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Unassociated Document

    THIS
      WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
      BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. EXCEPT AS OTHERWISE
      SET
      FORTH HEREIN OR IN A SECURITIES PURCHASE AGREEMENT, DATED AS OF AUGUST 31,
      2004,
      NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD, TRANSFERRED OR ASSIGNED
      IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER
      SAID ACT OR, AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE, CUSTOMARY
      FOR
      OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT
      REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH
      ACT.

    

    Right
      to
      Purchase _________ Shares of Common Stock, par value $.001 per share

    

    CLASS
      B WARRANT

    

    THIS
      CERTIFIES THAT,
      for
      value received, ___________________________, a ___________________, or its
      registered assigns (the “Holder”)
      is
      entitled to purchase from Tactical Air Defense Services, Inc., a Nevada
      corporation (the “Company”),
      at
      any time or from time to time during the period specified in Paragraph 2 hereof,
      ___________________________________ (_______) fully paid and nonassessable
      shares of the Company's Common Stock, par value $.001 per share (the
“Common
      Stock”),
      at an
      exercise price per share equal to $1.50 (the “Initial
      Exercise Price”).
      The
      term “Warrant
      Shares,”
as
      used herein, refers to the shares of Common Stock purchasable hereunder. The
      Warrant Shares and the Initial Exercise Price are subject to adjustment as
      provided in Paragraph 4 hereof. The term “Warrants”
means
      this Warrant issued March 2, 2007, pursuant to that certain Unit Purchase
      Agreement, by and among the Company and the Holder (the “Purchase
      Agreement”).
      Each
      capitalized term used herein, and not otherwise defined, shall have the meaning
      ascribed thereto in the Purchase Agreement. 

    

    This
      Warrant is subject to the following terms, provisions, and
      conditions:

    

    1. Manner
      of Exercise; Issuance of Certificates; Payment for
      Shares.
      Subject
      to the provisions hereof, this Warrant may be exercised by the Holder hereof,
      in
      whole or in part, by the surrender of this Warrant, together with a completed
      exercise agreement in the form attached hereto (the “Exercise
      Agreement”),
      to
      the Transfer Agent during normal business hours on any business day at the
      Transfer Agent's principal executive offices (or such other office or agency
      of
      the Transfer Agent as it may designate by notice to the Holder hereof), and
      upon
      the payment to the Company in cash, by certified or official bank check or
      by
      wire transfer for the account of the Company of the Exercise Price for the
      Warrant Shares specified in the Exercise Agreement; provided,
      however,
      so long
      as there is an effective Registration Statement for the resale of the Warrant
      Shares the Holder shall exercise this Warrant pursuant to Section 1 hereof.
      The
      Warrant Shares so purchased shall be deemed to be issued to the Holder hereof
      or
      such Holder's designee, as the record owner of such shares, as of the close
      of
      business on the date on which this Warrant shall have been surrendered, the
      completed Exercise Agreement shall have been delivered, and payment shall have
      been made for such shares as set forth above. Certificates for the Warrant
      Shares so purchased, representing the aggregate number of shares specified
      in
      the Exercise Agreement, shall be delivered by the Transfer Agent to the Holder
      hereof within a reasonable time, not exceeding three (3) business days, after
      this Warrant shall have been so exercised. The certificates so delivered shall
      be in such denominations as may be requested by the Holder hereof and shall
      be
      registered in the name of such Holder or such other name as shall be designated
      by such Holder. If this Warrant shall have been exercised only in part, then,
      unless this Warrant has expired, the Transfer Agent shall, at Company's expense,
      at the time of delivery of such certificates, deliver to the Holder a new
      Warrant representing the number of shares with respect to which this Warrant
      shall not then have been exercised.

     

    
      
        
        

      

      
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    Notwithstanding
      anything in this Warrant to the contrary, in no event shall the Holder of this
      Warrant be entitled to exercise a number of Warrants (or portions thereof)
      in
      excess of the number of Warrants (or portions thereof) upon exercise of which
      the sum of (i) the number of shares of Common Stock beneficially owned by the
      Holder and its affiliates (other than shares of Common Stock which may be deemed
      beneficially owned through the ownership of the unexercised Warrants and the
      unexercised or unconverted portion of any other securities of the Company and
      (ii) the number of shares of Common Stock issuable upon exercise of the Warrants
      (or portions thereof) with respect to which the determination described herein
      is being made, would result in beneficial ownership by the Holder and its
      affiliates of more than 4.99% of the outstanding shares of Common Stock. For
      purposes of the immediately preceding sentence, beneficial ownership shall
      be
      determined in accordance with Section 13(d) of the Securities Exchange Act
      of
      1934, as amended, and Regulation 13D-G thereunder, except as otherwise provided
      in clause (i) of the preceding sentence. Notwithstanding anything to the
      contrary contained herein, the limitation on exercise of this Warrant set forth
      herein may not be amended without the written consent of the Holder hereof
      and
      the Company.

    

    2. Period
      of Exercise.
      This
      Warrant is exercisable at any time or from time to time
      on
      or after the date on which this Warrant is issued and delivered pursuant to
      the
      terms of the Purchase Agreement and before 5:00 p.m., New York City time on
      March 2, 2010 (the “Exercise
      Period”).

    

    3. Certain
      Agreements of the Company.
      The
      Company hereby covenants and agrees
      as
      follows:

    

    (a) Shares
      to be Fully Paid.
      All
      Warrant Shares will, upon issuance in accordance with the terms of this Warrant,
      be validly issued, fully paid, and nonassessable and free from all taxes, liens,
      and charges with respect to the issue thereof.

    

    (b) Reservation
      of Shares.
      During
      the Exercise Period, the Company shall at all times have authorized, and
      reserved for the purpose of issuance upon exercise of this Warrant, a sufficient
      number of shares of Common Stock to provide for the exercise of this
      Warrant.

     

    
      
        
        

      

      
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    (c) Certain
      Actions Prohibited.
      The
      Company will not, by amendment of its charter or through any reorganization,
      transfer of assets, consolidation, merger, dissolution, issue or sale of
      securities, or any other voluntary action, avoid or seek to avoid the observance
      or performance of any of the terms to be observed or performed by it hereunder,
      but will at all times in good faith assist in the carrying out of all the
      provisions of this Warrant and in the taking of all such action as may
      reasonably be requested by the Holder of this Warrant in order to protect the
      exercise privilege of the Holder of this Warrant against impairment, consistent
      with the tenor and purpose of this Warrant. Without limiting the generality
      of
      the foregoing, the Company (i) will not increase the par value of any shares
      of
      Common Stock receivable upon the exercise of this Warrant above the Exercise
      Price then in effect, and (ii) will take all such actions as may be necessary
      or
      appropriate in order that the Company may validly and legally issue fully paid
      and nonassessable shares of Common Stock upon the exercise of this
      Warrant.

    

    (d) Successors
      and Assigns.
      This
      Warrant will be binding upon any entity succeeding to the Company by merger,
      consolidation, or acquisition of all or substantially all the Company's
      assets.

    

    4. Antidilution
      Provisions.
      During
      the Exercise Period, the Initial Exercise Price, (in this section, the
“Exercise
      Price”)
      and
      the number of Warrant Shares shall be subject to adjustment from time to time
      as
      provided in this Paragraph 4.

    

    In
      the
      event that any adjustment of the Exercise Price as required herein results
      in a
      fraction of a cent, such Exercise Price shall be rounded up to the nearest
      cent.

    

    (a) Subdivision
      or Combination of Common Stock.
      If the
      Company at any time subdivides (by any stock split, stock dividend,
      recapitalization, reorganization, reclassification or otherwise) the shares
      of
      Common Stock acquirable hereunder into a greater number of shares, then, after
      the date of record for effecting such subdivision, the Exercise Price in effect
      immediately prior to such subdivision will be proportionately reduced. If the
      Company at any time combines (by reverse stock split, recapitalization,
      reorganization, reclassification or otherwise) the shares of Common Stock
      acquirable hereunder into a smaller number of shares, then, after the date
      of
      record for effecting such combination, the Exercise Price in effect immediately
      prior to such combination will be proportionately increased.

    

    (b) Adjustment
      in Number of Shares.
      Upon
      each adjustment of the Exercise Price pursuant to the provisions of this
      Paragraph 4, the number of shares of Common Stock issuable upon exercise of
      this
      Warrant shall be adjusted by multiplying a number equal to the Exercise Price
      in
      effect immediately prior to such adjustment by the number of shares of Common
      Stock issuable upon exercise of this Warrant immediately prior to such
      adjustment and dividing the product so obtained by the adjusted Exercise
      Price.

    

    (c) Consolidation,
      Merger or Sale.
      In case
      of any consolidation of the Company with, or merger of the Company into any
      other corporation, or in case of any sale or conveyance of all or substantially
      all of the assets of the Company other than in connection with a plan of
      complete liquidation of the Company, then as a condition of such consolidation,
      merger or sale or conveyance, adequate provision will be made whereby the Holder
      of this Warrant will have the right to acquire and receive upon exercise of
      this
      Warrant in lieu of the shares of Common Stock immediately theretofore acquirable
      upon the exercise of this Warrant, such shares of stock, securities or assets
      as
      may be issued or payable with respect to or in exchange for the number of shares
      of Common Stock immediately theretofore acquirable and receivable upon exercise
      of this Warrant had such consolidation, merger or sale or conveyance not taken
      place if all shareholders of record of the Company's Common Stock, as a result
      of such consolidation, merger or sale or conveyance, will exchange their shares
      for securities of any other corporation. In any such case, the Company will
      make
      appropriate provision to insure that the provisions of this Paragraph 4 hereof
      will thereafter be applicable as nearly as may be in relation to any shares
      of
      stock or securities thereafter deliverable upon the exercise of this Warrant.
      The Company will not effect any consolidation, merger or sale or conveyance
      unless prior to the consummation thereof, the successor corporation (if other
      than the Company) assumes by written instrument the obligations under this
      Paragraph 4 and the obligations to deliver to the Holder of this Warrant such
      shares of stock, securities or assets as, in accordance with the foregoing
      provisions, the Holder may be entitled to acquire.

