Document:

IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

                                 August 30, 2006

Fidelity Transfer Company
1800 S. West Temple, Suite 301
Salt Lake City, Utah 84115

     RE:  CHARYS  HOLDING  CO.,  INC.

Ladies and Gentlemen:

          Reference is made to that certain Securities Purchase Agreement, dated
as  of  August  30, 2006 (the "AGREEMENT"), by and among Charys Holding Company,
Inc.,  a  Delaware  corporation  (the "COMPANY"), and the investors named on the
Schedule  of  Buyers attached thereto (collectively, the "HOLDERS"), pursuant to
which  the  Company  (x)  is issuing to the Holders (i) convertible notes (the "
NOTES"),  which  are convertible into shares of the common stock of the Company,
par  value  $0.001  per  share  (the  "COMMON  STOCK"),  and  (ii) warrants (the
"WARRANTS"),  which  are  exercisable  to  purchase  shares  of  Common  Stock.

          This  letter  shall  serve  as  our authorization and direction to you
(provided  that  you  are  the  transfer  agent  of  the  Company at such time):

          (i)     to  issue  shares of Common Stock upon conversion of the Notes
(the  "CONVERSION  SHARES")  to  or upon the order of a Holder from time to time
upon  delivery  to  you  of  a  properly  completed and duly executed Conversion
Notice;  and

          (ii)     to issue shares of Common Stock upon exercise of the Warrants
(the  "WARRANT  SHARES") to or upon the order of a Holder from time to time upon
delivery  to  you  of  a  properly  completed and duly executed Exercise Notice.

This  letter  shall  serve  as  our  irrevocable  authorization and direction to
Fidelity  Transfer  Company  (the  "Transfer  Agent")  to  do  the  following:
                                    ---------------

     1.     Conversion  Shares  and  Warrant  Shares.

          a.   Instructions  Applicable  to Transfer Agent.  With respect to the
               Conversion  Shares  and  the  Warrant  Shares, the Transfer Agent
               shall  issue  the  Conversion Shares or the Warrant Shares to the
               Holder from time to time upon delivery to the Transfer Agent of a
               properly  completed  and  duly  executed  Conversion  Notice (the
               "CONVERSION  NOTICE"),  in the form attached hereto as Exhibit I,
                                                                      ---------
               delivered  on  behalf of the Company to the Transfer Agent by the
               Holder  or  a  properly

<PAGE>
               completed  and  duly  executed  notice  of exercise substantially
               in  the  form  attached  to  the Warrant (the "EXERCISE NOTICE"),
               respectively.  Upon  receipt  of  a Conversion Notice or Exercise
               Notice,  the  Transfer  Agent  shall  within  one (1) Trading Day
               thereafter  (i)  issue  and  surrender  to  a  common carrier for
               overnight  delivery to the address as specified in the Conversion
               Notice  or  Exercise  Notice,  a  certificate  or  certificates,
               registered  in  the  name of the Holder or its designees, for the
               number  of  shares  of  Common Stock to which the Holder shall be
               entitled as set forth in the Conversion Notice or Exercise Notice
               or  (ii) provided that the Transfer Agent is participating in The
               Depository  Trust  Company  ("DTC")  Fast  Automated  Securities
               Transfer  Program,  upon  the  request of the Holder, credit such
               aggregate  number  of  shares of Common Stock to which the Holder
               shall  be  entitled  to  the  Holder's  or its designees' balance
               account  with  DTC  through their Deposit Withdrawal At Custodian
               ("DWAC")  system  provided the Holder cause its bank or broker to
               initiate  the DWAC transaction. For purposes hereof "TRADING DAY"
               shall  mean  any day on which the American Stock Exchange is open
               for  customary  trading.

          b.   The  Company hereby confirms to the Transfer Agent and the Holder
               that  certificates  representing  the  Conversion  Shares  and
               Warrant Shares shall not bear any legend restricting transfer and
               should not be subject to any stop-transfer restrictions and shall
               otherwise  be freely transferable on the books and records of the
               Company;  provided  that  counsel to the Company delivers (i) the
               Notice  of  Effectiveness set forth in Exhibit II attached hereto
                                                      ----------
               and  (ii)  an opinion of counsel in the form set forth in Exhibit
                                                                         -------
               III  attached  hereto,  and that if the Conversion Shares and the
               ---
               Warrant Shares are not registered for resale under the Securities
               Act  of  1933,  as  amended,  then  the  provisions  of paragraph
               1(a)(ii),  above,  shall  not be applicable until such shares are
               registered,  and  the  certificates for the Conversion Shares and
               Warrant  Shares  shall  bear  the  following  legend:

               "THE  SECURITIES  REPRESENTED  BY  THIS  CERTIFICATE  HAVE  NOT
               BEEN  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
               APPLICABLE  STATE  SECURITIES  LAWS.  THE  SECURITIES  HAVE  BEEN
               ACQUIRED  FOR  INVESTMENT  AND MAY NOT BE OFFERED FOR SALE, SOLD,
               TRANSFERRED  OR  ASSIGNED  IN  THE  ABSENCE  OF  AN  EFFECTIVE
               REGISTRATION  STATEMENT  FOR  THE SECURITIES UNDER THE SECURITIES
               ACT  OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR
               AN  OPINION  OF  COUNSEL,  IN A FORM REASONABLY ACCEPTABLE TO THE
               COMPANY,  THAT  REGISTRATION  IS  NOT  REQUIRED UNDER SAID ACT OR
               APPLICABLE  STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE
               144  UNDER  SAID  ACT."

          c.   In  the  event  that  counsel  to the Company fails or refuses to
               render  an  opinion  as  required  to issue the Conversion Shares
               or  Warrant  Shares  in  accordance  with the preceding paragraph
               (either with or without restrictive legends, as applicable), then
               the  Company  irrevocably and expressly authorizes counsel to the
               Holder  to  render  such opinion. The Transfer Agent shall accept
               and  be  entitled  to  rely  on

                                        2
<PAGE>
               such  opinion  for  the  purposes  of  issuing  the  Conversion
               Shares  and  Warrant  Shares.

     2.     All  Shares.

          a.   The  Transfer  Agent shall reserve for issuance to the Holder the
               Conversion  Shares  and  Warrant  Shares.  All  such shares shall
               remain  in  reserve  with  the  Transfer  Agent  until the Holder
               provides  the  Transfer Agent instructions that the shares or any
               part of them shall be taken out of reserve and shall no longer be
               subject  to  the  terms  of  these  instructions.

          b.   The  Transfer  Agent  shall  rely  exclusively  on the Conversion
               Notice  and  Exercise  Notice  and  shall  have  no liability for
               relying  on  such  instructions.  Any Conversion Notice delivered
               hereunder  shall  constitute  an  irrevocable  instruction to the
               Transfer  Agent  to  process such notice or notices in accordance
               with the terms thereof. Such notice or notices may be transmitted
               to the Transfer Agent by facsimile or any commercially reasonable
               method.

          c.   The  Company hereby confirms to the Transfer Agent and the Holder
               that  no  instructions  other  than  as  contemplated herein will
               be  given  to  Transfer  Agent by the Company with respect to the
               matters  referenced  herein.  The  Company  hereby authorizes the
               Transfer  Agent,  and  the  Transfer Agent shall be obligated, to
               disregard  any  contrary instructions received by or on behalf of
               the  Company.

     The  Company  hereby agrees that it shall not replace the Transfer Agent as
the  Company's  Transfer  Agent without the prior written consent of the Holder.

     Any  attempt  by  Transfer  Agent to resign as the Company's transfer agent
hereunder  shall not be effective until such time as the Company provides to the
Transfer Agent written notice that a suitable replacement has agreed to serve as
transfer  agent and to be bound by the terms and conditions of these Irrevocable
Transfer  Agent  Instructions.

     The  Company  and  the  Transfer  Agent hereby acknowledge and confirm that
complying  with  the terms of this Agreement does not and shall not prohibit the
Transfer Agent from satisfying any and all fiduciary responsibilities and duties
it  may  owe  to  the  Company.

     The  Company  and the Transfer Agent acknowledge that the Holder is relying
on  the representations and covenants made by the Company and the Transfer Agent
hereunder and are a material inducement to the Holder purchasing Notes under the
Securities  Purchase  Agreement.  The  Company  and  the  Transfer Agent further
acknowledge  that  without such representations and covenants of the Company and
the  Transfer  Agent  made  hereunder,  the Holder would not purchase the Notes.

     Each party hereto specifically acknowledges and agrees that in the event of
a  breach  or  threatened  breach by a party hereto of any provision hereof, the
Holder  will  be  irreparably  damaged  and  that  damages  at  law  would be an
inadequate  remedy  if  these  Irrevocable  Transfer Agent Instructions were not
specifically enforced.  Therefore, in the event of a breach or threatened breach
by  a  party hereto, including, without limitation, the attempted termination of
the  agency  relationship

                                        3
<PAGE>
created  by  this  instrument,  the Holder shall be entitled, in addition to all
other  rights  or  remedies,  to  an injunction restraining such breach, without
being  required to show any actual damage or to post any bond or other security,
and/or  to  a  decree  for  specific  performance  of  the  provisions  of these
Irrevocable  Transfer  Agent  Instructions.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                        4
<PAGE>
IN  WITNESS  WHEREOF,  the  parties  have caused this letter agreement regarding
Irrevocable  Transfer Agent Instructions to be duly executed and delivered as of
the  date  first  written  above.

                                        COMPANY:

                                        CHARYS HOLDING CO., INC.

