITIONS
        PRECEDENT TO EXCHANGE OF SECURITIES

      


      6.1 Conditions
        Precedent to Purchaser’s Obligations to Exchange.
        The
        obligation of Purchaser hereunder to exchange the Obligations for the Preferred
        Shares at the Closing is subject to the satisfaction, on or before the Closing
        Date, of each of the following conditions, provided that these conditions
        are
        for Purchaser’s sole benefit and may be waived by Purchaser at any time in its
        sole discretion:

      


      (a)  The
        Company shall have duly executed this Agreement, the Registration Rights
        Agreement and delivered the same to Purchaser;

      


      (b)  The
        Company and Barron shall have duly executed the Settlement
        Agreement;

      


      (c)  The
        Company shall have delivered to Purchaser (i) a duly executed certificate
        representing the Preferred Shares and (ii) a duly executed Warrant exercisable
        for the applicable number of shares to which Purchaser is entitled pursuant
        to
        this Agreement;

      


      (d)  The
        representations and warranties of the Company contained in each Transaction
        Agreement shall be true and correct in all material respects as of the date
        when
        made and as of the Closing Date and the Company shall have performed, satisfied
        and complied with all covenants, agreements and conditions required by such
        Transaction Agreements to be performed, satisfied or complied with by it
        at or
        prior to the Closing Date. Purchaser shall have received an Officer’s
        Certificate executed by the chief executive officer of the Company, dated
        as of
        the Closing Date, to the foregoing effect and as to such other matters as
        may be
        reasonably requested by Purchaser, including but not limited to certificates
        with respect to the Company Corporate Documents, resolutions relating to
        the
        transactions contemplated hereby and the incumbencies of certain officers
        and
        Directors of the Company. The form of such certificate is attached hereto
        as
Exhibit
        C;

      


      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      (e)  The
        Company shall have received all governmental, Board of Directors, shareholders
        and third party consents and approvals necessary or desirable in connection
        with
        the issuance and sale of the Securities and the consummation of the transactions
        contemplated by the Transaction Agreements;

      


      (f)  All
        applicable waiting periods in respect to the issuance and sale of the Securities
        shall have expired without any action having been taken by any competent
        authority that could restrain, prevent or impose any materially adverse
        conditions thereon or that could seek or threaten any of the
        foregoing;

      


      (g)  No
        law or
        regulation shall have been imposed or enacted that, in the judgment of
        Purchaser, could adversely affect the transactions set forth herein or in
        the
        other Transaction Agreements, and no law or regulation shall have been proposed
        that in the reasonable judgment of Purchaser could reasonably have any such
        effect;

      


      (h)  The
        Company Corporate Documents and the Subsidiary Corporate Documents, if any,
        shall be in full force and effect and no term or condition thereof shall
        have
        been amended, waived or otherwise modified without the prior written consent
        of
        Purchaser;

      


      (i)  There
        shall have occurred no material adverse change in the business, condition
        (financial or otherwise), operations, performance, properties or prospects
        of
        the Company or any Subsidiary since January 1, 2005;

      


      (j)  There
        shall exist no action, suit, investigation, litigation or proceeding pending
        or
        threatened in any court or before any arbitrator or governmental instrumentality
        that challenges the validity of or purports to affect this Agreement or any
        other Transaction Agreement, or other transaction contemplated hereby or
        thereby
        or that could reasonably be expected to have a Material Adverse Effect, or
        any
        material adverse effect on the enforceability of the Transaction Agreements
        or
        the Securities or the rights of the holders of the Securities or Purchaser
        hereunder;

      


      (k)  Purchaser
        shall have confirmed the receipt of the Preferred Shares to be issued, duly
        executed by the Company in the denominations and registered in the name of
        Purchaser;

      


      (l)  Immediately
        before and after the Closing Date, no Default or Event of Default shall have
        occurred and be continuing; and

      


      (m)  Purchaser
        shall have received all other opinions, resolutions, certificates, instruments,
        agreements or other documents as they shall reasonably request.

      


      6.2 Conditions
        to the Company’s Obligations.
        The
        obligations of the Company to issue the Securities to Purchaser pursuant
        to this
        Agreement are subject to the satisfaction, at or prior to the Closing Date,
        of
        the following conditions:

       

      (a)  The
        representations and warranties of Purchaser contained herein shall be true
        and
        correct in all material respects on the Closing Date and Purchaser shall
        have
        performed and complied in all material respects with all agreements required
        by
        this Agreement to be performed or complied with by Purchaser at or prior
        to the
        Closing Date;

      


      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      (b)  The
        issue
        of the Securities by the Company shall not be prohibited by any applicable
        law,
        court order or governmental regulation;

      


      (c)  Receipt
        by the Company of duly executed counterparts of this Agreement and the
        Registration Rights Agreement signed by Purchaser;

      


      (d)  The
        Company shall have received the cancelled Obligations.

      


      7. AFFIRMATIVE
        COVENANTS

       

      The
        Company hereby agrees that, from and after the date hereof for so long as
        any
        Preferred Stock remain outstanding and for the benefit of
        Purchaser:

       

      
        7.1
          Information.
          The
          Company will deliver to each holder of the Preferred
          Shares:

         

      

      (a)  within
        two (2) days after any officer of the Company obtains knowledge of a Default
        or
        Event of Default, or that any Person has given any notice or taken any action
        with respect to a claimed Default hereunder, a certificate of the chief
        financial officer of the Company setting forth the details thereof and the
        action which the Company is taking or proposed to take with respect
        thereto;

      


      (b)  promptly
        upon the mailing thereof to the shareholders of the Company generally, copies
        of
        all financial statements, reports and proxy statements so mailed and any
        other
        document generally distributed to shareholders;

      


      (c)  at
        least
        two (2) Business Days prior to the consummation of any Financing or other
        event
        requiring a repayment of the Preferred Shares under Section 3.4, notice thereof
        together with a summary of all material terms thereof and copies of all
        documents and instruments associated therewith;

      


      (d)  notice
        promptly upon the occurrence of any event by which the Reserved Amount becomes
        less than the sum of (i) 1.5 times the maximum number of Conversion Shares
        issuable pursuant to the Transaction Agreements; and

      


      (e)  promptly
        following the commencement thereof, notice and a description in reasonable
        detail of any litigation or proceeding to which the Company or any Subsidiary
        is
        a party in which the amount involved is $250,000 or more and not covered
        by
        insurance or in which injunctive or similar relief is sought.

      


      7.2  Payment
        of Obligations.
        The
        Company will, and will cause each Subsidiary to, pay and discharge, at or
        before
        maturity, all their respective material obligations, including, without
        limitation, tax liabilities, except where the same may be contested in good
        faith by appropriate proceedings and will maintain, in accordance with GAAP,
        appropriate reserves for the accrual of any of the same.

      


      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      7.3  Maintenance
        of Property; Insurance.
        The
        Company will, and will cause each Subsidiary to, keep all property useful
        and
        necessary in its business in good working order and condition, ordinary wear
        and
        tear excepted. In addition, the Company and each Subsidiary will maintain
        insurance in at least such amounts and against such risks as it has insured
        against as of the Closing Date.

       

      7.4  Maintenance
        of Existence.
        The
        Company will, and will cause each Subsidiary to, continue to engage in business
        of the same general type as now conducted by the Company and such Subsidiaries,
        and will preserve, renew and keep in full force and effect its respective
        corporate existence and their respective material rights, privileges and
        franchises necessary or desirable in the normal conduct of
        business.