     

    
      
        
        

      

      
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    (d) Distribution
      of Assets.
      In case
      the Company shall declare or make any distribution of its assets (including
      cash) to holders of Common Stock as a partial liquidating dividend, by way
      of
      return of capital or otherwise, then, after the date of record for determining
      stockholders entitled to such distribution, but prior to the date of
      distribution, the Holder of this Warrant shall be entitled upon exercise of
      this
      Warrant for the purchase of any or all of the shares of Common Stock subject
      hereto, to receive the amount of such assets which would have been payable
      to
      the Holder had such Holder been the holder of such shares of Common Stock on
      the
      record date for the determination of stockholders entitled to such
      distribution.

    

    (e) Notice
      of Adjustment.
      Upon the
      occurrence of any event which requires any adjustment of the Exercise Price,
      then, and in each such case, the Company shall give notice thereof to the Holder
      of this Warrant, which notice shall state the Exercise Price resulting from
      such
      adjustment and the increase or decrease in the number of Warrant Shares
      purchasable at such price upon exercise, setting forth in reasonable detail
      the
      method of calculation and the facts upon which such calculation is based. Such
      calculation shall be certified by the principal financial officer of the
      Company.

    

    (f) Minimum
      Adjustment of Exercise Price.
      No
      adjustment of the Exercise Price shall be made in an amount of less than 1%
      of
      the Exercise Price in effect at the time such adjustment is otherwise required
      to be made, but any such lesser adjustment shall be carried forward and shall
      be
      made at the time and together with the next subsequent adjustment which,
      together with any adjustments so carried forward, shall amount to not less
      than
      1% of such Exercise Price.

    

    (g) No
      Fractional Shares.
      No
      fractional shares of Common Stock are to be issued upon the exercise of this
      Warrant, but the Company shall pay a cash adjustment in respect of any
      fractional share which would otherwise be issuable in an amount equal to the
      same fraction of the Market Price of a share of Common Stock on the date of
      such
      exercise.

     

    
      
        
        

      

      
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    (h) Other
      Notices.
      In case
      at any time:

    

    (i) the
      Company shall declare any dividend upon the Common Stock payable in shares
      of
      stock of any class or make any other distribution (including dividends or
      distributions payable in cash out of retained earnings) to the holders of the
      Common Stock;

    

    (ii) the
      Company shall offer for subscription pro rata to the holders of the Common
      Stock
      any additional shares of stock of any class or other rights;

    

    (iii) there
      shall be any capital reorganization of the Company, or reclassification of
      the
      Common Stock, or consolidation or merger of the Company with or into, or sale
      of
      all or substantially all its assets to, another corporation or entity;
      or

    

    (iv) there
      shall be a voluntary or involuntary dissolution, liquidation or winding-up
      of
      the Company;

    

    then,
      in
      each such case, the Company shall give to the Holder of this Warrant (a) notice
      of the date on which the books of the Company shall close or a record shall
      be
      taken for determining the holders of Common Stock entitled to receive any such
      dividend, distribution, or subscription rights or for determining the holders
      of
      Common Stock entitled to vote in respect of any such reorganization,
      reclassification, consolidation, merger, sale, dissolution, liquidation or
      winding-up and (b) in the case of any such reorganization, reclassification,
      consolidation, merger, sale, dissolution, liquidation or winding-up, notice
      of
      the date (or, if not then known, a reasonable approximation thereof by the
      Company) when the same shall take place. Such notice shall also specify the
      date
      on which the holders of Common Stock shall be entitled to receive such dividend,
      distribution, or subscription rights or to exchange their Common Stock for
      stock
      or other securities or property deliverable upon such reorganization,
      re-classification, consolidation, merger, sale, dissolution, liquidation, or
      winding-up, as the case may be. Such notice shall be given at least 30 days
      prior to the record date or the date on which the Company's books are closed
      in
      respect thereto. Failure to give any such notice or any defect therein shall
      not
      affect the validity of the proceedings referred to in clauses (i), (ii), (iii)
      and (iv) above.

    

    (i) Certain
      Events.
      If any
      event occurs of the type contemplated by the adjustment provisions of this
      Paragraph 4 but not expressly provided for by such provisions, the Company
      will
      give notice of such event as provided in Paragraph 4(e) hereof, and the
      Company's Board of Directors will make an appropriate adjustment in the Exercise
      Price and the number of shares of Common Stock acquirable upon exercise of
      this
      Warrant so that the rights of the Holder shall be neither enhanced nor
      diminished by such event.

    

    (j) Certain
      Definitions. 

     

    
      
        
        

      

      
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    (i) “Market
      Price,”
      as of
      any date, (i) means the average of the last reported sale prices for the shares
      of Common Stock on the Over-the-Counter Bulletin Board (the “OTC
      BB”)
      for
      the five (5) Trading Days immediately preceding such date as reported by
      Bloomberg, or (ii) if the OTC BB is not the principal trading market for the
      shares of Common Stock, the average of the last reported sale prices on the
      principal trading market for the Common Stock during the same period as reported
      by Bloomberg, or (iii) if market value cannot be calculated as of such date
      on
      any of the foregoing bases, the Market Price shall be the fair market value
      as
      reasonably determined in good faith by (a) the Board of Directors of the
      Corporation or, at the option of a majority-in-interest of the Holders of the
      outstanding Warrants by (b) an independent investment bank of nationally
      recognized standing in the valuation of businesses similar to the business
      of
      the corporation. The manner of determining the Market Price of the Common Stock
      set forth in the foregoing definition shall apply with respect to any other
      security in respect of which a determination as to market value must be made
      hereunder.

    

    (ii) "Common
      Stock,"
      for
      purposes of this Paragraph 4, includes the Common Stock, par value $.001 per
      share, and any additional class of stock of the Company having no preference
      as
      to dividends or distributions on liquidation, provided that the shares
      purchasable pursuant to this Warrant shall include only shares of Common Stock,
      par value $.001 per share, in respect of which this Warrant is exercisable,
      or
      shares resulting from any subdivision or combination of such Common Stock,
      or in
      the case of any reorganization, reclassification, consolidation, merger, or
      sale
      of the character referred to in Paragraph 4(c) hereof, the stock or other
      securities or property provided for in such Paragraph.

    

    5. Issue
      Tax.
      The
      issuance of certificates for Warrant Shares upon the exercise of this Warrant
      shall be made without charge to the Holder of this Warrant or such shares for
      any issuance tax or other costs in respect thereof, provided that the Company
      shall not be required to pay any tax which may be payable in respect of any
      transfer involved in the issuance and delivery of any certificate in a name
      other than the Holder of this Warrant.

    

    6. No
      Rights or Liabilities as a Shareholder.
      This
      Warrant shall not entitle the Holder hereof to any voting rights or other rights
      as a shareholder of the Company. No provision of this Warrant, in the absence
      of
      affirmative action by the Holder hereof to purchase Warrant Shares, and no
      mere
      enumeration herein of the rights or privileges of the Holder hereof, shall
      give
      rise to any liability of such Holder for the Exercise Price or as a shareholder
      of the Company, whether such liability is asserted by the Company or by
      creditors of the Company.

    

    7. Transfer,
      Exchange, and Replacement of Warrant.

    

    (a) Restriction
      on Transfer.
      This
      Warrant and the rights granted to the Holder hereof are transferable, in whole
      or in part, upon surrender of this Warrant, together with a properly executed
      assignment in the form attached hereto, at the office or agency of the Company
      referred to in Paragraph 7(e) below, provided, however, that any transfer or
      assignment shall be subject to the conditions set forth in Paragraph 7(f) hereof
      and to the applicable provisions of the Purchase Agreement. Until due
      presentment for registration of transfer on the books of the Company, the
      Company may treat the registered Holder hereof as the owner and Holder hereof
      for all purposes, and the Company shall not be affected by any notice to the
      contrary. 

     

    
      
        
        

      

      
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    (b) Warrant
      Exchangeable for Different Denominations.
      This
      Warrant is exchangeable, upon the surrender hereof by the Holder hereof at
      the
      office or agency of the Company referred to in Paragraph 7(e) below, for new
      Warrants of like tenor representing in the aggregate the right to purchase
      the
      number of shares of Common Stock which may be purchased hereunder, each of
      such
      new Warrants to represent the right to purchase such number of shares as shall
      be designated by the Holder hereof at the time of such surrender.

    

    (c) Replacement
      of Warrant.
      Upon
      receipt of evidence reasonably satisfactory to the Company of the loss, theft,
      destruction, or mutilation of this Warrant and, in the case of any such loss,
      theft, or destruction, upon delivery of an indemnity agreement reasonably
      satisfactory in form and amount to the Company, or, in the case of any such
      mutilation, upon surrender and cancellation of this Warrant, the Company, at
      its
      expense, will execute and deliver, in lieu thereof, a new Warrant of like
      tenor.

    

    (d) Cancellation;
      Payment of Expenses.
      Upon the
      surrender of this Warrant in connection with any transfer, exchange, or
      replacement as provided in this Paragraph 7, this Warrant shall be promptly
      canceled by the Company. The Company shall pay all taxes (other than securities
      transfer taxes) and all other expenses (other than legal expenses, if any,
      incurred by the holder or transferees) and charges payable in connection with
      the preparation, execution, and delivery of Warrants pursuant to this Paragraph
      7.

    

    (e) Register.
      The
      Company shall maintain, at its principal executive offices (or such other office
      or agency of the Company as it may designate by notice to the Holder hereof),
      a
      register for this Warrant, in which the Company shall record the name and
      address of the person in whose name this Warrant has been issued, as well as
      the
      name and address of each transferee and each prior owner of this
      Warrant.

