Document:

ex4_1.htm

    
      

    

    Exhibit
      4.1

     

    SECURITIES
      PURCHASE AGREEMENT

     

    THIS
      SECURITIES PURCHASE AGREEMENT (this
“Agreement”), dated as of December 7, 2007, by and
      among Planetlink
      Communications, Inc, a Georgia corporation (the “Company”), and the
      Buyers listed on Schedule I attached hereto (individually, a “Buyer”
or collectively “Buyers”).

     

    WITNESSETH:

     

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

     

    WHEREAS,
      the parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Buyer(s), as provided herein,
      and the Buyer(s) shall purchase Five Hundred Thousand Dollars ($500,000) of
      secured convertible debentures (the “Convertible Debentures”), which
      shall be convertible into shares of the Company’s common stock, (the “Common
      Stock”) (as converted, the “Conversion Shares”) all of
      which  shall be funded to the Company on the date hereof (the
“Closing, for a total purchase price of Five Hundred Thousand Dollars
      ($500,000), (the “Purchase Price”) in the respective amounts set forth
      opposite each Buyer(s) name on Schedule I (the “Subscription Amount”);
      and

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering a Registration Rights Agreement
      substantially in the form attached hereto as Exhibit A (the “Investor
      Registration Rights Agreement”) pursuant to which the Company has agreed to
      provide certain registration rights under the 1933 Act and the rules and
      regulations promulgated there under, and applicable state securities laws;
      and

     

    WHEREAS,
      the proceeds of the sale of the Convertible Debentures contemplated hereby
      shall
      be held in escrow pursuant to the terms of an escrow agreement substantially
      in
      the form of the Escrow Agreement attached hereto as Exhibit B (the “Escrow
      Agreement”); and

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering Irrevocable Transfer Agent Instructions
      substantially in the form attached hereto as Exhibit C (the
“Irrevocable Transfer Agent Instructions”); and

     

    WHEREAS,
      contemporaneously with the execution and delivery of this Agreement, the parties
      hereto are executing and delivering a Security Agreement substantially in the
      form attached hereto as Exhibit D (the “Security Agreement”)
      pursuant to which the Company has agreed to provide the Buyer a security
      interest in Pledged Collateral (as this term is defined in the Security
      Agreement dated the date hereof) to secure Company’s obligations under this
      Agreement, the Convertible Debenture, the Investor Registration Rights
      Agreement, the Irrevocable Transfer Agent Instructions and the Security
      Agreement (collectively, the “Transaction Documents”) or any other obligations
      of the Company to the Buyer; and

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    1.      PURCHASE
      AND SALE OF CONVERTIBLE DEBENTURES.

     

    (a)           Purchase
      of Convertible Debentures.  Subject to the satisfaction (or
      waiver) of the terms and conditions of this Agreement, each Buyer agrees,
      severally and not jointly, to purchase at Closing (as defined herein below)
      and
      the Company agrees to sell and issue to each Buyer, severally and not jointly,
      at Closing, Convertible Debentures in amounts corresponding with the
      Subscription Amount set forth opposite each Buyer’s name on Schedule I
      hereto.  Upon execution hereof by a Buyer, the Buyer shall wire
      transfer the Subscription Amount set forth opposite his name on Schedule I
      in
      same-day funds or a check payable to ”James G. Dodrill II, P.A. as Escrow Agent
      for Planetlink/Trafalgar Capital Investment Fund”, which Subscription Amount
      shall be held in escrow pursuant to the terms of the Escrow Agreement (as
      hereinafter defined) and disbursed in accordance
      therewith.  Notwithstanding the foregoing, a Buyer may withdraw his
      Subscription Amount and terminate this Agreement as to such Buyer at any time
      after the execution hereof and prior to the Closing (as hereinafter
      defined).

     

    (b)           Closing
      Date.  The Closing of the purchase and sale of the Convertible
      Debentures shall take place at 10:00 a.m. Eastern Standard Time on the date
      hereof, subject to notification of satisfaction of the conditions to the Closing
      set forth herein and in Sections 6 and 7 below (or such later date as is
      mutually agreed to by the Company and the Buyer(s)) (the “Closing
      Date”),.  The Closing shall occur on the Closing Date at the
      offices of James G. Dodrill II, P.A., 5800 Hamilton Way, Boca Raton,
      FL  33496 (or such other place as is mutually agreed to by the Company
      and the Buyer(s)).

     

    (c)           Escrow
      Arrangements; Form of Payment.  Upon execution hereof by Buyer(s) the
      full amount of the portion of the Purchase Price for the Convertible Debentures
      to be purchased in the Closing shall be deposited in an escrow account with
      James G. Dodrill II, P.A., as escrow agent (the “Escrow Agent”), pursuant to the
      terms of the Escrow Agreement.  Such portion of the Purchase Price for
      the Convertible Debentures to be purchased in the other Closings shall be
      deposited into the Escrow Account prior to such applicable Closing
      Date.  Subject to the satisfaction of the terms and conditions of this
      Agreement, on the Closing Dates, (i) the Escrow Agent shall deliver to the
      Company in accordance with the terms of the Escrow Agreement that portion of
      the
      Escrow Funds (as that term is defined in the Escrow Agreement) equal to the
      gross amount of the Convertible Debentures being purchased by such Buyer(s)
      as
      set forth on  Schedule I (minus the fees and expenses as set forth
      herein which shall be paid directly from the Escrow Funds at the
      Closing) by wire transfer of immediately available funds and
      (ii) the Company shall deliver to each Buyer, Convertible Debentures which
      such Buyer(s) is purchasing in amounts indicated opposite such Buyer’s name on
      Schedule I, duly executed on behalf of the Company.

     

    (d)           “Closing
      Date Exchange Rate” means the Euro to US dollar spot exchange rate as quoted in
      the London edition of the Financial Times on the applicable Closing
      Date.

    
      
        
        

      

      
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    (e)
                 “Repayment
      Exchange Rate” means in relation to each date of a
      Conversion Notice or date of a Redemption Notice, the Euro
      to US dollar spot exchange rate as quoted in the London edition of the Financial
      Times on such date.

     

    (f)           If
      on the date of any Conversion Notice or Redemption Notice, the Repayment
      Exchange Rate is less than the Closing Date Exchange Rate then the number of
      Shares to be issued shall be increased by the same percentage as results from
      dividing the Closing Date Exchange Rate by the relevant Repayment Exchange
      Rate.  By way of example, if the number of Shares to be issued in
      respect of a particular Conversion Notice or Redemption Notice would, but for
      this Clause 1(f), be 1,000 and if the Closing Date Exchange Rate is 1.80 and
      the
      relevant Repayment Exchange Rate is 1.75, then 1,029 Shares will be issued
      in
      relation to that Conversion Notice or Redemption Notice, as the case may
      be.

     

    (g)           If
      on the Repayment Date or any Interest Repayment Date, the Cash Payment Date
      Exchange Rate, as defined below is less than the Closing Date Exchange Rate
      then
      the amount of cash required to satisfy the amounts due at such time shall be
      increased by the same percentage as results from dividing the Closing Date
      Exchange Rate by the relevant Cash Payment Date Exchange Rate. “Cash Payment
      Date Exchange Rate” means in
      relation to each Repayment Date or Interest Repayment Date
      the Euro to US dollar spot exchange
      rate as quoted in the London edition of the Financial Times on such
      date.  By way of example, if the amount of cash required to repay all
      amounts due on such date would, but for this Clause 1(g), be $1,000 and if
      the
      Closing Date Exchange Rate is 1.80 and the relevant Repayment Date Exchange
      Rate
      is 1.75 then the amount of cash from the Cash Payment required to repay all
      amounts due on such date will be $1,028.57.

     

    2.      BUYER’S
      REPRESENTATIONS AND WARRANTIES.

     

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

     

    (a)           Investment
      Purpose.  Each Buyer is acquiring the Convertible Debentures and,
      upon conversion of Convertible Debentures, the Buyer will acquire the Conversion
      Shares then issuable, for its own account for investment only and not with
      a
      view towards, or for resale in connection with, the public sale or distribution
      thereof, except pursuant to sales registered or exempted under the 1933 Act;
      provided, however, that by making the representations herein, such Buyer
      reserves the right to dispose of the Conversion Shares at any time in accordance
      with or pursuant to an effective registration statement covering such Conversion
      Shares or an available exemption under the 1933 Act.

     

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

     

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

    
      
        
        

      

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

     

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

     

    (f)           Transfer
      or Resale.  Each Buyer understands that except as provided in the
      Investor Registration Rights Agreement: (i) the Convertible Debentures have
      not
      been and are not being registered under the 1933 Act or any state securities
      laws, and may not be offered for sale, sold, assigned or transferred unless
      (A)
      subsequently registered thereunder, or (B) such Buyer shall have delivered
      to
      the Company an opinion of counsel selected by Buyer, in a generally acceptable
      form, to the effect that such securities to be sold, assigned or transferred
      may
      be sold, assigned or transferred pursuant to an exemption from such registration
      requirements; (ii) any sale of such securities made in reliance on Rule 144
      under the 1933 Act (or a successor rule thereto) (“Rule 144”)
      may be made only in accordance with the terms of Rule 144 and further, if Rule
      144 is not applicable, any resale of such securities under circumstances in
      which the seller (or the person through whom the sale is made) may be
      deemed to be an underwriter (as that term is defined in the 1933 Act) may
      require compliance with some other exemption under the 1933 Act or the rules
      and
      regulations of the SEC thereunder; and (iii) neither the Company nor any other
      person is under any obligation to register such securities under the 1933 Act
      or
      any state securities laws or to comply with the terms and conditions of any
      exemption thereunder.  The Company reserves the right to place stop
      transfer instructions against the shares and certificates for the Conversion
      Shares.

     

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

    
      
        
        

      

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

            	
               

            

    

     

    The
      legend set forth above shall be removed and the Company within two (2) business
      days shall issue a certificate without such legend to the holder of the
      Conversion Shares upon which it is stamped, if, unless otherwise required by
      state securities laws, (i) in connection with a sale transaction, provided
      the
      Conversion Shares are registered under the 1933 Act or (ii) in connection with
      a
      sale transaction, after such holder provides the Company with an opinion of
      counsel, which opinion shall be in form, substance and scope reasonably
      acceptable to counsel for the Company, to the effect that a public sale,
      assignment or transfer of the Conversion Shares may be made without registration
      under the 1933 Act.

     

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

     

    (i)           Receipt
      of Documents.  Each Buyer and his or its counsel has received and
      read in their entirety:  (i) this Agreement and each representation,
      warranty and covenant set forth herein, the Security Agreement, the Investor
      Registration Rights Agreement, the Escrow Agreement, and the Irrevocable
      transfer Agent Instructions; (ii) all due diligence and other information
      necessary to verify the accuracy and completeness of such representations,
      warranties and covenants; and (iii) answers to all questions each Buyer
      submitted to the Company regarding an investment in the Company; and each Buyer
      has relied on the information contained therein and has not been furnished
      any
      other documents, literature, memorandum or prospectus.

     

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

    
      
        
        

      

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

     

    3.      REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

     

    The
      Company represents and warrants as of the date hereof and as of the Closing
      Date
      to each of the Buyers that:

     

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

     

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

     

    (c)           Capitalization.  The
      authorized capital stock of the Company consists of _________________ shares
      of
      Common Stock, par value $_______ per share and ______________ shares of
      Preferred Stock.  As of the date hereof, the Company has
      ___________________ shares of Common Stock and _________ shares of Preferred
      Stock issued and outstanding.  All of such outstanding shares have
      been validly issued and are fully paid and nonassessable.  No shares
      of Common Stock are subject to preemptive rights or any other similar rights
      or
      any liens or encumbrances suffered or permitted by the Company.  As of
      the date of this Agreement, (i) there are no outstanding options, warrants,
      scrip, rights to subscribe to, calls or commitments of any character whatsoever
      relating to, or securities or rights convertible into, any shares of capital
      stock of the Company or any of its subsidiaries, or contracts, commitments,
      understandings or arrangements by which the Company or any of its subsidiaries
      is or may become bound to issue additional shares of capital stock of the
      Company or any of its subsidiaries or options, warrants, scrip, rights to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, any shares of capital stock of the
      Company or any of its subsidiaries, (ii) there are no outstanding debt
      securities and (iii) there are no agreements or arrangements under which the
      Company or any of its subsidiaries is obligated to register the sale of any
      of
      their securities under the 1933 Act (except pursuant to the Registration Rights
      Agreement) and (iv) there are no outstanding registration statements and there
      are no outstanding comment letters from the SEC or any other regulatory
      agency.  There are no securities or instruments containing
      anti-dilution or similar provisions that will be triggered by the issuance
      of
      the Convertible Debentures as described in this Agreement.  The
      Company has furnished to the Buyer true and correct copies of the Company’s
      Certificate of Incorporation, as amended and as in effect on the date hereof
      (the “Certificate of Incorporation”), and the Company’s By-laws, as in
      effect on the date hereof (the “By-laws”), and the terms of all
      securities convertible into or exercisable for Common Stock and the material
      rights of the holders thereof in respect thereto other than stock options issued
      to employees and consultants.

    
      
        
        

      

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

     

    (e)           No
      Conflicts.  The execution, delivery and performance of this
      Agreement and the Transaction Documents by the Company and the consummation
      by
      the Company of the transactions contemplated hereby will not (i) result in
      a
      violation of the Articles of Incorporation or the By-laws or (ii), to
      the  knowledge of the Company, conflict with or constitute a default
      (or an event which with notice or lapse of time or both would become a default)
      under, or give to others any rights of termination, amendment, acceleration
      or
      cancellation of, any agreement, indenture or instrument to which the Company
      or
      any of its subsidiaries is a party, or result in a violation of any law, rule,
      regulation, order, judgment or decree (including United States federal and
      state
      securities laws and regulations and the rules and regulations of The National
      Association of Securities Dealers Inc.’s OTC Bulletin Board on which the Common
      Shares may be quoted) applicable to the Company or any of its subsidiaries
      or by
      which any property or asset of the Company or any of its subsidiaries is bound
      or affected.  To the best knowledge of the Company, neither the
      Company nor its subsidiaries is in violation of any term of or in default under
      its Articles of Incorporation or By-laws or their organizational charter or
      by-laws, respectively, or, any material contract,
      agreement, mortgage, indebtedness, indenture, instrument, judgment, decree
      or
      order or any statute, rule or regulation applicable to the Company or its
      subsidiaries.  The business of the Company and its subsidiaries is not
      being conducted, and shall not be conducted in violation of any material law,
      ordinance, or regulation of any governmental entity.  Except as
      specifically contemplated by this Agreement and as required under the 1933
      Act
      and any applicable state securities laws, the Company is not required to obtain
      any consent, authorization or order of, or make any filing or registration
      with,
      any court or governmental agency in order for it to execute, deliver or perform
      any of its obligations under or contemplated by this Agreement in accordance
      with the terms hereof.  All consents, authorizations, orders, filings
      and registrations which the Company is required to obtain pursuant to the
      preceding sentence have been obtained or effected on or prior to the date
      hereof, except for any required post-Closing notice filings under applicable
      United States federal or state securities laws, if any.

    
      
        
        

      

      
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    (f)           SEC
      Documents: Financial Statements.  Since _________________ the
      Company has filed or furnished, as applicable, all reports, schedules, forms,
      statements and other documents required to be filed by it with the SEC under
      of
      the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of
      the foregoing filed prior to the date hereof or amended after the date hereof
      and all exhibits and schedules included therein and financial statements and
      schedules thereto and documents incorporated by reference therein, being
      hereinafter referred to as the “SEC Documents”).  The Company
      has delivered to the Buyers or their representatives, or made available through
      the SEC’s website at http://www.sec.gov, true and complete copies of the SEC
      Documents.  As of their respective dates, the financial statements of
      the Company included in the SEC Documents (the “Financial Statements”)
      complied as to form in all material respects with applicable accounting
      requirements and the published rules and regulations of the SEC with respect
      thereto as in effect at the time of filing.  Such financial statements
      have been prepared in accordance with U.S. generally accepted accounting
      principles, consistently applied, during the periods involved (except (i) as
      may
      be otherwise indicated in such Financial Statements or the notes thereto, or
      (ii) in the case of unaudited interim statements, to the extent they may exclude
      footnotes or may be condensed or summary statements) and, fairly present in
      all
      material respects the financial position of the Company as of the dates thereof
      and the results of its operations and cash flows for the periods then ended
      (subject, in the case of unaudited statements, to normal year-end audit
      adjustments).

     

    (g)           
      No Material Misstatement or Omission.  None of the Company’s SEC
      Documents at the time of filing and none of the representation and warranties
      made in this Agreement or any of the other  Transaction Documents
      include any untrue statements of material fact, nor do the Company’s SEC
      Documents at the time of filing and none of the representations and warranties
      made in this Agreement or any of the other Transaction Documents omit to state
      any material fact required to be stated therein necessary to make the statements
      made, in light of the circumstances under which they were made, not
      misleading.

     

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

    
      
        
        

      

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

     

    (j)           No
      General Solicitation.  Neither the Company, nor any of its
      affiliates, nor any person acting on its or their behalf, has engaged in any
      form of general solicitation or general advertising (within the meaning of
      Regulation D under the 1933 Act) in connection with the offer or sale of the
      Convertible Debentures or the Conversion Shares.

