Document:

Unassociated Document

    PROMISSORY
NOTE

     

    
      
        
          	
                  January
      __, 2009

                	 
      	
                  $
      5,200,000.00

                
	
                  Maturity
      Date: May 8, 2009

                	 
      	 
      
	 	 	 
	 	 	 
	
                  BORROWER:

                	
                  LENDER:

                	 
      
	
                  Avantair,
      Inc.

                	
                  Century
      Bank, F.S.B.

                	 
      
	
                  4311
      General Howard Drive

                	
                  1680
      Fruitville Road

                	 
      
	
                  Clearwater,
      FL 33762

                	
                  Sarasota,
      FL 34236

                	 
      

        

      

    

    

    Payment.
For value received, Borrower promises to pay to the order of Century Bank (the
“Bank”), in lawful money of the United States of America, at its office
indicated above or wherever else Bank may specify, the sum of Five Million Two
Hundred Thousand Dollars ($5,200,000.00) on the terms provided in this
promissory note (including all renewals, extensions or modifications hereof,
this “Note”) on or before the 120th day
from the date of this Note.

     

    Security.
Borrower has granted Bank a security interest in the Collateral described in the
Aircraft Mortgage, Collateral Assignment and Security Agreement dated of even
date herewith (the “Security Agreement”; capitalized terms used herein and not
otherwise defined herein shall have the meaning provided thereto in the Security
Agreement).

     

    Borrowing
Fees. Borrower will pay the following fees for the loan:  (1)
$75,000.00 on the date of this Note and (2) $75,000.00 on the 9th day of each
month thereafter until repayment of the principal in full.  There will
be no reduction in or reimbursement for the fee for repayment of the principal
in full prior to the next payment date. Borrower will also pay a fee of
$52,000.00 at the time of repayment in full of the principal amount of this
Note, constituting a fee of 1% of the principal. If repayment is made in full
within 90 days after the date hereof, this fee will be reduced to $26,000,
constituting a fee of 0.5% of the principal.

     

    Fee
Computation. Fees shall be computed on the basis of the actual number of
days within the period in which the principal balance has been outstanding and
on the basis of a year consisting of 365 days.

     

    Repayment
Terms. The principal amount shall be repaid 120 days from the date of
this Note, and all outstanding and unpaid fees thereon will be paid at that
time.  Upon the each sale of each 1/16 fractional interest in the
Collateral, Borrower will repay $325,000.00 of the principal amount of this
Note.  The repayment will be increased proportionately upon the sale
of an interest larger than 1/16.

     

    Prepayment.
Borrower may pay without penalty all or a portion of the amount owed earlier
than it is due. Early payments will not, unless agreed to by Bank in writing,
relieve Borrower of Borrower’s obligation to continue to make payments under the
payment schedule. Rather, early payments will reduce the principal balance due
and may result in Borrower’s making fewer payments. Borrower agrees not to send
Bank payments marked “paid in full”, “without recourse”, or similar language. If
Borrower sends such a payment, Bank may accept it without losing any of Bank’s
rights under this Note, and Borrower will remain obligated to pay any
PROMISSORY
NOTE further
amount owed to Bank. All written communications concerning disputed amounts,
including any check or other payment instrument that indicates that the payment
constitutes “payment in full” of the amount owed or that is tendered with other
conditions or limitations or as full satisfaction of the disputed amount must be
mailed or delivered to: Century Bank, FSB; 1680 Fruitville Road; Sarasota, FL
34236.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Application of
Payments.  Monies received by Bank from any source for
application toward payment of the obligations under this note (the
“Obligations”) shall be applied to fees that are due and payable and then to
principal. If a Default occurs, monies may be applied to the Obligations in any
manner or order deemed appropriate by Bank.  If any payment received
by Bank under this Note or other Loan Documents is rescinded, avoided or for any
reason returned by Bank because of any adverse claim or threatened action, the
returned payment shall remain payable as an obligation of all persons liable
under this Note or other Loan Documents as though such payment had not been
made.

     

    Late
Charge. Should Borrower fail to pay any payment under this note or any
other sum required to be paid Bank within ten (10) days after the due date
thereof, Borrower shall pay a late payment charge equal to five percent (5.0%)
of the delinquent payment. Acceptance by Bank of any late payment without an
accompanying late charge shall not be deemed a waiver of Bank’s right to collect
such late charge or to collect a late charge for any subsequent late payment
received.

     

    Attorneys’
Fees and Other Collection Costs. If Bank must sue Borrower, or defend any
action, suit, claim, or arbitration filed by Borrower, Borrower shall pay all of
Bank’s reasonable attorneys’ fees and costs if Bank is a prevailing party.
Attorneys’ fees and costs shall include, but not be limited to, arbitration and
litigation fees and expenses, paralegal fees, the fees and costs associated with
enforcing a judgment or filing or defending appeals, and expenses incurred to
enforce or collect any of the Obligations, whether incurred without the
commencement of a suit, in any trial, arbitration, or administrative proceeding,
or in any appellate or bankruptcy proceeding.

     

    Usury.
Regardless of any other provision of this Note or other Loan Documents, if for
any reason the effective interest should exceed the maximum lawful rate of
interest, the effective interest rate shall be deemed reduced to, and shall be,
such maximum lawful interest rate, and (i) the amount which would be excessive
interest shall be deemed applied to the reduction of the principal balance of
this Note and not to the payment of interest, and (ii) if the loan evidenced by
this Note has been or is thereby paid in full, the excess shall be returned to
the party paying same, such application to the principal balance of this Note or
the refunding of excess to be complete settlement and acquittance
thereof.

     

    Default. Each of the following
shall constitute an event of default (“Event of Default”) under  this
Note:

     

    Payment Default. Borrower
fails to make any payment when due under this Note.

     

    Other Defaults. Borrower fails
to comply with or to perform any other term, obligation, covenant or condition
contained in this Note or in any of the Loan Documents or to comply with or to
perform any term, obligation, covenant or condition contained in any other
agreement between Bank and Borrower. Any affiliate of Borrower, including,
without limitation, Borrower’s affiliate Aircraft Support, LLC, fails to comply
with or to perform any term, obligation, covenant or condition contained in any
other agreement between Bank and such affiliate.  For purposes of this
Note, an affiliate shall be any entity that is controlling, controlled by or
under common control with Borrower.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Default In Favor of Third
Parties. Borrower or any grantor defaults under any loan, extension of
credit, security agreement, purchase or sales agreement, or any other agreement,
in favor of any other creditor or person that may materially adversely affect
any of Borrower’s property or Borrower’s ability to repay this Note or perform
Borrower’s obligations under this Note or any of the related
documents.

     

    False Statements. Any
warranty, representation or statement made or furnished to Bank by Borrower or
on Borrower’s behalf under this Note or the related documents is false or
misleading in any material respect, either now or at the time made or furnished
or becomes false or misleading in any material respect at any time
thereafter.

     

    Insolvency. The dissolution or
termination of Borrower’s existence as a going business, the insolvency of
Borrower, the appointment of a receiver for any part of Borrower’s property, any
assignment for the benefit of creditors, any type of creditor workout, or the
commencement of any proceeding under any bankruptcy of insolvency laws by or
against Borrower (unless, if involuntary, the proceeding is dismissed within
sixty (60) days of the filing thereof).

     

    Creditor or Forfeiture
Proceedings. Commencement of foreclosure or forfeiture proceedings,
whether by judicial proceeding, self-help, repossession or any other method, by
any creditor of Borrower or by any governmental agency against any collateral
securing the loan. This includes the garnishment of any of Borrower’s accounts,
including deposit accounts, with Bank. However, this Event of Default shall not
apply if there is a good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or forfeiture
proceeding and if Borrower gives Bank written notice of the creditor or
forfeiture proceeding and deposits with Bank monies or a surety bond for the
creditor or forfeiture proceeding, in an amount determined by Bank, in its sole
discretion, as being an adequate reserve or bond for the dispute.

     

    Events Affecting Guarantor.
Any of the preceding events occurs with respect to any Guarantor of any of the
indebtedness or any Guarantor dies or becomes incompetent, or revokes or
disputes the validity of, or liability under, any guaranty of the indebtedness
evidenced by this Note. In the event of death of a guarantor, Bank, at its
option, may, but shall not be required to, permit the Guarantor’s estate to
assume unconditionally the obligations arising under the guaranty in a manner
satisfactory to Bank, and, in doing so, cure any Event of Default.

     

    Change in Ownership. Any
change in ownership of twenty-five percent (25%) or more of the outstanding
voting stock of Borrower.

     

    Adverse Change. A material
adverse change occurs in Borrower’s financial condition or Bank believes that
the payment of principal or performance of this Note is impaired or Bank in good
faith believes itself insecure.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Cure Provisions. If any
default, other than a default in payment is curable and if Borrower has not been
given a notice of a breach of the same provision of this Note within the
preceding twelve (12) months, it may be cured if Borrower, after receiving
written notice from Bank demanding cure of such default: (1) cures the default
within ten (10) days; or (2) if the cure requires more than ten (10) days,
immediately initiates steps which Bank deems in Bank’s sole discretion to be
sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practicable.