    

    (f) Exercise
      or Transfer Without Registration.
      If, at
      the time of the surrender of this Warrant in connection with any exercise,
      transfer, or exchange of this Warrant, this Warrant (or, in the case of any
      exercise, the Warrant Shares issuable hereunder), shall not be registered under
      the Securities Act of 1933, as amended (the “Securities
      Act”)
      and
      under applicable state securities or blue sky laws, the Company may require,
      as
      a condition of allowing such exercise, transfer, or exchange, (i) that the
      Holder or transferee of this Warrant, as the case may be, furnish to the Company
      a written opinion of counsel, which opinion and counsel are acceptable to the
      Company, to the effect that such exercise, transfer, or exchange may be made
      without registration under said Act and under applicable state securities or
      blue sky laws, (ii) that the Holder or transferee execute and deliver to the
      Company an investment letter in form and substance acceptable to the Company
      and
      (iii) that the transferee be an “accredited investor” as defined in Rule 501(a)
      promulgated under the Securities Act; provided that no such opinion, letter
      or
      status as an “accredited investor” shall be required in connection with a
      transfer pursuant to Rule 144 under the Securities Act. The first Holder of
      this
      Warrant, by taking and holding the same, represents to the Company that such
      Holder is acquiring this Warrant for investment and not with a view to the
      distribution thereof. 

     

    
      
        
        

      

      
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    8. Notices.
      All
      notices, requests, and other communications required or permitted to be given
      or
      delivered hereunder to the Holder of this Warrant shall be in writing, and
      shall
      be personally delivered, or shall be sent by certified or registered mail or
      by
      recognized overnight mail courier, postage prepaid and addressed, to such Holder
      at the address shown for such Holder on the books of the Company, or at such
      other address as shall have been furnished to the Company by notice from such
      Holder. All notices, requests, and other communications required or permitted
      to
      be given or delivered hereunder to the Company shall be in writing, and shall
      be
      personally delivered, or shall be sent by certified or registered mail or by
      recognized overnight mail courier, postage prepaid and addressed, to the office
      of the Company at 5501
      Airport Drive, Denison Texas 75020,
      Attention: Chief Executive Officer, or at such other address as shall have
      been
      furnished to the Holder of this Warrant by notice from the Company. Any such
      notice, request, or other communication may be sent by facsimile, but shall
      in
      such case be subsequently confirmed by a writing personally delivered or sent
      by
      certified or registered mail or by recognized overnight mail courier as provided
      above. All notices, requests, and other communications shall be deemed to have
      been given either at the time of the receipt thereof by the person entitled
      to
      receive such notice at the address of such person for purposes of this Paragraph
      8, or, if mailed by registered or certified mail or with a recognized overnight
      mail courier upon deposit with the United States Post Office or such overnight
      mail courier, if postage is prepaid and the mailing is properly addressed,
      as
      the case may be.

    

    9. Governing
      Law.
      THIS
      WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
      LAWS
      OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
      ENTIRELY WITH SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.
      THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED
      STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE
      ARISING UNDER THIS WARRANT, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH
      OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY
      WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT
      OR
      PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY
      MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE
      OF
      PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL
      AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
      BY
      LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT
      OR
      PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
      SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH DOES NOT
      PREVAIL IN ANY DISPUTE ARISING UNDER THIS WARRANT SHALL BE RESPONSIBLE FOR
      ALL
      FEES AND EXPENSES, INCLUDING ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY
      IN CONNECTION WITH SUCH DISPUTE.

     

    
      
        
        

      

      
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    10. Miscellaneous.

    

    (a) Amendments.
      This
      Warrant and any provision hereof may only be amended by an instrument in writing
      signed by the Company and the Holder hereof.

    

    (b) Descriptive
      Headings.
      The
      descriptive headings of the several paragraphs of this Warrant are inserted
      for
      purposes of reference only, and shall not affect the meaning or construction
      of
      any of the provisions hereof.

    

    (c) Remedies.
      The
      Company acknowledges that a breach by it of its obligations hereunder will
      cause
      irreparable harm to the Holder, by vitiating the intent and purpose of the
      transaction contemplated hereby. Accordingly, the Company acknowledges that
      the
      remedy at law for a breach of its obligations under this Warrant will be
      inadequate and agrees, in the event of a breach or threatened breach by the
      Company of the provisions of this Warrant, that the Holder shall be entitled,
      in
      addition to all other available remedies at law or in equity, and in addition
      to
      the penalties assessable herein, to an injunction or injunctions restraining,
      preventing or curing any breach of this Warrant and to enforce specifically
      the
      terms and provisions thereof, without the necessity of showing economic loss
      and
      without any bond or other security being required.

    

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF,
      the
      Company has caused this Warrant to be signed by its duly authorized
      officer.

     

    
      	 	 	 
	 	
              TACTICAL
                AIR DEFENSE SERVICES, INC.

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
Mark
              Daniels
	 	Chief Executive Officer

    

    

    Dated
      as
      of March 2, 2007

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    FORM
      OF EXERCISE AGREEMENT

    

    Dated:
      ________ __, 200_

    To: Tactical
      Air Defense Services, Inc.

    

    The
      undersigned, pursuant to the provisions set forth in the Warrant, hereby agrees
      to purchase ________ shares of Common Stock covered by such Warrant, and makes
      payment herewith in full therefor at the price per share provided by such
      Warrant: in cash or by certified or official bank check in the amount of
      $_________. Please issue a certificate or certificates for such shares of Common
      Stock in the name of and pay any cash for any fractional share to:

    

      
        	 	
                Name:______________________________

              
	 	 
	 	
                Signature:
                  _____________________________

              
	 	
                Address:
                  _______________________________

              
	 	
                _______________________________

              
	 	 
	 	
                Note: The
                  above signature should correspond exactly with the name on the
                  face of the
                  within Warrant, if
                  applicable.

              

      

    

    

    and,
      if
      said number of shares of Common Stock shall not be all the shares purchasable
      under the within Warrant, a new Warrant is to be issued in the name of said
      undersigned covering the balance of the shares purchasable thereunder less
      any
      fraction of a share paid in cash.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    FORM
      OF ASSIGNMENT

    

    FOR
      VALUE RECEIVED,
      the
      undersigned hereby sells, assigns, and transfers all the rights of the
      undersigned under the within Warrant, with respect to the number of shares
      of
      Common Stock covered thereby set forth hereinbelow, to:

    

      
        	
                Name
                  of Assignee

              	 	
                Address

              	 	
                No
                  of Shares

              
	 	 	 	 	 

      

    ,
      and
      hereby irrevocably constitutes and appoints ___________________________________
      as agent and attorney-in-fact to transfer said Warrant on the books of the
      within named corporation, with full power of substitution in the
      premises.

    

    

    Dated: ______________,
      200__

    

    

      
        	
                In
                  the presence of:

              	
                _______________________________

              
	 	 
	 	
                Name:
                  _______________________________

              
	 	 
	 	 
	 	
                Signature:_____________________________

              
	 	
                Title
                  of Signing Officer or Agent (if any):

              
	 	
                ______________________________

              
	 	
                Address:
                  ______________________________

              
	 	
                ______________________________

              
	 	
                ______________________________

              
	 	 
	 	
                Note: The
                  above signature should correspond exactly with the name on the
                  face of the
                  within Warrant, if
                  applicable.

              

      

     

    
      
        
        

      

      
        12Unassociated Document

    UNIT
      PURCHASE AGREEMENT

    

    THIS
      UNIT PURCHASE AGREEMENT
      (this
“Agreement”)
      is
      made _______, 200_ (the “Effective
      Date”)
      by and
      among Tactical Air Defense Services, Inc., a Nevada corporation (the
“Company”)
      and
      the investors named on Schedule
      A
      hereto
      (each an “Investor”
and
      collectively the “Investors”).
      

    

    THE
      PARTIES HEREBY AGREE AS FOLLOWS:

    

    1. PURCHASE
      AND SALE OF UNITS.

    

    1.1 Sale
      and Issuance of the Units. 

    

    Subject
      to the terms and conditions of this Agreement, and in reliance on the
      representations and warranties contained herein, each Investor agrees, severally
      and not jointly, to purchase at the Closing, and the Company agrees to sell
      and
      issue to such Investor at the Closing, that number of units of the Company’s
      securities (the “Securities”),
      as is
      set forth opposite such Investor’s name on Schedule
      A hereto
      which are part of a minimum number of 500,000 units and a maximum number of
      2,000,000 units being issued and sold to, and purchased by, the Investors at
      the
      Closing, at a purchase price of fifty-five cents ($0.55) per unit (the
      "Unit
      Purchase Price"),
      each
      unit consisting of: (i) one (1) share of the Company’s common stock, par value
      $.001 per share (“Common Stock”) (hereinafter the “Share”),
      (ii)
      one (1) Class A Warrant (the “Class
      A Warrant”),
      and
      (iii) one (1) Class B Warrant (the “Class
      B Warrant”).
      The
      Shares, Class A Warrants, and Class B Warrants are hereinafter collectively
      referred to as the “Units”
and
      the
      Class A Warrants and Class B Warrants are hereinafter collectively referred
      to
      as the “Warrants.”
The
      minimum required investment for each Investor is 2,500 Units. The Company,
      in
      its sole and absolute discretion, may sell less than 2,500 Units to an
      Investor.

    

    1.2 Closing.
      The
      purchase and sale of the Units shall take place at the offices of Hodgson Russ
      LLP, 60 East 42nd Street, New York, New York 10165 on October __, 2005, or
      at
      such other place and time as the Company and the Investors mutually agree (which
      time and place are designated as a “Closing”).
      At
      the Closing, the Company shall deliver to the Escrow Agent (as defined in
      Section 1.3 below) certificates representing each Investor's Shares and Warrants
      against payment of the purchase price by wire transfer of immediately available
      funds payable to the Company, or such other means acceptable to the Company,
      in
      the amount set forth opposite such Investor’s name on Schedule
      A
      hereto.
      At Closing, such amounts will be delivered by the Investor to the Escrow
      Agent.

    

    1.3 Escrow
      of Funds.
      Pursuant
      to the terms of the Escrow Agreement, a copy of which is attached hereto as
      Exhibit
      A,
      the
      Company has established an Escrow Account into which any funds received from
      the
      Investors will be deposited (the "Escrow
      Funds").
      In
      addition to the Escrow Funds, upon Closing, the Company shall deliver to the
      Escrow Agent, for each Investor, the Shares, Class A Warrant and Class B Warrant
      which comprise the Units to be purchased by each Investor. The Escrow Funds
      and
      the Units will be released by the Escrow Agent to the Company and the Investors
      respectively upon the completion of an acquisition by the Company of all, or
      substantially all, of the assets of Aerogroup Incorporated, a Utah corporation,
      and its subsidiaries (the "Aerogroup
      Acquisition").