     

    (k)           No
      Integrated Offering.  Neither the Company, nor any of its
      affiliates, nor any person acting on its or their behalf has, directly or
      indirectly, made any offers or sales of any security or solicited any offers
      to
      buy any security, under circumstances that would require registration of the
      Convertible Debentures or the Conversion Shares under the 1933 Act or cause
      this
      offering of the Convertible Debentures or the Conversion Shares to be integrated
      with prior offerings by the Company for purposes of the 1933 Act.

     

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

     

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

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

    4.      COVENANTS.

     

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

     

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

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (c)           Reporting
      Status.  Until the earlier of (i) the date as of which the
      Buyer(s) may sell all of the Conversion Shares without restriction pursuant
      to
      Rule 144(k) promulgated under the 1933 Act (or successor thereto), or (ii)
      the
      date on which (A) the Buyer(s) shall have sold all the Conversion Shares and
      (B)
      none of the Convertible Debentures are outstanding (the “Registration
      Period”), the Company shall file in a timely manner all reports required to
      be filed with the SEC pursuant to the 1934 Act and the regulations of the SEC
      thereunder, and the Company shall not terminate its status as an issuer required
      to file reports under the 1934 Act even if the 1934 Act or the rules and
      regulations thereunder would otherwise permit such termination.

     

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

     

    (e)           Reservation
      of Shares.  The Company shall take all action reasonably necessary
      to at all times have authorized, and reserved for the purpose of issuance,
      such
      number of shares of Common Stock as shall be necessary to effect the issuance
      of
      the Conversion Shares and the issuance of the shares upon exercise of the
      Warrants (as defined below).  If at any time the Company does not have
      available such shares of Common Stock as shall from time to time be sufficient
      to effect the conversion of all of the Conversion Shares of the Company or
      the
      issuance of all shares upon exercise of the Warrants, the Company shall file
      a
      preliminary proxy statement with the Securities and Exchange Commission within
      ten (10) business day and shall call and hold a special meeting of the
      shareholders as soon as practicable after such occurrence, for the sole purpose
      of increasing the number of shares authorized.  The Company’s
      management shall recommend to the shareholders to vote in favor of increasing
      the number of shares of Common Stock authorized.  Management shall
      also vote all of its shares in favor of increasing the number of authorized
      shares of Common Stock.

     

    (f)           Fees
      and Expenses.  Other than as set forth herein, each of the Company
      and the Buyer(s) shall pay all costs and expenses incurred by such party in
      connection with the negotiation, investigation, preparation, execution and
      delivery of the Transaction Documents and any other documents relating to this
      transaction.

     

    (i)           The
      Company shall pay the Buyer a commitment fee of seven percent (7%) of that
      portion of the Purchase Price paid at the Closing, which shall be disbursed
      by
      the Escrow Agent from the Escrow Funds upon the Closing.

     

    (ii)           The
      Company has agreed to pay a structuring fee to Buyer of Fifteen Thousand Dollars
      ($15,000), Five Thousand Dollars ($5,000) of which has been paid and Ten
      Thousand Dollars ($10,000) of which shall be paid directly from the proceeds
      of
      the Closing.

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (iii)           The
      Company shall issue to the Buyer a warrant to purchase: one percent of the
      fully diluted outstanding shares of the Company’s Common Stock for a period of
      two (2) years at an aggregate exercise price equal to $0.0001
      (“Warrant”)  The Warrants shall be issued in full at the First Closing
      and shall be exercised on a cash basis provided that the Company is not in
      Default and the shares underlying the Warrants are subject to an effective
      registration statement.   Furthermore, Warrant A shall be subject
      to a leak-out provision which is satisfactory to both parties as set forth
      therein.

     

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

     

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

     

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

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (j)           Restriction
      on Issuance of the Capital Stock. So long as any Convertible Debentures are
      outstanding, the Company shall not, without the prior written consent of the
      Buyer(s), (i) issue or sell shares of Common Stock or Preferred Stock without
      consideration or for a consideration per share less than the bid price of the
      Common Stock determined immediately prior to its issuance, (ii) issue any
      preferred stock, warrant, option, right, contract, call, or other security
      instrument granting the holder thereof, the right to acquire Common Stock
      without consideration or for a consideration less than such Common Stock’s bid
      price value determined immediately prior to it’s issuance, (iii) enter into any
      security instrument granting the holder a security interest in any and all
      assets of the Company other than a security instrument that is subordinate
      to
      the interest of the Buyer, or (iv) file any registration statement on Form
      S-8.In the event that Buyer does provide its consent hereunder to issue any
      such
      securities described under (i), (ii) or (iv) of this Section, the Fixed Price
      as
      defined in the Convertible Debentures shall be equal to the lesser of: (a)
      the
      Fixed Price as defined in the Convertible Debentures and (b) eighty-five percent
      (85%) of the consideration paid per share for such security.

     

    (k)           Restriction
      on “Short” Position.  Neither the Buyer nor any of its affiliates
      have an open short position in the Common Stock of the Company, and the Buyer
      agrees that it shall not, and that it will cause its affiliates not to, engage
      in any short sales with respect to the Common Stock as long as any Convertible
      Debentures shall remain outstanding.

     

    (l)           Inventory
      Purchase Order Receivable Financing.  In the event the Company
      requires Inventory Purchase Order Receivable Financing, upon mutual agreement
      of
      the Company and the Buyer, the Buyer will provide such financing at then market
      rates.

     

    5.      TRANSFER
      AGENT INSTRUCTIONS.

     

    The
      Company shall issue the Irrevocable Transfer Agent Instructions to its transfer
      agent irrevocably appointing James G. Dodrill II, P.A. as its agent for purpose
      of having certificates issued, registered in the name of the Buyer(s) or its
      respective nominee(s), for the Conversion Shares representing such amounts
      of
      Convertible Debentures as specified from time to time by the Buyer(s) to the
      Company upon conversion of the Convertible Debentures, for interest owed
      pursuant to the Convertible Debenture, and for any and all Liquidated Damages
      (as this term is defined in the Investor Registration Rights
      Agreement).  James G. Dodrill II, P.A. shall be paid a cash fee of One
      Hundred Dollars ($100) for every occasion they act pursuant to the Irrevocable
      Transfer Agent Instructions.  The Company shall not change its
      transfer agent without the express written consent of the Buyer(s), which may
      be
      withheld by the Buyer(s) in its sole discretion.  Prior to
      registration of the Conversion Shares under the 1933 Act, all such certificates
      shall bear the restrictive legend specified in Section 2(g) of this
      Agreement.  The Company warrants that no instruction other than the
      Irrevocable Transfer Agent Instructions referred to in this Section 5, and
      stop
      transfer instructions to give effect to Section 2(g) hereof (in the case of
      the
      Conversion Shares prior to registration of such shares under the 1933 Act)
      will
      be given by the Company to its transfer agent and that the Conversion Shares
      shall otherwise be freely transferable on the books and records of the Company
      as and to the extent provided in this Agreement and the Investor Registration
      Rights Agreement.  Nothing in this Section 5 shall affect in any way
      the Buyer’s obligations and agreement to comply with all applicable securities
      laws upon resale of Conversion Shares.  If the Buyer(s) provides the
      Company with an opinion of counsel, in form, scope and substance customary
      for
      opinions of counsel in comparable transactions and reasonably acceptable to
      the
      Company’s counsel, to the effect that registration of a resale by the Buyer(s)
      of any of the Conversion Shares is not required under the 1933 Act, the Company
      shall within two (2) business days instruct its transfer agent to issue one
      or
      more certificates in such name and in such denominations as specified by the
      Buyer.  The Company acknowledges that a breach by it of its
      obligations hereunder will cause irreparable harm to the Buyer by vitiating
      the
      intent and purpose of the transaction contemplated
      hereby.  Accordingly, the Company acknowledges that the remedy at law
      for a breach of its obligations under this Section 5 will be inadequate and
      agrees, in the event of a breach or threatened breach by the Company of the
      provisions of this Section 5, that the Buyer(s) shall be entitled, in
      addition to all other available remedies, to an injunction restraining any
      breach and requiring immediate issuance and transfer, without the necessity
      of
      showing economic loss and without any bond or other security being
      required.

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

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

     

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

     

    (a)           Each
      Buyer shall have executed this Agreement, the Security Agreement, the Escrow
      Agreement and the Investor Registration Rights Agreement and delivered the
      same
      to the Company.

     

    (b)           The
      Buyer(s) shall have delivered to the Escrow Agent the Purchase Price for
      Convertible Debentures in respective amounts as set forth next to each Buyer
      as
      outlined on Schedule I attached hereto and the Escrow Agent shall have delivered
      the net proceeds to the Company by wire transfer of immediately available U.S.
      funds pursuant to the wire instructions provided by the Company.

     

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

     

    (d)           The
      Company shall have filed a form UCC-1 with regard to the Pledged Property and
      Pledged Collateral as detailed in the Security Agreement dated the date hereof
      and provided proof of such filing to the Buyer(s).

     

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

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

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

     

    (a)           The
      Company shall have executed this Agreement, the Security Agreement, the
      Convertible Debenture (in such amounts as purchased by Buyer(s) hereunder),
      the
      Escrow Agreement, the Irrevocable Transfer Instructions, the Warrant and the
      Investor Registration Rights Agreement, and delivered the same to the
      Buyer(s).

     

    (b)           The
      trading in the Common Shares on the OTCBB shall not have been suspended for
      any
      reason.

     

    (c)           The
      representations and warranties of the Company shall be true and correct in
      all
      material respects (except to the extent that any of such representations and
      warranties is already qualified as to materiality in Section 3 above, in which
      case, such representations and warranties shall be true and correct without
      further qualification) as of the date when made and as of the Closing Dates
      as
      though made at that time (except for representations and warranties that speak
      as of a specific date) and the Company shall have performed, satisfied and
      complied in all material respects with the covenants, agreements and conditions
      required by this Agreement to be performed, satisfied or complied with by the
      Company at or prior to the Closing Dates.  If requested by the Buyer,
      the Buyer shall have received a certificate, executed by the President of the
      Company, dated as of the Closing Dates, to the foregoing effect and as to such
      other matters as may be reasonably requested by the Buyer including, without
      limitation an update as of the Closing Dates regarding the representation
      contained in Section 3(c) above.

     

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

     

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

     

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

     

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

     

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

     

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

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

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

     

    (k)           Buyer’s
      due diligence shall have been completed to Buyer’s satisfaction.

     

    (l)           Closing
      of the acquisition by the Company of the operating company.

     

    8.      INDEMNIFICATION.

     

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

     

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

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    9.      GOVERNING
      LAW: MISCELLANEOUS.

     

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

     

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

     

    (c)           Recitals
      and Headings.  The recitals of this Agreement
      are an integral part of this Agreement and shall be incorporated herein as
      if
      made a part of this Agreement.  The headings of this
      Agreement are for convenience of reference and shall not form part of, or affect
      the interpretation of, this Agreement.

     

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

     

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

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

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

     

    
      	
              If
                to the Company, to:

            	  
	 	  
	
               

            	  
	 	
              Attention: 

            
	 	
              Telephone: 

            
	 	
              Facsimile: 

            
	 	  
	
              With
                a copy to:

            	  
	 	  
	 	  
	 	
              Attn:  

            
	 	
              Telephone: 

            
	 	
              Facsimile: 

            
	 	  
	
              If
                to the Transfer Agent, to:

            	  
	 	  
	 	  
	 	
              Attn: 

            
	 	
              Telephone: 

            
	 	
              Facsimile: 

            
	 	  
	
              With
                Copy to:

            	
              James
                G. Dodrill II, P.A. 

            
	 	
              5800
                Hamilton Way 

            
	 	
              Boca
                Raton, FL  33496 

            
	 	
              Attention:                                

            	Jim
              Dodrill, Esq.
	 	
              Telephone:                                

            	(561)
              862-0529
	 	
              Facsimile:                                

            	(561)
              892-7787

    

     

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

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Buyers and the Company have caused this
      Securities Purchase Agreement to be duly executed as of the date first written
      above.

     

    

    
      	 	
              COMPANY:

            
	 	
              PLANETLINK
                COMMUNICATIONS, INC.

            
	 	 
	 	
              By:

            	
               

            
	 	
              Name:

            
	 	
              Title:  CEO

            

    

    

    

    
      	 	
              BUYER:

            
	 	 
	 	 
	 	
              By:

            
	 	
              Its:

            
	 	 
	 	
              By:

            	
               

            
	 	
              Name:

            
	 	
              Title:

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    FORM
      OF INVESTOR REGISTRATION RIGHTS AGREEMENT

    

     

    INVESTOR
      REGISTRATION RIGHTS AGREEMENT

     

    THIS
      REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of
      December 7, 2007, by and among PLANETLINK COMMUNICATIONS, INC.,
a Georgia corporation, (the “Company”), and the undersigned
      investors (each, an “Investor” and collectively, the
“Investors”).

     

    WHEREAS:

     

    A.           In
      connection with the Securities Purchase Agreement by and among the parties
      hereto of even date herewith (the “Securities Purchase
      Agreement”), the Company has agreed, upon the terms and subject to the
      conditions of the Securities Purchase Agreement, to issue and sell to the
      Investors secured convertible debentures (the “Convertible Debentures”)
      which shall be convertible into that number of shares of the Company’s common
      stock (the “Common Stock”), pursuant to the terms of the Securities
      Purchase  Agreement for an aggregate purchase price of Five Hundred
      Thousand U.S. Dollars ($500,000).  Capitalized terms not defined
      herein shall have the meaning ascribed to them in the Securities Purchase
      Agreement.

     

    B.           To
      induce the Investors to execute and deliver the Securities Purchase Agreement,
      the Company has agreed to provide certain registration rights under the
      Securities Act of 1933, as amended, and the rules and regulations there under,
      or any similar successor statute (collectively, the “1933 Act”), and
      applicable state securities laws.

     

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

     

    10.           DEFINITIONS.

     

    As
      used
      in this Agreement, the following terms shall have the following
      meanings:

     

    (a)           “Person”
      means a corporation, a limited liability company, an association, a partnership,
      an organization, a business, an individual, a governmental or political
      subdivision thereof or a governmental agency.

     

    (b)           “Register,”
      “registered,” and “registration” refer to a registration effected
      by preparing and filing one or more Registration Statements (as defined below)
      in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act
      or
      any successor rule providing for offering securities on a continuous or delayed
      basis (“Rule 415”), and the declaration or ordering of effectiveness of
      such Registration Statement(s) by the United States Securities and Exchange
      SEC
      (the “SEC”).

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    (c)           “Registrable
      Securities” means the shares of Common Stock issuable to Investors upon
      conversion of the Convertible Debentures pursuant to the Securities Purchase
      Agreement and the shares of Common Stock issuable to the Investors upon exercise
      of the Warrant issued pursuant to the Securities Purchase
      Agreement.  As to any particular Registrable Securities, such
      securities will cease to be Registrable Securities when (a) they have been
      effectively registered under the 1933 Act and disposed of in accordance with
      the
      registration statement covering them, (b) they are or may be freely traded
      without restriction and without  registration pursuant to Rule 144(k),
      or (c) they have been otherwise transferred and new certificates for them not
      bearing a restrictive legend have been issued by the Company and the Company
      shall not have “stop transfer” instructions against them. .

     

    (d)           “Registration
      Statement” means a registration statement under the 1933 Act which covers
      the Registrable Securities.

     

    11.           REGISTRATION.

     

    (a)           Subject
      to the terms and conditions of this Agreement, the Company shall prepare and
      file, no later than thirty (30) days from the date hereof (the “Scheduled
      Filing Deadline”), with the SEC a registration statement on Form S-1 or SB-2
      (or, if the Company is then eligible, on Form S-3) under the 1933 Act (the
      “Initial Registration Statement”) for the registration for the resale by
      all Investors who purchased Convertible Debentures pursuant to the Securities
      Purchase Agreement at least five (5) times the number of shares which are
      anticipated to be issued upon conversion of the Convertible Debentures issued
      pursuant to the Securities Purchase Agreement (subject to Rule 415
      restrictions).  The Company shall cause the Registration Statement to
      remain effective until all of the Registrable Securities have been
      sold.  Prior to the filing of the Registration Statement with the SEC,
      the Company shall furnish a copy of the Initial Registration Statement to the
      Investors and James G. Dodrill II, P.A. for their review and
      comment.  The Investors and James G. Dodrill II, P.A. shall furnish
      comments on the Initial Registration Statement to the Company by the later
      of:
      (a) seventy-two (72) hours of the receipt thereof from the Company and (b)
      the
      close of the third business day following receipt thereof from the
      Company.

     

    (b)           Effectiveness
      of the Initial Registration Statement.  The Company shall use its
      best efforts (i) to have the Initial Registration Statement declared effective
      by the SEC no later than ninety (90) days after the First Closing Date (the
      “Scheduled Effective Deadline”) and (ii) to insure that the Initial
      Registration Statement and any subsequent Registration Statement remains in
      effect until all of the Registrable Securities have been sold, subject to the
      terms and conditions of this Agreement.  It shall be an event of
      default hereunder if the Initial Registration Statement is not declared
      effective by the SEC within ninety (90) days after the First Closing
      Date.