     

    Bank’s Rights upon
Default. If a Default occurs under this Note or any Loan Document
and is continuing, Bank may at any time thereafter, take the following actions:
(i) foreclose its security interest or lien against Borrower’s accounts with
Bank without notice; (ii) accelerate the maturity of this Note and all other
Obligations, and all of the Obligations shall be immediately due and payable; or
(iii) exercise any rights and remedies as provided under the Note and other Loan
Documents, or as provided by law or equity.

     

    Dishonored
Item Fee. Borrower will pay a fee to Bank of $32.00 if Borrower makes a
payment on Borrower’s loan and the check or preauthorized charge with which
Borrower pays is later dishonored.

     

    Right of
Setoff. To the extent permitted by applicable law, Bank reserves a right
of setoff in all of Borrower’s accounts with Bank (whether checking, savings, or
some other account). This includes all accounts Borrower holds jointly with
someone else and all accounts Borrower may open in the future. However, this
does not include any IRA or KEOGH accounts, or any trust accounts for which
setoff would be prohibited by law. Borrower authorizes Bank, to the extent
permitted by applicable law, to charge or setoff all sums owing on the debt
against any and all such accounts, and, at Bank’s option, to administratively
freeze all such accounts to allow Bank to protect Bank’s charge and setoff
rights provided in this paragraph.

     

    Waivers.
Borrower and any other person who signs, guarantees, or endorses this Note, to
the extent permitted by law, waive presentment, protest, notice of dishonor,
demand for payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, notice of sale and all other notices of any kind.
Further, Borrower agrees that Bank may extend, modify or renew this Note or make
a novation of the loan evidenced by this Note for any period and grant any
releases, compromises or indulgences with respect to any Collateral securing
this Note, or with respect to any other person liable under this Note or other
Loan Documents, all without notice to or consent of Borrower or any person who
may be liable under this Note or other Loan Documents and without affecting the
liability of Borrower or any person who may be liable under this Note or other
Loan Documents.

     

    Security
Agreement. The Collateral is held by the Bank as security for this Note.
The provisions of this Note are subject to the Security Agreement. Reference is
hereby made to the Security Agreement and the Commitment Letter for a complete
statement of the rights of the holder of, and the nature and extent of the
security for, this Note.

     

    Notice
and Cure. Prior to any suit, arbitration, or other claim by Borrower
against Bank, Borrower shall give Bank notice and opportunity to cure. Written
notice shall be delivered by Certified Mail to Bank’s registered agent.
Borrower’s notice shall describe with specificity all items, defects, issues,
problems, breaches, errors, omissions, or other matters – regardless of severity
– so that Bank may correct the same within 45 days. Failure to comply with this
provision is a material breach of this Note.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Claims
against Bank.  Borrower
must submit to arbitration any claims against Bank, including, but not limited
to, claims arising out of this Note and statutory claims, provided, however that
Borrower may submit equitable claims, to a court within Sarasota County,
Florida. The arbitration shall be filed with the American Arbitration
Association in Sarasota, Florida. Bank and Borrower will share equally all
filing fees and arbitration expenses, except that each will pay the fees of its
own attorneys. Borrower must follow this provision and may not file
counterclaims to a suit brought by Bank to enforce this Note. Nor shall any
dispute concerning Bank’s performance be raised as a defense to the enforcement
of this Note. PLEASE NOTE: IF A DISPUTE CONCERNING BANK’S PERFORMANCE ARISES,
BOTH PARTIES ARE OBLIGATED TO ENGAGE IN BINDING ARBITRATION. IN DOING SO, BOTH
PARTIES WAIVE THEIR RIGHT TO TRIAL BY JURY. No arbitrator shall award Borrower
consequential, punitive, incidental, treble, or any other damages based upon a
multiplier. The arbitrator shall issue a reasoned award, one citing controlling
authority and reciting material findings of fact. No arbitrator shall award
damages in favor of Borrower if Borrower fails to follow the notice and cure
provision of this Note.

     

    Governing Law and
Venue. This Note shall be governed by and construed in accordance
with the internal laws of the State of Florida, including all matters of
construction, validity and performance, without reference to the conflicts of
laws principles thereof. Venue shall be in Sarasota, County, Florida. Bank and
Borrower hereby waive the right to any jury trial in any action, proceeding, or
counterclaim brought by either Bank or Borrower against the other. A copy, scan,
or fax of this Note shall be as effective as an original.

     

    General
Provisions. The terms of this Note shall be binding upon Borrower, and
upon Borrower’s heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Bank and its successors and assigns.

     

    PRIOR TO
SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE.
BORROWER AGREES TO THE TERMS OF THIS NOTE.

     

    BORROWER
ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS NOTE.

     

    [Signature
page follows.]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

        IN WITNESS
WHEREOF, Borrower has caused this Note to be executed on the day and year
first above written.

     

    DEBTOR:

     

        AVANTAIR,
INC.

     

        By:
______________________________

     

        Name:
Richard A. Pytak, Jr. Title:  Chief Financial Officer

    State of
Florida                  )

    ss:

    County of
Pinellas           
)

     

     

    I,
___________________________________, a Notary Public in and for said state and
county, do hereby certify that Richard A. Pytak, Jr., the Chief Financial
Officer of Avantair, Inc. appeared before me this ____ day of January, 2009, and
acknowledged that he executed the foregoing Promissory Note in the principal
amount of Five Million Two Hundred Thousand Dollars ($5,200,000.00) on behalf of
Avantair, Inc.

     

     

    Witness
my hand and official seal this ___________ day of January, 2009.

     

     

    __________________________________________      

    Notary
Public

     

    My
commission expires:

     

     

     

                        

     

    [NOTARY
SEAL]a5870591ex10_1.htm

    Exhibit
10.1

     

    
      SECURITIES PURCHASE
AGREEMENT

      

      

      THIS SECURITIES PURCHASE
AGREEMENT (“Agreement”) is made
as of the 7th day of
January, 2009, by and among Commerce Planet, Inc., a Utah corporation, with an
address at 30 South La Patera Lane, Suite 8, Goleta, California 93117 (the
“Company”), and
the Investors set forth on the signature pages affixed hereto (each an “Investor” and
collectively the “Investors”).

      

      Recitals:

      

      A.           The
Company and the Investors are executing and delivering this Agreement in
connection with an offering of securities of the Company (the “Offering”), in
reliance upon the exemption from securities registration afforded by the
provisions of Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”), or
Regulation D promulgated thereunder (“Regulation D”);
and

      

      B.           The
Investors wish to purchase from the Company, and the Company wishes to sell and
issue to the Investors, upon the terms and conditions stated in this
Agreement:

      

      (i)           Convertible
notes of up to an aggregate principal amount of $250,000, with an interest rate
of 10% per annum, convertible into common stock of the Company, par value $.001
per share (the “Common
Stock”), at a price equal to $.01 (“Notes”), in
substantially the form attached hereto as Exhibit
A; and

      

      (ii)           Warrants  to
purchase that number of shares of the Company’s Common Stock equal to twenty
(20%) percent of the principal dollar amount of the Notes purchased, at an
exercise price of $.01 per share (“Warrants”), in
substantially the form attached hereto as Exhibit
B.

      

      In consideration of the mutual promises
made herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

      

      1.            
Definitions.  In addition to
those terms defined above and elsewhere in this Agreement, for the purposes of
this Agreement, the following terms shall have the meanings set forth
below:

      

      “Affiliate” means,
with respect to any Person, any other Person which directly or indirectly
through one or more intermediaries Controls, is controlled by, or is under
common control with, such Person.

      

      “Business Day” means a
day, other than a Saturday or Sunday, on which banks in New York City are open
for the general transaction of business.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Common Stock” means
the Company’s common stock, par value $0.001 per share, and any securities into
which the common stock may be reclassified.

      

      “Company’s Knowledge”
means the actual knowledge of the executive officers (as defined in Rule 405
under the 1933 Act) of the Company, after due inquiry.

      

      “Confidential
Information” means trade secrets, confidential information and know-how
(including but not limited to ideas, formulae, compositions, processes,
procedures and techniques, research and development information, computer
program code, performance specifications, support documentation, drawings,
specifications, designs, business and marketing plans, and customer and supplier
lists and related information).

      

      “Control” (including
the terms “controlling”, “controlled by” or “under common control with”) means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

      

      “Conversion Shares”
means the shares of Common Stock issuable upon the conversion of the
Notes.

      

      “Escrow Agreement”
means that certain escrow agreement dated as of the date hereof by and among the
Company, the Investors and Hodgson Russ LLP, as escrow agent;

      

      “Interest” means
interest at a rate of 10% per annum.

      

      “Intellectual
Property” means all of the following: (i) patents, patent applications,
patent disclosures and inventions (whether or not patentable and whether or not
reduced to practice); (ii) trademarks, service marks, trade dress, trade names,
corporate names, logos, slogans and Internet domain names, together with all
goodwill associated with each of the foregoing; (iii) copyrights and
copyrightable works; (iv) registrations, applications and renewals for any of
the foregoing; and (v) proprietary computer software (including but not limited
to data, data bases and documentation).

      

      “Loan Amount” means up
to an aggregate of $250,000.