                                        By:
                                           -------------------------------------
                                        Name:   Billy Ray, Jr.
                                        Title:  Chief Executive Officer

                                        FIDELITY TRANSFER COMPANY

                                        By:
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                              ----------------------------------

                                        5
<PAGE>
<TABLE>
<CAPTION>
                                            SCHEDULE I
                                            ----------

                                         SCHEDULE OF BUYERS
                                         ------------------

                                                                                ADDRESS AND
BUYER                                             SIGNATURE                  FACSIMILE NUMBER
-------------------------------------  -------------------------------  ---------------------------
<S>                                    <C>                              <C>
Gottbetter Capital Finance, LLC        By ____________________          488 Madison Avenue
                                       Name:  Michael W. Chorske        12th Floor
                                       Title:  President                New York, NY 10022
                                                                        Facsimile: 212.400.6999

PCM II, LLC                            By ____________________          623 Fifth Avenue, 32nd Fl.
By: Prentice Capital Management, LP    Name:  Michael Weiss             New York, NY 10022
                                       Title:  Chief Financial Officer  Facsimile: (212) 756-1480

                                                                        Four Embarcadero Center,
Fort Mason Master, LP                                                   Suite 2050
By : Fort Mason Capital, LLC           By ____________________          San Francisco, CA
                                       Name:  Dan German                94111
                                       Title:  Managing Partner         Facsimile: 415.288.8113

                                                                        One North Wacker Drive,
UBS O'Connor LLC,                      By ____________________          32nd Floor
FBO O'Connor PIPES Corporate           Name:  Jeff Richmond             Chicago, IL 60606
Strategies Master Limited              Title:                           Facsimile: 312-525-6271

                                                                        Four Embarcadero Center,
                                                                        Suite 2050
Fort Mason Partners, LP                By ____________________          San Francisco, CA
By : Fort Mason Capital, LLC           Name:  Dan German                94111
                                       Title:  Managing Partner         Facsimile: 415.288.8113

                                                                        GCA Strategic Investment
GCA Strategic Investment Fund Limited  By ____________________          Fund Limited
                                       Name:  Lewis N. Lester           c/o Prime Management
                                       Title:  Director                 Limited
                                                                        Mechanics Building
                                                                        12 Church Street
                                                                        Hamilton HM II, Bermuda
                                                                        Facsimile: 441-295-3926

---------------------------------------------------------------------------------------------------
</TABLE>

                                  SCHEDULE I-1
<PAGE>
                                    EXHIBIT I
                                    ---------

                   TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
                   ------------------------------------------

                            FORM OF CONVERSION NOTICE
                            -------------------------

Reference is made to the Securities Purchase Agreement (the "Securities Purchase
                                                             -------------------
Agreement")  between  Charys  Holding Co., Inc., (the "Company"), and the Buyers
---------                                              -------
set  forth  on Schedule I attached thereto dated August 30, 2006.  In accordance
with  and  pursuant to the Securities Purchase Agreement, the undersigned hereby
elects  to convert notes into shares of common stock, par value $0.001 per share
(the  "Common  Stock"),  of the Company for the amount indicated below as of the
       -------------
date  specified  below.

Conversion Date:
                                                        ------------------------

Amount to be converted:                               $
                                                        ------------------------

Conversion Price:                                     $
                                                        ------------------------

Shares of Common Stock Issuable:
                                                        ------------------------

Amount of Note unconverted:                           $
                                                        ------------------------

Amount of Interest Converted:                         $
                                                        ------------------------

Conversion Price of Interest:                         $
                                                        ------------------------

Shares of Common Stock Issuable:
                                                        ------------------------

Shares of Common Stock Issuable:
                                                        ------------------------

Total Number of shares of Common Stock to be issued:
                                                        ------------------------

Please  issue  the  shares  of  Common  Stock  in  the following name and to the
following  address:

Issue to:
                                                        ------------------------

Authorized Signature:
                                                        ------------------------

Name:
                                                        ------------------------

Title:
                                                        ------------------------

                                 EXHIBIT I-1
<PAGE>
Phone #:
                                                        ------------------------

Broker DTC Participant Code:
                                                        ------------------------

Account Number*:
                                                        ------------------------

     * NOTE THAT RECEIVING BROKER MUST INITIATE TRANSACTION ON DWAC SYSTEM.

                                 EXHIBIT I-2
<PAGE>
                                   EXHIBIT II
                                   ----------

                   TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
                   ------------------------------------------

                         FORM OF NOTICE OF EFFECTIVENESS
                         -------------------------------
                            OF REGISTRATION STATEMENT
                            -------------------------

____________, 2006

Fidelity Transfer Company
1800 S. West Temple, Suite 301
Salt Lake City, Utah 84115

RE:  CHARYS HOLDING COMPANY, INC.

Ladies and Gentlemen:

     We  are  counsel to Charys Holding Company, Inc., (the "Company"), and have
                                                             -------
represented  the  Company  in  connection  with that certain Securities Purchase
Agreement,  dated  as  of August 30, 2006 (the "Securities Purchase Agreement"),
                                                -----------------------------
entered  into  by  and  among the Company and the Buyers set forth on Schedule I
attached  thereto (the "Buyer") pursuant to which the Company has agreed to sell
                        -----
to  the  Buyers  (i)                     Dollars  ($          )]  of  secured
                    --------------------            ----------
convertible  notes,  which  shall  be  convertible  into shares (the "Conversion
                                                                      ----------
Shares")  of the Company's common stock, par value $0.001 per share (the "Common
------                                                                    ------
Stock"),  and  (ii) [          ] shares of common stock pursuant to a warrant in
-----                ----------
accordance  with  the  terms  of the Securities Purchase Agreement (the "Warrant
                                                                         -------
Shares").  Pursuant  to  the  Securities  Purchase  Agreement,  the  Company has
------
entered  into a Registration Rights Agreement, dated as of August 30, 2006, with
the  Buyer  (the "Investor Registration Rights Agreement") pursuant to which the
                  --------------------------------------
Company  agreed,  among  other things, to register the Conversion Shares and the
Warrant  Shares  under  the Securities Act of 1933, as amended (the "1933 Act").
                                                                     --------
In  connection  with  the  Company's  obligations  under the Securities Purchase
Agreement  and  the Registration Rights Agreement, on        , 2006, the Company
                                                      -------
filed  a  Registration  Statement  (File  No.     -         ) (the "Registration
                                               --- ---------        ------------
Statement")  with the Securities and Exchange Commission (the "SEC") relating to
---------                                                      ---
the  sale  of  the  Conversion  Shares  and  the  Warrant  Shares.

     In  connection  with  the  foregoing,  we  advise the Transfer Agent that a
member  of  the SEC's staff has advised us by telephone that the SEC has entered
an  order  declaring  the Registration Statement effective under the 1933 Act at
     P.M. on           , 2006 and we have no knowledge, after telephonic inquiry
----         ----------
of a member of the SEC's staff, that any stop order suspending its effectiveness
has  been issued or that any proceedings for that purpose are pending before, or
threatened  by,  the  SEC  and  the Conversion Shares and the Warrant Shares are
available  for  sale  under the 1933 Act pursuant to the Registration Statement.

                                 EXHIBIT II-1
<PAGE>
     The  Buyers  have  confirmed they shall comply with all securities laws and
regulations  applicable  to  it  including  applicable  prospectus  delivery
requirements  upon  sale  of  the  Conversion  Shares,  and  the Warrant Shares.

                                        Very  truly  yours,

                                        By:
                                           -------------------------------------

                                 EXHIBIT II-2
<PAGE>
                                   EXHIBIT III
                                   -----------

                   TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
                   ------------------------------------------

                                 FORM OF OPINION
                                 ---------------

[        ], 2006

VIA FACSIMILE AND REGULAR MAIL
------------------------------
Fidelity Transfer Company
1800 S. West Temple, Suite 301
Salt Lake City, Utah 84115

Attention:

     RE:  CHARYS HOLDING COMPANY, INC.

Ladies and Gentlemen:

We  have  acted  as  special  counsel  to  Charys  Holding  Company,  Inc.  (the
"Company"),  in  connection  with  the  registration  of             shares (the
 -------                                                 -----------
"Shares")  of  its common stock with the Securities and Exchange Commission (the
 ------
"SEC").  We  have  not  acted  as  your  counsel.  This  opinion is given at the
 ---
request  and  with  the  consent  of  the  Company.

In  rendering  this  opinion  we  have  relied  on the accuracy of the Company's
Registration  Statement on Form SB-2, as amended (the "Registration Statement"),
                                                       ----------------------
filed by the Company with the SEC on              , 2006.  The Company filed the
                                     --------- ---
Registration  Statement  on behalf of certain selling stockholders (the "Selling
                                                                         -------
Stockholders").  This  opinion relates solely to the Selling Stockholders listed
------------
on  Exhibit  "A"  hereto  and  number  of Shares set forth opposite such Selling
    ------------
Stockholders'  names.  The  SEC declared the Registration Statement effective on
               ,  2006.
----------  ---

We  understand  that  the  Selling Stockholders acquired the Shares in a private
offering  exempt from registration under the Securities Act of 1933, as amended.
Information  regarding  the  Shares  to be resold by the Selling Stockholders is
contained  under  the  heading  "Selling  Stockholders"  in  the  Registration
Statement,  which information is incorporated herein by reference.  This opinion
does  not relate to the issuance of the Shares to the Selling Stockholders.  The
opinions set forth herein relate solely to the resale or transfer by the Selling
Stockholders  pursuant  to  the Registration Statement under the Federal laws of
the  United States of America.  We do not express any opinion concerning any law
of  any  state  or  other  jurisdiction.

In  rendering  this  opinion  we  have relied upon the accuracy of the foregoing
statements.

Based  on  the foregoing, it is our opinion that the Shares have been registered
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended,  and  that  the  Transfer

                                EXHIBIT III-1
<PAGE>
Agent may issue the Shares without restrictive legends or the Transfer Agent may
remove  the  restrictive  legends  contained on the Shares. This opinion relates
solely  to  the  number  of  Shares  set forth opposite the Selling Stockholders
listed  on  Exhibit  "A"  hereto.
            ------------

This  opinion is furnished to Transfer Agent specifically in connection with the
issuance  of  the  Shares,  and  solely  for your information and benefit.  This
letter  may not be relied upon by Transfer Agent in any other connection, and it
may not be relied upon by any other person or entity for any purpose without our
prior written consent.  This opinion may not be assigned, quoted or used without
our prior written consent.  The opinions set forth herein are rendered as of the
date  hereof  and we will not supplement this opinion with respect to changes in
the  law  or  factual  matters  subsequent  to  the  date  hereof.

Very truly yours,

                                EXHIBIT III-2
<PAGE>
                                   EXHIBIT "A"
                                   -----------
                         (LIST OF SELLING STOCKHOLDERS)
                         ------------------------------

NAME:                                                  NO. OF SHARES:
-----------------------------------------------------  -------------------------Unassociated Document

    SECURITIES
      PURCHASE AGREEMENT

    

    THIS SECURITIES
      PURCHASE AGREEMENT
      (this
“Agreement”),
      dated
      as of August 28, 2006, by and among MOBILEPRO
      CORP.,
      a
      Delaware corporation (the “Company”),
      and
      the Buyers listed on Schedule I attached hereto (individually, a
“Buyer”
or
      collectively “Buyers”).