       

      7.5  Compliance
        with Laws.
        The
        Company will, and will cause each Subsidiary to, comply, in all material
        respects, with all federal, state, municipal, local or foreign applicable
        laws,
        ordinances, rules, regulations, municipal by-laws, codes and requirements
        of
        governmental authorities (including, without limitation, Environmental Laws
        and
        ERISA and the rules and regulations thereunder) except (i) where compliance
        therewith is contested in good faith by appropriate proceedings or (ii) where
        non-compliance therewith could not reasonably be expected, in the aggregate,
        to
        have a material adverse effect on the business, condition (financial or
        otherwise), operations, performance, properties or prospects of the Company
        or
        such Subsidiary.

       

      7.6  Inspection
        of Property, Books and Records.
        The
        Company will, and will cause each Subsidiary to, keep proper books of record
        and
        account in which full, true and correct entries shall be made of all dealings
        and transactions in relation to their respective businesses and activities;
        and
        will permit, during normal business hours, Purchaser’ Representative or an
        affiliate thereof, as representatives of Purchaser, to visit and inspect
        any of
        their respective properties, upon reasonable prior notice, to examine and
        make
        abstracts from any of their respective books and records and to discuss their
        respective affairs, finances and accounts with their respective executive
        officers and independent public accountants (and by this provision the Company
        authorizes its independent public accountants to disclose and discuss with
        Purchaser the affairs, finances and accounts of the Company and its Subsidiaries
        in the presence of a representative of the Company; provided, however, that
        such
        discussions will not result in any unreasonable expense to the Company, without
        Company consent), all at such reasonable times.

       

      7.7  Investment
        Company Act.
        The
        Company will not be or become an open-end investment trust, unit investment
        trust or face-amount certificate company that is or is required to be registered
        under Section 8 of the Investment Company Act of 1940, as amended.

       

      7.8  Reserved.
        

       

      7.9 Compliance
        with Terms and Conditions of Material Contracts.
        The
        Company will, and will cause each Subsidiary to, comply, in all respects,
        with
        all terms and conditions of all material contracts to which it is
        subject.

      


      
        7.10
          Reserved Shares.

      

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      (a) The
        Company shall, as of January 31, 2006 and thereafter, at all times have
        authorized, and reserved for the purpose of issuance, a sufficient number
        of
        shares of Common Stock to provide for the full conversion of the outstanding
        Preferred Shares and issuance of the Conversion Shares (based on the conversion
        price of the Preferred Shares in effect from time to time) (the “Reserved
        Amount”). The Company shall not reduce the Reserved Amount without the prior
        written consent of Purchaser. With respect to all Securities which contain
        an
        indeterminate number of shares of Common Stock issuable in connection therewith
        (such as the Preferred Shares), the Company shall include in the Reserve
        Amount,
        the number of shares that is then actually issuable upon conversion or exercise
        of such Securities. If at any time the number of shares of Common Stock
        authorized and reserved for issuance is below the number of Conversion Shares
        issued or issuable upon conversion of the Preferred Shares, the Company will
        promptly take all corporate action necessary to authorize and reserve a
        sufficient number of shares, including, without limitation, either (x) calling
        a
        special meeting of shareholders to authorize additional shares, in the case
        of
        an insufficient number of authorized shares or (y) in lieu thereof, consummating
        the immediate repurchase of the Preferred Shares contemplated in Sections
        3.4(c)
        hereof.

      


      (b)  The
        Company will comply in all respects with the Company’s reporting, filing and
        other obligations under the bylaws or rules of the Nasdaq Small Cap Market,
        or
        the National Association of Securities Dealers, Inc. (the “NASD”), as
        applicable. The Company shall promptly provide to Purchaser copies of any
        notices it receives regarding the continued eligibility of the Common Stock
        for
        listing on the Nasdaq Small Cap Market.

      


      7.11  Transfer
        Agent Instructions.
        Upon
        receipt of a Notice of Conversion or Notice of Exercise, as applicable, the
        Company shall immediately direct the Company's transfer agent to issue
        certificates, registered in the name of Purchaser or its nominee, for the
        Conversion Shares, in such amounts as specified from time to time by Purchaser
        to the Company upon proper conversion of the Preferred Shares. Upon conversion
        of any Preferred Shares in accordance with their terms, the Company will,
        and
        will use its best lawful efforts to cause its transfer agent to, issue one
        or
        more certificates representing shares of Common Stock in such name or names
        and
        in such denominations specified by a Purchaser in a Notice of Conversion.
        As
        long as the Registration Statement contemplated by the Registration Rights
        Agreement shall remain effective, the shares of Common Stock issuable upon
        conversion of any Preferred Shares shall be issued to any transferee of such
        shares from Purchaser without any restrictive legend upon appropriate evidence
        of transfer in compliance with the Securities Act and the rules and regulations
        of the Commission; provided that for so long as the Registration Statement
        is
        effective, no opinion of counsel will be required to effect any such transfer.
        The Company further warrants and agrees that no instructions other than these
        instructions have been or will be given to its transfer agent. Nothing in
        this
        Section 7.11 shall affect in any way a Purchaser’s obligation to comply with all
        securities laws applicable to Purchaser upon resale of such shares of Common
        Stock, including any prospectus delivery requirements.

       

      7.12  Maintenance
        of Reporting Status; Supplemental Information.
        So long
        as any of the Securities are outstanding, the Company shall use its best
        lawful
        efforts to timely file all reports required to be filed with the Commission
        pursuant to the Exchange Act. The Company shall not terminate its status
        as an
        issuer required to file reports under the Exchange Act, even if the Exchange
        Act
        or rules and regulations thereunder would permit such termination. If at
        any
        time the Company is not subject to the requirements of Section 13 or 15(d)
        of
        the Exchange Act, the Company will promptly furnish at its expense, upon
        request, for the benefit of the holders from time to time of the Securities,
        and
        prospective purchasers of Securities, information satisfying the information
        requirements of Rule 144 under the Securities Act. 

      


      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      7.13  Form
        D; Blue Sky Laws.
        The
        Company agrees to file a “Form D”, if required, with respect to the Securities
        as required under Regulation D of the Securities Act and to provide a copy
        thereof to Purchaser promptly after such filing. The Company shall, on or
        before
        the Closing Date, take such action as the Company shall reasonably determine
        is
        necessary to qualify the Securities for sale to Purchaser at the Closing
        pursuant to this Agreement under applicable securities or “blue sky” laws of the
        states of the United States (or to obtain an exemption from such qualification),
        and shall provide evidence of any such action so taken to Purchaser on or
        prior
        to the Closing Date.

       

      8. NEGATIVE
        COVENANTS

       

      The
        Company hereby agrees that after the date hereof for so long as any Preferred
        Shares remain outstanding and for the benefit of Purchaser:

      


      8.1  Limitations
        on Debt or Other Liabilities.
        Neither
        the Company nor any Subsidiary will create, incur, assume or suffer to exist
        (at
        any time after the Closing Date, after giving effect to the application of
        the
        proceeds of the issuance of the Securities) (i) any Debt except (x) Debt
        incurred in a Permitted Financing, (y) Debt incurred in connection with
        equipment leases to which the Company or its Subsidiaries are a party incurred
        in the ordinary course of business; and (z) Debt incurred in connection with
        trade accounts payable, imbalances and refunds arising in the ordinary course
        of
        business and (ii) any equity securities (including Derivative Securities)
        (other
        than those securities that are issuable (x) under or pursuant to stock option
        plans, warrants or other rights programs that exist as of the date hereof,
        (z)
        in connection with the acquisition (including by merger) of a business or
        of
        assets otherwise permitted under this Agreement), unless the Company complies
        with the mandatory prepayment terms of Section 3.4(b) hereof.