      

      “Material Adverse
Effect” means a material adverse effect on (i) the assets, liabilities,
results of operations, condition (financial or otherwise), business, or
prospects of the Company and its Subsidiaries taken as a whole, or (ii) the
ability of the Company to perform its obligations under the Transaction
Documents.

      

      “Notes” means the
promissory notes purchased in connection with the Offering.

      

      “Person” means an
individual, corporation, partnership, limited liability company, trust, business
trust, association, joint stock company, joint venture, sole proprietorship,
unincorporated organization, governmental authority or any other form of entity
not specifically listed herein.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      

      “SEC Filings” has the
meaning set forth in Section 4.6.

      

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

      

      “Subsidiary” of any
Person means another Person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient to elect at
least a majority of its Board of Directors or other governing body (or, if there
are no such voting interests, 50% or more of the equity interests of which) is
owned directly or indirectly by such first Person.

      

      “Transaction
Documents” means this Agreement, the Notes, the Warrants, the Escrow
Agreement, and certain other papers, agreements, documents, instruments and
certificates necessary to carry out the purposes thereof.

      

      “Warrants” means the
warrants to purchase shares of Common Stock to be purchased in connection with
the Offering.

      

      “Warrant Shares” means
the shares of Common Stock issuable upon the exercise of the
Warrants.

      

      “1933 Act” has the
meaning set forth in the Recitals above.

      

      “1934 Act” means the
Securities Exchange Act of 1934, as amended, or any successor statute, and the
rules and regulations promulgated thereunder.

      

      2.            
Purchase
and Sale of Notes and Warrants.  Subject to the
terms and conditions of this Agreement, at the Closing, the Investors shall
severally, and not jointly, purchase, and the Company shall sell and issue to
such Investors, the Notes and Warrants in the respective amounts set forth
opposite the Investors’ names on the signature pages attached hereto in exchange
for each Investor’s pro rata share of the Loan Amount.

      

      3.            
Closing.  At the Closing,
and provided each of the conditions set forth in Section 6 hereof have been
satisfied or waived by the appropriate party or parties, (a) each Investor shall
deliver, or cause to be delivered, their pro rata share of the Loan Amount to
the Company, in immediately available funds, and (b) the Company shall deliver
the appropriate amount of Notes and number of Warrants to the applicable
Investors.  For the purposes hereof, the date the Closing actually
takes place shall be referred to as the “Closing Date.”  The Closing
shall take place at the offices of Hodgson Russ LLP, 1540 Broadway, 24th Floor,
New York, New York 10036, or at such other location and on such other date as
the Company and the Investors shall mutually agree.

      

      4.            
Representations
and Warranties of the Company.  The Company
hereby represents and warrants to the Investors that, except as set forth in the
schedules delivered herewith (collectively, the “Disclosure
Schedules”):

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      

      4.1           Organization, Good Standing
and Qualification.  Each of the Company and its Subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to carry on its business as now conducted and to own its
properties.  Each of the Company and its Subsidiaries is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property makes such qualification or leasing necessary unless the
failure to so qualify has not had and could not reasonably be expected to have a
Material Adverse Effect.  The Company’s Subsidiaries are listed on
Schedule 4.1
hereto.

      

      4.2           Authorization.  The
Company has full power and authority and, except as described in Schedule 4.2, has
taken all requisite action on the part of the Company, its officers, directors
and stockholders necessary for (i) the authorization, execution and delivery of
the Transaction Documents, (ii) the authorization of the performance of all
obligations of the Company hereunder or thereunder, and (iii) the authorization,
issuance (or reservation for issuance) and delivery of the
Securities.  The Transaction Documents constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors’ rights generally.

      

      4.3           Capitalization.  Schedule 4.3 sets
forth (a) the authorized capital stock of the Company on the date hereof; (b)
the number of shares of capital stock issued and outstanding; (c) the number of
shares of capital stock issuable pursuant to the Company’s stock plans; and (d)
the number of shares of capital stock issuable and reserved for issuance
pursuant to securities (other than the Securities) exercisable for, or
convertible into or exchangeable for any shares of capital stock of the
Company.  All of the issued and outstanding shares of the Company’s
capital stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of pre-emptive rights and were issued in full compliance
with applicable state and federal securities law and any rights of third
parties.  Except as described on Schedule 4.3, all of
the issued and outstanding shares of capital stock of each Subsidiary have been
duly authorized and validly issued and are fully paid, nonassessable and free of
pre-emptive rights, were issued in full compliance with applicable state and
federal securities law and any rights of third parties and are owned by the
Company, beneficially and of record, subject to no lien, encumbrance or other
adverse claim.  Except as described on Schedule 4.3, no
Person is entitled to pre-emptive or similar statutory or contractual rights
with respect to any securities of the Company.  Except as described on
Schedule 4.3,
there are no outstanding warrants, options, convertible securities or other
rights, agreements or arrangements of any character under which the Company or
any of its Subsidiaries is or may be obligated to issue any equity securities of
any kind and except as contemplated by this Agreement, neither the Company nor
any of its Subsidiaries is currently in negotiations for the issuance of any
equity securities of any kind.  Except as described on Schedule 4.3, there
are no voting agreements, buy-sell agreements, option or right of first purchase
agreements or other agreements of any kind among the Company and any of the
securityholders of the Company relating to the securities of the Company held by
them.  Except as described on Schedule 4.3, no
Person has the right to require the Company to register any securities of the
Company under the 1933 Act, whether on a demand basis or in connection with the
registration of securities of the Company for its own account or for the account
of any other Person.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      

      Except as described on Schedule 4.3, the
issuance and sale of the Securities hereunder will not obligate the Company to
issue shares of Common Stock or other securities to any other Person (other than
the Investors) and will not result in the adjustment of the exercise,
conversion, exchange or reset price of any outstanding security.

      

      Except as described on Schedule 4.3, the
Company does not have outstanding stockholder purchase rights or “poison pill”
or any similar arrangement in effect giving any Person the right to purchase any
equity interest in the Company upon the occurrence of certain
events.

      

      4.4           Valid
Issuance.  The Notes have been duly and validly authorized and
shall be free and clear of all encumbrances and restrictions (other than those
created by the Investors), except for restrictions on transfer set forth in the
Transaction Documents.  The Warrants have been duly and validly
authorized.  Upon the due conversion of the Notes, the Conversion
Shares will be validly issued, fully paid and non-assessable free and clear of
all encumbrances and restrictions, except for restrictions on transfer set forth
in the Transaction Documents or imposed by applicable securities laws and except
for those created by the Investors.  Upon the due exercise of the
Warrants, the Warrant Shares will be validly issued, fully paid and
non-assessable free and clear of all encumbrances and restrictions, except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws and except for those created by the
Investors.  The Company has reserved a sufficient number of shares of
Common Stock for issuance upon the conversion of the Notes and the exercise of
the Warrants, free and clear of all encumbrances and restrictions, except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws and except for those created by the
Investors.

      

      4.5           Consents.  Except
as described in Schedule 4.5, the
execution, delivery and performance by the Company of the Transaction Documents,
and the offer, issuance and sale of the Securities, require no consent of,
action by or in respect of, or filing with, any Person, governmental body,
agency, or official other than filings that have been made pursuant to
applicable state securities laws and post-sale filings pursuant to applicable
state and federal securities laws or any other notices required thereby, all of
which the Company undertakes to file within the applicable time
periods.  Subject to the accuracy of the representations and
warranties of each Investor set forth in Section 5 hereof, the Company has taken
all action necessary to exempt (i) the issuance and sale of the Notes and
Warrants, (ii) the issuance of the Conversion Shares upon due conversion of the
Notes, (iii) the issuance of the Warrant Shares upon due exercise of the
Warrants, and (iv) the other transactions contemplated by the Transaction
Documents from the provisions of any stockholder rights plan or other “poison
pill” arrangement, any anti-takeover, business combination or control share law
or statute binding on the Company or to which the Company or any of its assets
and properties may be subject and any provision of the Company’s Articles of
Incorporation, as amended, or Bylaws that is or could reasonably be expected to
become applicable to the Investors as a result of the transactions contemplated
hereby, including without limitation, the issuance of the Securities and the
ownership, disposition or voting of the Securities by the Investors or the
exercise of any right granted to the Investors pursuant to this Agreement or the
other Transaction Documents.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      

      4.6           Delivery of SEC Filings;
Business.  The Company has made available to the Investors
through the EDGAR system, true and complete copies of the Company’s Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2006 (the “10-KSB”), and all
other reports filed by the Company pursuant to the 1934 Act since the filing of
the 10-KSB and prior to the date hereof (collectively, the “SEC
Filings”).  The Investors acknowledge that the Company has not
filed its annual report for the fiscal year ended December 31, 2007, or of
its quarterly reports on Form 10-Q for each of the quarterly periods ended March
31, 2008, June 30, 2008 and September 30, 2008.

      

      4.7           Use of
Proceeds.  The net proceeds from this Offering will be used
primarily for general working capital purposes.