     

    (c)           Failure
      to File or Obtain Effectiveness of the Registration Statement.  In
      the event the Registration Statement is not declared effective by the SEC on
      or
      before the Scheduled Effective Date, or if after the Registration Statement
      has
      been declared effective by the SEC, sales cannot be made pursuant to the
      Registration Statement (whether because of a failure to keep the Registration
      Statement effective, failure to disclose such information as is necessary for
      sales to be made pursuant to the Registration Statement, failure to register
      sufficient shares of Common Stock or otherwise , then as partial relief for
      the
      damages to any holder of Registrable Securities by reason of any such delay
      in
      or reduction of its ability to sell the underlying shares of Common Stock (which
      remedy shall not be exclusive of any other remedies at law or in equity), the
      Company will pay as liquidated damages (the “Liquidated Damages”) to the
      holder, a cash amount within three (3) business days, after demand therefore,
      equal to two percent (2%) of the liquidated value of the Convertible Debentures
      outstanding as Liquidated Damages for each thirty (30) day period (or any part
      thereof) after the Scheduled Effective Date.  Notwithstanding the
      foregoing, in no event shall the Company be required to pay any Liquidated
      Damages in the event that the failure to be declared effective on the requisite
      date results in whole or in part from either (a) the failure of any Investor
      to
      provide information relating to the Investor and its proposed method of sale
      or
      any other information concerning the Investor that is required by the Securities
      and Exchange Commission to be included in the registration statement or (b)
      any
      delays resulting from questions or issues raised by the SEC or any other
      regulatory agency, market or exchange concerning any Investor (or the affiliates
      of any Investor) or relating to Rule 415.

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    (d)           Liquidated
      Damages.  The Company and the Investor hereto acknowledge and
      agree that the sums payable under subsection 2(c) above shall constitute
      liquidated damages and not penalties and are in addition to all other rights
      of
      the Investor, including the right to call a default.  The parties
      further acknowledge that (i) the amount of loss or damages likely to be incurred
      is incapable or is difficult to precisely estimate, (ii) the amounts specified
      in such subsections bear a reasonable relationship to, and are not plainly
      or
      grossly disproportionate to, the probable loss likely to be incurred in
      connection with any failure by the Company to obtain or maintain the
      effectiveness of a Registration Statement, (iii) one of the reasons for the
      Company and the Investor reaching an agreement as to such amounts was the
      uncertainty and cost of litigation regarding the question of actual damages,
      and
      (iv) the Company and the Investor are sophisticated business parties and have
      been represented by sophisticated and able legal counsel and negotiated this
      Agreement at arm’s length.

     

    (e)           Choice
      of law firm. The Company shall use a law firm recommended by the
      Buyers.

     

    12.           RELATED
      OBLIGATIONS.

     

    (a)           The
      Company shall keep the Registration Statement effective pursuant to
      Rule 415 at all times during the life of the Convertible
      Debentures.

     

    (b)           The
      Company shall prepare and file with the SEC such amendments (including
      post-effective amendments) and supplements to a Registration Statement and
      the
      prospectus used in connection with such Registration Statement, which prospectus
      is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may
      be
      necessary to keep such Registration Statement effective at all times during
      the
      Registration Period, and, during such period, comply with the provisions of
      the
      1933 Act with respect to the disposition of all Registrable Securities of the
      Company covered by such Registration Statement until such time as all of such
      Registrable Securities shall have been disposed of in accordance with the
      intended methods of disposition by the seller or sellers thereof as set forth
      in
      such Registration Statement.  In the case of amendments and
      supplements to a Registration Statement which are required to be filed pursuant
      to this Agreement (including pursuant to this Section 3(b)) by reason of the
      Company’s filing a report on Form 10-KSB, Form 10-QSB or Form 8-K or any
      analogous report under the Securities Exchange Act of 1934, as amended (the
      “1934 Act”), the Company shall incorporate such report by reference into
      the Registration Statement, if applicable, or shall file such amendments or
      supplements with the SEC on the same day on which the 1934 Act report is filed
      which created the requirement for the Company to amend or supplement the
      Registration Statement.

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    (c)           The
      Company shall furnish to each Investor whose Registrable Securities are included
      in any Registration Statement, without charge, (i) at least one (1) copy of
      such
      Registration Statement as declared effective by the SEC and any amendment(s)
      thereto, including financial statements and schedules, all documents
      incorporated therein by reference, all exhibits and each preliminary prospectus,
      (ii) ten (10) copies of the final prospectus included in such Registration
      Statement and all amendments and supplements thereto (or such other number
      of
      copies as such Investor may reasonably request in writing) and (iii) such other
      documents as such Investor may reasonably request in writing from time to time
      in order to facilitate the disposition of the Registrable Securities owned
      by
      such Investor.

     

    (d)           The
      Company shall use its best efforts to (i) register and qualify the Registrable
      Securities covered by a Registration Statement under such other securities
      or
“blue sky” laws of such jurisdictions in the United States as any Investor
      reasonably requests, (ii) prepare and file in those jurisdictions, such
      amendments (including post-effective amendments) and supplements to such
      registrations and qualifications as may be necessary to maintain the
      effectiveness thereof during the Registration Period, (iii) take such other
      actions as may be necessary to maintain such registrations and qualifications
      in
      effect at all times during the Registration Period, and (iv) take all other
      actions reasonably necessary or advisable to qualify the Registrable Securities
      for sale in such jurisdictions; provided, however, that the Company shall not
      be
      required in connection therewith or as a condition thereto to (w) make any
      change to its certificate of incorporation or by-laws, (x) qualify to do
      business in any jurisdiction where it would not otherwise be required to qualify
      but for this Section 3(d), (y) subject itself to general taxation in any such
      jurisdiction, or (z) file a general consent to service of process in any such
      jurisdiction.  The Company shall promptly notify each Investor who
      holds Registrable Securities of the receipt by the Company of any notification
      with respect to the suspension of the registration or qualification of any
      of
      the Registrable Securities for sale under the securities or “blue sky” laws of
      any jurisdiction in the United States or its receipt of actual notice of the
      initiation or threat of any proceeding for such purpose.

     

    (e)           As
      promptly as practicable after becoming aware of such event or development,
      the
      Company shall notify each Investor in writing of the happening of any event
      as a
      result of which the prospectus included in a Registration Statement, as then
      in
      effect, includes an untrue statement of a material fact or omission to state
      a
      material fact required to be stated therein or necessary to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading (provided that in no event shall such notice contain any material,
      nonpublic information), and promptly prepare a supplement or amendment to such
      Registration Statement to correct such untrue statement or omission, and deliver
      ten (10) copies of such supplement or amendment to each Investor.  The
      Company shall also promptly notify each Investor in writing (i) when a
      prospectus or any prospectus supplement or post-effective amendment has been
      filed, and when a Registration Statement or any post-effective amendment has
      become effective (notification of such effectiveness shall be delivered to
      each
      Investor by facsimile on the same day of such effectiveness), (ii) of any
      request by the SEC for amendments or supplements to a Registration Statement
      or
      related prospectus or related information, and (iii) of the Company’s
      reasonable determination that a post-effective amendment to a Registration
      Statement would be appropriate.

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    (f)           The
      Company shall use its best efforts to prevent the issuance of any stop order
      or
      other suspension of effectiveness of a Registration Statement, or the suspension
      of the qualification of any of the Registrable Securities for sale in any
      jurisdiction within the United States of America and, if such an order or
      suspension is issued, to obtain the withdrawal of such order or suspension
      at
      the earliest possible moment and to notify each Investor who holds Registrable
      Securities being sold of the issuance of such order and the resolution thereof
      or its receipt of actual notice of the initiation or threat of any proceeding
      for such purpose.

     

    (g)           [reserved]

     

    (h)           Upon
      written request, the Company shall make available for inspection by (i) any
      Investor and (ii) one (1) firm of accountants or other agents retained by
      the Investors (collectively, the “Inspectors”) all pertinent financial
      and other records, and pertinent corporate documents and properties of the
      Company (collectively, the “Records”), as shall be reasonably deemed
      necessary by each Inspector, and cause the Company’s officers, directors and
      employees to supply all information which any Inspector may reasonably request
      in writing; provided, however, that each Inspector shall agree, and each
      Investor hereby agrees, to hold in strict confidence and shall not make any
      disclosure (except to an Investor) or use  any Record or other
      information which the Company determines in good faith to be confidential,
      and
      of which determination the Inspectors are so notified, unless (a) the disclosure
      of such Records is necessary to avoid or correct a misstatement or omission
      in
      any Registration Statement or is otherwise required under the 1933 Act, (b)
      the
      release of such Records is ordered pursuant to a final, non-appealable subpoena
      or order from a court or government body of competent jurisdiction, or (c)
      the
      information in such Records has been made generally available to the public
      other than by disclosure in violation of this or any other agreement of which
      the Inspector and the Investor has knowledge.  Each Investor agrees
      that it shall, upon learning that disclosure of such Records is sought in or
      by
      a court or governmental body of competent jurisdiction or through other means,
      give prompt notice to the Company and allow the Company, at its expense, to
      undertake appropriate action to prevent disclosure of, or to obtain a protective
      order for, the Records deemed confidential.

     

    (i)           The
      Company shall hold in confidence and not make any disclosure of information
      concerning an Investor provided to the Company unless (i) disclosure of such
      information is necessary to comply with federal or state securities laws, (ii)
      the disclosure of such information is necessary to avoid or correct a
      misstatement or omission in any Registration Statement, (iii) the release of
      such information is ordered pursuant to a subpoena or other final,
      non-appealable order from a court or governmental body of competent
      jurisdiction, or (iv) such information has been made generally available to
      the
      public other than by disclosure in violation of this Agreement or any other
      agreement.  The Company agrees that it shall, upon learning that
      disclosure of such information concerning an Investor is sought in or by a
      court
      or governmental body of competent jurisdiction or through other means, give
      prompt written notice to such Investor and allow such Investor, at the
      Investor’s expense, to undertake appropriate action to prevent disclosure of, or
      to obtain a protective order for, such information.

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    (j)           The
      Company shall use its best efforts either to cause all the Registrable
      Securities covered by a Registration Statement (i) to be listed on each
      securities exchange on which securities of the same class or series issued
      by
      the Company are then listed, if any, if the listing of such Registrable
      Securities is then permitted under the rules of such exchange or (ii) the
      inclusion for quotation on the National Association of Securities Dealers,
      Inc.
      OTC Bulletin Board for such Registrable Securities.  The Company shall
      pay all fees and expenses in connection with satisfying its obligation under
      this Section 3(i).

     

    (k)           The
      Company shall cooperate with the Investors who hold Registrable Securities
      being
      offered and, to the extent applicable, to facilitate the timely preparation
      and
      delivery of certificates representing the Registrable Securities to be offered
      pursuant to a Registration Statement and enable such certificates to be in
      such
      denominations or amounts, as the case may be, as the Investors may reasonably
      request in writing and registered in such names as the Investors may
      request.  The certificates representing the Registrable Securities
      will bear a restrictive legend.

     

    (l)           The
      Company shall otherwise use its best efforts to comply with all applicable
      rules
      and regulations of the SEC in connection with any registration
      hereunder.

     

    (m)           Within
      two (2) business days after a Registration Statement which covers Registrable
      Securities is declared effective by the SEC, the Company shall deliver, and
      shall cause legal counsel for the Company to deliver, to the transfer agent
      for
      such Registrable Securities (with copies to the Investors whose Registrable
      Securities are included in such Registration Statement) confirmation that such
      Registration Statement has been declared effective by the SEC in the form
      attached hereto as Exhibit A.

     

    (n)           The
      Company shall take all other reasonable actions necessary to expedite and
      facilitate the lawful disposition by the Investors of Registrable Securities
      pursuant to a Registration Statement.

     

    13.           OBLIGATIONS
      OF THE INVESTORS.

     

    (a)           At
      least seven (7) Business Days prior to the first anticipated filing date of
      a
      Registration Statement, the Company shall notify each seller of Registrable
      Securities in writing of the information the Company requires from each such
      seller.  It shall be a condition precedent to the obligations of the
      Company to complete the registration pursuant to this Agreement with respect
      to
      the Registrable Securities of a particular seller of Registrable Securities
      that
      such seller shall furnish to the Company such information regarding itself,
      the
      Registrable Securities held by it and the intended method of disposition of
      the
      Registrable Securities held by it as shall be reasonably required to effect
      the
      effectiveness of the registration of such Registrable Securities and shall
      execute such documents in connection with such registration as the Company
      may
      reasonably request.

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    (b)           Each
      Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
      cooperate with the Company as reasonably requested by the Company in connection
      with the preparation and filing of any Registration Statement hereunder, unless
      such Investor has notified the Company in writing of such Investor’s election to
      exclude all of such Investor’s Registrable Securities from such Registration
      Statement.

     

    (c)           Each
      Investor covenants and agrees that it will comply with the prospectus delivery
      requirements of the 1933 Act as applicable to it in connection with sales of
      Registrable Securities pursuant to a Registration Statement

     

    (d)           Each
      Investor agrees that, upon receipt of any notice from the Company of the
      happening of any event of the kind described in Section 3(f) or the first
      sentence of 3(e), such Investor will immediately discontinue disposition of
      Registrable Securities pursuant to any Registration Statement(s) covering such
      Registrable Securities until such Investor’s receipt of the copies of the
      supplemented or amended prospectus contemplated by Section 3(e) or receipt
      of
      notice that no supplement or amendment is required.  Notwithstanding
      anything to the contrary, the Company shall cause its transfer agent to deliver
      unlegended certificates for shares of Common Stock to a transferee of an
      Investor in accordance with the terms of the Securities Purchase Agreement
      in
      connection with any sale of Registrable Securities with respect to which an
      Investor has entered into a contract for sale prior to the Investor’s receipt of
      a notice from the Company of the happening of any event of the kind described
      in
      Section 3(f) or the first sentence of 3(e) and for which the Investor has not
      yet settled.

     

    14.           EXPENSES
      OF REGISTRATION.

     

    All
      expenses incurred in connection with registrations, filings or qualifications
      pursuant to Sections 2 and 3, including, without limitation, all registration,
      listing and qualifications fees, printers, legal and accounting fees shall
      be
      paid by the Company. All underwriting discounts and selling commissions
      applicable to the sale of Registrable Securities are called “Selling Expenses”
and shall be paid by the Investors.

     

    15.           INDEMNIFICATION.

     

    With
      respect to Registrable Securities which are included in a Registration Statement
      under this Agreement:

     

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

     

    (a)           To
      the fullest extent permitted by law, the Company will, and hereby does,
      indemnify, hold harmless and defend each Investor, the directors, officers,
      partners, employees, agents, representatives of, and each Person, if any, who
      controls any Investor within the meaning of the 1933 Act or the 1934 Act (each,
      an “Indemnified Person”), against any losses, claims, damages,
      liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’
fees, amounts paid in settlement or expenses, joint or several (collectively,
      “Claims”) incurred in investigating, preparing or defending any action,
      claim, suit, inquiry, proceeding, investigation or appeal taken from the
      foregoing by or before any court or governmental, administrative or other
      regulatory agency, body or the SEC, whether pending or threatened, whether
      or
      not an indemnified party is or may be a party thereto (“Indemnified
      Damages”), to which any of them may become subject insofar as such Claims
      (or actions or proceedings, whether commenced or threatened, in respect thereof)
      arise out of or are based upon: (i) any untrue statement or alleged untrue
      statement of a material fact in a Registration Statement or any post-effective
      amendment thereto or in any filing made in connection with the qualification
      of
      the offering under the securities or other “blue sky” laws of any jurisdiction
      in which Registrable Securities are offered (“Blue Sky Filing”), or
      the omission or alleged omission to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading; (ii) any
      untrue statement or alleged untrue statement of a material fact contained in
      any
      final prospectus (as amended or supplemented, if the Company files any amendment
      thereof or supplement thereto with the SEC) or the omission or alleged omission
      to state therein any material fact necessary to make the statements made
      therein, in light of the circumstances under which the statements therein were
      made, not misleading; or (iii) any violation or alleged violation by the Company
      of the 1933 Act, the 1934 Act, any other law, including, without limitation,
      any
      state securities law, or any rule or regulation there under relating to the
      offer or sale of the Registrable Securities pursuant to a Registration Statement
      (the matters in the foregoing clauses (i) through (iii) being, collectively,
      “Violations”).  The Company shall reimburse the Investors and
      each such controlling person promptly as such expenses are incurred and are
      due
      and payable, for any legal fees or disbursements or other reasonable expenses
      incurred by them in connection with investigating or defending any such
      Claim.  Notwithstanding anything to the contrary contained herein, the
      indemnification agreement contained in this Section 6(a): (x) shall not apply
      to
      a Claim by an Indemnified Person arising out of or based upon a Violation which
      occurs in reliance upon and in conformity with information furnished in writing
      to the Company by such Indemnified Person expressly for use in connection with
      the preparation of the Registration Statement or any such amendment thereof
      or
      supplement thereto; (y) shall not be available to the extent such Claim is
      based
      on a failure of the Investor to deliver or to cause to be delivered the
      prospectus made available by the Company, if such prospectus was timely made
      available by the Company pursuant to Section 3(c); (z) shall not apply to
      amounts paid in settlement of any Claim if such settlement is effected without
      the prior written consent of the Company, which consent shall not be
      unreasonably withheld; and (aa) shall not apply to the extent that any such
      loss, claim, damage or liability (or action in respect thereof) arises out
      of or
      is based upon an untrue statement or alleged untrue statement or omission or
      alleged omission in such Registration Statement or Prospectus, which untrue
      statement or alleged untrue statement or omission or alleged omission is
      completely corrected in an amendment or supplement to the Registration Statement
      or Prospectus and Investor thereafter fails to deliver or cause to be delivered
      such Registration Statement or Prospectus as so amended or supplemented prior
      to
      or concurrently with the Registrable Securities, or the written confirmation
      of
      the sale of the Registrable Securities, as the case may be, to the person
      asserting such loss, claim, damage or liability (or action in respect thereof)
      or expense after the Company has furnished Investor with the same. Such
      indemnity shall remain in full force and effect regardless of any investigation
      made by or on behalf of the Indemnified Person and shall survive the transfer
      of
      the Registrable Securities by the Investors pursuant to Section 9
      hereof.

