Document:

Exhibit
      4.1

    

    THE
      REGISTERED HOLDER OF THIS PURCHASE OPTION BY ITS ACCEPTANCE HEREOF, AGREES
      THAT
      IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE OPTION EXCEPT AS HEREIN
      PROVIDED AND THE REGISTERED HOLDER OF THIS PURCHASE OPTION AGREES THAT IT WILL
      NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE OPTION FOR
      A
      PERIOD OF ONE YEAR FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW) TO ANYONE OTHER
      THAN (I) RODMAN & RENSHAW, LLC. (“RODMAN”) OR AN UNDERWRITER OR A SELECTED
      DEALER IN CONNECTION WITH THE OFFERING, OR (II) A BONA FIDE OFFICER OR PARTNER
      OF RODMAN OR OF ANY SUCH UNDERWRITER OR SELECTED DEALER.

    

    THIS
      PURCHASE OPTION IS NOT EXERCISABLE PRIOR TO THE LATER OF (I) THE CONSUMMATION
      BY
      ARGYLE SECURITY ACQUISITION CORPORATION. (“COMPANY”) OF A MERGER, CAPITAL STOCK
      EXCHANGE, ASSET ACQUISITION OR OTHER SIMILAR BUSINESS COMBINATION (“BUSINESS
      COMBINATION”) (AS DESCRIBED MORE FULLY IN THE COMPANY’S REGISTRATION STATEMENT
      (DEFINED HEREIN)) AND (II) JANUARY 24, 2007. VOID AFTER 5:00 P.M. EASTERN TIME,
      JANUARY 24, 2011. 

    

    UNIT
      PURCHASE OPTION 

    

    For
      the Purchase of 

    

    187,500
      Units 

    

    of
      

    

    ARGYLE
      SECURITY ACQUISITION CORPORATION 

    

    1. 
Purchase
      Option.
      

    

    THIS
      CERTIFIES THAT, in consideration of $100.00 duly paid by or on behalf of
      _____________ (“Holder”), as registered owner of this Purchase Option, to Argyle
      Security Acquisition Corporation, Holder is entitled, at any time or from time
      to time upon the later of (i) the consummation of a Business Combination and
      (ii) January 24, 2007 (“Commencement Date”), and at or before 5:00 p.m., Eastern
      Time, January 24, 2011 (“Expiration Date”), but not thereafter, to subscribe
      for, purchase and receive, in whole or in part, up to One Hundred Eighty-Seven
      Thousand Five Hundred (187,500) units (“Units”) of the Company, each Unit
      consisting of one share of common stock of the Company, par value $.0001 per
      share (“Common Stock”), and one warrant (“Warrant(s)”) expiring five years from
      the effective date (“Effective Date”) of the registration statement
      (“Registration Statement”) pursuant to which Units are offered for sale to the
      public (“Offering”). Each Unit is the same as the Units being registered for
      sale to the public by way of the Registration Statement which includes warrants
      (“Public Warrants”) with an exercise price of $5.50 per share (“Warrant Exercise
      Price”). If the Expiration Date is a day on which banking institutions are
      authorized by law to close, then this Purchase Option may be exercised on the
      next succeeding day which is not such a day in accordance with the terms herein.
      During the period ending on the Expiration Date, the Company agrees not to
      take
      any action that would terminate the Purchase Option. This Purchase Option is
      initially exercisable at $8.80 per Unit so purchased; provided, however, that
      upon the occurrence of any of the events specified in Section 6 hereof, the
      rights granted by this Purchase Option, including the exercise price per Unit
      and the number of Units (and shares of Common Stock and Warrants) to be received
      upon such exercise, shall be adjusted as therein specified. The term “Exercise
      Price” shall mean the initial exercise price or the adjusted exercise price,
      depending on the context. 

    

    2.      Exercise.
      

    

    2.1    
Exercise
      Form.
      In
      order to exercise this Purchase Option, the exercise form attached hereto must
      be duly executed and completed and delivered to the Company, together with
      this
      Purchase Option and payment of the Exercise Price for the Units being purchased
      payable in cash or by certified check or official bank check. If the
      subscription rights represented hereby shall not be exercised at or before
      5:00
      p.m., Eastern time, on the Expiration Date this Purchase Option shall become
      and
      be void without further force or effect, and all rights represented hereby
      shall
      cease and expire. 

    

      
        
          
          

        

        
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    2.2     Legend.
      Each
      certificate for the securities purchased under this Purchase Option shall bear
      a
      legend as follows unless such securities have been registered under the
      Securities Act of 1933, as amended (“Act”): 

    

    “The
      securities represented by this certificate have not been registered under the
      Securities Act of 1933, as amended (“Act”) or applicable state law. The
      securities may not be offered for sale, sold or otherwise transferred except
      pursuant to an effective registration statement under the Act, or pursuant
      to an
      exemption from registration under the Act and applicable state law.”

    

    2.3     Cashless
      Exercise.
      

    

    2.3.1    
Determination
      of Amount.
      In lieu
      of the payment of the Exercise Price multiplied by the number of Units for
      which
      this Purchase Option is exercisable (and in lieu of being entitled to receive
      Common Stock and Warrants) in the manner required by Section 2.1, the Holder
      shall have the right (but not the obligation) to convert any exercisable but
      unexercised portion of this Purchase Option into Units (“Conversion Right”) as
      follows:  upon exercise of the Conversion Right, the Company shall deliver
      to the Holder (without payment by the Holder of any of the Exercise Price in
      cash) that number of Units (or that number of shares of Common Stock and
      Warrants (or that number of shares of  comprising that number of Units)
      equal to the quotient obtained by dividing (x) the “Value” (as defined below) of
      the portion of the Purchase Option being converted by (y) the Current Market
      Value (as defined below). The “Value” of the portion of the Purchase Option
      being converted shall equal the remainder derived from subtracting (a) (i)
      the
      Exercise Price multiplied by (ii) the number of Units underlying the portion
      of
      this Purchase Option being converted from (b) the Current Market Value of a
      Unit
      multiplied by the number of Units underlying the portion of the Purchase Option
      being converted. As used herein, the term “Current Market Value” per Unit at any
      date means: (A) in the event that neither the Units nor Public Warrants are
      still trading, the remainder derived from subtracting (x) the exercise price
      of
      the Warrants multiplied by the number of shares of Common Stock issuable upon
      exercise of the Warrants underlying one Unit from (y) (i) the Current Market
      Price of the Common Stock multiplied by (ii) the number of shares of Common
      Stock underlying one Unit, which shall include the shares of Common Stock
      underlying the Warrants included in such Unit; (B) in the event that the Units,
      Common Stock and Public Warrants are still trading, (i) if the Units are listed
      on a national securities exchange or quoted on the Nasdaq National Market,
      Nasdaq SmallCap Market or NASD OTC Bulletin Board (or successor exchange),
      the
      last sale price of the Units in the principal trading market for the Units
      as
      reported by the exchange, Nasdaq or the NASD, as the case may be, on the last
      trading day preceding the date in question; or (ii) if the Units are not listed
      on a national securities exchange or quoted on the Nasdaq National Market,
      Nasdaq SmallCap Market or the NASD OTC Bulletin Board (or successor exchange),
      but is traded in the residual over-the-counter market, the closing bid price
      for
      Units on the last trading day preceding the date in question for which such
      quotations are reported by the Pink Sheets, LLC or similar publisher of such
      quotations; and (C) in the event that the Units are not still trading but the
      Common Stock and Public Warrants underlying the Units are still trading, the
      Current Market Price of the Common Stock plus the product of (x) the Current
      Market Price of the Public Warrants and (y) the number of shares of Common
      Stock
      underlying the Warrants included in one Unit. The “Current Market Price” shall
      mean (i) if the Common Stock (or Public Warrants, as the case may be) is listed
      on a national securities exchange or quoted on the Nasdaq National Market,
      Nasdaq SmallCap Market or NASD OTC Bulletin Board (or successor exchange),
      the
      last sale price of the Common Stock (or Public Warrants) in the principal
      trading market for the Common Stock as reported by the exchange, Nasdaq or
      the
      NASD, as the case may be, on the last trading day preceding the date in
      question; (ii) if the Common Stock (or Public Warrants, as the case may be)
      is
      not listed on a national securities exchange or quoted on the Nasdaq National
      Market, Nasdaq SmallCap Market or the NASD OTC Bulletin Board (or successor
      exchange), but is traded in the residual over-the-counter market, the closing
      bid price for the Common Stock (or Public Warrants) on the last trading day
      preceding the date in question for which such quotations are reported by the
      Pink Sheets, LLC or similar publisher of such quotations; and (iii) if the
      fair
      market value of the Common Stock cannot be determined pursuant to clause (i)
      or
      (ii) above, such price as the Board of Directors of the Company shall determine,
      in good faith. In the event the Public Warrants have expired and are no longer
      exercisable, no “Value” shall be attributed to the Warrants underlying this
      Purchase Option. Additionally, in the event this Purchase Option is exercised
      pursuant to this Section 2.3 and the Public Warrants are still trading, the
      “Value” shall be reduced by the difference between the Warrant Exercise Price
      and the exercise price of the Public Warrants. 

    

    2.3.2      Mechanics
      of Cashless Exercise.
      The
      Cashless Exercise Right may be exercised by the Holder on any business day
      on or
      after the Commencement Date and not later than the Expiration Date by delivering
      the Purchase Option with the duly executed exercise form attached hereto with
      the cashless exercise section 

    

      
        
          
          

        

        
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    completed
      to the Company, exercising the Cashless Exercise Right and specifying the total
      number of Units the Holder will purchase pursuant to such Cashless Exercise
      Right. 

    

    3.      Transfer.
      

    

    3.1      General
      Restrictions.
      The
      registered Holder of this Purchase Option, by its acceptance hereof, agrees
      that
      it will not sell, transfer, assign, pledge or hypothecate this Purchase Option
      for a period of one year following the Effective Date to anyone other than
      (i)
      Rodman or an underwriter or a selected dealer in connection with the Offering,
      or (ii) a bona fide officer or partner of Rodman or of any such underwriter
      or
      selected dealer. On and after the first anniversary of the Effective Date,
      transfers to others may be made subject to compliance with or exemptions from
      applicable securities laws. In order to make any permitted assignment, the
      Holder must deliver to the Company the assignment form attached hereto duly
      executed and completed, together with the Purchase Option and payment of all
      transfer taxes, if any, payable in connection therewith. The Company shall
      within five business days transfer this Purchase Option on the books of the
      Company and shall execute and deliver a new Purchase Option or Purchase Options
      of like tenor to the appropriate assignee(s) expressly evidencing the right
      to
      purchase the aggregate number of Units purchasable hereunder or such portion
      of
      such number as shall be contemplated by any such assignment. 

    

    3.2      Restrictions
      Imposed by the Act.
      The
      securities evidenced by this Purchase Option shall not be transferred unless
      and
      until (i) the Company has received the opinion of counsel for the Holder that
      the securities may be transferred pursuant to an exemption from registration
      under the Act and applicable state securities laws, the availability of which
      is
      established to the reasonable satisfaction of the Company, or (ii) a
      registration statement or a post-effective amendment to the Registration
      Statement relating to such securities has been filed by the Company and declared
      effective by the Securities and Exchange Commission and compliance with
      applicable state securities law has been established. 

    

    4.      New
      Purchase
      Options to be Issued.
      

    

    4.1      Partial
      Exercise or Transfer.
      Subject
      to the restric­tions in Section 3 hereof, this Purchase Option may be
      exercised or assigned in whole or in part. In the event of the exercise or
      assignment hereof in part only, upon surrender of this Purchase Option for
      cancellation, together with the duly executed exercise or assignment form and
      funds sufficient to pay any Exercise Price and/or transfer tax, the Company
      shall cause to be delivered to the Holder without charge a new Purchase Option
      of like tenor to this Purchase Option in the name of the Holder evidencing
      the
      right of the Holder to purchase the number of Units purchasable hereunder as
      to
      which this Purchase Option has not been exercised or assigned. 

    

    4.2      Lost
      Certificate.
      Upon
      receipt by the Company of evidence satisfactory to it of the loss, theft,
      destruction or mutilation of this Purchase Option and of reasonably satisfactory
      indemnification or the posting of a bond, the Company shall execute and deliver
      a new Purchase Option of like tenor and date. Any such new Purchase Option
      executed and delivered as a result of such loss, theft, mutilation or
      destruction shall constitute a substitute contractual obligation on the part
      of
      the Company. 

    

    5.      Registration
      Rights.
      

    

    5.1     Demand
      Registration.
      

    

    5.1.1     Grant
      of Right.
      The
      Company, upon written demand (“Initial Demand Notice”) of the Holder(s) of at
      least 51% of the Purchase Options and/or the underlying Units and/or the
      underlying securities (“Majority Holders”), agrees to register (the “Demand
      Registration”) on one occasion, all or any portion of the Purchase Options
      requested by the Majority Holders in the Initial Demand Notice and all of the
      securities underlying such Purchase Options, including the Units, Common Stock,
      the Warrants and the Common Stock underlying the Warrants (collectively, the
      “Registrable Securities”). On such occasion, the Company will file a
      registration statement or a post-effective amendment to the Registration
      Statement covering the Registrable Securities within sixty days after receipt
      of
      the Initial Demand Notice and use its best efforts to have such registration
      statement or post-effective amendment declared effective as soon as possible
      thereafter. The demand for registration may be made at any time during a period
      of five years beginning on the Effective Date. The Initial Demand Notice shall
      specify the number of shares of Registrable Securiites proposed to be sold
      and
      the intended method(s) of distribution thereof. The Company covenants and agrees
      to give written notice of its receipt of any Initial Demand Notice by any
      Holder(s) to all other registered Holders of the Purchase Options and/or the
      Registrable Securities within ten days 

    

      
        
          
          

        

        
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    from
      the
      date of the receipt of any such Initial Demand Notice. Each holder of
      Registrable Securities who wishes to include all or a portion of such holder’s
      Registrable Securities in the Demand Registration (each such holder including
      shares of Registrable Securities in such registration, a “Demanding Holder”)
      shall so notify the Company within fifteen (15) days after the receipt by the
      holder of the notice from the Company. Upon any such request, the Demanding
      Holders shall be entitled to have their Registrable Securities included in
      the
      Demand Registration. 