      

      4.8           No Material Adverse
Change.  Since September 30, 2008, except as identified and
described on Schedule
4.8 or except as disclosed in the SEC Filings, there has not
been:

      

      (a)           any
change in the consolidated assets, liabilities, financial condition or operating
results of the Company, except for changes in the ordinary course of business
which have not had and could not reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate;

      

      (b)           any
declaration or payment of any dividend, or any authorization or payment of any
distribution, on any of the capital stock of the Company, or any redemption or
repurchase of any securities of the Company;

      

      (c)           any
material damage, destruction or loss, whether or not covered by insurance to any
assets or properties of the Company or its Subsidiaries;

      

      (d)           any
waiver, not in the ordinary course of business, by the Company or any Subsidiary
of a material right or of a material debt owed to it;

      

      (e)           any
satisfaction or discharge of any lien, claim or encumbrance or payment of any
obligation by the Company or a Subsidiary, except in the ordinary course of
business and which is not material to the assets, properties, financial
condition, operating results or business of the Company and its Subsidiaries
taken as a whole (as such business is presently conducted and as it is proposed
to be conducted);

      

      (f)           any
change or amendment to the Company’s Articles of Incorporation, as amended, or
Bylaws, or material change to any material contract or arrangement by which the
Company or any Subsidiary is bound or to which any of their respective assets or
properties is subject;

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      

      (g)           any
material labor difficulties or labor union organizing activities with respect to
employees of the Company or any Subsidiary;

      

      (h)           any
material transaction entered into by the Company or a Subsidiary other than in
the ordinary course of business;

      

      (i)           the
loss of the services of any key employee, or material change in the composition
or duties of the senior management of the Company or any
Subsidiary;

      

      (j)           the
loss or threatened loss of any customer which has had or could reasonably be
expected to have a Material Adverse Effect; or

      

      (k)           any
other event or condition of any character that has had or could reasonably be
expected to have a Material Adverse Effect.

      

      4.9           SEC
Filings.  At the time of filing thereof, the SEC Filings
complied as to form in all material respects with the requirements of the 1934
Act and did not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. The
Investors acknowledge that the Company has not filed its annual report for the
fiscal year ended December 31, 2007, or of its quarterly reports on Form
10-Q for each of the quarterly periods ended March 31, 2008, June 30, 2008 and
September 30, 2008.

      

      4.10          No Conflict, Breach,
Violation or Default.  The execution, delivery and performance
of the Transaction Documents by the Company and the issuance and sale of the
Securities will not conflict with or result in a breach or violation of any of
the terms and provisions of, or constitute a default under (i) the Company’s
Articles of Incorporation, as amended, or the Company’s Bylaws, both as in
effect on the date hereof (true and complete copies of which have been made
available to the Investors), or (ii)(a) any statute, rule, regulation or order
of any governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company, any Subsidiary or any of their respective assets
or properties, or (b) any agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company or a Subsidiary is bound or to
which any of their respective assets or properties is subject.

      

      4.11          Tax
Matters.  The Company and each Subsidiary has timely prepared
and filed all tax returns required to have been filed by the Company or such
Subsidiary with all appropriate governmental agencies and timely paid all taxes
shown thereon or otherwise owed by it.  The charges, accruals and
reserves on the books of the Company in respect of taxes for all fiscal periods
are adequate in all material respects, and there are no material unpaid
assessments against the Company or any Subsidiary nor, to the Company’s
Knowledge, any basis for the assessment of any additional taxes, penalties or
interest for any fiscal period or audits by any federal, state or local taxing
authority except for any assessment which is not material to the Company and its
Subsidiaries, taken as a whole.  All taxes and other assessments and
levies that the Company or any Subsidiary is required to withhold or to collect
for payment have been duly withheld and collected and paid to the proper
governmental entity or third party when due.  There are no tax liens
or claims pending or, to the Company’s Knowledge, threatened against the Company
or any Subsidiary or any of their respective assets or
property.  Except as described on Schedule 4.11, there
are no outstanding tax sharing agreements or other such arrangements between the
Company and any Subsidiary or other corporation or entity.

       

      
        
          
          

        

        
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      4.12          Title to
Properties.  Except as disclosed in Schedule 4.12, the
Company and each Subsidiary has good and marketable title to all real properties
and all other properties and assets owned by it, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or currently planned to be made thereof
by them; and except as disclosed in Schedule 4.12, the
Company and each Subsidiary holds any leased real or personal property under
valid and enforceable leases with no exceptions that would materially interfere
with the use made or currently planned to be made thereof by them.

      

      4.13          Certificates, Authorities
and Permits.  The Company and each Subsidiary possess adequate
certificates, authorities or permits issued by appropriate governmental agencies
or bodies necessary to conduct the business now operated by it, and neither the
Company nor any Subsidiary has received any notice of proceedings relating to
the revocation or modification of any such certificate, authority or permit
that, if determined adversely to the Company or such Subsidiary, could
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate.

       

      4.14          Labor
Matters.

       

      (a)           Except
as set forth on Schedule
4.14, the Company is not a party to or bound by any collective bargaining
agreements or other agreements with labor organizations.  The Company
has not violated in any material respect any laws, regulations, orders or
contract terms, affecting the collective bargaining rights of employees, labor
organizations or any laws, regulations or orders affecting employment
discrimination, equal opportunity employment, or employees’ health, safety,
welfare, wages and hours.

       

      (b)           (i)
There are no labor disputes existing, or to the Company’s Knowledge, threatened,
involving strikes, slow-downs, work stoppages, job actions, disputes, lockouts
or any other disruptions of or by the Company’s employees, (ii) there are no
unfair labor practices or petitions for election pending or, to the Company’s
Knowledge, threatened before any governmental agency or labor commission
relating to the Company’s employees, (iii) no demand for recognition or
certification heretofore made by any labor organization or group of employees is
pending with respect to the Company, and (iv) to the Company’s Knowledge, the
Company enjoys good labor and employee relations with its employees and labor
organizations.

       

                                      (c)           The
Company is, and at all times has been, in compliance in all material respects
with all applicable laws respecting employment (including laws relating to
classification of employees and independent contractors) and employment
practices, terms and conditions of employment, wages and hours, and immigration
and naturalization.

       

      
        
          
          

        

        
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                                      (d)           Except
as disclosed in the SEC Filings or as described on Schedule 4.14, the
Company is not a party to, or bound by, any employment or other contract or
agreement that contains any severance, termination pay or change of control
liability or obligation, including, without limitation, any “excess parachute
payment,” as defined in Section 2806(b) of the Internal Revenue
Code.

      

                                      (e)           Except
as specified in Schedule 4.14, to the
Company’s Knowledge, none of the Company’s employees is a Person who is either a
United States citizen or a permanent resident entitled to work in the United
States.  To the Company’s Knowledge, the Company has no liability for
the improper classification by the Company of such employees as independent
contractors or leased employees prior to the Closing.

      

      4.15          Intellectual
Property.  Except as specified in Schedule
4.15:

      

      (a)           All
Intellectual Property of the Company and its Subsidiaries is currently in
compliance with all legal requirements (including timely filings, proofs and
payments of fees) and is valid and enforceable.  No Intellectual
Property of the Company or its Subsidiaries which is necessary for the conduct
of Company’s and each of its Subsidiaries’ respective businesses as currently
conducted or as currently proposed to be conducted has been or is now involved
in any cancellation, dispute or litigation, and, to the Company’s Knowledge, no
such action is threatened.  No patent of the Company or its
Subsidiaries has been or is now involved in any interference, reissue,
re-examination or opposition proceeding.

      

      (b)           All
of the licenses and sublicenses and consent, royalty or other agreements
concerning Intellectual Property which are necessary for the conduct of the
Company’s and each of its Subsidiaries’ respective businesses as currently
conducted or as currently proposed to be conducted to which the Company or any
Subsidiary is a party or by which any of their assets are bound (other than
 generally commercially available, non-custom, off-the-shelf software
application programs having a retail acquisition price of less than $10,000 per
license) (collectively, “License Agreements”)
are valid and binding obligations of the Company or its Subsidiaries that are
parties thereto and, to the Company’s Knowledge, the other parties thereto,
enforceable in accordance with their terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting the
enforcement of creditors’ rights generally, and there exists no event or
condition which will result in a material violation or breach of or constitute
(with or without due notice or lapse of time or both) a default by the Company
or any of its Subsidiaries under any such License Agreement.

      

      (c)           The
Company and its Subsidiaries own or have the valid right to use all of the
Intellectual Property that is necessary for the conduct of the Company’s and
each of its Subsidiaries’ respective businesses as currently conducted or as
currently proposed to be conducted and for the ownership, maintenance and
operation of the Company’s and its Subsidiaries’ properties and assets, free and
clear of all liens, encumbrances, adverse claims or obligations to license all
such owned Intellectual Property and Confidential Information, other than
licenses entered into in the ordinary course of the Company’s and its
Subsidiaries’ businesses.  The Company and its Subsidiaries have a
valid and enforceable right to use all third party Intellectual Property and
Confidential Information used or held for use in the respective businesses of
the Company and its Subsidiaries.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      

      (d)           To
the Company’s Knowledge, the conduct of the Company’s and its Subsidiaries’
businesses as currently conducted does not infringe or otherwise impair or
conflict with (collectively, “Infringe”) any
Intellectual Property rights of any third party or any confidentiality
obligation owed to a third party, and, to the Company’s Knowledge, the
Intellectual Property and Confidential Information of the Company and its
Subsidiaries which are necessary for the conduct of Company’s and each of its
Subsidiaries’ respective businesses as currently conducted or as currently
proposed to be conducted are not being Infringed by any third
party.  There is no litigation or order pending or outstanding or, to
the Company’s Knowledge, threatened or imminent, that seeks to limit or
challenge or that concerns the ownership, use, validity or enforceability of any
Intellectual Property or Confidential Information of the Company and its
Subsidiaries and the Company’s and its Subsidiaries’ use of any Intellectual
Property or Confidential Information owned by a third party, and, to the
Company’s Knowledge, there is no valid basis for the same.