       

      8.2  Transactions
        with Affiliates.
        The
        Company and each Subsidiary will not, directly or indirectly, pay any funds
        to
        or for the account of, make any investment (whether by acquisition or stock
        or
        indebtedness, by loan, advance, transfer of property, guarantee or other
        agreement to pay, purchase or service, directly or indirectly, and Debt,
        or
        otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
        tangible or intangible, to, or participate in, or effect any transaction
        in
        connection with any joint enterprise or other joint arrangement with, any
        Affiliate, except, (1) pursuant to those agreements specifically identified
        on
Schedule
        8.2
        attached
        hereto (with a copy of such agreements annexed to such Schedule
        8.2)
        and (2)
        on terms to the Company or such Subsidiary no less favorable than terms that
        could be obtained by the Company or such Subsidiary from a Person that is
        not an
        Affiliate of the Company upon negotiation at arms’ length, as determined in good
        faith by the Board of Directors of the Company; provided
        that no
        determination of the Board of Directors shall be required with respect to
        any
        such transactions entered into in the ordinary course of business.

       

      8.3  Merger
        or Consolidation.
        The
        Company will not, in a single transaction or a series of related transactions
        (i) consolidate with or merge with or into any other Person, or (ii) permit
        any
        other Person to consolidate with or merge into it, unless the Company shall
        be
        the survivor of such merger or consolidation and (x) immediately before and
        immediately after given effect to such transaction (including any indebtedness
        incurred or anticipated to be incurred in connection with the transaction),
        no
        Default or Event of Default shall have occurred and be continuing; and (y)
        the
        Company has delivered to Purchaser an Officer’s Certificate stating that such
        consolidation, merger or transfer complies with this Agreement, and that
        all
        conditions precedent in this Agreement relating to such transaction have
        been
        satisfied.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

      8.4  Limitation
        on Asset Sales.
        Neither
        the Company nor any Subsidiary will consummate an Asset Sale of material
        assets
        of the Company or any Subsidiary without the prior written consent of Purchaser,
        which consent shall not be unreasonably withheld. As used herein, “Asset Sale”
        means any sale, lease, transfer or other disposition (or series of related
        sales, leases, transfers or dispositions) or sales of capital stock of a
        Subsidiary (other than directors’ qualifying shares), property or other assets
        (each referred to for the purpose of this definition as a “disposition”),
        including any disposition by means of a merger, consolidation or similar
        transaction other than a disposition of property or assets at fair market
        value
        in the ordinary course of business.

       

      8.5  Restrictions
        on Certain Amendments.
        Neither
        the Company nor any Subsidiary will waive any provision of, amend, or suffer
        to
        be amended, any provision of such entity’s existing Debt, any material contract
        or agreement, any Company Corporate Document or Subsidiary Corporate Document
        if
        such amendment, in the Company’s reasonable judgment, would materially adversely
        affect Purchaser or the holders of the Securities without the prior written
        consent of Purchaser.

       

      8.6  Prohibition
        on Discounted Equity Offerings; Registration Rights.

       

      (a)  In
        addition to and not in lieu of the covenant specified in Section 8.1 above,
        beginning on the Closing Date and continuing until such time as all of the
        Preferred Shares have been either redeemed or converted into Conversion Shares
        in full, the Company agrees that it will not, without the written consent
        of the
        Majority Holders, issue any of its equity securities (or securities convertible
        into or exchangeable or exercisable for equity securities (the “Derivative
        Securities”)) on terms that allow a holder thereof to acquire such equity
        securities (or Derivative Securities) at a discount to the Market Price of
        the
        Common Stock at the time of issuance or, in the case of Derivative Securities
        at
        a conversion price based on any formula (other than standard anti-dilution
        provisions) based on the Market Price on a date later than the date of issuance
        so long as such conversion is not below the Market Price on the date of issuance
        (each such event, a “Discounted Equity Offering”). As used herein, “discount”
        shall include, but not be limited to, (i) any warrant (except warrants held
        by
        any party to the Settlement Agreement), right or other security granted or
        offered in connection with such issuance which, on the applicable date of
        grant,
        is offered with an exercise or conversion price, as the case may be, at less
        than the then current Market Price of the Common Stock or, if such security
        has
        an exercise or conversion price based on any formula (other than standard
        anti-dilution provisions) based on the Market Price on a date later than
        the
        date of issuance, then at a price below the Market Price on such date of
        exercise or conversion, as the case may be, or (ii) any commissions, fees
        or
        other allowances paid in connection with such issuances (other than customary
        underwriter or placement agent commissions, fees or allowances). For the
        purposes of determining the Market Price at which Common Stock is acquired
        under
        this Section, normal underwriting commissions and placement fees (including
        underwriters’ warrants) shall be excluded.

      


      (b)  Until
        such time as all of the Preferred Shares have been either redeemed or converted
        into Conversion Shares in full, the Company agrees it will not issue any
        of its
        equity securities (or Derivative Securities), unless any shares of Common
        Stock
        issued or issuable in connection therewith are “restricted securities.” As used
        herein “restricted securities” shall mean securities which may not be sold by
        virtue of contractual restrictions imposed by the Company either pursuant
        to an
        exemption from registration under the Securities Act or pursuant to a
        registration statement filed by the Company with the Commission, in each
        case
        prior to twelve (12) months following the date of issuance of such
        securities.

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

      (c)  The
        restrictions contained in this Section 8.6 shall not apply to the issuance
        by
        the Company of (or the agreement to issue) Common Stock or Derivative Securities
        in connection with (i) the acquisition (including by merger) of a business
        or of
        assets otherwise permitted under this Agreement, or (ii) stock option or
        other
        compensatory plans.

      


      8.7  Limitation
        on Stock Repurchases.
        Except
        as otherwise set forth in the Certificate of Designation and the Warrants,
        the
        Company shall not, without the written consent of the Majority Holders, redeem,
        repurchase or otherwise acquire (whether for cash or in exchange for property
        or
        other securities or otherwise) any shares of capital stock of the Company
        or any
        warrants, rights or options to purchase or acquire any such shares.

       

      9. 
        RESTRICTIVE LEGENDS

       

      9.1  Restrictions
        on Transfer.
        From
        and after their respective dates of issuance, none of the Securities shall
        be
        transferable except upon the conditions specified in this Section 9, which
        conditions are intended to ensure compliance with the provisions of the
        Securities Act in respect of the Transfer of any of such Securities or any
        interest therein. Each Purchaser will use its best efforts to cause any proposed
        transferee of any Securities held by it to agree to take and hold such
        Securities subject to the provisions and upon the conditions specified in
        this
        Section 9.

       

      9.2  Legends.
        The
        Conversion Shares, upon resale by the Purchaser pursuant to the Registration
        Statement, shall be freely tradeable and unrestricted. 