     

    WITNESSETH

    

    WHEREAS,
      the
      Company and the Buyer(s) are executing and delivering this Agreement in reliance
      upon an exemption from securities registration pursuant to Section 4(2) and/or
      Rule 506 of Regulation D (“Regulation
      D”)
      as
      promulgated by the U.S. Securities and Exchange Commission (the “SEC”)
      under
      the Securities Act of 1933, as amended (the “Securities
      Act”);

     

    WHEREAS,
      the
      parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Buyer(s), as provided herein,
      and the Buyer(s) shall purchase up to Seven Million Dollars ($7,000,000) of
      secured convertible debentures (the “Convertible
      Debentures”),
      which
      shall be convertible into shares of the Company’s common stock, par value $0.001
      (the “Common
      Stock”)
      (as
      converted, the “Conversion
      Shares”)
      of
      which Two Million Three Hundred Thousand Dollars ($2,300,000) shall be funded
      on
      or before the fifth (5th)
      business day following the date hereof (the “First
      Closing”),
      Two
      Million Three Hundred Fifty Thousand Dollars ($2,350,000) shall be funded at
      the
      second closing (the “Second
      Closing”),
      and
      Two Million Three Hundred Fifty Thousand Dollars ($2,350,000) shall be funded
      at
      the third closing (the “Third
      Closing”)
      (individually referred to as a “Closing”
      collectively referred to as the “Closings”),
      for a
      total purchase price of up to Seven Million Dollars ($7,000,000), (the
“Purchase
      Price”)
      in the
      respective amounts set forth opposite each Buyer(s) name on Schedule I (the
      “Subscription
      Amount”);

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering a Registration Rights Agreement (the
“Investor
      Registration Rights Agreement”)
      pursuant to which the Company has agreed to provide certain registration rights
      under the Securities Act and the rules and regulations promulgated there under,
      and applicable state securities laws; 

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering Irrevocable Transfer Agent Instructions
      (the
“Irrevocable
      Transfer Agent Instructions”);
      and

     

    WHEREAS,
      the
      Convertible Debentures will be secured by a first
      priority, perfected security interest in
      all of
      the assets of the Company and each of the Company's subsidiaries, as evidenced
      by the Assignment Agreement dated as of May 13, 2005 given by Airlee Opportunity
      Master Fund, Ltd. to the Buyer and acknowledged by the Company, the Amended
      and
      Restated Security Agreement dated May 13, 2005 and the Amended and Restated
      Collateral Assignment Agreement dated May 13, 2005 (collectively, the
“Security
      Documents”).

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants and other agreements contained in this
      Agreement the Company and the Buyer(s) hereby agree as follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.    PURCHASE
      AND SALE OF CONVERTIBLE DEBENTURES.

     

    (a)    Purchase
      of Convertible Debentures.
      Subject
      to the satisfaction (or waiver) of the terms and conditions of this Agreement,
      each Buyer agrees, severally and not jointly, to purchase at each Closing and
      the Company agrees to sell and issue to each Buyer, severally and not jointly,
      at each Closing, Convertible Debentures in amounts corresponding with the
      Subscription Amount set forth opposite each Buyer’s name on Schedule I hereto.

     

    (b)    Closing
      Date. 

     

    (i)    The
      First
      Closing of the purchase and sale of the Convertible Debentures shall take place
      at 10:00 a.m. Eastern Standard Time on or before the fifth (5th)
      business day following the date hereof, subject to notification of satisfaction
      of the conditions to the First Closing set forth herein and in Sections 6 and
      7
      below (or such later date as is mutually agreed to by the Company and the
      Buyer(s)) (the “First
      Closing Date”).

     

    (ii)    The
      Second Closing of the purchase and sale of the Convertible Debentures shall
      take
      place at 4:00 p.m. Eastern Standard Time on December 1, 2006, subject to
      notification of satisfaction of the conditions to the Second Closing set forth
      herein and in Sections 6 and 7 below, provided
      however
      that the Second Closing shall take place on September 1, 2006 if the conditions
      to the Second Closing set forth herein in Sections 6 and 7 below and the Company
      has satisfied the Acceleration Condition set forth in Section 7(b)(v) hereof
      (or
      such other date as is mutually agreed to by the Company and the Buyer(s)) (the
      “Second
      Closing Date”).
      

     

    (iii)    The
      Third
      Closing of the purchase and sale of the Convertible Debentures shall take place
      at 10:00 a.m. Eastern Standard Time on the third (3rd) business day immediately
      following the date the Registration Statement is declared effective by the
      SEC,
      subject to notification of satisfaction of the conditions to the Third Closing
      set forth herein and in Sections 6 and 7 below (or such earlier date as is
      mutually agreed to by the Company and the Buyer(s)) (the “Third
      Closing Date”
and
      collectively along with the First Closing Date and the Second Closing Date
      referred to a the “Closing
      Dates”).
      

     

    (iv)    Each
      Closing shall occur on the respective Closing Dates at the offices of Yorkville
      Advisors, LLC, 3700 Hudson Street, Suite 3700, Jersey City, New Jersey 07302
      (or
      such other place as is mutually agreed to by the Company and the Buyer(s)).
      

     

    (c)    Form
      of Payment.
      Subject
      to the satisfaction of the terms and conditions of this Agreement, on the
      Closing Dates, (i) the Buyers shall deliver to the Company such aggregate
      proceeds for the Convertible Debentures to be issued and sold to such Buyer(s),
      minus the fees to be paid directly from the proceeds of the Closings as set
      forth herein, and (ii) the Company shall deliver to each Buyer, Convertible
      Debentures which such Buyer(s) is purchasing in amounts indicated opposite
      such
      Buyer’s name on Schedule I, duly executed on behalf of the Company.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    2.    BUYER’S
      REPRESENTATIONS AND WARRANTIES.

     

    Each
      Buyer represents and warrants, severally and not jointly, that:

     

    (a)    Investment
      Purpose.
      Each
      Buyer is acquiring the Convertible Debentures and, upon conversion of
      Convertible Debentures, the Buyer will acquire the Conversion Shares then
      issuable, for its own account for investment only and not with a view towards,
      or for resale in connection with, the public sale or distribution thereof,
      except pursuant to sales registered or exempted under the Securities Act;
      provided, however, that by making the representations herein, such Buyer
      reserves the right to dispose of the Conversion Shares at any time in accordance
      with or pursuant to an effective registration statement covering such Conversion
      Shares or an available exemption under the Securities Act.

     

    (b)    Accredited
      Investor Status.
      Each
      Buyer is an “Accredited
      Investor”
as
      that
      term is defined in Rule 501(a)(3) of Regulation D.

     

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

     

    (d)    Information.
      Each
      Buyer and its advisors (and his or, its counsel), if any, have been furnished
      with all materials relating to the business, finances and operations of the
      Company and information he deemed material to making an informed investment
      decision regarding his purchase of the Convertible Debentures and the Conversion
      Shares, which have been requested by such Buyer. Each Buyer and its advisors,
      if
      any, have been afforded the opportunity to ask questions of the Company and
      its
      management. Neither such inquiries nor any other due diligence investigations
      conducted by such Buyer or its advisors, if any, or its representatives shall
      modify, amend or affect such Buyer’s right to rely on the Company’s
      representations and warranties contained in Section 3 below. Each Buyer
      understands that its investment in the Convertible Debentures and the Conversion
      Shares involves a high degree of risk. Each Buyer is in a position regarding
      the
      Company, which, based upon employment, family relationship or economic
      bargaining power, enabled and enables such Buyer to obtain information from
      the
      Company in order to evaluate the merits and risks of this investment. Each
      Buyer
      has sought such accounting, legal and tax advice, as it has considered necessary
      to make an informed investment decision with respect to its acquisition of
      the
      Convertible Debentures and the Conversion Shares.

     

    (e)    No
      Governmental Review.
      Each
      Buyer understands that no United States federal or state agency or any other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Convertible Debentures or the Conversion Shares, or the
      fairness or suitability of the investment in the Convertible Debentures or
      the
      Conversion Shares, nor have such authorities passed upon or endorsed the merits
      of the offering of the Convertible Debentures or the Conversion
      Shares.

     

    (f)    Transfer
      or Resale.
      Each
      Buyer understands that except as provided in the Investor Registration Rights
      Agreement: (i) the Convertible Debentures have not been and are not being
      registered under the Securities Act or any state securities laws, and may not
      be
      offered for sale, sold, assigned or transferred unless (A) subsequently
      registered thereunder, or (B) such Buyer shall have delivered to the Company
      an
      opinion of counsel, in a generally acceptable form, to the effect that such
      securities to be sold, assigned or transferred may be sold, assigned or
      transferred pursuant to an exemption from such registration requirements; (ii)
      any sale of such securities made in reliance on Rule 144 under the Securities
      Act (or a successor rule thereto) (“Rule 144”)
      may be
      made only in accordance with the terms of Rule 144 and further, if Rule 144
      is
      not applicable, any resale of such securities under circumstances in which
      the
      seller (or the person through whom the sale is made) may be deemed to be an
      underwriter (as that term is defined in the Securities Act) may require
      compliance with some other exemption under the Securities Act or the rules
      and
      regulations of the SEC thereunder; and (iii) neither the Company nor any other
      person is under any obligation to register such securities under the Securities
      Act or any state securities laws or to comply with the terms and conditions
      of
      any exemption thereunder. The Company reserves the right to place stop transfer
      instructions against the shares and certificates for the Conversion
      Shares.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (g)    Legends.
      Each
      Buyer understands that the certificates or other instruments representing the
      Convertible Debentures and or the Conversion Shares shall bear a restrictive
      legend in substantially the following form (and a stop -transfer order may
      be
      placed against transfer of such stock certificates):

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
      SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A
      VIEW
      TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      IN
      THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
      THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR
      AN
      OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
      REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS. 