      

      (e)           The
consummation of the transactions contemplated hereby and by the other
Transaction Documents will not result in the alteration, loss, impairment of or
restriction on the Company’s or any of its Subsidiaries’ ownership or right to
use any of the Intellectual Property or Confidential Information which is
necessary for the conduct of Company’s and each of its Subsidiaries’ respective
businesses as currently conducted or as currently proposed to be
conducted.

      

      (f)           The
Company and its Subsidiaries have taken reasonable steps to protect the
Company’s and its Subsidiaries’ rights in their Intellectual Property and
Confidential Information.  Each employee, consultant and contractor
who has had access to Confidential Information which is necessary for the
conduct of Company’s and each of its Subsidiaries’ respective businesses as
currently conducted or as currently proposed to be conducted has executed an
agreement to maintain the confidentiality of such Confidential Information and
has executed appropriate agreements that are substantially consistent with the
Company’s standard forms thereof, except where the failure to do so has not had
and could not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.  Except under confidentiality
obligations, there has been no material disclosure of any of the Company’s or
its Subsidiaries’ Confidential Information to any third party.

      

      4.16          Environmental
Matters.  Except as specified in Schedule 4.16, to the
Company’s Knowledge, neither the Company nor any Subsidiary (i) is in violation
of any statute, rule, regulation, decision or order of any governmental agency
or body or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic
substances (collectively, “Environmental Laws”),
(ii) owns or operates any real property contaminated with any substance that is
subject to any Environmental Laws, (iii) is liable for any off-site disposal or
contamination pursuant to any Environmental Laws, or (iv) is subject to any
claim relating to any Environmental Laws, which violation, contamination,
liability or claim has had or could reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate; and there is no pending or, to
the Company’s Knowledge, threatened investigation that might lead to such a
claim.

       

      
        
          
          

        

        
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      4.17          Litigation.  Except
as described on Schedule 4.17 and
except as disclosed in the SEC Filings, there are no pending actions, suits or
proceedings against or affecting the Company, its Subsidiaries or any of its or
their properties; and to the Company’s Knowledge, no such actions, suits or
proceedings are threatened or contemplated.

      

      4.18          Insurance
Coverage.  Except as set forth on Schedule 4.18, the
Company and each Subsidiary maintains in full force and effect insurance
coverage that is customary for comparably situated companies for the business
being conducted and properties owned or leased by the Company and each
Subsidiary, and the Company reasonably believes such insurance coverage to be
adequate against all liabilities, claims and risks against which it is customary
for comparably situated companies to insure.

      

      4.19          Brokers and
Finders.  No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company, other than as
described in Schedule
4.19.

      

      4.20          No Directed Selling Efforts
or General Solicitation.  Neither the Company nor any Person
acting on its behalf has conducted any general solicitation or general
advertising (as those terms are used in Regulation D) in connection with the
offer or sale of any of the Securities.

      

      4.21          No Integrated
Offering.  Neither the Company nor any of its Affiliates, nor
any Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any Company security or solicited any offers to buy any
security, under circumstances that would adversely affect reliance by the
Company on Section 4(2) for the exemption from registration for the transactions
contemplated hereby or would require registration of the Securities under the
1933 Act.

      

      4.22          Private
Placement.  The offer and sale of the Securities to the
Investors as contemplated hereby is exempt from the registration requirements of
the 1933 Act.

      

      4.23          Questionable
Payments.  Neither
the Company nor any of its Subsidiaries nor, to the Company’s Knowledge, any of
their respective current or former stockholders, directors, officers, employees,
agents or other Persons acting on behalf of the Company or any Subsidiary, has
on behalf of the Company or any Subsidiary or in connection with their
respective businesses: (a) used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity;
(b) made any direct or indirect unlawful payments to any governmental officials
or employees from corporate funds; (c) established or maintained any unlawful or
unrecorded fund of corporate monies or other assets; (d) made any false or
fictitious entries on the books and records of the Company or any Subsidiary;
(e) made any unlawful bribe, rebate, payoff, influence payment, kickback or
other unlawful payment of any nature; or (f) taken any actions that would
violate the U.S. Foreign Corrupt Practices Act of 1977, as amended.

       

      
        
          
          

        

        
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      4.24          Transactions with
Affiliates.  Except as disclosed in the SEC Filings or as
disclosed on Schedule
4.24, none of the officers or directors of the Company and, to the
Company’s Knowledge, none of the employees of the Company is presently a party
to any transaction with the Company or any Subsidiary (other than as holders of
stock options and/or warrants, and for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the Company’s Knowledge, any entity in which
any officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.

      

      4.25           Disclosures.  Neither
the Company nor any Person acting on its behalf has provided the Investors or
their agents or counsel with any information that constitutes or might
constitute material, non-public information.  The written materials
delivered to the Investors in connection with the transactions contemplated by
the Transaction Documents do not 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 light of the circumstances under which they were made, not
misleading.

      

      5.            
Representations
and Warranties of the Investors.  Each of the
Investors hereby severally, and not jointly, represents and warrants to the
Company that:

      

      5.1           Organization and
Existence.  Such Investor is an individual or a validly
existing corporation, limited partnership, or limited liability company and has
all requisite individual, corporate, partnership or limited liability company
power and authority to invest in the Securities pursuant to this
Agreement.

      

      5.2           Authorization.  The
execution, delivery and performance by such Investor of the Transaction
Documents to which such Investor is a party have been duly authorized and will
each constitute the valid and legally binding obligation of such Investor,
enforceable against such Investor in accordance with their respective terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability, relating to or affecting
creditors’ rights generally.

      

      5.3           Purchase Entirely for Own
Account.  The Securities to be received by such Investor
hereunder will be acquired for such Investor’s own account, not as nominee or
agent, and not with a view to the resale or distribution of any part thereof in
violation of the 1933 Act, and such Investor has no present intention of
selling, granting any participation in, or otherwise distributing the same in
violation of the 1933 Act without prejudice, however, to such Investor’s right
at all times to sell or otherwise dispose of all or any part of such Securities
in compliance with applicable federal and state securities laws.  Nothing contained
herein shall be deemed a representation or warranty by such Investor to hold the
Securities for any period of time.  Such Investor is not a
broker-dealer registered with the SEC under the 1934 Act or an entity engaged in
a business that would require it to be so registered.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      

      5.4           Investment
Experience.  Such Investor acknowledges that it can bear the
economic risk and complete loss of its investment in the Securities and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment contemplated
hereby.

      

      5.5           Disclosure of
Information.  Such Investor has had an opportunity to receive
all information related to the Company requested by it and to ask questions of
and receive answers from the Company regarding the Company, its business and the
terms and conditions of the offering of the Securities.  Such Investor
acknowledges receipt of copies of the SEC Filings.  Neither such
inquiries nor any other due diligence investigation conducted by such Investor
shall modify, amend or affect such Investor’s right to rely on the Company’s
representations and warranties contained in this Agreement.

      

      5.6           Restricted
Securities.  Such Investor understands that the Securities are
characterized as “restricted securities” under the U.S. federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the 1933 Act only in
certain limited circumstances.

      

      5.7           Legends.  It
is understood that, except as provided below, certificates evidencing the
Securities may bear the following or any similar legend:

      

      (a)           “The
securities represented hereby may not be transferred unless (i) such securities
have been registered for sale pursuant to the 1933 Act, as amended, or (ii) the
Company has received an opinion of counsel reasonably satisfactory to it that
such transfer may lawfully be made without registration under the 1933 Act, as
amended, or qualification under applicable state securities laws.”

      

      (b)           If
required by the authorities of any state in connection with the issuance of sale
of the Securities, the legend required by such state authority.

      

      5.8           Accredited
Investor.  Such Investor is an “accredited investor” within the
meaning of Rule 501(a) of Regulation D promulgated under the 1933 Act for the
reasons checked on Schedule
1 hereto, and would be considered either (a) a large institutional
accredited investor, or (b) a "qualified institutional buyer" under Rule 144A
under the 1933 Act.

      

      5.9           No General
Solicitation.  Such Investor did not learn of the investment in
the Securities as a result of any public advertising or general
solicitation.

      

      5.10          Brokers and
Finders.  No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of such Investor, other than as
described on Schedule
5.10.