      


      9.3  Notice
        of Proposed Transfers.
        Prior
        to any proposed Transfer of the Securities (other than a Transfer (i) registered
        or exempt from registration under the Securities Act, (ii) to an affiliate
        of a
        Purchaser which is an “accredited investor” within the meaning of Rule 501(a)
        under the Securities Act, provided that any such transferee shall agree to
        be
        bound by the terms of this Agreement and the Registration Rights Agreement,
        or
        (iii) to be made in reliance on Rule 144 under the Securities Act), the holder
        thereof shall give written notice to the Company of such holder’s intention to
        effect such Transfer, setting forth the manner and circumstances of the proposed
        Transfer, which shall be accompanied by (a) an opinion of counsel reasonably
        acceptable to the Company, confirming that such transfer does not give rise
        to a
        violation of the Securities Act, (B) representation letters in form and
        substance reasonably satisfactory to the Company to ensure compliance with
        the
        provisions of the Securities Act and (C) letters in form and substance
        reasonably satisfactory to the Company from each such transferee stating
        such
        transferee’s agreement to be bound by the terms of this Agreement and the
        Registration Rights Agreement. Such proposed Transfer may be effected only
        if
        the Company shall have received such notice of transfer, opinion of counsel,
        representation letters and other letters referred to in the immediately
        preceding sentence, whereupon the holder of such Securities shall be entitled
        to
        Transfer such Securities in accordance with the terms of the notice delivered
        by
        the holder to the Company.

      


      
        
          
          

        

        
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        10. 
          ADDITIONAL AGREEMENTS AMONG THE PARTIES

         

      

      10.1  Liquidated
        Damages.

       

      (a) The
        Company shall cause its transfer agent to, issue and deliver shares of Common
        Stock consistent with Section 7.11 hereof within three (3) Trading Days of
        delivery of a Notice of Conversion, as applicable (the “Deadline”) to Purchaser
        (or any party receiving Securities by transfer from Purchaser) at the address
        of
        Purchaser set forth in the Notice of Conversion. The Company understands
        that a
        delay in the issuance of such certificates after the Deadline could result
        in
        economic loss to Purchaser.

      


      (b) Without
        in any way limiting Purchaser’s right to pursue other remedies, including actual
        damages and/or equitable relief, the Company agrees that if delivery of the
        Conversion Shares is more than one (1) Business Day after the Deadline (other
        than a failure due to the circumstances described in Section 4.3 of the
        Preferred Shares, which failure shall be governed by such Section) the Company
        shall pay to Purchaser, as liquidated damages and not as a penalty, $500
        for
        each $100,000 of Preferred Shares then outstanding per day in cash, for each
        of
        the first ten (10) days beyond the Deadline, and $1,000 for each $100,000
        of
        Preferred Shares then outstanding per day in cash for each day thereafter
        that
        the Company fails to deliver such Common Stock. Such cash amount shall be
        paid
        to Purchaser by the last day of the calendar week following the week in which
        it
        has accrued or, at the option of Purchaser (by written notice to the Company
        by
        the first day of the week following the week in which it has accrued), shall
        be
        added to the principal amount of the Preferred Share (if then outstanding)
        payable to Purchaser, in which event interest shall accrue thereon in accordance
        with the terms of the Preferred Shares and such additional principal amount
        shall be convertible into Common Stock in accordance with the terms of the
        Preferred Shares.

      


      10.2  Conversion
        Notice.
        The
        Company agrees that, in addition to any other remedies which may be available
        to
        Purchaser, including, but not limited to, the remedies available under Section
        10.1, in the event the Company fails for any reason (other than as a result
        of
        actions taken by a Purchaser in breach of this Agreement) to effect delivery
        to
        a Purchaser of certificates with or without restrictive legends as contemplated
        by Section 9 representing the shares of Common Stock on or prior to the Deadline
        after conversion of any Preferred Shares, Purchaser will be entitled, if
        prior
        to the delivery of such certificates, to revoke the Notice of Conversion
        by
        delivering a notice to such effect to the Company whereupon the Company and
        Purchaser shall each be restored to their respective positions immediately
        prior
        to delivery of such Notice of Conversion.

       

      10.3  Intentionally
        Omitted.
        

       

      10.4 Registration
        Rights.
        The
        Company shall grant Purchaser registration rights covering the Conversion
        Shares
        (the “Registrable Securities”) on the terms set forth in the Registration Rights
        Agreement and herein.

      


      (a) The
        Company shall prepare and file in accordance with the Settlement Agreement
        (the
“Filing Date”), a registration statement (the “Registration Statement”) covering
        the resale of the Registrable Securities with the Commission. The Company
        shall
        use its best efforts to cause the Registration Statement to be declared
        effective by the Commission on the earlier of (i) the time set forth in the
        Settlement Agreement, (ii) ten days following the receipt of a “No Review”
        Letter from the Commission or (iii) the first Business Day following the
        day the
        Commission determines the Registration Statement eligible to be declared
        effective (the “Required Effectiveness Date”). The Company shall pay all
        expenses of registration (other than underwriting fees and discounts, if
        any, in
        respect of Registrable Securities offered and sold under the registration
        statement by Purchaser). The Company agrees to file an initial written response
        to the Commission within ten calendar days of receipt of any comments by
        the
        Commission relating to the Registration Statement. If the Company fails to
        file
        the Registration Statement by the Filing Date, the Company will pay to the
        Fund
        liquidated damages in the amount of 1% of the principal amount of the then
        outstanding Preferred Shares for each 30-day period, prorated, until the
        Registration Statement has been filed.

      


      
        
          
          

        

        
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      (b) If
        the
        Registration Statement is not declared effective by the Commission by the
        Required Effectiveness Date, the Purchaser may require that the Company redeem
        the Preferred Shares and the Warrant as set forth in Section 3 hereof with
        respect to the Preferred Shares and Section 13 of the Warrant. Additionally,
        the
        Company will grant to Purchaser certain piggyback registration rights in
        the
        event the Company proposes to effect a registered offering of Common Stock
        or
        warrants or both prior to the filing of the Registration Statement referenced
        above.

      


      (c) If,
        following the declaration of effectiveness of the Registration Statement,
        such
        registration statement (or any prospectus or supplemental prospectus contained
        therein) shall cease to be effective for any reason (including but not limited
        to the occurrence of any event that results in any prospectus or supplemental
        prospectus containing an untrue statement of a material fact or omitting
        a
        material fact required to be stated therein or necessary in order to make
        the
        statements therein, in light of the circumstances under which they were made,
        not misleading), the Company fails to file required amendments to the
        Registration Statement in order to allow the Purchaser to resell the Conversion
        Shares pursuant to the Registration Statement as unrestricted, unlegended,
        freely tradeable shares of Common Stock, or if for any reason there are
        insufficient shares of such shares of Common Stock registered under the then
        current Registration Statement to effect full conversion of the Preferred
        Shares
        or exercise of the Warrants (a "Registration Default"), the Company shall
        immediately take all necessary steps to cause the Registration Statement
        to be
        amended or supplemented so as to cure such Registration Default. Failure
        to cure
        a Registration Default within ten (10) Business Days shall result in the
        Company
        paying to Purchaser liquidated damages at the rate of one percent (1%) of
        the
        Purchase Price of Preferred Shares for each 30 day period (prorated), the
        Registration Default remains uncured.