    

    5.1.2.      Effective
      Registration.
      A
      registration will not count as a Demand Registration until the registration
      statement filed with the Commission with respect to such Demand Registration
      has
      been declared effective and the Company has complied with all of its obligations
      under this Agreement with respect thereto; provided, however, that if, after
      such registration statement has been declared effective, the offering of
      Registrable Securities pursuant to a Demand Registration is interfered with
      by
      any stop order or injunction of the Commission or any other governmental agency
      or court, the registration statement with respect to such Demand Registration
      will be deemed not to have been declared effective, unless and until, (i) such
      stop order or injunction is removed, rescinded or otherwise terminated, and
      (ii)
      a majority-in-interest of the Demanding Holders thereafter elect to continue
      the
      offering. 

    

    5.1.3.      Underwritten
      Offering.
      If the
      Majority Holders so elect and such holders so advise the Company as part of
      the
      Initial Demand Notice, the offering of such Registrable Securities pursuant
      to
      such Demand Registration shall be in the form of an underwritten offering.
      In
      such event, the right of any holder to include its Registrable Securities in
      such registration shall be conditioned upon such holder’s participation in such
      underwriting and the inclusion of such holder’s Registrable Securities in the
      underwriting to the extent provided herein. All Demanding Holders proposing
      to
      distribute their securities through such underwriting shall enter into an
      underwriting agreement in customary form with the underwriter or underwriters
      selected for such underwriting by the Majority Holders. 

    

    5.1.4.      Reduction
      of Offering.
      If the
      managing underwriter or underwriters for a Demand Registration that is to be
      an
      underwritten offering advises the Company and the Demanding Holders in writing
      that the dollar amount or number of shares of Registrable Securities which
      the
      Demanding Holders desire to sell, taken together with all other shares of Common
      Stock or other securities which the Company desires to sell and the shares
      of
      Common Stock, if any, as to which registration has been requested pursuant
      to
      written contractual piggy-back registration rights held by other stockholders
      of
      the Company who desire to sell, exceeds the maximum dollar amount or maximum
      number of shares that can be sold in such offering without adversely affecting
      the proposed offering price, the timing, the distribution method, or the
      probability of success of such offering (such maximum dollar amount or maximum
      number of shares, as applicable, the “ Maximum
      Number of Shares ”),
      then
      the Company shall include in such registration: (i) first, the Registrable
      Securities as to which Demand Registration has been requested by the Demanding
      Holders (pro rata in accordance with the number of shares that each such Person
      has requested be included in such registration, regardless of the number of
      shares held by each such Person (such proportion is referred to herein as “
Pro
      Rata ”))
      that
      can be sold without exceeding the Maximum Number of Shares; (ii) second, to
      the
      extent that the Maximum Number of Shares has not been reached under the
      foregoing clause (i), the shares of Common Stock or other securities that the
      Company desires to sell that can be sold without exceeding the Maximum Number
      of
      Shares; (iii) third, to the extent that the Maximum Number of Shares has not
      been reached under the foregoing clauses (i) and (ii), the shares of Common
      Stock or other securities registrable pursuant to the terms of the Registration
      Rights Agreement between the Company and the initial investors in the Company,
      dated as of January 24, 2006 (the “ Registration
      Rights Agreement ”
and
      such registrable securities, the “ Investor
      Securities ”)
      as to
      which “piggy-back” registration has been requested by the holders thereof, Pro
      Rata, that can be sold without exceeding the Maximum Number of Shares; and
      (iv)
      fourth, to the extent that the Maximum Number of Shares have not been reached
      under the foregoing clauses (i), (ii), and (iii), the shares of Common Stock
      or
      other securities for the account of other persons that the Company is obligated
      to register pursuant to written contractual arrangements with such persons
      and
      that can be sold without exceeding the Maximum Number of Shares. 

    

    5.1.5      Withdrawal.
      If a
      majority-in-interest of the Demanding Holders disapprove of the terms of any
      underwriting or are not entitled to include all of their Registrable Securities
      in any offering, such majority-in-interest of the Demanding Holders may elect
      to
      withdraw from such offering by giving written notice to the Company and the
      underwriter or underwriters of their request to withdraw prior to the
      effectiveness of the registration statement filed with the Commission with
      respect to such Demand Registration. If the majority-in-interest of the
      Demanding Holders withdraws from a proposed offering relating to a Demand
      Registration, then such registration shall not count as a Demand Registration
      provided for in Section 5.1. 

     

    
      
        
        

      

      
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    5.1.6      Terms.
      The
      Company shall bear all fees and expenses attendant to registering the
      Registrable Securities, including the expenses of any legal counsel selected
      by
      the Holders to represent them in connection with the sale of the Registrable
      Securities, but the Holders shall pay any and all underwriting commissions.
      The
      Company agrees to use its reasonable best efforts to qualify or register the
      Registrable Securities in such States as are reasonably requested by the
      Majority Holder(s); provided, however, that in no event shall the Company be
      required to register the Registrable Securities in a State in which such
      registration would cause (i) the Company to be obligated to qualify to do
      business in such State, or would subject the Company to taxation as a foreign
      corporation doing business in such jurisdiction or (ii) the principal
      stockholders of the Company to be obligated to escrow their shares of capital
      stock of the Company. The Company shall cause any registration state­ment or
      post-effective amendment filed pursuant to the demand rights granted under
      Section 5.1.1 to remain effective for a period of nine consecutive months from
      the effective date of such registration statement or post-effective amendment.
      

    

    5.2.      “Piggy-Back”
      Registration.
      

    

    5.2.1.     Grant
      of Right.
      In
      addition to the demand right of registration, the Holders of the Purchase
      Options shall have the right for a period of seven years commencing on the
      Effective Date, to include the Registrable Securities as part of any other
      registration of securities filed by the Company (other than in connection with
      a
      transaction contemplated by Rule 145(a) promulgated under the Act or pursuant
      to
      Form S-8); provided, however, that if, in the written opinion of the Company’s
      managing underwriter or underwriters, if any, for such offering, the inclusion
      of the Registrable Securities, when added to the securities being registered
      by
      the Company or the selling stockholder(s), will exceed the maximum amount of
      the
      Company’s securities which can be marketed (i) at a price reasonably related to
      their then current market value, and (ii) without materially and adversely
      affecting the entire offering, then the Company will still be required to
      include the Registrable Securities, but may require the Holders to agree, in
      writing, to delay the sale of all or any portion of the Registrable Securities
      for a period of 90 days from the effective date of the offering, provided,
      further, that if the sale of any Registrable Securities is so delayed, then
      the
      number of securities to be sold by all stockholders in such public offering
      during such 90 day period shall be apportioned pro
      rata among
      all
      such selling stockholders, including all holders of the Registrable Securities,
      according to the total amount of securities of the Company owned by said selling
      stockholders, including all holders of the Registrable Securities. The Company
      shall give written notice of such proposed filing to the Holders of the Purchase
      Options as soon as practicable, but in no event less than ten (10) days before
      the anticipated filing date, which notice shall describe the amount and type
      of
      securities to be included in such offering, the intended method(s) of
      distribution, and the name of the proposed managing underwriter or underwriters,
      if any, of the offering, and offer the Holders  in such notice the
      opportunity to register the sale of such number of shares of Registrable
      Securities as such holders may request in writing within five (5) days following
      receipt of such notice (a “Piggy-Back Registration”). All Holders proposing to
      distribute their Registrable Securities through a Piggy-Back Registration that
      involves an underwriter or underwriters shall enter into an underwriting
      agreement in  customary form with the underwriter or underwriters selected
      for such Piggy-Back Registration. 

    

    5.2.2.      Withdrawal.
      Any
      Holder of Registrable Securities may elect to withdraw such Holder’s request for
      inclusion of Registrable Securities in any Piggy-Back Registration by giving
      written notice to the Company of such request to withdraw prior to the
      effectiveness of the registration statement. The Company (whether on its own
      determination or as the result of a withdrawal by persons making a demand
      pursuant to written contractual obligations) may withdraw a registration
      statement at any time prior to the effectiveness of the registration statement.
      Notwithstanding any such withdrawal, the Company shall pay all expenses incurred
      by the holders of Registrable Securities in connection with such Piggy-Back
      Registration as provided in Section 5.2.3. 

    

    5.2.3.      Terms.
      The
      Company shall bear all fees and expenses attendant to registering the
      Registrable Securities, including the expenses of any legal counsel selected
      by
      the Holders to represent them in connection with the sale of the Registrable
      Securities but the Holders shall pay any and all underwriting commissions
      related to the Registrable Securities. In the event of such a proposed
      registration, the Company shall furnish the then Holders of outstanding
      Registrable Securities with not less than fifteen days written notice prior
      to
      the proposed date of filing of such registration statement. Such notice to
      the
      Holders shall continue to be given for each applicable registration statement
      filed (during the period in which the Purchase Option is exercisable) by the
      Company until such time as all of the Registrable Securities have been
      registered and sold. The holders of the Registrable Securities shall exercise
      the “piggy-back” rights provided for herein by giving written notice, within ten
      days of the receipt of the Company’s notice of its intention to file a
      registration statement. The Company shall cause 

    

    

      
        
          
          

        

        
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    any
      registration statement filed pursuant to the above “piggyback” rights to remain
      effective for at least nine months from the date that the Holders of the
      Registrable Securities are first given the opportunity to sell all of such
      securities. 

    

    5.3.      Damages.
      Should
      the registration or the effectiveness thereof required by Sections 5.1 and
      5.2
      hereof be delayed by the Company or the Company otherwise fails to comply with
      such provisions, the Company shall, in addition to any other equitable or other
      relief available to the Holder(s), be liable for any and all incidental, special
      and consequential damages sustained by the Holder(s), including, but not limited
      to, the loss of any profits that might have been received by the holder upon
      the
      sale of shares of Common Stock or Warrants (and shares of Common Stock
      underlying the Warrants) underlying this Purchase Option. 

    

    5.4
      .     General
      Terms.
      

    

    5.4.1.      Indemnification.
      The
      Company shall indemnify the Holder(s) of the Registrable Securities to be sold
      pursuant to any registration statement hereunder and each person, if any, who
      controls such Holders within the meaning of Section 15 of the Act or Section
      20(a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”),
      against all loss, claim, damage, expense or liability (including all reasonable
      attorneys’ fees and other expenses reasonably incurred in investigating,
      preparing or defending against litigation, commenced or threatened, or any
      claim
      whatsoever whether arising out of any action between the underwriter and the
      Company or between the underwriter and any third party or otherwise) to which
      any of them may become subject under the Act, the Exchange Act or otherwise,
      arising from such registration statement but only to the same extent and with
      the same effect as the provisions pursuant to which the Company has agreed
      to
      indemnify the underwriters contained in Section 5 of the Underwriting Agreement
      between the Company, Rodman and the other underwriters named therein dated
      the
      Effective Date. The Holder(s) of the Registrable Securities to be sold pursuant
      to such registration statement, and their successors and assigns, shall
      severally, and not jointly, indemnify the Company, its officers and directors
      and each person, if any, who controls the Company within the meaning of Section
      15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim,
      damage, expense or liability (including all reasonable attorneys’ fees and other
      expenses reasonably incurred in investigating, preparing or defending against
      any claim whatsoever) to which they may become subject under the Act, the
      Exchange Act or otherwise, arising from information furnished by or on behalf
      of
      such Holders, or their successors or assigns, in writing, for specific inclusion
      in such registration statement to the same extent and with the same effect
      as
      the provisions contained in Section 5 of the Underwriting Agreement pursuant
      to
      which the underwriters have agreed to indemnify the Company. 

    

    5.4.2.      Exercise
      of Purchase Options.
      Nothing
      contained in this Purchase Option shall be construed as requiring the Holder(s)
      to exercise their Purchase Options or Warrants underlying such Purchase Options
      prior to or after the initial filing of any registration statement or the
      effectiveness thereof. 

    

    5.4.3.     Documents
      Delivered to Holders.
      The
      Company shall furnish Rodman, as representative of the Holders participating
      in
      any of the foregoing offerings, a signed counterpart, addressed to the
      participating Holders, of (i) an opinion of counsel to the Company, dated the
      effective date of such registration statement (and, if such registration
      includes an underwritten public offering, an opinion dated the date of the
      closing under any underwriting agreement related thereto), and (ii) a “cold
      comfort” letter dated the effective date of such registration statement (and, if
      such registration includes an underwritten public offering, a letter dated
      the
      date of the closing under the underwriting agreement) signed by the independent
      public accountants who have issued a report on the Company’s financial
      statements included in such registration statement, in each case covering
      substantially the same matters with respect to such registration statement
      (and
      the prospectus included therein) and, in the case of such accountants’ letter,
      with respect to events subsequent to the date of such financial statements,
      as
      are customarily covered in opinions of issuer’s counsel and in accountants’
letters delivered to underwriters in underwritten public offerings of
      securities. The Company shall also deliver promptly to Rodman, as representative
      of the Holders participating in the offering, the correspondence and memoranda
      described below and copies of all correspondence between the Commission and
      the
      Company, its counsel or auditors and all memoranda relating to discussions
      with
      the Commission or its staff with respect to the registration statement and
      permit Rodman, as representative of the Holders, to do such investigation,
      upon
      reasonable advance notice, with respect to information contained in or omitted
      from the registration statement as it deems reasonably necessary to comply
      with
      applicable securities laws or rules of the National Association of Securities
      Dealers, Inc. (“NASD”). Such investigation shall include access to books,
      records and properties and opportunities to discuss the business of the Company
      with its officers and independent auditors, all to such reasonable extent and
      at
      such reasonable times and as often as Rodman, as 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    representative
      of the Holders, shall reasonably request. The Company shall not be required
      to
      disclose any confidential information or other records to Rodman, as
      representative of the Holders, or to any other person, until and unless such
      persons shall have entered into reasonable confidentiality agreements (in form
      and substance reasonably satisfactory to the Company), with the Company with
      respect thereto. 