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    (b)           In
      connection with a Registration Statement, each Investor agrees to severally
      and
      not jointly indemnify, hold harmless and defend, to the same extent and in
      the
      same manner as is set forth in Section 6(a), the Company, each of its directors,
      each of its officers, employees, representatives, or agents and each Person,
      if
      any, who controls the Company within the meaning of the 1933 Act or the 1934
      Act
      (each an “Indemnified Party”), against any Claim or Indemnified Damages
      to which any of them may become subject, under the 1933 Act, the 1934 Act or
      otherwise, insofar as such Claim or Indemnified Damages arise out of or is
      based
      upon any Violation, in each case to the extent, and only to the extent, that
      such Violation occurs in reliance upon and in conformity with written
      information furnished to the Company by such Investor expressly for use in
      connection with such Registration Statement; and, subject to Section 6(d),
      such
      Investor will reimburse any legal or other expenses reasonably incurred by
      them
      in connection with investigating or defending any such Claim; provided, however,
      that the indemnity agreement contained in this Section 6(b) and the agreement
      with respect to contribution contained in Section 7 shall not apply to amounts
      paid in settlement of any Claim if such settlement is effected without the
      prior
      written consent of such Investor, which consent shall not be unreasonably
      withheld; provided, further, however, that the Investor shall be liable under
      this Section 6(b) for only that amount of a Claim or Indemnified Damages as
      does
      not exceed the net proceeds to such Investor as a result of the sale of
      Registrable Securities pursuant to such Registration Statement.  Such
      indemnity shall remain in full force and effect regardless of any investigation
      made by or on behalf of such Indemnified Party and shall survive the transfer
      of
      the Registrable Securities by the Investors pursuant to Section 9.

     

    (c)           Promptly
      after receipt by an Indemnified Person or Indemnified Party under this Section
      6
      of notice of the commencement of any action or proceeding (including any
      governmental action or proceeding) involving a Claim, such Indemnified Person
      or
      Indemnified Party shall, if a Claim in respect thereof is to be made against
      any
      indemnifying party under this Section 6, deliver to the indemnifying party
      a
      written notice of the commencement thereof, and the indemnifying party shall
      have the right to participate in, and, to the extent the indemnifying party
      so
      desires, jointly with any other indemnifying party similarly noticed, to assume
      control of the defense thereof with counsel mutually satisfactory to the
      indemnifying party and the Indemnified Person or the Indemnified Party, as
      the
      case may be; provided, however, that an Indemnified Person or Indemnified Party
      shall have the right to retain its own counsel with the fees and expenses of
      not
      more than one (1) counsel for such Indemnified Person or Indemnified Party
      to be
      paid by the indemnifying party, if, in the reasonable opinion of counsel
      retained by the indemnifying party, the representation by such counsel of the
      Indemnified Person or Indemnified Party and the indemnifying party would be
      inappropriate due to actual or potential differing  interests between
      such Indemnified Person or Indemnified Party and any other party represented
      by
      such counsel in such proceeding.  The Indemnified Party or Indemnified
      Person shall cooperate fully with the indemnifying party in connection with
      any
      negotiation or defense of any such action or claim by the indemnifying party
      and
      shall furnish to the indemnifying party all information reasonably available
      to
      the Indemnified Party or Indemnified Person which relates to such action or
      claim.  The indemnifying party shall keep the Indemnified Party or
      Indemnified Person fully apprised at all times as to the status of the defense
      or any settlement negotiations with respect thereto.  No indemnifying
      party shall be liable for any settlement of any action, claim or proceeding
      effected without its prior written consent; provided, however, that the
      indemnifying party shall not unreasonably withhold, delay or condition its
      consent.  No indemnifying party shall, without the prior written
      consent of the Indemnified Party or Indemnified Person, consent to entry of
      any
      judgment or enter into any settlement or other compromise which does not include
      as an unconditional term thereof the giving by the claimant or plaintiff to
      such
      Indemnified Party or Indemnified Person of a release from all liability in
      respect to such claim or litigation.  Following indemnification as
      provided for hereunder, the indemnifying party shall be subrogated to all rights
      of the Indemnified Party or Indemnified Person with respect to all third
      parties, firms or corporations relating to the matter for which indemnification
      has been made.  The failure to deliver written notice to the
      indemnifying party within a reasonable time of the commencement of any such
      action shall not relieve such indemnifying party of any liability to the
      Indemnified Person or Indemnified Party under this Section 6, except to the
      extent that the indemnifying party is prejudiced in its ability to defend such
      action.

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    (d)           The
      indemnification required by this Section 6 shall be made by periodic payments
      of
      the amount thereof during the course of the investigation or defense, as and
      when bills are received or Indemnified Damages are incurred.

     

    (e)           The
      indemnity agreements contained herein shall be in addition to (i) any cause
      of action or similar right of the Indemnified Party or Indemnified Person
      against the indemnifying party or others, and (ii) any liabilities the
      indemnifying party may be subject to pursuant to the law.

     

    16.           CONTRIBUTION.

     

    To
      the
      extent any indemnification by an indemnifying party is prohibited or limited
      by
      law, the indemnifying party agrees to make the maximum contribution with respect
      to any amounts for which it would otherwise be liable under Section 6 to the
      fullest extent permitted by law; provided, however, that:  (i) no
      seller of Registrable Securities guilty of fraudulent misrepresentation (within
      the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
      from any seller of Registrable Securities who was not guilty of fraudulent
      misrepresentation; and (ii) contribution by any seller of Registrable Securities
      shall be limited in amount to the net amount of proceeds received by such seller
      from the sale of such Registrable Securities.

     

    17.           REPORTS
      UNDER THE 1934 ACT.

     

    With
      a
      view to making available to the Investors the benefits of Rule 144 promulgated
      under the 1933 Act or any similar rule or regulation of the SEC that may at
      any
      time permit the Investors to sell securities of the Company to the public
      without registration (“Rule 144”) the Company agrees to:

     

    (a)           make
      and keep public information available, as those terms are understood and defined
      in Rule 144;

     

    (b)           file
      with the SEC in a timely manner all reports and other documents required of
      the
      Company under the 1933 Act and the 1934 Act so long as the Company remains
      subject to such requirements (it being understood that nothing herein shall
      limit the Company’s obligations under Section 4(c) of the Securities Purchase
      Agreement) and the filing of such reports and other documents as are required
      by
      the applicable provisions of Rule 144; and

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    (c)           furnish
      to each Investor so long as such Investor owns Registrable Securities, promptly
      upon written request, (i) a written statement by the Company that it has
      complied with the reporting requirements of Rule 144, the 1933 Act and the
      1934
      Act, (ii) a copy of the most recent annual or quarterly report of the Company
      and such other reports and documents so filed by the Company, and (iii) such
      other information as may be reasonably requested to permit the Investors to
      sell
      such securities pursuant to Rule 144 without registration.

     

    18.           AMENDMENT
      OF REGISTRATION RIGHTS.

     

    Provisions
      of this Agreement may be amended and the observance thereof may be waived
      (either generally or in a particular instance and either retroactively or
      prospectively), only with the written consent of the Company and Investors
      who
      then hold at least two-thirds (2/3) of the Registrable
      Securities.  Any amendment or waiver effected in accordance with this
      Section 9 shall be binding upon each Investor and the
      Company.  No such amendment shall be effective to the extent that it
      applies to fewer than all of the holders of the Registrable
      Securities.  No consideration shall be offered or paid to any Person
      to amend or consent to a waiver or modification of any provision of any of
      this
      Agreement unless the same consideration also is offered to all of the parties
      to
      this Agreement.

     

    19.           MISCELLANEOUS.

     

    (a)           A
      Person is deemed to be a holder of Registrable Securities whenever such Person
      owns or is deemed to own of record such Registrable Securities.  If
      the Company receives conflicting instructions, notices or elections from two
      (2)
      or more Persons with respect to the same Registrable Securities, the Company
      shall act upon the basis of instructions, notice or election received from
      the
      registered owner of such Registrable Securities.

     

    (b)           Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered:  (i) upon receipt, when delivered personally;
      (ii) upon receipt, when sent by facsimile (provided confirmation of transmission
      is mechanically or electronically generated and kept on file by the sending
      party); or (iii) one (1) business day after deposit with a nationally recognized
      overnight delivery service, in each case properly addressed to the party to
      receive the same.  The addresses and facsimile numbers for such
      communications shall be:

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    
      	
              If
                to the Company, to:

            	 
	
               

            	 
	 	
              Attention:

            
	 	
              Telephone

            
	 	
              Facsimile:

            
	 	 
	
              With
                a copy to:

            	 
	 	 
	 	
              Attn: 

            
	 	
              Telephone:

            
	 	
              Facsimile:

            

    

     

     

    If
      to an
      Investor, to its address and facsimile number on the Schedule of Investors
      attached hereto, with copies to such Investor’s representatives as set forth on
      the Schedule of Investors or to such other address and/or facsimile number
      and/or to the attention of such other person as the recipient party has
      specified by written notice given to each other party five (5) days prior to
      the
      effectiveness of such change.  Written confirmation of receipt (A)
      given by the recipient of such notice, consent, waiver or other communication,
      (B) mechanically or electronically generated by the sender’s facsimile machine
      containing the time, date, recipient facsimile number and an image of the first
      page of such transmission or (C) provided by a courier or overnight courier
      service shall be rebuttable evidence of personal service, receipt by facsimile
      or receipt from a nationally recognized overnight delivery service in accordance
      with clause (i), (ii) or (iii) above, respectively.

     

    (c)           Failure
      of any party to exercise any right or remedy under this Agreement or otherwise,
      or delay by a party in exercising such right or remedy, shall not operate as
      a
      waiver thereof.

     

    (d)           The
      laws of the State of Florida shall govern all issues concerning the relative
      rights of the Company and the Investors as its stockholders.  All
      other questions concerning the construction, validity, enforcement and
      interpretation of this Agreement shall be governed by the internal laws of
      the
      State of Florida without giving effect to any choice of law or conflict of
      law
      provision or rule (whether of the State of Florida or any other jurisdiction)
      that would cause the application of the laws of any jurisdiction other than
      the
      State of Florida  Each party hereby irrevocably submits to the
      non-exclusive jurisdiction of the State Courts of the State of Florida sitting
      in Broward County, Florida and federal courts for the Southern District of
      Florida for the adjudication of any dispute hereunder or in connection herewith
      or with any transaction contemplated hereby or discussed herein, and hereby
      irrevocably waives, and agrees not to assert in any suit, action or proceeding,
      any claim that it is not personally subject to the jurisdiction of any such
      court, that such suit, action or proceeding is brought in an inconvenient forum
      or that the venue of such suit, action or proceeding is
      improper.  Each party hereby irrevocably waives personal service of
      process and consents to process being served in any such suit, action or
      proceeding by mailing a copy thereof to such party at the address for such
      notices to it under this Agreement and agrees that such service shall constitute
      good and sufficient service of process and notice thereof.  Nothing
      contained herein shall be deemed to limit in any way any right to serve process
      in any manner permitted by law.  If any provision of this Agreement
      shall be invalid or unenforceable in any jurisdiction, such invalidity or
      unenforceability shall not affect the validity or enforceability of the
      remainder of this Agreement in that jurisdiction or the validity or
      enforceability of any provision of this Agreement in any other
      jurisdiction.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
      HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
      DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT
      OR
      ANY TRANSACTION CONTEMPLATED HEREBY.

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    (e)           This
      Agreement, the Irrevocable Transfer Agent Instructions, the Securities Purchase
      Agreement and related documents including the Convertible Debenture and the
      Escrow Agreement dated the date hereof by and among the Company, the Investors
      set forth on the Schedule of Investors attached hereto, and James G. Dodrill
      II,
      P.A. (the “Escrow Agreement”) and the Security Agreement dated the date
      hereof (the “Security Agreement”) constitute the entire agreement among
      the parties hereto with respect to the subject matter hereof and
      thereof.  There are no restrictions, promises, warranties or
      undertakings, other than those set forth or referred to herein and
      therein.  This Agreement, the Irrevocable Transfer Agent Instructions,
      the Securities Purchase Agreement and related documents including the
      Convertible Debenture, the Escrow Agreement and the Security Agreement supersede
      all prior agreements and understandings among the parties hereto with respect
      to
      the subject matter hereof and thereof.

     

    (f)           This
      Agreement shall inure to the benefit of and be binding upon the permitted
      successors and assigns of each of the parties hereto.

     

    (g)           The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

     

    (h)           This
      Agreement may be executed in identical counterparts, each of which shall be
      deemed an original but all of which shall constitute one and the same
      agreement.  This Agreement, once executed by a party, may be delivered
      to the other party hereto by facsimile transmission of a copy of this Agreement
      bearing the signature of the party so delivering this Agreement.

     

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

     

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

     

    (j)           This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person.

     

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties have caused this Investor Registration
      Rights Agreement to be duly executed as of day and year first above
      written.

     

    

    
      	 	
              COMPANY:

            
	 	
              PLANETLINK
                COMMUNICATIONS, INC.

            
	 	 	 
	 	
              By:

            	
               

            
	 	
              Name:

            
	 	
              Title:

            

    

    

    

    
      	 	
              BUYER:

            
	 	 
	 	 
	 	
              By:

            
	 	
              Its:

            
	 	 
	 	
              By:

            	
               

            
	 	
              Name:

            
	 	
              Title:

            

    

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

    SCHEDULE
      I

    SCHEDULE
      OF INVESTORS

    

    
      	
              
                Name

              

            	 	
              
                Signature

              

            	 	
              
                Address/Facsimile

                Number
                  of Buyer

              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    FORM
      OF NOTICE OF EFFECTIVENESS

    OF
      REGISTRATION STATEMENT

     

    

    Attention:

    

    
      	
               

            	
              Re:

            	
              PLANETLINK
                COMMUNICATIONS, INC.

            

    

    

    Ladies
      and Gentlemen:

    

    We
      are
      counsel to Planetlink Communications, Inc., a Georgia corporation (the
“Company”), and have represented the Company in connection with that
      certain Securities Purchase Agreement (the “Securities Purchase
      Agreement”) entered into by and among the Company and the investors named
      therein (collectively, the “Investors”) pursuant to which the Company
      issued to the Investors shares of its Common Stock, (the “Common
      Stock”).  Pursuant to the Purchase Agreement, the Company also has
      entered into a Registration Rights Agreement with the Investors (the
“Investor Registration Rights Agreement”) pursuant to which the Company
      agreed, among other things, to register the Registrable Securities (as defined
      in the Registration Rights Agreement) under the Securities Act of 1933, as
      amended (the “1933 Act”).  In connection with the Company’s
      obligations under the Registration Rights Agreement, on ____________ ____,
      the
      Company filed a Registration Statement on Form ________ (File
      No. 333-_____________) (the “Registration Statement”) with the
      Securities and Exchange SEC (the “SEC”) relating to the Registrable
      Securities which names each of the Investors as a selling stockholder there
      under.

     

    In
      connection with the foregoing, we advise you that a member of the SEC’s staff
      has advised us by telephone that the SEC has entered an order declaring the
      Registration Statement effective under the 1933 Act at [ENTER TIME OF
      EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we
      have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that
      any stop order suspending its effectiveness has been issued or that any
      proceedings for that purpose are pending before, or threatened by, the SEC
      and
      the Registrable Securities are available for resale under the 1933 Act pursuant
      to the Registration Statement.

     

    
      	 	
              Very
                truly yours,

            
	 	 
	 	
              [INSERT
                NAME OF COMPANY COUNSEL]

            
	 	 
	 	
              By:

            	
               

            

    

    

    cc:           [LIST
      NAMES OF INVESTORS]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

     

    FORM
      OF ESCROW AGREEMENT

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

     

    TRANSFER
      AGENT INSTRUCTIONS

     

    IRREVOCABLE
      TRANSFER AGENT INSTRUCTIONS

     

    

    November
      ___, 2007

    

    [TA’s
      address block]

    Attn:

    

    

    RE:  PLANETLINK
      COMMUNICATIONS, INC.

    

    Ladies
      and Gentlemen:

    

    Reference
      is made to that certain Securities Purchase Agreement (the “Securities
      Purchase Agreement”), dated the date hereof, by and between
PLANETLINK COMMUNICATIONS, INC.., a corporation organized under
      the laws of _____________ (the “Company”), and the
      Buyers set forth on Schedule I attached thereto (collectively the
“Buyer”), pursuant to which the Company shall sell to the Buyer up to
      Five Hundred Thousand Dollars ($500,000) of the Company’s secured convertible
      debentures, which shall be convertible into shares of the Company’s common
      stock, par value $_____ per share (the “Common Stock”).  The
      shares of Common Stock to be converted thereunder plus interest which may be
      converted into Common Stock and any Liquidated Damages, which may be converted
      into Common Stock thereunder are referred to herein as the “Conversion
      Shares.”  This letter shall serve as our irrevocable authorization
      and direction to you (provided that you are the transfer agent of the
      Company at such time) to issue the Conversion Shares in shares of the Company’s
      Common Stock, in the event the Buyer has elected to have the interest of the
      Convertible Debenture, pursuant to Section 1.05 of the Convertible Debenture,
      paid in Common Stock (the “Interest Shares”), to the Buyer from time to
      time upon surrender to you of a properly completed and duly executed Conversion
      Notice, in the form attached hereto as Exhibit I, delivered on
      behalf of the Company by James G. Dodrill II, P.A..