       

      10.5  Restriction
        on Issuance of Securities.
        Without
        the prior written consent of the Purchaser, the Company will not sell, or
        offer
        to sell, any securities (including credit facilities which are convertible
        into
        securities which may be issued at a discount to the then current Market Price)
        other than borrowings under conventional credit facilities existing as of
        the
        date hereof, stock issued or credit facilities to be established in connection
        with acquisitions, employee and director stock options of the Company, existing
        rights and warrants of the Company and securities issued under the Preferred
        Shares or Warrants. In addition, the Company shall not issue any securities
        in
        connection with a strategic alliance entered into by the Company unless such
        securities are the subject of a one year statutory or contractual hold period
        or, if not subject to such a hold period, unless the Purchaser has fully
        converted all outstanding Preferred Shares and exercised all Warrants.
        Notwithstanding the foregoing, the Company may enter into the following types
        of
        transactions (collectively referred to as "Permitted Financings"): (1)
        "permanent financing" transactions, which would include any form of debt
        or
        equity financing (other than an underwritten offering), which is followed
        by a
        reduction of the said financing commitment to zero and payment of all related
        fees and expenses; (2) "project financing" which provide for the issuance
        of
        recourse debt instruments in connection with the operation of the Company's
        business as presently conducted or as proposed to be conducted; (3) an
        underwritten offering of Common Stock, provided that such offering provides
        for
        the registration of the Common Stock to be received by Purchaser as a result
        of
        the conversion of the Preferred Shares held by the Purchaser; and (4) other
        financing transactions specifically consented to in writing by the
        Purchaser.

      


      
        
          
          

        

        
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      11. 
        ADJUSTMENT OF FIXED PRICE

      


      11.1
        Reorganization.
        The
        Conversion Price and the exercise price of the Warrants (collectively, the
        “Fixed Prices”) shall be adjusted, as applicable, as hereafter
        provided.

      


      11.2
        Share
        Reorganization.
        If and
        whenever the Company shall:

      


      (a) subdivide
        the outstanding shares of Common Stock into a greater number of
        shares;

      


      (b) consolidate
        the outstanding shares of Common Stock into a smaller number of
        shares;

      


      (c) issue
        Common Stock or securities convertible into or exchangeable for shares of
        Common
        Stock as a stock dividend to all or substantially all the holders of Common
        Stock; or

      


      (d) make
        a
        distribution on the outstanding Common Stock to all or substantially all
        the
        holders of Common Stock payable in Common Stock or securities convertible
        into
        or exchangeable for Common Stock;

      


      any
        of
        such events being herein called a “Share Reorganization,” then in each such case
        the applicable Fixed Price shall be adjusted, effective immediately after
        the
        record date at which the holders of Common Stock are determined for the purposes
        of the Share Reorganization or, if no record date is fixed, the effective
        date
        of the Share Reorganization, by multiplying the applicable Fixed Price in
        effect
        on such record or effective date, as the case may be, by a fraction of
        which:

      


      (i) the
        numerator shall be the number of shares of Common Stock outstanding on such
        record or effective date (without giving effect to the Share Reorganization);
        and

      


      (ii) the
        denominator shall be the number of shares of Common Stock outstanding after
        giving effect to such Share Reorganization, including, in the case of a
        distribution of securities convertible into or exchangeable for shares of
        Common
        Stock, the number of shares of Common Stock that would have been outstanding
        if
        such securities had been converted into or exchanged for Common Stock on
        such
        record or effective date.

      


      11.3  Rights
        Offering
        . If and
        whenever the Company shall issue to all or substantially all the holders
        of
        Common Stock, rights, options or warrants under which such holders are entitled,
        during a period expiring not more than 45 days after the record date of such
        issue, to subscribe for or purchase Common Stock (or Derivative Securities),
        at
        a price per share (or, in the case of securities convertible into or
        exchangeable for Common Stock, at an exchange or conversion price per share
        at
        the date of issue of such securities) of less than 95% of the Market Price
        of
        the Common Stock on such record date (any such event being herein called
        a
“Rights Offering”), then in each such case the applicable Fixed Price shall be
        adjusted, effective immediately after the record date at which holders of
        Common
        Stock are determined for the purposes of the Rights Offering, by multiplying
        the
        applicable Fixed Price in effect on such record date by a fraction of
        which:

      


      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

      (1)  the
        numerator shall be the sum of:

      


      (a) the
        number of shares of Common Stock outstanding on such record date;
        and

      


      (b) a
        number
        obtained by dividing:

      


      (i)  either,

      


      (x) the
        product of the total number of shares of Common Stock so offered for
        subscription or purchase and the price at which such shares are so offered,
        or

      


      (y) the
        product of the maximum number of shares of Common Stock into or for which
        the
        convertible or exchangeable securities so offered for subscription or purchase
        may be converted or exchanged and the conversion or exchange price of such
        securities, or, as the case may be, by

      


      (ii)  the
        Market Price of the Common Stock on such record date; and

      


      (2)  the
        denominator shall be the sum of:

      


      (a)  the
        number of shares of Common Stock outstanding on such record date;
        and

      


      (b) the
        number of shares of Common Stock so offered for subscription or purchase
        (or, in
        the case of Derivative Securities, the maximum number of shares of Common
        Stock
        for or into which the securities so offered for subscription or purchase
        may be
        converted or exchanged).

      


      To
        the
        extent that such rights, options or warrants are not exercised prior to the
        expiry time thereof, the applicable Fixed Price shall be readjusted effective
        immediately after such expiry time to the applicable Fixed Price which would
        then have been in effect upon the number of shares of Common Stock (or
        Derivative Securities) actually delivered upon the exercise of such rights,
        options or warrants.

      


      11.4
        Special
        Distribution
        . If and
        whenever the Company shall issue or distribute to all or substantially all
        the
        holders of Common Stock:

      


      (a) shares
        of
        the Company of any class, other than Common Stock;

      


      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      (b) rights,
        options or warrants; or

      


      (c) any
        other
        assets (excluding cash dividends and equivalent dividends in shares paid
        in lieu
        of cash dividends in the ordinary course);

      


      and
        if
        such issuance or distribution does not constitute a Share Reorganization
        or a
        Rights Offering (any such event being herein called a “Special Distribution”),
        then in each such case the applicable Fixed Price shall be adjusted, effective
        immediately after the record date at which the holders of Common Stock are
        determined for purposes of the Special Distribution, by multiplying the
        applicable Fixed Price in effect on such record date by a fraction of
        which:

      


      the
        numerator shall be the difference between:

      


      (i) 
        the
        product of the number of shares of Common Stock outstanding on such record
        date
        and the Market Price of the Common Stock on such date; and

      


      (ii) 
        the fair
        market value, as determined by the Directors (whose determination shall be
        conclusive), to the holders of Common Stock of the shares, rights, options,
        warrants, evidences of indebtedness or other assets issued or distributed
        in the
        Special Distribution (net of any consideration paid therefor by the holders
        of
        Common Stock), and

      


      (iii) 
        the
        denominator shall be the product of the number of shares of Common Stock
        outstanding on such record date and the Market Price of the Common Stock
        on such
        date.