    

    5.4.4.      Underwriting
      Agreement.
      The
      Company shall enter into an underwriting agreement with the managing
      underwriter(s), if any, selected by any Holders whose Registrable Securities
      are
      being registered pursuant to this Section 5, which managing underwriter shall
      be
      reasonably acceptable to the Company. Such agreement shall be reasonably
      satisfactory in form and substance to the Company, each Holder and such managing
      underwriters, and shall contain such representations, warranties and covenants
      by the Company and such other terms as are customarily contained in agreements
      of that type used by the managing underwriter. The Holders shall be parties
      to
      any underwriting agreement relating to an underwritten sale of their Registrable
      Securities and may, at their option, require that any or all the
      representations, warranties and covenants of the Company to or for the benefit
      of such underwriters shall also be made to and for the benefit of such Holders.
      Such Holders shall not be required to make any representations or warranties
      to
      or agreements with the Company or the underwriters except as they may relate
      to
      such Holders and their intended methods of distribution. Such Holders, however,
      shall agree to such covenants and indemnification and contribution obligations
      for selling stockholders as are customarily contained in agreements of that
      type
      used by the managing underwriter. Further, such Holders shall execute
      appropriate custody agreements and otherwise cooperate fully in the preparation
      of the registration statement and other documents relating to any offering
      in
      which they include securities pursuant to this Section 5. Each Holder shall
      also
      furnish to the Company such information regarding itself, the Registrable
      Securities held by it, and the intended method of disposition of such securities
      as shall be reasonably required to effect the registration of the Registrable
      Securities. 

    

    5.4.5.      Rule
      144 Sale.
      Notwithstanding anything contained in this Section 5 to the contrary, the
      Company shall have no obligation pursuant to Sections 5.1 or 5.2 for the
      registration of Registrable Securities held by any Holder (i) where such
      Holder would then be entitled to sell under Rule 144 within any three-month
      period (or such other period prescribed under Rule 144 as may be provided
      by amendment thereof) all of the Registrable Securities then held by such
      Holder, and (ii) where the number of Registrable Securities held by such
      Holder is within the volume limitations under paragraph (e) of
      Rule 144 (calculated as if such Holder were an affiliate within the meaning
      of Rule 144). 

    

    5.4.6.      Supplemental
      Prospectus.
      Each
      Holder agrees, that upon receipt of any notice from the Company of the happening
      of any event as a result of which the prospectus included in the Registration
      Statement, as then in effect, includes an untrue statement of a material fact
      or
      omits to state a material fact required to be stated therein or necessary to
      make the statements therein not misleading in light of the circumstances then
      existing, such Holder will immediately discontinue disposition of Registrable
      Securities pursuant to the Registration Statement covering such Registrable
      Securities until such Holder’s receipt of the copies of a supplemental or
      amended prospectus, and, if so desired by the Company, such Holder shall deliver
      to the Company (at the expense of the Company) or destroy (and deliver to the
      Company a certificate of such destruction) all copies, other than permanent
      file
      copies then in such Holder’s possession, of the prospectus covering such
      Registrable Securities current at the time of receipt of such notice.

    

    6.      Adjustments.
      

    

    6.1.      Adjustments
      to Exercise Price and Number of Securities.
      The
      Exercise Price and the number of Units underlying the Purchase Option shall
      be
      subject to adjustment from time to time as hereinafter set forth: 

    

    6.1.1.      Stock
      Dividends - Split-Ups.
      If
      after the date hereof, and subject to the provisions of Section 6.4 below,
      the
      number of outstanding shares of Common Stock is increased by a stock dividend
      payable in shares of Common Stock or by a split-up of shares of Common Stock
      or
      other similar event, then, on the effective date thereof, the number of shares
      of Common Stock underlying each of the Units purchasable hereunder shall be
      increased in proportion to such increase in outstanding shares. In such case,
      the number of shares of Common Stock, and the exercise price applicable thereto,
      underlying the Warrants underlying each of the Units purchasable hereunder
      shall
      be adjusted in accordance with the terms of the Warrants. For example, if the
      Company declares a two-for-one stock dividend and at the time of such dividend
      this Purchase Option is for the purchase of one Unit at $8.80 per whole Unit
      (each Warrant underlying the Units is exercisable for $5.50 per share), upon
      effectiveness of 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    

    the
      dividend, this Purchase Option will be adjusted to allow for the purchase of
      one
      Unit at $8.80 per Unit, each Unit entitling the holder to receive two shares
      of
      Common Stock and two Warrants (each Warrant exercisable for $2.75 per share).
      

    

    6.1.2.      Aggregation
      of Shares.
      If
      after the date hereof, and subject to the provisions of Section 6.4, the number
      of outstanding shares of Common Stock is decreased by a consolidation,
      combination or reclassification of shares of Common Stock or other similar
      event, then, on the effective date thereof, the number of shares of Common
      Stock
      underlying each of the Units purchasable hereunder shall be decreased in
      proportion to such decrease in outstanding shares. In such case, the number
      of
      shares of Common Stock, and the exercise price applicable thereto, underlying
      the Warrants underlying each of the Units purchasable hereunder shall be
      adjusted in accordance with the terms of the Warrants. 

    

    6.1.3.      Replacement
      of Securities upon Reorganization, etc.
      In case
      of any reclassification or reorganization of the outstanding shares of Common
      Stock other than a change covered by Section 6.1.1 or 6.1.2 hereof or that
      solely affects the par value of such shares of Common Stock, or in the case
      of
      any merger or consolidation of the Company with or into another corporation
      (other than a consolidation or merger in which the Company is the continuing
      corporation and that does not result in any reclassification or reorganization
      of the outstanding shares of Common Stock), or in the case of any sale or
      conveyance to another corporation or entity of the property of the Company
      as an
      entirety or substantially as an entirety in connection with which the Company
      is
      dissolved, the Holder of this Purchase Option shall have the right thereafter
      (until the expiration of the right of exercise of this Purchase Option) to
      receive upon the exercise hereof, for the same aggregate Exercise Price payable
      hereunder immediately prior to such event, the kind and amount of shares of
      stock or other securities or property (including cash) receivable upon such
      reclassification, reorganization, merger or consolidation, or upon a dissolution
      following any such sale or transfer, by a Holder of the number of shares of
      Common Stock of the Company obtainable upon exercise of this Purchase Option
      and
      the underlying Warrants immediately prior to such event; and if any
      reclassification also results in a change in shares of Common Stock covered
      by
      Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to
      Sections 6.1.1, 6.1.2 and this Section 6.1.3. The provisions of this
      Section 6.1.3 shall similarly apply to successive reclassifications,
      reorganizations, mergers or consolidations, sales or other transfers.

    

    6.1.4.      Changes
      in Form of Purchase Option.
      This
      form of Purchase Option need not be changed because of any change pursuant
      to
      this Section, and Purchase Options issued after such change may state the same
      Exercise Price and the same number of Units as are stated in the Purchase
      Options initially issued pursuant to this Agreement. The acceptance by any
      Holder of the issuance of new Purchase Options reflecting a required or
      permissive change shall not be deemed to waive any rights to an adjustment
      occurring after the Commencement Date or the computation thereof. 

    

    6.2.     Substitute
      Purchase Option.
      In case
      of any consolidation of the Company with, or merger of the Company with, or
      merger of the Company into, another corporation (other than a consolidation
      or
      merger which does not result in any reclassification or change of the
      outstanding Common Stock), the corporation formed by such consolidation or
      merger shall execute and deliver to the Holder a supplemental Purchase Option
      providing that the holder of each Purchase Option then outstanding or to be
      outstanding shall have the right thereafter (until the stated expiration of
      such
      Purchase Option) to receive, upon exercise of such Purchase Option, the kind
      and
      amount of shares of stock and other securities and property receivable upon
      such
      consolidation or merger, by a holder of the number of shares of Common Stock
      of
      the Company for which such Purchase Option might have been exercised immediately
      prior to such consolidation, merger, sale or transfer. Such supplemental
      Purchase Option shall provide for adjustments which shall be identical to the
      adjustments provided in Section 6. The above provision of this Section shall
      similarly apply to successive consolidations or mergers. 

    

    6.3.      Elimination
      of Fractional Interests.
      The
      Company shall not be required to issue certificates representing fractions
      of
      shares of Common Stock or Warrants upon the exercise of the Purchase Option,
      nor
      shall it be required to issue scrip or pay cash in lieu of any fractional
      interests, it being the intent of the parties that all fractional interests
      shall be eliminated by rounding any fraction up to the nearest whole number
      of
      Warrants, shares of Common Stock or other securities, properties or rights.
      

    

    7.     Reservation
      and Listing.
      The
      Company shall at all times reserve and keep available out of its authorized
      shares of Common Stock, solely for the purpose of issuance upon exercise of
      the
      Purchase Options or the Warrants underlying the Purchase Option, such number
      of
      shares of Common Stock or other securities, properties or rights as

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    shall
      be
      issuable upon the exercise thereof. The Company covenants and agrees that,
      upon
      exercise of the Purchase Options and payment of the Exercise Price therefor,
      all
      shares of Common Stock and other securities issuable upon such exercise shall
      be
      duly and validly issued, fully paid and non-assessable and not subject to
      preemptive rights of any stockholder. The Company further covenants and agrees
      that upon exercise of the Warrants underlying the Purchase Options and payment
      of the respective Warrant exercise price therefor, all shares of Common Stock
      and other securities issuable upon such exercise shall be duly and validly
      issued, fully paid and non-assessable and not subject to preemptive rights
      of
      any stockholder. As long as the Purchase Options shall be outstanding, the
      Company shall use its best efforts to cause all (i) Units and shares of
      Common Stock issuable upon exercise of the Purchase Options, (ii) Warrants
      issuable upon exercise of the Purchase Options and (iii) shares of Common Stock
      issuable upon exercise of the  Warrants included in the Units issuable upon
      exercise of the Purchase Option to be listed (subject to official notice of
      issuance) on all securities exchanges (or, if applicable on the Nasdaq National
      Market, SmallCap Market, OTC Bulletin Board or any successor trading market)
      on
      which the Units, the Common Stock or the Public Warrants issued to the public
      in
      connection herewith may then be listed and/or quoted. 

    

    8.      Certain
      Notice Requirements.
      

    

    8.1.      Holder’s
      Right to Receive Notice.
      Nothing
      herein shall be construed as conferring upon the Holders the right to vote
      or
      consent as a stockholder for the election of directors or any other matter,
      or
      as having any rights whatsoever as a stockholder of the Company. If, however,
      at
      any time prior to the expiration of the Purchase Options and their exercise,
      any
      of the events described in Section 8.2 shall occur, then, in one or more of
      said
      events, the Company shall give written notice of such event at least fifteen
      days prior to the date fixed as a record date or the date of closing the
      transfer books for the determination of the stockholders entitled to such
      dividend, distribution, conversion or exchange of securities or subscription
      rights, or entitled to vote on such proposed dissolution, liquidation, winding
      up or sale. Such notice shall specify such record date or the date of the
      closing of the transfer books, as the case may be. Notwithstanding the
      foregoing, the Company shall deliver to each Holder a copy of each notice given
      to the other stockholders of the Company at the same time and in the same manner
      that such notice is given to the stockholders. 

    

    8.2.     Events
      Requiring Notice.
      The
      Company shall be required to give the notice described in this Section 8 upon
      one or more of the following events: (i) if the Company shall take a record
      of
      the holders of its shares of Common Stock for the purpose of entitling them
      to
      receive a dividend or distribution payable otherwise than in cash, or a cash
      dividend or distribution payable otherwise than out of retained earnings, as
      indicated by the accounting treatment of such dividend or distribution on the
      books of the Company, or (ii) the Company shall offer to all the holders of
      its
      Common Stock any additional shares of capital stock of the Company or securities
      convertible into or exchangeable for shares of capital stock of the Company,
      or
      any option, right or warrant to subscribe therefor, or (iii) a dissolution,
      liquidation or winding up of the Company (other than in connection with a
      consolidation or merger) or a sale of all or substantially all of its property,
      assets and business shall be proposed. 

    

    8.3.      Notice
      of Change in Exercise Price.
      The
      Company shall, promptly after an event requiring a change in the Exercise Price
      pursuant to Section 6 hereof, send notice to the Holders of such event and
      change (“Price Notice”). The Price Notice shall describe the event causing the
      change and the method of calculating same and shall be certified as being true
      and accurate by the Company’s President and Chief Financial Officer.

    

    8.4.      Transmittal
      of Notices.
      All
      notices, requests, consents and other communications under this Purchase Option
      shall be in writing and shall be deemed to have been duly made when hand
      delivered, or mailed by express mail or private courier service:  (i) If to
      the registered Holder of the Purchase Option, to the address of such Holder
      as
      shown on the books of the Company, or (ii) if to the Company, to the following
      address or to such other address as the Company may designate by notice to
      the
      Holders: 

    

    Argyle
      Security Acquisition Corporation 

    200
      Concord Plaza, Suite 700 

    San
      Antonio, Texas 78216 

    Attn:
      Bob
      Marbut, Co-Chief Executive Officer 

    

    9.      Miscellaneous.
      

    

    9.1.      Amendments.
      The
      Company and Rodman may from time to time supplement or amend this Purchase
      Option without the approval of any of the Holders in order to cure any
      ambiguity, to correct or supplement any provision contained herein that may
      be
      defective or inconsistent with any other provisions herein, or to make

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    any
      other
      provisions in regard to matters or questions arising hereunder that the Company
      and Rodman may deem necessary or desirable and that the Company and Rodman
      deem
      shall not adversely affect the interest of the Holders. All other modifications
      or amendments shall require the written consent of and be signed by the party
      against whom enforcement of the modification or amendment is sought.

    

    9.2.      Headings.
       The headings contained herein are for the sole purpose of convenience of
      reference, and shall not in any way limit or affect the meaning or
      interpretation of any of the terms or provisions of this Purchase Option.

    

    10.      Entire
      Agreement.
      This
      Purchase Option (together with the other agreements and documents being
      delivered pursuant to or in connection with this Purchase Option) constitutes
      the entire agreement of the parties hereto with respect to the subject matter
      hereof, and supersedes all prior agreements and understandings of the parties,
      oral and written, with respect to the subject matter hereof. 