     

    Additionally,
      pursuant to the Securities Purchase Agreement, the Company has issued to the
      Buyer warrants (the “Warrants”) which are exercisable to purchase shares of
      Common Stock (the “Exercise Shares”).

     

    Specifically,
      upon receipt by the Company or [Company counsel] of a copy of a Conversion
      Notice, or an Exercise Notice for the Warrants, [Company Counsel], on behalf
      of
      the Company, shall as soon as practicable, but in no event later than one (1)
      Trading Day (as defined below) after receipt of such Conversion Notice, send,
      via facsimile as appropriate either: (a) a Conversion Notice, or (b) an Exercise
      Notice, which in either event such document shall constitute an irrevocable
      instruction to you to process such Conversion Notice or Exercise Notice in
      accordance with the terms of these instructions.  Upon your receipt of
      a copy of the executed Conversion Notice or Exercise Notice, you shall use
      your
      best efforts to, within three (3) Trading Days following the date of receipt
      of
      the Conversion Notice or Exercise Notice, (A) issue and surrender to a common
      carrier for overnight delivery to the address as specified in the Conversion
      Notice or Exercise Notice, a certificate, registered in the name of the Buyer
      or
      its designee, for the number of shares of Common Stock to which the Buyer shall
      be entitled as set forth in the Conversion Notice or Exercise Notice or (B)
      provided you are participating in The Depository Trust Company (“DTC”)
      Fast Automated Securities Transfer Program, upon the request of the Buyer,
      credit such aggregate number of shares of Common Stock to which the Buyer shall
      be entitled to the Buyer’s or its designee’s balance account with DTC through
      its Deposit Withdrawal At Custodian (“DWAC”) system provided the
      Buyer causes its bank or broker to initiate the DWAC
      transaction.  (“Trading Day” shall mean any
      day on which the Nasdaq Market is open for customary trading.)

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
      Company hereby confirms to you and the Buyer that certificates representing
      the
      Conversion Shares, the Interest Shares, the Exercise Shares and/or the
      Liquidated Damages Shares shall not bear any legend restricting transfer of
      the
      Conversion Shares thereby and should not be subject to any stop-transfer
      restrictions and shall otherwise be freely transferable on the books and records
      of the Company provided that the Company counsel delivers (i) the Notice of
      Effectiveness set forth in Exhibit II attached hereto and (ii) an opinion
      of counsel in the form set forth in Exhibit III attached hereto, and that
      if the Conversion Shares, the Interest Shares, and/or the Liquidated Damages
      Shares are not registered for sale under the Securities Act of 1933, as amended,
      then the certificates for the Conversion Shares shall bear the following
      legend:

     

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

     

     The
      Company hereby
      confirms and Transfer Agent acknowledges that in the event Counsel to the
      Company does not issue an opinion of counsel as required to issue the Exercise
      Shares, the Conversion Shares and the Interest Shares free of legend the Company
      authorizes and Transfer Agent will accept an opinion of Counsel from James
      G.
      Dodrill II, P.A..

     

    The
      Company hereby confirms to you and the Buyer that no instructions other than
      as
      contemplated herein will be given to you by the Company with respect to the
      Conversion Shares, the Exercise Shares or the Interest Shares.  The
      Company hereby agrees that it shall not replace Transfer Agent as the Company’s
      transfer agent without the prior written consent of the Buyer.

     

    Unless
      the Company is in breach of its agreement with the Transfer Agent, any attempt
      by the Transfer Agent to resign as the Company’s transfer agent hereunder shall
      not be effective until such time as the Company provides to the Transfer Agent
      written notice that a suitable replacement has agreed to serve as transfer
      agent
      and to be bound by the terms and conditions of these Irrevocable Transfer Agent
      Instructions.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

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

     

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

     

    The
      Company and Transfer Agent acknowledge that the Buyer is relying on the
      representations and covenants made by the Company and Transfer Agent hereunder
      and are a material inducement to the Buyer purchasing convertible debentures
      under the Securities Purchase Agreement.  The Company and Transfer
      Agent further acknowledge that without such representations and covenants of
      the
      Company and Transfer Agent made hereunder, the Buyer would not enter into the
      Securities Purchase Agreement and purchase convertible debentures pursuant
      thereto.

     

    Each
      party hereto specifically acknowledges and agrees that in the event of a breach
      or threatened breach by a party hereto of any provision hereof, the Buyer will
      be irreparably damaged and that damages at law would be an inadequate remedy
      if
      these Irrevocable Transfer Agent Instructions were not specifically
      enforced.  Therefore, in the event of a breach or threatened breach by
      a party hereto, including, without limitation, the attempted termination of
      the
      agency relationship created by this instrument, the Buyer shall be entitled,
      in
      addition to all other rights or remedies, to an injunction restraining such
      breach, without being required to show any actual damage or to post any bond
      or
      other security, and/or to a decree for specific performance of the provisions
      of
      these Irrevocable Transfer Agent Instructions.

     

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

     

    
      	
              COMPANY:

            	 	
              THE
                FOREGOING INSTRUCTIONS ARE

            
	 	 	
              ACKNOWLEDGED
                AND AGREED TO

            
	
              PLANETLINK
                COMMUNICATIONS, INC.

            	 	
              THIS
                __________ DAY OF NOVEMBER 2007

            
	 	 	 
	
              By:

            	
               

            	 	
              [TA]

            
	
              Name:

            	 	 
	
              Title:

            	 	 
	 	 	
              By:

            	 
	
              [Company
                counsel]

            	 	
              Name:

            
	 	 	
              Title:

            
	
              By:

            	
               

            	 	 
	
              Name:

            	 	 
	
              Title:

            	 	 

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      I

     

    SCHEDULE
      OF BUYERS

     

    
      	
              
                Name

              

            	 	
              
                Signature

              

            	 	
              
                Address/Facsimile

                Number
                  of Buyer

              

            

    

     

    
      
        
        

      

      
        SCHEDULE
          I-1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      I

     

    TO
      IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

     

    FORM
      OF CONVERSION NOTICE

     

    Reference
      is made to the Securities Purchase Agreement (the “Securities Purchase
      Agreement”) between Planetlink Communications, Inc., (the “Company”),
      and________________________________., dated December 7, 2007.  In
      accordance with and pursuant to the Securities Purchase Agreement, the
      undersigned hereby elects to convert convertible debentures into shares of
      common stock, par value $_____ per share (the “Common Stock”), of the
      Company for the amount indicated below as of the date specified
      below.

     

    
      	
              Conversion
                Date:

            	
               

            
	 	 
	
              Amount
                to be converted:

            	
              $

            	
               

            
	 	 
	
              Conversion
                Price:

            	
              $

            	
               

            
	 	 
	
              Shares
                of Common Stock Issuable:

            	
               

            
	 	 
	
              Amount
                of Debenture unconverted:

            	
              $

            	
               

            
	 	 
	
              Amount
                of Interest Converted:

            	
              $

            	
               

            
	 	 
	
              Conversion
                Price of Interest:

            	
              $

            	
               

            
	 	 
	
              Shares
                of Common Stock Issuable:

            	
               

            
	 	 
	
              Amount
                of Liquidated Damages:

            	
              $

            	
               

            
	 	 
	
              Conversion
                Price of Liquidated Damages:

            	
              $

            	
               

            
	 	 
	
              Shares
                of Common Stock Issuable:

            	
               

            
	 	 
	
              Total
                Number of shares of Common Stock to be issued:

            	
               

            

    

     

    
      
        
        

      

      
        EXHIBIT
          I-1

        
          

        

      

      
        
        

      

    

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

    

    
      	
              Issue
                to:

            	
               

            
	 	 
	
              Authorized
                Signature:

            	
               

            
	 	 
	
              Name:

            	
               

            
	 	 
	
              Title:

            	
               

            
	 	 
	
              Phone
                #:

            	
               

            
	 	 
	
              Broker
                DTC Participant Code:

            	
               

            
	 	 
	
              Account
                Number*:

            	
               

            

    

    

    

    *
      Note that receiving broker must initiate transaction on DWAC
      System.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      II

     

    TO
      IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

     

    _________,
      200___

    ________

    

    

    Attention:

    

    RE:           PLANETLINK
      COMMUNICATIONS, INC.

    

    Ladies
      and Gentlemen:

    

    We
      are
      counsel to Planetlink Communications, Inc., a corporation
      organized under the laws of _____________ (the “Company”), and have
      represented the Company in connection with that certain Securities Purchase
      Agreement, dated as of December 7, 2007 (the “Securities Purchase
      Agreement”), entered into by and among the Company and the Buyers set forth
      on Schedule I attached thereto (collectively the “Buyer”) pursuant to
      which the Company has agreed to sell to the Buyer up to Five Hundred Thousand
      Dollars ($500,000) of secured convertible debentures (“Convertible Debentures”),
      which shall be convertible into shares (the “Conversion Shares”) of the
      Company’s common stock, par value $_____ per share (the “Common Stock”),
      in accordance with the terms of the Securities Purchase
      Agreement.  Pursuant to the Securities Purchase Agreement, the Company
      also has entered into a Registration Rights Agreement, dated as of November
      ___,
      2007, with the Buyer (the “Investor Registration Rights Agreement”)
      pursuant to which the Company agreed, among other things, to register the
      Conversion Shares under the Securities Act of 1933, as amended (the “1933
      Act”).  In connection with the Company’s obligations under the
      Securities Purchase Agreement and the Registration Rights Agreement, on _______,
      2007, the Company filed a Registration Statement (File No. ___-_________) (the
      “Registration Statement”) with the Securities and Exchange Commission
      (the “SEC”) relating to the sale of the Conversion Shares.

     

    In
      connection with the foregoing, we advise you that a member of the SEC’s staff
      has advised us by telephone that the SEC has entered an order declaring the
      Registration Statement effective under the 1933 Act at ____ P.M. on __________,
      200__ and we have no knowledge, after telephonic inquiry of a member of the
      SEC’s staff, that any stop order suspending its effectiveness has been issued or
      that any proceedings for that purpose are pending before, or threatened by,
      the
      SEC and the Conversion Shares are available for sale under the 1933 Act pursuant
      to the Registration Statement.

     

    The
      Buyer
      has confirmed it shall comply with all securities laws and regulations
      applicable to it including applicable prospectus delivery requirements upon
      sale
      of the Conversion Shares.

     

    

    
      	 	
              Very
                truly yours,

            
	 	 	 
	 	
              [Company
                Counsel]

            
	 	 	 
	 	 	 
	 	 	 
	 	
              By:

            	
               

            

    

     

    
      
        
        

      

      
        EXHIBIT
          II-1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      III

     

    TO
      IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

     

    FORM
      OF OPINION

     

    

    ________________
      2007

    

    VIA
      FACSIMILE AND REGULAR MAIL

    

    ________

    

    

    Attention:

    

    RE:           PLANETLINK
      COMMUNICATIONS, INC.

    

    Ladies
      and Gentlemen:

    

    We
      have
      acted as special counsel to Planetlink Communications, Inc. (the
“Company”), in connection with the registration of ___________shares (the
“Shares”) of its common stock with the Securities and Exchange Commission
      (the “SEC”).  We have not acted as your
      counsel.  This opinion is given at the request and with the consent of
      the Company.

     

    In
      rendering this opinion we have relied on the accuracy of the Company’s
      Registration Statement on Form SB-2, as amended (the “Registration
      Statement”), filed by the Company with the SEC on _________ ___,
      2007.  The Company filed the Registration Statement on behalf of
      certain selling stockholders (the “Selling
      Stockholders”).  This opinion relates solely to the
      Selling Shareholders listed on Exhibit “A” hereto and number of Shares
      set forth opposite such Selling Stockholders’ names.  The SEC declared
      the Registration Statement effective on __________ ___, 200__.

     

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

     

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

     

    Based
      on
      the foregoing, it is our opinion that the Shares have been registered with
      the
      Securities and Exchange Commission under the Securities Act of 1933, as amended,
      and that ________ may remove the restrictive legends contained on the Shares.
      This opinion relates solely to the number of Shares set forth opposite
      the Selling Stockholders listed on Exhibit “A” hereto.

    
      
        
        

      

      
        EXHIBIT
          III-1

        
          

        

      

      
        
        

      

    

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

     

    Very
      truly yours,

     

    

    JAMES
      G. DODRILL II, P.A.

    
      
        
        

      

      
        EXHIBIT
          III-2

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      “A”

     

    (LIST
      OF SELLING STOCKHOLDERS)

    

    
      	
              
                Name:

              

            	 	
              
                No.
                  of Shares:

              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      D

    

     

    FORM
      OF SECURITY AGREEMENT

    

    SECURITY
      AGREEMENT

     

    THIS
      SECURITY AGREEMENT (the “Agreement”), is
      entered into and made effective as of December 7, 2007, by and between
PLANETLINK COMMUNICATIONS, INC., (the “Company”), and
      the BUYER(S) listed on Schedule I attached to the Securities
      Purchase Agreement dated the date hereof (the “Secured
      Party”).

     

    WHEREAS,
      the Company shall issue and sell to the Secured Party, as provided
      in
      the Securities Purchase Agreement dated the date
      hereof between the Company and the Secured Party (the
“Securities Purchase Agreement”), and the Secured Party shall purchase up
      to Five Hundred Thousand Dollars ($500,000) of secured convertible
      debentures (the “Convertible Debentures”), which shall be
      convertible into shares of the Company’s common stock, par value $____ (the
“Common Stock”) (as converted, the “Conversion Shares”), for a
      total purchase price of up to Five Hundred Thousand Dollars ($500,000), in
      the respective amounts set forth opposite each Buyer(s) name on Schedule I
      attached to the Securities Purchase Agreement;

     

    WHEREAS,
      to induce the Secured Party to enter into the transaction contemplated
      by the Securities Purchase Agreement, the Secured Convertible Debenture, the
      Investor Registration Rights Agreement, the Irrevocable Transfer Agent
      Instructions, the Warrant, the Pledge Agreement, and the Escrow Agreement,
      each
      as defined in the Securities Purchase Agreement (collectively referred to as
      the
“Transaction Documents”), the Company hereby grants to the Secured Party
      a security interest in and to the pledged collateral identified on Attachment
      1 hereto until the satisfaction of the Obligations, as defined herein
      below.

     

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

     

    II.           ARTICLE
      1.

     

    DEFINITIONS
      AND INTERPRETATIONS

    A.  Section
      1.1.  Recitals.

     

    The
      above
      recitals are true and correct and are incorporated herein, in their entirety,
      by
      this reference.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    B.  Section
      1.2.  Interpretations.

     

    Nothing
      herein expressed or implied is intended or shall be construed to confer upon
      any
      person other than the Secured Party any right, remedy or claim under or by
      reason hereof.

     

    C.  Section
      1.3.  Obligations
      Secured.

     

    The
      obligations secured hereby are any and all obligations of the Company now
      existing or hereinafter incurred to the Secured Party, whether oral or written
      and whether arising before, on or after the date hereof including, without
      limitation, those obligations of the Company to the Secured Party under the
      Securities Purchase Agreement, the Secured Convertible Debenture, the Investor
      Registration Rights Agreement and Irrevocable Transfer Agent Instructions,
      and
      any other amounts now or hereafter owed to the Secured Party by the Company
      thereunder or hereunder (collectively, the “Obligations”).

     

    III.           ARTICLE
      2.

     

    Pledged
      Collateral, administration of collateral

    AND
      TERMINATION OF SECURITY INTEREST

    A.  Section
      2.1.  Grant of Security
      Interest.

     

    1.           As
      security for the Obligations, Company hereby pledges to Secured Party and grants
      to Secured Party a security interest in all right, title and interests of
      Company and its subsidiaries in and to the property described in Attachment
      1
      hereto, whether now existing or hereafter from time to time acquired
      (collectively, the  “Pledged Collateral.”).

     

    (1)  (a)  Simultaneously
      with the execution and delivery of this Agreement, the Company shall make,
      execute, acknowledge, file, record and deliver to the Secured Party any
      documents reasonably requested by the Secured Party to perfect its security
      interest in the Pledged Collateral.  Simultaneously with the execution
      and delivery of this Agreement, the Company shall make, execute, acknowledge
      and
      deliver to the Secured Party such documents and instruments, including, without
      limitation, financing statements, certificates, affidavits and forms as may,
      in
      the Secured Party’s reasonable judgment, be necessary to effectuate, complete or
      perfect, or to continue and preserve, the security interest of the Secured
      Party
      in the Pledged Collateral, and the Secured Party shall hold such documents
      and
      instruments as secured party, subject to the terms and conditions contained
      herein.

     

    B.  Section
      2.2.  Rights; Interests;
      Etc.

     

    (1)  (a)  So
      long as no Event of Default (as hereinafter defined) shall have occurred
      and be continuing:

     

    (a)  (i)  the
      Company and its subsidiaries shall be entitled to exercise any and all rights
      pertaining to the Pledged Collateral or any part thereof for any purpose not
      inconsistent with the terms hereof; and

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (b)  (ii)  the
      Company and its subsidiaries shall be entitled to receive and retain any and
      all
      payments paid or made in respect of the Pledged Collateral.