     

    The
      legend set forth above shall be removed and the Company within two (2) business
      days shall issue a certificate without such legend to the holder of the
      Conversion Shares upon which it is stamped, if, unless otherwise required by
      state securities laws, (i) in connection with a sale transaction, provided
      the
      Conversion Shares are registered under the Securities Act or (ii) in connection
      with a sale transaction, after such holder provides the Company with an opinion
      of counsel, which opinion shall be in form, substance and scope customary for
      opinions of counsel in comparable transactions, to the effect that a public
      sale, assignment or transfer of the Conversion Shares may be made without
      registration under the Securities Act. 

     

    (h)    Authorization,
      Enforcement.
      This
      Agreement has been duly and validly authorized, executed and delivered on behalf
      of such Buyer and is a valid and binding agreement of such Buyer enforceable
      in
      accordance with its terms, except as such enforceability may be limited by
      general principles of equity or applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation and other similar laws relating to,
      or
      affecting generally, the enforcement of applicable creditors’ rights and
      remedies.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (i)    Receipt
      of Documents.
      Each
      Buyer and his or its counsel has received and read in their entirety: (i) this
      Agreement and each representation, warranty and covenant set forth herein and
      the Transaction Documents (as defined herein); (ii) all due diligence and other
      information necessary to verify the accuracy and completeness of such
      representations, warranties and covenants; (iii) the Company’s Form 10-KSB for
      the fiscal year ended March 31, 2006; (iv) the Company’s Form 10-Q for the
      fiscal quarter ended June 30, 2006 and (v) answers to all questions each Buyer
      submitted to the Company regarding an investment in the Company; and each Buyer
      has relied on the information contained therein and has not been furnished
      any
      other documents, literature, memorandum or prospectus.

     

    (j)    Due
      Formation of Corporate and Other Buyers.
      If the
      Buyer(s) is a corporation, trust, partnership or other entity that is not an
      individual person, it has been formed and validly exists and has not been
      organized for the specific purpose of purchasing the Convertible Debentures
      and
      is not prohibited from doing so.

     

    (k)    No
      Legal Advice From the Company.
      Each
      Buyer acknowledges, that it had the opportunity to review this Agreement and
      the
      transactions contemplated by this Agreement with his or its own legal counsel
      and investment and tax advisors. Each Buyer is relying solely on such counsel
      and advisors and not on any statements or representations of the Company or
      any
      of its representatives or agents for legal, tax or investment advice with
      respect to this investment, the transactions contemplated by this Agreement
      or
      the securities laws of any jurisdiction. 

     

    3.    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

     

    The
      Company represents and warrants as of the date hereof to each of the Buyers
      that, except as set forth in the SEC Documents (as defined herein) or in the
      Disclosure Schedule attached hereto (the “Disclosure
      Schedule”):

     

    (a)    Organization
      and Qualification.
      The
      Company and its material subsidiaries are corporations duly organized and
      validly existing in good standing under the laws of the jurisdiction in which
      they are incorporated, and have the requisite corporate power to own their
      properties and to carry on their business as now being conducted. Each of the
      Company and its subsidiaries is duly qualified as a foreign corporation to
      do
      business and is in good standing in every jurisdiction in which the nature
      of
      the business conducted by it makes such qualification necessary, except to
      the
      extent that the failure to be so qualified or be in good standing would not
      have
      a material adverse effect on the Company and its subsidiaries taken as a
      whole.

     

    (b)    Authorization,
      Enforcement, Compliance with Other Instruments.
      (i) The Company has the requisite corporate power and authority to enter
      into and perform this Agreement, the Investor Registration Rights Agreement,
      the
      Irrevocable Transfer Agent Agreement, and any related agreements (collectively,
      along with the Security Agreements, the “Transaction
      Documents”)
      and to
      issue the Convertible Debentures and the Conversion Shares in accordance with
      the terms hereof and thereof, (ii) the execution and delivery of the Transaction
      Documents by the Company and the consummation by it of the transactions
      contemplated hereby and thereby, including, without limitation, the issuance
      of
      the Convertible Debentures the Conversion Shares and the reservation for
      issuance and the issuance of the Conversion Shares issuable upon conversion
      or
      exercise thereof, have been duly authorized by the Company’s Board of Directors
      and no further consent or authorization is required by the Company, its Board
      of
      Directors or its stockholders, (iii) the Transaction Documents have been duly
      executed and delivered by the Company, (iv) the Transaction Documents constitute
      the valid and binding obligations of the Company enforceable against the Company
      in accordance with their terms, except as such enforceability may be limited
      by
      general principles of equity or applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation or similar laws relating to, or
      affecting generally, the enforcement of creditors’ rights and remedies. The
      authorized officer of the Company executing the Transaction Documents knows
      of
      no reason why the Company cannot file the registration statement as required
      under the Investor Registration Rights Agreement or perform any of the Company’s
      other obligations under such documents. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (c)    Capitalization.
      The
      authorized capital stock of the Company consists of 1,500,000,000 shares of
      Common Stock and 20,035,425 shares of Preferred Stock, par value $.001
      (“Preferred
      Stock”)
      of
      which 588,888,574 shares of Common Stock and 35,378 shares of Preferred Stock
      are issued and outstanding. All of such outstanding shares have been validly
      issued and are fully paid and nonassessable. No shares of Common Stock are
      subject to preemptive rights or any other similar rights or any liens or
      encumbrances suffered or permitted by the Company. As of the date of this
      Agreement, (i) there are no outstanding options, warrants, scrip, rights to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, any shares of capital stock of the
      Company or any of its subsidiaries, or contracts, commitments, understandings
      or
      arrangements by which the Company or any of its subsidiaries is or may become
      bound to issue additional shares of capital stock of the Company or any of
      its
      subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities or rights
      convertible into, any shares of capital stock of the Company or any of its
      subsidiaries, (ii) there are no outstanding debt securities and (iii) there
      are
      no agreements or arrangements under which the Company or any of its subsidiaries
      is obligated to register the sale of any of their securities under the
      Securities Act (except pursuant to the Registration Rights Agreement) and (iv)
      there are no outstanding registration statements and there are no outstanding
      comment letters from the SEC or any other regulatory agency. There are no
      securities or instruments containing anti-dilution or similar provisions that
      will be triggered by the issuance of the Convertible Debentures as described
      in
      this Agreement. The Company has furnished or made available to the Buyer true
      and correct copies of the Company’s Certificate of Incorporation, as amended and
      as in effect on the date hereof (the “Certificate
      of Incorporation”),
      and
      the Company’s By-laws, as in effect on the date hereof (the “By-laws”),
      and
      the terms of all securities convertible into or exercisable for Common Stock
      and
      the material rights of the holders thereof in respect thereto other than stock
      options issued to employees and consultants. 

     

    (d)    Issuance
      of Securities.
      The
      Convertible Debentures are duly authorized and, upon issuance in accordance
      with
      the terms hereof, shall be duly issued, fully paid and nonassessable, are free
      from all taxes, liens and charges with respect to the issue thereof. The
      Conversion Shares issuable upon conversion of the Convertible Debentures have
      been duly authorized and reserved for issuance. Upon conversion or exercise
      in
      accordance with the Convertible Debentures the Conversion Shares will be duly
      issued, fully paid and nonassessable.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (e)    No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated hereby
      will
      not (i) result in a violation of the Certificate of Incorporation, any
      certificate of designations of any outstanding series of preferred stock of
      the
      Company or the By-laws or (ii) conflict with or constitute a default (or an
      event which with notice or lapse of time or both would become a default) under,
      or give to others any rights of termination, amendment, acceleration or
      cancellation of, any agreement, indenture or instrument to which the Company
      or
      any of its subsidiaries is a party, or result in a violation of any law, rule,
      regulation, order, judgment or decree (including federal and state securities
      laws and regulations and the rules and regulations of The National Association
      of Securities Dealers Inc.’s OTC Bulletin Board on which the Common Stock is
      quoted) applicable to the Company or any of its subsidiaries or by which any
      property or asset of the Company or any of its subsidiaries is bound or
      affected. Neither the Company nor its subsidiaries is, to its knowledge, in
      violation of any term of or in default under its Certificate of Incorporation
      or
      By-laws or their organizational charter or by-laws, respectively, or any
      material contract, agreement, mortgage, indebtedness, indenture, instrument,
      judgment, decree or order or any statute, rule or regulation applicable to
      the
      Company or its subsidiaries. The business of the Company and its subsidiaries
      is, to the Company’s knowledge, not being conducted, and shall not be conducted
      in violation of any material law, ordinance, or regulation of any governmental
      entity. Except as specifically contemplated by this Agreement and as required
      under the Securities Act and any applicable state securities laws, the Company
      is not required to obtain any consent, authorization or order of, or make any
      filing or registration with, any court or governmental agency in order for
      it to
      execute, deliver or perform any of its obligations under or contemplated by
      this
      Agreement or the Registration Rights Agreement in accordance with the terms
      hereof or thereof. All consents, authorizations, orders, filings and
      registrations which the Company is required to obtain pursuant to the preceding
      sentence have been obtained or effected on or prior to the date hereof. The
      Company and its subsidiaries are unaware of any facts or circumstance, which
      might give rise to any of the foregoing.

     

    (f)    SEC
      Documents: Financial Statements.
      Since
      December 15, 2003, the Company has filed all reports, schedules, forms,
      statements and other documents required to be filed by it with the SEC under
      the
      Securities Exchange Act of 1934, as amended (the “Exchange
      Act”)
      (all
      of the foregoing filed prior to the date hereof or amended after the date hereof
      and all exhibits included therein and financial statements and schedules thereto
      and documents incorporated by reference therein, being hereinafter referred
      to
      as the “SEC
      Documents”).
      The
      Company has delivered to the Buyers or their representatives, or made available
      through the SEC’s website at http://www.sec.gov., true and complete copies of
      the SEC Documents. As of their respective dates, the financial statements of
      the
      Company disclosed in the SEC Documents (the “Financial
      Statements”)
      complied as to form in all material respects with applicable accounting
      requirements and the published rules and regulations of the SEC with respect
      thereto. Such financial statements have been prepared in accordance with
      generally accepted accounting principles, consistently applied, during the
      periods involved (except (i) as may be otherwise indicated in such Financial
      Statements or the notes thereto, or (ii) in the case of unaudited interim
      statements, to the extent they may exclude footnotes or may be condensed or
      summary statements) and, fairly present in all material respects the financial
      position of the Company as of the dates thereof and the results of its
      operations and cash flows for the periods then ended (subject, in the case
      of
      unaudited statements, to normal year-end audit adjustments). No other
      information provided by or on behalf of the Company to the Buyer which is not
      included in the SEC Documents, including, without limitation, information
      referred to in this Agreement, contains any untrue statement of a material
      fact
      or, to the Company’s knowledge, omits to state any material fact necessary in
      order to make the statements therein, in the light of the circumstances under
      which they were made, not misleading.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (g)    10(b)-5.
      The SEC
      Documents do not include any untrue statements of material fact, nor do they
      omit to state any material fact required to be stated therein necessary to
      make
      the statements made, in light of the circumstances under which they were made,
      not misleading.