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    2. REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.
      The
      Company represents and warrants to each Investor, to the best of its knowledge,
      as of the date hereof, as follows:

    

    2.1 Organization,
      Good Standing and Qualification.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of the State of Nevada and has all requisite corporate power
      and
      authority to own and operate its assets and properties and to carry on its
      current or contemplated business. The Company is duly qualified to transact
      business and is in good standing in each jurisdiction wherein the properties
      owned or leased or the business transacted by the Company makes such
      qualification to do business as a foreign corporation necessary, except where
      the failure to so qualify could not reasonably be expected to have a material
      adverse effect on the condition (financial or otherwise), results of operations,
      business, prospects or properties of the Company (a “Material
      Adverse Effect”).

    

    2.2 Capitalization.
      (a) The
      number of outstanding shares of Common Stock of the Company is as set forth
      on
Schedule
      2.2(a).
      The
      outstanding shares of Common Stock of the Company have been duly authorized
      and
      validly issued and are fully paid and non-assessable, have been issued and
      sold
      in compliance with applicable securities laws of the United States and
      jurisdictions thereof and any other applicable securities laws and were not
      issued in violation of any preemptive rights, rights of first refusal or other
      similar rights granted by the Company.

    

    (b) There
      are
      no outstanding options, warrants, convertible securities or other rights calling
      for the issuance of, and there are no commitments or arrangements to issue,
      any
      shares of Common Stock of the Company or any security convertible, exchangeable
      or exercisable for shares of Common Stock of the Company. There are no
      shareholders agreements, voting agreements or other similar agreements with
      respect to the outstanding shares of Common Stock of the Company to which the
      Company is a party or, to the knowledge of the Company (having undertaken no
      independent investigation), between or among any of the Company’s
      shareholders.

    

    (c) The
      names
      of the officers, directors and all stockholders of the Company beneficially
      owning five (5%) percent or more of the Company’s outstanding shares of Common
      Stock and the number of outstanding shares of Common Stock held by them are
      set
      forth on Schedule
      2.2(c)
      hereto.

    

    2.3 Subsidiaries.
      Except
      as
      set forth on
      Schedule 2.3,
      the
      Company has no subsidiaries and does not own or control, directly or indirectly,
      any interest in any corporation, association or other business
      entity.

    

    2.4 Power
      and Authority.
      All
      corporate action on the part of the Company and its officers, directors and
      stockholders necessary for the authorization, execution and delivery of this
      Agreement and any other documents related thereto (collectively, the
“Transaction
      Agreements”),
      the
      performance of all obligations of the Company hereunder and thereunder and
      the
      authorization, issuance and delivery of the Shares and Warrants comprising
      the
      Units being sold hereunder and the shares of Common Stock to be issued upon
      exercise of the Warrants (the “Underlying
      Shares”),
      have
      been taken or will be taken prior to the Closing. The Transaction Agreements
      have been duly executed and delivered by the Company and (assuming due
      authorization, execution and delivery by the Investors) constitute the valid
      and
      legally binding obligations of the Company, enforceable in accordance with
      their
      terms, subject to (a) the laws of bankruptcy and the laws affecting creditors’
rights generally and (b) the availability of equitable remedies.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    2.5 Valid
      Issuance of Shares, Warrants and Underlying Shares.
      (a) The
      Shares and Warrants, when issued, sold and delivered in accordance with the
      terms hereof for the consideration expressed herein, will be duly and validly
      issued, fully paid and non-assessable and free of any liens or encumbrances
      created by the Company. When the Warrants are delivered in accordance with
      this
      Agreement and paid for pursuant to this Agreement on the Closing, such Warrants
      will be exercisable for the Underlying Shares pursuant to the terms of the
      Warrants;

    

    (b) The
      Underlying Shares initially issuable upon exercise of the Warrants have been
      duly and validly reserved for issuance upon such exercise, and upon issuance
      in
      accordance with the terms of the Warrants, will be fully paid and non-assessable
      and will be free of restrictions on transfer under applicable state and federal
      securities laws. Except as set forth on Schedule
      2.5(b),
      no
      preemptive right, right of first refusal granted by the Company or other similar
      right exists with respect to the Underlying Shares or the issuance and sale
      thereof.

    

    2.6 Governmental
      Consents.
      No
      consent, approval, order (the “Consents”)
      or
      authorization of, or registration, qualification, designation, declaration
      or
      filing with, any federal, regional, state or local governmental authority on
      the
      part of the Company (a “Governmental
      Entity”)
      is
      required in connection with the Company’s authorization, issuance and sale of
      the Units and the transactions contemplated by the Transaction Agreements,
      except for filings, if any, required pursuant to applicable state securities
      or
      Blue Sky laws, which filings will be made within the required statutory or
      regulatory periods, and any filing pursuant to Regulation D of the Securities
      and Exchange Commission (the “SEC”), which filing, if made, will be made within
      15 days of the Closing.

    

    2.7 Litigation.
      There
      is
      no action, suit, claim, proceeding or investigation pending or, to the Company’s
      knowledge, threatened against the Company which could reasonably be expected
      to
      have a Material Adverse Effect. The Company is not, and to the Company’s
      knowledge (having undertaken no independent investigation), no founder,
      director, officer or key employee is, a party or subject to the provisions
      of
      any order, writ, injunction, judgment or decree of any court or government
      agency or instrumentality (collectively, the “Judgments”)
      that
      could reasonably be expected to have a Material Adverse Effect. There is no
      action, proceeding or investigation by the Company currently pending or which
      the Company intends to initiate.

    

    2.8 Intellectual
      Property.
      The
      Company does not own intellectual property.

    

    2.9 Compliance
      With Other Instruments.
      To
      the
      best of the Company's knowledge, the Company is not in violation of (i) its
      Certificate of Incorporation or Bylaws, (ii) any statute or Consents or
      Judgments of any Governmental Entity applicable to it, or (iii) any contracts,
      mortgages, leases, indentures, agreements and instruments to which the Company
      is currently bound which, other than contracts entered into in the ordinary
      course of business, involve obligations of or payments to the Company in excess
      of $25,000 (collectively,
      the “Material
      Contracts”)
      or in
      material violation or default of any provision of any orders or Judgments by
      which it is bound or any provision of federal or state statute, rule or
      regulation applicable to the Company, which violation or default, in the case
      of
      (i), (ii), or (iii), could reasonably be expected to have a Material Adverse
      Effect. The execution, delivery and performance of and compliance with the
      Transaction Agreements and the consummation of the transactions contemplated
      hereby and thereby will not (i) result in any such violation or default or
      result in the creation of any mortgage, lien or encumbrance against any of
      the
      properties or assets of the Company, or (ii) give rise to obligations under
      any
      Material Contracts, that, in the case of either (i) or (ii), could reasonably
      be
      expected to have a Material Adverse Effect.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    2.10 Disclosure.
      The
      Company has provided each Investor with true and complete copies of all
      documents and information reasonably requested by such Investor in its due
      diligence review of the Company. As of the date hereof, neither the Transaction
      Agreements, the Schedules and Exhibits attached hereto, nor any certificate
      or
      other document prepared by the Company to be delivered at the Closing contains
      or will contain any untrue statement of a material fact or omit to state a
      material fact necessary to make the statements herein or therein, in light
      of
      the circumstances under which they were made, not misleading. To the Company’s
      knowledge, there are no facts which (individually or in the aggregate)
      materially and adversely affect the business, assets, liabilities, financial
      condition, prospects or operations of the Company that have not been set forth
      in the Agreement, the Schedules, the Exhibits hereto, the other Transaction
      Agreements or in other documents delivered to Investors their attorneys or
      agents in connection herewith.

    

    2.11 Material
      Agreements; Actions.
      (a) Except
      as
      set forth on Schedule
      2.11(a),
      there
      are no Material Contracts by which the Company is currently bound. Except as
      set
      forth on Schedule
      2.11(a), or
      indicated in the Company’s SEC Documents (as defined in Section 2.30), the
      Company is not currently indebted for money borrowed or has any other
      liabilities individually in excess of $25,000 or in the aggregate in excess
      of
      $50,000. To the best of the Company's knowledge, no default exists under any
      Material Contract to which the Company is a party that could reasonably be
      expected to have a Material Adverse Effect. Each of the Material Contracts
      is
      valid, binding, and in full force and effect in all material respects, subject
      to (i) the laws of bankruptcy and the laws affecting creditors’ rights generally
      and (ii) the availability of equitable remedies.

    

    (b) The
      Company has not (i) declared or paid any dividends or authorized any
      distribution upon or with respect to any class or series of its capital stock,
      (ii) made any loans or advances to any person, other than in the ordinary course
      of business, or (iii) sold, exchanged or otherwise disposed of any of its assets
      or rights other than in the ordinary course of business.

    

    2.12 Title
      to Property and Assets.
      The
      Company has good title to its properties and assets, in each case free and
      clear
      of all material liens, claims, encumbrances, security interests, options,
      charges or restrictions of any kind (collectively, the “Liens”)
      except
      such as (i) are set forth on Schedule
      2.12,
      or (ii)
      arise in the ordinary course of business and do not impair the Company’s use of
      such property or assets, including those reflected in the Company’s balance
      sheet (the “Balance
      Sheet”)
      dated
      as of June 30, 2005, included in the Company’s SEC Documents.
      With
      respect to the property and assets it leases, the Company is in material
      compliance with such leases and, holds a valid leasehold interest free of any
      material liens, claims and encumbrances.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    2.13 Brokers
      or Finders.
      There
      are
      no contracts, agreements or understandings between or among the Company, on
      the
      one hand, and any person, on the other, that would give rise to a claim against
      the Company or any Investor for a brokerage commission, finder’s fee or other
      like payment (the “Finder’s
      Fees”)
      in
      connection with the issuance and sale of the Units. To the extent permitted
      by
      law, the Company will indemnify and hold harmless each Investor against any
      losses, claims, damages or liabilities to which they may become subject under
      any claims for such Finder’s Fees in so far as such losses, claims, damages or
      liabilities are based on the finding that the Company is responsible for any
      such Finder’s Fees.