    

    10.1.      Binding
      Effect.
      This
      Purchase Option shall inure solely to the benefit of and shall be binding upon,
      the Holder and the Company and their permitted assignees, respective successors,
      legal representatives and assigns, and no other person shall have or be
      construed to have any legal or equitable right, remedy or claim under or in
      respect of or by virtue of this Purchase Option or any provisions herein
      contained. 

    

    10.2.      Governing
      Law; Submission to Jurisdiction.
      This
      Purchase Option shall be governed by and construed and enforced in accordance
      with the laws of the State of New York, without giving effect to conflicts
      of
      law principles that would result in the application of the substantive laws
      of
      another jurisdiction. The Company hereby agrees that any action, proceeding
      or
      claim against it arising out of, or relating in any way to this Purchase Option
      shall be brought and enforced in the courts of the State of New York or of
      the
      United States of America for the Southern District of New York, and irrevocably
      submits to such jurisdiction, which jurisdiction shall be exclusive. The Company
      hereby waives any objection to such exclusive jurisdiction and that such courts
      represent an inconvenient forum. Any process or summons to be served upon the
      Company may be served by transmitting a copy thereof by registered or certified
      mail, return receipt requested, postage prepaid, addressed to it at the address
      set forth in Section 8 hereof. Such mailing shall be deemed personal service
      and
      shall be legal and binding upon the Company in any action, proceeding or claim.
      The Company and the Holder agree that the prevailing party(ies) in any such
      action shall be entitled to recover from the other party(ies) all of its
      reasonable attorneys’ fees and expenses relating to such action or proceeding
      and/or incurred in connection with the preparation therefor. 

    

    10.3.      Waiver,
      Etc.
      The
      failure of the Company or the Holder to at any time enforce any of the
      provisions of this Purchase Option shall not be deemed or construed to be a
      waiver of any such provision, nor to in any way affect the validity of this
      Purchase Option or any provision hereof or the right of the Company or any
      Holder to thereafter enforce each and every provision of this Purchase Option.
      No waiver of any breach, non-compliance or non-fulfillment of any of the
      provisions of this Purchase Option shall be effective unless set forth in a
      written instrument executed by the party or parties against whom or which
      enforcement of such waiver is sought; and no waiver of any such breach,
      non-compliance or non-fulfillment shall be construed or deemed to be a waiver
      of
      any other or subsequent breach, non-compliance or non-fulfillment. 

    

    10.4.      Execution
      in Counterparts.
      This
      Purchase Option may be executed in one or more counterparts, and by the
      different parties hereto in separate counterparts, each of which shall be deemed
      to be an original, but all of which taken together shall constitute one and
      the
      same agreement, and shall become effective when one or more counterparts has
      been signed by each of the parties hereto and delivered to each of the other
      parties hereto. 

    

    10.5.      Exchange
      Agreement.
      As a
      condition of the Holder’s receipt and acceptance of this Purchase Option, Holder
      agrees that, at any time prior to the complete exercise of this Purchase Option
      by Holder, if the Company and Rodman enter into an agreement (“Exchange
      Agreement”) pursuant to which they agree that all outstanding Purchase Options
      will be exchanged for securities or cash or a combination of both, then Holder
      shall agree to such exchange and become a party to the Exchange Agreement.
      

    

    10.6.      Underlying
      Warrants.
      At any
      time after exercise by the Holder of this Purchase Option, the Holder may
      exchange his Warrants for Public Warrants. 

    

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Purchase Option to be signed by
      its
      duly authorized officer as of the  30th
      day of
      January, 2006. 

     

    
      	 	 	 
	 	
              ARGYLE
                SECURITY ACQUISITION CORPORATION

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              
                Name:
                  Bob Marbut 

              

            
	 	Title:
              Co-Chief
              Executive Officer  

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    Form
      to
      be used to exercise Purchase Option: 

    

    Argyle
      Security Acquisition Corporation 

    200
      Concord Plaza, Suite 700 

    San
      Antonio, Texas 78216 

    

    Attn:
      Bob
      Marbut, Co-Chief Executive Officer 

    

    Date:
                                        
      ,
      200
  
      

    

    The
      undersigned hereby elects irrevocably to exercise all or a portion of the within
      Purchase Option and to purchase         Units
      of
      Argyle Security Acquisition Corporation and hereby makes payment of 
$              (at
      the
      rate of  $               per
      Unit)
      in payment of the Exercise Price pursuant thereto. Please issue the Common
      Stock
      and Warrants as to which this Purchase Option is exercised in accordance with
      the instructions given below. 

    

    or
      

    

    The
      undersigned hereby elects irrevocably to convert its right to purchase
                   Units
      purchasable under the within Purchase Option by surrender of the unexercised
      portion of the attached Purchase Option (with a “Value” based of $               based
      on
      a “Market Price” of $               ).
      Please
      issue the securities comprising the Units as to which this Purchase Option
      is
      exercised in accordance with the instructions given below. 

     

     

    
      	 	Signature 
	 	Signature Guaranteed

    

     

     

    INSTRUCTIONS
      FOR REGISTRATION OF SECURITIES 

     

     

    
      	 	Name
	 	
               (Print
                in Block Letters)

            
	 	 Address

    

     

     

    NOTICE:
      The signature to this form must correspond with the name as written upon the
      face of the within Purchase Option in every particular without alter­ation
      or enlargement or any change whatsoever, and must be guaranteed by a bank,
      other
      than a savings bank, or by a trust company or by a firm having membership on
      a
      registered national securities exchange. 

    

    

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

    

     

    Form
      to
      be used to assign Purchase Option: 

    

    ASSIGNMENT
      

    

    (To
      be
      executed by the registered Holder to effect a transfer of the within Purchase
      Option): 

    

    FOR
      VALUE
      RECEIVED,                                                                                              does
      hereby sell, assign and transfer unto                                                                                               the
      right
      to purchase               Units
      of
      Argyle Security Acquisition Corporation. (“Company”) evidenced by the within
      Purchase Option and does hereby authorize the Company to transfer such right
      on
      the books of the Company. 

    

    Dated:
      ,
                        
      ,
      200
 
      

     

    
       

      
        	 	Signature 
	 	Signature Guaranteed

      

       

    

    

    NOTICE:
      The signature to this form must correspond with the name as written upon the
      face of the within Purchase Option in every particular without alteration or
      enlargement or any change whatsoever, and must be guaranteed by a bank, other
      than a savings bank, or by a trust company or by a firm having membership on
      a
      registered national securities exchange. 

    
 

    
      
        
        

      

      13EXHIBIT
      10.1

    

    DEBIT
      CARD SPONSORSHIP AGREEMENT

    

    This
      Debit Card Sponsorship Agreement (“Agreement”), dated as of February 1, 2006, is
      by and between Ready
      Credit Corporation,
      (“Company”), a Nevada corporation located at 800 Nicollet Mall, Suite 2690,
      Minneapolis, MN 55402 and Palm
      Desert National Bank
      (“Bank”), a national bank located at 73-745 El Paseo, Palm Desert, CA
      92260.

    

    RECITALS

    

      WHEREAS,
        Company
        has developed and
        is
        the sole owner of a stored value debit card program (“the Program”);
that
        incorporates the use of
        a self
        service kiosk to dispense instant issue stored value prepaid debit cards
        as
        approved by the network, and also offers personalized stored value prepaid
        debit
        cards, including upgrade of initial issuance stored value prepaid debit cardsby
        means including the Web, telephone and mail.

     

    WHEREAS,
      Bank is
      a member of various Networks for the purposes of issuing prepaid or stored
      value
      debit cards; and

    

    WHEREAS,
      Bank is
      willing to provide and the rights and privileges that follow from sponsorship
      to
      Company for the purposes of issuing the Company’s stored value debit card.

    

    NOW,
      THEREFORE,
      in
      consideration of the premises and mutual covenants set forth herein, and other
      good and valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, Company and Bank, intending to be legally bound, hereby agree
      as
      follows: 

    

    AGREEMENT

    

    ARTICLE
      I
      - DEFINITIONS

    

    SECTION
      1 - Definitions

    

    Except
      as
      otherwise specifically indicated, the following terms shall have the following
      meanings in this Agreement (such meanings to be equally applicable to both
      the
      singular and plural forms of the terms defined):

    ACH
      means
      the Automated Clearinghouse network, governed by the rules of the National
      Automated Clearinghouse Association (“NACHA”). 

    

    BIN
      means
      Bank Identification Number and is a number assigned to Bank by
      System.

    

      Business
        Plan
        means
        the document attached as Exhibit

    

    Card
      Product or Card
      means
      the various debit cards issued within the Program as the Company shall request
      and Bank shall approve now and in the future, pursuant to the Operating Rules
      of
      the Networks.

    

    Card
      Account Income
      means
      all revenue received from a Cardholder as disclosed in the Cardholder Agreement
      and other fees as specified from time to time.

    

    Cardholder
      means
      the person who is issued or accepts a Card pursuant to the Program.

    

    Cardholder
      Agreement
      means
      the agreement between the Bank and Cardholder governing the terms and use of
      a
      Card which shall be executed by Bank and Cardholder prior to the issuance of
      a
      Card by Bank and/or prior to Company’s request that a Card be issued to any such
      Cardholder 

    

    Graphic
      Standards
      mean all
      standards, policies, and other requirements adopted by a System from time to
      time with respect to use of its Marks.

    

    
      
         

      

      
        Page
          1

        
          

        

      

      
         

      

    

    Issuer
      means a
      Member Bank that issues Cards.

    

    Item
      means a
      transaction that is processed between between parties through the System and
      its
      members or through the Processor, the Bank and the Company, including purchases,
      cash withdrawals, disputes and refunds.

    

    Mark
      means
      the service marks, trademarks and copyrights of a System and Bank, including
      but
      not limited to, the names and other distinctive marks or logos, which identify
      a
      System, and Bank.

    

    Membership
      means
      the membership in a System and licensing rights thereto obtained by
      Bank.

    

    Operating
      Rules
      means
      the operating rules and regulations adopted and written by the System, NACHA,
      as
      the case may be, as the same may from time to time be amended, modified, or
      supplemented.

    

    Processing
      Services
      means
      those services, which are reasonably required or necessary to Issue a Card
      and/or process a transaction in accordance with the Rules of a System. Such
      services shall include but not be limited to: account set-up and maintenance,
      chargeback processing and compliance, Card design, Card production, Card
      issuance, transaction processing, Settlement, System access, Cardholder dispute
      resolution, customer service, System compliance, regulatory compliance, security
      and fraud control, collections, and activity reporting.

    

    Processor
      means
      the third party whom Company may retain to perform Processing Services under
      this Agreement.

    

    Program
      means the total concept of the Company’sproject inclusive of Buisness Plan,
whereby
      Cardholders will be issued cards for payroll or other funds distribution and
      which is subject to this Agreement and the business contemplated
      hereunder.

    

    Program
      Materials
      means
      all materials and methods of marketing used by Company in connection with this
      agreement, including without limitation, advertisements, brochures, telephone
      scripts, applications, Cardholder Agreements, and similar
      materials.

    

    Program
      Revenues
      mean all
      Interchange Fee and other Fees and revenues generated by or accruing under
      a
      Card marketed and governed by this Agreement.

    

    Regulatory
      Authority
      means,
      as the context requires and as they may have jurisdiction over one or more
      parties to this Agreement, any System; any state Department of Financial
      Institutions, the Federal Deposit Insurance Corporation; The Office of the
      Comptroller of the Currency; the Office of Thrift Supervision, the Federal
      Reserve Board, and any federal or state agency having jurisdiction over the
      Bank, Company, Merchants or Cardholders.

    

    Rules
      mean the
      by-laws ,
      operating rules and regulations adopted by any System or the National Automated
      Clearing House Association, Bank’s procedures and standards, applicable federal
      and state laws, and any regulations and guidance from any Regulatory Authority,
      as the same may from time to time be amended, modified, or
      supplemented.

    

    Settlement
      means
      the movement of funds between the Bank, Processor and System in accordance
      to
      the Bank’s policies and procedures and System Rules and subject to the terms of
      this Agreement.

    

    System
      means,
      at Bank’s sole discretion, Visa, Pulse, Star, and
      any
      other Card network authorization, routing, processing or funds transfer
system
      for transmitting Items and Settlement thereof.

    

    ARTICLE
      2 - DUTIES OF COMPANY

    

    
      
        
          	SECTION
                  2.1	
                  Marketing

                

        

      

    

    

      Company
        shall, from time to time
        as
        determined in Company’s discretion and/or commercial reasonable efforts in
        accordance with Network Rules,
        promote
        and market
        a Card
        Product to their
        customers. Company is solely responsible for all costs and expenses associated
        with marketing of any Card or Program under this Agreement. Company
        shall obtain Bank’s prior written approval for any marketing materials bearing
        Bank's name or any System Mark or name before distribution or broadcast of
        such
        materials and Company shall ensure that all marketing materials comply with
        the
        Rules. 

    

    
      
         

      

      
        Page
          2

        
          

        

      

      
         

      

    

    
      	SECTION
              2.2	
              Scope
                of Agreement

            

    

    

    Company
      agrees that the scope of this Agreement shall be limited to the Program as
      that
      term is defined provided
      by the Company with the Application. Bank’s obligation to provide to
      Company
      any
      services, sponsorship or otherwise, outside the scope of the Program and/or
      other than as required by this Agreement must be agreed to in writing executed
      by both Company and Bank. Company may receive any such services outside the
      scope of this Agreement from any third party if its receipt of such services
      does not interfere and/or limit Bank’s ability or right to provide the services
      provided for in this Agreement. 

    

    
      	SECTION
              2.3	
              Additional
                Offerings

            

    

    

    (a) Company
      may develop materials and/or product offerings or may send additional
      solicitations to Cardholders ("Additional Offerings") without Bank’s approval
      provided that such Additional Offerings do not include Bank’s name or any System
      Mark. Additional Offerings which utilize Bank’s name or any System Mark shall
      require Bank’s prior written approval, which approval shall not be unreasonably
      withheld. Company shall supply to Bank in writing all details, terms and
      conditions of any proposed Additional Offerings which contain Bank’s name or any
      System Mark before the distribution of such Additional Offerings, and Bank
      shall
      have the right to and must approve any such Additional Offering before its
      distribution.