       

      
        
          
          

        

        
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      5.11          Prohibited
Transactions.  During the last thirty (30) days prior to the
date hereof, neither such Investor nor any Affiliate of such Investor which (x)
had knowledge of the transactions contemplated hereby, (y) has or shares
discretion relating to such Investor’s investments or trading or information
concerning such Investor’s investments, including in respect of the Securities,
or (z) is subject to such Investor’s review or input concerning such Affiliate’s
investments or trading (collectively, “Trading Affiliates”)
has, directly or indirectly, effected or agreed to effect any short sale,
whether or not against the box, established any “put equivalent position” (as
defined in Rule 16a-1(h) under the 1934 Act) with respect to the Common Stock,
granted any other right (including, without limitation, any put or call option)
with respect to the Common Stock or with respect to any security that includes,
relates to or derived any significant part of its value from the Common Stock or
otherwise sought to hedge its position in the Securities (each, a “Prohibited
Transaction”).  Such Investor shall not, and shall cause its
Trading Affiliates not to, engage, directly or indirectly, in a Prohibited
Transaction.  Such Investor acknowledges that the representations,
warranties and covenants contained in this Section 5.11 are being made for the
benefit of the Investors as well as the Company and that each of the other
Investors shall have an independent right to assert any claims against such
Investor arising out of any breach or violation of the provisions of this
Section 5.11.

      

      5.12          Reliance on
Exemptions.  Such Investor understands that the Securities are
being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and such Investor’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Investor set forth herein in order to determine the
availability of such exemptions and the eligibility of such Investor to acquire
the Securities.

      

      6. 
           Conditions to
Closing.

      

      6.1           Conditions to the Investors’
Obligations. The obligation of each Investor to purchase the Notes and
the Warrants at the Closing is subject to the fulfillment to such Investor’s
satisfaction, on or prior to the Closing Date, of the following conditions, any
of which may be waived by such Investor (as to itself only):

      

      (a)           The
representations and warranties made by the Company in Section 4 hereof qualified
as to materiality shall be true and correct at all times prior to and on the
Closing Date, except to the extent any such representation or warranty expressly
speaks as of a specific date, in which case such representation or warranty
shall be true and correct as of such date, and, the representations and
warranties made by the Company in Section 4 hereof not qualified as to
materiality shall be true and correct in all material respects at all times
prior to and on the Closing Date, except to the extent any such representation
or warranty expressly speaks as of a specific date, in which case such
representation or warranty shall be true and correct in all material respects as
of such specific date.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      

      (b)           The
Company shall have performed in all material respects all obligations and
covenants herein required to be performed by it on or prior to the Closing
Date.

      

      (c)           The
Company shall have obtained any and all consents, permits, approvals,
registrations and waivers necessary or appropriate
for consummation of the purchase and sale of the Notes and the Warrants and the
consummation of the other transactions contemplated by the Transaction Documents
to be consummated on or prior to the Closing Date, all of which shall be in full
force and effect.

      

      (d)           The
Company shall have executed and delivered the Notes and the
Warrants.

      

      (e)           Other
than a proceeding of the Federal Trade Commission as disclosed by the Company in
SEC Filings, no judgment, writ, order, injunction, award or decree of or by any
court, or judge, justice or magistrate, including any bankruptcy court or judge,
or any order of or by any governmental authority, shall have been issued, and no
action or proceeding shall have been instituted by any governmental authority,
enjoining or preventing the consummation of the transactions contemplated hereby
or in the other Transaction Documents.

      

      (f)           No
stop order or suspension of trading shall have been imposed by the SEC or any
other governmental or regulatory body with respect to public trading in the
Common Stock.

       

      6.2           Conditions to Obligations of
the Company. The Company’s obligation to sell and issue the Notes and the
Warrants at the Closing is subject to the fulfillment to the satisfaction of the
Company on or prior to the Closing Date of the following conditions, any of
which may be waived by the Company:

      

      (a)           The
representations and warranties made by the Investors in Section 5 hereof, other
than the representations and warranties contained in Sections 5.3, 5.4, 5.5,
5.6, 5.7, 5.8 and 5.9 (the “Investment
Representations”), shall be true and correct in all material respects
when made, and shall be true and correct in all material respects on the Closing
Date with the same force and effect as if they had been made on and as of said
date.  The Investment Representations shall be true and correct in all
respects when made, and shall be true and correct in all respects on the Closing
Date with the same force and effect as if they had been made on and as of said
date.  The Investors shall have performed in all material respects all
obligations and covenants herein required to be performed by them on or prior to
the Closing Date.

      

      (b)           No
judgment, writ, order, injunction, award or decree of or by any court, or judge,
justice or magistrate, including any bankruptcy court or judge, or any order of
or by any governmental authority, shall have been issued, and no action or
proceeding shall have been instituted by any governmental authority, enjoining
or preventing the consummation of the transactions contemplated hereby or in the
other Transaction Documents.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      

      (c)           The
Company shall have received payment for the Loan Amount from each of the
Investors.

      

      6.3           Termination of Obligations
to Effect Closing; Effects.

      

      (a)           The
outstanding obligations of the Company, on the one hand, and the Investors, on
the other hand, to effect the Closing shall terminate as follows:

      

      (i)           Upon
the mutual written consent of the Company and the Investors;

      

      (ii)           By
the Company if any of the conditions set forth in Section 6.2 shall have become
incapable of fulfillment, and shall not have been waived by the Company;
or

      

      (iii)           By
an Investor (with respect to itself only) if any of the conditions set forth in
Section 6.1 shall have become incapable of fulfillment, and shall not have been
waived by the Investor.

      

      provided, however, that, except
in the case of clause (i) above, the party seeking to terminate its obligation
to effect the Closing shall not then be in breach of any of its representations,
warranties, covenants or agreements contained in this Agreement or the other
Transaction Documents if such breach has resulted in the circumstances giving
rise to such party’s seeking to terminate its obligation to effect the
Closing.

      

      (b)           In
the event of termination by any Investor of its obligations to effect the
Closing pursuant to this Section 6.3, written notice thereof shall forthwith be
given to the other Investors and the other Investors shall have the right to
terminate their obligations to effect such Closing upon written notice to the
Company and the other Investors.  Nothing in this Section 6.3 shall be
deemed to release any party from any liability for any breach by such party of
the terms and provisions of this Agreement or the other Transaction Documents or
to impair the right of any party to compel specific performance by any other
party of its obligations under this Agreement or the other Transaction
Documents.

      

      7.            
Covenants and
Agreements of the Company.

      

      7.1           Reservation of Common
Stock.  The Company shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of providing for the conversion of the Notes and the exercise of the
Warrants, such number of shares of Common Stock as shall from time to time equal
the Conversion Shares and the Warrant Shares issuable from time to
time.

      

      7.2           Reports.  The
Company will furnish to the Investors and/or their assignees such information
relating to the Company and its Subsidiaries as from time to time may reasonably
be requested by the Investors and/or their assignees; provided, however, that
the Company shall not disclose material nonpublic information to the Investors,
or to advisors to or representatives of the Investors, unless prior to
disclosure of such information the Company identifies such information as being
material nonpublic information and provides the Investors, such advisors and
representatives with the opportunity to accept or refuse to accept such material
nonpublic information for review and any Investor wishing to obtain such
information enters into an appropriate confidentiality agreement with the
Company with respect thereto.

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      

      7.3           No Conflicting
Agreements.  The Company will not take any action, enter into
any agreement or make any commitment that would conflict or interfere in any
material respect with the Company’s obligations to the Investors under the
Transaction Documents.

      

      7.4           Insurance.  The
Company shall not materially reduce the insurance coverages described in Section
4.18.

      

      7.5           Compliance with
Laws.  The Company will comply in all material respects with
all applicable laws, rules, regulations, orders and decrees of all governmental
authorities.

      

      7.6           Listing of Underlying Shares
and Related Matters.  If the Company applies to have its Common
Stock or other securities traded on any stock exchange or market, it shall
include in such application the Conversion Shares and the Warrant Shares and
will take such other action as is necessary to cause such Common Stock to be so
listed.  Thereafter, the Company will use commercially reasonable
efforts to continue the listing and trading of its Common Stock on such exchange
or market and, in accordance, therewith, will use commercially reasonable
efforts to comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of such exchange or market, as
applicable.

      

      8.            
Survival and
Indemnification.

      

      8.1           Survival.  The
representations, warranties, covenants and agreements contained in this
Agreement shall survive the Closing of the transactions contemplated by this
Agreement.

      

      8.2           Indemnification.  The
Company and the Investors agree to indemnify and hold harmless each other and
their respective Affiliates and their respective directors, officers, employees
and agents from and against any and all losses, claims, damages, liabilities and
expenses (including without limitation reasonable attorney fees and
disbursements and other expenses incurred in connection with investigating,
preparing or defending any action, claim or proceeding, pending or threatened
and the costs of enforcement thereof) (collectively, “Losses”) to which
such Person may become subject as a result of any breach of representation,
warranty, covenant or agreement made by or to be performed on the part of the
Company under the Transaction Documents, and will reimburse any such Person for
all such amounts as they are incurred by such Person.