    

    2.14 Registration
      Rights; Voting Rights.
      The
      Company is currently not under any obligation to register under the Securities
      Act of 1933, as amended (the “Securities
      Act”),
      any
      of its currently outstanding securities or any of its securities which may
      hereafter be issued, including the Shares and the Underlying Shares. To the
      Company’s knowledge (having undertaken no independent investigation) no
      shareholder of the Company has entered into any agreement, understanding or
      other arrangement with respect to the voting of common stock.

    

    2.15 Employees.
      The
      Company is not a party to any collective bargaining agreements and, to its
      knowledge (having undertaken no independent investigation), no organizational
      efforts are currently being made with respect to any of their respective
      employees. 

    

    2.16 Stockholders,
      Directors and Officers; Indebtedness.
      The
      Company is not currently indebted to its officers, directors or stockholders
      or
      any of their respective relatives (and none of the same are indebted to the
      Company), other than travel, relocation and other expenses which are advanced
      and reimbursed in the ordinary course of business. None of the officers or
      directors or significant employees or consultants of the Company has,
      individually or collectively, a material interest in any entity which is a
      competitor, customer or supplier of (or has any existing contractual
      relationship with) the Company.

    

    2.17 Employment
      Benefit Plans.
      The
      Company does not have any employee benefit plans.

    

    2.18 Tax
      Returns and Payments.
      To
      the
      best of the Company's knowledge, the Company has accurately prepared and timely
      filed all tax returns and reports as required by law. Such returns and reports
      are true and correct in all material respects. The Company has paid all taxes
      and other assessments due. All such taxes with respect to which the Company
      has
      become obligated pursuant to elections made by the Company in accordance with
      generally accepted practices have been paid and adequate reserves have been
      established for all taxes accrued but not yet payable. The Federal income tax
      returns of the Company have never been audited by the Internal Revenue Service.
      No deficiency or assessment with respect to or proposed adjustment of the
      Company’s Federal, state, county or local taxes is pending or, to the Company’s
      knowledge (having undertaken no independent investigation), threatened. There
      is
      no tax lien, whether imposed by any Federal, state, county or local taxing
      authority, outstanding against the assets, properties or business of the
      Company.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    2.19 Proprietary
      Information and Invention Agreements.
      Each
      material employee, consultant and officer of the Company has executed, or will
      execute, an agreement with the Company regarding confidentiality and proprietary
      information. The Company (having undertaken no independent investigation) is
      not
      aware that any of its employees or consultants is in violation thereof, and
      the
      Company will use its best efforts to prevent any such violation.

    

    2.20 Permits.
      The
      Company has all franchises, permits, licenses and any similar authority
      necessary for the conduct of its business (“Permits”)
      and is
      not in default under such Permits, except where the failure to have such
      Permits, or such default, would not reasonably be expected to result in a
      Material Adverse Effect.

    

    2.21 Absence
      of Certain Changes.
      Except
      as
      set forth on Schedule
      2.21,
      since
      the Balance Sheet Date (as defined in Section 2.12), to the best of the
      Company's knowledge, there has not been:

    

    (a) any
      changes in the assets, liabilities, condition (financial or otherwise), affairs,
      earnings, material contracts, business, operating or prospects of the Company,
      except changes in the ordinary course of business which could not reasonably
      be
      expected to have a Material Adverse Effect;

    

    (b)
       any
      change, except in the ordinary course of business, in the contingent obligations
      of the Company by way of guaranty or any assurance of performance or payment,
      endorsement, indemnity or warranty;

    

    (c)
       any
      material transaction or commitment made, or any material contract or material
      agreement entered into, by the Company relating to its assets or business
      (including the acquisition or disposition of any assets) or any relinquishment
      by the Company of any material contract or other material right (direct or
      indirect, whether alleged, contingent or otherwise), other than transactions
      and
      commitments in the ordinary course of business;

    

    (d)
       (i)
      any
      creation, incurrence or assumption of any debt (including obligations in respect
      of capital leases); (ii) assumption, guarantee, endorsement or other liability
      (whether directly, contingently or otherwise) for the obligations of any other
      person or entity; or (iii) any loans, advances or capital contributions to,
      or
      investments in, any other person or entity, except in the ordinary course of
      business and not in excess of $25,000
      in
      the aggregate or $10,000 individually;

    

    (e) any
      damage, destruction or loss, whether or not covered by insurance, materially
      and
      adversely affecting the properties or business or the Company;

    

    (f) any
      waiver by the Company of a valuable right or material debt owed to
      it;

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    (g) any
      resignation or termination of employment of any officer or key employee of
      the
      Company, or the threat of such resignation or termination, or any material
      change in any compensation arrangement or agreement (including salary, bonus,
      insurance or pension benefits) with any of the same;

    

    (h) any
      sale,
      assignment or transfer of any material Intellectual Property or tangible assets
      of the Company which would have a Material Adverse Effect; or

    

    (i) to
      the
      best of the Company’s knowledge, any agreement to do any of the foregoing, or
      any other event or condition of any character which could reasonably be expected
      to have a Material Adverse Effect.

    

    2.22 Financial
      Statements.
      As
      requested, the Company has provided to each Investor its audited financial
      statements for the year ended December 31, 2004 and its unaudited statements
      for
      the period ended June 30, 2005. The consolidated financial statements of the
      Company and the related notes, including the Balance Sheet, present fairly
      the
      financial position of the Company as of the dates indicated and the statement
      of
      operations, changes in shareholders’ equity and cash flows for the periods
      specified; said financial statements have been prepared in conformity with
      generally accepted accounting principles in the United States (“GAAP”)
      applied on a consistent basis throughout the periods involved. Bateman &
Co., Inc., P.C. and James Stafford, Chartered Accountants, who have both audited
      or reviewed certain consolidated financial statements of the Company, are
      independent public accountants as required under Rule 101 of the American
      Institute of Certified Public Accountants Code of Professional Conduct, and
      its
      interpretations and rulings.

    

    2.23 Accounting.
      The
      Company maintains a system of internal accounting controls sufficient to provide
      assurances that: (i) transactions are executed in accordance with management’s
      general or specific authorizations; (ii) transactions are recorded as necessary
      to permit preparation of financial statements in conformity with GAAP and to
      maintain accountability for assets; (iii) access to assets is permitted only
      in
      accordance with management’s general or specific authorization; and (iv) the
      recorded accountability for assets is compared with existing assets at
      reasonable intervals and appropriate action is taken with respect to any
      differences.

    

    2.24 Insurance.
      As
      necessary, the Company has adequately insured its properties against loss or
      damage by fire or other casualty and maintains, in amounts which it believes
      to
      be adequate, such other insurance, including but not limited to liability
      insurance, as is usually maintained by companies in the same or similar
      businesses. The Company has no reason to believe that it will not be able to
      renew its existing insurance coverage, if any, as and when such coverage expires
      or to obtain similar coverage from similar insurers as may be necessary to
      continue its business at a cost that would not have a Material Adverse
      Effect.

    

    2.25
      Environmental
      Laws.
      To
      the
      best knowledge of the Company, the Company (i) is not in violation of any
      applicable statute or Judgments of any Governmental Entity, relating to the
      use,
      disposal or release of hazardous or toxic substances or relating to the
      protection or restoration of the environment or human exposure to hazardous
      or
      toxic substances (collectively, “Environmental
      Laws”),
      (ii)
      does not own or operate, to the Company’s knowledge, any real property
      contaminated with any substance that is subject to any Environmental Laws,
      and
      (iii) is not liable for any off-site disposal or contamination pursuant to
      any
      Environmental Laws, or is subject to any pending, or to the knowledge of the
      Company, threatened Proceeding relating to any Environmental Laws, in each
      instance which violation, contamination, liability or claim, individually or
      in
      the aggregate, would reasonably be expected to have a Material Adverse
      Effect.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    2.26 No
      General Solicitation.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has engaged in any form of general solicitation or general advertising
      (within the meaning of Regulation D of the Securities Act (“Regulation
      D”)
      in
      connection with the offer or sale of the Units.

    

    2.27 No
      Integrated Offering.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has, directly or indirectly, made any offers or sales of any security
      or
      solicited any offers to buy any security, under circumstances that would require
      registration of any of the Units or Underlying Securities under the Securities
      Act or cause this offering of the Units to be integrated with prior offerings
      by
      the Company for purposes of the Securities Act.

    

    2.28 Exemption
      from Registration.
      Neither
      the Company nor any agent acting on its behalf shall take any action that would
      cause the loss of an exemption from, the registration provisions of the
      Securities Act and any state or foreign securities laws for the offer, sale
      and
      issuance of the Units, the Shares and the exercise of the Warrants into the
      Underlying Shares.

    

    2.29 Transactions
      With Affiliates.
      None
      of
      the officers, directors, or employees of the Company is presently a party to
      any
      material transaction with the Company or any of its affiliates (other than
      in
      connection with services as employees, officers and directors), including any
      contract, agreement or other arrangement providing for the furnishing of
      services to or by, providing for rental of real or personal property to or
      from,
      or otherwise requiring payments to or from any officer, director or such
      employee or, to the knowledge of the Company, any corporation, partnership,
      trust or other entity in which any officer, director, or any such employee
      has a
      substantial interest or is an officer, director, trustee or
      partner.