    

    (b) All
      income and expense for materials, product offerings, or Additional Offerings
      will be the income and expense of the Company.

    

    
      	SECTION
              2.4	
              Printing
                of Cards and Cardholder
                Agreements

            

    

    

      All
        Cards
        and Cardholder Agreements shall identify the Bank as the Issuer and include
        any
        such names or Marks as may be required to conform to Graphic Standards and
        Rules
        or other laws and Regulations. Prior to the issuance of any such materials,
        the
        Bank must approve in advance in writing any such materials, including but
        not
        limited to the Cards and the Cardholder Agreements, Applications and Statements
        which shall be developed by solely and exclusively by the
        Company.

     

    
      	SECTION
              2.5	
              Program
                Pricing

            

    

    

    (a) Company
      shall be solely responsible for ensuring that all charges and fees to be paid
      by
      applicants to become Cardholders shall be those charges that comply with all
      applicable State and Federal laws, Rules and Regulations. All charges and fees
      assessed by Company shall be given by Company to Bank in advance and Bank shall
      have the option, but no obligation, to prohibit or limit such charges and fees
      if such fees violate an applicable State or Federal Law, Rule, or Regulation.
      In
      accordance with Network rules and regulations, and applicable state and federal
      laws, Bank shall notify Company as soon as possible for any suspected, alledged
      or noticed compliance issues. The
      charges and fees paid by Cardholders shall be disclosed in the Cardholder
      Agreement and Applications given to the Cardholder by Company and Bank at the
      time the account is opened and when the Card is received. 

    

      (b) Company
        may modify pricing by giving written notice of the proposed modification
        or
        addition to the Bank. Company acknowledges and agrees that it shall be solely
        responsible for ensuring that any such modification or addition complies
        with
        the Operating Rules and the Rules and Regulations, which govern Cards and/or
        Demand
        Deposit Accounts.
        Bank
        shall have the option, but not the obligation, to object to a pricing
        modification if such modification violates an applicable State or Federal
        Law,
        Rule, or Regulation.

     

    
      	SECTION
              2.6	
              Establishment
                of Cardholder Accounts

            

    

    

      Company
        shall be responsible for accepting and processing Cardholder applications
        in
        accordance with the Rules and based on criteria, terms, and conditions used
        by
        Company that shall at all times comply with the Rules. The Company, when
        requested by the Bank, will provide reports indicating compliance with the
        established criteria.  

    

    
      
         

      

      
        Page
          3

        
          

        

      

      
         

      

    

    
      	SECTION
              2.7	
              Third
                Party Services

            

    

    

      Company
        shall perform or cause to be performed Processing Services for the Program
        and
        related activities. Company shall cause all such Processing Services to be
        performed in accordance with the Operating Rules. Company may employ or contract
        for such services with third parties. In such an event, Company shall obtain
        a
        signed Confidentiality Agreement containing confidentiality provisions
        comparable to those contained in this Agreement from all such third parties,
        which shall be applicable to the third parties and their directors, officers,
        employees or agents. Company shall obtain Bank's prior written approval,
        which
        shall not be unreasonably withheld
        before
        retaining any third party to provide services for the benefit of or in
        connection with the Program as directly related to Bank issuance of cards.
        

    The
      Bank’s approval of any third party shall not in any way relieve the Company of
      its duties and obligations under this Agreement, nor shall such approval
      constitute a representation or warranty by the Bank that the services to be
      performed or products to be furnished by a third party will be performed as
      agreed or represented. 

    

    
      	SECTION
              2.8	
              Deposit
                and Reserve Accounts

            

    

    

    A
      non-interest bearing
      account
      designated “Deposit Account” (“Deposit Account”) shall be established by the
      Company and controlled by Bank as a custodial account for the total of all
      Cardholder accounts. 

    

    (a)
       On
      each
      business day during the term of this Agreement, the applicable System will
      debit
      or credit the Deposit Account for the net funds required for Settlement with
      System for purchases and ATM withdrawals made by Cardholders offset by the
      (i)
      funds received from System for merchandise returned by Cardholders; and (ii)
      any
      other credits received from System that are due to Cardholder on such business
      day.

    

    (b)
       On
      each
      business day during the term of this Agreement, Company shall credit the Deposit
      Account for the following items: (i) funds received from Company for deposit
      to
      the Cardholder’s Card account by 3:00 p.m. Central time the previous day; and
      (ii) any other credits due to Cardholder and payable by Company. 

    

    (c)
       Company
      represents and warrants that the Deposit Account will be at all times funded
      by
      Company in an amount that is no less than 100% of the total amount of the
      current day’s balances of Cardholder Accounts, subject to the Company’s next
      business day crediting of the Deposit Account for deposits to Cardholders’ Card
      account. The Company, without prior written approval from the Bank, shall not
      withdraw funds from the Deposit Account, provided that, upon termination of
      this
      Agreement, Bank shall return any remaining funds in the Deposit Account in
      accordance with the terms of this Agreement. 

    

    (d)
       A
      non-interest
      bearing
      account designated “Reserve Account” shall be established by the Company and
      controlled by Bank as an account for potential losses for overlimits, fraud,
      and
      losses due to disputes or embezzlement. Account shall be funded based on a
      rolling monthly amount of total of previous months overlimits, fraud, and losses
      due to disputes or embezzlement. 

    

    (e)
       Company
      shall, on a daily basis, cause to be provided to Bank a written report which
      report shall show the total of funds and/or credits due from Company to
      Cardholders, the previous day’s balance of Cardholder Accounts and the current
      day’s balances of Cardholder Accounts. Such written report shall also contain
      any other information reasonably requested by Bank from time to time that
      Company can readily produce. 

    

    
      	SECTION
              2.9	
              Customer
                Service Standards

            

    

    

      Company
        shall develop and be responsible for customer
        service
        standards for servicing that are designed to promote customer satisfaction
        and
        to promote the preservation and growth of the customer base.

     

      Bank
        may,
        but shall not be required to monitor or at any time audit or otherwise review
        compliance with standards to ensure required levels be maintained. The Bank
        may
        request additional reasonable
        customer
        service standards; if the Bank receives any guidance, complaints or comments
        from any Regulatory Authority or System or is required to do so by any Operating
        Rules or Rules, the Company will have thirty (30) days to comply or
        initiate reasonable steps to effectuate such compliance
        with a
        written request from the Bank.

    

    
      
         

      

      
        Page
          4

        
          

        

      

      
         

      

    

    
      	SECTION
              2.10	
              Access
                to Program Documents and
                Information

            

    

    

    Bank
      shall at all times have reasonable access to all information and documents
      it
      requires to comply, as applicable, with all applicable laws, Regulations,
      Operating Rules and Rules concerning the Program which the Company may acquire
      or which may be in the control and possession of Company, including but not
      limited to information and documents in the possession of any third party
      providing Processing Services or otherwise performing any of Company’s
      obligations hereunder, which information and documents include but are not
      limited to applications for Cards, information concerning Program revenues,
      information concerning transactions and agreements affecting the management
      and
      administration of the Program.

    

    Company
      shall provide Bank with copies of any and all of the following documents and
      information, to the extent same exist: applications; advertisements;
      disclosures; terms and conditions; Company’s policies and procedures promulgated
      in connection with this Agreement; and any other documentation, processing
      information or customer service information which the Bank may reasonably
      request (hereinafter referred to as “Documentation and Processing”). If Bank, in
      its sole discretion, determines that such Documentation and Processing fails
      to
      comply with any law, Regulations or guidance of a Regulatory Authority then
      Bank
      may request appropriate changes be made to such Documentation and Processing,
      and Company will use its best efforts to accomplish such changes as soon as
      practicable in good faith in accordance with Bank and Regulator
      standards,
      and Bank
      determines in good faith that it has a legal or regulatory risk, such risk
      to be
      provided in writing to Company, then Bank may terminate this Agreement upon
      thirty (30) days written notice, without penalty.

    

    
      	SECTION
              2.11	
              Sponsorship
                Certification and Administrative
                Fees

            

    

    

    Bank
      shall complete all registration requirements as required by each applicable
      System or Network of which the Bank has agreed to become a member after
      obtaining from Company any corresponding agreements and/or commitments in
      writing from Company and/or entity(ies) providing Processing Services or any
      other service in connection with the Program. Company shall pay all applicable
      fees and expenses of each applicable System as imposed on Bank because of its
      sponsorship or registration of Company, and as required to maintain the Program.
      Company
      and Bank shall use reasonable commercial efforts to deliver to the other, within
      thirty (30) business days of receipt, a copy of all notices or correspondence
      (other than confidential information it receives from any System relating
      specifically to the Program. Company acknowledges and agrees that it is
      responsible for any and all obligations and compliance related to the operations
      of the Program which are imposed upon Bank whether by a System, Regulatory
      Authority, or any Operating Rules and Rules and Company further agrees that
      it
      will take all steps necessary to ensure that its operations are in compliance
      promptly after its receipt of notice thereof from Bank. Bank agrees that it
      will
      cooperate with Company to ensure such compliance. 

    

    
      	SECTION
              2.12	
              Liability
                of Company for System and Regulatory Claims.
                

            

    

    

      Company
        shall be liable to Bank for any and all liabilities and every loss, claim,
        demand, and cause of action (including, without limitation the cost of
        litigation and reasonable attorneys' fees) suffered or incurred by Bank as
        a
        result of or arising out of the Company’s failure to comply with any provision
        of this Agreement, the Operating Rules, Rules, applicable laws or Regulations
        except to the extent such non-compliance is as a result of Bank’s wrongful acts
        or omissions, provided that Bank provides Company with prompt notice of any
        such
        loss, claim, demand, or cause of action and permits Company the option to
        defend
        such claim or cause of action. Further, Bank may not settle any claim or
        cause
        of action for which it will seek indemnification from Company without Company’s
        prior written approval. 

    

    Should
      Bank be assessed any fees by any System or Regulatory Authority in connection
      with this Agreement, Bank shall notify the Company of such amounts ten (10)
      days
      prior to the Bank settling these expenses by setting off, drafting or wire
      transferring from one or more of the accounts for the amounts due except for
      those amounts identified as the responsibility of the Bank. 

    

    
      	SECTION
              2.13	
              Insurance
                

            

    

    

    Company
      acknowledges its obligation to obtain appropriate General Liability insurance
      coverage equal to at least One Million Dollars ($1,000,000) for each
      occurrence
      and
      Company will provide Bank with Certificates of Insurance evidencing proof of
      such policies. Company’s policies shall contain an endorsement providing that
      written notice shall be given to Bank at least thirty (30) days prior to
      termination, cancellation or reduction of coverage in the policy. The policy
      shall also include Bank and its directors, officers, employees and agents as
      additional insureds with respect to the work or operations done in connection
      with this Agreement. Coverage will include the processing provided by the
      Company and/or any third parties Company chooses to process, maintain, emboss
      or
      distribute cards.

    

    
      
         

      

      
        Page
          5

        
          

        

      

      
         

      

    

    
      	
              SECTION
                2.14

            	
              Reports

            

    

    

    Company
      will advise Bank of all Cardholder complaints or allegations of
      erroneous or unauthorized transactions, to the extent Company has received
      notice of such complaint or allegation, for each calendar month within ten
      (10)
      business days after the end of each calendar month. Company
      will respond to Bank within ten (10) business days of notice from Bank with
      respect to any complaint received by Bank from a Cardholder. Such advisement
      shall in no way be deemed or interpreted to relieve Company or Bank of any
      of
      its respective responsibilities under this Agreement.

    Company
      will also provide to the Bank any other information requested by Bank as may
      be
      required, from time to time by regulatory authorities, to ensure that safe
      and
      sound business practices are being followed concerning processing, merchant
      settlement and income to the Bank. 

    

    
      	SECTION
              2.15	
              Contingency
                Plans

            

    

    

    Company
      shall have a viable and tested contingency plan in effect and hereby warrants
      that any third party performing any
      of
      its duties hereunder has represented to Company that it has a viable and tested
      contingency plan in effect. The plan shall provide for short-term recovery
      of
      data for processing, reasonable security, confidentiality of customer data
      and
      reasonable period for full recovery in relation to the volume and importance
      of
      the application to the Company’s operations and duties under this
      Agreement.

    

    
      	SECTION
              2.16	
              Error
                Resolution

            

    

    

      Company
        agrees to resolve, in accordance with the applicable Rules and Operating
        Rules
        all alleged errors or unauthorized transactions with respect to any transactions
        performed or attempted to be performed in accordance with or under this
        Agreement. In particular, Company agrees, upon notification by Bank of a
        complaint or allegation, to obtain any and all documentation or data required
        to
        resolve the matter, fully investigate the allegations, advise Bank of the
        results of the investigation and provide an audit trail of information pertinent
        to the matter, all within any required timeframes required by the Operating
        Rules but in no event later than ten (10) business days after Bank has provided
        Company with notice of the complaint or allegations.. 

    

    
      	SECTION
              2.17	
              Records

            

    

    

    Company
      agrees that it will keep, or require third parties to keep, current and accurate
      records regarding transactions processed by the Company (or any third party
      whom
      Company retains) or for the Bank in accordance with System Rules, Operating
      Rules, and specifications with respect to services performed pursuant to this
      Agreement. Company agrees that, to the extent permitted by law, it will keep
      and
      disclose all documentation and statements required by any applicable laws,
      Regulations, Operating Rules, and Rules. 

    

    
      	SECTION2.18	
              Security
                

            

    

    

    Company
      agrees that it will allow only authorized personnel to have access to any
      systems available pursuant to this Agreement and will require personal and
      workstation identification for all transactions it enters or processes.
It
      further agrees to establish and comply with all security procedures and systems
      needed to protect all confidential cardholder information and
      cards.