      


      


      11.5
        Capital
        Reorganization
        . If and
        whenever there shall occur:

      


      (a) a
        reclassification or redesignation of the shares of Common Stock or any change
        of
        the shares of Common Stock into other shares, other than in a Share
        Reorganization;

      


      (b) a
        consolidation, merger or amalgamation of the Company with, or into another
        body
        corporate; or

      


      (c) the
        transfer of all or substantially all of the assets of the Company to another
        body corporate;

      


      (any
        such
        event being herein called a “Capital Reorganization”), then in each such case
        the holder who exercises the right to convert the Preferred Shares after
        the
        effective date of such Capital Reorganization shall be entitled to receive
        and
        shall accept, upon the exercise of such right, in lieu of the number of shares
        of Common Stock to which such holder was theretofore entitled upon the exercise
        of the conversion privilege, the aggregate number of shares or other securities
        or property of the Company or of the body corporate resulting from such Capital
        Reorganization that such holder would have been entitled to receive as a
        result
        of such Capital Reorganization if, on the effective date thereof, such holders
        had been the holder of the number of shares of Common Stock to which such
        holder
        was theretofore entitled upon conversion; provided, however, that no such
        Capital Reorganization shall be consummated in effect unless all necessary
        steps
        shall have been taken so that such holders shall thereafter be entitled to
        receive such number of shares or other securities of the Company or of the
        body
        corporate resulting from such Capital Reorganization, subject to adjustment
        thereafter in accordance with provisions the same, as nearly as may be possible,
        as those contained above.

      


      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

      11.6
        Adjustment
        Rules
        . The
        following rules and procedures shall be applicable to adjustments made in
        this
        Section 11:

      


      (a) no
        adjustment in the applicable Fixed Price shall be required unless such
        adjustment would result in a change of at least 1% in the applicable Fixed
        Price
        then in effect, provided, however, that any adjustments which, but for the
        provisions of this clause would otherwise have been required to be made,
        shall
        be carried forward and taken into account in any subsequent
        adjustment;

      


      (b) if
        any
        event occurs of the type contemplated by the adjustment provisions of this
        Section 11 but not expressly provided for by such provisions, the Company
        will
        give notice of such event as provided herein, and the Directors will make
        an
        appropriate adjustment in the Fixed Price so that the rights of the holders
        of
        the applicable Security shall not be diminished by such event; and

      


      (c) if
        a
        dispute shall at any time arise with respect to any adjustment of the applicable
        Fixed Price, such dispute shall be conclusively determined by the auditors
        of
        the Company or, if they are unable or unwilling to act, by a firm of independent
        chartered accountants selected by the Directors and any such determination
        shall
        be binding upon the Company and Purchaser.

      


      11.7
        Certificate
        as to Adjustment
        . The
        Company shall from time to time promptly after the occurrence of any event
        which
        requires an adjustment in the applicable Fixed Price deliver to Purchaser
        a
        certificate specifying the nature of the event requiring the adjustment,
        the
        amount of the adjustment necessitated thereby, the applicable Fixed Price
        after
        giving effect to such adjustment and setting forth, in reasonable detail,
        the
        method of calculation and the facts upon which such calculation is
        based.

      


      11.8
        Notice
        to Holders
        . If the
        Company shall fix a record date for:

      


      (a) any
        Share
        Reorganization (other than the subdivision of outstanding Common Stock into
        a
        greater number of shares or the consolidation of outstanding Common Stock
        into a
        smaller number of shares),

      


      (b) any
        Rights Offering,

      


      (c) any
        Special Distribution,

      


      (d) any
        Capital Reorganization (other than a reclassification or redesignation of
        the
        Common Stock into other shares),

      


      (e) Sale
        Event; or

      


      (f) any
        cash
        dividend,

      


      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

      the
        Company shall, not less than 10 days prior to such record date or, if no
        record
        date is fixed, prior to the effective date of such event, give to Purchaser
        notice of the particulars of the proposed event or the extent that such
        particulars have been determined at the time of giving the notice.

      


      12.
        OTHER AGREEMENTS

      


      12.1 Registration
        Rights.
        The
        Preferred Shares and any Common Stock into which they may be converted or
        exercised, as applicable, shall have the registration rights set forth in
        the
        Registration Rights Agreement, attached as Exhibit
        B
        hereto.

      


      12.2 Reserved.
        

       

      13. EVENTS
        OF DEFAULT 

      


      13.1 Events
        of Default.
        If one
        or more of the following events (each an “Event
        of Default”)
        shall
        have occurred and be continuing:

      


      (a) failure
        by the Company to pay (i) within five (5) Business Days following the delivery
        of notice to the Company of any fees or any other amount payable (not otherwise
        referred to in (a) above or this clause (b)) by the Company under any
        Transaction Agreement;

      


      (b) failure
        by the Company to timely comply with the requirements of Section 7.11 or
        10.1
        hereof, which failure is not cured within five (5) Business Days of such
        failure;

      


      (c) failure
        on the part of the Company to observe or perform any covenant contained in
        Section 8 of this Agreement; 

      


      (d) failure
        on the part of the Company to observe or perform any covenant or agreement
        contained in any Transaction Agreement (other than those covered by clauses
        (a)
        or (b), above) for 30 days from the date of such occurrence;

      


      (e) the
        trading in the Common Stock shall have been suspended by the Commission,
        OTC
        Bulletin Board or any National Market (except for any suspension of trading
        of
        limited duration solely to permit dissemination of material information
        regarding the Company and except if, at the time there is any suspension
        on any
        National Market, the Common Stock is then listed and approved for trading
        on
        another National Market within ten (10) Trading Days thereof);

      


      (f) the
        Company shall have its Common Stock delisted from the OTC Bulletin Board
        or a
        National Market for at least ten (10) consecutive Trading Days and is unable
        to
        obtain a listing on the OTC Bulletin Board or a National Market within such
        ten
        (10) Trading Days; 

      


      (g) the
        effectiveness of any registration statement required to be made and maintained
        effective pursuant to the terms of the Registration Rights Agreement shall
        not
        be maintained effective for the applicable period of time, and such failure
        results in the Company incurring the applicable liquidated damages or default
        fees for a continuous period in excess of 30 days;

      


      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

      (h) the
        Company or any Subsidiary has commenced a voluntary case or other proceeding
        seeking liquidation, winding-up, reorganization or other relief with respect
        to
        itself or its debts under any bankruptcy, insolvency, moratorium or other
        similar law now or hereafter in effect or seeking the appointment of a trustee,
        receiver, liquidator, custodian or other similar official of it or any
        substantial part of its property, or has consented to any such relief or
        to the
        appointment of or taking possession by any such official in an involuntary
        case
        or other proceeding commenced against it, or has made a general assignment
        for
        the benefit of creditors, or has failed generally to pay its debts as they
        become due, or has taken any corporate action to authorize any of the foregoing;
        

      


      (i) an
        involuntary case or other proceeding has been commenced against the Company
        or
        any Subsidiary seeking liquidation, winding-up, reorganization or other relief
        with respect to it or its debts under any bankruptcy, insolvency, moratorium
        or
        other similar law now or hereafter in effect or seeking the appointment of
        a
        trustee, receiver, liquidator, custodian or other similar official of it
        or any
        substantial part of its property, and such involuntary case or other proceeding
        shall remain undismissed and unstayed for a period of 60 days, or an order
        for
        relief has been entered against the Company or any Subsidiary under the federal
        bankruptcy laws as now or hereafter in effect; 

      


      (j) default
        in any provision (including payment) or any agreement governing the terms
        of any
        indebtedness of the Company or any Subsidiary in excess of $500,000, which
        has
        not been cured within any applicable period of grace associated therewith;
        

      