    

    2.30 SEC
      Documents.
      Since
      at
      least August 1, 2005, the Company has timely filed all reports, schedules,
      forms, statements and other documents required to be filed by it with the SEC
      pursuant to the reporting requirements of the Exchange Act of 1934, as amended
      (the “1934
      Act”)
      (all
      of the foregoing filed prior to the date hereof and all exhibits included
      therein and financial statements and schedules thereto and documents (other
      than
      exhibits to such documents) incorporated by reference therein, being hereinafter
      referred to herein as the “SEC
      Documents”).
      As of
      their respective dates, the SEC Documents complied in all material respects
      with
      the requirements of the 1934 Act and the rules and regulations of the SEC
      promulgated thereunder applicable to the SEC Documents, and none of the SEC
      Documents, at the time they were filed with the SEC, contained any untrue
      statement of a material fact or omitted to state a material fact required to
      be
      stated therein or necessary in order to make the statements therein, in light
      of
      the circumstances under which they were made, not misleading. None of the
      statements made in any such SEC Documents is, or has been, required to be
      amended or updated under applicable law (except for such statements as have
      been
      amended or updated in subsequent filings prior to the date hereof). As of their
      respective dates, the financial statements of the Company included in the SEC
      Documents complied as to form in all material respects with applicable
      accounting requirements and the published rules and regulations of the SEC
      with
      respect thereto. Such financial statements have been prepared in accordance
      with
      United States generally accepted accounting principles, consistently applied,
      during the periods involved (except (i) as may be otherwise indicated in such
      financial statements or the notes thereto, or (ii) in the case of unaudited
      interim statements, to the extent they may not include footnotes or may be
      condensed or summary statements) and fairly present in all material respects
      the
      financial position of the Company as of the dates thereof and the results of
      its
      operations and cash flows for the periods then ended (subject, in the case
      of
      unaudited statements, to normal year-end audit adjustments). Except as set
      forth
      in the financial statements of the Company included in the SEC Documents, the
      Company has no material liabilities, contingent or otherwise, other than (i)
      liabilities incurred in the ordinary course of business subsequent to June
      30,
      2005 (ii) liabilities set forth on Schedule
      2.21
      and
      (iii) obligations under contracts and commitments incurred in the ordinary
      course of business and not required under generally accepted accounting
      principles to be reflected in such financial statements, which, individually
      or
      in the aggregate, are not material to the financial condition or operating
      results of the Company.

     

    
      
        
        

      

      
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    2.31 Foreign
      Corrupt Practices.
      To the
      best of the Company's knowledge, neither the Company, nor any of its
      Subsidiaries, nor any director, officer, agent, employee or other person acting
      on behalf of the Company or any Subsidiary has, in the course of his actions
      for, or on behalf of, the Company, used any corporate funds for any unlawful
      contribution, gift, entertainment or other unlawful expenses relating to
      political activity; made any direct or indirect unlawful payment to any foreign
      or domestic government official or employee from corporate funds; violated
      or is
      in violation of any provision of the U.S. Foreign Corrupt Practices Act of
      1977,
      as amended, or made any bribe, rebate, payoff, influence payment, kickback
      or
      other unlawful payment to any foreign or domestic government official or
      employee.

    

    2.32 No
      Investment Company.
      The
      Company is not, and upon the issuance and sale of the Units as contemplated
      by
      this Agreement will not be an “investment company” required to be registered
      under the Investment Company Act of 1940 (an “Investment Company”). The Company
      is not controlled by an Investment Company.

    

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

     

    
      
        
        

      

      
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    2.34 Labor
      Agreements and Actions; Employee Arrangements.
      The
      Company is not bound by or subject to (and none of its assets or properties
      is
      bound by or subject to) any written or oral, express or implied, contract,
      commitment or arrangement with any labor union, and no labor union has requested
      or, to the best of the Company’s knowledge, has sought to represent any of the
      employees, representatives or agents of the Company. There is no strike or
      other
      labor dispute involving the Company pending, or to the best of the Company’s
      knowledge, threatened, that could have a Material Adverse Affect on the assets,
      properties, financial condition, operating results, or business of the Company
      (as such business is presently conducted and as it is proposed to be conducted),
      nor is the Company aware of any labor organization activity involving its
      employees. The Company is not aware that any officer or key employee, or that
      any group of key employees, intends to terminate their employment with the
      Company, nor does the Company have a present intention to terminate the
      employment of any of the foregoing. The employment of each officer and employee
      of the Company is terminable at the will of the Company. The Company has
      complied in all material respects with all applicable state and federal equal
      employment opportunity and other laws related to employment. Except as set
      forth
      on Schedule
      2.34,
      the
      Company is not a party to or bound by any currently effective employment
      contract, severance agreement, deferred compensation agreement, bonus plan,
      incentive plan, profit sharing plan, retirement agreement, other employee
      compensation agreement or Employee Benefit Plan as defined in the Employee
      Retirement Income Security Act of 1974. The Company has entered into an
      effective agreement with each of its employees requiring such employee not
      to
      compete with the Company for a period following that person’s employment by the
      Company.

    

    3. REPRESENTATIONS
      AND WARRANTIES OF THE INVESTOR.
      Each
      Investor hereby represents and warrants with respect to itself and not as to
      other Investors as of the date hereof as follows:

    

    3.1 Authorization.
      The
      Investor has all the requisite power and is duly authorized to execute and
      deliver the Transaction Agreements and has taken all necessary action to
      consummate the transactions contemplated hereby and thereby. The Transaction
      Agreements have been duly executed and delivered by the Investor and constitute
      valid and binding obligations of the Investor, enforceable in accordance with
      their respective terms, subject to, (a) the laws of bankruptcy and the laws
      affecting creditors’ rights generally and (b) the availability of equitable
      remedies.

    

    3.2 Sophistication
      and Suitability.
      The
      Investor, either alone or with the assistance of its professional advisor,
      is a
      sophisticated investor, and has such knowledge and experience in financial
      and
      business matters that it is capable of evaluating the merits and risks of the
      prospective investment in the Units. The investment in the Units is suitable
      for
      the Investor based upon the Investor’s investment objectives and financial
      needs, and the Investor has adequate net worth and means for providing for
      its
      current financial needs and contingencies and has no need for liquidity of
      its
      investment with respect to the Units. The Investor has experience in investing
      in companies in the start-up or early stages of development. The Investor is
      aware that there are substantial risks incident to an investment in the Units.
      The Investor is aware that any financial projections contained in any document
      provided to the Investor are forecasts only and do not contain any express
      or
      implied representation that such projections will be achieved or are attainable.
      The Investor also acknowledges that any estimates of market size or projected
      expenses contained in any documents provided or to be provided to the Investor
      do not contain any express or implied representation that such estimates will
      be
      attained. The Investor acknowledges that the tax consequences to the Investor
      of
      investing in the Units will depend on the Investor’s particular circumstances,
      and neither the Company, nor its agents, officers, directors, employees,
      affiliates or consultants or any of them will be responsible or liable for
      the
      tax consequences to the Investor of an investment in the Company. The Investor
      will look solely to, and rely solely upon, the Investor’s own advisors with
      respect to the tax consequences of this investment. The Investor
      understands that the Units, Shares, Warrants and Underlying Shares are
      being offered and sold to it in reliance upon specific exemptions from the
      registration requirements of United States federal and state securities laws
      and
      that the Company is relying upon the truth and accuracy of, and
      the Investor’s compliance with, the representations, warranties,
      agreements, acknowledgments and understandings of the Investor set forth
      herein in order to determine the availability of such exemptions and the
      eligibility of the Investor to acquire the Units, Shares, Warrants and
      Underlying Shares.

     

    
      
        
        

      

      
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    3.3 Access
      to Information.
      The
      Investor has received and carefully reviewed the Transaction Agreements and
      all
      other documents requested by such Investor, related to and to be executed in
      connection with the Investor’s investment in the Units and other transactions
      contemplated hereby (the “Additional
      Documents”).
      The
      Investor has either attended or been given reasonable opportunity to attend
      a
      meeting with representatives of the Company for the purpose of asking questions
      of, and receiving answers from, such representatives concerning the business
      of
      the Company and the terms and conditions of the offering of the Units. Except
      as
      set forth in the Transaction Agreements and the Additional Documents, no
      representations or warranties, whether written or oral, have been made to the
      Investor by the Company or any officer, employee or agent of the
      Company.

    

    3.4 Purchase
      Entirely for Own Account.
      The
      Investor is acquiring the Units and Underlying Shares for investment purposes
      for the Investor’s own account, not as a nominee or agent, and not with a view
      to the distribution of any part thereof. The Investor has no present intention
      of selling, granting any participation in or otherwise distributing the Units
      or
      Underlying Shares.

    

    3.5 Restricted
      Securities.
      The
      Investor realizes that: (a) neither the Units nor the Shares and Warrants
      comprising the Units have been registered under the Securities Act or registered
      or qualified under any state securities or “blue sky” laws, are characterized
      under the Securities Act as “restricted securities” and, therefore, cannot be
      sold or transferred unless they are subsequently registered under the Securities
      Act or an exemption from such registration is available, and (b) there is
      presently no public market for the Units, or Shares and Warrants comprising
      the
      Units, and only a limited public market for the Underlying Shares and no public
      market for the Units, or Shares and Warrants comprising the Units, is expected
      to develop and, due to the limited public market for the Underlying Shares,
      the
      Investor may not be able to liquidate its investment or pledge the Shares and/or
      Warrants as collateral security for loans. The Investor represents that it
      is
      familiar with Rule 144 under the Securities Act as presently in effect, and
      understands the resale limitations imposed thereby and by the Securities Act
      including the requirement that the Shares and/or Underlying Shares must be
      held
      for at least one year after purchase thereof from the Company prior to resale
      (two years in the absence of publicly available information about the Company)
      and the condition that there be available to the public current information
      about the Company under certain circumstances. The Investor acknowledges that
      the Company is under no obligation to register or qualify the Shares and/or
      Underlying Shares under the Securities Act or under any state or foreign
      securities law, or to assist the Investor in complying with any exemption from
      registration and qualification. The Investor understands that the Company will
      rely upon the accuracy and truth of the foregoing representations and the
      Investor hereby consents to such reliance. The Investor is also aware that
      sales
      or transfers of the Shares and/or Underlying Shares may be further restricted
      by
      state and foreign securities laws and that the certificates for the Shares
      and/or Underlying Shares will bear appropriate legends restricting their
      transfer.

     

    
      
        
        

      

      
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    3.6 Residency.
      For
      purposes of the application of state securities laws, each Investor represents
      that it is a bona fide resident of the state set forth in such Investor’s
      address on the signature pages hereof.