     

    (2)  (b)  Upon
      the occurrence and during the continuance of an Event of Default:

     

    (a)  (i)  All
      rights of the Company and/or its subsidiaries to exercise the rights which
      it
      would otherwise be entitled to exercise pursuant to
      Section 2.2(a)(i) hereof and to receive payments which it would
      otherwise be authorized to receive and retain pursuant to
      Section 2.2(a)(ii) hereof shall be suspended, and all such rights
      shall thereupon become vested in the Secured Party who shall thereupon have
      the
      sole right to exercise such rights and to receive and hold as Pledged Collateral
      such payments; provided, however, that if the Secured Party shall
      become entitled and shall elect to exercise its right to realize on the Pledged
      Collateral pursuant to Article 5 hereof, then all cash sums received by the
      Secured Party, or held by Company and/or its subsidiaries for the benefit of
      the
      Secured Party and paid over pursuant to Section 2.2(b)(ii) hereof,
      shall be applied against any outstanding Obligations; and

     

    (b)  (ii)  All
      interest, dividends, income and other payments and distributions which are
      received by the Company and/or its subsidiaries contrary to the provisions
      of
      Section 2.2(b)(i) hereof shall be received in trust for the benefit of
      the Secured Party, shall be segregated from other property of the Company and/or
      its subsidiaries and shall be forthwith paid over to the Secured Party;
      or

     

    (c)  (iii)  The
      Secured Party in its sole discretion shall be authorized to sell any or all
      of
      the Pledged Collateral at public or private sale in order to recoup all of
      the
      outstanding principal plus accrued interest owed pursuant to the Convertible
      Debenture as described herein

     

    (3)  (c)  Each
      of the following events shall constitute a default under this Agreement (each
      an
“Event of Default”):

     

    (a)  (i)  any
      default, whether in whole or in part, shall occur in the payment to the Secured
      Party of principal, interest or other item comprising the Obligations as and
      when due or with respect to any other debt or obligation of the Company to
      a
      party other than the Secured Party;

     

    (b)  (ii)  any
      default, whether in whole or in part, shall occur in the due observance or
      performance of any obligations or other covenants, terms or provisions to be
      performed under this Agreement or the Transaction Documents;

     

    (c)  (iii)  the
      Company and/or its subsidiaries shall:  (1) make a general
      assignment for the benefit of its creditors; (2) apply for or consent to
      the appointment of a receiver, trustee, assignee, custodian, sequestrator,
      liquidator or similar official for itself or any of its assets and properties;
      (3) commence a voluntary case for relief as a debtor under the United
      States Bankruptcy Code; (4) file with or otherwise submit to any
      governmental authority any petition, answer or other document
      seeking:  (A) reorganization, (B) an arrangement with
      creditors or (C) to take advantage of any other present or future
      applicable law respecting bankruptcy, reorganization, insolvency, readjustment
      of debts, relief of debtors, dissolution or liquidation; (5) file or
      otherwise submit any answer or other document admitting or failing to contest
      the material allegations of a petition or other document filed or otherwise
      submitted against it in any of the proceedings set forth in this Section
      2.2(c)(ii) under any such applicable law, or (6) be adjudicated a bankrupt
      or insolvent by a court of competent jurisdiction; or (iii) any case, proceeding
      or other action shall be commenced against the Company for the purpose of
      effecting, or an order, judgment or decree shall be entered by any court of
      competent jurisdiction approving (in whole or in part) anything specified
      in Section 2.2(c)(ii) hereof, or any receiver, trustee, assignee,
      custodian, sequestrator, liquidator or other official shall be appointed with
      respect to the Company and/or its subsidiaries, or shall be appointed to take
      or
      shall otherwise acquire possession or control of all or a substantial part
      of
      the assets and properties of the Company and/or its subsidiaries, and any of
      the
      foregoing shall continue unstayed and in effect for any period of thirty
      (30) days.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    IV.           ARTICLE
      3.

     

    attorney-in-fact;
      performance

    A.  Section
      3.1.  Secured Party Appointed
      Attorney-In-Fact.

     

    Upon
      the
      occurrence of an Event of Default, the Company hereby appoints the Secured
      Party
      as its attorney-in-fact, with full authority in the place and stead of the
      Company and in the name of the Company or otherwise, from time to time in the
      Secured Party’s discretion to take any action and to execute any instrument
      which the Secured Party may reasonably deem necessary to accomplish the purposes
      of this Agreement, including, without limitation, to receive and collect all
      instruments made payable to the Company representing any payments in respect
      of
      the Pledged Collateral or any part thereof and to give full discharge for the
      same.  The Secured Party may demand, collect, receipt for, settle,
      compromise, adjust, sue for, foreclose, or realize on the Pledged Collateral
      as
      and when the Secured Party may determine.  To facilitate collection,
      the Secured Party may notify account debtors and obligors on any Pledged
      Collateral or Pledged Collateral to make payments directly to the Secured
      Party.

     

    B.  Section
      3.2.  Secured Party May
      Perform.

     

    If
      the
      Company fails to perform any agreement contained herein, the Secured Party,
      at
      its option, may itself perform, or cause performance of, such agreement, and
      the
      expenses of the Secured Party incurred in connection therewith shall be included
      in the Obligations secured hereby and payable by the Company under
      Section 8.3.

     

    V.           ARTICLE
      4.

     

    representations
      and warranties

    A.  Section
      4.1.  Authorization;
      Enforceability.

     

    Each
      of
      the parties hereto represents and warrants that it has taken all action
      necessary to authorize the execution, delivery and performance of this Agreement
      and the transactions contemplated hereby; and upon execution and delivery,
      this
      Agreement shall constitute a valid and binding obligation of the respective
      party, subject to applicable bankruptcy, insolvency, reorganization, moratorium
      and similar laws affecting creditors’ rights or by the principles governing the
      availability of equitable remedies.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    B.  Section
      4.2.  Ownership of Pledged
      Collateral.

     

    The
      Company warrants and represents that it is the legal and beneficial owner of
      the
      Pledged Collateral free and clear of any lien, security interest, option or
      other charge or encumbrance except for the security interest created by this
      Agreement.

     

    VI.           ARTICLE
      5.

     

    default;
      remedies; substitute collateral

    A.  Section
      5.1.  Default and
      Remedies.

     

    (1)  (a)  If
      an Event of Default described in Section 2.2(c)(i) or
      (ii) occurs, then in each such case the Secured Party may declare the
      Obligations to be due and payable immediately, by a notice in writing to the
      Company, and upon any such declaration, the Obligations shall become immediately
      due and payable.  If an Event of Default described in
      Sections 2.2(c)(iii) or (iv) occurs and is continuing for the
      period set forth therein, then the Obligations shall automatically become
      immediately due and payable without declaration or other act on the part of
      the
      Secured Party.

     

    (2)  (b)  Upon
      the occurrence of an Event of Default, the Secured Party shall: (i) be
      entitled to receive all distributions with respect to the Pledged Collateral,
      (ii) to cause the Pledged Collateral to be transferred into the name of the
      Secured Party or its nominee, (iii) to dispose of the Pledged Collateral,
      and (iv) to realize upon any and all rights in the Pledged Collateral then
      held by the Secured Party.

     

    B.  Section
      5.2.  Method of Realizing
      Upon the
      Pledged Collateral: Other Remedies.

     

    Upon
      the
      occurrence of an Event of Default, in addition to any rights and remedies
      available at law or in equity, the following provisions shall govern the Secured
      Party’s right to realize upon the Pledged Collateral:

     

    (1)  (a)  Any
      item of the Pledged Collateral may be sold for cash or other value in any number
      of lots at brokers board, public auction or private sale and may be sold without
      demand, advertisement or notice (except that the Secured Party shall give the
      Company ten (10) days’ prior written notice of the time and place or
      of the time after which a private sale may be made (the “Sale Notice”)),
      which notice period shall in any event is hereby agreed to be commercially
      reasonable.  At any sale or sales of the Pledged Collateral, the
      Company may bid for and purchase the whole or any part of the Pledged Collateral
      and, upon compliance with the terms of such sale, may hold, exploit and dispose
      of the same without further accountability to the Secured Party.  The
      Company will execute and deliver, or cause to be executed and delivered, such
      instruments, documents, assignments, waivers, certificates, and affidavits
      and
      supply or cause to be supplied such further information and take such further
      action as the Secured Party reasonably shall require in connection with any
      such
      sale.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (2)  (b)  Any
      cash being held by the Secured Party as Pledged Collateral and all cash proceeds
      received by the Secured Party in respect of, sale of, collection from, or other
      realization upon all or any part of the Pledged Collateral shall be applied
      as
      follows:

     

    (a)  (i)  to
      the payment of all amounts due the Secured Party for the expenses reimbursable
      to it hereunder or owed to it pursuant to Section 8.3 hereof;

     

    (b)  (ii)  to
      the payment of the Obligations then due and unpaid.

     

    (c)  (iii)  the
      balance, if any, to the person or persons entitled thereto, including, without
      limitation, the Company.

     

    (3)  (c)  In
      addition to all of the rights and remedies which the Secured Party may have
      pursuant to this Agreement, the Secured Party shall have all of the rights
      and
      remedies provided by law, including, without limitation, those under the Uniform
      Commercial Code.

     

    (a)  (i)  If
      the Company fails to pay such amounts due upon the occurrence of an Event of
      Default which is continuing, then the Secured Party may institute a judicial
      proceeding for the collection of the sums so due and unpaid, may prosecute
      such
      proceeding to judgment or final decree and may enforce the same against the
      Company and collect the monies adjudged or decreed to be payable in the manner
      provided by law out of the property of Company, wherever
      situated.

    (b)  (ii)  The
      Company agrees that it shall be liable for any reasonable fees, expenses and
      costs incurred by the Secured Party in connection with enforcement, collection
      and preservation of the Transaction Documents, including, without limitation,
      reasonable legal fees and expenses, and such amounts shall be deemed included
      as
      Obligations secured hereby and payable as set forth in Section 8.3
      hereof.

     

    C.  Section
      5.3.  Proofs of
      Claim.

     

    (1)  In
      case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
      reorganization, arrangement, adjustment, composition or other judicial
      proceeding relating to the Company or the property of the Company or of such
      other obligor or its creditors, the Secured Party (irrespective of whether
      the
      Obligations shall then be due and payable as therein expressed or by declaration
      or otherwise and irrespective of whether the Secured Party shall have made
      any
      demand on the Company for the payment of the Obligations), subject to the rights
      of Previous Security Holders, shall be entitled and empowered, by intervention
      in such proceeding or otherwise:

     

    (a)  (i)  to
      file and prove a claim for the whole amount of the Obligations and to file
      such
      other papers or documents as may be necessary or advisable in order to have
      the
      claims of the Secured Party (including any claim for the reasonable legal fees
      and expenses and other expenses paid or incurred by the Secured Party permitted
      hereunder and of the Secured Party allowed in such judicial proceeding),
      and

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (b)  (ii)  to
      collect and receive any monies or other property payable or deliverable on
      any
      such claims and to distribute the same; and any custodian, receiver, assignee,
      trustee, liquidator, sequestrator or other similar official in any such judicial
      proceeding is hereby authorized by the Secured Party to make such payments
      to
      the Secured Party and, in the event that the Secured Party shall consent to
      the
      making of such payments directed to the Secured Party, to pay to the Secured
      Party any amounts for expenses due it hereunder.

     

    D.  Section
      5.4.  Duties Regarding Pledged
      Collateral.

     

    The
      Secured Party shall have no duty as to the collection or protection of the
      Pledged Collateral or any income thereon or as to the preservation of any rights
      pertaining thereto, beyond the safe custody and reasonable care of any of the
      Pledged Collateral actually in the Secured Party’s possession.

     

    VII.           ARTICLE
      6.

     

    AFFIRMATIVE
      COVENANTS

    The
      Company covenants and agrees that, from the date hereof and until the
      Obligations have been fully paid and satisfied, unless the Secured Party shall
      consent otherwise in writing (as provided in Section 8.4
      hereof):

     

    A.  Section
      6.1.  Existence, Properties,
      Etc.

     

    (1)  (a)  The
      Company shall do, or cause to be done, all things, or proceed with due diligence
      with any actions or courses of action, that may be reasonably necessary
      (i) to maintain Company’s due organization, valid existence and good
      standing under the laws of its state of incorporation, and (ii) to preserve
      and keep in full force and effect all qualifications, licenses and registrations
      in those jurisdictions in which the failure to do so could have a Material
      Adverse Effect (as defined below); and (b) the Company shall not do, or
      cause to be done, any act impairing the Company’s corporate power or authority
      (i) to carry on the Company’s business as now conducted, and (ii) to
      execute or deliver this Agreement or any other document delivered in connection
      herewith, including, without limitation, any UCC-1 Financing Statements required
      by the Secured Party to which it is or will be a party, or perform any of
      its obligations hereunder or thereunder.  For purpose of this
      Agreement, the term “Material Adverse Effect” shall mean any material and
      adverse affect as determined by Secured Party in its sole discretion, whether
      individually or in the aggregate, upon (a) the Company’s assets, business,
      operations, properties or condition, financial or otherwise or results of
      operations of the Company, taken as a whole, excluding any change, event,
      circumstance or effect that is caused by changes in general economic conditions
      or changes generally affecting the industry in which the Company operates
      (provided that such changes do not affect the Company in a materially
      disproportionate manner); or (b) the Company’s ability to make payment as
      and when due of all or any part of the Obligations; or (c) the Pledged
      Collateral.

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    B.  Section
      6.2.  Financial Statements
      and
      Reports.

     

    The
      Company shall furnish to the Secured Party such financial data as the Secured
      Party may reasonably request.  Without limiting the foregoing, the
      Company shall furnish to the Secured Party (or cause to be furnished to the
      Secured Party) the following:

     

    (1)  (a)  as
      soon as practicable and in any event within ninety (90) days after the end
      of
      each fiscal year of the Company, the balance sheet of the Company as of the
      close of such fiscal year, the statement of earnings and retained earnings
      of
      the Company as of the close of such fiscal year, and statement of cash flows
      for
      the Company for such fiscal year, all in reasonable detail, prepared in
      accordance with generally accepted accounting principles consistently applied,
      certified by the chief executive and chief financial officers of the Company
      as
      being true and correct and accompanied by a certificate of the chief executive
      and chief financial officers of the Company, stating that the Company has kept,
      observed, performed and fulfilled each covenant, term and condition of this
      Agreement during such fiscal year and that no Event of Default hereunder has
      occurred and is continuing, or if an Event of Default has occurred and is
      continuing, specifying the nature of same, the period of existence of same
      and
      the action the Company proposes to take in connection therewith;

     

    (2)  (b)  within
      thirty (30) days of the end of each calendar month, a balance sheet of the
      Company as of the close of such month, and statement of earnings and retained
      earnings of the Company as of the close of such month, all in reasonable detail,
      and prepared substantially in accordance with generally accepted accounting
      principles consistently applied, certified by the chief executive and chief
      financial officers of the Company as being true and correct; and

     

    (3)  (c)  promptly
      upon receipt thereof, copies of all accountants' reports and accompanying
      financial reports submitted to the Company by independent accountants in
      connection with each annual examination of the Company.

     

    C.  Section
      6.3  Accounts and
      Reports.

     

    The
      Company shall maintain a standard system of accounting in accordance with
      generally accepted accounting principles consistently applied and provide,
      at
      its sole expense, to the Secured Party the following:

     

    (1)  (a)  as
      soon as available, a copy of any notice or other communication alleging any
      nonpayment or other material breach or default, or any foreclosure or other
      action respecting any material portion of its assets and properties, received
      respecting any of the indebtedness of the Company in excess of $25,000 (other
      than the Obligations), or any demand or other request for payment under any
      guaranty, assumption, purchase agreement or similar agreement or arrangement
      respecting the indebtedness or obligations of others in excess of $25,000,
      including any received from any person acting on behalf of the Secured Party
      or
      beneficiary thereof, except for supplier requests in the normal course of
      business for payment of past due accounts payable invoices so long as such
      past
      due amounts do not exceed in the aggregate $50,000 at any time;
      and

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (2)  (b)  within
      fifteen (15) days after the making of each submission or filing, a copy of
      any report, financial statement, notice or other document, whether periodic
      or
      otherwise, submitted to the shareholders of the Company, or submitted to or
      filed by the Company with any governmental authority involving or affecting
      (i)
      the Company that could have a Material Adverse Effect; (ii) the
      Obligations; (iii) any part of the Pledged Collateral; or (iv) any of
      the transactions contemplated in this Agreement or the Transaction
      Documents.

     

    D.  Section
      6.4.  Maintenance of Books
      and
      Records; Inspection.

     

    The
      Company shall maintain its books, accounts and records in accordance with
      generally accepted accounting principles consistently applied, and permit the
      Secured Party, its officers and employees and any professionals designated
      by
      the Secured Party in writing, during business hours and upon reasonable notice
      to visit and inspect any of its properties (including but not limited to the
      Pledged Collateral), corporate books and financial records, and to discuss
      its
      accounts, affairs and finances with any employee, officer or director
      thereof.

     

    E.  Section
      6.5.  Maintenance and
      Insurance.

     

    (1)  (c)  The
      Company shall maintain or cause to be maintained, at its own expense, all of
      its
      assets and properties in good working order and condition, making all necessary
      repairs thereto and renewals and replacements thereof.