     

    (h)    Absence
      of Litigation.
      There
      is no action, suit, proceeding, inquiry or investigation before or by any court,
      public board, government agency, self-regulatory organization or body pending
      against or affecting the Company, the Common Stock or any of the Company’s
      subsidiaries, wherein an unfavorable decision, ruling or finding would (i)
      have
      a material adverse effect on the transactions contemplated hereby (ii) adversely
      affect the validity or enforceability of, or the authority or ability of the
      Company to perform its obligations under, this Agreement or any of the documents
      contemplated herein, or (iii) have a material adverse effect on the business,
      operations, properties, financial condition or results of operations of the
      Company and its subsidiaries taken as a whole.

     

    (i)    Acknowledgment
      Regarding Buyer’s Purchase of the Convertible Debentures.
      The
      Company acknowledges and agrees that the Buyer(s) is acting solely in the
      capacity of an arm’s length purchaser with respect to this Agreement and the
      transactions contemplated hereby. The Company further acknowledges that the
      Buyer(s) is not acting as a financial advisor or fiduciary of the Company (or
      in
      any similar capacity) with respect to this Agreement and the transactions
      contemplated hereby and any advice given by the Buyer(s) or any of their
      respective representatives or agents in connection with this Agreement and
      the
      transactions contemplated hereby is merely incidental to such Buyer’s purchase
      of the Convertible Debentures or the Conversion Shares. The Company further
      represents to the Buyer that the Company’s decision to enter into this Agreement
      has been based solely on the independent evaluation by the Company and its
      representatives.

     

    (j)    No
      General Solicitation.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has engaged in any form of general solicitation or general advertising
      (within the meaning of Regulation D under the Securities Act) in connection
      with
      the offer or sale of the Convertible Debentures or the Conversion
      Shares.

     

    (k)    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 security
      or
      solicited any offers to buy any security, under circumstances that would require
      registration of the Convertible Debentures or the Conversion Shares under the
      Securities Act or cause this offering of the Convertible Debentures or the
      Conversion Shares to be integrated with prior offerings by the Company for
      purposes of the Securities Act.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (l)    Employee
      Relations.
      Neither
      the Company nor any of its subsidiaries is involved in any labor dispute nor,
      to
      the knowledge of the Company or any of its subsidiaries, is any such dispute
      threatened. None of the Company’s or its subsidiaries’ employees is a member of
      a union and the Company and its subsidiaries believe that their relations with
      their employees are good.

     

    (m)    Intellectual
      Property Rights.
      The
      Company and its subsidiaries own or possess adequate rights or licenses to
      use
      all trademarks, trade names, service marks, service mark registrations, service
      names, patents, patent rights, copyrights, inventions, licenses, approvals,
      governmental authorizations, trade secrets and rights necessary to conduct
      their
      respective businesses as now conducted. The Company and its subsidiaries do
      not
      have any knowledge of any infringement by the Company or its subsidiaries of
      trademark, trade name rights, patents, patent rights, copyrights, inventions,
      licenses, service names, service marks, service mark registrations, trade secret
      or other similar rights of others, and, to the knowledge of the Company there
      is
      no claim, action or proceeding being made or brought against, or to the
      Company’s knowledge, being threatened against, the Company or its subsidiaries
      regarding trademark, trade name, patents, patent rights, invention, copyright,
      license, service names, service marks, service mark registrations, trade secret
      or other infringement; and the Company and its subsidiaries are unaware of
      any
      facts or circumstances which might give rise to any of the
      foregoing.

     

    (n)    Environmental
      Laws.
      The
      Company and its subsidiaries are (i) in compliance with any and all applicable
      foreign, federal, state and local laws and regulations relating to the
      protection of human health and safety, the environment or hazardous or toxic
      substances or wastes, pollutants or contaminants (“Environmental
      Laws”),
      (ii)
      have received all permits, licenses or other approvals required of them under
      applicable Environmental Laws to conduct their respective businesses and (iii)
      are in compliance with all terms and conditions of any such permit, license
      or
      approval.

     

    (o)    Title.
      Any
      real property and facilities held under lease by the Company and its
      subsidiaries are held by them under valid, subsisting and enforceable leases
      with such exceptions as are not material and do not interfere with the use
      made
      and proposed to be made of such property and buildings by the Company and its
      subsidiaries.

     

    (p)    Insurance.
      The
      Company and each of its subsidiaries are insured by insurers of recognized
      financial responsibility against such losses and risks and in such amounts
      as
      management of the Company believes to be prudent and customary in the businesses
      in which the Company and its subsidiaries are engaged. Neither the Company
      nor
      any such subsidiary has been refused any insurance coverage sought or applied
      for and neither the Company nor any such subsidiary has any reason to believe
      that it will not be able to renew its existing insurance coverage as and when
      such coverage expires or to obtain similar coverage from similar insurers as
      may
      be necessary to continue its business at a cost that would not materially and
      adversely affect the condition, financial or otherwise, or the earnings,
      business or operations of the Company and its subsidiaries, taken as a
      whole.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (q)    Regulatory
      Permits.
      The
      Company and its subsidiaries possess all material certificates, authorizations
      and permits issued by the appropriate federal, state or foreign regulatory
      authorities necessary to conduct their respective businesses, and neither the
      Company nor any such subsidiary has received any notice of proceedings relating
      to the revocation or modification of any such certificate, authorization or
      permit.

     

    (r)    Internal
      Accounting Controls.
      The
      Company and each of its subsidiaries maintain a system of internal accounting
      controls sufficient to provide reasonable assurance that (i) transactions are
      executed in accordance with management’s general or specific authorizations,
      (ii) transactions are recorded as necessary to permit preparation of financial
      statements in conformity with generally accepted accounting principles and
      to
      maintain asset accountability, and (iii) the recorded amounts for assets is
      compared with the existing assets at reasonable intervals and appropriate action
      is taken with respect to any differences.

     

    (s)    No
      Material Adverse Breaches, etc.
      Neither
      the Company nor any of its subsidiaries is subject to any charter, corporate
      or
      other legal restriction, or any judgment, decree, order, rule or regulation
      which in the judgment of the Company’s officers has or is expected in the future
      to have a material adverse effect on the business, properties, operations,
      financial condition, results of operations or prospects of the Company or its
      subsidiaries. Neither the Company nor any of its subsidiaries is in breach
      of
      any contract or agreement which breach, in the judgment of the Company’s
      officers, has or is expected to have a material adverse effect on the business,
      properties, operations, financial condition, results of operations or prospects
      of the Company or its subsidiaries.

     

    (t)    Tax
      Status.
      The
      Company and each of its subsidiaries has made and filed all federal and state
      income and all other tax returns, reports and declarations required by any
      jurisdiction to which it is subject and (unless and only to the extent that
      the
      Company and each of its subsidiaries has set aside on its books provisions
      reasonably adequate for the payment of all unpaid and unreported taxes) has
      paid
      all taxes and other governmental assessments and charges that are material
      in
      amount, shown or determined to be due on such returns, reports and declarations,
      except those being contested in good faith and has set aside on its books
      provision reasonably adequate for the payment of all taxes for periods
      subsequent to the periods to which such returns, reports or declarations apply.
      There are no unpaid taxes in any material amount claimed to be due by the taxing
      authority of any jurisdiction, and the officers of the Company know of no basis
      for any such claim.

     

    (u)    Certain
      Transactions.
      Except
      for arm’s length transactions pursuant to which the Company makes payments in
      the ordinary course of business upon terms no less favorable than the Company
      could obtain from third parties and other than the grant of stock options
      disclosed in the SEC Documents, none of the officers, directors, or employees
      of
      the Company is presently a party to any transaction with the Company (other
      than
      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
      knowledge of the Company, any corporation, partnership, trust or other entity
      in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (v)    Fees
      and Rights of First Refusal.
      The
      Company is not obligated to offer the securities offered hereunder on a right
      of
      first refusal basis or otherwise to any third parties including, but not limited
      to, current or former shareholders of the Company, underwriters, brokers, agents
      or other third parties.

     

    (w)    Security.
      The
      Convertible Debentures are secured pursuant to the Security
      Documents.

     

    4.    COVENANTS.

     

    (a)    Best
      Efforts.
      Each
      party shall use its best efforts to timely satisfy each of the conditions to
      be
      satisfied by it as provided in Sections 6 and 7 of this Agreement.

     

    (b)    Form
      D.
      The
      Company agrees to file a Form D with respect to the Conversion Shares as
      required under Regulation D and to provide a copy thereof to each Buyer promptly
      after such filing. The Company shall, on or before the Closing Date, take such
      action as the Company shall reasonably determine is necessary to qualify the
      Conversion Shares, or obtain an exemption for the Conversion Shares for sale
      to
      the Buyers at the Closing pursuant to this Agreement under applicable securities
      or “Blue Sky” laws of the states of the United States, and shall provide
      evidence of any such action so taken to the Buyers on or prior to the Closing
      Date.

     

    (c)    Reporting
      Status.
      Until
      the earlier of (i) the date as of which the Buyer(s) may sell all of the
      Conversion Shares without restriction pursuant to Rule 144(k) promulgated under
      the Securities Act (or successor thereto), or (ii) the date on which (A) the
      Buyer(s) shall have sold all the Conversion Shares and (B) none of the
      Convertible Debentures are outstanding (the “Registration
      Period”),
      the
      Company shall file in a timely manner all reports required to be filed with
      the
      SEC pursuant to the Exchange Act and the regulations of the SEC thereunder,
      and
      the Company shall not terminate its status as an issuer required to file reports
      under the Exchange Act even if the Exchange Act or the rules and regulations
      thereunder would otherwise permit such termination.