    

    3.7 Legend.
      It
      is
      understood that the certificates evidencing the Shares may bear a legend such
      as
      the following:

    

    “THE
      SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE LAW, AND NO
      INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR
      OTHERWISE TRANSFERRED UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT
      UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION
      INVOLVING SAID SECURITIES, (ii) NATALMA INDUSTRIES INCORPORATED (“COMPANY”)
      RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF THESE SECURITIES
      SATISFACTORY TO THE COMPANY STATING THAT SUCH TRANSACTION IS EXEMPT FROM
      REGISTRATION, OR (iii) THE COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH
      TRANSACTION IS EXEMPT FROM REGISTRATION. TRANSFER OF THESE SECURITIES IS FURTHER
      RESTRICTED AS PROVIDED IN THE UNIT PURCHASE AGREEMENT, A COPY OF WHICH IS
      AVAILABLE AT THE COMPANY’S OFFICES.”

    

    3.8 Accreditation.
      The
      Investor represents and warrants that it is an “accredited investor,” as defined
      in Rule 501 of Regulation D promulgated by the SEC under the Securities Act.
      Any
      and all accounts for which the Investor is acting (including its own) is able
      to
      bear the economic risks of this investment and to withstand a total loss of
      its
      investment. If the Investor is acquiring the Units as a fiduciary or agent
      for
      another investor’s account, the Investor has sole investment and voting
      discretion with respect to such account and has full power to make the
      acknowledgments, representations and agreements contained herein on behalf
      of
      such account.

    

    3.9 Investor’s
      Review.
      The
      Investor has relied on its own examination of the Company and the terms of
      the
      offering, including the merits and risks involved in making an investment in
      the
      Units. The Investor acknowledges that it has had the opportunity to review
      this
      Agreement, the Schedules and Exhibits attached hereto and the other agreements
      referred to herein and the transactions contemplated hereby with its own legal
      counsel and tax and investment advisor. The Investor is relying solely on such
      counsel and advisors for legal, tax and investment advice with respect to the
      transactions contemplated by this Agreement, except that this Section 3.9 does
      not limit or modify the representations and warranties of the Company set forth
      in Section 2 of this Agreement or the right of the Investor to rely thereon.
      The
      Investor has been informed and understands that the Company’s offering documents
      and offering materials, if any, and any statements made to the Investor have
      not
      been reviewed or passed upon by the Company’s counsel, accountants or other
      independent parties.

     

    
      
        
        

      

      
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    3.10 Brokers
      or Finders.
      Neither
      the Investor nor any of its officers, directors, employees, or shareholders
      has
      employed or made any agreement with any broker, finder or similar agent or
      any
      person or firm, which will result in the obligation of the Company to pay any
      finder's fee in connection with the Agreement or the transactions contemplated
      hereby.

    

    4.
       CONDITIONS
      OF THE INVESTORS’ OBLIGATIONS AT THE CLOSING.
      The
      obligations of the Investors under subsection 1.1 is subject to the fulfillment
      by the Company at or before the Closing, of each of the following conditions,
      the waiver of which shall not be effective against any Investor which does
      not
      consent in writing thereto:

    

    4.1 Representations
      and Warranties.
      The
      representations and warranties of the Company contained in Section 2 shall
      be
      true and correct on and as of the Closing with the same effect as though such
      representations and warranties had been made as of the date of the
      Closing.

    

    4.2 Performance.
      The
      Company shall have performed and complied in all material respects with all
      agreements, covenants, obligations and conditions contained in this Agreement
      that are required to be performed or complied with by it on or before the
      Closing.

    

    4.3 Qualifications.
      The
      Company shall have obtained all necessary authorizations, approvals, permits
      and
      qualifications, if any, or have the availability of exemptions or waivers
      therefrom, for the offer and sale of the Units.

    

    4.4 Stock
      Certificates.
      The
      Company is delivering to each Investor a certificate or certificates, duly
      executed on behalf of the Company, for the shares of Common Stock and Warrants
      purchased by such Investor and such Investor is delivering to the Company the
      full purchase price for such shares of Common Stock and Warrants in accordance
      with Section 1.2 hereof.

    

    4.5 Asset
      Purchases.
      The
      Company, or its subsidiaries, shall have completed the Aerogroup
      Acquisition.

    

    4.6
       Additional
      Documents.
      At
      the
      Closing Date, such ancillary certificates and documents required for closing
      the
      transactions contemplated hereby, as each Investor may reasonably request,
      shall
      have been delivered to such Investor including, but not limited to, a good
      standing certificate, any necessary waivers or consents, proprietary information
      and inventions agreements and key man life insurance.

     

    
      
        
        

      

      
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    5. CONDITIONS
      OF THE COMPANY’S OBLIGATIONS AT THE CLOSING.
      The
      obligations of the Company to each Investor under this Agreement are subject
      to
      the fulfillment by such Investor on or before the Closing of the following
      conditions by that Investor:

    

    5.1 Representations
      and Warranties.
      The
      representations and warranties of such Investor contained in Section 3 shall
      be
      true and correct in all material respects on and as of the Closing with the
      same
      effect as though such representations and warranties had been made as of the
      Closing.

    

    5.2 Payment
      of Purchase Price.
      Each
      Investor shall have delivered the purchase price specified in subsection 1.1
      to
      be delivered at the Closing, in the form specified in Section 1.2.

    

    5.3 Minimum
      Units Sold.
      The
      Company shall have sold, in the aggregate, a minimum of 500,000 Units in
      connection with this Offering.

    

    5.4 Securities
      Laws Qualification.
      The
      offer
      and sale to the Investors of the Units shall be qualified or exempt from
      registration or qualification under all applicable federal securities laws
      and
      Blue Sky laws.

    

    5.5 Performance.
      Each
      Investor shall have performed and complied in all material respects with all
      agreements, obligations and conditions contained in the Transaction Agreements
      that are required to be performed or complied with by it on or before the
      Closing. 

    

    5.6 Escrow
      Agreement. Each
      Investor shall have delivered to the Company a duly executed Escrow
      Agreement.

    

    6. COVENANTS
      OF THE COMPANY.

    

    6.1 Corporate
      Existence.
      The
      Company will maintain its corporate existence in good standing. The Company
      will
      comply with all applicable laws and regulations of the United States or any
      state or states thereof or of any political subdivisions thereof and of any
      governmental authority where failure to so comply could reasonably be expected
      to have a Material Adverse Effect.

    

    6.2 Inspection.
      The
      Company will permit each such Investor and any of its officers or employees,
      or
      any outside representatives designated by such Investor and reasonably
      satisfactory to the Company, to visit and inspect at the expense of such
      Investor any of the properties of the Company upon ten business days prior
      notice and during regular business hours without disruption of the Company’s
      operations, including their books and records (and to make photocopies thereof
      or extracts therefrom), and to discuss their affairs, finances and accounts
      with
      their officers, except with respect to trade secrets and similar confidential
      information. This right shall not exclude any right of inspection of any
      stockholders of the Company under applicable Nevada law.

     

    
      
        
        

      

      
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    6.3 Payment
      of Taxes and Maintenance of Property.
      The
      Company will:

    

    (a) pay
      and
      discharge promptly, or cause to be paid and discharged promptly when due and
      payable, all taxes, assessments and governmental charges or levies imposed
      upon
      it or upon its income or upon any of its property, real, personal or mixed,
      or
      upon any part thereof, as well as all material claims of any kind (including
      claims for labor, material and supplies) which, if unpaid, might by law become
      a
      lien or charge upon its property; provided, however, that the Company shall
      not
      be required to pay any such tax, assessment, charge, levy or claim while the
      amount, applicability or validity thereof is being contested in good faith
      by
      appropriate proceedings, provided that the Company shall have set aside on
      its
      books reserves (segregated to the extent required by generally accepted
      accounting principles) deemed adequate by it with respect thereto;
      and

    

    (b) maintain
      and keep, or cause to be maintained and kept, its properties in good repair,
      working order and condition, and from time to time make, or cause to be made,
      all repairs and renewals and replacements which in the opinion of the Company
      are necessary and proper so that the business carried on in connection therewith
      may be properly and advantageously conducted at all times.

    

    6.4 Insurance.
      The
      Company will:

    

    (a)
       keep
      or
      cause all of its insurable property or properties to be kept insured against
      loss or damage or fire and other risks;

    

    (b)
       maintain
      general liability insurance against claims for personal injury, death or
      property damage suffered by others upon or in or about the premises occupied
      by
      the Company or occurring as a result of the Company’s maintenance or operation
      of any automobiles, trucks or other vehicles or other facilities;
      and

    

    (c)
       maintain
      all such worker’s compensation or similar insurance as may be required under the
      laws of any state or jurisdiction in which it may be engaged in
      business.

    

    All
      insurance for which provision has been made in this Section 6.4 shall be
      maintained in the amounts and to the extent determined to be reasonable by
      the
      Board. All such insurance shall be effected and maintained in force under a
      policy or policies issued by insurers of recognized responsibility, except
      that
      the Company may effect worker’s compensation or similar insurance in respect of
      operations in any state or other jurisdiction either through an insurance fund
      operated by such state or other jurisdiction or by causing to be maintained
      a
      system or systems of self insurance which is in accord with applicable
      laws.

    

    6.5 Compliance
      with Laws.
      The
      Company shall conduct its business in compliance, in all material respects,
      with
      all laws, rules, regulations, statutes, ordinances and other legal
      requirements.

     

    
      
        
        

      

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

    

    6.7 Reporting
      Status.
      So long
      as any Investor beneficially owns any of the Shares and/or Underlying Shares,
      the Company will use its best efforts to timely file all reports required to
      be
      filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate
      its status as an issuer required to file reports under the 1934 Act even if
      the
      1934 Act or the rules and regulations thereunder would permit such termination.
      

    

    6.8 Use
      of Proceeds.
      The
      Company shall use the proceeds from the sale of the Units for general working
      capital purposes, including, but not limited to, the acquisition of the assets
      set forth in Section 4.5 hereof.