    

    
      	SECTION
              2.19	
              Back-Up
                of Data

            

    

    

    To
      the
      extent Bank will depend upon any data communications systems provided by
      Company, Merchant or Cardholder, the Company will require appropriate daily
      back-up of such data, so that in the event the data communications systems
      fails, Company or Bank or its designee, at the Bank’s discretion, will be able
      to continue processing applications and transactions. Company will provide
      Bank
      with copies of such back-up plans upon Bank’s reasonable request.

    

    
      
         

      

      
        Page
          6

        
          

        

      

      
         

      

    

    
      	SECTION
              2.20	
              Independent
                Processor

            

    

     

    Company
      has selected a system approved
      or registered Card processor,
      if such
      registration is required, to process Card transactions and provide Processing
      Services for the Program. Company shall pay for all processing costs for
      accounts processed under this agreement. Company will not change the Processor
      without advance written notification to Bank.

    

    

    
      	SECTION
              2.21	
              Account
                Data

            

    

    

    Company
      shall provide to Bank any data and/or other information required to reconcile
      accounts or substantiate information concerning deposits, returns, chargebacks,
      fees, or amounts settled or as required by any Regulatory Authority.

    

    Company
      shall make such data and other information available to the Bank at the sole
      cost and expense of the Company. Whenever an error or unauthorized transaction
      is alleged to have occurred, Company shall use its best efforts to obtain all
      documentation related to the transaction within ten (10) business days of
      receiving a request for such information from the Bank.

    

    ARTICLE
      3 - BANK COMPENSATION

    

    
      	SECTION
              3.1	
              Compensation
                to the Bank

            

    

    

    For
      its
      services under this Agreement, Company shall compensate Bank for such services
      in accordance with the provisions of Schedule B attached
      hereto.

    

    ARTICLE
      4 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY

    

    
      	SECTION
              4.1	
              The
                Company represents and warrants to the Bank as
                follows:

            

    

    

    (a) This
      Agreement is valid, binding, and enforceable against the Company in accordance
      with its terms.

    

    (b)  The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of Nevada
      and is authorized to do business in each state in which the nature of the
      Company's activities makes such authorization necessary.

    

    (c)  The
      Company has the full power and authority to execute and deliver this Agreement
      and to perform all its obligations under this Agreement. The provisions of
      this
      Agreement and the performance by the Company of its obligations under this
      Agreement are not in conflict with the Company's Articles of Incorporation,
      bylaws or any other agreement, contract, lease or obligation to which the
      Company is a party or by which it is bound.

    

    (d) Neither
      the Company nor any principal of the Company has been subject to any of the
      following:

    

    
      	 	
              (i)

            	
              Criminal
                conviction (except minor traffic offenses and other petty
                offenses);

            

    

    

    
      	
            	(ii)	
              Bankruptcy
                filing or petition;

            

    

    

    
      	
            	(iii)	
              Federal
                or state tax lien;

            

    

    

    
      	 	
              (iv)

            	
              Administrative
                or enforcement proceedings commenced by the Securities and Exchange
                Commission, any state securities Regulatory Authority, Federal Trade
                Commission, federal or state bank regulator, or any other state or
                federal
                regulatory agency; or

            

    

    

    
      	 	
              (v)

            	
              Restraining
                order, decree, injunction, or judgment in any proceeding or lawsuit,
                alleging fraud or deceptive practice on the part of the Company or
                any
                principal thereof.

            

    

    

    (e) For
      this
      subparagraph, the word "principal" shall include any officer or director owning
      ten percent (10%) or more of the Company, and any person actively participating
      in the control of the Company's business.

    

    
      
         

      

      
        Page
          7

        
          

        

      

      
         

      

    

    (f) The
      Company will provide to the Bank the most recent audited financial statements.
      Company agrees to provide audited financial statements on an annual basis,
      as
      soon as possible, and in any event within ninety (90) days after the end of
      the
      Company’s fiscal year, and interim quarterly financial statements if requested.

    

    (g) Annual
      Federal Tax Return will be sent to Bank within fourteen (14) days after filing
      for Company and any principals ;

    

    (h) As
      soon
      as possible, and in any event within ninety (90) days after the end of the
      Company’s fiscal year it will provide the Bank with a copy of most recent Form
      10-K filed with the U.S. Securities and Exchange Commission, if applicable.
      

    

    (i) It
      will
      comply with the Operating Rules, Rules and any laws, Regulations, guidance,
      orders or rules issued by the Regulatory Authorities that relate to the cards,
      matters and transactions contemplated by this Agreement and shall cause all
      third parties performing any of its respective obligations hereunder to comply
      with all of the foregoing, as may be applicable.

    

    (j) The
      Company is familiar with and able to fully comply with (i) the Rules and
      Operating Rules, as applicable; and (ii) the applicable federal laws and
      Regulations and the laws and Regulations in the states in which the Company
      does
      or may do business, including, without limitation, those laws, Rules and
      Regulations governing the Program and card services.

    

    

    ARTICLE
      5 - DUTIES OF BANK

    

    
      	SECTION
              5.1	
              Background
                Investigation of Company 

            

    

    

    Bank
      may
      conduct, at its expense, reasonable investigation as it may from time to time
      believe appropriate, and Company shall cooperate with Bank in connection
      therewith. Company consents, on an ongoing basis, to Bank’s obtaining any
      consumer credit report or other investigative documentation on Company, which
      Bank deems relevant for any purpose, related to this Agreement.

    

    
      	SECTION
              5.2	
              Membership
                in System

            

    

    

    Bank
      represents that it is a member of Visa U.S.A., Star, Pulse and other Systems
      as
      may be appropriate, and in good standing and will promptly notify Company in
      writing of any changes to Bank’s standing with the aforementioned
      organizations.

    

    
      	SECTION
              5.3	
              Notices

            

    

    

    Bank
      shall deliver to Company a copy of all notices or correspondence that it
      receives from the System, or any other third party, relating specifically to
      Bank's sponsorship of Company, within thirty (30) business days of receipt
      of
      such notice or correspondence unless legally or contractually prohibited from
      doing so, or unless the information is of a confidential nature.

    

    
      	SECTION
              5.4	
              Settlement

            

    

    

    Bank
      will
      settle funds with various Networks that Company and Bank have agreed to utilize
      for acceptance of the card issued under this program. 

    

    ARTICLE
      6 - EXPENSES

    

    
      	SECTION
              6.1	
              Expenses
                of Bank

            

    

    

    Bank
      shall be solely responsible for the following expenses:

    

    (a) Bank's
      own internal costs and expenses incurred in connection with maintaining the
      Deposit Account(s) and, except as may be otherwise agreed herein, its own
      internal monitoring of the Program, including all legal expenses.

    

    
      
         

      

      
        Page
          8

        
          

        

      

      
         

      

    

    (b) All
      annual Membership fees relating to Bank's general licenses with and general
      Membership in any System utilized by the Bank in connection with the Program,
      and any fines and penalties, or portion thereof, assessed by any such System
      or
      any Regulatory Authority due to Bank's negligence, fraud or willful misconduct,
      excluding any fines or penalties caused by Company or its officers, directors,
      employees or agents.

    

    (c) Such
      other services and expenses that Bank may deem necessary or appropriate for
      the
      Program and which are not the obligation of Company hereunder.

    

    
      	SECTION
              6.2	
              Expenses
                of Company

            

    

    

    Company
      shall be solely responsible for payment to Bank or on Bank’s behalf, to the
      extent Bank incurs such charges, for expenses associated with the Program,
      including but not limited to the following:

    

    (a) All
      fees,
      penalties, assessments, expenses, etc. payable to any System for any current
      or
      future registration of Company, except to the extent such penalties or
      assessments are due to the acts or omissions of Bank.

     

    (b) All
      System fees associated with BINs assigned to Bank for Company, including but
      not
      limited to transaction and volume fees, quarterly operating certificate or
      quarterly Membership fees related to the Program or pursuant to any Agreement
      between Bank and System.

    

    (c) All
      fines
      and penalties assessed by any System or any Regulatory Authority (other than
      Bank) due to Company’s actions or the actions of any third party retained by
      Company.

    

    (d) Any
      losses sustained from any Card or Account for any reason, except to the extent
      such loss was caused by Bank’s negligence or willful misconduct.

    

    Company
      also agrees that it is solely responsible for the following expenses that
      Company will incur:

    

    (e) Advertising
      and other expenses associated with the marketing incurred by Company, any party
      under its control or any party for which it is providing services, not including
      Bank.

    

    (f) All
      expenses associated with establishing and maintaining any accounts with, or
      receiving services from, any financial institution providing
      Settlement;

    

    (g) Costs
      incurred by any Processor or by Company or any part under its control or any
      party for which it is providing services for any account
      processing.

    

    (h) Expenses
      associated with manufacturing, embossing, and mailing Cards, which are incurred
      by Company and are associated with BINs assigned to Bank for
      Company.

    

    (i) All
      other
      amounts incurred in connection with customer service, balance inquiries, 800
      numbers, automated response unit (ARU) programming, chargebacks, fraud and/or
      administration of the Program, as provided in this Agreement (except those
      specifically made the responsibility of Bank pursuant to Section
      6.1).

    

    (j) All
      fees
      and charges set out in Section 3.1.

    

    ARTICLE
      7 - LIMITATION OF LIABILITY

    

    
      	SECTION
              7.1	
              Limitation
                on Liability

            

    

    

    Other
      than stated herein and subject to Section 7.2 herein, Bank shall not be liable
      for any loss or damage, direct or indirect, for any cause whatsoever,
      (including, but not limited to, those arising out of or related to this
      Agreement) with respect to any claim or allegation made by any Cardholder,
      third
      party, or Company, including but not limited to an allegation of an erroneous
      or
      unauthorized transfer or transaction, provided that Bank will be liable for
      any
      losses associated with Bank’s gross negligence or intentional misconduct with
      respect to the funds in the Deposit Account.

    

    
      
         

      

      
        Page
          9

        
          

        

      

      
         

      

    

    

    
      	SECTION
              7.2	
              No
                Special Damages

            

    

    

    In
      no
      event shall Bank or Company be liable under any theory of tort, contract, strict
      liability or other legal or equitable theory for any lost profits, exemplary,
      punitive, special, incidental, indirect or consequential damages, each of which
      is hereby excluded by agreement of the parties regardless of whether or not
      Bank
      or Company has been advised of the possibility of such damages. This section
      7.2
      should not be construed to limit the liabilities and obligations of the parties
      under section.  

    

    

    
      	SECTION
              7.3	
              Disclaimer
                of Warranties

            

    

    

    Bank’s
      and Company’s express warranties in this agreement are its only warranties and
      Bank and Company specifically disclaim all other warranties of any kind, express
      or implied, arising out of or related to this Agreement, including without
      limitation, any warranty of merchantability or fitness for a particular purpose
      or non-infringement. Bank’s and Company’s liability to each other hereunder
      shall in no event exceed an amount equal to actual monetary damages incurred
      by
      Company and/or Bank, as applicable.

    

    ARTICLE
      8 - TERM OF AGREEMENT

    

    
      	SECTION
              8.1	
              Term

            

    

    

    This
      Agreement is effective from the date hereof and shall extend for five (5) years
      (the "Original Term").

    

    
      	SECTION
              8.2	
              Renewal

            

    

    

    After
      the
      Original Term, this Agreement shall automatically be renewed for consecutive
      periods of two (2) years (each a "Renewal Term") unless either party gives
      the
      other party written notice at least one hundred eighty (180) days prior to
      the
      termination date of the Original Term or the then-current Renewal Term that
      the
      Agreement will not be renewed.

    

    Notwithstanding
      the first paragraph of this Section 8.2, Bank agrees that Company may terminate
      this Agreement without cause at any time. Company agrees that its decision
      to
      terminate without cause, i.e.,
      not a
      termination for cause pursuant to Section 8.3, prior to the expiration of the
      term will result in administrative costs and fees to the Bank and therefore
      agrees to pay a cancellation fee, in addition to other damages, in the following
      amounts:

     

    
      	
              (a)

            	
              During
                first year

            	
              $10,000.00
                

            
	
              (b)

            	
              During
                second year

            	
              $5,000.00

            
	
              (c)

            	
              During
                third year

            	
              $2,500.00

            
	
              (d)

            	
              During
                fourth year

            	
              $1,500.00

            
	
              (e)

            	
              During
                fifth year

            	
              $1,500.00

            
	
              (f)

            	
              During
                any renewal period

            	
              $1,500.00
                

            

    

    

    Company
      furthermore agrees such cancellation fee will be paid immediately upon written
      notice of termination.

    

    
      	SECTION
              8.3	
              Termination

            

    

    

    (a) Either
      Bank or Company shall have the right, subject to the requirements of Section
      8.4
      below, to terminate this Agreement upon written notice to the other party upon
      occurrence of one or more of the following events:

    

    
      	 	
              (i)

            	
              Any
                material breach, so long as the breach is not due to the negligence,
                fraud
                or willful misconduct of the terminating party, but only if the failure
                continues without appropriate cure steps as agreed by the
                parties
                for a period of;

            

    

    

    (a) thirty
      (30) days after the non-performing party receives written notice from the other
      party specifying the breach in the case of a failure not involving the payment
      of money, or 

     

    
      
         

      

      
        Page
          10

        
          

        

      

      
         

      

    

    (b) ten
      (10)
      days after the non-performing party receives written notice from the other
      party
      specifying the breach in the case of a failure to pay any amount then due
      hereunder, or 

    (c) immediately,
      in connection with intentional
      misconduct with respect to the Deposit Account.

    

    
      	 	
              (i)

            	
              The
                gross negligence, fraud, or willful misconduct of the other party.
                Such
                termination shall be effective immediately upon giving written notice
                of
                termination for such cause to the other
                party.

            

    

    

    
      	
            	(ii)	
              The
                other party; 

            

    

    

    
      	 	
              (a)

            	
              voluntarily
                commencing any proceeding or filing any petition seeking relief under
                Title 11 of the United States Code or any other Federal, state or
                foreign
                Bankruptcy, insolvency, liquidation or similar law,
                or

            

    

    

    
      	
            	(b)	
              applying
                for or consenting to the appointment of a receiver, trustee, custodian,
                sequestrator or similar official for such party or for a substantial
                part
                of its property or assets, or

            

    

    

    
      	
            	(c)	
              making
                a general assignment for the benefit of creditors, or
                

            

    

    

    
      	
            	(d)	
              taking
                corporate action for the purpose of effecting any of the
                foregoing.