      (k) judgments
        or orders for the payment of money which in the aggregate at any one time
        exceed
        $1,000,000 and are not covered by insurance have been rendered against the
        Company or any Subsidiary by a court of competent jurisdiction and such
        judgments or orders shall continue unsatisfied and unstayed for a period
        of 60
        days;

      


      (l) any
        representation, warranty, certification or statement made by the Company
        in any
        Transaction Agreement or which is contained in any certificate, document
        or
        financial or other statement furnished at any time under or in connection
        with
        any Transaction Agreement shall prove to have been untrue in any material
        respect when made; or

      


      (m) failure
        by the Company to observe or perform any covenant or agreement contained
        in the
        Settlement Agreement;

      


      then,
        and
        in every such occurrence, Purchaser may, with respect to an Event of Default
        specified in paragraphs (a) or (b), and Purchaser may, with respect to any
        other
        Event of Default, by notice to the Company, declare the Company to redeem
        the
        outstanding Preferred Shares, and the Preferred Shares shall thereon be redeemed
        immediately; provided
        that in
        the case of any of the Events of Default specified in paragraph (h) or (i)
        above
        with respect to the Company or any Subsidiary, then, without any notice to
        the
        Company or any other act by Purchaser, the outstanding Preferred Shares shall
        be
        immediately redeemed, provided,
        further,
        if any
        Event of Default has occurred and is continuing, and irrespective of whether
        any
        Preferred Shares have been declared immediately due and payable hereunder,
        Purchaser may proceed to protect and enforce the rights of such Purchaser
        by an
        action at law, suit in equity or other appropriate proceeding, whether for
        the
        specific performance of any agreement contained herein, 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 or
        otherwise.

      


      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

      13.2 Powers
        and Remedies Cumulative.
        No
        right or remedy herein conferred upon or reserved to any Purchaser is intended
        to be exclusive of any other right or remedy, and every right and remedy
        shall,
        to the extent permitted by law, be cumulative and in addition to every other
        right and remedy given hereunder or now hereafter existing at law or in equity
        or otherwise. The assertion or employment of any right or remedy hereunder,
        or
        otherwise, shall not prevent the concurrent assertion or employment of any
        other
        appropriate right or remedy. 

      


      14. MISCELLANEOUS

      


      14.1 Notices.
        All
        notices, demands and other communications to any party hereunder shall be
        in
        writing (including telecopier or similar writing) and shall be given to such
        party at its address set forth on the signature pages hereof, or such other
        address as such party may hereafter specify for the purpose to the other
        parties. Each such notice, demand or other communication shall be effective
        (i)
        if given by telecopy, when such telecopy is transmitted to the telecopy number
        specified on the signature page hereof, (ii) if given by mail, 4 days after
        such
        communication is deposited in the mail with first class postage prepaid,
        addressed as aforesaid or (iii) if given by any other means, when delivered
        at
        the address specified in or pursuant to this Section
        14.1.

      


      14.2 No
        Waivers; Amendments.

      


      (a) No
        failure or delay on the part of any party in exercising any right, power
        or
        remedy hereunder shall operate as a waiver thereof, nor shall any single
        or
        partial exercise of any such right, power or remedy preclude any other or
        further exercise thereof or the exercise of any other right, power or
        remedy.

      


      (b) Unless
        specifically noted to the contrary, any provision of this Agreement may be
        amended, supplemented or waived after the Closing if, but only if, such
        amendment, supplement or waiver is in writing and is signed by the Company
        and
        the Purchaser.

      


      14.3 Indemnification.

      


      (a) The
        Company agrees to indemnify and hold harmless each Purchaser, its respective
        Affiliates, and each Person, if any, who controls such Purchaser, or any
        of its
        respective Affiliates, and the respective partners, agents, employees, officers
        and Directors of such Purchaser, their Affiliates and any such Controlling
        Person (each an “Indemnified
        Party”)
        and
        collectively, the “Indemnified
        Parties”),
        from
        and against any and all losses, claims, damages, liabilities and expenses
        (including, without limitation and as incurred, reasonable costs of
        investigating, preparing or defending any such claim or action, whether or
        not
        such Indemnified Party is a party thereto, provided
        that the
        Company shall not be obligated to advance such costs to any Indemnified Party
        unless it has received from such Indemnified Party an undertaking to repay
        to
        the Company the costs so advanced if it should be determined by final judgment
        of a court of competent jurisdiction that such Indemnified Party was not
        entitled to indemnification hereunder with respect to such costs) which may
        be
        incurred by such Indemnified Party in connection with any administrative
        or
        judicial proceeding brought or threatened that relates to or arises out of,
        or
        is in connection with a breach of any of the Company’s representations and
        warranties or covenants contained herein; provided
        that the
        Company will not be responsible for any claims, liabilities, losses, damages
        or
        expenses that are determined by final judgment of a court of competent
        jurisdiction to result from such Indemnified Party’s negligence, willful
        misconduct or bad faith.

      


      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

      (b) If
        any
        action shall be brought against an Indemnified Party with respect to which
        indemnity may be sought against the Company under this Agreement, such
        Indemnified Party shall promptly notify the Company in writing and the Company,
        at its option, may, assume the defense thereof, including the employment
        of
        counsel reasonably satisfactory to such Indemnified Party and payment of
        all
        reasonable fees and expenses. The failure to so notify the Company shall
        not
        affect any obligations the Company may have to such Indemnified Party under
        this
        Agreement or otherwise unless the Company is materially adversely affected
        by
        such failure. Such Indemnified Party shall have the right to employ separate
        counsel in such action and participate in the defense thereof, but the fees
        and
        expenses of such counsel shall be at the expense of such Indemnified Party,
        unless (i) the Company has failed to assume the defense and employ counsel
        or
        (ii) the named parties to any such action (including any impleaded parties)
        include such Indemnified Party and the Company, and such Indemnified Party
        shall
        have been advised by counsel that there may be one or more legal defenses
        available to it which are different from or additional to those available
        to the
        Company, in which case, if such Indemnified Party notifies the Company in
        writing that it elects to employ separate counsel at the expense of the Company,
        the Company shall not have the right to assume the defense of such action
        or
        proceeding on behalf of such Indemnified Party; provided,
        however,
        that
        the Company shall not, in connection with any one such action or proceeding
        or
        separate but substantially similar or related actions or proceedings in the
        same
        jurisdiction arising out of the same general allegations or circumstances,
        be
        responsible hereunder for the reasonable fees and expenses of more than one
        such
        firm of separate counsel, in addition to any local counsel, which counsel
        shall
        be designated by the applicable Purchaser(s). The Company shall not be liable
        for any settlement of any such action effected without the written consent
        of
        the Company (which shall not be unreasonably withheld) and the Company agrees
        to
        indemnify and hold harmless each Indemnified Party from and against any loss
        or
        liability by reason of settlement of any action effected with the consent
        of the
        Company. In addition, the Company will not, without the prior written consent
        of
        the applicable Purchaser(s), settle or compromise or consent to the entry
        of any
        judgment in or otherwise seek to terminate any pending or threatened action,
        claim, suit or proceeding in respect to which indemnification or contribution
        may be sought hereunder (whether or not any Indemnified Party is a party
        thereto) unless such settlement, compromise, consent or termination includes
        an
        express unconditional release of the applicable Purchaser(s) and the other
        Indemnified Parties, satisfactory in form and substance to the applicable
        Purchaser(s), from all liability arising out of such action, claim, suit
        or
        proceeding.