      
         

        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      

      8.3           Conduct of Indemnification
Proceedings.  Promptly
after receipt by any Person (the “Indemnified Person”)
of notice of any demand, claim or circumstances which would or might give rise
to a claim or the commencement of any action, proceeding or investigation in
respect of which indemnity may be sought pursuant to Section 8.2, such
Indemnified Person shall promptly notify the indemnifying Person (the “Indemnifying Person”)
in writing and the Indemnifying Person shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; provided, however, that the failure of any
Indemnified Person so to notify the Indemnifying Person shall not relieve the
Indemnifying Person of its obligations hereunder except to the extent that the
Indemnifying Person is materially prejudiced by such failure to
notify.  In any such proceeding, any Indemnified Person shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Person unless: (i) the Indemnifying Person
and the Indemnified Person shall have mutually agreed to the retention of such
counsel; or (ii) in the reasonable judgment of counsel to such Indemnified
Person representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them.  The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, but if settled with such consent, or if there be a final judgment for
the plaintiff, the Indemnifying Person shall indemnify and hold harmless such
Indemnified Person from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment.  Without the prior
written consent of the Indemnified Person, which consent shall not be
unreasonably withheld, the Indemnifying Person shall not effect any settlement
of any pending or threatened proceeding in respect of which any Indemnified
Person is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Person from all liability arising out
of such proceeding.

      

      9.            
Miscellaneous.

      

      9.1           Successors and
Assigns.  This Agreement may not be assigned by a party hereto
without the prior written consent of the Company or the Investors, as
applicable, provided, however, that an Investor may assign its rights and
delegate its duties hereunder in whole or in part to an Affiliate or to a third
party acquiring some or all of its Securities in a private transaction without
the prior written consent of the Company or the other Investors, after notice
duly given by such Investor to the Company provided, that no such assignment or
obligation shall affect the obligations of such Investor
hereunder.  The provisions of this Agreement shall inure to the
benefit of and be binding upon the respective permitted successors and assigns
of the parties.  Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

      

      9.2           Counterparts;
Faxes.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  This Agreement
may also be executed via facsimile, which shall be deemed an
original.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      

      9.3           Titles 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.

      

      9.4           Notices.  Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given as hereinafter
described (i) if given by personal delivery, then such notice shall be deemed
given upon such delivery, (ii) if given by telex or telecopier, then such notice
shall be deemed given upon receipt of confirmation of complete transmittal,
(iii) if given by mail, then such notice shall be deemed given upon the earlier
of (A) receipt of such notice by the recipient or (B) three days after such
notice is deposited in first class mail, postage prepaid, and (iv) if given by
an internationally recognized overnight air courier, then such notice shall be
deemed given one Business Day after delivery to such carrier.  All
notices shall be addressed to the party to be notified at the address as
follows, or at such other address as such party may designate by ten days’
advance written notice to the other party:

      

      If to the Company:

      

      Commerce Planet, Inc.

      30 South La Patera Lane, Suite
8

      Goleta, California 93117

      Attn:  Anthony G. Roth,
President

      Fax:  (805)
456-2991

      

      With a copy to:

      

      Hodgson
Russ LLP

      1540
Broadway, 24th Floor

      New York,
NY 10036

      Attn:
Jeffrey A. Rinde, Esq.

      Fax: (212)
751-0928

      

      If to the Investors:

      

      to the addresses set forth on the
signature pages hereto.

      

      9.5           Expenses.  The
parties hereto shall pay their own costs and expenses in connection
herewith.  In the event that legal proceedings are commenced by any
party to this Agreement against another party to this Agreement in connection
with this Agreement or the other Transaction Documents, the party or parties
which do not prevail in such proceedings shall severally, but not jointly, pay
their pro rata share of the reasonable attorneys’ fees and other reasonable
out-of-pocket costs and expenses incurred by the prevailing party in such
proceedings.

      

      9.6           Amendments and
Waivers.  Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investors.  Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Securities purchased under this Agreement at the time outstanding,
each future holder of all such Securities, and the
Company.  Notwithstanding the foregoing, no consideration shall be
offered or paid by the Company to any Investor to amend or consent to a waiver
or modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the holders of the Notes and/or
Warrants.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      

      9.7           Publicity.  No
public release or announcement concerning the transactions contemplated hereby
shall be issued by the Company or the Investors without the prior consent of the
Company (in the case of a release or announcement by the Investors) or the
Investors (in the case of a release or announcement by the Company) (which
consents shall not be unreasonably withheld), except as such release or
announcement may be required by law or the applicable rules or regulations of
any securities exchange or securities market, in which case the Company or the
Investors, as the case may be, shall allow the Investors or the Company, as
applicable, to the extent reasonably practicable in the circumstances,
reasonable time to comment on such release or announcement in advance of such
issuance.

      

      9.8           Severability.  Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.  To the
extent permitted by applicable law, the parties hereby waive any provision of
law which renders any provision hereof prohibited or unenforceable in any
respect.

      

      9.9           Entire
Agreement.  This Agreement, including the Exhibits and the
Disclosure Schedules, and the other Transaction Documents constitute the entire
agreement among the parties hereof with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof and
thereof.

      

      9.10          Further
Assurances.  The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.

      

      9.11          Governing Law; Consent to
Jurisdiction; Waiver of Jury Trial.  This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
New York without regard to the choice of law principles thereof.  Each
of the parties hereto irrevocably submits to the exclusive jurisdiction of the
courts of the State of New York located in New York County and the United States
District Court for the Southern District of New York for the purpose of any
suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby.  Service of
process in connection with any such suit, action or proceeding may be served on
each party hereto anywhere in the world by the same methods as are specified for
the giving of notices under this Agreement.  Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such
court.  Each party hereto irrevocably waives any objection to the
laying of venue of any such suit, action or proceeding brought in such courts
and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY
RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS
AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

      

      9.12          Independent Nature of
Investors’ Obligations and Rights.  The obligations of each
Investor under any Transaction Document are several and not joint with the
obligations of any other Investor, and no Investor shall be responsible in any
way for the performance of the obligations of any other Investor under any
Transaction Document.  The decision of each Investor to purchase
Securities pursuant to the Transaction Documents has been made by such Investor
independently of any other Investor.  Nothing contained herein or in
any Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction
Documents.  Each Investor acknowledges that no other Investor has
acted as agent for such Investor in connection with making its investment
hereunder and that no Investor will be acting as agent of such Investor in
connection with monitoring its investment in the Securities or enforcing its
rights under the Transaction Documents.  Each Investor shall be
entitled to independently protect and enforce its rights, including, without
limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Investor to
be joined as an additional party in any proceeding for such
purpose.  The Company acknowledges that each of the Investors has been
provided with the same Transaction Documents for the purpose of closing a
transaction with multiple Investors and not because it was required or requested
to do so by any Investor.

      

      9.13          Acceptance of
Investment.  Except as otherwise set forth herein, at any time
prior to the Closing Date, the Company, in its sole discretion, may (i) accept
or reject any Investor’s purchase of Notes and Warrants in whole or in part, or
(ii) allot to any Investor a lesser number of Notes and Warrants than the
number of Notes and Warrants set forth on the Investor’s signature page attached
hereto.

       

      [signature
page follows]

       

       

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

      

      IN WITNESS WHEREOF, the
parties have executed this Agreement or caused their duly authorized officers to
execute this Agreement as of the date first above written.

       

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        	 
      	COMMERCE
      PLANET, INC.
	 
      	 	 
      	 
      
	 
      	 	 
      	 
      
	 
      	 	 
      	 
      
	 
      	By:	
                                                /s/ Anthony G.
      Roth

                                              
	 
      	 	 
      	
                                                Name:
      Anthony G. Roth

                                              
	 
      	 	 
      	
                                                Title:
      President

                                              

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

       

      SECURITIES
PURCHASE AGREEMENT

      COUNTERPART
SIGNATURE PAGE

       

      By signing below, the undersigned
agrees to the terms of the Securities Purchase Agreement and to purchase the
Note and Warrants set forth below.

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      
                                                                                                        
                                                                                                          
                                                                                                            
                                                                                                              
                                                                                                                
                                                                                                                  
                                                                                                                    
                                                                                                                      
                                                                                                                        
                                                                                                                          
                                                                                                                            
                                                                                                                              
                                                                                                                                
                                                                                                                                  
                                                                                                                                    
                                                                                                                                      	 
      	 	
                                                                                                                                              INVESTOR:

                                                                                                                                            
	 	 	 
	 	 	 
	Principal
      amount of Note being purchased:	 	Gary
      Palmer
	 	 	 	 	 
	$12,500	 	 	 	 
	 	 	 	 	 
	Warrant
      Shares:	 	By:	/s/
      Gary Palmer
	 	 	
                                                                                                                                               

                                                                                                                                            	Name:
      Gary Palmer
	250,000	 	 	 	 
	 	 	 	Address:	115 NE 12th
      Avenue
	Loan
      Amount:	 	
                                                                                                                                               

                                                                                                                                            	 	Ft.
      Lauderdale, FL 33301
	 	 	 	Facsimile:	(954)
      767-8333
	$12,500	 	with
      a copy
to:

                                                                                                                                    

                                                                                                                                  

                                                                                                                                

                                                                                                                              

                                                                                                                            

                                                                                                                          

                                                                                                                        

                                                                                                                      

                                                                                                                    

                                                                                                                  

                                                                                                                

                                                                                                              

                                                                                                            

                                                                                                          

                                                                                                        

                                                                                                      

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                  	
                                    Please
      complete the following:

                                  
	 
      	
                                    1.