    

    6.9 Reservation
      of Shares.
      The
      Company shall at all times have authorized, and reserved for the purpose of
      issuance, a sufficient number of shares of Common Stock to provide for the
      full
      exercise of the Warrants and issuance of the Underlying Shares in connection
      therewith (based on the Exercise Price of the Warrants in effect from time
      to
      time). The Company shall not reduce the number of shares of Common Stock
      reserved for issuance upon exercise of the Warrants without the consent of
      each
      Investor. If at any time the number of shares of Common Stock authorized and
      reserved for issuance is below the number of Underlying Shares issued and
      issuable exercise of the Warrants (based on the Exercise Price of the Warrants
      then in effect), the Company will promptly take all corporate action necessary
      to authorize and reserve a sufficient number of shares, including, without
      limitation, calling a special meeting of stockholders to authorize additional
      shares to meet the Company’s obligations under this Section 6.9, in the case of
      an insufficient number of authorized shares, and using its best efforts to
      obtain stockholder approval of an increase in such authorized number of
      shares.

    

    6.10 Listing.
      The
      Company shall and, so long as any Investor owns any of the Shares or Warrants,
      maintain the listing and trading of its Common Stock on the OTCBB, the Nasdaq
      National Market (“Nasdaq”),
      the
      Nasdaq SmallCap Market (“Nasdaq
      SmallCap”),
      the
      New York Stock Exchange (“NYSE”),
      or
      the American Stock Exchange (“AMEX”)
      and
      will comply in all respects with the Company’s reporting, filing and other
      obligations under the bylaws or rules of the National Association of Securities
      Dealers (“NASD”)
      and
      such exchanges, as applicable. The Company shall promptly provide to each
      Investor copies of any notices it receives from the OTCBB and any other
      exchanges or quotation systems on which the Common Stock is then listed
      regarding the continued eligibility of the Common Stock for listing on such
      exchanges and quotation systems.

    

    6.11 No
      Integration.
      The
      Company shall not make any offers or sales of any security (other than the
      Units) under circumstances that would require registration of the Units being
      offered or sold hereunder under the 1933 Act or cause the offering of the Units
      to be integrated with any other offering of securities by the Company for the
      purpose of any stockholder approval provision applicable to the Company or
      its
      securities.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    6.12 Binding
      Agreement.
      By
      execution of this Agreement, Investor and Company shall be entitled to any
      and
      all benefits, and subject to any and all obligations, of the Transaction
      Agreements.

    

    7. FEES.
      Each
      of
      the Company and the Investor shall be responsible for and bear all of its own
      costs and expenses incurred in connection with the transactions contemplated
      herein, including expenses of its financial, legal and accounting advisors,
      and
      no other party shall be responsible for any such costs and expenses of such
      party. 

    

    8. MISCELLANEOUS.

    

    8.1 Notices.
      Any
      notice or other communications required or permitted hereunder shall be deemed
      to be sufficient if contained in a written instrument delivered in person or
      duly sent by first class certified mail, postage prepaid, by reputable overnight
      courier or such other address as may hereafter be designated in writing by
      the
      addressee to the other parties:

    

    if
      to the
      Company, to:

    

    Tactical
      Air Defense Services, Inc.

    1550
      Ostler Ct

    N
      Vancouver Canada V7G2P7

    Attn.:
      Derick Sinclair

    

    if
      to the
      Investors, to each of the Investors at the address listed on Schedule
      A.

    

    with
      a
      copy in either case to:

    

    Hodgson
      Russ LLP

    60
      E. 42
      Street, 37th Floor

    New
      York,
      NY 11106

    Attn:
      Jeffrey A. Rinde

    

    or,
      in
      any case, at such other address or addresses as shall have been furnished in
      writing by such party to the other parties hereto. All such notices, requests,
      consents and other communications shall be deemed to have been received (a)
      in
      the case of personal delivery, on the date of such delivery, (b) in the case
      of
      mailing, on the fifth business day following the date of such mailing and (c)
      in
      the case of overnight courier, on the second next business day.

    

    8.2 Confidentiality.

     

    (a) Investor
      acknowledges that, pursuant to this Agreement, it may be given access to or
      may
      become acquainted with certain information, trade secrets or both, of Company,
      including but not limited to, contemplated corporate transactions, confidential
      information and trade secrets regarding procedures, methods, customers,
      policies, marketing, pricing, customer lists and other information and know-how,
      all relating to or useful to Company (collectively, the “Confidential
      Information”),
      and
      the exclusive property of Company.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    

    (b) Investor
      shall not in any manner, either directly or indirectly, divulge, disclose or
      communicate to any person or entity, any of the Confidential
      Information.

    

    (c) Investor
      acknowledges that the Company is subject to the restrictions imposed by
      Regulation FD thereunder. The Investor agrees that it will not: (i) use the
      Confidential Information for the purpose of trading in the Company’s common
      stock, or any other securities, and will take all steps necessary to prevent
      use
      by its employees or agents (if any) of the Confidential Information for such
      purpose, (ii) disclose such Confidential Information to any other party for
      the
      purpose of trading in the Company’s common stock. 

    

    (d) Investor
      acknowledges that disclosure of any Confidential Information by Investor will
      give rise to irreparable injury to Company or the owner of such information,
      inadequately compensable in damages. Accordingly, Company or such other party
      may seek and obtain injunctive relief against the breach or threatened breach
      of
      the foregoing undertakings, in addition to any other legal remedies that may
      be
      available. Investor acknowledges and agrees that the covenants contained herein
      are necessary for the protection of legitimate business interests of Company,
      its subsidiaries and/or affiliated companies and are reasonable in scope and
      content.

    

    8.3 Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York as they apply to contracts entered into and to be wholly
      performed within such state, without regard to conflicts of laws
      principles.

    

    8.4 Submission
      to Jurisdiction.
      (a)
      The
      Investors hereby irrevocably submit to the nonexclusive jurisdiction of any
      federal or state court sitting in the County and State of New York in any action
      or proceeding arising out of or relating to this Agreement, and the Investors
      hereby irrevocably agree that all claims in respect of such action or proceeding
      may be heard and determined in any such court. The Investors irrevocably consent
      to the service of any and all process in any such action by proceeding by the
      mailing via registered or certified mail of copies of such process to the
      Investors at their addresses specified on Schedule
      A
      hereto.

    

    (b) The
      Investors hereby irrevocably waive any objection which they may now or hereafter
      have to the laying of venue of any suit, action or proceeding arising out of
      or
      relating to this Agreement brought in any federal or state court sitting in
      the
      County and State of New York and hereby further irrevocably waives any claim
      that any such suit, action or proceeding brought in any such court has been
      brought in any inconvenient forum.

    

    8.5 Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original and all of which together constitute one and the same
      instrument.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

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

    

    8.7 Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the respective
      successors and assigns of the parties. Nothing in this Agreement, express or
      implied, is intended to confer upon any party other than the parties hereto
      or
      their respective successors and assigns any rights, remedies, obligations or
      liabilities under or by reason of this Agreement, except as expressly provided
      in this Agreement.

    

    8.8 Future
      Expenses; Attorneys’ Fees.
      If
      any
      action at law or in equity is necessary, to enforce or interpret the terms
      of
      this Agreement, the prevailing party shall be entitled to reasonable attorneys’
fees, costs and necessary disbursements in addition to any other relief to
      which
      such party may be entitled.

    

    8.9 Finders’
      Fees.
      Each
      Investor agrees to indemnify and hold harmless the Company from any liability
      for any commission or compensation in the nature of a finder’s fee (and the
      costs and expenses of defending against such liability or asserted liability)
      for which such Investor or any of its officers, partners, employees or
      representatives is responsible. The Company agrees to indemnify and hold
      harmless each Investor from any liability for any commission or compensation
      in
      the nature of a finder’s fee (and the costs and expenses of defending against
      such liability or asserted liability) for which the Company or any of its
      officers, employees or representatives is responsible.

    

    8.10 Severability.
      If
      one or
      more provisions of this Agreement are held to be unenforceable under applicable
      law, such provision shall be excluded from this Agreement, and the balance
      of
      this Agreement shall be interpreted as if such provision were so excluded and
      shall be enforceable in accordance with its terms.

    

    8.11 Survival
      of Representations and Warranties.
      The
      representations and warranties contained herein shall survive the Closing until
      the second anniversary of the date hereof, as applicable.

    

    8.12 Currency.
      Unless
      otherwise indicated, all dollar denominations specified herein shall be in
      United States dollars.

    

    8.13 Waiver
      of Jury Trial.
      THE
      COMPANY AND THE INVESTORS HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY
      IN
      ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
      OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT. THE EXCLUSIVE FORUM
      FOR
      ANY ACTION BETWEEN THE COMPANY AND INVESTORS ARISING OUT OF OR RELATED TO THIS
      AGREEMENT SHALL BE THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK,
      AND EACH PARTY AGREES THAT SUCH COURTS HAVE JURISDICTION AND ARE A PROPER VENUE
      AND CONVENIENT FORUM FOR ANY SUCH ACTION.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

    8.14
      Entire
      Agreement.
      This
      Agreement and the other documents delivered at the Closing constitute the full
      and entire understanding and agreement between the parties with respect to
      the
      subject matter hereof and supersede all prior agreements with respect to the
      subject matter hereof. 

     

    

    [THE
      REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    COUNTERPART
      SIGNATURE PAGE TO THE UNIT PURCHASE AGREEMENT, DATED __________,
      2006

    

    IN
      WITNESS WHEREOF,
      the
      parties have executed this Agreement on the date first above written.

    
      	 	 	 
	 	
              TACTICAL
                AIR DEFENSE SERVICES, INC.

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
Name:

	 	Title: President

    

    

      	 	 	 
	 	INVESTOR:
	 
 	 

	 	
              

            
	
            	Name: 
              	
            
	 	 	
              

            
	 	Address:  	
            
	 	 	
              
 
	 	
              
 
	 	
              
 

    

     

     

    
      	 	Aggregate Principal
              Amount of
              Units:	
              ______________

            
	 	 	 
	 	Aggregate Purchase Price:	
              ______________

            

    

     

     

    
      
        
        

      

      
        21

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