      


      (c) The
        indemnification, contribution and expense reimbursement obligations set forth
        in
        this Section
        14.3
        (i)
        shall be in addition to any liability the Company may have to any Indemnified
        Party at common law or otherwise; (ii) shall survive the Closing Date for
        a
        period of two (2) years and (iii) shall remain operative and in full force
        and
        effect regardless of any investigation made by or on behalf of any Purchaser
        or
        any other Indemnified Party.

      


      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

      (d) Each
        Purchaser acknowledges such Purchaser’s understanding of the representations,
        warranties and covenants set forth herein and that the Company relied upon
        such
        representations, covenants and warranties and each Purchaser agrees to
        indemnify, defend and save harmless the Company, its directors, officers,
        agents
        and employees, and each of them, from and against any and all loss, liability,
        claim, damage and expense (including, but not limited to, any and all expenses
        reasonably incurred in investigating, preparing or defending against any
        litigation commenced or threatened or any claim whatsoever), arising out
        of or
        based upon any false representation or warranty or breach or failure by such
        Purchaser to comply with any covenant or agreement made by such Purchaser
        herein
        or in any other document furnished by such Purchaser to any of the foregoing
        in
        connection with such Purchaser’s investment in the Securities.

      


      14.4 Reserved.

      


      14.5 Successors
        and Assigns.
        This
        Agreement shall be binding upon the Company and Purchaser and its respective
        successors and assigns upon execution hereof by the Company and Purchaser.
        Neither the Company nor Purchaser may transfer or assign this Agreement or
        any
        right, title or interest in, to or under this Agreement without the prior
        written consent of the other applicable party, and any attempted assignment
        without such consent shall be void and without further force or
        effect.

      


      14.6 Governing
        Law.
        This
        Agreement shall be governed by and controlled in accordance with the laws
        substantive of the State of Georgia without regard to conflict of law
        provisions. 

      


      14.7 Entire
        Agreement.
        This
        Agreement, the Exhibits or Schedules hereto, which includes, but is not limited
        to the Registration Rights Agreement, set forth the entire agreement and
        understanding of the parties relating to the subject matter hereof and
        supercedes all prior and contemporaneous agreements, negotiations and
        understandings between the parties, both oral and written relating to the
        subject matter hereof. The terms and conditions of all Exhibits and Schedules
        to
        this Agreement are incorporated herein by this reference and shall constitute
        part of this Agreement as is fully set forth herein.

      


      14.8 Survival;
        Severability.
        All
        representations, warranties, covenants, acknowledgments and agreements contained
        herein shall survive (a) the acceptance of this Agreement and the Closing
        and
        the delivery of the Securities, the Conversion Shares, and the Warrant Shares,
        and (b) with respect to any Purchaser, the death, disability, incompetency,
        termination, bankruptcy, insolvency or dissolution of such Purchaser. In
        the
        event that any provision of this Agreement becomes or is declared by a court
        of
        competent jurisdiction to be illegal, unenforceable or void, this Agreement
        shall continue in full force and effect without said provision; provided
        that
        such severability shall be ineffective if it materially changes the economic
        benefit of this Agreement to any party.

      


      14.9 Title
        and Subtitles.
        The
        titles and subtitles used in this Agreement are used for convenience only
        and
        are not to be considered in construing or interpreting this
        Agreement.

      


      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

      14.10 Reporting
        Entity for the Common Stock.
        The
        reporting entity relied upon for the determination of the trading price or
        trading volume of the Common Stock on any given Trading Day for the purposes
        of
        this Agreement and all Exhibits shall be Bloomberg, or any successor thereto.
        The written mutual consent of the holders of more than fifty percent (50%)
        of
        the then outstanding shares of Preferred Stock and the Company shall be required
        to employ any other reporting entity.

      


      14.11 Confidentiality.
        Each
        Purchaser acknowledges that certain of the information provided to such
        Purchaser is confidential and non-public and agrees that all such information
        shall be kept in confidence by such Purchaser and neither used by such Purchaser
        to such Purchaser’s personal benefit (other than in connection with this
        Agreement) nor disclosed to any Person not a party to this Agreement for
        any
        reason; provided,
        that
        this obligation shall not apply to any such information which (i) is or becomes
        part of the public knowledge or literature and readily accessible (except
        as a
        result of violation of any confidentiality agreements); or (ii) is received
        from
        third parties (except third parties who disclose such information in violation
        of any confidentiality agreements including, but not limited to, any Agreement
        they may have with the Company).

      


      14.12 Publicity.
        The
        Company and the Purchaser shall consult with each other in issuing any press
        releases or otherwise making public statements with respect to the transactions
        contemplated hereby and no party shall issue any such press release or otherwise
        make any such public statement without the prior written consent of the other
        parties, which consent shall not be unreasonably withheld or delayed, except
        that no prior consent shall be required if such disclosure is required by
        law,
        in which such case the disclosing party shall provide the other parties with
        prior notice of such public statement. Notwithstanding the foregoing, the
        Company shall not publicly disclose the name of Purchaser without the prior
        written consent of Purchaser, except to the extent required by law, in which
        case the Company shall provide Purchaser with prior written notice of such
        public disclosure.

      


      14.13 Powers
        and Remedies Cumulative.
        No
        right or remedy herein conferred upon or reserved to Purchaser is intended
        to be
        exclusive of any other right or remedy, and every right and remedy shall,
        to the
        extent permitted by law, be cumulative and in addition to every other right
        and
        remedy given hereunder or now hereafter existing at law or in equity or
        otherwise. The assertion or employment of any right or remedy hereunder,
        or
        otherwise, shall not prevent the concurrent assertion or employment of any
        other
        appropriate right or remedy. Every power and remedy given by the Preferred
        Shares or by law may be exercised from time to time, and as often as shall
        be
        deemed expedient, by Purchaser.

      


      


      (Signature
        pages follows)


      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
        executed by their respective authorized officers, as of the date first above
        written.

      
        
          	 	 	 	 
	SPEEDEMISSIONS,
                  INC. 	 	 	 
	 	 	 	 
	 	 	 	 
	By:
                  /s/ Richard A. Parlontieri	 	 	 
	
                  
Name: Richard
                  A. Parlontieri	 	 	
                
	Title: President
                  and Chief Executive Officer	 	 	 


        

        
          	 	 	 	 
	 	 	 	 
	Address:	 	 	 
	 	 	 	 
	Speedemissions, Inc. 	 	 	 
	1134 Senoia Road 	 	 	 
	Suite B-2 	 	 	 
	Tyrone, GA 30290 	 	 	 
	Attn: Richard A. Parlontieri 	 	 	 
	Phone: 770-306-7667 	 	 	 
	 	 	 	 
	with a copy to: 	 	 	 
	 	 	 	 
	The Lebrecht Group, APLC 	 	 	 
	22342 Avenida Empresa, Suite
                  220 	 	 	 
	Rancho Santa Margarita, CA
                  92688 	 	 	 
	Fax: 949-635-1244 	 	 	 
	 	 	 	 
	 	 	 	 
	PURCHASER: 	 	 	 
	 	 	 	 
	GCA Strategic Investment
                  Fund
                  Limited 	 	 	 
	 	 	 	 
	 	 	 	 
	By:
                  /s/ Lewis N. Lester,	 	 	 
	
                  
Lewis
                  N. Lester	 	 	
                
	its
                  Authorized Representative