                                  	
                                    The
      exact name that your Note and Warrants are to be registered in (this is
      the name that will appear on your Note and Warrant certificates). You may
      use a nominee name if appropriate:

                                  	
                                    Gary
      Palmer                             

                                  
	 
      	
                                    2.

                                  	
                                    The
      relationship between the Investors and the Registered Holder listed in
      response to item 1 above:

                                  	
                                    Self                             

                                  
	 
      	
                                    3.

                                  	
                                    The
      mailing address and facsimile number of the Registered Holder listed in
      response to item 1 above (if different from above):

                                  	
                                    115
      NE 12th
      Avenue

                                    Ft.
      Lauderdale, FL 33301

                                    Facsimile:
      (954) 767-8333

                                  
	 
      	
                                    4.

                                  	
                                    (For United States
      Investors:)  The Social Security Number or Tax
      Identification Number of the Registered Holder listed in the response to
      item 1 above:

                                  	 

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

       

      SECURITIES
PURCHASE AGREEMENT

      COUNTERPART
SIGNATURE PAGE

       

      By signing below, the undersigned
agrees to the terms of the Securities Purchase Agreement and to purchase the
Note and Warrants set forth below.

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      
                                                                                                        
                                                                                                          
                                                                                                            
                                                                                                              
                                                                                                                
                                                                                                                  
                                                                                                                    
                                                                                                                      
                                                                                                                        
                                                                                                                          
                                                                                                                            
                                                                                                                              
                                                                                                                                
                                                                                                                                  
                                                                                                                                    	 
      	 	
                                                                                                                                            INVESTOR:

                                                                                                                                          
	 	 	 
	 	 	 
	Principal
      amount of Note being purchased:	 	Gary
      D. Elliston
	 	 	 	 	 
	$75,000	 	 	 	 
	 	 	 	 	 
	Warrant
      Shares:	 	By:	/s/
      Gary D. Elliston
	 	 	
                                                                                                                                             

                                                                                                                                          	Name:
      Gary D. Elliston
	1,500,000	 	 	 	 
	 	 	 	Address:	901 Main St., Suite 3500
	Loan
      Amount:	 	
                                                                                                                                             

                                                                                                                                          	 	Dallas,
      TX 75202
	 	 	 	Facsimile:	(214)
      210-2500
	$75,000	 	with
      a copy
to:

                                                                                                                                  

                                                                                                                                

                                                                                                                              

                                                                                                                            

                                                                                                                          

                                                                                                                        

                                                                                                                      

                                                                                                                    

                                                                                                                  

                                                                                                                

                                                                                                              

                                                                                                            

                                                                                                          

                                                                                                        

                                                                                                      

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

         

        
           

          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	
                                        	
                                          Please
      complete the following:

                                        
	 
      	
                                          1.

                                        	
                                          The
      exact name that your Note and Warrants are to be registered in (this is
      the name that will appear on your Note and Warrant certificates). You may
      use a nominee name if appropriate:

                                        	
                                          Gary D. Elliston

                                        
	 
      	
                                          2.

                                        	
                                          The
      relationship between the Investors and the Registered Holder listed in
      response to item 1 above:

                                        	
                                          Self

                                        
	 
      	
                                          3.

                                        	
                                          The
      mailing address and facsimile number of the Registered Holder listed in
      response to item 1 above (if different from above):

                                        	
                                          901
      Main St., Suite 3500

                                          Dallas,
      TX 75202

                                          Facsimile:
      (214) 210-2500

                                        
	 
      	
                                          4.

                                        	
                                          (For United States
      Investors:)  The Social Security Number or Tax
      Identification Number of the Registered Holder listed in the response to
      item 1 above:

                                        	
                                        

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

           

        

         

        
          
            
            

          

          
            24

            
              

            

          

          
            
            

          

        

      

       

       

      SECURITIES
PURCHASE AGREEMENT

      COUNTERPART
SIGNATURE PAGE

       

      By signing below, the undersigned
agrees to the terms of the Securities Purchase Agreement and to purchase the
Note and Warrants set forth below.

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      
                                                                                                        
                                                                                                          
                                                                                                            
                                                                                                              
                                                                                                                
                                                                                                                  
                                                                                                                    
                                                                                                                      
                                                                                                                        
                                                                                                                          
                                                                                                                            
                                                                                                                              
                                                                                                                                
                                                                                                                                  
                                                                                                                                    
                                                                                                                                      
                                                                                                                                        
                                                                                                                                          
                                                                                                                                            
                                                                                                                                              
                                                                                                                                                	 
      	 	
                                                                                                                                                        INVESTOR:

                                                                                                                                                      
	 	 	 
	 	 	 
	Principal
      amount of Note being purchased:	 	VComm
      Network, Inc.
	 	 	 	 	 
	$75,000	 	 	 	 
	 	 	 	 	 
	Warrant
      Shares:	 	By:	/s/
      Anthony G. Roth
	 	 	
                                                                                                                                                         

                                                                                                                                                      	Name:
      Anthony G. Roth
	1,500,000	 	 	Title:
      Chairman
	 	 	 	 	 
	 	 	 	Address:	6080 Center Drive
	Loan
      Amount:	 	
                                                                                                                                                         

                                                                                                                                                      	 	Los
      Angeles, CA 90045
	 	 	 	Facsimile:	 
	$75,000	 	with
      a copy
to:

                                                                                                                                              

                                                                                                                                            

                                                                                                                                          

                                                                                                                                        

                                                                                                                                      

                                                                                                                                    

                                                                                                                                  

                                                                                                                                

                                                                                                                              

                                                                                                                            

                                                                                                                          

                                                                                                                        

                                                                                                                      

                                                                                                                    

                                                                                                                  

                                                                                                                

                                                                                                              

                                                                                                            

                                                                                                          

                                                                                                        

                                                                                                      

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

           

           

          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        	
                                              	
                                                Please
      complete the following:

                                              
	 
      	
                                                1.

                                              	
                                                The
      exact name that your Note and Warrants are to be registered in (this is
      the name that will appear on your Note and Warrant certificates). You may
      use a nominee name if appropriate:

                                              	
                                                VComm Network, Inc.

                                              
	 
      	
                                                2.

                                              	
                                                The
      relationship between the Investors and the Registered Holder listed in
      response to item 1 above:

                                              	
                                                Same

                                              
	 
      	
                                                3.

                                              	
                                                The
      mailing address and facsimile number of the Registered Holder listed in
      response to item 1 above (if different from above):

                                              	
                                                6080
      Center Drive

                                                Los
      Angeles, CA 90045

                                              
	 
      	
                                                4.

                                              	
                                                (For United States
      Investors:)  The Social Security Number or Tax
      Identification Number of the Registered Holder listed in the response to
      item 1 above:

                                              	
                                              

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

               

            

          

        

      

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

       

      Exhibit
A

      

      (Form
of Note)

       

       

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      
 

      Exhibit
B

      

      (Form
of Warrant)

       

       

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

       

       

      Schedule
1

      

      Accredited
Investor Status

      

      

      Investor
Name (please print): 
____________________________________________________________________

      

      Please initial below the items which
apply to your status as an Accredited Investor.

      

      

      
        	
                __________

              	
                An
      individual having a net worth with spouse (excluding automobiles,
      principal residence and furnishings) at the time of purchase, individually
      or jointly, in excess of
$1,000,000.

              

      

      

      
        	
                __________

              	
                An
      individual whose individual net income was in excess of $200,000 in each
      of the two most recent years, or whose joint net income with his or her
      spouse was in excess of $300,000 in each of those years, and who
      reasonably expects his individual or joint income with such investor’s
      spouse to reach such level in the current
year.

              

      

      

      
        	
                __________

              	
                A
      corporation or partnership, not formed for the specific purpose of
      acquiring the purchased securities, having total assets in excess of
      $5,000,000.

              

      

      

      
        	
                __________

              	
                A
      small business investment company licensed by the U.S. Small Business
      Administration under section 301(c) or (d) of the Small Business
      Investment Act of 1958.

              

      

      

      
        	
                __________

              	
                A
      self-directed benefit plan within the meaning of ERISA, with investment
      decisions made solely by persons who are accredited investors as defined
      in Rule 501(2) of Regulations D.

              

      

      

      
        	
                __________

              	
                A
      trust with total assets in excess of $5,000,000 not formed for the
      specific purpose of acquiring the purchased securities, whose purchase is
      directed by a sophisticated person (i.e., a person who has such knowledge
      and experience in financial and business matters that he, she or it is
      capable of evaluating the merits and risks of an investment in the
      purchased securities).

              

      

       

      
        
          	
                  __________

                	
                  An
      entity in which all of the equity owners are accredited
      investors.

                

        

      

       

      
        
          	
                  __________

                	
                  
                    Other
      (describe):

                  

                

        

      

       

    

     

    28

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