            

    

    

    
      	 	
              (iii)

            	
              The
                commencement of an involuntary proceeding or the filing of an involuntary
                proceeding or the filing of an involuntary petition in a court of
                competent jurisdiction seeking; 

            

    

    

    
      	 	
              (a)

            	
              relief
                in respect of the other party, or of a substantial part of its property
                or
                assets under Title 11 of the United States Code or any other Federal,
                state or foreign bankruptcy, insolvency, receivership or similar
                law,
                or

            

    

    

    
      	 	
              (b)

            	
              the
                appointment of a receiver, trustee, custodian, sequestrator or similar
                office for the other party or for a substantial part of its property
                or
                assets, or 

            

    

    

    

    
      	 	
              (c)

            	
              the
                winding up or liquidation of the other party, if such proceeding
                or
                petition shall continue undismissed for sixty (60) days or an order
                or
                decree approving or ordering any of the foregoing shall continue
                unstayed
                and in effect for sixty (60) days.

            

    

    

    
      	 	
              (v)

            	
              Upon
                any change to or enactment of any law or regulation which would have
                a
                material adverse effect upon Bank, Company, or the
                Program.

            

    

     

    
      	 	
              (vi)

            	
              Failure
                of the Bank to maintain its System
                Memberships.

            

    

    

    
      	 	
              (vii)

            	
              Any
                uncured material default by the Company with respect to its obligations
                to
                comply with the Rules or Operating
                Rules.

            

    

    

    
      	 	
              (viii)

            	
              If
                a Regulatory Authority or a System demands that this Agreement be
                terminated or modified in a materially adverse
                manner.

            

    

    

    
      	 	
              (ix)

            	
              If,
                upon review of the regulatory authorities governing this Agreement,
                Company determines in its sole discretion that such regulatory authorities
                either prohibit the operation of the Program or would cause the operation
                of the Program to adversely affect Company’s business
                operations.

            

    

    

      (b) Bank
        may
        terminate, limit production, or restrict access to any Cardholder under this
        Agreement by giving thirty (30) days advance written notice to the Company;
        however, if Bank at any time determines
        that continued operation under this Agreement may adversely affect the Bank’s
        safety and soundness or if the Bank has knowledge of or
        evidence
        of fraud, the Bank can terminate the Agreement immediately. 

     

    
      
         

      

      
        Page
          11

        
          

        

      

      
         

      

       

    

    
      	
              SECTION
                8.4

            	
              Survival
                of Payments and Survival of Obligations upon
                Termination

            

    

    

    Upon
      notice of termination and/or cancellation of this Agreement at any time for
      any
      reason, including pursuant to Section 8.3, and at the Bank’s written request,
      Company shall promptly provide notice of cancellation of the Program to all
      affected Cardholders processed through BINs assigned to the Bank and shall
      take
      appropriate action to cause all Cards to be cancelled or reissued
      and if
      applicable, money on deposit with the Bank to be refunded to the Cardholders.
      Additionally, upon the effective date of termination of this Agreement, Company
      will discontinue all use of the Bank’s name and Marks and the name and Marks of
      any System. At the Bank’s option and upon written notice to Company, this
      Agreement shall continue in full force and Bank shall continue to provide the
      services currently then being provided until such time as all Cards are so
      cancelled or reissued,
      but in
      no event exceeding ninety (90) days
      from
      notice of cancellation and/or termination. If such termination is made by Bank
      pursuant to Section 8.3(a), Bank, in addition to any other rights and/or
      remedies it may have at law and/or at equity, will have the option to withhold
      and pay directly expenses that it has incurred from any of the accounts,
      including Settlement, Bank fees, System expenses and chargebacks or any other
      charges, fees or costs. 

     

    Upon
      termination of this Agreement and cancellation of the Program, Bank shall,
      upon
      Company’s request, provide Company with reasonable transition assistance so that
      Company may transition the Program to another financial institution.

    

    
      	SECTION
              8.5	
              Disposition
                of the Deposit and Reserve
                Accounts

            

    

    

    Upon
      the
      termination of this Agreement for any reason including but not limited to the
      termination and/or expiration of this Agreement at the end of the Initial Term
      or any Renewal Term, this Agreement shall remain in full force and effect with
      respect to all provisions regarding the Deposit or Reserve Accounts and
      Company’s obligations and duties with regard to resolving any alleged errors or
      unauthorized transactions. However, an amount representing total alleged errors
      or unauthorized transactions at termination and for 90 days subsequent to
      termination will be required to be deposited in a suspense account held by
      Bank,
      provided that Bank shall release to the Company all funds in the suspense upon
      the earlier of 90 days following termination or the resolution of all
      outstanding alleged errors or unauthorized transactions. The balance of the
      Deposit and Reserve Accounts shall remain with and be equal to the total of
      the
      outstanding balance for all issued cards and Reserve Amounts, pursuant to this
      Agreement, provided that Bank shall return funds in the Deposit Account to
      Company upon the transfer of the issued cards to a new financial institution
      in
      an amount equal to the outstanding balance on the issued cards that are
      transferred. In addition, notwithstanding the foregoing, upon termination of
      this Agreement, Bank shall promptly return to Company an amount equal to the
      funds in the Deposit Account less the outstanding balance on the issued cards.
      The Bank may, in its sole discretion, place a hold on all such funds and/or
      disburse such funds in accordance with this Agreement and the Rules, provided
      that Bank exercises its discretion in good faith.

    

    
      	SECTION
              8.6	
              Chargebacks,
                Disputed, or Erroneous
                Transactions

            

    

    

    In
      the
      event of termination or expiration, this Agreement shall remain in full force
      and effect with respect to all provisions regarding chargebacks, disputed,
      erroneous transactions, and allegedly erroneous or unauthorized transactions.
      Company shall continue to process and service those accounts in dispute or
      with
      account liability under this Agreement. After Company has paid Bank in full
      for
      any items and allegedly erroneous
      or unauthorized transactions, accounts that become loss accounts shall be
      Company's property and shall be assigned, transferred and conveyed by Bank
      to
      Company or Company’s designee, unless such losses are due to Bank’s negligence
      or intentional misconduct.

    

    
      	SECTION
              8.7	
              Return
                of Materials

            

    

    

    Each
      party agrees that upon termination of this Agreement and the request of the
      other party, it will send certification of its destruction of, or deliver to
      the
      other party, all written and tangible material in its possession which
      incorporates any Confidential Information belonging to the other party, or
      otherwise relates to the other party’s businesses, except that information which
      must be retained as required by Regulatory Authority or System to comply with
      retention guidelines. 

    

    
      
         

      

      
        Page
          12

        
          

        

      

      
         

      

    

    ARTICLE
      9 - CONFIDENTIALITY

    

    
      	SECTION
              9.1	
              Confidential
                Information

            

    

    

    Under
      this Agreement, the parties will be disclosing to each other certain
      confidential and proprietary information including customer lists, customer
      data, business plans, software, data, prototypes, documentation, customer
      information, and other business and/or technical information (the
“Information”). The Information may be disclosed in either oral or written
      form.

     

    The
      receiving party shall hold the Information in confidence and shall prevent
      the
      disclosure of the Information, unless it is in accordance with the terms of
      this
      Agreement. The receiving party shall use the Information only for the purpose
      of
      fulfilling its obligations under the Agreement; shall reproduce the Information
      only to the extent necessary for such purpose; shall restrict disclosure of
      the
      Information to its employees and agents with a need to know; and shall advise
      such employees and agents of the nondisclosure obligation assumed herein. Other
      than as expressly permitted by this Agreement, the receiving party shall not
      disclose Information to any third party without prior written approval of the
      other party.

     

    The
      above
      restrictions on the use or disclosure of Information shall not apply to any
      Information:

     

    
      	 	
              (a)

            	
              which,
                as established by the receiving party’s written records, is independently
                developed by the receiving party or its affiliated company or lawfully
                received free of restriction from another source having the right
                to so
                furnish such Information; 

            

    

    
      	 	
              (b)

            	
              after
                it has become generally available to the public without breach of
                this
                Agreement or any other agreement to which Company is a party;
                

            

    

    
      	 	
              (c)

            	
              which
                the disclosing party agrees in writing is free of such restrictions;
                or

            

    

    
      	 	
              (d)

            	
              was
                in the receiving party’s possession as of the date of this
                Agreement

            

    

    

    Information
      may be disclosed where a party is legally required to disclose such information,
      including pursuant to a governmental or judicial order, provided that the
      receiving party notifies the disclosing party of the pending disclosure prior
      to
      such disclosure, unless the disclosing party is legally or contractually
      prohibited from doing so. Information
      may also be released to the Processor to the extent necessary and required
      to
      process transactions and service Cardholder’s accounts as required pursuant to
      the Rules and Regulations.

     

    All
      Information shall remain the property of the disclosing party and shall be
      returned upon written request or upon the receiving party’s determination that
      it no longer has a need for such Information.

     

    The
      parties acknowledge that in the event either party breaches the terms of this
      Section 9.1, the non-breaching party shall be entitled to injunctive relief
      in
      addition to any other remedies that may be available to it at law or under
      the
      terms of the Agreement.

    

    
      	SECTION9.2	
              Access

            

    

    

    Unless
      prohibited by applicable law, Company shall provide to Bank full access to
      all
      account information in whatever available form or medium necessary for Bank
      to
      perform its obligations hereunder and agrees to cooperate fully and promptly
      with any reasonable request from a Regulatory Agency or Bank’s auditors or
      compliance personnel to obtain any records, including inspection at Company’s
      premises or the of premises any third party, which are related in any way to
      this Agreement or Company’s ability to comply with its terms, provided that Bank
      shall bear its own costs in connection with any such request.

    

    ARTICLE
      10 - GENERAL PROVISIONS

    

      
        	SECTION
                10.1	
                Indemnification 

              

      

    

    (a) Company
      covenants and agrees to indemnify and hold Bank, its parent or affiliates,
      and
      their respective officers, directors, employees, agents and permitted assigns
      harmless, against any
      losses or expenses arising out of this Agreement including but in no way limited
      to those arising from any legal action, claim, demand or proceedings brought
      against any of them as a direct result of; (1) any negligence, fraud or willful
      misconduct by Company, its officers, directors, employees, agents, merchants
      or
      Cardholders or their officers, directors, employees or agents; (2) any action
      or
      omission of Company or its officers, directors, employees or agents or action
      or
      omission by Cardholders or merchants or their banks which violates any law,
      Regulation or Rule;
      (3) any
      claim relating to obligations owed to or by Company or any third party retained
      by it;
      (4)
      actions taken by Bank in accordance with or in good faith reliance upon
      information or instructions provided by Company or by its agents;
      (5)
      Company’s or its agents failure to comply with any federal,
      state, or local laws or Regulations, the Operating Rules or Rules; (6) the
      acts
      of omissions of the Processor;
      (7) the
      breach of this Agreement by Company; and (9) any breach of the agreement between
      Company and Processor.
      This
      provision shall not apply to the extent such claim is the direct result of
      any
negligence,
      fraud, willful misconduct or material breach by Bank or to the extent the Bank
      is obligated to provide indemnity under sub paragraph (b) below.

    

    
      
         

      

      
        Page
          13

        
          

        

      

      
         

      

    

      (b) Bank
        covenants and agrees to indemnify and hold Company, its parent or affiliates,
        and their respective officers, directors, employees, agents and permitted
        assigns, harmless against any losses or expenses arising from any legal action,
        claim, demand or proceedings brought against any of them to the extent they
        are
        the direct result of Bank’s (or its officers, directors, employees, or agents’)
breach
        of
        this Agreement, negligence,
        fraud or
        willful misconduct,
        or
        failure to comply with the Operating Rules, Rules, applicable laws or
        Regulations. This provision shall not apply to the extent such claim arises
        out
        of any gross negligence, fraud, willful misconduct, or breach by Company
        or its
        officers, directors employees or agents or to the extent the Company
        is
        obligated to provide indemnity under sub paragraph (a) above.

    

     (c) If
      any
      claim or demand is asserted against any party or parties (individually or
      collectively, the “Indemnified Party”) by any person who is not a party to this
      Agreement in respect of which the Indemnified Party may be entitled to
      indemnification under the provisions of subsections (a) or (b) above, written
      notice of such claim or demand shall promptly be given to any party or parties
      (individually or collectively, the “Indemnifying Party”) from whom
      indemnification may be sought. The Indemnifying Party shall have the right,
      by
      notifying the Indemnified Party within ten (10) business days of its receipt
      of
      the notice of the claim or demand, to assume the entire control (subject to
      the
      right of the Indemnified Party to Participate at the Indemnified Party’s expense
      and with counsel of the Indemnified Party’s choice) of the defense, compromise
      or settlement of the matter, including, at the Indemnifying Party’s expense,
      employment of counsel of the Indemnifying Party’s choice. If the Indemnifying
      Party gives notice to any Indemnified Party that the Indemnifying Party will
      assume control of the defense, compromise or settlement of the matter the
      Indemnifying Party will be deemed to have waived all defenses to the claims
      for
      indemnification by the Indemnified Party with respect to that matter. Any
      damages to the assets or business of the Indemnified Party caused by a failure
      of the Indemnifying Party to defend shall be included in the damages for which
      the Indemnifying Party shall be obligated to indemnify the Indemnified
      Party.