     

    (d)    Use
      of
      Proceeds.
      The
      Company will use the proceeds from the sale of the Convertible Debentures for
      general corporate and working capital purposes.

     

    (e)    Reservation
      of Shares.
      On the
      date hereof, the Company shall reserve for issuance to the Buyers 140,000,000
      shares for issuance upon conversions of the Convertible Dentures and 10,000,000
      shares for issuance upon exercise of the Warrants (collectively, the
“Share
      Reserve”).
      The
      Company represents that it has sufficient authorized and unissued shares of
      Common Stock available to create the Share Reserve after considering all other
      commitments that may require the issuance of Common Stock. The Company shall
      take all action reasonably necessary to at all times have authorized, and
      reserved for the purpose of issuance, 300% of such number of shares of Common
      Stock as shall be necessary to effect the full conversion of the Convertible
      Debentures and the full exercise of the Warrants. If at any time the Share
      Reserve is insufficient to effect the full conversion of the Convertible
      Debentures or the full exercise of the Warrants, the Company shall increase
      the
      Share Reserve accordingly. If the Company does not have sufficient authorized
      and unissued shares of Common Stock available to increase the Share Reserve,
      the
      Company shall call and hold a special meeting of the shareholders within thirty
      (30) days of such occurrence, for the sole purpose of increasing the number
      of
      shares authorized. The Company’s management shall recommend to the shareholders
      to vote in favor of increasing the number of shares of Common Stock authorized.
      Management shall also vote all of its shares in favor of increasing the number
      of authorized shares of Common Stock.

     

    
      
        
        

      

      
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    (f)    Listings
      or Quotation.
      The
      Company’s Common Stock shall be listed or quoted for trading on any of (a) the
      American Stock Exchange, (b) New York Stock Exchange, (c) the Nasdaq National
      Market, (d) the Nasdaq Capital Market, or (e) the Nasdaq OTC Bulletin Board
      (“OTC”)
      (each,
      a “Primary
      Market”)
      and
      the Company shall promptly secure the listing or quotation of the Conversion
      Shares and Warrant Shares for trading on the same Primary Market upon which
      the
      shares of Common Stock are then listed or quoted. 

     

    (g)    Fees
      and
      Expenses. 

     

    (i)    Each
      of
      the Company and the Buyer(s) shall pay all costs and expenses incurred by such
      party in connection with the negotiation, investigation, preparation, execution
      and delivery of the Transaction Documents. The Company shall pay Yorkville
      Advisors LLC a fee equal to seven percent (7%) of the Purchase Price.

     

    (ii)    The
      Company shall pay a structuring fee to Yorkville Advisors LLC of Fifteen
      Thousand Dollars ($15,000), which shall be paid directly from the proceeds
      of
      the First Closing. 

     

    (iii)    The
      Company shall issue to the Buyer warrants to purchase Ten Million (10,000,000)
      shares of Common Stock in the form of the warrant attached hereto as
      Exhibit A (the “Warrants”)
      which
      shall be issued to the Buyers at each Closing as set forth next each Buyers’
name on Schedule A. The shares of Common Stock issuable under the Warrant shall
      collectively be referred to as the “Warrant
      Shares”.
      

     

    (h)    Corporate
      Existence.
      So long
      as any of the Convertible Debentures remain outstanding, the Company shall
      not
      directly or indirectly consummate any merger, reorganization, restructuring,
      reverse stock split consolidation, sale of all or substantially all of the
      Company’s assets or any similar transaction or related transactions (each such
      transaction, an “Organizational
      Change”)
      unless, prior to the consummation an Organizational Change, the Company obtains
      the written consent of each Buyer, which consent shall not be unreasonably
      withheld. In any such case, the Company will make appropriate provision with
      respect to such holders’ rights and interests to insure that the provisions of
      this Section 4(h) will thereafter be applicable to the Convertible
      Debentures.

     

    (i)    Transactions
      With Affiliates.
      So long
      as any Convertible Debentures are outstanding, the Company shall not, and shall
      cause each of its subsidiaries not to, enter into, amend, modify or supplement,
      or permit any subsidiary to enter into, amend, modify or supplement any
      agreement, transaction, commitment, or arrangement with any of its or any
      subsidiary’s officers, directors, person who were officers or directors at any
      time during the previous two (2) years, stockholders who beneficially own five
      percent (5%) or more of the Common Stock, or Affiliates (as defined below)
      or
      with any individual related by blood, marriage, or adoption to any such
      individual or with any entity in which any such entity or individual owns a
      five
      percent (5%) or more beneficial interest (each a “Related
      Party”),
      except for (a) customary employment arrangements and benefit programs on
      reasonable terms, (b) any investment in an Affiliate of the Company, (c) any
      agreement, transaction, commitment, or arrangement on an arms-length basis
      on
      terms no less favorable than terms which would have been obtainable from a
      person other than such Related Party, (d) any agreement, transaction,
      commitment, or arrangement which is approved by a majority of the disinterested
      directors of the Company; for purposes hereof, any director who is also an
      officer of the Company or any subsidiary of the Company shall not be a
      disinterested director with respect to any such agreement, transaction,
      commitment, or arrangement. “Affiliate”
for
      purposes hereof means, with respect to any person or entity, another person
      or
      entity that, directly or indirectly, (i) has a ten percent (10%) or more equity
      interest in that person or entity, (ii) has ten percent (10%) or more common
      ownership with that person or entity, (iii) controls that person or entity,
      or
      (iv) shares common control with that person or entity. “Control”
or
      “controls”
for
      purposes hereof means that a person or entity has the power, direct or indirect,
      to conduct or govern the policies of another person or entity.

     

    
      
        
        

      

      
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    (j)    Transfer
      Agent.
      The
      Company covenants and agrees that, in the event that the Company’s agency
      relationship with the transfer agent should be terminated for any reason prior
      to a date which is two (2) years after the Closing Date, the Company shall
      immediately appoint a new transfer agent and shall require that the new transfer
      agent execute and agree to be bound by the terms of the Irrevocable Transfer
      Agent Instructions (as defined herein).

     

    (k)    Restriction
      on Issuance of the Capital Stock.
      So long
      as any Convertible Debentures are outstanding, the Company shall not, without
      the prior written consent of the Buyer(s), (i) issue or sell shares of Common
      Stock or Preferred Stock without consideration or for a consideration per share
      less than the bid price of the Common Stock determined immediately prior to
      its
      issuance, (ii) issue any preferred stock, warrant, option, right, contract,
      call, or other security or instrument granting the holder thereof the right
      to
      acquire Common Stock without consideration or for a consideration less than
      such
      Common Stock’s Bid Price determined immediately prior to it’s issuance, (iii)
      enter into any security instrument granting the holder a security interest
      in
      any and all assets of the Company unless in connection with a financing of
      $10,000,000 or more in which the Company grants to such financing entity a
      security interest junior to Buyer’s security interest in the Company, or (iv)
      file any registration statement on Form S-8.

     

    (l)    Neither
      the Buyer(s) nor any of its affiliates have an open short position in the Common
      Stock of the Company, and the Buyer(s) agrees that it shall not, and that it
      will cause its affiliates not to, engage in any short sales of or hedging
      transactions with respect to the Common Stock or the Warrants as long as any
      Convertible Debentures shall remain outstanding. 

     

    (m)    Rights
      of First Refusal.
      So
      long
      as any portion of Convertible Debentures are outstanding, if the Company intends
      to raise additional capital by the issuance or sale of capital stock of the
      Company, including without limitation shares of any class of common stock,
      any
      class of preferred stock, options, warrants or any other securities convertible
      or exercisable into shares of common stock (whether the offering is conducted
      by
      the Company, underwriter, placement agent or any third party) the Company shall
      be obligated to offer to the Buyers such issuance or sale of capital stock,
      by
      providing in writing the principal amount of capital it intends to raise and
      outline of the material terms of such capital raise, prior to the offering
      such
      issuance or sale of capital stock  to any third parties including, but not
      limited to, current or former officers or directors, current or former
      shareholders and/or investors of the obligor, underwriters, brokers, agents
      or
      other third parties.  The Buyers shall have ten (10) business days from
      receipt of such notice of the sale or issuance of capital stock to accept or
      reject all or a portion of such capital raising offer, provided,
      however,
      that
      the provisions of this section 4(m) shall not apply to a financing led by
      Southern Farm Bureau Life Insurance Company of at least $10,000,000 in which
      the
      Company grants a security interest junior the Buyers’ security interest in the
      Company and in which the conversion price of any security is no less than $0.174
      per share. 

     

    
      
        
        

      

      
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    (n)    Security.
      The
      Company shall take all steps necessary to
      perfect the security interests created by each Security Document,
      including, without limitation, file all appropriate
      financing statements on Form UCC-1 to be duly filed in such office or offices
      as
      may be necessary. 

     

    5.    TRANSFER
      AGENT INSTRUCTIONS.

     

    (a)    The
      Company shall issue the Irrevocable Transfer Agent Instructions to its transfer
      agent irrevocably appointing David Gonzalez, Esq. as the Company’s agent for
      purpose of having certificates issued, registered in the name of the Buyer(s)
      or
      its respective nominee(s), for the Conversion Shares representing such amounts
      of Convertible Debentures as specified from time to time by the Buyer(s) to
      the
      Company upon conversion of the Convertible Debentures, for interest owed
      pursuant to the Convertible Debenture, and for any and all Liquidated Damages
      (as this term is defined in the Investor Registration Rights Agreement). David
      Gonzalez, Esq. shall be paid a cash fee of Fifty Dollars ($50) for every
      occasion they act pursuant to the Irrevocable Transfer Agent Instructions.
      The
      Company shall not change its transfer agent without the express written consent
      of the Buyer(s), which may be withheld by the Buyer(s) in its sole discretion.
      Prior to registration of the Conversion Shares under the Securities Act, all
      such certificates shall bear the restrictive legend specified in Section 2(g)
      of
      this Agreement. The Company warrants that no instruction other than the
      Irrevocable Transfer Agent Instructions referred to in this Section 5, and
      stop
      transfer instructions to give effect to Section 2(g) hereof (in the case of
      the
      Conversion Shares prior to registration of such shares under the Securities
      Act)
      will be given by the Company to its transfer agent and that the Conversion
      Shares shall otherwise be freely transferable on the books and records of the
      Company as and to the extent provided in this Agreement and the Investor
      Registration Rights Agreement. Nothing in this Section 5 shall affect in any
      way
      the Buyer’s obligations and agreement to comply with all applicable securities
      laws upon resale of Conversion Shares. If the Buyer(s) provides the Company
      with
      an opinion of counsel, in form, scope and substance customary for opinions
      of
      counsel in comparable transactions to the effect that registration of a resale
      by the Buyer(s) of any of the Conversion Shares is not required under the
      Securities Act, the Company shall within two (2) business days instruct its
      transfer agent to issue one or more certificates in such name and in such
      denominations as specified by the Buyer. The Company acknowledges that a breach
      by it of its obligations hereunder will cause irreparable harm to the Buyer
      by
      vitiating the intent and purpose of the transaction contemplated hereby.
      Accordingly, the Company acknowledges that the remedy at law for a breach of
      its
      obligations under this Section 5 will be inadequate and agrees, in the event
      of
      a breach or threatened breach by the Company of the provisions of this
      Section 5, that the Buyer(s) shall be entitled, in addition to all other
      available remedies, to an injunction restraining any breach and requiring
      immediate issuance and transfer, without the necessity of showing economic
      loss
      and without any bond or other security being required.