     

    (2)  (d)  The
      Company shall maintain or cause to be maintained, at its own expense, insurance
      in form, substance and amounts (including deductibles), which the Company deems
      reasonably necessary to the Company’s business, (i) adequate to insure all
      assets and properties of the Company, which assets and properties are of a
      character usually insured by persons engaged in the same or similar business
      against loss or damage resulting from fire or other risks included in an
      extended coverage policy; (ii) against public liability and other tort
      claims that may be incurred by the Company; (iii) as may be required by the
      Transaction Documents and/or applicable law and (iv) as may be reasonably
      requested by Secured Party, all with adequate, financially sound and reputable
      insurers.

     

    F.  Section
      6.6.  Contracts and Other
      Collateral.

     

    The
      Company shall perform all of its obligations under or with respect to each
      instrument, receivable, contract and other intangible included in the Pledged
      Collateral to which the Company is now or hereafter will be party on a timely
      basis and in the manner therein required, including, without limitation, this
      Agreement.

     

    G.  Section
      6.7.  Defense of Collateral,
      Etc.

     

    The
      Company shall defend and enforce its right, title and interest in and to any
      part of:  (a) the Pledged Collateral; and (b) if not
      included within the Pledged Collateral, those assets and properties whose loss
      could have a Material Adverse Effect, the Company shall defend the Secured
      Party’s right, title and interest in and to each and every part of the Pledged
      Collateral, each against all manner of claims and demands on a timely basis
      to
      the full extent permitted by applicable law.

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    H.  Section
      6.8.  Payment of Debts, Taxes,
      Etc.

     

    The
      Company shall pay, or cause to be paid, all of its indebtedness and other
      liabilities and perform, or cause to be performed, all of its obligations in
      accordance with the respective terms thereof, and pay and discharge, or cause
      to
      be paid or discharged, all taxes, assessments and other governmental charges
      and
      levies imposed upon it, upon any of its assets and properties on or before
      the
      last day on which the same may be paid without penalty, as well as pay all
      other
      lawful claims (whether for services, labor, materials, supplies or
      otherwise) as and when due

     

    I.  Section
      6.9.  Taxes and Assessments;
      Tax
      Indemnity.

     

    The
      Company shall (a) file all tax returns and appropriate schedules thereto
      that are required to be filed under applicable law, prior to the date of
      delinquency, (b) pay and discharge all taxes, assessments and governmental
      charges or levies imposed upon the Company, upon its income and profits or
      upon
      any properties belonging to it, prior to the date on which penalties attach
      thereto, and (c) pay all taxes, assessments and governmental charges or
      levies that, if unpaid, might become a lien or charge upon any of its
      properties; provided, however, that the Company in good faith may
      contest any such tax, assessment, governmental charge or levy described in
      the
      foregoing clauses (b) and (c) so long as appropriate reserves are maintained
      with respect thereto.

     

    J.  Section
      6.10.  Compliance with Law
      and Other Agreements.

     

    The
      Company shall maintain its business operations and property owned or used in
      connection therewith in compliance with (a) all applicable federal, state
      and local laws, regulations and ordinances governing such business operations
      and the use and ownership of such property, and (b) all agreements,
      licenses, franchises, indentures and mortgages to which the Company is a party
      or by which the Company or any of its properties is bound.  Except as
      set forth in its cash flow projections provided to the Secured Party as set
      forth in the Securities Purchase Agreement, without limiting the foregoing,
      the
      Company shall pay all of its indebtedness promptly in accordance with the terms
      thereof.

     

    K.  Section
      6.11.  Notice of
      Default.

     

    The
      Company shall give written notice to the Secured Party of the occurrence of
      any
      default or Event of Default under this Agreement, the Transaction Documents
      or
      the Debenture any other agreement of Company for the payment of money, promptly
      upon the occurrence thereof.

     

    L.  Section
      6.12.  Notice of
      Litigation.

     

    The
      Company shall give notice, in writing, to the Secured Party of (a) any
      actions, suits or proceedings wherein the amount at issue is in excess of
      $50,000, instituted by any persons against the Company, or affecting any of
      the
      assets of the Company, and (b) any dispute, not resolved within fifteen
      (15) days of the commencement thereof, between the Company on the one hand
      and
      any governmental or regulatory body on the other hand, which might reasonably
      be
      expected to have a Material Adverse Effect on the business operations or
      financial condition of the Company.

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    VIII.  ARTICLE
      7.

     

    NEGATIVE
      COVENANTS

    The
      Company covenants and agrees that, from the date hereof until the Obligations
      have been fully paid and satisfied, the Company shall not, unless the Secured
      Party shall consent otherwise in writing:

     

    A.  Section
      7.1.  Indebtedness.

     

    Other
      than in the ordinary course of business consistent with past practice, the
      Company shall not directly or indirectly permit, create, incur, assume, permit
      to exist, increase, renew or extend on or after the date hereof any indebtedness
      on its part, including commitments, contingencies and credit availabilities,
      or
      apply for or offer or agree to do any of the foregoing.

     

    B.  Section
      7.2.  Liens and
      Encumbrances.

     

    Other
      than in the ordinary course of business consistent with past
      practice,  and except for such assignment, transfer, pledge, mortgage,
      security interest or other lien or encumbrance as is outstanding on the date
      of
      this Agreement, the Company shall not directly or indirectly make, create,
      incur, assume or permit to exist any assignment, transfer, pledge, mortgage,
      security interest or other lien or encumbrance of any nature in, to or against
      any part of the Pledged Collateral or of the Company’s capital stock, or offer
      or agree to do so, or own or acquire or agree to acquire any asset or property
      of any character subject to any of the foregoing encumbrances (including any
      conditional sale contract or other title retention agreement), or assign, pledge
      or in any way transfer or encumber its right to receive any income or other
      distribution or proceeds from any part of the Pledged Collateral or the
      Company’s capital stock; or enter into any sale-leaseback financing respecting
      any part of the Pledged Collateral as lessee, or cause or assist the inception
      or continuation of any of the foregoing.

     

    C.  Section
      7.3.  Certificate of Incorporation,
      By-Laws, Mergers, Consolidations, Acquisitions and Sales.

     

    Other
      than in the ordinary course of business consistent with past practice, without
      the prior express written consent of the Secured Party, the Company shall
      not:  (a) Amend its Certificate of Incorporation or By-Laws; (b)
      issue or sell any Common Stock or Preferred Stock without consideration or
      for a
      consideration per share less than the bid price of the Common Stock determined
      immediately prior to its issuance, (c) issue or sell any Preferred Stock,
      warrant, option, right, contract, call, or other security or instrument granting
      the holder thereof the right to acquire Common Stock without consideration
      or
      for a consideration per share less than such Common Stock’s bid price value
      determined immediately prior to its issuance,; (c) be a party to any merger,
      consolidation or corporate reorganization, (d) purchase or otherwise
      acquire all or substantially all of the assets or stock of, or any partnership
      or joint venture interest in, any other person, firm or entity, (e) enter
      into any security instrument granting the holder a security interest in any
      of
      the assets of the Company or sell, transfer or lease all or any substantial
      part
      of the assets of the Company, nor (f) create any subsidiaries nor convey
      any of its assets to any subsidiary.

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    D.  Section
      7.4.  Management,
      Ownership.

     

    The
      Company shall not materially change its ownership, executive staff or management
      without the prior written consent of the Secured Party.  The
      ownership, executive staff and management of the Company are material factors
      in
      the Secured Party's willingness to institute and maintain a lending relationship
      with the Company.

     

    E.  Section
      7.5.  Dividends,
      Etc.

     

    The
      Company shall not declare or pay any dividend of any kind, in cash or in
      property, on any class of its capital stock, nor purchase, redeem, retire or
      otherwise acquire for value any shares of such stock, nor make any distribution
      of any kind in respect thereof, nor make any return of capital to shareholders,
      nor make any payments in respect of any pension, profit sharing, retirement,
      stock option, stock bonus, incentive compensation or similar plan (except as
      required or permitted hereunder), without the prior written consent of the
      Secured Party.

     

    F.  Section
      7.6.  Guaranties;
      Loans.

     

    Other
      than in the ordinary course of business, and except for such guarantees or
      liabilities as are outstanding on the date of this Agreement, the Company shall
      not guarantee nor be liable in any manner, whether directly or indirectly,
      or
      become contingently liable after the date of this Agreement in connection with
      the obligations or indebtedness of any person or persons, except for (i) the
      indebtedness currently secured by the liens identified on the Pledged Collateral
      identified on Exhibit A hereto and (ii) the endorsement of negotiable
      instruments payable to the Company for deposit or collection in the ordinary
      course of business.  The Company shall not make any loan, advance or
      extension of credit to any person other than in the normal course of its
      business.

     

    G.  Section
      7.7.  Debt.

     

    Other
      than in the ordinary course of business, and except for such indebtedness as
      is
      outstanding on the date of this Agreement, without the prior written approval
      of
      Trafalgar, the Company shall not create, incur, assume or suffer to exist any
      additional indebtedness of any description whatsoever in an aggregate amount
      in
      excess of $50,000 (excluding any indebtedness of the Company to the Secured
      Party, trade accounts payable and accrued expenses incurred in the ordinary
      course of business and the endorsement of negotiable instruments payable to
      the
      Company, respectively for deposit or collection in the ordinary course of
      business).

     

    H.  Section
      7.8.  Conduct of
      Business.

     

    The
      Company will continue to engage in the business of the Company in the same
      manner as heretofore conducted and only in the ordinary course consistent with
      past practice.

     

    I.      Section
      7.9.   Places
      of Business.

     

    The
      location of the Company’s chief place of business is at the address set forth
      in  Section 8.1 hereof.  The Company shall not change the
      location of its chief place of business, chief executive office or any place
      of
      business disclosed to the Secured Party or move any of the Pledged Collateral
      from its current location (other than in the ordinary course of
      business) without thirty (30) days' prior written notice
      to the Secured Party in each instance.

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    IX.  ARTICLE
      8.

     

    MISCELLANEOUS

    A.  Section
      8.1.  Notices.

     

    All
      notices or other communications required or permitted to be given pursuant
      to
      this Agreement shall be in writing and shall be considered as duly given
      on:  (a) the date of delivery, if delivered in person, by
      nationally recognized overnight delivery service or
      (b) five (5) days after mailing if mailed from within the
      continental United States by certified mail, return receipt requested to the
      party entitled to receive the same:

     

    
      	 	
              If
                to the Secured Party:

            	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
              With
                a copy to:

            	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
              And
                if to the Company:

            	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	
              Attention:

            
	 	 	 	
              Telephone:

            
	 	 	 	
              Facsimile:

            
	 	 	 	 
	 	
              With
                a copy to:

            	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	
              Attn: 

            
	 	 	 	
              Telephone:

            
	 	 	 	
              Facsimile:

            

    

    

    Any
      party
      may change its address by giving notice to the other party stating its new
      address.  Commencing on the tenth (10th) day after
      the giving of such notice, such newly designated address shall be such party’s
      address for the purpose of all notices or other communications required or
      permitted to be given pursuant to this Agreement.

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    B.  Section
      8.2.  Severability.

     

    If
      any
      provision of this Agreement shall be held invalid or unenforceable, such
      invalidity or unenforceability shall attach only to such provision and shall
      not
      in any manner affect or render invalid or unenforceable any other severable
      provision of this Agreement, and this Agreement shall be carried out as if
      any
      such invalid or unenforceable provision were not contained herein.

     

    C.  Section
      8.3.  Expenses.

     

    In
      the
      event of an Event of Default, the Company will pay to the Secured Party the
      amount of any and all reasonable expenses, including the reasonable fees and
      expenses of its counsel, which the Secured Party may incur in connection
      with:  (i) the custody or preservation of, or the sale,
      collection from, or other realization upon, any of the Pledged Collateral;
      (ii) the exercise or enforcement of any of the rights of the Secured Party
      hereunder or (iii) the failure by the Company to perform or observe any of
      the provisions hereof.

     

    D.  Section
      8.4.  Waivers, Amendments,
      Etc.

     

    The
      Secured Party’s delay or failure at any time or times hereafter to require
      strict performance by Company of any undertakings, agreements or covenants
      shall
      not waiver, affect, or diminish any right of the Secured Party under this
      Agreement to demand strict compliance and performance herewith.  Any
      waiver by the Secured Party of any Event of Default shall not waive or affect
      any other Event of Default, whether such Event of Default is prior or subsequent
      thereto and whether of the same or a different type.  None of the
      undertakings, agreements and covenants of the Company contained in this
      Agreement, and no Event of Default, shall be deemed to have been waived by
      the
      Secured Party, nor may this Agreement be amended, changed or modified, unless
      such waiver, amendment, change or modification is evidenced by an instrument
      in
      writing specifying such waiver, amendment, change or modification and signed
      by
      the Secured Party.

     

    E.  Section
      8.5.  Continuing Security
      Interest.

     

    This
      Agreement shall create a continuing security interest in the Pledged Collateral
      and shall: (i) remain in full force and effect until payment in full of the
      Obligations; and (ii) be binding upon the Company and its successors and
      heirs and (iii) inure to the benefit of the Secured Party and its
      successors and assigns.  Upon the payment or satisfaction in full of
      the Obligations, the Company shall be entitled to the return, at its expense,
      of
      such of the Pledged Collateral as shall not have been sold in accordance with
      Section 5.2 hereof or otherwise applied pursuant to the terms
      hereof.

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    F.  Section
      8.6.  Independent
      Representation.

     

    Each
      party hereto acknowledges and agrees that it has received or has had the
      opportunity to receive independent legal counsel of its own choice and that
      it
      has been sufficiently apprised of its rights and responsibilities with regard
      to
      the substance of this Agreement.

     

    G.  Section
      8.7.  Applicable
      Law:  Jurisdiction.

     

    This
      Agreement shall be governed by and interpreted in accordance with the laws
      of
      the State of Florida without regard to the principles of conflict of
      laws.  The parties further agree that any action between them shall be
      heard in Florida and expressly consent to the jurisdiction and venue of the
      Florida State Court sitting in Broward County, Florida and the United States
      District Court for the Southern District of Florida for the adjudication of
      any
      civil action asserted pursuant to this Paragraph.

     

    H.  Section
      8.8.  Waiver of Jury
      Trial.

     

    AS
      A
      FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT AND TO
      MAKE THE FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY HEREBY WAIVES
      ANY
      RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS
      AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS
      TRANSACTION.

     

    I.  Section
      8.9.  Entire
      Agreement.

     

    This
      Agreement constitutes the entire agreement among the parties and supersedes
      any
      prior agreement or understanding among them with respect to the subject matter
      hereof.

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Security
      Agreement as of the date first above written.

     

    

    
      	 	
              COMPANY:

            
	 	
              PLANETLINK
                COMMUNICATIONS, INC.

            
	 	 
	 	
              By:

            	
               

            
	 	
              Name:

            
	 	
              Title:     
                Chairman

            
	 	 
	 	 
	 	
              SECURED
                PARTY:

            
	 	 
	 	 
	 	
              By:

            
	 	
              Its:

            
	 	 
	 	
              By:

            	
               

            
	 	
              Name:

            
	 	
              Title:

            

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    exhibit
      A

    DEFINITION
      OF PLEDGED COLLATERAL

     

    For
      the
      purpose of securing prompt and complete payment and performance by the Company
      of all of the Obligations, the Company unconditionally and irrevocably hereby
      grants to the Secured Party a continuing security interest in and to, and lien
      upon, all of the Company’s assets and all of the assets of the Company’s
      subsidiaries, including specifically the following Pledged Collateral of the
      Company and its subsidiaries:

     

    (1)  (a)  all
      goods of the Company and/or its subsidiaries, including, without limitation,
      machinery, equipment, furniture, furnishings, fixtures, signs, lights, tools,
      parts, supplies and motor vehicles of every kind and description, now or
      hereafter owned by the Company and/or its subsidiaries or in which the Company
      and/or its subsidiaries may have or may hereafter acquire any interest, and
      all
      replacements, additions, accessions, substitutions and proceeds thereof, arising
      from the sale or disposition thereof, and where applicable, the proceeds of
      insurance and of any tort claims involving any of the foregoing;

     

    (2)  (b)  all
      inventory of the Company and/or its subsidiaries, including, but not limited
      to,
      all goods, wares, merchandise, parts, supplies, finished products, other
      tangible personal property, including such inventory as is temporarily out
      of
      Company’s or its subsidiaries’ custody or possession and including any returns
      upon any accounts or other proceeds, including insurance proceeds, resulting
      from the sale or disposition of any of the foregoing;

     

    (3)  (c)  all
      contract rights and general intangibles of the Company and/or its subsidiaries,
      including, without limitation, goodwill, trademarks, trade styles, trade names,
      leasehold interests, partnership or joint venture interests, patents and patent
      applications, copyrights, deposit accounts whether now owned or hereafter
      created;

     

    (4)  (d)  all
      documents, warehouse receipts, instruments and chattel paper of the Company
      and/or its subsidiaries whether now owned or hereafter created;

     

    (5)  (e)  all
      accounts and other receivables, instruments or other forms of obligations and
      rights to payment of the Company and/or its subsidiaries (herein collectively
      referred to as “Accounts”), together with the proceeds thereof, all goods
      represented by such Accounts and all such goods that may be returned by the
      Company’s and/or its subsidiaries’ customers, and all proceeds of any insurance
      thereon, and all guarantees, securities and liens which the Company and/or
      its
      subsidiaries may hold for the payment of any such Accounts including, without
      limitation, all rights of stoppage in transit, replevin and reclamation and
      as
      an unpaid vendor and/or lienor, all of which the Company and its subsidiaries
      represent and warrant will be bona fide and existing obligations of its
      respective customers, arising out of the sale of goods by the Company in the
      ordinary course of business;

     

    (6)  (f)  to
      the extent assignable, all of the Company’s and/or its subsidiaries’ rights
      under all present and future authorizations, permits, licenses and franchises
      issued or granted in connection with the operations of any of its
      facilities;

     

    (7)  (g)  all
      products and proceeds (including, without limitation, insurance proceeds) from
      the above-described Pledged Collateral.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      I

     

    SCHEDULE
      OF BUYERS

    

    
      	
              
                Name

              

            	 	
              
                Signature

              

            	 	
              
                Address/Facsimile

                Number
                  of Buyer

              

            	 	
              
                Amount
                  of 

                Subscription

              

            
	 	 	 	 	
              8-10
                Rue Mathias Hardt

            	 	 

    

    

    

    Buyer’s
      Counsel:

    

    James
      G.
      Dodrill II, P.A.