    

    
      	SECTION
              10.2	
              Arbitration

            

    

    

    In
      the
      event of any dispute between Bank and Company relating to this Agreement, or
      their performance hereunder, Bank and Company agree that such dispute shall
      be
      resolved by means of binding arbitration in accordance with the commercial
      arbitration rules of the American Arbitration Association (the “AAA”), subject
      to any modifications contained in this Agreement, and judgment upon the award
      rendered by the arbitrator(s) may be entered in any court of competent
      jurisdiction. The arbitration decision shall be binding upon the Bank and
      Company. The arbitrator(s) shall be limited to awarding compensatory damages
      and
      shall have no authority to award punitive, exemplary or similar type damages.
      The dispute shall be determined by one (1) arbitrator, except that if the
      dispute involves an amount in excess of One Million Dollars ($1,000,000)
      (exclusive of interest and costs), three (3) arbitrators shall be appointed
      to
      decide by majority vote unless the parties agree otherwise. The arbitrator(s)
      shall be selected from panels maintained by the AAA unless the parties agree
      otherwise.
      The
      determination of the arbitrator shall be binding upon the parties and judgment
      upon the award rendered may be entered in any court having jurisdiction thereof.
      The arbitrator(s) shall base the award on the applicable law judicial precedent,
      which would apply if the Dispute were decided by a United States District Court
      Judge sitting in California. The award shall be in writing and include the
      findings of fact and conclusions of law upon which it is based unless the
      parties agree otherwise. Notwithstanding the foregoing, no party shall be
      prevented from seeking injunctive relief from a court of competent jurisdiction
      in order to enforce this Agreement. Depositions may be taken and other discovery
      may be obtained during such arbitration proceedings to the same extent
      authorized in civil judicial proceedings. The arbitrator(s) will resolve any
      discovery disputes. The arbitrator(s) and counsel of record will have the power
      of subpoena process as provided by law. Arbitration fees payable to the
      arbitrator in advance of an award shall be paid equally by the parties to the
      dispute. The arbitrator(s) shall award recovery of all costs and fees (including
      reasonable attorneys’ fees, administrative fees, arbitrator fees, costs and
      expenses) to the prevailing party. The arbitrator(s) may also grant provisional
      or ancillary remedies including, without limitation, injunctive relief,
      attachment or the appointment of a receiver, either during the pendency of
      the
      arbitration proceeding or as part of the arbitration award. The arbitration
      shall be governed by the substantive laws of the State of California without
      regard to conflicts of law rules. The arbitration proceedings shall be conducted
      in Palm Desert, California, unless the parties agree otherwise.

    

    
      
         

      

      
        Page
          14

        
          

        

      

      
         

      

    

    
      	SECTION
              10.3	
              Disclosure

            

    

    

    (a) Each
      party shall promptly notify the other of any action, suit, proceeding, facts
      and
      circumstances, and the threat of reasonable prospect of same, which might give
      rise to any indemnification hereunder or which might materially and adversely
      affect either party's ability to perform this Agreement.

    

    (b) Each
      party represents and warrants to the other that it has no knowledge of any
      pending or threatened suit, action, arbitration or other proceedings of a legal,
      administrative or regulatory nature, or any governmental investigation, against
      it or any of its affiliates or any officer, director, or employee which has
      not
      been previously disclosed in writing and which would materially and adversely
      affect its financial condition, or its ability to perform this
      Agreement.

    

    
      	SECTION
              10.4	
              Legal
                Compliance

            

    

    

    Company
      represents and warrants that it is familiar with the requirements of all
      applicable laws, regulations Operating Rules and Rules, including but not
      limited to federal and state consumer protection laws and agrees that it shall
      be solely responsible for complying and causing all third parties to
      comply
      with all such laws and Regulations and all other applicable laws and Regulations
      relating to its activities under this Agreement, now and in the future. Nothing
      in this Section 10.4 shall relieve Company of its obligations under this
      Agreement including, without limitation, the requirements of Section
      2.

    

    Without
      limiting the generality of the foregoing and other terms and conditions herein,
      Company’s obligations under this Agreement, including without limitation, its
      responsibility for all legal compliance, shall in no way be affected, altered
      and/or waived in the event Bank performs, exercises or fails to exercise, any
      right, obligation, option, or otherwise, to provide instruction, guidance,
      or
      recommendations of any kind, and/or review, any aspect of the Program.

    

    
      	SECTION
              10.5	
              Legal
                Authority

            

    

    

    Company
      and Bank each represents and warrants to the other that it is a corporation
      duly
      organized and validly existing as of the date of this Agreement, that all
      consents and approvals necessary for this Agreement to be valid and binding
      on
      it have been obtained, and that fulfillment of its obligations pursuant to
      this
      Agreement does not conflict with any provision of any state or Federal law
      applicable to it or any other contract to which it is a party.

    

    
      	SECTION
              10.6	
              Force
                Majeure 

            

    

    

    Neither
      party shall be liable for any failure or delay on its part to perform, and
      shall
      be excused from performing any of its non-monetary obligations hereunder if
      such
      failure, delay or non-performance results in whole or in part from any cause
      beyond the absolute control of the party, including without limitation, any
      act
      of God, act of war, riot, earthquake, fire, explosion, natural disaster,
      flooding, embargo, sabotage, government law, ordinance, rule, regulation, order
      or actions. Either party desiring to rely upon any of the foregoing as an excuse
      for failure, default or delay in performance shall, when the cause arises,
      give
      to the other party prompt notice in writing of the facts which constitute such
      cause; and, when the cause ceases to exist, give prompt notice thereof to the
      other party. This Section 10.6 shall in no way limit the right of either party
      to this Agreement to make any claim against third parties for any damages
      suffered due to said cause. If any performance under this Agreement is postponed
      or extended for longer than sixty (60) calendar days Bank or Company may, by
      written notice, terminate the Agreement immediately.

    

    
      	SECTION
              10.7	
              Relationship
                of Parties

            

    

    

    Bank
      and
      Company agree they are independent contractors to each other in performing
      their
      respective obligations hereunder. Nothing in this Agreement or in the working
      relationship being established and developed hereunder shall be deemed or is
      intended to be deemed, nor shall it cause, Bank and Company to be treated as
      partners, joint ventures, or otherwise as joint associates for
      profit.

    

    
      
         

      

      
        Page
          15

        
          

        

      

      
         

      

    

    
      	SECTION
              10.8	
              Regulatory
                Examinations and Financial
                Information

            

    

    

    Company
      agrees to submit to and cooperate fully and promptly with any examination that
      may be required by any Regulatory Authority, Bank auditors or Bank’s compliance
      personnel. Company shall also promptly provide to Bank any information, which
      may be reasonably required by any Regulatory Authority or Bank’s auditors or
      compliance personnel in connection with their audit or review of Bank or the
      Program. Company shall promptly furnish Bank, at Company's expense, with
      financial statements. Company shall also promptly provide such other information
      as Bank may from time to time request with respect to the financial condition
      of
      Company and such other information as Bank may from time to time request with
      respect to third parties retained by Company.

    

      Bank
        may
        require based on risk or suspected risk an annual operational audit of Company’s
        operations to be performed by the bank or a third party as designated by
        the
        Bank. All of expenses associated with the performance of such an operational
        audit shall be the sole responsibility of the Company. 

    

    
      	SECTION
              10.9	
              Governing
                Law

            

    

    

    This
      Agreement shall be governed by, and construed and enforced in accordance with,
      the laws of the State of California. The parties hereby consent to service
      of
      process, personal jurisdiction, and venue in the state and federal courts in
      Palm Desert, California or Riverside County, California.

    

    
      	SECTION
              10.10	
              Severability

            

    

    

    In
      the
      event that any part of this Agreement is ruled by a court, Regulatory Authority
      (other than Bank), or other public or private tribunal of competent jurisdiction
      to be invalid or unenforceable, such provision shall be deemed to have been
      omitted from this Agreement. The remainder of this Agreement shall remain in
      full force and effect, and shall be modified to any extent necessary to give
      such force and effect to the remaining provisions, but only to such
      extent.

    

    
      	SECTION
              10.11	
              Survival

            

    

    

    All
      representations and warranties and terms of this Agreement herein shall survive
      any termination or expiration of this Agreement

    

    
      	SECTION
              10.12	
              Successors
                and Third Parties

            

    

    

    Except
      as
      limited by Section 10.13, this Agreement and the rights and obligations
      hereunder shall bind, and inure to the benefit of the parties and their
      successors and permitted assigns. 

    

    
      	SECTION
              10.13	
              Assignments

            

    

    

    The
      rights and obligations of the Company and Bank under this Agreement are personal
      and are not assignable either voluntarily or by operational law, without prior
      written consent from the Bank, provided that Company may transfer, assign,
      or
      dispose of its rights or obligations under this Agreement without Bank’s consent
      to a parent, affiliate, or subsidiary, or to any successor as a result of any
      merger, consolidation, or other corporate reorganization of
      such
      party or any sale of all of substantially all of the stock or assets of such
      party. 

    

    
      	SECTION
              10.14	
              Notices

            

    

    

    All
      notices, requests, financial statements and approvals required by this Agreement
      shall be in writing and shall be deemed to have been duly given as follows:
      (i)
      upon receipt if personally delivered; or (ii) upon deposit in the mail, if
      sent
      by certified or registered mail, postage prepaid, return receipt requested,
      or
      by overnight carrier, addressed as indicated below, or at such other address
      of
      which the notifying party hereafter receives notice in conformity with this
      section.

    

    
      	
              To
                Bank:

            	
              Palm
                Desert National Bank

            	
              To
                Company:

            	
              Ready
                Credit Corporation

            
	 	
              72-760
                El Paseo

            	
               

            	
              800
                Nicollet Mall, Suite 2690

            
	 	
              Palm
                Desert CA 92260

            	
               

            	
              Minneapolis,
                MN 55402

            
	 	
              Attention:
                Jim Tingey

            	
               

            	
              Attention:
                Tim Walsh

            
	 	
              760-340-9693;
                Fax: 760-779-8576

            	
               

            	
              612-279-2004;
                Fax: 612-338-7332

            
	 	
              Email:
                jtingey@pdnb.com

            	
               

            	
              Email:
                tim@readycreditcorp.com

            

    

     

    
      
         

      

      
        Page
          16

        
          

        

      

      
         

      

       

    

    
      	
              SECTION
                10.15

            	
              Waivers

            

    

    

    Neither
      party shall be deemed to have waived any of its rights, powers, or remedies
      hereunder except in writing signed by an authorized agent or representative
      of
      the party to be charged. Either party may, by an instrument in writing, waive
      compliance by the other party with any term or provision of this Agreement
      on
      the part of the other party to be performed or complied with. The waiver by
      either party of a breach of any term or provision of this Agreement shall not
      be
      construed as a waiver of any subsequent breach. 

    

    Notwithstanding
      the generality of the foregoing, and for illustrative purposes only, Bank and
      Company shall not be deemed to have waived any of their respective rights as
      a
      result of any course of dealing or by its exercise or non-exercise of any right
      of approval or recommendation or supply of information, including without
      limitation, in the event that Bank has the right to review or approve any aspect
      of the Program and declines and/or does not for any reason exercise or opt
      to
      exercise that right. 

    

    
      	SECTION
              10.16	
              Entire
                Agreement; Amendments

            

    

    

    This
      Agreement constitutes the entire Agreement between the parties and supersedes
      all prior Agreements, understandings, and arrangements, oral or written, between
      the parties with respect to the subject matter hereof. This Agreement may not
      be
      modified or amended except by an instrument or instruments in writing signed
      by
      the party against whom enforcement of any such modification or amendment is
      sought.

    

    
      	SECTION
              10.17	
              Counterparts

            

    

    

    This
      Agreement may be executed and delivered by the parties in counterpart, each
      of
      which shall be deemed an original and both of which together shall constitute
      the same instrument.

    

    
      	SECTION
              10.18	
              Exclusivity

            

    

    

      This
        program is exclusive to the Bank, to the extent that the Bank’s Capital to
        Deposit ratio remains
        within compliance guidelines, in which case bank will relinquish right of
        exclusivity. Other programs issued by the Company
        may be
        presented to the Bank and Bank has first right of refusal to accept program.
        

    

    IN
      WITNESS WHEREOF,
      this
      Agreement is executed by the parties as of the date and year first above
      written.

     

     

    
      	
              February
                2, 2006

              Date

            	
              PALM DESERT NATIONAL BANK

               

              By: Tim Walsh

               

              Name and Title: Chief Executive
                Officer

            
	 	 
	
              February
                2, 2005

              Date

            	
              “COMPANY”

               

              By: James Tingey

               

              Name and Title: Senior Vice President,
                Administration

            

    

     

    
      
         

      

      
        Page
          17

        
          

        

      

      
         

      

       

    

    SCHEDULE
      B

    BANK
      FEES AND CHARGES

    

    

    SET-
      UP FEES

    

    
      	
              One-time
                program set-up fee:

            	
              $5,000.00

            	 

    

    

    ANNUAL
      FEES

    Any
      System Sponsorship Fees (passed through from networks):

    
      	 	
              a.

            	
              $5,000
                Visa ISO registration ($2,500 annual
                renewal)

            

    

    
      	 	
              b.

            	
              $100
                STAR Marketing Service Organization
                fee

            

    

    
      	 	
              c.

            	
              Any
                other Network fees

            

    

    

    CARD
      FEES

     

    
      	
              Monthly
                card maintenance fee:

            	
              $0.08
                

            	
              per
                card     1-10,000
                cards

            
	 	
              $0.07

            	
              per
                card     10,001-25,000

            
	 	
              $0.06

            	
              per
                card     25,001-50,000

            
	 	
              $0.05

            	
              per
                card     50,001-100,000

            
	 	
              $0.04

            	
              per
                card     100,001+

            
	 	 	 
	
              Completed
                transaction fee*:

            	
              $0.08

            	
              per
                trans     1-100,000

            
	 	
              $0.07

            	
              per
                trans     100,001-250,000

            
	 	
              $0.06

            	
              per
                trans     250,001-500,000

            
	 	
              $0.05

            	
              per
                trans     500,001-2,000,000

            
	 	
              $0.04

            	
              per
                trans     2,000,000+

            
	 	
               

            

    

     

    
      	
              Revenue
                share on interchange (to RCC):

            	
              40%

            	
              1-10,000
                cards

            
	 	
              50%

            	
              10,001-50,000
                cards

            
	 	
              60%

            	
              50,001+
                cards

            

    

    

    *
      Completed transactions include: loads, signature POS (settled), debit POS,
      and
      debit ATM. 

     

    
      
         

      

      
        Page
          18

        
          

        

      

      
         

      

    

    
SCHEDULE
      C

    ACCOUNT
      FUNDS FLOW

    (Attached)

     

     

    
      
         

      

      
        Page
          19

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