     

    
      
        
        

      

      
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    6.    CONDITIONS
      TO THE COMPANY’S OBLIGATION TO SELL.

     

    The
      obligation of the Company hereunder to issue and sell the Convertible Debentures
      to the Buyer(s) at the Closings is subject to the satisfaction, at or before
      the
      Closing Dates, of each of the following conditions, provided that these
      conditions are for the Company’s sole benefit and may be waived by the Company
      at any time in its sole discretion:

     

    (a)    Each
      Buyer shall have executed the Transaction Documents and delivered them to the
      Company.

     

    (b)    The
      Buyer(s) shall have delivered to the Company the Purchase Price for Convertible
      Debentures in respective amounts as set forth next to each Buyer as outlined
      on
      Schedule I attached hereto, minus any fees to be paid directly from the proceeds
      the Closings as set forth herein, by wire transfer of immediately available
      U.S.
      funds pursuant to the wire instructions provided by the Company.

     

    (c)    The
      representations and warranties of the Buyer(s) shall be true and correct in
      all
      material respects as of the date when made and as of the Closing Dates as though
      made at that time (except for representations and warranties that speak as
      of a
      specific date), and the Buyer(s) shall have performed, satisfied and complied
      in
      all material respects with the covenants, agreements and conditions required
      by
      this Agreement to be performed, satisfied or complied with by the Buyer(s)
      at or
      prior to the Closing Dates. 

     

    7.    CONDITIONS
      TO THE BUYER’S OBLIGATION TO PURCHASE.

     

    (a)    The
      obligation of the Buyer(s) hereunder to purchase the Convertible Debentures
      at
      the First Closing is subject to the satisfaction, at or before the First Closing
      Date, of each of the following conditions:

     

    (i)    The
      Company shall have executed the Transaction Documents and delivered the same
      to
      the Buyer(s).

     

    (ii)    The
      Common Stock shall be authorized for quotation on the OTCBB, trading in the
      Common Stock shall not have been suspended for any reason. 

     

    (iii)    The
      representations and warranties of the Company shall be true and correct in
      all
      material respects (except to the extent that any of such representations and
      warranties is already qualified as to materiality in Section 3 above, in which
      case, such representations and warranties shall be true and correct without
      further qualification) as of the date when made and as of the First Closing
      Date
      as though made at that time (except for representations and warranties that
      speak as of a specific date) and the Company shall have performed, satisfied
      and
      complied in all material respects with the covenants, agreements and conditions
      required by this Agreement to be performed, satisfied or complied with by the
      Company at or prior to the First Closing Date.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (iv)    The
      Company shall have executed and delivered to the Buyer(s) the Convertible
      Debentures in the respective amounts set forth opposite each Buyer(s) name
      on
      Schedule I attached hereto.

     

    (v)    The
      Buyer(s) shall have received an opinion of counsel from counsel to the Company
      in a form satisfactory to the Buyer(s).

     

    (vi)    The
      Company shall have provided to the Buyer(s) a certificate of good standing
      from
      the secretary of state from the state in which the company is
      incorporated.

     

    (vii)    The
      Company shall have filed a form UCC-1 or such other forms as may be required
      to
      perfect the Buyer’s interest in the Pledged Property as detailed in the Security
      Agreement dated the date hereof and provided proof of such filing to the
      Buyer(s).

     

    (viii)    The
      Company shall have provided to the Buyer an acknowledgement, to the satisfaction
      of the Buyer, from the Company’s independent certified public accountants as to
      its ability to provide all consents required in order to file a registration
      statement in connection with this transaction.

     

    (ix)    The
      Company shall have reserved out of its authorized and unissued Common Stock,
      solely for the purpose of effecting the conversion of the Convertible
      Debentures, shares of Common Stock to effect the conversion of all of the
      Conversion Shares then outstanding. 

     

    (x)    The
      Irrevocable Transfer Agent Instructions, in form and substance satisfactory
      to
      the Buyer, shall have been delivered to and acknowledged in writing by the
      Company’s transfer agent.

     

    (b)    The
      obligation of the Buyer(s) hereunder to accept the Convertible Debentures at
      the
      Second Closing is subject to the satisfaction, at or before the Second Closing
      Date, of each of the following conditions:

     

    (i)    The
      Common Stock shall be authorized for quotation on the OTCBB and trading in
      the
      Common Stock shall not have been suspended for any reason. 

     

    (ii)    The
      representations and warranties of the Company shall be true and correct in
      all
      material respects (except to the extent that any of such representations and
      warranties is already qualified as to materiality in Section 3 above, in which
      case, such representations and warranties shall be true and correct without
      further qualification) as of the date when made and as of the Second Closing
      Date as though made at that time (except for representations and warranties
      that
      speak as of a specific date) and the Company shall have performed, satisfied
      and
      complied in all material respects with the covenants, agreements and conditions
      required by this Agreement to be performed, satisfied or complied with by the
      Company at or prior to the Second Closing Date. 

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (iii)    The
      Company shall have executed and delivered to the Buyer(s) the Convertible
      Debentures in the respective amounts set forth opposite each Buyer(s) name
      on
      Schedule I attached hereto.

     

    (iv)    The
      Company shall have certified, in a certificate executed by two officers of
      the
      Company and dated as of the Second Closing Date, that all conditions to the
      Second Closing have been satisfied.

     

    (v)    Acceleration
      Condition.
      Provided that all other conditions to the Second Closing set forth in this
      Section 7(b), the date of the Second Closing shall be accelerated to September
      1, 2006 if the Company consummates the potential funding by Southern Farm Life
      Insurance Company and other co-investors pursuant to the terms of the Term
      Sheet
      attached hereto as Exhibit
      B.

     

    (c)    The
      obligation of the Buyer(s) hereunder to accept the Convertible Debentures at
      the
      Third Closing is subject to the satisfaction, at or before the Third Closing
      Date, of each of the following conditions:

     

    (i)    The
      Common Stock shall be authorized for quotation on the OTCBB and trading in
      the
      Common Stock shall not have been suspended for any reason. 

     

    (ii)    The
      representations and warranties of the Company shall be true and correct in
      all
      material respects (except to the extent that any of such representations and
      warranties is already qualified as to materiality in Section 3 above, in which
      case, such representations and warranties shall be true and correct without
      further qualification) as of the date when made and as of the Third Closing
      Date
      as though made at that time (except for representations and warranties that
      speak as of a specific date) and the Company shall have performed, satisfied
      and
      complied in all material respects with the covenants, agreements and conditions
      required by this Agreement to be performed, satisfied or complied with by the
      Company at or prior to the Third Closing Date. 

     

    (iii)    The
      Company shall have executed and delivered to the Buyer(s) the Convertible
      Debentures in the respective amounts set forth opposite each Buyer(s) name
      on
      Schedule I attached hereto.

     

    (iv)    The
      Registration Statement shall have been declared effective by the SEC.

     

    (v)    The
      Company shall have certified, in a certificate executed by two officers of
      the
      Company and dated as of the Third Closing Date, that all conditions to the
      Third
      Closing have been satisfied.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    8.    INDEMNIFICATION.

     

    (a)    In
      consideration of the Buyer’s execution and delivery of this Agreement and
      acquiring the Convertible Debentures and the Conversion Shares hereunder, and
      in
      addition to all of the Company’s other obligations under this Agreement, the
      Company shall defend, protect, indemnify and hold harmless the Buyer(s) and
      each
      other holder of the Convertible Debentures and the Conversion Shares, and all
      of
      their officers, directors, employees and agents (including, without
      limitation, those retained in connection with the transactions contemplated
      by
      this Agreement) (collectively, the “Buyer
      Indemnitees”)
      from
      and against any and all actions, causes of action, suits, claims, losses, costs,
      penalties, fees, liabilities and damages, and expenses in connection therewith
      (irrespective of whether any such Buyer Indemnitee is a party to the action
      for
      which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified
      Liabilities”),
      incurred by the Buyer Indemnitees or any of them as a result of, or arising
      out
      of, or relating to (a) any misrepresentation or breach of any representation
      or
      warranty made by the Company in this Agreement, the Convertible Debentures
      or
      the Investor Registration Rights Agreement or any other certificate, instrument
      or document contemplated hereby or thereby, (b) any breach of any covenant,
      agreement or obligation of the Company contained in this Agreement, or the
      Investor Registration Rights Agreement or any other certificate, instrument
      or
      document contemplated hereby or thereby, or (c) any cause of action, suit or
      claim brought or made against such Indemnitee and arising out of or resulting
      from the execution, delivery, performance or enforcement of this Agreement
      or
      any other instrument, document or agreement executed pursuant hereto by any
      of
      the parties hereto, any transaction financed or to be financed in whole or
      in
      part, directly or indirectly, with the proceeds of the issuance of the
      Convertible Debentures or the status of the Buyer or holder of the Convertible
      Debentures the Conversion Shares, as a Buyer of Convertible Debentures in the
      Company. To the extent that the foregoing undertaking by the Company may be
      unenforceable for any reason, the Company shall make the maximum contribution
      to
      the payment and satisfaction of each of the Indemnified Liabilities, which
      is
      permissible under applicable law.