    5800
      Hamilton Way

    Boca
      Raton, FL  33496

    Telephone:
      (561) 862-0529

    Facsimile:
      (561) 892-7787ex10_1.htm

    
      

    

    Exhibit
      10.1

     

    POMEROY
      IT SOLUTIONS, INC.

    
       

      SPECIAL
        CHANGE IN CONTROL BONUS AGREEMENT

       

      This
        SPECIAL CHANGE IN CONTROL BONUS AGREEMENT (this “Agreement”) is made and entered
        into as of this 11th day of December, 2007, by and between Pomeroy IT Solutions,
        Inc., a Delaware corporation (the “Company”), and Kevin Gregory – SVP, Chief
        Financial Officer, (the “Employee”).

       

      WHEREAS,
        the Company and the Employee have agreed that it is in their respective best
        interests that (i) the ongoing services of the Employee be secured at this
        time;
        and (ii) the Employee fully devote his/her attention to maximizing the value
        of
        the Company and to managing the Company’s participation in any potential “Change
        in Control” relating to the Company.

       

      NOW,
        THEREFORE, for and in consideration of the premises and the mutual covenants
        and
        agreements herein contained, the Company and Employee hereby agree as
        follows:

       

      
        	
              	
                1.

              	
                Definitions.

              

      

       

      
        	
                 

              	
                (a)

              	
                For
                  purposes of this Agreement, “Change In Control”
                  shall mean the first to occur of any of the following
                  events:

              

      

       

      
        	
                 

              	
                (i)

              	
                any
                  “person” (as defined in Section 13(d) and 14(d) of the Securities Exchange
                  Act of 1934, as amended (the “Exchange Act”),
                  excluding for this purpose, (A) the Company or any subsidiary
                  of
                  the Company, or (B) any employee benefit plan of the Company or
                  any
                  subsidiary of the Company, or any person or entity organized, appointed
                  or
                  established by the Company for or pursuant to the terms of any
                  such plan,
                  which acquires beneficial ownership of voting securities of the
                  Company,
                  is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
                  Exchange Act), directly or indirectly of securities of the Company
                  representing more than fifty percent (50%) of the combined voting
                  power of
                  the Company’s then outstanding securities; provided, however, that no
                  Change In Control will be deemed to have occurred as a result of
                  a change
                  in ownership percentage resulting solely from an acquisition of
                  securities
                  by the Company; or

              

      

       

      
        	
                 

              	
                (ii)

              	
                persons
                  who, as of the Effective Date constitute the Board (the “Incumbent
                  Directors”) cease for any reason, including
                  without limitation, as a result of a tender offer, proxy contest,
                  merger
                  or similar transaction, to constitute at least a majority thereof,
                  provided that any person becoming a director of the Company subsequent
                  to
                  the Effective Date shall be considered an Incumbent Director if
                  such
                  person’s election or nomination for election was approved by a vote of
                  at
                  least fifty percent (50%) of the Incumbent Directors; but provided
                  further, that any such person whose initial assumption of office
                  is in
                  connection with an actual or threatened election contest relating
                  to the
                  election of members of the Board or other actual or threatened
                  solicitation of proxies or consents by or on behalf of a “person” (as
                  defined in Section 13(d) and 14(d) of the Exchange Act) other than
                  the
                  Board, including by reason of agreement intended to avoid or settle
                  any
                  such actual or threatened contest or solicitation, shall not be
                  considered
                  an Incumbent Director; or

              

      

       

      
        
          
            
            

          

          
            Page
              1 of
              7

            
              

            

          

          
            
            

          

        

      

      

      
        	
                 

              	
                (iii)

              	
                consummation
                  of a reorganization, merger or consolidation or sale or other disposition
                  of at least eighty percent (80%) of the assets of the Company (a
                  “Business Combination”), unless, in each case, following
                  such Business Combination, all or substantially all of the individuals
                  and
                  entities who were the beneficial owners of outstanding voting securities
                  of the Company immediately prior to such Business Combination beneficially
                  own, directly or indirectly, more than fifty percent (50%) of the
                  combined
                  voting power of the then outstanding voting securities entitled
                  to vote
                  generally in the election of directors of the Company resulting
                  from such
                  Business Combination (including, without limitation, a company
                  which, as a
                  result of such transaction, owns the Company or all or substantially
                  all
                  of the Company’s assets either directly or through one or more
                  subsidiaries) in substantially the same proportions as their ownership,
                  immediately prior to such Business Combination, of the outstanding
                  voting
                  securities of the Company; or

              

      

       

      
        	
                 

              	
                (iv)

              	
                approval
                  by the stockholders of the Company of a complete liquidation or
                  dissolution of the Company.

              

      

       

      
        	
                 

              	
                (b)

              	
                “Board”
                  shall mean the Board of Directors of the
                  Company.

              

      

       

      
        	
                 

              	
                (c)

              	
                “Disability”
                  shall have the meaning as set forth in the Employment Agreement
                  by and
                  between Employee and Company dated November 17, 2005, or subsequent
                  replacement there of.

              

      

       

      
        	
                 

              	
                (d)

              	
                “Special
                  Change in Control Bonus Payment” shall mean
                  $310,000.00.

              

      

       

      
        	
                 

              	
                (e)

              	
                “Term”
                  shall have the meaning set forth in Section 2
                  below.

              

      

       

      
        
          
            
            

          

          
            Page
              2 of
              7

            
              

            

          

          
            
            

          

        

      

      

      
        	
                 

              	
                2.

              	
                Term
                  of Agreement; Duties.

              

      

       

      
        	
                 

              	
                (a)

              	
                Subject
                  to Section 4 below, this Agreement shall be effective on the date
                  hereof
                  and shall continue in effect through the first to occur of (i)
                  the  occurrence of a Change in Control or (ii) December 31, 2009
                  (the “Term”), unless extended by the President and Chief Executive Officer
                  and the Compensation Committee of the Board. Upon expiration of
                  the Term,
                  all obligations of the parties under this Agreement (except obligations
                  to
                  pay money that exist as of the end of the Term and any obligation
                  that by
                  its terms survives the expiration of the Term) shall terminate
                  and this
                  Agreement shall have no further
                  effect.

              

      

       

      
        	
                 

              	
                (b)

              	
                The
                  Employee shall have such duties and obligations as are set forth
                  in the
                  Employment Agreement by and between Employee and
                  Company.

              

      

       

      
        	
                 

              	
                3.

              	
                Payment
                  of Special Change in Control Bonus Payment.  Subject to Section
                  4 and Section 14 below, the Company shall pay the Employee the
                  Special
                  Change in Control Bonus Payment within four (4) business days following
                  the occurrence of a Change in
                  Control.

              

      

       

      
        	
                 

              	
                4.

              	
                Termination
                  of Employment and Compensation upon
                  Termination.

              

      

       

      
        	
                 

              	
                (a)

              	
                In
                  the event of termination of the Employee’s employment during the Term due
                  to death,  Disability or by the Company without cause , as
                  defined in the Employment Agreement, Company shall pay to the Employee,
                  or
                  to his or her beneficiary in the event of death or disability,
                  the Special
                  Change in Control Bonus Payment if:

              

      

       

      
        	
                 

              	
                (i)

              	
                a
                  Change in Control occurs within 90 days of the date of such death,
                  Disability or termination of employment without cause;
                  or

              

      

       

      
        	
                 

              	
                (ii)

              	
                a
                  definitive agreement relating to a Change in Control has been executed
                  at
                  the effective date of such termination, and such agreement is subsequently
                  consummated by the parties; or

              

      

       

      
        	
                 

              	
                (iii)

              	
                a
                  definitive agreement relating to a Change in Control is subsequently
                  executed with a party with whom the Company has had substantive
                  negotiations regarding a Change in Control prior to the effective
                  date of
                  such termination, or with an affiliate of such party, and such
                  negotiations have not been interrupted for a material period of
                  time (90
                  days or more) prior to the date of a Change in Control, and such
                  agreement
                  is subsequently consummated by the parties.    For
                  purposes of this Section 4(a), the effective date of termination
                  of the
                  Employee’s employment with the Company shall be determined under his/her
                  Employment Agreement..

              

      

       

      
        
          
            
            

          

          
            Page
              3 of
              7

            
              

            

          

          
            
            

          

        

      

      

      
        	
                 

              	
                (b)

              	
                In
                  the event of a termination of the Employee’s employment during the Term
                  for any other reason, the Company shall have no obligation to pay
                  the
                  Employee any Special Change in Control Bonus
                  Payment.

              

      

       

      
        	
                 

              	
                (c)

              	
                If
                  the Employee’s employment by the Company is not terminated prior to the
                  expiration of the Term, then if a definitive agreement relating
                  to a
                  Change in Control has been executed prior to the expiration of
                  the Term or
                  if a definitive agreement relating to a Change in Control is subsequently
                  executed with a party with whom the Company has had substantive
                  negotiations regarding a Change in Control prior to the expiration
                  of the
                  Term, or with an affiliate of such party, and such negotiations
                  have not
                  been interrupted for a material period of time (90 days or more)
                  prior to
                  the date of execution of such definitive agreement, the Employee
                  shall be
                  entitled to the Special Change in Control Bonus Payment if the
                  transaction
                  contemplated by that definitive agreement is consummated after
                  the
                  expiration of the Term and Employee is employed by the Company
                  at such
                  time.

              

      

       

      
        	
                 

              	
                5.

              	
                Withholding
                  Taxes.  The Company shall withhold from any payment due to the
                  Employee hereunder (or his/her beneficiary or estate)  all taxes
                  which, by applicable federal, state, local or other law, the Company
                  is
                  required to withhold therefrom.

              

      

       

      
        	
                 

              	
                6.

              	
                Confidentiality.  The
                  Employee agrees that the terms of the Agreement, and all discussions
                  relating to this Agreement, are and shall remain confidential as
                  between
                  the parties, unless and to the extent, disclosure as required by
                  law or to
                  secure advice from a legal or tax
                  advisor.

              

      

       

      
        
          
            
            

          

          
            Page
              4 of
              7

            
              

            

          

          
            
            

          

        

      

      

      
        	
                 

              	
                7.

              	
                Successors
                  and Assigns: No Third-Party Beneficiaries.  This Agreement shall
                  inure to the benefit of and shall be binding upon the Company and
                  its
                  successors, assigns and legal representatives and the Employee,
                  his/her
                  heirs and legal representatives.  The Employee may not assign,
                  transfer, or otherwise dispose of the Agreement, or any of his/her
                  rights
                  or obligations hereunder other than his/her rights to payments
                  hereunder,
                  which may be transferred only by will or by the laws of descent
                  and
                  distribution), without the prior written consent of the Company,
                  and any
                  such attempted assignment, transfer or other disposition without
                  such
                  consent shall be null and void.  The Company shall be entitled
                  to assign this Agreement, without the prior written consent of
                  the
                  Employee, (i) in connection with the merger or consolidation of
                  the
                  Company with another unaffiliated corporation, or (ii) in connection
                  with
                  the sale of all or substantially all of the assets or business
                  operations
                  of the Company to another person or entity; provided, however,
                  that such
                  assignee expressly assumes all of the rights and obligations of
                  the
                  Company hereunder, and provided further that solely with respect
                  to any
                  obligations of the Company to make a Special Change in Control
                  Bonus
                  Payment, the Company shall remain liable with respect to such obligation
                  in the event of a default by such assignee.  After any such
                  assignment, the Agreement shall continue in full force and
                  effect.

              

      

       

      
        	
                 

              	
                8.

              	
                Entire
                  Agreement.  This Agreement sets forth the entire agreement
                  between the parties hereto with respect to the subject matter hereof,
                  and
                  supersedes all other agreements and understandings, written or
                  oral,
                  between the parties hereto with respect to the subject matter hereof;
                  provided, however, nothing in the Agreement is intended to affect
                  the
                  Employee’s rights to payments or benefits provided to the Employee under
                  his/her Employment Agreement and the Company’s equity based compensation
                  and/or welfare benefit plans.

              

      

       

      
        	
                 

              	
                9.

              	
                Waiver
                  and Amendments.  Any waiver, alteration, amendment or
                  modification of any of the terms of this Agreement shall be valid
                  only if
                  made in writing and signed by the parties hereto; provided however,
                  that
                  any such waiver, alteration, amendment or modification is consented
                  to on
                  the Company’s behalf by the President and Chief Executive Officer or the
                  Board.   No waiver by either of the parties hereto of their
                  rights hereunder shall be deemed to constitute a waiver with respect
                  to
                  any subsequent occurrences or transactions hereunder unless such
                  waiver
                  specifically states that it is to be construed as a continuing
                  waiver.

              

      

       

      
        
          
            
            

          

          
            Page
              5 of
              7

            
              

            

          

          
            
            

          

        

      

      

      
        	
                 

              	
                10.

              	
                Severability.
                  If any provision of this Agreement or the application of any provision
                  is
                  held invalid, unenforceable or otherwise illegal, the remainder
                  of this
                  Agreement and the application of such provision will not be affected,
                  and
                  the provision so held to be invalid, unenforceable or otherwise
                  illegal
                  will be reformed to the extent (and only to the extent) necessary
                  to make
                  it enforceable, valid or legal. To the extent any provisions held
                  to be
                  invalid, unenforceable or otherwise illegal cannot be reformed,
                  such
                  provisions are to be stricken herefrom and the remainder of this
                  Agreement
                  will be binding on the parties and their successors and assigns
                  as if such
                  invalid or illegal provisions were never included in this Agreement
                  from
                  the first instance.

              

      

       

      
        	
                 

              	
                11.

              	
                Governing
                  Law. This Agreement will be construed and enforced according to
                  the laws
                  of the Commonwealth of Kentucky, without giving effect to the conflict
                  of
                  laws principles thereof.

              

      

       

      
        	
                 

              	
                12.

              	
                Section
                  Headings.  The headings of the sections and subsections of this
                  Agreement are inserted for convenience only and shall be deemed
                  to
                  constitute a part hereof, affect the meaning or interpretation
                  hereof or
                  of any term or provision hereof.

              

      

       

      
        	
                 

              	
                13.

              	
                Obligations
                  Contingent on Performance.  The obligations of the Company
                  hereunder, including its obligation to make the payments provided
                  for
                  herein, are contingent upon the Employee’s performance of the Employee’s
                  obligations under his/her Employment
                  Agreement.

              

      

       

      
        	
                 

              	
                14.

              	
                Waiver
                  and Release.  The Employee acknowledges and agrees that any
                  payment made under this Agreement is contingent upon Employee delivering
                  to the Company at the time of such Change In Control a release
                  in the form
                  attached hereto as Exhibit A, and the expiration of all revocation
                  periods
                  related thereto.

              

      

       

      
        	
                 

              	
                15.

              	
                Counterparts.  This
                  Agreement may be executed in two or more counterparts, each of
                  which shall
                  be deemed to be an original but all of which together shall constitute
                  one
                  and the same instrument.  The execution of this Agreement may be
                  by actual or facsimile signature.

              

      

       

      
        	
                 

              	
                16.

              	
                Notices.  All
                  notices and other communications hereunder shall be in writing
                  and shall
                  be given by hand delivery to the other party or by registered or
                  certified
                  mail, return receipt requested, postage prepaid, addressed as
                  follows:

              

      

      

      
        
          
            
            

          

          
            Page
              6 of
              7

            
              

            

          

          
            
            

          

        

      

      

      
        	
                If
                  to the Employee:

              	
                Kevin
                  Gregory

              

      

      11253
        Sunny Lane

      Union,
        Kentucky 41091

      

      
        	
                If
                  to the Company:

              	
                Pomeroy
                  IT Solutions, Inc.

              

      

      1020
        Petersburg Road

      Hebron,
        Kentucky  41048

      Attention:  President
        and Chief Executive Officer

      

      
        	
                With
                  copy to:

              	
                Pomeroy
                  IT Solutions, Inc.

              

      

      1020
        Petersburg Road

      Hebron,
        Kentucky 41048

      Attention:  General
        Counsel

      

       

      IN
        WITNESS WHEREOF, the undersigned have executed this Agreement of the date
        first
        written above.

       

      
        	
                Pomeroy
                  IT Solutions, Inc.

              	 	
                Employee

              
	 	 	 	 	 	 
	
                 

              	 	
                 

              	 
	
                By:

              	
                     Keith
                  R. Coogan

              	 	
                By:

              	
                Kevin
                  Gregory

              	 
	
                Title:

              	
                  President/Chief
                  Executive Officer

              	 	
                Title:

              	
                SVP,
                  Chief Financial Officer

              	 

      

       

       

      Page
        7 of
        7

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