     

    (b)    In
      consideration of the Company’s execution and delivery of this Agreement, and in
      addition to all of the Buyer’s other obligations under this Agreement, the Buyer
      shall defend, protect, indemnify and hold harmless the Company and all of its
      officers, directors, employees and agents (including, without limitation, those
      retained in connection with the transactions contemplated by this Agreement)
      (collectively, the “Company
      Indemnitees”)
      from
      and against any and all Indemnified Liabilities incurred by the Indemnitees
      or
      any of them as a result of, or arising out of, or relating to (a) any
      misrepresentation or breach of any representation or warranty made by the
      Buyer(s) in this Agreement, instrument or document contemplated hereby or
      thereby executed by the Buyer, (b) any breach of any covenant, agreement or
      obligation of the Buyer(s) contained in this Agreement, the Investor
      Registration Rights Agreement or any other certificate, instrument or document
      contemplated hereby or thereby executed by the Buyer, or (c) any cause of
      action, suit or claim brought or made against such Company Indemnitee based
      on
      material misrepresentations or due to a material breach and arising out of
      or
      resulting from the execution, delivery, performance or enforcement of this
      Agreement, the Investor Registration Rights Agreement or any other instrument,
      document or agreement executed pursuant hereto by any of the parties hereto.
      To
      the extent that the foregoing undertaking by each Buyer may be unenforceable
      for
      any reason, each Buyer shall make the maximum contribution to the payment and
      satisfaction of each of the Indemnified Liabilities, which is permissible under
      applicable law.

     

    
      
        
        

      

      
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    9.    GOVERNING
      LAW: MISCELLANEOUS.

     

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

     

    (b)    Counterparts.
      This
      Agreement may be executed in two or more identical counterparts, all of which
      shall be considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other party.
      In
      the event any signature page is delivered by facsimile transmission, the party
      using such means of delivery shall cause four (4) additional original executed
      signature pages to be physically delivered to the other party within five (5)
      days of the execution and delivery hereof.

     

    (c)    Headings.
      The
      headings of this Agreement are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Agreement.

     

    (d)    Severability.
      If any
      provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any other
      jurisdiction.

     

    (e)    Entire
      Agreement, Amendments.
      This
      Agreement supersedes all other prior oral or written agreements between the
      Buyer(s), the Company, their affiliates and persons acting on their behalf
      with
      respect to the matters discussed herein, and this Agreement and the instruments
      referenced herein contain the entire understanding of the parties with respect
      to the matters covered herein and therein and, except as specifically set forth
      herein or therein, neither the Company nor any Buyer makes any representation,
      warranty, covenant or undertaking with respect to such matters. No provision
      of
      this Agreement may be waived or amended other than by an instrument in writing
      signed by the party to be charged with enforcement.

     

    (f)    Notices.
      Any
      notices, consents, waivers, or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered (i) upon receipt, when delivered personally; (ii) upon
      confirmation of receipt, when sent by facsimile; (iii) three (3) days after
      being sent by U.S. certified mail, return receipt requested, or (iv) one (1)
      day
      after deposit with a nationally recognized overnight delivery service, in each
      case properly addressed to the party to receive the same. The addresses and
      facsimile numbers for such communications shall be:

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    
      	
              If
                to the Company, to:

            	
              Mobilepro
                Corp.

            
	 	
              6701
                Democracy Blvd., Suite 202

            
	 	
              Bethesda,
                MD 20817

            
	 	
              Attention: Jay
                Wright, Chairman and
                Chief Executive Officer

            
	 	
              Telephone: (301)
                315-9040

            
	 	
              Facsimile: (301)
                315-9027

            
	 	 
	
              With
                a copy to:

            	
              Seyfarth
                Shaw LLP

            
	 	
              815
                Connecticut Avenue, NW, Suite 500

            
	 	
              Washington,
                DC 20006-4004

            
	 	
              Attention:
                Ernest
                M. Stern, Esquire

            
	 	
              Telephone: (202)
                828-5360 

            
	 	
              Facsimile: (202)
                828-5393 

            

    

     

    If
      to the
      Buyer(s), to its address and facsimile number on Schedule I, with copies to
      the
      Buyer’s counsel as set forth on Schedule I. Each party shall provide five (5)
      days’ prior written notice to the other party of any change in address or
      facsimile number.

     

    (g)    Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective successors and assigns. Neither the Company nor any Buyer
      shall
      assign this Agreement or any rights or obligations hereunder without the prior
      written consent of the other party hereto.

     

    (h)    No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other person.

     

    (i)    Survival.
      Unless
      this Agreement is terminated under Section 9(l), the representations and
      warranties of the Company and the Buyer(s) contained in Sections 2 and 3, the
      agreements and covenants set forth in Sections 4, 5 and 9, and the
      indemnification provisions set forth in Section 8, shall survive the Closing
      for
      a period of two (2) years following the date on which the Convertible Debentures
      are converted in full. The Buyer(s) shall be responsible only for its own
      representations, warranties, agreements and covenants hereunder.

     

    (j)    Publicity.
      The
      Company and the Buyer(s) shall have the right to approve, before issuance any
      press release or any other public statement with respect to the transactions
      contemplated hereby made by any party; provided, however, that the Company
      shall
      be entitled, without the prior approval of the Buyer(s), to issue any press
      release or other public disclosure with respect to such transactions required
      under applicable securities or other laws or regulations (the Company shall
      use
      its best efforts to consult the Buyer(s) in connection with any such press
      release or other public disclosure prior to its release and Buyer(s) shall
      be
      provided with a copy thereof upon release thereof).

     

    (k)    Further
      Assurances.
      Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as the other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (l)    Termination.
      In the
      event that the First Closing shall not have occurred with respect to the Buyers
      on or before five (5) business days from the date hereof due to the Company’s or
      the Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7
      above (and the non-breaching party’s failure to waive such unsatisfied
      condition(s)), the non-breaching party shall have the option to terminate this
      Agreement with respect to such breaching party at the close of business on
      such
      date without liability of any party to any other party; provided, however,
      that
      if this Agreement is terminated by the Company pursuant to this Section 9(l),
      the Company shall remain obligated to reimburse the Buyer(s) for the fees and
      expenses of Yorkville Advisors LLC described in Section 4(g) above.

     

    (m)    Brokerage.
      The
      Company represents that no broker, agent, finder or other party has been
      retained by it in connection with the transactions contemplated hereby and
      that
      no other fee or commission has been agreed by the Company to be paid for or
      on
      account of the transactions contemplated hereby. 

     

    (n)    No
      Strict Construction.
      The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent, and no rules of strict construction
      will
      be applied against any party.

     

    10.    ADJUSTMENT
      TO EXISTING WARRANTS

     

    (a)    Effective
      as of the First Closing Date, the warrant (the “May
      Warrant”)
      issued
      by the Company to the Buyer on May 13, 2005 (Warrant No. CCP-001) shall be
      adjusted pursuant to Section 8(a) of the May Warrant such that exercise price
      shall be reduced to $0.20 and the number of warrant shares issuable shall be
      increased to Fifteen Million (15,000,000) shares. 

     

    (b)    Effective
      as of the First Closing Date, the warrant (the “June
      Warrant”)
      issued
      by the Company to the Buyer on June 30, 2006 (Warrant No. CCP-002) shall be
      adjusted pursuant to Section 8(a) of the June Warrant such that exercise price
      shall be reduced to $0.20 and the number of warrant shares issuable shall be
      increased to Thirteen Million Seven Hundred Fifty Thousand (13,750,000)
      shares.

     

    

    [REMAINDER
      PAGE INTENTIONALLY LEFT BLANK]

     

     

    
 

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their respective signature page to this
      Securities Purchase Agreement to be duly executed as of the date first written
      above.

     

    
      	 	 	 
	 	COMPANY:
MOBILEPRO
              CORP.
	 
 	 
 	 
 
	 	By:  	/s/
              Jay Wright
	 	
              

              Name: Jay
                Wright

            
	 	
              Title: Chairman
                and CEO

            

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their respective signature page to this
      Securities Purchase Agreement to be duly executed as of the date first written
      above.

     

    
      	 	 	 
	 	
              BUYERS:
CORNELL
                CAPITAL PARTNERS, LP

            
	 	 
	 	
              By:
                 Yorkville
                Advisors, LLC  

            
	 	
              Its: General
                Partner 

            
	 
 	 
 	 
 
	 	By:  	/s/
              Mark Angelo
	 	
              

              Name: Mark
                Angelo

            
	 	
              Its: Portfolio
                Manager

            

    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      I

     

    SCHEDULE
      OF BUYERS

     

    

    
      	
              (1)

            	
              (2)

            	
              (3)

            	
              (4)

            	
              (5)

            	
              (6)

            	
              (7)

            	
              (8)

            	
              (9)

            
	
              Buyer

            	
              Address
                and Facsimile Number

            	
              Subscription
                Amount

            	
              Warrants

            	
              Legal
                Representative’s Address and Facsimile Number

            
	 	 	
              First
Closing

            	
              Second
Closing

            	
              Third
Closing

            	
              First
Closing

            	
              Second
Closing

            	
              Third
Closing

            	 
	 	 	 	 	 	 	 	 	 
	
              Cornell
                Capital Partners, LP

            	
              101
                Hudson Street

              Suite
                3700

              Jersey
                City, NJ 07303

              Attention:
                Mark Angelo

              Facsimile:
                (201) 985-8266

              Telephone:
                (201) 985-8300

              Residence:
                Delaware

            	
              $2,300,000

            	
              $2,350,000

            	
              $2,350,000

            	
              3,333,334

            	
              3,333,333

            	
              3,333,333

            	
              Troy
                Rillo Esq.

              101
                Hudson Street - Suite 3700

              Jersey
                City, New Jersey 07302 

              Telephone: 
                (201) 985-8300 

              Facsimile:
                (201) 985-8266

            
	 	 	 	 	 	 	 	 	 
	
              TOTAL

            	 	 	 	 	 	 	 	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    DISCLOSURE
      SCHEDULE

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    FORM
      OF WARRANT

     

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

     

    TERM
      SHEET

     

     

     

    
      
        
        

      

      3

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